Ramsay Health Care (ASX:RHC) Announces Two Non-Recurring Items
Financial Impact
Ramsay Health Care has announced two non-cash, non-recurring items for the six months ended 31 December 2024. The UK segment impairment totals $305 million (£151 million) with a post-tax impact of $291 million (£144 million). Additionally, a tax provision related to Ramsay Santé has been released for $64.5 million ($34.0 million after minority interests).
UK Segment Impairment
The UK segment, comprising Ramsay UK Hospitals and Elysium mental health services, saw minimal headroom post-impairment testing in the FY24 full-year results. Goodwill in this segment was £898 million pre-impairment. Updated impairment testing reflected an increased valuation for Ramsay UK Hospitals due to better tariff outlooks and positive NHS partnerships, while Elysium’s valuation decreased due to occupancy challenges and rising operational costs.
Operational Improvements
In response to the underperformance of the Elysium business, Ramsay has appointed a new Chief Operating Officer for Elysium and halted further site expansions. The company is conducting a strategic and performance diagnostic with external consultants to identify profitability initiatives and is collaborating with the NHS to adjust fees based on resident complexity and acuity.
Finalisation of Accounts
Ramsay expects 1H FY25 EBIT excluding non-recurring items to range between $490 million and $500 million and NPAT attributable to owners of the parent excluding non-recurring items to range between $150 million and $160 million. Due to the impairment, growth in NPAT and non-controlling interests from continuing operations in FY25 is no longer anticipated. The half-year accounts will be released on 27 February 2025.
Executive Comments
Managing Director and CEO Natalie Davis stated, “We acknowledge the challenging performance in the Elysium business since acquisition and are taking immediate steps to increase focus on operational excellence and improve performance. The Elysium team delivers high quality clinical care across its services, and we will rapidly review how we reposition the business in response to structural shifts impacting profitability.” She added, “It is pleasing to see the strengthening performance of Ramsay UK’s core Hospital business. We remain committed to partnering with the NHS across the UK to reduce elective surgery wait lists, and to providing choice and high quality care to our UK hospital patients.”
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