NASHVILLE, Tenn., Aug. 8, 2016 /PRNewswire/ -- Brookdale Senior
Living Inc. (NYSE: BKD) ("Brookdale" or the "Company") today
reported financial and operating results for the second quarter of
2016. Highlights included:
- Total revenue was $1.3 billion
for the second quarter of 2016, an increase of 1.7% from the second
quarter of 2015.
- Net loss of $35.5 million for the
second quarter of 2016 compared to $84.8
million for the second quarter of 2015.
- Adjusted EBITDA(1) was $218.6
million in the second quarter of 2016, excluding
integration, transaction, transaction-related and strategic project
costs, an increase of 0.6% from the second quarter of
2015.
- Net cash provided by operating activities was $107.5 million for the second quarter of 2016, an
increase of 6.7% from the second quarter of 2015.
- Adjusted CFFO(1) was $123.4
million for the second quarter of 2016, an increase of 12.2%
from the second quarter of 2015.
- Continuing its portfolio rationalization initiative, the
Company entered into agreements to dispose of certain communities,
which is expected to lower leverage and provide added
liquidity.
- Reaffirmed full-year 2016 Adjusted CFFO guidance range,
expressed on an aggregate basis.
(1) Adjusted EBITDA and Adjusted Cash From
Facility Operations ("Adjusted CFFO") are financial measures that
are not calculated in accordance with GAAP. Adjusted CFFO
represents Cash From Facility Operations ("CFFO") excluding
integration, transaction, transaction-related and strategic project
costs. For the Company's definitions of Adjusted
EBITDA and Adjusted CFFO, as well as a reconciliation of Adjusted
EBITDA from net income (loss) and Adjusted CFFO from net cash
provided by (used in) operating activities, see "Reconciliation of
Non-GAAP Financial Measures" below. The Company's definitions
and calculations of Adjusted EBITDA and CFFO have changed from
prior periods. Prior period amounts of Adjusted EBITDA
included in this press release have been recast to conform to the
new definition. See "Reconciliation of Non-GAAP Financial
Measures" below for a description of the changes to the definitions
of Adjusted EBITDA and CFFO, as well as the Supplemental
Information described below for a reconciliation of the amounts of
Adjusted EBITDA previously reported for the full year
2015 and each of the quarters therein and the first quarter
of 2016 using the previous definition to the amounts of
Adjusted EBITDA calculated using the new definition. The
change in definition of CFFO had no effect on the amounts of CFFO
and Adjusted CFFO presented in this press release for this period
or prior periods.
Andy Smith, Brookdale's President
and CEO, said, "Our mission, to enrich the lives of those we serve,
is perfectly aligned with the tremendous opportunity to meet the
demographic surge of seniors in America. We have the size, scale
and depth of product offerings that no one else can match, and we
have a three year plan to build upon these advantages to grow
shareholder value. Our plan is based on continuously
improving our execution. So, I'm pleased that we showed
executional improvement with strong move-in momentum as the second
quarter progressed, continued solid cost control and cost synergy
attainment, and the beginnings of a recovery in our ancillary
business. We also entered into a number of agreements
recently for transactions that will simplify our business as well
as have positive economic impact on our leverage and balance
sheet."
Financial Results
Total revenue for the second quarter of 2016 was $1.3 billion compared to $1.2 billion for the prior year period. During
the fifteen months ended June 30,
2016, the Company disposed of a total of 30 communities,
either through sales or lease terminations. These communities
generated $4.9 million of revenue in
the second quarter of 2016 compared to $18.6
million of revenue in the prior year period.
Resident fees of $1.1 billion for
the second quarter of 2016 were a 1.0% increase over the second
quarter of 2015. Average monthly revenue per occupied unit
for the consolidated senior housing portfolio was $4,476 in the second quarter of 2016, an increase
of 3.3% compared with the second quarter of 2015. Weighted
average occupancy for all consolidated communities during the
second quarter of 2016 was 85.8%, compared to 86.5% during the
second quarter of 2015.
