Earnings call transcript: Sienna Senior Living Q2 2025 revenue beats expectations

Sienna Senior Living Inc. reported a revenue of $253.61 million for Q2 2025, surpassing the forecast of $250.5 million by 1.24%. Despite the revenue beat, the company’s stock fell by 3.38% post-announcement, closing at $18.95. According to InvestingPro data, the company maintains a GREAT financial health score of 3.1, though it operates with a significant debt burden. The stock’s current valuation suggests it’s trading slightly below Fair Value, with relatively low price volatility historically.

Key Takeaways

• Sienna Senior Living’s Q2 revenue increased by 17.4% year-over-year.
• The stock price dropped by 3.38% after the earnings release.
• Same-property NOI rose by 8.2%, with occupancy rates improving.
• The company completed $315 million in acquisitions during the quarter.
• Sienna is preparing to launch significant new projects in Ontario.

Company Performance

Sienna Senior Living demonstrated robust growth in Q2 2025, with a 17.4% increase in revenue compared to the same quarter last year. The company’s strong performance is underpinned by improvements in both the retirement and long-term care segments. Sienna’s strategic acquisitions and development projects are expected to contribute to future growth, aligning with the rising demand for senior housing driven by demographic shifts.

Financial Highlights

• Revenue: $253.61 million, up 17.4% year-over-year.
• Same-property NOI: $45.1 million, up 8.2%.
• Operating FFO: $29.3 million, a 24.3% increase.
• AFFO: $24.1 million, up 21%.
• AFFO payout ratio: 89.5%.

Earnings vs. Forecast

Sienna Senior Living’s revenue of $253.61 million exceeded the forecast of $250.5 million by 1.24%. This marks a positive deviation from expectations, although the impact on the stock was negative, indicating potential investor caution or broader market influences.

Market Reaction

Despite the revenue beat, Sienna’s stock declined by 3.38%, closing at $18.95. This drop might be attributed to investor concerns over the high AFFO payout ratio or the broader market environment. The stock remains within its 52-week range, suggesting room for recovery.

Outlook & Guidance

Sienna Senior Living remains optimistic about its growth prospects, expecting the retirement segment’s same-property NOI to exceed 10% growth in 2025. The company is on track to add nearly $660 million in assets by Q3 2025 and anticipates further growth opportunities throughout the year.

Executive Commentary

CEO Nitin Jain highlighted the demographic shift fueling demand for senior housing, stating, "We are at the beginning of a major demographic shift." CFO David Hung emphasized the potential financial benefits of occupancy increases, noting that "Between 75% to 80% of any occupancy increase would fall to the bottom line."

Risks and Challenges

• High AFFO payout ratio may concern dividend sustainability.
• Potential market saturation as new developments come online.
• Macroeconomic pressures could impact consumer spending.
• Regulatory changes in healthcare funding could affect profitability.
• Supply chain issues may delay new project completions.

Q&A

During the earnings call, analysts inquired about potential new development projects in the Greater Toronto Area and the timing of construction funding subsidies. Sienna’s management confirmed their lease-up expectations for new properties and explored the potential for occupancy growth beyond 95%.

Full transcript - Sienna Senior Living Inc (SIA) Q2 2025:

Conference Moderator: Ladies and gentlemen, welcome to Sienna Senior Living Inc. Q2 twenty twenty five Conference Call. Today’s call is hosted by Nitin Jain, President and Chief Executive Officer and David Hung, Chief Financial Officer and Executive Vice President, Investor of Sienna Senior Living Inc. Please be aware that certain statements or information discussed in today’s call are forward looking statements, and actual results could differ materially. The company does not undertake to update any forward looking statement or information.

Please refer to the forward looking information and risk factors section in the company’s public filings, including its most recent ND and A and AIF for more information. You will also find a more fulsome discussion of the company’s results in its MD and A and financial statements for the period, which are posted on the SEDAR plus and can be found on the company’s website, sienaliving.ca. Today’s call is being recorded and a replay will be available. Instructions for accessing the call are posted on the company’s website and the details are provided in the company’s news release. The company has posted slides, which accompany the host’s remarks on the company website under Events and Presentations.

