Q1 2026 Brookdale Senior Living Inc Earnings Call

May 7, 2026

Speaker #1: And welcome to Brookdale Senior Living's first quarter 2026 earnings call. Participating on today's call are Nick Stengle, Brookdale's Chief Executive Officer, Dawn Kussow, our Executive Vice President and Chief Financial Officer, and Chad White, our Executive Vice President, General Counsel, and Secretary.

Speaker #1: On today's call, we will discuss first quarter 2026 results, as well as our financial guidance for the 2026 year. We'll also provide other general business updates.

Speaker #1: During today's call, our remarks including our answers to your questions will include forward-looking statements pursuant to the Safe Harbor provisions of the Cybersecurities Litigation Reform Act.

Speaker #1: These statements are made as of today's date and we expressly disclaim any obligation to update these statements in the future. Actual results and performance may differ materially from forward-looking statements.

Speaker #1: Certain other factors that could cause actual results to differ are detailed in the earnings release issued after market yesterday, as well as in our Securities and Exchange Commission filings, including the risk factors described in our annual report on Form 10-K and quarterly reports on Form 10-Q.

Speaker #1: I direct you to the earnings release for the full Safe Harbor statement. Also, please note that during this call, management will discuss non-GAAP financial measures for reconciliation of each non-GAAP measure to the most comparable GAAP measure.

Speaker #1: I direct you to the earnings release and to the company's quarterly supplemental financial information, which may be found at brookdaleinvestors.com and was furnished on an 8-K yesterday.

Speaker #1: With that, it is my pleasure to turn the call over to our CEO, Nick Stengle.

Speaker #2: Thank you, Mike, and good morning, everyone. I appreciate you for joining us on today's call and for your interest in Brookdale. Before I get into the details of the quarter, I would like to highlight that I have been Brookdale's CEO for just over 7 months.

Speaker #2: During this time, we have continued the transformational pivot that began nearly a year ago towards Brookdale being first and foremost an operating company. While also acknowledging and taking advantage of the fact that we are a company that has built upon a foundation of specialized senior housing real estate, that is becoming increasingly scarce with each passing quarter.

Speaker #2: Brookdale's pivot has included meaningful changes in our structure, which in turn define the company that we are. While some of these changes were temporarily disruptive during the fourth quarter and the first couple of months of 2026, as any structural change can be, they are absolutely critical in properly positioning our company for this very moment and for the future.

Speaker #2: As I will describe in more detail shortly, we are already seeing the positive impacts of these changes in our March and April results, and those results give us renewed confidence in the annual guidance and multi-year projections we presented earlier this year.

Speaker #2: Let me recap some of these changes. First, in October, we implemented our regional leadership structure and redefined reporting relationships at all levels of our company.

Speaker #2: We created six geographic regions, each led by a single regional vice president of operations, and a dedicated regional leadership team encompassing all the key functions of a senior living company.

Speaker #2: We repositioned ourselves in effect as six companies of roughly 85 communities each, while still supported with the resources available from our corporate headquarters team.

Speaker #2: Second, in November, we hired Mary Sue Patchett to the role of Chief Operating Officer, Brookdale's first COO in over a decade. Then, in short order, we further bolstered our operations-first approach by formally aligning the operating model at every layer of the company.

Speaker #2: Practically, this means that our operations team, our sales team, and our clinical team share a common structure and alignment at every level of the company.

Speaker #2: At the executive level, this means that our head of sales and head of clinical now both report into our COO. This improved structure makes a clear connection with a single line of enablement and a single line of accountability from our executive leadership team, namely me as the CEO, down into each of our communities.

Speaker #2: With this significant reorganization, many of our community executive directors and other key field leaders experienced a change in their reporting relationships. While absolutely critical for our future success, there is no doubt that the cumulative effect of all these changes did temporarily impact our results, in Q4 and early Q1.

Speaker #2: In February, we also created a new position and hired our senior vice president of strategic operations. This new role consolidates three critical facets of any senior living company: our pricing, our labor management, and our capital deployment under a single accountable leader.

Speaker #2: Through all of this, we have also continued to dispose of the least and owned communities that were previously announced as well as exiting much of our third-party managed business that I will describe in further detail shortly.

Speaker #2: From the start of 2025 through today, Brookdale has exited from over 100 communities, including owned leased and managed, and that represents a lot of work and a lot of distraction for all our leaders.

Speaker #2: In short, after a year of near constant change, not to mention me stepping in as the third CEO to serve at that time period, the tables now set for Brookdale to fully capitalize on the supply and demand realities that exist in the senior living industry.

Mike: Welcome to Brookdale Senior Living's Q1 2026 Earnings Call. Participating on today's call are Nick Stengle, Brookdale's Chief Executive Officer, Dawn Kussow, our Executive Vice President and Chief Financial Officer, and Chad White, our Executive Vice President, General Counsel, and Secretary. On today's call, we will discuss Q1 2026 results as well as our financial guidance for the 2026 year. We'll also provide other general business updates. During today's call, our remarks, including our answers to your questions, will include forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act. These statements are made as of today's date, and we expressly disclaim any obligation to update these statements in the future. Actual results and performance may differ materially from forward-looking statements.

Michael Grant: Welcome to Brookdale Senior Living's Q1 2026 Earnings Call. Participating on today's call are Nick Stengle, Brookdale's Chief Executive Officer, Dawn Kussow, our Executive Vice President and Chief Financial Officer, and Chad White, our Executive Vice President, General Counsel, and Secretary. On today's call, we will discuss Q1 2026 results as well as our financial guidance for the 2026 year. We'll also provide other general business updates. During today's call, our remarks, including our answers to your questions, will include forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act. These statements are made as of today's date, and we expressly disclaim any obligation to update these statements in the future. Actual results and performance may differ materially from forward-looking statements.

Speaker #2: We have the team we want, and we have the portfolio of communities we want. For all these reasons, we remain confident in our 2026 annual guidance of 8 to 9 percent rev bar growth and adjusted EBITDA range of 502 to 516 million dollars, as well as with our multi-year growth outlook of mid-teens annual growth of adjusted EBITDA.

Speaker #2: Now, jumping to our results. The core occupancy got off to a slower start in January and into February. While facing the seasonal slowdown that typically occurs in these months, this year we also faced a combination of atypical events, including two meaningful winter storms, absorption of a significant annual in-place rate increase we implemented effective January 1st, and our numerous ongoing leadership and structural changes and initiatives that I just described.

Mike: Certain of the factors that could cause actual results to differ are detailed in the earnings release we issued after market yesterday, as well as in our Securities and Exchange Commission filings, including the risk factors described in our annual report on Form 10-K and quarterly reports on Form 10-Q. I direct you to the earnings release for the full safe harbor statement. Also, please note that during this call, management will discuss non-GAAP financial measures. For reconciliations of each non-GAAP measure to the most comparable GAAP measure, I direct you to the earnings release and to the company's quarterly supplemental financial information, which may be found at brookdaleinvestors.com and was furnished on an 8-K yesterday. With that, it is my pleasure to turn the call over to our CEO, Nick Stengle.

Michael Grant: Certain of the factors that could cause actual results to differ are detailed in the earnings release we issued after market yesterday, as well as in our Securities and Exchange Commission filings, including the risk factors described in our annual report on Form 10-K and quarterly reports on Form 10-Q. I direct you to the earnings release for the full safe harbor statement. Also, please note that during this call, management will discuss non-GAAP financial measures. For reconciliations of each non-GAAP measure to the most comparable GAAP measure, I direct you to the earnings release and to the company's quarterly supplemental financial information, which may be found at brookdaleinvestors.com and was furnished on an 8-K yesterday. With that, it is my pleasure to turn the call over to our CEO, Nick Stengle.

Speaker #2: Our consolidated first-quarter occupancy of 82.1 percent improved by 280 basis points over the prior years' first quarter. On the same community basis, our first-quarter occupancy was 82.7 percent, up 170 basis points from 81.0 percent in the prior year year quarter.

Speaker #2: Looking ahead, the key selling season in senior housing is roughly May through September. Historically, April occupancy tends to be up slightly sequentially, but this year we experienced a relatively stronger April.

Speaker #2: As we included in our earnings release, April consolidated occupancy increased 30 basis points sequentially to 82.3 percent on a consolidated basis while we improved 30 basis points to 82.8 percent on the same community basis.

Nick Stengle: Thank you, Mike, and good morning, everyone. I appreciate you for joining us on today's call and for your interest in Brookdale. Before I get into the details of the quarter, I would like to highlight that I have been Brookdale's CEO for just over seven months. During this time, we have continued the transformational pivot that began nearly a year ago towards Brookdale being first and foremost an operating company, while also acknowledging and taking advantage of the fact that we are a company that is built upon a foundation of specialized senior housing real estate that is becoming increasingly scarce with each passing quarter. Brookdale's pivot has included meaningful changes in our structure, which in turn define the company that we are.

Speaker #2: This strengthening occupancy in April is reflective of improved execution, tied to the organizational changes we have made in continuing overall strengthening and market conditions.

Speaker #2: So to the expense side, labor and other facility operating expenses declined year over year, along with our reduction in units, but also showed minor de-leveraging as a percent of revenue based on lower occupancy and also due to the pace of changes at Brookdale, including renewed operations, organizational structure, our ERP implementation, and the many changes to our leadership team.

Speaker #2: Frankly, our expense and productivity management during the first two months of the quarter were negatively impacted by all these changes, and we have taken decisive action steps.

Nick Stengle: While some of these changes were temporarily disruptive during Q4 and the first couple months of 2026, as any structural change can be, they are absolutely critical in properly positioning our company for this very moment and for the future. As I will describe in more detail shortly, we are already seeing the positive impacts of these changes in our March and April results. Those results give us renewed confidence in the annual guidance and multi-year projection we presented earlier this year. Let me recap some of these changes. First, in October, we implemented our regional leadership structure and redefined reporting relationships at all levels of our company. We created six geographic regions, each led by a single regional vice president of operations and a dedicated regional leadership team encompassing all the key functions of a senior living company.

Speaker #2: We are already seeing the initial positive impact of our efforts, as our senior housing operating margin for March was on target after lagging our budget for the first two months of the quarter.

