Yahoo Finance

• Group Revenue Growth: Up 10%.

• Pathology Revenue Growth: Up 7%.

• Agilex Revenue: Down 1.1%.

• Lumus Imaging Revenue Growth: Up 13.3%.

• EBITDA Growth: Up 3.3%.

• EBIT Growth: Up 51% to $23.7 million.

• Pathology Volume Growth: Up 5%.

• Genomic Diagnostics Revenue Growth: Up 45%.

• Collection Center Closures: Reduced by 50% from 800 to 400 per week.

• Contact Center Call Reduction: Reduced by one-third or 65,000 calls per month.

• Agilex EBIT: Reduced to $1.1 million.

• Lumus Imaging EBIT Growth: Up 50% to $26.4 million.

• Cash Conversion: Strong control over working capital.

• Capital Expenditure: Expected to be consistent with the first half.

• Warning! GuruFocus has detected 8 Warning Signs with ASX:HLS.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Healius Ltd (ASX:HLS) reported a 10% increase in group revenue, with pathology revenue growing by 7% and Lumus imaging revenue up by 13.3%.

• EBITDA increased by 3.3% and EBIT rose significantly by 51% to $23.7 million.

• The company has successfully reduced collection center closures by 50%, improving customer service levels.

• Genomic diagnostics revenue grew by 45%, highlighting strong growth potential in emerging diagnostics.

• The sale of Lumus imaging for $965 million is expected to generate net proceeds in excess of $800 million, which will be used to repay debt and return surplus cash to shareholders.

Negative Points

• Despite revenue growth, margins remained flat due to increased labor costs from investments in staffing collection centers and call centers.

• Agilex Biolabs' performance was impacted by the US elections, resulting in flat revenue and a reduction in EBIT to $1.1 million.

• The pathology segment's revenue growth has not yet translated into higher earnings due to deliberate investments in labor.

• There are concerns about stranded costs post the sale of Lumus imaging, which may affect profitability.

• The company faces challenges with indexation and potential changes in government policy, such as the B12 and vitamin year-end changes.

Q & A Highlights

Q: Can you provide insights on when productivity initiatives will impact margins, given they were flat this period? A: Paul Anderson, CEO, explained that while revenue improved by 7%, it came with increased labor costs to keep collection centers open and call centers staffed. The focus now is on improving productivity and reducing labor costs, but it's an ongoing process without a specific timeline.

Q: What are the expected stranded costs post the sale of Lumus, and how do you plan to address them? A: Paul Anderson, CEO, stated that they have a good understanding of the stranded costs and will provide more details at the Investor Day. Some costs will naturally disappear post-sale, while others will be managed through transition services agreements.