Ryman Healthcare (ASX:RYM)<\/a> CEO Naomi James, it\u2019s a great time for the retirement and aged-care operator to be straddling both sides of the Tasman.<\/p>\nIn its native New Zealand, Ryman is the biggest operator in a sector where scale is paramount.<\/p>\n
Here, Ryman has encroached into Victoria over the last decade, investing more than $2 billion in nine facilities.<\/p>\n
But James reckons that as well as weeding out poor practices, Australia\u2019s aged-care reforms have greatly improved the economics for operators such as Ryman.<\/p>\n
The company operates in retirement villages, assisted living and nursing home sectors.<\/p>\n
\u201cAs a listed stock exposure to housing demand and shortages and a growing ageing population, we are a unique proposition,\u201d she says.<\/p>\n
Facing similar demographic pressures, New Zealand is pondering its own reforms. And with the 44-year-old underarm arm bowling incident finally forgiven, Wellington is tipped to use Australia as the template.<\/p>\n
\u00a0<\/p>\n
Getting into shape<\/p>\n
Ryman listed on the ASX On October 1, as an adjunct to its primary NZ listing.<\/p>\n
Having taken on the job in November last year, James tackled performance issues including poor cash flow from tardy sales of new retirement units.<\/p>\n
She also oversaw a $1 billion capital raising.<\/p>\n
\u201cWe have had a significant reset and the heavy lifting has been done,\u201d James says.<\/p>\n
\u201cWe have addressed the accounting issues, reset the capital structure and moved to sharper focus on cash-based metrics.\u201d<\/p>\n
Ryman last month reported revenue of NZ$413.8 million for the first half to September 2025, 13% higher.<\/p>\n
The company lost NZ$45.2 million.<\/p>\n
But behind the ugly bottom line, Ryman recorded its first positive cash flow in more than decade \u2013 NZ$56.2 million.<\/p>\n
\u00a0<\/p>\n
DMF = Delightful Money Flows<\/p>\n
Ryman has benefitted from a standardised deferred management fee (DMF), of 30% on new retirement village sales.<\/p>\n
A DMF refers to the proportion of a new resident\u2019s fee that is taken off the selling price of the unit on disposal.<\/p>\n
James says the 30% is in line with the market. It also compares with Rymans\u2019 average 28.8% for the half, compared with 20.7% a year previously.<\/p>\n
A higher DMF means greater spoils in a rising property market, bearing in mind that retirement village valuations tend to track general trends<\/p>\n
\u201cThis means the forward book builds significantly as units roll over to new terms which will build in value over time,\u201d James says.<\/p>\n
What if property prices tumble?<\/p>\n
Nah \u2013 won\u2019t happen.<\/p>\n
\u00a0<\/p>\n
Those reforms are pretty RAD<\/p>\n
Ryman is also benefitting from the Australian aged-care reforms, which more sharply delineate the cost of clinical care (funded by the government) and everyday expenses (funded by the resident).<\/p>\n
In effect, the government tips more into the pot, but residents stump up more for the everyday stuff if they can afford to do so.<\/p>\n
Did we mention that it\u2019s complicated?<\/p>\n
A key benefit for operators is their ability to retain 2% of new refundable accommodation deposits (RADs) annually, for up to five years.<\/p>\n
This means less money for deserving\/non deserving heirs when the resident departs.<\/p>\n
James says that with a new RAD in Australia exceeding $800,000, this should deliver a \u201cmeaningful\u201d increase in revenue.<\/p>\n
\u00a0<\/p>\n
Get bigger or go home<\/p>\n
The local Aged Care Act means \u201ccare economics\u201d have become increasingly challenging, with requirements such as decent tucker.<\/p>\n
This has caused a wave of consolidation, especially in the more fragmented Australian market.<\/p>\n
Currently, more than 75% of Ryman\u2019s revenue derives from NZ, where it has 4000 aged-care beds.<\/p>\n
Ryman has 700 beds in Victoria \u2013 a similar sized market to Kiwiland \u2013 and is eyeing interstate expansion.<\/p>\n
James says Ryman operates in the \u201csweet spot\u201d of facilities with 80-100 beds, which can leverage facilities such as kitchens and laundries and roster staff more efficiently.<\/p>\n
She is confident NZ pollies will learn from the Australian experience and cherry-pick the best of the reforms, while going easy on compliance costs.<\/p>\n
In recent years, ASX-listed retirement\/aged-care operators Japara, Estia and Aveo have been subsumed by private interests.<\/p>\n
With a similar market cap to Ryman, Regis Healthcare (ASX:REG)<\/a> is more heavily exposed to the nursing home business.<\/p>\nAs the over 80s cohort triples to 3.5 million people over the next four decades, Ryman and Regis as rare ASX entrees to a sector with dead-certain growth prospects.<\/p>\n
\ufeff\u00a0<\/p>\n
This report does not constitute financial product advice. You should consider obtaining financial advice before making any financial decisions.<\/p>\n","protected":false},"excerpt":{"rendered":"You wouldn’t read about it: thanks to aged-care reforms and a dose of self help, Ryman Healthcare has…\n","protected":false},"author":2,"featured_media":344770,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[64,63,137,500],"class_list":{"0":"post-344769","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-healthcare","8":"tag-au","9":"tag-australia","10":"tag-health","11":"tag-healthcare"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/344769","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=344769"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/344769\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/344770"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=344769"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=344769"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=344769"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}