Thank you, operator. Good morning, everyone.

Welcome to Extendicare's 26 second quarter results conference call. Joining me today are Extendicare's President and CEO, Michael R.

Guerriere and Executive Vice President and CFO, David E. Bacon.

Our Q2 results were released yesterday. And are available on our website as is a live audio webcast of today's call.

along with the company's slide presentation. An archived recording will also be available on our website following the call today.

As well, replay numbers and passcodes have been provided in our press release for those wishing to access an archived recording by phone at midnight on August 21. Before we get started, please be reminded that today's call may include forward looking statements and non GAAP and other financial measures.

Such forward looking statements involve known and unknown risks and uncertainties, that may cause actual results to differ materially from those expressed or implied today. We have identified such factors as well as details of non GAAP and other financial measures our public filings with the Securities Regulators And suggest that you refer to those filings.

With that, I will turn the call over to Michael.

Thank you, Jillian. Good morning.

Our second quarter results reflect the successful execution of our acquisition strategy over the last 18 months. On April 1, we closed the $570 million acquisition of CBI, making Q2 the first period that CBI contributes to our results.

The year over year increase in our EBITDA of 71.7% also reflects the acquisition of 9 long term care homes from Revera, that closed 06/01/2025 and Closing the Gap that closed 07/01/2025. All 3 acquisitions are exceeding the originally underwritten adjusted EBITDA that we reported at the time they were announced, reflecting our focus on acquiring platforms that contribute to our organic growth.

Q2 also featured Extended Care's inaugural unsecured notes offering with the issuance of $450 million of unsecured notes supported by a BBB credit rating from DBRS. Together with a new $250 million unsecured senior credit facility, this new investment grade capital structure gives us flexibility in making future capital allocation decisions.

Leaving our pro forma net debt to EBITDA at 2.5x well ahead of our original leverage outlook when we announced the largest acquisition in our history. We are on track to complete the integration of closing the gap this year as we now focus our attention on integrating CBI.

We achieved another strong quarter of organic growth in home health care which coupled with the acquisitions contributed to a 133% year over year growth in home health care volumes. Excluding CBI, our ADV increased 31.7% from the prior year.

Driven by the Closing the Gap acquisition and strong underlying growth of the market. As we have previously noted, the unexpectedly rapid organic growth we have experienced recently in the home healthcare segment, has necessitated additional investments in technology and back office teams to support frontline home health care operations.

These investments, along with the lack of a 2026, rate increase in Ontario, contributed to the 60 basis point reduction in home health care NOI margins from the prior year period. Despite the strong volume growth again this quarter, we continue to expect that the underlying market growth will moderate over time to a long run average of approximately 6% to 8% on an annualized basis.

Reflecting the 4% demographic growth trend, and the expectation that the shortfall in the availability of long term care beds will continue. Long term care occupancy remains strong, with announced funding enhancements and preferred occupancy rate increases, contributing to NOI growth of $5.7 million and trailing 12-month NOI margins of 11.8%.

Our 8.3% year over year growth in the SGP customer base and NOI margins at 57.6%. We continue to expect annualized margins of 50% to 55% for this segment.

Driven by the strength of these results, our AFFO per share adjusted to remove the impact of stock based compensation payments increased to $0.448 per share an increase of 52.9% year over year. Stock based compensation was unusually impactful this quarter, due to the retirement of 2 long-tenured directors from our board.

Our payout ratio on a trailing 12-month basis excluding the impact of out of period items, was 37%. Turning to Slide 4, we see updated information on CBI home health.

As detailed in the business acquisition report we filed on May 12 CBI is tracking ahead of initial expectations with Q2 26 revenue of 146 million and adjusted EBITDA of 18.5 million. CBI contributed ADV of 33.6 thousand in the quarter.

Approximating a run rate of 12 million hours of care annually. About 20% ahead of 2024 volumes.

A very similar growth rate to what we experienced at ParaMed in the same period. CBI is highly complementary to PERIMID as it materially expands our presence in Western Canada, and introduces business models that offer new avenues for organic growth.

The added scale of the combined companies will enable further investments in technology, and deliver significant synergies once the integration is complete. This is important to position us to provide reliable, high quality services more efficiently to the thousands of people that rely on us for care every day.

Turning to Slide 5, we continue to advance our Ontario long term care redevelopment agenda through our joint venture with Axium Infrastructure. At the end of May, we welcomed residents to Extendicare Beauclair, the new 320-bed home in Ottawa, that we opened in the joint venture.

