NASHVILLE, Tenn., Nov. 4, 2015 /PRNewswire/ -- Brookdale
Senior Living Inc. (NYSE: BKD) ("Brookdale" or the "Company") today
reported financial and operating results for the third quarter of
2015. Highlights included:
- Cash From Facility Operations ("CFFO") of $0.59 per share for the third quarter of 2015, a
decline from $0.60 per share in the
second quarter of 2015, excluding integration, transaction,
transaction-related and electronic medical records ("EMR") roll-out
costs in both periods.
- Average occupancy for all consolidated communities in the third
quarter of 2015 of 86.7%, an increase of 20 basis points from the
second quarter of 2015, with September monthly average occupancy of
86.8%, an increase of 50 basis points from the average for the
month of June 2015.
- Adjusted EBITDA of $227.2 million
in the third quarter of 2015, a 1.2% decrease from the second
quarter of 2015, excluding integration, transaction,
transaction-related and EMR roll-out costs in both
periods.
Andy Smith, Brookdale's CEO,
said, "Brookdale's third quarter CFFO was in line with our
expectations. With much of the integration activity behind
us, our operations continue to normalize. We built occupancy
during the quarter, aided by normal seasonal promotional activity,
particularly in the Emeritus portfolio, resulting in same store
revenue per occupied unit growth of 1.7% for the third
quarter. At the same time, we achieved solid expense control
and increasing operating expense synergies. We are encouraged
by the advancements we are seeing in the business and excited about
our national brand campaign launched three weeks ago."
Financial Results
The third quarter of 2015 represents a full quarter of results
that include the operations of Emeritus, which the Company acquired
on July 31, 2014, as well as the
impact from the transactions with HCP, Inc., which closed on
August 29, 2014. The third quarter of
2014 includes only two months of operations of Emeritus and one
month for the transactions with HCP. Results beginning with the
fourth quarter of 2014 reflect the impact of those transactions for
the full quarter, and results from the first and second quarters of
2014 reflect legacy Brookdale on a stand-alone basis (except for
our Same Community results, which include results for the Emeritus
Same Community group on a proforma basis).
Total revenue of $1.2 billion for
the third quarter of 2015 was relatively flat compared with the
second quarter of 2015, with resident fees declining $3.9 million. Average monthly revenue per
unit for the consolidated senior housing portfolio was $4,303 in the third quarter of 2015, a decrease
of $28, or 0.6%, compared with the
second quarter of 2015. Average occupancy for all
consolidated communities for the third quarter of 2015 was 86.7%,
compared to 86.5% for the second quarter of 2015. Total
revenue for the third quarter of 2015 increased $154.9 million, or 14.3%, from the third quarter
of 2014, primarily due to the acquisition of Emeritus and new units
added to existing communities, partially offset by the effect of
the Company's contribution of entry fee CCRCs to a venture with HCP
and the resulting deconsolidation of those operations on
August 29, 2014.
Facility operating expenses for the third quarter of 2015 were
$699.7 million, an increase of
$62.6 million, or 9.8%, from the
third quarter of 2014, primarily due to the acquisition of
Emeritus. Excluding management services in all periods, Brookdale's
consolidated operating margin was 32.7% for the third quarter of
2015 versus 33.4% for the second quarter of 2015 and 33.3% for the
third quarter of 2014. Net loss attributable to Brookdale common
stockholders for the third quarter of 2015 was $(68.2) million, or $(0.37) per share, versus net loss attributable
to Brookdale common stockholders of $(36.9)
million, or $(0.23) per share,
in the third quarter of 2014.
Non-GAAP Financial Measures
Brookdale's management utilizes Adjusted EBITDA and CFFO to
evaluate the Company's performance and liquidity because these
metrics exclude non-cash items such as depreciation and
amortization, asset impairment charges, non-cash stock-based
compensation expense, gain (loss) on facility lease termination and
straight-line lease expense, net of deferred gain amortization.
Adjusted EBITDA includes integration, transaction,
transaction-related and EMR roll-out costs for the three months
ended September 30, 2015,
June 30, 2015 and September 30, 2014 of $35.8 million, $29.0
million and $76.6 million,
respectively. CFFO includes integration, transaction,
transaction-related and EMR roll-out costs for the three months
ended September 30, 2015,
June 30, 2015 and September 30, 2014 of $42.5 million, $29.0
million and $76.6 million,
respectively.
