Welcome to the Sonic Healthcare's Full Year Results Presentation. I would now like to hand the conference over to your host today, Doctor. Colin Goebschmidt. Please go ahead, Colin.
Thank you very much, Ben, and good morning to all, and a warm welcome to everyone. This is Sonic Healthcare's result presentation for financial year 2020. That's for the period ending thirtieth of of June twenty twenty. My name is Colin Goldschmidt. I'm the CEO of Sonic Healthcare, and I'm joined by my two colleagues today, Chris Wilkes, Sonic's CFO and Paul Alexander, Sonex' Deputy CFO.
Now I plan to take you through the result presentation, which I hope you have with you. And following that, we'll then revert to questions that you may have. All three of us will take the questions. Before we go to the slide pack, I was keen just to give a short introduction, I guess, to set the scene for the report that we give for this period. It was not long after the half year result in February of this year that the coronavirus hit us.
And at Sonic Healthcare level, what has taken place over the past six months has been nothing short of unprecedented, which is a word everyone uses, and extraordinary. And we're keen to share with you today Sonic's journey over the course of those tempestuous months is probably the best way to describe it. We'll obviously cover the numbers for FY 2020 as we normally do, but I'll share with you how Sonic has weathered the storm so far and come through it a stronger company. Essentially how we fared in the pandemic over the past six months, how we handled the initial pretty severe shock to the company in March and April when revenues in all eight countries in which we operate fell but fell rapidly and steeply. And despite that massive shock to our system, our Sonic staff responded so superbly first to reduce costs and preserve capital and then to set up validate and begin offering a new and fairly complex test that is of course the COVID PCR test which has now become so central in overall global pandemic control and management.
Then from May onwards, our base business volumes and revenues began to recover progressively. And that positive trend has continued through to the present, where today we are at or above pre COVID based business levels, except for The USA and The UK where revenue recovery is not quite at that level, but the trends are positive. Our COVID testing has ramped up very significantly to meet a huge global demand and we are now doing COVID testing in all eight countries with high volume testing taking place in The U. S, Germany and here in Australia. I guess as a summary of Sonic's current position, the recovery in our base business revenues augmented by our COVID testing indicate that we've moved from a pretty difficult position in March and April back into a strong position today.
From our current position and looking ahead, Sonic is secure and Sonic is strong, Although, I have to put the caveat on that we have no complacency about the possible uncertainties that lie ahead. And perhaps most importantly of all, through the six months of the pandemic to date, Sonic's people, have made sacrifices for the company and have risen to the occasion in an incredible way. With all the negative implications of this whole pandemic, Sonic really is, a shining light. Our company has risen to the occasion magnificently as well and continues to make a very meaningful contribution on a global basis in this epic battle that we have against COVID-nineteen. So if we could go to Slide three, please, which is the first real slide in the deck.
In order to best appreciate Sonic's performance to date and also going forward, we're keen to provide some information on Sonic's positioning in relation to COVID-nineteen. And that's really what this slide is about. First of all, under the heading of our contribution, I want to make the statement that our core business is the provision of essential diagnostic and clinical health care services. And I guess as a result of that, Sonic is playing a central role in pandemic testing, which itself enables treatment for coronavirus. It enables contact tracing and enables isolation and quarantining, all of which are absolutely critical to pandemic control and management.
And because testing plays such a vital role in pandemic control, our involvement in the pandemic has actually extended beyond the labs into the arena of public health policy and pandemic planning. And just going to the third sub bullet point on the contribution, our leaders around the world are actually supporting national and state based initiatives in partnership with governments and public health authorities. And it's fair to say that our leaders in all countries are in regular contact with federal health ministers, state premiers, governors, state health ministers, federal and state authorities and the like. This has been an incredible development in which Sonic is playing a very active part. And I guess these collaborations between a company like Sonic, a large private laboratory company and governments gives you an indication of the importance of Sonic's overall work in the COVID-nineteen pandemic.
Now to date, we have completed 6,000,000 COVID PCR tests on a global basis. And we'll speak more about COVID testing through this presentation. In terms of our staff, our 37,000 staff are operating really at the frontline of the pandemic. And in no uncertain terms, unsung heroes in the pandemic itself. There's very little publicity given to Sonic staff and all laboratory staff around the world, but it's in laboratories that the COVID testing actually takes place and it forms such a critical part of pandemic control.
Because we're doing so much COVID testing, obviously our focus has been very much on the safety of our staff and the safety of patients coming into our patient service centers given that we are handling infective specimens and coming into contact with potentially infective patients as well. Our staff are essentially working 20 fourseven around the clock, which again is a difference that Sonic Healthcare has with many other companies. And in Australia, we're not just doing the testing, we're also having to do all the swab collections as well. We're also doing small amounts of swab collections in Germany, but in the rest of the world collections are done by clinicians, hospitals, clinics, etc. So in Australia we have a particular I guess task and that is the collection of those swabs.
In every way we are leveraging Sonic's international expertise to optimize our response to the pandemic. And just to put some meat on that bone, within Sonic you have scores of for example microbiologists. These are specialist pathologists who are specialized in microbiology which is right in the space of coronavirus. We have infectious disease specialists all over our operations. We have hundreds of molecular biologists and senior scientists working for us all the time.
We have experienced managers and CEOs all working under the overall culture of medical leadership, which is really an invaluable and quite unique portfolio in the setting of a pandemic response. And just to give some more sense of the collaboration that's going on around Sonic, We're using that expertise to collaborate around test development, the validation of tests and different platforms. We're collaborating around swab collection. And just one example, we were the first company to publish a paper on a self collection kit. That's how to take a swab yourself and that was rushed through to publication from the Douglas Sandy Moyer lab and Sullivan Nicolaides labs here in Australia.
And bear in mind that everything I've said to date also means that Sonic has had to continue providing all our routine usual services at the same time as the new COVID testing that we're doing as well. And so this has presented a huge challenge to our staff around the world. The fact that we're working in a pandemic and need to operate 20 fourseven and the introduction of a brand new test at very high volume. Under the heading operations, just to note that all Sonic facilities have remained staffed and fully operational throughout the pandemic. And that our management teams in particular, but all our staff as well, have needed to respond and adapt very quickly to an almost completely new operating environment.
So all of a sudden it's not just the new test itself but huge additional volumes coming into most of our labs around the world required a lot of management expertise and adaptation. We've mobilized Sonic's resources and infrastructure to handle this pandemic in a very positive way. And I guess this reflects in many ways the long standing investments that we've made in lab buildings, technology, IT collection centers, equipment, people and it goes on. All those investments have given us very good foundation to pivot rapidly to handle the needs of the pandemic. And the final point there is just a mention of the challenge in procurement that existed around this pandemic.
