EXHIBIT 99.3
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
Background
As previously disclosed, on August 12, 2024, Sonida Senior Living, Inc., through various wholly-owned subsidiaries (the “Company” and “Sonida”), entered into eight asset purchase agreements (the “Palm PSAs”) with various affiliates of Principal Senior Living Group for the acquisition of eight senior living communities (collectively, the “Palm Communities” and “Palm”). Five of the Palm Communities are located in Florida and the other three Palm Communities are located in South Carolina.
Effective as of October 1, 2024, upon the terms and conditions set forth in the Palm PSAs, the Company completed its acquisition of the Palm Communities (the “Palm Acquisition”). Upon the completion of the Palm Acquisition, the Company paid the as-adjusted closing purchase price of approximately $102.9 million, which amount is subject to customary post-closing adjustments.
The foregoing description of the Palm PSAs and the transactions contemplated thereby is not complete and is qualified in its entirety by reference to the full text of the form of Palm PSA, which was filed as Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on August 15, 2024 and is incorporated herein by reference.
Basis of Presentation
The unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2024 and the year ended December 31, 2023 have been prepared as though the Palm Acquisition occurred on January 1, 2023. The unaudited pro forma consolidated balance sheet as of September 30, 2024 has been prepared as though the Palm Acquisition occurred on that date.
The accompanying unaudited pro forma consolidated financial statements should be read in conjunction with (i) the Company’s unaudited condensed consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, filed with the Securities and Exchange Commission (the “SEC”) on November 13, 2024, (ii) the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, that was filed with the SEC on March 27, 2024, (iii) the audited combined carve-out financial statements of the Palm Communities for the year ended December 31, 2023, included in this Current Report on Form 8-K/A as Exhibit 99.1, and (iv) the unaudited combined carve-out financial statements of the Palm Communities for the nine months ended September 30, 2024, included in this Current Report on Form 8-K/A as Exhibit 99.2.
The adjustments to the historical financial statements are based upon currently available information and certain estimates and assumptions. Actual effects of the Palm Acquisition will differ from the pro forma adjustments. The unaudited pro forma consolidated financial statements are not necessarily indicative of the results that would have occurred if the Palm Acquisition had been completed on the dates indicated or what could be achieved in the future. However, the Company believes the assumptions provide a reasonable basis for presenting the significant effects of the Palm Acquisition as contemplated and the pro forma transaction accounting adjustments are factually supportable and give appropriate effect to the expected impact of events directly attributable to the Palm Acquisition.
SONIDA SENIOR LIVING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of September 30, 2024
(in thousands, except share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Historical Sonida (A) | | Palm (B) | | Adjustments | | | Pro Forma Sonida |
| Assets: | | | | | | | | |
| Current assets | | | | | | | | |
| Cash and cash equivalents | $ | 24,938 | | | $ | 1,620 | | | $ | (1,620) | | (C) | | $ | 24,938 | |
| Restricted cash | 18,850 | | | — | | | — | | | | 18,850 | |
| Accounts receivable, net | 12,677 | | | 285 | | | (285) | | (C) | | 12,677 | |
| Prepaid expenses and other assets | 4,743 | | | 1,395 | | | (1,351) | | (C) | | 4,787 | |
| Derivative assets | 701 | | | — | | | — | | | | 701 | |
| Acquisition deposit | 102,461 | | | — | | | (102,461) | | (E) | | — | |
| Total current assets | 164,370 | | | 3,300 | | | (105,717) | | | | 61,953 | |
| Property and equipment, net | 611,911 | | | 93,918 | | | (6,773) | | (D) | | 699,056 | |
| Investment in unconsolidated entity | 11,868 | | | — | | | — | | | | 11,868 | |
| Other assets, net | 8,086 | | | 95 | | | 13,140 | | (F) | | 21,321 | |
