Q2 2020 Extendicare Inc Earnings Call
Thank you for standing by this is the conference operator, welcome to the Extendicare second quarter 2020 results conference call.
As a reminder, all participants are in listen only mode at the conference is being recorded.
For the presentation, there will be an opportunity to ask questions to join the question to you May Press Star then one on your telephone keypad should you need assistance during the conference call you May signal, an operator by pressing star and zero I would now like to turn the conference over to Joey and fountain for opening remarks.
Please go ahead.
Thank you good morning, everyone welcome to Extendicare second quarter 2020 results conference call.
With me today is extended <unk>, President and CEO, Michael There and senior Vice President and CFO David Bake.
Our second quarter 2020 results were disseminated yesterday in available on our website.
A webcast of today's call is also available on our website along with an accompanying slide presentation, which viewers made that's itself.
A replay of the call would be available later this afternoon until August 28, the replay number some cost cuts have been provided in our press release and an archive recording of this call will also be available on our website.
Before we get started please be reminded that today's call may include forward looking statements regarding our future operations such statements involve known and unknown risks and uncertainties that may cause actual results could differ materially from those expressed or implied today.
Dennis I'd such factors in our public filings with the securities regulators and suggests that you referred to those filings.
As we discussed our performance. Please bear in mind that all figures are in Canadian dollars unless otherwise noted.
With that I'll turn the call over to Michael.
Thank you gentlemen, and good morning, everyone.
Before we get to our second quarter results I'll take a moment to review our progress on managing through the covert 19 pandemic enter thank our hard working in committed team members.
We remain vigilant in our ongoing battle to keep the novel Corona virus out of our homes and communities.
Our focus remains firmly on doing everything possible to protect the health and wellbeing of our residents clients and stuff.
We have increased resources to manage our operations in today's environment to prevent the spread of cold with 19 were also preparing for a possible second wave by enhancing infection prevention measures to address the unique nature of this virus.
Including maintaining sufficient inventory of P.P.E. universal masking for all staff and visitors single site employer policies limiting long term care room occupancy through a maximum look to residents per room in Ontario, and regular voluntary testing of staff and aren't.
Jerry a long term care homes.
We continue to refine our protocols and processes as we learn more about the virus.
One of our strongest lines of defense against preventing outbreaks is regular staff casting.
Since we launched this voluntary program in June we've conducted over 33000 tests and identified positive cases in 20 long term care homes.
We were able to quickly isolate these team members and prevent further transmission of the virus to residents and other stuff.
We're actively advocating for the expansion of this program to other provinces in which we operate.
Our staff continue to demonstrate exceptional commitment and caring for our residents in clients with true compassion and kindness.
They are ready adaptability to evolving processes and protocols is a testament to their genuine commitment the doing everything possible to protect those in our care.
I'm deeply grateful for the important work they do and thank them for their ongoing hard work and devotion to our mission.
As of today of our 69 long term care homes and retirement communities. One long term care home is currently an outbreak.
And thanks to our testing program. The outbreak is limited to just one positive case of code at 19, and then asymptomatic staff member.
In respect of art Extendicare assist clients. None are currently an outbreak.
With that let's turn to our second quarter results starting on slide four.
[noise], our second quarter is down from the same period last year as the covert 19 pandemic drove lower volumes in our home health care segment and increased operating costs, particularly in our long term care operations.
This was partially offset by government funding for pandemic related expenses and growth in retirement and other operations.
We expect covert 19 to continue to affect our operations in future quarters as we remain focused on protecting the health and safety of our residents clients and stuff.
Well the occupancy based funding of our long term care operations is largely protected for the balance of 2020, we continue to incur additional costs associated with our enhanced infection prevention measures.
Today, we have incurred an estimate at $11 million and pandemic expenses in excess of government funding.
We understand that the fight against covert 19 as far from over however, we are happy to see some initial signs of recovery as restrictions are lifted.
Oh, My house volumes, while still well below previous levels have shown steady improvement over the past two months.
Our Ontario Rabbit retirement communities have resumed in person tours in admissions.
As long term care admissions have resumed although not beyond two residents per room.
