Sonida Senior Living, Inc. (the “Company,” “we,” “our,” or “us”)
(NYSE: SNDA) announced results for the first quarter ended March
31, 2023.
“The combination of strong and stable leadership across our
operating platform, productive discussions and progress with our
lending partners and recent significant margin expansion, position
the Company for continued growth in 2023 and beyond,” said Brandon
Ribar, President, and CEO. “We believe our continued success lies
in our focus on three key areas—driving NOI growth in the existing
portfolio, strengthening the balance sheet and participating as an
active acquirer in the market.”
Highlights
- Weighted average occupancy for the Company’s owned portfolio of
62 communities increased 220 basis points to 84.0% year-over-year
vs. Q1 2022, and increased 10 basis points sequentially vs. Q4
2022.
- Resident revenue increased 11.4% year-over-year, and increased
7.4% when excluding $2.0 million and $0.7 million of state grant
revenue received in Q1 2023 and Q1 2022, respectively.
- Net income attributable to common stockholders was $19.8
million (which includes a $36.3 million gain on debt
extinguishment), with a net income margin of 31.8% in Q1 2023 as
compared to a net loss margin of 30.5% in Q1 2022.
- Adjusted EBITDA, a non-GAAP measure, was $7.8 million for Q1
2023, an increase of 109.1% year-over-year and 69.1% in sequential
quarters.
- Results for the Company’s same-store, owned portfolio
(“same-store”) of 60 communities:
- Q1 2023 vs. Q1 2022:
- Revenue Per Available Unit (“RevPAR”) increased 11.4%.
- Revenue Per Occupied Unit (“RevPOR”) increased 8.9% to
$3,966.
- Community Net Operating Income, a non-GAAP measure, increased
$3.3 million. Adjusted Community Net Operating Income, a non-GAAP
measure, which excludes $2.0 million and $0.7 million of state
grant revenue received in Q1 2023 and Q1 2022, respectively, was
$11.4 million and $9.5 million for Q1 2023 and Q1 2022,
respectively.
- Community Net Operating Income Margin and Adjusted Community
Net Operating Income Margin (non-GAAP measures adjusted for
non-recurring state grant revenue) were 24.1% and 21.2% for Q1
2023, respectively and 20.2% and 19.1% for Q1 2022,
respectively.
- Q1 2023 vs. Q4 2022:
- RevPAR increased 6.5%.
- RevPOR increased 6.5% to $3,966.
- Community Net Operating Income increased $2.8 million. Adjusted
Community Net Operating Income, excluding $2.0 million of state
grant revenue received in Q1 2023, was $11.4 million and $10.7
million for Q1 2023 and Q4 2022, respectively.
- Community Net Operating Income Margin and Adjusted Community
Net Operating Income Margin (adjusted for non-recurring state grant
revenue) were 24.1% and 21.2% for Q1 2023, respectively, and 20.3%
and 20.3% for Q4 2022, respectively.
SONIDA SENIOR LIVING,
INC.
SUMMARY OF CONSOLIDATED
FINANCIAL RESULTS
FIRST QUARTER ENDED MARCH 31,
2023
(in thousands)
Quarters Ended March
31,
Quarter ended December
31,
2023
2022
2022
Consolidated results
Resident revenue
$
56,606
$
50,834
$
53,388
Management fees
505
628
523
Operating expenses
43,808
41,929
45,073
General and administrative expenses
7,063
8,273
6,723
Gain (loss) on extinguishment of debt
36,339
(641
)
—
Long-lived asset impairment
—
—
1,588
Income (loss) before provision for income
taxes
24,214
(16,424
)
(16,742
)
Net income (loss)
24,145
(16,678
)
(16,574
)
Adjusted EBITDA (1)
7,794
3,727
4,609
Net cash provided by (used in) operating
activities
3,249
(690
)
(5,481
)
Adjusted CFFO (1)
(40
)
(4,160
)
(3,060
)
Same-Store Results
Resident revenue (2)
56,010
50,497
52,826
Community net operating income (NOI)
(1)
13,471
10,188
10,720
Community net operating income margin
(1)
24.1
%
20.2
%
20.3
%
Weighted average occupancy (3)
84.2
%
82.3
%
84.2
%
(1) Adjusted EBITDA, Community Net
Operating Income, Community Net Operating Income Margin, and
Adjusted CFFO are financial measures that are not calculated in
accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”). See “Reconciliations of Non-GAAP Financial Measures” for
the Company's definition of such measures, reconciliations to the
most comparable GAAP financial measures, and other information
regarding the use of the Company's non-GAAP financial measures.