| Total assets | $ | 796,235 | | | $ | 97,313 | | | $ | (99,350) | | | | $ | 794,198 | |
| Liabilities: | | | | | | | | |
| Current liabilities | | | | | | | | |
| Accounts payable | $ | 6,098 | | | $ | 789 | | | $ | (789) | | (C) | | $ | 6,098 | |
| Accrued expenses | 44,791 | | | 4,083 | | | (2,888) | | (C) | | 45,986 | |
| Current portion of notes payable, net of deferred loan costs | 14,119 | | | — | | | — | | | | 14,119 | |
| Deferred income | 4,294 | | | 162 | | | (162) | | (C) | | 4,294 | |
| | | | | | | | |
| Federal and state income taxes payable | 161 | | | — | | | — | | | | 161 | |
| Other current liabilities | 826 | | | — | | | — | | | | 826 | |
| Total current liabilities | 70,289 | | | 5,034 | | | (3,839) | | | | 71,484 | |
| Notes payable, net of deferred loan costs and current portion | 589,975 | | | — | | | — | | | | 589,975 | |
| Other long-term liabilities | 23 | | | — | | | 443 | | (G) | | 466 | |
| Total liabilities | 660,287 | | | 5,034 | | | (3,396) | | | | 661,925 | |
| Redeemable preferred stock: | | | | | | | | |
| Series A convertible preferred stock, $0.01 par value; 41 shares authorized, 41 shares issued and outstanding | 51,248 | | | — | | | — | | | | 51,248 | |
| Equity: | | | | | | | | |
| Sonida’s shareholders’ equity (deficit): | | | | | | | | |
| Preferred stock, $0.01 par value: | | | | | | | | |
| Authorized shares - 15,000; none issued or outstanding, except Series A convertible preferred stock as noted above | — | | | — | | | — | | | | — | |
| Common stock, $0.01 par value: | | | | | | | | |
| Authorized shares - 30,000; 19,070 shares issued and outstanding | 191 | | | — | | | — | | | | 191 | |
| Additional paid-in capital | 492,072 | | | — | | | (3,675) | | (C) | | 488,397 | |
| Parent net investment | | | 92,279 | | | (92,279) | | (C) (E) | | — | |
| Retained deficit | (414,720) | | | — | | | — | | | | (414,720) | |
| Total Sonida shareholders’ equity (deficit) | 77,543 | | | 92,279 | | | (95,954) | | | | 73,868 | |
| Noncontrolling interest: | 7,157 | | | — | | | — | | | | 7,157 | |
| Total equity (deficit) | 84,700 | | | 92,279 | | | (95,954) | | | | 81,025 | |
| Total liabilities, redeemable preferred stock and equity (deficit) | $ | 796,235 | | | $ | 97,313 | | | $ | (99,350) | | | | $ | 794,198 | |
Notes to Unaudited Pro Forma Consolidated Balance Sheet
(A) Represents the unaudited historical condensed consolidated balance sheet of Sonida Senior Living, Inc. as of September 30, 2024, as reported in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, filed with the SEC on November 13, 2024.
(B) Represents the unaudited combined carve-out condensed consolidated balance sheet of the Palm Communities as of September 30, 2024.
(C) Represents adjustments to remove the historical operating assets, liabilities and equity of the Palm Communities as of September 30, 2024 which were not acquired or assumed by the Company plus adjustments to the balance sheet to reflect the Palm Acquisition.
(D) Represents property and equipment, predominantly land and buildings, allocated to the Palm Communities from the Palm Acquisition, which was an asset acquisition. Transaction costs related to the Palm Acquisition have been capitalized in the acquired property and equipment. The assets and liabilities were allocated proportionately based on an estimate of the relative fair values of the Palm Communities. Sonida has not finalized its opening balance sheet adjustment for the Palm Acquisition. The property and equipment are estimated to be depreciated over the straight-line method over their estimated useful lives as of the date of the Palm Acquisition: land and land improvements are not depreciated; buildings and building improvements between 10 to 30 years; and furniture and equipment 7 years.
(E) Represents the application of the cash purchase price paid by Sonida to Principal Senior Living Group prior to the closing of the Palm Acquisition on October 1, 2024. The purchase price was allocated to the assets acquired and liabilities assumed based on fair value estimates. Property and equipment assumed was valued based on the sales comparison approach, cost approach, and income capitalization. In place leases assumed were valued based on the value a market participant would ascribe to any existing leases.
