NASHVILLE, Tenn., Nov. 6,
2023 /PRNewswire/ -- Brookdale Senior Living Inc. (NYSE:
BKD) ("Brookdale" or the "Company") announced results for the
quarter ended September 30, 2023.
HIGHLIGHTS
- Third quarter consolidated weighted average occupancy grew 110
basis points sequentially and monthly weighted average occupancy
increased for seven consecutive months between March and
October.
- Same community weighted average occupancy grew 140 basis points
over the prior year third quarter; while same community revenue per
available unit (RevPAR) and revenue per occupied unit (RevPOR)
increased 10.8% and 8.9%, respectively.
- Delivered meaningful improvements in both leadership retention
and associate turnover.
"The incredible progress we are making on our key strategic
priorities is evidenced by our strong year-to-date results and
another quarter of consistently delivering against our commitments.
Our favorable results, both in the third quarter and year-to-date,
are an outcome of the strong execution of intentional,
experience-driven plans, and the dedication to our mission by our
more than 36,000 associates," said Lucinda ("Cindy") Baier,
Brookdale's President and CEO. "With the start of the fourth
quarter, we remain focused on continuing the operational progress
we have made over the course of this year. I am proud to be part of
an organization that cares for our residents deeply, fosters
meaningful connections among our residents and associates, and
enriches the lives of seniors who call Brookdale home."
SUMMARY OF THIRD QUARTER FINANCIAL RESULTS
Consolidated summary of operating results and
metrics:
|
|
Year-Over-Year
Increase /
(Decrease)
|
|
|
Sequential
Increase /
(Decrease)
|
($ in millions,
except RevPAR and RevPOR)
|
3Q
2023
|
3Q
2022
|
Amount
|
Percent
|
|
2Q
2023
|
Amount
|
Percent
|
Resident fee
revenue
|
$
717.1
|
$
650.2
|
$ 66.9
|
10.3 %
|
|
$
710.2
|
$
6.9
|
1.0 %
|
Other operating
income
|
2.6
|
66.8
|
(64.2)
|
(96.1) %
|
|
4.1
|
(1.5)
|
(36.4) %
|
Facility operating
expense
|
537.4
|
525.5
|
11.9
|
2.3 %
|
|
531.1
|
6.3
|
1.2 %
|
Cash facility operating
lease payments
|
64.6
|
50.0
|
14.6
|
29.1 %
|
|
62.1
|
2.5
|
4.1 %
|
Net income
(loss)
|
(48.8)
|
(28.4)
|
20.4
|
72.0 %
|
|
(4.5)
|
44.3
|
NM
|
Adjusted EBITDA
(1)
|
80.2
|
106.9
|
(26.7)
|
(24.9) %
|
|
81.4
|
(1.2)
|
(1.4) %
|
|
|
|
|
|
|
|
|
|
RevPAR
|
$
4,596
|
$
4,150
|
$ 446
|
10.7 %
|
|
$
4,544
|
$
52
|
1.1 %
|
Weighted average
occupancy
|
77.6 %
|
76.4 %
|
120 bps
|
n/a
|
|
76.5 %
|
110 bps
|
n/a
|
RevPOR
|
$
5,919
|
$
5,432
|
$ 487
|
9.0 %
|
|
$
5,939
|
$ (20)
|
(0.3) %
|
|
|
(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.