Despite the impact of cold with 19, our financial position remained strong with 122 million of cash on hand, and no scheduled debt maturities until Q1 2022.
Moving to slide five and our long term care operations the impact of coal with 19 became more evident.
In Q2 as occupancy levels declined and cost to predict residents in staff exceeded covert funding programs announced today.
Occupancy levels at our long term care homes declined to 93.5% down from the usual a run rate above 97%.
Despite the reduction in occupancy our funding is protected as Ontario has preserved 100% of its occupancy based funding to the ended the year.
In addition, Alberta has introduced additional funding for covert 19, which includes an allocation to address occupancy reductions and we expect Scott you want in Manitoba to provide some level of support to assist with Covance 19 impacts in the future.
We have highlighted the critical need to replace aging long term care homes and the pressing demand for additional long term care beds for many years.
Accordingly, we were pleased when the Ontario government recently announced changes to its construction funding program for long term care.
The programmable redevelop 12000 beds in the add 8000 beds over the next five years.
Well this will not be sufficient to replace all of the class B and C beds in Ontario. It is a welcome to step into right direction.
We have submitted applications to build 4200 beds, which would replace all of our existing see beds and add 931, new long term care beds to our portfolio.
We continue to work closely with the government to get the necessary approvals to expedite our projects that are feasible under the new program.
Turning to slide six are Paramount operations have also been impacted by covert 19.
With comparable average daily volumes down by 20.7% this quarter from Q2 last year.
In addition, higher back office costs and coal that expenses further contributed to a decline in an ally for our home health care operations.
The significant declines in demand were caused by deferral of elective procedures in hospitals provincial restrictions on non urgent homecare services and the choices made by some patients to self isolate and suspend the services they were receiving.
Let's call that 19 restrictions have eased we have seen steady improvement impairments volumes.
Average daily volumes for the four weeks ending August 9th are up 10% from the Q2 average.
While we can't predict how long the impacts of the virus will last.
We do expect average daily volumes to continue to improve as the pandemic receipts.
The final phase of the implementation of our new information system was put on hold to focus on our covert 19 response, leaving Alberta, which represents approximately 5% of our business volume still to be converted onto the new cloud based platform.
We are targeting to complete the conversion in Q4 2020.
Once the pandemic has eased we both refocus on achieving the back office efficiencies. This system is designed to support.
Paramount employs over 9000 staff members essential front line care Givers, who provide health services to clients supported by back office staff that coordinate operations in the field.
Given the transient nature of the softness in market demand, we applied for the Canada emergency wage subsidy for the financial flexibility. It provides to maintain our workforce through the pandemic.
Keeping our team in place ensures that we can respond quickly to increases in demand for home health care services and return to normal volumes as the pandemic receipts.
We will continue to assess paramount eligibility for further wage subsidy support as the year unfolds.
Turning to slide seven and our retirement living operations Covance 19 restrictions on in person tours and enhance infection control protocols to protect residents in staff led to lower occupancy and increased costs this quarter.
However continued occupancy improvements in our lease up communities year over year contributed to improvements in revenue and net operating income.
At June Thirtyth stabilized occupancy was 91.3% down 150 basis points from March 31st.
As a restrictions of east we have resumed in person tours in our Ontario communities and our awaiting a decision to be able to do the same insys catch one where we continue to conduct virtual tours.
We are seeing early signs of recovery in our occupancy levels with stabilized occupancy up 50 basis points at July 31st% to 91.8%.
On slide eight our assist contract services and SGP group purchasing services continue to show strong growth exceeding 10% CAGR in revenue and alike over the past eight quarters.
At the end of Q2, SGP together with our partners provided cost effective products and services to approximately 75200 senior residents across Canada up 28.1% from the same quarter last year.
And up 3.1% from the first quarter of 2020.
Since the end of Q2. The network has continued to grow as we've added a number of new clients, including Golden life and group leukemia, bringing our service coverage to approximately 79000 senior residents across Canada.
We continue to develop opportunities to expand SGP and assist through additional services and product offerings and by expanding the reach of our sales team into other geographers.
