Regis Healthcare (ASX:REG) share price leaps on return to profit

The ASX healthcare share reported its FY21 results this morning.

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The Regis Healthcare Ltd (ASX: REG) share price is leaping higher in morning trade, up 6.09% to $2.09 per share.

Below we take a look at the residential aged care provider’s financial results for the year ending 30 June (FY21).

Regis Healthcare share price up on FY21 results

Some top results likely moving the Regis Healthcare share price this morning:

  • Revenue from services increased 3.5% from FY20 to $701.4 million
  • Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $137.8 million, down 2.7% year-on-year from $141.6 million
  • Net profit after tax (NPAT) of $19.9 million compared to a loss of $700,000 in FY20
  • Declared a final dividend of 4.63 cents, 50% franked

What happened during the reporting period for Regis Healthcare?

During the financial year, Regis reduced its debt by 39.8%, down to $142.4 million from $236.7 million at the end of FY20.

Average occupancy at its facilities edged 0.7% higher, to 88.9% from 88.2% the prior year.

As an operator of aged care facilities, COVID-19 mitigation measures were prioritised. All residents were offered vaccination via a government program. Regis also secured a separate provider, offering vaccines to all willing residents and employees.

As at 27 August, the company reports 78% of residents have had 2 doses while 58% of staff is double dosed. Regis received $7.7 million of government funding and $4.2 million of government grants in relation to costs incurred from COVID-19..

On 9 August, Regis announced that it had “identified potential underpayments of employee entitlements” going back 6 years and affecting some current and former employees. The review is ongoing, but Regis provided $35 million in the financial statements in relation to the issue. $7.1 million of this comes off the FY21 profit before income tax. The rest has been “recorded as a prior period restatement”.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) moved to acquire Regis in September in an initial confidential, non-binding indicative proposal, valuing Regis Healthcare’s share price at $1.65. In November WHSP upped the offer to $1.85 per share.

Regis said the proposals were rejected as they “materially undervalued the company”. In January, WHSP withdrew its proposal.

The final dividend is payable 30 September. It takes the full-year dividends to 6.63 cents per share, or 100% of FY21 NPAT.

What did management say?

Commenting on the results, Regis’ CEO, Linda Mellors said:

Regis has performed strongly, responding to a range of significant events, including the threat to residents and employees from the global pandemic, an extended Royal Commission, the Australian government’s reform agenda, and various internal matters. Each challenge has been met with commitment and focus from a highly experienced team…

The company continues to review the progress of the COVID-19 pandemic and take necessary steps to protect the health, well-being and safety of residents, clients and employees.

What’s next for Regis Healthcare?

Looking ahead, management said it wasn’t prudent to provide guidance in the current macro-environment and the ongoing pandemic.

Mellors said:

Our focus on providing quality resident care, service and accommodation to support improved occupancy remains a high priority, while the reduction in debt places the company in a strong position to take advantage of various growth opportunities as they emerge.

The Regis Healthcare share price is up 68% over the past 12 months.

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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 owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. 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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