Ramsay Health Care Ltd (ASX: RHC) has recently provided its profit guidance for the fiscal year 2024, and the market has responded with a noticeable dip in the company’s share price. As of the latest update, Ramsay’s share price has fallen by 1.8%, reaching $44.49. This decline contrasts with the broader market trend, where the ASX 200 index has decreased by 2.3%.
For FY 2024, Ramsay Health Care, an ASX healthcare sector stock, is anticipating a significant increase in its net profit after tax. The company expects to report a figure in the range of $884 million to $889 million. This projection represents an impressive year-on-year growth of approximately 200%, compared to the $298.1 million reported in the previous fiscal year. This substantial increase in profit is drawing considerable attention from investors and analysts.
A major contributor to the dramatic rise in profits is the sale of Ramsay Sime Darby (RSD), a joint venture in Asia that was sold in December 2023. The sale generated an after-tax cash profit of $618 million. This divestment has played a pivotal role in boosting the company's reported profits, marking a significant financial milestone for Ramsay Health Care.
While the overall profit numbers are striking, a more accurate reflection of Ramsay Health Care’s core operational performance can be derived from the net profit from continuing operations. For FY 2024, the company projects that this figure will be between $265 million and $270 million. This represents a slight decrease compared to the $278.2 million reported for the prior corresponding period. This measure excludes the impact of the RSD sale, providing a clearer view of the company's ongoing operational efficiency.
The anticipated profit from continuing operations is expected to be affected by several non-cash adjustments. These include impairments and accelerated write-downs totaling $24.5 million after tax and minority interests, related to underperforming assets in Ramsay Sante and the UK region. Additionally, there will be negative net mark-to-market movements amounting to $13.1 million after tax, associated with interest rate swaps in Ramsay Sante's debt facilities. These adjustments are expected to influence the overall profitability of the company.
Ramsay Health Care’s depreciation, amortisation, and impairments charge for FY 2024 is anticipated to exceed the previously projected range of $1 billion to $1.1 billion, reaching approximately $1.13 billion. The inclusion of non-recurring items is also expected to negatively impact the financial results by approximately $29.5 million after tax. This is a contrast to the positive contribution of $27.5 million seen in the previous fiscal year. These non-recurring items further complicate the assessment of the company’s financial performance.
When isolating the effects of non-recurring items, Ramsay Health Care’s net profit after tax from continuing operations is expected to fall within the range of $294 million to $299 million. This adjusted figure provides a more focused view of the company’s profitability from its ongoing business activities.
Management has highlighted several factors driving the underlying results. These include improving activity trends and enhanced labor productivity. The company has also emphasized its commitment to sustainable performance acceleration programs and better tariff indexation as key components of its strategic focus. These efforts aim to bolster the company’s operational efficiency and financial stability in the face of market challenges.