UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 001-32641

BROOKDALE SENIOR LIVING INC.

(Exact name of registrant as specified in its charter)


Delaware			20-3068069
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

111 Westwood Place,

Suite 400,

Brentwood,

Tennessee

37027

(Address of principal executive offices)

(Zip Code)

(Registrant's telephone number, including area code) (615) 221-2250

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value Per Share	BKD	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐No ☒

As of ~~May 4,~~August 5, 2022, ~~186,752,412~~186,785,164 shares of the registrant's common stock, $0.01 par value, were outstanding (excluding restricted stock and restricted stock units).

TABLE OF CONTENTS

BROOKDALE SENIOR LIVING INC.

FORM 10-Q

FOR THE QUARTER ENDED ~~MARCH 31,~~JUNE 30, 2022


		PAGE
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets -
	As of ~~March 31~~June 3 0 , ~~202~~2 2022 (Unaudited) and December 31, 20 212021	4

	Condensed Consolidated Statements of Operations -
	Three an d six months ended ~~March~~June 3 10 , ~~202~~2 2022 and ~~202~~1 2021 (Unaudited)	5

	Condensed Consolidated Statements of Equity -
	Three and six months ended ~~March 31~~June 3 0 , ~~202~~2 2022 and ~~202~~1 2021 (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows -
	~~Three~~ Six months ended ~~March 31~~June 3 0 , ~~202~~2 2022 and ~~202~~1 2021 (Unaudited)	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1819

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3744

Item 4.	Controls and Procedures	3745

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	3845

Item 1A.	Risk Factors	3845

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3846

Item 6.	Exhibits	3947

Signatures		4048

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BROOKDALE SENIOR LIVING INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except stock amounts)


		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
Assets	Assets	(Unaudited)				Assets	(Unaudited)
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	289,247	$	347,031	Cash and cash equivalents	$	238,757	$	347,031
Marketable securities	Marketable securities	179,260		182,393		Marketable securities	165,481		182,393
Restricted cash	Restricted cash	24,791		26,845		Restricted cash	29,946		26,845
Accounts receivable, net	Accounts receivable, net	49,952		51,137		Accounts receivable, net	49,544		51,137
Assets held for sale	Assets held for sale	3,658		3,642		Assets held for sale	—		3,642
Prepaid expenses and other current assets, net	Prepaid expenses and other current assets, net	107,988		87,946		Prepaid expenses and other current assets, net	103,738		87,946
Total current assets	Total current assets	654,896		698,994		Total current assets	587,466		698,994
Property, plant and equipment and leasehold intangibles, net	Property, plant and equipment and leasehold intangibles, net	4,874,044		4,904,292		Property, plant and equipment and leasehold intangibles, net	4,839,643		4,904,292
Operating lease right-of-use assets	Operating lease right-of-use assets	588,935		630,423		Operating lease right-of-use assets	572,191		630,423
Restricted cash	Restricted cash	64,455		64,438		Restricted cash	59,839		64,438
Investment in unconsolidated ventures	Investment in unconsolidated ventures	62,050		67,424		Investment in unconsolidated ventures	59,697		67,424
Goodwill	Goodwill	27,321		27,321		Goodwill	27,321		27,321
Deferred tax asset	Deferred tax asset	2,584		279		Deferred tax asset	1,717		279
Other assets, net	Other assets, net	20,692		17,296		Other assets, net	20,422		17,296
Total assets	Total assets	$	6,294,977	$	6,410,467	Total assets	$	6,168,296	$	6,410,467
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Current liabilities	Current liabilities					Current liabilities
Current portion of long-term debt	Current portion of long-term debt	$	207,751	$	63,125	Current portion of long-term debt	$	268,341	$	63,125
Current portion of financing lease obligations	Current portion of financing lease obligations	28,559		22,151		Current portion of financing lease obligations	22,996		22,151
Current portion of operating lease obligations	Current portion of operating lease obligations	147,831		148,642		Current portion of operating lease obligations	154,455		148,642
Trade accounts payable	Trade accounts payable	82,014		76,125		Trade accounts payable	76,651		76,125
Accrued expenses	Accrued expenses	253,475		254,831		Accrued expenses	260,150		254,831
Refundable fees and deferred revenue	Refundable fees and deferred revenue	73,268		67,080		Refundable fees and deferred revenue	71,420		67,080
Total current liabilities	Total current liabilities	792,898		631,954		Total current liabilities	854,013		631,954
Long-term debt, less current portion	Long-term debt, less current portion	3,640,784		3,778,087		Long-term debt, less current portion	3,565,819		3,778,087
Financing lease obligations, less current portion	Financing lease obligations, less current portion	529,681		532,136		Financing lease obligations, less current portion	526,601		532,136
Operating lease obligations, less current portion	Operating lease obligations, less current portion	647,571		681,876		Operating lease obligations, less current portion	620,035		681,876

Other liabilities	Other liabilities	84,764		86,791		Other liabilities	83,261		86,791
Total liabilities	Total liabilities	5,695,698		5,710,844		Total liabilities	5,649,729		5,710,844
Preferred stock, $0.01 par value, 50,000,000 shares authorized at March 31, 2022 and December 31, 2021; no shares issued and outstanding		—		—
Common stock, $0.01 par value, 400,000,000 shares authorized at March 31, 2022 and December 31, 2021; 197,810,798 and 197,485,318 shares issued and 187,283,273 and 186,957,793 shares outstanding (including 530,861 and 1,549,059 unvested restricted shares), respectively		1,978		1,975
Preferred stock, $0.01 par value, 50,000,000 shares authorized at June 30, 2022 and December 31, 2021; no shares issued and outstanding						Preferred stock, $0.01 par value, 50,000,000 shares authorized at June 30, 2022 and December 31, 2021; no shares issued and outstanding	—		—
Common stock, $0.01 par value, 400,000,000 shares authorized at June 30, 2022 and December 31, 2021; 197,783,147 and 197,485,318 shares issued and 187,255,622 and 186,957,793 shares outstanding (including 483,299 and 1,549,059 unvested restricted shares), respectively						Common stock, $0.01 par value, 400,000,000 shares authorized at June 30, 2022 and December 31, 2021; 197,783,147 and 197,485,318 shares issued and 187,255,622 and 186,957,793 shares outstanding (including 483,299 and 1,549,059 unvested restricted shares), respectively	1,978		1,975
Additional paid-in-capital	Additional paid-in-capital	4,208,360		4,208,675		Additional paid-in-capital	4,211,931		4,208,675
Treasury stock, at cost; 10,527,525 shares at March 31, 2022 and December 31, 2021		(102,774)		(102,774)
Treasury stock, at cost; 10,527,525 shares at June 30, 2022 and December 31, 2021						Treasury stock, at cost; 10,527,525 shares at June 30, 2022 and December 31, 2021	(102,774)		(102,774)
Accumulated deficit	Accumulated deficit	(3,510,487)		(3,410,474)		Accumulated deficit	(3,594,905)		(3,410,474)
Total Brookdale Senior Living Inc. stockholders' equity	Total Brookdale Senior Living Inc. stockholders' equity	597,077		697,402		Total Brookdale Senior Living Inc. stockholders' equity	516,230		697,402
Noncontrolling interest	Noncontrolling interest	2,202		2,221		Noncontrolling interest	2,337		2,221
Total equity	Total equity	599,279		699,623		Total equity	518,567		699,623
Total liabilities and equity	Total liabilities and equity	$	6,294,977	$	6,410,467	Total liabilities and equity	$	6,168,296	$	6,410,467

See accompanying notes to condensed consolidated financial statements.

BROOKDALE SENIOR LIVING INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021				2022		2021		2022		2021
Revenue	Revenue						Revenue
Resident fees	Resident fees	$	636,974	$	664,350		Resident fees	$	640,388	$	673,978	$	1,277,362	$	1,338,328
Management fees	Management fees	3,329		8,566			Management fees	3,329		4,998		6,658		13,564
Reimbursed costs incurred on behalf of managed communities	Reimbursed costs incurred on behalf of managed communities	37,141		65,794			Reimbursed costs incurred on behalf of managed communities	37,388		43,008		74,529		108,802
Other operating income	Other operating income	376		10,735			Other operating income	8,411		1,308		8,787		12,043
Total revenue and other operating income	Total revenue and other operating income	677,820		749,445			Total revenue and other operating income	689,516		723,292		1,367,336		1,472,737

Expense	Expense						Expense
Facility operating expense (excluding facility depreciation and amortization of $79,932 and $77,274, respectively)		512,764		556,312
Facility operating expense (excluding facility depreciation and amortization of $80,944, $77,921, $160,876, and $155,195, respectively)							Facility operating expense (excluding facility depreciation and amortization of $80,944, $77,921, $160,876, and $155,195, respectively)	513,664		550,846		1,026,428		1,107,158

General and administrative expense (including non-cash stock-based compensation expense of $3,885 and $4,783, respectively)		45,126		49,943
General and administrative expense (including non-cash stock-based compensation expense of $3,619, $4,527, $7,504, and $9,310, respectively)							General and administrative expense (including non-cash stock-based compensation expense of $3,619, $4,527, $7,504, and $9,310, respectively)	41,752		52,400		86,878		102,343

Facility operating lease expense	Facility operating lease expense	41,564		44,418			Facility operating lease expense	41,538		43,864		83,102		88,282
Depreciation and amortization	Depreciation and amortization	85,684		83,891			Depreciation and amortization	86,623		83,591		172,307		167,482
Asset impairment	Asset impairment	9,075		10,677			Asset impairment	2,599		2,078		11,674		12,755

Costs incurred on behalf of managed communities	Costs incurred on behalf of managed communities	37,141		65,794			Costs incurred on behalf of managed communities	37,388		43,008		74,529		108,802
Total operating expense	Total operating expense	731,354		811,035			Total operating expense	723,564		775,787		1,454,918		1,586,822
Income (loss) from operations	Income (loss) from operations	(53,534)		(61,590)			Income (loss) from operations	(34,048)		(52,495)		(87,582)		(114,085)

Interest income	Interest income	95		421			Interest income	778		341		873		762
Interest expense:	Interest expense:						Interest expense:
Debt	Debt	(33,157)		(35,351)			Debt	(35,693)		(35,425)		(68,850)		(70,776)
Financing lease obligations	Financing lease obligations	(12,058)		(11,383)			Financing lease obligations	(11,994)		(11,492)		(24,052)		(22,875)
Amortization of deferred financing costs	Amortization of deferred financing costs	(1,542)		(1,915)			Amortization of deferred financing costs	(1,520)		(1,907)		(3,062)		(3,822)
Change in fair value of derivatives	Change in fair value of derivatives	3,403		42			Change in fair value of derivatives	973		(233)		4,376		(191)

Equity in earnings (loss) of unconsolidated ventures	Equity in earnings (loss) of unconsolidated ventures	(4,894)		(531)			Equity in earnings (loss) of unconsolidated ventures	(2,439)		13,946		(7,333)		13,415
Gain (loss) on sale of assets, net	Gain (loss) on sale of assets, net	(294)		1,112			Gain (loss) on sale of assets, net	961		(79)		667		1,033
Other non-operating income (loss)	Other non-operating income (loss)	(27)		1,644			Other non-operating income (loss)	(111)		2,948		(138)		4,592
Income (loss) before income taxes	Income (loss) before income taxes	(102,008)		(107,551)			Income (loss) before income taxes	(83,093)		(84,396)		(185,101)		(191,947)
Benefit (provision) for income taxes	Benefit (provision) for income taxes	1,976		(752)			Benefit (provision) for income taxes	(1,190)		792		786		40
Net income (loss)	Net income (loss)	(100,032)		(108,303)			Net income (loss)	(84,283)		(83,604)		(184,315)		(191,907)
Net (income) loss attributable to noncontrolling interest	Net (income) loss attributable to noncontrolling interest	19		18			Net (income) loss attributable to noncontrolling interest	(135)		19		(116)		37
Net income (loss) attributable to Brookdale Senior Living Inc. common stockholders	Net income (loss) attributable to Brookdale Senior Living Inc. common stockholders	$	(100,013)	$	(108,285)		Net income (loss) attributable to Brookdale Senior Living Inc. common stockholders	$	(84,418)	$	(83,585)	$	(184,431)	$	(191,870)

Basic and diluted net income (loss) per share attributable to Brookdale Senior Living Inc. common stockholders	Basic and diluted net income (loss) per share attributable to Brookdale Senior Living Inc. common stockholders	$	(0.54)	$	(0.59)		Basic and diluted net income (loss) per share attributable to Brookdale Senior Living Inc. common stockholders	$	(0.45)	$	(0.45)	$	(0.99)	$	(1.04)

Weighted average shares used in computing basic and diluted net income (loss) per share	Weighted average shares used in computing basic and diluted net income (loss) per share	185,916		184,011			Weighted average shares used in computing basic and diluted net income (loss) per share	186,761		185,182		186,341		184,600

See accompanying notes to condensed consolidated financial statements.

BROOKDALE SENIOR LIVING INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited, in thousands)


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021				2022		2021		2022		2021
Total equity, balance at beginning of period	Total equity, balance at beginning of period	$	699,623	$	802,729		Total equity, balance at beginning of period	$	599,279	$	695,107	$	699,623	$	802,729

Common stock:	Common stock:						Common stock:
Balance at beginning of period	Balance at beginning of period	$	1,975	$	1,983		Balance at beginning of period	$	1,978	$	1,978	$	1,975	$	1,983

Restricted stock and restricted stock units, net	Restricted stock and restricted stock units, net	9		2			Restricted stock and restricted stock units, net	—		(1)		9		1
Shares withheld for employee taxes	Shares withheld for employee taxes	(6)		(7)			Shares withheld for employee taxes	—		—		(6)		(7)

Balance at end of period	Balance at end of period	$	1,978	$	1,978		Balance at end of period	$	1,978	$	1,977	$	1,978	$	1,977
Additional paid-in-capital:	Additional paid-in-capital:						Additional paid-in-capital:
Balance at beginning of period	Balance at beginning of period	$	4,208,675	$	4,212,409		Balance at beginning of period	$	4,208,360	$	4,213,095	$	4,208,675	$	4,212,409
Non-cash stock-based compensation expense	Non-cash stock-based compensation expense	3,885		4,783			Non-cash stock-based compensation expense	3,619		4,527		7,504		9,310
Issuance of common stock under Associate Stock Purchase Plan	Issuance of common stock under Associate Stock Purchase Plan	—		224			Issuance of common stock under Associate Stock Purchase Plan	—		213		—		437

Restricted stock and restricted stock units, net	Restricted stock and restricted stock units, net	(9)		(2)			Restricted stock and restricted stock units, net	—		1		(9)		(1)
Shares withheld for employee taxes	Shares withheld for employee taxes	(4,191)		(4,322)			Shares withheld for employee taxes	(48)		(115)		(4,239)		(4,437)
Other, net	Other, net	—		3			Other, net	—		7		—		10
Balance at end of period	Balance at end of period	$	4,208,360	$	4,213,095		Balance at end of period	$	4,211,931	$	4,217,728	$	4,211,931	$	4,217,728
Treasury stock:	Treasury stock:						Treasury stock:
Balance at beginning and end of period	Balance at beginning and end of period	$	(102,774)	$	(102,774)		Balance at beginning and end of period	$	(102,774)	$	(102,774)	$	(102,774)	$	(102,774)

Accumulated deficit:	Accumulated deficit:						Accumulated deficit:
Balance at beginning of period	Balance at beginning of period	$	(3,410,474)	$	(3,311,184)		Balance at beginning of period	$	(3,510,487)	$	(3,419,469)	$	(3,410,474)	$	(3,311,184)

Net income (loss)	Net income (loss)	(100,013)		(108,285)			Net income (loss)	(84,418)		(83,585)		(184,431)		(191,870)

Balance at end of period	Balance at end of period	$	(3,510,487)	$	(3,419,469)		Balance at end of period	$	(3,594,905)	$	(3,503,054)	$	(3,594,905)	$	(3,503,054)
Noncontrolling interest:	Noncontrolling interest:						Noncontrolling interest:
Balance at beginning of period	Balance at beginning of period	$	2,221	$	2,295		Balance at beginning of period	$	2,202	$	2,277	$	2,221	$	2,295
Net income (loss) attributable to noncontrolling interest	Net income (loss) attributable to noncontrolling interest	(19)		(18)			Net income (loss) attributable to noncontrolling interest	135		(19)		116		(37)

Balance at end of period	Balance at end of period	$	2,202	$	2,277		Balance at end of period	$	2,337	$	2,258	$	2,337	$	2,258
Total equity, balance at end of period	Total equity, balance at end of period	$	599,279	$	695,107		Total equity, balance at end of period	$	518,567	$	616,135	$	518,567	$	616,135

Common stock share activity	Common stock share activity						Common stock share activity
Outstanding shares of common stock:	Outstanding shares of common stock:						Outstanding shares of common stock:
Balance at beginning of period	Balance at beginning of period	186,958		187,804			Balance at beginning of period	187,283		187,230		186,958		187,804
Issuance of common stock under Associate Stock Purchase Plan	Issuance of common stock under Associate Stock Purchase Plan	—		43			Issuance of common stock under Associate Stock Purchase Plan	—		30		—		73
Restricted stock and restricted stock units, net	Restricted stock and restricted stock units, net	925		127			Restricted stock and restricted stock units, net	(18)		(104)		907		23
Shares withheld for employee taxes	Shares withheld for employee taxes	(600)		(744)			Shares withheld for employee taxes	(9)		(17)		(609)		(761)

Balance at end of period	Balance at end of period	187,283		187,230			Balance at end of period	187,256		187,139		187,256		187,139

See accompanying notes to condensed consolidated financial statements.

BROOKDALE SENIOR LIVING INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


		Three Months Ended March 31,					Six Months Ended June 30,
		2022		2021			2022		2021
Cash Flows from Operating Activities	Cash Flows from Operating Activities					Cash Flows from Operating Activities
Net income (loss)	Net income (loss)	$	(100,032)	$	(108,303)	Net income (loss)	$	(184,315)	$	(191,907)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:					Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization, net	Depreciation and amortization, net	87,226		85,806		Depreciation and amortization, net	175,369		171,304
Asset impairment	Asset impairment	9,075		10,677		Asset impairment	11,674		12,755
Equity in (earnings) loss of unconsolidated ventures	Equity in (earnings) loss of unconsolidated ventures	4,894		531		Equity in (earnings) loss of unconsolidated ventures	7,333		(13,415)
Distributions from unconsolidated ventures from cumulative share of net earnings	Distributions from unconsolidated ventures from cumulative share of net earnings	561		—		Distributions from unconsolidated ventures from cumulative share of net earnings	561		5,355
Amortization of entrance fees	Amortization of entrance fees	(726)		(364)		Amortization of entrance fees	(1,267)		(876)
Proceeds from deferred entrance fee revenue	Proceeds from deferred entrance fee revenue	1,036		670		Proceeds from deferred entrance fee revenue	1,959		2,298
Deferred income tax (benefit) provision	Deferred income tax (benefit) provision	(2,304)		319		Deferred income tax (benefit) provision	(1,438)		(704)
Operating lease expense adjustment	Operating lease expense adjustment	(8,307)		(4,664)		Operating lease expense adjustment	(16,615)		(9,990)
Change in fair value of derivatives	Change in fair value of derivatives	(3,403)		(42)		Change in fair value of derivatives	(4,376)		191
Loss (gain) on sale of assets, net	Loss (gain) on sale of assets, net	294		(1,112)		Loss (gain) on sale of assets, net	(667)		(1,033)

Non-cash stock-based compensation expense	Non-cash stock-based compensation expense	3,885		4,783		Non-cash stock-based compensation expense	7,504		9,310

Other	Other	(43)		(1,416)		Other	(181)		(4,007)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable, net	Accounts receivable, net	1,185		(5,768)		Accounts receivable, net	1,592		(1,267)
Prepaid expenses and other assets, net	Prepaid expenses and other assets, net	(4,734)		(6,769)		Prepaid expenses and other assets, net	(5,550)		1,605
Prepaid insurance premiums financed with notes payable	Prepaid insurance premiums financed with notes payable	(16,629)		(12,985)		Prepaid insurance premiums financed with notes payable	(11,252)		(8,785)
Trade accounts payable and accrued expenses	Trade accounts payable and accrued expenses	(2,630)		(500)		Trade accounts payable and accrued expenses	(822)		2,131
Refundable fees and deferred revenue	Refundable fees and deferred revenue	5,907		7,717		Refundable fees and deferred revenue	3,956		(8,918)
Operating lease assets and liabilities for lessor capital expenditure reimbursements	Operating lease assets and liabilities for lessor capital expenditure reimbursements	1,490		7,563		Operating lease assets and liabilities for lessor capital expenditure reimbursements	4,857		15,506

Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	(23,255)		(23,857)		Net cash provided by (used in) operating activities	(11,678)		(20,447)
Cash Flows from Investing Activities	Cash Flows from Investing Activities					Cash Flows from Investing Activities
Change in lease security deposits and lease acquisition deposits, net	Change in lease security deposits and lease acquisition deposits, net	155		(62)		Change in lease security deposits and lease acquisition deposits, net	155		(75)
Purchase of marketable securities	Purchase of marketable securities	(125,990)		(79,932)		Purchase of marketable securities	(205,373)		(119,914)
Sale and maturities of marketable securities	Sale and maturities of marketable securities	129,000		117,995		Sale and maturities of marketable securities	222,500		192,995
Capital expenditures, net of related payables	Capital expenditures, net of related payables	(39,956)		(40,361)		Capital expenditures, net of related payables	(96,851)		(79,538)

Acquisition of assets						Acquisition of assets	(6,004)		—
Investment in unconsolidated ventures	Investment in unconsolidated ventures	(82)		(5,206)		Investment in unconsolidated ventures	(167)		(5,359)

Proceeds from sale of assets, net	Proceeds from sale of assets, net	710		3,760		Proceeds from sale of assets, net	5,739		9,646

Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(36,163)		(3,806)		Net cash provided by (used in) investing activities	(80,001)		(2,245)
Cash Flows from Financing Activities	Cash Flows from Financing Activities					Cash Flows from Financing Activities
Proceeds from debt	Proceeds from debt	25,258		18,575		Proceeds from debt	29,302		21,022
Repayment of debt and financing lease obligations	Repayment of debt and financing lease obligations	(21,440)		(49,924)		Repayment of debt and financing lease obligations	(43,084)		(72,970)

Payment of financing costs, net of related payables	Payment of financing costs, net of related payables	(76)		(87)		Payment of financing costs, net of related payables	(116)		(172)
Payments of employee taxes for withheld shares	Payments of employee taxes for withheld shares	(4,145)		(4,329)		Payments of employee taxes for withheld shares	(4,195)		(4,444)
Other	Other	—		203		Other	—		10
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(403)		(35,562)		Net cash provided by (used in) financing activities	(18,093)		(56,554)
Net increase (decrease) in cash, cash equivalents, and restricted cash	Net increase (decrease) in cash, cash equivalents, and restricted cash	(59,821)		(63,225)		Net increase (decrease) in cash, cash equivalents, and restricted cash	(109,772)		(79,246)
Cash, cash equivalents, and restricted cash at beginning of period	Cash, cash equivalents, and restricted cash at beginning of period	438,314		465,148		Cash, cash equivalents, and restricted cash at beginning of period	438,314		465,148
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	378,493	$	401,923	Cash, cash equivalents, and restricted cash at end of period	$	328,542	$	385,902

See accompanying notes to condensed consolidated financial statements.

