Q1 2022 Extendicare Inc Earnings Call

Jillian E. Fountain: Extendicare's first quarter 2022 results conference call. With me today are Extendicare's President and CEO, Michael Guerriere; and Senior Vice President and CFO, David Bacon.

Jillian E. Fountain: Good morning, everyone. Welcome to Extendicare's first quarter 2022 results conference call. With me today are Extendicare's President and CEO, Michael R. Guerriere, and Senior Vice President and CFO, David Bacon.

Jillian E. Fountain: Our Q1 results were disseminated yesterday and are available on our website. The audio webcast of today's call is also available on our website along with an accompanying slide presentation, which viewers may advance themselves.

Jillian E. Fountain: Our Q1 results were disseminated yesterday and are available on our website. The audio webcast of today's call is also available on our website, along with an accompanying slide presentation which viewers may advance themselves.

Jillian E. Fountain: A replay of the call will be available later this afternoon until May 27th. The replay numbers and passcodes have been provided in our press release and an archived recording of this call will also be available on the website.

Jillian E. Fountain: A replay of the call will be available later this afternoon until May 27th. 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 the website.

Jillian E. Fountain: 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 suggest that you refer to those filings.

Jillian E. Fountain: 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 refer to those filings.

Jillian E. Fountain: With that, I'll turn the call over to Michael.

Michael R. Guerriere: Thank you Jillian, and good morning.

Michael R. Guerriere: Once again, we started the call with a pandemic update marking the ninth consecutive quarter that's been impacted by COVID 19.

Multiple speakers: With that, I'll turn the call over to Michael. Thank you Jillian, and good morning.

Michael R. Guerriere: Once again, we start the call with a pandemic update marking the ninth consecutive quarter that's been impacted by COVID-19.

Michael R. Guerriere: The dramatic run up in Omicron cases in the community resulted in an increase in outbreaks in our homes and staffing challenges across the organization, setting back the positive trajectory of our occupancy levels and home healthcare volumes in the previous few quarters.

Michael R. Guerriere: The dramatic run-up in Omicron cases in the community resulted in an increase in outbreaks in our homes and staffing challenges across the organization, setting back the positive trajectory of our occupancy levels and home health care volumes in the previous few quarters. Thanks to vaccinations and boosters, the virus has manifested as a mild illness for the vast majority of our residents and staff. We continue to remain vigilant and focus on prevention and control measures to minimize the spread of the virus, as it can still pose a serious risk to the most vulnerable members of our community.

Michael R. Guerriere: Thanks to vaccinations and boosters, the virus has manifested as a mild illness for the vast majority of our residents and staff.

Michael R. Guerriere: We continue to remain vigilant and focus on prevention and control measures to minimize the spread of the virus as it can still pose a serious risk to the most vulnerable members of our community.

Michael R. Guerriere: Despite milder symptoms, high levels of staff absenteeism due to illness or isolation led to increased labor costs in the quarter through higher sick leave, overtime and agency use.

Michael R. Guerriere: Despite milder symptoms, high levels of staff absenteeism due to illness or isolation, led to increased labor costs in the quarter through higher sick leave, over time and agency use.

Michael R. Guerriere: This was particularly impactful in our home healthcare segment, where it also affected our ability to meet the demand for services and resulted in a significant drop in our average daily volumes as compared to Q4 2021.

Michael R. Guerriere: This was particularly impactful in our home health care segment, where it also affected our ability to meet the demand for services and resulted in a significant drop in our average daily volumes as compared to Q4 2021.

Michael R. Guerriere: While we are continuing to experience an elevated level of new cases within our homes and among our staff in the second quarter, there's been no impact on the demand for our services.

Michael R. Guerriere: While we are continuing to experience an elevated level of new cases within our homes and among our staff in the second quarter, there's been no impact on the demand for our services.

Michael R. Guerriere: Currently 24 of our 58 long-term care homes are in outbreak.

Michael R. Guerriere: However the number of new cases, both among our staff and residents, has leveled off in recent weeks, suggesting we may be experiencing the same seasonal drop-off in viral transmission we've seen over the past two years.

Michael R. Guerriere: Currently 24 of our 58 long-term care homes are an outbreak.

Michael R. Guerriere: However, the number of new cases, both among our staff and residents, has levelled off in recent weeks, suggesting we may be experiencing the same seasonal drop-off in viral transmission we've seen over the past two years.

Michael R. Guerriere: In the first quarter we benefited from 13.3 million in COVID funding for our Ontario long-term care operations related to costs incurred last year.

Michael R. Guerriere: In the first quarter we benefited from $13.3 million in COVID-19 funding for our Ontario long-term care operations related to costs incurred last year.

Michael R. Guerriere: This narrowed the cumulative unfunded costs since the beginning of the pandemic to $33.1 million.

Michael R. Guerriere: This narrowed the cumulative unfunded costs since the beginning of the pandemic to $33.1 million.

Michael R. Guerriere: Subsequent to the quarter, the government of Ontario announced additional COVID prevention and containment funding of $278 million for the 12 months ending March 31st, 2023. $130 million of which will flow in Q2 helping to mitigate the costs we continue to incur.

Michael R. Guerriere: Subsequent to the quarter, the government of Ontario announced additional COVID-19 prevention and containment funding of $278 million for the 12 months ending March 31st, 2023.

$130 million of which will flow in Q2 helping to mitigate the costs we continue to incur.

Michael R. Guerriere: $130 million of which will flow in Q2, helping to mitigate the costs we continue to incur.

Michael R. Guerriere: The Alberta and Manitoba governments have also indicated their intention to continue funding support on a retroactive basis for COVID costs incurred through to March 31, '23. We are encouraged by these announcements and grateful for the continuing support.

Michael R. Guerriere: The Alberta and Manitoba governments have also indicated their intention to continue funding support on a retroactive basis for COVID-19 costs and incurred through to March 31, 2023.

Michael R. Guerriere: We will continue to experience volatility in our operating and financial results until the effects of the pandemic are behind us.

Michael R. Guerriere: We are encouraged by these announcements and grateful for the continuing support.

Michael R. Guerriere: We will continue to experience volatility in our operating and financial results until the effects of the pandemic are behind us. Turning to slide four, as previously announced, we took important steps in the first quarter to execute on our strategy to focus on the long-term care and home health care segments using a less capital-intensive business model. Through a series of transactions, we are repositioning Extendicare to focus growth on operating and building new long-term care homes, while substantially reducing our ownership stake in the properties we operate.

Michael R. Guerriere: Turning to Slide 4, as previously announced, we took important steps in the first quarter to execute on our strategy to focus on the long-term care and home health care segments using a less capital-intensive business model.

Michael R. Guerriere: Through a series of transactions, we are repositioning Extendicare to focus growth on operating and building new long-term care homes, while substantially reducing our ownership stake in the properties we operate.

Speaker 3: using a less capital-intensive business model. Through a series of transactions, we are repositioning Extendicare to focus growth on operating and building new long-term care homes, while substantially reducing our ownership stake in the properties we operate.

Michael R. Guerriere: This will allow us to deploy capital more efficiently and to provide greater flexibility to fund growth initiatives, including acquisitions. The sale of our Esprit Retirement operations is expected to close on Monday, May 16.

Michael R. Guerriere: This will allow us to deploy capital more efficiently and to provide greater flexibility to fund growth initiatives, including acquisitions.

The sale of ours free retirement operations is expected to close on Monday, may sixteenth.

Michael R. Guerriere: The sale of our Esprit retirement operations is expected to close on Monday, May 16th, 2022.

Michael R. Guerriere: The sale to the Sienna-Sabra partnership for $307.5 million is expected to result in net proceeds to Extendicare of approximately $125 million.

Michael R. Guerriere: The sale to the Sienna / SABRA partnership for $307.5 million dollars is expected to result in net proceeds to Extendicare of approximately $125 million dollars.

Michael R. Guerriere: The transaction unlocks the value of our retirement segment at an implied cap rate of approximately 6%, thus focusing Extendicare on its two core segments, long-term care and home healthcare, where we can leverage our deep expertise and scale to drive improved performance and high quality care for seniors across Canada.

Michael R. Guerriere: The transaction unlocks the value of our retirement segment at an implied cap rate of approximately 6%, thus focusing Extendicare on its two core segments- long-term care and home health care- where we can leverage our deep expertise and scale to drive improved performance and high-quality care for seniors across Canada.

Thus focusing extendic care on its two core segments- long-term care and home health care- where we can leverage our deep expertise in scale to drive improved performance and high-quality care for seniors across Canada.

Speaker 3: thus focusing Extendicare on its two core segments- long-term care and home health care- where we can leverage our deep expertise and scale to drive improved performance and high-quality care for seniors across Canada.

Michael R. Guerriere: The retirement segment represented approximately $7.1 million in AFFO contribution, or $0.08 per share, based on our 2021 results.

Michael R. Guerriere: The retirement segment represented approximately $7.1 million in AFFO contribution, or eight cents per share, based on our 2021 results.

Michael R. Guerriere: Slide Five summarizes the two transactions with Revera and Axium infrastructure that we announced in March to take the next step in our strategic shift.