I will now turn to David Bake in our Chief financial Officer to provide insight into our financial results from the second quarter.
Thanks, Michael.
I'll first provide an overview of our corporate financial performance for the second quarter, and then I'll provide some financial highlights of the individual business segments.
For ease of comparison, when discussing our revenue and analyze I will be excluding the impact of RBC home health care operations, which we exited as previously announced in January of this year and the incremental funding at our home health care operations from Bill 148, we received in Q2 2019.
Both impacts of which are outlined on slide 20 of the investor presentation.
Turning now to slide 10, and our results for the quarter, which were negatively impacted by co bid cost in excess of funding a 20.7% decline in business volumes and higher back office and administrative costs in our home health care operations, partially offset by growth in the retirement and other operations.
Segments.
While we reported growth and consolidated revenue this quarter of 4.7% or 12.7 million to 281.9 million.
This included 27.2 million of coded related funding to offset in part the 36.7 million of covert related operating expenses, we incurred in the quarter.
The impact of the net coded costs, coupled with the impact of co bid on our home health care volumes resulted in a decline in our consolidated at Hawaii of 13.5 million or 40.3% to 19.9 million compared to prior year within NOI margins declining to 7.1% from 12.
0.4%.
Likewise, adjusted EBITDA declined by 17 million to 8.2 million due to decline in at Hawaii and increased administrative costs in part due to cope with.
Hey, AFFO decreased by 12 million to 2.9 million compared to the same prior year period, driven by the decline in adjusted EBITDA offset by lower income taxes.
Intimated after tax impact on the AFFO of the net covert costs 7.8 million or 8.7 cents per share.
To further elaborate on the impacts of Kogut on our NOI and adjusted EBITDA.
We have incurred an estimated 20 million of pandemic related operating expenses and 1.2 million encoded related administrative cost to date.
These costs include investments in additional staffing procurement of pp increased infection control and cleaning supplies.
These costs are partially offset by 10.2 million in revenue or expense recovery associated with the various provincial government programs.
The net resulting in a reduction of our adjusted EBITDA of approximately 11 million.
In addition to these amounts we have also incurred a further 17.4 million in 10 dynamic pay.
Fully funded by programs announced by the Ontario in Alberta governments to temporarily increase hourly wages for certain eligible frontline employees.
Not including in these expenses I. Just noted we have also purchased an additional 12.7 million and PPD inventory to date to ensure that we continue to have sufficient supply, particularly as restrictions are lifted and we resumed visitation and move and activities in our long term care homes and retirement community.
Further details on the breakdown of the estimated net cobot costs are included on slide 19 of this presentation and in our Mdna.
Turning now to the of individual business segments on slide 11.
Our long term care operations in the second quarter saw revenues grow by 18.5 million or 11.6% to 178.5 million.
Which includes Kobin funding of 17.6 million.
No I decreased by 8.3 million or 42.8% to 11.1 million and I know why margins were down to 6.2% from 12.1%.
The estimated cost associated with covert were 8.6 million in excess of our government funding.
Overall long term care occupancy in the quarter is down to 93.5% due to the impact of cobot, primarily driven by occupancy decreases in Ontario.
Where occupancy based funding is in place until the end of 2020.
The timing and amount of additional covert funding for long term care is unknown and will create ongoing volatility on our quarterly results.
We currently estimate our additional monthly cost and LTC related to co bid to be approximately 5.5 million before any recovery from additional government funding.
And we anticipate that this could continue into 2021, and the timing and amount of additional government funding remains difficult to predict.
In addition to the cobot funding, the Ontario government announced in the quarter, a 1.5% increase to the flow through an accommodation on bullets.
Turning to slide 12 in our home care Division as a result of the impact of cobot on our business volumes and higher back office operating costs and NOI from our home health care operations declined by 82% or 6.5 million to 1.5 million in Q2.
Annualized margin was 1.7% compared to 8.4% in the second quarter of 2019.
As the impact of cobot intensified in Q2 of 2020 volumes from the home health care operations declined by 20.7%, excluding the impact of the BC operations compared to the prior year and declined by 17.4% from Q1 of 2020.