With that, I will now turn the call to Mr. Jain. Please go ahead, Jain.

Nitin Jain, President and Chief Executive Officer, Sienna Senior Living Inc.: Thank you, and good morning, everyone, and thank you for joining us on our call today. During the second quarter, we had strong results, we maintained our growth momentum, which is reflected in our financial results and the closing of a number of significant transactions. We completed $315,000,000 of acquisitions during the quarter and we remain on track to add at close to $100,000,000 by the end of this quarter, with further potential for acquisitions during the remainder of this year. In addition, we are preparing to open our long term care community in North Bay and our campus of care in Brantford over the coming weeks. Together these two developments are valued at over $220,000,000 Our increasing scale comes at a time when demand for senior housing is accelerating and supply remains highly constrained.

These dynamics are not only making our assets more valuable, but they’re also making Canadian senior living an increasingly attractive sector for long term investments. From an operational perspective, our key performance indicators in both business segments continue to trend in a positive direction in this quarter. Same property NOI increased by 12.3% in the Retirement segment and by 4.8% in the Long Term Care segment. Key drivers of the double digit increase in the retirement segment were a year over year occupancy increase and rental rate growth. Average same property occupancy was up 150 basis points year over year and has reached 92.1% in the second quarter.

Subsequent to the quarter, monthly occupancy increased to 93.1% in July and we remain confident to reach our stabilized occupancy target of 95% by Q1 of next year. Our robust sales platform and focused marketing campaigns continue to generate strong interest in residences. Our call center leads remain high and tours have increased by over 30% year over year. In July, we hosted a two day national open house at our residences, the first time we extended our open house over a two day period. And we are encouraged by the results.

We saw a 58% increase in attendance and 66% increase in deposits compared to a previous open house last year. In addition, we maintain a robust focus on hospital outreach and excellent relationships with healthcare and business partners in the communities we operate in. All of these initiatives are expected to drive increasing lead generation and future movements. Beyond the strong same property performance, we are pleased to see the results of our repositioning efforts and our optimization portfolio. Second quarter NOI increased by approximately 32% year over year in this portfolio with an average margin increase of approximately 400 basis points compared to the same period last year.

In long term care, our fully occupied homes with growing wait lists continue to add to the strength of our operating platform. Further supporting the long term care segment was an annual funding increase of 2.4% from the government of Ontario. This increase comes into effect as of 04/01/2025 and we expect similar announcements funding increases in line with inflation from governments in Alberta and British Columbia. In addition, our recently acquired portfolio in Alberta and acquisition of the final 30% interest in Nicola Lodge in British Columbia have added to the increase in total NOI in the long term care segment. Moving to slide six, our strategy of maintaining a diversified portfolio of private paid retirement residences and government funded long term care communities is reflected in our recent acquisitions.

During the second quarter, we added six properties to our platform in Ontario and Alberta. On April 1, we finalized the portfolio acquisition of four continuing care homes in key markets in Alberta and are excited about this expansion adding five forty beds in a province where we expect to continue our growth as opportunities arise. We also closed the acquisition of two retirement residences in Ottawa, adding suites in a market that has seen a significant turnaround in the recent past. In addition, we are further strengthening the footprint in the Greater Toronto Area with an acquisition of 133 suite high quality retirement residence and 192 bed long term care home, both properties are located in Mississauga and are expected to close in this quarter. Our highly engaged team and a structured approach to onboarding and integration allows us to grow at this accelerated pace.

As we expand further, will continue to enhance our transition processes to ensure a smooth and fast integration of the new properties, team members and residents into the Ciena’s operating platform. This not only supports a positive experience for all involved, but will also further strengthen our operating results. Moving to development, we completed Sienna’s first long term care redevelopment project in North Bay and we expect to welcome residents to their new home in the coming weeks. We couldn’t be proud of the significant milestone, which highlights our commitment to modernizing our long term care portfolio in Ontario. We are also finalizing our $140,000,000 campus of care in Brantford, Ontario.

