Brookdale Senior Living Inc. (NYSE:BKD) Q4 2023 Earnings Call Transcript

Brookdale Senior Living Inc. (NYSE:BKD) Q4 2023 Earnings Call Transcript February 21, 2024

Brookdale Senior Living Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, all and welcome to the Brookdale Fourth Quarter 2023 Earnings Call. All lines have been placed on mute during the presentation portion of the call with an opportunity for question-and-answer at the end. [Operator Instructions] I would now like to turn this conference call over to our host from Brookdale’s Investor Relations team, Jessica Hazel.

Jessica Hazel: Thank you, and good morning. I’d like to welcome you to the fourth quarter 2023 earnings call for Brookdale Senior Living. Joining us today are Cindy Baier, our President and Chief Executive Officer; and Dawn Kussow, our Executive Vice President and Chief Financial Officer. All statements today which are not historical facts may be deemed to be forward-looking statements within the meaning of the Federal Securities Laws. These statements are made as of today’s date and we expressly disclaim any obligation to update these statements in the future. Actual results and performance may differ materially from forward-looking statements. Certain of the factors that could cause actual results to differ are detailed in the earnings release we issued yesterday, as well as in the reports we file with the SEC from time to time, including the risk factors contained in our Annual Report on Form 10-K and quarterly reports on Form 10-Q.

I direct you to the release for the full Safe Harbor statement. Also please note that during this call, we will present non-GAAP financial measures. For reconciliations of each non-GAAP measure from the most comparable GAAP measure, I direct you to the release and supplemental information, which may be found at brookdaleinvestors.com and was furnished on an 8-K yesterday. Now, I will turn the call over to Cindy.

Cindy Baier: Thank you, Jessica. Good morning to all of our shareholders, analysts and other call participants. Welcome to our fourth quarter and 2023 year end earnings call. We started 2023 with a clear vision and intense focus and a commitment to deliver positive results. This commitment extended beyond achieving positive operational and financial outcomes it also encompassed fulfilling our overarching priority, which is the health and well-being of our residents and associates. We dedicated ourselves to ensuring that we had created the right plans and initiatives for the year, had clearly communicated why these were the most important priorities and had the right people in place to effectively meet our objectives, but our efforts didn’t stop with our plans.

Our leaders focused intensely on achieving our objectives, worked together as a team and adjusted our tactics as new information became available. For this, I’m extremely grateful to our team for their leadership and their efforts, and I’m proud to say that the result was an incredibly strong year marked by more residents who chose to be part of a Brookdale community, which led to greater occupancy, significant improvements in our operations and robust financial growth. Although complete recovery is still ahead of us with each quarter of 2023, we continue to build a solid foundation that paves the way for sustained growth. For the fourth quarter, we are pleased to report another quarter in which both RevPAR and adjusted EBITDA achieved or exceeded our previously provided guidance.

Additionally by remaining focused on our key strategic priorities, we delivered a number of positive outcomes, throughout our community operations, our real estate portfolio and our financials. Same community RevPAR increased approximately 10%, over last year’s fourth quarter on positive occupancy and RevPOR growth. By pursuing RevPAR, through a balance of occupancy and rate, we delivered favorable top line results. In the fourth quarter, we maintained the positive margin improvements we have achieved throughout 2023, while ensuring that we continue to meet our residents’ needs, provide high-quality care and personalized service and remain in compliance, with applicable regulations. Through RevPAR growth and appropriate expense management, same community adjusted operating income grew 37%, over the prior year fourth quarter.

In addition to these financial accomplishments, we once again achieved meaningful progress towards our leadership retention and associate turnover goals. This is critically important because our business is all about people serving people. Year-over-year, retention rates for our Q3 community leadership roles increased 190 basis points and full-time hourly associate turnover improved by 910 basis points from the prior year fourth quarter. I am incredibly proud of the progress, we are making in this critical area of the business. Lastly, as reported in December, we completed two financing transactions and sold our remaining equity interest in our home health and hospice venture. Dawn will share the specifics, but I want to recognize our Brookdale team for the successful completion of these transactions, particularly our Treasurer, George Hicks and to share my gratitude toward each of the counterparties.

