NASHVILLE, Tenn., May 9, 2016 /PRNewswire/ -- Brookdale Senior
Living Inc. (NYSE: BKD) ("Brookdale" or the "Company") today
reported financial and operating results for the first quarter of
2016. Highlights included:
- Total revenue was $1.3 billion
for the first quarter of 2016, an increase of 1.2% from the first
quarter of 2015.
- Adjusted EBITDA(1) was $219.6
million in the first quarter of 2016, excluding integration,
transaction, transaction-related and strategic project costs.
- Adjusted CFFO(1) was $0.58 per share for the first quarter of
2016.
- Net loss attributable to Brookdale common stockholders was
$0.26 per share for the first quarter
of 2016, compared to $0.71 for the
first quarter of 2015.
- Brookdale's liquidity position increased by more than
$100 million from the fourth quarter
of 2015.
- Reaffirmed full-year 2016 guidance.
(1) Adjusted EBITDA and Adjusted Cash From
Facility Operations ("Adjusted CFFO") per share 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. Please see "Reconciliation of
Non-GAAP Financial Measures" below for the Company's definitions of
each of these financial measures and a reconciliation of each
measure to net income (loss).
Andy Smith, Brookdale's President
and CEO, said, "Overall our first quarter 2016 results are where we
expected them to be and, in fact, our first quarter Adjusted CFFO
modestly exceeded our plan for the quarter. A disciplined approach
to in-place rate increases and pricing led to strong revenue per
occupied unit growth. We achieved a modest gain in senior housing
revenues, despite occupancy being slightly below our
expectations. We remain focused on execution in our core
business to drive revenue and improve cash flow. The overall
results for the quarter, and what we see as improving momentum
during the period, allow us to confidently reiterate our previous
guidance for the full year 2016."
Financial Results
Total revenue for the first quarter of 2016 was $1.3 billion compared to $1.2 billion for the prior year period. During
the twelve months ended March 31,
2016, the Company has disposed of a total of 30 communities
with 2,594 units, either through sales or lease terminations.
These communities generated $7.4
million of revenue in the first quarter of 2016 compared to
$20.5 million of revenue in the prior
year period.
Resident fees of $1.1 billion for
the first quarter of 2016 were an 0.8% increase over the first
quarter of 2015. Average monthly revenue per occupied unit
for the consolidated senior housing portfolio was $4,485 in the first quarter of 2016, an increase
of 4.2% compared with the first quarter of 2015. Weighted
average occupancy for all consolidated communities during the first
quarter of 2016 was 86.1%.
Facility operating expenses for the first quarter of 2016 were
$715.9 million, an increase of
$19.0 million, or 2.7%, from the
first quarter of 2015, and included approximately $4.2 million for an extra day of expenses due to
the leap year.
Excluding management services in all periods, Brookdale's
consolidated operating margin was 32.5% for the first quarter of
2016 versus 33.8% for the first quarter of 2015. Excluding
the impact of the extra day due to the leap
year, the margin for the first quarter of 2016 would have
been approximately 32.9%.
Net loss attributable to Brookdale common stockholders for the
first quarter of 2016 was $48.8
million, or $0.26 per share,
versus net loss attributable to Brookdale common stockholders of
$130.5 million, or $0.71 per share, for the first quarter of
2015.
Non-GAAP Financial Measures
For the Company's definitions of Adjusted EBITDA, CFFO and
Adjusted CFFO (including on a per share basis), and Facility
Operating Income, as well as a reconciliation of each of the
non-GAAP financial measures from net income (loss), see
"Reconciliation of Non-GAAP Financial Measures" below.
Facility Operating Income was $344.3
million in the first quarter of 2016, a decline of
$10.3 million, or 2.9%, compared with
the first quarter of 2015.
Adjusted EBITDA was $219.6 million
in the first quarter of 2016 compared to $230.7 million in the first quarter of 2015,
excluding integration, transaction, transaction-related and
strategic project costs for the three months ended March 31, 2016 and March
31, 2015 of $20.0 million and
$27.3 million, respectively.
Adjusted EBITDA was $199.7 million in
the first quarter of 2016, compared to $203.4 million for the first quarter of 2015,
including integration, transaction, transaction-related and
strategic project costs in both periods.
