All participants, please stand by. Your meeting is about to begin. Good morning, ladies and gentlemen. Welcome to Extendicare Inc.'s third quarter conference call. Please be advised that this call is being recorded. I would now like to turn things over to Ms. Jillian Fountain. Please go ahead, Ms. Fountain.
Thank you, Ruth. Good morning, everyone, and welcome to Extendicare's 2018 third quarter results conference call. With me today is your new President and Chief Executive Officer, Dr. Michael Guerriere, and Elaine Everson, your Vice President and Chief Financial Officer. Our 2018 third quarter results were disseminated yesterday and are available on our website, along with the supplemental information package. The audio webcast of today's call is also available on our website, along with an accompanying slide presentation which viewers may advance themselves. A replay of the call will be available from noon today until midnight on November 23rd. The replay numbers and passcode have been provided in our press release. An archived recording of this call will also be available on our website. Before we get started, please be reminded that today's call may include forward-looking statements regarding our future operations.
Such 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 in our public filings with the Securities Commission and suggest that you refer to those filings. As we discuss our performance, please bear in mind that all figures are in Canadian dollars, unless otherwise noted. With that, I'll turn the call over to Michael.
Thank you, Jillian, and good morning, everyone. As you know, Extendicare operates across the spectrum of seniors care in Canada to meet the needs of the growing seniors population. As you can see on slide three, our services are provided under various brands that together cover the continuum of seniors care. It is becoming increasingly clear that the growing needs of seniors are placing significant pressure on public sector health budgets. We won't be able to meet their needs by using the same approaches we always have. We will need some innovative approaches that leverage new technology to help seniors thrive in their own homes longer before needing assisted living or long-term care. I believe Extendicare is uniquely positioned to bring innovative solutions to the market that cover the full spectrum, from home care to retirement to long-term care.
Given the steady expansion in this market given by demographic fundamentals, I believe there's a substantial opportunity to build shareholder value. On slide four, you can see that our results in the quarter were mixed across our various divisions. Growth from our retirement, management consulting, and group purchasing divisions was strong, offset somewhat by declines in our long-term care and home health care operations. Net operating income from Canadian operations was up 2.5% from the same quarter last year. This kept pace with revenue growth, maintaining a margin of 12.7%. AFFO, however, was down 14.5% this quarter to CAD 13.4 million. This was negatively impacted by higher lump sum compensation costs, maintenance CapEx, and current taxes. Let's look at the details in each of our divisions. Revenue in our home care division declined 2.4% from the year earlier quarter.
This was due to insufficient staff in some of our Ontario districts outside the GTA, where we found it very difficult to find enough care providers to meet all the demand coming from the LHINs. In order to address this, we've been beefing up our recruiting activity, adding training resources, and investing in new IT infrastructure. Our new computer system went live in the quarter and is being used in three of our districts, which account for about 20% of our home care volumes. It will take most of fiscal 2019 to complete the implementation. During this time, we are still shouldering the costs of operating three legacy systems, which will be decommissioned by the end of 2019. We are also investing in significant one-time training and implementation resources. Implementation is disruptive, causing a transient slowdown in activity in each office that we implement.
Taken together, these factors will result in profitability headwinds for the next four quarters. In Q3, NOI was down 19.8% due to the volume drop and one-time costs related to the IT implementation and WSIB surcharges. As we continue with the system deployment, we expect performance will pick up in those districts that are already live on the system. We should start seeing volume increases that help to offset the one-time costs as we enter the new year. We are actively looking at ways to increase the speed of our implementation efforts. We are also working hard to improve engagement with our team in the field. The level of staff turnover has improved by 50% in the quarter, a huge improvement on a chronic issue in our home care division.
