Exhibit 99.2 Supplemental Information 2nd Quarter 2018
Table of Contents Financial Overview 3 Segment Overview 7 Senior Housing 8 Ancillary Services 13 G&A Expense & Transaction Costs 14 Capital Expenditures 15 Cash Lease Payments 16 Unconsolidated Ventures 17 Debt & Liquidity 18 Net Asset Value Elements 20 Definitions 21 Appendix: Consolidated Statements of Cash Flows 24 Non-GAAP Financial Measures 25 2
Overview ($ in 000s, except Total RevPAR) 2017 2018 YoY Q2 Q3 Q4 Q1 Q2 Q2 Resident fee and management fee revenue $ 956,512 $ 941,030 $ 925,622 $ 924,947 $ 913,040 (4.5)% Net income (loss) $ (46,337) $ (413,929) $ 15,021 $ (457,234) $ (165,509) NM Net cash provided by operating activities (2) $ 133,759 $ 93,791 $ 84,036 $ 37,964 $ 60,620 (54.7)% Adjusted EBITDA $ 160,325 $ 141,829 $ 138,116 $ 130,000 $ 142,211 (11.3)% Adjusted Free Cash Flow (2) $ 40,610 $ 16,360 $ (11,174) $ 5,485 $ 12,362 (69.6)% Brookdale's Proportionate Share of Adjusted EBITDA of Unconsolidated Ventures $ 18,219 $ 16,788 $ 17,723 $ 16,749 $ 14,111 (22.5)% Brookdale's Proportionate Share of Adjusted Free Cash Flow of Unconsolidated Ventures (2) $ 7,920 $ 6,709 $ 12,037 $ 5,824 $ 5,798 (26.8)% Total RevPAR $ 4,392 $ 4,386 $ 4,463 $ 4,527 $ 4,500 2.5 % As of June 30, 2018 Q2 2018 weighted average unit occupancy Managed - 3rd Party: 160 Managed - 3rd Community Party: 20,042 % of Period End Occupancy Band Count Communities Leased: Greater than 95% 197 20% Leased: Managed- 28,422 90% < 95% 177 18% (1) 385 988 Venture: 80 94,885 85% < 90% 153 15% communities units Managed- 80% < 85% 145 15% Venture : Less than 80% 316 32% 13,134 Total 988 Owned: Consolidated Portfolio Average ~22.4 years 363 Owned: Asset Age 33,287 (1) Brookdale’s weighted average unit ownership percentage is 34.9%. (2) Reflects the retrospective adoption of ASU 2016-15. Refer to page 25 for additional detail. Important Note Regarding Non-GAAP Financial Measures. Adjusted EBITDA, Adjusted Free Cash Flow, Brookdale's Proportionate Share of Adjusted EBITDA of Unconsolidated Ventures and Brookdale’s Proportionate Share of Adjusted Free Cash Flow of Unconsolidated Ventures are financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). See the definitions of such measures under “Definitions” below and important information regarding such measures, including reconciliations to the most comparable GAAP financial measures, under “Non-GAAP Financial Measures” below. 3
Consolidated Portfolio Overview Segment Overview (1) Senior Housing Segments Brookdale CCRCs - Rental Ancillary 13% Services 12% (2) Management Assisted Living Services 2% 67% Senior Housing Revenue Revenue 86% Retirement Centers 20% Brookdale (3) Ancillary Services 4% Management CCRCs - Rental Services 6% Assisted Living 9% 66% Senior Housing 90% Retirement Segment Operating Income Income Segment Operating Centers 25% (1) Brookdale’s five segments are Retirement Centers, Assisted Living, CCRCs-Rental (which combined are referred to as Senior Housing), Brookdale Ancillary Services and Management Services. (2) Percentage of revenue is based on Q2 2018 resident fee and management fee revenue. (3) Percentage of segment operating income is based on Q2 2018 results. 4
Adjusted EBITDA and Adjusted Free Cash Flow (All amounts in 000s) 2017 2018 YoY Q2 Q3 Q4 Q1 Q2 Q2 Resident fee and management fee revenue 956,512 941,030 925,622 924,947 913,040 Less: Facility operating expense (1) (642,405) (650,654) (634,554) (632,325) (627,076) Combined Segment Operating Income 314,107 290,376 291,068 292,622 285,964 (9.0)% Less: G&A expenses (including non-cash stock-based compensation expense) (67,090) (63,779) (59,017) (76,710) (60,314) Add: Non-cash stock-based compensation expense 7,246 7,527 5,285 8,406 6,269 Less: Transaction costs (3,339) (1,992) (9,649) (4,725) (2,593) Less: Cash operating lease payments (see page 16) (90,599) (90,303) (89,571) (89,593) (87,115) Adjusted EBITDA 160,325 141,829 138,116 130,000 142,211 (11.3)% Less: Interest expense, net (69,076) (71,157) (67,054) (62,292) (65,352) Less: Lease financing debt amortization (14,382) (14,626) (18,650) (21,114) (18,787) Add: Proceeds from entrance fees, net of refunds and amortization 541 (547) 811 831 (218) Add/Less: Other (2) 2,034 1,866 7,511 (204) 2,189 Less: Non-Development Capital Expenditures, net (see page 15) (38,832) (41,005) (71,908) (41,736) (47,681) Adjusted Free Cash Flow $ 40,610 $ 16,360 $ (11,174) $ 5,485 $ 12,362 (69.6)% Brookdale's Proportionate Share of Unconsolidated Ventures Adjusted EBITDA $ 18,219 $ 16,788 $ 17,723 $ 16,749 $ 14,111 (22.5)% Adjusted Free Cash Flow $ 7,920 $ 6,709 $ 12,037 $ 5,824 $ 5,798 (26.8)% Weighted average shares used in computing basic net income (loss) per share 186,212 186,298 186,412 186,880 187,585 (1) Includes hurricane and natural disaster expense of $5.3 million and $1.9 million in Q3 2017 and Q4 2017, respectively. (2) Primarily consists of proceeds from property insurance and cash paid for state income taxes. 5
Adjusted EBITDA and Adjusted Free Cash Flow Distribution ($ in 000s) Q2 2018 Senior Senior Housing Housing Owned Leased Ancillary Management Total Portfolio Portfolio Services Services Other (1) Resident fee and management fee revenue $ 913,040 $ 388,108 $ 398,008 $ 109,853 $ 17,071 $ — Less: Facility operating expense (627,076) (265,066) (262,360) (99,650) — — Combined Segment Operating Income 285,964 123,042 135,648 10,203 17,071 — Less: G&A expenses (including non-cash stock-based compensation expense) (60,314) (14,924) (16,015) (6,990) (13,703) (8,682) Add: Non-cash stock-based compensation expense 6,269 — — — — 6,269 Less: Transaction costs (2,593) — — — — (2,593) Less: Cash operating lease payments (87,115) — (84,914) — — (2,201) Adjusted EBITDA 142,211 108,118 34,719 3,213 3,368 (7,207) Less: Interest expense, net (65,352) (48,967) (19,326) — — 2,941 Less: Lease financing debt amortization (18,787) — (17,764) — — (1,023) Add: Proceeds from entrance fees, net of refunds and amortization (218) — (218) — — — Add/Less: Other 2,189 — — — — 2,189 Less: Non-Development Capital Expenditures, net (47,681) (17,262) (16,192) (5) — (14,222) Adjusted Free Cash Flow $ 12,362 $ 41,889 $ (18,781) $ 3,208 $ 3,368 $ (17,322) (1) Other is primarily comprised of corporate capital expenditures, unallocated G&A expense (primarily organizational restructuring costs), non-cash stock-based compensation and transaction costs. 6