CFFO was $86.2 million in the
first quarter of 2016, or $0.47 per
share. Adjusted CFFO was $107.1
million, or $0.58 per share,
for the first quarter of 2016, a decline of $8.3 million, or 7.2%, compared with the first
quarter of 2015. Adjusted CFFO for the periods represents
CFFO excluding $20.9 million and
$27.3 million for the first 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
$939.0 million for the first quarter
of 2016, an increase of 0.2% from the first quarter of 2015.
During the twelve months ended March 31,
2016, the Company has disposed or terminated leases of 30
communities with 2,594 senior housing units. These
communities generated $7.4 million of
revenue in the first quarter of 2016 compared to $20.5 million of revenue in the prior year
period. Same community revenue for the consolidated senior housing
portfolio for the three months ended March
31, 2016 increased 1.5% over the corresponding period in
2015. Weighted average revenue per occupied unit for senior
housing increased 4.2% in the first quarter of 2016 from the first
quarter of 2015.
Facility operating expenses were $608.2
million for the first quarter of 2016, an increase of 0.7%
from the first quarter of 2015. Facilities operating expenses
were adversely impacted by the costs of an extra day associated
with leap year, totaling
approximately $4.2 million.
Consolidated same community operating expenses for the first
quarter of 2016 increased by 2.7% over the first quarter of
2015.
Operating income for the senior housing portfolio declined by
0.6% from the first quarter of 2015, to $330.7 million for the first quarter of
2016. Same community operating income for the senior housing
portfolio for the first quarter of 2016 declined by 0.8% from the
first quarter of 2015.
Brookdale Ancillary Services
Revenue for the Company's ancillary services segment increased
$6.8 million, or 5.9%, to
$122.2 million for the first quarter
of 2016 versus the prior year first quarter. The revenue
increase was primarily due to an increase in home health 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 first quarter of 2016 increased
$15.0 million, or 16.2%, over the
first quarter of 2015, primarily due to an increase in expenses
related to expansion of ancillary services into the legacy Emeritus
communities. As a result, ancillary services operating income
for the first quarter of 2016 was $14.5
million, a decline of 36.2% versus the first quarter of
2015.
Liquidity
Total liquidity for the Company was $301.9 million at March
31, 2016, including $70.9
million of unrestricted cash and cash equivalents and
$231.0 million of availability on its
secured credit facility. Proceeds from asset sales,
refinancings and operating cash flow reduced the outstanding
balance on our line of credit to $210.0
million at March 31, 2016
compared to $310.0 million at
December 31, 2015.
Dispositions of Non-Core Assets
During 2015, the Company began an initiative to dispose of 34
owned communities that were identified as non-core assets that do
not fit the Company's long-term strategy. Sixteen of these
communities were sold during the fourth quarter of 2015.
Seven of these communities were sold during the first quarter of
2016, producing net proceeds of $45.6
million. The results of operations of the disposed
communities were previously reported in the Assisted Living and
CCRC-Rental segments. As of March 31,
2016, $65.9 million was
recorded as assets held for sale and $60.8
million of mortgage debt was included in the current portion
of long-term debt within the Company's condensed consolidated
balance sheet related to the remaining ten communities classified
as held for sale. The sale of the remaining ten communities
held for sale, plus an additional community not classified as held
for sale, is expected to occur in 2016, although there can be no
assurance that the transactions will close or if they do, when the
actual closing will occur.
Outlook
Based on results year-to-date, the Company continues to expect
2016 full year Adjusted CFFO per share in a range of $2.45 to $2.55. The Company expects full
year senior housing and ancillary services revenue to be in a range
of $4.2 to $4.3 billion and full year
Adjusted EBITDA to be in a range of $935
million to $955 million, excluding integration, transaction,
transaction-related and strategic project costs. The Company
also expects 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 17 communities classified as held
for sale as of December 31,
2015.
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 first 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 first quarter ended March 31, 2016 on Tuesday,
May 10, 2016 at 11:00 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 First 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
May 24, 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 1,121 communities in 47
states and the ability to serve approximately 108,000 residents.
