EXTENDICARE INC. $7.77 (Toronto symbol EXE; TSINetwork Rating: Extra Risk) (905-470-5534; www.extendicare.com; Shares outstanding: 88.2 million; Market cap: $690.3 million; Dividend yield: 6.2%) owns 64 seniorcare facilities that can house 8,464 residents—on both a long- and short-term basis. It manages another 54 residences that are home to 6,426 seniors.
Extendicare also operates 47 ParaMed Home Health Care branches in six provinces. ParaMed’s 10,900 staff members provide nursing care and other forms of assistance to clients who remain in their own homes.
In the three months ended March 31, 2016, the company’s revenue rose 29.8%, to $284.4 million from $202.2 million a year earlier. Cash flow jumped 72.5%, to $12.2 million, or $0.14 a share, from $7.1 million, or $0.08.
The gain came mostly from successful acquisitions. In April 2015, Extendicare purchased Revera Home Health for $83.6 million. As well, in late 2015, it bought four senior-care facilities in Ontario and Saskatchewan for $98.8 million. In February 2016, it acquired two more in Saskatchewan for $40.5 million.
Provinces regulate nursing home fees in Canada, and they provide substantial funding. Both of those are subject to extensive and changing standards.
However, Extendicare’s cash flow is steady, and it’s in a growing business. The stock trades at 14.9 times the company’s forecast 2016 cash flow of $0.52 a share. It yields a high 6.2%.
Extendicare Inc. is a buy.
