Regis Healthcare (ASX:REG) shares have taken a significant hit following the company’s assessment of recent government funding changes, which are expected to negatively impact earnings despite strategic expansion efforts. The market reacted sharply to the news, sending the stock lower.
The Regis Healthcare share price closed down 26.25% to $6.80 today. This decline reflects market concern over the company’s revised earnings outlook in light of adjustments to residential aged care funding announced by the Australian Government.
Regis Healthcare anticipates that the funding changes will not adequately offset anticipated increases in staff costs. As a result, management projects underlying EBITDA for the upcoming fiscal year to be in the range of $130 million to $135 million. This represents a modest growth of 3% to 7% compared to FY 2025’s EBITDA.
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Despite these challenges, Regis Healthcare remains active in strategic acquisitions. On July 24, 2025, the company announced a binding agreement to acquire Rockpool RAC Holdings Pty Ltd, a privately-owned residential aged care provider. Furthermore, in September 2024, Regis agreed to acquire two residential aged care homes in Capel Sound and Mornington, Victoria, for a net consideration of $35.5 million. These homes had an average occupancy of 96% in Q4 FY 2024.
Earlier in the year, Regis Healthcare reported a revenue increase of 29.91% year-over-year, reaching AUD 1.01 billion in the first half of 2025, along with a net income of AUD 49 million, a stark contrast to the previous year’s loss. The company also announced higher dividends.
JPMorgan downgraded Regis Healthcare’s stock rating from “Overweight” to “Neutral” on August 19, 2025, while raising the price target to AUD 8.00 from AUD 7.10. The downgrade was based on the assessment that the positive outlook is largely reflected in the current share price, which had risen over 90% in the past year.
Approximately 56% of Regis Healthcare’s shares are held by insiders, including key executives like Ian Roberts (27%) and Bryan Dorman (7.8%).
While the recent share price decline presents a challenge, the company’s strategic acquisitions and insider ownership may provide a degree of confidence in Regis Healthcare’s long-term prospects, but the market weighs the impact of funding changes heavily.
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