In the November issue of The SeniorCare Investor, we raised the question of how long Sonida Senior Living could go with its cash burn rate. Well, the burn rate has decreased, which is good, but they are still not out of the woods.
In a case of one step forward, two steps back, weighted average occupancy increased year over year by 270 basis points and by 50 basis points sequentially to 83.7% in the third quarter. Slower than we would want to see, but decent.
The problem is that the same-community net operating margin declined by 140 basis points year over year and 100 basis points sequentially to 19.6%. And, RevPOR was up only 2.9% year over year to $3,682. That is not good enough.
With the damaging impact of inflation, Sonida does not seem to be keeping pace with rate increases, and this they need to do in a hurry. Increases of 8% to 12% are probably needed. The good news is that G&A expense is finally coming down from the stratosphere, and they are now trying to focus on other costs, such as food which declined month over month.
In an odd similarity to Brookdale Senior Living, Sonida’s quarter-ending spot occupancy in September dropped 20 basis points from the end of the second quarter. In my mind, this means that both companies are entering the cold months from a little weaker point than they should be. Time will tell.
