Sienna Senior Living Inc. Reports Second Quarter 2022 Financial Results and Unveils its New Purpose and Vision

·13 min read
Sienna Senior Living
Sienna Senior Living

MARKHAM, Ontario, Aug. 11, 2022 (GLOBE NEWSWIRE) -- Sienna Senior Living Inc. (“Sienna” or the “Company”) (TSX: SIA) today announced year-over-year growth in its financial results for the three and six months ended June 30, 2022. The Consolidated Financial Statements and accompanying Management’s Discussion and Analysis (“MD&A”) are available on the Company’s website at www.siennaliving.ca and on SEDAR at www.sedar.com.

An improving operating environment combined with Sienna’s successful marketing, sales and rebranding initiatives resulted in strong year-over-year occupancy and net operating income (“NOI”) growth in Q2 2022.

“Our second quarter results reflect our team’s outstanding efforts to elevate many aspects of our operations and highlight the benefits of running a diversified operating platform,” said Nitin Jain, President and Chief Executive Officer. “We have been able to capture the growth potential inherent in our retirement portfolio through same property occupancy and rental rate growth, which resulted in a near 20% year-over-year increase in our retirement net operating income, and continued to benefit from the stability of our long-term care operations. With deep experience and scale in each segment, we run two distinct business lines which are deeply aligned with respect to our purpose to cultivate happiness in the daily lives of our residents and our vision to become Canada’s most trusted and most loved seniors’ living provider.”

Operating Highlights

  • Strong Retirement Occupancy Gains – Average same property occupancy up 820 basis points (“bps”) to 87.1% in Q2 2022, and further increased to 88.6% in July 2022. Q2 2022 resident move-ins and rent deposits increased by 19% and 14%, respectively, compared to Q2 2021.

  • Continued Long-Term-Care (“LTC”) Occupancy Improvements – Average same property occupancy excluding beds unavailable due to capacity limitations or isolation requirements reached 95.5% in Q2 2022.

  • Total Same Property NOI increased by 9.8% in Q2 2022 to $33.1 million, compared to Q2 2021.

  • Operating Funds from Operations (“OFFO”) and Adjusted Funds from Operations (“AFFO”) per share increased by 4.9% and 12.4%, respectively, to $0.237 and $0.236, compared to Q2 2021.

Changes to Sienna’s Board of Directors

  • Dino Chiesa has decided to step down as Sienna’s Chair of the Board of Directors after a 12-year tenure on Sienna’s board as part of an active board renewal and succession planning process.

  • Shelly Jamieson, who joined Sienna as an independent director in November 2021, appointed as Sienna’s new Chair of the Board of Directors, effective today.

Purpose, Vision and Sustainability Highlights

  • Sienna’s New Purpose Statement “Cultivating Happiness in Daily Life” – conveys our belief that our role does not stop at providing the highest quality of service and care to our residents - it goes much further. Each and every day, we will strive to bring happiness into our residents’ lives by enabling our team to put their passion for their work into action and supporting families to bring joy into our homes. In retirement and long-term care, we are committed to helping residents discover happiness through personalization, choice and community engagement in a comfortable, home-like setting.

  • This purpose will guide Sienna in realizing its vision to be “Canada’s most trusted and most loved seniors’ living provider”. With this vision, Sienna will equally meet the needs and expectations of its residents, families, team members and the communities it serve.

  • Sienna’s Commitment to Sustainability is reflected in the Company’s purpose and vision and highlighted in Sienna’s 2021 ESG Report published today, outlining Sienna’s progress of integrating ESG into its overall strategy and daily business practices.

Acquisition Highlights

  • Completed $308 Million Joint Venture Acquisition – On May 16, 2022, the Company finalized its previously announced acquisition of a 50% ownership interest in 11 private-pay retirement residences in Ontario and Saskatchewan with joint venture partner Sabra Health Care REIT, Inc. (“Sabra”).