Speaker #2: We also made progress on overtime and contract labor sequentially, and as more opportunity ahead to improve labor utilization as occupancy continues to grow. Additionally, the winter storms, which impacted our occupancy as previously discussed, also impacted us on the cost side, through elevated utility expenses, repair and maintenance expenses, including general repairs, snow removal, and tree work, and also food expenses.

Speaker #2: Total direct additional costs from the storm were approximately 3 to 4 million dollars during the quarter. Next, I would like to take a moment to discuss our management portfolio.

Speaker #2: While it is a small portion of our revenue and operating income, it will be helpful to provide some additional color. For some background, in managed communities, the manager earns a fee, typically a mid-single-digit percentage of revenue, meaning that the manager does not participate at a meaningful economic level in the upside or downside of a given community.

Nick Stengle: We reposition ourselves, in effect, as 6 companies of roughly 85 communities each, while still supported with the resources available from our corporate headquarters team. Second, in November, we hired Mary Sue Patchett to the role of Chief Operating Officer, Brookdale's first COO in over a decade. In short order, we further bolstered our operations-first approach by formally aligning the operating model at every layer of the company. Practically, this means that our operations team, our sales team, and our clinical team share a common structure and alignment at every level of the company. At the executive level, this means that our head of sales and head of clinical now both report into our COO.

Speaker #2: At our longer-term holders know, we have actively decreased our participation in managed contracts from 229 managed communities at the end of 2017 to just 7 communities as of today, and we expect to reduce that number even further.

Speaker #2: As a result of our reduction of managed communities, you will see that during the first quarter we booked an exit fee of 2.5 million dollars in management fees.

Speaker #2: Looking forward, we anticipate management fees to be roughly 1 million dollars for the remainder of 2026. We have already taken internal steps to ensure that our organizational structure, and our G&A, our right size to account for this reduction in management fees, and we don't expect any impact to our adjusted EBITDA guidance from this change.

Nick Stengle: This improved structure makes a clear connection with a single line of enablement and a single line of accountability from our executive leadership team, namely me as the CEO, down into each of our communities. With this significant reorganization, many of our community executive directors and other key field leaders experienced a change in their reporting relationships. While absolutely critical for our future success, there is no doubt that the cumulative effect of all these changes did temporarily impact our results in Q4 and early Q1. In February, we also created a new position and hired our Senior Vice President of Strategic Operations. This new role consolidates three critical facets of any senior living company, our pricing, our labor management, and our capital deployment under a single accountable leader.

Speaker #2: Factoring in all the items I just highlighted, Brookdale's adjusted EBITDA improved 5.6 percent over the first quarter of 2025, despite a 14 percent year-over-year decrease in our weighted average consolidated unit count.

Speaker #2: Additionally, it is important to note that the underlying performance was better than that as the first quarter of 2025 benefited from early G&A rationalization that we took in advance of the revenue reduction that occurred later in the year, with our planned dispositions of communities.

Speaker #2: Per my comments on management fees and additional G&A rationalization, the second quarter's adjusted EBITDA growth will be in a similar range to that of the first quarter.

Nick Stengle: Through all of this, we have also continued to dispose of the leased and owned communities that were previously announced, as well as exiting much of our third-party managed business that I will describe in further detail shortly. From the start of 2025 through today, Brookdale has exited from over 100 communities, including owned, leased, and managed, and that represents a lot of work and a lot of distraction for all our leaders. In short, after a year of near constant change, not to mention me stepping in as the 3rd CEO to serve in that time period, the table is now set for Brookdale to fully capitalize on the supply and demand realities that exist in the senior living industry. We have the team we want, and we have the portfolio of communities we want.

Speaker #2: And then we expect more robust improvement in the second half of the year. We have added a slide, slide 12, to our quarterly investor presentation that speaks to the pacing of quarters in 2026.

Speaker #2: Again, we remain confident in our guidance of 8 to 9 percent rev par growth and 502 to 516 million dollars of adjusted EBITDA for the full year of 2026.

Speaker #2: Turning now to our service delivery. Brookdale continues to define excellence in senior living. In early April, Brookdale had 294 of our communities recognized for the best senior living award by U.S.

Speaker #2: News and World Report. This is the fifth consecutive year that Brookdale has garnered the most awards of any senior living operator. We're incredibly proud of this recognition, and we are thankful to our over 30,000 community associates who deliver this outstanding level of service every day.

Nick Stengle: For all these reasons, we remain confident in our 2026 annual guidance of 8% to 9% RevPAR growth and Adjusted EBITDA range of $502 to 516 million, as well as with our multi-year growth outlook of mid-teens annual growth of Adjusted EBITDA. Jumping to our results. The core occupancy got off to a slower start in January and into February. While facing the seasonal slowdown that typically occurs in these months, this year, we also faced a combination of atypical events, including two meaningful winter storms, absorption of the significant annual in-place rate increase we implemented effective January first, and our numerous ongoing leadership and structural changes and initiatives that I just described. Our consolidated Q1 occupancy of 82.1% improved by 280 basis points over the prior year's Q1.

Speaker #2: In addition to this external validation, Brookdale's internally tracked metrics also have continued to strengthen. Our February and March 2026 trailing 12-month net promoter scores or NPS were our highest levels achieved since we resumed monthly surveys following the COVID pandemic in 2022.

Speaker #2: Similarly, our associate turnover and Q3 leader turnover have continued to improve and are now the lowest since the beginning of the COVID pandemic. These improved metrics are indicative of the success of our recent organizational changes and the cultural transformation we have undertaken.

Speaker #2: Taken together, they are leading indicators of the accelerating improvement in resident satisfaction, occupancy, and operating margin that we expect over the remainder of the year.

Speaker #2: At Brookdale, we are truly excited for our future, both this year and in the coming years. Equally, we are appreciative for each of our residents, associates, and shareholders for your trust in our team.

Nick Stengle: On a same community basis, our Q1 occupancy was 82.7%, up 170 basis points from 81.0% in the prior quarter. Looking ahead, the key selling season in senior housing is roughly May through September. Historically, April occupancy tends to be up slightly sequentially, but this year we experienced a relatively stronger April. As we included in our earnings release, April consolidated occupancy increased 30 basis points sequentially to 82.3% on a consolidated basis, while we improved 30 basis points to 82.8% on a same community basis. This strengthening occupancy in April is reflective of improved execution tied to the organizational changes we have made in continuing overall strengthening in market conditions.

Speaker #2: At a company, we remain on track to unlock the intrinsic value of Brookdale's specialized services and real estate assets. I will now turn the call over to Brookdale CFO, Don Kussow, for more details on our financial performance and outlook.

Speaker #1: Thank you, Nick. This morning, I'll recap Brookdale's first quarter financial performance and our financial outlook for the year. I'll also discuss progress on our ongoing portfolio transition and other balance sheet improvements.

Speaker #1: Turning first to the first quarter financial results. Comparing our first quarter 2026 to the prior-year quarter, we grew our consolidated occupancy by 280 basis points to 82.1 percent, and our same community occupancy by 170 basis points to 82.7 percent.

Speaker #1: The first quarter marked 17th consecutive quarter that Brookdale has delivered 100 basis points or more of year-over-year consolidated occupancy growth. Sequentially, our first quarter consolidated occupancy declined 40 basis points from the fourth quarter of 2025.

Nick Stengle: Turning to the expense side, labor and other facility operating expenses declined year over year, along with our reduction in units, but also showed minor deleveraging as a percent of revenue based on lower occupancy and also due to the pace of changes at Brookdale, including our new operations organizational structure, our ERP implementation, and the many changes to our leadership team. Frankly, our expense and productivity management during the 2 months of the quarter were negatively impacted by all of these changes. We have taken decisive action steps. We are already seeing the initial positive impact of our efforts as our senior housing operating margin for March was on target after lagging our budget for the 2 months of the quarter. We also made progress on overtime and contract labor sequentially, and there is more opportunity ahead to improve labor utilization as occupancy continues to grow.

Speaker #1: Seasonally, the first quarter typically declines from the fourth quarter, due to higher levels of flu and other winter illnesses, the impact of winter weather, holiday timing, and also as a result of our annual in-place rate increases, which occurs on January 1st each year.

Speaker #1: Occupancy in the first quarter was modestly behind our expectations, reflecting the impact of the winter storms in the quarter. In contrast, our April occupancy sequential growth of 30 basis points was stronger than our historical average post-COVID April sequential occupancy improvement of 10 to 20 basis points.

Speaker #1: This level of sequential occupancy growth speaks to our improving execution under the new operating structure. For the first quarter, resident fees of $722 million declined 7.1 percent from the first quarter of last year.

Nick Stengle: Additionally, the winter storms which impacted our occupancy, as previously discussed, also impacted us on the cost side through elevated utility expenses, repair and maintenance expenses, including general repairs, snow removal, and tree work, and also food expenses. Total direct additional costs from the storm were approximately $3 to 4 million during the quarter. Next, I would like to take a moment to discuss our managed portfolio. While it is a small portion of our revenue and operating income, it will be helpful to provide some additional color. For some background, in managed communities, the manager earns a fee, typically a mid-single digit percentage of revenue, meaning that the manager does not participate at a meaningful economic level in the upside or downside of a given community.

Speaker #1: The key factors underpinning the revenue decline versus last year were a 14.2 percent reduction in our consolidated average units, partially offset by an 8.2 percent rev par increase, and a reminder we guided to 8 to 9 percent rev par growth for 2026, and we're within that range to start the year.

Speaker #1: We expect year-over-year rev par growth to accelerate over the remainder of the year based on improving community-level execution and the positive mixed impact of dispositions.

Speaker #1: The 8.2 percent year-over-year increase in rev par was driven by a balance of rate improvement and the 280 basis point increase in weighted average occupancy.

Speaker #1: Note that the unit mix which stems from our decision to exit a number of communities including many that were underperforming also positively impacted our reported rev par, leading to a consolidated rev par increase of 8.2 percent versus the same community rev par increase of 5.5 percent.

