Q4 2024 Extendicare Inc Earnings Call

Yeah.

Operator: Thank you for standing by.

Speaker Change: Thank you for standing by this is the conference operator, and welcome to extended care, Inc. Fourth quarter 2024 Analyst Conference call. As a reminder, all participants are in listen only mode and the conference is being recorded.

Operator: This is the conference operator. Welcome to Extendicare Inc. Fourth Quarter 2024 Analyst Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero.

Speaker Change: After the presentation, there will be an opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you may signal, an operator by pressing star zero.

Jillian Fountain: I would now like to turn the conference over to Jillian Fountain, Vice President, Investor Relations. Please go ahead.

Speaker Change: I would now like to turn the conference over to Jillian Fountain, Vice President Investor Relations. Please go ahead.

Jillian Fountain: Thank you, operator, and good morning, everyone. Welcome to Extendicare's 2024 fourth quarter four-year results conference call. Joining me today are Extendicare's President and CEO, Michael Guerriere, and Executive Vice President and CFO, David Bacon. Our Q4 results were released yesterday and are available on our website, as is a live audio webcast of today's call, along with an accompanying slide presentation.

Jillian Fountain: Thank you operator, and good morning, everyone welcome to extend the cares 'twenty 'twenty four fourth quarter and full year results conference call.

Jillian Fountain: Joining me today are extended cares president and CEO, Michael Greer, and executive Vice President and CFO David Bacon.

Jillian Fountain: Our Q4 results were released yesterday and are available on our website.

Jillian Fountain: This is a live audio webcast of today's call along with an accompanying slide presentation.

Jillian Fountain: An archived recording will also be available on our website following the call today, as well as replay numbers and passcodes have been provided on our press release to access an archived recording until midnight on March 14th. Before we get started, please be reminded that today's call may include forward-looking statements and non-GOP and other financial measures. Such forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied today.

Jillian Fountain: An archived recording will also be available on our website following the call today as well as replay numbers and Passcodes have been provided on our press release to access an.

Jillian Fountain: Archived recording until midnight on March 14th.

Jillian Fountain: Before we get started please be reminded that today's call may include forward looking statements and non-GAAP and other financial measures.

Jillian Fountain: Such forward looking statements involve known and unknown risks and uncertainties that may cause the actual results to differ materially from those expressed or implied today.

Jillian Fountain: We have identified such factors as well as details of non-GAAP and other financial measures in our public filings with the securities regulators and suggest that you refer to those filings.

Jillian Fountain: Yeah, Hey, unifies, such factors as well as details of non-GAAP and other financial measures in our public filings with the securities regulators and suggest that you refer to those filings.

Michael Guerriere: With that, I'll turn the call over to Mike. Thank you, Jillian.

Michael Greer: With that I'll turn the call over to Michael.

Michael Greer: Thank you Julien good morning.

Michael Guerriere: Good morning. Two years ago, we set out to transform our company into Canada's leader in the delivery of high-quality long-term care and home care services. We envisioned a model that would allow us to leverage our deep expertise to drive growth in a more capital-efficient manner. Since that time, we have steadily executed on that plan, and I am pleased to share our progress with you today. Yesterday, we announced strong fourth quarter and full year results. Adjusted EBITDA excluding out-of-period items increased by 43.5% to $33.4 million. Our momentum over the last two years continued into Q4 with all segments showing significant NOI and margin growth, as well as improved operating metrics.

Michael Greer: Two years ago, we set out to transform our company into Canada's leader in the delivery high quality long term care and home care services.

Michael Greer: We envisioned a model that would allow us to leverage our deep expertise to drive growth in a more capital efficient manner.

Michael Greer: Since that time, we have steadily executed on that plan and I am pleased to share our progress with you today.

Michael Greer: Yesterday, we announced strong fourth quarter and full year results.

Michael Greer: Adjusted EBITDA, excluding out of period items increased by 43, 5% to $33 $4 million.

Michael Greer: Our momentum over the last two years continued into Q4 with all segments, showing significant NOI and margin growth as.

Michael Greer: As well as improved operating metrics.

Michael Guerriere: In our long-term care segment, Q4 NOI margins increased 150 basis points from the prior year, supported by funding increases, improved occupancy, and reduced agency costs. On the home health care front, we delivered a record 11 million hours of care in 2024, with Q4 showing a 10.1% increase in average daily volume from the prior year period. Margins improved 160 basis points driven by operating efficiency and higher rates. In November, the Ontario government confirmed a 4% rate increase for the home care sector, retroactive to April 1, 2024. This rate increase will support our team members and expand service delivery by enhancing compensation.

Michael Greer: And our long term care segment Q4, NOI margins increased 150 basis points from the prior year supported by funding increases improved occupancy and reduced agency costs.

Michael Greer: On the whole health care front, we delivered a record 11 million hours of care in 2024 with Q4, showing a 10.1% increase in average daily volume from the prior year period.

Michael Greer: Margins improved 160 basis points, driven by operating efficiency and higher rates.

Michael Greer: In November the Ontario government confirmed a 4% rate increase to the homecare sector retroactive to April one 2024.

Michael Greer: This rate increase will support our team members and expand service delivery by enhancing compensation.

Michael Guerriere: strengthening recruitment and retention, and supporting investments in technology for innovative care. We welcome this funding increase in recognition of the importance of the home health care sector as a critical component of seniors care that facilitates continuing independence, enabling people to live at home for as long as possible. In managed services, we opened a new home in Kingston, adding 192 beds to the Axiom JV. Subsequent to Quarter End, we opened another 256 beds in Stittsville, Ontario. Organic growth in bed service by SGP increased 7.4% year over year, reaching 146,300 beds. Contributing to strong results in the quarter.

Michael Greer: Strengthening recruitment and retention and supporting investments in technology for innovative care.

Michael Greer: We welcome this funding increase in recognition of the importance of the home Cal care sector is a critical component of seniors care that facilitates continuing independents, enabling people to live at home for as long as possible.

Michael Greer: In managed services, we opened a new home in Kingston, adding.

Michael Greer: Adding 192 beds to the axiom JV.

Michael Greer: Subsequent to quarter end, we opened another 256 beds instead spill, Ontario.

Michael Greer: Organic growth in bed service by S. G P increased 7.4% year over year, reaching 146300 beds contributing.

Michael Greer: Contributing to strong results in the quarter.

Michael Guerriere: Margins in the managed service segment stayed within the 50 to 55% target range. These results demonstrate the effectiveness of our strategy and give us great confidence in the future as we continue to address the increasing demand for care services.

Michael Greer: Margins in the managed service segments stayed within the 50% to 55% target range.

Michael Greer: These results demonstrate the effectiveness of our strategy and gives us great confidence in the future as we continue to address the increasing demand for care services.

Michael Guerriere: Slide four details the positive impacts of our strategic transformation. We delivered steady growth in both managed services and home health care, reporting significant increases in net operating income and margins year over year. These two service lines now account for about 55% of our net operating income. We continue to leverage our capital light, higher margin approach to redevelopment, supported by our joint venture with Axiom. This enabled us to open two new homes and commence construction on two more. I'll provide more detail on these projects in a moment. Thanks to consistent focus on execution by all of our team members and financial and operating performance improvements across all business segments.

Slide four details the positive impacts of our strategic transformation.

