Q4 2025 Brookdale Senior Living Inc Earnings Call

February 19, 2026

Speaker #1: Good morning. My name is Jordan, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Brookdale Senior Living 4th Quarter 2025 earnings call.

Operator: Good morning. My name is Jordan, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Brookdale Senior Living Fourth Quarter 2025 Earnings Call. Today's conference call is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question-and-answer session. At this time, I would now like to turn the conference over to Mike Grant, Brookdale's Vice President of Investor Relations. Please go ahead.

Speaker #1: Today's conference call is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

Speaker #1: At this time, I would now like to turn the conference over to Mike Grant, Brookdale's Vice President of Investor Relations. Please go ahead.

Speaker #2: Thank you, Operator. Good morning, everyone, and welcome to Brookdale Senior Living's 4th Quarter 2025 earnings call. Participating on today's call are Nick Stangle, Brookdale's Chief Executive Officer, Dawn Kussow, our Executive Vice President and Chief Financial Officer, Mary Sue Patchett, our Chief Operating Officer, and Chad White, our Executive Vice President, General Counsel, and Secretary.

Mike Grant: Thank you, operator. Good morning, everyone, and welcome to Brookdale Senior Living's Fourth Quarter 2025 Earnings Call. Participating on today's call are Nick Stengle, Brookdale's Chief Executive Officer; Dawn Kussow, our Executive Vice President and Chief Financial Officer; Mary Sue Patchett, our Chief Operating Officer; and Chad White, our Executive Vice President, General Counsel, and Secretary. On today's call, we will discuss fourth quarter and full year 2025 results, as well as our financial guidance for the 2026 year. We'll also provide other general business updates. During today's call, our remarks, including our answers to your questions, will include forward-looking statements pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act. 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.

Speaker #2: On today's call, we will discuss 4th Quarter and full-year 2025 results as well as our financial guidance for the 2026 year. We'll also provide other general business updates.

Speaker #2: During today's call, our remarks including our answers to your questions will include forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act.

Speaker #2: 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.

Speaker #2: Certain other factors that could cause actual results to differ are detailed in the earnings release we issued after market yesterday, as well as in our Securities and Exchange Commission filings, including the risk factors described in our annual report on Form 10-K and quarterly reports on Form 10-Q.

Mike Grant: Certain of the factors that could cause actual results to differ are detailed in the earnings release we issued after market yesterday, as well as in our Securities and Exchange Commission filings, including the risk factors described in our annual report on Form 10-K and quarterly reports on Form 10-Q. I direct you to the earnings release for the full Safe Harbor statement. Also, please note that during this call, management will discuss non-GAAP financial measures. For reconciliations of each non-GAAP measure to the most comparable GAAP measure, I direct you to the earnings release and to the company's quarterly supplemental financial information, which may be found at brookdaleinvestors.com and was furnished on an 8-K yesterday. With that, it is my pleasure to turn the call over to our CEO, Nick Stengle.

Speaker #2: I direct you to the earnings release for the full Safe Harbor statement. Also, please note that during this call, management will discuss non-GAAP financial measures.

Speaker #2: For reconciliations of each non-GAAP measure to the most comparable GAAP measure, I direct you to the earnings release and to the company's quarterly supplemental financial information which may be found at brookdaleinvestors.com and was furnished on an 8-K yesterday.

Speaker #2: With that, it is my pleasure to turn the call over to our CEO, Nick Stangle.

Speaker #3: Thank you, Mike. Good morning. I appreciate everyone for joining us on today's call and for your interest in Brookdale. This morning, I'll provide a high-level commentary on our fourth quarter and full-year 2025 results.

Nikolas Stengle: Thank you, Mike. Good morning. I appreciate everyone for joining us on today's call and for your interest in Brookdale. This morning, I'll provide a high-level commentary on our Q4 and full year 2025 results. I will also review our strategic priorities and guidance for 2026 and our outlook through 2028. Note that we provided preliminary financial highlights for the Q4 and full year 2025 on 28 January, in advance of our Investor Day, which we held on 30 January. Today's results and guidance is consistent with what we previously shared. Speaking of our Investor Day, I would like to thank everyone who participated, and I'm especially grateful to those that made the trip to Nashville.

Speaker #3: I will also review our strategic priorities and guidance for 2026 and our outlook through 2028. Note that we provided preliminary financial highlights for the 4th Quarter and full-year 2025 on January 28th in advance of our investor day which we held on January 30th.

Speaker #3: Today's results and guidance is consistent with what we previously shared. Speaking of our investor day, I would like to thank everyone who participated and am especially grateful to those that made the trip to Nashville.

Speaker #3: The engagement and insight provided by our investors, prospective investors, and equity analysts, both those that formally cover Brookdale and those that have an interest even if not providing coverage today, was amazing.

Nikolas Stengle: The engagement and insight provided by our investors, prospective investors, and equity analysts, both those that formerly cover Brookdale and those that have an interest, even if not providing coverage today, was amazing. The Brookdale management team left the event with even stronger conviction in our multi-year projection. For those that were unable to participate, we do have the video recording and presentation available on Brookdale's Investor Relations page. When Brookdale initially provided guidance for 2025 in February of last year, the team guided to RevPAR growth of 4.75 to 5.75% and $430 to 445 million of Adjusted EBITDA.

Speaker #3: The Brookdale management team left the event with even stronger conviction in our multi-year projection. For those that were unable to participate, we do have the video recording and presentation available on brookdaleinvestorrelations page.

Speaker #3: When Brookdale initially provided guidance for 2025 in February of last year, the team guided to RevPAR growth of 4.75% to 5.75% and $430 to $445 million of adjusted EBITDA.

Speaker #3: Now, as we report the completed year, we finished at the top end of our initial RevPAR guidance at 5.7%, and we handily exceeded our initial adjusted EBITDA expectations, delivering $458 million for the year.

Nikolas Stengle: Now, as we report the completed year, we finished at the top end of our initial RevPAR guidance at 5.7%, and we handily exceeded our initial Adjusted EBITDA expectations, delivering $458 million for the year. Likewise, Brookdale's fourth quarter delivered on our expectations for RevPAR and Adjusted EBITDA, as the positive trends seen in the first three quarters of the year continued into the fourth quarter. Let me start by calling out a few highlights from the quarter. First, I'd like to highlight occupancy. Our trend of steadily improving occupancy growth continues, and we also continue to see positive movement in addressing our opportunity communities. Our fourth quarter occupancy achieved a weighted average of 82.5% and 83.5% on a same-community basis, our highest level since the beginning of the pandemic in Q1 2020.

Speaker #3: Likewise, Brookdale's 4th Quarter delivered on our expectations for RevPar and adjusted EBITDA as the positive trends seen in the first three quarters of the year continued into the 4th Quarter.

Speaker #3: Let me start by calling First, I'd like to highlight occupancy. Our trend of steadily improving occupancy growth continues. And we also continue to see positive movement in addressing our opportunity communities.

Speaker #3: Our 4th Quarter occupancy achieved a weighted average of 82.5% and 83.5% on a same community basis, our highest level since the beginning of the pandemic in Q1 2020.

Speaker #3: Notably, our consolidated 4th Quarter occupancy represents a 310 basis point improvement over the prior year quarter and a 70 basis point improvement from the preceding sequential quarter of 2025.

Nikolas Stengle: Notably, our consolidated fourth quarter occupancy represents a 310 basis point improvement over the prior year quarter and a 70 basis point improvement from the preceding sequential quarter of 2025. We closed the last day of the quarter with a consolidated occupancy of 83.7% or 84.3% on a same-community basis. As our longer-term investors will recall, the 80% occupancy level roughly marks a meaningful inflection point for Brookdale's margins and cash flow generation due to the fixed cost leverage in our operating model. So we are excited about our continued occupancy progress. While much of this occupancy growth is underpinned by overall market dynamics associated with increasing demand from baby boomers and continued stagnation in inventory growth, our own internal focus on occupancy growth has accelerated our ability to capture the opportunity that exists within the senior living industry....

Speaker #3: We closed the last day of the quarter with a consolidated occupancy of 83.7% or 84.3% on a same community basis. As our longer-term investors will recall, the 80% occupancy level roughly marks a meaningful inflection point for Brookdale's margins and cash flow generation due to the fixed cost leverage in our operating model so we are excited about our continued occupancy progress.

Speaker #3: While much of this occupancy growth is underpinned by overall market dynamics associated with increasing demand from baby boomers and continued stagnation in inventory growth, our own internal focus on occupancy growth has accelerated our ability to capture the opportunity that exists within the senior living industry.

Speaker #3: In previous calls and events, we described our SWAT teams. These are internal teams that use a structured process that includes a top-to-bottom review of a community to determine performance opportunities, with tools including capital investment, leadership and marketing assessment, as well as pricing recalibration.

Nikolas Stengle: In previous calls and events, we described our SWAT teams. These are internal teams that use a structured process that includes a top-to-bottom review of a community to determine performance opportunities, with tools including capital investment, leadership and marketing assessment, as well as pricing recalibration. As a result of this process and our previously announced disposition and lease termination activity, we continue to see good progress across our occupancy bands. Consolidated communities where occupancy is below 70% declined from 23% of total in Q1 2025, to just 15% of total consolidated communities in Q4 2025. At the other end of the spectrum, 25% of communities exceeded 90% occupancy in Q1 2025, and that percentage increased to 34% by Q4 2025.

Speaker #3: As a result of this process and our previously announced disposition and lease termination activity, we continue to see good progress across our occupancy bands.

Speaker #3: Consolidated communities where occupancy is below 70% declined from 23% of total in the first quarter of 2025 to just 15% of total consolidated communities in the fourth quarter of 2025.

Speaker #3: At the other end of the spectrum, 25% of communities exceeded 90% occupancy in the first quarter of 2025 and that percentage increased to 34% by the fourth quarter of 2025.

Speaker #3: For the fourth quarter, 80 communities remained below the 70% occupancy threshold. Of those, 14 are expected to be sold during the first half of 2026 and 21 are working with our SWAT teams.

Nikolas Stengle: For Q4, 80 communities remained below the 70% occupancy threshold. Of those, 14 are expected to be sold during the first half of 2026, and 21 are working with our SWAT teams. Excluding communities to be sold or working with SWAT teams, a further 17 need 3 or fewer move-ins to move out of the sub-70% occupancy band. Adjusted EBITDA is the second item I would like to highlight. For 2025, Brookdale grew adjusted EBITDA 19% to $458 million, a level that exceeded the midpoint of our final guidance for the year, a guidance level that was increased 3 times earlier in the year. Notably, this 19% growth also marks our fourth consecutive year of double-digit adjusted EBITDA growth.

Speaker #3: Excluding communities to be sold or working with SWAT teams, a further 17 need three or fewer move-ins to move out of the sub-70% occupancy band.

Speaker #3: Adjusted EBITDA is the second item I would like to highlight. For 2025, Brookdale grew adjusted EBITDA 19% to $458 million, a level that exceeded the midpoint of our final guidance for the year, a guidance level that was increased three times earlier in the year.

Speaker #3: Notably, this 19% growth also marks our fourth consecutive year of double-digit adjusted EBITDA growth. I do want to acknowledge that we fell just short of our adjusted free cash flow guidance of 30 to 50 million dollars.

