NASHVILLE, Tenn., Feb. 4, 2015 /PRNewswire/ -- Brookdale
Senior Living Inc. (NYSE: BKD) ("Brookdale" or the "Company") today
reported financial and operating results for the fourth quarter and
full year of 2014. The results contained in this release are
consistent with preliminary results for the fourth quarter of 2014
issued by the Company on January 26,
2015. Highlights included:
- Cash From Facility Operations ("CFFO") of $0.53 per share for the fourth quarter of 2014,
an $0.18 per share decline from the
fourth quarter of 2013, excluding integration, transaction and
electronic medical records ("EMR") roll-out costs in both
periods.
- Average occupancy for all consolidated communities in the
fourth quarter of 2014 of 88.3%, a decline of 70 basis points from
the fourth quarter of 2013 and a decline of 20 basis points from
the third quarter of 2014.
- Adjusted EBITDA of $201.1 million
in the fourth quarter of 2014, a 55.9% increase from the fourth
quarter of 2013, excluding integration, transaction and EMR
roll-out costs in both periods.
- A 61.1% increase in fourth quarter 2014 consolidated senior
housing revenue over the fourth quarter of 2013.
- Growth in Facility Operating Income of 61.7% for the fourth
quarter of 2014 over the fourth quarter of 2013.
Andy Smith, Brookdale's CEO,
said, "As previously announced, fourth quarter CFFO was impacted by
lower occupancy, as well as larger-than-usual additions to
insurance reserves. The occupancy shortfall was attributable to
lower lead generation and conversion rates as our sales force
acclimated to a reorganized field structure and, for many, new
systems and procedures, as a result of the Emeritus
integration."
Mr. Smith continued, "On the positive side, we are making good
progress on our accelerated integration schedule. During
2015, we expect to see the benefits from the uniform systems and
processes we are putting in place, from our accelerated capital
investments and from a fully rationalized management
structure. We remain fully confident in the long-term
economic thesis of the merger with Emeritus and in the anticipated
year-three revenue and expense synergies."
Financial Results
The fourth quarter of 2014 represents the first full quarter of
results that include the operations of Emeritus, which we acquired
on July 31, 2014, and the impacts
from the transactions with HCP, Inc. that closed on August 29, 2014. Results from the third quarter
of 2014 reflect the partial period impacts from those transactions,
and results from the second quarter of 2014 and prior quarters
reflect stand-alone legacy Brookdale.
Total revenue for the fourth quarter of 2014 was $1.3 billion, an increase of $517.9 million, or 70.5%, from the fourth quarter
of 2013. Fourth quarter 2014 total revenue was comprised of
resident fee revenue of $1.0 billion,
which increased $403.4 million, or
63.2%, from the fourth quarter of 2013, management fee revenue of
$16.9 million, which increased
$8.8 million, or 107.6%, from the
fourth quarter of 2013, and managed community reimbursed costs of
$193.2 million, which increased
$105.7 million, or 120.8%, from the
fourth quarter of 2013.
Resident fee revenue for the fourth quarter of 2014 increased
primarily as a result of the inclusion of revenue from communities
acquired since the end of the fourth quarter of 2013 (including
communities acquired as part of the Emeritus acquisition) and new
units added to existing communities, partially offset by the effect
of the Company's contribution of entry fee CCRCs to a venture with
HCP on August 29, 2014. Average
monthly revenue per unit for the consolidated senior housing
portfolio was $4,220 in the fourth
quarter of 2014, a decrease of $167,
or 3.8%, over the fourth quarter of 2013, primarily due to the
inclusion of acquired Emeritus communities with lower average
monthly revenue per unit. The contribution of entry fee
CCRCs, which have higher average monthly revenue per unit than the
total Brookdale portfolio, to the venture with HCP also impacted
average monthly revenue since their results were deconsolidated
after their contribution.
Average occupancy for all consolidated communities for the
fourth quarter of 2014 was 88.3%, compared to 88.5% for the third
quarter of 2014 and 89.0% for the fourth quarter of 2013.
Assuming the Emeritus and HCP transactions had closed on
July 1st, the sequential
change from the third quarter of 2014 to the fourth quarter of 2014
was a decline of 40 basis points.
Facility operating expenses for the fourth quarter of 2014 were
$708.0 million, an increase of
$285.7 million, or 67.6%, from the
fourth quarter of 2013, primarily due to the acquisition of
Emeritus. Excluding management services in both periods, the
operating margins were 32.1% for the fourth quarter of 2014 versus
33.9% for the fourth quarter of 2013. Fourth quarter 2014
operating expenses included approximately $11.0 million of higher-than-normal insurance
reserve adjustments.
General and administrative expenses for the fourth quarter of
2014 were $98.6 million, an increase
of $53.1 million, or 116.6%, over the
fourth quarter of 2013, primarily as a result of integration and
EMR roll-out costs and the addition of employees associated with
the acquisition of Emeritus. Included in the general and
administrative expenses were integration and EMR roll-out costs of
$38.3 million in the fourth quarter
of 2014, which include third party expenses directly related to the
integration of Emeritus as well as internal costs such as labor
reflecting time spent by Company personnel on integration and
transaction activities.
Depreciation and amortization expense in the fourth quarter of
2014 increased $148.4 million, or
217.6%, over the fourth quarter of 2013, primarily due to the
acquisition of Emeritus, offset in part by the contribution of
entry fee CCRCs to the venture with HCP during the third
quarter. Net loss attributable to Brookdale common
stockholders for the fourth quarter of 2014 was $(106.5) million, or $(0.58) per share, versus net loss attributable
to Brookdale common stockholders of $(1.0)
million, or $(0.01) per share,
in the fourth quarter of 2013.
