Q1 2024 Brookdale Senior Living Inc Earnings Call

May 8, 2024

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Operator: Hello all, and welcome to the Brookdale Senior Living 1Q 2024 earnings call. My name is Harry, and I'll be your operator today. If you would like to enter the queue for questions, you may do so by pressing star one on your telephone keypad. I would now hand the call over to Jessica Hazel, Vice President of Investor Relations, to begin. Please go ahead.

Hello, all and welcome to the Brookdale senior living <unk> 'twenty 'twenty four earnings call. My name is Harry and I'll be your operator for today.

Harry: If you'd like to enter the queue for questions. You may do so by pressing star one on your telephone keypad.

Operator: I would now hand, the call over to Jessica Hazel Vice President of Investor Relations to begin. Please go ahead.

Jessica Hazel: Thank you and good morning. I'd like to welcome you to the first quarter 2024 earnings call for Brookdale Senior Living. Joining us today are Cindy Baier, our President and Chief Executive Officer, and Dawn Kussow, our Executive Vice President and Chief Financial Officer. All statements today, which are not historical facts, may be deemed to be forward-looking statements within the meaning of the federal securities laws. These statements are made as of today's date, and we expressly disclaim any obligation to update these statements in the future.

Jessica Hazel: Thank you and good morning, I'd like to welcome you to the first quarter 'twenty 'twenty four earnings call for Brookdale senior living.

Jessica Hazel: Actual results and performance may differ materially from forward-looking statements, and 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 of the full Safe Harbor Statement.

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

Jessica Hazel: And Don Cuso, 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.

Jessica Hazel: Actual results and performance may differ materially from forward looking statements and certain of the factors that could cause actual results to differ are detailed in the earnings release, we issued yesterday.

Jessica Hazel: As well as in the reports we file with the SEC from time to time.

Jessica Hazel: Including the risk factors contained in our annual report on Form 10-K, and quarterly reports on Form 10-Q.

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

Jessica Hazel: Also please note that during this call we will present non-GAAP financial measures.

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

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. Thank you.

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 first quarter 2024 earnings call. In the first quarter, we made great progress on our key strategic priorities, which are designed to not only pave the way for operational excellence and sustainable long-term growth but also to support the health and well-being of our residents and associates. At Brookdale, our unwavering commitment is and has been the health and well-being of our residents and associates.

Cindy: Thank you Jessica and good morning to all of our shareholders analysts and other call participants welcome to our first quarter 2024 earnings call in the first quarter, we made great progress on our key strategic priorities, which are designed to not only paved the way for operational excellence and such.

Lucinda M. Baier: Stable long term growth, but also to support the health and wellbeing of our residents and associates at Brookdale. Our unwavering commitment is and has been the health and wellbeing of our residents and associates.

Lucinda M. Baier: We know that aging presents new challenges for seniors, and they, along with their families, often struggle with their evolving needs. Many times, these needs include a significant increase in chronic conditions, increased feelings of loneliness and isolation, and support to complete even the most basic activities of daily living.

Lucinda M. Baier: We know that aging presents new challenges for seniors and they along with their families often struggle with their evolving needs.

Lucinda M. Baier: Many times. These needs include a significant increase in chronic conditions increased feelings of loneliness and isolation and support to complete even the most basic activities of daily living.

Lucinda M. Baier: At Brookdale, we take pride in our ability to help seniors manage these challenges of aging through high-quality care and personalized services, all in a home-like setting, surrounded by a community of friends. But our commitment doesn't stop with our residents. Our business depends on people taking care of people, and as such, our greatest asset is our associates. Each Brookdale associate has the meaningful privilege to truly enrich our residents' lives with compassion, respect, excellence, and integrity. Our mission embodies Brookdale's commitment to a culture of caring and excellence.

Lucinda M. Baier: Brookdale, we take pride in our ability to help seniors manage these challenges of aging through high quality care and personalized services all in a home like setting surrounded by a community of friends.

Lucinda M. Baier: But our commitment doesn't stop with our residents our business depends on people taking care of people and as such our greatest asset is our associates. Each brookdale associates has the meaningful privilege to truly enrich our residents' lives with compassion respect excellence.

Lucinda M. Baier: And integrity, our mission and bodies Brookdale commitment to our culture of caring and excellence.

Lucinda M. Baier: Through our key strategic priorities and our relentless dedication to the health and well-being of our residents and associates, we are seeing meaningful, positive outcomes being realized for our residents and associates in our community operations and throughout our financial results. I'll share with you many of these positive first quarter outcomes, including an accelerating year over year occupancy growth trend, another year of favorable rate growth that is supporting profitable census increases, and our continued triple digit same community margin expansion. It remains undeniable that demand from the target senior demographic is here and rising.

Lucinda M. Baier: Through our key strategic priorities and our relentless dedication to health and wellbeing of our residents and associates, we are seeing meaningful positive outcomes being realized for our residents and associates in our community operations and throughout our financial results.

Lucinda M. Baier: I'll share with you many of these positive first quarter outcomes, including an accelerating year over year occupancy growth trend.

Lucinda M. Baier: Another year of favorable rate growth that is supporting profitable census increases and our continued triple digit same community margin expansion.

Lucinda M. Baier: It remains undeniable that demand from the target senior demographic is here and rising we remained focused on our goal to meet this growing demand and to be the nation's first choice in senior living with the strong start to the new year, including the sustainable growth we continued to deliver.

Lucinda M. Baier: We remain focused on our goal to meet this growing demand and to be the nation's first choice in senior living. With the strong start to the new year, including the sustainable growth we continue to deliver, I am filled with tremendous optimism for our ability to capture the incredible opportunity that lies ahead. In the first quarter, we maintained an intense focus on our key strategic priorities.

Lucinda M. Baier: Filled with tremendous optimism for our ability to capture the incredible opportunity that lies ahead.

Lucinda M. Baier: In the first quarter, we maintained an intense focus on our key strategic priorities building on our strong momentum from 2023 and with the continued successful execution of these priorities. We are proud to report another quarter of positive operational performance, where we once again.

Lucinda M. Baier: Building on our strong momentum from 2023 and with the continued successful execution of these priorities, we are proud to report another quarter of positive operational performance, where we once again deliver results within or better than our previously provided guidance ranges. Using our strategic framework as a guide, I'm proud to share with you our recent progress and noteworthy accomplishments. Beginning first with our priority to get every available room in service at the best profitable rate, in the first quarter, on a same community basis, REVPAR grew 6.3% over the prior year, which supported an operating income margin of 27.6%, our highest reported adjusted margin rate since the initial impact of the pandemic.

Lucinda M. Baier: <unk> delivered results within or better than our previously provided guidance ranges used.

Lucinda M. Baier: Using our strategic framework as a guide I am proud to share with you. Our recent progress and noteworthy accomplishments beginning first with our priority to get every available room in service at the best profitable rate in the first quarter on a same community basis Revpar grew six three.

Lucinda M. Baier: <unk> over the prior year, which supported operating income margin of 27, 6% our highest reported adjusted margin rate since the initial impact of the pandemic.

Lucinda M. Baier: As Dawn will share, this represents an important milestone on our road to pre-pandemic margins and beyond. Our effective January 1st rate increase, coupled with 150 basis points of year-over-year same-community occupancy growth and continued appropriate expense management, contributed to these strong results. We were very pleased that our year over year occupancy increased every month of the first quarter, accelerating from our fourth quarter growth level and exceeding our initial expectations. There continues to be robust demand for our services and a recognition of the strong value proposition that Brookdale provides, resulting in more seniors choosing to call Brookdale home. In the first quarter, our move-ins exceeded pre-pandemic levels by 7.5%.

Lucinda M. Baier: As Don will share. This represents an important milestone on our road to pre pandemic margins and beyond.

Lucinda M. Baier: Our effective January 1st rate increase coupled with 150 basis points of year over year same community occupancy growth and continued appropriate expense management contributed to these strong results.

Lucinda M. Baier: We were very pleased that our year over year occupancy increased every month of the first quarter accelerating from our fourth quarter growth level and exceeding our initial expectations. There continues to be robust demand for our services and a recognition for the strong value proposition that <unk>.

