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The Kuniko Ltd (ASX: KNI) share price was a 5-bagger on open, surging to an intraday high of $1.05 within its first three minutes on the ASX.

About the Kuniko share price

Kuniko is a spin-off of Vulcan Energy Resources Ltd (ASX: VUL) and its non-core Norwegian battery metal assets.

The spin-off enables Vulcan to fully focus on the development of its core Zero Carbon Lithium project while Kuniko will focus on the development of copper, nickel and cobalt projects in Scandinavia.

Kuniko’s initial public offering successfully raised ~7.8 million at an offer price of just 20 cents per share.

At the time of writing, the Kuniko share price is trading at 94 cents, or 370% higher than its offer price.

Kuniko’s projects

Kuniko will be focused on exploration programs to determine the economic viability of its projects, with a strict mandate to maintain a net zero carbon footprint throughout exploration, development and production.

The focus will be on the company’s 262km2 Nickel-Cobalt-Copper (Ni-Cu-Co) licence portfolio which includes:

• South-west Norway tenements: Ni-Cu-Co projects in the historically important Feøy and Romsås mining districts located in south-western Norway
• South-central Norway cobalt tenements: Copper-Cobalt-Gold project, part of the historically important Skuterud mining district of central-southern Norway, previously the largest cobalt mining area in the world
• South-central Norway copper tenements: Undal Cobalt-Zinc-Copper project and Vangrøfta Copper-Cobalt-Gold projects located in the Trondheim region of central Norway

The company has budgeted $4.15 million worth of exploration activities for the first two financial years. This could mean a number of catalysts for the Kuniko share price as geophysics, sampling and drilling results are released.

What’s the hype behind the Kuniko share price?

Kuniko was created by the same team as Vulcan Energy, an emerging ASX lithium producer whose share price surged from 60 cents to $14 in the past 12 months.

Moving forward, the company has a highly credible and experienced team to progress exploration. This includes its executive chairman, Gavin Rezos, who was the non-executive chairman of Vulcan Energy.

Kuniko’s prospectus also highlights that “in recent years there has been an increasing demand for battery metals including copper, nickel and cobalt, specifically in the EU as a result of change in policy by EU governments seeking to dramatically reduce carbon emissions”.

The post Kuniko (ASX:KNI) share price jumps 500% on ASX debut appeared first on The Motley Fool Australia.

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• Why Charter Hall, IGO, Vulcan, & Z Energy shares are storming higher
• Why the Vulcan Energy (ASX:VUL) share price is jumping 7% today
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• Why Baby Bunting, Galan Lithium, Suncorp, & Vulcan shares are sinking
• Here’s why ASX 200 lithium shares surged higher on Tuesday

Motley Fool contributor Kerry Sun owns shares of Vulcan Energy Resources Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The SEEK Limited (ASX: SEK) share price is trading lower on Tuesday despite announcing a big dividend increase with its full year results.

At the time of writing, the job listings giant’s shares are down 0.5% to $31.37.

SEEK share price lower despite large dividend increase

For the 12 months ended 30 June, SEEK reported a 1% increase in revenue to $1,591 million and a 58% jump in net profit after tax excluding significant items to $141 million.

Things were even better if you look at its continuing operations. Revenue from continuing operations increased 17% to $760 million and net profit from continuing operations jumped 68% to $135 million.

This was driven by a strong performance from the SEEK Australia and New Zealand (ANZ) business. It grew its revenue by 40% to $541 million thanks to a small and medium enterprise (SME)-led recovery.

The SEEK ANZ business reported record ad volumes in the second half of the year amid easing COVID-19 restrictions. Its market position also remained strong despite intense competition. This led to SEEK reporting an average of 40 million monthly site visits. This represents 10% growth on pre-COVID-19 levels.

Thanks to this strong form, the SEEK dividend grew strongly year on year.

What did the SEEK Board declare?

