The company has a major plus on its side during this time of COVID-19 uncertainty: more than 90% of its business is now government funded. The firm is well positioned to continue weathering the pandemic.
Meanwhile, expanded service and contract offerings led to an 9% revenue bump for this company in the quarter ended June 30.
COVID-19 has pressured the share price but earnings are up sharply and the company’s business is deemed an essential service.
EXTENDICARE INC. (Toronto symbol EXE; www.extendicare.com) owns and operates long-term care homes and retirement living communities through its Extendicare and Esprit Lifestyle Communities divisions. It also provides contract services to long-term care homes and retirement communities through its Extendicare Assist. The majority of these homes are in Ontario and Alberta.
Investors also tap the company’s 34 ParaMed Home Health Care branches in six provinces (although 29 are in Ontario). ParaMed provides nursing care and other forms of assistance to clients who remain in their own homes.
In the three months ended June 30, 2021, revenue rose 9.0%, to $307.4 million from $281.9 million a year earlier. A 24.0% increase in average daily volumes (number of hours of service provided) offset a drop in average occupancy, to 85.4% from 93.5%. Cash flow jumped 174.0%, to $8.1 million, or $0.09 a share, from $3.0 million, or $0.03.
Dividend Stocks: Spending is down while demand remains strong
About 90% of the company’s residents and staff have now received at least one dose of a COVID-19 vaccine. As a result, Extendicare’s pandemic-related spending decreased to $42.8 million in the second quarter of 2021 from $58.1 million in the first quarter. As well, government funding of $33.3 million helped offset those costs.
Extendicare continues to pay monthly distributions of $0.04 a share, for an annual rate of $0.48. That makes for a very high yield of 6.7%.
In the past 12 months, dividends accounted for a sustainable 52.7% of Extendicare’s cash flow.
As well, COVID-19 outbreaks should subside as more of its residents receive their vaccines.
What’s more, there are 35,000 people on the waiting list for Extendicare’s roughly 70,000 licensed beds. That makes any occupancy dip temporary.
All in all, as an industry, seniors care providers are better prepared than most to handle potential outbreaks, given that influenza and other virus outbreaks are annual occurrences. Enhanced COVID-19 measures include enhanced screening of visitors/employees, and increased cleaning of high-touch surfaces.
While governments have deemed many services non-essential during these turbulent times, there is no question that housing for seniors is vital. With more than 90% of its business now government funded, the company and its shareholders are well positioned to keep weathering the pandemic.
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Extendicare: Good . but also like Ratios P/E, fP/E or CF/P .
Thanks for your comment. We will continue to use a number of ratios in analysis, focusing on the ones we think are most relevant.
Thanks for your comment. We will continue to use a number of ratios in our analysis, focusing on the ones we think are most relevant.