Sonida Senior Living, Inc. (the “Company”) (NYSE: SNDA)
announced results for the fourth quarter and for the full year
ended December 31, 2022.
2022 Fourth Quarter Highlights
- Weighted average occupancy for the Company’s owned portfolio of
62 communities increased 310 basis points year-over-year vs. Q4
2021, and 50 basis points sequentially vs. Q3 2022. For the full
year ended December 31, 2022, the weighted average occupancy
increased 390 basis points vs. 2021.
- Resident revenue increased 8.1% year-over-year vs. Q4
2021.
- Net loss was $16.6 million, with a net loss margin of 27.8% as
compared to net income of $1.2 million, with a net income margin of
2.0% in the prior year quarter. Excluding a $31.6 million gain on
debt extinguishment and a $4.6 million loss on settlement of
backstop, net loss margin was 44.8% in the prior year quarter,
representing 17.0% margin improvement year-over-year vs. Q4
2021.
- Adjusted EBITDA was $4.6 million, an increase of 71.3%
year-over-year and 3.7% in sequential quarters, driven primarily by
continued improvement in operations.
- Results for the Company’s same-store, owned portfolio
(“same-store”) of 60 communities:
- Q4 2022 vs. Q4 2021:
- Revenue Per Available Unit (“RevPAR”) increased 7.2%.
- Revenue Per Occupied Unit (“RevPOR”) increased 3.6% to
$3,723.
- Community Net Operating Income, a non-GAAP measure, increased
$1.7 million, or 18.9%.
- Community Net Operating Income Margin, a non-GAAP measure,
increased 210 basis points due to continued improvement in
operations.
- Q4 2022 vs. Q3 2022:
- RevPAR increased 170 basis points, including a 50 basis point
increase in weighted average occupancy.
- RevPOR increased 110 basis points to $3,723.
- Community Net Operating Income, a non-GAAP measure, increased
$0.6 million, or 5.5%.
- Community Net Operating Income Margin, a non-GAAP measure,
increased 70 basis points to 20.3%.
“We are thrilled with what our team has accomplished in Q4 and
throughout 2022, following significant changes to our leadership
team. We continue to grow occupancy and revenue at a rate higher
than most of our industry peers. Additionally, beginning late Q4
2022 and early Q1 2023, we initiated material rate adjustments and
are encouraged by the early, promising impact from those
activities,” said Brandon M. Ribar, President and CEO. “We continue
to focus on operational excellence and enhancements to resident
experience, developing new programs that provide greater value and
improve resident satisfaction,” he added.
SONIDA SENIOR LIVING,
INC.
SUMMARY OF CONSOLIDATED
FINANCIAL RESULTS
FOURTH QUARTERS AND YEARS
ENDED DECEMBER 31, 2022 AND 2021
Quarters Ended December
31,
Quarter ended September
30,
Years Ended December
31,
2022
2021
2022
2022
2021
Consolidated results
Resident revenue
$
53,388
$
49,394
$
52,485
$
208,703
$
190,213
Management fees
523
625
608
2,359
3,603
Operating expenses
45,073
42,275
43,123
171,635
157,269
General and administrative expenses
(4)
6,723
8,143
5,851
30,286
32,328
Gain (loss) on extinguishment of debt,
net
—
31,609
—
(641
)
199,901
Long-lived asset impairment
1,588
6,502
—
1,588
6,502
Loss on settlement of backstop
—
(4,600
)
—
—
(4,600
)
Other income (expense)
1,348
—
—
10,011
8,270
Income/(Loss) before provision for income
taxes
(16,742
)
1,390
(13,739
)
(54,315
)
126,190
Net income (loss)
(16,574
)
1,175
(13,739
)
(54,401
)
125,607
Adjusted EBITDA (1)
4,609
2,690
4,446
16,981
10,843
Same-Store Results
Resident revenue (2)
$
52,826
$
49,394
$
51,925
$
206,737
$
189,837
Community net operating income (NOI)
(1)
$
10,720
$
9,011
$
10,157
$
41,661
$
38,271
Community net operating income margin
(1)
20.3
%
18.2
%
19.6
%
20.2
%
20.2
%
Weighted average occupancy (3)
84.2
%
81.3
%
83.7
%
83.3
%
79.0
%
(1) Adjusted EBITDA, Community Net
Operating Income and Community Net Operating Income Margin are
financial measures that are not calculated in accordance with U.S.
Generally Accepted Accounting Principles (“GAAP”). See
“Reconciliations of Non-GAAP Financial Measures” for the Company's
definition of such measures, reconciliations to the most comparable
GAAP financial measures, and other information regarding the use of
the Company's non-GAAP financial measures.
(2) Same-store resident revenue excludes $0.6 million for
each of the quarters ended December 31, 2022 and September 30, 2022
related to the revenues earned in the operations of the two Indiana
senior living communities acquired by the Company in February 2022.
(3) Weighted average occupancy for all periods presented
excludes the operations of the two Indiana senior living
communities acquired by the Company in February 2022. (4)
General and administrative expenses include non-cash stock-based
compensation expense of $0.8 million and $1.5 million for the
quarters ended December 31, 2022 and 2021, respectively, and
non-cash stock-based compensation expense of $4.3 million and $2.8
million for the years ended December 31, 2022 and 2021,
respectively.