(2) Same-store resident revenue excludes
$0.6 million, $0.3 million, and $0.6 million for the quarters ended
March 31, 2023, March 31, 2022, and December 31, 2022,
respectively, related to the revenues earned in the operations of
the two Indiana senior living communities acquired by the Company
in February 2022.
(3) Weighted average occupancy for all
periods presented excludes the operations of the two Indiana senior
living communities acquired by the Company in February 2022.
Results of Operations
Three months ended March 31, 2023 as compared to three months
ended March 31, 2022
Revenues
Resident revenue for the three months ended March 31, 2023 was
$56.6 million as compared to $50.8 million for the three months
ended March 31, 2022, an increase of $5.8 million, or 11.4%. The
increase in revenue was primarily due to increased occupancy,
increased average rent rates, and the acquisition of two
communities in Q1 2022.
Management fee revenue for the three months ended March 31, 2023
decreased by $0.1 million as compared to the three months ended
March 31, 2022, primarily as a result of managing fewer communities
in Q1 2023 versus Q1 2022.
Expenses
Operating expenses for the three months ended March 31, 2023
were $43.8 million as compared to $41.9 million for the three
months ended March 31, 2022, an increase of $1.9 million. The
increase is primarily due to a $1.3 million increase in labor and
employee-related expenses and a $0.6 million increase in utility
costs.
General and administrative expenses for the three months ended
March 31, 2023 were $7.1 million as compared to $8.3 million for
the three months ended March 31, 2022, representing a decrease of
$1.2 million. This decrease is primarily due to a $0.9 million
decrease in stock-based compensation expense from the prior year
quarter due to forfeiture credits in connection with executive
personnel changes in 2022, and a $0.3 million net decrease in
recurring corporate expenses.
Gain on extinguishment of debt was $36.3 million for the three
months ended March 31, 2023. The gain related to the derecognition
of notes payable and liabilities as a result of the transition of
legal ownership of two communities to Fannie Mae, the holder of the
related non-recourse debt.
The Company reported a net income of $24.1 million for the three
months ended March 31, 2023, compared to net loss of $16.7 million
for the three months ended March 31, 2022. A major factor impacting
the comparison of net income for the three months ended March 31,
2023 and March 31, 2022 includes a gain on extinguishment of debt
of $36.3 million in 2023.
Adjusted EBITDA for the three months ended March 31, 2023 was
$7.8 million compared to $3.7 million for the three months ended
March 31, 2022. Adjusted EBITDA excluding COVID-19 expenses was
$7.8 million for the three months ended March 31, 2023, compared to
$3.9 million for the three months ended March 31, 2022. See
“Reconciliation of Non-GAAP Financial Measures” below.
Three months ended March 31, 2023 as compared to three months
ended December 31, 2022
Revenues
Resident revenue for the three months ended March 31, 2023 was
$56.6 million as compared to $53.4 million for the three months
ended December 31, 2022, representing an increase of $3.2 million,
or 6.0%. Excluding $2.0 million in state grant revenue received in
Q1 2023, resident revenue increased $1.2 million, or 2.2%. The
increase in revenue was primarily due to increased occupancy and
increased average rent rates.
Management fee revenue for the three months ended March 31, 2023
and December 31, 2022 was $0.5 million.
Expenses
Operating expenses for the three months ended March 31, 2023
were $43.8 million as compared to $45.1 million for the three
months ended December 31, 2022, a decrease of $1.3 million. The
decrease is primarily due to a $0.2 million decrease in labor
costs, a $0.5 million decrease in food costs, a $0.2 million
decrease in supplies costs, and a $0.4 decrease in other
expenses.
General and administrative expenses for the three months ended
March 31, 2023 were $7.1 million as compared to $6.7 million for
the three months ended December 31, 2022, an increase of $0.4
million. This increase is primarily as a result of increased
employee costs.
Gain on extinguishment of debt was $36.3 million for the three
months ended March 31, 2023, as discussed above.
Long-lived asset impairment charge of $1.6 million for the
quarter ended December 31, 2022 related to a commitment to sell a
community at an agreed-upon selling price below the carrying
amount.
