Ramsay Health Care reported a modest 1.7% increase in underlying net profit for FY25, driven by strong Australian and UK hospital performances despite significant impairments in the UK. The company is advancing its multi-year transformation and expects EBIT growth in Australia for FY26, though challenges remain.
- Underlying NPAT up 1.7% excluding non-recurring items
- Significant $291m UK impairment weighs on reported net profit
- Completed major private health insurer negotiations improving revenue indexation
- Focused capital expenditure of $777m on expanding procedural capacity in Australia
- New leadership appointments to strengthen operational and commercial capabilities
FY25 Financial Highlights
Ramsay Health Care delivered a mixed FY25 financial performance, reporting a net profit after tax (NPAT) of $24 million, heavily impacted by a $281 million charge in non-recurring items, primarily a $291 million impairment in its UK operations linked to the underperformance of its Elysium business. Excluding these one-off items, underlying NPAT rose by 1.7% to $305.3 million, reflecting solid growth in its core Australian and UK hospital businesses.
Operational Progress and Strategic Transformation
CEO Natalie Davis highlighted the company’s ongoing multi-year transformation, with a strong focus on accelerating performance in its Australian hospital network. Key achievements include the completion of all major private health insurer negotiations, securing improved revenue indexation for FY25 and FY26, and a 3 percentage point uplift in theatre utilisation nationwide in Q4 FY25. The company has also reset its digital and transformation spend to prioritize five major hospital operational initiatives, including growth powered by data insights and AI-enabled operations.
Capital Discipline and Investment Focus
Capital expenditure for FY25 was $777 million, at the lower end of guidance, with a clear emphasis on expanding procedural capacity in major Australian hospitals located in growth corridors. Notable projects include expansions at Joondalup Private Hospital and Warringal Private Hospital. Ramsay Santé, the European arm, maintained strict capital discipline, reducing capital spend by 14% in local currency and focusing on working capital management while exploring strategic options with Goldman Sachs to optimise shareholder returns.
Regional Performance and Challenges
Australia’s private hospital portfolio showed resilience with 2.7% admissions growth and a 7.9% revenue increase, despite the return of Peel Health Campus management to the government and natural disaster impacts in Queensland. The UK hospitals business benefited from a 7.6% increase in NHS admissions and tariff indexation, expanding EBIT margins by 70 basis points. However, Elysium’s performance was disappointing due to lower occupancy and cost inflation, prompting a rapid performance improvement plan and cessation of growth capex.
Leadership and Outlook
Ramsay has refreshed its leadership with key appointments including Stuart Winters as Chief Operating Officer Australia and Andrew Coombs as Chief Commercial Officer Australia, aiming to bolster operational and commercial execution. Looking ahead, the company expects EBIT growth in Australia for FY26, supported by private hospital momentum and improved revenue indexation, though the Joondalup public campus faces a $37 million EBIT headwind from a new funding agreement linked to the Western Australia State Price. The dividend remains steady at 80 cents per share fully franked, with a payout ratio of approximately 64%.
Bottom Line?
Ramsay’s FY25 results underscore steady underlying growth tempered by significant UK impairments, setting the stage for a pivotal FY26 focused on operational execution and strategic portfolio review.
Questions in the middle?
- How will Ramsay mitigate the $37 million EBIT impact at Joondalup public campus in FY26?
- What strategic options will Ramsay pursue for its 52.8% stake in Ramsay Santé?
- Can the ‘Big 5’ hospital operational initiatives deliver sustained theatre utilisation and margin improvements?