The campus comprises of 160 redeveloped long term care beds and 147 retirement suites. We’re looking forward to welcoming our first residents and retirement residents at the end of this month and expect to open our long term care home by the end of the third quarter. Once fully operational, each of our redevelopment project is expected to grow Sienna’s AFFO per share by about 3%. At the July, the Ontario government announced enhancements to its construction funding program for long term care homes. The new program provides greater funding flexibility and addresses regional differences in construction costs, in particular with respect to higher building costs in the GTA.

While we continue to evaluate the revised funding and its implications on our development program, we feel optimistic about the significant improvement given that over 80% of our development pipeline is located in the Greater Toronto Area. Moving to slide eight, investing in our team members and building a workforce that is fully aligned is fundamental to grow and scale our operations. An important aspect of our growth story is the ownership culture we are building at Ciena and we are particularly proud of our share ownership program. Since launching the program in 2022, more than 10,000 team members have become shareholders. This year we made further enhancements by awarding additional shares to team members celebrating service milestones.

Many of the impactful initiatives that have helped us build highly engaged teams are also highlighted in our 2025 impact report, which we released yesterday. The report highlights the meaningful difference our 14,005 team members make every single day in the lives of our residents, families and the communities we operate in. With that, I’ll turn it over to David for an update on our financial results.

David Hung, Chief Financial Officer and Executive Vice President, Sienna Senior Living Inc.: Thank you, Nitin, and good morning, everyone. I will start on Slide 10 for financial results. In my commentary, in accordance with our MD and A disclosure, I will make reference to our operating results excluding one time items. In Q2 twenty twenty five, revenue on a proportionate basis increased by 17.4% year over year to $253,600,000 This increase was largely due to occupancy and rental rate growth as well as increased care revenue in the retirement segment. Adding to the increase were the contributions from our long term care platform including higher flow through funding for direct care, higher private accommodation revenue and additional revenue from acquisitions completed in 2025.

Same property NOI increased by 8.2% to 45,100,000 in Q2 twenty twenty five including by 12.3% in our retirement segment and by 4.8% in the long term care segment. In the retirement segment, same property NOI increased by $2,300,000 in Q2 twenty twenty five compared to last year largely as a result of improved occupancy and rate growth. These improvements in addition to generating higher care revenue and maintaining a strict focus on operating expenses supported the year over year two thirty basis point improvement of our same property operating margin. We expect the margin expansion to continue as we get closer to our 95% occupancy target and achieve additional efficiencies through scale. In addition to strong same property growth, we are progressing well with respect to our asset optimization initiatives which includes five assets in the company’s retirement portfolio.

These assets will benefit from a range of initiatives that target a better market fit including renovations, the change in suite mix, additional services or the alternative use of a property. Occupancy in our optimization portfolio increased by seven forty basis points year over year in Q2 adding to the strength of our results in the retirement segment. In the long term care segment, same property NOI increased by $1,100,000 Fully occupied homes with growing waitlist and continued improvements in private occupancy supported the year over year growth. During Q2 twenty twenty five, operating funds from operations increased by 24.3 to $29,300,000 compared to last year primarily due to higher same property contributions from acquisitions that were completed in the quarter. Adjusted funds from operations increased by 21% to $24,100,000 compared to last year.

The increase was mainly due to a higher OFFO offset by an increase in maintenance capital expenditures and lower construction funding income. On a per share basis, OFFO and AFFO per share decreased by 1.5% and by 4% respectively in Q2 twenty twenty five. Our Q2 twenty twenty five AFFO payout ratio was 89.5%, a three eighty basis point increase compared to Q2 twenty twenty four. The decrease in OFFO and AFFO per share and the increase in the company’s payout ratio are the results of the temporary dilution in connection with our equity issuances in August 2024 and February 2025, which made the significant expansion of our asset base possible. In total, raised $288,000,000 of equity by issuing 18,700,000.0 shares to fund our acquisitions and developments.

