_Australian aged care operator Estia Health [ASX:EHE] has now completed the acquisition of a 120-placehome.
The transaction meant a net cash outlay of $15.9 million and includes possible refundable accommodation deposit liabilities of $12.9 million.
Estia also gave its latest trading highlights and touched on a recent proposal from Bain Capital to acquire 100% of its shares.
Shares for EHE were moving up 2% in the early afternoon on Tuesday, trading for around $2.68 each.
So far in the year, EHE has risen more than 29% in value, and it’s doing very well versus the ASX 200:
Source: TradingView
Estia’s Mount Clear acquisition
Yesterday, the group formally finished crossing the T’s and dotting the I’s on its purchase of the 120-place fully operational home in Ballarat, VIC.
The Mount Clear home was built in 2019 and is created with all single ensuite rooms and a spot occupancy as at 30 April of 95.8%.
Estia expects the new investment to deliver approximately $3.0 million in EBITDA (earnings before interest, taxes, deprecation, and amortisation) in the first full year of ownership.
This acquisition is one new piece in the group’s ongoing strategy to sustainably grow its portfolio, a strategy that includes the purchasing of high-quality homes that match its existing cluster of operations.
Group CEO Sean Bilton commented:
‘I welcome the staff and residents of the newly acquired Mount Clear home to the Estia Health family. When added to our recent acquisition of four Premier Health Care homes and the planned completion towards the end of this calendar year of our newly built homes in St Ives and Aberglasslyn, both in NSW, we will have added 789 places, or 13%, to the Group’s capacity since June 2022.’
In March, Estia had received an unsolicited, non-binding indicative proposal from Bain Capital to acquire 100% of Estia’s shares in a scheme of arrangement, pricing each share at $3.00 each.
Last month, the group rejected the proposal, the board declaring it uncompelling and not up to scratch in price and conditionality.
It remains to be seen if Bain decide to improve their offer.
Estia’s most recent trading update
In addition to the acquisition news, the group also provided unaudited information for its recent trading performance.
For the group’s Premier Health Care homes, which it had acquired on 1 December 2022, occupancy increased from by 9.7% to 88.6%.
Net RAD inflows over the five months to 30 April 2023 reached $7.3 million, with the overall financial performance in keeping with company expectations.
Mature Homes occupancies, excluding the above, had moved up to 93.0% spot occupancy, marginally higher than the third quarter’s 92.4%.
EBITDA per occupied bed during Q3FY23 (excluding COVID-19 incremental costs and grant income) was in line with Q2FY23 performance.
The group’s average rate for its permanent residents during Q3FY23 was $227.6 per day, compared to $223.7 in Q2FY23.
Estia also received $13.1 million as a grant submission by the government as part of its COVID-19 initiative.
As at 30 April 2023, and after adjusting for the completion of the Mount Clear acquisition, their net bank debt came out at $72.2 million.
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Regards,
Mahlia Stewart
For Money Morning
