RHC
Company result
Ramsay do good communications. Instead of handwaving vaguely, in their commentary, about COVID impacts on next half earnings, they make an effort at relative quantification.
Markets hate uncertainty, and reward clarity, even if it is at the margin, and there a loads of companies that are making minimal to no effort to guide the market. We get it, absolutely, but there’s a gulf of difference between the above, and what else we’ve seen, over reporting season.
Otherwise, the result is about as good as you can ask, for a business that is impacted by delays/deferments of surgical procedures due to lockdowns.
Government contracts defray the earnings/revenue impact (for example, the $417.6m cost recovery agreement in place with the NHS) due to reduced elective procedures and non-COVID admissions…
…which we feel is somewhat misunderstood by the market, given how weakly the stock has traded on news of lockdowns. It isn’t a perfect offset, but given the circumstances, it is a very strong pillar of support to revenues and ultimately to profitability.
“Revenue from governments under COVID-19 support contracts” reflects payments made under arrangements with state governments in Australia and the NHSE in the UK to make Ramsay’s facilities and services available to support public health systems during the year.
RHC results commentary
The balance sheet remains in good shape (with the now defunct Spire acquisition, RHC will focus on regular brownfields capex to grow future revenues), and cashflows are strong.
Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.
This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.
Please note that past performance is not a reliable indicator of future performance.
General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.
Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.