Pathology and medical centre operator Primary Health Care's measures to improve underlying profit will not have a material impact until the 2019/20 financial year, equities researcher Citi says.
Citi also considers the consensus estimate among analysts for the company's 2017/18 underlying profit, of $97 million, as overly optimistic.
In a report released on Tuesday, Citi said Primary faces revenue challenges and rising costs in its medical centres division, higher costs in its pathology collection centres, and the loss a $30 million-per-year cancer screening contract from the second half of 2017/18.
Primary made an underlying profit of $92.1 million in 2016/17, down from the prior year's $96.8 million, as a strong performance from its imaging and pathology units partially offset a 34 per cent fall in earnings from medical centres.
Primary chief executive Malcolm Parmenter is likely provide net profit guidance for 2017/18 at the company's annual general meeting on November 23.
The company is aiming to improve its profitability with measures including the rationalisation of its collection centre network, reducing the centre's rent increases, recruiting more doctors for medical centres, and turning around non-GP businesses such as physiotherapy, dental and fertility.
"We expect these measures to take time and their impact unlikely to be material until 2019/20," the Citi report said.
Shares in Primary were down five cents, or 1.6 per cent, at $3.15 at 1235 AEDT.
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