Shares in Sonic Healthcare have fallen sharply after the international pathology, imaging and medical centres operator cut its forecast for underlying earnings this financial year.
Sonic shares slumped by more than six per cent in intraday trading after the surprise announcement was made at its annual general meeting on Thursday.
The company in August had forecast underlying earnings growth of five per cent for 2014/15.
But shareholders at the meeting were told that forecast had been cut to between two and four per cent.
Slides presented to the meeting by chief executive Dr Colin Goldschmidt said there had been low volume growth in Sonic's Australian pathology business during the first quarter.
However, while there had been a recovery in October, costs were increasing for its pathology collection centres and the business was having to cope with surprise Medicare fee cuts.
Dr Goldschmidt said cost cuts had begun, and volume growth had returned to trend levels in the second quarter.
Sonic's pathology business in Australian generated 29 per cent of the group's revenue in 2013/14.
Meanwhile, Sonic's business in the United States had lifted volumes by four per cent for the year to October, but revenue growth had fallen.
Sonic's shares were $1.055, or 5.7 per cent, lower at $17.345 at 1457 AEDT.
IG market strategist Evan Lucas said Sonic's downgrade was disappointing and surprising given that the group's businesses were usually stable drivers of earnings.
"No one really expected it," he said.
"Downgrading themselves to two to four per cent - that's really low growth, and that's why people (investors) are deserting them."
Outgoing chairman Peter Campbell told shareholders that Sonic would continue to benefit from the expected growth in demand globally for diagnostic healthcare services.
Governments and other healthcare funders around the world were under pressure to constrain the growing cost of healthcare.
"Encouraging early diagnosis through GP consultations, and laboratory and imaging testing is a key part of the solution, helping to prevent patients from ultimately requiring expensive acute care," he said.
"This creates demand for Sonic's services."
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