Also completed the sale of the Sudbury project to the Axium joint venture for net cash proceeds of $18.1 million, Net of costs and our 15% retained managed interest. Resulting in a $7.7 million gain after tax.

We currently have 6 projects under construction. Including Extendicare Forest Trail, a 256-bed home which is scheduled to open next month in Peterborough.

Looking ahead, we remain on track to open 4 new homes in 2027. Representing a further 832 beds.

We continue to progress an additional 17 projects that are at varying stages of planning and development. Under the Ontario Long Term Care Home Capital Development Program.

Including a 256 bed home in Ottawa we hope to break ground by the end of 26. We are actively working with the government on necessary funding and other elements required to fully realize our development agenda.

I will now turn the call over to our CFO, David E. Bacon, to discuss our financial results in more detail.

Thanks, Michael. I will start with an overview of our consolidated results, review our individual business segments and provide an update on the recent changes to our balance sheet.

This quarter's results reflect the full quarter impact from all of our acquisitions. Our consolidated Q2 revenue increased by 59.4% to $611 million driven by the full quarter contribution of the CBI acquisition which drove 132.6% growth in our home health volumes, the impact of Closing the Gap acquisition on a year over year basis and continued home healthcare organic growth.

It was also bolstered by the acquisition of the 9 LTC homes in June 2025 and our long term care funding enhancements. Our Q2 adjusted EBITDA was 68.3 million an increase of $28.5 million or 71.7% over the prior year, reflecting our acquisitions and strong underlying organic growth.

Particularly in our Home Health segment. The CBI acquisition contributed adjusted EBITDA of $18.5 million it is important to note this quarter that both our net earnings and our AFFO were negatively impacted by certain 1-time items that we believe should be adjusted for when considering our results.

Our Q2 net earnings of $30.9 million down $1.1 million from the prior year were impacted by pretax costs of $8.1 million in connection with establishing our senior unsecured credit structure and the early prepayment of certain long term care home mortgages and loans. In addition, net earnings were further impacted by pretax costs of $8.7 million related to transaction and integration costs primarily related to the CBI acquisition.

Additionally, we reported $3.6 million lower pre-tax gains on the sale of assets to the joint venture on a year over year basis. Adjusting for these impacts and certain fair value impacts, net of tax, our net earnings increased by $15.6 million to $36.4 million or $0.38 per basic share.

Our Q2 AFFO improved by $11.7 million or 47% to 36.5 million However, this quarter's AFFO was impacted by the settlement of deferred share units held by 2 long-standing directors who retired in April. Resulting in payroll cash withholding taxes of $8.7 million or $6.4 million on an after tax basis.

When this is excluded, our Q2 AFFO increased by $18.1 million or 73% to 42.9 million or AFFO per basic share of $0.48, an increase of 52.9% from the prior year. Turning to our individual segments, our home healthcare segment continues to deliver strong performance driven by the acquisitions and continued organic growth.

Our Q2 revenue increased by $202 million year over year while NOI increased by 25.2 million or a 117.8%. CBI contributed approximately $146 million in revenue and $19.5 million in NOI during the quarter.

As Mike indicated, our NOI margins declined 60 basis points to 12.9% largely due to the increased investment in back office to address recent and future growth and the absence of a 2026, rate increase in Ontario. To offset labor cost inflation.

Turning to our long term care segment, revenue increased by $26.5 million or 12.8% driven primarily by the contribution of $18.8 million from the 9 LTC homes acquired last June net of the closure of the Carlingview Manor, following the opening of the Extendicare Beauclair home in the joint venture in May. In addition, our LTC operations benefited from funding increases and improved preferred occupancy.

Our NOI increased by $5.7 million or 23.9% driven by the increases in revenue and the net contribution of approximately $2.5 million in NOI from the 9 LTC homes acquired. Q2 NOI margins increased 110 basis points over the prior year period to 12.7%.

Our LTC NOI margins are typically higher in the second and third quarters due to the timing of funding increases and spending under the envelope funding system and the timing of wage rate increases under our union agreements. For the trailing 12-month period ended June, our LTC NOI margin normalized for out of period items was approximately 11.8% which is more in line with our expectation that margins in LTC will remain consistent.

with these levels in recent years. Turning to our managed services segment, the results were impacted by the loss of the Revera management contracts during Q2 of last year.

