Ramsay Health Care Limited (ASX: RHC) has given a trading update for the first quarter of FY21. Is it starting to recover?
Was Ramsay’s FY21 first quarter any good?
For the first three months of FY21, Ramsay showed that there was a mixed performance across the business.
Australia
Ramsay Australia reported a 1.5% increase in total revenue (and excluding Victoria it was up 6.6%) which reflected a 1.7% increase in surgical admissions and lower non-surgical activity.
However, Ramsay Australia’s EBITDAR (EBITDA explained) declined compared to last year because of the restrictions in Victoria and the increase in costs and impact on the case mix as a result of the COVID-19 environment.
Ramsay Sante and Ramsay UK
Ramsay Sante reported an increase in surgical volumes of around 5.4% on the prior corresponding period combined with lower non-surgical activity.
French clinicians sought to reduce the backlog of surgeries created by the first COVID-19 lockdown. The Nordic region has also reported growth in surgical volumes in recent months.
Ramsay Sante is involved with the second wave of COVID-19 in France. It’s currently treating over 900 COVID-19 patients, with more than 320 in critical care.
Ramsay UK reported a decline in total revenue of 9.9% compared to last year, with volumes picking up in the latter part of the quarter.
In the face of the escalating second wave of COVID-19 cases in the UK, the business under the existing agreement has had to provide the NHS some capacity in regions where there has been more severe outbreaks.
Both the UK and France continue to operate under government support arrangements which currently run until 31 December 2020.
Is it time to jump on Ramsay shares?
Ramsay said that it has learned a number of lessons from the first wave of COVID-19, so its hospitals are better managing the situation with better safety and capacity. Where appropriate, it has allowed Ramsay to keep treating private patients and public waiting lists where requested.
Ramsay Managing Director and CEO Craig McNally said: “Given the near-term uncertainties in the market, we are not in a position to provide guidance for FY21. Notwithstanding the current environment, over the medium term 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.”
The private hospital business should benefit as COVID-19 passes, but I’m not sure how much it will recover. For me, there are other ASX growth shares I think could be better ‘turnaround’ ideas like A2 Milk Company Ltd (ASX: A2M) and EML Payments Ltd (ASX: EML).