Facility operating expenses for the second quarter of 2016 were
$693.1 million, a decline of
$1.9 million, or 0.3%, from the
second quarter of 2015. The decrease was primarily due to the
impact of the community dispositions and a decrease in general and
professional liability insurance expense of approximately
$10.8 million. Brookdale's
consolidated operating margin was 34.3% for the second quarter of
2016 versus 33.4% for the second quarter of 2015.
Net loss attributable to Brookdale common stockholders for the
second quarter of 2016 was $35.5
million, or $0.19 per share,
versus net loss attributable to Brookdale common stockholders of
$84.5 million, or $0.46 per share, for the second quarter of
2015. Weighted average shares outstanding were 185.8 million
for the quarter ended June 30,
2016. Net loss for the second quarter of 2016 was
$35.5 million, versus net loss of
$84.8 million for the second quarter
of 2015.
Net cash provided by operating activities for the second quarter
of 2016 was $107.5 million, an
increase of $6.7 million, or 6.7%,
compared with the second quarter of 2015.
Non-GAAP Financial Measures
For the Company's definitions of Adjusted EBITDA, CFFO and
Adjusted CFFO, as well as a reconciliation of Adjusted EBITDA from
net income (loss) and CFFO and Adjusted CFFO from net cash provided
by (used in) operating activities, see "Reconciliation of Non-GAAP
Financial Measures" below. Following the SEC's recent
issuance of updated guidance on the use of non-GAAP financial
measures, the Company has determined to change the definitions and
calculations of Adjusted EBITDA and CFFO from prior periods. Prior
period amounts of Adjusted EBITDA included in this press release
have been recast to conform to the new definition. In
addition, the Company no longer presents CFFO per share, Adjusted
CFFO per share or Facility Operating Income on a historical basis
or in its outlook. See "Reconciliation of Non-GAAP Financial
Measures" below for a description of the changes to the definition
of Adjusted EBITDA, as well as the Supplemental Information
described below for a reconciliation of the amounts of Adjusted
EBITDA previously reported for the full year 2015 and each of the
quarters therein and the first quarter of 2016 using the previous
definition to the amounts of Adjusted EBITDA calculated using the
new definition.
Adjusted EBITDA was $218.6 million
in the second quarter of 2016 compared to $217.4 million in the second quarter of 2015,
excluding integration, transaction, transaction-related and
strategic project costs for the three months ended June 30, 2016 and June 30,
2015 of $17.1 million and
$29.0 million, respectively.
Adjusted EBITDA was $201.5 million in
the second quarter of 2016, compared to $188.4 million for the second quarter of 2015,
including integration, transaction, transaction-related and
strategic project costs in both periods.
CFFO was $106.1 million in the
second quarter of 2016. Adjusted CFFO was $123.4 million for the second quarter of 2016, an
increase of $13.4 million, or 12.2%,
compared with the second quarter of 2015. In the second
quarter of 2016, CFFO benefited from a decrease in insurance
expense. Adjusted CFFO for the periods represents CFFO
excluding $17.3 million and
$29.0 million for the second quarter
of 2016 and 2015, respectively, of integration, transaction,
transaction-related and strategic project costs.
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 Brookdale 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
$931.2 million for the second quarter
of 2016, an increase of 0.4% from the second quarter of 2015.
During the fifteen months ended June 30,
2016, the Company disposed of a total of 30 communities,
either through sales or lease terminations. These communities
generated $4.9 million of revenue in
the second quarter of 2016 compared to $18.6
million of revenue in the prior year period. Same
community revenue for the consolidated senior housing portfolio for
the three months ended June 30, 2016
increased 1.6% over the corresponding period in 2015. Same
community weighted average revenue per occupied unit for senior
housing increased 3.0% in the second quarter of 2016 from the
second quarter of 2015.
