Healius Faces $495 Million Impairment but Eyes Margin Gains by 2027
Healius reported a 5.7% rise in FY25 revenue with underlying EBIT meeting consensus, buoyed by strong pathology growth and a significant profit from the Lumus Imaging sale. Despite challenges at Agilex Biolabs and a major goodwill impairment, the company targets improved margins by 2027.
- Group revenue up 5.7% to $1.34 billion
- Underlying EBIT of $17.1 million aligns with consensus
- Lumus Imaging sale generates $375.2 million profit and debt repayment
- Pathology revenue grows 6.0%, driven by specialist and genomic diagnostics
- Agilex Biolabs revenue declines 3.3% amid geopolitical challenges
Strong Revenue Growth and Strategic Divestment
Healius Limited has delivered a solid financial performance for the fiscal year ended June 30, 2025, with group revenue increasing by 5.7% to $1.34 billion. The company’s underlying earnings before interest and tax (EBIT) of $17.1 million came in line with market expectations, reflecting steady operational execution despite a complex external environment.
A highlight of the year was the profitable sale of Lumus Imaging, which generated a $375.2 million gain and enabled Healius to fully repay its debt, resulting in a net cash position of $57.2 million. This strategic divestment has simplified the company’s business model and strengthened its balance sheet, positioning it well for future growth initiatives.
Pathology Division Drives Growth Amid Operational Challenges
The pathology segment, the core of Healius’ operations, saw revenue rise 6.0% to $1.30 billion. Growth was particularly strong in specialist services and genomic diagnostics, with the latter expanding by over 25% in the second half of the year. This was achieved despite a modest volume increase of 1.6% in the latter half and a $3.5 million EBIT impact from Tropical Cyclone Alfred, which temporarily disrupted operations in Queensland and Northern New South Wales.
Healius also undertook a comprehensive labour optimisation program to address inflationary pressures, given that labour costs represent nearly half of pathology revenues. The program, now being implemented, aims to maintain labour costs broadly flat into FY26 while improving productivity across collection centres and laboratories.
Challenges at Agilex Biolabs and Impairment Charges
Agilex Biolabs faced a challenging year with revenue declining 3.3% to $38.2 million, impacted by geopolitical uncertainties affecting biotech and pharmaceutical research funding. However, management notes a recovery in the Q1 2026 revenue pipeline, with a strategic pivot towards large molecule projects and enhanced immunoassay capabilities.
On the accounting front, Healius recorded a significant non-cash goodwill impairment of $495.2 million in the pathology division, reflecting ongoing market pressures. Despite this, the company remains committed to its target of achieving high single-digit EBIT margins by June 2027, supported by ongoing cost reduction initiatives and revenue diversification strategies.
Dividend and Outlook
The board has decided not to pay a final dividend for FY25, following a special dividend paid in May 2025. Healius plans to resume dividend payments as soon as practicable, supported by a healthy franking credit balance.
Looking ahead, the company expects FY26 revenue growth to mirror the second half of FY25, with labour costs remaining stable. Profitability is anticipated to be weighted towards the second half of the year due to cost-saving measures and seasonal factors. The company’s webcast and investor briefing today will provide further insights into its strategic direction and operational priorities.
Bottom Line?
Healius’ FY25 results reflect resilience and strategic repositioning, but execution risks remain as it pursues margin expansion and market diversification.
Questions in the middle?
- How will Healius manage the significant goodwill impairment impact on investor confidence?
- Can Agilex Biolabs sustain its recovery amid ongoing geopolitical uncertainties?
- What specific initiatives will drive the targeted high single-digit EBIT margins by 2027?
