NASHVILLE, Tenn., Feb. 13, 2017 /PRNewswire/ --
FOURTH QUARTER 2016 AND RECENT HIGHLIGHTS:
- Net loss increased 54.1% to $268.6
million for the fourth quarter of 2016 compared to
$174.3 million for the fourth quarter
of 2015.
- Adjusted EBITDA(1) increased 3.5% to $184.2 million for the fourth quarter of 2016
compared to $178.0 million for the
fourth quarter of 2015. Excluding integration, transaction,
transaction-related and strategic project costs of $10.1 million, Adjusted EBITDA for the fourth
quarter of 2016 was $194.2
million.
- Fourth quarter 2016 net cash provided by operating activities
decreased 1.9% from the fourth quarter of 2015, to $88.5 million.
- Adjusted Free Cash Flow for the fourth quarter of 2016
increased $65.9 million to a positive
$33.2 million, compared to the fourth
quarter of 2015. Brookdale's proportionate share of Adjusted Free
Cash Flow of unconsolidated ventures for the fourth quarter of 2016
increased $0.6 million to
$6.8 million, compared to the fourth
quarter of 2015.
(1) Adjusted EBITDA
and Adjusted Free Cash Flow are financial measures not calculated
in accordance with GAAP. See "Reconciliation of Non-GAAP
Financial Measures" below for the Company's definitions of its
non-GAAP financial measures, reconciliations of such measures to
their most comparable GAAP financial measures and other important
information regarding the use of the Company's non-GAAP financial
measures.
FULL YEAR 2016 HIGHLIGHTS:
- Net loss decreased 11.7% to $404.6
million for 2016 compared to $458.2
million for 2015.
- Adjusted EBITDA increased 5.8% to $770.8
million for 2016 compared to $728.2
million for 2015. Excluding integration, transaction,
transaction-related and strategic project costs of $54.2 million, Adjusted EBITDA for the full year
2016 was $825.0 million.
- Net cash provided by operating activities increased 25.1% to
$365.7 million for 2016 compared to
$292.4 million for 2015.
- Adjusted Free Cash Flow was $153.8
million for 2016 versus a negative $8.7 million for 2015.
- Completed $304.9 million of
dispositions, including the sale of 51 owned communities.
- Entered into agreements to acquire a 15% ownership interest in
an unconsolidated joint venture that intends to acquire a portfolio
of 64 communities currently leased to Brookdale and to terminate
the leases on an additional 33 communities leased to Brookdale, of
which four were transitioned to an existing unconsolidated joint
venture.
- Total liquidity was $584.0
million at December 31, 2016
compared to $194.6 million at
December 31, 2015.
Brookdale Senior Living Inc. (NYSE: BKD) ("Brookdale" or the
"Company") announced results for the quarter and year ended
December 31, 2016.
Andy Smith, Brookdale's President
and CEO, said, "We accomplished much during 2016, including making
significant progress with our portfolio optimization efforts as
well as improving our liquidity and the Company's cash flow.
We are operating in a difficult environment with intense supply
pressure and a competitive labor market. Despite these
macro-economic conditions, we were able to grow both fourth quarter
Adjusted EBITDA and Adjusted Free Cash Flow over the prior year
quarter. With the fourth quarter results, we achieved results
at the upper end of our full year guidance range provided last
quarter."
"We believe that supply and labor pressures will continue for
the majority of 2017 and we have reflected this impact into our
guidance. We have prioritized our efforts in marketing,
pricing, product positioning, community management retention and
capital expenditures in markets where we are experiencing or expect
heightened competitive pressure. We remain focused on creating
shareholder value while enriching the lives of the seniors we
serve."
Fourth Quarter Financial Results
Total revenue for the fourth quarter of 2016 was $1.21 billion compared to $1.24 billion for the prior year period.
During the fifteen months ended December 31,
2016, the Company disposed of a total of 74 communities,
either through sales or lease terminations. Revenue for these
74 communities was $11.7 million in
the fourth quarter of 2016 compared to $48.1
million in the fourth quarter of 2015.
Resident fees were $1.0 billion
for the fourth quarter of 2016, a decrease of 3.0% from the fourth
quarter of 2015. Fourth quarter monthly RevPAR(2)
for the consolidated senior housing portfolio was $3,823, an increase of 2.5% from the fourth
quarter of 2015, driven by a year-over-year increase in
RevPOR(2) for the consolidated senior housing portfolio
of 3.3% and a decrease in weighted average unit occupancy of 80
basis points. The sequential decline in weighted average unit
occupancy was 20 basis points.
Facility operating expenses for the fourth quarter of 2016 were
$686.2 million, a decrease of 1.6%
from the fourth quarter of 2015. Combined segment operating
margin was 33.4% for the fourth quarter of 2016 versus 34.0% for
the fourth quarter of 2015. Facility operating expenses for
the 74 communities disposed of during the fifteen months ended
December 31, 2016 were $9.5 million in the fourth quarter of 2016
compared to $39.2 million in the
fourth quarter of 2015.
Net loss for the fourth quarter of 2016 was $268.6 million, versus net loss of $174.3 million for the fourth quarter of
2015. During the quarter, the Company incurred $76.3 million of impairment charges related to
the transactions with HCP, Inc. ("HCP") which were announced in
November 2016. Additionally, the Company incurred
$145.6 million of non-cash impairment
charges in conjunction with its annual impairment assessment.
Net cash provided by operating activities for the fourth quarter
of 2016 was $88.5 million, a decrease
of $1.7 million, or 1.9%, compared
with the fourth quarter of 2015.
Weighted average shares outstanding were 185.7 million for the
fourth quarter of 2016 compared with weighted average shares
outstanding of 184.8 million for the prior year quarter.
(2) RevPAR, or average monthly senior housing
resident fee revenues per available unit, is defined by the Company
as resident fee revenues, excluding the amortization of entry fees
and Brookdale Ancillary Services segment revenue, for the
corresponding portfolio for the period, divided by the weighted
average number of available units in the corresponding portfolio
for the period, divided by the number of months in the
period. RevPOR, or average monthly senior housing resident
fee revenues per occupied unit, is defined by the Company as
resident fee revenues, excluding the amortization of entry fees and
Brookdale Ancillary Services segment revenue, for the corresponding
portfolio for the period, divided by the weighted average number of
occupied units in the corresponding portfolio for the period,
divided by the number of months in the period.