Segment Overview ($ in 000s, except RevPAR and RevPOR) 2017 2018 YoY Q2 Q3 Q4 Q1 Q2 Q2 Total Senior Housing, Brookdale Ancillary and Management Services(1) Revenue $ 956,512 $ 941,030 $ 925,622 $ 924,947 $ 913,040 (4.5)% Combined Segment Operating Income $ 314,107 $ 290,376 $ 291,068 $ 292,622 $ 285,964 (9.0)% Combined Segment Operating Margin 32.8% 30.9% 31.4% 31.6% 31.3% -150 bps Senior Housing (see page 8) Revenue $ 823,880 $ 812,288 $ 792,755 $ 795,746 $ 786,116 (4.6)% Senior Housing Operating Income $ 278,562 $ 262,415 $ 258,904 $ 265,623 $ 258,690 (7.1)% Senior Housing Operating Margin 33.8% 32.3% 32.7% 33.4% 32.9% -90 bps Number of communities (period end) 829 820 794 792 748 Period end number of units 70,263 69,675 66,641 66,355 61,709 Total Average Units 70,833 70,112 67,652 66,557 66,342 RevPAR $ 3,873 $ 3,860 $ 3,904 $ 3,983 $ 3,948 1.9 % Weighted average unit occupancy 84.6% 84.8% 85.2% 84.4% 84.1% -50 bps RevPOR $ 4,580 $ 4,552 $ 4,584 $ 4,717 $ 4,692 2.4 % Brookdale Ancillary Services Segment Revenue $ 110,190 $ 110,604 $ 113,496 $ 110,520 $ 109,853 (0.3)% Segment Operating Income $ 13,103 $ 9,823 $ 12,793 $ 8,318 $ 10,203 -22.1 % Segment Operating Margin 11.9% 8.9% 11.3% 7.5% 9.3% -260 bps Management Services Segment Segment Operating Income (comprised solely of management fees) $ 22,442 $ 18,138 $ 19,371 $ 18,681 $ 17,071 (23.9)% G&A Allocation (see page 14) (14,184) (13,134) (12,979) (14,320) (13,703) 3.4 % Segment Operating Income (Adjusted to Include G&A Allocation) $ 8,258 $ 5,004 $ 6,392 $ 4,361 $ 3,368 (59.2)% Segment Operating Margin (Adjusted to Include G&A Allocation) 36.8% 27.6% 33.0% 23.3% 19.7% -1710 bps Resident fee revenue under management $ 371,381 $ 371,165 $ 386,253 $ 394,392 $ 357,469 Number of communities (period end) 210 211 229 218 240 Period end number of units 31,454 31,527 33,941 32,754 33,176 Total Average Units 31,361 31,417 33,176 33,699 30,422 RevPAR $ 3,876 $ 3,864 $ 3,804 $ 3,821 $ 3,819 (1.5)% Weighted average occupancy 84.8% 84.5% 84.7% 84.2% 83.6% -120 bps RevPOR $ 4,570 $ 4,566 $ 4,483 $ 4,531 $ 4,559 (0.2)% (1) Excludes reimbursed costs on behalf of managed communities of $229,960, $236,958, $240,268, $262,287, and $242,160 (in thousands), respectively. 7
Senior Housing Segments ($ in 000s, except RevPAR and RevPOR) 2017 2018 YoY Retirement Centers Q2 Q3 Q4 Q1 Q2 Q2 Revenue $ 162,248 $ 161,986 $ 157,342 $ 158,397 $ 159,293 (1.8)% Segment Operating Income $ 67,297 $ 65,907 $ 64,211 $ 64,422 $ 65,134 (3.2)% Segment Operating Margin 41.5% 40.7% 40.8% 40.7% 40.9% -60 bps Number of communities (period end) 86 85 84 84 75 Period end number of units 16,071 15,961 15,042 15,045 13,559 Total Average Units 16,071 16,061 15,256 15,045 15,083 RevPAR $ 3,365 $ 3,362 $ 3,438 $ 3,509 $ 3,520 4.6 % Weighted average unit occupancy 87.3% 87.6% 88.1% 87.7% 88.1% 80 bps RevPOR $ 3,857 $ 3,836 $ 3,905 $ 4,004 $ 3,993 3.5 % Assisted Living Revenue $ 547,430 $ 542,227 $ 530,494 $ 532,280 $ 522,027 (4.6)% Segment Operating Income $ 186,921 $ 173,576 $ 171,122 $ 176,538 $ 169,737 (9.2)% Segment Operating Margin 34.1% 32.0% 32.3% 33.2% 32.5% -160 bps Number of communities (period end) 713 705 682 681 645 Period end number of units 46,999 46,520 44,773 44,728 41,266 Total Average Units 47,246 46,858 45,448 44,773 44,403 RevPAR $ 3,862 $ 3,857 $ 3,891 $ 3,963 $ 3,919 1.5 % Weighted average unit occupancy 83.9% 84.2% 84.5% 83.4% 82.9% -100 bps RevPOR $ 4,602 $ 4,582 $ 4,604 $ 4,750 $ 4,725 2.7 % CCRCs - Rental Revenue $ 114,202 $ 108,075 $ 104,919 $ 105,069 $ 104,796 (8.2)% Segment Operating Income $ 24,344 $ 22,932 $ 23,571 $ 24,663 $ 23,819 (2.2)% Segment Operating Margin 21.3% 21.2% 22.5% 23.5% 22.7% 140 bps Number of communities (period end) 30 30 28 27 28 Period end number of units 7,193 7,194 6,826 6,582 6,884 Total Average Units 7,516 7,193 6,948 6,739 6,856 RevPAR $ 5,028 $ 4,989 $ 5,012 $ 5,172 $ 5,079 1.0 % Weighted average unit occupancy 83.0% 82.6% 83.2% 84.1% 83.0% 0 bps RevPOR $ 6,063 $ 6,046 $ 6,027 $ 6,160 $ 6,115 0.9 % 8
Senior Housing: Same Community ($ in 000s, except RevPAR and RevPOR) 2017 (1) 2018 (1) YoY Q2 Q3 Q4 Q1 Q2 Q2 Revenue $ 737,559 $ 733,339 $ 733,441 $ 743,821 $ 735,431 (0.3)% Community Labor Expense (309,463) (314,063) (318,063) (321,478) (322,048) Other facility operating expense (167,195) (169,853) (167,801) (169,567) (169,699) Facility operating expense (2) (476,658) (483,916) (485,864) (491,045) (491,747) Same Community Operating Income $ 260,901 $ 249,423 $ 247,577 $ 252,776 $ 243,684 (6.6)% Same Community Operating Margin 35.4% 34.0% 33.8% 34.0% 33.1% -230 bps Total Average Units 61,799 61,793 61,776 61,774 61,759 RevPAR $ 3,976 $ 3,954 $ 3,956 $ 4,012 $ 3,968 (0.2)% Weighted average unit occupancy 85.3% 85.5% 85.7% 84.8% 84.3% -100 bps RevPOR $ 4,660 $ 4,624 $ 4,614 $ 4,729 $ 4,704 0.9 % Same Community Operating Income/Weighted average unit occupancy Same Community RevPAR 85.7% 85.3% 85.5% 84.8% 84.3% $260,901 $252,776 $249,423 $4,012 $247,577 $3,976 $3,954 $3,956 $3,968 $243,684 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 (1) Reflects 758 communities owned or leased during each full period. (2) Excludes hurricane and natural disaster expense. 9
Senior Housing: Owned Portfolio ($ in 000s, except RevPAR and RevPOR) 2017 2018 YoY Q2 Q3 Q4 Q1 Q2 Q2 Resident fee revenue $ 381,418 $ 376,896 $ 377,586 $ 383,910 $ 388,108 Less: Facility operating expense (257,991) (261,069) (260,799) (260,673) (265,066) Owned Portfolio Operating Income 123,427 115,827 116,787 123,237 123,042 (0.3)% Less: G&A Portfolio Allocation (see page 14) (17,580) (16,326) (15,176) (16,616) (14,924) Owned Portfolio Operating Income (Adjusted to Include G&A Allocation) $ 105,847 $ 99,501 $ 101,611 $ 106,621 $ 108,118 2.1 % Additional Information Interest expense: property level and corporate debt $ (41,352) $ (44,214) $ (46,031) $ (45,727) $ (48,967) Community level capital expenditures, net (see page 15) $ (16,733) $ (17,695) $ (29,356) $ (20,884) $ (17,262) Number of communities (period end) 360 360 360 358 363 Period end number of units 32,765 32,721 32,539 32,417 33,287 Total Average Units 32,921 32,734 32,579 32,549 33,255 RevPAR $ 3,862 $ 3,838 $ 3,863 $ 3,932 $ 3,890 0.7 % Weighted average unit occupancy 83.9% 84.0% 84.9% 84.3% 83.9% 0 bps RevPOR $ 4,603 $ 4,569 $ 4,550 $ 4,664 $ 4,637 0.7 % Interest Coverage (as of June 30, 2018) 2.1x Net Debt (as of June 30, 2018; see page 19) $ 3,575,218 10
Senior Housing: Leased Portfolio ($ in 000s, except RevPAR and RevPOR) 2017 2018 YoY Q2 Q3 Q4 Q1 Q2 Q2 Resident fee revenue $ 442,462 $ 435,392 $ 415,169 $ 411,836 $ 398,008 Less: Facility operating expense (287,327) (288,804) (273,052) (269,450) (262,360) Leased Portfolio Operating Income 155,135 146,588 142,117 142,386 135,648 (12.6)% Less: G&A Portfolio Allocation (see page 14) (20,394) (18,860) (16,686) (17,824) (16,015) Leased Portfolio Operating Income (adjusted to Include G&A Allocation) $ 134,741 $ 127,728 $ 125,431 $ 124,562 $ 119,633 (11.2)% Additional Information Total cash lease payments on leased portfolio (see page 16) $ (129,853) $ (129,523) $ (127,647) $ (127,302) $ (122,004) Proceeds from entrance fees, net of refunds and amortization $ 541 $ (547) $ 811 $ 831 $ (218) Community level capital expenditures, net (see page 15) $ (14,205) $ (15,397) $ (29,119) $ (13,064) $ (16,192) Number of communities (period end) 469 460 434 434 385 Period end number of units 37,498 36,954 34,102 33,938 28,422 Total Average Units 37,912 37,378 35,073 34,008 33,087 RevPAR $ 3,883 $ 3,879 $ 3,942 $ 4,032 $ 4,006 3.2 % Weighted average unit occupancy 85.2% 85.5% 85.5% 84.6% 84.3% -90 bps RevPOR $ 4,557 $ 4,537 $ 4,610 $ 4,766 $ 4,752 4.3 % Lease Coverage (as of June 30, 2018) 0.96x Lease Maturity Information as of June 30, 2018 Trailing twelve Leased communities with Leased communities months ended purchase options without purchase options Total leased communities June 30, 2018 Total Total Total Community average Community average Community average Total cash lease Initial lease maturities count units count units count units payments 2018 42 2,169 33 2,990 75 5,159 $ 74,919 2019 — — 1 69 1 69 751 2020 2 89 36 1,584 38 1,673 16,532 2021 — — 6 593 6 593 9,075 2022 1 114 10 902 11 1,016 12,599 Thereafter 45 2,333 209 17,579 254 19,912 307,579 Total 90 4,705 295 23,717 385 28,422 $ 421,455 11