|
Same community(2) summary of operating
results and metrics:
|
|
|
Year-Over-Year
Increase /
(Decrease)
|
|
|
Sequential
Increase /
(Decrease)
|
($ in millions,
except RevPAR and RevPOR)
|
3Q
2023
|
3Q
2022
|
Amount
|
Percent
|
|
2Q
2023
|
Amount
|
Percent
|
Resident fee
revenue
|
$
702.7
|
$
634.2
|
$ 68.5
|
10.8 %
|
|
$
695.6
|
$ 7.1
|
1.0 %
|
Facility operating
expense
|
$
524.3
|
$
510.0
|
$ 14.3
|
2.8 %
|
|
$
517.0
|
$ 7.3
|
1.4 %
|
RevPAR
|
$
4,588
|
$
4,141
|
$ 447
|
10.8 %
|
|
$
4,541
|
$
47
|
1.0 %
|
Weighted average
occupancy
|
77.9 %
|
76.5 %
|
140 bps
|
n/a
|
|
76.7 %
|
120 bps
|
n/a
|
RevPOR
|
$
5,892
|
$
5,410
|
$ 482
|
8.9 %
|
|
$
5,918
|
$
(26)
|
(0.4) %
|
|
|
(2)
|
The same community
senior housing portfolio includes operating results and data for
632 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:
|
2022
|
|
Jan
|
Feb
|
Mar
|
Apr
|
May
|
Jun
|
Jul
|
Aug
|
Sep
|
Oct
|
Nov
|
Dec
|
Weighted
average
|
73.4 %
|
73.3 %
|
73.6 %
|
73.9 %
|
74.6 %
|
75.2 %
|
75.9 %
|
76.4 %
|
76.9 %
|
77.2 %
|
77.0 %
|
77.0 %
|
Month end
|
74.2 %
|
74.4 %
|
75.0 %
|
75.3 %
|
76.2 %
|
76.6 %
|
77.1 %
|
77.9 %
|
78.4 %
|
78.2 %
|
78.1 %
|
78.1 %
|
|
2023
|
|
Jan
|
Feb
|
Mar
|
Apr
|
May
|
Jun
|
Jul
|
Aug
|
Sep
|
Oct
|
Weighted
average
|
76.6 %
|
76.3 %
|
76.1 %
|
76.2 %
|
76.6 %
|
76.8 %
|
77.1 %
|
77.6 %
|
78.2 %
|
78.6 %
|
Month end
|
77.6 %
|
77.4 %
|
77.6 %
|
77.6 %
|
78.1 %
|
78.2 %
|
78.5 %
|
79.3 %
|
79.7 %
|
79.5 %
|
OVERVIEW OF THIRD QUARTER RESULTS
- Resident fee revenue.
- 3Q 2023 vs 3Q 2022:
- Resident fees increased primarily due to the increases in
RevPOR and occupancy.
- The increase in RevPOR was primarily the result of
the current year rate increase.
- The increase in occupancy primarily reflects the impact of the
Company's execution on key initiatives to rebuild occupancy lost
due to the COVID-19 pandemic.
- 3Q 2023 vs 2Q 2023: Resident fees increased
primarily due to the increase in occupancy, partially offset by
slightly lower RevPOR and the disposition of the Company's one
remaining entrance fee community during the second quarter of
2023.
- Other operating income. During the third quarter of
2022, the Company accepted $61.1
million of Phase 4 grants from the general distribution of
the Public Health and Social Services Emergency Fund ("Provider
Relief Fund") administered by the U.S. Department of Health and
Human Services, under which grants have been made available to
eligible healthcare providers for healthcare related expenses or
lost revenues attributable to COVID-19. The Company recognized
$2.6 million of government grants as
other operating income during the third quarter of 2023.
- Facility operating expense.
- 3Q 2023 vs 3Q 2022: The increase was primarily due
to broad inflationary pressure and higher third-party referral
source costs associated with resident move-ins. These increases
were partially offset by a decrease in the use of premium labor,
primarily contract labor, as the Company's associate turnover has
declined and the size of the Company's workforce has increased from
the prior year period. Additionally, the Company's retention rates
for its community leadership roles increased from the prior year
period.
- 3Q 2023 vs 2Q 2023: The increase in facility
operating expense was primarily due to an additional day of expense
during the third quarter of 2023 and seasonally higher utilities
expense, partially offset by the disposition of the entrance fee
community during the second quarter of 2023.
- Cash facility operating lease payments. The increases
were primarily attributable to a change in the classification of
lease payments as a result of lease amendments subsequent to the
beginning of the prior periods.
- Net income (loss).
- 3Q 2023 vs 3Q 2022: The increase in net loss was
primarily attributable to the $64.2
million decrease in other operating income, an increase in
debt interest expense primarily as a result of increases in
variable interest rates, and the increase in facility operating
expense, partially offset by the increase in resident fee
revenue.
- 3Q 2023 vs 2Q 2023: The increase in net loss was
primarily attributable to a $36.3
million gain on sale of communities, net recognized during
the second quarter of 2023 for the sale of the Company's one
remaining entrance fee community and an $8.6
million increase in asset impairment expense compared to the
prior period.