  • Completed $72 Million Joint Venture Acquisition of The Village at Stonebridge – On June 1, 2022, the Company completed its previously announced acquisition of a 50% ownership interest in The Village at Stonebridge in Saskatoon, Saskatchewan, a retirement residence consisting of 186 high-quality, private-pay suites, with Sabra.

Change to Sienna’s Board of Directors

Dino Chiesa, Sienna’s Chair of the Board of Directors, has announced that after a 12 year tenure, he will be stepping down from Sienna’s board. During this time, Mr. Chiesa also served as Sienna’s interim President and CEO for a seven-month period in 2012 and 2013.

Shelly Jamieson, who joined Sienna as an independent director in November 2021, has been appointed as the Company’s new Chair of the Board of Directors, effective today.

“Our active board renewal and succession planning process over the past year has resulted in the addition of three new board members and Shelly’s appointment as the new board chair. Her extensive and unique balance of private, not-for-profit and public sector experience at the most senior levels of government will guide Sienna’s growth and vision going forward,” said Dino Chiesa. “I would like to thank my fellow directors for their outstanding support and Nitin and his team for their tremendous achievements in transforming Sienna from a predominant long-term care operator in Ontario to Canada’s largest diversified seniors’ living company.”

“It has been a privilege to serve on Sienna’s board under Dino’s leadership for the past nine months,” said Shelly Jamieson, Chair of the Board of Directors of Sienna. “On behalf of the entire board, I would like to thank Dino for his guidance. I also want to acknowledge my fellow directors for their support and trust they have placed in me, and I look forward to working with Nitin on many exciting strategic initiatives during a time of unprecedented growth in Canadian seniors’ living.”

“I would like to express my gratitude to Dino for his leadership that supported Sienna’s growth and transformation. His extensive experience and wisdom over the past 12 years, and his steadfast guidance throughout the pandemic, shaped our organization and positioned us well in the fast-growing Canadian seniors’ living sector,” added Nitin Jain, President and CEO of Sienna. “As we pursue our vision to become Canada’s most trusted and most loved seniors’ living provider, I’m excited to work with Shelly, whose impressive expertise in seniors’ living, health care and government will guide us as we continue to grow our Company and add value to our operating platforms.”

Addition to Leadership Team

On July 25, 2022, Teresa Fritsch joined Sienna’s leadership team as Executive Vice President & Chief Corporate Officer. Teresa is a seasoned executive with deep experience in the Canadian seniors living sector and joins Sienna from Chartwell Retirement Residences where she held progressive leadership and management roles for the past 17 years and led the organization’s real-estate growth platform in Canada and U.S. Teresa will be instrumental in Sienna’s trajectory of growth and value-add initiatives across the organization.

Financial performance in Q2 2022

  • Total Adjusted Revenue increased by 10.7% to $180.2 million, compared to Q2 2021. The increase is mainly driven by occupancy growth, annual rental rate increases and additional revenues from the 12 newly acquired properties in our retirement segment, as well as flow-through funding for increased direct care provided to residents and higher preferred accommodation revenues from increased occupancy, offset partly by lower revenues from the disposition of properties in the year.

  • Total NOI increased by 10.3% to $34.2 million, compared to Q2 2021. The increase is mainly driven by NOI growth in the Retirement segment of $3.6 million from same property NOI as well as additional NOI from the 12 newly acquired retirement properties.

  • Same Property NOI increased by 9.8% to $33.1 million, compared to Q2 2021, including a 19.7% increase to $15.1 million in the retirement portfolio and a 2.7% increase to $18.0 million in the LTC portfolio.

  • OFFO per share increased by 4.9% to $0.237 per share, compared to Q2 2021. The increase was primarily due to higher NOI, partially offset by higher current income tax expense and higher administrative expenses.

  • AFFO per share increased by 12.4% to $0.236 per share, compared to Q2 2021. The increase was primarily due to an increase in OFFO, as well as lower maintenance costs as a result of timing of expenses.

