BKD - Earnings call transcript Q1 2018 | Brookdale Senior Living Inc.

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Operator

Good morning. My name is Jamie and I will be your conference operator today. At this time, I would like to welcome everyone to the Brookdale Senior Living First Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Ms. begin may your you conference. MacDonald

Kathy MacDonald

and welcome all you, earnings for good first morning, to like call Living. Senior would I Brookdale of XXXX everyone. quarter Thank you the to

Sparks, Federal our to may today guidance us Chief and including the Financial point like regarding are facts deemed I Baier, laws. out be statements forward-looking are earnings our within as Joining are President and that not the Chief Interim historical and all Cindy statements Executive statements today's meaning and Officer, of made to would be to Securities statements various Officer. Teresa These date today, all our uncertainties. of are risks subject which

on I and be could Relations to X-K on that as performance and supplemental yesterday. full should in materially XX-K earnings GAAP you during and present factors that actual quarterly in results expectations information, statements statements. earnings Forward-looking our filings. which the mind for estimates statement. obligation our release or Safe report statements contained furnished as we brookdale.com earnings Investor statements. including may our this those in untrue the disclaim release in keep you will issued risk any statements the from render factors update not note results to our differ both Brookdale Also Harbor considering Form those and the the to from of and to XX-Q. statements in Form report detailed are Living's the from our I the at expressed was time-to-time risks cautionary on guarantees reports events future differ the measures. non-GAAP financial in such forward-looking Future you Senior we SEC earlier cause on and could our performance. and expressly forward-looking other direct other the we and page Certain well may When filed yesterday are direct SEC found please factors call with release factors expectations we annual materially Actual

important of each most of measure non-GAAP Cindy. definitions and use that, non-GAAP each a the call such measure. of these the the of to With to comparable like measures from over information For measures reconciliation I GAAP regarding company's including turn the would

Lucinda Baier

Thank of all of you, our quarter analysts morning Welcome Kathy. to other call. to our earnings and shareholders, participants. first Good XXXX

quarter lease with our structure. in business we continue near appreciate the strategy, in long meet This our weeks of I our I important morning first annual was earnings few call REIT while further with guidance, and simplifying a Brookdale. Master term assign study to our and already two We for This partners years. announced the to expectations turnaround Ventas our we alternatives. improvements met our One to As reflects results, last your In said partners would top with key progress that manner always, Lease interest several our outcome our plans. that next around agreement term we agreement explore will thoughtful to to discuss relationship ago. our Ventas the the win-win

lease the significant, acquired transitions. have invest in ability will we jointly capital contract, and with concession with from and course continuing HCP rent the the select we six late assets Also last collaboratively We the year work receive continue of communities lease to over have remove along the appropriate announced to expenditures.

in late for with in I know you two CEO strategy our to announced am significant consistent now the work made While want still REIT seat there just we and do is we February. work to with our is have progress are months our that been over more continuing and what I partners.

remains top three turnaround operational on the priorities. Our priority strategic based

First, attract, best develop and engage, retain associates. the

personalized which will trust and for earn quality high family third our care providing resident and turn and long-term drive by shareholders. lead in endorsement priority us returns to valued service, attractive Second, to our

Let me with our associates. first start

to we geographic have Therefore that our locally. team to the and our support it's we've provide our Xst, leaderships. sales in goal into is teams right our Our April community critical Effective appropriate win communities leadership operations that three organized regions.

span oversee regions so District of for our we districts of average would This a designed Director improves average. our an Operations XX Average XX:X an Within from Director that Operations the District a of communities. of to XX:X these control

organization. the realignment our planned During of April, announced also sales we

towards the leadership sales actions moving to sales and support, leadership our these that a of operation. will enable ensure both reporting leaders. above will We leaders field force dedicated believe community best rather the mentoring than to level to our and community for coaching sales are report We

building some by of the am executive outs. CEO move-ins I given community the culture. allocating implemented been move driving Our directors performance, excited have community. reduced creative of ideas to to their improve resources within be empowered and This and controllable community guardrails the the includes

ability decisions are a Our locally by it's starting more energized the to difference. community make make and leaders to

team have going communities company. that are We dedicated new to to through including transition oversee a significant created transformations,

Accordingly, priority beyond most operate. what As to team own we communities have to they communities through matters this have progress communities. their the these will these transition, we created on continue for focus or incremental

track are our the we are progress. initiatives with making We around community our right and on leadership

from our we better Health In our Wellness X% improved focus XXXX, are Our rates retention. efforts. year-over-year resulting Directors The to and basis. a quarter and investment on down our quarter Directors in continue XXXX, first Executive retention so rate in slightly fourth were

sales we first This graph investing retention deck directors also baseline be community. while starting in show good somewhat to progress. a expanding voluntary will turnover. at similar average a sales of but turnover We've volatile Sales director the investor for lower year-over-year are our percentages of includes To to XX curriculum, for seeing and we we trend be our expect in month due our nature rolling voluntary Brookdale rate, saw the sale are improvement. the School added position, We quarter retention Director transparent,

selectively the other associates in benefit. positions, community expanding community three we but in are In the organizations, it's top the see investment addition investments to in our our early too to

