Oceania’s Debt Reduction and No Dividend Signal Caution Despite Earnings Rise

Solid Financial Performance Amid Challenging Conditions

Oceania Healthcare Limited has delivered a strong interim financial performance for the six months ended 30 September 2025, demonstrating resilience in a tough economic environment. The company’s proforma underlying EBITDA rose by 19.7% to $41.8 million, while proforma underlying net profit after tax increased 18.9% to $24.1 million compared to the prior corresponding period. These gains were supported by improved care margins, disciplined cost management, and operational efficiencies.

Total comprehensive income surged to $40.4 million, up $28.6 million year-on-year, largely driven by positive fair value movements on the company’s property portfolio. Operating cash flow also improved by 30%, reflecting better sales conversion and working capital discipline.

Sales and Development Drive Growth

Oceania’s sales momentum gathered pace with a total of 271 units sold in the half, including 161 care suites, underscoring strong demand for its premium care offerings. Key developments such as the Franklin Village in Auckland are progressing well, with the first residents expected to move in January 2026 and 11 villas already presold. The Helier development in Auckland reached 54.5% occupancy or under application by November 2025, with full development cash recovery anticipated by March 2026.

The company delivered 71 new units and care suites in the period, including 40 care suites at Meadowbank, contributing to a forecast of 100-150 units annually over the coming years. Oceania’s strategy of staged greenfield development and targeted marketing has helped reduce vacant stock from $392 million to $353 million.

Capital Management and Cost Efficiency

Oceania has made significant strides in capital management, reducing its gearing ratio to 34.8%, comfortably within the targeted 30-35% range and down from a peak of 38.3% in FY24. The company is actively divesting four sites expected to release $40 million in capital during FY26, further strengthening its balance sheet.

Cost reduction initiatives have identified $20.4 million in annualised savings, with $4 million realised in the first half and $13.2 million on track for delivery in the full year. Care segment profitability improved markedly, with underlying EBITDA per bed increasing 45.5% to $12,400, supported by enhanced clinical systems and acuity management.

Sustainability and Future Outlook

Oceania continues to integrate sustainability into its operations, linking debt costs to environmental performance through its Sustainable Finance Framework. The company’s leadership in sustainable care was recognised with awards at the Aged Care Association Conference, reinforcing its commitment to resident-centred and environmentally responsible care.

Despite current housing market constraints affecting residents’ ability to sell family homes, Oceania remains confident in the strong demographic demand for quality aged care and retirement living. The company’s clear priorities for the remainder of FY26 include accelerating stock sell-down, progressing divestments, executing cost efficiencies, and enhancing care profitability.

Oceania’s new dividend policy aligns payouts with free cash flow from operations, resulting in no interim dividend declaration for this period. Dividend payments are expected to resume once positive free cash flow is consistently achieved.