On this page of StockholderLetter.com we present the 4/29/2024 shareholder letter from Brookdale Senior Living Inc. — ticker symbol BKD. Reading current and past BKD letters to shareholders can bring important insights into the investment thesis.
2023 Annual Report brookdale.com
Our Mission Enriching the lives of those we serve with compassion, respect, excellence and integrity Our Vision To be the nation s rst choice in senior living Our Cornerstones More than a job, a passion Have fun and celebrate life every day. Doing the right thing takes courage Provide meaningful rewards for residents, associates and shareholders. We succeed through partnership Work together as one team. Built on a foundation of trust Listen, understand, partner and solve.
FELLOW SHAREHOLDERS, What a difference a year makes! Re ecting on the year that has just passed, I am beyond grateful for the teamwork, dedication, focus and determination of Brookdale s everyday heroes. Their unwavering commitment supported signi cant improvements in our operating and nancial performance while maintaining a steadfast dedication to our overarching priority the health and well-being of our residents and associates. Their simultaneous focus on mission and margin is bringing our vision of a bright Brookdale future into a reality. BROOKDALE SENIOR LIVING: A COMPANY WHOSE MISSION IS ESSENTIAL Our vision is for Brookdale to be the nation s rst choice in senior living. Brookdale s mission is to enrich the lives of those we serve with compassion, respect, excellence and integrity. These are not just words on a page. They represent what unites all Brookdale associates. We are a company of people serving people, and the work we do is essential and life-changing. Across the nation, people are considering the implications of an aging baby boomer population. We expect approximately 1 million new seniors to age into our target market every year through 2036.1 Aging presents new challenges for seniors, and they, along with their families, often struggle with their evolving needs. In fact, 70% of adults who are 65 or older will have a serious need for long-term support and services.2 For seniors who choose to age in place at home, this puts tremendous strain on families and loved ones, as 80% of long-term care at home is provided by unpaid caregivers.3 Seniors also struggle with isolation. In a recent survey, 60% of Medicare Advantage members reported being lonely or severely lonely. 4 Brookdale excels at helping seniors manage the challenges of aging in a home-like setting, surrounded by a community of friends. Additionally, given the rising prevalence of seniors with chronic medical conditions and our robust mix of assisted living and memory care offerings, Brookdale is exceptionally well-positioned to meet the expanding needs of the senior population. 1
The work that we do is critically important for both the seniors we serve and their families. Each day, our associates demonstrate their passion for our mission and their dedication to enriching the lives of our residents. We introduced several operational initiatives throughout 2023 that supported our incredible results and established a stronger foundation for future opportunities. Our initiatives were designed to increase the number of seniors we serve while ensuring the best pro table rate for our units; to earn resident and family trust and satisfaction; and to attract, engage, develop and retain the best associates. We introduced new tools and improved training for our community and eld leaders to reinforce alignment across our core priorities and support operational excellence. Recognizing that our associates are at the heart of our mission, we also introduced new processes and expanded programs that resulted in outcomes like improved retention and turnover, and an increase in the number of shifts staffed with full- and part-time Brookdale associates rather than contract staff. PROUD OF OUR ACCOMPLISHMENTS AND EXCITED FOR OUR FUTURE As we look toward the future, it is helpful to review some of our notable prior-year accomplishments. Our success in 2023 was demonstrated through several key operational enhancements, remarkable nancial improvement, and our disciplined approach to portfolio and balance sheet management. Operational Enhancements: Strengthening Brookdale s Foundation I am so pleased with the community-level success we have already seen from these operational enhancements, including an improved total company engagement score as highlighted in the meaningful survey insights we received from our residents and their families in 2023. We are grateful the vast majority of our residents responded overwhelmingly that they would recommend or highly recommend their community to friends and family, and we remain committed to earning and retaining resident and family trust and satisfaction. 2023 was a year lled with many accomplishments, and I am immensely proud of our executive and community leadership teams. Our leaders simultaneously grew the top line and appropriately managed our expenses to ensure that our product remains affordable for as many seniors as possible, while meeting residents needs, providing high-quality care and personalized service, and remaining in compliance with applicable regulatory requirements. 2
Financial Performance: Driving Remarkable Results and Building Momentum Portfolio and Balance Sheet Management: Supporting Sustained Long-Term Success Through an intentional balance of occupancy and rate, we delivered year-over-year same community RevPAR growth of 11.4%. This growth rate was stronger than any year in our recorded history and, when combined with appropriate expense management, supported same community adjusted operating income growth5 of more than 43%. As a result of our focus on quality and pro table occupancy increases, our 2023 RevPAR exceeded pre-pandemic levels, and we have remaining opportunities for continued meaningful growth as we continue to increase our census. We remained thoughtful in the management of our capital structure, real estate portfolio and liquidity position. In 2023, we negotiated favorable lease terms with two longstanding landlords and strategically disposed of certain assets that no longer aligned with our objectives, including our last entry fee community and our remaining equity interest in our home health and hospice venture. These actions not only simplify our business operations but also allow us to optimize our business for the powerful organic growth opportunities we see ahead. The strength of our community performance was re ected in our overall nancial results. Adjusted EBITDA6 increased 39% over the prior year, while Adjusted Free Cash Flow6 improved 76%! This remarkable growth was despite headwinds from signi cantly higher pandemic-related grant income in the prior year and the Adjusted EBITDA impact of two changes in lease classi cation. Our incredible 2023 performance is a result of our intentional, experience-driven plans; the successful execution of our sales, marketing and operational strategies; and the dedication to our mission by our approximately 36,000 associates. We were pleased to see our success and momentum help Brookdale achieve a 113% improvement in our stock price in 2023. Additionally, our lease transactions provided us with landlord-funded capex and secured favorable purchase options on select communities that were previously not available to us, enhancing future cash ow and supporting future opportunities to improve our owned-to-leased portfolio mix. We are very pleased with each of these transactions. Lastly, by the end of 2023, we successfully re nanced all our 2024 debt maturities, signi cantly extending our maturity runway. Our next debt maturity without extension options is not until September 2025. During the pandemic and recovery period, we have effectively managed our balance sheet and liquidity, and our 2023 outcomes further demonstrate our commitment to prudent nancial management.
 • shareholder letter icon 4/29/2024 Letter Continued (Full PDF)
 • stockholder letter icon 5/1/2023 BKD Stockholder Letter
 • stockholder letter icon 5/14/2025 BKD Stockholder Letter
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BKD 4/29/2024 Shareholder/Stockholder Letter Transcript:

