NASHVILLE, Tenn., May 5, 2022
/PRNewswire/ -- Brookdale Senior Living Inc. (NYSE: BKD)
("Brookdale" or the "Company") announced results for the quarter
ended March 31, 2022.
HIGHLIGHTS
- First quarter consolidated revenue per available unit (RevPAR)
increased 11.0% year-over-year.
- First quarter consolidated weighted average occupancy increased
380 basis points compared to the prior year quarter.
- First quarter consolidated revenue per occupied unit (RevPOR)
increased 5.3% year-over-year.
"We had a strong start to the year, with March's sequential
occupancy growth and returning to December's occupancy, we have
exceeded our historical sequential seasonal trend," said Lucinda
("Cindy") Baier, Brookdale's President and CEO. "We are making
great progress on our 2022 strategic priorities. We delivered
year-over-year double-digit RevPAR growth and our net hires nearly
doubled from the fourth quarter. I am grateful for what our team
has accomplished and look forward to accelerating our
recovery."
SUMMARY OF FIRST QUARTER RESULTS
Same Community Senior Housing (Independent Living (IL),
Assisted Living and Memory Care (AL/MC), and CCRCs)
The table below presents a summary of operating results and
metrics of the Company's same community senior housing
portfolio.(1)
|
|
|
Year-Over-Year
Increase /
(Decrease)
|
|
Sequential
Increase /
(Decrease)
|
($ in millions,
except RevPAR and RevPOR)
|
1Q
2022
|
1Q
2021
|
Amount
|
Percent
|
4Q
2021
|
Amount
|
Percent
|
Senior housing resident
fee revenue
|
$
614.4
|
$
553.8
|
$
60.6
|
10.9%
|
$
582.8
|
$
31.6
|
5.4%
|
Senior housing facility
operating expense
|
$
493.3
|
$
445.5
|
$
47.8
|
10.7%
|
$
467.7
|
$
25.6
|
5.5%
|
RevPAR
|
$
4,037
|
$
3,638
|
$
399
|
11.0%
|
$
3,829
|
$
208
|
5.4%
|
Weighted average
occupancy
|
73.4%
|
69.5%
|
390 bps
|
n/a
|
73.5%
|
(10) bps
|
n/a
|
RevPOR
|
$
5,502
|
$
5,235
|
$
267
|
5.1%
|
$
5,212
|
$
290
|
5.6%
|
|
|
(1)
|
The same community
senior housing portfolio includes operating results and data for
635 communities consolidated and operational for the full period in
both comparison years. Consolidated communities excluded from the
same community portfolio include communities acquired or disposed
of since the beginning of the prior year, communities classified as
assets held for sale, certain communities planned for disposition,
certain communities that have undergone or are undergoing
expansion, redevelopment, and repositioning projects, and certain
communities that have experienced a casualty event that
significantly impacts their operations. To aid in comparability,
same community operating results exclude natural disaster
expense.
|
|
|
- Resident fees.
-
- 1Q 2022 vs 1Q 2021:
-
- Same community resident fees increased due to the increases in
occupancy and RevPOR.
- The increase in occupancy primarily reflects the impact of the
Company's execution on key initiatives to rebuild occupancy lost
due to the COVID-19 pandemic.
- The increase in RevPOR was primarily the result of in-place
rate increases and an occupancy mix shift to more memory care and
skilled nursing services.
- 1Q 2022 vs 4Q 2021:
-
- Same community resident fees increased primarily due to the
increase in RevPOR, reflecting in-place rate increases.
- The sequential weighted average occupancy change was nearly
flat, representing the best first quarter sequential occupancy
change in ten years.
- Facility operating expense.
-
- 1Q 2022 vs 1Q 2021:
-
- The increase was primarily due to an increase in labor expense
primarily resulting from an increase in the use of contract labor
and overtime to cover open positions as well as merit and market
wage rate adjustments, partially offset by a decrease in
incremental direct labor costs to respond to the COVID-19
pandemic.
- As a result of increased occupancy since the prior year period,
higher food and repairs and maintenance costs also contributed to
the increase in same community facility operating expense.
- 1Q 2022 vs 4Q 2021:
-
- The increase was primarily due to an increase in labor expense
resulting from wage rate adjustments and an increase in employee
benefits expense, partially offset by a decrease in costs as a
result of fewer days of expense during the first quarter of 2022
and a decreased use of contract labor to cover open positions.
- Increases in marketing and customer acquisition costs and
utilities costs also contributed to the increase in same community
facility operating expense.
- The Company's same community senior housing portfolio incurred
$10.0 million, $3.2 million, and $24.7
million of incremental direct costs during the first quarter
of 2022, fourth quarter of 2021, and first quarter of 2021,
respectively, to respond to the COVID-19 pandemic, including costs
for: acquisition of personal protective equipment, medical
equipment, and cleaning and disposable food service supplies;
enhanced cleaning and environmental sanitation; increased
employee-related costs, including labor, workers compensation, and
health plan expense; and COVID-19 testing of residents and
associates where not otherwise covered by government payor or
third-party insurance sources.