Following Revera's sale of 30 LTC homes, 9 of which we acquired and are now included in our LTC segment. The number of management contract beds in extended care assist dropped 3.8% in Q2 as 2 third party assist contracts were not renewed during the quarter.

Partially offset by the new 320 bed Beauclair home opening in the joint venture in May. As a result, our managed services revenue decreased by $600 thousand to $17.1 million Despite this reduction, our NOI improved by $200 thousand to 9.9 million primarily from 8.3% organic growth in SGP clients and our increased management fees from the newly opened home in the joint venture.

Turning to Slide 11. We have significantly enhanced our balance sheet following the acquisition of CBI on April 1.

This quarter, we established our new unsecured credit structure including our successful inaugural senior secured investment grade credit offering, we issued $450 million senior unsecured notes priced at 4.345% on a 5 year term maturing in April 2031. Both the company and the notes received a BBB stable rating from Morningstar DBRS.

In conjunction with the notes offering and the repayment of the senior secured delay draw term loan, we amended our senior secured facilities to establish a new $250 million unsecured credit facility. This new facility provides us with lower credit spreads than the previous secured facility and extended the maturity to a new 3-year term ending in April 2029.

In addition, we completed a series of repayments on certain long term care home related mortgages and loans. To address near term maturities, floating rate interest and higher cost debt.

This reduces our borrowing costs, improves our maturity profile provides us with additional flexibility through lower mandatory payments associated with the mortgages and the term loan structures we retired. The result of these changes lowers our weighted average interest rate by 80 basis points to 4.4% and improves our weighted average term to maturity.

to 5.1 years. Lastly, turning to Slide 12 with the full impact from acquisitions, and our capital structure changes now reflected we exit Q2 in a strong financial position with $208 million in overall liquidity comprised of $93 million in cash on hand and $115 million available on our unsecured revolving facility.

Our pro forma debt to adjusted EBITDA is approximately 2.5x at quarter end reflecting the incremental debt in support of our recent acquisitions and the pro forma full year impact on adjusted EBITDA from CBI. This is well ahead of our original estimate of 3.3x post the CBI acquisition at the time we announced the transaction last year.

We are very comfortable with leverage at this level and given our strong free cash flow profile, and capital efficient redevelopment model, we have significant flexibility in considering future capital allocation decisions while maintaining our leverage commensurate with our new BBB stable rating. With that, I will pass it back to Mike for his closing remarks.

Thank you, David. Our second quarter results reflect the strength of the platform we have built over the past number of years.

Including a home health care segment that has more than doubled in size. We continue to be very confident about the potential of our home care and long term care platforms and our ability to expand access to care for the growing number of Canadians who depend on us.

In the second half of 26, we will be focused on disciplined execution. We will complete the integration of closing the gap, advance the integration of CBI, and continue to progress our redevelopment program.

With 5 new homes opening in the next 4 quarters, all without losing sight of the quality imperative that is fundamental to the care we provide to thousands of people who rely on us every day. The demographic trends underpinning our business are relentless in driving demand for care.

Our scale, technology platform and the flexibility of our capital structure position us well to meet that demand. Canada's health care system is under significant strain, our services allow us to ease pressure on hospital capacity by delivering care in the settings best suited to each person's needs at the most sustainable cost.

We will keep building that capacity so more Canadians can access the care they need wherever they call home. My sincere thanks to our team members for their unwavering commitment to the residents, patients, and individuals we serve.

And with that, we welcome any questions that you might have.

Hello, everyone. First 1 for me, just regarding your home healthcare margins, I understand this small move down versus recent quarters as you go through a round of OpEx investments that support all the growth.

Based on your investment needs that you would know, is there more transient margin pressure near term? Or are you kind of back on stable footing now and maybe climbing and leveraging the new cost base going forward from here?

And then also, is any of the OpEx investment you are making in anticipation of more home health care M&A that you are eyeing near in midterm?

Yes. Thanks, Kyle.

I would say address the last part of your question right away. You know, I think we have said, I think, in the last couple of quarters that we had been running quite hot on organic growth as we all know.

You know, we had talked about the fact that back office that supports the frontline operations think of those as schedulers and coordinators, supervisors, so not accountants and HR types, but the mid office that supports the front lines it is a bit of a step function from a cost perspective there. So we had grown quite significantly with that very rapid organic growth with largely an unchanged back office supporting that frontline.

So we have made investments. it is mostly people.

And the related technology costs that come with upsizing that back office. And so we have been doing that over the last couple of quarters.