Huge global demand, worldwide shortages of equipment and reagents and PPE gear goes on and on. And so big teams of Sonic have been working tirelessly every single day to ensure the supply chains coming into Sonic Labs around the world and we've been able to fulfill the demands that have come our way as a result of that. Moving on to Slide four, and we get to the numbers and these are headline numbers for FY 2020. And just to make the point that the numbers that we're talking about here are not including AASB 16, the new accounting standard. So our revenue for FY 2020 came in at AUD 6,860,000,000.00, which is 11% up on the prior year.
And our underlying EBITDA number came in at $1,109,000,000 which is just a bit ahead of the updated guidance that we gave on the June 24, which was $1,075,000,000 Underlying net profit was up 7% at $552,000,000 And I guess just to revise the point that up until mid March, that's eight point five months into the financial year, our performance was in line with the original guidance that we gave out in August of 6% to 8% constant currency underlying EBITDA growth. But of course, from mid March, everything changed. And as you know, we withdrew our guidance and then gave additional guidance on the June 24. The impact of COVID-nineteen, I've already
touched touched upon. First of all,
that our base businesses were severely affected in March, April and May with quite significant margin contraction. And then from May onwards, our base businesses began to recover such that by year end, most divisions excluding U. S. And The UK were back to pre COVID levels. Our COVID testing very importantly ramped up aggressively starting in about March 2020.
And of course, this served to partially offset the revenue deficits from our base business. A very pleasing fact is that our balance sheet remains extremely strong. Our available liquidity at the moment is approximately $1,400,000,000 and the Board has ratified a final dividend at $0.51 per share, which keeps it at the same level as the final dividend last year. But for the full year, the dividend is actually up by $01 Moving on to Slide five, which is a table which now does include numbers under AASB 16. And I guess this table shows some more headline number details.
You'll note that the EBITDA number under AASB 16 increases by about $300,000,000 for this financial year. So EBITDA under AASB, which is the statutory number, is 1,412,000,000.000 And just a couple of other comments. First of all, the revenue growth has been augmented by the Aurora acquisition. The acquisition date was thirty January twenty nineteen. And the net profit growth was reduced by nonrecurring items in the prior year.
So there was a gain of after tax gain of $50,000,000 on the sale of GLP systems, which was in the twenty nineteen year on which that growth is the number is reduced accordingly. And I guess the other point is our strong cash generation, which you'll see there at 26% above last year at over $1,000,000,000 was assisted by a prepayment by U. S. Medicare for fees to be done and also our cash preservation initiatives. There's just one other point that I'd like to make on this slide and it's about the earnings growth numbers, which you'll notice are below the revenue growth numbers for the year.
This is mainly a result of the margin contraction that I've mentioned as a result of the steep and rapid falls in our revenues in March and April. And those sudden falls in revenue across the board globally, like nothing we've ever experienced before, were amplified at bottom line level. And then they have been recovered more progressively as we adjusted costs, as COVID testing kicked in and as base volumes returned back to normal levels. So it's a timing effect at marginal profit level. So looking ahead into FY 2021, COVID revenue is now compensating even overcompensating for any residual shortfalls in our base business revenues.
So the discrepancy between revenue and earnings growth will no longer be there going forward. Now moving on to Slide six, which is, I guess, our outlook for 2021, which is very much governed by the fact that we are not providing formal guidance for 2021. And the reason for that relates directly and specifically to the unpredictability around the coronavirus pandemic. We can say though that our revenue growth in July and August 2020 are substantially higher than historical rates. And we can also say that we are in the midst of strong COVID-nineteen testing and that is currently augmenting our growth further.
Our base laboratory businesses, as I mentioned earlier, back to or better than pre COVID levels. And in July, they're up 5% on the prior year in most countries, but still negative in The U. S. And UK, but the trend is positive and we expect those to reach pre COVID levels in the near future. So the outlook is very much dependent on fluctuations in our base business and our COVID testing revenues.
But these are not absolutely certain. And because of that uncertain environment, we need to make it clear that current revenue growth rates that we're giving for July, for example, may not be sustained. But in general, I guess we can say that there is an inverse relationship between base business and COVID testing volumes. So it's logical fact that if base business levels fall then COVID testing volumes will tend to go up. And we have some examples of this taking place right now for example in Melbourne where our base volumes are now slightly down because of lockdowns in Melbourne but COVID testing volumes have gone up.
The rule is not always tight because in Germany as another example right now, base volumes are actually up as our COVID testing volumes. And so you have a situation where in Germany for example, COVID testing is now up because returning holiday makers are being tested for coronavirus not affecting our base businesses which are all above pre COVID levels and above last year's levels as well. And I guess I could say also that it's highly unlikely to envisage a scenario where both base business and COVID testing levels are both down, not impossible but highly unlikely. So the final point here is that even though we're not giving guidance today, we will provide a market update at our AGM in November of this year. On to Slide seven, which is information about the dividend that I've already provided.
The record and payment dates are there and franking to 30%, which is the same as the franking level for the interim dividend. I guess I can say that there's obviously been quite a bit of discussion at Board level about the dividend payment. But based on our strong balance sheet and earnings and cash flows, the Board has felt it appropriate to pay the dividend at the level of last year. Moving on to Slide eight please, and that's our traditional pie chart of the split of Sonic's revenue. It's there for your information.
I guess I could just add a couple of points. The pie itself is obviously larger than last year, 11% larger. The USA is now clearly Sonic's largest division. As foreshadowed previously, revenue growth in The U. S.
Was almost 30% for the year assisted by the Aurora acquisition. And there's also some foreign exchange tailwind in this chart bearing in mind the chart is all expressed in Australian dollars. I guess there's one other minor point to mention and that's the FCS and other segment. So for those of you who are going to be comparing this pie chart to last year's pie chart, you'll notice that the $418,000,000 is actually below the pie chart of the similar segment last year. And that's because last year, the other segment included operating revenue from GLP Systems, which we sold in June 2019.
I'm going to move through the country slides quite rapidly just in the interest of time. So we're on to Slide nine in The U. A. Slide. As I mentioned, revenue growth was strong at 29%, which is 21% constant currency revenue growth, including that extra seven months from the Aurora acquisition.
At organic growth level, it's 3%. And there is also government grants to maintain essential services in the pandemic of US20 million dollars included in that. The response to COVID-nineteen, we're doing large numbers of COVID tests in The U. S, approximately 3,000,000 to date with market leading turnaround times. We're testing in 12 separate labs of ours in The U.
S. Using multiple platforms deliberately to mitigate that global supply chain risk that I mentioned earlier and we're expanding our capacity even further in collaboration with federal agencies to satisfy an increasing demand in The U. S. We've got a few points there on our baseline operations. We're moving ahead with our ThyroSeq initiative, which is the genetic test for thyroid cancer.
