Extendicare (EXE) Q2 2024 earnings summary

Executive summary

• Q2 2024 delivered strong growth in net operating income and margins across all segments, driven by technology investments, managed services expansion, robust demand, and government funding increases.

• All three operating segments contributed to earnings growth, with managed services and home healthcare now comprising 56% of consolidated NOI.

• Strategic focus on scalable back office, joint ventures, and redevelopment supports ongoing expansion and margin improvement.

• LTC redevelopment advanced, with five homes under construction and two set to open by year-end; three new projects targeted to start in 2024.

• Liquidity increased to $208.6M, supporting capital flexibility and future growth initiatives.

Financial highlights

• Q2 2024 revenue increased 13.3% to $348.5M, mainly from LTC funding, occupancy, home healthcare volume, and managed services growth.

• Q2 NOI rose $24.3M to $52.8M (15.2% margin), or $20.2M to $48.7M excluding out-of-period LTC funding.

• Adjusted EBITDA increased by $23.8M (+161.3%) to $38.6M; net earnings up $23.9M to $25.9M year-over-year.

• AFFO per basic share was $0.27 ($0.24 adjusted), up from $0.11 last year; payout ratio at 43%.

• Out-of-period LTC funding of $4.1M and one-time support for Alberta and Manitoba homes impacted results.

Outlook and guidance

• Expectation for continued growth in managed services and home healthcare NOI as strategy execution progresses.

• Plan to open Kingston (192 beds) and Stittsville (256 beds) LTC homes by year-end; three new LTC projects (576 beds) targeted for 2024.

• Anticipate return to historical NOI margins in LTC (10.5%-11%) as cost efficiencies and funding increases take effect.

• Awaiting details on significant provincial investment in home health care announced in Ontario's 2024 budget.

• Home healthcare volume growth expected to remain above demographic trends for a few quarters before moderating.