Brookdale (BKD) Q1 2026 Earnings Call Transcript

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Date

Thursday, May 7, 2026 at 9:00 a.m. ET

Call participants

• Chief Executive Officer — Nikolas Stengle
• Executive Vice President and Chief Financial Officer — Dawn L. Kussow
• Executive Vice President, General Counsel, and Secretary — Chad C. White

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Takeaways

• Consolidated occupancy -- 82.1%, up 280 basis points year over year, marking the seventeenth consecutive quarter of at least 100 basis points year over year growth.
• Same-community occupancy -- 82.7%, an increase of 170 basis points from the prior-year quarter.
• April sequential occupancy -- Improved by 30 basis points to 82.3% consolidated and 82.8% same-community, exceeding the historical post-COVID April increase of 10 to 20 basis points.
• Consolidated unit count -- Declined 14.2% year over year, driving a 7.1% decrease in resident fees to $722 million.
• RevPAR -- Increased 8.2% year over year, driven by balanced rate improvement and higher weighted average occupancy; same-community RevPAR rose 5.5%.
• RevPOR (Revenue per occupied room) -- Increased 4.5% year over year due to a high single-digit in-place rate increase implemented January 1.
• First quarter adjusted EBITDA -- $131 million, a $7 million or 5.6% increase year over year, with an approximately 11% increase on a normalized baseline excluding prior-year G&A timing effects.
• Senior housing operating margin -- Expanded by 330 basis points sequentially; increased 80 basis points year over year despite a 4% decline in operating income, reflecting a 14% decline in units.
• Expenses from winter storms -- $3 million to $4 million of direct incremental costs, primarily in utilities and facility repairs.
• General and administrative expense guidance -- Lowered to $157 million for the year, down from a previous estimate of $162 million, with most savings expected in the second half.
• Lease payments -- First quarter cash facility operating lease payments were $44.7 million, down $12 million from the prior-year quarter, primarily due to dispositions.
• Planned community dispositions -- 29 communities (2,364 units) targeted for sale in 2026; seven communities (330 units) sold in Q1 for $22 million net proceeds, and three communities (545 units) sold in Q2 through call date for $88 million.
• Total anticipated proceeds from dispositions -- Approximately $200 million expected from 2026 planned community dispositions.
• Annual guidance -- Management reaffirmed 8%-9% RevPAR growth and $502 million–$516 million in adjusted EBITDA for 2026, with mid-teens adjusted EBITDA growth through 2028.
• Management fees -- Exit fee of $2.5 million recognized in Q1, with $1 million projected for the rest of 2026 as managed portfolio shrinks to seven communities.
• Liquidity -- $369 million in total liquidity as of March 31, 2026.
• Leverage -- Annualized leverage improved to 8.8 times; refinancing pushed 2027 mortgage maturities out to April 2033.
• First quarter adjusted free cash flow -- Seasonal outflow of $12 million, reflecting incentive compensation payments and higher capital expenditures.
• CapEx guidance -- Projected capital expenditures of $175 million–$195 million for 2026, targeting comprehensive community refresh projects prioritized for expected returns.
• Staff metrics -- Net promoter scores at highest levels since post-COVID survey resumption; associate and key leader turnover at lowest level since the pandemic began.
• Portfolio mix -- Following planned dispositions, the consolidated portfolio will be approximately 76% owned and 24% leased, with minimal managed exposure.

Summary

Brookdale Senior Living (NYSE:BKD) detailed the culmination of a multi-quarter organizational and portfolio transformation, resulting in improved operational alignment, a smaller but higher-performing portfolio, and increased pricing power. With most disruptive changes now complete, leadership emphasized that growth in occupancy and realized rate improvements accelerated into April, strengthening confidence in full-year guidance and multiyear growth targets. Proactive cost controls, divestiture of underperforming assets, and reduced G&A expense are expected to drive margin expansion and adjusted EBITDA growth, particularly in the latter half of 2026. Management further highlighted a substantial capital reinvestment program designed to elevate community quality and financial returns in targeted markets.

• Management indicated that remaining community dispositions are smaller, lower-performing assets that are expected to provide a positive mix effect on reported RevPAR and margins in the back-half of 2026.
• The high single-digit in-place rate increase enacted on January 1 resulted in higher financial move-outs for January and February, but leadership stated, "This year was slightly higher, based on the higher in-place rate increase that we pushed through, but it was well within our expectations. In fact, if anything, it showed the stickiness of that in-place rate increase."
• For highly occupied communities, realized pricing increases were in the low double digits, with EBITDA per available unit for these assets rising meaningfully versus the prior quarter.
• Management confirmed G&A savings will materialize mostly in the third and fourth quarters as dispositions conclude and operating model efficiencies are realized.
• Brookdale Senior Living's lease portfolio was described as "quite well from an occupancy and NOI expansion perspective year over year," with adjusted free cash flow turning positive and CapEx reimbursements supporting returns.

