Q1 2020 Earnings Call
Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to standby and thank you for your patience again today's conference is scheduled to begin shortly please continue to stand.
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Ladies and gentlemen, today's conference will begin warm entirely. Thank you for your patience in place continues to stand by.
The conference call became momentarily. Thank you for your patience.
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Yes, it's simple stuff.
Thank you.
Before we begin I want to remind you that we'll be making forward looking statements in her comments and in response to your questions concerning our expectations regarding our future financial position and results of operations, including the expected impacts of the ongoing cobot 19 pandemic.
Our expectations regarding our tenants in operators and our expectations regarding or acquisition disposition and investment plans.
These forward looking statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially including the red listed in our form 10-K for the year ended December 31st 2019 in in our form 10-Q that was filed with the.
Tc yesterday.
Well in our earnings press release included as exhibit 99.1.
Sure the form 8-K, we furnished yes, you see yesterday.
We undertake no obligation to update our forward looking statements to reflect subsequent events or circumstances and you should not assume later in the quarter that the comments, we make today are still Dallas.
In addition references will be made during this call to non-GAAP financial results.
Investors are encouraged to review these non-GAAP financial measures.
As well as the explanation and reconciliation of these measures to the comparable GAAP results included on the financials page of the Investor section of our website at Www Dot Sabra health Dotcom.
Our form 10-Q earnings release and supplement can also be access in the investor section of our website.
And with that let me turn the call over to Rick Matros, Chairman and CEO of Sabra Health care rights.
Thanks, Mike on the call with New York, Collier, and Harold and machines I finish my remarks, I'll pass it over to Taleo and then child in the quarter QNX first let me start you offer full joining the call.
I Hope you went all your families or stage of doing well sure and pretty really tough time. So.
I'd first like to start the call by honoring and recognizing the staff and all of our facilities.
I had the honor for years of working in facilities, operator, I started as an activity director of nursing home and so that's got to see every day the kind of care that was being delivered and the other services to be on direct care that were being delivered.
Oh the staff in the facilities.
There are skilled nursing assisted living memory care independent living become second families to the residents in patients that reside there.
And.
You know the hospitals have gotten tremendous attachments support.
And the staff are being part of this he lives, which they are and all that support his well deserved and there are also being treated with a very high level of understanding relative to its tough staffing issues and we showed you the supplies.
Unfortunately, we haven't seen that's in the media as it pertains to.
Skilled nursing and senior housing and.
Early on but it does make it was identified that the elderly with the most vulnerable population while the older buildings that are care for.
In our facilities are even more vulnerable and so.
You are part of an effort to get better PR out there you could Austria does deserve the same level of support in understanding that the hospital workers forgotten.
Our facilities have not been prioritize supplies are still tough staffing stuff.
They deserve the same level of understanding and so Oh you can go a step further when you all see things out in the paper, where you see letters.
Yes.
If you want to take a moment some thoughts have to respond to those are we'd appreciate that very much.
It's also appropriate to honor our staff not just because it's a pandemic, but as it gets to be naturalmotion stay at the beginning of national versus week next week, starting on Monday is national skilled care a week and we know it's I'm sure all of our peers, who do they are doing things out in the field to provide support.
I prefer to honor all the workers out in the field.
So with that let me get off to the Directedness. It had short talking about the acquisition environment. The acquisition BARDA has come to a complete stopped for all intents and purposes.
I do think that more of the smaller operators so tough the smaller operators don't have.
Good balance sheet, so capital partners that can provide the appropriate support that will create opportunities for us that's thing as in past since pandemic and we'd love to get back to growth at some point.
Ron.
We did get a number of deals done this year that came from our development pipeline for senior housing facilities totaling 112.6 million reflected deal are you able to approximately 7.4 or 5%. We don't expect to do any material acquisitions looking forward this year will happen.
A few deals from our direct.
From our acquisition I'm, sorry from our development pipeline.
Similar to the ones that we've closed on this year.
Moving on to be enlivened JV option, we're not doing anything about this we don't feel press to do anything obviously.
He is very difficult time, right now and even though we saw some really nice uplift to performance in the fourth quarter. The combination of the flu season, which is much tougher than last year.
Now be pandemic, not hitting really in March, particularly on the cost side, which we'll talk more about.
There's really no reason to do we're not for us to do it.
The fact that option that we have expires at the end of year at this point.
Isn't meaningful to us so what will take time, we'll see how everything goes we think this space, it's going to recover really nicely, we'll talk more about that but we still have to see how that plays out and how that affects valuations. So.
Yes, I wouldn't expect us to do anything in the foreseeable future.
Maybe option and whether we do something.
Well, you actually exercise the option or come to some other arrangement really remains to be seen again, we don't feel crest.
Moving on to first quarter numbers in the Pdps impact based on reported results through February PDP and had an annualized positive impact a 0.14.
On an EBITDAR SNF coverage of which 75% was rate related 25% was cost related.
We excluded the market basket and we excluded the month of October So we're talking truck trailing three months on an annualized basis.
In terms the PDP I'm, we're much better off.
As a sector, having PDP I'm in place, we would or could we still had rocks in place rugs incentivized operators to with net short term rehab patients only since we've had PBM PD PM in place. We've expanded the types of patients that had been admitted to the facilities to include a lot of.
Nursing conditions more complex nursing care and that is helping us through its one it positioned us well portfolio to be stronger going into the pandemic because as you all saw.
That's our coverage improved but if you look at all coverage on a standalone basis and improved.
Even more in the first quarter and.
Jonathan I know some of the clock concerns about like North American and problem here really showed improvement out of them years first Corps first quarter of this year was the strongest quarter that it's had since we acquired.
We acquired it so.
That's helped us and helped our operators because they are still building.
In terms of facilities that have positive cobot 19 patients if there's a large outbreak missions and stopped it there hasn't been a large outbreak and working in conjunction with the department of Health services. Most of our facilities are still admitting not particularly if they got the capacity.
Isolate quarantining, new admits may come in for a period of time, they're very specific guidelines that office relieves a following that have come issued by the CBC has been supported by the American Healthcare Association in terms of in terms of admitting patients.
So that said the cost savings that we saw partially pandemic from PDP and have pretty much gone away because much of those cost savings have to do with group and concur therapy and right now and the facilities everything is being done on a one on one basis not therapies being down one basis, so activities have been.
More than one multiple sure one on one so everything is being done on a one on one basis, so those cost savings.
We will come back both the pandemic.
Currently do not exist.
For the quarter as reported our skilled EBITDARM coverage increased as did occupancy and skilled mix our senior housing triple net rent coverage in occupancy were essentially flat our top 10 tenant showed their best quarter, yet with multiple skill tenant showed showing improved coverage in whole benefiting from Pdps Mcguire group was damaged.
I'll have strong coverage over two times and showed improved coverage with pdps more current basis.
For our shop portfolio of Hollywood discussed at a more detail what are the things I would point out it is that.
