Shares in institutional favourite, Ramsay Health Care (RHC) jumped to an all time high yesterday after it revealed a 16.8% jump in 2015-16 earnings and forecast a 10% plus gain for the current financial year.
The shares closed at $81.42, up more than 7% after hitting an all time high of $8.265 during the day.
Helping lift the shares was a bigger than expected rise in final dividend of 19% and the full year payout to nearly 18% – against the near 17% rise in earnings.
Thanks to the combination of strong growth in patient visits, the benefits of expansion here and offshore and cost controls, net profit hit an all time high as well of $450.3 million.
Core net profit, Ramsay’s preferred measure which strips out one-off items, rose 16.8% to $481.4 million.
Ramsay met its guidance of core net profit growth between 15% and 17%, which it lifted at the February halfway mark from the original range of 12% to 14%. (Core net profit though is not an accepted profit measure by regulators).
The shares jumped to record levels even though directors forecast a slowing in earnings growth this year to the range of 10% to 12%. Investors seem to be punting on a repeat of this year with a mid term upgrade in June 30, 2017 growth estimates next year.
The company’s business in France produced a 27.3% increase in revenue to €2.2 billion and its UK segment grew revenue by 4% to £429.6 million.
Ramsay’s Australian and Asian business achieved revenue growth of 8.8% thanks to solid volume growth, brownfield developments, and ongoing cost efficiencies. Earnings before interest and tax in Australia rose 11.8% to $572 million and is still the main profit centre of the company.
Group EBIT rose 11.6% to $8.97.1 million.
Revenue rose a solid 18.1% to $8.7 billion.
While the company has private hospital operations in Australia, Europe and Asia, Ramsay is now telling the market it has plans to move beyond this sector.
Pharmacies were mentioned yesterday by CEO Chris Rex who said the company has started “a strategic plan to extend our services beyond the hospital walls.”
"We are in the process of establishing strategically located community pharmacies across Australia, concentrating initially in close proximity to our hospitals," he said in a statement. "This will allow us to provide extended services to our patients including participation in the provision of care to the chronically ill."
"Solid volume growth, ongoing efficiencies, strategic acquisitions, and further investment in our facilities, continue to underpin our strong financial performance," Mr Rex said.
The board declared a dividend of 72 cents a share, up 19% on the final for 2014-15. Total for the year has been lifted to $1.19 a share, up 17.8%.
