snda-202405100001043000FALSE00010430002024-05-102024-05-10
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 10, 2024
_________________________________
Sonida Senior Living, Inc.
(Exact name of registrant as specified in its charter)
_________________________________
Delaware
(State or other jurisdiction of incorporation)
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| 1-13445 | 75-2678809 |
| (Commission File Number) | (IRS Employer Identification No.) |
| |
| 14755 Preston Road | |
| Suite 810 | |
| Dallas, | Texas | 75254 |
| (Address of principal executive offices) | (Zip Code) |
(972) 770-5600
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
_________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class | | Trading symbol(s) | | Name of each exchange on which registered |
| Common Stock, par value $0.01 per share | | SNDA | | New York Stock Exchange |
Item 2.02 Results of Operations and Financial Condition.
On May 10, 2024, Sonida Senior Living, Inc. (the “Company”) announced its financial results for the first quarter ended March 31, 2024 by issuing a press release. The full text of the press release issued in connection with the announcement is attached hereto as Exhibit 99.1.
The information being furnished under Item 2.02, Item 7.01, Exhibit 99.1 and Exhibit 99.2 shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such a filing. The press release and the presentation referenced below contain, and may implicate, forward-looking statements regarding the Company and include cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated.
Item 7.01 Regulation FD Disclosure.
Attached hereto as Exhibit 99.2 is an updated presentation of the Company.
By filing this Current Report on Form 8-K, the Company does not acknowledge that disclosure of this information is required by Regulation FD or that the information was material or non-public before the disclosure. The Company assumes no obligation to update or supplement forward-looking statements in this presentation that become untrue because of new information, subsequent events or otherwise.
Item 9.01 Financial Statements and Exhibits.
(d)Exhibits.
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| *99.1 | |
| *99.2 | |
| 104 | Cover Page Interactive Date File-formatted as Inline XBRL. |
*These exhibits to this Current Report on Form 8-K are not being filed but are being furnished pursuant to Item 9.01.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: May 10, 2024 | Sonida Senior Living, Inc. |
| | |
| By: | /s/ KEVIN J. DETZ |
| Name: | Kevin J. Detz |
| Title: | Executive Vice President and Chief Financial Officer |
Sonida Senior Living Announces First Quarter 2024 Results
DALLAS, Texas – May 10, 2024 – Sonida Senior Living, Inc. (the “Company,” “we,” “our,” or “us”) (NYSE: SNDA) a leading owner-operator and investor in communities and services for seniors, today announced its results for the first quarter ended March 31, 2024.
“We achieved strong across-the-board results during the first quarter of 2024, executing on our key financial and operational priorities with year-over-year occupancy, revenue and community net operating income all demonstrating continued growth. With our recent balance sheet and liquidity advancements, Sonida has meaningfully positioned itself for strategic expansion and continued momentum, with an eye on shareholder value creation into the second quarter and beyond. I am truly proud of our team, as our inherent focus on serving seniors with our signature programs and services is clearly being reflected in the strength of our performance,” said Brandon Ribar, President and CEO.
First Quarter Highlights
•Liquidity significantly improved in Q1 2024 with our private placement transaction of 5,026,318 shares of common stock at $9.50 a share (the “Private Placement”) completed in February and March of 2024 resulting in gross cash proceeds of $47.8 million.
•On April 1, 2024, the Company entered into an At-the-Market Issuance Sales Agreement with Mizuho Securities USA LLC, whereby the Company may sell, at its option, shares of its common stock up to an aggregate offering price of $75,000,000 (“ATM Sales Agreement”). An additional $10.3 million of net proceeds were raised in April 2024 through our ATM Sales Agreement.
•Using proceeds from the Private Placement, purchased $74.4 million of the outstanding principal balance with Protective Life (“Protective Life Loan Purchase”) for $40.2 million, resulting in a decrease in notes payable of $49.6 million.
•Weighted average occupancy for the Company’s consolidated portfolio increased 200 basis points to 85.9%, comparing Q1 2024 to Q1 2023.
•Resident revenue increased $4.1 million, or 7.3%, comparing Q1 2024 to Q1 2023.
•Net income for the Q1 2024 was $27.0 million which includes a $38.1 million gain on debt extinguishment in connection with the Protective Life Loan Purchase.
•Q1 2024 Adjusted EBITDA, a non-GAAP measure, was $9.5 million representing an increase of 21.5% year-over-year and 1.8% in sequential quarters, driven primarily by continued improvement in operations.
•Results for the Company’s consolidated portfolio of communities:
◦Q1 2024 vs. Q1 2023:
▪Revenue Per Available Unit (“RevPAR”) increased 8.3% to $3,557.
▪Revenue Per Occupied Unit (“RevPOR”) increased 5.9% to $4,140.
▪Community Net Operating Income, a non-GAAP measure, increased $1.5 million to $14.9 million. Adjusted Community Net Operating Income, a non-GAAP measure, which excludes $2.0 million of state grant revenue received in Q1 2023 (none received in Q1 2024) was $14.9 million and $11.4 million for Q1 2024 and Q1 2023, respectively.
▪Community Net Operating Income Margin and Adjusted Community Net Operating Income Margin (non-GAAP measures with the latter adjusted for non-recurring state grant revenue) were 24.6% and 24.6%, for Q1 2024, respectively, and 23.7% and 20.8% for Q1 2023, respectively.
◦Q1 2024 vs. Q4 2023:
▪RevPAR increased 2.5% to $3,557.
▪RevPOR increased 2.4% to $4,140.
▪Community Net Operating Income decreased $1.4 million to $14.9 million. There were no state grants received during these periods.
▪Community Net Operating Income Margin was 24.6% and 27.4% for Q1 2024 and Q4 2023, respectively.
SONIDA SENIOR LIVING, INC.
SUMMARY OF CONSOLIDATED FINANCIAL RESULTS
THREE MONTHS ENDED MARCH 31, 2024
(in thousands)
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | Three Months Ended December 31, | | |
| 2024 | | 2023 | | 2023 | | | | |
| Consolidated results | | | | | | | | | |
Resident revenue (1) | $ | 60,737 | | | $ | 56,606 | | | $ | 59,349 | | | | | |
| Management fees | 594 | | | 505 | | | 586 | | | | | |
| Operating expenses | 46,317 | | | 43,808 | | | 44,367 | | | | | |
| General and administrative expenses | 7,211 | | | 7,063 | | | 9,946 | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Gain on extinguishment of debt, net | 38,148 | | | 36,339 | | | — | | | | | |
| Other income (expense), net | (479) | | | 189 | | | (480) | | | | | |
Income (loss) before provision for income taxes (1) | 27,085 | | | 24,214 | | | (14,581) | | | | | |
Net income (loss) (1) | 27,019 | | | 24,145 | | | (14,629) | | | | | |
Adjusted EBITDA (1) (2) | 9,473 | | | 7,794 | | | 9,302 | | | | | |
| | | | | | | | | |
Community net operating income (NOI) (1) (2) | 14,915 | | | 13,402 | | | 16,260 | | | | | |
Community net operating income margin (1) (2) | 24.6% | | 23.7% | | 27.4% | | | | |
| Weighted average occupancy | 85.9% | | 83.9% | | 85.9% | | | | |
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(1) Includes $2.0 million of state grant revenue received in Q1 2023. There were no such grant revenues in Q1 2024 or Q4 2023.
(2) Adjusted EBITDA, Community Net Operating Income, and Community Net Operating Income Margin are financial measures that are not calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). See “Reconciliation of Non-GAAP Financial Measures” for the Company's definition of such measures, reconciliations to the most comparable GAAP financial measures, and other information regarding the use of the Company's non-GAAP financial measures.
Results of Operations
Three months ended March 31, 2024 as compared to three months ended March 31, 2023
Revenues
Resident revenue for the three months ended March 31, 2024 was $60.7 million as compared to $56.6 million for the three months ended March 31, 2023, an increase of $4.1 million, or 7.3%. The increase in revenue was primarily due to increased occupancy and increased average rent rates. For the three months ended March 31, 2023, the Company received approximately $2.0 million, in various relief funds received from state departments due to financial distress impacts of COVID-19 (“State Relief Funds”). For the three months ended March 31, 2024, the Company received no State Relief Funds.