Through its ancillary services program, the Company also
offers a range of outpatient therapy, home health, personalized
living and hospice services. Brookdale's stock is traded on
the New York Stock Exchange under the ticker symbol BKD.
Safe Harbor
Certain statements in this press release and the associated
earnings conference call may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Those forward-looking statements are subject to
various risks and uncertainties and include all statements that are
not historical statements of fact and those regarding our intent,
belief or expectations, including, but not limited to, statements
relating to our operational, sales and marketing initiatives and
growth strategies and our expectations regarding their effect on
our results; our expectations regarding the economy, the senior
living industry, occupancy, pricing, revenue, cash flow, operating
income, expenses, capital expenditures, Program Max opportunities,
the integration of Emeritus, cost savings and synergies, liquidity
and leverage, senior housing supply, the demand for senior housing,
expansion, development and construction activity, acquisition
opportunities, asset dispositions, the expansion of our ancillary
services offerings, innovation and revenue growth opportunities,
our share repurchase program, taxes, capital deployment, returns on
invested capital, Adjusted EBITDA, CFFO and Adjusted CFFO on an
aggregate and per-share basis, and/or Facility Operating Income (as
such terms are defined herein). Forward-looking statements
are generally identifiable by use of forward-looking terminology
such as "may," "will," "should," "could," "would," "potential,"
"intend," "expect," "endeavor," "seek," "anticipate," "estimate,"
"overestimate," "underestimate," "believe," "project," "predict,"
"continue," "plan," "target," or other similar words or
expressions. Although we believe that expectations reflected
in any forward-looking statements are based on reasonable
assumptions, we can give no assurance that our expectations will be
attained, and actual results and performance could differ
materially from those projected. Factors which could have a
material adverse effect on our operations and future prospects or
which could cause events or circumstances to differ from the
forward-looking statements include, but are not limited to, the
risk associated with the current global economic situation and its
impact upon capital markets and liquidity; changes in governmental
reimbursement programs; our inability to extend (or refinance) debt
(including our credit and letter of credit facilities and our
outstanding convertible notes) as it matures; the risk that we may
not be able to satisfy the conditions precedent to exercising the
extension options associated with certain of our debt agreements;
events which adversely affect the ability of seniors to afford our
monthly resident fees or entrance fees; the conditions of housing
markets in certain geographic areas; our ability to generate
sufficient cash flow to cover required interest and long-term
operating lease payments; the effect of our indebtedness and
long-term operating leases on our liquidity; the risk of loss of
property pursuant to our mortgage debt and long-term lease
obligations; the possibilities that changes in the capital markets,
including changes in interest rates and/or credit spreads, or other
factors could make financing more expensive or unavailable to us;
our determination from time to time to purchase any shares under
the repurchase program; our ability to fund any repurchases; our
ability to effectively manage our growth; our ability to maintain
consistent quality control; delays in obtaining regulatory
approvals; the risk that we may not be able to expand, redevelop
and reposition our communities in accordance with our plans; our
ability to complete acquisitions; our ability to successfully
integrate acquisitions, including our acquisition of Emeritus;
competition for the acquisition of assets; our ability to obtain
additional capital on terms acceptable to us; a decrease in the
overall demand for senior housing; our vulnerability to economic
downturns; acts of nature in certain geographic areas; terminations
