Ramsay Health Care: Improving volumes, but productivity lags

About the author:

Dr Derek Jellinek
Author name:
By Dr Derek Jellinek
Job title:
Senior Analyst
Date posted:
04 May 2023, 6:30 AM
Sectors Covered:

  • A nine-month FY23 trading update from Ramsay Health Care (ASX:RHC) highlighted improving volumes across all regions on increased surgical activity, although margins and profit lagged.
  • While COVID-related headwinds are subsiding, labour shortages and inflationary pressures remain, dampening a full recovery in underlying profitability.
  • We continue to view a gradual uplift in activity, with leverage likely to improve, and a more “normalised” FY24, although profitability remains contingent on multiple unknowns (eg tariff negotiations; recruitment/retention; lower agency nurse usage; and additional capacity gains) obscuring visibility.
  • We have adjusted our FY23-25 earnings lower, with our price target decreasing to (login to view). Add.

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