The Company reported a net income of $24.1 million for the three
months ended March 31, 2023 compared to a net loss of $16.6 million
for the three months ended December 31, 2022. A major factor
impacting the comparison of net income for the three months ended
March 31, 2023 and December 31, 2022 is the $36.3 million of gain
on extinguishment of debt during Q1 2023.
Adjusted EBITDA for the three months ended March 31, 2023 was
$7.8 million compared to $4.6 million for the three months ended
December 31, 2022. Adjusted EBITDA excluding COVID-19 expenses was
$7.8 million for the three months ended March 31, 2023 compared to
$4.7 million for the three months ended December 31, 2022. See
“Reconciliation of Non-GAAP Financial Measures” below.
Significant Transactions for the Three
Months Ended March 31, 2023
Foreclosure Proceedings on Fannie Mae Loans
On January 11, 2023, the Company received notice that the
foreclosure sales conducted by Fannie Mae had successfully
transitioned the remaining two properties to new owners. This event
relieved the Company of the existing Fannie Mae debt relating to
the two properties. Accordingly, the Company recognized a total of
$36.3 million for the gain on debt extinguishments for the quarter
ended March 31, 2023. With the transition of these two properties,
the 18 total Fannie Mae properties’ foreclosure that commenced in
2020 was completed.
Protective Life Insurance Company Non-recourse Mortgages
During the first quarter of 2023, the Company elected to not
make principal and interest payments due under certain non-recourse
mortgage loan agreements with an aggregate outstanding principal
amount of $69.8 million for four communities as of March 31, 2023.
Therefore, the Company is in default on these loans, and has
presented the total amount due as current notes payable on the
condensed consolidated balance sheet. The Company is currently
engaged in discussions with Protective Life Insurance Company, the
lender of such debt, in order to resolve this matter.
Liquidity and Capital
Resources
Cash flows
The table below presents a summary of the Company’s net cash
provided by (used in) operating, investing, and financing
activities (in thousands):
Three months ended March
31,
2023
2022
Net cash provided by (used in) operating
activities
$
3,249
$
(690
)
Net cash used in investing activities
(5,086
)
(17,924
)
Net cash used in financing activities
(3,759
)
(13,434
)
Decrease in cash and cash equivalents
$
(5,596
)
$
(32,048
)
In addition to $13.0 million of unrestricted cash balances on
hand as of March 31, 2023, our principal sources of liquidity are
expected to be cash flows from operations, COVID-19 or related
relief grants from various state agencies, proceeds from debt
refinancings or loan modifications, and/or proceeds from the sale
of owned assets. In March 2022, the Company completed the
refinancing of certain existing mortgage debt on 10 properties,
which was amended in December 2022 to include two additional
properties.
The Company has implemented plans, which include strategic and
cash-preservation initiatives, designed to provide the Company with
adequate liquidity to meet its obligations for at least the
12-month period following the date its first quarter 2023 financial
statements are issued. While the Company’s plans are designed to
provide it with adequate liquidity to meet its obligations for at
least the 12-month period following the date its financial
statements are issued, the remediation plan is dependent on
conditions and matters that may be outside of the Company’s
control, and no assurance can be given that certain options will be
available on terms acceptable to the Company, or at all. If the
Company is unable to successfully execute all of the planned
initiatives or if the plan does not fully mitigate the Company’s
liquidity challenges, the Company’s operating plans and resulting
cash flows along with its cash and cash equivalents and other
sources of liquidity may not be sufficient to fund operations for
the 12-month period following the date the financial statements are
issued.
The Company, from time to time, considers and evaluates
financial and capital raising transactions related to its
portfolio, including debt refinancings, purchases and sales of
assets and other transactions. There can be no assurances that the
Company will continue to generate cash flows at or above current
levels, or that the Company will be able to obtain the capital
necessary to meet the Company’s short and long-term capital
requirements.
Recent changes in the current economic environment, and other
future changes, could result in decreases in the fair value of
assets, slowing of transactions, and the tightening of liquidity
and credit markets. These impacts could make securing debt or
refinancings for the Company or buyers of the Company’s properties
more difficult or on terms not acceptable to the Company. The
Company’s actual liquidity and capital funding requirements depend
on numerous factors, including its operating results, its capital
expenditures for community investment, and general economic
conditions, as well as other factors described in “Item 1A. Risk
Factors” of our Annual Report on Form 10-K for the fiscal year
ended December 31, 2022, filed with the SEC on March 30, 2023.
