Supplemental Information 4th Quarter 2020 Exhibit 99.2
2 COVID-19 Financial Impact 4 Overview 5 Segment Overview 8 Senior Housing 9 Health Care Services 14 G&A Expense 15 Capital Expenditures 16 Cash Facility Lease Payments 17 Capital Structure 18 Definitions 19 Appendices: Pro-Forma Financial Information 22 2019 Lease Accounting Standard (ASC 842) Impact 25 Non-GAAP Financial Measures 26 Table of Contents
3 SAFE HARBOR Certain statements in this Supplemental Information 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 regarding the Company’s intent, expectations and assumptions related to the various pending and expected transactions outlined herein and any other statements that are not historical statements of fact. 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 the Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Although the Company believes that expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its assumptions or expectations will be attained, and actual results and performance could differ materially from those projected. Factors 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 the Company, on the Company's expected transactions; the Company’s 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, delays in obtaining regulatory approvals; disruptions in the financial markets, including those related to the pandemic; a decrease in the overall demand for senior housing, which may be adversely impacted by the pandemic; environmental contamination at any of the Company’s communities; failure to comply with existing environmental laws; as well as other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission (SEC), including those contained in the Company’s Annual Report on Form 10-K and Quarterly Reports 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 Supplemental Information. The Company cannot guarantee future results, levels of activity, performance or achievements, and, except as required by law, it expressly disclaims any obligation to release publicly any updates or revisions to any of these forward-looking statements to reflect any change in its expectations with regard thereto or change in events, conditions or circumstances on which any statement is based. This Supplemental Information should be read in conjunction with the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10- Q, Current Reports on Form 8-K, and other information filed with the SEC.
4 COVID-19 Financial Impact 4Q 2020 ($ in 000s) 1Q 2020 2Q 2020 3Q 2020 Independent Living Assisted Living and Memory Care CCRCs Health Care Services 4Q 2020 Full Year 2020 Estimated lost resident fee revenue (1) $ 5,800 $ 63,600 $ 91,600 $ 18,500 $ 65,400 $ 16,600 $ 19,600 $ 120,100 $ 281,100 Other operating income — 26,693 10,765 11,727 60,497 6,067 — 78,291 115,749 Facility operating expense 10,000 60,594 24,479 3,095 20,598 4,425 2,343 30,461 125,534 Working capital benefit — 118,671 20,151 21,393 160,215 The COVID-19 pandemic adversely impacted the Company's occupancy and resident fee revenue during 2020 and resulted in incremental direct costs to prepare for and respond to the pandemic, including costs for: acquisition of additional personal protective equipment ("PPE"), 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; increased expense for general liability claims; and COVID-19 testing of residents and associates where not otherwise covered by government payor or third-party insurance sources. During the second, third, and fourth quarter of 2020, the Company accepted $33.5 million, $2.6 million, and $73.7 million, respectively, of cash for grants pursuant to the Public Health and Social Services Emergency Fund (the "Provider Relief Fund"), which was expanded by the Coronavirus Aid, Relief, and Economic Security Act of 2020 ("CARES Act"). Grants are subject to the terms and conditions of the program, including that such funds may only be used to prevent, prepare for, and respond to COVID-19 and will reimburse only for healthcare related expenses or lost revenues that are attributable to COVID-19 and have not been reimbursed from other sources or that other sources are not obligated to reimburse. The Company recognized $109.8 million of the Provider Relief Fund grants and $5.9 million of other government grants in other operating income during 2020 based upon the Company’s estimates of its satisfaction of the conditions of the grants during such period. The Company’s net cash provided by operating activities and Adjusted Free Cash Flow for 2020 also include the benefit of temporary liquidity relief provided pursuant to the CARES Act, including the following items. • The Company received $87.5 million under the Medicare Accelerated and Advance Payment Program, consisting of $85.0 million and $2.5 million received during the second quarter and third quarter of 2020, respectively. Under current legislation, recoupment of accelerated/advanced payments will begin one year after payments were issued, and payments will be recouped at a rate of 25% of Medicare payments for the first eleven months following the anniversary of issuance and at a rate of 50% of Medicare payments for the next six months. Any outstanding balance of accelerated/advanced payments will be due following such recoupment period. • The Company elected to defer payment of the employer portion of social security payroll taxes incurred from March 27, 2020 through December 31, 2020. Under current legislation, one-half of such deferral amount will become due on each of December 31, 2021 and December 31, 2022. The Company utilized this deferral program to delay payment of $72.7 million of the employer portion of payroll taxes, which includes deferred amounts of $26.5 million, $23.6 million, and $22.6 million during the second, third, and fourth quarter of 2020, respectively. The following tables present the known or estimated impacts related to the COVID-19 pandemic to the Company's consolidated and Senior Housing Same Community quarterly and full year 2020 results. The tables exclude the impact of any rate adjustments under government reimbursement programs. Presentations of these impacts are intended to aid investors in better understanding the factors and trends affecting the Company’s performance and liquidity. (1) Estimated lost resident fee revenue represents the difference between the actual resident fee revenue for the period and the Company's pre-COVID-19 expectations. 4Q 2020 ($ in 000s) 1Q 2020 Same Community 2Q 2020 Same Community 3Q 2020 Same Community Independent Living Assisted Living and Memory Care CCRCs 4Q 2020 Same Community Full Year 2020 Same Community Estimated lost resident fee revenue (1) $ 2,400 $ 42,600 $ 70,800 $ 17,400 $ 63,100 $ 13,700 $ 94,200 $ 210,000 Other operating income — 6,444 3,710 10,679 58,852 4,580 74,111 84,265 Facility operating expense 8,883 52,247 20,349 2,932 20,292 2,802 26,026 107,505 Estimated Impact on Consolidated Portfolio Estimated Impact on Senior Housing: Same Community
5 726 communities 63,111 units (1) The 2019 periods presented include the non-recurring, non-cash revenue and expense associated with the Company's adoption of the lease accounting standard effective January 1, 2019. See page 25 for additional information. (2) Adjusted EBITDA for the first quarter and full year of 2020 includes the $100.0 million management agreement termination fee payment received from Healthpeak Properties Inc. ("Healthpeak") related to the sale of Brookdale’s interest in the entry fee CCRC venture, which closed on January 31, 2020. Adjusted EBITDA includes government grants recognized in other operating income during the respective periods as set forth on page 4. Adjusted EBITDA for the third quarter and full year of 2020 includes the $119.2 million one-time cash lease payment made to Ventas, Inc. ("Ventas") in connection with the Company's lease restructuring transaction effective July 26, 2020 ("one-time cash lease payment"). Important Note Regarding Non-GAAP Financial Measures • Adjusted EBITDA and Adjusted Free Cash Flow are financial measures that are not calculated in accordance with GAAP. See “Definitions” and “Non-GAAP Financial Measures” for the definitions of such measures and other important information regarding such measures, including reconciliations to the most comparable GAAP measures. 2019 2020 4Q20 vs. 4Q19 Full Year 20 vs. 19 ($ in 000s) 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year Better (B)/ (Worse) (W) B/(W) Resident fee revenue (1) $ 809,479 $ 801,863 $ 801,237 $ 797,352 $ 3,209,931 $ 782,707 $ 731,629 $ 700,771 $ 677,460 $ 2,892,567 (15.0) % (9.9) % Management fee revenue $ 15,743 $ 15,449 $ 13,564 $ 12,352 $ 57,108 $ 108,715 $ 6,076 $ 5,669 $ 10,230 $ 130,690 (17.2) % 128.8 % Other operating income $ — $ — $ — $ — $ — $ — $ 26,693 $ 10,765 $ 78,291 $ 115,749 NM NM Net income (loss) (1) $ (42,606) $ (56,055) $ (78,508) $ (91,323) $ (268,492) $ 369,497 $ (118,420) $ (124,993) $ (44,139) $ 81,945 51.7 % NM Net cash provided by (used in) operating activities $ (5,009) $ 64,128 $ 69,211 $ 88,082 $ 216,412 $ 57,479 $ 151,840 $ (77,169) $ 73,499 $ 205,649 (16.6) % (5.0) % Adjusted EBITDA(1) (2) $ 116,583 $ 104,036 $ 80,447 $ 100,103 $ 401,169 $ 185,069 $ 44,733 $ (64,019) $ 98,604 $ 264,387 (1.5) % (34.1) % Adjusted EBITDA, excluding $100.0 million management termination fee and $119.2 million one-time cash lease payment $ 116,583 $ 104,036 $ 80,447 $ 100,103 $ 401,169 $ 85,069 $ 44,733 $ 55,161 $ 98,604 $ 283,567 (1.5) % (29.3) % Adjusted Free Cash Flow $ (46,971) $ (16,369) $ (13,575) $ 511 $ (76,404) $ 5,182 $ 113,451 $ (114,327) $ 19,875 $ 24,181 NM NM Period end consolidated number of units 55,948 55,209 55,262 54,181 54,181 54,037 54,019 53,110 52,982 52,982 (2.2) % (2.2) % 4Q 2020 weighted average occupancy (consolidated communities) Occupancy Band Community Count % of Period End Communities Greater than 95% 34 5% 90% > 95% 43 7% 85% > 90% 62 10% 80% > 85% 72 11% 75% > 80% 83 13% 70% > 75% 96 15% Less than 70% 261 39% Total 651 100% Consolidated Portfolio Average Asset Age ~ 23 years Overview As of December 31, 2020 Consolidated: 52,982 Consolidated: 651 Leased 301 Managed 75 Owned 350 Leased 21,129 Managed 10,129 Owned 31,853
6 2019 2020 4Q20 vs. 4Q19 Full Year 20 vs. 19 ($ in 000s) 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year B(W) B(W) Resident fee revenue $ 809,479 $ 801,863 $ 801,237 $ 797,352 $ 3,209,931 $ 782,707 $ 731,629 $ 700,771 $ 677,460 $ 2,892,567 (15.0) % (9.9) % Management fee revenue 15,743 15,449 13,564 12,352 57,108 108,715 6,076 5,669 10,230 130,690 (17.2) % 128.8 % Other operating income — — — — — — 26,693 10,765 78,291 115,749 NM NM Facility operating expense (586,094) (590,246) (615,717) (598,438) (2,390,495) (588,482) (606,034) (570,530) (576,813) (2,341,859) 3.6 % 2.0 % Combined Segment Operating Income 239,128 227,066 199,084 211,266 876,544 302,940 158,364 146,675 189,168 797,147 (10.5) % (9.1) % General and administrative expense (1) (49,494) (50,912) (46,570) (39,280) (186,256) (46,657) (43,031) (41,752) (41,011) (172,451) (4.4) % 7.4 % Cash facility operating lease payments (see page 17) (73,051) (72,118) (72,067) (71,883) (289,119) (71,214) (70,600) (168,942) (49,553) (360,309) 31.1 % (24.6) % Adjusted EBITDA (2) 116,583 104,036 80,447 100,103 401,169 185,069 44,733 (64,019) 98,604 264,387 (1.5) % (34.1) % $100.0 million management termination fee — — — — — (100,000) — — — (100,000) NM NM $119.2 million one-time cash lease payment — — — — — — — 119,180 — 119,180 NM NM Adjusted EBITDA, excluding management termination fee and one- time cash lease payment 116,583 104,036 80,447 100,103 401,169 85,069 44,733 55,161 98,604 283,567 (1.5) % (29.3) % $100.0 million management termination fee — — — — — 100,000 — — — 100,000 NM NM $119.2 million one-time cash lease payment — — — — — — — (119,180) — (119,180) NM NM Transaction and Organizational Restructuring Costs (461) (634) (3,910) (5,002) (10,007) (1,981) (3,368) (6,250) (1,778) (13,377) 64.5 % (33.7) % Interest expense, net (see page 17) (59,302) (59,029) (58,749) (57,132) (234,212) (53,590) (48,623) (48,209) (47,130) (197,552) - 1 17.5 % 15.7 % Payment of financing lease obligations (5,453) (5,500) (5,549) (5,740) (22,242) (5,087) (4,677) (4,548) (4,556) (18,868) 20.6 % 15.2 % Changes in working capital (3) (43,405) 9,620 31,439 20,410 18,064 (53,902) 149,055 33,794 9,945 138,892 (51.3) % NM Other (4) (331) 1,602 1,868 3,482 6,621 (4,771) (2,148) (2,223) (567) (9,709) NM NM Non-Development Capital Expenditures, net (see page 16) (54,602) (66,464) (59,121) (55,610) (235,797) (60,556) (21,521) (22,872) (34,643) (139,592) 37.7 % 40.8 % Adjusted Free Cash Flow $ (46,971) $ (16,369) $ (13,575) $ 511 $ (76,404) $ 5,182 $ 113,451 $ (114,327) $ 19,875 $ 24,181 NM NM Adjusted EBITDA and Adjusted Free Cash Flow (1) Excluding non-cash stock-based compensation expense and Transaction and Organizational Restructuring Costs, see page 15. (2) Adjusted EBITDA for the first quarter and full year 2020 includes the $100.0 million management agreement termination fee payment received from Healthpeak related to the sale of Brookdale’s interest in the entry fee CCRC venture, which closed on January 31, 2020. Adjusted EBITDA includes government grants recognized in other operating income during the respective periods as set forth on page 4. Adjusted EBITDA for the third quarter and full year of 2020 includes the $119.2 million one-time cash lease payment. (3) Excludes changes in prepaid insurance premiums financed with notes payable, and lessor capital expenditure reimbursements under operating leases and includes the working capital benefits related to CARES Act programs as set forth on page 4. (4) Primarily consists of proceeds from property insurance and cash paid for state income taxes.
