AN-ACC shortfall to cost aged care operator Regis $10M in FY26
ASX-listed operator Regis Healthcare is pushing back its development pipeline as earnings remain constrained following last year’s shock AN-ACC pricing decision.
In releasing its half yearly FY26 reults on Monday (23 February), Regis revealed its revenue rose 18% on the prior corresponding period to $667.7 million, while EBITDA increased 4% to $70.6 million. The company is forecasting FY26 EBITDA of $130 million to $135 million – around 5% above FY25.
Chief Financial Officer Rick Rostolis said that despite strong occupancy, RAD growth, and recent acquisitions, earnings growth was modest, reflecting a full six-month impact from last year's “degradation” of AN-ACC margin.
“The October 25th [AN-ACC] price increase did not fully offset the wage cost pressures,” he told the results presentation.
Rick said the AN-ACC changes announced in late 2025 will cost Regis about $10 million in earnings in FY26, and he expects further margin contraction from AN-ACC pricing going forward.
Outgoing CEO Linda Mellors, who resigned in December 2025 and will depart the sector on 19 June, said the aged care sector was “blindsided” by last year’s AN-ACC price.
“The Minister [Minister for Aged Care Sam Rae] issued an instruction to that the pricing authority remove the margin from AN-ACC,” she said. “That was unexpected.”
Regis is recommending the Government include an “appropriate care margin” in AN-ACC funding, as well as other measures, including fully funding everyday living expenses, increasing the RAD retention rate to 4%, and introducing flexibility around care minute targets.
“Without an appropriate care margin, fully funded everyday living costs and sustainable accommodation funding, the industry cannot deliver the service quality, workforce investment and infrastructure renewal that older Australians deserve,” Linda said.
Supported residents
Regis' rate of supported residents fell to 41% of permanent residents in 1H FY26, down from 43% in the previous corresponding period, mainly due to acquisitions.
Linda said the significant gap in funding between non supported and supported residents materially impacts sector profitability and restricts providers in improving and expanding accommodation.
Linda said it is hoped the Government’s Aged Care Accommodation Pricing Review, due to report by 1 July 2026, will address the issue and result in pricing reforms that encourage new builds.
Pipeline delays
Regis, which has 8,400 beds today, is targeting 10,000 beds by the end of FY28 – two-and-a-half years’ away.
However, the company has downgraded the contribution from greenfield developments to the target, with approximately 300-450 beds contributing as per the 1H FY26 results, compared with 600 beds estimated during the FY25 results. The remaining 1,150-1,300 beds will be added through acquisition.
The contraction reflects slippage in some development dates. For example, construction of the Bulimba and Coburg homes was set to commence in FY26, but has been pushed back to FY27.
RADs up 22%
Other notable features of the result include:
- employee turnover was down to 20.2% from 25.6% in the prior half, and down from 40% in FY23
- RADs have increased 22% in 18 months
The delays underscore the fragility of new bed construction. While the Government is relying on the private sector to deliver an estimated 10,000 new beds each year, Regis’ result shows that even the country’s only listed aged care provider – and one of its largest, with 74 homes – is deferring new builds amid ongoing funding constraints.
Regis’ shares were volatile on the announcement, reaching $7.20 in morning trade, up 11% on the previous close, but easing to $6.91 at the time of publication.
You can download Regis’ 1H FY26 results here.
