Preliminary report on the health of private hospital system in Australia. This post pertains to the private health industry generally, not Ramsay specifically

Its not really all that helpful, but a few key points:

• Median EBITDA margin (p50) has fallen from about 10% to 5% in 5 years (see graphic)
• Private obstetric and mental health facilities under greatest pressure
• Private hospitals provide 70% of elective surgeries. Statements by Mark Butler distancing the government from success or failure of private enterprise ignore the inevitable link between public healthcare pressures
• Day surgery cases growing much faster than expected overnight admissions - look for private hospitals which provide innovative hybrid/virtual overnight stays to transition more patients out of hospital at night ($RHC is oversupplied in overnight beds I think)
• Expect greater pressure on insurers to contribute more to private hospitals
• Expect insurers to continue pushing for insurer-hospital partnerships to introduce US-style managed care products (generally considered a bad thing for patients). NIB tried and failed very recently to introduce such a scheme, but Im sure is still working on it

https://www.health.gov.au/sites/default/files/2024-11/private-hospital-financial-viability-health-check-summary.pdf?_cldee=n8hSwtkDelMYYKxEfmUeiW5O6xQgMy4jiQ859rA51v3XKmdIIm78sMXV17Lnws6o&recipientid=contact-9d18d4a35113ef119f8a00224892bcfb-dc9265614cc742f59e5e3c5826a21603&esid=8e5b28d2-0298-ef11-8a68-000d3acbacef

Wesfarmers is reportedly considering buying Ramsay Health Care, focusing on its Australian operations. (The Australian) 

I don't have access to the Australian unfortunately and not reported elsewhere currently that I can see.

David Thodey, former CEO of Telstra, bought over $200k worth on-market at $52 and change in a disclosure filed last week.

Good to see...

• SALE OF RAMSAY SIME DARBY JOINT VENTURE
• REACHED AGREEMENT ON SALE OF ITS 50:50 JOINT VENTURE IN ASIA, RAMSAY SIME DARBY HEALTH CARE
• DEAL FOR MYR6,056M
• EXPECTS NET PROFIT AFTER TAX ON SALE OF ITS SHARE OF JOINT VENTURE WILL BE APPROXIMATELY A$630M
• DEPENDING ON TIMING OF COMPLETION, FY24 NET INTEREST COSTS EXPECTED AT LOWER END OF A$570-600M
• PROCEEDS TO RAMSAY EXPECTED TO BE ABOUT A$935M AND WILL BE USED TO PAY DOWN DRAWN DEBT OF FUNDING GROUP

The company has announced the sale of its Asian JV, for what looks like a good price. The proceeds will be used to pay down debt, which is also a good move. These operations only contribute a low single digit % of operating profits, so the divestment should be a positive for management to focus on the more important divisions.

How much egg is on the Ramsay board's collective faces after spurning KKR's approach @ $88? They looked after themselves at the expense of shareholders, and have now destroyed an enormous amount of value - the most I can think of in absolute terms on the ASX, especially for a large and established company like this.

The tomatoes may follow at this year's AGM :)

Looks like Ramsay is going to try and realise the value from the property portfolio.

RHC AU: Ramsay Health Care is believed to be planning a move to sell a selection of its hospitals to real estate landlords after suitor Kohlberg Kravis Roberts abandoned a $20bn buyout proposal earlier this year.

Again the market Baby is throwing a fit here - me thinks -for long term holders this might serve a decent entry point if you believe in the long term tailwinds for this business.

Surely the value of RHC has not dropped by 10% just because the clock has turned around 1 full circle - 24 hrs.

I am topping up here - RHC is a big ship- will come good in fullness of time.Ofcourse there might be more take over revised offers from other vultures.......hovering for a bargain

"Agreement to acquire 100% of UK based mental healthcare provider Elysium Healthcare (Elysium) for a pre-IFRS 161 enterprise value of £775m (A$1.4bn) from private equity firm BC Partners

Transaction expected to deliver synergies of at least 5mill pounds p.a."

Interesting move into the mental health space - a growing sector with strong government backing and increasing research in diagnostics and treatments (in UK, Aust, France and Sweden in which they operate). They also mention leverage and extension into 'learning difficulties and neurological issues' space. I see this as a HUGE market, at both ends of the age spectrum with many government subsidies being increasingly encompassing of this area.

PE currently at 39.26, a bit on the high side.