Facility operating expenses were $588.8
million for the second quarter of 2016, a decrease of 1.3%
from the second quarter of 2015. Facility operating expense
decreased primarily due to the impact of community dispositions and
a decrease in insurance expense. Consolidated same community
operating expenses for the second quarter of 2016 increased by 0.1%
over the second quarter of 2015.
Operating income for the senior housing portfolio increased by
3.4% from the second quarter of 2015, to $342.4 million for the second quarter of
2016. Same community operating income for the senior housing
portfolio for the second quarter of 2016 increased by 4.1% from the
second quarter of 2015.
Brookdale Ancillary Services
Revenue for the Company's ancillary services segment increased
$7.2 million, or 6.2%, to
$123.3 million for the second quarter
of 2016 versus the prior year second quarter. The revenue
increase was primarily due to an increase in home health and
hospice average census and the roll-out of our home health and
hospice services to additional units subsequent to the prior year
period. Ancillary services operating expenses for the second
quarter of 2016 increased $5.9
million, or 6.0%, over the second quarter of 2015, primarily
due to higher census and an increase in expenses related to the
expansion of ancillary services into the legacy Emeritus
communities. As a result, ancillary services operating income
for the second quarter of 2016 was $19.0
million, an increase of 7.4% versus the second quarter of
2015, with operating margin at 15.4% for the second quarter of
2016.
Liquidity
Total liquidity for the Company was $306.3 million at June 30,
2016, including $39.1 million
of unrestricted cash and cash equivalents and $267.2 million of availability on its secured
credit facility.
Dispositions of Non-Core Assets
As previously announced, the Company has entered into an
agreement with a third party to sell 44 communities for a sales
price of $252.5 million. The
12-state portfolio comprises 2,453 units, including 1,874 assisted
living units and 579 memory care units. In addition, the Company
has entered into agreements to sell 6 communities with 691 units
for a sales price of $42.4
million. These 50 communities were classified as held
for sale as of June 30, 2016.
The Company expects to use the proceeds from the sale of these
communities primarily to repay debt.
The closings of the various transactions, mostly expected by the
end of the year, are subject to the receipt of regulatory approvals
and the satisfaction of other customary closing conditions.
There can be no assurance that the transactions will close or if
they do, when the actual closings will occur.
As of June 30, 2016, the Company
had 60 communities classified as assets held for sale; the 50
communities described above and 10 communities previously so
classified. The 60 communities' carrying value totaled $354.6 million with $154.7
million of mortgage debt included in the current portion of
long-term debt within the Company's condensed consolidated balance
sheet.
2016 Outlook
Based on results year-to-date, the Company is reaffirming its
2016 full year Adjusted CFFO guidance range, expressed on an
aggregate basis, and is providing a recasted range for Adjusted
EBITDA using its new definition. The Company expects Adjusted
CFFO in a range of $455 million to $475
million. Full year Adjusted EBITDA, as newly
redefined, is expected to be in a range of $870 million to $890 million, excluding
integration, transaction, transaction-related and strategic project
costs. Additionally, based on expected closings of certain
transactions not originally included in revenue guidance, the
Company expects full year senior housing and ancillary services
revenue to be reduced by $25 million
to $30 million, though the guidance
range for such revenue remains at $4.2
billion to $4.3 billion.
This does not have any impact on Adjusted EBITDA or Adjusted CFFO
guidance ranges. The Company continues to expect its
full year capital expenditures (excluding recurring capital
expenditures that are included in CFFO) to be in a range of
$210 million to $220 million.
The foregoing guidance excludes the potential impact of any
acquisition or disposition activity other than the planned
disposition of 60 communities classified as held for sale as of
June 30, 2016.
As noted above, the Company no longer presents CFFO per share
and Adjusted CFFO per share on a historical basis or in its
outlook, and its definitions of Adjusted EBITDA and CFFO have
changed from prior periods. See "Reconciliation of Non-GAAP
Financial Measures" below for a description of the changes to the
definitions of Adjusted EBITDA and CFFO. A reconciliation of
our Adjusted EBITDA and Adjusted CFFO guidance to the most
comparable GAAP financial measure is not available without
unreasonable effort due to the inherent difficulty in forecasting
the timing or amounts of items required to reconcile Adjusted
EBITDA and Adjusted CFFO from net income (loss) and net cash
provided by (used in) operating activities, respectively.
