The Japara Healthcare Ltd (ASX: JHC) share price fell after the aged care operator reported its FY19 result.
Japara Healthcare Ltd is an Australian aged care operator and owner. It runs communities across Australia which house more than 3,000 residents, making it one of our country’s largest providers.
Japara’s Falling FY19 Profit
The aged care operator reported that its total revenue increased by 7.1% to $399.8 million.
Occupancy was an average of 93% for the full year and total operational places rose by 4.1% to 4,235. Management also said that the company has made “excellent” progress on its development program with an identified near term pipeline of over 1,100 net new places established.
During FY19 Japara opened new homes in Glen Waverley (60 places), Rye (99 places) and Brighton Le Sands (60 places). The Robina home was opened in July 2019 (206 places).
Japara’s EBITDA declined by 2.2% to $49.6 million (click here to learn what EBITDA means). However, what Japara described as ‘recurring EBITDA’ rose by 2.5% to $48.6 million.
Net profit after tax (NPAT) dropped by 29.6% to $16.4 million due to lower ‘non-recurring’ earnings and growing depreciation & interest because of the expenditure on developments in the ramp up of its operations.
Japara Dividend And Balance Sheet
The Japara Board decided to declare a final dividend of 3.35 cents per share, franked to 50%, taking total dividends for FY19 to 6.15 cents per share – a fall of just over 20%.
Japara’s net bank debt was $179 million at the end of FY19 with $44.5 million core net debt and $134.5 million of development debt. Net refundable accommodation deposits (RAD) and independent living unit (ILU) was $44.7 million.
Is The Japara Share Price A Buy?
Japara has outlined that its FY20 EBITDA is expected to be 5% to 10% lower in FY20 due to the removal of the Federal Government’s temporary subsidy increased that applied in FY19 and occupancy remains below historic levels.
However, recently completed developments are expect to help mitigate industry headwinds. Around 300 net new places are expected to be opened in FY20.
Japara has a strong long term ageing tailwind, but it’s facing plenty of shorter term issues like the Aged Care Royal Commission, small funding increases and a reliance on the government for a significant portion of earnings.
I’d much rather invest in the shares in the free report below for long term growth and dividends over Japara because it’s very hard to say what the right price or valuation for Japara is.
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