Oh, no impact the flu impact really went into the first quarter and so in March we really started seeing the cost increases as result of the pandemic with the occupancy hit as a result pandemic starting.
Early April.
In terms of corporate 19, specifically.
First want to go over the things that we receive more operating from how we're monitoring what's going on in the business on a weekly basis. We wish you the sensors tracker for our top 10 operators every two weeks, we receive senses for all of our operators at the portfolio level. We don't we don't ask for half the facility level.
Walking a fine line between asking our operators to provide information to us that we think this critical monitored the business.
Not causing an undue burden darden and given everything else that they're dealing with it.
But we do get every two weeks status for the entire portfolio on a tenant by tenant basis. We also received when we report on all facilities with Cobot 19 positive test results and weekly we track track every county in Providence, we have facilities.
The number of positive cases that are out there. This is allowed us to.
Get some sense of how things might progress and the coffee from which we have operating facilities.
Our asset management team talk with our operators continue continuously not just to determine status of operations, where we can be of assistance.
We refer to the impact of covert 19, we use February as we'd be more case in point. So we're looking at February month to date, averaging a man.
Looking at marching to parish in February of April day in comparison to February as well as March and April as well.
So since.
But the average for February occupancy for shop is down 160 basis points to the last week of April the first week of April hardware store, the largest drop and it hasn't been dropping about degree since then our triple net senior housing occupancy was down 130 basis points from February average through the last week of April.
Senior housing has really held up pretty well.
Well here well admissions have slowed down.
In a slowdown in the back to our and really would happen beans.
A number of our residents who are able to maybe working families might consider taking them out.
More secure having them even facilities and from a practical perspective simply may not being able to provide the care they need outside.
Other facilities, so that's mitigated some of the occupancy.
A Jewish certain extent.
The other thing I would note, though is if you looked at it already if you look at occupancy on a year over year basis.
Triple net senior housing and in shop.
It's a bigger dropping that big a drop.
Really reflects the impact of the flu.
Sure everybody recalls first quarter of 2000.
18, we had a pretty light flu season, we had virtually no impact.
This is a tough flu season, not dissimilar to what we saw a couple of years ago, although not as long duration.
Thank you and a 2017 in 2018, so the reality is that facility tech recover from the combination of flu.
Derek but when we just measure how we're doing.
The pandemic and we look at.
The occupancy trends that we have access to senior housing industry, I think we pulled up really pretty well and probably will be more specific as to the reasons. Why we believe that's the case our skilled nursing occupancy was down 460 basis points from February from February but to date through the last week of April.
Skilled mix.
It's declining at a one third of the rate that our occupancy was skilled mix had been holding up pretty well and then it went from declining flat and now has an increase in skilled mix and our skilled mix as of the last week of April is actually higher.
Sure.
Just a little bit than it was.
For the pandemic here and so.
That's helped mitigate some of the problem well. The fact that skilled mix has been so healthy and the reason that skilled mix healthy is one.
Back to the comment I made earlier about PDP.
Got a much larger population, we're focused on merchant need.
Those individuals also have a lot of the length of stay so that's helped.
And with the.
One of the today.
So it will stay requirement, we're now able to skill in place so specifically if someone's condition worse than before.
Okay and they were on Medicaid it would have to be discharge the hospital, where they get additional care.
Regardless of whether the care could be treated at the at the nursing home and then they'd be sent back to the facility where they would qualify for Medicare. So these folks even when they're on Medicaid in that facility. They have got Medicare benefits niches how to go through this discharge and then back to the facility, which.
As one of the reasons that the industry has always try to lobby for you know a permanent.
Retraction of that rule, because it really doesn't make a whole lot of sensitive enhancers transfer trauma and things like that so that does that is going in place not patients.
Skilled in place so yes, the Medicaid patient, whose acuity has increased for whatever reason that doesn't even necessarily have to be cobot 19 related.
Although maybe shortly.
Yes, it can be put on Medicare without being discharged back to the hospital for three days qualifying state.
And.
And we've seen.
So important changes in terms of metrics from that perspective.
There are some more extreme examples where there have been bigger dropped the occupancy is whether it's being a big breakout of coated.
We've been able to care for most of those folks in place and able to convert them from Medicaid and Medicare well there. So so that's going to positive in the other.
The other factors that's going to help going forward on skilled mix is effective may onest sequestration was suspended and so we've got a 2% increase.
The Medicare rate as well.
So for all of that does help the occupancy drop is almost entirely due to the situation of elective surgeries. When we take facilities that are positive Kobe.
Excluding the Marcellus.
No difference because the drop from elective surgeries.
If you use proportion and given the numbers of buildings that we have that the impact from covert, particularly in a number a lot of absolutely still it yet.
Just doesn't really materially impacting overall occupancy at least at this at this point.
Now, let me move onto mitigation from the berries relief packages that are out there.
We're also tracking.
Each of our operators are accessing from the variety of programs that are out there.
And so I'm just going to give aggregate numbers right now I think some of you may have seen this.
Filings, but we.
You have a total of 320 million.
That our operators have access broken down as follows a 100 billion from public health care and social Emergency fund providers are P. H S. S. Yes.
60 million from that hundred billion dollar fund.
From sequestration suspension 10 million.
Map 20 million and we hope that that will improve from the advance Medicare payment program, a 150 million comment I would make there is.
Number of our operators have chosen not to access SAP because it has to be paid back number one in relatively short order and secondly, some of the some of the lenders are asking providers to pay down the line when they access that money. There are some lenders out there who have been flexible on that and we greatly.
I appreciate flexibility from everybody during the pandemic.
Thats limited.
Number of operators that we have that has access to thats Medicare payment program.
The employer payroll taxes related at 6.2%. This 50 million there, there's 30 million, our PPP and and again the way with a three day hospital stay.
Does provide a benefit.
Really can't quantify.
With that benefited as.
We're hoping for more for more help and we are cautiously optimistic yes, there will be another package that will be specifically to help on the Medicaid side.
But it's not done yet so we don't think this is all there will be.
And if this goes on longer we'll have to wait and see.
What else there will be out there.
We currently have 80 facilities with positive Cobas 19 patients for residents and 22 of our 70 tenants those 22 tenants to those tenants, our senior housing and live and holiday.
We're seeing different patterns in the asset classes.
As you would expect.
Assisted living and even more so independent living the population.
Healthy, but less employees coming into explodes folks so that does help somewhat but we're still experiencing positive positive cases in the skilled nursing facilities.
On.
It really hasn't been a pattern either we pack facilities that have had large breakouts and we've had facilities that have had a few patients and not much beyond that and when a facility has someone that test positive everybody gets tested in the facility, so but there really hasn't been.
A pattern there.
So.
Some of that may be the efficacy of the testing.
And.
In terms of the 80 facilities that doesn't mean that we don't have more positive covert patients and other facilities, but as everybody knows that continues to be a problem with both the adequacy.
Of the testing.
And the quantity.
Quantity of the testing.
So.
