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MARKHAM, Ont. - Shares in Extendicare Inc. (TSX:EXE) shot higher Thursday after it announced plans to separate its Canadian and U.S. businesses due to the complexity of operating on both sides of the border and the changing nature of the operations.
The stock gained 95 cents to close up 16 per cent at $6.88 on the Toronto Stock Exchange.
The company said the U.S. and Canadian health care businesses are expected to become more different over time with regulatory reform in the U.S. and the related federal and state spending cuts.
Extendicare's board expects the division to be completed later this year.
"The timing will depend on the form of the separation and obtaining any necessary regulatory and shareholder approvals and rulings," the company said in a statement.
"Although the board is optimistic that the separation will be completed by such time, no assurance can be given that the process will result in a separation of the two businesses or the timing or its terms."
Extendicare, which operates nursing homes, also reported Thursday a first-quarter profit of $3.8 million, down from a profit of $49 million a year ago.
Total revenue was $498 million, down from $517.2 million.
Revenue from its U.S. operations were $316.3 million, down from $340 million a year, while its Canadian operations improved to $181.6 million from $1772. million.
"In the first quarter of 2013, Extendicare experienced disappointing financial and operational results in light of the continued uncertainty in the U.S. health care sector, the persisting weakness in the economy and ongoing changes taking place in the U.S. regulatory and funding environment," president and chief executive Tim Lukenda said in a statement.