Q4 2023 Brookdale Senior Living Inc Earnings Call

Operator: For more information, visit www.fema.gov Good morning all, and welcome to the Brookdale fourth quarter 2023 earnings call. All lines have been placed on mute during the presentation portion of the call, with an opportunity for question and answer at the end. If you'd like to ask a question, please press start followed by one on your telephone keypad.

Good morning, all and welcome to the Brookdale bulk will talk to fall right on his call.

All lines have been placed on mute during the presentation portion of the call with an opportunity for a question and answer at the end.

If you'd like to ask a question. Please press star followed by one on your telephone keypad now.

Operator: I would now like to turn this conference call over to our host from Brookdale's investor relations team, Jessica Hazel. Thank you and good morning. I'd like to welcome you to the fourth quarter 2023 earnings call for Brookdale Senior Living. Joining us today are Cindy Baier, our President and Chief Executive Officer, and Dawn Cusseaux, our Executive Vice President and Chief Financial Officer. All statements made today, which are not historical facts, may be deemed to be forward-looking statements within the meaning of the federal securities laws.

Chinese culture, it's called iPhone to heist from Brookdale Investor Relations team Jessica Hazel. Thank you and good morning, I'd like to welcome you to the fourth quarter 2023 earnings call for Brookdale senior living.

Jessica Hazel: Joining us today are Cindy Baier, our president and Chief Executive Officer.

Jessica Hazel: Dan Caruso, our executive Vice President and Chief Financial Officer.

Jessica Hazel: All statements today, which are not historical facts may be deemed to be forward looking statements within the meaning of the federal securities laws.

Jessica Hazel: These statements are made as of today's date, and we expressly disclaim any obligation to update these statements in the future. However, actual results and performance may differ materially from forward-looking statements. Certain of the factors that could cause actual results to differ are detailed in the earnings release we issued yesterday, as well as in the reports we file with the SEC from time to time, including the risk factors contained in our annual report on Form 10-K and quarterly reports on Form 10-Q. I direct you to the release for the full Safe Harbor Statement.

Jessica Hazel: These statements are made as of today's date and we expressly disclaim any obligation to update these statements in the future.

Jessica Hazel: Actual results and performance may differ materially from forward looking statements certain of the factors that could cause actual results to differ are detailed in the earnings release, we issued yesterday as well as in the reports we file with the SEC from time to time, including the risk factors contained.

Jessica Hazel: And our annual report on Form 10-K.

Jessica Hazel: And quarterly reports on Form 10-Q I.

Jessica Hazel: I direct you to the release for the full Safe Harbor statement.

Jessica Hazel: Also, please note that during this call, we will present non-GAAP financial measures. For reconciliations of each non-GAAP measure from the most comparable GAAP measure, I direct you to the release and supplemental information, which may be found at BrookdaleInvestors.com and was furnished on an 8K yesterday. Now, I will turn the call over to Cindy.

Jessica Hazel: Also please note that during this call we will present non-GAAP financial measures for reconciliations of each non-GAAP measure from the most comparable GAAP measure I direct you to the release and supplemental information, which may be found at Brookdale investors Dot com.

Jessica Hazel: And was furnished on an 8-K yesterday.

Jessica Hazel: Now I will turn the call over to Cindy.

Lucinda M. Baier: Thank you, Jessica. Good morning to all of our shareholders, analysts, and other call participants. Welcome to our fourth quarter and 2023 year-end earnings call. We started 2023 with a clear vision, an intense focus, and a commitment to deliver positive results. This commitment extended beyond achieving positive operational and financial outcomes. It also encompassed fulfilling our overarching priority, which is the health and well-being of our residents and associates. We dedicated ourselves to ensuring that we had created the right plans and initiatives for the year, had clearly communicated why these were the most important priorities, and had the right people in place to effectively meet our objectives.

Lucinda M. Baier: Thank you Jessica good morning to all of our shareholders analysts and other call participants welcome to our fourth quarter and 2023 year end earnings call.

Lucinda M. Baier: We started 2023 with a clear vision and intense focus and a commitment to deliver positive results. This commitment extended beyond achieving positive operational and financial outcomes. It also encompass fulfilling our overarching priority, which is the health and wellbeing of our residents and associate.

Lucinda M. Baier: That's.

Lucinda M. Baier: We dedicated ourselves to ensuring that we had created the bright plans and initiatives for the year had clearly communicated why bees, where the most important priorities and have the right people in place to effectively meet our objectives, but our efforts didn't stop with our plans our leaders focused intensely on it.

Lucinda M. Baier: Our leaders focused intensely on achieving our objectives, worked together as a team, and adjusted our tactics as new information became available. For this, I'm extremely grateful to our team for their leadership and their efforts, and I'm proud to say that the result was an incredibly strong year, marked by more residents who chose to be part of a Brookdale community, which led to greater occupancy. Significant improvements in our operations and robust financial growth. Although a complete recovery is still ahead of us, with each quarter of 2023, we continue to build a solid foundation that paves the way for sustained growth. For the fourth quarter, we are pleased to report another quarter in which both RevPAR and Adjusted EBITDA achieved or exceeded our previously provided guidance.

Lucinda M. Baier: Cheating our objectives worked together as a team and adjusted our tactics as new information became available.

For this I am extremely grateful to our team for their leadership and their efforts and I am proud to say that the result was an incredibly strong year marked by more residents who chose to be part of a brookdale community, which led to greater occupancy.

Significant improvements in our operations and robust financial growth.

Lucinda M. Baier: Although complete recovery is still ahead of us with each quarter of 2023, we continue to build a solid foundation that paves the way for sustained growth.

For the fourth quarter, we are pleased to report another quarter in which both Revpar and adjusted EBITDA achieved or exceeded our previously provided guidance. Additionally.

Lucinda M. Baier: Additionally, by remaining focused on our key strategic priorities, we delivered a number of positive outcomes throughout our community operations, our real estate portfolio, and our financials. Same community REVPAR increased approximately 10% over last year's fourth quarter on positive occupancy and REVPAR growth. By pursuing RevPAR through a balance of occupancy and rate, we delivered favorable top-line results. In the fourth quarter, we maintained the positive margin improvements we have achieved throughout 2023 while ensuring that we continue to meet our residents' needs, provide high-quality care and personalized service, and remain in compliance with applicable regulations. Through REVPAR growth and appropriate expense management, same-community adjusted operating income grew 37% over the prior year or fourth quarter. In addition to these financial accomplishments, we once again achieved meaningful progress towards our leadership retention and associate turnover goals. This is critically important because our business is all about people serving people.

Lucinda M. Baier: Additionally by remaining focused on our key strategic priorities, we delivered a number of positive outcomes throughout our community operations, our real estate portfolio and our financials.

Lucinda M. Baier: Same community Revpar increased approximately 10% over last year's fourth quarter on positive occupancy and Revpar growth.

Lucinda M. Baier: By pursuing revpar through a balance of occupancy and rate we delivered favorable top line results.

Lucinda M. Baier: In the fourth quarter, we maintained a positive margin improvements we've achieved throughout 2023, while ensuring that we continue to meet our residents' needs provide high quality care and personalized service and remain in compliance with applicable regulations.

Lucinda M. Baier: Through Revpar growth and appropriate expense management same community adjusted operating income grew 37% over the prior year fourth quarter.

Lucinda M. Baier: In addition to these financial accomplishments, we once again achieved meaningful progress towards our leadership retention and associate turnover Kohl's.

Lucinda M. Baier: This is critically important because our business is all about people serving people.

Lucinda M. Baier: Year-over-year retention rates for our key three community leadership roles increased 190 basis points, and full-time hourly associate turnover improved by 910 basis points from the prior year fourth quarter. I am incredibly proud of the progress we are making in this critical area of the business. Lastly, as reported in December, we completed two financing transactions and filled our remaining equity interest in our home health and hospice venture. Dawn will share the specifics, but I want to recognize our Brookdale team for the successful completion of these transactions, particularly our treasurer, George Hicks, and to share my gratitude toward each of the counterparties.

