NASHVILLE, Tenn., Feb. 24, 2021 /PRNewswire/ -- Brookdale
Senior Living Inc. (NYSE: BKD) ("Brookdale" or the "Company")
announced results for the quarter and full year ended
December 31, 2020.
HIGHLIGHTS
- 100% of first dose and approximately 85% of second dose
COVID-19 vaccine clinics had been completed for residents and
associates at the Company's communities as of February 22, 2021.
- Liquidity increased to $575.5
million at December 31, 2020,
which includes the impact of cash received from government
funding.
- Fourth quarter revenue per occupied unit (RevPOR) increased by
3.9% year-over-year on a same community basis and the sequential
occupancy decline moderated in the fourth quarter on a same
community basis.
Subsequent to the end of the fourth quarter, the Company entered
into definitive agreements with affiliates of HCA Healthcare, Inc.,
providing for the sale of 80% of the Company's equity in its Health
Care Services segment, as further described in the press release
issued on February 24, 2021.
"With best-in-class clinical and cross-functional response team
leadership, we helped our residents, patients and associates
navigate through this unprecedented and evolving pandemic," said
Lucinda ("Cindy") Baier, Brookdale's President and CEO. "As an
industry leader, we used our strong voice to advocate for senior
living funding and then once again for top vaccine priority later
in the year. Our efforts culminated in our vaccine clinics starting
in mid-December and we are incredibly proud that 100% of our more
than 700 communities across 43 states have already completed their
first vaccine clinic and over 600 communities have completed their
second dose vaccine clinics. I am extremely grateful for our
associates' unity and dedication in providing our beloved seniors
with high quality services. We are all working tirelessly to
accelerate our path safely and emerge from the pandemic a stronger
company."
SUMMARY OF FOURTH QUARTER RESULTS
Consolidated
The table below presents a summary of consolidated operating
results for the fourth quarter.
|
|
Year-Over-Year
Increase / (Decrease)
|
|
Change
Attributable To:
|
($ in
millions)
|
4Q
2020
|
4Q
2019
|
Amount
|
Percent
|
|
COVID-19
|
Transactions
|
Lease
Standard
|
Resident fee
revenue
|
$
|
677.5
|
|
$
|
797.4
|
|
$
|
(119.9)
|
|
(15.0)
|
%
|
|
See note
(1)
|
$
|
(19.9)
|
|
$
|
(10.4)
|
|
|
Management fee
revenue
|
$
|
10.2
|
|
$
|
12.4
|
|
$
|
(2.2)
|
|
(17.7)
|
%
|
|
—
|
|
$
|
(1.2)
|
|
—
|
|
|
Other operating
income
|
$
|
78.3
|
|
—
|
|
$
|
78.3
|
|
NM
|
|
$
|
78.3
|
|
—
|
|
—
|
|
|
Facility operating
expense
|
$
|
576.8
|
|
$
|
598.4
|
|
$
|
(21.6)
|
|
(3.6)
|
%
|
|
$
|
30.5
|
|
$
|
(18.1)
|
|
$
|
(14.5)
|
|
|
General and
administrative
expense
|
$
|
45.3
|
|
$
|
49.0
|
|
$
|
(3.7)
|
|
(7.6)
|
%
|
|
—
|
|
—
|
|
—
|
|
|
Net income
(loss)
|
$
|
(44.1)
|
|
$
|
(91.3)
|
|
$
|
(47.2)
|
|
(51.7)
|
%
|
|
See note
(1)
|
See note
(1)
|
$
|
4.1
|
|
(1)
|
Adjusted EBITDA
(2)
|
$
|
98.6
|
|
$
|
100.1
|
|
$
|
(1.5)
|
|
(1.5)
|
%
|
|
See note
(1)
|
$
|
22.0
|
|
$
|
4.1
|
|
|
|
|
(1)
|
Estimated lost
resident fee revenue attributable to COVID-19 was $120.1
million for the fourth quarter of 2020. The change in net income
(loss) attributable to COVID-19 and transactions and the change in
Adjusted EBITDA attributable to COVID-19 are not presented as
certain impacts are not available without unreasonable effort. The
change attributable to the lease standard represents the 2019
impact of the timing of the revenue and cost recognition associated
with residency agreements related to the adoption of ASC
842.
|
(2)
|
Adjusted EBITDA is a
financial measure that is not calculated in accordance with GAAP.
See "Reconciliations of Non-GAAP Financial Measures" for the
Company's definition of such measure, reconciliations to the most
comparable GAAP financial measures, and other important information
regarding the use of the Company's non-GAAP financial
measures.
|
- Resident fee revenue.
-
- Excluding the impact of transactions and the lease accounting
standard, consolidated resident fee revenue decreased 11.7% over
the prior year quarter.
- Consolidated RevPAR decreased $443, or 10.8%, to $3,673 compared to the prior year fourth quarter
as a result of a decrease in consolidated weighted average
occupancy of 1,180 basis points, offset by an increase in
consolidated RevPOR of $181, or 3.7%,
to $5,052.
- Consolidated senior housing occupancy was 71.5% as of
December 31, 2020 compared to 75.0%
as of September 30, 2020. The Company
estimates that the COVID-19 pandemic resulted in $100.5 million and $19.6
million of lost resident fee revenue for its consolidated
senior housing and Health Care Services segments, respectively, for
the fourth quarter of 2020. Estimated lost resident fee revenue
represents the difference between the actual revenue for the period
and our expectations prior to estimating the effects of
COVID-19.
- Management fee revenue. The decrease was primarily due
to the transition of management arrangements on 48 net communities
since October 1, 2019, generally for
management arrangements on certain former unconsolidated ventures
in which the Company sold its interest and interim management
arrangements on formerly leased communities. The Company received
an $8.6 million management
termination fee payment during the fourth quarter of 2020, of which
$5.0 million of management fee
revenue was recognized during the fourth quarter of 2020.
