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Pathology operator Healius (ASX: HLS) has downgraded its full-year earnings guidance and warned that charging patients out-of-pocket fees for pathology tests is now the only viable option to bridge a widening funding gap, as the federal budget delivered no new support for the sector and a Fair Work Commission wage decision adds millions in labour costs.
Shares in Healius fell more than 23 per cent to a low of 37.2c each following the trading update, which revealed pathology volumes have turned negative and labour costs are rising faster than previously anticipated.
The company now expects group underlying EBITDA of $259 million to $264 million for FY26, with underlying EBIT of $30 million to $35 million.
Pathology volumes declined 0.4 per cent for the 10 months to April 2026, a sharp reversal from the 1.2 per cent growth recorded in the first half.
The company attributes the deterioration to the timing of Easter and school holidays, a later onset of the flu season and fewer GP attendances.
Labour costs in the pathology division have risen 0.8 per cent year-to-date inclusive of the Fair Work Commission increases, against previous guidance of broadly flat.
Healius has already cut about 400 full-time equivalent positions as part of its cost reduction program.
The Fair Work Commission's gender-based undervaluation decision, which reclassified pathology collectors under the Health Services Award from 1 April 2026, will add $1.8 million in labour costs in the fourth quarter of FY26 alone.
A further wage increase takes effect from 1 January 2027, with phased rises for health professionals extending over five years.
Healius says the full annualised impact will be determined once a final decision is made by the commission.
Healius points out that this year's federal budget will put additional pressure on a sector which it says is a critical part of Australia’s primary healthcare system.
"Last night’s federal budget contains no new funding for pathology, a sector already operating under an indexation freeze for most tests," says the company.
While the 2024-25 federal budget partially restored indexation, funding for the majority of pathology tests remains frozen, says the company, adding that changes to Medicare criteria for B12 and urine testing effective 1 July 2025 "more than offset these increases".
"Pressure on the pathology sector continues to build as we navigate a significant wage increase as the result of the Fair Work Commission decision on gender-based undervaluation," says Healius.
"Despite the fact that GPs and patients rely on pathology tests, the pathology sector is receiving no support to fund these increases.
"Inadequate funding has resulted in difficult decisions to cut staff, close collection centres and regional laboratories.
"In addition to rationalising labour, collection centres and regional laboratories, charging out of pocket fees for pathology tests is the only viable option left to bridge the funding gap."
Separately, Healius has engaged UBS to explore a potential sale of its Agilex Biolabs division following unsolicited approaches.
Agilex, which provides contract research and bioanalytical services, has delivered revenue growth of 13.7 per cent year-to-date and is being assessed as a standalone divestment opportunity.
The pathology operator has flagged that a sale of Agilex could unlock value not currently reflected in the group's share price, with proceeds to be directed toward debt reduction or reinvestment in the core pathology business.
Healius reported first-half underlying EBITDA of $139.3 million and underlying EBIT of $24.6 million.
The company notes that second-half earnings are typically weighted toward the winter respiratory season, but the delayed onset of flu activity in FY26 has pushed revenue into later months.
Shares in Healius were trading 10c lower at 38.5c at 12.30pm (AEST).
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