As we close out 2023, I would like to highlight some notable accomplishments that significantly contributed to our remarkable results. This year was pivotal in refining our operations to favorably impact our performance, as we further recover from the pandemic while continuing to support consistent, and high-quality resident experiences. We began the year with a strategic rebuild of our senior leadership team. These changes while incredibly difficult or central for matching our organizational structure, with our business priorities and streamlining decision-making. We then, evolved the Executive Director role, to emphasize a stronger growth mindset, combining both mission and margin and underscoring strong business acumen for the incumbents and future community leaders all the while maintaining our focus, on driving resident satisfaction and providing high-quality care and services.

This led to some turnover in 2023, but it was a necessary step to foster a culture of excellence and continue effectively delivering our mission. And by year-end, these changes have started yielding noticeable positive improvements, at the community level. We further supported a growth mindset by introducing new training for our community and field leaders, to provide alignment across our core priorities and support operational excellence that would enhance not only the business, but importantly, our overall resident and family satisfaction. To attract, engage, develop and retain the best associates We piloted and launched several new processes and programs that resulted in outcomes, like the improved retention and turnover that I spoke to.

By hiring associates, who are dedicated to our mission extending the length of employment of our Brookdale community leaders, and hourly associates and increasing the number of shifts staffed with full and part-time Brookdale associates rather than contract labor, we are building stronger teams that will have a favorable impact for years to come. I am so pleased with the community level successes we have already seen from these improvements. We remain committed to continuous improvement and are confident in our plans for further progress. Our annual resident and family survey, which we completed in the fourth quarter and which received roughly 45,000 responses, once again provided invaluable insights. Resident and family satisfaction has consistently been a key priority at Brookdale.

This priority became even more critical in 2023, given the rate increase we implemented at the beginning of the year. I’m proud to report that our total company engagement score improved by a significant amount with positive increases across all of our product lines. Additionally, we are grateful that the vast majority of our residents responded overwhelmingly that they would recommend or highly recommend their community to friends and family. These positive results reflect the great work of our dedicated associates, and we will build upon this to ultimately achieve our desired overall satisfaction goals for Brookdale residents and their families. We are always extremely appreciative of the meaningful insights received for regular resident and family engagement and we’ll continue to focus on this critical area.

Another accomplishment in 2023 was the expansion of the Brookdale Health Plus program, which has demonstrated remarkable success in improving resident health outcomes, through its innovative care delivery model. Independent evaluations confirmed that residents in our Health Plus Communities experienced fewer urgent care visits and hospitalizations, underscoring the effectiveness of our proactive and preventive care measures. Planning for our next Brookdale Health Plus expansion is well underway, and we expect to have nearly 130 communities in this industry-leading clinical program by the end of 2024. The continued expansion of Brookdale Health Plus not only creates an integrated benefit for our residents, but also it creates value for many stakeholders and further establishes Brookdale’s position as a market leader and industry innovator.

Also, in 2023, we continue to proactively manage our leased and owned portfolios to further improve our long-term financial position. This included negotiating favorable terms with two long-standing landlords as well as making strategic decisions about our portfolio, such as disposing of certain leased and owned properties that were no longer right for Brookdale. Through these transactions, we not only obtained additional landlord funded CapEx, but also secured favorable purchase options on certain communities that were previously not available to us. This will support future cash flows and enable us to further improve our own to lease portfolio mix in the years to come. Lastly, as a result of our strong 2023 adjusted EBITDA growth, our annualized leverage decreased from 19.8x at the end of 2022 to 11.1x at the end of 2023.

Throughout the pandemic and subsequent recovery period, we have successfully executed plans to manage our capital structure and maintain appropriate liquidity. Our fourth quarter transactions are the most recent examples of this. Combining a passion for successfully executing our mission, while focusing on delivering an appropriate margin is critical for our success. While our overarching priority remains the health and well-being of our residents and associates, cash flow and liquidity will continue to be our top financial priorities. In summary, 2023 was a year of strong and steadfast execution of our strategic goals, solid operational improvements and meaningful growth towards full recovery. In a moment, Dawn will share with you the measurable results of these efforts which are significant, while I’ll now turn to our 2024 plans.