of our resident agreements and vacancies in the living spaces we
lease; early terminations or non-renewal of management agreements;
increased competition for skilled personnel; increased union
activity; departure of our key officers; increases in market
interest rates; environmental contamination at any of our
communities; failure to comply with existing environmental laws; an
adverse determination or resolution of complaints filed against us;
the cost and difficulty of complying with increasing and evolving
regulation; 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
|
|
|
March
31,
|
|
|
2016
|
|
2015
|
Revenue
|
|
|
|
|
Resident
fees
|
|
$ 1,061,148
|
|
$ 1,052,232
|
Management
fees
|
|
16,780
|
|
15,097
|
Reimbursed costs
incurred on behalf of managed communities
|
|
185,228
|
|
180,552
|
Total
revenue
|
|
1,263,156
|
|
1,247,881
|
|
|
|
|
|
Expense
|
|
|
|
|
Facility operating
expense (excluding depreciation and amortization of $114,103 and
$208,823, respectively)
|
|
715,902
|
|
696,889
|
General and
administrative expense (including non-cash stock-based compensation
expense of $9,769 and $8,873, respectively)
|
|
92,621
|
|
89,530
|
Transaction
costs
|
|
850
|
|
6,742
|
Facility lease
expense
|
|
96,689
|
|
94,471
|
Depreciation and
amortization
|
|
127,137
|
|
220,427
|
Asset
impairment
|
|
3,375
|
|
-
|
Loss on facility
lease termination
|
|
-
|
|
76,143
|
Costs incurred on
behalf of managed communities
|
|
185,228
|
|
180,552
|
Total operating
expense
|
|
1,221,802
|
|
1,364,754
|
Income (loss) from
operations
|
|
41,354
|
|
(116,873)
|
|
|
|
|
|
Interest
income
|
|
702
|
|
427
|
Interest
expense:
|
|
|
|
|
Debt
|
|
(43,990)
|
|
(42,348)
|
Capital and financing
lease obligations
|
|
(50,579)
|
|
(53,203)
|
Amortization of
deferred financing costs and debt premium (discount)
|
|
(2,310)
|
|
(381)
|
Change in fair value
of derivatives
|
|
(24)
|
|
(550)
|
Debt modification and
extinguishment costs
|
|
(1,110)
|
|
(44)
|
Equity in earnings of
unconsolidated ventures
|
|
1,018
|
|
1,484
|
Other non-operating
income
|
|
7,787
|
|
2,491
|
Income (loss) before
income taxes
|
|
(47,152)
|
|
(208,997)
|
(Provision) benefit
for income taxes
|
|
(1,665)
|
|
78,288
|
Net income
(loss)
|
|
(48,817)
|
|
(130,709)
|
Net (income) loss
attributable to noncontrolling interest
|
|
42
|
|
258
|
Net income (loss)
attributable to Brookdale Senior Living Inc. common
stockholders
|
|
$
(48,775)
|
|
$
(130,451)
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
income (loss) per share attributable to Brookdale Senior Living
Inc. common stockholders
|
|
$
(0.26)
|
|
$
(0.71)
|
|
|
|
|
|
Weighted average
shares used in computing basic and diluted net income (loss) per
share
|
|
185,153
|
|
183,678
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets
(in
thousands)
|
|
|
|
|
|
|
|
|
March 31,
2016
|
|
December 31,
2015
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
70,862
|
|
$
88,029
|
Cash and escrow
deposits - restricted
|
|
28,645
|
|
32,570
|
Accounts receivable,
net
|
|
146,791
|
|
144,053
|
Assets held for
sale
|
|
65,906
|
|
110,620
|
Other current
assets
|
|
155,295
|
|
122,671
|
Total current
assets
|
|
467,499
|
|
497,943
|
Property, plant, and
equipment and
|
|
|
|
|
leasehold intangibles,
net
|
|
8,004,357
|
|
8,031,376
|
Other assets,
net
|
|
1,516,816
|
|
1,519,245
|
Total
assets
|
|
$
9,988,672
|
|
$
10,048,564
|
|
|
|
|
|
Current
liabilities
|
|
$
855,915
|
|
$
840,148
|
Long-term debt, less
current portion
|
|
3,753,068
|
|
3,769,371
|
Capital and financing
lease obligations, less current portion
|
|
2,403,191
|
|
2,427,438
|
Other
liabilities
|
|
557,065
|
|
552,880
|
Total
liabilities
|
|
7,569,239
|
|
7,589,837
|
Total Brookdale
Senior Living Inc. stockholders' equity
|
|
2,419,636
|
|
2,458,888
|
Noncontrolling
interest
|
|
(203)
|
|
(161)
|
Total
equity
|
|
2,419,433
|
|
2,458,727
|
Total liabilities and
equity
|
|
$
9,988,672
|
|
$
10,048,564
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows
(in
thousands)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2016
|
|
2015
|
Cash Flows from
Operating Activities
|
|
|
|
|
Net income
(loss)
|
|
$
(48,817)
|
|
$
(130,709)
|