With the substantial amount of the capital invested in recent months and further capital being deployed during the remainder of Q3, we expect to realize the full benefit in the quarters ahead. Moving to slide 11, throughout the second quarter, we maintained our strong financial position and balance sheet. We ended the quarter with $313,000,000 in liquidity, 1,200,000,000.0 of unencumbered assets and no major debt maturities until Q1 twenty twenty six. Further adding to the strong financial position was the confirmation of the company’s Morningstar DBRS BBB rating with stable trends. This confirmation was announced by Morningstar DBRS on August 1 and was based on Sienna’s robust operating performance.

With that, I will turn the call back to Nitin for his closing remarks.

Nitin Jain, President and Chief Executive Officer, Sienna Senior Living Inc.: Thank you, David. We are at the beginning of a major demographic shift, the leading edge of the baby boomer generation is turning 80 and entering a stage of life where retirement living becomes a real consideration. This powerful tailwind combined with a strong balance sheet and a healthy pipeline of growth opportunities puts us in a great position to take advantage of the positive momentum in Canadian Senior Living. With respect to our growth targets, we expect same property NOI in our Retirement segment to benefit from continued occupancy and rental rate increases and we remain confident to reach a stabilized occupancy target of 95% by 2026. Based on our strong results during the first six months of twenty twenty five and our outlook for the balance of the year, we maintain our guidance for Ciena’s 2025 same property retirement NOI growth to exceed 10%.

Ciena’s long term care portfolio is expected to benefit from the continued stability of this segment, the twenty twenty five target for same property NOI growth excluding one time items is expected to be in low single digits. In addition, we expect Sienna’s growth through acquisitions and development to continue. So far we are on track to add nearly $660,000,000 of assets by Q3 of this year and we see potential for additional growth during the balance of the year. In June, we celebrated the fifteenth anniversary of Ciena being listed on the Toronto Stock Exchange. Our recent growth initiatives are built on the same diversified strategy that has driven our success over the past fifteen years.

Since our IPO, we added $2,300,000,000 of assets and grew from a long term care operator in Ontario to one of the largest and most diversified senior living companies in Canada. During this time, Ciena has delivered a total shareholder return of over 400% and has significantly outperformed the TSX, which increased by approximately 140% over the same period. Last month, CNO was named one of Canada’s Best Companies in 2025 by Time Magazine, a ranking based on continuous growth, high employee satisfaction and a purpose driven culture. We are particularly proud of this recognition, which highlights our achievements and was made possible by our 14,005 team members who are also shareholders in our company. On behalf of our entire team and our Board of Directors, I want to thank you for your support and we are now ready to take your questions.

Conference Moderator: Thank you. Your first question comes from the line of Lauren Kalmar of Desjardins. Your line is open.

Lauren Kalmar, Analyst, Desjardins: Thanks. Good morning. Maybe just focusing in on the developments to start off a little bit. You guys got the two that are gonna be completed this quarter. You’ll have just one ongoing.

Obviously, you’ve called out the fact that you’re still evaluating the implications from the updated development scheme. But I was just wondering if you could give us a little bit of insight into how you’re thinking about new initiations and how many projects you think you guys can get underway in the maybe the next twelve to eighteen months.

Nitin Jain, President and Chief Executive Officer, Sienna Senior Living Inc.: Hi, Lorne. Good morning. In development, the new funding change in GTA, we are very optimistic about the funding is nearly increasing by close to 100%. Many of the projects which were not viable before could potentially be made viable. It’s always you always have to go through the details because the program was just recently launched.

We have close to 1,000 beds in pipeline in GTA markets. So we do expect us to continue on with some projects. It’s a bit too early to comment on which one will go first, but I would expect at least one project in the next two, twelve to eighteen months, considering that some of the next projects would be bigger than 160 beds that we’ve done in the past.

