Estia Health expects to bag additional revenue beyond its earnings guidance

EHE

Estia Health Limited today announced an increase in its existing earning guidance for the Fiscal Year 2019 on the back of additional revenue estimated to be earned during the remaining period.

In the announcement dated 4 April 2019, Estia Health Limited (ASX: EHE) informed the market about its expectation to receive and recognise additional revenue of $8.75 million to $9.25 million relating to the period 20 March 2019 to 30 June 2019. The report read that the revenue will be an addition to existing and re-affirmed Earnings Guidance.

However, the company restated that the costs arising directly from the initial costs of opening new homes at Maroochydore and Southport as well as expenses relating to the Royal Commission will be reported separately and are not reflected in the above Earnings Guidance. Direct external costs associated with preparing for and responding to the Royal Commission were $914,000 in 1HFY19.

The company further reported 93.6% average occupancy during the period 1 January to 31 March 2019 while the spot occupancy at 31 March 2019 was 93.8%. The new homes at Southport and Maroochydore comprising of 236 new beds will reportedly be commenced as scheduled in May 2019 and August 2019, respectively.

The combined impact in Fiscal 2019 of the initial net losses associated with the commissioning and opening of the homes in Fiscal 2019 are expected to be between $0.7 million and $1.0 million.

Recently, Estia announced the change in company secretary that includes the appointment of Ms Leanne Ralph as Company Secretary succeeding Ms Suzy Watson. This comes after Ms Suzy Watson resigned as Company Secretary of Estia; however, she continues in her role as General Counsel for the Estia Group.

The Group posted 6.6% growth in revenue to $289.7 million for the first half of Fiscal 2019. Its EBITDA increased by 3.1% to $46.9 million, taking 1H FY19 net profit after tax to $21.1 million up 4.1% compared to the previous corresponding period.

Estia paid an interim dividend of 8.0 cents per share, fully-franked, representing a payout ratio of approximately 100% of Net Profit After Tax for the period. Moreover, the Company intends to re-activate the Dividend Reinvestment Plan later in 2019 which will reportedly be informed to shareholders in due course. As at 31 December 2018, the Group’s net bank debt was $64.8 million with a gearing ratio of 0.7x EBITDA.

Commenting on the outlook for FY19, CEO Ian Thorley previously stated that Estia now anticipates to deliver low to mid-single digit percentage increase on Fiscal 2018 EBITDA from the current portfolio of homes in Fiscal 2019.

In today’s trading session, EHE stock price has declined by 0.746% to trade at $2.660 on 4 April 2019 (2:53 PM AEST). Its price to earnings multiple stands at $16.640x with a market capitalisation of $698.42 million.

Over the past 12 months, the stock has witnessed a negative performance change of 20.00% despite an upsurge of 18.06% in the past three months.


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