NASHVILLE, Tenn., Jan. 26, 2015 /PRNewswire/-- Brookdale
Senior Living Inc. (NYSE: BKD) ("Brookdale" or the "Company") today announced
that, for the fourth quarter of 2014, it expects to report Cash
From Facility Operations ("CFFO"), excluding integration,
transaction-related and electronic medical records ("EMR") roll-out
costs, of $0.53 per share. As a
result, Brookdale has adjusted its
2015 guidance for CFFO per share, excluding integration,
transaction-related and EMR roll-out costs, to a range of
$2.60 to $2.75, replacing its
previously announced preliminary range of $2.95 to $3.10. Brookdale plans to issue its fourth quarter
and full year 2014 financial results after the market closes on
Wednesday, February 4, 2015, with a
conference call to discuss the results on Thursday, February 5, 2015. The preliminary
financial information in this release is based on management's
estimates derived from the information available at this time and
is subject to revision upon finalization of the Company's quarterly
accounting and financial reporting procedures and completion of the
annual audit.
Andy Smith, Brookdale's CEO, said, "Brookdale's preliminary fourth quarter CFFO
was impacted by a combination of lower than expected occupancy and
approximately $11 million, or
$0.06 per share, of certain
higher-than-anticipated insurance reserve adjustments. We are
pleased, however, that the timing of our integration of Emeritus is
proceeding more quickly than planned. We anticipate the
business will be on a common systems and infrastructure platform by
mid-2015."
Mr. Smith continued, "The reduced guidance for the year is
largely a reflection of the lower starting point for occupancy for
2015. We remain confident in Brookdale's 2015 growth trajectory and in our
ability to achieve our previously disclosed third year revenue and
CFFO synergy projections arising from the Emeritus
transaction."
Mr. Smith concluded, "The lower than expected occupancy rates
were mostly concentrated in legacy Emeritus communities. While
move-out rates were in line with historical averages, we did not
capture our normal level of move-ins as we continued to acclimate
to new systems and procedures, and new organizational
structures. We are encouraged by our December metrics, as
lead generation, health care referrals and sales activity
improved. We have also accelerated our spending on deferred
maintenance to provide our sales force, and more importantly, our
residents, a more attractive product. We currently plan to
fully or partially renovate more than 150 former Emeritus
communities in 2015."
Brookdale's Fourth Quarter
Performance
For the fourth quarter of 2014, the Company estimates
consolidated total revenue was approximately $1,253 million with consolidated senior housing
revenue of approximately $929
million. Brookdale
expects to report consolidated senior housing average occupancy of
88.3%, a sequential quarter decline of 20 basis points, and
consolidated senior housing average monthly revenue per unit of
$4,220. The third quarter occupancy
rate represents one month of legacy Brookdale standalone in July, and one month's
deconsolidation of the ventures with HCP, Inc. ("HCP") in
September, versus a fourth quarter reflecting the full impact of
the Emeritus and HCP transactions. Assuming all transactions
had occurred on July 1, 2014, the
sequential quarter change in the consolidated senior housing
average occupancy would have been a decline of 40 basis points for
all consolidated communities, a decline of 80 basis points for the
legacy Emeritus portfolio and a decline of 10 basis points for the
legacy Brookdale portfolio.
Fourth quarter 2014 consolidated same-store senior housing
revenue increased by an estimated 1.5% from a year ago, driven by a
2.5% increase in rates and partially offset by a 90 basis point
decline in occupancy. Excluding the impact of year-end
insurance reserve adjustments, compared with the fourth quarter of
2013, same store facility expenses increased approximately 3.9% and
same store Facility Operating Income declined 2.6%. Including
the impact of these year-end insurance reserve adjustments,
compared with the fourth quarter of 2013, same store facility
expenses increased 5.9% and same store Facility Operating Income
decreased by
6.0%.
Assumptions Supporting Adjusted Guidance for 2015
CFFO
For the full year 2015, the Company expects CFFO per share in a
range of $2.60 to $2.75 per share,
excluding integration, transaction-related and EMR roll-out
costs. This guidance excludes the potential impact of any
future acquisition or disposition activity (other than planned
purchases of currently leased communities). Due to the
Emeritus merger and the transactions with HCP that closed in July
and August 2014, respectively,
comparability between years is, for some metrics, less meaningful.
