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Healthcare sector giant, Ramsay Healthcare Limited (ASX:RHC) witnesses the bullish market trends after the company announced higher Core Net Profit After Tax of $290.8 million for the half-year ended 31 December 2018, up 1.0% on the previous corresponding period. The stock price has gone up by 5.96% to trade at $64.820 on 28 February 2019 (1:44 PM AEST).
As per Ramsayâs interim report, the Groupâs total operating revenue has jumped by 16.3% to $5,168.7 million in 1HFY19 including the contribution from recently acquired Swedish healthcare company, Capio. The management informed that the acquisition of Capio contributed to RGdS, Ramsay Générale de Santé, from 7 November 2018 which resulted in an increased revenue, up 25.7%, and EBITDAR, up 19.1%, performance in the Europe division.
Ramsay Health Care Managing Director Craig McNally stated that the Group is well on track to meet the expectations it has posted earlier for Fiscal 2019.
On the geographical front, Australia region has delivered modest growth after the Continental Europe that was benefitted from Capio acquisition. Australiaâs strong focus on operational efficiencies resulted in a 5.7% growth in overall EBITDA compared to the previous corresponding period. The volume growth and investment in new and innovative services like clinical cancer trials and out-of-hospital services have been the key pillars of the company to accelerate growth in Australia.
But in the United Kingdom, Ramsay had to struggle in the first quarter of 1HFY19, impacting the overall earnings of the half year as its EBITDAR plunged by 9.2% to £44.8 million compared to 1HFY18. However, the Group has confirmed steady recovery as seen in Q2 1HFY19 on the back of NHS volume growth.
The strategy of private hospital operator, Ramsay, is based upon its ambition to become a global health care operator. Its core focus is on introducing new and innovative services in healthcare space including cancer clinical trials and healthcare provisions relating to out-of-hospital services like the pharmacy.
Mr McNally stated that Ramsay now sits at the market leading positions in France, Australia, and Scandinavia, which strengthens the group to achieve best practice, improved economies of scale, cost leadership, innovation and speed to market.
On the back of growing business, the Board declared an interim dividend of 60.0 cents per share, fully franked, for the half year ended 31 December 2018. This reflects an increase of 4.3% on the previous corresponding period. The Groupâs Core EPS was 140.6 cents in 1HFY19, a rise of 1.2% on the 139.0 cents as in 1HFY18.
Outlook:
For Fiscal 2019, the Group reaffirmed its Core EPS growth of up to 2% including Capio. In Australia, the Group commits to maintaining the provision of high-quality services along with its diversified portfolio. But it also eyes challenges in the private sector for the short term.
Following the recent tariff hike in France, Ramsay expects an increase in UK tariff by 1 April 2019, giving an upward push to the sector. In UK division, the Group confirmed the positive signs emerging in terms of both price and volume growth, despite foreseeing the short-term challenges ahead of Brexit. Moreover, the UK government has renewed commitment to patient choice and use of independent providers to cut waiting times.
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