Nikolas Stengle: I do want to acknowledge that we fell just short of our Adjusted Free Cash Flow guidance of $30 to 50 million. Don will provide more color on this metric, but the shortfall is related primarily to timing issues and working capital, and we still delivered significantly positive Adjusted Free Cash Flow of $23 million, our first positive year since 2020. Next, I would like to provide an update on how Brookdale is progressing against our five strategic priorities. Number one, excelling operationally. Number two, optimizing our real estate portfolio. Number three, reinvesting capital into our communities. Number four, reducing leverage. And number five, elevating quality for residents and associates. Starting with Brookdale excelling operationally. You've already heard about our significant improvements in occupancy and Adjusted EBITDA during 2025. There's still plenty of room for improvement as we sprint through various occupancy target milestones.

Speaker #3: Dawn will provide more color on this metric, but the shortfall is related primarily to timing issues and working capital, and we still delivered significantly positive adjusted free cash flow of $23 million our first positive year since 2020.

Speaker #3: Next, I would like to provide an update on how Brookdale is progressing against our five strategic priorities. Number one, excelling operationally. Number two, optimizing our real estate portfolio.

Speaker #3: Number three, reinvesting capital into our communities. Number four, reducing leverage and number five, elevating quality for residents and associates. Starting with Brookdale, excelling operationally.

Speaker #3: You've already heard about our significant improvements in occupancy and adjusted EBITDA during 2025. There's still plenty of room for improvement as we sprint through various occupancy target milestones.

Speaker #3: To that end, during the fourth quarter of 2025, we brought on an experienced chief operating officer, Mary Sue Patchett. This is the first time in over 10 years that Brookdale has had a COO and clearly aligns with the fact that we are, first and foremost, an operating company.

Nikolas Stengle: To that end, during Q4 2025, we brought on an experienced Chief Operating Officer, Mary Sue Patchett. This is the first time in over 10 years that Brookdale has had a COO, and clearly aligns with the fact that we are, first and foremost, an operating company. Concurrently, we implemented a new regional operating structure with 6 distinct regional leadership teams that encompass all functions integral to senior living operations. The net effect of these two changes is to have a company that can concurrently draw on the deep resources we have as the largest operator in senior living, while also having the nimbleness to operate in a manner similar to 6 regional companies of roughly 100 communities each. Additionally, we have created and hired the new position of Senior Vice President of Strategic Operations.

Speaker #3: Concurrently, we implemented a new regional operating structure with six distinct regional leadership teams that encompass all functions integral to senior living operations. The net effect of these two changes is to have a company that can concurrently draw on the deep resources we have as the largest operator in senior living, while also having the nimbleness to operate in a manner similar to six regional companies of roughly 100 communities each.

Speaker #3: Additionally, we have created and hired the new position of senior vice president of strategic operations. This role consolidates under a single leader that reports directly to Mary Sue several functions that are key to operations excellence.

Nikolas Stengle: This role consolidates under a single leader that reports directly to Mary Sue, several functions that are key to operations excellence. Chief among them is centralizing our pricing strategy, pricing analytics, and pricing implementation, and our labor management. Additionally, this role consolidates prioritization and decision-making for all capital investments that go into our communities. This organizational structure will create a true asset management approach, similar to how a portfolio manager would view investment decisions in their portfolio of assets. At the end of the day, these moves will define and sharpen our organization for faster responsiveness and greater accountability. Our second strategic objective is to optimize our real estate portfolio as we continue to focus our portfolio on communities with the strongest long-term value creation potential.

Speaker #3: Chief among them is centralizing our pricing strategy, pricing analytics, and pricing implementation, as well as our labor management. Additionally, this role consolidates prioritization and decision-making for all capital investments that go into our communities.

Speaker #3: This organizational structure will create a true asset management approach, similar to how a portfolio manager would view investment decisions in their portfolio of assets.

Speaker #3: At the end of the day, these moves will define and sharpen our organization for faster responsiveness and greater accountability. Our second strategic objective is to optimize our real estate portfolio as we continue to focus our portfolio on communities with the strongest long-term value creation potential.

Speaker #3: By the middle of 2026, we anticipate that we will have 517 communities in our consolidated portfolio meaning communities that we either own or lease.

Nikolas Stengle: By the middle of 2026, we anticipate that we will have 517 communities in our consolidated portfolio, meaning communities that we either own or lease. As of December 31, Brookdale's consolidated portfolio included 548 communities, 370 owned and 178 leased, a reduction of 2 owned and 43 leased communities since the end of Q3 2025. The significant decline in the lease portfolio represents the completion of our previously disclosed master lease reset with Ventas, from which we will continue to lease 65 communities going forward. As we shared last quarter, during the first half of 2026, we anticipate the sale of 29 owned communities, and we expect those transactions to generate approximately $200 million of proceeds.

Speaker #3: As of December 31st, Brookdale's consolidated portfolio included 548 communities. 370 owned and 178 leased. A reduction of 2 owned and 43 leased communities since the end of the third quarter of 2025.

Speaker #3: The significant decline in the leased portfolio represents the completion of our previously disclosed master lease reset with Ventas, from which we will continue to lease 65 communities going forward.

Speaker #3: As we shared last quarter, during the first half of 2026, we anticipate the sale of 29 owned communities, and we expect those transactions to generate approximately $200 million of proceeds.

Speaker #3: These sales mark the final meaningful streamlining of our portfolio, bringing us to our ongoing portfolio of 517 owned and leased communities. As we previously stated, the exit of these groups of assets will result in improved occupancy, RevPAR, and adjusted EBITDA, all while generating cash proceeds that can be used for capital investment.

Nikolas Stengle: These sales mark the final meaningful streamlining of our portfolio, bringing us to our ongoing portfolio of 517 owned and leased communities. As we previously stated, the exit of these groups of assets will result in improved occupancy, RevPAR, and adjusted EBITDA, all while generating cash proceeds that can be used for capital investment. Note, of the 29 assets that remained to be sold at the end of 2025, 14 were in our under 70% occupancy band. Turning now to capital investment. Our total non-development CapEx for 2025 was $170.7 million, most of which was reinvested into capital projects in our communities. Capital investment remains a priority, and we are particularly focused on ensuring that investments are prioritized to community projects that result in improved NOI, in addition to necessary life safety and structural improvements.

Speaker #3: Note, of the 29 assets that remain to be sold at the end of 2025, 14 were in our under-70% occupancy band. Turning now to capital investment.

Speaker #3: Our total non-development CapEx for 2025 was $170.7 million. Most of it was reinvested into capital projects in our communities. Capital investment remains a priority, and we are particularly focused on ensuring that investments are prioritized to community projects that result in improved NOI, in addition to necessary life safety and structural improvements.

Speaker #3: These larger projects often fall under what we call first impressions, or upgrades to public spaces that update aesthetics and functionality as opposed to the smaller piecemeal replacements we may have favored historically.

Nikolas Stengle: These larger projects often fall under what we call first impressions, or upgrades to public spaces that update aesthetics and functionality, as opposed to the smaller piecemeal replacements we may have favored historically. We believe these larger projects can have an outsized impact on growing occupancy and community-level NOI. For 2026, we are projecting non-development capital investment of approximately $175 to 195 million, an increase from 2025, as we believe investing today will help us capture enhanced occupancy growth and rate into the future. Reducing leverage is the next strategic objective that I would like to comment on. Brookdale's adjusted annualized leverage at the end of 2025 was 8.9 times Adjusted EBITDA on a trailing twelve-month basis, a meaningful improvement from the 9.9 times ratio at the end of the prior year.

Speaker #3: We believe these larger projects can have an outsized impact on growing occupancy and community-level NOI. For 2026, we are projecting non-development capital investment of approximately $175 to $195 million.

Speaker #3: An increase from 2025 as we believe investing today will help us capture enhanced occupancy growth and rate into the future. Reducing leverage is the next strategic objective that I would like to comment on.

Speaker #3: Brookdale's adjusted annualized leverage at the end of 2025 was 8.9 times adjusted EBITDA on a trailing 12-month basis, a meaningful improvement from the 9.9 times ratio at the end of the prior year.

Speaker #3: We will continue to reduce leverage meaningfully as our adjusted EBITDA continues to grow. As a reminder, we believe we can drive leverage to under six times by the end of 2028, primarily through adjusted EBITDA expansion.

Nikolas Stengle: We will continue to reduce leverage meaningfully as our Adjusted EBITDA continues to grow. As a reminder, we believe we can drive leverage to under 6x by the end of 2028, primarily through Adjusted EBITDA expansion. Notably, 90% of our total debt is non-recourse debt, secured by property-level mortgages. Don will provide a deeper update, but following recent refinancing activity, all of our mortgage debt is refinanced through 2026, and our team has made excellent progress toward working with our lenders on the 2027 tranches. The next strategic objective I will discuss is elevating quality for our residents and associates. One of the broadest measures of service delivery quality that we look at is our Net Promoter Score, or NPS.

Speaker #3: Notably, 90% of our total debt is non-recourse debt secured by property-level mortgages. Dawn will provide a deeper update, but following recent refinancing activity, all of our mortgage debt is refinanced through 2026 and our team has made excellent progress toward working with our lenders on the 2027 tranches.

Speaker #3: The next strategic objective I will discuss is elevating quality for our residents and associates. One of the broadest measures of service delivery quality that we look at is our net promoter score, or NPS.

Speaker #3: Since 2022, our NPS score has risen steadily and it is now 19 points higher, which is very strong improvement in the eyes of our most important constituents, our residents.

Nikolas Stengle: Since 2022, our NPS score has risen steadily, and it is now 19 points higher, which is very strong improvement in the eyes of our most important constituents, our residents. This improvement doesn't happen by accident. We survey our residents consistently to understand what would drive a better product, and we listen and respond through our offerings. We have improved consistently in such areas as food, where we have been recognized by outside rating services, such as US News & World Report, for high performance in food and dining across all our care segments: independent living, assisted living, and memory care. Another example of Brookdale's ability to elevate quality is the continued expansion of our Health Plus platform, which works to improve residents' quality of life through care coordination and chronic condition management, resulting in the prevention of avoidable emergency room visits and hospitalizations.

Speaker #3: This improvement doesn't happen by accident. We survey our residents consistently to understand what would drive a better product, and we listen and respond through our offerings.

Speaker #3: We have improved consistently in such areas as food, where we have been recognized by outside rating services, such as US News and World Report for high-performance in food and dining across all our care segments, independent living, assisted living, and memory care.

Speaker #3: Another example of Brookdale's ability to elevate quality is the continued expansion of our health plus platform, which works to improve residents' quality of life through care coordination, and chronic condition management resulting in the prevention of avoidable emergency room visits and hospitalizations.

Speaker #3: During 2025, we rolled Brookdale Health Plus into 58 additional communities across eight states, including three new states. This brings the Brookdale Health Plus platform to our current total of over 180 communities served.

Nikolas Stengle: During 2025, we rolled Brookdale Health Plus into 58 additional communities across 8 states, including 3 new states. This brings the Brookdale Health Plus platform to a current total of over 180 communities served. Finally, we aim to elevate quality for our associates. One of the best measures of associates' experience at Brookdale is employee turnover. Turnover of our key three community leaders, meaning the executive director and the leaders of sales and clinical, improved again in 2025. Our key three turnover has improved 390 basis points over the past 2 years. Overall, associate turnover across all positions also declined in 2025, and we have now nearly returned to the levels experienced before the pandemic.

