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Ramsay Health Care Posts Strong Results; Targets 12-14% Profit Growth

Ramsay Health Care Posts Strong Results; Targets 12-14% Profit Growth
Aug 27, 2015 By Imran Valibhoy

Australia’s largest private hospital operator Ramsay Health Care (ASX:RHC) posted strong full year results lifting core net profit by 19%. As of 30 June 2015 Ramsay health Care has expanded its hospital portfolio to 212 hospitals across five countries with approximately three million patients per annum.

Ramsay’s preferred way of reporting, core net profit after tax, rose 19% to $412.1m compared to last year’s results (FY14: $346.2m). Core earnings per share (EPS) increased by 20% to 196.6 cents.

Revenue in Australia and Asia rose modestly to $4.1bn, up 8.2% and EBIT of $521.4m. The star performer however was France which saw a 441% jump in revenue to Euro 1.75bn.

The strong performance enables management to increase the full year dividend by 18.8% to 101 cents. At the current price of ~$63.60, the distribution yields around 1.5%. Investors felt upbeat about Ramsay’s results and lifted the share price by more than 5% in early trade on Thursday (as of 11:30am AEST). RHC’s 12 months return is 22.5% as of today.

Ramsay’s Managing Director Christopher Rex calls the results a ‘strong financial performance’ and comments: “We have successfully developed a global portfolio of hospitals, strategically located to meet the growing demands and health care needs of the communities they serve and operated cost efficiently and according to The Ramsay Way philosophy of people caring for people.” The acquisition of Generale de Sante in France has enabled the company to be one of the leading hospital providers in France, which the company believes provides additional growth opportunities.

Ramsay’s UK operations have develivered strong results too with double-digit growth and a strong operating margin.

Outlook: Ramsay targets 12-14% EPS growth

Management is positive about Ramsay’s growth strategy and believes it will yield further benefits for both the company and shareholders. Investors will also pay close attention to the company’s statement that it “will continue to canvas opportunities in new and existing markets’ by ‘utilising our global experience in new and existing markets’. In plain English, Managing Director Mr. Rex is saying that Ramsay aims to acquire new hospitals and potentially expand into new geographical markets. The company is targeting Core EPS growth of 12-14% for FY16.

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Imran Valibhoy Author: Imran Valibhoy Aug 27, 2015

Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.

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