EX-99.1 2 a2q24earningsrelease.htm EX-99.1 Document

Exhibit 99.1
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Brookdale Announces Second Quarter 2024 Results

Nashville, Tenn., August 8, 2024 - Brookdale Senior Living Inc. (NYSE: BKD) ("Brookdale" or the "Company") announced results for the quarter ended June 30, 2024.

HIGHLIGHTS

•Second quarter consolidated revenue per available unit (RevPAR) increased 6.4% over the prior year quarter.
•Second quarter consolidated weighted average occupancy grew 160 basis points over the prior year quarter representing a continuation of better than pre-pandemic growth trends.
•Same community operating margin, when excluding prior period grant income, increased 160 basis points over the prior year second quarter on 6.0% revenue growth and 3.6% facility operating expense growth.
•Delivered meaningful improvements in both leadership retention and associate turnover.

“Thanks to our incredible leadership teams and passionate associates, we are making meaningful progress in key areas that support the ongoing and future success of our communities,” said Lucinda ("Cindy") Baier, Brookdale’s President and CEO. “We have demonstrated powerful positive progress toward full recovery from the impact of the pandemic, and with each quarter, we have and are continuing to deliver sustainable growth while building a significant runway for future revenue and operating income increases. Through careful and deliberate decisions and focused execution, we are strengthening Brookdale’s foundation to create lasting benefits for our residents, associates, and shareholders for decades to come.”

SUMMARY OF SECOND QUARTER FINANCIAL RESULTS

Consolidated summary of operating results and metrics:

Year-Over-Year
Increase / (Decrease)		Sequential
Increase / (Decrease)
($ in millions, except RevPAR and RevPOR)2Q 20242Q 2023AmountPercent1Q 2024AmountPercent
Resident fees$739.7$710.2$29.54.2%$744.2$(4.5)(0.6)%
Facility operating expense537.5531.16.41.2%542.6(5.1)(0.9)%
Cash facility operating lease payments64.462.12.33.8%64.6(0.2)(0.2)%
Net income (loss)(37.7)(4.5)33.2NM(29.6)8.127.6%
Adjusted EBITDA (1)
97.881.416.420.2%97.60.20.2%
RevPAR$4,835$4,544$2916.4%$4,854$(19)(0.4)%
Weighted average occupancy78.1%76.5%160 bpsn/a77.9%20 bpsn/a
RevPOR$6,193$5,939$2544.3%$6,228$(35)(0.6)%

(1)    Adjusted EBITDA is a financial measure that is not calculated in accordance with GAAP. See "Non-GAAP Financial Measures" for the Company's definition of such measure, reconciliations to the most comparable GAAP financial measure, and other important information regarding the use of the Company's non-GAAP financial measures.


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Same community(2) summary of operating results and metrics:

Year-Over-Year
Increase / (Decrease)		Sequential Increase / (Decrease)
($ in millions, except RevPAR and RevPOR)2Q 20242Q 2023AmountPercent1Q 2024AmountPercent
Resident fees$725.9$685.1$40.86.0%$729.1$(3.2)(0.4)%
Facility operating expense$527.1$508.5$18.63.6%$527.7$(0.6)(0.1)%
RevPAR$4,826$4,556$2705.9%$4,849$(23)(0.5)%
Weighted average occupancy78.1%76.8%130 bpsn/a78.0%10 bpsn/a
RevPOR$6,177$5,934$2434.1%$6,218$(41)(0.7)%

(2)    The same community senior housing portfolio includes operating results and data for 611 communities consolidated and operational for the full period in both comparison years. Consolidated communities excluded from the same community portfolio include communities acquired or disposed of since the beginning of the prior year, communities classified as assets held for sale, certain communities planned for disposition, certain communities that have undergone or are undergoing expansion, redevelopment, and repositioning projects, and certain communities that have experienced a casualty event that significantly impacts their operations. To aid in comparability, same community operating results exclude natural disaster expense.

