Private hospital and healthcare company, Ramsay Health Care [ASX:RHC], saw trading conditions improve in 1Q23, ‘reflecting the decline in COVID cases in the community.’
RHC shares were up 5% late on Friday, trending higher along with most of the ASX, which was buoyed by a strong rally on Wall Street following better-than-expected CPI inflation data in the US.
RHC shares are down 20% in the past six months.
Ramsay Health’s 1Q23 Business Update
The healthcare service operator has today alerted the public that as COVID cases declined in the quarter, business conditions improved along with profit.
Ramsay said the financial impact of COVID in Australia and the UK fell from $44 million in July to $5.9 million in September.
But while COVID-related costs waned, inflationary costs rose.
RHC said it is negotiating better terms with payors to ‘reflect higher staffing costs related to labour shortages and inflationary pressures more generally.’
The group’s financial highlights to the end of September were provided as unaudited results:
- Total revenue is up 6.7% YoY to $3,445.4 million.
- EBITDA dropped by 2.3%, from $420.3 million to $410.6 million
- EBIT declined 12.9% from $197.4 million to $171.9 million.
- Profit before tax also declined 24.3% from $107.2 million to $81.1 million.
- In the Asia Pacific region, revenue increased 3.6% from $1,372.7 million to $1,422.5 million, and EBITDA went up 1.3% from $196.0 million to $198.6 million.
- Revenue also went up 5% in the UK, from $139.7 million to $146.7 million.
While RHC reported a significant improvement post-pandemic, the company warned it expects continuing impacts from community cases and restrictions in the near term.
While the group has already invested around $2.7 billion over the past two fiscal years, the group intends to fast-track further investments in digital and data strategies.
RHC believes it is in a good position to harness ‘positive long-term dynamics’ in the health sector and anticipates normalised conditions for FY24:
‘Underlying earnings growth for the remainder of FY23 will benefit from the additional capacity created over the last few years combined with full year contributions from Elysium and recent acquisitions in Europe. The focus remains on driving the synergies, realising the growth opportunities and improving returns.’
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For The Daily Reckoning Australia