Given attracting thing of the best our people importance important the most is associates. the in strategy,

result it take sometimes a As we longer us than will like. to recruit might

her both To succession a Senior operations. are I cares to share. recently she Bill this and that industry believe preeminent people. has this Officer will external in Brookdale consistently strong Brookdale. business reenergize experience our provide it also our make support joined have chance important the program experience up With experienced Director before joined and built Living while Bill for Teresa's the which Financial have is rejoined Two as that recruiting will our our We attracting in to his a that both culture also to about I In the Bill for highly Executive implementing so call. a is we business a bring Sheriff resource accomplishments recapturing we have achievement leaders will healthcare and a you'll we headquarters, more as critical lead our of build search and getting begin reduced is Sparks from to time awards strength deeply a Chief is we and news in industry each robust strategy for Senior plan continue we the select our to and quickly corporate position I Interim speed developing the and am Consultant. success. pleased excited has the fit. should company a a are Brookdale our great Brookdale foundation, time. a and insights lifetime positions to how have and hear best received we on business. he while leader culture CFO. Teresa Living. that best to about working to of have wealth vacancy together in Argentum her that which ensuring turnaround complete its during the permanent about ASHA He internal people has strong natural from our am at by

that Turning care to believe RevPAR. residents priority, improve we will strategic providing our quality our second to

especially was widely covered work this difficult extremely flu the seniors. from media season, As by an

death provide is includes concern is programs, more visits will industry they While correlate specific in we first XXXX in have appropriately our protocols illnesses control containment the deaths move-ins quarter Teresa compared the the This in a temporarily infection stopping flu and paramount, processes, up vaccination were to residents. season. is section. you when if there rates to and our can't and to occur, leader, new protect leading a community. of robust details Brookdale Taking directly residents flu normal of financial more a care because

resident teams maintain the on during we're leads the efforts. our control, Our now sales homes what work do me focus example which to time, we an initial This diligently marketing is to assessment. this to we of lease and and how future

we week Over months, is decision of funds I joint marketing sharing days balance the contact team and the increasing that improve the speed look is to right will hours implemented to seven this effort lease. the can sales into forward between cost. example they After increasing on lead what a progress. and our would coordinated our One this so without the matters expect better operation most. think to overall capacity focus as past and pursue their few center, tangible capture our in extend redistribute finds We I

in last quarter's forward. committed to will our internal investor associate We indicators follow-up we in consistently based resident be call, operational included shared As this to our have metrics. metrics that a on I leading earnings going providing deck

to two of the are shows This that sales we in It to in quarter the investor operations statistics first statistics. in our added improvement first leads four sales and the leads our quarter team. visit are related the and which seeing deck XXXX, we

move of severe is move-ins basis, in generate and statistic a move-ins. first was controllable of reduce drivers a occupancy outs, significant XXXX controllable final to quarter exclude to declines move positive. statistic more first outs. like we driver were move-ins recognized to In that that I'll third were term outs Our some The fewer death. the is summary, is now on pleased Despite move event we quarter flu the the death. which season, year-over-year turn but controllable

the to benefits can scale. capturing Our we goal of is the as close make while to customer, as decisions

operations that owned as Our Directors they empowering is so it. Executive the of our they with local decision care more can team take leadership if community rights

our succeed. to need resources our have every are period they For what in example, that look committed I'm contact during to enhance spending time they month communities communities at to our ways to time focus. low ensure reallocating to facilities

residents. our I've a based is be to to differentiating on visits, starting all evidence strategic The locally is of quality, actively team with our my winning culture Brookdale Brookdale revitalized three of pursuing on seen personalized During priorities. caring, that our focus service

me highlights our let So sales. you asset our the shareholders. real to value creating strategy provide third opportunistically priority, estate on I from for of update want the

As to performing high the communities. previously approximately announced our assets, while grouping these intention majority a assets are of portfolio are optimization part several of XX-owned sell

as letter XX for We are already towards pleased are that we these agreement. and working of we of of intent a the approximately definitive assets April, have

it we possible. Given but take quickly that the expect reasonably as the large as transaction close while will size a we to of the move portfolio, will

financial on are our high guidance. remarks working close the I are with soon. comments receive marketing and started quarter on been and a our have few been also able report conclude to to pleased We to On and same assets also the and to first the operating am sequentially we our a like first pleased bids XXXX period would store income. I that accrue results positive flow to quarter. have cash that able basis adjusted revenue am that we flow pleased the in I sequential cash we've free improve performing

were reflect down first XXXX portfolios. Our financial significant be to for and rate above investments and continue From to make highest to a when a owned leased higher changes standpoint, openings intentional retention. to death with industry in season the Labor new first declines, and and occupancy due expenses flu the well-publicized results competitive our quarter compared to higher our quarter impacting is asset both of both themes improve intense revenue growth. seasonal of occupancy rate industry

