Why is the Ramsay (ASX:RHC) share price so volatile today?

A male Avita Medical doctor wearing a white lab coat shrugs his shoulders and holds his hands up in the air looking confused

The Ramsay Health Care Limited (ASX: RHC) share price has pulled back from its intraday highs in afternoon trade.

At the time of writing, the private hospital operator’s shares are up 0.5% to $68.00.

This compares to a 2% gain for the Ramsay share price in earlier trade.

What did Ramsay announce?

This afternoon Ramsay released an update in relation to the impact that COVID-19 restrictions are having on its operations.

It notes that the NSW Ministry of Health will introduce restrictions on non-urgent overnight Category 2 and Category 3 elective surgeries at all private hospitals in the state effective 10 January.

Category 2 admission relates to a condition which is not likely to deteriorate quickly or become an emergency within 90 days. Whereas a Category 3 admission is unlikely to deteriorate quickly and has little potential to become an emergency within 365 days.

In addition to this, Ramsay highlights that similar changes were made by the Victorian Department of Health and Human Services (DHHS) to surgical restrictions on 6 January. Elective surgery is now restricted to urgent elective surgery procedures.

Further, neither the DHHS nor the NSW Ministry of Health have provided a date for when these restrictions will end and Ramsay will be able to return to business as usual.

What will the impact be?

Ramsay has warned that these and previous surgical restrictions will have a material impact on its earnings in FY 2022. For example, it notes that in the first quarter, COVID related disruptions and costs impacted its Australian earnings by $55 million.

And while January is the seasonally quietest month of the year in the Australian business, it remains unclear when the current wave of Omicron cases will subside and Ramsay will be able to operate as normal again. This could see the restrictions creep into busier months.

The post Why is the Ramsay (ASX:RHC) share price so volatile today? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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