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Regis Healthcare Acquires Six Centres in Queensland

Regis Healthcare Acquires Six Centres in Queensland
At completion of the acquisition, Regis' portfolio will consist of 54 facilities with 5,968 operational places
Mar 07, 2016 By Simon Herrmann Tags: REG

Regis Healthcare Limited (ASX:REG) announced that it has entered into an agreement to purchase Masonic Care’s aged care portfolio in Queensland for $163 million.

Acquisition Expected to be Earnings Accretive in FY17

The portfolio, which is set to be acquired on 1 June 2016, comprises of 711 operational placed at six aged care facilities, distributed across four locations. 

According to Regis, Masonic Care has high quality facilities with strong occupancy of 98%. The facilities currently have a RAD (refundable accommodation deposits) pool of $50.1 million and Regis expects to uplift the RAD further once the acquisition is complete.

This transaction is anticipated to have a positive impact on FY17 results, in the range of $10 million-$12 million EBITDA and $1million-$2 million in NPAT. This portfolio is expected to benefit from the application of the Regis management systems and processes.

At completion, the company’s portfolio will consist of 54 facilities with 5,968 operational places, 91% of which are in single bed rooms.

Regis expects to commit an estimated $5 million in capital expenditure to the portfolio acquired. However, due to one off transaction costs such as stamp duty, integration and acquisition related expenses, the company expects to post lower FY 16 EBITDA of $13 million - $15 million and NPAT of $9 million to $10.5 million.

Regis Healthcare CEO, Mr. Ross Johnston commented on the acquisition: “The Masonic Care, Queensland portfolio is an excellent opportunity that is consistent with the Regis Healthcare strategic growth criteria. The facilities are of high quality, demonstrated by their strong occupancy and compliance track record. Operationally, the facilities are an excellent fit with the current Regis network.”

1H16 Result

Recently, Regis released its financial results for the half year ended December 2016. The company reported that its revenue rose 7.9% to $236.6 million while the normalised earnings expanded 12% over the pcp.

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Simon Herrmann Author: Simon Herrmann Mar 07, 2016

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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