Ryman Healthcare Posts NZD 171 Million Loss, Operating EBITDAF Doubles to $88 Million

Financial Turnaround Amid Market Challenges

Ryman Healthcare (NZX:RYM, ASX:RYM) marked a significant turnaround in FY26, slashing its net loss to NZD 171.3 million from a restated NZD 513.7 million the previous year. While still in the red, the company delivered its first positive free cash flow in over a decade, posting NZD 188.3 million, a remarkable $282.5 million improvement year-on-year. This shift was underpinned by a 94% jump in operating EBITDAF to NZD 88.3 million, reflecting strong operational discipline and a refreshed strategy focused on recurring earnings growth and portfolio optimisation.

Revenue climbed 12.5% to NZD 855.6 million, driven by higher care and village fees, deferred management fees, and increased occupancy across aged care and retirement living segments. Despite a modest rise in operating expenses, Ryman managed to contain costs effectively, including $57 million in annualised savings over two years and a 40% reduction in non-village headcount.

However, the company’s net loss was weighed down by a negative fair value adjustment of NZD 104.3 million on investment properties, reversing the prior year’s positive movement. This reflects ongoing market uncertainties and valuation complexities inherent in Ryman’s extensive property portfolio valued at over NZD 12 billion.

Balance Sheet Reset and Capital Management

FY26 saw Ryman complete a comprehensive balance sheet reset, refinancing NZD 2 billion in bank facilities with improved pricing and extending maturities to FY31 and beyond. The company now boasts the lowest gearing in its sector at 27.8% and holds NZD 675 million in debt headroom, providing a robust liquidity buffer. A high proportion (77%) of drawn debt is on fixed rates, mitigating interest rate risk amid global volatility.

Capital management remains cautious, with net tangible assets per share slightly down to NZD 4.00, and the board maintaining a high threshold for new investments given shares trade at a significant discount to NTA. Ryman has lifted its land divestment target from NZD 200 million to approximately NZD 250 million, having already contracted NZD 147 million in sales including the recent Kealba site sale for A$30.9 million. This divestment programme is a key lever for cash release and balance sheet flexibility.

Operational Highlights and Strategic Priorities

Ryman’s integrated model continues to drive growth, with 47 villages housing over 15,500 residents across New Zealand and Australia. The aged care segment showed particularly strong margin improvement, with operating EBITDAF per bed rising 31% half-on-half to NZD 20.1k, supported by higher occupancy and premium pricing. Retirement living sales remained stable, with 1,410 ORAs sold in FY26, aligning with guidance despite a slight dip in new sales late in the year.

The company is actively evolving its serviced apartment offerings to capture rising demand for assisted living and flexible care solutions, targeting over 95% occupancy in this segment. The rollout of the Resident Fund product in New Zealand supports smoother transitions into care and enhances capital retention.

Strategically, Ryman is on track to deliver a NZD 150 million sustainable improvement in cash flow from existing operations by FY29, having already achieved NZD 47 million in FY26. The company also aims to reduce vacant retirement living stock and maintain disciplined capital allocation, with FY27 guidance targeting operating EBITDAF per aged care bed of NZD 20–25k and total capex between NZD 150–180 million.

Valuation Uncertainty and Market Risks

The auditor’s report flagged the valuation of investment properties and aged care centres as a key audit matter due to significant estimation uncertainty. Independent valuers apply complex assumptions on discount rates, capitalisation rates, and market rental values, which can materially affect reported asset values and earnings volatility.

Additionally, Ryman faces ongoing market risks including interest rate fluctuations, foreign exchange exposure from its Australian operations, and liquidity considerations. The company’s hedging strategies and prudent liquidity management aim to mitigate these risks, but economic uncertainties remain a factor for investors to monitor.

Despite these challenges, demand for care and serviced apartments remains resilient, supported by demographic trends and government reforms in both New Zealand and Australia. Ryman’s integrated care model positions it to benefit from these long-term structural drivers, even as it navigates near-term market headwinds.

FY27 will be a critical year to watch as Ryman focuses on converting its strategic initiatives into sustained earnings growth and cash flow generation, while managing its development pipeline and capital deployment amid mixed housing market conditions and evolving aged care regulations.

This progress builds on the company’s recent FY26 sales meet guidance where retirement living sales volumes aligned with expectations despite a challenging environment, underscoring the resilience of Ryman’s core operations.