NASHVILLE, Tenn., Feb. 8, 2016 /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 2015. Highlights included:
- Cash From Facility Operations ("CFFO")(1) of
$0.58 per share for the fourth
quarter of 2015, a 9.4% increase from $0.53 per share in the fourth quarter of 2014 and
$2.40 per share for the full year
2015, excluding integration, transaction, transaction-related and
electronic medical records ("EMR") roll-out costs in all
periods.
- Average occupancy for all consolidated communities in the
fourth quarter of 2015 of 86.8%, an increase of 10 basis points
from the third quarter of 2015.
- Adjusted EBITDA(1) of $222.2
million in the fourth quarter of 2015, a 4.4% increase from
the fourth quarter of 2014, excluding integration, transaction,
transaction-related and EMR roll-out costs in both periods.
- Net loss attributable to Brookdale common stockholders of
$0.94 per share for the fourth
quarter of 2015, compared to $0.58
for the fourth quarter of 2014, and net loss attributable to
Brookdale common stockholders of $2.48 per share for the full year of
2015.
(1) CFFO per share and Adjusted EBITDA are
financial measures that are not calculated in accordance with
GAAP. Please see "Reconciliation of Non-GAAP Financial
Measures" below for the Company's definitions of each of these
financial measures and a reconciliation of each measure to net
income (loss).
Andy Smith, Brookdale's CEO,
said, "Our fourth quarter results demonstrate the progress we
are making on our operational execution. Stabilized occupancy
and rate, expense control and operating expense
synergies produced same community operating income growth
of more than 4% over the fourth quarter of 2014. We are well
positioned going into 2016. Our teams are in place, and we
are focused on extending the fourth quarter progress through
improved occupancy and increased rates, maintaining expense
discipline, delivering more synergies and, importantly, providing
our residents with high quality care and service."
Financial Results
The year-over-year quarterly comparison is the first since the
Company's acquisition of Emeritus that includes the combined
results in both quarters. Total revenue for the fourth
quarter of 2015 was $1.2 billion.
Resident fees of $1.0 billion were
level with the fourth quarter of 2014. Average monthly
revenue per unit for the consolidated senior housing portfolio was
$4,302 in the fourth quarter of 2015,
an increase of $82, or 1.9%, compared
with the fourth quarter of 2014. Average occupancy for all
consolidated communities during the fourth quarter of 2015 was
86.8%, up 10 basis points from the third quarter of 2015, though
below the 88.3% average occupancy for the fourth quarter of
2014.
Facility operating expenses for the fourth quarter of 2015 were
$697.3 million, a decline of
$10.7 million, or 1.5%, from the
fourth quarter of 2014, primarily due to cost management and
operating cost synergies. Excluding management services in all
periods, Brookdale's consolidated operating margin was 33.0% for
the fourth quarter of 2015 versus 32.1% for the fourth quarter of
2014.
Based on the current quarter review of the Company's deferred
tax assets, the Company recorded a $105.3
million valuation allowance on its deferred tax assets
during the fourth quarter of 2015, mainly attributed to the
Company's Net Operating Losses. Net loss attributable to
Brookdale common stockholders for the fourth quarter of 2015 was
$174.3 million, or $0.94 per share, versus net loss attributable to
Brookdale common stockholders of $106.5
million, or $0.58 per share,
in the fourth quarter of 2014.
Non-GAAP Financial Measures
For the Company's definitions of Adjusted EBITDA, CFFO, CFFO per
share, and Facility Operating Income, as well as a reconciliation
of each of the non-GAAP financial measures to net income (loss),
see "Reconciliation of Non-GAAP Financial Measures" below.
Adjusted EBITDA, excluding integration, transaction,
transaction-related and EMR roll-out costs, was $222.2 million for the fourth quarter of 2015, an
increase of $9.3 million, or 4.4%,
compared with the fourth quarter of 2014. Adjusted EBITDA
includes integration, transaction, transaction-related and EMR
roll-out costs for the three months ended December 31, 2015 and December 31, 2014 of $24.7
million and $46.0 million,
respectively.
CFFO was $81.8 million in the
fourth quarter of 2015, or $0.44 per
share. Excluding integration, transaction,
transaction-related and EMR roll-out costs, CFFO was $106.6 million, or $0.58 per share, for the fourth quarter of 2015,
an increase of $9.3 million, or 9.5%,
compared with the fourth quarter of 2014. CFFO includes
integration, transaction, transaction-related and EMR roll-out
costs for the three months ended December
31, 2015 and December 31, 2014
of $24.9 million (including
$0.2 million of debt modification
costs excluded from Adjusted EBITDA) and $46.0 million, respectively.
