Good morning, everybody. My name is Kate McKenzie, and on behalf of the board, I welcome you to Healius' 2026 Annual General Meeting. I am the Chair of Healius and the Chair of this meeting.
I would like to begin by acknowledging the traditional owners of the land on which we are meeting today, the Gadigal people of the Eora Nation, and pay my respects to elders past and present. I also recognize the traditional owners of the various lands on which our online attendees are attending and any Aboriginal and Torres Strait Islander people present in person.
I am advised that there is a quorum present and therefore I formally declare this meeting open. Please note that the webcast of this meeting is being recorded and will be posted to our website in due course, and the Chair and CEO addresses which will be presented during the meeting were lodged on the ASX prior to the start of the meeting.
Please also note the forward-looking statements disclaimer shown on the screen. Any forward-looking statements made during today's meeting are subject to the assumptions, risks, and uncertainties outlined in that disclaimer.
I will now introduce the board and management present today. All of your directors are in attendance today. Alongside me is Managing Director and CEO, Paul Anderson, and non-executive directors, Sally Evans, Charlie Taylor, Bruce Robinson, Steven Rubic, and Kathy O stin. Chris Hall is attending virtually as he has COVID and kindly has elected not to share it with us.
We are joined by Kylie Brown, who is our Group General Counsel, Chief Risk Officer, and Company Secretary. Healius CFO, Andrew Thomson, is in the audience and Company Secretary, Gillian Nairn, is seated at the table to the side. Gillian will moderate the online questions. We also have Katrina Zdrilic present. Katrina is the lead auditor at Ernst & Young, Healius's external auditor. Katrina is available to respond to any questions put to the auditor.
The notice of this AGM, dated the 16th of September 2026, was made available to shareholders via the ASX Market Announcements platform on the 16th of September and was subsequently dispatched to shareholders either electronically or by post. On that basis, I will take the notice of the AGM as read.
The agenda for today's meeting is shown on the screen. We will start with my Chair address, and then Paul will provide an update on the business. After Paul's address, I will invite general questions on the management of the company. We will then move to the formal business of the meeting. I now declare the polls in relation to all items of business open. Shareholders can now cast their votes up until the conclusion of the meeting.
Before I begin my address, some brief housekeeping points. If you need assistance in the room, please raise your hand and one of the registry team will assist you. For those of you joining via the online platform, please note down the telephone number shown on the screen. You can dial that number if you experience technical difficulties during the meeting.
In relation to questions, all shareholders will have the opportunity to ask questions in respect of each item of formal business. To allow those attending online more time to enter questions, I will invite questions from the shareholders in the room first, and then move to questions submitted online. If you are a shareholder in the room and wish to ask a question, you need to raise your blue or yellow attendance card so we can see it and make your way to the microphone.
If you are attending online, you will need to click the Ask a question button and either at the top or bottom of the webpage, select the item of business your question relates to, type your question in the box at the bottom of the screen, and then send. Questions will be answered when we get to the relevant item of business. Voting on each of the resolutions at this meeting will be conducted by a poll, and the results of the poll will be released on the ASX platform after the meeting.
Over to my address. As many of you in the room know, pathology is the quiet engine of evidence-based healthcare. With our national reach, we are proud to provide high quality, accessible, and affordable pathology services to communities across Australia. As one of the largest providers of diagnostic pathology services, Healius plays a key role in Australia's healthcare system. We give clinicians and patients the diagnostic insights that they need to make informed decisions, supporting early intervention before disease becomes irreversible, and therefore delivering better health outcomes.
Healius also uses its scale, clinical expertise, and data to make a broader contribution to Australia's health system. For example, during the year, we commenced a strategic partnership with the Royal Australian College of General Practitioners to support GP education, and we launched our inaugural Diabetes Watch report, drawing on more than 5 million HbA1c tests and undertaken over two years to provide important insights into diabetes and pre-diabetes across Australia. These initiatives demonstrate the important role Healius can play, not only in diagnosing disease, but in supporting earlier intervention and better health outcomes for all Australians.
FY 2026 was a year of meaningful progress for Healius. Notwithstanding that the healthcare environment remained, and remains, challenging, Healius delivered an improved financial performance. Group revenue increased by 2.1% to AUD 1.37 billion, and underlying EBITDA increased by 8.1% to AUD 258.6 million, while underlying EBIT increased by 76.6% to AUD 30.2 million. These results reflect disciplined execution, improved operational performance, and a continued focus on revenue quality and cost control.
One of the highlights of FY 2026 was the continued revenue growth of our specialized diagnostic businesses. Agilex Biolabs, Genomic Diagnostics, and Vetnostics all delivered revenue growth, and continued growth is expected into FY 2027. However, the sector continued to face significant challenges, including the ongoing absence of meaningful indexation of Medicare rebates, rising operating costs, including labor, workforce shortages, ever-increasing technology and compliance requirements, and funding pressures. At the same time, demand for diagnostic services is forecast to continue to grow. Patients are using different channels to access healthcare, and we still have an aging population and many advances in specialized and precision medicine.
Our T27 strategy continued to guide our efforts throughout the year with significant progress made. The strategy is focused on building a simpler, stronger, and more productive organization by enhancing revenue quality, strengthening operational performance, optimizing our network, and investing in the technology and digital capability needed to support better outcomes for patients, referrers, and employees. These initiatives are delivering better productivity and efficiency.
We continued to enhance our governance framework over the year, which guides the responsible execution of our strategic objectives. Key activities included the development of an artificial intelligence governance framework and the continued enhancement of our sustainability and climate-related reporting frameworks.
