Revenue Performance - For the three months ended September 30, 2023, the Company generated resident revenue of approximately $59.1 million, an increase of 12.6% compared to $52.5 million for the same period in 2022[128]. - For the nine months ended September 30, 2023, the Company generated resident revenue of approximately $172.7 million, representing an increase of 11.2% from approximately $155.3 million in the same period of 2022[128]. - Resident revenue for Q3 2023 was $59.1 million, an increase of $6.6 million or 12.6% compared to Q3 2022, primarily due to increased occupancy and average rent rates[150]. - Resident revenue for the nine months ended September 30, 2023 was $172.7 million, an increase of $17.4 million or 11.2% from $155.3 million in the same period in 2022, driven by increased occupancy and average rent rates[157]. Occupancy and Rental Rates - Weighted average occupancy for the three months ended September 30, 2023, was 84.9%, up from 83.4% in the same period of 2022, indicating continued recovery post-COVID-19[129]. - The average monthly rental rate for the quarter ended September 30, 2023, was 11.7% higher compared to the same quarter in 2022[129]. Operating Expenses - Operating expenses for Q3 2023 were $44.5 million, an increase of $1.4 million or 3.2% compared to Q3 2022, driven by a $2.2 million rise in labor and employee-related expenses[152]. - Operating expenses for the nine months ended September 30, 2023 were $133.0 million, an increase of $6.4 million or 5.1% compared to $126.6 million for the same period in 2022, mainly due to a $5.8 million increase in labor and employee-related expenses[159]. Grants and Financial Support - The Company received approximately $0.5 million in various state grants during the quarter ended September 30, 2023, and $2.9 million for the nine months ended September 30, 2023[127]. Debt and Financing - The Company entered into a forbearance agreement with Fannie Mae in June 2023, which significantly reduced debt service payments and improved working capital[126]. - The Company may request additional investments of up to $25.0 million from Conversant Investors for future capital expenditures and acquisitions[127]. - The Company entered into a $13.5 million equity commitment agreement with Conversant Investors, with a commitment fee of $675,000 payable through the issuance of 67,500 shares of common stock[137]. - The Company made an equity draw of $6.0 million in July 2023 and issued 600,000 shares of common stock to Conversant[137]. - The Company is required to escrow 50% of Net Cash Flow less Debt Service on an aggregate basis over all 37 Fannie Mae communities for the first twelve months following the loan modification[134]. Impairment and Restructuring - The Company recorded a non-cash impairment charge of $6.0 million in Q3 2023 related to one owned community due to recurring net operating losses[154]. - The Company recorded a non-cash impairment charge of $6.0 million during the nine months ended September 30, 2023, related to one owned community due to recurring net operating losses[161]. - The Company incurred restructuring costs of $0.7 million in the nine months ended September 30, 2023, included in deferred loan costs[134]. Cash Flow and Liquidity - Net cash provided by operating activities for the nine months ended September 30, 2023 was $10.6 million, an increase of $7.7 million from $2.9 million in the same period in 2022, attributed to increased income from operations[171]. - Net cash used in investing activities was $12.8 million for the nine months ended September 30, 2023, primarily due to $14.2 million in capital expenditures[172]. - Net cash used in financing activities for the nine months ended September 30, 2023 was $7.4 million, primarily due to repayments of notes payable of $12.5 million[173]. - As of September 30, 2023, the company had approximately $3.6 million of unrestricted cash balances on hand, with future liquidity dependent on operating performance and economic conditions[166]. Community Management - Managed community reimbursement revenue decreased to $5.0 million in Q3 2023 from $7.7 million in Q3 2022, a decline of $2.7 million due to managing fewer communities[151]. - Managed community reimbursement expense for the nine months ended September 30, 2023 was $15.3 million, a decrease of $6.5 million or 29.9% compared to $21.8 million for the same period in 2022, primarily due to managing fewer communities[158]. Workforce Challenges - The Company faced workforce challenges requiring the use of overtime, shift bonuses, and contract labor to support its senior living communities[131]. Liquidity Improvement Actions - The Company has taken actions to improve liquidity, including cost-cutting and efficiency initiatives, to address going concern uncertainties[122].

Sonida Senior Living, Inc. (NYSE:SNDA) Q2 2023 Results Conference Call August 14, 2023 12:30 PM ET Company Participants Brandon Ribar - CEO Kevin Detz - CFO Conference Call Participants Steven Valiquette - Barclays Operator Good day, and welcome to the Sonida Senior Living Second Quarter 2023 Earnings Conference Call. Today's conference is being recorded. All statements today, which are not historical facts may be deemed to be forward-looking statements within the meaning of the federal securities laws. The ...

