Sonida Senior Living, Inc. (the “Company,” “we,” “our,” or “us”)
(NYSE: SNDA) announced results for the third quarter ended
September 30, 2023.
“We continue to see growth in both year-over-year occupancy and
revenue that is surpassing industry trends. This strong financial
performance combined with our improved debt structure has Sonida
firmly positioned for strategic expansion within the marketplace,”
said Brandon Ribar, President and CEO. “As we close out the year
and prepare for 2024, we look forward to bringing our signature
programs and services to more seniors and to pursuing new avenues
of growth and shareholder value creation.”
Third Quarter Highlights
- Weighted average occupancy for the Company’s consolidated
portfolio increased 150 basis points to 84.9% year-over-year.
- Resident revenue increased $6.6 million, or 12.6%
year-over-year.
- Net loss for the third quarter was $18.4 million.
- Adjusted EBITDA, a non-GAAP measure, was $9.3 million for Q3
2023, an increase of $4.8 million year-over-year.
- Net cash provided by operating activities was $10.6 million
year-to-date as compared to $2.9 million for the same period in
2022.
- Results for the Company’s consolidated portfolio of
communities:
- Q3 2023 vs. Q3 2022:
- Revenue Per Available Unit (“RevPAR”) increased 13.7% to
$3,446.
- Revenue Per Occupied Unit (“RevPOR”) increased 11.7% to
$4,061.
- Community Net Operating Income, a non-GAAP measure, increased
$4.7 million. Adjusted Community Net Operating Income, a non-GAAP
measure, which excludes $0.5 million of state grant revenue
received in Q3 2023 (none recognized in Q3 2022) was $14.2 million
and $10.0 million for Q3 2023 and Q3 2022, respectively.
- Community Net Operating Income Margin and Adjusted Community
Net Operating Income Margin (non-GAAP measures with the latter
adjusted for non-recurring state grant revenue) were 24.8% and
24.2%, for Q3 2023, respectively, and 19.0% and 19.0% for Q3 2022,
respectively.
- Q3 2023 vs. Q2 2023:
- RevPAR increased 4.4% to $3,446.
- RevPOR increased 3.3% to $4,061.
- Community Net Operating Income increased $1.1 million. Adjusted
Community Net Operating Income, excluding $0.5 million and $0.4
million of state grant revenue received in Q3 2023 and Q2 2023,
respectively, was $14.2 million and $13.1 million for Q3 2023 and
Q2 2023, respectively.
- Community Net Operating Income Margin and Adjusted Community
Net Operating Income Margin (adjusted for non-recurring state grant
revenue) were 24.8% and 24.2% for Q3 2023, respectively, and 23.8%
and 23.2% for Q2 2023, respectively.
SONIDA SENIOR LIVING,
INC.
SUMMARY OF CONSOLIDATED
FINANCIAL RESULTS
THREE MONTHS ENDED SEPTEMBER
30, 2023
(in thousands)
Three Months Ended September
30,
Three Months Ended June
30,
2023
2022
2023
Consolidated results
Resident revenue (1)
$
59,117
$
52,485
$
56,960
Management fees
569
608
531
Operating expenses
44,486
43,123
44,662
General and administrative expenses
8,615
5,851
6,574
Long-lived asset impairment
5,965
—
—
Loss before provision for income taxes
(1)
(18,328
)
(13,739
)
(12,159
)
Net loss (1)
(18,411
)
(13,739
)
(12,212
)
Adjusted EBITDA (1) (2)
9,270
4,446
7,538
Community net operating income (NOI)
(2)
14,690
9,995
13,549
Community net operating income margin
(2)
24.8
%
19.0
%
23.8
%
Weighted average occupancy
84.9
%
83.4
%
83.9
%
(1) Includes $0.5 million, $0.0 million,
and $0.4 million of state grant revenue received in Q3 2023, Q3
2022, and Q2 2023, respectively.
(2) Adjusted EBITDA, Community Net
Operating Income, and Community Net Operating Income Margin are
financial measures that are not calculated in accordance with U.S.
Generally Accepted Accounting Principles (“GAAP”). See
“Reconciliation of Non-GAAP Financial Measures” for the Company's
definition of such measures, reconciliations to the most comparable
GAAP financial measures, and other information regarding the use of
the Company's non-GAAP financial measures.