BROOKDALE SENIOR LIVING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Description of Business

Brookdale Senior Living Inc. together with its consolidated subsidiaries ("Brookdale" or the "Company") is an operator of ~~678~~674 senior living communities throughout the United States. The Company is committed to its mission of enriching the lives of the people it serves with compassion, respect, excellence, and integrity. The Company operates and manages independent living, assisted living, memory care, and continuing care retirement communities ("CCRCs"). The Company's senior living communities and its comprehensive network help to provide seniors with care and services in an environment that feels like home. As of ~~March 31,~~June 30, 2022, the Company owned ~~347~~346 communities, representing a majority of the Company's consolidated community portfolio, leased ~~298~~295 communities, and managed 33 communities.

On July 1, 2021, the Company sold 80% of its equity in its Health Care Services segment. The accompanying unaudited condensed consolidated financial statements include the results of operations and cash flows of the Health Care Services segment for the ~~three~~six months ended ~~March 31,~~June 30, 2021. For periods beginning July 1, 2021, the results and financial position of the Health Care Services segment were deconsolidated from the Company's consolidated financial statements and its 20% equity interest in the Health Care Services venture (the "HCS Venture") is accounted for under the equity method of accounting.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for quarterly reports on Form 10-Q. In the opinion of management, these financial statements include all adjustments, which are of a normal and recurring nature, necessary to present fairly the financial position, results of operations, and cash flows of the Company for all periods presented. Certain information and footnote disclosures included in annual financial statements have been condensed or omitted. The Company believes that the disclosures included are adequate and provide a fair presentation of interim period results. Interim financial statements are not necessarily indicative of the financial position or operating results for an entire year. These interim financial statements should be read in conjunction with the audited financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 15, 2022.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Brookdale and its consolidated subsidiaries. The ownership interest of consolidated entities not wholly-owned by the Company are presented as noncontrolling interests in the accompanying unaudited condensed consolidated financial statements. Intercompany balances and transactions have been eliminated in consolidation, and net income (loss) is reduced by the portion of net income (loss) attributable to noncontrolling interests. The Company reports investments in unconsolidated entities over whose operating and financial policies it has the ability to exercise significant influence under the equity method of accounting.

The Company continually evaluates its potential variable interest entity ("VIE") relationships under certain criteria as provided for in Financial Accounting Standards Board Accounting Standards Codification 810, Consolidation ("ASC 810"). ASC 810 broadly defines a VIE as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity's activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity's activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity's activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The Company performs this analysis on an ongoing basis and consolidates any VIEs for which the Company is determined to be the primary beneficiary, as determined by the Company's power to direct the VIE's activities and the obligation to absorb its losses or the right to receive its benefits, which are potentially significant to the VIE.

Use of Estimates

The preparation of the condensed consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, revenue, other operating income, asset impairments, self-insurance reserves, performance-based compensation, the allowance for credit losses, depreciation and amortization, leasing transactions, income taxes, and other contingencies. Although these estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from the original estimates.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the Company's condensed consolidated financial position or results of operations.

3. COVID-19 Pandemic

The COVID-19 pandemic has adversely impacted the Company's occupancy and resident fee revenue beginning in March 2020 and resulted in incremental direct costs to respond to the pandemic and net cash used in operating activities.

The Company cannot predict with reasonable certainty the impacts that COVID-19 ultimately will have on its business, results of operations, cash flow, and liquidity, and its response efforts may continue to delay or negatively impact its strategic initiatives, including plans for future growth. The ultimate impacts of COVID-19 will depend on many factors, some of which cannot be foreseen, including the duration, severity, and breadth of the pandemic and any resurgence or variants of the disease; the impact of COVID-19 on the nation’s economy and debt and equity markets and the local economies in the Company's markets; the development, availability, utilization, and efficacy of COVID-19 testing, therapeutic agents, and vaccines and the prioritization of such resources among businesses and demographic groups; government financial and regulatory relief efforts that may become available to business and individuals, including the Company's ability to qualify for and satisfy the terms and conditions of financial relief; perceptions regarding the safety of senior living communities during and after the pandemic; changes in demand for senior living communities and the Company's ability to adapt its sales and marketing efforts to meet that demand; the impact of COVID-19 on the Company's residents’ and their families’ ability to afford its resident fees, including due to changes in unemployment rates, consumer confidence, housing markets, and equity markets caused by COVID-19; changes in the acuity levels of the Company's new residents; the disproportionate impact of COVID-19 on seniors generally and those residing in the Company's communities; the duration and costs of the Company's response efforts, including increased equipment, supplies, labor, litigation, testing, vaccination clinic, health plan, and other expenses; potentially greater use of contract labor and overtime due to COVID-19 and general labor market conditions; the impact of COVID-19 on the Company's ability to complete financings and refinancings of various assets or other transactions or to generate sufficient cash flow to cover required debt, interest, and lease payments and to satisfy financial and other covenants in its debt and lease documents; increased regulatory requirements, including the costs of unfunded, mandatory testing of residents and associates and provision of test kits to the Company's health plan participants; increased enforcement actions resulting from COVID-19; government action that may limit the Company's collection or discharge efforts for delinquent accounts; and the frequency and magnitude of legal actions and liability claims that may arise due to COVID-19 or the Company's response efforts.

Employee Retention Credit. The Company was eligible to claim the employee retention credit for certain of its associates under the Coronavirus Aid, Relief, and Economic Security Act of 2020 ("CARES Act"). The Company recognized $0.9 million and $9.9 million for the three and six months ended June 30, 2021, respectively, of employee retention credits on wages paid from March 12, 2020 to December 31, 2020 within other operating income, for which the Company has received $4.6 million in cash as of June 30, 2022. The credit was modified and extended by subsequent legislation for wages paid from January 1, 2021 through December 31, 2021. During the three and six months ended June 30, 2022, the Company recognized $4.7 million of employee retention credits on wages paid in 2021 within other operating income based upon its current estimates. The Company has a receivable for the remaining $10.1 million included within prepaid expenses and other current assets, net on the condensed consolidated balance sheet as of June 30, 2022.

Phase 4 Provider Relief Fund Grants.During the three months ended December 31, 2021, the Company applied for the Phase 4 general distribution from the Public Health and Social Services Emergency Fund ("Provider Relief Fund") administered by the U.S. Department of Health and Human Services ("HHS"), under which grants have been made available to eligible healthcare providers for healthcare related expenses or lost revenues attributable to COVID-19. The Company accepted approximately

$60.0 million of Phase 4 grants on August 5, 2022. The Company has not recognized any Phase 4 grant amounts in income for the three or six months ended June 30, 2022.

4. Fair Value Measurements

Marketable Securities

As of ~~March 31,~~June 30, 2022 and December 31, 2021, marketable securities of ~~$179.3~~$165.5 million and $182.4 million, respectively, are stated at fair value based on valuations provided by third-party pricing services and are classified within Level 2 of the valuation hierarchy.

Debt

The Company estimates the fair value of its debt using a discounted cash flow analysis based upon the Company's current borrowing rate for debt with similar maturities and collateral securing the indebtedness. The Company had outstanding long-term debt with a carrying amount of approximately $3.8 billion as of both ~~March 31,~~June 30, 2022 and December 31, 2021. Fair value of the long-term debt is approximately ~~$3.6~~$3.4 billion as of ~~March 31,~~June 30, 2022 and approximates the carrying amount as of December

31, 2021. The Company's fair value of long-term debt disclosure is classified within Level 2 of the valuation hierarchy.

5. Revenue

~~For the three months ended March 31, 2022,~~

The Company disaggregates its revenue from contracts with customers by payor source as the Company ~~generated 93.4%~~believes it best depicts how the nature, amount, timing, and uncertainty of its ~~resident~~revenue and cash flows are affected by economic factors. Resident fee revenue ~~from private pay customers, 5.2% from government reimbursement programs, and 1.4% from other~~by payor sources. For the three months ended March 31, 2021, the Company generated 81.5% of its resident fee revenue from private pay customers, 14.6% from government reimbursement programs (primarily Medicare), and 3.9% from other payor sources. source is as follows.


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Private pay	93.6	%	81.0	%	93.5	%	81.2	%
Government reimbursement	5.1	%	14.6	%	5.1	%	14.6	%
Other third-party payor programs	1.3	%	4.4	%	1.4	%	4.2	%

The sale of 80% of the ~~Company’s~~Company's equity in its Health Care Services segment on July 1, 2021 reduced its revenue from government reimbursement programs. Refer to Note 15 for disaggregation of revenue by reportable segment.

The payment terms and conditions within the Company's revenue-generating contracts vary by contract type and payor source, although terms generally include payment to be made within 30 days. Resident fee revenue for recurring and routine monthly services is generally billed monthly in advance under the Company's independent living, assisted living, and memory care residency agreements. Resident fee revenue for standalone or certain healthcare services is generally billed monthly in arrears. Additionally, non-refundable community fees are generally billed and collected in advance or upon move-in of a resident under the Company's independent living, assisted living, and memory care residency agreements. Amounts of revenue that are collected from residents in advance are recognized as deferred revenue until the performance obligations are satisfied.

The Company had total deferred revenue (included within refundable fees and deferred revenue and other liabilities within the condensed consolidated balance sheets) of ~~$73.6~~$71.8 million and $67.5 million, including ~~$34.2~~$30.9 million and $27.5 million of monthly resident fees billed and received in advance, as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively. For the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, the Company recognized ~~$40.1~~$48.6 million and ~~$30.8~~$46.2 million, respectively, of revenue that was included in the deferred revenue balance as of January 1, 2022 and 2021, respectively.

6. Property, Plant and Equipment and Leasehold Intangibles, Net

As of ~~March 31,~~June 30, 2022 and December 31, 2021, net property, plant and equipment and leasehold intangibles, which include assets under financing leases, consisted of the following.

(in thousands) March 31, 2022 December 31, 2021
Land $ 502,610 $ 502,610
Buildings and improvements 5,274,249 5,262,136
Furniture and equipment 1,002,550 990,006
Resident and leasehold operating intangibles 302,995 303,737
Construction in progress 53,099 51,037
Assets under financing leases and leasehold improvements 1,636,738 1,609,217
Property, plant and equipment and leasehold intangibles 8,772,241 8,718,743
Accumulated depreciation and amortization (3,898,197) (3,814,451)
Property, plant and equipment and leasehold intangibles, net $ 4,874,044 $ 4,904,292


(in thousands)	June 30, 2022		December 31, 2021
Land	$	508,210	$	502,610
Buildings and improvements	5,293,975		5,262,136
Furniture and equipment	1,019,609		990,006
Resident and leasehold operating intangibles	301,732		303,737
Construction in progress	58,387		51,037
Assets under financing leases and leasehold improvements	1,633,303		1,609,217
Property, plant and equipment and leasehold intangibles	8,815,216		8,718,743
Accumulated depreciation and amortization	(3,975,573)		(3,814,451)
Property, plant and equipment and leasehold intangibles, net	$	4,839,643	$	4,904,292

Assets under financing leases and leasehold improvements includes ~~$335.6~~$315.4 million and $332.3 million of financing lease right-of-use assets, net of accumulated amortization, as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively. Refer to Note 8 for further information on the Company's financing leases.

Long-lived assets with definite useful lives are depreciated or amortized on a straight-line basis over their estimated useful lives (or, in certain cases, the shorter of their estimated useful lives or the lease term) and are tested for impairment whenever indicators of impairment arise. ~~For the three months ended March 31, 2022 and 2021, the~~The Company recognized depreciation and amortization expense on its property, plant and equipment and leasehold intangibles of ~~$85.7~~$86.6 million and ~~$83.9~~$83.6 million for the three months ended June 30, 2022 and 2021, respectively, and $172.3 million and $167.5 million for the six months ended June 30, 2022 and 2021, respectively. The Company recognized $1.6 million and $0.6 million for the three months ended June 30, 2022 and 2021, respectively, and $2.1 million and $2.3 million for the six months ended June 30, 2022 and 2021, respectively, of non-cash impairment charges in its operating results for its property, plant and equipment and leasehold intangibles assets, primarily due to property damage at certain communities and decreased occupancy and future cash flow estimates at certain communities as a result of the continuing impacts of the COVID-19 pandemic.

7. Debt

Long-term debt consists of the ~~following:~~following.

(in thousands) March 31, 2022 December 31, 2021
Fixed rate mortgage notes payable due 2023 through 2047; weighted average interest rate of 4.14% as of both March 31, 2022 and December 31, 2021 $ 2,158,942 $ 2,164,115
Variable rate mortgage notes payable due 2023 through 2030; weighted average interest rate of 2.76% and 2.44% as of March 31, 2022 and December 31, 2021, respectively 1,472,438 1,476,943
Convertible notes payable due October 2026; interest rate of 2.00% as of both March 31, 2022 and December 31, 2021 230,000 230,000
Other notes payable due 2022, interest rate of 2.10% as of March 31, 2022 15,780 —
Deferred financing costs, net (28,625) (29,846)
Total long-term debt 3,848,535 3,841,212
Current portion 207,751 63,125
Total long-term debt, less current portion $ 3,640,784 $ 3,778,087


(in thousands)	June 30, 2022		December 31, 2021
Fixed rate mortgage notes payable due 2023 through 2047; weighted average interest rate of 4.14% as of both June 30, 2022 and December 31, 2021	$	2,153,956	$	2,164,115
Variable rate mortgage notes payable due 2023 through 2030; weighted average interest rate of 4.04% and 2.44% as of June 30, 2022 and December 31, 2021, respectively	1,467,840		1,476,943
Convertible notes payable due October 2026; interest rate of 2.00% as of both June 30, 2022 and December 31, 2021	230,000		230,000
Other notes payable due 2022, interest rate of 2.10% as of June 30, 2022	9,605		—
Deferred financing costs, net	(27,241)		(29,846)
Total long-term debt	3,834,160		3,841,212
Current portion	268,341		63,125
Total long-term debt, less current portion	$	3,565,819	$	3,778,087

As of ~~March 31,~~June 30, 2022, ~~93.7%~~93.8%, or $3.6 billion, of the Company's total debt obligations represented non-recourse property-level mortgage financings.

As of ~~March 31,~~June 30, 2022, $72.6 million of letters of credit and no cash borrowings were outstanding under the Company's $80.0 million secured credit facility. The Company also had a separate secured letter of credit facility providing up to $15.0 million of letters of credit as of ~~March 31,~~June 30, 2022 under which ~~$13.6~~$13.9 million had been issued as of that date.

Financial Covenants

Certain of the Company's debt documents contain restrictions and financial covenants, such as those requiring the Company to maintain prescribed minimum liquidity, net worth, and stockholders' equity levels and debt service ratios, and requiring the Company not to exceed prescribed leverage ratios, in each case on a consolidated, portfolio-wide, multi-community, single-community, and/or entity basis. In addition, the Company's debt documents generally contain non-financial covenants, such as those requiring the Company to comply with Medicare or Medicaid provider requirements and maintain insurance coverage.

The Company's failure to comply with applicable covenants could constitute an event of default under the applicable debt documents. Many of the Company's debt documents contain cross-default provisions so that a default under one of these instruments could cause a default under other debt and lease documents (including documents with other lenders and lessors). Furthermore, the Company's debt is secured by its communities and, in certain cases, a guaranty by the Company and/or one or more of its subsidiaries.

As of ~~March 31,~~June 30, 2022, the Company is in compliance with the financial covenants of its debt agreements.

8. Leases

As of ~~March 31,~~June 30, 2022, the Company operated ~~298~~295 communities under long-term leases ~~(231~~(230 operating leases and 6765 financing leases). The substantial majority of the Company's lease arrangements are structured as master leases. Under a master lease, numerous communities are leased through an indivisible lease. The Company typically guarantees the performance and lease payment obligations of its subsidiary lessees under the master leases. An event of default related to an individual property or limited number of properties within a master lease portfolio may result in a default on the entire master lease portfolio.

The leases relating to these communities are generally fixed rate leases with annual escalators that are either fixed or based upon changes in the consumer price index or the leased property revenue. The Company is responsible for all operating costs, including repairs, property taxes, and insurance. The leases generally provide for renewal or extension options from 5 to 20 years and in some instances, purchase options.

The community leases contain other customary terms, which may include assignment and change of control restrictions, maintenance and capital expenditure obligations, termination provisions and financial covenants, such as those requiring the Company to maintain prescribed minimum liquidity, net worth, and stockholders' equity levels and lease coverage ratios, in each case on a consolidated, portfolio-wide, multi-community, single-community and/or entity basis. In addition, the

Company's lease documents generally contain non-financial covenants, such as those requiring the Company to comply with Medicare or Medicaid provider requirements and maintain insurance coverage.

The Company's failure to comply with applicable covenants could constitute an event of default under the applicable lease documents. Many of the Company's debt and lease documents contain cross-default provisions so that a default under one of these instruments could cause a default under other debt and lease documents (including documents with other lenders and lessors). Certain leases contain cure provisions, which generally allow the Company to post an additional lease security deposit if the required covenant is not met. Furthermore, the Company's leases are secured by its communities and, in certain cases, a guaranty by the Company and/or one or more of its subsidiaries.

As of ~~March 31,~~June 30, 2022, the Company is in compliance with the financial covenants of its long-term leases.

Lease right-of-use assets are reviewed for impairment whenever changes in circumstances indicate that the carrying amount of an asset may not be recoverable. ~~For~~The Company recognized $1.0 million and $1.5 million for the three months ended ~~March 31,~~June 30, 2022 and 2021, ~~the Company recognized $8.6~~respectively, and $9.6 million and ~~$9.0~~$10.5 million for the six months ended June 30, 2022 and 2021, respectively, of non-cash impairment charges in its operating results for its operating lease right-of-use assets, primarily due to decreased occupancy and future cash flow estimates at certain communities as a result of the continuing impacts of the COVID-19 ~~pandemic and lower than expected operating performance at certain communities.~~pandemic.

A summary of operating and financing lease expense (including the respective presentation on the condensed consolidated statements of operations) and net cash outflows from leases is as follows.