Annual Financial Results
Total revenue for the full year 2016 was $4.98 billion, an increase of 0.3% from the prior
year. Net loss for the full year 2016 was $404.6 million, versus net loss of $458.2 million for the full year 2015. Full
year 2016 net cash provided by operating activities was
$365.7 million, an increase of
$73.4 million, or 25.1%, compared
with the prior year.
The Company's full year 2016 results compared to the most recent
2016 full-year guidance were:
|
Full Year 2016
Guidance as of
November 1, 2016
|
|
Actual
Full Year
2016
|
(in
millions)
|
|
|
|
|
|
Senior housing and
ancillary services revenue
|
$4,150 to
$4,200
|
|
$
4,169
|
|
|
|
|
Adjusted EBITDA,
excluding integration, transaction,
transaction-related and strategic project costs
|
$818 to
$828
|
|
$
825
|
|
|
|
|
Adjusted
CFFO
|
$365 to
$375
|
|
$
375
|
|
|
|
|
The Company's
proportionate share of CFFO of
unconsolidated ventures
|
$55 to $60
|
|
$
58
|
|
|
|
|
Capital Expenditures
(excl. recurring capex)
|
$200 to
$210
|
|
$
186
|
Non-GAAP Financial Measures
Adjusted EBITDA, Cash From Facility Operations ("CFFO"),
Adjusted CFFO and Adjusted Free Cash Flow are financial measures
that are not calculated in accordance with GAAP. The Company
strongly urges you to review the information under "Reconciliation
of Non-GAAP Financial Measures" below for the Company's definitions
of each of these non-GAAP financial measures, a detailed
description of why the Company believes such measures are useful,
the limitations of each measure, and a reconciliation of Adjusted
EBITDA from the Company's net income (loss), a reconciliation of
the Company's CFFO, Adjusted CFFO, and Adjusted Free Cash Flow from
the Company's net cash provided by (used in) operating activities,
and a reconciliation of the Company's proportionate share of each
of CFFO and Adjusted Cash Flow of unconsolidated ventures from such
ventures' net cash provided by (used in) operating
activities. The Company changed its definition and
calculation of Adjusted EBITDA and CFFO when it reported results
for the second quarter of 2016 and third quarter of 2016.
Prior period amounts of Adjusted EBITDA, CFFO and Adjusted CFFO
presented herein have been recast to conform to the new
definitions. See "Reconciliation of Non-GAAP Financial
Measures" below for a description of such changes to the
definitions of these non-GAAP measures.
Adjusted EBITDA increased 3.5% to $184.2
million in the fourth quarter of 2016, compared to
$178.0 million for the fourth quarter
of 2015. The Company's CFFO was $66.4
million in the fourth quarter of 2016, an increase of 5.6%
from the Company's CFFO of $62.9
million in the prior year period. The Company's
proportionate share of CFFO of unconsolidated ventures was
$12.9 million for the fourth quarter
of 2016, a decrease of 31.9% compared with $18.9 million for the prior year period.
The Company's Adjusted CFFO was $81.5
million for the fourth quarter of 2016, a decrease of
$6.2 million, or 7.1%, compared with
the fourth quarter of 2015. The Company's Adjusted CFFO for
these periods represents the Company's CFFO excluding $15.1 million and $24.9
million of integration, transaction, transaction-related and
strategic project costs for the fourth quarter of 2016 and 2015,
respectively.
The Company's Adjusted Free Cash Flow for the fourth quarter of
2016 increased $65.9 million to
$33.2 million for the fourth quarter
of 2016, versus a negative $32.7
million for the fourth quarter of 2015. The Company's
proportionate share of Adjusted Free Cash Flow of unconsolidated
ventures was $6.8 million for the
fourth quarter of 2016 compared with $6.2
million for the prior year period.
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 Ancillary Services segment includes the
Company's outpatient therapy, home health and hospice
services. The Management Services segment includes the
services provided to unconsolidated communities that are operated
under management agreements.
Senior Housing
Revenue for the consolidated senior housing portfolio was
$896.0 million for the fourth quarter
of 2016, a decrease of 2.7% from the fourth quarter of 2015.
During the fifteen months ended December 31,
2016, the Company disposed of a total of 74 communities,
either through sales or lease terminations. Revenue for these
74 communities was $11.7 million in
the fourth quarter of 2016 compared to $48.1
million in the fourth quarter of 2015.
Same community revenue for the consolidated senior housing
portfolio for the three months ended December 31, 2016 increased 1.0% over the
corresponding period in 2015. Same community RevPAR increased
1.1% in the fourth quarter of 2016 from the fourth quarter of 2015,
driven by an increase in same community RevPOR of 2.5% and a
decline in weighted average unit occupancy of 120 basis points.
Facility operating expenses were $588.4
million for the fourth quarter of 2016, a decrease of 1.1%
from the fourth quarter of 2015. Consolidated same community
facility operating expenses for the fourth quarter of 2016
increased by 3.5% over the fourth quarter of 2015, primarily due to
increases in salaries and wages from wage rate increases.
Operating income for the consolidated senior housing portfolio
decreased by 5.7% from the fourth quarter of 2015, to $307.6 million for the fourth quarter of
2016. Same community operating income for the consolidated
senior housing portfolio for the fourth quarter of 2016 decreased
by 3.3% from the fourth quarter of 2015, to $299.5 million.
Brookdale Ancillary Services
During the quarter, the Company significantly reduced the number
of outpatient therapy clinics because lower reimbursement rates and
lower utilization made the business less attractive. Revenue
for the Company's ancillary services segment decreased $5.8 million, or 4.9%, to $114.0 million for the fourth quarter of 2016
versus the prior year fourth quarter. Ancillary
services facility operating expenses for the fourth quarter of 2016
decreased $4.8 million, or 4.7%, over
the fourth quarter of 2015. As a result, ancillary services
operating income for the fourth quarter of 2016 was $16.3 million, a decrease of 6.0% versus the
fourth quarter of 2015, with operating margin at 14.3% for the
fourth quarter of 2016.
Liquidity
Total liquidity for the Company was $584.0 million at December
31, 2016, an increase of $389.4
million from December 31,
2015. Liquidity at December 31,
2016 included $216.4 million
of unrestricted cash and cash equivalents and $367.6 million of availability on the Company's
secured credit facility. During the fourth quarter of 2016,
the Company's unconsolidated CCRC venture obtained non-recourse
mortgage financing on certain communities as part of the multi-part
transactions with HCP, and the Company received distributions of
$221.6 million of the net proceeds
from such financing.
