Good morning. My name is Audra and I will be your conference operator today. At this time, I would like to welcome everyone to the Brookdale Senior Living First Quarter 2025 Earnings Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. [Operator Instructions] At this time, I would like to turn the conference over to Jessica Hazel, Vice President, Investor Relations. Please go ahead.

Thank you, and good morning. I'd like to welcome you to the first quarter 2025 earnings call for Brookdale Senior Living. Joining us today are Denise Warren, our Interim Chief Executive Officer and Chairman of the Board; Dawn Kussow, our Executive Vice President and Chief Financial Officer; and Chad White, our Executive Vice President-General Counsel and Secretary. All statements today which are not historical facts may be deemed to be forward-looking statements within the meaning of the federal securities laws. These statements are made as of today's date, and we expressly disclaim any obligation to update these statements in the future. Actual results and performance may differ materially from forward-looking statements. Certain of the factors that could cause actual results to differ are detailed in the earnings release we issued yesterday as well as in the reports we file with the SEC from time to time, including the risk factors contained in our annual report on Form 10-K and quarterly reports on Form 10-Q. I direct you to the release of the full safe harbor statement. Also, please note that during this call, we will present non-GAAP financial measures. For reconciliations of each non-GAAP measure from the most comparable GAAP measure, I direct you to the release and supplemental information, which may be found at brookdaleinvestors.com and was furnished on an 8-K yesterday. Before I turn the call over to Denise, I want to briefly acknowledge that we are in receipt of director nominations from one of our shareholders as previously disclosed. We don't intend to comment further on that matter today. The purpose of today's call is to discuss our first quarter results and strategy. Accordingly, we ask that you keep questions limited to this area. I'll hand the call over to Denise.

Thank you, Jessica, and good morning, everyone. Welcome to our first quarter 2025 earnings call. It's a pleasure to join you today as interim CEO. I'm also pleased to be accompanied by Dawn Kussow, our Chief Financial Officer; and Chad White, our General Counsel, both integral members of the office of the CEO. Today I will begin by reviewing our April 14th press release, after which I will discuss our strategy and how we are evaluating ways to unlock value at Brookdale. Following my remarks, Dawn will provide a comprehensive overview of our first quarter financial performance, annual guidance and outlook. Chad also will be answering questions and we are excited for you to get to know him better. Before we begin, I do want to note that we are pleased with the team's efforts in the quarter, which enabled us to deliver RevPAR and adjusted EBITDA that exceeded our expectations as well as positive adjusted free cash flow. And not to steal Dawn's thunder, but given the solid start to the year, we are happy to be able to raise our annual guidance. Now turning to our April 14th press release, as you read, the Board executed a planned leadership transition and initiated a search for a new CEO. Over the past several years, we made significant strides in streamlining our operations, simplifying our business model, rationalizing our lease portfolio and addressing our debt maturities. Although much progress has been made, there is more work ahead and the Board believed now was the right time to select our next leader. With our search well underway, we are focused on identifying a candidate with the proven experience and skills necessary to push continued operational improvements across our portfolio and the strategic vision to drive Brookdale into the next decade. By…

Good morning and thank you for joining us today. Brookdale had a strong start to the year driven by meaningful financial growth and operational improvements. Both RevPAR and adjusted EBITDA exceeded our expectations for the first quarter, giving us confidence to raise our annual guidance ranges. Additionally, adjusted free cash flow was positive, which is a significant milestone as adjusted free cash flow has generally been negative in the first quarter. We are excited about our achievements as we started 2025 and are optimistic about the remainder of the year. But before I speak to that, I'll walk you through details of our first quarter financials. I'll begin with first quarter revenue. Consolidated RevPAR, which is the basis for our annual guidance range, grew 4.9% in the first quarter, driven by an ongoing acceleration in year-over-year weighted average occupancy growth. First quarter move-ins were 3% above the prior year and 12% above the historic average. While move-out volume, both controllable and non-controllable, was also beneficial to the quarter. As a result, consolidated weighted average occupancy increased 140 basis points to 79.3% in the first quarter. Our year-over-year growth trend accelerated from the fourth quarter and the favorable GAAP to the prior year grew every month this year to date including April. First quarter consolidated RevPOR grew 3% over the prior year quarter, reflecting both resident rate increases as well as the ongoing trend of lower resident acuity. I'll now pivot to same community results. There are 59 communities included in our consolidated portfolio that are excluded from our same community portfolio. Of the 59, 55 are the Ventas communities that we will not be operating by year end. First quarter same community RevPAR increased 4.5% over the prior year driven by 130 basis points of occupancy growth and a 2.8%…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] We’ll go first to Ben Hendrix at RBC.