Results of Operations
Three months ended December 31, 2022 as compared to three
months ended December 31, 2021
Revenues
Resident revenue for the three months ended December 31, 2022
was $53.4 million as compared to $49.4 million for the three months
ended December 31, 2021, an increase of $4.0 million, or 8.1%. The
increase in revenue was primarily due to increased occupancy,
increased average rent rates, and the acquisition of two Indiana
communities during the first quarter of 2022.
Management fee revenue for the three months ended December 31,
2022 decreased by $0.1 million as compared to the three months
ended December 31, 2021, primarily as a result of managing fewer
communities in the fourth quarter of 2022.
Managed community reimbursement revenue for the three months
ended December 31, 2022 was $5.6 million as compared to $7.6
million for the three months ended December 31, 2021, representing
a decrease of $2.0 million. The decrease was primarily a result of
transitioning two Fannie Mae communities to other operators in the
fourth quarter of 2021.
Expenses
Operating expenses for the three months ended December 31, 2022
were $45.1 million as compared to $42.3 million for the three
months ended December 31, 2021, an increase of $2.8 million. The
increase is primarily due to a $1.3 million increase in labor and
employee-related expenses, a $0.5 million increase in insurance
costs, a $0.5 million increase in casualty losses, a $0.3 million
increase in utility costs, and a $0.2 million increase in property
taxes.
General and administrative expenses for the three months ended
December 31, 2022 were $6.7 million as compared to $8.1 million for
the three months ended December 31, 2021, representing a decrease
of $1.4 million. This decrease is primarily due to a $0.7 million
decrease in stock-based compensation expense and a $0.9 million
decrease in bonus.
Managed community reimbursement expense for the three months
ended December 31, 2022 was $5.6 million as compared to $7.6
million for the three months ended December 31, 2021, representing
a decrease of $2.0 million. The decrease was primarily a result of
transitioning of legal ownership of three Fannie Mae communities to
other operators in the fourth quarter of 2021.
Interest expense for the three months ended December 31, 2022
was $9.3 million as compared to $8.7 million for the three months
ended December 31, 2021, representing a increase of $0.6 million
primarily due to higher interest rates associated with the
Company’s variable rate debt during the fourth quarter of 2022.
Gain on extinguishment of debt was $31.6 million for the three
months ended December 31, 2021, with no comparable amount during
the three months ended December 31, 2022. The 2021 gain related to
the derecognition of notes payable and liabilities as a result of
the transition of legal ownership of three communities to Fannie
Mae, the holder of the related non-recourse debt.
The Company reported a net loss of $16.6 million for the three
months ended December 31, 2022, compared to net income of $1.2
million for the three months ended December 31, 2021. Major factors
impacting the comparison of net income for the three months ended
December 31, 2022 and December 31, 2021 include gain on
extinguishment of debt of $31.6 million in the fourth quarter of
2021 referenced above, which was partially offset by improved year
over year operational performance.
Adjusted EBITDA for the three months ended December 31, 2022 was
$4.6 million compared to $2.7 million for the three months ended
December 31, 2021. Adjusted EBITDA excluding COVID-19 expenses was
$4.7 million for the three months ended December 31, 2022, compared
to $2.9 million for the three months ended December 31, 2021. See
“Reconciliation of Non-GAAP Financial Measures” below.
Three months ended December 31, 2022 as compared to three
months ended September 30, 2022
Revenues
Resident revenue for the three months ended December 31, 2022
was $53.4 million as compared to $52.5 million for the three months
ended September 30, 2022, representing an increase of $0.9 million,
or 1.8%. The increase in revenue was primarily due to increased
occupancy and increased average rent rates during the fourth
quarter of 2022.
Management fee revenue for the three months ended December 31,
2022 was $0.5 million as compared to $0.6 million for three months
ended September 30, 2022, primarily as a result of managing fewer
communities during the fourth quarter of 2022 in connection with a
planned transition of four communities in October 2022.
Managed community reimbursement revenue for the three months
ended December 31, 2022 and September 30, 2022 were $5.6 million
and $7.7 million, respectively. The decrease is primarily a result
of the corresponding decrease in reimbursements of operating
expenses, as described below.
Expenses
Operating expenses for the three months ended December 31, 2022
were $45.1 million as compared to $43.1 million for the three
months ended September 30, 2022, an increase of $2.0 million. The
increase is primarily due to $0.4 million increase in labor costs,
$0.8 million increase in casualty loss related to a December ice
storm, $0.2 million increase in supplies, and $0.4 million increase
in all other operating costs during the fourth quarter of 2022.
General and administrative expenses for the three months ended
December 31, 2022 were $6.7 million as compared to $5.9 million for
the three months ended September 30, 2022, an increase of $0.8
million, primarily due to $1.4 million increase in non-cash
stock-based compensation expense during the fourth quarter of 2022,
partially offset by $0.6 million decrease in labor-related
expenses.
Managed community reimbursement expense for the three months
ended December 31, 2022 and September 30, 2022 were $5.6 million
and $7.7 million, respectively, primarily as a result of managing
fewer communities.
Interest expense for the three months ended December 31, 2022
was $9.3 million as compared to $8.2 million for the three months
ended September 30, 2022, representing an increase of $1.1 million.
The increase was primarily due to the recent rise in interest rates
associated with the Company’s variable rate mortgages during the
fourth quarter of 2022. As of December 31, 2022, all of the
Company’s variable rate debt (approximately 20.4% of total debt)
had interest rate cap instruments in place.