Michael Greer: We delivered steady growth in both managed services and home healthcare reporting significant increases in net operating income and margins year over year.

Michael Greer: These two service lines now account for about 55% of our net operating income.

Michael Greer: We continue to leverage our capital light higher margin approach to redevelopment supported by our joint venture with axiom.

Michael Greer: This enabled us to open two new homes and commence construction on two more.

Michael Greer: I'll provide more detail on these projects in a moment.

Michael Greer: Thanks to consistent focus on execution by all of our team members and financial and operating performance improvements across all business segments.

Michael Guerriere: Our dividend payout ratio for 2024 was less than 50 percent. This performance, coupled with our strong balance sheet and liquidity position, enabled us to announce a 5% increase in our common share dividend to $0.042 per month beginning in March. With continued growth momentum in our operations, we have the option of including dividend increases in future capital allocation decisions.

Michael Greer: Our dividend payout ratio for 'twenty 'twenty four was less than 50%.

Michael Greer: This performance, coupled with our strong balance sheet and liquidity position enabled us to announce a 5% increase in our common share dividend to 4.2 cents per month beginning in March.

Michael Greer: With continued growth momentum in our operations, we have the option of including dividend increases in future capital allocation decisions.

Michael Guerriere: Now we'll turn to our progress in long-term care home redevelopment on slide five. In December, we began construction on two new homes in Port Stanley in London, supported by the Ontario Government's enhanced construction funding subsidy. The new builds will replace 230 Class C beds in two existing Extendicare homes and are expected to open in the first half of 2027.

Michael Greer: Now I'll turn to our progress in long term care home redevelopment on slide five.

Michael Greer: In December we began construction on two new homes in Port Stanley in London supported by the Ontario government's enhanced construction funding subsidy.

Michael Greer: The new builds will replace 230 class C beds in two existing extended care homes and are expected to open in the first half of 2027.

Michael Guerriere: Both projects, together with the St. Catharines project, which we started in September, are under agreement to be sold to the Axiom JV pending regulatory approval, with Extendicare retaining a 15% managed interest. This results in our managed services segment receiving both development fees during construction and management fees once the home is operating. We expect to close the sale of these projects to the JV in Q2.

Both projects together with the St. Catharines project, which we started in September are under agreement to be sold to the axiom JV pending regulatory approval.

Michael Greer: With extended care, retaining a 15% managed interest.

Michael Greer: This results in our managed services segment, receiving both development fees during construction and management fees once the whole Ms operating.

Michael Greer: We expect to close the sale of these projects to the JV in Q2.

Michael Guerriere: As mentioned, we also recently opened two new homes, both held in the Axiom Joint Venture, replacing legacy Extendicare C homes nearby. The first is Limestone Bridge, a new 192-bed home in Kingston that opened in December. And this month, we welcomed residents for the first time to Crossing Bridge, a new 256-bed home in Stittsville. The sale of the vacated Kingston seabed home was completed in December for proceeds of $3.7 million, and we have initiated the sales process for the vacated Ottawa home.

Michael Greer: As mentioned, we also recently opened two new homes, both held in the axiom joint venture, replacing legacy extended care see homes nearby.

The first is limestone bridge, a new 192 bed home in Kingston that opened in December.

Michael Greer: And this month, we welcomed residents for the first time to crossing bridge, a new 256 bed home instead Phil.

Michael Greer: The sale of the vacated Kingston C bed home was completed in December for proceeds of $3 7 million and we have initiated the sales process for the vacated Ottawa Hall.

Michael Guerriere: That leaves us with six homes under construction, which will bring 1,408 new beds into operation to replace 1,097 Class C beds. This progress highlights the outstanding efforts and dedication of our team. We're excited to welcome residents and their families to their new homes and grow our care community.

Michael Greer: That leaves us with six homes under construction, which will bring 1408, new beds into operation to replace 1097 class C beds.

Michael Greer: This progress highlights the outstanding efforts and dedication of our team.

We're excited to welcome residents and their families to their new homes and grow our care community.

Michael Guerriere: The redevelopment team is also advancing 12 other projects to replace our remaining seahomes in the coming years, in anticipation of future capital funding subsidy programs. In November, we announced an agreement with Revera to acquire nine Class C long-term care homes in Ontario and Manitoba, along with one parcel of vacant land for $60.3 million. This is summarized on slide six. This purchase will be funded from cash on hand. We continue to work through regulatory approvals and anticipate that this transaction will close in Q2 of this year. The acquisition will move almost 1,400 long-term care and private pay retirement beds from our managed services segment to our long-term care segment.

Michael Greer: The redevelopment team is also advancing 12 other projects to replace our remaining C homes in the coming years in anticipation of future capital funding subsidy programs.

Michael Greer: In November we announced an agreement with Rivera to acquire nine class C long term care homes in Ontario, and Manitoba, along with one parcel of vacant land for $63 million.

Michael Greer: This is summarized on slide six.

Michael Greer: This purchase will be funded from cash on hand.

Michael Greer: We continue to work through regulatory approvals and anticipate that this transaction will close in Q2 of this year.

The acquisition will move almost 1400 long term care and private pay retirement beds from our managed services segment to our long term care segment.

Michael Guerriere: We plan to redevelop the 361 long-term care beds housed in the mixed use homes into six new long-term care homes, adding approximately 1,100 beds to our redevelopment pipeline as we work to meet growing demand. Additionally, a new Axiom JV320 bed home near Ottawa is under construction to replace the Carlingview Manor C bed home, which is included in the nine-home purchase from Rivera. We expect to recover most, if not all, of the purchase price for this acquisition by selling the seven operational pure play retirement homes after the LTC beds have been redeveloped. Relatedly, Revira announced an agreement to sell 21 Class C long-term care homes that are currently managed by Extendicare.

Michael Greer: We plan to redevelop the 361 long term care beds housed in the mixed use homes.

Michael Greer: Into six new long term care homes, adding approximately 1100 beds to our redevelopment pipeline as we work to meet growing demand.

Michael Greer: Additionally, our new axiom JV 320 bed home near Ottawa is under construction to replace the Carling view manners seabed home, which is included in the nine home purchase from Rivera.

Michael Greer: We expect to recover most if not all of the purchase price for this acquisition by selling the seven operational pure play retirement homes. After the L. T C beds have been redeveloped.

Michael Greer: Relatedly Riviera announced an agreement to sell 21 class C. Long term care homes that are currently managed by extended care.

Michael Guerriere: As a result, upon closing of the transactions, Extendicare's management agreements with Revera for 30 homes will terminate. We anticipate that the net impact of these two transactions will be accretive to earnings with a projected increase in the annual NOI of $6.8 million and AFFO of $1.4 million or $0.02 per share.

As a result upon closing of the transactions extended care's management agreements with Rivera for 30 homes will terminate.

We anticipate that the net impact of these two transactions will be accretive to earnings with a projected increase in annual NOI of $6 8 million and a F. A photo of one 4 million or two cents per share.

Michael Guerriere: We will continue to look for acquisitions that are consistent with our strategy and leverage our technology platform to add scale and synergy to the business.

Michael Greer: We will continue to look for acquisitions that are consistent with our strategy and leverage our technology platform to add scale and synergy to the business.

