Company Reports

Ramsay is returning to its core Australian business after a period of global expansion. It sold its German business in 2020, Ramsay Sime Darby in 2023, and now plans to demerge its 53% stake in Ramsay Santé in 2026, subject to shareholder approval. We support the exits, as market fundamentals are generally less attractive overseas. Around 80% of Ramsay's Australian revenue comes from commercial private health insurance, or PHI, agreements, compared with around 30% or less in its other geographies. This gives the Australian business greater pricing flexibility, while publicly funded activity is generally subject to government budgets and government-set tariffs. We also see limited benefits operating globally given differing regulatory and funding regimes and the local nature of staffing, a hospital's highest cost.

We take a fresh look at Ramsay's moat, capital allocation, and uncertainty ratings, in addition to its key growth drivers, ahead of its potential Ramsay Santé demerger in December 2026. Critically, we reassess what this means for our long-term earnings assumptions and thesis.

Our Aug. 27 modeling of Ramsay contained assumption errors, which we correct. We applied a lower fiscal 2027 tax rate and net interest than we think is achievable. This caused our EPS and dividend forecast for fiscal 2027 to be higher than they should have been. The note is materially unchanged.

Ramsay's fiscal 2026 constant currency revenue and underlying EBIT increased 4% and 12%, respectively, from the prior year. Australia's underlying EBIT was 11% higher, the UK's was 10% higher, and it has the beginnings of a turnaround in Elysium, with a return to profitability. Shares rose 15%.

Ramsay’s Australian business enabled its global acquisitions, but the market fundamentals offshore are far less attractive. The key differentiator is the proportion of private health insurance coverage of the population. According to data from the Australian Prudential Regulation Authority, approximately 46% of the Australian population has at least hospital treatment cover PHI, resulting in roughly 80% of Ramsay’s Australian revenue flowing from PHI versus 25% or less in its other geographies. This has a direct impact on profits earned as providers are price-takers in publicly outsourced work.

We transfer coverage of Ramsay Health Care, one of the world's largest private healthcare providers, with over 530 sites in eight countries. The key markets in which it operates are Australia, France, the UK, and Sweden. It's the largest private player in each of these markets except for the UK.

Ramsay’s Australian business enabled its global acquisitions, but the market fundamentals offshore are far less attractive. The key differentiator is the proportion of private health insurance coverage of the population. According to data from the Australian Prudential Regulation Authority, approximately 46% of the Australian population has at least hospital treatment cover PHI, resulting in roughly 80% of Ramsay’s Australian revenue flowing from PHI versus 25% or less in its other geographies. This has a direct impact on profits earned as providers are price-takers in publicly outsourced work.

Ramsay's interim 2026 underlying EBIT rose 5% in constant currency, driven by strong 7% growth in Australia, which accounted for 70% of attributable EBIT. The firm guided to EBIT growth momentum in Australia continuing on revenue indexation, improving mix, and cost control. Shares rose 13%.

Ramsay’s Australian business enabled its global acquisitions, but the market fundamentals offshore are far less attractive. The key differentiator is the proportion of private health insurance coverage of the population. According to data from the Australian Prudential Regulation Authority, 46% of the Australian population has PHI, resulting in roughly 80% of Ramsay’s Australian revenue flowing from PHI versus 25% or less in its other geographies. This has a direct impact on profits earned as providers are price-takers in publicly outsourced work.

Ramsay Health Care is looking to spin off its 53% holding in Ramsay Sante, which operates private hospitals mainly in France and the Nordics, by December 2026. If implemented, shareholders will receive Australian CDIs in proportion to holdings at the demerger record date yet to be set.

Ramsay Health Care’s first-quarter EBIT in Australia grew 6%, driven by improved revenue indexation. The firm reiterated fiscal 2026 Australia EBIT growth. Ramsay said it would also provide an update on the potential sale of its 53% holding in Ramsay Sante by February 2026. Shares rose 13%.

