Ramsay Health Care has scrapped its proposed hospital joint venture in western China because several conditions weren’t met.
The private hospital operator, along with Malaysian partner Sime Darby Berhad, had signed a deal in May 2015 to invest $US135 million ($A188.05 million) for a joint venture with Chinese healthcare group Chengdu Jinxin Healthcare Investment.
“Ramsay Sime Darby Health Care Sdn Bhd has decided not to proceed with the proposed joint venture in Chengdu, China, due to a number of threshold conditions precedent not being satisfied,” the company said in a brief one-sentence statement on Wednesday.
Ramsay – which operates 221 hospitals across six countries but its main business is in Australia – wasn’t immediately available to comment further.
The proposed hospital JV initially would involve four of the hospitals that Jinxin operates in Chengdu and, at a later stage, a 500-bed women’s health private hospital.
In total, the JV was expected to cover five hospitals with approximately 2,300 beds and a focus on women’s health, mental health, and traditional Chinese medicine.
Chengdu is home to more than 14 million people, and is the capital and centre of commerce and trade of the Sichuan Province in western China.
In May 2015, Ramsay forecast that the JV would be earnings per share neutral in the first full year, and mildly EPS accretive thereafter.
News that the proposed JV had been scrapped failed to dent Ramsay’s shares, which rose 68 cents to close at $66.62.
In 2015, Ramsay also signed a JV agreement to open a string of high quality international hospitals in China’s Pearl River Delta. The company didn’t provide an update on its progress.
Ramsay recently booked a 17.5 per cent jump net profit to $224.8 million for the six months ending December 31 as more capacity came on board and the group expanded in France through an acquisition.
On February 25, Ramsay forecast that its core profit after tax, the company’s preferred measure of profitability, and core earnings per share will be up 15-17 per cent in fiscal 2016.
That compares with Ramsay’s previous profit guidance of between 12-14 per cent growth.
© 2016 AAP