As Michael mentioned, we have begun to see improvements in volumes in recent weeks and are targeting to complete the rollout of our new cloud based operating system in Alberta in Q4 of this year.
Our home health care subsidy subsidiary Paramount Inc. applied for and received in August of payment of 21 million for the initial to claim periods of March and April under the Canada emergency wage subsidy program as a result of the revenue declines experienced in the home health care operations.
The subsidy amount will be recorded in Q3 as a reduction in operating expenses of the home health care segment, and we anticipate pyramid applying for additional wage subsidy periods in the coming weeks.
The original program rules are the same for me in June and the 21 million received to date is in line with our estimated claim amount for these additional periods.
The rules for the program for July onwards were amended in mid July by the federal government and we will be assessing for potential future additional wage subsidy under these new rules of the balance of 2020 unfolds, which will be impacted by the trajectory of pyramids business volume recovery.
Turning to roll up your retirement living on slide 13.
No I increased in the quarter by 20.5% or 600000 to 3.5 million.
This improvement was driven by our increased occupancy in our lease up communities, which had included the benefit of the opening of the very view home in Q4, 2019, which more than offset the negative impact of co bid on occupancy levels at operating costs.
With the easing of restrictions under way and in particular in person tours resuming in Ontario, We have started to see some early indication of improvements in occupancy with a 50 basis point increase in stabilized occupancy to 91.8% at the end of July.
We continue to for our expansion plans that are Empire crossing retirement continue in Port hope at this time.
Looking at our final business segment on Slide 14, NOI from our contract services consulting a group purchasing operations increased in the second quarter by 21.5% or 700000 to 3.9 million due to year over year growth of over 28% in the client served in our SGP division at lower travel and.
Cutting expenses this quarter due to cobot limitations.
Turning now to slide 15 in our financial position, we remain in a strong financial position with good financial flexibility and liquidity.
At June Thirtyth 2020, our consolidated cash and short term investments on hand was 122 million with 71.9 million undrawn on our credit facilities.
In the first six months of 2020, we have renewed and extended several mortgages and finalize the new CMHC mortgage on a retirement community to replace the existing construction loan as a result of this activity. We do not have any scheduled debt maturities until Q1 of 2022.
In addition, we've taken steps this quarter to accelerate the wind up of our wholly owned captive subsidiary, which self insured our former US operations. Following the completion of the regulatory approvals necessary to deregister. The captive we will be able to release and estimated 14 million of restricted cash back to extendicare with.
That I'll pass it back to Michael for his closing remarks.
Thanks, so much David.
During this challenging time, our focus remains firmly on the safety of our residents clients team members and families and providing the care and support they need.
The underlying demographic fundamentals that drive increasing demand for seniors care have not changed.
In the longer term once this pandemic has passed we are confident that we are well positioned for sustainable growth and profitability and all our business segments.
With that we'd be happy to take any questions you may have.
Operator.
We will now begin the question and answer session.
Good question Q you May Press Star then one your telephone keypad, you will hire talent acknowledging yard request. If you are using a speakerphone. Please pick up your handset before pressing any teas.
To withdraw your question. Please press Star then too.
We will pause for a moment as collars join the queue.
The first question comes from Lauren Kollmeyer with TD Securities. Please go ahead.
Thanks, and good morning, everyone.
I'm Learning Register.
Just a quick question on the Cws, how did the or maybe you can explain the I give some color on how extendicare with them to qualify for the March and April subsidy.
Sorry, I did qualify you mean, yeah, just just what the how it met the criteria yeah. It I mean it the program is based on a revenue tests on a year over year basis. The rules are quite complicated.
To be clear its are paramount subsidiary that qualified.
By its by a legal entity basis. So that you know with the drop we've seen with our revenues in that home health care business and what the rules that program and design on on the revenue tests in the program. We were eligible in March and April for the subsidy.
Okay, and then for for I guess May and June any expectation of what you guys are may get for those two months.
Yeah, I think as we just said in our comments that the a those initial two periods March and April were 21 million or the rules are remain intact for may and June from the original.
