Ryman Healthcare (ASX:RYM) used an investor day in Auckland to outline a refreshed strategy centered on lifting recurring earnings, optimizing its NZD 12 billion property portfolio, and returning to value-accretive growth, alongside a new capital management framework that sets a path back to dividends from FY2028.
Strategy refresh prioritizes recurring earnings and portfolio optimization
Chief executive Naomi James said the strategy refresh is focused on growing recurring earnings, optimizing the existing portfolio, and “getting back to value-creative portfolio growth.” She highlighted targets of NZD 150 million in sustainable cash flow improvement by FY2029 and at least NZD 500 million of cash release by FY2029, driven by initiatives including occupancy improvement, pricing resets, and cost efficiencies.
Industry outlook: demand growth, constrained supply, and shifting consumer expectations
External presenter Cam Ansell of Ansell Strategic described what he called the biggest period of change ahead for aged care and retirement living in Australia and New Zealand. He emphasized that while the 80-plus population is expected to double by 2050, the more influential change may be shifting consumer expectations as baby boomers replace the “builder generation.” He said baby boomers have higher expectations, are less willing to accept standardized service models, and have significant wealth and buying power.
Ansell also pointed to a supply-demand imbalance, citing that Australia required about 10,000 new built residential aged care beds last year but delivered about 803. He said workforce constraints, particularly for nurses, could further push models toward higher-density settings that allow scarce clinical resources to be deployed more efficiently.
On funding, Ansell said Australia has already implemented substantial reforms, including means testing and changes affecting accommodation revenues. He argued integrated “continuum of care” models and assisted living are likely to become increasingly important as residential aged care becomes more reserved for higher-acuity residents.
Sales effectiveness and pricing: closing the resales gap and boosting serviced apartment occupancy
Chief customer officer Rick Davies said Ryman is focused on improving sales effectiveness, while noting some details are commercially sensitive. He cited occupancy levels of 94% for independent units and 87% for serviced apartments in mature villages, while calling out a key opportunity in developing villages where serviced apartments were at 57% occupancy.
Davies referenced a third-quarter sales update announced in mid-January, describing “a solid quarter” amid mixed housing market conditions and heightened competition in some regions. He said serviced apartment sales were strong, with Auckland delivering its best quarter in three years, while resales were steady overall but mixed regionally. He said resale volumes remain below desired levels, though resales are occurring at higher deferred management fee (DMF) values under updated contract terms.
Ryman’s sales initiatives include flexible pricing options tied to DMF rates, monitoring performance across each stage of the sales funnel, and efforts to reduce cancellations by supporting customers through late-stage steps such as downsizing and selling their home. Davies said days from contract signing to settlement are now under 100 days.
He also highlighted the opportunity tied to vacant inventory. Ryman reported more than 1,300 vacant units, with around 1,000 described as either brand new or already paid out to departing residents, representing an estimated NZD 800 million cash release opportunity.
Operational focus: care occupancy, pricing, and cost-out initiatives
Chief operating officer Marsha Cadman discussed a focus on lifting developing village care center occupancy to mature levels, increasing premiums and resident capital outcomes, and driving efficiency initiatives. She said occupancy across mature care beds is consistently above 95%, and that 36 villages maintained 96% or higher occupancy in the first six months of the financial year. She also said Ryman added 440 beds through five new care centers over the past 18 months, with developing care centers at lower occupancy as they fill.
Cadman said lifting developing care centers to mature occupancy levels could unlock an additional NZD 26 million of revenue, and noted wages are the main variable cost in care, creating operating leverage as occupancy rises. She also described opportunities to grow accommodation premiums in New Zealand and refundable accommodation deposits (RADs) in Australia, providing an example at the Bert Newton village where recent RADs sold ranged from AUD 795,000 to just over AUD 1 million.
Cadman introduced a “Resident Fund” launched across New Zealand villages before Christmas after an H1 pilot. The product allows residents transitioning into care to transfer equity from their retirement unit sale into a fund that can be used to pay for care-related costs, which she said can also reduce Ryman’s interest costs by retaining capital.
On costs, Cadman reiterated a target of NZD 50 million to NZD 60 million of cost savings in FY2026 through changes including restructuring support functions, centralizing procurement, leasing vehicles, and pursuing operating savings at village level.
Capital management framework, cash flow targets, and dividends from FY2028
Chief financial officer Matt Prior outlined a simplified capital management framework intended to improve measurability of capital allocation and its translation into shareholder returns. He said the company is targeting a long-term gearing range of 20% to 30%.
Prior said retirement living and care should be measured differently. For retirement living, Ryman is targeting a yield of greater than 5%, measured as RV segment CFEO (cash flow from operating activities and investing activities), pre-interest, over RV net tangible assets. He said the company is not currently meeting that target. For care, he said EBITDAF per bed is the appropriate benchmark, reiterating an aim of NZD 25,000 to NZD 30,000 per bed (from about NZD 15,000 currently), while Cadman later discussed a target of NZD 35,000 per bed by FY2029.
Prior provided detail on the NZD 150 million CFEO improvement target by FY2029 versus an FY2025 baseline, with buckets including occupancy improvement, care operating performance, village operating margins, procurement savings, overhead reductions, and front-book DMF uplift as new contract terms roll through. He said the company expects NZD 5 million to NZD 10 million per year in one-off costs to deliver the improvements and noted that some CFEO elements such as village refinancing were excluded from the target due to macro sensitivity.
Ryman also announced a new dividend policy of paying 20% to 50% of CFEO, with dividends expected to recommence from FY2028. Prior said the payout range is intended to remain conservative to preserve capacity to invest in growth, and the company emphasized it will not pay dividends funded by debt.
Chair Dean Hamilton said the board has undergone significant change over the last two years and emphasized a shift from tactical reset activity toward longer-term strategy and shareholder value creation. He said the board supports the focus on resident satisfaction, sustainable cash returns from existing capital, disciplined expansion, prudent capital management, and total shareholder returns, noting management incentives have been reoriented toward total shareholder return.
About Ryman Healthcare (ASX:RYM)
Ryman Healthcare (ASX:RYM) is a New Zealand-based developer and operator of retirement villages and aged-care facilities. The company designs, builds and manages integrated communities that offer a continuum of care, including independent living units, serviced apartments, rest-home and hospital-level care, and specialist memory-care services. Ryman’s villages combine residential accommodation with on-site hospitality, clinical and wellness services intended to support residents as their care needs change.
Ryman’s operating model blends property development and ongoing village management.
