Sonic Healthcare (SHL) Share Trading Update

Submitted by Craig Strzelecki on 3 April, 2007 - 18:57

Sonic Healthcare (SHL) have now now reached critical mass in the USA with its recent acquisition of American Esoteric Laboratories in December 2006. Market analyst, Citigroup Investment Research thought they would compare the combined productivity of Sonic Healthcare's two acquisitions, CPL and AEL, relative to other laboratory service providers in the USA to assess the current efficiency and possible upside of the combined Sonic US businesses. The limitations to this approach include the underlying business mix, with esoterics being more labour intensive than routine tests. If the business is more hospital focused there will also be fewer Patient Service Centres (PSCs) which we have used as one of our productivity measures. PSCs are where commercial laboratories have leased space in order to collect samples. The exercise in productivity comparison is to see whether SHL can improve its current productivity ratios in three areas relative to other major commercial laboratories in the USA. These are revenue per employee, revenue per laboratory and revenue per PSC. While such an exercise does have some limitations it is one measure of earnings opportunities which may flow from growth by acquisition in the USA for Sonic Healthcare. The analysts have concluded, based on analysis of comparable performance benchmarks of other US commercial laboratories, that SHL's greatest upside lies in increasing revenue per laboratory in the USA.

Sonic Healthcare Limited is listed on the Australian Stock Exchange (ASX) under stock code SHL. You can view their investor website here. SHL was listed on the ASX on 30 April, 1987. Find out the meaning of the recommendations in this primer. Barry S Patterson is the chairman of Sonic Healthcare and Dr Colin S Goldschmidt is the Managing Director. Sonic Healthcare provides pathology services. The company is a dedicated medical diagnostics company operating in Australia, New Zealand, Germany, the United Kingdom and the USA. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade SHL. Check your charts and good luck with your share trading!

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