I know we live in a litigious country, and public companies have their teams of lawyers and PR consultants to protect them, telling them to disclose a minimum amount of information. But don’t you think it is time for some straight talk? I do. We are coming out of the pandemic distress, slowly for some and not as slow for others. But
with census growth not what it was in the second and third quarters of 2021, let’s admit that this will be a long slog.
We need both large census increases combined with margin increases. We will not get both as long as labor costs keep rising and inflation levels remain at 40-year records. And it is doubtful we will get back to the census levels of 2014-2015 anytime soon, which really should be the target. In my meager opinion, talk of “pre-pandemic” levels is camouflage. But most public company CEOs, whether providers or REITs, have not been as direct as they should be about future prospects for their companies, and how they will get there. It happens on earnings calls as well as interviews and panels. Part of the problem may be that they really have no idea, because we have never experienced an operating environment quite like this, ever. Still, they always seem overly “cheery” about rising from the COVID ashes. Shareholders keep waiting.
One CEO, Shankh Mitra of Welltower, speaks his mind on quarterly calls, at times lecturing his audience. You may not like what he says, you may not agree with him, but you know where he stands in terms of who comes first (his shareholders), how he is going to maximize their return (buy low, sell high), and that he has no problem leaving everyone else in the dust. So far it is working, but that strategy is not for all operators. Even he can be overly optimistic, but at least when asked something, he is not afraid to admit he does not have a clue. Most people are afraid to say that, fearing it is a sign of weakness, or letting shareholders know that they really don’t have a clue. The public company CEOs need to be more upfront and honest about what is going on, how long it will really take to get back to “normal,” and some of the pain that may be necessary. Soft answers to questions about performance and the future are not what investors, lenders, employees and other stakeholders need at this point in time. The bottom line is that it is time to get real, and give us some straight talk.
