How Did Ryman Healthcare Turn Around to Post First Positive Free Cash Flow in a Decade?

Financial Turnaround

Ryman Healthcare has marked a pivotal moment in its financial journey by reporting its first positive free cash flow in a decade, reaching NZD 56.2 million for the six months ended 30 September 2025. This milestone reflects a 193% surge in operating EBITDAF to NZD 40.1 million, driven by a combination of revenue growth and disciplined cost management. Total revenue rose 13%, supported by improved pricing strategies and higher utilisation rates across its retirement village and aged care operations.

Sales Momentum and Pricing Strategy

Sales volumes of retirement village units, measured by occupation right agreements (ORAs), showed a steady rebuild with 704 units sold in the first half of FY26. This rebound followed a period of adjustment due to pricing model changes and organisational restructuring. Encouraged by this momentum, Ryman upgraded its FY26 sales guidance to 1,300–1,400 ORA sales, up from the previous range of 1,100–1,300. The company has fully embedded a new pricing model, achieving an average deferred management fee (DMF) of 28.8% on 1H26 sales, a significant increase from 20.7% in 1H25, underpinning future revenue growth.

Cost Reduction and Operational Efficiency

Ryman has accelerated its cost-out initiatives, achieving an annualised saving of NZD 40 million in the first half and raising its FY26 target to NZD 50–60 million. This progress stems from restructuring support services, outsourcing development functions, and reallocating costs more efficiently. Village operating costs rose modestly due to capacity growth, but non-village expenses fell sharply by 27%, reflecting the company’s focus on financial discipline and operational reset.

Capital Management and Refinancing

The company successfully completed a full refinancing of its NZD 2 billion syndicated loan facilities in November 2025, extending the average tenor to nearly five years and improving pricing and covenant terms. This refinancing eliminates near-term maturities until FY31 and provides NZD 535 million in debt headroom, positioning Ryman with a stronger and more flexible capital structure. The weighted average cost of drawn debt fell to 5.7%, down approximately 50 basis points, contributing to annualised interest savings of NZD 67 million since the February 2025 equity raise.

Development and Aged Care Outlook

Development activity has been prudently scaled back, with capital expenditure halved to NZD 122.1 million in 1H26, reflecting fewer active construction sites and a focus on aligning future stages with market demand. The aged care segment continues to perform strongly, with high occupancy rates and revenue growth supported by government funding uplifts in Australia and anticipated reforms in New Zealand. Ryman is actively engaging with evolving regulatory frameworks, including the rollout of a new 'Resident Fund' product in New Zealand to facilitate capital transfer into care.

Strategic Priorities and Investor Engagement

Looking ahead, Ryman plans an investor day on 3 February 2026 to present a refreshed strategy and new capital management framework. The company aims to sustain its operational reset by building sales effectiveness, releasing cash from existing stock, and pursuing disciplined growth opportunities. Despite mixed market conditions, particularly in Auckland and parts of New Zealand, Ryman remains confident in its ability to leverage demographic trends and regulatory reforms to drive long-term value.