Lucinda M. Baier: Year over year retention rates for our key three community leadership roles increased 190 basis points and full time hourly associate turnover improved by 910 basis points from the prior year fourth quarter.

Lucinda M. Baier: I am incredibly proud of the progress we are making in this critical area of the business.

Lucinda M. Baier: Lastly, as reported in December we completed two financing transactions and sold our remaining equity interest in our home health and hospice venture.

Lucinda M. Baier: Don will share the specifics, but I want to recognize our brookdale team for the successful completion of these transactions, particularly our treasurer, George Hicks and to share my gratitude towards each of the Counterparties.

Lucinda M. Baier: As we close out 2023, I would like to highlight some notable accomplishments that significantly contributed to our remarkable results. This year was pivotal in refining our operations to favorably impact our performance as we further recover from the pandemic while continuing to support consistent and high-quality resident experiences. We began the year with a strategic rebuild of our senior leadership team. These changes, while incredibly difficult, were central to matching our organizational structure with our business priorities and streamlining decision-making.

Lucinda M. Baier: As we close out 2023, I would like to highlight some notable accomplishments that significantly contributed to our remarkable results.

Lucinda M. Baier: This year was pivotal in refining our operations to favorably impact our performance as we further recover from the pandemic, while continuing to support consistent and high quality resident experiences.

Lucinda M. Baier: We began the year with a strategic rebuild of our senior leadership team.

Lucinda M. Baier: These changes, while incredibly difficult where central for matching our organizational structure with our business priorities and streamlining decision making.

Lucinda M. Baier: We then evolved the executive Director role to emphasize a stronger growth mindset, combining both mission and margin, and underscoring strong business acumen for the incumbents and future community leaders, all the while maintaining our focus on driving resident satisfaction and providing high-quality care and services. This led to some turnover in 2023, but it was a necessary step to foster a culture of excellence and continue effectively delivering our mission. And by year end, these changes had started yielding noticeable positive improvements at the community level.

We then evolved the executive director role to emphasize our stronger growth mindset.

Lucinda M. Baier: Binding both mission and margin and underscoring strong business acumen for the incumbents and future community leaders.

Lucinda M. Baier: All the while maintaining our focus on driving resident satisfaction, and providing high quality care and services.

Lucinda M. Baier: This led to some turnover in 2023, but it was a necessary step to foster a culture of excellence and continue effectively delivering our mission and by year end. These changes has started yielding noticeable positive improvements at the community level.

Lucinda M. Baier: We further supported a growth mindset by introducing new training for our community and field leaders to provide alignment across our core priorities and support operational excellence that would enhance not only the business but, importantly, our overall resident and family satisfaction. To attract, engage, develop, and retain the best associates, we piloted and launched several new processes and programs that resulted in outcomes like the improved retention and turnover that I spoke about. By hiring associates who are dedicated to our mission, extending the length of employment of our Brookdale community leaders and hourly associates, and increasing the number of shifts staffed with full and part-time Brookdale associates rather than contract labor, we are building stronger teams that will have a favorable impact for years to come. I am so pleased with the community-level successes we have already seen from these improvements. We remain committed to continuous improvement and are confident in our plans for further progress. Our annual resident and family survey, which we completed in the fourth quarter and which received roughly 45,000 responses, once again provided invaluable insight.

Lucinda M. Baier: We further supported our growth mindset by introducing new training for our community and field leaders to provide alignment across our core priorities and support operational excellence that would enhance not only the business, but importantly, our overall resident and family satisfaction.

Lucinda M. Baier: To attract engage develop and retain the best associates, we piloted and launched several new processes and programs that resulted in outcomes like the improved retention and turnover that I spoke to.

Lucinda M. Baier: By hiring associates, who are dedicated to our mission extending the length of employment of our Brookdale community leaders and hourly associates and increasing the number of shifts staffed with full and part time Brookdale associates rather than contract labor. We are building stronger teams that will have a favorable impact.

Lucinda M. Baier: For years to come.

Lucinda M. Baier: I am so pleased with the community level successes, we have already seen from these improvements we remain committed to continuous improvement and are confident in our plans for further progress.

Lucinda M. Baier: Our annual resident and family survey, which we completed in the fourth quarter, and which received roughly 45000 responses. Once again provided invaluable insights.

Lucinda M. Baier: Resident and family satisfaction has consistently been a key priority at Brookdale. This priority became even more critical in 2023, given the rate increase we implemented at the beginning of the year. I'm proud to report that our total company engagement score improved by a significant amount with positive increases across all of our product lines. Additionally, we are grateful that the vast majority of our residents responded overwhelmingly that they would recommend or highly recommend their community to friends and family.

Lucinda M. Baier: Resident and family satisfaction has consistently been a key priority at Brookdale.

Lucinda M. Baier: This priority became even more critical in 2023, given the rate increase we implemented at the beginning of the year.

Lucinda M. Baier: I'm proud to report that our total company engagement score improved by a significant amount with positive increases across all of our product lines. Additionally.

Lucinda M. Baier: Additionally, we are grateful that the vast majority of our residents responded overwhelmingly that they would recommend for highly recommend their community to friends and family.

Lucinda M. Baier: These positive results reflect the great work of our dedicated associates, and we will build upon this to ultimately achieve our desired overall satisfaction goals for Brookdale residents and their families. We are always extremely appreciative of the meaningful insights received from regular resident and family engagement and will continue to focus on this critical area. Another accomplishment in 2023 was the expansion of the Brookdale Health Plus program, which has demonstrated remarkable success in improving resident health outcomes through its innovative care delivery model. Independent evaluations have confirmed that residents in our Health Plus communities experience fewer urgent care visits and hospitalizations, underscoring the effectiveness of our proactive and preventive care measures.

Lucinda M. Baier: These positive results reflect the great work of our dedicated associates and we will build upon this to ultimately achieve our desired overall satisfaction goals for Brookdale residents and their families.

Lucinda M. Baier: We are always extremely appreciative of the meaningful insights received from regular resident and family engagement and will continue to focus on this critical area Enel.

Lucinda M. Baier: Another accomplishment in 2023 with the expansion of the Brookdale Health plus program, which has demonstrated remarkable success and improving resident and health outcomes through innovative care delivery model.

Lucinda M. Baier: Independent evaluations confirmed that residents and our health plus communities experienced fewer urgent care visits and hospitalizations underscoring the effectiveness of our proactive and preventive care measures.

Lucinda M. Baier: Planning for our next Brookdale HealthPlus expansion is well underway, and we expect to have nearly 130 communities in this industry-leading clinical program by the end of 2024. The continued expansion of Brookdale HealthPlus not only creates an integrated benefit for our residents, but it also creates value for many stakeholders and further establishes Brookdale as a market leader and industry innovator. Also in 2023, we continue to proactively manage our leased and owned portfolios to further improve our long-term financial position. This includes negotiating favorable terms with two longstanding landlords, as well as making strategic decisions about our portfolio, such as disposing of certain leased and owned properties that were no longer right for Brookdale.

Lucinda M. Baier: <unk> for our next Brookdale health plus expansion is well underway and we expect to have nearly 130 communities in this industry, leading clinical program by the end of 2020 for.

Lucinda M. Baier: The continued expansion of Brookdale health plus not only creates an integrated benefit for our residents, but also it creates value for many stakeholders and further establishes brookdale position as a market leader in industry innovator.

Lucinda M. Baier: Also in 2023, we continue to proactively manage our leased and owned portfolios to further improve our long term financial position.

Lucinda M. Baier: This included negotiating favorable terms with two long standing landlords as well as making strategic decisions about our portfolio such as disposing of certain leased and owned properties that were no longer write for Brookdale.

