Board Members Beware

by John Harries, Managing

For this article, we created a composite of three NDIS providers who account for $1.5 billion in revenue, including $948 million in NDIS revenue. These large players are an essential barometer of the health of the NDIS provider space.

The three providers reported a combined loss of $15 million, with only one posting a minuscule 0.78% margin. These results are a far cry from the exorbitant profits we’ve seen in the media recently.

Worse still, one of these providers reported a -35% return on net assets (RoNA), which is a worrying indicator that there are not too many years like this left in the tank. Only one of these major providers reported NDIS growth greater than 1%, lending more evidence to a continuing theme that customers prefer smaller providers. Indeed, losing significant sums (which we assume the business invested in clients) and posting limited growth suggests something is pro-

foundly wrong with the customer value proposition.

We were troubled by provisions in the financials for substantial redundancies (100 staff) in one organisation, and a $5 million underpayment in another. This concerning data coincides with combined executive payments of $11.2 million, reflecting a 5.78% increase from prior periods.

These providers reported combined profits of $40 million this time last year. The prior figure reflected substantial job keeper payments, but this year includes significant COVID-19 relief payments. In fact, without COVID-19 relief payments, one provider would have made a $27 million loss for a RoNA of -65%, which is absolutely disastrous.

Many of the affected providers have significant Supported Independent Living (SIL) vacancies and inefficient overhead structures that limit their viability.