The Estia Health Ltd (ASX: EHE) share price has been one of the biggest movers in morning trade following the release of its full-year results.
At the time of writing the aged care operator's shares are up almost 5% to $3.15.
Highlights from today's release include:
- Operating revenue of $524.6 million, up 18% on FY 2016's result.
- EBITDA of $86.5 million, in line with guidance.
- Net profit after tax increased 47% to $40.7 million.
- Full year average occupancy of 93.5%. Second-half occupancy averaged 94%.
- Net RAD receipts were $80.1 million in FY 2017 ($41.4 million in the second-half).
- Fully franked final dividend of 8 cents per share declared.
- Earnings per share of 18.2 cents.
- Outlook: Mid-single digit EBITDA growth in FY 2018.
Overall I felt this was a strong result from Estia Health and cannot say I'm surprised to see its shares climb higher today.
I agree with management's view that the result demonstrates that initiatives implemented following a detailed operational and strategic review of the business are working and continue to have a positive effect.
Looking ahead, management has stated that capacity is set to increase with an additional 136 net new beds expected to be commissioned during FY 2018. Furthermore, net RAD inflows are expected to be positive based on a continuation of current operating trends.
All in all, this is expected to result in mid-single digit EBITDA growth, subject to no material changes in market or regulatory conditions.
Should you invest?
With Australia's population ageing and demand for age care services expected to rise significantly over the next couple of decades, I think the sector is a great place to look for a buy and hold investment.
Whilst I would sooner invest in its rival Japara Healthcare Ltd (ASX: JHC), I think Estia Health has turned a corner and could also be a good option.
