Healius boss Malcolm Parmenter warns of double Covid, flu hit this winter

The boss of pathology group Healius says ‘wishful thinking’ will not eradicate Covid-19, with fresh variants emerging every six months.

Healius CEO Malcolm Parmenter says pathology-based PCR testing to detect Covid-19 will continue to form the mainstay of Australia’s response in tackling the virus. Picture: Luis Enrique Ascui

Malcolm Parmenter, chief executive of pathology group Healius, has warned of a virus plagued winter, with a potential new Covid-19 mutation hitting Australia at the same time of the peak flu season.

Dr Parmenter’s warning comes as Australians this week begin enjoying freedoms they’ve not had for two years, with the reopening of international borders and the scrapping of QR code check-ins in the two biggest states.

But Dr Parmenter, who added he had contracted Covid-19, said “wishful thinking” would not eradicate the coronavirus, with a fresh mutation – like the infectious but less severe Omicron variant – emerging every six months.

He said vaccinations alone would also fail to contain the virus, and that pathology-based testing would continue to form the “mainstay” of Australia’s response in isolating those who become infected. Rather than cause alarm, Dr Parmenter said he was merely advocating for better preparation ahead of another wave, rather than a “sleep walk into another chaotic event” like the Omicron outbreak. “We all want to believe that it‘s going away and we’ll go back to life as we knew it,” he said.

“However, Helius is a science based organisation and wishful thinking won‘t get us there. There are a few aspects of coronavirus that we now know with a reasonably high degree of certainty. The first is that the virus has a greater capacity for mutation and evolution than was initially thought and variants of concern have been turning up every six months or so.

“We also know that vaccines are effective and immunity waned reasonably quickly and immunity from infection also wanes reasonably quickly. Now armed with this knowledge, the science says it‘s quite likely there’ll be another round of Covid this coming winter in Australia. Unfortunately, this may be in tandem with influenza given Australia has seen very little flu for more than three years.”

Taxpayer-funded Covid-19 tests have delivered a bonanza to listed pathology companies – including Healius, Sonic Healthcare, Australian Clinical Labs and Integral Diagnostics – fuelling record earnings and generating billions of dollars in revenue.

For the six months to December 31, Healius’s revenue surged 44 per cent to $1.34bn. Its profit more than tripled to $233.2m as it completed more than 11 million tests – about 40,000 a day.

Investors lapped up the result, with Healius shares jumped as high as 6.4 per cent to $4.46 before easing to a close of $4.41 on Wednesday. That compared with 0.6 per cent gain across the market.

Healius lifted its interim dividend by 54 per cent to 10c a share, fully franked, payable on April 15.

Royal Bank of Canada analyst Craig Wong-Pan said the group’s “result was ahead of our forecasts and consensus expectations, although the dividend was lower than consensus numbers”.

“We expect the market should like Healius’s result given it looks to have outperformed peers.”

Dr Parmenter said pathology-based PCR testing was still needed, despite the rise of rapid antigen tests – which were approved for self use last November.

“When it comes to tracking and tracing many people don‘t register the positive rapid antigen test result, as evidenced by the fact that now around half of registered positives still come from PCR testing,” he said.

“Keeping the economy open is not just about avoiding lock downs as we‘ve discovered in a rather painful way in the last couple of months. It’s also about keeping the number of infections under control. And in the event the variants (become) more virulent than Omicron that can be only be done with effective testing, tracking and tracing.”

At the start of the pandemic, Covid-19 tests attracted a $30 Medicare subsidy, which rose to as high as $100 a test in recognition of the need for pathology companies to invest increasing capacity. But before the latest wave, the subsidy eased to $85 per cent and analysts are predicting it called fall further to $34, which would put it on far with government-funded influenza testing.

Dr Parmenter said Healius has begun “investing” in its capacity to detect and respond to further Covid-19 variants. But he said Covid-19 wasn’t the sole driver of the company’s growth.

“Covid revenue was the prime driver of growth, but significantly non-Covid revenue was also up by 3 per cent,” he said. The company would continue to invest ahead of future variants, he added.