Conference Call
Information
The Company will host a conference call with senior management
to discuss the Company’s financial results for the three months
ended March 31, 2023, on Thursday May 11, 2023, at 12:30 p.m.
Eastern Time. To participate, dial 877-407-0989 (no passcode
required). A link to the simultaneous webcast of the teleconference
will be available at:
https://www.webcast-eqs.com/register/sonidaseniorliving_q12023_en/en.
For the convenience of the Company’s shareholders and the
public, the conference call will be recorded and available for
replay starting May 12, 2023 through May 26, 2023. To access the
conference call replay, call 877-660-6853, passcode 13738670. A
transcript of the call will be posted in the Investor Relations
section of the Company’s website.
About the Company
Dallas-based Sonida Senior Living, Inc. is a leading
owner-operator of independent living, assisted living and memory
care communities and services for senior adults. As of March 31,
2023, the Company operated 72 communities, with capacity for
approximately 8,000 residents across 18 states, which provide
comfortable, safe, affordable environment where residents can form
friendships, enjoy new experiences and receive personalized care
from dedicated team members who treat them like family. For more
information, visit www.sonidaseniorliving.com or connect with the
Company on Facebook, Twitter or LinkedIn.
Definitions of RevPAR and
RevPOR
RevPAR, or average monthly revenue per available unit, is
defined by the Company as resident revenue for the period, 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.
RevPOR, or average monthly revenue per occupied unit, is defined
by the Company as resident revenue for the period, 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.
Safe Harbor
This release contains forward-looking statements which are
subject to certain risks and uncertainties that could cause our
actual results and financial condition of Sonida Senior Living,
Inc. (the “Company,” “we,” “our” or “us”) to differ materially from
those indicated in the forward-looking statements, including, among
others, the risks, uncertainties and factors set forth under “Item.
1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2022, filed with the Securities and
Exchange Commission (the “SEC”) on March 30, 2023, and also include
the following: the impact of COVID-19, including the actions taken
to prevent or contain the spread of COVID-19, the transmission of
its highly contagious variants and sub-lineages and the development
and availability of vaccinations and other related treatments, or
another epidemic, pandemic or other health crisis; the Company’s
ability to generate sufficient cash flows from operations,
additional proceeds from debt financings or refinancings, and
proceeds from the sale of assets to satisfy its short- and
long-term debt obligations and to make capital improvements to the
Company’s communities; increases in market interest rates that
increase the cost of certain of our debt obligations; increased
competition for, or a shortage of, skilled workers, including due
to the COVID-19 pandemic or general labor market conditions, along
with wage pressures resulting from such increased competition, low
unemployment levels, use of contract labor, minimum wage increases
and/or changes in overtime laws; the Company’s ability to obtain
additional capital on terms acceptable to it; the Company’s ability
to extend or refinance its existing debt as such debt matures; the
Company’s compliance with its debt agreements, including certain
financial covenants and the risk of cross-default in the event such
non-compliance occurs; the Company’s ability to complete
acquisitions and dispositions upon favorable terms or at all; the
risk of oversupply and increased competition in the markets which
the Company operates; the Company’s ability to improve and maintain
controls over financial reporting and remediate the identified
material weakness discussed in its recent Quarterly and Annual
Reports filed with the SEC; the departure of the Company’s key
officers and personnel; the cost and difficulty of complying with
applicable licensure, legislative oversight, or regulatory changes;
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; and changes in accounting
principles and interpretations.
For information about Sonida Senior Living, visit www.sonidaseniorliving.com
Sonida Senior Living,
Inc.
