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Extendicare Announces 2017 Third Quarter Results

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MARKHAM, Ontario, Nov. 09, 2017 (GLOBE NEWSWIRE) -- Extendicare Inc. ("Extendicare" or the "Company") (TSX:EXE) today reported results for the three and nine months ended September 30, 2017. Results are presented in Canadian dollars unless otherwise noted.

Financial and Operational Highlights 

 Q3 2017 financial results comparison over Q3 2016 (from continuing operations unless otherwise noted):

  • Revenue of $273.2 million up 1.9% or $5.1 million resulting from higher home health care volumes, long-term care funding enhancements, and expansion of retirement operations.
  • Net operating income of $34.7 million down $0.3 million or 0.9%, reflecting increased earnings from long-term care and retirement operations, offset by reduced contribution from home health care business of $0.2 million, impact of favourable accrual adjustments recorded in 2016 of $1.0 million, and lower investment income from captive of $0.8 million.
  • Earnings from continuing operations of $6.5 million ($0.07 per basic share) down $3.4 million; impacted by a one-time executive compensation charge and lower interest revenue from U.S. sale deferred consideration.
  • AFFO from continuing operations of $15.6 million ($0.176 per basic share) down $5.2 million; impacted by lower earnings, reduction in income support, and favourable book-to-file tax adjustment recorded in 2016.

 2017 nine month financial results comparison over same 2016 period (from continuing operations unless otherwise noted)

  • Revenue of $815.9 million up 4.1% or $32.0 million resulting from higher home health care volumes, long-term care funding enhancements, and expansion of retirement operations.
  • Net operating income of $100.2 million up 4.0% or $3.8 million resulting from home health care volume increases, long-term care funding enhancements, and continued growth of retirement operations, partially offset by increased costs of resident care.
  • Earnings from continuing operations of $21.4 million ($0.24 per basic share) up $3.2 million.
  • AFFO from continuing operations of $42.8 million ($0.481 per basic share) down $10.4 million; impacted by a reduction in income support, lower interest revenue from U.S. sale deferred consideration, and favourable book-to-file tax adjustment recorded in 2016.

 Dividends declared of $32.0 million in the first nine months of 2017, representing approximately 75% of AFFO of $42.8 million for the same period.
 ParaMed successfully renews Accreditation Canada's highest award, retaining its Accredited with Exemplary Standing status.
 Douglas Crossing Retirement Community (103 suites), in Uxbridge, Ontario, opened on October 30, 2017, with a strong pre-opening demand. 

"We remain committed to the execution of our strategy to grow across all of our business segments in the senior care continuum, through long-term care redevelopment, growth in occupancy and expansion of Esprit Lifestyle Communities, and increased volumes in ParaMed Home Health Care, as well as additional service contracts under Extendicare Assist and SGP Purchasing Partner Network," stated Tim Lukenda, President and CEO of Extendicare. "The results this quarter were adversely impacted by transitional costs and other challenges that we are actively addressing, as well as items recorded in 2016 that make the comparison to last year less favourable. However, improvements in net operating income and Adjusted EBITDA were achieved year-to-date relative to the prior year."

Selected Financial Information

The following is a summary of selected financial information for the three and nine months ended September 30, 2017 and 2016.

(unaudited) Three months ended
September 30
  Nine months ended
September 30
(thousands of dollars, unless otherwise noted ) 2017 2016   2017 2016
CONTINUING OPERATIONS          
Revenue          
Long-term care 154,607   152,473     458,193   451,193  
Retirement living 5,143   3,996     14,575   11,034  
Home health care 108,650   106,167     326,577   305,734  
Management, consulting and other 4,830   5,460     16,588   15,943  
Total revenue 273,230   268,096     815,933   783,904  
Operating expenses 238,501   233,056     715,733   687,522  
Net operating income (NOI) (1) 34,729   35,040     100,200   96,382  
  NOI margin (1) 12.7 % 13.1 %   12.3 % 12.3 %
Administrative costs 9,058   7,843     25,095   22,708  
Lease costs 1,646   1,672     5,063   4,985  
Adjusted EBITDA (1) 24,025   25,525     70,042   68,689  
  Adjusted EBITDA margin (1) 8.8 % 9.5 %   8.6 % 8.8 %
Earnings from continuing operations 6,545   9,955     21,411   18,167  
  per basic share ($) 0.07   0.12     0.24   0.21  
Loss from discontinued operations, net of income taxes   (643 )   (32,913 ) (7,355 )
AFFO (continuing operations) (1) 15,646   20,832     42,782   53,188  
  per basic share ($) 0.176   0.236     0.481   0.603  
  per diluted share ($) 0.170   0.223     0.469   0.575  
AFFO (1) 15,646   20,300     42,782   51,690  
  per basic share ($) 0.176   0.230     0.481   0.586  
  per diluted share ($) 0.170   0.217     0.469   0.560  
Maintenance capex (continuing operations) 2,777   2,825     5,542   6,700  
Cash dividends declared per share 0.120   0.120     0.360   0.360  
Payout ratio (1) (2) 68 % 52 %   75 % 61 %
Weighted average number of shares (thousands)          
Basic 88,844   88,495     88,863   88,274  
Diluted
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