Lucinda M. Baier: Dale provides resulting in more seniors choosing to call Brookdale home.

Lucinda M. Baier: In the first quarter, our move ins exceeded pre pandemic levels by seven 5%.

Lucinda M. Baier: Though not quite as high as our prior year first quarter move-in level, we are still pleased with the strong demand that we are seeing. We're also grateful that first quarter move-outs improved relative to both the prior year and pre-pandemic levels. By holding steadfast to our commitment to consistent and profitable year-over-year occupancy increases while continuing to meet our residents' needs, provide high-quality care and personalized service, and remain in compliance with applicable regulations, we are building a significant runway for future revenue and operating income growth as we serve more seniors in the quarters and decades to come.

Lucinda M. Baier: So not quite as high as our prior year first quarter move in level. We are still pleased with the strong demand that we're seeing we're also grateful that first quarter move outs improved relative to both the prior year and pre pandemic levels by holding steadfast to our commitment to.

Lucinda M. Baier: Distant and profitable year over year occupancy increases, while continuing to meet our residents' needs provide high quality care and personalized service and remain in compliance with applicable regulations. We are building a significant runway for future revenue and operating income growth as we serve more senior.

Lucinda M. Baier: <unk> in the quarters and decades to come.

Lucinda M. Baier: Turning to our next strategic priority to attract, engage, develop, and retain the best associates. A simple philosophy resonates within Brookdale: if we take care of our associates, they, in turn, will take care of our residents. That is why this strategic priority remains critical to our long-term success. With this in mind, I am very pleased with our incredible progress to attract, engage, develop, and retain the best associates, which has already had a positive impact on our operational performance and financial results, while simultaneously strengthening our teams and creating lasting benefits for the future. The pandemic significantly affected the workforce in our industry, leading to a nationwide shortage of health care workers.

Lucinda M. Baier: Turning to our next strategic priority to attract engage develop and retain the best associates.

Lucinda M. Baier: In 2022, we increased our internal workforce by approximately 15% with nearly 5000 net hires, which supported more shifts being filled by our own Brookdale associates rather than contract labor. Then, in 2023, we refined the executive director role, introduced enhanced leadership training, and focused on enhancing our associate onboarding experience to support better turnover and retention, particularly within the first 90 days. During the first quarter, we've been pleased with our continued improvement in key three leadership retention, which includes our executive director, health and wellness director, and sales director, and in our associate turnover.

Lucinda M. Baier: Simple philosophy resonates within Brookdale, if we take care of our associates. They in turn will take care of our residents that is why this strategic priority remains critical to our long term success.

Lucinda M. Baier: With this in mind I am very pleased with our incredible progress to attract engage develop and retain the best associates, which has already had a positive impact on our operations performance and financial results, while simultaneously strengthening our teams and creating lasting.

Lucinda M. Baier: Fits for the future.

Lucinda M. Baier: The pandemic significantly affected the workforce in our industry, leading to a nationwide shortage of health care workers in 2022, we increased our internal workforce by approximately 15% with nearly 5000 net hires which supported more shifts being <unk>.

Lucinda M. Baier: Built by our own Brookdale associates, rather than contract labor.

Lucinda M. Baier: Then in 2023, we refined the executive director role introduced enhanced leadership training and focused on enhancing our associate on boarding experience to support better turnover and retention, particularly within the first 90 days during the first quarter. We've been pleased with our continued.

Lucinda M. Baier: <unk> improvement in key three leadership retention, which includes our executive director health and wellness director and sales director.

Lucinda M. Baier: And in our associate turnover.

Lucinda M. Baier: As part of this, we are incredibly proud that our trailing 12-month executive director retention rate through the first quarter has reached nearly 70%. This is critical, as we have found that when an executive director is in place at least two years, those communities have higher overall profitability.

Lucinda M. Baier: As part of this we are incredibly proud that our trailing 12 month executive director retention rate through the first quarter has reached nearly 70% retention.

Lucinda M. Baier: This is critical as we have found that when an executive director is in place at least two years those communities have higher overall profitability.

Lucinda M. Baier: Given the significant progress we've made over the last two years to stabilize our overall workforce in 2024, we are refreshing our hourly training to be more engaging and personalized for our associates.

Lucinda M. Baier: Given the significant progress we've made over the last two years to stabilize our overall workforce, in 2024, we are refreshing our hourly training to be more engaging and personalized for our associates, while ensuring that we continue to provide high-quality care and maintain regulatory compliance. It's still early, but we are excited about this opportunity and the impact it will have on our associates' productivity and growth in their career opportunities. Third, it is our strategic priority to earn resident and family trust and satisfaction by providing valued, high-quality care and personalized service.

Lucinda M. Baier: Ensuring that we continue to provide high quality care and maintain regulatory compliance.

Lucinda M. Baier: It's still early but we are excited about this opportunity and the impact it will have for our associates productivity and growth in their career opportunities.

Lucinda M. Baier: Third is our strategic priority to earn resident and family Trust and satisfaction by providing valued high quality care and personalized service.

Lucinda M. Baier: At Brookdale, we remain committed to continuous improvement, and we believe feedback is a gift. Thanks to strong engagement from our residents and their families, including approximately 65,000 internal and third-party satisfaction surveys over the past 12 months, we are able to gain meaningful insight. These insights enable us to appropriately address areas of opportunity within our communities, and we've been pleased with the progress we've made to continually improve resident satisfaction. Most recently, our internal resident satisfaction ratings increased each month of the first quarter.

Lucinda M. Baier: At Brookdale, we remain committed to continuous improvement and we believe feedback is again thanks.

Lucinda M. Baier: Thanks to strong engagement for our residents and their families, including approximately 65000 internal and third party satisfaction surveys over the past 12 months, we are able to gain meaningful insights.

Lucinda M. Baier: These insights enable us to appropriately address areas of opportunity within our communities and we've been pleased with the progress we've made to continually improve resident satisfaction.

Lucinda M. Baier: Most recently, our internal resident satisfaction ratings increased each month of the first quarter.

Lucinda M. Baier: I believe this reflects the positive outcomes of our continued efforts in this critical area and speaks to our dedication to compassionate, high-quality care and personalized service. While we believe our customer focus is strong, we feel a deep sense of pride when our industry leadership is recognized externally, whether that's when our individual communities are acknowledged as the best in their field or when one of our differentiated Brookdale programs receives a notable recognition. In just the last few weeks, we've been honored with three unique external distinctions.

Lucinda M. Baier: I believe this reflects the positive outcomes of our continued efforts in this critical area and speaks to our dedication to capacity at high quality care and personalized service.

Lucinda M. Baier: While we believe our customer focus is strong we feel a deep sense of pride when our industry leadership is recognized externally.

Lucinda M. Baier: Whether that's when our individual communities are acknowledged as the best of.

Lucinda M. Baier: Or when one of our differentiated brookdale programs receive a notable recognition and.

Lucinda M. Baier: And just the last few weeks, we've been honored with three unique external distinctions.

Lucinda M. Baier: First, our ClearBridge Alzheimer's and Dementia Care Training was recently certified by the Alzheimer's Association for its demonstrated commitment to providing evidence-based training with a person-centered focus. We are proud of our industry-leading expertise in the care of those with Alzheimer's and other related dementias. Today, Brookdale operates more than 9,000 memory care units that support residents and their families who are impacted by these diseases. The number of seniors who need these services is growing rapidly. By 2030, the CDC expects 8.5 million Americans will be living with Alzheimer's disease.

Lucinda M. Baier: First our Clearbridge, Alzheimer's and dementia care training was recently certified by the Alzheimer's Association for its demonstrated commitment to providing evidenced based training with a person centered focus.

Lucinda M. Baier: We are proud of our industry, leading expertise in the care of those with Alzheimers and other related dementias.

Lucinda M. Baier: Today Brookdale operates more than 9000 memory care units that support residents and their families who are impacted by these diseases.

Lucinda M. Baier: The number of seniors who need these services is growing rapidly by 2030, the CDC expects $8 5 million Americans will be living with all timers disease.

Lucinda M. Baier: We are confident in the effectiveness of our Alzheimer's and dementia care program to support those living with these chronic conditions, and we are honored to have this certification of our ClearBridge training. Second, Brookdale was recognized once again with the most communities on U.S. News and World Report's best senior living listings.

