Probe has Estia cautious

Profits up but aged-care provider cuts outlook

RESIDENTIAL aged-care provider Estia has downgraded its full-year guidance in the shadow of the royal commission into the sector, which it said had the potential to hit occupancy rates.

Estia lifted its first half profit 4.1 per cent to $21.1 million for the six months to December 31, with revenue up 6.6 per cent to $289.7 million as it prepares to open two new facilities in Queensland, which are scheduled to start operating by August.

But the company yesterday cut its full-year earnings guidance from mid single digit percentage growth to low-to-mid single digit percentage growth on existing facilities (pictured) – subject to no further material changes or extra regulatory conditions affecting the operator.

Estia told analysts that while lower occupancy assumptions played a part in the guidance, it was not going to offer a specific occupancy outlook.

Total resident numbers dipped slightly by 55 during the period but had recovered in the past six weeks, the company said.

The moderated outlook also excluded Estia’s direct costs of responding to the royal commission – which in early January had risen to $1.2 million – as well as fluctuations from opening new facilities and changes in government funding.

Chief executive Ian Thorley confirmed that Estia had not yet been asked to appear before the royal commission, which finished its first two weeks of hearings in Adelaide on February 22, and did not know when and if it would. He said Estia would not try to predict future costs arising from the inquiry.

“We believe that the future will have a key role for wellgoverned, quality-focused operators like Estia with both scale and capital to meet the demands for choice and for capacity needed to support the ageing demographics of Australia,” he said.

Witnesses at the inquiry have so far identified a range of issues across the sector, including sustainability of funding, poor staffing levels and the lack of adequate training, delays in the provision of home care assistance, high workloads experienced by carers, the financial pressures on providers and issues associated with the use of chemical and physical restraints. The next public hearings will be held in March.

The company announced yesterday it would pay a fully franked interim dividend of 8.0 cents a share, unchanged from a year ago.