Ramsay Health Care Limited (ASX: RHC) has announced its FY20 result today. Was it healthy enough for investors to want to buy at this Ramsay share price?
Ramsay FY20 result
Ramsay announced that total revenue was up 7.3% to $12.4 billion despite the COVID-19 pandemic.
However, group EBITDAR (click here to learn what EBITDA means) dropped 7% to $2 billion. Core net profit was down 43% to $336.9 million and statutory net profit was down 47.9% to $284 million.
In Australia, revenue was down 2.2% to $5.1 billion with EBITDAR down 23.2% to $781.3 million.
Its share of Asian joint venture net profits was down 18.2% to $15.9 million.
UK revenue dropped 4.9% to £494.8 million and EBITDAR dropped 10.6% to £89.2 million.
Continental Europe revenue rose 14.3% to €3.9 billion and EBITDAR grew 8.5% to €641.1 million. This division now includes the Capio acquisition.
Dividend
Ramsay’s board decided not to declare a final dividend for FY20. At the interim result it declared a dividend of 62.5 cents per share, up 4.2% on the corresponding period.
Management comments
Ramsay Health Care Managing Director Craig McNally said: “With the onset of the pandemic in March 2020, the sustainability of the business and ensuring that we protected the wellbeing of our patients, staff and doctors was overwhelmingly our primary focus. This was one of the most remarkable periods in my 33 years with the company and I am extremely proud of our global teams and how they responded to the crisis.
“It has been an extremely challenging time for our staff and doctors as we have pivoted to support national efforts during this crisis. COVID-19 has impacted our financial result this year but, importantly, it has reinforced our role as a leading health care and hospital provider in major regions.”
Outlook
Ramsay’s balance sheet is in a good position after undertaking a $1.5 billion capital raising.
Due to uncertainty because of the impact of the pandemic, Ramsay said it was unable to provide financial guidance for FY21.
However, Ramsay is still confident on the future due to the ageing populations with increased numbers of chronic disease and there are now longer public waiting lists in each of the company’s markets. Ramsay expects to play a role in helping reduce these waiting lists.
Ramsay said it’s considering investment opportunities with a strategic fit in or out of Australia, in or out of the hospital. The balance sheet can help this growth.
I’m not sure if private health has a long term growth outlook with the increasing costs of private health insurance premiums. The ageing tailwind is helpful, but people do have the option of going to public hospitals. I don’t think I’d buy Ramsay shares, I’d rather buy something with healthcare exposure like ASX growth shares such as Citadel Group Ltd (ASX: CGL).
