Ramsay Health Care Ltd
ASX:RHC
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
37.36
56.51
|
| Price Target |
|
We'll email you a reminder when the closing price reaches AUD.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Ramsay Health Care Ltd
You don't have any saved screeners yet
Thank you for standing by, and welcome to the Ramsay Health Care FY '22 Trading Update. [Operator Instructions]I'd now like to hand the call over to Mr. Craig McNally, Managing Director and CEO. Please go ahead.
Thanks very much, and thanks, everyone, for joining, and good morning. I don't want to say too much upfront. I'll just make some introductory comments and then open it up for as much Q&A as possible. Firstly, apologies for the earlier start than normal. I think that was really geared around me having flying to -- or arrive in London today. I've taken the opportunity when -- with the borders opening to get across to Europe as quickly as I could. So apologies for the earlier start. I think I was so jet lag, didn't kick in and I fell asleep through the call. The reason for the trading update was really -- there's a lot of uncertainty in the market. There's a lot of variability on what's happening. And so we thought it was a good opportunity, particularly when we're going to have the UBS conference next week, just to provide some additional information than you otherwise might have about what the first quarter of the year has looked like and sort of what volumes were looking like through October. So I think the key message is in that, that it is volatile. As we look across all the markets, if you look across Australia, it's different from state to state in terms of the impacts of lockdowns and surgical restrictions and the significance of those. The lockdowns have been extensive and more significant than last year. And then we've got different circumstances that we're seeing in other markets as well in the U.K., in particular, despite the restrictions and lockdowns being relaxed a few months ago. There's still a lot of volatility in the market with isolation from close contacts or contracting COVID itself, resulting in lots of cancellations. And so -- and in France, we're seeing numbers increase again. So we wanted to try and let you know that, that volatility is there. It's really hard to forecast when we see that clear air come through. We probably didn't anticipate the lockdowns in Australia lasting as long as they have, for example. And so hopefully, the information that was put in this morning's release will help you in terms of understanding the potential financial impacts that we might see or we certainly have seen in the first quarter, that we might see as we go through whatever the impacts of COVID will be in that period. So as well as the activity impacts, now there's still the cost base issues. We're still a high cost base resulting from COVID and the COVID environments in which we're operating. And so that has continued, and that will continue whilst we've still got that volatility, I think. So there the opening comments I want to make just to get that high level perspective that what we've seen in the first quarter has been difficult. And so with that, happy to open up straight away to a Q&A.
[Operator Instructions] Our first question is from Andrew Goodsall of MST Marquee.
Just the key question, I think, is just trying to understand the extent to which the costs are recurring, and particularly in the U.K. and France seems to be where you're getting hit the most?
All right. Martyn, I'll let you have that one first up.
Yes, I can take that, Andrew. So look, in the U.K., in the first quarter, from a cost perspective, the main impact was on staffing. So we have the pingdemic in the early days. And so that was resulting in nurses having to self-isolate for 12 days and then us having to employ agency staff to replace them. And so that was particularly significant in the first quarter. That will start to abate somewhat as the -- as the pins are starting to reduce. And so -- but it was quite significant. So I wouldn't consider that as an ongoing cost, particularly. And underlying that, clearly, we still got increases in PPE and things like that. But they're obviously nowhere as big as Australia because it's not as big a business.
I was just going to ask, proportionately, what would that be off? If we just look year-on-year, what would that be if the percentage change?
We have...
Half of it or...
We haven't given nothing. No, it's definitely not half. So there's a lot of nurses there. So some are being furloughed, et cetera, or having to go on sick leave, et cetera, but it's not half. But it was significant for the U.K. business, let's just put it that way.
All right. Okay. I know this is a one-off for [indiscernible].
Just to add to the -- sorry, on just the U.K. base. The cancellations generally occur really late. So that normally the flexibility that we have in adjusting staffing levels to activity. You just can't react quickly enough when you get those cancellations. So there's a real inefficiency in that market as well at the moment.
