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3 ASX-listed companies cashing in on the ageing population

The most dramatic change predicted to occur to Australia’s population over the next 50 years is its age structure. Australians aged over 65 now account for more than 15% of the total population and an ageing population prompts significant growth in demand for aged care services.

These 3 ASX-listed companies are cashing in on the trend, capitalising on the changing patterns of demand an ageing population will bring, and ensuring it underpins their growth strategies.

Ramsay Health Care Limited Fully Paid Ord. Shrs (ASX: RHC)

Global hospital group Ramsay Health Care Limited operates 221 hospitals and 14 day surgery and treatment centres across Australia, the UK, France, Indonesia, Malaysia and Italy.

Shares in Ramsay have been on the downward slide in the past year, with its April 9 closing price of $63.28 down almost 10% from its price of $69.82 at this time last year which some say signals buy time for the stock.

Ramsay delivered good returns for shareholders when it announced its results for the half-year ended December 31, 2017 with core NPAT up 7.5% to $288 million core EPS up 7.8% to 139c and a fully franked interim dividend of 57.5c per share – up 8.5% on the previous corresponding period.

Ramsay has been seeing some drops in revenue from its UK and French operations with the company investing in a major transformation project to centralise non-core hospital resources to protect long-term prospects in the region.

On home soil Ramsay has an emphasis on increasing demand in its over 65’s segment with a focus on improving value and affordability.

Overall the future looks bright for a company which seizes the opportunity to turn the difficulties facing our ageing population, burgeoning chronic health issues and a growing mental health crisis into profits – but that’s the business they’re in.

Healthscope Ltd (ASX: HSO)

As another player in the private healthcare operator space, Healthscope Ltd operate private hospitals, pathology testing services and medical centres across Australia.

Shares in Healthscope have had a volatile 12 months and its April 9 closing price of $1.93 is down 13% from its $2.24 share price at this time last year.

But Healthscope’s pipeline for growth is looking pretty strong, with construction and expansion projects on the go as the company works steadily to snatch as much market share as possible from Ramsay.

Healthscope’s half-year report for the 6 months to December 31, 2017 did see a 12.8% decline in statutory NPAT to $77.5 million – dropping from $88.9 million in the previous corresponding period.

But with group revenue up 4.9% and strong operating cash flow conversion of 107.6% the outlook for FY18 remains unchanged, with strong organic growth expected to continue from the Asian pathology segment with pathology operations in Asia contributing 4% of group operating EBITDA for the first half.

As a $3.3 billion market cap company Healthscope has a fair way to go to match up to Ramsay’s $12.79 billion market cap position.

Summerset Group Holdings Ltd (ASX: SNZ)

Integrated retirement village provider Summerset Group Holdings Ltd is dominating the New Zealand retirement village and aged care facility market.

Summerset shares have rocketed up in the past 12-months – up 29% from its $5 share price at this time last year to its April 9 close of $6.47.

Summerset’s FY17 results showed a NPAT rise of 54% on FY16 with underlying profit for the same period up 44% and total assets up 30% at NZ$2.2 billion.

Summerset’s growth is driven by strong demand and the continued construction of new retirement villages, with no signs of any slow down on the cards in the near future.

In the residential aged care space smaller fry Japara Healthcare Ltd (ASX: JHC) should also be on your watchlist as an up-and-coming provider of aged care facilities across Australia.

Other notable companies riding the ageing population wave include investment management firm Challenger Limited (ASX: CGF) which built its company on the premise of meeting one of the biggest challenges facing Australian retirees –managing their retirement income streams.

Challenger’s product range includes a fixed-rate superannuation product with its two core businesses being its Life division and fund management division but Credit Suisse recently named the company as a potential takeover prospect and Morgan Stanley downgraded its flagship Liquid Lifetime product.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia has recommended Ramsay Health Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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