Brookdale Senior Living Inc. · NYSE:BKD
Brookdale Senior Living — Q3 2024 Earnings Presentation
40 slides from Brookdale Senior Living's earnings presentation, Nov 7, 2024
Slide 1: Investor Presentation November 6, 2024
Investor Presentation November 6, 2024
Slide 2: Forward-Looking Statements – Safe Harbor
Forward-Looking Statements – Safe Harbor Certain statements in this Investor Presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to various risks and uncertainties and include
Slide 3: About Brookdale
About Brookdale v BROOKDALE a4 SENIOR LIVING
Slide 4: Leading senior living operator in the United States
Leading senior living operator in the United States Brookdale is the nation‘s premier operator of senior living communities, with communities in 41 46 states and the ability to serve approximately 58,000 residents. We offer a broad continuum of services across various sectors of the senior living in
Slide 5: Tailored product lines support a diverse range of needs
Tailored product lines support a diverse range of needs Independent Living (IL) Memory Care (MC) Our independent living communities are ideal Our memory care program is rooted in a for older adults who desire to live in a person-centered approach that preserves residential setting that feels like ho
Slide 6: Varied community types in markets with rapidly growing senior population
Varied community types in markets with rapidly growing senior population Expansive Footprint across 41 States Industry Mix(2) Brookdale Mix(1) 51% SNF SNF 9% 2% AL 37% IL IL 25% 40% AL MC 56% 14% MC 73% 17% Brookdale is 22% higher in needs-based AL & MC Consolidated Portfolio Broad Range of Communit
Slide 7: Strategic priorities provide a road map to continued growth
Strategic priorities provide a road map to continued growth Health and Well-Being of Residents and Associates Earn resident and family Get every available unit in Attract, engage, develop trust and satisfaction by service at the best and retain the best providing valued, profitable rate associates h
Slide 8: 3Q 2024 Results & 4Q 2024 Guidance
3Q 2024 Results & 4Q 2024 Guidance
Slide 9: Sustainable positive results continue in 2024
Sustainable positive results continue in 2024 Business Highlights and Recent Performance In 3Q 2024, Brookdale reported: 15% increase in Adjusted EBITDA over the prior year Same Community quarter YTD 2024 Results $14M of positive Adjusted Free Cash Flow 130 bps Consolidated weighted average occupanc
Slide 10: Intense focus on profitable occupancy growth
Intense focus on profitable occupancy growth Consolidated RevPAR & Weighted Average Occupancy(1) 1,000 bps growth since 85% inflection point in March 2021 $5,000 $4,600 80% March 2021 – Pandemic recovery inflection point $4,200 75% $3,800 70% $3,400 65% $3,000 Mar21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q2
Slide 11: Positive year-over-year Adjusted EBITDA growth momentum continues
Positive year-over-year Adjusted EBITDA growth momentum continues (mm) 4Q Guidance Midpoint Adj. EBITDA $95.5M $100 $75 $50 $25 $0 1Q 2Q 3Q 4Q 2022 2023 2024 Provider Relief Fund 1Q 2Q 3Q 4Q 2022 2023 2024 2022 2023 2024 2022 2023 2024 2022 2023 2024 Adjusted EBITDA (Actual/Guidance Midpoint) 37 89
Slide 12: Continued Adjusted EBITDA growth expected in the fourth quarter
Continued Adjusted EBITDA growth expected in the fourth quarter 4Q 2024 RevPAR YOY Growth 5.0% to 5.5% Adjusted EBITDA $93 million to $98 million Reconciliation of the non-GAAP financial measure included in the foregoing guidance to the most comparable GAAP financial measure is not available without
Slide 13: Capital structure anchored in attractive fixed-rate, non-recourse mortgages
Capital structure anchored in attractive fixed-rate, non-recourse mortgages $0M 62% 91% 100% mortgage debt maturities of debt is non-recourse of variable rate debt is of debt is without extension options are property-level mortgage covered by interest rate fixed rate debt due through June 2026 finan
Slide 14: Meaningful leverage reduction on significant Adjusted EBITDA growth