Variability in the timing or amounts of items required to reconcile
each measure may have a significant impact on our 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 second quarter 2016 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 second quarter ended June 30, 2016 on Tuesday,
August 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 Second 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
August 23, 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 "99312415". 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 1,114 communities in 47
states and the ability to serve approximately 107,000 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, and Adjusted EBITDA, CFFO and Adjusted CFFO (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 and dispositions on agreed upon
terms or at all; 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;
and the ability to obtain, or delays in obtaining, cost savings and
synergies from the Emeritus acquisition; 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
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenue
|
|
|
|
|
|
|
|
|
Resident
fees
|
|
$
1,054,568
|
|
$
1,043,978
|
|
$
2,115,716
|
|
$
2,096,210
|
Management
fees
|
|
18,186
|
|
14,839
|
|
34,966
|
|
29,936
|
Reimbursed costs
incurred on behalf of managed communities
|
|
186,076
|
|
179,367
|
|
371,304
|
|
359,919
|
Total
revenue
|
|
1,258,830
|
|
1,238,184
|
|
2,521,986
|
|
2,486,065
|
|
|
|
|
|
|
|
|
|
Expense
|
|
|
|
|
|
|
|
|
Facility operating
expense (excluding depreciation and amortization of$118,808,
$214,116, $232,911 and $422,939, respectively)
|
|
693,103
|
|
694,991
|
|
1,409,005
|
|
1,391,880
|
General and
administrative expense (including non-cash stock-based compensation
expense of $8,994, $6,851, $18,763 and $15,724,
respectively)
|
|
90,695
|
|
89,545
|
|
183,316
|
|
179,075
|
Transaction
costs
|
|
441
|
|
421
|
|
1,291
|
|
7,163
|
Facility lease
expense
|
|
92,682
|
|
91,338
|
|
189,371
|
|
185,809
|
Depreciation and
amortization
|
|
133,394
|
|
225,645
|
|
260,531
|
|
446,072
|
Asset
impairment
|
|
4,152
|
|
-
|
|
7,527
|
|
-
|
Loss on facility
lease termination
|
|
-
|
|
-
|
|
-
|
|
76,143
|
Costs incurred on
behalf of managed communities
|
|
186,076
|
|
179,367
|
|
371,304
|
|
359,919
|
Total operating
expense
|
|
1,200,543
|
|
1,281,307
|
|
2,422,345
|
|
2,646,061
|
Income (loss) from
operations
|
|
58,287
|
|
(43,123)
|
|
99,641
|
|
(159,996)
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
728
|
|
382
|
|
1,430
|
|
809
|
Interest
expense:
|
|
|
|
|
|
|
|
|
Debt
|
|
(43,731)
|
|
(43,684)
|
|
(87,721)
|
|
(86,032)
|
Capital and financing
lease obligations
|
|
(50,581)
|
|
(53,043)
|
|
(101,160)
|
|
(106,246)
|
Amortization of
deferred financing costs and debt premium (discount)
|
|
(2,288)
|
|
162
|
|
(4,598)
|
|
(219)
|
Change in fair value
of derivatives
|
|
(4)
|
|
(76)
|
|
(28)
|
|
(626)
|
Debt modification and
extinguishment costs
|
|
(186)
|
|
-
|
|
(1,296)
|
|
(44)
|
