Four Seasons to dispose of more care homes
The Financial Times reports that Four Seasons Health Care, the lossmaking care home operator, has closed or sold 51 homes for the elderly over the past eighteen months as it cuts costs ahead of a financial restructuring now planned for next year. Britain’s biggest care home operator, which runs 370 homes, plans to dispose of a similar number in 2017.
In its latest quarterly financial statement, Four Seasons disclosed a pre-tax loss of £27.6m, up from £25.6m in e same quarter in 2015, blaming one off costs. This is despite a 9% rise in revenue and a 40% increase in EBITDA. Net debt grew from £510m in the previous quarter to £565m at the end of September 2016. Interest costs per annum are some £50m.
This news comes just as research published by Opus Business Services highlights the fragile finances of the residential care. This found that over a quarter (28%) of UK care home operators is at risk of insolvency or a financial rescue over the next three years.
Our Business Risk Adviser is quoted by the Financial Times:
“It is hard to see how the group (Four Seasons) could avoid ending up in the hands of its lenders. This is a business drowning in debt, nowhere near covering the interest burden and will need the mother of all restructurings very soon.”