- Adjusted EBITDA.
- 3Q 2023 vs 3Q 2022: The decrease in Adjusted EBITDA was
primarily attributable to the $64.2
million decrease in other operating income, the change in
classification of $12.8 million of
lease payments for 51 communities as cash facility operating lease
payments as a result of lease amendments subsequent to the prior
year period, and the increase in facility operating expense,
partially offset by the increase in resident fee revenue.
- 3Q 2023 vs 2Q 2023: The decrease in
Adjusted EBITDA was primarily attributable to the change in
classification of $2.4 million of
lease payments for 35 communities as cash facility operating lease
payments as a result of lease amendments during the second quarter
of 2023.
LIQUIDITY
|
|
Year-Over-Year
Increase /
(Decrease)
|
|
Sequential
Increase /
(Decrease)
|
($ in
millions)
|
3Q
2023
|
3Q
2022
|
Amount
|
2Q
2023
|
Amount
|
Net cash provided by
(used in) operating activities
|
$
45.8
|
$
63.5
|
$
(17.7)
|
$
63.8
|
$
(18.0)
|
Non-development capital
expenditures, net
|
47.2
|
43.8
|
3.4
|
64.8
|
(17.6)
|
Adjusted Free Cash Flow
(3)
|
2.5
|
4.1
|
(1.6)
|
(7.5)
|
10.0
|
|
|
(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.
- 3Q 2023 vs 3Q 2022: The decrease in net cash
provided by operating activities was primarily attributable to a
$60.1 million decrease in cash
received associated with government grants and credits, an increase
in facility operating expense, and an increase in debt interest
expense compared to the prior year period, partially offset by an
increase in resident fee revenue compared to the prior year
period.
- 3Q 2023 vs 2Q 2023: The decrease in net cash
provided by operating activities was primarily attributable to a
$9.2 million decrease in cash
received associated with employee retention credits and government
grants and a decrease in cash provided by other changes in
operating assets and liabilities compared to the prior period.
- Non-development capital expenditures, net.
- 3Q 2023 vs 3Q 2022: The increase in non-development
capital expenditures, net of lessor reimbursements, was primarily
attributable to an increase in remediation costs at the Company's
communities resulting from natural disasters primarily from the
impact of Winter Storm Elliott.
- 3Q 2023 vs 2Q 2023: The decrease in non-development
capital expenditures, net of lessor reimbursements, was primarily
attributable to decreases in replacements of major building systems
and remediation costs at the Company's communities resulting from
natural disasters.
- Adjusted Free Cash Flow.
- 3Q 2023 vs 3Q 2022: The $1.6 million decrease in Adjusted Free Cash Flow
was primarily attributable to the decrease in net cash provided by
operating activities, partially offset by an increase in property
and casualty insurance proceeds.
- 3Q 2023 vs 2Q 2023: The $10.0 million change in Adjusted Free Cash Flow
was primarily attributable to the decrease in non-development
capital expenditures, net and an increase in property and casualty
insurance proceeds compared to the prior period, partially offset
by the decrease in net cash provided by operating activities.
- Total liquidity. Total liquidity of $405.4 million as of September 30, 2023
included $331.7 million of
unrestricted cash and cash equivalents, $66.2 million of marketable securities, and
$7.5 million of availability on the
Company's secured credit facility. Total liquidity as of
September 30, 2023 decreased $34.7
million from June 30,
2023, primarily attributable to payments of liabilities for
capital expenditures, debt repayments, and a capital contribution
to the Company's health care services venture, partially offset by
$2.5 million of Adjusted Free Cash
Flow.
TRANSACTION UPDATE
In August 2023, the Company
entered into a new lease agreement under which the Company will
continue to lease 10 communities from affiliates of LTC
Properties, Inc. In October 2023, the
new master lease agreement was amended to include 7 additional
communities. The lease will expire on December 31, 2029, subject to earlier termination
if the Company exercises its favorable purchase options. The
landlord has also agreed to make available a pool to fund costs
associated with certain capital expenditure projects.
On November 1, 2023, the Company
completed the sale of a continuing care retirement community, for
which the Company received cash proceeds of $12.7 million, net of transaction costs, at
closing.
