Federal funding cuts wiped out Regis’ earnings

Funding cuts by Federal government took away Regis Healthcare’s (ASX: REG) earnings as the ASX listed aged care services provider reported lower EBITDA of $117.1 million for the financial year ended 30 June 2018.

This represents a 5% decline in group’s EBITDA, driven by Federal Government cuts to residential aged care funding, indexation freeze, and the expenses associated with changes to the ACFI funding instrument. As a result, earnings per share was 1.79 cents, which was well below the market expectation of 1.84 cents.

Reported net profit after tax declined to $53.9 million in financial year 2018 compared to $61.1 million in previous year. This downfall of 12% reflects the impact of occupancy pressure resulting from influenza and gastro as well as the negative effects of funding cuts declared by the government. However, group’s normalized NPAT was in line with guidance provided in interim results. [optin-monster-shortcode id=”wxhmli4jjedneglg1trq”]

On the upside, company reported increased revenue of $594.4 million compared to $565.5 million in FY17, reflecting uplift from new facilities as the total operational places increased from 6,029 to 6,753. This makes it the revenue per occupied bed day to $283, up from $281 in the prior year.

The company declared the final dividend of 8.65 cents per share, payable on 26 September 2018 with the record date of 12 September 2018. This fully franked final dividend will take the FY18 total dividend to 17.93 cents per share.

Ahead of greenfield developments and higher revenue, Regis Healthcare’s share price climbed 5.09% to $3.510 as on 5 September 2018.

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