New Supply (1) Brookdale's Largest 20 Markets - Competitive Summary Brookdale in NIC Markets Competition Within 20 Minute Drive Q2 2018 Total Weighted IL/AL/MC 5 Yr 5 Yr Projected Average Average New 1 Yr Projected Projected Age 75 + Pop Community Units Unit Q2 2018 New Const. Const. Unit Opens % Current Total Pop w/ Inc. $50k + Market Count (IL/AL/MC) Occupancy RevPAR Properties(2) Units(2) of Supply(2) Saturation(3) Growth(4) Growth(4) Chicago, IL 16 2,602 90.1% $ 4,032 12 1,495 5.1% 22.7% 1.5% 24.1% Seattle, WA 25 2,427 86.8% 3,826 1 104 0.5% 28.4% 6.8% 37.3% Los Angeles, CA 20 2,144 84.4% 4,027 2 312 1.3% 10.5% 3.5% 24.0% Phoenix, AZ 22 1,788 89.3% 3,854 17 2,581 12.3% 25.9% 8.8% 43.5% Dallas, TX 22 1,419 84.0% 3,381 10 1,161 4.3% 27.2% 9.2% 39.7% Denver, CO 12 1,400 80.4% 4,342 7 944 7.2% 25.3% 8.5% 42.8% Portland, OR 16 1,377 95.0% 3,930 4 427 2.6% 38.2% 6.5% 46.0% Charlotte, NC 17 1,267 87.9% 4,417 2 341 3.4% 33.9% 8.9% 41.5% Miami, FL 8 1,118 82.6% 3,311 8 1,286 8.1% 18.1% 6.0% 36.5% Orlando, FL 13 1,079 87.6% 3,404 2 269 3.6% 22.3% 9.1% 46.3% Austin, TX 10 1,043 85.2% 5,355 8 1,328 17.9% 25.4% 13.3% 47.0% Jacksonville, FL 9 1,011 81.5% 3,342 3 628 12.0% 26.1% 6.9% 45.4% San Antonio, TX 12 971 74.3% 2,950 — — —% 23.3% 8.4% 35.9% Detroit, MI 10 955 84.4% 3,207 8 727 4.2% 28.7% 1.5% 31.0% Riverside, CA 9 903 82.1% 3,354 2 260 2.5% 15.3% 5.0% 24.6% Atlanta, GA 9 858 89.5% 3,430 9 1,382 12.5% 32.6% 8.0% 46.7% Tampa, FL 8 852 73.6% 2,829 2 323 2.6% 23.5% 6.1% 40.9% Santa Rosa, CA 6 841 80.8% 4,314 — — —% 18.7% 3.6% 31.4% New York, NY 8 840 85.5% 6,476 5 452 4.0% 8.9% 3.6% 22.7% Cleveland, OH 7 838 80.2% 4,361 4 363 4.2% 22.4% -0.1% 31.2% Top 20 Markets 259 25,733 85.1% $ 3,914 106 14,383 5.4% 23.9% 6.2% 36.9% All Other NIC Markets 306 24,172 81.7% $ 4,021 91 9,875 2.5% 24.6% 4.4% 32.2% (1) Data reflected is for the consolidated senior housing portfolio only. (2) NIC MAP Supply Set, Q2 2018 "New Construction" properties with projected open dates through Q2 2019. (3) Saturation is equal to units per population Age 75+ with income 50k+. (4) Percentage changes are based on data from ESRI for 2017-2022. 12
Ancillary Services ($ in 000s) 2017 2018 YoY Q2 Q3 Q4 Q1 Q2 Q2 Resident fee revenue Home Health $ 88,561 $ 87,315 $ 89,272 $ 85,490 $ 83,818 Hospice 15,441 17,328 18,248 19,327 19,676 Outpatient Therapy 6,179 5,941 5,937 5,685 6,359 Other ancillary services 9 20 39 18 — Segment resident fee revenue 110,190 110,604 113,496 110,520 109,853 (0.3)% Segment Operating Income 13,103 9,823 12,793 8,318 10,203 (22.1)% Segment Operating Margin 11.9% 8.9% 11.3% 7.5% 9.3% -260 bps Less: G&A Allocation (see page 14) (7,128) (7,091) (7,630) (7,113) (6,990) Segment Operating Income (Adjusted to Include G&A Allocation) $ 5,975 $ 2,732 $ 5,163 $ 1,205 $ 3,213 (46.2)% Segment Operating Margin (Adjusted to Include G&A Allocation) 5.4% 2.5% 4.5% 1.1% 2.9% -250 bps Additional Information Interest expense $ (165) $ (168) $ (132) $ — $ — Community level capital expenditures, net (see page 15) $ (35) $ (277) $ (3) $ (6) $ (5) Home Health average daily census 14,821 14,844 15,335 15,497 15,238 2.8 % Hospice average daily census 1,033 1,169 1,257 1,302 1,337 29.4 % Outpatient Therapy treatment codes 190,618 178,851 179,132 167,170 176,065 (7.6)% 13
G&A Expense & Transaction Costs ($ in 000s) 2017 2018 YoY Q2 Q3 Q4 Q1 Q2 Q2 G&A Expense Allocations(1) Senior Housing Owned Portfolio allocation $ 17,580 $ 16,326 $ 15,176 $ 16,616 $ 14,924 Senior Housing Leased Portfolio allocation 20,394 18,860 16,686 17,824 16,015 Ancillary Services allocation 7,128 7,091 7,630 7,113 6,990 Management Services allocation 14,184 13,134 12,979 14,320 13,703 Total allocations(1) 59,286 55,411 52,471 55,873 51,632 Non-cash stock-based compensation expense 7,246 7,527 5,285 8,406 6,269 Organizational Restructuring and Strategic Project Costs 558 841 1,261 12,431 2,413 General and administrative expense 67,090 63,779 59,017 76,710 60,314 -10.1% Transaction Costs 3,339 1,992 9,649 4,725 2,593 General and administrative expense and transaction costs $ 70,429 $ 65,771 $ 68,666 $ 81,435 $ 62,907 -10.7% Allocated G&A Expense as a Percentage of Resident Fee Revenue Resident fee revenue $ 934,070 $ 922,892 $ 906,251 $ 906,266 $ 895,969 Senior Housing Owned Portfolio allocation 17,580 16,326 15,176 16,616 14,924 Senior Housing Leased Portfolio allocation 20,394 18,860 16,686 17,824 16,015 Ancillary Services allocation 7,128 7,091 7,630 7,113 6,990 Non-cash stock-based compensation expense 7,246 7,527 5,285 8,406 6,269 Total $ 52,348 $ 49,804 $ 44,777 $ 49,959 $ 44,198 As a % of resident fee revenue 5.6% 5.4% 4.9% 5.5% 4.9% (1) G&A allocations are calculated using a methodology which the Company believes best matches the type of general and administrative cost with the community, segment, or portfolio. Some of the allocations are based on direct utilization and some are based on formulas such as unit proportion. G&A allocations presented herein exclude non-cash stock-based compensation expense and transaction, organizational restructuring, and strategic project costs. 14
Capital Expenditures ($ in 000s, except for Community level capital expenditures per unit) 2017 2018 YoY Q2 Q3 Q4 Q1 Q2 Q2 Community level capital expenditures, including allocations Senior Housing Owned Portfolio $ 16,733 $ 17,695 $ 29,356 $ 20,884 $ 17,262 Senior Housing Leased Portfolio 14,205 15,397 29,119 13,064 16,192 Ancillary Services 35 277 3 6 5 Community level capital expenditures, net 30,973 33,369 58,478 33,954 33,459 8.0% Corporate capital expenditures 7,859 7,636 13,430 7,782 14,222 81.0% Non-Development Capital Expenditures, net 38,832 41,005 71,908 41,736 47,681 22.8% Development Capital Expenditures, net 2,807 3,336 1,616 5,381 8,009 NM Total capital expenditures, net $ 41,639 $ 44,341 $ 73,524 $ 47,117 $ 55,690 33.7% Community level capital expenditures, net, per unit $ 437 $ 476 $ 864 $ 510 $ 504 15.3% Reconciliation to Additions to PP&E Total capital expenditures, net $ 41,639 $ 44,341 $ 73,524 $ 47,117 $ 55,690 Add: Total lessor reimbursements 5,545 4,379 8,218 2,379 80 Add: Change in related payables (6,542) 1,754 (7,899) 17,096 (1,904) Additions to property, plant and equipment and leasehold intangibles, net $ 40,642 $ 50,474 $ 73,843 $ 66,592 $ 53,866 15
