ASX:RHC
Ramsay Health Care Ltd Fully Paid Ord. Shrs
Investment Summary
The fund managers believe that Ramsay Health Care Ltd, as Australia's largest private hospital operator, continues to present significant value unlock opportunities despite recent challenges. The collapse of the KKR takeover deal, previously valued at $88 per share, was disappointing but they maintain that Ramsay's management has alternative strategies to maximize shareholder value, including portfolio simplification and property asset management. Recent reports indicate that Ramsay's share price performance has been impacted by various factors, including slower recovery in elective surgery volumes post-COVID and cost pressures in key markets like France and the UK. However, there is consensus among fund managers that the business's importance in the Australian healthcare landscape will support its long-term recovery. Moreover, improvements in tariff levels and potential restructuring options could alleviate debt burdens, providing a favorable outlook for future returns in the sector.
Commentary From The Managers
Blackwattle Investment Partners
31 May 2024
$47.11
- Blackwattle Investment Partners notes that the Healthcare sector was the greatest detractor for the Fund.
- A long position in Ramsay (RHC.AX) negatively impacted performance due to cost pressures and subdued patient numbers.
- Pricing growth remains limited, particularly in France and the UK.
- Post month end, a resolution between the private sector and Government provides multi-year certainty in tariff levels.
- This resolution could lead to a restructure of ownership, aiding in reducing the company’s debt load.
- Blackwattle remains constructive on Ramsay.
- Expectations are set on increased payer rates with local insurers and a resolution of the underperforming French business.
- These factors should ultimately lead to material improvements in returns for Ramsay, a leading private hospital operator with assets difficult to replicate.
Cooper Investors
30 Sept 2023
$51.18
- Cooper Investors initiated a position in Ramsay Health Care Ltd (RHC) during the quarter.
- RHC is categorized within their Stalwarts investments.
- The private hospital sector faced challenges due to COVID-19 restrictions on elective surgeries in 2020.
- RHC collaborated with the government to address pandemic-related challenges.
- Although restrictions have lifted, the recovery in elective surgery volumes has been slower than anticipated.
- Ongoing disrupted operating rhythm affects industry profitability.
- RHC has experienced share price underperformance as a result.
- Cooper Investors sees adequate Risk-Adjusted Value Latency to mitigate uncertainty about elective surgery recovery timing.
- Private hospitals provide about 60% of all surgical services in Australia, making RHC a vital player in the healthcare landscape.
- The investment thesis is based on the eventual recovery of elective surgery volumes.
- RHC's strategy includes Brownfield expansion and asset sales to reduce foreign operational exposure.
- Improving balance sheet quality is a focus through asset and/or property sales.
L1 Capital
30 Sept 2022
$57.28
- Ramsay Health Care (Long -22%) shares fell after ceasing discussions with the KKR consortium on its non-binding indicative proposal, originally valued at $88 cash per share.
- Ramsay is the largest private hospital operator in Australia with over 70 hospitals and day surgery units nationwide.
- The company has a well-established global footprint including Australia, the UK, France, the Nordics, and South-East Asia.
- The collapse of the takeover offer is disappointing as it was viewed as a near-term realisation of catalysts in the business.
- Key catalysts include portfolio simplification, unlocking value from its Australian property portfolio, and capital management opportunities.
- L1 Capital believes that opportunities to unlock value still exist for Ramsay.
- They note that Ramsay's management and board have a range of alternative options to maximise value for shareholders.
L1 Capital
30 Sept 2022
$57.28
- Ramsay Health Care shares fell in September following the cessation of discussions with the KKR consortium on its proposal.
- The proposal was originally valued at $88 cash per share, indicating a potential premium for shareholders.
- L1 Capital views Ramsay as the largest private hospital operator in Australia, with over 70 hospitals and a strong presence in global markets.
- Although the collapse of the takeover offer is disappointing, L1 Capital believes it highlighted several catalysts for value realisation.
- These catalysts include portfolio simplification and unlocking value from Ramsay's Australian property portfolio.
- Capital management opportunities are also seen as potential value drivers for the company.
- L1 Capital continues to hold Ramsay due to ongoing value unlock opportunities that management and the board can pursue.
- They have a range of alternative options available to maximise value for shareholders moving forward.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.