Brookdale also uses Facility Operating Income to assess the
performance of its communities. Facility Operating Income was
$339.7 million in the third quarter
of 2015, a decline of $8.3 million,
or 2.4%, compared with the second quarter of 2015 and an increase
of $27.1 million, or 8.7%, over the
third quarter of 2014. Adjusted EBITDA, excluding
integration, transaction, transaction-related and EMR roll-out
costs, was $227.2 million for the
third quarter of 2015, a decline of $2.8
million, or 1.2%, compared with the second quarter of 2015
and an increase of $31.0 million, or
15.8%, over the third quarter of 2014.
CFFO was $66.3 million in the
third quarter of 2015, or $0.36 per
share. Excluding integration, transaction,
transaction-related and EMR roll-out costs, CFFO was $108.7 million for the third quarter of 2015, a
decline of $1.2 million, or 1.1%,
compared with the second quarter of 2015, and an increase of
$9.2 million, or 9.2%, compared with
the third quarter of 2014.
Refinancings
During the quarter, the Company obtained $366.7 million in loans secured by first
mortgages on 39 communities. The mortgage facilities have seven to
ten year terms. Proceeds of the loans were used to refinance
$332.2 million of mortgage debt that
was scheduled to mature in 2017 and 2018.
Subsequent Events
On October 1, 2015, the Company
acquired the underlying real estate associated with five
communities that were previously leased for an aggregate purchase
price of $78.4 million.
Outlook
For the full year 2015, the Company continues to expect CFFO per
share in a range of $2.35 to $2.45,
excluding integration, transaction, transaction-related and EMR
roll-out costs. This guidance excludes the potential impact
of any future acquisition or disposition
activity.
Supplemental Information
The Company will shortly post on the Investor Relations section
of the Company's website at www.brookdale.com supplemental
information relating to the Company's third quarter 2015
results. This information will also be furnished in a Form
8-K to be filed with the SEC.
Earnings Conference Call
Brookdale's management will conduct a conference call to review
the financial results of its third quarter ended September 30, 2015 on Thursday, November 5, 2015 at 9:00 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 Third
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
November 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 "67620879". A copy of
this earnings release is posted on the Investor Relations page of
the Brookdale website (www.brookdale.com).
About Brookdale Senior Living
Brookdale Senior Living Inc. is the leading operator of senior
living communities throughout the United States. The Company
is committed to providing senior living solutions primarily within
properties that are designed, purpose-built and operated to provide
the highest-quality service, care and living accommodations for
residents. Currently Brookdale operates independent living,
assisted living, and dementia-care communities and continuing care
retirement centers, with approximately 1,132 communities in 47
states and the ability to serve approximately 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 the associated
earnings conference call may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Those forward-looking statements are subject to
various risks and uncertainties and include all statements that are
not historical statements of fact and those regarding our intent,
belief or expectations, including, but not limited to, statements
relating to our operational initiatives and growth strategies and
our expectations regarding their effect on our results; our
expectations regarding the economy, the senior living industry,
occupancy, revenue, cash flow, operating income, expenses, capital
expenditures, Program Max opportunities, cost savings and
synergies, senior housing supply, the demand for senior housing,
the home resale market, expansion, development and construction
activity, acquisition opportunities, asset dispositions, innovation
and revenue growth opportunities, our share repurchase program,
taxes, capital deployment, returns on invested capital and CFFO;
our expectations regarding returns to shareholders and our growth
prospects; our belief regarding our long-term strength and the
value of our assets; statements relating to creating shareholder
value; our expectations concerning the future performance of
recently acquired communities and the effects of acquisitions on
our financial results; our ability to secure financing or repay,
replace or extend existing debt at or prior to maturity; our
ability to remain in compliance with all of our debt and lease
agreements (including the financial covenants contained therein);
our expectations regarding liquidity and leverage; our expectations
regarding financings and refinancings of assets (including the
timing thereof) and their effect on our results; our expectations
regarding changes in government reimbursement programs and their
effect on our results; our plans to generate growth organically
through occupancy improvements, increases in annual rental rates
and the achievement of operating efficiencies and cost savings; our
plans to expand our offering of ancillary services (therapy, home
health, personalized living and hospice); our plans to expand,
renovate, redevelop and reposition existing communities; our plans
to acquire additional communities, asset portfolios, operating
companies and home health agencies; the expected project costs for