Michael R. Guerriere: Slide five summarizes the two transactions with Rivera and Axiom Infrastructure that we announced in March to take the next step in our strategic shift.

These arrangements will add 56 long-term care homes to the Extendicare assist portfolio of managed homes, bringing the total we own or manage to 164.

Michael R. Guerriere: These arrangements will add 56 long-term care homes to the Extendicare Assist portfolio of vantaged homes, bringing the total we own or manage to 164. These homes will also add approximately 7,500 beds to the SGP purchasing partner network, bringing the total participating beds to over 100,000.

Bring the total we own or manage to one hundred and sixty-four.

Michael R. Guerriere: These homes will also add approximately 7,500 beds to the SGP purchasing partner network, bringing the total participating beds to over 100,000.

Michael R. Guerriere: bringing the total we own or manage to 164. These homes will also add approximately 7,500 beds to the SGP purchasing partner network, bringing the total participating beds to over 100,000.

In addition, we are acquiring Rivera's 15% interest in the 24 long-term care homes they own in partnership with Axium, along with an opportunity to purchase future Revera redevelopment projects.

Michael R. Guerriere: In addition, we are acquiring Rivera's 15% interest in the 24 long-term care homes they own in partnership with Axiom, along with an opportunity to purchase future Rivera redevelopment projects.

Michael R. Guerriere: An important element of these transactions is the addition of Revera's long-term care operations group and a number of head office staff to the Extendicare team.

Michael R. Guerriere: An important element of these transactions is the addition of Rivera's long-term care operations group and a number of head office staff to the Extendicare team.

They will continue to support the ongoing delivery of high quality care and services to ensure a seamless transition into Extendicare for the Revera homes, the care staff and the residents and families.

Michael R. Guerriere: They will continue to support the ongoing delivery of high-quality care and services to ensure a seamless transition into Extendicare for the Rivera homes, the care staff and the residents and families.

We will also enter into a joint venture with Axium, for the redevelopment of our own class C homes. The joint venture provides us with capital to support our redevelopment agenda as well as the platform to expand our long-term care operations through acquisitions and Greenfield development.

The joint venture provides us for capital to support our redevelopment agenda, as well as a platform to expand our long-term care operations through acquisitions and greenfield development.

Michael R. Guerriere: We will also enter into a joint venture with Axiom for the redevelopment of our own class C homes.

Michael R. Guerriere: The joint venture provides us for capital to support our redevelopment agenda, as well as a platform to expand our long-term care operations through acquisitions and greenfield development.

Michael R. Guerriere: Total aggregate consideration to be paid on closing of these transactions is approximately $70 million, subject to customary adjustments consisting of cash and debt assumed through our 15% ownership stake in the joint venture.

Michael R. Guerriere: Total aggregate consideration to be paid on closing of these transactions is approximately $70 million dollars, subject to customary adjustments consisting of cash and debt assumed through our 15% ownership stake in the joint venture.

subject to customary adjustments consisting of cash and debt assumed through our 15% ownership stake in the joint venture.

Michael R. Guerriere: subject to customary adjustments consisting of cash and debt assumed through our 15% ownership stake in the joint venture.

Based on the anticipated revenue of the management agreements to operate Revera's 56 long-term care homes net of our incremental costs, management services could generate AFFO of $0.04 per basic share. 

Michael R. Guerriere: Based on the anticipated revenue of the management agreements to operate Rivera's 56 long-term care homes, net of our incremental costs, management services could generate AFFO of four cents per basic share.

Additionally, distributions in respect of our 15% interest in the 26 long-term care homes to be jointly owned with Axium could generate AFFO of $0.01 per basic share for a combined $0.05 per share, or $5.3 million.

Michael R. Guerriere: Additionally, distributions in respect of our 15% interest in the 26 long-term care homes to be jointly owned with Axiom could generate AFFO of one cent per basic share, for a combined five cents per share, or $5.3 million dollars.

For a combined five cents per share, or a five point three million dollars.

Closing of these transactions is subject to customary closing conditions, including receipt of regulatory approvals from the provincial health authorities in Ontario and Manitoba, which are underway.

Michael R. Guerriere: For a combined five cents per share, or $5.3 million dollars.

Michael R. Guerriere: Closing of these transactions is subject to customary closing conditions, including receipt of regulatory approvals from the provincial health authorities in Ontario and Manitoba, which are underway.

It is difficult to predict when the regulatory process for the transactions will be complete and the subsequent closing date, but we're actively working on integration planning with Revera and Axium to ensure that we're in the best position possible to integrate Revera's long term care operations team, the homes under management and the JV interest into Extendicare expeditiously after close.

Michael R. Guerriere: It is difficult to predict when the regulatory process for the transactions will be complete and the subsequent closing date, but we're actively working on integration planning with Rivera and Axiom to ensure that we're in the best position possible to integrate Rivera's long-term care operations team, the homes under management and the JV interest into Extendicare expeditiously after close. Slide six summarizes the strategic benefits of the Rivera and Axiom transactions.

Slide Six summarizes the strategic benefits of the Revera and Axium transactions. They provide Extendicare the ability to focus on our two core segments long-term care and home care where our depth of experience and scale will enable us to capitalize on the growing demand for these services.

They provide extendedic care. The ability to focus on our two core segments- long-term care and home care- where our depth of experience and scale will enable us to capitalize on the growing demand for these services.

Michael R. Guerriere: They provide Extendicare the ability to focus on our two core segments- long-term care and home care- where our depth of experience and scale will enable us to capitalize on the growing demand for these services.

A less capital intensive business model, coupled with the proceeds from the sale of the retirement operations will provide the flexibility to allocate capital strategically, including priority investments in our people, technology and our long-term care redevelopment program.

Michael R. Guerriere: A less capital-intensive business model, coupled with the proceeds from the sale of the retirement operations, will provide the flexibility to allocate capital strategically, including priority investments in our people, technology and our long-term care redevelopment program.

Including priority investments in our people, technology and our long-term care redevelopment program.

The JV platform created by these transactions provides a foundation to expand beyond our own redevelopment agenda and allows us to consider acquisitions both within long-term care and home healthcare, Greenfield long-term care and new builds and redevelopment of homes outside of Ontario.

Speaker 3: including priority investments in our people, technology and our long-term care redevelopment program.

Michael R. Guerriere: The JV platform created by these transactions provides a foundation to expand beyond our own redevelopment agenda and allows us to consider acquisitions both within long-term care and home health care, greenfield long-term care new builds and redevelopment of homes outside of Ontario.

Greenfield: long-term care- new builds.

And redevelopment of homes outside of Ontario.

In addition, these transactions expand the customer base for our Extendicare assist managed services and SGP group purchasing, driving growth in our higher margin other operation segment.

Speaker 3: greenfield long-term care new builds and redevelopment of homes outside of Ontario.

Speaker 3: and redevelopment of homes outside of Ontario.

Michael R. Guerriere: In addition, these transactions expand the customer base for our Extendicare Assist managed services and SGP group purchasing, driving growth in our higher-margin other operations segment.

The preferential rights to acquire Revera seabed redevelopment projects also provides us with a pipeline of new long-term care homes in Ontario to further grow the JV and extend related management fees.

Michael R. Guerriere: The preferential rights to acquire Rivera C bed redevelopment projects also provides us with a pipeline of new long-term care homes in Ontario, to further grow the JV and extend related management fees.

Overall, these transactions are estimated to contribute approximately $0.05 of a AFFO per share, replacing a significant portion of the $0.08 per share of AFFO lost with the sale of the retirement operations, using on an enterprise value basis, approximately $70 million of the $307.5 million generated from the sale of the retirement portfolio.

Michael R. Guerriere: Overall these transactions are estimated to contribute approximately five cents of AFFO per share, replacing a significant portion of the eight cents per share of AFFO lost with the sale of the retirement operations, using on an enterprise value basis, approximately $70 million of the $307.5 million generated from the sale of the retirement portfolio.

Using on an enterprise value basis, approximately seven million of the 307.5 million generated from the sale of the retirement portfolio.

Michael R. Guerriere: Using on an enterprise value basis, approximately $70 million of the $307.5 million generated from the sale of the retirement portfolio.

Moving to Slide 7, we continue to advance our redevelopment strategy to replace our older class C beds in Ontario.

Michael R. Guerriere: Moving to slide seven, we continue to advance our redevelopment strategy to replace our older class C beds in Ontario.

In total, we have been awarded 4,248 new and replacement beds across 20 redevelopment projects, which would replace all of our 3,285 existing Class C beds, including the three projects currently under construction.

Michael R. Guerriere: In total, we have been awarded 4,248 new and replacement beds across 20 redevelopment projects, which would replace all of our 3,285 existing class C beds, including the three projects currently under construction.

Which would replace all of our 3,285 existing class C beds. Including the three projects currently under construction.

Including the three projects currently under construction.

Speaker 3: which would replace all of our 3,285 existing class C beds, including the three projects currently under construction.

We are pleased to contribute to expanding much needed long-term care capacity in the province.

Speaker 3: including the three projects currently under construction.

Our new homes will be constructed exclusively with single resident bedrooms to maximize privacy, safety and resident comfort.

