Extendicare Announces 2025 Second Quarter Results

Executive Summary

• Extendicare Inc. reported financial results for the three and six months ended June 30, 2025, showing growth in revenue, NOI, and Adjusted EBITDA driven by home health care volume increases and long-term care (LTC) acquisitions.
• The company completed three significant transactions: the acquisition of "Closing the Gap" for ~$75.1M, the acquisition of nine Class C LTC homes from Revera for ~$41.9M, and the sale of three LTC projects to Axium JV for $56.3M in net cash proceeds.
• The Board declared an August 2025 cash dividend of $0.042 per share, and the company increased its senior secured credit facility to $375.0 million to support liquidity and future growth.

Key Details

• Q2 2025 Financial Highlights (vs Q2 2024):
  • Revenue: $383.4 million (up $35.0M; up 11.4% excluding out-of-period items).
  • Net Operating Income (NOI): $55.0 million (up $2.2M; up 12.9% excluding out-of-period items).
  • Adjusted EBITDA: $39.8 million (up $1.2M or 3.1%).
  • Net Earnings: $31.9 million (up $6.0M).
  • AFFO: $24.8 million ($0.293 per basic share), up from $23.1 million ($0.274 per basic share).
• Six Months 2025 Financial Highlights (vs Six Months 2024):
  • Revenue: $758.1 million (up $42.5M; up 8.6% excluding out-of-period items).
  • NOI: $105.2 million (up $7.7M; up 17.9% excluding out-of-period items).
  • Adjusted EBITDA: $75.4 million (up $6.6M).
  • Net Earnings: $47.0 million (up $8.0M).
  • AFFO: $44.6 million ($0.528 per basic share), up from $40.7 million ($0.484 per basic share).
• Segment Performance (Q2 2025):
  • Long-term Care: Revenue $207.1M; NOI $23.9M (11.6% margin). LTC average occupancy increased to 98.3%.
  • Home Health Care: Revenue $158.6M; NOI $21.4M (13.5% margin). Average Daily Volume (ADV) increased 10.9% to 33,310.
  • Managed Services: Revenue $17.7M; NOI $9.6M (54.3% margin). Third-party and JV beds serviced reached 149,300 (up 5.9%).
• M&A and Strategic Transactions:
  • Closing the Gap Acquisition (CTG): Completed July 1, 2025, for ~$75.1M cash (subject to adjustments). Funded via cash on hand and $55.0M draw on credit facility. Adds ~1.1M service hours (3,109 ADV). Includes an earnout of $3.5M–$5.5M based on new business revenue. Expected ~$1.1M annualized cost synergies.
  • Revera LTC Acquisition: Completed June 1, 2025. Acquired nine Class C LTC homes and one land parcel for $41.9M cash + assumption of $27.4M liabilities.
  • Axium JV Sale: Completed April 30, 2025. Sold three LTC projects under construction (St. Catharines, Port Stanley, London) for $56.3M net cash proceeds and $11.1M net after-tax gain.
• Financial Position & Capital Structure:
  • Cash and cash equivalents (excluding restricted): $72.6 million.
  • Access to revolving facility: $152.2 million.
  • Senior secured credit facility increased to $375.0 million.
  • Restricted cash of $76.1 million includes $75.1M held in trust for the CTG Transaction.
• Dividends:
  • August 2025 dividend declared: $0.042 per share, payable September 15, 2025.
  • YTD payout ratio: 47%.
• Other Updates:
  • Normal Course Issuer Bid (NCIB) renewed for up to 7,281,193 shares (no purchases made as of Aug 6, 2025).
  • Ontario government announced new 2025 LTC Capital Funding Policy; Extendicare advancing 18 redevelopment projects.

Notable Quotes

• "Our operations are scaling efficiently while we execute on strategic acquisitions, underpinned by the demographic trends driving demand for our services," said Dr. Michael Guerriere, President and Chief Executive Officer. "The accretion from Closing the Gap and the nine LTC homes from Revera will impact in Q3, and we look forward to the operating leverage and scale we will gain as we integrate them into our operations. The increase in our senior secured credit facility to $375.0 million maintains our strong liquidity position, providing flexibility to allocate capital to drive future growth."