our expansion, redevelopment and repositioning program; our
expected levels of expenditures and reimbursements (and the timing
thereof); our expectations regarding our sales, marketing and
branding initiatives and their impact on our results; our
expectations for the performance of our entrance fee communities;
our ability to anticipate, manage and address industry trends and
their effect on our business; our expectations regarding the
payment of dividends; our ability to increase revenues, earnings,
Adjusted EBITDA, Cash From Facility Operations, and/or Facility
Operating Income (as such terms are defined herein); and our
expectations regarding the integration of Emeritus and the
transactions with HCP. Forward-looking statements are
generally identifiable by use of forward-looking terminology such
as "may," "will," "should," "could," "would," "potential,"
"intend," "expect," "endeavor," "seek," "anticipate," "estimate,"
"overestimate," "underestimate," "believe," "project," "predict,"
"continue," "plan," "target," or other similar words or
expressions. Forward-looking statements are based on certain
assumptions or estimates, discuss future expectations, describe
future plans and strategies, contain projections of results of
operations or of financial condition, or state other
forward-looking information. Our ability to predict results
or the actual effect of future plans or strategies is inherently
uncertain. Although we believe that expectations reflected in
any forward-looking statements are based on reasonable assumptions,
we can give no assurance that our expectations will be attained and
actual results and performance could differ materially from those
projected. Factors which could have a material adverse effect on
our operations and future prospects or which could cause events or
circumstances to differ from the forward-looking statements
include, but are not limited to, the risk associated with the
current global economic situation and its impact upon capital
markets and liquidity; changes in governmental reimbursement
programs; our inability to extend (or refinance) debt (including
our credit and letter of credit facilities) as it matures; the risk
that we may not be able to satisfy the conditions precedent to
exercising the extension options associated with certain of our
debt agreements; events which adversely affect the ability of
seniors to afford our monthly resident fees or entrance fees; the
conditions of housing markets in certain geographic areas; our
ability to generate sufficient cash flow to cover required interest
and long-term operating lease payments; the effect of our
indebtedness and long-term operating leases on our liquidity; the
risk of loss of property pursuant to our mortgage debt and
long-term lease obligations; the possibilities that changes in the
capital markets, including changes in interest rates and/or credit
spreads, or other factors could make financing more expensive or
unavailable to us; our determination from time to time to purchase
any shares under the repurchase program; our ability to fund any
repurchases; our ability to effectively manage our growth; our
ability to maintain consistent quality control; delays in obtaining
regulatory approvals; the risk that we may not be able to expand,
redevelop and reposition our communities in accordance with our
plans; our ability to complete acquisitions and integrate them into
our operations; competition for the acquisition of assets; our
ability to obtain additional capital on terms acceptable to us; a
decrease in the overall demand for senior housing; our
vulnerability to economic downturns; acts of nature in certain
geographic areas; terminations of our resident agreements and
vacancies in the living spaces we lease; early terminations or
non-renewal of management agreements; increased competition for
skilled personnel; increased union activity; departure of our key
officers; increases in market interest rates; environmental
contamination at any of our communities; failure to comply with
existing environmental laws; an adverse determination or resolution
of complaints filed against us; the cost and difficulty of
complying with increasing and evolving regulation; risks relating
to the integration of Emeritus and the transactions with HCP,
including in respect of unanticipated difficulties and/or
expenditures relating to such transactions; the impact of such
transactions on the Company's relationships with residents,
employees and third parties; and the inability to obtain, or delays
in obtaining, cost savings and synergies from such transactions; as
well as other risks detailed from time to time in our filings with
the Securities and Exchange Commission, including our Annual Report
on Form 10-K and Quarterly Reports on Form 10-Q. When
considering forward-looking statements, you should keep in mind the
risk factors and other cautionary statements in such SEC
filings. Readers are cautioned not to place undue reliance on
any of these forward-looking statements, which reflect our
management's views as of the date of this press release and/or the
associated earnings conference call. We cannot guarantee
future results, levels of activity, performance or achievements,
and we expressly disclaim any obligation to release publicly any
updates or revisions to any forward-looking statements contained
herein to reflect any change in our expectations with regard
thereto or change in events, conditions or circumstances on which
any statement is based.
