Estia write down $148m, resident test positive for COVID-19

Print Friendly, PDF & Email

AGED care operator Estia Health reported the first positive COVID-19 cases among residents at its facilities, on the same day it revealed up to $148 million in writedowns due to uncertainty around future sector funding and financing.

The announcement of 13 residents testing positive at its Ardeer facility in western Melbourne came just hours after a market update that stated there had been no known instances of COVID-19 infection. Two staff across three of its homes had returned positive results although neither had displayed symptoms while working.

“The company has activated its COVID-19 positive test response plan and is working with the Victorian Department of Health and Human Services Public Health Unit and the Commonwealth Department of Health to manage and monitor the situation,” it said.

Estia said the non-cash charge has no impact on the company’s debt facilities, compliance with banking covenants or its ability to undertake capital management initiatives.

“As a result of ongoing uncertainty of future sector funding and financing, exacerbated by the issues arising from the COVID-19 pandemic, the company expects to report a non-cash impairment charge, primarily on goodwill arising from historical acquisitions, in its full year results for the year ended 30 June 2020 of between $124 million and $148 million.”

The federal government’s one-off payment to assist providers in covering additional costs of caring for residents during the pandemic, at $950 or $1,350 per resident depending on location, was received during June and totalled $5.8 million.

Occupancy in mature homes, totalling 5,946 operational beds, was 92.7% at the end of June, having improved gradually since May in line with the easing of restrictions. Second half occupancy was 92.6%, and full year occupancy was 93.2%.

New homes at Southport and Maroochydore ended the financial year at occupancy rates of 100% and 70.6% respectively.

Estia said the movement in occupancy rates since the COVID-19 pandemic was declared has not had a material impact to date on the company’s balance of RADs and bonds.

The total RAD/bond liability increased by $9.8 million over six months $836.3 million at the end of June, of which $99.9 million was represented by probate liabilities.

Net inflows from its two new homes were $14 million, net outflows from mature homes were $2.9 million and probate decreased by $3.5m from 31 December 2019.

Under the company’s $330 million bank facility, net bank debt was $99.4 million.