Oceania Healthcare Limited Analysis

Overview

Oceania operates in the New Zealand residential aged care and retirement village sectors, offering residents villas and apartments within its retirement villages, and also providing a full range of residential aged care services (including rest home, hospital and dementia level care) at its aged care facilities. Oceania is currently New Zealand's third largest provider of residential aged care, and New Zealand's sixth largest retirement village business. Oceania is the freehold owner of 47 of its 50 nationwide sites, comprising 48 aged care and retirement village facilities and two sites held for redevelopment purposes.

Oceania is also an experienced brownfields developer of aged care and retirement village facilities throughout New Zealand.

Oceania Healthcare Limited first listed on the New Zealand and Australian Stock Exchanges on 5 May 2017 under the code "OCA".

Performance

The following information was extracted from Oceania Healthcare's full year results, released on 22 May 2025:

Oceania Healthcare (NZX: OCA) reported underlying EBITDA of $86.0m for the year ended 31 March 2025, up 4.1% on FY24, reflecting steady sales momentum and stock sell down. Building on this momentum, the company has signalled a sharpened strategy centred on strengthening its foundation, enhancing efficiency, and setting the stage for accelerating growth.

Financial summary and highlights

-Total comprehensive income of $74.6m (FY24: $70.5m).

-Reported NPAT of $30.4m (FY24: $31.5m).

-Underlying EBITDA rose to $86.0m, up 4.1% on FY24.

-Underlying NPAT was $52.5m, (15.5%) lower than FY24, a result of interest charges on completed developments no longer able to be capitalised.

-Operating cashflow increased to $110.3m, up 6.7% from FY24.

-Total assets increased to $2.9b, a $158m increase on FY24 largely a reflecting the completion of Elmwood, Waterford and Awatere alongside fair value movements due to the sell down of independent living units at other sites.

-Debt gearing reduced to 36.3%, down from FY24’s 38.3%. All banking covenants were met.

-Realised capital gains rose to $83.2m, an increase of 22.6% on FY24.

-Premium care revenue was up 12.5% on FY24, reaching $25.4m.

-Total sales volume at The Helier increased 100% from FY24, with 24 apartments and care suites sold in FY25 and full development cost recovery expected by FY26.

-A broader business optimisation programme is underway, targeting $15m to $20m of cost savings with full benefits realised in FY27.

Financial Performance

Despite New Zealand’s economic downturn, Oceania achieved a solid first six months of FY25, lifting Underlying EBITDA by 2.7%, compared to the same period last year, to $38.6m. With increased sales volumes and prices, particularly in relation to care suite volumes, capital gains rose 34.9% period on period to $38.2m.

Underlying Net Profit After Tax (NPAT) was down 12.5% on 1HY24 to $24.0m, largely a result of increased interest expense in relation to completed developments.

Positive fair value movements in the care suite product are recognised in other comprehensive income, or in equity, rather than fair value movements in investment property in total income because of the classification of the care suite product as property, plant and equipment. Together with the recognition of an impairment in relation to the Elmwood care site in Auckland, as we partially closed the existing brownfield buildings and relocated residents to the newly commissioned care suite building, this resulted in a loss of $17.1m at the reported NPAT level.

Development stock continued to be sold down in the six months to 30 September 2024 with unsold new stock levels reducing by 13% to $305m. This contributed to the 23.0% increase in cash from operating activities from 1HY24, a net $70.4m cash inflow for the six months to 30 September 2024.