David Bacon: Now I'll turn it over to David Bacon to discuss our financial results in more detail. Thanks, Michael. I'll start by reviewing the consolidated results for the quarter, then review the balance sheet and our liquidity position. Our consolidated Q4 revenue increased by 11.8% to $391.6 million, driven by the same factors that have fueled growth throughout most of 2024, including LTC funding increases and occupancy recovery, growth in our home care volumes and increased bill rates, and expansion of our managed services. Excluding an out-of-period net benefit and revenue of $0.9 million recognized in the quarter, our NOI improved by $10.1 million, or 27.1%, to $47.5 million.

Michael Greer: Now I'll turn it over to David Bacon to discuss our financial results in more detail.

Michael Greer: Yeah.

David Bacon: Thanks, Michael.

David Bacon: I'll start by reviewing the consolidated results for the quarter, then review the balance sheet and our liquidity position.

David Bacon: Our consolidated Q4 revenue increased by 11, 8% to 391.6 million driven by the same factors that have fueled growth throughout most of 2024, including LTC funding increases at occupancy recovery.

David Bacon: And our home care volumes and increased bill rates and expansion of our managed services.

David Bacon: Excluding an out of period net benefit in revenue or 0.9 million recognized in the quarter, our NOI improved by $10 1 million or 27, 1% to $47 5 million.

David Bacon: This reflects our revenue growth and strong operating metrics across all segments, partially offset by higher operating costs. Excluding the impact of out-of-period funding, adjusted EBITDA increased by $10.1 million, or 43.5%, reflecting the improvement in NOI supported by stable administrative costs. We delivered another quarter of robust growth in the fourth quarter with AFFO of $0.34, up $0.23 in the same period last year. When adjusted to remove out-of-period funding in the quarter, our AFFO per share increased year-over-year by $0.10 to $0.28.

David Bacon: This reflects our revenue growth and strong operating metrics across all segments, partially offset by higher operating costs.

David Bacon: Excluding the impact of out of period funding adjusted EBITDA increased by $10 1 million or 43, 5%, reflecting the improvement in NOI supported by stable administrative costs.

David Bacon: We delivered another quarter of robust growth in the fourth quarter was <unk> 34 up 23% 23 cents in the same period last year when adjusted to remove out of period funding in the quarter, our <unk> per share increased year over year by 10 to 28 cents.

David Bacon: Extendicare ended the year in a strong liquidity position. The company held cash on hand of $122 million and access to a further $108 million under our new $275 million senior secured credit facility. As previously announced, the company accessed its DelayDraw term loan facility in December to redeem the $126.5 million of 5% convertible unsecured subordinated ventures that were due to mature in April of 2025. With the repurchase of the debentures, we are ending the year with a strong balance sheet and a favourable maturity profile. We have reduced our payout ratio on AFFO throughout the year, giving us enhanced financial flexibility.

David Bacon: Extended care ended the year in a strong liquidity position the company held cash on hand of $122 million and access to a further $108 million under our new 275 million senior secured credit facility.

David Bacon: As previously announced the company accessed this delayed draw term loan facility in December to redeem the $126 5 million or 5% convertible unsecured subordinated debentures that were due to mature in April of 2025.

David Bacon: With the repurchase of the debentures, we are ending the year with a strong balance sheet and a favorable maturity profile, we have reduced our payout ratio on a F F. Both throughout the year, giving us enhanced financial flexibility.

David Bacon: We're starting 2025 from a position of strength and demonstrated ability to pursue our redevelopment agenda with our capital light model in partnership with Axiom, which will drive growth in our higher margin managed services segment. The structure also allows us to recycle capital from the disposition of vacated legacy seahomes into new projects, which provides us additional flexibility to meet our capital.

David Bacon: We're starting 2025 from a position of strength and demonstrated the ability to pursue a redevelopment agenda with our capital light model in partnership with axiom, which will drive growth in our higher margin managed services segment.

David Bacon: The structure also allows us to recycle capital from the disposition of vacated legacy C homes into new projects with provide which provides us additional flexibility to meet our capital needs.

David Bacon: Turning now to our individual segments, starting with long-term care, our Q4 results included out-of-period funding of $1.9 million to support union wage settlements that were retroactive to April of 2023. Excluding this out-of-period funding, our revenue increased by $16.6 million, driven by the funding increases, timing of our envelope spend, and our improved occupancy. NOI increased by $4.7 million, driven by increases in revenue, partially offset by higher operating Corresponding NOI margins increased to 10% in the quarter from 8.5% last year. Long-term care continues to benefit from this year's funding increases, which have helped manage inflationary pressures. Reduced agency staff usage, especially in Western Canada, further improved our cost structure, helping us to maintain our historical NOI level.

David Bacon: Turning now to our individual segments, starting with long term care.

David Bacon: Our Q4 results included out of period of funding of 1.9 million to support Union wage settlements that were retroactive to April of 2023.

David Bacon: Excluding this out of period funding our revenue increased by $16 6 million driven by the funding increases timing of our envelope spend and our improved occupancy NOI increased by $4 7 million driven by increases in revenue, partially offset by higher operating costs.

David Bacon: Corresponding NOI margins increased to 10% in the quarter from eight 5% last year.

David Bacon: Long term care continues to benefit from this year's funding increases, which have helped manage inflationary pressures.

David Bacon: <unk> <unk> agency staff usage, especially in Western Canada further improved our cost structure, helping us to maintain our historical NOI levels.

David Bacon: Turning now to our home health care segment, the 4% bill rate increase denounced late in Q4 in Ontario, retroactive to April 1st of 2024, allowed us to recognize $4.4 million of revenue in the quarter. As you may recall, similar timing of rate increase announcements occurred last year, when a 6.7% increase was announced late in Q4 of 2023, which was retroactive to April of 2023. At that time, we recognized $5.4 million of out-of-period revenue in the quarter. In both cases, the revenue recognized reflects a recovery of eligible costs that were previously incurred in the corresponding retroactive periods, resulting in a year-over-year decrease of $1 million on revenue in NOI.

David Bacon: Turning now to our home health care segment, the 4% Bill rate increase to announce late in Q4 in Ontario retroactive to April one 2024 allowed us to recognize $4 4 million of revenue in the quarter.

David Bacon: As you may recall similar timing of rate increase announcements occurred last year. When a six 7% increased was announced late in Q4 of 2023, which was retroactive to April of 2023.

David Bacon: At that time, we recognized $5 4 million of out of period revenue in the quarter.

David Bacon: In both cases, the revenue recognized reflects a recovery of eligible costs that were previously incurred and the corresponding retroactive periods, resulting in a year over year decrease of $1 million on revenue and NOI.

David Bacon: The 4% bill rate increase will allow us to make further enhancements to our compensation programs and ongoing investments in recruiting, retention and technology in Q1 of 2025. Similar to the prior year, we expect to have one-time revenue and largely offsetting expenses recognized in Q1 related to the balance of the 4% funding increase, which will have minimal impact on NLI. In terms of the home health care results for the quarter, revenue reported in the fourth quarter increased by $20.6 million, or 16.2% from 2023, driven by the 10.1% year-over-year growth in volumes and supported by bill rate increases.

David Bacon: The 4% Bill rate increase will allow us to make further enhancements to our compensation program and ongoing investments in recruiting retention of technology in Q1 of 2025.

David Bacon: Similar to the prior year, we expect to have one time revenue and largely offsetting expenses recognized in Q1 related to the balance of the 4% funding increase which will have minimal impact on NOI.

