headshot - Capital Senior Living President and CEO Kimberly Lody
Capital Senior Living President and CEO Kimberly Lody

Calling 2021 “transformational” for Sonida Senior Living, president and CEO Kimberly Lody said Monday that the company’s three-year recovery strategy is working.

“Despite the emergence of multiple new [COVID-19] variants and a difficult operating environment throughout 2021, our pandemic recovery strategy to immediately and quickly drive occupancy improvements by short-term incentives to encourage move-ins was successful,” she said during Sonida’s fourth-quarter and full-year 2021 earnings call. “Clearly, the work we did prior to the pandemic to strengthen our sales, marketing, clinical and operating processes quickly delivered occupancy growth.”

Recovery strategy

Lody said that the “substantial doubt about the company’s ability to continue as a going concern” that the former Capital Senior Living had expressed in May 2020 due to COVID-19’s negative effects on occupancy no longer exists, based on an assessment of Sonida’s current financial position, its liquidity and potential sources of additional liquidity, continued improvement in overall occupancy and other factors.

The CEO said she was “extremely proud” of the company’s 2021 success coming out of the pandemic. 

“We have achieved significant increases in occupancy, improved our balance sheet by raising capital and addressing all near-term debt maturities, and built strong teams at the leadership and local levels,” Lody said. “Three years ago, we outlined a strategic plan — SING — to stabilize, improve, nurture and grow the company. Since then, we have checked off all key elements of this plan, created a leading operating platform and positioned the company to grow with strength.”

Building on this momentum, she said, Sonida continued to increase the size of its community portfolio by announcing an expansion of its relationship with Ventas in December with three additional managed communities in Arkansas. The company also completed the acquisition of two senior living communities in Indiana in February for $12.3 million. 

Occupancy increases 3.9%

Occupancy increased by 390 basis points (3.9%) in the fourth quarter 2021, to 81.6%, compared with occupancy of 77.4% in the fourth quarter of 2020.

Since then, occupancy has increased sequentially in January (82%), February (82.2%) and March (82.6%) in same-store communities, an increase of 730 basis points (7.3%) in the same-store portfolio from a pandemic low of 75.3% in February 2021. 

Lody said that 77% of Sonida communities now have an occupancies of 80% occupancy or greater, and the company is within 140 basis points (1.4%) of its overall first-quarter 2020 pre-pandemic occupancy of 83.7%.

Lead and tour volume increased 57% for the fourth quarter of 2021 compared with the same period in 2020 and by 15% versus 2019 numbers before the pandemic.

The early stages of significant capital investments — $10 million in capital projects are underway or completed — across key communities also provided occupancy boosts, according to the company.

Sonida also decreased rent concessions for new residents for the third consecutive quarter in the fourth quarter 2021. 

“Our focus continues to be responsible increases in market rates and in-place rents while managing the current circumstances of elevated operating expenses,” Lody said. “It is clear our strategic and operational initiatives are working.” 

Labor market ‘intensely competitive’

Chief Operating Officer Brandon Ribar said that the labor market continued to be intensely competitive into the fourth quarter and early 2022. Expensive agency labor and overtime pay in some communities is subsiding, however, he added.

Ribar called the fourth quarter of 2021 the “most challenging operating period in recent memory.” Labor costs increased by $2.6 million in the fourth quarter compared with fourth quarter 2020 due to a $1.7 million increase in contract labor, he said. 

But there is cause for optimism for 2022, Ribar said, adding that throughout 2021, Sonida implemented staffing and scheduling technology in an effort to support a more flexible and employee-friendly environment. The company further worked to stabilize its workforce through internal recruiting and retention strategies, wage increase and wage scale adjustments, he said.

Further development of labor management and staffing capabilities throughout 2021, combined with adjustments to the local wage scale, have shown promising results in the early months of 2022, Ribar said. Sonida hired 259 new employees in the fourth quarter of 2021 and first quarter of 2022, he added.

“Investments we have made, and will continue to make, in resident programming and experience, community technology infrastructure and wages for our community teams provide direct support for the rent increases at or above the 5% we referenced previously for 2022,” Ribar said. “More than three years of investment in developing and retaining strong local and regional leadership, and advancing resident-focused programming, will deliver consistent improvement in operating results moving forward.”