The SEEK Board declared a fully franked final dividend of 20 cents per share. Combined with the interim SEEK dividend of 20 cents, this brought its full year dividend to 40 cents per share.

This is triple the solitary interim dividend of 13 cents per share in FY 2020 that was declared in February but paid in July last year. It is, however, down a touch from the pre-COVID dividend of 46 cents per share paid in FY 2019.

Eligible shareholders can now look forward to being paid the final SEEK dividend of FY 2021 in six weeks on October 5.

The post SEEK (ASX:SEK) share price drops despite tripling its dividend in FY 2021 appeared first on The Motley Fool Australia.

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• ASX 200 midday update: Kogan crashes, Nanosonics rockets
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Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) is having another smooth rise today so far, up 0.31% to 7,513 points at the time of writing. But one ASX 200 share is faring far worse today. That would be Kogan.com Ltd (ASX: KGN). The e-commerce company reported its FY21 full-year earnings report this morning before the market open. And investors are not taking too kindly to what Kogan had to show for itself.

The Kogan share price is currently hovering at $11.38 a share, down a nasty 13.29% today so far. That’s a pretty definitive ‘don’t like it’ from investors, it seems.

So as we covered this morning, Kogan did report a 56.8% increase in revenues to $1,179 million. It also reported a 46.9% jump in active customers to just over 3.2 million, and a 61% increase in gross profit to $203.7 million.

However, as my Fool colleague James reported this morning, “Despite delivering a 56.8% increase in revenue, inventory management issues ultimately led to the company reporting an 87% reduction in net profit after tax to just $3.5 million”.

This was driven by a 123% rise in variable costs to $44.9 million.

No dividends for Kogan shares

But perhaps the most startling piece of news from Kogan this morning was the announcement that the company will not be paying a dividend for the period.

Here’s what management said on the matter in the earnings report this morning:

Kogan.com has a strong balance sheet, and attractive short-term and long-term growth opportunities. To support the Company with its growth plans, the Board has decided to conserve cash for business investment and growth purposes and has paused dividends – having not declared a FY21 final Dividend.

This might come as a surprise for even long-term investors. Kogan has paid out two dividends every year since 2017 – including over 2020. It has also been steadily ratcheting up these payments.

The past two dividend payments the company doled out were an interim dividend of 16 cents per share that was paid out back in May. And a final dividend of 13.5 cents per share from October last year. In contrast, the company’s first dividends back in 2017 came in at 3.9 and 3.8 cents per share respectively

Those two payments are enough to give Kogan shares a trailing dividend yield of 2.59% on current pricing.

Given the savagery of investors’ reaction to Kogan’s earnings today, it’s possible that many investors are reacting to this halt of Kogan’s dividends. As such, this might be a primary catalyst behind today’s steep share price drop for the company.

At the current Kogan share price, the company has a market capitalisation of $1.39 billion. It also has a price-to-earnings (P/E) ratio of 27.95.

The post Kogan (ASX:KGN) dividend scrapped, share price plummets appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Kogan crashes, Nanosonics rockets
• Kogan (ASX:KGN) share price sinks 8% after FY21 results and weak start to FY22
• 5 things to watch on the ASX 200 on Tuesday
• These are the 10 most shorted ASX shares
• Here’s how the Kogan (ASX:KGN) share price responded last reporting season

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Western Areas Ltd (ASX: WSA) share price is falling after the company released its full-year results for FY21.

At the time of writing, shares in the minerals company are trading for $3.10 – down 1.9%. The S&P/ASX 200 Index (ASX: XJO), meanwhile, is 0.32% higher.

Let’s take a closer look at today’s announcement.

Western Areas share price slumps on 16% fall in revenue

• Revenue fell 15.6% on the prior corresponding period (pcp) to $257 million.
• Earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $73.5 million – down 39.7% on the pcp. The EBITDA margin fell 10 percentage points to 29%.
• Net loss after tax of $7.7 million compared to $31.9 million NPAT in pcp.
• Net cash inflow of approximately $6 million.
• No dividend paid for the financial year. In FY20, 2 cents per share was paid out to investors.