Michael R. Guerriere: We are pleased to contribute to expanding much needed long-term care capacity in the province.

Michael R. Guerriere: Our new homes will be constructed exclusively with single resident bedrooms to maximize privacy, safety and resident comfort.

We're actively engaged with industry partners and the government to obtain the necessary enhancements to the government's capital development funding program to make projects in all markets economically feasible, given the considerable widespread inflation being experienced across the construction industry today.

Michael R. Guerriere: We're actively engaged with industry partners and the government to obtain the necessary enhancements to the government's capital development funding program to make projects in all markets economically feasible, given the considerable widespread inflation being experienced across the construction industry today. We continue to work through the Ontario Ministry of Long-Term Care and municipal approval processes for all of our projects and are targeting to have six ready for construction before the end of 2023.

Today we continue to work through the Ontario ministry of long term care and municipal approval processes for all of our projects and are targeting to have six ready for construction before the end of 2023.

And are targeting to have six ready for construction before the end of 2020. -three.

Now let's turn to a few operational highlights on slide 8.

Speaker 3: and are targeting to have six ready for construction before the end of 2023.

As you can see in the table, while we experienced year-over-year improvements in long-term care occupancy and home health care volumes, the impact of the omicron variant resulted in a decline in long-term care occupancy, which was 120 basis points lower than in Q4, and a drop in home healthcare average daily volumes, which was were down 4.8% on a sequential basis.

Michael R. Guerriere: Now let's turn to a few operational highlights on slide eight.

Michael R. Guerriere: As you can see in the table, while we experienced year-over-year improvements in long-term care occupancy and home health care volumes, the impact of the Omicron variant resulted in a decline in long-term care occupancy, which was 120 basis points lower than in Q4, and a drop in home health care average daily volumes, which were down four point eight percent on a sequential basis.

We did continue to see growth in our SGP customer base in Q1 up 6% from Q4 and 21.9% year over year.

Michael R. Guerriere: We did continue to see growth in our SGP customer base in Q1 up 6% from Q4 and 21.9% year-over-year.

While our pandemic-related spending began to decline in the second half of last year, it increased in December and continued to be elevated through the first quarter due to the omicron surge.

Michael R. Guerriere: While our pandemic-related spending began to decline in the second half of last year, it increased in December and continued to be elevated through the first quarter due to the Omicron surge.

Pandemic-related spending increased to $42.2 million in the first quarter, up $10 million from Q4.

Michael R. Guerriere: Pandemic related spending increased to $42.2 million in the first quarter, up $10 million from Q4.

Additional COVID funding I mentioned earlier resulted in a net recovery of COVID costs of $8.5 million for the quarter.

Michael R. Guerriere: Additional COVID-19 funding, I mentioned earlier, resulted in a net recovery of COVID-19 costs of $8.5 million for the quarter.

With that, I'll turn it over to our CFO , David bacon, to provide commentary on our consolidated and segmented financial results for the first quarter. David?

Michael R. Guerriere: With that, I'll turn it over to our CFO, David Bacon, to provide commentary on our consolidated and segmented financial results for the first quarter. David.

David.

David E. Bacon: Thanks Michael. I'll start by providing an overview of our consolidated results for the quarter, followed by some financial highlights of our individual business segments and liquidity positition.

David E. Bacon: Thanks, Michael. I'll start by providing an overview of our consolidated results for the quarter, followed by some financial highlights of our individual business segments and liquidity position.

Before I begin, I should note that, as a result of the agreement to sell our retirement living operations, we have classified this segment as discontinued and held for sale in Q1 of '22, and as you'll recall in Q4, we did the same with our Saskatchewan long term care operations pending their transition to the Saskatchewan health authority, which we continue to work towards completing in 2022.

David E. Bacon: Before I begin, I should note that as a result of the agreement to sell our retirement living operations, we have classified this segment as discontinued and held for sale in Q1 of 2022.

and as you'll recall in Q4, we did the same with our Saskatchewan long term care operations pending their transition to the Saskatchewan health authority, which we continue to work towards completing in 2022.

David E. Bacon: And as you'll recall, in Q4 we did the same with our Saskatchewan long-term care operations pending their transition to the Saskatchewan Health Authority, which we continue to work towards completing in 2022.

As such these operations are excluded from our results from continuing operations in our financial statements and MD&A and in our review of our financial results today, unless otherwise indicated.

David E. Bacon: As such, these operations are excluded from our results, from continuing operations, in our financial statements and MDNA and in our review of our financial results today, unless otherwise indicated.

 We've included a slide in the appendix of this presentation, illustrating the contribution to revenue, NOI and AFFO of our discontinued operations and further details can be found in our Q1 MD&A and Note 14 of our interim financial statements.

David E. Bacon: We've included a slide in the appendix of this presentation illustrating the contribution to revenue, NOI and AFFO of our discontinued operations, and further details can be found in our Q1 MDNA and Note 14 of our interim financial statements.

The retirement living operations contributed $1.3 million to AFFO in Q1 of '22 and $7.1 million or approximately $0.08 per share for the year end of December 31, 2021.

David E. Bacon: The retirement living operations contributed $1.3 million to AFFO in Q1 of 2022 and $7.1 million, or approximately eight cents per share, for the year ended December 31st, 2021.

The Saskatchewan long term care operations generated an AFFO loss of approximately $1.4 million in each of Q1 of '22 and for the 21-year or approximately a loss of one and a half cents per share.

David E. Bacon: The Saskatchewan long-term care operations generated an AFFO loss of approximately $1.4 million in each of Q1 of 2022 and for the 2021 year, or approximately a loss of one and a half cents per share.

As Michael mentioned, we're scheduled to close the sale of the retirement operations this coming Monday. Settlement of the estimated purchase price will be in cash of approximately $254.1 million and assumption of mortgages by the buyer uncertain of the communities of $53.4 million.

David E. Bacon: As Michael mentioned, we're scheduled to close the sale of retirement operations this coming Monday. Settlement of the estimated purchase price will be in cash of approximately $254.1 million and assumption of mortgages by the buyer uncertain of the communities of $53.4 million.

Cash proceeds will be used to repay all remaining outstanding debt related to the retirement operations, of approximately $117.1 million.

David E. Bacon: Cash proceeds will be used to repay all remaining outstanding debt related to the retirement operations, of approximately $117.1 million.

Net proceeds are estimated to be approximately $125 million, subject to customary post-closing working capital adjustments.

David E. Bacon: Net proceeds are estimated to be approximately $125 million, subject to customary post-closing working capital adjustments.

The netbook value of the property and assets related to the retirement living operations is approximately 220 million at closing, resulting in an estimated gain of $75 million that will be recognized in our second quarter results through discontinued operations.

David E. Bacon: The netbook value of the property and assets related to the retirement living operations is approximately $220 million at closing, resulting in an estimated gain of $75 million that will be recognized in our second quarter results through discontinued operations.

Turning now to Slide 10 in our consolidated results. As in prior quarters, we have included a detailed schedule of the impact of COVID 19 on our revenues operating expenses, NOI and EBITDA on Slide 18 in the presentation.

David E. Bacon: Turning now to slide 10 on our consolidated results. As in prior quarters, we have included a detailed schedule of the impact of COVID-19 on our revenues, operating expenses, NOI and EBITDA on slide 18 in the presentation. We continue to receive funding support under various provincial programs, which included an additional $13.3 million in the quarter from the Government Ontario related to unfunded COVID-19 costs in our long-term care segment incurred in 2021. As a result, we reported a net recovery of COVID-19 costs, positively impacting our consolidated adjusted EBITDA from continuing operations of $8.5 million for the quarter and an estimated after-tax impact on the FFO of approximately $6.3 million or seven cents per share.

We continue to receive funding support under various provincial programs, which included an additional $13.3 million in the quarter from the government Ontario related to unfunded COVID costs in our long-term care segment incurred in 2021.

As a result, we reported a net recovery of COVID costs positively impacting our consolidated adjusted EBITDA from continuing operations of $8.5 million for the quarter, and an estimated after tax impact on AFFO of approximately $6.3 million or $0.07 per share.

Our consolidated revenue in the first quarter increased 3.7% or $10.8 million to $305.7 million for the first quarter of 2021.

David E. Bacon: Our consolidated revenue in the first quarter increased 3.7% or $10.8 million to $305.7 million for the first quarter of 2021.

This increase was driven primarily by long-term care funding enhancements, including $2.9 million in retroactive long-term care funding in Manitoba and home healthcare billing rate increases, partially offset by reduced COVID-19 funding of $3.9 million, and the impact of the timing on our long-term care flow through funding.

David E. Bacon: This increase was driven primarily by long term care funding enhancements, including $2.9 million in retroactive of long term care funding in Manitoba and home health care billing rate increases, partially offset by reduced COVID-19 funding of $3.9 million, and the impact of the timing on our long term care flow through funding. NOI decreased by $3.3 million from $36.3 million in Q1 2021 due to the $9.7 million of Canadian- Canada emergency wage subsidy perceived by ParaMed in Q1 of 2021. Excluding this impact, our Q1 2022 NOI would have decreased by $6.4 million to $33 million, with a consolidated NOI margin of 10.8% up from $26.6 million and a margin of 9% in Q1 of 2021. NOI improvements were driven by higher net COVID-19 recoveries of $7.9 million and retroactive long term care funding of $2.9 million, partially offset by higher operating costs and the impact of the loss of occupancy protection for Ontario long term care homes.

