Thoughts on G8 Education Ltd (GEM)
Could you comment on what has happened to GEM, please.
The Latest Q&A
Answer
Hi Peter,
GEM, one of Australia’s largest childcare providers, has fallen ~80% since early 2025. The shares have dropped sharply due to a combination of large impairments, weaker earnings, and very importantly, declining/weak centre occupancy, which is the key driver of profitability in childcare. Occupancy now sits below COVID lows, as unfortunate news coverage has weighed heavily on enrolments, while the company’s past acquisitions have been reassessed through significant write-downs.
In February the stock dived again after cancelling its final dividend and flagging a $350mn goodwill impairment of $350mn in its FY results – a big number for a company with a market cap of less than 420mn! The board also paused the on-market share buyback until clarity returns on occupancy, and it has too much debt.
- We have no interest in GEM – occupancy and debt are our two major concerns.
