The Estia Health Ltd (ASX: EHE) share price is tumbling lower this morning after the ASX aged care provider released its half-year FY20 results.
Estia's earnings results sees significant falls
Estia came in with earnings before interest, tax, depreciation and amortisation (EBITDA) on mature homes (pre-AASB 16) of $40.9 million, which was a significant decline of 12.6% on the prior corresponding period (pcp) of H1 FY19. Estia was impacted by margin compression, a trend that occurred across the entire industry in which it operates.
The company record net profit after tax (NPAT) of $14.3 million which was an even more significant decline of 32.1% on the pcp. Estia pointed out, however, that this result does not include its expected gain on the sale of its Mona Vale property. This sale will see around $5.5 million after tax to be recognised in the second half of FY20.
Estia's operating cash flow came in at $35.7 million, which represents around 87% EBITDA to cash conversion.
$96.6 million of net debt was on the company's books at the end of December, with $211 million of undrawn facilities available.
An interim fully franked dividend of 5.4 cents per share was declared by Estia, which represented approximately 100% of the company's NPAT.
Commenting on the results, Chief Executive Officer, Ian Thorley said:
"As we look at the margin compression, and challenges in the sector, this is a solid result reflecting the quality of our services and portfolio and disciplined approach to costs and investment."
"This is the most difficult period for the sector I have seen, and we hope that the next stage of reform and change, will include changes to the funding and financing structure to create a financially sustainable sector," he added.
Estia maintains high occupancy rates
Estia's average occupancy rate for residents in its mature homes came in at 93.7%, while the company reported spot occupancy as at 21 February 2020 of 93.6%. Estia commented that its occupancy levels continue to exceed industry averages as it maintains focus on growing market share at a local and national level.
The company made $46.3 million worth of capital investments for new homes and for the enhancement of existing homes during the six-month period.
Net refundable accommodation deposit (RAD) inflows for the company amounted to $22.2 million during the six-month period, with a RAD balance at 31 December 2019 of $826.5 million.
