Ramsay Health Care’s failed £1.4bn takeover of fellow hospital group Spire Healthcare cost the business more than £2.6m.
In a quarterly trading update posted to the Australian Stock Exchange, Ramsay revealed the transaction which was scuppered by Spire shareholders in July cost it AU$4.9m, or around £2.62m.
Ramsay also noted its UK business had been hit hard in the three months of July to September, the first quarter of its 2022 financial year, from isolation orders because of the escalating Covid pandemic.
As a result, despite UK revenue growing to AU$262m from AU$217m a year earlier, its earnings before interest and taxes (EBIT) dropped to a loss of AU$4m from a profit of AU$25m.
“The UK business experienced highly disruptive short-term challenges through 1QFY22 due to isolation orders impacting patients, doctors and staff at short notice resulting in a significant number of procedure cancellations over the three-month period,” the hospital group said.
“While revenue was up on the Covid-impacted prior corresponding period, the short notice associated with many of the cancellations made it difficult for the business to respond by reducing costs appropriately resulting in significantly higher personnel costs over the quarter.”
However, Ramsay expects cancelled procedures to be re-booked and noted the pipeline of admissions remained strong, particularly from private insured and self-funded patients, with procedures generally higher acuity.
Public-funded work through the NHS has been slower to pick-up and Ramsay hinted that it did not expect a surge from this source, noting statements from government and NHS leaders.
“The operating environment in the UK has started to improve following the relaxation of rules around isolation and Covid protocols in hospital settings at the beginning of October,” it continued.
“The business is adapting its operating model and processes to a living with Covid setting while ensuring that Ramsay continues to treat patients in a safe clinical environment.”
Worldwide business costs increase
Overall, global revenue for the hospital group grew 1.3% to AU$3.2bn during the three months, but EBIT profits declined 28% to AU$197.4m.
In its home nation Australia, Ramsay revenue was largely unchanged but EBIT profits rose by 5% to AU$137m.
However, Ramsay estimated the total cost of Covid-related disruption in Australia over the period at AU$55m.
“All states incurred higher costs associated with operating in the Covid environment,” it said.
Meanwhile in Europe the Ramsay Santé business saw EBIT profits halved from AU$118 to AU$64.5m despite revenues remaining almost unchanged at AU$1.59bn.
Although government support has remained in place, the hospital group noted several challenges it was dealing with on the continent.
“France experienced lower patient volumes following a fourth Covid wave during the northern hemisphere summer,” it said.
“Staff attrition following Covid combined with mandatory vaccination for all staff in hospitals in France from mid-September has created a shortage of nurses impacting the ramp up of the business to meet the recovery in volumes.
Ramsay added: “Management is fully focused on retaining and recruiting nursing staff to meet the solid underlying demand in volume.”
But it noted that activity levels in the Nordics have been solid and driven by an increase in specialist care patients post-Covid in Sweden and Denmark and a continuation of Covid testing and vaccination activities.
Ramsay CEO and managing director Craig McNally said: “While the Covid environment has continued to create significant disruption across our business, we are seeing strong underlying demand for health care services across our regions.
“Our team will continue to support the public health sector as we transition the business to an environment where the world learns to live with Covid.”