Ramsay Health Care (RHC) - At the margins
March 10, 2025
Ramsay Health Care Limited owns and operates hospitals in Australia, and internationally. The company offers health care services to public and private patients.
Accounting changes created some noise around the first-half FY25 result, but earnings were in line with market expectations, driven by stronger-than-forecast performance in Ramsay's Australian operations and UK division that offset earnings in its French and Nordic divisions that fell a long way short of consensus estimates.
The Australian hospitals operations is the flagship asset in Ramsay’s business, but we struggle to see easy margin improvement from here given rising labour costs in the industry and continuing ructions overpayment rates from private health insurers. Meanwhile, Ramsay Santé, which houses its European operations, continues to drag on group performance. The company flagged the possible sale of the Santé business citing low returns and limited benefits from the offshore operations.
We remain concerned about margin prospects for Ramsay, which, along with the difficulty in making accurate forecasts of those, led us to cut our target price to $38.60 from $41.45. We maintain a Hold recommendation.
Insights that count
Discover the best opportunities to outperform the market. Our research team dig deep into the market, company and stock data to bring you insights others might overlook.
Challenger Limited (CGF) – Confidence boost
Challenger Limited is a life insurance and investment management group with a focus on retirement services such as annuities and distribution deals in various countries.
BHP Group Limited (BHP) – Copper shines
BHP Group Limited is the largest diversified miner in world and has operations around the globe.
Sonic Healthcare (SHL) – Margin squeeze
Sonic Healthcare offers medical diagnostic and administrative services to medical practitioners, hospitals, community health services, and patients in Australia, the US, Germany and elsewhere.
.jpg)