Calling 2021 “transformational” for Sonida Senior Living, President and CEO Kimberly Lody said Monday the company’s three-year recovery strategy is working.
“Despite the emergence of multiple new [COVID-19] variants and a challenging operating environment throughout 2021, our pandemic recovery strategy to immediately and quickly improve occupancy through short-term incentives to encourage move-ins has been successful,” he said. she said on Sonida’s fourth quarter and full year 2021 earnings call. “Clearly, the work we did before the pandemic to strengthen our sales, marketing, clinical and operational processes quickly led to occupancy growth.”
Lody said the “substantial doubt about the ability of the business to continue as a going concern” that the former Capital Senior Living expressed in May 2020 due to the negative effects of COVID-19 on the occupation no longer exists, based on an assessment of Sonida’s current financial situation. 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 success in 2021 after the pandemic.
“We have achieved significant increases in occupancy, improved our balance sheet by raising capital and addressing all short-term debt maturities, and have built strong teams at management and grassroots level,” said Lody said. “Three years ago, we defined a strategic plan – SING – to stabilize, improve, nurture and grow the business. Since then, we have verified all the key elements of this plan, created an operating platform prominent and positioned the business to grow strongly.”
Building on that 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 carried out the acquisition of two retirement homes in Indiana in February for $12.3 million.
The occupancy rate increases by 3.9%
The occupancy rate increased by 390 basis points (3.9%) in the fourth quarter of 2021, to 81.6%, compared to an occupancy rate of 77.4% in the fourth quarter of 2020.
Since then, occupancy increased sequentially in January (82%), February (82.2%) and March (82.6%) in the same store communities, an increase of 730 basis points (7 .3%) in the comparable store portfolio following a pandemic low of 75.3% in February 2021.
Lody said 77% of Sonida’s communities now have an occupancy rate of 80% or higher, and the company is within 140 basis points (1.4%) of its overall occupancy rate of 83.7% before the pandemic in the first quarter of 2020.
Lead and tour volume increased 57% for the fourth quarter of 2021 compared to the same period in 2020 and 15% compared to 2019 figures before the pandemic.
The early stages of major capital investments — $10 million of capital projects are underway or completed — in key communities have also helped boost occupancy, according to the company.
Sonida also reduced rent concessions for new residents for the third consecutive quarter in the fourth quarter of 2021.
“Our focus continues to be a responsible increase in market rates and in-place rents while managing the current circumstances of high operating expenses,” Lody said. “It is clear that our strategic and operational initiatives are working.”
Intensely competitive labor market
Chief Operating Officer Brandon Ribar said the labor market remained extremely competitive in the fourth quarter and into early 2022. However, agency labor and costly overtime in some communities are declining, a he added.
Ribar called the fourth quarter of 2021 “the toughest operating period in recent memory.” Labor costs increased by $2.6 million in the fourth quarter compared to the fourth quarter of 2020 due to a $1.7 million increase in contract labor, a- he declared.
But there is reason to be optimistic for 2022, Ribar said, adding that throughout 2021 Sonida has implemented staffing and scheduling technology in an effort to support a more flexible and user-friendly environment for the employees. The company has also worked to stabilize its workforce through internal recruitment and retention strategies, salary increases and pay scale adjustments, he said.
Continued development of workforce management and staffing capabilities throughout 2021, combined with local salary scale adjustments, has yielded promising results in the first months of 2022, said said Ribar. Sonida hired 259 new employees in the fourth quarter of 2021 and the first quarter of 2022, he added.
“The investments we have made and will continue to make in resident programming and experience, community technology infrastructure, and the salaries of our community teams provide direct support for rent increases equal to or greater than the 5% we have previously mentioned for 2022,” Ribar said. “More than three years of investing in developing and maintaining strong local and regional leadership, and promoting resident-focused programs, will steadily improve operating results in the future.