Nick Stengle: As our longer-term holders know, we have actively decreased our participation in managed contracts from 229 managed communities at the end of 2017 to just seven communities as of today, and we expect to reduce that number even further. As a result of our reduction of managed communities, you will see that during Q1, we booked an exit fee of $2.5 million in management fees. Looking forward, we anticipate management fees to be roughly $1 million for the remainder of 2026. We have already taken internal steps to ensure that our organizational structure and our G&A are right-sized to account for this reduction in management fees, and we don't expect any impact to our Adjusted EBITDA guidance from this change.

Speaker #1: Resident rate increases were also beneficial to the quarter. As revenue per occupied room, or rev par, essentially a realized pricing metric, increased 4.5 percent year-over-year.

Speaker #1: We successfully implemented a high single-digit in-place rate increase on January 1st. Note that the first quarter of 2026 year-over-year rev par comparison was impacted by strategic rate concessions taken starting in the second quarter of 2025 to accelerate occupancy.

Nick Stengle: Factoring in all the items I've just highlighted, Brookdale's Adjusted EBITDA improved 5.6% over the Q1 2025, despite a 14% year-over-year decrease in our weighted average consolidated unit count. It is important to note that the underlying performance was better than that as the Q1 2025 benefited from early G&A rationalization that we took in advance of the revenue reduction that occurred later in the year with our planned dispositions of communities. Per my comments on management fees and additional G&A rationalization, the Q2's Adjusted EBITDA growth will be in a similar range to that of the Q1, we expect more robust improvement in the H2 of the year. We have added a slide 12, to our quarterly investor presentation that speaks to the pacing of quarters in 2026.

Speaker #1: Sequentially, our rev par grew 6 percent from the fourth quarter of 2025, reflecting the benefit from the rate increase. While we typically expect rev par decline throughout a given year, for 2026 we expect our year-over-year rev par performance especially for the second half of the year to be better than our typical seasonal trends as we annualize concessions embedded in the prior-year periods.

Speaker #1: Now let's turn to expenses. As Nick mentioned, the first quarter expense impact of significant winter storms with approximately 3 to 4 million dollars. On a consolidated basis, first quarter expense per occupied unit or exp par increased 3.2 percent over the first quarter of 2025.

Speaker #1: Our 4.5 percent increase in rev par exceeded the 3.2 percent increase in exp par, generating a $130 basis point positive spread between realized revenue and expenses per occupied unit.

Nick Stengle: Again, we remain confident with our guidance of 8% to 9% RevPAR growth and $502 to $516 million of Adjusted EBITDA for the full year of 2026. Turning now to our service delivery. Brookdale continues to define excellence in senior living. In early April, Brookdale had 294 of our communities recognized for the Best Senior Living Award by U.S. News & World Report. This is the 5th consecutive year that Brookdale has garnered the most awards of any senior living operator. We're incredibly proud of this recognition, and we are thankful to our over 30,000 community associates who deliver this outstanding level of service every day. In addition to this external validation, Brookdale's internally tracked metrics also have continued to strengthen.

Speaker #1: Beyond the storm impact, we did see modest same community margin compression due to the operating leverage impact of the seasonal occupancy decline. We expect a resumption of positive margin trends as we first grow occupancy through the year, and second, move lower occupied communities up the occupancy bands and realize the associated operating income flow-through.

Speaker #1: On a consolidated basis, senior housing operating income grew 14 percent sequentially with margin expansion of 330 basis points. Year-over-year operating margin improved 80 basis points while operating income declined 4 percent on a 14 percent decline in units since the prior year.

Speaker #1: Labor is our single largest cost item at 64 percent of total facility operating expenses during the quarter. First quarter, same community labor expense as a percent of revenue improved 20 basis points year-over-year and we expect to realize additional leverage over labor costs as occupancy increases in coming quarters.

Nick Stengle: Our February and March 2026 trailing twelve-month Net Promoter Scores, or NPS, were our highest levels achieved since we resumed monthly surveys following the COVID pandemic in 2022. Similarly, our associate turnover and key 3 leader turnover have continued to improve and are now the lowest since the beginning of the COVID pandemic. These improved metrics are indicative of the success of our recent organizational changes and the cultural transformation we have undertaken. Taken together, they are leading indicators of the accelerating improvement in resident satisfaction, occupancy, and operating margin that we expect over the remainder of the year. At Brookdale, we are truly excited for our future, both this year and in the coming years. Equally, we are appreciative for each of our residents, associates, and shareholders for your trust in our team.

Speaker #1: We continue to make progress on reducing labor turnover and improving labor utilization. And we project a stable and predictable labor cost environment for 2026.

Speaker #1: Other facility operating expenses increased 40 basis points as a percent of revenue on the same community basis. Utility costs for higher year-over-year, mainly from the storms, as were food expenses.

Speaker #1: We expect these costs to moderate during the year. For the quarter, despite the 3 to 4 million dollar expense impact of the storms, we expanded our adjusted EBITDA by 7 million dollars to 131 million dollars, a 5.6 percent increase over the first quarter of 2025.

Nick Stengle: As a company, we remain on track to unlock the intrinsic value of Brookdale's specialized services and real estate assets. I will now turn the call over to Brookdale CFO, Dawn Kussow, for more details on our financial performance and outlook.

Speaker #1: As it relates to the year-over-year expected mid-teens growth rate, recall that our 2026 mid-teens adjusted EBITDA growth guidance is from our 2025 baseline adjusted EBITDA of $445 million not from the as-reported $458 million dollars.

Dawn Kussow: Thank you, Nick. This morning, I'll recap Brookdale's Q1 financial performance and our financial outlook for the year. I'll also discuss progress on our ongoing portfolio transition and other balance sheet improvements. Turning first to the Q1 financial results. Comparing our Q1 2026 to the prior year quarter, we grew our consolidated occupancy by 280 basis points to 82.1% and our same community occupancy by 170 basis points to 82.7%. The Q1 marked the 17th consecutive quarter that Brookdale has delivered 100 basis points or more of year-over-year consolidated occupancy growth. Sequentially, our Q1 consolidated occupancy declined 40 basis points from the Q4 of 2025.

Speaker #1: The $445 million baseline nets out the timing benefit of Brookdale's first half 2025 G&A reduction associated with the planned Benitas Community dispositions which occurred during the third and fourth quarters of 2025.

Speaker #1: If we were to normalize G&A in the prior year to create a baseline quarter, our year-over-year increase in adjusted EBITDA for the first quarter would have been approximately 11 percent.

Speaker #1: General administrative expense excluding non-cash stock-based compensation expense and transaction legal and organizational restructuring costs declined 3.8 percent year-over-year to 40.6 million dollars for the first quarter.

Speaker #1: Recently, we removed additional G&A costs to reflect both disposition activity as well as our scaled-back managed community portfolio. As you may have noted, the guidance provided in our updated investor deck now assumes 157 million dollars in full-year G&A.

Dawn Kussow: Seasonally, Q1 typically declines from Q4 due to higher levels of flu and other winter illnesses, the impact of winter weather, holiday timing, and also as a result of our annual in-place rate increases, which occurs on 1 January each year. Occupancy during Q1 was modestly behind our expectations, reflecting the impact of the winter storms in the quarter. In contrast, our April occupancy sequential growth of 30 basis points was stronger than our historical average post-COVID April sequential occupancy improvement of 10 to 20 basis points. This level of sequential occupancy growth speaks to our improving execution under the new operating structure. For Q1, resident fees of $722 million declined 7.1% from Q1 of last year.

Speaker #1: A decrease from our previous guidance of 162 million dollars. We expect to realize the incremental benefit of reducing G&A starting toward the end of the second quarter with most of the savings realized in the second half of this year.

Speaker #1: Cash facility operating lease payments during the first quarter of 2026 were 44.7 million dollars. Down a significant 12 million dollars from 56.7 million in the prior-year quarter primarily as a result of the Benitas lease dispositions, which occurred in the second half of last year, coupled with the contractual step-up on lease payments on the retained Benitas leases.

Speaker #1: Now I want to shift to Brookdale's progress on our portfolio optimization strategy, which includes the planned dispositions of non-strategic or underperforming owned and leased communities.

Dawn Kussow: The key factors underpinning the revenue decline versus last year were a 14.2% reduction in our consolidated average units, partially offset by an 8.2% RevPAR increase. As a reminder, we guided to 8% to 9% RevPAR growth for 2026, and we're within that range to start the year. We expect year-over-year RevPAR growth to accelerate over the remainder of the year based on improving community-level execution and the positive mix impact of dispositions. The 8.2% year-over-year increase in RevPAR was driven by a balance of rate improvement and the 280 basis point increase in weighted average occupancy.

Speaker #1: We previously shared that we expect to sell 29 communities comprised of 2,364 units during 2026, with the majority of those transactions to occur during the second quarter.

Speaker #1: During the first quarter of this year, we completed the sale of 7 communities with 330 units for proceeds of $22 million net of transaction costs.

Speaker #1: During the second quarter through today, we've closed on the sale of 3 additional communities comprising 545 units for $88 million in net proceeds. The dispositions of most of the remaining 19 communities comprising 1,430 units are tracking close during the second quarter, though a small number may close later in the year.

Dawn Kussow: Note that the unit mix, which stems from our decision to exit a number of communities, including many that were underperforming, also positively impacted our reported RevPAR, leading to a consolidated RevPAR increase of 8.2% versus a same community RevPAR increase of 5.5%. Resident rate increases were also beneficial to the quarter as revenue per occupied room or RevPOR, essentially our realized pricing metric, increased 4.5% year over year. We successfully implemented a high single-digit in-place rate increase on 1 January. Note that the Q1 2026 year-over-year RevPOR comparison was impacted by strategic rate concessions taken starting in the Q2 2025 to accelerate occupancy. Sequentially, our RevPOR grew 6% from the Q4 2025, reflecting the benefit from the rate increase.

Speaker #1: We continue to estimate total proceeds for our planned community disposition in 2026 to be approximately $200 million dollars. During the first quarter, we also exited 2 communities with 152 units through lease terminations.

Speaker #1: Once the remaining 19 dispositions are complete, we do not proceed significant changes to Brookdale's consolidated portfolio on a forward-looking basis. Looking ahead, we remain comfortable in Brookdale's ability to deliver both on our 2026 earning guidance and on our multi-year outlook through 2028 that we provided at our January investor day and reiterated on our previous earnings call.

