Sienna Senior Living Inc. Provides Operations Update and Reports 2020 Fourth Quarter and Year-End Financial Results

MARKHAM, Ontario, Feb. 18, 2021 (GLOBE NEWSWIRE) — Sienna Senior Living Inc. (“Sienna” or the “Company”) (TSX: SIA) today provided an update on its operations and announced its financial results for the three months and year ended December 31, 2020. 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.
“With many of our residents and team members now vaccinated, we have new protection and renewed hope amid the evolving challenges of the pandemic,” said Nitin Jain, President and Chief Executive Officer of Sienna. “As we look beyond the pandemic, our development plans are progressing and our focus remains steadfast on the important role we play in the lives of our 13,000 team members and 10,000 residents and their families. Our plans and actions are firmly anchored in Sienna’s core belief that it is a privilege to care for and serve Canadian seniors.”Operations and COVID-19 ResponseWe want to acknowledge our team members and the many stakeholders who are dedicated to supporting us in our ongoing fight against COVID-19, including the Governments of Ontario and British Columbia, our sector associations, and our healthcare partners.During the fourth quarter of 2020, Sienna’s vaccination task force has been focused on logistical and resource planning, consent collection, and team member and resident education to ensure readiness and success in the roll-out of the vaccines.Vaccinations – Since mid-December 2020, Sienna’s vaccination task force has been supporting the roll-out of vaccines across all of our residences in Ontario and British Columbia. As of February 16, 2021,approximately 92% of Sienna’s long-term care residents and approximately 60% of Sienna’s long-term care team members have been vaccinated; and,approximately 46% of Sienna’s retirement residents and 28% of the retirement team members have been vaccinated.
Administration of the second dose is underway at many of our long-term care and retirement communities.“With vaccine shortages impacting the entire country, we are thankful that so many of our residents, team members and essential caregivers have received their vaccinations over the past two months – many of them are now fully vaccinated,” said Dr. Andrea Moser, Chief Medical Officer at Sienna.COVID-19 Cases – As of February 16, 2021, 12 residences of Sienna’s 83 owned or managed residences are in outbreak with active cases COVID-19, including three retirement and nine long-term care residences. From the beginning of 2021, active COVID-19 cases among our residents at Sienna declined by approximately 96% and currently represent less than 0.2% of our total resident population.Additional Government Funding – On January 5, 2021, the Government of Ontario announced an additional $398 million in funding for costs related to enhanced staff and visitor testing requirements and continued prevention and containment efforts. In addition, the occupancy protection funding has been extended to February 28, 2021 for long-term care residences affected by access restrictions and capacity limitations in multi-bed rooms. The Government of Ontario is also funding the increased pay of $3/hour for personal support workers until March 31, 2021.Increased Staffing – From March to December, Sienna increased the number of its team members by 1,200 to over 13,000 and its total pool of full-time staff members by 16% to over two thirds of its total workforce to support frontline team members and ensure continuity of care for residents.