- Other operating income.
-
- During the fourth quarter of 2020, the Company accepted
$73.7 million of cash for grants from
the Provider Relief Fund, including $67.5
million pursuant to the Phase 2 General Distribution and
$5.3 million pursuant to the Phase 3
General Distribution. The grants are subject to the terms and
conditions of the program, including that such funds may only be
used to prevent, prepare for, and respond to COVID-19 and will
reimburse only for healthcare related expenses or lost revenues
that are attributable to COVID-19.
- The Company recognized $74.9
million of grants from the Provider Relief Fund and
$3.4 million from other government
grants as other operating income during the fourth quarter of
2020.
- Facility operating expense.
-
- Excluding the impact of transactions, the lease accounting
standard, and incremental direct COVID-19 costs, facility operating
expense decreased $19.4 million, or
3.4%, primarily due to a decrease in labor costs for home health
services as a result of the lower census and as the Company
adjusted its home health services operational structure, to better
align its facility operating expenses and business model with the
new Patient-Driven Grouping Model ("PDGM").
- The Company incurred $30.5
million of incremental direct costs during the fourth
quarter of 2020 to address the COVID-19 pandemic, including costs
for: acquisition of personal protective equipment ("PPE"), medical
equipment, and cleaning and disposable food service supplies;
enhanced cleaning and environmental sanitation; increased
employee-related costs, including labor, workers compensation, and
health plan expense; increased expense for general liability
claims; and COVID-19 testing of residents and associates where not
otherwise covered by government payor or third-party insurance
sources.
- General and administrative expense. The decrease in
general and administrative expense was primarily attributable to a
$3.2 million decrease in transaction
and organizational restructuring costs compared to the prior year
quarter, a reduction in the Company's travel costs due to the
pandemic, and a reduction in the Company's corporate headcount, as
it scaled its general and administrative costs in connection with
community dispositions.
- Net income (loss). The decrease in net loss compared to
the prior year quarter was primarily attributable to a $32.4 million decrease in asset impairment
expense and a $20.5 million decrease
in facility operating lease expense, partially offset by the net
impact of the revenue, other operating income, and facility
operating expense factors previously discussed.
- Adjusted EBITDA. The decrease in Adjusted EBITDA
compared to the prior year quarter was primarily attributable to
the net impact of the revenue, other operating income, and facility
operating expense factors previously discussed, partially offset by
a $22.3 million decrease in cash
facility operating lease payments, primarily reflecting reduced
cash lease payments as a result of the lease restructuring
transaction with Ventas, Inc. ("Ventas") on July 26, 2020.
- COVID-19 Impact.
-
- In December 2020, two COVID-19
vaccines received emergency use authorization from the U.S. Food
and Drug Administration. The Company elected to work with CVS
Health Corporation, with whom it has a longstanding relationship to
provide flu shot clinics in the Company's communities, to
administer vaccinations on site to its eligible residents and
associates through the Pharmacy Partnership for Long-Term Care
Program offered through the U.S. Centers for Disease Control and
Prevention. The Company's work to prepare for and host vaccine
clinics includes extensive planning, gathering insurance
information, obtaining consents, scheduling appointments, holding
educational sessions with residents, families, and associates and
detailed coordination of traffic flow and observation areas. The
Company hosted its first clinics on December
18, 2020 and by January 22,
2021 it hosted vaccine clinics at over 500 of its
communities. As of February 22, 2021,
first dose vaccine clinics had been completed for residents and
associates at 100% of the Company's communities, and approximately
85% of its communities had second dose vaccine clinics.
- The Company has continued testing residents and associates at
many of its communities, after completing baseline testing at all
of its communities in July 2020. The
Company's testing program has accumulated approximately 320,000
test results. Approximately 1.2% of the Company's residents were
known to have current COVID-19 positive test results on
February 22, 2021.
- During the fourth quarter, the Company continued evaluating
restrictions on its communities on a community-by-community basis,
including based on regulatory requirements and guidance, completion
of baseline testing at the community, and the presence of current
confirmed positive COVID-19 cases. Although the Company is hopeful
that administration of the vaccine to its residents and associates
will enable further easing of community restrictions, they may
continue for some time, and the Company may revert to more
restrictive measures if the pandemic worsens, as necessary to
comply with regulatory requirements, or at the direction of state
or local health authorities. Restrictions on move-ins escalated
throughout the fourth quarter of 2020 due to the resurgence of the
virus. At the end of the fourth quarter of 2020, 89% of the
Company's communities were accepting new move-ins compared to 98%
at the end of the third quarter of 2020. As of February 22, 2021, 97% of the Company's
communities were accepting new move-ins.
- The year-over-year decrease in monthly move-ins of the
Company's same community portfolio has moderated from 64.2% in
April 2020 to 26.5% in December 2020.