Condensed
Consolidated Statements of Operations
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenue
|
|
|
|
|
|
|
|
|
Resident
fees
|
|
$ 1,040,082
|
|
$
955,512
|
|
$ 3,136,292
|
|
$ 2,259,339
|
Management
fees
|
|
14,694
|
|
10,428
|
|
44,630
|
|
25,319
|
Reimbursed costs
incurred on behalf of managed communities
|
|
184,065
|
|
117,995
|
|
543,984
|
|
294,945
|
Total
revenue
|
|
1,238,841
|
|
1,083,935
|
|
3,724,906
|
|
2,579,603
|
|
|
|
|
|
|
|
|
|
Expense
|
|
|
|
|
|
|
|
|
Facility operating
expense (excluding depreciation and amortization of $148,120,
$169,855, $571,059 and $296,583, respectively)
|
|
699,720
|
|
637,084
|
|
2,091,600
|
|
1,502,369
|
General and
administrative expense (including non-cash stock-based compensation
expense of $10,147, $7,869, $25,871 and $23,170,
respectively)
|
|
99,534
|
|
90,020
|
|
278,609
|
|
181,693
|
Transaction
costs
|
|
-
|
|
41,572
|
|
7,163
|
|
59,224
|
Facility lease
expense
|
|
91,144
|
|
91,462
|
|
276,953
|
|
231,361
|
Depreciation and
amortization
|
|
160,715
|
|
178,999
|
|
606,787
|
|
320,403
|
Loss on facility
lease termination
|
|
-
|
|
-
|
|
76,143
|
|
-
|
Costs incurred on
behalf of managed communities
|
|
184,065
|
|
117,995
|
|
543,984
|
|
294,945
|
Total operating
expense
|
|
1,235,178
|
|
1,157,132
|
|
3,881,239
|
|
2,589,995
|
Income (loss) from
operations
|
|
3,663
|
|
(73,197)
|
|
(156,333)
|
|
(10,392)
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
399
|
|
392
|
|
1,208
|
|
998
|
Interest
expense:
|
|
|
|
|
|
|
|
|
Debt
|
|
(43,972)
|
|
(38,452)
|
|
(130,004)
|
|
(85,898)
|
Capital and financing
lease obligations
|
|
(53,217)
|
|
(40,916)
|
|
(159,463)
|
|
(53,125)
|
Amortization of
deferred financing costs and debt premium (discount)
|
|
(616)
|
|
189
|
|
(835)
|
|
(7,907)
|
Change in fair value
of derivatives
|
|
(164)
|
|
(10)
|
|
(790)
|
|
(2,179)
|
Debt modification and
extinguishment costs
|
|
(6,736)
|
|
(569)
|
|
(6,780)
|
|
(3,766)
|
Equity in (loss)
earnings of unconsolidated ventures
|
|
(1,578)
|
|
(1,246)
|
|
(766)
|
|
913
|
Other non-operating
income
|
|
3,089
|
|
700
|
|
8,234
|
|
4,621
|
Loss before income
taxes
|
|
(99,132)
|
|
(153,109)
|
|
(445,529)
|
|
(156,735)
|
Benefit for income
taxes
|
|
30,796
|
|
116,073
|
|
161,677
|
|
114,105
|
Net
loss
|
|
(68,336)
|
|
(37,036)
|
|
(283,852)
|
|
(42,630)
|
Net loss attributable
to noncontrolling interest
|
|
116
|
|
174
|
|
634
|
|
174
|
Net loss attributable
to Brookdale Senior Living Inc. common stockholders
|
|
$
(68,220)
|
|
$
(36,862)
|
|
$
(283,218)
|
|
$
(42,456)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per share attributable to Brookdale Senior Living Inc. common
stockholders
|
|
$
(0.37)
|
|
$
(0.23)
|
|
$
(1.54)
|
|
$
(0.31)
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in computing basic and diluted net loss per
share
|
|
184,570
|
|
159,003
|
|
184,175
|
|
136,306
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
|
|
|
|
|
|
|
September 30,
2015
|
|
December 31,
2014
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
70,391
|
|
$
104,083
|
Cash and escrow
deposits - restricted
|
|
48,020
|
|
38,862
|
Accounts receivable,
net
|
|
152,557
|
|
149,730
|
Other current
assets
|
|
207,153
|
|
322,114
|
Total current
assets
|
|
478,121
|
|
614,789
|
Property, plant, and
equipment and
|
|
|
|
|
leasehold intangibles,
net
|
|
8,277,675
|
|
8,389,505
|
Other assets,
net
|
|
1,519,164
|
|
1,517,069
|
Total
assets
|
|
$
10,274,960
|
|
$
10,521,363
|
|
|
|
|
|
Current
liabilities
|
|
$
716,130
|
|
$
877,762
|
Long-term debt, less
current portion
|
|
3,809,554
|
|
3,456,808
|
Capital and financing
lease obligations, less current portion
|
|
2,525,171
|
|
2,536,883
|
Other
liabilities
|
|
597,578
|
|
767,669
|
Total
liabilities
|
|
7,648,433
|
|
7,639,122
|
Total Brookdale
Senior Living Inc. stockholders' equity
|
|
2,626,644
|
|
2,881,724
|
Noncontrolling
interest
|
|
(117)
|
|
517
|
