The Ramsay Health Care Limited (ASX: RHC) share price has pushed higher this morning following the release of its full year results.
At the time of writing the private hospital operator's shares are up 1.5% to $68.63.
How did Ramsay perform in FY 2019?
This morning Ramsay Health Care announced revenue of $11.4 billion for the 12 months ended June 30. This was a 24.4% increase on the prior corresponding period and was boosted by the acquisition of the Capio business. Removing Capio from the equation, Ramsay's revenue grew 5.3% on FY 2018's result.
On the bottom line Ramsay posted a core net profit after tax of $590.9 million, which was a 2% increase on the prior corresponding period. Excluding the impact of the Capio transaction, core net profit after tax would have risen 2.5% to $593.9 million.
And core earnings per share increased 2.1% to 285.8 cents or 2.7% to 287.3 cents if you exclude the Capio acquisition.
This didn't stop the Ramsay board from growing its dividend at an even quicker rate. It declared a final fully franked dividend of 91.5 cents per share, which was up 5.8% on the prior corresponding period. This brought its full year dividend to 151.5 cents per share, which was an increase of 5.2% on FY 2018's dividend.
What were the drivers of growth?
The key Australian segment delivered solid earnings growth in FY 2019. It reported a 4.1% lift in revenue to $5,182.5 million and a 6% increase in EBITDA to $950.5 million. This was driven by above industry private admissions growth, strong growth in specialty areas such as cardiology, cancer, and mental health, and the moderation of the downward trend in births.
In Continental Europe the company reported a 51.7% increase in revenue to €3,401.1 million and a 32.6% lift in EBITDA to €32.6 million thanks to the Capio acquisition. Excluding this acquisition, revenue would have increased 2.6% and EBITDA would have been up by 1.8%.
The company's UK operations achieved a 4.7% increase in revenue to £444.3 million but a 2.8% decline in EBITDA to £99.8 million. Whilst this was a soft result, management revealed that its operations returned to profit growth in the second half and strong volume growth is expected in FY 2020.
In Asia the company's share of its Joint Venture generated net profit of $19.4 million, up 15.5% on the prior corresponding period thanks to strong operating performances from its Malaysia and Indonesia businesses. During the year the company opened a day surgery in Hong Kong. It could add to this in FY 2020 and is exploring acquisitions, partnerships and bolt-on opportunities in the Asian market.
Outlook.
In FY 2020 Ramsay is targeting core earnings per share growth on a like-for-like basis of 2% to 4%. This corresponds to negative core earnings per share growth of -6% to -4% under the new lease accounting standard AASB16.
This guidance is based on core EBITDAR growth of 8% to 10%, which is unaffected by the new lease standard.