Cash Lease Payments ($ in 000s) 2017 2018 YoY Q2 Q3 Q4 Q1 Q2 Q2 Operating Leases Facility lease expense $ 84,690 $ 84,437 $ 81,787 $ 80,400 $ 81,960 Less: Straight-line (income) expense, net 3,119 3,078 5,109 6,165 2,430 Less: Amortization of (above) below market lease, net 1,697 1,697 1,586 1,938 1,636 Add: Amortization of deferred gain 1,093 1,091 1,089 1,090 1,089 Cash operating lease payments(1) $ 90,599 $ 90,303 $ 89,571 $ 89,593 $ 87,115 (3.8)% Capital and Financing Leases Interest expense: capital and financing lease obligations $ 32,228 $ 31,999 $ 26,578 $ 22,931 $ 22,389 Less: Non-cash interest expense on financing lease obligations (3,865) (3,939) (3,784) (3,383) (3,063) Add: Lease financing debt amortization 14,382 14,626 18,650 21,114 18,787 Cash capital and financing lease payments $ 42,745 $ 42,686 $ 41,444 $ 40,662 $ 38,113 (10.8)% Total cash lease payments(1) $ 133,344 $ 132,989 $ 131,015 $ 130,255 $ 125,228 (6.1)% Interest Expense Reconciliation to Income Statement Interest expense: capital and financing lease obligations $ 32,228 $ 31,999 $ 26,578 $ 22,931 $ 22,389 Less: Non-cash interest expense on financing lease obligations (3,865) (3,939) (3,784) (3,383) (3,063) Interest expense: capital and financing lease obligations - cash payments 28,363 28,060 22,794 19,548 19,326 Less: Interest income (804) (1,285) (1,903) (2,983) (2,941) Interest expense: debt 41,517 44,382 46,163 45,727 48,967 Interest expense, net 69,076 71,157 67,054 62,292 65,352 Add: Amortization of deferred financing costs and debt premium (discount) 2,692 3,544 3,854 3,956 2,328 Add: Change in fair value of derivatives 39 74 15 (74) 217 Add: Non-cash interest expense on financing lease obligations 3,865 3,939 3,784 3,383 3,063 Add: Interest income 804 1,285 1,903 2,983 2,941 Interest expense per income statement $ 76,476 $ 79,999 $ 76,610 $ 72,540 $ 73,901 (1) Includes cash lease payments of $3,491, $3,466, $3,368, $2,953 and $3,224 (in thousands), respectively, for leases of corporate offices and information technology systems and equipment. 16
Unconsolidated Ventures Twelve Months Ended June 30, ($ in 000s) Q2 2018 2018 Total CCRC Venture Other Ventures Total Resident fee revenue $ 236,023 $ 104,403 $ 131,620 $ 1,232,137 Less: Facility operating expenses (179,496) (78,573) (100,923) (890,127) Less: G&A expenses including management fees (11,391) (5,283) (6,108) (64,233) Less: Facility lease expense 441 — 441 557 Adjusted EBITDA of Unconsolidated Ventures $ 45,577 $ 20,547 $ 25,030 $ 278,334 Less: Interest expense, net (21,726) (5,838) (15,888) (114,979) Add: Proceeds from entrance fees, net of refunds and amortization 6,374 6,389 (15) 29,672 Less: Other 758 (4) 762 2,004 Less: Community level capital expenditures, net (18,867) (10,060) (8,807) (98,783) Adjusted Free Cash Flow of Unconsolidated Ventures $ 12,116 $ 11,034 $ 1,082 $ 96,248 Statistics Brookdale's weighted average unit ownership percentage 34.9% 51.0% 15.1% 34.9% Non-recourse debt principal of unconsolidated ventures as of June 30, 2018 $ 1,357,982 $ 625,337 $ 732,645 $ 1,357,982 Number of communities (period end) 80 16 64 80 Total average units 18,452 7,260 11,192 25,242 Weighted average unit occupancy 82.6% 85.8% 80.6% 84.0% RevPOR $ 4,964 $ 5,113 $ 4,861 $ 4,719 Brookdale's Proportionate Share of: Adjusted EBITDA of Unconsolidated Ventures $ 14,111 $ 10,479 $ 3,632 $ 65,371 Adjusted Free Cash Flow of Unconsolidated Ventures $ 5,798 $ 5,627 $ 171 $ 30,368 Debt principal of unconsolidated ventures as of June 30, 2018 $ 429,890 $ 318,922 $ 110,968 $ 429,890 17
Debt & Liquidity Debt Structure(1) As of June 30, 2018 ($ in 000s) Weighted Rate Fixed rate debt 5.13% Variable rate debt (2) 4.26% Total debt and line of credit 4.82% Balance(1) $1,356,382 $533,557 $2,365,745 $822,825 Total debt $ 3,722,126 Fixed rate debt Total variable rate debt Variable rate debt with interest rate caps Variable rate debt- unhedged Total Liquidity ($ in 000s) $899,435 $1,000,000 $872,634 $868,228 $800,000 $546,006 $600,000 $537,930 $514,443 $510,061 $487,005 $181,307 $400,000 $146,628 $200,000 $364,699 $361,505 $358,191 $358,167 $340,377 $0 06/30/2017 09/30/2017 12/31/2017 03/31/2017 06/30/2018 (3) Line of credit available to draw Cash and cash equivalents and marketable securities Total liquidity (available to draw + cash) (1) Includes the carrying value of mortgage debt, line of credit and other notes payable, but excludes capital and financing lease obligations. (2) Pertaining to variable rate debt, reflects a) market rates as of June 30, 2018 and b) applicable cap rates for hedged debt. (3) The Company paid off its $316.3 million convertible senior notes that matured in June 2018. 18
Debt Maturity & Leverage Debt Maturity Schedule Weighted Rate ($ in 000s) Debt(1) $2,100,000 2018 4.50% 2019 6.38% 2020 5.39% $1,400,000 2021 5.88% 2022 4.35% $2,094,625 Thereafter 4.37% $700,000 Total 4.82% Total Balance $484,365 $324,313 $334,540 $340,563 Debt(1) $ 3,722,126 $0 $143,720 2018(1) 2019 2020 2021 2022 Thereafter (1) Includes mortgage debt and other notes payable, but excludes capital and financing leases and line of (1) Debt credit and recurring principal amortization. (2) Leverage ratios include results of operations of communities disposed of through sale or lease Leverage Ratios(2) ($ in 000s) termination through the disposition date. Annualized (3) Amounts exclude transaction, organizational Twelve months ended June 30, 2018 Leverage restructuring, and strategic project costs of $35.9 million. Adjusted EBITDAR (3) (A) $ 944,643 Less: Cash operating lease payments (see page 16) (356,582) Adjusted EBITDA (3) 588,061 Important Note Regarding Non-GAAP Financial Less: Cash capital and financing lease payments (see page 16) (162,905) Measures. Adjusted EBITDAR, Adjusted EBITDA and Adjusted EBITDA after cash capital and financing lease Adjusted EBITDA (3) after cash capital and financing lease payments (B) 425,156 payments (in each case excluding transaction, As of June 30, 2018 organizational restructuring and strategic project costs), Net Debt, and Adjusted Net Debt are financial measures (1) Debt 3,722,126 that are not calculated in accordance with GAAP. See the Line of credit — definitions of such measures under “Definitions” below Less: Cash and cash equivalents (126,637) and important information regarding such measures, Less: Marketable securities (19,991) including reconciliations to the most comparable GAAP Less: Cash and restricted cash held as collateral against existing debt (280) financial measures, under “Non-GAAP Financial Measures” below. Net Debt (C) 3,575,218 8.4x (C/B) Plus: Cash operating and capital and financing lease payments (see page 16) multiplied by 8 4,155,896 Adjusted Net Debt (D) $ 7,731,114 8.2x (D/A) 19