Industry glossary

• RevPAR: Revenue per Available Room, measuring total resident fees divided by the number of available units.
• RevPOR: Revenue per Occupied Room, indicating realized resident pricing on an occupied-unit basis.
• EXPOR: Expense per Occupied Room, representing facility operating costs allocated per occupied unit.
• G&A: General and Administrative expenses, reflecting corporate overhead unrelated to direct facility operations.
• CapEx: Capital Expenditures, spent on property, plant, equipment, or community improvements.
• NOI: Net Operating Income, or income before non-operating items such as interest and taxes.

Full Conference Call Transcript

Michael Grant: Thank you, Operator. Good morning, everyone, and welcome to Brookdale Senior Living Inc.’s first quarter 2026 earnings call. Participating on today's call are Nikolas Stengle, Brookdale Senior Living Inc.’s Chief Executive Officer; Dawn L. Kussow, our executive vice president and chief financial officer; and Chad C. White, our executive vice president, general counsel, and secretary. On today's call, we will discuss first quarter 2026 results as well as our financial guidance for the 2026 year. We will also provide other general business updates. During today's call, our remarks, including our answers to your questions, will include forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act.

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 after market yesterday as well as in our Securities and Exchange Commission filings, including the risk factors described in our Annual Report on Form 10-Ks and Quarterly Reports on Form 10-Qs. I direct you to the earnings release for the full Safe Harbor statement. Also, note that during this call, management will discuss non-GAAP financial measures.

For reconciliations of each non-GAAP measure to the most comparable GAAP measure, I direct you to the earnings release and to the company's quarterly supplemental financial information which may be found at brookdaleinvestors.com and was furnished on 8-Ks yesterday. With that, it is my pleasure to turn the call over to our CEO, Nikolas Stengle. Thank you, Michael, and good morning, everyone.

Nikolas Stengle: I appreciate you for joining us on today's call and for your interest in Brookdale Senior Living Inc. Before I get into the details of the quarter, I would like to highlight that I have been Brookdale Senior Living Inc.’s CEO for just over seven months. During this time, we have continued the transformational pivot that began nearly a year ago towards Brookdale Senior Living Inc. being, first and foremost, an operating company while also acknowledging and taking advantage of the fact we are a company that is built upon a foundation of specialized senior housing real estate that is becoming increasingly scarce with each passing quarter.

Brookdale Senior Living Inc.’s pivot has included meaningful changes in our structure, which in turn define the company that we are. While some of these changes were temporarily disruptive during the fourth quarter and the first couple months of 2026, as any structural change can be, they are absolutely critical in properly positioning our company for this very moment and for the future. As I will describe in more detail shortly, we are already seeing the positive impacts of these changes in our March and April results, and those results give us renewed confidence in the annual guidance and multiyear projections we presented earlier this year. Let me recap some of these changes.

First, in October, we implemented our regional leadership structure and redefined reporting relationships at all levels of our company. We created six geographic regions, each led by a single regional vice president of operations, and a dedicated regional leadership team encompassing all the key functions of a senior living company. We repositioned ourselves, in effect, as six companies of roughly 85 communities each, while still supported with the resources available from our corporate headquarters team. Second, in November, we hired Mary Sue Patchett to the role of chief operating officer, Brookdale Senior Living Inc.’s first COO in over a decade.

Then in short order, we further bolstered our operations-first approach by formally aligning the operating model at every layer of the company. Practically, this means that our operations team, our sales team, and our clinical team share a common structure and alignment at every level of the company. At the executive level, this means that our head of sales and head of clinical now both report into our COO. This improved structure makes a clear connection with a single line of enablement and a single line of accountability from our executive leadership team, namely me as the CEO, down into each of our communities.

With this significant reorganization, many of our community executive directors and other key field leaders experienced a change in their reporting relationships. While absolutely critical for our future success, there is no doubt that the cumulative effect of all these changes did temporarily impact our results in Q4 and early Q1. In February, we also created a new position and hired our senior vice president of strategic operations. This new role consolidates three critical facets of any senior living company—our pricing, our labor management, and our capital deployment—under a single accountable leader.

Through all of this, we have also continued to dispose of the leased and owned communities that were previously announced as well as exiting much of our third-party managed business that I will describe in further detail shortly. From the start of 2025 through today, Brookdale Senior Living Inc. has exited from over 100 communities including owned, leased, and managed. That represents a lot of work, and a lot of distraction for all our leaders.

In short, after a year of near constant change, not to mention me stepping in as the third CEO to serve in that time period, the table is now set for Brookdale Senior Living Inc. to fully capitalize on the supply and demand realities that exist in the senior living industry. We have the team we want, and we have the portfolio of communities we want. For all these reasons, we remain confident in our 2026 annual guidance of 8% to 9% RevPAR growth and adjusted EBITDA range of $502 million to $516 million as well as with our multiyear growth outlook of mid-teens annual growth of adjusted EBITDA. Now jumping to our results.

The quarter's occupancy got off to a slower start in January and into February. While facing the seasonal slowdown that typically occurs in these months, this year we also faced a combination of atypical events, including two meaningful winter storms, absorption of the significant annual in-place rate increase we implemented effective January 1, and our numerous ongoing leadership, structural changes and initiatives that I just described. Our consolidated first quarter occupancy of 82.1% improved by 280 basis points over the prior year's first quarter. On a same-community basis, our first quarter occupancy was 82.7%, up 170 basis points from 81% in the prior-year quarter. Looking ahead, the key selling season in senior housing is roughly May through September.