Three Months Ended
March 31,
Operating Leases (in thousands)
2022 2021
Facility operating expense $ 1,523 $ 4,842
Facility lease expense 41,564 44,418
Operating lease expense 43,087 49,260
Operating lease expense adjustment (1)
8,307 4,664
Changes in operating lease assets and liabilities for lessor capital expenditure reimbursements (1,490) (7,563)
Operating net cash outflows from operating leases $ 49,904 $ 46,361


	Three Months Ended June 30,				Six Months Ended June 30,
Operating Leases (in thousands)	2022		2021		2022		2021
Facility operating expense	$	1,561	$	4,520	$	3,084	$	9,362
Facility lease expense	41,538		43,864		83,102		88,282
Operating lease expense	43,099		48,384		86,186		97,644
Operating lease expense adjustment (1)	8,308		5,326		16,615		9,990
Changes in operating lease assets and liabilities for lessor capital expenditure reimbursements	(3,367)		(7,943)		(4,857)		(15,506)
Operating net cash outflows from operating leases	$	48,040	$	45,767	$	97,944	$	92,128

(1)Represents the difference between the amount of cash operating lease payments and the amount of operating lease expense.


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
Financing Leases (in thousands)	Financing Leases (in thousands)	2022		2021			Financing Leases (in thousands)	2022		2021		2022		2021
Depreciation and amortization	Depreciation and amortization	$	7,665	$	7,630		Depreciation and amortization	$	7,607	$	7,594	$	15,273	$	15,224
Interest expense: financing lease obligations	Interest expense: financing lease obligations	12,058		11,383			Interest expense: financing lease obligations	11,994		11,492		24,052		22,875
Financing lease expense	Financing lease expense	$	19,723	$	19,013		Financing lease expense	$	19,601	$	19,086	$	39,325	$	38,099

Operating cash outflows from financing leases	Operating cash outflows from financing leases	$	12,058	$	11,383		Operating cash outflows from financing leases	$	11,994	$	11,492	$	24,052	$	22,875
Financing cash outflows from financing leases	Financing cash outflows from financing leases	5,490		4,789			Financing cash outflows from financing leases	5,610		4,864		11,100		9,653
Changes in financing lease assets and liabilities for lessor capital expenditure reimbursement	Changes in financing lease assets and liabilities for lessor capital expenditure reimbursement	(3,207)		(1,389)			Changes in financing lease assets and liabilities for lessor capital expenditure reimbursement	(3,770)		(2,057)		(6,977)		(3,446)
Total net cash outflows from financing leases	Total net cash outflows from financing leases	$	14,341	$	14,783		Total net cash outflows from financing leases	$	13,834	$	14,299	$	28,175	$	29,082

The aggregate amounts of future minimum lease payments, including community, office, and equipment leases recognized on the condensed consolidated balance sheet as of ~~March 31,~~June 30, 2022 are as follows (in thousands).

Year Ending December 31, Operating Leases Financing Leases
2022 (nine months) $ 153,184 $ 51,412
2023 193,406 69,225
2024 194,140 70,438
2025 191,848 59,815
2026 76,588 61,069
Thereafter 206,501 53,286
Total lease payments 1,015,667 365,245
Purchase option liability and non-cash gain on future sale of property — 427,749
Imputed interest and variable lease payments (220,265) (234,754)
Total lease obligations $ 795,402 $ 558,240


Year Ending December 31,	Operating Leases		Financing Leases
2022 (six months)	$	102,321	$	34,171
2023	209,006		69,401
2024	194,536		70,615
2025	192,255		59,994
2026	76,955		61,250
Thereafter	206,716		53,382
Total lease payments	981,789		348,813
Purchase option liability and non-cash gain on future sale of property	—		424,316
Imputed interest and variable lease payments	(207,299)		(223,532)
Total lease obligations	$	774,490	$	549,597

9. Investment in Unconsolidated Ventures

As of ~~March 31,~~June 30, 2022, the Company holds a 20% equity interest, and affiliates of HCA Healthcare Inc. own an 80% interest, in the HCS Venture, and the Company has determined the HCS Venture is a VIE. The HCS Venture operates home health ~~hospice,~~ and ~~outpatient therapy~~hospice agencies in the United States. The Company does not consolidate this VIE because it does not have the ability to control the activities that most significantly impact this VIE's economic performance. The Company's interest in the HCS Venture is accounted for under the equity method of accounting. The carrying amount of the Company's investment in the unconsolidated venture and maximum exposure to loss as a result of the Company's ownership interest in the HCS Venture was ~~$57.2~~$54.3 million, which is included in investment in unconsolidated ventures on the accompanying unaudited condensed consolidated balance sheet as of ~~March 31,~~June 30, 2022. As of ~~March 31,~~June 30, 2022, the Company is not required to provide financial support, through a liquidity arrangement or otherwise, to the HCS Venture.

10. Litigation

The Company has been and is currently involved in litigation and claims incidental to the conduct of its business, which it believes are generally comparable to other companies in the senior living and healthcare industries, including, but not limited to, putative class action claims from time to time regarding staffing at the Company's communities and compliance with consumer protection laws and the Americans with Disabilities Act. Certain claims and lawsuits allege large damage amounts and may require significant costs to defend and resolve. As a result, the Company maintains general liability, professional liability, and other insurance policies in amounts and with coverage and deductibles the Company believes are appropriate, based on the nature and risks of its business, historical experience, availability, and industry standards. The Company's current policies provide for deductibles for each claim and contain various exclusions from coverage. Accordingly, the Company is, in effect, self-insured for claims that are less than the deductible amounts and for claims or portions of claims that are not covered by such policies and/or exceed the policy limits.

The senior living and healthcare industries are continuously subject to scrutiny by governmental regulators, which could result in reviews, audits, investigations, enforcement actions, or litigation related to regulatory compliance matters. In addition, the Company is subject to various government reviews, audits, and investigations to verify compliance with Medicare and Medicaid programs and other applicable laws and regulations. The Centers for Medicare & Medicaid Services ("CMS") has engaged third-party firms to review claims data to evaluate appropriateness of billings. In addition to identifying overpayments, audit contractors can refer suspected violations to government authorities. An adverse outcome of government scrutiny may result in citations, sanctions, other criminal or civil fines and penalties, the refund of overpayments, payment suspensions, termination of participation in Medicare and Medicaid programs, and damage to the Company’s business reputation. The Company’s costs to respond to and defend any such audits, reviews, and investigations may be significant.

In June 2020, the Company and several current and former executive officers were named as defendants in a putative class action lawsuit alleging violations of the federal securities laws filed in the federal court for the Middle District of Tennessee. The lawsuit asserted that the defendants made material misstatements and omissions concerning the Company's business, operational and compliance policies, compliance with applicable regulations and statutes, and staffing practices that caused the Company's stock price to be artificially inflated between August 2016 and April 2020. The district court dismissed the lawsuit and entered judgment in favor of the defendants in September 2021, and the plaintiffs did not file an appeal. Between October 2020 and June 2021, alleged stockholders of the Company filed several

stockholder derivative lawsuits in the federal courts for the Middle District of Tennessee and the District of Delaware, which was subsequently transferred to the Middle District of Tennessee. The derivative lawsuits are currently pending and assert claims on behalf of the Company against certain current and former officers and directors for alleged breaches of duties owed to the Company. The complaints ~~refer~~incorporate substantively similar allegations to the securities lawsuit described ~~above and incorporate substantively similar allegations.~~above.

11. Stock-Based Compensation

Grants of restricted stock units and stock awards under the Company's 2014 Omnibus Incentive Plan were as follows.

(in thousands, except weighted average amount) Restricted Stock Unit and Stock Award Grants Weighted Average Grant Date Fair Value Total Grant Date Fair Value
Three months ended March 31, 2022 2,862 $ 5.50 $ 15,743


(in thousands, except weighted average amounts)	Restricted Stock Unit and Stock Award Grants	Weighted Average Grant Date Fair Value		Total Grant Date Fair Value
Three months ended March 31, 2022	2,862	$	5.50	$	15,743
Three months ended June 30, 2022	26	$	6.40	$	166

12. Earnings Per Share

During the three and six months ended ~~March 31,~~June 30, 2022 and 2021, the Company reported a consolidated net ~~loss.~~losses. As a result of the net ~~loss~~losses reported for the periods, all unvested restricted stock, restricted stock units, and potential shares issuable under warrants and convertible senior notes were antidilutive for the periods and as such were not included in the computation of diluted weighted average shares outstanding. The following potentially outstanding shares of common stock were excluded from the computation of diluted net income (loss) per share attributable to common stockholders because including the shares would have been antidilutive.


		As of March 31,		As of June 30,
(in millions)	(in millions)	2022	2021		(in millions)	2022	2021
Restricted stock and restricted stock units	Restricted stock and restricted stock units	5.7	6.6		Restricted stock and restricted stock units	5.5	6.1

Warrants	Warrants	16.3	16.3		Warrants	16.3	16.3
Convertible senior notes	Convertible senior notes	38.3	—		Convertible senior notes	38.3	—
Total	Total	60.3	22.9		Total	60.1	22.4

On July 26, 2020, the Company issued to Ventas, Inc. ("Ventas") a warrant (the "Warrant") to purchase 16.3 million shares of the Company’s common stock, $0.01 par value per share, at a price per share of $3.00. The Warrant is exercisable at Ventas' option at any time and from time to time, in whole or in part, until December 31, 2025. The exercise price and the number of shares issuable on exercise of the Warrant are subject to certain anti-dilution adjustments, including for cash dividends, stock dividends, stock splits, reclassifications, non-cash distributions, certain repurchases of common stock, and business combination transactions.

As of ~~March 31,~~June 30, 2022, the maximum number of shares issuable upon conversion of convertible senior notes is 38.3 million (after giving effect to additional shares that would be issuable upon conversion in connection with the occurrence of certain corporate or other events).

13. Income Taxes

The difference between the Company's effective tax rate for the three months ended ~~March 31,~~June 30, 2022 and 2021 was due to the increase in the net deferred tax expense resulting from a valuation allowance recorded in excess of the benefit recorded on operational losses for the three months ended June 30, 2022. The difference between the Company's effective tax rate for the six months ended June 30, 2022 and 2021 was due to the increase in the net deferred tax benefit recognized on operational losses and an increase in the tax benefit recognized on the vesting of restricted stock units and restricted stock ~~awards due to an increase in the Company's stock price during the three months ended March 31, 2022.~~awards.

The Company recorded an aggregate deferred federal, state, and local tax benefit of ~~$24.9~~$20.6 million for the three months ended ~~March 31,~~June 30, 2022, which was offset by an increase to the valuation allowance of ~~$22.6~~$21.4 million. The Company recorded an aggregate deferred federal, state, and local tax benefit of ~~$25.2~~$45.5 million for the six months ended June 30, 2022, which was offset by an increase to the valuation allowance of $44.0 million. The Company recorded an aggregate deferred federal, state, and local tax benefit of $20.8 million for the three months ended ~~March 31,~~June 30, 2021, which was offset by ~~additional~~an increase to the valuation allowance of ~~$25.5~~$19.8 million. The Company recorded an aggregate deferred federal, state, and local tax benefit of $46.0 million for the six months ended June 30, 2021, which was offset by an increase to the valuation allowance of $45.3 million.

The Company evaluates its deferred tax assets each quarter to determine if a valuation allowance is required based on whether it is more likely than not that some portion of the deferred tax asset would not be realized. The Company's valuation allowance as of ~~March 31,~~June 30, 2022 and December 31, 2021 was ~~$390.6~~$412.0 million and $368.0 million, respectively.

The increase in the valuation allowance for the ~~three~~six months ended ~~March 31,~~June 30, 2022 is the result of current operating losses during the ~~three~~six months ended ~~March 31,~~June 30, 2022 and by the anticipated reversal of future tax liabilities offset by future tax deductions. The increase in the valuation allowance for the ~~three~~six months ended ~~March 31,~~June 30, 2021 is the result of current operating losses during the ~~three~~six months ended ~~March 31,~~June 30, 2021.

The Company recorded interest charges related to its tax contingency reserve for cash tax positions for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 which are included in income tax expense or benefit for the period. As of ~~March 31,~~June 30, 2022, tax returns for years 2018 through 2020 are subject to future examination by tax authorities. In addition, the net operating losses from prior years are subject to adjustment under examination.

14. Supplemental Disclosure of Cash Flow Information

Three Months Ended
March 31,
(in thousands) 2022 2021
Supplemental Disclosure of Cash Flow Information:
Interest paid $ 43,927 $ 47,129
Income taxes paid, net of refunds $ 341 $ 904
Capital expenditures, net of related payables:
Capital expenditures - non-development, net $ 39,326 $ 27,450
Capital expenditures - development, net 861 1,521
Capital expenditures - non-development - reimbursable 4,697 8,951
Trade accounts payable (4,928) 2,439
Net cash paid $ 39,956 $ 40,361
Supplemental Schedule of Non-cash Operating, Investing, and Financing Activities:
Non-cash lease transactions, net:
Property, plant and equipment and leasehold intangibles, net $ 10,997 $ ��
Operating lease right-of-use assets (4,003) 16,721
Financing lease obligations (6,237) —
Operating lease obligations (757) (16,721)
Net $ — $ —

During the period from January 1, 2021 through June 30, 2022, the Company disposed of 5 owned communities and the Company's triple-net lease obligations on 6 communities were terminated (including through the acquisition of one formerly leased community). During the six months ended June 30, 2022, the Company completed the sale of 2 owned communities for cash proceeds of $4.4 million, net of transaction costs, and recognized a net gain on sale of assets of $0.7 million for these sales. During the six months ended June 30, 2021, the Company completed the sale of 2 owned communities for cash proceeds of $8.5 million, net of transaction costs, and recognized a net gain on sale of assets of $0.5 million for these sales.


	Six Months Ended June 30,
(in thousands)	2022		2021
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	92,673	$	94,683
Income taxes paid, net of refunds	$	598	$	2,963

Capital expenditures, net of related payables:
Capital expenditures - non-development, net	$	85,012	$	63,245
Capital expenditures - development, net	2,690		2,118
Capital expenditures - non-development - reimbursable	11,833		18,952
Trade accounts payable	(2,684)		(4,777)
Net cash paid	$	96,851	$	79,538























Proceeds from sale of assets, net:
Prepaid expenses and other assets, net	$	(1,264)	$	—
Assets held for sale	(3,668)		(8,040)
Property, plant and equipment and leasehold intangibles, net	—		(568)





Other liabilities	(140)		(5)
Loss (gain) on sale of assets, net	(667)		(1,033)
Net cash received	$	(5,739)	$	(9,646)





Supplemental Schedule of Non-cash Operating, Investing, and Financing Activities:







Non-cash lease transactions, net:

Property, plant and equipment and leasehold intangibles, net	$	11,056	$	2,534

Operating lease right-of-use assets	10,780		16,733
Financing lease obligations	(6,296)		(2,534)
Operating lease obligations	(15,540)		(16,733)




Net	$	—	$	—

Restricted cash consists principally of deposits as security for self-insured retention risk under workers' compensation programs and property insurance programs, escrow deposits for real estate taxes, property insurance, and capital expenditures, and debt service reserve accounts required by certain lenders under mortgage debt agreements. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sums to the total of the same such amounts shown in the condensed consolidated statements of cash flows.

(in thousands) March 31, 2022 December 31, 2021
Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents $ 289,247 $ 347,031
Restricted cash 24,791 26,845
Long-term restricted cash 64,455 64,438
Total cash, cash equivalents, and restricted cash $ 378,493 $ 438,314


(in thousands)	June 30, 2022		December 31, 2021
Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents	$	238,757	$	347,031
Restricted cash	29,946		26,845
Long-term restricted cash	59,839		64,438
Total cash, cash equivalents, and restricted cash	$	328,542	$	438,314

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15. Segment Information

As of ~~March 31,~~June 30, 2022, the Company has 3 reportable segments: Independent Living; Assisted Living and Memory Care; and CCRCs. Operating segments are defined as components of an enterprise that engage in business activities from which it may earn revenues and incur expenses; for which separate financial information is available; and whose operating results are regularly reviewed by the chief operating decision maker to assess the performance of the individual segment and make decisions about resources to be allocated to the segment. Prior to July 1, 2021, the Company had an additional reportable segment, Health Care Services. On July 1, 2021, the Company sold 80% of its equity in its Health Care Services segment. For periods beginning July 1, 2021, the results and financial position of its Health Care Services segment were deconsolidated from the Company's consolidated financial statements and its 20% equity interest in the HCS Venture is accounted for under the equity method of accounting as of that date.

Independent Living. The Company's Independent Living segment includes owned or leased communities that are primarily designed for middle to upper income seniors who desire to live in a residential setting that feels like home, without the efforts of ownership. The majority of the Company's independent living communities consist of both independent and assisted living units in a single community, which allows residents to age-in-place by providing them with a broad continuum of senior independent and assisted living services to accommodate their changing needs.

Assisted Living and Memory Care. The Company's Assisted Living and Memory Care segment includes owned or leased communities that offer housing and 24-hour assistance with activities of daily living for the Company's residents. The Company's assisted living and memory care communities include both freestanding, multi-story communities, as well as smaller, freestanding, single story communities. The Company also provides memory care services at freestanding memory care communities that are specially designed for residents with Alzheimer's disease and other dementias.

CCRCs. The Company's CCRCs segment includes large owned or leased communities that offer a variety of living arrangements and services to accommodate a broad spectrum of physical ability and healthcare needs. Most of the Company's CCRCs have independent living, assisted living, memory care, and skilled nursing available on one campus.

All Other. All Other includes communities operated by the Company pursuant to management agreements. Under the management agreements for these communities, the Company receives management fees as well as reimbursement of expenses it incurs on behalf of the owners.

Health Care Services. The Company's former Health Care Services segment included the home health, hospice, and outpatient therapy services provided to residents of many of its communities and to seniors living outside its communities. The Health Care Services segment did not include the skilled nursing and inpatient healthcare services provided in the Company's skilled nursing units, which are included in the Company's CCRCs segment.

The following tables set forth selected segment financial data.

Three Months Ended
March 31,
(in thousands) 2022 2021
Revenue and other operating income:
Independent Living(1)(2)
$ 124,406 $ 120,146
Assisted Living and Memory Care(1)(2)
432,488 392,042
CCRCs(1)(2)
80,456 73,463
All Other 40,470 74,360
Health Care Services(1)(2)
— 89,434
Total revenue and other operating income $ 677,820 $ 749,445


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Revenue and other operating income:
Independent Living(1)(2)	$	126,737	$	118,116	$	251,143	$	238,262
Assisted Living and Memory Care(1)(2)	440,866		392,347		873,354		784,389
CCRCs(1)(2)	81,196		76,988		161,652		150,451
All Other	40,717		48,006		81,187		122,366
Health Care Services(1)(2)	—		87,835		—		177,269
Total revenue and other operating income	$	689,516	$	723,292	$	1,367,336	$	1,472,737

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		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	(in thousands)	2022		2021			(in thousands)	2022		2021		2022		2021
Segment operating income:(3)	Segment operating income:(3)						Segment operating income:(3)
Independent Living	Independent Living	$	37,684	$	37,329		Independent Living	$	38,709	$	35,292	$	76,393	$	72,621
Assisted Living and Memory Care	Assisted Living and Memory Care	76,863		71,433			Assisted Living and Memory Care	87,588		77,062		164,451		148,495
CCRCs	CCRCs	10,039		7,608			CCRCs	8,838		8,673		18,877		16,281
All Other	All Other	3,329		8,566			All Other	3,329		4,998		6,658		13,564
Health Care Services	Health Care Services	—		2,403			Health Care Services	—		3,413		—		5,816
Total segment operating income	Total segment operating income	127,915		127,339			Total segment operating income	138,464		129,438		266,379		256,777
General and administrative expense (including non-cash stock-based compensation expense)	General and administrative expense (including non-cash stock-based compensation expense)	45,126		49,943			General and administrative expense (including non-cash stock-based compensation expense)	41,752		52,400		86,878		102,343
Facility operating lease expense	Facility operating lease expense	41,564		44,418			Facility operating lease expense	41,538		43,864		83,102		88,282
Depreciation and amortization	Depreciation and amortization	85,684		83,891			Depreciation and amortization	86,623		83,591		172,307		167,482
Asset impairment	Asset impairment	9,075		10,677			Asset impairment	2,599		2,078		11,674		12,755

Income (loss) from operations	Income (loss) from operations	$	(53,534)	$	(61,590)		Income (loss) from operations	$	(34,048)	$	(52,495)	$	(87,582)	$	(114,085)


		As of					As of
(in thousands)	(in thousands)	March 31, 2022		December 31, 2021		(in thousands)	June 30, 2022		December 31, 2021
Total assets:	Total assets:					Total assets:
Independent Living(4)	Independent Living(4)	$	1,324,425	$	1,349,341	Independent Living(4)	$	1,310,044	$	1,349,341
Assisted Living and Memory Care	Assisted Living and Memory Care	3,573,911		3,601,144		Assisted Living and Memory Care	3,551,394		3,601,144
CCRCs	CCRCs	686,480		693,386		CCRCs	681,846		693,386
Corporate and All Other	Corporate and All Other	710,161		766,596		Corporate and All Other	625,012		766,596
Total assets	Total assets	$	6,294,977	$	6,410,467	Total assets	$	6,168,296	$	6,410,467

(1)All revenue and other operating income is earned from external third parties in the United States.

