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Cambian impresses the market, but dangers persist

The care home operator has had a better than expected six months, but we aren't convinced by the recovery strategy or the health of the marketplace
September 15, 2016

The chairman of care home operator Cambian (CMBN), Christopher Kemball, might have called this half's performance "good compared to the second half of last year", but the care home operator would have been hard-pressed to have done much worse.

IC TIP: Sell at 90p

Higher occupancy helped to boost revenues, while adjusted cash profits at £22m beat Canaccord forecasts by 42 per cent, although this was still down on the comparable period last year. However, it is net debt which remains the biggest worry, standing at almost 11.5 times cash profits, accompanied by a very high interest rate. Amendments to the banking facilities relieved the group of the immediate risk of breaching covenants, but came at a price - finance costs rocketed to £7.3m. Plus, Cambian must now repay £120m by April or encounter a fee of £4m.

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