Ramsay Health Care shares jump as results beat expectations
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More news: Ramsay Health Care shares were up 6.08% to $54.30 by 12:49pm AEDT, after the company posted mixed earnings results.
What they said: Jarden analysts said while there was ongoing margin pressure in Australia, the segment’s top line was slowly improving.
“UK was the big surprise with good revenue and strong margin beating estimates whilst Ramsay Sante missed at the EBIT line by about 3% due to depreciation and amortisation,” they said.
“In overall terms, the result was weak versus the prior corresponding period, as anticipated, but it did beat our expectation by 9% on net profit after tax.”
Ramsay cuts dividend as inflation hits healthcare sector
The news: Ramsay Health Care reported mixed results for the half to December 2023, as the private hospital operator saw patient revenue growth offset by high inflation across the sector.
The numbers: Profit after tax from continuing operations fell 23% to $140.4 million compared to the prior corresponding period. However, the sale of its Asian joint venture Ramsay Sime Darby in December delivered a net profit after tax of $618 million, taking total NPAT up 290% to $758.5 million. The sale also brought Ramsay's funding group leverage within its target range at 2.28 times.
Meanwhile, total revenue grew 10.5% to $8.16 billion, and EBITDAR rose 3.6% to $1.12 billion.
Ramsay cut its interim dividend to 40 cents per share, down from 50 cents per share a year earlier.
The context: The company credited higher tariffs and increased activity levels with driving patient revenue growth.
However, CEO and managing director Craig McNally noted the rate of margin recovery for the group continues to be impacted by high inflation in the healthcare sector, particularly in relation to wages and medical consumables. McNally said that "there is still a way to go" to ensure long-term industry sustainability, with many hospital operators losing money, closing or reducing services in the regions where Ramsay operates.
Elsewhere, Ramsay's increased investment in digital and data impacted margins, but the company said it expects its transformation programs to drive sustainable top line growth, improvements in productivity and operational efficiencies going forward.
What they said: "Excluding proceeds from teh sale of Ramsay Sime Darby, we continue to expect growth in earnings in FY24. This will be weighted to the second half, primarily due to the return of seasonality in our European earnings which have been smoothed by government support over the last few years," McNally said.
The source: ASX announcement
