Top Menu

Flat half-yearly results for listed aged care providers


Declining occupancy, rising staff costs and a fall in revenue are behind the lacklustre financial performance of the three-listed aged care companies, recent analysis shows.

In its regular half-yearly update, aged care industry consultants Ansell Strategic has summarised the results from the first half of this financial year of the three listed companies – Regis Aged Care, Estia Health and Japara Healthcare – and compared them to the previous year.

In the first six months of this financial year, Regis grew from 54 to 57 facilities and increased its beds from 6,029 to 6,436 while Estia still has 68 facilities but has increased the number of beds from 5,909 to 6,023.

Over the same period Japara has added one facility to reach 44 and increased the number of beds in its portfolio from 3,841 to 3,906.

The EBITDA (earnings before interest, tax, depreciation and amortisation) per bed per year results have declined for Regis and Japara over six months, and both Estia and Japara remain below industry top quartile results reported by StewartBrown, the report shows.

However, there were no real surprises in the results, which were close to the projections provided by the three CEOs, said Cam Ansell, managing director of Ansell Strategic.

Cam Ansell

“They all recognised that on a per bed basis they were not expecting things to improve; rather they were either to be flat or slightly decline,” Mr Ansell told Australian Ageing Agenda.

The CEOs worked hard to get their revenue as high as possible, but they were realistic that costs were rising by 3-4 per cent while the funding subsidies were going to be flat, he said.

Mr Ansell said the only anomaly was with Japara, which had not provided for the refund it will now pay residents for capital refurbishment deductions following the result of the Federal Court case instigated by Regis (read more on that here).

Key indicators

He highlighted occupancy, staff and revenue among the key factors influencing the results.

Regis and Japara both experienced a fall in occupancy largely driven by last winter’s influenza and gastro outbreak, while Regis’ acquisition of Presbyterian Care Tasmania also played a role, according to the analysis.

Staff costs for all three providers continued to rise above the growth in income with Regis and Japara experiencing ”a large increase” as a percentage of revenue, driven by insource catering costs for Regis and a wage increase and redundancies for Japara, the report said.

Revenue per occupied bed per day slightly improved for Estia and Regis while Japara’s fell slightly. Regis and Japara’s government revenue results remained steady in line with expectations given the indexation freeze and changes to scoring complex health under the Aged Care Funding Instrument.

But Estia’s increased by more than $3 per bed per day due to improved ACFI claiming processes and consolidation of acquired facilities in its portfolio, according to the report.

Mr Ansell said the regular financial reporting of the ASX-listed providers provided up-to-date data on the results of strong performers.

These companies may look like they are out of the top quartile – with the exception of Regis – but a lot of that has to do with growth through acquisitions and new builds, he said.

Any acquisition of a couple of hundred beds or more has the potential to impact financial results, so those consolidating are not expected to have top quartile performance, Mr Ansell said.

Providers advised to focus on maximising revenue

While the results may read “a bit of doom and gloom” it is the same situation as six months ago – organisations need to “batten down the hatches and weather the storm,” which may take a couple of years to pass, Mr Ansell said.

To do that, providers need to maximise revenues, which they can do by ensuring ACFI claiming is responsive to changes in a resident’s condition, he said.

Staff resourcing also needs to respond to occupancy and residents’ needs and be directly linked to ACFI, Mr Ansell said.

Providers also need to ensure head office does not carry additional resources it does not need, he said.

“If we do structural reviews of organisations quite often that structure reflects their history, not necessarily the operations they have in place.”

Read the Ansell Strategic report in full here.

Comment below to have your say on this story

Send us your news and tip-offs to [email protected] 

Subscribe to Australian Ageing Agenda magazine and sign up to the AAA newsletter



, , , , , ,

, , , , , , ,

2 Responses to Flat half-yearly results for listed aged care providers

  1. Country carer March 16, 2018 at 4:27 pm #

    So aged care is not quite the money spinner they thought it would be? I’m sure they would be faring better than smaller organisations who do not have the economies of scale enjoyed by the larger corporations. Maybe it’s time to trim the fat from administration.

  2. Peter Carter March 31, 2018 at 12:41 pm #

    Occupancy, staff and revenue as key financial factors? Who knew?

    Our industry is fortunate to have the wisdom of so many experts

Leave a Reply