Great. Thank you very much. I was hoping to get a little bit more color on your pricing strategy. Brookdale has operated the last couple of years with pretty solid pricing discipline and just wanted to kind of talk about the pricing promotions you’re putting through for the rest of the year and how you’re thinking about the guardrails around rate at the local level and how much flexibility you can add into pricing and still hit that 80% occupancy threshold in a profitable way.

Yes, hi Ben, this is Dawn. That’s a great question. I would start with if you look at our same-store, we’re excited that year-over-year, our RevPOR grew 2.8%, which was over our RevPOR of 1.6%. So, reflecting the price increase that we successfully put in January. I think as we think about the year and the guardrails, Denise had some specific comments around how we’re thinking about pricing. I would say that it’s more targeted in smaller areas. We’re doing some piloting of some of the pricing strategies in order to increase occupancy or to leverage off of where we can get increased occupancy at that 80% level to see a larger flow through. So I think the guardrails are either at the community level or they will be escalated up depending upon what that strategy is. But certainly making sure that we are growing our RevPAR while we’re protecting our rate and certainly very aware of making sure that we’re getting rate in excess of our expense growth.

Thank you. Just following up on that, looking at a little longer term, just the fresh impressions investment initiatives. How do you – kind of what’s the timeline that you expect that to impact rates and should we expect on the back of those type of investments some increase in RevPOR, maybe in line with 2024 levels, perhaps next year? Thanks.

Yes, a couple things. I think on the fresh impressions we certainly have included that in our CapEx guidance of $175 million to $180 million. It will be very targeted as we started last quarter on those targeted investments at the community level to increase occupancy. We’ll get to our 2026 rate as we start our budgeting process, which won’t be until mid to the end of the year as we work through that budgeting process. But nothing yet that I would comment on the rate increase for 2026.

Ben, I would say – this is Chad, I would say that it’s really – we’re very optimistic about the long-term prospects here for what we’re doing with the fresh impressions and first impressions program. What’s more important, I think, for that is that it’s really helping us to accelerate our occupancy growth. And so I think as we think about it, it’s really with the supply demand dynamics that we’re in in the market, it’s a real tool that we can use to make sure that our product is competitive and is actually growing occupancy.

Great. Thanks very much and congrats on the quarter.

Thank you, Ben.

We’ll take our next question from Brian Tanquilut at Jefferies.

Hey, good morning guys. And congrats on a good quarter. Maybe just to follow-up on some of Ben’s questions. So, as we think about maybe some of the question comments you made, Dawn, on the seasonality of margins, just curious how we should be thinking about the progression of that over the course of the year, understanding that you have some, what do you call this, basic bonus payments, incentive adjustments that kick in, in Q2. So curious how to think about seasonality of expenses and margins over the course of the year.

Yes, it’s a great question. Thanks, Brian. As you know, if you look back to our historical quarters, our first quarter is generally always our largest margin, because as I said in my prepared remarks, we have our revenue that’s billed on a monthly basis and expenses on a daily basis. And so of course, the first quarter has the least number of days. And so typically we’ve seen that as our highest margin. So as I think about that for the rest of the year, what I would point back to is the seasonality that we’ve laid out in the investor presentation and the expense, the expense seasonality that we would expect with more days in Q2 through Q4. The largest I spoke to in my prepared remarks is the $10 million headwind related to days and then the merit increase that we see that comes in Q2.

Got it. And then as I think about, Dawn, the RevPOR performance here, obviously good during the quarter. I mean, is this a sign that you’re gaining pricing power, or is there less discounting and promoing happening in the market that you’re in, is that what that is?

Yes. I mean, we are excited about the long-term impact of the supply and demand that Chad just spoke to and certainly are looking at making sure that we’re balancing pricing power and occupancy as we’re determining what our rate increases are, particularly for next year, but certainly looking at making sure that we’re focused on – again, our pricing power is – our prices are in excess of our expense growth. That’s important to get the margin expansion that we expect and that we would be leaning in end markets and more targeted markets where we think that we can do that.

