27 November 2023
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:
• Underlying EBITDA of $10.5m1, 50% up on comparative period and at the upper
end of guidance issued to the market.
• AFFO of $2.9m, 16% up on comparative period.
• Occupancy 93.0% at period end, ahead of industry average.
• Execution of business improvement programme, delivering $1.3m annual
savings.
• All facilities now fully staffed.
• Establishment of RConnect, Radius internal staffing bureau.
“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.
