The Regis Healthcare Ltd (ASX: REG) share price is finishing the week strongly following the release of its half-year results. In early trade the aged care operator's shares have climbed 2.5% to $4.75.
Here's what you need to know:
- Revenue from ordinary activities increased 20% to $284.7 million on the prior corresponding period.
- EBITDA of $61.8 million, 20% higher than normalised EBITDA in the first-half of FY 2016.
- Half-year net profit after tax increased 9% to $30.9 million.
- Revenue per occupied bed day of $281 compared with $271 in the prior corresponding period.
- Diluted earnings per share of 10.3 cents.
- Interim dividend of 10.3 cents per share, payable 20 March 2017.
Considering the difficulties that the aged care sector has faced in the last 12 months, I feel this was a solid result and justifies the rise in its share price in the last few months.
Management advised that the strong EBITDA growth was the result of an increased contribution from its refurbishment program, growth initiatives, and the acquisition of facilities acquired from Masonic Care Queensland.
This offset an impact on earnings from the closure of Regis Park in Western Australia for redevelopment and costs related to two news development in North Fremantle and East Malvern.
During the half the company's average occupancy percentage increased slightly to 95.3%, with revenue per occupied bed day also increasing slightly to $281.
Refundable accommodation deposits (RADs) rose to 2,443, with the dollar value of RADs held rising $46.8 million to a total of $850.9 million.
For the full-year management has reaffirmed its previous guidance of net RAD inflows of around $100 million.
Should you invest?
Like Estia Health Ltd (ASX: EHE) yesterday, I think this was a much improved performance from Regis.
But despite this I would still pick rival Japara Healthcare Ltd (ASX: JHC) over its peers. I believe its experienced management team and long runway for growth have set it up for success in the long-term.
However, it is worth remembering that the Federal Government has announced changes to its residential aged care funding. These changes are in place now, but are not expected to impact the industry significantly until 2018 and onwards. So investors might want to approach the industry with a touch of caution.
