Private equity in aged care continues to rise, with Bain Capital appearing to be interested in Melbourne residential aged care provider BlueCross Aged Care. The private equity giant recently closed its $838 million takeover of Estia Health, and seems to be popping up in multiple areas that would be ripe for existing players to consolidate their operations.

BlueCross owns and operates 31 aged care residences in Victoria that make up a property portfolio valued at $450 million (CBRE) and currently have 95%+ occupancy. BlueCross is forecast to make $400m revenue and $40 million EBITDA in FY24. High-quality aged care operators typically trade at  EBITDA multiples of 10x plus.

The aged care sector has a myriad of faults that need to be rectified, most of which were outlined in the royal commission. The 148 recommendations subsequently handed down showed that there is a lot to be done to improve the consumer experience, and where there is room for improvement, savvy PE investors smell growth and margin potential.

The only aged care-focused operator soon to be left on the ASX is Regis Healthcare (ASX: REG), which up until Bain’s arrival was the prime candidate for a merger with Estia. The combined group could have been making $195 million EBITDA and most likely would have been entitled to a higher EV/EBITDA multiple. 

Equities experts Regal Funds Management sees consolidation in the space as logical and necessary. Regal was buying both Estia and Regis in the lead up to the mooted merger, that Bain has likely stepped in to eventuate on their own terms.

With Bain willing to throw money at the sector in the hopes of being able to emerge from a decade of regulatory scrutiny and market uncertainty, the appropriate things to focus on are what exact measures these hopefully skilled operators are going to implement to comply with a stricter regulatory environment – and to boost margins while doing so.

Enter CarePage

The secret likely lies in technology. CarePage is an innovative technology company that has built a next-generation platform which is revolutionising the aged care sector. The company built a marketplace that makes it extremely easy and user-friendly for people to access aged care services. Their compassionate aged care coordination service provides support to people throughout every step of what is often a difficult period in people’s lives.

CarePage is able to generate a healthy flow of leads for aged care providers. Importantly, they are able to accurately qualify leads and make sure these people are ready to acquire aged care services. This boosts occupancy rates, while reducing occupant turnover and operator overhead costs.

CarePage also offers software as a service (SAAS) that is specifically designed around the reporting and compliance framework laid out by the Royal Commission. The software is extremely easy to integrate with an aged care services provider’s existing operations.

CarePage has an established track record of growing and operating profitably through organic growth and acquisition, and their SAAS model currently covers over 51,000 aged care beds, across 567 homes, which makes up 27% of the aged care market. 

CarePage recorded FY23 revenue of $6.34 million with an EBITDA of $707,000. The company is forecasting a significant growth in profitability on the back of a recent acquisition that gives them a dominant position on both the supply and demand side of their market.

Their FY24 revenue forecast currently stands at $9.95 million with an EBITDA of $2.54 million, increasing to $17.72 million revenue with an EBITDA of $9.51 million forecast for FY26.

Join Lauren Todorovic online for live investor briefing on Thursday, 19th October at 12pm (AEDT), where she will discuss CarePage’s dominant position in their market and provide a company update. Click here to book in or request a replay.

Reach Markets have been engaged by Aged Care Report Card Pty Ltd “CarePage” including to manage this offer and may receive fees for its services.