Brookdale Senior Living(BKD) - 2023 Q4 - Annual Report

Operational Overview - As of December 31, 2023, the company operated a total of 652 communities with 55,628 units, representing 100% of total units[154] - The company managed 30 communities (4,579 units) on behalf of others, accounting for 8% of its senior housing capacity[134] - The company provides memory care services at 338 communities, totaling 9,015 memory care units, including 107 freestanding memory care communities[131] - The company operates 68 independent living communities with 12,563 units, which is 22.6% of total units[154] - The company’s CCRCs consist of 17 communities with 4,731 units, representing 8.5% of total units[154] - Approximately 80% of the units in independent living communities were independent living units, with the remaining being assisted living and memory care units[127] Financial Performance - The revenue from resident fees and management fees totaled $2,867,431, with Assisted Living and Memory Care contributing 68.3$1,960,432[156] - Total resident fees and management fees revenue increased by $269,882 thousand, or 10.4$2,597,549 thousand in 2022 to $2,867,431 thousand in 2023[269] - Adjusted EBITDA rose by$94,233 thousand, or 39.1%, from $241,305 thousand in 2022 to$335,538 thousand in 2023[269] - Net cash provided by operating activities increased significantly from $3,281 thousand in 2022 to$162,923 thousand in 2023, a change of $159,642 thousand[283] - Adjusted Free Cash Flow improved by$153,754 thousand, or 76.3%, from $(201,385) thousand in 2022 to$(47,631) thousand in 2023[283] - The segment's resident fees increased by 8.4% to $295.8 million for the year ended December 31, 2023, compared to$273.0 million in 2022, driven by a 9.1% increase in same community RevPOR and a 200 basis point increase in occupancy[297][304] Occupancy and Market Trends - The company recovered 890 basis points of weighted average consolidated senior housing occupancy by December 31, 2023, after losing 1,330 basis points during the pandemic[202] - The weighted average occupancy rate improved by 190 basis points, increasing from 75.5% in 2022 to 77.4% in 2023[280] - RevPAR increased by $469, or 11.4$4,110 in 2022 to $4,579 in 2023[280] - Same community RevPAR rose by 8.5$5,714 in 2023, up from $5,267 in 2022, reflecting improved occupancy and pricing strategies[304] Labor and Employment - As of December 31, 2023, the company employed approximately 36,000 associates, with 70$3.5 billion in mortgage financing and $230 million in 2.00$3.7 billion in outstanding debt at a weighted average interest rate of 5.58%, with 91.9% of this debt being non-recourse property-level mortgage financings[323] - The increase in interest expense was 16.4%, amounting to $238.3 million, compared to$204.7 million in the previous year[308] - The company faces risks related to its significant indebtedness and lease obligations, which could adversely affect liquidity and operational capabilities[215] - Financial covenants in debt and lease documents require maintaining prescribed liquidity and leverage ratios, impacting the company's ability to obtain additional financing[223] Liquidity and Capital Management - As of December 31, 2023, the company's liquidity was reported at $340.7 million, exceeding the required minimum of$130 million[216] - The liquidity included $278.0 million of unrestricted cash and cash equivalents,$29.8 million of marketable securities, and $32.9 million available on the secured credit facility[324] - The decrease in liquidity was primarily due to debt repayment of$358.8 million and negative Adjusted Free Cash Flow of $47.6 million[324] - The company aims to enhance liquidity by increasing RevPAR, maintaining expense discipline, refinancing maturing debt, and monetizing underperforming assets[208] Regulatory and Market Risks - The regulatory environment for the senior living industry is intensifying, which could materially affect the company's operations and expansion plans[198] - The company is heavily dependent on mortgage financing from Fannie Mae and Freddie Mac, which may become less available due to ongoing reform efforts[204] - Labor union activities could lead to increased costs and reduced operational flexibility, adversely affecting results and cash flow[235] - Increases in market interest rates could significantly raise the costs of debt obligations, negatively impacting results and cash flow[230] - The company is subject to various federal, state, and local environmental laws, which could impose substantial liabilities exceeding the value of underlying assets[242] Legal and Environmental Concerns - Legal actions and liability claims could lead to increased operating costs and uninsured liabilities, adversely affecting financial condition[247] - The company is involved in litigation and claims that may require significant costs to defend and resolve, impacting overall financial health[253] - The company faces risks related to environmental contamination, which could materially impact financial condition and results of operations[242]