‘Volatile time’: Ramsay Health Care warns on global COVID juggle

Ramsay Health Care boss Craig McNally has warned the uncertain and volatile environment means the private hospital operator can’t predict earnings for next year as it continues to help fight COVID-19 second waves across several continents.

The $15.5 billion ASX listed company provided a trading update on Friday, ahead of its annual general meeting next week in what Mr McNally described as a “unique move” but necessary to provide clarity to investors.

“The real point we want to make is that point about the uncertainty. Different markets are in different stages of recovery. It will have an obvious impact on what the performance of Ramsay will be,” he said on a call to analysts.

Australian earnings for the first quarter of the financial year declined due to lockdowns in Victoria and continued costs relating to coronavirus safety. The company reported an 8 per cent increase in surgical volumes for the quarter if Victoria was excluded from the calculations, but this dropped to 1.7 per cent if the locked-down state was included.

Ramsay Health Care chief executive Craig McNally warned the company would not be in a position to provide guidance for FY21 due to virus uncertainties.
Ramsay Health Care chief executive Craig McNally warned the company would not be in a position to provide guidance for FY21 due to virus uncertainties. Credit:Christopher Pearce

Australian earnings were also impacted by additional costs relating to personal protective equipment, screening of hospital visitors, catering and cleaning. This figure was between $8 million and $9 million each month over the past three months, excluding Victoria.

Ramsay also has operations in the United Kingdom, Europe and Asia and has been brokering a range of government supply agreements across the course of 2020 to help public hospital systems fight COVID-19.

This includes in France, where its Ramsay Santé brand continues to operate under a revenue guarantee deal with the French government which is set to expire in December. Surgery volumes in France were up 5.4 per cent for the first quarter of 2021, though the company did not provide earnings numbers for the region.

Mr McNally and chief financial officer Martyn Roberts told analysts it would be too confusing to give these figures given the government agreements are smoothing out earnings.

The company’s UK facilities had seen a resumption of private surgical work in the first quarter of 2021, though management warned revenue was down 9.9 per cent.

Mr McNally was optimistic the company would continue to help public hospital systems into the future. Elective surgery waiting lists have been lengthening in the wake of the pandemic in Australia and the UK and private operators have offered to assist with easing the burden.

He said the company was keen to ink deals with state governments to assist with this issue in Australia, but no formal agreements had been reached.

“I’m still optimistic about it… but as you know, until you get those agreements done and executed, the circumstances can change and politics comes into it,” he said.

“The relationships we have with the public sector have improved markedly [since the pandemic]. And the intent going forward to use the private sector to deal with the waiting lists is still there.”

Ramsay shares opened down 1.4 per cent to $67.

Business Briefing

Start the day with major stories, exclusive coverage and expert opinion from our leading business journalists delivered to your inbox. Sign up for the Herald‘s here and The Age‘s here.

Most Viewed in Business

Source: Thanks smh.com