Regis Healthcare (ASX:REG) is set to gain from improved government funding, restructuring of accommodation supplements, and development incentives under proposed aged care reforms, according to a Thursday note by Jarden.

The aged care industry is under sustained strain as growing demand from the ageing baby boomer cohort outpaces limited new supply, leading to record-high occupancy and prompting providers to shift toward higher-paying non-concessional residents to improve financial returns.

Jarden said the accommodation pricing review changes introduced by Health Minister Mark Butler ahead of the federal budget are broadly positive and better than expectations of only a modest rise in the accommodation supplement.

The reforms include a AU$5 per resident per day increase in the accommodation supplement and a new tiered system that increases funding for homes with 30% to 39% and over 60% concessional residents, replacing incentives that previously encouraged operators to stay just below 40%.

Another important reform is the elimination of the maximum permissible interest rate for pricing refundable accommodation deposits, which Jarden considers beneficial as it gives providers more flexibility in setting conversion rates and enhances the stability of cash flows.

The firm estimates that the combined impact of these changes could generate around a AU$7 million annual pre-tax earnings uplift for the company, equating to a mid-single-digit percentage increase to fiscal 2027 consensus profit measures.

The firm notes the review proposes long-term daily payments and AU$2 billion in annual interest-free loans for aged care developments, which could support the company's nine greenfield projects, adding around 1,200 beds despite funding constraints.

Jarden maintained an overweight rating on Regis Healthcare with a share price target of AU$8.50.