The Company reported a net loss of $16.6 million for the three
months ended December 31, 2022 compared to a net loss of $13.7
million for the three months ended September 30, 2022. Major
factors impacting the comparison of net income for the three months
ended December 31, 2022 and September 31, 2022 include $1.6 million
impairment charge and $1.1 million casualty loss related to winter
storm Elliott.
Adjusted EBITDA for the three months ended December 31, 2022 was
$4.6 million compared to $4.4 million for the three months ended
September 30, 2022. Adjusted EBITDA excluding COVID-19 expenses was
$4.7 million for the three months ended December 31, 2022 compared
to $4.5 million for the three months ended September 30, 2022. See
“Reconciliation of Non-GAAP Financial Measures” below.
Twelve months ended December 31, 2022 as compared to twelve
months ended December 31, 2021
Revenues
Resident revenue for the year ended December 31, 2022 was $208.7
million as compared to $190.2 million for the year ended December
31, 2021, an increase of $18.5 million, or 9.7%. The increase in
revenue was primarily due to increased occupancy, increased average
rent rates, and the acquisition of two new communities during
2022.
Management fee revenue for the year ended December 31, 2022
decreased by $1.2 million as compared to the year ended December
31, 2021, primarily as a result of managing fewer communities in
2022.
Managed community reimbursement revenue for the year ended
December 31, 2022 was $27.4 million as compared to $40.9 million
for the year ended December 31, 2021, representing a decrease of
$13.5 million, or 33.0%. The decrease was primarily a result of
transitioning the operations of eighteen Fannie Mae communities to
other operators during the year ended December 31, 2021.
Expenses
Total expenses were $269.3 million during fiscal year 2022
compared to $274.9 million during fiscal year 2021, representing a
decrease of $5.6 million. This decrease was primarily the result of
a decrease in long-lived asset impairment of $4.9 million, a
decrease of $2.0 million in general and administrative expenses,
and a decrease of $13.5 million in managed community reimbursement
expense in 2022 as compared to 2021. These decreases were partially
offset by a $14.4 million increase in operating expenses.
Operating expenses for the year ended December 31, 2022 were
$171.6 million as compared to $157.3 million for the year ended
December 31, 2021, an increase of $14.3 million, or 9.1%. The
increase is primarily due to a $9.9 million increase in labor and
employee-related expenses including premium labor and contract
labor, $1.3 million increase in utilities, $1.2 million increase in
food costs, $0.6 million increase in supplies, and $0.6 million
increase in promotion and marketing expenses in fiscal 2022.
General and administrative expenses for the year ended December
31, 2022 were $30.3 million as compared to $32.3 million for year
ended December 31, 2021, a decrease of $2.0 million, or 6.2%. The
decrease is primarily due to a $2.3 million decrease in bonuses and
a $1.3 million decrease in employee insurance and workers'
compensation, partially offset by a $1.5 million increase in
non-cash stock-based compensation expense. Non-cash stock-based
compensation expense included in general and administrative
expenses was $4.3 million and $2.8 million for the years ended
December 31, 2022 and 2021, respectively.
The $0.6 million increase in depreciation and amortization
expense is primarily due to the acquisition of the two Indiana
communities during fiscal year 2022.
During the year ended December 31, 2022, the Company recorded a
non-cash impairment charge of $1.6 million related to the
management's commitment to a plan to sell the community shortly
after the balance sheet date, and the agreed-upon selling price
being below the community's carrying amount, compared to $6.5
million of non-cash impairment charges recorded during the year
ended December 31, 2021, which was related to one owned community
with decreased cash flow estimates as a result of recurring net
operating losses.
Managed community reimbursement expense for the year ended
December 31, 2022 was $27.4 million as compared to $40.9 million
for the year ended December 31, 2021, a decrease of $13.5 million,
or 33.0%. The decrease was primarily a result of transitioning the
operations of eighteen Fannie Mae communities to other operators
during the year ended December 31, 2021.
Interest income generally reflects interest earned on the
investment of cash balances and escrow funds or interest associated
with certain income tax refunds or property tax settlements.
Interest income increased by $0.2 million compared to the prior
year primarily due to more active cash management and heavier
investment into money market accounts during 2022.
Interest expense for the year ended December 31, 2022 was $33.0
million as compared to $37.2 million for the year ended December
31, 2021, a decrease of $4.2 million, due to lower overall
borrowings in 2022, partially offset by increased interest rates
associated with the Company’s variable rate debt.
Loss on extinguishment of debt for the year ended December 31,
2022 was $0.6 million as compared to a gain on extinguishment of
debt of $199.9 million for the year ended December 31, 2021, a
decrease of $200.5 million. The 2022 loss was incurred in
conjunction with the refinancing of debt during the first quarter
of 2022. The 2021 gain is related to the derecognition of notes
payable and liabilities as a result of transition of legal
ownership of sixteen communities to Fannie Mae, the holder of the
related non-recourse debt.
Other income for the year ended December 31, 2022 was $10.0
million as compared to income of $8.3 million for the year ended
December 31, 2021. Both current year and prior year periods include
cash received for CARES Act funding for healthcare-related expenses
or lost revenues attributable to COVID-19 of $9.1 million and $8.7
million, respectively.
As a result of the foregoing factors, the Company reported net
loss and comprehensive loss of $54.4 million for the year ended
December 31, 2022, compared to net income and comprehensive income
of $125.6 million for the year ended December 31, 2021.
