A Healthcare Sector in Turmoil
This episode was filmed on Wednesday, 6th May 2026. It starts with nothing. A minor ache here, an odd pain there. It lingers… strange, but not alarming enough to call the doctor. Not yet. So you make the mistake of consulting Dr. Google. Suddenly you’re staring at different diagnoses ranging from mild indigestion to planning funeral arrangements because you’re definitely a lost cause.
Much the same could be said of ASX healthcare. For years, the sector was the picture of health itself – a compounding growth story that investors treated as a set-and-forget holding. Then came a brutal twelve months. The sector has shed nearly 40%, with former darlings and long-standing heavyweights hitting lows not seen in a decade.
The causes aren’t simple, and perhaps most disorienting is the ‘defensiveness’ that investors paid a premium for has simply stopped working. As one of our guests in this week’s episode says, to quote The Castle – “The vibe is off.”
To work through the prognosis, Livewire’s Anna Dadic is joined by Julia Weng of Paradice Investment Management and Hamish FitzSimons of AllianceBernstein. In this episode, five sector stocks are put under the microscope. Our guests unpack the sell-off, make the case for where the stock-picking opportunities lie, and as always, share a high-conviction pick of their own.
Stock Picks and Market Outlooks
ResMed (ASX: RMD)
Anna Dadic:
So let’s get onto the stocks now. First up is ResMed, a rare bright spot recently posting a double-digit revenue beat, but the share price is still struggling to stay above $30. Hamish, I’m going to start with you. Are you a buy, hold, or sell on ResMed?
Hamish FitzSimons: (BUY)
We’re a buy. Great summary there, right? The vibe is against ResMed. They’re doing great earnings and the stock price goes down. Is that an opportunity? We think so.
And it’s amazing how this narrative of weight-loss drugs curing sleep issues is still running after two years, whereas all the evidence is sort of saying, “Actually, no, it’s complementary, possibly positive.” But we’re still getting the resurgence of this kind of, “Oh, there’s a new GLP-1 drug,” or whatever.
So I think, particularly when you look through all the results of the trials about the effects of weight-loss drugs and now the real-world evidence — the differences between males and females, diabetics and non-diabetics, people with severe health issues and those without, the compliance issues, the persistence issues — I think the jury’s sort of in. This is not really a big issue for ResMed, and they’re going to keep growing really nicely. So we’re pretty excited about it.
Julia Weng: (BUY)
Yeah, I agree. It’s a buy for us. It’s one of our preferred picks within healthcare. In fact, on the ASX, which other companies give you high single-digit revenue growth and operating leverage every part of the way through, getting 20% EPS growth and trading below market?
And so, as Hamish said, the narrative is clearly against them, mostly coming from the US market. But we do a lot of calls with sleep doctors around the world, and really the overwhelming feedback is GLP-1s are great for weight loss if you stick on them for life, which is a real sticking point. And also, you need CPAP in conjunction. Weight loss itself doesn’t resolve sleep apnoea.
So we continue to see CPAP as your first line of defence and treatment for sleep apnoea, which is still underdiagnosed globally. And so, as Hamish said, the last two years have provided evidence that the accelerating mask growth, for example, gives us real evidence that people are sticking with CPAP. They’re not coming off CPAP just because there are GLP-1s, even though GLP-1s are probably 10% to 15% penetrated in the US now.
And the management team has been managing growth and capital management, and has done an excellent job in our view. Which other company is spitting out $500 million in free cash flow a quarter? So I think we continue to see good capital management along with good earnings growth at a very attractive valuation.
Ramsay Health Care (ASX: RHC)
Anna Dadic:
Next is Ramsay Health Care, Australia’s largest private hospital operator, officially selling off their European business to focus on home soil. Is this the turnaround the company needs? Julia, I’ll start with you.
Julia Weng: (BUY)
Yeah, Ramsay’s a buy for us. I think Ramsay’s at that junction point, that inflection point, where the Australian portfolio, which is about 80% of its profits, is starting to show real signs of improvement. And that’s coming from a multitude of sources.
I’d say the hospital sector in Australia traditionally has been underinvested. You’ve got a lot of your scripts still written on pen and paper, and you’ve got to sift through doctors’ scribbles to understand what’s happening. But I think the new management team there, and you’ve got new management teams throughout the execs, is really taking a more scientific and methodical way to designing hospitals, adding capacity where it’s actually needed in certain therapeutic areas, rather than just expansion for expansion’s sake.
At the same time, they’re taking a very meticulous review of the cost structure, whether it’s food or consumables, getting doctors to actually agree on what to buy. So I think there are numerous ways the margin inflection story and margin improvement story are really coming to fruition.
And on top of that, the political and government backdrop is now becoming more favourable for them. Health insurers are passing on a greater share of benefits to the hospitals, which have been struggling with wage pressure and, more recently, energy and consumable pressure coming through as well.