We are cautiously optimistic however, because our census decline is slowing in skilled nursing as I said, our skilled mix held up better than overall occupancy is now.
Increasing accounting for chopper facilities, and now showing as many decreases in cases.
The increase in cases.
Following protocols, regardless of the lack of testing it's had a positive impact so in other words because of the lack of testing and the reliability in some cases of testing so you've got.
Hey.
Some of FDA approved.
Thats out there that's still have high.
False negatives and false positives.
But every patient resin is being treated according to CDC guidelines as if they have opened 19. So while we know we have more positive cases of more aware of we also know that we've had.
Untold numbers of patients and residents that it had been treated in place and the recovered from it.
I have not been sick enough, where they need like a care for example needs to be transferred to to a hospital.
So.
We think thats really helped quite a bit and enliven, which for example, which has done a lot of testing has had a 1% positive rate so and again.
That's because of the protocol that they've been following and.
A lot of this does come down three operator.
Not just the markets, there and what's occurring and test availability.
Hi, Michelle concern coming into this was on the senior housing side, because they didnt seem they didn't have the same level experience dealing with infections things like that got skilled nursing pad and certainly even more so on the independent living side, we that's not a healthcare settings assisted living memory care has become a needs based business obviously.
So it's much different than it was during the great recession.
When you when you have a provider like holiday, who regardless of the fact that they're not have healthcare workers in place Institute all the guidelines immediately.
The restrictions in place on visitors and such.
Had a very positive positive impact so that's been really great to see from an operator perspective.
We have operators that regardless of their experience or asset class everybody's jumped on it.
Notes would sort of effect, what sort of the same bigger.
And.
One of the things that we do I mentioned, our asset managers is we're trying to provide as much assistance as possible that goes from sharing best practices.
And so we share with our operators other operators are doing.
Source supply.
In terms of all the.
We'll be programs.
You disseminated as much information as we can to help them get access to make referrals like how they can get access.
Any of them, we're struggling with it.
So.
We'd like to think goal that has helped in terms of value that we're trying to bring to.
All of our tenants.
All that said availability of supplies continues to be an issue masks are much more valuable than they were counter a huge problem.
And so.
There's nothing on the horizon that.
That showed that there'll be some a lease there.
But at some point, there will be but thats the biggest problem.
Right now in terms of costs going forward.
No the Thats on everybody's mind I think for.
Skilled nursing a lot of these additional costs will go away.
The skilled nursing as well as senior housing will definitely be an uptick in inventory skilled nursing facilities typically have a lot of stock now the stock has to change a little bit now because this is different.
The senior housing operating as.
Normally don't carry the same kind of inventory for obvious reasons that skilled nursing does that I think they'll have those aren't hands. So.
So the more prepared for something like this happens.
Once again.
I do think from an infection control perspective, maybe some increase in supplies on a go forward.
On a go forward basis, that's more material for.
Senior housing on a relative basis, just because the cost of labor is the biggest driver in skilled nursing.
On a relative basis that additional cost.
And we'll have that much of an impact.
I think it'll be reasonable.
The senior housing level again, I think it's going to be more a function of building up inventory. So you have what you need in case I think should happen.
On a go forward basis.
And then finally before I turn it over to Taleo, Let me comment just briefly on our specialty hospital portfolio, which is primarily behavioral facilities.
So I'll have some other facilities in children's hospitals, and others as well, that's 10% of our NOI and that's been remarkably stable.
Through this period of time, so far and no sense at this point.
It's going to be any material impact.
For 2% to 10% of of our NOI.
In those facilities.
And so with that I will turn the call over to Talia.
Thank you Rick.
In my remarks felt provide you with the first quarter operating results of our managed portfolio. The first quarter, mostly reflects a pre pandemic environment and sets the stage for the broader impact of the spread of the Corona buyers that is followed.
And we'll also provide you with insights into April results, which will include real time data on senior housing operations amid the pandemic.
In the first quarter 2020, approximately 17% of Cibers annualized cash net operating income was generated by our managed senior housing portfolio approximately 52% of that relates to communities that are managed timelines and 33% relates to our holiday managed communities. The balance includes our Canadian.
Portfolio in five assisted living and memory care communities in the U.S.
On a same store year over year basis, the managed portfolio, which excludes the holiday portfolio in two recent acquisitions showed favorable topline results in the first quarter compared with the first quarter 2019.
Revenue increased by 2.1% revenue per occupied room, Rob poor, excluding the non stabilized assets was up 3.8% despite occupancy declining from 85.1% to 83%. However, cash net operating income decreased by 10.1%.
From $14.9 million to $13.4 million in part related to the impact of covered 90 preparedness cost incurred in March by our operators.
Occupancy remained fairly consistent during the quarter, but late in the quarter operators began to incur and budgeted cost for PPD and changes to the delivery of resident services, which together had a negative impact on cash net operating income and margin.
I wanted to that grass briefly describe what has transpired for operators and senior housing over the last 45 to 60 days and provide context for that within our managed portfolio.
In the face to the coupon of buyers operators have had to retool nearly everything that they do and get it done quickly and effectively.
Virtual tours have to be created in person tours and we're not allowed will tend to be developed to ensure that incoming residents were infection, Sri clinical assessment attached to be done virtually dining happy be converted to interim only meaning that all meals had to be prepared packaged and deliver to each resident three times a day.
At a minimum.
Group activities had to be replaced with activities that could be down with residents cap socially distance.
Asset to be screened before every shift and sometimes after including logging their temperatures.
Sufficient mask love Downs, and even face shields had to be stock to ensure appropriate protection.
Enlivened, just primarily a national assisted living memory care, operator, with a portfolio smaller communities in secondary and tertiary locations with the middle market price point staff in each community includes health care professionals, who support the day to day medical needs of residents.
Holiday retirement is primarily independent living operator also with the national platform. The operating model centers on providing a social environment comfort and activities staff in each community is limited to residential support such as housekeeping dining in activity and there are no health care professionals on staff.
And our portfolio managed by Sienna is similar to that of holiday, but located in Canada.
And as a company CNS senior living operates nursing homes as well as retirement homes in Canada. So there are significant health care resources within the organization, even though it is not a service offered within our communities.
Regardless of whether healthcare services were part of their offering to route to residents operators were now on the front line of protecting residents from a very wheel healthcare threat and they assessed planned in implemented change immediately.
The alive in joint venture portfolio 168 properties of wish Sabra, 49% show top line improvement in the first quarter of Twentytwenty on the same store year over year basis, but was impacted by costs related to preparing for the pandemic late in the quarter.
Average occupancy, but the for the quarter was 81.5%, 1.5% and are on the stabilized same store year over year basis coming off was impacted the flu, which impacts which affected occupancy beginning in November and into January.
Rather poor was.
$1340, 2.7% higher on a state stabilized same store year over year basis taken together revenue was 1% higher on a same store year over year basis. However, cash net operating income margin was 22.1% four point.
