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As a ministry of the Evangelical Covenant Church, Covenant Retirement
Communities celebrates God’s gift of life in Christian community. We
follow the Great Commandment to love and serve God and one another
as taught by Jesus Christ. That compels us to affirm the dignity of each
person and to pursue excellence and financial integrity in all that we do.
As we provide a broad range of resources, services and programs
to enhance individual and community wellness, we collaborate with
residents and families to achieve the best possible results. While seeking
to foster independence, we respond to each individual’s evolving needs
in order to provide the security that assures peace of mind.
Creating joy and peace of mind
Our Mission
2 COVENANT RETIREMENT COMMUNITIES
Contents
Table of Contents 5
2OUR MISSION
Creating Joy & Peace of Mind
8OUR VISION
From the President
12COMMITTED TO MISSION
The Year in Review, Part One
20POSITIONED FOR SUCCESS
Report on Finances
6OUR PASSION
From the Board of Directors
10OUR GOVERNANCE
Leadership and Boards
16INVESTED IN GROWTH
The Year in Review, Part Two
18 ENGAGED IN COMMUNITY
Report on Community Benefit
A s you read this annual report you will see that one of
the themes for the past year at Covenant Retirement
Communities has been investment. Why this theme?
Investment is something we do to express our passion, to embrace
what is most important to us. We invest in education for ourselves
and our children. We invest our time in friendships and causes that
are dear to us. We invest our financial resources in what we most
value. Investment signals passion.
As a longtime board member of Covenant Retirement
Communities, I have seen firsthand that this is an organization
that passionately invests in creating secure, engaging, inspiring,
and compassionate Christian communities. We as organizational
leaders are always asking ourselves how we can create
communities of abundant lives for our residents and staff. As the
pace of change in our society accelerates, so does our need to
adapt to the changing needs of seniors. And that is just what we
are committed to do.
This investment expresses itself in beautiful and safe facilities,
building a culture focused on service where staff and residents
can thrive, and innovating with new programs that enrich the lives
of those we serve. Investment has also meant building a team of
leaders and professionals who are national experts in the field of
senior living.
What motivates us as board members and leaders of Covenant
Retirement Communities? This work is personal for us. Our
communities care for our own family members, close friends,
and people we love. And this is the work we are called to do—to
model the compassion of Christ on a large scale so that each
person we serve experiences love and care in a deeply individual
and personal way.
Although our roots go back over 130 years, we believe the best is
yet to come. We look forward to serving you.
Our Passion
MARK EASTBURGBoard Chair
6 COVENANT RETIREMENT COMMUNITIES
S enior living may not appear as fast paced as Silicon Valley,
complicated as NASA, exciting as Disney World or as
impactful as Habitat for Humanity. However, this is contrary
to what leaders, employees and residents say about Covenant
Retirement Communities (CRC). Senior living is rapidly changing
as it prepares for the “silver tsunami,” the largest 65-plus cohort
in U.S. history. Our industry is more regulated than nuclear power
plants, and the “customer” experience is vital as our residents live
with us and the work is more impactful as we serve an “extended
family of residents.”
This past year we have continued to focus on executing the right
strategies and action plans to assure CRC remains well positioned
to serve current and future residents through programs, services
and amenities that promote joy, peace of mind and a life of
continued purpose.
We recognize a great resident experience is the result of an even
better employee experience—every single day. Over the past
year we have identified and addressed key factors to improving
our staff’s experience through leadership training, creating a wage
and benefit strategy to improve our competitive advantage and
sustaining our commitment to Inspired to Serve, CRC’s customer
service framework.
Through the work of our Board of Directors, we journeyed through
a brand audit to evaluate consistency of CRC’s brand in relation to
our strategic vision. We are excited for the impact this study will
have on the future of CRC.
CRC’s strategic vision is transformational, exciting and hopeful. I
look forward to continuing to lead and serve Covenant Retirement
Communities as it strives to be the best place to live and work.
Please enjoy this annual report and God bless.
TERRI CUNLIFFEPresident
From the President 9
Our Governance
10 COVENANT RETIREMENT COMMUNITIES
MARK EASTBURG
Chair
MATTHEW MANLOVE
Vice Chair
SARAH BENTLEY
Secretary
JON AAGAARD, M.D.
PAMELA CHRISTENSEN
KARA DAVIS, M.D.
