Britain’s biggest care home group, Four Seasons Health Care, has said its turnaround is gathering pace as it reported improved occupancy and revenues.
Its parent company, Elli Investments, said 89.6% of the group’s care home beds were occupied, the highest level for more than three years. Revenues rose 9% to £174.3m in the three months to 30 September, and earnings before interest, tax, depreciation and amortisation climbed 40% to £19.7m.
The Four Seasons chairman, Robbie Barr, said the financial performance had stabilised at the turn of the year and had improved from quarter to quarter.
However, due to one-off costs related to the sale or closure of homes and restructuring costs, the group’s quarterly loss before tax widened to £27.6m from £25.6m. Last year it made a pretax loss of £264m after writing down the value of its care homes.
Barr said he was “disappointed” the chancellor’s recent autumn statement did not address the UK’s care home crisis. He quoted industry figures from LaingBuisson that show a 5% reduction in fees paid by local authorities for care over the past few years due to “historical underfunding”, resulting in a shortfall of £40 to £70 a resident a week.
Additional pressure came from the introduction of the “national living wage” in April and subsequent increases that are raising care home staff costs, as well as nurse shortages, which force care homes and hospitals to turn to expensive agency staff.
A number of care providers have closed in recent months as cuts to council budgets meant there were not enough funds to run services.
Care home providers, senior doctors and council leaders have demanded a funding U-turn from the government to prevent the system from collapsing amid care home closures. Four Seasons said it had closed 20 homes in the past two years and sold many more, including 18 in the first nine months of this year.
The company’s chief financial officer, Ben Taberner, dismissed warnings from credit rating agencies that the group’s financial position was unsustainable earlier this year as “scaremongering”. He said the group had £51m in the bank, more than £10m more than at the end of the previous quarter.
However, Four Seasons has said its debts of £565m, which force it to make annual interest payments of more than £50m, need restructuring. Barr said “good progress is being made” in discussions with creditors, mainly bondholders.
The group spent £10.9m on improving care and care homes in the quarter. It has also introduced iPads to collect feedback from residents and their families.
