The ASX-listed provider may have reported a loss in its full year financial results this week – but its underlying figures point to a brighter future for its new owner.

As we report in this issue, Estia Health reported an overall net loss of $33.9 million thanks to an $80 million write-off of its bed licences.

But in terms of both occupancy and Government revenue, its results are looking up.

Estia Health reported that its occupancy is now circa 95% outside of Victoria where rates are still trailing behind at 89%.

Overall, the average annualised mature home EBITDA per bed was $15,632, an increase of 9.4% on the previous year. 

For its newer aged care beds, this figure is closer to $20,000 EBITDA.

At the same time, Government revenue increased by 7.5% or $17 per day.

The positive results follow a recommendation by Estia Health’s board earlier this month that its shareholders accept a revised $3.20 a share bid by US private equity firm Bain Capital for the operator’s 73 aged care homes.
 

Based on the shares that Estia Health has on offer, the deal values its 6,700 beds at $280,000 each inclusive of shareholder equity, RAD balance and debt – a great price when the going cost for a new bed is closer to $325,000.

Estia Health CEO Sean Bilton confirmed on the provider’s earning call on Tuesday morning that the group is not seeing any material change in the costs of delivering a new bed under development.

“I would suggest [those costs are] well north now of $400,000 a bed depending on the land component and where that’s located,” he said. 

Development of new beds is already at critical lows, as we discussed in last week’s issue.

Looking ahead, increasing compliance and workforce costs will only drive further consolidation of the sector and constrain the supply of new beds.

Combined with the end of bed licenses and the hope of a more sustainable funding model – including Plan B or increased consumer contributions – to be delivered by the Aged Care Taskforce in December, Bain Capital’s timing appears to be perfect.

With Estia Health under its belt, the private equity firm will have the platform to acquire other smaller operators and expand its portfolio – at a time when demand for new aged care beds will be at a premium.

The SOURCE: In three years’ time, Estia Health’s beds will be ‘rolled gold’ for Bain Capital.