This last minute call is to shore up support. Wylie moving to make decisive changes at the top its appears:

Healius guidance for 1H23 is $14-$17m and full year almost $95m, just can't see how this can be achieved. Typically pathology 1H vs 2H ratio of 45 : 55.

It all looks very desperate at Healius.

Healius faces John Wylie broadside as shares plummet 33pc

Pathology company Healius is under fire from investors.

• By GLEN NORRIS

  SENIOR BUSINESS REPORTER

  and JARED LYNCH

  TECHNOLOGY EDITOR

  @jaredm_lynch
• 7:07PM NOVEMBER 22, 2023
• NO COMMENTS

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Activist investor John Wylie has ramped up his campaign against struggling pathology company Healius accusing it of being “extremely” poorly run and lacking accountability.

The operator of more than 2000 pathology clinics around the country suffered from management decisions that lacked industry understanding with no “culture of performance and accountability,” Mr Wylie’s Tanarra Capital said in a note to investors. Tanarra Capital holds just over 8 per cent of ASX-listed Healius.

Healius stock plummeted 33 per cent on Wednesday after it resumed trading, following an announcement it would raise equity at a steep discount to appease lenders.

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“Tanarra has supported Healius in its turnaround efforts,” the note said. “They have now lost our support.”

John Wylie. Picture: Stuart McEvoy

Tanarra said the company’s performance had been extremely poor, even allowing for a shortage of GPs with its pathology margins a fraction of competitors.

Australia is facing a shortfall of 10,600 GPs by 2031, according to the Australian Medical Association, after the pandemic border closures halted the arrival of new doctors via immigration, while older practitioners are retiring earlier, citing increased workloads.

READ MORE: Healius hurting as pandemic testing evaporates, GP woes | ACL accuses Healius of misleading shareholders | ACL dealt competition blow over Healius deal |

The broadside by the prominent investor comes as Healius announced it was raising $187m of equity at a discount. The shares are being sold at $1.20 each, a 34.6 per cent discount to their last closing price of $1.84 before the raising. The stock closed down 61c on Wednesday at $1.22.

Healius had already received a debt covenant waiver from its lenders and there were expectations it was likely going to need to top up its equity levels to refinance its debt.

Healius chief executive Maxine Jaquet.

Tanarra said the debt problems could have been solved without raising equity with “better and less panicked management”.

It said the company had a top-heavy management structure with a human resources department of more than 80 people.

Healius sunk to a full-year $367.8m loss in August following sharp writedowns in the value of its assets as Covid-19 testing evaporated and a chronic GP shortage limited the number of referrals for blood tests and other pathology services.

Chief executive Maxine Jaquet said the group has reset its cost base following a collapse in lucrative government-funded Covid-19 testing, which had hit all pathology groups. An extended freeze on Medicare rebates has led to more GPs withdrawing from offering bulk billing and charging out-of-pocket costs, which has led to more people seeking medical treatment from public hospital emergency departments or putting off doctor visits all together.

A Healius spokesperson denied the claims raised by Tanarra Capital in the note.

“We are facing a range of challenges, including high inflation and lower volumes in our industry,” the spokesperson said. “We are dealing with those issues, as well as our relative high levels of debt, in a way that is best for all of our shareholders. Raising equity in the current market was never our first choice but we needed to reduce net debt by $150m to meet the requirements of our lenders. The board and management considered every available option and a capital raising was clearly the best solution.”

Smaller rival Australian Clinical Labs is attempting to mount a takeover of Healius.