Highlights continuing major shortfall in new supply

Welcome to the 2nd edition of the Aged Care Financial Sustainability Review. This year’s edition continues our series of key measures of sustainability in the residential sector and adds an analysis of the home care sector. Despite the sector deriving net profit before tax of $2Bn sector net assets grew by only $0.04Bn.

While the review analyses a number of key metrics for us, the key messages are;

The sector is not creating new supply at the rate identified by ACFA and the shortfall is significant. Our analysis suggests the shortfall is as much as 25%

While average EBITDA has increased over the last three years the same cannot be said for return on assets.

To the extent that new investment is being made in the sector, this is not being financed by equity. This suggests a lack of confidence from the investment community.

While not reported in the review the data on places online at June 2017 suggests that supply of residential places increased by 4,886 in 2017. This is 1,000 less than our forecasts and suggests the rate of investment is continuing to fall short of requirements.

Read the full review here