(2)Includes other operating income recognized for the credits or grants pursuant to the employee retention credit and other government sources. Allocations to the applicable segment generally reflect the credits earned by the segment, the ~~segment’s~~segment's receipt and acceptance of the grant, or the ~~segment’s~~segment's proportional utilization of the grant. Other operating income by segment is as follows.

Three Months Ended
March 31,
(in thousands) 2022 2021
Other operating income:
Independent Living $ 2 $ 1,364
Assisted Living and Memory Care 356 5,104
CCRCs 18 1,684
Health Care Services — 2,583
Total other operating income $ 376 $ 10,735


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Other operating income:
Independent Living	$	1,159	$	111	$	1,161	$	1,475
Assisted Living and Memory Care	6,412		629		6,768		5,733
CCRCs	840		46		858		1,730
Health Care Services	—		522		—		3,105
Total other operating income	$	8,411	$	1,308	$	8,787	$	12,043

(3)Segment operating income is defined as segment revenues and other operating income less segment facility operating expenses (excluding facility depreciation and amortization) and costs incurred on behalf of managed communities.

(4)The Company's Independent Living segment had a carrying amount of goodwill of $27.3 million as of both ~~March 31,~~June 30, 2022 and December 31, 2021.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain statements in this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to various risks and uncertainties and include all statements that are not historical statements of fact and those regarding our intent, belief or expectations. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "could," "would," "potential," "intend," "expect," "endeavor," "seek," "anticipate," "estimate," "believe," "project," "predict," "continue," "plan," "target," or other similar words or expressions. These forward-looking statements are based on certain assumptions and expectations, and our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Although we believe that expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our assumptions or expectations will be attained and actual results and performance could differ materially from those projected. Factors which could have a material adverse effect on our operations and future prospects or which could cause events or circumstances to differ from the forward-looking statements include, but are not limited to, the impacts of the COVID-19 pandemic, including the response efforts of federal, state, and local government authorities, businesses, individuals, and us on our business, results of operations, cash flow, revenue, expenses, liquidity, and our strategic initiatives, including plans for future growth, which will depend on many factors, some of which cannot be foreseen, including the duration, severity, and breadth of the pandemic and any resurgence or variants of the disease, the impact of COVID-19 on the nation’s economy and debt and equity markets and the local economies in our markets, the development, availability, utilization, and efficacy of COVID-19 testing, therapeutic agents, and vaccines and the prioritization of such resources among businesses and demographic groups, government financial and regulatory relief efforts that may become available to business and individuals, including our ability to qualify for and satisfy the terms and conditions of financial relief, perceptions regarding the safety of senior living communities during and after the pandemic, changes in demand for senior living communities and our ability to adapt our sales and marketing efforts to meet that demand, the impact of COVID-19 on our residents’ and their families’ ability to afford our resident fees, including due to changes in unemployment rates, consumer confidence, housing markets, and equity markets caused by COVID-19, changes in the acuity levels of our new residents, the disproportionate impact of COVID-19 on seniors generally and those residing in our communities, the duration and costs of our response efforts, including increased equipment, supplies, labor, litigation, testing, vaccination clinic, health plan, and other expenses, potentially greater use of contract labor and overtime due to COVID-19 and general labor market conditions, the impact of COVID-19 on our ability to complete financings and refinancings of various assets, or other transactions or to generate sufficient cash flow to cover required debt, interest, and lease payments and to satisfy financial and other covenants in our debt and lease documents, increased regulatory requirements, including the costs of unfunded, mandatory testing of residents and associates and provision of test kits to our health plan participants, increased enforcement actions resulting from COVID-19, government action that may limit our collection or discharge efforts for delinquent accounts, and the frequency and magnitude of legal actions and liability claims that may arise due to COVID-19 or our response efforts; events which adversely affect the ability of seniors to afford resident fees, including downturns in the economy, housing market, consumer confidence, or the equity markets and unemployment among resident family members; changes in reimbursement rates, methods, or timing under governmental reimbursement programs including the Medicare and Medicaid programs; the effects of senior housing construction and development, lower industry occupancy (including due to the pandemic), and increased competition; conditions of housing markets, regulatory changes, acts of nature, and the effects of climate change in geographic areas where we are concentrated; terminations of our resident agreements and vacancies in the living spaces we lease, including due to the pandemic; failure to maintain the security and functionality of our information systems, to prevent a cybersecurity attack or breach, or to comply with applicable privacy and consumer protection laws, including HIPAA; our ability to complete our capital expenditures in accordance with our plans; our ability to identify and pursue development, investment, and acquisition opportunities and our ability to successfully integrate acquisitions; competition for the acquisition of assets; our ability to complete pending or expected disposition, acquisition, or other transactions on agreed upon terms or at all, including in respect of the satisfaction of closing conditions, the risk that regulatory approvals are not obtained or are subject to unanticipated conditions, and uncertainties as to the timing of closing, and our ability to identify and pursue any such opportunities in the future; risks related to the implementation of our strategy, including initiatives undertaken to execute on our strategic priorities and their effect on our results; limits on our ability to use net operating loss carryovers to reduce future tax payments; delays in obtaining regulatory approvals; disruptions in the financial markets or decreases in the appraised values or performance of our communities that affect our ability to obtain financing or extend or refinance debt as it matures and our financing costs; our ability to generate sufficient cash flow to cover required interest, principal, and long-term lease payments and to fund our planned capital projects; the effect of our non-compliance with any of our debt or lease agreements (including the financial covenants contained therein), including the risk of lenders or lessors declaring a cross default in the event of our non-compliance with any such agreements and the risk of loss of our property securing leases and indebtedness due to any resulting lease terminations and foreclosure actions; the effect of our indebtedness and long-term leases on our liquidity and our ability to operate our business; increases in market interest rates that increase the

1819

costs of our debt obligations; our ability to obtain additional capital on terms acceptable to us; departures of key officers and potential disruption caused by changes in management; increased competition for, or a shortage of, associates (including due to the pandemic or general labor market conditions), wage pressures resulting from increased competition, low unemployment levels, minimum wage increases and changes in overtime laws, and union activity; environmental contamination at any of our communities; failure to comply with existing environmental laws; an adverse determination or resolution of complaints filed against us, including putative class action complaints; the cost and difficulty of complying with increasing and evolving regulation; costs to respond to, and adverse determinations resulting from, government reviews, audits and investigations; changes in, or our failure to comply with, employment-related laws and regulations; unanticipated costs to comply with legislative or regulatory developments; the risks associated with current global economic conditions and general economic factors such as inflation, the consumer price index, commodity costs, fuel and other energy costs, competition in the labor market, costs of salaries, wages, benefits, and insurance, interest rates, and tax rates; the impact of seasonal contagious illness or an outbreak of COVID-19 or other contagious disease in the markets in which we operate; actions of activist stockholders, including a proxy contest; as well as other risks detailed from time to time in our filings with the Securities and Exchange Commission, including those set forth under "Item 1A. Risk Factors" contained in our Annual Report on Form 10-K for the year ended December 31, 2021 and Part II, "Item 1A. Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in such SEC filings. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect management's views as of the date of this Quarterly Report on Form 10-Q. We cannot guarantee future results, levels of activity, performance or achievements, and, except as required by law, we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements contained in this Quarterly Report on Form 10-Q to reflect any change in our expectations with regard thereto or change in events, conditions, or circumstances on which any statement is based.

1920

Unless otherwise specified, references to "Brookdale," "we," "us," "our," or "the Company" in this Quarterly Report on Form 10-Q mean Brookdale Senior Living Inc. together with its consolidated subsidiaries.

Overview

We are the nation's premier operator of senior living communities, operating and managing ~~678~~674 communities in 41 states as of ~~March 31,~~June 30, 2022, with the ability to serve more than 60,000 residents. We offer our residents access to a broad continuum of services across the most attractive sectors of the senior living industry. We operate and manage independent living, assisted living, memory care, and continuing care retirement communities ("CCRCs").

Our goal is to be the first choice in senior living by being the nation's most trusted and effective senior living provider and employer. Our senior living communities and our comprehensive network help to provide seniors with care and services in an environment that feels like home. Our expertise in healthcare, hospitality, and real estate provides residents with opportunities to improve wellness, pursue passions, and stay connected with friends and loved ones. By providing residents with a range of service options as their needs change, we provide greater continuity of care, enabling seniors to age-in-place, which we believe enables them to maintain residency with us for a longer period of time. The ability of residents to age-in-place is also beneficial to our residents' families who are concerned with care decisions for their elderly relatives.

COVID-19 Pandemic Update

The COVID-19 pandemic significantly disrupted the senior living industry and our business beginning in March 2020. We expect the impact of this disruption to continue into 2023 as we continue to make progress to rebuild occupancy lost due to the pandemic. The health and wellbeing of our residents and associates has been and continues to be our highest priority.

Rebuilding Occupancy. We continue to execute on key initiatives to rebuild occupancy lost due to the pandemic while maintaining rate discipline. From March 2020 through February 2021, we lost 1,330 basis points of weighted average consolidated senior housing occupancy. From February 2021 through ~~March~~July 2022, we increased our weighted average consolidated senior housing occupancy by ~~420~~650 basis points to ~~73.6%~~75.9%. ~~We typically experience a seasonal occupancy decline in winter months. Despite our typical seasonal pattern, sequentially~~Sequentially from the ~~fourth~~first quarter of ~~2021,~~2022, our weighted average consolidated senior housing occupancy ~~decreased slightly~~increased by ~~10 basis points~~120 bps to ~~73.4%, which represented~~74.6% for the ~~best first~~second quarter ~~sequential occupancy change in ten years.~~of 2022. The table below sets forth our recent consolidated occupancy trend.


		Q1 2021		Q2 2021		Q3 2021		Q4 2021		Q1 2022			Q1 2021		Q2 2021		Q3 2021		Q4 2021		Q1 2022		Q2 2022
Weighted average	Weighted average	69.6	%	70.5	%	72.5	%	73.5	%	73.4	%	Weighted average	69.6	%	70.5	%	72.5	%	73.5	%	73.4	%	74.6	%
Quarter end	Quarter end	70.6	%	72.6	%	74.2	%	74.5	%	75.0	%	Quarter end	70.6	%	72.6	%	74.2	%	74.5	%	75.0	%	76.6	%


		Jan 2022		Feb 2022		Mar 2022		Apr 2022			Jan 2022		Feb 2022		Mar 2022		Apr 2022		May 2022		Jun 2022		Jul 2022
Weighted average	Weighted average	73.4	%	73.3	%	73.6	%	73.9	%	Weighted average	73.4	%	73.3	%	73.6	%	73.9	%	74.6	%	75.2	%	75.9	%
Month end	Month end	74.2	%	74.4	%	75.0	%	75.3	%	Month end	74.2	%	74.4	%	75.0	%	75.3	%	76.2	%	76.6	%	77.1	%

During the three and six months ended ~~March 31,~~June 30, 2022, various communities experienced restrictions on new resident move-ins due to the pandemic. As of ~~April 30,~~July 31, 2022, substantially all of our communities were open for new resident move-ins. We may revert to more restrictive measures at our communities, including restrictions on visitors and move-ins, if the pandemic worsens, as a result of infections at a community, as necessary to comply with regulatory requirements, or at the direction of authorities having jurisdiction. We cannot predict with reasonable certainty when our occupancy will return to pre-COVID-19 pandemic levels.

Pandemic Expenses. For the three and six months ended ~~March 31,~~June 30, 2022, we recognized $1.9 million and $12.3 million, respectively, of facility operating expense for incremental direct costs to respond to the pandemic. For the three and six months ended June 30, 2021, we recognized ~~$10.4~~$9.7 million and ~~$27.3~~$37.1 million, respectively, of facility operating expense for incremental direct costs to respond to the pandemic. The direct costs include those for: acquisition of additional personal protective equipment, medical equipment, and cleaning and disposable food service supplies; enhanced cleaning and environmental sanitation; increased employee-related costs, including labor, workers' compensation, and health plan expense; and COVID-19 testing of residents and associates where not otherwise covered by government payor or third-party insurance sources. On a cumulative basis since the beginning of fiscal 2020 through ~~March 31,~~June 30, 2022, we have incurred ~~$183.6~~$185.5 million of pandemic related facility operating expense. For the three and six months ended ~~March 31,~~June 30, 2022, ~~and 2021,~~ we recorded ~~$9.1~~$2.6 million and ~~$10.7~~ $11.7

million, respectively, of non-cash impairment charges in our operating results for our operating lease right-of-use assets and property, plant and equipment and leasehold intangibles, primarily due to decreased occupancy and future cash flow estimates at certain communities as a result of the continuing impacts of the COVID-19 ~~pandemic~~pandemic. For the three and ~~lower than expected operating performance at certain communities.~~six months ended June 30, 2021, we recorded $2.1 million and $12.8 million, respectively, of such non-cash impairment charges.

Phase 4 Provider Relief Fund Grants. During the three months ended December 31, 2021, we applied for the Phase 4 general distribution from the Public Health and Social Services Emergency Fund ("Provider Relief Fund") administered by the U.S. Department of Health and Human Services ("HHS"), under which grants have been made available to eligible healthcare providers for healthcare related expenses or lost revenues attributable to COVID-19. We accepted approximately $60.0 million of Phase 4 grants on August 5, 2022. We expect to ~~receive~~recognize the Phase 4 ~~general distribution~~grants in income during the ~~second quarter of~~three months ended September 30, 2022. There can be no assurance that we will qualify for, or receive, such future grants in the amount we expect or that additional restrictions on the permissible uses or terms and conditions of the grants will not be imposed by HHS.

Employee Retention Credit. We were eligible to claim the employee retention credit for certain of our associates under the Coronavirus Aid, Relief, and Economic Security Act of 2020 ("CARES Act"). ~~During the year ended December 31, 2021, we~~We recognized ~~$9.9~~$0.9 million ~~including $9.0~~and $9.9 million for the three and six months ended ~~March 31,~~June 30, 2021, respectively, of employee retention credits on wages paid from March 12, 2020 to December 31, 2020 within other operating income, for which we have received $4.6 million in cash as of ~~March 31, 2022. We recognized a receivable for the remaining $5.3 million within prepaid expenses and other current assets, net on the condensed consolidated balance sheet as of March 31,~~June 30, 2022. The credit was modified and extended by subsequent legislation for wages paid from January 1, 2021 through December 31, 2021. During the three and six months ended June 30, 2022, we recognized $4.7 million of employee retention credits on wages paid in 2021 within other operating income based upon our current estimates. We have a receivable for the remaining $10.1 million included within prepaid expenses and ~~we are assessing our eligibility to claim such credit. There can be no assurance that we will qualify for, or receive, credits in the amount or~~other current assets, net on the ~~timing we expect.~~

~~Vaccine Update.~~ ~~In March 2022, the U.S. Centers for Disease Control and Prevention updated its recommendations to allow people over the age~~condensed consolidated balance sheet as of 50 who received an initial COVID-19 booster dose at least four months ago to be eligible for another mRNA booster to increase their protection against severe disease from COVID-19. We are working to complete second vaccine booster clinics for our communities.June 30, 2022.

We cannot predict with reasonable certainty the impacts that COVID-19 ultimately will have on our business, results of operations, cash flow, and liquidity, and our response efforts may continue to delay or negatively impact our strategic initiatives, including plans for future growth. The ultimate impacts of COVID-19 will depend on many factors, some of which cannot be foreseen, including the duration, severity, and breadth of the pandemic and any resurgence or variants of the disease; the impact of COVID-19 on the nation's economy and debt and equity markets and the local economies in our markets; the development, availability, utilization, and efficacy of COVID-19 testing, therapeutic agents, and vaccines and the prioritization of such resources among businesses and demographic groups; government financial and regulatory relief efforts that may become available to business and individuals, including our ability to qualify for and satisfy the terms and conditions of financial relief; perceptions regarding the safety of senior living communities during and after the pandemic; changes in demand for senior living communities and our ability to adapt our sales and marketing efforts to meet that demand; the impact of COVID-19 on our residents' and their families' ability to afford our resident fees, including due to changes in unemployment rates, consumer confidence, housing markets, and equity markets caused by COVID-19; changes in the acuity levels of our new residents; the disproportionate impact of COVID-19 on seniors generally and those residing in our communities; the duration and costs of our response efforts, including increased equipment, supplies, labor, litigation, testing, vaccination clinic, health plan, and other expenses; potentially greater use of contract labor and overtime due to COVID-19 and general labor market conditions; the impact of COVID-19 on our ability to complete financings and refinancings of various assets or other transactions or to generate sufficient cash flow to cover required debt, interest, and lease payments and to satisfy financial and other covenants in our debt and lease documents; increased regulatory requirements, including the costs of unfunded, mandatory testing of residents and associates and provision of test kits to our health plan participants; increased enforcement actions resulting from COVID-19; government action that may limit our collection or discharge efforts for delinquent accounts; and the frequency and magnitude of legal actions and liability claims that may arise due to COVID-19 or our response efforts.

Community Labor

We continue to experience pressures associated with the intensely competitive labor environment. During 2021 and the ~~three~~six months ended ~~March 31,~~June 30, 2022, the pressures included increased associate turnover, difficulty in timely filling open positions, and increasing wages. Continued increased competition for, or a shortage of, nurses or other associates, including due to the COVID-19 pandemic, general labor market conditions, low levels of unemployment, or general inflationary pressures, have required and may require that we enhance our pay and benefits package to compete effectively for such associates. We have increased our recruiting efforts to fill open ~~positions.~~positions and have increased our workforce since December 31, 2021. We have reviewed wage rates in all of our markets and made appropriate adjustments, and we will monitor to remain competitive. We seek to ensure that our communities are staffed with full and part-time associates. To cover open positions, we have increased our use of more expensive contract labor and overtime. Third-party staffing agencies from which we source contract labor have increased the rates they charge which has resulted in increases in the cost of contract labor. Our labor expense in our same community portfolio for the three and six months ended ~~March 31,~~June 30, 2022 increased ~~4.4% sequentially~~14.0% and 13.6% from the three and six months ended ~~December 31,~~June 30, 2021, ~~and 13.2% year-over-year from the three months ended March 31, 2021.~~respectively. The year-over-year ~~increase~~increases in our same community labor expense primarily resulted from our

increased use of contract labor and overtime ~~to cover open positions~~ as well as merit and market wage rate adjustments. Our labor expense in our same community portfolio for the three months ended June 30, 2022 increased 0.2% sequentially from the three

months ended March 31, 2022 due to increases in hours worked by associates, recent wage rate adjustments, ~~initiated in 2021.~~and an additional day of expense during the three months ended June 30, 2022, which were offset by a decreased use of contract labor and a moderation of COVID-19 related labor costs. We expect to continue to experience labor cost pressure as a result of ~~merit wage rate adjustments made in March 2022,~~ an anticipated increase in hours worked as our occupancy levels grow and the labor environment conditions described above. As we fill more full and part-time positions, we expect to use less contract labor and overtime.

Resident Fee Rates

The rates charged at communities are highly dependent on local market conditions and the competitive environment in which the communities operate. Substantially all of our private pay senior housing residency agreements allow for adjustments into the monthly rate on 90 or fewer days' notice which enables us to seek increases in monthly rates due to inflation or other factors. Increases for level of care changes or additional services are typically allowed immediately upon notice of the change. Generally, we have increased our monthly rates, including rates for care and other services, for private pay residents on an annual basis beginning January 1 each year. We made the annual rate adjustment effective January 1, 2022 for our in-place private pay residents, which was higher than our typical annual rate adjustment and resulted in a ~~5.1%~~4.6% net increase in same community RevPOR for the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared to the ~~three~~six months ended ~~March 31,~~June 30, 2021. Such adjustment reflects our increased costs associated with additional efforts to serve and care for our residents during the pandemic, the current inflationary environment, and the intensely competitive labor environment. ~~The rate adjustment could result in a decrease in occupancy in our communities, and any~~Any use of promotional or other discounting would offset a portion of such rate adjustments in our RevPAR and RevPOR results. ~~In addition, the rate adjustment may not be sufficient to offset our increased costs.~~

Sale of Health Care Services

On July 1, 2021, we completed the sale of 80% of our equity in our Health Care Services segment to affiliates of HCA Healthcare, Inc. ("HCA Healthcare") for a purchase price of $400.0 million in cash, subject to certain adjustments set forth in the Securities Purchase Agreement (the "Purchase Agreement") dated February 24, 2021, including a reduction for the remaining outstanding balance as of the closing of Medicare advance payments and deferred payroll tax payments related to the Health Care Services segment (the "HCS Sale"). We received net cash proceeds of $312.6 million, including $305.8 million at closing on July 1, 2021 and $6.8 million upon completion of the post-closing net working capital adjustment in October 2021. The Purchase Agreement also contained certain agreed upon indemnities for the benefit of the purchaser. At closing of the transaction, we retained a 20% equity interest in the venture with HCA Healthcare ("HCS Venture").

