What: Ramsay Health Care Limited (ASX: RHC), the leading operator of private hospitals in Australia and abroad came out with a superb full year result. It was a great achievement for a company celebrating 50 years in business, while at the same time mourning the passing of its founder Paul Ramsay, who died in May. Underlying net profit climbed 19% to $346.2 million, following a 17.5% increase in revenue to $4.91 billion. The stock is up about 1.3% in morning trade.
So what: Although each business segment achieved higher revenue and earnings before interest and tax (EBIT) for the year, the highlight of business growth was the number of acquisitions that made the company into a leading healthcare provider in Indonesia and France. A joint venture doubled the hospitals in Indonesia from three to six.
In December 2013, it acquired a 30-hospital mental health network in France. It later added 61 more hospitals in France when it acquired a controlling interest in Générale de Santé. Now, Ramsay Health Care will be the largest private hospital operator in France once the transaction is complete. In total, the company now has 151 hospitals and day surgery facilities worldwide.
But wait…there's more! It is also doing major renovations and brownfield developments on its existing sites to increase the facilities to drive further growth. Recently $172 million in capacity expansions for 12 sites in Australia was approved.
Growth and higher earnings on pretty much all fronts doesn't leave much to complain about. A stunning year that maintains the company's record for raising revenues and underlying net profits every year since 2005. Bravo!
Here are some of the highlights from the report.
> Earnings before interest, tax, depreciation and amortisation (EBITDA) at $746.9 million (up 19%)
> Basic earnings per share (EPS) at 141.1 cents (up 15.2%)
> Final dividend of 51 cents per share, up from 41.5 cents per share, fully franked
> Total dividend came to 85 cents per share, up from 70.5 cents, for a 20.5% increase.
> EBIT from France was up 85%, largely due to the acquisitions
Now what: Topping this standout year may be hard, but the company is targeting underlying net profit and underlying EPS to rise 14% – 16%. The stock is up 50.2% in the last twelve months. It has a 30.9 PE because of the expected strong growth, so it's not a bargain. The dividend yield is 1.7% fully franked. I really like the company, but you may have to buy on occasional weakness if you want to ease your way in on this growing stock.