Consolidated
The table below presents a summary of consolidated operating
results.
|
|
Year-Over-Year
Increase /
(Decrease)
|
|
|
Sequential
Increase /
(Decrease)
|
($ in
millions)
|
1Q
2022
|
1Q
2021
|
Amount
|
Percent
|
|
4Q
2021
|
Amount
|
Percent
|
Senior housing resident
fee revenue
|
$ 637.0
|
$
577.5
|
$ 59.5
|
10.3%
|
|
$
605.4
|
$ 31.6
|
5.2%
|
Health Care Services
resident fee revenue (2)
|
—
|
86.9
|
(86.9)
|
n/a
|
|
—
|
—
|
n/a
|
Total resident fee revenue
|
637.0
|
664.4
|
(27.4)
|
(4.1)%
|
|
605.4
|
31.6
|
5.2%
|
Management fee
revenue
|
3.3
|
8.6
|
(5.3)
|
(61.6)%
|
|
3.4
|
(0.1)
|
(2.9)%
|
Other operating
income
|
0.4
|
10.7
|
(10.3)
|
(96.3)%
|
|
0.2
|
0.2
|
100.0%
|
Senior housing facility
operating expense
|
512.8
|
469.3
|
43.5
|
9.3%
|
|
488.3
|
24.5
|
5.0%
|
Health Care Services
facility operating
expense
(2)
|
—
|
87.0
|
(87.0)
|
n/a
|
|
—
|
—
|
n/a
|
Total facility operating expense
|
512.8
|
556.3
|
(43.5)
|
(7.8)%
|
|
488.3
|
24.5
|
5.0%
|
General and
administrative expense
|
45.1
|
49.9
|
(4.8)
|
(9.6)%
|
|
38.8
|
6.3
|
16.2%
|
Net income
(loss)
|
(100.0)
|
(108.3)
|
(8.3)
|
(7.7)%
|
|
(81.7)
|
18.3
|
22.4%
|
Adjusted EBITDA
(3)
|
37.2
|
35.0
|
2.2
|
6.3%
|
|
35.8
|
1.4
|
3.9%
|
|
|
(2)
|
The Company sold 80% of
its equity in its Health Care Services segment (the "HCS Sale") on
July 1, 2021. For periods beginning July 1, 2021, the results and
financial position of the Health Care Services segment were
deconsolidated from the Company's consolidated financial
statements.
|
(3)
|
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 measure, and other important information
regarding the use of the Company's non-GAAP financial
measures.
|
|
|
- Senior housing resident fee revenue.
-
- The changes in senior housing resident fee revenue were
primarily due to the same community operating results discussed
above.
- The year-over-year changes were also impacted by the
disposition of six communities through sales of owned communities
and lease terminations since the beginning of the first quarter of
2021.
The table below sets forth the Company's recent consolidated
occupancy trend.
2021
|
Jan
|
Feb
|
Mar
|
Apr
|
May
|
Jun
|
Jul
|
Aug
|
Sep
|
Oct
|
Nov
|
Dec
|
Weighted
average
|
70.0%
|
69.4%
|
69.4%
|
69.9%
|
70.5%
|
71.2%
|
72.0%
|
72.5%
|
73.0%
|
73.3%
|
73.5%
|
73.6%
|
Month end
|
70.4%
|
70.1%
|
70.6%
|
71.1%
|
71.6%
|
72.6%
|
73.3%
|
73.7%
|
74.2%
|
74.5%
|
74.3%
|
74.5%
|
|
|
|
|
|
2022
|
Jan
|
Feb
|
Mar
|
Apr
|
Weighted
average
|
73.4%
|
73.3%
|
73.6%
|
73.9%
|
Month end
|
74.2%
|
74.4%
|
75.0%
|
75.3%
|
- Other operating income.
-
- The Company recognized $0.4
million of government grants as other operating income
during the first quarter of 2022, compared to $0.2 million of government grants during the
fourth quarter of 2021 and $10.7
million of government grants and credits during the first
quarter of 2021.
- During the three months ended December
31, 2021, the Company applied for the Phase 4 general
distribution from the Public Health and Social Services Emergency
Fund ("Provider Relief Fund") administered by the U.S. Department
of Health and Human Services ("HHS"), under which grants have been
made available to eligible healthcare providers for healthcare
related expenses or lost revenues attributable to COVID-19. The
Company expects to receive the Phase 4 general distribution during
the second quarter of 2022. There can be no assurance that the
Company will qualify for, or receive, such future grants in the
amount it expects or that additional restrictions on the
permissible uses or terms and conditions of the grants will not be
imposed by HHS.
