Ramsay Health Care Full Year Result: RHC posts solid result but FY18 forecast underwhelmed

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Ramsay Health Care (RHC) has reported a 12.7% lift in Core Net Profit after Tax of $542.7 million, while posting a weaker than expected $488.9 million full-year net profit for the 2017 financial year.

 Ramsay’s result was supported by growth in admissions and medical procedures especially in Australia with operational efficiencies across the group also contributing to the result.

 Ramsay’s Australian unit saw revenue increase by 7% to $4.7 billion while earnings grew by 13.6% to $649.6 million. This was helped by margin improvements after renegotiation of the majority of Ramsay’s Australian hospital funding arrangements over the year and higher admission rates. Operations and admissions are continuing to trend up, as expected, with an ageing and growing population.

 Ramsay’s Asian unit with its Malaysian and Indonesian facilities (part of a joint venture with Sime Darby), saw net profits lifting by 31.9% to $13.1 million.

 In France, Ramsay Generale de Sante (RGdS) generated an increase in revenue up 0.3% and earnings before interest, taxes, depreciation, amortization and rent/restructuring costs (EBITDAR) up slightly to €448.3 million. French growth was held back by a reduction in tariffs. Ramsay’s UK revenue lifted by 4.6% while EBITDAR increased 1.7% to £113.9 million. The European business are continuing to focus on achieving volume growth and controlling costs, with UK agency nurse costs well controlled in the second half of 2017.

 The Ramsay pharmacy franchise network is expanding and is on track to total 55 retail pharmacies once current contracts are completed and its 24/7 in hospital service growing.

 Ramsay said it has a continual pipeline of development opportunities “Based on operating conditions in each of our core markets, continued successful execution of our strategy, barring unforeseen circumstances, is targeting Core EPS growth of 8% to 10% for FY18.” After EPS growth of 13% in 2017.

 Ramsay announced a final fully franked dividend of $0.815 to be paid out on the 28th of September 2017.

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