Acceleration of Developments in OntarioSienna’s development plans include over $600 million in capital investments to redevelop its Ontario Class C long-term care portfolio through new and upgraded facilities over the next five to seven years. This is a major opportunity for Sienna and its shareholders to invest with purpose to enhance the lives of the seniors we serve and enrich the work environment of our team members.A number of development projects in Ontario are in advanced stages of planning and approval by regulatory and local authorities, including:Altamont Care Community (“Altamont”) redevelopment – an active pursuit of a partnership with Scarborough Health Network to redevelop Altamont in Toronto into a new long‐term care campus; andTwo Class C redevelopments – construction is expected to commence at two projects that have been prioritized in 2021, including a previously announced redevelopment in North Bay.In addition, the Company continues to proceed with development plans to grow and enhance its retirement portfolio, including a 150-suite greenfield joint-venture development in Niagara Falls.Publication of Inaugural Environmental, Social and Governance (“ESG”) ReportSienna published its inaugural ESG Report today to demonstrate the Company’s commitment to conducting its business in a manner that is respectful to the environment and the communities it operates in, and fits naturally with Sienna’s mission to help seniors live fully, every day.Fourth Quarter Operating and Financial PerformanceThe Company’s financial performance has been significantly impacted by extraordinary expenses incurred to manage the pandemic in excess of government funding received. With the strength in overall fundamentals in the seniors living sector and the high vaccination rates of long-term care team members and residents, coupled with Sienna’s solid balance sheet and liquidity, we are confident we will begin to see significant improvements in the Company’s operational and financial performance as the pandemic subsides.Revenue decreased by 0.2% to $168.8 million in Q4 2020, compared to Q4 2019;Operating expenses, net were $140.2 million in Q4 2020, an increase of 4.4% compared to Q4 2019, driven by pandemic expenses in excess of pandemic-related government assistance (“net pandemic expenses”);Total same property NOI decreased by 25.0% (or $9.5 million) to $28.5 million in Q4 2020, compared to Q4 2019, mainly due to net pandemic expenses of $7.0 million;Net income decreased by $9.8 million year-over-year to a net loss of $8.7 million;Average occupancy in Sienna’s Long-Term Care (“LTC”) portfolio was 84.8%;Average same property occupancy in Sienna’s Retirement portfolio was 81.3%;Operating Funds from Operations (“OFFO”) per share decreased by 37.9% year-over-year to $0.211 per share; excluding net pandemic expenses, OFFO per share decreased by 12.9% year-over-year to $0.296 per share;Adjusted Funds from Operations (“AFFO”) per share decreased by 37.4% year-over-year to $0.196 per share; excluding net pandemic expenses, AFFO per share decreased by 10.2% year-over-year to $0.281 per share;Payout ratio was 119.4% for the three months ended December 31, 2020; excluding net pandemic expenses, payout ratio was 83.3%.
Solid Financial PositionThe Company maintained a strong financial position and liquidity during Q4 2020:Completed $275 million of debt financings and significantly reduced near-term debt maturities;Increased liquidity to $217 million as at December 31, 2020, from $144 million as at December 31, 2019, and repaid $63 million of credit facilities subsequent to Q4 2020;Increased unencumbered asset pool to $840 million as at December 31, 2020, from $307 million as at December 31, 2019; andLowered weighted average cost of debt by 40 basis points to 3.2% as at December 31, 2020, from 3.6% as at December 31, 2019.Financial and Operating ResultsThe following table represents key performance indicators for the periods ended December 31:Notes:Retirement same property occupancy excludes the results from the expansion at Island Park Retirement Residence, which opened in July 2019 and is in the lease-up period. Retirement total average occupancy is 80.7% for Q4 2020 (2019 – 85.0%) and 81.9% for the year ended December 31, 2020 (2019 – 87.4%).The quarter-over-quarter and year-over-year declines in Retirement occupancy are primarily related to a decline in new residents moving in as a result of access restrictions and the general impact of the COVID-19 pandemic.Long-term care occupancy represents the number of occupied beds over total capacity of beds. Long-term care residences are receiving occupancy protection funding for vacancies caused by temporary closure of admissions due to an outbreak, including COVID-19, and for capacity limitations in multi-bed rooms present in Class B/C homes to a maximum of two residents per room. The current funding protection does not compensate for the loss of preferred accommodation premiums from private and semi-private room vacancies.NOI for the three months and year ended