Extendicare Announces 2024 Fourth Quarter and Full Year Results and Dividend Increase

MARKHAM, Ontario, Feb. 27, 2025 (GLOBE NEWSWIRE) — Extendicare Inc. (“Extendicare” or the “Company”) (TSX:EXE) today reported results for the three and twelve months ended December 31, 2024.

Fourth Quarter 2024 Highlights

• Adjusted EBITDA⁽¹⁾ excluding out-of-period items increased by $10.1 million or 43.5% to $33.4 million driven by improvements in all three business segments.
• Home health care average daily volume (“ADV”) increased to 30,993, an increase of 10.1% from Q4 2023.
• SGP third-party and joint venture serviced beds increased 7.4% from Q4 2023 to 146,300 beds, driven by continued organic growth.
• As previously announced, the Company entered into an agreement with Revera Inc. and certain of its affiliates (“Revera”) to acquire nine Class C LTC homes located in Ontario and Manitoba and a parcel of land for approximately $60.3 million (the “LTC Acquisition”).
• The Company completed the redemption of the 2025 convertible debentures in December 2024, leveraging its new $275.0 million senior secured credit facility, ending the year with $230.3 million in cash and available credit facilities.
• Opened Limestone Ridge, a new 192-bed LTC home in Kingston held in the Axium JV, in December 2024 and completed the sale of the vacated Kingston C bed home for proceeds of approximately $3.7 million.
• Commenced construction of two new LTC projects, a 128-bed home in Port Stanley and a 192-bed home in London, to replace 230 Class C beds in existing Extendicare homes in the same cities.

Subsequent to Q4

• Entered into an agreement to sell three LTC projects under construction in St. Catharines, Port Stanley and London, Ontario to the Axium JV, subject to customary closing conditions, including receipt of regulatory approvals, with closing anticipated in Q2 2025.
• Opened Crossing Bridge, a new 256-bed LTC home in Stittsville held in the Axium JV.
• Announced an increase of 5.0% to its dividend to 4.2 cents per month.

“The steps we have taken over the past two years to implement our strategic transformation are evident in our strong fourth quarter and full year results, with all segments delivering meaningful NOI and margin growth, as well as improvements in operating metrics,” said Dr. Michael Guerriere, President and Chief Executive Officer. “Our new $275.0 million senior secured credit facility supported the early redemption of our 2025 convertible debentures, providing us with considerable flexibility as we consider options to allocate capital to drive growth in 2025.”

Dr. Guerriere added, “Our improved performance, combined with our strong balance sheet and considerable prospects for future growth also allowed us to introduce a dividend increase.”

Agreement to Acquire Nine LTC Homes From Revera

The Company continues to work through the required regulatory approvals in connection with the LTC Acquisition announced in November 2024. The transaction is anticipated to close in Q2 2025, subject to customary closing conditions, including receipt of regulatory approvals.

The acquired portfolio encompasses 1,396 beds in nine homes, including the 250-bed Class C Carlingview Manor home in Ontario that will soon be replaced by a new LTC home currently under construction and owned by the Axium JV. The remaining seven homes in Ontario consist of a mix of 574 private pay retirement beds and 361 funded LTC Class C beds that the Company intends to redevelop. The LTC Acquisition will give the Company control in redeveloping these seven Class C homes, adding six projects comprising a proposed 1,088 LTC beds to the Company’s redevelopment pipeline.

In addition, the Company believes it has the potential to recover most if not all of the purchase price for the LTC Acquisition through the eventual sale of the seven operational retirement homes once the LTC redevelopment is complete.

Redevelopment Progresses with Two Homes Commencing Construction

In December 2024, the Company began construction of two new LTC projects under the enhanced construction funding subsidy provided by the Government of Ontario before it expired. Together, the new 128-bed home in Port Stanley and 192-bed home in London will replace 230 Class C beds in two existing Extendicare homes in the same cities. The two new homes are expected to open in the first half of 2027. In connection with the two projects, Extendicare entered into fixed-price construction contracts totalling $101.3 million and estimates the total development costs will approximate $130.4 million.

In December 2024, the Company opened Limestone Ridge, a new 192-bed Axium JV home in Kingston, Ontario, that replaced Extendicare Kingston, a 150-bed Class C home nearby. Following the opening, the Company completed the sale of the vacated Kingston property for proceeds of approximately $3.7 million. Additionally, in February 2025, the Company opened Crossing Bridge, a new 256-bed Axium JV home in Stittsville, Ontario, that replaces Extendicare West End Villa, a home in Ottawa. The Company has initiated the sale process for the related Class C LTC home.

