Extendicare Yields 3.5% and Shows Strong Growth in Home Health Services

Given Canada’s aging population and the company’s strategic position in the senior care spectrum, Extendicare, a leading provider of essential services in a sector is experiencing growing demand. The company’s diversified revenue streams across long-term care facilities, home healthcare, and managed services provide stability while offering multiple growth avenues.

Management’s focus on long-term care redevelopment and geographic expansion through strategic acquisitions further enhances growth prospects while addressing Canada’s critical need for senior care infrastructure.

EXTENDICARE INC. (Toronto symbol EXE) owns and operates long-term care homes. Investors also tap the company’s ParaMed Home Health Care branches. ParaMed provides nursing care and other forms of assistance to clients who remain in their own homes.

Extendicare has entered into an agreement with Revera Inc. and certain of its affiliates to acquire nine Class C long-term care homes located in Ontario and Manitoba and one parcel of vacant land located in Ontario. The purchase price is $60.3 million.

The acquired homes encompass 1,396 beds in nine homes, seven of which consist of a mix of 361 funded LTC beds and 574 private pay retirement beds. The LTC beds in these seven homes are all Class-C beds, which Extendicare intends to redevelop and replace with six new LTC homes comprising a proposed 361 replacement beds and 727 new beds.

Also included in the 1,396 beds is the 250 bed Class C Carlingview Manor home in Ottawa, which is in the process of being redeveloped into a new LTC home that is owned by its joint venture with Axium.

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At the same time, Extendicare has been advised by Revera that Revera has entered into a sale agreement with a third party pursuant to which that third party will acquire 21 of Revera’s Class C LTC homes located in Ontario. They are currently managed by Extendicare. Upon closing of the two transactions, Extendicare’s existing management agreements with Revera in respect of the 30 homes, as well as related redevelopment arrangement agreements, will end.

Meanwhile, Extendicare’s ParaMed unit has entered into an agreement to buy Closing the Gap Healthcare Group Inc. and certain affiliates. The purchase price is $75.5 million, but the transaction also includes an earnout tied to new business revenue generation in the 12 months after closing.

Founded in 1990, Closing the Gap is a leading provider of integrated home and community-based healthcare services in Ontario and Nova Scotia, delivering adult and pediatric care services in patients’ homes and in community clinics. In addition to personal support and nursing services, Closing the Gap has expertise in allied health services, including physiotherapy, occupational therapy, speech language pathology, nutrition and social work.

In the 12 months ended December 31, 2024, Closing the Gap’s approximately 1,200 caregivers delivered over 1.1 million service hours plus average daily volume (ADV) of 3,109.

Based on Closing the Gap’s 2024 financial performance, the acquisition would have added to Extendicare’s home health care segment for 2024 approximately $84.2 million in revenue with profit margins very similar to those of ParaMed. The acquisition would have increased cash flow per share by approximately $0.06.

On a combined basis, giving effect to the acquisition, Extendicare’s home health care segment service volumes for 2024 would have been approximately 12.1 million hours and ADV of 33,164.

Payout increase reflects Extendicare’s financial strength and growth prospects

The company’s revenue rose 11.8% in the quarter ended December 31, 2024, to $391.6 million from $350.2 million a year earlier. The gain was mainly due to increased government funding, and higher home healthcare visits and rate increases. Cash flow per share increased 47.8%, to $0.34 from $0.23.

With the April 2025 payment, Extendicare raised your monthly dividend by 5.0%. Investors now receive $0.042 a share instead of $0.04. The new annual rate of $0.504 yields 3.5%.

With this increase, Extendicare has raised your dividend by an average of 1.0% annually over the past five years. The company’s TSI Dividend Sustainability Rating is Average.

Recommendation in Dividend Advisor: Extendicare Inc. is a buy.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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