Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Brookdale Senior Living Inc. | bkdq22017form-8k.htm |
| EX-99.1 - EXHIBIT 99.1 - Brookdale Senior Living Inc. | bkdq22017pressrelease.htm |
Supplemental Information
2nd Quarter 2017
Exhibit 99.2
2
Financial Overview 3
Segment Overview 7
Senior Housing 8
Ancillary Services 13
G&A Expense & Transaction Costs 14
Capital Expenditures 15
Cash Lease Payments 16
Unconsolidated Ventures 17
Debt & Liquidity 18
Net Asset Value Elements 20
Definitions 21
Appendix:
Consolidated Statements of Cash Flows 24
Non-GAAP Financial Measures 25
Table of Contents
3
(1) Brookdale’s weighted average unit ownership percentage is 22.2%.
Important Note Regarding Non-GAAP Financial Measures. Adjusted EBITDA, Adjusted Free Cash Flow, Brookdale's Proportionate Share of Adjusted EBITDA of Unconsolidated Ventures and
Brookdale’s Proportionate Share of Adjusted Free Cash Flow of Unconsolidated Ventures are financial measures that are not calculated in accordance with U.S. generally accepted accounting
principles (GAAP). See the definitions of such measures under “Definitions” below and important information regarding such measures, including reconciliations to the most comparable GAAP
financial measures, under “Non-GAAP Financial Measures” below.
($ in 000s, except Total RevPAR) FY 2016 FY 2017 YoY
Q2 Q3 Q4 Q1 Q2 Q2
Resident fee and management fee revenue $ 1,072,754 $ 1,058,363 $ 1,030,338 $ 1,032,821 $ 956,512 (10.8)%
Net income (loss) $ (35,491) $ (51,728) $ (268,600) $ (126,361) $ (46,337) 30.6 %
Net cash provided by operating activities $ 107,496 $ 99,442 $ 88,451 $ 66,766 $ 133,108 23.8 %
Adjusted EBITDA $ 201,478 $ 202,343 $ 184,198 $ 198,296 $ 160,325 (20.4)%
Adjusted Free Cash Flow $ 44,886 $ 47,829 $ 33,156 $ 63,445 $ 39,959 (11.0)%
Brookdale's Proportionate Share of Adjusted EBITDA of Unconsolidated Ventures $ 16,425 $ 15,353 $ 17,989 $ 17,126 $ 18,219 10.9 %
Brookdale's Proportionate Share of Adjusted Free Cash Flow of Unconsolidated
Ventures $ 9,860 $ 7,502 $ 6,763 $ 8,750 $ 7,920 (19.7)%
Total RevPAR $ 4,352 $ 4,337 $ 4,310 $ 4,405 $ 4,392 0.9 %
Q2 2017 weighted average unit occupancy
Community
% of Period End
Occupancy Band Count Communities
Greater than 95% 204 20%
90% < 95% 216 21%
85% < 90% 171 16%
80% < 85% 163 16%
Less than 80% 285 27%
Total 1,039
Consolidated Portfolio Average
Asset Age
~21 years
Managed - 3rd
Party: 1,408
Managed-
Venture :
30,490
Owned:
32,914
Leased:
37,498
102,310 period
end number
of units
Managed - 3rd
Party: 8
Managed-
Venture:
202
Owned:
360
Leased:
469
1,039 period
end number of
communities
Overview
(1)
As of June 30, 2017
4
Segment Overview (1) Senior Housing Segments
Re
venue
(2
)
Segme
nt
O
pe
ra
ting
In
come
(3
)
(1) Brookdale’s five segments are Retirement Centers, Assisted Living, CCRCs–Rental (which combined are referred to as Senior Housing), Brookdale Ancillary Services and Management
Services.
(2) Percentage of revenue is based on Q2 2017 resident fee and management fee revenue.
(3) Percentage of segment operating income is based on Q2 2017 results.
Brookdale
Ancillary
Services
12%
Management
Services 2%
Senior Housing
86%
Brookdale
Ancillary
Services 4%
Management
Services 7%
Senior Housing
89%
CCRCs - Rental
14%
Retirement
Centers 20%
Assisted Living
66%
CCRCs Rental
9%
Retirement
Centers 24%
Assisted Living
67%
Consolidated Portfolio Overview
5
(1) Primarily consists of proceeds from property insurance, cash paid for debt modification and extinguishment costs and cash paid for state income taxes.
(All amounts in 000s) FY 2016 FY 2017 YoY
Q2 Q3 Q4 Q1 Q2 Q2
Resident fee and management fee revenue $ 1,072,754 $ 1,058,363 $ 1,030,338 $1,032,821 $ 956,512
Less: Facility operating expenses (693,103) (704,221) (686,176) (674,542) (642,405)
Combined Segment Operating Income 379,651 354,142 344,162 358,279 314,107 (17.3 )%
Less: G&A expense (including non-cash stock-based compensation expense) (90,695) (63,425) (66,668) (65,560) (67,090)
Add: Non-cash stock-based compensation expense 8,994 8,455 5,067 7,774 7,246
Less: Transaction costs (441) (659) (2,040) (7,593) (3,339)
Less: Cash operating lease payments (see page 16) (96,031) (96,170) (96,323) (94,604) (90,599)
Adjusted EBITDA 201,478 202,343 184,198 198,296 160,325 (20.4)%
Less: Interest expense, net (87,008) (86,581) (85,594) (83,645) (69,076)
Less: Lease financing debt amortization (15,532) (16,024) (16,409) (17,248) (14,382)
Add: Proceeds from entrance fees, net of refunds and amortization 3,352 2,389 1,575 (173) 541
Add/Less: Other (1) 1,355 1,313 (1,251) 937 1,383
Less: Non-Development Capital Expenditures, net (see page 15) (58,759) (55,611) (49,363) (34,722) (38,832)
Adjusted Free Cash Flow $ 44,886 $ 47,829 $ 33,156 $ 63,445 $ 39,959 (11.0)%
Brookdale's Proportionate Share of Unconsolidated Ventures':
Adjusted EBITDA $ 16,245 $ 15,353 $ 17,989 $ 17,126 $ 18,219 12.2 %
Adjusted Free Cash Flow $ 9,860 $ 7,502 $ 6,763 $ 8,750 $ 7,920 (19.7)%
Weighted average shares used in computing basic and diluted net income (loss) per share 185,825 185,946 185,684 185,689 186,212
Adjusted EBITDA and Adjusted Free
Cash Flow
6
(1) Other is primarily comprised of corporate capital expenditures, unallocated G&A expense (primarily integration, transaction-related and strategic project costs), non-cash stock-based
compensation and transaction costs.
($ in 000s) Q2 2017
Total
Senior
Housing
Owned
Portfolio
Senior
Housing
Leased
Portfolio
Ancillary
Services
Management
Services Other (1)
Resident fee and management fee revenue $ 956,512 $ 381,418 $ 442,462 $ 110,190 $ 22,442 $ —
Less: Facility operating expenses (642,405) (257,991) (287,327) (97,087) — —
Combined Segment Operating Income 314,107 123,427 155,135 13,103 22,442 —
Less: G&A expense (including non-cash stock-based compensation expense) (67,090) (17,580) (20,394) (7,128) (14,184) (7,804)
Add: Non-cash stock-based compensation expense 7,246 — — — — 7,246
Less: Transaction costs (3,339) — — — — (3,339)
Less: Cash operating lease payments (90,599) — (89,490) — — (1,109)
Adjusted EBITDA 160,325 105,847 45,251 5,975 8,258 (5,006)
Less: Interest expense, net (69,076) (41,352) (28,363) (165) — 804
Less: Lease financing debt amortization (14,382) — (14,382) — — —
Add: Proceeds from entrance fees, net of refunds and amortization 541 — 541 — — —
Add/Less: Other 1,383 — — — — 1,383
Less: Non-Development Capital Expenditures, net (38,832) (16,733) (14,205) (35) — (7,859)
Adjusted Free Cash Flow $ 39,959 $ 47,762 $ (11,158) $ 5,775 $ 8,258 $ (10,678)
Adjusted EBITDA and Adjusted Free
Cash Flow Distribution
7(1) Excludes reimbursed costs on behalf of managed communities of $186,076, $187,763, $178,530, $183,945 and $229,960 (in thousands), respectively.
