Sonic Healthcare Limited (SHL)

By Jason Fittler

Sonic Healthcare Limited (SHL) is an international medical diagnostics company.

It offers laboratory medicine/pathology and radiology services to the medical community.

The company is structured as a decentralized federation of medically led diagnostic practices. The head office is in Sydney, Australia.

SHL provides the services and infrastructure in eight countries - Australia, New Zealand, the UK, Germany, Switzerland, Belgium, Ireland, and the USA. 

SHL is the largest operator of medical centres and the largest occupational health provider in Australia and the second largest participant in the Australian radiology market.

The company has grown strongly since listing on the ASX in 1987 through a combination of organic growth and ongoing acquisitions in Australia and abroad.

SHL is currently a constituent of the S&P/ASX100 benchmark on the ASX.

SHL operates in attractive and growing global healthcare markets, in which there is increasing demand for diagnostic services arising from growing and ageing populations, new tests and preventative medicine.

Whilst the present focus for acquisitions is on SHL’s existing markets, further international expansion in pathology is likely in the medium to long-term.

Regulatory risks and increasing completion can be regarded as the main risks to SHL’s business model.

We have seen the price of the company fluctuate over the past months as the Government looks at Medicare and has announced a number of changes all of which will affect the bottom line at SHL.

Our price target is $20 for the company, but the recent backflip on the reduction in the Medicare rebate to doctors has seen the price jump.

SHL is currently trading around $19.00.

It is paying 3.8% with 55% franking.

This is a stock to watch.

For more information about Sonic Healthcare Limited (SHL) please contact us on 07 4771 4577.