Design of the program and we think the those two months are inline with what we saw in March and April.
And as you as you probably know in July and later in July the government change the program for the balance of the year. So there's a whole different set of rules for the balance of the year and we'll continue to monitor that as as the year unfolds and we watch the recovery in the pace of recovery impairments volumes.
Okay.
And then maybe switching gears here, but on the on limitation of occupancy due to to Peru, how many beds does that impact for extendicare.
We have that would remove 185 beds in Ontario for us.
And a little under 100 beds across the rest of the country.
And then with what's it going down to two per room does not know qualify them as a preferred accommodations would you get a the preferred accommodation rate for those rooms now.
No we wouldn't.
Okay.
And then any idea what the plan is what the government plan as you know beyond 2020, once they stopped a funding the additional beds or are they expecting to.
Allow you guys to begin re occupying the three and forward beds or what's the plan there.
Yes, I think at this point it we don't know.
Specifically, what the plan will be I think too early to say what I, what I would offer is that across the province.
That removes over 4000 beds. So I think that well you know that's going to put a lot of pressure on on individual operators of individual homes.
I'd say the government is certainly aware of that and I suspect as they as they continue to consider additional coded funding to help us with our with our costs.
And as well as their ongoing considerations around potential changes to the operating funding models that we know that they're working on I think that will all get sort of put in the blended together and as they think about further changes in funding, but at this point as it's too early to say exactly what will happen come January.
Okay, Yeah, I don't know sort of uncertainty with all the stuff and then I guess is another sort of uncertain topic, but I know you're not sure about what government funding oversee but any idea or guidance on what the net pandemic expenses will be over the balance of the year in the I guess predominately LTC portfolio than the others as well.
Yeah I think.
Hard to comment on that to be to be honest I think what weve. What we just said in my comments you know in our long term care division across the country. We're looking at about five and a half million right now of estimated monthly costs before any of the government any additional government funding factored in.
So that's you know we've got some sense of the cost side of the equation, but the revenue side is gonna be volatile here and a bit on even over the coming quarters.
Okay. Thank you very much further color I will turn it back.
The next question comes from Chris Cooper, You would see APC. Please go ahead.
Good morning.
Maybe just following up on the Orange line of questioning there at the end.
Yes. Some of your peers have also kind of reported a high levels of.
Pandemic.
Expenses that they're encouraging their LTC division, presumably you guys are not alone in experiencing this type of burn rate.
Is there any reason to believe that most of this would not be ultimately recovered.
Given the profit models of of different operators.
Chris Yes, I mean it.
It's not it's something that we're all experiencing a cross across the entire sector up until now we've seen about two thirds of the costs covered to date.
And.
You know, there's there's there's quite a range of the ability to absorb.
Those kinds of costs on a long time over a long term basis across the sector. So.
The larger operators or are you know certainly have a more flexibility to I had to cover that then the smaller operators do.
As you can imagine so we don't really view. This is a sustainable situation, we think that there's gonna have to be a reaction to it.
But as David said.
Ah Theres a number of other things going on as well. So you know you you'll recall that on July 30, as the Ontario long term care staffing study was was released.
So that was that you know the report of the expert group assembled to respond to their recommendations coming out of the lease inquiry.
And you know it calls for a significant increases in staffing for long term care.
And the Premier as reaction to it was that just it just a comment in one of his.
A press conferences was bad.
We do need to fix staffing in long term care. So there's certainly working on it a and and so we may see something on a permanent basis.
As a result as those those recommendations so.
We're really hard pressed to say, what you know what kind of a number it would be and when it would be.
But.
You know, we're waiting for that and of course, the other thing to just keep in mind is that.
These costs are covering things that we have to do because of the pandemic when a pandemic subsides.
Most of these products will disappear.
Right Okay understood.
Maybe just moving onto to pair mad.
With respect to kind of what's your view on what you've been seeing in the business.
How have.
Do you you highlight the change in 80. These so that's great.
How are how would you say that kind of referral volumes are.
Are you.
Are you basically acting on as many deferrals as you can or is there still are kind of a big gap between.
