If your organisation is looking to exit the sector, there has never been a better time to sell – why?
With the new Aged Care Act tantalisingly close to being passed by Parliament and many operators reporting positive financial results for the first time in years, boards and management now have far more certainty on their future – and can decide whether to stay or exit.
StewartBrown’s latest results for FY24 are proof.
While 51% of the sector continues to operate at a loss, the average Net Profit Before Tax (NPBT) per provider was a $2.5 million surplus – a significant improvement on FY23’s average deficit of $2.3 million.
The average operating EBITDA (cash) result for the financial year was also a $2.5 million surplus, up from a $676K surplus in FY23.
While these results are still far below what is needed to get the majority of the sector building new beds, they support what we are hearing from a number of operators.
Larger operators cautiously growing
Their organisations are finally breaking even or close to profitability on aged care – and they now have financial and regulatory certainty thanks to the incoming Act.
They know what the rules of the game will be (even without the official ‘rules’).
They know what their customer will look like – and they are ready to reset their strategic plans.
As a result, the current market for acquisitions in both aged care and retirement living is “overwhelming” according to advisers and real estate brokers.
Larger operators are already expanding, though mainly through mergers and acquisitions given the cost to build – see our exclusive article on the latest BaptistCare merger here.
For smaller and mid-sized operators where the business case for new beds doesn’t stack up, we understand many are either looking to acquire and build greater scale or diversify their portfolios into innovative models of care for the future.
Case in point: West Australian village and aged care operator RAAFA has just acquired home care provider Perth Care and Companion Company (PCCC).
RAAFA CEO Michelle Fyfe says the acquisition will form part of its plans to expand its footprint to more ageing Australians living at home.
“When opportunity knocks, you have to open the door,” she stated.
“We have a really solid foundation for our organisation so now’s the opportunity to take the leap from mid-size to big – the world is our oyster.”
What if your organisation wants to hang up the gloves?
With the cost to build beds at a premium, and few new beds expected to hit the ground in the next three years, demand for both aged care and villages is expected to stay heated well into the New Year and beyond.
Whether you choose to go or grow, 2025 is shaping up to be an exciting year.
