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Ramsay Health share price bleeds as profits plunge

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The Ramsay Health Care Limited (ASX: RHC) share price is back in focus today after releasing its third-quarter trading update.

In early morning trade, shares in the private hospital operator are down 0.6% to $81.04.

Total revenue up 5.7% from prior corresponding period to $3,449.2 millionEarnings before interest, tax, depreciation, and amortisation (EBITDA) down 8.8% to $422.7 millionNet profit after tax (NPAT) attributable to owners down 59% to $42.7 millionExcluding non-recurring items, NPAT fell 6.8% to $269.7 millionCompleted Elysium Healthcare acquisition on 31 January 2022Australia operations tallied up an estimated $89.2 million in costs associated with COVID-19 in Q3

What else happened during the quarter?

The world might be returning to some form of normality, but COVID-19 still hit Ramsay Health hard in the most recent quarter. Ultimately, this is likely weighing on the Ramsay Health share price today.

According to the trading update, quantifiable impacts due to disruptions from the pandemic in Australia eclipsed $196 million for the nine months ending 31 March 2022. The healthcare giant noted that this has been a consequence of COVID-related absenteeism, surgical restrictions, and higher operating costs.

Furthermore, a similar situation played out across the company’s UK operations. Although, admissions were said to be improving during the quarter. Meanwhile, Ramsay Santé experienced an increase in profits primarily from the Nordics region.

The difficult environment didn’t stop Ramsay Health from continuing to invest in its expansion. During the nine months to the end of March invested around $145 million in further developments. This included more than 240 beds and nine theatres being added.

What did management say?

Cognisant of the continued COVID-19 impacts, Ramsay Health managing director and CEO Craig McNally said:

While the 3QFY22 has seen significant levels of disruption in the business due to high rates of COVID in the community, we are starting to see activity levels rise as surgical restrictions lift and our regions move into an endemic COVID setting.

Additionally, with respect to addressing the challenges being faced, McNally said:

We remain focused on our short- and long-term plans to address staff shortages and covid related fatigue among our frontline teams and to ensure that we remain an attractive place to work and an employer of choice. I would like to thank our people for continuing to live our purpose of ‘People Caring for People’ which has underpinned the resilience and success of the Ramsay business over many years.”

What’s next?

Currently, the Ramsay Health share price is a hot topic as the ASX-listed company evaluates a $20 billion takeover bid.

The last time we heard about the offer lobbed its way by the KKR consortium, the pair were conducting due diligence. The timing around the next steps is unclear as it is not yet publicly disclosed. However, it will be interesting to see if the consortium is rattled by the latest quarterly figures.

Ramsay Health share price snapshot

The Ramsay Health share price had been struggling prior to its recent takeover offer. Specifically, the company’s share price was down roughly 10% on a year-to-date (YTD) basis.

However, shares rocketed higher following the offer, putting an investment in the hospital operator back in the green for the year. Now, the YTD performance stands at a 13.5% gain — outpacing the S&P/ASX 200 Index (ASX: XJO) by nearly 16%.

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