Recent consolidated occupancy trend:

2023
JanFebMarAprMayJunJulAugSepOctNovDec
Weighted average76.6 %76.3 %76.1 %76.2 %76.6 %76.8 %77.1 %77.6 %78.2 %78.6 %78.4 %78.3 %
Month end77.6 %77.4 %77.6 %77.6 %78.1 %78.2 %78.5 %79.3 %79.7 %79.5 %79.6 %79.3 %
2024
JanFebMarAprMayJunJul
Weighted average78.0 %77.9 %77.9 %77.9 %78.1 %78.2 %78.6 %
Month end79.3 %79.2 %79.1 %79.2 %79.5 %79.7 %79.9 %

OVERVIEW OF SECOND QUARTER RESULTS

•Resident fees.
•2Q 2024 vs 2Q 2023:
◦Resident fees increased primarily due to the increases in RevPOR and occupancy, partially offset by the disposition of communities, primarily through lease terminations, since the beginning of the prior year period, which resulted in $14.4 million less in resident fees during the second quarter of 2024.
◦The increase in RevPOR was primarily the result of annual in-place rate increases effective January 1, 2024.
◦The increase in occupancy primarily reflects the impact of the Company's execution on key initiatives to rebuild occupancy lost due to the pandemic.
•2Q 2024 vs 1Q 2024:
◦Resident fees decreased primarily due to the decrease in RevPOR, due to an occupancy mix shift to more independent living residents and lower skilled nursing revenue, and the disposition of owned communities since the beginning of the prior period, which resulted in $1.6 million less in resident fees during the second quarter of 2024.
◦The decrease was partially offset by the 20 basis point increase in weighted average occupancy, an improvement from normal pre-pandemic seasonality trends.

•Facility operating expense.
•2Q 2024 vs 2Q 2023:
◦The increase in facility operating expense was primarily due to broad inflationary pressure and an increase in estimated insurance expense.
◦These increases were partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $12.8 million less in facility operating expense during the second quarter of 2024, and by a decrease in the use of premium labor, primarily contract labor, and a decrease in estimated incentive compensation costs.
•2Q 2024 vs 1Q 2024:
◦The decrease in facility operating expense was primarily due to decreases in property repair expense primarily as a result of severe weather events in the prior period.
◦Additionally, the disposition of communities since the beginning of the prior period resulted in $1.5 million less in facility operating expense during the second quarter of 2024.
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•Cash facility operating lease payments: The increase compared to the second quarter of 2023 was primarily due to a change in classification of lease payments as cash facility operating lease payments as a result of lease amendments in the prior year period.

•Net income (loss).
•2Q 2024 vs 2Q 2023: The increase in net loss was primarily due to a $36.3 million gain on sale of communities, net recognized during the three months ended June 30, 2023 for the sale of the Company's one remaining entrance fee community and the increase in facility operating expense, partially offset by the increase in resident fees.
•2Q 2024 vs 1Q 2024: The increase in net loss was primarily due to an increase in the fair value of interest rate derivatives in the prior period and a decrease in property insurance recoveries.

•Adjusted EBITDA: The increase compared to the second quarter of 2023 was primarily due to the increase in resident fees partially offset by the increase in facility operating expense, a $4.1 million decrease in other operating income for state government grants recognized during the prior year period, and the change in classification of $2.5 million of lease payments for 35 communities as cash facility operating lease payments as a result of lease amendments in the prior year period.

LIQUIDITY

Year-Over-Year
Increase / (Decrease)		Sequential
Increase / (Decrease)
($ in millions)2Q 20242Q 2023Amount1Q 2024Amount
Net cash provided by (used in) operating activities$55.7 $63.8 $(8.1)$(1.1)$56.8 
Non-development capital expenditures, net52.3 64.8 (12.5)50.6 1.7 
Adjusted Free Cash Flow (3)
(5.5)(7.5)2.0 (26.3)20.8 

(3)    Adjusted Free Cash Flow is a financial measure that is not calculated in accordance with GAAP. See "Non-GAAP Financial Measures" for the Company's definition of such measure, reconciliations to the most comparable GAAP financial measure, and other important information regarding the use of the Company's non-GAAP financial measures.

