Ramsay Health Care Ltd (ASX: RHC) shares are on the slide on Monday.
At the time of writing, the ASX 100 stock is down 1.8% to $44.49.
This compares to the performance of the benchmark ASX 200 index, which is down 2.3%.
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Why is this ASX 100 stock falling?
Investors have been selling the private hospital operator's shares amid market weakness and the release of its profit guidance for FY 2024.
According to the release, subject to finalisation of the accounts and audit sign off, Ramsay is expecting to report a net profit after tax in the range of $884 million to $889 million for the 12 months.
This is up approximately 200% on the $298.1 million that the ASX 100 stock reported a year ago.
However, before you get too excited, there's a very big reason why Ramsay Health Care's profits are up significant year on year.
That reason is the company sold its 50:50 joint venture in Asia, Ramsay Sime Darby (RSD), in December 2023. This has led to it recording an after-tax cash profit on the sale of RSD of $618 million.
Profit from continuing operations
A more accurate representation of its performance in FY 2024 would be its profits from continuing operations.
The ASX 100 stock revealed that its FY 2024 net profit after tax from continuing operations is expected to be in the range of $265 million to $270 million. This compares to $278.2 million in the prior corresponding period.
The result is expected to include non-cash impairments and accelerated write-downs against the book value of underperforming assets in both Ramsay Sante and the UK region of $24.5 million after tax and minority interests.
Also included will be negative net mark to market movements in relation to interest rate swaps in Ramsay Sante's debt facilities of $13.1 million after tax.
Furthermore, as a result of the expected impairment charges and write downs, Ramsay's FY 2024 depreciation, amortisation, and impairments charge is expected to be slightly above the top end of its previously expected range of $1 billion to $1.1 billion at approximately $1.13 billion.
Finally, non-recurring items in total are expected to make a negative contribution to the result of approximately $29.5 million after tax. This compares to a positive contribution of $27.5 million in the prior corresponding period.
Excluding the impact of non-recurring items, its FY 2024 net profit after tax from continuing operations is expected to be in the range of $294 million to $299 million.
Management commented:
The Group's underlying result has been driven by improving activity trends and labour productivity, combined with a focus on sustainable performance acceleration programs and improved tariff indexation.