Lucinda M. Baier: Through these transactions, we not only obtained additional landlord-funded CapEx but also secured favorable purchase options on certain communities that were previously not available to us. This will support future cash flows and enable us to further improve our own-to-lease portfolio mix in the years to come. Lastly, as a result of our strong 2023 adjusted EBITDA growth, our annualized leverage decreased from 19.8 times at the end of 2022 to 11.1 times at the end of 2023. Throughout the pandemic and subsequent recovery period, we have successfully executed plans to manage our capital structure and maintain appropriate liquidity. Our fourth quarter transactions are the most recent examples of this.

Lucinda M. Baier: Through these transactions, we not only obtained additional landlord funded capex, but also secured favorable purchase option on certain communities that were previously not available to us.

Lucinda M. Baier: This will support future cash flows and enable us to further improve our owned to leased portfolio mix in the years to come.

Lucinda M. Baier: Lastly, as a result of our strong 2023, adjusted EBITDA growth our annualized leverage decreased from $19 eight times at the end of 2022 to 11, one times at the end of 2023.

Lucinda M. Baier: Throughout the pandemic and subsequent recovery period, we have successfully executed plans to manage our capital structure and maintain appropriate liquidity.

Lucinda M. Baier: Our fourth quarter transactions are the most recent examples of this.

Lucinda M. Baier: Combining a passion for successfully executing our mission while focusing on delivering an appropriate margin is critical for our success. While our overarching priority remains the health and well-being of our residents and associates, cash flow and liquidity will continue to be our top financial priority. In summary, 2023 was a year of strong and steadfast execution of our strategic goals, solid operational improvements, and meaningful growth towards full recovery. In a moment, Dawn will share with you the measurable results of these efforts, which are significant, while I'll now turn to our 2024 plan. As we look to 2024, our expectations are simple: stay the course.

Lucinda M. Baier: Combining a passion for successfully executing our mission, while focusing on delivering an appropriate margin is critical for our success, while our overarching priority remains the health and wellbeing of our residents and associates cash flow and liquidity will continue to be our top financial priorities.

Lucinda M. Baier: In summary, 2023, it was a year of strong and steadfast execution of our strategic goals solid operational improvements and meaningful growth towards full recovery.

Speaker Change: In a moment Don will share with you. The measurable results of these efforts, which are significant well I'll now turn to our 2024 plans.

Don: As we look to 2024, our expectations are simple.

Don: Stay the course.

Lucinda M. Baier: We have worked incredibly hard to lay a strong foundation for future growth, and we intend to build upon the successful execution of our strategy. Our commitment is to continue to provide growth opportunities and rewards to our people while reinforcing the favorable initiatives and processes that we introduced in 2023. Brookdale remains a learning organization.

Don: We have worked incredibly hard to lay a strong foundation for future growth and we intend to build upon the successful execution of our strategy.

Don: Our commitment is to continue to provide growth opportunities and rewards to our people, while reinforcing the favorable initiatives and processes that we introduced in 2023.

Don: Brookdale remains a learning organization Accordingly, we will take our learnings from 2023, and we will address and improve areas that require ongoing refinement and our continuous pursuit to be the nation's first choice in senior living.

Lucinda M. Baier: Accordingly, we'll take our learnings from 2023, and we will address and improve areas that require ongoing refinement in our continuous pursuit to be the nation's first choice in senior living. We made remarkable progress last year, but driving meaningful change through an organization and reaping the full benefit of that change takes time. We take pride in our accomplishments, but we also see them as stepping stones towards our full recovery and achieving our ultimate potential. As such, our teams throughout the organization are incredibly committed to executing against our key strategic priorities that guide our success and growth in 2023. These key strategic priorities for 2024 will remain. First, get every available room and service at the best profitable rate.

Don: We made remarkable progress last year, but driving meaningful change through the organization and reaping the full benefit of that change takes time.

Don: We take pride in our accomplishments and we also see them as stepping stones towards our full recovery and achieving our ultimate potential.

Don: As such our teams throughout the organization are incredibly committed to executing against our key strategic priorities that guide our success and growth in 2023.

Don: These key strategic priorities for 2024 will remain first get every available room in service at the best profitable rate.

Lucinda M. Baier: Second, attract, engage, develop, and retain the best associates. And third, earn resident and family trust and satisfaction by providing valued, high-quality care and personalized service. Through consistent execution of these, I believe we will grow occupancy in REVPAR, deliver meaningful 2024 adjusted EBITDA growth and adjusted free cash flow improvement, and support further shareholder value creation, all while continuing to grow resident satisfaction. I look forward to providing you with positive quarterly updates on our progress throughout 2024. I'll now turn the call over to Dawn. Thank you, Cindy. Good morning, and thank you for being here today.

Don: Second attract engage develop and retain the best associates and third earn resident and family Trust and satisfaction by providing valued high quality care and personalized service.

Don: Through consistent execution of these I believe we will grow occupancy and revpar deliver meaningful 2024, adjusted EBITDA growth and adjusted free cash flow improvement and support further shareholder value creation, all while continuing to grow resident satisfaction.

Don: I look forward to providing you with positive quarterly updates on our progress throughout 2024.

Don: I'll now turn the call over to Don Thank.

Don Thank: Thank you Cindy good morning, and thank you for being here today, we were very pleased to finish 2023 with another quarter of solid operating results and financial growth.

Dawn Cusseaux: We were very pleased to finish 2023 with another quarter of solid operating results and financial growth. Beginning with fourth quarter revenue, residency revenue grew 8.9% over the prior year quarter. Fourth quarter consolidated REV PAR growth was 10% over the prior year, which is in line with the top of our previously provided guidance range. Our year-over-year REVPAR growth was attributable to a 130 basis point increase in weighted average occupancy and an 8.1% REVPAR increase. This marked our ninth consecutive quarter of year-over-year occupancy growth. sequentially, these results represented an 80 basis point increase in occupancy and a half percent decrease in REVPOR compared to the third quarter. We are pleased to report that this sequential occupancy growth was meaningfully above normal pre-pandemic seasonality for this period. Fourth quarter rev per unit was slightly below our expectations due to resident mix, disposition timing, and our competitive response on pricing.

Don Thank: Beginning with fourth quarter revenue.

Don Thank: Resident fee revenue grew eight 9% over the prior year quarter.

Don Thank: Fourth quarter consolidated Revpar growth was 10% over the prior year, which is in line with the top of our previously provided guidance range.

Don Thank: Our year over year Revpar growth was attributable to a 130 basis point increase in weighted average occupancy and an eight 1% Revpar increase.

Don Thank: This marked our ninth consecutive quarter of year over year occupancy growth.

Sequentially. These results represented an 80 basis point increase in occupancy and a half per cent decrease in Rev poor compared to the third quarter.

Don Thank: We are pleased to report that this sequential occupancy growth was meaningfully above normal pre pandemic seasonality for this period.

Don Thank: Fourth quarter Revpar was slightly below our expectations due to resident mix disposition timing in our competitive response on pricing.

Dawn Cusseaux: Our same community portfolio performed largely in line with the consolidated portfolio in the fourth quarter, including REV-PAR growth of approximately 10%, a 130 basis point increase in weighted average occupancy, and approximately 8% REV-PAR growth over the prior year. We are pleased with these top-line results. Moving to fourth-quarter expenses, consolidated facility operating expense was $530 million, while same community facility operating expense, as shown on page eight of our financial supplement, was $513 million.

Don Thank: Our same community portfolio performed largely in line with the consolidated portfolio in the fourth quarter, including Revpar growth of approximately 10% 130 basis point increase in weighted average occupancy.

And approximately 8% revpar growth over the prior year.

Don Thank: We are pleased with these top line results.

Don Thank: Moving to fourth quarter expenses.

Don Thank: Consolidated facility operating expense was $530 million well same community facility operating expense as shown on page eight of our financial supplement was $513 million.