- Senior housing facility operating expense.
-
- The changes in senior housing facility operating expense were
primarily due to the same community operating results discussed
above.
- The year-over-year changes were also impacted by the
disposition of communities since the beginning of the first quarter
of 2021.
- General and administrative expense.
-
- 1Q 2022 vs 1Q 2021: The decrease in general and
administrative expense was primarily attributable to decreases in
compensation costs primarily as a result of reductions in the
Company's corporate headcount related to the HCS Sale, transaction
and organizational restructuring costs, and non-cash stock-based
compensation expense.
- 1Q 2022 vs 4Q 2021: The increase in general and
administrative expense was primarily attributable to increases in
estimated incentive compensation costs, payroll taxes, and
estimated employee benefits expense.
- Net income (loss).
-
- 1Q 2022 vs 1Q 2021: The decrease in net loss was
primarily attributable to decreases in interest expense and
facility operating lease expense compared to the prior year period,
as well as the net impact of the revenue, other operating income,
facility operating expense, and general and administrative expense
factors previously discussed.
- 1Q 2022 vs 4Q 2021: The increase in net loss was
primarily attributable to a $21.4
million decrease in benefit for income taxes, partially
offset by the net impact of the revenue, other operating income,
facility operating expense, and general and administrative expense
factors previously discussed.
- Adjusted EBITDA.
-
- 1Q 2022 vs 1Q 2021: The increase in Adjusted EBITDA was
primarily attributable to the increase in senior housing resident
fee revenue and decrease in general and administrative expense
(excluding non-cash stock-based compensation expense and
transaction and organizational restructuring costs), partially
offset by the increase in senior housing facility operating expense
and decrease in other operating income.
- 1Q 2022 vs 4Q 2021: The increase in Adjusted EBITDA was
primarily attributable to the increase in senior housing resident
fee revenue, partially offset by the increases in senior housing
facility operating expense and general and administrative expense
(excluding non-cash stock based compensation expense and
transaction and organizational restructuring costs).
- COVID-19 pandemic update.
-
- The Company continues to execute on key initiatives to rebuild
occupancy lost due to the pandemic while maintaining rate
discipline.
- As of April 30, 2022, all of the
Company's communities were open for new resident move-ins. The
Company may revert to more restrictive measures at its communities,
including restrictions on visitors and move-ins, if the pandemic
worsens, as a result of infections at a community, as necessary to
comply with regulatory requirements, or at the direction of
authorities having jurisdiction.
LIQUIDITY
The table below presents a summary of the Company's net cash
provided by (used in) operating activities, non-development capital
expenditures, net, and Adjusted Free Cash Flow.
|
|
Year-Over-
Year
Increase /
(Decrease)
|
|
Sequential
Increase /
(Decrease)
|
($ in
millions)
|
1Q
2022
|
1Q
2021
|
4Q
2021
|
Net cash provided by
(used in) operating activities
|
$
(23.3)
|
$
(23.9)
|
$
(0.6)
|
$
(81.4)
|
$
(58.1)
|
Non-development capital
expenditures, net
|
39.3
|
27.5
|
11.8
|
46.0
|
(6.7)
|
Adjusted Free Cash Flow
(4)
|
(53.5)
|
(50.7)
|
(2.8)
|
(138.7)
|
85.2
|
|
|
(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.
-
- 1Q 2022 vs 1Q 2021: The decrease in net cash used in
operating activities was primarily attributable to an increase in
same community revenue and a decrease in general and administrative
expense compared to the prior year period. These changes were
partially offset by an increase in same community facility
operating expense and a decrease in lessor reimbursements for
capital expenditures for operating leases.
- 1Q 2022 vs 4Q 2021: The decrease in net cash used in
operating activities was primarily attributable to $31.6 million paid during the prior period for
previously deferred payroll taxes and an increase in same community
revenue compared to the prior period.
- Non-development capital expenditures.
-
- 1Q 2022 vs 1Q 2021: The increase in non-development
capital expenditures, net was primarily attributable to increased
investment in the current year period attributable to the reopening
of communities for move-ins as the Company continues to execute on
key initiatives to rebuild occupancy lost due to the pandemic.
- 1Q 2022 vs 4Q 2021: The decrease in non-development
capital expenditures, net was primarily attributable to decreased
expenditures as various communities experienced restrictions due to
the pandemic.
- Adjusted Free Cash Flow.
-
- 1Q 2022 vs 1Q 2021: The $2.8
million change in Adjusted Free Cash Flow was primarily
attributable to an increase in non-development capital
expenditures, net compared to the prior year period and an increase
in same community facility operating expense. These changes were
partially offset by an increase in same community revenue and a
decrease in general and administrative expense compared to the
prior year period.
