Why are Healius shares crashing 35% on Wednesday?

This healthcare share is crashing deep into the red on Wednesday. What's happening?

| More on:
A woman looks shocked as she drinks a coffee while reading the paper.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Healius Ltd (ASX: HLS) shares are back from their trading halt and crashing deep into the red.

In morning trade, the healthcare company's shares are down 35% to $1.19.

As a comparison, the ASX 200 index is trading broadly flat.

Why are Healius shares crashing?

Investors have been hitting the sell button today after the company completed the institutional component of a heavily discounted entitlement offer.

According to the release, the company has raised a total of approximately $154 million at $1.20 per new share. This represents a 35% discount to where Healius shares last traded.

The company notes that the institutional entitlement offer was well supported by existing Healius institutional shareholders. Approximately 92% of entitlements available to eligible institutional shareholders were taken up.

Entitlements not taken up by eligible institutional shareholders and entitlements of ineligible institutional shareholders were sold at the $1.20 per share offer price.

The company will now push ahead with a retail entitlement offer aiming to raise a further $33 million.

Why is it raising funds?

Healius will use the proceeds from the entitlement offer to reduce its net debt and reset its balance sheet with appropriate gearing.

This capital raising coincides with the company making an agreement with its lenders to waive its gearing covenant for the first half of 2024 and temporarily increase the covenant from 3.5 times to 4 times at 30 June 2024.

Following the completion of the entitlement offer, Healius expects to have sufficient financial flexibility and liquidity. Though, it is worth noting that part of the agreement will see the company suspend its dividend in FY 2024.

Following today's disappointing decline, Healius shares are now down approximately 64% over the last 12 months.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Healthcare Shares

Cropped shot of an attractive young female scientist working on her computer in the laboratory.
Healthcare Shares

Why this top broker expects CSL shares to surge 26%

A leading broker foresees a big rebound ahead for CSL shares. But why?

Read more »

Man jumps for joy in front of a background of a rising stocks graphic.
Healthcare Shares

Guess which ASX All Ords stock is jumping on big US news

This small cap is catching the eye on Thursday. But why?

Read more »

three excited doctors with hands in the air
Healthcare Shares

Two ASX healthcare shares that could be set to double

This broker has buy recommendations on these two shares. 

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Healthcare Shares

Telix shares jump 7% on big US news

Let's see what is getting investors excited on Wednesday.

Read more »

An older gentleman leans over his partner's shoulder as she looks at a tablet device while seated at a table.
Healthcare Shares

Macquarie tips 28% upside for this ASX healthcare stock

The broker expects big things from this New Zealand retirement village developer and operator.

Read more »

Teamwork, planning and meeting with doctors and laptop for medical, review and healthcare. Medicine, technology and internet with group of people for collaboration, diversity and support in hospital
Healthcare Shares

$10,000 invested in these ASX healthcare shares 5 years ago is now worth…

These healthcare stocks have brought big returns for investors 

Read more »

A man wearing a white coat and glasses is wide-mouthed in surprise.
Healthcare Shares

Guess which ASX 300 stock is crashing 55% today

What's going on with this stock? Let's see why investors are hitting the sell button.

Read more »

Woman serving customer in pharmacy.
Healthcare Shares

Up 132% in a year, are Sigma Healthcare shares still a good buy post the Chemist Warehouse merger?

After gaining 132% in 12 months, it too late to buy Sigma Healthcare shares today?

Read more »