Extendicare Inc. ((TSE:EXE)) has held its Q4 earnings call. Read on for the main highlights of the call.
Extendicare Inc.’s recent earnings call conveyed a predominantly positive sentiment, underscored by robust financial performance and strategic growth initiatives. The company reported significant growth in adjusted EBITDA and home healthcare services, alongside increased government funding and a dividend hike. Despite some challenges, such as potential tariff and inflation impacts on construction costs and the termination of management agreements due to Revera’s asset sales, the overall outlook remains optimistic.
Significant Increase in Adjusted EBITDA
Extendicare reported a remarkable 43.5% increase in adjusted EBITDA, excluding out-of-period items, reaching $33.4 million. This substantial growth reflects the company’s strong operational performance and effective management strategies.
Home Healthcare Growth
The company achieved a record 11 million hours of care in 2024, with a notable 10.1% increase in average daily volume during Q4 compared to the previous year. This growth highlights Extendicare’s expanding footprint in the home healthcare sector.
Ontario Government Funding Increase
Extendicare benefited from a 4% rate increase for the home care sector, retroactive to April 1, 2024. This funding boost supports compensation, recruitment, retention, and technology investments, enhancing service delivery.
Expansion Achievements
The opening of new facilities in Kingston and Stittsville, Ontario, added 448 beds, bolstering the company’s managed services segment. This expansion contributes to Extendicare’s strong results and future growth potential.
Dividend Increase
Reflecting its financial strength, Extendicare announced a 5% increase in its common share dividend to $0.042 per month. This move underscores the company’s commitment to delivering shareholder value.
Impact of Inflation and Tariffs on Construction Costs
While inflation and tariffs pose potential risks to construction costs, a current leveling off has been noted. Extendicare may need to adjust government funding programs to mitigate these impacts.
Termination of Management Agreements
Following Revera’s sale of 21 Class C homes, Extendicare will terminate management agreements for 30 homes. This development presents a challenge but also an opportunity for strategic realignment.
Forward-Looking Guidance
Extendicare’s guidance for 2024 emphasizes strategic initiatives and financial performance. The company plans to redevelop 361 long-term care beds, projecting an increase in annual NOI of $6.8 million and AFFO of $1.4 million. With a strong liquidity position, Extendicare is well-prepared for future growth and expansion.
In conclusion, Extendicare Inc.’s earnings call paints a picture of a company on a strong growth trajectory, buoyed by robust financial results and strategic initiatives. While challenges exist, the positive aspects and forward-looking strategies significantly outweigh them, positioning Extendicare for continued success.