(F) Represents intangible assets, predominantly in place leases, allocated to the Palm Communities from the Palm Acquisition and adjustments to remove the historical operating assets of the Palm Communities. A portion of transaction costs related to the Palm Acquisition have been capitalized in the acquired intangible assets. Sonida has not finalized its opening balance sheet adjustment for the Palm Acquisition. The intangible assets are estimated to be amortized over the straight-line method over their estimated useful lives as of the date of the Palm Acquisition. In place leases are amortized over 3 years.
(G) Represents other long-term liabilities, predominantly below market leases, allocated to the Palm Communities from the Palm Acquisition. A portion of transaction costs related to the Palm Acquisition have been capitalized in the acquired intangible liabilities. Sonida has not finalized its opening balance sheet adjustment for the Palm Acquisition. The intangible liabilities are estimated to be amortized over the straight-line method over their estimated useful lives as of the date of the Palm Acquisition. Below market leases are amortized over 3 years.
SONIDA SENIOR LIVING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended September 30, 2024
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Historical Sonida (AA) | | Palm (BB) | | Adjustments | | | | Pro Forma Sonida |
| Revenues: | | | | | | | | | |
| Resident revenue | $ | 190,796 | | | $ | 26,122 | | | $ | — | | | | | $ | 216,918 | |
| Management fees | 2,465 | | | — | | | — | | | | | 2,465 | |
| Managed community reimbursement revenue | 19,134 | | | — | | | — | | | | | 19,134 | |
| Total revenues | 212,395 | | | 26,122 | | | — | | | | | 238,517 | |
| Expenses: | | | | | | | | | |
| Operating expense | 142,790 | | | 19,551 | | | — | | | | | 162,341 | |
| General and administrative expense | 28,182 | | | 2,091 | | | (1,819) | | | (DD) | | 28,454 | |
| Depreciation and amortization expense | 30,731 | | | 2,438 | | | 3,674 | | | (EE) | | 36,843 | |
| Managed community reimbursement expense | 19,134 | | | — | | | — | | | | | 19,134 | |
| Total expenses | 220,837 | | | 24,080 | | | 1,855 | | | | | 246,772 | |
| Other income (expense): | | | | | | | | | |
| Interest income | 1,379 | | | — | | | — | | | | | 1,379 | |
| Interest expense | (27,394) | | | (4,800) | | | 4,800 | | | (FF) | | (27,394) | |
| Gain on extinguishment of debt, net | 38,148 | | | — | | | — | | | | | 38,148 | |
| Loss from equity method investment | (181) | | | — | | | — | | | | | (181) | |
| Other expense, net | (379) | | | (174) | | | — | | | | | (553) | |
| Income (loss) before provision for income taxes | 3,131 | | | (2,932) | | | 2,945 | | | | | 3,144 | |
| Provision for income taxes | (193) | | | — | | | — | | | | | (193) | |
| Net income (loss) | 2,938 | | | (2,932) | | | 2,945 | | | | | 2,951 | |
| Less: Net loss attributable to noncontrolling interests | 507 | | | — | | | — | | | | | 507 | |
| Net income (loss) attributable to Sonida shareholders | 3,445 | | | (2,932) | | | 2,945 | | | | | 3,458 | |
| | | | | | | | | |
| Dividends on Series A convertible preferred stock | (1,409) | | | — | | | — | | | | | (1,409) | |
| Undeclared dividends on Series A convertible preferred stock | (2,707) | | | — | | | — | | | | | (2,707) | |
| Net loss attributable to common stockholders | $ | (671) | | | $ | (2,932) | | | $ | 2,945 | | | | | $ | (658) | |
| | | | | | | | | |
| Weighted average common shares outstanding — basic | 12,787 | | | | | | | | | 12,787 | |
| Weighted average common shares outstanding — diluted | 12,787 | | | | | | | | | 12,787 | |
| | | | | | | | | |
| Basic net loss per common share | $ | (0.05) | | | | | | | | | $ | (0.05) | |
| Diluted net loss per common share | $ | (0.05) | | | | | | | | | $ | (0.05) | |
SONIDA SENIOR LIVING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2023