($ in 000s, except RevPAR and RevPOR) FY 2016 FY 2017 YoY
Q2 Q3 Q4 Q1 Q2 Q2
Total Senior Housing, Brookdale Ancillary and Management Services(1)
Revenue $ 1,072,754 $ 1,058,363 $ 1,030,338 $ 1,032,821 $ 956,512 (10.8)%
Combined Segment Operating Income $ 379,651 $ 354,142 $ 344,162 $ 358,279 $ 314,107 (17.3)%
Combined Segment Operating Margin 35.4% 33.5% 33.4% 34.7% 32.8% -260 bps
Senior Housing (see page 8)
Revenue $ 931,232 $ 925,568 $ 896,032 $ 904,955 $ 823,880 (11.5)%
Senior Housing Operating Income $ 342,433 $ 323,986 $ 307,609 $ 326,756 $ 278,562 (18.7)%
Senior Housing Operating Margin 36.8% 35.0% 34.3% 36.1% 33.8% -300 bps
Number of communities (period end) 956 921 902 838 829
Period end number of units 80,519 78,562 77,135 71,186 70,263
Total Average Units 80,700 80,059 78,029 76,862 70,833
RevPAR $ 3,842 $ 3,849 $ 3,823 $ 3,919 $ 3,873 0.8 %
Weighted average unit occupancy 85.8% 86.2% 86.0% 85.3% 84.6% -120 bps
RevPOR $ 4,476 $ 4,465 $ 4,446 $ 4,597 $ 4,580 2.3 %
Brookdale Ancillary Services Segment
Revenue $ 123,336 $ 117,263 $ 114,042 $ 111,972 $ 110,190 (10.7)%
Segment Operating Income $ 19,032 $ 14,624 $ 16,289 $ 15,629 $ 13,103 -31.2 %
Segment Operating Margin 15.4% 12.5% 14.3% 14.0% 11.9% -350 bps
Management Services Segment
Segment Operating Income (comprised solely of management fees) $ 18,186 $ 15,532 $ 20,264 $ 15,894 $ 22,442 23.4%
G&A Allocation (see page 14) $ (11,200) $ (8,567) $ (9,505) $ (11,238) $ (14,184) 26.6%
Segment Operating Income (Adjusted to Include G&A Allocation) $ 6,986 $ 6,965 $ 10,759 $ 4,656 $ 8,258 18.2%
Segment Operating Margin (Adjusted to Include G&A Allocation) 38.4% 44.8% 53.1% 29.3% 36.8% -160 bps
Resident fee revenue under management $ 304,047 $ 300,750 $ 297,713 $ 310,050 $ 371,381
Number of communities (period end) 158 156 153 214 210
Period end number of units 26,232 25,983 25,633 31,284 31,454
Total Average Units 26,435 26,088 25,623 25,702 31,361
RevPAR $ 3,834 $ 3,843 $ 3,873 $ 3,939 $ 3,876 1.1%
Weighted average occupancy 86.8% 87.2% 86.8% 86.3% 84.8% -200 bps
RevPOR $ 4,350 $ 4,322 $ 4,367 $ 4,549 $ 4,570 5.1%
Segment Overview
8
Retirement Centers
Revenue $ 169,990 $ 170,706 $ 169,381 $ 172,620 $ 162,248 (4.6)%
Segment Operating Income $ 74,754 $ 73,112 $ 72,215 $ 74,002 $ 67,297 (10.0)%
Segment Operating Margin 44.0% 42.8% 42.6% 42.9% 41.5% -250 bps
Number of communities (period end) 95 95 93 86 86
Period end number of units 17,095 17,105 17,017 16,071 16,071
Total Average Units 17,095 17,105 17,115 17,108 16,071
RevPAR $ 3,315 $ 3,327 $ 3,299 $ 3,363 $ 3,365 1.5 %
Weighted average unit occupancy 88.9% 89.3% 88.9% 88.0% 87.3% -160 bps
RevPOR $ 3,727 $ 3,727 $ 3,711 $ 3,823 $ 3,857 3.5 %
Assisted Living
Revenue $ 613,017 $ 607,345 $ 581,827 $ 590,537 $ 547,430 (10.7)%
Segment Operating Income $ 234,085 $ 217,878 $ 204,044 $ 217,439 $ 186,921 (20.1)%
Segment Operating Margin 38.2% 35.9% 35.1% 36.8% 34.1% -410 bps
Number of communities (period end) 818 783 768 720 713
Period end number of units 53,459 51,494 50,682 47,296 46,999
Total Average Units 53,521 52,991 51,087 50,540 47,246
RevPAR $ 3,818 $ 3,820 $ 3,796 $ 3,895 $ 3,862 1.2 %
Weighted average unit occupancy 85.3% 85.6% 85.6% 84.7% 83.9% -140 bps
RevPOR $ 4,478 $ 4,461 $ 4,437 $ 4,600 $ 4,602 2.8 %
CCRCs - Rental
Revenue $ 148,225 $ 147,517 $ 144,824 $ 141,798 $ 114,202 (23.0)%
Segment Operating Income $ 33,594 $ 32,996 $ 31,350 $ 35,315 $ 24,344 (27.5)%
Segment Operating Margin 22.7% 22.4% 21.6% 24.9% 21.3% -140 bps
Number of communities (period end) 43 43 41 32 30
Period end number of units 9,965 9,963 9,436 7,819 7,193
Total Average Units 10,084 9,963 9,827 9,214 7,516
RevPAR $ 4,866 $ 4,896 $ 4,876 $ 5,086 $ 5,028 3.3 %
Weighted average unit occupancy 83.7% 84.0% 83.2% 83.5% 83.0% -70 bps
RevPOR $ 5,812 $ 5,833 $ 5,861 $ 6,091 $ 6,063 4.3 %
($ in 000s, except RevPAR and RevPOR) FY 2016 FY 2017 YoY
Q2 Q3 Q4 Q1 Q2 Q2
Senior Housing Segments
9
Revenue $ 798,048 $ 798,037 $ 790,042 $ 810,041 $ 798,396 — %
Community Labor Expenses (324,092) (324,277) (329,058) (331,947) (339,008)
Other facility operating expenses (170,147) (182,928) (180,124) (177,308) (183,452)
Facility operating expenses (494,239) (507,205) (509,182) (509,255) (522,460)
Same Community Operating Income $ 303,809 $ 290,832 $ 280,860 $ 300,786 $ 275,936 (9.2)%
Same Community Operating Margin 38.1% 36.4% 35.6% 37.1% 34.6% -350 bps
Number of communities (period end) 818 818 818 818 818
Total Average Units 68,322 68,316 68,317 68,309 68,300
RevPAR $ 3,892 $ 3,892 $ 3,853 $ 3,950 $ 3,894 0.1 %
Weighted average unit occupancy 86.5% 86.8% 86.5% 85.8% 85.0% -150 bps
RevPOR $ 4,499 $ 4,484 $ 4,453 $ 4,603 $ 4,581 1.8 %
($ in 000s, except RevPAR and RevPOR) FY 2016 FY 2017 YoY
Q2 Q3 Q4 Q1 Q2 Q2
Same Community Operating Income/Weighted average unit
occupancy
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
86.5% 86.8% 86.5%
85.8%
85%
$303,809
$290,832
$280,860
$300,786
$275,936
Same Community RevPAR
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
$3,892 $3,892
$3,853
$3,950
$3,894
Senior Housing: Same Community
10
Resident fee revenue $ 406,908 $ 403,655 $ 383,588 $ 388,310 $ 381,418
Less: Facility operating expenses (267,901) (271,664) (259,430) (252,673) (257,991)
Owned Portfolio Operating Income 139,007 131,991 124,158 135,637 123,427 (11.2)%
Less: G&A Portfolio Allocation (see page 14) (20,015) (14,685) (16,163) (16,808) (17,580)
Owned Portfolio Operating Income (Adjusted to Include G&A Allocation) $ 118,992 $ 117,306 $ 107,995 $ 118,829 $ 105,847 (11.0)%
Additional Information
Interest expense: property level and corporate debt $ (43,408) $ (43,380) $ (42,302) $ (40,285) $ (41,352)
Community level capital expenditures, net (see page 15) $ (18,661) $ (19,983) $ (18,668) $ (13,909) $ (16,733)
Number of communities (period end) 407 375 363 362 360
Period end number of units 35,541 33,800 33,054 33,016 32,765