Adjusted EBITDA for the year ended December 31, 2022 was $17.0
million compared to $10.8 million for the year ended December 31,
2021. Adjusted EBITDA excluding COVID-19 expenses was $17.4 million
for the year ended December 31, 2022 compared to $12.7 million for
the year ended December 31, 2021. See “Reconciliation of Non-GAAP
Financial Measures” below.
Subsequent Events
Transactions Involving Certain Fannie Mae
Loans
As of December 31, 2022, two properties remained for which the
legal ownership had not been transferred back to Fannie Mae. The
transfer of legal ownership of these properties had previously been
deemed probable, and the Company had already transitioned
operations of the assets. At December 31, 2022, the outstanding
debt related to these properties that was included in the current
portion of notes payable was $31.8 million, net of deferred loan
costs of $0.2 million, and the related accrued interest was $4.1
million.
On January 11, 2023, Fannie Mae completed the legal transfer of
ownership on the two properties. As a result of the change in legal
ownership, the Company will derecognize all of the debt and accrued
interest related to the two properties, which will result in the
gain on extinguishment of debt of approximately $36 million during
the first quarter of 2023.
Protective Life Loans
During the first quarter of 2023, the Company elected not to
make principal and interest payments due in February and March of
2023 related to certain non-recourse mortgage loan agreements
covering four of the Company’s properties, with outstanding debt
amount under such agreements totaling $70.0 million as of December
31, 2022. Therefore, the Company is in default on these loans, and
was so notified by the lender on March 1, 2023. The Company is
currently engaged in active negotiations with the lender for these
loans as well as the additional Protective Life loans relating to
six communities to resolve this matter and obtain more favorable
terms. However, we cannot give any assurance that a mutually
agreeable resolution will be reached.
COVID-19 Relief Grants
The Company received approximately $2.0 million in various state
grants during January and February of 2023.
Liquidity and Capital
Resources
Cash flows
The table below presents a summary of the Company’s net cash
provided by (used in) operating, investing, and financing
activities (in thousands):
Twelve months ended December
31,
2022
2021
Net cash used in operating activities
$
(2,578
)
$
(28,795
)
Net cash used in investing activities
(36,904
)
(10,443
)
Net cash (used in) provided by financing
activities
(22,652
)
99,415
(Decrease) increase in cash and cash
equivalents
$
(62,134
)
$
60,177
In addition to $16.9 million of unrestricted cash balances on
hand at December 31, 2022, the Company’s principal sources of
liquidity are expected to be cash flows from operations, COVID-19
or related relief grants from various state agencies, and/or
proceeds from the sale of select owned assets. During November
2021, the Company raised net proceeds of $141.4 million from the
private placement of Series A Preferred Stock and common stock to
the Conversant Investors and the sale of common stock pursuant to
the Rights Offering. The A&R Investment Agreement allows for,
subject to certain conditions, an additional $25 million equity
investment by the Conversant Investors to fund future growth
initiatives (as more fully described in the A&R Investment
Agreement).
In March 2022, the Company completed the refinancing of certain
existing mortgage debt with Ally Bank (the “Refinance Facility”)
for ten of its communities. The Refinance Facility includes an
initial term loan of $80 million. In addition, $10 million is
available as delayed loans that can be borrowed upon achieving and
maintaining certain financial covenant requirements, and up to an
additional uncommitted $40 million may be available in the lender's
discretion to fund future growth initiatives. On December 13, 2022,
the Company entered into an agreement with Ally Bank to amend the
Refinance Facility by adding two additional subsidiaries of the
Company (which own the two Indiana properties acquired during the
first quarter of 2022) as borrowers. The amendment increased the
principal by $8.1 million to $88.1 million, with an additional $10
million still available as delayed loans that can be borrowed upon
achieving and maintaining certain financial covenant
requirements.
On November 30, 2022, in order to comply with the lender’s
requirements under the Refinance Facility, the Company entered into
a SOFR-based interest rate cap transaction for an aggregate
notional amount of $88.1 million at a cost of $2.4 million. The
interest rate cap agreement has a 12-month term and effectively
caps the interest rate at 2.25% with respect to the portion of our
floating rate indebtedness. As of December 31, 2022, the entire
balance of our outstanding variable-rate debt obligations was
covered by the interest rate transactions entered into during 2022
to better manage our exposure to market risks associated with the
fluctuations in interest rates.
The Company, from time to time, considers and evaluates
financial and capital raising transactions related to its
portfolio, including debt refinancings, purchases and sales of
assets and other transactions. There can be no assurance that the
Company will continue to generate cash flows at or above current
levels, or that the Company will be able to obtain the capital
necessary to meet the Company’s short and long-term capital
requirements.
Recent changes in the current economic environment, and other
future changes, could result in decreases in the fair value of
assets, slowing of transactions, and the tightening of liquidity
and credit markets. These impacts could make securing debt or
refinancings for the Company or buyers of the Company’s properties
more difficult or on terms not acceptable to the Company. The
Company’s actual liquidity and capital funding requirements depend
on numerous factors, including its operating results, its capital
expenditures for community investment, and general economic
conditions, as well as other factors described in the Company’s SEC
filings.
Going Concern
As disclosed in our Annual Report on Form 10-K, due to the
current inflationary environment, elevated interest rates, and
continued impact of COVID-19 on our financial position, as well as
our upcoming debt maturities, our management concluded as of
December 31, 2022 there is substantial doubt about our ability to
continue as a going concern.