•Net cash provided by (used in) operating activities.
•2Q 2024 vs 2Q 2023: The decrease in net cash provided by operating activities was primarily due to a decrease in cash received associated with government grants and credits, other changes in working capital, and the increase in facility operating expense, partially offset by the increase in resident fees.
•2Q 2024 vs 1Q 2024: The change in net cash provided by (used in) operating activities was primarily due to decreases in payments under the Company's annual and long-term incentive compensation programs and annual insurance premium payments made in the first quarter of 2024.

•Non-development capital expenditures, net: The decrease compared to the second quarter of 2023 in non-development capital expenditures, net of lessor reimbursements, was primarily due to a decrease in remediation costs at the Company's communities resulting from natural disasters.

•Adjusted Free Cash Flow.
•2Q 2024 vs 2Q 2023: The change in Adjusted Free Cash Flow was primarily due to the decrease in non-development capital expenditures, net, partially offset by the decrease in net cash provided by operating activities and a decrease in property insurance proceeds.
•2Q 2024 vs 1Q 2024: The change in Adjusted Free Cash Flow was primarily due to the change in net cash provided by (used in) operating activities, excluding $30.9 million of changes in prepaid property insurance premiums financed with notes payable, partially offset by a decrease in property insurance proceeds.

•Total liquidity. Total liquidity of $345.8 million as of June 30, 2024 included $290.0 million of unrestricted cash and cash equivalents, $19.7 million of marketable securities, and $36.1 million of availability on the Company's secured credit facility. Total liquidity as of June 30, 2024 decreased $9.2 million from March 31, 2024, primarily due to repayments of $9.7 million of mortgage debt and negative Adjusted Free Cash Flow, partially offset by $6.2 million of net proceeds from the sale of three communities.




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TRANSACTION UPDATE

Subsequent to the three months ended June 30, 2024, the Company and Omega Healthcare Investors, Inc. ("Omega") amended the existing master lease pursuant to which the Company continues to lease 24 communities (2,555 units) from Omega. The Company's amended master lease has an initial term to expire on December 31, 2037. As part of the amendment, Omega agreed to make available up to $80.0 million to fund costs associated with capital expenditures for the communities through December 31, 2037. The annual rent under the lease will not be adjusted upon reimbursements for capital expenditures in the aggregate amount of up to $30.0 million of the $80.0 million pool, which is available in certain tranches through June 30, 2028. With respect to the remaining $50.0 million of the $80.0 million pool, the annual rent under the lease will prospectively increase by the amount of each reimbursement multiplied by 9.5%. The $50.0 million will be available in certain tranches beginning January 1, 2025, subject to certain annual reimbursement caps specified in the lease. Under the terms of the amendment, rent will escalate annually per the terms of the existing lease escalator, with a potential minor contingent rent adjustment beginning in 2028 depending on lease performance.

2024 OUTLOOK

For the third quarter 2024, the Company is providing the following guidance:

Third Quarter 2024 Guidance
RevPAR year-over-year growth
6.25% - 6.75%
Adjusted EBITDA$90 million to $95 million

In the aggregate, the Company expects its full-year 2024 non-development capital expenditures, net of anticipated lessor reimbursements, to be approximately $180.0 million.

This guidance excludes future acquisition or disposition activity. Reconciliation of the non-GAAP financial measure included in the foregoing guidance to the most comparable GAAP financial measure is not available without unreasonable effort due to the inherent difficulty in forecasting the timing or amounts of items required to reconcile Adjusted EBITDA from the Company's net income (loss). Variability in the timing or amounts of items required to reconcile the measure may have a significant impact on the Company's future GAAP results.

SUPPLEMENTAL INFORMATION

The Company will post on its website at brookdaleinvestors.com supplemental information relating to the Company's second quarter results, an updated investor presentation, and a copy of this earnings release. The supplemental information and a copy of this earnings release will also be furnished in a Form 8-K to be filed with the SEC.

EARNINGS CONFERENCE CALL

Brookdale's management will conduct a conference call to discuss the financial results for the second quarter on August 9, 2024 at 9:00 AM ET. The conference call can be accessed by dialing (833) 470-1428 (from within the U.S.) or (929) 526-1599 (from outside of the U.S.) ten minutes prior to the scheduled start and referencing the access code "007240".