Portfolio Optimization Activities
The Company continues to actively explore opportunities to
optimize its portfolio through disposing of owned and leased
communities and restructuring leases in order to simplify and
streamline its business, to increase the quality and durability of
cash flow, and to reduce debt and lease leverage.
Dispositions of Owned Communities
The Company began the fourth quarter of 2016 with 28 communities
classified as assets held for sale with a carrying value totaling
$173.5 million, and $106.9 million of associated mortgage debt was
included in the current portion of the Company's long-term
debt. During the fourth quarter of 2016, the Company sold 12
of these communities (837 units) for an aggregate sales price of
$80.7 million.
As of December 31, 2016, 16
communities (1,423 units) were classified as assets held for sale
with a carrying value of $97.8
million, and $60.5 million of
associated mortgage debt was included in the current portion of
long-term debt. The closings of the sales of the 16 remaining
communities held for sale are subject to receipt of regulatory
approvals and satisfaction of other customary closing conditions,
and are expected to occur in the next 12 months; however, there can
be no assurance that the transactions will close or, if they do,
when the actual closings will occur.
Dispositions and Restructurings of Leased Communities
During the fourth quarter of 2016, the Company announced that it
had entered into a definitive agreement with HCP for a multi-part
transaction involving, among other things, the termination of
leases for 29 communities and the contribution of four communities
then leased to the Company by HCP into an existing RIDEA joint
venture with HCP. During the fourth quarter of 2016, the
Company terminated triple-net leases with respect to seven of such
communities, four of which were contributed to an existing
unconsolidated venture. The Company terminated one triple-net
lease during January 2017, and
expects the triple-net leases with respect to the remaining 25
communities to be terminated in stages through the fourth quarter
of 2017.
The Company announced at the same time that it had entered into
a definitive agreement with affiliates of Blackstone Real Estate
Partners VIII L.P. (collectively "Blackstone") to acquire a 15%
ownership interest in a joint venture that intends to acquire a
portfolio of 64 communities currently leased to the Company from
HCP. Upon completion of the acquisition of the assets, the
Company will manage the communities on behalf of the joint
venture. The Company expects to contribute a total of
approximately $170.0 million to
purchase its equity interest, terminate the existing leases and
fund its share of anticipated closing costs and working capital.
The transaction is expected to close during the first quarter of
2017.
The closings of the various pending transactions with HCP and
Blackstone are subject to the satisfaction of various closing
conditions, including (where applicable) the receipt of regulatory
approvals. There can be no assurance that the transactions will
close or, if they do, when the closings will occur.
Share Repurchase
On November 1, 2016, the Company
announced that its board of directors had approved a share
repurchase program that authorizes the Company to purchase up to
$100.0 million in the aggregate of
the Company's common stock. Pursuant to this authorization,
during the three months ended December 31,
2016, the Company purchased 750,000 shares at a cost of
approximately $9.6 million, or a
weighted average price of approximately $12.83 per share. As of December 31, 2016, approximately $90.4 million remains available under this share
repurchase authorization.
2017 Outlook
For the full year 2017, the Company is providing the following
guidance:
|
Full-Year 2017
Guidance
|
(in
millions)
|
|
|
Adjusted EBITDA,
excluding integration, transaction,
transaction-related and strategic project costs
|
$670 to
$710
|
|
|
Adjusted Free Cash
Flow
|
$140 to
$170
|
|
|
The Company's
proportionate share of Adjusted Free Cash Flow
of unconsolidated ventures
|
$25 to $35
|
The foregoing guidance excludes the potential impact of any
future acquisition, disposition or refinancing, including debt
modification costs. It includes the pending or planned
dispositions of communities, including the 16 communities
classified as held for sale as of December
31, 2016, and it includes the pending transactions with HCP
and Blackstone announced during the fourth quarter of 2016.
For further details on guidance please see the updated
Investor Presentation, which will be posted on the Company's
website at www.brookdale.com. Reconciliations of the non-GAAP
financial measures included in the foregoing guidance to the most
comparable GAAP financial measures are not available without
unreasonable effort due to the inherent difficulty in forecasting
the timing or amounts of items required to reconcile Adjusted
EBITDA, Adjusted Free Cash Flow and the Company's proportionate
share of Adjusted Free Cash Flow of unconsolidated ventures from
the Company's net income (loss), the Company's net cash provided by
(used in) operating activities and the unconsolidated ventures' net
cash provided by (used in) operating activities, as
applicable. Variability in the timing or amounts of items
required to reconcile each measure may have a significant impact on
the Company's future GAAP results.
Supplemental Information
The Company will post on the Investor Relations section of the
Company's website at www.brookdale.com supplemental information
relating to the Company's fourth quarter 2016 results. This
information will also be furnished in a Form 8-K to be filed with
the SEC. An updated Investor Presentation also will be posted.
