Brookdale Senior Living Inc. Q4 FY2024 earnings call

• 2024 achievements: Weighted average occupancy grew 140 basis points, RevPAR increased 6.1%, adjusted EBITDA grew over 15%, adjusted free cash flow improved nearly 40% turning positive in back half of 2024. • Associate engagement: Attained year-over-year improvement in trailing twelve-month turnover for seven consecutive quarters, 2024 turnover improved over 13 percentage points vs 2023, key leadership positions retention improved, named top 200 most loved workplace by Newsweek in 2024. • Brookdale Health Plus: Converted eighty additional assisted living communities to Health Plus, independent analysis showed residents in Health Plus communities had 80% fewer ER/urgent care visits and 66% fewer hospitalizations, received strong survey engagement from residents/families. • Portfolio management transactions: Lease amendment with Omega Healthcare, executed purchase agreements to acquire forty-one communities, favorable lease amendment involving 120-community Ventas portfolio extending lease for sixty-five communities through 2035 and exiting fifty-five underperforming ones. • Capital structure: Addressed more than $1 billion of future maturities, eliminated all 2025 debt maturities and reduced 2026 maturities without extension options to $44 million. • 2025 priorities: Focus on getting every available room in service at best profitable rate, attracting/engaging/developing/retaining best associates, earning resident and family trust/satisfaction through operational excellence and continual improvements in care/services.

Fourth quarter Residency revenue grew 3.9% over prior year quarter despite 2.2% or ~1,100 units reduction in capacity. Consolidated RevPAR grew 5.5%, driven by 100 basis point increase in weighted average occupancy and 4.2% increase in RevPOR. Fourth quarter same community RevPAR increased 5.2% over prior year, driven by 90 basis points of occupancy growth and 4% increase in RevPOR. Fourth quarter same community labor expense as a percent of revenue improved 40 basis points. Fourth quarter same community other facility operating expense as a percent of revenue increased 50 basis points year over year. Fourth quarter same community operating income increased 4.4% year over year. Adjusted EBITDA for fourth quarter was approximately $99 million, above guidance range. Adjusted free cash flow was approximately $12 million negative for fourth quarter but positive in second half of 2024. Total liquidity was $389 million as of December 31st, 2024 with annualized leverage of 10.4 times.

• 2025 RevPAR guidance: 4.75% to 5.75% growth over prior year. • 2025 adjusted EBITDA guidance: Range of $430 million to $445 million, 11% to 15% year-over-year growth. • Portfolio expectations: Assumed October 1st, 2025 disposition date for fifty-five Ventas nonrenewal communities. Total average units assumed to remain relatively in line through third quarter of 2025 then step down to ~44,500 for fourth quarter. • RevPAR growth drivers: Improved move-in volume supporting strong January occupancy, anticipated progress on strategic priorities leading to accelerated occupancy growth, moderate year-over-year RevPOR growth due to lower January in-place rate increase and lower acuity move-in trend. • Adjusted EBITDA drivers: Favorable flow-through of revenue increase given high fixed cost component, new ERP system expected to provide long-term benefits but incurring ~$3 million incremental facility operating expense in 2025, general and administrative expense expected to increase due to annual merit increase and normalized incentive compensation expense, cash facility lease payments expected to be ~$57 million in first to third quarters of 2025 then step down in fourth quarter assuming October 1st disposition of Ventas communities.

• Disruption in paid third-party lead flow: Persistent disruption in lead flow from two largest third-party paid referral partners impacted 2024 move-ins and occupancy, although efforts made to redeploy marketing spend and strengthen connections with other paid referral sources. • Natural disasters: Fourth quarter incurred approximately $3.5 million of natural disaster expense related to hurricanes Helene and Milton, with potential impact on operations and financials in future periods. • Political landscape and Medicaid changes: Potential changes to Medicaid could impact the business, although Brookdale's portfolio has low Medicaid mix and focuses on profitable occupancy growth, and will continue to educate policymakers and pursue policy initiatives.

Q: For 2025 RevPAR guidance of 4.75% to 5.75%, parse out one-quarter impact from Ventas lease amendment expected on October 1st, and share assumed range for rates and OpEx growth assumptions for guidance.

A: Dawn said guide for 4.75% to 5.75% to be move-ins that have been proven to achieve, move-outs expected, haven't fully lapped prior year lead disruption, and flu season could be challenging, and have baked Ventas community dispositions into the range.

Q: How Brookdale can further accelerate growth and create shareholder value beyond 2025 and 2026?

A: Cindy said focus on key strategic priorities, mix of product types with more assisted living and memory care, expand Brookdale Health Plus to sixty additional communities, implement Brookdale Engagement Plus, enhance quality and experiential dining, focus on resident experience to capture share, and improve associate onboarding and leadership development.

Q: How does political landscape and Medicaid changes impact business?

A: Cindy said Brookdale's portfolio has under 4% Medicaid mix vs industry 18%, focused on profitable occupancy growth and walked away from some Medicaid business due to low margins, and will continue to educate policymakers and pursue policy initiatives.

Q: Long-term EBITDA growth rate and when to get to pre-pandemic occupancy rate?

A: Cindy said 2024 was third consecutive year of adjusted EBITDA growth over $50 million, 2025 expected fourth consecutive year, demographics in sweet spot of portfolio positioned haven't hit yet, and focus on disciplined profitable growth rather than specific time frame to reach pre-pandemic occupancy rate.

Q: Range of expectation for adjusted free cash flow in 2025?

A: Dawn said no specific range put out but significant adjusted free cash flow is expectation with seasonality.

Q: Color on Brookdale Engagement Plus?

A: Cindy said it's a proprietary program to personalize resident experience, match residents with unique interests to solve loneliness and give meaningful purpose.

Q: Lower acuity mix related to internal and hyper-local paid referral sources and phasing in 2025?

A: Cindy said not related to referral source change, Brookdale Health Plus attracts lower acuity residents with longer length of stay, average age has come down about six months pre-pandemic.

Q: Medicaid mix of Ventas leases walked away from vs retained portfolio?

A: Cindy said transitioning CCRC in Ventas communities, skilled nursing has higher Medicaid/Medicare mix but didn't specify overall mix comparison.

Q: Q1 occupancy assumption with higher flu incidents?

A: Cindy said Brookdale proactive in vaccinations and infection prevention with no flu closures, Dawn said January occupancy strong with 120 basis points year over year, better than prior two years' sequential decline.

Q: Drivers of 50 million dollar year-over-year EBITDA growth in 2025 guidance?

A: Dawn said RevPAR guidance 4.75% to 5.75%, solid expense management, and Cindy said focus on profitable growth and natural disaster impact managed.

Q: Framework for G&A costs beyond 2025 after exiting Ventas leases?

A: Cindy said proactive in matching support to business, always adjusting overhead cost to portfolio size.