Canada's Long-Term Care Consolidation Wave Drives Extendicare to 59% Revenue Surge

Canada's publicly funded care-services sector is deep into a consolidation cycle, and against that backdrop Extendicare Inc. (TSX: EXE) posted its sharpest year-over-year revenue gain in recent memory. Second-quarter revenue reached C$611 million, up 59.4%, while adjusted EBITDA rose 71% to C$68.3 million, as three completed acquisitions contributed for the first full quarter simultaneously.

Three acquisitions, one quarter

President and CEO Michael Guerriere said the results reflect execution of the company's acquisition strategy over the past 18 months. The C$570 million purchase of CBI Home Health, which closed April 1, contributed C$145.7 million of revenue and C$18.5 million of adjusted EBITDA during the quarter. Nine long-term-care homes acquired from Revera in June 2025 and Closing the Gap, a home-health-care purchase completed in July 2025, added further top-line weight. Guerriere said all three acquisitions are exceeding the adjusted EBITDA levels originally underwritten at announcement.

CBI generated average daily visits of 33,609 during the quarter, representing an annualized run rate of roughly 12 million hours of care and approximately 20% volume growth from 2024. Home health-care segment revenue rose C$201.7 million year over year and net operating income increased 117.8%. The segment's NOI margin narrowed 60 basis points to 12.9%, reflecting investment in scheduling, coordination and supervisory resources and the absence of a 2026 Ontario home-care rate increase to offset labour-cost inflation. CFO David Bacon said the company made a "fairly large step up" in back-office staffing over the past six months and does not expect a comparable step-up ahead.

The rate and funding environment

The macro read-through for Extendicare's margin trajectory runs directly through provincial funding policy. Ontario's two recent C$1.1 billion home-care announcements were aimed at volumes, Guerriere said, rather than rates, which means labour-cost inflation is not yet fully offset at the segment level. Provincial funding increases have historically tracked labour costs over the long term, though announcements in home care are less regular than in long-term care and may include retroactive adjustments. Management's long-run home-health-care volume growth expectation remains 6% to 8% annually, supported by roughly 4% demographic growth and ongoing shortages of long-term-care beds.

Balance sheet repositioned after acquisition sprint

Extendicare completed its inaugural unsecured notes offering in the quarter, issuing C$450 million of five-year senior unsecured notes at 4.345%, maturing April 2031, and received a BBB stable rating from Morningstar DBRS. The company also established a new C$250 million unsecured revolving credit facility maturing April 2029 and retired higher-cost mortgage debt. Those moves cut the weighted-average interest rate 80 basis points to 4.4% and extended weighted-average debt maturity to 5.1 years. Pro forma leverage landed at approximately 2.5 times adjusted EBITDA, well below management's original post-acquisition estimate of 3.3 times.

On balance, the capex cycle continues. Six long-term-care redevelopment projects are under construction, including the 256-bed Extendicare Forest Trail home in Peterborough, scheduled to open next month. Four additional openings in 2027 are expected to add 832 beds. Further acquisitions, management said, are unlikely before late 2027, a timeline that leaves integration costs of C$3 million to C$4 million annually as the near-term drag to watch.