We are optimistic that the measures we are taking on the people front will put this division back on a path to significant annual growth. Let's turn to long-term care on slide six. Although revenue growth was 3% over the prior year quarter, NOI was flat. Spending beyond our government funding envelopes, labor-related accruals, and a prior year revenue pickup were responsible for a drop in NOI margin from 13% to 12.7%. Average occupancy continued to improve incrementally this quarter from the beginning of 2018, although it remains slightly below the same 2017 period. On the long-term care redevelopment front, as previously announced, we received approval for two of our redevelopment applications, one in Stittsville, a growing suburb of Ottawa, and the other in Sudbury. Both are 256-bed centers, and we are optimistic that we will be breaking ground on them early in 2019.
We were granted 158 new long-term care beds in connection with the redevelopment of three of our other projects in Sault Ste. Marie, Sudbury, and Peterborough, which are still in the government's review process. We continue to be encouraged by the emphasis the new Ontario government has put on new long-term care beds to reduce alternative level of care pressure in acute care hospitals. We will continue to apply for allocations of new beds to leverage the redevelopment of our older centers and to initiate new campus of care opportunities. In all, we have 21 long-term care centers in Ontario to redevelop, and we continue to work collaboratively with the Ministry of Health to move all our projects through the approval process.
Turning to our Esprit Lifestyle division on slide seven, revenue is up 78% over the prior year quarter, and net operating income is up 294% due to higher occupancy in both our existing properties and our new communities. Our stabilized properties reached 94.8% occupancy by the end of the quarter, and our lease-up properties, of which there are four, Yorkton Crossing and Westpark Crossing in Saskatchewan, Cedar Crossing and Douglas Crossing in Ontario, reached 82.4% occupancy by the end of the quarter. We are very pleased with the continued growth of our retirement operations through acquisition and development. As previously mentioned, our new 103-suite Douglas Crossing community has outperformed our expectations and is already at 93% occupancy after only a year of opening. And this week, we are welcoming our first residents to the 47-suite addition.
Interest in the addition has been robust, with 46 deposits on hand and 11 move-ins already scheduled before the end of this year. The total retirement community of 150 suites at Douglas Crossing has an expected NOI yield of 8.6%. The two development projects we have under construction in Bolton and Barrie are anticipated to deliver NOI yields of 7.6% and 8%, respectively. You can see these on slide eight. These sites are on target to accept residents in early 2019 for Bolton and in Q3 2019 for the Barrie View. We are using the Barrie View retirement community to develop a smart retirement home concept, which we intend to be a prototype for future projects.
We are exploring technologies that will enable independence by helping connect our residents with the information they need to stay well longer, as well as offering them technologies that will help them connect more effectively with their healthcare providers. We anticipate we will be able to use the same technology platform in our home care division to support seniors in their own homes as well. Following completion of these two communities, our Esprit platform, which we launched two and a half years ago, will have 11 communities with 1,052 suites. We are working on additional projects, two of which are expansions of existing communities. We are doubling the size of Empire Crossing in Port Hope. If all goes well, we will begin construction on the expansion in the summer of 2019.
We are also pursuing expansion of Lynde Creek, which features 3.7 acres of surplus land ideal for an independent living development. On the next slide, you can see that revenue from our Extendicare Assist Management and Consulting Services team and our SGP Purchasing Partner Network increased 24.3% over the prior year quarter. Margins improved from 56.6% to 62.9%. The growth in these business units resulted in record-high revenue and profit in Q3. Assist added three new centers, bringing 416 beds to its managed facility portfolio for a total of 53 senior care centers with capacity for 6,632 residents. The new contracts thus far in 2018 for SGP represent over 5,800 residents, bringing third-party residents served by SGP to over 51,000.
We continue to experience increased demand for our day-to-day management services, and clients are contracting with us for assistance with their redevelopment efforts, where we provide analysis, application support, and development services. In fact, Extendicare Assist recently secured a contract to provide consulting services in connection with Lakeside LTC Center, part of the University Health Network. With that, I'll turn it over to Elaine to provide more details on the financial results. Elaine.