Dawn Cusseaux: Fourth quarter, same community, adjusted operating income grew by 37% over the prior year fourth quarter, significantly outpacing our peers. This is our ninth consecutive quarter to deliver year-over-year adjusted operating income growth. We are very proud of this progress as we diligently work to return to pre-pandemic segment operating margins while continuing to ensure that we meet our residents' needs, provide high-quality care and service, and remain in compliance with applicable regulations. Same community fourth quarter adjusted operating margin was 26.3 percent, which represented the highest reported margin rate since the initial impact of the pandemic. This solid progress is the result of favorable outcomes from the 2023 accomplishments Cindy spoke to, In the fourth quarter, general and administrative expense was approximately $1 million lower than in the third quarter.

Don Thank: Fourth quarter same community adjusted operating income.

Don Thank: Grew by 37% over the prior year fourth quarter significantly outpacing our peers.

Don Thank: This was our ninth consecutive quarter to deliver year over year adjusted operating income growth. We are very proud of this progress as we diligently work to return to pre pandemic segment operating margins, while continuing to ensure that we meet our residents' needs provide high quality care and service and remain in compliance with applicable.

Don Thank: <unk>.

Don Thank: Same community fourth quarter adjusted operating margin was 26, 3%, which represented the highest reported margin rate since the initial impact of the pandemic.

This solid progress as a result of favorable outcomes from the 2023 accomplishments Cindy spoke too, including continued revpar growth and appropriate expense management.

Don Thank: Fourth quarter General and administrative expense was approximately $1 million lower than the third quarter.

Dawn Cusseaux: Cash operating lease payments were $65 million, which is in line with our previously provided expectations. Fourth quarter adjusted EBITDA was $85 million and exceeded the top end of our guidance range by approximately $3 million. This positive result was due to a combination of strong flow-through of fourth quarter revenue and modest favorability in GNA. Compared to the prior year's fourth quarter, Adjusted EBITDA grew 83 percent. This remarkable growth was despite the $13 million quarterly impact of the changes in lease classification and the $5 million in government grants and credits recognized in the fourth quarter of 2022 versus no grant income in the fourth quarter of 2023. Adjusted free cash flow was negative $21 million for the quarter; normal seasonal working capital, specifically annual real estate tax payments, was the primary driver of the variance to the third quarter.

Don Thank: Cash operating these payments were $65 million, which is in line with our previously provided expectations.

Don Thank: Fourth quarter, adjusted EBITDA was $85 million and exceeded the top end of our guidance range by approximately $3 million.

Don Thank: This positive result was due to a combination of strong flow through of fourth quarter revenue and modest favorability in G&A.

Don Thank: Compared to the prior year fourth quarter.

Don Thank: Adjusted EBITDA grew 83%.

Don Thank: This remarkable growth was despite the $13 million quarterly impact of the changes in lease classification.

Don Thank: The $5 million in government grants and credits recognized in the fourth quarter of 2022 versus no grant income in the fourth quarter of 2023.

Don Thank: Adjusted free cash flow was negative $21 million for the quarter.

Don Thank: Normal seasonal working capital specifically annual real estate tax payments was the primary driver of the variance to the third quarter.

Dawn Cusseaux: Fourth quarter, non-development capital expenditures, net of insurance proceeds, were $36 million. For the full 2023 year, we incurred approximately $26 million in reimbursable remediation costs and received approximately $24 million of insurance reimbursement related to the 2022 natural disasters. As of December 31st, total liquidity was $341 million.

Don Thank: Fourth quarter non development capital expenditures net of insurance proceeds were $36 million.

Don Thank: For the full 2023 year, we incurred approximately $26 million in Reimbursable remediation costs and received approximately $24 million of insurance reimbursement related to the 2020 to natural disasters.

Don Thank: As of December 31, total liquidity was $341 million.

Dawn Cusseaux: The primary driver of the $65 million sequential decrease in quarter-end liquidity was related to the refinancing transaction we reported in a press release on December 27. In that press release, we announced four completed or pending capital markets transactions. I'll speak to each of them briefly. First, we obtained a $180 million agency loan under an existing master credit facility agreement with Fannie Mae.

Don Thank: The primary driver of the $65 million sequential decrease in quarter end liquidity was related to the refinancing transaction, we reported in our press release on December 27th.

Don Thank: In the December press release, we announced four completed or pending capital markets transactions.

Speak to each of them briefly.

Don Thank: First we obtained $180 million agency loan under an existing master credit facility agreement with Fannie Mae.

Dawn Cusseaux: The loan is secured by non-recourse first mortgages on 47 communities that also secure another larger tranche of debt with a later maturity. The loan has a fixed interest rate of 5.97% and a borrow-up provision which allows for potential additional proceeds in 2024 as communities in the loan continue to recover. We used proceeds from the $180 million loan coupled with cash on hand to repay a $260 million loan, which was set to mature under the credit facility in September 2024. With this transaction, we cleared our maturity runway for the next 18 months and right-sized the latter tranche of the existing loan. We were very grateful for Fannie Mae's partnership in this transaction. In the second transaction, we amended our existing revolving credit agreement, which increased the commitment by up to $20 million and extended the agreement to January 2027, with additional extension options thereafter. Third, we sold the remaining 20% equity interest in our home health and hospice unconsolidated venture for aggregate proceeds of $27 million.

Don Thank: The loan is secured by nonrecourse first mortgages on 47 communities that also secure another larger tranche of debt with a later maturity.

Don Thank: The loan has a fixed interest rate of 597%.

Don Thank: And a borrow up provision which allows for potential additional proceeds in 2024 as communities and the loan continued to recover.

Don Thank: We used proceeds from the $180 million loan coupled with cash on hand to repay a $260 million alone, which was set to mature under the credit facility in September 2024.

Don Thank: With this transaction, we cleared our maturity runway for the next 18 months and rightsize the ladder tranche of the existing loan.

Don Thank: We were very grateful for Fannie Mae's partnership in this transaction.

And the second transaction, we amended our existing revolving credit agreement, which increased the commitment by up to $20 million and extended the agreement to January 2027, with additional extension options thereafter.

Third we sold the remaining 20% equity interest in our home health and hospice unconsolidated venture for aggregate proceeds of $27 million.

Dawn Cusseaux: And fourth, as part of the press release, we noted plans for a new financing transaction. Earlier this month, we completed a new financing transaction to obtain $50 million of bank debt, which matures in February 2027 with two one-year extension options. This property-level mortgage financing is on 11 previously unencumbered communities and carries a variable interest rate of 350 basis points over SOFR. We are very pleased with the outcome of each of these transactions and believe they are examples of our continued proactive management of liquidity and our capital structure. Our next debt maturity without extension options is September 2025.

Don Thank: And fourth as part of the press release, we noted plans for a new financing transaction earlier. This month, we completed a new financing transaction to obtain $50 million of bank debt.

Don Thank: Which matures in February 2027, with two one year extension options.

Don Thank: This property level mortgage financing is on 11 previously unencumbered communities and carries a variable interest rate of 350 basis points over sofa.

Don Thank: We are very pleased with the outcome of each of these transactions and believe they are examples of our continued proactive management of liquidity and our capital structure.

Don Thank: Our next debt maturity without extension options at September 2025.

Dawn Cusseaux: Cindy walked you through some of our 2023 accomplishments. Thanks to the hard work of our approximately 36,000 associates, we have delivered measurable, positive results in 2023. I'll share a few of the highlights.

Don Thank: Cindy walked you through some of our 2023 accomplishments. Thanks to the hard work of our approximately 36000 associates, we have delivered measurable positive results in 2023.

Don Thank: I'll share a few of the highlights.