- 1Q 2022 vs 4Q 2021: The $85.2
million change in Adjusted Free Cash Flow was primarily
attributable to the change in net cash used in operating
activities, excluding $21.3 million
of changes in prepaid insurance premiums financed with notes
payable, and a decrease in non-development capital expenditures,
net compared to the prior period.
- Total Liquidity. Total liquidity of $475.9 million as of March
31, 2022 included $289.2
million of unrestricted cash and cash equivalents,
$179.3 million of marketable
securities, and $7.4 million of
availability on the Company's secured credit facility. Total
liquidity as of March 31, 2022
decreased $60.9 million from
December 31, 2021, primarily
attributable to negative $53.5
million of Adjusted Free Cash Flow and $9.7 million of payments of mortgage debt.
2022 OUTLOOK
Based on results year-to-date, the Company reiterates its full
year 2022 guidance:
|
Full Year 2022
Guidance
|
RevPAR
growth
|
10% - 12%
|
Adjusted
EBITDA
|
$240 million - $260
million
|
|
|
This guidance excludes the potential impact of any additional
government financial relief, including distributions from the
Provider Relief Fund, and future acquisition or disposition
activity other than the planned disposition of two communities
classified as held for sale and the termination of the Company's
lease obligations on two communities for which it has provided
notice of non-renewal. Reconciliation of the non-GAAP financial
measure included in the foregoing guidance to the most comparable
GAAP financial measure is not available without unreasonable effort
due to the inherent difficulty in forecasting the timing or amounts
of items required to reconcile Adjusted EBITDA from the Company's
net income (loss). Variability in the timing or amounts of items
required to reconcile the measure may have a significant impact on
the Company's future GAAP results.
SUPPLEMENTAL INFORMATION
The Company will post on its website at
www.brookdaleinvestors.com supplemental information relating
to the Company's first quarter 2022 results, an updated investor
presentation, and a copy of this earnings release. The supplemental
information and a copy of this earnings release will also be
furnished in a Form 8-K to be filed with the SEC.
EARNINGS CONFERENCE CALL
Brookdale's management will conduct a conference call to discuss
the financial results for the first quarter 2022 on May 6,
2022 at 9:00 AM ET. The conference
call can be accessed by dialing (844) 200-6205 (from within the
U.S.) or (929) 526-1599 (from outside of the U.S.) ten minutes
prior to the scheduled start and referencing the access code
"263465".
A webcast of the conference call will be available to the public
on a listen-only basis at www.brookdaleinvestors.com. Please allow
extra time before to the call to download the necessary software
required to listen to the internet broadcast. A replay of the
webcast will be available through the website following the
call.
For those who cannot listen to the live call, a replay of the
webcast will be available until 11:59 PM
ET on May 13, 2022 by dialing
(866) 813-9403 (from within the U.S.) or +44 (204) 525-0658 (from
outside of the U.S.) and referencing access code "007204".
ABOUT BROOKDALE SENIOR LIVING
Brookdale Senior Living Inc. is the nation's premier operator of
senior living communities. The Company is committed to its mission
of enriching the lives of the people it serves with compassion,
respect, excellence, and integrity. The Company operates
independent living, assisted living, memory care, and continuing
care retirement communities. Through its comprehensive network,
Brookdale helps to provide seniors with care and services in an
environment that feels like home. The Company's expertise in
healthcare, hospitality, and real estate provides residents with
opportunities to improve wellness, pursue passions and stay
connected with friends and loved ones. Brookdale operates and
manages 678 communities in 41 states as of March 31, 2022,
with the ability to serve more than 60,000 residents. Brookdale's
stock trades on the New York Stock Exchange under the ticker symbol
BKD. For more information, visit brookdale.com or connect with
Brookdale on Facebook or Twitter.
DEFINITIONS OF RevPAR AND RevPOR
RevPAR, or average monthly senior housing resident fee revenue
per available unit, is defined by the Company as resident fee
revenue for the corresponding portfolio for the period (excluding
revenue from the former Health Care Services segment, revenue for
private duty services provided to seniors living outside of the
Company's communities, and entrance fee amortization), divided by
the weighted average number of available units in the corresponding
portfolio for the period, divided by the number of months in the
period.
RevPOR, or average monthly senior housing resident fee revenue
per occupied unit, is defined by the Company as resident fee
revenue for the corresponding portfolio for the period (excluding
revenue from the former Health Care Services segment, revenue for
private duty services provided to seniors living outside of the
Company's communities, and entrance fee amortization), divided by
the weighted average number of occupied units in the corresponding
portfolio for the period, divided by the number of months in the
period.