- The Company's weighted average occupancy and month-end weighted
average occupancy for the months of March
2020 to January 2021 were as
follows:
|
Mar
2020
|
Apr
2020
|
May
2020
|
Jun
2020
|
Jul
2020
|
Aug
2020
|
Sep
2020
|
Oct
2020
|
Nov
2020
|
Dec
2020
|
Jan
2021
|
Consolidated weighted
average occupancy
|
82.7
|
%
|
80.4
|
%
|
78.4
|
%
|
77.4
|
%
|
76.4
|
%
|
75.2
|
%
|
74.3
|
%
|
73.8
|
%
|
72.8
|
%
|
71.5
|
%
|
70.0
|
%
|
Consolidated
month-end occupancy
|
82.2
|
%
|
80.0
|
%
|
78.5
|
%
|
77.8
|
%
|
76.6
|
%
|
75.5
|
%
|
75.0
|
%
|
74.1
|
%
|
73.1
|
%
|
71.5
|
%
|
70.4
|
%
|
Same Community Senior Housing (Independent Living (IL),
Assisted Living and Memory Care (AL/MC), and CCRCs)
The table below presents a summary of same community operating
results and metrics of the Company's consolidated senior housing
portfolio.(3)
|
|
|
Year-Over-Year
Increase / (Decrease)
|
|
Sequential
Increase / (Decrease)
|
($ in millions,
except RevPAR and RevPOR)
|
4Q
2020
|
4Q
2019
|
Amount
|
Percent
|
3Q
2020
|
Amount
|
Percent
|
RevPAR
|
$
|
3,692
|
|
$
|
4,151
|
|
$
|
(459)
|
|
(11.1)%
|
$
|
3,826
|
|
$
|
(134)
|
|
(3.5)%
|
Weighted average
occupancy
|
|
72.9
|
%
|
|
85.1
|
%
|
|
(1,220)
|
bps
|
n/a
|
|
75.6
|
%
|
|
(270)
|
bps
|
n/a
|
RevPOR
|
$
|
5,067
|
|
$
|
4,878
|
|
$
|
189
|
|
3.9%
|
$
|
5,060
|
|
$
|
7
|
|
0.1%
|
Facility operating
expense
|
$
|
447.4
|
|
$
|
422.7
|
|
$
|
24.7
|
|
5.8%
|
$
|
434.2
|
|
$
|
13.2
|
|
3.0%
|
|
|
(3)
|
The same community
portfolio includes operating results and data for 629 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 (i) hurricane and other natural disaster expense of
$1.6 million, $2.3 million, and $1.6 million for the fourth and
third quarters of 2020 and fourth quarter of 2019, respectively,
and (ii) for the 2019 period the additional resident fee revenue
and facility operating expense recognized as a result of the
application of the lease accounting standard ASC 842 of
approximately $9.5 million and $13.4 million, respectively. As
presented herein, same community facility operating expense
includes the direct costs incurred to respond to the COVID-19
pandemic.
|
- Resident fees. Same community resident fees decreased
$67.8 million to $545.4 million attributable to the decrease in
occupancy, partially offset by the increase in RevPOR.
- Facility operating expense. The year-over-year increase
was primarily due to $26.0 million of
incremental direct costs incurred during the fourth quarter of 2020
to respond to the COVID-19 pandemic.
Health Care Services
|
|
Increase /
(Decrease)
|
($ in
millions)
|
4Q
2020
|
4Q
2019
|
Amount
|
Percent
|
Resident fee
revenue
|
$
|
91.9
|
|
$
|
109.5
|
|
$
|
(17.6)
|
|
(16.1)
|
%
|
Facility operating
expense
|
92.1
|
|
106.6
|
|
(14.5)
|
|
(13.6)
|
%
|
- Resident fee revenue. Health Care Services revenue
decreased primarily due to a decline of 13.5% in home health
average daily census year-over-year for the fourth quarter of 2020
as a result of lower occupancy in the Company's communities.
- Facility operating expense.
-
- The year-over-year decrease in facility operating expense was
primarily attributable to a decrease in labor costs for home health
services as a result of the lower census and as the Company
adjusted its home health services operational structure, to better
align its facility operating expenses and business model in
connection with PDGM.
- The decrease in facility operating expenses was partially
offset by $2.3 million of incremental
direct costs to respond to the COVID-19 pandemic incurred during
the fourth quarter of 2020.
LIQUIDITY
The table below presents a summary of the Company's net cash
provided by (used in) operating activities, Adjusted Free Cash
Flow, and liquidity.
|
|
Increase /
(Decrease)
|
($ in
millions)
|
4Q
2020
|
4Q
2019
|
Amount
|
Percent
|
Net cash provided by
(used in) operating activities
|
$
|
73.5
|
|
$
|
88.1
|
|
$
|
(14.6)
|
|
(16.6)
|
%
|
Adjusted Free Cash
Flow (4)
|
19.9
|
|
0.5
|
|
19.4
|
|
NM
|
|
|
|
Increase /
(Decrease)
|
($ in
millions)
|
December 31,
2020
|
September 30,
2020
|
Amount
|
Percent
|
Unrestricted cash and
cash equivalents
|
$
|
380.4
|
|
$
|
354.6
|
|
$
|
25.8
|
|
7.3
|
%
|
Marketable
securities
|
172.9
|
|
136.1
|
|
36.8
|
|
27.0
|
%
|
Availability on
secured credit facility
|
22.2
|
|
—
|
|
22.2
|
|
NM
|
|
Total
Liquidity
|
$
|
575.5
|
|
$
|
490.7
|
|
$
|
84.8
|
|
17.3
|
%
|
|
|
(4)
|
Adjusted Free Cash Flow is a
financial measure that is not calculated in accordance with GAAP.
See "Reconciliations of 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. The
year-over-year decrease in net cash provided by operating
activities was primarily attributable to a decrease in same
community revenue compared to the prior year period and
$30.5 million of incremental direct
costs to respond to the COVID-19 pandemic during the current year
period, partially offset by $77.2
million of government grants accepted.
- Adjusted Free Cash Flow. The $19.4 million increase in Adjusted Free Cash Flow
compared to the prior year fourth quarter was attributable to a
$21.0 million decrease in
non-development capital expenditures, net and a $10.7 million decrease in reimbursed
non-development capital expenditures partially offset by the
$14.6 million decrease in net cash
provided by operating activities.
- Total Liquidity. Total liquidity as of December 31, 2020, increased $84.8 million from September 30, 2020, primarily attributable to the
release of restricted cash, availability on the Company's new
secured credit facility, and the Adjusted Free Cash Flow, which
includes $77.2 million of government
grants accepted during the period.
