Ryman Healthcare lifts cash flow as balance-sheet reset paves the way back to dividends

About Ryman Healthcare

Ryman Healthcare Limited (ASX: RYM) was founded in Christchurch in 1984 and is New Zealand’s largest retirement living and aged care provider, as well as the leading integrated operator in Victoria. The company owns and operates 47 integrated retirement villages across New Zealand and Australia, including two under construction, providing homes to more than 15,500 residents and employing around 7,800 team members. Its villages offer a fully integrated continuum of care, bringing independent living, assisted living and aged care together in a single community.

A refreshed strategy

Ryman set out a refreshed strategy underpinned by its purpose of enhancing freedom, connection and wellbeing for people as they grow older, built on four strategic pillars. The first is to be the provider of choice in care-centric living for the growing 80-plus population, where the strongest demand sits in assisted living and aged care. The second is to grow recurring earnings through reset pricing, operational excellence and improved occupancy. The third is to optimise the existing portfolio to improve returns and reduce capital intensity, and the fourth is disciplined, value-creating portfolio growth guided by clear return thresholds.

Together, the pillars reflect a balance between strengthening current performance and positioning the business for sustainable long-term value, supporting recurring earnings, sustainable dividends and active management of Ryman’s sizeable property portfolio.

Financial results

Total revenue grew to $855.6 million for the year, up from $760.7 million. Operating EBITDAF — earnings before interest, tax, depreciation, amortisation and fair value movements, a non-GAAP measure increased 94% to $88.3 million, from $45.5 million the prior year. Free cash flow turned positive at $188.3 million, an improvement of $282.5 million on the prior year’s outflow.

The reported net loss after tax narrowed to $171.3 million, from a $513.7 million loss in FY25, with the prior-year result heavily affected by fair value movements. Capital expenditure fell 59% to $221.8 million as the company took a more disciplined approach to development, while total equity stood at around $4.08 billion at year end.

Operational performance

Aged care occupancy in mature villages averaged 96% for the year, broadly stable. Within the care business, Ryman lifted occupancy, increased revenue per bed and managed costs to grow margin, with aged care operating EBITDAF per bed rising 31% half-on-half to $17.7 thousand, comprising $15.3 thousand in the first half and $20.1 thousand in the second.

Sales of retirement living occupation right agreements totalled 1,410 on an occupation basis, down 7%, made up of 348 new sales and 1,062 resales. The average contracted deferred management fee for new residents rose eight percentage points to 30%. Ryman also rolled out its Resident Fund across all New Zealand villages following a successful pilot, allowing retirement living residents to use their capital to transfer seamlessly to care, supporting flexibility and the long-term sustainability of care funding. The company reported $57 million in annualised cost savings over the past two years and closed two underperforming villages.

Balance-sheet reset and capital management

Ryman completed the reset of its balance sheet during the year, citing lower-cost debt, no bank maturities until FY31 and more than $600 million of available debt headroom. Interest-bearing loans and borrowings reduced to about $1.58 billion from $1.68 billion. In February the company introduced a new capital management framework establishing prudent capital parameters, and noted that foundations had been strengthened over two years through raising new equity to lower gearing, changes to revenue settings, reduced development exposure and longer-tenor debt. The board has set a clear pathway to resume sustainable dividends in FY28, under a payout policy of 20–50% of cash flow from existing operations per share.

FY29 targets and outlook

Ryman is targeting $150 million in sustainable cash-flow improvement by FY29, supported by pricing resets, cost efficiencies and rising occupancy, and expects to release at least $500 million in cash over the same period to strengthen the balance sheet, invest for growth and support the return to dividends. The cash release includes an increased surplus land sell-down target of around $250 million. In FY26 the company released $150 million of net cash from developments, settled $72 million in land divestment proceeds and delivered $47 million of sustainable improvement in cash flow from existing operations.

Looking ahead, Ryman noted mixed market conditions but continued growth in demand for its care and serviced apartments. It is monitoring proposed changes to New Zealand’s Retirement Villages Act with which it says its contract terms are already aligned and anticipated aged care funding reforms, with government funding changes expected in 2027.

Conclusion

The FY2026 result marks a year of materially stronger cash generation and a reset balance sheet for Ryman Healthcare, alongside a refreshed strategy focused on recurring earnings and disciplined capital allocation. While the company still reported a net loss and faces an evolving regulatory backdrop, the improved cash flow, FY29 targets and planned return to dividends in FY28 set out a clear pathway, the delivery of which will depend on execution across occupancy, costs and portfolio optimisation.