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Ramsay Health Care  FY21 Result – Sound result but continued impact from COVID

Timothy Anderson

Timothy Anderson is a contributor with the Australian Stock Report and is currently in his final year of studying a Bachelor of Applied Economics and a Bachelor of International Relations and Politics at the University of Canberra. Tim has a genuine passion for economics, specifically in macroeconomic analysis including how certain macroeconomic policies and indicators affect financial markets and the economy, as well as how these factors affect personal investment strategies. Tim currently holds RG146 Tier 1 Generic Knowledge qualifications.

Ramsey Health Care Ltd (ASX: RHC) is a global health care company mainly operating private hospitals. Ramsay has 480 facilities across 11 countries, which makes them one of the largest hospital health care companies globally. Ramsay’s main markets are Australia, the United Kingdom and Continental Europe. Its market capitalisation is around A$15.4 billion.

 

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What are the key features of Ramsey Health Care’s profit result?

Ramsey Health Care reported statutory net profit to owners for FY21 of $449 million, up 58.1% from FY21. Revenue from patients and other revenue for FY21 was $12,435 million, up 3.9% from FY21. The final dividend per share for FY21 is A103 cents per share, which brings the full year dividend per share of A151.5 cents per share. Earnings per share for FY21 was A192.6, up 47.6% from FY21.

Regarding Ramsey Health Care’s individual region operations, Australia reported revenue of $5,430 million, up 7.8% from FY21, driven by strong growth in surgical admissions. UK reported patient revenue of $606.5 million, down 21.3% from FY21. Revenue from government agreements for FY21 was $417.6 million, resulting in total revenue increasing by 10.2%. Europe reported patient revenue of $6,399 million, up 4% from FY21. Revenue from government agreements for FY21 was $428.3 million, resulting in total revenue increasing 6.9%. UK and Europe are continually to be negatively impacted by COVID, but government agreements are partly offsetting this impact.

 

What is the outlook for Ramsey Health Care?

Management did not provide any profit guidance for FY22. However, management did not that FY22 will be impacted by the effectiveness of the world’s ongoing response to COVID and the success of global vaccination programs. If further lockdowns persist in FY22, this can be expected to impact revenue.

It is important to note that the COVID-19 impact on Ramsey Health Care should only be temporary. Once a vaccine is globally distributed or the pandemic is under control in Ramsey’s markets, operations should continue as they did prior to the COVID pandemic.  

 

What is the market reaction to Ramsey Health Care’s profit result?

The market reaction to Ramsey’s profit result is positive with the share price up around 1.5% to A$67.55 while the market is up down by 0.4% (26 August 2021). This suggests that Ramsey’s FY21 result is better than market expectations. Ramsey trades on a forward P/E ratio in the low-thirties and has a dividend yield of around 1.3% (fully franked).


Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purposes only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceedings. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.
ASR has no position in any of the stocks mentioned.

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