Q3 2020 Extendicare Inc Earnings Call
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Thank you for standing by this is the conference operator, welcome to the Extendicare, Inc. Third quarter results Conference call.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions to join the question queue. You May present Star then one on your telephone keypad should you need assistance during the conference call you may signaling operator by pressing star and zero.
I would now like to turn the conference over to Gillian Belgian Vice President Investor Relations. Please go ahead.
Thank you and good morning, everyone welcome.
Welcome to Dennis Extendicare strict quarter 2020 results conference call with me today is extendicare as President and CEO, Michael Greer, Senior Vice President and CFO, David Baker our.
Our third quarter 2020 results were disseminated yesterday and are available on our website. The audio webcast of today's call is also available on our web site, along with an accompanying slide presentation, which can be worth many advances so.
A replay of the call will be available later this afternoon until November 27.
The replay numbers and pass codes have been provided in our press release.
And an archived 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.
Such statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied today.
We have identified 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 Julie and good morning, everyone.
Before we get to our third quarter results I'll take a moment to discuss our efforts in relation to the COVID-19 pandemic and to thank our hard working and committed team members.
As you are all aware the battle with COVID-19 virus is far from over and in recent days, we have seen record numbers of new cases across Canada.
The numbers have risen in our communities, we have seen a resurgence of outbreaks in long term care homes.
Combating the recent surge is the top priority for our organization.
We learned a lot from the first wave and we have used that experience to the maximum extent possible to prepare us to meet the challenges posed by the second wave.
We are focused on mitigating the spread of the virus using measures such as universal masking maintaining sufficient levels of personal protective equipment single site employer policies limiting long term care occupancy to no more than two residents per room and regular staff casting in our.
Ontario homes in cooperation with the local public health authorities.
Stop testing is important to identify positive staff, who in many cases are asymptomatic to minimize the potential for the virus to enter our homes.
We have also assembled a team of specialized managers to provide rapid effective assistance to homes experiencing COVID-19 challenges.
This team has experience dealing with outbreaks and can quickly provide support and proven solutions to limit the impact of an outbreak on our residents and staff.
We've also increased staffing levels in our long term care homes and are investing in education and training of our new pool of skilled care givers.
As part of our ongoing efforts, we created a new role in the organization and in October Welcome Dr., Matthew Morgan to our executive team as our first Chief Medical Officer.
Dr. Morgan is focused on developing clinical strategies to better.
Manage outcomes for residents clients and their families.
He will also work to establish deeper relationships with our medical directors in long term care and strength in medication management practices in all of our lines of business.
As a specialist in internal medicine with a masters in clinical epidemiology, Dr. Morgan brings extensive experience and clinical expertise to our executive team.
I look forward to the contributions he will make in support of our residents clients and valued team members.
Our staff continue to work tirelessly, providing the crucial care and comfort our residents and clients require.
With restrictions on visitations their presence and company are an important lifeline from many and their ability to provide care with true compassion kindness under very challenging circumstances is commendable.
I am deeply grateful for the work they do and thank all of our care providers for their ongoing hard work and devotion to our mission.
Well our actions have helped mitigate the impact of coal that 19 in our long term care homes. The sharp rise of cases in surrounding communities has caused a resurgence of outbreaks.
Of our 69 long term care homes in retirement communities.
12 long term care homes are in outbreak the majority of which are limited to fewer than three active cases of coal with 19, among the residents and staff.
We are also working closely with some of our Extendicare assist clients to help them manage outbreaks in their homes.
In the third quarter, the Ontario government launched an independent commission into COVID-19, and the long term care sector.
In recent weeks the commission issued an interim report, which recommended increased funding for long term care staff.
Stronger collaboration with hospitals and improved infection control, including priority access to cope with 19 testing for long term care residents and staff.
We were happy to have an opportunity to present to the commission and fully support its interim recommendations.
Yes, Ontario government has already announced plans to implement some of these recommendations.
With that context, let's turn to our third quarter results starting on slide four.
The impact of COVID-19 continues to be felt across our operations driving lower occupancy levels in our retirement communities and long term care homes and lower volumes in our home health care business.
The cost of combating the pandemic have totaled $42.5 million to date exceeding related funding by 19.8 million.
