HealthCo Healthcare and Wellness (HCW) H1 2025 earnings summary

Executive summary

• Achieved 5% year-over-year growth in FFO per unit and DPU for 1H FY25, both at 4.2 cents, with a diversified $1.6 billion healthcare real estate portfolio focused on stable, growing distributions and long-term capital growth.

• Maintained 99% occupancy and 100% cash rent collection, with 79% of leases CPI-linked and a weighted average lease expiry of 11.6 years.

• Asset valuations remained stable as of December 2024, with a 0.8% gross increase from June 2024.

• Portfolio reduced from 25 to 20 properties due to asset recycling, with $46.5 million in property sales between July and November 2024.

• Healthscope assets represent a significant portion of earnings; ongoing market speculation and unit price volatility are acknowledged, with contingency plans and governance in place to protect value.

Financial highlights

• 1H FY25 FFO: $23.5m, up from $22.6m in 1H FY24, with DPU of 4.2 cents per unit; 100% of distribution covered by FFO.

• EBITDA: $34.7m in 1H FY25, up from $34.2m in 1H FY24.

• Net loss widened to $15.3 million for the half-year ended 31 December 2024, compared to $5.1 million loss in the prior year period.

• Asset recycling program resulted in $47 million of asset sales at around a 5% discount to book value, with an average yield just under 5.5%.

• Net tangible assets per unit at $1.58 as of Dec-24.

Outlook and guidance

• FY25 FFO per unit and DPU guidance reaffirmed at 8.4 cents, predicated on continued rent payments and portfolio performance.

• No significant post-31 December 2024 events expected to affect future operations or financial position.

• Management remains confident in the private hospital asset class and long-term value creation.