I guess it's good news that the PAMA fee reductions which we have flagged before have now been deferred to January 2022. And there is also talk about a smallish fee cut to anatomical pathology, a Medicare fee cut to anatomical pathology. And our industry association in the state is lobbying hard against that. We've calculated that it will not be material in Sonic's numbers approximately 7,000,000 impact in total. Slide 10, the Australian Pathology or Australian Laboratory Division Slide.
5% organic growth for the division does not include any government subsidies at all. As far as our COVID-nineteen response goes, we are also doing large volumes of testing in our labs in Australia, currently in eight sonic laboratories and capacity continuing to expand as well. To date, we have done over a million COVID PCR tests and that represents about 20% of the national testing load. You may ask why is it only 20% and not Sonic's more like 40% of market share and the reason for that is that the public hospital labs are very active in the COVID testing space. So state governments have set up COVID clinics, feeder clinics, COVID collection centers, drive through centers, etcetera.
And I guess fulfilling an important role in doing their share of the COVID testing for Australia. Sonic was awarded a national contract to cover COVID testing in all aged care facilities around Australia, which is a huge undertaking. And it's really a huge acknowledgment to our Sonic team because to date we've already covered more sixty percent of all aged care facilities with testing. It's been a massive logistic exercise and it's not just testing of the residents in those aged care centers but the staff as well. I mentioned earlier that I'm going to call it the burden that the Australian Laboratory Division carries in having to do swab collections for all the tests that we perform.
This has been another massive task for our leadership team throughout Australia. Setting up dedicated COVID collection centers, trying to isolate COVID or potential COVID patients from non COVID patients, setting up drive through centers and working through a massive logistic exercise around this. And I have to say it's been a wonderfully successful exercise now fully set up driving testing going forward as well. Three minor bullet points on non COVID operations. We've completed the rollout of our total lab automation system.
That's the GLP systems automation system. Our genetic testing continues to grow very strongly, including prenatal testing which we're doing in two of our labs in Australia. And our bowel cancer contract national cancer bowel cancer contract continues to fire strongly and we're finding increasing participation rates perhaps that was due to people doing the test during lockdowns, not sure but it's all good for the Australian population. Slide 11, Sonic Healthcare Germany. 10% revenue growth in FY 2020 and six percent organic revenue growth for the period, and there were no government subsidies included in that number.
As far as our COVID-nineteen response go, we're very proud to say that our labs in Germany were amongst the very first in the whole of Europe to commence COVID testing that was in late February or in February and running ramping up from then going forward to the point that we're now doing COVID testing in 24 separate labs in Germany and capacity is still expanding. To date, we've completed approximately 1,600,000 COVID tests, PCR tests, and that represents about twenty percent of the entire German COVID testing load, an incredible achievement and a huge acknowledgement to our leadership team and staff in Germany as well. There are a few points on non COVID operations, which I won't go into right now, just again in the interest of time. Moving on to Slide 12, please. In Switzerland, revenue growth was strong at 14%, but 5% organic revenue growth at constant currency level.
The ramp up of our COVID testing in Switzerland was fairly late compared to Germany, for example, and really only started ramping up late in the fiscal year. A couple of points about operations in Lausanne and Zug for your information. And moving on to Slide 13, our UK slide, 9% revenue growth, of which 5% was organic at constant currency level. We did receive approximately GBP 6,500,000.0 worth of government grants in support of essential services during the pandemic. So that's included in the revenue number for The UK.
Our COVID-nineteen response, our base business in The UK was perhaps more severely impacted in March and April, probably due to the fact that we have a greater weighting to hospitals in our private business in The UK. So remember hospitals right around the world were repurposed for COVID-nineteen patients and that meant that elective surgery and all sorts of routine undertakings in private hospitals essentially ceased. This is obviously now coming back and there is a bounce back. So the other thing that happened in The UK was that initially testing was a little late in The UK did not involve private labs in the first instance. And so the ramp up like Switzerland in COVID testing in The UK came late in the fiscal year as well.
But since then, we've been ramping up our COVID testing after the end of the financial year and ramping up capacity even more as we speak today. So our central laboratory, the HALO Building in London is providing COVID testing for both the private sector and the public sector and we expect that to grow quite significantly going forward. We've also made a few points for your information about non COVID business, which again, I won't go into on this call. If we could move to Slide 14, which is Belgium. Our revenue growth there was 1% and negative 2% organic revenue growth at constant currency level, quite a severe impact on our business from the pandemic.
We've implemented COVID testing in our Antwerp laboratory, relatively low volumes in FY 2020. So in other words, a late start as well, but volumes now increasing quite significantly. And again, we've got a couple of points about our base business there as well. Moving on to Sonic Imaging on Slide 15. Revenue growth was 4% for the year, I guess, by investments in greenfield sites and also new equipment.
We had a 6% EBITDA decline. And the phenomenon that took place in our Imaging division is similar to what I described about the margin compression in our Laboratory division as well. So a huge hit to top line occurred in March and April with amplified hit to bottom line and then a slow recovery of baseline business. But of course, in the Imaging division without the assistance of COVID testing. A big effort was made by our Imaging division in terms of cost reductions, given that there was no compensation from COVID testing.
And I'm pleased to say that July and August revenues and earnings are now significantly above historical growth levels. So there appears to be some sort of rebound phenomenon, certainly a bounce back in the imaging division, which is really good news. And from July one of this year, most of the items or tests that we do, examinations that we do are subject to a small indexation amount as well. Slide 16 on Sonic Clinical Services. The revenue growth for the year was essentially flat and we can put that down to the COVID pandemic.
We were not eligible for government subsidies. That's the JobKeeper subsidy for the Australians on the call. And in terms of the COVID-nineteen response, of course, SCS manages many medical centers and we do know that patients essentially stopped going to see their doctors in fairly large numbers, probably out of fear of infection more than anything else and because of lockdowns. And as a result, we have implemented fairly widespread telehealth consultations certainly during the lockdown period following the implementation of a specific fee by the Australian Medicare system for telehealth consultations. That telehealth consultation phenomenon does continue.
Whether it continues long term into future remains to be seen, but it's certainly a feature of the pandemic itself. We've also had to do a huge amount of work in our medical centers to ensure the safety of patients and of course our staff as well. And also to revise that SCS is the largest operator of medical centers in Australia, two twenty seven medical centers and almost 2,500 GPs working in those centers. And our efforts remain ongoing to work on a slow and measured consolidation of those centers and rationalization of those centers. And in fact, two twenty seven million I think is slightly down on the previous number last year.
Slide 17 is a slide on capital management. And really it shows Sonic's very strong balance sheet. I guess our debt is currently sitting at just over $2,000,000,000 Our gearing ratio has come down pleasingly to 26%. Interest cover is pleasingly up at 11.5% and really a great number of the debt cover is now 1.8x, which is the lowest it's been in twenty years. And the reason for that is a combination of the equity we raised for the Aurora acquisition, which was a little more than we needed for the Aurora acquisition itself.