David Bacon: In terms of the home health care results for the quarter revenue reported in the fourth quarter increased by $26 million or 16, 2% from 2024.

David Bacon: From 2023, driven by the 10, 1% year over year growth in volumes and supported by Bill rate increases.

David Bacon: Excluding the reduction in funding, NOI increased by 4.2 million, or 39.4%, to 14.9 million, with an NOI margin of 10.4%, an increase of 160 basis points over the same quarter last year.

David Bacon: Excluding the reduction in funding NOI increased by $4 2 million or 39, 4% to 14.9 million with an NOI margin of 10, 4% an increase of 160 basis points over the same quarter last year.

David Bacon: Finally, turning to our Managed Services segment, our revenue increased by $2.3 million in the quarter to $18.8 million. Largely due to organic growth in SGP clients and changes in the mix of assist services, including management fees from the newly opened homes in the Axiom JV. NOI increased by 1.2 million to 10.3 million with an NOI margin of 54.6 within our expected range for this segment of between 50 and 55 percent.

David Bacon: Finally, turning to our managed services segment, our revenue increased by $2 3 million in the quarter to $18 8 million largely due to organic growth in S. G. P clients and changes in the mix of assist services, including management fees from the newly opened homes and the axiom JV.

David Bacon: NOI increased by $1 2 million to $10 3 million with an NOI margin of 54.6 within our expected range for this segment of between 50 and 55%.

Michael Guerriere: With that, I'll pass the call back to Michael for his closing remarks. Thank you, David. This has been an outstanding year at Extendicare, and we are starting 2025 from a position of strength and momentum. Our fourth quarter and full year results give us confidence in the potential of our business model and in the leadership team that is making that potential a reality.

Michael Greer: With that I'll pass the call back to Michael for his closing remarks.

Michael Greer: Thank you David.

This has been an outstanding year at extended care and we are starting 2025 from a position of strength and momentum.

Michael Greer: Our fourth quarter and full year results give us confidence in the potential of our business model and in the leadership team that is making that potential a reality.

Michael Guerriere: I'll take a moment now to thank Al Mawani, who retired from our board yesterday after seven years of dedicated service. He chaired several board committees and provided strategic counsel during his tenure, contributing to the success of our transformation agenda. We are deeply grateful for Al's contributions and the insights that he brought to the board's deliberations.

Speaker Change: I'll take a moment now to thank al <unk>.

Speaker Change: Who retired from our board yesterday after seven years of dedicated service.

Speaker Change: He chaired several board committees and provided strategic counsel during his tenure contributing to the success of our transformation agenda.

Speaker Change: We are deeply grateful for ALS contributions and the insights that he brought to the board's deliberations.

Michael Guerriere: Yesterday, we were delighted to announce the appointment of two new, highly accomplished individuals to our Board of Directors, Donald Clow and Heather Ann Irwin. Their proven track records and governance experience will bring new insights to the board as we pursue our strategy to meet the needs of our stakeholders and create shareholder value. While we find ourselves in a time of increased political and economic uncertainty, one undeniable truth is that the demand for health care and services from the seniors population will continue to grow for years to come.

Speaker Change: Yesterday, we were delighted to announce the appointment of two new highly accomplished individuals to our board of directors.

Speaker Change: Donald Clos and Heather and Irwin.

Speaker Change: Their proven track records and governance experience will bring new insights to the board as we pursue our strategy to meet the needs of our stakeholders and create shareholder value.

Speaker Change: While we find ourselves in a time of increased political and economic uncertainty one undeniable truth is that the demand for health care and services from the seniors population will continue to grow for years to come.

Michael Guerriere: Canada, as a country, is challenged to deliver the highest standards of care and services to our aging population. Extendicare is committed to meeting that challenge. It is this commitment that pushes us to continuously expand our redevelopment portfolio, to invest in technology, to strengthen our recruitment and training programs, and to look for complementary acquisitions. This is made possible by maintaining a healthy balance sheet and a very disciplined approach to capital allocation. The growth and improved performance we are experiencing today is made possible by our team who are dedicated to helping people live better. I offer my congratulations to them on a successful year of outstanding care delivery and expanding access to care for tens of thousands of seniors who depend on us for a better quality of life.

Speaker Change: Canada as a country is challenged to deliver the highest standards of care and services to our ageing population extended care is committed to meeting that challenge.

Speaker Change: It is this commitment that pushes us to continuously expand our redevelopment portfolio.

Speaker Change: To invest in technology to strengthen our recruitment and training programs and to look for complementary acquisitions.

Speaker Change: This is made possible by maintaining a healthy balance sheet and a very disciplined approach to capital allocation.

Speaker Change: The growth and improved performance. We are experiencing today is made possible by our team who are dedicated to helping people live better.

Speaker Change: I offer my congratulations to them on a successful year of outstanding care delivery and expanding access to care for tens of thousands of seniors who depend on us for a better quality of life.

Michael Guerriere: We are sincerely grateful to each person who helps make Extendicare the caring community that it is today.

Speaker Change: We are sincerely grateful to each person who helps make extended care the carrying community than it is today.

Operator: With that, we're happy to take any questions that you might have. Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two.

Speaker Change: With that we're happy to take any questions that you might have.

Speaker Change: Yeah.

Speaker Change: Thank you we will now begin the question and answer session joined our question queue. You May Press Star then one on your telephone keypad, you'll hear tone acknowledging your request.

Speaker Change: A speakerphone please pick up your handset before pressing Eddy key cause Italia question. Please press Star then two.

Kyle McPhee: Our first question comes from Kyle McPhee with Cormark Securities. Please go ahead. Hello, everyone. Great quarter. I'm thinking about the capital allocation decisions I see you making. You have an underleveraged balance sheet, you have excess capital building up, and in the face of this great capital position, you're using the capital like JV structure for your Class C redevelopments. That doesn't dip into your excess capital, but probably does leave some cash on the table long term. And now we see you increasing your dividend by 5%. You likely have room to pick it much higher if you wanted to.

Speaker Change: The first question comes from Kyle Mcphee with Carmax Securities. Please go ahead.

Speaker Change: Hello, everyone.

Speaker Change: Great quarter, I'm thinking about the capital allocation decisions I see you're making do you have an under.

Speaker Change: Your leverage balance sheet, you have excess capital building up in the face of this great capital position your Youre using the capital light JV structure for your class E Redevelopments.

Speaker Change: Different to your excess capital, but probably does leave some cash on the table long term and now we see you increasing your dividend.

Speaker Change: 5% you'd likely have room to take that much higher if you wanted to so help me with the read through here. It seems like you're sitting on a big and attractive use of capital can you share some thoughts on what you're saving your capital foreign.

Michael Guerriere: So help me with the read-through here. It seems like you're sitting on a big and attractive use of capital.

Michael Guerriere: So can you share some thoughts on what you're saving your capital for and when might the capital deployment start beyond the Rivera deal? Well, I think I think the capital deployment started last year with the acquisition that we announced in December. And we will use our balance sheet to fund that acquisition that we expect to close in Q2. And we are actively looking at other acquisition opportunities. We'll be very disciplined in looking at those and looking for acquisitions that fit very tightly with the strategy that we've articulated and that give us organic growth opportunities. I'd say organic growth is very important to us.

Speaker Change: Capital deployment start beyond the Riverdale.