SAFE HARBOR
Certain statements in this press release and the associated
earnings call may constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to various risks and
uncertainties and include all statements that are not historical
statements of fact and those regarding the Company's intent, belief
or expectations. Forward-looking statements are generally
identifiable by use of forward-looking terminology such as "may,"
"will," "should," "could," "would," "potential," "intend,"
"expect," "endeavor," "seek," "anticipate," "estimate," "believe,"
"project," "predict," "continue," "plan," "target," or other
similar words or expressions. 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, revenue, expenses, liquidity, and its strategic initiatives,
including plans for future growth, which will depend on many
factors, some of which cannot be foreseen, including the duration,
severity, and breadth of the pandemic and any resurgence or
variants 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 its 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, health plan, and other
expenses, potentially greater use of contract labor and overtime
due to COVID-19 and general labor market conditions, the impact of
COVID-19 on the Company's ability to complete financings and
refinancings of various assets, or other transactions or to
generate sufficient cash flow to cover required debt, interest, and
lease payments and to satisfy financial and other covenants in its
debt and lease documents, increased regulatory requirements,
including the costs of unfunded, mandatory testing of residents and
associates and provision of test kits to the Company's health plan
participants, 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 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; failure to maintain the security and functionality of the
Company's information systems, to prevent a cybersecurity attack or
breach, or to comply with applicable privacy and consumer
protection laws, including HIPAA; the Company's ability to complete
its capital expenditures in accordance with its plans; the
Company's ability to identify and pursue development, investment,
and acquisition opportunities and its ability to successfully
integrate acquisitions; competition for the acquisition of assets;
the Company's ability to complete pending or expected disposition,
acquisition, or other transactions on agreed upon terms or at all,
including in respect of the satisfaction of closing conditions, the
risk that regulatory approvals are not obtained or are subject to
unanticipated conditions, and uncertainties as to the timing of
closing, and the Company's ability to identify and pursue any such
opportunities in the future; risks related to the implementation of
the Company's strategy, including initiatives undertaken to execute
on the Company's strategic priorities and their effect on its
results; limits on the Company's ability to use net operating loss
carryovers to reduce future tax payments; delays in obtaining
regulatory approvals; disruptions in the financial markets or
decreases in the appraised values or performance of the Company's
communities that affect the Company's ability to obtain financing
or extend or refinance debt as it matures and the Company's
financing costs; the Company's ability to generate sufficient cash
flow to cover required interest, principal, and long-term lease
payments and to fund its planned capital projects; the effect of
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 the Company's liquidity and its ability to
operate its business; increases in market interest rates that
increase the costs of the Company's debt obligations; the Company's
ability to obtain additional capital on terms acceptable to it;
departures of key officers and potential disruption caused by
changes in management; increased competition for, or a shortage of,
associates (including due to the pandemic or general labor market
conditions), wage pressures resulting from increased competition,
low unemployment levels, minimum wage increases and changes in
overtime laws, and union activity; environmental contamination at
any of the Company's communities; failure to comply with existing
environmental laws; an adverse determination or resolution of
complaints filed against the Company, including putative class
action complaints; 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; changes in, or its failure to comply with,
employment-related laws and regulations; unanticipated costs to
comply with legislative or regulatory developments; the risks
associated with current global economic conditions and general
economic factors such as inflation, the consumer price index,
commodity costs, fuel and other energy costs, competition in the
labor market, costs of salaries, wages, benefits, and insurance,
interest rates, and tax rates; the impact of seasonal contagious
illness or an outbreak of COVID-19 or other contagious disease in
the markets in which the Company operates; actions of activist
stockholders, including a proxy contest; as well as other risks
detailed from time to time in the Company's filings with the
Securities and Exchange Commission, including those set forth in
the Company's Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q. When considering forward-looking statements, you should
keep in mind the risk factors and other cautionary statements in
such SEC filings. Readers are cautioned not to place undue reliance
on any of these forward-looking statements, which reflect
management's views as of the date of this press release and/or
associated earnings call. The Company cannot guarantee future
results, levels of activity, performance or achievements, and,
except as required by law, it expressly disclaims any obligation to
release publicly any updates or revisions to any forward-looking
statements contained in this press release and/or associated
earnings call to reflect any change in the Company's expectations
with regard thereto or change in events, conditions, or
circumstances on which any statement is based.