December 31, 2020 includes net pandemic expenses of $7,035 and $21,977, respectively.EBITDA for the three months ended December 31, 2020 decreased by $12,953 primarily due to the net pandemic expenses of $7,713, lower Retirement revenues of $1,034 due to occupancy decreases, restructuring costs of $1,886 and increases in share-based compensation expense from mark-to-market adjustments of $1,395. EBITDA for the year ended December 31, 2020 decreased by $40,117, primarily due to the net pandemic expenses of $28,227, lower Retirement revenues of $3,444 due to occupancy decreases, restructuring costs of $6,534, partially offset by a decrease in share-based compensation expense from mark-to-market adjustments of $4,400.OFFO and AFFO for the three months and year ended December 31, 2020 include an after-tax mark-to-market expense (recovery) on share-based compensation of $713 and ($2,477), respectively (2019 – after-tax (recovery) expense of ($311) and $754, respectively).Property and equipment and intangible assets included in total assets are measured at cost less accumulated depreciation and amortization.OFFO and AFFO per share for the three months ended December 31, 2020 excluding the after-tax mark-to-market adjustments on share-based compensation would have increased by $0.011 to $0.222 and $0.207, respectively (2019 – decreased by $0.005 to $0.335 and $0.308, respectively). OFFO and AFFO per share for the year ended December 31, 2020 excluding the after-tax mark-to-market adjustments on share-based compensation would have decreased by $0.037 to $0.991 and $1.001, respectively (2019 – increased by $0.011 to $1.393 and $1.413, respectively).Financial and Operating Results, excluding net pandemic expensesThe following table represents key performance indicators excluding net pandemic expenses for the periods ended December 31:Notes:Operating expenses, same property NOI and total NOI for the three months and year ended December 31, 2020 exclude net pandemic expenses of $7,035 and $21,977, respectively.EBITDA for the three months and year ended December 31, 2020 excludes net pandemic expenses of $7,713 and $28,227, respectively.Net (loss) income and OFFO for the three months and year ended December 31, 2020 exclude net pandemic expenses (after tax) of $5,664 and $20,727, respectively.AFFO for the three months ended December 31, 2020 excludes net pandemic expenses (after tax) of $5,664 and pandemic capital expenditure of $57. AFFO for the year ended December 31, 2020 excludes net pandemic expenses (after tax) of $20,727 and pandemic capital expenditures of $501.OFFO and AFFO for the three months and year ended December 31, 2020 include an after-tax mark-to-market expense (recovery) on share-based compensation of $713 and ($2,477), respectively (2019 – after-tax (recovery) expense of ($311) and $754, respectively).OFFO and AFFO per share, excluding net pandemic expenses and pandemic capital expenditures for the three months ended December 31, 2020 and further excluding the after-tax mark-to-market adjustments on share-based compensation would have increased by $0.095 to $0.306 and by $0.096 to $0.292, respectively (2019 – decreased by $0.005 to $0.335 and $0.308, respectively). OFFO and AFFO per share, excluding net pandemic expenses and pandemic capital expenditures for the year ended December 31, 2020 and further excluding the after-tax mark-to-market adjustments on share-based compensation would have increased by $0.272 to $1.300 and by $0.280 to $1.318, respectively (2019 – increased by $0.011 to $1.393 and $1.413, respectively).2020 Fourth Quarter SummaryAverage same property occupancy in Retirement was 81.3% in Q4 2020. Contributing factors to occupancy softness in the Retirement portfolio are related to the decline in new residents moving in due to the impact of the COVID-19 pandemic, including access restrictions.The following table provides an update on the monthly average same property occupancy and rent collections in Sienna’s Retirement portfolio during and subsequent to the end of Q4 2020:Average occupancy in LTC was 84.8% in Q4 2020. Long-term care residences are fully funded for vacancies caused by temporary closure of admissions due to an outbreak, including COVID-19, and for capacity limitations in multi-bed rooms present in Class B/C homes to a maximum of two residents per room. The Government of Ontario has announced that the occupancy protection funding will be in place for long-term care residences until February 28, 2021. This funding protection does not compensate for the loss of preferred accommodation premiums from private and semi-private room vacancies.NOI decreased by 24.3% (or $9.2 million) to $28.7 million in Q4 2020, compared to Q4 2019, mainly due to net pandemic expenses of $7.0 million. Excluding net pandemic expenses, NOI decreased by 5.7% (or $2.2 million) to $35.7 million mainly due to softness in Retirement occupancy, lower LTC preferred accommodation revenue from lower occupancy in private and semi-private accommodations, annual inflationary labour cost