Extendicare, a Markham, Ontario-based senior care services provider, has agreed to acquire a 15 percent stake in Ontario and Manitoba long-term care homes held by Rivera. The purchase price is about C$36 million plus the assumption of about C$34 million of debt. Extendicare also formed a redevelopment joint venture with Axium Infrastructure, which owns the remaining 85 percent interest in Rivera assets.
MARKHAM, Ontario, March 01, 2022 (GLOBE NEWSWIRE) — Extendicare Inc. (“Extendicare”) (TSX: EXE.TO) announced today that it has entered into agreements with Revera Inc. and its affiliates (“Revera”) and Axium Infrastructure Inc. and its affiliates (“Axium”) , a Canadian investment firm with a strong and enduring commitment to long-term care, in respect of the ownership, operation and redevelopment of long-term care homes in Ontario and Manitoba.
Highlights of the Transactions
Adds 56 long-term care homes to double the Extendicare Assist portfolio of managed homes
Revera’s long-term care operations team to join Extendicare to advance the delivery of high-quality care and services across all of our homes
Extendicare to acquire Revera’s 15% interest in a portfolio of 24 long-term care homes owned in partnership with Axium, and an opportunity to purchase future Revera redevelopment projects
Extendicare to form a joint venture with Axium for the redevelopment of “class C” homes owned by Extendicare
These transactions, combined with the recent announcement of the sale of Extendicare’s Esprit retirement communities portfolio, represent a significant transition of Extendicare’s strategy to focus on long-term care and home health care using a less capital-intensive business model. Extendicare will focus its growth on operating and building new long-term care homes, while substantially reducing the amount of its own capital required to redevelop its “class C” portfolio. This will allow Extendicare to deploy capital more efficiently and provide greater flexibility for growth initiatives, including acquisitions.
Extendicare has entered into agreements with Revera to acquire a 15% managed interest in 18 “class A” long-term care homes located in Ontario and six homes in Manitoba (the “Acquisition”). The remaining 85% interest will continue to be owned by an affiliate of Axium. Relatedly, on closing of the Acquisition, Extendicare will enter into management contracts with Revera to manage all of Revera’s other long-term care homes, which comprise 31 “class C” homes located in Ontario and one personal care home located in Manitoba. Extendicare will also enter into development arrangement agreements with Revera in respect of the potential redevelopment of those managed “class C” homes in Ontario into new homes (collectively with the Acquisition, the “Revera Transactions”).
In addition to the Revera Transactions, Extendicare announced today that it has entered into an agreement with Axium in respect of the formation of a joint venture with Axium to jointly redevelop certain of Extendicare’s existing Ontario “class C” homes (the “Axium Transaction” and, with the Revera Transactions, the “Transactions”). Axium will own an 85% interest in the joint venture with Extendicare retaining a 15% interest. Extendicare will continue to undertake all development activities in respect of the joint venture homes and will operate the homes upon completion of construction.
The Revera transactions will add 56 long-term care homes to the 108 long-term care homes Extendicare currently operates (58 owned, 50 managed). These homes will also join the SGP Purchasing Partner Network, bringing the total participating beds to over 100,000. Revera’s deeply experienced team of long-term care experts will join Extendicare’s, in a shared mission to provide best-in-class seniors’ care. Extendicare also has a right of first offer on Revera’s redevelopment projects in respect of its 31 class C homes in Ontario, either alone or in partnership with Axium.
Closing of the Revera Transactions is subject to customary closing conditions, including receipt of regulatory approvals from the Ontario Ministry of Long-Term Care and Manitoba Health and Winnipeg Regional Health Authority, and is not conditional on financing or due diligence.
The aggregate cash consideration for the Revera Transactions is approximately $36.0 million plus the assumption of approximately $34.0 million in debt (at Extendicare’s share), subject to customary adjustments. Certain of the associated debt will be refinanced or repaid on or before closing, resulting in changes in the allocation between cash consideration and debt assumption. The purchase price is expected to be funded from cash on hand.
“Today’s announcement, together with the recently announced sale of our Esprit retirement business, represents a significant repositioning of Extendicare to focus on growth in our long-term care and home health care segments. The addition of the Revera long-term care team and the 56 homes to our management portfolio meaningfully enhances our expertise and scale to drive improved performance and high-quality care for seniors across Canada,” said President and CEO, Dr. Michael Guerriere. “We look forward to the opportunity to work with Revera and Axium to rebuild as many of Revera’s 31 class C homes as approvals and favourable market conditions permit.”
Closing of the Axium Transaction is subject to customary closing conditions, including receipt of regulatory approvals from the Ontario Ministry of Long-Term Care, and is not conditional on financing or due diligence.