Speaker #3: Finally, we aim to elevate quality for our associates. One of the best measures of associates' experience at Brookdale is employee turnover. Turnover of our key three community leaders, meaning the executive director and the leaders of sales and clinical, improved again in 2025.

Speaker #3: Our key three turnover has improved 390 basis points over the past two years. Overall, associate turnover across all positions also declined in 2025 and we have now nearly returned to the levels experienced before the pandemic.

Speaker #3: To close out my remarks, I want to comment on the financial guidance for 2026 that we provided in our earnings release last night and also pre-released in advance of our investor day.

Nikolas Stengle: To close out my remarks, I want to comment on the financial guidance for 2026 that we provided in our earnings release last night, and also pre-released in advance of our Investor Day. I will also comment on our longer-term financial outlook. As we look to 2026 and the next several years, we are excited about our outlook. 1946 marked the start of the baby boom, with over 600,000 more Americans born in 1946 than were born in 1945. 2026 is the year the first baby boomers hit the 80-year age mark. This age is an important benchmark for Brookdale, as over half of our move-ins occur at between 80 to 90 years of age. Our average age at move-in is about 83 years. The demand outlook is robust, starting this year, but also looking many years into the future.

Speaker #3: I will also comment on our longer-term financial outlook. As we look to 2026 and the next several years, we are excited about our outlook.

Speaker #3: 1946 marked the start of the baby boom with over 600,000 more Americans born in 1946 than were born in 1945. 2026 is the year the first baby boomers hit the 80-year age mark.

Speaker #3: This age is an important benchmark for Brookdale, as over half of our move-ins occur between 80 and 90 years of age. Our average age at move-in is about 83 years.

Speaker #3: The demand outlook is robust, starting this year, but also looking many years into the future. Demographic reports show that the population of 80-plus-year-old Americans will grow at a 4% plus compounded annual rate for the next decade.

Nikolas Stengle: Demographic reports show that the population of 80+-year-old Americans will grow at a 4%+ compounded annual rate for the next decade. On the other side of the equation, senior housing supply growth has severely stagnated, and the rate of unit growth at the end of 2025 was just 0.6%, a historical low. Comparing the 80-year-old and greater population growth of 4%+ with the current unit growth of 0.6% indicates a strong trend toward increasing occupancy for the entire senior living industry. For 2026, Brookdale is projecting RevPAR growth of 8% to 9%, which is an improvement over the most recent years. Don will dive into the specifics, but the 8% to 9% RevPAR should include a balance of positive occupancy and pricing, with some mixed support from last year's lease terminations and completed and ongoing dispositions.

Speaker #3: On the other side of the equation, senior housing supply growth has severely stagnated and the rate of unit growth at the end of 2025 was just 0.6%, a historical low.

Speaker #3: Comparing the 80-year-old and greater population growth of 4% plus with the current unit growth of 0.6% indicates a strong trend toward increasing occupancy for the entire senior living industry.

Speaker #3: For 2026, Brookdale is projecting RevPAR growth of 8 to 9 percent, which is an improvement over the most recent years. Dawn will dive into the specifics, but the 8 to 9 percent RevPAR should include a balance of positive occupancy and pricing with some mixed support from last year's lease terminations and completed and ongoing dispositions.

Speaker #3: Occupancy and pricing in excess of cost inflation are both very positive drivers of EBITDA. Particularly once communities are above 80% occupancy, the approximate level at which we leverage our fixed costs.

Nikolas Stengle: Occupancy and pricing in excess of cost inflation are both very positive drivers of EBITDA, particularly once communities are above 80% occupancy, the approximate level at which we leverage our fixed costs. As such, we believe we will be able to attain mid-teen adjusted EBITDA growth from our $445 million 2025 baseline level to $502 to 516 million for 2026. As we look out over the next several years, we expect these trends to continue. As such, we are reiterating our expectation that we can drive mid-teens adjusted EBITDA growth through 2028. Additionally, based on that expansion of adjusted EBITDA, we believe we can end 2028 at under 6x leverage. Every day, we are thankful for our residents, our associates, and also our shareholders.

Speaker #3: As such, we believe we will be able to obtain mid-teen adjusted EBITDA growth from our 445 million 2025 baseline level to 502 to 516 million dollars for 2026.

Speaker #3: As we look out over the next several years, we expect these trends to continue. As such, we are reiterating our expectation that we can drive mid-teens adjusted EBITDA growth through 2028.

Speaker #3: Additionally, based on that expansion of adjusted EBITDA, we believe we can end 2028 at under six times leverage. Every day, we are thankful for our residents, our associates, and also our shareholders.

Speaker #3: Each of you puts your trust in us and we don't take that lightly. We remain confident in the intrinsic value of the company which is built upon a bedrock of specialized and scarce real estate.

Nikolas Stengle: Each of you puts your trust in us, and we don't take that lightly. We remain confident in the intrinsic value of the company, which is built upon a bedrock of specialized and scarce real estate. We remain confident in our ability to serve and care for seniors with excellence while being an employer of choice, and we remain confident in our ability to drive durable shareholder value. Now it is my pleasure to turn the call over to our CFO, Dawn Kussow, for more details on our financial performance and outlook.

Speaker #3: We remain confident in our ability to serve and care for seniors with excellence while being an employer of choice. And we remain confident in our ability to drive durable shareholder value.

Speaker #3: Now it is my pleasure to turn the call over to our CFO, Don Kussow, for more details on our financial performance and outlook.

Speaker #2: Thank you, Nick. This morning, I first want to recap Brookdale's performance against 2025 targets. Then turn to a deeper dive into the fourth quarter.

Dawn Kussow: Thank you, Nick. This morning, I first want to recap Brookdale's performance against 2025 targets, then turn to a deeper dive into the Q4, followed by a discussion of our recently issued 2026 guidance and the assumptions that underpin that guidance. As Nick mentioned, we are very pleased with our Q4 and full year 2025 financial and operating results. Here's a quick recap of the targets we established for 2025 and how we delivered against them. Our 2025 target for annual RevPAR growth was 4.75% to 5.75%, which we later increased 2 times to 5.25% to 6%. Brookdale delivered against that target as we reported 5.7% RevPAR growth on a consolidated basis, coming in above the midpoint of our increased target.

Speaker #2: Followed by a discussion of our recently issued 2026 guidance and the assumptions that underpin that guidance. As Nick mentioned, we are very pleased with our fourth quarter and full year 2025 financial and operating results.

Speaker #2: Here's a quick recap of the targets we established for 2025 and how we delivered against them. Our 2025 target for annual RevPAR growth was 4.75% to 5.75%.

Speaker #2: Which we later increased two times to 5.25 to 6%. Brookdale delivered against that target as we reported 5.7% RevPAR growth on a consolidated basis coming in above the midpoint of our increased target.

Speaker #2: Our 2025 target for adjusted EBITDA started at 430 to 445 million dollars and increased three times over the course of the year to a range of 455 to 460 million dollars.

Dawn Kussow: Our 2025 target for Adjusted EBITDA started at $430 to 445 million and increased three times over the course of the year to a range of $455 to 460 million. Again, we delivered on that goal as we reported Adjusted EBITDA of $458 million, also above the midpoint of our increased range. For 2025, we set a goal of generating $30 to 50 million in Adjusted Free Cash Flow. We fell just short of that goal with full year 2025 Adjusted Free Cash Flow of $23 million. I would characterize this modest shortcoming as related primarily to working capital timing and refinancing-related interest prepayments.

Speaker #2: Again, we delivered on that goal as we reported adjusted EBITDA of 458 million dollars also above the midpoint of our increased range. For 2025, we set a goal of generating 30 to 50 million dollars in adjusted free cash flow.

Speaker #2: We fell just short of that goal with full year 2025 adjusted free cash flow of 23 million dollars. I would characterize this modest shortcoming as related primarily to working capital timing and refinancing-related interest prepayments.

Speaker #2: Importantly, the $23 million in adjusted free cash flow generated in 2025 marks our return to generating positive cash flow for the first time since 2020.

Dawn Kussow: Importantly, the $23 million in adjusted free cash flow generated in 2025 marks our returning to generating positive cash flow for the first time since 2020. 2025 was also an exciting and successful year for Brookdale's portfolio transition as we worked to rightsize our footprint by exiting non-strategic or underperforming owned and leased communities. On the lease side, during 2025, Brookdale exited 58 communities with 6,466 units through lease terminations. Notably, pursuant to an amendment of our master lease arrangement with Ventas during December of 2024, we agreed to terminate the leases for 55 communities comprising 6,125 units that we had previously leased from Ventas. Most of the associated transitional activity as we exited those 55 leases occurred during the Q3 and particularly the Q4 of 2025, when we exited 42 leases.

Speaker #2: 2025 was also an exciting and successful year for Brookdale's portfolio transition as we worked to right-size our footprint by exiting non-strategic or underperforming owned and leased communities.

Speaker #2: On the lease side, during 2025, Brookdale exited 58 communities with 6,466 units through lease terminations. Notably, pursuant to an amendment of our master lease arrangement with Ventas during December of 2024, we agreed to terminate the leases for 55 communities comprising 6,125 units that we had previously leased from Ventas.

Speaker #2: Most of the associated transitional activity, as we exited those 55 leases, occurred during the third and particularly the fourth quarter of 2025, when we exited 42 leases.

Speaker #2: Note that we'll continue to manage eight of those non-renewed communities. As we enter 2026, we continue to lease 65 communities from Ventas, comprising 4,055 units through 2035 with an economically improved lease structure including landlord-funded capital improvement allowance and an annual rent escalator of 3%.

Dawn Kussow: Note that we'll continue to manage eight of those non-renewed communities. As we enter 2026, we continue to lease 65 communities from Ventas, comprising 4,055 units through 2035, with an economically improved lease structure, including landlord-funded capital improvement allowance and an annual rent escalator of 3%. During 2025, we also completed the sale of 12 owned communities with 482 units for proceeds of $26.1 million, net of transaction costs. As we have previously shared, the disposition of non-strategic owned communities will continue into 2026, as we plan to sell the remaining 29 previously announced communities comprising 2,364 units. We expect the bulk of these transactions to be completed by mid-year 2026, and we estimate the total proceeds for these communities to be approximately $200 million.

Speaker #2: During 2025, we also completed the sale of 12 owned communities with 482 units for proceeds of 26.1 million dollars net of transaction costs. As we have previously shared, the disposition of non-strategic owned communities will continue into 2026 as we plan to sell the remaining 29 previously announced communities comprising 2,364 units.

Speaker #2: We expect the bulk of these transactions to be completed by mid-year 2026 and we estimate the total proceeds for these communities to be approximately 200 million dollars.

Speaker #2: Once these dispositions are complete, we do not foresee significant changes to Brookdale's consolidated portfolio on a forward-looking basis. Turning now to full year 2025 and fourth quarter financial results.