increases and higher property expenses, partially offset by annual rental rate increases in Retirement and annual inflationary funding increases in LTC.The Governments of Ontario and British Columbia have provided funding for incremental COVID-19 costs in addition to ongoing long-term care funding for nursing and personal care, programming, food and accommodation. Except for accommodation, all government funding, including COVID-19 pandemic related funding, is required to be spent entirely on resident care and is subject to a periodic reconciliation process set by the applicable regulatory authorities. Any excess funding amounts not spent directly on resident care or pandemic expenses have to be returned to the government.As outlined in detail in the Company’s MD&A, certain pandemic expenses are not funded by the various governments, and have been reflected in the Company’s net pandemic expenses. The table below summarizes the government assistance and pandemic expenses recognized for the three months and year ended December 31, 2020:LTC same property NOI decreased by 24.3% (or $5.2 million) to $16.3 million in Q4 2020, compared to Q4 2019, mainly due to net pandemic expenses of $5.2 million. Excluding net pandemic expenses, LTC same property NOI for Q4 2020 was $21.5 million, which was flat compared to Q4 2019, primarily due to lower preferred accommodation revenue from lower occupancy in private and semi-private rooms, annual inflationary labour cost increases and higher property expenses, partially offset by annual inflationary funding increases and timing of expenses.Retirement same property NOI decreased by 26.0% (or $4.3 million) to $12.2 million in Q4 2020, compared to Q4 2019, including net pandemic expenses of $1.8 million recognized in Q4 2020. Excluding net pandemic expenses, Retirement same property NOI for Q4 decreased by 14.9% (or $2.5 million) to $14.0 million, compared to Q4 2019, primarily attributable to lower occupancy, annual inflationary labour cost increases in labour costs and higher property expenses, partially offset by annual rental rate increases in line with market conditions.Revenue decreased by 1.9% (or $3.3 million) to $168.8 million in Q4 2020, compared to Q4 2019. In the Retirement segment, the decrease of $1.0 million was mainly a result of occupancy softness, partially offset by annual rental rate increases in line with market conditions. LTC’s revenues decreased by $2.3 million, because $3.6 million of government funding, which would have typically been included in LTC revenues, has been recorded against eligible operating expenses related to the pandemic, and lower LTC preferred accommodation revenue from lower occupancy in private and semi-private rooms, partially offset by annual inflationary funding increases.Operating expenses, net increased by 4.4% (or $5.9 million) to $140.2 million in Q4 2020, compared to Q4 2019. The increase was mainly a result of net pandemic expenses of $7.0 million, annual inflationary labour cost increases and higher property expenses, partially offset by timing of expenses and expense reductions as a result of access restrictions at certain residences during the pandemic.The Company generated a net loss of $8.7 million in Q4 2020, representing a decrease of $9.8 million compared to Q4 2019. The decrease was primarily related to net pandemic expenses, non-recurring restructuring costs, softer Retirement occupancy and mark-to-market adjustments on share-based compensation, partially offset by annual rental rate increases in Retirement and lower income taxes.OFFO decreased by 37.8% (or $8.6 million) to $14.2 million in Q4 2020, compared to Q4 2019. The decrease was primarily due to net pandemic expenses of $7.7 million, increase in share-based compensation from mark-to-market adjustments of $1.4 million, softer Retirement occupancy, annual inflationary labour cost increases and higher property expenses, partially offset by annual rental rate increases in Retirement and a recovery of current income taxes of $3.0 million due to lower taxable income for the quarter.AFFO decreased by 36.9% (or $7.7 million) to $13.2 million in Q4 2020, compared to Q4 2019. The decrease was primarily related to the decrease in OFFO noted above, partially offset by lower maintenance capital expenditures.2020 Year End Results SummaryNOI decreased by 19.7% (or $30.9 million) to $126.0 million over the comparable prior year period, mainly due to net pandemic expenses of $22.0 million, which would have been lower by $6.9 million in the LTC segment’s net pandemic expenses if pandemic funding announced in January 2021 relating to expenses previously incurred was recognized in the year ended December 31, 2020. Excluding net pandemic expenses, NOI decreased by 5.7% (or $8.9 million) to $148.0 million mainly due to lower Retirement occupancy, annual inflationary labour cost increases and higher property expenses.LTC same property NOI decreased by 22.5% (or $19.9 million) year-over-year, primarily attributable to net pandemic expenses of $18.0 million, which