Total
equity
|
|
2,626,527
|
|
2,882,241
|
Total liabilities and
equity
|
|
$
10,274,960
|
|
$
10,521,363
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows
|
(in
thousands)
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2015
|
|
2014
|
Cash Flows from
Operating Activities
|
|
|
|
|
Net loss
|
|
$
(283,852)
|
|
$
(42,630)
|
Adjustments to
reconcile net loss to net cash provided by
operating
|
|
|
|
|
activities:
|
|
|
|
|
Loss on
extinguishment of debt, net
|
|
44
|
|
3,766
|
Depreciation and
amortization, net
|
|
607,622
|
|
328,310
|
Equity in loss
(earnings) of unconsolidated ventures
|
|
766
|
|
(913)
|
Distributions from
unconsolidated ventures from cumulative share of net
|
|
7,825
|
|
1,210
|
earnings
|
|
|
|
|
Amortization of
deferred gain
|
|
(3,279)
|
|
(3,279)
|
Amortization of
entrance fees
|
|
(2,316)
|
|
(20,506)
|
Proceeds from
deferred entrance fee revenue
|
|
8,887
|
|
30,129
|
Deferred income tax
benefit
|
|
(164,014)
|
|
(116,164)
|
Change in deferred
lease liability
|
|
6,451
|
|
2,400
|
Change in fair value
of derivatives
|
|
790
|
|
2,179
|
(Gain) loss on sale
of assets
|
|
(1,723)
|
|
315
|
Non-cash stock-based
compensation
|
|
25,871
|
|
23,170
|
Non-cash interest
expense on financing lease obligations
|
|
17,458
|
|
5,947
|
Amortization of
(above) below market rents, net
|
|
(5,425)
|
|
(1,377)
|
Other
|
|
(2,272)
|
|
-
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts receivable,
net
|
|
(2,907)
|
|
25,086
|
Prepaid expenses and
other assets, net
|
|
39,897
|
|
(68,046)
|
Accounts payable and
accrued expenses
|
|
(23,192)
|
|
(7,094)
|
Tenant refundable
fees and security deposits
|
|
(738)
|
|
(1,151)
|
Deferred
revenue
|
|
(23,708)
|
|
(4,504)
|
Net cash provided by
operating activities
|
|
202,185
|
|
156,848
|
Cash Flows from
Investing Activities
|
|
|
|
|
Decrease in lease
security deposits and lease acquisition deposits, net
|
|
12,541
|
|
3,260
|
Decrease in cash and
escrow deposits — restricted
|
|
6,822
|
|
14,640
|
Additions to
property, plant, and equipment and leasehold intangibles,
net
|
|
(301,778)
|
|
(212,533)
|
Acquisition of
assets, net of related payables and cash received
|
|
(193,451)
|
|
(39,818)
|
Acquisition of
Emeritus Corporation, cash received
|
|
-
|
|
28,429
|
Investment in
unconsolidated ventures
|
|
(40,709)
|
|
(25,532)
|
Distributions
received from unconsolidated ventures
|
|
7,038
|
|
12,057
|
Proceeds from sale of
assets, net
|
|
8,072
|
|
-
|
Other
|
|
3,163
|
|
2,713
|
Net cash used in
investing activities
|
|
(498,302)
|
|
(216,784)
|
Cash Flows from
Financing Activities
|
|
|
|
|
Proceeds from
debt
|
|
550,131
|
|
226,510
|
Repayment of debt and
capital and financing lease obligations
|
|
(453,389)
|
|
(274,381)
|
Proceeds from line of
credit
|
|
970,000
|
|
242,000
|
Repayment of line of
credit
|
|
(760,000)
|
|
(272,000)
|
Proceeds from public
equity offering, net
|
|
-
|
|
330,405
|
Payment of financing
costs, net of related payables
|
|
(32,251)
|
|
(1,020)
|
Refundable entrance
fees:
|
|
|
|
|
Proceeds
from refundable entrance fees
|
|
1,510
|
|
20,330
|
Refunds
of entrance fees
|
|
(3,251)
|
|
(25,327)
|
Cash portion of loss
on extinguishment of debt
|
|
(44)
|
|
(4,101)
|
Payment on lease
termination
|
|
(12,375)
|
|
(3,875)
|
Other
|
|
2,094
|
|
1,208
|
Net cash
provided by financing activities
|
|
262,425
|
|
239,749
|
Net (decrease) increase in cash and cash
equivalents
|
|
(33,692)
|
|
179,813
|
Cash and cash equivalents at beginning of period
|
|
104,083
|
|
58,511
|
Cash and cash equivalents at end of period
|
|
$
70,391
|
|
$
238,324
|
|
|
|
|
|
Non-GAAP Financial Measures
Adjusted EBITDA
Adjusted EBITDA is a measure of operating performance that is
not calculated in accordance with U.S. generally accepted
accounting principles ("GAAP"). Adjusted EBITDA should not be
considered in isolation or as a substitute for net income, income