The results and financial position of the Health Care Services segment were deconsolidated from our consolidated financial statements as of July 1, 2021 and our 20% equity interest in the HCS Venture is accounted for under the equity method of accounting subsequent to that date. As of July 1, 2021, we recognized a $100.0 million asset within investment in unconsolidated ventures on our consolidated balance sheet for the estimated fair value of our retained 20% noncontrolling interest in the HCS Venture. We recognized a $286.5 million gain on sale, net of transaction costs, within our consolidated statement of operations for the year ended December 31, 2021 for the HCS Sale. Refer to Note 15 to the condensed consolidated financial statements contained in "Item 1. Financial Statements” for selected financial data for the Health Care Services segment for the three and six months ended ~~March 31,~~June 30, 2021.

On November 1, 2021, the HCS Venture sold certain home health, hospice, and outpatient therapy agencies in areas not served by HCA Healthcare to LHC Group Inc. Upon the completion of the sale, we received $35.0 million of cash distributions from the HCS Venture from the net sale proceeds, which decreased our investment in unconsolidated ventures. We continue to own a 20% equity interest in the remaining HCS Venture, which continues to operate home health ~~hospice,~~ and ~~outpatient therapy~~hospice agencies in areas served by HCA Healthcare.

Results of Operations

As of ~~March 31,~~June 30, 2022, our total operations included ~~678~~674 communities with a capacity to serve over 60,000 residents. As of that date, we owned ~~347~~346 communities ~~(31,635~~(31,603 units), leased ~~298~~295 communities ~~(20,846~~(20,567 units), and managed 33 communities ~~(4,842~~(4,810 units). The following discussion should be read in conjunction with our condensed consolidated financial statements and the related notes, which are included in "Item 1. Financial Statements" of this Quarterly Report on Form 10-Q. The results of operations for any particular period are not necessarily indicative of results for any future period. Transactions completed during the period of January 1, 2021 to ~~March 31,~~June 30, 2022 affect the comparability of our results of operations.

2223

We use the operating measures described below in connection with operating and managing our business and reporting our results of operations.

•Senior housing operating results and data presented on a same community basis reflect results and data of a consistent population of communities by excluding the impact of changes in the composition of our portfolio of communities. The operating results exclude natural disaster expense and related insurance recoveries. We define our same community portfolio as communities consolidated and operational for the full period in both comparison years. Consolidated communities excluded from the same community portfolio include communities acquired or disposed of since the beginning of the prior year, communities classified as assets held for sale, certain communities planned for disposition, certain communities that have undergone or are undergoing expansion, redevelopment, and repositioning projects, and certain communities that have experienced a casualty event that significantly impacts their operations. Our management uses same community operating results and data for decision making, and we believe such results and data provide useful information to investors, because it enables comparisons of revenue, expense, and other operating measures for a consistent portfolio over time without giving effect to the impacts of communities that were not consolidated and operational for the comparison periods, communities acquired or disposed during the comparison periods (or planned for disposition), and communities with results that are or likely will be impacted by completed or in-process development-related capital expenditure projects.

•RevPAR, or average monthly senior housing resident fee revenue per available unit, is defined as resident fee revenue for the corresponding portfolio for the period (excluding revenue from our former Health Care Services segment, revenue for private duty services provided to seniors living outside of our communities, and entrance fee amortization), divided by the weighted average number of available units in the corresponding portfolio for the period, divided by the number of months in the period. We measure RevPAR at the consolidated level, as well as at the segment level with respect to our Independent Living, Assisted Living and Memory Care, and CCRCs segments. Our management uses RevPAR for decision making, and we believe the measure provides useful information to investors, because the measure is an indicator of senior housing resident fee revenue performance that reflects the impact of both senior housing occupancy and rate.

•RevPOR, or average monthly senior housing resident fee revenue per occupied unit, is defined as resident fee revenue for the corresponding portfolio for the period (excluding revenue from our former Health Care Services segment, revenue for private duty services provided to seniors living outside of our communities, and entrance fee amortization), divided by the weighted average number of occupied units in the corresponding portfolio for the period, divided by the number of months in the period. We measure RevPOR at the consolidated level, as well as at the segment level with respect to our Independent Living, Assisted Living and Memory Care, and CCRCs segments. Our management uses RevPOR for decision making, and we believe the measure provides useful information to investors, because it reflects the average amount of senior housing resident fee revenue we derive from an occupied unit per month without factoring occupancy rates. RevPOR is a significant driver of our senior housing revenue performance.

•Weighted average occupancy rate reflects the percentage of units at our owned and leased communities being utilized by residents over a reporting period. We measure occupancy rates with respect to our Independent Living, Assisted Living and Memory Care, and CCRCs segments, and also measure this metric both on a consolidated senior housing and a same community basis. Our management uses weighted average occupancy, and we believe the measure provides useful information to investors, because it is a significant driver of our senior housing revenue performance.

This section includes the non-GAAP performance measure Adjusted EBITDA. See "Non-GAAP Financial Measures" below for our definition of the measure and other important information regarding such measure, including reconciliations to the most comparable GAAP measure.

2324

Comparison of Three Months Ended ~~March 31,~~June 30, 2022 and 2021

Summary Operating Results

The following table summarizes our overall operating results for the three months ended ~~March 31,~~June 30, 2022 and 2021.

Three Months Ended
March 31, Increase (Decrease)
(in thousands) 2022 2021 Amount Percent
Total resident fees and management fees revenue $ 640,303 $ 672,916 $ (32,613) (4.8) %
Other operating income 376 10,735 (10,359) (96.5) %
Facility operating expense 512,764 556,312 (43,548) (7.8) %
Net income (loss) (100,032) (108,303) 8,271 7.6 %
Adjusted EBITDA 37,176 34,981 2,195 6.3 %


	Three Months Ended June 30,				Increase (Decrease)
(in thousands)	2022		2021		Amount		Percent
Total resident fees and management fees revenue	$	643,717	$	678,976	$	(35,259)	(5.2)	%
Other operating income	8,411		1,308		7,103		NM
Facility operating expense	513,664		550,846		(37,182)		(6.7)	%
Net income (loss)	(84,283)		(83,604)		(679)		(0.8)	%
Adjusted EBITDA	50,714		33,064		17,650		53.4	%

The decrease in total resident fees and management fees revenue was primarily attributable to deconsolidation of results of the Health Care Services segment effective July 1, 2021, which resulted in a decrease of ~~$86.9~~$87.3 million of resident fees compared to the prior year period. The decrease in resident fees was partially offset by ~~an 11.0%~~a 10.4% increase in same community RevPAR, comprised of a ~~390~~420 basis point increase in same community weighted average occupancy and a ~~5.1%~~4.2% increase in same community RevPOR. Management fee revenue decreased ~~$5.2~~$1.7 million primarily due to the transition of management agreements on 4212 net communities since the beginning of the prior year period.

During the three months ended ~~March 31,~~June 30, 2022 and 2021, we recognized ~~$0.4~~$8.4 million and ~~$10.7~~$1.3 million, respectively, of government grants and employee retention credits as other operating income based on our estimates of our satisfaction of the conditions of the grants and credits during the period.

The decrease in facility operating expense was primarily attributable to deconsolidation of results of the Health Care Services segment effective July 1, 2021, which resulted in an ~~$87.0~~$84.4 million decrease in facility operating expenses. The decrease in facility operating expense was partially offset by ~~a 10.7%~~an 11.8% increase in same community facility operating expense, including a ~~$38.8~~$40.6 million, or ~~13.2%~~14.0%, increase in our same community labor expense primarily resulting from an increase in the use of contract labor and overtime ~~to cover open positions~~ as well as merit and market wage rate ~~adjustments, partially offset by a decrease in incremental direct labor costs to respond to the COVID-19 pandemic.~~adjustments. Additionally, an increase in food costs due to increased occupancy and higher prices during the period and an increase in repairs and maintenance costs contributed to the increase in our same community facility operating expense. Facility operating expense for the three months ended ~~March 31,~~June 30, 2022 and 2021 includes ~~$10.4~~$1.9 million and ~~$27.3~~$9.7 million, respectively, of incremental direct costs to respond to the COVID-19 pandemic.

The ~~decrease~~increase in net loss was primarily attributable to ~~decreases~~a decrease in ~~interest expense,~~equity in earnings of unconsolidated ventures compared to the prior year period, partially offset by a decrease in general and administrative ~~expense, and facility operating lease~~ expense compared to the prior year period ~~as well as~~and the net impact of the revenue, other operating income, and facility operating expense factors previously discussed.

The increase in Adjusted EBITDA was primarily attributable to a decrease in general and administrative expense ~~(excluding non-cash stock based compensation expense and transaction and organizational restructuring costs)~~ compared to the prior year period as a result of the sale of 80% of our equity in our Health Care Services segment and a decrease in estimated incentive compensation costs, as well as the net impact of the revenue, other operating income, and facility operating expense factors previously discussed.

2425

Operating Results - Senior Housing Segments

The following table summarizes the operating results and data of our three senior housing segments (Independent Living, Assisted Living and Memory Care, and CCRCs) on a combined basis for the three months ended ~~March 31,~~June 30, 2022 and 2021, including operating results and data on a same community basis. See management's discussion and analysis of the operating results on an individual segment basis on the following pages.

Three Months Ended
March 31, Increase (Decrease)
(in thousands, except communities, units, occupancy, RevPAR, and RevPOR) 2022 2021 Amount Percent
Resident fees $ 636,974 $ 577,499 $ 59,475 10.3 %
Other operating income $ 376 $ 8,152 $ (7,776) (95.4) %
Facility operating expense $ 512,764 $ 469,281 $ 43,483 9.3 %
Number of communities (period end) 645 650 (5) (0.8) %
Total average units 52,586 52,971 (385) (0.7) %
RevPAR $ 4,032 $ 3,631 $ 401 11.0 %
Occupancy rate (weighted average) 73.4 % 69.6 % 380 bps n/a
RevPOR $ 5,493 $ 5,219 $ 274 5.3 %
Same Community Operating Results and Data
Resident fees $ 614,441 $ 553,761 $ 60,680 11.0 %
Other operating income $ 358 $ 7,355 $ (6,997) (95.1) %
Facility operating expense $ 493,284 $ 445,519 $ 47,765 10.7 %
Number of communities 635 635 — —
Total average units 50,737 50,734 3 —
RevPAR $ 4,037 $ 3,638 $ 399 11.0 %
Occupancy rate (weighted average) 73.4 % 69.5 % 390 bps n/a
RevPOR $ 5,502 $ 5,235 $ 267 5.1 %


	Three Months Ended June 30,						Increase (Decrease)
(in thousands, except communities, units, occupancy, RevPAR, and RevPOR)	2022			2021			Amount			Percent
Resident fees	$	640,388		$	586,665		$	53,723		9.2	%
Other operating income	$	8,411		$	786		$	7,625		NM
Facility operating expense	$	513,664		$	466,424		$	47,240		10.1	%

Number of communities (period end)	641			648			(7)			(1.1)	%

Total average units	52,368			52,911			(543)			(1.0)	%
RevPAR	$	4,071		$	3,692		$	379		10.3	%
Occupancy rate (weighted average)	74.6		%	70.5		%	410		bps	n/a

RevPOR	$	5,459		$	5,237		$	222		4.2	%

Same Community Operating Results and Data
Resident fees	$	617,730		$	559,667		$	58,063		10.4	%
Other operating income	$	8,015		$	763		$	7,252		NM
Facility operating expense	$	492,939		$	440,870		$	52,069		11.8	%

Number of communities	633			633			—			—
Total average units	50,594			50,589			5			—
RevPAR	$	4,070		$	3,688		$	382		10.4	%
Occupancy rate (weighted average)	74.6		%	70.4		%	420		bps	n/a
RevPOR	$	5,456		$	5,236		$	220		4.2	%

2526

Independent Living Segment

The following table summarizes the operating results and data for our Independent Living segment for the three months ended ~~March 31,~~June 30, 2022 and 2021, including operating results and data on a same community basis.

Three Months Ended
March 31, Increase (Decrease)
(in thousands, except communities, units, occupancy, RevPAR, and RevPOR) 2022 2021 Amount Percent
Resident fees $ 124,404 $ 118,782 $ 5,622 4.7 %
Other operating income $ 2 $ 1,364 $ (1,362) (99.9) %
Facility operating expense $ 86,722 $ 82,817 $ 3,905 4.7 %
Number of communities (period end) 68 68 — —
Total average units 12,568 12,539 29 0.2 %
RevPAR $ 3,299 $ 3,158 $ 141 4.5 %
Occupancy rate (weighted average) 74.6 % 73.6 % 100 bps n/a
RevPOR $ 4,423 $ 4,290 $ 133 3.1 %
Same Community Operating Results and Data
Resident fees $ 122,846 $ 117,572 $ 5,274 4.5 %
Other operating income $ 2 $ 1,345 $ (1,343) (99.9) %
Facility operating expense $ 85,685 $ 81,867 $ 3,818 4.7 %
Number of communities 67 67 — —
Total average units 12,378 12,373 5 —
RevPAR $ 3,308 $ 3,167 $ 141 4.5 %
Occupancy rate (weighted average) 74.6 % 73.5 % 110 bps n/a
RevPOR $ 4,435 $ 4,310 $ 125 2.9 %


	Three Months Ended June 30,						Increase (Decrease)
(in thousands, except communities, units, occupancy, RevPAR, and RevPOR)	2022			2021			Amount			Percent
Resident fees	$	125,578		$	118,005		$	7,573		6.4	%

Other operating income	$	1,159		$	111		$	1,048		NM
Facility operating expense	$	88,028		$	82,824		$	5,204		6.3	%

Number of communities (period end)	68			68			—			—

Total average units	12,569			12,552			17			0.1	%
RevPAR	$	3,330		$	3,134		$	196		6.3	%
Occupancy rate (weighted average)	76.0		%	73.5		%	250		bps	n/a

RevPOR	$	4,380		$	4,266		$	114		2.7	%

Same Community Operating Results and Data
Resident fees	$	123,890		$	116,715		$	7,175		6.1	%
Other operating income	$	1,146		$	111		$	1,035		NM
Facility operating expense	$	86,879		$	81,773		$	5,106		6.2	%

Number of communities	67			67			—			—
Total average units	12,379			12,376			3			—
RevPAR	$	3,336		$	3,144		$	192		6.1	%
Occupancy rate (weighted average)	75.9		%	73.4		%	250		bps	n/a
RevPOR	$	4,393		$	4,285		$	108		2.5	%

The increase in the segment's resident fees was primarily attributable to an increase in the segment's same community RevPAR, comprised of a ~~2.9% increase in same community RevPOR and a 110~~250 basis point increase in same community weighted average ~~occupancy. The~~occupancy and a 2.5% increase in ~~the segment's~~ same community ~~RevPOR was primarily the result of in-place rate increases.~~RevPOR. The increase in the segment's same community weighted average occupancy primarily reflects the impact of our execution on key initiatives to rebuild occupancy lost due to the pandemic. The increase in the segment's same community RevPOR was primarily the result of in-place rate increases.

2627

Assisted Living and Memory Care Segment

The following table summarizes the operating results and data for our Assisted Living and Memory Care segment for the three months ended ~~March 31,~~June 30, 2022 and 2021, including operating results and data on a same community basis.

Three Months Ended
March 31, Increase (Decrease)
(in thousands, except communities, units, occupancy, RevPAR, and RevPOR) 2022 2021 Amount Percent
Resident fees $ 432,132 $ 386,938 $ 45,194 11.7 %
Other operating income $ 356 $ 5,104 $ (4,748) (93.0) %
Facility operating expense $ 355,625 $ 320,609 $ 35,016 10.9 %
Number of communities (period end) 558 562 (4) (0.7) %
Total average units 34,817 35,110 (293) (0.8) %
RevPAR $ 4,136 $ 3,673 $ 463 12.6 %
Occupancy rate (weighted average) 73.0 % 68.3 % 470 bps n/a
RevPOR $ 5,665 $ 5,376 $ 289 5.4 %
Same Community Operating Results and Data
Resident fees $ 427,733 $ 380,616 $ 47,117 12.4 %
Other operating income $ 356 $ 4,930 $ (4,574) (92.8) %
Facility operating expense $ 352,338 $ 313,580 $ 38,758 12.4 %
Number of communities 553 553 — —
Total average units 34,384 34,386 (2) —
RevPAR $ 4,147 $ 3,690 $ 457 12.4 %
Occupancy rate (weighted average) 72.9 % 68.2 % 470 bps n/a
RevPOR $ 5,689 $ 5,409 $ 280 5.2 %


	Three Months Ended June 30,						Increase (Decrease)
(in thousands, except communities, units, occupancy, RevPAR, and RevPOR)	2022			2021			Amount			Percent
Resident fees	$	434,454		$	391,718		$	42,736		10.9	%
Other operating income	$	6,412		$	629		$	5,783		NM
Facility operating expense	$	353,278		$	315,285		$	37,993		12.1	%

Number of communities (period end)	554			560			(6)			(1.1)	%

Total average units	34,598			35,018			(420)			(1.2)	%
RevPAR	$	4,183		$	3,728		$	455		12.2	%
Occupancy rate (weighted average)	74.2		%	69.5		%	470		bps	n/a

RevPOR	$	5,636		$	5,365		$	271		5.1	%

Same Community Operating Results and Data
Resident fees	$	429,970		$	384,404		$	45,566		11.9	%
Other operating income	$	6,291		$	609		$	5,682		NM
Facility operating expense	$	349,423		$	308,097		$	41,326		13.4	%

Number of communities	551			551			—			—
Total average units	34,240			34,238			2			—
RevPAR	$	4,186		$	3,742		$	444		11.9	%
Occupancy rate (weighted average)	74.2		%	69.4		%	480		bps	n/a
RevPOR	$	5,642		$	5,390		$	252		4.7	%

The increase in the segment's resident fees was primarily attributable to an increase in the segment's same community RevPAR, comprised of a ~~470~~480 basis point increase in same community weighted average occupancy and a ~~5.2%~~4.7% increase in same community RevPOR. The increase in the segment's same community weighted average occupancy primarily reflects the impact of our execution on key initiatives to rebuild occupancy lost due to the pandemic. The increase in the segment's same community RevPOR was primarily the result of in-place rate increases. The increase in the segment's resident fees was partially offset by the disposition of ~~five~~eight communities ~~(399~~(653 units) since the beginning of the prior year period, which resulted in ~~$2.3~~$3.3 million less in resident fees during the three months ended ~~March 31,~~June 30, 2022 compared to the prior year period.

The increase in the segment's facility operating expense was primarily attributable to an increase in the segment's same community facility operating expense, including a ~~$32.2~~$33.5 million, or ~~15.3%~~16.2%, increase in the segment's same community labor expense primarily resulting from merit and market wage rate adjustments, an increase in the use of contract labor and overtime, and an increase in hours worked due to ~~cover open positions as well as merit and market wage rate adjustments, partially offset by a decrease in incremental direct labor costs to respond to~~increased occupancy during the ~~COVID-19 pandemic.~~period. Additionally, an increase in food costs due to increased occupancy and higher prices during the period and an increase in repairs and maintenance costs contributed to the increase in the segment's same community facility operating expense. The increase in the segment's facility operating expense was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in ~~$2.2~~$3.2 million less in facility operating expense during the three months ended ~~March 31,~~June 30, 2022 compared to the prior year period. The segment's facility operating expense for the three months ended ~~March 31,~~June 30, 2022 and 2021 includes ~~$7.6~~$1.3 million and ~~$18.9~~$6.1 million, respectively, of incremental direct costs to respond to the COVID-19 pandemic.

2728

CCRCs Segment

The following table summarizes the operating results and data for our CCRCs segment for the three months ended ~~March 31,~~June 30, 2022 and 2021, including operating results and data on a same community basis.

