An analysis of the financial performance of three listed aged care providers reflects the  difficulties facing the sector as a whole, an industry professional tells Australian Ageing Agenda.

The StewartBrown Listed Aged Care Providers Financial Performance Analysis released this week analyses the financial results of listed aged care providers Regis Aged Care, Estia Health and Japara Healthcare for the 12-month period ended 30 June 2020.

The analysis shows that while all three listed providers reported an increase in operating revenue and places for the year ending June 2020, growth is slowing compared to previous years.

Regis made an operating revenue of $675.2 million in 2019-20, up from $646 million in 2018-19, and reported 140 additional places.

Estia’s operating revenue in 2019-20 is $593.5 million, up from $586 million the previous year, and recorded 80 additional places.

Japara reported an operating revenue of $422.6 million this year, up from $394.9 million the previous year, and had an additional 261 places since June 2019.

However, growth in operational places has slowed compared to previous years, the report said.

David Sinclair

StewartBrown partner David Sinclair said this was reflective of the wider aged care sector.

“The listed entities have been affected like everybody else in the sector. It’s been affected by the underfunding in the system and their operational results are declining,” Mr Sinclair told AAA.

“Revenue is increasing at a lower rate than their major expense which is wages, so their results are declining,” he said.

Occupancy declines

Mr Sinclair said decline in occupancy is consistent with the broader industry.

“The occupancy has declined between 1.3 to 2 per cent over the 12 months or 18 months,” Mr Sinclair said.

The average occupancy for Regis in 2019-20 was 90.3 per cent, down from 92.7 per cent in 2018-19.

For Estia, its average occupancy was 93.2 per cent, slightly down from 93.6 per cent the previous year.

Japara’s average occupancy in 2019-20 was 92.2 per cent, also slightly down from 92.9 per cent the previous year.

The analysis shows that in Victoria, occupancy declined among all three providers, with Regis at 82 per cent, Estia at 86.8 per cent and Japara at 88 per cent around mid-late August.

Mr Sinclair said the occupancy decline in Victoria post 30 June is due to COVID.

“There has been further decline in Victorian facilities in July and August, which is when the second wave hit,” he said.

Cost of staff rises

The proportion of operating revenue spent on staff increased for all three providers.

Regis’ staffing costs accounted for 73 per cent of operational revenue in 2019-20, up from 69.3 per cent the previous year.

Estia’s staffing costs accounted for 70 per cent of operational revenue in 2019-20 and 66 per cent the year before.

Staffing accounted for 74 per cent of operational revenue in 2019-20 for Japara, up from 70 per cent in 2018-19.

Mr Sinclair said the findings provide insight into how the rest of the sector is doing.

He said the lack of funding allocated for residential aged care announced this week in the federal budget will impact the sector.

“The message was funding would come in the May budget, but in our view there needs to be something coming beforehand because there is chronic underfunding in the sector.”

Mr Sinclair said the sector needs additional funding.

“Wages are going up by 2-3 per cent, revenue is indexed at 1.2 and 1.4 per cent and ACFI was frozen there for 12 months,” he said.

“With nothing else to help, it will result in the continual decline,” Mr Sinclair said.

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