Ryman Healthcare Limited

Ryman reported FY26 operating revenue growth of 10%, supported by fee growth and a 2.6% increase in residents. Operating EBITDAF doubled year on year, and the company delivered positive free cash flow of $188 million. Care revenue per bed rose 6% in New Zealand and 9% in Australia; in the second half, care revenue grew 7% while expenses rose 3%, producing 32% EBITDAF growth, and EBITDAF per bed lifted 31% to just over $20,000. Gross annualized cost savings reached $57 million since FY24, within the upgraded $50 million to $60 million range. Net debt fell $94 million to $1.57 billion, average cost of debt is now 5.9%, and gross interest costs are down $68 million since February 2025. FY26 CapEx was $222 million, below the $235 million guidance. For FY27, management expects retirement living resales to rise to match turnover by year-end, care performance to keep building, and build rate/capex to remain lower; they also said FY27 will include continued cash release from land divestments and lower development intensity.

Naomi James framed FY26 as an operational inflection point, saying the past two years of restructuring are now showing up in improved performance, cash generation, and balance sheet strength. She emphasized that the portfolio is higher quality, with only 2 active construction sites, a lower overhead structure, and a stronger mix of recurring earnings from care and reset retirement living contracts. Her tone was constructive but measured: she repeatedly pointed to disciplined capital allocation, cautious land buying, and a focus on re-earning the right to grow before expanding again.

Matthew Prior highlighted that revenue growth outpaced expense growth, driving a doubling of operating EBITDAF and clearer linkage between earnings and cash. He cited $57 million of gross annualized cost savings since FY24, gross non-village costs down 25%, and headcount down 39% since FY24, alongside NZ EBITDAF margin expansion of 250 basis points. On cash and capital, he pointed to $188 million of free cash flow, FY26 CFDA increasing by more than $200 million, net debt down to $1.57 billion, $675 million of debt headroom, gearing below 28%, and annualized gross interest costs down $68 million since February 2025. He also noted the balance sheet was strengthened by refinancing $2 billion of bank facilities, with no bank maturities until FY31.

Analysts focused on resale margins, stock levels, sales cadence, divestment timing, and whether Ryman would pursue new land purchases. Management said resale margin moderation is slowing, citing 20.3% in the first half versus 19.9% for the full year, and noted independent resale margin remains 27% even as service apartment mix rises. They said bought-back resale stock is highest in subdued markets like Auckland, while land sales will continue to progress but the company is not prioritizing new land acquisition right now. On sales guidance, management said the macro backdrop and quarterly update format led them to avoid detailed volume guidance, and they stressed that FY27 sales are lumpy and more dependent on build timing and seasonality.