Ramsay Health Care Forecasts Higher Net Profit From Continuing Operations

By David Winning

SYDNEY--Private hospital operator Ramsay Health Care said it expects to increase its net profit this year when the sale of its Asian joint venture is excluded, but that it continues to face headwinds in major markets.

Ramsay reported a net profit of 888.7 million Australian dollars (US$604.1 million) in the 12 months through June, which included a A$618 million gain on sale of the Ramsay Sime Darby venture. That was consistent with a forecast provided to investors earlier this month for a profit between A$884 million and A$889 million.

When measured against only the operations that it continues to own, Ramsay said its annual net profit totaled A$270.6 million. That was lower than a comparable profit of A$278.2 million achieved in the 2023 fiscal year.

Directors of the company declared a final dividend of 40 Australian cents a share, up from a payout of 25 cents a year earlier.

With the broad outlines of Ramsay's fiscal 2024 result already known, investor attention is focused on the prospects for a business that played a key role in the healthcare sector's response to Covid-19 and which then felt the sting of inflation and shortages of clinical professionals in the pandemic's aftermath.

"We have made some progress with private sector payors on tariff indexation, however tariffs from payors remain out of touch with cost inflation," Chief Executive Craig McNally said on Friday.

Tariff outcomes for the U.K. and France from the start of April and March, respectively, were well below recent inflation levels, he said, which makes earnings growth in both markets challenging in the current fiscal year.

"Patient activity is forecast to grow in FY 2025, albeit the rate of growth is expected to be slower than in FY 2024," McNally said. "We expect net profit from continuing operations to increase."

Ramsay is already plotting its path under new leadership with McNally intending to retire as CEO at the end of June. His successor, Natalie Davis, is due to join the company at the start of October and become CEO later this year.

Ramsay last year said it would put more emphasis on investing in digital and data platforms in Australia to support growth and make its business more efficient. When 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 david.winning@wsj.com

(END) Dow Jones Newswires

August 29, 2024 18:48 ET (22:48 GMT)

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