The Estia Health Ltd (ASX: EHE) share price has tumbled nearly 5% today after the company released a market update.
Estia is one of Australia’s largest residential aged care providers. The company operates 69 facilities with more than 6,000 operational beds up and down the east coast of Australia and in South Australia.
What’s moving the Estia Health share price?
It was a busy morning for Estia Health. The aged care operator released a business update before market open, only to request a trading halt “in order for the Company to update a statement made” in its earlier release.
Let’s dive into the general market update first, which relates to operational and financial matters. Here are the key takeaways:
- Estia expects to report a non-cash impairment charge of between $124 million and $148 million in its FY20 results. This impairment is primarily on goodwill arising from previous acquisitions.
- Occupancy in mature homes was 92.7% at 30 June 2020, improving gradually since May, while full 12-month occupancy was 93.2%.
- Estia’s refundable accommodation deposit (RAD) balance, which is guaranteed by the government and paid upfront by residents, increased by $9.8 million to be $836.3 million at 30 June 2020.
- Net bank debt at 30 June 2020 stood at $99.4 million. As previously stated, the company has not sought covenant relief.
As for COVID-19, Estia said: “Strict protocols and testing remain in place at all homes and will do so for the foreseeable future, including testing of all new admissions.”
After three staff members tested positive for COVID-19 in March and April, Estia noted it had “no known instance of COVID-19 infection amongst its past of current residents at the present time”.
Why did Estia request a trading halt?
Estia’s trading halt relates to this matter of COVID-19 infection. Namely, having no active cases.
In an announcement that was delivered just after midday today, the company revealed that 13 residents at its Ardeer home in Victoria have tested positive for COVID-19.
Estia stated it received this advice after it had lodged its market update this morning.
“Company has activated its COVID-19 positive test response plan and is working with the Victorian Department of Health and Human Services Public Health Unit and the Commonwealth Department of Health to manage and monitor the situation,” the announcement read.
Now what?
Estia Health shares last changed hands at $1.44, giving the company a market capitalisation of around $375 million.
It’s been a disappointing year for Estia Health, dragged down by COVID-19 related factors such as the cancellation of travel and elective surgeries, and visitor restrictions.
This led to Estia shares dropping out of the S&P/ASX 200 (INDEXASX: XJO) in the June 2020 quarterly balance.
The company is set to release its full-year FY20 results on 18 August 2020. While Estia could be on the radar of bargain hunters, it’s not the type of company I’d usually invest in. I believe there are better options out there for income and growth – one such option is profiled in the free report below.
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