Shares in troubled aged care group Estia Health (EHE) went into a trading halt yesterday pending the release of information about the company’s first quarter.
In a statement to the ASX the company requested the trading halt for two days or until it thought otherwise that the halt could be lifted. Estia, which operates about 5,700 aged care places across the country, saw its share price drop 17% on August 29 after reporting a net profit of $51.8 million – a result which more than 7% under the guidance the company gave in April.
Subsequently Estia’s chief executive Paul Gregersen resigned last month following the earlier resignation of its founder Peter Arvanitis, whoalso sold his $55 million worth of shares.
Board director Marcus Darville also resigned last Friday.
Last month chairman new chair, Pat Grier said that the company was conducting a review into federal government clarifications on what fees aged care operators could charge.
Several analysts cut for Estia and other aged care operators such as Regis Healthcare and Japara Healthcare. Shares in fellow aged care providers Japara Healthcare and Regis Healthcare also slumped on Wednesday, down 7.7% and 4.8% respectively.
That’s because the surprise trading halt and explanation is seen as a warning about their performance.
In late August, Estia said that it expected 2016-17 (FY17) earnings before interest, tax, depreciation and amortisation (EBITDA) to be at least 13% higher than FY16’s EBITDA of $92.7 million or above $104 million.
That’s despite forecasting higher interest expense of around $12 million and higher depreciation of between $17 and $20 million. Estia also said it expected total capital expenditure to come in between $36 and $44 million.
Now the latest changes to government payments, which could wipe out these earnings estimates for Estia, and its rivals.
Estia shares last traded at $3.30 and have fallen 55% this year.