Historically, April occupancy tends to be up slightly sequentially, but this year, we experienced a relatively stronger April. As we included in our earnings release, April consolidated occupancy increased 30 basis points sequentially to 82.3% on a consolidated basis while we improved 30 basis points to 82.8% on a same-community basis. This strengthening occupancy in April is reflective of improved execution tied to the organizational changes we have made and continuing overall strengthening market conditions.

Switching to the expense side, labor and other facility operating expenses declined year over year along with our reduction in units, but also showed minor deleveraging as a percent of revenue based on lower occupancy and also due to the pace of changes at Brookdale Senior Living Inc., including our new operations organizational structure, our ERP implementation, and the many changes to our leadership team. Frankly, our expense and productivity management during the first two months of the quarter were negatively impacted by all of these changes, and we have taken decisive action steps.

We are already seeing the initial positive impact of our efforts, as our senior housing operating margin for March was on target after lagging our budget for the first two months of the quarter. We also made progress on overtime and contract labor sequentially, and there is more opportunity ahead to improve labor utilization as occupancy continues to grow. Additionally, the winter storms which impacted our occupancy as previously discussed also impacted us on the cost side through elevated utility expenses, repair and maintenance expenses—including general repairs, snow removal, and tree work—and also food expenses. Total direct additional costs from the storms were approximately $3 million to $4 million during the quarter.

Next, I would like to take a moment to discuss our managed portfolio. While it is a small portion of our revenue and operating income, it will be helpful to provide some additional color. For some background, in managed communities, the manager earns a fee, typically a mid single-digit percentage of revenue, meaning that the manager does not participate at a meaningful economic level in the upside or downside of a given community. As our longer-term holders know, we have actively decreased our participation in managed contracts from 229 managed communities in 2017 to just seven communities as of today, and we expect to reduce that number even further.

As a result of our reduction of managed communities, you will see that during the first quarter, we booked an exit fee of $2.5 million in management fees. Looking forward, we anticipate management fees to be roughly $1 million for the remainder of 2026. We have already taken internal steps to ensure that our organizational structure and our G&A are right-sized to account for this reduction in management fees, and we do not expect any impact to our adjusted EBITDA guidance from this change. Factoring in all the items I have just highlighted, Brookdale Senior Living Inc.’s adjusted EBITDA improved 5% over 2025 despite a 14% year over year decrease in our weighted average consolidated unit count.

Additionally, it is important to note that the underlying performance was better than that, as 2025 benefited from early G&A rationalization that we took in advance of the revenue reduction that occurred later in the year with our planned dispositions of communities. Per my comments on management fees and additional G&A rationalization, the second quarter's adjusted EBITDA growth will be in a similar range to that of the first quarter and then we expect more robust improvement in the second half of the year. We have added a slide, Slide 12, to our quarterly investor presentation that speaks to the pacing of quarters in 2026.

Again, we remain confident with our guidance of 8% to 9% RevPAR growth and $502 million to $516 million of adjusted EBITDA for the full year of 2026. Turning now to our service delivery. Brookdale Senior Living Inc. continues to define excellence in senior living. In early April, Brookdale Senior Living Inc. had 294 of our communities recognized for the Best Senior Living award by U.S. News & World Report. This is the fifth consecutive year that Brookdale Senior Living Inc. has garnered the most awards of any senior living operator. We are incredibly proud of this recognition, and we are thankful to our over 30,000 community associates who deliver this outstanding level of service every day.

In addition to this external validation, Brookdale Senior Living Inc.’s internally tracked metrics also have continued to strengthen. Our February 2026 trailing twelve-month net promoter scores, or NPS, were our highest levels achieved since we resumed monthly survey following the COVID pandemic in 2022. Similarly, our associate turnover and key three leader turnover have continued to improve and are now the lowest since the beginning of the COVID pandemic. These improved metrics are indicative of the success of our recent organizational changes and the cultural transformation we have undertaken. Taken together, they are leading indicators of the accelerating improvement in resident satisfaction, occupancy, and operating margin that we expect over the remainder of the year.

At Brookdale Senior Living Inc., we are truly excited for our future, both this year and in the coming years. Equally, we are appreciative for each of our residents, associates, and shareholders for your trust in our team. As a company, we remain on track to unlock the intrinsic value of Brookdale Senior Living Inc.’s specialized services and real estate assets. I will now turn the call over to Brookdale Senior Living Inc.’s CFO, Dawn L. Kussow, for more details on our financial performance and outlook.

Dawn L. Kussow: Thank you, Nick. This morning, I will recap Brookdale Senior Living Inc.’s first quarter financial performance and our financial outlook for the year. I will also discuss progress on our ongoing portfolio transition and other balance sheet improvements. Turning first to the first quarter financial results. Comparing our first quarter 2026 to the prior-year quarter, we grew our consolidated occupancy by 280 basis points to 82.1% and our same-community occupancy 170 basis points to 82.7%. The first quarter marked the seventeenth consecutive quarter that Brookdale Senior Living Inc. has delivered 100 basis points or more of year-over-year consolidated occupancy growth. Sequentially, our first quarter consolidated occupancy declined 40 basis points from 2025.