As we look to 2024, our expectations are simple, stay the course. We have worked incredibly hard to lay a strong foundation for future growth. And we intend to build upon the successful execution of our strategy. Our commitment is to continue to provide growth opportunities and rewards to our people, while reinforcing the favorable initiatives and processes that we introduced in 2023. Brookdale remains a learning organization. Accordingly, we’ll take our learnings from 2023. And we will address and improve areas that require ongoing refinement in our continuous pursuit, to be the nation’s first choice in senior living. We made remarkable progress last year, but driving meaningful change through an organization and reaping the full benefit of that change takes time.

We take pride in our accomplishments. And we also see them as stepping stones, towards our full recovery and achieving our ultimate potential. As such, our teams throughout the organization are incredibly committed to executing against our key strategic priorities that guided our success and growth in 2023. These key strategic priorities for 2024 will remain. First, get every available room in service at the best profitable rate. Second; attract, engage, develop and retain The Best, associates. And third, earn resident and family trust and satisfaction by providing valued, high-quality, care and personalized service. Through consistent execution of these, I believe we will grow occupancy and RevPAR, deliver meaningful 2024 adjusted EBITDA growth and adjusted free cash flow improvement and support further shareholder value creation all while continuing to grow resident satisfaction.

I look forward to providing you with positive quarterly updates on our progress throughout 2024. I’ll now turn the call over to, Dawn.

Dawn Kussow: Thank you, Cindy. Good morning, and thank you for being here today. We were very pleased to finish 2023 with another quarter of solid operating results and financial growth. Beginning with fourth quarter revenue, Resident fee revenue grew 8.9% over the prior year quarter. Fourth quarter consolidated RevPAR growth was 10% over the prior year, which is in line with the top of our previously provided guidance range. Our year-over-year RevPAR growth was attributable to a 130 basis point increase in weighted average occupancy and an 8.1% RevPAR increase. This marked our ninth consecutive quarter of year-over-year occupancy growth. Sequentially, these results represented an 80 basis point increase in occupancy and a 0.5% decrease in RevPOR, compared to the third quarter.

We are pleased to report that this sequential occupancy growth was meaningfully above normal pre-pandemic seasonality for this period. Fourth quarter RevPOR was slightly below our expectations, due to resident mix disposition timing and our competitive response on pricing. Our same community portfolio performed largely in line with the consolidated portfolio in the fourth quarter, including RevPAR growth of approximately 10%, a 130 basis point increase in weighted average occupancy and approximately 8% RevPOR growth over the prior year. We are pleased with these top line results. Moving to fourth quarter expenses. Consolidated facility operating expense was $530 million while same community facility operating expense, as shown on page 8 of our financial supplement, was $513 million.

Fourth quarter same community adjusted operating income grew by 37% over the prior year fourth quarter, significantly outpacing our peers. This was our ninth consecutive quarter to deliver year-over-year adjusted operating income growth. We are very proud of this progress as we diligently work to return to pre-pandemic segment operating margins while continuing to ensure that we meet our residents’ needs, provide high-quality care and service, and remain in compliance with applicable regulations. Same-community fourth quarter adjusted operating margin was 26.3%, which represented the highest reported margin rate since the initial impact of the pandemic. This solid progress is a result of favorable outcomes from the 2023 accomplishments Cindy spoke to, including continued RevPAR growth and appropriate expense management.

Fourth quarter general and administrative expense was approximately $1 million, lower than the third quarter. Cash operating lease payments were $65 million, which is in line with our previously provided expectations. Fourth quarter adjusted EBITDA was $85 million and exceeded the top end of our guidance range by approximately $3 million. This positive result was due to a combination of strong flow through of fourth quarter revenue and modest favorability in G&A. Compared to the prior year fourth quarter adjusted EBITDA grew 83%. This remarkable growth was despite the $13 million quarterly impact of the changes in lease classification and the $5 million in government grants and credits recognized in the fourth quarter of 2022 versus no grant income in the fourth quarter of 2023.

Adjusted free cash flow was negative $21 million for the quarter. Normal seasonal working capital, specifically annual real estate tax payments, was the primary driver of the variance to the third quarter. Fourth quarter non-development capital expenditures, net of insurance proceeds, were $36 million. For the full 2023 year, we incurred approximately $26 million in reimbursable remediation costs and received approximately $24 million of insurance reimbursement related to the 2022 natural disasters. As of December 31, total liquidity was $341 million. The primary driver of the $65 million sequential decrease in quarter-end liquidity was related to the refinancing transaction we reported in a press release on December 27. In the December press release, we announced four completed or pending capital markets transactions.