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
|
|
129,447
|
|
220,808
|
Asset
impairment
|
|
3,375
|
|
-
|
Equity in earnings of
unconsolidated ventures
|
|
(1,018)
|
|
(1,484)
|
Distributions from
unconsolidated ventures from cumulative share of net
|
|
-
|
|
500
|
earnings
|
|
|
|
|
Amortization of
deferred gain
|
|
(1,093)
|
|
(1,093)
|
Amortization of
entrance fees
|
|
(926)
|
|
(767)
|
Proceeds from
deferred entrance fee revenue
|
|
3,087
|
|
2,455
|
Deferred income tax
provision (benefit)
|
|
934
|
|
(79,237)
|
Change in deferred
lease liability
|
|
3,935
|
|
2,801
|
Change in fair value
of derivatives
|
|
24
|
|
550
|
Gain on sale of
assets
|
|
(2,749)
|
|
-
|
Non-cash stock-based
compensation
|
|
9,769
|
|
8,873
|
Non-cash interest
expense on financing lease obligations
|
|
6,439
|
|
5,700
|
Amortization of above
(below) market rents, net
|
|
(1,733)
|
|
(1,959)
|
Other
|
|
(2,330)
|
|
-
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts receivable,
net
|
|
(2,738)
|
|
(13,140)
|
Prepaid expenses and
other assets, net
|
|
(36,554)
|
|
24,504
|
Accounts payable and
accrued expenses
|
|
(1,388)
|
|
(38,773)
|
Tenant refundable
fees and security deposits
|
|
(226)
|
|
(510)
|
Deferred
revenue
|
|
12,766
|
|
11,494
|
Net cash provided by
operating activities
|
|
70,343
|
|
10,057
|
Cash Flows from
Investing Activities
|
|
|
|
|
(Increase) decrease
in lease security deposits and lease acquisition deposits,
net
|
|
(1,210)
|
|
13,037
|
Decrease in cash and
escrow deposits — restricted
|
|
72
|
|
12,289
|
Additions to
property, plant, and equipment and leasehold intangibles,
net
|
|
(108,510)
|
|
(79,129)
|
Acquisition of
assets, net of related payables and cash received
|
|
(12,157)
|
|
(174,305)
|
Investment in
unconsolidated ventures
|
|
(2,365)
|
|
(3,923)
|
Distributions
received from unconsolidated ventures
|
|
1,724
|
|
-
|
Proceeds from sale of
assets, net
|
|
45,584
|
|
-
|
Other
|
|
2,414
|
|
740
|
Net cash used in
investing activities
|
|
(74,448)
|
|
(231,291)
|
Cash Flows from
Financing Activities
|
|
|
|
|
Proceeds from
debt
|
|
177,370
|
|
85,365
|
Repayment of debt and
capital and financing lease obligations
|
|
(84,016)
|
|
(47,555)
|
Proceeds from line of
credit
|
|
357,000
|
|
445,000
|
Repayment of line of
credit
|
|
(457,000)
|
|
(245,000)
|
Payment of financing
costs, net of related payables
|
|
(818)
|
|
(1,481)
|
Refundable entrance
fees:
|
|
|
|
|
Proceeds
from refundable entrance fees
|
|
535
|
|
36
|
Refunds
of entrance fees
|
|
(1,128)
|
|
(829)
|
Cash portion of loss
on extinguishment of debt
|
|
-
|
|
(44)
|
Payment on lease
termination
|
|
(4,625)
|
|
(3,875)
|
Other
|
|
(380)
|
|
716
|
Net cash
(used in) provided by financing activities
|
|
(13,062)
|
|
232,333
|
Net (decrease) increase in cash and cash
equivalents
|
|
(17,167)
|
|
11,099
|
Cash and cash equivalents at beginning of period
|
|
88,029
|
|
104,083
|
Cash and cash equivalents at end of period
|
|
$
70,862
|
|
$
115,182
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial Measures
This earnings release and the supplemental information referred
to in the earnings release contain financial measures utilized by
management to evaluate our financial and operating performance that
are not calculated in accordance with U.S. generally accepted
accounting principles ("GAAP"). Each of these measures,
Adjusted EBITDA, CFFO and Adjusted CFFO on an aggregate and
per-share basis, and Facility Operating Income, should not be
considered in isolation from or as superior to or as a substitute
for net income (loss), income (loss) from operations, cash flows
provided by or used in operations, or other financial measures
determined in accordance with GAAP. We strongly urge you to
review the reconciliations of such measures from GAAP net income
(loss), along with our consolidated financial statements included
herein. We caution investors that amounts presented in
accordance with our definitions of Adjusted EBITDA, CFFO and
Adjusted CFFO (including on a per share basis, and Facility
Operating Income may not be comparable to similar measures
disclosed by other companies, because not all companies calculate
these non-GAAP measures in the same manner.