Seasonally, the first quarter typically declines from the fourth quarter due to higher levels of flu and other winter illnesses, the impact of winter weather, holiday timing, and also as a result of our annual in-place rate increases, which occur on January 1 each year. Occupancy during the first quarter was modestly behind our expectations, reflecting the impact of the winter storms in the quarter. In contrast, our April occupancy sequential growth of 30 basis points was stronger than our historical average post-COVID April sequential occupancy improvement of 10 to 20 basis points. This level of sequential occupancy growth speaks to our improving execution under the new operating structure.

For the first quarter, resident fees of $722 million declined 7.1% from the first quarter of last year. The key factors underpinning the revenue decline versus last year were a 14.2% reduction in our consolidated average units, partially offset by an 8.2% RevPAR increase. As a reminder, we guided to 8% to 9% RevPAR growth for 2026, and we are within that range to start the year. We expect year-over-year RevPAR growth to accelerate over the remainder of the year based on improving community-level execution and the positive mix impact of dispositions. The 8.2% year-over-year increase in RevPAR was driven by a balanced rate improvement and the 280 basis point increase in weighted average occupancy.

Note that the unit mix, which stems from our decision to exit a number of communities, including many that were underperforming, also positively impacted our reported RevPAR, leading to a consolidated RevPAR increase of 8.2% versus a same-community RevPAR increase of 5.5%. Resident rate increases were also beneficial to the quarter, as revenue per occupied room, or RevPOR—essentially a realized pricing metric—increased 4.5% year over year. We successfully implemented a high single-digit in-place rate increase on January 1. Note that the 2026 year-over-year RevPAR comparison was impacted by strategic rate concessions taken starting in 2025 to accelerate occupancy. Sequentially, our RevPOR grew 6% from 2025, reflecting the benefit from the rate increase.

While we typically expect RevPOR to decline throughout a given year, for 2026, we expect our year-over-year RevPOR performance—especially for the second half of the year—to be better than our typical seasonal trends as we annualize concessions embedded in the prior-year periods. Now let us turn to expenses. As Nick mentioned, the first quarter expense impact of significant winter storms was approximately $3 million to $4 million. On a consolidated basis, first quarter expense per occupied unit, or EXPOR, increased 3.2% over 2025. Our 4.5% increase in RevPOR exceeded EXPOR growth, resulting in a positive spread between realized revenue and expenses per occupied unit.

Beyond the storm impact, we did see modest same-community margin compression due to the operating leverage impact of the seasonal occupancy decline. We expect a resumption of positive margin trends as we first grow occupancy through the year and second, move lower-occupied communities up the occupancy bands and realize the associated operating income flow-through. On a consolidated basis, senior housing operating income grew 14% sequentially with margin expansion of 330 basis points. Year over year, operating margin improved 80 basis points while operating income declined 4% on a 14% decline in units since the prior year. Labor is our single largest cost item, at 64% of total facility operating expenses during the quarter.

First-quarter same-community labor expense as a percent of revenue improved 20 basis points year over year, and we expect to realize additional leverage over labor costs as occupancy increases in coming quarters. We continue to make progress on reducing labor turnover and improving labor utilization, and we project a stable and predictable labor cost environment for 2026. Other facility operating expenses increased 40 basis points as a percent of revenue on a same-community basis. Utility costs were higher year over year, mainly from the storms, as were food expenses. We expect these costs to moderate during the year.

For the quarter, despite the $3 million to $4 million expense impact of the storms, we expanded our adjusted EBITDA by $7 million to $131 million, a 5.6% increase over 2025. As it relates to the year-over-year expected mid-teens growth rate, recall that our 2026 mid-teens adjusted EBITDA growth guidance is from our 2025 baseline adjusted EBITDA of $145 million, not from the as-reported $458 million. The $445 million baseline nets out the timing benefit of Brookdale Senior Living Inc.’s first half 2025 G&A reduction associated with the planned Ventas community dispositions which occurred during 2025.

If we were to normalize G&A in the prior year to create a baseline quarter, the year-over-year increase in adjusted EBITDA for the first quarter would have been approximately 11%. General and administrative expense, excluding non-cash stock-based compensation expense, and transaction, legal, and organizational restructuring costs, declined 3.8% year over year to $40.6 million for the first quarter. Recently, we removed additional G&A costs to reflect both disposition activity as well as our scaled-back managed community portfolio. As you may have noted, the guidance provided in our updated investor deck now assumes $157 million in full-year G&A, a decrease from our previous guidance of $162 million.

We expect to realize the incremental benefit of reducing G&A starting toward the end of the second quarter, with most of the savings realized in the second half of this year. Cash facility operating lease payments during the first quarter of 2026 were $44.7 million, down a significant $12 million from $56.7 million in the prior-year quarter, primarily as a result of the Ventas lease dispositions which occurred in the second half of last year, coupled with the contractual step-up on lease payments on the retained Ventas leases. Now I want to shift to Brookdale Senior Living Inc.’s progress on our portfolio optimization strategy, which includes the planned dispositions of nonstrategic or underperforming owned and leased communities.

