Expanded service and contract offerings led to a 5% revenue bump for this company in the quarter ended September 30. At the same time it continues its ongoing efforts to protect clients and to maintain its 97% occupancy rates.
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%).
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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 September 30, 2020, overall revenue rose 5.0%, to $296.8 million from $282.7 million a year earlier. Earnings increased sharply, to $34.6 million, or $0.39 a share, from $5.4 million, or $0.06. However, the latest quarter, included the $37.3 million (after taxes) that ParaMed received under the Canada Emergency Wage Subsidy (CEWS) program. That was partly offset by the estimated $6.4 million in after-tax costs to deal with COVID-19.
Extendicare’s shares have dropped amid the COVID-19 crisis—although they have started moving up. That reflects investor worries that coronavirus outbreaks in its homes will hurt its revenues and cash flow going forward.
Value Stocks: Government funding maintains this essential service
Investors should note, though, that long-term-care occupancy rates in the company’s homes remain above 97%. That protects its government funding. As well, in the event of a home’s closure to new admissions because of an outbreak, full funding is preserved in Ontario and many other provinces. 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 weather the pandemic.
In the meantime, the company 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 7.7%.
Thanks for your comment. We will continue to address all aspects of Extendicare’s outlook—-including that legal issue–in Power Growth Investor, and its weekly Hotlines.
Looking at the chart looks like the shorts will have made money and the public lost money had they own it. Specialists,short sellers have the stock they bought from your selling they will soon want to sell at higher prices and that’s were you come in look for a rally in the offing.Not all Bottoms are a buy.
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The recently filed 200 million class action legal action against Extendicare will impact my decision to invest.
Thanks for your comment. We will continue to address all aspects of Extendicare’s outlook—-including that legal issue–in Power Growth Investor, and its weekly Hotlines.
Not my pick as lost love one will there during the virus.MY pick today V.DOC
Thanks for your view on CloudMD Software & Service.
Looking at the chart looks like the shorts will have made money and the public lost money had they own it. Specialists,short sellers have the stock they bought from your selling they will soon want to sell at higher prices and that’s were you come in look for a rally in the offing.Not all Bottoms are a buy.
Thanks for your opinion on this Power Growth Investor recommendation.