RHC +13.72%: Surprised on the upside in FY26, with earnings comfortably ahead of expectations as better cost management, particularly across the UK and Australia, translated into stronger margins while the looming separation of Ramsay Santé should also leave behind a simpler business with a cleaner earnings profile.
Key results:
- Revenue and other income of A$18.58bn, up 4.2%.
- Core earnings (EBIT) of ~A$1.2bn, ~7% ahead of consensus.
- Net profit (NPAT) of A$329.2m, versus A$24m last year and ~6% ahead of A$311.7m expected.
- Final dividend increased to 48.5cps, from 40cps.
The outlook is encouraging, with Ramsay expecting FY27 EBIT growth and margin improvement across the Funding Group, including both Australia and its UK businesses. National Capital is expected to be EPS accretive in its first 12 months, while capex is guided to A$480-520m. The next major catalyst is the separation of Ramsay Santé, with the demerger booklet due in October ahead of a shareholder vote on 24 November.
MM’s view: This is the sort of result RHC desperately needed. Ramsay finally demonstrated that getting a tighter grip on costs can drive meaningful earnings leverage. We wouldn’t extrapolate one good year too aggressively given healthcare labour costs and hospital economics remain challenging, but the direction is clearly better. Separating Ramsay Santé should simplify what has become an unnecessarily complicated investment case, while FY27 margin improvement offers another lever. After years of operational frustration, RHC has finally given the market a credible reason to believe earnings can improve — the challenge now is proving this wasn’t simply the low-hanging fruit of cost cutting.
MM is bullish toward RHC
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