We previously shared that we expect to sell 29 communities comprised of 2,364 units during 2026, with the majority of those transactions to occur during the second quarter. During the first quarter of this year, we completed the sale of seven communities with 330 units for proceeds of $22 million net of transaction costs. During the second quarter through today, we have closed on the sale of three additional communities comprising 545 units for $88 million in net proceeds. The dispositions of most of the remaining 19 communities comprising 1,438 units are tracking to close during the second quarter, though a small number may close later in the year.

We continue to estimate total proceeds for our planned community dispositions in 2026 to be approximately $200 million. During the first quarter, we also exited two communities with 152 units through lease terminations. Once the remaining 19 dispositions are complete, we do not foresee significant changes to Brookdale Senior Living Inc.’s consolidated portfolio on a forward-looking basis. Looking ahead, we remain comfortable in Brookdale Senior Living Inc.’s ability to deliver both on our 2026 earnings guidance and on our multiyear outlook through 2028 that we provided at our January Investor Day and reiterated on our previous earnings call.

As a reminder, for 2026, we expect to deliver 8% to 9% RevPAR growth and mid-teens adjusted EBITDA growth from our 2025 baseline of $445 million, a level that translates to $502 million to $516 million of 2026 adjusted EBITDA. Through 2028, we expect to maintain mid-teens adjusted EBITDA growth. We also believe we can decrease annualized leverage to below six times by 2028. Our 2026 guidance sets forth annual targets. We describe our quarterly pacing outlook for units, RevPAR, and adjusted EBITDA for 2026 on Slide 12 of our investor presentation.

Remember, the comparability of the 2026 against 2025 periods is impacted by disposition activity, the timing of the related G&A cost savings, and managed business timing, which results in smaller growth rates on reported results for the first two quarters. We expect our underlying business to still deliver the 2026 and multiyear growth we have previously outlined. We just reported first quarter adjusted EBITDA year-over-year growth of 5.6%. We expect second quarter adjusted EBITDA growth versus the prior-year as-reported results to be in the low- to mid-single-digit range. But remember, when baseline G&A timing in the prior year is considered, our growth would have been up in the low double-digit range.

Then, with improved occupancy levels, the associated operating income flow-through, and as cost initiatives take hold, year-over-year adjusted EBITDA growth in the third quarter is expected to return to our longer-term mid-teens growth-rate level, and fourth quarter growth should be even stronger than that. We expect other seasonal factors outlined on the last page of our investor deck to remain consistent with historical trends, with the exception of RevPOR. RevPOR typically declines slightly over the course of the year. For 2026, we expect RevPOR to decline slightly in the second quarter, but then to remain relatively firm in the back half of the year, helped in part by the mix impact of our dispositions.

As I mentioned earlier in my remarks, we now estimate general and administrative expense—excluding non-cash stock-based comp, and transaction, legal, and restructuring costs—of approximately $157 million, down from our previous estimate of $162 million for 2026. We continue to expect that cash facility operating lease payments should be approximately $180 million during 2026, and management fees for the second quarter through the fourth quarter to be a total of approximately $1 million. Looking now at the balance sheet, our annualized leverage continues to improve; we finished the quarter at 8.8 times. As of 03/31/2026, Brookdale Senior Living Inc.’s total liquidity was $369 million.

On the topic of leverage, I would like to highlight that on March 31, we refinanced a significant portion of our remaining 2027 mortgage debt maturities, effectively extending those maturities to April 2033. Through this transaction, we obtained $185 million of non-recourse mortgage debt secured by seven of our communities and we repaid $191 million of mortgage debt secured by 11 communities. We appreciate our banking partners for their confidence in our business and their ongoing support.

Coupled with the refinancing of the entirety of our 2026 mortgage debt, and another portion of our 2027 debt that we completed at the end of 2025, our team continues to proactively manage Brookdale Senior Living Inc.’s balance sheet and extend our more imminent maturities. Adjusted free cash flow for the first quarter was a seasonal outflow of $12 million reflecting, among other factors, use of cash for changes in working capital including the payment of annual incentive compensation, and an increase in non-development capital expenditures. In conclusion, we are excited about the underlying strength we saw to end the first quarter and into the start of the second quarter.

As we look forward to the balance of 2026 and beyond, we remain confident that we have the right team in place and that we are pursuing the correct strategic and operational plans. The Brookdale Senior Living Inc. team remains highly confident in our ability to create durable, long-term growth and value for our shareholders. Operator, we will now open the call for questions.

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press 1 to raise your hand. To withdraw your question, please press 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Brian Tanquilut with Jefferies. Brian, your line is open. Please go ahead.

Brian Tanquilut: Hey. Good morning. Maybe, Michael, thanks for putting these slides together. So I will reference one of these slides. Dawn, when I look at Slide 12, where you have the quarterly cadence on EBITDA growth even with baseline, just curious how you are thinking about that ramp because it looks like there is a ramp implied in here, and where that confidence comes from, especially given your comment about RevPOR trend over the course of the year.