Lauren Kalmar, Analyst, Desjardins: Okay. That’s very helpful. And then just, like, a bit more of a technical one, I guess. On the construction funding subsidy for North Bay and Brantford, when do you guys expect that to come on? Would that come on sort of right when they’re completed and you get the full benefit in 4Q?

David Hung, Chief Financial Officer and Executive Vice President, Sienna Senior Living Inc.: Thanks for that question, Lauren. We would start getting the construction funding when the first resident moves in. So that would be in several weeks from now when we start moving residents to the new building. We’ve already completed the building in July and we’ve gotten $4,000,000 of development grant from them already. We’re currently just undergoing final ministry inspection and so within the next few weeks when the first resident moves in, that’s when we would get the construction funding subsidies.

Lauren Kalmar, Analyst, Desjardins: Okay. And just to confirm, that 4,000,000 development grant, that doesn’t hit

David Hung, Chief Financial Officer and Executive Vice President, Sienna Senior Living Inc.: FFO? No, it does not. It would go against the cost of construction.

Lauren Kalmar, Analyst, Desjardins: Perfect. Okay. Thank you so much. I’ll turn it back.

Conference Moderator: Your next question comes from the line of Jonathan Kelcher of TD Cowen. Your line is open.

Lauren Kalmar, Analyst, Desjardins: Thanks. Good morning. Just sticking on the development front, for Brantford, for the retirement home, how should we think about the cadence of lease up for the property? Have you guys started leasing that yet?

Nitin Jain, President and Chief Executive Officer, Sienna Senior Living Inc.: Hi, Jonathan. Good morning. Are, we have started leasing up, we have deposits already and residents are ready to move in when the homes open, which probably is end of this month or September. Usually for a property that size, our regular lease up is around two point five to three years. Our goal would be to do it faster, but again, we’ll provide more detail on it as it opens up and we’ll start to see more and more visibility.

And again, for some of the services such as Assisted Living and Memory Care, they’re both they’re more in time where you people don’t really put deposits. It’s a need driven service and the retirement home that we’re building in Brantford has assisted living, has memory care. So we do expect that once it opens, it’ll get filled out pretty fast, at least those wings.

Lauren Kalmar, Analyst, Desjardins: Okay, and how many deposits would you have? This is a lot of little.

Nitin Jain, President and Chief Executive Officer, Sienna Senior Living Inc.: I would say it’s in line with what you would expect when a building opens.

Lauren Kalmar, Analyst, Desjardins: Okay. Fair enough. On the on your same property NOI outlook for retirement, You guys kept it at 10% plus, but you did do 14% give or take in the first half. Should we maybe think about this as kind of 10% plus for the back half of the year?

Nitin Jain, President and Chief Executive Officer, Sienna Senior Living Inc.: Yes, I would say that’s not an assumption like that would make sense. We see margin growth, we see occupancy change. We saw a little bit of dip in occupancy in the second quarter, which is more driven by where we ended the first quarter. And as you know, it’s an average, so when you start low, it takes a bit of time to build it up. And the numbers we’re seeing in July where occupancy is trending up, we do expect to deliver on the 10% plus target we have for this year.

Lauren Kalmar, Analyst, Desjardins: Okay. And then just lastly on 95% that you expect to hit Q1. Is there any reason to think that you can’t get to 96% or maybe even a little bit more as the year progresses next year? 95% is not just a magic stop number, is it?

Nitin Jain, President and Chief Executive Officer, Sienna Senior Living Inc.: I agree with you 100%. I think there was a time when 95% was really the end mark for retirement. We see many of our homes delivering much above 95%. You always have in a portfolio of few properties when in a market which is a bit oversupplied for a year or two. I would say the reality is majority of the homes on an average of 95 would be much above 95% and you might have a few homes which are at 90% or in the high 80 just depending market conditions or if it is going through some optimization or renovation.