I’ll speak to each of them briefly. First, we obtained a $180 million agency loan under an existing master credit facility agreement with Fannie Mae. The loan is secured by non-recourse first mortgages on 47 communities that also secure another larger tranche of debt with a later maturity. The loan has a fixed interest rate of 5.97% and a borrow out provision which allows for potential additional proceeds in 2024, as communities in the loan continue to recover. We used proceeds from the $180 million loan, coupled with cash on hand to repay a $260 million loan, which was set to mature under the credit facility in September 2024. With this transaction, we cleared our maturity runway for the next 18 months and rightsize the latter tranche of the existing loan.

We were very grateful for Fannie Mae’s partnership in this transaction. In the second transaction, we amended our existing revolving credit agreement which increased the commitment by up to $20 million and extended the agreement to January 2027 with additional extension options thereafter. Third, we sold the remaining 20% equity interest in our home health and hospice unconsolidated venture for aggregate proceeds of $27 million. And fourth, as part of the press release, we noted plans for a new financing transaction. Earlier this month, we completed a new financing transaction to obtain $50 million of bank debt, which matures in February 2027 with two one-year extension options. This property level mortgage financing is on 11 previously unencumbered communities and carries a variable interest rate of 350 basis points over SOFR.

We are very pleased with the outcome of each of these transactions and believe they are examples of our continued proactive management of liquidity and our capital structure. Our next debt maturity without extension options is September 2025. Cindy walked you through some of our 2023 accomplishments. Thanks to the hard work of our approximately 36,000 associates, we have delivered measurable positive results in 2023. I’ll share a few of the highlights. As of 2023 year-end, weighted average occupancy has grown a total of nearly 900 basis points from the start of the pandemic recovery. Full year same-community RevPAR grew 11.4% which significantly outpaced our peers. Same-community adjusted operating income which excludes government grants grew 43% over the prior year supporting a 580 basis point improvement in adjusted operating margin.

On a per available unit basis, our same-community adjusted operating income has reached 92% of the 2019 same-community adjusted operating income we reported. Given the significant runway still available to grow occupancy, we believe this reflects a very strong recovery. Lastly, adjusted EBITDA grew 39% over the prior year while adjusted free cash flow improved 76%. This was despite $71 million of higher grant income in the prior year than the $41 million impact of the two changes in lease classification. I am proud of these results and deeply appreciative of our team’s efforts that went into achieving them. Turning to our first quarter expectations. In yesterday’s press release, we guided to first quarter RevPAR growth of 6.25% to 6.75% over the prior year and adjusted EBITDA in the range of $90 million to $95 million.

There are a few considerations I’d like to provide specific to these guidance ranges. Regarding RevPAR, we anticipate first quarter weighted average occupancy, will reflect a normal seasonal trend for this period. As a reminder, pre-pandemic the first quarter generally declined sequentially compared to the fourth quarter. We saw this normal seasonality return in the prior year first quarter, and have built this expectation into our guidance. January weighted average occupancy was 78% a 140 basis point increase over the prior year January. Additionally, we implemented a lower January one in-place resident rate increase than in the prior year, but higher than historic norms. We remain focused on ensuring appropriate pricing to match the services we deliver in our communities, and believe our annual pricing increase appropriately addresses our expected labor costs, which is the most significant portion of community operating expense, as well as normal inflationary increases on food, supplies and utilities in addition to interest rates which remain elevated.

Regarding our adjusted EBITDA guidance. While it has been more normal course for me to note sequential variations and expectations, for this particular quarter, I believe noting a few considerations compared to the prior year first quarter would be more helpful. First, there will be an incremental day this year, specifically leap day, which results in higher expense with only a minor impact on revenue. Second, given the timing of a 2023 change in lease classification through the second quarter of 2024, there will continue to be a year-over-year impact to adjusted EBITDA. Specific to the first quarter this is a $7.4 million, year-over-year impact. As a reminder, this lease accounting change decreased adjusted EBITDA, but has no impact on adjusted EBITDAR, a standard and widely used non-GAAP valuation metric, and no impact to adjusted free cash flow.