Yes. And in France, in terms of structural ongoing costs, there's nothing that we've called out there other than there would be PPE costs going forward. It's a bit of a different situation there, almost a reverse to be honest, where we are challenged with staff shortages in France as the whole market is we're not as bad as the rest of the market, but actually getting nurses to fulfill the work that we've got is the challenge there rather than increasing cost, if that makes sense.
And has your October exit rate, in terms of those margins, has that seen an improvement versus where you were for the quarter?
U.K. was a marginal improvement, but I would say that at the back end of October, starting to get a lot better mainly because they've changed structurally what you have to do to have an operation in the U.K. So you used to have to have a PCR test and self-isolate for 12 days before you come in to the hospital. They've now changed that. You can have a rapid antigen test and just come with that test the next day. So we are seeing some green shoots in the U.K. in terms of -- the bookings are still strong and the bookings were really strong through the first quarter and reflective of the big backlog that's there. But we did see those cancellations reducing towards the back end of October, so yes.
And the French exit rate, just thinking of how you finished October or exit October?
France, still okay. But remember, we've got the revenue guarantee scheme there. So the thing's kind of smooth. You've seen a big difference in the EBIT quarter-on-quarter in Ramsay Sante, but the revenue guarantee scheme does kind of smooth things over a 6-month period. So we've got to sort of wait to sort of play that through to see how that kind of lands by the end of the half, but it does tend to smooth things out.
And when you say smooth things out, is that -- does that imply a better second quarter than first quarter?
Well, I mean, the first quarter last year was particularly strong, and the second quarter last year was particularly weak. So you can make from that what you will.
Our next question is from Gretel Janu of Credit Suisse.
So just in terms of Australia, are you able to quantify the EBIT impact from the lockdowns in New South Wales and Victoria? Just trying to compare it to that previous commentary that you've made around Victoria last year having a $70 million impact.
Well, we've called out, Gretel, a $55 million impact in the quarter from all of the disruptions. That includes, for example, the $13 million that we called out for July when we issued our first half results -- sorry, full year results. And then to get to the $55 million, you could imagine that there was probably a similar number for August, and then we had elective restrictions in New South Wales. We've said that -- forgive me for the math here, but just trying to help you ask the question. We said that Victoria for 90 days was $70 million. So if you assume that, that $23 million a month, we said that the 7 hospitals in New South Wales were about the same sizes as Victoria. So that gives you another $23 million. And then another $5 million gets you to the $55 million. So that's pretty much the math behind the impact.
Great. That's very helpful. And then just trying to understand as well, so I think that was probably a little bit less than what people were thinking. Is that because you've had a lot more public work coming through Australia?
No. So the public work we're doing at the moment during COVID is really not giving us any incremental EBIT, if any, to be honest. It's much lower rates than probably what we would consider having outside of COVID. And so we have had a fair amount of public admissions come through, but they're not really contributing to the EBIT. So what you've got to remember is, of course, that in October, we had Victoria still in restrictions. And now into November, they're still in restrictions, and that may continue for some time. So I can't comment whether the $55 million is more or less than what people were thinking, but it was pretty significant for us and the Victoria issue will continue into the second quarter.
Yes. Understood. And then just wanted to touch on the U.K. a little bit more. Just in terms of cancellations. Like are you able to give some estimate in terms of the percentage of cancellations just so we understand quantum here in terms of how big an impact it really is?
Yes. Craig, do you want to have a go? I can answer.
Well, cancellations well, absolute numbers cancellations were in the thousands, 2,000 a month on. So as a percentage, I don't know the exact percentage, Gretel. I'd be guessing at it. But certainly, it's double digit as a proportion of the business, at least.
Yes. I think that's right. I think we were planning sort of 16,000, 17,000 admissions a month. We were getting 2,000 to 3,000 cancellations per month.
Yes, correct.
Our next question is from John Deakin-Bell of Citigroup.
Just to follow up on the U.K. It's quite confusing. I mean the revenue, despite all the cancellations, grew 20%. So you're implying that had that not been the case, you would have seen 30% plus revenue in the quarter -- revenue growth in the quarter?