2023 OUTLOOK
For the fourth quarter 2023, the Company is providing the
following guidance:
|
Fourth Quarter 2023
Guidance
|
RevPAR year-over-year
growth
|
9.5% - 10.0%
|
Adjusted
EBITDA
|
$77 million to $82
million
|
In the aggregate, the Company expects its full-year 2023
non-development capital expenditures, net of anticipated lessor
reimbursements, to be approximately $195.0
million, excluding reimbursable remediation costs at the
Company's communities resulting from 2022 natural disasters. The
Company anticipates an additional approximately $28.0 million in reimbursable remediation costs
at the Company's communities resulting from 2022 natural disasters,
and such costs are expected to be reimbursed from the Company's
property and casualty insurance policies in 2023 or 2024.
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 third 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 third quarter on November 7, 2023 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 "864657".
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 November 14, 2023 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
"142154".
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 672
communities in 41 states as of September 30, 2023, with the
ability to serve more than 60,000 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 or YouTube.
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.
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, the impacts of the COVID-19 pandemic, including on the
nation's economy and debt and equity markets and the local
economies in the Company's markets, and on the Company and the
Company's business, results of operations, cash flow, revenue,
expenses, liquidity, and its 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;
the frequency and magnitude of legal actions and liability claims
that may arise due to COVID-19 or the Company's response efforts;
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;
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 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; costs to respond to, and adverse
determinations resulting from, government reviews, audits and
investigations; the cost and difficulty of complying with
increasing and evolving regulation; changes in, or its failure to
comply with, employment-related laws and regulations; unanticipated
costs to comply with legislative or regulatory developments; the
risks associated with current global economic conditions and
general economic factors such as inflation, the consumer price
index, commodity costs, fuel and other energy costs, competition in
the labor market, costs of salaries, wages, benefits, and
insurance, interest rates, and tax rates; 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.
Condensed
Consolidated Statements of Operations
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
(in thousands,
except per share data)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Resident
fees
|
$
717,123
|
|
$
650,248
|
|
$
2,140,688
|
|
$
1,927,610
|
Management
fees
|
2,566
|
|
2,967
|
|
7,653
|
|
9,625
|
Reimbursed costs
incurred on behalf of managed communities
|
34,979
|
|
37,484
|
|
103,932
|
|
112,013
|
Other operating
income
|
2,623
|
|
66,759
|
|
9,073
|
|
75,546
|
Total revenue and
other operating income
|
757,291
|
|
757,458
|
|
2,261,346
|
|
2,124,794
|
|
|
|
|
|
|
|
|
Facility operating
expense (excluding facility depreciation and
amortization of $79,384, $81,405, $236,547, and
$242,281,
respectively)
|
537,411
|
|
525,510
|
|
1,599,336
|
|
1,551,938
|
General and
administrative expense (including non-cash stock-
based
compensation expense of $2,893, $3,403, $8,966, and
$10,907,
respectively)
|
43,076
|
|
41,331
|
|
137,021
|
|
128,209
|
Facility operating
lease expense
|
53,145
|
|
41,317
|
|
149,784
|
|
124,419
|
Depreciation and
amortization
|
85,932
|
|
86,922
|
|
255,314
|
|
259,229
|
Asset
impairment
|
9,086
|
|
5,688
|
|
9,606
|
|
17,362
|
Loss (gain) on sale of
communities, net
|
—
|
|
—
|
|
(36,296)
|
|
—
|
Costs incurred on
behalf of managed communities
|
34,979
|
|
37,484
|
|
103,932
|
|
112,013
|
Income (loss) from
operations
|
(6,338)
|
|
19,206
|
|
42,649
|
|
(68,376)
|
|
|
|
|
|
|
|
|
Interest
income
|
6,323
|
|
2,192
|
|
17,764
|
|
3,065
|
Interest
expense:
|
|
|
|
|
|
|
|
Debt
|
(53,413)
|
|
(41,330)
|
|
(155,984)
|
|
(110,180)
|
Financing lease
obligations
|
(4,950)
|
|
(11,916)
|
|
(16,955)
|
|
(35,968)
|
Amortization of
deferred financing costs
|
(1,910)
|
|
(1,528)
|
|
(5,749)
|
|
(4,590)
|
Change in fair value of
derivatives
|
861
|
|
4,901
|
|
5,130
|
|
9,277
|
Equity in earnings
(loss) of unconsolidated ventures
|
(1,426)
|
|
(2,020)
|
|
(3,156)
|
|
(9,353)
|
Non-operating gain
(loss) on sale of assets, net
|
—
|
|
(56)
|
|
860
|
|
611
|
Other non-operating
income (loss)
|
10,166
|
|
1,877
|
|
16,512
|
|
1,739
|
Income (loss) before
income taxes
|
(50,687)
|
|
(28,674)
|
|
(98,929)
|
|
(213,775)
|
Benefit (provision) for
income taxes
|
1,876
|
|
300
|
|
1,029
|
|
1,086
|
Net income
(loss)
|
(48,811)
|
|
(28,374)
|
|
(97,900)
|
|
(212,689)
|
Net (income) loss
attributable to noncontrolling interest
|
15
|
|
15
|
|
45
|
|
(101)
|
Net income (loss)
attributable to Brookdale Senior Living Inc.