Net Asset Value Elements ($ in 000s and are for the trailing twelve months ending June 30, 2018 unless otherwise noted) Senior Housing: Owned Portfolio(1) Owned Portfolio Operating Income $ 478,893 Less: G&A Portfolio Allocation(2) (63,042) Owned Portfolio Operating Income (Adjusted to Include G&A Allocation) $ 415,851 Net Debt as of June 30, 2018 (see page 19) $ 3,575,218 Total Average Units 32,779 Senior Housing: Leased Portfolio(1) Leased Portfolio Operating Income (Adjusted to Include G&A Allocation)(2) $ 497,354 Total cash lease payments on leased portfolio (see page 16) $ (506,476) Proceeds from entrance fees, net of refunds and amortization $ 877 Total Average Units 34,887 Ancillary Services Segment Operating Income (Adjusted to Include G&A Allocation)(2) $ 12,313 Management Services Segment Operating Income (Adjusted to Include G&A Allocation)(2) $ 19,125 Unconsolidated Ventures Brookdale's Proportionate Share of Adjusted EBITDA $ 65,371 Brookdale's Proportionate Share of non-recourse debt principal as of June 30, 2018 $ 429,890 Total Average Units 25,242 Brookdale's weighted average unit ownership percentage 34.9% Shares outstanding (excluding 6,145,795 unvested restricted shares) as of June 30, 2018 187,652,092 (1) Includes results of operations of communities disposed through sale or lease termination through the disposal date. (2) See page 14. G&A allocations presented on this page exclude non-cash stock-based compensation expense of $27,487 (in thousands) and transaction, organizational restructuring, and strategic project costs of $35,905 (in thousands) for the twelve months ended June 30, 2018. 20
Definitions Adjusted EBITDA is a non-GAAP financial measure that the Company defines as net Combined Segment Operating Income is defined by the Company as resident fee income (loss) before provision (benefit) for income taxes; non-operating (income) and management fee revenue of the Company, less facility operating expenses. expense items; depreciation and amortization (including non-cash impairment Combined Segment Operating Income does not include general and administrative charges); (gain) loss on sale or acquisition of communities (including gain (loss) on expenses, transaction costs or depreciation and amortization. facility lease termination and modification); straight-line lease expense (income), net of amortization of (above) below market rents; amortization of deferred gain; non- Community Labor Expenses is a component of facility operating expense that cash stock-based compensation expense; and change in future service obligation. includes regular and overtime salaries and wages, bonuses, paid-time-off and holiday For purposes of the Company’s leverage ratios presented under “Debt Maturity & wages, payroll taxes, contract labor, employee benefits, and workers compensation. Leverage”, Adjusted EBITDA and Adjusted EBITDA after cash capital and financing Development Capital Expenditures means capital expenditures for community lease payments exclude transaction, organizational restructuring, and strategic expansions and major community redevelopment and repositioning projects, project costs. including the Company’s Program Max initiative, and the development of new communities. Amounts of Development Capital Expenditures are presented net of Adjusted EBITDAR is a non-GAAP financial measure that the Company defines as lessor reimbursements received or anticipated to be received. Adjusted EBITDA before cash operating lease payments. For purposes of the Company’s leverage ratios presented under “Debt Maturity & Leverage”, Adjusted Interest Coverage is calculated based on the trailing-twelve months Owned EBITDAR excludes transaction, organizational restructuring, and strategic project Portfolio Operating Income adjusted for 5% management fee and capital costs. expenditures at $350/unit, divided by the trailing-twelve months property level and corporate debt interest expense. Adjusted Free Cash Flow is a non-GAAP financial measure that the Company defines as net cash provided by (used in) operating activities before: changes in operating Lease Coverage is calculated based on the trailing-twelve months Leased Portfolio assets and liabilities; gain (loss) on facility lease termination and modification; and Operating Income, excluding resident fee revenue and facility operating expense of distributions from unconsolidated ventures from cumulative share of net earnings; communities disposed during such period adjusted for 5% management fee and plus: proceeds from refundable entrance fees, net of refunds; and property insurance capital expenditures at $350/unit, divided by the trailing-twelve months cash lease proceeds; less: lease financing debt amortization and Non-Development Capital payments for both operating leases and capital and financing leases, excluding cash Expenditures (next page). lease payments for leases of communities disposed during such period, corporate offices, and information technology systems and equipment. Adjusted Net Debt is a non-GAAP financial measure that the Company defines as Net Debt, plus cash operating and capital and financing lease payments for the Leased Portfolio Operating Income is defined by the Company as resident fee relevant period multiplied by 8. revenues (excluding Brookdale Ancillary Services segment revenue), less facility operating expenses for the Company’s Senior Housing Leased Portfolio. Leased Brookdale's Proportionate Share of Adjusted EBITDA of Unconsolidated Portfolio Operating Income does not include general and administrative expenses Ventures is a non-GAAP financial measure calculated based on the Company’s equity (unless otherwise noted), transaction costs or depreciation and amortization. ownership percentage and in a manner consistent with the Company’s definition of Adjusted EBITDA for its consolidated entities. The Company’s investments in its Net Debt is a non-GAAP financial measure that the Company defines as the total of unconsolidated ventures are accounted for under the equity method of accounting. its debt (mortgage debt and other notes payable) and the outstanding balance on the line of credit, less unrestricted cash, marketable securities, and cash held as Brookdale’s Proportionate Share of Adjusted Free Cash Flow of Unconsolidated collateral against existing debt. Ventures is a non-GAAP financial measure calculated based on the Company’s equity ownership percentage and in a manner consistent with the Company’s definition of NM means not meaningful and is used in the year-over-year variance column if either Adjusted Free Cash Flow for its consolidated entities. The Company’s investments in or both periods being compared are negative values. its unconsolidated ventures are accounted for under the equity method of accounting and, therefore, the Company’s proportionate share of Adjusted Free Cash Flow of unconsolidated ventures does not represent cash available to the Company’s consolidated business except to the extent it is distributed to the Company. 21