Non-GAAP Financial Measures
Brookdale's management utilizes Adjusted EBITDA and CFFO to
evaluate the Company's performance and liquidity because these
metrics exclude non-cash items such as depreciation and
amortization, asset impairment charges, non-cash stock-based
compensation expense, gain on facility lease termination and
straight-line lease expense, net of deferred gain amortization.
Adjusted EBITDA and CFFO for the fourth quarter of 2014 include
transaction costs of $7.7 million and
integration and EMR roll-out costs of $38.3
million versus transaction costs of $0.6 million and integration and EMR roll-out
costs of $3.5 million for the fourth
quarter of 2013. Brookdale also uses Facility Operating Income to
assess the performance of its communities.
Facility Operating Income was $333.9
million in the fourth quarter of 2014, an increase of
$127.4 million, or 61.7%, over the
fourth quarter of 2013. Adjusted EBITDA, excluding
integration, transaction and EMR roll-out costs, was $201.1 million for the fourth quarter of 2014, an
increase of $72.1 million, or 55.9%,
over the fourth quarter of 2013.
CFFO was $51.3 million in the
fourth quarter of 2014, or $0.28 per
share. Excluding integration, transaction and EMR roll-out
costs, CFFO was $97.3 million for the
fourth quarter of 2014, an increase of $8.8
million, or 9.9%, compared with the fourth quarter of
2013. This translated to $0.53
per share in the most recent quarter, a decrease of $0.18 per share, or 25.4%, from the fourth
quarter of 2013, on a 47.6% increase in weighted average shares
outstanding, primarily as a result of shares issued in the Emeritus
acquisition and the $330.4 million
public equity offering completed in the third quarter of
2014.
Operating Activities
As of December 31, 2014, the
Company organizes its business into five segments. Three
segments (Retirement Centers, Assisted Living and CCRCs–Rental)
constitute the Company's consolidated senior housing
portfolio. The fourth segment, Brookdale Ancillary Services,
includes the Company's outpatient therapy, home health and hospice
services. The fifth segment, Management Services, includes
the services provided to communities that are operated under
management agreements for third parties or for unconsolidated
ventures in which we have an ownership interest.
In connection with the transactions completed between the
Company and HCP on August 29, 2014,
the Company contributed all but two of its entry fee CCRCs to the
entry fee CCRC venture, at which time the communities were
deconsolidated. The operating results of the entry fee CCRCs
contributed to the venture are reported in the Company's
CCRCs-Entry Fee segment for the time periods prior to being
contributed to the venture. The results of the two remaining
entry fee CCRCs are reported in the Company's CCRCs-Rental segment
beginning with the third quarter of 2014. The Company no
longer reports operating results for a CCRCs–Entry Fee segment.
Senior Housing
Revenue for the consolidated senior housing portfolio was
$928.5 million in the fourth quarter
of 2014, an increase of 61.1% from the fourth quarter of
2013. The revenue growth reflects the addition of
approximately 34,490 weighted average units since the fourth
quarter of last year through the merger with Emeritus, organic
growth and other acquisitions (partially offset by the contribution
of entry fee CCRCs to the venture with HCP). The consolidated
portfolio period-end unit count was 83,176 units. Facility
operating expenses were $614.2
million for the fourth quarter of 2014, an increase of 66.1%
from the fourth quarter of 2013. Operating income for the
senior housing portfolio for the fourth quarter of 2014 increased
by $107.7 million, or 52.1%, to
$314.3 million from the fourth
quarter of 2013.
For the 951 same store communities in the senior housing
portfolio for the three months ended December 31, 2014, revenues grew by 1.5% over the
corresponding period in 2013. Revenue per unit increased by
2.5%, and occupancy declined by 90 basis points. Same
community expenses for the fourth quarter of 2014 increased by 5.9%
over the fourth quarter of 2013. Same community Facility
Operating Income for the consolidated senior housing portfolio
decreased by 6.0% in the fourth quarter of 2014 over the fourth
quarter of 2013. Excluding the $11.0
million of larger-than-usual insurance adjustments, the same
community expenses would have grown by 3.9% and Facility Operating
Income decreased by 2.6%.
Brookdale Ancillary Services
Revenue for the Company's ancillary services segment increased
$51.4 million, or 82.7%, to
$113.5 million for the fourth quarter
of 2014 versus the prior year quarter. The revenue increase
was driven primarily by the addition of Emeritus' Nurse on Call
ancillary services business. Ancillary services operating
expenses for the fourth quarter of 2014 increased $41.3 million, or 78.8%, compared to the fourth
quarter of 2013, primarily due to the inclusion of Nurse on Call
expenses. As a result, ancillary services operating income
for the fourth quarter of 2014 was $19.7
million, an increase of $10.0
million, or 104.1%, versus the fourth quarter of 2013.
Liquidity
Brookdale had $104.1 million of
unrestricted cash and cash equivalents and $95.2 million of restricted cash as of
December 31, 2014.
As previously announced, in December
2014, the Company entered into an amended and restated
$500 million secured credit facility
with lenders led by GE Capital, Healthcare Financial Services, as
administrative agent. The amended facility replaces the
Company's prior $250 million secured
revolving credit facility and extends the maturity date from
March 31, 2018 to January 3, 2020. The total commitment
amount is comprised of a $100 million
term loan drawn at closing and a $400
million revolving credit facility. The amended
facility decreases the interest rate payable on drawn amounts and
the fee payable on the unused portion of the facility.