7 (1) Subsequent to the end of the quarter, the Company entered into definitive agreements with affiliates of HCA Healthcare, Inc., providing for the sale of 80% of the Company's equity in its Health Care Services segment, as further described in the press release issued on February 24, 2021. (2) Primarily consists of changes in working capital, corporate capital expenditures, Transaction and Organizational Restructuring Costs, lease payments for corporate offices and information technology systems and equipment, cash paid for state income taxes, and interest income. (3) G&A includes both direct, incremental costs attributable to the segment or portfolio and allocated costs; see page 15. (4) Adjusted EBITDA for the fourth quarter of 2020 includes $78.3 million of government grants recognized in other operating income. (5) Excludes changes in prepaid insurance premiums financed with notes payable and lessor capital expenditure reimbursements under operating leases and includes $21.4 million impact related to CARES Act programs for the fourth quarter of 2020. 4Q 2020 ($ in 000s) Total Senior Housing Owned Portfolio Senior Housing Leased Portfolio Health Care Services(1) Management Services Other (2) Resident fee revenue $ 677,460 $ 338,806 $ 246,736 $ 91,918 $ — $ — Management fee revenue 10,230 — — — 10,230 — Other operating income 78,291 43,955 34,336 — — — Facility operating expense (576,813) (286,816) (197,909) (92,088) — — Combined Segment Operating Income 189,168 95,945 83,163 (170) 10,230 — General and administrative expense (excluding non-cash stock-based compensation expense and transaction costs)(3) (41,011) (17,511) (12,753) (4,910) (5,837) — Cash facility operating lease payments (49,553) — (48,120) — — (1,433) Adjusted EBITDA (4) 98,604 78,434 22,290 (5,080) 4,393 (1,433) Transaction and Organizational Restructuring Costs (1,778) — — — — (1,778) Interest expense, net (47,130) (36,172) (11,452) — — 494 Payment of financing lease obligations (4,556) — (4,464) — — (92) Changes in working capital (5) 9,945 — — — — 9,945 Other (567) 100 — — — (667) Non-Development Capital Expenditures, net (34,643) (14,633) (10,730) — — (9,280) Adjusted Free Cash Flow $ 19,875 $ 27,729 $ (4,356) $ (5,080) $ 4,393 $ (2,811) Adjusted EBITDA and Adjusted Free Cash Flow Distribution
8 2019 2020 4Q20 vs. 4Q19 Full Year 20 vs. 19 ($ in 000s, except RevPAR and RevPOR) 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year B(W) B(W) Total Senior Housing, Health Care Services, and Management Services Revenue (1) $ 825,222 $ 817,312 $ 814,801 $ 809,704 $ 3,267,039 $ 891,422 $ 737,705 $ 706,440 $ 687,690 $ 3,023,257 (15.1) % (7.5) % Other operating income $ — $ — $ — $ — $ — $ — $ 26,693 $ 10,765 $ 78,291 $ 115,749 NM NM Combined Segment Operating Income $ 239,128 $ 227,066 $ 199,084 $ 211,266 $ 876,544 $ 302,940 $ 158,364 $ 146,675 $ 189,168 $ 797,147 (10.5) % (9.1) % Combined Segment operating margin (2) 29.0 % 27.8 % 24.4 % 26.1 % 26.8 % 34.0 % 20.7 % 20.5 % 24.7 % 25.4 % (140) bps (140) bps Senior Housing (see page 9) Revenue $ 697,947 $ 687,429 $ 689,452 $ 687,843 $ 2,762,671 $ 687,888 $ 641,459 $ 610,868 $ 585,542 $ 2,525,757 (14.9) % (8.6) % Other operating income $ — $ — $ — $ — $ — $ — $ 9,698 $ 4,873 $ 78,291 $ 92,862 NM NM Senior Housing Operating Income $ 215,212 $ 202,450 $ 180,742 $ 196,045 $ 794,449 $ 203,346 $ 142,596 $ 139,544 $ 179,108 $ 664,594 (8.6) % (16.3) % Senior Housing operating margin (2) 30.8 % 29.5 % 26.2 % 28.5 % 28.8 % 29.6 % 21.9 % 22.7 % 27.0 % 25.4 % (150) bps (340) bps Number of communities (period end) 680 671 671 663 663 661 660 652 651 651 (1.8) % (1.8) % Period end number of units 55,948 55,209 55,262 54,181 54,181 54,037 54,019 53,110 52,982 52,982 (2.2) % (2.2) % Total Average Units 56,460 55,465 55,258 54,821 55,501 54,184 54,040 53,440 53,086 53,687 (3.2) % (3.3) % RevPAR $ 4,102 $ 4,097 $ 4,109 $ 4,116 $ 4,106 $ 4,229 $ 3,954 $ 3,806 $ 3,673 $ 3,917 (10.8) % (4.6) % Weighted average unit occupancy 83.6 % 83.5 % 84.2 % 84.5 % 83.9 % 83.2 % 78.7 % 75.3 % 72.7% 77.5% (1,180) bps (640) bps RevPOR $ 4,909 $ 4,909 $ 4,880 $ 4,871 $ 4,893 $ 5,085 $ 5,022 $ 5,056 $ 5,052 $ 5,054 3.7 % 3.3 % Health Care Services Segment (see page 14) Revenue $ 111,532 $ 114,434 $ 111,785 $ 109,509 $ 447,260 $ 94,819 $ 90,170 $ 89,903 $ 91,918 $ 366,810 (16.1) % (18.0) % Other operating income $ — $ — $ — $ — $ — $ — $ 16,995 $ 5,892 $ — $ 22,887 NM NM Segment Operating Income $ 8,173 $ 9,167 $ 4,778 $ 2,869 $ 24,987 $ (9,121) $ 9,692 $ 1,462 $ (170) $ 1,863 NM (92.5) % Segment operating margin (2) 7.3 % 8.0 % 4.3 % 2.6 % 5.6 % (9.6) % 9.0 % 1.5 % (0.2) % 0.5 % (280) bps (510) bps Management Services Segment Segment Operating Income (comprised solely of management fees) $ 15,743 $ 15,449 $ 13,564 $ 12,352 $ 57,108 $ 108,715 $ 6,076 $ 5,669 $ 10,230 $ 130,690 (17.2) % 128.8 % Resident fee revenue under management (3) $ 321,952 $ 294,114 $ 275,796 $ 259,437 $ 1,151,299 $ 184,145 $ 131,558 $ 116,576 $ 107,817 $ 540,096 (58.4) % (53.1) % Number of communities (period end) (3) 164 138 123 100 100 80 77 74 75 75 (25.0) % (25.0) % Period end number of units (3) 23,742 21,451 20,168 18,086 18,086 11,033 10,694 9,980 10,129 10,129 (44.0) % (44.0) % Total Average Units (3) 25,047 22,464 20,730 18,836 21,769 13,325 10,905 10,446 10,062 11,184 (46.6) % (48.6) % Weighted average unit occupancy (3) 82.9 % 82.8 % 83.4 % 84.6 % 83.3 % 84.0 % 78.0 % 74.6 % 72.1 % 77.6 % (1,250) bps (570) bps Segment Overview (1) Excludes reimbursed costs on behalf of managed communities. (2) Segment operating margin excluding other operating income was 17.8% (2Q20), 19.2% (3Q20), 16.1% (4Q20), and 22.5% (Full Year 20) for Total Senior Housing, Health Care Services, and Management Services; 20.7% (2Q20), 22.0% (3Q20), 17.2% (4Q20), and 22.6% (Full Year 20) for Senior Housing; and (8.1)% (2Q20), (4.9)% (3Q20), (0.2)% (4Q20), and (5.7)% (Full Year 20) for Health Care Services. (3) Not included in consolidated reported amounts.