Results of Operations
Three months ended September 30, 2023 as compared to three
months ended September 30, 2022
Revenues
Resident revenue for the three months ended September 30, 2023
was $59.1 million as compared to $52.5 million for the three months
ended September 30, 2022, an increase of $6.6 million, or 12.6%.
The increase in revenue was primarily due to increased occupancy
and increased average rent rates.
Expenses
Operating expenses for the three months ended September 30, 2023
were $44.5 million as compared to $43.1 million for the three
months ended September 30, 2022, an increase of $1.4 million, or
3.2%. The increase is primarily due to a $2.2 million increase in
labor and employee-related expenses and a $0.3 million increase in
computer software/ internet costs, partially offset by a reduction
in real estate taxes of $0.4 million and $0.7 million in other
expenses.
General and administrative expenses for the three months ended
September 30, 2023 were $8.6 million as compared to $5.9 million
for the three months ended September 30, 2022, representing an
increase of $2.7 million. This increase is primarily due to a $1.4
million increase in transaction costs due to our loan modification
and a $1.2 million increase in stock-based compensation expense
from prior quarter due to forfeiture credits in connection with
executive personnel changes.
The Company reported a net loss of $18.4 million for the three
months ended September 30, 2023, compared to a net loss of $13.7
million for the three months ended September 30, 2022. A major
factor impacting the comparison of net loss for the three months
ended September 30, 2023 and September 30, 2022 relates to a
non-cash impairment charge of $6.0 million related to one owned
community.
Adjusted EBITDA for the three months ended September 30, 2023
was $9.3 million compared to $4.4 million for the three months
ended September 30, 2022. See “Reconciliation of Non-GAAP Financial
Measures” below.
Nine months ended September 30, 2023 as compared to nine
months ended September 30, 2022
Revenues
Resident revenue for the nine months ended September 30, 2023
was $172.7 million as compared to $155.3 million for the nine
months ended September 30, 2022, an increase of $17.4 million, or
11.2%. The increase in revenue was primarily due to increased
occupancy and increased average rent rates.
Expenses
Operating expenses for the nine months ended September 30, 2023
were $133.0 million as compared to $126.6 million for the nine
months ended September 30, 2022, an increase of $6.4 million, or
5.1%. The increase is primarily due to a $5.8 million increase in
labor and employee-related expenses, a $0.4 million increase in
service contracts, a $0.8 million increase in computer software/
internet costs, partially offset by a $0.6 million decrease in food
costs and a $0.2 million decrease in real estate taxes.
General and administrative expenses for the nine months ended
September 30, 2023 were $22.3 million as compared to $23.6 million
for the nine months ended September 30, 2022, representing a
decrease of $1.3 million. This decrease is primarily due to a $1.9
million decrease in recurring general and administrative expenses
and a $1.3 million decrease in stock-based compensation expense as
a result of prior year forfeiture credits in connection with
executive personnel changes. Partially offsetting the decrease in
general and administrative expense is an increase of $1.9 million
related to transaction costs associated with our 2023 loan
modifications.
The Company reported a net loss of $6.5 million for the nine
months ended September 30, 2023 compared to a net loss of $37.8
million for the nine months ended September 30, 2022, primarily due
to a $36.3 million gain on extinguishment of debt, partially offset
by a non-cash impairment charge of $6.0 million during the nine
months ended September 30, 2023.
Significant Transactions
Fannie Mae Loan Modification
On June 29, 2023, the Company entered into a binding forbearance
agreement (“Fannie Forbearance”) with the Federal National Mortgage
Association (“Fannie Mae”) for all 37 of its encumbered
communities, effective as of June 1, 2023 (“Fannie Forbearance
Effective Date”). Under the Fannie Forbearance, Fannie Mae agreed
to forbear on its remedies otherwise available under the community
mortgages and Master Credit Facility (“MCF”) in connection with
reduced debt service payments made by the Company during the
forbearance period. In connection with the Fannie Forbearance, the
Company made a $5.0 million principal payment in July 2023. The
Fannie Forbearance was the first of a two-step process to modify
all existing mortgage agreements with Fannie Mae by October 1, 2023
under proposed loan modification agreements, as defined in the
Fannie Forbearance (“Loan Modification Agreements”). Terms outlined
in an agreed upon term sheet accompanying the Fannie Forbearance
were included in the Loan Modification Agreements as the final step
to modify the various 37 Fannie Mae community mortgages and MCF
prior to the expiration of the Fannie Forbearance, which was
subsequently extended to October 6, 2023. The Company entered into
Loan Modification Agreements with Fannie Mae on October 2, 2023.
