Private hospital operator Ramsay Health Care expects its Australian operations will remain the group’s powerhouse as demand for hospital services continues to grow.
Managing director Craig McNally says demand for hospital services is underpinned by a growing and ageing population, increased chronic disease, innovative treatments and new technology.
Ramsay operates hospitals in Australia, France, the UK, Malaysia and Indonesia, and lifted its net profit by nine per cent to $488.9 million in the 2016/17 financial year.
Growth in admissions and procedural volumes boosted revenue in its Australian operations by seven per cent, and earnings rose 14 per cent to $650 million.
“Australia remains the powerhouse of the business,”‘ Mr McNally said.
He expects strong growth in the Australian hospital business to continue in the 2017/18 financial year, fuelled by ongoing growth in hospital utilisation rates, upgrades of existing hospitals and new facilities.
“Strong growth in our Australian business will continue, but we do anticipate more challenging environments in Europe – tariff environments are going to get more difficult for FY18,” Mr McNally said.
He said Ramsay’s operations in the UK and France performed to expectations in 2016/17 as governments in both countries made changes to their respective national tariff, which governs the pricing of healthcare services.
Ramsay is not expecting earnings growth in the UK and France in 2017/18.
Mr McNally said the company is continuing to expand its pharmacy franchise network, and will have 55 retail pharmacies once current contracts are completed.
The expansion of the pharmacy network proved slower than anticipated in 2016/17 because of regulatory processes.
Ramsay is targeting core earnings per share growth of between eight and 10 per cent in 2017/18.
Equities researcher Citi said Ramsay’s net profit was in line with expectations but its revenue was slightly weaker, as was its earnings per share and guidance for earnings per share.
Ramsay shares dropped $3.78, or 5.3 per cent, to $68.10, their lowest level since March.
AUSSIE HOSPITALS DRIVE RAMSAY HEALTH’S PROFIT GROWTH:
* Net profit up 8.6pct to $488.9m
* Revenue up 0.2pct to $8.7b
* Final fully-franked dividend up 9.5 cents to 81.5 cents