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, 2016 on Tuesday, February 14, 2017 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 28, 2017 by dialing (855)
859-2056 (from within the U.S.) or (404) 537-3406 (from outside of
the U.S.) and referencing access code "65980961". 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. Brookdale operates independent living, assisted
living, and dementia-care communities and continuing care
retirement centers, with approximately 1,055 communities in 47
states and the ability to serve approximately 103,000 residents as
of December 31, 2016. Through
its ancillary services program, the Company also offers a range of
outpatient therapy, home health 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 strategy, our operational, sales, marketing and
branding initiatives, our portfolio optimization and growth
initiatives and our expectations regarding their effect on our
results; our expectations regarding the economy, the senior living
industry, senior housing construction, supply and competition,
occupancy, and pricing and the demand for senior housing; our
expectations regarding our revenue, cash flow, operating income,
expenses, capital expenditures, including expected levels and
reimbursements and the timing thereof, development, expansion,
renovation, redevelopment and repositioning opportunities,
including Program Max opportunities, and their projected costs,
cost savings and synergies, and our liquidity and leverage; our
plans and expectations with respect to disposition, lease
restructuring, financing, re-financing and venture transactions and
opportunities (including assets currently held for sale and the
transactions with HCP, Inc. ("HCP") and affiliates of Blackstone
Real Estate Partners VIII L.P. (collectively, "Blackstone")),
including the timing thereof and their effects on our results; our
expectations regarding taxes, capital deployment and returns on
invested capital, Adjusted EBITDA, Cash From Facility Operations,
Adjusted Cash From Facility Operations and Adjusted Free Cash Flow
(as those terms are defined herein); our expectations regarding
returns to shareholders, our share repurchase program and the
payment of dividends; 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 changes in government reimbursement
programs and their effect on our results; and our plans to expand
our offering of ancillary services (therapy, home health and
hospice). 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; the risk of overbuilding and
new supply; 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 our
share 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 acquisition, disposition, lease restructuring,
financing, re-financing and venture transactions (including assets
currently held for sale and the transactions with HCP and
Blackstone) on agreed upon terms or at all, including in respect of
the satisfaction of closing conditions, the risk that regulatory
approvals are not obtained or are subject to unanticipated
conditions, and uncertainties as to the timing of closing; our
ability to successfully integrate acquisitions; 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 wage pressure and 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,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenue
|
|
|
|
|
|
|
|
|
Resident
fees
|
|
$
1,010,074
|
|
$
1,040,835
|
|
$
4,168,621
|
|
$
4,177,127
|
Management
fees
|
|
20,264
|
|
15,553
|
|
70,762
|
|
60,183
|
Reimbursed costs
incurred on behalf of managed communities
|
|
178,530
|
|
179,314
|
|
737,597
|
|
723,298
|
Total
revenue
|
|
1,208,868
|
|
1,235,702
|
|
4,976,980
|
|
4,960,608
|
|
|
|
|
|
|
|
|
|
Expense
|
|
|
|
|
|
|
|
|
Facility operating
expense (excluding depreciation and amortization of $117,721,
$113,429,
$469,388 and $684,488, respectively)
|
|
686,176
|
|
697,262
|
|
2,799,402
|
|
2,788,862
|
General and
administrative expense (including non-cash stock-based
compensation
expense of $5,067, $5,780, $32,285 and $31,651,
respectively)
|
|
66,668
|
|
91,970
|
|
313,409
|
|
370,579
|
Transaction
costs
|
|
2,040
|
|
1,089
|
|
3,990
|
|
8,252
|
Facility lease
expense
|
|
91,745
|
|
90,621
|
|
373,635
|
|
367,574
|
Depreciation and
amortization
|
|
129,088
|
|
126,378
|
|
520,402
|
|
733,165
|
Asset
impairment
|
|
221,877
|
|
57,941
|
|
248,515
|
|
57,941
|
Loss on facility
lease termination
|
|
11,113
|
|
-
|
|
11,113
|
|
76,143
|
Costs incurred on
behalf of managed communities
|
|
178,530
|
|
179,314
|
|
737,597
|
|
723,298
|
Total operating
expense
|
|
1,387,237
|
|
1,244,575
|
|
5,008,063
|
|
5,125,814
|
Income (loss) from
operations
|
|
(178,369)
|
|
(8,873)
|
|
(31,083)
|
|
(165,206)
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
694
|
|
395
|
|
2,933
|
|
1,603
|
Interest
expense:
|
|
|
|
|
|
|
|
|
Debt
|
|
(42,605)
|
|
(43,480)
|
|
(174,027)
|
|
(173,484)
|
Capital and financing
lease obligations
|
|
(50,451)
|
|
(51,669)
|
|
(202,012)
|
|
(211,132)
|
Amortization of
deferred financing costs and debt premium (discount)
|
|
(2,422)
|
|
(2,516)
|
|
(9,400)
|
|
(3,351)
|
Change in fair value
of derivatives
|
|
(150)
|
|
(7)
|
|
(178)
|
|
(797)
|
Debt modification and
extinguishment costs
|
|
(5,930)
|
|
(240)
|
|
(9,170)
|
|
(7,020)
|
Equity in earnings
(loss) of unconsolidated ventures
|
|
1,182
|
|
(38)
|
|
1,660
|
|
(804)
|
Gain (loss) on sale
of assets, net
|
|
5,092
|
|
(453)
|
|
7,218
|
|
1,270
|
Other non-operating
income
|
|
3,790
|
|
2,046
|
|
14,801
|
|
8,557
|
Income (loss) before
income taxes
|
|
(269,169)
|
|
(104,835)
|
|
(399,258)
|
|
(550,364)
|
Benefit (provision)
for income taxes
|
|
569
|
|
(69,468)
|
|
(5,378)
|
|
92,209
|
Net income
(loss)
|
|
(268,600)
|
|
(174,303)
|
|
(404,636)
|
|
(458,155)
|
Net (income) loss
attributable to noncontrolling interest
|
|
113
|
|
44
|
|
239
|
|
678
|
Net income (loss)
attributable to Brookdale Senior Living Inc. common
stockholders
|
|
$
(268,487)
|
|
$
(174,259)
|
|
$
(404,397)
|
|
$
(457,477)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
income (loss) per share attributable to Brookdale Senior Living
Inc. common stockholders
|
|
$
(1.45)
|
|
$
(0.94)
|
|
$
(2.18)
|
|
$
(2.48)
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in computing basic and diluted net income (loss)
per
share
|
|
185,684
|
|
184,805
|
|
185,653
|
|
184,333
|
Condensed
Consolidated Balance Sheets
(in
thousands)
|
|
|
|
|
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
216,397
|
|
$
88,029
|
Cash and escrow
deposits - restricted
|
|
32,864
|
|
32,570
|
Accounts receivable,
net
|
|
141,705
|
|
144,053
|
Assets held for
sale
|
|
97,843
|
|
110,620
|
Other current
assets
|
|
130,695
|
|
122,671
|
Total current
assets
|
|
619,504
|
|
