Ramsay Health Care Limited (ASX: RHC) could soon be making more acquisitions, is it time to buy shares?
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’s Acquisition Plan
Ramsay Health Care is one of Australia’s largest healthcare businesses and one of the largest private hospital operators in the world.
It recently became a lot bigger after acquiring Capio, a large European based healthcare business. But it could be after more acquisitions according to an article in the Australian Financial Review.
With the acquisition, Ramsay entered the primary care market in the Nordic region. It already owns diagnostics in Asia, the UK and partly in France.
Ramsay CEO Craig McNally said to the newspaper that in a decade from now he wants to have a wide array of extra services outside of private hospitals like pharmacy, physical therapy and diagnostic imaging could be areas of interest.
Mr McNally said to the AFR, “We need to be more relevant for our customers and provide better experience for them. Integration is always the Holy Grail in healthcare. The Australian healthcare system operates in silos.
“But as we provide more out of hospitals services, managing data better so there is not a lot of duplicating in the system, engaging with pre- and post-hospital activities with patients and involving our clinicians, I think we are on the right path to providing more value to the system.
“For us it’s about looking at other non-hospitals business we can add to supplement what we have now.”
Obviously there’s a lot more value in the healthcare chain that Ramsay can capture if it can make referrals in its system to other areas of the business.
Not only could this be a good move for Ramsay, it could protect against the possible negative of falling earnings at private hospitals if some young policyholders continue to drop out of the system.
Extra services, particularly out of home care, would make me more interested in buying Ramsay shares.
The Ramsay share price is almost as low as it has been over the past six months, and at 22 times the estimated earnings for the 2020 financial year, it’s not cheap for its growth rate. But it could be a decent option for very defensive options.
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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.