$48M turnaround: Estia Health makes profit after tax with sale pending

CEO Sean Bilton said the FY23 financial outcomes for shareholders of the aged care provider with 73 homes operating across four states “signify a marked turnaround in sector and company operational performance notwithstanding the ongoing impacts of COVID-19”.

Estia Health, which purchased four residential aged care homes from Premier Health Care in December last year and a fully operational home in Mount Clear, a semi-rural suburb of Ballarat, Victoria, in May, made a profit after tax of $38.4 million, compared to a loss of $9.6 million in FY22.

EBITA (Earnings Before Interest, Taxes, and Amortisation) was $116.1 million (2022: $37.5 million). The Sydney-based business reported a Statutory Net Loss After Tax of $33.9 million due to a full-year bed licence amortisation charge of $80.5 million before tax.

The aged care home purchases, plus a slight increase in occupancy to 92.3% on average, helped it increase its net RAD intake to $85.7 million (2022: $22.8 million). 

The purchase of two Royal Freemasons homes in Victoria is expected to conclude in October, and two new greenfield homes under development at St Ives, 18km north of Sydney’s CBD, and Aberglasslyn, a suburb of Maitland, 166km north of Sydney, are due to complete late this year and will add 236 new resident places to the portfolio.

Sean said the biggest challenge facing the sector remained the lack of workers. 

Staff costs, excluding the impact of the costs associated with COVID-19 outbreaks increased by $46.1 million to $490.1 million (2022: $444.0 million) due to increasing use of agency staff and overtime costs associated with staff shortages.

Estia Health’s board has entered a Scheme of Arrangement with Bain Capital to buy all the issued shares for $3.20 a share. A booklet about the deal will be sent to shareholders, who will then be given the opportunity to vote on the recommended Scheme at a meeting expected to be held in November. 

Estia Health shares rose 0.32% after the announcement to sit at $3.12.

The SOURCE: Their FY23 Financial Report shows exactly why Bain Capital wants to own Estia Health.