A webcast of the conference call will be available to the public on a listen-only basis at brookdaleinvestors.com. Please allow extra time before the call to download the necessary software required to listen to the internet broadcast. A replay of the webcast will be available through the website following the call.

For those who cannot listen to the live call, a replay of the webcast will be available until 11:59 PM ET on August 16, 2024 by dialing (866) 813-9403 (from within the U.S.) or +44 (204) 525-0658 (from outside of the U.S.) and referencing access code "520218".

ABOUT BROOKDALE SENIOR LIVING

Brookdale Senior Living Inc. is the nation’s premier operator of senior living communities. The Company is committed to its mission of enriching the lives of the people it serves with compassion, respect, excellence, and integrity. The Company, through its affiliates, operates independent living, assisted living, memory care, and continuing care retirement communities. Through its comprehensive network, Brookdale helps to provide seniors with care, connection, and services in an environment that feels like home. The Company’s expertise in healthcare, hospitality, and real estate provides residents with opportunities to improve wellness, pursue passions, make new friends, and stay connected with loved ones. Brookdale, through its affiliates, operates and manages 649 communities in 41 states as of June 30, 2024, with the ability to serve approximately 59,000 residents. Brookdale's stock trades on the New York Stock Exchange under the ticker symbol BKD. For more information, visit brookdale.com or connect with Brookdale on Facebook at facebook.com/brookdaleseniorliving or YouTube at youtube.com/BrookdaleLiving.
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DEFINITIONS OF REVPAR AND REVPOR

RevPAR, or average monthly senior housing resident fee revenue per available unit, is defined by the Company as resident fee revenue for the corresponding portfolio for the period (excluding revenue for private duty services provided to seniors living outside of the Company's communities and entrance fee amortization), divided by the weighted average number of available units in the corresponding portfolio for the period, divided by the number of months in the period.

RevPOR, or average monthly senior housing resident fee revenue per occupied unit, is defined by the Company as resident fee revenue for the corresponding portfolio for the period (excluding revenue for private duty services provided to seniors living outside of the Company's communities and entrance fee amortization), divided by the weighted average number of occupied units in the corresponding portfolio for the period, divided by the number of months in the period.