Dawn Kussow: Once these dispositions are complete, we do not foresee significant changes to Brookdale's consolidated portfolio on a forward-looking basis. Turning now to full year 2025 and Q4 financial results. For the year 2025, we expanded our consolidated Adjusted EBITDA by $72 million, a 19% increase over 2024. As Nick mentioned, this is our fourth consecutive year delivering double-digit Adjusted EBITDA growth, and we believe that we can maintain mid-teens annual growth from our 2025 baseline results over the next several years. During the Q4, our consolidated Adjusted EBITDA increased $7 million or 7% year-over-year, consistent with our implied guidance from the Q3. Overall, Brookdale has already made significant progress on our lower-occupied communities through performance improvements and portfolio optimization efforts, and we anticipate further income flow through as these efforts progress.

Speaker #2: For the year 2025, we expanded our consolidated adjusted EBITDA by 72 million dollars a 19% increase over 2024. As Nick mentioned, this is our fourth consecutive year delivering double-digit adjusted EBITDA growth and we believe that we can maintain mid-teens annual growth from our 2025 baseline results over the next several years.

Speaker #2: During the fourth quarter, our consolidated adjusted EBITDA increased $7 million, or 7% year over year, consistent with our implied guidance from the third quarter.

Speaker #2: Overall, Brookdale has already made significant progress on our lower-occupied communities through performance improvements and portfolio optimization efforts and we anticipate further income flow-through as these efforts progress.

Speaker #2: We're pleased with our continued progress and our optimistic about our ability to drive adjusted EBITDA higher over the next several years. In the fourth quarter, we grew our occupancy sequentially by 70 basis points on a consolidated level and by 50 basis points on a same community level.

Dawn Kussow: We're pleased with our continued progress and are optimistic about our ability to drive Adjusted EBITDA higher over the next several years. In the fourth quarter, we grew our occupancy sequentially by 70 basis points on a consolidated level and by 50 basis points on a same community level. This is stronger sequential growth as compared to our pre-pandemic sequential growth, and in addition to a strong third quarter, our normal selling season. So growth on top of that is an accomplishment and gives us momentum coming into 2026. Our fourth quarter consolidated weighted average occupancy was 82.5%, an improvement of 310 basis points year-over-year, our highest year-over-year rate of increase of the year. Brookdale has now reported three consecutive quarters with consolidated weighted average occupancy above 80%.

Speaker #2: This is stronger sequential growth as compared to our pre-pandemic sequential growth and in addition to a strong third quarter, our normal selling season so growth on top of that is an accomplishment and gives us momentum coming into 2026.

Speaker #2: Our fourth quarter consolidated weighted average occupancy was 82.5% and improvement of 310 basis points year over year our highest year over year rate of increase of the year.

Speaker #2: Brookdale has now reported three consecutive quarters with consolidated weighted average occupancy above 80%. Our first quarter's above that pivotal 80% level since before the pandemic.

Dawn Kussow: Our Q1 is above that pivotal 80% level since before the pandemic. For the year, our consolidated weighted average occupancy was 80.9%. On a same community basis, weighted average occupancy for the Q4 was 83.5%, representing an increase of 250 basis points year-over-year. The occupancy growth stems directly from Brookdale's initiative to drive occupancy, including our SWAT approach, targeted pricing actions focused on communities and lower occupancy bands, and a focus on operational accountability. For the full year, same community weighted average occupancy was 82.3%. Turning now to our top-line results. For the full year, resident fees increased 2.4% to $3 billion.

Speaker #2: For the year, our consolidated weighted average occupancy was 80.9%. On a same community basis, weighted average occupancy for the fourth quarter was 83.5% representing an increase of 250 basis points year over year.

Speaker #2: The occupancy growth stems directly from Brookdale Initiative to drive occupancy including our SWOT approach, targeted pricing actions focused on communities and lower-occupancy bands, and a focus on operational accountability.

Speaker #2: For the full year, same community weighted average occupancy was 82.3%. Turning now to our top-line results. For the full year, resident fees increased 2.4% to $3 billion dollars.

Speaker #2: The components of this 2.4% year over year growth are a 5.7% increase in RevPAR partially offset by 3.2% decline in the number of total average available units from our previously announced portfolio optimization including the disposition of both owned and leased communities.

Dawn Kussow: The components of this 2.4% year-over-year growth are a 5.7% increase in RevPAR, partially offset by 3.2% decline in the number of total average available units from our previously announced portfolio optimization, including the disposition of both owned and leased communities. For the fourth quarter, resident fees of $715 million declined by 4% over the fourth quarter of last year. The key factors underpinning the revenue decline versus last year were a 10.5% reduction in total average units, the result of community lease non-renewals and targeted dispositions, which accelerated in the second half of the year, partially offset by a 7.1% RevPAR increase.

Speaker #2: For the fourth quarter, resident fees of $715 million dollars declined by 4% over the fourth quarter of last year. The key factors underpinning the revenue decline versus last year were a 10.5% reduction in total average units the result of community lease non-renewals and targeted dispositions which accelerated in the second half of the year partially offset by a 7.1% RevPAR increase.

Speaker #2: The 7.1% increase in RevPAR from the fourth quarter of the prior year was driven by an ongoing acceleration in year-over-year weighted average occupancy. Fourth quarter same community move-ins were 5% below the prior year while move-out volume was beneficial in the quarter.

Dawn Kussow: The 7.1% increase in RevPAR from Q4 of the prior year was driven by an ongoing acceleration in year-over-year weighted average occupancy. Q4 same community move-ins were 5% below the prior year, while move-out volume was beneficial in the quarter. Resident rate increases more than offset the ongoing trend of lower resident acuity as revenue per occupied room, or RevPOR, essentially our realized pricing metric, increased 3.1% year-over-year. Q4 exhibited sequential steady occupancy with notable strong move-in volume to close out the quarter, which should create a tailwind to start Q1. Indeed, January 2026 consolidated occupancy improved 310 basis points year-over-year.

Speaker #2: Resident rate increases more than offset the ongoing trend of lower resident acuity as revenue per occupied room or RevPOR essentially our realized pricing metric increased 3.1% year over year.

Speaker #2: The fourth quarter exhibited sequential steady occupancy with notable strong move-in volume to close out the quarter which should create a tailwind to start the first quarter.

Speaker #2: Indeed, January 2026 consolidated occupancy improved 310 basis points year over year. Fourth quarter same community RevPAR increased 5% over the prior year driven by 250 basis points of occupancy growth coupled with a 1.8% increase in RevPOR.

Dawn Kussow: Fourth quarter same community RevPAR increased 5% over the prior year, driven by 250 basis points of occupancy growth, coupled with a 1.8% increase in RevPOR. Our fourth quarter same community weighted average occupancy continued to improve with 50 basis points of sequential growth. While pre-pandemic, the fourth quarter typically displays the flattest sequential growth trend of the year, Brookdale's fourth quarter occupancy growth exceeded its normal seasonality for this period. Now, turning to expenses. On a consolidated basis, fourth quarter expense per occupied unit, or ExPOR, increased 2.6% over the fourth quarter of 2024. Our 3.1% increase in RevPOR exceeded the 2.6% increase in ExPOR, generating 50 basis points positive spread between realized revenue and expenses per occupied unit.

Speaker #2: Our fourth quarter same community weighted average occupancy continued to improve with 50 basis points of sequential growth. While pre-pandemic, the fourth quarter typically displays the flattest sequential growth trend of the year Brookdale's fourth quarter occupancy growth exceeded its normal seasonality for this period.

Speaker #2: Now, turning to expenses. On a consolidated basis, fourth quarter expense per occupied unit or XPOR increased 2.6% over the fourth quarter of 2024. Our 3.1% increase in RevPOR exceeded the 2.6% increase in XPOR generating 50 basis points positive spread between realized revenue and expenses per occupied unit.

Speaker #2: As we successfully move lower-occupied communities up in the occupancy bands, we expect to see flow-through to continue to expand. For 2025 year, consolidated community RevPOR improved 2.7% while XPOR increased 1.8% creating a positive spread of 90 basis points.

Dawn Kussow: As we successfully move lower occupied communities up in the occupancy bands, we expect to see flow through to continue to expand. For 2025 year, consolidated community RevPOR improved 2.7%, while ExPOR increased 1.8%, creating a positive spread of 90 basis points. Same community operating income increased 6.1% for the year 2025, and operating margin improved by 30 basis points over 2024. Q4, same community operating income grew 4% from the prior year, while the operating margin declined by 30 basis points. Note that the fourth quarter typically has a lower operating margin, as the quarter has 92 days, which drives labor costs higher than the first two quarters of the year, which have fewer days. Our revenues are based on monthly billings, while labor costs reflect hours and days worked.

Speaker #2: Same community operating income increased 6.1% for the year 2025, and operating margin improved by 30 basis points over 2024. Fourth quarter same community operating income grew 4% from the prior year, while the operating margin declined by 30 basis points.

Speaker #2: Note that the fourth quarter typically has a lower operating margin as the quarter has 92 days which drives labor costs higher than the first two quarters of the year which have fewer days.

Speaker #2: Our revenues are based on monthly billings while labor costs reflect hours and days worked. Full year general and administrative expense excluding non-cash stock-based compensation expense and transaction legal and organizational restructuring costs were flat year over year as a percentage of revenue.

Dawn Kussow: Full-year general and administrative expense, excluding non-cash stock-based compensation expense and transaction, legal, and organizational restructuring costs, were flat year-over-year as a percentage of revenue, reflecting cost structure optimization undertaken earlier in the year in advance of the anticipated revenue reduction associated with disposition activity that occurred later in the year. As we complete the optimization of our portfolio, Brookdale will remain focused on the appropriate cost structure. Cash facility operating lease payments during the fourth quarter of 2025 were $43.7 million, down a significant $12.2 million from $55.9 million in the prior-year quarter as a result of the Ventas lease dispositions, which occurred throughout the third and fourth quarter of the year.

Speaker #2: Reflecting cost structure optimization undertaken earlier in the year in advance of the anticipated revenue reduction associated with disposition activity that occurred later in the year.

Speaker #2: As we complete the optimization of our portfolio, Brookdale will remain focused on the appropriate cost structure. Cash facility operating lease payments during the fourth quarter of 2025 were 43.7 million dollars down a significant 12.2 million dollars from 55.9 million in the prior year quarter as a result of the Ventas lease dispositions which occurred throughout the third and fourth quarter of the year.

Speaker #2: Adjusted EBITDA for the fourth quarter was 106 million dollars and increase of 7 million dollars or 7% above the prior year quarter. For the 2025 year, adjusted EBITDA of 458 million dollars increased 19% year over year.

Dawn Kussow: Adjusted EBITDA for Q4 was $106 million, an increase of $7 million, or 7% above the prior year quarter. For the 2025 year, Adjusted EBITDA of $458 million increased 19% year-over-year. We delivered $23 million of Adjusted Free Cash Flow for in 2025, marking our return to positive Adjusted Free Cash Flow for the first time since 2020. During Q4, our Adjusted Free Cash Flow was an outflow of $23 million. Seasonally, we note that a significant proportion of our annual real estate taxes are paid during Q4, so Q4 typically requires the use of cash for changes in working capital. Additionally, the timing of working capital and prepayments associated with our refinancing activities negatively impacted Adjusted Free Cash Flow.

Speaker #2: We delivered $23 million of adjusted free cash flow in 2025, marking our return to positive adjusted free cash flow for the first time since 2020.

