Brookdale Announces First Quarter 2024 Results

NASHVILLE, Tenn., May 7, 2024 /PRNewswire/ -- Brookdale Senior Living Inc. (NYSE: BKD) ("Brookdale" or the "Company") announced results for the quarter ended March 31, 2024.

HIGHLIGHTS

• First quarter consolidated revenue per available unit (RevPAR) increased 6.7% year-over-year and 5.1% sequentially.
• First quarter consolidated weighted average occupancy increased 160 basis points, accelerating from recent year-over-year growth trends and outperforming normal seasonal expectations.
• Delivered 27.6% first quarter same community operating margin, highest reported margin rate since the initial impact of the pandemic, when excluding prior period grant income.
• Net income (loss) improved 34% year-over-year while Adjusted EBITDA grew 10%, exceeding previously provided guidance range.
• Recognized with the most communities on U.S. News & World Report "Best of" senior living list for third consecutive year and named an Argentum 2024 "Best of the Best" award winner for innovative Brookdale HealthPlus program.

"Through the continued successful execution of our key strategic priorities and our relentless dedication to the health and well-being of our residents and associates, we continue to drive meaningful favorable progress in our day-to-day community operations, and in our financial results," said Lucinda ("Cindy") Baier, Brookdale's President and CEO. "Our consistent forward progress each quarter reinforces my confidence that the plans we are executing, combined with favorable industry supply and demand dynamics, and Brookdale's key differentiators, will support our ability to enrich the lives of even more seniors and to capture the incredible opportunity that lies ahead."

SUMMARY OF FIRST QUARTER FINANCIAL RESULTS

Consolidated summary of operating results and metrics:

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

Recent consolidated occupancy trend:

OVERVIEW OF FIRST QUARTER RESULTS

• Resident fees.
  • 1Q 2024 vs 1Q 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 $16.3 million less in resident fees during the first 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.
  • 1Q 2024 vs 4Q 2023:
    • Resident fees increased primarily due to the increase in RevPOR, reflecting the annual in-place rate increases effective January 1, 2024.
    • The increase was partially offset by the 50 basis point decrease in weighted average occupancy and the disposition of communities, primarily through lease terminations, since the beginning of the prior period, which resulted in $8.3 million less in resident fees during the first quarter of 2024.

• Facility operating expense.
  • 1Q 2024 vs 1Q 2023:
    • The increase in facility operating expense was primarily due to broad inflationary pressure, an additional day of expense due to the leap year, and an increase in property repair expense primarily as a result of severe weather events.
    • These increases were partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $13.7 million less in facility operating expense during the first quarter of 2024, and by a decrease in the use of premium labor, primarily contract labor.
  • 1Q 2024 vs 4Q 2023:
    • The increase in facility operating expense was primarily due to increases in estimated group health insurance expense, property repair expense primarily as a result of severe weather events, estimated incentive compensation expense, payroll taxes, and a seasonal increase in utilities expense.
    • These increases were partially offset by the disposition of communities since the beginning of the prior period, which resulted in $6.6 million less in facility operating expense during the first quarter of 2024, and by one less day of expense compared to the prior year period.

• Cash facility operating lease payments: The increase compared to the first quarter of 2023 was primarily due to a change in the classification of lease payments from financing leases to operating leases as a result of lease amendments subsequent to the beginning of the prior year period.

• Net income (loss).
  • 1Q 2024 vs 1Q 2023: The decrease in net loss was primarily due to the increase in resident fees, partially offset by the increase in facility operating expense.
  • 1Q 2024 vs 4Q 2023: The decrease in net loss was primarily due to a $29.3 million decrease in asset impairment expense, the increase in resident fees, and a decrease in provision for income taxes, partially offset by the increase in facility operating expense.

• Adjusted EBITDA.
  • 1Q 2024 vs 1Q 2023: The increase in Adjusted EBITDA was primarily due to the increase in resident fees partially offset by the increase in facility operating expense and the change in classification of $7.4 million of lease payments for 35 communities as cash facility operating lease payments as a result of lease amendments subsequent to the prior year period.
  • 1Q 2024 vs 4Q 2023: The increase in Adjusted EBITDA was primarily due to the increase in resident fees and partially offset by the increase in facility operating expense.

LIQUIDITY

• Net cash provided by (used in) operating activities.
  • 1Q 2024 vs 1Q 2023: The change in net cash provided by (used in) operating activities was primarily due to an increase in payments under our annual and long-term incentive compensation programs, a decrease in cash received associated with government grants and credits, and the increase in facility operating expense, partially offset by the increase in resident fees.
  • 1Q 2024 vs 4Q 2023: The change in net cash provided by (used in) operating activities was primarily due to payments under our annual and long-term incentive compensation programs and annual insurance premium payments made in the first quarter of 2024, partially offset by the increase in resident fees.

• Non-development capital expenditures, net.
  • 1Q 2024 vs 1Q 2023: The decrease 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.
  • 1Q 2024 vs 4Q 2023: The increase in non-development capital expenditures, net of lessor reimbursements, was primarily due to a $7.8 million decrease in reimbursements from lessors.

• Adjusted Free Cash Flow.
  • 1Q 2024 vs 1Q 2023: The change in Adjusted Free Cash Flow was primarily due to the change in net cash provided by (used in) operating activities, partially offset by the decrease in non-development capital expenditures, net and a decrease in payment of financing lease obligations.
  • 1Q 2024 vs 4Q 2023: The change in Adjusted Free Cash Flow was primarily due to the change in net cash provided by (used in) operating activities, excluding $29.8 million of changes in prepaid property insurance premiums financed with notes payable, and the increase in non-development capital expenditures, net.

• Total liquidity. Total liquidity of $355.1 million as of March 31, 2024 included $318.5 million of unrestricted cash and cash equivalents and $36.5 million of availability on the Company's secured credit facility. Total liquidity as of March 31, 2024 increased $14.4 million from December 31, 2023, primarily due to $50.0 million of mortgage debt proceeds, partially offset by negative $26.3 million of Adjusted Free Cash Flow and repayments of mortgage debt.

FINANCING UPDATE

In February 2024, the Company obtained $50.0 million of debt secured by first priority mortgages on 11 communities. The loan bears interest at a variable rate equal to the Secured Overnight Financing Rate ("SOFR") plus a margin of 350 basis points. The debt matures in February 2027 with two one-year extension options, exercisable subject to certain performance criteria.

2024 OUTLOOK

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

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 first 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 first quarter on May 8, 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 "645544".

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 May 15, 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 "272165".

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 652 communities in 41 states as of March 31, 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 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, 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.