Adjusted EBITDA
We define Adjusted EBITDA as net income (loss) before provision
(benefit) for income taxes, non-operating (income) expense items,
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,
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) and Cash From Facility Operations from
unconsolidated ventures. Management uses Adjusted EBITDA to,
among other things, assess our overall financial and operating
performance because this metric excludes non-cash items such as
depreciation and amortization, asset impairment charges, non-cash
stock-based compensation expense, gain (loss) on facility lease
termination and straight-line lease expense, net of deferred gain
amortization. In addition, management uses Adjusted EBITDA to
assess decisions which are expected to facilitate meeting current
financial goals as well as to achieve optimal financial
performance, and to provide an indicator to determine if
adjustments to current spending decisions are needed. We
believe Adjusted EBITDA is useful to investors in evaluating our
operating performance, results of operations and financial position
because it is helpful in identifying trends in our day-to-day
performance since the items excluded have little or no significance
to our day-to-day operations and it provides an assessment of our
expense management.
The table below reconciles Adjusted EBITDA from net income
(loss) for the three months ended March 31,
2016 and March 31, 2015 (in
thousands):
|
|
|
|
|
|
|
Three Months Ended
March 31,(1)
|
|
|
2016
|
|
2015
|
Net income
(loss)
|
|
$
(48,817)
|
|
$
(130,709)
|
Provision (benefit)
for income taxes
|
|
1,665
|
|
(78,288)
|
Equity in earnings of
unconsolidated ventures
|
|
(1,018)
|
|
(1,484)
|
Debt modification and
extinguishment costs
|
|
1,110
|
|
44
|
Other non-operating
income
|
|
(7,787)
|
|
(2,491)
|
Interest
expense:
|
|
|
|
|
Debt
|
|
43,990
|
|
42,348
|
Capital and financing lease obligations
|
|
50,579
|
|
53,203
|
Amortization of deferred financing costs and debt (premium)
discount
|
|
2,310
|
|
381
|
Change in fair value of derivatives
|
|
24
|
|
550
|
Interest
income
|
|
(702)
|
|
(427)
|
Income (loss) from
operations
|
|
41,354
|
|
(116,873)
|
Depreciation and
amortization
|
|
127,137
|
|
220,427
|
Asset
impairment
|
|
3,375
|
|
-
|
Loss on facility
lease termination
|
|
-
|
|
76,143
|
Straight-line lease
expense (income)
|
|
3,935
|
|
2,801
|
Amortization of
(above) below market lease, net
|
|
(1,733)
|
|
(1,959)
|
Amortization of
deferred gain
|
|
(1,093)
|
|
(1,093)
|
Amortization of
entrance fees
|
|
(926)
|
|
(767)
|
Non-cash stock-based
compensation expense
|
|
9,769
|
|
8,873
|
Entrance fee
receipts(2)
|
|
3,622
|
|
2,491
|
Entrance fee
disbursements
|
|
(1,128)
|
|
(829)
|
CFFO from
unconsolidated ventures
|
|
15,354
|
|
14,213
|
Adjusted
EBITDA
|
|
$
199,666
|
|
$
203,427
|
|
|
|
|
|
|
|
|
|
|
(1) The calculation of Adjusted
EBITDA includes integration, transaction, transaction-related and
strategic project costs of $20.0
million and $27.3 million for
the three months ended March 31, 2016
and March 31, 2015, respectively.