Lucinda M. Baier: We are confident in the effectiveness of our Alzheimer's and dementia care program to support those living with these chronic conditions and we are honored to have the certification of our Clearbridge training.

Lucinda M. Baier: Second Brookdale was recognized once again with the most communities on U S News and World Report's best of senior living listings. This year more brookdale communities were recognized as a best of winter than ever in our history and we are proud to lead the industry in <unk>.

Lucinda M. Baier: This year, more Brookdale communities were recognized as a best of winner than ever in our history, and we are proud to lead the industry in community recognition for the third year in a row. I believe this is a testament to the trust our residents and their families place in us, the quality of the care we are providing, and the unique Brookdale programs that we believe support improved resident outcomes. Third, as yet another recognition of our differentiated programs, Argentum awarded Brookdale as a 2024 Best of the Best winner for our innovative Brookdale Health Plus Program.

Lucinda M. Baier: Community recognition for the third year in a row.

Lucinda M. Baier: I believe this is a testament to the trust our residents and their families place on us.

Lucinda M. Baier: Quality of the care, we are providing and the unique brookdale programs that we believe support improved resident outcomes.

Lucinda M. Baier: Third.

Lucinda M. Baier: As yet another recognition of our differentiated programs argentum awarded Brookdale as a 'twenty 'twenty four best of the best winner for our innovative Brookdale health plus program, noting that innovative programs like this show unparalleled passion and commitment to providing it.

Lucinda M. Baier: Noting that innovative programs like this show unparalleled passion and commitment to providing an optimal environment for the residents and families we serve. As I've shared before, Brookdale HealthPlus delivers measurable positive outcomes, and we believe that over the long term, through programs like HealthPlus, we will further improve the quality of life for our residents, increase the satisfaction of our customers and their loved ones, while also reducing costs to residents, their families, and the overall health care system. And we deliver value to our shareholders. We are very proud of this Argentum Best of the Best award as we strive to continue to differentiate ourselves through clinical excellence and an emphasis on value-based care.

Lucinda M. Baier: The optimal environment for the residents and families we serve.

Lucinda M. Baier: As I've shared before Brookdale health plus delivers measurable positive outcomes and we believe that over the long term through programs like health plus we will further improve the quality of life for our residents increase the satisfaction of our customers and their loved ones.

Lucinda M. Baier: Also reducing cost to residents their families and the overall health care system.

Lucinda M. Baier: And delivering value to our shareholders.

Lucinda M. Baier: We are very proud of this argentum best of the Best Award as we strive to continue to differentiate ourselves through clinical excellence and an emphasis on value based care.

Lucinda M. Baier: In summary, we entered 2024 with a clear vision, an intense focus, and a dedication to continued positive results. Already this year, we have delivered meaningful, positive outcomes across our key strategic priorities. With the first quarter annualized, we have recovered 97% of our 2019 adjusted EBITDA. At the same time, we are keenly focused on the incredible opportunity ahead of us to recover our pre-pandemic occupancy and margins. Our consistent forward progress each quarter reinforces my confidence that the plans we are executing, combined with industry supply and demand dynamics, and Brookdale's key differentiators, will drive significant growth for decades to come. We are excited to continue our positive momentum in the second quarter and throughout 2024. I'll now turn the call over to Dawn.

Lucinda M. Baier: In summary, we entered 2024 with a clear vision and intense focus and a dedication to continued positive results.

Dawn: Already this year, we have delivered meaningful positive outcomes across our key strategic priorities with the first quarter annualized we have recovered 97% of our 2019 adjusted EBITA.

Dawn: At the same time, we are keenly focused on the incredible opportunity ahead of us from recovering our pre pandemic occupancy and margins.

Dawn: Our consistent forward progress each quarter reinforces my confidence that the plans, we are executing combined with industry supply and demand dynamics and Brookdale key Differentiators will drive significant growth for decades to come.

Dawn: We are excited to continue our positive momentum in the second quarter and throughout 2024.

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

Dawn L. Kussow: Thank you, Cindy. Good morning, and thank you for being here today. Cindy shared highlights of our positive first quarter operational and financial progress. I'll provide additional color on our first quarter results, and then I'll speak to our second quarter guidance. Beginning with first quarter revenue, residency revenue grew 4.3% over the prior year first quarter. At the top end of our previously provided first quarter guidance range, consolidated REVPAR grew 6.7% over the prior year first quarter, which was attributable to a 160 basis point increase in weighted average occupancy and a 4.4% REVPAR growth.

Dawn: Thank you Cindy good morning, and thank you for being here today.

Dawn L. Kussow: Cindy sharing highlights of our positive first quarter operational and financial progress.

Dawn L. Kussow: I'll provide additional color on our first quarter results and then I'll speak to our second quarter guidance.

Dawn L. Kussow: Beginning with first quarter revenue.

Dawn L. Kussow: President fee revenue grew four 3% over the prior year first quarter.

Dawn L. Kussow: At the top end of our previously provided first quarter guidance range.

Dawn L. Kussow: Validated revpar grew six 7% over the prior year first quarter, which was attributable to a 160 basis point increase in weighted average occupancy and a 4.4% revpar growth.

Dawn L. Kussow: Marking our 10th consecutive quarter of year-over-year occupancy growth, the first quarter's 160 basis point increase reflects a positive acceleration of our recent occupancy growth trend. We are also pleased to report that the sequential occupancy change from the fourth quarter of 2023 to the first quarter of 2024 was meaningfully better than normal pre-pandemic seasonality for this period. Specific to first quarter REV, as a reminder, while higher than historic norms, we implemented a lower average January 1st rate increase than in the prior year. We remain focused on ensuring appropriate pricing to match the services we deliver in our communities while remaining affordable to our residents and appropriately addressing our costs.

Dawn L. Kussow: Marking our 10th consecutive quarter of year over year occupancy growth. The first quarter's 160 basis point increase.

Dawn L. Kussow: Reflects a positive acceleration of our recent occupancy growth trends.

Dawn L. Kussow: We are also pleased to report that the sequential occupancy change from the fourth quarter of 2023 to the first quarter of 2024 was meaningfully better than normal pre pandemic seasonality for this period.

Dawn L. Kussow: Specific to first quarter as poor as a reminder, while higher than historic norms, we implemented a lower average January 1st rate increase than in the prior year.

Dawn L. Kussow: We remain focused on ensuring appropriate pricing to match the services, we deliver in our communities, while remaining affordable to our residents and appropriately addressing our costs.

Dawn L. Kussow: As reflected in our results, this year's January 1st increase effectively supported continued REVPOR growth, improved year-over-year financial move-outs, and strong flow-through, as evidenced by our margin growth. Specific to our same community portfolio, first quarter REVPAR increased 6.3% over the prior year, driven by 150 basis points of occupancy growth and a 4.3% increase in REVPOR. We are pleased with our continued top-line progress, including first quarter occupancy that was better than normal seasonality, strong demand, and year-over-year improvement in controllable attrition. Moving to first quarter expenses, The Consolidated Facility Operating Expense was $543 million, while the Same Community Facility Operating Expense, as shown on page 8 of our financial supplement, was $528 million.

Dawn L. Kussow: As reflected in our results. This year's January 1st increase effectively supported.

Dawn L. Kussow: <unk> Revpar growth.

Dawn L. Kussow: Improved year over year financial move outs and strong flow through as evidenced by our margin growth.

Dawn L. Kussow: Specific to our same community portfolio first quarter Revpar increased six 3% over the prior year driven by a 150 basis points of occupancy growth and a four 3% increase in revpar.

Dawn L. Kussow: We are pleased with our continued top line progress.

Dawn L. Kussow: Including first quarter occupancy that was better than normal seasonality strong demand and year over year improvement in controllable attrition.

Dawn L. Kussow: Moving to first quarter expenses.

Dawn L. Kussow: Consolidated facility operating expense was $543 million, while same community facility operating expense as shown on page eight of our financial supplement was $528 million.