Expenses
Operating expenses for the three months ended March 31, 2024 were $46.3 million as compared to $43.8 million for the three months ended March 31, 2023, an increase of $2.5 million, or 5.7%. The increase is attributable to the increase in total labor over this period.
General and administrative expenses for the three months ended March 31, 2024 were $7.2 million as compared to $7.1 million for the three months ended March 31, 2023, representing an increase of $0.1 million. The increase was primarily a result of an increase in labor and employee related expenses of $0.6 million, partially offset by decreases in stock-based compensation of $0.3 million and other expenses of $0.2 million.
Gain on extinguishment of debt for the three months ended March 31, 2024 was $38.1 million as compared to $36.3 million for three months ended March 31, 2023. The 2024 gain relates to the derecognition of notes payable and liabilities as a result of the Protective Life Loan Purchase. The 2023 gain relates to the derecognition of notes payable and
liabilities as a result of the transition of legal ownership of two communities to the Federal National Mortgage Association (“Fannie Mae”).
As a result of the foregoing factors, the Company reported net income of $27.0 million and $24.1 million for the three months ended March 31, 2024 and March 31, 2023, respectively.
Adjusted EBITDA for the three months ended March 31, 2024 was $9.5 million compared to $7.8 million for the three months ended March 31, 2023, driven primarily by continued improvement in operations. See “Reconciliation of Non-GAAP Financial Measures” below.
Liquidity, Capital Resources, and Subsequent Events
Liquidity
During 2023, the Company's liquidity conditions, including operating losses and a net working capital deficit, raised substantial doubt about the Company's ability to continue as a going concern. As a result of increases in occupancy in 2023 and 2024, annual rental rate increases in March 2024 and the Private Placement and Protective Life Loan Purchase, the Company has substantially improved its liquidity position. In addition, $10.3 million of net proceeds were raised in April 2024 through our at-the-market equity offering. See details below of the transactions which have increased cash on hand significantly. Based on these events, the Company concluded it has adequate cash to meet its obligations as they become due for the 12-month period following the date the March 31, 2024 financial statements are issued.
Increase in Authorized Shares of Common Stock
On March 21, 2024, following receipt of stockholder approval at the Special Meeting of the Company’s stockholders held on March 21, 2024, the Company filed an amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended, with the Delaware Secretary of State to increase the number of authorized shares of the Company’s common stock from 15,000,000 shares to 30,000,000 shares. The charter amendment became effective upon filing.
Securities Purchase Agreement
On February 1, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with affiliates of Conversant Capital and several other shareholders (together, the “Investors”), pursuant to which the Investors agreed to purchase from the Company, and the Company agreed to sell to the Investors, in a private placement transaction pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, an aggregate of 5,026,318 shares of the Company’s Common Stock at a price of $9.50 per share.
The Private Placement occurred in two closings. The Company issued and sold an aggregate of 3,350,878 shares to the Investors and received gross cash proceeds of $31.8 million at the first closing, which was completed on February 1, 2024. The Company issued the remaining 1,675,440 shares to the Investors and received additional gross cash proceeds of $15.9 million at the second closing, which occurred on March 22, 2024. The Company intends to use this new capital for working capital, continued investments in community improvements, potential acquisitions of new communities, broader community programming and other general corporate purposes.
Protective Life Loan Purchase
On February 2, 2024, the Company completed the Protective Life Loan Purchase of the total outstanding principal balance of $74.4 million from Protective Life Insurance Company (“Protective Life”) that was secured by seven of the Company’s senior living communities for a purchase price of $40.2 million. In addition to aggregate deposits of $1.5 million made in December 2023 and January 2024, the Company funded the remaining cash portion of the purchase price (including one-time closing costs) with $15.4 million of net proceeds from the sale of the shares at the first closing of the Private Placement. The Company obtained additional debt proceeds through its existing loan facility with Ally Bank for the remaining portion of the purchase price, as described below. The Company terminated these loans after completion of the loan purchase from Protective Life.
Ally Term Loan Expansion
On February 2, 2024, in connection with the Protective Life Loan Purchase, the Company expanded its outstanding term loan with Ally Bank by $24.8 million, which was secured by six of the Company’s senior living communities within the Protective Life Loan Purchase. As part of the loan amendment with Ally, the Company also increased its interest rate cap coverage to include the additional borrowings at a cost of $0.6 million.
Cash flows
The table below presents a summary of the Company’s net cash provided by (used in) operating, investing, and financing activities (in thousands):
| | | | | | | | | | | | | | | | | | | | |
| Three months ended March 31, | | |
| 2024 | | 2023 | | $ Change | |
| Net cash provided by (used in) operating activities | $ | (4,105) | | | $ | 3,249 | | | $ | (7,354) | | |
| Net cash used in investing activities | (5,131) | | | (5,086) | | | (45) | | |
| Net cash provided by (used in) financing activities | 29,149 | | | (3,759) | | | 32,908 | | |
| Increase (decrease) in cash and cash equivalents | $ | 19,913 | | | $ | (5,596) | | | $ | 25,509 | | |
In addition to $24.2 million of unrestricted cash on hand as of March 31, 2024, our future liquidity will depend in part upon our operating performance, which will be affected by prevailing economic conditions, and financial, business and other factors, some of which are beyond our control. Principal sources of liquidity are expected to be cash flows from operations, proceeds from equity offerings, proceeds from debt refinancings or loan modifications, and proceeds from the sale of owned assets.
In addition to the Private Placement and Ally term loan expansion on April 1, 2024, the Company entered into the At-the-Market Issuance Sales Agreement with Mizuho Securities USA LLC, whereby the Company may sell, at its option, shares of its common stock up to an aggregate offering price of $75,000,000. On April 5, 2024, the Company sold 382,000 shares pursuant to the ATM Sales Agreement at $27.50 per share for net proceeds of $10.3 million, inclusive of $0.2 million in commission paid to Mizuho. These transactions are expected to provide additional financial flexibility to the Company and increase our liquidity position.
The Company, from time to time, considers and evaluates financial and capital raising transactions related to its portfolio, including debt refinancings, purchases and sales of assets and other transactions. There can be no assurance that the Company will continue to generate cash flows at or above current levels, or that the Company will be able to obtain the capital necessary to meet the Company’s short and long-term capital requirements.
Recent changes in the current economic environment, and other future changes, could result in decreases in the fair value of assets, slowing of transactions, and the tightening of liquidity and credit markets. These impacts could make securing debt or refinancings for the Company or buyers of the Company’s properties more difficult or on terms not acceptable to the Company. The Company’s actual liquidity and capital funding requirements depend on numerous factors, including its operating results, its capital expenditures for community investment, and general economic conditions, as well as other factors described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 27, 2024.
Conference Call Information
The Company will host a conference call with senior management to discuss the Company’s financial results for the three months ended March 31, 2024, on Friday May 10, 2024, at 12:30 p.m. Eastern Time. To participate, dial 877-407-0989 (no passcode required). A link to the simultaneous webcast of the teleconference will be available at: https://www.webcast-eqs.com/register/sonidaseniorliving_q12024_en/en.
For the convenience of the Company’s shareholders and the public, the conference call will be recorded and available for replay starting May 11, 2024 through May 24, 2024. To access the conference call replay, call 877-660-6853, passcode 13743707. A transcript of the call will be posted in the Investor Relations section of the Company’s website.
About the Company
Dallas, Texas-based Sonida Senior Living, Inc. is a leading owner-operator and investor in independent living, assisted living and memory care communities and services for senior adults. As of March 31, 2024, the Company operated 71 senior housing communities in 18 states with an aggregate capacity of approximately 8,000 residents, including 61 communities which the Company owns and 10 communities that the Company third-party manages, which provide compassionate, resident-centric services and care as well as engaging programming. For more information, visit www.sonidaseniorliving.com or connect with the Company on Facebook, Twitter or LinkedIn.