Availability under the facility may vary from time to time
based upon the value and performance of the communities securing
the facility. As of December 31,
2014, the Company had $488.4
million of availability on its secured line of credit, of
which $100.0 million of borrowings
were drawn as of that date. The Company also had secured and
unsecured letter of credit facilities of up to $98.7 million in the aggregate as of December 31, 2014. Letters of credit
totaling $72.7 million had been
issued under these facilities as of that date.
In the fourth quarter of 2014, the Company repaid $275.9 million of existing variable rate debt,
financed primarily with the proceeds of its $330.4 million public equity offering completed
in the third quarter of 2014. During the fourth quarter of
2014, the Company also obtained $89.7
million of supplemental loans, secured by 21 communities,
which bear interest at a fixed rate of approximately 4.6%.
Outlook
For the full year 2015, the Company expects CFFO per share in a
range of $2.60 to $2.75 per share,
excluding integration, transaction-related and EMR roll-out
costs. This guidance excludes the potential impact of any
future acquisition or disposition activity (other than planned
purchases of currently leased communities).
Supplemental Information
The Company will shortly post on the Investor Relations section
of the Company's website at www.brookdale.com supplemental
information relating to the Company's fourth quarter and full year
2014 results. This information will also be furnished in a
Form 8-K to be filed with the SEC.
Earnings Conference Call
Brookdale's management will conduct a conference call to review
the financial results of its fourth quarter and full year ended
December 31, 2014 on Thursday, February 5, 2015 at 10:00 AM ET. The conference call can be
accessed by dialing (866) 900-2996 (from within the U.S.) or (706)
643-2685 (from outside of the U.S.) ten minutes prior to the
scheduled start and referencing the "Brookdale Senior Living Fourth
Quarter Earnings Call."
A webcast of the conference call will be available to the public
on a listen-only basis at www.brookdale.com. Please allow
extra time prior to the call to visit the site and download the
necessary software required to listen to the internet
broadcast. A replay of the webcast will be available through
the website for three months following the call.
For those who cannot listen to the live call, a replay will be
available until 11:59 PM ET on
February 18, 2015 by dialing (855)
859-2056 (from within the U.S.) or (404) 537-3406 (from outside of
the U.S.) and referencing access code "72921420". A copy of
this earnings release is posted on the Investor Relations page of
the Brookdale website (www.brookdale.com).
About Brookdale Senior Living
Brookdale Senior Living Inc. is the leading operator of senior
living communities throughout the United States. The Company
is committed to providing senior living solutions primarily within
properties that are designed, purpose-built and operated to provide
the highest-quality service, care and living accommodations for
residents. Currently Brookdale operates independent living,
assisted living, and dementia-care communities and continuing care
retirement centers, with approximately 1,150 communities in 46
states and the ability to serve approximately 111,000 residents.
Through its ancillary services program, the Company also
offers a range of outpatient therapy, home health, personalized
living and hospice services. Brookdale's stock is traded on
the New York Stock Exchange under the ticker symbol BKD.
Safe Harbor
Certain statements in this press release and the associated
earnings conference call may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Those forward-looking statements are subject to
various risks and uncertainties and include all statements that are
not historical statements of fact and those regarding our intent,
belief or expectations, including, but not limited to, statements
relating to our operational initiatives and growth strategies and
our expectations regarding their effect on our results; our
expectations regarding the economy, the senior living industry,
occupancy, revenue, cash flow, operating income, expenses, capital
expenditures, Program Max opportunities, cost savings, the demand
for senior housing, the home resale market, expansion, development
and construction activity, acquisition opportunities, asset
dispositions, our share repurchase program, taxes, capital
deployment, returns on invested capital and CFFO; our expectations
regarding returns to shareholders and our growth prospects; our
expectations concerning the future performance of recently acquired
communities and the effects of acquisitions on our financial
results; our ability to secure financing or repay, replace or
extend existing debt at or prior to maturity; our ability to remain
in compliance with all of our debt and lease agreements (including
the financial covenants contained therein); our expectations
regarding liquidity and leverage; our expectations regarding
financings and refinancings of assets (including the timing
thereof) and their effect on our results; our expectations
regarding changes in government reimbursement programs and their
effect on our results; our plans to generate growth organically
through occupancy improvements, increases in annual rental rates
and the achievement of operating efficiencies and cost savings; our
plans to expand our offering of ancillary services (therapy, home
health, personalized health and hospice); our plans to expand,
renovate, redevelop and reposition existing communities; our plans
to acquire additional communities, asset portfolios, operating
companies and home health agencies; the expected project costs for
our expansion, redevelopment and repositioning program; our
expected levels of expenditures and reimbursements (and the timing
thereof); our expectations regarding our sales, marketing and
branding initiatives and their impact on our results; our
expectations for the performance of our entrance fee communities;
our ability to anticipate, manage and address industry trends and
their effect on our business; our expectations regarding the
payment of dividends; our ability to increase revenues, earnings,
Adjusted EBITDA, Cash From Facility Operations, and/or Facility
Operating Income (as such terms are defined herein); and our
expectations regarding the integration of Emeritus and the
transactions with HCP. Forward-looking statements are
generally identifiable by use of forward-looking terminology such
as "may," "will," "should," "potential," "intend," "expect,"
"endeavor," "seek," "anticipate," "estimate," "overestimate,"
"underestimate," "believe," "could," "would," "project," "predict,"
"continue," "plan" or other similar words or expressions.
