Published:
Extendicare REIT Announces 2008 First Quarter Results
Extendicare Real Estate Investment Trust ("Extendicare REIT" or the "REIT") (TSX: EXE.UN) today reported 2008 first quarter results with the following highlights:
- revenue growth, excluding foreign exchange impact, 20.5% in Q1/08 over Q1/07;
- average Medicare Part A rate of US$410.86, up 5.9% from the 2007 first quarter;
- same-facility skilled mix census increased to 25.1% in Q1/08 from 24.1% in Q1/07;
- integration of Tendercare exceeding expectations; and
- May distribution of $0.0925 per unit declared.
Tim Lukenda, President and CEO of Extendicare REIT, commented: "While the results for the quarter are not at the level we would like them to be, there are a number of items that make the comparison of the first quarter 2008 to the first quarter of 2007 less favourable. Some isolated challenges that have been identified and plans have been implemented to rectify them. I plan to build on the core strengths of Extendicare's past and drive future performance through a refocused effort on fundamentals of the business including census growth and cost containment. I believe our strategy to be fundamentally sound and the company's outlook positive. We will continue with our program of new facility developments and enhancements to our current portfolio, and will continue to seek accretive acquisitions subject to the availability of funding from the credit and capital markets."
Earnings from continuing health care operations were $3.9 million ($0.05 per diluted unit) for the three months ended March 31, 2008, compared to $18.7 million ($0.26 per diluted unit) for the same period in 2007. Excluding separately reported gains and losses as outlined in Table 2, earnings from continuing health care operations in the 2008 first quarter were $7.4 million ($0.10 per diluted unit) compared to earnings in the 2007 first quarter of $17.8 million ($0.25 per diluted unit). Earnings before interest, income taxes, depreciation, amortization, and accretion (EBITDA) for the 2008 first quarter totalled $47.2 million compared to $52.6 million in the same 2007 period. However, excluding a $6.3 million negative impact of the stronger Canadian dollar, EBITDA improved $0.9 million from the prior period level.
Acquisitions and Development Projects
The most significant acquisition made in 2007 was the purchase of Tendercare (Michigan) Inc. and affiliated entities (collectively "Tendercare"), which added 30 senior care facilities (3,301 operational beds), with two additional facilities (177 beds) under development. For the 2008 first quarter, Tendercare's operations contributed $56.5 million (US$56.3 million) of revenue and $5.8 million (US$5.8 million) of EBITDA. We made significant progress in the integration of the Tendercare portfolio within the Extendicare operations. In the month of March 2008, we benefited from the implementation of our marketing programs, resulting in an average daily increase of 47 Medicare residents, or 12%, from the month of February 2008.
In January 2008 we opened two newly constructed skilled nursing facilities in the U.S: a 100-bed replacement facility in Sequim, Washington, including an 11-bed addition completed in April, and a 77-bed facility in Holland, Michigan. An existing older skilled nursing facility in Washington was closed in January 2008 and the residents were relocated to the newly built facility. The Michigan facility only had 10 of its 77 beds operational for private-pay residents during the first quarter because it did not receive its Medicare and Medicaid certification until April 2008. Lastly, we reduced occupancy levels as we remodelled a newly acquired facility in Milwaukee, Wisconsin, that was completed in March 2008. In aggregate the start-up losses associated with these facilities were $0.5 million in the 2008 first quarter.
EHSI Skilled Nursing Facility Revenue Rates
As shown in the table entitled, "Financial and Operating Statistics", the average daily Medicare Part A rate for Extendicare Health Services, Inc. (EHSI) in the 2008 first quarter was US$410.86, an increase of 5.9% from US$387.95 in the same 2007 period, and down slightly from US$411.87 in the 2007 fourth quarter. Approximately half of the increase from the 2007 first quarter related to a 3.3% market basket inflationary increase effective October 1, 2007, with the remainder primarily related to higher average acuity levels among Medicare patients served. Excluding the Tendercare facilities, the percentage of Medicare residents in the nine highest Resource Utilization Groupings (RUGs) classifications was 37.7% in each of the 2008 and 2007 first quarters, and decreased slightly from 38.5% in the 2007 fourth quarter. The percentage of therapy residents increased to 86.9% in the 2008 first quarter from 86.7% in the same 2007 period, and from 85.9% in the 2007 fourth quarter.