I do not think it is not it is not in anticipation of any future M&A. it is more to more to support where we are at from the recent growth and future growth From a margin perspective, I think the our view is unchanged.

I think we have always felt that you know, this margin this business would run 50 to 100 basis points higher than where we were at when we first started talking about that. We were in the high 12s.

And we thought we could be into the up into the 13s. I think, you know, when that happens, you know, part of it was a function of you know, putting some additional investment in the back office knowing how fast we were running on organic growth.

And so I think there is not know, I what I would say is we still believe that this is a higher margin business, The timing of when that 50 to 100 basis points will come in know, moderates with the investments we have had to make in the back office. Obviously, rate increases tie into that.

And as we know, yet as of yet, there has not been an increase or an announcement in Ontario for this year on home care. So that obviously factors in.

From a long term perspective, though, you know, the largest single cost for the business is labor, and we do feel that, you know, over time, that always will even out from a rate increase perspective. So that the businesses maintain an equilibrium with labor costs.

So I think I would not read too much into a 60 basis point decline year over year this 1 quarter. Our trailing 12-month margins in the business are still above 13.

And I think that we still on a, you know, medium term basis to longer term basis feel that there is margin expansion to come in this business. But I would not get too focused on an individual quarter.

Yeah. Got it.

Is it fair to say the step up the phase of the step up in investment is done, though?

Or is there Yes. We have made quite a quite a significant move on that the headcount.

I mean, I would say there is probably not another big step coming. I think, you know, it was happening ratably over the first half of this year.

So maybe a little bit of, you know, normalizing that out, but I think, yes, for buying for the most part, we have made a fairly large step up in the last 6 months in the size of the back office. So I do not expect that to trend to continue.

Got it. And then just on your onetime costs, they were high in Q2, understandably, given you closed the CBI deal, and that had cost associated with it.

But 1 of the components of your onetime cost was integration, which I assume is recurring near term as you integrate CBI. You broke that out.

It was $1.5 million of integration costs. Is that a kind of run rate to expect over the next year or so as you integrate CBI?

Or will that step up or down?

No, I think, I mean, that might be you know, it is a think we are looking at $3 million to $4 million a year for the next couple of years. So the 1.5 in the quarter probably a tad high if you if you tried to annualize that.

But you know, it is not a bad that would be in that level of what we are looking at. Okay.

Thank you. I will pass it on.

Hi, thanks. Good morning.

Just sticking on the home health care. What sort of rate increases do you typically get from the Ontario government?

And are those like have those been consistently annual in this is just delayed this year for whatever reason?

Jonathan, we tend to see, as David said, over the long term, that it tracks labor cost inflation So, you know, in our current environment, that is in the 2% to 2.5% kind of range. The rate increases in home care in the different provinces do not happen like clock work?

it is not as kind of regular as we see in long term care where it tends to happen at the same time every year. So there can be some lumpiness, but what we have seen over the long term is that the rate increases track labor cost inflation quite closely.

Okay. And then are do they work like the long-term care 1 where you might get a retroactive increase?

Or Yes. We have certainly seen we have certainly seen 1 time like retroactive payments coming in the past.

If you if you look into our past statements, you can see several examples of that.

Okay. And then just maybe a different way.

I asking about M&A in the space. When you like, you have now made these investments, to be able to grow or scale up, like, ultimately, how much how much do the investments you just made let you scale?

Like, can you Well, the technology the technology platform that we have put in place gives us a lot of scalability. And that is the key element that really allows us to scale up But you know, I to be candid, we have modeled you know, a few years ago when we were looking at this, we modeled on that 6% to 8% annual growth and we have exceeded that by a lot, and hence, the step function that David talked about that we needed to do.

But we have been able to get you know, quite significant annual productivity improvements in our back office. Because of the technology that we are continuing to introduce AI is giving us a lot of flexibility now as well.

In terms of introducing increased tools for our staff to be able to become more efficient So we see that efficiency trend continuing. But, you know, that is that is been able to absorb volume growth you know, 10, even 15% annually in the past.

Without increasing the headcount in the back office. But when we started getting into the high teens and even up you know, up to 20% that was just exceeding our ability to accommodate that based purely on efficiency gains.

And so, hence, the step function headcount that we added in the first couple of quarters of this year. But we expect that ability to continue to improve our back office productivity to extend into the future.

Okay. that is that is helpful.

Thanks. I will I will turn it back.

Thanks. Good, good afternoon, I guess.

