##### 



Exhibit 99.1 (EXTENDICARE LOGO) NEWS RELEASE
FOR IMMEDIATE RELEASE
May 5, 2005 Extendicare Inc. Achieves Record Medicare Census in First Quarter Results  
    Q1 health care earnings of $0.26 per diluted share
    Consolidated EBITDA margin of 12.1%; U.S. operations EBITDA margin of 13.6%
    U.S. Medicare census increases to 18.8%
    U.S. nursing home occupancy increases to 93.8% MARKHAM, ONTARIO (TSX: EXE.MV and EXE.SV; NYSE: EXE). Extendicare Inc. today reported 2005 first
quarter net earnings of $18.2 million ($0.26 per diluted Subordinate Voting Share) compared to
$28.3 million ($0.40 per diluted Subordinate Voting Share) in the 2004 first quarter, which
included an after-tax gain of $10.7 million ($0.16 per diluted share) on the sale of assets.
Earnings from health care operations prior to the undernoted items rose to $18.4 million ($0.26 per
diluted share) compared to $15.2 million ($0.21 per diluted share) in the 2004 first quarter. The following table illustrates the components of the Companys net earnings for the first quarter
periods ended March 31, 2005 and 2004. Three months ended March 31Components of Earnings (Loss)(1)
    
    2005
    
    
    2004After
    
    
    Diluted
    
    
    After
    
    
    Diluted(thousands of Canadian dollars except per share amounts)
    
    -tax
    
    
    EPS(2)
    
    
    -tax
    
    
    EPS(2)Health care operations before undernoted(1)
    
    
    18,398
    
    
    $
    0.26
    
    
    
    15,165
    
    
    $
    0.21Valuation adjustment on interest rate caps
    
    
    (968
    )
    
    
    (0.01
    )
    
    
    
    
    
    
    Gain from asset disposals, impairment and other items
    
    
    127
    
    
    
    
    
    
    
    10,722
    
    
    
    0.1617,557
    
    
    $
    0.25
    
    
    
    25,887
    
    
    $
    0.37Share of equity accounted earnings
    
    
    606
    
    
    
    0.01
    
    
    
    2,452
    
    
    
    0.03Net earnings
    
    
    18,163
    
    
    $
    0.26
    
    
    
    28,339
    
    
    $
    0.40(1) Refer to discussion of non-GAAP measures.(2) Diluted earnings per common share prior to
the Subordinate Voting Share preferential dividend.Diluted Earnings per Share(3)
    
    
    
    
    
    
    Q1/05
    
    
    
    
    
    
    
    Q1/04Subordinate Voting Share
    
    
    
    
    
    $
    0.26
    
    
    
    
    
    
    $
    0.40Multiple Voting Share
    
    
    
    
    
    $
    0.24
    
    
    
    
    
    
    $
    0.40(3) After giving effect to the
Subordinate Voting Share preferential dividend
of $0.025 in Q1/05, and nil in Q1/04
 Extendicares U.S. operations continue to successfully execute our sales strategy, achieving
record Medicare census levels, said Mel Rhinelander, Extendicare Inc.s President and Chief
Executive Officer. We are also very pleased with the operational performance of the newly acquired
Assisted Living Concepts portfolio. As we look ahead, we see extensive internal growth
opportunities, which will further enhance shareholder value.




