OCA - Oceania Healthcare

[Untamed]

OK. Here goes. I am not going to respond to every comment you made in your post, just the aged care related bits that I have some knowledge of.

I understand now that you are more interested in the company (OCA) and the retirement home industry and the wellbeing of the retired/elderly, than the shares you hold in OCA (I'm pretty sure that's what you meant).

Incorrect. I would say I am equally as interested in, the business itself and the shares I hold in that business. Like every other investor, I too need a return from my investment. But it is a long term investment, so as long as the business itself remains solid, which I believe it is, I am reasonably happy to wait for the share price to eventually improve. If something changes with the business, that no longer fits with my initial reasons for investing, of course I would re-visit it.

"For one thing, if they are still living in their home, they don't have that 'bucket of money' you are talking about, at their disposal. It is tied up in the equity in their house."-- Untamed

That's not correct. There are various ways to utilize home equity upon retirement. Reverse Mortgage being one of them. Any financial advisor not going through these options with the retiree would be negligent. (And I sincerely hope retirees are seeking independent financial advice before making big decisions.)

Yes, they could go down the reverse mortgage road, but as I said before, one of the primary reasons people choose an RV, is to entirely remove the stress of continuing home and garden maintenance. A reverse mortgage might free up some cash to meet those costs, but it won't provide the same peace of mind that not owning a house will.

All RVs require prospective customers to seek independent advice before they sign a contract. That requirement is set in concrete and cannot be bypassed. It is there to protect both parties, and RVs are demonstrating responsibility by enforcing it.

Why not just long-term lease? Make it a purely rental situation where the unit can be rented until the occupant passes away. Why force the sale of the retiree's [most likely] largest asset, and the proceeds of that to be used for another home that they then live in (and they also pay a weekly fee that could be considered rent anyway). In other words, tying up capital when all the retiree really wants is to live in a unit within a village, and subsequently enjoy its security and social aspects (see: I agree with you on these two aspects). To me, this is not the retirement home industry, it is instead a part of the real estate industry (with special character). To me, the primary focus of companies like OCA is selling (and re-selling) high-priced real estate.

While your suggestion for lease/rental options might have some merit, how exactly would this work in an RV scenario? As we have discussed often, RVs use the funds from selling villas, apartments and care suites, to develop new villas, apartments and care suites. If the model changed to lease/rent, that upfront money would not be available to use for further development.

By the way, nobody is being forced to sell their house and move into an RV. It is merely one option available to those who wish to take it up. If they prefer a standard rest home level facility run by an NGO, they can choose that option instead. If they wish to downsize from a house to a unit, and pay someone to do the gardens, they can choose to do that. If they wish to move in with family in their old age, they can do that. All of these things are choices. As I have said many times before, do not underestimate our elderly folk! They might be getting old, but they are not dead, and they are not stupid. The vast majority of them still have their faculties and are perfectly capable of making their own decisions. Yes, they might need some assistance from family or friends, to explore their options and do their homework. But at the end of the day it is their decision, their money, and we need to stop implying that they are not capable of making it!

The medical side that you describe, I think falls into "private hospital" territory, but is strange because the government seems to be setting prices for aged care as well as handing out subsidies. This situation is worrying. Maybe I don't have full information. But how does OCA do out of this? Price controls never end well. This care bit really interests me; I'm annoyed I can't figure it out; any information appreciated, especially on the viability of this what appears to be forced partnership with government, and especially in regards to 1) good service to the customer, and 2) profit to OCA.

What a lot of people don't fully understand is that "hospital level care" does not mean someone needs to be in a hospital. It does not even mean that they are seriously unwell. More often than not, someone is assessed as needing hospital level care for one or more of the following reasons:

• They have health issues that would be better served in a facility that has 24/7 Registered Nurse cover. This could be for things like diabetes or circulatory issues that mean they have wounds that are difficult to heal, it could be someone who has regular seizures, someone with COPD, lung disease or heart disease - that needs to be on supplemental oxygen. It could be someone with cancer, a neuropathy, or a degenerative condition that causes extreme pain/discomfort. There are many health issues that must be managed by an RN. Remember, at rest home only level we do not have 24/7 RN cover. After 3.30pm our 32 bed rest home is managed by two staff - both of whom are caregivers, not nurses. We do manage a lot of health/medical issues including administering charted, PRN and controlled medications, but there are some things that are out of our scope of practice.
  
