Regis Healthcare Ltd (ASX: REG) shares are having a terrible start to the week.
After hitting a record high last week, the ASX 300 share is now down a whopping 26% to $6.79.
Image source: Getty Images
Why is this ASX 300 share crashing?
Investors have been hitting the sell button today after the aged care operator released a disappointing update.
The ASX 300 share highlights that it has been reviewing the changes announced by the Australian Government earlier this month to residential aged care funding. This includes adjustments to the Australian National Aged Care Classification (AN-ACC) model and an increase in the Hotelling Supplement.
According to the release, the headline 4.7% increase to the AN-ACC industry starting price falls short of Regis' expected increase.
Based on analysis undertaken over the past week, the company expects these changes to result in receiving an AN-ACC funding increase of 2.6% from 1 October 2025. The funding gap arises mainly due to the reweighting of the National Weighted Activity Unit (NWAU) across various resident classifications. This has had the impact of reduced funding to several key resident classifications under the AN-ACC framework.
Unfortunately, a negative financial impact will occur as the AN-ACC funding changes do not sufficiently offset anticipated increases in staff costs arising from the 1 October 2025 Fair Work Commission's Work Value Case, the Annual Wage Review, and annual changes to direct care workers' wages under Enterprise Agreements.
Trading update
The ASX 300 share also released a trading update before the market open.
Its acquisition of the four Rockpool homes was successfully completed on 1 September 2025. And as at 18 September, Regis had a mature spot occupancy of 96.5%.
Furthermore, net RAD cash inflows are anticipated to remain strong throughout the year, underpinning operating cash flows and enabling continued investment in its growth initiatives.
However, due to the aforementioned funding changes, the company's earnings are only expected to grow modestly in FY 2026.
It has provided the market with guidance of underlying EBITDA in the range of $130 million to $135 million. This represents growth of 3% to 7% on FY 2025's EBITDA.
Despite today's sizeable pullback, Regis Healthcare's shares are still in positive territory on an annual basis.
Since this time last year, the company's shares have risen 10%. This is slightly ahead of the ASX 200 index, which is up 8% over the same period.