The forbearance and subsequent loan modification provide the
Company with additional financial flexibility and increases its
liquidity position.
Under the terms of the Loan Modification Agreements, the
mortgage principal payments on 18 community mortgages, ranging from
July 2024 to December 2026, will be extended to December 2026. The
remaining 19 communities under the MCF have existing maturities in
December 2028. The Company will not be required to make scheduled
principal payments due under the 18 community mortgages and 19
communities under the MCF through (the revised maturity date)
December 2026 and June 1, 2026, respectively. The monthly interest
rate was reduced by a 1.5% weighted average on all 37 communities
for 12 months, resulting in a projected cash savings of $6.1
million over the period of June 1, 2023 through June 1, 2024.
Ally Loan Amendment
On June 29, 2023 and concurrent with the Fannie Forbearance, the
Company executed a second amendment (“Ally Amendment”) to its
refinance facility (“Ally Term Loan”) and amended limited payment
guaranty with Ally Bank (“Second Amended and Restated Limited
Payment Guaranty”) with terms that include a waiver of its current
$13.0 million liquid assets requirement through June 30, 2024.
During the waiver period (June 30, 2023 through July 1, 2024 under
the Ally Amendment, the “Waiver Period”), a new and temporary
liquid assets minimum threshold will be established at $6.0 million
and measured weekly. Beginning on July 1, 2024, a new liquid assets
requirement of $7.0 million will be effective, with such threshold
increasing $1.0 million per month rising to $13.0 million by the
earlier of the release of the Waiver Period or December 31, 2024.
In addition, the Company must replace its interest rate cap (“IRC”)
on the $88.1 million notional value and a 2.25% SOFR strike rate
when the current IRC expires on November 30, 2023. In July 2023,
the Company funded a $2.3 million interest rate cap reserve to Ally
Bank with an additional $0.1 million added during the remainder of
Q3.
Conversant Equity Commitment
In connection with the Fannie Forbearance and Ally Amendment
signed on June 29, 2023, the Company entered into a $13.5 million
equity commitment agreement (“Equity Commitment”) with Conversant
Dallas Parkway (A) LP and Conversant Dallas Parkway (B) LP,
(together “Conversant”) for a term of 18 months. The Equity
Commitment had a commitment fee of $675,000 payable through the
issuance of 67,500 shares of common stock of the Company. Sonida
shall have the right, but not the obligation, to utilize
Conversant’s equity commitment and may draw on the commitment in
whole or in part. The Company made a $6.0 million equity draw in
July 2023 in exchange for 600,000 shares of common stock of the
Company. Subsequent to September 30, 2023, the Company elected to
draw down an additional $4.0 million of the Conversant Equity
Commitment in October which was received on November 1, 2023. The
Company issued 400,000 shares of common stock to Conversant on
November 1, 2023.
The foregoing description of the Fannie Forbearance, the Ally
Amendment, Second Amended & Restated Limited Payment Guaranty,
Loan Modification Agreements, and Equity Commitment and related
transactions contemplated do not purport to be complete and are
subject to, and qualified in their entirety by, the full text of
the Fannie Forbearance, the Ally Amendment, Second Amended and
Restated Limited Payment Guaranty, and Equity Commitment which are
filed as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, to the
Company’s Form 8-K filed on July 5, 2023, incorporated herein by
reference. In addition, the full text of the Loan Modification
Agreements are filed as Exhibits 10.2 and 10.3 to the Company’s
Form 8-K filed on October 6, 2023, incorporated herein by
reference.
Liquidity and Capital
Resources
Cash flows
The table below presents a summary of the Company’s net cash
provided by (used in) operating, investing, and financing
activities (in thousands):
Nine months ended September
30,
2023
2022
Net cash provided by operating
activities
$
10,643
$
2,903
Net cash used in investing activities
(12,792
)
(30,659
)
Net cash used in financing activities
(7,441
)
(24,304
)
Decrease in cash and cash equivalents
$
(9,590
)
$
(52,060
)
In addition to $3.6 million of unrestricted cash on hand as of
September 30, 2023, our future liquidity will depend in part upon
our operating performance, which will be affected by prevailing
economic conditions, including those related to the COVID-19
pandemic, and financial, business and other factors, some of which
are beyond our control. Principal sources of liquidity are expected
to be cash flows from operations, proceeds from debt refinancings
or loan modifications, proceeds from the issuance of common or
preferred stock, COVID-19 or related relief grants from various
state agencies, and/or proceeds from the sale of owned assets. In
June 2023, the Company entered into the Fannie Forbearance, the
Ally Amendment, Second Amended and Restated Limited Payment
Guaranty, and the Equity Commitment, as disclosed above. The
Company entered into Loan Modification Agreements with Fannie Mae
on October 2, 2023. These transactions are expected to provide
additional financial flexibility to the Company and increase its
liquidity position. In March 2022, the Company completed the
refinancing of certain existing mortgage debt, which was further
amended in December 2022 and June 2023.