Meaningful leverage reduction on significant Adjusted EBITDA growth Pandemic-impacted Adjusted EBITDA resulted in significantly higher Annualized Leverage as Net Debt remained relatively stable (mm) (mm) Pandemic Impact $450 Begins $4,500 91.4x $400 $4,000 $350 70.0x $3,500 $300 $3,000 $250 $2,500 4
Slide 15: Recently Announced Transactions
Recently Announced Transactions
Slide 16: Summary of previously announced acquisition transactions
Summary of previously announced acquisition transactions Brookdale continues to successfully grow percentage of owned units • 41 communities (2,789 units) Consolidated Portfolio Units • $610 million combined purchase price • Expected to increase annualized Adjusted EBITDA by $33 million 39% 34% begi
Slide 17: Summary of previously announced convertible financing
Summary of previously announced convertible financing Convertible financing transaction addresses vast majority of 2026 debt and provides additional funding for high-return strategic acquisitions • Extends maturity on $207 million of convertible debt to 2029 while increasing conversion price to $9.0
Slide 18: Post transactions pro forma debt structure and leverage ratio
Post transactions pro forma debt structure and leverage ratio Pro Forma Debt Structure 2026 and Thereafter ($ in millions) Reported as of Sep 30, 2024 Pro Forma as of Sep 30, 2024 Debt Maturities Debt Maturities Recurring Recurring Available No Available Principal Available No Available Principal $4
Slide 19: Long-Term Organic Growth Opportunity
Long-Term Organic Growth Opportunity
Slide 20: Key Drivers of Long-Term Organic Growth
Key Drivers of Long-Term Organic Growth Limited Rapidly Brookdale’s New Growing Unique Supply Demographic Differentiators Less Greater Competitive Competition Demand Advantage
Slide 21: Macroeconomic factors have influenced pace of industry development
Macroeconomic factors have influenced pace of industry development … ●Higher cost materials ● Labor shortage ● Elevated interest rates ● Tighter credit conditions ● Higher cost materials ● Labor market challenges ● Elevated interest rates ● Tight credit conditions Fed funds rate is now in a range of
Slide 22: Extremely few competitive communities under construction
… which has led to extremely few competitive communities under construction Inventory growth currently Lower starts and opens reflect the continued at near record lows(1) deceleration in construction activity Inventory Growth New Starts and Opens(2) in NIC Primary Markets(1) (k) In NIC markets natio
Slide 23: Age-driven demand for senior living is growing
Age-driven demand for senior living is growing … ● Higher cost materials ● Labor shortage ● Elevated interest rates ● Tighter credit conditions Demographic Trends Target Population(3) ~1 million new seniors enter 30% of Brookdale move-ins are (mm) +58% (5 yrs.) target market age cohort every under a
Slide 24: Difficulties experienced by older adults are on the rise
… and difficulties experienced by older adults are on the rise Higher Acuity Needs: Higher Acuity Needs: Alzheimer's in the US(3) Chronic conditions in residential care(2) 70% of adults age 65+ Higher High Blood Pressure develop severe need of (mm) +39% High Blood Pressure Acuity long-term services
Slide 25: Senior living improves affordability of support for an aging population
Senior living improves affordability of support for an aging population Brookdale Senior Living is a strong value proposition 66% of total net 93% increase in median Health and Wellness wealth in U.S. is held income for households by Baby Boomer and headed by person aged Silent generations(2) 65+ fr
Slide 26: Brookdale is differentiated within a highly fragmented industry
Brookdale is differentiated within a highly fragmented industry Well Recognized Leadership Position Highly fragmented competitive landscape (3) with ~2,500 operators, ~90% of which operate Earned most senior living community five or fewer recognitions in 2021, 2022 and 2023 communities(1) Ranked #1
Slide 27: Industry-leading clinical expertise through Brookdale HealthPlus
Industry-leading clinical expertise through programs like Brookdale HealthPlus® Benefits Community-Based, Care Coordination Proactive Care Coordination – Proactive assistance with and management of preventive healthcare That’s Brookdale HealthPlus® services, like annual wellness visits, immunization