Equity in earnings
(loss) of unconsolidated ventures
|
|
338
|
|
(672)
|
|
1,356
|
|
812
|
Other non-operating
income
|
|
2,069
|
|
2,654
|
|
9,856
|
|
5,145
|
Income (loss) before
income taxes
|
|
(35,368)
|
|
(137,400)
|
|
(82,520)
|
|
(346,397)
|
(Provision) benefit
for income taxes
|
|
(123)
|
|
52,593
|
|
(1,788)
|
|
130,881
|
Net income
(loss)
|
|
(35,491)
|
|
(84,807)
|
|
(84,308)
|
|
(215,516)
|
Net (income) loss
attributable to noncontrolling interest
|
|
41
|
|
260
|
|
83
|
|
518
|
Net income (loss)
attributable to Brookdale Senior Living Inc. common
stockholders
|
|
$
(35,450)
|
|
$
(84,547)
|
|
$
(84,225)
|
|
$
(214,998)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
income (loss) per share attributable to Brookdale Senior Living
Inc. common stockholders
|
|
$
(0.19)
|
|
$
(0.46)
|
|
$
(0.45)
|
|
$
(1.17)
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in computing basic and diluted net income (loss) per
share
|
|
185,825
|
|
184,266
|
|
185,489
|
|
183,974
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
|
|
|
June 30,
2016
|
|
December 31,
2015
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
39,053
|
|
$
88,029
|
Cash and escrow
deposits - restricted
|
|
32,343
|
|
32,570
|
Accounts receivable,
net
|
|
138,614
|
|
144,053
|
Assets held for
sale
|
|
354,565
|
|
110,620
|
Other current
assets
|
|
137,011
|
|
122,671
|
Total current
assets
|
|
701,586
|
|
497,943
|
Property, plant and
equipment and
|
|
|
|
|
leasehold intangibles,
net
|
|
7,691,478
|
|
8,031,376
|
Other assets,
net
|
|
1,479,268
|
|
1,519,245
|
Total
assets
|
|
$
9,872,332
|
|
$
10,048,564
|
|
|
|
|
|
Current
liabilities
|
|
$
898,098
|
|
$
840,148
|
Long-term debt, less
current portion
|
|
3,629,301
|
|
3,769,371
|
Capital and financing
lease obligations, less current portion
|
|
2,425,850
|
|
2,427,438
|
Other
liabilities
|
|
525,632
|
|
552,880
|
Total
liabilities
|
|
7,478,881
|
|
7,589,837
|
Total Brookdale
Senior Living Inc. stockholders' equity
|
|
2,393,695
|
|
2,458,888
|
Noncontrolling
interest
|
|
(244)
|
|
(161)
|
Total
equity
|
|
2,393,451
|
|
2,458,727
|
Total liabilities and
equity
|
|
$
9,872,332
|
|
$
10,048,564
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows
|
(in
thousands)
|
|
|
|
Six Months Ended
June 30,
|
|
|
2016
|
|
2015
|
Cash Flows from
Operating Activities
|
|
|
|
|
Net income
(loss)
|
|
$
(84,308)
|
|
$
(215,516)
|
Adjustments to
reconcile net income (loss) to net cash provided by
operating
|
|
|
|
|
activities:
|
|
|
|
|
Loss on
extinguishment of debt, net
|
|
139
|
|
44
|
Depreciation and
amortization, net
|
|
265,129
|
|
446,291
|
Asset
impairment
|
|
7,527
|
|
-
|
Equity in earnings of
unconsolidated ventures
|
|
(1,356)
|
|
(812)
|
Distributions from
unconsolidated ventures from cumulative share of net
|
|
-
|
|
1,450
|
earnings
|
|
|
|
|
Amortization of
deferred gain
|
|
(2,186)
|
|
(2,186)
|
Amortization of
entrance fee revenue
|
|
(1,939)
|
|
(1,697)
|
Proceeds from
deferred entrance fee revenue
|
|