common
stockholders
|
$
(48,796)
|
|
$
(28,359)
|
|
$
(97,855)
|
|
$ (212,790)
|
|
|
|
|
|
|
|
|
Basic and diluted net
income (loss) per share attributable to
Brookdale
Senior Living Inc. common stockholders
|
$
(0.22)
|
|
$
(0.15)
|
|
$
(0.43)
|
|
$
(1.14)
|
|
|
|
|
|
|
|
|
Weighted average shares
used in computing basic and diluted
net income
(loss) per share
|
225,416
|
|
186,790
|
|
225,136
|
|
186,493
|
Condensed
Consolidated Balance Sheets
|
|
(in
thousands)
|
September 30,
2023
|
|
December 31,
2022
|
Cash and cash
equivalents
|
$
331,716
|
|
$
398,850
|
Marketable
securities
|
66,233
|
|
48,680
|
Restricted
cash
|
41,265
|
|
27,735
|
Accounts receivable,
net
|
47,522
|
|
55,761
|
Assets held for
sale
|
12,675
|
|
—
|
Prepaid expenses and
other current assets, net
|
94,536
|
|
106,067
|
Total current
assets
|
593,947
|
|
637,093
|
Property, plant and
equipment and leasehold intangibles, net
|
4,372,072
|
|
4,535,702
|
Operating lease
right-of-use assets
|
707,434
|
|
597,130
|
Other assets,
net
|
155,616
|
|
167,137
|
Total
assets
|
$
5,829,069
|
|
$
5,937,062
|
|
|
|
|
Current portion of
long-term debt
|
$
304,504
|
|
$
66,043
|
Current portion of
financing lease obligations
|
1,031
|
|
24,059
|
Current portion of
operating lease obligations
|
190,703
|
|
176,758
|
Other current
liabilities
|
402,057
|
|
374,345
|
Total current
liabilities
|
898,295
|
|
641,205
|
Long-term debt, less
current portion
|
3,492,860
|
|
3,784,099
|
Financing lease
obligations, less current portion
|
150,763
|
|
224,801
|
Operating lease
obligations, less current portion
|
722,293
|
|
616,973
|
Other
liabilities
|
71,519
|
|
85,831
|
Total
liabilities
|
5,335,730
|
|
5,352,909
|
Total Brookdale Senior
Living Inc. stockholders' equity
|
491,836
|
|
582,605
|
Noncontrolling
interest
|
1,503
|
|
1,548
|
Total
equity
|
493,339
|
|
584,153
|
Total liabilities and
equity
|
$
5,829,069
|
|
$
5,937,062
|
Condensed
Consolidated Statements of Cash Flows
|
|
|
Nine Months Ended
September 30,
|
(in
thousands)
|
2023
|
|
2022
|
Cash Flows from
Operating Activities
|
|
|
|
Net income
(loss)
|
$
(97,900)
|
|
$
(212,689)
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating
activities:
|
|
|
|
Depreciation and
amortization, net
|
261,063
|
|
263,819
|
Asset
impairment
|
9,606
|
|
17,362
|
Equity in (earnings)
loss of unconsolidated ventures
|
3,156
|
|
9,353
|
Distributions from
unconsolidated ventures from cumulative share of net
earnings
|
430
|
|
561
|
Amortization of
entrance fees
|
(732)
|
|
(1,816)
|
Proceeds from deferred
entrance fee revenue
|
477
|