Ramsay’s Australian business enabled its global acquisitions, but the market fundamentals offshore are far less attractive. The key differentiator is the proportion of private health insurance, or PHI, coverage of the population. According to data from the Australian Prudential Regulation Authority, 45% of the Australian population have PHI resulting in roughly 80% of Ramsay’s Australian revenue flowing from PHI versus 25% or less in its other geographies. This has a direct impact on profits earned as providers are price-takers in publicly outsourced work.

Ramsay Health Care's fiscal 2025 revenue grew 5% but underlying EBIT fell 1% to AUD 1.04 billion. A 60% fall in Elysium EBIT more than offset 17% and 5% underlying growth in the UK and Australia. Ramsay guides to volume growth in all regions and Australia EBIT growth in fiscal 2026. Shares fell 10%.

Ramsay’s Australian business enabled its global acquisitions, but the market fundamentals offshore are far less attractive. The key differentiator is the proportion of private health insurance, or PHI, coverage of the population. According to data from the Australian Prudential Regulation Authority, 45% of the Australian population have PHI resulting in roughly 80% of Ramsay’s Australian revenue flowing from PHI versus 25% or less in its other geographies. This has a direct impact on profits earned as providers are price-takers in publicly outsourced work.

Australia's second-largest private hospital operator Healthscope entered receivership last month. This raises two concerns: first, around the viability of the private hospital industry, and second, the implications for private health insurers.

Ramsay’s Australian business enabled its global acquisitions, but the market fundamentals offshore are far less attractive. The key differentiator is the proportion of private health insurance, or PHI, coverage of the population. According to data from the Australian Prudential Regulation Authority, 45% of the Australian population have PHI resulting in roughly 80% of Ramsay’s Australian revenue flowing from PHI versus 20% or less in its other geographies. This has a direct impact on profits earned as providers are price-takers in publicly outsourced work.

Ramsay’s Australian business enabled its global acquisitions, but the market fundamentals offshore are far less attractive. The key differentiator is the proportion of private health insurance, or PHI, coverage of the population. According to data from the Australian Prudential Regulation Authority, 45% of the Australian population have PHI resulting in roughly 80% of Ramsay’s Australian revenue flowing from PHI versus 20% or less in its other geographies. This has a direct impact on profits earned as providers are price-takers in publicly outsourced work.

Narrow-moat Ramsay Health Care’s interim fiscal 2025 patient revenue grew 6% to AUD 8.5 billion, driven by volume growth and improved indexation. However, underlying EBIT of AUD 500 million fell 1%, with a 31% decline in France more than offsetting 6% and 31% growth in Australia and the UK, respectively. Management still guided to activity growth in all regions in fiscal 2025, but stopped short of reiterating underlying EBIT growth. We cut our fiscal 2025 underlying EBIT forecast by 6% to AUD 1.023 billion, implying a 1% decline year on year.

Shares in narrow-moat Ramsay Health Care have declined roughly 20% since August 2024 and now trade at roughly a 40% discount to our unchanged AUD 62 per share fair value estimate. While wage growth is likely to outpace tariff indexation in Europe near-term, we think the market has a myopic view of Ramsay’s profitability.

We cut our fair value estimate for narrow-moat Ramsay Health Care by 9% to AUD 62. Fiscal 2024 revenue from patient activity grew 7% in constant currency to AUD 16.7 billion, in line with our expectations, driven by 3% volume growth, tariff uplifts, and new capacity. However, underlying EBIT of AUD 1.034 billion was up a smaller 6%, and 9% below our forecast. The result was dragged down by underlying EBIT in France falling 21%. The decline largely reflects lower government support that is significantly lagging cost inflation. While future earnings in France are supported by a 3.2% tariff increase from July 2024, indexation will be 0.6% in the UK, and, overall, wage growth is likely to outpace tariff indexation in Europe.