Forward-looking statements are based on certain assumptions or
estimates, discuss future expectations, describe future plans and
strategies, contain projections of results of operations or of
financial condition, or state other forward-looking
information. Our ability to predict results or the actual
effect of future plans or strategies is inherently uncertain.
Although we believe that expectations reflected in any
forward-looking statements are based on reasonable assumptions, we
can give no assurance that our expectations will be attained and
actual results and performance could differ materially from those
projected. Factors which could have a material adverse effect on
our operations and future prospects or which could cause events or
circumstances to differ from the forward-looking statements
include, but are not limited to, the risk associated with the
current global economic situation and its impact upon capital
markets and liquidity; changes in governmental reimbursement
programs; our inability to extend (or refinance) debt (including
our credit and letter of credit facilities) as it matures; the risk
that we may not be able to satisfy the conditions precedent to
exercising the extension options associated with certain of our
debt agreements; events which adversely affect the ability of
seniors to afford our monthly resident fees or entrance fees; the
conditions of housing markets in certain geographic areas; our
ability to generate sufficient cash flow to cover required interest
and long-term operating lease payments; the effect of our
indebtedness and long-term operating leases on our liquidity; the
risk of loss of property pursuant to our mortgage debt and
long-term lease obligations; the possibilities that changes in the
capital markets, including changes in interest rates and/or credit
spreads, or other factors could make financing more expensive or
unavailable to us; our determination from time to time to purchase
any shares under the repurchase program; our ability to fund any
repurchases; our ability to effectively manage our growth; our
ability to maintain consistent quality control; delays in obtaining
regulatory approvals; the risk that we may not be able to expand,
redevelop and reposition our communities in accordance with our
plans; our ability to complete acquisitions and integrate them into
our operations; competition for the acquisition of assets; our
ability to obtain additional capital on terms acceptable to us; a
decrease in the overall demand for senior housing; our
vulnerability to economic downturns; acts of nature in certain
geographic areas; terminations of our resident agreements and
vacancies in the living spaces we lease; early terminations or
non-renewal of management agreements; increased competition for
skilled personnel; increased union activity; departure of our key
officers; increases in market interest rates; environmental
contamination at any of our communities; failure to comply with
existing environmental laws; an adverse determination or resolution
of complaints filed against us; the cost and difficulty of
complying with increasing and evolving regulation; risks relating
to the integration of Emeritus and the transactions with HCP,
including in respect of unanticipated difficulties and/or
expenditures relating to such transactions; the impact of such
transactions on the Company's relationships with residents,
employees and third parties; and the inability to obtain, or delays
in obtaining, cost savings and synergies from such transactions; as
well as other risks detailed from time to time in our filings with
the Securities and Exchange Commission, including our Annual Report
on Form 10-K and Quarterly Reports on Form 10-Q. When
considering forward-looking statements, you should keep in mind the
risk factors and other cautionary statements in such SEC
filings. Readers are cautioned not to place undue reliance on
any of these forward-looking statements, which reflect our
management's views as of the date of this press release and/or the
associated earnings conference call. The factors discussed
above and the other factors noted in our SEC filings from time to
time could cause our actual results to differ significantly from
those contained in any forward-looking statement. We cannot
guarantee future results, levels of activity, performance or
achievements and we expressly disclaim any obligation to release
publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in our expectations with
regard thereto or change in events, conditions or circumstances on
which any statement is based.
Condensed
Consolidated Statements of Operations (in thousands,
except per share data)
|
|
|
|
Three Months
Ended
|
|
|
Years
Ended
|
|
|
December
31,
|
|
|
December
31,
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
Revenue
|
|
|
|
|
|
|
|
|