7,458
|
|
5,313
|
Deferred income tax
provision (benefit)
|
|
332
|
|
(132,462)
|
Change in deferred
lease liability
|
|
3,412
|
|
4,720
|
Change in fair value
of derivatives
|
|
28
|
|
626
|
Gain on sale of
assets
|
|
(2,551)
|
|
-
|
Non-cash stock-based
compensation
|
|
18,763
|
|
15,724
|
Non-cash interest
expense on financing lease obligations
|
|
13,014
|
|
11,516
|
Amortization of
(above) below market lease, net
|
|
(3,466)
|
|
(3,799)
|
Other
|
|
(3,597)
|
|
(1,416)
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts receivable,
net
|
|
5,439
|
|
(12,241)
|
Prepaid expenses and
other assets, net
|
|
(16,845)
|
|
37,493
|
Accounts payable and
accrued expenses
|
|
(23,133)
|
|
(49,536)
|
Tenant refundable
fees and security deposits
|
|
38
|
|
(517)
|
Deferred
revenue
|
|
(4,059)
|
|
7,829
|
Net cash provided by
operating activities
|
|
177,839
|
|
110,824
|
Cash Flows from
Investing Activities
|
|
|
|
|
(Increase) decrease
in lease security deposits and lease acquisition deposits,
net
|
|
(1,538)
|
|
15,723
|
Decrease in cash and
escrow deposits — restricted
|
|
355
|
|
10,206
|
Additions to
property, plant and equipment and leasehold intangibles,
net
|
|
(190,060)
|
|
(178,348)
|
Acquisition of
assets, net of related payables
|
|
(12,157)
|
|
(192,701)
|
Investment in
unconsolidated ventures
|
|
(3,733)
|
|
(38,609)
|
Distributions
received from unconsolidated ventures
|
|
3,602
|
|
-
|
Proceeds from sale of
assets, net
|
|
45,584
|
|
4,993
|
Other
|
|
1,211
|
|
2,239
|
Net cash used in
investing activities
|
|
(156,736)
|
|
(376,497)
|
Cash Flows from
Financing Activities
|
|
|
|
|
Proceeds from
debt
|
|
192,128
|
|
165,193
|
Repayment of debt and
capital and financing lease obligations
|
|
(128,427)
|
|
(84,037)
|
Proceeds from line of
credit
|
|
894,500
|
|
685,000
|
Repayment of line of
credit
|
|
(1,018,000)
|
|
(515,000)
|
Payment of financing
costs, net of related payables
|
|
(641)
|
|
(3,466)
|
Refundable entrance
fees:
|
|
|
|
|
Proceeds
from refundable entrance fees
|
|
1,146
|
|
586
|
Refunds
of entrance fees
|
|
(1,745)
|
|
(1,817)
|
Cash portion of loss
on extinguishment of debt
|
|
-
|
|
(44)
|
Payment on lease
termination
|
|
(9,250)
|
|
(7,750)
|
Other
|
|
210
|
|
1,421
|
Net cash
(used in) provided by financing activities
|
|
(70,079)
|
|
240,086
|
Net decrease in cash and cash equivalents
|
|
(48,976)
|
|
(25,587)
|
Cash and cash equivalents at beginning of period
|
|
88,029
|
|
104,083
|
Cash and cash equivalents at end of period
|
|
$
39,053
|
|
$
78,496
|
|
|
|
|
|
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 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 and Adjusted CFFO, 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 net income (loss) and CFFO
and Adjusted CFFO from 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 and Adjusted CFFO may not be comparable to
similar measures disclosed by other companies, because not all
companies calculate these non-GAAP measures in the same manner.