What happened in FY21 for Western Areas?

The price of nickel plays a key role in the movement of the Western Areas share price. In FY21, nickel appreciated 42.8% although the company didn’t capitalise.

Western Areas shares experienced a massive shock in October when it downgraded its nickel forecast at its Flying Fox mine by 2,000 tonnes. As well, the company said unit costs would be higher than anticipated.

Nickel demand is surging as more consumers buy electric vehicles. Nickel is a key component of electric vehicle batteries. While the alloy metal had a great FY21, the Western Areas share price was not so impressive.

What did management say?

Western Areas Managing Director Dan Lougher said FY21 was “a tale of two halves”:

I am proud of the professional and resilient performance of the technical team which successfully overcame the mine production difficulties encountered in the first half to enable the improved second half production and costs performance. Ultimately it was this turn around that allowed us to deliver into updated guidance for FY21.

At Odysseus, our new long life mine continues to advance towards production of first ore in this September quarter, which will mark a very significant milestone in its expected 10 plus year mine life. Odysseus remains one of the few long-dated supplies of nickel sulphide to enter the market in the coming years, just as the EV market continues to drive nickel demand for delivery into the EV battery supply chain.

What next for Western Areas

The Western Areas share price rocketed in early August after the company and IGO Ltd (ASX: IGO) confirmed IGO was looking to acquire Western Areas.

At the time, the company said nothing was confirmed and this has still not changed as at the time of writing. It’s notable Andrew “Twiggy” Forest bought a 10% stake in the company in August as well.

Western Areas also gave a guidance for FY22 in today’s release. The company says it expects to produce between 16,000 and 17,000 tonnes of nickel at a unit cost of $4.25 to $4.65 per pound.

Western Areas share price snapshot

Over the past 12 months, the Western Areas share price has increased 28%. It has outperformed the ASX 200 by almost 6.5 percentage points.

Western Areas has a market capitalisation of around $1 billion.

The post Western Areas (ASX:WSA) share price falls after last year’s $32 million profit turns to $8 million loss appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Monash IVF Group Ltd (ASX: MVF) share price is gaining in intraday trade, up 3% to 99 cents per share.

This follows on the release of the reproductive services provider’s results for the 2021 financial year ending 30 June (FY21).

Monash IVF share price gains on FY21 results

• Revenue of $183.6 million, increased 26.3% from $145.4 million in FY20
• Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 37.1% to $47.7 million
• Adjusted net profits after tax (NPAT) increased 61.5% to $23.3 million, beating guidance of $21-23 million
• Reported NPAT increased 16.9% to $25.5 million
• $32.8 million of Free Cash Flow generation

What happened during the reporting period for Monash IVF?

Over the course of the 2021 financial year, Monash IVF reported a 36.6% increase in the number of its Australian Stimulated Cycles (STIMS). It attributed much of this to broader industry growth as well as the company making some market share gains.

Internationally its STIMS numbers reached 208 cycles, up 25.1% year-on-year.

Ultrasound scan volumes also performed strongly compared to FY20, increasing by 12.9%.

Monash IVF also opened its flagship clinic in Sydney and appointed 5 Fertility Specialists and a Medical Director of Genetics. The company flagged additional new clinics opening in FY22.

The company said that the first quarter of the financial year saw it servicing the pent-up demand from deferred IVF treatments, which had been temporarily suspended during the early COVID lockdowns.

What did management say?

Commenting on the results, Monash IVF’s CEO, Michael Knaap said:

Our FY21 financial performance was strong and ahead of market expectations and was driven not just by strong industry growth, but also through implementing our own growth initiatives to increase our market share and build for future sustainable growth…

We believe there is a fundamental shift in the community whereby the on-going Pandemic has changed the mindset of our patient cohort, leading to greater focus on family, health and wellbeing and resulting in re-direction of priorities towards family extension. This shift is driving industry growth and is expected to continue.