Speaker #2: During the fourth quarter, our adjusted free cash flow was an outflow of 23 million dollars. Seasonally, we note that a significant proportion of our annual real estate taxes are paid during the fourth quarter so the fourth quarter typically requires the use of cash for changes in working capital.

Speaker #2: Additionally, the timing of working capital and prepayments associated with our refinancing activities negatively impacted adjusted free cash flow. As of December 31, 2025, Brookdale's total liquidity was $378 million, up $26 million from the third quarter.

Dawn Kussow: As of 31 December 2025, Brookdale's total liquidity was $378 million, up $26 million from Q3. Our adjusted annualized leverage continues to improve and finished the year at 8.9 times. Our leverage has improved significantly, primarily as a result of our strong Adjusted EBITDA growth over the last several years. Now I'd like to shift from reviewing the past quarter and year to looking ahead. On 28 January, we pre-announced Q4 financial highlights in advance of our Investor Day event, and in that release, we also included our financial guidance for 2026. Before I get into our specific guidance, I'd like to briefly reiterate how Brookdale approaches its guidance philosophy. Delivering on our financial commitments is paramount to what we do.

Speaker #2: Our adjusted annualized leverage continues to improve and finish the year at 8.9 times. Our leverage has improved significantly primarily as a result of our strong adjusted EBITDA growth over the last several years.

Speaker #2: Now I'd like to shift from reviewing the past quarter and year to looking ahead. On January 28th, we pre-announced fourth quarter financial highlights in advance of our investor day event.

Speaker #2: And in that release, we also included our financial guidance for 2026. Before I get into our specific guidance, I'd like to briefly reiterate how Brookdale approaches its guidance philosophy.

Speaker #2: Delivering on our financial commitments is paramount to what we do. There is a great deal of thought and work that goes into defining appropriate targets, targets that we believe are credible, and grounded in reality, but at the same time compel the Brookdale team to strive for growth and improvement.

Dawn Kussow: There's a great deal of thought and work that goes into defining appropriate targets, targets that we believe are credible and grounded in reality, but at the same time compel the Brookdale team to strive for growth and improvement. As a company, we will always look for opportunities to outperform over a multiyear horizon. Our 2026 guidance has two components: 8% to 9% RevPAR growth and $502 to 516 million of Adjusted EBITDA. Let's start with our RevPAR target of 8% to 9% annual growth, which reflects accelerated growth in comparison to what we have achieved in the past two years. We believe 8% to 9% RevPAR growth is attainable, and there are a few main components underpinning that growth.

Speaker #2: As a company, we will always look for opportunities to outperform over a multi-year horizon. Our 2026 guidance has two components. 8 to 9 percent RevPAR growth and 502 to 516 million dollars of adjusted EBITDA.

Speaker #2: Let's start with our RevPAR target of 8 to 9 percent annual growth, which reflects accelerated growth in comparison to what we have achieved in the past two years.

Speaker #2: We believe 8% to 9% RevPAR growth is attainable, and there are a few main components underpinning that growth. First, at the start of this year, we implemented a higher in-place rate increase compared to the prior year, which is supported by higher occupancy levels.

Dawn Kussow: First, at the start of this year, we implemented a higher in-place rate increase compared to the prior year, which is supported by higher occupancy levels, both at our communities and throughout the industry. Second, occupancy growth is expected to be supported by strong move-in demand, which is a result of both internal efforts as well as the undeniable demographics of America's aging population. The final component is the accretive impact of disposition communities, which will positively impact RevPAR. Our annual guidance for Adjusted EBITDA is a range of $502 to 516 million. This guidance is consistent with our longer-term mid-teens Adjusted EBITDA annual growth outlook from a baseline of $445 million.

Speaker #2: Both at our communities and throughout the industry. Second, occupancy growth is expected to be supported by strong move-in demand, which is a result of both internal efforts as well as the undeniable demographics of America's aging population.

Speaker #2: The final component is the accretive impact of disposition communities, which will positively impact RevPAR. Our annual guidance for adjusted EBITDA is a range of 502 to 516 million dollars.

Speaker #2: This guidance is consistent with our longer-term mid-teens adjusted EBITDA annual growth outlook from a baseline of $445 million. Improving occupancy and rate are the key drivers of this adjusted EBITDA expansion, as both have very significant flow-through, with Brookdale now exceeding 80% occupancy—roughly at the level at which our fixed costs are covered.

Dawn Kussow: Improving occupancy and rate are the key drivers of this Adjusted EBITDA expansion, as both have very significant flow-through, with Brookdale now exceeding 80% occupancy, roughly at the level at which our fixed costs are covered. Labor is our single largest cost item at approximately 65% of our facility operating expenses. We have continued to make progress on reducing labor turnover, and we project a stable and predictable labor cost environment for 2026. We estimate general and administrative expense, excluding non-cash stock-based comp and transaction, legal, and restructuring costs of approximately $162 million for 2026. Cash facility operating lease payments should be approximately $180 million during 2026.

Speaker #2: Labor is our single largest cost item. At approximately 65% of our facility operating expenses, we have continued to make progress on reducing labor turnover and we project a stable and predictable labor cost environment for 2026.

Speaker #2: We estimate general and administrative expense excluding non-cash stock-based comp and transaction legal and restructuring costs of approximately 162 million dollars for 2026. Cash facility operating lease payments should be approximately 180 million dollars during 2026.

Speaker #2: Reflecting on our guidance of adjusted EBITDA expansion to 502 to 516 million dollars, we expect our annualized leverage to continue to decline significantly both in 2026 and in the coming years.

Dawn Kussow: Reflecting on our guidance of Adjusted EBITDA expansion to $502 to 516 million, we expect our annualized leverage to continue to decline significantly, both in 2026 and in the coming years. Modest additional deleveraging may also result from the disposition activity we're currently undertaking through roughly mid-2026. We believe that we have the ability to drive leverage below 6x by the end of 2028. On the topic of leverage, I'd like to highlight that during January, we announced the refinancing of all of our remaining 2026 mortgage debt maturities, as well as a portion of our 2027 mortgage debt maturities. These refinancings extend our more imminent maturities, thereby furthering our well-staggered debt maturity schedule.

Speaker #2: Modest additional deleveraging may also result from the disposition activity we're currently undertaking through roughly mid-year 2026. We believe that we have the ability to drive leverage below six times by the end of 2028.

Speaker #2: On the topic of leverage, I'd like to highlight that during January, we announced the refinancing of all of our remaining 2026 mortgage debt maturities as well as a portion of our 2027 mortgage debt maturities.

Speaker #2: These refinancings extend our more imminent maturities thereby furthering our well-stagered debt maturity schedule. Our intention is to always be proactive in managing our balance sheet and our improving operating results and strong lender relationships make that possible.

Dawn Kussow: Our intention is to always be proactive in managing our balance sheet, and our improving operating results and strong lender relationships make that possible. As you consider the quarterly progression of our financial results, there are a few factors to keep in mind. Firstly, we will start the year with more available units than we anticipate during the second half of the year, consistent with our planned dispositions. Second, our occupancy rate is expected to ramp over the course of the year, reflecting rising demand, community-level improvements, as well as positive mix dynamics resulting from our dispositions. Other typical seasonal factors are expected to remain consistent with history, and as a reminder, those seasonal factors are called out in the last page of our investor presentation. In conclusion, we're pleased with our fourth quarter and 2025 operating and financial results.

Speaker #2: As you consider the quarterly progression of our financial results, there are a few factors to keep in mind. Firstly, we will start the year with more available units than we anticipate during the second half of the year, consistent with our planned dispositions.

Speaker #2: Second, our occupancy rate is expected to ramp over the course of the year reflecting rising demand, community-level improvements, as well as positive mixed dynamics resulting from our dispositions.

Speaker #2: Other typical seasonal factors are expected to remain consistent with history, and, as a reminder, those seasonal factors are called out on the last page of our investor presentation.

Speaker #2: In conclusion, we're pleased with our fourth quarter and 2025 operating and financial results. As we look forward to 2026 and beyond, we remain confident in our strategic and operational plans, which are generating solid adjusted EBITDA growth.

Dawn Kussow: As we look forward to 2026 and beyond, we remain confident in our strategic and operational plans, which are generating solid Adjusted EBITDA growth. Our team was enhanced significantly during 2025 through the addition of Nick, an operations-focused CEO, and also by the addition of Mary Sue Patchett as Brookdale's first dedicated Chief Operating Officer in over a decade. As evidenced by our 2025 results and our outlook, Brookdale is confident in our ability to create sustainable, long-term growth and value for our shareholders. Operator, we will now open the call for questions.

Speaker #2: Our team was enhanced significantly during 2025 through the addition of NIC and the operations focus CEO. And also by the addition of Mary Sue Patchett as Brookdale's first dedicated chief operating officer in over a decade.

Speaker #2: As evidenced by our 2025 results and our outlook, Brookdale is confident in our ability to create sustainable, long-term growth and value for our shareholders.

Speaker #2: Operator, we will now open the call for questions. As a reminder, if you'd like to ask a question, simply press star, followed by the number one on your telephone keypad.

Operator: As a reminder, if you'd like to ask a question, simply press star followed by the number one on your telephone keypad. Your first question comes from the line of Josh Raskin from Nephron Research LLC. Your line is live.

Speaker #2: Your first question comes from the line of Josh Raskin, from Nephron Research, LLC. Your line is live.

Speaker #3: Thanks. Good morning. I've actually got two. I guess the first is—and Nick, you started on some of this—just maybe talk a little about the progress you're making around that transition to an operating company, and if you could give some maybe specific examples.

Josh Raskin: Thanks, and good morning. I've actually got two. I guess the first is, and Nick, you started on some of this. Just maybe talk a little about the progress you're making around that transition to an operating company, and if you could give some maybe specific examples. I, I heard, on the, on the workforce side, but maybe changes around workflows or budgeting and how you guys were approaching that as you came into guidance would be helpful. And then second question, just if you could walk us through expected progress on Health Plus. You gave some great statistics for 2025. But I'm just curious if you could remind us targets for 2026 rollouts.

Speaker #3: I heard on the workforce side, but maybe changes around workflows or budgeting and how you guys were approaching that as you came into guidance would be helpful.

Speaker #3: And then second question, just if you could walk us through expected progress on health plus. You gave some great statistics for 2025, but I'm just curious if you could remind us targets for 2026 rollouts.

Speaker #3: And have you looked at data around rents, or rent increases, or even retention data, in the communities that have rolled out Health Plus—and maybe where they were the year before—and sort of any tangible progress that you can point to?

Josh Raskin: You know, have you looked at data around rents or, you know, rent increases or, you know, even retention data in the communities that have rolled out Health Plus and maybe where they were the year before and, you know, sort of any tangible progress that you can point to?

Speaker #4: Yeah. Excellent. Good morning, Josh. Thanks for the question. I'll tackle the first one first and we'll go to the second one. So very clearly, and I've articulated this now several times both in the Q3 call, the investor day, and even on this call today, this idea that we're an operating company first and foremost.