DONALD HODGKINSON
KURT KINCANON
ROBERT MARTIN
MARY PALMER
DALE RINARD
MARLENE STANTE
ANDREW VANOVER
Covenant Retirement Communities Board of Directors (2018-19)
JANET CREANEY
Chair
MARC ESPINOSA
Vice Chair
WALTER SCHILLER
GARTH BOLINDER
DONALD HODGKINSON
Covenant Retirement Services Board of Directors (2018-19)
Our Governance 11
TERRI CUNLIFFEPresident
JODY HOLTSenior Vice President of Finance
SCOTT MOOREExecutive Vice President ofCampus Operations
WILLIAM RABESenior Vice President of Enterprise Operations
DAVID ERICKSONSenior Vice President & General Counsel
JAY HIBBARDSenior Vice President of Sales, Marketing & Communications
ELIZABETH MCLARENVice President of Health Services Strategy, Programming & Health Network Integration
FRAN PALMASenior Vice President of Digital Strategies
MICHELLE KOZLOSKIVice President of Human Resources
T he past year has been full of exciting interactions,
countless activities, and strengthening relationships
among the 5,000 residents and nearly 3,500 employees at
Covenant Retirement Communities (CRC). This year we continued
to invest in our resident-centered service distinctive. We are
ignited by our mission which calls us to serve older adults, ensuring
they’re leading purposeful lives in a Christian environment. Our
employees are a daily reflection of the commitment to creating joy
and peace of mind for residents and their families by providing a
better way of life.
LifeConnect®
LifeConnect is the whole-person wellness partnership, providing a
framework for staff to partner with each resident on their wellness
journey. LifeConnect was developed by CRC to provide resident-
directed wellness focused opportunities within eight dimensions
of wellness. The need for relevant conversations around health
and wellness is increasing in consideration of societal changes in
health and mortality trends, as well as a continuing shift towards a
proactive lifestyle.
CRC is responding to this shifting industry by refreshing
the LifeConnect philosophy and software to better partner
with residents for their wellness needs and preferences. The
LifeConnect refresh will provide greater opportunities for the
whole person wellness of each community through software
enhancements, expanded training and additional resources at all
levels of care.
Singing in the community choirs, raising funds for employee
scholarships, helping immigrant families and even soaring through
the skies in vintage aircrafts are just a few of the LifeConnect
activities resident have enjoyed this past year. We are excited to
see how LifeConnect will grow and continue to enable residents to
live life to the fullest.
The Year in Review 13
Inspired to Serve
Inspired to Serve is a unique CRC initiative
that serves as our customer service framework
consisting of standards and behaviors related
to how we serve residents and interact
with one another. We regularly recognize
individual employees who have provided
excellent service to our residents or identified
a way to make their work more efficient
or effective. Our commitment to the small
details contributes to a larger shared goal of
making our communities the best place to
work, live and visit.
In 2017, a group of nine CRC employees
from campuses across the country were
honored with the first-ever Inspiration
Awards. The Inspiration Awards will be given
every 18 months and represent the following
categories of service excellence:
� Common Purpose Award—This award
is given to an individual who embodies
our common purpose of “creating joy
and peace of mind for residents and
their families by providing a better
way of life.” This individual inspires by
being an example for others in all four
Service Standards (Safety, Courtesy,
Responsiveness and Image).
� Safety Award—This award is given to
an individual who is inspired to serve
and inspires others by providing an
environment that uses training, reporting,
and analysis to foster a culture where no
one gets hurt.
� Courtesy Award—This award is given
to an individual who is inspired to serve
and inspires others by providing an
environment that is respectful, helpful, and
patient.
� Responsiveness Award—This award is
given to an individual who is inspired to
serve and inspires others by taking timely,
appropriate action with communication
and follow-up support.
� Image Award—This award is given to
an individual who is inspired to serve
and inspires others by providing a clean,
professional, and welcoming environment
for everyone.
2017 Inspiration Award Winners (pictured
above): Front row, from left to right: Ellen
14 COVENANT RETIREMENT COMMUNITIES
The Year in Review 15
Roth, The Holmstad (Image Award); Janel
Wirta, Covenant Village of Florida (Courtesy
Award); Maud Eglaus, Covenant Village of
Florida (Common Purpose Award); Margo
Bule, Mount Miguel Covenant Village
(Common Purpose Award); Back row, from
left to right: Patricia Dooley, Covenant
Village of Cromwell (Responsiveness Award);
James Harris, Covenant Village of Cromwell
(Safety Award); Adrian Ursache, Windsor Park
(Courtesy Award); and Tom Lane, Covenant
Village of the Great Lakes (Common Purpose
Award). Not pictured, Janette Getgen, Mount
Miguel Covenant Village (Safety Award).