The average revenue rate for Health Maintenance Organization (HMO) and commercial insurance (CI) clients, another important area of growth for EHSI that represents the highest rate component of private and other, increased to US$335.74 in the 2008 first quarter from US$311.38 in the 2007 first quarter, and US$334.10 in the 2007 fourth quarter.
EHSI's Skilled Nursing Facility Average Daily Census (ADC)
On a same-facility basis, EHSI's skilled mix increased from 3,135 in the 2007 first quarter to 3,219 in the 2008 first quarter, or 2.7%. Growth was primarily due to an increase of 138 in HMO/CI ADC, to 776 from 638 in the 2007 first quarter. The increase in HMO/CI residents is due to our focus on these higher acuity residents and the number of Medicare beneficiaries opting out of traditional Medicare Part A benefits and selecting coverage through a Medicare HMO product. EHSI's Medicare ADC on a same-facility basis in the 2008 first quarter was 2,443, down 2.2% from the comparable 2007 period level. In comparison to the 2007 fourth quarter, our same-facility Medicare ADC increased 7.0% from 2,283, and our HMO/CI increased 10.9% from 700.
Our total ADC from same-facility skilled nursing facilities was 12,854 in the 2008 first quarter, a decline of 181, or 1.4%, from the 2007 first quarter of 13,035. Over a third of this decline, or 70 ADC, was due to clinical challenges we are experiencing at six facilities, primarily in the State of Washington, which have resulted in a voluntary slowdown in admissions. In comparison to the 2007 fourth quarter ADC of 12,863, if not for a decline of 46 ADC from these six facilities our total ADC would have improved by 37 in the 2008 first quarter.
2008 First Quarter Financial Review
TABLE 1 Q1 Q1 Q4
--------------------------------------------------------------------
2008 2007 2007
--------------------------------------------------------------------
(thousands of dollars unless otherwise noted)
Revenue
U.S. operations (US$) 347,676 272,392 321,591
--------------------------------------------------------------------
U.S. operations (C$) 349,135 319,135 320,315
Canadian operations 142,416 137,138 148,852
--------------------------------------------------------------------
Total Revenue 491,551 456,273 469,167
--------------------------------------------------------------------
--------------------------------------------------------------------
EBITDA
U.S. operations (US$) 37,596 35,672 37,563
--------------------------------------------------------------------
U.S. operations (C$) 37,752 41,793 37,110
Canadian operations 9,449 10,856 13,144
--------------------------------------------------------------------
Total EBITDA 47,201 52,649 50,254
--------------------------------------------------------------------
--------------------------------------------------------------------
Average US/Canadian dollar
exchange rate 1.0042 1.1716 0.9837
--------------------------------------------------------------------
Revenue Comparison to 2007 First Quarter and 2007 Fourth Quarter
Revenue for the 2008 first quarter grew 7.7% to $491.6 million from $456.3 million in the 2007 first quarter, and excluding the impact of the stronger Canadian dollar, revenue grew 20.5%. In comparison to the 2007 fourth quarter, revenue this quarter grew 4.8%.
EBITDA Comparison to 2007 First Quarter
EBITDA for the 2008 first quarter was $47.2 million compared to $52.6 million for the 2007 first quarter. Excluding the impact of a stronger Canadian dollar, EBITDA increased $0.9 million.
Compared to the 2007 first quarter, EBITDA from U.S. operations in U.S. dollars improved US$1.9 million. Acquisitions contributed US$6.6 million in EBITDA, primarily due to the impact of Tendercare, whereas same-facility EBITDA declined US$4.7 million. Earnings from same-facility operations increased US$1.5 million, or 4.4%, through increases in revenue rates and skilled mix census, however the results were softened due to the following three items:
- start-up costs at two facilities and clinical challenges at six facilities (voluntary slowdown in admissions and incremental staffing costs) resulted in reduced earnings of US$2.2 million;
- an increase in bad debts of US$2.2 million in specific facilities in Pennsylvania; and
- 2007 first quarter release of actuarial reserve provision and lower investment earnings in our captive insurance company of US$1.8 million.