From governments, where we operate.
Despite the impact of coal with 19, we've continued to see improved financial performance year over year in our retirement living operations due to lease up activity and in our contract services and group purchasing operations due to a growing client base.
As we indicated last quarter due to revenue declines in our home health care segment are Paramount subsidiary qualified for funding under the Canadian emergency wage subsidy program.
From Ed received $50.8 million this quarter, which is recorded as a reduction in operating expenses.
David will provide more detail on this later in the call.
Moving to slide five in our long term care operations. The impact of COVID-19 remained evident in Q3 as occupancy levels continued to decline and costs to protect residents and staff exceeded COVID-19ien funding programs by $15.5 million year to date.
Occupancy levels at our long term care homes declined to 90% down.
Down from the usual run rate above 97%.
And a further decline from the 93.5% recorded in the second quarter.
Despite the reduction in occupancy our funding is largely protected currently as governments recognize the need to reduce ward room occupancy during the pandemic.
Following the Commission's interim recommendations, the Ontario government committed to increase funding over the next four years to enable an average of four hours of care per resident day.
The Ontario government has also committed to introduce programs to accelerate the education and recruitment of thousands of additional health care workers that will be needed to meet the new objective.
As part of its 20 2021 budget, the Ontario government reconfirmed previously announced targeted funding for COVID-19 costs through to Q1 2021.
While the budget did not include specific investments to achieve the four hours of care previously announced the government did confirm that an implementation plan will be released as part of the government's staffing strategy in December of this year.
Moving to long term care redevelopment on slide six.
I note that for many years Extendicare has joined with others in the sector in advocating for solutions to address the aging infrastructure and shortage of long term care beds across Canada.
During the quarter, the Ontario government moved a step closer to addressing this issue with announcements from the Ministry of long term care in respect of its redesigned capital development funding program.
The Ministry's revised program provides for increases in the per diem bed construction funding subsidies and the new capital development grant to offset some of the construction costs.
Both of which improved the economics for development projects.
The Ministry announced funding for the program with a 1.75 billion dollar investment to redevelop 12000 long term care beds and add an additional 8000 long term care beds over the next five years.
As previously announced we have submitted applications for 22 projects that in total would build over 4200 beds, replacing all of our existing C class beds, and adding just over 900, new beds to our portfolio.
In October we received our first approval, allowing us to commence construction on a new 256 bed long term care home in Sudbury later this month.
This is Tom will replace the 234 bed Extendicare Falconbridge home and will include 154 private rooms with the balance of the beds in semi private accommodation.
Construction is expected to be completed in Q4 2022 at an estimated cost of $62.3 million net of a capital grant provided by the government under their capital funding program.
The Sudbury project is one of six projects at an advanced stage in the government's approval process that we hope to have under construction before the end of 2022.
We continue to work closely with our industry partners and government to further refine the new capital development funding program in particular to address specific requirements for certain geographic regions and to streamline related approval and licensing processes.
Turning to slide seven our Paramount operations continue to be impacted by coal with 19 with comparable average daily volumes down by 9.9% this quarter from Q3 last year.
In addition, higher operating costs and covert expenses further negatively impacted our home health care results.
The peak impact of co with 19 on our average daily volumes occurred in April.
And since that time, we've experienced a steady increase in our average daily volumes, increasing by 11.6% in Q3 compared to Q2 2020.
And up 5.2% since the end of the third quarter.
However, while referrals from our clients have recently returned to pre covert levels. Our workforce capacity is recovering more slowly constrained by cold related factors.
Nevertheless, we continue to make steady progress toward three pandemic business volumes.
To address the continued growth in demand for home care services, we are making long term investments to address the shortage of personal support workers that has challenged our industry for many years recently exacerbated by the pandemic.
We have developed in house programs and partnered with colleges to create a new supply of skilled caregivers.
To attract a broader pool of interested students paramount is covering tuition and providing paid on the job training followed by full employment upon the completion of the program.
To date, we have put approximately 200, new caregivers through the program and we expect to increase this to more than 600 students per year as we partner with additional colleges.
Note also that we are targeting to complete the final stage of the rollout of our new cloud based platform in permits Alberta operations in the fourth quarter.
