In June, the listed provider warned the market it expected its full-year financial results to include a non-cash impairment charge up to $300 million because of the coronavirus pandemic – now the full impact has been revealed.
Japara says COVID-19 severely affected its business in the second half of FY20, resulting in a net loss after tax of $292.1 million – compared to $16 million profit last year.
Most of this loss is due to the one-off non-cash impairment of $291.9 million made against its goodwill in May.
$6 million spent on five COVID outbreaks
Five of its homes were impacted by outbreaks during the first months of FY21 – resulting in an extra $6 million in expenses – with another $2 million spent on PPE and other infection control measures.
While revenue was up by 6.9% to $427.5 million, this came on the back of additional development earnings, $4.5 million in funding from the Federal Government’s coronavirus support measures and the sale of assets.
EBITDA was also down 24.1% to $36.9 million on the previous period, mainly due to lower occupancy and operations.
The second coronavirus wave in Victoria, where 33 of its 50 homes are located, played a significant part in this result.
As of 25 October, occupancy across the portfolio was sitting at 87.6% with occupancy in Victoria at 85.4% – below the industry average of 88%.
Net RAD inflows were $2.3 million, but this was offset by $2.6 million in outflows from the closure of its Wyong home in August.
New developments and earnings guidance on hold
While two existing greenfield developments at Newport in Victoria and Belrose in NSW are expected to open in early 2021, CEO Chris Price (pictured right) says the company will now hold off on starting any new developments until the outlook improves.
Earnings guidance for FY21 will also be withheld due to the uncertain conditions ahead.
“Alert to growth opportunities post-COVID”
However, the CEO says the group is looking ahead to the future.
“We are conscious of maintaining appropriate debt levels for the COVID-19 period and beyond and are alert to growth opportunities post-COVID,” he said. “We are engaged with streamlining our operations to ensure we have the capacity and capability to take advantage of these opportunities.”
“Our hope and belief is that the Federal Government will provide the necessary ongoing support for the sector to build and operate new homes.”
Japara has 50 aged care homes across Victoria, NSW, QLD, South Australia and Tasmania with over 4,000 residents and 6,000 staff.