The Company has implemented plans, which include strategic and
cash-preservation initiatives, designed to provide the Company with
adequate liquidity to meet its obligations for at least the
12-month period following the date its fiscal year 2022 financial
statements are issued. While the Company’s plans are designed to
provide it with adequate liquidity to meet its obligations for at
least the 12-month period following the date its financial
statements are issued, the remediation plan is dependent on
conditions and matters that may be outside of the Company’s
control, and no assurance can be given that certain options will be
available on terms acceptable to the Company, or at all. If the
Company is unable to successfully execute all of the planned
initiatives or if the plan does not fully mitigate the Company’s
liquidity challenges, the Company’s operating plans and resulting
cash flows along with its cash and cash equivalents and other
sources of liquidity may not be sufficient to fund operations for
the 12-month period following the date the financial statements are
issued.
Debt Covenants
Certain of our debt agreements contain restrictions and
financial covenants, such as those requiring us to maintain
prescribed minimum debt service coverage ratios, in each case on a
multi-community basis. The debt service coverage ratios are
generally calculated as revenues less operating expenses, including
an implied management fee, divided by the debt (principal and
interest). Furthermore, our debt is secured by our communities and
if a Company is not able to comply with some of the financial
covenants and other restrictions contained in our debt instruments,
this could trigger an event of default under our loan agreements.
An event of default, subject to cure provisions in certain
instances, would give the respective lenders the right to
accelerate the related debt and to declare all amounts outstanding
to be immediately due and payable, or foreclose on collateral
securing the outstanding indebtedness. We cannot provide assurance
that we will be able to pay the debts if they become due upon
acceleration following an event of default.
Except for the non-compliance with Fannie Mae mortgages for the
two properties in the process of transition back to Fannie Mae, and
certain mortgage loan agreements with Protective Life (as described
above), the Company was in compliance with all aspects of its
outstanding indebtedness at December 31, 2022.
Impact of Inflation
The continuation of the current inflationary environment could
affect the Company’s future revenues and results of operations
because of, among other things, the Company’s dependence on senior
residents, many of whom rely primarily on fixed incomes to pay for
the Company’s services. As a result, during inflationary periods,
the Company may not be able to increase resident service fees to
account fully for increased operating expenses. In structuring its
fees, the Company attempts to anticipate inflation levels, but
there can be no assurances that the Company will be able to
anticipate fully or otherwise respond to any future inflationary
pressures.
The United States consumer price index increased 6.5% during
2022, with food and energy prices increasing above 10%. We
mitigated a portion of the increase in food costs with the scale
benefit of a higher number of residents, along with appropriate
product substitution. Despite our mitigation efforts and with
higher occupancy, for 2022 our non-labor operating expense in our
same-store community portfolio increased approximately $4.0
million, or 6.8%, compared to the prior year, while the labor
component of our operating expense increased approximately $9.5
million, or 10.2% during 2022 compared to 2021 primarily due to
merit and market wage rate adjustments, more hours worked with
higher occupancy during 2022, and an increase in the use of more
expensive premium labor, primarily contract labor and overtime. For
2023, we expect to continue to experience inflationary
pressures.
Definitions of RevPAR and RevPOR
RevPAR, or average monthly revenue per available unit, is
defined by the Company as resident revenue for the period, 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 revenue per occupied unit, is defined
by the Company as resident revenue for the period, 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.
Conference Call
Information
The Company will host a conference call with senior management
to discuss the Company’s financial results for the fourth quarter
and full year 2022, on Thursday March 30, 2023, at 2:30 p.m.
Eastern Time. To participate, dial 877-407-0989 (no passcode
required). A link to the simultaneous webcast of the teleconference
will be available at:
https://www.webcast-eqs.com/register/sonidaseniorliving_033023_en/en
For the convenience of the Company’s shareholders and the
public, the conference call will be recorded and available for
replay starting March 31, 2023 through April 14, 2023. To access
the conference call replay, call 877-660-6853, passcode 13737176. A
transcript of the call will be posted in the Investor Relations
section of the Company’s website.
About the Company
Dallas-based Sonida Senior Living, Inc. is a leading
owner-operator of independent living, assisted living and memory
care communities and services for senior adults. The Company
provides compassionate, resident-centric services and care as well
as engaging programming operating 72 senior housing communities in
18 states with an aggregate capacity of approximately 8,000
residents, including 62 communities which the Company owns and 10
communities that the Company manages on behalf of third parties.
For more information, visit www.sonidaseniorliving.com or connect
with the Company on Facebook, Twitter or LinkedIn.
Safe Harbor
This release contains forward-looking statements which are
subject to certain risks and uncertainties that could cause our
actual results and financial condition of Sonida Senior Living,
Inc. (the “Company,” “we,” “our” or “us”) to differ materially from
those indicated in the forward-looking statements, including, among
others, the risks, uncertainties and factors set forth under “Item.
