CSL’s headache has persisted this week. Pic: Getty Images
The ASX healthcare sector plunged 4.46% this week as CSL and Healius both lowered FY26 guidance
Biggest healthcare name CSL fell heavily as cut full year FY26 outlook and flagged multi-billion dollar impairment
EBR Systems secures a purchasing deal with one of the largest healthcare networks in the US HCA Healthcare
Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 27 years, gives his take on the ASX healthcare sector for the week.
It’s been, in the words of Morgans senior analyst Scott Power, another “shocking” week for the ASX healthcare sector, driven by big downgrades to heavyweight CSL (ASX:CSL) and pathology and imaging provider Healius (ASX:HLS).
At close on Friday, the ASX Health Care Index (ASX:XHJ) was an ugly -4.46% for the past five days, while the benchmark ASX 200 (ASX:XJO) was -0.79% for the same period.
CSL goes from defensive darling to uncertain heavyweight
Firstly, let’s unpack CSL which fell ~20% on Monday to $97 after hitting a nine-year low of $93.63 after it slashed its full year FY26 outlook and flagged a multi-billion dollar impairment.
Not so long ago, CSL was the stalwart of ASX healthcare and at times sat alongside Commonwealth Bank (ASX:CBA) as one of Australia’s largest listed companies — the classic “bottom drawer” stock investors were told to buy and forget.
Today, that once-reliable blue chip is looking a far paler blue as it continues to sink under sustained pressure.
CSL now forecasts revenue of ~US$15.2 billion, down 2% and a fall of 4% in NPATA to US$3.1bn in FY26, compared with prior expectations of 2–3% and 4–7% growth respectively.
The revision reflects major headwinds including a ~US$300 million impact from normalising inventory levels in the US immunoglobulin (Ig) channel, around US$200m pressure from lower pricing and value in China’s albumin market and ~US$150m from Middle East disruption.
Slower uptake of CSL’s gene therapy treatment for haemophilia B Hemgenix and increased competition in iron therapies is also putting pressure on the stock.
CSL also flagged around US$5bn in non-cash pre-tax impairments across FY26–FY27, largely tied to its iron and nephrology business CSL Vifor Pharma intangible assets and underutilised infrastructure.
It was enough to send the stock falling after a 12-month sharp sell-off following a series of disappointments, which has seen CSL’s share price almost halve in value and move well off its highs of ~$342 in February 2020.
In a research note following the downgrade analyst Derek Jellinek noted despite the weaker outlook, management continued to frame the issues as executional rather than structural.
He wrote management reported “green shoots” emerging including stabilising immunoglobulin market share trends, improving China albumin volumes, and continued momentum in preventative treatment for hereditary angioedema Andembry and Hemgenix.
CSL is also progressing its broader transformation agenda, with US$500–550m in cost savings targeted by FY28 through operational simplification, plasma efficiency improvements, and restructuring initiatives across CSL Behring and Vifor Pharma.
The separation of its global influenza vaccine arm Seqirus remains on track for July 2026, alongside an ongoing focus on balance sheet discipline and capital allocation improvements.
“While credibility has clearly been damaged and near-term visibility remains weak, we do not believe current industry conditions support the view that CSL’s core plasma franchise is structurally broken,” Jellinek wrote.
Like many brokers this week Morgans has slashed its target price for CSL. The broker maintains a buy rating but reduces its 12-month target price from $241.34 to $147.59.
Morgans slashes Healius target price on earnings downgrade
Healius has also materially downgraded FY26 earnings in a trading update and is now targeting underlying EBITDA of $259-$264m and EBIT of $30-$35m, below consensus expectations of $273m and $44m, respectively.
“The downgrade is notable given management’s commentary at the H1 FY26 result, where FY26 earnings were expected to be broadly in line with consensus and weighted toward H2 FY26 due to seasonality and timing of cost savings,” Jellinek wrote in a research note.
“While pathology cost control continues to improve and labour optimisation initiatives are gaining traction, weaker volumes, ongoing GP softness and mounting regulatory/funding pressures are offsetting operational progress.”
He noted Healius’s clinical trials business Agilex continues to perform relatively well, and the company had started a strategic review following unsolicited interest in the asset, which it acquired for ~$301 million in 2021.
“However, the extent to which value can be crystallised above the original high acquisition multiple remains uncertain given the business’ modest scale and inconsistent earnings trajectory,” Jellinek wrote.