• Mobility issues. When someone has major mobility issues (for whatever reason) they are often a two person (sometimes even three) transfer, using hoists in and out of bed/chairs/shower chairs/toilet etc. Rest home level facilities simply don't have the equipment and manpower, to manage cases like this long term.
• When someone is unwell or frail, and now needs assistance with all aspects of daily living (ADL), such as using the toilet, showering, moving, and eating/drinking, they need to be somewhere with higher staffing levels. At rest home level, we can manage this if it is short term - say after someone returns from hospital - but once again, we just don't have the manpower to sit with someone and assist them to eat at every meal.

So, your belief that this level of care should be provided by private hospitals, is misguided.

With regards to government subsidies - I don't have all the details of that - someone else might. But the government subsidies apply only to those who have been assessed as needing a certain level of care, and they must be under the cash assets threshold to qualify. If they qualify, the government pays the standard subsidy to the provider. Hospital level subsidy is higher than rest home level, and I believe dementia level subsidy is higher again. If a provider is receiving the subsidy for a resident, yes, the government dictates the maximum they can charge for that bed. I could be wrong, but my understand is that this only applies to residents receiving the subsidy. Not to private paying residents. Breezy might be able to clarify that for us. I can't lay my hands on it right now, but OCA talked about this with regard to The Hellier I think. No government subsidies for anyone there, for obvious reasons, and no provision of standard care beds. So no government subsidies and no government limits on what they can charge for care.

You, and others, might be quite correct about OCA being a good company with a good product. But this may not translate into a good stock investment. This is a very important investment concept. When it comes to the stock market, I don't invest in companies as such, I first and foremost invest in stocks. An amazing company, even a reasonably profitable one, might have a terrible share price journey. These bad journeys can last several years, even decades.

Yep, we could all be proven wrong. Or we could all be right. Which is why we all need to make our own personal investing decisions, based on our own situations/circumstances. Having said that, I don't subscribe to your "I don't invest in companies as such, I first and foremost invest in stocks." If that works for you that is great, but it is the exact opposite of how I invest. I only invest in companies whose business I understand. If I don't understand what a business does to make its money, how can I fully understand what they are doing/thinking, what their goals are, and how they are progressing towards achieving those goals? Clearly, there are still more than a few people in these forums, who still don't fully understand aged care. If you look only at the share price to judge a company, you are missing a heck of a lot of other very relevant information. Just my humble opinion for what it's worth.

Just one last thing: longs on this thread, please stop being so defensive. It's not a good look. You don't need to attack people who have a differing view. Just reply back to negative-sentiment posts with reasoned argument. Be confident. I truly do not understand why people get angry when someone doesn't like the stock they like. I have the opposite approach: for a stock I'm in, and that includes any that are down big, I want all knowledge, I want all opinions, I especially want negative opinions, I do not want to restrict any of it because it's all of benefit (with the exception of defamatory assault of a named officer of the company, and no this exception does not include evidence-backed statements of opinion on, for example, CEO performance). What's actually detrimental is hiding away negative opinion, and living in an echo chamber - that's the quickest way to ruin. (Here's a prime example of a disastrous echo chamber: those delusional folk who say Bitcoin has zero value - patting each other on the back and missing out on millions of dollars of pure-profit derived from some of the best percentage gains ever seen in the history of investment.)

Nobody here has ever complained about people sharing information - negative or positive. What we object to from time to time, are posts that bring up the exact same stuff, day after day after day, without adding anything new to the conversation. This thread absolutely gets more than its fair share of that, and yes, I personally get tired of it as it detracts from any meaningful discussion. I can take the negative comments about OCA, as long as they are based on fact, and not continually rammed down my throat over and over again.

As for bitcoin - best we never go there 

[Azz]

OK. Here goes. ...

Great! I'll read in a bit - I have chocolate to eat.

[Azz]

This is unreal. WTAF? How are these probabilities calculated?

I used my noggin. How do you calculate probabilities?

Screw the underlying fundamentals eh? Pathetic. You should be happy for a stocks intrinsic value to compound away from the stock price, who doesn't like a good discount?

You misunderstand. The market may not price the stock according to your subjective view of the company. You can test this, in a backward manner, by looking at historical "great fundamentals" within companies and then see what happened to the stocks.

The world's greatest investors all average down, because the forward return becomes greater as a share price falls.

Averaging down, to zero - is an actual thing unfortunately.

[Teitei]

Sobering looking at the auctions in Auckland last week - property after property passed in and quite a number of those sold went for well under rating valuations.

[Azz]

I agree that companies listed on the NZX are mostly overvalued.