EBITDA from Canadian operations declined $1.4 million to $9.4 million in the 2008 first quarter from $10.8 million in the 2007 first quarter, due to increased wage costs primarily resulting from three additional statutory holidays in the 2008 first quarter and timing of spending under the Ontario nursing home envelope system. These costs fluctuate relative to established funding levels and are normally recovered in subsequent quarters.
EBITDA Comparison to 2007 Fourth Quarter
EBITDA for the 2008 first quarter was $47.2 million compared to $50.2 million in the 2007 fourth quarter. Excluding the impact of a stronger U.S. dollar, EBITDA declined $3.6 million from the 2007 fourth quarter.
Compared to the 2007 fourth quarter, EBITDA from U.S. operations was unchanged, with the improvement from acquisitions of US$3.0 million, primarily due to the impact of Tendercare, offset by a decline in same-facility EBITDA. Earnings from same-facility operations increased US$3.0 million, or 9.2%, through increases in revenue rates and skilled mix census, however the results were softened due to the following items:
- start-up costs at two facilities and clinical challenges at six facilities resulted in reduced earnings of US$1.0 million;
- an increase in bad debts of US$2.6 million in specific facilities in Pennsylvania;
- 2007 fourth quarter release of actuarial reserve provision and lower investment earnings in our captive insurance company of US$1.4 million; and
- an increase in utilities due to the winter months of US$1.0 million.
EBITDA from Canadian operations in the 2008 first quarter declined by $3.7 million from $13.1 million in the 2007 fourth quarter. The comparison of the quarters was impacted by a number of items as follows:
- an increase in utility costs due to the winter months of $1.5 million;
- higher spending of labour costs in the 2008 first quarter within the Ontario flow-through envelope system of $1.0 million; and
- lower home health care earnings resulting from lower volumes and a favourable Workplace Safety and Insurance Board adjustment late in 2007.
Earnings from Continuing Operations
TABLE 2 Three months ended March 31
--------------------------------------------------------------------
2008 2007
--------------------------------------------------------------------
Per Per
Components of Earnings from After diluted After diluted
Continuing Operations (1) -tax unit -tax unit
--------------------------------------------------------------------
(thousands of Canadian dollars except per unit amounts)
Continuing Health Care Operations before Undernoted (1)
U.S. operations (US$) 7,427 12,892
--------------------------------------------------------------------
U.S. operations (C$) 7,456 15,079
Canadian operations (69) 2,727
--------------------------------------------------------------------
7,387 $0.10 17,806 $0.25
Gain (loss) on derivative financial instruments
and foreign exchange (3,529) (0.05) 897 0.01
--------------------------------------------------------------------
Earnings from continuing health
care operations 3,858 $0.05 18,703 $0.26
Share of equity accounted earnings 580 0.01
--------------------------------------------------------------------
Earnings from continuing
operations 3,858 $0.05 19,283 $0.27
--------------------------------------------------------------------
--------------------------------------------------------------------
(1) Refer to discussion of non-GAAP measures.
Earnings from continuing health care operations prior to separately reported items, as outlined in Table 2 above, were $7.4 million ($0.10 per diluted unit) in the 2008 first quarter compared to $17.8 million ($0.25 per diluted unit) in the 2007 first quarter. There were $6.1 million ($0.09 per diluted unit) of non-recurring items and other items that impact the comparability of these two quarters, namely:
- stronger Canadian dollar reduced earnings by $1.2 million;
- 2007 tax adjustment pertaining to the 2006 reorganization of $1.4 million;
- release of actuarial reserve provision and incremental investment earnings in our captive insurance company of $1.8 million;
- SIFT taxes that were not reflected in 2007 until the second quarter of $1.1 million; and
- interest costs associated with the March 2007 US$90 million financing for payment of taxes associated with the distribution of Assisted Living Concepts, Inc. of $0.6 million.
Exclusive of the above, health care net earnings declined by $4.3 million due to the previously discussed decline in the U.S. and Canadian EBITDA, and increase in depreciation and financing costs due primarily to acquisitions and capital expenditures.
