Brookdale Senior Living Inc. · NYSE:BKD
Brookdale Senior Living — Q2 2024 Earnings Presentation
35 slides from Brookdale Senior Living's earnings presentation, Aug 9, 2024
Slide 1: Investor Presentation August 8, 2024
Investor Presentation August 8, 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 y BR K DALE a4 OO 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 a presence in 41 46 states and the ability to serve approximately 59,000 residents. We offer a broad continuum of services across various sectors of the senior living ind
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 seniors who desire to live in a residential person-centered approach that preserves setting that feels like home, w
Slide 6: Unique and varied community types
Unique and varied community types 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 Community Sizes 51% 39% Owned 13% 40% 30% 10% 7
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: Recent Growth and Expectations
Recent Growth and Expectations
Slide 9: Sustainable positive results continue in 2024
Sustainable positive results continue in 2024 Business Highlights and Recent Performance In 2Q 2024, Brookdale delivered: 20% increase in Adjusted EBITDA and 26% improvement in Adjusted Free Cash Flow over the prior year quarter Same Community First Half 2024 Results Adjusted EBITDA outperformance f
Slide 10: Intense focus on sustainable growth
Intense focus on sustainable growth Consolidated RevPAR & Weighted Average Occupancy(1) 920 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 4Q22 1Q23 2Q23
Slide 11: Positive year-over-year Adjusted EBITDA growth momentum continues
Positive year-over-year Adjusted EBITDA growth momentum continues (mm) 3Q Guidance Midpoint Adj. EBITDA $92.5M $125 $100 $75 $50 $25 $0 1Q 2Q 3Q 4Q 2022 2023 2024 Lease Classifications Impact Provider Relief Fund 1Q 2Q 3Q 4Q 2022 2023 2024 2022 2023 2024 2022 2023 2024 2022 2023 2024 Adjusted EBITDA
Slide 12: Expected double-digit Adjusted EBITDA growth over third quarter 2023
Expected double-digit Adjusted EBITDA growth over third quarter 2023 3Q 2024 RevPAR YOY Growth 6.25% to 6.75% Adjusted EBITDA $90 million to $95 million Reconciliation of the non-GAAP financial measure included in the foregoing guidance to the most comparable GAAP financial measure is not available
Slide 13: Capital structure anchored in attractive fixed-rate, non-recourse mortgages
Capital structure anchored in attractive fixed-rate, non-recourse mortgages $0 58% 91% 94% of debt is non-recourse of variable rate debt is mortgage debt of debt is property-level mortgage subject to interest rate maturities in 2024 fixed rate debt financings cap/swap agreements ($mm) Variable Recur
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) Pandemic Impact (mm) $450 92.3x $4,000 Begins $400 $3,500 $350 69.9x $3,000 $300 $2,500 $250 45.5x 46
Slide 15: Long-Term Organic Growth Opportunity
Long-Term Organic Growth Opportunity
Slide 16: Key Drivers of Long-Term Organic Growth
Key Drivers of Long-Term Organic Growth Rapidly Brookdale’s Limited New Growing Unique Supply Demographic Differentiators Demand
Slide 17: 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 ● Tighter credit conditions Fed funds rate is now in a range
Slide 18: Limited near-term development pipelines
… which has led to limited near-term development pipelines 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 nationwide 25 150 55%
Slide 19: 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 20: Difficulties experienced by seniors are on the rise
… and difficulties experienced by seniors 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+ High Blood Pressure Higher develop severe need of (mm) High Blood Pressure Acuity +39% Alzheimer's and Alzheime
Slide 21: 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 22: 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 23: Industry-leading clinical expertise through programs like 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 24: Sustainable Organic Growth Potential for Years to Come
Sustainable Organic Growth Potential for Years to Come
Slide 25: 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 $240M of of 89.0% would drive at least $415M of incremental revenue(1) incremental revenue(1) Brookdale Quarterly Weighted Average Occu
Slide 26: 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 27: 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 seniors and their families Brookdale’s innovative initiatives combined with unprecedented Accelerating Demographic
Slide 28: Appendix & Endnotes
Appendix & Endnotes y BR K DALE a6 OO SENIOR LIVING
Slide 29: 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 30: 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 31: 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 32: 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 33: 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 First Half Net income (loss) $ (91.1) $ (91.8) $ (294.4)
Slide 34: Endnotes
Endnotes Slide Reference 1. National Investment Center for Seniors Housing & Care (NIC) IL, AL, and MC units, NIC Supply Set 2Q 2024 4 2. Brookdale’s Senior Housing segments’ resident fees for the trailing 12 months ending June 30, 2024 3. “2024 Largest 150 Providers Report” Argentum, June 2024, Ski
Slide 35: 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
Brookdale Senior Living — Q2 2024 Earnings Presentation on 6ix