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 full year report, released on 27 May 2024:

Highlights

• Total revenue of $689.9 million, up 18% on FY23
• Reported net profit after tax (NPAT) of $4.8 million, down from $257.8 million in FY23
• IFRS profit before tax and fair-value movements (PBTF) of -$324.5 million (-47.2cps), down from -$225.3 million in FY23 (-43.6cps per share)
• PBTF includes $283.9 million of one-off costs which predominantly reflects impairments relating to the company’s land bank
• Cash flow from existing operations1 of $43.3 million, an improvement of $51.8 million on the prior year
• Cash flow from development activity1 of -$230.2 million, an improvement of $150.8 million on the prior year
• Underlying profit1 of $270.0 million, down 11% on the prior year, and in-line with February 2024 guidance of $265 – 285 million
• Welcomed over 1,500 residents to our retirement villages and over 2,200 into our aged care facilities
• Completed two villages (John Flynn, William Sanders), opened three (Northwood, Patrick Hogan and Bert Newton) and commenced one new development (Mulgrave)

Ryman Healthcare Limited (Ryman) has reported an 18% increase in revenue to $689.9 million for the year ended 31 March 2024, driven by growth in care, village and deferred management fees. However, the combined impact of impairments and other one-off costs ($283.9 million, FY23: $175.4 million) and a lower fair value gain on investment properties, has led to a significant reduction in NPAT to $4.8 million against the $257.8 million achieved in FY23.

This result has been achieved against a particularly challenging operating environment with residential property markets subdued and cost inflation impacting all areas of the business.

Executive Chair, Dean Hamilton commented, “The reported profit result was clearly disappointing as the company took the hard decision to reassess the carrying value of a number of its assets in light of the current economic environment and also place higher hurdles on new developments. Despite these non-cash write-downs, it was pleasing that the company achieved an improvement in cash flow from existing operations to $43.3 million (-$8.5 million in FY23). Contributing to this was a record number of ORA resale settlements, which continues to underline the attractiveness of the Ryman offering.”