Australian Clinical Labs flags revenue boost, amid a surge in COVID-19 testing demand
Health & Biotech
Health & Biotech
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The COVID-19 outbreaks in NSW and Victoria have led to a surge in demand for testing, and that trend looks set to show up in the bottom line of pathology network Australian Clinical Labs (ASX:ACL).
Australian Clinical Labs, which listed in May, is the third largest pathology network in Australia. Pathology is a branch of medicine that conducts testing for diseases including (but not limited to) COVID-19.
Pathology accounts for 70 per cent of all healthcare decisions, and is a market of more than $5 billion in Australia.
While the stock had a nuanced debut, its share price has begun to take off in the past two months and is now over 25% up from its $4 per share IPO price.
This morning, ACL shares rose above $5 after the company revealed just how much it expected to benefit from the Delta outbreak, as far as its results for the first half of FY22 are concerned.
It is tipping revenue between $398.1 million and $414 million, which is between 29.5% and 34.7% higher than its prospectus forecast of $307.4 million.
Net profit after tax is expected to be between $63.7 million and $70 million, which would be between 177.9% and 205.6% higher than the $22.9 million forecast prior to listing.
Although vaccinations are gradually turning the tide in NSW and are expected to soon in Victoria, the company said the forecast assumed a reduction in COVID-19 testing in the next quarter.
However it also said its non-COVID business had sustained success too.
The upgraded guidance followed a solid full year result for FY21 with revenue of $674.4 million and a profit of $88.7 million. While the former was only up 29% from FY120, the latter was up 659%.
While Australian Clinical Labs is the newest pathology stock on the block, it is not the only company to have benefited from the demand for COVID-19 testing.
Healius is up nearly 80% since January 2020 and Sonic is up nearly 40%.
Sonic grew its profit by 149% to $1.3 billion, and Healius’ was 179% higher at $148.4 million.