Ryman Healthcare Limited Analysis

Overview

Ryman Healthcare limited (RYM) is the largest provider of retirement living options for New Zealanders over the age of 70. The company provides a range of retirement living and care options, including independent townhouses and apartments, serviced apartments and care centres providing resthome, dementia and hospital-level care.

RYM was established in Christchurch in 1984. It was listed in June 1999 followed a public offering of 30 million shares at a price of $1.35. In January 2007 the company implemented a 5:1 share split. In 2014 RYM opened its first village in Melbourne and plans to build four more in Victoria by 2020.

As at July 2016, RYMs 30 retirement villages in New Zealand and Australia provided homes for over 10,000 residents and employed more than 4,000 staff.

Performance

The following information was extracted from Ryman Healthcare Limited's half year report, released on 28 November 2024:

Highlights

• Total revenue of $366.3 million, up 10% on 1H24.
• Reported net profit after tax (NPAT) of $94.4 million, down 50% from $187.1 million in 1H24.
• IFRS profit before tax and fair-value movements (PBTF) of -$79.8 million (-11.6cps), down from -$17.8 million in 1H24 (-2.6cps).
• Cash flow from existing operations (CFEO)1 of -$7.8 million, down $24.8 million on 1H24.
• Cash flow from development activity (CFDA)1 of -$44.7 million, an improvement of $132.6 million on 1H24.
• Sales of occupation right agreements (ORAs)1 of 827, up 5% on 1H24, with resales up 9% to 603 and new sales down 5% to 224. Gross receipts of $651.4m, up 5%.
• Occupancy on mature aged care centres steady at 96.4% (96.2% in 1H24).
• 667 new retirement village units and aged care beds delivered.
• Completed one village (Miriam Corban), opened one village (Hubert Opperman) and opened three main buildings (Miriam Corban, Keith Park, and James Wattie).

Ryman Healthcare Limited (Ryman) has reported a 10% increase in revenue to $366.3 million for the six months ended 30 September 2024, driven by increases in care and village fees following the opening of one village and three main buildings, and growth across the existing portfolio.

Executive Chair Dean Hamilton said: “We were pleased with the operating performance of our villages in the first half relative to the prior year as we remained firmly focused on providing great care and experience for our residents.

“Whilst occupancy remained high for our mature villages, we know there is a cost to opening three main buildings in the period as we progressively fill care beds and sell down serviced apartments. Resident sentiment remains positive – with NPS stable across care and independent living residents. Excluding one-offs, our non-village operating costs were relatively static year on year. However, with lower development activity, we are capitalising less of these costs, impacting reported earnings.”

Sales of ORAs were up 5% to 827 in 1H25, the strongest six-month period in the last three financial years, demonstrating that demand for Ryman’s product remains strong. Whilst we maintained pricing in a challenging market, this has translated to a compression in resale margins per unit, which are dependent on unit price inflation.

The decline in PBTF from -$17.8 million in 1H24 to -$79.8 million in 1H25 reflected higher growth in reported operating expenses and finance costs – both largely due to lower cost capitalisation.

CFEO declined from $17.1 million in 1H24 to -$7.8 million in 1H25, with solid growth in village cash flows offset by higher non-village and interest costs – both also due to lower cost capitalisation. CFDA has seen a material improvement from -$177.3 million in 1H24 to -$44.7 million in 1H25, driven by steady cash inflows from resident funding and significant reductions in capex on direct construction spend and reduced investment in new land.