Just back to the billing rate increases, has there ever been an instance where you have not gotten 1 at all during a year? You have a big catch of the next year?

Are you still expecting to see something either this quarter or next?

Yeah. Lorne, I think if you go back far enough, especially coming out of COVID, you would have seen examples both in LTC and home care where you know, inflation ran quite hot emerging out of COVID, and you there were years where we got you know, a catch-up of, in home care, 6 point 7 percent 1 year and then 3% or 4% the next.

We got an 11% roughly increase to catch-up. So there is been quite a bit of volatility with that.

But, you know, I think that, you know, it is pre COVID, pre-COVID, LTC was quite regular as Mike alluded to, like a inflationary increase every year around the same time. We are we are feeling like we are back to that in LTC over the last couple of years.

Home care has always been a little bit more sporadic in terms of when they do the announcements. Even a bit before COVID.

So yes, there is conceivably a period of time where you will have a gap where the increase does not come when you want it. But, again, over time, you know, we do feel that a long term basis, the it takes care of itself, it finds that equilibrium whether it is through a bigger catch-up versus a regular.

So you know, that you know, you would see that pattern if you went back far enough. So Yeah.

But I was I was just trying to get at, like, have you ever had a year where they have given you, they just have not announced an increase for home health and then done a big catch-up versus doing 1 that is, you know, maybe below where inflation actually came in and doing a catch-up. Just trying to get an idea from modeling standpoint and, I guess, an outlook standpoint what to expect in terms of top line for the, home health business?

Yeah. That we have it is a bit of a hard question to answer because they make the announcements at different times.

So sometimes we have had announcements in November You know, sometimes we have had announcements earlier in the year So I guess I would say yes. Is the answer to the question, but then we have always seen a catch-up of some sort when that happens.

Gotta love the government. Okay.

And then flipping over to the LTC redevelopments obviously, the big tranche that is expected to be completed by the by 2Q 2027. And you mentioned the Ottawa 1 you are working towards.

Do you expect to announce more developments in the coming quarters to kind of keep that cadence in that 5 to 7 project range or not?

Yeah. I think we are definitely advancing projects in the 17.

As you mentioned, the we will you know, aiming to start another 1 this by the end of this year. We are tracking, as we have said in the past, you know, looking to start, you know, at least 3 a year.

On average. So there are you know, I would expect more starts towards the back half of next year.

Just based on kind of our current cadence on moving through the development cycle on a few more of the near term projects. So but we still have that target of trying to, you know, have 3 to 4 started per year.

Okay. Perfect.

Thank you so much.

Hi. Good morning, guys.

A couple for me. So on CBI, now that it is closed and you completed the investment grade refinancing, how should we think about your appetite for additional home healthcare acquisitions versus focusing on that integration over the next couple of years?

Well, at this point, the integration is front and center in our focus and certainly for the rest of 2026, will be a key focal point. I think it is going to take us some time to integrate this, and we want to make sure that we do that well.

That said, you know, our balance sheet gives us the flexibility to be opportunistic So, you know, we will certainly evaluate things that may come to our attention. But I would I would I would say that likelihood is that you know, further acquisition activity would not be likely until later next year at the earliest.

But never say never. I mean, I think I think if something fit really well with our strategy, and came to our attention.

We would consider it. Okay.

Excellent. And now that you have had CBI under the umbrella for a full quarter, can you just give us a little bit more detail, I guess, on where you are in the integration process?

what is been completed? What are the next steps?

And whether you are seeing opportunities for revenue or cost synergies beyond what you originally underwrote.

Yeah. I would I would say still early days.

We are at quarter end. Most of our focus at the moment on the CBI side of things is planning for there are a couple of elements of that transaction where there is still some transitional services.

A couple of our application platforms, where we need to separate So our focus is trying to move off of any transition support, which we think is targeted for the start of next year. Behind the scenes, there is a significant amount of work going on now going through analyzing and breaking down their business region by region, office by office as we have talked about in the past and what we are doing with CTG.

We do not do a big bang cutover. We move things in a very methodical way piece by piece.

So the front--, you know, to ahead of those integrations, you have to the nature of the workforce in those particular geographies, how the union the union versus nonunion grids might stack up, harmonizing wages and benefits, etcetera. So a lot of planning for that.

You know, it is it is you know, 8, 9 times the size of CTG, and it is got some nuances with the SCS business and some other geographies that we need to work through. So the real focus now is all of the planning for that, The better you plan upfront, and we have learned this through lots of examples, the more planning you do up front on the harmonization and the communications plans, the better the cutovers go.

