Ramsay Health Care forecasts higher net profit from continuing operations

By David Winning

SYDNEY — Private hospital operator Ramsay Health Care said it expected its net profit to rise this year after excluding the sale of its Asian joint venture, but it still faces headwinds in major markets.

Ramsay reported net profit of A$888.7 million ($604.1 million) in the 12 months to June, which included a gain of A$618 million from the sale of the Ramsay Sime Darby business. That was in line with a forecast given to investors earlier this month for profit of A$884 million to A$889 million.

When measured solely against the operations it still owns, Ramsay said its annual net profit totalled A$270.6 million. This was lower than the comparable profit of A$278.2 million achieved in fiscal 2023.

The company’s directors announced a final dividend of 40 Australian cents per share, up from a payout of 25 cents a year earlier.

With the broad outline of Ramsay’s fiscal 2024 financial results now in sight, investors’ attention is now focused on the prospects for a company that played a key role in the healthcare sector’s response to Covid-19 and then suffered the effects of inflation and clinical staff shortages in the wake of the pandemic.

“We have made some progress working with private sector payers on rate indexation, but payer rates still do not reflect cost inflation,” CEO Craig McNally said Friday.

Tariff results for the UK and France in early April and March respectively were well below recent inflation levels, making earnings growth in both markets a challenge in the current fiscal year, he added.

“Patient activity is projected to increase in fiscal 2025, although the pace of growth is expected to be slower than in fiscal 2024,” McNally said. “We expect net income from continuing operations to increase.”

Ramsay is already planning his path under new management, and McNally is set to retire as CEO at the end of June. His successor, Natalie Davis, is expected to join the company in early October and become CEO later this year.

Ramsay said last year it would place a greater emphasis on investing in digital and data platforms in Australia to support growth and improve the efficiency of its business. In announcing the appointment of Davis, a former head of Woolworths Supermarkets in Australia, Ramsay touted her data-driven understanding of customer needs and focus on digital innovation.

Write to David Winning at [email protected]

(END) Dow Jones Newswires

August 29, 2024, 6:48 PM ET (10:48 PM GMT)