TRANSACTION AND FINANCING UPDATE
- Secured Credit Facility: On December 11, 2020, the Company entered into a
revolving credit agreement with Capital One, National Association,
as administrative agent and lender and the other lenders from time
to time parties thereto. The agreement provides a commitment amount
of $80 million which can be drawn in
cash or as letters of credit. The agreement matures on January 15, 2024. Amounts drawn under the
facility will bear interest at 30-day LIBOR plus an applicable
margin which was 2.75% as of December 31,
2020. Additionally, a quarterly commitment fee of 0.25% per
annum was applicable on the unused portion of the facility as of
December 31, 2020. The revolving
credit facility is currently secured by first priority mortgages
and negative pledges on certain of the Company's communities.
Available capacity under the facility will vary from time to time
based upon borrowing base calculations related to the appraised
value and performance of the communities securing the credit
facility. As of December 31, 2020, no
borrowings were outstanding on the revolving credit facility,
$40.4 million of letters of credit
were outstanding, and the revolving credit facility had
$22.2 million of remaining
availability. As a result of the refinancing of the Company's
letters of credit, $41.0 million of
restricted cash that previously collateralized letters of credit
was released to the Company as unrestricted cash in December 2020.
- Community Disposition: During the fourth quarter of
2020, the Company's triple-net lease obligation on one community
(159 units) was terminated. As a result, the Company's operating
lease obligations were reduced by $24.5
million and the Company recognized a $2.3 million gain on lease termination during the
fourth quarter of 2020 for the amount by which the lease
obligations exceeded the net carrying amount of the Company's
assets under the operating lease as of the lease termination
date.
FULL YEAR RESULTS
Consolidated
The table below presents a summary of consolidated operating
results for the full year.
|
|
Year-Over-Year
Increase / (Decrease)
|
|
Change
Attributable To:
|
($ in
millions)
|
2020
|
2019
|
Amount
|
Percent
|
|
COVID-19
|
Transactions
|
Lease
Standard
|
Resident fee
revenue
|
$
|
2,892.6
|
|
$
|
3,209.9
|
|
$
|
(317.3)
|
|
(9.9)
|
%
|
|
See note
(5)
|
$
|
(81.0)
|
|
$
|
(26.4)
|
|
|
Management fee
revenue
|
$
|
130.7
|
|
$
|
57.1
|
|
$
|
73.6
|
|
128.9
|
%
|
|
—
|
|
$
|
75.9
|
|
—
|
|
|
Other operating
income
|
$
|
115.7
|
|
$
|
—
|
|
$
|
115.7
|
|
NM
|
|
|
$
|
115.7
|
|
—
|
|
—
|
|
|
Facility operating
expense
|
$
|
2,341.9
|
|
$
|
2,390.5
|
|
$
|
(48.6)
|
|
(2.0)
|
%
|
|
$
|
125.5
|
|
$
|
(69.7)
|
|
$
|
(49.5)
|
|
|
General and
administrative
expense
|
$
|
206.6
|
|
$
|
219.3
|
|
$
|
(12.7)
|
|
(5.8)
|
%
|
|
—
|
|
—
|
|
—
|
|
|
Net income
(loss)
|
$
|
81.9
|
|
$
|
(268.5)
|
|
$
|
350.4
|
|
NM
|
|
|
See note
(5)
|
See note
(5)
|
$
|
23.1
|
|
(5)
|
Adjusted EBITDA
(6)
|
$
|
264.4
|
|
$
|
401.2
|
|
$
|
(136.8)
|
|
(34.1)
|
%
|
|
See note
(5)
|
$
|
1.4
|
|
$
|
23.1
|
|
|
$100.0
million
management
termination
fee and
one-time cash
lease
payment
|
$
|
19.2
|
|
$
|
—
|
|
$
|
19.2
|
|
NM
|
|
|
—
|
|
$
|
19.2
|
|
$
|
—
|
|
|
Adjusted
EBITDA,
excluding
$100.0 million
management
termination
fee and
one-time cash
lease
payment
|
$
|
283.6
|
|
$
|
401.2
|
|
$
|
(117.6)
|
|
(29.3)
|
%
|
|
See note
(5)
|
$
|
20.6
|
|
$
|
23.1
|
|
|
|
|
(5)
|
Estimated lost
resident fee revenue attributable to COVID-19 was $281.1 million
for 2020. The change in net income (loss) attributable to COVID-19
and transactions and the change in Adjusted EBITDA attributable to
COVID-19 are not presented as certain impacts are not available
without unreasonable effort. The change attributable to the lease
standard represents the 2019 impact of the timing of the revenue
and cost recognition associated with residency agreements related
to the adoption of ASC 842.
|
(6)
|
Unless otherwise
indicated, Adjusted EBITDA for 2020 includes the $100.0 million
management agreement termination fee payment received from
Healthpeak Properties, Inc. ("Healthpeak") related to the sale of
Brookdale's interest in the entry fee CCRC venture, which closed on
January 31, 2020, and the $119.2 million one-time cash lease
payment made to Ventas in connection with the Company's lease
restructuring transaction effective July 26, 2020 ("one-time cash
lease payment").
|
OUTLOOK
Given the unprecedented nature of COVID-19 and rapidly changing
developments, the Company will continue to be agile and focus its
local community response to help protect its residents, associates,
and patients. The Company cannot predict the ultimate impact of the
duration, severity, and breadth of the pandemic for the United States. Key factors that may impact
the Company's financial performance and liquidity for 2021
include:
- Senior Housing Occupancy: To provide timely updates, the
Company expects to continue to publish monthly occupancy until it
returns to providing financial guidance, at which point it would
expect to return to its historical reporting practices.
- Senior Housing RevPOR: Most annual price increases took effect
in January and are expected to help offset labor rate
increases.
- Non-development Capital Expenditures: The Company expects
non-development capital expenditures, net of lessor reimbursements,
to be approximately $140 million for
the full year 2021.