Additional assumptions underlying this guidance include, but
are not limited to:
- an increase in average annual occupancy for the consolidated
portfolio of zero to 50 basis points, including an increase of 130
to 180 basis points for the fourth quarter of 2015 from the fourth
quarter of 2014;
- a flat to slight decrease in year over year average monthly
revenue per unit, including a 3.5% to 3.75% increase for the fourth
quarter of 2015 from the fourth quarter of 2014;
- senior housing margin expansion from 34.0% to 34.5%;
- cash G&A expense, which excludes non-cash stock
compensation, integration, transaction-related and EMR roll-out
costs, of approximately $235 million to $245
million;
- Adjusted EBITDA of $930 million to $960
million;
- an updated forecast that Brookdale will not pay federal cash income
taxes until 2017, at the earliest; and
- total capital expenditures of $355
million to $375 million, of which $225 million to $235 million are major
EBITDA-enhancing and Program Max projects.
Stifel 2015 Seniors Housing & Healthcare Real Estate
Conference
Company management will participate at the Stifel 2015 Seniors
Housing & Healthcare Real Estate Conference on January 27, 2015 at the St. Regis Monarch Beach
in Dana Point, CA.
Fourth Quarter and Full Year 2014 Release and Earnings
Call
The Company plans to release its fourth quarter and full year
2014 financial results after the market closes on Wednesday, February 4, 2015. The Company
has also scheduled a conference call to discuss the results on
Thursday, February 5, 2015 at
10:00 AM ET. The conference
call can be accessed by dialing (866) 900-2996 (from within the
U.S.) or (706) 643-2685 (from outside of the U.S.) ten minutes
prior to the scheduled start and referencing the "Brookdale Senior
Living Fourth Quarter Earnings Call."
A webcast of the conference call will be available to the public
on a listen-only basis at www.brookdale.com. Please allow
extra time prior to the call to visit the site and download the
necessary software required to listen to the internet
broadcast. A replay of the webcast will be available through
the website for three months following the call.
For those who cannot listen to the live call, a replay will be
available until 11:59 PM ET on
February 18, 2015 by dialing (855)
859-2056 (from within the U.S.) or (404) 537-3406 (from outside of
the U.S.) and referencing access code "72921420".
About Brookdale Senior Living
Brookdale Senior Living Inc. is the leading operator of senior
living communities throughout the United States. The Company
is committed to providing senior living solutions primarily within
properties that are designed, purpose-built and operated to provide
the highest-quality service, care and living accommodations for
residents. Currently Brookdale operates independent living,
assisted living, and dementia-care communities and continuing care
retirement centers, with approximately 1,150 communities in 46
states and the ability to serve over 110,000 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 statements made by
or on behalf of Brookdale relating
hereto 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 expected financial results; our operational initiatives and
growth strategies and our expectations regarding their effect on
our results; our expectations regarding the economy, the senior
living industry, occupancy, revenue, cash flow, operating income,
expenses, capital expenditures, Program Max opportunities, cost
savings, the demand for senior housing, the home resale market,
expansion, development and construction activity, acquisition
opportunities, asset dispositions, our share repurchase program,
taxes, capital deployment, returns on invested capital and CFFO;
our expectations regarding returns to shareholders and our growth
prospects; our expectations concerning the future performance of
recently acquired communities and the effects of acquisitions on
our financial results; our ability to secure financing or repay,
replace or extend existing debt at or prior to maturity; our
ability to remain in compliance with all of our debt and lease
agreements (including the financial covenants contained therein);
our expectations regarding liquidity and leverage; our expectations
regarding financings and refinancings of assets (including the
timing thereof) and their effect on our results; our expectations
regarding changes in government reimbursement programs and their
effect on our results; our plans to generate growth organically
through occupancy improvements, increases in annual rental rates
and the achievement of operating efficiencies and cost savings; our
plans to expand our offering of ancillary services (therapy, home
health and hospice); our plans to expand, renovate, redevelop and
reposition existing communities; our plans to acquire additional
communities, asset portfolios, operating companies and home health
agencies; the expected project costs for our expansion,
redevelopment and repositioning program; our expected levels of
expenditures and reimbursements (and the timing thereof); our
expectations regarding our sales, marketing and branding
initiatives and their impact on our results; our expectations for
the performance of our entrance fee communities; our expectations
for the operating results of our unconsolidated joint ventures; our
ability to anticipate, manage and address industry trends and their
effect on our business; our expectations regarding the payment of
dividends; our ability to increase revenues, earnings, Adjusted
EBITDA, Cash From Facility Operations, and/or Facility Operating
Income (as such terms are defined herein); and our expectations