from operations or cash flows provided by or used in operations, as
determined in accordance with GAAP. Adjusted EBITDA is a key
measure of the Company's operating performance used by management
to focus on operating performance and management without mixing in
items of income and expense that relate to long-term contracts and
the financing and capitalization of the business. We define
Adjusted EBITDA as net income (loss) before provision (benefit) for
income taxes, non-operating (income) expense items, (gain) loss on
sale or acquisition of communities (including gain (loss) on
facility lease termination), depreciation and amortization
(including non-cash impairment charges), straight-line lease
expense (income), net of amortization of (above) below market
rents, amortization of deferred gain, amortization of deferred
entrance fees, non-cash stock-based compensation expense, and
change in future service obligation and including Cash From
Facility Operations from unconsolidated ventures and entrance fee
receipts and refunds (excluding (i) first generation entrance fee
receipts from the sale of units at a recently opened entrance fee
CCRC prior to stabilization and (ii) first generation entrance fee
refunds not replaced by second generation entrance fee receipts at
the recently opened community prior to stabilization).
We believe Adjusted EBITDA is useful to investors in evaluating
our performance, results of operations and financial position for
the following reasons:
- It is helpful in identifying trends in our day-to-day
performance because the items excluded have little or no
significance to our day-to-day operations;
- It provides an assessment of controllable expenses and affords
management the ability to make decisions which are expected to
facilitate meeting current financial goals as well as achieve
optimal financial performance; and
- It is an indication to determine if adjustments to current
spending decisions are needed.
The table below
reconciles Adjusted EBITDA from net loss for the three months ended
September 30, 2015, June 30, 2015 and September 30, 2014 (in
thousands):
|
|
|
|
|
|
|
|
|
|
Three Months Ended
(1)
|
|
|
September 30,
2015
|
|
June 30,
2015
|
|
September 30,
2014(2)
|
Net
loss
|
|
$
(68,336)
|
|
$
(84,807)
|
|
$
(37,036)
|
Benefit for income
taxes
|
|
(30,796)
|
|
(52,593)
|
|
(116,073)
|
Equity in loss of
unconsolidated ventures
|
|
1,578
|
|
672
|
|
1,246
|
Debt modification and
extinguishment costs
|
|
6,736
|
|
-
|
|
569
|
Other non-operating
income
|
|
(3,089)
|
|
(2,654)
|
|
(700)
|
Interest
expense:
|
|
|
|
|
|
|
Debt
|
|
43,972
|
|
43,684
|
|
38,452
|
Capital and financing lease obligations
|
|
53,217
|
|
53,043
|
|
40,916
|
Amortization of deferred financing costs and debt (premium)
discount
|
|
616
|
|
(162)
|
|
(189)
|
Change in fair value of derivatives
|
|
164
|
|
76
|
|
10
|
Interest
income
|
|
(399)
|
|
(382)
|
|
(392)
|
Income (loss) from
operations
|
|
3,663
|
|
(43,123)
|
|
(73,197)
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
160,715
|
|
225,645
|
|
178,999
|
Straight-line lease
expense
|
|
1,731
|
|
1,919
|
|
2,840
|
Amortization of
(above) below market lease, net
|
|
(1,626)
|
|
(1,840)
|
|
(1,377)
|
Amortization of
deferred gain
|
|
(1,093)
|
|
(1,093)
|
|
(1,093)
|
Amortization of
entrance fees
|
|
(619)
|
|
(930)
|
|
(5,757)
|
Non-cash stock-based
compensation expense
|
|
10,147
|
|
6,851
|
|
7,869
|
Entrance fee
receipts(3)
|
|
4,498
|
|
3,408
|
|
9,576
|
Entrance fee
disbursements
|
|
(1,434)
|
|
(988)
|
|
(7,668)
|
CFFO from
unconsolidated ventures
|
|
15,481
|
|
11,177
|
|
9,435
|
Adjusted
EBITDA
|
|
$
191,463
|
|
$
201,026
|
|
$
119,627
|
|
|
(1) The
calculation of Adjusted EBITDA includes integration, transaction,
transaction-related and EMR roll-out costs of $35.8 million, $29.0
million and $76.6 million for the three months ended September 30,
2015, June 30, 2015 and September 30, 2014, respectively.
