Regis, Japara and Estia share prices hit by Royal Commission and Four Corners program

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The announcement by the Federal government of a Royal Commission into aged care will be the start of a ‘summer of discontent’ for the listed aged care operators, Regis, Japara and Estia.

Yesterday their share prices were equally hit after the Sunday announcement by the Prime Minister.

Regis’ share price was down 19%, Estia 18% and Japara 17%.

As the graph above shows they each have been on a downward slide since 2015 on the back of federal government ACFI funding cuts to aged care, and regulatory uncertainty.

Over the past six months they have also been the focus of the nurses’ union strategy to single them out as the profiteers, as well as alleged tax avoiders, of the sector while driving down staff ratios. This resulted in a Senate enquiry.

Interestingly the StewartBrown surveys demonstrate that a good number of Not For Profit operators generate higher net income per bed than these three public companies.

Looking forward two to three years, it is highly plausible that Regis, Japara and Estia will benefit from the Royal Commission. There is no alternative for the government but to allow customers to be charged more for aged care services. It is the only equitable way that workforce wages can increase and more people can be employed.