The Ramsay Health Care Ltd (ASX: RHC) share price is up 5% after the private hospital operator announced a potential sale of one of its business units.
Ramsay has private hospitals across Australia and Europe, including the UK.
It also has a 50% stake in an Asian healthcare business called Ramsay Sime Darby which has four hospitals in Malaysia and three in Indonesia. On. Malaysian business Sime Darby Berhad owns the other half.
Potential Asian sale
Ramsay said that, together with its partner Sime Darby, a decision has been made to “explore the possibility” of realising a sale of Ramsay Sime Darby.
The ASX healthcare share said that the decision had been reached after receiving “significant inbound interest” in Ramsay Sime Darby at values that are “in shareholders’ interests to explore” noting that there is “no certainty” that a sale process will result in a completed transaction.
It could attract good interest considering, according to Ramsay, the business has “continued to perform strongly” in FY23. This may be a useful boost for the Ramsay Health Care share price.
The equity-accounted contribution, meaning Ramsay’s entitlement to the profit, for the nine months to 31 March 2023 was $16.2 million, an increased on 31.7% year on year.
Ramsay pointed out that Ramsay Sime Darby has a commitment to “delivering exceptional healthcare services” and that this was recognised in the recent 2023 GlobalHealth Asia-Pacific Awards with the business winning 10 awards including ‘stand-out jury hospital of the year in Asia Pacific’ for its flagship Malaysian hospital Subang Jaya Medical Centre.
Bank loan refinancing
In a separate announcement, Ramsay said that it had secured A$1.5 billion in new committed revolving bank loan facilities with two of its ‘key relationship’ banks
These facilities will mature in the first half of FY26, and are part of Ramsay’s ongoing bank loan refinancing activities and will be used to repay facilities maturing in the first half of FY25.
Ramsay said it will continue to seek to diversify the source and tenor of its borrowings over time.
Final thoughts on the Ramsay share price
The Ramsay share price has fallen noticeably over the last few weeks. It’s good that investors are recognising value within the business, but I don’t think it makes sense to sell a business that is growing at a good speed.
Asia is a huge market and the middle class is growing in those countries, so I’d personally want to hang onto that division.
