Opportunities Amid Crisis: Ramsay Health Care, Playing Critical Role in Response to COVID-19

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Opportunities Amid Crisis: Ramsay Health Care, Playing Critical Role in Response to COVID-19

 Opportunities Amid Crisis: Ramsay Health Care, Playing Critical Role in Response to COVID-19

COVID-19 is a public health crisis, with staggering casualties and human suffering beyond words. The unprecedented crisis is being considered as the Great Virus Crisis (GVC). With more than 4.6 million confirmed cases and over 312k deaths so far, according to WHO as on 18 May 2020, the turmoil remains to haunt the world with its fast pace growth day by day.

During these unprecedent times when several health care sector players have geared up to find treatment or vaccine for combating this deadly virus, some sector players are playing a key role in supplementing the broader public health response to COVID-19, targeted towards delivering the best care and treatment to patients.

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In this article, we will acquaint you with ASX-listed health care player, Ramsay Health Care, which is a global health operator, making a positive contribution to patients within all of its communities while remaining actively involved in the global response to the COVID-19 pandemic.

About Ramsay Health Care Limited (ASX:RHC)

Australia-based RHC is one of the largest and most diverse private health care players across the world, engaged in delivering services with high quality, patient care that is outstanding, along with hospital management. The Company caters to 11 countries from its 480 facilities with primary and acute health care services.

Behind the success of the Company is its delivery of superior quality outcomes for patients and focus on relationships with doctors as well as other staff.

RHC remains focused and committed towards its strategy to continue creating shareholder value-

Partnership with Governments- Ramsay is continuously working on making its facilities and capabilities available to support public health systems in the global response to the ongoing turmoil and in return, governments are contributing to the overall viability of the sector, including Ramsay, through legislative or contractual support. This is aimed to make sure that the private hospital sector emerges from the COVID-19 pandemic with operations substantially intact and positioned to provide support for deferred elective surgeries.

Ramsay Health Care has entered a partnership with the governments of Australia, United Kingdom and France.

  • In Australia, duration of the agreement is subject to finalisation of negotiations, likely to cover the period of COVID-19 disruptions but may vary by state.
  • In the UK, the agreement is for a minimum period of fourteen weeks (starting from 23 March 2020) and continues on a rolling basis.
  • In France, the arrangements are anticipated to stay in place until the end of the calendar year 2020.

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Agreement with NHS England Finalised

Ramsay Health Care, on 18 May 2020, confirmed to have finalised an agreement with NHS England to make its facilities and services available to the NHS and its patients during the pandemic.

As formerly announced, Ramsay UK started discussions with NHS England in mid-March 2020 and has been providing much desirable capacity as well as services since 23 March 2020.

The tenure of the complete agreement is for a minimum of fourteen weeks from 23 March 2020, and then on a regular basis terminable by NHS England on one-month prior notice. For its services, the Company will receive cost recovery covering overheads, operating costs and use of assets. Moreover, it will be entitled to interest less a deduction for providing any urgent elective care.

Agreement with Western Australia Executed

Ramsay also confirmed to have finalised a comprehensive agreement with the state government of Western Australia to make available its facilities and services during the COVID-19 crisis with the term starting from 31 March 2020. The duration of this agreement would end on the date notified by Western Australia.

For the commitment to provide complete workforce capacity at its facilities, RHC would receive net recoverable expenses for services it will provide.

Excluding interest and debt servicing costs, recoverable costs will cover corporate overhead costs, services costs, direct operating costs, etc.

NSW Binding Heads of Agreement

On 15 May 2020, the Company announced to have entered into a Binding Heads of Agreement with the NSW Ministry of Health, providing certain crisis support functions as per the request of NSW Health while making available its services and facilities amid the coronavirus outbreak.

The non-binding terms, applicable since 31 March 2020, have also been replaced with the Binding Heads of this Agreement.

The Company disclosed that the initial period might be extended by NSW Health by notice given at any time for an additional period of up to one year after the original expiry date for the purpose of NSW Health obtaining public patient services from Ramsay.

With this commitment to support NSW Health during the crisis, in return, RHC will be made a viability payment throughout the initial period in respect of its performance of required pandemic support functions together with payments for health services to public patients referred by NSW Health.

The Company mentioned that, in time, it is expected that the Binding Heads of Agreement would be replaced by a comprehensive agreement.

Finalisation of Queensland Agreement

In early May 2020, Ramsay also confirmed to have finalised a comprehensive agreement with the State of Queensland for providing its facilities and services during the coronavirus outbreak.

The Company is working towards executing deals with other state governments to provide its services and make available its facilities for the ongoing treatment of public patients amid the COVID-19 crisis.

All these agreements with state and federal governments highlight the critical importance of Ramsay’s hospitals to the overall health care system during the current pandemic.

Stock Performance - RHC stock was trading upward by 1.513% from its previous close to $67.090 on 19 May 2020 (AEST 12:23 PM). The Company has a market capitalisation of $14.77 billion and approximately 223.51 million outstanding shares, with its stock delivering a negative return of 16.26% in the last three months. Its annual dividend yield stood at 2.33%.

NOTE: Currency is reported in Australian Dollars unless stated otherwise.


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