Last month, we announced an important strategic transaction, the sale of Agilex Biolabs to a leading clinical research organization, Novotech Health Holdings, for an enterprise value of AUD 160 million, subject to the customary regulatory approvals and completion conditions. Agilex has been a successful business within Healius, and we are proud of what our management team achieved with the business. The board carefully considered the sale opportunity. We concluded that the Novotech transaction would unlock compelling value for shareholders and support management focus on the growth of our pathology business. The transaction, if completed, will strengthen our balance sheet and further enhance our financial flexibility as we continue to execute our strategy.
Over the past 12 months, the board welcomed Steven Rubic, who joined in December last year, and Professor Bruce Robinson, who joined in February this year. Bruce and Steven have added valuable perspectives to board discussions and have strengthened the board's collective capability in healthcare sector expertise, experience in developing and executing growth strategies, and senior executive operational expertise. I would also like to thank those directors who retired during the year for their service to Healius.
Pathology is a critical component of Australia's healthcare system, and its importance continues to grow. We have strengthened our operational foundations and sharpened our strategic focus. As such, Healius is uniquely positioned through its scale, national network, trusted brands, and highly skilled workforce to meet the growing demand for diagnostic services. While challenges remain, your board is confident that continued execution of our strategy will support further improvement in performance and the creation of sustainable long-term value for shareholders.
I would like to acknowledge the work of our employees across Australia. Every day, their work, directly or indirectly, supports patients, clinicians, and the healthcare system. Their dedication and professionalism underpin everything we achieve as an organization. On behalf of the board, I'd like to thank our Managing Director and CEO, Paul Anderson, the executive leadership team, and all Healius employees for their commitment and contribution throughout the year. I also thank you, our shareholders, for your ongoing confidence and support. We look forward to updating you on our progress in the year ahead.
I will now hand over to Paul for his presentation. Thank you.
Thank you, Kate, and good morning, everyone, and thank you for joining us here in Sydney or online today. In the 2026 financial year, we made significant operational improvements across the Healius Pathology network. We have strengthened the underlying earnings through improved revenue mix and disciplined cost control while continuing to execute our T27 strategy and deliver on our purpose of supporting better health outcomes for all Australians.
Pathology is fundamental to the health of our nation, supporting the prevention, diagnosis, treatment, and monitoring of disease. In this year's annual report, we featured Alan, a patient of our Western Diagnostic Pathology business, and Jun, a WDP collector. For patients like Alan, pathology provides vital insights that help GPs and specialists make informed decisions about their care. Behind those insights are our people like Jun, providing the expertise, quality, and care our patients and referrers rely on. We never lose sight of that. Our patients, referrers, and people are at the heart of everything we do, and improving their experience remains a key priority.
For the past two years, we have reported to you on our considerable progress against the T27 plan. I would like to call out some of the highlights from FY 2026, including some of the initiatives that we are delivering for our customers. Our strategy is about building a simpler, stronger, and more productive Healius with patients and referrers at the center. We are focused on improving customer service, modernizing our laboratories, growing in emerging areas of diagnostics, and using digital technology to make our business more efficient. Underpinning this is a simpler national operating model that reduces complexity and creates more consistent ways of working across our network.
We have now completed the major implementation phase of our digital technology investment, and we are beginning to realize meaningful operational and customer benefits. Our Medway collections portal has been rolled out to more than 1,700 collection centers, with more than 80% of episodes now processed digitally. Online bookings are now making it easier for patients to access a range of tests, and e-referrals have been integrated with all major practice management software systems. I am pleased to announce that our Patient App will be released by early December, providing patients with the opportunity to track their pathology journey from referral to result all in one place, a first for Australian pathology providers.
Pathway is our single laboratory system and provides the foundation for a unified, efficient, scalable, and digitally enabled pathology network. Anatomical pathology, cytology, and a large majority of our genetic tests are already using this system. The remainder of our disciplines will be transitioned by the end of FY 2027. The Pathway system will unlock major operational and financial benefits in the short to medium term and is a key building block of our T27 strategy.
We are also continuing to invest carefully in AI with a clear focus on technologies that can deliver measurable value. Our AI co-workers operated throughout FY 2026 in high volume transaction and workforce planning environments, delivering strong results and rapid payback. In our clinical operations, Ibex AI is providing decision support in complex histopathology and helping improve turnaround times for referrers.
We have spoken previously about microbiology automation as an important part of the modernization of our laboratory network. Today, I am delighted to share that our new WASPLab automated microbiology system at Laverty Pathology in North Ryde is now installed and has received NATA accreditation. This is a major milestone for us, and it is the largest automated microbiology system in the Southern Hemisphere.
I mentioned earlier that our referrers and patients are at the heart of everything we do. We continue to focus on enhancing our patient experience, strengthening referrer relationships, and optimizing our collection center network to ensure it meets the needs of the communities that we serve. During FY 2026, we introduced a dedicated client service liaison team that works alongside our field team and supports referrers with implementation of digital services such as e-referrals. We also launched a dedicated doctor callback line, enhanced our GP education platform with a Diabetes Audit tool, and introduced a monthly newsletter that now reaches nearly 12,000 GPs nationally.
For patients, clearer communications and simpler, more transparent payment processes are reducing unnecessary administration and making our services easier to understand and access. The progress that we've made in FY 2026 gives us the confidence that we have the right strategy and that we are building momentum.
However, the Australian healthcare environment does remain challenging. The sector continues to face significant pressure from lack of meaningful indexation, rising labor costs, changes to Medicare criteria for vitamin B12 and urine testing, and lower face-to-face GP attendances. The Fair Work Commission determination on gender-based undervaluation is already having a significant impact on labor costs for the entire sector and will put further pressure on pathology services across Australia. We continue to work closely with both Australian Pathology and the Department of Health, Disability and Ageing to find a solution to offset these labor cost increases.