SAIDO Learning®
SAIDO Learning, implemented within CRC
communities in 2013, is an opportunity for
residents with memory impairment to meet
with trained staff for structured sessions
focusing on simple arithmetic, writing and
reading aloud using materials developed by
the Kumon Institute of Education in Japan.
CRC staff or “supporters” engage with
residents three to five times a week in this
program in one-on-two settings for 30-minute
sessions. Some residents have increased in
engagement through this program.
C ovenant Retirement Communities
is committed to continued
investment in our strategic plan
which includes the pillars of service, growth
and optimization. The optimization pillar
implements ways in which we can operate our
business more efficiently and cost effectively
in areas that might enhance infrastructure or
service offerings to our campuses.
Over the past year, we have seen changes
in some key leadership positions. Jody
Holt joined CRC as our new Chief Financial
Officer. Prior to assuming the role of CFO,
Jody served as a member of the CRC Board
of Directors. During her initial months as
CFO, Jody visited every CRC campus and
invested a significant amount of time learning
about campus culture, the financial reporting
practices and current organizational structure.
An optimization strategy arising from those
visits was the implementation of financial
shared services across all CRC campuses.
Financial shared services optimization works
to eliminate the duplication of efforts,
integrate additional financial controls and
create efficiencies on how we track and report
on all of our financial business.
Providing the best resident and staff
experience is critical for organizational
sustainability in consideration of the
competitive and changing senior living
market. It is imperative to create a leadership
structure that supports campus operations in
Invested in Growth
16 COVENANT RETIREMENT COMMUNITIES
The Year in Review 17
the most effective manner possible while also
advancing CRC’s strategic and operational
initiatives. As part of this structure change,
Scott Moore recently joined CRC as Executive
Vice President Campus Operations. In this
role he will focus on key campus operations
such as dining, facilities management and
healthcare, as well as other areas related to
campus operations.
CRC has been evaluating our relationships
with consultants and vendors as an area
for optimization. We determined there is a
considerable savings to the organization by
internalizing some key initiatives that will
be of great benefit to CRC as we continue
our growth. To this effort, we’ve internalized
some key components related to marketing
and communications. CRC hired a creative
services director to manage the design and
layout of the many communication pieces
distributed to CRC stakeholders. This position
also coordinates the video team who are
charged with producing videos to help in
conveying messages to residents, staff and
the general public.
Communicating internally and externally
about CRC and its campuses is vitally
important in keeping people informed
about the organization, its initiatives, and
happenings across the country. These efforts
have been centralized with an internal public
relations and communications director to
work in collaboration with leadership across
the system. We’ve implemented consistent
monthly newsletters for employees and
embarked on public relations campaigns for
each campus and within the field of senior
living.
Marketing on a digital level is equally
important in promoting CRC campuses
and aiding in specific sales and marketing
endeavors. Through our in-house digital
team, digital tactics like retargeting,
geofencing, behavior targeting, search
and intelligent display, we are more certain
the right message is reaching prospective
residents and their families in the right place
and at the right time.
In the ever-changing, complex world of senior
living we know these types of investments are
already benefiting CRC residents, staff and
the financial viability of the organization.
O ur mission at Covenant Retirement Communities
extends well beyond providing services and care for
our residents on our campuses across the country.
Each campus is a valuable asset in the communities where they
are located, and we recognize that giving back to the greater
community is equally important. From our residents and staff
providing tens of thousands of hours of volunteer services in
schools, churches, charities and hospitals to making monetary
donations to local nonprofits and providing meeting space for local
organizations— it all adds up to significant community benefits.
Engaged in Community
18 COVENANT RETIREMENT COMMUNITIES
72,000Volunteer HoursOur residents and staff regularly donate their time and talents to support causes in our communities.
$ 150,000DonationsWe help support causes in our communities through sponsorships and other monetary contributions.
$ 2.53MSpace UsageMeetings rooms and auditoriums are available to community organizations for board meeting and gatherings.
$ 2.34MVolunteer ServicesOur residents and staff also contribute financially to support of a variety of charitable causes.
$ 7.07MCommunity EventsOur communities frequently host car shows, concerts, and educational events that are open to the public.
$ 5.70MBenevolent CareWe provide help to those residents who through no fault of their own no longer have adequate resources.
20 COVENANT RETIREMENT COMMUNITIES
O verall, total operating revenues
increased 4% primarily due to a
2% increase in routine resident
care and a 6% increase in ancillary revenue.