Referrals and what you're executing on I guess, the bottleneck more on on getting people back to work and then maybe if you look at the.
Type of ours.
That's been increasing is it more of the.
More specialized type of of hours versus more of the traditional DSW.
Yeah more the in terms of the hours that dropped off we saw a lot more.
That reduction on the P. S W side than the nursing side, the nursing side actually held up.
Quite well through this so it was it was more or is that the P. S. W side as a business that was impacted.
In terms of what were you know what we're seeing come back we've seen their referral the referrals pick up.
Quite briskly.
And Ah Ah, but it takes time for those referrals because of cards a referral isn't isn't per visit a referral is is per patient and so a patient can require services for you know for a year on on an ongoing basis. So referrals are the leading edge.
Indicator and volumes as a lagging indicator. So we're certainly seeing that referrals a return to a levels in most districts that are similar to what they were pre pandemic.
So now the volumes are tracking you know tracking back up and that gives us a lot of optimism.
That that you know, we will return to normal levels.
The the caveat in any of those kinds of predictions the possibility of a second wave.
Causing us to go back into.
Some kind of a lock down a that bad may indeed caused the volumes to go down again, so we're not.
We're in we're not predicting that.
You know that but that won't happen. So at this point, it's it's it we're very optimistic.
But.
You know there are a lot of unpredictable elements or to take into account.
Is there anything that may have changed with respect to the the cost structure as a result at the pandemic that would if you return back to say 2019 type of levels is there any reason to believe that the margin couldn't return to those.
Those types of.
Those levels at a minimum.
No not at all I in fact, our contribution margins I have have tracked very closely with the volumes and and.
So we don't we don't see any change in in that aspect as a business.
Okay, and then maybe just last one on on home care generally I know the.
There's been a lot of.
Of talk about changes potentially occurring in long term care is there any is there anything in the home care side that we should be aware of.
Well.
The one thing Chris that too.
To to watch for is that if there is a major expansion in staffing in long term care or a significant change in.
In pay rates in long term care, a we could see resulting staffing shortages in home care.
So the too.
The two sectors operate a right next to each other so if if there are changes in one that aren't echoed in the other then I'm. A you know then we could see some challenges.
ER that that that resolved on the labor front.
That said Oh, you know that report that I I mentioned earlier.
[noise] that reported on July 30 as.
They they took pains to point that I.
And and you know made the recommendation that anything that happens in long term care should be echoed in home care.
But we'll see how that plays out.
Thanks very much.
Thanks, Chris Thanks, Chris.
The next question comes from Cowen Lilly with National Bank Financial. Please go ahead.
So.
I think everybody.
Now that's all.
Just a couple of financial questions on top so I just.
I want to make sure I understand how this wage subsidy or will work so you'll be booking luxury 21 million dollar no cost reduction next quarter with the reach subsidy.
Yeah, but the accounting treatment of that subsidy or.
For us it's treated as a grant so for in our policies on under I forget that gets netted against our operating expenses of the pyramid segment in Q3.
And then.
[noise] for whatever you apply for within Q3 that would theoretically have been come with come in Q4, but sort of the way to think about it no is the additional amounts we talked about those extra two periods may and June that's likely to be in our Q3 as well.
Okay.
And then that and then and then sorry go ahead. No go ahead I know you go ahead [laughter].
No.
Fit as it's going to say that the it's in our operating.
Maybe I don't know your next question will be this but it isn't our operating and therefore will be an IRA AFFO. So just a similar to how the cove. It expenses impacted our AFFO. This quarter that will that will be included area AFFO in Q3.
Okay.
And then do you have any just because a number or your numbers are going to be.
Shifting to watch over the next little while.
Depending on how these reimbursements go do you have any like covenant concerns or challenges that you need to think about with your lenders would just as we go sort of go through the cycle.
No. We're at Q2, we are on side with everything I mean, the mix all of our covenants are tied to specific mortgages and sort of more traditional debt service coverage test and things like that on the on the.
Long term care side and retirement side, but at this point, we have no no concerns right now and the outlook on anything and then are there are no covenants in our bonds.
