Radius Expenses Push Profit Down as it Brings in Nurses from Overseas
Listed aged care rest home and retirement village owner/operator, Radius Residential Care, experienced a 21 percent increase in revenue. However, rising costs resulted in a reduction of its bottom-line profit. In the six months leading up to September 30, 2023, the company generated a total revenue of $84.4 million, surpassing the previous half-year’s $69.8 million.
Despite the growth in revenue, employee costs also soared from $44 million to $52 million, contributing to a decrease in net profit after tax from $1.7 million to $1.4 million for the latest half-year. Additionally, other expenses saw an increase from $16 million to $18 million.
One factor that boosted the first half’s result was a $1.8 million one-off gain from the acquisition of a previously leased property asset. However, the value of total assets dropped from $356 million to $355 million partly due to flat investment property valuations.
Radius currently operates 24 aged care properties, owning 13 and leasing 11. With over 1900 employees, the company has been intensifying its overseas nurse recruitment program. Recruiting internationally qualified nurses from countries such as the Philippines, India, South Africa, and Europe, Radius aims to fill many vacancies and address the shortage of nurses in New Zealand.
Andrew Peskett, the chief executive of Radius Residential Care, emphasized the importance of welcoming and training overseas nurses to ensure they integrate well into New Zealand and its healthcare systems. To support this process, the company assists nurses upon arrival, including meeting them at the airport and helping them find accommodation.
Despite the decrease in bottom-line profit, Radius experienced a 50 percent increase in EBITDA to $10.5 million. Additionally, the company’s occupancy rate is at 93 percent, surpassing industry averages of 80-90 percent. Peskett attributed this success to the scale at which Radius operates, with larger rest homes compared to privately-owned options.
While facing challenges and rising costs, Radius managed to save $1.3 million in the last six months through its business improvement program. This program led to a reduction in personnel at the support office and a decrease in fees paid to consultants. Radius also reported having only 120 out of 1885 beds empty, demonstrating strong occupancy rates.
Looking ahead, Radius expressed its focus on reducing debt and completing the debt management program, expected to conclude in 2024. Consequently, no dividend will be paid in this half-year, but shareholders can anticipate dividends again in the future.
As Radius Residential Care strives to navigate the complexities of the aged care industry, it aims to provide quality care for its residents while effectively managing costs and addressing the ongoing nursing shortage.