Condensed
Consolidated Statements of Operations
|
|
|
Three Months
Ended
March
31,
|
(in thousands,
except per share data)
|
2022
|
|
2021
|
Revenue
|
|
|
|
Resident fees
|
$
636,974
|
|
$
664,350
|
Management fees
|
3,329
|
|
8,566
|
Reimbursed costs incurred on behalf of managed
communities
|
37,141
|
|
65,794
|
Other operating income
|
376
|
|
10,735
|
Total revenue and other
operating income
|
677,820
|
|
749,445
|
|
|
|
|
Expense
|
|
|
|
Facility operating expense (excluding facility depreciation
and amortization of $79,932 and
$77,274, respectively)
|
512,764
|
|
556,312
|
General and administrative expense (including non-cash
stock-based compensation expense
of $3,885 and $4,783,
respectively)
|
45,126
|
|
49,943
|
Facility operating lease expense
|
41,564
|
|
44,418
|
Depreciation and amortization
|
85,684
|
|
83,891
|
Asset impairment
|
9,075
|
|
10,677
|
Costs incurred on behalf of managed communities
|
37,141
|
|
65,794
|
Total operating
expense
|
731,354
|
|
811,035
|
Income (loss) from
operations
|
(53,534)
|
|
(61,590)
|
|
|
|
|
Interest
income
|
95
|
|
421
|
Interest
expense:
|
|
|
|
Debt
|
(33,157)
|
|
(35,351)
|
Financing lease obligations
|
(12,058)
|
|
(11,383)
|
Amortization of deferred financing costs
|
(1,542)
|
|
(1,915)
|
Change in fair value of derivatives
|
3,403
|
|
42
|
Equity in earnings
(loss) of unconsolidated ventures
|
(4,894)
|
|
(531)
|
Gain (loss) on sale of
assets, net
|
(294)
|
|
1,112
|
Other non-operating
income (loss)
|
(27)
|
|
1,644
|
Income (loss) before
income taxes
|
(102,008)
|
|
(107,551)
|
Benefit (provision) for
income taxes
|
1,976
|
|
(752)
|
Net income
(loss)
|
(100,032)
|
|
(108,303)
|
Net (income) loss
attributable to noncontrolling interest
|
19
|
|
18
|
Net income (loss)
attributable to Brookdale Senior Living Inc. common
stockholders
|
$ (100,013)
|
|
$ (108,285)
|
|
|
|
|
Basic and diluted net
income (loss) per share attributable to Brookdale Senior Living
Inc.
common stockholders
|
$
(0.54)
|
|
$
(0.59)
|
|
|
|
|
Weighted average shares
used in computing basic and diluted net income (loss) per
share
|
185,916
|
|
184,011
|
Condensed
Consolidated Balance Sheets
|
|
(in
thousands)
|
March 31,
2022
|
|
December 31,
2021
|
Cash and cash
equivalents
|
$
289,247
|
|
$
347,031
|
Marketable
securities
|
179,260
|
|
182,393
|
Restricted
cash
|
24,791
|
|
26,845
|
Accounts receivable,
net
|
49,952
|
|
51,137
|
Assets held for
sale
|
3,658
|
|
3,642
|
Prepaid expenses and
other current assets, net
|
107,988
|
|
87,946
|
Total current assets
|
654,896
|
|
698,994
|
Property, plant and
equipment and leasehold intangibles, net
|
4,874,044
|
|
4,904,292
|
Operating lease
right-of-use assets
|
588,935
|
|
630,423
|
Other assets,
net
|
177,102
|
|
176,758
|
Total assets
|
$
6,294,977
|
|
$
6,410,467
|
|
|
|
|
Current portion of
long-term debt
|
$
207,751
|
|
$
63,125
|
Current portion of
financing lease obligations
|
28,559
|
|
22,151
|
Current portion of
operating lease obligations
|
147,831
|
|
148,642
|
Other current
liabilities
|
408,757
|
|
398,036
|
Total current
liabilities
|
792,898
|
|
631,954
|
Long-term debt, less
current portion
|
3,640,784
|
|
3,778,087
|
Financing lease
obligations, less current portion
|
529,681
|
|
532,136
|
Operating lease
obligations, less current portion
|
647,571
|
|
681,876
|
Other
liabilities
|
84,764
|
|
86,791
|
Total liabilities
|
5,695,698
|
|
5,710,844
|
Total Brookdale Senior
Living Inc. stockholders' equity
|
597,077
|
|
697,402
|
Noncontrolling
interest
|
2,202
|
|
2,221
|
Total equity
|
599,279
|
|
699,623
|
Total liabilities and
equity
|
$
6,294,977
|
|
$
6,410,467
|
Condensed
Consolidated Statements of Cash Flows
|
|
|
Three Months Ended
March 31,
|
(in
thousands)
|
2022
|
|
2021
|
Cash Flows from
Operating Activities
|
|
|
|
Net income
(loss)
|
$
(100,032)
|
|
$
(108,303)
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
Depreciation and amortization, net
|
87,226
|
|
85,806
|
Asset impairment
|
9,075
|
|
10,677
|
Equity in (earnings) loss of unconsolidated
ventures
|
4,894
|
|
531
|
Distributions from unconsolidated ventures from cumulative
share of net earnings
|
561
|
|
—
|
Amortization of entrance fees
|
(726)
|
|
(364)
|
Proceeds from deferred entrance fee revenue
|
1,036
|
|
670
|
Deferred income tax (benefit) provision
|
(2,304)
|
|
319
|
Operating lease expense adjustment
|
(8,307)
|
|
(4,664)
|
Change in fair value of derivatives
|
(3,403)
|
|
(42)
|
Loss (gain) on sale of assets, net
|
294
|
|
(1,112)
|
Non-cash stock-based compensation expense
|
3,885
|
|
4,783
|
Other
|
(43)
|
|
(1,416)
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts receivable, net
|
1,185
|
|
(5,768)
|
Prepaid expenses and other assets, net
|
(4,734)
|
|
(6,769)
|
Prepaid insurance premiums financed with notes
payable
|
(16,629)
|
|
(12,985)
|
Trade accounts payable and accrued expenses
|
(2,630)
|
|
(500)
|