Speaker Change: Well I think I think the capital deployment started last year with.

Speaker Change: The acquisition that we announced in December and we will use our balance sheet to fund that acquisition that we expect to close in Q2, and we are actively looking at other acquisition opportunities.

Speaker Change: We'll be very disciplined in looking at those.

Speaker Change: And looking for acquisitions that fit very tightly with the strategy that we've articulated.

Speaker Change: And that.

Speaker Change: Give us or grant organic growth opportunities I'd say organic growth is very important to us. So when we look at acquisitions, we're looking at acquisitions that are.

Michael Guerriere: So when we look at acquisitions, we're looking at acquisitions that will support further organic growth going forward. So I think that's the kind of thing that you can look forward to in the future. And as we see what kinds of opportunities come up in that regard, we'll be balanced in our capital allocation. And as I think we're demonstrating with choosing to include a dividend increase in our plans this quarter. Got it. Okay, thanks for that color.

Speaker Change: Will support further organic growth going forward.

So I think that's.

Speaker Change: The kind of thing that you can you can look forward to in the future.

Speaker Change: And as.

Speaker Change: As we see what kinds of opportunities.

Speaker Change: Come up in that regard, we'll be balanced in our capital allocation and and as I think we're demonstrating with choosing to include a dividend increase in our in our plans this quarter.

Speaker Change: Got it okay. Thanks for that color and then I mean, how much of what Youre looking at in your M&A pipeline has to do with.

Michael Guerriere: And then I mean, how much of what you're looking at in your M&A pipeline has to do with And, you know, changing the weightings across your various business segments, maybe adding a new business segment, or is it more kind of mechanical and you're just putting your capital to the highest return on capital?

Speaker Change: You know changing the weightings across your various business segments, maybe adding a new business segment or is it more kind of mechanical and you're just putting your capital to the highest return on capital opportunities you see.

Michael Guerriere: Well, first, I don't see us adding any new business lines to our strategy at this point. We have a very long runway of need across the country for home care, for long-term care, so we'll stay very disciplined in those spaces. There are, you know, there are a lot of opportunities for us to expand from a, you know, geographic perspective into other provinces or into other regions of the provinces where we already operate. So, we see enough opportunity there to stay focused in our strategy. And Kyle, it does give me an opportunity to just highlight how much we've invested in our back office, in our systems, in our cloud-based solutions.

Speaker Change: Well first I don't see us, adding any new business lines to.

Speaker Change: Two our strategy at this point.

Speaker Change: We have a very long runway of of need across the country for home care for long term care. So we'll we will stay very disciplined in those spaces.

Speaker Change: Are there are you know there are a lot of opportunities for us too.

Speaker Change: Expand from Budd.

Speaker Change: Geographic perspective.

Speaker Change: Into into other provinces or into other regions of the provinces, where we already operate.

Speaker Change: So.

Speaker Change: We see a lot of opportunity there too.

Speaker Change: To stay focused in our strategy and Kyle It does give me an opportunity to.

Speaker Change: Just highlight how much we've invested in our back office in our systems and our cloud based solutions and so we very much are looking to leverage those and take advantage of the.

Michael Guerriere: And so, we very much are looking to leverage those and take advantage of the operating leverage that comes from adding volume to that existing platform. So, that's why we'll stay disciplined in the spaces that we're in using the capital structure that we've set up. Got it.

Speaker Change: Operating leverage that comes from adding volume to two that existing platform.

Speaker Change: So that's why we'll stay disciplined in the in the spaces that we're in using the capital structure that we've we've we've set up.

Speaker Change: Got it and last one just around this topic.

Michael Guerriere: And last one, just to round out this topic, you know, you mentioned buying things that also offer organic growth. You know, when I think about a long term care home, there's a fixed number of beds. So it's just suggesting that your M&A pipelines probably weighted more towards home health care? I would say that we're looking at potential acquisitions in all three segments. So, no, I wouldn't say that it's weighted on any particular segment, but purchases in long-term care will be aimed at increasing the services model that we're using, as opposed to big expansions in our real estate holdings.

Speaker Change: Now you mentioned buying things that also off of organic growth.

Think about a long term care home, there's a fixed number of beds.

Speaker Change: Is that suggesting that your M&A pipeline is probably weighted more towards home health care.

Speaker Change: I would say that we're looking at add potential acquisitions in all three segments.

So so no I wouldn't say that it's weighted on any on any particular segment, but you know purchases in in long term care will be aimed at increasing the services model that that where we're using as.

Speaker Change: As opposed to a big expansions in our real estate holdings. So I think we want to you know move more than in the direction of operating long term care homes.

Michael Guerriere: I think we want to, you know, move more in the direction of operating long-term care homes and find to have, you know, the minority stakes that we do in the joint venture. But I think we'd rather operate homes and focus on services than on expanding our real estate holdings. Got it. Okay.

Speaker Change: And find to have the minority stakes that we do in the joint venture, but I think we'd rather operate homes and focus on.

Speaker Change: On services, then on expanding our real estate holdings.

Speaker Change: Got it okay. Thank you very much for the answers I'll pass the line.

Kyle McPhee: Thank you very much for the answers, I'll pass.

Jonathan Kelcher: The next question comes from Jonathan Kelcher with TD Cohen. Please go ahead. Thanks, good morning. First question, just on the home health care, 10% year-over-year growth, obviously very strong, and I think you're in around 10% for most of 2024. How should we think about the year-over-year growth going forward? Well, this is always the big challenge in predicting what that demand curve looks like. You know, we've often in the past pointed to the demographic drivers, which, you know, which have been around four percent per year for, you know, the customer base that we're serving. But what we've seen in recent years is, you know, first of all, a catch up on the backlog that grew during the pandemic.

Speaker Change: The next question comes from Jonathan Chang with TD Cowen. Please go ahead.

Jonathan Chang: Thanks, Good morning.

Jonathan Chang: First question just on the home health care Tempur.

Speaker Change: 10% year over year growth, obviously, very strong and I think you're in around 10% for most of 2024.

Speaker Change: How should how should we think about the year over year growth going forward.

Speaker Change: Well this is always the big challenge.

Speaker Change: In predicting.

Speaker Change: What that that demand curve looks like Oh, we've often in the past pointed to the demographic drivers, which you know which have been around 4% per year.

Speaker Change: For you know the customer base that we're serving but what we've seen in recent years as you know first of all a catch up on the backlog that that that group during the pandemic, but now what we're seeing.

Michael Guerriere: But now what we're seeing is that growth in long-term care services and even private pay retirement capacity has slowed down. And so it's not keeping up with the demographics. And so home care is being turned to to fill the gap. So, right now, we're not seeing any slowdown in the demand for home care services. So I think we may be, you know, closer to the high single digits than the low single digits for us, you know, for the foreseeable future.

Speaker Change: Is that that growth in long term care services and even private pay retirement capacity has slowed down and so there it's not keeping up with the demographics and so homecare is being turned to <unk> to fill the gap.

Speaker Change: So right now we're not seeing any slowdown in the demand for for home care services.

Speaker Change: So I think I think we may be a you know closer to the high single digits and then the low single digits for US you know for the for the foreseeable future.

Michael Guerriere: But that, you know, that can change depending on capacity in the other segments. Okay, so your limiting factor in your term would, I guess, just be your ability to hire more staff. Well, at this point, we've pretty much solved that issue. I mean, we're certainly able to grow home care at a 10% annual clip. So I think at this point, it's more the demand that is driving the growth rate as opposed to our ability to recruit and train people to deliver the service.

