Chart of the Week: Ramsay Health Care margins to rebound
Charts from our latest stock pitch for Ramsay Health Care show a clear path to improved profitability.
Mentioned: Ramsay Health Care Ltd (RHC)
This week’s Chart of the Week comes from Morningstar equity analyst Shane Ponraj, who recently published a stock pitch for Ramsay Health Care.
Key takeaways
- The market is losing faith in a return to pre-pandemic profitability in the core Australian division. Margin stagnation over four years amid high wage inflation has fed this pessimism.
- But we see a credible path to margins improving by 3% to 12.5% in fiscal 2030, still materially below the fiscal 2019 actual of 15%.
- About 60% of this uplift is from revenue growth outpacing wage growth, with the rest from abnormal costs declining.

Ramsay won higher reimbursement rates from all major health insurers in late fiscal 2025, with the industry payout ratio* lifting to 88% in the June quarter versus 81% in March.
After a sector review and public pressure on insurers, we expect tighter government oversight to keep payouts high, supporting the private system to reduce strains on public hospitals.
Meanwhile, wage pressures are easing. We see average wage growth falling below 3.5% by fiscal 2027 from 6% in fiscal 2025. Better scheduling is lifting theater utilisation and workforce leverage, while internal and government initiatives are cutting costly agency staff and turnover.
Valuation
Margin expansion to drive shares higher
Given temporarily depressed profitability, investors have a chance to buy Ramsay at a large discount to fair value. The firm is 5-star-rated with a narrow moat, owning a network of over 70 Australian hospitals well placed to serve an ageing population with rising healthcare needs.
Our $54 per share fair value estimate is driven by three key assumptions:
- Australia EBIT margin of 12.5% by fiscal 2030, up from 9.5% in fiscal 2025.
- Forecast five-year Australia revenue CAGR of 5%, modestly down on the three-year trailing CAGR of 6%.
- Group EBIT margin of 8% by fiscal 2030, up from 6% in fiscal 2025.

*Note: Payout or benefits ratio is the claims paid out by health insurers/premiums charged ratio.
The full pitch is available to Morningstar Investor subscribers and trialists.
You’re able to find previous editions of Chart of the Week here.