Definitions of RevPAR and RevPOR
RevPAR, or average monthly revenue per available unit, is defined by the Company as resident revenue for the period, divided by the weighted average number of available units in the corresponding portfolio for the period, divided by the number of months in the period.
RevPOR, or average monthly revenue per occupied unit, is defined by the Company as resident revenue for the period, divided by the weighted average number of occupied units in the corresponding portfolio for the period, divided by the number of months in the period.
Safe Harbor
This release contains forward-looking statements which are subject to certain risks and uncertainties that could cause our actual results and financial condition of Sonida Senior Living, Inc. (the “Company,” “we,” “our” or “us”) to differ materially from those indicated in the forward-looking statements, including, among others, the risks, uncertainties and factors set forth under “Item. 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on March 27, 2024, and also include the following: the Company’s ability to generate sufficient cash flows from operations, proceeds from equity issuances and debt financings, and proceeds from the sale of assets to satisfy its short- and long-term debt obligations and to fund the Company’s acquisitions and capital improvement projects to expand, redevelop, and/or reposition its senior living communities; increases in market interest rates that increase the cost of certain of our debt obligations; increased competition for, or a shortage of, skilled workers, including due to general labor market conditions, along with wage pressures resulting from such increased competition, low unemployment levels, use of contract labor, minimum wage increases and/or changes in overtime laws; the Company’s ability to obtain additional capital on terms acceptable to it; the Company’s ability to extend or refinance its existing debt as such debt matures; the Company’s compliance with its debt agreements, including certain financial covenants, and the risk of cross-default in the event such non-compliance occurs; the Company’s ability to complete acquisitions and dispositions upon favorable terms or at all; the risk of oversupply and increased competition in the markets which the Company operates; the Company’s ability to improve and maintain controls over financial reporting and remediate the identified material weakness discussed in its recent Quarterly and Annual Reports filed with the SEC; the cost and difficulty of complying with applicable licensure, legislative oversight, or regulatory changes; risks associated with current global economic conditions and general economic factors such as inflation, the consumer price index, commodity costs, fuel and other energy costs, competition in the labor market, costs of salaries, wages, benefits, and insurance, interest rates, and tax rates; the impact from or the potential emergence and effects of a future epidemic, pandemic, outbreak of infectious disease or other health crisis; and changes in accounting principles and interpretations.
For information about Sonida Senior Living, visit www.sonidaseniorliving.com or connect with the Company on Facebook, Twitter or LinkedIn.
Contact : Investor Relations
Jason Finkelstein
Ignition Investor Relations
ir@sonidaliving.com
Sonida Senior Living, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended
March 31, |
| | | | | 2024 | | 2023 |
| Revenues: | | | | | | | |
| Resident revenue | | | | | $ | 60,737 | | | $ | 56,606 | |
| Management fees | | | | | 594 | | | 505 | |
| Managed community reimbursement revenue | | | | | 6,107 | | | 4,962 | |
| Total revenues | | | | | 67,438 | | | 62,073 | |
| Expenses: | | | | | | | |
| Operating expense | | | | | 46,317 | | | 43,808 | |
| General and administrative expense | | | | | 7,211 | | | 7,063 | |
| | | | | | | |
| Depreciation and amortization expense | | | | | 9,935 | | | 9,881 | |
| | | | | | | |
| Managed community reimbursement expense | | | | | 6,107 | | | 4,962 | |
| Total expenses | | | | | 69,570 | | | 65,714 | |
| Other income (expense): | | | | | | | |
| Interest income | | | | | 139 | | | 194 | |
| Interest expense | | | | | (8,591) | | | (8,867) | |
| | | | | | | |
| | | | | | | |
| Gain on extinguishment of debt, net | | | | | 38,148 | | | 36,339 | |
| | | | | | | |
| Other income (expense), net | | | | | (479) | | | 189 | |
| Income before provision for income taxes | | | | | 27,085 | | | 24,214 | |
| Provision for income taxes | | | | | (66) | | | (69) | |
| Net income | | | | | 27,019 | | | 24,145 | |
| | | | | | | |
| Undeclared dividends on Series A convertible preferred stock | | | | | (1,335) | | | (1,198) | |
| Undistributed net income allocated to participating securities | | | | | (2,849) | | | (3,182) | |
| Net income attributable to common stockholders | | | | | $ | 22,835 | | | $ | 19,765 | |
| | | | | | | |
| Weighted average common shares outstanding — basic | | | | | 9,861 | | | 6,855 | |
| Weighted average common shares outstanding — diluted | | | | | 10,562 | | | 7,168 | |
| | | | | | | |
| Basic net income per common share | | | | | $ | 2.32 | | | $ | 2.88 | |
| Diluted net income per common share | | | | | $ | 2.16 | | | $ | 2.76 | |
Sonida Senior Living, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except per share amounts)
| | | | | | | | | | | |
| March 31,
2024 | | December 31,
2023 |
| | | |
| Assets | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 24,211 | | | $ | 4,082 | |
| Restricted cash | 13,452 | | | 13,668 | |
| Accounts receivable, net | 10,346 | | | 8,017 | |
| | | |
| Prepaid expenses and other assets | 3,412 | | | 4,475 | |
| Derivative assets | 2,130 | | | 2,103 | |
| Total current assets | 53,551 | | | 32,345 | |
| Property and equipment, net | 581,902 | | | 588,179 | |
| | | |
| Other assets, net | 824 | | | 936 | |
| Total assets | $ | 636,277 | | | $ | 621,460 | |
| Liabilities and Equity | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 4,864 | | | $ | 11,375 | |
| Accrued expenses | 39,747 | | | 42,388 | |
| Current portion of notes payable, net of deferred loan costs | 6,831 | | | 42,323 | |
| Deferred income | 4,255 | | | 4,041 | |
| Federal and state income taxes payable | 288 | | | 215 | |
| Other current liabilities | 512 | | | 519 | |
| | | |
| | | |
| | | |
| Total current liabilities | 56,497 | | | 100,861 | |
| Notes payable, net of deferred loan costs and current portion | 571,267 | | | 587,099 | |
| Other long-term liabilities | 40 | | | 49 | |
| Total liabilities | 627,804 | | | 688,009 | |
| Commitments and contingencies | | | |
| Redeemable preferred stock: | | | |
| Series A convertible preferred stock, $0.01 par value; 41 shares authorized, 41 shares issued and outstanding as of March 31, 2024 and December 31, 2023 | 49,877 | | | 48,542 | |
| Shareholders’ deficit: | | | |
| Authorized shares - 15,000 as of March 31, 2024 and December 31, 2023; none issued or outstanding, except Series A convertible preferred stock as noted above | — | | | — | |
| Authorized shares - 30,000 and $15,000 as of March 31, 2024 and December 31, 2023, respectively; 13,197 and 8,178 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | 132 | | | 82 | |
| Additional paid-in capital | 349,610 | | | 302,992 | |
| Retained deficit | (391,146) | | | (418,165) | |
| Total shareholders’ deficit | (41,404) | | | (115,091) | |
| Total liabilities, redeemable preferred stock and shareholders’ deficit | $ | 636,277 | | | $ | 621,460 | |
Sonida Senior Living, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
| | | | | | | | | | | |
| | Three Months Ended March 31, |
| | 2024 | | 2023 |
| Cash flows from operating activities: | | | |
| Net income | $ | 27,019 | | | $ | 24,145 | |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | | |
| Depreciation and amortization | 9,935 | | | 9,881 | |
| Amortization of deferred loan costs | 324 | | | 366 | |
| | | |
| | | |
| Gain on sale of assets, net | (192) | | | (251) | |
| | | |
| | | |
| Loss on derivative instruments, net | 527 | | | 572 | |
| Gain on extinguishment of debt | (38,148) | | | (36,339) | |
| Provision for bad debt | 397 | | | 237 | |
| Non-cash stock-based compensation expense | 575 | | | 902 | |
| Other non-cash items | (3) | | | (1) | |
| Changes in operating assets and liabilities: | | | |
| Accounts receivable, net | (2,726) | | | (48) | |
| | | |
| Prepaid expenses and other assets | 1,063 | | | 1,159 | |
| Other assets, net | (41) | | | 62 | |
| Accounts payable and accrued expense | (3,123) | | | 1,828 | |
| | | |
| Federal and state income taxes payable | 73 | | | 260 | |
| Deferred income | 214 | | | 438 | |
| | | |
| Other current liabilities | 1 | | | 38 | |
| Net cash provided by (used in) operating activities | (4,105) | | | 3,249 | |
| Cash flows from investing activities: | | | |
| | | |
| Capital expenditures | (5,762) | | | (5,429) | |
| Proceeds from sale of assets | 631 | | | 343 | |
| Net cash used in investing activities | (5,131) | | | (5,086) | |
