Regis Healthcare (ASX:REG) used its 2026 first-half results call to outline a stronger operating performance and cash generation, while also highlighting ongoing funding and margin pressures tied to AN-ACC settings. Managing Director and CEO Dr. Linda Mellors also reiterated that she has resigned and will complete her time as CEO in June, saying a “well-structured transition” is underway.
Industry and funding backdrop
Mellors described Australian aged care as a “strongly growing, and reforming sector,” supported by demographic demand, regulated pricing and fragmented supply. She pointed to an estimated need for 200,000 net new beds by 2043 and said hospital discharge delays remain significant, citing an estimate of 3,000 older Australians occupying public hospital beds while waiting for aged care placement.
She highlighted the introduction of the higher everyday living fee (HELF), which replaces previous additional and extra service frameworks and allows providers to offer services beyond those charged through the basic daily fee.
On accommodation, Mellors cited two material changes: the reintroduction of RAD retention (allowing providers to retain 2% of new RADs for up to five years) and an increase in maximum room pricing from AUD 550,000 to AUD 750,000 without IHACPA approval (effective 1 January 2025). Management said the pricing change has already driven stronger market pricing, referencing StewartBrown forecasts for room price growth of around 8% annually over the next five years.
Despite these reforms, Mellors framed funding as still imbalanced, particularly for supported residents. She said the gap between what non-supported residents can contribute through DAPs and what providers receive through the maximum accommodation supplement can equate to “more than an AUD 50 loss of revenue per supported resident per day” based on an AUD 600,000 room price. She said reform should consider lifting RAD retention to 4% and increasing the accommodation supplement, and noted an independent government review of the accommodation supplement is due to be completed by 1 July 2026.
First-half financial performance and dividend
Regis reported revenue from services up 18% to AUD 668 million and underlying EBITDA up 4% to AUD 70.6 million. Operating cash flow increased 40% to AUD 291.7 million, supported by net RAD cash inflows of AUD 178.5 million, and the company ended the half with net cash of AUD 198 million.
Management said statutory NPAT was impacted by one-off costs, “mainly from recent acquisitions.” The board declared an interim dividend of AUD 0.09 per share, fully franked, representing 92% of underlying first-half NPAT.
Regis also pointed to improvements in quality and staffing metrics, with average star ratings rising to 3.92 in the first quarter of FY2026 from 3.56 in the first quarter of FY2025. Average care minutes increased to 220 minutes in the second quarter of FY2026 from 210.1 minutes in the first quarter of FY2025, as Regis continued investing in its direct care workforce to meet mandated targets.
What drove revenue and margins
CFO Rick Rostolis said acquisitions were the largest contributor to revenue growth, accounting for 55% of the uplift (AUD 57 million). This included contributions from Ti Tree (acquired December 2024), Rockpool, and OC Health.
AN-ACC indexation added AUD 30 million to revenue, though Rostolis said the latest uplift did not include a margin, and reiterated that the AN-ACC changes (net of hotel supplement increases) have cost the business around AUD 10 million of earnings in FY2026. The hoteling supplement added AUD 9 million, with the average rate per resident per day increasing to just over AUD 19 in H1 FY2026 from AUD 12 in H1 FY2025. Other income grew 31% to AUD 77 million, including AUD 72 million of RAD imputation, driven by a higher number of RAD-paying residents.
Underlying EBITDA margin moderated to 10.6% (from 12% in H1 FY2025), though Rostolis noted it improved from 9.7% in H2 FY2025. Staff costs increased 22%, driven by acquisitions, higher wages under the Aged Care Work Value Case, minimum wage and EBA increases, and additional hours to meet care minute targets. He also noted “a meaningful reduction in agency usage and overtime,” with agency hours falling to 0.5% of total worked hours versus a COVID peak of 6%.
Rostolis said aged care revenue per occupied bed day increased 9% to AUD 460.60, while staff expenses per occupied bed day increased 12% to AUD 340.30. He said the next AN-ACC funding increase is not expected until 1 October 2026 and warned of further margin contraction from AN-ACC pricing, although management expects RAD retention (as it phases in), a potential uplift in the accommodation supplement, and efficiencies from technology investments to support margins over the medium term.
Portfolio, occupancy, RADs and balance sheet
Average available beds increased 7% to just over 8,000 during the half. Average occupancy at mature homes rose to 96% from 95.7%, and reached 96.2% in the second quarter. As of 31 December 2025, 73 of 74 homes were considered mature, with Oxley in Brisbane the only home in ramp-up.
The paid-up RAD balance increased by AUD 390 million to more than AUD 2.2 billion at December 2025, with acquisitions contributing AUD 239 million. Rostolis said Regis has lifted the average incoming RAD by 32% to AUD 710,000 over the past 18 months.
In December 2025, Regis completed a partial refinance of its syndicated debt facility, reducing the facility by AUD 5 million to AUD 362 million and extending maturity dates for facility B and D through to March 2029.
M&A, development pipeline and outlook
During the half, Regis completed the acquisition of Rockpool (four homes, 600 beds in Southeast Queensland) and two premium homes from OC Health (230 beds in Victoria). Rostolis said the net cash investment in Rockpool was AUD 138 million at completion, reducing to AUD 102 million by 31 December 2025 after RAD inflows collected post-acquisition; he cited a net price paid per bed of AUD 170,000. The OC Health acquisition was described as a net cash investment of AUD 45 million, or AUD 195,000 per bed.
Management said its greenfield development pipeline now includes nine sites with capacity for almost 1,200 new beds. Two projects are under construction:
- Toowong (Queensland): 123 beds; management said construction is on track for completion by the end of the calendar year.
- Carlingford (New South Wales): 101 beds; scheduled to open in mid-calendar year 2027.
Mellors said Regis is targeting 10,000 quality beds by FY2028, up from approximately 8,400 beds currently, through a combination of greenfield builds and further acquisitions.
On guidance, management maintained its range and said seasonality and public holidays typically make the second half more expensive, while Regis will also face six months of AN-ACC margin pressure (compared with three months in the first half). Rostolis said he saw FY2026 guidance of “AUD 130–AUD 135,” with a view toward the top end of that range.
In Q&A, management also discussed supported resident mix and funding signals, with Mellors warning that current settings could push the sector away from supported residents. She noted that minimum supported resident ratios ceased with the commencement of the new Aged Care Act on 1 November 2025, though some accommodation supplements still depend on supported resident proportions.
About Regis Healthcare (ASX:REG)
Regis Healthcare Limited engages in the provision of residential aged care services in Australia. It provides aged care services, including ageing-in-place, respite care, specialist dementia care, and palliative care services through operation of aged care homes located in Victoria, Queensland, New South Wales, South Australia, Tasmania, Northern Territory and Western Australia. The company also offers home care services, such as personal care, nursing, help around your home, shopping, transport, companionship, overnight sleepovers, cleaning, and cooking and meal preparation.