Speaker #1: As a reminder for 2026, we expect to deliver 8 to 9 percent RevPAR growth and mid-teens adjusted EBITDA growth from our 2025 baseline of $445 million.

Speaker #1: A level that translates to $502 to $516 million of 2026 adjusted EBITDA. Through 2028, we expect to maintain mid-teens adjusted EBITDA growth, and we also believe we can decrease annualized leverage to below 6 times by the end of 2028.

Dawn Kussow: While we typically expect RevPOR to decline throughout a given year, for 2026, we expect our year-over-year RevPOR performance, especially for the H2 of the year, to be better than our typical seasonal trends as we annualize concessions embedded in the prior year periods. Now, let's turn to expenses. As Nick mentioned, the Q1 expense impact of significant winter storms was approximately $3 to 4 million. On a consolidated basis, Q1 expense per occupied unit or ExPOR increased 3.2% over the Q1 of 2025. Our 4.5% increase in RevPOR exceeded the 3.2% increase in ExPOR, generating a 130 basis point positive spread between realized revenue and expenses per occupied unit.

Speaker #1: Our 2026 guidance sets forth annual targets. We describe our quarterly pacing outlook for units, RevPAR, and adjusted EBITDA for 2026 on slide 12 of our investor presentation.

Speaker #1: Remember, the comparability of the first two quarters of 2026 against 2025 periods are impacted by disposition activity, the timing of the related G&A cost savings, and managed business timing, which results in smaller growth rates on reported results for the first two quarters.

Speaker #1: We expect our underlying business to still deliver the 2026 and multi-year growth that we have previously outlined. We just reported first quarter adjusted EBITDA year-over-year growth of 5.6 percent.

Dawn Kussow: Beyond the storm impact, we did see modest same community margin compression due to the operating leverage impact of the seasonal occupancy decline. We expect a resumption of positive margin trends as we first grow occupancy through the year, and second, move lower occupied communities up the occupancy bands and realize the associated operating income flow through. On a consolidated basis, senior housing operating income grew 14% sequentially, with margin expansion of 330 basis points. Year-over-year operating margin improved 80 basis points while operating income declined 4% on a 14% decline in units since the prior year. Labor is our single largest cost item at 64% of total facility operating expenses during the quarter.

Speaker #1: We expect second quarter adjusted EBITDA growth versus the prior year as reported results to be in the low to mid single-digit range. Remember, when baseline G&A timing and the prior year's considered, our growth would have been up in the low double-digit range.

Speaker #1: Then, with improved occupancy levels and the associated operating income flow-through and as cost initiatives take hold, year-over-year adjusted EBITDA growth in the third quarter is expected to return to our longer-term mid-teens growth rate level, and fourth quarter growth should be even stronger than that.

Speaker #1: We expect other seasonal factors as outlined on the last page of our investor deck to remain consistent with historical trends with the exception of RevPOR.

Speaker #1: RevPOR typically declines slightly over the course of the year. For 2026, we expect RevPOR to decline slightly in the second quarter, but then to remain relatively firm in the back half of the year helped in part by the mixed impact of our dispositions.

Dawn Kussow: Q1, same community labor expense as a percent of revenue improved 20 basis points year over year. We expect to realize additional leverage over labor costs as occupancy increases in coming quarters. We continue to make progress on reducing labor turnover and improving labor utilization. We project a stable and predictable labor cost environment for 2026. Other facility operating expenses increased 40 basis points as a percent of revenue on a same community basis. Utility costs were higher year over year, mainly from the storms, as were food expenses. We expect these costs to moderate during the year. For the quarter, despite the $3 to 4 million expense impact of the storms, we expanded our Adjusted EBITDA by $7 million to $131 million, a 5.6% increase over Q1 2025.

Speaker #1: As I mentioned earlier in my remarks, we now estimate general administrative expense excluding non-cash stock-based comp and transaction legal and restructuring costs of approximately $157 million down from our previous estimate of $162 million for 2026.

Speaker #1: We continue to expect that cash facility operating lease payments should be approximately $180 million during 2026, and management fees for the second quarter through the fourth quarter to be a total of approximately $1 million.

Speaker #1: Looking now at the balance sheet, our annualized leverage continues to improve and we've finished the quarter at 8.8 times. As of March 31, 2026, Brookdale's total liquidity was $369 million.

Dawn Kussow: As relates to the year-over-year expected mid-teens growth rate, recall that our 2026 mid-teens Adjusted EBITDA growth guidance is from our 2025 baseline Adjusted EBITDA of $445 million, not from the as reported $458 million. The $445 million baseline nets out the timing benefit of Brookdale's H1 2025 G&A reduction associated with the planned Ventas community dispositions, which occurred during the Q3 and Q4 of 2025. If we were to normalize G&A in the prior year to create a baseline quarter, our year-over-year increase in Adjusted EBITDA for the Q1 would have been approximately 11%.

Speaker #1: On the topic of leverage, I'd like to highlight that on March 31, we refinanced a significant portion of our remaining 2027 mortgage debt maturities effectively extending those maturities to April 2033.

Speaker #1: Through this transaction, we obtained $185 million of non-recourse mortgage debt, secured by 7 of our communities, and we repaid $191 million of mortgage debt secured by 11 communities.

Speaker #1: We appreciate our banking partners for their confidence in our business and our ongoing support. Coupled with the refinancing of the entirety of our 2026 mortgage debt and another portion of our 2027 debt that we completed at the end of the fourth quarter of 2025, our team continues to proactively manage Brookdale's balance sheet and extend our more imminent maturities.

Dawn Kussow: General and administrative expense, excluding non-cash stock-based compensation expense and transaction, legal, and organizational restructuring costs declined 3.8% year over year to $40.6 million for Q1. Recently, we removed additional G&A costs to reflect both disposition activity as well as our scaled back managed community portfolio. As you may have noted, the guidance provided in our updated investor deck now assumes $157 million in full year G&A, a decrease from our previous guidance of $162 million. We expect to realize the incremental benefit of reducing G&A starting toward the end of Q2, with most of the savings realized in H2 of this year.

Speaker #1: Adjusted free cash flow for the first quarter was a seasonal outflow of $12 million. Reflecting among other factors, use of cash for changes in working capital including the payment of annual incentive compensation and an increase in non-development capital expenditures.

Speaker #1: In conclusion, we're excited about the underlying strength we saw to end the first quarter and into the start of the second quarter. As we look forward to the balance of 2026 and beyond, we remain confident that we have the right team in place and that we are pursuing the correct strategic and operational plans.

Speaker #1: The Brookdale team remains highly confident in our ability to create durable, long-term growth and value for our shareholders. Operator, we will now open the call for questions.

Dawn Kussow: Cash facility operating lease payments during Q1 2026 were $44.7 million, down a significant $12 million from $56.7 million in the prior year quarter, primarily as a result of the Ventas lease dispositions, which occurred in H2 last year, coupled with the contractual step-up on lease payments on the retained Ventas leases. I want to shift to Brookdale's progress on our portfolio optimization strategy, which includes the planned dispositions of non-strategic or underperforming owned and leased communities. We previously shared that we expect to sell 29 communities comprised of 2,364 units during 2026, with the majority of those transactions to occur during Q2.

Speaker #1: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press *1 to raise your hand.

Speaker #1: To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #1: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from a line of Brian Tankowicz with Jefferies.

Speaker #1: Brian, your line is open. Please go ahead.

Speaker #3: Hey, good morning. Maybe Mike, thanks for putting these slides together, so I'll reference one of these slides. Dawn, may I look at slide 12 where you have the quarterly cadence on EBITDA growth with the baseline.

Dawn Kussow: During Q1 of this year, we completed the sale of 7 communities with 330 units for proceeds of $22 million net of transaction costs. During Q2 through today, we've closed on the sale of 3 additional communities comprising 545 units for $88 million in net proceeds. The dispositions of most of the remaining 19 communities comprising 1,438 units are tracking close during Q2, though a small number may close later in the year. We continue to estimate total proceeds for our planned community disposition in 2026 to be approximately $200 million. During Q1, we also exited 2 communities with 152 units through lease terminations.

Speaker #3: Just curious how you're thinking about that ramp because it looks like there's a ramp implied in here, and where the confidence comes from, especially given your comment about RevPOR's trend over the course of the year.

Speaker #4: Yeah, thank you. Thanks, Brian, for the question. And yes, slide 12 is a new slide that just talks to and is explicit about how we're thinking about the quarterly pacing.

Speaker #4: As we talked about in a prepared remark, adjusted EBITDA particular 5.6 percent growth year-over-year on an as-reported basis. What we expect for the second quarter is that low to mid-single-digit year-over-year growth on an as-reported basis.

Speaker #4: And what's really driving that is two things: our seasonal trends that we outlined on the last page of the investor deck. We have a full quarter of merit additional days and holidays that normally come into the quarter and then the managed property the disposition of the managed properties going away and the fact that the cost savings are really kind of coming in the back half of the year, so that timing difference.

Dawn Kussow: Once the remaining 19 dispositions are complete, we do not foresee significant changes to Brookdale's consolidated portfolio on a forward-looking basis. Looking ahead, we remain comfortable in Brookdale's ability to deliver both on our 2026 earning guidance and on our multi-year outlook through 2028 that we provided at our January Investor Day and reiterated on our previous earnings call. As a reminder, for 2026, we expect to deliver 8% to 9% RevPAR growth and mid-teens Adjusted EBITDA growth from our 2025 baseline of $445 million, a level that translates to $502 million to $516 million of 2026 Adjusted EBITDA. Through 2028, we expect to maintain mid-teens Adjusted EBITDA growth, and we also believe we can decrease annualized leverage to below 6 times by the end of 2028.

Speaker #4: But important to look at the last item as Nick and I both talked about in our prepared remarks, that low to double-digit year-over-year growth on really kind of the underlying business.

Speaker #4: We do expect to accelerate throughout the year. So appreciate the question on that quarterly pacing. And I think Nicole commented on the confidence in the guidance.

Speaker #3: Yeah, thanks, Brian. Nick here. So a lot of this has to do with our results despite all the changes and disruption that we had to.

Speaker #3: So we really are not transformative kind of path here. And some of the predates me, so this started maybe about a year ago. But even in the last seven months that I've been enrolled, I did share some of these details during the prepared remarks.