| Cash flows from financing activities: | | | |
| Proceeds from notes payable | 24,830 | | | — | |
| Repayments of notes payable | (41,999) | | | (3,714) | |
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| Proceeds from issuance of common stock, net | 47,641 | | | — | |
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| Purchase of interest rate cap | (554) | | | — | |
| Deferred loan costs paid | (549) | | | — | |
| Other financing costs | (220) | | | (45) | |
| Net cash provided by (used in) financing activities | 29,149 | | | (3,759) | |
| Increase (decrease) in cash and cash equivalents and restricted cash | 19,913 | | | (5,596) | |
| Cash, cash equivalents, and restricted cash at beginning of period | 17,750 | | | 30,742 | |
| Cash, cash equivalents, and restricted cash at end of period | $ | 37,663 | | | $ | 25,146 | |
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
This earnings release contains the financial measures (1) Community Net Operating Income and Adjusted Community Net Operating Income, (2) Community Net Operating Income Margin and Adjusted Community Net Operating Income Margin, (3) Adjusted EBITDA, (4) Revenue per Occupied Unit (RevPOR) and (5) Revenue per Available Unit (RevPAR), all of which are not calculated in accordance with U.S. GAAP. Presentations of these non-GAAP financial measures are intended to aid investors in better understanding the factors and trends affecting the Company’s performance and liquidity. However, investors should not consider these non-GAAP financial measures as a substitute for financial measures determined in accordance with GAAP, including net income (loss), income (loss) from operations, net cash provided by (used in) operating activities, or revenue. Investors are cautioned that amounts presented in accordance with the Company’s definitions of these non-GAAP financial measures may not be comparable to similar measures disclosed by other companies because not all companies calculate non-GAAP measures in the same manner. Investors are urged to review the following reconciliations of these non-GAAP financial measures from the most comparable financial measures determined in accordance with GAAP.
Community Net Operating Income and Community Net Operating Income Margin are non-GAAP performance measures for the Company’s consolidated owned portfolio of communities that the Company defines as net income (loss) excluding: general and administrative expenses (inclusive of stock-based compensation expense), interest income, interest expense, other income/expense, provision for income taxes, settlement fees and expenses, revenue and operating expenses from the Company’s disposed properties; and further adjusted to exclude income/expense associated with non-cash, non-operational, transactional, or organizational restructuring items that management does not consider as part of the Company’s underlying core operating performance and impacts the comparability of performance between periods. For the periods presented herein, such other items include depreciation and amortization expense, gain(loss) on extinguishment of debt, gain(loss) on disposition of assets, long-lived asset impairment, and loss on non-recurring settlements with third parties. The Community Net Operating Income Margin is calculated by dividing Community Net Operating Income by resident revenue. Adjusted Community Net Operating Income and Adjusted Community Net Operating Income Margin are further adjusted to exclude the impact from non-recurring state grant funds received.
The Company believes that presentation of Community Net Operating Income, Community Net Operating Income Margin, Adjusted Community Net Operating Income, and Adjusted Community Net Operating Income Margin as performance measures are useful to investors because (i) they are one of the metrics used by the Company’s management to evaluate the performance of our core consolidated owed portfolio of communities, to review the Company’s comparable historic and prospective core operating performance of the consolidated owned communities, and to make day-to-day operating decisions; (ii) they provide an assessment of operational factors that management can impact in the short-term, namely revenues and the controllable cost structure of the organization, by eliminating items related to the Company’s financing and capital structure and other items that management does not consider as part of the Company’s underlying core operating performance, and impacts the comparability of performance between periods.
Community Net Operating Income, Net Community Operating Income Margin, Adjusted Community Net Operating Income, and Adjusted Community Net Operating Income Margin have material limitations as a performance measure, including: (i) excluded general and administrative expenses are necessary to operate the Company and oversee its communities; (ii) excluded interest is necessary to operate the Company’s business under its current financing and capital structure; (iii) excluded depreciation, amortization, and impairment charges may represent the wear and tear and/or reduction in value of the Company’s communities, and other assets and may be indicative of future needs for capital expenditures; and (iv) the Company may incur income/expense similar to those for which adjustments are made, such as gain (loss) on debt extinguishment, gain(loss) on disposition of assets, loss on settlements, non-cash stock-based compensation expense, and transaction and other costs, and such income/expense may significantly affect the Company’s operating results.
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| (Dollars in thousands) | Three Months Ended
March 31, | | Three Months Ended December 31, | | |
| 2024 | | 2023 | | 2023 | | | | |
| Community Net Operating Income | | | | | | | | | |
| Net income (loss) | $ | 27,019 | | | $ | 24,145 | | | $ | (14,629) | | | | | |
| General and administrative expense | 7,211 | | | 7,063 | | | 9,946 | | | | | |
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| Depreciation and amortization expense | 9,935 | | | 9,881 | | | 10,137 | | | | | |
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| Interest income | (139) | | | (194) | | | (87) | | | | | |
| Interest expense | 8,591 | | | 8,867 | | | 9,673 | | | | | |
| Gain on extinguishment of debt | (38,148) | | | (36,339) | | | — | | | | | |
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Other (income) expense, net | 479 | | | (189) | | | 480 | | | | | |
| Provision for income taxes | 66 | | | 69 | | | 48 | | | | | |
Settlement (income) fees and expense, net (1) | (99) | | | 99 | | | 692 | | | | | |
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| Community net operating income | 14,915 | | | 13,402 | | | 16,260 | | | | | |
| Resident revenue | $ | 60,737 | | | $ | 56,606 | | | $ | 59,349 | | | | | |
| Community net operating income margin | 24.6 | % | | 23.7 | % | | 27.4 | % | | | | |
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COVID-19 state relief grants (2) | — | | | 2,037 | | | — | | | | | |
| Adjusted resident revenue | 60,737 | | | 54,569 | | | 59,349 | | | | | |
| Adjusted community net operating income | $ | 14,915 | | | $ | 11,365 | | | $ | 16,260 | | | | | |
| Adjusted community net operating income margin | 24.6 | % | | 20.8 | % | | 27.4 | % | | | | |
(1) Settlement fees and expenses relate to non-recurring settlements with third parties for contract terminations, insurance claims, and related fees.
(2) COVID-19 relief revenue are grants and other funding received from third parties to aid in the COVID-19 response and includes State Relief Funds received.
ADJUSTED EBITDA (UNAUDITED)
Adjusted EBITDA is a non-GAAP performance measures that the Company defines as net income (loss) excluding: depreciation and amortization expense, interest income, interest expense, other expense/income, provision for income taxes; and further adjusted to exclude income/expense associated with non-cash, non-operational, transactional, or organizational restructuring items that management does not consider as part of the Company’s underlying core operating performance and impacts the comparability of performance between periods. For the periods presented herein, such other items include stock-based compensation expense, provision for bad debts, gain (loss) on extinguishment of debt, gain on sale of assets, long-lived asset impairment, casualty losses, and transaction and conversion costs.
The Company believes that presentation of Adjusted EBITDA’s impact as a performance measure is useful to investors because it provides an assessment of operational factors that management can impact in the short-term, namely revenues and the controllable cost structure of the organization, by eliminating items related to the Company’s financing and capital structure and other items that management does not consider as part of the Company’s underlying core operating performance and that management believes impact the comparability of performance between periods.
