Ramsay Health Care Limited (RHC)
BUY

KKR Re-bid. Soft Result.

 26 Aug 2022
Sector: Health Care

FY22 RESULT

Need to know:

  • In trading halt after receiving an update on the indicative proposal led by KKR.
  • Soft result across all aspects. Covid impacts.
  • No formal guidance provided however gradual recovery is expected.

Investment implications

FY22 Result: Earnings came in below consensus which had already seen a round of downgrades over May. Full-year dividend came in slightly below consensus. Covid pressures remained a headwind with added requirements and costs still putting pressure on earnings.

Trading Halt: RHC went into a trading halt this morning after a KKR-led indicative proposal was announced. The trading halt is expected to continue through next week as RHC needs time to review the revised proposal from KKR. Press speculation suggests the $88 all-cash offer has been dropped.

Result Details: Revenue $13,174m vs 13,751m market, EBITDA $1,830m vs $1,920m market. EPS $1.16 vs $1.34 market. Full-year dividend $0.97ps vs $1.00ps market. No formal guidance was given.

Outlook: No formal guidance was provided. RHC is expecting a gradual recovery in earnings over FY23. This recovery is expected to be driven by additional capacity created over the past few years notably through acquisitions in Europe. The KKR deal also explains the hesitance on giving clearer formal guidance.  

Summary: Results fell below consensus however the market largely expected it to be very soft.

The main game remains around the potential for a revised KKR bid. We believe a revised offer will be forthcoming, likely at a lower price than the original offer at $88 per share.

This commentary reflects our initial view. For detailed reports for companies under Sandstone Insights coverage, see our latest research notes for our investment view and specific risks associated with investing in these companies.

FIGURE 1: RHC TRENDS IN SURGICAL ADMISSIONS. COVID INTERRUPTIONS REMAINED THROUGHOUT FY22.

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Stock overview

Share Price

Company overview

Ramsay Health Care Limited is an Australia-based healthcare services company. The Company operates through four segments: Asia Pacific, UK, France, and Nordics.

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