Three Months Ended
March 31, Increase (Decrease)
(in thousands, except communities, units, occupancy, RevPAR, and RevPOR) 2022 2021 Amount Percent
Resident fees $ 80,438 $ 71,779 $ 8,659 12.1 %
Other operating income $ 18 $ 1,684 $ (1,666) (98.9) %
Facility operating expense $ 70,417 $ 65,855 $ 4,562 6.9 %
Number of communities (period end) 19 20 (1) (5.0) %
Total average units 5,201 5,322 (121) (2.3) %
RevPAR $ 5,109 $ 4,473 $ 636 14.2 %
Occupancy rate (weighted average) 73.2 % 68.5 % 470 bps n/a
RevPOR $ 6,976 $ 6,534 $ 442 6.8 %
Same Community Operating Results and Data
Resident fees $ 63,862 $ 55,573 $ 8,289 14.9 %
Other operating income $ — $ 1,080 $ (1,080) (100.0) %
Facility operating expense $ 55,261 $ 50,072 $ 5,189 10.4 %
Number of communities 15 15 — —
Total average units 3,975 3,975 — —
RevPAR $ 5,355 $ 4,660 $ 695 14.9 %
Occupancy rate (weighted average) 73.7 % 68.2 % 550 bps n/a
RevPOR $ 7,267 $ 6,833 $ 434 6.4 %


	Three Months Ended June 30,						Increase (Decrease)
(in thousands, except communities, units, occupancy, RevPAR, and RevPOR)	2022			2021			Amount			Percent
Resident fees	$	80,356		$	76,942		$	3,414		4.4	%
Other operating income	$	840		$	46		$	794		NM
Facility operating expense	$	72,358		$	68,315		$	4,043		5.9	%

Number of communities (period end)	19			20			(1)			(5.0)	%

Total average units	5,201			5,341			(140)			(2.6)	%
RevPAR	$	5,115		$	4,770		$	345		7.2	%
Occupancy rate (weighted average)	73.4		%	70.2		%	320		bps	n/a

RevPOR	$	6,970		$	6,790		$	180		2.7	%

Same Community Operating Results and Data
Resident fees	$	63,870		$	58,548		$	5,322		9.1	%
Other operating income	$	578		$	43		$	535		NM
Facility operating expense	$	56,637		$	51,000		$	5,637		11.1	%

Number of communities	15			15			—			—
Total average units	3,975			3,975			—			—
RevPAR	$	5,356		$	4,910		$	446		9.1	%
Occupancy rate (weighted average)	73.9		%	69.9		%	400		bps	n/a
RevPOR	$	7,246		$	7,028		$	218		3.1	%

The increase in the segment's resident fees was primarily attributable to an increase in the segment's same community RevPAR, comprised of a ~~550~~400 basis point increase in same community weighted average occupancy and a ~~6.4%~~3.1% increase in same community RevPOR. The increase in the segment's same community weighted average occupancy primarily reflects the impact of our execution on key initiatives to rebuild occupancy lost due to the pandemic. The increase in the segment's same community RevPOR was primarily the result of ~~an occupancy mix shift to more skilled nursing services within the segment and~~ in-place rate increases. The increase in the segment's resident fees was partially offset by the disposition of one community (120 units) since the beginning of the prior year period, which resulted in ~~$1.6~~$2.5 million less in resident fees during the three months ended ~~March 31,~~June 30, 2022 compared to the prior year period.

The increase in the segment's facility operating expense was primarily attributable to an increase in the segment's same community facility operating expense, including a ~~$4.7~~$4.3 million, or ~~13.8%~~12.3%, increase in the segment's same community labor expense primarily resulting from an increase in the use of contract labor and overtime ~~to cover open positions, partially offset by a decrease in incremental direct labor costs to respond to the COVID-19 pandemic.~~as well as merit and market wage rate adjustments. The increase in the segment's facility operating expense was partially offset by the disposition of one community since the beginning of the prior year period, which resulted in ~~$2.0~~$2.6 million less in facility operating expense during the three months ended ~~March 31,~~June 30, 2022 compared to the prior year period. The segment's facility operating expense for the three months ended ~~March 31,~~June 30, 2022 and 2021 includes ~~$1.5~~$0.3 million and ~~$4.0~~$1.4 million, respectively, of incremental direct costs to respond to the COVID-19 pandemic.

2829

Operating Results - Other Income and Expense Items

The following table summarizes other income and expense items in our operating results for the three months ended ~~March 31,~~June 30, 2022 and 2021.

Three Months Ended
March 31, Increase (Decrease)
(in thousands) 2022 2021 Amount Percent
Management fees $ 3,329 $ 8,566 $ (5,237) (61.1) %
Reimbursed costs incurred on behalf of managed communities 37,141 65,794 (28,653) (43.5) %
Costs incurred on behalf of managed communities 37,141 65,794 (28,653) (43.5) %
General and administrative expense 45,126 49,943 (4,817) (9.6) %
Facility operating lease expense 41,564 44,418 (2,854) (6.4) %
Depreciation and amortization 85,684 83,891 1,793 2.1 %
Asset impairment 9,075 10,677 (1,602) (15.0) %
Interest income 95 421 (326) (77.4) %
Interest expense 43,354 48,607 (5,253) (10.8) %
Equity in earnings (loss) of unconsolidated ventures (4,894) (531) (4,363) NM
Gain (loss) on sale of assets, net (294) 1,112 (1,406) NM
Other non-operating income (loss) (27) 1,644 (1,671) NM
Benefit (provision) for income taxes 1,976 (752) 2,728 NM


	Three Months Ended June 30,				Increase (Decrease)
(in thousands)	2022		2021		Amount		Percent
Management fees	$	3,329	$	4,998	$	(1,669)	(33.4)	%
Reimbursed costs incurred on behalf of managed communities	37,388		43,008		(5,620)		(13.1)	%
Costs incurred on behalf of managed communities	37,388		43,008		(5,620)		(13.1)	%
General and administrative expense	41,752		52,400		(10,648)		(20.3)	%
Facility operating lease expense	41,538		43,864		(2,326)		(5.3)	%
Depreciation and amortization	86,623		83,591		3,032		3.6	%
Asset impairment	2,599		2,078		521		25.1	%

Interest income	778		341		437		128.2	%
Interest expense	48,234		49,057		(823)		(1.7)	%

Equity in earnings (loss) of unconsolidated ventures	(2,439)		13,946		(16,385)		NM
Gain (loss) on sale of assets, net	961		(79)		1,040		NM
Other non-operating income (loss)	(111)		2,948		(3,059)		NM
Benefit (provision) for income taxes	(1,190)		792		(1,982)		NM

Management Fees. The decrease in management fees was primarily attributable to the transition of management arrangements on 4212 net communities since the beginning of the prior year period, generally for management arrangements on certain former unconsolidated ventures in which we sold our interest and interim management arrangements on formerly leased communities.

Reimbursed Costs Incurred on Behalf of Managed Communities and Costs Incurred on Behalf of Managed Communities. The decrease in reimbursed costs and costs incurred on behalf of managed communities was primarily attributable to terminations of management agreements subsequent to the beginning of the prior year period.

General and Administrative Expense. The decrease in general and administrative expense was primarily attributable to decreases in compensation costs as a result of reductions in our corporate headcount related to the HCS Sale, ~~transaction and organizational restructuring~~estimated incentive compensation costs, and non-cash stock-based compensation expense. General and administrative expense includes transaction and organizational restructuring costs of ~~$0.4~~$0.2 million and ~~$1.9~~$0.7 million for the three months ended ~~March 31,~~June 30, 2022 and 2021, respectively. Transaction costs include those directly related to acquisition, disposition, financing and leasing activity, and are primarily comprised of legal, finance, consulting, professional fees, and other third-party costs. Organizational restructuring costs include those related to our efforts to reduce general and administrative expense and our senior leadership changes, including severance costs.

Facility Operating Lease Expense. The decrease in facility operating lease expense was primarily due to expense reductions for lease incentives received for capital expenditures since the beginning of the prior year period, expense reductions subsequent to the recognition of impairment of operating lease right-of-use assets since the beginning of the prior year period, and lease termination activity since the beginning of the prior year period.

Depreciation and Amortization. The increase in depreciation and amortization expense was primarily due to the completion of community renovations, apartment upgrades, and other major building infrastructure projects for leased communities since the beginning of the prior year period.

Asset Impairment. During the three months ended ~~March 31,~~June 30, 2022 and 2021, we recorded ~~$9.1~~$2.6 million and ~~$10.7~~$2.1 million, respectively, of non-cash impairment charges, primarily for ~~right-of-use assets for~~ certain leased communities with decreased occupancy and future cash flow estimates as a result of the continuing impacts of the COVID-19 ~~pandemic~~pandemic.

Interest Expense. The decrease in interest expense was primarily due to increases in the fair value of interest rate derivatives, reflecting the impact of increases in forward interest rates. Based upon our estimates of variable interest rates we expect debt interest expense to increase approximately $15.0 million for the full year 2022 compared to 2021.

Equity in Earnings (Loss) of Unconsolidated Ventures. The change in equity in earnings (loss) of unconsolidated ventures was primarily due to the gain on sale of assets recognized by our unconsolidated entrance fee venture for the sale of the two remaining entry fee CCRCs during the prior year period.

Benefit (Provision) for Income Taxes. The difference between our effective tax rate for the three months ended June 30, 2022 and ~~property damage at~~2021 was due to the increase in the net deferred tax expense resulting from a valuation allowance recorded in excess of the benefit recorded on operational losses for the three months ended June 30, 2022.

We recorded an aggregate deferred federal, state, and local tax benefit of $20.6 million, which was offset by an increase in the valuation allowance of $21.4 million in the three months ended June 30, 2022. We recorded an aggregate deferred federal, state, and local tax benefit of $20.8 million as a result of the operating loss for the three months ended June 30, 2021, which was offset by an increase in the valuation allowance of $19.8 million.

We evaluate our deferred tax assets each quarter to determine if a valuation allowance is required based on whether it is more likely than not that some portion of the deferred tax asset would not be realized. Our valuation allowance as of June 30, 2022 and December 31, 2021 was $412.0 million and $368.0 million, respectively.

Comparison of Six Months Ended June 30, 2022 and 2021

Summary Operating Results

The following table summarizes our overall operating results for the six months ended June 30, 2022 and 2021.


	Six Months Ended June 30,				Increase (Decrease)
(in thousands)	2022		2021		Amount		Percent
Total resident fees and management fees revenue	$	1,284,020	$	1,351,892	$	(67,872)	(5.0)	%
Other operating income	8,787		12,043		(3,256)		(27.0)	%
Facility operating expense	1,026,428		1,107,158		(80,730)		(7.3)	%
Net income (loss)	(184,315)		(191,907)		7,592		4.0	%
Adjusted EBITDA	87,890		68,045		19,845		29.2	%

The decrease in total resident fees and management fees revenue was primarily attributable to deconsolidation of results of the Health Care Services segment effective July 1, 2021, which resulted in a decrease of $174.2 million of resident fees compared to the prior year period. The decrease in resident fees was partially offset by a 10.6% increase in same community RevPAR, comprised of a 400 basis point increase in same community weighted average occupancy and a 4.6% increase in same community RevPOR. Management fee revenue decreased $6.9 million primarily due to the transition of management agreements on 42 net communities since the beginning of the prior year period.

During the six months ended June 30, 2022 and 2021, we recognized $8.8 million and $12.0 million, respectively, of government grants and employee retention credits as other operating income based on our estimates of our satisfaction of the conditions of the grants and credits during the period.

The decrease in facility operating expense was primarily attributable to deconsolidation of results of the Health Care Services segment effective July 1, 2021, which resulted in a $171.5 million decrease in facility operating expenses. The decrease in facility operating expense was partially offset by an 11.3% increase in same community facility operating expense, including a $79.4 million, or 13.6%, increase in our same community labor expense primarily resulting from an increase in the use of contract labor and overtime as well as merit and market wage rate adjustments, partially offset by a decrease in incremental direct labor costs to respond to the COVID-19 pandemic. Additionally, an increase in food costs due to increased occupancy and higher prices during the period and an increase in repairs and maintenance costs contributed to the increase in our same community facility operating expense. Facility operating expense for the six months ended June 30, 2022 and 2021 includes $12.3 million and $37.1 million, respectively, of incremental direct costs to respond to the COVID-19 pandemic.

The decrease in net loss was primarily attributable to decreases in general and administrative expense, interest expense, and facility operating lease expense compared to the prior year period, as well as the net impact of the revenue, other operating income, and facility operating expense factors previously discussed. These changes were partially offset by a decrease in equity in earnings of unconsolidated ventures compared to the prior year period.

The increase in Adjusted EBITDA was primarily attributable to a decrease in general and administrative expense compared to the prior year period as a result of the sale of 80% of our equity in our Health Care Services segment and a decrease in estimated incentive compensation costs, as well as the net impact of the revenue, other operating income, and facility operating expense factors previously discussed.

Operating Results - Senior Housing Segments

The following table summarizes the operating results and data of our three senior housing segments (Independent Living, Assisted Living and Memory Care, and CCRCs) on a combined basis for the six months ended June 30, 2022 and 2021 including operating results and data on a same community basis. See management's discussion and analysis of the operating results on an individual segment basis on the following pages.


	Six Months Ended June 30,						Increase (Decrease)
(in thousands, except communities, units, occupancy, RevPAR, and RevPOR)	2022			2021			Amount			Percent
Resident fees	$	1,277,362		$	1,164,164		$	113,198		9.7	%
Other operating income	$	8,787		$	8,938		$	(151)		(1.7)	%
Facility operating expense	$	1,026,428		$	935,705		$	90,723		9.7	%

Number of communities (period end)	641			648			(7)			(1.1)	%

Total average units	52,478			52,941			(463)			(0.9)	%
RevPAR	$	4,052		$	3,662		$	390		10.6	%
Occupancy rate (weighted average)	74.0		%	70.0		%	400		bps	n/a

RevPOR	$	5,476		$	5,228		$	248		4.7	%

Same Community Operating Results and Data
Resident fees	$	1,230,332		$	1,111,771		$	118,561		10.7	%
Other operating income	$	8,373		$	8,106		$	267		3.3	%
Facility operating expense	$	984,265		$	884,495		$	99,770		11.3	%

Number of communities	633			633			—			—
Total average units	50,594			50,590			4			—
RevPAR	$	4,053		$	3,663		$	390		10.6	%
Occupancy rate (weighted average)	74.0		%	70.0		%	400		bps	n/a
RevPOR	$	5,477		$	5,234		$	243		4.6	%

Independent Living Segment

The following table summarizes the operating results and data for our Independent Living segment for the six months ended June 30, 2022 and 2021, including operating results and data on a same community basis.


	Six Months Ended June 30,						Increase (Decrease)
(in thousands, except communities, units, occupancy, RevPAR, and RevPOR)	2022			2021			Amount			Percent
Resident fees	$	249,982		$	236,787		$	13,195		5.6	%
Other operating income	$	1,161		$	1,475		$	(314)		(21.3)	%
Facility operating expense	$	174,750		$	165,641		$	9,109		5.5	%

Number of communities (period end)	68			68			—			—

Total average units	12,569			12,546			23			0.2	%
RevPAR	$	3,315		$	3,146		$	169		5.4	%
Occupancy rate (weighted average)	75.3		%	73.5		%	180		bps	n/a

RevPOR	$	4,401		$	4,278		$	123		2.9	%

Same Community Operating Results and Data
Resident fees	$	246,736		$	234,287		$	12,449		5.3	%
Other operating income	$	1,148		$	1,456		$	(308)		(21.2)	%
Facility operating expense	$	172,564		$	163,640		$	8,924		5.5	%

Number of communities	67			67			—			—
Total average units	12,379			12,375			4			—
RevPAR	$	3,322		$	3,155		$	167		5.3	%
Occupancy rate (weighted average)	75.3		%	73.4		%	190		bps	n/a
RevPOR	$	4,413		$	4,298		$	115		2.7	%

The increase in the segment's resident fees was primarily attributable to an increase in the segment's same community RevPAR, comprised of a 2.7% increase in same community RevPOR and a 190 basis point increase in same community weighted average occupancy. The increase in the segment's same community RevPOR was primarily the result of in-place rent increases. The increase in the segment's same community weighted average occupancy primarily reflects the impact of our execution on key initiatives to rebuild occupancy lost due to the pandemic.

The increase in the segment's facility operating expense was primarily attributable to an increase in the segment's same community facility operating expense, including a $4.9 million, or 4.9%, increase in the segment's same community labor expense primarily resulting from an increase in the use of contract labor and overtime as well as merit and market wage rate adjustments, partially offset by a decrease in incremental direct labor costs to respond to the COVID-19 pandemic. The segment's facility operating expense for the six months ended June 30, 2022 and 2021 includes $1.6 million and $4.5 million, respectively, of incremental direct costs to respond to the COVID-19 pandemic.

Assisted Living and Memory Care Segment

The following table summarizes the operating results and data for our Assisted Living and Memory Care segment for the six months ended June 30, 2022 and 2021, including operating results and data on a same community basis.


	Six Months Ended June 30,						Increase (Decrease)
(in thousands, except communities, units, occupancy, RevPAR, and RevPOR)	2022			2021			Amount			Percent
Resident fees	$	866,586		$	778,656		$	87,930		11.3	%
Other operating income	$	6,768		$	5,733		$	1,035		18.1	%
Facility operating expense	$	708,903		$	635,894		$	73,009		11.5	%

Number of communities (period end)	554			560			(6)			(1.1)	%

Total average units	34,708			35,063			(355)			(1.0)	%
RevPAR	$	4,159		$	3,700		$	459		12.4	%
Occupancy rate (weighted average)	73.6		%	68.9		%	470		bps	n/a

RevPOR	$	5,650		$	5,371		$	279		5.2	%

Same Community Operating Results and Data
Resident fees	$	855,864		$	763,363		$	92,501		12.1	%
Other operating income	$	6,647		$	5,527		$	1,120		20.3	%
Facility operating expense	$	699,803		$	619,783		$	80,020		12.9	%

Number of communities	551			551			—			—
Total average units	34,240			34,240			—			—
RevPAR	$	4,166		$	3,716		$	450		12.1	%
Occupancy rate (weighted average)	73.6		%	68.9		%	470		bps	n/a
RevPOR	$	5,663		$	5,397		$	266		4.9	%

The increase in the segment's resident fees was primarily attributable to an increase in the segment's same community RevPAR, comprised of a 470 basis point increase in same community weighted average occupancy and a 4.9% increase in same community RevPOR. The increase in the segment's same community weighted average occupancy primarily reflects the impact of our execution on key initiatives to rebuild occupancy lost due to the pandemic. The increase in the segment's same community RevPOR was primarily the result of in-place rent increases. The increase in the segment's resident fees was partially offset by the disposition of nine communities (695 units) since the beginning of the prior year period, which resulted in $5.6 million less in resident fees during the six months ended June 30, 2022 compared to the prior year period.

The increase in the segment's facility operating expense was primarily attributable to an increase in the segment's same community facility operating expense, including a $65.6 million, or 15.8%, increase in the segment's same community labor expense primarily resulting from an increase in the use of contract labor and overtime as well as merit and market wage rate adjustments, partially offset by a decrease in incremental direct labor costs to respond to the COVID-19 pandemic. Additionally, an increase in food costs due to increased occupancy and higher prices during the period and an increase in repairs and maintenance costs contributed to the increase in the segment's same community facility operating expense. The increase in the segment's facility operating expense was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $5.7 million less in facility operating expense during the six months ended June 30, 2022 compared to the prior year period. The segment's facility operating expense for the six months ended June 30, 2022 and 2021 includes $8.9 million and $25.0 million, respectively, of incremental direct costs to respond to the COVID-19 pandemic.

CCRCs Segment

The following table summarizes the operating results and data for our CCRCs segment for the six months ended June 30, 2022 and 2021, including operating results and data on a same community basis.


	Six Months Ended June 30,						Increase (Decrease)
(in thousands, except communities, units, occupancy, RevPAR, and RevPOR)	2022			2021			Amount			Percent
Resident fees	$	160,794		$	148,721		$	12,073		8.1	%
Other operating income	$	858		$	1,730		$	(872)		(50.4)	%
Facility operating expense	$	142,775		$	134,170		$	8,605		6.4	%

Number of communities (period end)	19			20			(1)			(5.0)	%

Total average units	5,201			5,332			(131)			(2.5)	%
RevPAR	$	5,112		$	4,621		$	491		10.6	%
Occupancy rate (weighted average)	73.3		%	69.3		%	400		bps	n/a

RevPOR	$	6,973		$	6,665		$	308		4.6	%

Same Community Operating Results and Data
Resident fees	$	127,732		$	114,121		$	13,611		11.9	%
Other operating income	$	578		$	1,123		$	(545)		(48.5)	%
Facility operating expense	$	111,898		$	101,072		$	10,826		10.7	%

Number of communities	15			15			—			—
Total average units	3,975			3,975			—			—
RevPAR	$	5,356		$	4,785		$	571		11.9	%
Occupancy rate (weighted average)	73.8		%	69.0		%	480		bps	n/a
RevPOR	$	7,256		$	6,931		$	325		4.7	%

The increase in the segment's resident fees was primarily attributable to an increase in the segment's same community RevPAR, comprised of a 480 basis point increase in same community weighted average occupancy and a 4.7% increase in same community RevPOR. The increase in the segment's same community weighted average occupancy primarily reflects the impact of our execution on key initiatives to rebuild occupancy lost due to the pandemic. The increase in the segment's same community RevPOR was primarily the result of in-place rent increases and an occupancy mix shift to more skilled nursing services within the segment. The increase in the segment's resident fees was partially offset by the disposition of one community (120 units) since the beginning of the prior year period, which resulted in $4.1 million less in resident fees during the six months ended June 30, 2022 compared to the prior year period.