Awesome, thank you.

Thanks, Brian.

We’ll move next to Andrew Mok at Barclays.

Hi, good morning. A couple of follow-ups here. On some of the initiatives that you mentioned to accelerate occupancy in the prepared remarks, I'm trying to get a better sense of which initiatives were already underway and contributing to the better occupancy results that you've already delivered and which are more forward looking actions that haven't yet impacted results? So it sounds like pricing promotions is kind of one of the forward looking ones, but I think there are a number of other initiatives. So I'm just trying to get a better sense of that? Thanks.

Yes. I'd say that, they've been evolving. We talked about, I think, the Denise talked about the high opportunity, the SWAT Groups that had started – that was underway late 2024. And so with the positive results that we've seen, it is proof of concept. We are rolling out more SWAT teams with more communities, so that that piece is underway. So that was underway and still ongoing. The dynamic pricing and the initiatives, we've always done a level of initiatives with targeted pricing. I think that that has been we've been more active with that. And so I think that that is something that is probably scaled up a little bit. And then the first impressions, we talked about $5 million that we spent at the end of last year and identified another $10 million that we would, have with that increased investment in the first quarter, so that is underway as well.

Great. And RevPAR finished the quarter at 4.9% toward the low end of the guidance range, but you increased the guidance assumption for the full year. So can you talk about the underlying drivers and visibility into higher RevPAR for the balance of the year? Thanks.

Yes. The one thing I'd say about that, Andrew, is remember we expect our fourth quarter year-over-year RevPAR and occupancy to be better than first quarter year-over-year. So we expect that RevPAR to be better – that year-over-year RevPAR growth to be better in the fourth quarter with the expected increased occupancy we expect through the year.

So that's both on the same store basis and the result of the divestitures? Like, both of those should be driving RevPAR up in the fourth quarter?

Yes. We – remember, we guide on consolidated. We are not guiding on same store.

Yes. With the one thing I'll mention on same store, it excludes the Ventas, but there is an assumption in our consolidated RevPAR range that says the Ventas communities will transition on 10/01. We know that that is not realistic, but to the extent that it significantly varies, there could be some level of variability, but that is the assumption on our RevPAR guidance.

Great. And I wanted to follow-up on kind of the dynamic pricing strategy. So curious to hear, like, why now is the right time to get more active here when it seems like strong demand and pricing power is working more to your advantage. So can you talk to the specific characteristics of these markets? Are you not seeing as much pricing power? Are there different competitive dynamics versus the rest of the portfolio? Thanks.

Yes. I would say that; we have always been looking at repricing our communities up or down. And so there's an opportunity to go up or down as we're looking at all of the different markets. I think more actively as we're – as we're looking at things a little bit different, looking at different markets and whether there's some sort of strategies that we can roll out. I don't think it's anything significantly different, just maybe a little bit more active on some of the thoughts around that repricing. Again, that would be either up or down that we're doing this.

Great. Thanks for all the color.

Great. Thank you.

We'll move next to Tao Qiu at Macquarie.

Thank you. Good morning. I'd like to drill down on the low 70% bucket. I think, Dawn, you mentioned the sizable portion is 1%, 2%, 3% away from 70%. For the remainder, what percentage have structural challenges such as smaller assets, traffic geography similar to the 14 assets you identified for sale. In other words, why not be more aggressive with the dispositions, and what is the market appetite for these assets today?

Yes. What I would say, I think it's a great question, Tao. I think, when we look at that bucket, there's 20% of those communities that we just absolutely will not be operating by the end of the year. It's either they're in the Ventas transition bucket or dispositions. The other – there's another 22% that are already in a high opportunity group that we're focused on. And then there's a third of the remaining 84 communities that are in the 1%, 2% or 3% bucket. And so if, you kind of do that math, the residual amount you're always going to have a level of your communities that are below 70%. I think that we spoke to kind of the – a real estate strategy and not leaning in on what that look is going to be. But it's certainly something that we would look at as part of that real estate strategy that Denise talked about.

