Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Extendicare Inc (EXETF, Financial) reported strong revenue and earnings growth across all business segments, driven by demographic trends and strategic execution.
- Adjusted EBITDA increased by 18.2% to $35.6 million, with a significant improvement of 42.7% when excluding out of period items.
- The company declared a 5% increase in the monthly dividend on common shares, reflecting confidence in sustainable growth.
- Extendicare Inc (EXETF) completed the sale of three long-term care redevelopment projects, generating $56.3 million in cash proceeds.
- The acquisition of Closing the Gap Healthcare is expected to be accretive to earnings and AFFO, with anticipated cost synergies of $1.1 million annually.
Negative Points
- The closure of three Class-C long-term care homes resulted in a reduction of revenue, partially offsetting overall growth.
- The company faces ongoing regulatory approval processes for the acquisition of nine homes from Rivera, which could delay strategic plans.
- There is uncertainty regarding the timing of long-term care funding increases, which are typically communicated later in the year.
- Extendicare Inc (EXETF) experienced a large tax payment outflow in Q1, partly due to the settlement of annual PSU grants and director DSUs.
- The company remains under-leveraged, which may limit its ability to capitalize on larger acquisition opportunities without additional financing.
Q & A Highlights
Q: On your home healthcare platform, do you see any issues maintaining organic volume growth, or are there labor supply challenges?
A: Michael Guerriere, President and CEO, stated that there are no constraints in maintaining growth. The demand remains robust, and their ability to hire and train new caregivers is keeping pace. Investments in back-office automation and partnerships with educational institutions provide a competitive edge in recruiting.
Q: Are you gaining market share in the home healthcare space, and how does your growth rate compare to the broader market?
A: Guerriere noted that while they believe they are growing slightly faster than the broader market, the overall market is also expanding at a similar pace. Governments are increasingly relying on home care to alleviate pressure on hospitals and compensate for slow long-term care bed construction.
Q: With excess capital and leverage capacity, do you have an active pipeline of deals, particularly in home healthcare?
A: David Bacon, CFO, mentioned that they are well-positioned from a liquidity perspective and are actively looking for accretive opportunities, especially in the fragmented home care sector. They aim to acquire complementary assets that align with their growth strategy.
Q: Are there opportunities to expand your home healthcare business beyond Ontario?
A: Guerriere confirmed interest in expanding geographically, leveraging their back-office technology. They are already in three provinces, with Closing the Gap providing a footprint in Nova Scotia, aligning with their growth strategy.
Q: Regarding the acquisition of Closing the Gap, how quickly can back-office synergies be realized?
A: Guerriere expects some synergies to be realized within the first year, with the full run rate achieved over 12 months. The integration into a single technology platform will drive these efficiencies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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