The Ramsay Health Care Limited Fully Paid Ord. Shrs (ASX:RHC) share price was trading 5.25% lower today. Over the past month, shares of Ramsay Health Care are down 11%. For comparison, the S&P/ASX 200 (INDEXASX:XJO) has risen 3% in the same time.
About Ramsay Health Care
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.
What’s Happened?
Paul Ramsay Holdings, which remains as the company’s largest shareholder, has sold 22 million shares, around 10.9%, of Ramsay to institutional investors at $61.80 per share, which is almost exactly the price Ramsay is now trading at.
The settlement of this trade is expected to occur on 19 September 2019. After the shares have settled, Paul Ramsay Holdings will still hold around 21% of Ramsay’s shares.
The share sale will raise almost $1.36 billion for the foundation.
Paul Ramsay Foundation Chairman Gregory Hutchison said: “On behalf of the Board, the Paul Ramsay Foundation has no intention to authorise or sell any shares in the Company, directly or indirectly, in addition to the shares sold…in the medium to long term in the absence of extraordinary or unforeseen circumstances, and that the Paul Ramsay Foundation does not possess any information that is not generally available and that a reasonable person would expect to have a material effect on the price or value of the Company’s shares.”
Buy, Hold or Sell?
Selling to raise money for charitable causes shouldn’t be seen as too negative, and Paul Ramsay Holdings remains a very large shareholder.
The bigger question is whether private health insurance policyholder numbers (particularly younger people) will grow or shrink in the coming years. The system requires healthy people to subsidise the high-use policyholders. It’s a very tough question to answer.
Ramsay is a high quality, defensive business which is valued at around 20 times earnings. However, if you’re looking for growth I’m not sure Ramsay is the best place to look. For income and capital growth, the shares in the free report below could be better ideas.
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