Adjusted EBITDA has material limitations as a performance measure, including: (i) excluded interest is necessary to operate the Company’s business under its current financing and capital structure; (ii) excluded depreciation, amortization and impairment charges may represent the wear and tear and/or reduction in value of the Company’s communities and other assets and may be indicative of future needs for capital expenditures; and (iii) the Company may incur income/expense similar to those for which adjustments are made, such as bad debts, gain(loss) on sale of assets, or gain(loss) on debt extinguishment, non-cash stock-based compensation expense and transaction and other costs, and such income/expense may significantly affect the Company’s operating results.
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| (In thousands) | Three Months Ended
March 31, | | Three Months Ended
December 31, | | | | |
| 2024 | | 2023 | | 2023 | | | | |
| Adjusted EBITDA | | | | | | | | | |
| Net income (loss) | $ | 27,019 | | | $ | 24,145 | | | $ | (14,629) | | | | | |
| Depreciation and amortization expense | 9,935 | | | 9,881 | | | 10,137 | | | | | |
| Stock-based compensation expense, net | 575 | | | 902 | | | 605 | | | | | |
| Provision for bad debt | 398 | | | 238 | | | 568 | | | | | |
| Interest income | (139) | | | (194) | | | (87) | | | | | |
| Interest expense | 8,591 | | | 8,867 | | | 9,673 | | | | | |
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| Gain on extinguishment of debt, net | (38,148) | | | (36,339) | | | — | | | | | |
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Other (income) expense, net | 479 | | | (189) | | | 480 | | | | | |
| Provision for income taxes | 66 | | | 69 | | | 48 | | | | | |
Casualty losses (1) | 298 | | | — | | | 348 | | | | | |
Transaction and conversion costs (2) | 399 | | | 414 | | | 2,159 | | | | | |
| Adjusted EBITDA | $ | 9,473 | | | $ | 7,794 | | | $ | 9,302 | | | | | |
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(1) Casualty losses relate to non-recurring insured claims for unexpected events.
(2) Transaction and conversion costs relate to legal and professional fees incurred for transactions, restructure activities, or related projects.
SUPPLEMENTAL INFORMATION
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| First Quarter | | |
| (Dollars in thousands) | 2024 | | 2023 | | Increase (decrease) | | Fourth Quarter 2023 | | Sequential increase (decrease) |
| Selected Operating Results | | | | | | | | | |
I. Consolidated community portfolio | | | | | | | | | |
| Number of communities | 61 | | 62 | | (1) | | 61 | | — |
| Unit capacity | 5,692 | | 5,747 | | (55) | | 5,700 | | (8) |
Weighted average occupancy (1) | 85.9% | | 83.9% | | 2.0% | | 85.9% | | —% |
| RevPAR | $3,557 | | $3,283 | | $274 | | $3,470 | | $87 |
| RevPOR | $4,140 | | $3,911 | | $229 | | $4,042 | | $98 |
| Consolidated community net operating income | $14,915 | | $13,402 | | $1,513 | | $16,260 | | $(1,345) |
Consolidated community net operating income margin (3) | 24.6% | | 23.7% | | 0.9% | | 27.4% | | (2.8)% |
Consolidated community net operating income, net of general and administrative expenses (2) | $7,704 | | $6,339 | | $1,365 | | $6,314 | | $1,390 |
Consolidated community net operating income margin, net of general and administrative expenses (2) | 12.7% | | 11.2% | | 1.5% | | 10.6% | | 2.1% |
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| II. Consolidated Debt Information | | | | | | | | | |
| (Excludes insurance premium financing) | | | | | | | | | |
| Total variable rate mortgage debt | $162,114 | | $137,453 | | N/A | | $137,320 | | N/A |
| Total fixed rate debt | $418,275 | | $500,721 | | N/A | | $492,998 | | N/A |
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(1) Weighted average occupancy represents actual days occupied divided by total number of available days during the quarter.
(2) General and administrative expenses exclude stock-based compensation expense in order to remove the fluctuation in fair value measurement due to market volatility.
(3) Includes $2.0 million of state grant revenue received in Q1 2023. There were no such grant revenues in Q1 2024 or Q4 2023. Excluding the grant revenue, Q1 2023 consolidated community NOI margin was 20.8%.
sndaq1investordeck_final
A Leading Operator, Owner and Investor in Senior Living Investor Presentation First Quarter 2024 A Leading Operator, Owner & Investor May 10, 2024 SNDA NYSE Listed
Forward-Looking Statements 2 This presentation contains forward-looking statements which are subject to certain risks and uncertainties that could cause our actual results and financial condition of Sonida Senior Living, Inc. (“Sonida,” the “Company,” “we,” “our” or “us”) to differ materially from those indicated in the forward-looking statements, including, among others, the risks, uncertainties and factors set forth under “Item. 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on March 27, 2024, as well as on Form 10-Q for the quarter ended March 31, 2024, filed with the SEC on May 10, 2024, and also include the following: The Company’s ability to generate sufficient cash flows from operations, additional proceeds from equity issuances and debt financings, and proceeds from the sale of assets to satisfy its short- and long-term debt obligations and to fund the Company’s acquisitions and capital improvement projects to expand, redevelop, and/or reposition its senior living communities; increases in market interest rates that increase the cost of certain of our debt obligations; increased competition for, or a shortage of, skilled workers, including due to general labor market conditions, along with wage pressures resulting from such increased competition, low unemployment levels, use of contract labor, minimum wage increases and/or changes in overtime laws; the Company’s ability to obtain additional capital on terms acceptable to it; the Company’s ability to extend or refinance its existing debt as such debt matures; the Company’s compliance with its debt agreements, including certain financial covenants, and the risk of cross-default in the event such non-compliance occurs; the Company’s ability to complete acquisitions and dispositions upon favorable terms or at all; the risk of oversupply and increased competition in the markets which the Company operates; the Company’s ability to improve and maintain controls over financial reporting and remediate the identified material weakness discussed in Item 4 of Part I of Form 10-Q; the cost and difficulty of complying with applicable licensure, legislative oversight, or regulatory changes; risks associated with current global economic conditions and general economic factors such as inflation, the consumer price index, commodity costs, fuel and other energy costs, competition in the labor market, costs of salaries, wages, benefits, and insurance, interest rates, and tax rates; the impact from or the potential emergence and effects of a future epidemic, pandemic, outbreak of infectious disease or other health crisis; and changes in accounting principles and interpretations. We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or outcomes that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. For information about the Company, visit www.sonidaseniorliving.com.