As noted above, the Company's definitions and calculations of
Adjusted EBITDA and CFFO have changed from prior periods, and prior
period amounts of Adjusted EBITDA included in this press release
have been recast to conform to the new definition. The new
definition of Adjusted EBITDA reflects the removal of the following
adjustments to net income (loss) used in the previous
definition: the addition of CFFO from unconsolidated ventures
and entrance fee receipts, net of refunds, and the subtraction of
amortization of entrance fees. See the Supplemental
Information described above for a reconciliation of the amounts of
Adjusted EBITDA previously reported for the full year 2015 and each
of the quarters therein and the first quarter of 2016 using the
previous definition to the amounts of Adjusted EBITDA calculated
using the new definition. In addition, the Company is now
reporting CFFO and Adjusted CFFO as measures of liquidity, and as
such the definitions of CFFO and Adjusted CFFO have been
revised to reflect the reconciliation of such measures from net
cash provided by (used in) operating activities, and the Company is
no longer presenting CFFO per share or Adjusted CFFO per
share. However, the amounts included in the calculation of
CFFO and Adjusted CFFO have not changed, and the changes in the
definition of CFFO and Adjusted CFFO have no effect on the amounts
of CFFO or Adjusted CFFO presented in this press release for this
period or prior periods.
Adjusted EBITDA
We define Adjusted EBITDA as follows:
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.
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 six months ended June 30, 2016 and June 30,
2015 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, (1)
|
|
Six Months Ended
June 30,(1)
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net income
(loss)
|
|
$
(35,491)
|
|
$
(84,807)
|
|
$
(84,308)
|
|
$
(215,516)
|
Provision (benefit)
for income taxes
|
|
123
|
|
(52,593)
|
|
1,788
|
|
(130,881)
|
Equity in (earnings)
loss of unconsolidated ventures
|
|
(338)
|
|
672
|
|
(1,356)
|
|
(812)
|
Debt modification and
extinguishment costs
|
|
186
|
|
-
|
|
1,296
|
|
44
|
Other non-operating
income
|
|
(2,069)
|
|
(2,654)
|
|
(9,856)
|
|
(5,145)
|
Interest
expense
|
|
96,604
|
|
96,641
|
|
193,507
|
|
193,123
|
Interest
income
|
|
(728)
|
|
(382)
|
|
(1,430)
|
|
(809)
|
Income (loss) from
operations
|
|
58,287
|
|
(43,123)
|
|
99,641
|
|
(159,996)
|
Depreciation and
amortization
|
|
133,394
|
|
225,645
|
|
260,531
|
|
446,072
|
Asset
impairment
|
|
4,152
|
|
-
|
|
7,527
|
|
-
|
Loss on facility
lease termination
|
|
-
|
|
-
|
|
-
|
|
76,143
|
Straight-line lease
expense (income)
|
|
(523)
|
|
1,919
|
|
3,412
|
|
4,720
|
Amortization of
(above) below market lease, net
|
|
(1,733)
|
|
(1,840)
|
|
(3,466)
|
|
(3,799)
|
Amortization of
deferred gain
|
|
(1,093)
|
|
(1,093)
|
|
(2,186)
|
|
(2,186)
|
Non-cash stock-based
compensation expense
|
|
8,994
|
|
6,851
|
|
18,763
|
|
15,724
|
Adjusted
EBITDA
|
|
$
201,478
|
|
$
188,359
|
|
$
384,222
|
|
$
376,678
|
|
|
|
|
|
|
|
|
|
(1) For the three and six months ended June 30, 2016, the calculation of Adjusted EBITDA
includes integration, transaction, transaction-related and
strategic project costs of $17.1
million and $37.1 million,
respectively. For the three and six months ended June 30, 2015, the calculation of Adjusted EBITDA
includes integration, transaction, transaction-related and
strategic project costs of $29.0
million and $56.3 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 and Adjusted CFFO
We define Cash From Facility Operations (CFFO) as follows:
Net cash provided by (used in) operating activities before:
- changes in operating assets and liabilities;
- gain (loss) on facility lease termination;
- 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;
- CFFO of 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 capital expenditures related to community
expansions and major community redevelopment and repositioning
projects, the development of new communities, corporate capital
expenditures (including systems projects and integration capital
expenditures) and capital expenditures related to maintenance,
renovations and upgrades to our communities that are funded using
lease or financing proceeds, available cash and/or proceeds from
the sale of communities.