You were talking about the U.K., John?
Yes. Just in the U.K., just a follow-on from Gretel's question there. Notwithstanding the cancellations, the revenue growth was 20%. So x -- had that not occurred, shall we to understand that the revenue growth would have been 30% plus in the quarter?
Well, that math kind of makes sense, yes. What you've got to remember for the U.K. quarter-on-quarter is we were under the government guarantee scheme last year. And so you had -- you have essentially our costs covered plus a margin. So it was -- and that sort of underpinned us making a profit last year. Then we come out of that agreement into this quarter. And yes, we've got revenue, but we've got those cancellations, meaning 2 things: a, we had to replace those nurses who had to go and isolate; and b, as Craig was saying, we couldn't really sort of pull back on our variable costs due [indiscernible] nature of the cancellations. So -- and seasonally, the first quarter is very low normally in the U.K. anyway. So yes, that's really why you've got that weird differential between revenue and EBIT.
Yes I mean the crux of the question is really what's the margin going to be going forward? And if I look at your margins, last year, 10% in the first -- of EBIT [ nice ] 10% in the first half, 8% in the second, and we're now negative. It's just -- I know it's hard for you as well, but are you saying that as those -- as the pings abate and the cancellation debate, there wouldn't be any reason why the margin shouldn't go back to where they used to be, ex the additional costs, which we'll have to have a stab forecasting?
Yes. I think that logic is right, John. And having -- I think what Martyn was saying, just to add to that, having come out of that cost plus support arrangement, we're back into -- we would normally see first quarter in the U.K. not being a great quarter because it's the summer -- summer holidays for them. And so we'd normally have some losses in those first couple of months. And so getting back to that profile for the first quarter is not surprising either.
And don't forget also that we had some Spire transaction costs in the first quarter this year as well. Now we don't have some nonrecurring items.
Understand. And then look in France, we've been hearing about these nursing issues from other people in the market. But is there any light at the end of the tunnel? Or is this just going to be a problem for maybe the next 6 to 12 months?
Yes, I think it's a problem for that period of time. It is an industry-wide problem, both private and public sector, with lots of sort of fatigue amongst the clinicians, both nurses and doctors. And so that's, I don't think that's a challenge that's fixed in the next month or 2 months?
Our next question is from David Low of JPMorgan.
Could I talk a little bit about seasonality? I mean you've touched on it in the U.K. and France. And just thinking about what does Australia look like in the December quarter? What does France and the U.K. tend to look like in the December quarter? And then perhaps, Martyn, I think we also need to think about the government's support in France and whether that sort of renders seasonality to relevant, please?
Well, you've got U.K. and France and some say would typically be lower in Q1 versus Q2 just because of the holidays. In Australia, there's a bit of a ramp up towards December, but I'm not sure it's as prominent as it would be in the U.K. and Santé. And you're right, the revenue guarantee scheme in Santé does, as I said earlier, sort of smooth the results across a 6-month period. But that -- and as I said, on top of that, sitting behind that, we had a very strong Q1 and a very weak Q2. Because you remember last year, everyone was out and about, enjoying the sun shining in Europe in their summer, and then the wave hit again as we went into winter. So we had a much more accentuated, almost reverse seasonality last year in Sante, but that should smooth itself out by the end of the half.
Yes. But you won't see that in Australia. We could just give a bit the lockdowns and surgical restrictions, particularly still being the place in place in Victoria so.
Yes. And we've just to build on what Craig just said all those sort of mini lockdowns and things like that, we said it cost us $13 million just in July. If there's any further disruptions like that, then there's going to be a cost of that going forward. The ramp-up out of restrictions in Sydney will be interesting to see in November. So we were allowed to do day surgeries for most of October. Hence, why the admissions were kind of flat, go back to 2019, but clearly, that's a much lower rate that you get with the inpatient activity. And so those more acute surgery has been since seeing what the ramp-up is like in New South Wales. And then the biggest amount for us is as, I said earlier, what happens in Victoria, where we might see restrictions go to Christmas or even beyond. We just don't know at this stage.
