The Ramsay Health Care Ltd (ASX: RHC) share price is up 8% this morning after the global private healthcare company reported its half-year results.
Prior to open, Ramsay's share price was sitting at $63.28. At the time of writing, the share price stands at $68.44. The share price has been impacted over the last 12 months, falling 18.3%, with COVID-19 creating a challenging environment. It appears the market was originally preparing for weaker results.
What's moving the Ramsay Health share price?
Ramsay Health struggled through the half, with restrictions and lockdowns continuing in some of its operational regions. The impact of this was reflected in the 6.6% decline in operational revenue during the half-year. Additionally, lower demand for non-surgical services added to the dampened result.
Looking locally, Australian operations resulted in earnings before interest, tax, depreciation, and amortisation (EBITDA) of $402 million, a reduction of 21% compared to last year. Restrictions on capacity and increased costs associated with the COVID environment were held responsible for the decline.
Luckily, Ramsay experienced lifts in EBITDA across Europe and the United Kingdom. This was mostly due to cost controls and cost support payments by governments. Importantly, this levelled out EBITDA for the group to $1.039 billion, a slight reduction of 1%.
Lastly, the board has nominated to resume dividend payments to shareholders. Ramsay has declared a fully franked dividend per share of 48.5 cents, which indicates a 50% payout ratio. This decision has been made as the board holds confidence in the strong cash flows of the business.
Ramsay's light at the end of the tunnel?
Ramsay has indicated that the second half will be highly contingent on how the COVID-19 situation transpires. Vaccine rollouts have reduced the number and severity of cases based on early data. However, uncertainty remains.
The private hospital operator expects to continue investing in expanding the company's footprint. Notably, during the half, Ramsay sold 9 facilities in Germany and 2 in France.
Ramsay expects that surgeries placed on the backburner during COVID-19 disruptions will drive volumes over the next half. Some of these surgeries will also be from public waitlists, as Ramsay helps alleviate the public sector pressure.
Finally, the company provided no guidance for FY21 due to the ongoing uncertainty. It seems that shareholders are not quite out of the woods yet.
CEO commentary
CEO and managing director, Craig McNally, provided commentary on today's first-half results:
The result reflects the operational and financial resilience of the Ramsay business. Despite the disruption caused by the pandemic, we continued to invest in the business across all regions as we look to maintain our competitive advantage and optimise our portfolio of facilities
The Ramsay Health share price has unsurprisingly suffered downward pressure in the last year. Underperforming the broader market, Ramsay suffered a 15.4% fall over the 12 months gone.