Nikolas Stengle: Yeah, excellent. Good morning, Josh. Thanks for the question. I'll tackle the first one first, then we'll go to the second one. So, very clearly, and I've articulated this now several times, both in the Q3 call, Investor Day, and even on this call today, this idea that we're an operating company first and foremost. Obviously, we've now described Mary Sue's role as our COO, and she's in the room with us, this morning to tackle any really, you know, deep dive ops type questions. That is fundamentally kind of how we are thinking of everything, and the regional model really is a, an extension of that. So not only do we have a dedicated COO, wakes up every morning focused on driving great performance, driving great resident and experience driving move-ins, we also have regional teams.

Speaker #4: Obviously, we've now described Mary Sue's role as our COO, and she's in the room with us this morning to tackle any really deep-dive ops-type questions.

Speaker #4: That is fundamentally kind of how we are thinking of everything. And the regional model really is an extension of that. So not only do we have a dedicated COO, wakes up every morning focused on driving great performance, driving great resident experience, driving move-ins, we also have a regional teams.

Speaker #4: And again, I sort of described this in the investor day and it's far more impactful maybe even than a slide can really capture. But it's this idea that we have six regional leaders with a dedicated team and truly dedicated team of a sales leader, a clinical leader, an asset management leader, a dining leader, all the different functions so that we can really focus in and be very nimble and very focused on that super hyper local type decision that a customer faces when they're contemplating senior living.

Nikolas Stengle: And again, I sort of described this in the Investor Day, and it's far more impactful maybe even than a slide can really capture. But it's this idea that we have six regional leaders with a dedicated team, and truly dedicated team of a sales leader, a clinical leader, an asset management leader, a dining leader, all the different functions, so that we can really focus in and be very nimble and very focused on that, you know, super, hyper local type decision that a customer faces when they're contemplating senior senior living. The other part that I just announced during my prepared remarks is we have hired a brand-new position here at Brookdale. It's the Senior Vice President of Strategic Operations.

Speaker #4: The other part that I just announced during my prepared remarks is we have hired a brand new position here at Brookdale. This is Senior Vice President of Strategic Operations.

Speaker #4: This role will consolidate all our pricing decision-making, the analytics, the reporting, the implementation, how we deploy pricing strategy within all our communities. Now, we had a similar structure in the past, but it wasn't truly consolidated under one leader, specifically under operations.

Nikolas Stengle: This role will consolidate all our pricing, decision-making, the analytics, the reporting, the implementation, how we deploy pricing strategy within all our communities. Now we had a similar structure in the past, but it wasn't truly consolidated under one leader, specifically under operations. Concurrently, in a similar manner, all our labor management, our staffing ratios, our workforce management, overtime control, all those types of things will also be under this role. And probably most importantly, our CapEx decision-making. As I've shared quite a few times now, we are really leaning into this idea of redeploying capital into our communities. And for those that were fortunate enough to be with us at Investor Day and got to do the tour of our Franklin...

Speaker #4: Concurrently, in a similar manner, all our labor management, our staffing, ratios, our workforce management, overtime control—all those types of things—will also be under this role.

Speaker #4: And probably most importantly, our CapEx decision-making. As I've shared quite a few times now, we are really leaning into this idea of redeploying capital into our communities.

Speaker #4: And for those that were fortunate enough to be with us at investor day and got to do the tour of our Franklin, sorry, our Brookdale Green Hills community, I think it showed pretty clearly what you can do with a 16-year-old building when you have a very deliberate and comprehensive capital deployment plan.

Nikolas Stengle: Sorry, our Brookdale Green Hills community, I think it showed pretty clearly what you can do with a 16-year-old building when you have a very deliberate and comprehensive capital deployment plan. And we are centralizing all that capital deployment and how we think of it under this role. So it's a very meaningful position that we've now hired under this SVP of Strategic Operations. The second part. Actually, let me pause there. Mary Sue, anything to add on Josh's question?

Speaker #4: And we are centralizing all that capital deployment and how we think of it under this role. So, it's a very meaningful position that we've now hired under this SVP of Strategic Operations.

Speaker #4: The second part, actually—let me pause there. Mary, is there anything to add on Josh's question?

Speaker #5: I'm just very excited about this next step for us because it puts all of those specialized functions so that we can go to market to support our regions and winning locally.

Dawn Kussow: I'm just very excited about this next step for us because it puts all of those specialized functions so that we can go to market to support our regions in winning locally.

Mary Sue Patchett: I'm just very excited about this next step for us because it puts all of those specialized functions so that we can go to market to support our regions in winning locally.

Speaker #4: Yep, perfect. And I think the second question was around HealthPlus. So as I shared, we rolled out HealthPlus in an additional 58 communities in 2025, expanded our footprint in, I think, three new states, if I can recall my prepared remarks.

Nikolas Stengle: Yep, perfect.

Dawn Kussow: Excited.

Mary Sue Patchett: Excited.

Nikolas Stengle: I think the second question was around Health Plus. As I shared, we rolled out Health Plus in an additional 58 communities in 2025, expanded our footprint in, I think, three new states, if I can recall my prepared remarks correctly there. As far as going forward, the real focus, Josh, and as you recall, for those that listened to the Investor Day, and again, I encourage everyone who has any interest in Brookdale to take a look at our Investor Day presentation and video that's still on our investor relations website. We leaned in on this idea of winning markets, and pivoting the thinking of how we win by saying we will win a market. The two examples I happened to give at Investor Day were Kansas City and Dallas.

Speaker #4: Correctly there. As far as going forward, the real focus, Josh, and as you recall, for those that listened to the investor day, and again, I encourage everyone who has any interest in Brookdale to take a look at our investor day presentation and video that's still on our investor relations website.

Speaker #4: We leaned in on this idea of winning markets and pivoting the thinking of how we win by saying we will win a market. And the two examples I happen to give at Investor Day were Kansas City and Dallas.

Speaker #4: Obviously, we're in many more markets where we have some critical density. The Health Plus plan going forward will be to really fill out those gaps that we may still have in markets.

Nikolas Stengle: Obviously, we're in many more markets where we have some critical density. The Health Plus plan going forward will be to really fill out those gaps that we may still have in markets and use that as yet another lever to driving performance around care, around service. And the net effect of that, and I think this was the kind of next part of your question on Health Plus, is we have seen a definite improvement in turnover of residents.

Speaker #4: And use that as yet another lever to driving performance around care, around service. And the net effect of that—and I think this was kind of the next part of your question on HealthPlus—is we have seen a definite improvement in turnover of residents.

Speaker #4: For one, they enjoy and appreciate the care coordination that's provided. But then there's a very practical objective component where they're just going to the hospital less.

Nikolas Stengle: For one, they enjoy and appreciate the care coordination that's provided, but then there's a very practical, objective component where they're just going to the hospital less, they're going to the emergency room less, and those are both areas of, I'll call them, leakage, that happens in our, in our industry, where folks who are in assisted living or memory care, if they land in an inpatient unit in a hospital because of some acute event, quite often they don't come back to senior living. They go to a different level of care, or unfortunately, sometimes actually pass. So our Health Plus program is helping quite a bit on our retention of residents, which then in turn drives our occupancy growth.

Speaker #4: They're going to the emergency room less. And those are both areas of, I'll call them, leakage that happens in our industry where folks who are in assisted living or memory care if they land in an inpatient unit in a hospital because of some acute event, quite often they don't come back to senior living.

Speaker #4: They go to a different level of care. More unfortunately, sometimes actually pass. So our Health Plus program is helping quite a bit on our retention of residents, which then in turn drives our occupancy growth.

Speaker #3: So, one thing I might add to that, Josh, is that we've also seen some really favorable impacts to our associate turnover rates. In our HealthPlus communities, that's actually been very good.

Mary Sue Patchett: The one thing I might add to that, Josh, is that we've also seen some really favorable impacts to our associate turnover rates in our Health Plus communities. That's actually been very, very good. Our associates like the technology that's provided. They love the system that's in place. It's been very, very beneficially received, and it's helping on the move-in side. As you're able to talk about the benefits of the program and what you can provide to residents. Family members love that, and it's been very, very positively received.

Chad White: The one thing I might add to that, Josh, is that we've also seen some really favorable impacts to our associate turnover rates in our Health Plus communities. That's actually been very, very good. Our associates like the technology that's provided. They love the system that's in place. It's been very, very beneficially received, and it's helping on the move-in side. As you're able to talk about the benefits of the program and what you can provide to residents. Family members love that, and it's been very, very positively received.

Speaker #3: Our associates like the technology that's provided. They love the system that's in place. It's been very, very beneficially received. And it's helping on the move-in side.

Speaker #3: As you're able to talk about the benefits of the program and what you can provide to residents, family members love that, and it's been very, very positively received.

Speaker #4: Yep. So question comes from the line. Comes from the line of Joanna. Good joke from Bank of America. Your line is live.

Nikolas Stengle: Yep.

Operator: Another question comes from the line of Joanna Gajuk, from Bank of America. Your line is live.

Speaker #6: Hi. Good morning. Thanks so much for taking the questions. So maybe first, on the centralized pricing strategy rate, your peers talk about in-place spending increases in the high single digits.

Joanna Gajuk: Hi, good morning. Thanks so much for taking the questions. So maybe first, on the centralized pricing strategy, right? Your peers talk about in-place rent increases in the high single digits, so is that kind of what you were able to push as well? And, to that end, have you noticed any change in financial-related move-outs because of that?

Speaker #6: So is that kind of what you were able to push as well? And to that end, have you noticed any change in financial-related move-outs because of that?

Speaker #4: Yep. Good morning, Joanna. Very good question. And I'll characterize what you just said roughly in line with what we were able to achieve with our in-place rate increases that went effective on January 1.

Nikolas Stengle: Yeah. Good morning, Joanna. Very good question, and I'll characterize what you just said roughly in line with what we were able to achieve with our in-place rate increases that went effective on 1 January. So high mid, high single digits is definitely aligned. In fact, the way I think we'll say it even more clearly, our in-place rate increases for 2026 are more akin to what we did two years ago in 2024, and definitely more than what we did last year. And that's a very important metric because it, our entire resident base gets the same in-place rate increase, and it, in some ways, underpins our overall RevPOR growth for the entire year.

Speaker #4: So high, mids, high single digits is definitely aligned. In fact, the way I think we'll say it even more clearly, our in-place rate increases for 2026 are more akin to what we did two years ago in 2024, and definitely more than what we did last year.

Speaker #4: And that's a very important metric because our entire resident base gets the same in-place rate increase. And in some ways, it underpins our overall REVPOR growth for the entire year.

Speaker #4: The other thing I want to comment on regarding REVPOR growth is, as the year progresses and we get new move-ins, those new move-ins are typically replacing residents who moved in on average, let's say, two years ago.

Nikolas Stengle: The other thing I want to comment on RevPOR growth is as the year progresses and we get new move-ins, those new move-ins are typically replacing residents who moved in on average, let's say, two years ago, back in 2024, when our occupancy was meaningfully lower, where our discounting was a little bit higher. So typically, as the year will progress, we will be moving in new residents at a different price point than those that are moving out because of the strength in our business, the overall strength in the senior living industry, and for sure, the occupancy that we have within Brookdale specifically.

Speaker #4: Back in 2024, when our occupancy was meaningfully lower, where our discounting was a little bit higher, so typically as the year will progress, we will be moving in new residents at a different price point than those that are moving out because of the strength in our business, the overall strength in the senior living industry, and for sure, the occupancy that we have within Brookdale specifically.