would have been lower by $6.9 million in the LTC segment’s net pandemic expenses if pandemic funding announced in January 2021 relating to expenses previously incurred was recognized in the year ended December 31, 2020. Excluding net pandemic expenses, LTC same property NOI for the year ended December 31, 2020 decreased by 2.2% (or $1.9 million) to $86.4 million, over the comparable prior year period, mainly due to lower preferred accommodation revenue from lower occupancy in private and semi-private rooms, annual inflationary labour cost increases and higher property expenses, partially offset by annual inflationary funding increases.Retirement same property NOI decreased 16.9% (or $11.6 million) year-over-year, including net pandemic expenses of $4.0 million recognized for the year ended December 31, 2020. Excluding net pandemic expenses, Retirement same property NOI for the year ended December 31, 2020 decreased by 11.1% (or $7.6 million) to $61.1 million, over the comparable prior year period, primarily attributable to lower occupancy, annual inflationary labour cost increases and higher property expenses, partially offset by annual rental rate increases in line with market conditions.Revenue decreased by 0.8% (or $5.5 million) to $664.2 million over the comparable prior year period. In the Retirement segment, the decrease of $3.4 million was due to lower Retirement occupancy, partially offset by annual rental rate increases in line with market conditions. LTC’s revenues decreased by $2.1 million because $10.3 million of government funding, which would have typically been included in LTC revenues, has been recorded against eligible operating expenses related to the pandemic, and lower LTC preferred accommodation revenue from lower occupancy in private and semi-private rooms, partially offset by annual inflationary funding increases.Operating expenses, net increased by 4.9% (or $25.4 million) to $538.0 million over the comparable prior year period. The increase was mainly a result of net pandemic expenses of $22.0 million, which would have been lower by $6.9 million in LTC segment’s net pandemic expenses if pandemic funding announced in January 2021 relating to expenses previously incurred was recognized in the year ended December 31, 2020, annual inflationary labour cost increases and higher property expenses, partially offset by expense reductions as a result of access restrictions at certain residences during the pandemic.The Company generated a net loss of $24.5 million, representing a decrease of $32.0 million over the comparable prior year period. The decrease was primarily related to net pandemic expenses and non-recurring restructuring costs, partially offset by lower income taxes and mark-to-market adjustments of $4.4 million on share-based compensation.OFFO decreased by 25.0% (or $23.0 million) to $68.9 million over the comparable prior year period. The decrease was primarily attributable to net pandemic expenses of $28.2 million, softer Retirement occupancy, annual inflationary labour cost increases and higher property expenses, partially offset by annual rental rate increases in Retirement, a decrease in share-based compensation from mark-to-market adjustments of $4.4 million, and a recovery of current income taxes for the year of $5.7 million due to lower taxable income for the year.AFFO decreased by 25.3% (or $23.6 million) to $69.6 million over the comparable prior year period, mainly due to the decrease in OFFO noted above, increase in maintenance capital expenditures and pandemic capital expenditures in excess of government assistance.Conference CallThe conference call will be on Friday February 19, 2021 at 9:30 a.m. (ET). The toll-free dial-in number for participants is 1-844-543-5234, conference ID: 1072524. A webcast of the call will be accessible via Sienna’s website at: www.siennaliving.ca/investors/events-presentations. The webcast of the call will be available for replay until February 19, 2022 and archived on Sienna’s website.About Sienna Senior LivingSienna 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 13,000 employees are passionate about helping residents live fully every day. For more information, please visit www.siennaliving.ca.Risk FactorsRefer to the risk factors disclosed in the Company’s MD&A for the three and twelve months ended December 31, 2020, and its most recent Annual Information Form for more information.Forward-Looking StatementsCertain 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 include, without limitation, statements with respect to the impact of COVID-19 and measures taken to mitigate the impact including the effectiveness of the vaccine, availability of government funding, the availability of various government programs, government funding, and financial assistance. 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:Karen Hon
Chief Financial Officer and Senior Vice President
(905) 489-0254
karen.hon@siennaliving.caNancy Webb
Senior Vice President, Public Affairs and Marketing
(905) 489-0788
nancy.webb@siennaliving.ca