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Australiaâs leading aged care service provider, Estia Health Limited (ASX:EHE) unleashed the robust performance of its first half of Fiscal 2019 with EBITDA up 3.1% to $46.9 million, NPAT of $21.1 million up 4.1%, and Revenue up 6.6% to $289.7 million.
During the period, the company achieved an average occupancy of 93.9% in 1HFY19 with net RAD inflows from current residents of $15.2 million, including $10.7 million received at the new homes in Twin Waters, QLD, and Kogarah, NSW. The company stated that both these new homes are now fully operational and contributing in line with expectations as top quartile homes.
Estia Chief Executive Officer Ian Thorley stated that this result outlines the companyâs ability to sustain margin and profitability even in the challenging time for the sector which had impacted costs compared to the Groupâs expectation.
The Board has declared an interim dividend of 8 cents per share, fully franked, payable on 27 March 2019 with the record date of 6 March 2019. This interim dividend for the half-year ended 31 December 2018 represents a payout ratio of almost Net Profit After Tax (NPAT) for the period. Further, the Group intends to re-activate the Dividend Reinvestment Plan.
To improve its home portfolio, Estia made the capital investment of $26.3 million that will result into the expansion of bed capacity by 344 beds at Maroochydore and Southport (Qld) and Blakehurst (NSW) on completion. A further $17.1 million was invested in refurbishment and capital replacement programs to enhance the resident experience, provide improved asset quality and extend asset lifecycle.
On the balance sheet front, Estiaâs Net bank debt stood at $64.8 million as at 31 December 2018, resulting in a gearing ratio of 0.7x EBITDA. Moreover, the Group achieved strong operating cash flow conversion of 100% of EBITDA to cash in line with its targets to maintain bank debts within the determined range. Its total debt facilities stood at $330.0 million of which more than $250.0 million are undrawn as at 31 December 2018.
Outlook:
Estia has revised its full-year FY19 EBITDA Guidance to low to mid-single digit percentage increase on FY18 EBITDA. The Group stated that the guidance is based on the existing portfolio of homes subject to no further material changes in the market or regulatory conditions.
Mr Thorley stated that the companyâs brownfield investment continues and by the end of December 2019 it expects to have more than 4,097 beds in 42 homes refurbished under the Governmentâs significant refurbishment program, improving the experience of its residents and generating improved investment returns.
Moreover, the company expects both Queensland homes, Maroochydore and Southport, to open on time and budget in 2019. Whereas, the considerable delay has been recognised for Blakehurst due to the need for site remediation which has been fully assessed but delays opening of the home until November 2020.
The Group further informed that the costs arising directly from the Royal Commission and the initial costs of opening new homes at Southport and Maroochydore in May and August will be reported separately and are not reflected in Guidance. Further, Estia has already submitted its comprehensive response to Royal Commission and is looking forward to the outcomes from the Royal Commission into Aged Care which it believes will lead to a higher performing and more sustainable aged care sector that meets community expectations and provides safe and high-quality care for all consumers.
EHE stock price slipped by 1.245% to close at $2.380 on 26 February 2019. The stock last traded at a PE of 15.250x with a market capitalisation of $628.05 million.
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