9 2019 2020 4Q20 vs. 4Q19 Full Year 20 vs. 19 ($ in 000s, except RevPAR and RevPOR) 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year B(W) B(W) Independent Living Revenue $ 135,694 $ 135,951 $ 136,874 $ 136,039 $ 544,558 $ 135,862 $ 130,278 $ 125,762 $ 120,696 $ 512,598 (11.3) % (5.9) % Other operating income $ — $ — $ — $ — $ — $ — $ — $ 96 $ 11,727 $ 11,823 NM NM Segment Operating Income $ 52,876 $ 51,459 $ 49,414 $ 49,992 $ 203,741 $ 51,414 $ 41,038 $ 42,438 $ 47,923 $ 182,813 (4.1) % (10.3) % Segment operating margin (1) 39.0 % 37.9 % 36.1 % 36.7 % 37.4 % 37.8 % 31.5 % 33.7 % 36.2 % 34.9 % (50) bps (250) bps Number of communities (period end) 68 68 68 68 68 68 68 68 68 68 — % — % Period end number of units 12,430 12,460 12,511 12,514 12,514 12,537 12,534 12,534 12,534 12,534 0.2 % 0.2 % Total Average Units 12,430 12,440 12,511 12,514 12,474 12,529 12,534 12,534 12,534 12,533 0.2 % 0.5 % RevPAR $ 3,602 $ 3,592 $ 3,581 $ 3,545 $ 3,580 $ 3,615 $ 3,465 $ 3,345 $ 3,210 $ 3,408 (9.4) % (4.8) % Weighted average unit occupancy 89.8 % 89.1 % 89.1 % 88.7 % 89.2 % 87.1 % 83.5 % 80.0 % 76.7 % 81.8 % (1,200) bps (740) bps RevPOR $ 4,012 $ 4,033 $ 4,018 $ 3,994 $ 4,014 $ 4,151 $ 4,147 $ 4,182 $ 4,183 $ 4,165 4.7 % 3.8 % Assisted Living and Memory Care Revenue $ 458,526 $ 450,225 $ 452,474 $ 454,713 $ 1,815,938 $ 457,479 $ 432,156 $ 408,695 $ 392,946 $ 1,691,276 (13.6) % (6.9) % Other operating income $ — $ — $ — $ — $ — $ — $ 152 $ 1,936 $ 60,497 $ 62,585 NM NM Segment Operating Income $ 140,699 $ 133,144 $ 116,856 $ 127,937 $ 518,636 $ 132,001 $ 87,708 $ 87,152 $ 121,740 $ 428,601 (4.8) % (17.4) % Segment operating margin (1) 30.7 % 29.6 % 25.8 % 28.1 % 28.6 % 28.9 % 20.3 % 21.2 % 26.8 % 24.4 % (130) bps (420) bps Number of communities (period end) 586 577 577 573 573 571 570 563 563 563 (1.7) % (1.7) % Period end number of units 36,944 36,175 36,177 35,956 35,956 35,789 35,744 35,124 35,126 35,126 (2.3) % (2.3) % Total Average Units 37,477 36,451 36,173 36,140 36,560 35,944 35,785 35,268 35,126 35,530 (2.8) % (2.8) % RevPAR $ 4,070 $ 4,092 $ 4,127 $ 4,135 $ 4,106 $ 4,242 $ 4,025 $ 3,863 $ 3,729 $ 3,967 (9.8) % (3.4) % Weighted average unit occupancy 81.6 % 82.1 % 83.2 % 83.6 % 82.6 % 81.9 % 77.8 % 74.4 % 71.8 % 76.5 % (1,180) bps (610) bps RevPOR $ 4,988 $ 4,987 $ 4,962 $ 4,948 $ 4,971 $ 5,178 $ 5,172 $ 5,193 $ 5,193 $ 5,184 5.0 % 4.3 % CCRCs Revenue $ 103,727 $ 101,253 $ 100,104 $ 97,091 $ 402,175 $ 94,547 $ 79,025 $ 76,411 $ 71,900 $ 321,883 (25.9) % (20.0) % Other operating income $ — $ — $ — $ — $ — $ — $ 9,546 $ 2,841 $ 6,067 $ 18,454 NM NM Segment Operating Income $ 21,637 $ 17,847 $ 14,472 $ 18,116 $ 72,072 $ 19,931 $ 13,850 $ 9,954 $ 9,445 $ 53,180 (47.9) % (26.2) % Segment operating margin (1) 20.9 % 17.6 % 14.5 % 18.7 % 17.9 % 21.1 % 15.6 % 12.6 % 12.1 % 15.6 % (660) bps (230) bps Number of communities (period end) 26 26 26 22 22 22 22 21 20 20 (9.1) % (9.1) % Period end number of units 6,574 6,574 6,574 5,711 5,711 5,711 5,741 5,452 5,322 5,322 (6.8) % (6.8) % Total Average Units 6,553 6,574 6,574 6,167 6,467 5,711 5,721 5,638 5,426 5,624 (12.0) % (13.0) % RevPAR $ 5,232 $ 5,081 $ 5,012 $ 5,168 $ 5,123 $ 5,496 $ 4,572 $ 4,477 $ 4,385 $ 4,738 (15.2) % (7.5) % Weighted average unit occupancy 82.9 % 80.6 % 80.4 % 81.5 % 81.3 % 82.4 % 74.0 % 70.7 % 69.2 % 74.2 % (1,230) bps (710) bps RevPOR $ 6,312 $ 6,305 $ 6,234 $ 6,341 $ 6,298 $ 6,669 $ 6,181 $ 6,332 $ 6,334 $ 6,389 (0.1) % 1.4 % Senior Housing Segments (1) Segment operating margin excluding other operating income was 31.5% (2Q20), 33.7% (3Q20), 30.0% (4Q20), and 33.4% (Full Year 20) for Independent Living; 20.3% (2Q20), 20.9% (3Q20), 15.6% (4Q20), and 21.6% (Full Year 20) for Assisted Living and Memory Care; and 5.4% (2Q20), 9.3% (3Q20), 4.7% (4Q20), and 10.8% (Full Year 20) for CCRCs.
10 2019 2020 4Q20 vs. 4Q19 Full Year 20 vs. 19 ($ in 000s, except RevPAR and RevPOR) 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year B(W) B(W) Revenue $ 615,284 $ 610,422 $ 612,501 $ 613,145 $ 2,451,352 $ 627,630 $ 588,401 $ 565,106 $ 545,392 $ 2,326,529 (11.1) % (5.1) % Other operating income — — — — — — 6,444 3,710 74,111 84,265 NM NM Revenue and other operating income 615,284 610,422 612,501 613,145 2,451,352 627,630 594,845 568,816 619,503 2,410,794 1.0 % (1.7) % Community Labor Expenses (268,501) (271,343) (284,702) (283,485) (1,108,031) (283,810) (289,683) (284,267) (292,867) (1,150,627) (3.3) % (3.8) % Other facility operating expenses (141,501) (143,270) (148,424) (139,198) (572,393) (155,258) (171,438) (149,894) (154,533) (631,123) (11.0) % (10.3) % Facility operating expenses (2) (410,002) (414,613) (433,126) (422,683) (1,680,424) (439,068) (461,121) (434,161) (447,400) (1,781,750) (5.8) % (6.0) % Same Community Operating Income $205,282 $195,809 $ 179,375 $ 190,462 $ 770,928 $ 188,562 $133,724 $134,655 $ 172,103 $ 629,044 (9.6) % (18.4) % Same Community operating margin (3) 33.4 % 32.1 % 29.3 % 31.1 % 31.4 % 30.0 % 22.5 % 23.7 % 27.8 % 26.1 % (330) bps (530) bps Total Average Units 49,219 49,228 49,239 49,242 49,232 49,242 49,235 49,234 49,236 49,237 — % — % RevPAR $ 4,167 $ 4,133 $ 4,146 $ 4,151 $ 4,149 $ 4,249 $ 3,984 $ 3,826 $ 3,692 $ 3,938 (11.1) % (5.1) % Weighted average unit occupancy 84.4 % 84.1 % 84.8 % 85.1 % 84.6 % 83.5 % 79.2 % 75.6 % 72.9 % 77.8 % (1,220) bps (680) bps RevPOR $ 4,935 $ 4,917 $ 4,888 $ 4,878 $ 4,904 $ 5,086 $ 5,032 $ 5,060 $ 5,067 $ 5,063 3.9 % 3.2 % Same Community Operating Income / Weighted Average Occupancy $205,282 $195,809 $179,375 $190,462 $188,562 $133,724 $134,655 $172,103 84.4% 84.1% 84.8% 85.1% 83.5% 79.2% 75.6% 72.9% 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 Same Community RevPAR $4,167 $4,133 $4,146 $4,151 $4,249 $3,984 $3,826 $3,692 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 Senior Housing: Same Community(1) (1) Same Community portfolio reflects 629 communities. (2) Excludes hurricane and other natural disaster expense of $2.6 million and $2.8 million for the full year 2019 and 2020, respectively. (3) Same Community operating margin excluding other operating income was 21.6% (2Q20), 23.2% (3Q20), 18.0% (4Q20), and 23.4% (Full Year 20) for the Same Community portfolio. (4) Same Community Operating Income includes $6.4 million (2Q20), $3.7 million (3Q20), and $74.1 million (4Q20) of government grants recognized in other operating income. (2) (4) (4) (4)
11 2019 2020 4Q20 vs. 4Q19 Full Year 20 vs. 19 ($ in 000s, except RevPAR and RevPOR) 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year B(W) B(W) Independent Living Revenue $ 126,822 $ 126,563 $ 126,823 $ 125,521 $ 505,729 $ 127,944 $ 122,716 $ 118,384 $ 113,156 $ 482,200 (9.9) % (4.7) % Other operating income — — — — — — — 96 10,679 10,775 NM NM Community Labor Expense (44,502) (45,748) (46,498) (46,552) (183,300) (46,297) (47,588) (46,094) (46,917) (186,896) (0.8) % (2.0) % Other facility operating expense (30,823) (31,048) (31,947) (30,672) (124,490) (32,867) (35,904) (31,293) (31,511) (131,575) (2.7) % (5.7) % Facility operating expense (75,325) (76,796) (78,445) (77,224) (307,790) (79,164) (83,492) (77,387) (78,428) (318,471) (1.6) % (3.5) % Same Community Operating Income $ 51,497 $ 49,767 $ 48,378 $ 48,297 $ 197,939 $ 48,780 $ 39,224 $ 41,093 $ 45,407 $ 174,504 (6.0) % (11.8) % Same Community operating margin 40.6 % 39.3 % 38.1 % 38.5 % 39.1 % 38.1 % 32.0 % 34.7 % 36.7 % 35.4 % (180) bps (370) bps Total Average Units 11,680 11,690 11,703 11,706 11,695 11,706 11,703 11,703 11,703 11,704 — % 0.1 % RevPAR $ 3,619 $ 3,609 $ 3,612 $ 3,574 $ 3,604 $ 3,643 $ 3,495 $ 3,372 $ 3,223 $ 3,433 (9.8) % (4.7) % Weighted average unit occupancy 89.5 % 88.8 % 89.4 % 88.9 % 89.2 % 87.3 % 83.8 % 80.3 % 76.8 % 82.1 % (1,210) bps (710) bps RevPOR $ 4,043 $ 4,063 $ 4,043 $ 4,020 $ 4,042 $ 4,174 $ 4,169 $ 4,201 $ 4,197 $ 4,185 4.4 % 3.5 % Assisted Living and Memory Care Revenue $ 426,752 $ 424,348 $ 426,654 $ 427,733 $ 1,705,487 $ 438,183 $ 414,912 $ 396,351 $ 383,024 $ 1,632,470 (10.5) % (4.3) % Other operating income — — — — — — 150 1,937 58,852 60,939 NM NM Community Labor Expense (192,547) (194,084) (206,378) (205,434) (798,443) (205,406) (210,183) (207,328) (214,528) (837,445) (4.4) % (4.9) % Other facility operating expense (95,593) (97,307) (101,161) (93,497) (387,558) (106,642) (119,310) (104,042) (107,593) (437,587) (15.1) % (12.9) % Facility operating expense (288,140) (291,391) (307,539) (298,931) (1,186,001) (312,048) (329,493) (311,370) (322,121) (1,275,032) (7.8) % (7.5) % Same Community Operating Income $ 138,612 $ 132,957 $ 119,115 $ 128,802 $ 519,486 $ 126,135 $ 85,569 $ 86,918 $ 119,755 $ 418,377 (7.0) % (19.5) % Same Community operating margin 32.5 % 31.3 % 27.9 % 30.1 % 30.5 % 28.8 % 20.6 % 21.8 % 27.1 % 24.7 % (300) bps (580) bps Total Average Units 33,927 33,926 33,924 33,924 33,925 33,924 33,920 33,919 33,921 33,921 — % — % RevPAR $ 4,193 $ 4,169 $ 4,192 $ 4,203 $ 4,189 $ 4,305 $ 4,077 $ 3,895 $ 3,764 $ 4,010 (10.4) % (4.3) % Weighted average unit occupancy 82.7 % 82.7 % 83.6 % 84.0 % 83.3 % 82.4 % 78.3 % 74.6 % 72.0 % 76.8 % (1,200) bps (650) bps RevPOR $ 5,070 $ 5,044 $ 5,014 $ 5,001 $ 5,032 $ 5,226 $ 5,213 $ 5,221 $ 5,226 $ 5,222 4.5 % 3.8 % CCRCs Revenue $ 61,710 $ 59,511 $ 59,024 $ 59,891 $ 240,136 $ 61,503 $ 50,773 $ 50,371 $ 49,212 $ 211,859 (17.8) % (11.8) % Other operating income — — — — — — 6,294 1,677 4,580 12,551 NM NM Community Labor Expense (31,452) (31,511) (31,826) (31,499) (126,288) (32,107) (31,912) (30,845) (31,422) (126,286) 0.2 % — % Other facility operating expense (15,085) (14,915) (15,316) (15,029) (60,345) (15,749) (16,224) (14,559) (15,429) (61,961) (2.7) % (2.7) % Facility operating expense (46,537) (46,426) (47,142) (46,528) (186,633) (47,856) (48,136) (45,404) (46,851) (188,247) (0.7) % (0.9) % Same Community Operating Income $ 15,173 $ 13,085 $ 11,882 $ 13,363 $ 53,503 $ 13,647 $ 8,931 $ 6,644 $ 6,941 $ 36,163 (48.1) % (32.4) % Same Community Operating Margin 24.6 % 22.0 % 20.1 % 22.3 % 22.3 % 22.2 % 15.7 % 12.8 % 12.9 % 16.1 % (940) bps (620) bps Total Average Units 3,612 3,612 3,612 3,612 3,612 3,612 3,612 3,612 3,612 3,612 — % — % RevPAR $ 5,695 $ 5,492 $ 5,447 $ 5,527 $ 5,540 $ 5,676 $ 4,686 $ 4,648 $ 4,541 $ 4,888 (17.8) % (11.8) % Weighted average unit occupancy 84.4 % 82.0 % 81.8 % 82.4 % 82.7 % 82.1 % 72.9 % 70.0 % 68.3 % 73.3 % (1,410) bps (940) bps RevPOR $ 6,749 $ 6,701 $ 6,659 $ 6,707 $ 6,704 $ 6,913 $ 6,430 $ 6,645 $ 6,667 $ 6,674 (0.6) % (0.4) % Senior Housing Segments: Same Community(1) (1) Same Community portfolio reflects 64 Independent Living communities, 551 Assisted Living and Memory Care communities, and 14 CCRC communities. (2) Same Community operating margin excluding other operating income was 32.0% (2Q20), 34.6% (3Q20), 30.7% (4Q20), and 34.0% (Full Year 20) for Independent Living; 20.6% (2Q20), 21.4% (3Q20), 15.9% (4Q20), and 21.9% (Full Year 20) for Assisted Living and Memory Care; and 5.2% (2Q20), 9.9% (3Q20), 4.8% (4Q20), and 11.1% (Full Year 20) for CCRCs.
12 2019 2020 4Q20 vs. 4Q19 Full Year 20 vs. 19 ($ in 000s, except RevPAR and RevPOR) 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year B(W) B(W) Revenue $ 380,691 $ 375,900 $ 377,451 $ 373,793 $ 1,507,835 $ 402,397 $ 376,140 $ 356,105 $ 338,806 $ 1,473,448 (9.4) % (2.3) % Other operating income — — — — — — 7,156 3,317 43,955 54,428 NM NM Facility operating expense (269,078) (271,222) (285,422) (273,557) (1,099,279) (290,116) (301,459) (284,780) (286,816) (1,163,171) (4.8) % (5.8) % Owned Portfolio Operating Income $ 111,613 $ 104,678 $ 92,029 $ 100,236 $ 408,556 $ 112,281 $ 81,837 $ 74,642 $ 95,945 $ 364,705 (4.3) % (10.7) % Additional Information Interest expense: property level and corporate debt $ (45,643) $ (45,193) $ (44,344) $ (42,538) $ (177,718) $ (41,763) $ (38,974) $ (36,908) $ (36,172) $ (153,817) 15.0 % 13.4 % Community level capital expenditures, net (see page 16) $ (24,967) $ (33,828) $ (33,144) $ (32,055) $ (123,994) $ (36,735) $ (12,011) $ (12,236) $ (14,633) $ (75,615) 54.4 % 39.0 % Number of communities (period end) 338 336 336 330 330 355 355 350 350 350 6.1 % 6.1 % Period end number of units 31,397 31,165 31,226 30,160 30,160 32,455 32,481 31,824 31,853 31,853 5.6 % 5.6 % Total Average Units 31,840 31,262 31,222 30,784 31,277 32,513 32,461 32,137 31,851 32,240 3.5 % 3.1 % RevPAR $ 3,969 $ 3,976 $ 3,982 $ 3,984 $ 3,978 $ 4,125 $ 3,862 $ 3,694 $ 3,540 $ 3,807 (11.1) % (4.3) % Weighted average occupancy 82.4 % 82.6 % 83.2 % 83.6 % 83.0 % 82.6 % 78.0 % 74.2 % 71.5 % 76.6 % (1,210) bps (640) bps RevPOR $ 4,815 $ 4,812 $ 4,783 $ 4,764 $ 4,794 $ 4,997 $ 4,944 $ 4,978 $ 4,950 $ 4,968 3.9 % 3.6 % Senior Housing Owned Portfolio(1) Interest Coverage as of December 31, 2020(2) 1.8x Net Debt as of December 31, 2020 (see page 18) $ 3,344,011 (1) The Company acquired 26 communities that were previously leased during the first quarter of 2020. The results of operations of the previously leased communities are included within the Senior Housing Owned Portfolio beginning in the first quarter of 2020. Prior quarters have not been recast. (2) As of December 31, 2020, the interest coverage ratio excluding other operating income was 1.5x.
13 2019 2020 4Q20 vs. 4Q19 Full Year 20 vs. 19 ($ in 000s, except RevPAR and RevPOR) 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year B(W) B(W) Revenue $ 317,256 $ 311,529 $ 312,001 $ 314,050 $ 1,254,836 $ 285,491 $ 265,319 $ 254,763 $ 246,736 $ 1,052,309 (21.4) % (16.1) % Other operating income — — — — — — 2,542 1,556 34,336 38,434 NM NM Facility operating expense (213,657) (213,757) (223,288) (218,241) (868,943) (194,426) (207,102) (191,417) (197,909) (790,854) (9.3) % (9.0) % Leased Portfolio Operating Income $ 103,599 $ 97,772 $ 88,713 $ 95,809 $ 385,893 $ 91,065 $ 60,759 $ 64,902 $ 83,163 $ 299,889 (13.2) % (22.3) % Additional Information One-time cash lease payment $ — $ — $ — $ — $ — $ — $ — $ (119,180) $ — $ (119,180) NM NM Other cash facility lease payments on leased portfolio (see page 17) $ (93,129) $ (92,337) $ (92,337) $ (92,810) $ (370,613) $ (88,503) $ (85,623) $ (64,534) $ (64,036) $ (302,696) 31.0 % 18.3 % Community level capital expenditures, net (see page 16) $ (18,419) $ (25,934) $ (22,162) $ (13,347) $ (79,862) $ (18,413) $ (1,727) $ (5,808) $ (10,730) $ (36,678) 19.6 % 54.1 % Number of communities (period end) 342 335 335 333 333 306 305 302 301 301 (9.6) % (9.6) % Period end number of units 24,551 24,044 24,036 24,021 24,021 21,582 21,538 21,286 21,129 21,129 (12.0) % (12.0) % Total Average Units 24,620 24,203 24,036 24,037 24,224 21,671 21,579 21,303 21,235 21,447 (11.7) % (11.5) % RevPAR $ 4,274 $ 4,254 $ 4,273 $ 4,286 $ 4,271 $ 4,384 $ 4,091 $ 3,977 $ 3,874 $ 4,083 (9.6) % (4.4) % Weighted average unit occupancy 85.0 % 84.5 % 85.4 % 85.6 % 85.1 % 84.1 % 79.7 % 76.9 % 74.5 % 78.8 % (1,110)bps (630)bps RevPOR $ 5,028 $ 5,032 $ 5,004 $ 5,005 $ 5,017 $ 5,215 $ 5,136 $ 5,166 $ 5,199 $ 5,179 3.9 % 3.2 % Lease Coverage as of December 31, 2020, excluding the one-time cash lease payment(2) 0.81x Pro-forma Lease Coverage (see page 24 for full year 2020 pro forma results) 0.96x Total operating and financing lease obligations as of December 31, 2020 (see page 29)(3) $ 1,467,474 Facility Lease Maturity Information as of December 31, 2020 Pro-forma Full Year 2020 (see page 24) Initial lease maturities Community count Total units Total cash facility lease payments 2021 37 1,637 $ 15,276 2022 4 386 3,674 2023 — — — 2024 7 904 13,925 2025 121 10,290 101,666 Thereafter 132 7,912 117,839 Total 301 21,129 $ 252,380 Senior Housing Leased Portfolio(1) (1) The Company acquired 26 communities that were previously leased during the first quarter of 2020. The results of operations of the previously leased communities are included within the Senior Housing Owned Portfolio beginning in the first quarter of 2020. Prior quarters have not been recast. (2) As of December 31, 2020, the lease coverage ratio, excluding both the one-time cash lease payment and other operating income, was 0.68x and including both the one-time cash lease payment and other operating income, was 0.58x. (3) Amount recognized on consolidated balance sheet reflects the discounted future minimum lease payments and the residual value for financing lease obligations.
