Why fund managers still like Regis Healthcare despite a funding shock

A below-inflation government funding increase hit Regis Healthcare hard in 2025, but fund managers point to its debt-free balance sheet and Australia's aged care bed shortage.

30 Jun 2026 · 6 min read

Aged care provider Regis Healthcare was rocked in September 2025 by a government funding decision that increased its per-day care rate by less than underlying cost inflation, triggering a 23% share price fall in a single month. Ellerston Capital's September 2025 Monthly Report described the setback as reversing the recent trend of cost and price alignment, even as it remained constructive on the medium-term outlook given the Department of Health forecasts Australia needs approximately 9,000 new aged care beds per year for two decades, against only around 1,500 currently being built annually.

A funding shock against a structurally undersupplied sector

Cooper Investors' September 2025 Quarterly Report explained the funding mechanics in detail: Regis received only a 2.6% increase under the AN-ACC care funding model, significantly below its expected cost increase of 4-5%, prompting the company to revise its FY26 EBITDA guidance to roughly 10% below consensus and to place all greenfield and capital investment projects under review. Wilson Asset Management's May 2026 Article argued the market has since missed a key balance sheet strength: with no debt, around $200 million of cash, and a further $400 million of expected cash inflow from refundable accommodation deposits, Regis effectively holds a $600 million war chest for acquisitions at a time when its more indebted competitors cannot match that firepower.

What the market misses on this stock is the company has no debt... effectively it's got a $600 million war chest set it can use for acquisitions, which as the largest player in the country, when all its competitors are indebted, gives it an advantage.

— Wilson Asset Management, Article, May 2026

The stock recovered much of its September 2025 losses over subsequent months, helped by expansionary M&A activity: Wilson Asset Management's October 2025 Monthly Report detailed the acquisition of two aged care facilities on Victoria's Surf Coast and Bellarine Peninsula for approximately $45 million, funded from existing cash and priced well below replacement value, adding 230 beds. The unexpected December 2025 resignation of well-regarded CEO Dr Linda Mellors after six years introduced fresh uncertainty, prompting Wilson Asset Management to reduce its position even as Firetrail Investments maintained its conviction in the broader executive team and structural tailwinds.

What managers are watching next

Paradice Investment Management's June 2026 Quarterly Report detailed materially increasing its position, taking Regis from a modest holding to one of its top five by quarter end, on continued conviction in favourable regulatory settings, structural demand growth, industry consolidation and strong refundable accommodation deposit inflows supporting an under-geared balance sheet. Endeavor Asset Management's April 2026 Monthly Report added a fresh catalyst, entering a new position following a positive Accommodation Review from the Minister for Health that could pave the way for a potential $3 billion aged care funding package at the upcoming Federal Budget.