Dawn L. Kussow: Thank you, Brian, for the question. Yes, Slide 12 is a new slide that is explicit about how we are thinking about the quarterly pacing. As we talked about in our prepared remarks, adjusted EBITDA in particular was 5.6% growth year over year on an as-reported basis. What we expect for the second quarter is low- to mid-single-digit year-over-year growth on an as-reported basis, and what is really driving that is two things.

Our seasonal trends that we outlined on the last page of the investor deck—we have a full quarter of merit, additional days, holidays that normally come into the quarter—and then the managed property disposition and the managed property fees going away, and the fact that the cost savings are really coming in the back half of the year, so that is a timing difference. Importantly, as Nick and I both talked about in our prepared remarks, that low double-digit year-over-year growth on the underlying business we do expect to accelerate throughout the year. I think Nick will comment on the confidence in the guidance.

Nikolas Stengle: Thanks, Brian. A lot of this has to do with our results despite all the changes and disruption that we had to do. We really are on a transformative path here, and some of it predates me. This started maybe about a year ago, and even in the last seven months that I have been in the role—I did share some of these details during the prepared remarks, but it bears repeating—we have undergone many changes, first and foremost, organizationally how we are structured, and it truly defines who we are as a company. The line of connection between the executive leadership team, me namely as the CEO, all the way down to communities, has been reset.

So there is a much cleaner line of enablement, a cleaner line of accountability than we have had in many years. A lot of that has to do with hiring a COO, layering up our sales team and our clinical team under that COO, and doing the same thing at every layer of the organization. At the same time—and we need to keep sight of this—we have disposed and exited over 100 communities in that time period, which is very much the right decision, but it is also very disruptive. A lot of effort, a lot of work of leaders going into making that as seamless as it has been has been quite seamless. That is now mostly behind us.

We do have a few communities, as we have shared, that we still have to get out of in Q2 and just a handful later in the year. But the reality is that is now mostly behind us, and we are now in a position to really lean into the company and operate the company as the operating company that we are. I do want to point out our April results. Again, one data point—no need to start doing victory laps quite yet—but it is a very strong data point in our April occupancy growing 30 basis points when historically it has been close to flat, maybe 10 to 20 basis points.

To have that happen at the early stages of the selling season—which in senior living is typically May through September—is reflective of our confidence and of all the change that we made.

Brian Tanquilut: I appreciate that. And then maybe, Nick, I will use that as a segue. When I look at Slide 9—again, lovely slides—controllable move-outs obviously ticked up in Q1. Just curious what your philosophy is or how you are thinking about the balancing act between RevPOR or RevPAR growth and move-outs. I think move-outs are not necessarily negative in this sense when your RevPOR and RevPAR are growing as much as they are. So just curious if you would walk us through that thought process.

Nikolas Stengle: Very good set of questions there, Brian. Fundamentally, RevPAR is the number we all need to lean around. We reported 8.2% and feel good about that RevPAR and what that looks like for our guidance for the rest of the year. It truly is a balance between rate and occupancy, and we are always monitoring that and it is always a constant mix. Obviously, as occupancy goes up, then we can lean more on rate. As occupancy is not going up and is stagnant in a subset of communities, we have to lean on rate in a different direction.

As far as the move-outs for Q1, we feel very good about it in light of the large in-place rate increase that we were able to push on January 1. Typically in January and February, you do have a slightly increased pace of move-outs specifically for financial reasons, and we monitor all the different categorizations of the in-place rate increase. That happens every January and February. This year was slightly higher, based on the higher in-place rate increase that we pushed through, but it was well within our expectations. In fact, if anything, it showed the stickiness of that in-place rate increase. We feel really good about what we did.

We feel really good about our pricing power, and the net result of that move-out pace was as expected and in line with what we hoped to see with the stickiness of that in-place rate increase.

Brian Tanquilut: If I may ask just one quick question, Slide 19 shows these community renovation CapEx projects. How should we be thinking about the pipeline of these projects and what you are seeing? The ROIs look good here in this slide, so could you just walk us through that? Thank you.

Nikolas Stengle: I am glad you pointed that out. That is another new slide in our investor deck. For those that joined us at our Investor Day, we did a tour of a community where we did a very meaningful CapEx investment—beautiful building, great results. We wanted to share even more details, since part of our story has been our CapEx spend. We are projecting a spend of between $175 million to $195 million of CapEx this year, and we want to do that because we see the results, and Slide 19 shows three very specific examples where those results exist, and we have a pipeline.

I mentioned earlier in my prepared remarks, we have hired a new role to our company, the senior vice president of strategic operations, and that leader deploys this capital. We have a program. We have a prioritized list of communities where we build a pro forma. We monitor our results, and we project seeing results very similar to what you see on Slide 19. We have dozens of projects—large, deliberate, comprehensive investments of capital to improve the overall performance of the communities and get returns that achieve our hurdles.

Brian Tanquilut: Awesome. Thank you.

Operator: Your next question comes from the line of Ben Hendrix with RBC Capital Markets. Ben, your line is open. Please go ahead.