This will complete the final phase of the transformation project that we postponed in the early stages of the pandemic.
Turning to slide eight and our retirement living operations COVID-19 restrictions on in person tours and enhanced infection control protocols led to occupancy pressures and increased costs this quarter.
However continued improvements in our lease up communities year over year contributed to overall growth and financial performance.
Stabilized average occupancy remains below prior year levels, but improved in Q3 2020 compared to Q2 as in person to or restrictions were lifted in Ontario from most of the third quarter.
However in recent weeks the increase in COVID-19 cases in Ontario has led to the reimposition of restrictions on in person tours in certain markets lead.
Leading to a reduction in stabilized occupancy by 140 basis points since the end of September.
We will continue to actively market our properties and conduct virtual tours, but expect the ongoing restrictions will continue to impact our occupancy in the short term.
On slide nine our assist contract services and ESG group purchasing services continue to perform well with steady growth in revenue and NOI exceeding a 9% cumulative average growth rate over the past eight quarters.
At the end of Q3, SGP together with our partners provided cost effective products and services to approximately 79400 senior residents across Canada.
23.5% from the same quarter last year and up 5.6% from the second quarter of 2020.
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 geographies.
I'll now turn to David Bacon, our Chief financial Officer to provide additional insights into our financial results from the quarter.
Thanks, Michael.
Ill start by providing an overview of our consolidated results for the third quarter, followed by some financial highlights of our individual business segments and our liquidity position.
As evidenced this quarter, we continue to experience a high level of volatility in our financial results as a result of co with 19.
Pandemic costs remain in excess of related funding programs established by the provincial governments occupancy pressures continue in our LTC and retirement segments and business volumes and revenues in our home care segment continued to lag below pre coded and prior year levels.
As previously noted in Q2, our home health care subsidiary Pyramid received 50.8 million in the third quarter in connection with the federal government's Canada emergency weighted subsidy program.
As we review our financial results, we will exclude the impact of the wage subsidy and as in prior quarters, we will exclude from our 2019 comparative results. The pair Medici business that we exited in January of this year and the incremental funding from Bill 148.
The details of these factors are outlined on slide 21 of our investor presentation.
Turning now to slide 11, and our consolidated revenue and ROI for the quarter.
Excluding the factors impacting comparability related to pyramid that I just noted our consolidated revenue increased 10.1% or 27.2 million to $296.8 million compared to Q3 2019.
Driven by coded related funding of $28.7 million to offset in part the $35.9 million of coated related to operating expenses, we incurred in the quarter.
The impact of coated costs in excess of funding coupled with the decline in our home health care volumes decreased our consolidated net operating income, 27.6% or 9.6 million to $25.2 million compared to Q3 2019 with annualized margins declining to 8.5.
5% from 12.9%.
Adjusted EBITDA was down 45.3% or 10.8 million to $13 million due to the decline in Hawaii and increased administrative costs compared to Q3 2019, primarily due to the COVID-19 related costs.
They AFFO was down 60% or 8.2 million to $5.5 million due to the decline in adjusted EBITDA offset by lower income taxes, and lower maintenance capital expenditures in Q3.
Our overall financial results continued to be impacted by the net costs related to coated in Q3, 2020 impacting in Hawaii, and adjusted EBITDA by $7.2 million and $8.8 million respectively.
The year to date impact on EPS, Hawaii, and adjusted EBITDA is $17 million from $19.8 million respectively additions.
Additional detailed uncoated 19 related costs are included on slide 22 of the Investor presentation.
The net the impact of the net coded costs on basic AFFO per share is approximately seven cents in Q3, and 16 cents year to date.
Turning now to our to the individual business segments on slide 12.
Our long term care operations in the third quarter saw revenues grow by $23.8 million or 14.8% to $184.7 million, which includes pandemic funding of $21.1 million.
And allied decreased by $7.7 million or 37.1% to $13 million and why margins were down to 7% from 12.8% primarily due to the estimated costs associated with coated of $6.6 million in excess of their government funding.
Overall long term care occupancy in the quarter was down to 90% due to the impact of coated primarily driven by occupancy declines in Ontario.
Where occupancy based funding is in place for the remainder of the year.
