Ramsay Health Care (ASX:RHC) reported improved underlying earnings for the six months to Dec. 31, 2025, with management pointing to momentum in its Australian hospitals as the key driver and outlining further progress on a multi-year transformation program.
Chief executive officer Natalie Davis said the company had completed a refresh of its group executive team and remained focused on three priorities: transforming its market-leading Australian hospital business, strengthening capital allocation and returns across the portfolio, and evolving the culture to “innovate and accelerate delivery.” Group CFO Anthony Neilson, who joined in late November, said the company emphasized underlying results given large non-recurring items in the prior-year period in the U.K. region and at Ramsay Santé.
Half-year financial results and dividend
Neilson said items excluded from underlying profit in the half were an AUD 11 million negative impact on net profit, primarily transaction and restructuring costs. He said the underlying NPAT tax rate was 36%, slightly higher than the prior year, reflecting the impact of French CVAE taxes calculated on turnover despite France being in a pre-tax loss position in the first half. The company forecast a full-year underlying effective tax rate of about 35%.
Operating cash flow improved 16.9% to AUD 350 million, which Neilson attributed to Australia’s performance and lower tax paid compared to the prior period that included the sale of Ramsay Sime Darby. He said improving cash conversion was a key priority across all regions, including initiatives to strengthen billing and collections.
Australia: activity growth, higher acuity, and capital discipline
Australia was the largest contributor to earnings growth, delivering underlying EBIT growth of 7.1%. Management attributed the result to activity growth, higher acuity, improved private health insurer (PHI) indexation, and cost management, which together helped offset the impact of a new funding mechanism at Joondalup Health Campus.
Revenue from customers in Australia increased 8.2%, supported by a 3.1% rise in hospital admissions and improved indexation. Revenue from the private hospital portfolio rose 8.7%. EBIT margins excluding Joondalup improved by 40 basis points, driven by higher activity levels and case acuity, increased theater utilization, and PHI indexation that management said was improved relative to wage inflation.
On activity, the company reported 5.7% growth in core surgical admissions, with day admissions growing faster than overnight admissions. Davis said a higher-acuity mix lifted inpatient activity metrics faster than inpatient admissions. In the Q&A, she said the company believed it was likely taking market share, citing new data tools to support hospital CEOs and business development teams in targeting specialists, improving theater utilization, and reducing cancellations.
Management also highlighted operational initiatives at Joondalup, including efforts to reduce agency usage and a recruitment program that brought in about 50 nurses to support lower reliance on agency staff. Davis also referenced the opening of Joondalup Private, which she said created dedicated private theaters at the campus and would support growth in the private hospital operations there.
Ramsay lowered its Australian development capital expenditure guidance for the year to AUD 170 million to AUD 190 million, below its prior range, as it postponed or reshaped some projects based on utilization. Major projects in the half included completion of Ramsay Private at Joondalup and the final phase of the Warringal expansion in Melbourne, due to complete in the second quarter of FY2027. The company said 23 new theaters and procedure rooms are scheduled to open in FY2026, concentrated in major hospitals.
U.K.: NHS uncertainty and Elysium turnaround
Ramsay said both of its U.K. businesses operated in challenging conditions. The acute hospital business delivered 3.5% revenue growth in constant currency, driven by higher acuity, increased private pay admissions, and tariff indexation. However, NHS admissions slowed and declined in the second quarter as budget constraints began to impact activity.
The company said the acute results included backdated indexation; excluding that, underlying EBIT margins improved by 30 basis points to 9.3%. Looking ahead, Ramsay expects NHS activity in the third quarter of FY2026 to remain negative compared with the prior period, and management said it would continue focusing on private volumes and operational initiatives while NHS funding uncertainty persists until the new fiscal year beginning April 1.
At Elysium, management said weak demand from local authorities continued to pressure the business. The company’s turnaround plan includes central cost reductions, agency reduction, site optimization, and fee negotiation. Ramsay said it closed 163 beds at underperforming sites in the first half, with five sites expected to close in the second half, and noted some properties have been put up for sale. Joe O’Connor commenced as CEO in January, and management said it saw improvement toward the end of the half and expected the turnaround to continue gaining traction.
Ramsay Santé: proposed demerger and European trading conditions
Ramsay reiterated plans to progress a proposed demerger of Ramsay Santé via an in specie distribution of its 52.8% investment to Ramsay shareholders, subject to approvals. Davis said management believed the move would simplify the group and allow a clearer focus on transforming the core Australian hospital business. The company said it currently expects to complete the distribution in December 2026, subject to approvals and the release of a demerger booklet.
Ramsay Santé delivered a 4.4% increase in underlying EBIT in constant currency, driven by a strong result in the Nordics, particularly Sweden, partially offset by weaker performance in France. Management cited a EUR 20 million reduction in subsidies versus the prior period and inadequate tariff indexation as factors pressuring French earnings.
For the second half, the company expects European activity growth to continue, led by day admissions, but said this would be partially offset by the impact of a three-day French doctor strike in January. Ramsay also noted a new contract at St. Göran commenced Jan. 5, 2026, for “8+4” additional years on improved terms, which management said would assist Nordics results.
Balance sheet, leverage, and updated guidance
Neilson said currency translation had a significant impact on the balance sheet in the half, and consolidated net debt was AUD 5.1 billion. He emphasized that consolidated leverage was not a meaningful metric given separate funding arrangements between the “Funding Group” and Ramsay Santé.
Key balance sheet points discussed included:
- Funding Group leverage of 2.22x, within the target range of less than 2.5x, with strong interest cover.
- Fitch reaffirmed the Funding Group’s BBB- investment grade rating.
- Ramsay refinanced key syndicated debt facilities, extending tenor and reducing margin by 30 basis points; the weighted average cost of debt declined 20 basis points since June 30, 2025.
- Ramsay Santé had EUR 391 million of liquidity and leverage of 5.3x, with management focused on cash flow improvement and cost-out programs.
For FY2026, Ramsay maintained its focus on continued Australian EBIT growth momentum, warned of negative NHS activity in the U.K. third quarter, and reiterated expectations that Elysium’s turnaround would continue to gain traction. It forecast net financing costs of AUD 590 million to AUD 610 million and reduced group CapEx guidance to AUD 755 million to AUD 795 million, noting second-half spend is expected to be lower than the first half. The company said the dividend payout ratio for the year is expected to be 60% to 70% of underlying NPAT and non-controlling interest.
About Ramsay Health Care (ASX:RHC)
Ramsay Health Care Limited owns and operates hospitals. The company offers health care services to public and private patients. It operates facilities in approximately 530 locations in the Asia Pacific, the United Kingdom, France, and Nordics. Ramsay Health Care Limited was founded in 1964 and is based in Sydney, Australia.