The Company has implemented plans, which include strategic and
cash-preservation initiatives, designed to provide the Company with
adequate liquidity to meet its obligations for at least the
12-month period following the date its third quarter 2023 financial
statements are issued. While the Company’s plans are designed to
provide it with adequate liquidity to meet its obligations for at
least the 12-month period following the date its financial
statements are issued, the remediation plan is dependent on
conditions and matters that may be outside of the Company’s
control, and no assurance can be given that certain options will be
available on terms acceptable to the Company, or at all. If the
Company is unable to successfully execute all of the planned
initiatives or if the plan does not fully mitigate the Company’s
liquidity challenges, the Company’s operating plans and resulting
cash flows along with its cash and cash equivalents and other
sources of liquidity may not be sufficient to fund operations for
the 12-month period following the date the financial statements are
issued.
The Company, from time to time, considers and evaluates
financial and capital raising transactions related to its
portfolio, including debt refinancings and modifications, purchases
and sales of assets and other transactions. There can be no
assurance that the Company will continue to generate cash flows at
or above current levels, or that the Company will be able to obtain
the capital necessary to meet the Company’s short and long-term
capital requirements.
Recent changes in the current economic environment, and other
future changes, could result in decreases in the fair value of
assets, slowing of transactions, and the tightening of liquidity
and credit markets. These impacts could make securing debt or
refinancings for the Company or buyers of the Company’s properties
more difficult or on terms not acceptable to the Company. The
Company’s actual liquidity and capital funding requirements depend
on numerous factors, including its operating results, its capital
expenditures for community investment, and general economic
conditions, as well as other factors described in “Item 1A. Risk
Factors” of our Annual Report on Form 10-K for the fiscal year
ended December 31, 2022, filed with the SEC on March 30, 2023.
Conference Call
Information
The Company will host a conference call with senior management
to discuss the Company’s financial results for the three months
ended September 30, 2023, on Tuesday November 14, 2023, at 4:00
p.m. Eastern Time. To participate, dial 877-407-0989 (no passcode
required). A link to the simultaneous webcast of the teleconference
will be available at:
https://www.webcast-eqs.com/register/sonidaseniorliving_q32023_en/en.
For the convenience of the Company’s shareholders and the
public, the conference call will be recorded and available for
replay starting November 15, 2023 through November 29, 2023. To
access the conference call replay, call 877-660-6853, passcode
13742296. A transcript of the call will be posted in the Investor
Relations section of the Company’s website.
About the Company
Dallas-based Sonida Senior Living, Inc. is a leading
owner-operator of independent living, assisted living and memory
care communities and services for senior adults. As of September
30, 2023, the Company operated 71 communities, with capacity for
approximately 8,000 residents across 18 states, which provide
comfortable, safe, affordable environment where residents can form
friendships, enjoy new experiences and receive personalized care
from dedicated team members who treat them like family. For more
information, visit www.sonidaseniorliving.com or connect with the
Company on Facebook, Twitter or LinkedIn.
Definitions of RevPAR and
RevPOR
RevPAR, or average monthly revenue per available unit, is
defined by the Company as resident revenue for the period, divided
by the weighted average number of available units in the
corresponding portfolio for the period, divided by the number of
months in the period.
RevPOR, or average monthly revenue per occupied unit, is defined
by the Company as resident revenue for the period, divided by the
weighted average number of occupied units in the corresponding
portfolio for the period, divided by the number of months in the
period.
Safe Harbor
This release contains forward-looking statements which are
subject to certain risks and uncertainties that could cause our
actual results and financial condition of Sonida Senior Living,
Inc. (the “Company,” “we,” “our” or “us”) to differ materially from
those indicated in the forward-looking statements, including, among
others, the risks, uncertainties and factors set forth under “Item.
