HLS –6.55%: Was weaker today on a result that had been flagged at the end of last year. In a trading update on the 15th November, HLS provided guidance for this result, so we had a pretty good handle on what they should deliver. The most unexpected outcome though was further margin pressure in pathology even with ~7% growth at the top line. Normally, more revenue = higher margins due to scale but that wasn’t the case with HLS today, which is the reason (we think) the stock fell.
- Revenue $933.9 million was up +10% y/y, ahead of $912 million expected
- Underlying Earnings (Ebitda) of $164.4 million, up +3.3% y/y but a 3.5% miss to consnesus
- No dividend (as expected)
- Net debt at period end $345.3 million
Overall, a poor result and now we need to wait another month before we get clarity on capital management and their plans for the future at an investor day.
MM is neutral HLS
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