Will Ramsay Health Care's (ASX: RHC) earnings recovery gather momentum in FY24?

Highlights

• Ramsay Health Care reported 10.9% annual growth in its revenue to AUD 11.24 billion for the nine months ended 31 March 2023
• As per the company, the revenue growth was primarily because of a growth in surgical admissions, recovery in non-surgical admissions
• For the first nine months of FY23, RHC's net profit registered a growth of 16.6% at AUD 235.1 million compared to AUD 201.6 million in the year-ago period

Ramsay Health Care Limited (ASX:RHC), which owns and operates private hospitals, primary care clinics in Australia and other different countries, is gradually witnessing an earnings recovery. For the nine months ended 31 March 2023, the company reported a 10.9% annual growth in its revenue to AUD 11.24 billion. In the corresponding period of the previous fiscal, RHC's revenue stood at AUD 10.13 billion.

As per the company, the revenue growth was primarily because of a growth in surgical admissions, recovery in non-surgical admissions and contribution from Elysium Healthcare and acquisitions in Europe, including GHP.

For the first nine months of FY23, RHC's net profit registered a growth of 16.6% at AUD 235.1 million compared to AUD 201.6 million in the year-ago period. The company said that top-line growth in Australia and Ramsay UK contributed to the above net profit growth.

Recent Update

Last month on 28 June, the company announced that it is trying to sell its Asian joint venture, Ramsay Sime Darby Health Care (RSD), in which it holds a 50% stake. The decision was taken after the company received multiple interests in "RSD at values that are in shareholders' interests to explore."

Outlook

The healthcare service provider expects a gradual recovery in earnings through FY23 and more normalised conditions from FY24 onwards. It focuses on driving synergies, realising growth opportunities, and improving returns. Regarding dividend payout, RHC targets a payout range of 60-70% of statutory net profit.

RHC Share Price Performance

RHC shares closed 0.67% higher at AUD 55.580 on Tuesday (11 July 2023). In the last one year, the stock has declined by 21.64%, and on a year-to-date basis, it is down by nearly 14%. The stock hit its 52-week low of AUD 54.10 last month on 23 June. Its 52-week high of AUD 73.980 was seen on 18 Aug 2022. At today's closing price, RHC shares are 2.74% higher than its 52-week low and 24.87% lower than its 52-week high.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, and currency, is 11 July 2023. The reference data in this report has been partly sourced from REFINITIV. 

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