Knapp said the company has improved its clinical pregnancy rates by 4.5% since 2018, “following a huge amount of effort put into improving outcomes for our patients including harmonisation of laboratory protocols and new innovation”.

What’s next for Monash IVF?

Monash IVF said its strong balance sheet puts it in a good position to get through the ongoing pandemic, as well as optimising “future earnings through strategic and operational gains” made during the past financial year.

Based on there being no major increase in adverse impacts from the pandemic, management is “confident” the company can grow revenue and earnings in FY22.

Knapp said, “With a growing pipeline of new patient enquiries and registrations, we are confident and well placed for sustainable future growth.”

The Monash IVF share price is up 68% over the past 12 months.

The post Monash IVF (ASX:MVF) share price up 3% on guidance beating profits appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Investors in Zip Co Ltd (ASX: Z1P) shares have an anxious wait on their hands. Zip reports its earnings for the 2021 financial year tomorrow, and all eyes are on this buy now, pay later (BNPL) company in anticipation of what its books might hold.

While we wait, it might be a good idea to check out how the Zip share price responded to the company’s last earnings report. That was back on 25 February, when the company delivered its half-year update for FY21. Let’s see what happened with Zip shares when that all went down.

Back in February, Zip reported its numbers for the half-year ending 31 December 2020. Here’s a summary of what Zip had to show for itself:

• Revenues of $160 million, up 130% year-on-year
• Total transaction volume of $2.32 billion, up 141% year on year
• A loss before tax, depreciation, amortisation, and share-based payments of $14.9 million
• Statutory loss of $455.9 million
• Cash gross profit margin of 54%
• 5.7 million active customers, a 217% year-on-year increase
• US-based QuadPay acquisition implemented

How did the Zip share price react at the time?

The market reaction to this earnings report was swift.

Investors gave Zip two thumbs down following the release of these results. As we covered at the time, the Zip share price fell around 10% upon release of these earnings. A month later, the company had shed around a third of its value. It was trading around $11.86 a share the day before this report was released. By 25 March, Zip shares had fallen to $7.53.

Of course, the Zip share price arguably got caught up in some frenzied speculation in the month or so leading up to this earnings report.

Between 15 January and 16 February, Zip had rocketed from around $5.60 a share all the way to a high of $14.53 a share. The ride up proved to be just as steep as the ride down for investors over this period.

We see no similar build-up to Zip’s earnings this time around, so who knows what might happen after tomorrow.

Zip is trading at a share price of $7.26 a share at the time of writing, up 1.68% today. That gives Zip Co a market capitalisation of $4.01 billion.

The post The Zip (ASX:Z1P) share price fell 10% last time the company reported appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Johns Lyng Group Ltd (ASX: JLG) share price is sinking on Tuesday as the building services company reported its FY21 earnings.

Let’s investigate further.

Johns Lyng share price slumps despite strong earnings and sales growth

The company detailed several investment highlights in its report, including:

• Sales revenue up 14.8% year on year to $568.4 million
• Group EBITDA of $52.6 million, a 28.3% year on year growth from FY20
• Normalised net profit after tax (NPAT) of $20.7 million, up 26.3% from the year prior
• Earnings per share (EPS) of 8.3 cents, up from 7.13 cents in FY20
• Final fully franked dividend of 5 cents per share, a 25% increase from the previous year.

What happened in FY21 for Johns Lyng Group?

Johns Lyng recognised revenue of $568 million, which came in 15% higher than FY20. The growth carried vertically through its income statement, with EBITDA increasing by 28.3% and NPAT by about 26%.

Much of the growth was underscored by “another outstanding performance” from the Group’s core business of insurance building and restoration services. In addition, results were “supported by a solid contribution” from its catastrophe (CAT) business.

In addition, Johns Lyng completed several “important strategic acquisitions” completed prior to FY21’s end.