Operating expenses increased 4% largely due
to routine nursing expenses, administrative
and general expense and depreciation
expense. CRC’s Net Operating Margin (NOM)
of 5.89% is slightly less than the amount
reported in 2017 fiscal year of 5.95%.
Entrance fee income remains steady. There
were 366 reoccupancies in fiscal 2018
compared to 394 in fiscal year 2017. Net
reoccupancy proceeds totaled $60.6 million
compared to $61.8 million in the prior year.
Residential occupancy remains strong at
92.7%. Occupancy in assisted living is at 86%,
consistent with the prior year end and skilled
nursing occupancy has decreased from 88%
at the prior year end to 87%; however, payor
mix is trending better than the prior year.
Days cash on hand was 413 and significantly
better than the prior year (351 days at the
prior year end). This higher variance is largely
due to investment returns.
Fitch Ratings affirmed CRC’s rating at BBB+
with a positive outlook in January 2018.
Positioned for Success
366Projected: 379
372Projected: 350
Move-Ins■ Actual ■ Budget
Attrition■ Actual ■ Budget
CRC’s Obligated Group
Report on Finances 21
Residential Living Assisted Living Skilled Nursing
50
75
25
AS
OF
JA
N 3
1 2
01
7
AS
OF
JA
N 3
1 2
01
8
AS
OF
JA
N 3
1 2
01
7
AS
OF
JA
N 3
1 2
01
8
AS
OF
JA
N 3
1 2
01
7
AS
OF
JA
N 3
1 2
01
8
92.8
0 %
86.0
0 %
88.0
0 %
92.7
0 %
86.0
0 %
87.0
0 %
100
Occupancy
22 COVENANT RETIREMENT COMMUNITIES
■ Nursing Services, 35%■ Administrative and General, 23%■ Dining Services, 16%■ Maintenance and Utilities, 12%■ Resident Benefits and Services, 10%■ Other, 4%
Total Revenues
5.89%FY2017: 5.95%
Operating Margin
■ CRC, 91%■ CovenantCare at Home, 6% ■ Sr Living Rental Communities, 2.5%■ Other, 0.5%
Cost of Resident Care
■ FY 2017 ■ FY 2018
Report on Finances 23
Fiscal Year Ended January 31, 2017 2018
ASSETS
Cash and cash equivalents $ 24,130 $ 18,182
Notes and accounts receivable, net 29,602 24,127
Board designated investments:
Benevolent care 56,625 68,356
Capital reserve 68,838 90,183
Other 83,027 99,622
Total board designated investments 208,490 258,161
Investments restricted under debt agreements 41,650 42,818
Property and equipment, net 579,981 552,226
Other assets 48,606 50,205
TOTAL ASSETS $ 932,459 $ 945,719
LIABILITIES AND NET ASSETS
Accounts payable and accrued expenses $ 27,604 $ 25,029
Long-term debt 371,093 359,626
Other liabilities 88,592 66,915
Refundable contract liabilities 83,276 92,457
Deferred revenue from entrance fees 295,722 302,169
TOTAL LIABILITIES 866,287 846,196
Net assets:
Unrestricted 53,437 83,391
Restricted 12,735 16,132
Total net assets 66,172 99,523
TOTAL LIABILITIES AND NET ASSETS $ 932,459 $ 945,719
OPERATING REVENUES
Operating revenues $ 261,659 $ 271,615
Amortization of deferred entrance fees 39,843 42,047
Total operating revenues 301,502 313,662
OPERATING EXPENSES
Cost of resident care 233,044 242,447
Interest expense 16,386 16,815
Sales and marketing 11,950 11,606
Depreciation and amortization 45,249 47,306
Total operating expenses 306,629 318,174
LOSS FROM OPERATIONS (5,127) (4,512)
NONOPERATING REVENUE (EXPENSE), NET
Investment income 22,340 32,413
Unrealized gains on derivative instrument 5,201 3,706
Contributions, net 124 1,450
Other nonoperating (expense) income (1,051) 71
Derivative instruments termination loss and interest expense (3,801) (3,291)
Loss on extinguishment of debt 0 (471)
INCOME (LOSS) 17,686 29,366
OTHER CHANGES IN UNRESTRICTED NET ASSETS
Net assets released from restriction for capital purposes 199 588
Net asset transfer to related organization (500) —
Total other changes in unrestricted net assets (301) 588
INCREASE (DECREASE) IN UNRESTRICTED NET ASSETS $ 17,385 $ 29,954