Extendicare (EXE) Q3 2024 earnings summary

Executive summary

• Q3 2024 delivered robust financial and operational results, with strong earnings and margin expansion across all segments, driven by growth in services, LTC redevelopment, and increased demand from an aging demographic.

• Strategic focus on less capital-intensive, higher-margin managed services and home health care continued to deliver results, with SGP customer base up 11.4% year-over-year.

• Home health care average daily volume grew 10.2% year-over-year to 30,181, offsetting seasonal softness.

• Construction commenced on a new 256-bed LTC home in St. Catharines, with two more projects targeted to start by year-end and further expansion planned.

• New $275M senior secured credit facility enhances capital flexibility and will be used for growth and early redemption of 2025 debentures.

Financial highlights

• Q3 2024 consolidated revenue increased by 11.3% to $359.1M, driven by funding increases, home care volume growth, and managed services expansion.

• Adjusted EBITDA rose by $15.3M (73.8%) to $36.1M; excluding out-of-period LTC funding, Adjusted EBITDA increased by 64.9% to $34.3M.

• Q3 NOI increased $14.9M (42.3%) to $50.1M; AFFO per basic share doubled to $0.28, with payout ratio improved to 43%.

• Net earnings for Q3 were $16.3M, up $4.5M (37.7%) year-over-year.

• Out-of-period LTC funding of $1.8M recognized in Q3; YTD results impacted by $27.5M in out-of-period funding and one-time compensation costs.

Outlook and guidance

• Continued organic growth expected in managed services and home healthcare, with home healthcare volumes anticipated to outperform demographic trends in the short to medium term.

• Two new LTC homes expected to open by year-end, with management fees from joint ventures to partially offset NOI drop from transferred homes.

• Three redevelopment projects expected to be sold to Axium JV in Q1 2025, with a 15% managed interest retained.

• Additional redevelopment projects in London and Port Stanley planned before November 2024, pending regulatory approval.

• Awaiting details on new Ontario home health care investment; sector volumes expected to continue outpacing population growth.