Radius Care Delivers 37% Profit Growth and Raises Dividend 50%

Strong Earnings Growth Driven by Operational Momentum

Radius Residential Care (NZX:RAD) has reported a robust FY26 performance, with profit before tax jumping 37% to $14.3 million and net profit after tax climbing 34% to $9.5 million. These gains reflect improved occupancy, which averaged 94.9%, up 2.1 percentage points on the previous year, and an 11% increase in annualised EBITDAR per bed to $31,100. Revenue grew 14% to $202.3 million, underpinned by a better mix of higher-revenue hospital and specialist care residents and accommodation supplement growth.

Dividend Boost and Capital Management

Radius Care’s board declared a final fully imputed cash dividend of 1.2 cents per share, a 50% increase on FY25’s 0.8 cents. This lifts the total FY26 dividend to 2.2 cents per share, representing a gross yield of 8.0% on the average share price for the second half of FY26. The company’s capital management framework remains disciplined, with net bank debt stable at $68.7 million and leverage at a medium-term target of 2.5x EBITDA, providing ample headroom for growth initiatives.

Growth via Acquisitions and New Developments

Strategic acquisitions continue to fuel Radius Care’s expansion. The recent purchase of the 90-bed and 14-unit Karori Village care home in Wellington, expected to settle on 26 May 2026, marks the company’s first entry into the Wellington region and is anticipated to be immediately earnings accretive. This follows last year’s acquisition of St Allisa, which is now fully occupied and profitable.

On the development front, Radius has commenced bulk earthworks on land acquired in Belfast, Christchurch, for its first new-build care home designed for hospital-level and dementia care, alongside a retirement village of approximately 80 villas. An 80-bed care home development in Hokitika is also progressing, alongside brownfield expansions adding villas at Matamata and Clare House, Invercargill, expected to complete within FY27.

Innovations and Diversification Beyond Residential Care

Radius Care is broadening its service offerings with the launch of Luma®, a clinician-designed continence product range tailored for elderly care, aiming to improve resident support and deliver cost savings. The company is also expanding its home support and rehabilitation services nationwide, extending its reach beyond residential care into community-based support, including ACC-funded in-home care.

Valuations and Financial Position Confirmed by Auditor

The company’s investment properties and land and buildings were independently valued at $80.5 million and $108.6 million respectively as at 31 March 2026. The auditor’s report highlighted the complexity and subjectivity involved in these valuations, noting they were conducted by qualified valuers following international standards. Radius Care’s acquisition accounting for St Allisa and its sale and leaseback arrangement were also reviewed and confirmed appropriate.

What Lies Ahead for FY27?

Radius Care expects continued underlying growth in key financial metrics in FY27, with the addition of Karori’s 90 beds and 14 independent living units from late May set to boost earnings. The company’s pipeline of new builds and expansions, supported by private investors, signals an acceleration in capacity growth. However, the success of these developments and acquisitions in sustaining profitability and occupancy amid evolving market dynamics remains to be seen.