497,943
|
Property, plant and
equipment and
|
|
|
|
|
leasehold intangibles,
net
|
|
7,379,305
|
|
8,031,376
|
Other assets,
net
|
|
1,218,878
|
|
1,519,245
|
Total
assets
|
|
$
9,217,687
|
|
$
10,048,564
|
|
|
|
|
|
Current
liabilities
|
|
$
731,142
|
|
$
840,148
|
Long-term debt, less
current portion
|
|
3,413,998
|
|
3,769,371
|
Capital and financing
lease obligations, less current portion
|
|
2,415,914
|
|
2,427,438
|
Other
liabilities
|
|
578,901
|
|
552,880
|
Total
liabilities
|
|
7,139,955
|
|
7,589,837
|
Total Brookdale
Senior Living Inc. stockholders' equity
|
|
2,077,982
|
|
2,458,888
|
Noncontrolling
interest
|
|
(250)
|
|
(161)
|
Total
equity
|
|
2,077,732
|
|
2,458,727
|
Total liabilities and
equity
|
|
$
9,217,687
|
|
$
10,048,564
|
Condensed
Consolidated Statements of Cash Flows
(in
thousands)
|
|
|
|
|
|
Years Ended
December 31,
|
|
|
2016
|
|
2015
|
Cash Flows from
Operating Activities
|
|
|
|
|
Net income
(loss)
|
|
$
(404,636)
|
|
$
(458,155)
|
Adjustments to
reconcile net income (loss) to net cash provided by
operating
|
|
|
|
|
activities:
|
|
|
|
|
Loss on
extinguishment of debt, net
|
|
1,251
|
|
121
|
Depreciation and
amortization, net
|
|
529,802
|
|
736,516
|
Asset
impairment
|
|
248,515
|
|
57,941
|
Equity in (earnings)
loss of unconsolidated ventures
|
|
(1,660)
|
|
804
|
Distributions from
unconsolidated ventures from cumulative share of net
|
|
23,544
|
|
7,825
|
earnings
|
|
|
|
|
Amortization of
deferred gain
|
|
(4,372)
|
|
(4,372)
|
Amortization of
entrance fee revenue
|
|
(4,195)
|
|
(3,204)
|
Proceeds from
deferred entrance fee revenue
|
|
13,980
|
|
11,113
|
Deferred income tax
provision (benefit)
|
|
3,248
|
|
(95,261)
|
Change in deferred
lease liability
|
|
767
|
|
6,956
|
Change in fair value
of derivatives
|
|
178
|
|
797
|
Gain on sale of
assets, net
|
|
(7,218)
|
|
(1,270)
|
Change in future
service obligation
|
|
-
|
|
(941)
|
Non-cash stock-based
compensation
|
|
32,285
|
|
31,651
|
Non-cash interest
expense on financing lease obligations
|
|
26,496
|
|
23,472
|
Amortization of
(above) below market lease, net
|
|
(6,864)
|
|
(7,158)
|
Other
|
|
(9,137)
|
|
(3,157)
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts receivable,
net
|
|
1,581
|
|
5,608
|
Prepaid expenses and
other assets, net
|
|
2,954
|
|
51,079
|
Accounts payable and
accrued expenses
|
|
(83,248)
|
|
(60,564)
|
Tenant refundable
fees and security deposits
|
|
(839)
|
|
(524)
|
Deferred
revenue
|
|
3,300
|
|
(6,911)
|
Net cash provided by
operating activities
|
|
365,732
|
|
292,366
|
Cash Flows from
Investing Activities
|
|
|
|
|
(Increase) decrease
in lease security deposits and lease acquisition deposits,
net
|
|
(2,225)
|
|
10,866
|
Decrease in cash and
escrow deposits — restricted
|
|
5,027
|
|
29,286
|
Additions to
property, plant and equipment and leasehold intangibles,
net
|
|
(333,647)
|
|
(411,051)
|
Acquisition of
assets, net of related payables
|
|
(12,157)
|
|
(191,216)
|
Investment in
unconsolidated ventures
|
|
(13,377)
|
|
(69,297)
|
Distributions
received from unconsolidated ventures
|
|
218,973
|
|
9,054
|
Proceeds from sale
of assets, net
|
|
297,932
|
|
49,226
|
Property insurance
proceeds
|
|
9,137
|
|
3,175
|
Other
|
|
7,162
|
|
980
|
Net cash provided by
(used in) investing activities
|
|
176,825
|
|
(568,977)
|
Cash Flows from
Financing Activities
|
|
|
|
|
Proceeds from
debt
|
|
387,348
|
|
585,650
|
Repayment of debt and
capital and financing lease obligations
|
|
(469,309)
|
|
(485,762)
|
Proceeds from line of
credit
|
|
1,276,500
|
|
1,175,000
|
Repayment of line of
credit
|
|
(1,586,500)
|
|
(965,000)
|
Purchase of treasury
stock
|
|
(9,640)
|
|
-
|
Payment of financing
costs, net of related payables
|
|
(2,938)
|
|
(32,622)
|
Refundable entrance
fees:
|
|
|
|
|
Proceeds
from refundable entrance fees
|
|
3,083
|
|
1,939
|
Refunds
of entrance fees
|
|
(3,984)
|
|
(4,411)
|
Cash portion of loss
on extinguishment of debt
|
|
-
|
|
(44)
|
Payment on lease
termination
|
|
(9,250)
|
|
(17,000)
|
Other
|
|
501
|
|
2,807
|
Net cash
(used in) provided by financing activities
|
|
(414,189)
|
|
260,557
|
Net increase (decrease) in cash and cash
equivalents
|
|
128,368
|
|
(16,054)
|
Cash and cash equivalents at beginning of year
|
|
88,029
|
|
104,083
|
Cash and cash equivalents at end of year
|
|
$
216,397
|
|
$
88,029
|
Reconciliation of Non-GAAP Financial
Measures
This earnings release contains financial measures utilized by
management to evaluate our operating performance and liquidity that
are not calculated in accordance with U.S. generally accepted
accounting principles ("GAAP"). Each of these measures,
Adjusted EBITDA, CFFO, Adjusted CFFO and Adjusted Free Cash Flow
should not be considered in isolation from or as superior to or as
a substitute for net income (loss), income (loss) from operations,
net cash provided by (used in) operating activities, or other
financial measures determined in accordance with GAAP. We use
these non-GAAP financial measures to supplement our GAAP results in
order to provide a more complete understanding of the factors and
trends affecting our business. We strongly urge you to review
the reconciliations of Adjusted EBITDA from the Company's net
income (loss), the Company's CFFO, Adjusted CFFO and Adjusted Free
Cash Flow from the Company's net cash provided by (used in)
operating activities, and the Company's proportionate share of each
of CFFO and Adjusted Free Cash Flow of unconsolidated ventures from
such ventures' net cash provided by (used in) operating activities,
along with our consolidated financial statements included
herein. We also strongly urge you not to rely on any single
financial measure to evaluate our business. We caution
investors that amounts presented in accordance with our definitions
of Adjusted EBITDA, CFFO, Adjusted CFFO and Adjusted Free Cash Flow
may not be comparable to similar measures disclosed by other
companies, because not all companies calculate these non-GAAP
measures in the same manner.
We changed our definitions and calculations of Adjusted EBITDA
and CFFO from prior periods when we reported results for the second
and third quarters of 2016, as follows:
- We changed our definition and calculation of Adjusted EBITDA
when we reported results for the second quarter of 2016. Prior
period amounts of Adjusted EBITDA presented herein have been recast
to conform to the new definition. The current definition of
Adjusted EBITDA reflects the removal of the following adjustments
to our net income (loss) that were used in the former definition:
the addition of our proportionate share of CFFO of unconsolidated
ventures and our entrance fee receipts, net of refunds, and the
subtraction of our amortization of entrance fees.