to let to call earnings with few will labor improvement. XXXX I of business provide term in pressure storm be I challenge with call, on midst was our So In the three the senior a said of the a Teresa and perfect last our detail. continue market, industry escalators. points, and highlighted lease pressures, longer that me to more before housing turn guidance highlights a this, over our I provide XXXX tight

industry-wide starts the point resulted may Competitive lower create signs absorption industry will start season that growing circumstances continue some from part be lower appropriately the and of new openings new throughout recent will pressure reported, of XXXX deliveries to we NIC they results ability the First, could control that to make difficult. decline to year. Higher said, starting watch and quarters. That beginning a and when trend from. intense coming respond debt over competition our we'll our to and early occur. flu construction is occupancy to occupancy own any be refine continue to we business openings there carefully in new

in lease better to is for metrics a are helped appropriately tight agreement there good could about committed outcome first lease to February. new a XXXX invest labor operational associates. Ventas improving have market. us new the years Second, show The the us The in I This making position XXXX prepare drive enable our in us about that the set improvement. shared the and feel supply. to we're less retention. will will was in three grow The occupancy had We've better investments rent to master We these when be in higher investments escalators. I and success. point to credit especially has already final

both As we result, good communities' is companies. this improve for these

of have of Finally, to that but us. to amount us Brookdale where I we and work significant positive right making see is are the I investments ahead not continue be. believe operational we starting progress, to a want

only first the We this inning of turnaround. in are

We the turn wave the are now in the Teresa. ready are to silver control, over take we demographics we advantage industry. housing all call what can that and the fixing senior of term so to of I'll positive long

Teresa Sparks

of you, Brookdale be innings pleasure a turnaround early strategy. Thank in of a Cindy. It part the to is our

yearend challenging on discussed XXXX the year. a be call As will

it share exciting our an is to locally. However, time associates passion in to win

leadership the on must mission three focus minded mission the incredibly team topics. with respect of achieve an an remarks My understanding to margin. will the have We with balance primary we and today

First, given our progress. an strategy, optimization the update importance of portfolio provide I'll on our

quarter highlight will I our financial XXXX Second, first results.

will expand of the comments communities cash outlook are positioning the optimization to to simplifying for we of the our remainder portfolio the year. structure improve while this Cindy's and Lastly, mid-term over perspective, on our our delivering by related I flow. expect initiative a our on From we lease improving

to our may As partnerships. we lease on remember, for preference In general, continue assets. as the year our portfolio underperformed to now XXXX you full our efforts is focus REIT improving own our our

agreement of it the As In we acquired to interest the remaining communities unconsolidated transaction, the venture. agreements. continue XXXX, terminated and sale quarter to we the first the of previously announced RIDEA relates on community. our We XX completed in progress management's for HCP one make we

the remaining the in we acquisition While from of HCP. not included quarter, during five the completed April, communities

of XXXX. throughout expect balance the We terminations remaining net management agreement triple occur lease to the

remain regulatory $XX.X from held for generated the In joint our approximately asset However, the million in the and total, quarter, have has subject properties sale acquired of Exiting as RIDEA proceeds $XXX they conditions we six and of classified we million. interest purchase communities approvals. a of XX to sale. HCP for transaction the ventures various price unconsolidated closing

of yet they This the XXX optimization resulted first have portfolio assets because activity XXXX and completed less not have that operating letter majority of process beginning XXXX adjusted assets XXXX is the XXXX. in a closed yet transactions revenue amounts assets million summary, of to and of tool disposed provides less and a a are website recent approximately our of provided of have actively approximate marketed. XX or held portfolio XX, XXXX in are of results. sale In remaining XXXX in our in and presentation most $XX.X of intent forma assets February million under as activity through free the slide approximate as sale adjusted been This not contract. of communities view in in pro of as being reduction revenue helpful impact classified investor $X.X the on group since resident a under addition, the we in reflecting XX. first these the in full the the improvement XX, Xst, transactions resulting million terminations. quarter part assets had prior In are EBITDA since December sales a After under of understanding we the lease cash basis. and this year flow. in $XXX.X May we million These if XXXX, announced year the our through expenses facility expenses on not on posted for slide $XX.X the Since for Slide quarter are XX through are in beginning compared on are and contract for of a

Turning quarter to results. XXXX the first financial

results with expectations. generally our in Our were line

the results in compared the changes and our portfolios. owned asset first of quarter leased first our XXXX significant discussed quarter financial both to As when reflect in

view provided a Investor and our quarter XX. forma also of We presentation first XXXX on pro results slide our

of to openings. in quarter, was total disposal the the first terminations XXXX. and This the and reflects to lease quarter of billion excels communities flu compared $X.XX decrease X.X% industry and the through billion revenue season headwinds For related competitive $X.XX reflects the new

