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| Weekly Commentary | | For archival copies of the Weekly Commentary click here... | | | | 29th November 2009 | Wakefield Health (WFD) struck a rough patch in its first half, its interim net profit dropping by 41.2 percent to $3.6 million. WFD's first quarter was affected by negative trends in District Health Board, ACC and self-funded patient revenues, which continued into the second quarter. A decline in admission numbers, most notably those for major surgery, resulted in a 10.1 percent decline in revenue over the six-month period. While the company benefited from a reduction in interest expense due to substantially lower interest rates and declining debt levels, the impact of lower operating earnings flowed through to the bottom line. WFD retains a strong balance sheet and it continues to explore opportunities for growth through merger or acquisition. The aftermath of the recession and the global financial crisis will persist throughout the remainder of WFD's year, but 2010-11 is looking more promising. Long term,the future of private sector healthcare is bright.
Ramsay Health Care (Au: RHC) has grown to become a global hospital group operating over 100 hospitals and day surgery facilities in Australia, the United Kingdom and Indonesia. RHC undertook an institutional share placement and share purchase plan in August and September, pitched at A$10.05 per share (raising A$260m), which could explain the flat performance in the share price. The group delivered
core earnings per share of 74.1c for 2008-9, a 22.1 percent increase on the 60.7c recorded in 2007-8. RHC experienced solid growth in hospital admissions in Australia, Indonesia and in the UK during the year. RHC's capital position is strong after the recent fund raising and the company is targeting core net profit growth of 12-14 percent for 2009-10, which is looking conservative. RHC is redeveloping its Australian hospitals, which are close to major population centres.
The company does not shy away from opportunities to grow via acquisitions. Expansion into Europe is also on the cards.
(Disclosure Statement: A disclosure statement can be obtained free of charge by calling IRG 0800 474669, or by email info@irg.co.nz.)
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