Welltower Inc. (WELL) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

May 3, 2023 9:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks：

Operator

Good morning, ladies and gentlemen. Welcome to the Welltower First Quarter 2023 Earnings Release Conference Call and Webcast. At this time, all participants are in a listen-only mode and please be advised that this call is being recorded. After the speakers' prepared remarks, there will be a question-and-answer session. [Operator Instructions]

And at this time, I would like to turn the call over to Matt McQueen, General Counsel. Please go ahead, sir.

Matt McQueen

Thank you, and good morning. As a reminder, certain statements made during this call may be deemed forward-looking statements in the meaning of the Private Securities Litigation Reform Act. Although Welltower believes any forward-looking statements are based on reasonable assumptions, the Company can give no assurances that its projected results will be attained. Factors that could cause actual results to differ materially from those in the forward-looking statements are detailed in the Company's filings with the SEC.

And with that, I'll hand the call over to Shankh for his remarks.

Shankh Mitra

Thank you, Matt, and good morning, everyone. I'll review our first quarter results and describe high-level business trends and our capital allocation priorities. John will provide an update on the performance of a senior housing operating and outpatient medical portfolio. Tim will walk you through triple-net businesses, balance sheet highlights and revised guidance. Nikhil is also on the call to answer questions.

We're pleased to report another strong quarter with results that exceeded our expectations. Our strong performance was once again driven by outsized growth in our senior housing operating portfolio. We generated 23.4% same-store NOI growth, with both revenue and expense trends continue to move in the right direction. In fact, we produced our fifth consecutive quarter of double-digit organic revenue growth on the back of strong pricing power and occupancy build, with each coming slightly better than expected. But perhaps equally, if not more encouraging, is the margin expansion story, which has been driven by a significant improvement on the cost side. While we generated strong revenue growth in 2020, these gains were largely offset by pressure across the expense tax, which ultimately resulted a lost year in terms of partial growth.

We are delighted by the progress made on various expense items, but particularly pleased by the sharp decline in agency labor or temporary staffing across the portfolio. Over the past few quarters, we have noted the headway our operating partners have made in net hiring, as JL employment rates have been weakening. This has ultimately translated into a meaningful reduction of prohibitively expensive temporary staffing, which -- with cost declining over 50% versus the first quarter of last year. Though we still have a long way to go to eradicate this problem which we largely attribute to committee leadership challenges, we believe that this trend along with strong pricing power will continue to be a tailwind for further margin expansion.