Shares in Japara Healthcare fell 6.3 per cent on Monday to $2.24, and are slightly higher today. For chief executive Andrew Sudholz that represented a $2.4 million fall in the value of his shares to $37.5 million. A representative of the company was not immediately available for comment.
Regis Healthcare shares fell 2.4 per cent to $4.10, although they have recovered 2.2 per cent today to $4.19..
Wilson HTM analyst George **riel blamed the slump in part on a ruling from the Department of Social Services regarding an annuity product sold by Challenger. The department said that from January 2015 the Care Annuity product would no longer be exempt from the means test assessments of elderly Australian retirees entering residential aged care.
The previously favourable treatment resulted in “residents paying up to $5000 less per annum in aged care fees,” Mr **riel said.
Challenger, which has total Care Annuity sales of about $400 million spread across the sector, is expected to appeal the decision.
Nonetheless Mr **riel said that he did not expect the decision would be material. “Given the large operators only have [about] 3 per cent market share, we conclude that no single operator would be over-exposed to this change,” he said in a note to clients. “We conclude that the peak potential revenue loss to any single operator is [about] $300,000.”