Non-GAAP Financial Measures 3 This presentation contains contains the financial measures (1) Community Net Operating Income and Adjusted Community Net Operating Income, (2) Community Net Operating Income Margin and Adjusted Community Net Operating Income Margin, (3) Adjusted EBITDA, (4) Revenue per Occupied Unit (RevPOR), (5) Revenue per Available Unit (RevPAR), (6) Adjusted Operating Expenses, and (7) Pro Forma normalized amounts for these metrics, all of which are not calculated in accordance with U.S. GAAP. Presentations of these non-GAAP financial measures are intended to aid investors in better understanding the factors and trends affecting the Company’s performance and liquidity. However, investors should not consider these non-GAAP financial measures as a substitute for financial measures determined in accordance with GAAP, including net income (loss), income (loss) from operations, net cash provided by (used in) operating activities, or revenue. Investors are cautioned that amounts presented in accordance with the Company’s definitions of these non-GAAP financial measures may not be comparable to similar measures disclosed by other companies because not all companies calculate non-GAAP measures in the same manner. Investors are urged to review the reconciliations of these non-GAAP financial measures from the most comparable financial measures determined in accordance with GAAP included in our Form 8k filing with this presentation. Community Net Operating Income and Community Net Operating Income Margin are non-GAAP performance measures for the Company’s consolidated owned portfolio of communities that the Company defines as net income (loss) excluding: general and administrative expenses (inclusive of stock-based compensation expense), interest income, interest expense, other income/expense, provision for income taxes, settlement fees and expenses, revenue and operating expenses from the Company’s disposed properties; and further adjusted to exclude income/expense associated with non-cash, non-operational, transactional, or organizational restructuring items that management does not consider as part of the Company’s underlying core operating performance and impacts the comparability of performance between periods. For the periods presented herein, such other items include depreciation and amortization expense, gain(loss) on extinguishment of debt, gain(loss) on disposition of assets, long-lived asset impairment, and loss on non-recurring settlements with third parties. The Community Net Operating Income Margin is calculated by dividing Community Net Operating Income by resident revenue. Adjusted Community Net Operating Income and Adjusted Community Net Operating Income Margin are further adjusted to exclude the impact from non-recurring state grant funds received. The Company believes that presentation of Community Net Operating Income, Community Net Operating Income Margin, Adjusted Community Net Operating Income, and Adjusted Community Net Operating Income Margin as performance measures are useful to investors because (i) they are one of the metrics used by the Company’s management to evaluate the performance of our core consolidated owed portfolio of communities, to review the Company’s comparable historic and prospective core operating performance of the consolidated owned communities, and to make day-to-day operating decisions; (ii) they provide an assessment of operational factors that management can impact in the short-term, namely revenues and the controllable cost structure of the organization, by eliminating items related to the Company’s financing and capital structure and other items that management does not consider as part of the Company’s underlying core operating performance, and impacts the comparability of performance between periods. Community Net Operating Income, Net Community Operating Income Margin, Adjusted Community Net Operating Income, and Adjusted Community Net Operating Income Margin have material limitations as a performance measure, including: (i) excluded general and administrative expenses are necessary to operate the Company and oversee its communities; (ii) excluded interest is necessary to operate the Company’s business under its current financing and capital structure; (iii) excluded depreciation, amortization, and impairment charges may represent the wear and tear and/or reduction in value of the Company’s communities, and other assets and may be indicative of future needs for capital expenditures; and (iv) the Company may incur income/expense similar to those for which adjustments are made, such as gain (loss) on debt extinguishment, gain(loss) on disposition of assets, loss on settlements, non-cash stock-based compensation expense, and transaction and other costs, and such income/expense may significantly affect the Company’s operating results.
About Sonida
Leading Senior Living Operator, Owner & Investor in the U.S. 5 • Bringing quality senior living to life, with a focus on independent living, assisted living and memory care • Providing comfortable, safe and affordable communities where residents receive personalized care from team members who treat them like family • Focused on organic growth through existing community advancement as well as inorganic growth through acquisitions, joint ventures and management contracts • Positioned to provide competitive residential rates and flexible product offerings • Portfolio situated in markets where positive demographic trends exist: population growth, income growth and increased chronic medical conditions relative to the 75+ age group 8 XX XX XX 8 Consecutive Qtr Revenue Growth 12 Consecutive Qtr Occupancy Growth 90% Private Pay Residents ~4,000 Total Employees 85.9% Weighted Avg Occupancy (Q1) ~8,000 Resident Capacity71 Geographically Concentrated Communities Geographically Concentrated Communities (as of 3/31/24) Weighted Average Occupancy (Q1’24) Private Pay Residents Consecutive Quarters Same- Store Occupancy t Consecutive Quarters Resident Rent Rate Growth Consecutive Quarters RevPAR Gr l Employees R t Capacity
3,957 Employees (2,553 FT / 1,404 PT) Sonida Senior Living Footprint 6 71 Communities (as of 3/31/24) (61 Owned / 10 Managed) 15+ Communities 5 - 14 Communities < 5 Communities 7,011 Units Across 18 States Managed Owned Data as of March 31, 2024. 23% 20% 18% 10% 29% Texas OhioWisconsin Indiana Other Resident Revenue by State (Owned Portfolio) 46% 3,261 Units 42% 2,920 Units 12% 830 Units Assisted Living Memory Care Independent Living Balanced Unit Mix Supports Target Market Profile (Total Portfolio)
Recent Highlights & Accomplishments 7 - February 2024: Private placement raise of $47.75M (including investment from largest shareholder Conversant Capital) with ~$25M available for potential acquisitions and working capital - April 2024: Launched ATM (At-the-Market) securities program with a $75M capacity to fund identified acquisitions; subsequently sold 382,000 shares at $27.50, representing $10.3M of net proceeds to the Company - February 2024: Purchased $77.4M worth of loans (including accrued interest) on seven owned communities for $40.2M, representing a 48% discount on the outstanding principal balance - Company’s recent acquisition in Ohio brings total U.S. senior living portfolio footprint to 72 communities - In process of acquiring an additional 8 geographically-strategic communities through joint ventures - Expanding management footprint with 3 communities transitioning to Sonida on June 1 - Expansion of underwriting and business development functions to address increased inbound deal flow - Creation of “Operational Excellence” department to support transitions, training and portfolio-wide performance initiatives - Tactical support team headcount additions driven by departmental productivity metrics - Total incremental cost of personnel additions accretive to G&A as a percentage of revenue - March 1, 2024: Portfolio-wide annual average rate increase of 6.3% on an all-in basis - Excluding Medicaid supported and ancillary fee revenues, annual average rate increase jumps to 7.3% over the same period Equity Infusions Strategic Portfolio Growth Discounted Debt Repurchase Investments in Growth and Support Infrastructure Rent Rate Increase
Power of Unique “Operator-Owner-Investor” Model 8 Full Control of Operations Fully integrated operating platform: No reliance on third-party property management Unified team structure increases efficiencies and brings senior decision makers closer to assets Ability to implement fast-paced operational changes and drive market-by-market labor and purchasing efficiencies through scale Value-drivers: Industry Recovery + Company-specific Operational Improvements Portfolio recovery surpassing industry pace with occupancy above pre-pandemic levels Developed tools to better manage lead funnel, labor and resident care Enhanced resident experience with proprietary Joyful LivingTM life enrichment, Magnolia TrailsTM memory care and Grove MenuTM dining Growth-drivers: Balance Sheet Investments + Third-party Management Contracts Restructuring experience informs creative capital stack solutions for distressed sellers + operating expertise allows for asset acquisitions requiring significant operational turnarounds Strategic acquisitions focused on existing and comparable markets, create operating efficiencies Growth of management contracts with select third-party owners allow leverage of operational capabilities and enhanced ROIC with asset-light earnings growth Sonida is uniquely positioned to aggressively invest in a dislocated senior living landscape to grow and create value
Growth Drivers in 2024 and Beyond Significant acquisition opportunities tied to limited capital availability across the sector; banks, private equity sponsors, and management companies all represent current target relationships Company specific operational improvements led by new management initiatives (labor, sales efficiency, rate optimization, length of stay, Group Purchasing Organization (GPO) utilization, etc.) to drive further margin improvement Ability to scale G&A at the corporate level and within existing geographies that are right-sized for a company approximately 2x larger Continued industry recovery driven by lack of new supply, high construction costs and robust demand to drive occupancy and rate growth 9
Proactive Management of Debt 10 (in millions) Fixed Rate Maturities Variable Rate Maturities Insurance & Other Recurring Principal Payments Total Weighted Rate 2024 - - $2.1 $6.0(1) $8.1(1) 4.95% 2025 $30.6(2) - - $0.9 $31.4 4.94% 2026 $220.1 - - $2.2 $222.3 5.00% 2027(4) - $112.9 - $3.6 $116.5 5.46% 2028 - - - $3.7 $3.7 5.31% 2029+ $147.4 $49.2 - $3.8 $200.4 5.31% $0 Debt Maturities in 2024 72.2% Fixed Rate Debt 4.95% Effective Weighted Avg. Interest Rate 100% Of Variable Rate Debt is Hedged Debt Maturities in 2024 Fixed Rate Debt (3) Eff i e Wei vg. Interest Rate Variable Rate is Hedged (1) Includes a one-time $5mm principal payment due in June 2024 in connection with the second of two paydowns required under the 2023 Fannie Mae comprehensive debt restructure. (2) Comprised of $17.4mm Baytown community loan (Prescott) maturing April 2025 and $13.2mm Greenbriar community loan (Avant) maturing September 2025. (3) Insurance & Other included in fixed rate debt calculation. (4) Assumes the Company exercises right to extend Ally Term Loan maturity by 1 year.