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SAFE HARBOR
Certain statements in this press release and the associated earnings call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to various risks and uncertainties and include all statements that are not historical statements of fact and those regarding the Company's intent, belief, or expectations. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "could," "would," "potential," "intend," "expect," "endeavor," "seek," "anticipate," "estimate," "believe," "project," "predict," "continue," "plan," "target," or other similar words or expressions, and include statements regarding the Company's expected financial and operational results. These forward-looking statements are based on certain assumptions and expectations, and the Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Although the Company believes that expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its assumptions or expectations will be attained and actual results and performance could differ materially from those projected. Factors which could have a material adverse effect on the Company's operations and future prospects or which could cause events or circumstances to differ from the forward-looking statements include, but are not limited to, events which adversely affect the ability of seniors to afford resident fees, including downturns in the economy, housing market, consumer confidence, or the equity markets and unemployment among resident family members; changes in reimbursement rates, methods, or timing under governmental reimbursement programs including the Medicare and Medicaid programs; the effects of senior housing construction and development, lower industry occupancy, and increased competition; conditions of housing markets, regulatory changes, acts of nature, and the effects of climate change in geographic areas where the Company is concentrated; terminations of the Company's resident agreements and vacancies in the living spaces it leases; failure to maintain the security and functionality of the Company's information systems, to prevent a cybersecurity attack or breach, or to comply with applicable privacy and consumer protection laws, including HIPAA; the Company's ability to complete its capital expenditures in accordance with its plans; the Company's ability to identify and pursue development, investment, and acquisition opportunities and its ability to successfully integrate acquisitions; competition for the acquisition of assets; the Company's ability to complete pending or expected disposition, acquisition, or other transactions on agreed upon terms or at all, including in respect of the satisfaction of closing conditions, the risk that regulatory approvals are not obtained or are subject to unanticipated conditions, and uncertainties as to the timing of closing, and the Company's ability to identify and pursue any such opportunities in the future; risks related to the implementation of the Company's strategy, including initiatives undertaken to execute on the Company's strategic priorities and their effect on its results; the impacts of the COVID-19 pandemic, including on the nation's economy and debt and equity markets and the local economies in our markets, and on us and our business, results of operations, cash flow, revenue, expenses, liquidity, and our strategic initiatives, including plans for future growth, which will depend on many factors, some of which cannot be foreseen, including the pace and consistency of recovery from the pandemic and any resurgence or variants of the disease; limits on the Company's ability to use net operating loss carryovers to reduce future tax payments; delays in obtaining regulatory approvals; disruptions in the financial markets or decreases in the appraised values or performance of the Company's communities that affect the Company's ability to obtain financing or extend or refinance debt as it matures and the Company's financing costs; the Company's ability to generate sufficient cash flow to cover required interest, principal, and long-term lease payments and to fund its planned capital projects; the effect of any non-compliance with any of the Company's debt or lease agreements (including the financial or other covenants contained therein), including the risk of lenders or lessors declaring a cross default in the event of the Company's non-compliance with any such agreements and the risk of loss of the Company's property securing leases and indebtedness due to any resulting lease terminations and foreclosure actions; the inability to renew, restructure, or extend leases, or exercise purchase options at or prior to the end of any existing lease term; the effect of the Company's indebtedness and long-term leases on the Company's liquidity and its ability to operate its business; increases in market interest rates that increase the costs of the Company's debt obligations; the Company's ability to obtain additional capital on terms acceptable to it; departures of key officers and potential disruption caused by changes in management; increased competition for, or a shortage of, associates (including due to general labor market conditions), wage pressures resulting from increased competition, low unemployment levels, minimum wage increases and changes in overtime laws, and union activity; environmental contamination at any of the Company's communities; failure to comply with existing environmental laws; an adverse determination or resolution of complaints filed against the Company, including putative class action complaints, and the frequency and magnitude of legal actions and liability claims that may arise due to COVID-19 or the Company's response efforts; negative publicity with respect to any lawsuits, claims, or other legal or regulatory proceedings; costs to respond to, and adverse determinations resulting from, government inquiries, reviews, audits, and investigations; the cost and difficulty of complying with increasing and evolving regulation, including new disclosure obligations; changes in, or its failure to comply with, employment-related laws and regulations; the risks associated with current global economic conditions and general economic factors on the Company and the Company's business partners such as inflation, commodity costs, fuel and other energy costs, competition in the labor market, costs of salaries, wages, benefits, and insurance, interest rates, tax rates, geopolitical tensions or conflicts, and uncertainty surrounding federal elections; the impact of seasonal contagious illness or an outbreak of COVID-19 or other contagious disease in the markets in which the Company operates; actions of activist stockholders, including a proxy contest; as well as other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission, including those set forth in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in such SEC filings. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect management's views as of the date of this press release and/or associated earnings call. The Company cannot guarantee future results, levels of activity, performance or achievements, and, except as required by law, it expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained in this press release and/or associated earnings call to reflect any change in the Company's expectations with regard thereto or change in events, conditions, or circumstances on which any statement is based.
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Condensed Consolidated Statements of Operations
Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands, except per share data)2024202320242023
Resident fees$739,709 $710,161 $1,483,950 $1,423,565 
Management fees2,616 2,510 5,234 5,087 
Reimbursed costs incurred on behalf of managed communities35,216 33,999 71,188 68,953 
Other operating income— 4,122 — 6,450 
Total revenue and other operating income 777,541 750,792 1,560,372 1,504,055 
Facility operating expense (excluding facility depreciation and amortization of $81,706, $77,846, $161,610, and $157,163, respectively)
537,507 531,118 1,080,057 1,061,925 
General and administrative expense (including non-cash stock-based compensation expense of $3,975, $2,969, $7,248, and $6,073, respectively)
46,664 45,326 92,396 93,945 
Facility operating lease expense50,964 50,512 102,460 96,639 
Depreciation and amortization88,028 84,448 174,155 169,382 
Asset impairment— 520 1,708 520 
Loss (gain) on sale of communities, net— (36,296)— (36,296)
Costs incurred on behalf of managed communities35,216 33,999 71,188 68,953 
Income (loss) from operations19,162 41,165 38,408 48,987 
Interest income4,714 6,115 9,492 11,441 
Interest expense:
Debt(53,778)(52,256)(107,234)(102,571)
Financing lease obligations(5,110)(5,453)(10,171)(12,005)
Amortization of deferred financing costs(2,334)(1,899)(4,591)(3,839)
Change in fair value of derivatives(345)5,173 2,742 4,269 
Equity in earnings (loss) of unconsolidated ventures— (1,153)— (1,730)
Non-operating gain (loss) on sale of assets, net199 860 903 860 
Other non-operating income (loss)199 3,197 3,537 6,346 
Income (loss) before income taxes(37,293)(4,251)(66,914)(48,242)
Benefit (provision) for income taxes(449)(275)(409)(847)
Net income (loss)(37,742)(4,526)(67,323)(49,089)
Net (income) loss attributable to noncontrolling interest15 16 30 30 
Net income (loss) attributable to Brookdale Senior Living Inc. common stockholders$(37,727)$(4,510)$(67,293)$(49,059)
Basic and diluted net income (loss) per share attributable to Brookdale Senior Living Inc. common stockholders$(0.17)$(0.02)$(0.30)$(0.22)
Weighted average shares used in computing basic and diluted net income (loss) per share226,789 225,404 226,340 224,994 
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Condensed Consolidated Balance Sheets
(in thousands)June 30, 2024December 31, 2023
Cash and cash equivalents$290,018 $277,971 
Marketable securities19,727 29,755 
Restricted cash43,959 41,341 
Accounts receivable, net49,782 48,393 
Prepaid expenses and other current assets, net89,343 80,908 
Total current assets492,829 478,368 
Property, plant and equipment and leasehold intangibles, net4,256,490 4,330,629 
Operating lease right-of-use assets603,816 670,907 
Other assets, net97,751 93,531 
Total assets$5,450,886 $5,573,435 
Current portion of long-term debt$60,939 $41,463 
Current portion of financing lease obligations1,123 1,075 
Current portion of operating lease obligations199,226 192,631 
Other current liabilities360,797 364,947 
Total current liabilities622,085 600,116 
Long-term debt, less current portion3,679,102 3,655,850 
Financing lease obligations, less current portion150,240 150,774 
Operating lease obligations, less current portion584,556 683,876 
Other liabilities73,230 77,666 
Total liabilities5,109,213 5,168,282 
Total Brookdale Senior Living Inc. stockholders' equity340,214 403,664 
Noncontrolling interest1,459 1,489 
Total equity341,673 405,153 
Total liabilities and equity$5,450,886 $5,573,435 
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Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30,
(in thousands)20242023
Cash Flows from Operating Activities
Net income (loss)$(67,323)$(49,089)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization, net178,746 173,221 
Asset impairment1,708 520 
Equity in (earnings) loss of unconsolidated ventures— 1,730 
Distributions from unconsolidated ventures from cumulative share of net earnings— 430 
Amortization of entrance fees— (732)
Proceeds from deferred entrance fee revenue— 477 
Deferred income tax (benefit) provision(360)188 
Operating lease expense adjustment(26,572)(22,362)
Change in fair value of derivatives(2,742)(4,269)
Loss (gain) on sale of assets, net(903)(37,156)
Non-cash stock-based compensation expense7,248 6,073 
Property and casualty insurance income(2,688)(3,927)
Other non-operating (income) loss— (2,542)
Changes in operating assets and liabilities:
Accounts receivable, net(1,390)7,550 
Prepaid expenses and other assets, net(855)11,711 
Prepaid insurance premiums financed with notes payable(15,702)(13,004)
Trade accounts payable and accrued expenses(14,380)3,782 
Refundable fees and deferred revenue(1,563)13,021 
Operating lease assets and liabilities for lessor capital expenditure reimbursements1,300 2,244 
Net cash provided by (used in) operating activities54,524 87,866 
Cash Flows from Investing Activities
Purchase of marketable securities(19,591)(110,754)
Sale and maturities of marketable securities30,000 65,100 
Capital expenditures, net of related payables(95,973)(109,825)
Acquisition of assets, net of cash acquired— (574)
Proceeds from sale of assets, net7,017 43,059 
Property and casualty insurance proceeds2,704 8,789 
Purchase of interest rate cap instruments(8,513)(3,019)
Proceeds from interest rate cap instruments9,129 3,423 
Other(176)(109)
Net cash provided by (used in) investing activities(75,403)(103,910)
Cash Flows from Financing Activities
Proceeds from debt81,271 25,532 
Repayment of debt and financing lease obligations(41,077)(72,917)
Payment of financing costs, net of related payables(3,074)(676)
Payments of employee taxes for withheld shares(3,405)(1,861)
Net cash provided by (used in) financing activities33,715 (49,922)
Net increase (decrease) in cash, cash equivalents, and restricted cash12,836 (65,966)
Cash, cash equivalents, and restricted cash at beginning of period349,668 474,548 
Cash, cash equivalents, and restricted cash at end of period$362,504 $408,582 
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Non-GAAP Financial Measures