2% below the prior years results on the same store basis and this includes $482000 of hybrid share of the cold with 19 related costs, primarily medical supplies bras food dining supplies as the community stocked up prepare for EM and implemented.
Actually control protocols and interim dining this additional cost represents 1.3 points of margin.
During the month of April average occupancy in April declined about 130 basis points compared to February average impacted primarily by fewer move ins at the start of April although somewhat offset by fewer move outs than expected rates of housing collections have been normal enliven estimate.
Sabra share of continued expenditures on pp labor and employee programs will be about $425000 per month.
In total 10 of our enlivened JV properties that had it resident test positive for covered 19 as a couple of days ago only four communities had a resident with a positive test.
In the second half of April my that began to see increases an increase in Leeds and virtual towards potential residents have delayed move ins if they could in order to wait it out which suggests that there is pent up demand enlivens ability to manage the safety of its residents and staff through this period plus the backlog of delayed.
Move ins makes us cautiously optimistic about occupancy levels.
Cibers wholly owned enliven portfolio. The 11 communities continue to experience strong rate growth. However, as described in last quarters earnings.
Occupancy in margin that had been affected by the early start of the flu season in the fourth quarter did not have a chance to rebound first quarter occupancy was 86.1%.
We 0.4% decline compared to the prior quarter declining from 86.9% in January to 85.5% in March the recovery from the regular flow was overwhelmed by the impacted the pandemic.
Brent for in the first quarter with 5799 in line with the prior quarter and 8.1% higher than the prior year revenue was 2.5% higher on a year over year basis, but 3.9% lower on a quarter over quarter basis, However, cash.
And align margin was 26.2% 3.7% below the prior quarter's results the declining cash net operating income in margin reflects reduced revenue did that change in occupancy distract described about an $80000 of costs related to covert 19.
During the month of April.
I can see averaged 83.9% 210 basis points below february's average occupancy.
Occupancy declined with mostly in the first half of April as fewer new residents moved in and this was stabilized by fewer move outs, resulting in flat occupancy in the second half of the month.
Similarly rates is held steady in collections have been sign in light of an estimate that cyber share of continued expenditures on PPI E labor and employee programs will be about $100000 per month in this portfolio.
In total four of our wholly owned enliven communities have had a resident test positive for cobot 19, as a couple of days ago, three communities had a resident with a positive tests.
We transitioned our holiday communities from our net lease to managed portfolio at the start of the second quarter 2019. So we do not yet have year over year same store results to report. In addition, we transitioned our independent living community and Frank and lose Michigan to holiday in the fourth quarter of 2019.
You know occupancy excluding the transitioned community with 87.2% in the quarter, 0.6% lower than the prior quarter.
Pour on a same store basis, excluding the one transition community was $2496 slightly higher than $2486 in the prior quarter.
Cash net operating income, including the recently transitioned community with inline with the prior quarter, where the cash and a wide margin of 35.2%.
$39000 of coded 19 related costs were incurred in late March.
During the month of April occupancy averaged 86.4%, excluding the one transition community only 40 basis points below February.
Rates of housing that have no issues with collection.
Holiday continues to apply a 4.5% ran crease on lease anniversary dates and there has been little pushback because of residents positive experience.
Good 19 related cost for April are expected to totaled $278000.
So far only two of our quality communities have had a resident test positive for Kroger 19.
Holiday team has done an extraordinary work managing all aspects of the pandemic, particularly because they're operating model is not geared to or staffed to handle health care matters.
In order to further support its Rasmus holiday rolled out a free Tele health program, giving resident access to medical providers, while protecting them from possible exposure to the virus.
Sienna senior living manages eight retirement homes in Ontario in British Columbia for Sabra and the first quarter 2020, the eight properties managed by Sabra delivered 85.3% occupancy, 3% lower than the prior quarter and 4.9% lower on a year over year basis.
Revpar was $2227, which was flat to the prior quarter and 2% higher on a year over year basis.
First quarter and ROI was also flat to the prior quarter, but down 3.7% on a year over year.
It's it's reflecting the revenue decline. This includes about $20000 in cobot 19 related costs cash and Hawaiian margin was 38.9% for the quarter, a 1.1% increase over the prior quarter end, 0.5% lower on a year over year basis during.
The month of April portfolio occupancy averaged 84% only 20 basis points below February's average and ended the month at 83.9% occupancy increased in several of the properties, but was offset.
A decrease in occupancy into homes in Ontario, both impacted by new competition in the market.
To date that had been no confirmed cases of cobot 19, Oxiana portfolio. The number of infections is very low in the interior of British Columbia, yet where four of our retirement homes are located and there are fewer than 19000 cases in the entire province of Ontario.
Yes, I have seen some potential residents differ moving in until the pandemic eases, yet many see retirement hung living as a safer option at a time isolation and access to food services and community threatened so many older adult.
Independent living residents and our holiday Inn Sienna portfolios Navy the same age the residents and assisted living and memory care, but they are healthier and require less care lower care means.
Lower care needs. It means less staff, which means fewer interactions with people coming in from outside the community. We believe that this has helped to support occupancy during April.
There are two themes that ran through there's results that we've discussed occupancy pressure during April and cost incurred to ensure strict adherence to CDC protocols. The occupancy story is simple more move outs been move then in April move ins were down about 40% year over year, well move outs continue.
But at a slower paced unusual in particular residents were reluctant to move to higher levels of care and others didn't have access to the support they needed during a pandemic outside the community.
Infection control protocols were implemented and visitors were restricted sales strategies had to be modified and new residents moving in were often required to have a cobot negative task to spend two weeks in south isolation and their new apartment, not very appealing unless the move with truly necessary.
I appreciate operators discovered that virtual tourists turned out to be a strong sales tool as it allows greater access to potential customers and decision makers.
All of our operators that have now ramped up their digital marketing to generate leads and are seeing strong responses. They believe there. There is pent up demand for senior housing at the same time rates are holding and collections are normal.
On the cost side, all of our operators of work to procure and stock materials necessary to continue to deliver services to their residents such as Nielsen they're wrong.
Our operators are faced with additional labor costs because of the need for additional cleaning and Neil packaging and delivery and additional labor to cover for staff impacted by the virus.
Our managed communities located mostly in secondary and tertiary markets and targeting a middle market price point have so far Sean Sean themselves to be more shielded from the pandemic and its impact.
The spread of the Corona virus has been worse in death densely populated areas with 70% of cases in primary markets and far fewer cases in secondary and tertiary markets measured both on an absolute and per capita basis.
Labor pool is more stable and while than competitive urban markets and in many of these locations. The senior community is an important employer. These communities are part of the Fabrica the towns where they're located near the place where older adults can live out there years in place they know with the support they need.
During a national crisis. These communities has continued to care for their resident and their workforce dependable employers and providers of jobs in a time of uncertainty and job insecurity and into gender goodwill that we believe will carry forward.
With that I will turn over the call to Harold Andrew Sovereign Chief Financial Officer.