There's been no M and A activity of note in the recent past and also our cash preservation initiatives, managing creditors, prepayment of Medicare, U. S. Medicare, etcetera, have all contributed to this very good number. We've currently got headroom of around $1,400,000,000 that is before the final dividend is paid. Slide 18, which is the final slide.
And I guess we've just split this into a COVID nineteen summary where I can say that Sonic Healthcare is responding magnificently to the call to combat COVID nineteen. And I'd also want to take the opportunity when we're talking about COVID nineteen to really acknowledge fully Sonic's leaders and staff for the role they're playing in the pandemic. It's really been quite amazing to see how quickly and how expertly Sonic's people have responded to this crisis. Because at very short notice, we've had to adapt our business completely and in an expert and professional way to respond to the pandemic and I guess in so doing provide a crucial public service around the world to combat COVID-nineteen. It might be out of place, but I'm going to make special mention about three largest laboratory divisions that's Australia, Germany and The USA.
In Germany and Australia, Sonic really led the way in each country with high volume COVID testing. And Sonic's early and extensive testing in those countries played a very critical role in the good outcomes that have been achieved to date in both countries.
I just always put the
caveat that we still got a long way to go with the pandemic. And to add to this, Sonic's Australian Laboratory Division also had the job of collecting specimens for COVID testing. So for the million COVID tests that we've done to date in Australia, we've taken a million COVID swabs. That's a massive achievement in itself with staff working under very difficult conditions like outdoor drive throughs and full PPE gear, etcetera, putting their own health on the line in a real way. And when we turn to the work of our Sonic U.
S. Division, it's been incredible because in The U. S. We've turned on massive COVID testing volumes at very short notice. And simultaneously, our U.
S. Division has led the way in Sonic in terms of cost control and the response to a very steep base business fall in those early months of the pandemic. But it's not just the three large lab divisions that have made such a big contribution. It's all of Sonic's 10 divisions including imaging and Sonic clinical services. All our people have had to work continuously during very difficult times and have come through with flying colors.
And I have to say and I think I'm speaking on behalf of everyone working at Sonic, how proud I am to be part of this company. Certainly as the CEO of Sonic, I feel immensely proud to lead such a fine organization. If we move on from the COVID-nineteen summary to the outlook position, the demand for Sonic services are increasing and they're non cyclical in nature. Our geographical diversification continues to be vitally important for the strength of the company. It provides risk mitigation and gives us opportunities for growth.
We have incredible experience and commitment from our leadership teams in all countries of our operation. And I have to say through the pandemic this has been utterly invaluable. A hugely experienced committed team of leaders working under an embedded strong culture of medical leadership has been a godsend for us. Our balance sheet is strong and it underpins our global operations and very much our future growth. And we continue to focus very much on ongoing organic and acquisitional growth.
And the bottom line of this presentation, I can say that Sonic is well placed for future success. Thank you very much. Ben, can I hand back to you please to coordinate the question section of this presentation?
Your first question comes from David Lowe from JPMorgan. Go ahead, David.
Thanks very much and thanks for taking my questions, Colin. Can we
start with COVID testing? Mean, there's been some interesting trends recently. We've seen the rate of testing declining in The U. S, declining in Australia, continuing to grow in Germany. Any particular insights as to why those trends might be playing out and what you're expecting in
the future, understanding that's difficult to predict?
Yes. And you've hit on one of the reasons why we feel it's not prudent for us to give guidance for FY 2021. The demand for COVID testing varies by country and varies by pandemic stage and progression. So as I mentioned in the presentation, we've had a very strong baseline, if I could call it that COVID volume in Germany. It's now increased somewhat because of returning holiday makers following their summer vacation.
In The U. S, yes, it's true that there have been some reports of a slight fall in overall demand for COVID testing. There are various theories about this. One is the reported poor turnaround times by some operators. We don't consider Sonic part of that, where people are saying if I have to wait four, five, six or even a week for my test, may as well not have it.
Is that the reason for reduced COVID testing? Don't know. And in Australia, it's I guess we see demand increasing despite the fact that really it's only Victoria that's in the midst of a wave at the moment. So testing has actually increased in New South Wales and Queensland running parallel with what's going on in Victoria where itself the volumes have increased quite dramatically. So you can see that there are different factors driving volume growth of COVID testing in different countries and different even different areas of a country.
And it's impossible to predict what might happen going forward. We interpret that as meaning that AGM is probably not going to give guidance either? Don't want commit to that, but we will certainly be in position to give the market update. It may not be guidance, but it will certainly be some indication of how we performed financial year 2021 to date. Again, I can't predict what the world is going to be like in November.
Things are changing almost on a daily basis. So we'll have to leave it until then or sooner before we come back to the market with some more information. If I could just ask to switch to the routine business. So this 5% volume growth
is pretty impressive. Do you think that, that's a catch up issue? And I was wondering if you could just touch on the Aurora business as well, given anatomical seems likely to have been hit harder by the pandemic than perhaps other routine testing, please.
Yeah. And I'll start with that one first. It is true that our anatomical pathology divisions were hit harder and and fell more steeply. But the interesting thing is that they have recovered faster and have risen more steeply as well. And I guess it's logical when you think about it.
Generally, anatomical pathology tests are absolutely essential despite the fact that people are actually putting off or skipping tests of all kinds. So what we're finding right now is that the anatomical pathology division has rebounded very strongly and we expect that to continue if not to rebound because you've got to consider that all colonoscopies cease. That means bowel biopsies and gastric biopsies suddenly stopped. That means there's a whole lot of bowel cancer out there undiagnosed. A whole lot of gastric issues that remain diagnosed.
Same applies for urology, same applies for for cervical biopsies and pap smears, same applies for skin lesions, pigmented skin lesions. And there's a, you know, publicity now that the the incidence of melanoma might increase because pigmented skin lesions are still going to be out there but we're not have been delayed or put off. So in terms of anatomical pathology, it's just been an interesting thing and we believe that the volumes will continue. The base business growth of the strong growth that we're experiencing right now is very pleasing. And it's in a similar vein that specialists and GPs and elective surgeries in hospitals all need to get back to normal levels.
You know, having been put off for months during this pandemic, there's a pent up demand, an essential demand for clinical procedures and lab tests and radiology and everything in health care. So this is one of the less spoken about issues that have come about from this pandemic is all the healthcare that's actually waiting to be done that still needs to be done. Unfortunately, Sonic is right in that space. So whilst we're doing COVID testing pandemic related, we're also in the healthcare space and we'll be doing the non pandemic, if I could call it that routine healthcare work as well as it bounces back. And we're seeing that in July and August in our base business.
