Extendicare Announces 2017 Year End Results
MARKHAM, ONTARIO – February 28, 2018 – Extendicare Inc. (“Extendicare” or the “Company”) (TSX: EXE) today reported results for the fourth quarter and year ended December 31, 2017. Results are presented in Canadian dollars unless otherwise noted.Financial and Operational Highlights
- Q4 2017 financial results comparison over Q4 2016 (from continuing operations unless otherwise noted):
o Revenue of $281.4 million up 1.6% or $4.5 million reflecting growth from all divisions moderated by impact of prior period funding of $2.2 million received in Q4 2016.
o Net operating income of $35.6 million up $1.9 million or 5.5% reflecting increased contributions from all divisions partially offset by favourable prior period accrual adjustments of $1.6 million recorded in Q4 2016.
o Earnings from continuing operations of $10.3 million ($0.12 per basic share) down $2.9 million, with improvements in operations offset by an unfavourable change in fair value adjustments and foreign exchange and lower interest revenue related to U.S. sale deferred consideration received in 2016.
o AFFO from continuing operations of $15.7 million ($0.178 per basic share) up $2.2 million.
- 2017 financial results comparison over 2016 (from continuing operations unless otherwise noted):
o Revenue of $1,097.3 million up 3.4% or $36.6 million.
o Net operating income of $135.8 million up 4.4% or $5.7 million resulting from home health care volume increases and continued growth of retirement operations.
o Retirement community occupancy increased to an average of 90.8% in stabilized communities for 2017 (up from 81.5% for 2016) and to 54.6% in the lease-up communities from 37.5% in 2016. As at occupancy at the end of 2017 was 95.9% at the stabilized communities and 68.6% at the lease up communities.
o Earnings from continuing operations of $31.7 million ($0.36 per basic share) up $0.3 million.
o AFFO from continuing operations of $58.5 million ($0.659 per basic share) down $8.2 million; impacted by lower interest revenue from U.S. sale deferred consideration of $7.4 million.
- Dividends declared of $42.6 million in 2017, representing approximately 73% of AFFO of $58.5 million for the same period.
- 24-bed expansion at Extendicare Eaux Claires long-term care centre in Edmonton, opened in February 2018; incremental net operating income of $0.6 million annually.
As previously announced on February 26, 2018, the Company has entered into a definitive agreement to acquire the Lynde Creek Retirement Community, located in Whitby, Ontario, for a cash purchase price of $34.5 million, subject to normal closing adjustments. The purchase price, exclusive of excess land, represents an implied capitalization rate of 6.3% on 2018 net operating income, and the operations are expected to be immediately accretive to the Company’s AFFO. The acquired community consists of the Lynde Creek Manor Retirement Residence, offering 93 independent and assisted living suites; the Lynde Creek Life Lease Village, with 113 townhomes; and 3.7 acres of adjacent land for expansion. Closing, which is subject to customary conditions, is expected to occur in the second quarter of 2018.
“We are pleased with the steady progress towards stabilized occupancy in our retirement communities and the continued growth in this segment through new developments, expansions and acquisitions,” stated Tim Lukenda, President and CEO of Extendicare. “In addition, increasing home health care volumes and the announcement of plans for new long-term care beds in Ontario reinforce our opportunity to deliver across the continuum of care,” he added.