I never said that - so how can you agree with it?

having low liquidity is a good thing, not a bad thing for a long-term investor.

Low liquidity is a very bad thing. It's one of the worst things. My replies to your posts are becoming more "public service announcement" than "discussion".

Higher volatility is something to take advantage of.

Is OCA a high volatility stock?

Process vs outcome. You ask those crypto millionaires to repeat a fraction of their returns in the past and none would be able to do it. The statistics are very clear, those who take a Graham-Newman approach to investing are the only ones who can consistently beat the market over decades.

Ok, I'll ask myself... Answer: to take your question literally ("...repeat a fraction of their returns..."), then all in that illustrious category would be able to do it unless unable to do another investment ever again due to, say, dying immediately. I'm guessing you used "fraction of" in error. If you ever hit a jackpot return, you might understand that, thereafter, diversification and safer-investment waters become priorities, and also that there is more capital available so returns by amount can certainly better previous higher-percentage returns. Let's use every investor's desire: the ten-bagger. Ever had one? Some investors never have one. Others have many. Being specific to the thread's stock, do you think OCA is going to become a ten-bagger? I'll use a probability: in my opinion, there is a 99.999% chance that OCA stock will never ten-bag or more (I'm not saying OCA stock won't be successful in some manner).

[Azz]

Sobering looking at the auctions in Auckland last week - property after property passed in and quite a number of those sold went for well under rating valuations.

We're in a very bad recession. Last thing people will be doing is selling-up to relocate to a retirement village.

[Buzz]

We're in a very bad recession. Last thing people will be doing is selling-up to relocate to a retirement village.

This is just one of the many RV's, Summerset ... "Over 2023 we saw a record 1,103 sales of Occupation Rights, our highest year to date, and an excellent result in a very difficult macroeconomic environment."

There will be keen interest in the OCA sales results, published in May.

[Breezy]

We're in a very bad recession. Last thing people will be doing is selling-up to relocate to a retirement village.

Its not a choice for many, when its your time its sell no matter the market.

[Azz]

There will be keen interest in the OCA sales results, published in May.

That's a good point, actually. Behaviors for this particular recession might be unexpected.

[ValueNZ]

Ok, I'll ask myself... Answer: to take your question literally ("...repeat a fraction of their returns..."), then all in that illustrious category would be able to do it unless unable to do another investment ever again due to, say, dying immediately. I'm guessing you used "fraction of" in error. If you ever hit a jackpot return, you might understand that, thereafter, diversification and safer-investment waters become priorities, and also that there is more capital available so returns by amount can certainly better previous higher-percentage returns. Let's use every investor's desire: the ten-bagger. Ever had one? Some investors never have one. Others have many. Being specific to the thread's stock, do you think OCA is going to become a ten-bagger? I'll use a probability: in my opinion, there is a 99.999% chance that OCA stock will never ten-bag or more (I'm not saying OCA stock won't be successful in some manner).

A fraction of is an expression meaning much lower.

Even 1% interest checking account will eventually be a ten-bagger. Whether an investor is successful is dependent on both return and time taken. Oceania is almost certain to 10x in price given enough time. If I had to guess how long that'd take, I'd say 10 years.

[Azz]

A fraction of is an expression meaning much lower.

It's not very specific, though. And therefore very much open to speculation as to what the actual fraction is.

Even 1% interest checking account will eventually be a ten-bagger. 

Oh Lord, give me strength.

Whether an investor is successful is dependent on both return and time taken. Oceania is almost certain to 10x in price given enough time. If I had to guess how long that'd take, I'd say 10 years.

A prediction. I respect that. See how we go.

[Azz]

Ok here we go. Bit delayed because I nearly had a chocolate overdose.

Incorrect. I would say I am equally as interested in, the business itself and the shares I hold in that business. Like every other investor, I too need a return from my investment. But it is a long term investment, so as long as the business itself remains solid, which I believe it is, I am reasonably happy to wait for the share price to eventually improve. If something changes with the business, that no longer fits with my initial reasons for investing, of course I would re-visit it.

All good; and I understand the nuance.

All RVs require prospective customers to seek independent advice before they sign a contract. That requirement is set in concrete and cannot be bypassed. It is there to protect both parties, and RVs are demonstrating responsibility by enforcing it.

This is good, and yes it does protect both parties.

While your suggestion for lease/rental options might have some merit, how exactly would this work in an RV scenario? As we have discussed often, RVs use the funds from selling villas, apartments and care suites, to develop new villas, apartments and care suites. If the model changed to lease/rent, that upfront money would not be available to use for further development.

