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Aged Care and COVID Outbreaks: Estia Health

  • July 29, 2020 05:47 PM AEST
  • Kunal Sawhney
    CEO Kunal Sawhney
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    Kunal Sawhney is founder & CEO at Kalkine and is a richly experienced and accomplished financial professional with a wealth of knowledge in the Australian Equities Market. Kunal obtained a Master of Business Administration degree from University of T...

Aged Care and COVID Outbreaks: Estia Health


  • New cases in Victoria are rising, and signs of small outbreaks in NSW are also noticeable. The infection has also hit aged care facilities, especially in Melbourne, Victoria.
  • Federal Government has stepped in to tackle the crisis in aged care facilities, especially private aged care facilities where people are losing lives.
  • Two properties of Estia Health experienced virus outbreaks, and no new residents would be admitted until concerned authorities give clean chit.
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Winter is on a full swing, so is the virus. Melbourne is battered with the virus, and new infections continue hitting records. Perhaps rising new cases also indicate high testing rate, which is crucial for the early containment of COVID 19.

Health authorities have mentioned that the containment of outbreaks in Melbourne would take more than the current six-week lockdown period, as the virus has ‘embedded’ now. Despite this outbreak in Melbourne, Australia remains one of the least infected countries around the world, following a successful containment of the initial wave. Most of the states continue to operate under normal conditions with gradual re-openings.

Do Read: Australia’s COVID-19 Battle Continues- Melbourne Lockdown Takes A Toll On Residents

COVID 19 outbreaks in aged care homes have now gathered momentum, and a substantial number of cases have been linked to aged care homes. Since aged care facilities have elderly people, the risk of fatalities is relatively higher.

Government has made masks mandatory at aged care homes. PM Morrison is going to work with the health ministry to focus on rising number of cases from these facilities. Recently, there was an emergency evacuation at an aged care centre in Victoria, and patients were taken to the hospital.

Federal policymakers have been forced to step into the situation, as number of deaths from aged care centres is on the rise. Incidentally, only people at private aged care facilities have lost lives, and none have died in public aged care homes.

Must Read: Your Complete Guide: Companies Hitting the COVID-19 Vaccine Charter

Most of the cases in aged care facilities are linked to six private centres in the North West of Melbourne. Government has also restricted staff movement across aged care centres to limit the spread of virus, and it would pay the foregone wages to staff.

Since aged care staff usually work in multiple centres, the chances of spreading infections to other places could not be ruled out. Government is also ensuring that aged care facilities are provided with sufficient PPE kits.

They are also emphasising that infected people should be moved out of hospitals earlier. People are moved to hospitals on a case-by-case basis, and some sections are also demanding all patients be moved to hospitals.

Estia Health Limited (ASX:EHE)

Recently, Estia Health provided an update on the COVID 19 condition in Victoria. The Aged Care Quality and Safety Commission served Estia with Notices to Agree, as a result of COVID 19 outbreaks at its properties in Heidelberg West and Ardeer.

EHE confirmed to have implemented the requirements in the Notices from the Commission. Estia would not be able to admit new residents in the home until the health authorities declare the site as COVID 19 free.

Under the requirements, the company has appointed an independent advisor to ensure the health and wellness of residents. Estia would provide daily and weekly reports to the authority on managing the outbreak.

At both properties, the company continues to work with State and Federal Government authorities in managing the outbreak. It is following the guidelines provided by the authority, including on regular testing, hospital transfers, employees and residents.

Estia has added further support to keep families informed about their loved ones. It has opened a dedicated support line, and daily updates were being provided to the family members of residents.

The company continues to emphasise on safety, health and well-being of its residents and employees. It has ensured confidential counselling to support the mental well-being of residents. At this point, Estia is not able to quantify the financial impact.

Earlier this month, the company provided a market update. In light of uncertainties in funding and financing in the sector over future, Estia expects to incur a non-cash impairment charge, primarily on goodwill of historical acquisitions.

The non-cash impairment is expected in the range of $124 million to 148 million, and the non-cash impairment would not impact debt facilities, compliance with banking covenants, and room for capital management initiatives.

At the end of June, the occupancy in mature homes with around 6k operational beds was at 92.7%, improving gradually since May 2020 and consistent with re-opening and easing of restrictions on people movement.

The company also received payment of $5.8 million as a one-off support payment to the aged care providers to meet additional costs arising out of COVID 19. At the end of June 2020, it had net debt of $99.4 million under its $330 million bank debt facility.

Estia expects to announce full-year results on 18 August 2020. On 29 July 2020, EHE settled at $1.450, down by 2.357% from the previous close.

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