1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2022, filed with the Securities and
Exchange Commission (the “SEC”) on March 30, 2023, and also include
the following:
- the impact of COVID-19, including the actions taken to prevent
or contain the spread of COVID-19, the transmission of its highly
contagious variants and sub-lineages and the development and
availability of vaccinations and other related treatments, or
another epidemic, pandemic or other health crisis;
- the Company’s ability to generate sufficient cash flows from
operations, additional proceeds from debt financings or
refinancings, and proceeds from the sale of assets to satisfy its
short and long-term debt obligations and to fund the Company’s
capital improvement projects to expand, redevelop, and/or
reposition its senior living communities;
- increases in market interest rates that increase the cost of
certain of our debt obligations;
- increased competition for, or a shortage of, skilled workers,
including due to the COVID-19 pandemic or general labor market
conditions, along with wage pressures resulting from such increased
competition, low unemployment levels, use of contract labor,
minimum wage increases and/or changes in overtime laws;
- the Company’s ability to obtain additional capital on terms
acceptable to it;
- the Company’s ability to extend or refinance its existing debt
as such debt matures;
- the Company’s compliance with its debt agreements, including
certain financial covenants, and the risk of cross-default in the
event such non-compliance occurs;
- the Company’s ability to complete acquisitions and dispositions
upon favorable terms or at all;
- the risk of oversupply and increased competition in the markets
which the Company operates;
- the Company’s ability to improve and maintain controls over
financial reporting and remediate the identified material weakness
discussed in Item 9 of our Annual Report on Form 10-K;
- the departure of certain of the Company’s key officers and
personnel;
- the cost and difficulty of complying with applicable licensure,
legislative oversight, or regulatory changes;
- 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; and
- changes in accounting principles and interpretations.
We caution you that the risks, uncertainties and other factors
referenced above may not contain all of the risks, uncertainties
and other factors that are important to you. In addition, we cannot
assure you that we will realize the results, benefits or outcomes
that we expect or anticipate or, even if substantially realized,
that they will result in the consequences or affect us or our
business in the way expected.
For information about Sonida Senior Living, visit www.sonidaseniorliving.com
SONIDA SENIOR LIVING,
INC.
CONSOLIDATED STATEMENT OF
OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except per
share data)
Quarters Ended December
31,
Years Ended December
31,
2022
2021
2022
2021
Revenues:
Resident revenue
$
53,388
$
49,394
$
208,703
$
190,213
Management fees
523
625
2,359
3,603
Managed community reimbursement
revenue
5,614
7,585
27,371
40,902
Total revenues
$
59,525
$
57,604
$
238,433
$
234,718
Expenses:
Operating expenses
45,073
42,275
171,635
157,269
General and administrative expense
6,723
8,143
30,286
32,328
Depreciation and amortization expense
9,508
10,059
38,448
37,870
Long-lived asset impairment
1,588
6,502
1,588
6,502
Managed community reimbursement
revenue
5,614
7,585
27,371
40,902
Total expenses
68,506
74,564
269,328
274,871
Other income (expense):
Interest income
188
1
235
6
Interest expense
(9,297
)
(8,660
)
(33,025
)
(37,234
)
Gain (loss) on extinguishment of debt,
net
—
31,609
(641
)
199,901
Loss on settlement of backstop
—
(4,600
)
—
(4,600
)
Other income, net
1,348
—
10,011
8,270
Income (loss) before provision for income
taxes
(16,742
)
1,390
(54,315
)
126,190
Provision for income taxes
168
(215
)
(86
)
(583
)
Net (loss) income
$
(16,574
)
$
1,175
$
(54,401
)
$
125,607
Dividends on Series A convertible
preferred stock
—
(718
)
(2,269
)
(718
)
Undeclared dividends on Series A
convertible preferred
(1,168
)
—
(2,300
)
—
Remeasurement of Series A convertible
preferred stock
—
(13,474
)
—
(13,474
)
Net income (loss) attributable to common
stock
$
(17,742
)
$
(13,017
)
$
(58,970
)
$
111,415
Per share data:
Basic net income (loss) per share
$
(2.79
)
$
(2.39
)
$
(9.27
)
$
38.24
Diluted net income (loss) per share
$
(2.79
)
$
(2.39
)
$
(9.27
)
$
37.92
Weighted average shares outstanding —
basic
6,365
4,795
6,359
2,750
Weighted average shares outstanding —
diluted
6,365
4,795
6,359
2,773
Comprehensive income (loss)
$
(16,574
)
$
1,175
$
(54,401
)
$
125,607
SONIDA SENIOR LIVING,
INC.
CONSOLIDATED BALANCE
SHEET
(in thousands)
December 31, 2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
16,913
$
78,691
Restricted cash
13,829
14,185
Accounts receivable, net
6,114
3,983
Federal and state income taxes
receivable
2
—
Prepaid expenses and other
4,097
9,328
Derivative assets, current
2,611
—
Total current assets
43,566
106,187
Property and equipment, net
615,754
621,199
Derivative assets, non-current
111
—
Other assets, net
1,837
1,166
Total assets
$
661,268
$
728,552
LIABILITIES AND SHAREHOLDERS’
DEFICIT
Current liabilities:
Accounts payable
$
7,272
$
9,168
Accrued expenses
36,944
37,026
Current portion of notes payable, net of
deferred loan costs
46,029
69,769
Current portion of deferred income
3,419
3,162
Federal and state income taxes payable
—
599
Customer deposits
653
758
Total current liabilities
94,317
95,187
120,482
Other long-term liabilities
113
288
Notes payable, net of deferred loan costs
and current portion
625,002
613,342
Total liabilities
719,432
734,112
Commitments and contingencies
Redeemable preferred stock:
Series A convertible preferred stock,
$0.01 par value; 41 shares authorized, 41 shares issued and
outstanding as of December 31, 2022 and 2021
43,550
41,250
Shareholders’ deficit:
Preferred stock, $0.01 par value:
Authorized shares — 15,000 as of December
31, 2022 and 2021; none issued or outstanding, except Series A
convertible preferred stock as noted above
—
—
Common stock, $0.01 par value:
Authorized shares — 15,000 and 15,000 as
of December 31, 2022 and 2021, respectively; 6,670 and 6,634 shares
issued and outstanding as of December 31, 2022 and 2021,
respectively
67
66
Additional paid-in capital
295,277
295,781
Retained deficit
(397,058
)
(342,657
)
Total shareholders’ deficit
(101,714
)
(46,810
)
Total liabilities, redeemable preferred
stock and shareholders’ deficit
$
661,268
$
728,552
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
This earnings release contains the financial measures (1)
Same-Store Community Net Operating Income, (2) Same-Store Community
Net Operating Income Margin, (3) Adjusted EBITDA, (4) Adjusted
EBITDA excluding COVID-19 impact, (5) Revenue per Occupied Unit
(RevPOR) and (6) Revenue per Available Unit (RevPAR), all of 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. Investors are cautioned 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. Investors are urged
to review the following reconciliations of these non-GAAP financial
measures from the most comparable financial measures determined in
accordance with GAAP.