Beyond our critical day-to-day work in diagnostic pathology, we believe that we have a broader role to play in enabling better health outcomes for Australians through information and awareness. To deliver on this role, we are systematically launching a series of evidence-based reports and findings to help engage clinicians, policymakers, communities, and patients. During FY 2026, we commissioned and released research looking at Australia's growing reliance on online and AI-generated health information. Many Australians now rely on AI-generated summaries without consistently checking sources or clinical context, increasing the potential for misunderstanding, misdiagnosis, or delayed care.
Despite the rise of AI, the research has found that 98% of Australians trust pathology results, healthcare professionals, and pharmacists for health advice and information. This finding underscores the shared responsibility across the Australian healthcare sector to ensure that trusted, evidence-based healthcare continues to guide health decisions in an increasingly complex information environment.
As the Chair mentioned, late last year, we published our inaugural Diabetes Watch report. Diabetes has become one of the most pressing health challenges in Australia, with almost 120,000 new cases diagnosed each year. Our Diabetes Watch report draws on more than 5 million HbA1c tests that Healius has conducted over the last two years to identify pre-diabetes and diabetes hotspots across the country. This population-level view is critical because pre-diabetes does not need to become diabetes. Nearly 60% of type 2 diabetes can be delayed or prevented with early intervention.
Alongside the Diabetes Watch report, we launched the Healius Diabetes Audit, a new monitoring and education tool designed to help GPs monitor key patient biomarkers like HbA1c and influence patients to take proactive measures at the pre-diabetic stage. We have continued that work with the recent launch of our latest report, Women and Cardiovascular Disease in Australia, which highlights the risk factors for cardiovascular disease in women and our initiatives to support women's heart health. Female-specific factors such as hypertensive disorders of pregnancy, gestational diabetes, and early menopause enhance women's cardiovascular risk across their lifespan. However, the risk factors in women are often overlooked and under-recognized.
Pathology data can help strengthen the safety net around women's heart health by identifying risk factors earlier. These initiatives demonstrate the broader role that pathology can play, not only in diagnosing disease but providing education, evidence, and insights that can help clinicians, policymakers, community, and patients make better-informed decisions.
In terms of a trading update, Healius reaffirms the guidance provided at the full-year results for FY 2027 EBIT. Pathology revenue for Q1 FY 2027 is up 1.6%, despite a 4.9% decrease in episode volumes for the quarter due to the loss of two major hospital contracts and a significantly reduced ACC footprint. Excluding these changes, like-for-like episode volumes have increased by 1.1%. We have seen strong revenue growth in our hospitals and high-value segments of genomics, Vetnostics, and commercial contracts, which have led to a 6% increase in our average fee.
Our targeted increase in collection centers is also on track, with a focus on increasing our footprint in both areas where we are currently underrepresented and on expanding our presence in independent and other non-GP sites.
Cost control for Q1 FY 2027 has remained strong, with labor costs reducing by 1.4% and total costs reducing by 0.5% on the same period in FY 2026. Agilex Biolabs has also had a strong first quarter, with both revenue and profitability trading in line with expectations. As the Chair has already set out, in September, we entered into a binding agreement to sell Agilex Biolabs to Novotech for an enterprise value of AUD 160 million. This transaction delivers attractive value for shareholders while allowing us to sharpen our focus on growing and improving our core pathology business. On completion, Healius will be in a net cash position, further strengthening our balance sheet. This transaction remains subject to regulatory approvals and other customary conditions, with completion expected in the second half of FY 2027.
In conclusion, it has been a significant year for your company, despite the challenging Medicare environment we operate in and the labor cost challenges posed by the Fair Work Commission. We continue to focus on executing the building blocks of our T27 strategy and delivering better health outcomes for all Australians.
I want to sincerely thank all of our people across the Healius Pathology network for their commitment to our patients, our referrers, and to each other. I am incredibly grateful for their hard work and the contribution they make every day to supporting the health of millions of Australians. Finally, I would like to thank our patients, our referring practitioners, and of course, you, our shareholders, for your ongoing support. Thank you.
Thank you very much, Paul. We will now open for general questions from shareholders on the management or governance of the company. Are there any questions in the room?
Good morning, Chair and Paul. Bearing in mind no one else has any questions, I will make a couple of comments and a question.
Look, I was interested, Chair, you talked about significant progress in delivering efficiency. You also shocked me when you described Agilex as a successful business. It has not been from a shareholder's point of view, Chair. Healius paid AUD 300 million for it five years ago. You just sold it for half that. You have destroyed 150. Not you, but the company has destroyed AUD 150 million of value. You also said, Chair, holding out hope that you seek sustainable long-term value for shareholders. I am not sure whether that is a euphemism or a motherhood comment, but the history in the last five years has been disastrous.
Paul was CFO in March 2023, CEO in March 2024. You acknowledged, Paul, the challenges, but you also made similar comments about progress. The fundamental problem of Healius from a shareholder perspective is it has been a shocker for shareholders. It peaked at AUD 5 five years ago. It currently has a AUD 280 million market cap at the current price of AUD 0.40. There is ongoing painful capital losses for shareholders, and apart from the special dividend from Lumus, there has been no dividends. It has been a debacle.
I would ask you a question, Chair. Would you agree that Healius would have been bankrupt, if it had not raised AUD 180 million in the 2023 emergency rights issue at AUD 1.20? If it had not retained significant proceeds from the sale of Lumus, net of the dividend, and obviously the pending Agilex sale will inject AUD 180 million. It seems to me, doing those equations, if the market value is right at AUD 280 million, without those injections of money, Chair, none of us would be here. The company would be bankrupt, which is very disappointing for a company that has had prime, very important medical assets. But I just ask if you would clarify whether my numbers are right. Would Healius have been bankrupt apart from those capital injections? Thank you.