“While a potential Agilex sale could provide balance sheet upside, the downgrade reinforces that sustainable margin recovery within core pathology remains elusive.”
Pathology volumes grew 1.2% in H1 FY26 but declined 0.4% across the 10 months to April, implying more than a -2% decline in H2 so far, with revenue growth similarly slowing to 2.4%, down from 3.5% in the first half.
“GP attendances remain weak, declining 1.0% over Jan-Mar-26, reflecting subdued primary care activity and ongoing impacts from Medicare changes to B12 and urine testing introduced in July 2025,” Jellinek wrote.
However, he noted cost control improved with costs increasing 1.1% over the 10-month period and labour costs only up 0.8% with labour optimisation initiatives delivering benefits with further efficiencies expected in 2H26.
“While execution is improving (eg tighter cost control, labour productivity gains), weaker volumes and structural funding pressures offset these benefits, delaying the path toward sustainable earnings leverage,” Jellinek wrote.
Morgans maintains a hold on Healius but has almost halved its 12-month target price to 41 cents from 80 cents.
EBR secures US contract as WiSE rollout gains momentum
EBR Systems (ASX:EBR) has inked a purchasing deal with one of the largest healthcare networks in the US HCA Healthcare, with 190 hospitals and ~2500 ambulatory sites across 19 states, marking a significant step in the commercial rollout of its WiSE CRT System.
EBR is currently active at two HCA Healthcare hospitals in Texas, including St David’s Medical Center in Austin and Medical City in Fort Worth, with the agreement set to simplify procurement pathways and support broader adoption of WiSE across the network.
WiSE is the only wireless cardiac pacing technology designed to deliver left ventricular stimulation without the need for leads, offering an alternative for patients unable to benefit from existing CRT options and was approved by the US Food and Drug Administration (FDA) in April 2025.
EBR also posted Q1 FY26 revenue at the top end of pre-released guidance at US$2.36m, reflecting continued momentum from the limited market release of WiSE.
Operating cash outflows totalled US$20.3m, impacted by annual bonus payments and payroll taxes, as well as charges tied to WiSE demo and testing units used for commercialisation and research.
The company finished the quarter with liquidity of US$33.5m, including US$6.6m in cash and US$24.3m in marketable securities.
WiSE implants jumped 128% quarter-on-quarter to 41 procedures in Q1, up from 18 in Q4, taking total implants across the pilot and limited market release to 71.
“While still early in the commercial rollout, the ongoing step-up in execution continues to increase our confidence in the pathway to scale through CY26,” Jellinek wrote in a research note.
Morgans maintains a buy on EBR and a 12-month target price of $2.86.
Power’s Powerplay: Morgans initiates coverage on Blinklab
Blinklab (ASX:BB1), which was founded in 2021 by neuroscientists at Princeton University, is Power’s pick for the week with the broker initiating coverage of the stock.
Blinklab has developed a smartphone-based diagnostic platform with two initial products — Dx1 for autism and Dx2 for ADHD — with potential to address other neurological conditions.
The company has completed multiple clinical studies supporting Dx1. In a pilot study involving 485 children across a clinically diverse population representing the full spectrum of developmental concerns, Dx1 achieved 83.7% sensitivity and 84.7% specificity relative to clinical reference diagnosis.
BB1 is now undertaking a pivotal US FDA 510(k) registrational program for DX1 in autism, enrolling a minimum of 528 children aged two to 11, with an FDA submission targeted by the end of CY26 and clearance expected in Q1 CY27.
“They’ve recently completed a $17.5m capital raising which comfortably funds its two clinical programs, ASD and ADHD, through to approval, which the company expects in FY27 and FY28 respectively,” Power said.
Power said the company had several other upcoming catalysts including:
Completion and analysis of the European ADHD dataset expected in Q2 CY26
Continued regulatory alignment for US and European pathways
Early engagement with clinicians, key opinion leaders, and potential commercial partner
Blinklab’s smartphone-based neuro diagnostic platform initially targets significant market opportunities in ASD and ADHD with the potential to address other neurological conditions,” Power said.
Morgans has a speculative buy rating and 12-month price target of $1.76 on Blinklab.
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Disclosures: Morgans Corporate was a joint lead manager to the recent Blinklab capital raise and has received fees in this regard. Scott Power owns shares in CSL, EBR Systems and Blinklab
The journalist held shares in CSL at the time of writing this article.