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Estia's troubles claim CEO's scalp

AAP logoAAP 15/09/2016 Prashant Mehra

Aged care operator Estia Health's continuing troubles have taken a further toll, with chief executive Paul Gregersen stepping down with immediate effect.

The owner of 69 retirement homes did not give a reason for his resignation, but the decision comes just weeks after Estia, the largest listed aged care operator, missed its annual profit and earnings guidance.

Its shares have since slumped more than 50 per cent on concerns over its future earnings and increased debt related to its recent spate of acquisitions.

Mr Gregersen's exit follows the departure of founder Peter Arvanitis from the company's board, who sold off his entire stake in the company in August, while chief financial officer Joe Genova stepped down after the company's financial results failed to meet expectations.

Estia said non-executive director and veteran industry executive Norah Barlow will step in as acting CEO until a permanent replacement is found.

It also announced new chairs of the board's audit and remuneration committees, and said a search for possible new board members is underway.

"We are very fortunate to have someone of the quality and experience of Norah to step into the CEO role while we undertake a global search for a permanent CEO," chairman Pat Grier said.

Mrs Barlow has previously served as chief executive of listed retirement village operator Summerset Group Holdings.

Estia's troubles have been exacerbated by the federal government's new guidelines for charging certain service fees from residential aged care customers.

Those changes, announced in August, also buffeted stocks of rival operators Japara Healthcare and Regis Healthcare, as analysts cut their earnings forecasts and downgraded price targets for the major sector companies.

On Friday, Estia shares rose on news of the CEO's exit, up 3.9 per cent to $3.21 by 1330 AEST.

The stock hit a low of $2.78 in August, a fraction from its November 2015 peak of $7.81.

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