Financial Performance & Highlights
Q1 2024 Financial Comparisons – Owned Communities 12 $ in millions, except RevPAR and RevPOR Q1’24 Q1’23 Q1’24 vs Q1’23 YoY Change (%) Pro Forma Q1’24 March 1 Rent Rates(5) Pro Forma Q4’23(6) Pro Forma Q1’24 vs Pro Forma Q4’23(6) Change (%) 85.9% 83.9% 200 bps 85.9% 85.9% - $3,557 $3,282 8.4% $3,667 $3,471 5.6% $4,140 $3,912 5.8% $4,271 $4,042 5.7% $60.7 $56.6 7.2% $62.6 $59.3 5.6% $45.7 $43.2 6.0% $45.7 $44.6 (6) 2.5% $14.9 $13.4 11.2% $16.9 $14.7 15.0% 24.6% 23.7% 90 bps 26.9% 24.8% 210 bps $14.9 $11.4 30.7% $16.9 $14.7 15.0% 24.5% 20.9% 360 bps 26.9% 24.8% 210 bps (1) Amounts are not calculated in accordance with GAAP. See page 3 for the Company’s disclosure regarding non-GAAP financial measures. (2) Includes non-recurring state grant revenue earned and received of $2.0M in Q1 2023. No such grants received in Q1 2024. (3) Adjusted Operating Expenses exclude professional fees, settlement expense, non-income tax, non-property tax, casualty gains and losses, and other expenses (corporate operating expenses not allocated to the communities): $0.8M Q1'24, $0.7M Q1'23, and $1.3M Q4’23. (4) Excludes non-recurring state grant revenue earned and received of $2.0M in Q1 2023. No such grants received in Q1 2024. (5) March 1, 2024: Portfolio-wide annual average rate increase of 6.3% on an all-in basis. (6) Pro Forma Q4’23 excludes the one-time credits associated with real estate tax reassessed values ($0.8M) and workers compensation true-ups ($0.6M) recognized on a GAAP basis in the 2023 Form 10K. YoY Community NOI Growth of 11.2% and Adjusted Community NOI Margin Expansion of 360 bps
Q1 2024 Revenue Highlights 13 Assisted Living Level of Care “LoC” Program Impact • Simplified 4 level system with clear requirements • New monitoring tools implemented to reinforce timely LoC reviews based on company and state-specific requirements • Leveraged new monitoring technology to facilitate more accurate resident assessments Resident Rent Rate Changes (1) Sequential rate increase of $101 or 2.7% for Q1’24 Positive resident rent rate growth for eight consecutive quarters (1) Includes Private Pay and Medicaid rent only. Q1’24 Resident rent rates(1) increased $355 or 10.1% YoY compared to Q1’23 100% of Current Residents Converted 15.4% YoY % Increase of LoC Revenue $1.9M YoY $ Increase of LoC Revenue Positive upward re-leasing spreads continue as rent rates escalate Trend Re-leasing Spread Resident Rate Rent Trend March 1, 2024: Portfolio-wide annual average rate increase of 6.3% on an all-in basis; 7.3% excluding Medicaid supported and ancillary fee revenues
84.4 % 75.5 % 78.1 % 81.0 % 81.3 % 81.9 % 82.7 % 83.4 % 83.9 % 83.9 % 83.9 % 84.9 % 85.9 % 85.9 % 84.0 % 76.7 % 79.7 % 82.2 % 82.2 % 83.3 % 84.1 % 84.9 % 84.5 % 85.2 % 85.0 % 86.8 % 86.4 % 86.9 % Q4 '19 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1' 23 Q2' 23 Q3' 23 Q4' 23 Q1' 24 Weighted Average Occupancy End of Period Spot Occupancy 12 Consecutive Quarters of Occupancy Growth (Same-Store) 14 Pandemic occupancy low point Data presented for the Company’s 62 owned communities inclusive of Shaker Heights (divested in August 2023), Plainfield and Brownsburg (acquired in February 2022). Pre-Pandemic
Revenue Growth Continues to Outpace Labor Costs 15 Labor(1) Costs Trend as a Percent of Revenue(2) (1) Represents 62 Owned Communities (inclusive of Shaker Heights through its 8/4/2023 sale); excludes benefits. (2) Amounts calculated as a percentage of revenues exclude non-recurring state grants in all periods. • Q1’24 labor(1) costs as a percent of revenue(2) were 45.1%, marking 2 consecutive quarters of stabilized labor costs below 46.0% of revenue • Q1’24 labor(1) costs as a percent of revenue(2) are down 100 basis points compared to Q1’23: • Q1’24 direct labor increased $1.8M compared to Q1’23, offset by a contract labor decrease of $0.4M compared to 2022
Non-Labor Operating Cost Holding Steady 16 Total Operating Expense Excluding Labor(1) Costs Trend (1) Represents 62 Owned Communities (inclusive of Shaker Heights through its 8/4/2023 sale); amounts calculated as a percentage of revenues exclude non-recurring state grants in all periods. • As a percent of revenue, Q1’24 expense was 90 basis points lower than the previous 4-quarter average • QoQ increase driven primarily by: • Q1’24 utilities ($0.7M QoQ) and snow removal ($0.3M QoQ) • Q4’23 non-recurring credits to real estate taxes ($0.8M QoQ) • Food costs per financial occupied day for Q1’24 decreased 5.7% compared to Q4’23 • Q1’24 utility costs as a percent of revenue were down 115 basis points when compared to Q1’23 • Q1’24 real estate tax costs as a percent of revenue were down 107 basis points compared to Q1’23 as a result of re-assessments and litigation over the last year
Inorganic Growth Strategy
U.S. Senior Housing Trends: Favorable Set-Up 18Data sourced from US Census, NIC MAP, Green Street and PWC Emerging Trends in Real Estate® 2024. Senior Housing Demand Senior Housing Supply -200 0 200 400 600 800 1000 ' 0 1 ' 0 5 ' 0 9 ' 1 3 ' 1 7 ' 2 1 ' 2 5 ' 2 9 80+ Incremental Population Growth (000s) ‘22-’30 CAGR of ~4% 0 200 400 600 800 1000 1200 ' 0 8 ' 0 9 ' 1 0 ' 1 1 ' 1 2 ' 1 3 ' 1 4 ' 1 5 ' 1 6 ' 1 7 ' 1 8 ' 1 9 ' 2 0 ' 2 1 ' 2 2 ' 2 3 ' 2 4 Senior Housing Units Under Construction (000s) • 40% decrease in Senior Housing pipeline since Q4’18 • FY '23 supply growth fell to its lowest levels seen since ’11 • Total U.S. 80+ population anticipated to grow by 24%+ through 2029 • Americans ages 65+ will make up ~ 21% of the U.S. population by ‘30, up from ~ 15% in ‘16 700 750 800 850 900 950 ' 1 9 ' 2 0 ' 2 1 ' 2 2 ' 2 3 ' 2 4 Occupied Senior Housing Units (000s) - Top 99 Markets Capital Market Dislocation Creating Motivated Sellers and Accelerating M&A Environment Enhanced pressure on lenders and owner/operators to solve capital structure challenges: • Lenders seeking to reduce construction financing exposure and stabilize loan books • $10 billion - $14 billion of senior housing loans maturing in the next 24 months • 10-year loans issued in 2008 and 2009 had five-year interest-only covenants, and amortization of the principal is now being added to debt service costs Highest on record
Three-Pronged Inorganic Growth Approach 19 Target Profiles Key Attributes I. Balance Sheet Acquisitions -Traditional owner / operator model -Underperforming assets with distressed capitalization -Newer assets -Single assets in existing portfolio footprint or larger strategic portfolios -Distressed lender pipeline -Near-term maturities / poor LTVs -Seller-financed or low leverage -Turn-around assets require over-capitalization for working capital -Many off-market, relationship-based opportunities -Attractive + assumable debt opportunities but mostly debt-market constrained II. Joint Ventures -Capital stack refresh with future value recovery / creation -Opportunity to recapitalize / paydown debt -Newer assets -Portfolio opportunities -Promote structure allows Sonida to earn additional returns on equity with strong operating performance -Aligns Sonida capital with additional sponsors to scale RE ownership and deliver growth + management fee income III. Management Contracts -Under-performing assets -Lenders, REITS, funds, and management transition -Strategic, programmatic relationships -Limited or no equity required -Marginal incremental G&A required -Management incentive fee structure for alignment -Expanded density and scalability in existing Sonida MSAs Structure
