Australia's Healius sinks after analysts trim PT on lower Medicare benefits

HL Science

06/06/2022 02:43

(Adds Citi comments, share price)
    ** Jefferies and Citi lower their price targets on Healius
Ltd  HLS.AX  after the co reported a dip in Medicare benefits;
shares dip as much as 4.2% to A$3.64
    ** Shares of the Australian healthcare services firm touch
lowest level since Dec 8, 2020
    ** Jefferies cuts PT to A$4.30 from A$4.40, "hold" rating
maintained; Citi lowers PT to A$$4.30 from A$4.70, upgrades to
"buy" on recent share price decline
    ** Medicare, the country's main public health insurance
system, which covers certain healthcare expenses for citizens,
is one of Healius' sources of revenue 
    ** Healius said on Friday in the four months ended April 30,
core pathology benefits (non-COVID) declined 8.8% - Jefferies
estimates Medicare spending generates ~85% of revenue in the
Australian pathology market  urn:newsml:reuters.com:*:nASX8wxLKl 
    ** Jefferies also notes that COVID pathology testing revenue
has remained solid  
    ** Citi says Healius' day hospitals business is also likely
to have had a difficult quarter 
    ** HLS also reported diagnostic imaging benefits dipped 8.2%
in the four months to April 30 
    ** "We believe there are likely to be impacts from
healthcare cost inflation and lower healthcare services volumes
at least into 1HFY23, and hence are below consensus for FY23" -
Jefferies 
    ** Jefferies decreases earnings per share estimate by 5.3%
for FY22, cuts by 4.7% for FY23; Citi cuts EPS estimate by 16%
for FT22, 7% for FY24 and 5% for FY25
    ** Of 14 analysts, five rate HLS "buy" or higher, eight
"hold", one "sell"; median PT is A$4.40 
    ** HLS down 28% YTD, as of last close 


 (Reporting by Harshita Swaminathan; editing by Diane Craft)
 ((Harshita.Swaminathan@thomsonreuters.com))