Why the Japara (ASX:JHC) share price just hit a 52-week high

Calvary Health Care has increased its bid for the aged care provider.

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Older man getting blood pressure checked with nurse indicating healthcare aged care

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The Japara Healthcare Ltd (ASX: JHC) share price is flying higher today. In morning trade, shares in the aged care provider reached a new, 52-week high of $1.19. The Japara share price has since retreated slightly to $1.18, up 5.83% for the day so far.

The positive price movement comes after Calvary Health Care upped its bid for Japara to $1.20 per share.

Let’s take a closer look at today’s news.

Why Japara shares are rising

In its statement to the ASX, Japara Healthcare said Little Company of Mary Health Care Ltd, known as Calvary, has submitted a new bid for 100% of the company at $1.20 per share.

Calvary’s original bid, which it submitted in late April, was for $1.04 per share. At the time, the Japara share price rocketed by more than 26% on the news. Since then, external factors have driven Japara shares higher than the original bid, such as the federal government’s proposed funding boost for the aged care sector.

The new bid represents a premium of roughly 7.6% on Friday’s closing price and a 94% increase compared to the first trading day of 2021.

Japara confirmed it will afford Calvary due diligence access to its records, subject to “appropriate conditions and confidentiality arrangements”. In its statement, Japara also made it clear there is no guarantee Calvary’s bid will result in a successful transaction.

Aged care sector in focus

The quality of aged care in Australia has come into the spotlight in recent times. It culminated in a Royal Commission into the industry, which was delivered in March this year. The commission found funding and staffing levels to be inadequate and made 148 recommendations to the federal government.

The sector has also been in the spotlight due to the COVID-19 pandemic, especially in Victoria. The southern state’s devastating second wave saw 820 people die, most of whom were aged care residents. Of all COVID-related aged care deaths in Australia, 95% were in Victoria.

Despite the troubles faced by the aged care sector recently, some ASX aged-care shares have fared surprisingly well. However, while the Japara share price, for instance, has been steadily increasing over the past 12 months, its value is still below what it was fetching in mid-2019.

Japara share price snapshot

Over the past 12 months, the Japara share price has increased by around 109%. Year to date, the company’s shares are up by around 90%.

Japara Healthcare has a market capitalisation of $315 million.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

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