The focus is on the health care sector as the COVID-19 pandemic has driven panic into markets around the world. This virus has had a devastating effect on the elderly in the areas where it has been most prevalent.
Today, I want to look at a Canadian company that operates long-term care facilities across the country.
Extendicare (TSX:EXE) operates through five business segments, some of which include Long-Term care, Retirement living, and Home health care. Its shares have plunged 33% month-over-month as of close on March 20, as it has not been spared from the massive selloff on the TSX. The company released its fourth quarter and year end results for 2019 on February 27.
Revenue rose 1.1% year-over-year to $1.13 billion in 2019. Higher administrative costs dragged down adjusted EBITDA by $3.1 million to $91.1 million.
Retirement Living operations showed very good progress in Q4 2019. Revenue rose 25.6% year-over-year to $11.4 million and NOI margins improved to 26.4%. Average occupancy grew to 94.9% from 89.8% in the prior year.
Canada’s aging population is a great reason to have faith in Extendicare’s business going forward. Demand for long-term care facilities is set to steadily expand in the years and decades to come.
The company last announced a monthly distribution of $0.04 per share, which represents a tasty 8.5% yield. Shares last had a price-to-earnings ratio of 29, which is favourable compared to industry peers. I like Extendicare at its current price.