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Historical Sonida (AA) | | Palm (CC) | | Adjustments | | | | Pro Forma Sonida |
| Revenues: | | | | | | | | | |
| Resident revenue | $ | 232,032 | | | $ | 31,236 | | | $ | — | | | | | $ | 263,268 | |
| Management fees | 2,191 | | | — | | | — | | | | | 2,191 | |
| Managed community reimbursement revenue | 21,099 | | | — | | | — | | | | | 21,099 | |
| Total revenues | 255,322 | | | 31,236 | | | — | | | | | 286,558 | |
| Expenses: | | | | | | | | | |
| Operating expense | 177,323 | | | 24,719 | | | — | | | | | 202,042 | |
| General and administrative expense | 32,198 | | | 2,399 | | | (2,175) | | | (DD) | | 32,422 | |
| Depreciation and amortization expense | 39,888 | | | 3,208 | | | 4,942 | | | (EE) | | 48,038 | |
| Long-lived asset impairment | 5,965 | | | — | | | — | | | | | 5,965 | |
| Managed community reimbursement expense | 21,099 | | | — | | | — | | | | | 21,099 | |
| Total expenses | 276,473 | | | 30,326 | | | 2,767 | | | | | 309,566 | |
| Other income (expense): | | | | | | | | | |
| Interest income | 608 | | | — | | | — | | | | | 608 | |
| Interest expense | (36,118) | | | (6,665) | | | 6,410 | | | (FF) | | (36,373) | |
| Gain on extinguishment of debt, net | 36,339 | | | — | | | — | | | | | 36,339 | |
| Other expense, net | (532) | | | (161) | | | — | | | | | (693) | |
| Loss before provision for income taxes | (20,854) | | | (5,916) | | | 3,643 | | | | | (23,127) | |
| Provision for income taxes | (253) | | | — | | | — | | | | | (253) | |
| Net loss | (21,107) | | | (5,916) | | | 3,643 | | | | | (23,380) | |
| Less: Net loss attributable to noncontrolling interests | — | | | — | | | — | | | | | — | |
| Net loss attributable to Sonida shareholders | (21,107) | | | (5,916) | | | 3,643 | | | | | (23,380) | |
| | | | | | | | | |
| Undeclared dividends on Series A convertible preferred stock | (4,992) | | | — | | | — | | | | | (4,992) | |
| Net loss attributable to common stockholders | $ | (26,099) | | | $ | (5,916) | | | $ | 3,643 | | | | | $ | (28,372) | |
| | | | | | | | | |
| Weighted average common shares outstanding — basic | 6,786 | | | | | | | | | 6,786 | |
| Weighted average common shares outstanding — diluted | 6,786 | | | | | | | | | 6,786 | |
| | | | | | | | | |
| Basic net loss per common share | $ | (3.85) | | | | | | | | | $ | (4.18) | |
| Diluted net loss per common share | $ | (3.85) | | | | | | | | | $ | (4.18) | |
Notes to Unaudited Pro Forma Consolidated Statements of Operations
(AA) Represents the historical condensed consolidated statement of operations of Sonida Senior Living, Inc. for the nine months ended September 30, 2024, as reported in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, filed with the SEC on November 13, 2024 and the historical consolidated statement of operations for the year ended December 31, 2023, as reported in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 27, 2024.
(BB) Represents the unaudited combined carve-out statement of operations of the Palm Communities as of the nine months ended September 30, 2024, as included in Exhibit 99.2 of this Current Report on Form 8-K/A.
(CC) Represents the audited combined carve-out statement of operations of the Palm Communities as of December 31, 2023, as included in Exhibit 99.1 of this Current Report on Form 8-K/A.
(DD) Represents expenses for management fees recorded by the Palm Communities that will not be in the Sonida statement of operations as the properties will be internally managed.
(EE) Represents depreciation and amortization expense based on the preliminary estimate of the relative fair value and useful lives of the assets acquired by the Company for the acquisition of the Palm Communities and an adjustment to remove the depreciation and amortization expense recorded by Palm.
(FF) Represents adjustments to remove the historical interest expense of the Palm Communities for the nine months ended September 30, 2024 and the year ended December 31, 2023.