And the media focus will be on just weaning ourselves off the last couple of pieces of transitional services is the focus. And some of this team is doing double duty on CTG and CBI, but we are on track to finish the CTG work by the end of the year.

So then they that same team gets freed up to then turn their minds to the very methodical process of cutting over the business sort of geography by geography, which will take us some time. And then second part of your question, any, you know, different view of revenue or cost synergies, I would say, at this point There was never really a revenue synergy aspect of these transactions as much as you know, creating the growth platforms and putting ourselves in the right and the right service types.

On the cost side, you know, we still have still looking at that target, the 7.4 million of cost side, you know, from an exit perspective once the businesses are fully brought together. We still think that is a target that is achievable.

Thank you.

Hi, guys. Good afternoon, everyone.

I just want to go to the funding announcement that recently happened, the collectively 2.2 billion I know you have not received details on how that is being allocated, but in prior episodes, how was that? Like, with that being earmarked for operators, I am just a bit surprised that there was no rate increase this year or thus far.

I think you are talking about the 2 $1.1 billion announcements that the Ontario government made for home care. that is correct.

Just want yes.

So those were predominantly directed at volume. And so that really is what is what is making these, you know, very rapid organic volume increases possible.

And you know, their decisions about rates are handled through a different process. So you know, we will see what happens now in the in the fall economic statement, but the pace of growth you know, continues to be quite fast.

And so, you know, we are anticipating that they will continue to be making these investments. But we it is impossible to tell at what pace until the announcement comes out.

Right. And then is the is the industry growing at similar rates as yourselves right now?

Like that mid teens or so. Area?

Or are you anticipating that you are you are taking share from competitors?

No, I think the whole sector is increasing at this pace. I mean, 1 of the things that we observed in our management discussion was the fact that the you know, the CBI volume growth pace and the ParaMed volume growth pace have been very similar.

Despite the fact they have had a little bit of a different kind of mix of services and a little bit of a different distribution. Remarkably similar growth patterns.

So it does appear to be you know, a sector-wide expansion, as opposed to us gaining share from other operators.

I am just kind of curious as to as to why then you are you are thinking it reverts down to kind of 6% to 8%. Like, is that like a low base, do you think?

Relative if this ALC issue kind of persists and there is more funding. I know what the demographics are, but I am just kind of trying to determine where that range could trend if the issues persist as they are.

Well, I think the first thing to say about this is that you know, we are we are we are we are using our best knowledge of the industry to guess at what may be ahead. it is really very difficult to project what you know, how this may go because a lot of the demand for services is hidden.

it is it is not easy to quantify it. But that said, I think it is unlikely that a service line in health care will outgrow the expansion in demographics for an extended period of time.

So that is why we are we are looking at it and saying, you know, the 4% growth in the demographic that we serve which is you know, kind of an ironclad projection, and then the fact that long term care bed additions are not going to keep pace at that at that kind of rate. And means that, you know, that 6% to 8% is where we think that it is going to settle.

So you know, where is the rest of the growth coming from? Well, it must be coming from you know, unmet needs, and the backlog that is based on the 50 thousand person wait list for long term care in the province and the ALC in acute care hospitals, which we have been seeing declining you know, for the first time in my experience, So we do see some evidence that the that backlog, which is difficult to quantify, is dropping.

So how long it will take before, you know, before it goes back down to the numbers that we are we are suggesting. We really cannot say.

Alright. Thank you, Mike.

Thanks. Hi, everyone.

I just wanted to come back to the investments in the back office and the technology side in ParaMed. Were any of those perhaps costs unanticipated or maybe even just brought forward just to sort of get it all done as focus on the integration of CBI?

Yeah. I would not say unanticipated.

I think we you know, I think you know, we have this large group that we have talked about in the past that supports the frontline. It largely stayed the same size through 24, 2025 with multi, you know, high teen-digit organic growth which proved out sort of, you know, the technology and support.

You know, we were able to absorb a lot of that growth. I think we have as we have been saying the last couple of quarters, it is-- we need to, you know, bolster the size of, of that team and the resources there.

So I might say it was unexpected. I think we have been talking about needing to do that given the sustained level of organic growth.

So you know, I think again and it is mostly it is just-- mostly it scales with this the size of our frontline teams and its level of activity. and the referral activity, scheduling activity.

So it is mostly people supporting that. That level of growth.