Thank you very much for your question. I won't try and sort of recreate history from five years ago to now, but clearly decisions were made along the way, to ensure the company was getting itself into better shape, including the sale of Lumus and the sale of Agilex. We're working very hard on getting the pathology business to the point where it is cash flow positive too. I acknowledge that it has been quite painful for shareholders along the way, but we are making the best decisions that we can to ensure the ongoing sustainability of the company.
We've been hearing for a couple of years that Healius' pathology division is going to finally deliver high single-digit margins. Those indications haven't yet been fulfilled, and that's the root cause of the current malaise and the cause of the reason why the market is rating Healius so poorly. It regards Healius as the worst of breed pathology companies. It's rated very poorly, and that's why the share price is AUD 0.40. Is there any tangible hope that shareholders can finally get some sort of return, or is it going to be a situation where we have to wait for a takeover bid for the rump of the company?
Well, I think Paul's already reaffirmed this morning, guidance and that this year that's our goal. The guidance that we gave at the full year results, we're still on track for that, including quite significant cost takeout programs and an array of other initiatives, with the goal of getting the pathology business to be cash flow positive and to be high single-digit EBIT margin. We're not going to get there this year, but we're going to continue on the path that does have a very defensible and realistic path to get us there.
Just my final clarification. I appreciate this isn't your issue. The accounting standards, in my view, are misleading, with the AASB issues. I think you hit the nail on the head, Chair, of cash flow positive. From memory, you've got AUD 1 billion or so of pathology revenue, if my memory is correct.
Bit more than that.
Bit more. Yet you are translating that AUD 1 billion coming in, zero cash flow, if I am correct. We can look at EBITDA, which is not your fault. That is, in my view, the accounting standards are misleading. But if we look at what really determines whether a company survives and continues or whether it goes bankrupt, ultimately it comes down to cash flow. Unfortunately, the only good news of this company is that you have had two assets that you could sell, Lumus, which injected cash, and now Agilex. But you are now down to the rump. If you cannot deliver free cash flow, forget about EBITDA and all those things, and even margins are a bit misleading. If you cannot deliver free cash flow, you will be bankrupt, notwithstanding the good fortune of the emergency rights issue and those two asset sales.
All I would ask is that if this company moves heaven and earth to actually finally deliver free cash flow, because at the moment it is the dunce of the class, of the various pathology companies. For whatever reason, whatever excuses, it is the worst of breed. Your competitors are actually making some free cash flow.
Okay. Thank you. We have no plans to go bankrupt, and we are very mindful of the importance of free cash flow, and you can rest assured that we are very focused on that.
Thank you.
Are there any other questions in the room?
Thank you. Charlie Kingston. If you can comment on assuming the Agilex sale goes ahead. You said you're going to be net cash. Are my numbers fair that I think you have AUD 40 million of net debt plus AUD 150 million, assuming it's around about that. Just call it AUD 100 million of net cash. Is that fair? Then what do you think you'll be doing with that cash? I think you've always said to hit the EBIT margin target, you don't need to spend any more CapEx. That's all done. If you could just comment that hopefully that is still the case, no more CapEx, but then AUD 100 million or thereabouts of net cash. I know it's early, but what do you think you will be doing with those proceeds, please?
Clearly, that's something we're giving a lot of thought to. We don't expect that the transaction will conclude until next year. We've still got to get through ACCC approvals and FIRB approvals. We are spending a lot of time and energy thinking about what we'll do with that money, but we don't want to count our chickens too early. We will keep you posted as we come to a landing on precisely what we think we're going to do.
Do you need to spend any more to hit your EBIT margin targets? Is there a CapEx bill that you may pursue or?
Look, I think we haven't made any of those decisions yet. Clearly, some of the things that we're thinking about is could we move faster with some more investments? That clearly, we have to be able to satisfy ourselves that they're going to give a return. If the answer to that is no, well, we won't spend the money, but that's something that we're going to spend the next few months working through.
Is it still that you don't need to spend more CapEx to hit the margin targets or sounds like you are thinking maybe you could.
We don't need to. According to our current plan, we've got a plan, and we don't need to spend more money. The only question is, could we deliver a better outcome by spending a bit more money? We don't have an answer to that yet.
Okay. Thank you.
If there are no more questions in the room, do we have online questions, Gillian?
We have one question, which is on a similar vein. Lachlan Rogers has asked, is Healius generating positive free cash flow on a run rate basis?
Again, I think I've probably already answered this question in response to Mr. Kingston, but we do expect to be cash flow positive in FY 2027. Not hugely, but, yes.
Chair, there are no further questions online.
Okay. If that is the case, I will move to the formal business. I will first briefly explain our voting procedures. For shareholders present in the room, you can cast your vote by completing the yellow voting card provided to you by the registry. For shareholders joining us online, you should click on Get a Voting Card at the top of the webpage. The resolutions will then appear to be voted on. Ensure you click Submit at the bottom once complete. You can change your vote right up until the time I declare the polls closed. As we move through the items of business, the number of valid votes and proxies for and against each resolution received prior to the meeting will be shown on the screen.
As Chair of the meeting, I will be voting all directed proxies in accordance with the director's directions provided by shareholders. For open proxies, unless specifically directed otherwise, I will vote these in favor of all resolutions.
The first item of business is the receipt and consideration of the 2026 annual report. No vote is required on this item. The 2026 report was released on the ASX on 23rd of September and is available on Healius' website. I will take it as having been received by the meeting and invite any questions regarding the report. The auditor has advised that she did not receive any questions prior to the meeting. Are there any questions from those present in the room?
Yeah. Chair, I would like to ask the auditor a couple of questions. Is the auditor happy with intangibles in the balance sheet? Is the auditor happy that this company is a going concern company rather than one that is facing bankruptcy?