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##### 



Extendicare Health Services, Inc.s (EHSI) Medicare patient census on a same-facility basis
increased to 18.8% of total nursing home census in the 2005 first quarter compared to 17.2% in the
2004 first quarter, and EHSIs average daily Medicare patient census rose 12% to 2,433. Nursing
home occupancy, on a same-facility basis, rose during the 2005 first quarter to 93.8% compared to
91.4% in the 2004 first quarter. Extendicare completed the acquisition of Assisted Living Concepts, Inc. (ALC) on January 31, 2005.
The integration is proceeding smoothly and Extendicare expects the acquisition to perform better
than the previously anticipated annualized US$34.0 million of EBITDA by the third quarter of 2005.
For the two months ended March 31, 2005, ALC achieved revenue of $35.7 million (US$29.1 million)
and EBITDA of $6.6 million (US$5.4 million). The Company is in the process of, and will complete by
the end of 2005, the valuation of ALCs net assets acquired. Finalization of the valuation may
alter the preliminary purchase price allocation along with the resulting depreciation and
amortization. EHSIs Phase I new build program has already completed six of the seven projects, adding 111
assisted living units and 38 nursing home beds. Phase II is underway with an additional 276
assisted living units expected to open between spring 2005 and fall 2006. Phase III will take
advantage of the expansion opportunities existing at ALC. EHSIs preliminary examination of the
expansion potential of ALCs portfolio indicates an immediate demand across 35% of the portfolio
for an incremental 500 units in markets where the facilities are already operating at full
capacity. It is still too soon to provide additional details at this time, but the Company expects
to be able to announce more definitive plans by the end of August 2005. The industry is still waiting for the Centers for Medicare and Medicaid Services (CMS) to issue its
report on the Resource Utilization Groups (RUGs) refinement. CMS is expected to make its
recommendation shortly, after which there will be a 60-day comment period. The current funding
formula will remain in place until October 1, 2005. Nursing home providers are working closely with
industry associations to ensure CMS is aware that any cuts made to Medicare will be detrimental to
the health of the industry and the quality of patient care. Finalization of the State of Pennsylvanias supplemental provider tax plan in the 2005 first
quarter resulted in retroactive incremental earnings before income tax of $3.8 million (US$3.2
million), related to the July 1, 2003 to December 31, 2004 period. The Company reported prior year
Medicaid funding of $20.2 million (US$16.5 million) in the quarter substantially offset by prior
year costs of $16.4 million (US$13.3 million). The cash receipt and payment of these amounts will
occur in the second quarter of 2005, and therefore, are reported as outstanding accounts receivable
and accrued liabilities at the end of March 2005. Quarters ended March 31, 2005 and March 31, 2004  U.S. operations revenue on a same-facility basis grew 16.0% in its functional currency. However,
before prior year revenue adjustments this revenue grew 9.1%, primarily due to an 8.1% increase in
average nursing home rates, and a 2.8% increase in nursing home resident occupancy, of which
Medicare patient census improved by 12.0%. Revenue from Canadian operations on a same-facility basis grew $4.5 million, or 3.8%. Of this, $2.2
million was due to prior year property tax funding adjustments, and the rest was primarily due to
increased funding for resident care. With respect to the property tax funding adjustments, last
year the 2004 first quarter results included a provision for an anticipated $1.8 million reduction
in funding. This was then reversed in the second quarter of 2004. In addition, the 2005 first
quarter results included a $0.4 million pick up in property tax funding as a result of finalization
of the Ontario governments funding formula for the 2004 calendar year. EBITDA rose to $59.1 million in the 2005 first quarter from $51.0 million in the 2004 first
quarter, and as a percent of revenue increased to 12.1% from 11.9%. This included a negative impact
of the stronger Canadian dollar of $3.7 million. EBITDA on a same-facility basis, and excluding the
prior year revenue and provider tax adjustments was $49.0 million compared to $50.5 million, and as
a percent of revenue declined slightly to 11.5% from 12.1%. Excluding a $2.9 million negative
impact of the stronger Canadian dollar, EBITDA at this level grew $1.4 million. EBITDA margins