Thank you, Michael, and good morning, everyone. I'll provide you with an overview of our consolidated results, beginning with the NOI contributions of each of our business segments. Turning to slide 11. Our NOI generated from Canadian operations was up two and a half% to CAD 35.5 million this quarter, with a margin of 12.7%, unchanged from Q3 of 2017. As you can see on the slide, this was driven from growth of CAD 2 million from our retirement living operations, both organically and as a result of the acquisition completed earlier this year, as well as the increased contribution from our management, consulting, and group purchasing operations. Conversely, our LTC operations were flat this quarter, and our home health care NOI was lower by CAD 2.2 million, experienced lower volume due to labor capacity challenges that Michael's just spoken about.
Similar factors impacted the NOI from Canadian operations for the nine months, where we experienced a CAD 3.7 million or 3.8% increase over the prior year. As outlined on the slide, the Esprit operations contributed an additional CAD 5.3 million, of which CAD 2.2 million was non-same store, and Extendicare Assist and SGP contributed an additional CAD 2.5 million. On a year-to-date basis, the home health care contribution was lower by CAD 2.8 million, and long-term care was lower by CAD 1.3 million, impacted by timing of spending under the flow-through envelope, as well as higher cost of resident care and a favorable prior period revenue adjustment received last year. Turning to slide 12, our consolidated NOI, EBITDA, and AFFO.
The improvement in our consolidated NOI this quarter was partially offset by a slight increase in our admin and lease costs, bringing the increase in our adjusted EBITDA to CAD 400,000 over the same period of 2017, with a margin of 8.7%. For the nine months, the consolidated NOI reflects the improvement I just discussed from our Canadian operations, as well as lower investment income from our remaining U.S. operations. The investment income relates to income earned on the investments in our captive that are held to settle self-insured liabilities remaining from those former operations. The earnings of the captive do not impact our AFFO, as any settled claims are funded by its cash and investments. Lower administrative and lease costs of CAD 800,000 in the nine-month period, due primarily to share-based compensation and professional fees, brought the improvement in our adjusted EBITDA to CAD 1.7 million and a margin unchanged at 8.6%.
AFFO this quarter was CAD 13.4 million or CAD 0.151 per basic share and included a charge for our former CEO departure of CAD 2.1 million on an after-tax basis or CAD 0.025 per share. In comparison to Q3 of 2017, AFFO was down CAD 2.2 million, reflecting the increase in adjusted EBITDA, the exclusion of the impact of lower non-cash share-based compensation included therein, and an increase in our current taxes and maintenance CapEx spending quarter-over-quarter. For the nine months, AFFO improved by CAD 2.4 million, reflecting the improvement in adjusted EBITDA and lower current income taxes, partially offset by an increase in the amount of maintenance CapEx spending over the same period last year. We anticipate our effective tax rate on AFFO will be in the range of 13%-15% for the 2018 year.
Our maintenance CapEx spend was CAD 8.5 million year to date, and we expect it to be in the range of CAD 11 million-CAD 12 million for the year. Our payout ratio for the first nine months this year was 70%, compared to 75% in 2017. Turning to our financial position in slide 13. Our total long-term debt at September 30th was CAD 540 million and relatively unchanged from year-end, with debt repayments offset by construction loan draws and a new mortgage on one of our retirement communities. At September 30th, our weighted average interest rate was 4.8%, and the weighted average term to maturity on our debt was eight years.
Our debt to GBV was 46.6%, and EBITDA to interest coverage was relatively unchanged at 3.4 times. We ended the quarter with cash on hand of CAD 67.4 million, representing a decrease of CAD 60 million from the end of last year, primarily attributable to the acquisition of Lynde Creek in the second quarter, growth capital expenditures, purchases of common shares under our Normal Course Issuer Bid , and costs incurred in connection with the refinancing of our convertible debenture. As Michael mentioned, one of our priorities is the redevelopment of our long-term care centers over the next few years, which will necessitate raising funds through debt financing and capital markets. We expect to be in a position to share more around our capital plans with you in the new year.
With respect to our captive, our provision for self-insured liabilities was $35 million at September 30th, with CAD 62 million of investments held to service those liabilities. In October, we repatriated $7.5 million of that cash from the captive, bringing the total repatriated since the sale in 2015 to $28.5 million. With that, I'd like to turn it back over to Michael for his concluding remarks.