Katrina, do you want to come up here? It might be easier if you come up there. Yep.
Hi, my name is Katrina Zdrilic. I am from Ernst & Young. Thank you for your questions. Yes, both matters that you have raised are ones that we give serious consideration to in the conduct of our audit and were specifically addressed and concluded on in our unqualified opinion. You will actually see in our audit report towards the very back of it talks about some of the areas, which we call out as key audit matters, and the carrying value of the intangibles is one of those.
Okay. We have got your confirmation as well as what is in the audit report that you have done a detailed review of what is clearly a key risk factor. Obviously, you look at the future cash flows. At the moment, there is zero cash flow, which is why I asked the question, is this a going concern? You, Ernst & Young, you obviously believe it is a going concern.
Secondly, there is no intangible value on any company unless it makes money. Clearly in your assessment, you have done a detailed assessment of the future, what, three years, five years, which gives you confidence that the company will be around, that the company will do what the Chair said and make a small amount of free cash flow this year, hopefully a substantial amount the following years. Otherwise, I do not see how you can sign off the accounts on the intangibles or on a going concern basis.
Yes, you would have seen over the last few years there was a fairly significant goodwill balance on the balance sheet. I think it was circa AUD 2 billion or so. That is down to a very, very small amount now due to impairments over a number of years. So that is the point that you are addressing in terms of the intangibles, and I think that is reflected in the residual net assets on the balance sheet, which I think addresses your question.
Okay. Just wanted your clarification. Thank you. We can all look forward to a positive future because Ernst & Young has signed off. Thank you.
Thank you.
Thank you, Katrina. Are there any more questions in the room? Are there any questions online, Gillian?
No, Chair. No questions.
Okay. I will move on then to the next item of business. The next item of business is the adoption of Healius 2026 remuneration report. Are there any questions on this report? I note that a voting exclusion statement and voting prohibition statement apply to this resolution as detailed in the notice of meeting. The question is that the remuneration report for the year ended 30 June 2026 be adopted. Questions? Are there any online questions, Gillian?
No, Chair, there are no questions.
The votes received in relation to this resolution are voted on the screen. Obviously, we are disappointed to note the level of votes against the remuneration report. The board does regularly engage with the company's largest shareholders and proxy advisors to understand any concerns they may have with the management of the company, and in particular, our executive remuneration strategy. The feedback received during this engagement process informed the development of our FY 2027 incentive plans and our return to a more conventional set of STI and LTI arrangements. Obviously, others formed a different view, so in response to today's vote, the board will further engage with shareholders and proxy advisors to understand any outstanding concerns. I note that the resolution does not appear to have received sufficient votes in favor, and therefore, the vote will be noted as a first strike.
I think we need to go away and do some more work on what the concerns were. Part of it, I think, relates to the fact that we are still transitioning from a bespoke set of arrangements to a slightly longer term set of arrangements, and we're hopeful that that transition will be complete by next year. So some of those challenges about the length of time that it takes for the LTI to vest should automatically go away. Then there's a range of things around metrics and targets that, we will continue to engage on. All right. No further questions online?
No, Chair.
Gillian?
No questions.
All right. Please enter your vote in relation to item two. As I say, we have worked quite hard to move ourselves towards a more normal set of STI and LTI arrangements. So encourage anybody who hasn't voted so far to vote in favor.
All right. Items three, four, and five relate to the election or re-election of directors. The biographies of the three directors standing for re-election and election today were included in the notice of meeting and are also available in the 2026 annual report.
Item three is the election of Charlie Taylor. Charlie Taylor has been an incredibly valuable member of the board and somebody who we are unanimously recommending for re-election. We recommend that shareholders vote in favor of Charlie's re-election. The wording of the proposed resolution is shown on the screen that Charlie Taylor, who retires by rotation in accordance with Clause 13.6 of the Constitution of the Company, being eligible, is re-elected as a non-executive director of the company. The votes and proxies in relation to this resolution are shown on the screen. I invite questions, any questions people might have regarding this item.
David Kingston again. Look, we all make mistakes, and hindsight's a marvelous thing, but clearly this has been a hugely unsuccessful company for shareholders. With the benefit of hindsight, Charles, what could this company have done better in the last few years?
I think we're not going to get into the game of everybody at the table giving their own response to all of this. I think as a board, there's a lot of things that we've reflected on, and I'm sure Charlie's no different to the rest of it in terms of things that we might have done differently. But rest assured, we do reflect on the decisions that we've made. I think we've tried to make sure that we have the right mix of talent around the board table. People who have been around for long enough to remember some of those things and enough new blood that can guide us going forward. Charlie is definitely part of that.
But Chair, one of the nice things about a board is that, again, you put five or six or seven people in a room, and it's great to have different opinions. I don't have a problem. We all make mistakes. I make mistakes, yes. But I would like to hear from Charlie and maybe the others. Thank you for your advice, that you believe that the company will be cash flow positive this year. Charlie, do you share that view? What are the risks of the company making excuses this time next year of not being cash flow positive?
Look, I think it's just not appropriate to be airing every thought process that we've had around the board table. You can assume that if the board has said something, and I am saying things on behalf of the board, but the entirety of the board has been part of that decision-making process and agrees with it. I don't think it's productive to have cross-examination of individual board directors to see if they've got a different opinion. It's just not the way it works.
Okay. Well, we can take comfort that each and every member of the board shares your advice, Chair, that the long-suffering shareholders who've been disappointed for many years, they've had indications of high single-digit margins for several years, which have not materialized. There's been disappointment after disappointment after disappointment. The amount of cash leakage on ongoing CapEx has been horrendous. When Lumus got sold, there's disappointment after disappointment. Where did the cash go? Cash leakage, more CapEx. Then there's adjustments recently. More cash leakage. It's been a litany of disappointments, Chair.
