Key Highlights

  • Underlying net profit after tax rose 23% on a constant currency basis, reflecting performance momentum in Australia and operational improvements across all regions
  • Australian underlying EBIT grew 11.2% with a 30 basis point Margin uplift, supported by activity growth of 3.3% and improved theatre utilisation
  • The proposed separation of Ramsay Santé remains on track, subject to a Shareholder vote in November 2026
  • The Group revised its net zero Scope 1 and 2 greenhouse gas emissions target to 2050, from a previous target of 2040

Ramsay Health Care Limited (ASX:RHC) reported that its Funding Group achieved a 17.9% constant currency increase in underlying net profit after tax after controlling interests, driven by a 12.0% constant currency increase in underlying EBIT, reflecting positive momentum in Australia and a result from the UK businesses that the company attributed to the benefits of operational improvement programs. All regions within the Funding Group delivered EBIT improvement during the period.

In Australia, Revenue increased 7.8% and underlying EBIT grew 11.2%, driven by higher activity growth, increased acuity and theatre utilisation, improved private Health Insurance revenue indexation and cost management. The result was partially offset by a reduced contribution from the Joondalup Health Campus, reflecting a new funding mechanism that carried a net impact of $26 million, partially mitigated through operational actions.

UK Operations and Elysium Turnaround

The UK Acute hospital Business delivered EBIT growth of 10.3% on a constant currency basis, offsetting an 8% decline in NHS activity volumes through higher acuity work, increased private pay volumes and operational initiatives. Elysium Healthcare's performance turnaround plan gained traction in the second half, delivering EBIT growth of 43.5% on a constant currency basis through central cost reduction, agency cost reduction, site optimisation and fee negotiation initiatives, including site and ward closures to match local demand.

Group Capital Expenditure was below the company's revised range at $729 million on a constant currency basis, with growth and development spending focused on Australia and procedural capacity expansion. Funding Group return on capital employed improved 150 basis points to 14.8%. Ramsay Santé, the Group's French and Nordic operations, reported a reduced underlying loss after minority interests despite a €20 million reduction in French government subsidies and what the company described as continued inadequacy of French hospital Tariff indexation relative to cost inflation, though underlying EBIT for Ramsay Santé grew 11.4% on a constant currency basis, supported by a 65.6% increase in Nordics region EBIT related to the new St Göran contract in Sweden.

Ramsay Santé Separation and Revised Emissions Target

The company confirmed that the proposed in-specie distribution and separation of Ramsay Santé remains on track for completion in 2026, subject to a Ramsay shareholder vote scheduled for November. If approved, Ramsay Santé will be reported as a discontinued business in the first half and full year FY27 results, with total demerger-related costs, including $16 million incurred to 30 June 2026, to be detailed in the demerger booklet.

Separately, Ramsay revised its long-term net zero greenhouse gas emissions targets, citing the current and anticipated commercial and operating environment. The Group will now target net zero Scope 1 and 2 emissions on an Equity share basis by 2050, extended from a previous target of 2040, while Ramsay UK and Elysium Healthcare will target net zero Scope 3 emissions by 2050. The company noted that its progress on Supply chain emissions remains dependent on the pace at which its suppliers are able to reduce and manage their own Scope 1 and 2 emissions.

FY27 Outlook

Assuming shareholder approval of the Ramsay Santé separation, the Funding Group is expected to report EBIT growth and margin improvement in FY27, with growth anticipated in Australia and both UK businesses. Australia is targeting incremental year-on-year EBIT growth and margin expansion driven by activity growth, improved capacity utilisation and revenue indexation in line with cost indexation, alongside a $10 million to $15 million increase in technology and transformation spending. The recently acquired National Capital Private Hospital, expected to complete by 1 September 2026, is expected to be Earnings Per Share accretive within its first 12 months of ownership, with transition operating costs of $9 million to $11 million guided for FY27.

Conclusion

Ramsay Health Care's results point to earnings improvement across its Australian, UK and Elysium operations, supported by activity growth, higher acuity mix and cost management initiatives, while the Ramsay Santé segment continued to navigate a challenging French funding and tariff environment. The proposed separation of Ramsay Santé, subject to shareholder approval in November, represents a structural change to the Group's portfolio, alongside a revised long-term timeline for its net zero emissions targets.