Dawn Cusseaux: As of 2023 year end, weighted average occupancy has grown a total of nearly 900 basis points from the start of the pandemic recovery. Full year, same community rev par grew 11.4%, which significantly outpaced our peers. Same community adjusted operating income, which excludes government grants, grew 43% over the prior year, supporting a 580 basis point improvement in adjusted operating margin.

Don Thank: As of 2023 year end weighted average occupancy has grown a total of nearly 900 basis points from the start of the pandemic recovery.

Full year same community Revpar grew 11, 4%, which significantly outpaced our peers.

Don Thank: Same community adjusted operating income, which excludes government grants grew 43% over the prior year supporting our 580 basis point improvement in adjusted operating margin.

Dawn Cusseaux: On a per available unit basis, our same community adjusted operating income has reached 92% of the 2019 same community adjusted operating income we reported. Given the significant runway still available to grow occupancy, we believe this reflects a very strong recovery. Lastly, adjusted EBITDA grew 39 percent over the prior year, while adjusted free cash flow improved 76 percent. This was despite $71 million of higher grant income in the prior year and the $41 million impact of the two changes in lease classification.

Don Thank: On a per available unit basis, our same community adjusted operating income has reached 92% of the 2019 same community adjusted operating income we reported.

Don Thank: Given the significant runway still available to grow occupancy. We believe this reflects a very strong recovery.

Don Thank: Lastly, adjusted EBITDA grew 39% over the prior year, while adjusted free cash flow improved 76%.

Don Thank: This was despite $71 million of higher grant income in the prior year and $41 million impact of the two changes in lease classification.

Dawn Cusseaux: I am proud of these results and deeply appreciative of our team's efforts that went into achieving them. Turning to our first quarter expectations, In yesterday's press release, we guided to first quarter par growth of 6.25 to 6.75 percent over the prior year and adjusted EBITDA in the range of 90 to 95 million dollars. There are a few considerations I'd like to provide specific to these guidance ranges. Regarding REV-CAR, we anticipate first quarter weighted average occupancy will reflect a normal seasonal trend for this period. As a reminder, pre-pandemic, the first quarter generally declined sequentially compared to the fourth quarter.

Speaker Change: I am proud of these results and deeply appreciative of our teams' efforts that went into achieving them.

Speaker Change: Turning to our first quarter expectations.

Speaker Change: In Yesterdays press release, we guided to first quarter Revpar growth of 625 to $6 seven 5% over the prior year and adjusted EBITDA in the range of $90 million to $95 million there.

There are a few considerations I'd like to provide specific to these guidance ranges.

Speaker Change: Regarding revpar, we anticipate first quarter weighted average occupancy will reflect a normal seasonal trend for this period.

Speaker Change: As a reminder, pre pandemic the first quarter generally declined sequentially compared to the fourth quarter.

Dawn Cusseaux: We saw this normal seasonality return in the prior year's first quarter and have built this expectation into our guidance. January's weighted average occupancy was 78%, a 140 basis point increase over the prior year's January. Additionally, we implemented a lower January 1st in-place resident rate increase than in the prior year, but higher than historic norms. We remain focused on ensuring appropriate pricing to match the services we deliver in our communities and believe our annual pricing increase appropriately addresses our expected labor costs, which is the most significant portion of community operating expense, as well as normal inflationary increases on food, supplies, and utilities, in addition to interest rates, which remain elevated. Regarding our adjusted EVDA guidance, while it has been more normal course for me to note sequential variations and expectations, for this particular quarter, I believe noting a few considerations compared to the prior year first quarter would be more helpful.

Speaker Change: We saw this normal seasonality returned in the prior year first quarter and have built this expectation into our guidance Janney.

Speaker Change: January weighted average occupancy was 78% a 140 basis point increase over the prior year January.

Speaker Change: Additionally, we implemented a lower January 1st in place resident rate increase than in the prior year, but higher than historic norms.

Speaker Change: We remain focused on ensuring appropriate pricing to match the services, we deliver in our communities and believe our annual pricing increase appropriately addresses our expected labor costs, which is the most significant portion of community operating expense as well as normal inflationary increases on food supplies.

Speaker Change: And utilities in addition to interest rates, which remain elevated.

Speaker Change: Regarding our adjusted EBITDA guidance well it has been more normal course for me to note sequential variations and expectations for this particular quarter I believe noting a few considerations compared to the prior year first quarter would be more helpful.

Dawn Cusseaux: First, there will be an incremental day this year, specifically Leap Day, which results in higher expenses with only a minor impact on revenue. Second, given the timing of a 2023 change in lease classification through the second quarter of 2024, there will continue to be a year-over-year impact on adjusted EBITDA. Specific to the first quarter, this is a $7.4 million year-over-year impact. As a reminder, this lease accounting change decreased adjusted EBITDA, but it has no impact on adjusted EBITDAR, a standard and widely used non-GAAP valuation metric, and has no impact on adjusted free cash flow. Third, in the prior year's first quarter, we recognized $2 million in grant income, and our guidance does not assume any grant income in the first quarter of 2024. Lastly, while we are still fully assessing the total costs of needed maintenance and repairs, we currently estimate the expense impact from the two January winter storms to be approximately $2 million.

Speaker Change: First there will be an incremental day this year, specifically leap day, which results in higher expense with only a minor impact on revenue.

Speaker Change: Second given the timing of a 2023 change in lease classification through the second quarter of 'twenty 'twenty four there will continue to be a year over year impact to adjusted EBITDA specific.

Speaker Change: Specific to the first quarter. This is a $7 $4 million year over year impact.

Speaker Change: As a reminder, this lease accounting change decrease adjusted EBITDA, but has no impact on adjusted EBITDAR of standard and widely used non-GAAP valuation metric and no impact to adjusted free cash flow.

Speaker Change: Third in the prior year first quarter, we recognized $2 million in grant income and our guidance does not assume any grant income in the first quarter of 2020 for.

Speaker Change: Lastly, while we are still fully assessing the total cost of needed maintenance and repairs. We currently estimate the expense impact from the two January winter storms to be approximately $2 million. This estimate is reflected in our adjusted EBITDA guidance range.

Dawn Cusseaux: This estimate is reflected in our adjusted EBITDA guidance range. I am very proud of the progress our team has made in 2023, and I am looking forward to our continued success in 2024. I'll now turn the call back over to Cindy.

Speaker Change: I am very proud of the progress our team has made in 2023 and I am looking forward to our continued success in 2024.

I'll now turn the call back over to Sidney.

Speaker Change: Today.

Lucinda M. Baier: Standing on the other side of this remarkable year, I am not just proud of what we've accomplished but also more determined than ever to continue on our path of sustainable growth for the benefit of our residents, associates, and shareholders. The future holds even greater opportunities, and we are fully committed to seizing them and building a stronger Brookdale so that we may serve the needs of more seniors for years to come. I'll close by saying thank you.

Sidney: Standing on the other side of this remarkable year.

Sidney: I am not just proud of what we've accomplished but also more determined than ever to continue on our path of sustainable growth for the benefit of our residents associates and shareholders.

Sidney: The future holds even greater opportunities and we are fully committed to seizing them and building a stronger brookdale. So that we may serve the needs of more seniors for years to come.

Speaker Change: I'll close by saying thank you.

Operator: Thank you to our residents who called Brookdale home, to our associates who are dedicated to the health and well-being of our residents, and to our shareholders for their continued partnership, trust, and support. Operator, please open the line for questions. Thanks. If you'd like to ask a question..., press star followed by one on your telephone keypad and ensure that you are unmuted locally.

Thank you to our residents who call Brookdale home.

Speaker Change: To our associates, who are dedicated to the health and wellbeing of our residents and to our shareholders for their continued partnership trust and support.

Speaker Change: Operator, please open the line for questions.

Speaker Change: Thank you if you'd like to ask a question. Please press star followed by one on your telephone keypad and ensure that you are on mute locally if you would like to withdraw your question at any time. Please press star followed by cheap Big time.