Good point. But it doesn't remove a rental format because of unviability, not yet anyway. More opinions on this would be great!

By the way, nobody is being forced to sell their house and move into an RV. It is merely one option available to those who wish to take it up. If they prefer a standard rest home level facility run by an NGO, they can choose that option instead. If they wish to downsize from a house to a unit, and pay someone to do the gardens, they can choose to do that. If they wish to move in with family in their old age, they can do that. All of these things are choices.

I'm not using the word "forced" as in there's a gun to their head, I mean that for a certain category (retiree with only one major asset - ie, their home), then for those people to join the RV they need to sell their home because they require the payment to buy another home within the RV.

This part of it really comes down to the "management fee" structure. I think it's a weakness in the business model. If RVs are relying on it, then if competition were to attack that fee in some manner (reduction, removal, ...) then current RVs living and breathing on these very high, what I would call commission fees, will run into problems.

As I have said many times before, do not underestimate our elderly folk! They might be getting old, but they are not dead, and they are not stupid. The vast majority of them still have their faculties and are perfectly capable of making their own decisions. Yes, they might need some assistance from family or friends, to explore their options and do their homework. But at the end of the day it is their decision, their money, and we need to stop implying that they are not capable of making it!

 I agree.

What a lot of people don't fully understand is that "hospital level care" does not mean someone needs to be in a hospital. It does not even mean that they are seriously unwell. More often than not, someone is assessed as needing hospital level care for one or more of the following reasons ...

Thanks for writing those up.

So, your belief that this level of care should be provided by private hospitals, is misguided.

I'm not saying that. I'm saying it's a private company selling health care akin to a hospital, I'm categorizing it. But it has the government all over it, which complicates it.

With regards to government subsidies - I don't have all the details of that - someone else might. But the government subsidies apply only to those who have been assessed as needing a certain level of care, and they must be under the cash assets threshold to qualify. If they qualify, the government pays the standard subsidy to the provider. Hospital level subsidy is higher than rest home level, and I believe dementia level subsidy is higher again. If a provider is receiving the subsidy for a resident, yes, the government dictates the maximum they can charge for that bed. I could be wrong, but my understand is that this only applies to residents receiving the subsidy. Not to private paying residents. Breezy might be able to clarify that for us. I can't lay my hands on it right now, but OCA talked about this with regard to The Hellier I think. No government subsidies for anyone there, for obvious reasons, and no provision of standard care beds. So no government subsidies and no government limits on what they can charge for care.

Thanks Untamed. Breezy, any input?

Yep, we could all be proven wrong. Or we could all be right. Which is why we all need to make our own personal investing decisions, based on our own situations/circumstances. Having said that, I don't subscribe to your "I don't invest in companies as such, I first and foremost invest in stocks." If that works for you that is great, but it is the exact opposite of how I invest. I only invest in companies whose business I understand. If I don't understand what a business does to make its money, how can I fully understand what they are doing/thinking, what their goals are, and how they are progressing towards achieving those goals? Clearly, there are still more than a few people in these forums, who still don't fully understand aged care.

All good.

If you look only at the share price to judge a company, you are missing a heck of a lot of other very relevant information.

I use the share price to judge the share price.

Just my humble opinion for what it's worth.

Your opinion is appreciated.

Nobody here has ever complained about people sharing information - negative or positive. What we object to from time to time, are posts that bring up the exact same stuff, day after day after day, without adding anything new to the conversation. This thread absolutely gets more than its fair share of that, and yes, I personally get tired of it as it detracts from any meaningful discussion. I can take the negative comments about OCA, as long as they are based on fact, and not continually rammed down my throat over and over again.

I get what you're saying. But I reckon with repeated negative comments just reply as if you had heard the comment for the very first time.

[Untamed]

Ok, but this doesn't only apply to people moving into an RV. If someone wants to move into a standard Not for Profit rest home (like the one I work in), they would, in most cases, also have to sell their house. To qualify for the government subsidy, one must be under the cash assets threshold.

Here are the figures:

If you're 65 or older, your and your partner's (if you have one) total assets must be $273,628 or less. If you have a partner who's not in long-term residential care, you can choose whether the total value of your combined assets is either:
$149,845 or less, if you don't want to include the value of your house and car (your house isn't counted as an asset if it's the main place where your partner or dependent child lives), or
$273,628 or less, if you do want to include the value of your house and car.

