Extendicare Inc.

Thank you for standing by. This is the conference operator. Welcome to the Extended Care, Inc. First Quarter 2021 Analyst Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Jillian Fountain for any opening remarks. Please go ahead.

Thank you, operator. And good morning, everyone. Welcome to Extended Care's first quarter 2021 results conference call. With me today is Extended Care's President and CEO, Michael Greer, and Senior Vice President and CFO, David Bacon. Our first quarter 2021 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. A replay of the call will be available later this afternoon until May 28th. The replay numbers and passcodes have been provided in our press release, as well as an archived recording of this call will also be available on our website. Before we get started, Please be reminded that today's call may include forward-looking statements. Such statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied today. We have identified such factors in our public filings with the securities regulators and refer you to those filings. With that, I'll turn the call over to Michael.

Thank you, Gillian, and good morning, everyone. Before we get to our first quarter results, I will take a few moments to provide an update on our activities related to the pandemic. It has been more than a full year since the pandemic struck, and this pernicious virus remains a threat to our community and the world. Fortunately, vaccines have proven very effective, and we've seen a dramatic decline in the infection rates experienced by our long-term care homes and retirement communities. However, with the emergence of new, more virulent virus variants and significantly higher rates of community transmission in the third wave, we must remain ever vigilant in our fight against COVID-19. We are focused on keeping our people safe, all the while remembering those we have lost, all of the much loved friends, colleagues, or family members. We recognize the tremendous toll that the past year has taken on our residents, team members and their families. We are hopeful that with increased vaccine supply and accelerated distribution, we're in the final phase of the pandemic. In the meantime, our devoted caregivers continue to work tirelessly to care for and support our residents and clients. And I thank each of them for their selfless commitment and ongoing effort. As the third wave brought significantly higher case numbers across the country, we have continued to invest in critical programs and support for our residents and staff. We have further enhanced testing protocols with rapid testing for all long-term care staff and visitors across Canada and have increased testing frequency, particularly in areas where there are high levels of community transmission. We are now administering over 24,000 rapid tests each week through our programs. Currently, approximately 90% of our long-term care residents and 86% of our retirement residents have been fully vaccinated with two doses. Our extensive education and awareness campaign for staff along with the provision of paid time off and reimbursement of travel expenses for vaccination, has resulted in 74% of our long-term care staff and 67% of our retirement staff having received at least their first dose as of last week. Community health care workers became eligible for vaccination more recently, so the Paramed vaccine campaign is now also underway. Each week, hundreds more of our staff are joining the ranks of those vaccinated, coming together in a community effort to stifle the virus once and for all. We are very encouraged by the impact vaccinations and increased testing have had on our communities. As of today, there's only one active resident case of COVID-19 across our 69 long-term care homes and retirement communities. We also support our extended care assist clients as they implement similar testing and vaccination programs. These have resulted in similarly positive outcomes. During the last year, extended care added more than 1,000 new frontline caregivers to our long-term care homes. We did this to support enhanced infection control protocols and to fortify our homes against COVID-19 outbreaks. As we look to the post-pandemic future, the expanded care team positions as well to enhance our quality of care in line with the Ontario government's long-term care staffing plan that targets four hours of care per resident day. We are also on track with our internal training programs that were launched last year within Paramed. They will result in 600 new caregivers being added to the Paramed team this year. Governments continue to do their utmost to support our COVID-19 prevention efforts, and we appreciate both the financial support we have received and the policy commitments they have made to address longstanding challenges in the long-term care sector. With that, let's turn to some first quarter highlights starting on slide four. As with the past few quarters, our results continue to be significantly impacted by COVID-19. Our costs to combat the pandemic in Q1 totaled $46.2 million, exceeding related government funding by $2.3 million in the quarter. $18.8 million of the government support recorded in Q1 was for reimbursement of costs incurred last year, which resulted in lower net COVID costs for Q1 than we experienced in the previous quarter. We were very gratified to see further recovery in our home healthcare volumes in Q1, overcoming the detrimental effects of significant wave two lockdowns. We are also seeing back office efficiencies contribute to wider NOI margins, a direct result of the new system implementation we completed in Q4 last year. Occupancy levels in our retirement communities held up well, ending Q1 in line with Q4. Again, a great result in light of the lockdowns in the quarter. The SGP customer base continued to grow at double-digit rates, also contributing to NOI growth in the quarter. In April, we were also very pleased to be able to break ground on our second construction project in Ontario under the new capital funding program. More on that on slide five. Here we see more detail about our redevelopment progress. We are advancing