Dawn L. Kussow: Same community labor expense as a percent of revenue improved 150 basis points compared to the prior year first quarter. This was a result of favorable flow through of top line growth, given the fixed cost nature of our business, reductions in contract labor and overtime, and the favorable impact of improved leadership retention and hourly associate turnover. We are very pleased to realize these favorable outcomes from our strategic priorities, particularly considering the year-over-year incremental expense increase from Leap Day.

Dawn L. Kussow: Same community labor expense as a percent of revenue improved 150 basis points compared to the prior year first quarter.

Dawn L. Kussow: This was a result of favorable flow through of topline growth.

Dawn L. Kussow: Given the fixed cost nature of our business reductions in contract labor and overtime and the favorable impact of improved leadership retention in hourly associate turnover.

Dawn L. Kussow: We are very pleased to realize these favorable outcomes from our strategic priorities, particularly considering the year over year incremental expense increase from leap day.

Dawn L. Kussow: Same community other facility operating expense as a percent of revenue was flat to the prior year.

Dawn L. Kussow: Same community, other facility operating expense as a percent of revenue was flat to the prior year. Driving the dollar expense increase over the prior year first quarter were a number of marginal factors, including the higher cost of property and casualty coverage, including higher premiums and higher retained risk. Technology enhancements, including upgraded Wi-Fi within our independent living portfolio and an outsourcing of our data centers, as well as broad inflationary pressure and the impact of an extra day. Importantly, the data center outsourcing is neutral from a cash flow perspective.

Dawn L. Kussow: Driving the dollar expense increase over the prior year first quarter.

Dawn L. Kussow: There are a number of marginal factors, including the higher cost of property and casualty coverage, including higher premiums and higher retained risk.

Dawn L. Kussow: Technology enhancements, including upgraded Wi Fi within our independent living portfolio.

Dawn L. Kussow: And in outsourcing of our data centers as.

Dawn L. Kussow: As well as broad inflationary pressure and the impact of an extra day.

Dawn L. Kussow: Importantly, the data center outsourcing is neutral from a cash flow perspective, our.

Dawn L. Kussow: Our continued favorable same-community revenue-to-expense spread drove 140 basis points of year-over-year adjusted operating margin expansion to 27.6% of revenue. As Cindy shared, this represents our highest reported adjusted margin rate since the initial impact of the pandemic. Reflecting our 10th consecutive quarter of meaningful year-over-year saved community growth, first quarter adjusted operating income increased by 12% over the prior year first quarter. Continued progress on the top line and ongoing appropriate expense management have supported these results, as well as supported our achievement of a meaningful milestone in our pandemic recovery.

Dawn L. Kussow: Continued favorable same community revenue to expense spread drove 140 basis points of year over year adjusted operating margin expansion to 27, 6% of revenue.

Dawn L. Kussow: And Cindy shared this represents our highest reported adjusted margin rate since the initial impact of the pandemic.

Dawn L. Kussow: Reflecting our 10th consecutive quarter of meaningful year over year same community growth.

Dawn L. Kussow: First quarter adjusted operating income increased by 12% over the prior year first quarter.

Dawn L. Kussow: Continued progress on the topline and ongoing appropriate expense management have supported these results as well as supporting our achievement of a meaningful milestone in our pandemic recovery.

Dawn L. Kussow: On a per available unit basis, our annualized first quarter same community operating income surpassed our 2019 same community operating income per available unit. Given the significant runway still available for occupancy growth, we believe this not only reflects a remarkable accomplishment but also positions us well over the near and long term as occupancy continues to grow. I am very proud of our continued 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 services, and remain in compliance with applicable regulations. In the first quarter, general and administrative expense was relatively flat to the prior year first quarter, excluding prior year restructuring costs. Cash operating lease payments were $65 million.

Dawn L. Kussow: On a per available unit basis, our annualized first quarter same community operating income surpassed our 2019 same community operating income per available unit.

Dawn L. Kussow: Given the significant runway still available for occupancy growth. We believe this not only reflects a remarkable accomplishment, but also positions us well over the near and long term as occupancy continues to grow I am very proud of our continued progress as we diligently work to return to pre pandemic.

Dawn L. Kussow: Segment operating margins, while continuing to ensure that we meet our residents' needs provide high quality care and services and remain in compliance with applicable regulations.

Dawn L. Kussow: First quarter general and administrative expenses relatively flat to the prior year first quarter, excluding prior year restructuring costs.

Dawn L. Kussow: Cash operating lease payments were $65 million.

Dawn L. Kussow: These financial results culminated in first quarter adjusted EBITDA of $98 million, which exceeded the top end of our guidance range by approximately $3 million. This outperformance was due to favorable market conditions and labor expense driven predominantly by wage rates. Compared to the prior year first quarter, adjusted EBITDA increased $9 million, or 10%. As we shared previously, when comparing first quarter adjusted EBITDA to the first quarter of 2023, there are several factors that present a meaningful headwind to year-over-year growth results. First, the prior year's first quarter included approximately $2.3 million in government grant revenue.

Dawn L. Kussow: These financial results culminated in first quarter, adjusted EBITDA of $98 million, which exceeded the top end of our guidance range by approximately $3 million.

Dawn L. Kussow: This outperformance was due to favorability in labor expense driven predominantly by wage rate.

Dawn L. Kussow: Compared to the prior year first quarter, adjusted EBITDA increased $9 million or 10%.

Dawn L. Kussow: Second, as a result of the May 2023 change in lease classification, we had approximately $7.4 million of lease payments that impacted adjusted EBITDA this year but did not affect last year and did not impact cash rent payments. Third, our current year first quarter adjusted EBITDA results include approximately $2 million of incremental expense from the January winter storms. And lastly, the current year's first quarter included an extra day for leap years, which resulted in approximately $3 million of incremental expense with only a minor impact on revenue. Considering the magnitude of these factors combined, we are very pleased with our year-over-year adjusted EBITDA growth results. Adjusted free cash flow was negative $26 million for the quarter.

Dawn L. Kussow: We shared previously when comparing first quarter adjusted EBITDA to the first quarter of 2023. There are several factors that presented a meaningful headwind to year over year growth results.

Dawn L. Kussow: First the prior year first quarter included approximately $2 $3 million and government grant revenue.

Dawn L. Kussow: Second as a result of the May 2023 change in lease classification.

Dawn L. Kussow: We had approximately $7 $4 million of lease payments that impacted adjusted EBITDA. This year, but did not affect last year and did not impact cash rent payments.

Dawn L. Kussow: Third our current year first quarter. Adjusted EBITDA results include approximately $2 million of incremental expense from the January winter storms.

Dawn L. Kussow: And lastly, the current year first quarter included an extra day for leap year, which resulted in approximately $3 million of incremental expense with only a minor impact to revenue.

Dawn L. Kussow: Considering the magnitude of these factors combined we are very pleased with our year over year adjusted EBITDA growth results adjusted.

Dawn L. Kussow: Adjusted free cash flow was negative $26 million for the quarter as expected our first quarter change in working capital was negative $22 million and represented the largest impact when comparing first quarter adjusted free cash flow to the prior year first quarter as normal course seasonality.

Dawn L. Kussow: As expected, our first quarter change in working capital was negative $22 million and represented the largest impact when comparing first quarter adjusted free cash flow to the prior year first quarter. As with normal core seasonality, annual incentive compensation payments occurred during the first quarter and are reflected in our change in working capital results. Additionally, unique to this quarter was the impact of cash long-term incentive payments related to awards that were granted in lieu of equity in 2021 following satisfaction of certain performance conditions.

Dawn L. Kussow: Annual incentive compensation payments occurred during the first quarter and are reflected in our change in working capital results.

Dawn L. Kussow: Additionally, unique to this quarter was the impact of cash long term incentive payments related to awards that were granted in lieu of equity in 2021, following satisfaction of certain performance conditions.

Dawn L. Kussow: Given Brookdale's strong 2023 performance and the timing of the unique approximately $4 million long-term incentive grant, the cash impact of our current period incentive compensation payments was larger than in recent prior years. For the first quarter, non-development capital expenditures were $51 million.

Dawn L. Kussow: Given brookdale strong 2023 performance and the timing of the unique approximately $4 million long term incentive grant the cash impact of our current period incentive compensation payments was larger than in recent prior years.