Speaker #6: And Joanna, I'll follow up on the financial-related move-outs and our experience there. We, of course, are monitoring as we roll out our rate increase.

Dawn Kussow: Yeah, and Joanna, I'll follow up on the financial-related move-outs and our experience there. You know, we, of course, are monitoring as we roll out our rate increase what we would see, and I would just say that it's relatively in line with what we saw when we rolled out kind of the same rate increase two years ago. Now, what I would also say is, if you look at our attrition rates, we've seen some favorability in our attrition rates over the last two years. Our attrition rate has been coming down, and so that has been favorable. You can see that in our investor presentation, and we're continuing to see that in 2026.

Speaker #6: What we would see, and I would just say that it's relatively in line with what we saw when we rolled out kind of the same rate increase two years ago.

Speaker #6: Now, what I would also say is if you look if our attrition rates, we've seen some favorability in our attrition rates over the last two years.

Speaker #6: Our attrition rate has been coming down, and so that has been favorable. You can see that in our investor presentation. And we're continuing to see that in 2026.

Speaker #5: Great, thank you. And I have another one—different topic. I guess somewhat related, but in terms of your COPEX commentary. So, you clearly expect the non-development COPEX to increase from last year.

Joanna Gajuk: Great. Thank you. And I have another one, different topic, I guess, somewhat related, but in terms of your CapEx commentary, so you clearly expect the non-development CapEx to increase from last year. So can you give us a little bit more, maybe details there in terms of the number of projects, and I guess as it relates to going forward, you know, without giving specific numbers, I guess, if you're not ready to talk about it, but, you know, how should we think about this, you know, 2027, 2028 and so on, in terms of, you know, how long will it take to touch all locations that need that CapEx? Thank you.

Speaker #5: So can you give us a little bit more, maybe details there in terms of the number of projects, and I guess as it relates to going forward—without giving specific numbers, I guess, if you're not ready to talk about it—but how should we think about this, '27, '28, and so on, in terms of how long will it take to touch a location that needs that COPEX?

Speaker #5: Thank you.

Speaker #4: Yeah, so as a real estate company, you always have to reinvest in real estate. No matter the age—and obviously, the older it is, the more you potentially have to do.

Nikolas Stengle: Yeah. So, so as a real estate company, you always have to reinvest in real estate, no matter the age. And obviously, the, the older it is, the more you potentially have to do. But the reality is there will always be ongoing real estate capital reinvestment. That's true of any real estate type, and senior living, for sure, falls in line. You know, it's fairly high, highly lived-in type real estate, just as hotels are, just as things of that nature. So I'll reiterate what we said. We expect to execute, to deploy in 2026, the, the range that I had in my prepared remarks. But the reality is that the real focus and the real shift in mindset under this new SVP of strategic operations is really taking that asset management perspective, really take this view of we invest-...

Speaker #4: But the reality is, there will always be ongoing real estate capital reinvestment. That's true of any real estate type. And senior living, for sure, falls in line as a fairly highly lived-in type of real estate, just as hotels are—just as things of that nature.

Speaker #4: So, I'll reiterate what we said. We expect to execute, to deploy in 2026, the range that I had in my prepared remarks. But the reality is that the real focus and the real shift in mindset under this new SVP of Strategic Operations is really taking that asset management perspective—really taking this view of, we invest into a portfolio to get a return.

Speaker #4: So, if anything, the spend will pivot more toward these larger projects. And we do have a list—I mean, we've prioritized it. We have the high impact, and it kind of is aligned with this idea of winning markets.

Nikolas Stengle: into a portfolio to get a return. So if anything, that spend will pivot more towards these larger projects. And we do have a list. I mean, we've prioritized it. We have the high impact, and it kind of does align with this idea of winning markets. So we're gonna deploy our capital in a more deliberate way in the markets that we want to win, so we can create an overall market lift for Brookdale. Again, I used Dallas and Kansas City as illustrative markets. They're far more, and obviously, we won't disclose kind of where our strategy is and where we're leaning in. But that's really the real meaningful part.

Speaker #4: So, we're going to deploy our capital in a more deliberate way in the markets that we want to win, so we can create an overall market lift for Brookdale.

Speaker #4: Again, I used Dallas and Kansas City as illustrative markets. There are far more, and obviously, we won't disclose kind of where our strategy is and where we're leaning in.

Speaker #4: But that’s really the real meaningful part. As far as the spend going forward beyond that, I mean, we can’t specify a number, but I think if you think of continuing to be roughly in line with what we’re doing, it feels like a comfortable run rate.

Nikolas Stengle: As far as the spend going forward beyond that, I mean, we can't, you know, specify a number, but I think if you think of continuing to be roughly in line with what we're doing, feels like a comfortable run rate. We can cover more than enough of the required items while continuing to expand these really high NOI-driving type projects.

Speaker #4: We can cover more than enough of the required items, while continuing to expand these really high NOI-driving type projects.

Speaker #5: Great. Thank you so much for taking the question.

Brian Tanquilut: Great. Thank you so much for taking the question.

Joanna Gajuk: Great. Thank you so much for taking the question.

Speaker #4: Thank you.

Speaker #6: Thank you.

Nikolas Stengle: Thank you.

Speaker #7: Your next question comes from the line of Ben Hendricks from RBC Capital Markets. Your line is live.

Dawn Kussow: Thank you.

Operator: Your next question comes from the line of Ben Hendricks from RBC Capital Markets. Your line is live.

Speaker #8: Great, thank you very much. Just a quick question on the occupancy bands. I appreciate all the color on the sub-70 bucket—we've talked about that a lot—but I wanted to focus a little bit more on the 70 to 80 band, the 90 or so communities there.

Ben Hendrix: Great. Thank you very much. Just a quick question on the occupancy bands. I appreciate all the color on the sub-70 bucket. We've talked about that a lot, but I wanted to focus a little bit more on the 70 to 80 bands, the 90 or so communities there. It seems like there's a lot of earnings power in that bucket. I just wanted to think about the timing and considerations for getting those more meaningfully above 80%. Can you maybe talk about those in terms of their profile for three key leadership? Are there geography considerations to think about how your pricing strategy shifts to address that bucket? And just anything you can, and CapEx needs, anything that is kind of the gating item for getting those over 80? Thanks.

Speaker #8: It seems like there's a lot of earnings power in that bucket, and I just wanted to think about the timing and considerations for getting those more meaningfully above 80%.

Speaker #8: Can you maybe talk about those in terms of their profile for three key leadership? Are there geography considerations to think about? How does your pricing strategy shift to address that bucket?

Speaker #8: And just anything you can, and CapEx needs—anything that is kind of the gating item for getting those over 80. Thanks.

Speaker #4: Yeah, great question, Ben. And oh, by the way, the SWAT communities that we've identified are predominantly in that 70 to 80, and then also the below 70.

Nikolas Stengle: Yeah, great question, Ben. And oh, by the way, our the SWAT communities that we've identified are predominantly in that 70 to 80, and then also the below 70. Now, a lot of the below 70, we're disposing, so obviously we're not, we're not putting a lot of SWAT energy into those as they unwind. But the reality is, even though we quite often benchmark and use milestones around the less than 70, 'cause that's at that point, you're really talking about break even. The real magic of flow-through occurs as you enter into that 80% point. So the fact that you're highlighting that is, is definitely, you know, top of mind for us as well, where a lot of our efforts with our SWAT team is actually specifically in that mark.

Speaker #4: Now, a lot of the below 70 were disposing. So, obviously, we're not putting a lot of SWAT energy into those as they unwind. But the reality is, even though we quite often benchmark and use milestones around the less-than-70, because at that point, you're really talking about break-even.

Speaker #4: The real magic of flow-through occurs as you enter in that 80% point. So the fact that you're highlighting that is definitely top of mind for us as well, where a lot of our efforts with our SWAT team is actually specifically in that mark.

Speaker #4: And then usually, once it accelerates beyond 85 to 90, it's never a cruise control or autopilot, but it kind of enters that phase pretty quickly just based on where the community is.

Nikolas Stengle: Then usually once it accelerates beyond 85 to 90, it's never cruise control or autopilot, but it kind of enters that, that phase pretty quickly, just based on where the, the community is. So I will tell you, that really is kind of the sweet spot of where we focus a lot of our energy, is first, let's get communities above break even. That usually happens fairly quickly, and again, we're disposing a lot of them. And then the next point is: How do you nudge them? How do you push them beyond that 80%, benchmark to get them above?

Speaker #4: So, I will tell you, that really is kind of the sweet spot of where we focus a lot of our energy. First, let's get communities above break-even—that usually happens fairly quickly.

Speaker #4: And again, we're disposing a lot of them. And then the next point is, how do you nudge them? How do you push them beyond that 80% benchmark to get them above?

Speaker #6: Yeah, and then the other thing that I would add is that there are a few communities. Nick was explicit about the 14 communities and the less than 70 that are on the disposition list.

Dawn Kussow: Yeah, and then the other thing that I would add is that there are a few communities. Nick was explicit about the 14 communities in the less than 70 that are on the disposition list. I'd say the next largest group on our disposition, 'cause as we said, there's 29 that are coming out in 2026, is in that band as well. And so as they continue to move up, and there's a large number of communities in that 70 to 80% band that are already in our SWAT team groups, that we're already focused on, whether it's CapEx, it's pricing, it's turnover with our associates, to make sure that we're highly focused to continue to move them up.

Mary Sue Patchett: Yeah, and then the other thing that I would add is that there are a few communities. Nick was explicit about the 14 communities in the less than 70 that are on the disposition list. I'd say the next largest group on our disposition, 'cause as we said, there's 29 that are coming out in 2026, is in that band as well. And so as they continue to move up, and there's a large number of communities in that 70 to 80% band that are already in our SWAT team groups, that we're already focused on, whether it's CapEx, it's pricing, it's turnover with our associates, to make sure that we're highly focused to continue to move them up.

Speaker #6: I'd say the next largest group on our disposition, because as we said, there's 29 that are coming out, and 26 is in that band as well.

Speaker #6: And so as they continue to move up, and there's a large number of communities in that 70 to 80 percent band that are already in our SWAT team groups that we're already focused on—whether it's CapEx, it's pricing, it's turnover with our associates.

Speaker #6: To make sure that we're highly focused to continue to move them up. Nick already talked about the progress that we made during the year, and we would expect to continue to make that progress here in '26.

Dawn Kussow: Nick already talked about the progress that we made during the year, and we would expect to continue to make that progress here in 2026.

Mary Sue Patchett: Nick already talked about the progress that we made during the year, and we would expect to continue to make that progress here in 2026.

Speaker #5: Great. Thank you.

Ben Hendrix: Great. Thank you.

Speaker #7: Your next question comes from the line of Brian. Your line is live.

Operator: Your next question comes from the line of Brian Tanquilut from Jefferies. Your line is live.

Speaker #4: Hey, good morning, guys, and thanks again for hosting us back in January. So maybe, Nick, as I think about occupancy that you reported for January, it seems like that kind of tracks your typical seasonality for December to January.

Brian Tanquilut: Hey, good morning, guys, and thanks again for hosting us back in January. So maybe Nick, as I think about occupancy that you reported for January, it seems like that kind of tracks your typical seasonality for the December to January move. But as we think about the snowstorms or the ice storms that hit the South, how should we be thinking about the recovery that you're seeing there and what it tells you about the health of the demand equation for the business? Thanks.