Revenue and Occupancy - For the three months ended June 30, 2023, the Company generated resident revenue of approximately $57.0 million, a 9.5% increase from $52.0 million in the same period of 2022 [127]. - The weighted average occupancy for the 62 communities owned by the Company was 83.9% for the three months ended June 30, 2023, compared to 82.7% for the same period in 2022, indicating continued recovery [128]. - The average monthly rental rate for the communities for the quarter ended June 30, 2023, was 8.3% higher compared to the same quarter in 2022 [128]. - Resident revenue for Q2 2023 was $57.0 million, an increase of $5.0 million or 9.5% compared to Q2 2022, primarily due to increased occupancy and average rent rates [149]. - The Company generated resident revenue of approximately $113.6 million for the six months ended June 30, 2023, representing a 10.5% increase from $102.8 million in the same period of 2022 [127]. - Resident revenue for the six months ended June 30, 2023, was $113.6 million, an increase of $10.8 million or 10.5% compared to the same period in 2022 [155]. Grants and Financial Support - The Company received approximately $0.4 million in various state grants during the quarter ended June 30, 2023, and $2.4 million for the six months ended June 30, 2023, due to financial distress impacts of COVID-19 [126]. - The company received grants of $2.4 million in the six months ended June 30, 2023, compared to $1.2 million in the same period of 2022 due to COVID-19 impacts [168]. Operating Expenses - Operating expenses for Q2 2023 were $44.7 million, an increase of $3.2 million or 7.7% compared to Q2 2022, driven by a $2.3 million increase in labor and employee-related expenses [151]. - Operating expenses for the six months ended June 30, 2023, were $88.5 million, an increase of $5.1 million or 6% compared to the same period in 2022 [157]. - General and administrative expenses for Q2 2023 were $6.6 million, a decrease of $2.8 million compared to Q2 2022, mainly due to a reduction in stock-based compensation [152]. - General and administrative expenses decreased to $13.6 million for the six months ended June 30, 2023, down $4.1 million from $17.7 million in 2022 [158]. - Managed community reimbursement revenue for Q2 2023 was $5.4 million, a decrease of $1.6 million compared to Q2 2022, due to managing fewer communities [150]. - Managed community reimbursement revenue for the six months ended June 30, 2023, was $10.3 million, a decrease of $3.8 million compared to the same period in 2022, due to managing fewer communities [156]. - Managed community reimbursement expense decreased to $10.3 million for the six months ended June 30, 2023, a decrease of $3.8 million from $14.1 million in 2022 [159]. Debt and Financing - The Company entered into a forbearance agreement with Fannie Mae, which will significantly reduce debt service payments and improve working capital [126]. - The terms of the Loan Modification Agreement with Fannie Mae include extending maturities on 18 community mortgages to December 2026 and reducing the monthly interest rate by 1.5% for 12 months [132]. - The Company entered into a $13.5 million equity commitment agreement with Conversant Investors for a term of 18 months, with a commitment fee of $675,000 [137]. - The Refinance Facility includes an initial term loan of $80.0 million, with an additional $10.0 million available as delayed loans upon meeting certain financial covenants [139]. - Interest expense for Q2 2023 was $8.6 million, an increase of $0.7 million compared to Q2 2022, primarily due to increased interest rates on variable rate mortgages [154]. - Interest expense increased to $17.4 million for the six months ended June 30, 2023, up $1.9 million from $15.5 million in 2022 due to higher interest rates [160]. - The Company incurred costs of $0.2 million related to debt restructuring for the six months ended June 30, 2023 [133]. Cash Flow and Liquidity - Net cash provided by operating activities was $5.5 million for the six months ended June 30, 2023, an increase of $7.6 million from net cash used of $2.1 million in 2022 [168]. - Net cash used in investing activities was $9.4 million for the six months ended June 30, 2023, compared to $24.5 million in 2022 [169]. - Net cash used in financing activities was $6.3 million for the six months ended June 30, 2023, down from $19.9 million in 2022 [170]. - The company had approximately $7.2 million of unrestricted cash balances on hand as of June 30, 2023, with future liquidity dependent on operating performance and economic conditions [163]. Workforce Challenges - The Company is facing workforce challenges, requiring the use of overtime, shift bonuses, and contract labor to support its senior living communities [130]. Gain on Debt Extinguishment - Gain on extinguishment of debt was $36.3 million for the six months ended June 30, 2023, compared to a loss of $0.6 million in the same period of 2022 [161].