The tax provision from continuing operations was $4.8 million in the 2008 first quarter compared to $6.3 million in the 2007 first quarter, representing effective tax rates of 55.5% and 25.1%, respectively. The effective tax rates for each year were distorted by the gains and losses from derivative financial instruments and foreign exchange, as well as a credit adjustment in the 2007 first quarter of $1.4 million for withholding taxes associated with the 2006 reorganization, and the fact that the REIT did not start recording SIFT tax until the second quarter of 2007, of which approximately $1.1 million related to the 2007 first quarter. Excluding these items, the effective tax rate for the 2008 first quarter was 42.7% compared to 35.1% in the 2007 first quarter. The higher effective tax rate in 2008 is due primarily to a shift in income between taxable and non-taxable entities.
Adjusted Funds from Operations
AFFO from continuing operations was $19.0 million ($0.270 per basic unit) in the 2008 first quarter compared to $26.5 million ($0.377 per basic unit) in the 2007 first quarter, representing a decline of $7.5 million ($0.107 per basic unit). There were $7.5 million of after-tax non-recurring items and other items that impacted the comparability with the 2007 first quarter, namely:
- stronger Canadian dollar reduced AFFO by $2.6 million;
- Q1/07 tax adjustment pertaining to the 2006 reorganization of $1.4 million;
- release of actuarial reserve provision and lower investment earnings in our captive insurance company of $1.8 million;
- SIFT taxes that were not reflected in 2007 until the second quarter, of $1.1 million; and
- interest costs associated with the March 2007 US$90 million financing for payment of taxes associated with the distribution of Assisted Living Concepts, Inc. of $0.6 million.
As well, facility maintenance costs were $4.5 million in the 2008 first quarter, or 0.9% of revenue, and were $1.5 million less than the 2007 first quarter. Annual facility maintenance costs are anticipated to be approximately 2% of revenue, which is consistent with our objective to maintain and upgrade our facilities.
Exclusive of the above, AFFO declined by $1.5 million due to the previously discussed decline in EBITDA, and increase in financing costs.
The reported AFFO from continuing operations of $0.270 per basic unit does not reflect the incremental benefit of our U.S. dollar distributions at the locked-in exchange rate of 1.11 until November 2009, that amounts to approximately $0.012 per unit per quarter.
Liquidity and Capital Resources
At March 31, 2008, we had cash and cash equivalents of $28.1 million compared with $44.2 million at December 31, 2007. Cash provided by operating activities was $12.0 million in the 2008 first quarter compared to $30.3 million in the 2007 first quarter. The decline reflected a reduction in earnings and an unfavourable change of $11.0 million in operating assets and liabilities between periods, related to an increase in accounts receivable and prepaid expenses, partially offset by an increase in accounts payable and income taxes payable.
Capital additions to property and equipment, excluding acquisitions, were $14.1 million in the 2008 first quarter compared to $15.3 million in the 2007 first quarter. Growth expenditures totalled $9.6 million in the 2008 first quarter versus $9.3 million in the 2007 first quarter. Facility maintenance costs were $4.5 million in the 2008 first quarter compared to $6.0 million in the same 2007 period. These costs fluctuate on a quarterly basis with the timing of projects and seasonality.
Long-term debt, including current portion, was $1,099.4 million at March 31, 2008, and was net of $20.1 million of deferred financing costs. The current portion of long-term debt at March 31, 2008, was $77.4 million and included mortgage loans of $61.7 million that have been extended beyond their 2008 maturity dates. In EHSI, we are currently refinancing certain facilities within the Tendercare portfolio and have arranged for an extension of the existing loan until May 31, 2008. We remain confident in refinancing by the end of May. At March 31, 2008, long-term debt (at face value and including current portion) represented 43.5% of adjusted gross book value (39.0% excluding the convertible debentures).
At March 31, 2008, our U.S. operations had US$54.9 million available under its credit facility and our Canadian operations had cash on hand of $25.3 million and available bank lines of $6.1 million.
For 2008, we are confident that our cash from operating activities, together with available bank credit facilities, and debt refinancings in process, will be sufficient to fund the current requirements of our ongoing operations, including an expected $40.0 million of maintenance capital expenditures, as well as to meet debt obligations and pay declared distributions to unitholders. The REIT raises funds through debt financings and the capital markets to fund strategic acquisitions and growth capital expenditures, the latter of which are expected to total $80.0 million in 2008.