So we think Ramsay is by far the best private hospital operator in Australia, and we think that’s where the bulk of the profit sits. We see an inflection point in both revenue growth and operating leverage.
Hamish FitzSimons: (SELL)
Yeah, look, contrary to that, I’m going to call it a sell. I agree with a lot of the substantive points. I think it’s a great set of assets and a great management team doing all the right things. So I agree with all that. I just think at a 28-times forward multiple, give or take, a lot has got to go right to hit that.
And just from a really big-picture point of view, what I think is emerging into clarity is there are a couple of big things that have happened in the last decade to healthcare. The payments to private health insurers and hospitals prior to 2018 or 2019 used to be GDP-plus type numbers. So you’d be running sevens and eights. And that just made it too expensive. Then we had the 2019 election, where that kind of got reset down to GDP-minus numbers.
But I think there’s still this sort of view that hospitals are GDP-plus growers, and I think that world is over. I think you’ve got to think about that in terms of the multiple. COVID kind of muddied that because we had so much strange use of hospitals — underuse and overuse.
The other big trend that’s happened in the last 10 years, and I think COVID accelerated it, is out-of-hospital treatments. A lot more overnight surgeries have become day surgeries. A lot more in-hospital treatments are now being provided in the home, which is shrinking demand.
So I don’t disagree that these are the best assets with the best management team. I’m just looking at the growth outlook and going, 28 times? We’ve really got to nail this for that to land as a good valuation.
CSL Ltd (ASX: CSL)
Anna Dadic:
Onto the heavyweight champion, CSL, trading at $124 today, a price not seen in years. Hamish, is this a bargain or a falling knife?
Hamish FitzSimons: (HOLD)
Yeah, well look, we’re a hold here — a nuanced view. I think this is a really interesting company with a lot built in. The slightly worrying thing about it is they’re not benefiting from the vibe, and they’ve done a lot to disappoint shareholders. They’ve overpromised and underdelivered for a solid 18 months now. The CEO and CFO left their jobs as a result, and the company’s response to that was to promptly come out and make a whole bunch of big promises again.
And you think, “Geez, should we maybe just back off a little and underpromise for a while?” So I’m a little worried about the short term, but the price is getting so low you’re looking at it going, “This is very interesting.”
Their core market of plasma — you can look at what all their competitors are doing globally — the market’s fine. It’s still growing high single digits, around 10%. There was a little bit of a dust-up on competition. One of their competitors, Grifols, added some capacity and decided to deploy it into the market. That capacity has now gone. It was a one-off.
The interesting thing is the war seems to be over. Grifols, their competitor that sort of started the dust-up that made CSL miss a lot of its targets, came out in its February result and said, “Look, we’re going to stop going for share and we’re going to have margins going up.”
Now, if you said that in Australia, the ACCC would have you in court in about a week. But because they’re a global company and talking about a global market, they seem to have gotten away with it.
I think a lot of the issues that hit CSL in terms of competition have kind of gone away, and the underlying health of the market will probably help them. But we’re just a little nervous about the next result. I think you can see this as a hold and go either way. I don’t think it’s a sell. Selling would be risky.
Julia Weng: (SELL)
Yeah, I think CSL is still a sell for us. I acknowledge that it definitely looks attractive in terms of valuation and it definitely looks cheap. However, we’re still worried about the earnings outlook over the next couple of years.
Where’s that stemming from? Well, I think the plasma industry, while there’s still growth, faces the risk of becoming oversupplied. Over the last few years, all of the plasma players have improved their yield through better plasma collection technology. And what that has translated to is a noticeable increase in plasma supply.
At the same time, there are alternative technologies out there to treat some of the diseases that plasma was treating. So I do think there’s a risk of oversupply in the market as it becomes more and more competitive. At the same time, with the US administration, they have very limited pricing power to move on prices.
And so we can see Grifols closing collection centres in the past couple of months, which is a potential sign of oversupply. At the same time, the albumin market, especially in China, is a big profit driver for CSL. There, the central government is limiting the procurement of albumin, especially for off-label usage. That has been a large revenue source for CSL and a very profitable one.
So to the extent that that’s not a one-off — and we do think that will be protracted — it does have an impact on the rest of plasma economics, and so we worry about that. We’d also like to see Vifor stabilise as well. Vifor has a range of iron products which are still subject to generic competition over the next couple of years.
So look, some of that is reflected in market numbers, but overall we want to see revenue improve. We want conviction that revenue can accelerate before we step in.
Sigma Healthcare (ASX: SIG)
Anna Dadic:
Onto Sigma now. They just announced a massive UK expansion for Chemist Warehouse, so London is about to be hit by those very bright fluorescent lights. Julia, I’m going to stay with you. What’s your call — buy, hold, or sell?