Speaker #3: But it bears repeating. We have undergone many, many changes. And first and foremost, it's organizationally how we're structured. And it truly defines who we are as a company.

Speaker #3: And the line of connection between the executive leadership team, me, namely as the CEO, all the way down to the committees, has been reset.

Dawn Kussow: Our 2026 guidance sets forth annual targets. We describe our quarterly pacing outlook for units, RevPAR, and Adjusted EBITDA for 2026 on slide 12 of our investor presentation. Remember, the comparability of the first 2 quarters of 2026 against 2025 periods are impacted by disposition activity, the timing of the related G&A cost saving, and managed business timing, which results in smaller growth rates on reported results for the first 2 quarters. We expect our underlying business to still deliver the 2026 and multi-year growth that we have previously outlined. We just reported Q1 Adjusted EBITDA year over year growth of 5.6%. We expect Q2 Adjusted EBITDA growth versus the prior year as reported results to be in the low to mid-single-digit range.

Speaker #3: So there's a much cleaner line of enablement, cleaner line of accountability. And we've had many, many years. And a lot of it has to do with hiring a COO, layering up our sales team and our clinical team under that COO and doing the same thing at every layer of the organization.

Speaker #3: At the same time, we need to keep sight of this is we've disposed and exited over 100 communities in that time period, which is very much the right decision.

Speaker #3: But it's also very disruptive. A lot of effort, a lot of work of leaders going into making that as seamless as it has been.

Speaker #3: It has been quite seamless. And that is not mostly behind us. We do have a few communities as we share that we still have to get out of in Q2 and potentially just a handful later in the year.

Speaker #3: But the reality is that is now mostly behind us. We're now in a position to really lean into the company and operate the company as the operating company that we are.

Speaker #3: And I do want to point out our April results. Again, one data point that no need to start doing victory laps quite yet, but it is a very strong data point in our April occupancy growing 30 basis points.

Dawn Kussow: Remember, when baseline G&A timing in the prior year is considered, our growth would have been up in the low double-digit range. With improved occupancy levels and the associated operating income flow through, and as cost initiatives take hold, year-over-year Adjusted EBITDA growth in Q3 is expected to return to our longer-term mid-teens growth rate level, and Q4 growth should be even stronger than that. We expect other seasonal factors, as outlined on the last page of our investor deck, to remain consistent with historical trends, with the exception of RevPOR. RevPOR typically declines slightly over the course of the year. For 2026, we expect RevPOR to decline slightly in Q2, but then to remain relatively firm in the back half of the year, helped in part by the mixed impact of our dispositions.

Speaker #3: And historically, it's been closer to flat, maybe 10, 20 basis points. So to have that happen, at the beginning, at the early stages of the selling season, which is senior living industries typically May, June, July, August, September, is reflective of our confidence and of all the change that we made.

Speaker #5: I appreciate that. And maybe, Nick, I'll use that as a segue. When I look at slide 9, again, I love these slides. Control will move out, obviously, tick up in Q1.

Speaker #5: Just curious what your philosophy is or how you're thinking about the balancing act between RevPOR, RevPAR growth, and move-outs, right? Because I think move-outs aren't necessarily negative.

Speaker #5: In this sense, when you're RevPOR and RevPAR growing as much as they are. So just curious how you would walk us through that thought process.

Speaker #3: Yeah, very good instead of a question there, Brian. So fundamentally, RevPAR is the number we all need to lean around. And obviously, report the 8.2 percent feel good about that.

Dawn Kussow: As I mentioned earlier in my remarks, we now estimate General and Administrative expense, excluding non-cash, stock-based comp, and transaction, legal, and restructuring costs of approximately $157 million, down from our previous estimate of $162 million for 2026. We continue to expect that cash facility operating lease payments should be approximately $180 million during 2026, and management fees for Q2 through Q4 to be a total of approximately $1 million. Looking now at the balance sheet, our annualized leverage continues to improve, and we finished the quarter at 8.8x. As of 31 March 2026, Brookdale's total liquidity was $369 million.

Speaker #3: RevPAR and what that looks like for our guidance for the rest of the year. And it truly is a balance between rate and occupancy.

Speaker #3: And we're always monitoring that. And it's always a constant mix. Obviously, as occupancy goes up, then we can lean more on rate. As occupancy is not going up and is stagnant in a subset of communities, we have to lean on rate in a different direction.

Speaker #3: But as far as the move-outs for Q1, we feel very good about it. In light of the large in-place rate increase that we're able to push on January 1st, typically, January 1st, you always have or in January, February for that matter, you do have a slightly increased pace of move-outs.

Speaker #3: Specifically for financial reasons, we monitor all the different categorizations because of the in-place rate increase. That happens every January, every February, every year. This year was slightly higher.

Speaker #3: Based on the higher in-place rate increase that we pushed through, but it was well within our expectations. And in fact, if anything, it showed the stickiness of that in-place rate increase.

Dawn Kussow: On the topic of leverage, I'd like to highlight that on 31 March, we refinanced a significant portion of our remaining 2027 mortgage debt maturities, effectively extending those maturities to April 2033. Through this transaction, we obtained $185 million of non-recourse mortgage debt secured by 7 of our communities, and we repaid $191 million of mortgage debt secured by 11 communities. We appreciate our banking partners for their confidence in our business and their ongoing support. Coupled with the refinancing of the entirety of our 2026 mortgage debt and another portion of our 2027 debt that we completed at the end of Q4 2025, our team continues to proactively manage Brookdale's balance sheet and extend our more imminent maturities.

Speaker #3: So we feel really good about what we did. We feel really good about our pricing power. And the net result of that move-out pace was as expected.

Speaker #3: In line with what we actually kind of hoped to see with the stickiness of that in-place rate increase.

Speaker #5: That makes sense. If I may ask just one quick question. Slide 19, you show these community renovation CapEx projects. Just curious, how should we be thinking about the pipeline of these projects and what you're seeing?

Speaker #5: Obviously, the ROIs look here in this slide. So if you can just walk us through that. Thank you.

Speaker #3: Yep. Yeah, I'm glad you pointed that out. That is another new slide in our investor deck. So take a look at slide 19 for those that didn't note it.

Speaker #3: So for those that joined us at our investor day, we did a tour of another community where we did a very meaningful CapEx investment.

Speaker #3: Obviously, beautiful building, great results. We wanted to kind of share even more details since part of our story has been our CapEx spend. We are projecting a spend of between $175 to $195 million of CapEx this year.

Dawn Kussow: Adjusted free cash flow for Q1 was a seasonal outflow of $12 million, reflecting, among other factors, use of cash for changes in working capital, including the payment of annual incentive compensation and an increase in non-development capital expenditures. In conclusion, we're excited about the underlying strength we saw to end Q1 and into the start of Q2. As we look forward to the balance of 2026 and beyond, we remain confident that we have the right team in place and that we are pursuing the correct strategic and operational plans. The Brookdale team remains highly confident in our ability to create durable long-term growth and value for our shareholders. Operator, we will now open the call for questions.

Speaker #3: And we want to do that because we see the results in slide 19 shows three very specific examples where those results exist. And we have a pipeline.

Speaker #3: I alluded to or I mentioned earlier in my prepared remarks, we have hired a new role to our company, the senior vice president, strategic operations.

Speaker #3: And that team, that leader, deploys this capital. So we have a program. We have a prioritized list of communities where we build a pro forma.

Speaker #3: We monitor our results. And we project seeing results very similar to what you see on slide 19. And we have dozens of projects, large deliberate comprehensive investments of capital to improve the overall performance of the communities and get returns that achieve our hurdles.

Operator: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Brian Tanquilut with Jefferies. Brian, your line is open. Please go ahead.

Speaker #5: Awesome. Thank you.

Speaker #1: Your next question comes from the line of Ben Hendricks with RBC Capital Markets. Ben, your line is open. Please go ahead.

Speaker #6: Thank you very much. Very much appreciate the slide on pacing. Slide 12 here. I just wanted to drill in a little bit on the expectation for RevPAR acceleration in the second half.

Speaker #6: And you've noted here both the disposition impact and also the core occupancy growth. Maybe we can help us parse that out a little bit more.

Speaker #6: Any notes you can give us on the overall occupancy profile and performance profile of those 19 facilities still pending disposition? And then we can kind of make an idea of the kind of core growth and then mix their impact.

Brian Tanquilut: Hey, good morning. Mike, thanks for putting these slides together. I'll reference one of these slides. Dawn, when I look at slide 12, where you have the quarterly cadence on EBITDA growth, even with baseline, just curious how you're thinking about that ramp? 'Cause it looks like there's a ramp implied in here, and where that confidence comes from, especially given your comment about the RevPOR trend over the course of the year.

Speaker #6: Thanks.

Speaker #1: This has been great question. Digging into the slide, if we've outlined the RevPAR growth, we expect an 8.2 percent here in the first quarter.

Speaker #1: We expect that to be similar in the second quarter. And really, what's driving that, of course, is our occupancy and RevPOR. And from an occupancy perspective, we expect our occupancy growth really to be directional with historical seasonal trends.

Dawn Kussow: Yeah. Thank you. Thanks, Brian, for the question. Yes, slide 12 is a new slide that just talks to and is explicit about how we're thinking about the quarterly pacing. As we talked about in our prepared remarks, Adjusted EBITDA, in particular, 5.6% growth year-over-year on an as-reported basis. What we expect for the Q2 is that low to mid-single-digit year-over-year growth on an as-reported basis. You know, what's really driving that is two things. Our seasonal trends that we outline on the last page of the investor deck. We have a full quarter of merit additional days and holidays that normally come into the quarter.

Speaker #1: We've gotten the disposition on the 19 communities. I think they're relatively small communities. The largest one really went on April 1st. So relatively small communities are lower performing communities, but not moving the needle.

Speaker #1: We're getting a little bit of accretion on the back half, but I would say occupancy is directional with the historical trend. The RevPOR, as I mentioned, and our prepared remarks, how we're thinking about is the second quarter, we normally see our RevPOR step down after we do our January 1st rate increase.

Speaker #1: We expect that step down to be slight in the second quarter, but then in the third and fourth quarters, as I said, in my prepared remarks, we expect that RevPOR to be remaining firm just because you get the accretion benefit.

