MENU

Estia Health Ltd, Regis Healthcare & Japara shares crater on Royal Commission worries

Shares in aged care provider Estia Health Ltd (ASX: EHE) tanked 17% this afternoon after new prime minister Scott Morrison called for a Royal Commission into the practices of the aged care sector.

The sector includes several ‘for profit’ operators on the ASX such as Estia, Japara Healthcare Ltd (ASX: JHC) and Regis Healthcare Ltd (ASX: REG), with the latter two both also down 17% respectively.

Given the aftershocks being felt across the financial advice industry thanks to the ongoing Royal Commission into financial services it’s no surprise shareholders are taking an abandon ship approach to listed players in the aged care sector.

The problem with some ‘for profit’ professional services business such as those in aged care, child care, or higher education, is that standards of service and profit margins can be inversely correlated, with greater regulation a constant threat.

In response to today’s news Estia’s CEO Norah Barlow claimed Estia “welcomed scrutiny” and ‘looked forward” to working with the government on the terms of reference for any inquiry.

The sector looks to be in for a major public relations battle over the short term and the potential for damaging revelations to come out of a potential Royal Commission.

OUR #1 dividend pick to grow your wealth now is revealed for FREE here!

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool writer Tom Richardson has no financial interest in any company mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.