The Ramsay Health Care Limited (ASX: RHC) share price is up over 7% today after the election results, here’s why.
Ramsay is the largest private hospital operator in Australia, Scandinavia and France. It also has a major presence in the UK. It has been operating for more than 50 years, having been started by Paul Ramsay AO in 1964. It has 480 facilities across 11 countries with 77,000 staff, annually treating around 8.5 million patients.
Ramsay Share Price Up On Election Results
Investors have pushed the Ramsay share price up over 7% on the first ASX trading day after the Federal Election. Seemingly due to the fact that Labor will not be able to implement its proposed policy changes around private health insurance.
Labor pledged to limit premium increases on private health insurance to 2% per year for the next two years. This is considerably lower than the average increases over the past seven years, with a total average increase of 35.61% collectively. The lowest average increase in that seven-year period was 3.25% in 2019.
The private health insurance sector is already feeling the pinch with younger Australians choosing not to take out health insurance, and an increasing number of baby boomers relying on private health insurance services.
Labor also committed to a ‘Productivity Commission’ into private health insurance, saying it would be the most significant review into private health insurance in over 20 years.
With a Coalition government elected it seems to have been a sigh of relief to the sector. Health insurers are soaring higher today with Medibank Private Ltd (ASX: MPL) up 11.8% and NIB Holdings Ltd (ASX: NHF) up 15.5%.
Ramsay investors may also have been relieved due to the fact that private health insurers often cut costs through their deals with hospitals, being a private hospital business this may have put pressure on Ramsay’s profit margins.
Is Ramsay A Buy?
As exciting as this news is for the sector, it seems as though the positive news may already be fully priced in. Although Ramsay is still making good moves, expanding further into Europe with its acquisition of Capio AB.
However I’m hesitant with the squeeze on private health insurance and the increasing numbers of young people reluctant to join up, or forgoing it all together.
I would rather consider putting my investment money towards reliable shares with a sound plan for future growth. Our free report below, put together by our lead analyst, might just include the next big share you’re looking to add to your portfolio.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.