Brookdale Senior Living Inc.

for question and answer at the end. If you'd like to ask a question, please press start followed by one on your telephone keypad. I would now like to turn this conference call over to our host from Brookdale's Investor Relations team, Jessica Hazel.

Thank you and good morning. I'd like to welcome you to the fourth quarter 2023 earnings call for Brookdale Senior Living. Joining us today are Cindy Byer, our President and Chief Executive Officer, and Don Cousseau, our Executive Vice President and Chief Financial Officer. All statements today, which are not historical facts, may be deemed to be forward-looking statements within the meaning of the federal securities laws. These statements are made as of today's date, and we expressly disclaim any obligation to update these statements in the future. Actual results and performance may differ materially from forward-looking statements. Certain of the factors that could cause actual results to differ are detailed in the earnings release we issued yesterday, as well as in the reports we file with the SEC from time to time, including the risk factors contained in our annual report on Form 10-K and quarterly reports on Form 10-Q. I direct you to the release for the full Safe Harbor Statement. Also, please note that during this call, we will present non-GAAP financial measures. For reconciliations of each non-GAAP measure from the most comparable GAAP measure, I direct you to the release and supplemental information, which may be found at BrookdaleInvestors.com and was furnished on an 8K yesterday. Now, I will turn the call over to Cindy.