Speaker Change: But that you know that that can change depending on capacity and in the other segments.

Speaker Change: Okay. So youre eliminating factor near term would I guess, just the your ability to hire more staff.

Speaker Change: Well at this point, we've pretty much solve that issue I mean, we're certainly able to grow home care at a at a 10% annual clip. So I think at this point, it's more of the demand that is driving the growth rate as opposed to our.

Speaker Change: Ability to recruit and train people to deliver the service.

Michael Guerriere: Okay, that's good. On for long term care, and I guess home health care, what are what are your expectations for rate increases? this April. Well, we've been through a period of catch up in the, you know, to to the inflation that we experienced in the aftermath of the pandemic. So I think the rate increases have been, you know, outsized just to just to catch up. But I think we see it returning now to keeping pace with inflation.

Speaker Change: Okay.

Speaker Change: Good on for long term care and home health care, what are what are your expectations for rate increases.

Speaker Change: This April.

Speaker Change: Well, we've been through a period of catch up in the you know due to the inflation that we experienced in the aftermath of the pandemic. So I think the rate increases have been you know outsized just to just to catch up.

Speaker Change: But I think we see it returning now to keeping pace with with inflation.

Michael Guerriere: Okay, and then lastly, and I guess it's back to capital allocation. You talked about it being below 50% payout ratio as one of the reasons. Should we think about the 50% payout ratio as a way to forecast future dividend bumps? Yeah, John, I think, obviously, that's a factor that we'll look at. I think, you know, it was a decision that, that we took this time, as you pointed out, it's been 10 years or more. We take it looking at payout, looking at our liquidity, looking at our need for capital. And I think, you know, feel quite confident that we can, we could make that increase.

Okay.

Speaker Change: And then lastly, the and it gets us back to capital allocation.

Speaker Change: First our first dividend bump in.

Speaker Change: Sure and you talked about it being below 50% payout ratio is one of the reasons should we sort of think about the 50% payout ratios as a way to kind of forecast future dividend bumps.

Jonathan Chang: Yeah, Jonathan I think.

Jonathan Chang: Obviously, that's a factor are the that we'll look at I think you know it was a decision that we took this time as you pointed out it's been 10 years or more we take it looking at pay out looking at our liquidity looking at our need for capital and I think you know feel quite confident.

Jonathan Chang: The weakened we could make that increase but we also do so with the thought the outlook that you know.

Michael Guerriere: But we also do so with the thought, you know, the outlook that you know, we're fairly confident in our growth prospects. And therefore, you know, we'll also look at, you know, how the business is performing going forward as the last piece of the puzzle, in addition to opportunities around other capital allocation and M&A. So I don't, I wouldn't call the 50% payout as some hard threshold that we've now developed or will have. But certainly, when you're down around that level, and if we can maintain that as long as we remain confident in the growth prospects and how the business is performing, you know, it would be a factor.

Jonathan Chang: So we're fairly.

Jonathan Chang: Confident in our growth prospects and therefore, you know we will also look at how the business is performing going forward is the last piece of the puzzle in addition to opportunities around other capital allocation and M&A.

Jonathan Chang: So I don't I wouldn't call that 50% payout as some hard threshold that we've we've now developed or will have but certainly when you're down around that level.

Jonathan Chang: And if we can maintain that as long as we remain confident in the growth prospects and how the business is performing.

Jonathan Chang: It would be a factor but.

Michael Guerriere: But, but not I wouldn't want to think of it as a hard threshold. Okay, fair enough.

Jonathan Chang: But not I wouldn't want to think of it as a hard threshold.

Jonathan Chang: Okay Fair enough I'll turn it back thanks.

Jonathan Kelcher: I'll turn it back. Thanks.

Christopher Pugh: The next question comes from Christopher Pugh with Kennecott Genuity. Please go ahead. Hi, thanks. Hi, Michael. Hi, David. I'm on the line for Tanya. I just got a few questions.

Speaker Change: Our next question comes from Christopher King.

Speaker Change: Canaccord Genuity, Inc. Go ahead.

Speaker Change: Yeah.

Speaker Change: Oh, I think so hard micro hi, David you know I'm on the line for <unk>.

Speaker Change: Just got a few questions.

Michael Guerriere: So, in regarding construction costs and things like that for the year in 2024 has been kind of creeping up. Just kind of wondering what could be the strategies for dealing with this and what could be the impact on the JV growth and perhaps meeting hurdles of Axiom? Yeah, sure. I think a couple of thoughts there. I do actually think, while the costs for the new projects that we started last year would look higher than the first series of projects we started, we do feel that at the moment, construction costs had leveled off. I say that before we get into maybe some of the more recent discussions around tariffs and tariff threats, etc.

Speaker Change: So and regarding construction costs and things like that for the year in 2024. It has been creeping up I'm just kind of wondering what what could be the strategy for dealing with this on and what could be the impact on the JV growth and perhaps meeting hurdles with axiom.

Speaker Change: Yeah sure I think a couple a couple of thoughts there I do actually think while the costs for the new projects that we started last year would look higher than the first series of projects. We started we do feel that at the moment construction cost had tapered off at leveled off.

Speaker Change: So and I say that before we get into maybe some of the more recent discussions and in and around.

Michael Guerriere: We did see a period of leveling off, which is also why you were able to see us start 3 new projects late in the year with the capital funding subsidy, which didn't change from the year before. We did see that. I think going forward, a couple of comments. There is some uncertainty now, potentially, with tariffs on what that does to inputs. It's probably more the reciprocal tariffs that Canada may put in place. I think the important thing is I don't think any of us know what that's going to look like, it's impossible to tell, but we do have to monitor that collectively, and not just on our construction costs, but other things, but we really don't know and we need to let that play out.

Speaker Change: Around tariffs and tariff threats et cetera. So we did see I think a period of leveling off which is also while you were able to see us start three new projects late in the year with the capital funding subsidy, which didn't change from the year before so I think so we are we did see that I think going forward.

Speaker Change: You know a couple of comments there there is some uncertainty now but potentially with tariffs on what that does to inputs. It's probably more of the reciprocal tariffs that Canada may put in place, but I think whats.

Speaker Change: The important thing is I don't think any of us know what what that's going to look like it's very it's impossible to tell but you know there we do have to monitor that collectively in and not just on our construction costs, but other things, but we really don't know and we need to let that play out.

Michael Guerriere: And then I think the other thing from our perspective is, given the demand, given the backlog in LTC and the waitlists, the Ford government being re-elected for a new four-year mandate, we do believe that the capital funding program will get revisited and continue to be monitored by the government and the sector. And that's a bit of a lever to balance out effects, whether it's inflation or tariffs or interest rates, and that goes for if costs go up or costs go down. So, we think there's still potentially some timing issues where perhaps the funding subsidy is a little out of whack with what's happening on the underlying costs, but we do believe the demand is there and we do believe the programs will adjust as needed to continue some pace of redevelopment.

Speaker Change: And then I think the other.

Speaker Change: Thing from our perspective as you know given the demand given the backlog and L. T C and the Waitlists.

Speaker Change: You know the Ford government being reelected for a new four year mandate. We you know we do believe that.

