Estia Health (EHE) shares have jumped nearly 6% to $3.03, their highest in six weeks, after the embattled aged-care operator reaffirmed earnings guidance.
Estia said it’s expecting underlying EBITDA for FY2017 to come in between $86 million and $90 million.
But it also said that changes in government funding recently announced will have a significant adverse impact on earnings in the 2018 and 2019 financial years, if it doesn’t put strategies in place to cope this.
The company added that it remains "comfortably" within its debt covenants.
Given the company’s mixed experiences since August, it was a ‘good news’ day for the embattled stock yesterday.
Helping the stock was the early results of a strategic review which is continuing.
Estia revealed several initiatives from its ongoing strategic review, including a management and operational restructure which will enable the Company to focus on growing its core assets and deliver profitable growth.
The management restructure included the finalisation of a 3 year contract with Mrs Norah Barlow, who was confirmed as the company’s permanent CEO.
It is currently estimated that phase one of the refurbishment program will deliver $4 million in additional EBITDA on a stabilised basis, with an estimated further capital expenditure outlay of $9 million.
The management overhaul included the appointment of Mr Ian Thorley as Chief Operating Officer, while Mr Steven Boggiano will continue in the role of Acting chief financial officer as the company undertakes an active search for a permanent CFO.