|
2,360
|
Deferred income tax
(benefit) provision
|
(2,015)
|
|
(2,068)
|
Operating lease
expense adjustment
|
(33,820)
|
|
(25,329)
|
Change in fair value
of derivatives
|
(5,130)
|
|
(9,277)
|
Loss (gain) on sale of
assets, net
|
(37,156)
|
|
(611)
|
Non-cash stock-based
compensation expense
|
8,966
|
|
10,907
|
Property and casualty
insurance income
|
(14,047)
|
|
(996)
|
Other non-operating
(income) loss
|
(2,542)
|
|
—
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts receivable,
net
|
8,250
|
|
(411)
|
Prepaid expenses and
other assets, net
|
9,347
|
|
(11,807)
|
Prepaid insurance
premiums financed with notes payable
|
(6,530)
|
|
(5,552)
|
Trade accounts payable
and accrued expenses
|
21,444
|
|
1,548
|
Refundable fees and
deferred revenue
|
8,518
|
|
7,265
|
Operating lease assets
and liabilities for lessor capital expenditure
reimbursements
|
2,244
|
|
9,224
|
Net cash provided by
(used in) operating activities
|
133,629
|
|
51,843
|
Cash Flows from
Investing Activities
|
|
|
|
Purchase of marketable
securities
|
(159,811)
|
|
(230,106)
|
Sale and maturities of
marketable securities
|
145,100
|
|
323,765
|
Capital expenditures,
net of related payables
|
(174,700)
|
|
(150,572)
|
Acquisition of assets,
net of cash acquired
|
(574)
|
|
(6,004)
|
Investment in
unconsolidated ventures
|
(7,589)
|
|
(192)
|
Proceeds from sale of
assets, net
|
43,181
|
|
5,844
|
Property and casualty
insurance proceeds
|
19,536
|
|
—
|
Other
|
(890)
|
|
(228)
|
Net cash provided by
(used in) investing activities
|
(135,747)
|
|
(57,493)
|
Cash Flows from
Financing Activities
|
|
|
|
Proceeds from
debt
|
25,532
|
|
32,031
|
Repayment of debt and
financing lease obligations
|
(91,866)
|
|
(64,190)
|
Payment of financing
costs, net of related payables
|
(940)
|
|
(646)
|
Payments of employee
taxes for withheld shares
|
(1,880)
|
|
(4,282)
|
Other
|
—
|
|
(760)
|
Net cash provided by
(used in) financing activities
|
(69,154)
|
|
(37,847)
|
Net increase
(decrease) in cash, cash equivalents, and restricted
cash
|
(71,272)
|
|
(43,497)
|
Cash, cash
equivalents, and restricted cash at beginning of period
|
474,548
|
|
438,314
|
Cash, cash
equivalents, and restricted cash at end of period
|
$
403,276
|
|
$
394,817
|
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, gain/loss on facility operating lease
termination, operating lease expense adjustment, non-cash
stock-based compensation expense, gain/loss on sale of communities,
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.
The table below reconciles Adjusted EBITDA from net income
(loss).
