Forsyth Barr have initiated coverage on Radius Care. To read the report, please click the link below:

Radius Care Aged Care focus drives superior returns 2024

Radius Care (NZX: RAD) has completed the previously announced sale of the Arran Court care home, located in Te Atatu, Auckland.

Net sale proceeds of $18.3m have been applied to repay existing ASB borrowings.

Radius Care also announces that the ASB has agreed to amend the expiry date of the remaining $4.7m short term borrowings from 31 January 2024 to 1 November 2026, for consistency with the majority of Radius Care’s term borrowings. As part of the facility extension, ASB has also agreed to remove any requirement to further reduce debt, representing completion of the debt management program agreed with ASB, and referred to in Radius Care’s 2023 Annual Report.

Brien Cree, Executive Chair, said “The sale of Arran Court has materially reduced debt levels. A strengthened balance sheet and the strong operating performance seen in our year to date results ensures Radius Care is in a strong position to accelerate our growth strategy.”

Following the successful completion of the Arran Court sale, extension of ASB debt maturity dates and strong trading performance in FY24 to date, no further asset sales are required.

Radius Care Delivers 50% Uplift in First Half Year Underlying EBITDA Radius Residential Care Limited (NZX: RAD) today announced its results for the six months ended 30 September 2023, the first half of the FY24 year.

Highlights:

“We are a specialist care provider with a clear focus on our core business. Radius Care has once again delivered industry leading results and a strong financial performance, which is a testament to our exceptional people who have continued to deliver exceptional care to our residents” said Andrew Peskett, Radius Care’s CEO.

People
“I want to give immense thanks to our staff for their resilience over the last few years and the way they’ve continued to offer the very best of Radius Care to our residents every day. The results we’ve achieved point to our operational capability as well as the commitment of our team”.

Radius Care is fully staffed. The overseas nurse recruitment programme was intensified last year and Internationally Qualified Nurses were successfully recruited to fill all vacancies. These new team members have completed their New Zealand accreditation as Registered Nurses and are leading the exceptional Radius Care provided to our residents.

Business Performance
Radius Care’s business has delivered strong growth across its key metrics. Occupancy levels remained strong and above industry averages. Occupancy for September averaged of 93.0%. The strong operating performance was assisted by staffing stability, reduced external staffing costs and improved mix. We also increased our accommodation supplement revenue for our premium rooms, and new funding levels in place from 1 July 2023 boosted revenue in the second quarter.

1 Underlying EBITDA is a non-GAAP (unaudited) financial measure. A reconciliation is included within the Investor Interim Report and the Investor Presentation.

“The establishment of RConnect has been a highlight of the first half year. Our internal staffing bureau has been a key factor in controlling our cost base, through reducing external staffing costs. More recently, RConnect is also sourcing staff for external customers” said Mr Brien Cree, Radius Care’s Executive Chair.

“The quality of our operating performance and financial results of the last six months demonstrate the value of our clear focus on our core business. We’re continuing to position our operations in line with Radius Care’s strategy to deliver accelerated growth and continue to go from strength to strength”.

Financial Performance
Revenue increased 21% on the prior period to $84.5m excluding other income. Radius Care’s key performance measure, Underlying EBITDA, was $10.5m, compared to $7.0m achieved for the comparative period. The result was driven by stronger operating metrics across the business.

AFFO of $2.9m was earned, 16% up on the $2.5m earned in the comparative period. Net Profit After Tax was $1.4m, down 18% on $1.7m for the comparative period, which included $1.8m of one-off gains related to previously leased properties.
Radius Care recently confirmed the short-term bridge facilities held with ASB Bank had been extended for four months to be repaid on 31 January 2024, recognising the progress on Radius Care’s debt management programme. The sale of one care home is due for settlement on 16 January 2024, and the expected net sale proceeds of approximately $19m will repay debt. With the Board actively progressing the sale of another care home, Radius Care will be in a stronger position and able to progress its planned growth strategy more rapidly.

Development Update
During the last two years, Radius Care has completed four large property transactions, acquiring the land and buildings of eight care homes that were previously leased, and the acquisition of two integrated care homes and retirement villages. These acquisitions have increased the opportunities for brownfield developments to expand these facilities without adding significant additional fixed overhead.

Planning, preparation and consenting has continued on brownfield developments at Taupaki Gables in West Auckland and Lexham Park in Katikati, which will extend these sites. Advance planning is also continuing for the previously announced full service retirement village and care home in Belfast, Christchurch.

Outlook
Radius Care expects the improved operating results and momentum in the first half
of FY24 to continue for the remainder of the year.

