MARKHAM, Ontario, May 15, 2024 (GLOBE NEWSWIRE) -- Extendicare Inc. ("Extendicare" or the "Company") (TSX:EXE) today reported results for the three months ended March 31, 2024. Results are presented in Canadian dollars unless otherwise noted. First Quarter 2024 Highlights Adjusted EBITDA(1) excluding one-time items improved by $8.0 million to $20.3 million, largely driven by home health care volume growth, rate increases and growth in managed services. Home health care growth continued, with Q1 average daily volume ("ADV") increasing to 29,007, up 11.4% from Q1 2023. LTC average occupancy increased 90 basis points ("bps") to 97.5% from 96.6% Q1 2023. Extendicare Assist beds under management grew to 9,777, up 64.1% from Q1 2023, and SGP third-party and joint venture serviced beds increased by 23.7% from Q1 2023 to approximately 138,300 beds, driven by the Revera and Axium transactions. Countryside, a newly built Axium JV 256-bed LTC home in Sudbury, opened in March 2024. Subsequent to Q1 Completed the sale of a 256-bed LTC redevelopment project in Orleans, Ontario to Axium JV, for cash proceeds of $20.1 million, net of Extendicare's 15% retained managed interest and other closing adjustments, resulting in an estimated gain of $2.5 million net of taxes, certain closing and other costs. Completed the sale of the land and building associated with the former Class C LTC home in Sudbury that closed in March 2024 with the opening of Countryside, for proceeds of $5.3 million, resulting in an estimated gain of $4.1 million, net of taxes, certain closing and other costs. "We continued to see the benefits of our strategy in action in the first quarter, with double-digit growth across our home health care and managed services segments," said Dr. Michael Guerriere, President and Chief Executive Officer. "Funding increases for long-term care included in the Government of Ontario budget announced in March will go a long way to restoring the financial stability of the sector and support our redevelopment program. The societal need for the critical services we deliver has never been more apparent, positioning us for continued growth in future quarters." Ontario Ministry of Long-Term Care Addresses Inflation Gap Effective April 1, 2024, the Ontario Ministry of Long-Term Care ("MLTC") implemented a 6.6% blended funding increase, consisting of an 11.5% increase in the other accommodation envelope and approximately 4.5% to the flow-through envelopes. The Company estimates these funding changes will result in incremental annual revenue of approximately $21.3 million, of which $12.0 million is applicable to the other accommodation envelope. In March 2024, the MLTC provided LTC operators with one-time funding of $2,543 per bed to help relieve financial pressures and address key priorities, including capital and maintenance needs, redevelopment and other operating needs. As a result, the Company recognized approximately $12.2 million in one-time funding in Q1 2024, of which approximately $9.2 million is retroactive to April 1, 2023. Continued Momentum in LTC Redevelopment In March 2024, the MLTC announced a second time-limited supplemental construction funding subsidy ("CFS") to support LTC redevelopment, helping to offset rising construction costs and higher interest rates. The supplemental CFS provides an additional $35.00 per bed per day to the existing base CFS and is available to eligible applicants who receive approval from the government to construct by November 30, 2024. While the MLTC continues to demonstrate its commitment to building new LTC homes in Ontario, it has acknowledged that given the delays in redevelopment of the Class C LTC homes, their operating licenses will need to remain in service beyond their current expiration date of June 2025. In April 2024, the MLTC requested that LTC operators submit notice of their intentions regarding their Class C homes in order to qualify for license extensions of up to five years. The Company is seeking license extensions for all remaining Class C beds. As at May 15, 2024 the joint ventures with Axium have five LTC redevelopment projects under construction in Ontario, consisting of 1,280 new beds, slated to replace 1,121 Class C beds. Four of the projects are replacing homes owned by Extendicare and the fifth project is replacing an existing Revera home that Extendicare is managing. The homes are being constructed exclusively with private and semi-private rooms, with substantial improvements in common areas available to the residents. The Company continues to focus its efforts on progressing its remaining 15 redevelopment projects in Ontario, consisting of 3,032 new or replacement beds that would replace 2,211 Class C beds. With the enhanced CFS reintroduced and in place until November 2024, we are targeting to begin construction on up to four new projects in 2024, with tendered construction costs and receipt of applicable regulatory approvals largely determining if and when they proceed. Home Health Care Funding Increases Support Service Expansion In Q1 2024, the Company made a number of investments enabled by the 6.7% rate increase announced by the province of Ontario in Q4 2023. These consisted of enhancements to our wage and benefits programs, and further investments in recruiting, retention, training and technology. This resulted in the recognition of revenue and expense of $13.6 million related to a one-time compensation payment to all home health care staff, with no impact to NOI. Q1 2024 Financial Highlights (all comparisons with Q1 2023) Revenue increased 13.1%, or $42.4 million to $367.1 million, driven primarily by LTC flow-through funding increases and improved occupancy; home health care ADV growth, rate increases and $13.6 million in retroactive funding to support one-time compensation costs incurred in the quarter; and growth in managed services; partially offset by lower prior period LTC funding. NOI(1) increased $0.2 million to $44.7 million; if we exclude a net recovery of COVID-19 costs of $12.1 million in Q1 2023 and the increase in prior period LTC funding of $3.2 million, NOI improved by $9.0 million to $34.9 million from $25.9 million, reflecting revenue growth partially offset by higher operating costs across all segments. Adjusted EBITDA(1) decreased $0.8 million to $30.1 million, reflecting the increase in NOI noted above offset by higher administrative costs of $1.0 million. Other expense of $1.9 million was down $1.7 million, reflecting a decline in strategic transformation costs in connection with the Revera and Axium transactions. Share of profit from joint ventures was $1.1 million, reflecting the impact of one-time funding for Ontario LTC homes in the quarter, of which $0.7 million related to prior periods. Net earnings increased $1.5 million to $13.1 million, driven by the share of profit from joint ventures, the decline in other expense and lower net finance costs, partially offset by the decrease in Adjusted EBITDA. AFFO(1) was $17.6 million ($0.21 per basic share) compared with $20.8 million ($0.24 per basic share in Q1 2023), largely reflecting the decline in Adjusted EBITDA, increased current taxes and higher maintenance capex. Excluding the year-over-year net reduction of $5.8 million in AFFO related to a net recovery of COVID-19 costs in Q1 2023 partially offset by out-of-period LTC funding and share of profit from joint ventures, AFFO improved by $2.6 million to $9.7 million ($0.12 per basic share) from $7.1 million ($0.08 per basic share) in the prior year. Business Updates The following is a summary of Extendicare's revenue, NOI(1) and NOI margins(1) by business segment for the three months ended March 31, 2024 and 2023.   Three months ended March 31 (unaudited)         2024           2023 (millions of dollars unless otherwise noted) Revenue   NOI   Margin   Revenue   NOI   Margin Long-term care 206.5   25.3   12.3%   207.6   33.8   16.3% Home health care 143.5   10.8   7.5%   107.4   6.4   6.0% Managed services 17.1   8.7   50.7%   9.7