Sonida Senior Living (NYSE: SNDA) has grown occupancy and revenue each quarter in the last year – a sign to CEO Kimberly Lody that the company’s current strategy is paying off.
With revenue and occupancy heading in the right direction, Lody said the first-quarter results represent “the beginning of incremental NOI expansion.”
Dallas-based Sonida’s communities added 100 basis points of average occupancy in the first quarter of 2022, reaching 82.3%. A little more than a third of Sonida’s 76 communities were at least 90% occupied as of May, Sonida COO Brandon Ribar said.
Sonida reported revenue of $50.8 million in the first quarter of 2022, up 12.5% from the same quarter last year and 2.2% from 4Q22. Revenue per occupied unit (RevPOR) increased 3.2% in 1Q compared to the same quarter last year to about $3,600.
The company’s NOI margin had increased to 20.2% in the first quarter of 2022, an increase of 200 basis points from 4Q21, when its NOI margin was 18.2%.
“Our Covid-19 recovery strategy was to focus on occupancy and revenue growth, knowing that NOI would follow,” Lody said during the company’s first-quarter earnings call with investors and analysts Monday.
Looking ahead, the company will focus on three priorities to continue its momentum: Developing people-centered culture and programming, investing in communities programming capital improvements and optimizing staffing and purchasing practices to reduce costs.
“We believe that by continuing to focus on three major priorities, we will provide short and long term incremental value,” Lody said.
Last year, Sonida began managing three communities in Arkansas for Chicago-based Ventas (NYSE: VTR). The operator in February acquired two senior living communities in Indiana for $12.3 million, and has since grown occupancy at the communities by nine percentage points.
The latest acquisitions represent a “new phase of growth” for the company. Looking ahead, the company will continue to look for acquisition opportunities, though Sonida has a “pretty specific criteria” in mind, according to Lody.
“We want to make sure that if we do acquire another community or communities, that the fundamentals are there [and] that we can layer on our platform that we’ve developed here over the last couple of years,” Lody added.
Sonida is also addressing the cost of agency labor. In the first quarter of 2022, labor costs increased $3.2 million, more than 65% of which was related to contract labor and overtime pay.
Sonida implemented flexible employee staffing models that allow the company to rely on fewer agency staffers, according to Ribar.
“Early trends for Q2 show a favorable reduction in year-over-year employee turnover,” he said.
The company also hired Kevin Detz as its new CFO in May. Detz is a veteran of the hospitality industry, having come to the organization from global hotel management company Aimbridge Hospitality.
“I’m looking forward to working with Kim, Brandon and the entire leadership team to execute on the company’s growth strategy,” Detz said on the call Monday. “This growth strategy includes a keen focus on our cost to serve, corporate G&A [and] maximizing our incremental margins on growth while raising occupancy push up.”
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