Expanded service and contract offerings led to an 18.6% revenue bump for this company in the quarter ended March 31.
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 58 long-term care homes and 11 retirement living communities, through its Extendicare and Esprit Lifestyle Communities divisions. It also provides contract services to 53 long-term care homes and retirement communities through its Extendicare Assist. The majority of these homes are in Ontario (77% of residents) and Alberta (11%).
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.
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Extendicare continues to pay monthly distributions of $0.04 a share; the annual rate of $0.48 yields a high 6.0%.
That high dividend yield still looks sustainable. 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, Extendicare is in a strong position to weather the pandemic.
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.
Extendicare’s revenue in the three months ended March 31, 2021, rose 18.6%, to $322.4 million from $271.8 million a year earlier. That gain was mainly due to $55.4 million in COVID-19 funding from governments. That offset a drop in average occupancy, to 82.9% from 97.0%. Cash flow per share rose 61.5%, to $0.21 from $0.13.
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.
Long-term care homes lately cannot get enough staff, so they are paying out more over time, which in my opinion will make them less profitable. My wife works at an Extendicare facility
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Long-term care homes lately cannot get enough staff, so they are paying out more over time, which in my opinion will make them less profitable. My wife works at an Extendicare facility