Dawn Kussow: The managed property, the disposition of the managed property is going away and the fact that the cost savings are really kind of coming in the back half of the year, so that timing difference. You know, important to look at the last item as Nick and I both talked about in our prepared remarks, that low to double-digit year-over-year growth on really kind of the underlying business. We do expect to accelerate throughout the year. Appreciate, you know, the question on that quarterly pacing. I think Nick will comment on the confidence in the guidance.

Speaker #1: Off that's offsetting kind of that normal step down. And that's what's going to drive that RevPOR, that RevPOR growth that we've outlined in that slide.

Speaker #1: Or excuse me, the RevPAR growth that we've outlined in the slide.

Speaker #6: Great. Thank you. And just on a long-themed line, just if you could kind of give a little bit of detail on kind of the sources and pacing of the incremental G&A savings, it makes sense that maybe you would see a little pickup there in savings getting rid of some of these smaller communities.

Nick Stengle: Yeah. Thanks, Brian. Nick here. A lot of this has to do with our results despite all the changes and disruption that we had to do. We really are on a transformative kind of path here. Some of it predates me, so this started maybe about 1 year ago. Even in the last 7 months that I've been enrolled, and I did share some of these details during the prepared remarks, but it bears repeating, we have undergone many changes. First and foremost, it's organizationally how we're structured, and it truly defines who we are as a company. The line of connection between the executive leadership team, me namely as the CEO, all the way down to the communities has been reset.

Speaker #6: But just wanted to kind of get an idea of where that's coming from and how we should think about that layering onto the balance of the year.

Speaker #6: Thanks.

Speaker #1: Of course. As we said in our prepared remarks, we've taken our G&A expectations down by $5 million most of that we expect to see in the second half.

Speaker #1: From a pacing perspective, my expectation is G&A is going to be relatively the same in Q2 as it was in Q1 because remember, you get a little bit of extra expense with more days and then a merit increase that comes in in the second quarter that's going to offset that little bit of savings that we'll get most of that $5 million is going to be in Q3 and Q4.

Nick Stengle: There's a much just a cleaner line of enablement, a cleaner line of accountability, than we've had in many, many years. A lot of that has to do with hiring a COO, layering up our sales team and our clinical team under that COO, and doing the same thing at every layer of the organization. At the same time, you know, we need to keep sight of this, is we've disposed and exited over 100 communities in that time period, which is very much the right decision, but it's also very disruptive. A lot of effort, a lot of work of leaders going into making that as seamless as it has been, which it has been quite seamless. That is now mostly behind us.

Speaker #1: Your next question comes from the line of Joanna Gadchuk with Bank of America. Joanna, your line is open. Please go ahead.

Speaker #7: Good morning. Thanks so much. So I guess maybe a different question. A little bit. But at your investor day, you mentioned your interest to add some assets strategically, talking about packing acquisitions, small things.

Nick Stengle: We do have a few communities as we've shared that we still have to get out of in Q2, and potentially just a handful later in the year. The reality is, that is now mostly behind us, and we're now in a position to really lean into the company and operate the company as the operating company that we are. I do wanna point out our April results. Again, one data point, you know, no need to start doing victory laps quite yet, but it is a very strong data point in our April occupancy growing 30 basis points, when historically it's been closer to flat, maybe 10, 20 basis points.

Speaker #7: So would a lot of interest from the REITs and private equity to consolidate in the industry? Does it mean you see more competition, or is that still kind of on the table?

Speaker #3: Yeah. Thanks for the question, Joanna. So our strategy, we articulated this, as you mentioned on the investor day, on the acquisition side is very small, deliberate, single one, two, three community-type acquisitions in markets that we already exist.

Speaker #3: So when we're in 41 states today, no desire to be in a 42nd or 43rd state. We're in about 125 different markets, no desire to be in 126, 127.

Nick Stengle: To have that happen at the beginning, at the early stages of the selling season, which in senior living industry is typically May, June, July, August, September, is very reflective of our confidence and of all the changes that we made.

Speaker #3: And that is a strategy for some of our peers. But that's not our strategy. Our strategy is to be in markets we already are in.

Speaker #3: On the investor day, we used Kansas City and Dallas Fort Worth as illustrative examples. Where we are looking to make a very deliberate strategic target acquisition.

Brian Tanquilut: Yeah, appreciate that. Maybe, Nick, I'll use that as a segue. When I look at slide 9, again, love these slides. Controllable move-outs obviously ticked up in Q1. Just curious what your philosophy is or how you're thinking about the balancing act between RevPAR or RevPAR growth and move-outs, right? I think, you know, move-outs aren't necessarily negative in this sense when your RevPOR and RevPAR are growing as much as they are. Just curious how you would walk us through that thought process.

Speaker #3: And typically, our big tier REITs are not doing single community-type transactions. They're looking for larger things where they can really take their team and invest and make larger acquisitions.

Speaker #3: So I do not feel we do not feel, based on the pipeline that we're looking at currently contemplating, that we're competing against large REITs because we're basically deploying different acquisition strategies based on our needs and based on their needs.

Speaker #7: Thank you. And I guess coming back to the discussion around rate increases, so it sounds like you pushed a higher goal that is rent increases this year and the financial models were high but not out of ordinary so to speak.

Nick Stengle: No, very good insightful question there, Brian. Fundamentally, RevPAR is the number we all need to lean around. Obviously, we reported the 8.2%, feel good about that RevPAR and what that looks like for our guidance for the rest of the year. It truly is a balance between rate and occupancy, and we're always monitoring that. It's always a constant mix. Obviously, as occupancy goes up, we can lean more on rate. As occupancy is not going up and is stagnant in the subset of communities, we have to lean on rate in a different direction. As far as the move-outs for Q1, we feel very good about it in light of the large in-place rate increase that we were able to push on 1 January.

Speaker #7: But we also hear a lot about higher community fees. So is that also another level you can pull, especially when you have communities with higher occupancy?

Speaker #3: Yeah. Yeah. No. For sure. And we don't talk about community fees a lot. I'm glad you brought that up. So that is one of the features in our industry for sure at Brookdale where we do have an upfront non-refundable community fee.

Speaker #3: And as your occupancy goes up, you collect on that far more regularly, and you can even increase the community fee as your occupancy is lower, and you need to drive movements.

Nick Stengle: Typically, January 1st you always have, in January and February for that matter, you do have a slightly increased pace of move-outs, specifically for financial reason, and we monitor all the different categorizations because of the in-place rate increase. That happens every January, every February, every year. This year was slightly higher, based on the higher in-place rate increase that we pushed through, but it was well within our expectations. In fact, if anything, it showed the stickiness of that in-place rate increase. We feel really good about what we did. We feel really good about our pricing power. The net result of that move-out pace was as expected, and in line with what we, like, actually kind of hoped to see, with the stickiness of that in-place rate increase.

Speaker #3: That's one of the potentially one of the first things you would discount because it's a one-time thing, and you're not locking in for a year or two years' worth of rates.

Speaker #3: So it's an easy concession to give to a prospective resident. But our community fees are strong. In fact, they continue to grow as our occupancy grows.

Speaker #3: Our overall RevPOR is obviously growing monthly rate that we get paid. But even the community fees that upfront non-refundable community fee we collect, we can increase.

Speaker #7: Okay. Great. And last one, and thank you for letting me question. So I guess talking about the occupancy and these different buckets, so it looks like what, 50% of your consolidated communities are above 95%.

Brian Tanquilut: That makes sense. If I may ask just 1 quick question. Slide 19, you show these community renovation CapEx projects. Just curious, how should we be thinking about the pipeline of these projects and what you're seeing? Obviously, the ROIs look good here in this slide. If you could just walk us through that. Thank you.

Speaker #7: So can you talk about margins and growth in those highly occupied assets? Are the streets increases, rate increases, much higher than the in-place customers when you have such highly occupied assets?

Nick Stengle: Yep. Yeah, I'm glad you pointed that out. That is another new slide in our investor deck. Take a look at slide 19 for those that didn't note it. For those that joined us at our Investor Day, we did a tour of another community where we did a very meaningful CapEx investment. Obviously beautiful building, great results. We wanted to kind of share even more details since part of our story has been our CapEx spend. We are projecting a spend of between $175 million to $195 million of CapEx this year. We want to do that because we see the results, and slide 19 shows three very specific examples where those results exist. We have a pipeline.

Speaker #3: Yes. For sure. And we've been communicating this high single-digit in-place rate increase that we push through on January 1st. The reality is that is not the same not every community got the same number.

Speaker #3: And as an aggregated number, more highly occupied communities actually had a low double-digit increase. The lower occupied communities had a, call it, a mid-single-digit increase.

Speaker #3: The net effect is what we've been communicating. But for sure, you have very strong pricing power that exists as your occupancy goes up. And in fact, on the slide, 18, we updated the numbers into the slide we've had for a while where you can see the EBITDA per available unit and increase meaningfully if you compare it to last quarter's slide 8, where the slide number was because of that in-place rate increase.

Nick Stengle: I alluded to or I mentioned earlier in my prepared remarks, we have hired a new role to our company, the senior vice president of strategic operations. That team, that leader deploys this capital. We have a program, we have a prioritized list of communities where we build a pro forma, we monitor our results, and we project seeing results very similar to what you see on slide 19. We have dozens of projects, large, deliberate, comprehensive investments of capital to improve the overall performance of the communities and get returns that achieve our hurdles.

Speaker #3: Additional in-place rate increase, we were able to achieve in the more highly occupied communities.

Speaker #7: Yeah. Exactly. I like that slide. The 20, I guess, 1,000 EBITDA per unit, that's what's getting in. So thank you so much for taking the question.

Speaker #3: Yep. Awesome. Thanks for pointing that out. Thank you, Joanna.

Speaker #7: Your next question comes from the line of Andrew Mock with Barclays. Andrew, your line is open. Please go ahead.

Brian Tanquilut: Awesome. Thank you.

Speaker #8: Hi. Morning. The same store RevPOR, which cuts the noise that investors was up about 3.4% in the quarter for the senior housing. Community, you called out annualizing concessions as weighing on that metric in the quarter.

