While macroeconomic headlines can influence share prices in the short term, the companies held within the portfolio remain focused on delivering their strategies. Regis Healthcare (ASX: REG), an aged care operator we have owned for approximately five years, is a good example.
Over this period, we have seen supportive regulatory and industry trends in the aged care sector evolve and this is particularly positive for the larger and more efficient operators with high quality homes. We see the abolishment of ‘bed licences’ in 2024 as a key catalyst for the industry that allows well-funded operators to optimise their portfolio over time and drive growth through both acquisitions and new builds. We like the long-term thematics around the aging population as Australia’s population aged 85 and over is projected to double over the next 20 years. At the same time, the supply of aged care homes continues to lag significantly due to the material slowdown in new builds pre and post the royal commission and COVID-19. New regulations also benefit the scaled and efficient operators which can manage reporting and compliance requirements which were introduced over the last few years. As the only listed aged care operator, Regis Healthcare is well positioned to benefit from this long-term theme. Its refundable accommodation deposit (RAD) model supports cash flow and provides financial flexibility, helping Regis Healthcare reinvest in existing homes, develop new facilities, and selectively acquire smaller operators as regulatory requirements increase. We remain confident in the investment thesis and are attracted to Regis Healthcare’s strong growth profile, underpinned by favourable structural tailwinds over the coming years.