Total Average Units 35,615 35,206 33,489 33,041 32,921
RevPAR $ 3,808 $ 3,822 $ 3,818 $ 3,916 $ 3,862 1.4 %
Weighted average unit occupancy 85.1% 85.4% 85.2% 84.4% 83.9% -120 bps
RevPOR $ 4,474 $ 4,473 $ 4,481 $ 4,641 $ 4,603 2.9 %
Interest Coverage (as of June 30, 2017) 2.5x
Net Debt (as of June 30, 2017; see page 19) 3,414,682
($ in 000s, except RevPAR and RevPOR) FY 2016 FY 2017 YoY
Q2 Q3 Q4 Q1 Q2 Q2
Senior Housing: Owned Portfolio
11
Resident fee revenue $ 524,324 $ 521,913 $ 512,444 $ 516,645 $ 442,462
Less: Facility operating expenses (320,898) (329,918) (328,993) (325,526) (287,327)
Leased Portfolio Operating Income 203,426 191,995 183,451 191,119 155,135 (23.7 )%
Less: G&A Portfolio Allocation (see page 14) (25,791) (18,987) (21,592) (22,362) (20,394)
Leased Portfolio Operating Income (adjusted to Include G&A Allocation) $ 177,635 $ 173,008 $ 161,859 $ 168,757 $ 134,741 (24.1)%
Additional Information
Total cash lease payments (see page 16) $ (154,398) $ (154,699) $ (155,255) $ (154,422) $ (132,235)
Proceeds from entrance fees, net of refunds and amortization $ 3,352 $ 2,389 $ 1,575 $ (173) $ 541
Community level capital expenditures, net (see page 15) $ (23,573) $ (17,360) $ (16,585) $ (14,801) $ (14,205)
Number of communities (period end) 549 546 539 476 469
Period end number of units 44,978 44,762 44,081 38,170 37,498
Total Average Units 45,085 44,853 44,540 43,821 37,912
RevPAR $ 3,869 $ 3,870 $ 3,827 $ 3,922 $ 3,883 0.4 %
Weighted average unit occupancy 86.4% 86.8% 86.6% 85.9% 85.2% -120 bps
RevPOR $ 4,478 $ 4,458 $ 4,420 $ 4,564 $ 4,557 1.8 %
Lease Coverage (as of June 30, 2017) 1.02x
($ in 000s, except RevPAR and RevPOR) FY 2016 FY 2017 YoY
Q2 Q3 Q4 Q1 Q2 Q2
Lease Maturity Information as of June 30, 2017 Trailing twelve
months ended
March 31, 2017
Leased communities with
purchase options
Leased communities
without purchase options Total leased communities
Initial lease maturities
Community
count
Total
Average
Units
Community
count
Total
Average
Units
Community
count
Total
Average
Units
Total cash lease
payments
2017 1 903 27 2,246 28 3,149 $ 16,624
2018 42 2,169 10 1,035 52 3,204 44,119
2019 3 327 49 2,743 52 3,070 47,243
2020 2 301 86 4,551 88 4,852 57,160
2021 — — 26 1,649 26 1,649 20,605
Thereafter 46 2,446 177 19,128 223 21,574 320,291
Total 94 6,146 375 31,352 469 37,498 $ 506,042
Senior Housing: Leased Portfolio
12
(1) Data reflected is for the consolidated senior housing portfolio only.
(2) NIC MAP Supply Set, Q2 2017 "New Construction" properties with projected open dates through Q2 2018.
(3) Saturation is equal to units per population Age 75+ with income 50k+.
(4) Percentage changes are based on data from Esri for 2016-2021.
Brookdale's Largest 20 Markets - Competitive Summary
Brookdale in NIC Markets Competition Within 20 Minute Drive
Market
Community
Count
Total
Average
Units
(IL/AL/MC)
Q2 2017
Weighted
Average
Unit
Occupancy
Q2 2017
RevPAR
New Const.
Properties(2)
IL/AL/MC
New
Const.
Units(2)
1 Yr Projected
Unit Opens %
of Supply(2)
Current
Saturation(3)
5 Yr
Projected
Total Pop
Growth(4)
5 Yr Projected
Age 75 + Pop
w/ Inc. $50k +
Growth(4)
Chicago, IL 16 2,600 90.2% $ 3,971 12 1,439 5.8% 22.4% 1.5% 19.9%
Seattle, WA 25 2,449 87.8% 3,714 4 454 2.1% 31.2% 7.1% 32.9%
Los Angeles, CA 20 2,145 82.2% 3,885 4 430 1.7% 11.7% 3.7% 22.7%
Phoenix, AZ 22 1,790 88.7% 3,823 12 1,509 7.3% 29.6% 7.3% 43.4%
Dallas, TX 25 1,711 85.9% 3,478 17 1,348 5.2% 31.1% 8.6% 35.2%
Portland, OR 19 1,649 93.6% 3,630 3 419 2.2% 51.6% 6.0% 45.5%
Charlotte, NC 19 1,457 90.6% 4,454 4 533 5.4% 38.2% 8.6% 46.3%
Denver, CO 11 1,207 83.4% 4,450 11 1,483 11.7% 29.1% 8.7% 34.5%
Riverside, CA 12 1,205 82.2% 3,195 2 238 2.2% 17.3% 4.7% 19.9%
Austin, TX 10 1,042 86.2% 5,356 7 814 11.4% 28.6% 13.5% 41.7%
Miami, FL 7 1,038 83.0% 2,969 5 756 5.2% 18.8% 6.5% 40.4%
Jacksonville, FL 9 991 87.5% 3,584 3 391 7.9% 28.0% 6.2% 50.7%
Houston, TX 12 989 85.0% 4,511 8 890 8.3% 19.0% 9.6% 36.8%
Richmond, VA 2 980 85.8% 1,905 3 196 2.8% 43.2% 5.6% 8.8%
San Antonio, TX 12 971 72.0% 2,866 1 63 0.8% 25.8% 8.7% 29.6%
Detroit, MI 10 955 82.7% 3,188 11 1,364 8.5% 30.3% 1.4% 42.9%
Santa Rosa, CA 6 866 80.6% 4,063 — — —% 18.4% 3.8% 26.1%
Atlanta, GA 9 858 86.3% 3,329 6 747 7.5% 34.0% 8.1% 56.2%
Philadelphia, PA 11 853 84.8% 4,578 1 96 0.7% 23.6% 1.7% 18.6%
Tampa, FL 8 851 79.3% 2,980 6 677 6.2% 23.9% 5.5% 39.6%
Top 20 Markets 265 26,607 85.7% $ 3,746 120 13,847 5.0% 24.2% 6.0% 31.8%
All Other NIC Markets 327 26,674 84.5% $ 3,886 92 10,123 3.2% 24.1% 4.6% 29.8%
New Supply (1)
13
Resident fee revenue
Home Health $ 97,423 $ 91,858 $ 91,199 $ 92,241 $ 88,561
Outpatient Therapy 14,511 12,667 9,320 6,375 6,179
Hospice 10,503 11,766 12,531 13,346 15,441
Other ancillary services 899 972 992 10 9
Segment resident fee revenue 123,336 117,263 114,042 111,972 110,190 (10.7)%
Segment Operating Income 19,032 14,624 16,289 15,629 13,103 (31.2)%
Segment Operating Margin 15.4% 12.5% 14.3% 14.0% 11.9% -350 bps
G&A Allocation (see page 14) (7,998) (6,323) (6,331) (7,225) (7,128)
Segment Operating Income (Adjusted to Include G&A Allocation) $ 11,034 $ 8,301 $ 9,958 $ 8,404 $ 5,975 (45.8)%
Segment Operating Margin (Adjusted to Include G&A Allocation) 8.9% 7.1% 8.7% 7.5% 5.4% -350 bps
Additional Information
Interest expense $ (323) $ (321) $ (303) $ (288) $ (165)
Community level capital expenditures, net (see page 15) $ (77) $ (155) $ (51) $ (22) $ (35)
Outpatient Therapy treatment codes 476,530 419,619 307,933 193,853 190,618 (60.0)%
Home Health average daily census 15,388 14,456 14,587 15,370 14,821 (3.7)%
Hospice average daily census 737 813 863 920 1,033 40.2 %
($ in 000s) FY 2016 FY 2017 YoY
Q2 Q3 Q4 Q1 Q2 Q2
Ancillary Services
14
(1) G&A allocations are calculated using a methodology which the Company believes best matches the type of general and administrative cost with the community, segment, or portfolio.
