Japara shares dive after funding warning

Shares in aged care provider Japara Healthcare have dived, despite increases in profit and revenue.

The government has trimmed aged care funding.

Japara Healthcare’s shares have taken a sharp dive after the aged care provider warned of a dip in government funding.

Shares in the company (JHC) were today down more than 7 per cent to $2.41, despite the company revealing a 5.6 per cent lift in annual net profit after tax to $30.4 million and a 16.4 per cent increase in revenue to $327.3m.

Japara is the first of the three listed Australian aged care companies to report financial results since the government announced cuts to aged care funding instruments (ACFI). About 70 per cent of operator revenue is directly government-funded.

Japara warned in its 2017 outlook commentary that it expected low single digit ACFI growth.

The government pays a fixed daily amount per person, with more funding available for residents who need more ­attention, using the aged-care funding instrument system.

Not only has the government trimmed ACFI funding, but it has also raised concerns ACFI revenue claims by operators have been too aggressive.

Aged Care Minister Sussan Ley has previously revealed up to a fifth of the industry claims made for aged-care funding instruments had been ruled to be too high.

Operators have argued they have ­improved care management practices and have been properly claiming the higher payments.

Japara’s chief executive, Andrew Sudholz, said the company delivered a pleasing result, adding that the aged care provider was continuing to add capacity to its portfolio.

“Japara Healthcare is well placed to continue to deliver sustainable earnings growth with a sound, diversified growth strategy underpinned by a focus on high quality resident care,” he said.

“With a strong balance sheet and a prudent approach to fiscal management, we remain well positioned to deliver on this growth strategy.”