Yes, Tao. Good morning. Denise mentioned that one of our key initiatives that we're focused on is optimizing our real estate portfolio. We see tremendous intrinsic value here at Brookdale that we are going to work to continue to unlock. And so one of the things we talked about is we're working on disposition transactions involving 14 non-core or underperforming owned communities. That's an initial group that we've already identified that we're working on. Early stages there overall, but we expect those to be completed by year end. I'll say many of those are already under LOI and some are even further along in the process than that, so that's a good thing. The sales proceeds for that group are relatively minor. But as a group, the disposition of those communities will improve our adjusted EBITDA, our adjusted free cash flow and our leverage. It's a win-win for unlocking value as you generate cash proceeds and improve the performance of the remaining portfolio, just to your question there. So we've already also begun work on identifying additional opportunities for portfolio optimization. There's a modest group of other non-core owned assets that we believe can be monetized to further unlock value. So we're looking at that, and as you and obviously, that is looking at occupancy rates, performance, NOI opportunities, et cetera, markets. We take a variety of factors to look at, but that is something we're actively working on. It's too early for us to share additional details on that next group of assets, but it is something that we're really focused on.

Got it. I appreciate the color. So just to clarify, so none of the disposition benefits from either from an EBITDA or cash flow perspective is in the guidance, right?

Correct.

Okay. My second question is for Dawn. Could you, for Denise, sorry. Could you share with us your thoughts on the CEO search? What kind of experience and skill set is the board prioritizing today? And how should we think about the shift in business strategy going forward?

Yes. I can do that. So as I stated in my remarks, we have – we started late last fall working with Spencer Stuart outlining succession planning that the company might need. And so when we are looking at the candidates, which we've already had a good look at about, I think, 15 or 16 candidates already. And the board search committee is in the process of narrowing those down into the ones that we want to interview and to push forward through the process. So we are really looking for someone that can give us the operational expertise because we do believe there's a lot more work that can be done on the operations, down in the community level, while at the same time getting someone that has the strategic vision that can really propel Brookdale into the future, that can look out and see what Brookdale will be in five to ten years.

Got it. Thank you.

Thank you, Tao.

And we'll go next to Joanna Gajuk at Bank of America.

Hi, good morning. Thanks so much for taking the question. So I guess first, just to clarify, so you raised your EBITDA guidance by $7.5 million. So is that essentially for your outperformance in the first quarter?

That's exactly right, Joanna. When we looked at our outperformance in the first quarter, our occupancy was down 10 basis points when you'd normally see it down 70 basis points to 80 basis points. So we saw that favorability in our occupancy and then of course our expense management. And so as we look at that outperformance, we certainly re-forecasted the full year and lifted the – felt comfortable lifting the range by 2%. Now the one thing that I would add is that there is and we're acknowledging as we thought about the guide range or the guidance raise, there is a backdrop of macroeconomic uncertainty that we certainly didn't ignore, just acknowledging where we're at and what that impact could potentially be on the full year just because there's a lot of unknown. But we're very optimistic about our plans and wanted to balance that with – the global uncertainty with our forecast.

That was my other follow-up on that comment about macro factors. It sounds like you're a little bit more cautious there as you look out. But is there something that you're seeing currently, say in April? I mean, it sounds like occupancy in April was very good, so it's really hard to say. But is there something you already see, or is it more sort of, like things might kind of, I guess, turn for the worst during the season that's usually very busy for senior housing, right, during the summer months from June through, I guess, September. So is that's how you're thinking about it? That as of now, you're not seeing it, but things might change, and that's going to be during the time when – the time that's actually critical?

Joanna, that's exactly right. I think, just acknowledging the level of macroeconomic uncertainty, I would, again, point to, as you did, our April occupancy was up 30 basis points sequentially and 90 basis points year-over-year. The last time we saw April occupancy with that level of favorability was coming out of the pandemic. So we obviously were pleased with that. We will continue to stay focused on our expense management, but making sure that we are cautious as we thought about our guidance for the full year.

Thank you. And if I may, last, a follow-up on these SWAT teams. And sounds like you're getting already some traction and you're seeing any Q1 results on the occupancy front. So can you give us some examples of what exactly was done differently that was not done before in this particular community that allowed, I guess what you call some early indication of success there? Thank you.

Yes. I think what I would say is we certainly have, as you have a SWAT team, and focus on something removing of barriers. As Chad talked about some of the fresh impression or the CapEx deployment or the speed at which a role is filled or the speed at which we've moved on pricing. I think removing some of the barriers is probably the biggest thing that I would point to just because as you have one group focused and available to react quickly on 619 properties, that we had 65 communities in the group, that was helpful in getting results quicker.