The increase in the segment's facility operating expense was primarily attributable to an increase in the segment's same community facility operating expense, including an $8.9 million, or 13.0%, increase in the segment's same community labor expense primarily resulting from an increase in the use of contract labor and overtime as well as merit and market wage rate adjustments. The increase in the segment's facility operating expense was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $4.7 million less in facility operating expense during the six months ended June 30, 2022 compared to the prior year period. The segment's facility operating expense for the six months ended June 30, 2022 and 2021 includes $1.8 million and $5.4 million, respectively, of incremental direct costs to respond to the COVID-19 pandemic.

Operating Results - Other Income and Expense Items

The following table summarizes other income and expense items in our operating results for the six months ended June 30, 2022 and 2021.


	Six Months Ended June 30,				Increase (Decrease)
(in thousands)	2022		2021		Amount		Percent
Management fees	$	6,658	$	13,564	$	(6,906)	(50.9)	%
Reimbursed costs incurred on behalf of managed communities	74,529		108,802		(34,273)		(31.5)	%
Costs incurred on behalf of managed communities	74,529		108,802		(34,273)		(31.5)	%
General and administrative expense	86,878		102,343		(15,465)		(15.1)	%
Facility operating lease expense	83,102		88,282		(5,180)		(5.9)	%
Depreciation and amortization	172,307		167,482		4,825		2.9	%
Asset impairment	11,674		12,755		(1,081)		(8.5)	%

Interest income	873		762		111		14.6	%
Interest expense	91,588		97,664		(6,076)		(6.2)	%

Equity in earnings (loss) of unconsolidated ventures	(7,333)		13,415		(20,748)		NM
Gain (loss) on sale of assets, net	667		1,033		(366)		(35.4)	%
Other non-operating income (loss)	(138)		4,592		(4,730)		NM
Benefit (provision) for income taxes	786		40		746		NM

Management Fees. The decrease in management fees was primarily attributable to the transition of management arrangements on 42 net communities since the beginning of the prior year period, generally for management arrangements on certain former unconsolidated ventures in which we sold our interest and interim management arrangements on formerly leased communities.

~~Interest Expense~~Reimbursed Costs Incurred on Behalf of Managed Communities and Costs Incurred on Behalf of Managed Communities. The decrease in reimbursed costs and costs incurred on behalf of managed communities was primarily attributable to terminations of management agreements subsequent to the beginning of the prior year period.

General and Administrative Expense. The decrease in general and administrative expense was primarily attributable to decreases in compensation costs as a result of reductions in our corporate headcount related to the HCS Sale, estimated incentive compensation costs, transaction and organizational restructuring costs, and non-cash stock-based compensation expense. General and administrative expense includes transaction and organizational restructuring costs of $0.6 million and $2.6 million for the six months ended June 30, 2022 and 2021, respectively. Transaction costs include those directly related to acquisition, disposition, financing and leasing activity, and are primarily comprised of legal, finance, consulting, professional fees, and other third-party costs. Organizational restructuring costs include those related to our efforts to reduce general and administrative expense and our senior leadership changes, including severance costs.

Asset Impairment. During the six months ended June 30, 2022 and 2021, we recorded $11.7 million and $12.8 million, respectively, of non-cash impairment charges, primarily for certain leased communities with decreased occupancy and future cash flow estimates as a result of the continuing impacts of the COVID-19 pandemic.

Interest Expense. The decrease in interest expense was primarily due to increases in the fair value of interest rate derivatives, reflecting the impact of increases in forward interest rates, and a decrease in interest expense on long-term debt, reflecting the

impact of a lower weighted average interest rate for our fixed interest rate debt obligations as a result of financing activities since the beginning of the prior year period. Based upon our estimates of variable interest rates we expect debt interest expense to increase approximately $15.0 million for the full year 2022 compared to 2021.

Equity in Earnings (Loss) of Unconsolidated ~~Ventures~~Ventures.. The ~~increase~~change in equity in earnings (loss) of unconsolidated ventures was primarily due to the gain on sale of assets recognized by our unconsolidated entrance fee venture for the sale of the two remaining entry fee CCRCs during the prior year period. The equity in loss of unconsolidated ventures for the current year period was primarily for our share of the operating results of the new HCS Venture, including the impact of organizational restructuring costs for adjustments to its operational structure.

Benefit (Provision) for Income Taxes. The difference between our effective tax rate for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021 was due to the increase in the net deferred tax benefit recognized on operational losses and an increase in the tax benefit recognized on the vesting of restricted stock units and restricted stock ~~awards due to an increase in our stock price during the three months ended March 31, 2022.~~awards.

We recorded an aggregate deferred federal, state, and local tax benefit of ~~$24.9~~$45.5 million, which was offset by an increase in the valuation allowance of ~~$22.6~~$44.0 million in the ~~three~~six months ended ~~March 31,~~June 30, 2022. We recorded an aggregate deferred federal, state, and local tax benefit of ~~$25.2~~$46.0 million, ~~as a result of the operating loss for the three months ended March 31, 2021,~~ which was offset by an increase in the valuation allowance of ~~$25.5 million.~~

~~We evaluate our deferred tax assets each quarter to determine if a valuation allowance is required based on whether it is more likely than not that some portion of~~$45.3 million for the ~~deferred tax asset would not be realized. Our valuation allowance as of March 31, 2022 and December 31, 2021 was $390.6 million and $368.0 million, respectively.~~six months ended June 30, 2021.

Liquidity and Capital Resources

This section includes the non-GAAP liquidity measure Adjusted Free Cash Flow. See "Non-GAAP Financial Measures" below for our definition of the measure and other important information regarding such measure, including reconciliations to the most comparable GAAP measure.

Liquidity

The following is a summary of cash flows from operating, investing, and financing activities, as reflected in the condensed consolidated statements of cash flows, and our Adjusted Free Cash ~~Flow:~~Flow.

Three Months Ended
March 31, Increase (Decrease)
(in thousands) 2022 2021 Amount Percent
Net cash provided by (used in) operating activities $ (23,255) $ (23,857) $ (602) (2.5) %
Net cash provided by (used in) investing activities (36,163) (3,806) 32,357 NM
Net cash provided by (used in) financing activities (403) (35,562) (35,159) (98.9) %
Net increase (decrease) in cash, cash equivalents, and restricted cash (59,821) (63,225) (3,404) (5.4) %
Cash, cash equivalents, and restricted cash at beginning of period 438,314 465,148 (26,834) (5.8) %
Cash, cash equivalents, and restricted cash at end of period $ 378,493 $ 401,923 $ (23,430) (5.8) %
Adjusted Free Cash Flow $ (53,493) $ (50,674) $ (2,819) (5.6) %


	Six Months Ended June 30,				Increase (Decrease)
(in thousands)	2022		2021		Amount		Percent
Net cash provided by (used in) operating activities	$	(11,678)	$	(20,447)	$	(8,769)	(42.9)	%
Net cash provided by (used in) investing activities	(80,001)		(2,245)		77,756		NM
Net cash provided by (used in) financing activities	(18,093)		(56,554)		(38,461)		(68.0)	%
Net increase (decrease) in cash, cash equivalents, and restricted cash	(109,772)		(79,246)		30,526		38.5	%
Cash, cash equivalents, and restricted cash at beginning of period	438,314		465,148		(26,834)		(5.8)	%
Cash, cash equivalents, and restricted cash at end of period	$	328,542	$	385,902	$	(57,360)	(14.9)	%
Adjusted Free Cash Flow	$	(101,956)	$	(105,421)	$	3,465	3.3	%

The decrease in net cash used in operating activities was attributable primarily to an increase in same community revenue and a decrease in general and administrative expense compared to the prior year period. These changes were partially offset by an increase in same community facility operating expense and a decrease in lessor reimbursements for capital expenditures for operating leases.

The increase in net cash used in investing activities was primarily attributable to ~~a $46.1~~an $85.5 million increase in purchases of marketable securities, a $17.3 million increase in cash paid for capital expenditures, a $6.0 million increase in cash paid for the acquisition of a previously leased community, and a ~~$3.1~~$3.9 million decrease in net proceeds from the sale of assets compared to the prior year period. These changes were partially offset by ~~an $11.0~~a $29.5 million increase in proceeds from sales and maturities of marketable securities and a ~~$5.1~~$5.2 million decrease in investments in unconsolidated ventures compared to the prior year period.

The decrease in net cash used in financing activities was primarily attributable to a ~~$28.5~~$29.9 million decrease in repayment of debt and financing lease obligations and ~~a $6.7~~an $8.3 million increase in debt proceeds compared to the prior year period.

The change in Adjusted Free Cash Flow was primarily attributable to ~~an $11.9 million increase in non-development capital expenditures, net and an increase in same community facility operating expense compared to the prior year period. These~~

~~changes were partially offset by~~ an increase in same community revenue and a decrease in general and administrative expense compared to the prior year period. These changes were partially offset by an increase in same community facility operating expense compared to the prior year period and a $21.8 million increase in non-development capital expenditures, net.

Our principal sources of liquidity have historically been from:

•cash balances on hand, cash equivalents, and marketable securities;

•cash flows from operations;

•proceeds from our credit facilities;

•funds generated through unconsolidated venture arrangements;

•proceeds from mortgage financing or refinancing of various assets;

•funds raised in the debt or equity markets; and

•proceeds from the disposition of assets.

Over the longer-term, we expect to continue to fund our business through these principal sources of liquidity. We also have received pandemic-related government relief, including cash grants and advanced Medicare payments, and we have elected to utilize the pandemic-related payroll tax deferral program.

Our liquidity requirements have historically arisen from:

•working capital;

•operating costs such as labor costs, severance costs, general and administrative expense, and supply costs;

•debt, interest, and lease payments;

•acquisition consideration, lease termination and restructuring costs, and transaction and integration costs;

•capital expenditures and improvements, including the expansion, repositioning, redeveloping, and major renovation of our current communities and the development of new communities;

•cash collateral required to be posted in connection with our financial instruments and insurance programs;

•purchases of common stock under our share repurchase authorizations;

•other corporate initiatives (including integration, information systems, branding, and other strategic projects); and

•prior to 2009, dividend payments.

Over the near-term, we expect that our liquidity requirements will primarily arise from:

•working capital;

•operating costs such as labor costs, general and administrative expense, and supply costs, including those related to the COVID-19 pandemic;

•debt, interest, and lease payments;

•payment of deferred payroll taxes under the CARES Act;

•acquisition consideration;

•transaction costs and investment in our healthcare and wellness initiatives;

•capital expenditures and improvements, including the expansion, renovation, redevelopment, and repositioning of our existing communities;

•cash collateral required to be posted in connection with our financial instruments and insurance programs; and

•other corporate initiatives (including information systems and other strategic projects).

We are highly leveraged and have significant debt and lease obligations. As of ~~March 31,~~June 30, 2022, we have three principal corporate-level debt obligations and credit facilities:

•$230.0 million principal amount of 2.00% convertible senior notes due 2026.

•$80.0 million secured credit facility maturing January 2024, under which $72.6 million of letters of credit and no cash borrowings have been issued as of ~~such date.~~June 30, 2022.

•Separate secured letter of credit facility providing for up to $15.0 million of letters of credit as of ~~March 31,~~June 30, 2022, under which ~~$13.6~~$13.9 million had been issued as of that date.

As of ~~March 31,~~June 30, 2022, we had $3.8 billion of debt outstanding, at a weighted average interest rate of ~~3.5%~~3.98%. As of such date, ~~93.7%~~93.8%, or $3.6 billion, of our total debt obligations represented non-recourse property-level mortgage financings. As of ~~March 31,~~June 30, 2022, $1.2 billion of our long-term debt is variable rate debt subject to interest rate cap agreements. The remaining ~~$226.9~~$227.0 million of our long-term variable rate debt is not subject to any interest rate cap agreements. We are subject to market

risks from changes in interest rates charged on our credit facilities and other variable rate indebtedness. Refer to “Item 3. Quantitative and Qualitative Disclosures About Market Risk” for further information on our interest rate risk.

As of ~~March 31,~~June 30, 2022, we had ~~$1.4~~$1.3 billion of operating and financing lease obligations. For the twelve months ending ~~March 31,~~June 30, 2023, we will be required to make approximately ~~$273.7~~$275.4 million of cash lease payments in connection with our existing operating and financing leases.

Total liquidity of ~~$475.9~~$411.7 million as of ~~March 31,~~June 30, 2022 included ~~$289.2~~$238.8 million of unrestricted cash and cash equivalents (excluding restricted cash of ~~$89.2~~$89.8 million), ~~$179.3~~$165.5 million of marketable securities, and $7.4 million of availability on our secured credit facility. Total liquidity as of ~~March 31,~~June 30, 2022 decreased ~~$60.9~~$125.1 million from total liquidity of $536.8 million as of December 31, 2021. The decrease was primarily attributable to negative ~~$53.5~~$102.0 million of Adjusted Free Cash Flow and ~~$9.7~~$19.3 million of payments of mortgage debt.

As of ~~March 31,~~June 30, 2022, our current liabilities exceeded current assets by ~~$138.0~~$266.5 million. Included in our current liabilities is ~~$207.8~~$268.3 million of the current portion of long-term debt. Our current liabilities also include ~~$176.4~~$177.5 million of the current portion of operating and financing lease obligations, for which the associated right-of-use assets are excluded from current assets on our condensed consolidated balance sheets. We currently estimate our historical principal sources of liquidity, primarily our cash flows from operations, together with cash balances on hand, cash equivalents, and marketable securities will be sufficient to fund our liquidity needs for at least the next 12 months. We continue to seek opportunities to preserve and enhance our liquidity, including through increasing our RevPAR, maintaining expense discipline, continuing to refinance maturing debt, continuing to evaluate our ~~financing~~capital structure and the state of debt and equity markets, and monetizing non-strategic or underperforming owned ~~assets, and seeking further government-sponsored financial relief related to the pandemic.~~assets. There is no assurance that ~~debt~~ financing will continue to be available on terms consistent with our expectations or at all, or that our efforts will be successful in ~~seeking further government-sponsored financial relief or regarding the amount of, or conditions required to qualify for, any such relief.~~monetizing certain assets.

Our actual liquidity and capital funding requirements depend on numerous factors, including our operating results, our actual level of capital expenditures, general economic conditions, and the cost of capital, as well as other factors described in "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 15, 2022. The amount of mortgage financing available for our communities is generally dependent on their appraised values and performance. In addition, our inability to satisfy underwriting criteria for individual communities may limit our access to our historical lending sources for such communities, including Fannie Mae and Freddie Mac. Due to lower operating performance of our communities, generally, resulting from the COVID-19 pandemic, during 2021 we sought and obtained non-agency mortgage financings to partially refinance maturing Freddie Mac and Fannie Mae indebtedness. Until our communities' performance recovers, we plan to refinance maturities using non-agency financing, and ~~we expect~~ our loan proceeds from such financing ~~generally will~~may be insufficient to fully cover maturing mortgage indebtedness. As of ~~March 31,~~June 30, 2022, we have no remaining 2022 mortgage debt ~~maturities.~~maturities and have $227.7 million of mortgage debt maturities due in 2023, which we plan to refinance. Our inability to obtain refinancing proceeds sufficient to cover 2023 and later maturing indebtedness could adversely impact our liquidity, and may cause us to seek additional alternative sources of financing, which may be less attractive or unavailable. ~~Increases~~We expect increases in market interest rates ~~may~~to increase our future borrowing costs for ~~any~~ new ~~financing.~~financings obtained in the near-term. Shortfalls in cash flows from estimated operating results or other principal sources of liquidity may have an adverse impact on our ability to fund our planned capital expenditures, or to pursue any acquisition, investment, development, or potential lease restructuring opportunities that we identify, or to fund investments to support our strategy. In order to continue some of these activities at historical or planned levels, we may incur additional indebtedness or lease financing to provide additional funding. There can be no assurance that any such additional financing will be available or on terms that are acceptable to us.

Capital Expenditures

Our capital expenditures are comprised of community-level, corporate, and development capital expenditures. Community-level capital expenditures include recurring expenditures (routine maintenance of communities over $1,500 per occurrence and for unit turnovers over $500 per unit) and community renovations, apartment upgrades, and other major building infrastructure projects. Corporate capital expenditures include those for information technology systems and equipment, the expansion of our support platform and the remediation or replacement of assets as a result of casualty losses. Development capital expenditures include community expansions, major community redevelopment and repositioning projects, and the development of new communities.

With our development capital expenditures program, we intend to expand, renovate, redevelop, and reposition certain of our communities where economically advantageous. Certain of our communities may benefit from additions and expansions or from adding a new level of service for residents to meet the evolving needs of our customers. These development projects include converting space from one level of care to another, reconfiguration of existing units, the addition of services that are not currently present, or physical plant modifications.

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The following table summarizes our capital expenditures for the ~~three~~six months ended ~~March 31,~~June 30, 2022 for our consolidated business.


(in millions)
Community-level capital expenditures, net(1)	$	~~33.5~~71.9
Corporate capital expenditures, net~~(2)~~	~~5.8~~13.1
Non-development capital expenditures, net~~(3)~~(2)	~~39.3~~85.0
Development capital expenditures, net	~~0.9~~2.7
Total capital expenditures, net	$	~~40.2~~87.7

(1)Reflects the amount invested, net of lessor reimbursements of ~~$4.7~~$11.8 million.

(2)~~Includes $0.3 million of remediation costs at our communities resulting from natural disasters.~~

~~(3)~~Amount is included in Adjusted Free Cash Flow.

In the aggregate, we expect our full-year 2022 non-development capital expenditures, net of anticipated lessor reimbursements, to be approximately $160.0 million. In addition, we expect our full-year 2022 development capital expenditures to be approximately $20.0 million, net of anticipated lessor reimbursements, and such projects include those for expansion, repositioning, redeveloping, and major renovation of selected existing senior living communities. We anticipate that our 2022 capital expenditures will be funded from cash on hand, cash equivalents, marketable securities, cash flows from operations, and reimbursements from lessors.

Funding our planned capital expenditures, pursuing any acquisition, investment, development, or potential lease restructuring opportunities that we identify, or funding investments to support our strategy may require additional capital. We expect to continue to assess our financing alternatives periodically and access the capital markets opportunistically. If our existing resources are insufficient to satisfy our liquidity requirements, we may need to sell additional equity or debt securities. Any such sale of additional equity securities will dilute the percentage ownership of our existing stockholders, and we cannot be certain that additional public or private financing will be available in amounts or on terms acceptable to us, if at all. Any newly issued equity securities may have rights, preferences, or privileges senior to those of our common stock. If we are unable to raise additional funds or obtain them on terms acceptable to us, we may have to delay or abandon our plans.

Credit Facilities

On December 11, 2020, we entered into a revolving credit agreement with Capital One, National Association, as administrative agent and lender and the other lenders from time to time parties thereto. The agreement provides a commitment amount of up to $80.0 million which can be drawn in cash or as letters of credit. The agreement matures on January 15, 2024. Amounts drawn under the facility will bear interest at 30-day London Interbank Offer Rate ("LIBOR") plus an applicable margin which was 2.75% as of ~~March 31,~~June 30, 2022. Additionally, a quarterly commitment fee of 0.25% per annum was applicable on the unused portion of the facility as of ~~March 31,~~June 30, 2022. The revolving credit facility is currently secured by first priority mortgages and negative pledges on certain of our communities. Available capacity under the facility will vary from time to time based upon borrowing base calculations related to the appraised value and performance of the communities securing the credit facility and the variable interest rate of the credit facility.

As of ~~March 31,~~June 30, 2022, $72.6 million of letters of credit and no cash borrowings were outstanding under our $80.0 million secured credit facility and the facility had $7.4 million of availability. We also had a separate secured letter of credit facility providing up to $15.0 million of letters of credit as of ~~March 31,~~June 30, 2022 under which ~~$13.6~~$13.9 million had been issued as of that date.

Long-Term Leases

As of ~~March 31,~~June 30, 2022, we operated ~~298~~295 communities under long-term leases ~~(231~~(230 operating leases and 6765 financing leases). The substantial majority of our lease arrangements are structured as master leases. Under a master lease, numerous communities are leased through an indivisible lease. We typically guarantee the performance and lease payment obligations of our subsidiary lessees under the master leases. Due to the nature of such master leases, it is difficult to restructure the composition of our leased portfolios or economic terms of the leases without the consent of the applicable landlord. In addition, an event of default related to an individual property or limited number of properties within a master lease portfolio may result in a default on the entire master lease portfolio.

