Extendicare posted a sharp rise in quarterly billings and net profit, largely due to its acquisition of CBI Home Health earlier this year. The senior care provider announced its September quarter results in early November. Its adjusted net figure and adjusted diluted per-share earnings also increased strongly from a year earlier. The company declared its regular monthly dividend and scheduled a conference call for the following day.
Excluding out-of-period funding, billings rose by a sizeable sum. The adjusted operating measure also increased sharply, achieving a healthy margin. Adjusted funds from operations rose markedly both in total and on a per diluted share basis. The dividend payout ratio was low for the quarter.
The company's chief executive said strong operating funds flow had lowered leverage and gave management more flexibility in capital allocation. Unrestricted liquidity was healthy, with substantial undrawn capacity on its revolving credit facility. A low payout ratio leaves room for debt reduction, reinvestment and acquisitions. The home health care segment, operating under the ParaMed brand, generated the largest share of billings and net operating figures, with a solid margin. Average daily volume rose far above the year-earlier level, with the recently acquired CBI Home Health contributing a large portion. The release noted that home health care did not receive an Ontario rate rise, which weighed on the segment's margin even as volumes expanded.
The long-term care segment produced substantial billings and net operating figures at a solid margin. Average occupancy remained near full, only marginally below the level of a year earlier. Funding for long-term care rose, though out-of-period funding recorded in the quarter was lower than a year earlier. Extendicare continues to modernize its portfolio. A new, larger long-term care home in Peterborough opened in September, replacing a home with fewer, older Class C beds. The vacated Peterborough property was sold after the quarter ended, with a sizeable estimated pre-tax gain. The company expects to conclude the divestiture of another vacated Class C home, Carlingview Manor, in the December quarter.
The managed services segment generated modest billings but a very high margin on its net operating figure. This segment includes the SGP Purchasing Network and Extendicare Assist. Its asset-light model is less sensitive to staffing costs and provincial per-diem rates than directly operated homes. Year-to-date figures show billings, net profit, the adjusted operating measure and adjusted funds from operations all reached substantial levels. This indicates the improvement extends beyond a single quarter, with the enlarged home health business now contributing for a full period.
The company declared a monthly dividend per share for November, payable in mid-December to shareholders of record at the end of November. It is designated an eligible dividend for Canadian tax purposes. Dividends declared during the quarter totalled a modest amount per share. Management did not provide formal financial guidance but said earlier integration work is largely complete. The focus now turns to integrating CBI while supporting the needs of an aging population. Extendicare operates a large network of long-term care homes and delivers a very large volume of home health care hours annually. Future results will be shaped by the pace of CBI integration, changes in provincial home health care rates, long-term care occupancy trends and the completion of redevelopment projects. Labour availability and wage pressures remain sector-wide considerations.