Okay. Just -- you've touched on -- you mentioned the Spire costs are in the U.K. numbers. Has that been disclosed?
Yes, it was $4.9 million. $4.9 million, yes.
All right. So we take that straight off EBIT presumably?
Straight off EBIT, yes.
Yes. All right. And then just finally, with France and with staffing. And as John said, I mean, this has been reported. But we're talking about something here that doesn't particularly affect the costs because labor costs are set, and this is about being able to do the amount of work which is effectively in patients in need. So this is much more about activity and costs, or am I misunderstanding it?
It's about both, David, because when you're replacing staff off on sick leave or furloughed, you're replacing them. So you've got a double cost in there for a while as well as the activity implication.
And am I right in understanding that the activity or the demand in France is actually quite strong? If you had sufficient staffing or readily available staff, you could actually work at a level above historic norms?
Yes, it certainly come back strongly. But right across the industry, you're just not seeing that delivered because of the constraints around capacity.
The other nuance, David, in terms of staffing in France is the seguro De Santé, which was the increase in nurse salaries, so -- which came through in tariffs. So there was roughly a 6% increase that flowed through into our costs. That's baked in. But then the 6% comes through, depending on the volume that you do, and it's only based on MSO activity. And so we did see some quite challenging volumes in MSO activity in the quarter versus the last year. So the amount that we've received through the revenue line is not compensated for the increase that we've had in the cost line. So that's why, again, you've got this kind of strange scenario where revenue is sort of flat to slightly increased in Santé, but the EBIT is down significantly because you've got this, a, you've got probably negative volumes and positive price getting into a slightly higher revenue, but you haven't -- you've got much higher costs coming through the cost line. And that should normalize over time as volumes come back and we get the full benefit of that. But that was one of the issues again that we had in the first quarter.
And without wanting to say be obviously, EBIT, even when it normalizes, it will have a downward pressure on margin because you're seeing that cost recovery that's much more significant labor cost.
Okay. Look, last question for me then. Craig, you've talked a bit about the expected shape of the recovery. I was just wondering whether the lower for longer mantra still is your best estimate of what we should expect going forward?
Yes, I think so. I think we might see the initial peak being a little higher, possibly, but I think that will still into lower for longer. Because I think what you see France is a good reflection, and so is the U.K. to a certain extent. You just have to manage the pressure on staff. And so -- and that's doctors and nurses. And so that longer, higher premium volume, I think, is a much more challenging sort of scenario than the lower for longer.
And I'm going to get you to clarify what you mean by lower for longer because I think it can be misinterpreted. I presume you mean a little bit above historic activity levels portfolio a lot rather than a lot about?
Correct. Yes, correct. Lower...
I think we might understand, but I just hear that, that get quoted as again could be completely misinterpreted as a negative rather than what I would care positive, but I'll leave it at that.
Absolutely. Absolutely. Thanks, Dave.
Our next question is from Steve Wheen of Jarden.
So just trying to understand, I guess, the next quarter in the context of the quarter that you've just reported. I mean, it would sound like you're suggesting this is as bad as it could get, but -- all things else being equal. But if conditions remain as they are at the moment, then we're going into second quarter with the benefit of seasonality. You've got the benefit of volumes now that lockdowns are sort of coming off and the smoothing effect of France reversing. Is that essentially what you're trying to message here to us?
Not necessarily. I would say October is as bad as it gets because we have Victoria and New South Wales under surgical restrictions. So that kind of got worse in October. And so -- and we can't say -- and Victoria carries on the restrictions going forward, and that's going to be pretty bad, too. As we've said, circa [ 23 ] a month impact from Victoria being under surgical restrictions. So that's pretty bad. If you multiply that by 3 for a quarter as well. So in Australia, it's not -- I wouldn't describe it as that. In the U.K., possibly. As we've said, we're coming out at the back end of October in a slightly better situation. The restrictions around how you go about surgeries are a bit more pragmatic now. We're getting on top of our costs. And in Santé, as we said, we've got that kind of almost reverse seasonality last year, and the revenue guarantee scheme will smooth things out. That will be how I'd summarize it. And then Craig, if you want to add anything to that?