To illustrate, the company acquired Unitech, a South Australian “insurance building services company”. The company said the transaction “presents clear synergies” with its core business and will increase Johns Lyng’s exposure in SA.

Moreover, it also acquired Steamatic Australia which is a “national restoration services company”, according to the company’s announcement. This extends the previous acquisition of the Steamatic Global Master Franchise back in FY19.

Finally, Johns Lyng also hiked its dividend by 25% from the same time last year, representing 61% of NPAT as a coverage ratio.

What did management say?

Johns Lyng CEO Scott Didier said:

These FY21 results are an excellent representation of the Johns Lyng value proposition and I think it’s an extremely rewarding outcome for our people, our Board and our shareholders.

Speaking on the CAT business’s progress in the year, Didier added:

Our CAT response activity during the year was again a clear indication of the value of the national scale we have built, responding to disasters from southeast Queensland to coastal Western Australia. The growing strength of our offering was recognised late in the year when we entered into a partnership with the State Government of Victoria for clean-up and Makesafe works on damage properties following a significant storm event in June.

What’s next for Johns Lyng Group?

The company expects revenue from FY21 “CAT-related activity” to eventually “flow through to FY22”. Work on the state government contract will also commence in FY22.

As such, management forecasts FY22 sales revenue of $635.4 million and FY22 EBITDA of $60.1 million. These estimates call for 22.2% and 28.6% year-on-year increases from FY21, respectively.

The company also remains prioritised on extending its acquisition trail, whilst “building upon (its) digital service capability”.

The Johns Lyng Group share price has posted a year to date return of 90%, extending the previous 12 months’ gain of 126%.

Both of these results have outpaced the S&P/ASX 200 Index (ASX: XJO)’s climb of around 25% over the past year.

The post Johns Lyng (ASX:JLG) share price sinks 7% despite 26% net profit growth appeared first on The Motley Fool Australia.

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• Dimerix (ASX:DXB) share price down 10% after prospectus issued
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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Infomedia Limited (ASX: IFM) share price is sliding today following the company’s release of its FY21 full-year results.

At the time of writing, the software company’s shares are down 3.37% to $1.575 apiece.

Infomedia share price falls despite announcing top end of guidance

The Infomedia share price is in the red after the company delivered its FY21 results for the 12 months ending 30 June 2021. Here are some of the key financial highlights for the period:

• Total revenue of $97.4 million, up 3% on the prior corresponding period (FY20 $94.6 million);
• Earnings before interest, tax, depreciation and amortisation (EBITDA) of $47.6 million, up 3% (FY20 $46 million);
• Underlying Net profit after tax (NPAT) of $20 million, up 8% (FY20 $18.6 million); and
• Partially-franked final dividend of 2.3 cents per share, bringing full-year dividend to 4.45 cents apiece.

What happened to Infomedia in FY21?

Infomedia reported a strong finish to a challenging year, underpinned by $35 million in new contract wins across all geographical areas. This included clients such as Ford, Mazda, Audi, and BMW.

In particular, the Asia Pacific region represented $17 million in revenue for the second-half. This is around 40% higher than the next best region of Europe and the Middle East.

The company began transitioning from its legacy software to the Next Gen integrated platform. So far, good sales traction has been recorded with Infodrive (data, analytics, and Nidasu). As such, Nidasu has attained 57% revenue growth, reflecting strong demand for its products.

What did management say?

Infomedia CEO, Jonathan Rubinsztein commented on the result, saying:

Pandemic related restrictions delayed installations, which impacted the conversion of sales to revenue during the year. However, new opportunities emerged as evidenced by the total of our TCV that closed during the period.

Further, innovation and product integration in the core parts and service platform including Infodrive contributed to good sales and revenue momentum in the second half. Global sales and the addition of SimplePart, underpins strong growth into FY22.

What’s next for Infomedia in FY22?

