The Ramsay Health Care Ltd (ASX: RHC) share price down 2% after giving an update about FY24.
Ramsay Health Care is a large private hospital operator in Australia and Europe.
FY24 earnings update
The ASX healthcare share revealed it’s expecting its 2024 financial year net profit after tax (NPAT) to be in the range of between $884 million to $889 million. This will include the after-tax cash profit on the sale of Ramsay Sime Darby (a Malaysian private hospital unit).
Ramsay revealed its FY24 net profit after tax and minority interests from continuing operations is expected to be between $265 million to $270 million, compared to $278.2 million in FY23.
The company announced a number of negative items.
Negative items to report
It’s expecting to include non-cash impairments and accelerated write-downs against the book value of underperforming assets in both Ramsay Sante (mainland Europe operations) and the UK region of $24.5 million after tax and minority interests. This is not helpful for the Ramsay share price.
Another item is $13.1 million after tax and minority interests relating to a reduction in value of ‘interest rate swaps‘ in Ramsay Sante’s debt facilities.
As result of the expected impairment charges and writedowns, Ramsay’s FY24 depreciation, amortisation and impairment charge is expected to be $1.13 billion, above the top end of its range of between $1 billion to $1.1 billion.
Non-recurring items in total, including those mentioned above, are expected to make a negative contribution to the result of approximately $29.5 million after tax and minority interests.
Excluding the impact of non-recurring items, the FY24 net profit after tax and minority interests from continuing operations is expected to be in the range of $294 million to $299 million.
Final thoughts on the Ramsay share price
The private health insurer said its underlying result has been driven by “improving activity trends and labour productivity, combined with a focus on sustainable performance acceleration programs and improved tariff indexation.”
There’s also a fight between private hospitals and private health insurers which could impact Ramsay’s profitabilty, depending on how things go.
It’s not one I’m looking to add to my own portfolio because of the strained dynamic of funding, though there is a tailwind of ageing demographics.
