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$15.2 billion.

What are the key features of Ramsey Health Care FY20 result?

Ramsey Health Care FY20 revenue is $12.4 billion, up 7.3% from FY19. Core net profit after tax for FY20 is $336.9 million, down 43% from FY19. Core earnings per share for FY20 is 155.9 cents, down 44.5% from FY19. Ramsey Health Care will not pay a final dividend for FY20.

Regarding Ramsey’s regional performance, Australia/Asia Earnings before interest, taxes, depreciation and amortization (EBITDA) is down 7%. Ramsey Health Care Australia during February was on track to meet FY20 guidance. However, in March, the Australian government-imposed restrictions on elective surgeries due to COVID-19 concerns, which impacted the EBITDA result. Ramsey Health Care Asia was impacted by government imposed COVID-19 restrictions that impacted patient volumes. Ramsey Health Care United Kingdom EBITDA is down 10.6%, this result was heavily impacted by COVID-19 from March 2020. Continental Europe EBITDA is up 8.5%. This was mainly attributed to the strong performance in 1H20. On a positive note for the second half of the year, the French government decreed a revenue guarantee for private hospitals.

Ramsey Health Care HY20 result showed that the company was on track to meet FY20 guidance. However, the COVID-19 pandemic significantly impacted the company’s FY20 result. Apart from continental Europe, the negative impact of COVID-19 in 2H20 was greater than the positive result in 1H20.

Ramsey Health Care has a sound balance sheet with a Group Consolidation Leverage Ratio of 2.0x. This was reduced from 3.1x due to the company’s equity raising during 2H20. Ramsey Health Care raised $1.5 billion in March 2020 that should allow the company to have a strong enough balance sheet to navigate the rest of the pandemic. Ramsey Health Care has available debt capacity and cash headroom of around $3.0 billion.

What is the outlook for Ramsey Health Care?

Ramsey Health Care’s management noted that the company cannot provide FY21 guidance at this time. This is due to the ongoing impact and uncertainty of COVID-19 in the company’s operating markets.

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-19 pandemic.

What is the market’s reaction?

The market reaction to Ramsey Health Care’s is broadly neutral. Ramsey Health Care’s share price is up around 0.8% and is currently trading at A$66.14. Ramsey Health Care is trading at a forward P/E ratio in the high-thirties and has an annual dividend yield of around 1.6%.

 


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August 27, 2020