There are a few S&P/ASX 200 Index (ASX: XJO) shares that are making a lot of revenue and profit from the high level of COVID-19 testing.
A few key providers are providing millions of tests, such as Sonic Healthcare Ltd (ASX: SHL) and Healius Ltd (ASX: HLS). The smaller, non-ASX 200 business Australian Clinical Labs Ltd (ASX: ACL) is also involved in testing.
Image source: Getty Images
How is testing benefiting the ASX 200 healthcare shares?
According to reporting by The Australian there has been a total of more than 55 million PCR tests done. The testing providers are now receiving a $85 million Medicare rebate for every test, which has gone up from $28.65 per test at the start of pandemic.
On 18 November 2021, Sonic disclosed that it had conducted 36 million COVID-19 PCR tests in total to date, though Sonic operates in several northern hemisphere countries like the USA, Germany, the UK and Switzerland.
Sonic also performs vaccinations. It had provided more than 1 million vaccinations when it announced a trading update in mid-November.
Whilst rapid antigen tests are quickly becoming a key part of the testing system, it's still thought that PCR testing will continue for the next couple of years at least.
Healius noted at its recent annual general meeting (AGM) (in October, before the Omicron surge) that it was doing more than 40,000 COVID tests per working day with commercial COVID testing performing "well" in industries like sports and film production. The ASX 200 share's underlying net profit after tax almost tripled from $53.1 million to $148.4 million.
Healius said that it expected COVID PCR testing to be part of the health landscape for years.
How are investors seeing the situation?
The Australian reported that Citi is expecting more COVID testing in FY22 and FY23, as well as a continuation of testing going into FY24.
Investors have sent the share prices of the three companies mentioned much higher in recent times.
The Sonic Healthcare share price has risen 24% over the last six months and 39% over the last year at the time of writing.
Over the last six months the Healius share price has risen by 13% and it has increased by 36% in the past year.
The Australian Clinical Labs share price has surged 37% in just the last month and over the past six months it has soared 75%.
Are those ASX 200 shares still opportunities?
The broker Morgans has rated both Healius and Sonic Healthcare as buys with price targets that are approximately 10% higher than where they are now. It noted that both businesses are also making bolt-on acquisitions to boost earnings over the longer-term.