Some of the allocations are based on direct utilization and some are based on formulas such as unit proportion. G&A allocations presented herein exclude non-cash stock-based
compensation expense and integration, transaction, transaction-related and strategic project costs.
G&A Expense Allocations(1)
Senior Housing Owned Portfolio allocation $ 20,015 $ 14,685 $ 16,163 $ 16,808 $ 17,580
Senior Housing Leased Portfolio allocation 25,791 18,987 21,592 22,362 20,394
Ancillary Services allocation 7,998 6,323 6,331 7,225 7,128
Management Services allocation 11,200 8,567 9,505 11,238 14,184
Total allocations(1) 65,004 48,562 53,591 57,633 59,286
Non-cash stock-based compensation expense 8,994 8,455 5,067 7,774 7,246
Integration, Transaction-Related and Strategic Project Costs 16,697 6,408 8,010 153 558
General and administrative expense 90,695 63,425 66,668 65,560 67,090 -26.0%
Transaction Costs 441 659 2,040 7,593 3,339
General and administrative expense and transaction costs $ 91,136 $ 64,084 $ 68,708 $ 73,153 $ 70,429 -22.7%
Allocated G&A Expense as a Percentage of Resident Fee Revenue
Resident fee revenue $ 1,054,568 $ 1,042,831 $ 1,010,074 $ 1,016,927 $ 934,070
Senior Housing Owned Portfolio allocation 20,015 14,685 16,163 16,808 17,580
Senior Housing Leased Portfolio allocation 25,791 18,987 24,592 22,362 20,394
Ancillary Services allocation 7,998 6,323 6,331 7,225 7,128
Non-cash stock-based compensation expense 8,994 8,455 5,067 7,774 7,246
Total $ 62,798 $ 48,450 $ 49,153 $ 54,169 $ 52,348
As a % of resident fee revenue 6.0% 4.6% 4.9% 5.3% 5.6%
($ in 000s) FY 2016 FY 2017 YoY
Q2 Q3 Q4 Q1 Q2 Q2
G&A Expense & Transaction Costs
15
(1) Includes net recurring and EBITDA-enhancing projects which were formerly reported separately.
(2) Formerly referred to by the Company as corporate, integration and other.
Community level capital expenditures, including allocations(1)
Senior Housing Owned Portfolio $ 18,661 $ 19,983 $ 18,668 $ 13,909 $ 16,733
Senior Housing Leased Portfolio 23,573 17,360 16,585 14,801 14,205
Ancillary Services 77 155 51 22 35
Community level capital expenditures, net(1) 42,311 37,499 35,304 28,732 30,973 (26.8 )%
Corporate capital expenditures(2) 16,448 18,112 14,059 5,990 7,859 (52.2 )%
Non-Development Capital Expenditures, net 58,759 55,611 49,363 34,722 38,832 (33.9)%
Development Capital Expenditures, net 6,508 6,000 7,186 1,064 2,807 (56.9)%
Total capital expenditures, net $ 65,267 $ 61,611 $ 56,549 $ 35,786 $ 41,639 (36.2)%
Community level capital expenditures per unit $ 524 $ 468 $ 452 $ 374 $ 437 (16.6 )%
Reconciliation to Additions to PP&E
Total capital expenditures, net $ 65,267 $ 61,611 $ 56,549 $ 35,786 $ 41,639
Add: Total lessor reimbursements 14,557 10,385 12,727 8,044 5,545
Add: Change in related payables 1,726 1,894 421 5,098 (6,542)
Additions to property, plant and equipment and leasehold intangibles, net $ 81,550 $ 73,890 $ 69,697 $ 48,928 $ 40,642
($ in 000s, except for Community level capital expenditures per unit) FY 2016 FY 2017 YoY
Q2 Q3 Q4 Q1 Q2 Q2
Capital Expenditures
16(1) Includes corporate lease expense of $1,171, $1,182, $1,160 $1,133, and $1,109 (in thousands), respectively.
Operating Leases
Facility lease expense $ 92,682 $ 92,519 $ 91,745 $ 88,807 $ 84,690
Less: Straight-line (income) expense, net 523 859 1,786 3,007 3,119
Less: Amortization of (above) below market lease, net 1,733 1,699 1,699 1,697 1,697
Add: Amortization of deferred gain 1,093 1,093 1,093 1,093 1,093
Cash operating lease payments(1) $ 96,031 $ 96,170 $ 96,323 $ 94,604 $ 90,599 (5.7 )%
Capital and Financing Leases
Interest expense: capital and financing lease obligations $ 50,581 $ 50,401 $ 50,451 $ 49,859 $ 32,228
Less: Non-cash interest expense on financing lease obligations (6,575) (6,714) (6,768) (6,156) (3,865)
Add: Lease financing debt amortization 15,532 16,024 16,409 17,248 14,382
Cash capital and financing lease payments $ 59,538 $ 59,711 $ 60,092 $ 60,951 $ 42,745 (28.2 )%
Total cash lease payments(1) $ 155,569 $ 155,881 $ 156,415 $ 155,555 $ 133,344 (14.3)%
Interest Expense Reconciliation to Income Statement
Interest expense: capital and financing lease obligations $ 50,581 $ 50,401 $ 50,451 $ 49,859 $ 32,228
Less: Non-cash interest expense on financing lease obligations (6,575) (6,714) (6,768) (6,156) (3,865)
Interest expense: capital and financing lease obligations - cash payments 44,006 43,687 43,683 43,703 28,363
Less: Interest income (728) (809) (694) (631) (804)
Interest expense: debt 43,731 43,701 42,605 40,573 41,517
Interest expense, net 87,009 86,579 85,594 83,645 69,076
Add: Amortization of deferred financing costs and debt premium (discount) 2,288 2,380 2,422 2,591 2,692
Add: Change in fair value of derivatives 4 — 150 46 39
Add: Non-cash interest expense on financing lease obligations 6,575 6,714 6,768 6,156 3,865
Add: Interest income 728 809 694 631 804
Interest expense per income statement $ 96,604 $ 96,482 $ 95,628 $ 93,069 $ 76,476
($ in 000s) FY 2016 FY 2017 YoY
Q2 Q3 Q4 Q1 Q2 Q2
Cash Lease Payments
17
($ in 000s) Q2 2017
Twelve Months
Ended June 30,
2017
Total CCRC Venture Other Ventures Total
Resident fee revenue $ 360,425 $ 100,066 $ 260,359 $ 1,223,071
Less: Facility operating expenses (251,100) (77,249) (173,851) (841,481)
Less: General and administrative expenses including management fees (17,839) (5,214) (12,625) (63,641)
Less: Facility lease expense, net 14 — 14 (1,523)
Adjusted EBITDA of Unconsolidated Ventures $ 91,500 $ 17,603 $ 73,897 $ 316,426
Less: Interest expense, net (34,361) (6,154) (28,207) (138,448)
Add: Proceeds from entrance fees, net of refunds and amortization 7,468 7,468 — 33,281
Less: Other 507 (10) 517 100
Less: Community level capital expenditures, net (23,739) (11,694) (12,045) (92,759)
Adjusted Free Cash Flow of Unconsolidated Ventures $ 41,375 $ 7,213 $ 34,162 $ 118,600
Statistics
Brookdale's weighted average unit ownership percentage 22.2% 51.0% 12.5% 22.2%
Non-recourse debt principal of unconsolidated ventures as of June 30, 2017 $ 3,334,823 $ 636,451 $ 2,698,372 $ 3,334,823
Number of communities (period end) 202 16 186 202
Total Average Units 30,215 7,213 23,002 25,895
Weighted average unit occupancy 84.7% 85.2% 84.6% 86.2%
RevPOR $ 4,577 $ 5,065 $ 4,423 $ 4,588
Brookdale's Proportionate Share of:
Adjusted EBITDA of Unconsolidated Ventures $ 18,219 $ 8,978 $ 9,241 $ 68,687
Adjusted Free Cash Flow of Unconsolidated Ventures $ 7,920 $ 3,679 $ 4,241 $ 30,935
Debt principal of unconsolidated ventures as of June 30, 2017 $ 660,343 $ 324,590 $ 335,753 $ 660,343
Unconsolidated Ventures
18
$2,326,295 $1,271,513
(1) Includes the carrying value of mortgage debt, convertible notes, line of credit and other notes payable, but excludes capital and financing lease obligations.