- We changed our definition and calculation of CFFO when we
reported results for the third quarter of 2016. Prior period
amounts of the Company's CFFO and Adjusted CFFO have been recast to
reflect the Company's CFFO and Adjusted CFFO separate from, and
exclusive of, the Company's proportionate share of CFFO of
unconsolidated ventures. Previously, in connection with our
reporting results for the second quarter of 2016, we began
reporting CFFO as a measure of liquidity, and as such we changed
the definition of CFFO to reflect the reconciliation of such
measure from the Company's net cash provided by (used in) operating
activities. This previous change had no effect on the amounts of
CFFO or Adjusted CFFO presented herein for this period or prior
periods.
Adjusted EBITDA
We define Adjusted EBITDA as net income (loss) before:
provision (benefit) for income taxes; non-operating (income)
expense items; depreciation and amortization (including non-cash
impairment charges); (gain) loss on sale or acquisition of
communities (including gain (loss) on facility lease termination);
straight-line lease expense (income), net of amortization of
(above) below market rents; amortization of deferred gain; non-cash
stock-based compensation expense; and change in future service
obligation.
We use Adjusted EBITDA to assess our overall operating
performance. We believe this non-GAAP measure, as we have defined
it, is helpful in identifying trends in our day-to-day performance
because the items excluded have little or no significance on our
day-to-day operations. This measure provides an assessment of
controllable expenses and affords management the ability to make
decisions which are expected to facilitate meeting current
operating goals as well as achieve optimal operating performance.
It provides an indicator for management to determine if adjustments
to current spending decisions are needed.
Adjusted EBITDA provides us with a measure of operating
performance, independent of items that are beyond the control of
management in the short-term, such as the change in the liability
for the obligation to provide future services under existing
lifecare contracts, depreciation and amortization (including
non-cash impairment charges), straight-line lease expense (income),
taxation and interest expense associated with our capital
structure. This metric measures our operating performance based on
operational factors that management can impact in the short-term,
namely revenues and the cost structure or expenses of the
organization. Adjusted EBITDA is one of the metrics used by senior
management and the board of directors to review the operating
performance of the business on a regular basis. We believe that
Adjusted EBITDA is also used by research analysts and investors to
evaluate the performance of and value companies in our
industry.
Adjusted EBITDA has limitations as an analytical tool. Material
limitations in making the adjustments to our net income (loss) to
calculate Adjusted EBITDA, and using this non-GAAP financial
measure as compared to GAAP net income (loss), include:
- the cash portion of interest expense, income tax (benefit)
provision and non-recurring charges related to gain (loss) on sale
of communities (or facility lease termination) and extinguishment
of debt activities generally represent charges (gains), which may
significantly affect our operating results; and
- depreciation and amortization and asset impairment represent
the wear and tear and/or reduction in value of our communities and
other assets, which affects the services we provide to residents
and may be indicative of future needs for capital
expenditures.
We believe Adjusted EBITDA is useful to investors in evaluating
our operating performance 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 revenue and expense management.
The table below reconciles Adjusted EBITDA from net income
(loss) for the three and twelve months ended December 31, 2016 and December 31, 2015 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, (1)
|
|
Years Ended
December 31, (1)
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net income
(loss)
|
|
$
(268,600)
|
|
$
(174,303)
|
|
$
(404,636)
|
|
$
(458,155)
|
(Benefit) provision
for income taxes
|
|
(569)
|
|
69,468
|
|
5,378
|
|
(92,209)
|
Equity in (earnings)
loss of unconsolidated ventures
|
|
(1,182)
|
|
38
|
|
(1,660)
|
|
804
|
Debt modification and
extinguishment costs
|
|
5,930
|
|
240
|
|
9,170
|
|
7,020
|
(Gain) loss on sale
of assets, net
|
|
(5,092)
|
|
453
|
|
(7,218)
|
|
(1,270)
|
Other non-operating
income
|
|
(3,790)
|
|
(2,046)
|
|
(14,801)
|
|
(8,557)
|
Interest
expense
|
|
95,628
|
|
97,672
|
|
385,617
|
|
388,764
|
Interest
income
|
|
(694)
|
|
(395)
|
|
(2,933)
|
|
(1,603)
|
Income (loss) from
operations
|
|
(178,369)
|
|
(8,873)
|
|
(31,083)
|
|
(165,206)
|
Depreciation and
amortization
|
|
129,088
|
|
126,378
|
|
520,402
|
|
733,165
|
Asset
impairment
|
|
221,877
|
|
57,941
|
|
248,515
|
|
57,941
|
Loss on facility
lease termination
|
|
11,113
|
|
-
|
|
11,113
|
|
76,143
|
Straight-line lease
expense (income)
|
|
(1,786)
|
|
505
|
|
767
|
|
6,956
|
Amortization of
(above) below market lease, net
|
|
(1,699)
|
|
(1,733)
|
|
(6,864)
|
|
(7,158)
|
Amortization of
deferred gain
|
|
(1,093)
|
|
(1,093)
|
|
(4,372)
|
|
(4,372)
|
Non-cash stock-based
compensation expense
|
|
5,067
|
|
5,780
|
|
32,285
|
|
31,651
|
Change in future
service obligation
|
|
-
|
|
(941)
|
|
-
|
|
(941)
|
Adjusted
EBITDA
|
|
$
184,198
|
|
$
177,964
|
|
$
770,763
|
|
$
728,179
|
|
|
|
|
|
|
|
|
|
(1) For
the three and twelve months ended December 31, 2016, the
calculation of Adjusted EBITDA includes
integration,
transaction, transaction-related and strategic project costs of
$10.1 million and $54.2 million,
respectively. For the
three and twelve months ended December 31, 2015, the calculation of
Adjusted EBITDA
includes integration,
transaction, transaction-related and strategic project costs of
$24.7 million and $116.8
million, 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.
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. Strategic
project costs include costs associated with
certain strategic
projects related to refining the Company's strategy, building out
enterprise-wide capabilities for
the post-merger
platform (including the EMR roll-out project) and reducing costs
and achieving synergies by capitalizing on scale.
|
CFFO, Adjusted CFFO and Adjusted Free Cash Flow
We define Cash From Facility Operations (CFFO) as net cash
provided by (used in) operating activities before: changes
in operating assets and liabilities; gain (loss) on facility lease
termination; and distributions from unconsolidated ventures from
cumulative share of net earnings; and adjusted for:
recurring capital expenditures, net; lease financing debt
amortization with fair market value or no purchase options;
proceeds from refundable entrance fees; refunds of entrance fees;
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 capital expenditures related to community
expansions, renovations and major projects (including major
community redevelopment and repositioning projects), the
development of new communities and corporate capital expenditures
(including systems projects and integration capital expenditures)
that are funded using lease or financing proceeds, available cash
and/or proceeds from the sale of communities.