Speaker Change: The capital funding program will get revisited and continue to be monitored by the government in the sector and.

Speaker Change: And we that's a bit of a lever to balance out affects whether it's it's inflation or tariffs or interest rates and that goes for if costs go up or cost go down. So we think well we think there's still potentially some timing issues, where perhaps the funding subsidies a little of a lot of out of whack with what's happening on.

Speaker Change: The underlying costs, but we do believe the demand is there and we do believe the programs will we'll adjust as needed to continue some pace of redevelopment.

Michael Guerriere: That's really great color and yeah, that's a really fair comment about nobody really knows what the tariff landscape will be. Just another follow-up question to the construction, I noticed that for the contract. The kind of the fixed price for the contracts are always less than 100% of the total development cost. Just wondering, like, how come the The contracts are not fixed to 100% of the expected costs, and it seems like there was an uptick in the proportion of costs being fixed for St. Catharines since the Q3 report. Yeah, I think the construction cost contracts, the fixed price, are for the hard cost of construction.

Speaker Change: Well, that's that's really great color and yeah, that's a really fair comment about nobody really knows what the tariff landscape will be.

Speaker Change:

Another follow up question to the construction.

Speaker Change: I noticed that for the contracts.

Speaker Change: The kind of the fixed price contracts are always less than a 100% of the total development cost just wondering like how come.

Speaker Change:

Speaker Change: The kind of the contracts that are fixed to 100% of the expected cost and it seems like there was an uptick in the proportion of costs being fixed for Katherine since the Q3 report.

Speaker Change: Yeah, I think the.

Speaker Change: The fixed cost the construction cost contracts with fixed price or for the hard cost of construction.

Michael Guerriere: So, that's all the inputs and the labor related to building the building. On top of that, there's contingencies, there's the value of both, there's the cost of the land. Then all the related soft costs, you know, architects, designers. We go through site plan approval, designers, et cetera. And then there's also furniture and fixtures that go into the building. So, they're not part of the physical plans, but all of the equipment and beds and other equipment that we bring into the home. So, that's the delta there. There's quite a few other cost categories that go into building the building.

Speaker Change: So that's all the inputs and the labor related to building the building on top of that there's contingencies. There's the value of built there's the cost of the land.

Speaker Change: Then all of the related soft costs are architects designers. We go through site plan approval, our designers etcetera, and then Theres also.

Speaker Change: Furniture and fixtures that go into the building so they're not part of the physical plant, but all of the equipment in beds and and other equipment that we bring into the home. So that's the delta there. There's there's quite a few other cost categories that go into building the building.

Michael Guerriere: And then there also is the last piece of our cost estimates is an estimate of the capitalized interest during construction. So, that's a function of the size of the home, how long we expect it to take, and obviously the underlying interest rate assumption. So, there's quite a few cost categories and other elements that go into that delta between the hard construction costs and the overall costs. That's a great detail there.

Speaker Change: And then there also is the last piece of our cost estimates as is.

Speaker Change: Estimate of the capitalized interest during construction. So there that's a function of the size of the home how long we expect it to take and obviously the underlying interest rate assumption. So theres quite a few cost categories and other elements that go into that delta between the hard construction costs and the overall costs. So.

Speaker Change: That's a great detail there.

Michael Guerriere: And my last question is in regards to the Class C semi-private home occupancy rates. I mean, it's definitely even higher than the pre-pandemic levels. It is lower than the other kind of rooms, but it's at 72 percent right now.

Speaker Change: And my my last question is in regard to the classy semi private home occupancy rates I mean, it definitely even higher than pre pandemic levels.

Speaker Change: It is lower than the other rooms, but it's at 72% right now and just wondering how much more potential do you see for improving that occupancy rate.

Michael Guerriere: Just wondering how much more potential do you see for improving that occupancy rate? We're always looking at trying to optimize that on the semi, there's very, the semi rooms in the old context in the C beds, you know, in the new world with new A bed homes, the new redeveloped homes, the semis are less prominent, we're either building private or a basic room that actually looks like the old semis. So I think there's always opportunity to improve that, but it's not something that would be material in the mix for us, and each of those is governed a bit also by sort of the turnover that happens in the homes, so we're always looking to try to optimize that, there's a number of things that go into play in terms of those rooms versus the basic versus private, but so not really a material opportunity on the semis.

Speaker Change: We're always looking at trying to optimize that.

Speaker Change: On the semi Ah theres there the semi rooms in the old context, and the C beds built in the new world with new a bed homes of new Redeveloped homes. The semis are less prominent breather building private or a basic room that actually looks like the old semi so I think theres there.

Speaker Change: Always opportunity to improve that.

Speaker Change: But it's not something that would be material in the mix for us and.

Speaker Change: Each of those as a governor or a bit also by sort of the turnover that happens in the home. So we're always looking to try to optimize that because a number of things that go into into play in terms of those rooms versus the basic versus private Ah, but so model is not really a material opportunity on the semi.

Christopher Pugh: Okay, okay, sounds good. Thanks.

Speaker Change: Okay. Okay sounds good. Thanks, those are all the questions from wave.

Operator: Those are all questions from.

Doug Lowe: Once again, if you have a question, please press star then one.

Speaker Change: Once again, if you have a question.

Michael Guerriere: The next question comes from Doug Lowe with LEAD Financial. Please go ahead. Thanks, Operator, and good morning, everybody. Michael, just returning back to the theme on home health care growth, you mentioned that you have several options on the table, including expanding service hours, the acquisitive organic growth in other provinces, and potentially acquiring a client base. One of the things I was thinking about that could be an option would be just expanding services on a per patient or per service hour basis. Examples just off the top of my head may perhaps provide infusion therapy for patients that need injectable pharmaceuticals or providing CPAP equipment for individuals that require respiratory care.

Speaker Change: The next question comes from Douglas <unk> with loop financial Oh go ahead.

Speaker Change: Oh, yeah, thanks, operator, and good morning, everybody.

Speaker Change: So Michael just returning back to see him on home health care growth I mean, you mentioned that.

Speaker Change: And you have several options on the table I'm, giving you are expanding.

Speaker Change: So acquisitive organic growth you know the provinces.

Speaker Change: Potentially you're acquiring clients.

Speaker Change: This one when it seems like you broke it could be an option would be just expanding services on a per patient would pursue this hour basis.

Speaker Change: Hum.

Speaker Change: Examples of this off the top of my head, maybe perhaps provide your infusion therapy for patients who need injectable.

Speaker Change: Oh pharmaceuticals, or providing CPAP equipment for.

Speaker Change: Individuals with required respiratory care.

Michael Guerriere: So that's just two of many examples. So I'm just wondering if it's on the table that you could perhaps expand services into more high acuity care as a way to sort of go top line in home health care? Thanks, Doug. So it's a good question. Note, just just to remind everybody that the services that we do provide in home care are all government funded services. And the way that works is that we receive referrals from government agencies with a fairly precise prescription of what services are to be provided to the patients. So we don't really influence the types of services, or the magnitude of the services provided to any one of our, our patients.

Speaker Change: Two of many examples so I'm just wondering if that's what's on the table, which you could perhaps expand services.

More.

Speaker Change: Our high acuity care as a way to sort of grow top line.

Speaker Change: Walter.

Walter: Thanks, Doug.

Walter: So it's a good question.

Speaker Change: Note just to remind everybody that the services that we do provide in home care are all government funded services.

