Regis Healthcare shares gain on aged care reforms
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The news: Shares in Regis Healthcare advanced on the ASX as Jarden analysts predicted a future earnings boost for the aged care services provider, after Labor struck a deal with the Coalition to introduce major aged care reforms yesterday.
The numbers: Regis shares rose 8.1% to $5.85 by 1:40pm AEST, having climbed 80% already this year.
Jarden currently has an 'overweight' rating on Regis with a target price of $4.46.
The context: Jarden analysts noted that while the government's reforms still need to be passed in the senate, changes around refundable accommodation deposits could be "particularly favourable for the industry".
Under the proposed measures, aged care providers like Regis will be able to retain 2% of a resident's refundable accommodation deposits for up to five years.
The analysts estimate that Regis' total additional income under this reform measure would be around $27.5 million within three years, or an anticipated 18% increase in EBITDA in FY28/29.
The analysts noted that the full financial benefit will take around two and half years to appear. They therefore made no changes to their forecasts for Regis, but highlighted "earnings upside if the act is adopted in its current form".
The source: Jarden research
