Aged care stocks slammed in Tuesday trading

Estia Health suspended its guidance, prompting a wider sell off that engulfed rival Regis Healthcare.

Aged care stocks were slammed in Tuesday trading.

Aged care stocks were slammed in Tuesday trading with Estia Health suspending its guidance, prompting a wider sell off that engulfed rival Regis Healthcare.

The companies, along with operator Japara Healthcare, have been already been sold off on the back of concerns about how the coronavirus will hit their operations but have said they were not yet been directly affected by any cases.

However, worries about their ability to operate for an extended period under the extraordinary circumstances caused by the virus have prompted selling.

Estia stock had fallen by 10.5 per cent to $1.145 in early afternoon trading but Regis Healthcare fell even further, plunging by 18.1 per cent to just 86c, despite not providing an update.

Estia suspended its 2020 fiscal year guidance following heightened uncertainty surrounding the potential future impact of coronavirus.

The company said none of its homes had experienced cases of Covid-19 among its residents or staff and nor had they been materially impacted, but warned of the period to come.

“Australia is experiencing an unprecedented public health crisis of unknown dimensions with economic and financial implications that cannot at this point be estimated,” Estia said.

“The company is continuing to monitor the COVID-19 situation closely and is planning for any further escalation.”

Estia said that “at this stage” it was not possible to have a high degree of certainty about the impact the situation may have on future occupancy, revenue and costs across its 69 homes.

“Given the dynamic and uncertain nature of this situation, it is not possible to provide meaningful guidance at this time on the size of the projected impact on earnings for the remainder of fiscal 2020,” Estia said.

Despite the precipitous share price drop the company said its balance sheet strength would allow it greater flexibility and depth of resources to meet the challenges the crisis may present.

Net debt on March 13 was $106m, with undrawn and committed facilities under the company’s syndicated financing facility of about $216m. The company’s net RAD balance was about $827m which includes amounts due under probate.