Extendicare Inc.

Consolidated Q2 revenue increased 59.4% to $611 million. Adjusted EBITDA was $68.3 million, up $28.5 million or 71.7% year over year. Net earnings were $30.9 million, down $1.1 million year over year, but adjusted for one-time items net earnings were $36.4 million, or $0.38 per basic share, up $15.6 million. AFFO was $36.5 million, or $0.48 per basic share after excluding the DSU-related withholding tax impact; that was up 52.9% year over year. Home health revenue increased by $202 million year over year, with NOI up $25.2 million or 117.8%; CBI contributed approximately $146 million of revenue and $19.5 million of NOI. Home health NOI margin was 12.9%, down 60 bps. LTC revenue increased $26.5 million or 12.8%, NOI increased $5.7 million or 23.9%, and LTC NOI margin was 12.7% in the quarter; trailing-12-month normalized LTC NOI margin was about 11.8%. Managed services revenue declined $600 thousand to $17.1 million while NOI rose $200 thousand to $9.9 million. The company said CBI is tracking ahead of initial expectations and reiterated that the CBI integration is expected to take 18 to 24 months; it also continues to expect annualized home health market growth of roughly 6% to 8% over time. Balance sheet updates included $450 million of senior unsecured notes priced at 4.345% due April 2031, a new $250 million unsecured credit facility due April 2029, a weighted average interest rate reduced by 80 bps to 4.4%, $208 million of overall liquidity, and pro forma debt to adjusted EBITDA of approximately 2.5x.

Michael Guerriere framed the quarter as proof that Extendicare’s acquisition strategy is working, highlighting that CBI, the Revera homes, and Closing the Gap are all outperforming the original underwritten adjusted EBITDA. He stressed that the company now has a more flexible, investment-grade capital structure and is focused on disciplined execution, integrating CBI, and continuing its redevelopment program. His tone was confident and constructive, with repeated emphasis on demand from demographics, scalability, and the company’s ability to expand access to care.

David Bacon walked through the financial bridge in detail, pointing to $611 million of revenue, $68.3 million of adjusted EBITDA, and adjusted AFFO of $42.9 million, or $0.48 per share, excluding the DSU-related tax withholding impact. He explained that one-time items included $8.1 million of pretax costs tied to the unsecured credit structure and debt prepayment, $8.7 million of transaction and integration costs mainly related to CBI, and lower gains on asset sales to the JV. On capital structure, he noted the $450 million unsecured notes at 4.345%, the new $250 million unsecured facility, $208 million of liquidity, a reduced weighted average interest rate of 4.4%, and leverage at about 2.5x, which he said leaves the company comfortable and flexible.

Analysts focused on whether the home health margin dip was temporary and if the recent back-office investment was being made for future M&A; management said the investment was mainly to support rapid organic growth, not to prepare for acquisitions, and said they do not expect another big step-up in headcount. Questions also centered on Ontario rate increases, and management said home care rates typically track labor cost inflation over time, but announcements are not on a fixed schedule and can include retroactive catch-ups. On CBI, management said integration is still early, there were no surprises on operations, synergy targets of $7.4 million remain achievable, and further acquisitions are unlikely until later next year at the earliest.