Speaker #4: But as we think about the snowstorms or the ice storms that hit the South, how should we be thinking about the recovery that you're seeing there, and what it tells you about the health of the demand equation for the business?

Speaker #4: Thanks. Yeah, I appreciate it, Brian. So historically, our December to January sequential occupancy trend is around a 30 to 40 basis point decline, and that's pre-pandemic.

Nikolas Stengle: Yeah, I appreciate it, Brian. So historically, our December to January sequential occupancy trend is around a 30 to 40 basis point decline, and that's pre-pandemic. Even since the stabilization post-pandemic, that 30 to 40 basis point decline from December to January, very typical, by the way, the industry and for sure, Brookdale. And that's exactly what we achieved this year, 2026. And I'll say that is despite this winter storm. The other reality that occurs in senior living, most move-ins occur at the very end of the month, the last week of the month, and you can see that in our own numbers. If you ever look at our month-end number as compared to the weighted average for the entire month, nearly every month, if not every single month, it's always higher.

Speaker #4: Even since the stabilization post-pandemic, that 30 to 40 basis point decline from December to January is very typical. By the way, that's true for the industry and for sure Brookdale.

Speaker #4: And that's exactly what we achieved this year, 2026. And I'll say that is despite this winter storm. The other reality that occurs in senior living: most move-ins occur at the very end of the month, the last week of the month.

Speaker #4: And you can see that in our own numbers. If you ever look at our month-end number as compared to the weighted average for the entire month, nearly every month, if not every single month, it's always higher.

Speaker #4: So, the fact that that big storm—that kind of transitioned through Texas, where we have a meaningful footprint, through Tennessee, for sure, where we have a meaningful footprint, and then off to the East, right in that last week of January—definitely clipped us.

Nikolas Stengle: So the fact that, that big storm, that kind of transitioned through Texas, where we have a meaningful footprint, through Tennessee for sure, where we have a meaningful footprint, then off to the east, right in that last week of January, definitely clipped us. I mean, folks didn't have power. Everything was frozen over. There are not many move-ins or tours that occur in that environment. So for sure, that impacted our occupancy gain in January. But the nice thing about our industry and the nice thing about the segment of the industry we're in, we're in a very non-discretionary, needs-based, not many alternatives. And oh, by the way, it was the entire market that was impacted. So folks who needed senior living, assisted living in January, the end of January, still need it today.

Speaker #4: I mean, folks didn't have power. Everything was frozen over. There are not many move-ins or tours that occur in that environment, so for sure, that impacted our occupancy gain in January.

Speaker #4: But the nice thing about our industry, and the nice thing about the segment of the industry we're in, is we're in a very non-discretionary, needs-based segment with not many alternatives.

Speaker #4: And, oh, by the way, it was the entire market that was impacted. So folks who needed senior living, assisted living in January—the end of January—still need it today.

Speaker #4: So, in fact, we're already seeing it in our February numbers. The pace of move-ins in the first few weeks of February is already ahead of what we typically see.

Nikolas Stengle: So, in fact, we're already seeing it in our February numbers. The pace of move-ins in the first few weeks of February are already ahead of what we typically see, and that's a direct spillover from the January. So I think the better way to look at it is to combine our January and February numbers to get a better sense of how Q1 is progressing, and from our perspective, it's already progressing very nicely as we would expect, despite that storm.

Speaker #4: And that's a direct spillover from January. So I think the better way to look at it is to combine our January and February numbers to get a better sense of how Q1 is progressing.

Speaker #4: And from our perspective, it's already progressing very nicely, as we would expect, despite that storm. Awesome. Thank you.

Joanna Gajuk: Awesome. Thank you.

Brian Tanquilut: Awesome. Thank you.

Speaker #7: As a reminder, if you'd like to ask a question, simply press *1 on your telephone keypad. Your next question comes from Andrew Mock from Barclays.

Operator: As a reminder, if you'd like to ask a question, simply press star one on your telephone keypad. Your next question comes from Andrew Mock from Barclays. Your line is live.

Speaker #7: Your line is live.

Speaker #4: Hi, good morning. I wanted to follow up on the CAPEX spend. I think the range you gave implies about $4,400 per unit across the continuing portfolio.

Andrew Mok: Hi, good morning. Wanted to follow up on the CapEx spend. I think the range you gave implies about 4,400 per unit across the continuing portfolio. Is that the right level we should be thinking about? And then, Nick, I think I heard you say this is a comfortable run rate. So should we be thinking about this as a structural increase in ongoing maintenance CapEx versus a cyclical acceleration? Thanks.

Speaker #4: Is that the right level we should be thinking about? And then, Nick, I think I heard you say this is a comfortable run rate.

Speaker #4: So, should we be thinking about this as a structural increase in ongoing maintenance CAPEX versus a cyclical acceleration? Thanks.

Speaker #8: Yeah, Andrew, I'll take the first swing and then Dawn will chime in with some more details. So the per unit number, I think, is right if you do the math.

Nikolas Stengle: Yeah, Andrew, I'll take the first swing, then Don will chime in with some more details. So the per unit number, I think, is right, if you do the math, so 40... No, she, we, Don.

Speaker #8: So 40 no, Dawn.

Speaker #6: I think, yeah, Andrew, we can maybe talk about your units, but I think it's more around that 3,500, 3,600 on a net basis, because the number we're giving is a net.

Dawn Kussow: I think, yeah, Andrew, we, we can maybe talk about your units, but I think it's more around that 3,500, 3,600 on a, on a net basis, because the number we're giving is a net.

Speaker #8: But the real point is we are looking to reinvest in our communities. As we expand our EBITDA and as we expand our cash flow generation—again, overall, thematically, the run rate feels about right—but we're also looking to reinvest.

Nikolas Stengle: But the real point is, we are looking to reinvest in our communities. As we expand our EBITDA and as we expand our cash flow generation, again, overall, thematically, the run rate feels about right, but we're also looking to reinvest. And the real point I think I'm gonna make is even on an -- you know, we always look at it on an average per unit basis. The reality is we're gonna overinvest in some communities, so the number will be much higher in a community that we really lean into. Other communities will be, you know, near zero or something almost meaningless as far as the CapEx.

Speaker #8: And the real point I think I'm going to make is, even on an— we always look at it on an average per unit basis.

Speaker #8: The reality is, we're going to overinvest in some communities. So the number will be much higher in a community that we really lean into.

Speaker #8: Other communities will be near zero or something almost meaningless as far as the CapEx. And that's the real point of the shift: it's less this idea that we have a bolus or big grouping of CapEx that we deploy in a peanut-butter-spread-type fashion.

Nikolas Stengle: That's the real point of this shift, is less this idea that we have a bolus, a big, you know, grouping of CapEx that we deploy in a peanut butter spread type fashion, and it's more we are gonna target specific communities and specific markets to drive that return and that NOI. So it's less of a piecemeal approach, which is what we've done a little bit of, and more of a comprehensive, targeted, deliberate approach of our CapEx deployment.

Speaker #8: And it's more—we are going to target specific communities and specific markets to drive that return and that NOI. So it's less of a piecemeal approach, which is what we've done a little bit of, and more of a comprehensive, targeted, deliberate approach to our CapEx deployment.

Speaker #4: Great. And then, just to follow up, I think I heard in the prepared remarks that rate increases offset an ongoing trend of lower resident acuity.

Andrew Mok: Great. And then just a follow-up. I think I heard in the prepared remarks that rate increases offset an ongoing trend of lower resident acuity. Can you elaborate on what you're seeing on the acuity side? Is this a mix effect of younger seniors moving in or an actual decrease in same resident acuity? Thanks.

Speaker #4: Can you elaborate on what you're seeing on the acuity side? Is this a mixed effect of younger seniors moving in, or an actual decrease in same-resident acuity?

Speaker #4: Thanks.

Speaker #6: Yeah. I can start. And I think from an acuity side, it's the comments are around the fact that you have as you have a higher acuity resident move out, you generally are having a lower acuity resident move in, which if you look at our report throughout the year, you can see that in our rate because of the care rate.

Dawn Kussow: Yeah, I can, I can start, and I think, I think from an acuity side, it's the comments are around the fact that as you have a higher acuity resident move out, you generally are having a lower acuity resident move in, which if you look at our RevPOR throughout the year, you can see that in our rate because of the care rate. So as you have someone with a higher acuity that's moving out in a higher care rate and someone lower moving in, you're naturally gonna have a lower care rate, which is impacting our RevPOR trending throughout the year. And I think that those are the comments. From an overall acuity level, you know, we obviously monitor our overall acuity as our acuity levels have come down since COVID.

Speaker #6: So, as you have someone with a higher acuity that's moving out at a higher care rate, and someone lower moving in, you're naturally going to have a lower care rate, which is impacting our RevPOR trending throughout the year.

Speaker #6: And I think that those are the comments from an overall acuity level. We obviously monitor our overall acuity, as our acuity levels have come down since COVID.

Speaker #6: We certainly saw them spiking up as we were coming out of COVID, but we certainly have seen them starting to come down. The benefit of that is that you have a longer length of stay with your residents.

Dawn Kussow: We certainly saw them spiking up as we were coming out of COVID, but we certainly have seen them starting to come down. The benefit of that is that you have a longer length of stay with your residents.

Speaker #4: Yeah, so our overall resident turnover rate is slowly decreasing, which is actually a very positive sign because our length of stay is increasing, which again very much underpins overall occupancy growth.

Nikolas Stengle: Yeah, so our overall resident turnover rate is slowly decreasing, which is actually a very positive sign because our length of stay is increasing, which again, very much underpins overall occupancy growth. So it's kind of a balance between acuity and length of stay. Obviously, the sicker or the older the resident, the less the length of stay. So it's actually balancing out pretty nicely.

Speaker #4: So, it's kind of a balance between acuity and length of stay. Obviously, the sicker or the older the resident, the less the length of stay.

Speaker #4: So it's actually balancing out pretty nicely. Great. Thank you.

Andrew Mok: Great. Thank you.

Speaker #7: There are no further questions. I'll now turn the call back over to Nick Stengle, CEO, for closing remarks.

Operator: There are no further questions. I'll now turn the call back over to Nick Stengle, CEO, for closing remarks.

Speaker #4: Excellent. Thank you, Jordan. I really appreciate everyone joining us today. I appreciate the continued interest and engagement with Brookdale. As I've shared at Investor Day and on previous calls...

Nikolas Stengle: Excellent. Thank you, Jordan. Really appreciate everyone joining us today. Appreciate the continued interest and engagement with, with Brookdale. As I've shared in Investor Day on the, and on previous calls, excited to make the entire management team available to any, any folks, any stakeholders who have, an interest in, in Brookdale. So please reach out to Mike Grant, and we'll, we'll set it up. So with that, let's wrap this up. Jordan, I wish everyone a pleasant Thursday and end of the week.

Speaker #4: Excited to make the entire management team available to any folks, any stakeholders who have an interest in Brookdale. So please reach out to Mike Grant, and we'll set it up.

Speaker #4: So with that, let's wrap this up, Jordan. I wish everyone a pleasant Thursday and end of the week.

Operator: That concludes today's meeting.

Q4 2025 Brookdale Senior Living Inc Earnings Call

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