NOI decreased by $3.3 million from $36.3 million in Q1 '21, due to the $9.7 million of Canadian -- Canada emergency wage subsidy received by Pyramid in Q1 of '21. Excluding this impact, our Q1 '22 NOI would've decreased by $6.4 million to $33 million with a consolidated NOI margin of 10.8% up from $26.6 million and a margin of 9% in Q1 of '21.

NOI improvements were driven by higher net COVID 19 recoveries of $7.9 million and retroactive long-term care funding of $2.9 million, partially offset by higher operating costs and the impact of the loss of occupancy protection for Ontario long-term care homes.

Our consolidated adjusted EBITDA decreased $4.2 million from Q1 of '21 to $19.6 million due to the factors impacting NOI just noted, including higher administrative costs, primarily attributable to higher transaction related professional fees and increased IT costs, offset by lower COVID-related administrative costs.

Excluding the impact of the wage subsidy received by Pyramid in Q1 of '21 our consolidated adjusted EBITDA increased by $5.5 million as compared to Q1 of '21.

AFFO per share was $0.13 in Q1, down 38.4% from the prior period, excluding the impact of the wage subsidy received by Pyramid in the prior year, the year-over-year decline in AFFO per share is $0.01 cent.

Turning to our individual business segments on Slide 11, our long-term care operations saw revenue increase by $10 million or 5.3% in Q1 driven by funding enhancements, including the $2.9 million in retroactive funding in Manitoba and $9.1 million in Ontario flow through funding partially offset by reduced funding for COVID-19 of $2.7 million and the impact of the loss of occupancy protection.

Speaker 3: Driven by funding enhancements, including the two point nine million in retroactive funding, ammanitoba and nine point one million in Ontario flow through funding, partially offset by reduced funding for COVID-19 of two point seven million, and the impact of the loss of occupancy protection.

NOI increased by $10.8 million for the same period last year to $26.6 million and represented 13.3% of revenue, largely due to the net COVID recovery of $9.9 million driven by the $13.3 million of COVID funding received in the first quarter related to 2021 costs. These increases were offset by higher labor, utilities and the impact of the occupancy protection.

Speaker 3: Noi increased by 10.8 million for the same period last year to 26.6 million and represented 13% of revenue, largely due to the net COVID-19 recovery of nine point nine million, driven by the 13 million of COVID-19 funding received in the first quarter related to twent thousand and 21 costs.

These increases were offset by higher labor utilities and the impact of the occupancy protection.

We believe the improving trend we experienced in occupancy levels in 2021 will return, as the impacts of the Omicron wave moderate and subside. In Q1, our occupancy declined 120 basis points from Q4.

Speaker 3: These increases were offset by higher labor utilities and the impact of the occupancy protection.

Speaker 3: We believe the improving trend we experienced in occupancy levels in 2021 will return, as the impacts of the omaronwave moderate and subside. In Q1, our occupcy declined one hundred and twenty basis points from Q4.

Occupancy protection in Ontario, long-term care homes expired at the end of January, and we are required to achieve 97% occupancy over the remainder of 2022 to receive full funding, excluding ward style beds no longer in use.

Speaker 3: Occupancy protection. In Ontario, long-term care homes expired at the end of January and we are required to achieve 90% 97% - occupancy over the remainder of 2022 to receive full funding, excluding ward style beds no longer in use.

Our average adjusted occupancy for the two months ended March 31 was 94.9%. We are tracking a small number of homes in Ontario that are currently tracking below the 97% requirement for full funding and have targeted plans in place to attempt to recover the occupancy shortfall over the balance of 2022.

Speaker 3: Our average adjusted occupancy for the two months ended March thirty-first was 95%. We are tracking a small number of homes in Ontario that are currently tracking below the 97% requirement for full funding and have targeted plans in place to attempt to recover the occupancy shortfall over the balance of 2020 -two.

Turning to Slide 12 in our home healthcare segment, revenue grew $1 million or 1% in Q1 driven by billing rate increases and a 0.8% volume increase partially offset by reduced COVID-19 and pandemic pay funding of $1.2 million.

Speaker 3: Turning to Slide 12, in our home health care segment, revenue grew one million or 1% in Q1, driven by billing rate increases and a 1% volume increase, partially offset by reduced over 19 and pandemic pay funding of one point two million.

Excluding the wager subsidy received in Q1 of '21 pyramids NOI declined by $3.6 million to $2.7 million with an NOI margin of 2.7% from $6.3 million and 6.4% margin in the same period last year.

Speaker 3: Excluding the wage of subsidy received in Q1 of 21 pamid's NOI declined by three point six million to two point seven million, with an NOI margin of 3% from six point three million and 6% margin in the same period last year.

The decline in NOI reflects an increase in unfunded COVID costs of approximately $2 million and higher cost to address our staffing capacity challenges, which resulted in higher wages and benefits, recruitment, travel and training costs as well as higher IT costs in the quarter.

Speaker 3: The decline in NOI reflects an increase in unfunded COVID-19 costs of approximately $2 million and higher cost to address our staffing capacity challenges, which resulted in higher wages and benefits recruitment, travel and training costs, as well as higher it costs in the quarter.

Which resulted in higher wages and benefits for recruitment, travel and training costs, as well as higher it costs in the quarter.

The surge in COVID 19 cases among Pyramid staff had a significant impact on our workforce capacity in the quarter, leading to a sequential decline in volumes of 4.8% and a narrowing of our NOI margins.

Speaker 3: The surgeon COVID-19 cases among pairid staff had a significant impact on our workforce capacity in the quarter, leading to a sequential decline in volumes of 5% and a narrowing of our NOI margins. Staffing shortages across the entire health sector, including both nursess and PSWs, continues to be a challenge and was further exasperated by the prevalence of community transmission caused by the omron variant.

Staffing shortages across the entire health sector, including both nurses and PSWs continues to be a challenge and was further exasperated by the prevalence of community transmission caused by the Omicron variant.

In the first quarter, more than 2100 Pyramid staff took some amount of COVID-related sick leave peaking at more than 900 staff absent in the last week of January of '22.

Speaker 3: In the first quarter more than 2100 pyamid staff took some amount of COVID-related sick leave, peaking at more than 900 staff absent in the last week of January of twenty-two.

We continue to focus on supporting the safe return of our staff who are on leave, building capacity through our large scale recruiting efforts in hiring through our internal training programs. Our PSW college partnerships and in-house training programs graduated and hired more than 170 caregivers in Q1 and we are in track with our target of an additional 600 staff from these programs for all of '22.

Speaker 3: We continue to focus on supporting the safe return of our staff who are on leave, building capacity through our large-scale recruiting efforts and hiring through our internal training programs. Our PSW college partnerships and in-house training programs graduated and hired more than 170 caregivers in Q1 and we are in track with our target of an additional 600 staff from these programs for all of twenty-two.

On a sequential basis, excluding the impact of the net COVID costs and adjusted for the retroactive billing rates recorded in Q4 of '21 the NOI margin in Q1 was 5.5% down from 8.8% in Q4.

Speaker 3: On a sequential basis, excluding the impact of the net COVID-19 costs and adjusted for the retroactive billing rates recorded in Q4 of 21. the NOI margin in Q1 was 6%, down from 9% in Q4, and.

This decrease in NOI margins in the quarter was largely due to the staffing capacity challenge impacting volumes and higher related operating cost as noted earlier.

Speaker 3: This decrease in NOI margins in the quarter was largely due to the staff and capacity challenge impacting volumes and higher-related operating costs noted earlier.

Consistent with our experience in '21, we do anticipate that we will resume our recovery in our home healthcare volumes as the effects of the pandemic recede and our staffing capacity recovers.

Speaker 3: Consistent with our experience in 21. we do anticipate that we will resume our recovery in our home health care volumes as the effects of the pandemic receed and our staffing capacity recovers. We're also encouraged by the recent announcements from the ontaro government of an additional one billion in funding for the home health care segment over the next three years, included in the April 22 budget and the making of the three -dollar hour PSW wage enhancement permanent.

We're also encouraged by the recent announcements from the Ontario government of an additional $1 billion in funding for the home healthcare segment over the next three years included in the April '22 budget and the making of the $3 hour PSW wage enhancement permanent.

We believe these are important investments by the government and will help us drive the recovery needed in staffing across the sector to address the existing and growing demand for home healthcare.

Speaker 3: We believe these are important investments by the government and will help us drive the recovery needed and staffing across the sector to address the existing and growing demand for home health care.

Turning now to Slide 13 and our other operations, assist contract services and SGP group services segments, the underlying demand for our services continues to be strong and SGP now supports over 98,800 in third party residents, an increase of 21.9% from Q1 of '21 and up 6% from Q4 of last year.

Speaker 3: Turning now to Slide 13 and our other operations: assist, contract services and GP group services segments.

