Extendicare Inc. Earnings Call Highlights Robust Growth

Extendicare Inc. ((TSE:EXE)) has held its Q1 earnings call. Read on for the main highlights of the call.

Extendicare Inc. recently held its earnings call, revealing a robust performance across all business segments. The company showcased significant growth in revenue and earnings, bolstered by strategic acquisitions. Despite these positive developments, there are some uncertainties related to regulatory approvals and funding timelines.

Strong Revenue and Earnings Growth

Extendicare reported an impressive increase in Adjusted EBITDA, which rose to $35.6 million, marking an 18.2% growth over the previous year. When excluding out-of-period items, this figure surged by 42.7% to $29 million. The company experienced notable NOI and margin growth across all business segments, underscoring its strong financial performance.

Growth in Home Healthcare

The home healthcare segment demonstrated significant progress, with Q1 average daily volumes up by 8.9% compared to the same period last year. Excluding out-of-period items, the NOI margin improved by 200 basis points, driven by rate increases and operational efficiencies.

Managed Services Expansion

Extendicare’s managed services segment experienced year-over-year growth in both revenue and NOI. This growth was largely attributed to the opening of three homes in the Axium JV and a 7.2% increase in beds serviced by SGP, reflecting the company’s successful expansion efforts.

Increase in Dividend

In a move to reward shareholders, Extendicare’s Board declared a 5% increase in the monthly dividend on common shares, raising it to $0.042 per share. This decision highlights the company’s confidence in its financial stability and future prospects.

Acquisition of Closing the Gap Healthcare

Extendicare announced the acquisition of Closing the Gap Healthcare for approximately $75.5 million. This strategic acquisition is expected to add around $84.2 million in revenue to the home healthcare segment, further strengthening the company’s market position.

Long-term Care Redevelopment Progress

The company made strides in its long-term care redevelopment efforts by opening a new 256-bed facility and closing the sale of three long-term care projects. These actions demonstrate Extendicare’s effective capital recycling strategy.

Delays in Long-term Care Funding

Despite the positive developments, there is uncertainty regarding the timing of new long-term care funding announcements in Ontario, influenced by the provincial budget schedule. This uncertainty poses potential challenges for future planning.

Regulatory Approval Delays for Revera Acquisition

Extendicare is facing delays in obtaining regulatory approvals for the acquisition of nine homes from Revera. These delays could potentially postpone the closing of the transaction, impacting the company’s expansion plans.

Forward-looking Guidance

Looking ahead, Extendicare anticipates continued financial growth across its business segments. The company expects the acquisition of Closing the Gap Healthcare to close in Q3 2025, adding significant revenue and annualized cost synergies of $1.1 million. The Board’s decision to increase the monthly dividend reflects confidence in sustained financial performance.

In summary, Extendicare’s earnings call highlighted a period of robust growth and strategic acquisitions, with positive sentiment prevailing despite some regulatory and funding uncertainties. The company’s strong financial performance and expansion efforts position it well for future success.