Healius Limited

This report is an updated version of the report published on the 17 August 2022 at 3:45 PM GMT.

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Healius Limited (ASX: HLS) is in the healthcare facilities and services sector that offers a range of medical and health-related services and healthcare technology solutions to medical and allied health professionals. The company reported segments are Pathology, Imaging, Day Hospitals, and Corporate.

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~45.10% of the total shareholding. Australian Retirement Trust and Perpetual Investment Management Limited hold a maximum stake in the company at ~7.41% and ~7.15%, respectively.

1.4 Key Metrics: During 1HFY22, the company recorded an EBITDA margin of 38.0% against 11.9% of the industry median. In addition, the asset turnover ratio stood at 0.35x as compared to 0.22x in 1HFY21. Below captured the trend of net debt and gross operating cash flow:

Section 2: Business Updates, Financial and Operational Highlights

2.1 Recent Updates:

2.2 Insights of 1HFY22: During 1HFY22, HLS reported underlying revenue of AUD 1,339mn, up from AUD 936.4mn reported in the year-ago period. Underlying NPAT stood at AUD 245.6mn as compared to AUD 75.3mn reported in 1HFY21. Results were positively impacted by Pathology's key role in COVID-19 testing.

2.3 Development Program: During 1HFY22, the company completed the acquisition of Axis Radiology and also declared the development of Murdoch day hospital and cancer center in Western Australia.

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 17 August 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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