The underlying demand for our services continues to be strong and GP now supports over 98.8 thousand third-party residents, an increase of 22% from Q1 of 21 and up 6% from Q4 of last year.

Speaker 3: The underlying demand for our services continues to be strong and GP now supports over 98.8 thousand third-party residents, an increase of 22% from Q1 of 21 and up 6% from Q4 of last year.

Q1 '22 revenues declined 2.1% largely due to lower management services revenue and NOI decreased by 900,000 to $3.7 million due to increased staff and IT costs to support the growth initiatives in this segment.

Speaker 3: Q1 22, revenues declined two point 1%, largely due to lower management services. Revenue at NOI decreased by nine thousand to three point seven million due to increased staff and it costs to support the growth initiatives in the segment.

Finally turning to our overall financial position, at the end of Q1, we remain well positioned with consolidated cash of $118 million and $73 million in undrawn credit facilities.

At the end of Q1, we remain well positioned, with consolidated cash of one hundred and eighteen million and seventy-three million in undrawn credit facilities.

Speaker 3: Finally Turning to our overall financial position.

Speaker 3: At the end of Q1, we remain well positioned, with consolidated cash of one hundred and eighteen million and seventy-three million in undrawn credit facilities.

In addition, we have closed construction financing facilities for our three long-term care redevelopment projects under construction and have an aggregate of $151 million in available undrawn construction financing available on these facilities.

Speaker 3: In addition, we have closed construction financing facilities for our three long-term care element projects under construction and have an aggregate of 151 million in available undrawn.

The estimated $125 million in net proceeds to be realized on closing of the retirement living sale will provide added flexibility to allocate capital strategically, including in our long-term care redevelopment program to fund the Rivera transactions, consider other potential acquisitions as well as capital structure initiatives.

Speaker 3: Its construction financing available on these facilities. The estimated 125 million in net proceeds proceeds to be realized on closing of the retirement living sale will provide added flexibility to allocate capital strategically, including in our long-term care redevelopment program, to fund the rivera transactions. Consider other potential acquisitions as well as capital structure initiatives.

Excluding the impact of the retirement living debt, which is being fully repaid or assumed on the closing of the sale, our maturity profiles improved with only modest debt maturities coming due over the next two years remaining and our proforma debt to gross book value at 34.6%.

Speaker 3: Excluding the impact of the retirement living debt which is being fully repaid or assumed. On the closing of the sale, our maturity profiles improved, with only modest debt maturities coming due over the next two years remaining, and our pro forma debt-to gross book value at 35%. With that, I'll passed the call back to Michael for his closing remarks.

With that, I'll pass the call back to Michael for his closing remarks.

Michael R. Guerriere: Thanks David.

Michael R. Guerriere: Before we turn to your questions, I just want to highlight the commitment of our team members and the incredible dedication they display every day in caring for our clients, residents and their families.

Speaker 4: Thanks David. Before we turn to your questions, I just want to highlight the commitment of our team members and the incredible dification they display every day in caring for our clients,' residents and their families.

Throughout the pandemic, now entering its third year, our team members have remained steadfast in their commitment to protect the health of the most vulnerable in our society. For this, we are extremely grateful.

Speaker 4: Throughout the pandemic, now entering its third year, our team members have remained steadfast in their commitment to protect the health of the most vulnerable in our society.

For this, we are extremely grateful.

We are optimistic about the opportunities for growth in our long-term care and home healthcare segments.

Speaker 4: For this, we are extremely grateful.

The combination of the sale of our retirement operations and the Revera and Axium transactions focuses the organization on those areas where we have the greatest expertise and scale.

Speaker 4: We are optimistic about the opportunities for growth in our long-term care and home health care segments. The combination of the sale of our retirement operations and the revere and axiom transactions focuses the organization on those areas where we have the greatest expertise in scale.

As we are faced with the demographic reality of relentlessly increasing demand, we are dedicated to advancing the delivery of much needed, high-quality home healthcare and long-term care.

Speaker 4: As we are faced with the demographic reality of relentlessly increasing demand, we are dedicated to advancing the delivery of much needed, high-quality home health care and long-term care.

Thank you for your continued interest and support, and with that we'd be happy to take any questions you might have. Operator?

Speaker 4: Thank you for your continued interest and support, and with that, we'd be happy to take any questions you might have operator.

Operator.

Operator: Thank you. We will now begin the question-and-answer session. To join the question queue, you may press star one on your telephone keypath. You will hear a tone acknowledging your request. If you are using a speaker phone, please pick up your handset before pressing the star key. To withdraw your question, please press star two. We will pause for a moment as callers join the queue.

Speaker 5: Thank you. We will now begin the question-and-answer session. To join the question Q, you may press star one on your telephone key path. You will hear a phone acknowledging your request. If you are using a speaker phone, Please pick up your handset before pressing this starkey. To withdraw your question, please press star twowe will pause for a moment as callers join the que.

If you are using a speaker phone, please pick up your handset before pressing the star key.

To withdraw your question, please press star two.

We will pause for a moment as callers join the queue.

Operator: Thank you. Our first question is from Scott Fromson with --

Speaker 6: Thank you our first question is from Scot bromson with.

Scott Douglas Fromson: CIBC. Just a quick question on inflation. How are you thinking of it besides staffing and agency costs. How are you thinking of its impact on future cost structure?

Speaker 7: So you see, just a quick question on inflation. How are you thinking of it?

besides staffing and agency costs, how are you thinking of its impact on future cost structure?

And agency costs. How are you thinking of its impact on future cost structure?

Speaker 8: Besides besi, DES staffing an agency costs, how are you thinking of its impact on future cost structureyes, I think Scot. I mean the.

Michael R. Guerriere: Yeah, I think Scott, from an inflation perspective, on our cost structure, it's always been a bit of a challenge in the sense that over the long-term the historical trend has been that the inflation impacts do work their weight through the different lines of business with ultimately funding changes and rate increases that address things, but it does tend to happen over longer periods of time. Obviously in the short term, we're seeing some acute increases in some of our costs. I think on the operating side of things, we are seeing -- generally seeing support starting to come into the sector from the various provincial governments acknowledging that. So we are seeing rate increases coming through on the LTC side or continued funding on COVID. The announcement included in the budget for the $1 billion over three years in the home care side, details still to come on that, but we do expect that some component of that billion in funding will go into rate increases that will help us address the increases in our labor costs that we've been experiencing, but we have to wait for the full details on that to come out. On the construction redevelopment front, it is a concern at the current moment. I think that just the magnitude of kind of the increases that the sector's seeing broadly, not just in seniors care, obviously, but broadly in construction does leave us in a situation where the construction in our projects, we are needing to work with our partners and the government on looking at the capital funding program, which at the moment doesn't have an inflation component or an indexation component in it. So obviously there's some work to be done there to continue to progress on the construction side, on the redevelopment.

From an inflation perspective. You know the on our cost structure it's always been a bit of a challenge in the sense that over the long term the historical trend has been that the inflation, inflation impacts do work their weight through the different lines of business with ultimately know funding changes and rate increases that that address things. But the it does tend to happen, you know, over longer periods of time. Obviously in the short term seeing some acute increases in in some of our costs. I think on the operating side of things you know we are seeing generally seeing support starting to come into the sector from the various provincial government acknowledging that. So we are seeing rate increases coming through on the L T C side or continued funding on COVID-19, the announcement from included in the budget for the billion dollars over three years in the home care side. Know, details still to come on that, but we do expect that some, some component of that billion and funding will go into rate increases that will help us address the increases and our labor costs that we've been experiencing. But you we have to wait for the full details on that to come out. On the on the construction redevelopment front, it is, it is concern the current moment. I think that just the magnitude of kind of the increases that the sector seeing broadly- not just in seniors care obviously, but broadly and construction does- does leave us in a situation where the construction and our projects we are needing to work with our partners and the government on, on looking at the capital funding program which at the moment doesn't have an inflation component or an indexation component in. So obviously there's some work to be done there to continue to progress on the construction side, on the redevelopment.

Speaker 3: From an inflation perspective, the on our cost structure. It's always been a bit of a challenge in the sense that over the long term the historical trend has been that the inflation, inflation impacts do work their weight through the different lines of business with ultimately funding changes and rate increases that address things, but it does tend to happen over longer periods of time. Obviously, in the short term we're seeing some acute increases in some of our costs. I think on the operating side of things we are seeing generally seeing support starting to come into the sector from the various provincial governments acknowledging that. So we are seeing rate increases coming through on the L? C side or continued funding on COVID-19. The announcement from.

Speaker 3: Included in the budget for the billion dollars over three years in the home care side. Details still to come on that, but we do expect that some some component of that billion and funding will go into rate increases. That will help us address the increases and it our labor costs that we've been experiencing. But we have to wait for the full details on that to come out. On the on the construction redevelopment front, it is it is a concern at the current moment. I think that just the magnitude of kind of the increases that the sector seeing broadly- not just in seniors care obviously, but broadly- and construction does- does leave us in a situation where the construction and our projects we are needing to work with our partners and the government on. On looking at the capital funding program which, at the moment, doesn't have an inflation.

Speaker 3: Component or an indexation component in it. So obviously there's some work to be done there to continue to progress on the construction side, on the redevelopment.