regarding the integration of Emeritus and the transactions with
HCP. Forward-looking statements are generally identifiable by
use of forward-looking terminology such as "may," "will," "should,"
"potential," "intend," "expect," "endeavor," "seek," "anticipate,"
"estimate," "overestimate," "underestimate," "believe," "could,"
"would," "project," "predict," "continue," "plan" or other similar
words or expressions. Forward-looking statements are based on
certain assumptions or estimates, discuss future expectations,
describe future plans and strategies, contain projections of
results of operations or of financial condition, or state other
forward-looking information. Our ability to predict results
or the actual effect of future plans or strategies is inherently
uncertain. Although we believe that expectations reflected in
any forward-looking statements are based on reasonable assumptions,
we can give no assurance that our expectations will be attained and
actual results and performance could differ materially from those
projected. Factors which could have a material adverse effect on
our operations and future prospects or which could cause events or
circumstances to differ from the forward-looking statements
include, but are not limited to, the risk associated with the
current global economic situation and its impact upon capital
markets and liquidity; changes in governmental reimbursement
programs; our inability to extend (or refinance) debt (including
our credit and letter of credit facilities) as it matures; the risk
that we may not be able to satisfy the conditions precedent to
exercising the extension options associated with certain of our
debt agreements; events which adversely affect the ability of
seniors to afford our monthly resident fees or entrance fees; the
conditions of housing markets in certain geographic areas; our
ability to generate sufficient cash flow to cover required interest
and long-term operating lease payments; the effect of our
indebtedness and long-term operating leases on our liquidity; the
risk of loss of property pursuant to our mortgage debt and
long-term lease obligations; the possibilities that changes in the
capital markets, including changes in interest rates and/or credit
spreads, or other factors could make financing more expensive or
unavailable to us; our determination from time to time to purchase
any shares under the repurchase program; our ability to fund any
repurchases; our ability to effectively manage our growth; our
ability to maintain consistent quality control; delays in obtaining
regulatory approvals; the risk that we may not be able to expand,
redevelop and reposition our communities in accordance with our
plans; our ability to complete acquisitions and integrate them into
our operations; competition for the acquisition of assets; our
ability to obtain additional capital on terms acceptable to us; a
decrease in the overall demand for senior housing; our
vulnerability to economic downturns; acts of nature in certain
geographic areas; terminations of our resident agreements and
vacancies in the living spaces we lease; early terminations or
non-renewal of management agreements; increased competition for
skilled personnel; increased union activity; departure of our key
officers; increases in market interest rates; environmental
contamination at any of our communities; failure to comply with
existing environmental laws; an adverse determination or resolution
of complaints filed against us; the cost and difficulty of
complying with increasing and evolving regulation; risks relating
to the integration of Emeritus and the transactions with HCP,
including in respect of unanticipated difficulties and/or
expenditures relating to such transactions; the impact of such
transactions on the Company's relationships with residents,
employees and third parties; and the inability to obtain, or delays
in obtaining, cost savings and synergies from such transactions; as
well as other risks detailed from time to time in our filings with
the Securities and Exchange Commission, including our Annual Report
on Form 10-K and Quarterly Reports on Form 10-Q. When
considering forward-looking statements, you should keep in mind the
risk factors and other cautionary statements in such SEC
filings. Readers are cautioned not to place undue reliance on
any of these forward-looking statements, which reflect our
management's views as of the date of this press release. The
factors discussed above and the other factors noted in our SEC
filings from time to time could cause our actual results to differ
significantly from those contained in any forward-looking
statement. We cannot guarantee future results, levels of
activity, performance or achievements and we expressly disclaim any
obligation to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change
in our expectations with regard thereto or change in events,
conditions or circumstances on which any statement is based.
Non-GAAP Financial Measures
This release contains the following non-GAAP financial measures
we believe are useful to investors as key measures of our operating
performance and liquidity: Adjusted EBITDA, CFFO, and Facility
Operating Income, as defined below. A reconciliation of Adjusted
EBITDA to net income (loss), of CFFO to net cash provided by (used
in) operating activities, and of Facility Operating Income to net
income (loss) for the three months and full year ended December 31, 2014 will be included in the
Company's release of fourth quarter and full year 2014 financial
results as discussed above. For a reconciliation of these measures
for the three and nine-months ended September 30, 2014, see our earnings release for
the third quarter of 2014.
