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StewartBrown has reiterated the need for the residential aged care sector to be more investable in its September 2025 Aged Care Performance Survey Analysis, covering the 3-month period from 1 July to 30 September 2025.
According to StewartBrown, the minimum financial returns needed to reach the required level of investability to meet future demand is an average earnings before interest, taxes, depreciation, and amortisation between $20,000 and $22,000 per bed – or a minimum of 4 per cent return on new builds of $550,000.
The September 2025 operating EBITDA result was $5,486 per bed and the operating margin for return on revenue was 5.3 per cent.
Meanwhile, the AN-ACC margin decreased from $16.10 per bed per day in the 2025 financial year to $11.84 per bed per day for the following quarter.
StewartBrown predicts it will decline further as providers ramp up direct care minutes and related staff costs to meet their target minutes – or face a reduced AN-ACC subsidy if they are a metropolitan home that falls short.
This will further disadvantage aged care homes in metropolitan areas – Modified Monash Model 1 – as unlike other categories, they have no basic care tariff loading allocation within AN-ACC.
The accommodation margin also worsened, going from a loss of $12.05 per bed per day in FY25 to $12.82 per bed per day for the September 2025 quarter.
StewartBrown senior partner Grant Corderoy told Australian Ageing Agenda he believes investability “all comes around to the profitability,” and that he hopes direct action is taken to increase the AN-ACC margin, or direct care margin.
“The AN-ACC margin needs to be sustainable, and higher and more achievable,” he said.
“But the big one is the accommodation,” he continued, adding that he hopes the accommodation pricing review – expected to be tabled in parliament by 1 July 2026 – correctly reflects that.
Mr Corderoy also called for the supplement for residents with low means to be increased and for non-financially supported residents to pay “an appropriate price” for their accommodation – which he called “a general view within the sector at all levels”.
“We think the accommodation pricing is still too low,” Mr Corderoy said.
Occupancy up but operating loss worsens
Occupancy increased 1.1 per cent since September 2024, to 94.9 per cent but despite this, the operating result was a loss of $7.14 per bed per day, which Mr Corderoy called a “disappointment” compared to a $3.08 loss per bed per day in FY25.
Mr Corderoy explained that with increased occupancy – which StewartBrown predicts to exceed 96 per cent for the next five to 10 years – and with the fixed costs being spread, they would normally expect the results to improve. Instead the AN-ACC margin is decreasing.
He said this is in line with the Independent Health and Aged Care Pricing Authority’s “charter of not building in a margin,” but further discussion on what margin needs to exist must happen with the Department of Health, Disability and Ageing and the government.
However, the everyday living margin slightly improved from a $7.13 loss per bed per day in FY25 to $6.16 per bed per day. As highlighted by Mr Corderoy, the higher hotelling supplement of $22.15 per bed per day – which came into effect on 20 September 2025 – will improve the everyday living margin further.
More than half of homes operating at a loss
Mr Corderoy said it was also interesting to see that the direct care margin for homes in metropolitan areas – Modified Monash Model 1 – had worsened, from 52 per cent of homes in September 2024 to 60 per cent in September 2025.
“IHACPA’s charter generally is obviously to support all geographic locations, and they’ve done that by putting an additional loading on MM2 down to MM7, particularly MM2 to MM5,” Mr Corderoy said.
“MM6 and 7 also get some additional loading on top of that, and that was deliberate, and understandable.
“I just feel though, that in the sense of balancing it, they’ve reduced it by giving no additional loading to MM1 and it’s put them out of kilter – and over 60 per cent of homes are actually in MM1.”
In all categories expect MM1, fewer homes operated at a loss in the September 2025 quarter compared to the same period in 2024. However, overall 59 per cent of homes nationally are still operating at a loss.
Home operating profit up
Home care results were more positive, with an operating profit of $4.70 per client per day in the September 2025 quarter, up from $3.77 per client per day in FY25. Revenue utilisation also increased from 88.2 per cent to 89.6 per cent – which Mr Corderoy attributed to providers putting their prices up in preparation for the introduction of the Support at Home program.
But the September 2025 operating margin was 5.3 per cent return on revenue – insufficient for sector investability, says Mr Corderoy.
The amount of unspent funds per care recipient is averaging $15,486. While it is a $315 increase from $15,171 in FY25, Mr Corderoy said it is stable and not growing exponentially like in the past.
The StewartBrown report analyses data from 1,205 aged care homes across Australia operating a total of 101,146 beds and 87,320 home care packages.
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