Okay.
And then just for Sep.
Any concerns about the health of the customer base, but you've got right now.
Or you feel comfortable in fact group of customers who is going to.
Continue to continue to operate through this period.
I can't imagine a scenario where.
Long term care homes.
That are.
Currently in operation would somehow go out of business and and and then.
The residents have nowhere to go so I you know I thought we don't really have that concern I think the retirement side of of of this sector.
Is is is clearly starting a recovery at this point. So we you know we don't we don't anticipate a problem. There. So in fact, what what what we are seeing is that as a the sector has been under some financial challenges and of course has.
Variance I procurement challenges, particularly with things like Pea that we're seeing really significant interest in in our offerings. So as a result, we're continuing to see growth in that segment. Despite the fact that our sales team can travel a they've moved everything to online.
But it doesn't seem to have interrupted there.
Their ability to to bring new.
Customers to the business.
Okay.
[laughter] sort of a technical question just in terms of like how operations are specified between the government and the operators for the lunch or care.
But.
The extra cost that you incurred like this quarter.
Are these the result of choices risk management choices operators are making or are these public health directives coming are coming from municipalities or in fact are coming from you know the provinces themselves like financial risk in the homes.
Well I'd say, it's a it's a combination.
Ah first of all there's a very very collaborative engagement going on between government and and the operators in the sector. There's also a very collaborative.
Activity going on between the operators as we all you know a share best practices shared data I shared learning.
In terms of how best to defend ER, our homes and communities from from from the virus. So.
That that's driving all of us in a in a similar direction you can see our costs. You know are similar or the government doesn't direct us to higher certain individuals.
They are certainly helping us with with revisions to policies and procedures that we.
We know work.
And I think you're seeing that across the whole sector is we get a you know those worst outbreaks that occurred very early in the pandemic are now saying fully behind us. So so so it's not it's not prescriptive in terms of what we need to spend but certainly in terms of the policies.
Procedures that that a were required to follow.
That has both product and staff cost associated with it.
Okay. Thanks for Oh, sorry, just one other question.
Are you know I can you sort of works through the darkest for.
This crazy for.
You know was there anything that's sort of stuck out to you in a way to system works.
Oh, I'm, sorry, but almost frontier system.
You know it like you're just like to use this really needs to change like because like this isn't you know like we sort of run run into some challenges you know when a regular kind of year. There you know because they're not so significant you know you could kind of work through them, but this was such an extreme thing.
But.
Just in terms of the where the funding mechanisms all work and you know.
The ability to deliver good care like.
Do you do you like that's one of the largest operators have recommendations for like Hey. These are some things we should really be changing in the system.
Well I think there's two things that that have been true for a long time for over a decade that the Ontario long term care Association has.
Pointed out many times in its advocacy one is that the older homes need to be replaced.
ER and we've had applications into the government.
Into various governments for replacing our older homes for a long time course, we've talked about the monies analyst calls or you know long before the pandemic and ER and that clearly.
ER has proven to be a vulnerability for the whole sector through you know through through the pandemic. So.
So that that probably be at the top of my list and then I think the second thing is that that.
That the way that the homes were funded for <unk> for delivering care was such that or if there was any significant challenge. We just didnt have the resiliency in the sector to be able to respond or.
The way the way, we would like to and.
The.
Ontario College of nurses as.
Published a a summary of all of the long term care reports.
They have been generated over the last 20 years in Ontario, and there were there were 35 of them.
All of them with similar recommendations about the kinds of staffing levels and this staffing expert panel that reported on on July Thirtyth repeated a lot of those lot of those recommendations. So I think there's a.
You know theres a need to recognize that.
Over time very slowly the acuity in the needs of the residents and long term care have been increasing and the staff complement hasn't been increasing in tandem with it.
I think that Theres, a recognition that that's the case and that Oh, you know, we're very very hopeful that will make strides in that in that direction I had to be able to add to staff or you know to our to our teams in the homes.
Those are the two things that I'd point to there's probably.
Some more minor points, but but but those are the big ones.
Okay. Thanks very much appreciate it.