Operator: If you would like to withdraw your question at any time, please press star followed by two to do so. So our first question comes from the line of Ben Hendricks of RBC Capital Markets. Your line is now open, please go ahead.

Speaker Change: So our last question comes from the line of Ben Hendrix of RBC capital market. Your line is that like pet. Please go ahead.

Ben Hendricks: Great, thank you. Good morning. I wanted to drill into your first quarter guidance comments a little bit more. The REV PAR range certainly appears consistent with historical seasonal occupancy trends that we saw pre-pandemic. We're thinking a step down in the 80 basis points range, give or take.

Ben Hendrix: Great. Thank you good morning, I wanted to drill into your first quarter guidance comments, a little bit more.

Ben Hendrix: Revpar range, certainly appears consistent with historical seasonal occupancy occupancy trends that we saw pre pandemic, we're taking a step down in the 80 basis points range give or take.

Dawn Cusseaux: You know, that said, the December into January occupancy held up a little bit better than last year, certainly so on a month-end basis. I just wanted to see if there could be some conservatism in there, given the occupancy momentum that Don called out through the second half of 2023 and what you've seen into January. And then more broadly, just any updated views on the path back to that pre-pandemic 4Q19 level occupancy that we're targeting. Thank you. Yep, good morning, Ben. This is Dawn.

Ben Hendrix: That said the December and January occupancy held up a little bit better than last year, certainly so on a month end basis I just wanted to see if there could be some conservatism in there.

Speaker Change: Given the occupancy momentum that Don called out through the second half of 2023, and what you've seen in January and then more broadly just any updated views on the path back to that pre pandemic <unk> 19 level occupancy are that they were targeting thank you.

Speaker Change: Yes. Good morning, Ben This is Don Thanks for the question.

Dawn Cusseaux: Thanks for the question. How we're thinking about it is, yes, we did see January occupancy go down 30 basis points as opposed to 40 basis points last year. But what we would say is our expectation is continuing to follow that historical pre-pandemic trend for the full 1st quarter. And as far as full year occupancy, what I would say is we are continuing this year, as Cindy mentioned in her prepared remarks, to focus on getting every room in service at the most profitable rate. So, expectations would be that we would continue to grow occupancy through 2024, and if I go to the longer term, Ben, this is Cindy. I would just say that we were really, really pleased to finish 2023 with another quarter of incredible growth.

Don Thank: How we're thinking about it is yes, we did see January occupancy went down 30 basis points as opposed to 40 basis points last year, but what we would say is we're continuing to <unk>. Our expectation is continuing to follow that historical pre pandemic trend for the full first quarter and as far as.

Don Thank: Full year occupancy what I would say is we are continuing this year as Cindy mentioned in her prepared remarks to focus on getting every room in service at the most profitable rate so expectations would be that we would continue to grow occupancy through 2024, and if I go to the longer term Ben This is Cindy.

Lucinda M. Baier: I would just say that we're really really pleased to finish 2023 with another quarter of incredibly.

Lucinda M. Baier: Solid operating results and financial growth, and we believe that we have built a very solid foundation that has paved the way for sustained growth. And so we're looking forward to welcoming new residents into our communities, extending the length of service for our associates, and focusing on providing quality services, which will help us achieve our long-term objectives as quickly as possible. Thank you.

Lucinda M. Baier: Solid operating results and financial growth and we believe that we have built a very solid foundation that has paved the way for sustained growth and so we're looking forward to welcoming new residents into our communities.

Lucinda M. Baier: Extending the length of service for our associates and focusing on providing quality services, which will help us achieve our long term objectives as quickly as possible.

Lucinda M. Baier: Yeah.

Speaker Change: Thank you if I could just add on a quick one or periodic labor trackers suggest a pickup in job postings late in the year, which is consistent with your strong occupancy I wanted to get your thoughts on just the full time labor cost expectations that youre thinking about in guidance since either through the rest of the year and that there could be some some added onboarding call.

Ben Hendricks: Our Periodical Labor Tracker suggests a pickup in job postings late in the year, which is consistent with your strong occupancy. I wanted to get your thoughts on just the full-time labor cost expectations that you're thinking about in guidance and through the rest of the year, and if there could be some added onboarding costs in the first quarter. Thanks. Yes, I'll start.

Speaker Change: In the first quarter. Thanks.

Speaker Change: Yeah, I'll start and I think how we're thinking about our labor costs. It is we have gotten so much of our contract labor out in 2023 that the premium labor savings in 'twenty four would be something less than in 'twenty. Three however, what we would expect.

Dawn Cusseaux: And I think, Ben, how we're thinking about our labor costs is that we've gotten so much of our contract labor out in 2023 that the premium labor savings in 24 would be something less than in 23. However, what we would expect is that the productivity of our labor will naturally get better as we increase our occupancy. And Cindy mentioned in her prepared remarks about the focus on training and our focus on retention and turnover.

Speaker Change: <unk> is we will the productivity of our labor will naturally get better as we increase our occupancy and Cindy mentioned in her prepared remarks about the focus on training and a focus on retention and turnover and as we see that improve we would expect to.

Lucinda M. Baier: And as we see that improve, we would expect to have increased productivity there as well. And the one thing that I would just add is that we definitely see that the labor market continues to be competitive, and there are some challenges, particularly for nurses and certain hourly positions like caregivers and CNAs, but there is definitely a stabilization in the labor market, which has resulted in less labor market churn. And so when you think about that, there will be more muted inflation in labor costs on a per employee, per hour basis than we saw in previous years.

Speaker Change: Have increased productivity there as well.

Speaker Change: And the one thing that I would just add is we definitely see that the labor market continues to be competitive and there are some challenges, particularly in nurses and certain hourly positions like caregivers in cna's, but there is definitely a stabilization in the labor market, which has resulted in less labor market.

Speaker Change: And so when you think about that.

There will be more muted inflation and labor costs on a per employee per hour basis than we saw in prior years.

Ben Hendricks: Thank you. Thanks, Ben. Thanks, Ben. Our next question comes from the line of Joanna Gajuk of Bank of America. Your line is now open, please go ahead. Hi, good morning.

Speaker Change: Thank you.

Thanks, Ben Thanks, Pat.

Speaker Change: Our next question comes from the line of Joe on a catch up of Bank of America. Your line is now open. Please go ahead.

Joe: Hi, good morning. Thank you so much so I guess the first a follow up on the on the pricing. So I guess, we just talk about occupancy so pricing you made a comment around the.

Joanna Gajuk: Thank you so much. First, I guess I'd like to follow up on the pricing, so I guess we just talk about occupancy. So pricing, you made a comment about pricing being up less than last year but above the historical average. But you also mentioned in Q4 some activity around competition or competitive activity when it comes to pricing. So can you elaborate a little bit more on what's going on?

Joe: Pricing being up.

Joe: Up less than last year, but above the historical was but you also mentioned it in Q4, some activity around a competitive competition or competitive activity. When it comes to pricing. So could you elaborate a little bit more what's going on is there just some markets, where I guess you have to be more competitive and kind of what are you.

Dawn Cusseaux: Is there just some markets where, I guess, you have to be more competitive and kind of what do you assume going forward when it comes to this dynamic? And maybe just to confirm that pricing out seems like the guidance implies maybe mid single digit increases or so. Yes, Joanna, this is Dawn.

Joe: I assume going forward.

Joe: When it comes to this dynamic and maybe just to confirm I guess pricing outlook seems of is a the guidance implies so maybe mid single digits increases or so.

Joe: Yeah.

Joe: Yeah. Joanna this is Dan what I would say is certainly when you're looking at our Rev core for the fourth quarter.