Thank you target and thanks, everybody for joining the call.
I will begin my comments with an overview of the quarterly results and finish with some discussion around the financial implications of the cobot Daiichi pandemic going forward.
First I would like to note that the cold exciting began in March which for our financial performance only impacted our managed portfolio.
Impacting cost increases and minimal loss revenues through lower occupancy cost increases included certain identified a direct costs totaling <unk> point $3 million in our wholly owned.
Managed portfolio point $5 million in our share of the joint venture assets operated by and license.
Can you sort of cost at which directly related to covert 19, such as the incremental personal protection equipment incentive pay incremental staffing and incremental operational cleaning supplies.
We have normalized this point 8 million dollar cost impact out of our FFO and AFFO for the quarter and we made no normalizing adjustments to revenues.
Now for a few comments about the financial performance for the quarter.
The three months ended March 30, Onest Twentytwenty, we recorded revenues and in July of $149.3 million in $125.6 million, respectively, as compared to $155.8 million and $134.8 million for the fourth quarter of 2019 representing decline.
Lines of 6.5 million and $9.2 million respectively.
Wise when revenue in the NOI, primarily due to the write off a straight line receivables and above market leases tangibles totaling $6.1 million associated with for operators move to cash basis accounting.
As operators represent 3.1% of our total annualized cash in a wide.
At the bulk of the quarter was $86.9 million in a normalized basis was $92.1 billion or 45 cents per share.
FFO was normalized primarily to exclude $5.8 million of the write off of straight line receivables and above market leases tangibles mentioned, a moment ago and.
And $1.99 billion settlement received from the legacy CCP legal case.
And the point $8 million of incremental costs associated with Cobot 19 also mentioned a moment ago.
This compares to normalized FFO of $95.6 million.48 per share in the fourth quarter 2019.
Hey, AFFO, which excludes from EFO merger and acquisition costs in certain non cash revenues and expenses.
Was $91.8 million normalized basis was $90.5 billion or 44 cents per share.
FFO was normalized primarily to exclude the same $1.9 million settlement received from a legacy CCP legal case in point $8 million of pandemic related expenses that were normalized.
FFO.
This compares to our normalized AFFO of $93.2 million more 47 cents per share for the fourth quarter 2019.
Approximately one half of this three cents per share decline in normalized FFO normalized AFFO is attributed to the incremental weighted average shares outstanding in the first quarter of 2020 over the fourth quarter of 2019 due to our de leveraging activities. While another primary contributor was higher compensation expense.
Including point $7 billion of cash compensation and $1.4 million stock based compensation, which impacted Fo only.
Stock based compensation was inline with expectations during the quarter, although higher than the fourth quarter 2019 as that quarter included an accrual true up to reflect lower payouts been accrued for in earlier quarters.
For the quarter, we recorded net income attributable to common stock holders of 34 $35.2 million or 17 cents per share.
Gee any cost for the quarter totaled $8.8 billion up $2.8 billion from the fourth quarter 2019.
Which were low due to the.
Equity award trips mentioned a moment ago.
First quarter 2020, Jumei cost included $2.4 million stock based compensation expense.
Recurring cash DNA costs of $6.2 million.
4.9% of mill NOI for the quarter inline with our expectations.
Our interest expense for the core totaled $25.7 million compared to $27.4 million in the fourth quarter of 2019.
This quarter over quarter reduction was primarily driven by a combination of debt paydowns in the fourth quarter.
2019 associated with our deleveraging activities and lower overall borrowing costs, our cost of permanent debt declined 12 basis points from the end of 2019 to be ended this quarter to 3.67%.
While our revolver borrowing costs declined 82 basis points from the into 2019 to the ended the quarter to 2.09%.
Interest expense includes $2.2 million of non cash interest for each of the first quarter 2020 in the fourth quarter 2019.
Other income of $2.3 million for the quarter includes the $1.9 million legal settlement previously mentioned.
And the loss from our unconsolidated joint venture includes a 1.7 million dollar loss on the sale of two assets from that portfolio.
During the quarter, we completed the acquisition two senior housing Triple net communities and one senior housing manage community.
Our properties proprietary development pipeline aggregate purchase price of $83.4 million with a weighted average cash yield of 7.51%.
We also completed the sale of three skilled nursing transitional care facilities for direct sales proceeds of $6.8 million, resulting in a point 2 million dollar loss on sale.
During the quarter, we recorded no revenues from new solar facilities.
As of March 30, Onest 2020, the company determined that two skilled nursing transitional care facilities with an aggregate net book value of $11.3 million and a net secured debt balance of $13.8 million met the criteria to be classified as assets liabilities held for sale.
These balances are included in accounts receivable prepaid expenses, another asset Smith and accounts payable and accrued liabilities respectively.
Subsequent to March 30, Onest 2020, we completed the sale of the facilities towards aggregate gross sales price of $14.4 million inclusive of the assumption by the buyer of an aggregate $14.2 million HUD insured mortgage debt encumbering the facilities.
During the quarter, we issued a point 2 million shares of common stock under the ATM program at an average price of $20.33 generating $3.9 million of gross proceeds before $58000 of commissions.
While we expect it could issue additional equity during the quarter under the ATM program to further lower our debt positively impact our leverage as we completed the acquisitions previously mentioned the sharp decline in the equity markets eliminated that opportunity. However, we're very pleased to have maintained or leverage below.
Our target of 5.5 times, including our share of the lightest joint venture debt, which stood at 5.747 times and 4.97 times, excluding the joint venture debt.
We were in compliance with all of our debt covenants as of March 31, 2020, and continued to have a strong credit metrics as follows interest coverage 5.28 times fixed charge coverage 5.07 times total debt asset value, 36% unencumbered asset value.
Unsecured debt, 269% unsecured debt asset value 1%.
On May six 2020, the company's board of directors declared a quarterly cash dividend of 30 cents per share.
Given what we paid on May 29 to common stockholders of record as of May 18.
Dividend was reduced this quarter in response to the uncertainty around the impact from covert 19.
Set the dividend this quarter at a level, we feel can be sustained in the future. Even if our operations are disruptive to a level in excess of what we believe is likely to occur.
We will continue to evaluate the dividend payout as we get through the pandemic.
Shifting gears to the financial implications of the Cobot 19 pandemic I would like to start by noting that we formally withdrawn our 2020, earning guidance due to the significant amount of uncertainty around the impact. It may have on our triple net rental revenues are managed portfolio performance over the balance of 2020.
We can't however, provide some insights into the strength of our balance sheets and our fortified liquidity position that will provide a solid foundation has exceeded our way through this difficult.
As of March 31, 2020, we had over $950 million and liquidity.
Our principal payment obligations through end of 2021, total only $19.6 million and we have significant cushion in our debt covenants.
We have suspended all significant investment activity, thereby eliminating any associated material liquidity requirements.
We anticipate continuing in this manner until our cost of capital provides a clear path for pursuing accretive investment opportunities that can be match funded with debt and equity to maintain our leverage targets.
