‘In a Nutshell’ – Weathering the Storm

ASX Listed Aged Care Company Performance Summary

The possibilities have always looked promising for the residential aged care sector – an obvious growth market, ripe for consolidation. Even better, it’s funded primarily by the Commonwealth Government and their deregulation reform agenda is creating opportunities for the innovative.

But investors received a rude shock last year when the Federal Government announced a $1.2 billion cut to funding in Budget 2016, in addition to the $752 million cut in the Mid-Year Economic Forecast Outlook (MYEFO) 2015. Share prices for the three listed companies fell drastically. Now, in the face of tightening fiscal restraints, compliance crackdowns and uncertain industry reform, these groups are proving to be resilient and adaptable.

The mantra is moving away from rapid growth through acquisition, to a more strategic leveraging of resources in readiness for the substantial changes ahead. The 2017 profits might not be inspiring, but this strategy is moving the Big Three into a position to capitalise on a rapidly transforming industry.

As the Government wrestles towards a solution to the ageing dilemma, the opportunities for growth in this sector are enormous. The implementation of the major reforms will see the emergence of dominant market leaders and sector-wide consolidation. Regis, Estia and Japara are positioning themselves strategically to take that mantle.

Following on from this edition of “In a Nutshell”, we have also interviewed the CEOs of the listed players to talk about the year that was and to find out how they see the future ahead.