Facility Operating Income was $341.7
million in the fourth quarter of 2015, an increase of
$7.8 million, or 2.3%, compared with
the fourth quarter of 2014.
Operating Activities
The Company reports information on 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 unconsolidated communities that are
operated under management agreements.
Senior Housing
Revenue for the consolidated senior housing portfolio was
$921.0 million for the fourth quarter
of 2015, a decline of 0.8% from the fourth quarter of 2014.
The revenue decrease reflects a 150 basis point decline in
occupancy and a 1.9% increase in rate over the fourth quarter of
2014. Facility operating expenses were $594.7 million for the fourth quarter of 2015, a
decline of 3.2% from the fourth quarter of 2014. Operating
income for the senior housing portfolio increased by $11.9 million, or 3.8%, to $326.2 million for the fourth quarter of
2015.
Same community revenues for the consolidated senior housing
portfolio for the three months ended December 31, 2015 showed revenues declined 0.4%
over the corresponding period in 2014, as revenue per unit
increased by 1.7% and occupancy declined by 190 basis points.
Consolidated same community expenses for the fourth quarter of 2015
declined by 2.7% over the fourth quarter of 2014 with same
community operating income for the senior housing portfolio for the
fourth quarter of 2015 increasing 4.1% over the fourth quarter of
2014.
Brookdale Ancillary Services
Revenue for the Company's ancillary services segment increased
$6.4 million, or 5.7%, to
$119.9 million for the fourth quarter
of 2015 versus the prior year fourth quarter. The revenue
increase was driven primarily by a volume increase in home health
and hospice. Ancillary services operating expenses for the fourth
quarter of 2015 increased $8.8
million, or 9.3%, over the fourth quarter of 2014, primarily
due to an increase in expenses related to expansion of the
ancillary services into the former Emeritus communities. As a
result, ancillary services operating income for the fourth quarter
of 2015 was $17.3 million, a decline
of $2.3 million, or 11.9%, versus the
fourth quarter of 2014.
Transactions
During the fourth quarter of 2015, the Company acquired the
underlying real estate associated with five communities that
previously were leased for an aggregate purchase price of
$78.4 million. The Company financed
the transaction with seller financing.
During 2015, the Company began an initiative to dispose of 34
communities. Sixteen of these communities were sold during
the fourth quarter of 2015 for an aggregate selling price of
$76.9 million (including $33.2 million of seller financing). The results
of operations of the disposed communities were previously reported
in the Retirement Centers, Assisted Living, and CCRCs - Rental
segments.
The Company has designated 17 communities as assets held for
sale as of December 31, 2015.
The results of operations of these communities are reported
in the Assisted Living and CCRCs – Rental segments within the
consolidated financial statements for the year ended December 31, 2015. The sale of the 17 communities
is expected to occur in 2016, although there can be no assurance
that the transactions will close or if they do, when the actual
closing will occur.
During the fourth quarter of 2015, the Company recorded an
impairment charge of $57.9 million.
The impairments primarily were related to the 16 assets that were
sold, the assets held for sale, and certain assets on the
consolidated balance sheet whose fair value was determined to be
below carrying value.
Outlook
For the full year 2016, the Company expects CFFO per share in a
range of $2.45 to $2.55, excluding
integration, transaction, transaction-related and EMR roll-out
costs and costs associated with certain strategic projects related
to refining the Company's strategy, building out enterprise-wide
capabilities for the post-merger platform and reducing costs and
achieving synergies by capitalizing on scale. This guidance
excludes the potential impact of any future acquisition or
disposition activity other than the planned disposition of 17
communities classified as held for sale.
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 2015
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 ended December 31, 2015 on Tuesday, February 9, 2016 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 22, 2016 by dialing (855)
859-2056 (from within the U.S.) or (404) 537-3406 (from outside of
the U.S.) and referencing access code "41751281". 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 1,123 communities in 47
states and the ability to serve approximately 108,000 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, sales and marketing initiatives and
growth strategies and our expectations regarding their effect on
our results; our expectations regarding the economy, the senior
living industry, occupancy, pricing, revenue, cash flow, operating
income, expenses, capital expenditures, Program Max opportunities,
the integration of Emeritus, cost savings and synergies, liquidity
and leverage, senior housing supply, the demand for senior housing,
expansion, development and construction activity, acquisition
opportunities, asset dispositions, the expansion of our ancillary
services offerings, innovation and revenue growth opportunities,
our share repurchase program, taxes, capital deployment, returns on
invested capital, Adjusted EBITDA, CFFO, CFFO per share, and/or
Facility Operating Income (as such terms are defined herein).