SUPPLEMENTAL INFORMATION
The Company will post on its website at
www.brookdale.com/investor supplemental information relating to the
Company's fourth quarter and full year 2020 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 review
the financial results for the fourth quarter and full year 2020 on
February 25, 2021 at 9:00 AM ET. The conference call can be accessed
by dialing (866) 900-2996 (from within the U.S.) or (706) 643-2685
(from outside of the U.S.) ten minutes prior to the scheduled start
and referencing "Brookdale".
A webcast of the conference call will be available to the public
on a listen-only basis at www.brookdale.com/investor. Please allow
extra time prior to the call to visit the site and 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 will be
available until 11:59 PM ET on
March 12, 2021 by dialing (855)
859-2056 (from within the U.S.) or (404) 537-3406 (from outside of
the U.S.) and referencing access code "3060269".
ABOUT BROOKDALE SENIOR LIVING
Brookdale Senior Living Inc. is the leading operator of senior
living communities throughout the United
States. The Company is committed to providing senior living
solutions primarily within properties that are designed,
purpose-built, and operated to provide the highest-quality service,
care, and living accommodations for residents. Brookdale operates
and manages independent living, assisted living, memory care, and
continuing care retirement communities, with 726 communities in 43
states and the ability to serve approximately 64,000 residents as
of December 31, 2020. The Company also offers a range of home
health, hospice, and outpatient therapy services to over 17,000
patients as of that date. Brookdale's stock is traded on the New
York Stock Exchange under the ticker symbol BKD.
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
Health Care Services segment revenue and entrance fee amortization,
and, for the 2019 periods, the additional resident fee revenue
recognized as a result of the application of the lease accounting
standard ASC 842), 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
Health Care Services segment revenue and entrance fee amortization,
and, for the 2019 periods, the additional resident fee revenue
recognized as a result of the application of the lease accounting
standard ASC 842), 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 conference 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. 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 the response efforts of federal,
state, and local government authorities, businesses, individuals,
and the Company on the Company's business, results of operations,
cash flow, liquidity, and its strategic initiatives, including
plans for future growth, which will depend on many factors, some of
which cannot be foreseen, including the duration, severity, and
breadth of the pandemic and any resurgence of the disease, the
impact of COVID-19 on the nation's economy and debt and equity
markets and the local economies in the Company's markets, the
development, availability, utilization, and efficacy of COVID-19
testing, therapeutic agents, and vaccines and the prioritization of
such resources among businesses and demographic groups, government
financial and regulatory relief efforts that may become available
to business and individuals, including the Company's ability to
qualify for and satisfy the terms and conditions of financial
relief, perceptions regarding the safety of senior living
communities during and after the pandemic, changes in demand for
senior living communities and the Company's ability to adapt its
sales and marketing efforts to meet that demand, the impact of
COVID-19 on the Company's residents' and their families' ability to
afford the Company's resident fees, including due to changes
in unemployment rates, consumer confidence, housing markets, and
equity markets caused by COVID-19, changes in the acuity levels of
the Company's new residents, the disproportionate impact of
COVID-19 on seniors generally and those residing in the Company's
communities, the duration and costs of the Company's response
efforts, including increased equipment, supplies, labor,
litigation, testing, vaccination clinic, and other expenses, the
impact of COVID-19 on the Company's ability to complete financings,
refinancings, or other transactions (including dispositions) or to
generate sufficient cash flow to cover required interest and lease
payments and to satisfy financial and other covenants in its debt
and lease documents, increased regulatory requirements, including
unfunded, mandatory testing, increased enforcement actions
resulting from COVID-19, government action that may limit the
Company's collection or discharge efforts for delinquent accounts,
and 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 impact of ongoing
healthcare reform efforts; the effects of senior housing
construction and development, lower industry occupancy (including
due to the pandemic), 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, including due to the
pandemic; limits on the Company's ability to use net operating loss