Scott Douglas Fromson: Do you have any concern that the focus on seniors and long-term care will sort of wean after the election in Ontario?

Speaker 9: Do you have any concern that the focus on on seniors and long-term care will sort of wan after the eleions in Ontario?

Michael R. Guerriere: Well it's always a consideration, but I think the government with its new legislation has enshrined in that legislation, the move to four hours of care per resident day by 2025 the bed allocations for the capital program over the next five to seven years have all been made now all those, all those letters have been issued. So none of that is a guarantee, but certainly the program has been laid out over the next number of years. And it would take a government deciding to actively roll that back to you know, to see us kind of step away from these historic investments. The other thing that that's there that hasn't really worked its way through the system is the federal commitment to long-term care. We've seen a couple of smaller provinces come to an agreement with the federal government on the spending of some of those funds, but there's more to come on that front as well. So there's some federal support coming. So, yes, I think it's a risk given all of the competing needs for government support in healthcare and outside of the healthcare sector, but they certainly have made an effort to enshrine the capital and the staff programs on a multi-year basis.

Speaker 10: Well it's always a consideration but I think the the government with its new legislation has enshrined in that legislation the move to four hours of care per residident day. By 2025 the B allocations for the capital program over the next five to seven years have all been made. Now all all those letters have been issued. So none of that is a guarantee but certainly the program has been laid out over the next number of years and it would take.

A government deciding to actively roule that back to, to see, to see us kind of step away from these historic investmentsthe other thing that that's there that hasn't really worked its way through the system is the federal commitment to long term care. We've seen a couple of smaller provinces come to an agreement with the federal government on the spending of some of those funds, but there's more to come on that on that front as well. So there's some, some federal support coming. So yes, I think it's a risk, given all of the competing needs for government support in health care and outside of the health care sector. But they certainly have made an effort: shrine the capital and the staff programs on a multiyear basis.

Speaker 4: A government deciding to actively roll that back to, to see, to see us kind of step away from these historic investmentsthe other thing that that's there hasn't really worked its way through the system is the federal commitment to long term care. We've seen a couple of smaller provinces come to an agreement with the federal government on the spending of some of those funds, butthere's more to come on that on that front as well. So there's some, some federal support coming. So yes, I think it's a risk, given all of the competing needs for government support in health care and outside of the health care sector. But they certainly have made an effort to shrine the capital and the staff.

Scott Douglas Fromson: Great. That's excellent color. Thanks gentlemen, I'll turn it back.

Speaker 4: Programs on a multiyear basis. Great, that's. That's excellent color. Thanks gentlemen, I'll turn it back.

Operator: Thank you. Our next question comes from Jonathan Kelcher with TD Securities. Please proceed with your question.

Speaker 6: Thank you. Our next question comes from Jonathan culter with TD security. Please preceed their question.

Jonathan Kelcher: Thanks. First question, just on the home healthcare business, I guess Omicron slowed it down in the first quarter. Are you still seeing staff shortages as we go through Q2 here? How is April versus last year?

Speaker 11: S first question. Just on the home health care business. They get on mcron, slowed it down in the first quarter. Are you still seeing stoaf shortages as we go through Q2 here how? How is April versus last year?

Michael R. Guerriere: Yeah, I think Q2 is continuing to have some challenges, not as bad as Q1 in terms of the severity of, of, of the Omicron infection rates, but we're certainly seeing elevated absenteeism as we go into, as we go into Q2. We're also seeing significant kind of post pandemic turnover that I think we're seeing quite broadly throughout the labor market so that's been a challenge. It's hard to know how long that will continue. But I think we put in three pretty good kind of sequential quarters of growth in both volumes and margins last year when the pandemic was at a relative low point. And we feel that we've got the systems in place to return to that kind of a cadence as soon as the as soon as the pandemic recedes. And as I mentioned in my remarks, the last two years in mid may, we've seen the pandemic go quiet ascent just on seasonal basis. And so we're certainly hopeful that that will happen again.

Speaker 4: Yes I think Q2 is is continuing to have some challenes- not as bad as Q1 in terms of the severity of of the omaron infection rates, but we're certainly seeing elevated absenteism as we go into. As we go into Q2 we're also seeing significant kind of post pandemic turnoover that I think we're seeing quite broadly throughout the labor market. So that that's that's been a challenge. It's hard to know how long that you that will continuebut you I think we put in three pretty good kind of sequential quarters of of growth in both volumes and margins last year when the pandemic was at a relative low point.

Speaker 4: And we feel that we've got the systems in place to return to that kind of cadence as soon as the, as soon as the pandemic receis- and as I mentioned in my remarks, I mean the last two years- in mid-May we've seen the pandemic go quiescent, just just on the seasonal basis, and so we're certainly hopeful that that will happen again.

Jonathan Kelcher: Okay. And then for just in that business the home healthcare workers, they I'm assuming, they're responsible for their own, like getting from home to home. So they'd pay their own gas.

Speaker 11: Okay and then for just in that business, the home health care workers state. I'm assuming they're responsible for their own like.

theyi'was assuming they're responsible for their own like.

Getting from home to home, So they'd PID their own gas.

Michael R. Guerriere: Well, there's a series of -- we reimburse our staff for travel costs. So that's built into our agreements with them. So they are responsible for paying those costs, but then we reimburse them.

Speaker 11: Getting from home to home So they D pay their own gas. Well, there's a series of yes. We reimbursed our staff for travel costs.

So that's that's built into our agreements with them, So they are responsible for paying those costs, but then we reimburse them.

Speaker 4: So that's that's built into our agreements with them, So they are responsible for paying those costs. But then we reimburseed them.

Jonathan Kelcher: Okay. So that's something that should be obviously a little bit more expensive this year than last year?

Michael R. Guerriere: Yes.

Speaker 11: Okay So that's something. I should be obviously a little bit more expensive this year than did last year.

Jonathan Kelcher: Okay. And then just you guys talked a little bit about capital initiatives with, with some of the proceeds you're going to get, it would share buybacks sort of be in the bucket you're looking at.

Speaker 12: yesokay. And then just you guys talked a little bit about capital initiatives. With some of the proceeds you're going to get, it would share buybacks, sort of being in the bucket you're looking at.

Michael R. Guerriere: We're considering everything at the moment. I think our focus right now is closing the transaction on Monday, is on the regulatory approval process for the other transactions, and of course, we're waiting to see how quickly our redevelopment program moves forward, which will dictate the capital needs for that. So I think we've got still some work to do before we make final decisions on how best to deploy the capital and when.

Speaker 4: We're considering everything at the moment I think our our focus right now is closing that transaction on Monday is on the regulatory approval process for for the other transactions and of course. We're you know. We're we're waiting to see how quickly our redevelopment program moves forward which will dictate the capital needs you know for that. So I think we've got still some work to do before we a final decisions on on how best to deploy the capital and whenok that's helpful just one more quick one Just on the L C the way it works. Here. 95% or take for February . In March is the 97% of full year average or it is it sort of done by month. It's a full year. It's a full year average well. Typically it's an annual calendar measurement and.

Jonathan Kelcher: Okay. That's helpful. Just one more quick one on just on the LTC the way it works, you were 95% give or take for February and March, is the 97% a full year average, or is it sort of done by month?

Michael R. Guerriere: It's a full year. Yeah, it's a full year average. Well, typically it's an annual calendar measurement and this year, it's going to be an 11 month year just given they had that COVID-related occupancy protection in place for January. So, the test is 97% for the 11 months.

Just given the. They had that COVID-19 related occupancy protection in place for January , So the test is 97% for the 11 months.

Michael R. Guerriere: So it's something we measure as we go and have an outlook as well. But yeah, we are, for the two month period we're 94.9% on the new basis of the calculation. So that's a number we'll be tracking and talking about as we move through the year. And obviously the goal there is to get that number to 97% for the 11 months.

Jonathan Kelcher: Ok thanks. I'll turn it back.

Operator: Thank you. Our next question is from Tal Woolley with National Bank Financial. Please proceed with your question.

Tal Woolley: Yes. I just wanted to talk a little bit more about the labor situation. Most of your employees are unionized, correct? So, like, in terms of the rate you're paying, you have visibility on that, correct?

Most of your employees are unionized correct. So like in terms of like the.

Rate you paying. You have visibility on that correct.

Speaker 13: suition.

Speaker 14: Most of your employees are unionized, correct? So, like in terms of like therate you're paying, you have visibility on that, correct?

Multiple speakers: [Michael Guerriere] Well, yes. You mean visibility going forward as well? Is that what you're asking? [Tal Woolley] Well, yes, I'm saying like, you've got contracted wage rates for the next few years with your unions right? So the issue with respect to labor costs is really, it seems like it's an availability issue. It's not so much a wage rate issue.

I add't I'.

Speaker 15: It well yes't, I'm yes.

Yes.

You mean visibility, visibility going forward. As well as that, we are asking: well Yeah thinkly, you've got, like you know, contracted wager, contracted wage rate for the next two years with your unions right. So the issue with respect to labor cost is really, it seems, like a play. It's an availability issue 'snot so much awage of rate issue.

