The Ramsay Health Care Limited (ASX: RHC) share price is pushing higher on Thursday following its full year results release.
At the time of writing the private hospital operator's shares are up 1.5% to $66.45.
How did Ramsay perform in FY 2020?
It was a tough year for Ramsay because of the negative impact of the pandemic on elective surgeries and costs.
During the 12 months ended 30 June 2020, Ramsay posted a solid 7.3% increase in revenue up 7.3% to $12.4 billion.
However, this revenue increase didn't flow through to its earnings. Ramsay recorded a 7% decline in earnings before interest, taxes, depreciation, amortisation, and restructuring or rent costs (EBITDAR) to $2 billion.
Things were even worse on the bottom line, with the company posting a 43% decline in core net profit after tax to $336.9 million. This was down 34.4% on a like for like basis.
In light of this sizeable profit decline and the tough operating environment, as previously announced, Ramsay has decided against paying a final dividend.
How did its segments perform?
Ramsay's core Australia/Asia business reported a 2.2% decline in revenue to $5.1 billion and a 23.2% reduction in EBITDAR to $781.3 million.
Over in the UK, Ramsay recorded a 4.9% decline in revenue to 494.8 million pounds and a 10.6% fall in EBITDAR to 89.2 million pounds.
Things were better in Continental Europe due to its recent acquisitions. It recorded a 14.3% lift in revenue to 3.9 billion euros and an 8.5% increase in EBITDAR to 641.1 million euros.
A tale of two halves.
Ramsay Health Care's Managing Director, Craig McNally, notes that the company was on track for growth until the end of February.
He commented: "At our interim results we reaffirmed our FY'20 guidance of core EPS growth on a like for like basis of 2% to 4%. However, the extraordinary circumstances posed by the COVID-19 pandemic on the Company's operations around the world resulted in us withdrawing guidance in March 2020 and had a significant impact on the full year result."
Mr McNally notes that elective surgery restrictions were imposed in most regions from March 2020 creating a significant level of uncertainty. Combined with increasing costs, this weighed heavily on its results.
Speaking about the costs, the managing director commented: "We are also experiencing additional costs associated with increased PPE usage, more costly PPE on a per unit basis, social distancing requirements, staff costs involved in screening patients, staff and visitors, and increased cleaning regimes."
Outlook.
Given that many uncertainties remain with respect to the ongoing impact of the pandemic, Ramsay was unable to provide financial guidance for FY 2021.
Nevertheless, the company remains positive on its long term outlook.
Mr McNally commented: "Notwithstanding the significant near-term uncertainties, over the longer term, strong industry fundamentals remain. In addition to the increased demand for healthcare generally created by ageing populations with increased incidence of chronic disease, there are also now longer public waiting lists in each of our markets. We expect to play an enhanced role in relieving pressure on public waiting lists into the future."
The managing director also revealed that the company continues to look at expanding its network at home and abroad.
"Following our recent $1.5 billion equity raising, Ramsay is also committed to expanding our business both in Australia and overseas, in and out of hospital where there is a strategic fit and it meets our strict investment criteria. We have a strong balance sheet to support this growth strategy," he concluded.