CFFO of unconsolidated ventures represents our proportionate
share of CFFO of our unconsolidated ventures based on our equity
ownership percentage and is calculated for each unconsolidated
venture in a manner consistent with the definition of CFFO for our
consolidated entities. Our investments in our unconsolidated
ventures are accounted for under the equity method of
accounting. CFFO of unconsolidated ventures does not
represent cash available directly for use by our consolidated
business.
Adjusted CFFO represents 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 use CFFO to assess our overall liquidity. This measure
provides an assessment of controllable expenses and affords
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. It provides an indicator
for management to determine if adjustments to current spending
decisions are needed. This metric measures our liquidity
based on operational factors that management can impact in the
short-term, namely the cost structure or expenses of the
organization. CFFO is one 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 planning purposes,
including preparation of our annual budget and (v) in making
compensation determinations for certain of our associates
(including our named executive officers).
We believe CFFO 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 and (3) our ability to
make capital expenditures. CFFO and Adjusted CFFO does not
represent cash available for dividends or discretionary
expenditures, since we have mandatory debt service requirements and
other non-discretionary expenditures not reflected in the
measure.
The table below reconciles CFFO and Adjusted CFFO from net cash
provided by (used in) operating activities for the three and six
months ended June 30, 2016 and
June 30, 2015 (in
thousands):
|
|
Three Months Ended
June 30, (1)
|
|
Six Months Ended
June 30, (1)
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
107,496
|
|
$
100,767
|
|
$
177,839
|
|
$
110,824
|
Net cash used in
investing activities
|
|
(82,288)
|
|
(145,206)
|
|
(156,736)
|
|
(376,497)
|
Net cash (used in)
provided by financing activities
|
|
(57,017)
|
|
7,753
|
|
(70,079)
|
|
240,086
|
Net decrease in cash
and cash equivalents
|
|
$
(31,809)
|
|
$
(36,686)
|
|
$
(48,976)
|
|
$
(25,587)
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
107,496
|
|
$
100,767
|
|
$
177,839
|
|
$
110,824
|
Changes in operating
assets and liabilities
|
|
10,420
|
|
547
|
|
38,560
|
|
16,972
|
Refundable entrance
fee received
|
|
611
|
|
550
|
|
1,146
|
|
586
|
Entrance fee refunds
disbursed
|
|
(617)
|
|
(988)
|
|
(1,745)
|
|
(1,817)
|
Recurring capital
expenditures, net
|
|
(13,668)
|
|
(17,425)
|
|
(26,949)
|
|
(32,428)
|
Lease financing debt
amortization with fair market value or no purchase
options
|
|
(14,117)
|
|
(12,756)
|
|
(27,926)
|
|
(25,195)
|
Loss on facility
lease termination
|
|
-
|
|
-
|
|
-
|
|
76,143
|
Distributions from
unconsolidated ventures from cumulative share of net
earnings
|
|
-
|
|
(950)
|
|
-
|
|
(1,450)
|
CFFO of
unconsolidated ventures
|
|
15,939
|
|
11,177
|
|
31,293
|
|
25,390
|
CFFO
|
|
$
106,064
|
|
$
80,922
|
|
$
192,218
|
|
$
169,025
|
|
|
|
|
|
|
|
|
|
Integration,
transaction, transaction-related and strategic project
costs
|
|
17,324
|
|
29,027
|
|
38,252
|
|
56,327
|
Adjusted
CFFO
|
|
$
123,388
|
|
$
109,949
|
|
$
230,470
|
|
$
225,352
|
|
|
|
|
|
|
|
|
|
(1) For the three and six months ended
June 30, 2016, the calculation of
CFFO includes integration, transaction, transaction-related and
strategic project costs of $17.3
million and $38.3 million
(including $1.2 million of debt
modification costs excluded from Adjusted EBITDA). For the three
and six months ended June 30, 2015,
the calculation of CFFO includes integration, transaction,
transaction-related and strategic project costs of $29.0 million and $56.3
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.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/brookdale-announces-second-quarter-2016-results-300310684.html
SOURCE Brookdale Senior Living Inc.