Integration, transaction-related and EMR roll-out costs include
third party expenses directly related to the integration of
Emeritus, community financing activities and corporate capital
structure assessment activities (including shareholder relations
advisory matters) as well as internal costs such as labor
reflecting time spent by Company personnel on integration, EMR
roll-out, and transaction-related activity and severance
costs. Transaction costs include third party costs directly
related to the acquisition of Emeritus and other acquisition and
community leasing activity and are primarily comprised of legal,
finance, consulting, professional fees and other third party
costs.
|
(2) The
definition of Adjusted EBITDA was changed in the first quarter of
2015 to include CFFO from unconsolidated ventures. Prior
periods have been recast to conform to the new
definition.
|
(3) Includes the receipt of refundable and
non-refundable entrance fees.
|
Cash From Facility Operations
CFFO is a measurement of liquidity that is not calculated in
accordance with GAAP and should not be considered in isolation as a
substitute for cash flows provided by or used in operations, as
determined in accordance with GAAP. We define CFFO as net
cash provided by (used in) operating activities adjusted for
changes in operating assets and liabilities, deferred interest and
fees added to principal, refundable entrance fees received, first
generation entrance fee receipts at a recently opened entrance fee
CCRC prior to stabilization, entrance fee refunds disbursed
adjusted for first generation entrance fee refunds not replaced by
second generation entrance fee receipts at the recently opened
community prior to stabilization, lease financing debt amortization
with fair market value or no purchase options, gain (loss) on
facility lease termination, recurring capital expenditures (net),
distributions from unconsolidated ventures from cumulative share of
net earnings, CFFO from unconsolidated ventures, and other.
Recurring capital expenditures include routine expenditures
capitalized in accordance with GAAP that are funded from current
operations. Amounts excluded from recurring capital
expenditures consist primarily of major projects, renovations,
community repositionings, expansions, systems projects or other
non-recurring or unusual capital items (including integration
capital expenditures) or community purchases that are funded using
lease or financing proceeds, available cash and/or proceeds from
the sale of communities.
We believe CFFO is useful to investors in evaluating our
liquidity for the following reasons:
- It provides an assessment of our ability to facilitate meeting
current financial and liquidity goals.
- To assess our ability to:
(i) service our
outstanding indebtedness;
(ii) pay dividends; and
(iii) make regular recurring capital expenditures to
maintain and improve our communities.
The table below
reconciles CFFO from net cash provided by operating activities for
the three months ended September 30, 2015, June 30, 2015 and
September 30, 2014 (in thousands):
|
|
|
|
|
|
|
|
|
|
Three Months
Ended(1)
|
|
|
September 30,
2015
|
|
June 30,
2015
|
|
September 30,
2014
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
91,361
|
|
$
100,767
|
|
$
12,634
|
Changes in operating
assets and liabilities
|
|
(6,324)
|
|
547
|
|
29,620
|
Refundable entrance
fees received
|
|
924
|
|
550
|
|
3,388
|
Entrance fee refunds
disbursed
|
|
(1,434)
|
|
(988)
|
|
(7,668)
|
Recurring capital
expenditures, net
|
|
(14,531)
|
|
(17,425)
|
|
(13,199)
|
Lease financing debt
amortization with fair market value or no purchase
options
|
|
(12,852)
|
|
(12,756)
|
|
(10,710)
|
Distributions from
unconsolidated ventures from cumulative share of net
earnings
|
|
(6,375)
|
|
(950)
|
|
(595)
|
CFFO from
unconsolidated ventures
|
|
15,481
|
|
11,177
|
|
9,435
|
Cash From Facility
Operations
|
|
$
66,250
|
|
$
80,922
|
|
$
22,905
|
|
|
|
|
|
|
|
|
(1) The calculation of Cash
From Facility Operations includes integration, transaction,
transaction-related and EMR roll-out costs of $42.5 million, $29.0
million and $76.6 million for the three months ended September 30,
2015, June 30, 2015 and September 30, 2014, respectively.