(2) Pertaining to variable rate debt, reflects a) market rates as of June 30, 2017 and b) applicable cap rates for hedged debt.
Line of credit available to draw Cash and cash equivalents and marketable securities Total liquidity (available to draw + cash)
$600,000
$400,000
$200,000
$0
06/30/16 09/30/16 12/31/16 03/31/17 06/30/17
$267,244 $309,576
$367,642 $367,473 $364,699
$39,053
$74,184
$216,397
$59,237
$181,307
$426,710
$584,039
$383,760
$306,297
As of June 30, 2017
Weighted Rate
Fixed rate debt 5.02%
Variable rate debt (2) 3.55%
Total debt and line of credit 4.50%
Balance(1)
Total debt $ 3,597,808
Total Liquidity
($ in 000s)
Debt & Liquidity
$546,006
Debt Structure(1)
($ in 000s)
Fixed rate debt
Variable rate debt with interest rate caps
Variable rate debt- unhedged
Total variable rate debt
$776,393
$495,120
19
Debt Maturity Schedule(1)
($ in 000s)
Debt
$1,400,000
$700,000
$0
2017 2018 2019 2020 2021 Thereafter
$130,067
$1,032,438
$135,570
$475,794
$324,128
$1,499,811
(1) The debt maturity and weighted rate schedules
reflect the payment and interest terms of a debt
refinancing completed in July 2017. The amounts
presented exclude the $19.6 million of
incremental debt from the refinancing transaction.
(2) Includes carrying value of $302.5 million of
convertible notes.
(3) Includes mortgage debt, convertible notes and
other notes payable, but excludes capital and
financing leases and line of credit and recurring
principal amortization.
(4) Leverage ratios include results of operations of
communities disposed of through sale or lease
termination through the disposition date.
(5) Amounts exclude integration, transaction,
transaction-related and strategic project costs of
$28.8 million.
Important Note Regarding Non-GAAP Financial
Measures. Adjusted EBITDAR, Adjusted EBITDA and
Adjusted EBITDA after cash capital and financing lease
payments (in each case excluding integration,
transaction, transaction-related and strategic-project
costs), Net debt, and Adjusted net debt are financial
measures that are not calculated in accordance with
GAAP. See the definitions of such measures under
“Definitions” below and important information
regarding such measures, including reconciliations to
the most comparable GAAP financial measures,
under “Non-GAAP Financial Measures” below.
(3)
(2)
Leverage Ratios(4)
($ in 000s)
Twelve months ended June 30, 2017
Annualized
Leverage
Adjusted EBITDAR(5) (A) $ 1,151,618
Less: Cash operating lease payments (see page 16) (377,696)
Adjusted EBITDA(5) 773,922
Less: Cash capital and financing lease payments (see page 16) (223,499)
Adjusted EBITDA(5) after cash capital and financing lease payments (B) 550,423
As of June 30, 2017
Debt (3) 3,597,808
Line of credit —
Less: Cash and cash equivalents (151,528)
Less: Marketable securities (29,779)
Less: Cash and escrow deposits - restricted held as collateral against existing debt (1,819)
Net Debt (C) 3,414,682 6.2x (C/B)
Plus: Cash operating and capital and financing lease payments (see page 16) multiplied by 8 4,809,560
Adjusted Net Debt (D) $ 8,224,242 7.1x (D/A)
Weighted Rate(1)
Debt(3)
Line of
Credit
2017 5.08% —
2018 4.16% —
2019 5.98% —
2020 5.21% —
2021 5.81% —
Thereafter 3.84% —
Total 4.41% —
Total Balance
Debt(3) $ 3,597,808
Debt Maturity & Leverage
20
(1) Includes results of operations of communities disposed through sale or lease termination through the disposal date.
(2) See page 14. G&A allocations presented on this page exclude non-cash stock-based compensation expense of $28,542 and integration, transaction, transaction-related and strategic
project costs of $28,760 for the twelve months ended June 30, 2017.
Senior Housing: Owned Portfolio(1)
Owned Portfolio Operating Income $ 515,213
Less: G&A Portfolio Allocation(2) (65,236)
Owned Portfolio Operating Income (Adjusted to Include G&A Allocation) $ 449,977
Net Debt as of June 30, 2017 (see page 19) $ 3,414,682
Total Average Units 33,664
Senior Housing: Leased Portfolio(1)
Leased Portfolio Operating Income (Adjusted to Include G&A Allocation)(2) $ 638,365
Total cash lease payments (see page 16) $ (596,611)
Proceeds from entrance fees, net of refunds and amortization $ 4,332
Total Average Units 42,782
Ancillary Services
Segment Operating Income (Adjusted to Include G&A Allocation)(2) $ 32,638
Management Services
Segment Operating Income (Adjusted to Include G&A Allocation)(2) $ 30,638
Unconsolidated Ventures
Brookdale's Proportionate Share of Adjusted EBITDA $ 68,687
Brookdale's Proportionate Share of non-recourse debt principal as of June 30, 2017 $ 660,343
Total Average Units 25,895
Brookdale's weighted average unit ownership percentage 22.2%
Shares outstanding (excluding 5,358,640 unvested restricted shares) as of June 30, 2017 186,267,753
($ in 000s and are for the trailing twelve months ending June 30, 2017 unless otherwise noted)
Net Asset Value Elements
21
Adjusted EBITDA is a non-GAAP financial measure that the Company defines as net
income (loss) before provision (benefit) for income taxes; non-operating (income)
expense items; depreciation and amortization (including non-cash impairment
charges); (gain) loss on sale or acquisition of communities (including gain (loss) on
facility lease termination); straight-line lease expense (income), net of amortization
of (above) below market rents; amortization of deferred gain; non-cash stock-based
compensation expense; and change in future service obligation. For purposes of the
Company’s leverage ratios presented under “Debt Maturity & Leverage”, Adjusted
EBITDA and Adjusted EBITDA after cash capital and financing lease payments exclude
integration, transaction, transaction-related and strategic project costs.
Adjusted EBITDAR is a non-GAAP financial measure that the Company defines as
Adjusted EBITDA less cash operating lease payments. For purposes of the Company’s
leverage ratios presented under “Debt Maturity & Leverage”, Adjusted EBITDAR
excludes integration, transaction, transaction-related and strategic project costs.
Adjusted Free Cash Flow is a non-GAAP financial measure that the Company defines
as net cash provided by (used in) operating activities before: changes in operating
assets and liabilities; gain (loss) on facility lease termination; and distributions from
unconsolidated ventures from cumulative share of net earnings; plus: proceeds from
refundable entrance fees, net of refunds; and property insurance proceeds; less: lease
financing debt amortization and Non-Development Capital Expenditures (next
page).
Adjusted Net Debt is a non-GAAP financial measure that the Company defines as
Net Debt, plus cash operating and capital and financing lease payments for the
relevant period multiplied by 8.
Brookdale's Proportionate Share of Adjusted EBITDA of Unconsolidated
Ventures is a non-GAAP financial measure calculated based on the Company’s equity
ownership percentage and in a manner consistent with the Company’s definition of
Adjusted EBITDA for its consolidated entities. The Company’s investments in its
unconsolidated ventures are accounted for under the equity method of accounting.
Brookdale’s Proportionate Share of Adjusted Free Cash Flow of Unconsolidated
Ventures is a non-GAAP financial measure calculated based on the Company’s equity
ownership percentage and in a manner consistent with the Company’s definition of
Adjusted Free Cash Flow for its consolidated entities. The Company’s investments in
its unconsolidated ventures are accounted for under the equity method of
accounting and, therefore, the Company’s proportionate share of Adjusted Free Cash
Flow of unconsolidated ventures does not represent cash available to the Company’s
consolidated business except to the extent it is distributed to the Company.