I'd just add that even in the best case scenario for New South Wales, and that's all restrictions on elective surgery are lifted commencing next week, you've still got half of the second quarter being significantly impacted with restrictions in New South Wales so yes.
Okay. Yes. I guess the big surprise of the quarterly numbers came from the U.K. and France or Europe. Your opening comments seem to suggest that there is not really the labor pressures in France. That's just a continuation of what we already have seen in the past, but it's...
No, it's pressures -- the labor pressures are increasing, not in terms of cost of sort of wage increases, that's done or that's understood. Now just the response from staff really about wanting to remain in health care, taking time off. So we expected that to improve more quickly than it has. So I think, as I said, I think that's an issue that won't be resolved in the next month or 2, I think that -- I'm not sure who posed the question, but the 6 or 12 months' time frame on that is more likely than not.
Yes. Okay. And then just, I mean, more specifically on the U.K., you've obviously had to rely quite extensively on agency staff. What's the ability for that to turn around faster than perhaps what you're suggesting in Europe?
Yes. I think that's more directly for the U.K. more directly related to furloughing our staff who have to isolate. And that's the -- one, the length of the isolation has been reduced. So that's a positive. And then I think there will be a time sometime in the next 6 months where people won't have to isolate. Now I can't predict when that would be. But that's more of an issue for us in U.K. There's a flexibility issue with cancellations, but there's also this duplicate cost of people being furloughed or often on sick leave, but you've got to then replace them. And so yes, that's our problem.
Yes. And just lastly on the U.K. There seems to be a lot of talk about clearing this backlog, and there was even the suggestion in the budget of something like, I think, $6 billion being dedicated to actually do that. When do you expect that to -- when do you expect to start to see that?
Yes. I think Martyn sort of alluded to it. Without the cancellations because of the pingdemic and the isolation that results from that, we would have seen strong numbers. So you add those cancellations back in, and you would have seen the numbers start -- the activity start to come through strongly. So I think it's getting through that period. That's taking longer for the countries to get through, but it's improving. So it's hard to put an exact time frame also.
Our next question is from David Bailey of Macquarie.
Just thinking more so about calendar year '22. There's a comment saying that in Australia, could be looking towards a more favorable operating environment in the second half. Just interested in some of the drivers of that. I'm just wondering if public is going to public works a bit of a feature or could be a feature within that? And you made the comment earlier that those rates are not as favorable as they could be in a normal environment. Just wondering if there's opportunity for public work in calendar year '22, whether those rates are commensurate with what you get on the private side?
Yes. I think as you -- so 2 aspects to it. I think vaccination and just people getting back to normal patterns of behavior as the biggest driver. And then in terms of public volumes, they're certainly higher than they've been historically. And once you get out of the viability agreements that are still on foot with some of the states and more commercial longer-term arrangements to put in place, then we would anticipate they're a much more commercial basis. It's just the immediate issues that -- around making sure that the system can deal with the worst-case scenario rather than more of a catch-up on activity that needs to be undertaken. So I think there's a sort of difference about being part of the solution to the potential short-term crisis, if there was to be one, as opposed to what the long-term arrangements look like.
Yes. So we should think about [ '20 ] -- calendar year '22 as being hopefully more normalized year so the volumes coming back and reimbursement rates getting back to a more normalized level?
Look, I'd like to think so, David, but I don't want to predict anything really.
Yes. Fair enough. And then just in the U.K., just an update on -- I mean, there's a comment there around working with the NHS and U.K. government to deliver additional capacity. Just any updates you can provide there and what that might look like and how you think that's able to support volumes over calendar year '22 and potentially '23?
