Extendicare Inc.

Welcome to the Extended Care, Inc. Fourth Quarter 2022 Analyst Conference Call. As a reminder, all participants are in lesson-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 Gillian Thompson, Vice President and Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to Extended Care's fourth quarter and year-end 2022 results conference call. With me today are Extended Care's President and CEO, Michael Greer, and our Senior Vice President and CFO, David Bacon. Our Q4 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 March 17. The replay numbers and passcodes have been provided in our press release, and an iCard recording of the call is also 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 suggest that you refer to those filings. With that, I'll turn the call over to Michael.

Thank you, Gillian, and good morning. We begin our presentation today with an update on the impact of COVID-19 on our operations. During the quarter, COVID-19 continued its endemic presence in our community, driving outbreaks and staff absenteeism across the sector. Over 80% of our own long-term care homes experienced a COVID outbreak in Q4. Fortunately, High rates of vaccination have dramatically reduced the incidence of severe illness, so the virus has a much milder impact on our resident population than earlier in the pandemic. Despite the persistence of outbreaks in our homes, occupancy continues its gradual recovery. However, outbreaks are keeping costs elevated as we continue to invest the resources required to help protect our residents, clients, and staff. To date, we have received funding to cover approximately 90% of our COVID-related costs, leaving a cumulative unfunded COVID cost for continuing operations at $31.4 million. In December, the Ontario government announced further prevention and containment funding of $180 million to assist with COVID-19 costs through to March 2023. Alberta has announced its pandemic funding will end in June. Manitoba has indicated funding will continue at least until the end of March. While we are grateful for the government's support to date, we expect to continue to experience volatility in our financial and operating results until pandemic impacts recede. We anticipate that some portion of the $15.5 million in cumulative unfunded COVID costs we have incurred in long-term care will be recovered in 2023, but we can't be sure of the quantum or the timing. In home health care, our operations returned to growth in Q4 as staff absenteeism eased. Limited availability of caregivers continues to constrain our ability to meet the strong demand for services. We are working to alleviate this issue with a continuing focus on large-scale recruiting and enhanced retention programs, supplemented by our ongoing college partnerships and in-house training programs. Pandemic-related costs across the business are dropping as the pandemic recedes. We anticipate that lower costs will result in stronger margins in 2023. Turning to strategic transactions on slide four, we made significant progress last year toward completing our strategic transformation while managing the challenges caused by the pandemic. During the year, we created a strategic partnership with Axiom and Revera, which, once approved, will drive significant capital-efficient long-term growth. We also refocused our operations with the sale of our retirement living segment and our Saskatchewan long-term care homes. The funds from these asset sales are being directed toward advancing our redevelopment program and returning value to shareholders through our share buyback program. Collectively, these transactions support our strategic agenda to focus on long-term care and home health care, leveraging our deep expertise and scale to drive growth using a less capital-intensive business model. Work continues to prepare for the completion of the Revera and Axiom transactions. Regulatory approvals in Ontario and Manitoba are in progress. And in the meantime, we continue to work with Revera and Axiom on a comprehensive integration plan to ensure a smooth and efficient transition following approval. We have incurred approximately $9 million year to date in strategic transformation costs related to these activities. The aggregate consideration to be paid on closing these transactions remains an estimated $70 million. Following the completion of the sale of our retirement living segment, we initiated a normal course issuer bid. purchasing approximately 5 million common shares for cancellation and returning $35 million in capital to shareholders in 2022. Moving to slide five, our redevelopment program has gained momentum with enhanced funding from the Ontario government. In November, the government introduced a time-limited capital funding supplement of $35 per bed per day to help counter significant inflationary pressures and rising interest costs that had otherwise prevented new long-term care homes from starting construction. This enhanced program is available to eligible applicants who receive construction approval by August 2023. We are working toward a goal to break ground on up to four new projects this year. As a reminder, our Ontario Redevelopment Program consists of 20 projects representing 4,248 new and replacement long-term care beds. Three projects are currently under construction and are projected to open between the third quarter of 2023 and the first quarter of 2024. We continue to advance the balance of our projects to ensure they are construction ready. in anticipation of funding that may be available in future years. We are working collaboratively with our industry partners and the Ontario government to make all of our projects economically feasible, as we still have not overcome the economic barriers faced by projects in the Greater Toronto Area and in small rural markets. Now let's turn to a few operational highlights On slide six, despite the ongoing impact of the pandemic in the form of persistent outbreaks in our homes, long-term care average occupancy improved 100 basis points in the quarter over Q3. As I mentioned earlier, we continue to face ongoing staffing shortages and inflationary pressures that impact our operating costs. These factors, together with occupancy clawbacks and funding increases that lag inflation, have negatively impacted our financial performance. In our home healthcare segment, we experienced a 2% sequential increase in our average daily volumes in the fourth quarter, due in part to a decline in staff absenteeism. We are encouraged by the return to growth as the pandemic recedes and our recruiting and enhanced retention programs help us to meet continued strong demand for our services. We were delighted to announce that Paramed retained its status as a nationally accredited service provider, having been awarded exemplary standing by Accreditation Canada, the highest level an organization can receive. This award is a reflection of our dedicated team members, our high-quality programs, and our commitment to service excellence. It is also a testament to the exceptional care our home health staff provide to our patients and clients each and every day, especially in this challenging environment. In our managed services segment, we continue to see strong growth in our SGP customer base, which increased 2.6% from Q3 and 17.7% from the prior year. With that, I'll turn it over to our CFO, David Bacon, who will comment on our consolidated and segmented financial results for the fourth quarter.