Thanks, South.
Once again, if you have a question. Please press Star then one.
Our next question comes from Yesh Sankpal Laurentian Bank. Please go ahead.
Good afternoon.
Yes.
I think you mentioned that you have submitted application for 4000 bench so that doesn't should it go watch all your properties.
Are you not why did that if all of those applications. She.
What approved you would be.
Finished with like lot of flow through development projects or do you think they wouldn't be approved on it to your basis.
Yeah, Yeah, I think I think you're the latter well we have those 4200 beds of applications and I think that realistically.
The those projects will get built over a period of time I think in this with the new program, just announced or any other governments targeting 12000.
20000 beds in total.
And you know if you think of that relative to the 32000 see beds that are in the problems today.
It's clear that not all of those existing seabed projects across the province or are gonna be covered by this initial phase of the government's new program. So I think there is going to be a cadence to how these get approved and and and ER and how we think about things as they unfold over the over the next to say five years.
Which is the initial target phase for this first wave.
Got it so okay.
So the wish subsidy that you're getting for your homecare business, what's supposed to digital.
Which would that go when they cut off me I'm trying to understand how much is development compensate big pool.
Well the design of the program, yes. It is it too to reimburse employers that meet the ER. The test of the program for up to 75% of of them a weekly wage maximum of $847. So it's a very complicated calculation you literally.
We are doing the calculation employee by employee and looking at the wages paid over these discrete four week periods.
So it is the target is to pay a.
Maximum 75.
Or percent of up to $847 a week per person.
The reason I ask because you have some part time employees like a mix so.
Oh, just the government addressed that like based on how much they would onyx before our.
Yes. This state is based on what we've actually paid during certain periods of time, it's not based on a on a you know in implied or imputed amount. We will have stayed it actually looks at what we did pay in this specific period and give us that gives us back a portion of those wages to help.
Okay.
Moving to the other Tom at home Division.
When it's a would you be able to say video to occupancy is at this point.
Yeah, I think I as as as I think Mike or or I alluded to in the script, we have our as that occupancy at the end of June was 91.3% and we haven't seen a slight uptick in July.
In our stabilized occupancy to 91.8, so we've seen about a 50 basis point uptick in the in the month of July.
Okay.
And lastly on New York and she P Division.
How is the pipeline looking at this point like I'm trying to understand how much this business can grow.
I say yearend.
Ah, Yes, a couple of things first of all.
[laughter].
Given the year that we've had so far.
Our our.
ER or extremely radisson to predict how many sales we might close in the next six months.
But that said.
There's still quite a lot of room to grow.
You know where were expanding our sites to eastern Canada, then come back where we haven't.
Traditionally done very much business ER and we're also looking.
Looking at expanding the offerings.
So there's other products and services that we currently don't offer through the partnership.
That we think we can add so so in terms of of additional clients and and additional revenue from existing clients. A we think theres a lot of lot of opportunity there too.
To continue to grow and of course, a as the new bad to get built a we're going to see a growth in in that business organically as as our different clients grow their their their population of beds as well.
Right.
And recently you expanded into Western Canada.
So are you happy with how that expansion is.
Going.
Yeah, we're we're delighted with it actually I mean, I think the magic of that business is that.
You know our our role is to.
Give.
Our our partners access to a very favorable contract terms.
But when it comes to the logistics of delivery and and ordering and that sort of thing. It's the it's the parkers if the business the suppliers, who take care of that.
So we don't have that the challenge of having to expand operations into other geography, that's something that that our clients pardon me our partners provide to our clients.
Well, you need or boots on the ground at least.
<unk> coordination pump was right.
Correct.
Very late problem from a sales and customer service perspective, we have that we have people covering that the geography course, we've had to reinvent the way, we do that given that that nobody traveling at the moment.
So where we're learning a lot about how to how to provide that customer service virtually which I think we'll have.
Ah ongoing implications positive implications for our business after after the pandemic receipts.
Like we're seeing significant.
Significant ever adoption in our in our customer service costs through through the pandemic.
And that's good. Thank you that's all for me.
Thanks [noise].
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