13-Nov-2020:  Ramsay Health Care First Quarter Trading Update

07-May-2020:  Ramsay Health Care finalises Queensland Agreement

22-April-2020:  Ramsay Announces Equity Raising

Investor Presentation

RAMSAY HEALTH CARE (RHC) ANNOUNCES EQUITY RAISING AND CAPITAL MANAGEMENT INITIATIVES TO ENHANCE FINANCIAL FLEXIBILITY

Key Points

• The COVID-19 pandemic has resulted in the suspension of most elective surgery in each of RHC’s major operating geographies and led to an uncertain operating environment 
• RHC is undertaking an equity raising and announcing capital management initiatives to enhance financial flexibility during the COVID-19 pandemic 
• RHC is raising A$1,200 million in new equity via an underwritten institutional placement and up to an additional $200 million via a non-underwritten share purchase plan 
• RHC has received consents to amend or waive key banking covenants from lenders to the Ramsay Funding Group (1) up to and including the December 2020 testing date and will temporarily suspend the ordinary share dividend
• RHC expects that these initiatives will enable it to strengthen its balance sheet and increase financial flexibility in an uncertain operating environment and position Ramsay for future growth opportunities

(1) Ramsay Funding Group comprises wholly owned subsidiaries and excludes Ramsay Santé and its covenant-lite debt, which is non-recourse to Ramsay Funding Group

Ramsay is undertaking a fully underwritten institutional placement of new ordinary shares to raise approximately A$1,200 million (“Placement”) and a non-underwritten Share Purchase Plan (“SPP”) to raise up to an additional A$200 million (together, the “Offer”).  The proceeds of the Offer will initially be used to partially repay Ramsay Funding Group’s revolving debt facilities which will remain available for redraw. 

Ramsay’s Managing Director Craig McNally said, “the equity raising will strengthen Ramsay’s balance sheet and liquidity position, as well as increase financial flexibility during the unprecedented operating environment. More importantly, it will ensure that we can continue to pursue our growth initiatives and position us to take advantage of other growth opportunities that may arise” 

“Private hospital operators, including Ramsay, are making an important contribution in terms of supplementing the broader public health system in fighting the COVID-19 pandemic,” Mr McNally said.

With more than 500 locations across 11 countries globally, Ramsay plays a critical role in the healthcare systems of each of its major markets. Ramsay is pleased to be partnering with Governments to supplement the public health response to COVID-19 and making a positive contribution to patients within all of its communities during the pandemic. The health and safety of Ramsay’s people is also paramount and it is  taking proactive steps to monitor the impacts of COVID-19 and support them. 

Commitment from Existing Lenders and Covenant Waivers 

[click on link above for this section]

COVID-19 Arrangements with Governments and Health Authorities  

[click on link above for this section]

Dividends

Ramsay has determined to temporarily suspend ordinary share dividend payments.

Dividend payments on Ramsay CARES will not be suspended. 

Details of the Placement 

Ramsay is undertaking a fully underwritten Placement of new fully paid ordinary shares in Ramsay (“New Shares”) to eligible institutional investors to raise approximately A$1,200 million, at a price of A$56.00 per New Share (“Placement Price”) which represents a 12.9% discount to the last closing price of A$64.29 on 21 April 2020.

The Placement will result in approximately 21.4 million New Shares being issued, representing approximately 10.6% of Ramsay’s existing issued ordinary shares, and are expected to settle on 27 April 2020 and be issued, and commence trading on the following business day.

The Placement is fully underwritten by J.P. Morgan Securities Australia Limited.

Due to the nature of the Foundation, it will not be participating in the equity raising. However, the equity raising has the Foundation’s support.

Details of the Share Purchase Plan (SPP)

Following completion of the Placement, Ramsay will offer existing eligible shareholders the opportunity to participate in a non-underwritten SPP, to raise up to A$200 million.

Under the SPP, eligible Ramsay shareholders will have the opportunity to apply for up to A$30,000 of New Shares without incurring brokerage or transaction costs.

The Issue Price of the New Shares under the SPP will be the lesser of: 

• - the Placement Price; and 
• - a 2% discount to the volume weighted average price (VWAP) of Ramsay shares traded during the five ASX trading days up to, and including, the closing date of the SPP (20 May 2020).

Ramsay may decide to accept applications (in whole or in part) that result in the amount raised under the SPP being greater than or less than A$200 million in its absolute discretion.

Full details of the SPP will be set out in the SPP Offer Booklet which is expected to be released to the ASX and dispatched to eligible shareholders on 29 April 2020.

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