Speaker 4: You mean visibility, visibility going forward. As well as that, we are asking: well Yeah exactly, you've got, like you know, contracted wageres, contracted wage rates for the next two years with your unions, right. So the issue with respect to labor costs is really- it seems like a play of it-'s- an availability issue. It's not so much a wage of rate issue.

Michael R. Guerriere: Yes, I think availability is the biggest factor right now. Yes, that's true. And just as we're talking about home care, just over half of our staff is unionized, so it's not 100% union.

Speaker 4: Yeah I think avail availability is the biggest is the biggest factor right now yes that's that's that's true and just just you know as we're talking about home care just over our half of our staff is unionized. So that's not it's not 100% unionokayand then.

Tal Woolley: Okay. And then if we say, you know, just going back to the question about like travel costs, and obviously you've got fuel costs to the roof, so clearly that's going to have an impact. The way the contract works with governments, is it basically gross revenue to you and the costs are on your own, or is it more you're on your own for the costs or is it more like LTC where it's a bit more prescribed in terms of how --

And then.

Or if we say, you know, just going back in a question like travel, travel costs obviously, like you've got fuel, fuel cost to the roof, So clearly that's going to, that's going to have an impact. Just the way the contract works with the government.

Speaker 14: Or if we say, just going back to a question like travel, travel costs and obviously, like you've got fuel, fuel cost to the roofs, So clearly that's going to, that's going to have an impact. Just the way the contract works with the governments.

Is it basically gross revenues- you and the co, the costs are on your own- or is it more you're on your own to for the costs? Or is it more like LTC, where it's a bit more?

Speaker 13: Is it basically gross revenues- you and the co, the costs are on your own- or is it more you're on your own to for the costs? Or is it more like LTC, where it's a bit more prescribed ter?

Described you know, tril ATE hopper.

Michael R. Guerriere: It's very much the former. Our revenue is paid as a single rate, and then we're responsible for the costs.

Speaker 10: It's very much the former. So we're, our revenue is paid as a single, as a single rate, and then we're responsible for the costs.

Tal Woolley: Got it so okay, makes sense, and then. You talked a little bit about turnover post pandemic. Do you have a sense of where your staff is going, and is it a certain --  is it nurses, is it PSWs, is it care assistants, or is it just kind of across the Board?

You talked a little bit about turnover post pandemic. Do you have that sense of where your staff is going as, and is it a certain? Is it nurses, is it PSWs, is it Caris, it things like, or is it just kind of across the Board?

Speaker 13: Got it. So okay, makes sense. And then you know you talked a little bit about turnover, you know, post pandemic, do you have a sense of where your staff is going as, and is it a certain you know? Is it nurses, is it PSW's? Is it careious list like, or is it just kind of across the Board?

Michael R. Guerriere: Well, there's several dynamics here. First of all we have, let's say a competition within the healthcare sector itself where we've got hospitals adding beds, long-term care adding staff and then of course the expansion in home care. So there is significant movement between those segments of the healthcare sector. So, we certainly see people moving to other opportunities as they get experience. We have staff that come into our organization, get training and experience, and then move on to other opportunities. Then I think the other thing that's happened is for certain groups that we employ as part of our home care operations for general housekeeping and supporting people in their independent living, those people can also leverage that experience to move into the hospitality sector. And of course we've seen in the last six months, a big opening up of hospitality, which is increasing competition for labor as well. So there's dynamics within healthcare and there's dynamics across with other sectors and that combined with the generally very high participation right now from an employment perspective means that labor competition is heightened at the moment

First of all, we have a a, let's say, a competition within the health care sector itself where we've got hospitals adding beds, long term care, adding staff and that, of course, the expansion and home care. So there is significant movement between those segments of the health care. You know the health care sector, So you know we certainly see people, you know, moving to moving to other opportunities as they get experience. We have staff that come into our organization, get training and experience and then move on to move on to other opportunities. Then I think the other thing that's happened is you know certain for certain groups that that we employ as part of our home care operations for general housekeeping and supporting people in their independent living. Those people can also leverage that experience to move into the hospitality sector and of course we've seen in the last six months a big opening up of hospitality which is increasing competition for for labor as well. So there is there's dynamics within health care and their dynamics across with with with other sectors and you know that, combined with the generally very high participation right now in the- you know, in from an employment perspective, means that that labor competition is heightened at the moment.

Speaker 16: Well' there's there's several dynamics here first of all. We have a a let's say a competition within the health care sector itself where we've got hospitals adding beds long term care adding staff and then of course the expansion and home care. So there is significant movement between those segments of the health care you know the health care sector. So you know we certainly see people you know moving to moving to other opportunities that they get experience. We have staff that come into our organization get training and experience and then move on to move on to other opportunities. Then I think the other thing that's happened is.

Speaker 10: You know certain for certain groups that that we employ as part of our home care operations for general housekeeping and supporting people in their independent living. Those people can also leverage that experience to move into the hospitality sector and of course we've seen in the last six months a big opening up of hospitality which is increasing competition for for for labor as well. So there's there's dynamics within health care in their dynamics across with with other sectors and you know that combined with the generally very high participation right. Now in the you know in from an employment. Perspective means that.

Tal Woolley: And are you also seeing a dynamic where the industry is suffering from availability challenges, and so you're employing agencies, but the agencies are getting contracted back to you at a higher typical rate than you would have for the staff. So are you seeing employees move from staff to deciding to go work for an agency instead?

Staff to decline to go work for an agency and said.

Michael R. Guerriere: That's a dynamic that is true in the long term care side of the business. Not in home care -- we don't use agencies in home care for the most part, but in long-term care we do tend to see a surge in agency use during periods of heightened absenteeism. So when we get a lot of outbreaks, agency use tends to go up but then we manage it back down again when things go back to normal. So that tends to be a transient kind of situation as opposed to something that is on a long term trend.

Speaker 10: absenteism. So when we get a lot of outbreaks, agency use tends to go up, but then we manage it back down again when when things go back to normal, So that that that tends to be a transient kind of a situation as opposed to something that is on a long term trend. Sorry, I guess what's more specifically if I am a- you know, a- care worker at an L P C facility on a Union contract.

Tal Woolley: Sorry, I guess just more specifically, if I'm a care worker in an LTC facility on a union contract, is it possible for me to go work for an agency instead and make more money?

On a Union contract.

Is it possible for me to go work for an agency andstead and make more money?

Michael R. Guerriere: Well theoretically, yes, but you'd be moving to a situation of stable employment to unstable employment right. Because by its very nature, it's short term - there's no commitment. So, while that might happen in a few cases, generally doing that is kind of putting your long-term employment at risk.

Speaker 14: Is it possible for me to go work for an agency stead to make more moneywell, theoretically yes, but you'd be moving to a situation of unstable employment. To unstable employment right, because it's it's by it's very nature, it's, it's short term. There's no, there's no commitment. So you know, while that might happen, and if few, you know, in a few cases, generally doing that is is kind of putting your long term employment at risk. It OK, and then' just going back to the restructuring, the of the L T C operationswhen you start the redevelopment of certain of your class C facilities with axium, can you talk a bit about how the pricing of the sale of those assets into the J V will work?

So while that might happen in a few, in a few cases, generally doing that is kind of putting your long-term employment at risk.

Tal Woolley: Got it. Okay. And then just going back to the restructuring of the LTC operations, when you start the redevelopment of certain of your Class C facilities with Axiom, can you talk a bit about how the pricing of the sale of those assets into the JV will work?

When you start the redevelopment of certain of your class C facilities with axiom. Can you talk a bit about how the pricing of the sale of those assets into the JV will work?

Michael R. Guerriere: Sure. The structure of the deal is the fact the joint venture we're going to establish will acquire an 85% interest in the home. We are going to be the manager of the home within the JV on a sort of typical management agreement structure, and earn management fees to continue to operate that home. The pricing, the details of the mechanics have a couple of different elements to it around, how we arrive at the components. There's a development fee, a management fee. There's some other consideration. But in the end we're looking at selling the homes into the JV in cap factors in the 6.5 to 6.75 quarter range. So there's a lot of ways we get there, but if you on an implied kind of cap, you're in that sort of 6.5 to 7 range.

Speaker 17: Sure the the structure of of the deal is the acts. The joint venture we're going to establish will acquire and 85% interest in the home. We are going to be the manager of the home within the JV on a sort typical management agreement structure or management fees to continue to operate that home. The pricing. The details of the mechanics have a couple of different elements to it around how we arrive at the components. There's a development fee management fee. There's some other consideration. But in the end we're looking at selling the homes into the JV in cap factors in the six and a half to six and three quarter range. So.

There's a lot of ways we get there. But if you on an implied kind of cap, you're in that sort of six and a half to seven range.

Speaker 3: There's a lot of ways we get there. But if you on an implied kind of cap, you're in in that sort of six and a half to seven range and your intention amendment So it'snot.

Tal Woolley: And your intention then, so it's not, because I thought one of the ways you could have structured it too, was you would maybe take less for the homes and then participate less on the CapEx side in the redevelopment. But it sounds like you're going to do it sort of like, try and do it as everything at market as best you can through the JV?