For the first nine months of 2020, our co bid related costs in our long term care operations have exceeded funding by 15.5 million and for the quarter by $6.6 million.
It is difficult to estimate the extent to which these costs will continue and to what extent they will ultimately be addressed by government support.
Based on the information available to date, both in terms of our estimates of our costs and the government funding that has been announced we anticipate we will see our quarterly net kobin costs in our long term care operations generally in line with our Q3 2020 costs of 6.6 million into the first quarter of 2020.
One.
However, this will be heavily influenced by the ongoing pandemic and the progression of Covance in the community.
Turning to slide 13, and our home health care results.
Which as a reminder, exclude the impact of the wage subsidies received in Q3 and the prior year impacts of the BC contracts and build 148 funding.
And why this quarter declined by 41.5% or 3.3 million to 4.7 million and the NOI margin decreased to 5.1% compared to 8.7% in the third quarter of 2019.
The decrease in NOI margin was largely as a result of the 9.9% decline in business volumes increased workers' compensation and benefits costs and costs associated with Cove at 19, and panic pandemic pay in excess of funding.
Our average daily volumes increased in Q3, 2020 by 11.6% compared to Q2 levels.
And as Michael mentioned, while we continue to see improvements in our average daily volumes the pace of our volume recovery has slowed whos COVID-19 related factors constraining, our workforce capacity, which remain below pre pandemic levels and limit our ability to accept more referrals.
As discussed in Q3 pyramid received 50.8 million under the federal government's Canada emergency weighted subsidy program related to the claim periods covering March 15th to July 4th of 2020.
Subsequent to quarter end pyramid received an additional $31.4 million related to the claims periods from July 5th to September 26, which will be recognized in our Q4 results.
Under I FRS the wage subsidy is recorded as an offset to operating expenses.
Thereby increasing the net operating income of the home care segment when recognized.
The federal government further amended the program on October 14th of 2020 and extended it to June of 2021.
We anticipate filing for further amounts under the program depending on the final details of the recent amendments to the program and the performance of our home health care segment over the coming months.
The impact of the wage subsidy on our AFFO per share in Q3 and year to date is approximately 42 cents a share.
Turning to retirement living on slide 14, and NOI increased in the quarter by 9.5% or 300000 to $3.2 million. This improvement was driven by increased occupancy in our lease up communities, which includes the contribution from the opening from the various view retirement community in Q4 of 29.
Teen despite.
Despite the improvement in our lease up communities lower same store occupancy levels and increased cost associated with Cove. It led to downward pressure on our NOI margins to 26.9% from 28.3% from the same quarter last year.
The easing of restrictions during Q3 and in particular in person tours resuming in Ontario contributed to an increase in our average stabilized occupancy to 91.9% in Q3 compared to 91.5% in Q2.
And improvements in our as that occupancy of 93.1% as at the end of Q3, However, as Michael mentioned in person tours restrictions were reimposed in certain regions and Ontario in October which contributed to a decline of 140 basis points and stabilized as that occupancy at October 30, Onest to 91 point.
1%.
We expect occupancy to continue to be impacted in the short term as coated restrictions remain in place.
Looking at our final business segment on Slide 15, and Hawaii from our contract services consulting and group purchasing operations increased in the third quarter by 34% to $4.3 million as the impact of our growing SGP client base, which is up 23.5% over last year and lower travel and marketing.
Expenses due to coated restrictions contributed to the improvement year over year.
Turning now to slide 16, and our financial position, we remain in a strong position with good financial flexibility and liquidity.
Q3, our consolidated cash and short term investments on hand were $170 million with $71 million Undrawn on our credit facilities.
The impact of the home health care segment wage subsidy received in the third quarter positively impacted our debt metrics with interest coverage improving to four times from 2.6 and debt to gross book value improving to 47.9 from 49.7 as compared to Q2.
As previously disclosed our financing activities in the first half of 2020 positions us well with no scheduled debt maturities until the first quarter of 2022.
In addition, we have made progress this quarter on our previously announced windup of our wholly owned captive subsidiary, which self insured our former US operations in September the Bermuda Monetary authority approved the DEA registration of the captive and the remaining balance of risk, it's restricted cash of us $10 million.