1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2022, filed with the Securities and
Exchange Commission (the “SEC”) on March 30, 2023, and also include
the following: the impact of COVID-19, including the actions taken
to prevent or contain the spread of COVID-19, the transmission of
its highly contagious variants and sub-lineages and the development
and availability of vaccinations and other related treatments, or
another epidemic, pandemic or other health crisis; the Company’s
ability to generate sufficient cash flows from operations,
additional proceeds from debt financings or refinancings, and
proceeds from the sale of assets to satisfy its short- and
long-term debt obligations and to make capital improvements to the
Company’s communities; increases in market interest rates that
increase the cost of certain of our debt obligations; increased
competition for, or a shortage of, skilled workers, including due
to the COVID-19 pandemic or general labor market conditions, along
with wage pressures resulting from such increased competition, low
unemployment levels, use of contract labor, minimum wage increases
and/or changes in overtime laws; the Company’s ability to obtain
additional capital on terms acceptable to it; the Company’s ability
to extend or refinance its existing debt as such debt matures,
including the Company’s ability to complete the modifications to
its loan agreements; the Company’s compliance with its debt
agreements, including certain financial covenants and the risk of
cross-default in the event such non-compliance occurs; the
Company’s ability to complete acquisitions and dispositions upon
favorable terms or at all; the risk of oversupply and increased
competition in the markets which the Company operates; the
Company’s ability to improve and maintain controls over financial
reporting and remediate the identified material weakness discussed
in its recent Quarterly and Annual Reports filed with the SEC; the
departure of the Company’s key officers and personnel; the cost and
difficulty of complying with applicable licensure, legislative
oversight, or regulatory changes; risks associated with current
global economic conditions and general economic factors such as
inflation, the consumer price index, commodity costs, fuel and
other energy costs, competition in the labor market, costs of
salaries, wages, benefits, and insurance, interest rates, and tax
rates; and changes in accounting principles and
interpretations.
For information about Sonida Senior Living, visit
www.sonidaseniorliving.com
Sonida Senior Living,
Inc.
Condensed Consolidated
Statements of Operations (Unaudited)
(in thousands, except per
share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Revenues:
Resident revenue
$
59,117
$
52,485
$
172,683
$
155,315
Management fees
569
608
1,605
1,836
Managed community reimbursement
revenue
4,989
7,694
15,314
21,757
Total revenues
64,675
60,787
189,602
178,908
Expenses:
Operating expense
44,486
43,123
132,956
126,562
General and administrative expense
8,615
5,851
22,252
23,563
Depreciation and amortization expense
9,943
9,691
29,751
28,940
Long-lived asset impairment
5,965
—
5,965
—
Managed community reimbursement
expense
4,989
7,694
15,314
21,757
Total expenses
73,998
66,359
206,238
200,822
Other income (expense):
Interest income
139
44
521
47
Interest expense
(9,020
)
(8,205
)
(26,445
)
(23,728
)
Gain (loss) on extinguishment of debt,
net
—
—
36,339
(641
)
Gain (loss) on sale of assets, net
(34
)
—
217
—
Other income (expense), net
(90
)
(6
)
(269
)
8,663
Loss before provision for income
taxes
(18,328
)
(13,739
)
(6,273
)
(37,573
)
Provision for income taxes
(83
)
—
(205
)
(254
)
Net loss
(18,411
)
(13,739
)
(6,478
)
(37,827
)
Dividends on Series A convertible
preferred stock
—
—
—
(2,267
)
Undeclared dividends on Series A
convertible preferred stock
(1,265
)
(1,134
)
(3,693
)
(1,134
)
Undistributed net income allocated to
participating securities
—
—
—
—
Net loss attributable to common
stockholders
$
(19,676
)
$
(14,873
)
$
(10,171
)
$
(41,228
)
Weighted average common shares outstanding
— basic
7,050
6,364
6,602
6,357
Weighted average common shares outstanding
— diluted
7,050
6,364
6,602
6,357
Basic net loss per common share
$
(2.79
)
$
(2.34
)
$
(1.54
)
$
(6.49
)
Diluted net loss per common share
$
(2.79
)
$
(2.34
)
$
(1.54
)
$
(6.49
)
Sonida Senior Living,
Inc.
