Healius will slash costs and focus on pathology and lab services after bumper Lumus sale

Healius will look at how to return capital to shareholders after its bumper $965m Lumus Imaging sale to Affinity Equity Partners.

Healius will refocus on pathology after selling its Lumus Imaging division.

Healius will be in a “material net cash position’’ following the sale of its Lumus Imaging division for $965m, and will refocus the streamlined business into growing its pathology and laboratory services businesses.

The deal with Affinity Equity Partners will result in Healius receiving more than $800m net of transaction and other costs, which will more than cover the $360.7m in net debt the company was carrying at the end of the financial year.

The price was “much bigger” than expected, analysts on a call with the company on Monday said, while Healius managing director Paul Anderson said they would be looking at how to return surplus proceeds to shareholders in a tax effective manner.

“The form and timing of the shareholder distributions will be communicated closer to the time of completion of the sale,’’ Mr Anderson said.

Mr Anderson said Healius was now planning material reductions to head office, infrastructure and other costs as a result of the smaller size of the business, and the company would have materially lower capital expenditure requirements.

Following the sale of the Lumus division, the company would be left with its Healius Pathology business, which operates almost 2000 collection centres and 93 laboratories nationally, as well as its Agilex Biolabs division.

“Following completion of the transaction, Healius will continue to be a leading provider of pathology services in Australia with a rapidly growing bioanalytical laboratory services business, Agilex,’’ the company told the ASX.

“The divestment of Lumus is not expected to have any negative impact on the operations or earnings of Healius’ remaining businesses.

“The sale of Lumus will alleviate balance sheet pressures and allow the business to focus solely on executing this new strategy by improving customer service, modernising laboratories, completing the investment in digital technologies that will provide efficiencies, and most importantly, providing better services for our patients and referrers.’’

Mr Anderson said Healius would refinance and right-size its debt facilities using the proceeds of the sale, which is not subject to shareholder approval,

The sale came about as a result of a strategic review which started in March, when the company was getting close to breaching its debt covenants after performing poorly following the boom pandemic years.

The stock had fallen from close to $5 in late 2021 to as low as $1.09, and Healius was forced to raise $187m at a steeply discounted $1.20 per share late last year, with shareholders including John Wylie’s Tannara Capital expressing their displeasure at how it was being run.

Mr Anderson took the top job in March, replacing Maxine Jaquet, who had herself replaced former boss Malcolm Parmenter just a year previously.

Healius in August reported underlying earnings for the full year near the top end of guidance, coming in at $346.6m, down from $376.2m last year. Revenue increased to $1.74bn from $1.64bn.

The company’s net loss ballooned to $645.8m, from $367.8m a year earlier, hurt by a $603.2m impairment as a result of the writedown of goodwill in its pathology division in the first half.

This was caused by lower near-term volume forecasts and cashflows, Healius said.

The deal, which is subject to Foreign Investor Review Board approval, is expected to close in the first quarter of 2025.

Healius shares closed up 7.45 per cent at $1.73 on Monday.

Originally published as Healius will slash costs and focus on pathology and lab services after bumper Lumus sale