May Distribution Declared
The Board of Trustees of the REIT today declared a cash distribution of $0.0925 per unit for the month of May 2008, payable to unitholders of record at the close of business on May 30, 2008, and will be paid on June 16, 2008.
Extendicare Limited Partnership (the "Partnership") also announced that it has declared a cash distribution of $0.0925 per Class B limited partnership unit for the month of May 2008, payable to unitholders of record at the close of business on May 30, 2008, and will be paid on June 16, 2008.
Management estimates that approximately 70% of the 2008 distributions of the REIT and Partnership will be characterized as tax deferred returns of capital for Canadian residents. The remaining 30% of distributions of the REIT paid in 2008 are expected to be taxed as dividends and those paid to Canadian residents are eligible dividends as per the Income Tax Act (Canada) (the "Act"). To the extent a portion of the remaining 30% of distributions of the Partnership allocated in 2008 is taxed as dividends, those paid to Canadian residents are eligible dividends as per the Act. Extendicare REIT is not required to, and does not, calculate its "earnings and profits" pursuant to the United States Internal Revenue Code of 1986, as amended (the "Code"), and therefore no portion of its distributions represent qualified dividend income for U.S. tax purposes.
As previously announced, a portion of the May distribution will be treated as U.S. source interest income in the hands of the unitholders of the REIT and Partnership. The amount of the U.S. source interest income in the May distribution is $0.0437 per unit. This U.S. source interest income is subject to U.S. withholding tax for non-U.S. residents, and U.S. backup withholding tax for U.S. holders. Unitholders may be eligible for the portfolio interest exemption under Sections 871 and 881 of the Code by submitting a valid Form W-8BEN or Form W-9, as applicable to their broker/administrator.
About Us
Extendicare REIT, through its wholly owned subsidiaries, is a major provider of long-term care and related services in North America. We operate 269 nursing and assisted living facilities in North America, with capacity for approximately 30,300 residents. As well, we offer medical specialty services such as subacute care and rehabilitative therapy services in the United States, and home health care services in Canada, and employ approximately 37,800 people in North America.
On May 9, 2008, at 10:00 a.m. (ET), we will hold a conference call to discuss our results for the 2008 first quarter. The call will be webcast live, and archived, in the Investors/Presentation & Webcast section of our website at www.extendicare.com. Alternatively, the call-in number is 1-877-323-2090 or 416-641-6140. A taped rebroadcast of the call will be available until midnight on May 23, 2008. To access the rebroadcast, dial 1-800-408-3053 or 416-695-5800, conference ID number 3257431. Slides accompanying remarks during the call will be posted to our website as part of the live webcast. Also, a supplemental information package containing historical quarterly financial results and operating statistics can be found on the website under Investors/Financial Results/Supplemental Information.
Certain 2007 figures have been revised to conform to the presentation in 2008, mainly for discontinued operations.
Non-GAAP Measures
Extendicare REIT assesses and measures operating results and financial position based on performance measures referred to as "EBITDA", "continuing health care operations before undernoted", "Distributable Income", "Funds from Operations", "Adjusted Funds from Operations" and "Adjusted Gross Book Value". These are not measures recognized under GAAP and do not have standardized meanings prescribed by GAAP. These non-GAAP measures are presented in this document because either: (i) management believes that they are a relevant measure of the ability of the REIT to make cash distributions; or (ii) certain ongoing rights and obligations of the REIT may be calculated using these measures. Such non-GAAP measures may differ from similar computations as reported by other issuers and, accordingly, may not be comparable to similarly titled measures as reported by such issuers. They are not intended to replace earnings (loss) from operations, net earnings (loss) for the period, cash flow, or other measures of financial performance and liquidity reported in accordance with Canadian GAAP. Reconciliations of these non-GAAP measures from net earnings and/or from cash provided by operations, where applicable, are provided in this press release. Detailed descriptions of these terms can be found in the disclosure documents filed by Extendicare REIT with the securities regulatory authorities, available at www.sedar.com and on the REIT's website at www.extendicare.com.
