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Aged Care Services
beancount
post Posted: Oct 11 2019, 05:34 AM
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In Reply To: nipper's post @ Oct 10 2019, 10:33 AM

i agree. EHG has figured out the traditional village model. The rental income is stable at $15.8 Mn, with 91% occupancy.

They are looking at four new acquisition targets to recreate this village model: Terranora, Wynnum, Gympie, and Townsville.

I like the solidity and the plan for growth. It's everything the existing management team can handle.

https://www.eurekagroupholdings.com.au/wp-c...-30-08-2019.pdf

 
nipper
post Posted: Oct 10 2019, 10:33 AM
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QUOTE
Eureka Group Holdings Limited (EGH) is a property asset manager of senior independent living communities in Australia.

EGH focuses on flexible guest and care services with 32 owned villages and 9 villages under management representing 2,182 units.

- EGH seems to have stabilised after the widespread selloff across the sector 2017-18
QUOTE
Eureka Business Model
✓ Owner/Operator of independent rental accommodation with a focus on independent retirees who are completely or primarily supported by the Australian Government pension
✓ Target market represents a significant portion of the growing retirement population
✓ Objective to grow and scale the business, through acquisition of traditional villages and development of existing assets. Portfolio and greenfield developments to follow at a later stage




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
blacksheep
post Posted: Mar 24 2019, 02:20 PM
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Killing it: Australian Unity takes its elderly Home Care customers to the cleaners
Mar 24, 2019 | Business, Featured
extract
QUOTE
“Thanks for your enquiry. Australian Unity declines to comment to (sic) your enquiry or respond to the report you refer to (sic)”.

That’s a pity because it would appear that Australian Unity has been exploiting frail and elderly Australians and the government’s home care system as well. Of course, a “no comment” does not constitute proof of guilt; but it surely gives rise to suspicion.

Australian Unity is a large private health insurer. It also runs retirement villages and has burst onto the Home Care scene, profiteering from its elderly customers and, like the banks in the Royal Commission, charging for services which were never provided.

Not just overcharging a little either. According to sources, Australian Unity charged one elderly customer “over $600 per month for case management during the period (18 months) when the client had no case manager”.

Another client was charged more in “administration” and “case management” fees ($1,276.50) than the cost of providing the actual home care service ($1,251.46).

These, amid a litany of other things. Australian Unity is believed to be Provider M in this report to the Aged Care Royal Commission from Dr Sarah Russell of Aged Care Matters.


read more - https://www.michaelwest.com.au/killing-it-a...o-the-cleaners/



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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington

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nipper
post Posted: Mar 24 2019, 11:29 AM
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QUOTE
As the aged care royal commission rolls on across the country, the troubled sector has received a rare positive signal. The unmistakeable trend of falling property prices, which are down 10-20 per cent Australia-wide, is set to affect costs in aged care.

Many people have to sell their family home to pay the infamous Refundable Accommodation Deposits, so it stands to reason that if the family home is worth 20 per cent less than it was last year, RADs become commensurately more expensive.

The range of RADs is enormous, varying between different facilities, aged-care providers, locations, even between different rooms within the same facility. So far, RADs have not changed to reflect falling house prices, but we can expect changes soon.

Since July 2014, the Minister for Aged Care has had the power to set the RAD threshold under the Aged Care Act. That threshold is currently $550,000. When an aged-care provider wishes to set the RAD above this threshold, it must apply to the Aged Care Pricing Commissioner for approval. (No approval is required if the proposed RAD is less than $550,000).

Once a higher RAD has been approved by the commissioner, it remains valid and can’t be changed (except for annual CPI increases) for four years, after which it lapses. The aged-care provider must then reapply for a further approval.

A wide range of factors determine how much an aged-care facility wishes to charge as a RAD.

In their application to the commissioner, providers are required to include details such as quality, condition, size, and amenity of rooms and common areas, business case supporting the proposed pricing, and the cost and value of the facility. Part of the calculation is assessing median house prices and historical bond levels by locality and comparing the proposed RADs to historical bond levels.

In theory at least, the commissioner has the power to demand a lowering of RADs in times of falling house prices.

Perhaps the most encouraging sign came from listed retirement accommodation provider Aveo, whose business includes mainly retirement villages but an increasing proportion of aged-care services.

Aveo management recently acknowledged that the residential property market is posing challenges for its business, including a longer gap between clients signing for rooms, selling their homes and moving in.