Forward-looking statements are generally identifiable by use of
forward-looking terminology such as "may," "will," "should,"
"could," "would," "potential," "intend," "expect," "endeavor,"
"seek," "anticipate," "estimate," "overestimate," "underestimate,"
"believe," "project," "predict," "continue," "plan," "target," or
other similar words or expressions. 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 and our outstanding convertible notes) 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; our ability to
successfully integrate acquisitions, including our acquisition of
Emeritus; 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; 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. We expressly
disclaim any obligation to release publicly any updates or
revisions to any of these forward-looking statements 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,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenue
|
|
|
|
|
|
|
|
|
Resident
fees
|
|
$ 1,040,835
|
|
$ 1,041,958
|
|
$ 4,177,127
|
|
$ 3,301,297
|
Management
fees
|
|
15,553
|
|
16,920
|
|
60,183
|
|
42,239
|
Reimbursed costs
incurred on behalf of managed communities
|
|
179,314
|
|
193,225
|
|
723,298
|
|
488,170
|
Total
revenue
|
|
1,235,702
|
|
1,252,103
|
|
4,960,608
|
|
3,831,706
|
|
|
|
|
|
|
|
|
|
Expense
|
|
|
|
|
|
|
|
|
Facility operating
expense (excluding depreciation and amortization of $113,429,
$207,079, $684,488 and $503,662, respectively)
|
|
697,262
|
|
707,999
|
|
2,788,862
|
|
2,210,368
|
General and
administrative expense (including non-cash stock-based compensation
expense of $5,780, $5,129, $31,651 and $28,299,
respectively)
|
|
91,970
|
|
98,574
|
|
370,579
|
|
280,267
|
Transaction
costs
|
|
1,089
|
|
7,725
|
|
8,252
|
|
66,949
|
Facility lease
expense
|
|
90,621
|
|
92,469
|
|
367,574
|
|
323,830
|
Depreciation and
amortization
|
|
126,378
|
|
216,632
|
|
733,165
|
|
537,035
|
Asset
impairment
|
|
57,941
|
|
9,992
|
|
57,941
|
|
9,992
|
Loss on facility lease
termination
|
|
-
|
|
-
|
|
76,143
|
|
-
|
Costs incurred on
behalf of managed communities
|
|
179,314
|
|
193,225
|
|
723,298
|
|
488,170
|
Total operating
expense
|
|
1,244,575
|
|
1,326,616
|
|
5,125,814
|
|
3,916,611
|
Income (loss) from
operations
|
|
(8,873)
|
|
(74,513)
|
|
(165,206)
|
|
(84,905)
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
395
|
|
345
|
|
1,603
|
|
1,343
|
Interest
expense:
|
|
|
|
|
|
|
|
|
Debt
|
|
(43,480)
|
|
(42,104)
|
|
(173,484)
|
|
(128,002)
|
Capital and financing
lease obligations
|
|
(51,669)
|
|
(56,873)
|
|
(211,132)
|
|
(109,998)
|
Amortization of
deferred financing costs and debt premium (discount)
|
|
(2,516)
|
|
430
|
|
(3,351)
|
|
(7,477)
|
Change in fair value
of derivatives
|
|
(7)
|
|
(532)
|
|
(797)
|
|
(2,711)
|
Debt modification and
extinguishment costs
|
|
(240)
|
|
(2,621)
|
|
(7,020)
|
|
(6,387)
|
Equity in (loss)
earnings of unconsolidated ventures
|
|
(38)
|
|
(742)
|
|
(804)
|
|
171
|
Other non-operating
income
|
|
1,593
|
|
2,614
|
|
9,827
|
|
7,235
|
Income (loss)
before income taxes
|
|
(104,835)
|
|
(173,996)
|
|
(550,364)
|
|
(330,731)
|
(Provision) benefit
for income taxes
|
|
(69,468)
|
|
67,200
|
|
92,209
|
|
181,305
|
Net income
(loss)
|
|
(174,303)
|
|
(106,796)
|
|
(458,155)
|
|
(149,426)
|
Net (income) loss
attributable to noncontrolling interest
|
|
44
|
|
262
|
|
678
|
|
436
|
Net income (loss)
attributable to Brookdale Senior Living Inc. common
stockholders
|
|
$
(174,259)
|
|
$
(106,534)
|
|
$ (457,477)
|
|
$
(148,990)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
income (loss) per share attributable to Brookdale Senior Living
Inc. common stockholders
|
|
$