Dawn L. Kussow: First quarter non development capital expenditures were $51 million.

Dawn L. Kussow: We continue to anticipate approximately $180 million of net non-development capital expenditures in 2024. First quarter interest expense was relatively flat to the fourth quarter of 2023. As of March 31st, total liquidity was $355 million compared to $341 million at the end of the 2023 fourth quarter. We are pleased with this liquidity position and that we have no mortgage debt maturities without extension options until September 2025. Turning to the second quarter, in yesterday's press release, we guided to second quarter REV-PAR growth of 6.25% to 6.75% over the prior year and adjusted EBITDA in the range of $93 to $98 million.

Dawn L. Kussow: We continue to anticipate approximately $180 million of net non development capital expenditures in 2024.

Dawn L. Kussow: First quarter interest expense net was relatively flat to the fourth quarter of 2023.

Dawn L. Kussow: As of March 31st total liquidity was $355 million compared to $341 million at the end of the 2023 fourth quarter.

Dawn L. Kussow: We are pleased with this liquidity position and that we have no mortgage debt maturities without extension options until September 2025.

Dawn L. Kussow: Turning to the second quarter and Yesterdays press release, we guided to second quarter Revpar growth of 6.25% to.

Dawn L. Kussow: To 675% over the prior year.

Dawn L. Kussow: And adjusted EBITDA in the range of $93 million to $98 million.

Dawn L. Kussow: Contributing to our REVPAR expectations, we anticipate our second quarter weighted average occupancy to increase sequentially from the first quarter, representing favorable performance when compared to normal pre-pandemic seasonality for this period. This favorable expectation reflects our strong first quarter move-in and the anticipation for continued positive recovery from the impact of the pandemic. Regarding Rev Pour, we expect a step down sequentially from first quarter Rev. 4 to second quarter Rev. 4.

Dawn L. Kussow: Contributing to our Revpar expectations, we anticipate our second quarter weighted average occupancy to increase sequentially from the first quarter, representing favorable performance when compared to normal pre pandemic seasonality for this period.

Dawn L. Kussow: This favorable expectation reflects our strong first quarter move ins and the anticipation for continued positive recovery from the impact of the pandemic.

Dawn L. Kussow: Regarding Rev poor.

Dawn L. Kussow: We expect a step down sequentially from first quarter Revpar to second quarter Revpar.

Dawn L. Kussow: A sequential step-down between these two quarters is normal course and has varied historically in amount based upon a number of factors, including product mix and care rates, as newer residents generally move in with lower acuity and therefore have a lower care rate than existing residents. We are pleased that our top line expectations will support another quarter of meaningful year-over-year revenue growth, particularly considering we received more than $4 million in state grant revenue in the second quarter of 2023.

Dawn L. Kussow: A sequential step down between these two quarters is normal course and has varied historically in amount based upon a number of factors, including product mix and cure rates as newer residents generally move in with lower acuity.

Dawn L. Kussow: And therefore have a lower cure rate than existing residents.

Dawn L. Kussow: We are pleased that our topline expectations will support another quarter of meaningful year over year revenue growth, particularly considering we received more than $4 million in state grant revenue in the second quarter of 2023.

Dawn L. Kussow: We expect to exit the second quarter with a capacity of 50,950 units, or 1,000 fewer units than at the same time last year as a result of owned and leased dispositions over the 12-month period. We believe that with our continued expected occupancy recovery as we build upon our strong occupancy start to this year, our year-over-year REVPAR growth rate will further improve throughout the year. When considering our second quarter Adjusted EBITDA guidance, we believe that beyond our expected favorable occupancy growth compared to the first quarter and continued appropriate expense management, the cadence of our results will be largely in line as it relates to the seasonal sequential performance as shown on the last page of our investor presentation.

Dawn L. Kussow: We expect to exit the second quarter with a capacity of 50950 units or 1000 fewer units than at the same time last year as a result of owned and leased dispositions over the 12 month period.

Dawn L. Kussow: We believe that with our continued expected occupancy recovery as we build upon our strong occupancy start to this year our year over year Revpar growth rate will further improve throughout the year.

Dawn L. Kussow: When considering our second quarter adjusted EBITDA guidance, we believe that beyond our expected favorable occupancy growth compared to the first quarter and continued appropriate expense management. The cadence of our results will be largely in line as it relates to the seasonal sequential performance as shown on the last piece.

Dawn L. Kussow: Age of our Investor presentation.

Dawn L. Kussow: In closing, we are pleased to have delivered another quarter of strong year-over-year growth. We are confident that our disciplined approach to achieving positive outcomes and sustainable growth, while maintaining a commitment to quality and excellence, will yield favorable results in 2024 and for decades to come. I'll now turn the call back over to Cindy.

Dawn L. Kussow: In closing we are pleased to have delivered another quarter of strong year over year growth.

Cindy: We are confident that our disciplined approach to achieving positive outcomes and sustainable growth.

Cindy: While maintaining our commitment to quality and excellence will yield favorable results in 2024 and for decades to come.

Dawn L. Kussow: I'll now turn the call back over to Cindy.

Lucinda M. Baier: I'd like to close by saying thank you. Thank you to our residents and their families for entrusting us with their care and allowing us the privilege of serving them. To our 36,000 associates for their dedication and commitment to enriching the lives of those we serve. And to our shareholders for their continued support in advancing our mission. And lastly, a special thank you to Guy Sansone and Mark Bromley for their years of service on Brookdale's Board of Directors, as they notified us that they will not be standing for re-election and will be retiring from our board at our 2024 annual meeting. Guy and Mark have played an important role at Brookdale, and we are grateful for their contribution. Operator, please open the line for questions.

Cindy: I'd like to close by saying thank you.

Lucinda M. Baier: Thank you to our residents and their families for entrusting us with their care and allowing us the privilege to serve them too.

Lucinda M. Baier: Our 36000 associates for their dedication and commitment to enriching the lives of those we serve two.

Lucinda M. Baier: To our shareholders for their continued support and advancing our mission.

Lucinda M. Baier: And lastly, a special thank you to Guy Samsung and Mark Bromley for their years of service to Brookdale Board of directors as they notified us that they will not be standing for reelection and will be retiring from our board at our 2024 annual meeting.

Lucinda M. Baier: Guy and Marc have played an important role at Brookdale and we are grateful for their contributions.

Lucinda M. Baier: Operator, please open the line for questions.

Operator: Thank you. If you would like to ask a question, please dial star followed by one on your keypad. Now, if you change your mind, please dial star followed by two to withdraw yourself from the queue. And finally, when preparing to ask your question, please ensure that your phone is unmuted locally. And our first question today is from the line of Ben Hendrix of RBC. Please go ahead. Your line is open.

Speaker Change: Thank you if you would like to ask a question. Please dial star followed by one on Youll keep up now if you turn.

Operator: And your mind, please dial star followed by two to vitro yourself from the queue and finally when preparing to ask you. A question. Please ensure that your phone is on mute locally.

Operator: And our first question today is from a lot of Ben Hendrix of RBC. Please go ahead. Your line is open.

Benjamin Hendrix: Great. Thank you very much and congratulations on the quarter. Just wanted to get some more details on the factors that give you confidence in outperforming the seasonal occupancy trends for the remainder of the year. Is that largely driven by staff retention efforts and advances you've made there, or are there other market dynamics? And then just related to that, clearly strong performance and controllable move out this quarter. But is the overall move out rate kind of where it needs to be at this point, or how much room to run do we have there? Thank you.

Benjamin Hendrix: Great. Thank you very much and congratulations on the quarter.

Benjamin Hendrix: Just wanted to get more details on the factors that give you confidence and outperforming the seasonal occupancy trends through the remainder of the year is that largely driven by the staff retention efforts and advances you've made there or are there other market dynamics and then just related to that clearly strong performance in controllable move outs this quarter.

Benjamin Hendrix: The overall move out rate kind of where it needs to be at this point or how much how much your room to run do we have there. Thank you.

Lucinda M. Baier: Hi Ben, and thanks so much for the question. This is Cindy.

Benjamin Hendrix: Hi, Dan and thanks, so much for the question. This is Andy I'll start with a response to the controllable move out rates and then Don can jump in.

