Ramsay Health Care (RHC) SNAPSHOT
Profile: Ramsay Health Care Limited (RHC) is a private hospital provider headquartered in Australia with hospitals in central Europe, the United Kingdom, Asia and Australia. Its facilities include hospitals, day surgery centres, treatment facilities, rehabilitation & psychiatric units and a nursing college.
History: RHC was established in 1964 by Paul Ramsay AO, when he purchased a guesthouse in Sydney and converted it to a psychiatric hospital. Over the next 14 years RHC expanded its psychiatric hospital business. In 1978, RHC diversified into its first medical/surgical hospital. In 1997, RHC listed on the ASX and in 2007, RHC expanded offshore by acquiring Capio UK. In 2010, RHC purchased a 57% interest in Groupe Proclif SAS in France and has continued to make various acquisitions across Europe and Asia. In November 2018, RHC’s 52.5%-owned subsidiary RGdS closed its offer for Capio AB at a value of $1.3bn.
Earnings composition: In FY19, the Asia-Pacific segment generated Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of $970m (61%). The France segment reported $476m (30%), the UK segment $90m (6%) and the Nordics segment contributed $56m (3%).
Most recent result – FY19: Group EBITDA increased 14% on the prior corresponding period (pcp) to $1.6bn. Excluding the recent Capio acquisition, EBITDA increased 6.5%. The new acquisition contributed c.$100m in EBITDA during FY19. However, the acquisition was slightly earnings dilutive in FY19, with underlying EPS up 2.7% on the pcp to $2.87 excluding Capio and up 2.1% on the pcp to $2.86 including Capio. EBITDA grew 6.3% on the pcp to $970m in the Asia-Pacific segment, which is predominately driven by RHC’s Australian Business. The growth was aided by above industry private admissions growth. RHC reported material volume growth in specialty areas, including cardiac services, cancer care and mental health. A dividend of A$0.92 was declared, bringing total dividends in FY19 to A$1.52, up from A$1.44 in the pcp.
Company outlook: RHC is targeting EPS growth of 2-4% on a life-for-like basis. EPS growth is expected to be -4% to -6% including the impacts of the new AASB16 account standard. This is based on an EBITDAR growth target of 8-10%.
Important dates: Ex-dividend date is 5 September 2019. Payment date is 30 September 2019. AGM is scheduled for 14 November 2019.
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