Why the Oceania Healthcare share price could be set for a fall

The Oceania Healthcare Ltd (ASX: OCA) share price could fall after the company reported a 41% decline in its full-year net profit after tax.

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The Oceania Healthcare Ltd (ASX: OCA) share price could be in for a fall after the company reported a 41% decline in its full-year net profit after tax (NPAT) this morning.

What did Oceania Healthcare announce this morning?

Oceania reported revenue from continuing operations of $189.4 million, a 3% increase on the prior corresponding period (pcp) for the Aussie healthcare provider.

However, underlying NPAT from continuing operations fell 1.8% to $49.7 million while total NPAT fell to $45.4 million –  down a whopping 41% on 2018 full-year numbers.

Total comprehensive income for the year totalled $99.8 million, a 22% increase on 2018 figures in what was a mixed result for Oceania overall.

Oceania also announced a full-year gross dividend of NZ$0.026 per share with a dividend reinvestment plan (DRP) discount of 2.5% for its shareholders.

How does the result stack up against last year?

Oceania Healthcare’s full-year 2019 results are relatively disappointing compared to 2018 numbers, which saw the company’s profit soar 77% to $72 million in the last financial year.

All of the New Zealand aged care provider’s financial metrics saw increases last year in a breakthrough year for the group, but it wasn’t to be this year, with the 41% plunge in NPAT.

The company also saw one of its major shareholders sell a 15.6% stake in September 2018 as Macquarie Group Ltd (ASX: MQG) sold its shares for $102.6 million after restrictions on its sale were lifted in July.

How has the Oceania share price performed in 2019?

There is little doubt that the Oceania share price has been an underperformer so far this year, with the company’s share price climbing just 4% since the start of January.

While the Oceania share price remains in the black, its performance pales in comparison to the S&P/ASX 200 (INDEXASX: XJO) index, which has gained 21.9% since the start of the year in the best start to the year since 1991.

The New Zealand-based healthcare group currently boasts a market cap of $640.8 million and its current $1.05 per share valuation is not too far shy of its $1.14 per share, meaning momentum could be a factor that carries the share price higher.

Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. 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.

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