In January 2025, the Company entered into an agreement to sell the Port Stanley and London projects along with the St. Catharines project started in Q3 2024 to the Axium JV, with Extendicare retaining a 15% managed interest. Closing of the transaction is anticipated in Q2 2025, subject to customary closing conditions, including receipt of regulatory approvals from the Ontario Ministry of Long-Term Care.

New $275 Million Credit Facility Enables Early Redemption of 2025 Convertible Debentures

As announced on November 8, 2024, the Company established a new senior secured credit facility for $275.0 million with a syndicate of Canadian chartered banks, for an initial term of three years. This facility includes a $145.0 million revolving credit facility for working capital and general corporate purposes, including capital expenditures and acquisitions, and a $130.0 million delayed draw term loan facility, which was fully drawn to redeem the 2025 convertible debentures in December 2024.

Dividend Increase

Improved performance and growth in all three business segments has resulted in the dividend payout ratio dropping below 50%. Accordingly, the Company will increase its dividend by 5.0% to 4.2 cents per month effective with the dividend to be declared in March 2025. Continued strong performance will give the Company the opportunity to consider dividend increases on a regular basis.

Q4 2024 Financial Highlights (all comparisons with Q4 2023)

• Revenue increased 11.8%, or $41.4 million, to $391.6 million, driven primarily by LTC funding increases, home health care ADV growth and rate increases, and growth in managed services.
• NOI⁽¹⁾ increased $11.0 million to $53.8 million; excluding a net benefit of out-of-period funding of $0.9 million, NOI improved by $10.1 million, or 27.1%, to $47.5 million, reflecting revenue growth, partially offset by higher operating costs across all segments.
• Adjusted EBITDA⁽¹⁾ increased $11.0 million to $39.7 million, in line with increase in NOI and administrative costs unchanged from the prior year period.
• Other expense declined to $0.3 million from $2.7 million, reflecting a gain on the sale of assets of $3.6 million in Q4 2024 and a $1.5 million decline in strategic transformation costs in connection with the Revera and Axium transactions, partially offset by an impairment charge of $2.7 million in Q4 2024.
• Net earnings increased $11.3 million to $19.9 million, largely driven by the increase in Adjusted EBITDA and decline in other expense.
• AFFO⁽¹⁾ increased to $29.0 million ($0.34 per basic share) from $19.1 million ($0.23 per basic share), largely reflecting the improvement in Adjusted EBITDA and share of profit from joint ventures, partially offset by increased current taxes. Excluding the out-of-period funding, AFFO improved by $8.9 million to $24.0 million ($0.28 per basic share) from $15.1 million ($0.18 per basic share).

Year Ended 2024 Financial Highlights (all comparisons with Year Ended 2023)

• Revenue increased 12.4%, or $161.2 million, to $1,466.2 million, driven primarily by LTC funding increases; home health care ADV growth, rate increases and $13.6 million in retroactive funding to support one-time compensation costs incurred in Q1 2024; and growth in managed services, partially offset by lower COVID-19 and out-of-period LTC funding.
• NOI⁽¹⁾ increased $50.5 million to $201.5 million; excluding a net recovery of COVID-19 costs of $12.1 million in 2023 and the increase in out-of-period LTC funding of $8.7 million, NOI improved by $53.8 million, or 40.6%, to $186.2 million, reflecting revenue growth, partially offset by higher operating costs across all segments.
• Adjusted EBITDA⁽¹⁾ increased $49.4 million to $144.5 million, reflecting the increase in NOI noted above, partially offset by higher administrative costs.
• Other income was $2.5 million compared with an expense of $2.7 million in the prior year, reflecting a $5.8 million decline in strategic transformation costs in connection with the Revera and Axium transactions and a $2.1 million increase in gains on the sale of assets, partially offset by an impairment charge of $2.7 million this quarter.
• Share of profit from joint ventures was $1.9 million compared with a nominal amount in the prior year, including the impact of one-time funding for Ontario LTC homes in 2024, of which $1.0 million related to prior periods.
• Net earnings increased $41.2 million to $75.2 million, largely driven by the increase in Adjusted EBITDA and contribution from other income.
• AFFO⁽¹⁾ increased $31.6 million to $92.8 million ($1.10 per basic share) compared with $61.2 million ($0.72 per basic share), largely reflecting the improvement in Adjusted EBITDA and share of profit from joint ventures, partially offset by increased current taxes and higher maintenance capex. Excluding a net recovery of COVID-19 costs in 2023 and out-of-period funding in 2024, AFFO improved by $33.0 million to $80.5 million ($0.96 per basic share) from $47.5 million ($0.56 per basic share).

Business Updates

The following is a summary of Extendicare’s revenue, NOI⁽¹⁾ and NOI margins⁽¹⁾ by business segment for the three and twelve months ended December 31, 2024 and 2023.