Australia's only remaining listed residential aged care provider has announced a $16.3 million profit after tax before amortisation of beds for the six months to 31 December 2023, a profit more than five times the result of the 1H23 result.
A $28.5 million write down on the value of bed licences net of tax, ahead of the deregulation of bed licences on 1 July 2024, took Regis Healthcare's net loss after tax to $12.1 million.
However, the fundamentals of the business were strong. Revenue rose 26% on the previous corresponding period (pcp) to $480.1 million, due mainly to AN-ACC increases, the CPSM acquisition of five homes with 644 beds, and an 11.2% increase in resident revenue per occupied bed day. However, staff expenses rose 26.6% to $366.5 million due to the Fair Work Commission (FWC)'s 15% pay rise for direct care workers, and care minute mandates which necessitated high use of agency staff.
Occupancy increased from 91.1% to 93.6%, also boosting the aged care provider's performance.
Investors were rewarded with a 6.28 cents per share (CPS) dividend, returning 100% of NPATA (net profit after tax adjusted) excluding one-off items to shareholders. Though down from the 2H23 dividend of 7.48 CPS, the dividend was a significant improvement on prior years.
“Regis has delivered very strong growth across key metrics including occupancy, revenue, underlying earnings and cashflow during a more stable aged care environment, notwithstanding the complex reform program," said Regis Managing Director and CEO Dr Linda Mellors.
"Importantly, funding has improved with increases to AN-ACC on 1 July 2023 and 1 December 2023," she said.
Further expansion
The company is "seeking potential acquisition targets to expand its residential aged care footprint" from its current 68 aged care homes, or 7,600 beds, which operate in every State and Territory except the ACT.
“With a strong balance sheet, net cash at the end of the half-year and a substantial debt facility, Regis is well positioned to expand its residential aged care footprint through greenfield developments and further material strategic acquisitions," Linda said.
At the time of writing, Regis shares had surged 4.1% on the announcement to $3.55, the stock's highest level since 2019, prior to the pandemic.