  • AFFO payout ratio was 99.2% for Q2 2022.

Financial performance in the six months ended June 30, 2022

  • Total Adjusted Revenue increased by 9.4% or $30.5 million, to $354.4 million, compared to the six months ended June 30, 2021. The increase is mainly driven by occupancy growth, rental rate increases and additional revenues from the 12 newly acquired properties in our retirement segment as well as flow-through funding for increased direct care provided to residents, annual inflationary increases and higher preferred accommodation revenues from increased occupancy, offset partly by lower revenues from the disposition of properties in the year.

  • Total NOI decreased by 11.9% or $8.9 million, to $66.4 million, compared to the six months ended June 30, 2021. The decrease is mainly due to $15.3 million in LTC retroactive pandemic funding received in Q1 2021 related to pandemic expenses incurred in 2020, offset partly by higher same property NOI in our Retirement segment as well as additional NOI from the 12 newly acquired retirement properties.

  • Same Property NOI decreased by 10.7% to $64.8 million, compared to the six months ended June 30, 2021, including a 13.5% increase to $28.7 million in the retirement portfolio and a 23.6% decrease to $36.1 million in the LTC portfolio, largely due to $15.3 million in LTC retroactive pandemic funding received in Q1 2021 related to pandemic expenses incurred in 2020.

  • OFFO per share decreased by 21.2% to $0.476 per share, compared to the six months ended June 30, 2021. The decrease was primarily due to lower NOI in the LTC segment mainly due to retroactive pandemic funding received in Q1 2021 related to pandemic expenses incurred in 2020, partially offset by higher NOI in the Retirement segment.

  • AFFO per share decreased by 21.0% to $0.478 per share, compared to the six months ended June 30, 2021. The decrease was primarily due to a decrease in OFFO, offset partly by lower maintenance costs as a result of timing of expenses.

  • AFFO payout ratio was 97.9% for the six months ended June 30, 2022.

Financial position

The Company maintained a strong financial position during Q2 2022:

  • Lowered debt to gross book value by 210 bps to 43.4% compared to Q2 2021;

  • Increased debt to adjusted EBITDA from 7.4 years to 9.5 years, compared to Q2 2021;

  • Increased liquidity to $270.7 million as of June 30, 2022, representing an increase of $45.1 million from December 31, 2021; and

  • Increased debt service coverage ratio to 1.8 times from 1.6 times, compared to Q2 2021.

Financial and Operating Results

 

Three Months Ended

Six Months Ended

$000s except occupancy, per share and ratio data

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Retirement - Average same property occupancy

 

87.1

%

 

78.9

%

 

86.3

%

 

79.0

%

LTC - Average total occupancy

 

88.5

%

 

82.8

%

 

87.8

%

 

82.2

%

LTC - Average total occupancy excl. 3 and 4 ward beds and isolation beds

 

95.5

%

n/a

 

 

94.7

%

n/a

 

Total Adjusted Revenue (1)

$

180,151

 

$

162,668

 

$

354,433

 

$

323,896

 

Same property NOI (1)

$

33,131

 

$

30,169

 

$

64,773

 

$

72,541

 

Total NOI (1)

$

34,218

 

$

31,025

 

$

66,356

 

$

75,292

 

OFFO per share (1)

$

0.237

 

$

0.226

 

$

0.476

 

$

0.604

 

AFFO per share (1)

$

0.236

 

$

0.210

 

$

0.478

 

$

0.605

 

Payout ratio (1)

 

99.2

%

 

111.4

%

 

97.9

%

 

77.4

%

(1) Total Adjusted Revenue, Same property NOI, Total NOI, OFFO per share, AFFO per share, Payout ratio are non-IFRS measures. These measures do not have standardized meanings prescribed by IFRS and, therefore, may not be comparable to similar measures used by other issuers. These measures are used by management in evaluating operating and financial performance. Please refer to the heading "Non-IFRS Performance Measures” on page 2 of the MD&A.