Lucinda M. Baier: I'll start with a response to the controllable move out rates, and then Dawn can jump in. I'm really proud of the progress that we made this quarter. And quite honestly, since our recovery began in March of 2021, we would still like to see improvement in both controllable and non-controllable move outs relative to pre-pandemic. I think it makes sense to say that we are making progress, and we're focused on improving resident satisfaction.

Cindy: I'm really proud of.

Cindy: We made this quarter and quite honestly since the recovery began in March 2021.

Lucinda M. Baier: We would still like to see improvement in both controllable and non controllable move outs relative to pre pandemic I think it makes sense to say that we.

Lucinda M. Baier: Are making progress and we're focused on improving resident satisfaction and that is one of the ways that we think that our result.

Lucinda M. Baier: <unk> improved its also important to note that this year's rate increase was more.

Lucinda M. Baier: And that is one of the ways that we think that our results will improve. It's also important to note that this year's rate increase was more aggressive than historical norms but less aggressive than last year. And I think that played a critical role in helping us with controllable move outs. Now, Dawn, if you want to address the rest of the question. Yes, good morning.

Dawn: Aggressive than historical norms, but less aggressive than last year and I think that played a critical role in helping us with controllable move outs at Don If you want to address the rest of the question. Yes. Good morning, guys. How are you today.

Dawn L. Kussow: Yes, good morning, Ben. How are you today?

Benjamin Hendrix: Great, thank you. Yeah, thinking about our over performance in the fourth quarter to first quarter, where we had the 50 basis point decline in our occupancy, as Cindy mentioned in her prepared remarks, our move-ins were 7.5% better than our pre-pandemic move-ins, so we were very happy with that, and we would expect that to continue throughout the year.

Dawn: Great. Thank about.

Speaker Change: Yeah thinking about.

Benjamin Hendrix: <unk> in the fourth quarter to first quarter, where we had the 50 basis point decline in our occupancy.

Benjamin Hendrix: Mentioned in her prepared remarks, our move ins were seven 5% better than our pre pandemic move in so we were very happy with that with the strong move ins.

Benjamin Hendrix: No move out perspective, I think we saw less on the financial move outs compared to the prior year and so we continue to see that supply and demand.

Benjamin Hendrix: Coupled with the fact that the rate the rate was that rate increase was lower than the prior year. Additionally, Cindy talked about in her prepared remarks, our retention and turnover of progress and we think that that is playing into.

Benjamin Hendrix: That favorability and we would expect to continue that to continue throughout the year.

Speaker Change: Thank you very much.

Benjamin Hendrix: Okay.

Speaker Change: Thanks Pat.

Dawn L. Kussow: Our next question today is from the line of Joanna Gajuk of Bank of America. Please go ahead. Your line is open.

Benjamin Hendrix: Our next question today is from the line of Joanna <unk> of Bank of America. Please go ahead. Your line is open.

Joanna Sylvia Gajuk: Oh, thank you. Thank you. Good morning.

Joanna Sylvia Gajuk: Oh. Thank you. Thank you good morning, thanks for taking the questions.

Joanna Sylvia Gajuk: So I guess I'm, saying on occupancy for a second.

Joanna Sylvia Gajuk: Thanks for taking the questions. So I'll stay on occupancy for a second. So you mentioned you expect this positive, I guess, experience from Q1 to continue in Q2. And you talk about, you know, you expect to vote, you know, sequentially.

Joanna Sylvia Gajuk: So you mentioned you expect a positive I guess experienced from Q1 to continue in Q2 and you talk about.

Joanna Sylvia Gajuk: Correct.

Joanna Sylvia Gajuk: With you know sequentially, because when I look at.

Joanna Sylvia Gajuk: Because when I look at the historical data, you know, 2018, 2019, actually occupancy was down a quarter of a quarter, I guess, because of the new supply pressure there. But last year, right, Q2 versus Q1 was up 20 basis points. So is that what you're referring to? Is that the magnitude we should be thinking about in terms of the growth of Q2 versus Q1 occupancy?

Joanna Sylvia Gajuk: The historical data you know 2018, 2019, actual occupancy was down quarter over quarter, I guess because of the new supply pressure there, but last year right Q2 versus Q1 was up 20 basis points. So is that what you're referring to I'm kind of is that the magnitude we should be thinking about in terms of the growth Q2 versus.

Speaker Change: Q1, Okay, let's see.

Dawn L. Kussow: I think, Joanna, how you have to think about it is we would generally be similar in trend as the prior year, maybe not similar in percent. If you think about what happened Q2 into Q1 of 22 into 23, we're relatively flat coming because we were recovering from the pandemic. We're seeing that favorability, so not coming down from Q4 into Q1 of this year.

Speaker Change: I think Joanna how you have to think about it is we.

Dawn L. Kussow: It would generally be.

Dawn L. Kussow: Similar trend as prior year, maybe not similar in person.

Dawn L. Kussow: If you think about what has happened in Q2 into Q1.

Dawn L. Kussow: <unk> 'twenty two into 'twenty three were relatively flat coming because we were recovering from the pandemic, we're seeing that favorability so not coming down from Q4 into Q1 of this year, we're making that churn. If you will sooner. So that's evidenced by the occupancy that we just published last night.

Dawn L. Kussow: We're making that turn, if you will, sooner. So that's evidenced by the April occupancy that we just published last night, where our average occupancy was consistent with March. And then you can see our ending occupancy was up 10 basis points over March. So we would expect to make that turn sooner. We are making that turn sooner, and we expect that you'll see that in our Q2 occupancy.

Dawn L. Kussow: Our average occupancy was consistent with March and then you can see our ending occupancy was up 10 basis points over March, but we would expect to make.

Dawn L. Kussow: We would expect to make that turn sooner, we're making that turn sooner than we would expect that you'll see that in our Q2 occupancy.

Lucinda M. Baier: Right, that makes sense. And to that end, when it comes to occupancy, you know, continue to surprise on the upside, right? Like improvement is happening, you know, at a faster rate, you know, in those quarters. So I guess it relates to the prior question, but can you give us your views on the main drivers? I understand you have obviously been working hard on this, you know, not just this last quarter but the last couple of years.

Dawn L. Kussow: Right that makes sense and do that and.

Lucinda M. Baier: When it comes to the occupancy you know continue to surprise to the upside led our improvement as those happening you know are the fastest rate.

Lucinda M. Baier: This quarter, so I guess as it relates to you know prior question, but can you give us a you know a year.

Lucinda M. Baier: Your views effect the main drivers I understand you obviously been working hard on this are you know not just this last quarter, but for the last couple of years, but you know any specific examples you can point to in terms of what's happening obviously, the the the new supply that would be there is helping but you know any other industry level.

Lucinda M. Baier: But, you know, any specific examples you can point to in terms of, you know, what's happening? Obviously, the new supply not being there is helping, but, you know, any other, you know, industry-level drivers versus the company specific and to that end, you know, in your slides, right? You have this mention of, you know, targeting, you know, coming back to 2019. And I guess you added, you know, thinking about kind of returning to not really the 19 level, right?

Lucinda M. Baier: You know driver versus the company specific and do that and you know in your slides right do you have this.

Lucinda M. Baier: I'll mention off are you now targeting are you know coming back to 2019, and I guess you added you know thinking about the kind of returning to nobody there 19 level right because that was again.

Lucinda M. Baier: Because that was, again, impacted by the robust, you know, new construction happening across the industry, but really, you know, to the prior peak. So I guess it was 2014 or 15. So, you know, any updated views in terms of how long it's going to take you to, you know, either get to 84 or higher occupancy?

Lucinda M. Baier: Pack them buy that are robust.

Lucinda M. Baier: No new construction happening across the industry, but really.

Lucinda M. Baier: Prior peak, so I guess it was $2014 50. So you know any updated views in terms of you know how long it's going to it's going to take you to two you know.

Lucinda M. Baier: You do get to the 84 call it or or higher occupancy.