Third, in the prior year first quarter, we recognized $2 million in grant income and our guidance does not assume any grant income in the first quarter of 2024. Lastly, while we are still fully assessing the total cost of needed maintenance and repairs, we currently estimate the expense impact from the two January winter storms to be approximately $2 million. This estimate is reflected in our adjusted EBITDA guidance range. I am very proud of the progress our team has made in 2023, and I am looking forward to our continued success in 2024. I’ll now turn the call back over to Cindy.

Cindy Baier: Today, standing on the other side of this remarkable year, I am not just proud of what we’ve accomplished, but also more determined than ever to continue on our path of sustainable growth for the benefit of our residents associates and shareholders. The future holds even greater opportunities and we are fully committed to seizing them and building a stronger Brookdale, so that we may serve the need of more seniors for years to come. I’ll close by saying, thank you. Thank you to our residents, who call Brookdale Home, to our associates who are dedicated to the health and well-being of our residents and to our shareholders for their continued partnership trust and support. Operator, please open the line for questions.

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Q&A Session

Operator: Thank you. [Operator Instructions] So our first question comes from the line of Ben Hendrix of RBC Capital Markets. Your line is now open. Please go ahead.

Ben Hendrix: Great. Thank you. Good morning. I wanted to drill into your first quarter guidance comments a little bit more. The RevPAR range certainly appears consistent with historical seasonal occupancy trends that we saw pre-pandemic we’re thinking a step down in the 80 basis points range give or take. You know, that said the December into January occupancy held up a little bit better than last year certainly so on a month end basis. I just wanted to see if there could be some conservatism in there given the occupancy momentum that Dawn called out through the second half of 2023 and what you’ve seen into January. And then more broadly just any updated views on the path back to that prepandemic 4Q 2019 level occupancy that we’re targeting? Thank you.

Dawn Kussow: Yes. Good morning, Ben. This is Dawn. Thanks for the question. How we’re thinking about it is, yes, we did see January occupancy went down 30 basis points as opposed to 40 basis points last year, but what we would say is we’re continuing to — our expectation is continuing to follow that historical pre-pandemic trend for the full first quarter. And as far as full year occupancy what I would say is we are continuing this year as Cindy mentioned in her prepared remarks to focus on getting every room in service at the most profitable rate. So expectations would be that we would continue to grow occupancy through 2024.

Cindy Baier: And if I go to the longer term Ben, this is Cindy, I would just say that we were really, really pleased to finish 2023 with another quarter of incredibly solid operating results and financial growth. And we believe that we have built a very solid foundation that it paves the way for sustained growth. And so we’re looking forward to welcoming new residents into our communities, extending the length of service for our associates and focusing on providing quality services, which will help us achieve our long-term objectives as quickly as possible.

Ben Hendrix: Thank you. If I can just add on a quick one. Our periodic labor trackers suggest a pickup in job postings late in the year which is consistent with the strong occupancy. I wanted to get your thoughts on just the full-time labor cost expectations that you’re thinking about in guidance and through the rest of the year and if there could be some added onboarding costs in the first quarter? Thanks.

Dawn Kussow: Yes, I’ll start. And I think Ben how we’re thinking about our labor costs is we have gotten so much of our contract labor out in 2023 that the premium labor savings in 2024 would be something less than in 2023. However, what we would expect is we will — the productivity of our labor will naturally get better as we increase our occupancy. And as Cindy mentioned in her prepared remarks about the focus on training and our focus on retention and turnover, and as we see that improve we would expect to have increased productivity there as well.

Cindy Baier: And the one thing that I would just add is we definitely see that the labor market continues to be competitive and there are some challenges particularly in nurses and certain hourly positions like caregivers and CNAs, but there is definitely a stabilization in the labor market which has resulted in less labor market churn. And so when you think about that there will be more muted inflation in labor costs on a per employee per hour basis than we saw in prior years.

Ben Hendrix: Thank you.

Cindy Baier: Thanks, Ben.

Dawn Kussow: Thanks, Ben.