Ancillary down housing details drill our will Services. the I into senior and we provide quarter, then I'll about As discuss

year. housing occupancy. the is the portfolio of points some consolidated declined the X%, growth RevPOR impacting our initiatives business basis in community comparability. to Same is XXX This to which the prior decline same-community compared communities, basis reported revenues XX optimization analyze to to For way due use mitigated senior best the points was results.

first the dropped As a in reminder occupancy quarter. seasonally

weather several decline the a East impacting exacerbated was inclement events nationwide by lengthy However, this flu season. severe and Coast and year's

closed in last first same XX% the days our year. quarter XXXX, communities moves-ins and For quarter the visits of approximately for were more new

As season. rates quarter The difference mentioned, XXXX, were XXXX, representative Cindy quarter flu in occupancy. basis of of normalized of the is an in which death the first of death XX point up reduction compared first to represents approximate a

average occupancy. The the data basis a XX.X%, as compared quarter of land same-community of communities based sequentially the a XX NIC to quarter basis living occupancy a data by weight compared XX The our points of the XXXX point reported in on points first on quarter the decline fourth result, occupancy weighted and XXXX If decline basis mix housing of lower senior at basis basis a NIC XX in sequential occupancy is XXXX. is are XXX decline portfolio As versus comparable from first communities, points XX most recent of and XX% we we points lower XX%. assisted our to our based reporting. mix was the

of X% to in prior basis rate a growth fourth incentives a RevPOR the quarter from increases RevPOR which place over beginning same competitive year. the XXXX resident reflects X.X% first Sequentially, manage increased occupancy on Our environment. the the the from quarter only use community largely our through of place to at year due of took

quarter expenses same-community consolidated increased X.X% first year-over-year. operating XXXX Our housing senior

wage industry. compensation in to to drop the tight pressure labor expected, recruit market, increased improve and our more best our the benefits wages, along cost. retain This investments with As the to salaries largest due in was plus associates industry labor and robust ability a above Total intentional reflects X.X%.

results X.X% snow We detail quarter $X.X later full the quarter fourth to with operating including be and will caused and this in I year weather Cindy increased X%. expectations call, discussed our an The in the this increase risks discuss for of million in normal more remarks. Other X.X% labor line year On range year-over-year. inclement costs resulting a our year-over-year in our my removal, range believe will during than higher the in repairs outlook expenses maintenance, increase. with

of had favorable that did million of the $X.X In insurance adjustment a we not this first addition, during reoccur quarter year. XXXX,

our revenue increased lower increased the result leadership key income of communities, with and a in operating our decreased investments XX.X%. same-community expenses, along operating at As our

$X.X earned million segment quarter. the Moving of to Ancillary Services. operating during income We

revenue basis. our Our be continues on the a was home health. primarily to health a The first housing, and on challenge senior business quarter is decline quarter. million decreased or expectations. below X.X% pressure by sector there during Similar $X.X year-over-year The to home was driven health home

cost addition expense rates. Medicare margin. labor from reimbursement quarter to operating focus as such perspective, operating a labor improve our reducing continued we impact first In From negative on use slight the the reflected to higher lower contract solutions an of

the hospice On basis. the year-over-year on XX% during revenue quarter, by increased positive side, a

of and made $X.X office. million underway as a February Cindy includes call, restructuring on eliminating $XX.X was areas The reminder administrative and retention in These includes focus we based operating the we of expense. This implementation stock economies have a which cost progress. are of key mentioned, of included This announced and scale expense G&A severance for As our general company's division and $XX.X XXXX. consolidating our organizational compensation quarter outside million our significant of first of additional the on projects initiatives cut. back non-cash focusing million well

of costs quarter and X.X% separately statement restructuring to Excluding cost generated reported of EBITDA project The the organizational in transaction We strategic quarter resulted adjusted year EBITDA XXXX in approximately less costs along project sale of on compared cost $X.X the first G&A. of through terminations year-over-year as million, basis. first million. cost million of $XXX.X lease of and in transaction strategic have the on the $XXX included prior EBITDA with a been excluding adjusted would This $X.X $XX.X million income community and quarter, XXXX $XX.X year. disposal in along the these prior excluding as adjusted G&A million below the with

less Living reduction value. fair capitalization. impairment we announcements and We that of During which non-cash than market was primarily our significant The estimated analysis an price impairment segment. relates a performed $XXX.X Assisted the the carrying goodwill as in market charges recorded value approximately of the quarter, revealed our the in to result stock

segment. goodwill XX, no March carrying related Assistant books we XXXX, on our Living the are to longer of As

adjusted quarter flow Our million for $X.X cash the free was XXXX. first

EBITDA the due are capital factors investments lower addition of to adjusted late due lease year-over-year and increase payments cash In community changes of the terminations. to impact impacting to planned

segment share proportionate and million the prior first interest free senior unconsolidated quarter and of housing XXXX in as the cash from with operating year previously activity. flow of discussed I new two briefly Our along want occupancy technical of disposition expense higher the consistent within the lower changes, to than with of adjusted with $X.X with accounting of cash presentation on certain lower transactions accounting first announcement adoption highlight the our of flows. the statement

