The Ramsay Health Care Ltd (ASX: RHC) share price is ending the week deep in the red.
At the time of writing, the private hospital operator's shares are down 8% to a 52-week low of $40.94.
Investors have been heading to the exits after the company released its full year results.
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Ramsay share price sinks on results day
- Total revenue up 9.4% to $16,772.1 million
- EBIT from continuing operations down 0.4% to $997.6 million
- Profit after tax from continuing operations down 2.7% to $270.6 million
- Full year dividend up 6.7% to 80 cents per share
What happened in FY 2024?
For the 12 months ended 30 June, Ramsay Health Care reported a 9.4% increase in revenue to $16,772.1 million. This reflects increased patient activity driven by activity growth in all regions, combined with indexation increases and the benefit of new capacity coming online.
Things weren't as positive for the company's EBIT from continuing operations. It was down 0.4% to $997.6 million. This was due to an improved result from Australia and strong growth from the UK region being offset by a decline in earnings from Ramsay Santé.
In addition, its EBIT from continuing operations includes a negative contribution from non-recurring items of $36.4 million. This compares to a benefit of $42.1 million in the prior corresponding period. Excluding this impact, its EBIT increased 6.1% in constant currency to $1,034 million.
And on the bottom line, Ramsay's profit after tax from continuing operations fell 2.7% to $270.6 million.
Despite this, the Ramsay board lifted its full year dividend by 6.7% to 80 cents per share. This represents a ~2% dividend yield at current levels.
Management commentary
Ramsay's CEO, Craig McNally, was pleased with the result but acknowledges that margins are taking longer than expected to recover. He said:
I am pleased to report an operating result that reflects the benefits of growing patient activity and productivity improvement programs across all of our regions. We have made some progress with private sector payors on tariff indexation, however tariffs from payors remain out of touch with cost inflation.
Margin recovery has been slowed by the significant cost inflation impacting the private hospital industry over the last few years. Wage inflation exceeding expectations remains a critical risk. Tariff outcomes for the UK and France from 1st April and 1st March 2024 respectively were well below recent inflation levels making earnings growth in both markets challenging in FY25.
Outlook
The company revealed that it currently expects growth in net profit after tax from continuing operations in FY 2025.
This is based on the assumption that activity growth will be achieved in all regions, albeit at a lower rate than in FY 2024.
However, margin recovery will be impacted by further investment in business enablement, particularly in digital and data programs in Australia, and the ongoing gap between wage inflation and tariff indexation.
The Ramsay share price is down 21% since this time last year.