Speaker Change: And the way that works is that we receive referrals from government agencies with a fairly precise prescription of what services are to be provided to the patients. So we don't really influence the <unk>.

Speaker Change: Types of services or the magnitude of the services provided to any one of our our patients.

Michael Guerriere: That's prescribed by the agency that is procuring the service from from Paramed. So, you know, I think we look at service expansions and, and moving more into other therapeutic areas through the various procurements that happen from time to time where we would bid on those services. And by the way, the things that you mentioned by way of example, we do provide those services today. That's great feedback. Thanks, Michael.

Speaker Change: Thats prescribed by the agency that is procuring the service.

Speaker Change: From from Paramount. So you know I think we are look at service expansions and and moving more into our other therapeutic areas.

Speaker Change: Through the various procurements that happened from time to time.

Speaker Change: Where we would bid.

Speaker Change: Bid on those services and by the way that the things that you mentioned by way of example, we do provide those services today.

That's great. Good luck. Thank you.

Speaker Change: Yeah.

Pammi Bir: The next question comes from Pammi Bir with RBC. Please go ahead. Thanks, everyone.

Speaker Change: Our next question comes from Patti Bank.

Speaker Change: Please go ahead.

Speaker Change: Thanks, everyone.

Pammi Bir: You mentioned acquisitions, you know, across segments, but, you know, in home healthcare, can you talk about the opportunities there and what range of maybe multiple you're seeing deals transact at? So, home care is a very varied business with large operators like us and many, many, many very small operators or regional operators across the country. So, you know, we're looking at that landscape and looking, as I said earlier, at opportunities that allow us to start operations in a geography where we don't operate, or to add capabilities or services in a region where we do operate, but we don't provide that particular service.

Speaker Change: You mentioned acquisitions across segments, but and home health care can you talk about the opportunities there and what ranges maybe multiples youre seeing deals transact at.

Speaker Change: So oh.

Speaker Change: Home care is a very.

Speaker Change: Varied.

Speaker Change: Business with.

Speaker Change: A large operators like us and many many many very small operators regional operators.

Speaker Change: Across the country. So you know where we're looking at that.

Speaker Change: The landscape and looking as I said earlier AD opportunities that allow us to start operations in a geography, where we don't operate or to add capabilities or services in a region, where we do operate but we don't provide that particular service and that.

Pammi Bir: And that's the way we're evaluating the... evaluating the opportunity.

Speaker Change: The way we're evaluating.

Speaker Change: The.

You know evaluating the opportunity.

Pammi Bir: As far as rates are concerned, or multiples, there really aren't great comps in the space to be able to really talk about what we're seeing in the market. I think that's part of our opportunity here is to look at this market from a consolidation perspective. We'll be disciplined in the way we look at those opportunities and seek to create either platforms for organic growth or acquisitions that are accretive to our current earnings.

Speaker Change: As far as rates are concerned ah or multiples.

Speaker Change: There really aren't great.

Speaker Change: Great comps in the in the in the space to be able to really talk about.

Speaker Change: What we're seeing in the market I think that's part of our opportunity here is to you know to look at this market.

Speaker Change: From a.

Speaker Change: A consolidation perspective.

But.

Speaker Change: You know, we'll be disciplined in the way, we look at those opportunities and.

Speaker Change: You know seek to.

Speaker Change: Create either a platforms for for organic growth.

Speaker Change: Or are you know acquisitions that are accretive to our current earnings.

Pammi Bir: Okay, that's helpful.

Speaker Change: Okay. That's helpful.

Pammi Bir: I guess really just one last one for me, in terms of maybe coming back to the labour discussion earlier, are you seeing any, or are you anticipating any potential impact from some of the recent immigration changes in terms of the availability or access to the labour pools within Paramed or in the long-term care Well, so far, Pammi, we haven't seen anything, any impact. We've been able to recruit more than what we need. So, you know, at the moment, we're managing recruitment to demand rather than, you know, throttling services to to meet what we can recruit.

Speaker Change: But I guess really just one last one for me.

Speaker Change: In terms of.

Speaker Change: Maybe coming back to the labor discussion earlier are you seeing any or are you anticipating any potential impact from some of the recent immigration changes.

Speaker Change: In terms of the availability of access to the <unk>.

Speaker Change: Labor pools within pyramid or in the long term care segments.

Speaker Change: Yeah.

Speaker Change: Well, so far pardon me, we haven't seen anything any.

Speaker Change: Any impact.

Speaker Change: <unk> been able to recruit more than what we need. So you know at the moment, we're managing recruitment to demand rather than.

Speaker Change: Throttling services to meet what we can recruit.

Pammi Bir: So I would say that probably more important for us is the labor market overall and the availability of of of labor. So, you know, looking at the unemployment rate and and just generally the availability of labor as opposed to what you know, what the pace of immigration might be. So we're not anticipating any significant issue there.

Speaker Change: So I.

Speaker Change: I would say that are probably more important for us.

Speaker Change: Is the labor market overall, and the availability of of of Labor. So you.

Speaker Change: You know looking at the unemployment rate and and just generally the availability of labor.

Speaker Change: As opposed to what you know what the pace of immigration might be so we're not anticipating any significant issue there and as you may recall, we have our own in house training programs to be able to hire.

Pammi Bir: And as you may recall, we have our own in-house training programs to be able to hire people and bring them into the sector. And we also have extensive partnerships with colleges and universities that have about 3000 students placed in our in our homes and in our home care districts on an annual basis, which gives us a real opportunity at graduation to to recruit people to our staff. So I think we've got that that that training and recruiting machinery working quite well. So I don't see that as a constraint on our on our growth at this point.

Speaker Change: Hire people and bring them into the sector.

Speaker Change: And we also have extensive partnerships with colleges and universities.

Speaker Change: That have about 3000 students placed in our in our homes and in our home care districts on an annual basis, which gives us a real opportunity at graduation to to recruit people to our staff.

Speaker Change: So I think we've got that that that.

That training and recruiting machinery working quite well.

So I don't see that as a <unk>.

Speaker Change: Constraint on our on our growth at this point.

Pammi Bir: Great to hear. Sounds like so there's no real need to perhaps lean into any sort of agency staffing at this point for any of the segments.

Speaker Change: Great to hear it sounds like.

Speaker Change: So there's no real need to.

Speaker Change: Absolutely and into any sort of agency staffing at this point to us or any of the segments. So okay I will pass it back thank you.

Pammi Bir: So, okay, I will, I'll pass it back.

Operator: This concludes the question and answer session.

Speaker Change: This concludes the question and answer session I would like to turn the conference back over to Julien Patten for any closing remarks. Please go ahead.

Jillian Fountain: I would like to turn the conference back over to Jillian Fountain for any closing remarks. Please go ahead. Thank you, operator. That concludes our call for today. This presentation is available on our website, as are the call-in numbers for an archived recording. Thank you all for joining us, and please don't hesitate to reach out if you have any questions.

Julien Patten: Thank you operator.

Julien Patten: That concludes our call for today. This presentation is available on our website as are the call in numbers for an archived recording.

Julien Patten: Thank you all for joining us and please don't hesitate to reach out if you have any questions.

Operator: Goodbye. This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Julien Patten: Goodbye.

Julien Patten: This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

Julien Patten: [music].

Julien Patten: Yeah.

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