Td morning note (pre conference call) td note below. There was a $5 million retro payment in HHC that bumped results, but even after adjusting, still comfortably ahead of estimates
TD NOTE:
Our take. Overall, Extendicare delivered solid results. After adjusting for $5.4mm
of retroactive funding in Home Health Care, FFO/unit of $0.16 ($0.21 reported) was
still nicely ahead of our estimate/consensus at $0.14. The beat was due to higher
Managed Services (higher revenue) and LTC NOI. Home Health Care was slightly
below our estimate adjusting for the retroactive funding.
Operations:
LTC NOI (54% of NOI) was up ~12% y/y adjusting for pandemic-related costs/
funding and a worker's compensation rebate in Q4/22. The increase was due to
lower agency staff usage, funding enhancements, and higher occupancy, partially
offset by higher operating costs. Average occupancy was unchanged q/q at 97.8%
(+330bps y/y).
Home Health Care (29%) NOI was ~53% higher y/y after adjusting for pandemic-
related costs/funding. The increase was due to higher ADV volumes and rates,
offset partially by higher wages. ADV's were up +10.2% y/y and +2.8% q/q to
28,158, representing the fifth consecutive quarter of growth. NOI margin in Q4
(adjusted) was +220bps y/y and +20bps q/q to 8.8%.
Managed Services (17%) NOI: +90% y/y on a near doubling of revenue largely
due to the growth in SGP clients from the Revera and Axium JV's. Third-party
beds served by SGP were +24.1% y/y and +5.6% q/q to 136,164.
Other:
During Q4, the Axium JV acquired a 320-bed LTC redevelopment project in
Ottawa from Revera (completion slated for Q2/26). Revera will develop the home.
Extendicare posted a $5mm letter of credit in support of its 15% equity interest.
Extendicare commenced construction on 256-bed LTC home in Ottawa (open
slated for Q2/26), which was vended into the Axium JV (Extendicare will retain a
15% interest). Closing is expected in Q2/24.
Extendicare entered into an agreement to sell the land and buildings at its Sudbury
and Kingston Class C homes for gross/net proceeds of $9.1mm/$8.5mm (gain of
$7.7mm). The transaction is expected to close this year following the opening of
the replacement redevelopment homes.
Liquidity was $146.1mm. Repurchased 1.7mm shares in 2023 (0.3mm in Q4) for
$11.1mm ($6.34/share