Ramsay Health Care (ASX:RHC) share price on watch after Q1 update

The Ramsay Health Care Limited (ASX:RHC) share price will be on watch today following the release of its first quarter update…
The post Ramsay Health Care (ASX:RHC) share price on watch after Q1 update appeared first on Motley Fool Australia. –

The Ramsay Health Care Limited (ASX: RHC) share price will be on watch this morning following the release of an announcement.

What did Ramsay announce?

In response to the ongoing impact of the COVID-19 pandemic on its operations, this morning Ramsay provided an update on trading across the business during the first quarter of FY 2021.

Ramsay’s Managing Director and CEO Craig McNally, commented: “Ramsay’s operating results continued to be impacted by the COVID-19 pandemic in 1Q FY’21. Surgical restrictions, regional outbreaks and lower demand for some services, combined with higher costs associated with operating in the current environment, have all impacted the results.”

How are its businesses performing?

According to the release, Ramsay Australia reported a 1.5% increase in total revenue during the first quarter. This reflects a 1.7% increase in surgical admissions and lower non-surgical activity.

A major drag on its performance was its Victorian operations. Excluding Victoria, total Australian revenue was up 6.6% and surgical admissions rose 8% over the prior corresponding period.

These operations also weighed heavily on Ramsay Australia’s earnings before interest, taxes, depreciation, amortisation and restructuring or rent costs (EBITDAR), which was lower than the prior corresponding period.

Management notes that this was due to restricted surgical activity in Victoria, increased costs, and reduced procurement benefits as a result of operating in a COVID safe environment. Also weighing on its performance was a negative mix impact from the decrease in medical, mental health, and rehabilitation case volumes.

The Ramsay Santé business saw an increase in surgical activity in the first quarter. Management revealed that volumes increased 5.4% over the prior corresponding period in France as clinicians sought to reduce the backlog of surgeries created by the first COVID-19 lockdown.

The Nordic region also reported growth in surgical volumes in recent months. Though, demand for other services has been below the prior period due to the impact of COVID-19.

After a slow start to FY 2021, the company revealed that its Ramsay UK business has experienced a recovery in private work in recent months. This is being driven by private health insurers and clinicians moving to reduce the surgical wait lists, and a recovery in demand for other services such as oncology flowing from the public system.

Nevertheless, total Ramsay UK revenue for the first quarter was down 9.9% on the prior corresponding period in local currency.

Finally, over in Asia the company revealed that movement control orders have impacted patient volumes. One positive, though, is that its diagnostic pathology services in Indonesia and Malaysia have benefitted from an increase in COVID-19 PCR testing as a result of a second wave in both countries.


Mr McNally warned that the near term will be tough for Ramsay but he remains very positive on its long term outlook.

He said: “Given the near-term uncertainties in the market, we are not in a position to provide guidance for FY’21. Notwithstanding the current environment, over the medium to long term the health care industry fundamentals remain positive.”

“Ramsay is well positioned to capitalise on the shifting industry dynamics in each of our key markets. Following the recent equity raising, the Company has a strong balance sheet to support new opportunities as they arise,” concluded Mr McNally.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Ramsay Health Care (ASX:RHC) share price on watch after Q1 update appeared first on Motley Fool Australia.

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