[Part I. Financial Information](index=5&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents Sonida Senior Living's unaudited Q1 2023 condensed consolidated financial statements and detailed notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric (in thousands) | March 31, 2023 (Unaudited) | December 31, 2022 | Change (vs. Dec 31, 2022) | | :-------------------------------- | :-------------------------- | :------------------ | :------------------------ | | **Assets** | | | | | Cash and cash equivalents | $12,972 | $16,913 | $(3,941) | | Restricted cash | $12,174 | $13,829 | $(1,655) | | Total current assets | $36,141 | $43,566 | $(7,425) | | Property and equipment, net | $610,945 | $615,754 | $(4,809) | | Total assets | $648,697 | $661,268 | $(12,571) | | **Liabilities and Equity** | | | | | Accounts payable | $9,246 | $7,272 | $1,974 | | Accrued expenses | $31,857 | $36,944 | $(5,087) | | Current portion of notes payable, net | $81,151 | $46,029 | $35,122 | | Total current liabilities | $127,011 | $94,317 | $32,694 | | Notes payable, net of current portion | $554,723 | $625,002 | $(70,279) | | Total liabilities | $681,829 | $719,432 | $(37,603) | | Redeemable preferred stock | $44,748 | $43,550 | $1,198 | | Total shareholders' deficit | $(77,880) | $(101,714) | $23,834 | | Total liabilities, redeemable preferred stock and shareholders' deficit | $648,697 | $661,268 | $(12,571) | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change (YoY) | | :------------------------------------ | :---------------------------------- | :---------------------------------- | :------------------- | | Resident revenue | $56,606 | $50,834 | $5,772 (11.4%) | | Total revenues | $62,073 | $58,484 | $3,589 (6.1%) | | Operating expense | $43,808 | $41,929 | $1,879 (4.5%) | | General and administrative expense | $7,063 | $8,273 | $(1,210) (-14.6%) | | Total expenses | $65,714 | $66,802 | $(1,088) (-1.6%) | | Interest expense | $(8,867) | $(7,603) | $(1,264) (16.6%) | | Gain (loss) on extinguishment of debt, net | $36,339 | $(641) | $36,980 | | Net income (loss) | $24,145 | $(16,678) | $40,823 | | Net income (loss) attributable to common stockholders | $19,765 | $(17,811) | $37,576 | | Basic net income (loss) per common share | $2.88 | $(2.81) | $5.69 | | Diluted net income (loss) per common share | $2.76 | $(2.81) | $5.57 | [Condensed Consolidated Statements of Shareholders' Equity (Deficit)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity%20(Deficit)) | Metric (in thousands) | As of March 31, 2023 | As of December 31, 2022 | | :------------------------------------ | :------------------- | :-------------------- | | Common Stock (Shares) | 6,942 | 6,670 | | Common Stock (Amount) | $69 | $67 | | Additional Paid-In Capital | $294,964 | $295,277 | | Retained Deficit | $(372,913) | $(397,058) | | Total Shareholders' Deficit | $(77,880) | $(101,714) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change (YoY) | | :------------------------------------ | :---------------------------------- | :---------------------------------- | :------------------- | | Net cash provided by (used in) operating activities | $3,249 | $(690) | $3,939 | | Net cash used in investing activities | $(5,086) | $(17,924) | $12,838 | | Net cash used in financing activities | $(3,759) | $(13,434) | $9,675 | | Decrease in cash and cash equivalents and restricted cash | $(5,596) | $(32,048) | $26,452 | | Cash, cash equivalents, and restricted cash at end of period | $25,146 | $60,828 | $(35,682) | | Cash paid for interest | $7,639 | $7,076 | $563 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed explanations for financial statements, covering policies, going concern, and specific line items [1. Basis of Presentation](index=9&type=section&id=1.%20Basis%20of%20Presentation) - Sonida Senior Living, Inc. operates **72 senior housing communities** in 18 states, with approximately **8,000 resident capacity** as of March 31, 2023, including **62 owned and 10 managed communities**[21](index=21&type=chunk) - The company completed the transfer of legal ownership for **two properties** to Fannie Mae in January 2023, which were no longer operated as of December 31, 2022[21](index=21&type=chunk) - The financial statements are unaudited and prepared in accordance with GAAP, with certain disclosures omitted per SEC rules for Form 10-Q[22](index=22&type=chunk) [2. Going Concern Uncertainty and Related Strategic Cash Preservation Initiatives](index=9&type=section&id=2.