Operator: Our next question comes from the line of Joanna Gajuk of Bank of America. Your line is now open. Please go ahead.

Joanna Gajuk: Hi. Good morning. Thank you so much. So I guess first a follow-up on the pricing. So I guess, you just talked about occupancy. So pricing you made a comment around, pricing being up less than last year but above the historical. But you also mentioned in Q4, some activity around competition or competitive activity when it comes to pricing. So can you elaborate a little bit more what’s going on, is there just some markets where I guess you have to be more competitive? And kind of what do you assume going forward, when it comes to this dynamic? And maybe just to confirm, I guess, the pricing outlook seems — the guidance implies to maybe mid-single-digit increases or so.

Dawn Kussow: Yes, Joanna this is Dawn. What I would say is, certainly when you’re looking at our RevPOR for the fourth quarter, it was impacted by the competitive markets and our reaction to those competitive markets as well as disposition and a little bit of our product mix [indiscernible] expectation coming into the first quarter is that, as we put our January 1st price increase, in effect that our expectation is that we would continue to grow our RevPOR.

Cindy Baier: And let me just add to what Dawn said, by saying, I’m really pleased with the way that our pricing strategy has worked out for 2023. And if I look back for the whole year and you see that full year RevPAR was 11.4% that significantly outpaced our peers. So what that tells me is that we had the right balance for Brookdale of price and occupancy to get that outsized performance.

Joanna Gajuk: Thank you. And if I may just another follow-up, when it comes to I guess your outlook on EBITDA? And how should we think about the impact of the lease exits, when it comes to say, run rate rent expense and anything else around EBITDA or occupancy impact from those lease exits that occurred in Q4?

Cindy Baier: Joanne, I think you asked a question that’s on many people’s minds. What I would say is sitting in our shoes today I’m very excited about the optionality that lease expirations give us at Brookdale. The way that I see it is, is no matter what happens with the lease, it’s going to be good for our shareholders. If the assets are performing well then we can extend the lease and continue that. If they’re not, we can choose not to extend the lease and go forward or we may end up with a situation like we had with LTC, where we ultimately chose not to extend the lease. That was a 35% asset lease with LTC. But ultimately we ended up releasing, 17 of those assets under a favorable lease which gave us CapEx support as well as favorable purchase options. So heads we win tails we win.

Joanna Gajuk: Right. Understood. And on what was actually my question in terms of this LTC in particular the impact to the rent expense, I guess going forward?

Dawn Kussow: Yes, Joanna. This is Dawn. What I would say is, the impact of the 18 LTC dispositions we would expect that to be modestly favorable as it relates to 2024.

Joanna Gajuk: So you’re talking about the kind of annual rent increases, but I was also thinking whether there’s material impact when it comes to just not having these 18 leases going forward?

Dawn Kussow: Yeah. I think that that’s what we would say from an adjusted EBITDA perspective, it would be modestly favorable for those leases going away.

Joanna Gajuk: Okay. Thank you. And if I may another question different topic, I guess in January, there were some hearings in Congress focused on the assisted living facilities and they talked about quality of care, lack of transparency and standards. And I guess there’s this special committee on aging that called for a government accountability of a GAO study on this topic. So kind of your thoughts around this in terms of what are the risks that could be some efforts to maybe come up with some staffing requirements or other requirements for the operators? Thank you.

Cindy Baier: Let me start by just saying at Brookdale, the health and well-being of our residents has always been our top priority, and we are dedicated to providing high-quality care and services to residents and their families. As a company, we’re honored to enrich the lives of hundreds of thousands of seniors over the last decade and our communities have been recognized as some of the best in the nation. As an example, in the US News and World Report Best Senior Living ratings for 2023, Brookdale has more senior living communities in assisted living and memory care communities, recognized than any other provider for the second year in a row. Additionally, Brookdale tie is number one in customer satisfaction ranking in both 2020 and 2022, as recognized by J.D. Power for assisted living and memory care.

It is true that Brookdale is one of several organizations that were contacted by the special committee on aging Senator Bob Casey and we have provided a response. We’re an advocate for seniors and we’re willing to partner with others to serve the best interest of residents and promote assisted living in the industry. We take great pride in serving our hundreds of thousands of residents at communities across the country over the last decade. At this point, it’s too soon to tell what the outcome of the inquiry could be. But I’m very comfortable that our focus is and has always been providing quality care.

