Australia's Estia Health trims guidance as inquiry costs hit
* Sector-wide aged-care inquiry has hit industry stock
* Estia spent almost A$1 million preparing for inquiry
* Trimmed earnings outlook to reflect costs
SYDNEY, Feb 27 (Reuters) - Australian aged-care company
Estia Health Ltd adjusted its full-year guidance lower
on Wednesday, hit by costs for responding to a high-profile
inquiry into mistreatment of the elderly in the sector.
The powerful Royal Commission, convened after a slew of
reports of assaults on patients, predatory pricing and poor
care, began hearing testimony two weeks ago from families of
poorly treated patients.
It is expected to be similar to a probe that exposed
widespread wrongdoing in Australia's financial sector last year.
Estia's downgraded outlook is among the first financial effects
to emerge from the inquiry, which has already pounded stocks in
Estia, which operates nursing homes across the country, said
it had spent A$914,000 ($656,709) preparing for and responding
to the inquiry over the six months to Dec. 31. That is about
triple the figure its rival Regis Healthcare Ltd
announced it had spent so far.
Estia also adjusted its full-year earnings-growth guidance
lower. It now expects a low-to-mid-single-digit percentage
increase on pretax earnings this year compared with the previous
financial year. It previously forecast an increase in the
Estia's half-year profit rose 4.1 percent to A$21 million,
as it opened new homes and lifted revenue by 6.6 percent.
Public pressure for an inquiry in the sector began in 2017
after media reported dementia patients were being bound in
restraints, overdosed on medication and neglected at a
since-closed home for the elderly in South Australia.
"We look forward to the outcomes ... which we believe will
lead to a higher performing and more sustainable aged care
sector that meets community expectations and provides safe and
high-quality care for all consumers," Estia's chief executive
officer, Ian Thorley, said in a statement.
Shares in Estia and the three other largest listed operators
- Aveo Group, Japara Healthcare Ltd and Regis
- have plunged since the probe was announced last September.
They were previously seen as an attractive exposure to
Australia's aging population.
They have each shed at least a fifth of their value, wiping
almost A$1 billion from their cumulative market capitalisation.
($1 = 1.3918 Australian dollars)
(Reporting by Tom Westbrook in Sydney
Editing by Matthew Lewis)
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