now costs extinguishment activity. We financing of repayment as will instead classify debt activities operating

flows For financing XX, was the $XX.X have XXXX year million, classified cash ended which we as retrospectively activities. December from

results. As with the will is cash the million be XX, accounting of $XX.X free adjusted of The XXXX to by free year of amount change to and $XX.X applied future for the increased the was of flow be million ended most with first immaterial application the significant December cash presentations flow. align third to a XXXX XXXX retrospective result, adjusted quarter for the quarter

for Second, has new the revenue X, as XXXX. standard January opted company of accounting the

costs related the a P&L reduction our debt revenue incurred reimbursed for with nursing along on in million behalf During offsetting community. the first with of $XX.X include managed a to quarter, and bad million $X.X change Ancillary Services decrease of skilled an changes expense

over of to second million availability of $XXX.X indemnity the approximately which XXXX million non-recourse March in into summarize credit the $XXX.X of June. Taking In property our of quarter results. XX% XX, than outstanding. the five of end quarter the mortgage notes our convertible off pay have of was of was or level next debt years the first the be including our first will amount. mature debt million remainder will of comprised total quarter the that As we this consideration, XXXX, double line our the senior more financing $X.X we XXXX, of plan liquidity maturities and reasonable To total

operational While our results. focus winning continue a improving tough mostly we to and on quarter,

occupancy did monthly improvement balance results, is we see While and we momentum rate provide a in year perspective. March for don't there of from and believe the the

Our our balance and positioned flexibility communities. of the is optimize well continue to as provide the to portfolio sufficient sheet positioning we improve

are willingness this encouraged on we've by the We to the call. embrace the outlined of challenges organizations

XXXX I'll our guidance on Next assumptions. details to provide pivot the and

Our our outlook a turnaround along from with strategy full execution year reflects industry the the of broader challenges perspective. continued

in with our key combined and XXXX the impact of the when metrics compared to for guidance Our XXXX terminations. reflects dispositions decline

flow cash flow be $XX including cash million. our million the adjusted restructuring $XX the transaction unconsolidated of $XXX transaction XXXX of and organizational million. previously costs proportionate in of the EBITDA ventures from million or we real $XX estate impact to be range $XX organizational to in of expected of excluding including to of range announced For free range our be free share the costs the communities pending joint to adjusted And to planned transactions, restructuring targeted and dispositions and expect $XXX Adjusted million. to million in the

some underlining I'll of assumptions the Next highlight guidance. our

can found slide our investor We presentation be have website. on on our major assumptions XX listed current which of our

is reflecting in are slide impacting impact items process. of deck after that pro results significant our Again, view investor strategy. optimization our most a the transactions the XXXX our forma one our portfolio outlook in First, XX of is

XXXX While we will for it partial continuing in of understanding have year results operations. transactions, will the results the you our help

expect modest our from we growth Second, continuing revenue operations.

will consolidated the of revenue dispositions of because impact our decline. However,

XXXX be expect with growth, somewhat we senior largely the in offset from improvement by Services to business, occupancy in-place be expect than health demonstrate At Home to our recapture and Cindy positive a year, favorable rate compared during compared continued all not our XXXX XXXX to mark-to-market. although occupancy the occupancy Ancillary will lower discussed the for slightly with of same or rate XXXX losses. as growth XXXX slight pressures housing, to in reasons Therefore, we performance hospice. For remarks. time, produce sufficient In her to improvements we expect coming to

we Next, expect pressure year. to during remain our the under operating margins

benefits, We labor, to expect grow to by X%. total X.X% including

community. the selectively from retention in improvements the we within are resulted investments, investments our Given XXXX expanding that those

expect While we XXXX to in we these in do immediate don't expect create beyond. late investments improvement XXXX, them and returns from

expenses, expect also including and our our costs year. adjusted G&A organizational cash I Lastly, prior transaction based items remain compensation, to restructuring free the we and will line to with in stock want XXXX flow. non-cash impact a few which highlight

lower expect planned primarily transactions combined, by are from for XXXX we expense cost. and offset our interest or XXXX, lease those interest amortization occurred First, that rising somewhat and

Second, $XX million expect organizational costs to transaction XXXX. restructuring be our we and in approximately

million to related $X do range of in collect Third, offset we expect that XXXX, to insurance other $XXX did CapEx and to the not be million. this range of the we million expect CapEx losses. our XXXX which in proceeds non-development $XXX hurricane we Within nearly

result, related including capital approximately provided to to hurricane completed real today $XX the a and million. year's transactions complexities estimated are Florida the be XXXX pending of guidance generator includes transaction, targeted well the portfolio As last turnaround expenditures as as our requirements new execute The involved we upon optimization appreciate in a described. strategy. transition year the certainly as estate as We the

turn well I'd to the believe in future call to and this senior nation's the being fulfill now like first to in commitment However, to capture trends positions industry the over we to strategy Cindy. living. our us back our choice

Lucinda Baier

Teresa. you, Thank

for answer I'm improving committed questions our and our our is most, Operator, for thank taking associates strategy say now. on want to I our care focusing residents. please team you happy for management performance to for questions. benefit Our and of company open line the the of matters turnaround the operation what for shareholders. our to

Operator

Jefferies. the question [Operator Our of you Tanquilut from with first Instructions] line comes Thank Brian

Brian Tanquilut

factoring trends how we Good or the the seasonality the through, us morning. mind for cadence think mean, just throughout all year in just if I as I working guess through and that don't initiatives you I you through about cash and other view you're EBITDA Teresa, flow and progress QX, QX Cindy walking the as QX?

