HealthCo Healthcare and Wellness (HCW) H2 2025 earnings summary

Executive summary

• FY 2025 results were significantly impacted by the receivership of Healthscope at its parent level, which represents 53% of earnings on a look-through basis, leading to suspension of distributions in H2 and an 18% year-over-year drop in FFO per unit.

• Portfolio remains diversified and resilient, with 99% occupancy, 98% rent collection, and 11.5 years WALE, focused on medium and high-acuity critical services.

• Prudent capital management maintained, with gearing at 31%, at the low end of the target range.

• Healthscope receivership and ongoing sale process are key focus areas, with conditional agreements reached with alternative operators.

• Strong conviction in the long-term fundamentals of healthcare real estate.

Financial highlights

• FY25 FFO per unit was $0.066, down 18% year-over-year, affected by the unlisted healthcare fund pausing distributions.

• Like-for-like net income growth was 5.2% year-over-year, driven by market rent reviews and leasing spreads.

• Portfolio valuations declined by 4% on a gross basis due to a 37 basis points cap rate expansion.

• FY 2025 distribution was $0.042 per unit, with no distributions declared in the second half.

• NTA at June was $1.44 per unit, reflecting cap rate expansion and a $0.14 decrease from Dec-24.

Outlook and guidance

• No FY 2026 guidance provided until the Healthscope situation is resolved; resolution of the tenancy is the top priority.

• Focus remains on continuity of services, securing well-capitalized tenants, and maintaining long-term value.

• Distributions will remain paused until resolution of Healthscope, with recommencement expected post-resolution.

• Sufficient liquidity to comply with debt covenants and fund new arrangements if needed.

• Long-term growth underpinned by demographic megatrends and a stretched public healthcare system.