Regis Healthcare has forecast steady full-year earnings despite ongoing cuts to residential aged care funding and industry-wide occupancy pressure, after posting a slight dip in first-half profit.
The aged care provider expects full-year underlying profit to be in the range of $56 to $58 million, slightly lower than last year’s $61 million.
Regis on Friday reported a 12 per cent decline in half-year profit to $27.9 million, with the results impacted by lower occupancy levels.
Normalised, or underlying profit was largely steady at $30.5 million, while revenue for the six months to December 31 rose four per cent to $297 million.
Managing Director Ross Johnston said the results were in line with expectations.
“Despite the cutbacks to residential aged care funding in 2017 and 2018 and industry-wide occupancy pressure during the period, Regis delivered a solid interim result,” he said, referring to cuts to federal government funding introduced in 2016.
The numbers were underpinned by contributions from three new facilities as well as last year’s acquisition of Presbyterian Care Tasmania.
As at February 2018, Regis had 6,489 operational places with average occupancy of 95.3 per cent.
It has 1,245 new places in the expansion pipeline as at February 23.
Regis has mainly focused on developing or expanding existing facilities, with just two portfolio acquisitions since listing in October 2014.
It completed the Presbyterian Care acquisition in August 2017, adding 287 places across three facilities, but has otherwise focused on acquisition of single facilities.
The company’s medium-term strategy continues to combine organic growth, including greenfield and brownfield development, with acquisitions of single facilities and portfolios, it said.
The company expects second-half earnings to be in line with those in the first half.
Total capital expenditure in the second-half is expected FY17 is expected to be lower than the first-half’s $143.3 million, Mr Johnston said.
Regis will distribute its entire profit, declaring a fully-franked interim dividend of 9.28 cents a share, down 10 per cent from last year.
At 1512 AEDT, Regis shares were up 25 cents, or 6.6 cents, at $4.05 – their highest level since June.
REGIS HEALTHCARE PROFIT DIPS
* Net profit $27.9m, down 12pct
* Revenue $297m, up 4.0pct
* Fully franked interim dividend 9.28 cents a share vs 10.3cents