Lucinda Baier

it's much Hi, Brian. for Thank you Cindy. your question. so

operating and So X.X% in sequential call my were as I prepared where QX improve the X.X%. in by same increase with we really said RevPOR our in our improvement saw community remarks, income the we pleased

in to that We our of May is first we really GAAP performance XXXX. a results year-over-year to expect or occupancy quarter end normal favorable our expect a the low and of June progresses as no year that. year be dips, different We where this as year our the always occurs XXXX our seasonal to by and would narrow the is the Now to guidance than would result expect occupancy point. turn the quarter the would

Brian Tanquilut

obviously, Got then shifting it's last week seems like Cindy with it. It guys you gears, agreement big deal. Ventas And a co-announced the we pretty them. saw that

divestitures that us you the planning your what additional that that sale for really you're don't together? through in units with walking for terms and mind flexibility also If on up putting the they're it of provides it thoughts the company just does

Lucinda Baier

question another That's good Brian. Thanks it. for

is strong let believe and first thank this that I Brookdale. and say So win are me we and team. support. very to Cafaro Debbie very the for are partners truly Ventas win, for They a Ventas you grateful their transaction

and flow is our As term near that first business. from a that released agreement us to bridge do the communities reminder, us that us improves rent is we the to Ventas credits the we operational what the cash of through it providing and Ventas, turnaround have XXX is allows to

is, that again support jointly thing that's second interest operational our it will aligns to something CapEx it our does turnaround. and The fund that

portfolio. to streamline us the allows the it ability Third,

Now between is next $XX for or portfolio rent XX% optimized us. the two XX% of and be base over and the can year roughly that of million

agreement. to under to collaboratively communities sales price reduce about us to equal better may advantage coverage to communities allow ability over and have will with rent the our improve us Ventas to identify time once, with I credit coverage million while in that of of the We it is, say issue the those take up turnaround be doesn't a that of by does the it it work and we business. reducing gives this get operator $XX operational at would allow our all And will our another rent what positioned X.XX% the to us that the

think we both and Ventas for So transaction Brookdale. it's a for fantastic

Brian Tanquilut

Cindy last question me. for

that business, indicators all know about where talked we even benefits going translate 'XX? through leading in 'XX we've is and the your I into as P&L get your about I these things, employee confidence these retention from into will As think

Lucinda Baier

it and high I confidence. about I very feel great have

Health is our X% had me good that improved the first in and really retention quarter of the makes Directors Directors feel Executive about and and One both we improved our year-over-year. retention by things Wellness that

lease director retention the a at in our had side, top sales stability look of you three critical the operational double-digit lease if of those to community We've in improvement that also known success We by you we year-over-year. the X% is always in [ph] Then the positions if year-over-year. improved communities. our over improvement look on

at look low visits. improvement in visits, year-over-year had we single a you digit If

move-ins, If you low had move-ins improvement year-over-year. at a look in single-digit we

move-outs controllable improved. also Our

think occupancy more by improves you that people will better we translates the if fewer and move-outs shareholders. our best higher our into better drive industry, the the move-ins translates We of controllable for in performance revenue RevPAR that and so which communities. having higher believe And about absolutely which into returns

Brian Tanquilut

All right.

good. Sounds Thank you.

Lucinda Baier

Bryan.

Operator

with from comes Bank America. of question Joanna next Your line Gajuk the of

Lucinda Baier

Joanna, Hi,

Joanna Gajuk

here. Hi. How much so for you you? are taking Thank question the

Ventas compare transaction, how actually do your escalators prior quickly the to So on these new escalators?