(0.94)
|
|
$
(0.58)
|
|
$
(2.48)
|
|
$
(1.01)
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in computing basic and diluted net income (loss) per
share
|
|
184,805
|
|
183,432
|
|
184,333
|
|
148,185
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
|
|
|
|
|
|
|
December 31,
2015
|
|
December 31,
2014
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
88,029
|
|
$
104,083
|
Cash and escrow
deposits - restricted
|
|
32,570
|
|
38,862
|
Accounts receivable,
net
|
|
144,053
|
|
149,730
|
Assets held for
sale
|
|
110,620
|
|
-
|
Other current
assets
|
|
122,671
|
|
237,915
|
Total current
assets
|
|
497,943
|
|
530,590
|
Property, plant, and
equipment and
|
|
|
|
|
leasehold intangibles,
net
|
|
8,031,376
|
|
8,389,505
|
Other assets,
net
|
|
1,519,245
|
|
1,497,366
|
Total
assets
|
|
$
10,048,564
|
|
$
10,417,461
|
|
|
|
|
|
Current
liabilities
|
|
$
840,148
|
|
$
873,896
|
Long-term debt, less
current portion
|
|
3,769,371
|
|
3,440,971
|
Capital and financing
lease obligations, less current portion
|
|
2,427,438
|
|
2,536,883
|
Other
liabilities
|
|
552,880
|
|
683,470
|
Total
liabilities
|
|
7,589,837
|
|
7,535,220
|
Total Brookdale
Senior Living Inc. stockholders' equity
|
|
2,458,888
|
|
2,881,724
|
Noncontrolling
interest
|
|
(161)
|
|
517
|
Total
equity
|
|
2,458,727
|
|
2,882,241
|
Total liabilities and
equity
|
|
$
10,048,564
|
|
$
10,417,461
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows
|
(in
thousands)
|
|
|
|
|
|
Years Ended
December 31,
|
|
|
2015
|
|
2014
|
Cash Flows from
Operating Activities
|
|
|
|
|
Net income
(loss)
|
|
$
(458,155)
|
|
$
(149,426)
|
Adjustments to
reconcile net income (loss) to net cash provided by
operating
|
|
|
|
|
activities:
|
|
|
|
|
Loss on extinguishment
of debt, net
|
|
121
|
|
6,387
|
Depreciation and
amortization, net
|
|
736,516
|
|
544,512
|
Asset
impairment
|
|
57,941
|
|
9,992
|
Equity in loss
(earnings) of unconsolidated ventures
|
|
804
|
|
(171)
|
Distributions from
unconsolidated ventures from cumulative share of net
|
|
7,825
|
|
1,840
|
earnings
|
|
|
|
|
Amortization of
deferred gain
|
|
(4,372)
|
|
(4,372)
|
Amortization of
entrance fees
|
|
(3,204)
|
|
(21,220)
|
Proceeds from deferred
entrance fee revenue
|
|
11,113
|
|
32,704
|
Deferred income tax
benefit
|
|
(95,261)
|
|
(182,371)
|
Change in deferred
lease liability
|
|
6,956
|
|
1,439
|
Change in fair value
of derivatives
|
|
797
|
|
2,711
|
Gain on sale of
assets
|
|
(1,270)
|
|
(446)
|
Change in future
service obligation
|
|
(941)
|
|
670
|
Non-cash stock-based
compensation
|
|
31,651
|
|
28,299
|
Non-cash interest
expense on financing lease obligations
|
|
23,472
|
|
12,647
|
Amortization of
(above) below market rents, net
|
|
(7,158)
|
|
(3,444)
|
Other
|
|
(3,157)
|
|
-
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts receivable,
net
|
|
5,608
|
|
3,510
|
Prepaid expenses and
other assets, net
|
|
51,079
|
|
(52,868)
|
Accounts payable and
accrued expenses
|
|
(60,564)
|
|
16,812
|
Tenant refundable fees
and security deposits
|
|
(524)
|
|
(1,183)
|
Deferred
revenue
|
|
(6,911)
|
|
(3,370)
|
Net cash provided by
operating activities
|
|
292,366
|
|
242,652
|
Cash Flows from
Investing Activities
|
|
|
|
|
Decrease (increase) in
lease security deposits and lease acquisition deposits,
net
|
|
10,866
|
|
(48,944)
|
Decrease in cash and
escrow deposits — restricted
|
|
29,286
|
|
56,935
|
Additions to property,
plant, and equipment and leasehold intangibles, net
|
|
(411,051)
|
|
(304,245)
|
Acquisition of assets,
net of related payables and cash received
|
|
(191,216)
|
|
(40,441)
|
Acquisition of
Emeritus Corporation, cash acquired
|
|
-
|
|
28,429
|