Thank you, Jessica. Good morning to all of our shareholders, analysts, and other call participants. Welcome to our fourth quarter and 2023 year-end earnings call. We started 2023 with a clear vision, an intense focus, and a commitment to deliver positive results. This commitment extended beyond achieving positive operational and financial outcomes. It also encompassed fulfilling our overarching priority which is the health and wellbeing of our residents and associates. We dedicated ourselves to ensuring that we had created the right plans and initiatives for the year, had clearly communicated why these were the most important priorities, and had the right people in place to effectively meet our objectives. But our efforts didn't stop with our plans. Our leaders focused intensely on achieving our objectives, worked together as a team, and adjusted our tactics as new information became available. For this, I'm extremely grateful to our team for their leadership and their efforts, and I'm proud to say that the result was an incredibly strong year, marked by more residents who chose to be part of a Brookdale community, which led to greater occupancy, significant improvements in our operations, and robust financial growth. Although complete recovery is still ahead of us, with each quarter of 2023, we continue to build a solid foundation that paves the way for sustained growth. For the fourth quarter, we are pleased to report another quarter in which both RevPAR and adjusted EBITDA achieved or exceeded our previously provided guidance. Additionally, by remaining focused on our key strategic priorities, we delivered a number of positive outcomes throughout our community operations, our real estate portfolio, and our financials. Same community REVPAR increased approximately 10% over last year's fourth quarter on positive occupancy and REVPAR growth. By pursuing REVPAR through a balance of occupancy and rate, we delivered favorable top-line results. In the fourth quarter, we maintained the positive margin improvements we have achieved throughout 2023 while ensuring that we continue to meet our residents' needs, provide high-quality care and personalized service, and remain in compliance with applicable regulations. Through REVPAR growth and appropriate expense management, same community adjusted operating income grew 37% over the prior year fourth quarter. In addition to these financial accomplishments, we once again achieved meaningful progress towards our leadership retention and associate turnover goals. This is critically important because our business is all about people serving people. Year-over-year retention rates for our key three community leadership roles increased 190 basis points and full-time hourly associate turnover improved by 910 basis points from the prior year fourth quarter. I am incredibly proud of the progress we are making in this critical area of the business. Lastly, as reported in December, we completed two financing transactions and sold our remaining equity interest in our home health and hospice venture. Dawn will share the specifics, but I want to recognize our Brookdale team for the successful completion of these transactions, particularly our treasurer, George Hicks, and to share my gratitude toward each of the counterparties. As we close out 2023, I would like to highlight some notable accomplishments that significantly contributed to our remarkable results. This year was pivotal in refining our operations to favorably impact our performance as we further recover from the pandemic while continuing to support consistent and high-quality resident experiences. We began the year with a strategic rebuild of our senior leadership team. These changes, while incredibly difficult, were central for matching our organizational structure with our business priorities and streamlining decision-making. We then evolved the executive director role to emphasize a stronger growth mindset, combining both mission and margin, and underscoring strong business acumen for the incumbents and future community leaders, all the while maintaining our focus on driving resident satisfaction and providing high quality care and services. This led to some turnover in 2023, but it was a necessary step to foster a culture of excellence and continue effectively delivering our mission. And by year end, these changes had started yielding noticeable positive improvements at the community level. We further supported a growth mindset by introducing new training for our community and field leaders to provide alignment across our core priorities and support operational excellence that would enhance not only the business, but importantly, our overall resident and family satisfaction. To attract, engage, develop, and retain the best associates, we piloted and launched several new processes and programs that resulted in outcomes like the improved retention and turnover that I spoke to. By hiring associates who are dedicated to our mission, extending the length of employment of our Brookdale community leaders and hourly associates, and increasing the number of shifts staffed with full and part-time Brookdale associates rather than contract labor, we are building stronger teams that will have a favorable impact for years to come. I am so pleased with the community level successes we have already seen from these improvements. We remain committed to continuous improvement and are confident in our plans for further progress. Our annual resident and family survey, which we completed in the fourth quarter and which received roughly 45,000 responses once again provided invaluable insights. Resident and family satisfaction has consistently been a key priority at Brookdale. This priority became even more critical in 2023 given the rate increase we implemented at the beginning of the year. I'm proud to report that our total company engagement score improved by a significant amount with positive increases across all of our product lines. Additionally, we are grateful that the vast majority of our residents responded overwhelmingly that they would recommend or highly recommend their community to friends and family. These positive results reflect the great work of our dedicated associates, and we will build upon this to ultimately achieve our desired overall satisfaction goals for Brookdale residents and their families. We are always extremely appreciative of the meaningful insights received from regular resident and family engagement and will continue to focus on this critical area. Another accomplishment in 2023 was the expansion of the Brookdale Health Plus program, which has demonstrated remarkable success in improving resident health outcomes through its innovative care delivery model. Independent evaluations confirmed that residents in our HealthPlus communities experience fewer urgent care visits and hospitalizations, underscoring the effectiveness of our proactive and preventive care measures. Planning for our next Brookdale HealthPlus expansion is well underway, and we expect to have nearly 130 communities in this industry-leading clinical program by the end of 2024. The continued expansion of Brookdale Health Plus not only creates an integrated benefit for our residents, but also it creates value for many stakeholders and further establishes Brookdale's position as a market leader and industry innovator. Also in 2023, we continue to proactively manage our leased and owned portfolios to further improve our long-term financial position. This included negotiating favorable terms with two long-standing landlords, as well as making strategic decisions about our portfolio, such as disposing of certain leased and owned properties that were no longer right for Brookdale. Through these transactions, we not only obtained additional landlord-funded CapEx, but also secured favorable purchase options on certain communities that were previously not available to us. This will support future cash flows and enable us to further improve our own to lease portfolio mix in the years to come. Lastly, as a result of our strong 2023 adjusted EBITDA growth, our annualized leverage decreased from 19.8 times at the end of 2022 to 11.1 times at the end of 2023. Throughout the pandemic and subsequent recovery period, we have successfully executed plans to manage our capital structure and maintain appropriate liquidity. Our fourth quarter transactions are the most recent examples of this. Combining a passion for successfully executing our mission while focusing on delivering an appropriate margin is critical for our success. While our overarching priority remains the health and wellbeing of our residents and associates, Cash flow and liquidity will continue to be our top financial priorities. In summary, 2023 was a year of strong and steadfast execution of our strategic goals, solid operational improvements, and meaningful growth towards full recovery. In a moment, Dawn will share with you the measurable results of these efforts, which are significant, while I'll now turn to our 2024 plans. As we look to 2024, our expectations are simple. Stay the course. We have worked incredibly hard to lay a strong foundation for future growth, and we intend to build upon the successful execution of our strategy. Our commitment is to continue to provide growth opportunities and rewards to our people while reinforcing the favorable initiatives and processes that we introduced in 2023. Brookdale remains a learning organization. Accordingly, we'll take our learnings from 2023 and we will address and improve areas that require ongoing refinement in our continuous pursuit to be the nation's first choice in senior living. We made remarkable progress last year, but driving meaningful change through an organization and reaping the full benefit of that change takes time. We take pride in our accomplishments And we also see them as stepping stones towards our full recovery and achieving our ultimate potential. As such, our teams throughout the organization are incredibly committed to executing against our key strategic priorities that guided our success and growth in 2023. These key strategic priorities for 2024 will remain. First, get every available room and service at the best profitable rate. Second, attract, engage, develop, and retain the best associates. And third, earn resident and family trust and satisfaction by providing valued, high-quality care and personalized service. Through consistent execution of these, I believe we will grow occupancy in REVPAR, deliver meaningful 2024 adjusted EBITDA growth and adjusted free cash flow improvement, and support further shareholder value creation. all while continuing to grow resident satisfaction. I look forward to providing you with positive quarterly updates on our progress throughout 2024. I'll now turn the call over to Dawn.