By Rajasik Mukherjee and Sherin Sunny
(Reuters) -Ramsay Health Care posted a steep drop in its annual results, hurt by a one-off charge and poor performance at its European division and British mental health service business, sending its shares to a more than four-month low.
The Australian private hospital operator posted a net profit after tax of A$24 million ($15.60 million) for the year ended June 30 on Thursday, compared with A$888.7 million a year ago.
That also missed the Visible Alpha consensus estimate of A$70.4 million.
Weaker results from its European arm Ramsay Santé and the British mental health business Elysium, higher net financing costs, among others, weighed on the firm’s bottom line, the company said.
The dire profit drop strengthens the argument to divest the company’s European operations and get the house back in order in Australia first, KCM Trade chief market analyst Tim Waterer said.
A one-off post-tax charge of A$291 million related to underperformance at Elysium further squeezed its earnings.
Santé, a private healthcare operator in Europe with its services spread across France, Italy, Norway, among others, has been underperforming for a while.
Earlier this year, the company hinted at a potential sale of Santé and appointed Goldman Sachs to look at strategic options for its stake in the division.
The prospect of a divestment of Ramsay Santé could resurface as a way to restore investor confidence since it has once again emerged as the weak link, Vantage Markets analyst Hebe Chen said.
However, any sale would be complicated by weak operating metrics and broader valuation pressures across the group, added Chen.
Shares of the company dropped as much as 15.7% to A$32.1, as of 0429 GMT, hitting their lowest level since April 14.
Stock was among the top laggards on the ASX S&P/200 benchmark index, which was flat, and was on track to log a record drop.
($1 = 1.5389 Australian dollars)
(Reporting by Rajasik Mukherjee & Sherin Sunny; Editing by Alan Barona and Rashmi Aich)