14 2019 2020 4Q20 vs. 4Q19 Full Year 20 vs. 19 ($ in 000s) 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year B(W) B(W) Revenue Home health $ 84,185 $ 85,233 $ 80,632 $ 77,440 $ 327,490 $ 65,948 $ 60,935 $ 61,586 $ 60,702 $ 249,171 (21.6) % (23.9) % Hospice 21,722 23,184 25,258 26,062 96,226 23,182 23,849 22,997 25,439 95,467 (2.4) % (0.8) % Outpatient Therapy 5,625 6,017 5,895 6,007 23,544 5,689 5,386 5,320 5,777 22,172 (3.8) % (5.8) % Segment revenue 111,532 114,434 111,785 109,509 447,260 94,819 90,170 89,903 91,918 366,810 (16.1) % (18.0) % Other operating income — — — — — — 16,995 5,892 — 22,887 NM NM Revenue and other operating income 111,532 114,434 111,785 109,509 447,260 94,819 107,165 95,795 91,918 389,697 (16.1) % (12.9) % Facility operating expense (103,359) (105,267) (107,007) (106,640) (422,273) (103,940) (97,473) (94,333) (92,088) (387,834) 13.6 % 8.2 % Segment Operating Income (Loss) $ 8,173 $ 9,167 $ 4,778 $ 2,869 $ 24,987 $ (9,121) $ 9,692 $ 1,462 $ (170) $ 1,863 NM (92.5) % Segment operating margin(2) 7.3 % 8.0 % 4.3 % 2.6 % 5.6 % (9.6) % 9.0 % 1.5 % (0.2) % 0.5 % NM (510) bps Additional Information Home health average daily census 15,904 15,966 15,357 14,618 15,457 14,020 12,980 13,146 12,646 13,196 (13.5) % (14.6) % Hospice average daily census 1,428 1,540 1,642 1,704 1,580 1,698 1,646 1,666 1,622 1,658 (4.8) % 4.9 % Health Care Services(1) (1) Subsequent to the end of the quarter, the Company entered into definitive agreements with affiliates of HCA Healthcare, Inc., providing for the sale of 80% of the Company's equity in its Health Care Services segment, as further described in the press release issued on February 24, 2021. (2) Segment operating margin excluding other operating income was (8.1)% (2Q20), (4.9)% (3Q20), (0.2)% (4Q20), and (5.7)% (Full Year 20).
15 (1) G&A includes both direct, incremental costs attributable to the segment or portfolio and allocated costs. G&A allocations are calculated using a methodology which the Company believes matches the type of general and administrative cost with the community, segment, or portfolio. Some of the allocations are based on direct utilization and some are based on formulas such as unit proportion. G&A allocations presented herein exclude non-cash stock-based compensation expense and Transaction and Organizational Restructuring Costs. (2) Not included in consolidated reported amounts. (3) Excluding other operating income and other operating income under management: G&A expense (excluding non-cash stock-based compensation expense and Transaction and Organizational Restructuring Costs) as a percentage of resident fee revenue (consolidated and under management) was 5.0% (2Q20), 5.1% (3Q20), 5.2% (4Q20), and 5.0% (Full Year 20). G&A expense (including non-cash stock-based compensation expense and Transaction and Organizational Restructuring Costs) as a percentage of resident fee revenue (consolidated and under management) was 6.1% (2Q20), 6.6% (3Q20), 5.8% (4Q20), and 6.0% (Full Year 20), respectively. Consolidated, unless otherwise noted 2019 2020 4Q20 vs. 4Q19 Full Year 20 vs. 19 ($ in 000s) 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year B(W) B(W) G&A expense allocations (1) Senior Housing Owned Portfolio allocation $ 15,693 $ 16,875 $ 15,759 $ 13,553 $ 61,880 $ 18,635 $ 18,336 $ 17,804 $ 17,511 $ 72,286 (29.2) % (16.8) % Senior Housing Leased Portfolio allocation 13,078 13,986 13,027 11,387 51,478 13,221 12,933 12,738 12,753 51,645 (12.0) % (0.3) % Health Care Services allocation 7,077 6,730 6,385 5,439 25,631 6,953 5,355 5,158 4,910 22,376 9.7% 12.7% Management Services allocation 13,646 13,321 11,399 8,901 47,267 7,848 6,407 6,052 5,837 26,144 34.4% 44.7% Subtotal G&A expense allocations 49,494 50,912 46,570 39,280 186,256 46,657 43,031 41,752 41,011 172,451 (4.4) % 7.4% Non-cash stock-based compensation expense 6,356 6,030 5,929 4,711 23,026 5,957 6,119 6,136 2,535 20,747 46.2% 9.9% Transaction and Organizational Restructuring Costs 461 634 3,910 5,002 10,007 1,981 3,368 6,250 1,778 13,377 64.5% (33.7) % General and administrative expense $ 56,311 $ 57,576 $ 56,409 $ 48,993 $ 219,289 $ 54,595 $ 52,518 $ 54,138 $ 45,324 $ 206,575 7.5 % 5.8 % 2019 2020 4Q20 vs. 4Q19 Full Year 20 vs. 19 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year B(W) B(W) Resident fee revenue $ 809,479 $ 801,863 $ 801,237 $ 797,352 $ 3,209,931 $ 782,707 $ 731,629 $ 700,771 $ 677,460 $ 2,892,567 (15.0) % (9.9) % Other operating income — — — — — — 26,693 10,765 78,291 115,749 NM NM Resident fee revenue under management (2) 321,952 294,114 275,796 259,437 1,151,299 184,145 131,558 116,576 107,817 540,096 (58.4) % (53.1) % Other operating income under management (2) — — — — — — 8,066 1,497 1,548 11,111 NM NM Total (consolidated and under management) $ 1,131,431 $ 1,095,977 $ 1,077,033 $ 1,056,789 $ 4,361,230 $ 966,852 $ 897,946 $ 829,609 $ 865,116 $ 3,559,523 (18.1) % (18.4) % Allocated G&A Expense as a Percentage of Resident Fee Revenue and Other Operating Income (Consolidated and Under Management) G&A expense (excluding non-cash stock- based compensation expense and Transaction and Organizational Restructuring Costs) (3) 4.4 % 4.6 % 4.3 % 3.7 % 4.3 % 4.8 % 4.8 % 5.1 % 4.7% 4.8 % (100) bps (50) bps Non-cash stock-based compensation expense 0.6 % 0.6 % 0.6 % 0.4 % 0.5 % 0.6 % 0.7 % 0.7 % 0.3% 0.6 % 10 bps (10) bps G&A expense (excluding Transaction and Organizational Restructuring Costs) 5.0 % 5.2 % 4.9 % 4.1 % 4.8 % 5.5 % 5.5 % 5.8 % 5.0% 5.4 % (90) bps (60) bps Transaction and Organizational Restructuring Costs — % 0.1 % 0.4 % 0.5 % 0.2 % 0.2 % 0.4 % 0.7 % 0.2% 0.4 % 30 bps (20) bps G&A expense (including non-cash stock-based compensation expense and Transaction and Organizational Restructuring Costs) (3) 5.0 % 5.3 % 5.2 % 4.6 % 5.0 % 5.6 % 5.9 % 6.5 % 5.2% 5.8 % (60) bps (80) bps G&A Expense
16 ($ in 000s, except for community level capital expenditures, net, per weighted average unit) 2019 2020 4Q20 vs. 4Q19 Full Year 20 vs. 19 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year B(W) B(W) Community level capital expenditures, including allocations Senior Housing Owned Portfolio $ 24,967 $ 33,828 $ 33,144 $ 32,055 $ 123,994 $ 36,735 $ 12,011 $ 12,236 $ 14,633 $ 75,615 54.4 % 39.0 % Senior Housing Leased Portfolio 18,419 25,934 22,162 13,347 79,862 18,413 1,727 5,808 10,730 36,678 19.6 % 54.1 % Community level capital expenditures, net (A) 43,386 59,762 55,306 45,402 203,856 55,148 13,738 18,044 25,363 112,293 44.1 % 44.9 % Corporate capital expenditures (includes Health Care Services) 11,216 6,702 3,815 10,208 31,941 5,408 7,783 4,828 9,280 27,299 9.1 % 14.5 % Non-Development Capital Expenditures, net 54,602 66,464 59,121 55,610 235,797 60,556 21,521 22,872 34,643 139,592 37.7 % 40.8 % Development Capital Expenditures, net 5,269 5,354 8,054 5,918 24,595 3,900 2,923 3,090 3,754 13,667 36.6 % 44.4 % Total capital expenditures, net $ 59,871 $ 71,818 $ 67,175 $ 61,528 $ 260,392 $ 64,456 $ 24,444 $ 25,962 $ 38,397 $ 153,259 37.6 % 41.1 % Lessor reimbursements: non-development capital expenditures — 1,000 11,043 22,766 34,809 5,827 8,096 4,056 9,867 27,846 Change in related payables 184 (10,576) 5,870 13,413 8,891 (898) 10,938 (2,191) (3,083) 4,766 Total cash paid for capital expenditures $ 60,055 $ 62,242 $ 84,088 $ 97,707 $ 304,092 $ 69,385 $ 43,478 $ 27,827 $ 45,181 $ 185,871 53.8 % 38.9 % Senior Housing Total Average Units (B) 56,460 55,465 55,258 54,821 55,501 54,184 54,040 53,440 53,086 53,687 (3.2) % (3.3) % Community level capital expenditures, net, per weighted average unit (A/B) $ 768 $ 1,077 $ 1,001 $ 828 $ 3,673 $ 1,018 $ 254 $ 338 $ 478 $ 2,092 42.3 % 43.0 % Capital Expenditures
17 (1) Includes cash lease payments for leases of corporate offices and information technology systems and equipment. 2019 2020 4Q20 vs. 4Q19 Full Year 20 vs. 19 ($ in 000s) 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year B(W) B(W) Operating Lease Obligations Facility lease expense $ 68,668 $ 67,689 $ 67,253 $ 66,056 $ 269,666 $ 64,481 $ 62,379 $ 51,620 $ 45,553 $ 224,033 Operating lease expense adjustment 4,383 4,429 4,814 5,827 19,453 6,733 8,221 117,322 4,000 136,276 Cash facility operating lease payments 73,051 72,118 72,067 71,883 289,119 71,214 70,600 168,942 49,553 360,309 31.1 % (24.6) % Financing Lease Obligations Interest expense: financing lease obligations 16,743 16,649 16,567 16,394 66,353 13,282 11,892 11,908 11,452 48,534 Payment of financing lease obligations 5,453 5,500 5,549 5,740 22,242 5,087 4,677 4,548 4,556 18,868 Cash financing lease payments 22,196 22,149 22,116 22,134 88,595 18,369 16,569 16,456 16,008 67,402 27.7 % 23.9 % Total cash facility lease payments (1) $ 95,247 $ 94,267 $ 94,183 $ 94,017 $ 377,714 $ 89,583 $ 87,169 $ 185,398 $ 65,561 $ 427,711 30.3 % (13.2) % One-time cash lease payment — — — — — — — (119,180) — (119,180) Total cash facility lease payments, excluding the one-time cash lease payment $ 95,247 $ 94,267 $ 94,183 $ 94,017 $ 377,714 $ 89,583 $ 87,169 $ 66,218 $ 65,561 $ 308,531 30.3 % 18.3 % Interest Expense Reconciliation to Income Statement Interest expense: financing lease obligations 16,743 16,649 16,567 16,394 66,353 13,282 11,892 11,908 11,452 48,534 30.1 % 26.9 % Interest income (3,084) (2,813) (2,162) (1,800) (9,859) (1,455) (2,243) (607) (494) (4,799) (72.6) % (51.3) % Interest expense: debt 45,643 45,193 44,344 42,538 177,718 41,763 38,974 36,908 36,172 153,817 15.0 % 13.4 % Interest expense, net 59,302 59,029 58,749 57,132 234,212 53,590 48,623 48,209 47,130 197,552 17.5 % 15.7 % Amortization of deferred financing costs and debt premium (discount) $ 979 $ 986 $ 1,167 $ 1,138 $ 4,270 $ 1,315 $ 1,556 $ 1,730 $ 1,827 $ 6,428 Interest income 3,084 2,813 2,162 1,800 9,859 1,455 2,243 607 494 4,799 Interest expense per income statement $ 63,365 $ 62,828 $ 62,078 $ 60,070 $ 248,341 $ 56,360 $ 52,422 $ 50,546 $ 49,451 $ 208,779 17.7 % 15.9 % Cash Facility Lease Payments