Condensed Consolidated Balance
Sheets (Unaudited)
(in thousands, except per
share amounts)
September 30,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
3,562
$
16,913
Restricted cash
17,590
13,829
Accounts receivable, net
8,124
6,114
Prepaid expenses and other assets
3,540
4,099
Derivative assets
745
2,611
Total current assets
33,561
43,566
Property and equipment, net
594,116
615,754
Other assets, net
1,412
1,948
Total assets
$
629,089
$
661,268
Liabilities and Equity
Current liabilities:
Accounts payable
$
10,067
$
7,272
Accrued expenses
41,532
36,944
Current portion of notes payable, net of
deferred loan costs
64,309
46,029
Deferred income
3,790
3,419
Federal and state income taxes payable
158
—
Other current liabilities
548
653
Total current liabilities
120,404
94,317
Notes payable, net of deferred loan costs
and current portion
565,149
625,002
Other liabilities
61
113
Total liabilities
685,614
719,432
Commitments and contingencies
Redeemable preferred stock:
Series A convertible preferred stock,
$0.01 par value; 41 shares authorized, 41 shares issued and
outstanding as of September 30, 2023 and December 31, 2022
47,243
43,550
Shareholders’ deficit:
Authorized shares - 15,000 as of September
30, 2023 and December 31, 2022; none issued or outstanding, except
Series A convertible preferred stock as noted above
—
—
Authorized shares - 15,000 as of September
30, 2023 and December 31, 2022; 7,778 and 6,670 shares issued and
outstanding as of September 30, 2023 and December 31, 2022,
respectively
78
67
Additional paid-in capital
299,690
295,277
Retained deficit
(403,536
)
(397,058
)
Total shareholders’ deficit
(103,768
)
(101,714
)
Total liabilities, redeemable preferred
stock and shareholders’ deficit
$
629,089
$
661,268
Sonida Senior Living,
Inc.
Condensed Consolidated
Statements of Cash Flows (Unaudited)
(in thousands)
Nine Months Ended September
30,
2023
2022
Cash flows from operating
activities:
Net loss
$
(6,478
)
$
(37,827
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
29,751
28,940
Amortization of deferred loan costs
1,130
946
Gain on sale of assets, net
(217
)
—
Long-lived asset impairment
5,965
—
Write-off of other assets
—
535
Unrealized (gain) loss on interest rate
cap, net
1,958
(206
)
(Gain) loss on extinguishment of debt
(36,339
)
641
Provision for bad debt
582
908
Non-cash stock-based compensation
expense
2,144
3,479
Other non-cash items
(7
)
7
Changes in operating assets and
liabilities:
Accounts receivable, net
(2,592
)
(1,760
)
Prepaid expenses and other assets
2,997
6,755
Other assets, net
(45
)
(115
)
Accounts payable and accrued expense
11,276
566
Federal and state income taxes payable
158
(423
)
Deferred income
371
414
Other current liabilities
(11
)
43
Net cash provided by operating
activities
10,643
2,903
Cash flows from investing
activities:
Acquisition of new communities
—
(12,342
)
Capital expenditures
(14,168
)
(18,317
)
Proceeds from sale of assets
1,376
—
Net cash used in investing
activities
(12,792
)
(30,659
)
Cash flows from financing
activities:
Proceeds from notes payable
—
80,000
Repayments of notes payable
(12,508
)
(98,535
)
Proceeds from issuance of common stock
6,000
(263
)
Dividends paid on Series A convertible
preferred stock
—
(2,987
)
Purchase of interest rate cap
—
(258
)
Deferred loan costs paid
(825
)
(2,180
)
Other financing costs
(108
)
(81
)
Net cash used in financing
activities
(7,441
)
(24,304
)
Decrease in cash and cash equivalents and
restricted cash
(9,590
)
(52,060
)
Cash, cash equivalents, and restricted
cash at beginning of period
30,742
92,876
Cash, cash equivalents, and restricted
cash at end of period
$
21,152
$
40,816
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (UNAUDITED)
This earnings release contains the financial measures (1)
Community Net Operating Income and Adjusted Community Net Operating
Income, (2) Community Net Operating Income Margin and Adjusted
Community Net Operating Income Margin, (3) Adjusted EBITDA, (4)
Revenue per Occupied Unit (RevPOR) and (5) Revenue per Available
Unit (RevPAR), all of which are not calculated in accordance with
U.S. 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,
net cash provided by (used in) operating activities, or revenue.
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.