Was released to Extendicare in Q3 contributing to the increase in our liquidity during the quarter.
With that I'll pass it back to Michael for his closing remarks.
Thank you David.
During this challenging time, we remain vigilant in our efforts to protect our resident clients and staff and are doing everything in our power to provide the care and support they need.
While managing COVID-19 remains our immediate priority. We are also committed to building a better future.
We are investing in our people by increasing the vital supply of caregivers with our new training programs to provide a steady stream of trained and skilled workers. We are also investing in improving the quality and quantity of available long term care beds with the construction beginning on our new 256 bed.
Long term care facility in Sudbury later this month.
And we are working towards finalizing approvals in construction tenders for additional projects in the near term.
These important long term investments will improve conditions for both residents and employees, while also adding value for all stakeholders.
With that we'd be happy to take any questions you may have operator.
Operator.
Thank you well now begin the question and answer session to join the question queue.
Star then one on your telephone keypad.
Total and acknowledging you request if.
If you are using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
The first question is from Lauren Colomer with TD Securities. Please go ahead.
Thanks, Good good just just good morning.
Thanks, following up on on Michael last comment about some additional LTC developments from the Hopper, maybe could you guys give a little bit more color on on what sort of coming down the pipe in the near term.
Sure.
So.
As I mentioned, we have 22 projects that we have submitted for the governments review.
That would be a total of 4200 beds, we anticipate that these will be add distributed over.
Quite a number of years the program that has been announced only replaces about a third of the SEC five beds in the province.
So if we expected our proportional share of our projects.
We might have six or seven projects approved under that that program. We might have more we might have last but but that would be roughly proportional.
We would like to see.
Something in the neighborhood of three projects a year launching.
And we've got the Sudbury project launching next week breaking ground next week.
And we are hoping to to have a couple more to announce.
And the next next quarter or two.
I think I think three.
Three projects per year is is.
It is roughly what we're planning for if we could do more we would but.
We're not we're not at this point able to say how quickly we'll get the approvals from the government.
Yes, you answered my follow up question as to how much how many developed guys volume carrying at once.
And then with the occupancy guarantees the LTC.
Running out and I guess at the end of the year have you guys gotten any word on sort of what the government's plan is for that going forward.
We don't have clarity on that at all at this point.
I mean, we we have an expectation at this point that that that that.
Occupancy protection, we will continue to the end of March.
To the end of the fiscal year, but we don't have visibility beyond.
When I say that I meant the government's fiscal year, we don't have visibility beyond beyond the end of March at this point.
But given the strong evidence that's available that having.
Having more than two residents in a room is is there a risk in in the midst of the pandemic.
We're hopeful that we'll.
We'll see that continue for the duration of the pandemic.
Okay, that's very helpful.
Then just to paraphrase it looked like you had a wide margin excluding the sous payment was about 5% nicely up from last quarter.
Is that sort of a good run rate for the duration of the pandemic in consideration that hdds could be impacted by new restrictions.
Well, we've got David May want to comment on this but but I'll start.
We've got a couple of things at play at the moment Lorne so.
One of them is is that our volumes are increasing.
And because of the system that we put in place and and the new operating procedures. We put in place we're able to grow those volumes without growing the back office. So we'll see some margin expansion.
As the volumes go up.
So that's that will change.
That will change over time, but that said.
It's hard for us to project just how quickly we'll see the volumes continue to rise we were very happy to see.
Through October continuing growth and then in the business you can see that.
In the permit page in the debt.
On page seven.
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So so as those volumes.
Come back to pre pandemic levels, then we'll start to see the impact of our investments on systems in automation, improving our margins over time.
Got it I appreciate with side with all the uncertainty or it's tough to quantify and then last one really quick one I just want to confirm that the shoes.
Shoes payments are in fact taxable.
Yes. They are okay, great. That's all from me I'll turn it back thanks.
Thanks Lauren.
The next question is from Chris Cooper Free with RBC. Please go ahead.
Hi, there.
Just maybe following up on the on the shoe Suze payment.
Given what let's just see if we extrapolate.
The sufferer, the the first month and kind of couple that with.
I guess some of the some of the changes in and funding for.
