Welltower(WELL)2022-08-10 17:34Financial Data and Key Metrics Changes - Total revenue increased by 29% year-over-year, driven by organic growth and significant capital deployment over the last 18 months [7] - Same-store senior housing operating portfolio revenue rose by 11.5% year-over-year, with a 5% occupancy growth and 4.5% REVPOR growth [7] - Same-store NOI growth was 15.4% in Q2, with annual EBITDA exceeding 0.86, representing an 8.9% year-over-year growth [53][54] Business Line Data and Key Metrics Changes - The outpatient medical business saw a 2.5% same-store NOI growth year-over-year, with occupancy increasing by 30 basis points [32] - Senior housing operating platform revenue growth was led by the U.S. and UK, with respective growth rates of 13.1% and 14.7% [33] - Senior housing triple-net portfolio same-store NOI increased by 9.9% year-over-year, driven by improved rent collections [55] Market Data and Key Metrics Changes - The overall market experienced a rebound in demand, particularly in the second half of July, leading to increased move-ins [15][36] - Average occupancy for the portfolio in July was up over 40 basis points in the same-store portfolio [36] - The traffic in July was comparable to June, indicating a recovery trend [36] Company Strategy and Development Direction - The company is focused on long-term earnings and cash flow growth, emphasizing occupancy, rates, labor costs, and external growth opportunities [64] - A significant capital deployment of $1.1 billion occurred in Q2, with a robust pipeline of high-quality opportunities [22][24] - The company is transforming its operating platform to enhance operational excellence and efficiency in senior housing [39][47] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from COVID-19 but noted that the impact is lessening, with quicker rebounds observed [65] - There is confidence in driving occupancy and rate growth due to a sharp increase in the senior population and reduced new supply [68] - Management remains focused on long-term value creation despite short-term challenges [30] Other Important Information - The company has about 120 senior housing properties generating negative cash flow, which could significantly improve as they stabilize [10][96] - The company is implementing a data analytics platform to enhance operational results and customer experience [47][50] Q&A Session Summary Question: Can you discuss the impact of high-frequency data on future projections? - Management acknowledged the noise in high-frequency data and emphasized the importance of focusing on long-term trends despite short-term fluctuations [73][76] Question: What are the expectations for pricing power and margins in the senior housing space? - Management noted that street rates are significantly increasing, which should translate into continued pricing power and improved margins [82][84] Question: How is the company addressing labor cost growth in different care segments? - Management indicated that capital allocation is driven by opportunity sets rather than labor costs, which can be priced in [88][89] Question: What is the trajectory of recurring CapEx spend? - Management explained that the increase in CapEx is due to a combination of deferred spending and value-add opportunities from recent acquisitions [92][93] Question: What is the NOI drag from the 120 senior housing facilities generating negative cash flow? - Management refrained from providing specific numbers but indicated that these properties are expected to stabilize faster than the overall portfolio [95][96]