You know, 'cause I thought one of the ways you could have structured to is you would, you know, maybe take less for the homes and then participate less on the CapEx side in the redevelopment. But it sounds like you're going to do it sort of like trying to do it as everything at market as best you can through the jby.

Speaker 14: Because without one of the ways you could have structured it. You would maybe take less for the homes and then participate less on the CapEx side in the redevelopment. But it ssounds like you're going to do it sort of like trying to do it as everything at market. As best you can through the JV yes.

Michael R. Guerriere: Yes.

Tal Woolley: Okay. And then how much NOI right now comes from the Class C beds?

And then how much NOI right now comes from the class fee beds.

Speaker 18: Okay and then how much NOI right now comes from the class E bedswe don't generally break that. I don't think we've broken that out before. So if I use the proxy like just the bedcount, am my in the ballpark?

Multiple speakers: [Michael Guerriere] We don't generally break that -- I don't think we've broken that out before. [Tal Woolley ] If I use the proxy, like just for the bed count, am I in the ballpark?

Michael R. Guerriere: Yes. I'd say if you took our NOI and extrapolated across the beds, I'd say the C beds run at a slightly low -- they run lower NOI than an A bed home just given the composition of the home and basic versus preferred split and the funding. So, if you looked at our long term pre-COVID NOI margins in long term care of sort of 11.5 to 12, you'd have the C bed slightly below that average and the A beds a bit above, but you could do a proration off the beds.

Speaker 3: Yes I'd say if you have took our NOI and extrapolated across the beds. I'd say the se beds run it slightly low. They run lower NOI than an AED home just given the composition of the home and basic versus preferred split and the funding So.

So if you look at our long-term preCOVID, NOI margins in long-term care of sort of 11 and a half to twelve.

Speaker 3: So if you look at our long-term preCOVID, NOI margins in long-term careod of sort of 11 and a half to twelve.

You'd have the se bed slightly below that average in the ab-beds a bit above. But you could do a prooration off the beds.

Speaker 3: You'd have the se bed slightly below that average in the ab-beds a bit above. But you could do a prooration off the bedsokay and then for the occupancy bonus for the year.

Tal Woolley: Okay. And then for the occupancy bonus for this year, if you hit 97%, everything's cool. If you come in, let's say at like 95% for the year, what's sort of the amount of dollars we're talking about in terms of -- that you end up giving up as a result?

If you, if you hit 97%, everything's cool. If you come in, let's say, at like 95% for the year, what sort of the amount of dollars we're talking about? In terms of that, you end up giving up as a result.

Speaker 19: If you look, if you hit 95%, everything's cool. If you come in, let's say, like 95% for the year, what sort of the amount of dollars we're talking about in terms, So that you end up giving up as a result? It's, it's. There isn't a lot of homes. To be honest, we're tracking a handful of homes in Ontario now that that you know need a recovery plan that the tops team is focused on. I think sitting here today at a 94.9, we're talking about a million to to a million three potential impact that we're going to be working to mitigate. So it's not, it isn't, it isn't big, but but it is straight to NOI. So it is, you know. But that's kind of a magnitude of how we're feeling today, given where we're at. I mean, if we have a some type of resurgence of a seventh wi or something different, but where we sit today, that's kind of a magnitude of the problem we're looking to solve.

Michael R. Guerriere: Yes, there isn't a lot of homes to be honest. We're tracking a handful of homes in Ontario now that need a recovery plan that the ops team is focused on. I think sitting here today at a 94.9, we're talking about a 1.2 million to 1.3 million potential impact if we're going to be working to mitigate. So it isn't big, but it is straight to NOI. But that's kind of the magnitude of how we're feeling today, given where we're at. If we have some type of resurgence of a seventh wave or something different, but where we sit today, that's kind of the magnitude of the problem we're looking to solve.

Tal Woolley: Okay. And then Michael, just lastly, like, I appreciate that all of the, you know, this, all these changes, you made are going to take quite some time to actually play out. But if you think about 5 to 10 years down the road, do you have an idea in your head of like, how much NOI you expect to be generating from principal investment in real estate and operations of long term care homes versus how much will come from service operations and management fees, that kind of stuff?

I appreciate that all of the this all these changes you made are going to take quite some time to actually play out but if you think about.

Speaker 13: Okay and then Michael, just lly, like I appreciate that all of the you know this, all these changes you know you made are going to take quite some time to actually play out, but if you think about you know.

five 10 years down the road.

Can you?

Do you have I on your head of like how much NOI you expect to be generating from principal investment in real estate operations of long-term care homes versus how much will come from service operations?

Speaker 14: five 10 years down the road. Can you do you have I on your head of like how much NOI you expect to be generating from principal investment in real estate operations of waterterm careir homes versus how much will come from service operations and management fees? That cus.

And management fees back coto FF.

Michael R. Guerriere: Yeah, well it's a good question, but our focus at this point has been to create a number of growth platforms for our organization, so that we have opportunities for organic growth in terms of home care, in terms of long term care, management services, in terms of the services that we provide to other operators. And these transactions are setting us up to be able to do that, to be able to predict what the mix might be five to seven years out really is difficult because you know, with our partnership with Axium, we see lots of opportunity for new Greenfield builds in all the provinces that we operate. We know that the demographic projections that actually just came out with the recent census release are predicting that by 2040 the number of people over age 85 will triple in that period of time. And of course, that's our prime market focus and that's where our demand comes from. So we could see quite a lot of expansion. What the government decides to do in terms of the mix of long-term care or home care in terms of servicing that aging demographic still remains to be seen. It's an issue of some debate and I think people will be feeling their way forward kind of year over year, as we see what happens with the wait lists and what happens with demand, et cetera. So I'm really not sure, but our agenda is to be able to capitalize on wherever the growth materializes, whether it be in people's own homes or in homes of our -- that we operate. Either way, we'll be able to capitalize on that demographic demand.

But our focus at this point has been to create a number of.

Speaker 4: Yes well it's a good question but our focus at this point has been to create a number of.

A number of growth platforms for our organization, So that we have opportunities for organic growth in terms of, of course, home care, in terms of long-term care management services, in terms of the services that we provide to other operators, and these transactions are setting us up to be able to do that.

Speaker 10: A number of growth platforms for our organization, So that we have opportunities for organic growth in terms of, of course, home care, in terms of long-term care management services, in terms of the services that we provide to other operators, and these transactions are setting us up to be able to do that.

To be able to predict what the mix might be five to seven years out really is is difficult because with our partnership with axiom we see lots of opportunity for new greenfield builds. In all the provinces that we operate we know that the the demographic.

Speaker 4: To be able to predict what the mix might be five to seven years out really is is difficult because with with our partnership with axiom, we see lots of opportunity for new greenfield builds in all the provinces that we operate. We know that the the demographic projections that actually just came out with the recent census release our predicting that by by two 20 40, the number of people over age eighty five will triple in that in that period of time. And of course that's our, that's our prime market focus and that's where our, our demand comes from. So we could see quite a lot of expansion. What the government decides to do in terms of the mix of long term care or home care.

Projections that actually just came out, with the recent census releaseour predicting that by by 20- 40, the number of people over age 85 will triple in that in that period of time. And of course that's our, that's our prime market focus and that's where our, our demand comes from, So we could see quite a lot of expansion. What the government decides to do in terms of the mix of long term care or home care, in terms of servicing that aging demographic, still remains to be seen. It's an issue of some debate and I think people will be feeling their way forward, kind of year over year, as we see what happens with the weight lists and what happens with demand ETC. So you know, I'm really not sure, but but our, you know our agenda is to be able to capitalize on, on wherever the growth materialize, whether it be in people's own homes or in homes of our, that we operate either way, will be able to capitalize on that demographic demand.

Speaker 10: In terms of servicing that, that aging demographic still remains to be seen. It's an issue of some debate and I think people will be feeling their way forward kind of year over-year, as we see what happens with the weight lists and what happens with demand et cetera. So I'm really not sure. But but our, our agenda is to be able to capitalize on wherever the growth materialize, whether it be in people's own homes or in homes of our we operate. Either way, we'll be able to capitalize on that demographic demand.

Tal Woolley: Got it. Alright, thanks very much gentlemen. I appreciate it.

Tal Woolley: Thanks, Tal.

Speaker 14: Got it all right. Thanks very much. Shall appreciate it's. Thanks, dalas. A reminder: if you would like to ask your question, please press star woneall on your telephone. keepingthank you. There are no further questions at this time. I would like to turn the floor back over to Julian thounton for any closing renoning.

Operator: As a reminder, if you would like to ask a question, please press star one on your telephone keypad.

Operator: Thank you. There are no further questions at this time. I would like to turn the floor back over to Jillian Fountain for any closing remarks.

Jillian E. Fountain: Thank you operator. That concludes our call for today. This presentation is available on our website as are the call in numbers for an archived recording. Thank you everyone for joining us today, and have a good weekend. Please don't hesitate to give us a call if you have any questions.

Speaker 2: Thank you, operator. That concludes our call for today. This presentation is available on our website, as are the call and numbers for an archiive recording. Thank you everyone for joining us today and have a good weekend. Please don't have its hesitate to give us the call if you have any questions.

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