Thanks, Elaine. In summary, we had strong results from Esprit, Assist, and SGP, steady performance from LTC, and a drop in volumes within the ParaMed division. Despite this, I'm very optimistic about where we are going with our home care operations. We have embarked on a modernization program focused on technology infrastructure that is approximately 20% complete. Improvements in our HR practices will increase the size of our team available for care delivery. Given the success of efforts made to date, I will be looking for ways to speed adoption across the rest of our home care business. We are building momentum in the redevelopment of our Ontario C beds and envision this to be the start of a multi-year long-term care redevelopment and expansion phase for Extendicare across the province, involving 21 centers and over 3,300 beds, augmented by additional beds allocated by the government to Extendicare.
Furthermore, our market leadership in redevelopment is providing opportunities to leverage our consulting and design services through Extendicare Assist, and we anticipate more growth on this front in the future as well. We are delivering on our plans to enhance our non-government revenue through the growth in the Esprit Lifestyle platform with additional organic development underway. In summary, our mission of helping people live better brings together a growing societal need and an enticing investment opportunity. Providing seniors with services across the spectrum of care is a key element of our strategy. At Extendicare, we are unique in having the foundational building blocks in place to deliver that vision. With the investments we are making now in technology platforms and human resources, we will be well positioned to meet the growing needs of seniors, whether or not they reside in one of our communities.
In closing, I want to pay tribute to each one of our more than 23,000 people at Extendicare who work hard every day to make a difference for seniors. The passion they have for our mission is nothing short of inspiring. The quality of care we provide and the quality of life that our residents and clients enjoy is our number one priority and gives purpose to everything we do. I feel fortunate to be part of a team that is pursuing a mission so vital for Canadian society. That concludes our formal remarks. We'll now be happy to take any questions you may have.
Thank you. We'll now take questions on the telephone lines. If you have a question and you're using a speakerphone, please lift your handset before making a selection. If you have a question, please press star one on your telephone keypad. You may at any time cancel your question by pressing the pound sign. Please press star one at this time if you have a question. There will be a brief pause while participants register. Thank you for your patience. The first question from Lorne Kalmar from TD Securities. Please go ahead.
Hi. Good morning.
Good morning, Lorne.
Congratulations, Michael, on the new role.
Thank you.
Turning to home health, where do you guys see the margins going over the next couple of years?
As we talked about, we've got a significant investment program going on that involves significant one-time spending that'll last for the better part of the next four quarters. That's certainly going to be an impact from a margin perspective. That will come to an end, and we'll be able to decommission some of the legacy systems and take advantage of the new capabilities that those systems will give us from an analytics perspective, from a scheduling perspective. We'll be able to speed up the growth of that particular business line. We don't expect the margins to change materially from what we've seen historically. What we expect to see change is our growth rate as a result of these investments.
There will be a transient period where we're facing these one-time costs, as well as just the duplicated costs of supporting multiple computer systems until we've consolidated to one.
All right. How much are you guys expecting to spend on the new system in 2019?
Lorne, that's a great question. We are looking at that pretty carefully right now. I think we'll be able to give you more visibility to that in the next quarter. At the moment, I think the way to look at it is that it won't be significantly different from what our investment pace has been to date.
Okay. I guess kind of 8.5% would represent a good NOI run rate for 2019?
I expect the performance of that division to be about the same in Q4. As we get into next year, the volume increases that we're anticipating will probably offset some of the one-time costs. It just depends on the rate of those two things and how they combine to set the margin.
All right. It sounds like you're off to a great start. I'll turn it back.
Thank you, Lorne.
Thank you. Our next question is from Chris Couprie from CIBC. Please go ahead.
Morning.
Good morning, Chris.
Hi there. I just wanted to follow up on Lorne's comments there. You mentioned that there's some one-time expenses that you're seeing in home care right now. Could you maybe just elaborate on what you mean by that and quantify it, if possible?