Investment in
unconsolidated ventures
|
|
(69,297)
|
|
(26,499)
|
Distributions received
from unconsolidated ventures
|
|
9,054
|
|
12,275
|
Proceeds from sale of
assets, net
|
|
49,226
|
|
4,339
|
Other
|
|
4,155
|
|
3,269
|
Net cash used in
investing activities
|
|
(568,977)
|
|
(314,882)
|
Cash Flows from
Financing Activities
|
|
|
|
|
Proceeds from
debt
|
|
585,650
|
|
326,639
|
Repayment of debt and
capital and financing lease obligations
|
|
(485,762)
|
|
(584,345)
|
Proceeds from line of
credit
|
|
1,175,000
|
|
442,000
|
Repayment of line of
credit
|
|
(965,000)
|
|
(372,000)
|
Proceeds from public
equity offering, net
|
|
-
|
|
330,386
|
Payment of financing
costs, net of related payables
|
|
(32,622)
|
|
(9,393)
|
Refundable entrance
fees:
|
|
|
|
|
Proceeds
from refundable entrance fees
|
|
1,939
|
|
20,342
|
Refunds
of entrance fees
|
|
(4,411)
|
|
(25,865)
|
Cash portion of loss
on extinguishment of debt
|
|
(44)
|
|
(4,101)
|
Payment on lease
termination
|
|
(17,000)
|
|
(7,750)
|
Other
|
|
2,807
|
|
1,889
|
Net cash
provided by financing activities
|
|
260,557
|
|
117,802
|
Net (decrease) increase in cash and cash equivalents
|
|
(16,054)
|
|
45,572
|
Cash and cash equivalents at beginning of year
|
|
104,083
|
|
58,511
|
Cash and cash equivalents at end of year
|
|
$
88,029
|
|
$
104,083
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial Measures
This earnings release and the supplemental information referred
to in the earnings release contain financial measures utilized by
management to evaluate our financial and operating performance that
are not calculated in accordance with U.S. generally accepted
accounting principles ("GAAP"). Each of these measures,
Adjusted EBITDA, CFFO, CFFO per share, and Facility Operating
Income, should not be considered in isolation from or as superior
or a substitute for net income (loss), income (loss) from
operations, cash flows provided by or used in operations, or other
financial measures determined in accordance with GAAP. We
strongly urge you to review the reconciliations of such measures to
GAAP net income (loss), along with our consolidated financial
statements included herein. We caution investors that amounts
presented in accordance with our definitions of Adjusted EBITDA,
CFFO, CFFO per share, and Facility Operating Income may not be
comparable to similar measures disclosed by other companies,
because not all companies calculate these non-GAAP measures in the
same manner.
Adjusted EBITDA
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 Cash From
Facility Operations from unconsolidated ventures and 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).
Management uses Adjusted EBITDA to, among other things, assess our
overall financial and operating performance because this metric
excludes non-cash items such as depreciation and amortization,
asset impairment charges, non-cash stock-based compensation
expense, gain (loss) on facility lease termination and
straight-line lease expense, net of deferred gain
amortization. In addition, management uses Adjusted EBITDA to
assess decisions which are expected to facilitate meeting current
financial goals as well as to achieve optimal financial
performance, and to provide an indicator to determine if
adjustments to current spending decisions are needed. We
believe Adjusted EBITDA is useful to investors in evaluating our
operating performance, results of operations and financial position
because it is helpful in identifying trends in our day-to-day
performance since the items excluded have little or no significance
to our day-to-day operations and it provides an assessment of our
expense management.