So I was not necessarily looking ahead to CBI. CBI has their own folks in their back office as well, and you know, that is where some of the opportunities will come when we bring everybody together and you know, longer term, there is as we have spoken about in the past, there is definitely future opportunities when we are all on 1 platform, platform to you know, bring further technology into play and looking at AI, etcetera, for that you know, the functions that back office does.

So it is it is really just trying to get back to an equilibrium in that group so that we are we are servicing and supporting the front lines appropriately given just the volume of activity that we are asking those frontline teams to take on. Got it.

And then just not to keep beating on this, but the Ontario the absence of Ontario billing rate increases, are there any discussions at the moment underway with you know, by the industry with the ministry in Ontario. That would suggest that it is really just a matter of time.

So there are constant communications back and forth in particular where the industry shares the labor cost inflation, what we are seeing in the labor market, what we are what we are seeing in terms of costs. So the government has complete information to make their decisions.

But we generally do not get you know, much forewarning about their thinking until the announcement comes out. So we do not really have any visibility to, you know, when a rate increase might come.

But that is not unusual. Okay.

And then just on the CBI, on the integration that, you know, you have been working to date, have there been any surprises at all or any pain points that might, you know, might, maybe, shift your view as to, you know, the anticipated increase accretion on this on this transaction?

Not at all, actually. If there is been any surprises, it is been on the quality of the team there They have been an outstanding group I am very, very excited about the just the level of energy as the 2 teams come together.

We are seeing a lot, you know, a lot of opportunities and, you know, I think the groups are working well together. So as David said, we still are very confident about the synergies that we projected and you know, we quantified 7.4 million of synergies that we could readily see.

But then we also speculated about further synergies farther out based on the common technology platform and some of the new capabilities that we are we are pursuing with our vendors. So we are we are very positive about the way that is unfolding.

Okay.

And then just on that point, in terms of the that 7.4, can you just remind us what the sort of time line was for that to get or I guess, to get realized?

Well, we do not we do not feel that those will be fully realized until we complete the integration. And, you know, we said it was going to take 18 to 24 months to do the integration.

We do not have any further refinement of that of that projection at this point. Got it.

Thanks very much. I will turn it back, Mike.

Hi, good morning. Just in early days, any hitches serving customers as you have integrated the businesses?

Thus far? No, I think the strategy that David described where we do it kind of region by region rather than a big bang.

Allows us to mitigate any hiccups that may occur along the along the way. The closing the gap integration has been quite seamless from a customer perspective.

So we are we are we are quite happy with the way that is going. And that is allowed us to develop a really solid playbook for how to do this.

As we as we, you know, move to the CBI segments. So that, you know, that is been going quite well.

And no staff communication issues anything like that. I guess what I am trying to get at is that service to the customer and labor you know, the labor team is functioning well in your opinion.

Yes. We have not seen any increase in quality issues or anything of that sort.

And from a staff perspective, you know, our turnover has been dropping over the last few quarters So you know, retention is improved. So, you know, if we were if we were seeing an exodus of staff from our acquisitions that might be a concern.

But in fact, we have been seeing the opposite trend. So there is there is every indication that this is coming together well.

Okay. And then just with respect to provincial funding, like, I guess, at this point, like, as we are seeing demand surge, for the product, like, is the bigger worry right now you know, to get that province to commit more of or, like, a higher share of its operating budget.

To home health care or the rates?

So I would not describe it as a as a concern at all. I mean, there is there is a few fundamentals at work here.

The first is to remember that we are the lowest cost provider of services to this particular demographic surge. So if the government made a decision not to fund the services that we are providing or, you know, not to expand those services.

Then all of that need would back up into hospitals which are the most expensive place to provide those services. So I think we have a dynamic in the market that supports continued expansion of the of the services that you know, that to meet that constant kinda demographic need.

So you know, as we have talked about, there, you know, there can be shorter term kind of considerations that might kind of interrupt the cadence of those rate increases or volume increases, but you know, we believe that over time, those long run averages are going to prove out the 2, you know, the 2 thesis points that our whole business model is built on. Which is that 6% to 8% annual growth in volumes and rate increases that track labor costs.

So we do not see any indication that will not continue to be the dynamic that drives the market. Okay.

that is helpful.

David, you are still carrying about $95 million I think, on the balance sheet in cash. You know, I think since Extendicare sold the retirement business, you know, the cash balance on your balance sheet in pretty elevated.

Just wondering, you know, is that the number you need to be carrying going forward?

No. I talented the quick answer is no.