Lucinda Baier

is is Cindy. lower the in Ventas will that say had What are I than that this in leases. Joanna escalators traditionally that So escalators lease the we the are

Now we before. you which given didn't credits churn, aggregate we Ventas have in have and we look rent can't additional have because at also the

seniors a What allow credit For got of got healthier midterm, also Ventas, aging. longer better we lease. us what will portfolio capture to they quality short was and the is a in silver wave and a on term which

Joanna Gajuk

can the specific would better to I number in I you mean there want you've I I release, press right. to those have otherwise. would give it is be All better that flag ask assumed not going portfolio guess, numbers might said a But your just about that forward? how what lease should the want about you overall think with weighted you what's whether that. talk an the to I lease we and now average of understand escalators, guess

Lucinda Baier

of X.XX% I the is We in think what haven't can have and the that this is say escalators than of is escalators. both our multiple is our weighted for some I transaction interest. we more CPI Brookdale good really is aligned about of lease But that and lower published or Ventas Again, what Ventas the a average other leases.

for they the Ventas we lease this flow get We align capital healthy So and maturity. interests. a operating to short portfolio is our get a cash ability Brookdale for gets long-term. a the gets term And term longer more and what security very in

is shareholders we both an shareholders. So overall to think improvement our this that's our the good and lease portfolio for and something Ventas

Joanna Gajuk

then pending talk there reflects in about And planned of of it you. sale reflected other what's in topic on Thank outlook assets. and the that the Great. the XX or you also terms guidance the

quarter quarter. the think timing appreciate you what the the so I sort the of out that end asset So should much that assume coming so the this slide to it? on 'XX? $XX you of in third Because to the also we How towards of about - annually million in assume end is assume size guess of the the I'm get. the what $XX trying way that's some EBITDA, of come fourth it will I EBITDA million there out and Is year by is EBITDA of the maybe happens right this

Lucinda Baier

good just our out We while that in the part the asset of we really little question. near call. year market as takes expect a that the given announced end our a it's yearend Joanna, those. sales It of strategy come to to would

aggressively and the working of we to year. expect would hopefully close by are end the We

Joanna Gajuk

still down on asset some year. occupancy seasonality with openings. right. us Do for expect the new about grow the heard All around peers And then We obviously the talking from follow-up there. some lastly the you to comment be quickly

but So takes something still in longer. may you where just see there is well there there your as be as coming online, it market

getting exit I we you XXXX? how occupancy about at, think So guess what XXXX as should of I'm sort progression

Lucinda Baier

Yes.

has our certainly been That's the Assisted up since in So second highest is heaviest growth inventory fourth X.X% the growth what I will say was Living. XXXX. intent. of And which quarter most in it's been where supply XXXX and XXXX, the

which inventory that signs XXXX. is longer is inventory down construction of of points a percentage the term. And has actually the as are of QX the the there basis good AL is from Now peaked percentage AL construction improving, as for as of a a our think inventory percentage construction and XX we

think we will I what in down is be say that we in will occupancy So slightly XXXX.

and by a then we to our and XXXX, expect normalized operational having environment turnaround the build to capture benefits plan We full going operating full executed. more of in having XXXX are

Joanna Gajuk

so Great. much. Thank you

Lucinda Baier

Joanna. Thanks,

Operator

question from [Operator line Stifel. the comes Instructions] Your of next with Chad Vanacore

Lucinda Baier

Chad. Hi,

Chad Vanacore

morning, Good Cindy.

can occupancy same expect quarter, in quarter. then number? drops encompassed then you occupancy quarter in year. down that is mentioned in we second occupancy first that that had of store be you the sequentially kind assume range to improve So third slightly our from What And slightly

covered part just want explicit. you think but I this, I it of to make

Lucinda Baier

second of that's slightly will is and that guidance as is be. is in year slightly, that say that I quarter back the to down What with we'll improvement we've on to first our is give And quarter, half normal seasonality the much year. down flat modeled

Chad Vanacore

right. All

Forgive trying. me for

Lucinda Baier

try Chad. It good was a

Chad Vanacore

fourth on a quarter fourth reported the the you that could comment be on 'XX? basis of that be basis? as end quarter to the than or of take year year-over-year You basis. mean is adjusted And that Can that expect also higher meant made is higher as that I of you 'XX should

Lucinda Baier

as basis Chad, adjusted flow cash what flow higher flow, I should QX on be cash that free asking will adjusted free Thanks on say as is XXXX. basis for reported for reported an cash clarifying than an question.

good for and clear have in a I been should I comments. everyone more think it's clarification my

Chad Vanacore

per picking Okay. Ventas $X above CapEx a And on unit just, is it the then stipulates of that XXXX, up Ventas agreement, whatever's right? with a year

Lucinda Baier

It $X,XXX will over is. And traditionally is, on we've CapEx. what say year spent I a

the that a and is interests, we do is Ventas the to better positioning we're partnering to operate align CapEx that CapEx in good is that the possible into again, trying Ventas when so best intention not level, improve they Ventas. for for Brookdale. that get so type from our good portfolio our and Brookdale want went to their community operational to communities, get to normal transfer maintenance with so What to the and we're at And

Chad Vanacore

Okay.

that So mean in and doesn't a XXXX you're this bed your assumptions increase per right? expecting that be much on basis, any in would

Lucinda Baier

at Not all. at not No, all.

Chad Vanacore

going be CapEx XXXX should think a down? with there we about the CapEx is total way dispositions, So should

Lucinda Baier

So of a should be doing CapEx dispositions. total as result down

real doing to of we our we've our community defined make time to know really Once at communities, the we lot and one strategy is positioned best a final in each sure things we estate want looking CapEx, our in we Now, that look been and the of our what's got per-unit is that spending communities. get exactly have at community.

a so return with CapEx matched And for nice the operate the at make spend what best communities still to chance for best community we're we for our sure might they are looking that in shareholders.

