SYDNEY (Reuters) - Australia’s biggest private hospital operator Ramsay Health Care Ltd (RHC.AX) took a charge and cut its outlook for profit growth on a slump in business from Britain’s National Health Service, sending its shares tumbling to a four-year low.
It marks a rare stumble for a stock analyst favorite that has seen net profit climb every year for a decade with a string of offshore acquisitions. Ramsay is also the biggest private hospital operator in France.
British government strategies to dampen non-essential use of public health were having “a significant negative impact on volumes, despite the significant and increasing number of people in the U.K. awaiting treatment”, Ramsay said in a statement.
Theresa May has promised to raise NHS funding by 20 billion pounds once the country split from the European Union but “we do not anticipate immediate benefits for us and expect operating conditions in the UK to remain challenging”, it added.
The Sydney-based company cut its forecast for underlying profit growth to 7 percent, from between 8 percent and 10 percent, for the year to end-June, and wrote down the value of six UK hospitals by another A$125 million ($92 million).
Ramsay shares fell as much as 13 percent, their biggest intraday fall in more than a decade. It was down 7 percent by midsession, giving it a market value of about $8.5 billion.
“What is notable about this announcement is the softer conditions, given that typically Ramsay does outperform the general market given the quality and location of its portfolio,” said Chris Kallos, a healthcare analyst at Morningstar.
Ramsay also blamed weaker trading conditions in its home country for the profit warning. Thousands of Australians are cancelling private health insurance policies every month, according to official figures, as people return to the public system to avoid rising premiums and limits to the services they can access.
Reporting by Susan Mathew in Bengaluru, Editing by Sherry Jacob-Phillips