Target Acquisition Profile & Sourcing Channels 20 Community Profile for New Target Acquisitions and Joint Ventures Sourcing Channel Strategy Business Model Priority: IL/AL/MC Asset Quality Consideration Market Demographic and Competitor Profile Valuation / Cash Flow Geographic Overlay Political and Economic Climate • 2 or 3 care types, or as complements Sonida’s existing market footprint • Balance of higher-margin IL and need-based AL/MC • Growing market demand and 75+ population • Limited competition and pipeline • Target upper-middle market • Fill-up or distressed communities require over-funded reserves • Per share NAV and cash flow accretive • Existing footprint • Primary / secondary markets • Target Midwest, South, and Southeast • “Friendly” regulatory environment • Built after 2010 • Opportunity to improve quality of portfolio at low basis Other Lenders & BK Receivers Institutional Investors 3rd Party Owners & Developers Boots on the Ground Broker & Debt Advisors Existing Lending Relationships Other Management Companies
Recent Acquisition 21 $10.7M purchase price: Acquired at 43% discount to in- place senior loan balance at approximately $105k per unit Located in the same submarket as existing Sonida community; acquisition provides complementary product offering to existing footprint, allowing for greater penetration into an affluent submarket and increased operating efficiencies Specific operational turnaround plan and implementation of Sonida systems and processes expected to yield significant NOI growth from asset’s current marginally positive position Going in NOI is slightly positive with underwritten stabilized cap rate in the low double-digits Closed: May 9, 2024 100 Units (AL / MC) Macedonia, OH 2015 vintage high-quality physical asset
Pending Transactions 22 Two 4-Community Acquisitions (8 Total) 750+ Units Midwest and Texas 3 Community Management Contracts -Joint venture partnerships - IL, AL & MC - Management fees to Sonida - Basis at or below 50% of replacement price - Average purchase price below $120K/unit - Double-digit NOI yields at stabilization Anticipated Closings: Q2 2024 -Management contract with 3rd party owner -Leverage full suite of operational capabilities -Asset-light earnings growth Anticipated Closing: June 1, 2024
Appendix – Supplemental Information
A-1 Financial Overview A-2 Community NOI A-3 Net Income (Loss) Walk Forward A-4 Adjusted EBITDA Walk Forward A-5 Capitalization – Q1 2024 A-6 Geographical Breakdown A-7 Financial and Key Metrics A-8 Table of Contents Market Fundamentals
Financial Overview – Owned Communities A-1 Note: Dollars in 000s. Numbers may vary due to rounding. Amounts derived from 2023 10-K as filed; nominal adjustments were made to conform 2022 actuals to 2023 presentation in the 2023 Form 10-K. (1) Resident Revenue, Community NOI, Community NOI Margin %, Net Income (loss), Adjusted EBITDA, REVPOR and REVPAR include the impact of non-recurring state grants earned and received in the period, as follows: Q1 2022: $0.7M, Q2 2022: $0.5M, Q1 2023: $2.0M, Q2 2023: $0.4M and Q3 2023: $0.5M. (2) Data presented for the Company’s 62 owned communities inclusive of Shaker Heights (divested in August 2023), Plainfield and Brownsburg (acquired in February 2022).
A-2 Note: Dollars in 000s. Numbers may vary due to rounding. Amounts derived from 2022 10-K as filed; nominal adjustments were made to conform 2022 actuals to 2023 presentation in the 2023 Form 10-K. (1) Includes Second Person and Level of Care fees. (2) Community NOI and Other Income include the impact of non-recurring state grants earned and received in the period. (3) Includes benefits, overtime, payroll taxes and related labor costs, excluding contract labor. (4) Adjusted Operating Expense excludes professional fees, settlement expense, non-income tax, non-property tax, casualty gains and losses, and other expenses. Community NOI – Owned Communities
Net Income (Loss) Walk Forward A-3 Note: Dollars in 000s. Numbers may vary due to rounding. Amounts derived from 2022 10-K as filed; nominal adjustments were made to conform 2022 actuals to 2023 presentation in the 2023 Form 10-K (1) Amounts are not calculated in accordance with GAAP. See page 4 for the Company’s disclosure regarding non-GAAP financial measures. (2) Non-Operating Expenses include professional fees, settlement expense, non-income tax, non-property tax, casualty gains and losses, and other expenses.
Adjusted EBITDA Walk Forward A-4 Note: Dollars in 000s. Numbers may vary due to rounding. Amounts derived from 2022 10-K as filed; nominal adjustments were made to conform 2022 actuals to 2023 presentation in the 2023 Form 10-K. (1) Casualty losses relate to non-recurring insured claims for unexpected events. (2) Transaction and conversion costs relate to legal and professional fees incurred for transactions, restructure projects or related projects. (3) COVID-19 expenses are expenses for supplies and personal protective equipment, testing of the Company’s residents and employees, labor and specialized disinfecting and cleaning services.
Capitalization Summary as of March 31, 2024 A-5 Note: Dollars in 000s except for share price, share count, and strike price. Numbers may vary due to rounding. (1) Weighted average interest rate. (2) Variable exposure is synthetically limited with interest rate caps on all debt. Rates reflect all-in interest rate. (3) Includes unrestricted and restricted cash. (4) Assumes Company exercises its option to extend Ally Term Loan maturity by 12 months. Common Equity (38.9%) Preferred Equity (5.0%) Net Debt (56.1%) Components of Total Capital
Geographical Breakdown – Owned Communities A-6 South/Southwest 18 Communities Midwest 35 Communities East 8 Communities (1) Data based on Q1’24 average and excludes the Shaker Heights community, which was sold in Aug. 2023. (2) As of March 31, 2024. Service Mix Distribution (1) Occupancy Distribution (2) (2)
T3M: Financial and Key Metrics – Owned Communities A-7 Note: Dollars in 000s. Numbers may vary due to rounding. Financial data presented is March 2024 trailing 3-month results. (1) Includes Second Person Fees and Level of care fees. (2) Revenue includes non-recurring state grant revenue. (3) Adjusted Operating Expense excludes professional fees, settlement expense, non-income tax, non-property tax, casualty gains and losses, and other expenses. (4) Includes benefits, overtime, payroll taxes and related labor costs, excluding contract labor. (1) (1) (1) (2) (3) (4)
Market Fundamentals A-8 1Based on an average of a 5-mile radius of SSL site 2Adult child reflects population between the ages of 45-64. 3Amounts are not calculated in accordance with GAAP. See page 4 for the Company’s disclosure regarding non-GAAP financial measures. 4Includes independent living, assisted living, and memory care units in stand-alone and continuum communities. Primary Markets (26%) Secondary Markets (36%) Tertiary Markets (38%) Market Type Classification(5) Note: Dollars in 000s. Numbers may vary due to rounding. Source: Sonida portfolio data presented on 61 owned assets as of Q1 2024. Data provided by NIC MAP Vision. Demographics data is current as of January 1, 2024. NIC MAP Vision Seniors Housing Inventory data is current as of the Q12024 Market Fundamentals update released April 4, 2024. 5140 Metropolitan Statistical Area ("MSA") across the country are classified by NIC MAP Vision into three market classes based on the Total Population. Demographics data in this report is current as of January 1, 2024. The largest of these markets are the Primary Markets, where NIC MAP has been tracking data since 4Q2005. These are sometimes referred to as the MAP31 as there are 31 of these markets. The next largest are the Secondary Markets, where NIC MAP has been tracking data since 1Q2008. These markets are the next 68 largest markets. Finally, Additional Markets are 41 markets located in close proximity to the 99 Primary and Secondary Markets and help to fill gaps between these Primary and Secondary Markets. NIC MAP has tracked data in Additional Markets since 1Q2015.