.SAME-STORE NET OPERATING INCOME AND SAME-STORE NET
OPERATING INCOME MARGIN (UNAUDITED)
Same-Store Community Net Operating Income and Same-Store
Community Net Operating Income Margin are non-GAAP performance
measures for the Company’s portfolio of 60 owned continuing
communities that the Company defines as net income (loss)
excluding: general and administrative expenses (inclusive of
stock-based compensation expense), interest income, interest
expense, other income/expense, provision for income taxes,
settlement fees and expenses, revenue and operating expenses from
the Company’s disposed properties; and further adjusted to exclude
income/expense associated with non-cash, non-operational,
transactional, 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 depreciation and
amortization expense, gain(loss) on extinguishment of debt,
gain(loss) on disposition of assets, long-lived asset impairment,
and loss on non-recurring settlements with third parties. The
Same-Store Community Net Operating Income Margin is calculated by
dividing Same-Store Community Net Operating Income by same-store
community resident revenue.
The Company believes that presentation of Same-Store Community
Net Operating Income and Same-Store Community Net Operating Income
Margin as performance measures are useful to investors because (i)
they are one of the metrics used by the Company’s management to
evaluate the performance of our core portfolio of 60 owned
continuing communities, to review the Company’s comparable historic
and prospective core operating performance of the 60 owned
continuing communities, and to make day-to-day operating decisions;
(ii) they provide 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.
Same-Store Community Net Operating Income and Same-Store Net
Community Operating Income Margin have material limitations as a
performance measure, including: (i) excluded general and
administrative expenses are necessary to operate the Company and
oversee its communities; (ii) excluded interest is necessary to
operate the Company’s business under its current financing and
capital structure; (iii) excluded depreciation, amortization and
impairment charges may represent the wear and tear and/or reduction
in value of the Company’s communities, and other assets and may be
indicative of future needs for capital expenditures; and (iv) the
Company may incur income/expense similar to those for which
adjustments are made, such as gain(loss) on debt extinguishment,
gain(loss) on disposition of assets, loss on settlements, non-cash
stock-based compensation expense, and transaction and other costs,
and such income/expense may significantly affect the Company’s
operating results.
(in thousands)
Three Months Ended
December 31,
Quarter ended September
30,
Twelve Months Ended
December 31,
2022
2021
2022
2022
2021
Same-store Community Net Operating
Income
Net income (loss)
$
(16,574
)
$
1,175
$
(13,739
)
$
(54,401
)
$
125,607
General and administrative expenses
(4)
6,723
8,143
5,851
30,286
32,328
Depreciation and amortization expense
9,508
10,059
9,691
38,448
37,870
Long-lived asset impairment
1,588
6,502
—
1,588
6,502
Interest income
(188
)
(1
)
(44
)
(235
)
(6
)
Interest expense
9,297
8,660
8,205
33,025
37,234
(Gain) loss on extinguishment of debt
—
(31,609
)
—
641
(199,901
)
Loss on settlement of backstop
—
4,600
—
—
4,600
Other (income) expense
(1,391
)
—
5
(10,011
)
(8,270
)
Provision for income taxes
—
215
—
86
583
Settlement fees and expenses, net (1)
294
495
26
241
1,888
Consolidated community net operating
income
$
9,257
$
8,239
$
9,995
$
39,668
$
38,435
Net operating (income) loss for non
same-store communities (2), and corporate activity
1,463
772
162
1,993
(164
)
Same-store community net operating
income
$
10,720
$
9,011
$
10,157
$
41,661
$
38,271
Resident revenue
$
53,388
$
49,394
$
52,485
$
208,703
$
190,213
Resident revenue for non same-store
communities (3)
(562
)
—
(560
)
(1,966
)
(376
)
Same-store community resident
revenue
$
52,826
$
49,394
$
51,925
$
206,737
$
189,837
Same-store community net operating
income margin
20.3
%
18.2
%
19.6
%
20.2
%
20.2
%
(1) Settlement fees and expenses relate to
non-recurring settlements with third parties for contract
terminations, insurance claims, and related fees.