David, it's Paul here. Going back to your
point around U. S. COVID volumes, whilst there might be a short term slight low in volumes in The U. S. It is government policy in fact to increase those volumes.
And in fact, we are working with government at the moment to increase our capacity at the request of government for additional COVID PCR testing. So chances are the government will encourage that rate to go up as we go forward.
Great. Thanks very much. That's helpful.
Thank you, David. Your next question comes from Chris Cooper from Goldman Sachs. Please go ahead,
Hi, morning. Again, on the base business, look, I appreciate the virus progression is different materially by region. But beyond that, is there any structural reason why The U. S. And UK shouldn't follow a similar recovery trend to the others, albeit a little bit later?
And put another way, I mean,
I know it's impossible to predict with any certainty, but would you be surprised if they were still tracking negatively by the end of twenty twenty?
The answer is yes, would be surprised. And yes, we do expect them to recover. They're just lagging a bit behind. Guess it's that inverse relationship that I spoke about earlier. You've got to appreciate that in The U.
S. And the UK pandemic activity is more intense than it is in our other countries and therefore base business levels are probably a bit lower. There's lockdown not shutdowns, not full lockdowns in many U. S. Countries.
And The U. K. Is only recently opening up, and we're seeing a return to normal business in The U. K, probably a bit faster than The U. S.
So the answer is yes. We certainly expect base business to be returning to normal by the end of the calendar year.
Got it. And two quick questions on COVID testing. Obviously, we've seen Canada further here, which is helpful. What are your expectations for reimbursement of COVID tests as we go through the next twelve months? Is it reasonable to assume some pressure to PCR as we go through the period?
Chris, this is a question we can't answer. I don't know. I mean, there's many points we can make about the fees for COVID testing. Put, you know, that there's a lot of expense that goes into doing a COVID test. It's not a test that you just bang on a machine and get a yes, no answer, nothing like that.
And I guess there's all the stuff around COVID testing needs to be factored into the fee. So we're certainly hoping that the current fee levels are maintained. There's been some revision, minor revisions that have taken place already and we don't expect any further. But this is one of the variables in our decision not to put out guidance And the answer we simply don't know the answer to your question at this point.
Okay. And just lastly, I'm just shifting away from PCR, I guess. I'd just be curious to get your thoughts on serology testing from here. Mean, lots of debate in terms of whether it does have a bigger role to play. I just wanted hear what you think about that.
And I guess, whether that answer might change depending on if and when we get a vaccine.
Yes. And so this is obviously an important question and I'm not going to claim to be the world expert to answer it but I can say that the take up of the serology test has not been near the expectation that there was several months ago. And there's good reason for that and that is that the antibody response to infection, in other words the immunity levels that are achieved following infection are not as clear cut as everyone would have expected. And so therefore the utility of that antibody test is not as great as we would have hoped. It might have some implication for the vaccine, yes.
And it depends who you talk to. Again, know, there's many elements to the success of a vaccine, whether antibody testing will be valuable following a vaccine application. So you get a vaccine, you want to do a test to know has it taken, am I immune? And then the question is does this serology test actually give you that answer? And this is one of the big unknown areas right now in the COVID pandemic situation.
What we have found with the serology test is that we're doing reasonably big volumes in The U. S. And probably U. S. Only.
We're doing a fair number in Germany as well and a small number elsewhere. And we're also doing some in The UK, but we don't expect the volumes to be anything like the COVID PCR volumes. And time needs to play out as to the future utility of this test, particularly as it relates to the vaccine as you've raised.
Understood. Thanks, Colin.
Thank you, Chris. Your next question comes from Steve Wayne of Evidence and Partners. Please go ahead, Steve.
Yeah. Good morning, Colin. I just wanted to ask in response to if and when a vaccine comes out just on its positioning to be perhaps at the forefront of administering that vaccine. Is that something that you're prepared for? Any dialogue with government as to preparations around that yet?
Steve, we probably would not be in the front line of vaccine administration. It's not really our job. That will fall to GPs and health clinics. And that that's not what we do is give the vaccine. But there will be testing required around the application of vaccine as we've just been talking about, and that's where we will come into play because people will wanna know has the vaccine taken?
Am I immune? And the only way you can do that is by checking for antibodies. And so I suspect that there will be an integral role for lab companies like Sonic, if and when a vaccine becomes available, but not in the administration of it. A medical center operation in Australia will be. Yes.
That's Australia only. Yep. Okay. I mean, I
was looking at that specifically just in light of its flat revenue that that might not might be something that might help, you know, improve some of the visitation around those centers.
Yes. Probably well assuming that. Can
I also just ask to the government grants that you've received to date? Are they repeatable? Or is there sort of how are they structured in terms of this is obviously going on longer than perhaps was originally expected? So are there follow-up payments that can come through from those governments?
Yes, look, there is some potential for that, Steve. We're in some discussions. I think Colin alluded before to the fact that we're talking to federal agencies about ramping up capacity. And so there are some grants that we're talking to federal agencies in The U. S.
About having some funding to create more capacity for COVID testing. So there is a chance that I think there's one that's been announced in their column for about US6.5 million just a week or so ago that we've received. There's others as well that are in discussion. So you can probably expect a little more coming through in the FY 'twenty one year in that space, but it's fairly targeted to grading capacity for testing.
Okay, great. That's all from me.
Thanks, Steve.
Thank you. Your next question comes from Andrew Goodsell from MST Marquee. Please go ahead, Andrew.
Thanks very much for taking my questions. I think overnight, the FDA just listed a few items associated with PCR tests on shortage, including reagents and so on. Just wondering whether you're any mix on taking levels just because it's getting access to those products and and whether that's sort of easing going forward.
Sorry, Andrew. That was a bit noisy. Are you asking whether there's a shortage?
Yes. So the FDA agreed that that quite a number of those supplies that needed to be discharged on shortage. And so I'm just wondering whether you've had adequate access or whether you could be doing more tests if not for shortages of those reagents or those reagents?
Yes. So in response to that question, Andrew, thanks for that. I could just again call out the work done by Sonic's procurement teams around the world, mainly because ever since this pandemic broke, we've had to literally work day and night with all the supply companies, and there's a range of them to try and ensure adequate supplies for our laboratories. There are allocations made by country by some of the supplying companies and then within a country there are allocations made to various testing facilities. And in some cases, have actually taken control of the distribution of reagents and equipment for COVID testing.
So we've had to work within all those constraints to try and ensure that we can satisfy the demand that comes our way. We are in no significant way have we been constrained. So if you take our high volume testing countries, Germany, U. S, Australia, I think we could do a little bit more in the past in The U. S, where demand has exceeded our capacity.