Forward-looking Statements
Information provided by Extendicare REIT from time to time, including this release, contains or may contain forward-looking statements concerning anticipated financial events, results, circumstances, economic performance or expectations with respect to the REIT and its subsidiaries, including its business operations, business strategy, and financial condition. Forward-looking statements can be identified because they generally contain the words "expect", "intend", "anticipate", "believe", "estimate", "plan" or "objective" or other similar expressions. Forward-looking statements reflect management's beliefs and assumptions and are based on information currently available, and the REIT assumes no obligation to update any forward-looking statement. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the REIT to differ materially from those expressed or implied in the statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on the REIT's forward-looking statements. Further information can be found in the disclosure documents filed by Extendicare REIT with the securities regulatory authorities, available at www.sedar.com and on the REIT's website at www.extendicare.com.
EXTENDICARE REIT
Condensed Consolidated Earnings
Three months ended
March 31
-------------------------------------------------------------------
2008 2007
-------------------------------------------------------------------
(thousands of Canadian dollars except per unit amounts)
(revised)
Revenue
Nursing and assisted living centres
United States 337,533 305,072
Canada 105,574 99,560
Home health - Canada 34,311 35,380
Outpatient therapy - United States 2,992 3,254
Other 11,141 13,007
-------------------------------------------------------------------
491,551 456,273
Operating expenses 424,197 383,338
Administrative costs 17,073 17,070
Lease costs 3,080 3,216
-------------------------------------------------------------------
EBITDA (1) 47,201 52,649
Depreciation and amortization 14,044 12,645
Accretion expense 375 341
Interest expense 21,350 17,842
Interest income (1,451) (1,647)
Loss (gain) on derivative financial instruments
and foreign exchange 4,212 (1,497)
-------------------------------------------------------------------
Earnings from continuing health care operations
before income taxes 8,671 24,965
-------------------------------------------------------------------
Income tax expense (recovery)
Current 6,459 6,312
Future (1,646) (50)
-------------------------------------------------------------------
4,813 6,262
-------------------------------------------------------------------
Earnings from continuing health care operations 3,858 18,703
Share of equity accounted earnings 580
-------------------------------------------------------------------
Earnings from continuing operations 3,858 19,283
Discontinued operations (280) (3,917)
-------------------------------------------------------------------
Net earnings 3,578 15,366
-------------------------------------------------------------------
-------------------------------------------------------------------
Basic and Diluted Earnings per Unit($)
Earnings from continuing operations 0.05 0.27
Net earnings 0.05 0.22
-------------------------------------------------------------------
(1) Refer to discussion of non-GAAP measures.
EXTENDICARE REIT
Condensed Consolidated Cash Flows
Three months
ended March 31
-------------------------------------------------------------------
2008 2007
-------------------------------------------------------------------
(thousands of Canadian dollars)
Operating Activities
Net earnings 3,578 15,366
Adjustments for:
Depreciation and amortization 14,063 12,788
Provision for self-insured liabilities 3,907 2,264
Payments for self-insured liabilities (4,214) (5,969)
Future income taxes (1,139) (28)
Loss (gain) on derivative financial instruments
and foreign exchange 4,212 (1,497)
Loss (gain) from asset impairment, disposals
and other items from discontinued operations (368) 5,845
Undistributed share of earnings from equity
accounted investments (580)
Other 1,685 946
-------------------------------------------------------------------
21,724 29,135
Net change in operating assets and liabilities
Accounts receivable (17,609) 879
Supplies and prepaid expenses (8,083) (4,864)
Accounts payable and accrued liabilities 12,574 (14,561)
Income taxes 3,363 19,758
-------------------------------------------------------------------
11,969 30,347
-------------------------------------------------------------------
Investing Activities
Capital additions (14,065) (15,343)
Acquisitions (8,693)
Net proceeds from dispositions 1,528 2,228
Other assets 722 (654)
-------------------------------------------------------------------
(11,815) (22,462)
-------------------------------------------------------------------
Financing Activities
Issue of long-term debt 962 131,695
Issue on line of credit 9,038 19,917
Repayment of long-term debt (9,073) (2,758)
Decrease in investments held
for self-insured liabilities 893 7,838