Definitions Non-Development Capital Expenditures is comprised of corporate and Segment Operating Income is defined by the Company as segment revenues less community-level capital expenditures, including those related to maintenance, segment facility operating expenses. Segment Operating Income does not include renovations, upgrades and other major building infrastructure projects for the general and administrative expenses (unless otherwise noted), transaction costs or Company’s communities. Non-Development Capital Expenditures does not include depreciation and amortization. Management Services segment operating income capital expenditures for community expansions and major community excludes revenue for reimbursements for which the Company is the primary obligor redevelopment and repositioning projects, including the Company’s Program Max of costs incurred on behalf of managed communities, and there are no facility initiative, and the development of new communities (i.e., Development Capital operating expenses associated with the Management Services segment. See the Expenditures). Amounts of Non-Development Capital Expenditures are presented Segment Information note to the Company’s consolidated financial statements for net of lessor reimbursements received or anticipated to be received. more information regarding the Company’s segments. Owned Portfolio Operating Income is defined by the Company as resident fee Senior Housing Leased Portfolio represents Brookdale leased communities and revenues (excluding Brookdale Ancillary Services segment revenue), less facility does not include owned, managed – 3rd party, or managed – venture communities. operating expenses for the Company’s Senior Housing Owned Portfolio. Owned Portfolio Operating Income does not include general and administrative expenses Senior Housing Operating Income is defined by the Company as segment revenues (unless otherwise noted), transaction costs or depreciation and amortization. less segment facility operating expenses for the Company’s Retirement Centers, Assisted Living and CCRCs–Rental segments on an aggregate basis. Senior Housing RevPAR, or average monthly senior housing resident fee revenues per available unit, Operating Income does not include general and administrative expenses, is defined by the Company as resident fee revenues, excluding Brookdale Ancillary transaction costs or depreciation and amortization. Services segment revenue and entrance fee amortization, for the corresponding portfolio for the period, divided by the weighted average number of available units Senior Housing Owned Portfolio represents Brookdale owned communities and rd in the corresponding portfolio for the period, divided by the number of months in does not include leased, managed – 3 party, or managed – venture communities. the period. Total Average Units represents the average number of units operated during the RevPOR, or average monthly senior housing resident fee revenues per occupied unit, period. is defined by the Company as resident fee revenues, excluding Brookdale Ancillary Total RevPAR, or average monthly resident fee revenues per available unit, is defined Services segment revenue and entrance fee amortization, for the corresponding by the Company as resident fee revenues, excluding entrance fee amortization, for portfolio for the period, divided by the weighted average number of occupied units the Company for the period, divided by the weighted average number of available in the corresponding portfolio for the period, divided by the number of months in units in the Company’s consolidated portfolio for the period, divided by the number the period. of months in the period. Same Community information reflects historical results from senior housing Transaction, Organizational Restructuring, and Strategic Project Costs are operations for same store communities (utilizing the Company's methodology for general and administrative expenses. Transaction costs include third party costs determining same store communities). directly related to acquisition and disposition activity, community financing and Same Community Operating Income is defined by the Company as resident fee leasing activity, our assessment of options and alternatives to enhance stockholder revenues (excluding Brookdale Ancillary Services segment revenue), less facility value, and stockholder relations advisory matters, and are primarily comprised of operating expenses (excluding hurricane and natural disaster expenses) for the legal, finance, consulting, professional fees and other third party costs. Company's Same Community portfolio. Same Community Operating Income does Organizational restructuring costs include those related to our efforts to reduce not include general and administrative expenses, transaction costs or depreciation general and administrative expenses and our senior leadership changes, including and amortization. severance and retention costs. Strategic project costs include costs associated with certain strategic projects related to refining our strategy, building out enterprise- wide capabilities (including the electronic medical records (“EMR”) roll-out project) and reducing costs and achieving synergies by capitalizing on scale. 22
Appendix Consolidated Statements of Cash Flows 24 Non-GAAP Financial Measures 25 Brookdale West Hartford West Hartford, CT 23
Consolidated Statements of Cash Flows ($ in 000s) 2017 2018 Q2 Q3 Q4 Q1 Q2 Cash Flows from Operating Activities Net income (loss) $ (46,337) $ (413,929) $ 15,021 $ (457,234) $ (165,509) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Debt modification and extinguishment costs 693 11,129 526 35 9 Depreciation and amortization, net 123,579 121,193 119,908 118,211 118,444 Goodwill and asset impairment 1,559 368,551 18,966 430,363 16,103 Equity in (earnings) loss of unconsolidated ventures 4,570 6,722 4,516 4,243 1,324 Distributions from unconsolidated ventures from cumulative share of net earnings 453 473 6,893 408 739 Amortization of deferred gain (1,093) (1,091) (1,089) (1,090) (1,089) Amortization of entrance fees (832) (427) (444) (501) (336) Proceeds from deferred entrance fee revenue 2,025 567 1,193 1,109 289 Deferred income tax provision (benefit) (2,937) (31,704) (63,978) 15,037 (16,028) Straight-line lease (income) expense (3,119) (3,078) (5,109) (6,165) (2,430) Change in fair value of derivatives 39 74 15 (74) 217 Loss (gain) on sale of assets, net 547 233 (20,656) (43,431) (23,322) Loss on facility lease termination and modification, net 6,368 4,938 2,970 — 133,423 Non-cash stock-based compensation expense 7,246 7,527 5,285 8,406 6,269 Non-cash interest expense on financing lease obligations 3,865 3,939 3,784 3,383 3,063 Amortization of (above) below market lease, net (1,697) (1,697) (1,586) (1,938) (1,636) Non-cash management contract termination