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Voyage Care Memo 130121

Voyage Care. Transition Of Supported Individuals From Registered Care Homes To Supported Living & Fee vs Cost Inflation – Can Voyage Navigate Financial Impacts?
PUBLISHED: 13 January 2021
SUBMARKET: Top Reports, Top Reports, Voyage Care,


Why Read?

  • Understand financial impact of transition of supported individuals from registered care homes to supported living (i.e. of persistent revenue mix shift for Voyage Care away from its higher margin Registered Care Homes segment to its lower margin Community Based Care segment) – EBITDA, maintenance capex, working capital, potential property disposals / reduced debt / reduced interest and FCF impacts. Playbook for how Voyage can seek to successfully navigate this revenue mix shift and its historical success in doing so
  • Understand Voyage Care’s fee inflation vs cost inflation dynamics given high sensitivity to national living / minimum wage

What’s New?

  • Quantification of key financial impacts as business continues to shift towards supported living
  • Construction of weighted average hourly fee rate (combining both Registered and Community segments) to track fee inflation vs cost inflation
  • Financial projections (including of liquidity), DCF valuation and sensitivities 

Questions Answered

  • What does Voyage need to do (as best it can) to support EBITDA as the business mix shifts to its lower margin Community segment?
  • What is the return on equity investment from investing in learning disabilities registered care homes?
  • Can Voyage refinance in our bear case and would it be in the sponsors’ interest to inject equity to support any refinancing?
  • How are working capital dynamics different across Registered and Community segments?
  • Per supported individual, how does unleveraged FCF compare across Registered and Community segments?
  • How does Voyage’s operating and financial performance compare with UK competitors?
  • Could we see some of the larger (non-charity) players in the UK consolidate?
  • How much of Voyage’s growth has been inorganic?
  • How has Voyage’s property valuation been evolving and what risks are there for valuation in any sales of its registered care homes to social landlords / housing associations for supported living or in repurposing as normal or HMO residential property?
  • How does adult social care in the UK work? Funding, budgets, legislation and changes over time
  • How vulnerable is Voyage’s 2nd lien debt to impairment in our bear case and how resilient is recovery on its SSNs?

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