In FY22, Infomedia is forecasting total revenue to be in the range of $117 million and $123 million. This represents an increase of around 20% year on year. However, the future result is dependent on no adverse movements in foreign exchange rates and no significant impact from COVID-19.

The Infomedia board stated it’s confident that the company can return to double-digit growth in FY22. The recent acquisition of e-commerce platform, SimplePart will help achieve the group’s targets. Furthermore, Infodrive is expected to be a significant contributor to revenue in FY22.

The post Infomedia (ASX:IFM) share price backtracks despite returning to growth appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Infomedia. The Motley Fool Australia has recommended Infomedia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Dimerix Ltd (ASX: DXB) share price has sunk well into the red from the opening of trade on Tuesday.

Dimerix shares are on the way down as the company advised it had lodged a prospectus with the Australian Securities and Investment Commission (ASIC).

Let’s investigate further.

A quick refresher on Dimerix

Dimerix is a clinical-stage drug development company. Its lead clinical program is investigating the use of the company’s DMX-200 treatment in chronic kidney disease (CKD).

In addition, Dimerix is developing DMX-200 for applications in chronic and acute respiratory disease, and another kidney condition known as focal segmental glomerulosclerosis (FSGS).

As a result of its efforts, Dimerix has a market capitalisation of $67.65 million at the time of writing.

What did Dimerix announce?

Dimerix advised its prospectus contained an offer of a share purchase plan (SPP) that gives “each eligible shareholder” the opportunity to apply for “up to $30,000 worth of new (Dimerix) shares”.

In addition, the securities are issued at a price of 20 cents per share. As such, this offer represents the same price as the 2-tranche placement of about 100 million shares last week. The Dimerix share price rocketed 50% on the news of the successful capital raise and the release of the company’s full 2021 financial year results.

Moreover, eligible shareholders will receive “one free unlisted option for every two shares issued under the placement”. This option is exercisable at 40 cents per share, and has an expiry date of July 2024.

Further, it is extending the same option to its SPP, naming it the “SPP Option”.

The proceeds from both the SPP and the placement will be used for working capital, debt repayment and to finance clinical studies in FSGS patients.

Moreover, it will also use the funds to establish manufacturing and distribution channels to conduct further clinical studies. This makes sense, as it can cost up to $1 million for an 8-patient study in some instances.

Investors have punished the company on the back of this update today. Dimerix shares are now exchanging hands at 30.5 cents apiece, a 10.29% dip on the day.

Dimerix share price snapshot

The Dimerix share price has climbed 32% this year to date. Despite this, it has posted a loss of 50% over the past 12 months.

In the last month, Dimerix shares have stepped a further 24% into the green.

This has lagged the S&P/ASX 200 index (ASX: XJO)’s gain of about 23% over the past year.

The post Dimerix (ASX:DXB) share price down 10% after prospectus issued appeared first on The Motley Fool Australia.

More reading

• Dimerix (ASX:DXB) share price rockets 50% on capital raise and results

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Estia Health Ltd (ASX: EHE) share price is in the red on the back of the company’s financial year 2021 (FY21) earnings.

Right now, the Estia Health share price is $2.23, 0.43% lower than its previous close.

Estia Health share price slumps despite 105% increase to profits

Here’s how the residential aged care provider performed over FY21:

• Revenue of $646 million – up 4.4%
• $5.99 million net profit after tax – 105% more than in FY20
• Reinstated 2.3-cent fully franked final dividend

FY21 was a productive but challenging time for Estia Health.

The company’s operations suffered a $24.3 million hit from its COVID-19 response, as it increased costs, and reduced occupancy and revenue. Estia received $21.4 million of government support throughout FY21, none of which was from JobKeeper.

Additionally, Estia Health settled a shareholder class action brought about it due to disclosures the company made between August 2015 and October 2016. The class action was settled for $38.4 million, of which Estia paid $12.3 million and its insurers covered the rest. 