Operator: Your next question comes from the line of Ben Hendrix with RBC Capital Markets. Ben, your line is open. Please go ahead.

Ben Hendrix: Thank you very much. Very much appreciate the slide on pacing, slide 12 here. I just wanted to drill in a little bit on the expectation for RevPAR acceleration in the H2. I know you've noted here both the disposition impact and also the core occupancy growth. Maybe we can help us parse that out a little bit more. Any notes you can give us on the overall occupancy profile and performance profile of those 19 facilities still pending disposition? We can kind of get an idea of the kind of the core growth and the mix there impact. Thanks.

Speaker #8: So could you give a sense for how the same store RevPOR is tracking your higher occupancy or non-discounted communities? And just to be clear, we should expect the same store year over year RevPOR growth to also accelerate in the back half as you anniversary those pricing sessions, correct?

Speaker #9: Correct. Thanks for the question, Andrew. We generally are bifurcating the RevPOR growth between the occupancy bands. As we just had on the last call, we're looking at the occupancy bands where we're giving you adjusted EBITDA on a per-unit basis.

Speaker #9: From a RevPOR perspective, we absolutely expect as we're thinking about our RevPOR to follow that normal trending that I talked about with our RevPOR to kind of do the normal stepping down, but we expect the RevPOR to be export growth to certainly be expanding throughout the year as we think about our labor costs and getting the compression releases.

Dawn Kussow: Yes, Ben, great question. Digging into the slide, you know, we've outlined the RevPAR growth we expect, you know, on the 8.2% here in Q1, we expect that to be similar in the second quarter. Really what's driving that, of course, is our occupancy and RevPAR. From an occupancy perspective, we expect our occupancy growth really to be directional with historical seasonal trends. We've gotten the disposition of the 19 communities. I think they're relatively small communities. The largest one really went on 1 April. Relatively small communities, they're lower performing communities, but not moving the needle. We're getting a little bit of accretion on H2, but I would say occupancy is directional with the historical trends.

Speaker #9: And you get an additional incremental margin growth.

Speaker #8: Got it. Okay. And then to follow up on the winter storms, I think you said total direct cost of about 3 to 4 million in the quarter.

Speaker #8: Do you have a more comprehensive impact that would include both revenue and cost side of things? Thanks.

Speaker #9: We did quantify the revenue and the cost side. We talked about the occupancy impact and slowness of the occupancy in the first couple of months.

Dawn Kussow: The RevPAR, as I mentioned in our prepared remarks, how we're thinking about the Q2, we normally see our RevPAR step down after we do our 1 January rate increase. We expect that step down to be slight in the Q2, but then in the Q3 and Q4, as I said in my prepared remarks, we expect that RevPAR to remain firm just because you get the accretion benefit that's offsetting kind of that normal step down. That's what's gonna drive that RevPAR growth that we've outlined on that slide. Or excuse me, the RevPAR growth that we've outlined in the slide.

Speaker #9: We thought it would be helpful, at least just to quantify those direct costs. Most of those costs of the 3 to 4 million dollars, you can see them in our other facility operating expenses.

Speaker #9: A lot of it was our utilities. I'd say about two-thirds in our other facility operating expenses. And then the other one-third maybe up in our labor expense.

Speaker #9: But we didn't quantify the top line just because it excuse me, just because I think it becomes a little bit more fungible. Especially when you're talking about the pacing of the occupancy growth and things of that nature.

Speaker #8: Great. Thank you.

Speaker #7: Your next question comes from the line of Raj Kumar with Stevens. Raj, your line is open. Please go ahead.

Speaker #10: Hi. Good morning. Maybe just kind of focusing on the capital investments and you kind of reiterated your CapEx guidance for this year. I was kind of thinking about what you highlighted during Investor Day with the kind of core initiatives and just kind of thinking about how many communities are underway for 2026 with those efforts.

Ben Hendrix: Great. Thank you. Just almost along the same lines, just if you could kind of give us a little bit detail on kind of the sources and pacing of the incremental G&A savings. It makes sense that maybe you would see a little pickup there in savings from getting rid of some of these smaller communities. Just wanted to kind of get an idea of where that's coming from and how we should think about that layering on through the balance of the year. Thanks.

Speaker #10: And in terms of the average investment size, are you seeing a bigger investment on a per-community basis in terms of the portfolio? And what remains requires a bigger lift from that perspective?

Dawn Kussow: Of course. As we said in our prepared remarks, we've taken our G&A, our expectations down by $5 million. Most of that we expect to see in H2. From a pacing perspective, my expectation is G&A is gonna be relatively the same in Q2 as it was in Q1, because remember, you get a little bit of extra expense with more days, and then our merit increase that comes in in Q2, that's gonna offset that little bit of savings that we'll get. Most of that $5 million is gonna be in Q3 and Q4.

Speaker #10: And then I guess also on that front, are you also integrating Health Plus as a part of that process to boost the offering at those communities?

Speaker #3: Yeah, Raj. I think what we can say on the good morning, this is Chad. What we can say on the CapEx front, I think, is we have a number of projects underway across the portfolio as Nick talked about when he came on.

Speaker #3: We had a shift in strategy as we think about our CapEx program. Instead of doing sort of piecemeal projects here, adding some new furniture, whatever, we've really focused to say, "Let's prioritize our CapEx spend and place it where we can drive a great return." As you see on the slide, we've included in the Investor Deck.

Operator: Your next question.

Ben Hendrix: Thank you.

Operator: comes from the line of Joanna Gajek with Bank of America. Joanna, your line is open. Please go ahead.

Speaker #3: We also prioritize larger community refreshes. So we've not given you an exact number of that. The budgets included in our overall CapEx guidance, we've given for the year.

Joanna Gajek: Good morning. Thanks so much.

Joanna Gajuk: Good morning. Thanks so much.

Dawn Kussow: Okay

Joanna Gajek: A different question, a little bit. At your Investor Day, you mentioned your interest to add some assets strategically, you know, talking about pack and acquisition, small things. With a lot of interest from the REITs and private equity to consolidate in the industry, does it mean, you know, you're seeing more competition or that's still kind of on the table?

Joanna Gajuk: A different question, a little bit. At your Investor Day, you mentioned your interest to add some assets strategically, you know, talking about pack and acquisition, small things. With a lot of interest from the REITs and private equity to consolidate in the industry, does it mean, you know, you're seeing more competition or that's still kind of on the table?

Speaker #3: But I think it's in our way of looking at it is we can do some more of these refreshes and markets where we can drive additional growth.

Speaker #3: We think that will drive better returns and ultimately help our performance and help us achieve the guidance that we've given in the multi-year guidance we've given.

Speaker #3: As it relates to Health Plus, we have been around 180 communities across the portfolio. We think it's still a very innovative program that is something that our competitors don't offer.

Nick Stengle: Yeah. Thanks for the question, Joanna. Our strategy, and we articulated this, as you mentioned on the Investor Day, on the acquisition side, is very small, deliberate, single one, two, three community type acquisitions in markets that we already exist. When we're in 41 states today, no desire to be in a 42nd or 43rd state. We're in about 125 different markets. No desire to be in 126, 127. That is a strategy for some of our peers, but that's not our strategy. Our strategy is to be in markets we already are in. On Investor Day, we used Kansas City and Dallas-Fort Worth as illustrative examples where we are looking to make a very deliberate strategic target acquisition.

Speaker #3: It allows us to play in the value-based care space in a way. But it also really provides benefits for the residents and their family members in the way of reduced hospitalizations, reduced visits, etc.

Speaker #3: And so we think as that goes and that matures, that program matures, we'll continue to drive good results hopefully as we expect leading to longer links to stay and we've got a lot of good things going on in the portfolio.

Speaker #3: One of the things Nick mentioned in his call was that the progress is prepared marks. The progress we've made on net promoter score and turnover, those are really key leading indicators that I think are going to help us really achieve the results that we've talked about today we're very excited about where the company's going.

Nick Stengle: Typically, you know, our big tier REITs are not doing single community type transactions. They're looking for larger, you know, things where they can really take their team and invest and make larger acquisitions. I do not feel and we do not feel based on the pipeline that we're looking in and currently contemplating that we're competing against large REITs because we're basically deploying different acquisition strategies based on our needs and based on their needs.

Speaker #10: Great. And then as my follow-up, I appreciate the kind of disclosures on the occupancy bands and with the own portfolio. And as I kind of think about the lease portfolio and the kind of bifurcating that opportunity, any way you kind of framing kind of that portfolio's progression in 2026 and what's embedded in guidance as we kind of think about that piece of the portfolio?

Joanna Gajek: Thank you. I guess coming back to the discussion around rate increases, it sounds like you pushed like a high single digits rent increases this year, and the financial movements were higher, but not out of, you know, ordinary, so to speak. We're also hearing a lot about higher community fees. Is that also another lever you can pull, especially when you have communities with higher occupancy?

Joanna Gajuk: Thank you. I guess coming back to the discussion around rate increases, it sounds like you pushed like a high single digits rent increases this year, and the financial movements were higher, but not out of, you know, ordinary, so to speak. We're also hearing a lot about higher community fees. Is that also another lever you can pull, especially when you have communities with higher occupancy?

Speaker #9: Yeah. And thank you, Raj, for the question. We obviously have a separate slide slide 11 in our supplement that has the lease portfolio economics we're pleased with.

Speaker #9: The margin growth that we've seen in the portfolio itself, I don't know that we would call it anything specific other than we are pleased with the part that we've made on our lease portfolio.

Speaker #9: It adjusted free cash flow positive. We just talked a little bit about the CapEx deployment. We have a significant number of CapEx reimbursement opportunities with our landlords that we are taking advantage of.

Nick Stengle: Yeah. No, for sure. We don't talk about community fees a lot, and I'm glad you brought that up. That is one of the features in our industry, and for sure at Brookdale, where we do have an upfront non-refundable community fee. As your occupancy goes up, you collect on that far more regularly, and you can even increase the community fee. As your occupancy is lower and you need to drive move-ins, that's potentially one of the first things you would discount because it's a one-time thing, and you're not locking in for a year or 2 years worth of rates. It's an easy concession to give to a prospective resident. Our community fees are strong. In fact, they continue to grow.

Speaker #9: And we expect that portfolio to continue to progress just as we expect our own portfolio to progress.

