Oceania Healthcare CEO expects Macquarie to start selling down controlling stake

Thursday 26th July 2018

Oceania Healthcare chief executive Earl Gasparish expects Macquarie Group to start gradually selling its majority stake now an escrow period is ending.

Under the conditions outlined in its initial public offering last year, a 57 percent stake held by Macquarie Group managed funds and senior managers will be able to be sold from Friday when the escrow period ends.

While "I can't speak for Macquarie ... I would expect them to gradually begin a selldown strategy over time," Gasparich told BusinessDesk. "The ability for them to start doing that is live," he said, adding that it is a positive for investors as it increases trading liquidity.

The stock rose 3.7 percent to $1.13 today after the company reported net profit rose to $77 million in the year ended May 31 from $44.9 million in the prior period and underlying earnings, which includes pro-forma adjustments, climbed 53 percent to $52.1 million. Both figures beat forecasts in the IPO document.

Separately, retirement village operator and developer Ryman Healthcare unveiled a substantial pay rise for its nursing staff at its annual general meeting, stating the reset follows last year’s pay equity settlement which benefitted more than 2,000 Ryman caregivers.

According to Ryman's chair David Kerr, "our more than 500 experienced New Zealand nurses have had an average pay increase of more than 20 percent since last April and other village staff have also enjoyed significant increases." He said the reset is likely to cost an additional $5 million this financial year and is over and above the 2 percent increase in government funding for aged care.

The move comes just as nurses are about to vote on a further revised offer from the district health boards, following a strike earlier this month. The New Zealand Nurses Organisation and DHBs have been in Employment Relations Authority-facilitated bargaining since the strike on July 12, when NZNO members rejected the previous offer after the union recommended it.

Oceania's Gasparich, meanwhile, acknowledged "pressure on registered nurses' wage rates at the moment through the industrial action with the district health boards." He said the aged care sector is predominantly still funded through the DHBs, "so our ability to lift wages is somewhat linked to the funding we receive from the district health boards."

According to Gasparich, the aged care sector's annual contract renegotiation with the DHBs included an undertaking by the DHBs to come back to the table in the event that there is a "significantly higher settlement than normal with their own nurses."

He noted that for Oceania to pay a 20 percent increase in registered nurse wage rates "would require a significant increase in the daily care fee we are paid by DHBs."

The company received $101 million in the year ended May 31 from the Ministry of Health for aged care subsidies, up from $96.9 million a year earlier. Operating care operations revenue rose to $158.5 million from $152.1 million a year earlier.

(BusinessDesk)

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