But your question around that 95% is not really the high watermark, we agree with it completely. I think there is a lot more potential after ’95

Lauren Kalmar, Analyst, Desjardins: What do you think the high watermark would be for a portfolio like yours?

Nitin Jain, President and Chief Executive Officer, Sienna Senior Living Inc.: Yes, it’s just very difficult to predict. I mean, have homes which are running at 100% quarter after quarter for multiple quarters. So one could argue everything become like that? I think that would be very optimistic, but getting to 96%, 97% is not unreasonable. I just think we have to first get to 95% before we start talking about some of those other numbers.

Okay, that’s helpful. That’s it for me. I’ll turn

Lauren Kalmar, Analyst, Desjardins: it back. Thank you. Thank you.

Conference Moderator: Your next question comes from the line of Himanshu Gupta of Scotiabank. Your line is open.

Himanshu Gupta, Analyst, Scotiabank: Thank you and good morning. So just sticking to the Diamond Home occupancy, how was your occupancy performance in Q2? And does that make you on track to reach your 95% of it?

Nitin Jain, President and Chief Executive Officer, Sienna Senior Living Inc.: Yes, I mean, our occupancy target our occupancy for we started the quarter in Q2 with a bit late. And so we had to catch we do a bit of catch up. We had significant more move outs in Q1 than we saw in the past. So it takes a bit of time to catch that up. We are happy with our July results where we are tracking around 93% or so.

So I would say we and we don’t see much change in the trend. We had very successful open house, our leads are up, our deposits are up, our tours are up. So again, that’s what gives us the confidence of getting to that 95% in Q1.

Himanshu Gupta, Analyst, Scotiabank: Got it. And then assuming like a seasonal dip in February, March, I mean, so technically you have to get to that 95% by December or January. So it’s like four, five months ahead of us and 200 basis points to cover, are able to say that?

Nitin Jain, President and Chief Executive Officer, Sienna Senior Living Inc.: Yes, that’s correct. There is seasonality, there is also a combination of you might have markets where there’s a lot of as long term care homes are opening up, you might have a dip when a new homes open up, but that it’ll get absorbed quickly, it might take a month or so. We are not seeing the level of seasonality we used to see in the past. This the move outs in Q1 were more driven by additional long term care homes opening so that people on the waitlist go up and it takes a month or so to backfill the retirement home. So it’s hard to say Himanshu at this time that would be done by December.

I would say we would stick to the target of by Q1, we’ll get to 95%. And again, all things are trending towards that.

Himanshu Gupta, Analyst, Scotiabank: Fair enough. Thank you for that. Turning attention to the Diamond Home NOI margins. Good to see some expansion in Q2 on a year over year basis. I mean, in the past, you guys have said like 70% to 75% of revenue from incremental occupancy should go to NOI.

Is that match still working and that’s how you see it going forward as well?

David Hung, Chief Financial Officer and Executive Vice President, Sienna Senior Living Inc.: Yes, that’s right, Himanshu. We have said before that between 75% to 80% of any occupancy increase would fall to the bottom line. We still continue to believe that, particularly now that we’re above 92% occupancy that would be more true than ever.

Himanshu Gupta, Analyst, Scotiabank: Awesome. Okay, thank you. Maybe the last question is on North Bay. So that 3% AFFO accretion, would you say that most of it or the bulk of it is coming from that annual construction subsidy and not much of incremental, are fair to say that?

David Hung, Chief Financial Officer and Executive Vice President, Sienna Senior Living Inc.: Yes, no, I mean, it’s going to come from a combination of incremental NOI. Remember that North Bay, it is a bigger building than the older building that we have currently. We’re also going to get more NOI from higher preferred revenues. But there will also be, of course, the lift from the construction funding subsidy as well, of which it would be $3,300,000 on an annual basis. So it’s really the combination of the two.

Himanshu Gupta, Analyst, Scotiabank: Got it. Thank you, guys. And I’ll jump in back. Thank you.

Conference Moderator: With no further questions, that concludes our Q and A session. And it also concludes today’s conference call. You may now disconnect.

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