This earnings release contains the financial measures Adjusted EBITDA and Adjusted Free Cash Flow, which are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). Presentations of these non-GAAP financial measures are intended to aid investors in better understanding the factors and trends affecting the Company’s performance and liquidity. However, investors should not consider these non-GAAP financial measures as a substitute for financial measures determined in accordance with GAAP, including net income (loss), income (loss) from operations, or net cash provided by (used in) operating activities. The Company cautions investors that amounts presented in accordance with the Company’s definitions of these non-GAAP financial measures may not be comparable to similar measures disclosed by other companies because not all companies calculate non-GAAP measures in the same manner. The Company urges investors to review the following reconciliations of these non-GAAP financial measures from the most comparable financial measures determined in accordance with GAAP.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP performance measure that the Company defines as net income (loss) excluding: benefit/provision for income taxes, non-operating income/expense items, and depreciation and amortization; and further adjusted to exclude income/expense associated with non-cash, non-operational, transactional, cost reduction, or organizational restructuring items that management does not consider as part of the Company’s underlying core operating performance and that management believes impact the comparability of performance between periods. For the periods presented herein, such other items include non-cash impairment charges, operating lease expense adjustment, non-cash stock-based compensation expense, and transaction and organizational restructuring costs. Transaction costs include those directly related to acquisition, disposition, financing, and leasing activity, and are primarily comprised of legal, finance, consulting, professional fees, and other third-party costs. Organizational restructuring costs include those related to the Company’s efforts to reduce general and administrative expense and its senior leadership changes, including severance.