18 Total Liquidity ($ in millions) $481 $536 $600 $491 $575 $309 $501 $562 $491 $553 $172 $35 $38 $22 12/31/2019 03/31/2020 06/30/2020 09/30/2020 12/31/2020 $0 $200 $400 $600 (1) Includes the carrying value of mortgage debt and other notes payable of which 98.2%, or $3.8 billion, represented non-recourse property-level mortgage financings. (2) Reflects market rates as of December 31, 2020 and applicable cap rates for hedged debt. (3) Amount includes maturities and recurring monthly principal payments. (4) Leverage ratios include results of operations of communities disposed of through the disposition date. (5) Includes the $100.0 million management agreement termination fee. (6) Includes the one-time cash lease payment. (7) Excludes operating lease obligations related to certain non-facility leases for which the related lease expense is included in Adjusted EBITDAR. Important Note Regarding Non-GAAP Financial Measures. Adjusted EBITDAR, Adjusted EBITDA, Adjusted EBITDA after cash financing lease payments, Net Debt, and Adjusted Net Debt are financial measures that are not calculated in accordance with GAAP. See “Definitions” and “Non-GAAP Financial Measures” for the definitions of such measures and other important information regarding such measures, including reconciliations to the most comparable GAAP measures. Leverage Ratios (4) ($ in 000s) Year Ended December 31, 2020 Annualized Leverage Adjusted EBITDAR (5) (A) $ 624,696 Cash facility operating lease payments (see page 17) (360,309) Adjusted EBITDA (5) (6) 264,387 Cash financing lease payments (see page 17) (67,402) Adjusted EBITDA after cash financing lease payments (5) (6) (B) $ 196,985 As of December 31, 2020 Debt $ 3,915,988 Cash and cash equivalents (380,420) Marketable securities (172,905) Restricted cash held as collateral against existing debt (18,652) Net Debt (C) 3,344,011 17.0 x (C/B) Operating and financing lease obligations (7) 1,483,641 Adjusted Net Debt (D) $ 4,827,652 7.7 x (D/A) Debt (1)(2) ($ in millions) Maturity(3) Weighted Rate 2021 $ 69 4.33 % 2022 348 3.57 % 2023 231 3.51 % 2024 301 4.30 % 2025 290 4.00 % Thereafter 2,677 3.45 % Total $ 3,916 3.59 % Capital Structure $2,399 $1,389 $128 Debt Structure(1) ($ in millions) As of December 31, 2020 Weighted Rate Fixed rate debt 4.28 % Variable rate debt (2) 2.49 % Total debt 3.59 % 61% 36% Fixed rate debt Variable rate debt with interest rate caps Variable rate debt - unhedged 3% Line of credit available to draw Cash and cash equivalents and marketable securities
19 Adjusted EBITDA is a non-GAAP performance measure that the Company defines 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 the Company’s 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 lease termination and modification, operating lease expense adjustment, amortization of deferred gain, change in future service obligation, non-cash stock- based compensation expense, and Transaction and Organizational Restructuring Costs. Adjusted EBITDAR is a non-GAAP financial measure that the Company defines as Adjusted EBITDA before cash facility operating lease payments. Adjusted Free Cash Flow is a non-GAAP liquidity measure that the Company defines 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 liability for lease termination, cash paid/received for gain/loss on facility lease termination and modification, 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. Adjusted Net Debt is a non-GAAP financial measure that the Company defines as Net Debt, plus operating and financing lease obligations. Operating and financing lease obligations exclude operating lease obligations related to certain non-facility leases for which the related lease expense is included in Adjusted EBITDAR. Combined Segment Operating Income is defined by the Company as resident fee and management fee revenue and other operating income of the Company, less facility operating expense. Combined Segment Operating Income does not include general and administrative expense or depreciation and amortization. Community Labor Expense is a component of facility operating expense that includes regular and overtime salaries and wages, bonuses, paid-time-off and holiday wages, payroll taxes, contract labor, employee benefits, and workers compensation. Development Capital Expenditures means capital expenditures for community expansions, major community redevelopment and repositioning projects, and the development of new communities. Amounts of Development Capital Expenditures are presented net of lessor reimbursements. Interest Coverage is calculated based on the trailing-twelve months Owned Portfolio Operating Income adjusted for an implied 5% management fee and capital expenditures at $350/unit, divided by the trailing-twelve months property level and corporate debt interest expense. Lease Coverage is calculated based on the trailing-twelve months Leased Portfolio Operating Income, excluding resident fee revenue, other operating income, and facility operating expense of communities disposed during such period adjusted for an implied 5% management fee and capital expenditures at $350/unit, divided by the trailing-twelve months cash facility lease payments for both operating leases and financing leases, excluding cash lease payments for leases of communities disposed during such period and the one-time cash lease payment to Ventas, corporate offices, and information technology systems and equipment, vehicles and other equipment. Leased Portfolio Operating Income is defined by the Company as resident fee revenue and other operating income (excluding Health Care Services segment revenue), less facility operating expense for the Company’s Senior Housing Leased Portfolio. Leased Portfolio Operating Income does not include general and administrative expense (unless otherwise noted) or depreciation and amortization. Net Debt is a non-GAAP financial measure that the Company defines as the total of its debt (mortgage debt and other notes payable) and the outstanding balance on the line of credit, less unrestricted cash, marketable securities, and cash held as collateral against existing debt. NM means not meaningful. Non-Development Capital Expenditures is comprised of corporate and community- level capital expenditures, including those related to maintenance, renovations, upgrades, and other major building infrastructure projects for the Company’s communities. Non-Development Capital Expenditures does not include capital expenditures for community expansions, major community redevelopment and repositioning projects, and the development of new communities (i.e., Development Capital Expenditures). Amounts of Non-Development Capital Expenditures are presented net of lessor reimbursements. Owned Portfolio Operating Income is defined by the Company as resident fee revenue and other operating income (excluding Health Care Services segment revenue), less facility operating expense for the Company’s Senior Housing Owned Portfolio. Owned Portfolio Operating Income does not include general and administrative expense or depreciation and amortization. RevPAR, or average monthly senior housing resident fee revenue per available unit, is defined by the Company as resident fee revenue for the corresponding portfolio for the period (excluding Health Care Services segment revenue and entrance fee amortization, and, for the 2019 periods, the additional resident fee revenue recognized as a result of the application of the lease accounting standard under ASC 842), 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. Definitions
20 RevPOR, or average monthly senior housing resident fee revenue per occupied unit, is defined by the Company as resident fee revenue for the corresponding portfolio for the period (excluding Health Care Services segment revenue and entrance fee amortization, and, for the 2019 periods, the additional resident fee revenue recognized as a result of the application of the lease accounting standard under ASC 842), 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. Same Community information reflects operating 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 hurricane and natural disaster expense and related insurance recoveries, and for the 2019 periods, exclude the additional resident fee revenue and facility operating expense recognized as a result of the application of the lease accounting standard ASC 842. 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. Same Community Operating Income is defined by the Company as resident fee revenue and other operating income (excluding Health Care Services segment revenue and, for the 2019 periods, the additional resident fee revenue recognized as a result of application of the lease accounting standard under ASC 842), less facility operating expense (excluding hurricane and natural disaster expense and related insurance recoveries, and for the 2019 periods, the additional facility operating expense recognized as a result of application of the lease accounting standard under ASC 842) for the Company's Same Community portfolio. Same Community Operating Income does not include general and administrative expense or depreciation and amortization. Segment Operating Income (Loss) is defined by the Company as segment revenue and other operating income less segment facility operating expense. Segment Operating Income (Loss) does not include general and administrative expense or depreciation and amortization. Management Services Segment Operating Income excludes revenue for reimbursements for which the Company is the primary obligor of costs incurred on behalf of managed communities, and there is no facility operating expense associated with the Management Services segment. See the Segment Information note to the Company’s consolidated financial statements for more information regarding the Company’s segments. Senior Housing Leased Portfolio represents Brookdale leased communities and does not include owned or managed communities. Senior Housing Operating Income is defined by the Company as segment revenue and other operating income less segment facility operating expense for the Company’s Independent Living, Assisted Living and Memory Care, and CCRCs segments on an aggregate basis. Senior Housing Operating Income does not include general and administrative expense or depreciation and amortization. Senior Housing Owned Portfolio represents Brookdale owned communities and does not include leased or managed communities. Total Average Units represents the average number of units operated during the period. Transaction and Organizational Restructuring Costs are general and administrative expenses. Transaction costs include those directly related to acquisition, disposition, financing, and leasing activity, and stockholder relations advisory matters, and are primarily comprised of legal, finance, consulting, professional fees, and other third party costs. Organizational restructuring costs include those related to the Company’s efforts to reduce general and administrative expense and its senior leadership changes, including severance. Definitions
21 Appendices Pro-Forma Financial Information 22 2019 Lease Accounting Standard (ASC 842) Impact 25 Non-GAAP Financial Measures 26
