May 2014 Annual Meeting Slide Presentation

Annual General Meeting
May 7, 2014
Benjamin J. Hutzel
Chairman
…helping people live better
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Tim Lukenda
President & CEO
…helping people live better
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Forward-looking Statements
This presentation contains forward-looking statements, based on our
best judgments, which reflect risks and uncertainties.
Actual results could vary from expectations.
“Adjusted EBITDA”, “net operating income” (NOI), “funds from
operations” (FFO), and “adjusted funds from operations” (AFFO) are
non-GAAP measures and do not have standardized meanings
prescribed by GAAP.
Further information can be found in the disclosure documents filed by
Extendicare.
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ONE CUSTOMER
…helping people live better
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ONE CUSTOMER
A DEMOGRAPHIC IMPERATIVE
Ages:
65–84
85+
100
90
80
70
60
50
Population in Millions
40
30
20
10
0
2010
2020
2030
…helping people live better
2040
2050
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ONE CUSTOMER
TWO MARKETS
…helping people live better
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ONE CUSTOMER
TWO
GREAT
MARKETS
…helping people live better
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ONE CUSTOMER
TWO
DIFFERENT MARKETS
…helping people live better
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CANADA
Stable and Strong
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A Leader in Canadian Senior Care Services
The Largest Long-Term Care
Center Operator in Canada
The Largest Home Health
Care Operator in Ontario
95 centers*
21 branches
~12,600 beds*
4.9M hours of home health
40+ years of operation
care services
23% of our Canadian revenue
* Including assisted living, retirement and chronic care centers
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The Canadian Landscape
Extendicare Canada
Occupancy and Daily Rate
Occupancy (%)
Daily Rate ($PPD)
100
DEMAND
outstrips supply
300
90
250
80
70
200
60
STABLE
50
150
40
100
30
20
50
10
0
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
High and Stable Occupancy. Predictable Cash Flow.
5/7/2014
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Positioned for Continued Success
Critical Mass
Extendicare’s centers
Strong Brand and
Reputation for Quality
Nursing centers
Chronic care unit
Assisted living & retirement centers
ParaMed home health care (21 branches)
Extendicare Maple View,
Sault Ste. Marie, ON
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Our Opportunity in Canada
1. Grow our Long-Term Care Business
5 new centers since 2010  Average daily rate up 3.8% (2013)
 Added 14 centers to the managed portfolio since 2011
Extendicare Maple View,
Sault Ste. Marie, ON
Extendicare Timmins,
Timmins, ON
Continued Investment in Existing Centers
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Our Opportunity in Canada
2. Grow our Home Health Care Business
Demand for aging at home
• Volume up 5.2% (2013)
Well-positioned to benefit under
Ontario government's new home
health care funding model
• Contracts awarded on
quality of care and value
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Our Opportunity in Canada
3. Expand into Vertical Businesses
HEALTH CARE CONTINUUM
INDEPENDENT
LIVING/
SENIORS
APARRTMENTS
HOME
HEALTH
CARE
HOSPICE
CARE
OUTPATIENT
REHABILITATION
CLIENTS
RETIREMENT/
ASSISTED
LIVING
CENTERS
LONG-TERM
CARE
CENTERS
ACUTE CARE
HOSPITALS
INTENSITY OF SERVICES
LOWER
HIGHER
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Canadian Financial Review
(C$ M)
Revenue
NOI
Adjusted EBITDA
753.0
729.0
698.4
91.4
96.0
97.2
AFFO
37.3
72.2 72.0
33.2
65.8
21.8
2011 2012 2013
2011 2012 2013
2011 2012 2013
2011 2012 2013
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United States
Significant Potential for the Long-Term
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A Top-Ten Operator of Skilled Nursing Centers
Established platform
for long-term growth
8th largest SNF provider
in the U.S.
~15,200 beds*
156 centers*
11 states
Nursing center operations
Nursing center properties
Assisted living centers
ProStep outpatient rehab (23 branches)
* Including assisted living and retirement centers
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The U.S. Landscape
Extendicare U.S.