Well, and importantly we're taking the learnings that we had from that group and rolling that out to additional communities so that we can further accelerate our occupancy improvement. And that is something we're all committed to as a management team to continuing to improve our operating results. We're very pleased with where we were in the first quarter and the progress we're making. And that was a big part of it with the early impressive results from that first work group, and we're moving forward.

And I guess those actions are sustainable? I think, like once the SWAT team is gone, whatever they kind of identify. But I mean, I understand, like, CapEx being deployed, like that's sustainable, but maybe these other items, like, how sustainable those changes are? Thank you.

Yes. We think that they absolutely are sustainable. We think that the reaction that we have or if we – if we've done like a common area of renovation, like, that – those are things that are long-term and helpful. And, I think that – we think that everything that it would be absolutely sustainable, which is why we're scaling it.

Thank you.

Thanks, Joanna.

Next we'll move to Josh Raskin at Nephron Research.

Hi, thanks. Good morning. The big picture question to start with is, can you speak to the process around strategy and operational improvements and sort of who's leading that charge? how that's being done? And also, how does this ongoing CEO search impact that? Does that accelerate the need to make changes before? Or is there some thought around slowing things down to incorporate the new CEO, et cetera?

Yes. I can start, and then Denise or Chad can add if they, feel? But I think, the office of the CEO, the strategy has not changed from focusing on occupancy and growth. What I would say is the office of the CEO, Chad and I, are on the ground working through with the operations team and the back office to ensure that we haven't lost focus, to ensure that we are meeting – more meeting regularly in order to make sure that we have visibility into the results as we're looking at the operational deployment of some of the strategies that Denise talked about. The broader team is very excited and very engaged. And I think that as a management group, we are very focused on moving forward. And, again, that is the day-to-day with Chad and I. Denise is in the office every day as well, focusing a lot on that high level and moving forward, with some of the initiatives that she talked about as well in making sure that the teams are motivated and have the tools that they need in order to move forward.

All right. Sounds like a team sport.

Yes. Very much. This is Denise, Josh. It very much is a team sport. One of the things I have, has been amplified since I've been here, and this is my fourth week, is how great the team is. We have an exceptional leadership team, and they work very well together. They're excited. They're engaged and everybody is pushing forward. Changes we make will be tweaks to operations like the high opportunity response teams. They will start to have a true operations person engaged in that team and we will be digging deeper down into those communities for the true operational improvements, which to I believe Joanna's question earlier of the sustainability of that initiative. So we will do that. We are working very closely with Teddy and his team on portfolio optimization. There are assets in the portfolio that would be better owned by someone else or have a different lessee. And so we will be working on pulling that together. We did have great results from [indiscernible] in the first quarter. And I think by embedding more operations folks into that and looking at the next segment of opportunity will really push us forward and drive it. My background is operations and finance. And so I guess for now, I'm the operations person that will push that forward. On the CEO search, we think it will take six months. I laugh and tell people I live on the beach and the view from my porch is a lot better than the view of the Brookdale parking lot. But I am here for the team and will be through the summer. And so I'll probably get back home just in time for the wintertime. But that's okay because this is a great company and we have great people, we have great assets, and we have so much intrinsic value that needs to be opened up and released here that it is worth spending my summer here.

All right. I'm a fan of Nashville, so I'll put that in there. But my micro – my more micro question is the magnitude of these pricing, these piloting, the new promotions to boost the occupancy in select communities, like, is there a way to give us some sense of magnitude, like, number of months of rent and just any sort of parameters that you have in terms of what it takes to induce more occupancy in some of these select communities you talked about?

Yes. Josh, what I would say is more – it's more targeted. I would say that we are conscious of, as I had mentioned before, pricing up or down. I think that it is more targeted and that we're looking at where is our rate where we have the opportunity to do some pricing. That's one of the things I would mention to – mention about on the high opportunity where we were at a little bit of a higher than our consolidated rate in order to make sure that we could reduce rate to again protect our RevPOR ensuring that our rate was in excess of our expense growth. It's one of the things that we're highly focused on. So I wouldn't over index on the efforts that we have. We always have ongoing efforts on re-pricings, and we've been doing that for a year – I think for the years. I would just say it's maybe a little bit more targeted and accelerated a little bit more, but I wouldn't over index on that.

Okay. Thanks.

And this concludes the Q&A session and today's conference call. Thank you for your participation. You may now disconnect.