Lucinda M. Baier: Yeah, Joanna, let me start and then Dawn can jump in if she has something to add. First, our goal really is to get back to our 2019 profitability. And as I mentioned, we were incredibly proud of the fact that this quarter, if you annualize our first quarter results, we're back to 97% of pre-pandemic levels. And if you look at our same community adjusted operating income on a per unit basis, and you annualize the first quarter results, we're actually better than 2019.

Speaker Change: Yes, Joanna let me start and then Don can jump in if she has something to add.

Lucinda M. Baier: First our goal really is to get back to our 2019 profitability and as I mentioned, we were incredibly proud of the fact that this quarter. If you annualize our first quarter results were back to 97% of pre tax.

Lucinda M. Baier: And if you look at our same community adjusted operating income on a per unit basis, and you annualize that first quarter results were actually better than 2019 and so unlike.

Lucinda M. Baier: And so, unlike many in the industry, we really focused on recovering the cash flow of our business. And so we focused very hard on what the rate that we were charging for the services was, and what the costs that went into making a resident experience differentiated from our competition.

Lucinda M. Baier: Many in the industry, we really focused on recovering the cash flow of our business.

Lucinda M. Baier: And so we focused.

Lucinda M. Baier: Very hard.

Lucinda M. Baier: And what was the rate that we're charging for the services and what were the call that went into making our resident experience differentiated from our competition and I think that has boded well what I can tell you that as a team. There really are those three priorities that are really going to drive a recovery.

Lucinda M. Baier: And I think that has been voted well. What I can tell you is that, as a team, there really are those three priorities that are really going to drive our recovery, right? We have to make sure that everyone in the company is focused on getting every unit available in service at the best profitable rate as quickly as we can. That's going to be easier in some markets than others, but everybody is focused on that.

Lucinda M. Baier: Right.

Lucinda M. Baier: To make sure that everyone in the company is focused on getting every unit available in service at the best profitable rate as quickly as we can that is going to be easier in some markets than others, but everybody is focused on that and last year, we enhanced the executive director job description to make sure that they were.

Lucinda M. Baier: And last year, we enhanced the executive Director job description to make sure that they were focused on driving sales in addition to providing good quality care to our existing residents and focusing on their satisfaction. The second thing that we've made great progress on is retaining our associates. Now we know that when an executive director has been in place at least two years, that community has better profitability.

Lucinda M. Baier: We're focused on driving sales in addition to providing good quality care to our existing residents and focused on their satisfaction.

Lucinda M. Baier: One thing that we've made just great progress on is retaining our associates now we know that when an executive director has had in place at least two years that community has better profitability and we also know that we've got the stability in our leadership team that translates into stability of the community hourly associates and.

Lucinda M. Baier: And we also know that we've got stability in our leadership team that translates into stability for the community hourly associates. And that stability is important because our teams build relationships with the residents. In addition, when they have been in position for a long time, they're more effective at serving the residents. And so that translates into higher resident satisfaction, which is our third priority of providing residents with earning resident family trust by providing valued, high-quality services.

Lucinda M. Baier: The stability is important because our team sales relationships with the residents. In addition, when they have been in traditional long time theyre more effective at serving the rest of that and so that translates into higher resident satisfaction, which is our third priority of providing.

Lucinda M. Baier: Residents burning resident and family Trust by providing valued high quality services. The reason that's important is when you have residents who are happy with the care that you are providing they want their friends to live with them and they have a longer length of stay so that helps you build occupancy in the communities.

Lucinda M. Baier: The reason that this is important is that when you have residents who are happy with the care that you're providing, they want their friends to live with them, and they have a longer length of stay. So that helps you build occupancy in the community.

Lucinda M. Baier: So, what I can say is that we have a playbook that is working quite effectively. I think that we are going to continue to sort of drill down on the training that we did last year on the Brookdale way. We're pleased with our progress, but we have a long way to go in terms of getting back to pre-pandemic occupancy and margins and beyond. And that's why it's such an exciting time to enter Brookdale stock, because we've demonstrated that we can execute our plan successfully.

Lucinda M. Baier: So what I can say is we'd had a playbook that is working quite effectively.

Lucinda M. Baier: Think that we are going to continue to sort of drill down on the training that we did last year on the Brookdale way.

Lucinda M. Baier: I used with our progress, but we have a long way to go in terms of getting back to pre pandemic occupancy and margin and beyond and that's why it's such an exciting time to enter Brookdale stock.

Lucinda M. Baier: Demonstrated that we can execute our plan successfully and at the same time, there's still a lot of opportunity in front of us backed by strong supply and demand fundamentals.

Lucinda M. Baier: And at the same time, there's still a lot of opportunity in front of us, backed by strong supply and demand fundamentals. And you'll continue to see us roll out Brookdale Health Plus because we're just so far ahead of the industry in terms of our ability to participate in value-based care and really provide a differentiated experience on the clinical side.

Lucinda M. Baier: Can you just see us roll out Brookdale health clubs, because we're just so far ahead of the industry in terms of our ability to participate in value based care and really provide a differentiated experience on the clinical side for our residents.

Speaker Change: And Joanna.

Lucinda M. Baier: I'll go ahead.

Lucinda M. Baier: What I would point back to dwell just adding onto what Cindy said is slide 24, and 25 in our investor presentation, where we laid out our pre pandemic operating margins.

Lucinda M. Baier: We're nearing Cindy had said in our prepared remarks.

Lucinda M. Baier: We are over our 2019 on a per unit basis operating margin, but you can see how close we are to those pre pandemic operating margin and then just the runway that we have from an occupancy standpoint, and how excited we are about that.

Lucinda M. Baier: Yes, exactly that's what I was trying to think you and Cindy you mentioned not help us broke ground on and it was on my list to it.

Lucinda M. Baier: In terms of the rollout so I don't remember.

Lucinda M. Baier: Have you guys thought talk about like how many communities currently have.

Lucinda M. Baier: I have it in place and I guess, what are the plans in terms of the rollout like how aggressive you are in terms of sort.

Lucinda M. Baier: Sort of you know lapping those seats are in the across the portfolio. Thank you.

Lucinda M. Baier: Sure today, Brookdale health pluses and close to 50 communities and our goal is to have it in 130 communities by year end one of the things that we think about with regards to the rollout. It's we're scaling it clinical program that involves changing every single aspect community operations. So we want to move quickly.

Lucinda M. Baier: But we also want to move carefully to make sure that we're able to appropriately source oriented care managers, who can help us with that that we're able to train our people. So that will help us communities operate effectively and we're excited about the fact that by year end, we'll be at 130 <unk>.

Lucinda M. Baier: And again I couldnt be more excited about the fact that our industry Trade Association argentum recognize brookdale hub class.

Lucinda M. Baier: One of the best of the best programs.

Lucinda M. Baier: And that just is a testament to how far we are ahead of the industry in this area.

Speaker Change: Thank you so much thanks for taking the question.

Speaker Change: Thanks Joanna.

unknown: [inaudible]

Lucinda M. Baier: As a reminder for any further questions. Please dial star followed by one on your telephone keypad now.

Dawn L. Kussow: What I would point back to as well, just adding on to what Cindy said, is slides 24 and 25 in our investor presentation, where we laid out our pre-pandemic operating margins. We're nearing, as Cindy had said in her prepared remarks, we are over our 2019 on a per unit basis operating margin, but you can see how close we are to those pre-pandemic operating margins. And then just the runway that we have from an occupancy standpoint and how excited we are about that.

Joanna Sylvia Gajuk: Yeah, exactly. That's what I was referring to.

Lucinda M. Baier: Since Cindy mentioned the Help Us program, and it was on my list too, in terms of the rollout, so, I don't remember, have you guys talked about how many communities currently have it in place? And I guess what the plans are in terms of the rollout? Like how aggressive you are in terms of sort of, you know, planting those seeds across the portfolio? Thank you.

Joanna Sylvia Gajuk: And our next question today is from the line of Josh Raskin of Nephron Research. Please go ahead. Your line is open.

Lucinda M. Baier: Sure, today Brookdale HealthPlus is in close to 50 communities, and our goal is to have it in 130 communities by year end. One of the things that we think about with regard to the rollout is that we're scaling a clinical program that involves changing every single aspect of community operations. So, we want to move quickly, but we also want to move carefully to make sure that we're able to appropriately source our end care managers who can help us with that.

