Ryman Healthcare Reports Significant Progress Despite Losses

Ryman Healthcare has announced a notable advancement in its business transformation, despite reporting a net loss after tax of $45.2 million for the six months ending September 30, 2023. This figure represents a decline of 155% compared to a restated profit of $82 million during the same period last year. The company, New Zealand’s largest retirement village operator, highlighted that its revenue increased by 13% to $413.7 million, driven by a rise in resident numbers and robust fee growth.

The first-half results indicate a significant improvement in the company’s financial health, as it achieved its first positive free cash flow result in a decade, amounting to $56.2 million. This achievement stems from strong development cash flows from new units and a reduction in development investment. Operating costs also fell by 2%, attributed to successful cost-cutting initiatives and improved performance across Ryman’s village network.

Strategic Milestones and Future Outlook

Ryman Healthcare’s Chief Executive, Naomi James, characterized the results as a “major milestone,” signaling that the company has turned a key corner in its transformation journey. The completion of a $1 billion equity raise in February, along with the full refinancing of its $2 billion bank facilities in November, has provided a solid foundation for sustainable performance going forward. James emphasized the stabilization of the business and the return of momentum, noting, “We are delivering results with meaningful progress achieved against the 2026 financial year priorities.”

Despite a decline in total sales of occupancy rights agreements (ORA) for units, which fell by 15% to 704 from 827 in the previous year, Ryman reported a rebound in sales momentum. The company recorded 337 sales in the first quarter, followed by 367 in the second quarter. This positive trend has allowed Ryman to elevate its full-year sales guidance range to 1,300 to 1,400 sales, up from the previous estimate of 1,100 to 1,300.

Reviewing Development Activities and Aged Care Capacity

Ryman is currently reassessing its development activities, with ongoing projects reduced from seven to four. The company is aligning future project timelines with market demand, reflecting a disciplined growth strategy. James indicated that additional details regarding the land bank review would be shared during the investor day scheduled for February, including sites earmarked for future development and potential divestments. Recently, Ryman secured two sales from this review, contracting Park Terrace for $42 million and Mount Eliza for $35 million.

Additionally, Ryman confirmed an ongoing review of its aged care bed capacity in New Zealand, prompted by sector-wide underfunding issues. The closure of two care centers—Margaret Stoddart and Woodcote in Christchurch—has been part of this evaluation. James welcomed the announcement of a Ministerial Advisory Group, aiming to address the funding gap in aged care, stating, “Sustainable funding is essential to both maintaining existing capacity and growing the additional capacity needed for future growth in demand.”

Looking ahead, Ryman Healthcare aims to maintain its focus on enhancing sales momentum, unlocking cash flow, and driving operational efficiencies. James expressed confidence that the company is well-positioned for future cash flow growth, supported by factors such as a potential rebound in the housing cycle, aged care funding reforms, and demographic trends related to an ageing population.