Brookdale Senior Living Inc.

followed by one on your telephone keypad. I would now like to hand this conference call over to our host, Jessica Hazel, Head of Investor Relations. Please go ahead.

Thank you and good morning. I'd like to welcome you to the second quarter 2024 earnings call for Brookdale Senior Living. Joining us today are Cindy Beyer, our President and Chief Executive Officer, and Don Cusseau, 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, and 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 of 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 brickdaleinvestors.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 second quarter 2024 earnings call. I am proud to speak to Brookdale's accomplishments in our financial results, in our community operations, and in our strategic priorities. This morning, I will provide a few highlights for each of these areas and then offer additional insights on a couple of key topics. Beginning with our financials. Second quarter adjusted EBITDA grew a meaningful 20% over the prior year quarter and adjusted free cash flow improved 26%. Taking this a step further through consistent occupancy growth continued report increases and quarter after quarter of operating margin expansion, we have nearly doubled our adjusted EBITDA in just two years from the second quarter of 2022. Brookdale's progress towards full recovery from the impact of the pandemic has been powerful. This marked our 11th consecutive quarter of year-over-year same-community adjusted operating income growth while supporting resident satisfaction, meeting our resident needs, providing high-quality care and personalized service, and remaining in compliance with applicable regulations. We are incredibly proud of this as we continue to strive towards our full potential. I believe these results reflect the further strengthening of our Community operations and the successful execution of our strategic priorities. Specifically, we are showing tremendous progress in key areas that support the ongoing and future success of our communities. In the second quarter we achieved our fourth consecutive quarter of trailing 12 month key three leadership retention improvement. and our fifth consecutive quarter of hourly associate turnover improvement compared to the prior year periods. This is very impactful because as retention and turnover improve, our associates become naturally more proficient in their roles, which we believe translates into improved operational performance, stronger relationships with our residents and other associates, increased resident satisfaction, and ultimately better financial results. At our core, We are a business of people serving people. And throughout our organization, we remain focused on cultivating a culture that promotes servant leadership and attracts the best associates who also believe that serving our residents is a privilege and take pride in providing high quality personalized services. Another important way that we are positively impacting our associates, residents, and their families is through our Brookdale Health Plus program. As a reminder, Brookdale Health Plus is an innovative care delivery model that is designed to help improve residents' quality of life through evidence-based preventive care coordination. With plans to grow our Health Plus communities from 49 at the start of 2024 to 130 by year end, we have been diligently introducing new medical record technology, implementing new community processes, and successfully training our associates for the HealthPlus platform. This month, approximately 50 of the planned communities will launch HealthPlus, and the excitement among associates and residents is palpable. We are so proud to introduce impactful programs like HealthPlus that enhance our residents' lives, enhance associate satisfaction, and solidify our position as an industry leader. As I just shared we've made incredible progress in our recovery, since the depths of the pandemic, at the same time, I know we can do better. I want to take a moment to discuss our recent occupancy results, as well as our continued thoughtful approach to long term growth. While we are pleased that our occupancy performance in the second quarter exceeded our traditional pre pandemic performance. Our second quarter same community year-over-year occupancy growth wasn't as strong as we experienced in the first quarter of the year. During the second quarter, our move-ins associated with leads from some paid third-party referral sources were relatively soft compared to our historical experience. Once we identified this trend, we took action, including working closely with these critical partners to improve performance, launching incremental sales initiatives, and increasing our planned marketing spend. We believe that we have taken the right actions and have begun to see the benefits from our response and incremental investments. Importantly, our move-ins for the second quarter continued to exceed our pre-pandemic results and we saw improvement within the quarter in response to our initiatives. As a result, we remain incredibly optimistic about our future growth potential. We believe that delivering move-ins that are above pre-pandemic levels represents a strengthening demand from the earliest wave of the baby boomer demographic. While 30% of our move-ins are individuals who are below the age of 80, the average age of new residents entering our communities is 84. Given this, it's easy to visualize the opportunity for many years of occupancy growth as we capture the unprecedented demand for our services as this population ages into our average new resident age. Clearly, we currently see the benefits from higher demand and understanding the coming demographic wave, we are being extraordinarily disciplined to the fact that as occupancy grows, so must our cash flow. Following the multi-year impact of the pandemic to not only our census, but also our cost