RYM-Ryman

[KW]

2 residents per employee perhaps? Still seems a lot

Ah yes, my bad.  Typo.  Will correct it.   

As a comparison, Stockland, one of Australia's largest property developers and retirement community owners, with a $12B market cap, employs 1600 people.

Ingenia, another big developer and owner of retirement communities with 11,000 residents, employs 1200 people.

Summerset has 2,470 employees for 8,400 residents. 

[Dolcile]

Are you comparing like with like, on those other contract out the care? Or employ directly?

Still extremely high. 

Disc. Wouldn't touch Rym with a barge pole. 

[Mos]

Ah yes, my bad.  Typo.  Will correct it.   

As a comparison, Stockland, one of Australia's largest property developers and retirement community owners, with a $12B market cap, employs 1600 people.

Ingenia, another big developer and owner of retirement communities with 11,000 residents, employs 1200 people.

Summerset has 2,470 employees for 8,400 residents. 

Yes your point is still well made.

[Basil]

Yes KW's comment is well worth noting.  The exact difference is this.
RYM 1.95 residents per employee.
SUM 3.40 residents per employee.
The reason why SUM's business model is vastly superior to RYM's is right there.
Who wants the pleasure of looking up how many residents per staff member at Oceania ?
Okay, no takers...I will.  drum roll please....3,000 staff, 4100 residents, that's only 1.37 residents per employee !!   No wonder their business model is working so "well" lol
source page 6 of their annual report here https://media.oceaniahealthcare.co.nz/wp-content/uploads/2024/05/30120131/FY2024-Annual-Report.pdf?_gl=1*be5cxe*_gcl_au*MTQ5Mjc1MTI4OC4xNzMyOTMxNjA1

[Untamed]

You need to know the breakdown of these employee figures, for them to be meaningful. For a start, how many of those employees are caregivers, RNs, cleaning staff, laundry staff, kitchen staff, ground staff, maintenance staff. Those roles are literally essential roles, that have a direct impact on meeting the needs of residents. Then you need to know how many locally sited management/admin roles there are eg: facility manager, clinical manager, reception etc.

Anything over and above these roles, can then legitimately be looked at and a judgement made as to whether that group of employees is "top heavy" and can realistically be reduced, and savings made. If it turns out that RYM has better caregiver to resident ratios than other providers, that's a good thing! Same applies to OCA. The better the care related ratios are, the higher the quality of care provided should be. Care doesn't just include personal cares and other "tasks" it includes time spent interacting with, and building relationships with residents. I guarantee that aspect of the role is the one residents value the most.

I suspect there is a good chance that savings can be made within the backroom roles - maybe at least some of those roles can be centralised, doing whatever they do, for all facilities, rather than duplicating those roles in every RV.

What I am trying to say is, there is insufficient information to draw any accurate conclusions about any of this, regardless of which RV you are looking at.

By the way, I know nothing about Ingenia, but if they provide a care component, I'd love to know how many care residents they have, and how many care staff/RNs dedicated to that care. Going by KW's figure of 1200 staff to 11,000 residents, either they have no care component, or a very small one.

[Basil]

I don't care how you slice and dice it.  For OCA, even with its care intense business model I think only 1.37 residents per employee is absurd and it's why as noted by Craigs analysts, OCA is only making a fraction of the average of what is normal for care providers.  Yes, it would be wonderful if staff have heaps of time to spend relationship building with lonely care residents and that's great for a charity...except that this is a listed company with responsibilities to shareholders, something that seems to have been forgotten by management up until quite recently.
RYM have a lot of care in their business model too and 1.95 residents per employee seems at least somewhat more believable they could make a go of things again if they can get the rest of their operation running smoothly.

I think the most important thing for investors to note here, is the stark contrast in employee numbers between these three such that both RYM and OCA are hemorrhaging profusely from village operational losses, (subsidized by property gains) whereas SUM, not nearly as much.  This is the key reason SUM goes from one record profit to another while RYM and OCA and languishing in the doldrums

Thanks to KW for starting off this illuminating discussion about staff to resident ratio.  It explains a LOT.

[Untamed]

I don't care how you slice and dice it.  For OCA, even with its care intense business model I think only 1.37 residents per employee is absurd and it's why as noted by Craigs analysts, OCA is only making a fraction of the average of what is normal for care providers.  Yes, it would be wonderful if staff have heaps of time to spend relationship building with lonely care residents and that's great for a charity...except that this is a listed company with responsibilities to shareholders, something that seems to have been forgotten by management up until quite recently.
RYM have a lot of care in their business model too and 1.95 residents per employee seems at least somewhat more believable they could make a go of things again if they can get the rest of their operation running smoothly.

The reality is, you are not in the slightest bit interested in anything I share with regard to my work related experience, or with my knowledge and skills with regard to care. My comments were not made in defence of OCA. This is actually the RYM thread. They were generalised and applicable to any provider.

You don't understand and you never will. So I give up. You win Basil.

[Dolcile]

I think the point is, one Operator is doing there job efficiently and the others aren't. 

[Basil]

The reality is, you are not in the slightest bit interested in anything I share with regard to my work related experience, or with my knowledge and skills with regard to care. My comments were not made in defence of OCA. This is actually the RYM thread. They were generalised and applicable to any provider.