But we're in the midst of major ramp ups all over our testing facilities, over the world. And so it hasn't been a major issue for us. I understand the FDA would be saying that because in The US the demand is huge and there's talk that The US wants to achieve 1,000,000 COVID tests per day. I don't know how that's going to be achieved but that is the stated aim and part of the grant that Chris just mentioned is to help some labs and Sonic was fortunately one of those to increase its capacity using different platforms to those that are mainstream where there might be less demand out of the mainstream. So we haven't found it to be a major problem for us to date.
And I think we can rely on our procurement teams going forward to continue doing the great job they're doing in securing supplies so that we do match supply with demand. Maybe just add to that column, the supply companies has been rapidly ramping up their own production capability. So you mentioned before that there's probably that drop off in demand in The U. S. Was probably a function largely of some supply constraint, which meant that the turnaround times were slower.
That's now improving.
I think people like Roche have quadrupled their production in the last few months. So I think we're now coming to a point where the supply constraint will be not as bigger issue as it has perhaps in the last few months.
And this is just such an interesting point because as you consider that this pandemic by by that word is global and more and more and more countries are turning on COVID testing. So, you know, you've got the whole global population crying out for COVID testing and equipment and supplies around that. It's it's an unbelievable phenomenon when you think about it.
In the early days of this of of the pandemic, the US Air Force was flying fighters into Northern Italy just to get pickup swaps. The whole thing was kind of out of control, but it has settled down a lot since then.
That's a comprehensive answer. Thank you. And just a change of practice with your DI business. On our numbers, you're slightly ahead of market intensity growth this year for revenue line. I know the noisy noisy periods are probably not overly reliable.
But just going forward, just just are you are you expecting that the ex of the touring shutdown? Are you sort of expecting that stabilizes and sort of tracks in line with that the recovery in surgery and stuff? Just trying to get a feel for that one.
Yes. So I think, Andrew, as Colin alluded to, the growth in our imaging business has been quite strong in recent months. To what extent that is a bounce back for things that didn't happen whilst communities were locked down, etcetera, is a little unclear. The Melbourne situation at the moment, as you're probably aware, we have very limited involvement in imaging in Melbourne other than through a small joint venture. So that's not having much of an impact on our growth.
But the rates are strong and possibly above market, although it's always hard to judge what the market rate is given the timing of the Medicare data. But I don't know
the amount of
Outside of Medicare.
Okay. And and so, yeah, my my team is saying you sort of think that would that's sort of reasonably stable now and should continue to sort of parallel with recovery in medical
services. That's what we
have in surgery.
Yeah. Okay. Yeah.
That's That's
terrific. Thank you very much.
Thanks, Andy.
Thank you. Your next question comes from Lyon Harrison of Bank of America. Please go ahead.
Hi, good morning all. Just to continue that vein on on discussions around COVID testing, you called out what your market share was in Australia and and in Germany. But can you give us some color in terms of what you think the market share is in The United States? And and also to follow on on that in those three key markets, how much additional capacity do you currently have? And and how much, can you increase it by?
And if so, what sort of CapEx investment might we expect for financial year 'twenty one?
Okay. So the first question about U. S. Market share, we don't know the answer to that question. We we've been given estimates, and we don't know even what the total COVID testing volume is in The US.
I'm not even gonna put out the numbers to you. We think we are batting above our average day. We think we're doing more tests than our market share in non COVID business. In fact, we're pretty sure of that, but I don't know the exact number, I won't give it to you. In terms of setting up capacity going forward, our aim is to match supply with demand.
And we're doing everything we can to expand capacity, particularly in The U. S. Demand remains very strong. But also in other countries, we're finding demand has increased in Germany. We're setting up more facilities in Australia.
In Australia, I think our setup is adequate to handle the demand at the moment, including what's going on in Victoria because remember we can assist each other, our labs in Australia. But lab in Melbourne is doing fairly high volumes there as well. Now your final question about the CapEx related to expanding that volume is not material in the scheme of things because we yes, there are additional pieces of equipment that are required. But in the scheme of our normal CapEx expenditure and in terms of our return on capital, this is not an issue for us at all. The big problem thus far has been the supply of reagents from supplying companies.
That's been more of an issue than anything internal in Sonic like CapEx or space or anything like that.
Okay. So in terms of value based market share, mentioned you didn't have any color on what that might be. But can you give us a sense of how many tests per day COVID tests per day you're conducting in The US?
Yes. So we're not giving that information out as you can expect. And we've given you and and the reason for that is not to be cute. It's just that it it's it's an it's an environment that is unpredictable. And so for us for us, we don't wanna give out that specific information just for fear that we will be misleading, and we don't wanna do that at all.
So we've given you what we've done to date, and I guess it's gonna be up to you to to sort of figure out what's happened. We've we've mentioned that it's ramped up over a period of time. But we we don't wanna commit to anything per day because those numbers change. They can go down and it might go up as well. Perhaps just to
add a
bit to what you said before, Colin, if you look at I think Quest and LabCorp have announced some of their numbers up to a certain point. And if you look at the relative size, we probably are doing more than our normal market share of the COVID testing in The U. S. Market. As Colin said, it's hard to tell because you don't know how accurate exactly when the cutoffs of those testing volumes were.
So but yes, from a high level, it does look like we're doing more than our market
share. Thank
you for that. And just a follow-up question. I'm just trying to understand the mix that we might see in 2021. How does the COVID testing gross margin in the key geographies compare to your gross margins for routine testing?
When you say gross margin Gross margin. Gross margin. Okay.
Gross margin.
The whole question is certainly impossible to answer because it depends on so many different factors, which platform you're using to do the test, whether you're doing collection as part of that service as we do in Australia, but we do a little bit on there as well. Obviously, fee level is important. So there's a lot of variables in that. And so there is no single answer there.
Okay. But best guess, would you say it would be higher or lower?
And volume is another variable as well, so it will depend on the level of volume.
Okay. But that's fine. I understand you you won't share. But if you put things about current volume, do you get a sense that it might be higher or lower than routine testing?
We don't want give that information. I know you're trying to tease it out of us, but be happy to get out of Sorry about that.
Okay. Thank you, gentlemen. I'll leave it there then.
Your next question comes from Sean Lyman of Morgan Stanley.
Just looking at across the industry, clearly, will be a very different profit outcome if
it wasn't for COVID testing, which is true for everyone. But I
think this might have bought some time for some of those smaller scale operators. And I'm just wondering what how you think about the pace and scale of M and A in a post COVID world?
Sean, I think that's a very interesting question because you are dead right that under the pandemic scenario, you would have expected that M and A opportunities would have been enhanced. And I still believe that it will be, but there are many labs who might have been in that position who have turned on COVID testing as a means to I guess shore up their fortunes and they're providing a good job in doing that. So that's quite important because it helps the global and national interest as well. I think we've got to wait and see what happens going forward. The fact that smaller labs are doing COVID testing doesn't exclude them from sale process and doesn't exclude them from our interest in them.