fee — — — (2,242) (2,834) Other (1,571) (1,730) (4,120) (156) — Changes in operating assets and liabilities: Accounts receivable, net 8,401 (1,192) 1,982 3,488 7,468 Prepaid expenses and other assets, net 27,609 4,344 (1,353) (24,807) 26,685 Trade accounts payable and accrued expenses 3,645 26,523 16,932 (21,370) (36,245) Tenant refundable fees and security deposits 82 (17) (190) (137) (166) Deferred revenue 664 (7,557) (15,430) 12,426 (3,818) Net cash provided by operating activities 133,759 93,791 84,036 37,964 60,620 Cash Flows from Investing Activities Change in lease security deposits and lease acquisition deposits, net 425 (416) (1,702) (2,015) (947) (Purchase) sale of marketable securities, net (29,779) (216,597) (44,811) 118,273 155,000 Additions to property, plant and equipment and leasehold intangibles, net (40,642) (50,474) (73,843) (66,592) (53,866) Acquisition of assets, net of related payables and cash received (400) — (4,796) (27,330) (243,990) Investment in unconsolidated ventures (195) (1,434) (11,417) (8,434) (430) Distributions received from unconsolidated ventures 6,238 3,446 17,544 2,037 7,360 Proceeds from sale of assets, net 2,780 115 35,937 75,060 55,837 Property insurance proceeds 1,571 1,461 4,120 156 — Other 251 15 13 — 1,393 Net cash (used in) provided by investing activities (59,751) (263,884) (78,955) 91,155 (79,643) Cash Flows from Financing Activities Proceeds from debt 58,116 1,200,476 14,158 30,168 249,751 Repayment of debt and capital and financing lease obligations (36,931) (869,499) (95,458) (44,001) (422,266) Proceeds from line of credit — 100,000 — — 200,000 Repayment of line of credit — (100,000) — — (200,000) Payment of financing costs, net of related payables (853) (15,738) (350) (248) (2,943) Proceeds from refundable entrance fees, net of refunds (652) (687) 62 223 (171) Payments for lease termination (552) — — — (10,548) Payments of employee taxes for withheld shares (208) (346) (223) (2,618) (97) Other 455 532 457 372 398 Net cash (used in) provided by financing activities 19,375 314,738 (81,354) (16,104) (185,876) Net (decrease) increase in cash, cash equivalents and restricted cash 93,383 144,645 (76,273) 113,015 (204,899) Cash, cash equivalents and restricted cash at beginning of period 120,791 214,174 358,819 282,546 395,561 Cash, cash equivalents and restricted cash at end of period $ 214,174 $ 358,819 $ 282,546 $ 395,561 $ 190,662 Reflects the retrospective adoption of ASU 2016-15 and 2016-18. Refer to page 25 for additional detail regarding the impact of ASU 2016-15. For ASU 2016-18, the Company identified that the inclusion of the change in restricted cash within the retrospective presentation of the statements of cash flows resulted in a (decrease) increase to the amount of net cash used in investing activities of ($1.1 million), ($4.6 million) and $7.4 million for each of the three months ended June 30, 2017, September 30, 2017 and December 31, 2017, respectively. 24
Non-GAAP Financial Measures This Supplemental Information contains financial measures utilized by management to evaluate the Company’s operating performance and liquidity that are not calculated in accordance with GAAP, including Adjusted EBITDA; the Company's Proportionate Share of Adjusted EBITDA of Unconsolidated Ventures; Adjusted EBITDAR, Adjusted EBITDA and Adjusted EBITDAR after cash lease payments (in each case excluding transaction, organizational restructuring and strategic project costs); Net Debt; Adjusted Net Debt; Adjusted Free Cash Flow; and the Company’s Proportionate Share of Adjusted Free Cash Flow of Unconsolidated Ventures, the Company’s definitions for which are included in the “Definitions” section above. These non-GAAP financial measures should not be considered in isolation from or as superior to or as a substitute for net income (loss), income (loss) from operations, net cash provided by (used in) operating activities, short-term debt, long-term debt, less current portion, current portion of long-term debt, or other financial measures determined in accordance with GAAP. Management uses these non-GAAP financial measures to supplement the Company’s GAAP results to provide a more complete understanding of the factors and trends affecting the business. Investors are urged to review the reconciliations set forth in this section of such non-GAAP financial measures to their most comparable GAAP financial measures and to review the information under “Reconciliation of Non-GAAP Financial Measures” in the Company’s earnings release dated August 6, 2018 for additional information regarding the Company’s use, and the limitations of, the Company’s non- GAAP financial measures. Investors are cautioned that amounts presented in accordance with the Company’s definitions of these non-GAAP measures may not be comparable to similar measures disclosed by other companies, because not all companies calculate such measures in the same manner. The Company adopted ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15") on January 1, 2018 and applied ASU 2016-15 retrospectively for all prior periods presented. Among other things, ASU 2016-15 provides that debt prepayment and extinguishment costs will be classified within financing activities in the statement of cash flows. The Company identified $651, $10,556, and $481 (in thousands) of cash paid for debt modification and extinguishment costs which have been retrospectively classified as cash flows from financing activities, resulting in a corresponding increase to the amount of net cash provided by operating activities for each of the three months ended June 30, 2017, September 30, 2017, and December 31, 2017, respectively. The Company did not change its definition of Adjusted Free Cash Flow upon the adoption of ASU 2016-15. Following the adoption of ASU 2016-15, the amount of Adjusted Free Cash Flow reflects a $651, $10,556, and $481 (in thousands) increase for each the three months ended June 30, 2017, September 30, 2017, and December 31, 2017, respectively. 25
Non-GAAP Financial Measures (Continued) Adjusted EBITDA Reconciliation ($ in 000s) 2017 2018 Q2 Q3 Q4 Q1 Q2 Net income (loss) $ (46,337) $ (413,929) $ 15,021 $ (457,234) $ (165,509) Provision (benefit) for income taxes (2,735) (31,218) (66,590) 15,585 (15,546) Equity in loss of unconsolidated ventures 4,570 6,722 4,516 4,243 1,324 Debt modification and extinguishment costs 693 11,129 526 35 9 Loss (gain) on sale of assets, net 547 233 (20,656) (43,431) (23,322) Other non-operating income (2,236) (2,621) (4,899) (2,586) (5,505) Interest expense 76,476 79,999 76,610 72,540 73,901 Interest income (804) (1,285) (1,903) (2,983) (2,941) Income (loss) from operations 30,174 (350,970) 2,625 (413,831) (137,589) Depreciation and amortization 120,887 117,649 116,054 114,255 116,116 Goodwill and asset impairment 1,559 368,551 18,966 430,363 16,103 Loss on facility lease termination and modification, net 6,368 4,938 2,970 — 146,467 Straight-line lease expense (income) (3,119) (3,078) (5,109) (6,165) (2,430) Amortization of above market lease, net (1,697) (1,697) (1,586) (1,938) (1,636) Amortization of deferred gain (1,093) (1,091) (1,089) (1,090) (1,089) Non-cash stock-based compensation expense 7,246 7,527 5,285 8,406 6,269 Adjusted EBITDA $ 160,325 $ 141,829 $ 138,116 $ 130,000 $ 142,211 26