The table below reconciles Adjusted EBITDA from net income
(loss) for the three months and the years ended December 31, 2015 and December 31, 2014 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31(1),
|
|
Years Ended
December 31(1),
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net income
(loss)
|
|
$
(174,303)
|
|
$
(106,796)
|
|
$
(458,155)
|
|
$
(149,426)
|
Provision (benefit)
for income taxes
|
|
69,468
|
|
(67,200)
|
|
(92,209)
|
|
(181,305)
|
Equity in loss
(earnings) of unconsolidated ventures
|
|
38
|
|
742
|
|
804
|
|
(171)
|
Debt modification and
extinguishment costs
|
|
240
|
|
2,621
|
|
7,020
|
|
6,387
|
Other non-operating
income
|
|
(1,593)
|
|
(2,614)
|
|
(9,827)
|
|
(7,235)
|
Interest
expense:
|
|
|
|
|
|
|
|
|
Debt
|
|
43,480
|
|
42,104
|
|
173,484
|
|
128,002
|
Capitalized and financing lease obligations
|
|
51,669
|
|
56,873
|
|
211,132
|
|
109,998
|
Amortization of deferred financing costs and debt (premium)
discount
|
|
2,516
|
|
(430)
|
|
3,351
|
|
7,477
|
Change in fair value of derivatives
|
|
7
|
|
532
|
|
797
|
|
2,711
|
Interest
income
|
|
(395)
|
|
(345)
|
|
(1,603)
|
|
(1,343)
|
Income (loss) from
operations
|
|
(8,873)
|
|
(74,513)
|
|
(165,206)
|
|
(84,905)
|
Depreciation and
amortization
|
|
126,378
|
|
216,632
|
|
733,165
|
|
537,035
|
Asset
impairment
|
|
57,941
|
|
9,992
|
|
57,941
|
|
9,992
|
Loss on facility
lease termination
|
|
-
|
|
-
|
|
76,143
|
|
-
|
Straight-line lease
expense (income)
|
|
505
|
|
(961)
|
|
6,956
|
|
1,439
|
Amortization of
deferred gain
|
|
(1,093)
|
|
(1,093)
|
|
(4,372)
|
|
(4,372)
|
Amortization of
entrance fees
|
|
(888)
|
|
(714)
|
|
(3,204)
|
|
(21,220)
|
Amortization of
(above) below market lease, net
|
|
(1,733)
|
|
(2,067)
|
|
(7,158)
|
|
(3,444)
|
Non-cash stock-based
compensation expense
|
|
5,780
|
|
5,129
|
|
31,651
|
|
28,299
|
Change in future
service obligation
|
|
(941)
|
|
670
|
|
(941)
|
|
670
|
Entrance fee
receipts(2)
|
|
2,655
|
|
2,587
|
|
13,052
|
|
53,046
|
Entrance fee
disbursements
|
|
(1,160)
|
|
(538)
|
|
(4,411)
|
|
(25,865)
|
CFFO from
unconsolidated ventures
|
|
18,896
|
|
11,662
|
|
59,767
|
|
25,334
|
Adjusted
EBITDA
|
|
$
197,467
|
|
$
166,786
|
|
$
793,383
|
|
$
516,009
|
|
|
|
|
|
|
|
|
|
(1) The calculation of
Adjusted EBITDA includes integration, transaction,
transaction-related and EMR roll-out costs of $24.7 million and $46.0
million for the three months ended December 31, 2015 and December 31, 2014, respectively. The calculation
of Adjusted EBITDA includes integration, transaction,
transaction-related and EMR roll-out costs of $116.8 million and $146.4
million for the years ended December
31, 2015 and December 31,
2014, respectively. 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. EMR roll-out costs include third
party consulting expenses and internal costs such as training,
travel and labor, reflecting time spent by Company personnel on the
EMR roll-out project. 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 and corporate capital structure
assessment activities (including shareholder relations advisory
matters), and are primarily comprised of legal, finance,
consulting, professional fees and other third party
costs.
(2) Includes the receipt of
refundable and non-refundable entrance fees.
Cash From Facility Operations and CFFO per Share
Our definition of and method of calculating CFFO as used herein
differs from those presented in earnings releases and other
presentations issued prior to this earnings release. As used
herein, CFFO is defined and calculated beginning with net income
(loss). Historically, we have defined and calculated CFFO
beginning with net cash provided by (used in) operations. The
change in definition and method of calculating CFFO results in a
differing reconciliation, but has no effect on the amount of CFFO
presented historically or herein.