Yeah. The one-time expenses are due to installing a new computer system across the home care division. When we made the acquisitions in the past, we inherited different information systems with each acquisition. We're running three different systems to operate that division. We're consolidating them all to actually a fourth system, a brand-new system that we feel is state-of-the-art in the industry. The costs associated with that are implementation costs to install the system as well as training for our entire team. We're also, of course, still shouldering the cost of the three legacy systems, which we'll be able to turn off when the new system is completely implemented. That's the nature of the one-time cost that we're facing.
The magnitude?
Well, I think that just as we said in response to Lorne's question, we're looking at adding that up and being able to disclose more detail on that in the next quarter. I don't have a number to share with you at the moment, but we will be able to give you more of a picture of what that investment looks like over the course of 2019. We'll also be letting you know how far along we are. We've implemented three of our districts to date. That represents about 20% of our home care volume. We'll report that on a quarterly basis so you can track our progress. As we implement the system, those offices that are getting advantage of it are the ones that will start to see an improvement in operations. We're just getting started. We just went live with the system.
We're still measuring what the impacts are on our operations. We'll be able to give you more visibility as we get into the new year.
Okay. In terms of where these costs are kind of currently allocated, you call out the 92 and change% of OpEx tied to labor. Is the costs of these systems and the implementation, are they appearing in the ex-labor costs, or is some of it in the labor cost as well?
Chris, it's Elaine. There's a combination. The vast majority of the costs that we've seen to date are really around the implementation team and resources. There'd be an impact within those labor costs as well as corporately through the infrastructure of our IT team. We are aggregating and teasing them out, looking at opportunities as to how we can accelerate progress on that, and that's why we expect to be in a position to be able to share a little more on a granular level over the next quarter.
Okay, sure. Then just on the volume front, the government last year said that they wanted to add 2.6 million hours of various types of home care service in the province. In terms of the kind of submissions or requests for service from the government that you're seeing, would you say that the level of requests that you're getting from the government is flat? Is it up, and it's just that your, for lack of a better word, your closing ratio is down?
Yeah. It's definitely up. We've been turning down referrals, unfortunately, because of a lack of staff to fulfill those services in a number of districts outside of the GTA. In the GTA, we've been able to keep up. Other parts of the province of Ontario, we've had real difficulty with recruiting staff to be able to meet the demand. Just roughly speaking, we've turned down over the past year, close to CAD 100 million worth of referrals. It's very significant demand. It's a fulfillment issue as to why the volume has dropped, not a demand issue.
Okay. Just maybe, big picture from new change in government. Has there been any dialogue at all in terms of where the government stands with respect to how it sees funding home care and so on?
This government has indicated that they're continuing to look for ways to take pressure off the acute care, healthcare system. The reduction of hallway medicine, as they call it, has been a major focus for this government, and that will involve home care, long-term care, other community-based solutions, in order to address that demand function within the acute care system. I made reference in my comments to ALC or alternate level of care, which is people who should be in long-term care facilities that are in acute care beds in the acute care hospital system. Clearly if they're there, then they're not able to admit new patients, and that's why we have so many people on stretchers in the hallways of emergency departments. This is very high priority for this government.
I expect to see continued support for expansion of long-term care and home care services over the course of this government's mandate.
Where do you sit on the private home care idea?
We provide some private services, but as long as we're not fulfilling the referrals that we're getting from the public system, that will be our focus.
Thanks. I'll turn it back.
Thanks, Chris.
Thank you. Our next question is from Michael Smith from RBC Capital Markets. Please go ahead.
Thank you, good morning.
Morning.
Michael, congratulations on your new position. I have a question just again on home healthcare. I know this was the major acquisition of the business was done before you were in management. You're going from three systems to a fourth system, and I guess the company's hired a consultant, and you've been going through a process. Was that all part of the pro forma when you doubled the size of the business, so to speak? Is that basically something that's come out after you've tried to integrate the two businesses?