But, if you're not going to allow that question, that's okay. You're the Chair. But I will take comfort from it, and many shareholders can, that effectively you are roping in each and every one of the directors into your, not a promise, things may not happen, but you are relatively confident that the litany excuses about cash flow losses are going to cease, and that this company will finally actually make cash flow positive return in the FY 2027 year. Is that correct?
Yes. And I can assure you that the board is united. When we make these decisions, we make the decisions as a board. And I do not say anything in these forums that has not been canvassed and discussed and agreed around the board table.
Okay, Charlie. Well, you have been endorsed in that representation. Thank you.
Are there any questions online, Gillian?
No, Chair. No questions.
Okay. I move to item four, which is the election of Professor Bruce Robinson, with Bruce abstaining. The directors unanimously recommend that the shareholders vote in favor of Bruce's election. The wording of the proposed resolution is shown on the screen that Bruce, being eligible, is elected as a non-executive director of the company. Again, I think we feel very fortunate to have Bruce having joined the board. He has a very extensive and illustrious background in health provision and is making a huge contribution to the board. I think a few years ago, we made a big effort to try and get people with stronger health background, and he certainly ticks that box, so unanimously recommend support for his election. Any questions in the room?
Look, I appreciate there needs to be a balance, Chair, between medical interests, top quality healthcare. Without that, you don't have a business. So I accept that. I just wonder and worry about whether this company is imbalanced. Is it excessively prioritizing health issues? Another professor coming on the board. Is it giving enough attention to the people who own the company who have had an appalling run? Is the balance right, Chair? And I absolutely appreciate you've got to get the healthcare right, otherwise you don't have a business. But at the moment, you don't have a business because you're making nothing. Thank you.
Look, I note your comment. I think we're very happy with the people that we've attracted to the board and glad that it looks like they're going to be supported for election. We are constantly looking at and thinking about succession and the right skill set around the board table and the interest of shareholders a very important one as well. So you can rest assured that we think about those things all the time. I don't want to get into individuals, but Bruce is a very commercially oriented, very experienced board director who certainly is perfectly well able to have in mind the interest of shareholders, as well as bringing a vast deal of health knowledge to the board. Are there any online questions, Gillian?
No, Chair, there are no questions.
Can I ask a question, please?
Sure.
Can Bruce respond to questions?
No, because I think, we just don't want these things to descend into chaos. It's not an environment where we're wanting to cross-examine individuals about specific items of business.
He is up for election.
Yep.
Be great to hear from Bruce, given his background, so shareholders.
We have given you a lot of information, I think, about Bruce and his background and his skillset and what he does and I think it speaks for itself.
You are not going to allow any other director to speak even if they are up for election.
No.
I'm interested in his views, given healthcare experience, main pharma-
Look, we've-
the background there. I'd just be grateful to hear his opinions on that.
Very happy to take some of that online, and I'm sure Bruce would be happy to talk to you offline about things that you're interested in. That's not the purpose of this meeting.
It's an AGM. He's up for election.
Yep.
Chairs would allow other directors to speak when they're up for election. Normally, they introduce themselves, give their own background. I just find it very strange that given the performance of the company, shareholders are suffering, clearly. You've acknowledged that. So it's very strange if you're not going to allow a director to hopefully turn this around, to actually give his views as to why he thinks he can make that change. But you're not going to allow that?
No.
It's very strange, but thank you.
Okay. The votes and proxies received in relation to this resolution are shown on the screen. I now invite people to enter your vote in relation to this item. Item five is the election of Steven Rubic and we plan to follow a similar procedure here. The directors, with Steven abstaining, unanimously recommend that shareholders vote in favor of Steven's election. The wording of the proposed resolution is shown on the screen. That Steven Rubic, being eligible, is elected as a non-executive director of the company. The votes and proxies received in relation to this resolution are shown on the screen. I now invite questions regarding this item.
It's David Kingston again. Look, Chair, you are an experienced Chair, but with respect, I think I have been to a lot more AGMs than you have, because it's something that I enjoy, AGMs. I would also point out that I was at an AGM at 9:00 A.M. this morning, chaired by probably the pre-eminent chairperson in Australia, David Gonski. He was more than happy to let adult directors ask, answer questions. I find it disappointing that you are unilaterally censoring directors. As the previous speaker said, this is an AGM. Under the Corporations Act, the roles are reversed, Chair. Shareholders have the right to make comments and ask questions, and I think you are wrongly and improperly censoring legitimate questions.
I would say in nine out of 10 meetings I go to, the Chair asks the directors to actually provide a little bit of their background, provide why they wish to continue, why they're going to help shareholders. You have unilaterally and deliberately censored those questions to directors, which is contrary to best practice, and I think it's out of order. If that's what you're going to do, that's what you're going to do, but I think it's wrong.
I note your comment and certainly, we will reflect on that at the close of this meeting. I think we felt that there were adequate details included in the notice of meeting for people to be able to make their judgment calls and that's the call that we've made.
Try my luck once more, but Steven, would you like to make any comments? Given you're up for election, do you agree with the Chair's view that you don't deserve the right to speak in this forum and talk to shareholders that are voting for you?
The Chair is captain of the team. I am not going to engage in a different view. I support the approach. We are happy to talk to you later on.
That would be great.
Thank you.
I just do not see why you would want that private meeting rather than addressing all shareholders, but if you agree with the Chair, then-
You won't find any division around the board, mate. I'm sorry.
I would hope there would be division because we need division. We need to change. But anyway, look forward to catching up after. Thank you.
Are there any questions online, Gillian?
There is a question, Chair, along a similar vein. The question comes from Gerald Sims, and he has said, "Can Steven please make a statement in support of his election?