Ben Hendrix: Thank you very much. I very much appreciate the slide on pacing, Slide 12. I just wanted to drill in a little bit on the expectation for RevPAR acceleration in the back half and you have noted here both the disposition impact and also the core occupancy growth. Maybe help us parse that out a little bit more. Any notes you can give us on the overall occupancy profile and performance profile of those 19 facilities still pending disposition, so we can get an idea of the core growth and then the mix impact? Thanks. Also, along the same lines, could you give a little detail on the sources and pacing of the incremental G&A savings?

It makes sense that maybe you would see a little pickup there in savings from getting rid of some of these smaller communities, but I just wanted to get an idea of where that is coming from and how we should think about that layering on through the balance of the year. Thanks.

Dawn L. Kussow: Yes, Ben, great question. Digging into the slide, we outlined the RevPAR growth. We had 8.2% in the first quarter and expect that to be similar in the second quarter. What is driving that, of course, is our occupancy and RevPOR. From an occupancy perspective, we expect our occupancy growth to be within historical seasonal trends. Regarding the dispositions of the 19 communities, they are relatively small communities; the largest one went on April 1. So relatively small, lower-performing communities but not moving the needle. We are getting a little bit of accretion in the back half, but I would say occupancy is directional with the historical trend.

On RevPOR, as I mentioned in our prepared remarks, the second quarter normally sees our RevPOR step down after we do our January 1 rate increase. We expect that step down to be slight in the second quarter, but then in the third and fourth quarter we expect RevPOR to remain firm, helped by the accretion benefit from dispositions offsetting that normal step down. That is what will drive the RevPAR growth we have outlined. On G&A, we have taken our expectations down by $5 million. Most of that we expect to see in the second half.

From a pacing perspective, my expectation is G&A is going to be relatively the same in Q2 as it was in Q1 because you get a little bit of extra expense with more days, and then our merit increase comes in the second quarter that is going to offset a little bit of the savings that we will get. Most of that $5 million will be in Q3 and Q4.

Operator: Your next question comes from the line of Joanna Gajuk with Bank of America. Joanna, your line is open. Please go ahead.

Joanna Gajuk: Good morning. Thanks so much. At your Investor Day, you mentioned your interest to add some assets strategically, talking about “tacking” acquisitions, small things. With a lot of interest from the REITs and private equity to consolidate in the industry, do you see more competition, or is that still kind of on the table? And coming back to the discussion around rate increases, it sounds like you pushed a high single-digit increase this year and the financial move-outs were higher, but not out of the ordinary. We are also hearing a lot about higher community fees. Is that also another lever you can pull, especially when you have communities with higher occupancy?

Lastly, it looks like about 15% of your consolidated communities are above 95% occupancy. Can you talk about margins and growth in those highly occupied assets? Are the rate increases much higher than the in-place customers when you have such highly occupied assets?

Nikolas Stengle: Thanks for the question, Joanna. Our strategy—articulated at Investor Day—on the acquisition side is very small, deliberate, single community or one-, two-, three-community-type acquisitions in markets where we already exist. We are in 41 states today with no desire to be in a forty-second or forty-third state. We are in about 125 different markets with a desire to be in 126 or 127. That is a strategy for some of our peers; that is not our strategy. Our strategy is to be in markets we already are in. At Investor Day, we used the Kansas City and Dallas–Fort Worth areas as illustrative examples where we are looking to make very deliberate, strategic, targeted acquisitions.

Typically, the bigger REITs are not doing single-community transactions; they are looking for larger things. So we do not feel, and we do not see in the pipeline we are contemplating, that we are competing against large REITs because we are basically deploying different acquisition strategies based on our needs and their needs. On community fees, that is one of the features of our industry and for sure at Brookdale Senior Living Inc., where we do have an upfront nonrefundable community fee. As your occupancy goes up, you collect on that far more regularly, and you can even increase the community fee.

As your occupancy is lower and you need to drive move-ins, that is potentially one of the first things you would discount because it is a one-time thing and you are not locking in a year or two years of rate. It is an easier concession to give to a prospective resident. As our communities strengthen, our overall RevPOR is growing, and community fees—the upfront nonrefundable community fee—we collect and can increase. On highly occupied assets, we have been communicating this high single-digit in-place rate increase that we pushed through on January 1. The reality is not every community got the same number; that is an aggregated number.

The more highly occupied communities actually had a low double-digit increase, while the lower-occupied communities had a mid single-digit increase. The net effect is what we have been communicating, but for sure you have very strong pricing power as your occupancy goes up. On Slide 18, we updated the numbers in a slide we have had for a while where you can see the EBITDA per available unit. It increased meaningfully as you compare it to last quarter’s slide because of that additional in-place rate increase we were able to achieve in the more highly occupied communities.

Joanna Gajuk: Yeah, exactly. I like that slide. That is the roughly $21,000 EBITDA per unit—that is what I was getting at. So thank you so much for taking the questions.

Nikolas Stengle: Yep. Awesome. Thanks for pointing that out. Thank you, Joanna.

Operator: Your next question comes from the line of Andrew Mok with Barclays. Andrew, your line is open. Please go ahead.

