Healius Limited reported a 3.8% revenue increase and a turnaround to positive underlying EBIT in the first half of FY2026, despite ongoing challenges in pathology services. The company also secured a significant five-year contract with the Australian Defence Force valued at $60 million.
- 3.8% revenue growth to $688.1 million driven by Pathology and Agilex Biolabs
- Underlying EBIT improved to $7.9 million from a prior loss
- No interim dividend declared for the half-year
- Signed a $60 million, five-year pathology services contract with the Australian Defence Force
- Ongoing cost pressures from Fair Work Commission wage rulings and Medicare indexation issues
Financial Performance and Market Context
Healius Limited has delivered a mixed but cautiously optimistic half-year result for the six months ended 31 December 2025. The company posted a 3.8% increase in underlying revenue to $688.1 million, supported by volume and fee growth in its core Pathology division and strong performance from Agilex Biolabs. Underlying earnings before interest and tax (EBIT) swung to a positive $7.9 million, a significant improvement from a loss of $2.7 million in the prior corresponding period.
However, the reported net loss after tax widened to $30.4 million, reflecting non-underlying costs including restructuring and digital transformation expenses. The pathology sector continues to face headwinds, notably from stagnant Medicare Benefits Schedule (MBS) indexation, reduced GP attendances due to cost-of-living pressures, and rising labour costs following a Fair Work Commission decision on gender-based undervaluation.
Operational Highlights and Strategic Progress
Healius’ T27 strategy, focused on revenue diversification and cost efficiency, is showing tangible results. The company has realised over $10 million in annualised support cost savings in the half-year and is on track to meet its $15–20 million target by FY2027. Labour optimisation programs have reduced headcount by approximately 400 full-time equivalents, with technology and artificial intelligence (AI) playing a growing role in improving operational efficiency.
Digital initiatives include the rollout of the Medway Collectors Portal, now processing 80% of collections, and AI co-workers like Reva AI and Julie AI, which assist in financial reconciliation and workforce planning. These innovations underpin Healius’ efforts to streamline workflows and enhance customer service across its pathology network.
Division Performance and New Contracts
The Pathology division saw revenue grow by 3.5% with a 1.2% volume increase, driven by higher fees in genomics, clinical trials, and veterinary pathology. EBIT improved to $5.2 million from a loss of $3.8 million a year earlier. Agilex Biolabs recorded a 16% revenue increase and a 65.5% jump in EBITDA, reflecting strategic focus on large molecule development and expanded bioanalytical capabilities, including a new Brisbane laboratory.
Notably, Healius secured a five-year contract with the Australian Department of Defence to provide outpatient pathology services to Australian Defence Force personnel. The contract, valued at approximately $60 million, includes dedicated collection staff and comprehensive digital solutions, marking a significant revenue stream and strategic partnership.
Financial Position and Outlook
Healius remains in a net cash position of $11.6 million and comfortably within its banking covenants, despite a reduction from $57.2 million at June 2025. The company continues to manage capital prudently, focusing on disciplined investment with clear return hurdles. No dividends are expected for the half-year, reflecting the company’s focus on reinvestment and balance sheet strength.
Looking ahead, Healius faces ongoing sector challenges, including the finalisation of Fair Work Commission wage increases and potential adjustments to Medicare funding. Nonetheless, the company’s strategic initiatives, digital transformation, and new contract wins position it well for medium-term growth and margin improvement.
Bottom Line?
Healius’ progress in operational efficiency and new contracts offers promise, but rising labour costs and sector pressures warrant close investor attention.
Questions in the middle?
- How will Healius manage the full financial impact of the Fair Work Commission’s wage rulings beyond FY2026?
- What are the prospects for Medicare Benefits Schedule indexation or reform to support pathology providers?
- How quickly can AI and digital initiatives translate into sustainable margin improvements across the business?