Speaker #3: Yeah. And fundamentally, it is a creator of the business. And maybe for the first time in many, many years, in fact, if you look at the specific performance of our lease portfolio, it actually quite well from an occupancy NOI expansion perspective.

Speaker #3: Year over year, we feel really good about our portfolio mix. It's the overall portfolio mix. So we're going to be, what, 76% owned, 24% leased, managed is just a tiny, tiny sliver on the management side.

Speaker #3: So again, it's one of these transformational shifts that we have undergone over the last year that I alluded to. And this is a big part of it.

Nick Stengle: As our occupancy grows, our overall RevPAR is obviously growing the monthly rate that we get paid. Even the community fees, that upfront non-refundable community fee, we collect and we can increase.

Speaker #3: So now we have the right portfolio in the right locations, in the right markets with the right buildings. And we have the right team.

Speaker #3: So again, Raj, I appreciate the question. We feel really good about our lease portfolio just as much as we feel really good about the assets we own, which is that scarce real estate.

Joanna Gajek: Okay, great. Last one. Thank you for taking questions. I guess, talking about the occupancy and these different buckets. Looks like, what? 15% of your consolidated communities are above 95%. Can you talk about margins and growth in those highly occupied assets? Are the street increases, you know, rate increases, much higher than the in-place customers, when you have such highly occupied assets?

Joanna Gajuk: Okay, great. Last one. Thank you for taking questions. I guess, talking about the occupancy and these different buckets. Looks like, what? 15% of your consolidated communities are above 95%. Can you talk about margins and growth in those highly occupied assets? Are the street increases, you know, rate increases, much higher than the in-place customers, when you have such highly occupied assets?

Speaker #10: Great. Thanks.

Speaker #7: We have reached the end of the Q&A session. I will now end the call back to Nick Stengle, CEO for Closing Remarks.

Speaker #3: Excellent. Thank you, Samantha. I'd be remiss if I didn't just take a moment to thank all our associates. 30,000, over 30,000 associates for this very moment in our caring for all our residents.

Speaker #3: I'd also like to thank all our residents or loved ones who put their trust or their family members who put their trust in their loved ones.

Speaker #3: And I'd also like to thank all our stakeholders. All our investors, our banking partners, all the different partners who work with us. Excited by what the rest of the year brings now that we have pivoted our company, now that we are on the tail end of all the transformation changes that we've undergone over the last year.

Nick Stengle: Yes, for sure. We've been communicating this high single-digit in-place rate increase that we pushed through on 1 January. Not every community got the same number. That's an aggregated number. The more highly occupied communities actually had a low double-digit increase, while the lower occupied communities had a, call it, a mid-single-digit increase. The net effect is what we've been communicating. For sure you have very strong pricing power that exists as your occupancy goes up. In fact, on slide 18, we updated the numbers, and it's a slide that we've had for a while, where you can see the EBITDA per available unit, it increased meaningfully if you compare it to last quarter's slide 18, whatever the equivalent slide number was.

Speaker #3: And excited by what the 2026 will bring. With that, Samantha, I think we can end the call.

Nick Stengle: Because of that in-place rate increase, additional in-place rate increase we were able to achieve in the more highly occupied communities.

Joanna Gajek: Yeah, exactly. I like that slide. That's the $21,000, you know, EBITDA per unit that's what I was getting at. Thank you so much for taking the question.

Joanna Gajuk: Yeah, exactly. I like that slide. That's the $21,000, you know, EBITDA per unit that's what I was getting at. Thank you so much for taking the question.

Nick Stengle: Yep. Yep. Awesome. Thanks for pointing that out. Thank you, Joanna Gajek.

Operator: Your next question comes from the line of Andrew Mok with Barclays. Andrew, your line is open. Please go ahead.

Andrew Mok: Hi. Good morning. The same store RevPAR, which should cut through the noise of divestitures, was up about 3.4% in the quarter for the senior housing community. You called out annualizing concessions as weighing on that metric in the quarter. Can you give us a sense for how same store RevPAR is tracking in your higher occupancy or non-discounted communities? Just to be clear, we should expect same store year-over-year RevPAR growth to also accelerate in the H2 as you anniversary those pricing sessions, correct?

Dawn Kussow: Correct. Thanks for the question, Andrew. We generally are bifurcating out the RevPAR growth between the occupancy bands. As we just had on the last call, you know, we're looking at the occupancy bands where we're giving you Adjusted EBITDA on a per unit basis. You know, from a RevPAR perspective, we absolutely expect, you know, as we're thinking about our RevPAR to follow that normal trending that I talked about, with our RevPAR to kind of do the normal stepping down, but we expect the ExPOR growth to certainly be expanding throughout the year as we, you know, as we think about our labor costs and getting as the compression releases and you get that additional incremental margin growth.

Andrew Mok: Got it. Okay. Then just to follow up on the winter storms. I think you sized total direct, cost of about $3 to 4 million in the quarter. Do you have a more comprehensive impact that would include both the revenue and cost side of things? Thanks.

Dawn Kussow: We didn't quantify the revenue and the cost side. We talked about the occupancy impact and the slowness of the occupancy in the first couple of months. We thought it would be helpful at least just to quantify, you know, those direct costs. Most of those costs of the $3 to 4 million, you can see them in our other facility operating expenses. A lot of it was our utilities. I'd say about two-thirds in our other facility operating expenses, and then the other one-third maybe up in our labor expense. We didn't quantify the top line just because excuse me, just because I think it becomes a little bit more fungible, especially when you're talking about the pacing of the occupancy growth, and things of that nature.

Andrew Mok: Great. Thank you.

Operator: Your next question comes from the line of Raj Kumar with Stephens. Raj, your line is open. Please go ahead.

Raj Kumar: Hi. Good morning. Maybe just kind of focusing on the capital investments and, you know, you kind of reiterated your CapEx guidance for this year. As I kind of think about, you know, what you highlighted during Investor Day with the kind of core initiatives and just kind of thinking about, you know, how many communities are underway for 2026 with those efforts and, you know, in terms of the average investment size. Are you seeing, you know, a bigger investment on a per community basis in terms of the portfolio and, you know, what remains requires a bigger, you know, lift from that perspective? I guess also on that front, are you also integrating HealthPlus as a part of that process to boost the offering at those communities?

Chad White: Yeah, Raj, I think what we can say on the, Good morning. This is Chad. What we can say on the CapEx front, I think, is we have a number of projects underway across the portfolio. As Nick talked about when he came on, we had a shift in strategy as we think about our CapEx program. Instead of doing sort of piecemeal projects here, adding, you know, adding some new furniture or whatever, we've really focused to say, Let's prioritize our CapEx spend in places where we can drive a great return, as you see on the slide we've included in the investor deck, but also prioritize larger community refreshes. We've not given you an exact number of that. The budget's included in our overall CapEx guidance we've given for the year.

Chad White: I think it's in our way of looking at it is if we can do some more of these refreshes in markets where we can drive additional growth, we think that will drive better returns and ultimately help our performance and help us achieve the guidance that we've given, the multi-year guidance that we've given. As it relates to Health+, we have it in around 180 communities across the portfolio. We think it's still a very innovative program that is something that our competitors don't offer. It allows us to play in the value-based care space in a way, but it also really provides benefits for the residents and their family members in the way of reduced hospitalizations, reduced ER visits, et cetera.

Chad White: We think as that goes and that matures, that program matures, we'll continue to drive good results. Hopefully, as we expect leading to longer length of stay. We've got a lot of good things going on in the portfolio. One other thing Nick mentioned in his call was that the progress in his prepared remarks, is the progress we've made on Net Promoter Score and turnover. Those are really key leading indicators that I think are gonna help us really achieve the results that we've talked about today. We're very excited about where the company's going.

Raj Kumar: Great. As my follow-up, you know, appreciate the kind of disclosures on the occupancy bands and the, you know, with the own portfolio. As I kind of think about the lease portfolio and the kind of bifurcating that opportunity, any way of kind of framing kind of that, you know, portfolio's progression in 2026 and kind of what's embedded in guidance as we kind of think about that piece of the portfolio?

Dawn Kussow: Thank you, Raj, for the question. We, we obviously, have a separate slide 11, in our supplement that has the lease portfolio economics. We're pleased with the margin growth that we've seen in the portfolio itself. I don't know that we would call it anything specific other than, you know, we are pleased with the progress that we've made on our lease portfolio. It is adjusted free cash flow positive. You know, we just talked a little bit about the CapEx deployment. We have a significant number of CapEx reimbursement opportunities with our landlords that we are taking advantage of. You know, we expect that portfolio to continue to progress just as we expect our own portfolio to progress.

Nick Stengle: Yeah. I'll add, fundamentally it is accretive to the business and maybe for the, you know, for the first time in many, many years. In fact, if you look at the specific performance of our lease portfolio, it actually did quite well from an occupancy NOI expansion perspective year over year. We feel really good about our portfolio mix, and it's the overall portfolio mix. We're gonna be, what, 76% owned, 24% leased. Managed is just a tiny sliver on the management side. Again, it's one of these transformational shifts that we have undergone over the last year that I alluded to, and this is a big part of it. Now we have the right portfolio in the right locations, in the right markets with the right buildings, and we have the right team.

Nick Stengle: Again, I, Raj, appreciate the question. We feel really good about our lease portfolio just as much as we feel really good about the assets we own, which is that scarce real estate.

Raj Kumar: Great. Thanks.

Operator: We have reached the end of the Q&A session. I will now turn the call back to Nick Stengle, CEO, for closing remarks.

Nick Stengle: Excellent. Thank you, Samantha. I'd be remiss if I didn't just take a moment and thank all our associates. Over 30,000 associates who at this very moment are caring for all our residents. I'd also like to thank all our residents, their loved ones who have put their trust, or their family members who have put their trust in their loved ones. I'd also like to thank all our stakeholders, all our investors, our banking partners, all the different partners who work with us. Excited by what the rest of the year brings now that we have pivoted our company, now that we are on the tail end of all the transformational changes that we've undergone over the last year, and excited by what 2026 will bring.

Nick Stengle: With that, Samantha, I think we can end the call.

Operator: This concludes today's call. Thank you for attending.