You don't understand and you never will. So I give up. You win Basil.

I understand a lot more than you think and yes its about market outperformance, winning, if you like, and beating the index otherwise we might as well just save a truckload of time, buy a bunch of ETF's and be done with it..  OCA were making ~ $19,500 EBITDA per care bed before they were listed and now more than 7.5 years into their so-called transition to making better returns on care, are making much less than half that at $8,500 EBITDA.  Radius healthcare the other day with their profit announcement are making ~ $13,500 EBITDA per care bed.  Craigs are dead right to call OCA out on being grossly inefficient with their care model.  The other thing I understand that I haven't talked about before is this.  Its the CFO's job to run the business from an operational perspective like a well oiled Swiss watch and ensure the business is running in an optimal manner for all stakeholders.  The one consistent thing with all OCA's management changes over the years is Katheryn Wargh the CFO has always been there and I'm calling it.  I think she's a very poor operator.  Winner tells me she was there long before the IPO so she should know how to run an efficient operation, (private equity returns as noted above were vastly better).  Maybe if she didn't waste so much time on her pet projects like endless ESG grandstanding, returns to shareholders would have been much better over the years.  One thing to look for with turning around OCA is for the current CFO to be fired and for the new CEO to being in someone with proven expertise in the industry.

Sheeting this back to RYM and highlighting the difference excellent management makes, RYM used to have the services of the legendary Simon Challis as CEO and shareholders make an absolute fortune under his stewardship of the company.  It's never been the same since, not even remotely close.  Whether the current bunch of unproven newbie management and directors' lifts RYM's performance out of the quagmire is anyone's guess, flip a coin.

Another example of management making a huge difference is the current SUM CEO Scott Scoullar who was a truly brilliant CFO and then co-CEO understudy to Julian Cook.  I happen to know Scott was making many of the key pricing and development decisions long before Julian stood down.  Those two have driven a near 1,000% return for shareholders since SUM listed in 2011.  Compare that with OCA languishing under its IPO price 7.5 years after listing and currently and likely to for some time, suspending dividends.  It's been a disaster by any standards and an unmitigated disaster by comparison with SUM.

Great management makes a great difference.  Something to remember when next making investment decisions.

That's exactly the point Dolcile.

[BlackPeter]

...

Ingenia, another big developer and owner of retirement communities with 11,000 residents, employs 1200 people.

...

I assume you realize that Ingenia has a totally different business model? They own the section, but sell the unit (basically a tiny house which can be thrown away after the departure of the resident) - they don't need to worry about doing maintenance or similar, and if we look at services to the residents, its all done by contractors.

They are basically the Uber Eats of the retirement villages - hardly any employees, little responsibilities and living off clipping the ticket.

Roughly as comparable as Backpacker hostels and 5 star Hotel accommodation. Sure, both business models might have their justification, but comparing them based on staffing levels? Now, who of these two would have a higher staffing demand? Let me guess ...

[KW]

If you apply the Summerset staff ratio to Ryman, and assume Summerset contract out their building to third parties, then it appears that approx 3291 people are involved in the building side of the business.  For 9 building sites.  Thats 365 people per building site.  I'm pretty sure private builders dont have 365 people on a single building site all day, every day.

[Basil]

To be fair, SUM are known to have a materially lower care component to their business model than RYM. 

I think the most telling thing that investors need take note of it is that despite RYM's sterling reputation with care, they can't make acceptable returns on invested capital given the systemic underfunding and have recently taken the drastic step of reconfiguring village developments with a much lower level of care operations.  For them to do this, you know the underfunding of care has reached a crisis level.  SUM too, tweaking their business model.  Where does that leave the likes of OCA in terms of their target being 50% care beds? (presently higher) Up the creek in a grossly underfunded sector without a paddle is where.  You can see how horrendous the size of the problem is above.  You're never in your wildest dreams going to make acceptable returns on capital employed with only 1.37 residents per employee.  In fact, I would day they're so overstaffed, its truly absurd.  This staff level comparison that KW kindly started, and Craigs highlighted this issue in their recent note as a major issue for OCA, has proved to me that OCA's problems run far, far deeper than just chronically slow-moving stock.    I think shareholders in OCA can "look forward to" the lowest returns in the entire sector forever and a day.

[BlackPeter]

From:

https://businessdesk.co.nz/article/property/analysts-unfazed-by-ryman-walking-back-guidance
(likely paywalled)

In a nutshell:

After Fridays announcement restated Forsyth Barr's Aaron Ibbotson his one-year target price of $7.00 while Jarden's Arie Dekker (a long term sceptic about the future of the sector) raised his target price by one cent to $5.04.

Obviously - analysts are not better in predicting future stock prices than anybody else, but - they are not worse either. At least they give a good idea about the general market vibes. It appears not everybody sees doom and gloom in the recent announcement, but hey - what would they know?

[KW]

To be fair, SUM are known to have a materially lower care component to their business model than RYM. 

How much lower though?  Does anyone have the number of aged care beds for both Ryman and Summerset?

[Basil]

A lot.