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##### 



declined primarily due to increased drug and supply costs associated with a higher acuity mix of
Medicare patients and an increase in provider taxes and employee benefit costs. U.S. EBITDA on a same-facility basis grew 8.7% in its functional currency. However, before prior
year revenue and provider tax adjustments, EBITDA grew 1.8%. EBITDA from Canadian operations on a same-facility basis improved $2.9 million, of which $2.2
million was due to the prior year property tax funding adjustments. Net interest costs for the 2005 first quarter were up $1.0 million from the 2004 first quarter. The
2004 first quarter results included non-recurring interest income associated with the settlement of
the Greystone notes receivable of $1.3 million. The added interest costs associated with the ALC
acquisition were offset by a decline in other debt, lower interest rates and the change in the
foreign exchange rates. Cash flow from operations was $15.0 million for the 2005 first quarter compared to $13.4 million in
the 2004 first quarter. The improvement in earnings is not fully reflected in cash flow from
operations for the 2005 first quarter because of the timing of settlement of the Pennsylvania
Medicaid amounts. Other Items  At their meeting today the Directors declared quarterly dividends on Extendicares common shares
and Class I Preferred Shares, payable on August 15, 2005, to shareholders of record on July 29,
2005. The dividends on the Subordinate Voting Shares are $0.05 per share, and are $0.025 per share
on the Multiple Voting Shares. The dividends on the Class I, Series 3 Preferred Shares (EXE.PR.C)
are $0.2475 per share. The dividends on the Class I, Series 2 (EXE.PR.B) and Series 4 (EXE.PR.D)
Preferred Shares will be determined by applying $25.00 to one quarter of 71% and 72% of the average
Canadian prime rate of interest, respectively, for the quarter ending March 31, 2005. In addition,
the Directors declared the monthly dividend of $0.071 per share on Extendicares Class II Preferred
Shares, Series 1 (EXE.PR.E), payable on June 15, 2005 to shareholders of record on May 31, 2005. Extendicare is a major provider of long-term care and related services in North America. Through
its subsidiaries, Extendicare operates 440 long-term care facilities in the United States and
Canada, with capacity for over 34,400 residents. As well, through its operations in the United
States, Extendicare offers medical specialty services such as subacute care and rehabilitative
therapy services, while home health care services are provided in Canada. The Company employs
37,600 people in North America. In a separate news release issued today, Extendicare Inc. announced the 2005 first quarter
financial results of its wholly owned U.S. subsidiary, Extendicare Health Services, Inc. On May 6, 2005, at 10:00 a.m. (ET), Extendicare Inc. will hold a conference call to discuss its
results for the first quarter. The call will be webcast live, and archived, in the investor
information section of Extendicares website at www.extendicare.com. Alternatively, the call in
number is 1-800-387-6216 or 416-405-9328. For those unable to listen to the call live, a taped
rebroadcast will be available from two hours after completion of the live call until midnight on
May 20, 2005. To access the rebroadcast, dial 1-800-408-3053 or 416-695-5800, conference ID number
3149815. Also, a supplemental information package containing historical annual and quarterly
financial results and operating statistics on the Company can be found on the website under
Investor Information/Investor Documents/Supplemental Information. The attached statements reflect certain reclassifications to the prior period figures to conform to
the 2005 presentation. Non-GAAP Measures