Outlook

For the balance of 2022, Sienna forecasts continued occupancy improvements in the retirement portfolio, based on the assumption that residences will be open for in-person tours, pent-up demand and the Company’s continued investment in sales and marketing initiatives and operating platforms. In line with the positive occupancy trend, Sienna has updated its occupancy forecast for its retirement portfolio, increasing its projections for same-property occupancy levels to reach approximately 89% - 90% by the end of 2022 from the previously stated 87% - 89%.

In Sienna's LTC portfolio, resident admissions progressed steadily throughout Q2 2022, however, the recent increase in COVID-19 outbreaks are impacting admissions at some care communities. Average same-property occupancy, excluding the unavailable 3rd and 4th beds in multi-bed rooms due to capacity limitation and isolation beds, reached 95.5% during the second quarter and 96.4% as at June 30, 2022. In February 2022, the Government of Ontario reinstated occupancy targets of 97% required for full funding. Given the long waiting list for long-term care beds, we anticipate to meet the required occupancy targets at the vast majority of our care communities for full funding in 2022.

With respect to our retirement platform, Sienna expects year-over-year NOI growth and margin improvements in 2022 to be supported by occupancy improvements, rental rate increases in line with market rates and added scale from acquisitions. These factors are expected to contribute to revenue growth, while cost pressures are expected to continue for some time due to labour shortages, increased insurance premiums, higher utility rates and high overall inflation. Taking all factors into account, the Company continues to expect total operating margins to further improve by 50 to 100 bps in the second half of 2022 from Q2 2022.

Sienna anticipates that incremental net pandemic-related expenses could range from $2.0 to $3.0 million in Q3 2022 as a result of the recent increase of COVID-19 cases.

For the balance of 2022 and beyond, Sienna intends to capitalize on the improving fundamentals in Canadian seniors' living, achieve operating efficiencies through scale, and continue to grow the business through development and acquisitions.

Conference Call

A webcast of the call will be accessible via Sienna's website. The webcast of the call will be available for replay and archived on Sienna's website at www.siennaliving.ca/investors/events-presentations. For those who wish to participate in the question and answer session via telephone, please pre-register at Sienna Earnings Call Registration. All participants will receive dial-in information and a PIN allowing them to access the live call. To avoid delays, we encourage participants to register online fifteen minutes ahead of the scheduled start time.

About Sienna Senior Living

Sienna Senior Living Inc. (TSX:SIA) offers a full range of seniors' living options, including independent living, assisted living, long-term care, and specialized programs and services. Sienna's approximately 12,000 employees are passionate about helping residents live fully every day. For more information, please visit www.siennaliving.ca.

Risk Factors

Refer to the risk factors disclosed in the Company’s MD&A for the six months ended June 30, 2022, and its most recent Annual Information Form for more information.

Forward-Looking Statements

Certain of the statements contained in this news release are forward-looking statements and are provided for the purpose of presenting information about management’s current expectations and plans relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. These statements generally use forward-looking words, such as “anticipate,” “continue,” “could,” “expect,” “may,” “will,” “estimate,” “believe,” “goals” or other similar words and are based on the Company’s expectations, estimates, forecasts and projections. These statements are subject to significant known and unknown risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied by such statements and, accordingly, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. The forward-looking statements in this news release are based on information currently available and what management currently believes are reasonable assumptions. The Company does not undertake any obligation to publicly update or revise any forward-looking statements except as may be required by applicable law.

FOR FURTHER INFORMATION, PLEASE CONTACT:

David Hung
Chief Financial Officer and Executive Vice President
(905) 489-0258
david.hung@siennaliving.ca

Nancy Webb
Senior Vice President, Public Affairs and Marketing
(905) 489-0788
nancy.webb@siennaliving.ca