our plan to replace aging infrastructure with new modern homes that are designed to provide improved functionality, safety and comfort for our residents. Of the 22 long-term care redevelopment projects we have proposed to the Ontario government, requisite beds have been granted for nine so far. After so many years of advocating for replacement of aging facilities, it is gratifying to see these projects move forward. Those nine projects with bed allocations represent a $500 million investment by extended care in the future of long-term care in the province. We are targeting to have six of these projects under construction by the end of 2022, with an additional three projects planned for 2023. Construction of our Sudbury home continues, joined now by the new project underway in Kingston. This new 192-bed long-term care home will replace an existing 150-bed Class C home in that city. It will feature 114 private rooms and 78 semi-private rooms. Our investment in this home totals $45.4 million with completion expected in the first quarter of 2023. Our third project is just outside Ottawa in Stittsville, Ontario. It is advancing through the approval process and we expect to begin construction on that home later this year. This is the first of four projects being planned for the Ottawa area and is a new 256 bed home that will replace C beds from other extended care homes in that region. Subsequent to quarter end, we entered into commitment letters for $95.9 million in committed construction financing for our Sudbury and Kingston redevelopment projects. This will bolster our strong liquidity position and clearly demonstrates the financing community support of the sector and the new Ontario capital funding program. Moving to slide six and our long-term care segment, pandemic continued to significantly impact our operations. As a result of the numerous outbreaks experienced at the height of the second wave in the early part of the quarter, costs incurred to protect our residents and staff from COVID-19 were $48.1 million, up almost $14 million from the Q4 levels. Occupancy at our long-term care homes continued to decline in Q1 as a result of ongoing pandemic restrictions. Average occupancy declined to 82.9% in the quarter. Despite the lower occupancy levels, our revenue base was largely preserved as governments continue to support the sector through the challenges associated with new admissions during the pandemic. In Ontario, the government has extended basic occupancy protection funding until August 31st. The Ontario government is also working with the sector to incorporate revised occupancy models that will enable homes with ward-style four bedrooms to maintain a maximum of two residents per room until they are redeveloped to modern building standards. We anticipate that funding for these ward-style rooms will continue at the current level beyond August 2021. Through April, we have seen long-term care occupancy start to recover. Given the success of the vaccination program and the growing waiting list of people waiting for long-term care, both at home and in hospital, we anticipate that occupancy will increase steadily in the coming months. The Ontario government has continued to demonstrate a commitment to support the long-term care sector for costs related to the pandemic. In Q1, we received a total of $18.2 million, fully reimbursing us for COVID-related costs incurred in 2020 in our Ontario homes. In addition, the recent Ontario budget provided for an additional $600 million in COVID response funding for the fiscal year starting on April 1. We have invested in the safety of our people since the beginning of the COVID-19 pandemic without knowing whether we would be fully reimbursed for our costs, but with a view only to doing everything possible to protect our staff and those in our care. Over the past year, various governments have stepped up to provide funding to cover these substantial costs, and we are deeply grateful for the support we have received. On April 30, 2021, the Ontario Long-Term Care COVID-19 Commission delivered its final report, which included 85 recommendations. On the whole, the report calls for greater attention and resources for seniors' care and long-term care in particular. We welcome these recommendations and look forward to working with the government and our industry partners to make them a reality. Turning now to slide seven, our Paramed volumes continue to recover from the impact of the pandemic, with the rate of growth constrained somewhat by workforce capacity limitations. Our Q1 volumes are up 1.7% from Q4 2020 levels, and we have continued to see further growth in April, with our average daily volume for the four weeks ending May 2nd up 2.7% from Q1. Ongoing lockdown measures, particularly prolonged school closures in certain regions, have impeded the ability of some of our home healthcare caregivers to continue working, which has slowed the pace of recovery in our volumes. To meet the continued growth and demand for home health care services, we continue to make long-term investments in training new health care workers. Since their inception in Q3 of 2020, our in-house and college partnership training programs have graduated approximately 400 new caregivers, including over 100 who graduated in Q1. We expect to add approximately 600 new caregivers from these programs throughout 2021. Demand for home health care services continues to be robust, with new referrals exceeding levels experienced before the pandemic. We believe we are well positioned for further growth as we emerge from the crisis and address the gap between referrals and supply that has widened over the past year. We are also seeing the benefits of our completed cloud-based scheduling and clinical management system, particularly with improved efficiency in our back office operations and growing volumes of virtual care services. We expect that as the impact of the pandemic abates and volumes further recover, the scalability of the new system will drive further margin improvements. I'll now turn to David Bacon, our Chief Financial Officer, to provide insight into our financial results for the first quarter. David?