The UK NHS has published hospital activity data for April. UBS estimates NHS e-referrals represent around 79% of Ramsay Health Care’s UK total admissions. April volumes for Ramsay decreased -2.9% while 12-month rolling growth moderated to 4.9% from 6.5% at the end of March.
UBS believes the current admissions data combined with a tariff increase should support robust growth in NHS-derived revenue in the second half and into FY20.
However, based on increased usage of agency nursing to manage the higher caseload, UBS models a -40 basis points decline in UK earnings (EBIT) margin in the second half. Neutral rating and $68.40 target maintained.
Sector: Health Care Equipment & Services.
Target price is $68.40.Current Price is $72.54. Difference: ($4.14) – (brackets indicate current price is over target). If RHC meets the UBS target it will return approximately -6% (excluding dividends, fees and charges – negative figures indicate an expected loss).
