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Ramsay Health Care share price edges lower on first-half results

Health check

The Ramsay Health Care Limited (ASX: RHC) share price is on watch this morning after the global private healthcare provider released its 1H20 results.

At the time of writing, Ramsay Health Care shares are edging 1.11% lower to trade at $73.94 per share.

What did Ramsay Health Care announce?

For the six months to 31 December 2019, Ramsay reported core net profit after tax (NPAT) of $273.6 million. This was an increase of 3.4% on the previous corresponding period (pcp) on a like-for-like basis.

Meanwhile, the company’s core earnings per share (EPS) came in at 132.5 cents, an increase of 3.7% on a like-for-like basis.

Across its wider group, Ramsay recorded impressive revenue growth of 22.5% to come in at $6.3 billion. However, if the acquisition of the Capio business is excluded, this revenue growth comes in at a more modest 4.8%.

Earnings before interest, tax, depreciation, amortisation, and restructuring costs (EBITDAR) for the group grew strongly by 17.4% to $1.1 billion, although the increase was only 5.4% excluding the Capio acquisition.

Ramsay declared an interim dividend 62.5 cents fully franked, which is an increase of 4.2% on the pcp.

Challenging Australian market with strong international performance

The company commented that its businesses in the UK, Continental Europe and Asia performed well during the period. However, this was partially offset by more challenging conditions in Australia.

Ramsay’s Australia and Asia operations grew revenues by 3.9% to $2.7 billion during the period and grew EBITDAR by 2.4% to $530 million.

In its United Kingdom division, revenues were up by up 8.7% to £267.6 million and EBITDAR was up 6.0% to £47.7 million.

Meanwhile, Continental Europe saw very strong revenue growth of 44.3%, with the company recording revenues of €1.9 billion and EBITDAR growth of 38.0% to €319.1 million. However, excluding Capio, these growth figures come in at 2.4% and 7.4% respectively.

Market outlook for remainder of FY20

Ramsay commented that it expects the softer operating environment it has been experiencing in Australia to continue, with operating volumes remaining subdued. However, it added that there continue to be positive signs for Ramsay’s business in the UK and Europe.

Ramsay did, however, acknowledge that the coronavirus may impact its global business. The company will continue to monitor the impacts on supply chain and admissions.

The company reaffirmed its FY20 core EPS growth on a like-for-like basis of between 2% and 4%, based on core EBITDAR growth of 8% to 10%.

Ramsay commented that it still sees significant opportunities for growth moving forward. On this, Ramsay managing director Craig McNally said:

“During the 1H, we continued to invest in infrastructure and research to position the business for the future including, digitalizing and integrating our IT systems.”

“At the same time, we are focused on opportunities outside our core hospital business that will further our position as a global integrated healthcare service provider with a more convenient and accessible healthcare offering to better meet the expectations of our clinicians and our patients,” he added.

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Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. 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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