Dallas-based Sonida Senior Living is striving to reach its pre-pandemic occupancy level and stop using contract labor by the end of the year, departing President and CEO Kimberly Lody shared Friday during the company’s latest earnings call.
The second quarter marked five consecutive quarters of occupancy and revenue growth for the company, which reported weighted average occupancy of 83.2% for the quarter, up 90 basis points (0.9%) from the first quarter of this year and 510 basis points (5.1%) from the same quarter in 2021, she said. The comparison excludes the two Indianapolis independent living communities the company purchased in February.
“We continue to outperform the industry in occupancy recovery from the pandemic,” Lody said.
Two-thirds of Sonida communities are more than 85% occupied, said Chief Operating Office Brandon Ribar, who will succeed Lody as CEO on Sept. 2. Overall spot occupancy on the last day of the quarter was 84%, Chief Financial Officer Kevin Detz noted.
The occupancy numbers are evidence of positively trending leading indicators, Lody said. Compared with the second quarter of 2019, before the pandemic started, leads are 18% higher, tours are 32% higher and move-ins are 33% higher, she said.
Lead volume increased 14% in the second quarter compared with the first quarter, Ribar said, and it increased 28% over the same quarter of last year.
“Continued improvement in the stability of our local care and service providers remains the highest priority from an operations perspective,” he said.
RevPOR, RevPAR increase
Revenue per occupied room in the second quarter increased 0.8% over the first quarter and 4.4% year-over-year, and revenue per available room increased 2% over the first quarter and 11.3% year-over-year, the company reported.
“Rate growth has been a positive driver for our business, starting at a lower level earlier in the year and gaining momentum each month with market rate increases and in-place renewals,” Lody said. “We believe there is still opportunity to push rates higher in 2022 given positive supply and demand dynamics as well as the tangible value provided by our care teams and resident programs.”
Rate increases of more than 5% have been implemented for new and existing residents, Ribar said.
Lody said the company is “very optimistic about the pricing power in senior living, not only through the rest of this year but into 2023.” Reasons for the confidence in addition to senior living’s value proposition, she added, are that new supply is somewhat limited and demand is strong.
“We believe that we’ll see, I would say, at least similar rate growth in 2023 as we’ve seen this year,” Lody said.
Sonida reported a net loss attributable to common stockholders of $8.5 million for the second quarter.
Contract labor expenses down 41%
Sonida also saw a 41% reduction in contract labor expenses compared with the first quarter, Lody said. Sonida attributed the decline to a focus on recruiting, training and retention, as well as a new shift flexibility program.
“Another achievement is our continued strong trend of net positive hires in each of the past three quarters. …We have expanded our community workforce by about 6% since the beginning of the year,” she said.
Net hires in the second quarter were almost two-and-a-half times those in the first quarter “and support further improvement expectations in [the third quarter],” Ribar said.
“Turnover trends in [the second quarter] show a favorable reduction in year-over-year turnover of more than five percentage points,” he added. “Overall, we are pleased that total labor costs remain flat sequentially, while revenue and occupancy grew.”
Total labor costs were up $2.7 million year-over-year in the second quarter compared with the $3.2 million year-over-year increase seen in the first quarter, Ribar said.
Lody said that, unlike some skilled nursing facilities, Sonida has “not experienced any lost opportunities in occupancy due to labor shortages.”
Company has 3 pillars for success
Sonida’s results, Lody said, stem from prioritizing the health, wellness and engagement of residents and employees, a “strong collaborative people-centric culture” and “unique experiences for residents and their families through differentiated resident programming.”
“Continuing our unwavering focus on these three pillars will enable us to achieve pre-pandemic occupancy in our portfolio by the end of 2022 while also continuing to expand [net operating income] margin sequentially throughout the year,” she said.
The second quarter marked two consecutive quarters of margin expansion, with a sequential increase of 40 basis points (0.4%) compared with the first quarter and 240 basis points (2.4%) of improvement from the margin low point in the fourth quarter of 2021, Lody said.
As of June 30, Sonida owned 62 communities and managed 14, according to a presentation posted online in conjunction with the earnings call. Aug. 9, the company said in a press release issued in conjunction with the call, real estate investment trust Welltower notified Sonida that in the fourth quarter it plans to move to a new operator four Welltower-owned properties that Sonida currently manages.
Detz said that in April, Sonida accepted $9.1 million in Coronavirus Aid, Relief, and Economic Security Act (CARES) Act monies to cover COVID-10-related expenses. The grants were from the Phase 4 general distribution of the Provider Relief Fund.