What did the Japara (ASX:JHC) share price do after a big HY21 profit plunge?

The Japara Healthcare Ltd (ASX:JHC) share price was on watch today after reporting a large profit decline due to COVID-19.

| More on:
Aged Care Worker

The Japara Healthcare Ltd (ASX: JHC) share price was on watch today after the company reported its FY21 half-year result.

Japara is one of the country’s largest aged care operators.

What was in the Japara HY21 result?

Japara reported that it managed to grow its total revenue by 3.6% to $220.3 million due to increased government revenue and additional places.

The average occupancy for the period was 89.2%. The occupancy on 19 February 2021 was 87.3%. New places were added with the opening of the brownfield extension at Albury with 25 places.

However, there were $7 million of non-recurring (ASX: JHC) share price was on watch today after the company reported its FY21 half-year result. Japara is one of the country’s largest aged care operators. What was in the Japara HY21 result? Japara reported that it managed to grow its total revenue by 3.6% to $220.3 million due to increased government revenue and additional places. The average occupancy for the period was 89.2%. The occupancy on 19 February 2021 was 87.3%. New places were added with the opening of the brownfield extension at Albury with 25 places. However, there were $7 million of non-recurring COVID-19 pandemic specific expenses incurred, partially offset with a $1.6 million recognised reimbursement through the government grant program. Applications have been lodged to be reimbursed for the full expense incurred. Earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 67% to $8 million, impacted by COVID-19 costs. ‘Recurring EBITDA’ declined 29% to $15 million. The net cash from operating activities more than halved to $24.7 million, down from $59.7 million in the prior corresponding period. This includes net refundable accommodation deposit (RAD) and independent living inflows (ILU) of $2.4 million. It reported a statutory net loss after tax of $9.5 million. The prior corresponding result was a net profit of $5.4 million. Balance sheet Japara said that its net bank debt was $208 million at 31 December 2020, which includes $48 million of core net debt and $160 million of development debt. It still has $137 million of available liquidity, however it isn’t going to pay an interim dividend. FY21 outlook Japara said that progress continues to be made on the development program with an identified pipeline of 628 net new aged care places and three co-located seniors living development projects. Its latest developments, being Trugo place in Victoria with 120 places and Corymbia in NSW with 102 places are expected to open during the second half of FY21. Japara said that the revenue and cost implications of COVID-19 remain uncertain. The funding environment continues to be challenging, with occupancy lower than the company was hoping. Recently completed developments are expected to contribute to earnings. Decisions on future development commencements have been deferred until the COVID-19 pandemic and economic outlook become more certain. Japara’s management is focused on the government response to the upcoming final report of the royal commission into aged care quality and safety.">COVID-19 pandemic specific expenses incurred, partially offset with a $1.6 million recognised reimbursement through the government grant program. Applications have been lodged to be reimbursed for the full expense incurred.

Earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 67% to $8 million, impacted by COVID-19 costs. ‘Recurring EBITDA’ declined 29% to $15 million.

The net cash from operating activities more than halved to $24.7 million, down from $59.7 million in the prior corresponding period. This includes net refundable accommodation deposit (RAD) and independent living inflows (ILU) of $2.4 million.

It reported a statutory net loss after tax of $9.5 million. The prior corresponding result was a net profit of $5.4 million.

Balance sheet

Japara said that its net bank debt was $208 million at 31 December 2020, which includes $48 million of core net debt and $160 million of development debt.

It still has $137 million of available liquidity, however it isn’t going to pay an interim dividend.

Japara share price

Despite such a large change in profit, the Japara share price was unmoved today. It’s down 18% over the last year, though it has recovered significantly since the news of the effectiveness of the COVID-19 vaccines late last year. 

FY21 outlook

Japara said that progress continues to be made on the development program with an identified pipeline of 628 net new aged care places and three co-located seniors living development projects.

Its latest developments, being Trugo place in Victoria with 120 places and Corymbia in NSW with 102 places, are expected to open during the second half of FY21.

Japara said that the revenue and cost implications of COVID-19 remain uncertain. The funding environment continues to be challenging, with occupancy lower than the company was hoping.

Recently completed developments are expected to contribute to earnings.

Decisions on future development commencements have been deferred until the COVID-19 pandemic and economic outlook become more certain.

Japara’s management is focused on the government response to the upcoming final report of the royal commission into aged care quality and safety.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News