By David Winning


SYDNEY--Ramsay Health Care said it is actively reviewing ways to unlock value from its portfolio of global hospitals after half-year net profit from continuing operations fell by 40%.

Ramsay reported a net profit from continuing operations of 135.5 million Australian dollars (US$91.9 million) for the six months through December, down from A$224.5 million a year earlier. The result excluded a A$618.1 million profit made by Ramsay on the sale of its Asia-focused joint venture with Malaysia's Sime Darby.

On a statutory basis, Ramsay's net profit totaled A$758.5 million in the period, compared with A$194.4 million a year ago. Revenue rose by 11% to A$8.16 billion, while earnings before interest, tax, depreciation and amortization--or Ebitda--rose by 2.9% to A$1.04 billion when only continuing operations were included.

Directors of the private hospital operator declared an interim dividend of 40 Australian cents a share, down 20% on the payout of 50.0 cents a year ago.

"The performance of the business will continue to be reviewed in the context of optimizing shareholder returns, a range of strategies are actively being assessed to unlock value and drive improved performance from the Company's portfolio of assets," said Ramsay.

Like other health care providers, Ramsay has felt the sting of a global labor shortage that followed the Covid-19 pandemic. Wages for doctors, nurses and other health care professionals have risen sharply as hospitals and clinics competed to hire staff. At the same time, protocols that were put in place to slow the spread of Covid-19 have only been withdrawn slowly, limiting the rebound in activity.

Rising costs have led Ramsay to take action on multiple fronts. The company sold its the Ramsay Sime Darby venture, pledging to use the deal proceeds to repay debt that became more costly to service when interest rates increased. On Thursday, Ramsay said its funding group leverage was 2.28 times at the end of December, within its target range of less than 2.5 times, and it expects annual net interest costs of A$590 million-A$620 million.

Ramsay has made some progress in talks with payors around reimbursement rates to offset wage rises and other inflationary pressures that the hospital sector has been facing. The company has also been speeding up programs locally that aim to rein in costs.

Still, it said reimbursement rates are yet to fully reflect cost pressures, hampering the recovery in its profit margins. Ramsay has also stepped up digital, data, and cyber security investment.

Ramsay's half-year revenue from patients in Australia rose by 6%, which management said was driven by a 4.7% increase in hospital admissions and improved indexation.

Revenue from patients in continental Europe rose by 7.4% at constant-currency rates. While in the U.K., Ramsay said its half-year revenue from treating patients rose by 26%.

"The result reflects 10% growth in admissions in the U.K. acute hospital business and tariff increases combined with higher levels of case acuity, and a significant turnaround in the operating performance of Elysium reflecting a material reduction in the use of agency labor, lower staff turnover and improving occupancy levels," Ramsay said.

Turning to the outlook, Ramsay said it continues to expect earnings growth would accelerate in the second half of fiscal 2024, excluding the gain from the sale of the Ramsay Sime Darby venture.


Write to David Winning at david.winning@wsj.com


(END) Dow Jones Newswires

02-28-24 1705ET