carryovers to reduce future tax payments; 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 its
strategic priorities and their effect on the Company's results;
delays in obtaining regulatory approvals; disruptions in the
financial markets 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 and long-term lease
payments and to fund its planned capital projects; the effect of
the Company's non-compliance with any of its debt or lease
agreements (including the financial 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 its liquidity; the potential phasing out of
LIBOR which may 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 personnel (including due to the pandemic),
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 class action and
stockholder derivative complaints; the cost and difficulty of
complying with increasing and evolving regulation; costs to respond
to, and adverse determinations resulting from, government reviews,
audits and investigations; 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, 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 contained 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
December 31,
|
|
Years
Ended
December 31,
|
(in thousands,
except per share data)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenue
|
|
|
|
|
|
|
|
Resident
fees
|
$
|
677,460
|
|
|
$
|
797,352
|
|
|
$
|
2,892,567
|
|
|
$
|
3,209,931
|
|
Management
fees
|
10,230
|
|
|
12,352
|
|
|
130,690
|
|
|
57,108
|
|
Reimbursed costs
incurred on behalf of managed communities
|
86,186
|
|
|
176,934
|
|
|
401,189
|
|
|
790,049
|
|
Other operating
income
|
78,291
|
|
|
—
|
|
|
115,749
|
|
|
—
|
|
Total revenue and
other operating income
|
852,167
|
|
|
986,638
|
|
|
3,540,195
|
|
|
4,057,088
|
|
|
|
|
|
|
|
|
|
Expense
|
|
|
|
|
|
|
|
Facility operating
expense (excluding facility depreciation
and amortization of $81,642, $88,105,
$334,768, and $349,215, respectively)
|
576,813
|
|
|
598,438
|
|
|
2,341,859
|
|
|
2,390,495
|
|
General and
administrative expense (including non-cash stock-
based compensation expense of $2,535, $4,711,
$20,747,
and $23,026, respectively)
|
45,324
|
|
|
48,993
|
|
|
206,575
|
|
|
219,289
|
|
Facility operating
lease expense
|
45,553
|
|
|
66,056
|
|
|
224,033
|
|
|
269,666
|
|
Depreciation and
amortization
|
87,513
|
|
|
94,971
|
|
|
359,226
|
|
|
379,433
|
|
Asset
impairment
|
10,579
|
|
|
43,012
|
|
|
107,308
|
|
|
49,266
|
|
Loss (gain) on
facility lease termination and modification, net
|
(2,303)
|
|
|
1,382
|
|
|
(2,303)
|
|
|
3,388
|
|
Costs incurred on
behalf of managed communities
|
86,186
|
|
|
176,934
|
|
|
401,189
|
|
|
790,049
|
|
Total operating
expense
|
849,665
|
|
|
1,029,786
|
|
|
3,637,887
|
|
|
4,101,586
|
|
Income (loss) from
operations
|
2,502
|
|
|
(43,148)
|
|
|
(97,692)
|
|
|
(44,498)
|
|
|
|
|
|
|
|
|
|
Interest
income
|
494
|
|
|
1,800
|
|
|
4,799
|
|
|
9,859
|
|
Interest
expense:
|
|
|
|
|
|
|
|
Debt
|
(36,172)
|
|
|
(42,538)
|
|
|
(153,817)
|
|
|
(177,718)
|
|
Financing lease
obligations
|
(11,452)
|
|
|
(16,394)
|
|
|
(48,534)
|
|
|
(66,353)
|
|
Amortization of
deferred financing costs and debt discount
|
(1,827)
|
|
|
(1,138)
|
|
|
(6,428)
|
|
|
(4,270)
|
|
Gain (loss) on debt
modification and extinguishment, net
|
(211)
|
|
|
(53)
|
|
|
10,896
|
|
|
(5,247)
|
|
Equity in earnings
(loss) of unconsolidated ventures
|
(1,244)
|
|
|
(970)
|
|
|
(2,107)
|
|
|
(4,544)
|
|
Gain (loss) on sale
of assets, net
|
513
|
|
|
4,522
|
|
|
374,532
|
|
|
7,245
|
|
Other non-operating
income (loss)
|
1,050
|
|
|
4,815
|
|
|
5,648
|
|
|
14,765
|
|
Income (loss) before
income taxes
|
(46,347)
|
|
|
(93,104)
|
|
|
87,297
|
|
|
(270,761)
|
|
Benefit (provision)
for income taxes
|
2,208
|
|
|
1,781
|
|
|
(5,352)
|
|
|
2,269
|
|
Net income
(loss)
|
(44,139)
|
|
|
(91,323)
|
|
|
81,945
|
|
|
(268,492)
|
|
Net (income) loss
attributable to noncontrolling interest
|
19
|
|
|
(85)
|
|
|
74
|
|
|
561
|
|
Net income (loss)
attributable to Brookdale Senior Living Inc.
common stockholders
|
$
|
(44,120)
|
|
|
$
|
(91,408)
|
|
|
$
|
82,019
|
|
|
$
|
(267,931)
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to Brookdale Senior
Living Inc. common stockholders:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.24)
|
|
|
$
|
(0.49)
|
|
|
$
|
0.45
|
|
|
$
|
(1.44)
|
|
Diluted
|
$
|
(0.24)
|
|
|
$
|
(0.49)
|
|
|
$
|
0.44
|
|
|
$
|
(1.44)
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
183,389
|
|
|
185,245
|
|
|
183,498
|
|
|
185,907
|
|
Diluted
|
183,389
|
|
|
185,245
|
|
|
184,386
|
|
|
185,907
|
|
Condensed
Consolidated Balance Sheets
|
|
(in
thousands)
|
December 31,
2020
|
|
December 31,
2019
|
Cash and cash
equivalents
|
$
|
380,420
|
|
|
$
|
240,227
|
|
Marketable
securities
|
172,905
|
|
|
68,567
|
|
Restricted
cash
|
28,059
|
|
|
26,856
|
|
Accounts receivable,
net
|
109,221
|
|
|
133,613
|
|
Assets held for
sale
|
16,061
|
|
|
42,671
|
|
Prepaid expenses and
other current assets, net
|
66,937
|
|
|
84,241
|
|
Total current
assets
|
773,603
|
|
|
596,175
|
|
Property, plant and
equipment and leasehold intangibles, net
|