Condensed Consolidated
Statements of Operations (Unaudited)
(in thousands, except per
share data)
Three Months Ended
March 31,
2023
2022
Revenues:
Resident revenue
$
56,606
$
50,834
Management fees
505
628
Managed community reimbursement
revenue
4,962
7,022
Total revenues
62,073
58,484
Expenses:
Operating expense
43,808
41,929
General and administrative expense
7,063
8,273
Depreciation and amortization expense
9,881
9,578
Managed community reimbursement
expense
4,962
7,022
Total expenses
65,714
66,802
Other income (expense):
Interest income
194
1
Interest expense
(8,867
)
(7,603
)
Gain (loss) on extinguishment of debt,
net
36,339
(641
)
Gain on sale of assets, net
251
—
Other income (expense), net
(62
)
137
Income (loss) before provision for
income taxes
24,214
(16,424
)
Provision for income taxes
(69
)
(254
)
Net income (loss)
24,145
(16,678
)
Dividends on Series A convertible
preferred stock
(1,198
)
(1,133
)
Undistributed net income allocated to
participating securities
(3,182
)
—
Net income (loss) attributable to
common stockholders
$
19,765
$
(17,811
)
Weighted average common shares outstanding
— basic
6,855
6,341
Weighted average common shares outstanding
— diluted
7,168
6,341
Basic net income (loss) per common
share
$
2.88
$
(2.81
)
Diluted net income (loss) per common
share
$
2.76
$
(2.81
)
Sonida Senior Living,
Inc.
Condensed Consolidated Balance
Sheets (Unaudited)
(in thousands, except per
share amounts)
March 31, 2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
12,972
$
16,913
Restricted cash
12,174
13,829
Accounts receivable, net
5,924
6,114
Prepaid expenses and other
2,940
4,099
Total current assets
36,141
43,566
Property and equipment, net
610,945
615,754
Other assets, net
1,611
1,948
Total assets
$
648,697
$
661,268
Liabilities and Equity
Current liabilities:
Accounts payable
$
9,246
$
7,272
Accrued expenses
31,857
36,944
Current portion of notes payable, net of
deferred loan costs
81,151
46,029
Current portion of deferred income
3,857
3,419
Federal and state income taxes payable
260
—
Other current liabilities
640
653
Total current liabilities
127,011
94,317
Notes payable, net of deferred loan costs
and current portion
554,723
625,002
Other liabilities
95
113
Total liabilities
681,829
719,432
Commitments and contingencies
Redeemable preferred stock:
Series A convertible preferred stock,
$0.01 par value; 41 shares authorized, 41 shares issued and
outstanding as of March 31, 2023 and December 31, 2022
44,748
43,550
Shareholders’ deficit:
Authorized shares - 15,000 as of March 31,
2023 and December 31, 2022; none issued or outstanding, except
Series A convertible preferred stock as noted above
—
—
Authorized shares - 15,000 as of March 31,
2023 and December 31, 2022; 6,942 and 6,670 shares issued and
outstanding as of March 31, 2023 and December 31, 2022,
respectively
69
67
Additional paid-in capital
294,964
295,277
Retained deficit
(372,913
)
(397,058
)
Total shareholders’ deficit
(77,880
)
(101,714
)
Total liabilities, redeemable preferred
stock and shareholders’ deficit
$
648,697
$
661,268
Sonida Senior Living,
Inc.
Condensed Consolidated
Statements of Cash Flows (Unaudited)
(in thousands)
Three Months Ended March
31,
2023
2022
Cash flows from operating
activities:
Net income (loss)
$
24,145
$
(16,678
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
9,881
9,578
Amortization of deferred loan costs
366
244
Gain on sale of assets, net
(251
)
—
Unrealized loss on interest rate cap,
net
572
—
(Gain) loss on extinguishment of debt
(36,339
)
641
Provision for bad debt
237
106
Non-cash stock-based compensation
expense
902
1,828
Other non-cash items
(1
)
(55
)
Changes in operating assets and
liabilities:
Accounts receivable, net
(48
)
(625
)
Property tax and insurance deposits
—
—
Prepaid expenses and other
1,159
1,633
Other assets, net
62
296
Accounts payable and accrued expense
1,828
1,700
Federal and state income taxes payable
260
251
Deferred income
438
365
Other current liabilities
38
26
Net cash provided by (used in)
operating activities
3,249
(690
)
Cash flows from investing
activities:
Acquisition of new communities
—
(12,342
)
Capital expenditures
(5,429
)
(5,582
)
Proceeds from sale of assets
343
—
Net cash used in investing
activities
(5,086
)
(17,924
)
Cash flows from financing
activities:
Proceeds from notes payable
—
80,000
Repayments of notes payable
(3,714
)
(90,579
)
Dividends paid to Series A preferred
stockholders
—
(718
)
Deferred loan costs paid
—
(2,137
)
Other financing costs
(45
)
—
Net cash used in financing
activities
(3,759
)
(13,434
)
Decrease in cash and cash equivalents and
restricted cash
(5,596
)
(32,048
)
Cash, cash equivalents, and restricted
cash at beginning of period
30,742
92,876
Cash, cash equivalents, and restricted
cash at end of period
$
25,146
$
60,828
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (UNAUDITED)
This earnings release contains the financial measures (1)
Same-Store Community Net Operating Income and Adjusted Community
Net Operating Income, (2) Same-Store Community Net Operating Income
Margin and Adjusted Community Net Operating Income Margin, (3)
Adjusted EBITDA, (4) Adjusted EBITDA excluding COVID-19 impact, (5)
Adjusted CFFO, (6) Revenue per Occupied Unit (RevPOR) and (7)
Revenue per Available Unit (RevPAR), all of 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 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, or net cash provided by (used in)
operating activities. 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 following reconciliations of these non-GAAP financial
measures from the most comparable financial measures determined in
accordance with GAAP.