Michael, it's Elaine. I was around at that time, and when we acquired the home care business and doubled our size, we absolutely understood that there would be efforts to integrate and benefits of the synergies that we would get. We were well aware they were running on two different platforms at the time, as well as another internal platform that we had on the scheduling side. We're well aware that there would be initiative in order to bring those together. Considering it in the pro forma, I can't answer that level of granularity here, but absolutely it was a factor that we were well aware we would be undertaking after we acquired them.
Sure. Michael, have you made any changes since, I know it's early days, since joining on the sort of the plan for the care business?
Sorry, for the home care business?
Yeah. Home care business. Yeah.
Well, no. I'm on day 15, so it's been pretty early.
Yep.
I can tell you that I've spent a lot of those 15 days focused on the home care business and understanding it. Just to top up on what Elaine said earlier, the areas that are a bit of a surprise for us, if you look back over the last couple of years, are one, the difficulty in finding people to fulfill the service. The fact that our economy is performing so well means that it's hard to find people with the unemployment rate so low. That, by the way, is not across the province. It's only in certain parts of the province where we're seeing that. As I said, in G.T.A., we've had no difficulty. It's been in other parts of the province. Then Bill 148 was a challenge as well.
It caused significant compression in wage rates, and that has created more competition within the market from other sectors.
for people. I think those things have been surprises. I think our nimbleness in being able to respond to those issues has been challenged by the fact that we were behind the eight ball on the integration of the various businesses. It's made things more difficult. In the midst of all of this, we're combining pay scales and computer systems and integrating the analytics that we have on each of our districts. We'll get that sorted out in the next few quarters, and I think we'll be able to get back to the growth pace that we anticipated.
Okay. Thank you. I'd like to try and get a sense. Again, I realize it's early days, you're only 15 days on the job. What's the pecking order between LTC, retirement, and home care in terms of the businesses that you really want to grow over the next five years, and where you see the most opportunity?
Yeah, it's a great question, Michael. I think the way to look at it is, as opposed to a pecking order, is what are the synergies between those three businesses that we can achieve to create a more continuous set of services for seniors? If you think about it as a progression, seniors go from needing some help to stay in their own homes, to then moving to seniors living in assisted living, and then moving through to requiring more residential care and nursing care in our long-term care facilities. Today, Extendicare is largely managing those three businesses as separate businesses, just because of the history of those businesses. A big part of our growth strategy is to look at ways that we can create combinations and synergies between those businesses.
One, to get better operating results, but also to give our clients and residents a much better customer experience. Also bringing technology to bear allows us to deliver care in different ways. My focus is on getting growth out of all of our business lines, but finding ways that we can use each to provide synergy to the other, in terms of improving our performance. I think the other thing that's important is the quality of our service and making sure that the customer experience is a positive one, and I'll be spending a lot of time on that aspect of it, and creating a differentiated customer experience within the Extendicare community.
Great. Thank you. That's it for me.
Thank you, Michael.
Thank you.
Thank you. Our next question is from Yash Sankpal from Laurentian Bank. Please go ahead.
Good afternoon.
Hi.
Go ahead, Yash.
Yeah. My first question is about your Douglas Crossing development. You said the expected NOI is 8.6%. What is the market cap rate there right now? If you were to sell the property right now, assuming it is fully stabilized, what kind of cap rate would you get?
I think that is a market area that I would think would demand a cap rate that is probably in the low sixes, that's a speculative number, Yash. It's.
No, I just
A great community. It's got a great community. It's got a high demand in the market. It's a first-class building. It's been a very big success story from our perspective.
Right. Okay. Roughly 40% upside, just from the value creation perspective. Okay. The second question is on home care. When you say you're going to fix the problem of fulfillment and you're going to get your staff ready for the demand, does that mean essentially you're going to pay higher wages to the people you're going to hire?
That's a good question, and I think it's going to involve a number of measures. One of the things that we're looking at very closely is the whole issue of scheduling services and how we fulfill the demand that we're getting from the market. Scheduling is a key part of it because it determines how many hours that we can give to every one of our care workers, and they're very focused on being able to get a sufficient number of hours in order to achieve a target total income. And we've been looking at this very carefully because a lot of our employees are not working full-time hours, and many of them want to.