Reduction of our quarterly dividends from 45 cents per share to 30 cents per share will prove deserve an incremental amount of liquidity equal to approximately $30 million per quarter.
Given these factors, we feel confident in our ability to sustain a disruption of cash flows from operations for an extended period of time, even at levels well in excess of what we believe is likely to occur.
Great we have not seen a disruption in the monthly payment of risks associated with the cobot 19 pandemic for the month of April we saw with paid in the normal course collect in 100% of our forecasted Blitz through the first few business days of May we have seen collections slightly above our normal level of collections at this point.
In the month.
We have not use any deposits or other credit enhancements to fund rent payments due to covert 19 disruptions.
Do you expect that relief will be warranted for some tenants and all such requests will be evaluated on a case by case basis, taking into consideration the following.
Operators first avail themselves to the government relief programs available impractical to access and the operators business plan and approach to managing through the operational and financial challenges demonstrates a strong commitment to quality care and fair and reasonable approach to addressing all of its financial obligations.
What really is provided it will be on the basis of helping the operator navigate through the challenges presented by coking by team.
This means providing temporary relief to the level with the cash flows can support and not a permit reduction that provides a level of wind coverage one would expect to provide under a long term lease renegotiations.
Finally, we expect will lead to take the form of a rent deferral and not a permanent forgiveness.
Level to stress and other factors will dictate the timeframe, we will consider for repayment of any deferrals and each will be terminal on the case by case basis.
A couple of comments on our analysis of the available government assistance for our operators.
And our supplemental on page seven we provided cobot 19 mitigation summary, which identifies the estimated funds available to our tenants from these various programs three of the programs can have a direct positive impact on EBITDARM Q can provide short to medium term cash flow release, and one has the potential to be a permanent cash.
Injection through the forgiveness of an SDK low.
If certain criteria are met.
While the total amount of approximately $320 million is informative when evaluating potential mitigation at a macro level. It must be noted that certain limitations on the benefit may also come into play.
This estimated $150 million of liquidity available to our operators, who may benefit from the accelerated that that Medicare payment for a BMP plan, maybe limited you. This desired effect on liquidity as some working capital lenders may require any funds received under this program to be fully risk.
Correct.
In addition, the amounts available for relief must be evaluated on an operator by operator basis, therefore broad based conclusions about mitigation across the portfolio.
That being made based on these estimates certain of these mitigation funds will be provided to operators would not have otherwise required with relief by some operators may need rent relief. In addition to obtain the funds available to them.
Finally relative to our debt ratings, we have been and we'll continue to be close contact with a three rating agencies. During this trend Debbie.
We believe we have good visibility into the drivers of our ratings and currently have cushion and most financial drivers, notably we believe our net debt to adjusted EBITDA level for each of the rating agencies drivers have cushion that will provide us Ruth sustain a sizable disruption in our EBITDA before tripping any down.
Great drivers. Furthermore, we understand the health of the operators in our portfolio is a key rating driver the agencies and we will continue to provide them with information they request to make informed assessments.
The impact our ratings and while we cannot predict at this time the final impact on EBITDA from the financial stress creative Ico with 19, we do believe that excluding set stress our net debt to adjusted EBITDA can be maintained through 2020 in the area of 5.50 times without accessing.
Equity and debt markets.
Further to further reduce debt.
With that I will turn the call back over to matrix.
Thanks.
The culinary now.
Thank you and ladies and gentlemen easier question at this time just press Star then one on your telephone keypad to withdraw your question just press the pound or hash key dates star one on your telephone to get into Q.
Our first question is from Nick Yulico with Scotia Bank.
Hi, This is Josh Brown for Nick I was hoping to dig into the 320 million of state and federal assistance available for operators I know you session. All operators plan to use the accelerated in advance Medicare payment program.
Could you give some sort of asked him to unlike the average amount of fund that skilled nursing facility could receive like stripping out the funds that they don't plan to use and then secondly, how many months do you think of that relief by operators before they would otherwise need to request drug deferrals.
So I know when I saw one of the notes someone made in an attempt to do that but that doesn't make any sense to us because.
Every operator, not every operators accessing all the program so it's.
Acting every operator differently, depending on what's happening with their operations, depending on how Covance 19.
Has affected the business. So if you just look at averages.
I think there's anything about that thats helpful.
Looking at thousand trying to say, okay, that's going to help them for two months, depending on how much occupancy drops or whatever I just don't pick it works that way because these decisions. The operators made was specific to their own needs and that's going to determine with the accessed or tempted to access and how much time that will give them. So.
We also know anything I'd really say is if you were told me two months ago that we'd be sitting here today.
Not having gratitude.
Any relief I would be surprised.
Particularly on the senior housing side, because the senior housing operators don't have these programs access and some by sort of opening comments about how our.
Operator is hasn't been prioritize within the healthcare system.
Even less so for senior housing that for skilled nursing right. So.
I think in our case.
The pandemic rollover reasons, that's how you talked about Hasnt impacted our senior housing portfolio of triple net or shop.
We've seen some other places.
It's enabled them to continue to move forward without.
Any additional assistance so.
I just I just don't buy the metric. That's you know I mean, I get why people try to do I just don't buy.
Okay. Thanks, Thats helpful. And then just looking at the skilled nursing occupancy it looks like it declined 460 basis points since February from just all the whole time elective surgeries have you done any indication of how quickly elective surgeries can bounce back in some of those states that have started to relax restrictions.
So it's a little bit hard to predict because one thing I'd say just generally speaking.
There will be a lot of pent up demand. So when that starts I think the recovery will be much more much quicker than say look if you bought a facility through.
20% vacancy rate is probably a lot of reasons for that it's going to take you along targeting build that differences me a lot of pent up demand. The reason, it's hard to predict because there are a number of states to the said, they're starting elective surgeries, but if you actually drilled down you're starting elective surgeries for certain conditions, it's not necessarily blank.
And all these places so I think what we're going to see is.
It's going to be very market specific.
Issue, where we start seeing things ramp up.
I will tell you that.
All of our operators have been in continuous communication with the hospitals that are normally their partner referral sources and so they know specifically when they're going to be ready to go and who they can take now there may be some facilities that maybe had a big corporate breakdown and they're just not ready to do that yet.
The majority of the facilities, they will be ready and and I think in some of the geographic areas that really got hit So Washington State was kind of ground zero and we had a couple of north American and have a mere buildings that got hit with pretty decent size breakouts.
Since then.
It's going to continue in the can spread to the other facilities.
We have in the state so.
There's been a lot of recovery.
Earlier on we have larger breakouts. That's enabled these operators to start moving again and.
Some people have asked.
I would you admit at all were won the hospitals in the physician groups need.
Our offerings to admit how people have just have to be taking care of and so so thats helped somewhat and that's where you'll see some of the benefits that were seeing at our numbers.
Skilled mix so.