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##### 



The Company has also reported separately a prior year tax benefit in the fourth quarter of 2004,
as this related to the tax benefit on a loss that occurred in 1999 and does not relate to income
earned in the current period. In addition, the Company determines and reports the above line items on an after-tax basis as a
means of deriving the remaining earnings from health care operations and related diluted earnings
per share. The resulting term health care operations before undernoted is a measure commonly used
by the Company and its investors as a means of assessing the performance of the core operations in
comparison to prior periods. Neither EBITDA nor health care operations before undernoted have a standardized meaning under
Canadian GAAP, and they are not necessarily comparable to similar measures disclosed by other
issuers. Accordingly, EBITDA and health care operations before undernoted are not intended to
replace earnings (loss) from operations, net earnings (loss) for the period, cash flow, or other
measures of financial performance and liquidity reported in accordance with Canadian GAAP. Forward-looking Statements Statements contained in this release other than statements of historical fact, including statements
regarding anticipated financial performance, business strategy and managements plans and
objectives for future operations, are forward-looking statements. These forward-looking statements
can be identified as such because the statements generally include words such as expect,
intend, anticipate, believe, estimate, plan or objective or other similar expressions.
These forward-looking statements are subject to risks and uncertainties that could cause actual
results to differ materially from those expressed in, or implied by, these statements. In addition
to the risks and uncertainties related to these statements, other risks and uncertainties are
identified in Extendicare Inc.s or Extendicare Health Services, Inc.s filings with Canadian and
United States securities regulators and include, but are not limited to, the following: changes in
the health care industry in general and the long-term care industry in particular because of
political and economic influences; changes in regulations governing the industry and the Companys
compliance with such regulations; changes in government funding levels for health care services;
resident care litigation, including exposure for punitive damage claims and increased insurance
costs, and other claims asserted against the Company; the successful integration of Assisted Living
Concepts, Inc.; changes in foreign currency translation; the Companys ability to attract and
retain qualified personnel; the availability and terms of capital to fund the Companys capital
expenditures; changes in competition; and demographic changes. Given these risks and uncertainties,
readers are cautioned not to place undue reliance on the Companys forward-looking statements. All
forward-looking statements contained in this report are necessarily estimates reflecting the best
judgement of the party making such statements based upon current information, and the Company
assumes no obligation to update any forward-looking statement.
 For further information, contact: Extendicare Inc.
Christopher Barnes
Manager, Investor Relations
Phone: (905) 470-5483; Fax: (905) 470-4003
Email: cbarnes@extendicare.comVisit Extendicares Website @ www.extendicare.com




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##### 



EXTENDICARE INC.
Condensed Consolidated Earnings Three months ended(thousands of Canadian dollars except per share amounts)
    
    March 312005
    
    
    2004RevenueNursing and assisted living centresUnited States
    
    
    351,274
    
    
    
    295,795Canada
    
    
    91,804
    
    
    
    88,294Outpatient therapy  U.S.
    
    
    3,345
    
    
    
    3,512Home health  Canada
    
    
    30,759
    
    
    
    31,441Other
    
    
    10,879
    
    
    
    10,530488,061
    
    
    
    429,572Operating and administrative costs
    
    
    422,201
    
    
    
    374,460Lease costs
    
    
    6,714
    
    
    
    4,132EBITDA(1)
    
    
    59,146
    
    
    
    50,980Depreciation and amortization
    
    
    15,162
    
    
    
    14,135Interest, net
    
    
    13,865
    
    
    
    12,850Valuation adjustment on interest rate caps
    
    
    1,580
    
    
    
    Loss (gain) from asset disposals, impairment and other items
    
    
    (212
    )
    
    
    (10,068
    )Earnings before income taxes
    
    
    28,751
    
    
    
    34,063Income taxesCurrent
    
    
    10,009
    
    
    
    15,065Future (benefit)
    
    
    1,185
    
    
    
    (6,889
    )11,194
    
    
    
    8,176Earnings from health care
    
    
    17,557
    
    
    
    25,887Share of equity accounted earnings
    
    
    606
    
    
    
    2,452Net earnings
    
    
    18,163
    
    
    
    28,339Earnings per Subordinate Voting Share ($)Basic
    
    
    0.26
    
    
    
    0.41Diluted
    
    
    0.26
    
    
    
    0.40Earnings per Multiple Voting Share ($)Basic
    
    
    0.24
    
    
    
    0.41Diluted
    
    
    0.24
    
    
    
    0.40
  (1)
    Refer to discussion on non-GAAP measures.