Refundable fees and deferred revenue
|
5,907
|
|
7,717
|
Operating lease assets and liabilities for lessor capital
expenditure
reimbursements
|
1,490
|
|
7,563
|
Net cash provided by (used in) operating
activities
|
(23,255)
|
|
(23,857)
|
Cash Flows from
Investing Activities
|
|
|
|
Change in lease security deposits and lease acquisition
deposits, net
|
155
|
|
(62)
|
Purchase of marketable securities
|
(125,990)
|
|
(79,932)
|
Sale and maturities of marketable securities
|
129,000
|
|
117,995
|
Capital expenditures, net of related payables
|
(39,956)
|
|
(40,361)
|
Investment in unconsolidated ventures
|
(82)
|
|
(5,206)
|
Proceeds from sale of assets, net
|
710
|
|
3,760
|
Net cash provided by (used in) investing
activities
|
(36,163)
|
|
(3,806)
|
Cash Flows from
Financing Activities
|
|
|
|
Proceeds from debt
|
25,258
|
|
18,575
|
Repayment of debt and financing lease obligations
|
(21,440)
|
|
(49,924)
|
Payment of financing costs, net of related
payables
|
(76)
|
|
(87)
|
Payments of employee taxes for withheld shares
|
(4,145)
|
|
(4,329)
|
Other
|
—
|
|
203
|
Net cash provided by (used in) financing
activities
|
(403)
|
|
(35,562)
|
Net increase (decrease) in
cash, cash equivalents, and restricted cash
|
(59,821)
|
|
(63,225)
|
Cash, cash equivalents, and
restricted cash at beginning of period
|
438,314
|
|
465,148
|
Cash, cash equivalents, and
restricted cash at end of period
|
$
378,493
|
|
$
401,923
|
Non-GAAP Financial Measures
This earnings release contains the financial measures Adjusted
EBITDA and Adjusted Free Cash Flow, which are not calculated in
accordance with U.S. generally accepted accounting principles
("GAAP"). Presentations of these non-GAAP financial measures are
intended to aid investors in better understanding the factors and
trends affecting the Company's performance and liquidity. However,
investors should not consider these non-GAAP financial measures as
a substitute for financial measures determined in accordance with
GAAP, including net income (loss), income (loss) from operations,
or net cash provided by (used in) operating activities. The Company
cautions investors that amounts presented in accordance with the
Company's definitions of these non-GAAP financial measures may not
be comparable to similar measures disclosed by other companies
because not all companies calculate non-GAAP measures in the same
manner. The Company urges investors to review the following
reconciliations of these non-GAAP financial measures from the most
comparable financial measures determined in accordance with
GAAP.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP performance measure that the
Company defines as net income (loss) excluding: benefit/provision
for income taxes, non-operating income/expense items, and
depreciation and amortization; and further adjusted to exclude
income/expense associated with non-cash, non-operational,
transactional, cost reduction, or organizational restructuring
items that management does not consider as part of the Company's
underlying core operating performance and that management believes
impact the comparability of performance between periods. For the
periods presented herein, such other items include non-cash
impairment charges, gain/loss on facility operating lease
termination, operating lease expense adjustment, non-cash
stock-based compensation expense, and transaction and
organizational restructuring costs. Transaction costs include those
directly related to acquisition, disposition, financing, and
leasing activity, and are primarily comprised of legal, finance,
consulting, professional fees, and other third-party costs.
Organizational restructuring costs include those related to the
Company's efforts to reduce general and administrative expense and
its senior leadership changes, including severance.
The Company believes that presentation of Adjusted EBITDA as a
performance measure is useful to investors because (i) it is one of
the metrics used by the Company's management for budgeting and
other planning purposes, to review the Company's historic and
prospective core operating performance, and to make day-to-day
operating decisions; (ii) it provides an assessment of operational
factors that management can impact in the short-term, namely
revenues and the controllable cost structure of the organization,
by eliminating items related to the Company's financing and capital
structure and other items that management does not consider as part
of the Company's underlying core operating performance and that
management believes impact the comparability of performance between
periods; 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 operating lease termination, or debt
modification and extinguishment, non-cash stock-based compensation
expense, and transaction and other costs, and such income/expense
may significantly affect the Company's operating results.