2023
Annual
Report
brookdale.com

Our Mission
Enriching the lives of those we serve
with compassion, respect, excellence and integrity
Our Vision
To be the nation   s    rst choice in senior living
Our Cornerstones
More than a job, a passion
Have fun and celebrate life every day.
Doing the right thing takes courage
Provide meaningful rewards for residents,
associates and shareholders.
We succeed through partnership
Work together as one team.
Built on a foundation of trust
Listen, understand, partner and solve.

FELLOW SHAREHOLDERS,
What a difference a year makes! Re   ecting on the
year that has just passed, I am beyond grateful for
the teamwork, dedication, focus and determination
of Brookdale   s everyday heroes. Their unwavering
commitment supported signi   cant improvements
in our operating and    nancial performance while
maintaining a steadfast dedication to our
overarching priority     the health and well-being of
our residents and associates. Their simultaneous
focus on mission and margin is bringing our vision
of a bright Brookdale future into a reality.
BROOKDALE SENIOR LIVING:
A COMPANY WHOSE MISSION IS ESSENTIAL
Our vision is for Brookdale to be the nation   s    rst
choice in senior living. Brookdale   s mission is to
enrich the lives of those we serve with
compassion, respect, excellence and integrity.
These are not just words on a page. They
represent what unites all Brookdale associates.
We are a company of people serving people, and
the work we do is essential and life-changing.
Across the nation, people are considering the
implications of an aging baby boomer
population. We expect approximately 1 million
new seniors to age into our target market every
year through 2036.1 Aging presents new
challenges for seniors, and they, along with their
families, often struggle with their evolving needs.
In fact, 70% of adults who are 65 or older will
have a serious need for long-term support and
services.2 For seniors who choose to age in place
at home, this puts tremendous strain on families
and loved ones, as 80% of long-term care at
home is provided by unpaid caregivers.3 Seniors
also struggle with isolation. In a recent survey,
60% of Medicare Advantage members reported
being    lonely    or    severely lonely.   4
Brookdale excels at helping seniors manage the
challenges of aging in a home-like setting,
surrounded by a community of friends.
Additionally, given the rising prevalence of seniors
with chronic medical conditions and our robust mix
of assisted living and memory care offerings,
Brookdale is exceptionally well-positioned to meet
the expanding needs of the senior population.
1

