Global medical diagnostics company Sonic Healthcare is confident a recovery is underway within its key pathology businesses.
Softer volumes and earnings at its pathology collection centres and labs in Australia and the US dragged Sonic's first half profit down two per cent to $174 million, which was below market expectations and came despite a six per cent revenue rise.
But chief executive Dr Colin Goldschmidt said strong volume growth had returned in the second half, a trend that was expected to continue and drive profits higher.
The group was also reining in costs while momentum was building in its European businesses.
"Whilst the first half was not our best result on record ... we have weathered that storm and there's a lot of good stuff coming through for the second half, let alone for FY16 and beyond," Dr Goldschmidt said.
Sonic is sticking with its forecast of growth of between two and four per cent in underlying earnings for the full year.
It also expects currency tailwind in the second half following the fall in the Australian dollar.
With industry growth rates at five per cent, thanks in part to the ageing population, Sonic expected to increase its market share, Dr Goldschmidt said.
It was also considering a "number of sizeable acquisitions", particularly in Europe and the US.
And it stands to receive a $320 million a year boost to revenues as a result of outsourcing contracts with hospitals in the UK and Canada.
Meanwhile, Sonic is not expecting any major funding cuts to the pathology sector when the federal government hands down its budget in May.
However Dr Goldschmidt said he hoped the government would soon resolve issues around deregulation of the pathology sector, which has caused rents to rise for many operators.
Sonic, which owns the Douglas Hanly Moir pathology collection centres and labs, wants rents and opening hours to be regulated by the government.
Dr Goldschmidt said he was also aware of anecdotal evidence from across the medical centre industry about a fall in patient numbers as a result of confusion surrounding the government's botched plan to introduce a co-payment for visits to the GP.
However he said Sonic's IPN GP centres had not experienced any major change in patient numbers.
Sonic's shares closed three cents weaker at $18.91.
SONIC'S PROFIT SLIDES
* Net profit of $174m, down 1.9pct from $177.3m
* Revenue of $2b, up 6.1pct from $1.9b
* Partly franked interim dividend of 29 cents a share, up two cents
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