Andrew Mok: Hi. Good morning. The same-store RevPAR, which cuts through the noise of divestitures, was up about 3.4% in the quarter for the senior housing community. You called out annualizing concessions as weighing on that metric in the quarter. Could you give us a sense for how same-store RevPAR is tracking in your higher-occupancy or non-discounted communities? And just to be clear, we should expect same-store year-over-year revenue growth to also accelerate in the back half as you anniversary those pricing concessions, correct? Also, to follow up on the winter storms, you sized total direct cost of about $3 million to $4 million in the quarter.

Do you have a more comprehensive impact that would include both the revenue and cost side of things? Thanks.

Dawn L. Kussow: Correct. Thanks for the question, Andrew. We are generally bifurcating out the RevPAR and RevPOR growth between the occupancy bands. As we showed on the last call, we are looking at the occupancy bands where we are giving you adjusted EBITDA on a per-unit basis. From a RevPOR perspective, we absolutely expect our RevPOR to follow that normal trending I talked about, with RevPOR doing the normal step-down seasonally, but we expect EXPOR growth to be manageable and margin expansion to improve throughout the year as labor cost leverage improves and seasonal compression releases. On the storms, we did not quantify the revenue impact.

We talked about the occupancy impact and the slowness of the occupancy in the first couple of months. We thought it would be helpful at least to quantify those direct costs. Most of those costs—of the $3 million to $4 million—you can see in our other facility operating expenses. A lot of it was our utilities—about two-thirds in our other facility operating expenses—and the remainder was in labor expense. We did not quantify the top line because it becomes a bit more fungible when you are talking about the pacing of occupancy growth and things of that nature.

Andrew Mok: Great. Thank you.

Operator: Your next question comes from the line of Raj Kumar with Stephens. Raj, your line is open. Please go ahead.

Analyst: Hi. Good morning. Focusing on the capital investments—you reiterated your CapEx guidance for this year. Thinking about what you highlighted during Investor Day with the refresh initiatives: how many communities are underway for 2026 with those efforts, and in terms of the average investment size, are you seeing a bigger investment on a per-community basis for what remains? And are you integrating HealthPlus as part of that process to boost the offering at those communities? As my follow-up, I appreciate the disclosures on the occupancy bands with the owned portfolio. As I think about the leased portfolio and bifurcating that opportunity, any way of framing that portfolio’s progression in 2026 and what is embedded in guidance?

Chad C. White: Hi, Raj. Good morning. What we can say on the CapEx front is we have a number of projects underway across the portfolio. As Nick talked about when he came on, we had a shift in strategy as we think about our CapEx program. Instead of doing piecemeal projects—adding some new furniture or small fixes—we have really focused on prioritizing our CapEx spend in places where we can drive a great return, as you see on the slide included in the investor deck, and prioritizing larger community refreshes. We have not given an exact number of projects, but the budget is included in our overall CapEx guidance for the year.

If we can do more of these refreshes in markets where we can drive additional growth, we think that will drive better returns and ultimately help our performance and help us achieve both the guidance and multiyear outlook we have given. As it relates to HealthPlus, we have it in around 180 communities across the portfolio. We think it is still a very innovative program that our competitors do not offer. It allows us to play in the value-based care space, and it really provides benefits for residents and their family members in the way of reduced hospitalizations and reduced ER visits. As that program matures, we expect it to drive good results, including longer lengths of stay.

We also have a lot of good things going on in the portfolio. One other thing Nick mentioned is the progress we have made on net promoter score and turnover—those are key leading indicators that we think will help us achieve the results we discussed today. We are very excited about where the company is going.

Dawn L. Kussow: On the leased portfolio, we have a separate slide—Slide 11—in our supplement that has the lease portfolio economics. We are pleased with the margin growth we have seen in the portfolio. It is adjusted free cash flow positive. We also have a significant number of CapEx reimbursement opportunities with our landlords that we are taking advantage of, and we expect that portfolio to continue to progress just as we expect our owned portfolio to progress.

Nikolas Stengle: Fundamentally, it is accretive to the business—maybe for the first time in many years. If you look at the specific performance of our lease portfolio, it did quite well from an occupancy and NOI expansion perspective year over year. We feel really good about our portfolio mix. Overall, we will be roughly 76% owned and 24% leased. Managed is just a tiny sliver. It is one of the transformational shifts we have undergone over the last year. Now we have the right portfolio, in the right locations, in the right markets, with the right buildings—and we have the right team.

We feel really good about our leased portfolio, as much as we feel really good about the assets we own, which is that scarce real estate.

Analyst: Great. Thanks.

Operator: We have reached the end of the Q&A session. I will now turn the call back to Nikolas Stengle, CEO, for closing remarks.

Nikolas Stengle: Thank you, Samantha. I would be remiss if I did not take a moment and thank all our associates—over 30,000 associates—who at this very moment are caring for all our residents. I would also like to thank all our residents and their loved ones who have put their trust in us. I would also like to thank all our stakeholders—our investors, our banking partners, and all the different partners who work with us. We are excited by what the rest of the year brings now that we have pivoted our company and are on the tail end of all the transformational changes that we have undergone over the last year, and excited by what 2026 will bring.

With that, Samantha, we can end the call.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

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