Rising Labour Costs and Regulatory Risks Challenge Healius’ Profit Outlook

Solid Financial Performance Amid Operational Challenges

Healius Limited has delivered a robust first half for the 2026 financial year, posting a 3.8% increase in group revenue to $688.1 million and a notable 13.1% rise in underlying EBITDA to $122.2 million. Underlying EBIT swung into positive territory at $7.9 million, a significant turnaround from a $2.7 million loss in the prior corresponding period. These results reflect a combination of steady volume growth, pricing improvements, and disciplined cost management across the business.

Pathology, the core segment, saw revenues climb 3.5% driven by a 1.2% volume increase and a favourable shift in service mix, including growth in genomics, clinical trials, and veterinary pathology. Despite some headwinds from Medicare changes affecting B12 and urine testing volumes, the division’s EBIT improved to $5.2 million from a prior loss, signalling operational resilience.

Efficiency Gains Through Technology and Workforce Optimisation

Healius has aggressively pursued cost containment, with total expenses rising only 1.9% despite inflationary pressures. A labour optimisation program has reduced headcount by approximately 400 full-time equivalents, while labour costs as a percentage of revenue fell by 2.7 percentage points between the first and second quarters. The company is leveraging artificial intelligence with the introduction of AI co-workers, Reva AI and Julie AI, to streamline financial reconciliation and workforce planning, respectively. These digital initiatives are part of a broader transformation that includes a new Medway Collectors Portal and upgraded laboratory management systems, positioning Healius for ongoing efficiency improvements.

Agilex Biolabs Accelerates Growth with Strategic Focus

Agilex Biolabs, Healius’ specialised laboratory arm, reported a 16% increase in revenue to $21.8 million and a 65.5% jump in EBITDA to $4.8 million. The business has sharpened its focus on large molecule development and immunoassay capabilities, exiting the toxicology segment to align with evolving market demands. The opening of a new Brisbane bioanalytical laboratory in August 2025 has expanded Agilex’s footprint and capacity, contributing to a strong pipeline of new work.

Strategic Contract and Regulatory Headwinds

In a significant development, Healius secured a five-year contract worth approximately $60 million to provide pathology services to the Australian Defence Force. This deal underscores the company’s national reach and digital capabilities, including e-referrals and online booking systems. However, regulatory challenges loom with the Fair Work Commission’s gender-based undervaluation ruling set to increase labour costs for pathology collectors and health professionals starting April 2026. Healius estimates an impact of around $1.8 million for the current financial year and is working with industry bodies to seek Medicare support for these additional costs.

Outlook and Capital Position

Healius ended the half with a net cash position of $11.6 million, maintaining strong liquidity despite one-off costs related to restructuring and tax settlements. The company expects full-year earnings to align with consensus forecasts and aims for high single-digit EBIT margins by mid-2027. This target will be driven by volume growth, pricing initiatives, continued digital transformation, and further cost savings planned for the second half of the year.