The tables below reconcile the Company's Adjusted EBITDA from
net income (loss).
|
Three Months
Ended
|
(in
thousands)
|
March 31,
2022
|
|
December 31,
2021
|
|
March 31,
2021
|
Net income
(loss)
|
$
(100,032)
|
|
$
(81,720)
|
|
$
(108,303)
|
Provision (benefit) for
income taxes
|
(1,976)
|
|
(23,402)
|
|
752
|
Equity in (earnings)
loss of unconsolidated ventures
|
4,894
|
|
1,547
|
|
531
|
Loss (gain) on debt
modification and extinguishment, net
|
—
|
|
1,932
|
|
—
|
Loss (gain) on sale of
assets, net
|
294
|
|
573
|
|
(1,112)
|
Other non-operating
(income) loss
|
27
|
|
(740)
|
|
(1,644)
|
Interest
expense
|
43,354
|
|
48,115
|
|
48,607
|
Interest
income
|
(95)
|
|
(301)
|
|
(421)
|
Income (loss) from operations
|
(53,534)
|
|
(53,996)
|
|
(61,590)
|
Depreciation and
amortization
|
85,684
|
|
85,571
|
|
83,891
|
Asset
impairment
|
9,075
|
|
9,609
|
|
10,677
|
Loss (gain) on facility
operating lease termination, net
|
—
|
|
(2,003)
|
|
—
|
Operating lease expense
adjustment
|
(8,307)
|
|
(7,017)
|
|
(4,664)
|
Non-cash stock-based
compensation expense
|
3,885
|
|
3,392
|
|
4,783
|
Transaction and
organizational restructuring costs
|
373
|
|
293
|
|
1,884
|
Adjusted EBITDA(5)
|
$
37,176
|
|
$
35,849
|
|
$
34,981
|
|
|
(5)
|
Adjusted EBITDA
includes $0.4 million, $0.2 million, and $10.7 million benefit for
the three months ended March 31, 2022, December 31, 2021, and
March 31, 2021, respectively, of government grants and credits
recognized in other operating income.
|
|
|
Adjusted Free Cash Flow
Adjusted Free Cash Flow is a non-GAAP liquidity measure that the
Company defines as net cash provided by (used in) operating
activities before: distributions from unconsolidated ventures from
cumulative share of net earnings, changes in prepaid insurance
premiums financed with notes payable, changes in operating lease
assets and liabilities for lease termination, cash paid/received
for gain/loss on facility operating lease termination, and lessor
capital expenditure reimbursements under operating leases;
plus: property 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 tables below reconcile Adjusted Free Cash Flow from net cash
provided by (used in) operating activities.
|
Three Months
Ended
|
(in
thousands)
|
March 31,
2022
|
|
December 31,
2021
|
|
March 31,
2021
|
Net cash provided by
(used in) operating activities
|
$
(23,255)
|
|
$
(81,387)
|
|
$
(23,857)
|
Net cash provided by
(used in) investing activities
|
(36,163)
|
|
(20,272)
|
|
(3,806)
|
Net cash provided by
(used in) financing activities
|
(403)
|
|
(37,926)
|
|
(35,562)
|
Net increase (decrease) in
cash, cash equivalents,
and
restricted cash
|
$
(59,821)
|
|
$
(139,585)
|
|
$
(63,225)
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
$
(23,255)
|
|
$
(81,387)
|
|
$
(23,857)
|
Distributions from
unconsolidated ventures from
cumulative share of net earnings
|
(561)
|
|
—
|
|
—
|
Changes in prepaid
insurance premiums financed with
notes payable
|
16,629
|
|
(4,634)
|
|
12,985
|
Changes in operating
lease assets and liabilities for lease
termination
|
—
|
|
2,380
|
|
—
|
Changes in assets and
liabilities for lessor capital
expenditure reimbursements under operating
leases
|
(1,490)
|
|
(3,908)
|
|
(7,563)
|
Non-development capital
expenditures, net
|
(39,326)
|
|
(45,972)
|
|
(27,450)
|
Payment of financing
lease obligations
|
(5,490)
|
|
(5,182)
|
|
(4,789)
|
Adjusted Free Cash Flow (6)
|
$
(53,493)
|
|
$
(138,703)
|
|
$
(50,674)
|
|
|
|
(6)
|
Adjusted Free Cash Flow
includes:
|
|
•
|
$0.8 million, $0.6
million, and $1.7 million benefit for the three months ended March
31, 2022, December 31, 2021, and March 31, 2021, respectively, from
government grants and credits received.
|
|
•
|
$1.8 million and $3.0
million recoupment of accelerated/advanced Medicare payments for
the three months ended March 31, 2022 and December 31, 2021,
respectively.
|
|
•
|
$31.6 million paid
during the three months ended December 31, 2021 for payroll taxes
deferred for the year ended December 31, 2020.
|
|
|
|
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SOURCE Brookdale Senior Living Inc.