Combined Segment Operating Income is defined by the Company as resident fee
and management fee revenue of the Company, less facility operating expenses.
Combined Segment Operating Income does not include general and administrative
expenses, transaction costs or depreciation and amortization.
Community Labor Expenses is a component of facility operating expense that
includes regular and overtime salaries and wages, bonuses, paid-time-off and holiday
wages, payroll taxes, contract labor, employee benefits, and workers compensation.
Development Capital Expenditures means capital expenditures for community
expansions and major community redevelopment and repositioning projects,
including the Company’s Program Max initiative, and the development of new
communities. Amounts of Development Capital Expenditures are presented net of
lessor reimbursements received or anticipated to be received.
Integration, Transaction, Transaction-Related and Strategic Project Costs are
general and administrative expenses. Integration costs include transition costs
associated with the Emeritus merger and organizational restructuring (such as
severance and retention payments and recruiting expenses), third party consulting
expenses directly related to the integration of Emeritus (in areas such as cost savings
and synergy realization, branding and technology and systems work), and internal
costs such as training, travel and labor, reflecting time spent by Company personnel
on integration activities and projects. Transaction and transaction-related costs
include third party costs directly related to the acquisition of Emeritus, other
acquisition and disposition activity, community financing and leasing activity, our
assessment of options and alternatives to enhance stockholder value, and corporate
capital structure assessment activities (including stockholder relations advisory
matters), and are primarily comprised of legal, finance, consulting, professional fees
and other third party costs. Strategic project costs include costs associated with
certain strategic projects related to refining the Company's strategy, building out
enterprise-wide capabilities for the post-merger platform (including the electronic
medical records (“EMR”) roll-out project) and reducing costs and achieving synergies
by capitalizing on scale.
Interest Coverage is calculated based on the trailing-twelve months Owned
Portfolio Operating Income adjusted for 5% management fee and capital
expenditures at $350/unit, divided by the trailing-twelve months property level and
corporate debt interest expense.
Lease Coverage is calculated based on the trailing-twelve months Leased Portfolio
Operating Income adjusted for 5% management fee and capital expenditures at
$350/unit, divided by the trailing-twelve months cash lease payments for both
operating leases and capital and financing leases, excluding corporate lease expense.
Definitions
22
Leased Portfolio Operating Income is defined by the Company as resident fee
revenues (excluding Brookdale Ancillary Services segment revenue), less facility
operating expenses for the Company’s Senior Housing Leased Portfolio. Leased
Portfolio Operating Income does not include general and administrative expenses
(unless otherwise noted), transaction costs or depreciation and amortization.
Net Debt is a non-GAAP financial measure that the Company defines as the total of
its debt (mortgage debt, convertible notes and other notes payable) and the
outstanding balance on the line of credit, less unrestricted cash, marketable
securities, and cash held as collateral against existing debt.
n/m means not meaningful and is used in the year-over-year variance column if either
or both periods being compared have a negative sign.
Non-Development Capital Expenditures is comprised of corporate and
community-level capital expenditures, including those related to maintenance,
renovations, upgrades and other major building infrastructure projects for the
Company’s communities. Non-Development Capital Expenditures does not include
capital expenditures for community expansions and major community
redevelopment and repositioning projects, including the Company’s Program Max
initiative, and the development of new communities (i.e., Development Capital
Expenditures). Amounts of Non-Development Capital Expenditures are presented
net of lessor reimbursements received or anticipated to be received.
Owned Portfolio Operating Income is defined by the Company as resident fee
revenues (excluding Brookdale Ancillary Services segment revenue), less facility
operating expenses for the Company’s Senior Housing Owned Portfolio. Owned
Portfolio Operating Income does not include general and administrative expenses
(unless otherwise noted), transaction costs or depreciation and amortization.
RevPAR, or average monthly senior housing resident fee revenues per available unit,
is defined by the Company as resident fee revenues, excluding Brookdale Ancillary
Services segment revenue and entrance fee amortization, for the corresponding
portfolio for the period, divided by the weighted average number of available units
in the corresponding portfolio for the period, divided by the number of months in
the period.
RevPOR, or average monthly senior housing resident fee revenues per occupied unit,
is defined by the Company as resident fee revenues, excluding Brookdale Ancillary
Services segment revenue and entrance fee amortization, for the corresponding
portfolio for the period, divided by the weighted average number of occupied units
in the corresponding portfolio for the period, divided by the number of months in
the period.
Same Community information reflects historical results from senior housing
operations for same store communities (utilizing the Company's methodology for
determining same store communities).
Segment Operating Income is defined by the Company as segment revenues less
segment facility operating expenses. Segment Operating Income does not include
general and administrative expenses (unless otherwise noted), transaction costs or
depreciation and amortization. Management Services segment operating income
excludes revenue for reimbursements for which the Company is the primary obligor
of costs incurred on behalf of managed communities, and there are no facility
operating expenses associated with the Management Services segment. See the
Segment Information note to the Company’s consolidated financial statements for
more information regarding the Company’s segments.
Senior Housing Leased Portfolio represents Brookdale leased communities and
does not include owned, managed – 3rd party, or managed – venture communities.
Senior Housing Operating Income is defined by the Company as segment revenues
less segment facility operating expenses for the Company’s Retirement Centers,
Assisted Living and CCRCs–Rental segments on an aggregate basis. Senior Housing
Operating Income does not include general and administrative expenses,
transaction costs or depreciation and amortization.
Senior Housing Owned Portfolio represents Brookdale owned communities and
does not include leased, managed – 3rd party, or managed – venture communities.
Total Average Units represents the average number of units operated during the
period, excluding equity homes.
Total RevPAR, or average monthly resident fee revenues per available unit, is defined
by the Company as resident fee revenues, excluding entrance fee amortization, for
the Company for the period, divided by the weighted average number of available
units in the Company’s consolidated portfolio for the period, divided by the number
of months in the period.