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##### 



EXTENDICARE INC.
Condensed Consolidated Cash Flows Three months ended(thousands of Canadian dollars)
    
    March 312005
    
    
    2004Cash provided by (used in) operationsNet earnings
    
    
    18,163
    
    
    
    28,339Adjustments for:Depreciation and amortization
    
    
    15,162
    
    
    
    14,135Provision for self-insured liabilities
    
    
    3,711
    
    
    
    3,672Payments for self-insured liabilities
    
    
    (6,362
    )
    
    
    (5,236
    )Future income taxes
    
    
    1,185
    
    
    
    (6,889
    )Valuation adjustment on interest rate caps
    
    
    1,580
    
    
    
    Loss (gain) from asset disposals, impairment and other items
    
    
    (212
    )
    
    
    (10,068
    )Undistributed share of earnings from equity investments
    
    
    (606
    )
    
    
    (2,452
    )Other
    
    
    834
    
    
    
    32533,455
    
    
    
    21,826Net change in operating working capital, excluding cashAccounts receivable
    
    
    (35,502
    )
    
    
    2,122Inventories, supplies and prepaid expenses
    
    
    (7,080
    )
    
    
    (5,434
    )Accounts payable and accrued liabilities
    
    
    21,941
    
    
    
    (13,239
    )Income taxes
    
    
    2,194
    
    
    
    8,10515,008
    
    
    
    13,380Cash provided by (used in) investment activitiesProperty and equipment
    
    
    (16,110
    )
    
    
    (16,437
    )Acquisitions
    
    
    (170,853
    )
    
    
    (1,891
    )Net cash proceeds from dispositions
    
    
    
    
    
    
    18,526Other assets
    
    
    1,444
    
    
    
    4,854(185,519
    )
    
    
    5,052Cash provided by (used in) financing activitiesIssue of long-term debt
    
    
    72,164
    
    
    
    Repayment of long-term debt
    
    
    (25,039
    )
    
    
    (25,654
    )Decrease in investments held for self-insured liabilities
    
    
    8,477
    
    
    
    5,712Purchase of shares for cancellation
    
    
    (34
    )
    
    
    (1,184
    )Financing costs
    
    
    (154
    )
    
    
    (41
    )Other
    
    
    4,765
    
    
    
    2,90360,179
    
    
    
    (18,264
    )Foreign exchange gain on cash held in foreign currency
    
    
    750
    
    
    
    755Increase (decrease) in cash and cash equivalents
    
    
    (109,582
    )
    
    
    923Cash and cash equivalents at beginning of period
    
    
    156,193
    
    
    
    74,846Cash and cash equivalents at end of period
    
    
    46,611
    
    
    
    75,769




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##### 



EXTENDICARE INC.
Condensed Consolidated Balance Sheets March 31
    
    
    December 31(thousands of Canadian dollars)
    
    2005
    
    
    2004AssetsCurrent assetsCash and short-term investments
    
    
    58,815
    
    
    
    156,193Accounts receivable
    
    
    180,427
    
    
    
    140,761Income taxes recoverable
    
    
    
    
    
    
    2,916Future income taxes
    
    
    20,769
    
    
    
    19,296Inventories, supplies and prepaid expenses
    
    
    28,607
    
    
    
    13,312288,618
    
    
    
    332,478Property and equipment
    
    
    1,138,852
    
    
    
    767,401Goodwill and other intangible assets
    
    
    89,906
    
    
    
    89,683Other assets
    
    
    162,091
    
    
    
    168,2381,679,467
    
    
    
    1,357,800Equity accounted investments
    
    
    69,159
    
    
    
    68,5311,748,626
    
    
    
    1,426,331Liabilities and Shareholders EquityCurrent liabilitiesBank overdraft
    
    
    12,204
    
    
    
    Accounts payable
    
    
    26,787
    
    
    
    30,611Accrued liabilities
    
    
    233,164
    
    
    
    184,235Accrual for self-insured liabilities
    
    
    23,587
    
    
    
    30,050Current maturities of long-term debt
    
    
    11,203
    
    
    
    7,251Income taxes payable
    
    
    1,009
    
    
    
    307,954
    
    
    
    252,147Accrual for self-insured liabilities
    
    
    53,925
    
    
    
    48,487Long-term debt
    
    
    850,270
    
    
    