5,068,060
|
|
|
5,109,834
|
|
Operating lease
right-of-use assets
|
788,138
|
|
|
1,159,738
|
|
Other assets,
net
|
271,957
|
|
|
328,686
|
|
Total
assets
|
$
|
6,901,758
|
|
|
$
|
7,194,433
|
|
|
|
|
|
Current
liabilities
|
$
|
690,733
|
|
|
$
|
1,046,972
|
|
Long-term debt, less
current portion
|
3,847,103
|
|
|
3,215,710
|
|
Financing lease
obligations, less current portion
|
543,764
|
|
|
771,434
|
|
Operating lease
obligations, less current portion
|
819,429
|
|
|
1,277,178
|
|
Other
liabilities
|
198,000
|
|
|
184,414
|
|
Total
liabilities
|
6,099,029
|
|
|
6,495,708
|
|
Total Brookdale
Senior Living Inc. stockholders' equity
|
800,434
|
|
|
696,356
|
|
Noncontrolling
interest
|
2,295
|
|
|
2,369
|
|
Total
equity
|
802,729
|
|
|
698,725
|
|
Total liabilities and
equity
|
$
|
6,901,758
|
|
|
$
|
7,194,433
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
|
Years Ended
December 31,
|
(in
thousands)
|
2020
|
|
2019
|
Cash Flows from
Operating Activities
|
|
|
|
Net income
(loss)
|
$
|
81,945
|
|
|
$
|
(268,492)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
Loss (gain) on debt
modification and extinguishment, net
|
(10,896)
|
|
|
5,247
|
|
Depreciation and
amortization, net
|
365,654
|
|
|
383,703
|
|
Asset
impairment
|
107,308
|
|
|
49,266
|
|
Equity in (earnings)
loss of unconsolidated ventures
|
2,107
|
|
|
4,544
|
|
Distributions from
unconsolidated ventures from cumulative share of net
earnings
|
766
|
|
|
3,472
|
|
Amortization of
entrance fees
|
(2,122)
|
|
|
(1,634)
|
|
Proceeds from deferred
entrance fee revenue
|
734
|
|
|
3,544
|
|
Deferred income tax
(benefit) provision
|
(5,840)
|
|
|
(2,654)
|
|
Operating lease
expense adjustment
|
(136,276)
|
|
|
(19,453)
|
|
Loss (gain) on sale of
assets, net
|
(374,532)
|
|
|
(7,245)
|
|
Loss (gain) on
facility lease termination and modification, net
|
(2,303)
|
|
|
3,388
|
|
Non-cash stock-based
compensation expense
|
20,747
|
|
|
23,026
|
|
Non-cash management
contract termination gain
|
—
|
|
|
(969)
|
|
Other
|
(2,777)
|
|
|
(8,700)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts receivable,
net
|
24,277
|
|
|
292
|
|
Prepaid expenses and
other assets, net
|
24,707
|
|
|
55,873
|
|
Trade accounts payable
and accrued expenses
|
27,294
|
|
|
(12,984)
|
|
Refundable fees and
deferred revenue
|
62,614
|
|
|
(25,117)
|
|
Operating lease assets
and liabilities for lessor capital expenditure
reimbursements
|
22,242
|
|
|
31,305
|
|
Net cash provided by
(used in) operating activities
|
205,649
|
|
|
216,412
|
|
Cash Flows from
Investing Activities
|
|
|
|
Change in lease
security deposits and lease acquisition deposits, net
|
3,569
|
|
|
(859)
|
|
Purchase of marketable
securities
|
(378,269)
|
|
|
(186,224)
|
|
Sale and maturities of
marketable securities
|
275,000
|
|
|
134,000
|
|
Capital expenditures,
net of related payables
|
(185,871)
|
|
|
(304,092)
|
|
Acquisition of assets,
net of related payables and cash received
|
(472,193)
|
|
|
(497)
|
|
Investment in
unconsolidated ventures
|
(4,082)
|
|
|
(4,346)
|
|
Distributions received
from unconsolidated ventures
|
—
|
|
|
9,635
|
|
Proceeds from sale of
assets, net
|
331,316
|
|
|
92,735
|
|
Proceeds from notes
receivable
|
5,419
|
|
|
34,109
|
|
Net cash provided by
(used in) investing activities
|
(425,111)
|
|
|
(225,539)
|
|
Cash Flows from
Financing Activities
|
|
|
|
Proceeds from
debt
|
963,099
|
|
|
321,996
|
|
Repayment of debt and
financing lease obligations
|
(538,859)
|
|
|
(427,923)
|
|
Proceeds from line of
credit
|
166,381
|
|
|
—
|
|
Repayment of line of
credit
|
(166,381)
|
|
|
—
|
|
Purchase of treasury
stock, net of related payables
|
(18,123)
|
|
|
(23,955)
|
|
Payment of financing
costs, net of related payables
|
(19,649)
|
|
|
(7,309)
|
|
Payments of employee
taxes for withheld shares
|
(4,037)
|
|
|
(3,313)
|
|
Other
|
482
|
|
|
1,110
|
|
Net cash provided by
(used in) financing activities
|
382,913
|
|
|
(139,394)
|
|
Net increase
(decrease) in cash, cash equivalents, and restricted
cash
|
163,451
|
|
|
(148,521)
|
|
Cash, cash
equivalents, and restricted cash at beginning of period
|
301,697
|
|
|
450,218
|
|
Cash, cash
equivalents, and restricted cash at end of period
|
$
|
465,148
|
|
|
$
|
301,697
|
|
Reconciliations of 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. 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.
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 lease termination and
modification, operating lease expense adjustment, amortization of
deferred gain, change in future service obligation, non-cash
stock-based compensation expense, and transaction and
organizational restructuring costs. Transaction costs include those
directly related to acquisition, disposition, financing, and
leasing activity, and stockholder relations advisory matters, 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; and (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.
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 lease termination and modification, 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 the Company's Adjusted EBITDA from
its net income (loss).