EPS values do you anticipate.
Further shoes.
Receipts into next year.
Yeah, Chris I mean, we're going to evaluate as I've mentioned.
The government introduced rule changes in mid October, which we still don't have all the details on.
So that.
We're waiting for that and what that might look like going into 2021.
There is an interplay between the rules for for the balance of this year, where the by design the program sort of tapers off your entitlement. So you have that going and obviously, we are hoping for a recovery in our business volume. So it's a little hard to say, what that's going to look like and we have no visibility.
This point into the rules for next year, but what I would say as I think that the magnitude of what Weve received to date, both and what we recognize this quarter subsequent from United is going to be the lion's share of what we think is going to be the entitlement as the programs rules change and we see recovery in the business.
Okay. That's good color.
And then just have a question with respect to the Paramount in terms of the.
The Labor force.
Call it out as being a bit of a bit of the bottleneck as.
Referrals of kind of reach from your pandemic levels.
Where where is the labor force sitting at in terms of headcount maybe from versus the prior year SBC.
Yes, I mean, we're we're.
If you look at our levels today overall.
Free co bid level back in March we're probably still down in the range of seven to 800 employees out of.
The workforce.
Okay. So.
With the new IP system.
I haven't done the math here, but.
Are you is there more profit productivity per head with it with the new system in terms of hours per day.
Not in terms of frontline staff Chris.
In terms of back office, there is but not in terms of frontline staff.
We are.
You know we are you getting higher utilization from our frontline staff, but.
That that doesn't increase productivity per hour.
But it just increases the number of hours that.
We're able to get from from the individuals.
The other point to note is similar to what we reported in the last quarter, we're seeing about 50 people or so.
Coming back into work.
Every two week day period so.
We're seeing that that.
That work force coming back over time.
Of course that.
That work force has been impacted by.
All manner of things related to the pandemic in terms of childcare challenges health challenges.
The availability of federal.
Eli and other entitlements.
That that have been keeping people out of the workforce and.
So it makes it pretty hard to predict when we see a record levels of new infections in the community. So were really you.
You know were really staring into the unknown I mean, we're very encouraged by what we're seeing in terms of our trend line, but can be sure that that trend line. We will continue the way it is now.
Sure so.
Absent the unknown based on on the timelines that Youre seeing if you're doing 50 50.
50 people coming back every two weeks or so you could anticipate that call. It in the next six seven months you'd be back to pre pandemic.
Volumes in X. PC.
Yes, and don't forget credits that were also hiring new people at the same time, and we talked about our education programs, which are bringing new people into the sector. So we're not just dependent on getting people back to work were also hiring new people.
Got it okay. Thanks, I will turn it back.
The next question is from Josh Thanks, Paul with Laurentian Bank Securities. Please go ahead.
Thanks.
Hi, good afternoon.
Hi Ash.
Uh huh.
I want to understand how much on outage cost of an.
Home goes into hospital management.
Good day.
Is that a ballpark figure that you can give us.
There really isn't yes, I mean, our experience has been.
Quite quite variable.
And.
The way to think about this is debt.
When a home goes into outbreak.
It typically needs more help it needs more people that can be our own people or that can be a contracted people from agencies are coming from hospitals et cetera. So it's.
It's it's quite variable.
So you know ranges.
You know from from nothing in most of our in most of our outbreaks to add to being a higher percentage of the total cost, but we've included those costs in our projections. So David you know David commentary about cost in excess of funding.
It includes the cost of the hospital help.
Yes, no I understand that far.
Just I was trying to understand how much of it.
<unk> costs from the home is an autumn outbreak what it does it does and it also.
Haas from the management team.
And just like we were talking about positive to abolish.
Well, yes, I wouldn't think about it as handing the home over to a hospital management team, we don't have anything over.
When we sign those agreements, which give the hospitals.
Protections in and then we work very collaboratively collaboratively with them.
But we continue to.
The administrator of the home and we continue to run the operations of those homes, we continue to add additional staff into those homes et cetera. So.
So it's not like there is a binary we're handing it over or not we're continuing to take responsibility from managing those outbreaks, whether a hospital is involved or not.
Okay got it.
Okay.
Thank you your non smoking.
