Shares in G8 Education have plummeted following concerns raised by RBC Capital Markets analyst Wei-Weng Chen regarding a significant drop in occupancy rates. The analyst noted that G8 Education’s fiscal year 2025 earnings before interest and taxes (EBIT) of $92.2 million were in line with expectations, which was supported by effective cost management, though revenue marginally fell short of anticipated figures. G8 Education is one of Australia’s largest providers of early childhood education and care, operating numerous centres across the country. The company aims to provide high-quality education and care services to children and families.
A key concern highlighted by Chen was a sharp decline in spot occupancy, which fell to 54.4 per cent, a decrease of 7.5 percentage points compared to the previous year. This figure is considerably lower than RBC’s forecast of 63.5 per cent for the first half of fiscal year 2026. Chen pointed out that even during the height of the COVID-19 pandemic, occupancy rates never dipped below 60 per cent or experienced a half-year drop exceeding 4.5 percentage points, underscoring the magnitude of the current challenges faced by the group.
Further adding to the unease was the group’s guidance for fiscal year 2026 capital expenditure, projected at $50 million. This figure is slightly above market expectations of $45 million, particularly amid continued pressure on enrolments. Chen characterised the outlook commentary as “of concern,” citing the sustained decline in occupancy as a major contributing factor to the negative sentiment.
At last check, G8 Education’s shares were down 17 per cent, reflecting the market’s response to the analyst’s report and the company’s updated guidance. The steep decline highlights investor worries about the company’s ability to maintain profitability in the face of declining occupancy rates and increased capital expenditure.