Community Net Operating Income and Consolidated Community Net
Operating Income Margin are non-GAAP performance measures for the
Company’s consolidated owned portfolio of communities that the
Company defines as net income (loss) excluding: general and
administrative expenses (inclusive of stock-based compensation
expense), interest income, interest expense, other income/expense,
provision for income taxes, settlement fees and expenses, revenue
and operating expenses from the Company’s disposed properties; and
further adjusted to exclude income/expense associated with
non-cash, non-operational, transactional, or organizational
restructuring items that management does not consider as part of
the Company’s underlying core operating performance and impacts the
comparability of performance between periods. For the periods
presented herein, such other items include depreciation and
amortization expense, gain(loss) on extinguishment of debt,
gain(loss) on disposition of assets, long-lived asset impairment,
and loss on non-recurring settlements with third parties. The
Community Net Operating Income Margin is calculated by dividing
Community Net Operating Income by community resident revenue.
Adjusted Community Net Operating Income and Adjusted Community Net
Operating Income Margin are further adjusted to exclude the impact
from non-recurring state grant funds received.
The Company believes that presentation of Community Net
Operating Income, Community Net Operating Income Margin, Adjusted
Community Net Operating Income, and Adjusted Community Net
Operating Income Margin as performance measures are useful to
investors because (i) they are one of the metrics used by the
Company’s management to evaluate the performance of our core
consolidated owed portfolio of communities, to review the Company’s
comparable historic and prospective core operating performance of
the consolidated owned communities, and to make day-to-day
operating decisions; (ii) they provide an assessment of operational
factors that management can impact in the short-term, namely
revenues and the controllable cost structure of the organization,
by eliminating items related to the Company’s financing and capital
structure and other items that management does not consider as part
of the Company’s underlying core operating performance, and impacts
the comparability of performance between periods.
Community Net Operating Income, Net Community Operating Income
Margin, Adjusted Community Net Operating Income, and Adjusted
Community Net Operating Income Margin have material limitations as
a performance measure, including: (i) excluded general and
administrative expenses are necessary to operate the Company and
oversee its communities; (ii) excluded interest is necessary to
operate the Company’s business under its current financing and
capital structure; (iii) excluded depreciation, amortization, and
impairment charges may represent the wear and tear and/or reduction
in value of the Company’s communities, and other assets and may be
indicative of future needs for capital expenditures; and (iv) the
Company may incur income/expense similar to those for which
adjustments are made, such as gain (loss) on debt extinguishment,
gain(loss) on disposition of assets, loss on settlements, non-cash
stock-based compensation expense, and transaction and other costs,
and such income/expense may significantly affect the Company’s
operating results.
(in thousands)
Three Months Ended
September 30,
Three Months Ended June
30,
2023
2022
2023
Consolidated Community Net Operating
Income
Net loss
$
(18,411
)
$
(13,739
)
$
(12,212
)
General and administrative expense
8,615
5,851
6,574
Depreciation and amortization expense
9,943
9,691
9,927
Long-lived asset impairment
5,965
—
—
Interest income
(139
)
(44
)
(188
)
Interest expense
9,020
8,205
8,558
Loss on sale of assets, net
34
—
—
Other expense
90
6
117
Provision for income taxes
83
—
53
Settlement (income) fees and expense, net
(1)
(510
)
25
559
Other taxes
—
—
161
Consolidated community net operating
income
14,690
9,995
13,549
Resident revenue
$
59,117
$
52,485
$
56,960
Consolidated community net operating
income margin
24.8
%
19.0
%
23.8
%
COVID-19 state relief grants (2)
478
—
411
Adjusted resident revenue
58,639
52,485
56,549
Adjusted community net operating
income
$
14,212
$
9,995
$
13,138
Adjusted community net operating income
margin
24.2
%
19.0
%
23.2
%
(1) Settlement fees and expenses relate to
non-recurring settlements with third parties for contract
terminations, insurance claims, and related fees.
(2) COVID-19 relief revenue are grants and
other funding received from third parties to aid in the COVID-19
response and includes state relief funds received.