Yes, good question, but just to give you one more one more assertive example.
You know, we've we've had situations where.
We've we've signed a you know a management agreement with our hospital.
And.
You know, maybe there's been two or three visits of hospital experts who've come into the home have looked at everything we're doing and have have felt that it was absolutely sufficient to manage this situation and they were not any more involved in that so eight even though we.
Sign an agreement it doesnt necessarily mean.
Theres any significant amount of work force from the hospital engaged in that home, it's more an oversight question.
The reason I asked that question because one of your competitors sugar content like $2 million <unk> cost the $2 million ish.
For having debt homes under the hospital management and I was not sure how expensive that.
Transition its.
Well, we haven't had the same experience.
So.
So I can't speak to that.
Okay.
Good morning on for you on a day STG and assess ER division.
Division.
Are you noticing any you.
No particular, tench and the solutions that are being.
Acquired volume pintail or the student.
The pandemic.
No we've we any day.
Yes, it really hasn't changed that the.
The types of services or or or what we've been doing with with those supports for our clients those assets have stayed relatively consistent.
Through the pandemic.
The reason I am not as especially for small small mom and pop operators or small non off nutrition.
It's been a difficult to handle these bonds.
Pandemics like given the guidance.
Amount you guys are spending out of pocket.
I don't know how a small non offering.
How does that kind of shock.
So.
Have you noticed any.
Clients are asking you to take hold of the facility and you know.
Managing the pandemic on.
From that Kinda services, yes, we havent had those kinds of requests the ash I think that debt.
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The hospitals have been playing that coordinating role on a regional basis.
So people have been turning to to the hospitals, rather than other operators and as you can imagine.
We're happy about that because were quite busy managing.
Our own operations.
Okay, and just one more on your home care Division so.
Is it based on your answer to this question is it.
Safe to assume that over the next five to six months home volumes would come back to you if we.
The typical globally level.
Well all all other things being equal that that's the trend line net were on at the moment, but the other trend line that I worry about is the record high rates of infection in the community.
The pressure that we're seeing on hospitals.
As a result of that.
The potential exists that we might see another lockdown scenarios similar to wave one it's impossible for us to to be able to predict that so.
So you know we may we may see another.
You know another change in the demand curve as a result of that of course, it would be temporary.
Certainly wouldn't be wouldn't be a you know a permanent change in demand, but we could certainly see something through the winter months that that that has an effect on on referrals.
Okay.
One follow up so you are.
The projection of roughly $6.6 million from quarter of out of pocket expense is what does the well injection assume in terms of.
What you will likely see over the next two quarters.
What are you gonna baseline assumption.
And then let yes.
Well I think I think.
We've got we've had.
Our costs now running for two quarters.
And as I mentioned I think in my comments, we got some some additional clarity in announcements from the Ontario government.
On funding for coated related expenses through to the end of the first quarter of next year. So I think when I look at that previous announcements from Alberta, and our run rate.
We're feeling that again absent of a sharp change in in total bid cases, and those types of things.
The $6.6 million net cost and LTC.
For for lack of any other.
It is hard to know and all of this is caveated similar to the comments, Michael just made about homecare, but.
But that's our best view that gives them some sense of the of the net list. The immediate term over the next couple of quarters that were sort of forecasting four but a lot can change that but that's our best view today.
That's it from me thank you.
Once again, if you have a question. Please press Star then one.
Our next question is from tell really with National Bank financial. Please go ahead.
Hi, good afternoon.
I doubt.
Oh.
Well it started Ottawa can you just give us an update on how the Oh.
Oh price are going there and how how you're managing them.
Yeah sure.
I think the outbreaks are.
Add on more advanced.
Stage in their evolution now.
In that.
Most of the staff are back to work.
And.
The incidence of new cases.
Coming down quite a lot.
Uh huh.
At one point we had.
All five of our Ottawa homes.
In outbreak.
And.
That coincided with a period of time when lab test results were very very slow to come back taking more than a week to get results.
And.
I don't think it was a coincidence that all five of our homes went into outbreak as well as homes from other operators during that time.
But we seem to be getting those those under control now and.
So I think that the worst is past.
And do you have an estimate of how long like you'll be working with the hospital network. There on these facilities.