Same-Store Community Net Operating Income and Same-Store
Community Net Operating Income Margin are non-GAAP performance
measures for the Company’s portfolio of 60 owned continuing
communities that the Company defines as net income (loss)
excluding: general and administrative expenses (inclusive of
stock-based compensation expense), interest income, interest
expense, other income/expense, provision for income taxes,
settlement fees and expenses, revenue and operating expenses from
the Company’s disposed properties; and further adjusted to exclude
income/expense associated with non-cash, non-operational,
transactional, 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 depreciation and
amortization expense, gain(loss) on extinguishment of debt,
gain(loss) on disposition of assets, long-lived asset impairment,
and loss on non-recurring settlements with third parties. The
Same-Store Community Net Operating Income Margin is calculated by
dividing Same-Store Community Net Operating Income by same-store
community resident revenue. Same-Store Adjusted Community Net
Operating Income and Same-Store Adjusted Community Net Operating
Income Margin are further adjusted to exclude the impact from
non-recurring state grant funds received.
The Company believes that presentation of Same-Store Community
Net Operating Income, Same-Store Community Net Operating Income
Margin, Adjusted Same-Store Community Net Operating Income, and
Adjusted Same-Store Community Net Operating Income Margin as
performance measures are useful to investors because (i) they are
one of the metrics used by the Company’s management to evaluate the
performance of our core portfolio of 60 owned continuing
communities, to review the Company’s comparable historic and
prospective core operating performance of the 60 owned continuing
communities, and to make day-to-day operating decisions; (ii) they
provide 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 the
Company’s financing and capital structure and other 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.
Same-Store Community Net Operating Income, Same-Store Net
Community Operating Income Margin, Adjusted Same-Store Community
Net Operating Income, and Adjusted Same-Store Community Net
Operating Income Margin have material limitations as a performance
measure, including: (i) excluded general and administrative
expenses are necessary to operate the Company and oversee its
communities; (ii) excluded interest is necessary to operate the
Company’s business under its current financing and capital
structure; (iii) excluded depreciation, amortization and impairment
charges may represent the wear and tear and/or reduction in value
of the Company’s communities, and other assets and may be
indicative of future needs for capital expenditures; and (iv) the
Company may incur income/expense similar to those for which
adjustments are made, such as gain(loss) on debt extinguishment,
gain(loss) on disposition of assets, loss on settlements, non-cash
stock-based compensation expense, and transaction and other costs,
and such income/expense may significantly affect the Company’s
operating results.
(in thousands)
Three Months Ended
March 31,
Quarter ended December
31,
2023
2022
2022
Same-store Community Net Operating
Income
Net income (loss)
$
24,145
$
(16,678
)
$
(16,574
)
General and administrative expenses
7,063
8,273
6,723
Depreciation and amortization expense
9,881
9,578
9,508
Long-lived asset impairment
—
—
1,588
Interest income
(194
)
(1
)
(188
)
Interest expense
8,867
7,603
9,297
(Gain) loss on extinguishment of debt
(36,339
)
641
—
Gain on sale of assets, net
(251
)
—
—
Other (income) expense
62
(137
)
(1,391
)
Provision for income taxes
69
254
—
Settlement fees and expenses, net (1)
404
231
294
Consolidated community net operating
income
13,707
9,764
9,257
Net operating (income) loss for non
same-store communities (2)
(236
)
424
1,463
Same-store community net operating
income
$
13,471
$
10,188
$
10,720
Resident revenue
$
56,606
$
50,834
$
53,388
Resident revenue for non same-store
communities (3)
(596
)
(337
)
(562
)
Same-store community resident
revenue
$
56,010
$
50,497
$
52,826
Same-store community net operating
income margin
24.1
%
20.2
%
20.3
%
COVID-19 relief funds (4)
2,037
689
—
Same-store adjusted community net
operating income
$
11,434
$
9,499
$
10,720
Same-store adjusted community net
operating income margin
21.2
%
19.1
%
20.3
%
(1) Settlement fees and expenses relate to
non-recurring settlements with third parties for contract
terminations, insurance claims, and related fees.
