Europe’s financial turmoil could inflict some pain on Ramsay Health Care’s fledgling private hospital business on the continent but the company remains committed to expanding there.
Speaking after Ramsay’s annual shareholders meeting on Tuesday, managing director Christopher Rex said the financial turmoil engulfing the European Union could impact its hospitals chain in the UK and France, but not in a “catastrophic” way.
“It’s just a drag down on the potential growth of these businesses,” Mr Rex told reporters.
Mr Rex said the amount of money Ramsay receives from the French and British governments for treating public patients had remained stagnant due to the economic turmoil, meaning Ramsay would have to drive earnings growth by increasing the number of patients it treats.
Earlier, he told shareholders that Ramsay was hunting for more European acquisitions but was being extra cautious about splashing out.
“Yes, the economic conditions in the UK and France remain challenging in the short term but I am very confident and remain upbeat and excited about what we can do with our businesses in those market places over the medium to long term,” Mr Rex said.
“We will continue to explore any bolt-on acquisitions in both the UK and France over the coming months.”
Ramsay shares fell 37 cents, or 1.9 per cent, to close at $19.42. The stock declined from Monday’s record high close of $19.79.
Ramsay has a network of 38 acute hospitals and day procedure centres in the UK, owns a majority stake in the Paris-based private hospitals operator, Ramsay Santé, and recently bought a private hospital near Lyon.
Mr Rex said Ramsay was also keen to expand its Asian operations beyond Indonesia, where it operates three hospitals in Jakarta.
But like France, where he said Ramsay could have bought 20 other hospitals in the past year, prices were often too steep.
Mr Rex told shareholders that even in times of financial hardship, governments were reluctant to cut health spending.
That, combined with an increasing demand for private health care services due to the ageing population, stood Ramsay in good stead for long-term growth.
In Australia, Ramsay is halfway through spending more than $800 million on expanding its network of 66 private hospitals and day surgery units.
Mr Rex said he believed Ramsay would spend at least $100 million a year for the foreseeable future expanding in Australia.
He repeated his criticism of the federal government’s plan to means test the private health insurance rebate, saying it would be a “roadblock” to people taking out private cover.
He also confirmed Ramsay was track to lift its full year earnings by up to 12 per cent for the 2011/12 financial year.