Adjusted CFFO represents the Company's CFFO, excluding
integration, transaction, transaction-related and strategic project
costs. Integration costs include transition costs associated
with the Emeritus merger and organizational restructuring (such as
severance and retention payments and recruiting expenses), third
party consulting expenses directly related to the integration of
Emeritus (in areas such as cost savings and synergy realization,
branding and technology and systems work), and internal costs such
as training, travel and labor, reflecting time spent by Company
personnel on integration activities and projects. Transaction and
transaction-related costs include third party costs directly
related to the acquisition of Emeritus, other acquisition and
disposition activity, community financing and leasing activity 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. Strategic project costs include costs
associated with certain strategic projects related to refining the
Company's strategy, building out enterprise-wide capabilities for
the post-merger platform (including the EMR roll-out project) and
reducing costs and achieving synergies by capitalizing on
scale.
We define Adjusted Free Cash Flow as net cash provided by (used
in) operating activities before: changes in operating assets
and liabilities, gain (loss) on facility lease termination; and
distributions from unconsolidated ventures from cumulative share of
net earnings; plus: proceeds from refundable entrance
fees, net of refunds; and property insurance proceeds;
less: lease financing debt amortization and
Non-Development Capital Expenditures. Non-Development Capital
Expenditures is comprised of corporate and community-level capital
expenditures, including those related to maintenance, renovations,
upgrades and other major building infrastructure projects for our
communities. Non-Development Capital Expenditures does not
include capital expenditures for community expansions and major
community redevelopment and repositioning projects, including our
Program Max initiative, and the development of new communities.
Amounts of Non-Development Capital Expenditures are presented net
of lessor reimbursements received or anticipated to be received in
the calculation of Adjusted Free Cash Flow.
Our proportionate share of each of CFFO and Adjusted Free Cash
Flow of unconsolidated ventures is calculated based on our equity
ownership percentage and in a manner consistent with the definition
of CFFO and Adjusted Free Cash Flow for our consolidated entities,
respectively. Our investments in our unconsolidated ventures
are accounted for under the equity method of accounting and,
therefore, our proportionate share of each of CFFO and Adjusted
Free Cash Flow of unconsolidated ventures does not represent cash
available to our consolidated business except to the extent it is
distributed to us.
We use CFFO, Adjusted CFFO and Adjusted Free Cash Flow to assess
our overall liquidity. These measures provide an assessment of
controllable expenses and afford management the ability to make
decisions which are expected to facilitate meeting current
financial and liquidity goals as well as to achieve optimal
financial performance. They provide indicators for management to
determine if adjustments to current spending decisions are
needed.
These metrics measure our liquidity based on operational factors
that management can impact in the short-term, namely the cost
structure or expenses of the organization. CFFO, Adjusted CFFO and
Adjusted Free Cash Flow are some of the metrics used by our senior
management and board of directors (i) to review our ability to
service our outstanding indebtedness, including our credit
facilities, (ii) to review our ability to pay dividends to
stockholders or engage in share repurchases, (iii) to review our
ability to make capital expenditures, (iv) for other corporate
planning purposes and/or (v) in making compensation determinations
for certain of our associates (including our named executive
officers).
Each of CFFO, Adjusted CFFO and Adjusted Free Cash Flow has
limitations as an analytical tool. Material limitations in making
the adjustments to our net cash provided by (used in) operating
activities to calculate such measures, and using these non-GAAP
financial measures as compared to GAAP net cash provided by (used
in) operating activities, include:
- CFFO, Adjusted CFFO and Adjusted Free Cash Flow do not
represent cash available for dividends or discretionary
expenditures, since we have mandatory debt service requirements and
other non-discretionary expenditures not reflected in these
measures; and
- the cash portion of non-recurring charges related to gain
(loss) on lease termination and extinguishment of debt activities
generally represent charges (gains), which may significantly affect
our financial results.
In addition, our proportionate share of each of CFFO and
Adjusted Free Cash Flow of unconsolidated ventures has limitations
as an analytical tool because such measures do not represent cash
available directly for use by our consolidated business except to
the extent actually distributed to us, and we do not have control,
or we share control in determining, the timing and amount of
distributions from our unconsolidated ventures and, therefore, we
may never receive such cash.
We believe each of CFFO, Adjusted CFFO and Adjusted Free Cash
Flow is useful to investors because it assists their ability to
meaningfully evaluate (1) our ability to service our outstanding
indebtedness, including our credit facilities and capital and
financing leases, (2) our ability to pay dividends to stockholders
or engage in share repurchases, (3) our ability to make capital
expenditures, and (4) the underlying value of our assets, including
our interests in real estate.
We believe presentation of our proportionate share of each of
CFFO and Adjusted Free Cash Flow of unconsolidated ventures is
useful to investors since such measure reflects the cash generated
by the operating activities of the unconsolidated ventures for the
reporting period and, to the extent such cash is not distributed to
us, it generally represents cash used or to be used by the ventures
for the repayment of debt, investing in expansions or acquisitions,
reserve requirements, capital expenditures for community
renovations, apartment upgrades and other major building
infrastructure projects (in the case of CFFO), or other corporate
uses by such ventures, and such uses reduce our potential need to
make capital contributions to the ventures of our proportionate
share of cash needed for such items.