And so I guess M and A activity has slowed down dramatically as expected because of the pandemic and as soon as we get an opportunity we will be back in the fray because we are very interested in looking for opportunities all over the world. And it's just it's not appropriate right now to be doing that. And we'll have to wait and see how players, individual players, I guess, turn out with their COVID testing even though they might be doing them in fairly small volumes because an astute buyer will recognize that at some point the COVID testing will decline. I don't think even though I can't be sure, don't think it will be there forever. It's an important part of any labs business right now.
And many people say it will go on for years, but maybe not at the current levels. And so these are factors that got to be taken into account in any M and A situation.
Well, thank you, Colin. And one more quick one. So whenever we get to the back end
of COVID testing, how easy a process is it to sort of manage, I guess,
manage out whatever increased resources you might have needed to add during the ramp up phase? So is there kind of a lingering cost down for a while? Or do things kind of doing business, should things kind of calm down, I guess, or tail down along with the revenue side?
I don't think this is going to be a problem because the COVID test is a molecular test. It's a test that whilst I mentioned, it's a complex test. There are a family of tests that are very closely aligned in a way. So, yes, we have had to take on additional staff at the front end of our labs to do all the data entry work, to do all the specimen receiving and also obviously in the labs that do the testing itself. And of course, need to do swab collections if there are some.
But this will be nothing new to us, and it won't be a problem should that eventuate. So I don't see it as an issue.
Your next question comes from Gretel Janu of Credit Suisse. Please go ahead, Gretel.
Thanks. Good morning. I just wanted to ask a question about reimbursement. So apart from what you called S.
For Anatomical Pathology, do you see any other further reimbursement pressure in any of your regions? And can you give us an update for Germany and what you saw in terms of quotas in the half?
So other than what we've already discussed, the outlook on the regulatory side is stable, think is probably the best word for it across our different geographies. The quota levels in Germany remained relatively stable through the FY 'twenty year. As you know, there's quite a delay there, so we won't actually know the final quota level for the June for some months to come. So we've had to make a conservative estimate around that. But yes, stable, I think, is probably the keyword.
And then just in terms of costs, can you give us some commentary just in terms of the outlook for cost methodology business? Any of the costs that you took out during shutdowns, can any of those be maintained? Or are they all back to normal now and kind of offset by the increase in consumable costs?
So that's a very good question. And we think it depends where you're talking because it's not the same line across the Sonic world. In some of our markets, the costs that have come that there will be a retention of some of the savings. Now obviously, with ramping up of COVID testing, we've had to take on additional staff. But it has presented an opportunity, the whole pandemic to review our staffing in general.
I think we will come out when I said at the beginning that we'll come out a stronger company, that was one of the things that I'm alluding to. I think we will come out stronger and leaner in some way to answer the point that you're making.
Your next question comes from David Stanton of Jefferies. Look,
firstly, I know you don't want to give guidance and understandably for F 'twenty one, but historically, you have given us some help below EBITDA in terms of what you're thinking. I wonder if you could sort of talk to where you can, your thoughts on F 'twenty one in terms of CapEx, tax rate and potentially D and A and interest, please?
Yes, maybe I'll give you a bit of an answer to that. So with CapEx, you'll see in the 4E that our CapEx as we had guided previously was down a bit on previous year. I think in this environment, there's reasonable control, reasonably good control over CapEx. There's a question before about the whole COVID equipment cost. I think we'll probably find at the end of the day with support we're getting from governments around the world that will at least offset the cost of that.
So I think we shouldn't see any blowout in CapEx and that we should be reasonably stable, probably at around the levels that we've seen for the year gone plus a bit for growth, but ignoring the COVID growth. Things like interest, we have often given some guidance, David, again, because we can't give guidance for 'twenty one. We're not quite sure about the cash gain and what that will do to our net debt levels. But if anything, I think we'll probably be down on interest cost for FY 'twenty one. How much?
We don't know. Tax rates, you'll see our tax rate. We've normally guided to about 25%. I think that shouldn't be any different. Again, it depends a little bit on where profits are made and we've got some differential tax rates around the world.
And so that will have a bearing as it flows through. So that's probably about all I can tell you without going outside of what what we've said in the.
And I guess just to follow-up on that DNA, you know, there shouldn't be a blowout in that that we're aware of.
No. The only the only blowout we've got is the the double a s b 16 and getting your head around how that all works. And we've had a you'll start digesting those new numbers, which are in line with what we guided to in December just a bit of a sing out to the team here at Sonic that's put all that together because we're probably we think we've probably got one of the largest leasing portfolios in corporate Australia with 4,500 leases in eight countries. So all the effort that's gone into bringing Sonic to AASB 16 compliance, setting up the systems to do that around the world has been amazing, all done sort of throughout this COVID period. Thank you to the finance team for all the effort that's gone
into that. You might notice in the 4A that the effect of AASB 16 on net profit is a little more than what we've guided to back a year ago. And that very much relates to the gain on the sale of the Hawaii laboratory building, which is a non recurring item. Had it not been for that item, the net profit impact would have been in single digit millions, which is the sort of guidance we gave at the time.
Understood. And Colin, my final question. We've seen increasing focus on in The U. S. In particular on point of care sort of saliva tests to diagnose COVID, at least in the first instance.
If that rolls out increasingly, as some commentators believe it will, what does that mean for the PCR testing on a medium term view in The U. S. In particular? Does it decrease it? Does it maintain PCR testing rates or increase indeed increase in PCR testing rates?
I'd interested in your thoughts.
Yes. So David, at the moment, the point of care instruments unfortunately are not all that reliable. So the level of false negative results are pretty high. And on that basis, I think they have limited utility and therefore usage. If a point of care test comes out that is much more reliable and cheaper because at the moment the test is still too expensive, then yes, it could have an effect on conventional COVID testing volumes.
We would hope to be involved in that space ourselves though. And so I guess this is the same question that gets asked about point of care testing of any other test as well. People talk about point of care instruments but none of them have really penetrated markets substantially. It is quite possible that at some stage a point of care test does come into use for coronavirus and I think that'll be a good thing for the world. Whether you want to have a confirmatory test if it's positive so that would feed into PCR testing.
And what do you do if you're negative and you know that it's a ten percent false negative rate or whatever that percentage is? There's the problem with the point of care testing at the moment. So I'm sorry not to give you a definitive answer, but I think the jury's out. I don't think at the moment point of care instruments are having much impact on the PCR testing done in labs.
Your next question comes from Hushan Desilva of CLSA.
Just one question from me. With the increasing use of KLLs, just trying to think about how GP practice will change going forward. Do you see any opportunities to significantly reduce the physical centers and the cost of that business and changing the way that business actually delivers the service?
