Regis Healthcare puts development pipeline on hold after 50% HY profit slump to $12M

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The listed aged care provider says it is reviewing its acquisition strategy and pausing new aged care home developments after it halved its NPAT to $12.1 million compared to the same quarter last year.

Regis also reported a $17.6 million decline in its EBITDA – put down to the cost of inflation (3%) exceeding the Government’s COPE increase (1.4) and lower occupancy of 90.4% – that was only partly offset by $6.1 million in EBITDA from its home ramping up.

Underlying revenue did increase by 4.4% to $332.2 million, boosted by $46.1 million in RAD receipts and retirement village entry contributions, but overall the results were flat with underlying EBITDA down 21.7% to $44.4 million.

Shareholders will receive an interim dividend of 4.02c per share, 50% franked, but its shares have dropped 16% in the past week on the back of the results.

Regis confirmed its full year net profit guidance is still expected to be $28 million compared with $50.9 million in 2019.

CEO Dr Linda Mellors said the results reflected the challenging conditions in the industry, with pressure on occupancy and insufficient indexation failing to cover the increase in operating costs.

“Investment in new homes has now slowed due to the lack of certainty in government funding and policy, as well as uncertain outcomes from the aged care royal Commission,” Dr Mellors said.

 “We continue to review acquisition and development opportunities whilst keeping a conservative approach to managing our balance sheet and debt.”

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