The company’s mature homes segment brought in earnings before interest, tax, depreciation, and amortisation (EBITDA) of $62.5 million. The segment reported 91.2% occupancy over FY21.

Estia Health ended the period with $33.4 million of cash and $81.1 million of debt.

What happened in FY21 for Estia Health?

Here’s what moved the Estia share price in FY21:

Royal Commission

First off, the Royal Commission into Aged Care Quality and Safety handed down its final report in February. The report contained 148 recommendations, of which, the government accepted 126.

According to Estia, the accepted recommendations will lead to higher costs, compliance, and administrative requirements. Many will need to receive legislative approval, which will require detailed assessment, research and consultation, expected to take place over the next 2 to 3 years. These include:

• A $10 per day short-term financial relief by way of an increase in daily fees. If the increase had been applied to Estia’s occupied bed days in FY21 it would have added $20.6 million to the company’s revenue
• Mandated minimum care hours from October 2023
• A wide range of regulatory, supervisory, prudential, reporting and governance improvements that will be introduced over the next 18 to 24 months

Estia was required to provide two sets of information to the Royal Commission regarding the quality of care and staff hours at its homes. The company wasn’t asked to appear before the Royal Commission following its submissions. Estia’s performance matters were also not referenced in the final report.

COVID-19

Over FY21, all of Estia’s homes were impacted by COVID-19 at one time or another.

During Victoria’s second wave, 11 of the company’s 27 Victorian homes experienced at least one infection. Those infections resulted in the deaths of 36 residents.

The outbreaks were resolved over September and October and the last of Estia’s homes with a COVID-19 infection was COVID-19 free on 10 November 2020.

No Estia homes experienced infections between November 2020 and 30 June 2021.

As of 20 August 2021, 82.4% of Estia’s residents and 82.1% of employees had been at least partially vaccinated against COVID-19. According to Estia, the Federal Government expects all states to issue public health orders before mid-September to make vaccinations mandatory for all residential aged care workers.

Developments and sales

In February, Estia opened its newest home at Blakehurst NSW. The 105-bed home reached 63.8% occupancy less than five months after opening. The home has been EBITDA positive since May.

Over FY21, the company decided to close its 46 bed home at Keilor Downs, Victoria. It stated the home wouldn’t meet community expectations for residential aged care homes in the coming years. The closure cost Estia $300,000.

Additionally, Estia sold 3 surplus land sites for $9.5 million over the period.

What did management say?

Estia Health’s CEO, Ian Thorley, commented on the news driving the company’s share price today. He said:

In the face of one of the most challenging periods the sector has ever faced Estia delivered a resilient performance which, combined with a strong balance sheet, has given us the confidence to reinstate the dividend.

The financial result, supported by temporary government funding and grants provided to cover the COVID-19 cost impacts during the pandemic, places Estia in a sound position to respond to the Government’s post-Royal Commission reforms which represent a fundamental shift in thinking towards a more transparent and competitive sector.

While we are broadly supportive of the government’s response, significant uncertainty remains over the detail of the system and program reforms and the financial and operational impacts that these will have on the sector and individual providers…

The current situation with restrictions in NSW and Victoria, and to a lesser extent in Queensland is further testing the sector. At this stage it is too early to make any statements or guidance about the consequences or impacts on the FY22 financial performance. Our focus is wholly on the well-being of our residents and our people.

What’s next for Estia Health?

Here’s what might drive the Estia Health share price in FY22:

The company didn’t give guidance for FY22, but it is planning to develop 2 new homes at St Ives and Aberglasslyn in NSW. The homes will include a total of 236 new beds.

Additionally, it’s waiting for more recommendations of the Royal Commission to be implemented by the government. These might have a large impact on the business.

Estia Health share price snapshot

The Estia Health share price has gained 24% year to date. Its also 39% higher than it was this time last year.

The post Estia Health (ASX:EHE) share price falls on FY21 earnings appeared first on The Motley Fool Australia.

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