Yes. I mean it's not different from sort of the comments we've made in the last few months anyway. There's absolutely still a significant catch-up on activity to be undertaken. And there's more steps coming through on misdiagnosis. People haven't attended or accessed the system so there's underlying issues sitting out in the community. So the expectation is and sort of was just mentioned in the government allocating more funding to deal with weighted less issues. Now the expectation is still very positive. Just got to get back into a normal environment so the work will come through. So the money will be there. The demand certainly is there, just going to get through what is this bumpy period of COVID impact.
[Operator Instructions] Our next question is from Chris Cooper of Goldman Sachs.
Look, I know it's early days, but could you just comment on the shape of the sort of early recovery you're seeing in New South Wales? We've had a few weeks now of more reasonable volumes coming in the door? Are you seeing any sort of changes in patient or physician behavior compared to what you saw when we came out of lockdown sort of last time? And I guess, therefore, any reason to think that we don't see a similar sort of shape of volumes this time around?
Yes. I mean what we're seeing, so the restrictions have moved from 50% capacity to 75% with some additions for public work and some emergency work. And so we've seen -- as the restrictions have been lifted, we've seen the activity come back to meet those restrictions or the threshold in those restrictions. So -- so as -- when the 75% is relaxed to be -- you can go back to 100%, and we expect that volume to come back reasonably quickly.
And no changes you're seeing at this stage to patient or physician behavior, which would make you think that we'll see any sort of difference to that dynamic as we go forward?
No, but it is constrained by what they can do now. So for the doctors, they can only -- they know that they've got a 75% limit. So -- and that is reflected in the activity they do. So I don't think there's anything noticeable in terms of behaviors that would make us think any differently from what happened last time.
Secondly, just on nursing. I mean, sorry to come back to it, but it's obviously been a significant theme in the global hospital space for quite some time now, and you talked a lot about it today. I think to date, it's probably fair to say that the pressures in Australia have been there, but perhaps less pronounced than some of the other developed markets globally. Obviously, there's some good reasons for that. Can I just get your thoughts on how you see that developing as we go through the next year or 2? I mean, is there some nuances on border and EBAs and things? So perhaps just your latest thinking on the kind of nursing challenges as it pertains specifically to Australia.
Yes. Okay. EBA negotiations have gone well. So we've put to bed a number of those in the last couple of months. So nothing untoward coming through out of those EBA negotiations. Australia -- without -- I mean, it's all relative. So the Australian sort of staffing has felt pressure, does feel a bit fatigued, but very different to what the position is for France and the U.K., for example. But -- but relative to what they've previously had in Australia, there's an element of fatigue. There hasn't been a crisis as such, if you like, in terms of concerns about capacity constraints because of shortage of staff. And so -- but that doesn't mean that we haven't looked at what the strategies need to be, short, medium, long term, to ensure that we're still a preferred employer, that we've got a good pipeline of staff coming through. So I think you've mentioned before, the graduate nurse program, we've doubled the capacity of that. So we've got 600 new graduate nurses coming on board. So we're not in as difficult to position in Australia as we have, now we are in France, but it doesn't mean that we're not looking at what those strategies need to be to ensure that we keep ahead of the game there. But at the moment, there's no -- there's no concern about not having the capacity or the complement of nursing staff to be able to service whatever the demand is.
Our next question is from Shane Polage of Morningstar.
Firstly, just to clarify with the ongoing COVID impacts in Australia. You estimated roughly $23 million for both New South Wales and Vic in October, plus potentially $23 million a month for Vic continuing a bit extra from New South Wales, which is still somewhat limited. And that's all before the higher COVID costs. Is that right?
Well, what we have said is, I mean, we just keep coming back to Victoria last year for 90 days with $70 million. That's the best reference point. It's hard to forecast these things. Yes, we haven't seen anything dissimilar to that from the restrictions this time around. But as a thumbnail, that $70 million impact, including the incremental costs for the training in the COVID environment, divide that by 3, you've got $23 million. So that's the best sort of number we can refer you back to. But we'd be a bit -- we'll be a bit rash as to try and forecast or predict that because they've all got their little anomalies and nuances to them.