Definitions
23
Brookdale West Hartford
West Hartford, CT
Consolidated Statements of Cash Flows 24
Non-GAAP Financial Measures 25
Appendix
24
Cash Flows from Operating Activities
Net income (loss) $ (35,491) $ (51,728) $ (268,600) $ (126,361) $ (46,337)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Loss on extinguishment of debt, net — 236 876 54 42
Depreciation and amortization, net 135,682 133,163 131,510 130,078 123,579
Asset impairment 4,152 19,111 221,877 20,706 1,559
Equity in (earnings) loss of unconsolidated ventures (338) 878 (1,182) (981) 4,570
Distributions from unconsolidated ventures from cumulative share of net earnings — 6,400 17,144 439 453
Amortization of deferred gain (1,093) (1,093) (1,093) (1,093) (1,093)
Amortization of entrance fee revenue (1,013) (1,172) (1,084) (1,198) (832)
Proceeds from deferred entrance fee revenue 4,371 3,869 2,653 1,927 2,025
Deferred income tax (benefit) provision (602) 3,472 (556) 83,310 (2,937)
Change in deferred lease liability (523) (859) (1,786) (3,007) (3,119)
Change in fair value of derivatives 4 — 150 46 39
Loss (gain) on sale of assets, net 198 425 (5,092) 603 547
Loss on facility lease termination — — — — 6,368
Non-cash stock-based compensation 8,994 8,455 5,067 7,774 7,246
Non-cash interest expense on financing lease obligations 6,575 6,714 6,768 6,156 3,865
Amortization of (above) below market rents, net (1,733) (1,699) (1,699) (1,697) (1,697)
Other (1,267) (2,763) (2,777) (1,398) (1,571)
Changes in operating assets and liabilities:
Accounts receivable, net 8,177 2,744 (6,602) 3,556 8,401
Prepaid expenses and other assets, net 19,709 9,507 10,292 (8,630) 27,609
Accounts payable and accrued expenses (21,745) (50,759) (9,356) (51,627) 3,645
Tenant refundable fees and security deposits 264 (731) (146) (297) 82
Deferred revenue (16,825) 15,272 (7,913) 8,406 664
Net cash provided by operating activities 107,496 99,442 88,451 66,766 133,108
Cash Flows from Investing Activities
Change in lease security deposits and lease acquisition deposits, net (328) (238) (449) (420) 425
Change in cash and escrow deposits - restricted 283 (2,165) 6,837 (629) (1,092)
Purchase of marketable securities — — — — (29,779)
Additions to property, plant and equipment and leasehold intangibles, net (81,550) (73,890) (69,697) (48,928) (40,642)
Acquisition of assets, net of related payables — — — — (400)
Investment in unconsolidated ventures (1,368) (2,338) (7,306) (185,971) (195)
Distributions received from unconsolidated ventures 1,878 1,234 214,137 1,807 6,238
Proceeds from sale of assets, net — 173,887 78,461 31,675 2,780
Property insurance proceeds 1,267 2,763 2,777 1,398 1,571
Other (2,470) 3,109 6,439 696 251
Net cash (used in) provided by investing activities (82,288) 102,362 231,199 (200,372) (60,843)
Cash Flows from Financing Activities
Proceeds from debt 14,758 10,004 185,216 34,455 58,116
Repayment of debt and capital and financing lease obligations (44,411) (89,269) (251,613) (52,273) (36,931)
Proceeds from line of credit 446,000 382,000 — — —
Repayment of line of credit (469,500) (468,500) (100,000) — —
Purchase of treasury stock — — (9,640) — —
Payment of financing costs, net of related payables 177 (773) (1,524) (321) (202)
Proceeds from refundable entrance fees, net of refunds (6) (308) 6 (902) (652)
Payment on lease termination (4,625) — — — (552)
Payments of employee taxes for withheld shares (3) (467) (205) (5,112) (208)
Other 593 640 323 599 455
Net cash (used in) provided by financing activities (57,017) (166,673) (177,437) (23,554) 20,026
Net increase (decrease) in cash and cash equivalents (31,809) 35,131 142,213 (157,160) 92,291
Cash and cash equivalents at beginning of period 70,862 39,053 74,184 216,397 59,237
Cash and cash equivalents at end of period $ 39,053 $ 74,184 $ 216,397 $ 59,237 $ 151,528
($ in 000s) FY 2016 FY 2017
Q2 Q3 Q4 Q1 Q2
Consolidated Statements of Cash Flows
25
This Supplemental Information contains financial measures utilized by management to evaluate the Company’s operating performance and liquidity that are not calculated
in accordance with GAAP, including Adjusted EBITDA; the Company's Proportionate Share of Adjusted EBITDA of Unconsolidated Ventures; Adjusted EBITDAR, Adjusted
EBITDA and Adjusted EBITDAR after cash lease payments (in each case excluding integration, transaction, transaction-related and strategic project costs); Net Debt; Adjusted
Net Debt; Adjusted Free Cash Flow; and the Company’s Proportionate Share of Adjusted Free Cash Flow of Unconsolidated Ventures, the Company’s definitions for which
are included in the “Definitions” section above. In addition, this section contains reconciliations of the Company’s non-GAAP financial measures Cash From Facility Operations
(CFFO), Adjusted CFFO and the Company's proportionate share of CFFO of unconsolidated ventures, which the Company historically reported and has included herein for
purposes of comparison. These non-GAAP financial measures should not be considered in isolation from or as superior to or as a substitute for net income (loss), income
(loss) from operations, net cash provided by (used in) operating activities, short-term debt, long-term debt, less current portion, current portion of long-term debt, or other
financial measures determined in accordance with GAAP. Management uses these non-GAAP financial measures to supplement the Company’s GAAP results to provide a
more complete understanding of the factors and trends affecting the business. Investors are urged to review the reconciliations set forth in this section of such non-GAAP
financial measures to their most comparable GAAP financial measures and to review the information under “Reconciliation of Non-GAAP Financial Measures” in the Company’s
earnings release dated May 8, 2017 for additional information regarding the Company’s use, and the limitations of, the Company’s non-GAAP financial measures. Investors
are cautioned that amounts presented in accordance with the Company’s definitions of these non-GAAP measures may not be comparable to similar measures disclosed by
other companies, because not all companies calculate such measures in the same manner.
As noted in the Company’s earnings release dated August 7, 2017, the Company changed its definition and calculation of Adjusted EBITDA when it reported results for the
second quarter of 2016. Prior period amounts of Adjusted EBITDA presented herein have been recast to conform to the new definition. See "Reconciliation of Non-GAAP
Financial Measures" in the Company’s earnings release dated August 7, 2017 for more information regarding the changes made to the definition and calculation of Adjusted
EBITDA.
In addition, the Company changed its definition and calculation of CFFO when it reported results for the third quarter of 2016. Prior period amounts of the Company's CFFO
and Adjusted CFFO have been recast to reflect the Company's CFFO and Adjusted CFFO separate from, and exclusive of, the Company's proportionate share of CFFO of
unconsolidated ventures. Previously, in connection with the Company's reporting results for the second quarter of 2016, the Company began reporting CFFO as a measure
of liquidity, and as such the Company changed the definition of CFFO to reflect the reconciliation of such measure from the Company's net cash provided by (used in)
operating activities. This previous change had no effect on the amounts of CFFO or Adjusted CFFO presented herein.
Non-GAAP Financial Measures
26
Net income (loss) $ (35,491) $ (51,728) $ (268,600) $ (126,361) $ (46,337)
Provision (benefit) for income taxes 123 4,159 (569) 84,028 (2,735)
Equity in (earnings) loss of unconsolidated ventures (338) 878 (1,182) (981) 4,570
Debt modification and extinguishment costs 186 1,944 5,930 61 693
Loss (gain) on sale of assets, net 198 425 (5,092) 603 547
Other non-operating income (2,267) (3,706) (3,790) (1,662) (2,236)
Interest expense 96,604 96,482 95,628 93,069 76,476
Interest income (728) (809) (694) (631) (804)
Income (loss) from operations 58,287 47,645 (178,369) 48,126 30,174
Depreciation and amortization 133,394 130,783 129,088 127,487 120,887
Asset impairment 4,152 19,111 221,877 20,706 1,559
Loss on facility lease termination — — 11,113 — 6,368
Straight-line lease expense (income) (523) (859) (1,786) (3,007) (3,119)
Amortization of above market lease, net (1,733) (1,699) (1,699) (1,697) (1,697)