Slide 28: Sustainable Organic Growth Potential for Years to Come
Sustainable Organic Growth Potential for Years to Come
Slide 29: Robust revenue opportunity from continued occupancy recovery
Robust revenue opportunity from continued occupancy recovery Returning to pre-pandemic occupancy Achieving our historic occupancy high of 84.5% would drive at least $210M of of 89.0% would drive at least $380M of incremental revenue(1) incremental revenue(1) Brookdale Quarterly Weighted Average Occu
Slide 30: Excellent operating income growth potential in the coming years
Excellent operating income growth potential in the coming years (billions) Senior Housing Revenue(1) Returning to pre-pandemic occupancy $3.4 and operating margin would deliver $3.2 $2.9 significant Operating Income Growth $2.6 Key Considerations Represents annualized revenue impact of returning to
Slide 31: Brookdale is a solid long-term investment option
Brookdale is a solid long-term investment option Nation’s premier operator of senior living communities known for Strong Brand and Leadership providing exceptional care and services to older adults and their families Brookdale’s innovative initiatives combined with unprecedented Accelerating Demogra
Slide 32: Appendix & Endnotes
—— & Endnotes t as BROOKDALE SENIOR LIVING
Slide 33: Appendix: Definitions and Non-GAAP Financial Measures
Appendix: Definitions and Non-GAAP Financial Measures Definitions RevPAR, or average monthly senior housing resident fee revenue per available unit, is defined by the Company as resident fee revenue for the corresponding portfolio for the period (excluding revenue for private duty services provided
Slide 34: Appendix: Non-GAAP Financial Measures
Appendix: Non-GAAP Financial Measures Adjusted EBITDA — Definition and Reconciliation Adjusted EBITDA is a non-GAAP performance measure that the Company defines as net income (loss) excluding: benefit/provision for income taxes, non- operating income/expense items, and depreciation and amortization;
Slide 35: Appendix: Non-GAAP Financial Measures
Appendix: Non-GAAP Financial Measures Adjusted Free Cash Flow — Definition and Reconciliation Adjusted Free Cash Flow is a non-GAAP liquidity measure that the Company defines as net cash provided by (used in) operating activities before: distributions from unconsolidated ventures from cumulative sha
Slide 36: Appendix: Non-GAAP Financial Measures
Appendix: Non-GAAP Financial Measures Adjusted EBITDA after cash financing lease payments and Net Debt — Definition and Reconciliations Net Debt is a non-GAAP financial measure that the Company defines as the total of its debt and the outstanding balance on the line of credit, less unrestricted cash
Slide 37: Appendix: Non-GAAP Financial Measures
Appendix: Non-GAAP Financial Measures Adjusted EBITDA after cash financing lease payments and Net Debt — Reconciliations (continued) For the twelve months ended: Annualized 2022 2023 2024 2024 (i n mi l l i ons ) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 9 months Net income (loss) $ (91.1) $ (91.8) $ (294.4)
Slide 38: Endnotes
Endnotes Slide Reference 1. National Investment Center for Seniors Housing & Care (NIC) IL, AL, and MC units, NIC Supply Set 3Q 2024 4 2. Brookdale’s Senior Housing segments’ resident fees for the trailing 12 months ending September 30, 2024 3. “2024 Largest 150 Providers Report” Argentum, June 2024
Slide 39: Endnotes
Endnotes Slide Reference 1. “What is the Lifetime Risk of Needing and Receiving Long-Term Services and Supports?” Office of Disability, Aging and Long-Term Care Policy, HHS, April 2019 2. “Residential Care Community Resident Characteristics: United States, 2018” National Center for Health Statistics
Slide 40: Endnotes
Endnotes Normal Seasonality Sequential View 1Q 2Q 3Q 4Q Lower due to increased Historically highest Begins to turn positive Remains flat to slightly Occupancy Sequential Change incidence and severity of sequential growth period of toward end of quarter positive to third quarter flu the year Full-qua
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