Adjusted EBITDA
Adjusted EBITDA is a measure of operating performance that is
not calculated in accordance with U.S. generally accepted
accounting principles ("GAAP"). Adjusted EBITDA should not be
considered in isolation or as a substitute for net income, income
from operations or cash flows provided by or used in operations, as
determined in accordance with GAAP. Adjusted EBITDA is a key
measure of the Company's operating performance used by management
to focus on operating performance and management without mixing in
items of income and expense that relate to long-term contracts and
the financing and capitalization of the business. We define
Adjusted EBITDA as net income (loss) before provision (benefit) for
income taxes, non-operating (income) expense items, (gain) loss on
sale or acquisition of communities (including gain (loss) on
facility lease termination), depreciation and amortization
(including non-cash impairment charges), straight-line lease
expense (income), net of amortization of (above) below market
rents, amortization of deferred gain, amortization of deferred
entrance fees, non-cash stock-based compensation expense, and
change in future service obligation and including entrance fee
receipts and refunds (excluding (i) first generation entrance fee
receipts from the sale of units at a recently opened entrance fee
CCRC prior to stabilization and (ii) first generation entrance fee
refunds not replaced by second generation entrance fee receipts at
the recently opened community prior to stabilization).
We believe Adjusted EBITDA is useful to investors in evaluating
our performance, results of operations and financial position for
the following reasons:
- It is helpful in identifying trends in our day-to-day
performance because the items excluded have little or no
significance to our day-to-day operations;
- It provides an assessment of controllable expenses and affords
management the ability to make decisions which are expected to
facilitate meeting current financial goals as well as achieve
optimal financial performance; and
- It is an indication to determine if adjustments to current
spending decisions are needed.
Cash From Facility Operations
CFFO is a measurement of liquidity that is not calculated in
accordance with GAAP and should not be considered in isolation as a
substitute for cash flows provided by or used in operations, as
determined in accordance with GAAP. We define CFFO as net
cash provided by (used in) operating activities adjusted for
changes in operating assets and liabilities, deferred interest and
fees added to principal, refundable entrance fees received, first
generation entrance fee receipts at a recently opened entrance fee
CCRC prior to stabilization, entrance fee refunds disbursed
adjusted for first generation entrance fee refunds not replaced by
second generation entrance fee receipts at the recently opened
community prior to stabilization, lease financing debt amortization
with fair market value or no purchase options, gain (loss) on
facility lease termination, recurring capital expenditures (net),
distributions from unconsolidated ventures from cumulative share of
net earnings, CFFO from unconsolidated ventures, and other.
Recurring capital expenditures include routine expenditures
capitalized in accordance with GAAP that are funded from current
operations. Amounts excluded from recurring capital
expenditures consist primarily of major projects, renovations,
community repositionings, expansions, systems projects or other
non-recurring or unusual capital items (including integration
capital expenditures) or community purchases that are funded using
lease or financing proceeds, available cash and/or proceeds from
the sale of communities.
We believe CFFO is useful to investors in evaluating our
liquidity for the following reasons:
- It provides an assessment of our ability to facilitate meeting
current financial and liquidity goals.
- To assess our ability to:
(i) service
our outstanding indebtedness;
(ii) pay
dividends; and
(iii)
make regular recurring capital expenditures to maintain and improve
our facilities.
Facility Operating Income
Facility Operating Income is not a measurement of operating
performance calculated in accordance with GAAP and should not be
considered in isolation as a substitute for net income, income from
operations, or cash flows provided by or used in operations, as
determined in accordance with GAAP. We define Facility
Operating Income as net income (loss) before provision (benefit)
for income taxes, non-operating (income) expense items, (gain) loss
on sale or acquisition of communities (including gain (loss) on
facility lease termination), depreciation and amortization
(including non-cash impairment charges), facility lease expense,
general and administrative expense, including non-cash stock-based
compensation expense, transaction costs, change in future service
obligation, amortization of deferred entrance fee revenue and
management fees.
We believe Facility Operating Income is useful to investors in
evaluating our facility operating performance for the following
reasons:
- It is helpful in identifying trends in our day-to-day facility
performance;
- It provides an assessment of our revenue generation and expense
management; and
- It provides an indicator to determine if adjustments to current
spending decisions are needed.
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SOURCE Brookdale Senior Living Inc.