|
Resident
fees
|
|
$ 1,041,958
|
|
$ 638,581
|
|
|
$ 3,301,297
|
|
$ 2,515,033
|
Management
fees
|
|
16,920
|
|
8,150
|
|
|
42,239
|
|
31,125
|
Reimbursed costs
incurred on behalf of managed communities
|
|
193,225
|
|
87,502
|
|
|
488,170
|
|
345,808
|
Total
revenue
|
|
1,252,103
|
|
734,233
|
|
|
3,831,706
|
|
2,891,966
|
|
|
|
|
|
|
|
|
|
|
Expense
|
|
|
|
|
|
|
|
|
|
Facility operating
expense (excluding depreciation and amortization of $207,079,
$60,558,
$503,662 and $238,153, respectively)
|
|
707,999
|
|
422,336
|
|
|
2,210,368
|
|
1,671,945
|
General and
administrative expense (including non-cash stock-based
compensation
expense of $5,129, $5,202, $28,299 and $25,978,
respectively)
|
|
98,574
|
|
45,504
|
|
|
280,267
|
|
180,627
|
Transaction
costs
|
|
7,725
|
|
574
|
|
|
66,949
|
|
3,921
|
Facility lease
expense
|
|
92,469
|
|
69,701
|
|
|
323,830
|
|
276,729
|
Depreciation and
amortization
|
|
216,632
|
|
68,200
|
|
|
537,035
|
|
268,757
|
Asset
impairment
|
|
9,992
|
|
10,233
|
|
|
9,992
|
|
12,891
|
Costs incurred on
behalf of managed communities
|
|
193,225
|
|
87,502
|
|
|
488,170
|
|
345,808
|
Total operating
expense
|
|
1,326,616
|
|
704,050
|
|
|
3,916,611
|
|
2,760,678
|
(Loss) income from
operations
|
|
(74,513)
|
|
30,183
|
|
|
(84,905)
|
|
131,288
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
345
|
|
312
|
|
|
1,343
|
|
1,339
|
Interest
expense:
|
|
|
|
|
|
|
|
|
|
Debt
|
|
(42,104)
|
|
(24,840)
|
|
|
(128,002)
|
|
(96,131)
|
Capital and financing
lease obligations
|
|
(56,873)
|
|
(6,029)
|
|
|
(109,998)
|
|
(25,194)
|
Amortization of
deferred financing costs and debt premium (discount)
|
|
430
|
|
(4,037)
|
|
|
(7,477)
|
|
(17,054)
|
Change in fair value
of derivatives
|
|
(532)
|
|
386
|
|
|
(2,711)
|
|
980
|
Debt modification and
extinguishment costs
|
|
(2,621)
|
|
(319)
|
|
|
(6,387)
|
|
(1,265)
|
Equity in (loss)
earnings of unconsolidated ventures
|
|
(742)
|
|
493
|
|
|
171
|
|
1,484
|
Other non-operating
income
|
|
2,614
|
|
1,360
|
|
|
7,235
|
|
2,725
|
Loss before income
taxes
|
|
(173,996)
|
|
(2,491)
|
|
|
(330,731)
|
|
(1,828)
|
Benefit (provision)
for income taxes
|
|
67,200
|
|
1,516
|
|
|
181,305
|
|
(1,756)
|
Net
loss
|
|
(106,796)
|
|
(975)
|
|
|
(149,426)
|
|
(3,584)
|
Net loss attributable
to noncontrolling interest
|
|
262
|
|
-
|
|
|
436
|
|
-
|
Net loss attributable
to Brookdale Senior Living Inc. common stockholders
|
|
$ (106,534)
|
|
$ (975)
|
|
|
$ (148,990)
|
|
$ (3,584)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per share attributable to Brookdale Senior Living Inc.
common stockholders
|
|
$ (0.58)
|
|
$ (0.01)
|
|
|
$ (1.01)
|
|
$ (0.03)
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in computing basic and diluted net loss per
share
|
|
183,432
|
|
124,308
|
|
|
148,185
|
|
123,671
|
Condensed
Consolidated Balance Sheets
(in thousands)
|
|
|
|
|
|
|
|
|
December 31,
2014
|
|
December 31,
2013
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
104,083
|
|
$
58,511
|
Cash and escrow
deposits - restricted
|
|
38,862
|
|
38,191
|
Accounts receivable,
net
|
|
149,730
|
|
104,262
|
Other current
assets
|
|
322,114
|
|
93,898
|
Total current
assets
|
|
614,789
|
|
294,862
|
Property, plant, and
equipment and
|
|
|
|
|
leasehold intangibles,
net
|
|
8,389,505
|
|
3,895,475
|
Other assets,
net
|
|
1,517,069
|
|
547,420
|
Total
assets
|
|
$
10,521,363
|
|
$
4,737,757
|
|
|
|
|
|
Current
liabilities
|
|
$
877,762
|
|
$
870,844
|
Long-term debt, less
current portion
|
|
3,456,808
|
|
2,168,162
|
Capital and financing
lease obligations, less current portion
|
|
2,536,883
|
|
266,462
|
Other
liabilities
|
|
767,669
|
|
411,352
|
Total
liabilities
|
|
7,639,122
|
|
3,716,820
|
Total Brookdale
Senior Living Inc. stockholders' equity
|
|
2,881,724
|
|
1,020,937
|
Noncontrolling
interest
|
|
517
|
|
-
|
Total
equity
|
|
2,882,241
|
|
1,020,937
|
Total liabilities and
equity
|
|
$
10,521,363
|
|
$
4,737,757
|
Condensed
Consolidated Statements of Cash Flows (in
thousands)
|
|
|
|
Years Ended
December 31,
|
|
|
2014
|
|
2013
|
Cash Flows from
Operating Activities
|
|
|
|
|
Net loss
|
|
$ (149,426)
|
|
$ (3,584)
|
Adjustments to
reconcile net loss to net cash provided by
operating
|
|
|
|
|
activities:
|
|
|
|
|
Debt modification and
extinguishment costs
|
|
6,387
|
|
1,265
|
Depreciation and
amortization
|
|
544,512
|
|
285,811
|
Asset
impairment
|
|
9,992
|
|
12,891
|
Equity in earnings of
unconsolidated ventures
|
|
(171)
|
|
(1,484)
|
Distributions from
unconsolidated ventures from cumulative share of net
|
|
1,840
|
|
2,691
|
earnings
|
|
|
|
|
Amortization of
deferred gain
|
|
(4,372)
|
|
(4,372)
|
Amortization of
entrance fees
|
|
(21,220)
|
|
(29,009)
|
Proceeds from
deferred entrance fee revenue
|
|
32,704
|
|
44,191
|
Deferred income tax
benefit
|
|
(182,371)
|
|
(183)
|
Change in deferred
lease liability
