The Estia Health Ltd (ASX: EHE) share price has been a solid performer in early trade on Thursday.
At the time of writing the aged care provider's share price is up 2% to $2.73.
Why is the Estia Health share price on the rise?
This morning the company announced that it has assessed the impact of the Temporary Funding Increase announced by the Federal Government.
According to the release, the company estimates that, subject to occupancy levels remaining in line with recent performance, it will receive and recognise as revenue an additional $8.75 million to $9.25 million in FY 2019.
This relates to the period March 20 2019 to June 30 2019 and is based on its average occupancy rate of 93.6% during the first quarter of calendar year 2019.
In addition to this, management confirmed that the new homes at Southport and Maroochydore are due to open on schedule in May 2019 and August 2019, respectively. These homes will add 236 new beds to its portfolio.
However, it will come at a cost. Management revealed that the combined impact in FY 2019 of the initial net losses associated with the commissioning and opening of the homes is expected to be between $0.7 million and $1 million.
Should you invest?
Whilst I think that Estia Health and aged care provider peers Japara Healthcare Ltd (ASX: JHC) and Regis Healthcare Ltd (ASX: REG) are well positioned for long-term growth thanks to the ageing population tailwind, I'm not a buyer of their shares at this point due to the Royal Commission into the industry.
Once this has concluded and recommendations have been made, then I intend to take a look at the industry again. But until then, I would prefer to gain exposure to the ageing population tailwind through hearing solutions company Cochlear Limited (ASX: COH).
After all, as hearing invariably fades as we age, I expect demand for Cochlear's products will increase as the global population ages.