Non-GAAP Financial Measures (Continued) Adjusted EBITDAR; Adjusted EBITDA; and Adjusted EBITDA after cash capital and financing lease payments Reconciliations (excluding transaction, organizational restructuring, and strategic project costs) ($ in 000s) Twelve Months Ended June 30, 2018 Net income (loss) $ (1,021,651) Benefit for income taxes (97,769) Equity in loss of unconsolidated ventures 16,805 Debt modification and extinguishment costs 11,699 Gain on sale of assets, net (87,176) Other non-operating income (15,611) Interest expense 303,050 Interest income (9,112) Income (loss) from operations (899,765) Depreciation and amortization 464,074 Goodwill and asset impairment 833,983 Loss on facility lease termination and modification, net 154,375 Facility lease expense 328,584 Non-cash stock-based compensation expense 27,487 Transaction, organizational restructuring, and strategic project costs 35,905 Adjusted EBITDAR (excluding Transaction, Organizational Restructuring, and Strategic Project Costs) $ 944,643 $ — Facility lease expense $ (328,584) Straight-line lease expense (income) (16,782) Amortization of above market lease, net (6,857) Amortization of deferred gain (4,359) Adjusted EBITDA (excluding Transaction, Organizational Restructuring, and Strategic Project Costs) $ 588,061 Interest expense: capital and financing lease obligations $ (103,897) Non-cash interest expense on financing lease obligations 14,169 Lease financing debt amortization (73,177) Adjusted EBITDA after cash capital and financing lease payments (excluding Transaction, Organizational Restructuring, and Strategic Project Costs) $ 425,156 27
Non-GAAP Financial Measures (Continued) Net Debt and Adjusted Net Debt Reconciliations ($ in 000s) As of June 30, 2018 Long-term debt (including current portion) $ 3,722,126 Line of credit — Less: cash and cash equivalents (126,637) Less: marketable securities (19,991) Less: cash held as collateral against existing debt (280) Net Debt 3,575,218 Plus: trailing twelve months cash lease payments multiplied by 8 4,155,896 Adjusted Net Debt $ 7,731,114 Adjusted Net Debt to Adjusted EBITDAR (excluding Transaction, Organizational Restructuring, and Strategic Project Costs) 8.2x Net Debt to Adjusted EBITDA after cash capital and financing lease payments (excluding Transaction, Organizational Restructuring, and Strategic Project Costs) 8.4x 28
Non-GAAP Financial Measures (Continued) Adjusted Free Cash Flow Reconciliation ($ in 000s) 2017 2018 Q2 Q3 Q4 Q1 Q2 Net cash provided by operating activities $ 133,759 $ 93,791 $ 84,036 $ 37,964 $ 60,620 Net cash (used in) provided by investing activities (59,751) (263,884) (78,955) 91,155 (79,643) Net cash provided by (used in) financing activities 19,375 314,738 (81,354) (16,104) (185,876) Net increase (decrease) in cash, cash equivalents and restricted cash $ 93,383 $ 144,645 $ (76,273) $ 113,015 $ (204,899) Net cash provided by operating activities $ 133,759 $ 93,791 $ 84,036 $ 37,964 $ 60,620 Changes in operating assets and liabilities (40,401) (22,101) (1,941) 30,400 6,076 Proceeds from refundable entrance fees, net of refunds (652) (687) 62 223 (171) Lease financing debt amortization (14,382) (14,626) (18,650) (21,114) (18,787) Loss on facility lease termination and modification, net — — — — 13,044 Distributions from unconsolidated ventures from cumulative share of net earnings (453) (473) (6,893) (408) (739) Non-development capital expenditures, net (38,832) (41,005) (71,908) (41,736) (47,681) Property insurance proceeds 1,571 1,461 4,120 156 — Adjusted Free Cash Flow $ 40,610 $ 16,360 $ (11,174) $ 5,485 $ 12,362 29
Non-GAAP Financial Measures (Continued) Brookdale's Proportionate Share of Adjusted EBITDA of Unconsolidated Ventures For purposes of this presentation, amounts for each line item represent the aggregate amounts of such line items for all the Company's unconsolidated ventures. ($ in 000s) 2017 2018 TTM Q2 Q3 Q4 Q1 Q2 Q2 2018 Net income (loss) $ (22,935) $ (40,233) $ (26,373) $ (22,662) $ (13,417) $ (102,685) Provision for income taxes 327 323 292 234 209 1,058 Debt modification and extinguishment costs 16 80 21 (17) 135 219 (Gain) loss on sale of assets, net 189 20 11 (1,045) 3,885 2,871 Other non-operating income (837) (617) (590) (903) (967) (3,077) Interest expense 35,304 36,119 34,035 26,827 23,182 120,163 Interest income (750) (783) (804) (757) (809) (3,153) Income (loss) from operations 11,314 (5,091) 6,592 1,677 12,218 15,396 Depreciation and amortization 79,695 79,884 77,189 67,885 33,237 258,195 Goodwill and asset impairment 483 3,911 546 155 118 4,730 Straight-line lease expense (income) 8 4 1 4 4 13 Adjusted EBITDA of unconsolidated ventures $ 91,500 $ 78,708 $ 84,328 $ 69,721 $ 45,577 $ 278,334 Brookdale's weighted average ownership percentage 19.9% 21.3% 21.0% 24.0% 31.0% 23.5% Brookdale's proportionate share of Adjusted EBITDA of unconsolidated ventures $ 18,219 $ 16,788 $ 17,723 $ 16,749 $ 14,111 $ 65,371 30
Non-GAAP Financial Measures (Continued) Brookdale's Proportionate Share of Adjusted Free Cash Flow of Unconsolidated Ventures For purposes of this presentation, amounts for each line item represent the aggregate amounts of such line items for all the Company's unconsolidated ventures. ($ in 000s) 2017 2018 TTM Q2 Q3 Q4 Q1 Q2 Q2 2018 Net cash provided by operating activities $ 85,867 $ 62,054 $ 61,910 $ 50,262 $ 47,510 $ 221,736 Net cash used in investing activities (26,408) (16,476) (26,550) (14,642) (15,746) (73,414) Net cash used in financing activities (37,686) (32,514) (52,315) (23,279) (29,380) (137,488) Net increase (decrease) in cash, cash equivalents and restricted cash $ 21,773 $ 13,064 $ (16,955) $ 12,341 $ 2,384 $ 10,834 Net cash provided by operating activities $ 85,867 $ 62,054 $ 61,910 $ 50,262 $ 47,510 $ 221,736 Changes in operating assets and liabilities (16,559) (5,615) 6,904 1,119 (13,838) (11,430) Proceeds from refundable entrance fees, net of refunds (5,028) (6,309) (1,664) (6,712) (3,323) (18,008) Non-development capital expenditures, net (23,739) (28,659) (31,196) (20,061) (18,867) (98,783) Property insurance proceeds 834 614 584 901 634 2,733 Adjusted Free Cash Flow of Unconsolidated Ventures $ 41,375 $ 22,085 $ 36,538 $ 25,509 $ 12,116 $ 96,248 Brookdale's weighted average ownership percentage 19.1% 30.4% 32.9% 22.8% 47.9% 31.6% Brookdale’s Proportionate Share of Adjusted Free Cash Flow of Unconsolidated Ventures $ 7,920 $ 6,709 $ 12,037 $ 5,824 $ 5,798 $ 30,368 31
Brookdale Senior Living Inc. 111 Westwood Place, Suite 400 Brentwood, TN 37027 (615) 221-2250 www.brookdale.com