The work that we do is critically important for
both the seniors we serve and their families. Each
day, our associates demonstrate their passion for
our mission and their dedication to enriching the
lives of our residents.
We introduced several operational initiatives
throughout 2023 that supported our incredible
results and established a stronger foundation for
future opportunities. Our initiatives were designed
to increase the number of seniors we serve while
ensuring the best pro   table rate for our units; to
earn resident and family trust and satisfaction; and
to attract, engage, develop and retain the best
associates. We introduced new tools and
improved training for our community and    eld
leaders to reinforce alignment across our core
priorities and support operational excellence.
Recognizing that our associates are at the heart of
our mission, we also introduced new processes and
expanded programs that resulted in outcomes like
improved retention and turnover, and an increase in
the number of shifts staffed with full- and part-time
Brookdale associates rather than contract staff.
PROUD OF OUR
ACCOMPLISHMENTS
AND EXCITED FOR OUR FUTURE
As we look toward the future, it is helpful to
review some of our notable prior-year
accomplishments. Our success in 2023 was
demonstrated through several key operational
enhancements, remarkable    nancial
improvement, and our disciplined approach to
portfolio and balance sheet management.
Operational Enhancements:
Strengthening Brookdale   s Foundation
I am so pleased with the community-level success
we have already seen from these operational
enhancements, including an improved total
company engagement score as highlighted in the
meaningful survey insights we received from our
residents and their families in 2023. We are grateful
the vast majority of our residents responded
overwhelmingly that they would recommend or
highly recommend their community to friends and
family, and we remain committed to earning and
retaining resident and family trust and satisfaction.
2023 was a year    lled with many
accomplishments, and I am immensely proud of
our executive and community leadership teams.
Our leaders simultaneously grew the top line and
appropriately managed our expenses to ensure
that our product remains affordable for as many
seniors as possible, while meeting residents   
needs, providing high-quality care and
personalized service, and remaining in compliance
with applicable regulatory requirements.
2

Financial Performance: Driving
Remarkable Results and Building Momentum
Portfolio and Balance Sheet Management:
Supporting Sustained Long-Term Success
Through an intentional balance of occupancy
and rate, we delivered year-over-year same
community RevPAR growth of 11.4%. This
growth rate was stronger than any year in our
recorded history and, when combined with
appropriate expense management, supported
same community adjusted operating income
growth5 of more than 43%. As a result of our
focus on quality and pro   table occupancy
increases, our 2023 RevPAR exceeded
pre-pandemic levels, and we have remaining
opportunities for continued meaningful growth
as we continue to increase our census.
We remained thoughtful in the management of
our capital structure, real estate portfolio and
liquidity position. In 2023, we negotiated
favorable lease terms with two longstanding
landlords and strategically disposed of certain
assets that no longer aligned with our
objectives, including our last entry fee
community and our remaining equity interest in
our home health and hospice venture. These
actions not only simplify our business
operations but also allow us to optimize our
business for the powerful organic growth
opportunities we see ahead.
The strength of our community performance was
re   ected in our overall    nancial results. Adjusted
EBITDA6 increased 39% over the prior year, while
Adjusted Free Cash Flow6 improved 76%! This
remarkable growth was despite headwinds from
signi   cantly higher pandemic-related grant
income in the prior year and the Adjusted EBITDA
impact of two changes in lease classi   cation.
Our incredible 2023 performance is a result of our
intentional, experience-driven plans; the
successful execution of our sales, marketing and
operational strategies; and the dedication to our
mission by our approximately 36,000 associates.
We were pleased to see our success and
momentum help Brookdale achieve a 113%
improvement in our stock price in 2023.
Additionally, our lease transactions provided us
with landlord-funded capex and secured
favorable purchase options on select
communities that were previously not available
to us, enhancing future cash    ow and
supporting future opportunities to improve our
owned-to-leased portfolio mix. We are very
pleased with each of these transactions.
Lastly, by the end of 2023, we successfully
re   nanced all our 2024 debt maturities,
signi   cantly extending our maturity runway.
Our next debt maturity without extension
options is not until September 2025.
During the pandemic and recovery period, we have
effectively managed our balance sheet and liquidity,
and our 2023 outcomes further demonstrate our
commitment to prudent    nancial management.



shareholder letter icon 4/29/2024 Letter Continued (Full PDF)
 

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