We define CFFO as net income (loss) before deferred income tax
provision (benefit), non-operating (income) expense items, non-cash
financing lease interest expense, (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 Cash From Facility Operations from
unconsolidated ventures, and 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), recurring capital
expenditures, net, lease financing debt amortization with fair
market value or no purchase options, 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. The calculation of quarterly 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. Management uses CFFO and CFFO per share
to, among other things, assess our overall financial and operating
performance because these metrics exclude non-cash items such as
depreciation and amortization, asset impairment charges, non-cash
stock-based compensation expense, gain (loss) on facility lease
termination and straight-line lease expense, net of deferred gain
amortization. In addition, management uses CFFO and CFFO per
share to assess decisions which are expected to facilitate meeting
current financial goals as well as to achieve optimal financial
performance, and to provide an indicator to determine if
adjustments to current spending decisions are needed. We
believe CFFO is useful to investors in evaluating our operating
performance, results of operations and financial position because
it is helpful in identifying trends in our day-to-day performance
since the items excluded have little or no significance to our
day-to-day operations and it provides an assessment of our expense
management.
The table below reconciles CFFO from net income (loss) for the
three months and the years ended December
31, 2015 and December 31, 2014
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31(1),
|
|
Years Ended
December 31(1),
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
(174,303)
|
|
$
(106,796)
|
|
$
(458,155)
|
|
$
(149,426)
|
Other non-operating
income
|
|
(1,593)
|
|
(2,614)
|
|
(9,827)
|
|
(7,235)
|
Equity in loss
(earnings) of unconsolidated ventures
|
|
38
|
|
742
|
|
804
|
|
(171)
|
Debt modification and
extinguishment costs
|
|
240
|
|
2,621
|
|
7,020
|
|
6,387
|
Interest
expense
|
|
|
|
|
|
|
|
|
Amortization of
deferred financing costs and debt (premium) discount
|
|
2,516
|
|
(430)
|
|
3,351
|
|
7,477
|
Change in fair value
of derivatives
|
|
7
|
|
532
|
|
797
|
|
2,711
|
Loss on facility
lease termination
|
|
-
|
|
-
|
|
76,143
|
|
-
|
Depreciation and
amortization
|
|
126,378
|
|
216,632
|
|
733,165
|
|
537,035
|
Asset
impairment
|
|
57,941
|
|
9,992
|
|
57,941
|
|
9,992
|
Straight-line lease
expense (income)
|
|
505
|
|
(961)
|
|
6,956
|
|
1,439
|
Amortization of
(above) below market lease, net
|
|
(1,733)
|
|
(2,067)
|
|
(7,158)
|
|
(3,444)
|
Amortization of
deferred gain
|
|
(1,093)
|
|
(1,093)
|
|
(4,372)
|
|
(4,372)
|
Amortization of
entrance fees
|
|
(888)
|
|
(714)
|
|
(3,204)
|
|
(21,220)
|
Non-cash stock-based
compensation expense
|
|
5,780
|
|
5,129
|
|
31,651
|
|
28,299
|
Change in future
service obligation
|
|
(941)
|
|
670
|
|
(941)
|
|
670
|
Entrance fee
receipts
|
|
2,655
|
|
2,587
|
|
13,052
|
|
53,046
|
Entrance fee
disbursements
|
|
(1,160)
|
|
(538)
|
|
(4,411)
|
|
(25,865)
|
CFFO from
unconsolidated ventures
|
|
18,896
|
|
11,662
|
|
59,767
|
|
25,334
|
Non-cash interest
expense financing lease obligations
|
|
6,014
|
|
6,700
|
|
23,472
|
|
12,647
|
Deferred income tax
provision (benefit)
|
|
68,753
|
|
(66,207)
|
|
(95,261)
|
|
(182,371)
|
Recurring capital
expenditures, net
|
|
(13,978)
|
|
(16,353)
|
|
(60,937)
|
|
(50,762)
|
Lease financing debt
amortization with fair market value or no purchase
options
|
|
(13,249)
|
|
(10,028)
|
|
(51,296)
|
|
(28,618)
|
Other
|
|
998
|
|
1,853
|
|
(1,499)
|
|
6,789
|
Cash From Facility
Operations
|
|
$
81,783
|
|
$
51,319
|
|
$
317,058
|
|
$
218,342
|
|
|
|
|
|
|
|
|
|
(1) The calculation of Cash
From Facility Operations includes integration, transaction,
transaction-related and EMR roll-out costs of $24.9 million (including $0.2 million of debt modification costs excluded
from Adjusted EBITDA) and $46.0
million for the three months ended December 31, 2015 and December 31, 2014, respectively, and $123.7 million (including $6.9 million of debt modification costs excluded
from Adjusted EBITDA) and $146.4
million for the years ended December
31, 2015 and December 31,
2014, respectively. 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. EMR roll-out costs include third
party consulting expenses and internal costs such as training,
travel and labor, reflecting time spent by Company personnel on the
EMR roll-out project. 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 and corporate capital structure
assessment activities (including shareholder relations advisory
matters), and are primarily comprised of legal, finance,
consulting, professional fees and other third party costs.