Aveo is one of the smaller listed aged care operators. When the royal commission was announced last September, shares in the three largest listed companies — Regis, Estia and Japara — were smashed. All fell at least 20 per cent.

All have recovered a little since these lows, but they are still well below the performance of the All Ordinaries index. All reported their interim results last month and all were largely uninspiring.

The drop in share prices does not mean that the companies are now cheap. Regis and Japara shares are now on 18 times earnings while Estia’s shares are on 15 times earnings.

Of course there are two sides to the story. Retirees looking to enter a retirement village must now factor in lower expected proceeds from the sale of a house and possibly longer times to sell those houses.

Hopefully, the Aged Care Pricing Commissioner will do the right thing and lower RADs.

While the process for entering residential aged care is different to entering a retirement village, the property market downgrades will put pressure on both types of aged-care providers, as well as those entering both types of facility.

One effect of lower house prices will be that families will look at lower-priced rooms or different quality facilities.

In addition, people are delaying their entry into aged care for as long as possible, and more of them are opting for home care as an alternative to aged care. The government is happy about the latter trend, as it means a smaller funding requirement. Regis recently offered to waive the basic daily care fee for anyone moving into its facilities before June 30.

One thing’s for sure, people and their families looking at aged care should negotiate very hard with the aged-care providers on the RAD, which is, after all, a maximum advertised price that can be negotiated down. If the facility is keen to fill beds, they are often willing to come to the party and agree to a reduction in the RAD.

Sooner or later, falling property prices will affect RADs, whether aged-care providers like it or not.

https://www.theaustralian.com.au/business/w...79624b341978d72



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
early birds
post Posted: Sep 18 2018, 10:02 AM
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my two bobs on this things

ageing issue is like ticking bomb for most of country not just aussies.
Govt. needs private money to help them to tackle this problem
the rc is try to gives bit of knock to those whom abuse the system badly, but no way Govt will intent to destroy it---they simply can not for it. lib or lab.
it's only my view though.

i'm little biased as i hold little bit of EHE .



 
Mags
post Posted: Sep 18 2018, 09:08 AM
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In Reply To: triage's post @ Sep 17 2018, 08:16 PM

Not sure an RC is really needed. No doubt the sector is riddled with horror and corruption. But what good is airing the dirty laundry gonna do?

What happened to the old days of announcing a 6 month task force, and then a 7 point plan and some funding?

Trouble is, in western societies when your old and poor, no-one cares: That's one of my rich mates quotes, and a huge part of what drove him to chase wealth.

A few percent of the population are taking note of the Banking RC which shows average people being ripped off left right and centre: Are they really gonna care about the RC for old folk? Nah.

If it's liberals attempt to build some credibility, they fail.
If it's the lib's attempt to destroy their brand, they succeed.


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triage
post Posted: Sep 17 2018, 08:16 PM
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In Reply To: nipper's post @ Sep 17 2018, 02:43 PM

Scummo only called a royal commission on aged care because 4 corners tonight starts a two part special on the aged care sector and he wants to get ahead of the story. According to the ABC when 4 corners put out a call for anecdotes about abuse in aged care facilities they were overwhelmed with the number of responses.

The thing is a politican should never ask a question that they don't know the answer to, and I think that once the horror stories start coming out on a daily basis from the rc the government will be put on the defensive. Maybe the plan is to have the election before the rc gets underway.



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"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog

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nipper
post Posted: Sep 17 2018, 02:43 PM
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The narrative is along these lines:
QUOTE
If the painful de-rating of our largest financial institution is anything to go by, investors should be wary of our listed aged care sector after the federal government announced on Sunday that it was launching a Royal Commission looking into bad practices in the sector. This could be worse than the Banking Royal Commission. Age care is arguably a more emotive subject and there’s already plenty of circumstantial evidence pointing to the need for major regulatory reforms that are likely to squeeze the profit margins of our listed players....
- everyone has a story !.. usually about grandma



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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nipper
post Posted: Oct 21 2017, 04:32 PM
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Listed aged care sector’s treatment of debt in question
QUOTE
If you look back at the history of failed property companies, they have one thing in common: high debt levels combined with insufficient cash flow. Typically they will rely on capital markets to fund their operations, and when those markets close, the music stops. This happened in 2007 for the REIT sector and the poor capital management was exposed.

Understandably, with interest rates beginning to rise globally, investors are now starting to get nervous. However, when we look across the sector we do see vastly improved capital management in recent years.

One sector that stands out for complex financial reporting is aged care. There are concerns that companies are potentially understating debt and overstating their cash flows.