Integration costs include transition costs associated with the
Emeritus merger and organizational restructuring (such as severance
and retention payments and recruiting expenses), third party
consulting expenses directly related to the integration of Emeritus
(in areas such as cost savings and synergy realization, branding
and technology and systems work), and internal costs such as
training, travel and labor, reflecting time spent by Company
personnel on integration activities and projects. Transaction and
transaction-related costs include third party costs directly
related to the acquisition of Emeritus, other acquisition and
disposition activity, community financing and leasing activity and
corporate capital structure assessment activities (including
shareholder relations advisory matters), and are primarily
comprised of legal, finance, consulting, professional fees and
other third party costs. Strategic project costs include costs
associated with certain strategic projects related to refining the
Company's strategy, building out enterprise-wide capabilities for
the post-merger platform (including the EMR roll-out project) and
reducing costs and achieving synergies by capitalizing on
scale.
(2) Includes the receipt of refundable
and non-refundable entrance fees.
CFFO and Adjusted CFFO
We define CFFO as net income (loss) before deferred income tax
provision (benefit), non-operating (income) expense items, non-cash
financing lease interest expense, (gain) loss on sale or
acquisition of communities (including gain (loss) on facility lease
termination), depreciation and amortization (including non-cash
impairment charges), straight-line lease expense (income), net of
amortization of (above) below market rents, amortization of
deferred gain, amortization of deferred entrance fees, non-cash
stock-based compensation expense, and change in future service
obligation and including 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), Cash From Facility
Operations from unconsolidated ventures, recurring capital
expenditures, net, lease financing debt amortization with fair
market value or no purchase options, and other. Recurring
capital expenditures include routine expenditures capitalized in
accordance with GAAP that are funded from current operations.
Amounts excluded from recurring capital expenditures consist
primarily of major projects, renovations, community repositionings,
expansions, systems projects or other non-recurring or unusual
capital items (including integration capital expenditures) or
community purchases that are funded using lease or financing
proceeds, available cash and/or proceeds from the sale of
communities.
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.
The calculations of CFFO per share and Adjusted CFFO per share
are based on weighted average shares used in computing basic net
income (loss) per share for the period, which excludes potentially
dilutive common stock equivalents (unvested restricted stock,
restricted stock units and convertible debt instruments and
warrants).
Management uses these metrics to, among other things, assess our
overall financial and operating performance because these metrics
exclude non-cash items such as depreciation and amortization, asset
impairment charges, non-cash stock-based compensation expense, gain
(loss) on facility lease termination and straight-line lease
expense, net of deferred gain amortization. In addition,
management uses these metrics to assess decisions which are
expected to facilitate meeting current financial goals as well as
to achieve optimal financial performance, and to provide an
indicator to determine if adjustments to current spending decisions
are needed. We believe these metrics are useful to investors
in evaluating our operating performance, results of operations and
financial position because they are 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 they provide an
assessment of our expense management.
The table below reconciles CFFO and Adjusted CFFO (including on
a per-share basis) from net income (loss) for the three months
ended March 31, 2016 and March 31, 2015 (in thousands):
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
Net income
(loss)
|
|
$
(48,817)
|
|
$
(130,709)
|
Deferred income tax
provision (benefit)
|
|
934
|
|
(79,237)
|
Other non-operating
income
|
|
(7,787)
|
|
(2,491)
|
Equity in earnings of
