Oceania Healthcare posts record FY26 earnings with sales surge and debt cut

Sales Momentum and Portfolio Refinement

Oceania Healthcare (NZX/ASX:OCA) has reported a record year for FY26, with total sales volumes climbing 16% to 603 units, including a 9% increase in new sales and a 20% jump in resales. This sales surge comes amid a subdued residential property market, highlighting Oceania’s effective pricing and stock management strategies.

Key developments such as Franklin Village and The Helier in Auckland have been pivotal. Franklin Stage 1, opened in January 2026, achieved an 80% sell-down or application rate, exceeding pre-sale targets, while The Helier’s independent living apartments are 74% sold or under application, nearing full development cost recovery.

The company also divested seven smaller or geographically isolated sites, unlocking $51.1 million in proceeds that were directed towards reducing debt and focusing capital on larger integrated villages that blend aged care and retirement living.

Financial Performance and Cash Flow Improvements

Oceania’s Proforma Underlying EBITDA surged 20% to $97.7 million, driven by operational efficiencies and portfolio premiumisation. Care EBITDA per occupied bed rose 40% to $27,000, reflecting both improved occupancy and profitability per bed. Underlying net profit after tax increased 34% to $64.1 million on a proforma basis.

Despite these earnings gains, Free Cash Flow from Operations remained negative at $15 million, though this marked a 64% improvement over FY25’s $41.7 million outflow. Management expects to achieve positive operating free cash flow in FY27, supported by ongoing cost discipline and working capital management.

Oceania’s gearing ratio tightened to 30.1%, down from 36.3%, placing it at the lower end of its 30%-35% target range. Net debt fell by $121 million to $507 million, aided by divestments and a significant reduction in unsold development stock, which decreased by 34% to $227 million.

Strategic Focus on Sustainability and Care Integration

Oceania’s FY26 Annual Report underscores a strategic pivot towards sustainability and integrated care. The company has embedded climate considerations into capital allocation and development, with new builds targeting NZGBC Homestar and Green Star certifications. Franklin Village notably achieved the retirement industry's first Green Star 4 Community rating, aiming for Green Star 5 as development progresses.

The launch of Oceania Healthcare Centre, an in-house nurse practitioner-led service, exemplifies the company’s commitment to connected care, improving continuity and responsiveness for residents. This integrated model is designed to reduce disruption as residents’ care needs evolve.

On the sustainability front, Oceania reported a 44% reduction in total Scope 1 and 2 greenhouse gas emissions since FY22, meeting its science-based targets. The company’s $500 million sustainability-linked loan was successfully renewed through FY30, with all performance targets achieved in FY26.

Governance and Leadership Transitions

The Board remains focused on disciplined capital allocation and operational excellence. Recent governance changes include the appointment of Sarah Ottrey, a director with extensive marketing and commercial experience, and the planned retirement of Sally Evans at the upcoming Annual Shareholder Meeting.

Oceania’s dividend policy targets payouts of 40%-60% of free cash flow from operations. However, the Board has elected not to declare a dividend for FY26, awaiting positive cash flow generation in FY27 before resuming distributions.