Estia Health’s Share Price Jumps following Report Release

Shares of Australian aged care provider Estia Health Limited [ASX:EHE] are up 4.1% in today’s trading at time of writing, on the back of a report released in response to Prime Minister Scott Morrison’s call for a royal commission into Australia’s aged care sector.

Shares are trading at $2.50 apiece at time of writing. Estia Health currently has a market cap of $625.45 million.

What’s wrong with the aged care sector?

Prime Minister Morrison has called for a royal commission into our aged care sector ‘…in response to damning incidents of neglect, abuse and negligence in nursing homes across the country,’ as reported by The Guardian.

The Guardian reports that Mr Morrison said ‘…incidences of older people being hurt by failures of care could not be excused’ and he was ‘determined to know how widespread the problems were’.

It appears our aged care industry is rife with scandals, including the mistreatment of patients by staff. Morrison says he has learnt from his errors in the past, especially in reference to opposing the banking royal commission for so long. Many in the Coalition government initially opposed the idea of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, a position that they have come to regret since the commission has uncovered widespread gross misconduct across the sector.

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Estia Health’s response

Estia Health, being an established aged care provider in Australia for over 50 years, has responded to Mr Morrison’s call for a Royal Commission by releasing at statement yesterday. Estia Health said that it would welcome a Royal Commission and greater scrutiny into the sector.

Estia’s CEO, Norah Barlow, said:

‘Caring for the elderly is a privilege and an enormous responsibility. We will continue to work with government to build a viable sector that older Australians deserve.’

While there’s no way to be sure what this potential royal commission would uncover, it seems as though Estia Health has nothing to hide from government inquiries. This may be why their share price has jumped today.

Best wishes,

Julija Zivanovic,
Contributing Editor, Money Morning

PS: Income investors looking for dividend-paying stocks should check out income specialist Matt Hibbard’s free research report ‘Top 5 Dividend Stocks in Australia for 2018’ today. You can download your copy here.


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