Yes, well the contracts themselves or 90 day contracts and then they automatically expire.
Glad it's quite in terms of what's actually happening on the ground, it's quite quite dependent on the needs of the home. So we just signed agreements for.
For three of our holdings with the Ottawa Hospital in quick succession, not really knowing where we would need help from where we wouldn't need help so out of an abundance of caution we just signed them for for for all of them.
If you take our Lori a manner home for instance that was the example, where you know the.
Hospital experts came in a couple of times did a couple of visits looked at what was happening and we're you know we're very contends that debt that was.
Handled sufficiently with with our with our existing staff.
With the other two homes the debt.
Hospital people, who are more engaged.
And boy, we were really happy to have them there and they were they were incredibly helpful.
Okay.
For the redevelopment in February.
Sure that's 62 million net of the.
Construction grammar.
How are first of all I was like well the existing facilities still be running during this period are you taking it or does it come down during this period.
No the.
The sub this summary project is a greenfield towel. So it's we're going to be up basically building the brand new home on a on on new land and then we will de can residence from Socgen Bridge.
Over to the new building. So so there is no sort of disruption to the current building through the construction.
And as you work through like this redevelopment process I'm, assuming that is likely the most preferred way to go about this because you're not talking about all beds offline. What what are your plans for like that existing land or you just going to put it back to the market or is that something to maybe you think about a retirement residents.
How are you thinking about utilizing.
Extra what about next drilling a backward.
Yeah I think.
We from a modeling sort of thinking about the business case perspective, we just view it as sort of putting them land back to market.
And then anything that we could do on that if opportunities arise for other other development options retirement, those other things those would be sort of accretive to that if we if we were to do that but.
But our planning assumption is that Oh for we'll we'll just put the existing site back to market.
Okay and.
Yes. This is do they give guidance to be completed in late 2022 like what's the cadence on power units Youve spent about 62 million.
Over the course like should we expect is that going to be a lot next year will be sort of evenly over the next few years or is it more backend weighted Ashley.
Yes, it's spread out reasonably evenly over the two years. We're I mean, we're doing some are breaking ground next week, but it's some rock blasting insight perhaps before the.
For the winter assets in and then and getting going but over the two years it will be probably maybe 60% weighted to next year and 40 the following year.
And then.
You had mentioned earlier like the rule changes for the wage subsidy what are the specific rule changes you think impact your ability to.
Or that would change your ability to receive.
While we don't we don't know tell they said, they're going to live with the extension of the program to June of next year. There's no. There's no detail yet as to what the formulas are going to be in the calculations. Both in terms of what the revenue decline pests, we're going to look like and also then what the underlying and.
Title net is when you when you have a percentage of the wage recovery that you have so when they first announced the program. They made some changes back in July if you recall that did tweak some of those formulas. So we expect some changes at this point.
So it's hard for us to we hard for us to know what that's what it's going to be I mean, the biggest one is you know is going to be the.
How they look at the revenue test rate is it.
Is it going to be year over year or are they going to be comparing januarys revenues in 2021, the january's revenues of 2019 et cetera, I mean, all of those things we don't know.
And of course, we're hoping.
These we're hoping that theres, just we're having a recovery in our volumes as well, which would which would you the new whatever entitlement there could be so we're still this waiting for clarity on non.
Having announced the details.
I guess, the one thing that's sort of surprises free or the whole thing is with the ball, but the amount of the subsidies that are taking relative to like the existing in NOI generated by the business.
Meaningful meaningfully different and is there any you know like I guess.
That's like is there any test on the back ends up after having taken this money where.
You might you might be like you might have to look at returning some of it or anything like that.
No no.
There is nothing like that on the back end.
Okay. Thanks.
Thanks very much.
This concludes the question and answer session I'd now like to turn the conference back over to Gillian Thornton for any closing remarks.
Thank you operator.
As set out pretty noted this concludes our call Hearts day. The presentation is available on our website as are the Collin numbers for an archived recording.
Don't hesitate to give us a coffee have any further questions Inc.
Thank you again, everyone for joining us today and have a good weekend goodbye.
Hi.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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Okay.
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Okay.
Mm.
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Uh huh.
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Yes.
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