COVID stocks are losing their allure in FY23

As the COVID pandemic wanes, so-called COVID stocks (companies that benefited financially from the pandemic) are coming back to earth. Not necessarily from a share price perspective, but their revenues are returning to normal after being inflated for two financial years.

 

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Healius shows COVID stocks are losing their shine

Of all COVID stocks, Healius (ASX:HLS) is the ultimate example given it provided PCR testing services throughout the pandemic. As Australia began to tolerate higher case numbers, it began to tolerate self-administered Rapid Antigen Tests (RATs).  

In the first four months of FY22, Healius made $370.6m in revenue attributed to COVID-19, out of a $903m total. In the first four months of FY23, Healius’ COVID revenues fell 85% to $54m and its total revenues fell 32% to $617.5m. This was despite its non-COVID revenues actually gaining 6%. 

 

Sonic Healthcare feeling the pinch too 

Healius’ peer Sonic Healthcare (ASX:SHL) also saw a plunge in COVID revenues from $795m in the first 4 months of FY22 to $280m in the first 4 months of FY23 – a drop of 65%.

Like Healius, Sonic recorded a gain in non-COVID revenues (by 7% to $2.4bn), but its total revenue and earnings fell – by 12% and 37% respectively.

 

Zoono leads the decline COVID stocks 

But the ultimate example of a COVID stock is Zoono (ASX:ZNO) which sells bacteria-killing sanitisers. In the early months of the pandemic it rose from ~10c to as high as $3.12 in July 2020, only to gradually fall back to earth. 

 

 

Zoono’s results have nearly mirrored its share price. From just NZ$1.8m in revenue and an NZ$0.8m gross profit in FY19, it rocketed to NZ$38.3m in revenue and a NZ$28.3m gross profit, up 2056% and 3369% respectively.  

Its revenues fell 29% to NZ$27.1m in FY21 and another 67% NZ$9m in FY22. The decline has continued in FY23 with cash receipts coming in at just NZ$1m, down NZ$0.6m on the prior quarter. All COVID stocks have done it tough, but arguably none more so than Zoono. 

 

 

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