The leases relating to these communities are generally fixed rate leases with annual escalators that are either fixed or based upon changes in the consumer price index or leased property revenue. Approximately 89% of our community lease payments are subject to a weighted average maximum annual increase of 2.7% for community leases subject to fixed annual escalators or variable annual escalators based on the consumer price index subject to a cap. The remaining community lease payments are subject to variable annual escalators primarily based upon the change in the consumer price index. An additional 1% increase in the consumer price index would have resulted in additional cash lease payments of approximately $0.2 million for the twelve months ended June 30, 2022. We are responsible for all operating costs, including repairs, property taxes, and insurance. The lease terms generally provide for renewal or extension options from 5 to 20 years, and, in some instances, purchase options.

The community leases contain other customary terms, which may include assignment and change of control restrictions, maintenance and capital expenditure obligations, termination provisions, and financial covenants, such as those requiring us to maintain prescribed minimum liquidity, net worth, and stockholders' equity levels and lease coverage ratios. Our lease documents generally contain non-financial covenants, such as those requiring us to comply with Medicare or Medicaid provider requirements and maintain insurance coverage. Certain leases contain cure provisions, which generally allow us to post an additional lease security deposit if the required covenant is not met.

Certain of our master leases contain radius restrictions, which limit our ability to own, develop, or acquire new communities within a specified distance from certain existing communities covered by such agreements. These radius restrictions could negatively affect our ability to expand, develop, or acquire senior housing communities and operating companies.

For the three and six months ended ~~March 31,~~June 30, 2022, our cash lease payments for our operating leases ~~and financing leases~~ were $51.4 million and ~~$17.5~~$102.8 million, respectively, and for our financing leases were $17.6 million and $35.2 million, respectively. For the twelve months ending ~~March 31,~~June 30, 2023, we will be required to make ~~$273.7~~$275.4 million of cash lease payments in connection with our existing operating and financing leases.

Debt and Lease Covenants

Certain of our debt and lease documents contain restrictions and financial covenants, such as those requiring us to maintain prescribed minimum liquidity, net worth, and stockholders' equity levels and debt service and lease coverage ratios, and requiring us not to exceed prescribed leverage ratios, in each case on a consolidated, portfolio-wide, multi-community, single-community, and/or entity basis. Net worth is generally calculated as stockholders' equity as calculated in accordance with GAAP, and in certain circumstances, reduced by intangible assets or liabilities or increased by deferred gains from sale-leaseback transactions and deferred entrance fee revenue. The debt service and lease coverage ratios are generally calculated as revenues less operating expenses, including an implied management fee and a reserve for capital expenditures, divided by the debt (principal and interest) or lease payment. In addition, our debt and lease documents generally contain non-financial covenants, such as those requiring us to comply with Medicare or Medicaid provider requirements and maintain insurance coverage.

Our failure to comply with applicable covenants could constitute an event of default under the applicable debt or lease documents. Many of our debt and lease documents contain cross-default provisions so that a default under one of these instruments could cause a default under other debt and lease documents (including documents with other lenders and lessors).

Furthermore, our debt and leases are secured by our communities and, in certain cases, a guaranty by us and/or one or more of our subsidiaries. Therefore, if an event of default has occurred under any of our debt or lease documents, subject to cure provisions in certain instances, the respective lender or lessor would have the right to declare all the related outstanding amounts of indebtedness or cash lease obligations immediately due and payable, to foreclose on our mortgaged communities, to terminate our leasehold interests, to foreclose on other collateral securing the indebtedness and leases, to discontinue our operation of leased communities, and/or to pursue other remedies available to such lender or lessor. Further, an event of default could trigger cross-default provisions in our other debt and lease documents (including documents with other lenders or lessors). We cannot provide assurance that we would be able to pay the debt or lease obligations if they became due upon acceleration following an event of default.

As of ~~March 31,~~June 30, 2022, we are in compliance with the financial covenants of our debt agreements and long-term leases.

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Non-GAAP Financial Measures

This Quarterly Report on Form 10-Q contains the financial measures Adjusted EBITDA and Adjusted Free Cash Flow, which are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). Presentations of these non-GAAP financial measures are intended to aid investors in better understanding the factors and trends affecting our performance and liquidity. However, investors should not consider these non-GAAP financial measures as a substitute for financial measures determined in accordance with GAAP, including net income (loss), income (loss) from operations, or net cash provided by (used in) operating activities. We caution investors that amounts presented in accordance with our definitions of these non-GAAP financial measures may not be comparable to similar measures disclosed by other companies because not all companies calculate non-GAAP measures in the same manner. We urge investors to review the following reconciliations of these non-GAAP financial measures from the most comparable financial measures determined in accordance with GAAP.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP performance measure that we define as net income (loss) excluding: benefit/provision for income taxes, non-operating income/expense items, and depreciation and amortization; and further adjusted to exclude income/expense associated with non-cash, non-operational, transactional, cost reduction, or organizational restructuring items that management does not consider as part of our underlying core operating performance and that management believes impact the comparability of performance between periods. For the periods presented herein, such other items include non-cash impairment charges, gain/loss on facility operating lease termination, operating lease expense adjustment, non-cash stock-based compensation expense, and transaction and organizational restructuring costs. Transaction costs include those directly related to acquisition, disposition, financing, and leasing activity, and are primarily comprised of legal, finance, consulting, professional fees, and other third-party costs. Organizational restructuring costs include those related to our efforts to reduce general and administrative expense and our senior leadership changes, including severance.

We believe that presentation of Adjusted EBITDA as a performance measure is useful to investors because (i) it is one of the metrics used by our management for budgeting and other planning purposes, to review our historic and prospective core operating performance, and to make day-to-day operating decisions; (ii) it provides an assessment of operational factors that management can impact in the short-term, namely revenues and the controllable cost structure of the organization, by eliminating items related to our financing and capital structure and other items that management does not consider as part of our underlying core operating performance and that management believes impact the comparability of performance between periods; and (iii) we believe that this measure is used by research analysts and investors to evaluate our operating results and to value companies in our industry.

Adjusted EBITDA has material limitations as a performance measure, including: (i) excluded interest and income tax are necessary to operate our business under our current financing and capital structure; (ii) excluded depreciation, amortization, and impairment charges may represent the wear and tear and/or reduction in value of our communities, goodwill, and other assets and may be indicative of future needs for capital expenditures; and (iii) we may incur income/expense similar to those for which adjustments are made, such as gain/loss on sale of assets, facility operating lease termination, or debt modification and extinguishment, non-cash stock-based compensation expense, and transaction and other costs, and such income/expense may significantly affect our operating results.

3542

The table below reconciles Adjusted EBITDA from net income (loss).

Three Months Ended
March 31,
(in thousands) 2022 2021
Net income (loss) $ (100,032) $ (108,303)
Provision (benefit) for income taxes (1,976) 752
Equity in (earnings) loss of unconsolidated ventures 4,894 531
Loss (gain) on sale of assets, net 294 (1,112)
Other non-operating (income) loss 27 (1,644)
Interest expense 43,354 48,607
Interest income (95) (421)
Income (loss) from operations (53,534) (61,590)
Depreciation and amortization 85,684 83,891
Asset impairment 9,075 10,677
Operating lease expense adjustment (8,307) (4,664)
Non-cash stock-based compensation expense 3,885 4,783
Transaction and organizational restructuring costs 373 1,884
Adjusted EBITDA(1)
$ 37,176 $ 34,981


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Net income (loss)	$	(84,283)	$	(83,604)	$	(184,315)	$	(191,907)
Provision (benefit) for income taxes	1,190		(792)		(786)		(40)
Equity in (earnings) loss of unconsolidated ventures	2,439		(13,946)		7,333		(13,415)

Loss (gain) on sale of assets, net	(961)		79		(667)		(1,033)
Other non-operating (income) loss	111		(2,948)		138		(4,592)
Interest expense	48,234		49,057		91,588		97,664
Interest income	(778)		(341)		(873)		(762)
Income (loss) from operations	(34,048)		(52,495)		(87,582)		(114,085)
Depreciation and amortization	86,623		83,591		172,307		167,482
Asset impairment	2,599		2,078		11,674		12,755

Operating lease expense adjustment	(8,308)		(5,326)		(16,615)		(9,990)
Non-cash stock-based compensation expense	3,619		4,527		7,504		9,310
Transaction and organizational restructuring costs	229		689		602		2,573
Adjusted EBITDA(1)	$	50,714	$	33,064	$	87,890	$	68,045

(1) Adjusted EBITDA includes ~~$0.4~~$8.4 million and ~~$10.7~~$8.8 million benefit for the three and six months ended ~~March 31,~~June 30, 2022, respectively, and $1.3 million and $12.0 million benefit for the three and six months ended June 30, 2021, respectively, of government grants and credits recognized in other operating income.

Adjusted Free Cash Flow

Adjusted Free Cash Flow is a non-GAAP liquidity measure that we define as net cash provided by (used in) operating activities before: distributions from unconsolidated ventures from cumulative share of net earnings, changes in prepaid insurance premiums financed with notes payable, changes in operating lease assets and liabilities for lease termination, cash paid/received for gain/loss on facility operating lease termination, and lessor capital expenditure reimbursements under operating leases; plus: property insurance proceeds and proceeds from refundable entrance fees, net of refunds; less: non-development capital expenditures and payment of financing lease obligations. Non-development capital expenditures are comprised of corporate and community-level capital expenditures, including those related to maintenance, renovations, upgrades, and other major building infrastructure projects for our communities and is presented net of lessor reimbursements. Non-development capital expenditures do not include capital expenditures for: community expansions, major community redevelopment and repositioning projects, and the development of new communities.

We believe that presentation of Adjusted Free Cash Flow as a liquidity measure is useful to investors because (i) it is one of the metrics used by our management for budgeting and other planning purposes, to review our historic and prospective sources of operating liquidity, and to review our ability to service our outstanding indebtedness, pay dividends to stockholders, engage in share repurchases, and make capital expenditures, including development capital expenditures; and (ii) it provides an indicator to management to determine if adjustments to current spending decisions are needed.

Adjusted Free Cash Flow has material limitations as a liquidity measure, including: (i) it does not represent cash available for dividends, share repurchases, or discretionary expenditures since certain non-discretionary expenditures, including mandatory debt principal payments, are not reflected in this measure; (ii) the cash portion of non-recurring charges related to gain/loss on facility lease termination generally represent charges/gains that may significantly affect our liquidity; and (iii) the impact of timing of cash expenditures, including the timing of non-development capital expenditures, limits the usefulness of the measure for short-term comparisons.

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The table below reconciles Adjusted Free Cash Flow from net cash provided by (used in) operating activities.

Three Months Ended
March 31,
(in thousands) 2022 2021
Net cash provided by (used in) operating activities $ (23,255) $ (23,857)
Net cash provided by (used in) investing activities (36,163) (3,806)
Net cash provided by (used in) financing activities (403) (35,562)
Net increase (decrease) in cash, cash equivalents, and restricted cash $ (59,821) $ (63,225)
Net cash provided by (used in) operating activities $ (23,255) $ (23,857)
Distributions from unconsolidated ventures from cumulative share of net earnings (561) —
Changes in prepaid insurance premiums financed with notes payable 16,629 12,985
Changes in assets and liabilities for lessor capital expenditure reimbursements under operating leases (1,490) (7,563)
Non-development capital expenditures, net (39,326) (27,450)
Payment of financing lease obligations (5,490) (4,789)
Adjusted Free Cash Flow(1)
$ (53,493) $ (50,674)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Net cash provided by (used in) operating activities	$	11,577	$	3,410	$	(11,678)	$	(20,447)
Net cash provided by (used in) investing activities	(43,838)		1,561		(80,001)		(2,245)
Net cash provided by (used in) financing activities	(17,690)		(20,992)		(18,093)		(56,554)
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	(49,951)	$	(16,021)	$	(109,772)	$	(79,246)

Net cash provided by (used in) operating activities	$	11,577	$	3,410	$	(11,678)	$	(20,447)
Distributions from unconsolidated ventures from cumulative share of net earnings	—		(5,355)		(561)		(5,355)
Changes in prepaid insurance premiums financed with notes payable	(5,377)		(4,200)		11,252		8,785
Changes in assets and liabilities for lessor capital expenditure reimbursements under operating leases	(3,367)		(7,943)		(4,857)		(15,506)
Non-development capital expenditures, net	(45,686)		(35,795)		(85,012)		(63,245)
Payment of financing lease obligations	(5,610)		(4,864)		(11,100)		(9,653)
Adjusted Free Cash Flow(1)	$	(48,463)	$	(54,747)	$	(101,956)	$	(105,421)

(1) Adjusted Free Cash Flow includes:

•$~~0.8~~0.2 million and ~~$1.7~~$0.6 million for the three and six months ended June 30, 2022, respectively, and $0.7 million and $2.6 million for the three and six months ended June 30, 2021, respectively, for transaction and organizational costs.

•$4.6 million and $5.4 million benefit for the three and six months ended ~~March 31,~~June 30, 2022, respectively, and $0.4 million and $2.1 million benefit for the three and six months ended June 30, 2021, respectively, from government grants and credits ~~received~~received.

•$~~1.8~~1.2 million and $3.1 million recoupment for the three and six months ended June 30, 2022, respectively, and $14.3 million recoupment for both the three and six months ended June 30, 2021, respectively, of accelerated/advanced Medicare ~~payments for the three months ended March 31, 2022~~payments.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to market risks from changes in interest rates charged on our credit facilities and other variable rate indebtedness. The impact on earnings and the value of our long-term debt are subject to change as a result of movements in market rates and prices. As of ~~March 31,~~June 30, 2022, 62.0%, or $2.4 billion, of our long-term debt had a weighted average fixed interest rate of 3.93%. As of ~~March 31,~~June 30, 2022, we had $1.5 billion of long-term variable rate debt, at a weighted average interest rate of ~~2.76%~~4.04%.

In the normal course of business, we enter into certain interest rate cap agreements with major financial institutions to manage our risk above certain interest rates on variable rate debt. As of ~~March 31,~~June 30, 2022, $1.2 billion, or 32.1%, of our long-term debt is variable rate debt subject to interest rate cap agreements, at a weighted-average interest rate of ~~2.81%~~4.13%, and ~~$226.9~~$227.0 million, or 5.9%, of our long-term debt is variable rate debt not subject to any interest rate cap agreements. Approximately 91% of our outstanding variable rate debt is indexed to LIBOR and approximately 9% of our outstanding variable rate debt is indexed to the Secured Overnight Financing Rate ("SOFR"), and accordingly our annual interest expense related to variable rate debt is directly affected by movements in LIBOR or SOFR. ~~After consideration of hedging instruments currently in place,~~

The table below reflects the additional annual debt interest expense that would have resulted for the respective basis point increases in LIBOR and SOFR as of ~~100, 200, and 500 basis points would have resulted~~June 30, 2022.


Increase in Index (in basis points)	Annual Interest Expense Increase (1) (in millions)
100	$	14.8
200	27.8
500	42.9
1,000	55.2

(1)Amounts are after consideration of interest rate cap agreements in ~~additional annual interest expense~~place as of ~~$14.9 million, $29.9 million, and $59.2 million, respectively.~~ June 30, 2022.

Certain of our variable rate debt instruments include springing provisions that obligate us to acquire additional interest rate caps in the event that LIBOR or SOFR increases above certain levels, and the implementation of those provisions ~~would~~may result in additional mitigation of interest ~~costs.~~costs, which may be partially or fully offset by the costs of the additional interest rate caps.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined under Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer each concluded that, as of ~~March 31,~~June 30, 2022, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There has not been any change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended ~~March 31,~~June 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The information contained in Note 10 to the condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated herein by this reference.

Item 1A. Risk Factors

There have been no material changes to the risk factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table contains information regarding purchases of our common stock made during the quarter ended ~~March 31,~~June 30, 2022 by or on behalf of the Company or any ''affiliated purchaser,'' as defined by Rule 10b-18(a)(3) of the Exchange Act.

Period
Total
Number of
Shares
Purchased (1)
Average
Price Paid
per Share Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs
Approximate Dollar Value of
Shares that May Yet Be
Purchased Under the
Plans or Programs ($ in thousands) (2)
1/1/2022 - 1/31/2022 — $ — — $ 44,026
2/1/2022 - 2/28/2022 594,939 6.99 — 44,026
3/1/2022 - 3/31/2022 4,817 7.05 — 44,026
Total 599,756 $ 7.00 —


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ($ in thousands) (2)
4/1/2022 - 4/30/2022	—	$	—	—	$	44,026
5/1/2022 - 5/31/2022	9,144	5.48		—	44,026
6/1/2022 - 6/30/2022	—	—		—	44,026
Total	9,144	$	5.48	—

(1)Consists entirely of shares withheld to satisfy tax liabilities due upon the vesting of restricted stock and restricted stock units. The average price paid per share for such share withholding is based on the closing price per share on the vesting date of the restricted stock and restricted stock units or, if such date is not a trading day, the trading day immediately prior to such vesting date.

(2)On November 1, 2016, we announced that our Board of Directors had approved a share repurchase program that authorizes us to purchase up to $100.0 million in the aggregate of our common stock. The share repurchase program is intended to be implemented through purchases made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or block trades, or by any combination of such methods, in accordance with applicable insider trading and other securities laws and regulations. The size, scope and timing of any purchases will be based on business, market and other conditions and factors, including price, regulatory and contractual requirements, and capital availability. The repurchase program does not obligate us to acquire any particular amount of common stock and the program may be suspended, modified or discontinued at any time at our discretion without prior notice. Shares of stock repurchased under the program will be held as treasury shares. As of ~~March 31,~~June 30, 2022, $44.0 million remained available under the repurchase program.

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Item 6. Exhibits


Exhibit No.						Description

2.1						Securities Purchase Agreement dated as of February 24, 2021, by and among the Company and certain of its subsidiaries and certain subsidiaries of HCA Healthcare, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on February 24, 2021 (File No. 001-32641)).*
3.1						Amended and Restated Certificate of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q filed on November 5, 2019 (File No. 001-32641)).
3.2						Amended and Restated Bylaws of the Company dated October 29, 2019 (incorporated by reference to Exhibit 3.3 to the Company's Current Report on Form 8-K filed on October 29, 2019 (File No. 001-32641)).
4.1						Form of Certificate for common stock (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-1 (Amendment No. 3) filed on November 7, 2005 (File No. 333-127372)).
4.2						Description of the Company's common stock (incorporated by reference to Exhibit 4.2 to the Company's Annual Report on Form 10-K filed on February 19, 2020 (File No. 001-32641)).
4.3						Indenture, dated as of October 1, 2021, by and among the Company and American Stock Transfer & Trust Company, LLC, as trustee, governing the 2.00% Convertible Senior Notes due 2026 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on October 1, 2021 (File No. 001-32641)).
4.4						Form of 2.00% Convertible Senior Notes due 2026 (included in Exhibit 4.3).
~~10.1~~						Amendment No. 2 to Amended and Restated Brookdale Senior Living Inc. 2014 Omnibus Incentive Plan (“Omnibus Incentive Plan”) effective January 26, 2022 (incorporated by reference to Exhibit 10.4.3 to the Company's Annual Report on Form 10-K filed on February 15, 2022 (File No. 001-32641)).
~~10.2~~						Amended and Restated Tier I Severance Pay Policy dated February 10, 2022 (incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K filed on February 15, 2022 (File No. 001-32641)).
~~10.3~~						Form of Severance Letter Under Amended and Restated Tier I Severance Pay Policy dated August 6, 2010 (applicable to Todd Kaestner)(incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed on August 6, 2010 (File No. 001-32641)).
~~10.4~~						~~Form of Restricted Stock Unit Agreement under the Omnibus Incentive Plan (2022 Time-Based Form for Executive Officers).~~
~~10.5~~						~~Form of Restricted Stock Unit Agreement under the Omnibus Incentive Plan (2022 Performance-Based Form for Executive Officers).~~

31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32						Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.SCH						Inline XBRL Taxonomy Extension Schema Document.
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104						The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~June 30, 2022, formatted in Inline XBRL (included in Exhibit 101).
*						Schedules and exhibits have been omitted pursuant to Item 601 of Regulation S-K. The Company hereby undertakes to furnish supplementally a copy of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			BROOKDALE SENIOR LIVING INC.
			(Registrant)

			By:			/s/ Steven E. Swain
			Name:			Steven E. Swain
			Title:			Executive Vice President and Chief Financial Officer (Principal Financial Officer)
			Date:			~~May 6,~~August 9, 2022

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