It's more about changing the relationship that we have with our team, and we're exploring ways to do that and offer more of our team a full-time status and being able to incorporate that into our scheduling systems to be able to optimize the way that we perform. It's more a focus on that. It's also a focus on training and being able to offer people a very compelling career trajectory. That's another place where we think we can leverage our continuum. We employ people in one of our three divisions. Giving people opportunities for more mobility between those divisions, I think, will create more career opportunities for some of our people. There are a lot of things that we can do that will substantially improve our employees' experience without necessarily changing the average hourly rates that we're having to pay.
Right. Okay. Just for my understanding, what happens when you are not able to cater to a particular patient or the government wants you to provide them care, but you don't have staff, so where does it go?
Those referrals would be offered to another company or another supplier.
Does the government give the same rate to those guys as you?
Yes.
They are different?
No, those are standard. They're absolutely standard.
If you are not able to find enough people, say, outside the GTA, how are other guys able to do it? On a broader scale, what do you think is happening?
The details of the referral acceptance rates are not shared, so we don't have the information about how much of the care that we are unable to fulfill isn't fulfilled by other people. Anecdotally, we know that shortages of supply in certain parts of the province are a major problem and that governments and agencies and hospitals are struggling to pick up the slack where we're not able to provide the care in people's homes. We're also looking at different models in terms of how we do it. As you can imagine, in a home care situation, people are traveling quite a lot. A fair bit of their time is spent traveling from house to house.
We're exploring other models where when certain people are more mobile, that they may be able to come to a central office to get some of the services that they would've been able to get from a home care perspective. There's a lot of different things that we're doing to try to figure out how to be more efficient and fill that gap in care that we're seeing.
Okay. What I'm trying to understand is, if this situation persists, would the government step in at some point and say, "You know what? Maybe we should provide more funding to this particular area to make sure that everybody gets the care that they need.
Some of the LHINs are already exploring that. We don't have any decisions on that front that we can share with you at this point. We'll see how that evolves.
All right. Just one more question. You said that you're exploring various synergies that are possible between your divisions. Can you give us some examples?
At this point, I think it would be speculative for me to get ahead of the game on that front. I think I'd rather defer the answer to that question until we have something definitive to announce.
All right. That's all for me. Thank you.
Thank you.
Thank you, Yash.
Our next question is from Doug Loe from Echelon Wealth Partners. Please go ahead.
Yeah, my questions have been answered. Thanks very much.
Thank you, Doug.
Thank you. Once again, please press star one on your telephone keypad if you have a question. Our next question is from Chris Couprie from CIBC. Go ahead.
All right, just one follow-up from me, guys. How should we think about your cash position?
Our cash position ended the year, Chris, at about that CAD 64 million. I think that our cash position and our cash from operations are comfortable. As we grow, as we activate our redevelopment, as we look at development opportunities, we will be looking for raising capital, either through a combination of debt and the capital markets, I think that we'll be in a better position to maybe share a little more of that with you early in the new year.
Okay. Is it safe to say then that the cash you currently have on hand is more earmarked for development and redevelopment versus making acquisitions?
No, it'll be a transaction-by-transaction decision. There's a level of operating cash that needs to be there. The excess cash that is there can begin some of that, but with the amount of redevelopment that we have ahead of us and our growth plans, it'll go beyond what's on the balance sheet right now.
Okay. Thanks, guys.
Thank you.
Thank you. There are no further questions registered at this time. I would like to turn it back over to you, Ms. Fountain.
Thank you, Ruth. That concludes our call for today. This presentation is available on our website, as are the call-in numbers for an archived recording. Please don't hesitate to give us a call if you have any further questions. Thank you again, everyone, for joining us. Goodbye, and have a good weekend.
Thank you. The conference call has now ended. Please disconnect your lines at this time, and we thank you for your participation.