Lucinda M. Baier: What I would say is, certainly, when you're looking at our rev core for the fourth quarter, it was impacted by the competitive markets and our reaction to those competitive markets, as well as, you know, disposition and a little bit of our product mix. The expectation coming into the first quarter is that, as we put our January 1st price increase in effect, our expectation is that we would continue to grow our rev core. And let me just add to what Dawn said by saying I'm really pleased with the way that our pricing strategy has worked out for 2023. And if I look back for the whole year, and you see that full-year rev power was 11.4%, that significantly outpaced our peers.

Dan Caruso: It was impacted by.

The competitive market and the reaction to those competitive markets.

Dan Caruso: Well as you know disposition and a little bit of our product mix.

Dan Caruso: Patients coming into the first quarter is that you know as.

Dan Caruso: We put out for January 1st price increase in that and in fact that our expectation is is that we would continue to grow our revpar and let me just add to what Don said by saying I'm really pleased with the way that our pricing strategy has worked out for 2023, and if I look back for the whole.

Dan Caruso: Here and you see that full year Revpar was 11, 4% that significantly outpaced our peers. So what that tells me is that we had the right balance for Brookdale.

Lucinda M. Baier: So what that tells me is that we had the right balance for Brookdale of price and occupancy to get that outsized performance. Thank you. And if I may, just another follow-up when it comes to, I guess, your outlook on EBITDA and how we should think about the impact of the lease exits when it comes to say, you know, run rate, rent expense, and anything else around, you know, EBITDA or occupancy impact from those lease exits that occurred in Q4. Joanna, I think you asked a question that's on many people's minds.

Dan Caruso: Price and occupancy to get that outsized performance.

Speaker Change: Thank you and if I may just another follow up when it comes to I guess your outlook.

Speaker Change: On EBIT.

Speaker Change: And how should we think about the impact of the lease exits.

Speaker Change: When it comes to say you know our run rate our rent expense and any anything else about you know EBITDA or occupancy back from from those at least exits that occurred in Q4.

Speaker Change: So and I think you asked the question Thats on many People's lives, what I would say is sitting in our shoes today I'm very excited about the optionality that lease explorations give us at Brookdale the way that I see is no matter what happens with the lease it's going to be good for our shareholders.

Joanna Gajuk: What I would say is sitting in our shoes today, I'm very excited about the optionality that lease expirations give us at Brookdale. The way that I see it, no matter what happens with the lease, it's going to be good for our shareholders. If the assets are performing well, then we can extend the lease and continue that. If they're not, we can choose not to extend the lease and go forward. Or we may end up with a situation like we had with LTC, where we ultimately chose not to extend the lease. That was a 35-asset lease with LTC. But ultimately, we ended up releasing 17 of those assets under a favorable lease, which gave us CapEx support, as well as favorable purchase options. So, heads we win, tails we win.

Speaker Change: If the assets are performing well then we can extend the lease and continue that if they're not we can choose not to extend the lease and and go forward or we may end up with a situation like we had with LTC, where we ultimately chose not to extend the lease that was a 35 asset.

Speaker Change: Lease with LTC, but ultimately we ended up re leasing 17 of those assets under a favorable lease which gave us.

Speaker Change: Capex support as well as favorable purchase options. So hence we win tails we win.

Lucinda M. Baier: Right. And on this, that was actually my question in terms of this LDC, in particular, the impact on the rent expense, I guess, going forward. Yes, Joanna, this is Dawn.

Speaker Change: Right right understood that was actually my question in terms of this L. D C. Ah Ah in particular, the impact to the rent expense I guess going forward.

Dawn Cusseaux: What I would say is the impact of the 18 LTC dispositions; we would expect that to be modestly favorable as it relates to 2024. So you're talking about the kind of annual event increases, but I was also wondering whether there's a material impact when it comes to just not having, you know, these 18 leases going forward. Yeah, I think that's what we would say from an adjusted EBITDA perspective. It would be modestly favorable for those leases going away. Okay, thank you. And if I may, another question, different topic, I guess.

Speaker Change: Yes, Joanna this is Dan what I would say is the impact of the 18 LTC dispositions, we would expect that to be modestly favorable as it relates to 2024.

Speaker Change: So you're talking about the kind of annual rent increases, but I was also thinking whether there was material impact when it comes to just not having you know these 18 leases going forward.

Joanna: Yeah, I think I think that that's what we would say from an adjusted EBITDA perspective, it would be modestly favorable for those leases going away.

Speaker Change: Okay. Thank you and if I may another question different topic I guess in January there were some hearings in Congress focus on the assisted living facilities and they talk about quality of care, a lack of transparency and others and I guess, there's this special committee on aging called for.

Joanna Gajuk: In January, there were some hearings in Congress focused on assisted living facilities, and they talked about quality of care, lack of transparency, and standards. And I guess there's this special committee on aging; they called for a government accountability GAO study on this topic. So your thoughts around this in terms of, you know, what are the risks that could be some efforts to maybe, you know, come up with some staffing requirements for many or other requirements for the operators?

Speaker Change: E government.

Speaker Change: Accountability Office J O study on this topic.

Speaker Change: So cut out your thoughts around that in terms of you know what are the risks that there could be some efforts to maybe you know come up with some staffing requirements, where many or.

Speaker Change: Or are the requirements are for the operators. Thank you.

Lucinda M. Baier: Thank you. Let me start by just saying that at Brookdale, the health and well-being of our residents has always been our top priority, and we are dedicated to providing high-quality care and services to residents and their families. As a company, we're honored to have enriched the lives of hundreds of thousands of seniors over the last decade, and our communities have been recognized as some of the best in the nation. As an example, in the U.S. News and World Report Best Senior Living Ratings for 2023, Brookdale has more senior living communities in assisted living and memory care recognized than any other provider for the second year in a row. Additionally, Brookdale ties for number one in customer satisfaction rankings in both 2020 and 2022, as recognized by J.D. Power for Assisted Living and Memory Care.

Speaker Change: Let me start by just saying at Brookdale, the health and wellbeing of our residents has always been our top priority and we are dedicated to providing high quality care and services to residents and their families.

Speaker Change: Company, we're honored to enrich the lives of hundreds of thousands of seniors over the last decade, and our communities have been recognized as some of the best in the nation. As an example in the U S News and World Report Best Senior Living's ratings for 2023, Brookdale has more senior living communities and assisted.

Speaker Change: Living and memory care communities recognized than any other provider for the second year in a row. Additionally, brookdale tied as number one in customer satisfaction rankings in both 2020 and 2022 as recognized by J D power for assisted living and memory care. It is true that brookdale.

Lucinda M. Baier: It is true that Brookdale is one of several organizations that were contacted by the Special Committee on Aging, Senator Bob Casey, and we have provided a response. We're an advocate for seniors, and we're willing to partner with others to serve the best interests of residents and promote assisted living in the industry. We take great pride in serving hundreds of thousands of residents across the country over the last decade. At this point, it's too soon to tell what the outcome of the inquiry could be, but I'm very comfortable that our focus is and has always been providing quality care. Thank you; I appreciate it. Thanks, Joanna.

Speaker Change: <unk> is one of several organizations that were contacted by the special Committee on aging Senator Bob Casey and we have provided a response, we're an advocate for seniors and we're willing to partner with others to serve the best interests of residents and promote assisted living in the industry, we take great pride in serving our.

Speaker Change: One hundreds of thousands of residents that communities across the country over the last decade at this point, it's too soon to tell what the outcome of the inquiry could be but I'm very comfortable that our focus is and has always been providing quality care.

Speaker Change: Thank you I appreciate it.

Speaker Change: Thanks Joanna.

Speaker Change: Thanks Joanna.

Operator: As a reminder, if you'd like to ask a question, please press star followed by 1 on your telephone keypad. Our next question comes from the line of Josh Raskin, Nethron Research. Your line is now open, please go ahead.

Speaker Change: As a reminder, if you'd like to ask a question. Please press star followed by one on the telephone keypad.

Speaker Change: Our next question comes from the line of Josh Raskin.