|
|
1,439
|
|
2,597
|
Change in fair value
of derivatives
|
|
2,711
|
|
(980)
|
Gain on sale of
assets
|
|
(446)
|
|
(972)
|
Change in future
service obligation
|
|
670
|
|
(1,917)
|
Non-cash stock-based
compensation
|
|
28,299
|
|
25,978
|
Non-cash interest
expense on financing leases
|
|
12,647
|
|
-
|
Amortization of
(above) below market rents, net
|
|
(3,444)
|
|
-
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts receivable,
net
|
|
3,510
|
|
(5,449)
|
Prepaid expenses and
other assets, net
|
|
(52,868)
|
|
7,483
|
Accounts payable and
accrued expenses
|
|
16,812
|
|
33,837
|
Tenant refundable
fees and security deposits
|
|
(1,183)
|
|
(792)
|
Deferred
revenue
|
|
(3,370)
|
|
(1,881)
|
Net cash provided by
operating activities
|
|
242,652
|
|
366,121
|
Cash Flows from
Investing Activities
|
|
|
|
|
Increase in lease
security deposits and lease acquisition deposits, net
|
|
(48,944)
|
|
(2,051)
|
Decrease in cash and
escrow deposits — restricted
|
|
56,935
|
|
10,726
|
Additions to
property, plant, and equipment and leasehold intangibles,
net
|
|
(304,245)
|
|
(257,527)
|
Acquisition of
assets, net of related payables and cash received
|
|
(40,441)
|
|
(34,686)
|
Acquisition of
Emeritus Corporation, cash acquired
|
|
28,429
|
|
-
|
Payments on notes
receivable, net
|
|
3,269
|
|
168
|
Investment in
unconsolidated ventures
|
|
(26,499)
|
|
(17,172)
|
Distributions
received from unconsolidated ventures
|
|
12,275
|
|
1,600
|
Proceeds from sale of
assets, net
|
|
4,339
|
|
34,136
|
Net cash used in
investing activities
|
|
(314,882)
|
|
(264,806)
|
Cash Flows from
Financing Activities
|
|
|
|
|
Proceeds from
debt
|
|
326,639
|
|
662,934
|
Repayment of debt and
capital and financing lease obligations
|
|
(584,345)
|
|
(724,133)
|
Proceeds from line of
credit
|
|
442,000
|
|
425,000
|
Repayment of line of
credit
|
|
(372,000)
|
|
(475,000)
|
Proceeds from public
equity offering, net
|
|
330,386
|
|
-
|
Payment of financing
costs, net of related payables
|
|
(9,393)
|
|
(11,576)
|
Refundable entrance
fees:
|
|
|
|
|
Proceeds
from refundable entrance fees
|
|
20,342
|
|
48,140
|
Refunds
of entrance fees
|
|
(25,865)
|
|
(35,325)
|
Cash portion of loss
on extinguishment of debt
|
|
(4,101)
|
|
(502)
|
Payment on lease
termination
|
|
(7,750)
|
|
-
|
Purchase of
derivatives
|
|
-
|
|
(2,863)
|
Other
|
|
1,889
|
|
1,281
|
Net cash
provided by (used in) financing activities
|
|
117,802
|
|
(112,044)
|
Net increase (decrease) in cash and cash
equivalents
|
|
45,572
|
|
(10,729)
|
Cash and cash equivalents at beginning of year
|
|
58,511
|
|
69,240
|
Cash and cash equivalents at end of year
|
|
$ 104,083
|
|
$ 58,511
|
Non-GAAP Financial Measures
Adjusted EBITDA
Adjusted EBITDA is a measure of operating performance that is
not calculated in accordance with U.S. generally accepted
accounting principles ("GAAP"). Adjusted EBITDA should not be
considered in isolation or as a substitute for net income, income
from operations or cash flows provided by or used in operations, as
determined in accordance with GAAP. Adjusted EBITDA is a key
measure of the Company's operating performance used by management
to focus on operating performance and management without mixing in
items of income and expense that relate to long-term contracts and
the financing and capitalization of the business. We define
Adjusted EBITDA as net income (loss) before provision (benefit) for
income taxes, non-operating (income) expense items, (gain) loss on
sale or acquisition of communities (including gain (loss) on
facility lease termination), depreciation and amortization
(including non-cash impairment charges), straight-line lease
expense (income), net of amortization of (above) below market
rents, amortization of deferred gain, amortization of deferred
entrance fees, non-cash stock-based compensation expense, and
change in future service obligation and including entrance fee
receipts and refunds (excluding (i) first generation entrance fee
receipts from the sale of units at a recently opened entrance fee
CCRC prior to stabilization and (ii) first generation entrance fee
refunds not replaced by second generation entrance fee receipts at
the recently opened community prior to stabilization).
We believe Adjusted EBITDA is useful to investors in evaluating
our performance, results of operations and financial position for
the following reasons:
- It is helpful in identifying trends in our day-to-day
performance because the items excluded have little or no
significance to our day-to-day operations;
- It provides an assessment of controllable expenses and affords
management the ability to make decisions which are expected to
facilitate meeting current financial goals as well as achieve
optimal financial performance; and
- It is an indication to determine if adjustments to current
spending decisions are needed.
