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Estia Health share price on watch after coronavirus update

The Estia Health Ltd (ASX: EHE) share price could come under further pressure on Tuesday after it became the latest company to withdraw its guidance for FY 2020.

This follows moves by companies such as Cochlear Limited (ASX: COH) on Monday and Webjet Limited (ASX: WEB) last week that did the same.

What did Estia Health announce?

This morning Estia Health provided an update on current trading and its guidance for the full year.

According to the release, at this point, management notes that none of its homes have experienced cases of COVID-19 among residents or employees nor been materially impacted. As of March 15, the company’s occupancy rate within its mature home portfolio was 93.8%.

However, due to the heightened uncertainty surrounding the potential future impact of coronavirus, the company is suspending its FY 2020 guidance.

The company notes that Australia is experiencing an unprecedented public health crisis of unknown dimensions with economic and financial implications that cannot at this point be estimated.

What now?

Management advised that it continues to monitor the COVID-19 situation closely and is planning for any further escalation.

Its focus is on the wellbeing and safety of staff and the frail and vulnerable residents and their families, while at the same time being responsive to the community need for access to residential aged care.

Management said: “At this stage it is not possible to have a high degree of certainty about the impact the situation may have on future occupancy, revenue and costs across the company’s 69 homes. Given the dynamic and uncertain nature of this situation, it is not possible to provide meaningful guidance at this time on the size of the projected impact on earnings for the remainder of FY20.”

The company notes that its disciplined capital management continues to be a key element of its strategy and its balance sheet strength is expected to give it greater flexibility and depth of resource to meet the challenges the crisis may present.

As of March 13, its net debt stood at ~$106 million, with undrawn and committed facilities under its Syndicated Financing Facility of ~$216 million. The net RAD balance on March 13 was ~$827 million, which includes amounts due under probate.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. and Webjet Ltd. 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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