This firm’s revenues rose 2.3% during the most-recent quarter, even as COVID-19 raised investor worries about the outlook for it and other long-term-care providers.

The company’s cash flow did dip 7.9% on higher maintenance spending, but occupancy levels remain strong.

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 for third parties through 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 five provinces. ParaMed provides nursing care and other forms of assistance to clients who remain in their own homes.

Extendicare’s shares have dropped amid the COVID-19 crisis, mostly on investor worries that coronavirus outbreaks in its homes will hurt its revenues and cash flow going forward.

At this point, 10 of its long-term care homes and one retirement community have had one or more positive cases of COVID-19, with a majority of these outbreaks limited to fewer than 10 residents and/or staff. In addition, two long-term care homes previously experiencing an outbreak have now been declared clear of the virus by public health. The company is also working with its Extendicare Assist clients to help them manage any outbreaks in their homes.

Value Stocks: Occupancy demand and prospects remain strong

Investors should note, though, that long-term care occupancy in virtually all of the company’s homes remains above 97%, thereby retaining government funding (which pays for all long-term care). As well, in the event of a home’s closure to new admissions because of an outbreak, full funding is preserved in Ontario and similar protocols are being followed in other provinces. What’s more, there are also 35,000 people on the waiting list for the roughly 70,000 licensed beds, making any occupancy dip temporary.

At retirement residences, restrictions on move-ins and tours by prospective residents have temporarily impacted their occupancy levels. However, resident credit quality remains strong and the company reports that April rent and service charges were collected in line with the normal collection experience.

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 single points of entry; 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, Extendicare and its investors are well positioned to weather the pandemic.

During COVID-19, the company will defer non-essential capital expenditures. That includes the expansion of its 59-suite Empire Crossing Retirement Community in Port Hope, Ontario.

Extendicare’s revenue in the quarter ended March 31, 2020, rose 2.3%, to $268.8 million from $262.7 million a year earlier. Revenue at its long-term-care and retirement living segments was offset by a revenue slip in its home health unit. On higher maintenance spending for its facilities, cash flow fell by 7.9%, to $11.6 million, or $0.127 a share, from $12.6 million, or $0.138.

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