The table below reconciles Adjusted EBITDA from net loss for the
three months and years ended December 31,
2014 and 2013 (in thousands):
|
|
Three Months Ended
December 31(1),
|
|
Years Ended
December 31(1),
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Net
loss
|
|
$(106,796)
|
|
$ (975)
|
|
$(149,426)
|
|
$ (3,584)
|
(Benefit) provision
for income taxes
|
|
(67,200)
|
|
(1,516)
|
|
(181,305)
|
|
1,756
|
Equity in loss
(earnings) of unconsolidated ventures
|
|
742
|
|
(493)
|
|
(171)
|
|
(1,484)
|
Debt modification and
extinguishment costs
|
|
2,621
|
|
319
|
|
6,387
|
|
1,265
|
Other non-operating
income
|
|
(2,614)
|
|
(1,360)
|
|
(7,235)
|
|
(2,725)
|
Interest
expense:
|
|
|
|
|
|
|
|
|
Debt
|
|
42,104
|
|
24,840
|
|
128,002
|
|
96,131
|
Capitalized and financing lease obligations
|
|
56,873
|
|
6,029
|
|
109,998
|
|
25,194
|
Amortization of deferred financing costs and debt (premium)
discount
|
|
(430)
|
|
4,037
|
|
7,477
|
|
17,054
|
Change in fair value of derivatives
|
|
532
|
|
(386)
|
|
2,711
|
|
(980)
|
Interest
income
|
|
(345)
|
|
(312)
|
|
(1,343)
|
|
(1,339)
|
(Loss) income from
operations
|
|
(74,513)
|
|
30,183
|
|
(84,905)
|
|
131,288
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
216,632
|
|
68,200
|
|
537,035
|
|
268,757
|
Asset
impairment
|
|
9,992
|
|
10,233
|
|
9,992
|
|
12,891
|
Straight-line lease
expense
|
|
(961)
|
|
347
|
|
1,439
|
|
2,597
|
Amortization of
deferred gain
|
|
(1,093)
|
|
(1,093)
|
|
(4,372)
|
|
(4,372)
|
Amortization of
entrance fees
|
|
(714)
|
|
(7,831)
|
|
(21,220)
|
|
(29,009)
|
Amortization of
(above) below market lease, net
|
|
(2,067)
|
|
-
|
|
(3,444)
|
|
-
|
Non-cash stock-based
compensation expense
|
|
5,129
|
|
5,202
|
|
28,299
|
|
25,978
|
Change in future
service obligation
|
|
670
|
|
(1,917)
|
|
670
|
|
(1,917)
|
Entrance fee
receipts(2)
|
|
2,587
|
|
32,482
|
|
53,046
|
|
92,331
|
Entrance fee
disbursements
|
|
(538)
|
|
(10,821)
|
|
(25,865)
|
|
(35,325)
|
Adjusted
EBITDA
|
|
$ 155,124
|
|
$ 124,985
|
|
$ 490,675
|
|
$ 463,219
|
(1) The calculation of Adjusted EBITDA includes
integration, transaction and EMR roll-out costs of $46.0 million and $146.4
million for the three and twelve months ended December 31, 2014, respectively. The calculation
of Adjusted EBITDA includes integration, transaction and EMR
roll-out costs of $4.1 million and
$14.5 million for the three and
twelve months ended December 31,
2013, respectively.
(2) Includes the receipt of refundable and
non-refundable entrance fees.
Cash From Facility Operations
CFFO is a measurement of liquidity that is not calculated in
accordance with GAAP and should not be considered in isolation as a
substitute for cash flows provided by or used in operations, as
determined in accordance with GAAP. We define CFFO as net
cash provided by (used in) operating activities adjusted for
changes in operating assets and liabilities, deferred interest and
fees added to principal, refundable entrance fees received, first
generation entrance fee receipts at a recently opened entrance fee
CCRC prior to stabilization, entrance fee refunds disbursed
adjusted for first generation entrance fee refunds not replaced by
second generation entrance fee receipts at the recently opened
community prior to stabilization, lease financing debt amortization
with fair market value or no purchase options, gain (loss) on
facility lease termination, recurring capital expenditures (net),
distributions from unconsolidated ventures from cumulative share of
net earnings, CFFO from unconsolidated ventures, and other.
Recurring capital expenditures include routine expenditures
capitalized in accordance with GAAP that are funded from current
operations. Amounts excluded from recurring capital
expenditures consist primarily of major projects, renovations,
community repositionings, expansions, systems projects or other
non-recurring or unusual capital items (including integration
capital expenditures) or community purchases that are funded using
lease or financing proceeds, available cash and/or proceeds from
the sale of communities.
We believe CFFO is useful to investors in evaluating our
liquidity for the following reasons:
- It provides an assessment of our ability to facilitate meeting
current financial and liquidity goals.
- To assess our ability to:
(i) service our outstanding indebtedness;
(ii) pay dividends; and
(iii) make regular recurring capital expenditures to maintain
and improve our communities.
The table below reconciles CFFO from net cash provided by
operating activities for the three months and years ended
December 31, 2014 and 2013 (in
thousands):
|
|
Three Months Ended
December 31(1),
|
|
Years Ended
December 31(1),
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$ 85,804
|
|
$ 117,046
|
|
$ 242,652
|
|
$ 366,121
|
Changes in operating
assets and liabilities
|
|
(18,610)
|
|
(27,473)
|
|
37,099
|
|
(33,198)
|
Refundable entrance
fees received(2
|
|
12
|
|
18,875
|
|
20,342
|
|
48,140
|
Entrance fee refunds
disbursed
|
|
(538)
|
|
(10,821)
|
|
(25,865)
|
|
(35,325)
|
Recurring capital
expenditures, net
|
|
(16,353)
|
|
(10,786)
|
|
(50,762)
|
|
(42,901)
|
Lease financing debt
amortization with fair market value or no purchase
options
|
|
(10,028)
|
|
(3,594)
|
|
(28,618)
|
|
(13,927)
|
Distributions from
unconsolidated ventures from cumulative share of net
earnings
|
|
(630)
|
|
(602)
|
|
(1,840)
|
|
(2,691)
|
CFFO from
unconsolidated ventures
|
|
11,662
|
|
1,825
|
|
25,334
|
|
7,804
|
Cash From Facility
Operations
|
|
$ 51,319
|
|
$ 84,470
|
|
$ 218,342
|
|
$ 294,023
|
(1) The calculation of Cash From Facility Operations
includes integration, transaction and EMR roll-out costs of
$46.0 million and $146.4 million for the three and twelve months
ended December 31, 2014,
respectively. The calculation of Cash From Facility Operations
includes integration, transaction and EMR roll-out costs of
$4.1 million and $14.5 million for the three and twelve months
ended December 31, 2013,
respectively.
