Did We Miss Anything On ASX-listed Aged-care Facility Providers: EHE, SNZ, and RHC?

  • Jul 13, 2020 AEST
  • Team Kalkine
Did We Miss Anything On ASX-listed Aged-care Facility Providers: EHE, SNZ, and RHC?


  • The Australian government provides funds to aged care homes across the country; Government organisations, not-for-profit organisations and for-profit private companies, offer aged care services.
  • Estia Health foresees a non-cash impairment charge in the range A$124-A$148 million in FY20.
  • Thirteen residents in Estia’s Ardeer home affected by COVID-19; Stock price drops over 3%.
  • Summerset Group provided earning guidance for 1H 2020; underlying profit is projected to be in between NZ$40 and NZ$45 million.
  • Ramsay and the Western Australian Department of Health agreed to terminate their cooperation agreement that made Ramsay’s WA facilities accessible during the COVID-19 crisis.

An aged care system helps older individuals to live independently in their homes and provides support and accommodation when this is no longer possible. An aged care home, which is also known as a residential aged care facility or nursing home, is for older people who can no longer live at home and require constant help with everyday tasks or health care.

Leaving your own home and moving into a residential care or aged care facility is not an easy option; though, it should not have to be a terrifying experience. An aged care space can provide the services and care which is required to maintain the quality of life.

The government of Australia provides funds to many aged care homes to cater to the aged people who need it. Residential aged care facilities could help with daily activities, personal as well as nursing care by providing accommodation, hotel type services and care services (personal as well as clinical care).

In Australia, different types of organisations provide aged care services, including government organisation, not-for-profit organisations, and for-profit private companies.

In this backdrop, let us discuss three ASX-listed aged care service providers- EHE, SNZ, RHC

Estia Health Limited (ASX:EHE)

Estia Health Limited is engaged in providing aged care assistance via owned and leased residential facilities in Australia.

The Company is a leading residential aged care provider. Estia has sixty-nine operational homes with over 7,500 employees in Queensland, Victoria, New South Wales, and South Australia.

On 13 July 2020, Estia Health provided a market update on ASX, highlighting financial and operational information.

Highlights from financial front

With ongoing uncertainty around future financing and funding, aggravated by the issues evolving due to the COVID-19 crisis, Estia anticipates reporting a non-cash impairment charge, mainly on goodwill arising from past acquisitions, in its results for FY20 (year ended 30 June 2020) in between A$124-$148 million.

Moreover, the Company disclosed that this non-cash charge is a provisional assessment and is still subject to finalisation and audit before the completion of FY20 financial results.

The total RAD/bond liability of the Company was up by $9.8 million from 31 December 2019 to $836.3 million as on 30 June 2020 (A$99.9 million of which was represented by probate liabilities).

During the 2H FY20, net inflows from the two homes at Southport and Maroochydore in ramp-up were approximately A$14.0 million, net outflows from mature homes were A$2.9 million, and probate declined by A$3.5 million from 31 December 2019.

Under A$330 million bank facility of the Company, net bank debt was approximately A$99.4 million as of 30 June 2020.

Highlights from operations front

Estia disclosed that occupancy in mature homes was 92.7% demonstrating 5,946 operational beds as of 30 June 2020, having increased steadily since May 2020 in-line with the easing of home and community restrictions arising due to the COVID-19 pandemic. Moreover, in the second half, occupancy was 92.6% over 6 months, and the full 12-month occupancy was nearly 93%.

COVID-19 Update: Virus spreads in Estia nursing home

The Company, on 13 July, said that 13 residents at its Ardeer home had tested COVID-19 positive. Consequently, Estia has activated its COVID-19 positive test response plan and is working with the Victorian Department of Health and Human Services Public Health Unit and the Commonwealth Department of Health to manage and monitor the situation.

Stock Information: On 13 July 2020, EHE stock quoted at A$1.450, down by 3.333%. With a market cap of ~A$391.91 million, the Company has nearly 261.27 million shares outstanding.

EHE were placed in a trading halt during the day pending its market update announcement.

ALSO READ: How are Childcare and Aged Care Sectors Placed amidst Covid-19 and Government Entitlements

Summerset Group Holdings Limited (ASX:SNZ)

Listed on the ASX and NZX, Summerset Group Holdings Limited is a leading retirement villages operator, with 31 villages completed or in development across the country. The Group provides several living options, including care services, to more than 5.5k residents.

Summerset Group Provides Earning Guidance for 1H 2020 (ended 30 June 2020)

On 9 July 2020, Summerset Group disclosed its earning guidance on ASX and revealed its underlying profit for six months is projected to be in between NZ$40-NZ$45 million. As compared to the underlying profit of 1H19, this guidance dropped by 6-16%, reflecting the substantial impacts induced by COVID-19 pandemic.

Notably, in the first half, the Company delivered 139 new retirement units. The lockdown witnessed construction at 13 sites in the country close for 6-weeks.

Summerset CEO Julian Cook commented:

Furthermore, Summerset has not provided any estimate for NZ IFRS NPAT due to a key component of this profit measure being unavailable until after the completion of an independent valuation process.

As stated in prior guidance, the Group continues to make sure that it has robust financial management disciplines in place with nearly NZ$350 million of unutilised funding capacity available.

Notably, at this stage, given trading conditions, Summerset disclosed that the directors foresee being able to provide an interim dividend.

Stock Information: On 13 July 2020, SNZ stock quoted at A$6.650, up by 1.527%. With nearly 227.98 million shares on ASX, the market cap of the Company stood at A$1.49 billion.    

Ramsay Health Care Limited (ASX:RHC)

Global health care company Ramsay Health Care Limited is one of the leading and most diverse private health care players at international level. Ramsay offers high-quality services and outstanding patient care, along with hospital management. RHC provides primary and severe healthcare services across eleven nations from its 480 facilities.

Termination of Western Australian COVID-19 agreement

On 1 July 2020, Ramsay Health Care confirms that the Western Australian Department of Health and Ramsay have agreed to terminate the cooperation agreement that made Ramsay’s Western Australian facilities and services accessible through the COVID-19 pandemic with effect from 30 June 2020.

This decision has been made for the continuation of elective surgery and comprises a right for the Department to direct Ramsay Health Care for one year from termination to sign a new agreement on similar conditions as the original agreement.

Moreover, this right can be employed if the Commonwealth Government or the Department reasonably form the view that this is needed to make sure that the public and private health sectors can respond successfully to the ongoing turmoil.

Stock Information: On 13 July 2020, RHC stock was trading at A$61.910, down by 1.699%, with a market cap of nearly A$14.41 billion.


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