Ramsay Health Care shares dive on mixed earnings
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More news: Ramsay Health Care shares dived in morning trading after mixed full-year result and "subdued" outlook failed to impress analysts.
Shares were down 7.6% to $41.17 by 11:45am AEST.
RBC Capital Markets analyst Craig Wong-Pan noted that while the NPAT result was pre-guided at a recent trading update, Ramsay's revenue and underlying EBITDA was in line with consensus expectations, with EBIT 4% below average estimates.
Divisionally, Wong-Pan said the Asia Pacific result edged out RBC's forecasts but earnings came in below consensus. The UK was broadly in line with expectations, while Europe missed EBIT forecasts.
RBC hd an 'outperform' rating on the stock with a price target of $61.
UBS analysts expect Ramsay's lower activity growth guide to "lead to some questions", with reimbursement headwinds still a problem for the company. UBS had a 'neutral' rating on the stock with a price target of $44.56.
Jarden analysts noted that Ramsay's outlook is "pretty subdued" with consensus looking more optimistic. Jarden had a 'neural' rating on the stock with a price target of $54.47.
What they said: "Encouragingly, top line growing in line with our expectations but cold comfort in light of margin pressure," Jarden analysts said. "Stock expected to trade weaker in response to composition of result."
Ramsay Health Care tops profit guidance, beats estimates
The news: Hospital operator Ramsay Health Care topped analysts' estimates after nearly tripling full-year profit in the 2024 financial year.
The numbers: Ramsay reported net profit after tax of $888.7 million, up from $298.1 million in FY23, and ahead of average forecasts of $825 million, according to Visible Alpha data. The result came in at the top of the company's guidance range of $884 million to $889 million.
Profit from continuing operations lowered 2.7% year on year $270.6 million, above its guidance range of $265 million to $270 million, but short of consensus estimates of $295.2 million. Total revenue lifted 9.4% to $16.8 million while EBITDAR grew 5.9% to $2.3 billion.
Ramsay declared a final dividend of 40 cents per share, up from 25 cents in the second half of last year, and in line with expectations. Its full-year dividend totalled 80 cents, up from 75 cents a year ago.
The context: Ramsay said the result was boosted by growing patient activity and productivity improvement programs across all its regions. The group noted that it has made progress with private sector payors on tariff indexation, though tariffs from payors "remain out of touch with cost inflation".
The bottom line result also reflects the $618 million cash profit from the sale of Ramsay's Asian joint venture Ramsay Sime Darby.
Meanwhile, a slowdown in margin recovery was driven by "significant cost inflation" impacting the private hospital industry over the last few years, the company said. Wage inflation exceeding expectations "remains a critical task" it noted.
What they said: "Patient activity is forecast to grow in FY25, albeit the rate of growth is expected to be slower than in FY24," said Ramsay's CEO and managing director Craig McNally.
"We expect NPAT from continuing operations to increase," he said. "Margin recovery will be impacted by further investment in business enablement, particularly in digital and data programs in Australia, and the ongoing gap between wage inflation and tariff indexation most notably in the UK and Europe.
The sources: ASX announcement, UBS research, Jarden research, RBC Capital Markets research