(2) Total entrance fee receipts for the three months
ended December 31, 2014 and 2013 were
$2.6 million and $32.5 million, respectively, including
$2.6 million and $13.6 million, respectively, of non-refundable
entrance fee receipts included in net cash provided by operating
activities. Total entrance fee receipts for the twelve
months ended December 31, 2014 and
2013 were $53.0 million and
$92.3 million, respectively,
including $32.7 million and
$44.2 million, respectively, of
non-refundable entrance fee receipts included in net cash provided
by operating activities. Due to the contribution of all but
two of the Company's entry fee CCRCs to the CCRC venture with HCP
in the third quarter of 2014, the two consolidated entry fee CCRCs
were reclassified to the CCRCs–Rental segment beginning with the
third quarter of 2014.
The calculation of CFFO per share is based on weighted average
outstanding common shares for the period, excluding any unvested
restricted shares. Annual CFFO per share for all periods is
calculated as the sum of the quarterly amounts for the year.
Facility Operating Income
Facility Operating Income is not a measurement of operating
performance calculated in accordance with GAAP and should not be
considered in isolation as a substitute for net income, income from
operations, or cash flows provided by or used in operations, as
determined in accordance with GAAP. We define Facility
Operating Income as net income (loss) before provision (benefit)
for income taxes, non-operating (income) expense items, (gain) loss
on sale or acquisition of communities (including gain (loss) on
facility lease termination), depreciation and amortization
(including non-cash impairment charges), facility lease expense,
general and administrative expense, including non-cash stock-based
compensation expense, transaction costs, change in future service
obligation, amortization of deferred entrance fee revenue and
management fees.
We believe Facility Operating Income is useful to investors in
evaluating our facility operating performance for the following
reasons:
- It is helpful in identifying trends in our day-to-day facility
performance;
- It provides an assessment of our revenue generation and expense
management; and
- It provides an indicator to determine if adjustments to current
spending decisions are needed.
The table below reconciles Facility Operating Income from net
loss for the three months and years ended December 31, 2014 and 2013 (in
thousands):
|
|
Three
Months Ended December 31,
|
|
Years Ended
December 31,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$(106,796)
|
|
$ (975)
|
|
$ (149,426)
|
|
$ (3,584)
|
(Benefit) provision
for income taxes
|
|
(67,200)
|
|
(1,516)
|
|
(181,305)
|
|
1,756
|
Equity in (earnings)
loss of unconsolidated ventures
|
|
742
|
|
(493)
|
|
(171)
|
|
(1,484)
|
Debt modification and
extinguishment costs
|
|
2,621
|
|
319
|
|
6,387
|
|
1,265
|
Other non-operating
income
|
|
(2,614)
|
|
(1,360)
|
|
(7,235)
|
|
(2,725)
|
Interest
expense:
|
|
|
|
|
|
|
|
|
Debt
|
|
42,104
|
|
24,840
|
|
128,002
|
|
96,131
|
Capitalized and financing lease obligations
|
|
56,873
|
|
6,029
|
|
109,998
|
|
25,194
|
Amortization of deferred financing costs and debt (premium)
discount
|
|
(430)
|
|
4,037
|
|
7,477
|
|
17,054
|
Change in fair value of derivatives
|
|
532
|
|
(386)
|
|
2,711
|
|
(980)
|
Interest
income
|
|
(345)
|
|
(312)
|
|
(1,343)
|
|
(1,339)
|
(Loss) income from
operations
|
|
(74,513)
|
|
30,183
|
|
(84,905)
|
|
131,288
|
Depreciation and
amortization
|
|
216,632
|
|
68,200
|
|
537,035
|
|
268,757
|
Asset
impairment
|
|
9,992
|
|
10,233
|
|
9,992
|
|
12,891
|
Facility lease
expense
|
|
92,469
|
|
69,701
|
|
323,830
|
|
276,729
|
General and
administrative (including non-cash
|
|
|
|
|
|
|
|
|
stock-based compensation
expense)
|
|
98,574
|
|
45,504
|
|
280,267
|
|
180,627
|
Transaction
costs
|
|
7,725
|
|
574
|
|
66,949
|
|
3,921
|
Change in future
service obligation
|
|
670
|
|
(1,917)
|
|
670
|
|
(1,917)
|
Amortization of
entrance fees
|
|
(714)
|
|
(7,831)
|
|
(21,220)
|
|
(29,009)
|
Management
fees
|
|
(16,920)
|
|
(8,150)
|
|
(42,239)
|
|
(31,125)
|
Facility Operating
Income
|
|
$ 333,915
|
|
$ 206,497
|
|
$ 1,070,379
|
|
$ 812,162
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/brookdale-announces-fourth-quarter-and-full-year-2014-results-300031081.html
SOURCE Brookdale Senior Living Inc.