The Estia Health Ltd (ASX: EHE) share price has dropped lower on Thursday following the release of its first quarter update.
In morning trade the aged care operator’s shares are down over 1% to $1.34.
What happened in the first quarter?
According to the release, the occupancy level of the company’s homes (excluding Victoria) averaged 93.7% during the first quarter and stood at 93.2% on 31 October. Whereas in Victoria, Estia Health’s average occupancy during the quarter was 86.8% and its spot occupancy was 83.2% at 31 October 2020.
This meant that total occupancy averaged 91.3% in the first quarter and stood at 89.7% at 31 October 2020.
In light of this, the company recorded total first quarter revenue of $158.9 million. This includes $0.8 million of temporary funding and $10.9 million of imputed DAP revenue on RAD balances in accordance with AASB 16.
Management explained: “Revenues were impacted by the decline in occupancy experienced in Victoria. In addition, the Group took the decision to cease resident billings at a number of homes during COVID-19 outbreaks in Victoria, and ceased Additional Services billings at all homes in Victoria for 3 months as a result of limitations on the ability to deliver those services during the State-wide lockdown. All homes in Victoria are now billing residents as normal.”
Another negative was that Estia Health experienced a jump in its costs because of the pandemic.
It incurred incremental employee costs due to the impact of COVID-19 of approximately $6 million for the quarter. This comprises $4.4 million in Victoria and $1.6 million in other states.
The majority of the costs were incurred in managing the outbreaks in metropolitan Melbourne at the height of the second wave in its homes at Ardeer, Heidelberg West, Keysborough, and Keilor Downs.
Estia Health has also incurred and continues to incur costs associated with additional Resident Liaison Officers and Infection Prevention Control supervision and training at all homes.
Due to the uncertainty caused by the pandemic, management has been unable to provide guidance at this stage.
It commented: “The scale and duration of the COVID-19 pandemic remain extremely uncertain and the Group is not able to quantify with any degree of certainty at this stage the expected future financial impact of the enduring pandemic, including the impact on revenues, costs or funding support from the Government by way of increased subsidies or grants.”
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