Lucinda M. Baier: That we're able to train our people so that the HealthPlus communities operate effectively, and we're excited about the fact that, by year end, we'll be at 130 communities. And again, I couldn't be more excited about the fact that our industry trade association, Argentum, recognized Brookdale HealthPlus as one of the best of the best programs. And that is just a testament to how far we are ahead of the industry in this area. Thank you.

Speaker Change: Hi, Thanks, maybe just taking a step back if you could speak about your development plans I guess, both sort of short and intermediate term and then the long term and I'm, specifically interested in how you're thinking about changing populations and state demographics and things like that I'm curious also you know as we've seen a big ramp in home.

Lucinda M. Baier: Health care services are you seeing any impact from that on demand or individuals' able to live at home longer and they're in specific areas.

Joanna Sylvia Gajuk: Thank you so much. Thanks for taking the question.

Speaker Change: Good question, Josh. We currently don't have a lot of development plans at Brookdale, we're very focused on winning the recovery with our existing portfolio as we think about what the right answer is we are very focused on serving resident in there.

Operator: As a reminder, for any further questions, please dial star followed by one on your telephone keypad now. And our next question today is from the line of Josh Raskin of Nephron Research. Please go ahead. Your line is open.

Joshua Richard Raskin: Hi, thanks. Maybe just taking a step back, if you could speak about your development plans, I guess both sort of short, you know, intermediate term, and then the long term. And I'm specifically interested in how you're thinking about changing populations and state demographics and things like that. I'm also curious, you know, as we've seen a big ramp in home-based healthcare services, are you seeing any impact from that on demand or individuals able to live at home longer in specific areas?

Joshua Richard Raskin: Hall, which are our communities.

Joshua Richard Raskin: And we think that.

Lucinda M. Baier: Good questions, Josh. We currently don't have a lot of development plans at Brookdale. We're very focused on winning the recovery with our existing portfolio. As we think about what the right answer is, we are very focused on serving residents in their homes, which are our communities, and we think that Brookdale Health Plus and adding health care to our communities is the right answer. One of the things that you may or may not know is that we have physicians and nurse practitioners who are in many of our communities, and so our residents are able to get health care services right at home.

Speaker Change: Brookdale health sauce, and adding health care and to our communities is the right answer one of the things that you may or may not know is that we have physicians and nurse practitioners, who around in many of our communities and so our residents are able to get health care services right at home, we're continuing to look to see what additional health care.

Lucinda M. Baier: We're continuing to look to see what additional health care services could be provided by third parties in our communities. I think you probably know that, historically, we've had home health and hospice within our communities. We are continuously focusing on the quality of the programs within our communities, whether that is quality dining and nutrition, whether that is our resident social engagement, whether that's the home life setting without the burden of homeownership, but most particularly health and wellness. What you'll see over the longer term, though, is we will look to increase the density in the markets where we think there's growth and where we've got a strong process.

Lucinda M. Baier: <unk> could be provided by.

Lucinda M. Baier: By third parties in our communities I think you'd probably know that historically, we've had home health and hospice within our communities.

Lucinda M. Baier: We are continuously focusing on the quality.

Lucinda M. Baier: The programs within our communities, whether that is quality dining and nutrition, whether that is a resident in social engagement, whether that's the whole life setting without the burden of homeownership, but most particularly health and wellness and what youll see over the longer term, though is we will look to increase the density and the market.

Lucinda M. Baier: That's where we think there's growth and where we've got a strong presence.

unknown: Yeah, I'm sorry. I've spoken to work about work development. I meant more about

Speaker Change: Yeah I'm sorry.

Lucinda M. Baier: Spoken word development I meant more of that.

Joshua Richard Raskin: I was going to say, the last part of your question concerns home base. We have not seen an impact of home-based services at this point in time, and the age of our residents over the last few years hasn't really changed in terms of the age that they're moving in at. In fact, what we've actually seen is a lower acuity resident moving into Brookdale, and that is even compared to pre-pandemic.

Speaker Change: Go ahead, sorry, I was going to say the last part.

Joshua Richard Raskin: Yeah on the Homebase, we have not seen an impact of home based services at this point in time.

Joshua Richard Raskin: The age of our residents over the last few years haven't really changed in terms of the age that they're moving it at in fact, what we've actually seen is a lower acuity resident is moving into brookdale and that is even compared to pre pandemic.

Dawn L. Kussow: Gotcha. So I was gonna say I sort of misspoke; I shouldn't have used the word development. I meant more around sort of like your, you know, development CapEx at the local level, like, you know, sort of developing more memory care. Is that more targeted? Or, you know, is there sort of a general thought on that? I know those numbers have been relatively low in recent years.

Joshua Richard Raskin: Gotcha Gotcha, I was going to say I'm, sorry, I misspoke I shouldn't use the word development I've met more around sort of like your.

Dawn L. Kussow: Development Capex at the local level like you know sort of developing more memory care or is that more targeted or is there sort of a general thought on that I know those numbers have been relatively low in recent years.

Lucinda M. Baier: We aren't currently doing much in terms of development capital in terms of changing the configuration of a community from assisted living to memory care, but we're very pleased with the mix that we have. We're much higher in assisted living and memory care than the industry and lower in terms of SNF, the 0.2% of our portfolio. So we're pretty pleased with the position of our portfolio and really looking forward to improving the execution and capturing the opportunities in front of us.

Dawn L. Kussow: We arent currently doing.

Dawn L. Kussow: March in terms of development capital in terms of changing the configuration of the community fall in assisted living memory care. We're very pleased with the mix that we have or much higher assisted living and memory care than the industry and lower in terms of Smith with one 2% of our portfolio. So we're pretty pleased with the position of our portfolio.

Lucinda M. Baier: I'm really looking forward to improving the execution and capturing the opportunities in front of us.

Joshua Richard Raskin: Gotcha. And then you sort of touched on this, Cindy, but, you know, I understand Brookdale Health Plus isn't an explicit upcharge for residents. It's more kind of built into the rents. But is there any thought of getting back into health services and actually charging for specific services? I know, you know, you sold the home base to, you sold the JV to HGA, but I'm just curious if there's an appetite to sort of get back into other value-added services. It's a good question, Josh, and I'm

Speaker Change: Got you and then you sort of touched on this journey, but you know I understand Brookdale health pluses and an explicit upcharge to residents, it's more kind of built into the rents.

Joshua Richard Raskin: But is there a thought of getting back into health services and actually charging for specific services I know you sold the Homebase to you sold the JV debt.

Joshua Richard Raskin: But I'm just curious if there's an appetite to sort of get back into other value added services.

Cindy: It's a good question, Josh and I'm very proud of the transaction that we had with HCA I think we got a very good exit from that service line I think we're more interested at this point of making sure that our residents have access to the services within our communities.

Lucinda M. Baier: It's a good question, Josh, and I'm very proud of the transaction that we had with HCA. I think we got a very good exit from that service line. I think we're more interested in this point of making sure that our residents have access to the services within our communities and less interested in adding a new business line. If you look at just the investor presentation and the opportunity that's in front of us, there is so much opportunity for getting back to our pre-pandemic and our historical high occupancy and margins. That's where we're focused. And I think that's the right answer for us today.

Lucinda M. Baier: And less with the.

Lucinda M. Baier: The adding a new business line. If you look at just the investor presentation and the opportunity that's in front of us.

Lucinda M. Baier: So much opportunity from getting back to our pre pandemic and our historical high occupancy and margin, that's where we're focused and I think that's the right answer for us today.

Speaker Change: Okay. Thanks.

Lucinda M. Baier: Gosh.

Operator: Thank you. With no further questions in the queue at this time, this will conclude the Brookdale Senior Living 1Q 2024 earnings call. Thank you to everyone who has joined us today. You may now disconnect your lines.

Speaker Change: Thank you with no further questions in the queue. At this time this will conclude the Brookdale senior living <unk> 'twenty 'twenty four earnings call.

Operator: Thank you to everyone who has joined US today you may now disconnect your lunch.

Operator: Okay.

Operator: Yeah.

Operator: Okay.

Operator: Yeah.

Q1 2024 Brookdale Senior Living Inc Earnings Call

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