Distributions paid (18,917) (24,845)
Financial costs (310) (3,862)
Income taxes paid re: the distribution of ALC (120,220)
Other 919 (839)
-------------------------------------------------------------------
(16,488) 6,926
-------------------------------------------------------------------
Foreign exchange gain (loss) on cash
held in foreign currency 216 (10)
-------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (16,118) 14,801
Cash and cash equivalents at beginning of period 44,234 28,057
-------------------------------------------------------------------
Cash and cash equivalents at end of period 28,116 42,858
-------------------------------------------------------------------
-------------------------------------------------------------------
EXTENDICARE REIT
Condensed Consolidated Balance Sheets
March 31 December 31
2008 2007
-------------------------------------------------------------------
(thousands of Canadian dollars, unless otherwise noted)
(revised)
Assets
Current assets
Cash and short-term investments 36,376 44,234
Invested assets 2,402 2,439
Accounts receivable, less allowances 241,111 214,305
Income taxes recoverable 2,640
Future income tax assets 29,246 27,504
Supplies and prepaid expenses 28,574 25,467
-------------------------------------------------------------------
337,709 316,589
Property and equipment 863,585 842,648
Goodwill and other intangible assets 170,830 162,481
Other assets 126,042 118,445
-------------------------------------------------------------------
1,498,166 1,440,163
-------------------------------------------------------------------
-------------------------------------------------------------------
Liabilities and Unitholders' Deficiency
Current liabilities
Outstanding cheques in excess of bank balance 8,260
Accounts payable 38,558 35,963
Accrued liabilities 222,291 203,084
Accrual for self-insured liabilities 18,170 12,392
Current portion of long-term debt 77,456 80,378
Income taxes payable 515
-------------------------------------------------------------------
365,250 331,817
Accrual for self-insured liabilities 31,620 30,018
Long-term debt 1,021,958 991,333
Other long-term liabilities 66,462 63,978
Future income tax liabilities 47,406 46,595
-------------------------------------------------------------------
1,532,696 1,463,741
Unitholders' deficiency (34,530) (23,578)
-------------------------------------------------------------------
1,498,166 1,440,163
-------------------------------------------------------------------
-------------------------------------------------------------------
Closing US/Cdn. dollar exchange rate 1.0265 0.9913
EXTENDICARE REIT
Financial and Operating Statistics
(dollar amounts in Canadian dollars, unless otherwise noted)
Q1/08 Q1/07
---------------------------------------------------------------------
Health Care Earnings from Continuing Operations (millions)
United States (US$) $3.3 $13.7
---------------------------------------------------------------------
United States $3.3 $16.0
Canada 0.6 2.7
---------------------------------------------------------------------
$3.9 $18.7
---------------------------------------------------------------------
---------------------------------------------------------------------
Health Care Net Earnings (millions)
United States (US$) $3.0 $10.3
---------------------------------------------------------------------
United States $3.0 $12.1
Canada 0.6 2.7
---------------------------------------------------------------------
$3.6 $14.8
---------------------------------------------------------------------
---------------------------------------------------------------------
U.S. Skilled Nursing Facility Statistics
Percent of Revenue by Payor Source (same-facility basis)
Medicare (Part A and B) 36.6% 36.7%
HMO/CI 8.5 6.9
---------------------------------------------------------------------
Skilled mix 45.1 43.6
Private/other 8.7 9.7
---------------------------------------------------------------------
Quality mix 53.8 53.3
Medicaid 46.2 46.7
---------------------------------------------------------------------
Average Daily Census by Payor Source (same-facility basis)
Medicare 2,443 2,497
HMO/CI 776 638
---------------------------------------------------------------------
Skilled mix 3,219 3,135
Private/other 1,264 1,370
---------------------------------------------------------------------
Quality mix 4,483 4,505
Medicaid 8,371 8,530
---------------------------------------------------------------------
12,854 13,035
---------------------------------------------------------------------
---------------------------------------------------------------------
Average Revenue per Resident Day by Payor Source
(excluding prior period settlement adjustments)(US$)
Medicare Part A only $410.86 $387.95
Medicare (Part A and B) 448.56 424.04
HMO/CI 335.74 311.38
Private/other 207.80 205.70
Medicaid 165.21 157.68
Weighted average 231.31 221.28
---------------------------------------------------------------------