(2) Net operating income for non
same-store communities relate to operating income realized in the
quarters ended March 2023, March 2022, and December 2022,
respectively, related to the operations of the two Indiana senior
living communities acquired by the Company in February 2022.
(3) Resident revenue for non-same-store
communities relates to revenues earned from the operations for the
three months ended March 31, 2023 and 2022, and December 31, 2022,
respectively, related to the revenues earned in the operations of
the two Indiana senior living communities acquired by the Company
in February 2022.
(4) COVID-19 relief revenue are grants and
other funding received from third parties to aid in the COVID-19
response and includes state relief funds received.
ADJUSTED EBITDA AND ADJUSTED EBITDA
EXCLUDING COVID-19 IMPACT (UNAUDITED)
Adjusted EBITDA and Adjusted EBITDA excluding COVID-19 impact
are non-GAAP performance measures that the Company defines as net
income (loss) excluding: depreciation and amortization expense,
interest income, interest expense, other expense/income, provision
for income taxes; and further adjusted to exclude income/expense
associated with non-cash, non-operational, transactional, 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 stock-based compensation expense,
provision for bad debts, gain (loss) on extinguishment of debt,
gain on sale of assets, long-lived asset impairment, casualty
losses, and transaction and conversion costs.
The Company believes that presentation of Adjusted EBITDA and
Adjusted EBITDA excluding COVID-19 impact as performance measures
are useful to investors because they are one of the metrics that
the Company uses because 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 the Company’s financing and capital
structure and other 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.
Adjusted EBITDA and Adjusted EBITDA excluding COVID-19 impact
have material limitations as a performance measure, including: (i)
excluded interest is necessary to operate the Company’s business
under its current financing and capital structure; (ii) excluded
depreciation, amortization and impairment charges may represent the
wear and tear and/or reduction in value of the Company’s
communities and other assets and may be indicative of future needs
for capital expenditures; and (iii) the Company may incur
income/expense similar to those for which adjustments are made,
such as bad debts, gain(loss) on sale of assets, or gain(loss) on
debt extinguishment, non-cash stock-based compensation expense and
transaction and other costs, and such income/expense may
significantly affect the Company’s operating results.
(In thousands)
Three Months Ended
March 31,
Quarter Ended
December 31,
2023
2022
2022
Adjusted EBITDA
Net income (loss)
$
24,145
$
(16,678
)
$
(16,574
)
Depreciation and amortization expense
9,881
9,578
9,508
Stock-based compensation expense
902
1,828
848
Provision for bad debt
238
106
251
Interest income
(194
)
(1
)
(188
)
Interest expense
8,867
7,603
9,297
Long-lived asset impairment
—
—
1,588
(Gain) loss on extinguishment of debt,
net
(36,339
)
641
—
Gain on sale of assets, net
(251
)
—
—
Other (income) expense, net
62
(137
)
(1,391
)
Provision for income taxes
69
254
—
Casualty losses (1)
—
625
1,167
Transaction and conversion costs (2)
414
(92
)
103
Adjusted EBITDA
$
7,794
$
3,727
$
4,609
COVID-19 expenses (3)
33
213
56
Adjusted EBITDA excluding COVID-19
impact
$
7,827
$
3,940
$
4,665
(1) Casualty losses relate to
non-recurring insured claims for unexpected events.
(2) Transaction and conversion costs
relate to legal and professional fees incurred for transactions,
restructure projects, or related projects.
(3) COVID-19 expenses are expenses for
supplies and personal protective equipment, testing of the
Company’s residents and employees, labor and specialized
disinfecting, and cleaning services.