Again, a very interesting question. And again, I'm not going to try and be the seer who predicts the future. But I do know that there are a significant number of GPs who like the idea of telehealth. But I don't think it's gonna mean the end of medical centers at all because at at the end of the day, there are a sizable proportion of all patients that need to be seen with the healing hands put on the on the patient face to face with the doctor. And so I think it'll end up being a useful addition to how GPs practice.
We're hoping that the telehealth item number in Australia continues because it's a useful thing especially for things like repeat prescriptions and stuff like that. And I think it's a logical way to go. Some specialists even use telehealth during the pandemic, but I think they believe that they would rather have the patient come and see them. There is no substitute for seeing the patient. It is fundamental to the practice of medicine.
So we can't eliminate it completely at all.
Perfect. If I could sneak one more in there. I'm just thinking of the margin impact on a normalized basis of the rollout of the GOP systems in Australia and potential rollout globally. If you could provide any color on the margin improvement there.
So the issue here, Shanti, is that we're talking about the automated section of our lab. It's one part of a a big operation. I can't give you the impact on overall business margins other than to say it will improve the margins, but it's probably not gonna be all that significant in the total scheme of a big lab business or the whole of Sonic. It's not big enough because this is one of many things that we do to improve our efficiency. Great.
Thank you.
Thank you. Your next question comes from John Deakin Bell from Citigroup. Please go ahead, John.
Thanks for calling an exhaustive list of questions. I'll be extremely brief. I'm just trying to ascertain that market share in The U. S. Of testing.
I know it's difficult. The CDC says there's been 75,000,000 which would give you a 4% market share. But let me ask the question another way. Is there any reason why the type of numbers you've been doing wouldn't be continued going forward, I. E, did you get a jump on the competition and have they caught up?
Or do you see the market in last month and this month kind of steady state versus at the beginning of the testing regime in The U. S?
John, to answer your question, we don't see any let up in the demand. It does fluctuate slightly. It's a sort of gentle rolling demand. So there is no major change from early on when we set up testing. Our US division did move quite rapidly.
As you know, The US started testing a little bit late in general. So in the early days, the CDC pushed its test and it was run by a small number of government labs actually until the main labs, the national labs including Sonic met with the vice president Mike Pence and the the testing was then thrown open to private labs. And of course once that happened you had Quest Lab called Sonic BioReference Lab setting up testing in a big way very rapidly. And then of course with the pandemic marching ahead at great speed in The US demand did not supply did not meet the demand that was there and so other labs started setting up testing. You've got a situation now in The US where there are hundreds if not thousands of labs offering PCR testing.
The big labs, including Sonic, are the ones who are doing the testing in big volumes. And so we don't see any reason why demand will slow. And in fact, I mentioned earlier that there is a desire in The States to increase the testing to a million a day. Now I don't I don't think that's gonna happen, but not impossible. And the grand money that that Chris mentioned has been specifically targeted at that.
It's to help us improve our capacity using non mainstream suppliers, which is a good thing. So just looking ahead without any certainty because we haven't given guidance, we believe that the testing demand in The States will continue if not increase going forward.
And and just to be clear, that 3,000,000 tests performed to date on your slide, that's the date ending in the August 20, or is
that to to the June? Well, now you're getting precise, John. It's just eight. That's what it says.
Your next question comes from David Bailey from Macquarie Bank. Please go ahead, David.
Yes, thanks. Good morning, guys. I'm just wondering if you could be able to quantify the impact of COVID-nineteen testing for FY 'twenty revenues and EBITDA either in dollar terms or growth?
David, look, we haven't announced that. And so that's obviously a pretty sensitive number, so it's not something that we can go into detail. I think you've got to sort of try and make some assumptions yourself based on some of the information we've given, including what we just clarified to John Deacon Bell about the fact that we've the numbers we've given that $6,000,000 is a to date number from the start till today effectively. So yes, I guess it's up to you guys to make your assessments on what that means.
Fair enough. And then just following you from Gretel's question, actually. Just thinking about staff costs, as base volumes recover, just wanted to understand how much you're able to offset some of the volume declines with lower staff costs as April, May, June and how we should expect some of those staff costs to come back as those base volumes recover? Just trying to understand the variable fixed mix, I suppose, within the staff cost base and then maybe the overall cost base as well.
Yes. So how we've handled this is not quite the same in each country. But in general, what we did right at the beginning was to try and match the lower volumes of base business to our staffing costs. And we employed a range of options bearing in mind that we didn't want to lose jobs. Now in general, there were options like standing down or furlough as it's called elsewhere.
We encourage people to take leave. We reduced overtime dramatically. We reduced variable hours like casual staff and part time staff as well. And we knew that the base volumes would begin to come back and so whatever we did in those early stages was designed to allow us to bring staff back as soon as the volumes returned. That was a critically important thing for us.
And of course then you've got in addition to this handling the additional volumes coming from COVID testing. So all in all, as a general answer to your question, I can say that we have very carefully matched as best we can our costs to the prevailing volumes of work at that time. I mean, it hasn't been precise because there's always a bit of a lag. It's very difficult to respond to a steep fall in revenue loss like we experienced in March. Suddenly it's almost falling off a cliff and you've got a lot of fixed cost and you've got to run the labs twenty four hours a day anyway because you're running all sorts of other tests even at low volume.
But we managed to do that very, very well and I do take my hat off to all our leaders around the world especially in The US where the task was bigger and required a lot of planning because in The U. S. The falls were a bit steeper than elsewhere. And so the response of our U. S.
Management team was incredible in how you take a large division, almost AUD 2,000,000,000 of revenue now and having to adjust that downwards was an unprecedented achievement in the history of Sonic. And we did that to a lesser extent in other divisions. So I think we're quite happy with the way it's turned out now because with volumes coming back it was critical for us that we weren't caught short. We want to deliver outstanding services with very good turnaround times in every single test we do and we've been able to achieve that. Thanks.
So just clarify, we should probably expect a relatively close approximation of those costs coming back with volumes over the course of fiscal 'twenty one?
Yes. Save that extra comment I made, I think we're going to come through this a little leaner.
Your final question comes from Saul Hedasson from UBS.
Just a quick one from me. Just noticed you spent $100,000,000 on business acquisitions during the year. I think half of that was probably the Steinberg minority in
the first half. What was
the other $50,000,000 that
you spent on? And was there any contribution to EBITDA from those acquisitions? If you have a look on
the German side, so you'll see that we mentioned the acquisition of Pathology Hamburg on April 2020. That's the majority of the second half number. And given we only owned it for three months, there wasn't a significant impact at all.
And that is the final question for today. I will now hand back to Doctor. Colin Goldschmidt for any closing remarks.
Thank you, Ben. And just to say thank you very much everyone for hanging around this long if you have hang around, and we'll speak to you again soon. Thanks. Signing off. Bye bye.