The table below reconciles the Company's CFFO, Adjusted CFFO and
Adjusted Free Cash Flow from net cash provided by (used in)
operating activities for the three and twelve months ended
December 31, 2016 and December 31, 2015 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, (1)
|
|
Years Ended
December 31, (1)
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
88,451
|
|
$
90,181
|
|
$
365,732
|
|
$
292,366
|
Net cash provided by
(used in) investing activities
|
|
231,199
|
|
(70,675)
|
|
176,825
|
|
(568,977)
|
Net cash (used in)
provided by financing activities
|
|
(177,437)
|
|
(1,868)
|
|
(414,189)
|
|
260,557
|
Net increase
(decrease) in cash and cash equivalents
|
|
$
142,213
|
|
$
17,638
|
|
$
128,368
|
|
$
(16,054)
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
88,451
|
|
$
90,181
|
|
$
365,732
|
|
$
292,366
|
Changes in operating
assets and liabilities
|
|
13,725
|
|
664
|
|
76,252
|
|
11,312
|
Proceeds from
refundable entrance fees
|
|
1,097
|
|
429
|
|
3,083
|
|
1,939
|
Refunds of entrance
fees
|
|
(1,091)
|
|
(1,160)
|
|
(3,984)
|
|
(4,411)
|
Lease financing debt
amortization
|
|
(16,409)
|
|
(14,914)
|
|
(63,267)
|
|
(56,922)
|
Loss on facility
lease termination
|
|
11,113
|
|
-
|
|
11,113
|
|
76,143
|
Distributions from
unconsolidated ventures from cumulative share of net
earnings
|
|
(17,144)
|
|
-
|
|
(23,544)
|
|
(7,825)
|
Non-development
capital expenditures
|
|
(49,363)
|
|
(108,828)
|
|
(220,767)
|
|
(324,479)
|
Property insurance
proceeds
|
|
2,777
|
|
909
|
|
9,137
|
|
3,175
|
Adjusted Free Cash
Flow
|
|
$
33,156
|
|
$
(32,719)
|
|
$
153,755
|
|
$
(8,702)
|
|
|
|
|
|
|
|
|
|
Add: Non-development
capital expenditures
|
|
49,363
|
|
108,828
|
|
220,767
|
|
324,479
|
Less: Recurring
capital expenditures, net
|
|
(14,744)
|
|
(13,978)
|
|
(58,583)
|
|
(60,937)
|
Less: Property
insurance proceeds
|
|
(2,777)
|
|
(909)
|
|
(9,137)
|
|
(3,175)
|
Add: Lease financing
debt amortization with bargain purchase option
|
|
1,432
|
|
1,665
|
|
5,765
|
|
5,626
|
CFFO
|
|
$
66,430
|
|
$
62,887
|
|
$
312,567
|
|
$
257,291
|
|
|
|
|
|
|
|
|
|
Integration,
transaction, transaction-related and strategic project
costs
|
|
15,104
|
|
24,853
|
|
62,131
|
|
123,679
|
Adjusted
CFFO
|
|
$
81,534
|
|
$
87,740
|
|
$
374,698
|
|
$
380,970
|
|
|
|
|
|
|
|
|
|
(1) For the three and
twelve months ended December 31, 2016, the calculation of CFFO and
Adjusted Free Cash
Flow include
integration, transaction, transaction-related and strategic project
costs of $15.1 million and $62.1
million
(including $5.1 million and $7.9 million of debt modification costs
excluded from Adjusted EBITDA
for the
three and twelve months ended December 31, 2016, respectively). For
the three and twelve months
ended
December 31, 2015, the calculation of CFFO and Adjusted Free Cash
Flow include integration,
transaction,
transaction-related and strategic project costs of $24.9 million
and $123.7 million, respectively
(including
$0.2 million and $6.9 million of debt modification costs excluded
from Adjusted EBITDA for the
three
and twelve months ended December 31, 2015, 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.
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. Strategic project costs
include
costs associated with certain strategic projects related to
refining the Company's strategy, building out
enterprise-wide
capabilities for the post-merger platform (including the EMR
roll-out project) and reducing
costs
and achieving synergies by capitalizing on scale.
|
The table below reconciles the Company's proportionate share of
each of CFFO and Adjusted Free Cash Flow of unconsolidated ventures
from net cash provided by (used in) operating activities of such
unconsolidated ventures for the three and twelve months ended
December 31, 2016 and December 31, 2015 (in thousands). For
purposes of this presentation, amounts for each line item represent
the aggregate amounts of such line items for all of our
unconsolidated ventures.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
40,994
|
|
$
67,839
|
|
$
198,524
|
|
$
180,266
|
Net cash provided by
(used in) investing activities
|
|
5,556
|
|
(175,244)
|
|
(118,935)
|
|
(1,218,101)
|
Net cash (used in)
provided by financing activities
|
|
(55,554)
|
|
96,706
|
|
(88,262)
|
|
1,028,562
|
Net (decrease)
increase in cash and cash equivalents
|
|
$
(9,004)
|
|
$
(10,699)
|
|
$
(8,673)
|
|
$
(9,273)
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
40,994
|
|
$
67,839
|
|
$
198,524
|
|
$
180,266
|
Changes in operating
assets and liabilities
|
|
8,617
|
|
(17,274)
|
|
(2,508)
|
|
(7,634)
|
Proceeds from
refundable entrance fees
|
|
9,820
|
|
13,720
|
|
43,698
|
|
37,819
|
Refunds of entrance
fees
|
|
(14,751)
|
|
(9,565)
|
|
(51,373)
|
|
(42,663)
|
Non-development
capital expenditures
|
|
(26,232)
|
|
(43,332)
|
|
(98,305)
|
|
(121,895)
|
Adjusted Free Cash
Flow of unconsolidated ventures
|
|
$
18,448
|
|
$
11,388
|
|
$
90,036
|
|
$
45,893
|
|
|
|
|
|
|
|
|
|
Brookdale's Weighted
Average Ownership percentage
|
|
36.7%
|
|
54.4%
|
|
36.2%
|
|
49.0%
|
|
|
|
|
|
|
|
|
|
Brookdale's
proportionate share of Adjusted Free Cash Flow of unconsolidated
ventures
|
$
6,763
|
|
$
6,191
|
|
$
32,630
|
|
$
22,470
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash
Flow of unconsolidated ventures
|
|
$
18,448
|
|
$
11,388
|
|
$
90,036
|
|
$
45,893
|
Add: Non-development
capital expenditures
|
|
26,232
|
|
43,332
|
|
98,305
|
|
121,895
|
Less: Recurring
capital expenditures, net
|
|
(5,075)
|
|
(6,253)
|
|
(19,836)
|
|
(19,843)
|
CFFO of
unconsolidated ventures
|
|
$
39,605
|
|
$
48,467
|
|
$
168,505
|
|
$
147,945
|
|
|
|
|
|
|
|
|
|
Brookdale's Weighted
Average Ownership percentage
|
|
32.5%
|
|
39.0%
|
|
34.4%
|
|
38.8%
|
|
|
|
|
|
|
|
|
|
Brookdale's
proportionate share of CFFO of unconsolidated ventures
|
|
$
12,870
|
|
$
18,896
|
|
$
58,000
|
|
$
57,379
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/brookdale-announces-fourth-quarter-and-full-year-2016-results-300406449.html
SOURCE Brookdale Senior Living Inc.