22 During the period of January 1, 2020 to December 31, 2020, the Company: • terminated its triple-net lease obligations on an aggregate of 32 communities, including through the acquisition of 27 formerly leased communities and financed the acquisitions with $263.0 million of non-recourse mortgage debt. • modified the terms of the amended and restated master lease with Healthpeak. • sold its equity interest in the unconsolidated entrance fee CCRC Venture. • modified the terms of the master lease with Ventas and paid the one-time cash lease payment. • disposed of an aggregate of seven owned communities, including five communities conveyed to Ventas and two communities sold. • transitioned management agreements on 25 net communities. During the next approximately 12 months, the Company additionally expects: • to close on the disposition of three owned communities classified as held for sale as of December 31, 2020. • termination of a substantial portion of its management arrangements as of December 31, 2020. The pro-forma results on the following pages summarize the Company’s actual consolidated results excluding the impact of transactions as follows: • The pro-forma table for the fourth quarter of 2020 table on page 23 reflects the Company’s actual consolidated results excluding the impact on those results assuming that the foregoing completed and expected transactions had closed on September 30, 2020. • The pro-forma table for the 2020 full year table on page 24 reflects the Company's actual consolidated results excluding the impact on those results assuming that the foregoing completed and expected transactions had closed on December 31, 2019. The pro-forma results on the following pages do not include adjustments for the pending sale of 80% of the Company's equity in its Health Care Services segment, as further described in the press release issued on February 24, 2021. The closings of the various pending and expected transactions described above are, or will be, subject to the satisfaction of various conditions, including (where applicable) the receipt of regulatory approvals; however, there can be no assurance that the transactions will close or, if they do, when the actual closings will occur. Pro-Forma Financial Information
23 Pro-Forma Fourth Quarter 2020(1) Consolidated 4Q20 Actual Results Amounts Attributable to Transactions Completed during 4Q20 Actual Results Net of Amounts Attributable to Completed Transactions Amounts Attributable to Transactions Completed or Expected to be Completed after December 31, 2020 Actual Results Net of Amounts Attributable to Completed and Pending Transactions ($ in 000s) (A) (B) (A+B) (C) (A+B+C) Senior Housing weighted average units operated 53,086 (106) 52,980 (249) 52,731 Senior Housing resident fee revenue $ 585,542 $ (1,733) $ 583,809 $ (2,406) $ 581,403 Health Care Services resident fee revenue 91,918 — 91,918 — 91,918 Management fee revenue 10,230 (140) 10,090 (7,968) 2,122 Other operating income 78,291 — 78,291 — 78,291 Resident and management fee revenue and other operating income 765,981 (1,873) 764,108 (10,374) 753,734 Facility operating expense (576,813) 1,578 (575,235) 3,316 (571,919) General and administrative expense (2) (41,011) — (41,011) — (41,011) Cash facility operating lease payments (49,553) 654 (48,899) — (48,899) Adjusted EBITDA(3) 98,604 359 98,963 (7,058) 91,905 Transaction and Organizational Restructuring Costs (1,778) — (1,778) — (1,778) Interest expense, net (47,130) — (47,130) — (47,130) Payment of financing lease obligations (4,556) — (4,556) — (4,556) Changes in working capital (4) 9,945 — 9,945 — 9,945 Other (567) — (567) — (567) Non-Development Capital Expenditures, net (34,643) 11 (34,632) 117 (34,515) Adjusted Free Cash Flow $ 19,875 $ 370 $ 20,245 $ (6,941) $ 13,304 (1) The pro-forma results do not include adjustments for the pending sale of 80% of the Company's equity in its Health Care Services segment, which remains subject to the satisfaction of various conditions, including the receipt of regulatory approvals, as further described in the press release issued on February 24, 2021. (2) Excludes non-cash stock-based compensation expense and Transaction and Organizational Restructuring Costs. Brookdale scales general and administrative expense following disposal of communities. This is reflected in actual results as they occur. (3) Adjusted EBITDA includes $78.3 million of government grants recognized into other operating income during the fourth quarter of 2020. (4) The pro-forma adjustments do not include assumptions on the impact to changes in working capital.
24 Pro-Forma Full Year 2020(1) Consolidated Full Year Actual Results Amounts Attributable to Transactions Completed on or before December 31, 2020 Actual Results Net of Amounts Attributable to Completed Transactions Amounts Attributable to Transactions Completed or Expected to be Completed after December 31, 2020 Actual Results Net of Amounts Attributable to Completed and Pending Transactions ($ in 000s) (A) (B) (A+B) (C) (A+B+C=D) Senior Housing weighted average units operated 53,687 (749) 52,938 (249) 52,689 Senior Housing resident fee revenue $ 2,525,757 $ (34,574) $ 2,491,183 $ (11,887) $ 2,479,296 Health Care Services resident fee revenue 366,810 — 366,810 — 366,810 Management fee revenue (2) 130,690 (103,625) 27,065 (17,968) 9,097 Other operating income 115,749 — 115,749 — 115,749 Resident and management fee revenue and other operating income 3,139,006 (138,199) 3,000,807 (29,855) 2,970,952 Facility operating expense (2,341,859) 33,005 (2,308,854) 13,948 (2,294,906) General and administrative expense (3) (172,451) — (172,451) — (172,451) Cash facility operating lease payments (360,309) 166,108 (194,201) — (194,201) Adjusted EBITDA (4) 264,387 60,914 325,301 (15,907) 309,394 $100.0 million management termination fee (100,000) 100,000 — — $119.2 million one-time cash lease payment 119,180 (119,180) — — — Adjusted EBITDA, excluding $100.0 million management termination fee and $119.2 million one-time cash lease payment 283,567 41,734 325,301 (15,907) 309,394 $100.0 million management termination fee 100,000 (100,000) — — — $119.2 million one-time cash lease payment (119,180) 119,180 — — — Transaction and Organizational Restructuring Costs (13,377) — (13,377) — (13,377) Interest expense, net (197,552) 3,468 (194,084) — (194,084) Payment of financing lease obligations (18,868) 925 (17,943) — (17,943) Changes in working capital (5) 138,892 — 138,892 — 138,892 Other (9,709) — (9,709) — (9,709) Non-Development Capital Expenditures, net (139,592) 1,888 (137,704) 485 (137,219) Adjusted Free Cash Flow $ 24,181 $ 67,195 $ 91,376 $ (15,422) $ 75,954 Cash facility operating and financing lease payments $ 427,711 $ (169,496) $ 258,215 $ — $ 258,215 (1) The pro-forma results do not include adjustments for the pending sale of 80% of the Company's equity in its Health Care Services segment, which remains subject to the satisfaction of various conditions, including the receipt of regulatory approvals, as further described in the press release issued on February 24, 2021. (2) The Company expects management agreement termination fee revenue of approximately $4.6 million in 2021. Such amount is not included within the Actual Results Net of Amounts Attributable to Completed and Pending Transactions. (3) Excludes non-cash stock-based compensation expense and Transaction and Organizational Restructuring Costs. Brookdale scales general and administrative expense following disposal of communities. This is reflected in actual results as they occur. (4) Adjusted EBITDA for 2020 includes the $100.0 million management agreement termination fee payment received from Healthpeak related to the sale of Brookdale’s interest in the entry fee CCRC venture, which closed on January 31, 2020, $115.7 million of government grants recognized into other operating income and the $119.2 million one-time cash lease payment. (5) The pro-forma adjustments do not include assumptions on the impact to changes in working capital. Pro-forma (from column D above) Owned and Leased Specifically Identifiable Information, and Other Senior Housing Owned Portfolio Senior Housing Leased Portfolio Health Care Services and Other Pro-forma Total (from column D above) Weighted average units operated 31,561 21,128 — 52,689 Senior Housing and Health Care Services revenue $ 1,443,310 $ 1,035,986 $ 366,810 $ 2,846,106 Facility operating expense $ (1,133,304) $ (773,768) $ (387,834) $ (2,294,906) Total cash facility lease payments and interest expense, net $ (152,812) $ (252,380) $ (1,036) $ (406,228) Non-Development Capital Expenditures, net $ (74,562) $ (35,358) $ (27,299) $ (137,219)
25 1Q 2019 2Q 2019 Q3 2019 4Q 2019 Full Year 2019 ($ in 000s, except RevPAR and RevPOR) Total Senior Housing Total Senior Housing Total Senior Housing Total Senior Housing Total Senior Housing Independent Living Assisted Living and Memory Care CCRCs Resident fee revenue $ 2,780 $ 5,299 $ 7,958 $ 10,383 $ 26,420 $ 8,725 $ 14,686 $ 3,009 Facility operating expense 9,210 11,826 13,955 14,533 49,524 12,661 31,560 5,303 Net income (loss) and Adjusted EBITDA (6,430) (6,527) (5,997) (4,150) (23,104) (3,936) (16,874) (2,294) Foregoing impact is offset within working capital 6,430 6,527 5,997 4,150 23,104 3,936 16,874 2,294 Adjusted Free Cash Flow $ — $ — $ — $ — $ — $ — $ — $ — RevPAR - Including impact of ASC 842 $ 4,118 $ 4,129 $ 4,157 $ 4,180 $ 4,146 $ 3,638 $ 4,139 $ 5,161 RevPAR - Excluding impact of ASC 842 4,102 4,097 4,109 4,116 4,106 3,580 4,106 5,123 RevPOR - Including impact of ASC 842 $ 4,929 $ 4,948 $ 4,937 $ 4,946 $ 4,940 $ 4,080 $ 5,012 $ 6,346 RevPOR - Excluding impact of ASC 842 4,909 4,909 4,880 4,871 4,893 4,014 4,971 6,298 2019 Lease Accounting Standard (ASC 842) Impact The Company’s adoption of the lease accounting standard, effective January 1, 2019, impacted the timing of the revenue and cost recognition associated with its residency agreements. For the full year 2019, the impact of the adoption and application to its residency agreements had a negative, non-recurring net impact of $23.1 million to net income (loss) and Adjusted EBITDA, with no impact to net cash provided by (used in) operating activities or Adjusted Free Cash Flow. To aid in comparability between periods, the following presentations in this Supplement exclude the negative, non-recurring net impact of adoption of the lease accounting standard: (i) the Company’s results on a Same Community basis, (ii) RevPAR and RevPOR (other than as noted on this page), (iii) Interest Coverage, (iv) lease coverage, and (v) annualized leverage. All other presentations of the Company's 2019 results in this Supplement include the impact of the lease accounting standard effective January 1, 2019. The following table presents the impact of adoption of the lease accounting standard to the Company’s quarterly and full year 2019 results from its application to the Company's residency agreements and costs related thereto for the senior housing portfolio. For the quarterly impact of the adoption for each senior housing segment, see the supplemental information furnished as Exhibit 99.2 to the Current Reports on Form 8-K filed with the SEC on May 6, 2019, August 5, 2019, November 5, 2019, and February 18, 2020.