Impossible to predict but I would say when it starts with me a lot of pent up demand the only the other point I'd make it I think its pent up demand applies to assisted living memory care as much as skilled nursing is to the extent that people needed surgeries and as it's been deferred.
Given the age of the population.
I believe that we're going to be treating patients that are sick of than they otherwise would have been because by the delaying surgeries.
That can exacerbate other issues they have as well. So we may wind up getting patients that are stricter than if we have been able to admit them in a timely manner because it wasn't substation aspirational surgeries during the great recession, we saw a substation.
A pullback of elective surgeries for very different reasons, everybody. It was a financial situation people kind of out of pocket and we saw less with the delay with our age group there with the younger age group about 45 to 60 days.
But this means that we've already passed 60 days really so I do think we may see some sicker patients right now that's a long answer to your question without specifically answering efforts. Thus we got right now.
Hey, thanks.
Thank you our next question from Nick Joseph with Citi.
Hey, this is Michael Gryphon on for net just circling back to the government assistance programs for your operators.
Sense of timeframe of when these loans has to be paid back on average and how will your operators come up with capital sources to pay them back.
Well, it's different for every program right, it's not it's not all payback so.
The.
Frequency duration suspension delicate lifted next year it looks like.
Mac isn't a payback cavium quarter tax delay, they're going to retain their employers in the same thing and with PPP those aren't necessarily paybacks.
Payback is with the advance Medicare payment program and that's why very few of our operators have.
I have accessed it.
We work with their lenders to seize they actually could use that you go over to pay down the line.
And so.
The operating units.
The l. themselves is that one piece.
Yes, so because.
There is enough else going on their companies that they have very high level of confidence.
Over the next year.
Which is when they'll have to pay it back we'll be able to pay it back and and in all likelihood what will happen is Medicare may just take.
Well that over a period of time so.
Do some negotiation so it's really just the one piece and most are operators happened avail themselves of that piece, it's just for a decent size operator.
Most of Medicare and advances are huge numbers.
And 50 million looks larger than it is in terms of the number of operators, it's really impacting does that make sense.
Yeah, no. Thanks, I appreciate that and just as it wants to add to that real quick you can look on slide seven there. So theres a lot of details of description of how each one of these work. So as you have more questions. You can look certainly give me a calls and still have questions about that.
Okay. Thanks, and just one more for me.
Obviously done a good job lowering leverage recently, but should you see good external growth opportunities are you comfortable increasing your leverage in the near term.
Harold you want to take that.
Yes, as I said it.
Opening remarks, we're actually not prepared to increase leverage beyond the levels that we've identified.
This is going to be certainly theres, some disruption and we see some.
Rent relief to were helped provide.
Yes at our EBITDA numbers will go down which would naturally increase our leverage to some extent. So we had to be very mindful of that I would just as it were extremely focused on maintaining our credit rating and certainly given what's going on in Japan.
In this environment there is some risk because the rating agencies could look across the portfolio or I should say look across the whole space big about downgrading. So we'll just being very mindful of that so as I said in my remarks, we're really going to be.
Very cautious in our acquisition activity until we can continue to fund it matching funds with both debt and equity.
So we maintain leverage.
Below that level of identifies our target.
Okay. That's it for me.
Yes, the only thing I would ask you have I think from an asset class perspective.
It looks like it would be quite some time of of in our development pipeline that we would be.
Doing deals on the senior housing side, but in terms of skilled nursing behavioral an addiction those yields that we can see.
Ourselves ourselves doing and work within our weighted average cost of capital.
Got it thanks.
Yep.
Thank you Nick.
Steven Valiquette with Barclays.
Hey, thanks.
Good morning, and afternoon, everybody everyone stands save.
A couple of questions first of all I do want to circle back quickly on that comment from an ACO them I am little surprised around the comment that.
Operators would not be accessing the advance payment program.
It's really every company is just going to be paying that back out of their future Medicare receivables.
Future revenue that that would receive CMS down the road.
Really not even alone it's just.
Any revenue early with really no penalty for doing so thank every hospital based legacies that there have been that whether they need to enterprises that are not having that that's kind of more of a comment then a question. If you want to comment on that then the other question I really wanted to ask about was.
Has to do with.
The accounting for your operators when they're reporting their EBITDAR back to you.
Yes, some companies are excluding coven 19 operating expenses some or not.
Seems like the.
Stimulus federal grants in my mind, probably should be counted as EBITDAR, but again these advance payments.
Probably not counted as EBITDA are just curious how you're thinking about.
Any sort of standards for reporting this back to you from your operators quarterly when then when you're talking about.
EBITDAR coverage ratios down the road thanks.
Comment on the first thing kick it over to Harrell for the second so on the first I'd say a couple of things one.
The determining what they actually need and if they're getting enough assistance from these other programs might off to access the if thats Medicare program, they're not doing that secondly, depending on who they are lender is with that lenders requiring accrued pay down the line, which some do for every dollar they get why would you do that right now so thats really.
Just looking at individually if they don't want to they don't need to put themselves in that situation.
Turning to be a little bit more cautious on when.
Medicare occupancy is going to come back or build up to a level that basin.
More normalized.
They just don't want to be in a position, where they're having to pay that back or have those details later on if the other assistance programs that data access.
Seem to be meeting their needs, which is the case.
Okay, well not real quick one if I missed this the.
It does 0.8 million of co bid operating expenses that you stripped out of EFO for your managed properties.
Sense for how much larger that number might be in twoq and the remainder of 2020, if you're still going to exclude aftermath just approximation.
Yes, they tell you had it in her comments.
Kind of what we were expecting pick on annualized basis.
Sure.
For it.
In lives.
About 425000 per month for in light of it no thats.
So that there that's our share.
Yes that would be our shift thats about $5 billion on an annualized basis, and then the others would be but smaller than that big holiday was quite a bit smaller, but I think it was report of auto.
See 80000 80000 for the month of April.
In our.
Lipid wholly owned portfolio.
And then for holiday it looks like it's about $1.2 million on an annualized basis about $100000 a month.
Yes look we'll script that and we would intend to pull it out on the normalizing basis, most likely and report that so people can get a sense for what it is without those costs as specific to reporting coverages to follow up finish up on the on your first question. If you look color on our supplemental on page seven.
Identified the three that that have implications for our EBITDARM, which would rule, which would improve coverage going forward, which is basically the 100 billion dollar program of which we had $60 million available.
Obviously, the suspension of sequestration would have an effect on EBITDARM EFT App, which is the federal Medicaid medical assistance program that this because the federal government, giving to the states.
And that number is about $20 million and that's that's a number that's going to continue hopefully to go up we only we're able to identify 15 states that have made terminations of how they're going to utilize those funds and how they're going to impact skilled nursing and so there's potential for that piece to go up higher with goes through.
Areas do have a positive impact on coverages, while as you point out the ex the accelerated payment program. The employee payroll tax delays those two items would not be reported in coverage as you've just short to medium term cash flow. So they would not affect our coverage going forward.