Amortization of deferred gain (1,093) (1,093) (1,093) (1,093) (1,093)
Non-cash stock-based compensation expense 8,994 8,455 5,067 7,774 7,246
Adjusted EBITDA $ 201,478 $ 202,343 $ 184,198 $ 198,296 $ 160,325
($ in 000s) FY 2016 FY 2017
Q2 Q3 Q4 Q1 Q2
Adjusted EBITDA Reconciliation
Non-GAAP Financial Measures (Continued)
27
Adjusted EBITDAR; Adjusted EBITDA; and Adjusted EBITDA after cash capital and financing lease payments Reconciliations (excluding integration, transaction,
transaction-related and strategic-project costs)
($ in 000s) Twelve Months Ended June 30,
2016 2017
Net income (loss) $ (326,947) $ (493,026)
Provision for income taxes 40,460 84,883
Equity in loss of unconsolidated ventures 260 3,285
Debt modification and extinguishment costs 8,272 8,628
Gain on sale of assets, net (3,821) (3,517)
Other non-operating income (10,717) (11,394)
Interest expense 389,148 361,655
Interest income (2,224) (2,938)
Income (loss) from operations 94,431 (52,424)
Depreciation and amortization 547,624 508,245
Asset impairment 65,468 263,253
Loss on facility lease termination — 17,481
Facility lease expense 371,136 357,761
Non-cash stock-based compensation expense 34,690 28,542
Change in future service obligation (941) —
Integration, transaction, transaction-related and strategic project costs 97,547 28,760
Adjusted EBITDAR (excluding Integration, Transaction, Transaction-Related and
Strategic Project Costs) $ 1,209,955 $ 1,151,618
$ —Facility lease expense $ (371,136) $ (357,761)
Straight-line lease expense (income) 5,648 (8,771)
Amortization of above market lease, net (6,825) (6,792)
Amortization of deferred gain (4,372) (4,372)
Adjusted EBITDA (excluding Integration, Transaction, Transaction-Related and
Strategic Project Costs) $ 833,270 $ 773,922
Interest expense: capital and financing lease obligations $ (206,046) $ (182,939)
Non-cash interest expense on financing lease obligations 24,970 23,503
Lease financing debt amortization (60,220) (64,063)
Adjusted EBITDA after cash capital and financing lease payments (excluding
Integration, Transaction, Transaction-Related and Strategic Project Costs) $ 591,974 $ 550,423
Non-GAAP Financial Measures (Continued)
28
Net Debt and Adjusted Net Debt Reconciliations
($ in 000s) As of June 30,
2016 2017
Long-term debt (including current portion) $ 3,708,655 $ 3,597,808
Line of credit 186,500 —
Less: cash and cash equivalents (39,053) (151,528)
Less: marketable securities — (29,779)
Less: cash held as collateral against existing debt (2,249) (1,819)
Net Debt 3,853,853 3,414,682
Plus: trailing twelve months cash lease payments multiplied by 8 4,943,848 4,809,560
Adjusted Net Debt $ 8,797,701 $ 8,224,242
Adjusted Net Debt to Adjusted EBITDAR (excluding Integration, Transaction, Transaction-
Related and Strategic Project Costs) 7.3x 7.1x
Net Debt to Adjusted EBITDA after cash capital and financing lease payments (excluding
Integration, Transaction, Transaction-Related and Strategic Project Costs) 6.5x 6.2x
Non-GAAP Financial Measures (Continued)
29
Net cash provided by operating activities $ 107,496 $ 99,442 $ 88,451 $ 66,766 $ 133,108
Net cash (used in) provided by investing activities (82,288) 102,362 231,199 (200,372) (60,843)
Net cash (used in) provided by financing activities (57,017) (166,673) (177,437) (23,554) 20,026
Net (decrease) increase in cash and cash equivalents $ (31,809) $ 35,131 $ 142,213 $ (157,160) $ 92,291
Net cash provided by operating activities $ 107,496 $ 99,442 $ 88,451 $ 66,766 $ 133,108
Changes in operating assets and liabilities 10,420 23,967 13,725 48,592 (40,401)
Proceeds from refundable entrance fees, net of refunds (6) (308) 6 (902) (652)
Lease financing debt amortization (15,532) (16,024) (16,409) (17,248) (14,382)
Loss on facility lease termination — — 11,113 — —
Distributions from unconsolidated ventures from cumulative share of net earnings — (6,400) (17,144) (439) (453)
Non-development capital expenditures, net (58,759) (55,611) (49,363) (34,722) (38,832)
Property insurance proceeds 1,267 2,763 2,777 1,398 1,571
Adjusted Free Cash Flow $ 44,886 $ 47,829 $ 33,156 $ 63,445 $ 39,959
Add: Non-development capital expenditures, net $ 58,759 $ 55,611 $ 49,363 $ 34,722 $ 38,832
Less: Recurring capital expenditures, net (13,668) (16,890) (14,744) (12,774) (11,754)
Less: Property insurance proceeds (1,267) (2,763) (2,777) (1,398) (1,571)
Add: Lease financing debt amortization with bargain purchase option 1,415 1,425 1,432 867 868
CFFO $ 90,125 $ 85,212 $ 66,430 $ 84,862 $ 66,334
Less: Integration, transaction, transaction-related and strategic project costs $ 17,324 $ 8,775 $ 15,104 $ 7,753 $ 4,548
Adjusted CFFO $ 107,449 $ 93,987 $ 81,534 $ 92,615 $ 70,882
($ in 000s) FY 2016 FY 2017
Q2 Q3 Q4 Q1 Q2
Adjusted Free Cash Flow; CFFO; and Adjusted CFFO Reconciliations
Non-GAAP Financial Measures (Continued)
30
Brookdale's Proportionate Share of Adjusted EBITDA of Unconsolidated Ventures
For purposes of this presentation, amounts for each line item represent the aggregate amounts of such line items for all the Company's unconsolidated ventures.
($ in 000s) FY 2016 FY 2017 TTM
Q2 Q3 Q4 Q1 Q2 Q2 2017
Net income (loss) $ (1,232) $ (6,195) $ 1,917 $ 8,118 $ (26,412) $ (22,572)
Provision for income taxes 517 224 227 263 327 1,041
Debt modification and extinguishment costs — — 131 13 16 160
(Gain) loss on sale of assets, net — — (724) (372) 189 (907)
Other non-operating income (loss) (88) — (781) (434) (837) (2,052)
Interest expense 27,979 28,021 27,183 26,391 35,304 116,899
Interest income (678) (700) (723) (703) (750) (2,876)
Income (loss) from operations 26,498 21,350 27,230 33,276 7,837 89,693
Depreciation and amortization 45,262 47,085 48,042 47,528 83,172 225,827
Asset impairment 34 — 413 2 483 898
Straight-line lease expense (income) — — — — 8 8
Adjusted EBITDA of unconsolidated ventures $ 71,794 $ 68,435 $ 75,685 $ 80,806 $ 91,500 $ 316,426
Brookdale's weighted average ownership percentage 22.6% 22.4% 23.8% 21.2% 19.9% 21.7%
Brookdale's proportionate share of Adjusted EBITDA of unconsolidated ventures $ 16,245 $ 15,353 $ 17,989 $ 17,126 $ 18,219 $ 68,687
Non-GAAP Financial Measures (Continued)
31
Net cash provided by operating activities $ 55,842 $ 47,095 $ 40,994 $ 59,924 $ 85,867 $ 233,880
Net cash (used in) provided by investing activities (45,682) (40,885) 5,556 (1,150,080) (68,585) (1,253,994)
Net cash (used in) provided by financing activities (14,784) (12,073) (55,554) 1,145,059 (29,166) 1,048,266
Net (decrease) increase in cash and cash equivalents $ (4,624) $ (5,863) $ (9,004) $ 54,903 $ (11,884) $ 28,152
Net cash provided by operating activities $ 55,842 $ 47,095 $ 40,994 $ 59,924 $ 85,867 $ 233,880
Changes in operating assets and liabilities (5,205) (3,600) 8,617 2,086 (16,559) (9,456)
Proceeds from refundable entrance fees, net of refunds (677) 32 (4,931) (4,365) (5,028) (14,292)
Non-development capital expenditures, net (24,507) (25,761) (26,232) (17,027) (23,739) (92,759)
Property insurance proceeds — — — 393 834 1,227
Adjusted Free Cash Flow of unconsolidated ventures $ 25,453 $ 17,766 $ 18,448 $ 41,011 $ 41,375 $ 118,600
Brookdale's Weighted Average Ownership percentage 38.7% 42.2% 36.7% 21.3% 19.1% 26.1%
Brookdale’s Proportionate Share of Adjusted Free Cash Flow of Unconsolidated Ventures $ 9,860 $ 7,502 $ 6,763 $ 8,750 $ 7,920 $ 30,935
Adjusted Free Cash Flow $ 25,453 $ 17,766 $ 18,448 $ 41,011 $ 41,375 $ 118,600
Add: Non-development capital expenditures, net 24,507 25,761 26,232 17,027 23,739 92,759
Less: Recurring capital expenditures, net (5,189) (5,256) (5,075) (4,475) (6,461) (21,267)
Less: Property insurance proceeds — — — (393) (834) (1,227)
CFFO of unconsolidated ventures $ 44,771 $ 38,271 $ 39,605 $ 53,170 $ 57,819 $ 188,865
Brookdale's Weighted Average Ownership percentage 35.6% 36.2% 32.5% 24.6% 23.8% 28.3%
Brookdale’s proportionate share of CFFO of unconsolidated ventures $ 15,939 $ 13,837 $ 12,870 $ 13,057 $ 13,762 $ 53,526
($ in 000s) FY 2016 FY 2017 TTM
Q2 Q3 Q4 Q1 Q2 Q2 2017
Brookdale's Proportionate Share of Adjusted Free Cash Flow and CFFO of Unconsolidated Ventures
For purposes of this presentation, amounts for each line item represent the aggregate amounts of such line items for all the Company's unconsolidated ventures.
Non-GAAP Financial Measures (Continued)
Brookdale Senior Living Inc.
111 Westwood Place, Suite 400
Brentwood, TN 37027
(615) 221-2250
www.brookdale.com