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
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. Management uses
Facility Operating Income to, among other things, assess our
facility operating performance, to assess decisions which are
expected to facilitate meeting current financial goals as well as
to achieve optimal facility financial performance, and to provide
an indicator to determine if adjustments to current spending
decisions are needed. We believe Facility Operating Income is
useful to investors in evaluating our facility operating
performance because it is helpful in identifying trends in our
day-to-day facility performance since the items excluded have
little or no significance on our day-to-day facility operations and
it provides and an assessment of our revenue generation and expense
management.
The table below reconciles Facility Operating Income from net
income (loss) for the three months and the years ended December 31, 2015 and December 31, 2014 (in thousands):
|
|
Three
Months Ended December 31,
|
|
Years Ended
December 31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
(174,303)
|
|
$
(106,796)
|
|
$
(458,155)
|
|
$
(149,426)
|
Provision (benefit)
for income taxes
|
|
69,468
|
|
(67,200)
|
|
(92,209)
|
|
(181,305)
|
Equity in loss
(earnings) of unconsolidated ventures
|
|
38
|
|
742
|
|
804
|
|
(171)
|
Debt modification and
extinguishment costs
|
|
240
|
|
2,621
|
|
7,020
|
|
6,387
|
Other non-operating
income
|
|
(1,593)
|
|
(2,614)
|
|
(9,827)
|
|
(7,235)
|
Interest
expense:
|
|
|
|
|
|
|
|
|
Debt
|
|
43,480
|
|
42,104
|
|
173,484
|
|
128,002
|
Capitalized and financing lease obligations
|
|
51,669
|
|
56,873
|
|
211,132
|
|
109,998
|
Amortization of deferred financing costs and debt (premium)
discount
|
2,516
|
|
(430)
|
|
3,351
|
|
7,477
|
Change in fair value of derivatives
|
|
7
|
|
532
|
|
797
|
|
2,711
|
Interest
income
|
|
(395)
|
|
(345)
|
|
(1,603)
|
|
(1,343)
|
Income (loss) from
operations
|
|
(8,873)
|
|
(74,513)
|
|
(165,206)
|
|
(84,905)
|
Depreciation and
amortization
|
|
126,378
|
|
216,632
|
|
733,165
|
|
537,035
|
Asset
impairment
|
|
57,941
|
|
9,992
|
|
57,941
|
|
9,992
|
Facility lease
expense
|
|
90,621
|
|
92,469
|
|
367,574
|
|
323,830
|
General and
administrative (including non-cash
|
|
|
|
|
|
|
|
|
stock-based compensation
expense)
|
|
91,970
|
|
98,574
|
|
370,579
|
|
280,267
|
Transaction
costs
|
|
1,089
|
|
7,725
|
|
8,252
|
|
66,949
|
Loss on facility
lease termination
|
|
-
|
|
-
|
|
76,143
|
|
-
|
Change in future
service obligation
|
|
(941)
|
|
670
|
|
(941)
|
|
670
|
Amortization of
entrance fees
|
|
(888)
|
|
(714)
|
|
(3,204)
|
|
(21,220)
|
Management
fees
|
|
(15,553)
|
|
(16,920)
|
|
(60,183)
|
|
(42,239)
|
Facility Operating
Income
|
|
$
341,744
|
|
$
333,915
|
|
$
1,384,120
|
|
$
1,070,379
|
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/brookdale-announces-fourth-quarter-and-full-year-2015-results-300216828.html
SOURCE Brookdale Senior Living Inc.