Average Occupancy (excluding managed facilities)
(same-facility basis)
U.S. skilled nursing facilities 89.4% 90.6%
U.S. assisted living facilities 81.9 80.8
Canadian facilities average occupancy 97.6 97.6
---------------------------------------------------------------------
Capital Additions to Property and Equipment (thousands)
Growth expenditures 9,561 9,323
Facility maintenance 4,504 6,020
---------------------------------------------------------------------
Consolidated reported 14,065 15,343
---------------------------------------------------------------------
---------------------------------------------------------------------
Average US/Cdn. dollar exchange rate 1.0042 1.1716
---------------------------------------------------------------------
EXTENDICARE REIT
Supplemental Information-FFO and AFFO
The following table provides a reconciliation of EBITDA to Funds
from Operations(FFO), Distributable Income (DI) and Adjusted Funds
from Operations (AFFO) for the periods ended March 31, 2008 and
2007. (1)
Q1/08 Q1/07
--------------------------------------------------------------------
(thousands of Canadian dollars unless otherwise noted)
EBITDA from continuing health care operations 47,201 52,649
Depreciation for furniture, fixtures,
equipment and computers (4,166) (3,531)
Interest expense, net (19,899) (16,195)
--------------------------------------------------------------------
23,136 32,923
Current income tax expense (2) (5,879) (5,555)
--------------------------------------------------------------------
FFO (continuing operations) 17,257 27,368
Amortization of deferred financing costs 1,562 1,079
Principal portion of government
capital funding payments 541 510
--------------------------------------------------------------------
DI (continuing operations) 19,360 28,957
Additional maintenance capital expenditures (3) (338) (2,489)
--------------------------------------------------------------------
AFFO (continuing operations) 19,022 26,468
AFFO (discontinued operations) (4) (593) (230)
--------------------------------------------------------------------
AFFO 18,429 26,238
--------------------------------------------------------------------
--------------------------------------------------------------------
Per Basic Unit ($)
AFFO (continuing operations) 0.270 0.377
AFFO 0.262 0.374
--------------------------------------------------------------------
Per Diluted Unit ($)
AFFO (continuing operations) 0.263 0.377
AFFO 0.255 0.374
--------------------------------------------------------------------
Distributions declared 19,558 19,493
Distributions declared per unit ($) 0.2775 0.2775
--------------------------------------------------------------------
Basic weighted average number of units (thousands) 70,471 70,234
Diluted weighted average number of
units (thousands) 76,250 70,234
--------------------------------------------------------------------
1. "EBITDA", "funds from operations", "distributable income" and
"adjusted funds from operations" are not recognized measures
under GAAP and do not have a standardized meaning prescribed by
GAAP. Refer to the discussion of non-GAAP measures.
2. Excludes current tax with respect to the loss (gain) from
derivative financial instruments, foreign exchange, restructuring
charges, asset disposals and other items that are excluded from
the computation of AFFO.
3. Represents total facility maintenance capital expenditures less
depreciation for furniture, fixtures, equipment and computers
already deducted in determining DI.
4. The impact of discontinued operations reduces FFO, DI and AFFO
by the same amount.
Reconciliation of Cash Provided by Operating Activities to DI
and AFFO
--------------------------------------------------------------------
(thousands of Canadian dollars) Q1/08 Q1/07
--------------------------------------------------------------------
Cash provided by operating activities 11,969 30,347
Add (Deduct):
Net change in operating assets and liabilities 9,755 (1,212)
Current tax recovery on loss (gain) from derivative
financial instruments, foreign exchange, asset
impairment, disposals and other items 104 (1,587)
Net provisions and payments for
self-insured liabilities 307 3,705
Depreciation for furniture, fixtures,
equipment and computers (4,166) (3,531)
Other 257 495
Principal portion of government capital
funding payments 541 510
--------------------------------------------------------------------
DI 18,767 28,727
Additional maintenance capital expenditures (338) (2,489)
--------------------------------------------------------------------
AFFO 18,429 26,238
--------------------------------------------------------------------
--------------------------------------------------------------------
Copyright © 2009, MarketWire
Copyright © 2009, NewsBlaze,
Daily NewsTags: ,Medical and Healthcare:FacilitiesandProviders, MedicalandHealthcare:HealthandNutrition, MedicalandHealthcare:Healthcare, MedicalandHealthcare:Nursing, RealEstateandConstruction:ResidentialRealEstate, ,GA,MARKHAM, ONTARIO
Search News
Daily News