unconsolidated ventures
|
|
(1,018)
|
|
(1,484)
|
Debt modification and
extinguishment costs
|
|
1,110
|
|
44
|
Interest
expense
|
|
|
|
|
Amortization of
deferred financing costs and debt (premium) discount
|
|
2,310
|
|
381
|
Change in fair value
of derivatives
|
|
24
|
|
550
|
Non-cash interest
expense on financing lease obligations
|
|
6,439
|
|
5,700
|
Loss on facility
lease termination
|
|
-
|
|
76,143
|
Depreciation and
amortization
|
|
127,137
|
|
220,427
|
Asset
impairment
|
|
3,375
|
|
-
|
Straight-line lease
expense (income)
|
|
3,935
|
|
2,801
|
Amortization of
(above) below market lease, net
|
|
(1,733)
|
|
(1,959)
|
Amortization of
deferred gain
|
|
(1,093)
|
|
(1,093)
|
Amortization of
entrance fees
|
|
(926)
|
|
(767)
|
Non-cash stock-based
compensation expense
|
|
9,769
|
|
8,873
|
Entrance fee
receipts
|
|
3,622
|
|
2,491
|
Entrance fee
disbursements
|
|
(1,128)
|
|
(829)
|
CFFO from
unconsolidated ventures
|
|
15,354
|
|
14,213
|
Recurring capital
expenditures, net
|
|
(13,281)
|
|
(15,003)
|
Lease financing debt
amortization with fair market value or no purchase
options
|
|
(13,809)
|
|
(12,439)
|
Other
|
|
1,737
|
|
2,491
|
CFFO
|
|
$
86,154
|
|
$
88,103
|
|
|
|
|
|
Integration,
transaction, transaction-related and strategic project
costs
|
|
20,928
|
|
27,300
|
Adjusted
CFFO
|
|
$
107,082
|
|
$
115,403
|
|
|
|
|
|
Weighted average
shares used in computing basic net income (loss) per
share
|
|
185,153
|
|
184,175
|
|
|
|
|
|
CFFO per
share
|
|
$
0.47
|
|
$
0.48
|
Adjusted CFFO per
share
|
|
$
0.58
|
|
$
0.63
|
|
|
|
|
|
|
|
|
|
|
Facility Operating Income
We define Facility Operating Income as net income (loss) before
provision (benefit) for income taxes, non-operating (income)
expense items, (gain) loss on sale or acquisition of communities
(including gain (loss) on facility lease termination), depreciation
and amortization (including non-cash impairment charges), facility
lease expense, general and administrative expense, including
non-cash stock-based compensation expense, transaction costs,
amortization of deferred entrance fee revenue, change in future
service obligation and management fees. Management uses
Facility Operating Income to, among other things, assess our
facility operating performance, to assess decisions which are
expected to facilitate meeting current financial goals as well as
to achieve optimal facility financial performance, and to provide
an indicator to determine if adjustments to current spending
decisions are needed. We believe Facility Operating Income is
useful to investors in evaluating our facility operating
performance because it is helpful in identifying trends in our
day-to-day facility performance since the items excluded have
little or no significance on our day-to-day facility operations and
it provides and an assessment of our revenue generation and expense
management.
The table below reconciles Facility Operating Income from net
income (loss) for the three months ended March 31, 2016 and March
31, 2015 (in thousands):
|
|
Three
Months Ended March 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
Net income
(loss)
|
|
$
(48,817)
|
|
$
(130,709)
|
Provision (benefit)
for income taxes
|
|
1,665
|
|
(78,288)
|
Equity in earnings of
unconsolidated ventures
|
|
(1,018)
|
|
(1,484)
|
Debt modification and
extinguishment costs
|
|
1,110
|
|
44
|
Other non-operating
income
|
|
(7,787)
|
|
(2,491)
|
Interest
expense:
|
|
|
|
|
Debt
|
|
43,990
|
|
42,348
|
Capital and financing lease obligations
|
|
50,579
|
|
53,203
|
Amortization of deferred financing costs and debt (premium)
discount
|
|
2,310
|
|
381
|
Change in fair value of derivatives
|
|
24
|
|
550
|
Interest
income
|
|
(702)
|
|
(427)
|
Income (loss) from
operations
|
|
41,354
|
|
(116,873)
|
Loss on facility
lease termination
|
|
-
|
|
76,143
|
Depreciation and
amortization
|
|
127,137
|
|
220,427
|
Asset
impairment
|
|
3,375
|
|
-
|
Facility lease
expense
|
|
96,689
|
|
94,471
|
General and
administrative (including non-cash
|
|
|
|
|
stock-based compensation
expense)
|
|
92,621
|
|
89,530
|
Transaction
costs
|
|
850
|
|
6,742
|
Amortization of
entrance fees
|
|
(926)
|
|
(767)
|
Management
fees
|
|
(16,780)
|
|
(15,097)
|
Facility Operating
Income
|
|
$
344,320
|
|
$
354,576
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/brookdale-announces-first-quarter-2016-results-300265252.html
SOURCE Brookdale Senior Living Inc.