The Board expects to resume dividend payments following the completion of the debt
management programme.

Radius Care (NZX: RAD) is pleased to confirm the extension of the $23 million bridge facilities with ASB to 31 January 2024.
Sale proceeds from the previously announced sale of the Arran Court facility will be applied to repay the majority of these facilities, representing significant progress in meeting the goals of the company’s debt management program.

For further information, please contact:
Andrew Peskett
Chief Executive Officer
Phone: +64 21 747 363
Email: andrew.peskett@radiuscare.co.nz

Jeremy Edmonds
Chief Financial Officer
Phone: +64 22 650 9354
Email: jeremy.edmonds@radiuscare.co.nz

Radius Care (NZX: RAD) has signed an agreement to sell the Arran Court facility, located in Te Atatu, Auckland.

The sale is for 100% of the business, including the freehold property. The sale proceeds are approximately $19.0m (net of sale costs), with settlement planned on 16 January 2024.

The sale is conditional on ASB approval. The pending transaction is also conditional on the purchaser completing satisfactory due diligence and obtaining finance and regulatory approvals. All conditions are due to be satisfied by 30 November 2023.

Brien Cree, Executive Chair, said “Our people at Arran Court have been an important part of the Radius Care community since 2007. We will work closely with the purchaser to ensure a smooth transition and continuity of the care standards our residents and their families expect”.

The sale proceeds will be applied to repay existing debt, representing significant progress in meeting the goals of the debt management program (as outlined in Radius Care’s 2023 Annual Report).

For further information, please contact:
Andrew Peskett
Chief Executive Officer
Phone: +64 21 747 363
Email: andrew.peskett@radiuscare.co.nz

Jeremy Edmonds
Chief Financial Officer
Phone: +64 22 650 9354
Email: jeremy.edmonds@radiuscare.co.nz

UCG Acquisition

Radius Residential Care Limited (NZX: RAD) (Radius Care) today announced that it has entered into conditional agreements to acquire the land and buildings of four aged care facilities, currently operated by Radius Care with 342 care beds, from its landlord UCG Investments Limited (UCG) (UCG Acquisition).

The properties which form part of the UCG Acquisition are:

a. Radius Arran Court located in Te Atatu South, West Auckland: 102 care beds;
b. Radius Fulton located in Caversham, Dunedin: 93 care beds;
c. Radius Peppertree located in Kelvin Grove, Palmerston North: 62 care beds; and
d. Radius St Joans located in Fairfield, Hamilton: 85 care beds.

The total purchase price of the properties is $46.7 million, based on independent valuations. The UCG Acquisition will be funded by the following facilities to be provided by ASB Bank Limited:

 

In line with the company’s previously communicated and executed strategy, Radius Care intends to raise capital to repay the $23 million funding provided under the existing development and new bridging facilities.

 

Radius Kensington

In addition to the four UCG Acquisition properties, Radius Care leases the land and buildings of a fifth aged care facility operated by Radius Care – Radius Kensington in Maeroa, Hamilton (96 care beds). Concurrent with the UCG Acquisition, Radius Care has entered into a conditional agreement with UCG to acquire the land and buildings at Radius Kensington (Kensington Acquisition). Radius Care has entered into a separate agreement with a third party for Radius Care to nominate the third party to acquire Radius Kensington in place of Radius Care (Nomination). Under the terms of the Nomination, Radius Care is granted an option to acquire Radius Kensington from 24 May 2022 at a purchase price determined based on an agreed yield, calculated on the then-current rent.

 

Alignment with Radius Care’s Growth Strategy

The transactions represent a continuation of Radius Care’s growth strategy of purchasing facilities already operated by Radius Care. It will increase Radius Care’s freehold ownership to 12 out of 23 aged care facilities it operates. Ownership of the four properties will remove the annual lease expense (and future CPI increases) paid by Radius Care. The UCG Acquisition will also increase the company’s development pipeline by 80 to 100 beds. The acquisition also enables further business optimisation by increasing Radius Care’s future revenue that can be generated by premium-charging and will facilitate the provision of Occupation Right Agreements over care beds (care suites).

 

Shareholder Approval and Timing

The transactions are conditional on Radius Care shareholder approval. Information will be sent to shareholders in April to enable them to vote on the transactions at a shareholders’ meeting in late April 2022. The transactions are expected to settle on 29 April 2022.

 

For further information, please contact:
Andrew Peskett
Chief Executive Officer
Phone: +64 21 747 363
Email: andrew.peskett@radiuscare.co.nz