structure, The targeted efforts I have consistently highlighted over the last 18 months are aimed at delivering an appropriate return for the services we are providing and are purposely being established before the expected rapid surge in demand. Accordingly, we remain dedicated to ensuring that our pricing actions at the company level, the community level, and with each resident who moves into our communities are appropriate for our cost structure. and that we are focused on being good stewards of the revenue we receive from our residents by managing expenses prudently and appropriately so that we can demonstrate a strong value proposition to our residents, a compelling career opportunity to our associates, and a solid return for our shareholders. As is evident in our results, this dedication to disciplined growth is producing meaningful recovery. If you were to analyze our 2024 first half senior housing results, the operating income, we are delivering per available unit would be 11% higher than our 2019 full year level. that's incredible it shows that our thoughtful approach to the balance between occupancy growth and profitability is working and is sustainable. We believe this places us profoundly ahead of our peers in terms of a meaningful organic growth opportunity as we fully recover occupancy and even exceed our pre-pandemic occupancy levels. With continued sustainable occupancy increases, we are setting ourselves up to deliver powerful operating income growth as outlined in our investor presentation. That, in turn, will continue to support significant adjusted EBITDA and cash flow growth. annualized leverage reductions and value creation for our shareholders, future residents and associates for many years to come. This gives me tremendous optimism for our future. The senior living industry is experiencing a positive and growing gap between supply and demand. And this imbalance has more potential for occupancy increases than we have ever seen. Additionally, Brookdale's unique company strengths and industry-leading programs will continue to differentiate us as a leader within our highly fragmented industry. On the supply side, senior housing inventory growth has stalled at near record lows, and industry construction starts have fallen to levels not seen since the impact of the Great Recession. In the second quarter, less than 2% of our communities were exposed to new construction within a 20-minute drive time. Given elevated interest rates, high labor and supply costs, and lengthy pre development and construction timelines, our expectation is that we will have constrained new supply for many years to come. At the same time that there is constrained supply, we are entering a period of unprecedented target demographic growth on the demand side. The US population is aging at the fastest rate in more than a century, providing a historically unparalleled need for senior living. More than 1 million new seniors are expected to enter our target market every year through 2036, with the first baby boomers turning 80 next year. Along with substantial growth in the aging population, there will be a growing need for the services that we provide. Aging in place is becoming increasingly more difficult with the US Census Bureau reporting an estimated 28% of older adults in the United States living alone and childless. Further, the CDC reports that 66% of residential care community residents have at least two chronic health conditions. Leading industry studies have shown that when aging adults choose a senior living community and receive services to meet their needs, they are less frail and vulnerable. Brookdale is uniquely positioned to capitalize on these macro dynamics. As the nation's largest senior housing operator in a highly fragmented industry where our scale and expertise sets us apart, our communities are well established within their markets. Additionally, our higher mix of needs-based product offerings, primarily assisted living and memory care, distinguish us from the industry, which is skewed towards lower acuity products. This is so important, given the rising difficulties faced by today's seniors and Brookdale's ability to serve these diverse needs with our strong clinical expertise, personalized services and resident engagement programs, and innovative healthcare models like Brookdale Health Plus. As I look ahead, I am confident in our long-term growth outlook supported by muted inventory supply, strong demand fundamentals, and our unique Brookdale differentiators. Today, I'm pleased to share that we've beneficially extended our 24 community triple net lease with Omega Healthcare Investors until 2037. As part of this amended lease, Omega has agreed to make available a pool of up to $80 million of new landlord-funded CapEx funding over the life of the lease. $30 million of this pool will be available prior to July 2028 on a rent-free basis. The terms of the amended lease will meaningfully benefit both our cash flow and our liquidity over the life of the lease, and most directly in the near term. We value our relationship with Omega and are grateful for their willingness to work together to achieve such a mutually beneficial positive outcome on a high-quality portfolio of assets. which are well positioned largely in our core markets. In summary, as I think about the supply and demand dynamics and what our proven ability to deliver meaningful growth will mean for our current year, the next three to five years, and even further, I am profoundly optimistic for Brookdale's future and the lasting impact we can achieve for our current and future residents and associates. I believe that remaining disciplined in our commitment to profitable occupancy growth remains the best path forward, and that by being thoughtful in our approach to growth, we are continuing to position Brookdale to deliver incredible results, not just over the near term, but for many years to come. I'll now turn the call over to Dawn.