Julia Weng: (HOLD)
That’s a hold for us. We like the Chemist Warehouse powerhouse. Like-for-like comps are in the mid-teens — very, very strong, probably the best retailer in Australia. Having said that, the expectations are very high given the multiple it’s trading on.
So we think from here it really needs to accelerate. It needs to accelerate store rollout in Australia and really needs to see profits in the international network, which is a huge opportunity, but it could take a number of years to build scale, build distribution, and really have those international markets like London and Ireland firing.
So we think some of the opportunity is already captured in the price. For us, we want to see a bit more execution before we step in. But coming back to the core Australian business, we do think that’s operating very well — very strong growth and managing costs very well too. So it’s one that we’re watching carefully.
Hamish FitzSimons: (SELL)
Yeah, look, I’m a sell on this one. I mean, it’s 50 times PE. It’s not an AI stock. They sell perfumes and pills, right? If they achieve the growth implied by that share price, we’re all going to smell great and be really healthy. So let’s hope they do succeed, but it’s 50 times.
And structurally, this wasn’t an IPO, it was kind of a reverse merger, but it looked a lot like an IPO. There was a big prospectus document put out. There was an investment banker who owned part of it, selling it to you and promising it’s all going to be fine.
What you tend to find with these is everyone’s incentive is to get the growth outlook up, get the highest PE they can, get it on the market, and hit those numbers for 18 to 24 months because you’re legally on the hook for it. This can all work out, but in the past that scenario has often been one where you’re playing hot potato. It all looks good for a while, but at some point it peters out and that 50-times multiple turns out not to be the answer.
So I just feel like this fits a pattern where you’ve got to be pretty wary, and you’ve really got to believe.
Sonic Healthcare (ASX: SHL)
Anna Dadic:
Final stock for discussion is Sonic Healthcare. They’re dealing with a 23% share price drop this year. Hamish, what’s your play on this one?
Hamish FitzSimons: (HOLD)
We’re a hold, but we’re very interested. This is a business that does blood tests. And look, the world’s generally of the view that prevention is better than cure, so you do more blood tests. Having said that, it’s also a get-cheap-or-go-home type business because governments want the cost down as they do more of these things. So you’ve got this conflict between revenue and volume that’s playing out.
COVID hasn’t been their friend. Initially it was, with volume, but then they got hit on costs through inflation. There’s a lot going on, but this is a growth business over time. This is going to grow its earnings. There’s a lot of cash.
So we’re very interested. We’ve got to look at the price and the catalysts, but we’re on a hold. But you can tell we’re doing the work.
Julia Weng: (SELL)
We’re a sell on this one. I acknowledge that it also looks cheap. However, we worry about the regulatory backdrop, especially for Australia and Germany. So with a budget looming next week, we worry there are potentially further savings the government is looking to extract from the pathology sector.
At the same time, you still have quite high wage growth and cost imposts coming through. So we think the margin recovery story is still some way out, and we worry that consensus looks a little high. Germany faces similar issues, so the regulatory backdrop is a concern there too.
And I guess Sonic has had a track record of a lot of acquisitions, but it hasn’t had the free cash flow to demonstrate long-term value creation from those. So that’s what we want to see. It’s always had good revenue growth, but we really want to see the operating leverage and strong cash flow come through.
Guest Picks
Ansell (ASX: ANN)
Hamish FitzSimons:
Yeah, look, we’re once again doing a lot of work on Ansell. Their share price has come down a long way. The tricky thing about Ansell is they are a loser from spikes in energy prices. They’ve had tariffs on, tariffs off. The CEO and CFO have both resigned. There’s a lot going on here.
But I think a cleansing result from Ansell, where we get a clear look at how they’re actually running under the current environment, is going to be an interesting catalyst for that stock. So we’re not there yet, but we are looking at it very closely and looking forward to the new CEO and CFO putting their stamp on the business and telling us where we are in this turbulent time.
ARTRYA (ASX: AYA)
Julia Weng:
I’m going to go with Artrya. The code there is AYA. So Artrya is a medtech play. If you step back and look at where we think the future of healthcare is going, we think there will be a rotation from treatment and reactive care to more preventative diagnosis.
Artrya is an AI company — and we talk about AI a lot — but I think AI could play a big role in medtech. Artrya does coronary imaging. So if you went to a hospital at this point, it might take up to an hour and a lot of waiting time to get results back on detecting coronary blockages. With Artrya’s technology, you can get results back in 10 minutes and move straight through to the next best treatment.
What that does is free up a lot of capacity for doctors — and we know there’s a shortage of capacity everywhere around the world — while also delivering better patient outcomes, faster treatment, and greater accuracy. So we think it’s a win-win-win for everyone.
Artrya is at that stage of getting adoption from different hospitals in the US, and it’s also got a reimbursement code, so hospitals are not out of pocket for recommending and using it. We’re seeing good acceptance of it, and we do think it could be a structural grower for years to come.
