Extendicare Inc. ((TSE:EXE)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Extendicare Inc. recently held its third-quarter earnings call, revealing a strong performance with significant organic growth and successful acquisitions, particularly in the Home health care segment. The company reported positive trends in financial metrics such as EBITDA and margins, although it faced challenges in the Managed Services segment and experienced some delays in construction projects.
Strong Organic Growth and Acquisitions
The third quarter was marked by robust organic growth, with Home health care volumes at ParaMed increasing by 13% year-over-year. The acquisition of Closing the Gap significantly boosted revenue, contributing $24 million and $3.1 million in NOI, surpassing expectations.
Financial Performance and Margin Improvements
Extendicare’s financial performance was impressive, with adjusted EBITDA rising by 40.6% to $50.8 million, led by the Home health care segment. The NOI margin for Home health care improved by 230 basis points to 13.6%, and AFFO increased to $0.31 per share, a 19.3% year-over-year rise.
Expansion in Long-Term Care Segment
The company is expanding its Long-Term Care segment, with six homes under construction, adding 1,408 new beds to replace 1,097 Class C beds. A new 320-bed home in Sudbury is also planned to begin construction by the end of the year.
Liquidity and Credit Facility
Extendicare extended its senior secured credit facility by $100 million, maintaining strong liquidity with $166 million in cash and access to an additional $154 million under a revolving credit facility.
Managed Services Segment Decline
The Managed Services segment saw a decline, with revenue decreasing by $3.3 million to $15.6 million and NOI dropping by $1 million, attributed to the loss of a management contract following the sale of 30 Long-Term Care homes.
Delayed Construction Completion
The completion of the Theodore Place location was delayed by a quarter, primarily due to issues with tying in power with Hydro One.
Forward-Looking Guidance
Looking ahead, Extendicare remains committed to expanding its Long-Term Care capacity and enhancing Home health care services through strategic acquisitions and capital-efficient growth. The company plans to introduce 1,408 new beds with a $565 million development cost funded through a joint venture with Axium.
In conclusion, Extendicare’s third-quarter earnings call highlighted a strong financial performance driven by organic growth and strategic acquisitions. Despite challenges in the Managed Services segment and construction delays, the company is well-positioned for future growth, maintaining robust liquidity and focusing on expanding its Long-Term Care and Home health care services.