Turnaround for Four Seasons ‘gathering momentum’
EMBATTLED Four Seasons Healthcare says it is continuing to build on its turnaround plan and positive momentum achieved in the first half of 2016.
Third-quarter revenue for the Cheshire-based care homes group is up to £174.3m – £13.9m and 9% ahead of the same period last year.
The company, owned by Guy Hands’ private equity firm Terra Firma and which is paying £55m in interest alone, following the £825m acquisition deal in 2012, said occupancy in the Group’s care homes has increased to 89.6% in Q3, the highest level for more than three years.
EBITDA in the quarter of £19.7m was £6.1m higher than Q2 2016 and was 40% up on Q3 of 2015, which the company said demonstrates the momentum that has built up during the year across the business.
Year to date group EBITDA of £42.5m is 29% ahead of the same period in 2015.
Four Seasons says it has continued to invest in its estate, spending £10.9m in the quarter.
This included maintenance capital expenditure of £6.1m and equated to over £1,250 per bed on an annualised basis, in line with the first half of this year and more than the same period in 2015.
The group ended the quarter with over £51m of cash which is over £10m more than at the end of the previous quarter.
“This cash balance, together with further expected disposals, provides sufficient medium term financing to allow the group to continue to focus on driving further improvements to our operational and financial results whilst working towards a debt and capital structure which is appropriate to its long term requirements,” a statement said.
Chairman Robert Barr said: “Our turnaround is driven by improved quality, providing what our customers want and achieving high levels of customer satisfaction leading to significantly increased occupancy, together with further operational efficiencies.
“I am confident that we will continue to build on the momentum that we have seen so far this year.
“The underlying drivers for the care sector continue to include cost increases as a result of the introduction of the National Living Wage; pressures resulting from local authority funding constraints which increasingly appear to be having a significant impact on bed blocking in the NHS and on-going nurse shortages, which force hospitals and care homes alike to turn to expensive agency nurses to maintain required staffing levels.
“The first year of the National Living Wage required an increase of about 5% in council funding if providers were to be compensated for the extra cost.
“The impact has been mitigated in part by the government’s introduction of the social care precept, which allowed councils to raise up to an additional 2% on council taxes, to be spent on social care. We understand that more than 90% of councils raised a precept.”