ADJUSTED CFFO (UNAUDITED)
Adjusted Cash Flows From Operations (CFFO) is a non-GAAP
liquidity measure that the Company defines as net cash provided by
(used in) operating activities adjusted for COVID-19 expenses,
transaction and conversion costs, other non-cash items, and changes
in operating assets and liabilities.
The Company believes that presentation of Adjusted CFFO as a
liquidity measure is useful to investors because it is one of the
metrics used by the Company’s management for budgeting and other
planning purposes, to review the Company’s historic and prospective
sources of operating liquidity, and to review the Company’s ability
to service its outstanding indebtedness and make capital
expenditures.
Adjusted CFFO has material limitations as a liquidity measure,
including: (i) it does not represent cash available for
discretionary expenditures since certain non-discretionary
expenditures, including mandatory debt principal payments, are not
reflected in this measure; and (ii) the cash portion of
non-recurring charges generally represent charges/gains that may
significantly affect the Company’s liquidity limits the usefulness
of the measure for short-term comparisons.
A reconciliation of Net cash provided by (used in) operating
activities to Adjusted CFFO is as follows:
Quarters ended
March 31,
Quarter ended December
31,
(in thousands)
2023
2022
2022
Net cash provided by (used in)
operating activities (1)
$
3,249
$
(690
)
$
(5,481
)
COVID-19 expenses (2)
33
213
56
Transaction and conversion costs (3)
414
(92
)
103
Other non-cash items (4)
1
55
—
Changes in operating assets and
liabilities
(3,737
)
(3,646
)
2,262
Adjusted CFFO
$
(40
)
$
(4,160
)
$
(3,060
)
(1) Includes COVID-19 relief revenue and
grants received from state relief funds of $2.0 million and $0.7
million for Q1 2023 and Q1 2022, respectively.
(2) COVID-19 expenses are expenses for
supplies and personal protective equipment, testing of the
Company’s residents and employees, labor and specialized
disinfecting and cleaning services.
(3) Transaction and conversion costs
relate to legal and professional fees incurred for transactions,
restructure projects or related projects.
(4) Other non-cash items include operating
lease expense adjustments.
SUPPLEMENTAL
INFORMATION
First Quarter
(Dollars in thousands)
2023
2022
Increase (decrease)
Fourth Quarter 2022
Sequential increase
(decrease)
Selected Operating Results
I. Same-store community portfolio
(1)
Number of communities
60
60
—
60
—
Unit capacity
5,592
5,616
(24
)
5,619
(27
)
Weighted average occupancy (2)
84.2
%
82.3
%
1.9
%
84.2
%
—
%
Average monthly rent
$
3,966
$
3,644
$
322
$
3,723
$
243
Same-store community net operating
income
$
13,471
$
10,188
$
3,283
$
10,720
$
2,751
Same-store community net operating income
margin (4)
24.1
%
20.2
%
3.9
%
20.3
%
3.8
%
Same-store community net operating income,
net of general and administrative expenses (3)
$
7,310
$
3,743
$
3,567
$
4,627
$
2,683
Same-store community net operating income
margin, net of general and administrative expenses (3)
13.1
%
7.4
%
5.7
%
8.8
%
4.3
%
II. Consolidated Debt
Information
(Excludes insurance premium
financing)
Total variable rate mortgage debt (5)
$
137,453
$
130,127
N/A
$
137,652
N/A
Total fixed rate debt
$
500,721
$
543,593
N/A
$
535,303
N/A
(1) Excludes two Indiana senior living
communities acquired by the Company in February 2022.
(2) Weighted average occupancy represents
actual days occupied divided by total number of available days
during the quarter.
(3) General and administrative expenses
exclude stock-based compensation expense in order to remove the
fluctuation in fair value due to market volatility.
(4) Includes $2.0 million and $0.7 million
of state grant revenue received in Q1 2023 and Q1 2022,
respectively. Excluding the grant revenue, Q1 2023 same-store
community NOI margin was 21.2%.
(5) As of March 31, 2023, the entire
balance of our outstanding variable-rate debt obligations were
covered by interest rate cap agreements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230511005264/en/
Investor Contact: Kevin J. Detz, Chief Financial Officer, at
972-308-8343 Press Contact: media@sonidaliving.com
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