Chad Vanacore

All one right. And then last just one.

platform. in it So challenge. that like would you you to the And somewhere intimate continues a you release then, parts expend ancillary to of press health, home be the also mention

business So improve parse can to expect that you and out how you expand?

Lucinda Baier

Yeah.

part Let me start question with the the of last first.

residents hospice benefit is Our it's business really from. our a business that fabulous something and

So what as business. I you've say new is, that And expanding build investing will is what load. licenses, got you in case are happens your we buy to

the long drag, margin definitely as do but a you so, a it value And that, bit there's of over creates term.

creates is margin something a in compression. little that that continue We'll So to that business. invest

as few the Lower where home penetration, the well. decrease Now we that a are change attributable we mix inside walls our health than as traditionally well episodes to decrease rates a and in operating our which therapy as things. fewer was our first visits a in have, during quarter, we saw affected

Now was to our But it we than grow year-over-year, to guidance. a wanted first reflected business our we softer expect would that's in bit our and BHS be. quarter

Chad Vanacore

just sneak if remember got here, because if going I'm in right. All this. - did to one we more I we can't

So season investors assume to that could going you quantify I to the want know? impact flu

Lucinda Baier

question. great Chad, a it's

that as flu what believe now, that, an death XX result And experience, long. is impact. a believe, follows season you a point we when year rate have So on the the of elevated all based our you flu impact basis that had we

are revenue $X.X million that about was impact, XXXX probably to flu elevated. season, so million reference, a flow XXXX And $XX.X we've was little that, normal for adjusted normal cash flu EBITDA the normal And season, full XXXX about death compare of more of higher impact. estimated for year than a a the and

Chad Vanacore

if That's me. All right. for Thanks.

Lucinda Baier

Thanks, Chad.

Operator

Frank of Your from line RBC Capital the with comes question Morgan next Markets.

Lucinda Baier

Hi, Frank.

Frank Morgan

that certainly some Good anywhere marketplace can't XX from the on the with home times and the morning. assets right XX for now health out business. hospice some and EBITDA even on question ignore follow-up hospice it. home to there are mixed the care going of Hey, times I in wanted healthcare valuations on We in to

but business with So area guess, any value at that today. an way you you is in lot I any for way terms the seems does about, those want of grow, decisions of fetch weigh can in to in kind this valuations same obviously, that of like time a mean you

that So health? on I where valuations this does buyers, just we ready the guess home and absolutely hospice are in I'm are considering way curious positively or the going any options to and concentration given path grow develop

Lucinda Baier

providing we for and to business to we what our hospice to that believe valuable, hospice good so that me it's sure business. important is the And to focus grow that's making so shareholders that's right the residents that have is important and It's that really I want services to would continue on. very Franks, most the a why is our services out. pointing very and good for residents thanks those and know

Frank Morgan

or you hopefully is the in improvement the And in Any Okay. you expect then characterize that terms saw second that being strategies? of just would specifically the just you you're there and of sales the of on overall, Thanks. where - that momentum quarter. improvement by involved I'm terms kind curious in volume is your the color more early market how driven it concessions would growth programs, service in aggressively you issue line to And concessions? most seeing any what or drive color appreciate are of we by kind then of it? the just

Lucinda Baier

Frank. you, Thank

reason me better hold, of Let take sort our results starting of that that strategy start our actually improved the got to think operations driving community top is leadership. momentum. the with is retention think since we've I and I

time improving, into We outs prior more also move leads, translates move-ins occupancy. drives At controllable occupancy. more visits, than That have which the same year. in more are

really that are are environment, doing business difficult macro-economic forward I in that. I despite So good a operating the very think feel moving the and we things about

that into the how very for looked market to selling about we're one translating Now value things and concessions, of with into we're is the careful that shareholders. regard how we've our

go would mark-to-market our you the particular If paid. terms quarter the XXXX, of resident third new resident what in what negative prior a back to to that compared of X% all pay the unit was way of

QX, was X%. QX. Now that only some quarter, we progress X.X% in with slightly X% we the negative a improved and further the over we to In mark-to-market made fourth that between so in improved

that we're focus its It's So a regard good competitive environment. think Brookdale continuing to making we're on with selling very to progress I the residents. value delivers price. But to

Frank Morgan

you. Thank

Lucinda Baier

Frank. Thanks,

Operator

there the closing allotted remarks? Ladies answers. question and Are gentlemen, we have any for time and reached

Lucinda Baier

morning. I much We look want to in your joining us to talking to appreciate call this thank on next forward quarter. Brookdale very for you and interest everyone our

Operator

gentlemen, this today's concludes and Ladies teleconference.

may You now disconnect.

Brookdale Senior Living (BKD) 8 May 182018 Q1 Earnings call transcript