Look, I will just reiterate what I have said previously, that we made a decision to do it this way. Given the strength of feeling in the room, we may need to reconsider that for next year, but that's the decision that we made for this meeting, so I will just leave it at that. Can I please get people to enter their votes in relation to item five.
I will then move on to item six. The next item of business seeks shareholder approval for the issue of securities under the non-executive director share plan. The wording of the proposed resolution is shown on the screen. That approval is given for all purposes, including ASX listing rule 10.14 for the issue of securities under the non-executive director share plan to Christopher Hall, Bruce Robinson, and Steven Rubic for the next three years on the terms described in the explanatory statement. The votes and proxies received in relation to this resolution are shown on the screen. I now invite questions regarding this item.
I will just make one comment, Chair, that it adds insult to injury. It puts salt on the wound. It rips the Band-Aid off when a resolution like this is put forward at the nadir of the share price. Having been AUD 5 five years ago, it's now AUD 0.40. In my opinion, it's inappropriate, but you've decided to put it forward, and it will be voted through. But the share price is insulting to everyone, and it represents a major loss of value to 99% of shareholders, and yet you're proposing to issue new shares at a low level.
I note your comment. Probably not anything more that I want to add to that comment. Are there any other questions?
No questions online, Chair.
Then I would invite people to please enter your vote in relation to item six. The next item of business seeks shareholder approval for the issue of performance rights to Paul Anderson under Healius' FY 2027 long-term incentive plan. The wording of the proposed resolution is shown on the screen. That approval is given for all purposes, including ASX listing rule 10.14 for the issue of performance rights to Paul Anderson under the long-term incentive plan on the terms described in the explanatory statement. The votes and proxies received in relation to this resolution are shown on the screen. I now invite questions regarding this item.
David Kingston. Look, no surprise that 47% are against, again, Chair. I think it's offensive. Paul's a decent guy. Used to run Channel 10. He's been in the Chair for, I think, as CFO about three years ago, Paul, two and a half years as CEO. Lovely guy. At the end of the day, aside from sale of Lumus, well done, Paul, I think you did a good job there. The sale of Agilex, AUD 150 million, that's okay. AUD 160 million.
But aside from that, there's been a litany of broken promises, broken expectations. Let's say indications, Chair, not promises. There's no promises in life. I think the reason why there's 47% against it, I think it's basically saying, Chair, you as the captain, as Steven said, you are the captain. There's unity on the board. You're out of touch, Chair, with the amount of pain that this company has caused shareholders. That's a very, very large protest, folks. I've got a few shares to vote today, so I might swing the balance to a 50% against. I'm not sure if it's a special or an ordinary resolution.
It's an ordinary resolution.
Okay. Well, you might sneak over the line even with my shares. Paul, I just think it indicates today, Chair, you're out of touch. You don't understand and appreciate the amount of pain you've caused shareholders. When you censured people before, the gentleman over there clapped when I opposed that. There's a lot of very polite people today who I think you're wrong, so I'm glad that you're going to reconsider that for next year. This resolution and the vote against indicates very clearly you are out of touch. You're not taking into account the amount of pain that this company's caused the shareholders. Thank you.
If maybe I'll just respond partly to some of that, just for the sake of clarity, which is this is a grant to allow Paul to participate in the LTIP scheme. He doesn't get a dollar unless the outcomes that we're looking for are delivered. This is largely in response to the fact that Paul has now been here for a couple of years. We want to give him a chance to get some equity in the company. So far, any equity he's got, he's had to pay for out of his own pocket. This is directionally what we've always said to directors, that we will move towards a more normal STI, LTI scheme. But to be clear, if the metrics don't get met, he doesn't get paid out.
Yeah. You're an intelligent woman. The word up there in the heading is performance rights. I think on any normal use of the English language, there's been zero performance in this company. It's been one way, down, down. Disappointment. It's just a red rag to the bull, which is why the vote is so severe. It's very unusual to see that sort of vote. Paul will sneak over the line, it looks like. But, I just think you're out of touch, Chair, about the amount of pain that you're causing the shareholders. Thank you.
Are there any questions online, Gillian?
No, Chair. No questions.
Oh, sorry. Yep. Another question in the room.
Thank you. Can you just clarify? Sorry, I am trying to read it now, but what are the performance hurdles? It is EPS, but what is the starting point given today there is I do not even know what the EPS is, but not a very high starting point. But what are the actual hurdles, please? I suppose relative TSR, does that start from AUD 0.40 today? Which again, pretty low hurdle, and to outperform from here, we would hope that would happen. But if you can just actually clarify the EPS targets, please.
The performance rights are subject to an EPS performance condition. It is all laid out in the notice of meeting, how that works, and it will be assessed against targets set for FY 2028 and for FY 2029 and divided by the number of shares on issue, in June 2026. In terms of relative TSR performance, it is a performance condition that comprises the ASX listed healthcare organizations within the S&P/ASX 300 Health Care Index. We look at that comparator group from time to time.
We usually give more information at the point in time when it looks like these things are going to vest. At this point, no LTI has vested for the last few years. Just in response to that criticism and concern, this is all against the guidance that we have given and the budget that we have given. The performance has to be delivered before any of this comes into play.
What is the EPS that needs to be met for the grants to be issued, please?
I think the vesting schedule is what I have just read out to you and in terms of what the results are, we have to wait until the point in time at which that vesting gets tested to be able to precisely answer that.
Earnings per share. What is the target that you have set for the company to make if Paul is to get paid? As a dollar amount, do you know who is the head of the remuneration committee? Does anyone know what the actual EPS target is?
We are not disclosing.
Yep.
We have always disclosed after the assessment period. So we have always disclosed what the target was after vesting. So we do not disclose prospectively. We only disclose retrospectively.