Occupancy and Daily Rate
SUPPLY
exceeds demand
Occupancy (%)
Daily Rate ($PPD)
100
300
90
250
80
70
EVOLVING
government policy and
funding environment
200
60
50
150
40
100
30
20
50
10
0
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Annual SNF Admissions Predicted to Grow by 1 Million by 2020
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5/7/2014
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Managing Risk
Liability Risk
Regulatory Risk
Limit exposure in
litigious jurisdictions
Take appropriate
compliance precautions
• Leased 21 skilled nursing centers in
Kentucky, retaining cash flow from
the real estate
• Increased staffing levels and
training
• Continue to monitor geographic
exposure
• Investments in centers and
programs
Commitment to Meet or Exceed Government Quality Standards
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Keys to Success
1. Improved Physical Environment
Active Life Transition Units  Hotel-style amenities
 Private-room accommodations
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Keys to Success
2. Improved Program Offerings
New clinical technologies  Lifestyle innovations /
Life enhancement series  Sophisticated programs for
health care delivery  Data collection and reporting systems
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Keys to Success
3. Maximizing our Market Knowledge and Concentration
Concentrated marketing to preferred provider networks
92%
of our patients come
from an acute-care
facility
Nursing center operations
Nursing center properties
Assisted living & retirement centers
ProStep outpatient rehab (23 branches)
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Attracting a Higher Premium Mix
50% MEDICAID
US$199
9% PRIVATE/OTHER
US$245
11% MANAGED CARE
US$443
Premium Payment
Source
30% MEDICARE
US$470
High Premium Mix Relative to Industry Average
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The Inherent Value of Owning our Assets
Long-term HUD-insured
mortgages
Improved payor mix
Access to capital
84 centers
US$542
Continuous
Improvement
Loop
million
Weighted average fixed rate of
4.3%
Weighted average term to maturity
30 years
Higher quality
ratings/customer satisfaction
Investment in our centers
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U.S. Financial Review
(US$ M)
Revenue
NOI
Adjusted EBITDA
1,411.1
1,309.0
1,234.6
190.9
130.0
2011 2012 2013
51.4
135.8
161.5
2011 2012 2013
AFFO
48.5
111.1
81.4
2011 2012 2013
32.8
2011 2012 2013
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Consolidated Financial Review
(C$ M)
Revenue
2,094.1
2,037.4
2,024.5
NOI
Adjusted EBITDA
AFFO
84.6
280.3
257.4
231.1
200.1
183.3
69.8
71.1
155.7
2011 2012 2013
2011 2012 2013
2011 2012 2013
2011 2012 2013
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Quality
Our Key to Growth
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Our Ongoing Quality Initiatives
Helping People
Live Better
Setting new standards in care
Providing quality services
Energizing team members
Establishing innovative
partnerships
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AHCA/NCAL Quality Awards
Silver Recipients
Total Bronze Centers
Total Silver Centers
2008
2009
2010
2011
2012
2
2013
1
1
13
17
20
23
3
33
31
6
56
76
9
93
106
Bronze Recipients
2011
2012
2013
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CMS Five-Star Ratings
EHSI - Percentage of Stars
Dec ‘08
Dec ‘09
Dec ‘10
Dec ‘11
Dec ‘12
Dec ‘13
60%
50%
40%
30%
20%
10%
0%
1 Star
2 Stars
3 Stars
4 Stars
5 Stars
300% Improvement in Four- and Five-star Rating Since Inception
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Canadian Quality Standards
Our Goal: 100%
Our Goal: 100%
TODAY 50%
• Our Goal is to outperform the CIHI
provincial average on all 4 publically
reported indicators
TODAY 50%
• In 2013, 50% of Extendicare’s Ontario homes
reached HQO’s aspirational goals in at least one
publicly reported quality indicator
• Our Goal is to have all our homes reach these
goals in all of these indicators
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Canadian Accreditation
Our Goal: 100%
Accreditation is an established
marker of quality assurance, and
demonstrates our commitment to
the communities we serve. It
means our operations have been
assessed by our peers and we
have met or exceeded national
standards of excellence.
TODAY 100%
• All our homes are accredited
• In 2013, our home health care operations
earned the highest rating accreditation with
exemplary standing
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TWO DIFFERENT
REGULATORY ENVIRONMENTS
BUSINESS MODELS
GROWTH STRATEGIES
RISK-REWARD PROFILES
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ONE GOAL
MAXIMIZING THE VALUE OF
EACH OF OUR BUSINESSES
Status Quo is Not an Option!
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THANK YOU
…helping people live better

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