The Company believes that presentation of Adjusted EBITDA as a performance measure is useful to investors because (i) it is one of the metrics used by the Company’s management for budgeting and other planning purposes, to review the Company’s historic and prospective core operating performance, and to make day-to-day operating decisions; (ii) it provides an assessment of operational factors that management can impact in the short-term, namely revenues and the controllable cost structure of the organization, by eliminating items related to the Company’s financing and capital structure and other items that management does not consider as part of the Company’s underlying core operating performance and that management believes impact the comparability of performance between periods; (iii) the Company believes that this measure is used by research analysts and investors to evaluate the Company’s operating results and to value companies in its industry; and (iv) the Company uses the measure for components of executive compensation.

Adjusted EBITDA has material limitations as a performance measure, including: (i) excluded interest and income tax are necessary to operate the Company’s business under its current financing and capital structure; (ii) excluded depreciation, amortization, and impairment charges may represent the wear and tear and/or reduction in value of the Company’s communities, goodwill, and other assets and may be indicative of future needs for capital expenditures; and (iii) the Company may incur income/expense similar to those for which adjustments are made, such as gain/loss on sale of assets, facility operating lease termination, or debt modification and extinguishment, non-cash stock-based compensation expense, and transaction and other costs, and such income/expense may significantly affect the Company’s operating results.

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The table below reconciles Adjusted EBITDA from net income (loss).

