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Estia Health - Report FY19 Results

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Estia Health (ASX: EHE) is health company specialising in aged care. It is based in Australia and operates over 65 facilities Australia-wide.

Estia Health - FY19 Report

What are the results from Estia Health FY19?

Today (Tuesday 20th of August 2019) Estia Health released its FY19 annual results. The main points are as follows:

  • Revenue for FY19 is A$586 million, up by 7.1% from FY18.
  • EBITDA for FY19 is A$94million, up 4.3% from FY18.
  • NPAT for FY19 is A$41.3 million, up 0.3% compared with reported FY18 NPAT.
  • The final dividend is 7.8 cent per share (fully franked). This brings the full year dividend to 15.8 cents per share (fully franked).

Specific results on company operations are as follows:

  • Capital Investment of A$93.8 million in enhancing the home portfolio.
  • Average occupancy during FY19 of 93.6%, down 0.6% from FY18

What were the drivers of this result?

Major drivers of this result include 17,000 extra occupied bed days, the impact of significant renovations and refurbishments as well as the partial re-introduction of Aged Care Funding Instrument indexation.

Other drivers include growth in response to growing demand within communities. Investment were made across the portfolio of properties to improve resident amenity and generate incremental earnings through Higher Accommodation Supplements and the improved marketability of the homes.

What is the outlook for Estia Health?

The outlook for Estia Health is positive, driven by projected robust future demand for aged housing. Competition into FY20 will prove challenging as the market conditions will continue to change.

Estia Health will look to apply the best technology possible in their homes as it will improve productivity and support delivery of quality care.

The Royal commission on aged care brings Estia Health an opportunity to firmly entrench themselves as a reliable and safe provider in a strong and sustainable aged care sector.

FY20 EBITDA on mature homes, based on pre-leasing standard changes will be in the range of $86m to $90m. FY20 EBITDA on mature homes, reflecting the new leasing standard will be in the range of $132m to $141m. Thus, low to neutral net inflows on mature homes are expected to persist in FY20.

Capital Investment will be between $120m - $150m in FY20. The Target bank debt gearing ratio will remain between 1.5X – 1.9X EBITDA.

What is the market reaction?

The initial market reaction to Estia Health FY19 results is slightly positive. The current share price is trading at A$2.68 which represents a 0.05% increase (10:02 am AEST).




This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

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