I think the short term answer is you know, we are we have just taken on CBI. We wanna get a sense of you know, how that factors into you know, the needs and the timing of working cap swings get used to the new some of the new you know, cash flow patterns on the SCS business, which are a little different than what happens on home care and long term care.

So I do suspect you will see you know, us carrying lower balances and, you know, in the immediate term, given the flexibility and we have now with the new structure, we would we redirect some of that to the to the revolver pay down. So but, no, I do not I do not, I think that is just where we ended up, but I do think over the next court quarter or so is and towards the year end, you will probably see that balance lower.

And, you know, an obvious place to direct that cash would be to just pay down the revolver draws in the mean which would you know, delever us a little bit further So Perfect.

And can you talk about just the SEO business you just maybe give a little bit of a broader explanation of what that involves? How big a piece of it is of the combined puzzle and how it might grow going forward?

Yeah. SCS was about 20 percent of the of the CBI operation.

And you know, the business model there is residential homes that are leased and housed typically 3 to 5 residents with long term needs. And currently, there is just under 100 of these leased homes in operation, and the services are provided by the home care you know, by the home care team.

So at this point, you know, the pace of growth in that group is you know, is something that we are becoming more familiar with. So I do not have a number at this point to suggest, but you know, what we are seeing in long term care and the long term care waiting lists, we feel that a number of people on those waiting lists could be served by this different business model And the volume that we are currently serving is predominantly Western provinces, there is very little in Ontario and provinces East And so we see potentially quite significant growth opportunities in that in that segment.

But as to what those trend lines might look like, I think it is just too early for us to hazard a guess.

Yeah. Got it.

And then I guess just lastly, like, you know, when we are talking about the start with clients, like, I am talking to a real estate client, we will talk about an FFO and AFFO. If I am talking to someone else, I am probably talking about EBITDA and EPS.

Where ultimately would you like the market to sort of train its eye when, you know, we are looking at quarters and you know, are you thinking longer term about how to sort of present results to the market. Because, obviously, this has been a company in transition for the last several years.

Yeah.

it is a it is a great question, Tal, and we spend a lot of time talking about it. We, you know, we are have been in transition, but I think we feel now we are we are we are past that.

Like, we kind of we have a view now of kind of our business model and strategy, which is you know, an asset-light base focused on growing the services side and advancing redevelopment in a capital-light model. With the CBI deal now in there, you know, we are we are we are 2 thirds of our NOIs coming from services businesses.

And we expect that to grow even if we do nothing else other than redevelop these 17 homes, that is gonna push more into managed services on the services side. So you know, I think what you will see you know, we are thinking about evolving our view and focus I would say absolutely moving away from AFFO over time is something that we likely will do.

there is a lot of variability down between FFO, AFFO, and we have seen that, you know, even this quarter with the DSU treatment. You know, whether FFO is the right cash flow measure or something that is, you know, less real estate kind of looking.

But quite frankly, when at the FFO level, it is not the dissimilar to other free cash flow measures. You could factor in, you know, EBITDA less, you know, interest and CapEx needs, etcetera.

For us, you know, the CapEx is more maintenance related as the big growth CapEx will-- you know, those are more transient because we are doing the growth big growth CapEx through the JV off balance sheet. So I do think over time, we are going to try and hopefully, you know, you know, tell the story with a focus on EBITDA, and a focus on a cash flow measure that does not have some of the volatility and variability that comes into play is probably more of a focus for us going forward.

So but we are also you know, we are we are in an in between. So we have grown our analyst you know, coverage over the last year as everybody knows, and we have got some new folks that are covering us that are not sort of coming from the REIT side, and we have you know, folks like yourselves that are that are evolving their thinking about us together.

So but I do think EBITDA and a sort of a cash flow measure that is not AFFO that eliminates some of that noise that I think is a problem, and hopefully try and bring everybody to focus on consensus numbers that are, you know, everybody's looking at the same number. We do have a bit of variety out there, which I think sometimes causes some of the disconnect, because people are focused on different things.

But that is, I think, where we are going. Tal, and you will start to see us do, you know, give more prominence to those measures certainly next year for sure as we you know, start thinking about some of that for 27.

Okay. that is great.

Thanks for the feedback, David. Cheers.

Thanks.

Thank you, operator. That concludes our call for today.

This presentation is available on our website along with a link to a replay of the call. Thank you all for joining us, and please do not hesitate to reach out if you have any further questions.

Goodbye.