ADJUSTED EBITDA (UNAUDITED)
Adjusted EBITDA is a non-GAAP performance measures that the
Company defines as net income (loss) excluding: depreciation and
amortization expense, interest income, interest expense, other
expense/income, provision for income taxes; and further adjusted to
exclude income/expense associated with non-cash, non-operational,
transactional, or organizational restructuring items that
management does not consider as part of the Company’s underlying
core operating performance and impacts the comparability of
performance between periods. For the periods presented herein, such
other items include stock-based compensation expense, provision for
bad debts, gain (loss) on extinguishment of debt, gain on sale of
assets, long-lived asset impairment, casualty losses, and
transaction and conversion costs.
The Company believes that presentation of Adjusted EBITDA’s
impact as a performance measure is useful to investors because it
provides an assessment of operational factors that management can
impact in the short-term, namely revenues and the controllable cost
structure of the organization, by eliminating items related to the
Company’s financing and capital structure and other items that
management does not consider as part of the Company’s underlying
core operating performance and that management believes impact the
comparability of performance between periods.
Adjusted EBITDA has material limitations as a performance
measure, including: (i) excluded interest is necessary to operate
the Company’s business under its current financing and capital
structure; (ii) excluded depreciation, amortization and impairment
charges may represent the wear and tear and/or reduction in value
of the Company’s communities and other assets and may be indicative
of future needs for capital expenditures; and (iii) the Company may
incur income/expense similar to those for which adjustments are
made, such as bad debts, gain(loss) on sale of assets, or
gain(loss) on debt extinguishment, non-cash stock-based
compensation expense and transaction and other costs, and such
income/expense may significantly affect the Company’s operating
results.
(In thousands)
Three Months Ended
September 30,
Three Months Ended June
30,
2023
2022
2023
Adjusted EBITDA
Net loss
$
(18,411
)
$
(13,739
)
$
(12,212
)
Depreciation and amortization expense
9,943
9,691
9,927
Stock-based compensation expense, net
641
(588
)
601
Provision for bad debt
249
386
96
Interest income
(139
)
(44
)
(188
)
Interest expense
9,020
8,205
8,558
Long-lived asset impairment
5,965
—
—
Loss on sale of assets, net
34
—
—
Other expense, net
90
6
117
Provision for income taxes
83
—
53
Casualty losses (1)
204
372
456
Transaction and conversion costs (2)
1,591
157
130
Adjusted EBITDA
$
9,270
$
4,446
$
7,538
(1) Casualty losses relate to
non-recurring insured claims for unexpected events.
(2) Transaction and conversion costs
relate to legal and professional fees incurred for transactions,
restructure projects, or related projects.
SUPPLEMENTAL INFORMATION
Third Quarter
(Dollars in thousands)
2023
2022
Increase
(decrease)
Second Quarter 2023
Sequential increase
(decrease)
Selected Operating Results
I. Consolidated community
portfolio
Number of communities
61
62
(1)
62
(1)
Unit capacity
5,718
5,771
(53)
5,753
(35)
Weighted average occupancy (1)
84.9%
83.4%
1.5%
83.9%
1.0%
RevPAR
$3,446
$3,032
$414
$3,300
$146
RevPOR
$4,061
$3,636
$425
$3,932
$129
Consolidated community net operating
income
$14,690
$9,995
$4,695
$13,549
$1,141
Consolidated community net operating
income margin (3)
24.8%
19.0%
5.8%
23.8%
1.0%
Consolidated community net operating
income, net of general and administrative expenses (2)
$6,716
$3,556
$3,160
$7,576
$(860)
Consolidated community net operating
income margin, net of general and administrative expenses (2)
11.4%
6.8%
4.6%
13.3%
(1.9)%
II. Consolidated Debt
Information
(Excludes insurance premium
financing)
Total variable rate mortgage debt (4)
$137,320
$129,727
N/A
$137,253
N/A
Total fixed rate debt
$493,436
$538,128
N/A
$499,078
N/A
(1) Weighted average occupancy represents
actual days occupied divided by total number of available days
during the quarter.
(2) General and administrative expenses
exclude stock-based compensation expense in order to remove the
fluctuation in fair value due to market volatility.
(3) Includes $0.5 million, $0.0 million,
and $0.4 million of state grant revenue received in Q3 2023, Q3
2022, and Q2 2023, respectively. Excluding the grant revenue, Q3
2023 consolidated community NOI margin was 24.2%.
(4) As of September 30, 2023, the entire
balance of our outstanding variable-rate debt obligations were
covered by interest rate cap agreements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231114372746/en/
Investor Contact: Kevin J. Detz, Chief Financial Officer, at
972-308-8343 Press Contact: media@sonidaliving.com
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