Integration, transaction-related and EMR roll-out costs include
third party expenses directly related to the integration of
Emeritus, community financing activities and corporate capital
structure assessment activities (including shareholder relations
advisory matters) as well as internal costs such as labor
reflecting time spent by Company personnel on integration, EMR
roll-out, and transaction-related activity and severance
costs. Transaction costs include third party costs directly
related to the acquisition of Emeritus and other acquisition and
community leasing activity and are primarily comprised of legal,
finance, consulting, professional fees and other third party
costs.
|
The calculation of CFFO per share is based on weighted average
outstanding common shares for the period, excluding any unvested
restricted shares. Annual CFFO per share for all periods is
calculated as the sum of the quarterly amounts for the year.
Facility Operating Income
Facility Operating Income is not a measurement of operating
performance calculated in accordance with GAAP and should not be
considered in isolation as a substitute for net income, income from
operations, or cash flows provided by or used in operations, as
determined in accordance with GAAP. We define Facility
Operating Income as net income (loss) before provision (benefit)
for income taxes, non-operating (income) expense items, (gain) loss
on sale or acquisition of communities (including gain (loss) on
facility lease termination), depreciation and amortization
(including non-cash impairment charges), facility lease expense,
general and administrative expense, including non-cash stock-based
compensation expense, transaction costs, change in future service
obligation, amortization of deferred entrance fee revenue and
management fees.
We believe Facility Operating Income is useful to investors in
evaluating our facility operating performance for the following
reasons:
- It is helpful in identifying trends in our day-to-day facility
performance;
- It provides an assessment of our revenue generation and expense
management; and
- It provides an indicator to determine if adjustments to current
spending decisions are needed.
The table below
reconciles Facility Operating Income from net loss for the three
months ended September 30, 2015, June 30, 2015 and September 30,
2014 (in thousands):
|
|
|
|
Three Months
Ended
|
|
|
September 30,
2015
|
|
June 30,
2015
|
|
September 30,
2014
|
|
|
|
|
|
|
|
Net
loss
|
|
$
(68,336)
|
|
$
(84,807)
|
|
$
(37,036)
|
Benefit for income
taxes
|
|
(30,796)
|
|
(52,593)
|
|
(116,073)
|
Equity in loss of
unconsolidated ventures
|
|
1,578
|
|
672
|
|
1,246
|
Debt modification and
extinguishment costs
|
|
6,736
|
|
-
|
|
569
|
Other non-operating
income
|
|
(3,089)
|
|
(2,654)
|
|
(700)
|
Interest
expense:
|
|
|
|
|
|
|
Debt
|
|
43,972
|
|
43,684
|
|
38,452
|
Capital and financing lease obligations
|
|
53,217
|
|
53,043
|
|
40,916
|
Amortization of deferred financing costs and debt (premium)
discount
|
616
|
|
(162)
|
|
(189)
|
Change in fair value of derivatives
|
|
164
|
|
76
|
|
10
|
Interest
income
|
|
(399)
|
|
(382)
|
|
(392)
|
Income (loss) from
operations
|
|
3,663
|
|
(43,123)
|
|
(73,197)
|
Depreciation and
amortization
|
|
160,715
|
|
225,645
|
|
178,999
|
Facility lease
expense
|
|
91,144
|
|
91,338
|
|
91,462
|
General and
administrative (including non-cash
|
|
|
|
|
|
|
stock-based compensation
expense)
|
|
99,534
|
|
89,545
|
|
90,020
|
Transaction
costs
|
|
-
|
|
421
|
|
41,572
|
Amortization of
entrance fees
|
|
(619)
|
|
(930)
|
|
(5,757)
|
Management
fees
|
|
(14,694)
|
|
(14,839)
|
|
(10,428)
|
Facility Operating
Income
|
|
$
339,743
|
|
$
348,057
|
|
$
312,671
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/brookdale-announces-third-quarter-2015-results-300172700.html
SOURCE Brookdale Senior Living Inc.