Three Months Ended
(in thousands)June 30, 2024March 31, 2024June 30, 2023
Net income (loss)$(37,742)$(29,581)$(4,526)
Provision (benefit) for income taxes449 (40)275 
Equity in (earnings) loss of unconsolidated ventures— — 1,153 
Non-operating loss (gain) on sale of assets, net(199)(704)(860)
Other non-operating (income) loss(199)(3,338)(3,197)
Interest expense61,567 57,687 54,435 
Interest income(4,714)(4,778)(6,115)
Income (loss) from operations19,162 19,246 41,165 
Depreciation and amortization88,028 86,127 84,448 
Asset impairment— 1,708 520 
Loss (gain) on sale of communities, net— — (36,296)
Operating lease expense adjustment(13,483)(13,089)(11,557)
Non-cash stock-based compensation expense3,975 3,273 2,969 
Transaction and organizational restructuring costs134 351 123 
Adjusted EBITDA$97,816 $97,616 $81,372 

Adjusted Free Cash Flow

Adjusted Free Cash Flow is a non-GAAP liquidity measure that the Company defines as net cash provided by (used in) operating activities before: distributions from unconsolidated ventures from cumulative share of net earnings, changes in prepaid insurance premiums financed with notes payable, changes in operating lease assets and liabilities for lease termination, cash paid/received for gain/loss on facility operating lease termination, and lessor capital expenditure reimbursements under operating leases; plus: property and casualty insurance proceeds and proceeds from refundable entrance fees, net of refunds; less: non-development capital expenditures and payment of financing lease obligations. Non-development capital expenditures are comprised of corporate and community-level capital expenditures, including those related to maintenance, renovations, upgrades, and other major building infrastructure projects for the Company’s communities and is presented net of lessor reimbursements. Non-development capital expenditures do not include capital expenditures for: community expansions, major community redevelopment and repositioning projects, and the development of new communities.

The Company believes that presentation of Adjusted Free Cash Flow as a liquidity measure is useful to investors because (i) it is one of the metrics used by the Company’s management for budgeting and other planning purposes, to review the Company’s historic and prospective sources of operating liquidity, and to review the Company’s ability to service its outstanding indebtedness, pay dividends to stockholders, engage in share repurchases, and make capital expenditures, including development capital expenditures; and (ii) it provides an indicator to management to determine if adjustments to current spending decisions are needed.

Adjusted Free Cash Flow has material limitations as a liquidity measure, including: (i) it does not represent cash available for dividends, share repurchases, or discretionary expenditures since certain non-discretionary expenditures, including mandatory debt principal payments, are not reflected in this measure; (ii) the cash portion of non-recurring charges related to gain/loss on facility lease termination generally represent charges/gains that may significantly affect the Company’s liquidity; and (iii) the impact of timing of cash expenditures, including the timing of non-development capital expenditures, limits the usefulness of the measure for short-term comparisons.

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The table below reconciles Adjusted Free Cash Flow from net cash provided by (used in) operating activities.

Three Months Ended
(in thousands)June 30, 2024March 31, 2024June 30, 2023
Net cash provided by (used in) operating activities$55,670 $(1,146)$63,824 
Net cash provided by (used in) investing activities(68,457)(6,946)(41,891)
Net cash provided by (used in) financing activities(20,375)54,090 (50,093)
Net increase (decrease) in cash, cash equivalents,
    and restricted cash		$(33,162)$45,998 $(28,160)
Net cash provided by (used in) operating activities$55,670 $(1,146)$63,824 
Distributions from unconsolidated ventures from cumulative share of net earnings— — (430)
Changes in prepaid insurance premiums financed with notes payable(7,617)23,319 (6,301)
Changes in assets and liabilities for lessor capital expenditure reimbursements under operating leases(1,051)(249)— 
Non-development capital expenditures, net(52,325)(50,591)(64,815)
Property and casualty insurance proceeds62 2,642 2,367 
Payment of financing lease obligations(265)(262)(2,126)
Adjusted Free Cash Flow$(5,526)$(26,287)$(7,481)



Contact:
Jessica Hazel
VP Investor Relations
(615) 564-8104
Jessica.Hazel@brookdale.com
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