This phenomenon comes about through what is referred to as refundable accommodation deposits. The RADs are a lump-sum payment paid upfront for entry into an aged care facility.

They can be used for multiple purposes and sit on the balance sheet as a liability, but not as pure debt. As a result they can be used as a third source of funding (alongside equity and debt) and can effectively be used to increase a company’s return on equity. The listed players (Estia, Japara and Regis) have historically used these funds plus debt to make acquisitions, adding more RADs and hence more funding to the balance sheet. In addition some of the listed players include the change in RADs in operating cashflow, which potentially overstates the cash they are earning.

If we take Estia for example, we find its debt level is $121m against $1.79bn of total assets. At first glance it appears there is nothing to be worried about (a gearing ratio of 6.7 per cent), but if we delve deeper we discover some cracks. Of the $1.79bn of assets we find just over $1bn are intangible, predominantly goodwill from acquisitions. In addition the RADs on the balance sheet are $730m; if we were to include these as debt (they do have to be repaid and the holder does receive government-mandated interest), the company has negative net tangible assets.

The problem comes about if the proportion of residents who pay via RADs starts to fall. If this proportion falls, these companies will experience potentially negative cash flow in what is effectively a forced reduction in debt. A large reversal in resident behaviour would cause tremendous strain. The three major players are all recent listings that came to market riding changes in legislation (the Living Longer Living Better reforms) and a thematic that investors were excited by (an ageing population). However, at the heart of these companies are low-returning assets juiced up by financial engineering. I don’t believe the sector has been fully tested as yet and worry about what happens when it is.
Guy Carson is the head of Australian value strategies at TAMIM Asset Management

- I'll go along with that



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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nipper
post Posted: Sep 26 2017, 01:26 AM
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QUOTE
a look at recently ­announced annual results makes for interesting reading.

Japara’s EBITDA rose 7 per cent to $60 million but its dividend reduced from 11.5c per share to 11.2c per share, with franking down to 84 per cent from 100 per cent.

At Regis profits rose 18 per cent but management guided that earnings would be flat in the year ahead.

Estia reported EBITDA of $86.5m, down from $92.7m last year, despite revenue growing 18 per cent: Total dividends fell from 25.6c a share in 2016 to 8c a share in 2017.

Japara and Regis are sitting on large debts, with debt-to-equity ratios of 96 per cent and 138 per cent respectively. When borrowing costs rise, there will almost certainly be a hit to profit.

There are five other reasons why listed aged-care operators are struggling:

1. Reduced government funding

At the midyear economic and fiscal outlook (MYEFO) in November 2015 the government announced that some aged-care providers were taking advantage of the low-care/high-care funding disparity, and putting too many people into high care to attract the higher government funding. It announced that a review of funding arrangements would save it more than $1 billion. These changes were ratified in the following year’s budget.

2. Rising costs

The cost of running a bed in an aged-care centre is typically about $200 a day. In order to make a profit, operators must charge significantly more than that. Things are tougher when they are operating at less than 100 per cent capacity. The major component of their revenue is locked in via government funding. The rest they must make up via the extra ser­vices fee and the daily accommodation payment (the interest payment on any unpaid RAD, formerly known as the bond).

3. Staff wages

As ever, running an aged-care centre is a balancing act. Too many staff affect profits, too few staff and standards of care drop and people leave. Staff are generally on enterprise bargaining agreements, so their wages are locked in.

4. Pressure on fees

The costs of aged care — particularly the initial cost of entering aged-care bed (the RAD/bond) — are a function of supply and ­demand. There are more than 2800 aged-care centres in Australia, and many of them have empty beds, so there is plenty of choice. If there are empty beds, there is significant pressure on operators to offer deals on RADs and extra services fees. The level of government funding also encourages operators to offer concessional beds to people with low means.

5. Competition from NFPs

Listed aged-care providers have plenty of competition from not-for-profit aged-care providers, which do not have the same pressure to make a return on investment. In addition, not-for-profit organisations can offer staff benefits that their for-profit counterparts cannot match, such as exemptions on Fringe Benefits Tax. This makes it harder for the listed companies to attract staff.

The aged-care sector is going through an expensive growth phase. The companies are increasingly struggling to cover their costs with sufficient margins to attract the interest of investors.

The market has brought the shares of aged-care providers back to about 15-16 times earnings, which is where they will remain until they can convince investors that large-scale growth is likely.
John Rawling is an aged-care consultant at Joseph Palmer & Sons



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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