But how can shareholders vote on granting something when we do not actually know what the target you have set?
It is quite a common practice, and you can see our prior period EPS targets.
It might be common practice, but that does not really provide any comfort that you have given an appropriate target because the last target, mid to high single digits, that has been pushed out, has not been met. What is the actual return that-
If it has not been met, it does not pay out, so it becomes theoretical.
No, but that was a high margin target that was not actually a remuneration target. That was just something given to shareholders that was not met. But, see, you do not know what the EPS target is.
I think we've said as much as we're going to say on this topic.
Do you know, Paul, what your target is?
Yes, of course, he does.
It's not retrospective. I'm very confused.
It is disclosed. There are two performance periods. There is a two-year performance period and a three-year performance period. We cannot disclose the EPS because that would be a forward-looking guidance for a two or three-year period. That is quite common outside the ASX 100.
It is not guidance. I just want to know, Paul knows.
Effectively, it is. That is why we do not.
That's what he's getting paid on. If you meet this, you get paid. What target are you shooting for to hopefully make it? But that's very confused if you don't.
I've said, this is all related to the budget and the guidance that we've put out, and that's as far as we're willing to go in terms of what we can sensibly say on this topic.
Okay. Maybe next year, if you could tell shareholders what the target is that you're shooting for.
I would love to be in a position where we are paying it out because we've hit the targets, and we will give you as much detail as you want when we get to that point.
Assuming it's a good target, but anyway.
It'll be a good target. Okay. Are there any questions online, Gillian?
No, Chair, there are no questions.
Okay, then I would invite people to please enter your vote in relation to item seven. The last item of formal business seeks shareholder approval for the issue of service rights to Paul Anderson as a salary sacrifice arrangement. The wording of the proposed resolution is shown on the screen that approval is given for all purposes, including ASX listing rule 10.14, for the issue of service rights to Paul Anderson as a salary sacrifice arrangement on the terms described in the explanatory statement accompanying this notice of meeting. The votes and proxies received in relation to this resolution are shown on the screen. I now invite questions regarding this item.
David Kingston again. Look, I love paying performance and money to executives. I come from investment banking, so I love it. The fundamental problem here, Chair, you are just not reading the room. Another resolution asking for approval to do certain things for Paul. He is a great guy, and I hope he gets all his performance rights, but it is just a red rag to the bull. Life is all about fairness, and the different strategic holders in any enterprise need to be treated fairly. The healthcare workers need to be treated fairly, the employees. The patients need to be treated properly. The doctors need to be treated properly.
The party that is not been treated properly, Chair, for many years in this company, it has been a shocker, are the shareholders. When you get one critical part of any group that is not being treated properly, you know what? There is dysfunctionality, there is disharmony, there is massive dissatisfaction. Part of the reason the stock is currently rated at AUD 280 million market cap share, when you have announced the sale of Agilex at AUD 160 million, that is, I think, AUD 155 million ex a couple of costs. It puts sort of a paltry AUD 120 odd million on the whole of pathology, which is embarrassing.
Part of the reason is the market hates this company because it has disappointed for so long, and the board is sitting there supposedly looking after shareholders but not delivering to shareholders. We get defensive responses today, censoring directors from speaking, giving reasons why you are not prepared to give the EPS target. It is not guidance, it is a target. I just think, again, you are misreading the room. I have made that comment before. I just thought I would make it again. Thank you.
Okay. I am not sure there was a question in there, and I hear your comment and note it. Gillian, are there any questions online?
No, Chair, there are no questions.
Then I would invite people to please enter your vote in relation to item eight. That concludes the formal business of the meeting. I will now allow a few minutes for shareholders and proxy holders to complete their voting instructions. If shareholders have any further questions, please use this opportunity to submit your question. After receiving any further questions, I will declare the poll closed.
Chair, I had one further question. Has the company received any approaches from parties who wish to bid for the whole company?
There are no current approaches from any party, but clearly, that is something that we spend time making sure that we are well prepared for in terms of a defense strategy and up-to-date valuations of the company in case any such approach should occur. As you would expect, if it did, we would consider it in the way that you would expect a responsible board to consider it.
You said no current approaches. Does that mean there's been some recent approaches in the last year or two? All right. Okay. Have you as Chair given any consideration to getting on the front foot and actually trying to initiate a takeover bid, which would finally provide some small relief to shareholders?
Look, we think about those things from time to time, depending on what's going on out there in the market. We take advice from time to time, and as you would expect, we'll continue to think about those things.
You did have a bid for the company from ACL. There's clearly substantial synergies if that were to happen. Obviously, Maxine was negative on it and didn't like it. There's huge synergies if the two companies were put together. There was an ACCC issue. I think that's probably surmountable given the malaise of the industry. I think Healius is the worst, but ACL and others are not printing money. Would you resurrect that merger? Take the initiative to finally look after shareholders.
I mean, look, we always have an open mind if we can come up with something that's good for shareholders. But I think you are very optimistic in terms of thinking that the ACCC issues can be overcome, because all of our advice suggests that that's not the case.
Well, ACL obviously disagreed because they wouldn't have wasted their time without it. But I think the main problem last time, Chair, was that Maxine and the board was negative on it.
We don't have any feelings of negativity. If we could figure out a way to make something sensible happen that's good for shareholders, we will have an open mind.
Okay. Well, let's cross our fingers. Thank you.
Ladies and gentlemen, representatives of the share registry will now come and collect any voting cards from shareholders and proxy holders in the room. For those online, I now formally declare the poll closed. I confirm that the voting results will be announced to the ASX as soon as the votes can be counted and verified. With that, I bring this AGM to a close. Thank you for your continued engagement and support and for the comments made today, which we will certainly go away and reflect on. Thank you.