Devaluations, accounting changes send Ryman’s profits plummeting

Thursday, 29 May 2025

Ryman Healthcare reported an after tax loss of $436.8 millon over the year to the end of March.

Retirement village giant Ryman Healthcare’s after tax losses took a significant $260 million dive last year off the back of property devaluations and accounting restatements.

But if the substantial change programme it has embarked on works, it should lead to stronger results, a financial analyst says.

The company has reported an after tax loss of $436.8m over the year to the end of March, a decline from its $169.7m loss the previous year.

It had previously signalled its financial statements would be significantly impacted by accounting changes across revenue recognition, valuations and cost capitalisation.

Changes to the value of the company’s investment properties played a big part in the loss. They were devalued by $169.1m in the 2025 year, compared to a $39.1m devaluation the previous year.

Ryman’s revenue rose by 10% to $760.7 million in the year to the end of March.

Cash flow from existing operations was also down by $103.6m to -$118.6m, although its cash flow from development activity improved by $196.3m to $24.4m.

But the company had seen an improvement in free cash flow, and in its core operating performance, Ryman’s chief financial officer Rob Woodgate said in a presentation to investors.

Operating earnings before tax were up to $45.5m from $14.8m, reflecting improvements in both village and non-village performance.

The company’s revenue rose by 10% to $760.7m from $689.9m the previous year, and that was driven by increased weekly fees and deferred management fees, and cost control within villages.

Sales of occupancy rights agreements (ORA) for units in its villages were down 3% to 1523 from 1574 over the same period last year.

There had been an increase in sales momentum since a $1 billion capital raise earlier this year, although sales remained down on previous periods, it reported.

Ryman chief executive Naomi James said it had been a year of “significant reset”, as $23m was cut from annualised costs, and a two-year financial reporting review to improve transparency was completed.

It has been a year of “significant reset” for Ryman, chief executive Naomi James says.

“While there is still work to be done, we start the year with a strong balance sheet, a reset in revenue and cost performance well underway, and a portfolio positioned to deliver cash and returns as the housing and economic cycle improves.”

One-off costs from the reporting review, and the completion of four main buildings impacted on the 2025 results, while the benefits of the cost reduction and lower interest costs following the capital raise were not captured, she said.

“We do expect a more positive outcome going forward, and sales momentum will contribute to that.

“We are still seeing soft market conditions, but sales improved in the last two quarters, and our focus on improving sales performance should contribute to stronger sales in the second half of the year.”

Ryman’s increase in deferred management fees meant the value of its ORA sales was about 40% higher now, and that would come through in future financial results, she said.

“We are also getting off the development treadmill, and will be outsourcing development and construction. It gives us the flexibility to grow and invest when it makes sense, rather than having to for volume.”

Ryman still had a number of development projects underway, but James said those projects would be reduced over time to a much more manageable level of building.

Despite the shift in focus away from development, Ryman had its biggest build year ever in 2025, with 950 units and beds delivered, she said.

There is an increasing gap between aged care capacity and demand, James says.

“That was our peak, and we are now reducing our spend to match our investment in new capacity with demand. We have significant change levers in the business to release investment in that space.

“Demand for aged care is high, and there is an increasing gap between aged care capacity and demand as the baby boomers move into the 80 plus age bracket and acuity of care needs increases.”

But aged care funding issues needed to be urgently addressed by the Government, she said.

That was because aged care capacity was not being built to meet the growing demand coming, and if nothing was done it would impact on a hospital system already under stress.

“As markets recover, we are confident the changes we are making to our business will enhance our financial performance and strengthen our position as industry leaders in retirement living and aged care,” she added.

Nikko Asset Management investment analyst Tim O’Loan said Ryman’s net tangible asset writedown was higher than expected, while its sales guidance for 2026 was lower than expected.

But it was a tough operating environment, and Ryman was going through a process of making substantial changes to its operating and reporting, he said.

Ryman is in a tough operating environment, Nikko Asset Management’s Tim O’Loan says.

“It does ring true that the changes will lead to better outcomes, but I hoped to see more proof points of that, and that the programme would be a bit more advanced than it seems to be.

“The information around ORA fee pricing and sales efficiency was good, and provided they work it should set the company up for better results in future.”

O’Loan said Ryman’s move away from development had been flagged for some time, and he would like to see more detail on what it meant for future growth.

As it came out of the reset period, Ryman needed to move towards positive free cash flow and set in place the new growth strategy, he said.

“If these last two critical steps are achieved, and provided the economic and operating backdrop are supportive, we expect Ryman to be well placed to repay investor patience.”

Ryman owns and operates 49 retirement villages and aged care units across New Zealand and Australia. They are home to 15,156 residents and employ 7778 staff.