|
Three Months
Ended
|
|
Nine Months
Ended
|
(in
thousands)
|
September
30, 2023
|
|
June
30,
2023
|
|
September
30, 2022
|
|
September
30, 2023
|
|
September
30, 2022
|
Net income
(loss)
|
$
(48,811)
|
|
$
(4,526)
|
|
$
(28,374)
|
|
$
(97,900)
|
|
$
(212,689)
|
Provision (benefit) for
income taxes
|
(1,876)
|
|
275
|
|
(300)
|
|
(1,029)
|
|
(1,086)
|
Equity in (earnings)
loss of unconsolidated ventures
|
1,426
|
|
1,153
|
|
2,020
|
|
3,156
|
|
9,353
|
Non-operating loss
(gain) on sale of assets, net
|
—
|
|
(860)
|
|
56
|
|
(860)
|
|
(611)
|
Other non-operating
(income) loss
|
(10,166)
|
|
(3,197)
|
|
(1,877)
|
|
(16,512)
|
|
(1,739)
|
Interest
expense
|
59,412
|
|
54,435
|
|
49,873
|
|
173,558
|
|
141,461
|
Interest
income
|
(6,323)
|
|
(6,115)
|
|
(2,192)
|
|
(17,764)
|
|
(3,065)
|
Income (loss) from
operations
|
(6,338)
|
|
41,165
|
|
19,206
|
|
42,649
|
|
(68,376)
|
Depreciation and
amortization
|
85,932
|
|
84,448
|
|
86,922
|
|
255,314
|
|
259,229
|
Asset
impairment
|
9,086
|
|
520
|
|
5,688
|
|
9,606
|
|
17,362
|
Loss (gain) on sale of
communities, net
|
—
|
|
(36,296)
|
|
—
|
|
(36,296)
|
|
—
|
Operating lease expense
adjustment
|
(11,458)
|
|
(11,557)
|
|
(8,714)
|
|
(33,820)
|
|
(25,329)
|
Non-cash stock-based
compensation expense
|
2,893
|
|
2,969
|
|
3,403
|
|
8,966
|
|
10,907
|
Transaction and
organizational restructuring costs
|
105
|
|
123
|
|
346
|
|
3,796
|
|
948
|
Adjusted
EBITDA(4)
|
$
80,220
|
|
$
81,372
|
|
$
106,851
|
|
$
250,215
|
|
$
194,741
|
|
|
(4)
|
Adjusted EBITDA
includes a $2.6 million, $4.1 million, and $66.8 million benefit
for the three months ended September 30, 2023, June 30, 2023, and
September 30, 2022, respectively, and a $9.1 million and $75.5
million benefit for the nine months ended September 30, 2023 and
2022, respectively, of government grants and credits recognized in
other operating income.
|
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. Additionally, Adjusted Free
Cash Flow excludes cash used to purchase interest rate cap
instruments, as well as any cash provided by settlements of
interest rate cap instruments.
The table below reconciles Adjusted Free Cash Flow from net cash
provided by (used in) operating activities.
|
Three Months
Ended
|
(in
thousands)
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Net cash provided by
(used in) operating activities
|
$
45,763
|
|
$
63,824
|
|
$
63,521
|
Net cash provided by
(used in) investing activities
|
(31,837)
|
|
(41,891)
|
|
22,508
|
Net cash provided by
(used in) financing activities
|
(19,232)
|
|
(50,093)
|
|
(19,754)
|
Net increase
(decrease) in cash, cash equivalents,
and
restricted cash
|
$
(5,306)
|
|
$
(28,160)
|
|
$
66,275
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
$
45,763
|
|
$
63,824
|
|
$
63,521
|
Distributions from
unconsolidated ventures from
cumulative share of net earnings
|
—
|
|
(430)
|
|
—
|
Changes in prepaid
insurance premiums financed with
notes payable
|
(6,474)
|
|
(6,301)
|
|
(5,700)
|
Changes in assets and
liabilities for lessor capital
expenditure reimbursements under operating
leases
|
—
|
|
—
|
|
(4,367)
|
Non-development capital
expenditures, net
|
(47,248)
|
|
(64,815)
|
|
(43,819)
|
Property and casualty
insurance proceeds
|
10,747
|
|
2,367
|
|
—
|
Payment of financing
lease obligations
|
(244)
|
|
(2,126)
|
|
(5,506)
|
Adjusted Free Cash
Flow (5)
|
$
2,544
|
|
$
(7,481)
|
|
$
4,129
|
|
(5)
Adjusted Free Cash
Flow includes:
|
- $2.7 million,
$11.9 million, and $62.8 million benefit for the three months ended
September 30, 2023, June 30, 2023, and September 30, 2022,
respectively, from government grants and credits
received.
- $0.1 million, $0.1
million, and $0.3 million for the three months ended September 30,
2023, June 30, 2023, and September 30, 2022, respectively, for
transaction and organizational restructuring costs.
|
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SOURCE Brookdale Senior Living Inc.