Joshua Raskin: Nephron Research. Your line is now open. Please go ahead.

Joshua Raskin: Thanks, and good morning. I want to go back to the comment Don made about the 92% of pre-pandemic, I think same store operating income, 92%. Just better understand what that was. Is that on a per unit basis, on a per occupied room, or per available room? And then how do you sort of juxtapose that with the cost of capital?

Joshua Raskin: Thanks, Good morning.

Joshua Raskin: I wanted to go back to the comment Dan made about the 92% pre pandemic excellent same store operating income of 92% just better understand what that was is that is that on a per unit basis on a per occupied room or per available room, and then how do you sort of juxtapose that with the cost of capital and where do you think returns.

Lucinda M. Baier: And you know, where do you think returns are versus where they were pre-pandemic? Well, let me start by saying that, and this is Cindy, let me start by saying that we still have recovery ahead of us. And so senior living communities operate most effectively at that 80 plus percent occupancy rate. And so that is still ahead of us. But Dawn can address the 92% that she referenced in her prepared remark. Yes, Jess, this is Dawn.

Joshua Raskin: Are versus where they were pre pandemic.

Joshua Raskin: Well, let me start by saying that and this is Cindy let me start by saying that we still have the recovery ahead of us and so senior living communities operate most effectively at that 80 plus percent.

Lucinda M. Baier: The occupancy rate. So that is still ahead of us, but Don can address the 92% that she referenced in our prepared remarks.

Lucinda M. Baier: Yes, Jeff this is Don.

Dawn Cusseaux: The 92% was on an available room basis, and that's shown in our supplement on the same community slide, so you can refer to that there. Okay, I'll take a look. And then, you know, you guys have referenced that, you know, pre-pandemic, 84.5% total occupancy, I think about 600 basis points off of that. I think it's a little bit less if you look at just the AL side. So what's a reasonable time frame? You know, if you think about that as a target, is that a three-year time frame? Does that take longer?

The 92% was on available room basis, and that's shown in the in our supplement on the same community slide. So you can reference there.

Lucinda M. Baier: Yeah.

Speaker Change: Okay, I'll take a look at that.

Jeff: And then you know you guys have referenced that's pre pandemic 84, 5% total occupancy I think you're about 600 basis points off of that I think it's a little bit less if you look at just the al side. So what's a reasonable timeframe you know as you think about that as a target is that is that a three year timeframe is that take longer just trying to figure out cadence of occupancy improvement.

Lucinda M. Baier: Just trying to figure out the cadence of occupancy improvement. So, what I would say, Josh, is our goal is to recover as quickly as possible. I think there are a number of factors that will impact the timing of our recovery. First, we're seeing incredibly strong supply and demand demographics, with more seniors entering our target market this year than ever before. We're seeing a very muted supply environment given the constraints of the pandemic on our industry, as well as capital tightening.

Speaker Change: So what I would say Josh is our goal is to recover as quickly as possible. I think there are a number of factors that will impact the timing of a recovery first we're seeing incredibly strong supply and demand demographics with more seniors entering our target market this year than ever before we're seeing.

Speaker Change: A very muted supply environment, given the constraints of the pandemic on our industry as well as capital tightening and then I would say that the brookdale differentiation is continuing to grow we're very excited about brookdale whole cloth. We're excited about the quality of care that we're providing and so.

Lucinda M. Baier: And then I would say that the Brookdale differentiation is continuing to grow. We're very excited about Brookdale Health Plus. We're excited about the quality care that we're providing. And so our goal is to serve as many seniors as we can as quickly as we can. But it's too soon to comment on exactly how long that full recovery will be.

Speaker Change: Our goal is to serve as many seniors as we can as quickly as we can but it's too soon to comment on exactly how long that full recovery is going to take.

Joshua Raskin: Okay, and if I could take a last one, and you actually just mentioned it, Brookdale Health Plus, I'm curious about the economics of residents that are enrolled in, I guess, sort of a program. I don't know if that's community-based, or if that's, you know, I assume that's room by room. You know, is there a difference in the economics of, the margin of that individual resident? Is there a difference in length of stay? Maybe any sort of economic data that would be helpful for us.

Speaker Change: Okay, and if I could sneak a last one in you actually just mentioned that Brookdale health plus I'm curious on the economics of residents that are enrolled in I guess sort of the program I don't know if thats a community based or if that's you know I assume that's room by room.

Speaker Change: Is there a difference in the economics of it.

Speaker Change: The margin of that individual resident is there a difference in length of stay maybe any just sort of economic data that would be helpful for us.

Lucinda M. Baier: There is no incremental cost to a Brookdale resident for Brookdale Health Plus. We've priced it as part of the care charges in that particular community. And one of the things that's exciting about Brookdale Health Plus is that it is an innovative care model designed to close care gaps. And so when we put it into a community, we completely change the operating protocols of that particular community, which has resulted in 78% fewer urgent care visits compared to similar residents living outside of Brookdale and 36% fewer hospitalizations compared to similar individuals living outside of Brookdale. But what excites me most for the shareholders of Brookdale is that we have seen that Health Plus communities' profitability grows much faster than non-Health Plus communities.

Speaker Change: No there is no incremental cost to a brookdale residents for Brookdale health plus we price. It is part of the care charges in that particular community and one of the things that's exciting about Brookdale health plus is it is an innovative care model designed to close care gaps and so on.

Speaker Change: When we put it into a community we completely change the operating protocols at that particular community, which has resulted in sort of 78% fewer urgent care visits compared to similar residents living outside of Brookdale at 36% fewer hospitalizations compared to similar.

Speaker Change: Living outside of Brookdale, but what excites me most for the shareholders of Brookdale is that we have seen that health plus communities profitability grows much faster than non health plus communities and so for our shareholders. We think theres going to be a strong return, but by supporting the health and wellbeing of our.

Lucinda M. Baier: And so for our shareholders, we think there's going to be a strong return by supporting the health and well-being of our residents even more than we previously did. Right, so when you say it's it's not, there's no incremental cost to the resident, but that community, I assume that their care charges are higher than a non-Brookdale Health Plus community. Is that the way to think about it? Not necessarily.

Speaker Change: Our residents even more than we previously do.

Speaker Change: Right. So when you say, it's it's not there's no incremental cost to the resident.

Speaker Change: But that community I assume that their care charges are higher than a non brookdale health plus community is that is that the way to think about it.

Not necessarily our business case was built on the fact that.

Lucinda M. Baier: Our business case was built on the fact that it would be an attractive value proposition for residents, and that would, as you mentioned, help us increase length of stay. Now, one of the things that is true is that although we've been rolling HealthPlus out over the last few years, we haven't gotten to a stabilized length of stay for those communities yet. And so that's one statistic that we're still watching, but we're encouraged by the residents that are choosing Brookdale as a result of Brookdale HealthPlus.

Speaker Change: It would be an attractive value proposition for residents and that would as you mentioned help us increase length of stay now one of the things that is true because we've been rolling health plus out.

Speaker Change: Over the last few years, we haven't gotten to a stabilized length of stay for those communities yet and so that's one statistic that we're still watching but we're encouraged by the residents that are choosing brookdale as a result of Brookdale health plus.

Joshua Raskin: Thank you. Thank you, Josh. As this concludes our Q&A session for today, ladies and gentlemen, I would like to thank you for joining today's call. Have a great rest of your day. You may now disconnect your lines. For our Q&A session today, ladies and gentlemen, I would like to thank you for joining us.

Speaker Change: Got it thank you.

Speaker Change: Thank you Josh.

Speaker Change: Thank you.

Speaker Change: This concludes our Q&A session for today, ladies and gentlemen, I would like to thank you for joining today's call have a quite rescue day you may now disconnect your lines.

Speaker Change:

Speaker Change: So all Q&A session for today, ladies and gentlemen, I would like to thank you for joining us.