(2) Net operating income for non same-store communities
relate to operating income realized in the quarters ended December
2022, and 2021, respectively, related to the operations of the two
Indiana senior living communities acquired by the Company in
February 2022 and the senior living communities transitioned in the
first quarter of 2021. (3) Resident revenue for
non-same-store communities relates to revenues earned from the
operations for the three and twelve months ended December 31, 2022
and 2021, respectively, related to the revenues earned in the
operations of the two Indiana senior living communities acquired by
the Company in February 2022 and the senior living communities
transitioned in the first quarter of 2021. (4) General and
administrative expenses include non-cash stock-based compensation
expense of $0.8 million and $1.5 million for the quarters ended
December 31, 2022 and 2021, respectively, and non-cash stock-based
compensation expense of $4.3 million and $2.8 million for the years
ended December 31, 2022 and 2021, respectively.
ADJUSTED EBITDA AND ADJUSTED EBITDA
EXCLUDING COVID-19 IMPACT (UNAUDITED)
Adjusted EBITDA and Adjusted EBITDA excluding COVID-19 impact
are non-GAAP performance measures that the Company defines as net
income (loss) excluding: depreciation and amortization expense,
interest income, interest expense, other expense/income, provision
for income taxes; and further adjusted to exclude income/expense
associated with non-cash, non-operational, transactional, 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 stock-based compensation expense,
provision for bad debts, gain(loss) on extinguishment of debt, loss
on disposition of assets, long-lived asset impairment, casualty
losses, and transaction and conversion costs.
The Company believes that presentation of Adjusted EBITDA and
Adjusted EBITDA excluding COVID-19 impact as performance measures
are useful to investors because they are one of the metrics that
the Company uses because 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.
Adjusted EBITDA and Adjusted EBITDA excluding COVID-19 impact
have material limitations as a performance measure, including: (i)
excluded interest is 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 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 bad debts, gain(loss) on sale of assets, or gain(loss) on
debt extinguishment, non-cash stock-based compensation expense and
transaction and other costs, and such income/expense may
significantly affect the Company’s operating results.
(In thousands)
Three Months Ended
December 31,
Quarter ended September
30,
Twelve Months Ended
December 31,
2022
2021
2022
2022
2021
Adjusted EBITDA
Net income (loss)
$
(16,574
)
$
1,175
$
(13,739
)
$
(54,401
)
$
125,607
Depreciation and amortization expense
9,508
10,059
9,691
38,448
37,870
Stock-based compensation expense
848
1,537
(588
)
4,327
2,807
Provision for bad debt
251
504
386
1,159
1,251
Interest income
(188
)
(1
)
(44
)
(235
)
(6
)
Interest expense
9,297
8,660
8,205
33,025
37,234
Long-lived asset impairment
1,588
6,502
—
1,588
6,502
(Gain) loss on extinguishment of debt,
net
—
(31,609
)
—
641
(199,901
)
Loss on settlement of backstop
—
4,600
—
—
4,600
Other (income) expense, net
(1,391
)
—
5
(10,011
)
(8,270
)
Provision for income taxes
—
215
—
86
583
Casualty losses (1)
1,167
692
372
2,050
2,210
Transaction and conversion costs (2)
103
356
158
304
356
Adjusted EBITDA
$
4,609
$
2,690
$
4,446
$
16,981
$
10,843
COVID-19 expenses (3)
56
166
85
415
1,902
Adjusted EBITDA excluding COVID-19
impact
$
4,665
$
2,856
$
4,531
$
17,396
$
12,745
(1) Casualty losses relate to
non-recurring insured claims for unexpected events.
(2) Transaction and conversion costs relate to legal and
professional fees incurred for lease termination transactions,
restructure projects, or related projects. (3) COVID-19
expenses are expenses for supplies and personal protective
equipment, testing of the Company’s residents and employees, labor
and specialized disinfecting, and cleaning services.
SUPPLEMENTAL
INFORMATION
Fourth Quarter
(Dollars in thousands)
2022
2021
Increase (decrease)
Third Quarter 2022
Sequential increase
(decrease)
Selected Operating Results
I. Same-store community portfolio
(1)
Number of communities
60
60
—
60
—
Unit capacity
5,619
5,632
(13)
5,617
2
Weighted average occupancy (2)
84.2%
81.3%
2.9%
83.7%
0.5%
Average monthly rent
$3,723
$3,594
$129
$3,682
$41
Same-store community net operating
income
$10,720
$9,011
$1,709
$10,157
$563
Same-store community net operating income
margin
20.3%
18.2%
2.1%
19.6%
0.7%
Same-store community net operating income,
net of general and administrative expenses (3)
$4,627
$2,490
$2,137
$3,714
$913
Same-store community net operating income
margin, net of general and administrative expenses (3)
8.8%
5.0%
3.8%
7.2%
1.6%
II. Consolidated Debt
Information
(Excludes insurance premium financing
and deferred loan costs)
Total variable rate mortgage debt
$137,652
$88,711
N/A
$129,727
N/A
Total fixed rate debt
535,303
592,997
N/A
538,128
N/A
Total other debt
1,619
2,121
N/A
2,121
N/A
(1) Excludes (a) two communities that will
transition legal ownership to Fannie Mae subsequent to December 31,
2022 and five communities that transitioned legal ownership to
Fannie Mae during Q4 2021, and (b) two Indiana senior living
communities acquired by the Company in February 2022.
(2) Weighted average occupancy represents actual days
occupied divided by total number of available days during the
quarter. (3) General and administrative expenses exclude
stock-based compensation expense in order to remove the fluctuation
in fair value due to market volatility.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230330005318/en/
Investor Contact: Kevin J. Detz, Chief Financial Officer, at
972-308-8343 Press Contact: media@sonidaliving.com
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