Ramsay Health Care has flagged the potential sale of its European division

Ramsay Health Care has flagged the potential sale of its underperforming European division and further corporate action could be in the wings.

Ramsay Health Care is looking at strategic options for its European division.

Ramsay Health Care has flagged the potential sale of its underperforming European division and will refocus efforts to bolster its growing Australian operations and its lagging UK mental health business.

The company’s stock bounced 13.4 per cent on the news to be trading at $38.42 on Thursday morning.

The private hospitals operator on Thursday announced it had plunged to a net loss for the full year, driven down by more than a quarter of a billion dollars worth of write downs.

It also said it had appointed Goldman Sachs to look at strategic options for its stake in European hospitals operator Ramsay Santé, which it has been under pressure from some investors to move on, given its poor performance in recent years.

Ramsay owns 52.8 per cent of Ramsay Santé which employs 38,000 people across 465 sites spread across France, Sweden, Norway, Denmark and Italy.

The division has been underperforming for some time and reported a loss of €19.8m after tax and minority interests for the most recent half.

Ramsay said the decision to look at options for its European division was in line with the refocus of its strategy, which is aiming to transform its Australian private hospitals business under the leadership of new managing director Natalie Davis.

Ramsay said on Thursday it would consider “a range of options” for Ramsay Santé.

“Ramsay will remain disciplined and give consideration to the current operating performance of Ramsay Santé, market conditions and execution certainty, which will influence the decision to undertake, and timing of, any strategic activity,’’ the company said.

“There is no certainty that a transaction will eventuate from the exploration of strategic options for Ramsay Santé. Ramsay will provide more detail on the outcomes of the review as appropriate.’’

The company’s Elysium Healthcare mental health business in the UK, which it acquired just three years ago, has also been underperforming, with Ramsay flagging earlier this month that the value of division would be written down to the tune of $291m post-tax.

Wilsons Advisory analyst Dr Shane Storey said on Thursday the “board (is) clearly positioning for break-up scenarios, admitting Elysium and Santé have not worked’’.

Ms Davis told The Australian on Thursday that while Elysium had clearly not been performing up to standard, she believed that the division would be turned around.

“With Elysium we really think we can lift performance, we’ve already started really focusing on good operational rigour in that business,’’ she said.

“I appointed a chief operating officer who started in January ... and he’s already having an impact there.’’

Ms Davis said cost control and occupancy would be key metrics the Elysium business was looking to improve.

The company’s separate UK hospitals business in contrast had demonstrated “continued and sustained momentum’’ Ms Davis said.

“That business continues to perform well,’’ she said.

Across the broader business in 2024, while underlying profit was up 10.7 per cent to $158.9m, the net loss came in at $104.9m, once one off costs of $263.8m were factored in.

The Elysium writedown was the main factor in this while a non-tax cash provision of $34m was released in the company’s favour.

Ms Davis, who joined the company in October, said they had recently announced a new group operating structure which would be focused on the transformation of the core Australian hospitals business.

In her “observations” released as part of the company’s results reporting, Ms Davis said there was significant scope to grow the Australian business, but there was a “multi-year transformation required’’.

She said limited global synergies had been realised with the Elysium and Santé divisions, and there were low returns on capital in both.

Meanwhile in the UK hospitals business “performance and momentum is improving’’.

Ms Davis said Ramsay had a solid base from which to develop its new strategy.

“Pleasingly, we saw activity and revenue growth in all our regions in the first half of FY25, with solid performance in Australian hospitals and continuing performance momentum in our UK hospitals,’’ she said.

“However, profitability continues to be impacted by industry-wide challenges and weak results in Elysium and Ramsay Santé.

“Having recently announced a new group operating structure and strategic focus on the transformation of our core Australian hospitals business, we are building our capabilities to improve performance, accelerate transformation and improve capital returns across the portfolio.

“There is clear alignment between the board and leadership, and a commitment to do what is necessary to position Ramsay for success.’’

Ramsay Australia boosted earnings by 3.8 per cent on a 5.3 per cent increase in revenue from customers.

On the outlook, Ramsay said it expected activity growth in each region, albeit at a lower rate than in 2024.

The dividend has been held steady at 40c per share, fully franked, to be paid on March 27.

Originally published as Ramsay Health Care has flagged the potential sale of its European division