So, a single person would generally sell their house, then pay full price until their cash assets dropped below the $273,628 threshold. Once they reach that point, they can then apply for the government subsidy, which would then meet the cost of their care. Note, that anyone receiving the subsidy, loses the bulk of their government superannuation - they get to keep maybe $40/week for incidentals (don't quote me on that figure as it might be more now).

If that person doesn't want to sell their house - maybe wants to rent it out or gift to family or whatever - they would not qualify for the government subsidy and would therefore have to pay for their care themself.

This applies to any residential aged care service, whether the provider is OCA, SUM, Presbyterian Support or a private rest home run by Mrs Brown. The government subsidy paid, is the same for each level of care, irrespective of who is providing the care. Any provider can choose to provide "add on" features such as rooms with a view, private ensuite etc - which the person or their family pays for. Government subsidies do not cover "extras."

So, when you refer to the RV model "forcing" people to sell their home, it is not specific to RVs. It simply means, that any person who chooses an alternative lifestyle arrangement, other than continuing to live in their own home, pretty much has no option but to sell their home to achieve that. It doesn't matter whether they are selling it to buy an ORA or to pay privately for a care bed (non ORA) - most people will not be in the position to keep their house and move into any kind of aged care/lifestyle facility.  Yes, there may be a few very wealthy people who could keep their house (rent it out maybe) and have sufficient other cash assets/investments, to pay privately for "care" (as opposed to a villa or apartment) until they die, but the cost of that care would chew through that money, very quickly.

I feel that your thinking is a little skewed in this respect.

I'm not using the word "forced" as in there's a gun to their head, I mean that for a certain category (retiree with only one major asset - ie, their home), then for those people to join the RV they need to sell their home because they require the payment to buy another home within the RV.

[Breezy]

Oh yes just a bit of imput re the room rates Untamed mentioned. Standard room rates are capped for both subsidized and private payers as per individual area DHB contracts. Non standard rooms are not subject to the cap as you have alluded to and so both subsidized and private payers must pay the extra charges if they wish to stay in these rooms. The same applies to respite care where the standard room rate is capped for either category.
On the odd occasion some families are happy to pay the difference for their subsidized family member to stay in a non standard room.
The current age related personal allowance is $55.35 per week as of today.

[Azz]

Ok, but this doesn't only apply to people moving into an RV. If someone wants to move into a standard Not for Profit rest home (like the one I work in), they would, in most cases, also have to sell their house. To qualify for the government subsidy, one must be under the cash assets threshold.

Here are the figures:

If you're 65 or older, your and your partner's (if you have one) total assets must be $273,628 or less. If you have a partner who's not in long-term residential care, you can choose whether the total value of your combined assets is either:
$149,845 or less, if you don't want to include the value of your house and car (your house isn't counted as an asset if it's the main place where your partner or dependent child lives), or
$273,628 or less, if you do want to include the value of your house and car.

So, a single person would generally sell their house, then pay full price until their cash assets dropped below the $273,628 threshold. Once they reach that point, they can then apply for the government subsidy, which would then meet the cost of their care. Note, that anyone receiving the subsidy, loses the bulk of their government superannuation - they get to keep maybe $40/week for incidentals (don't quote me on that figure as it might be more now).

If that person doesn't want to sell their house - maybe wants to rent it out or gift to family or whatever - they would not qualify for the government subsidy and would therefore have to pay for their care themself.

This applies to any residential aged care service, whether the provider is OCA, SUM, Presbyterian Support or a private rest home run by Mrs Brown. The government subsidy paid, is the same for each level of care, irrespective of who is providing the care. Any provider can choose to provide "add on" features such as rooms with a view, private ensuite etc - which the person or their family pays for. Government subsidies do not cover "extras."

So, when you refer to the RV model "forcing" people to sell their home, it is not specific to RVs. It simply means, that any person who chooses an alternative lifestyle arrangement, other than continuing to live in their own home, pretty much has no option but to sell their home to achieve that. It doesn't matter whether they are selling it to buy an ORA or to pay privately for a care bed (non ORA) - most people will not be in the position to keep their house and move into any kind of aged care/lifestyle facility.  Yes, there may be a few very wealthy people who could keep their house (rent it out maybe) and have sufficient other cash assets/investments, to pay privately for "care" (as opposed to a villa or apartment) until they die, but the cost of that care would chew through that money, very quickly.

I feel that your thinking is a little skewed in this respect.

This is getting complicated.

The home purchased at an OCA RV, is that not seen the same for these calculations as the home they just sold?