Share in Sonic Healthcare Ltd plummeted 19.33% to $10.18 at midday, following an announcement downgrading its 2010 profit guidance.

Sonic Healthcare warned yesterday that the company is likely to fall short of its guidance for the 2010 financial year due to an unexpected and temporary impact on Australian pathology revenues.

Sonic said the revenue shortfall resulted from Government cuts to Australian Medicare fees for pathology services, effective November 2009. The company also lost market share in Queensland and suffered from a nationwide fall in pathology volumes.

"A contributing factor to Sonic's current position is the lower than expected revenue growth of its Australian radiology division. The anticipated benefit from recent Medicare fee increases has been offset by lower average fees and increased competition from bulk-billing competitors, including State government subsidised public hospital radiology operations, "said Sonic Healthcare in a statement to the ASX.

Sonic Healthcare CEO, Dr Colin Goldschmidt said, "The issues impacting our full-year guidance are confined to our Australian operations only and reflect industry destabilisation flowing from Government interventions in billing arrangements. I wish to emphasise that Sonic Healthcare remains in a strong and healthy position across all key operating regions and businesses."

According to Sonic Healthcare, with two months' trading still to follow, Sonic's net profit for FY 2010 is now estimated between $290-295 million, slightly exceeding the prior year's profit on a constant currency basis. It expects to achieve 10-15 per cent earning growth for FY 2011.