What you need to know about Radius Residential Care

Radius Residential Care pitched a relatively straightforward proposition in its direct listing in late 2020.

New Zealand had weathered the first wave of the covid-19 pandemic when the aged care operator decided to join the NZX through a direct listing at 80 cents a share or a market capitalisation of $141.2 million. At the time, it was moving towards owning its care homes outright rather than primarily leasing them, with a $48.2 million capital raising at 52 cents a share the following year helping it buy four sites and start preparing for new developments.

Radius focuses on the high acuity and specialist care parts of the sector that delivered the biggest margins and offered the fastest growth.

Those higher margins show up in Radius’s earnings before interest, tax, depreciation, amortisation and rent per bed at $31,000, comfortably above listed retirement players that aren’t as reliant on aged care for their business models. Oceania Healthcare was the closest at $27,000 at its June balance date, while Summerset Group Holdings was $21,200 per bed and Ryman Healthcare $17,700.

“With our acuity mix, we skew towards hospital and dementia level care rather than resthome care,” chief executive Andrew Peskett said in an interview on Sept 30. “They’re higher funded rates.”

That’s a key metric Radius wants investors to track, along with its occupancy rate, which has been rising over the past six years and was at 96.7% as at Aug 12, with 1,923 occupied beds.

Chart made in Flourish using Radius data.

“The combination of those two will have a very linear relationship to our care earnings, which in turn will drive the earnings of Radius Care,” Peskett said.

Easier comparisons

Chief financial officer Jeremy Edmonds said the company prefers to strip out rent to make it easier to compare across its owned and leased properties: “It’s capital structure agnostic.” In the March 2026 year, cash outflows on leases were $9.7 million compared to $12.4 million five years earlier.

The other core metrics Radius encourages investors to focus on are adjusted funds from operations – a measure of the underlying cash in the business that can be returned to shareholders, used to repay debt or reinvested – and pre-tax profit, which tracks the AFFO figures more closely than net profit by removing the complicated accounting treatment of deferred tax.

Chart made in Flourish using Radius data.

Peskett said Radius tries to tell a very simple story.

“There are a few key drivers of our business, and if we present them clearly and talk about growth, that gives everyone what they need to know without overcomplicating it,” he said.

Forsyth Barr analysts James Lindsay and Georgio Toulis are tracking similar metrics, with a few extras to round out their research. Occupancy and occupied care beds are at the top of their list, with each percentage point worth about $2 million of revenue, followed by revenue per bed to gauge the mix of government funding, accommodation supplements and care fees.

They’re also following labour costs and care margin, to test how an uplift in funding feeds earnings, while staffing and quality are seen as leading indicators of occupancy, cost and regulatory risk.

Exceptional care

That’s high on Radius’s internal watchlist too, with Peskett highlighting the reduction in staff turnover to 18% and the firm’s preference for internal promotion.

“We like to call it exceptional people, exceptional care,” he said. “Those people are totally focused on providing really good care, looking after our residents, making sure the families feel kind of as though their loved ones are being well looked after, and we think largely they’re very well led from the care homes, not by us.

“We sit in the background trying to help and support, and make sure if there are any issues, we're there to help.”

Forsyth Barr’s Lindsay and Toulis also have underlying earnings before interest, tax, depreciation and amortisation in their main metrics to watch as a measure of cash conversion and the firm’s leverage – with net debt of $68.7 million in line with the firm’s target of 2.5 times underlying ebitda at the end of March – while Radius’s plans to build new care homes are seen as a medium-term driver of its growth.

Care suite and occupation rights agreement cashflows are less important to the analysts than care earnings but are relevant to the firm’s liquidity.

Radius differs from many of its listed peers in that it’s primarily a service company providing care for seniors, rather than the property focus of the retirement village operators and developers that are tied to the ups and downs of the wider housing market, which typically have care services as an adjunct to a village.

“That’s important because often investors think of aged care as retirement village and it’s really more health services,” Peskett said. “Aged care has a number of components, but our business is run as a service business.”

Care first, property second

Radius does have a small component of units to complement some care sites, but generated just $3.2 million of underlying ebitda on $3.6 million of revenue in the March 2026 financial year. The group’s underlying ebitda was $27.4 million and revenue was $202.3 million.

The company’s looking to effectively double its care footprint of 25 care homes, with plans to build 20 new facilities of between 80 and 100 care beds in the higher fee hospital and dementia care space over the next five-to-10 years.

Forsyth Barr’s Toulis said the company’s ambition to add beds is significant, with construction underway on a Christchurch hospital and an upcoming site in Hokitika key points of interest.

Like many small companies on the NZX, retail investors account for a bigger proportion of its trading, with Iress data showing Sharesies users have accounted for 8.2% of the $58 million of shares traded so far this year, while ASB Securities clients accounted for 10%. That compares with their respective market shares of 2.6% and 2.2% of the entire market trading value.

Radius shares are unchanged at 39 cents so far this year, just outperforming the 1.6% decline for the S&P/NZX all index, and following an 86% surge last year and a 48% gain in 2024, when it snapped three years of double-digit declines.

Shareholders will get their next opportunity to check in on those metrics when Radius reports its first-half result on Nov 11.

Reporting by Paul McBeth. Image from Radius Residential Care.

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