Joanna Gajuk: Thank you. I appreciate it.

Cindy Baier: Thanks, Joanna.

Dawn Kussow: Thanks, Joanna.

Operator: [Operator Instructions] Our next question comes from the line of Josh Raskin of Nephron Research. Your line is now open. Please go ahead.

Josh Raskin: Thanks, good morning. I wanted to go back to the comment Dawn made about the 92% pre-pandemic same-store operating income of 92% just better understand what that was. Is that on a per unit basis on a per occupied room or per available room. And then, how do you sort of juxtapose that with the cost of capital? And where do you think returns are versus where they were pre-pandemic?

Cindy Baier: Well, let me start by saying that — and this is Cindy. Let me start by saying that we still have the recovery ahead of us. And so senior living communities operate most effectively at that 80-plus percent occupancy rate. So that is still ahead of us. But Dawn can address the 92% that she referenced in our prepared remarks.

Dawn Kussow: Yes, Jeff, this is Dawn. The 92% was on available room basis and that’s shown in our supplement on the same community slide, so you can reference there.

Josh Raskin: Okay. I’ll take a look at that. And then, you guys have referenced that pre-pandemic 84.5% total occupancy. I think you’re about 600 basis points off of that. I think it’s a little bit less if you look at just the AL side. So, what’s a reasonable time frame? As you think about that as a target, is that a three-year time frame? Does that take longer? Just trying to figure out cadence of occupancy improvement?

Cindy Baier: So what I would say, Josh is our goal is to recover as quickly as possible. I think there are a number of factors that will impact the timing of our recovery. First, we’re seeing incredibly strong supply and demand demographics with more seniors entering our target market this year than ever before. We’re seeing a very muted supply environment, given the constraints of the pandemic on our industry as well as capital tightening. And then, I would say that the Brookdale differentiation is continuing to grow. We’re very excited about Brookdale HealthPlus. We’re excited about the quality of care that we’re providing. And so our goal is to serve as many seniors as we can, as quickly as we can. But it’s too soon to comment on exactly how long that full recovery is going to take.

Josh Raskin: Okay. And if I could sneak a last one and you actually just mentioned a Brookdale HealthPlus. I’m curious on the economics of residents that are enrolled in, I guess, sort of the program. I don’t know if that’s community-based or if that’s — I assume that’s room-by-room. Is there a difference in the economics of — and the margin of that individual resident? Is there a difference in length of stay? Maybe any just sort of economic data that would be helpful for us.

Cindy Baier: No, there is no incremental cost to a Brookdale resident or Brookdale HealthPlus. We priced it as part of the care charges in that particular community. And one of the things that’s exciting about Brookdale HealthPlus is it is an innovative care model designed to close care gaps, and so when we put into a community, we completely change the operating protocols of that particular community, which has resulted in sort of 78% fewer urgent care visits, compared to similar residents living outside of Brookdale and 36% fewer hospitalization, compared to similar individuals living outside of Brookdale. But what excites me most for the shareholders of Brookdale is that we have seen the HealthPlus community’s profitability grows much faster than non-HealthPlus communities. And so, for our shareholders, we think there’s going to be a strong return by supporting the health and well-being of our residents even more than we previously do.

Josh Raskin: Right. So when you say, it’s not — there’s no incremental cost to the resident, but that community I assumed that their care charges are higher than a non-Brookdale HealthPlus community. Is that the way to think about it?

Cindy Baier: Not necessarily. Our business case was built on the fact that, it would be an attractive value proposition for residents and that would, as you mentioned, help us increased length of stay. Now one of the things that is true is, because we’ve been rolling HealthPlus out over the last few years, we haven’t gotten to a stabilized length of stay for those communities yet. And so that’s one statistic that we’re still watching. But we’re encouraged by the residents that are choosing Brookdale as a result of Brookdale HealthPlus.

Josh Raskin: Got it. Thank you.

Cindy Baier: Thank you, Josh.

Operator: Thank you. As this concludes our Q&A session for today, ladies and gentlemen, I would like to thank you for joining today’s call. Have a great rest of your day. You may now disconnect your lines.