|
Three Months
Ended
December 31,
|
|
Years
Ended
December 31,
|
(in
thousands)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income
(loss)
|
$
|
(44,139)
|
|
|
$
|
(91,323)
|
|
|
$
|
81,945
|
|
|
$
|
(268,492)
|
|
Provision (benefit)
for income taxes
|
(2,208)
|
|
|
(1,781)
|
|
|
5,352
|
|
|
(2,269)
|
|
Equity in (earnings)
loss of unconsolidated ventures
|
1,244
|
|
|
970
|
|
|
2,107
|
|
|
4,544
|
|
Loss (gain) on debt
modification and extinguishment, net
|
211
|
|
|
53
|
|
|
(10,896)
|
|
|
5,247
|
|
Loss (gain) on sale
of assets, net
|
(513)
|
|
|
(4,522)
|
|
|
(374,532)
|
|
|
(7,245)
|
|
Other non-operating
(income) loss
|
(1,050)
|
|
|
(4,815)
|
|
|
(5,648)
|
|
|
(14,765)
|
|
Interest
expense
|
49,451
|
|
|
60,070
|
|
|
208,779
|
|
|
248,341
|
|
Interest
income
|
(494)
|
|
|
(1,800)
|
|
|
(4,799)
|
|
|
(9,859)
|
|
Income (loss) from
operations
|
2,502
|
|
|
(43,148)
|
|
|
(97,692)
|
|
|
(44,498)
|
|
Depreciation and
amortization
|
87,513
|
|
|
94,971
|
|
|
359,226
|
|
|
379,433
|
|
Asset
impairment
|
10,579
|
|
|
43,012
|
|
|
107,308
|
|
|
49,266
|
|
Loss (gain) on
facility lease termination and modification,
net
|
(2,303)
|
|
|
1,382
|
|
|
(2,303)
|
|
|
3,388
|
|
Operating lease
expense adjustment
|
(4,000)
|
|
|
(5,827)
|
|
|
(136,276)
|
|
|
(19,453)
|
|
Non-cash stock-based
compensation expense
|
2,535
|
|
|
4,711
|
|
|
20,747
|
|
|
23,026
|
|
Transaction and
organizational restructuring costs
|
1,778
|
|
|
5,002
|
|
|
13,377
|
|
|
10,007
|
|
Adjusted
EBITDA(1)
|
$
|
98,604
|
|
|
$
|
100,103
|
|
|
$
|
264,387
|
|
|
$
|
401,169
|
|
$100.0 million
management termination fee
|
—
|
|
|
—
|
|
|
(100,000)
|
|
|
—
|
|
$119.2 million
one-time cash lease payment
|
—
|
|
|
—
|
|
|
119,180
|
|
|
|
Adjusted EBITDA,
excluding $100.0 million management termination fee and $119.2
million one-time cash lease payment
|
$
|
98,604
|
|
|
$
|
100,103
|
|
|
$
|
283,567
|
|
|
$
|
401,169
|
|
|
|
(1)
|
Adjusted EBITDA
includes:
|
|
• $78.3 million
and $115.7 million, respectively, benefit for the three and twelve
months ended December 31, 2020 of Provider Relief Funds and other
government grants recognized in other operating income
|
|
• $119.2 million
for the twelve months ended December 31, 2020 for the one-time cash
lease payment made to Ventas in connection with the Company's lease
restructuring transaction effective July 26, 2020
|
|
• $100.0 million
benefit for the twelve months ended December 31, 2020 for the
management agreement termination fee payment received from
Healthpeak in connection with closing of the multi-part transaction
on January 31, 2020
|
|
• $4.2 million
and $23.1 million, respectively, of a negative, non-recurring net
impact for the three and twelve months ended December 31, 2019
from the application of the lease accounting standard effective
January 1, 2019
|
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
liability for lease termination, cash paid/received for gain/loss
on facility lease termination and modification, and lessor capital
expenditure reimbursements under operating leases;
plus: property 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.
The table below reconciles the Company's Adjusted Free Cash Flow
from its net cash provided by (used in) operating activities.
|
Three Months
Ended
December 31,
|
|
Years
Ended
December 31,
|
(in
thousands)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net cash provided
by (used in) operating activities
|
$
|
73,499
|
|
|
$
|
88,082
|
|
|
$
|
205,649
|
|
|
$
|
216,412
|
|
Net cash provided by
(used in) investing activities
|
(81,147)
|
|
|
(75,184)
|
|
|
(425,111)
|
|
|
(225,539)
|
|
Net cash provided by
(used in) financing activities
|
(20,279)
|
|
|
(26,560)
|
|
|
382,913
|
|
|
(139,394)
|
|
Net increase
(decrease) in cash, cash equivalents, and
restricted cash
|
$
|
(27,927)
|
|
|
$
|
(13,662)
|
|
|
$
|
163,451
|
|
|
$
|
(148,521)
|
|
|
|
|
|
|
|
|
|
Net cash provided
by (used in) operating activities
|
$
|
73,499
|
|
|
$
|
88,082
|
|
|
$
|
205,649
|
|
|
$
|
216,412
|
|
Distributions from
unconsolidated ventures from
cumulative share of net earnings
|
—
|
|
|
(1,084)
|
|
|
(766)
|
|
|
(3,472)
|
|
Changes in prepaid
insurance premiums financed with
notes payable
|
(5,823)
|
|
|
(5,875)
|
|
|
—
|
|
|
—
|
|
Changes in assets and
liabilities for lessor capital
expenditure reimbursements under operating
leases
|
(8,602)
|
|
|
(19,262)
|
|
|
(22,242)
|
|
|
(31,305)
|
|
Non-development
capital expenditures, net
|
(34,643)
|
|
|
(55,610)
|
|
|
(139,592)
|
|
|
(235,797)
|
|
Payment of financing
lease obligations
|
(4,556)
|
|
|
(5,740)
|
|
|
(18,868)
|
|
|
(22,242)
|
|
Adjusted Free Cash
Flow (1)
|
$
|
19,875
|
|
|
$
|
511
|
|
|
$
|
24,181
|
|
|
$
|
(76,404)
|
|
|
|
(1)
|
Adjusted Free Cash
Flow includes transaction and organizational restructuring costs of
$1.8 million and $5.0 million for the three months ended December
31, 2020 and 2019, respectively, and $13.4 million and $10.0
million for the twelve months ended December 31, 2020 and 2019,
respectively. Additionally, Adjusted Free Cash Flow
includes:
|
|
|
|
For the three months
ended December 31, 2020:
|
|
• $77.2
million benefit from Provider Relief Funds and other government
grants accepted
|
|
• $22.6
million benefit from payroll taxes deferred
|
|
|
|
For the twelve months
ended December 31, 2020:
|
|
• $115.7
million benefit from Provider Relief Funds and other government
grants accepted
|
|
• $119.2
million one-time cash lease payment made to Ventas in connection
with the Company's lease restructuring transaction effective July
26, 2020
|
|
• $100.0
million benefit from management agreement termination fee payment
received from Healthpeak
|
|
• $87.5
million benefit from accelerated/advanced Medicare payments
received
|
|
• $72.7
million benefit from payroll taxes deferred
|
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SOURCE Brookdale Senior Living Inc.