    613,651Other long-term liabilities
    
    
    43,360
    
    
    
    34,879Future income taxes
    
    
    19,085
    
    
    
    20,1801,274,594
    
    
    
    969,344Share capital and contributed surplus
    
    
    314,778
    
    
    
    312,707Retained earnings
    
    
    166,737
    
    
    
    151,903Foreign currency translation adjustment account
    
    
    (7,483
    )
    
    
    (7,623
    )1,748,626
    
    
    
    1,426,331Closing US/Cdn. dollar exchange rate
    
    
    1.2096
    
    
    
    1.2020




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##### 



EXTENDICARE INC.
Financial and Operating Statistics Three months ended(dollar amounts in Canadian dollars, unless otherwise noted)
    
    March 312005
    
    
    2004Revenue(millions)United States
    
    $
    363.3
    
    
    $
    308.0Canada
    
    
    124.7
    
    
    
    121.6$
    488.1
    (1)
    
    $
    429.6EBITDA(millions)United States
    
    $
    49.2
    
    
    $
    43.7Canada
    
    
    9.9
    
    
    
    7.3$
    59.1
    
    
    $
    51.0Health Care Net Earnings(millions)United States
    
    $
    15.2
    
    
    $
    13.2Canada
    
    
    2.3
    
    
    
    12.7$
    17.6
    (1)
    
    $
    25.9Components of Diluted Earnings (Loss) per Share(prior to Subordinate Voting Share preferential dividend)Health care operations before undernoted and after preferred share dividends
    
    $
    0.26
    
    
    $
    0.21Valuation adjustment on interest rate caps
    
    
    (0.01
    )
    
    
    Gain from asset disposals, impairment and other items
    
    
    
    
    
    
    0.16Share of equity accounted earnings
    
    
    0.01
    
    
    
    0.03$
    0.26
    
    
    $
    0.40Diluted earnings per shareSubordinate Voting Share
    
    $
    0.26
    
    
    $
    0.40Multiple Voting Share
    
    $
    0.24
    
    
    $
    0.40U.S. Nursing Centre StatisticsPercent of Revenue by Payor Source(same-facility basis)Medicare
    
    
    33.1
    %
    
    
    33.1
    %Private/other
    
    
    14.6
    
    
    
    17.5Medicaid
    
    
    52.3
    
    
    
    49.4Average Daily Census by Payor Source(same-facility basis)Medicare
    
    
    2,433
    
    
    
    2,173Private/other
    
    
    2,018
    
    
    
    2,110Medicaid
    
    
    8,500
    
    
    
    8,31412,951
    
    
    
    12,597Average
Revenue per Resident Day by Payor Source (excluding
prior period settlement adjustments) (US dollars)Medicare (Part A and B)
    
    $
    370.68
    
    
    $
    346.82Private/other
    
    
    196.61
    
    
    
    192.77Medicaid
    
    
    144.87
    
    
    
    134.37Medicare Part A only
    
    
    340.14
    
    
    
    317.99U.S. Average Occupancy(excluding managed facilities) (same-facility basis)Nursing facilities
    
    
    93.8
    %
    
    
    91.4
    %Assisted living facilities
    
    
    84.4
    
    
    
    86.5Combined nursing and assisted living facilities
    
    
    92.8
    
    
    
    90.9U.S. Average Occupancy(excluding managed facilities)Nursing facilities
    
    
    93.5
    %
    
    
    91.3
    %Assisted living facilities
    
    
    88.5
    
    
    
    86.7Combined nursing and assisted living facilities
    
    
    92.0
    
    
    
    90.8Canadian facilities average occupancy(same-facility basis)
    
    
    97.3
    %
    
    
    96.9
    %Extendicare Inc. total average occupancy(same-facility basis)
    
    
    94.3
    %
    
    
    92.9
    %Average US/Cdn. dollar exchange rate
    
    
    1.2267
    
    
    
    1.3180(1) Does not add due to rounding.