26 Non-GAAP Financial Measures This Supplemental Information contains the financial measures Adjusted EBITDA, Adjusted EBITDAR, Adjusted EBITDA after cash financing lease payments, Adjusted Free Cash Flow, Net Debt, and Adjusted Net Debt (each as defined in the “Definitions” section), which are not calculated in accordance with U.S. GAAP ("GAAP"). Presentations of these non-GAAP financial measures are intended to aid investors in better understanding the factors and trends affecting the Company’s 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, net cash provided by (used in) operating activities, short-term debt, long-term debt less current portion, or current portion of long-term debt. Investors are cautioned that amounts presented in accordance with the Company’s 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. Investors are urged to review the reconciliations set forth in this Appendix of these non-GAAP financial measures from the most comparable financial measures determined in accordance with GAAP and to review the information under “Reconciliations of Non-GAAP Financial Measures” in the Company’s earnings release dated February 24, 2021 for additional information regarding the Company’s use and the limitations of such non-GAAP financial measures.
27 2019 2020 ($ in 000s) 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year Net income (loss) $ (42,606) $ (56,055) $ (78,508) $ (91,323) $ (268,492) $ 369,497 $ (118,420) $ (124,993) $ (44,139) $ 81,945 Provision (benefit) for income taxes 679 633 (1,800) (1,781) (2,269) (15,828) 8,504 14,884 (2,208) 5,352 Equity in (earnings) loss of unconsolidated ventures 526 991 2,057 970 4,544 1,008 (438) 293 1,244 2,107 Loss (gain) on debt modification and extinguishment, net 67 2,672 2,455 53 5,247 (19,181) 157 7,917 211 (10,896) Loss (gain) on sale of assets, net 702 (2,846) (579) (4,522) (7,245) (372,839) 1,029 (2,209) (513) (374,532) Other non-operating (income) loss (2,988) (3,199) (3,763) (4,815) (14,765) (2,662) (988) (948) (1,050) (5,648) Interest expense 63,365 62,828 62,078 60,070 248,341 56,360 52,422 50,546 49,451 208,779 Interest income (3,084) (2,813) (2,162) (1,800) (9,859) (1,455) (2,243) (607) (494) (4,799) Income (loss) from operations 16,661 2,211 (20,222) (43,148) (44,498) 14,900 (59,977) (55,117) 2,502 (97,692) Depreciation and amortization 96,888 94,024 93,550 94,971 379,433 90,738 93,154 87,821 87,513 359,226 Asset impairment 391 3,769 2,094 43,012 49,266 78,226 10,290 8,213 10,579 107,308 Loss (gain) on facility lease termination and modification, net 209 1,797 — 1,382 3,388 — — — (2,303) (2,303) Operating lease expense adjustment (4,383) (4,429) (4,814) (5,827) (19,453) (6,733) (8,221) (117,322) (4,000) (136,276) Non-cash stock-based compensation expense 6,356 6,030 5,929 4,711 23,026 5,957 6,119 6,136 2,535 20,747 Transaction and Organizational Restructuring Costs 461 634 3,910 5,002 10,007 1,981 3,368 6,250 1,778 13,377 Adjusted EBITDA (1) (2) $ 116,583 $ 104,036 $ 80,447 $ 100,103 $ 401,169 $ 185,069 $ 44,733 $ (64,019) $ 98,604 $ 264,387 $100.0 million management termination fee — — — — — (100,000) — — — (100,000) $119.2 million one-time cash lease payment — — — — — — — 119,180 — 119,180 Adjusted EBITDA, excluding $100.0 million management termination fee and $119.2 million cash lease payment $ 116,583 $ 104,036 $ 80,447 $ 100,103 $ 401,169 $ 85,069 $ 44,733 $ 55,161 $ 98,604 $ 283,567 Adjusted EBITDA Reconciliation Non-GAAP Financial Measures (continued) (1) The 2019 periods presented include the non-recurring, non-cash impact associated with the Company's adoption of the lease accounting standard effective January 1, 2019. See page 25 for additional information. (2) Adjusted EBITDA for the first quarter and full year of 2020 includes the $100.0 million management agreement termination fee payment received from Healthpeak related to the sale of Brookdale’s interest in the entry fee CCRC venture, which closed on January 31, 2020. Adjusted EBITDA for the second quarter, third quarter, fourth quarter, and full year of 2020 includes $26.7 million, $10.8 million, $78.3 million, and $115.7 million of government grants recognized in other operating income during the respective period, and for the third quarter and full year of 2020 includes the one-time cash lease payment.
28 Adjusted EBITDAR; Adjusted EBITDA; and Adjusted EBITDA after Cash Financing Lease Payments Reconciliations (1) Full Year 2020($ in 000s) Net income (loss) $ 81,945 Provision (benefit) for income taxes 5,352 Equity in (earnings) loss of unconsolidated ventures 2,107 Loss (gain) on debt modification and extinguishment, net (10,896) Loss (gain) on sale of assets, net (374,532) Other non-operating (income) loss (5,648) Interest expense 208,779 Interest income (4,799) Income (loss) from operations (97,692) Depreciation and amortization 359,226 Asset impairment 107,308 Loss (gain) on facility lease termination and modification, net (2,303) Facility lease expense 224,033 Non-cash stock-based compensation expense 20,747 Transaction and Organizational Restructuring Costs 13,377 Adjusted EBITDAR $ 624,696 Facility lease expense (224,033) Operating lease expense adjustment (136,276) Adjusted EBITDA $ 264,387 Interest expense: financing lease obligations (48,534) Payment of financing lease obligations (18,868) Adjusted EBITDA after cash financing lease payments $ 196,985 Non-GAAP Financial Measures (continued) (1) Includes the $100.0 million management agreement termination fee payment received from Healthpeak and the $119.2 million one-time cash lease payment.
29 Net Debt and Adjusted Net Debt Reconciliations ($ in 000s) As of December 31, 2020 Long-term debt (including current portion) $ 3,915,988 Cash and cash equivalents (380,420) Marketable securities (172,905) Cash held as collateral against existing debt (18,652) Net Debt 3,344,011 Operating and financing lease obligations 1,528,962 Operating lease obligations related to certain non-facility leases for which the related lease expense is included in Adjusted EBITDAR (45,321) Adjusted Net Debt $ 4,827,652 Adjusted Net Debt to Adjusted EBITDAR 7.7 x Net Debt to Adjusted EBITDA after cash financing lease payments 17.0 x Operating and financing lease obligations $ 1,528,962 Operating lease obligations related to certain non-facility leases for which the related lease expense is included in Adjusted EBITDAR (45,321) Operating lease obligations related to corporate office and information technology leases $ (16,167) Operating and financing lease obligations for Senior Housing Leased Portfolio $ 1,467,474 Non-GAAP Financial Measures (continued)
30 2019 2020 ($ in 000s) 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year Net cash provided by (used in) operating activities $ (5,009) $ 64,128 $ 69,211 $ 88,082 $ 216,412 $ 57,479 $ 151,840 $ (77,169) $ 73,499 $ 205,649 Net cash provided by (used in) investing activities (100,073) 19,774 (70,056) (75,184) (225,539) (247,927) (47,483) (48,554) (81,147) (425,111) Net cash provided by (used in) financing activities (16,636) (87,443) (8,755) (26,560) (139,394) 347,250 (40,726) 96,668 (20,279) 382,913 Net increase (decrease) in cash, cash equivalents and restricted cash $ (121,718) $ (3,541) $ (9,600) $ (13,662) $ (148,521) $ 156,802 $ 63,631 $ (29,055) $ (27,927) $ 163,451 Net cash provided by (used in) operating activities $ (5,009) $ 64,128 $ 69,211 $ 88,082 $ 216,412 $ 57,479 $ 151,840 $ (77,169) $ 73,499 $ 205,649 Distributions from unconsolidated ventures from cumulative share of net earnings (749) (781) (858) (1,084) (3,472) — — (766) — (766) Changes in prepaid insurance premiums financed with notes payable 18,842 (6,752) (6,215) (5,875) — 17,434 (5,770) (5,841) (5,823) — Changes in liabilities for lessor capital expenditure reimbursements under operating leases — (1,000) (11,043) (19,262) (31,305) (4,088) (6,421) (3,131) (8,602) (22,242) Non-development capital expenditures, net (54,602) (66,464) (59,121) (55,610) (235,797) (60,556) (21,521) (22,872) (34,643) (139,592) Payment of financing lease obligations (5,453) (5,500) (5,549) (5,740) (22,242) (5,087) (4,677) (4,548) (4,556) (18,868) Adjusted Free Cash Flow (1) $ (46,971) $ (16,369) $ (13,575) $ 511 $ (76,404) $ 5,182 $ 113,451 $ (114,327) $ 19,875 $ 24,181 Adjusted Free Cash Flow Reconciliation Non-GAAP Financial Measures (continued) Brookdale Senior Living Inc. 111 Westwood Place, Suite 400 Brentwood, TN 37027 (615) 221-2250 www.brookdale.com (1) The first quarter of 2020 includes the $100.0 million management agreement termination fee payment received from Healthpeak related to the sale of Brookdale’s interest in the entry fee CCRC venture, which closed on January 31, 2020. The second quarter of 2020 includes $85.0 million of accelerated/advanced Medicare payments received, $34.2 million of Provider Relief Funds and other government grants accepted, and $26.5 million of the employer portion of payroll taxes deferred in the second quarter of 2020. The third quarter of 2020 includes the one-time cash lease payment of $119.2 million, and includes $2.5 million of accelerated/advanced Medicare payments received, $4.4 million of Provider Relief Funds and other government grants accepted, and $23.6 million of employer portion of payroll taxes deferred in the third quarter of 2020. The fourth quarter of 2020 includes $77.2 million of Provider Relief Funds and other government grants accepted and $22.6 million of employer portion of payroll taxes deferred in the fourth quarter of 2020.