Yes. Got it. Sorry, that $70 million number includes the higher COVID costs?
Yes, yes, yes.
Okay. And apologies...
And what we've also said is the 7 hospitals in New South Wales that have been under restrictions in a normal environment, about the same size as the -- our Victorian business.
Yes.
Yes.
And apologies, I'm quite new to this stuff, but do you mind just giving us a refresher, please, on when sort of the COVID grants and support contracts are rolling off in each market? And was there any material benefit in assisting with the vaccine rollout in Australia?
So well, no benefit from the vaccine rollout in Australia at all. We did have quite a lot of stuff, our volunteers go and actually helped administer those in like the Homebush set up and that kind of stuff. But that there was no -- I mean, they cost covered, I think, basically. So no benefit from that. In terms of the agreements, in terms in Australia, some sort of remain on foot, but sort of a redundant because we're not drawing on them. Some get put to sleep and then get reawakened again. And so -- and some are finished. So WA is finished, for example. So it depends on the state. In the U.K., we're not under any COVID agreement at all at the moment. [indiscernible] met a loss. And in France, the revenue guarantee scheme expires at the end of December this year.
Our next question is from Sean Laaman of Morgan Stanley.
Sorry if I've missed it, but just on the Asia Pacific margins, why were they better? Is there something funny in there? Or just help me understand that first question.
Asia Pacific, basically, we've actually benefited from being in COVID in Asia Pacific, mainly because our business there is quite different. And we've been doing a significant amount of PCR testing and vaccine administering. So -- and they've been good margins for us. So that's why the margins get better in Asia Pacific. It's pretty small though, yes, yes.
Yes. But also just looking at the strong rebound that you've observed in rehab. I mean thinking, I guess, so the ratio between associated surgeries with rehab. Are you back to kind of more normalized ratios? Is there an element of rehab that sort of moved more permanently to an outpatient basis? Or is it back to sort of normal ratios on an inpatient basis?
[ EBIT more? ]
Look, I think when you -- when you do find normal ratios. But as we've talked about many times, that mobile orthopedic patient that goes to inpatient rehab, that's been declining for a number of years. That will continue to be the case. And that's compensated for by -- in terms of ratios, that's compensated for by other forms of rehab, cardiac rehab, [indiscernible] rehab to get people fit for short length of stays, those sorts of things. But the other thing that will continue to drive rehab is just the aging population. So you're just going to get -- even if the ratio has changed a bit, you just an absolute quantum coming through.
Yes. I'd also add that it's a rebound off a very poor period in the prior year. So that's really why you've seen that bar chart to have that big uptick and probably more day rehab than inpatient we have than we may have experienced before.
And one final one, just also good growth in maternity and just looking at sort of IVF statistics, which have been enormous over the last year, put the 9-month lag through, it sort of suggests that you're still going to see good growth in maternity. Is that fair?
Yes. We're still -- the bookings, you get a better line of sight on activity from maternity down the track. Bookings are still strong.
Our next question is from David Stanton of Jefferies.
Just apologies if this has already been asked. I got on a bit late. But I wanted to understand a little bit more about the difference between F '22 EBIT and NPAT. We've seen that you talked to 28% -- call it a 28% decline in the EBIT and sort of a 40% decline in NPAT. Is there anything within that, that we should be -- that you can sort of give us more color on that will help us going forward, please?
Yes, David, it's probably more in the minority interest line. So you've seen a big decline in Ramsay Santé earnings. And so that will then flow through to minority interest rather than anything kind of weird going on in interest or tax.
Okay. So it's a decline in Santé that's driving that?
Yes.
Okay. Understood. That was basically my question. All my other questions have been answered.
Thanks, David.
Mr. McNally, there are no further questions. I'll hand the call back to you for closing comments.
Okay. Thank you. Thanks, everyone, for joining, and I look forward to catching up sometime soon. Thank you.
Thank you. This concludes today's call. Thank you for joining us. You may now disconnect your lines.