The Ramsay Health Care Limited (ASX: RHC) share price will be one to watch on Wednesday after the private hospital operator revealed that its CEO and managing director has been selling shares.
According to the release, the company's CEO and managing director, Mr Craig McNally, sold 45,000 shares on March 25 through an on-market trade.
Mr McNally received an average of $64.0482 per share, equating to a total consideration of just under $2.9 million.
In order to ease concerns, the company advised that the sale was made primarily for the purpose of satisfying his personal income tax obligations.
The release explains that: "These obligations arose in connection with shares allocated upon vesting of LTIs ceasing to be subject to dealing restrictions under the relevant Income tax legislation, thereby triggering a FY2019 tax liability. The sale of these shares was made in accordance with the Company's Securities Trading Policy"
Mr McNally still holds 323,834 Ramsay shares and 187,635 performance rights. Though, the company has advised that he may sell further shares in order to meet impending tax obligations.
Should you be worried?
Whilst insider selling rarely goes down well with the market, I wouldn't be overly concerned with this. Especially given Mr McNally's sizeable remaining holding, which I feel means his interests are still firmly aligned with shareholders.
However, I wouldn't be a buyer of it shares at current levels. At 23x trailing earnings, I believe Ramsay's shares are expensive given its current growth profile.
This year the company is targeting core EPS growth of up to 2%, including the acquired Capio business. And with trading conditions remaining tough in many of its markets, I suspect that growth in FY 2020 could be similarly weak.
In light of this, I would consider buying healthcare shares such as CSL Limited (ASX: CSL) and ResMed Inc. (ASX: RMD) instead.
