Health Check: Experts deliver verdict on Healius imaging deal and it’s ‘yes, no’

Health Check is a daily round-up from renowned biotech journalist Tim Boreham covering the key developments in the healthcare sector on the ASX, Monday to Thursday.

• Brokerage analysts skeptical about Healius’ deal to sell imaging division, but await more details
• Immutep says “oui” and “merci” to French R&D incentive
• Bioxyne presents a new range of hemp gummies and flowers

Brokerage analysts are proving to be a tough bunch with their views on Healius (ASX:HLS) after the pathology giant yesterday sold its Lumos Imaging (radiology) division to Affinity Equity Partners for $965 million.

The prevailing view is that the acquisition price was higher than expected, as was the projected net income of more than $800 million.

The proceeds will be used to pay down debt, which is currently at a worrying level, while any excess capital will be returned to shareholders in a “tax-efficient manner.”

A smart idea is to buy back shares.

However, concerns remain about the pathology department’s margins and how to fill the revenue gap.

Maintaining the stock as a “sell”, Citi forecasts a 6% profit margin (based on earnings before interest and tax) for Healius bonsai in 2026-27, compared with 10% and 12% for listed rivals Australian Clinical Laboratories (ASX:ACL) AND Sonic Healthcare (ASX:SHL) appropriately.

Health experts at Macquarie note that the $800 million figure represents 17 times earnings, while the company was expecting only 12-14 times.

The company believes capital investment and debt reduction could offset the impact of lost Lumus profits, although group profits are expected to fall by 45% following the sale.

“But we await further details on the amount of net income and the use of surplus funds.”

Another school of thought is that the long-heralded sell-off was ill-timed, with Lumus’ performance improving under new Healius chief executive and former Ten Network boss Paul Anderson.

Interestingly, Lumus contributed $475 million of Healius’ $1.7 billion in revenue in 2023-34—28%—but $42 million of its $65 million EBIT (two-thirds). But Lumus’ business is more capital-intensive.

Macquarie has a ‘neutral’ view on the stock, which we believe is a better option than a sell.

Despite falling 1% today to $1.72, Healius shares have gained about 6.5% since Monday’s announcement, so perhaps the broader investor base isn’t quite as displeased.

Immutep says “merci” to Gallic cash

While Australia’s R&D Tax Incentives program has provided a strong incentive for drug development companies to conduct clinical work in the country, it is worth remembering that similar programs exist in other countries as well.

In the case of a manufacturer of immuno-oncology drugs Immutep (ASX:IMM)The company earned $3.6 million under the government’s Credit d’Impot Recherche program.

Yes – that translates to “research tax relief.”

The scheme provides a 30% refund of justified expenses and applies to R&D carried out anywhere in the European Union, belying France’s unfair reputation as a somewhat closed and superior country.

Through a subsidiary, Immutep has a research laboratory in France and indeed the company has French roots.

Meanwhile, Immutep also qualifies for the more generous Australian regime, set at 18.5 percentage points above a company’s corporate tax rate.

The funding will be used to support the clinical development of the lead candidate, the immune activator eftilagimod alfa.

Meanwhile, Immutep shares were added to the ASX300 stock market index yesterday, but there were no shouts of delight: the shares have lost 10% since the inclusion was announced on September 9, and were trading at 35 cents this morning.

So much for the claim that index funds will rush to buy new shares because they are required to do so – or perhaps we are just impatient and the revaluation will become obvious over time.

Bioxyne Launches New Offer on Cannabis Gummies and Flowers

Supplier of medicinal hemp products Bioxyn (ASX:BXN) has amended a manufacturing and supply agreement with an existing Australian customer that is expected to generate approximately $6 million in annual sales.

The Aura Therapeutics transaction was concluded through Bioxyne’s subsidiary, Breathe Life Sciences (BLS).

“Based on the terms, agreement and projected volumes signed by the customer, BLS can reasonably expect to generate annual sales of approximately $5.94 million,” Bioxyne said.

$3.14 million of revenue is expected to come from gummy sales and $2.8 million from THC flower sales.

If the wording seems balanced and specific, you are right.

This is because on August 23, the stock exchange asked the company about the contents of an August 21 announcement regarding a projected gummy supply deal worth at least $28 million with “one of Australia’s largest cannabis companies.”

The inquiry was prompted by Bioxyne shares rising 240 per cent to 1.7 cents. In part, ASX police wanted to know why the company had not announced it earlier, who the client was and why it could be certain of the $28 million.

Bioxyne responded that the amount was justified by the initial order of $1.6 million and was an extrapolation of the customer’s forecast of ongoing monthly purchases of $1.2 million through December 2024.

The supply agreement was signed on July 25, but its announcement was delayed, partly because the company was waiting for the delivery of machines from China to be sure the order would be fulfilled.

The company also said the client is Montu Group.

BLS is the first Australian manufacturer to complete commercial production of pharmaceutical-grade, GMP-certified THC gummies.

Currently, cannabis gummies prescribed to patients in Australia must be produced overseas and then imported.

Bioxyne reported revenue of $9.65 million for the fiscal year ending June 2024, meaning the new contracts point to significant growth in the current fiscal year.

Bioxyne shares were steady at 1.3 cents this morning.

At Stockhead, we tell it like it is. While Bioxyne is a Stockhead advertiser at the time of writing, it did not sponsor this article.