PPP, there's not a lot of our of our operators, who can access that program given the limitations.
It will depend on whether or not those loans are forgiven, whether they will be impacting covered. So initially we were just not including those in coverage until that impact is known to impact the dog.
Okay perfect I appreciate the color. Thanks.
Thank you. Our next question diet locals tie up with me so hub.
Yes, good afternoon.
Question Hi, guys.
Quick question around the state of affairs.
And various state I think again kind of hand, more and more about state thing.
Their financials are in disarray as a result for fluid 19 that they need.
Bailout money or whatever you want to call it from the federal government.
Imminent that doesn't end up happening how does a one time to start to think about the.
The ability of.
Of states to kind of needs they have made in king.
Budget, so how does one kind of not thinking about maybe see payment.
In the next fiscal year.
Yes. Good question I don't really have a good answer but I think that the question you pose is one of the reasons that when the 6.2% F. map increase happen.
We actually saw relatively small numbers states pass that on frankly as they should have to the providers, you're just keeping your for themselves.
Right so.
So I think.
And maybe for all the regions that you talked about.
Having somebody for rainy day or just padding.
Let's move a little bit on the Medicaid side.
In the long term.
No I don't have a good answer for that I mean, you've got.
Real safety net issue here that I think.
Sort of on the positive side really is going to get re address.
We get through this.
Because it really hasn't.
It really hasn't adequate.
Oh.
How the juggle those parties and working.
Roll the feds, partly because it does play a critical role on the Medicaid.
Even though as you point out it's a state by state issue the federal matches huge piece.
How they meet those obligations I think that.
You talked a little bit about this before.
Because some of that came up in the conversations.
Ways back about block grants and London and aluminum.
Medicaid spending that and when you think about Medicaid was put in place for the blind doubling disabled and since it's been expanded rights.
Community based programs all these waiver programs I think most vulnerable.
And I think that's that's going to be something that's more vulnerable and say Medicaid rates and skills facility.
Because Medicare part of it was really never set up to do that and when a lot of those things are put in place.
Myself.
Going back into the mid eighties.
The the policy long thought that well people don't need to be in nursing homes.
We put all these other programs in place occupancy of have done a nursing home it'll tick up in these clearly those programs with Medicaid and will actually save money well that never happened because acuity keeps going up in skilled nursing facilities.
We turned out to be just huge additional expense.
No.
Had been in place before they do that so.
So yes, great answer because that's where I think this new more vulnerability.
But all these states basically have to address that people have been a new fiscal year stocks your life for US right. So from decision. After the made in the next few months around this.
Yes, yes, because that's usually when we hear about our state by state Medicaid rate increases and things like that so.
I have no sense of whether they're going to try to do anything normally do or.
Thanks, largely adjustments now we will not will we what we should have some sense of that.
Was that they think they're going to have more time and their size. The says they're going to help them more who knows Tara.
Gotcha, Okay, and then I may have missed this earlier on but could you just talked specifically about them there.
The second largest tenant the rent coverage seems to be stabilizing now we're kind of flat quarter over quarter, but can you talk a little bit about what kind of happening there and kind of what's your kind of seasonal the outlook for that particular tenants.
Yes, so there on the quarter quarterly Standalone basis there.
Bottomed out in the third quarter, they started improving in the fourth quarter, we started improving even more in the first quarter they've really benefited.
From PDP.
The whole I dig IP transition that they went through which hurt their earnings.
Mid to late last year.
Now behind them and it's proven to be really affected for them. So for instance, the.
Health, Virginia, Pdps, Pdgm, which has been largely viewed as you probably know as a negative for the home health industry.
That have under investigation is going to be actually is quite positive.
Rates so.
So we actually feel pretty good about.
The trajectory.
As a mere has now in the Weatherford.
Good weather.
Outbreak in Washington, They did get some help because.
Despite my earlier comments about on enough states got the.
Help from method to Scott, we got it where we need to get the most so Washington state with the state where we've been talking about how bad Medicaid rates and then they already determine a $29 rate increase effective July 1st they put an additional $29 rate increase effective March 1st.
And this could extend into July you'll keep that so they'll have doubled the rate for awhile, so that really helped.
Quite a bit not just as a near but we've got north American up there as well.
And then Oregon was another state where.
Some help as needed and they had a rate increase coming but they give a 10% Medicaid rate increase effective March for so.
Just as it turns out and made because the problems were so bad in the northwest even before covert duals in so many facility closures and things like that that states really stepped up there so.
Well I think for Ave, It's a combination of their own initiatives, while theyre executing our PDP and the helping you out on the Medicaid side in Washington, and Oregon.
Gotcha that's helpful. Thank you.
And ladies and gents on asset reminder.
Question, Jeff Star then one when your telephone keypad, yes, die want to getting the Q.
And our next question is from Daniel Bernstein with capital one.
Hi.
I guess my best wishes to everybody.
Your company at your facilities and your family so.
I'll have just one question.
Just wanted to understand what the mid how much Medicaid is in your seniors housing.
And whether you think maybe any Medicaid aid from the federal government to the states could filter into seniors housing.
We are hoping for that Medicaid package, but we have.
It's hard why don't you jump in with virtually nothing there.
That's right Dan it's it's it's so minimal that theres nothing because one operator has a little bit.
Operator, we're three buildings.
Okay.
Not at all meaningful.
Okay.
Okay.
And to see if there was a.
Backwards way of getting some eight to the seniors housing folks.
But thats all ask.
The rules chat later thanks.
Okay.
Thank you Bill and I'm not showing any part of your question Nick you Sir.
All right one of those topic I did want to address because one of the analysts how to jump off and shot us and note suburban questions about Tele health and I would say that we actually do tele health as a positive.
Paul You mentioned in with holiday was doing which I think is really going to serve them well the long run.
Those asking folks are going to be concerned about entering into facilities like that because of the which happened with cope with 19, I think anything that the operators can do the provided greater sense of security is going to go. It can go a long way in the fact that holiday do that.
From the gecko I think ROE will work out really well for some of them along with but beyond that.
A number of our operators within employing tele health initiatives for quite some time signature health had one for several initiatives to several years avenues doing at a number of our offers if you're doing it because they looked at it as a way of providing more comfort providing greater connection because physicians don't visit facilities that often even on the skilled nursing side.
Providing greater connectivity to individual healthcare workers outside and will help to provide care in place for a long period of time, particularly on the senior housing side. So.
And.
Assisted living memory care, and obviously skill.
Needs based businesses and acuity is just going to continue to increase for all of them.
So.
No not individuals.
Could be care for call them less and less so on a go forward basis.
Relative to assisted living memory care. So we view that has a positive for I just want to.
You can note that since we got a question on it and with that.
Appreciate everybody's talked today again.
Healthier hope nothing but the best renewal families. Please think about all of our workers.
Thank you given your printers take care.
And thank you ladies and gentlemen, this concludes todays call. Thank you for participating and you may now disconnect.
Right.
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