%20Going%20Concern%20Uncertainty%20and%20Related%20Strategic%20Cash%20Preservation%20Initiatives) - Substantial doubt exists about the Company's ability to continue as a going concern for the next 12 months due to COVID-19 impact, inflation, elevated interest rates, **$81.2 million in principal payments** and **$38.5 million in interest payments** due, recurring operating losses, working capital deficit, and non-compliance with certain mortgage agreements[28](index=28&type=chunk) - The Company has implemented strategic and cash preservation initiatives, including resident rate reviews, global purchasing, labor environment mitigants, cash optimization, discussions with lenders for debt modifications, proactive spending reductions, and pursuing state grants[30](index=30&type=chunk) - Management could not conclude that its plans would probably mitigate the going concern doubt, as the remediation plan depends on external factors and there's a probability of non-compliance with debt covenants, potentially triggering default and acceleration of debt[31](index=31&type=chunk) [3. Summary of Significant Accounting Policies](index=12&type=section&id=3.%20Summary%20of%20Significant%20Accounting%20Policies) | Restricted Cash Category (in thousands) | March 31, 2023 | December 31, 2022 | | :-------------------------------------- | :------------- | :---------------- | | Property tax and insurance reserves | $4,361 | $6,184 | | Lender reserve | $1,500 | $1,500 | | Capital expenditures reserves | $2,202 | $2,034 | | Deposits for outstanding letters of credit | $4,111 | $4,111 | | Total restricted cash | $12,174 | $13,829 | - Revenue recognition for resident services is generally recorded when services are rendered, with residency agreements typically short-term (one year or less) and terminable with **30 days' notice**[40](index=40&type=chunk) - Medicaid program revenues accounted for approximately **9.3%** and **9.6%** of total revenue for the three months ended March 31, 2023 and 2022, respectively, with **24 communities** participating in Medicaid in Q1 2023[42](index=42&type=chunk) - The Company adopted ASU 2016-13 (Credit Losses) on January 1, 2023, with an **immaterial impact** on financial statements[61](index=61&type=chunk) [4. Property and Equipment, net](index=17&type=section&id=4.%20Property%20and%20Equipment,%20net) | Asset Category (in thousands) | March 31, 2023 | December 31, 2022 | | :---------------------------- | :------------- | :---------------- | | Total property and equipment | $973,817 | $968,888 | | Less accumulated depreciation and amortization | $(362,872) | $(353,134) | | Total property and equipment, net | $610,945 | $615,754 | - No impairments on long-lived assets were recorded for the three months ended March 31, 2023, or March 31, 2022[64](index=64&type=chunk) [5. Accrued expenses](index=17&type=section&id=5.%20Accrued%20expenses) | Accrued Expense Category (in thousands) | March 31, 2023 | December 31, 2022 | | :-------------------------------------- | :------------- | :---------------- | | Accrued payroll and employee benefits | $14,187 | $13,795 | | Accrued interest | $5,897 | $9,374 | | Accrued taxes | $5,876 | $6,939 | | Accrued professional fees | $3,571 | $3,179 | | Accrued other expenses | $2,326 | $3,657 | | Total accrued expenses | $31,857 | $36,944 | [6. Notes Payable](index=18&type=section&id=6.%20Notes%20Payable) | Notes Payable Category (in thousands) | March 31, 2023 | December 31, 2022 | | :------------------------------------ | :------------- | :---------------- | | Fixed rate mortgage notes payable | $500,721 | $503,312 | | Variable rate mortgage notes payable | $137,453 | $137,652 | | Notes payable - insurance | $800 | $1,724 | | Notes payable - other | $1,619 | $1,619 | | Total notes payable, excluding deferred loan costs | $640,593 | $676,298 | | Deferred loan costs, net | $(4,719) | $(5,267) | | Total notes payable, net | $635,874 | $671,031 | | Less current portion | $(81,151) | $(46,029) | | Total long-term notes payable, net | $554,723 | $625,002 | | Principal Payments Due (in thousands) | Amount | | :------------------------------------ | :----- | | 2023 | $80,081 | | 2024 | $150,220 | | 2025 | $76,031 | | 2026 | $136,116 | | 2027 | $3,980 | | Thereafter | $194,165 | | Total notes payable, excluding deferred loan costs | $640,593 | - The Company completed the transition of legal ownership of the remaining **two Fannie Mae properties** to new owners on January 11, 2023, resulting in a **$36.3 million gain on debt extinguishment** for Q1 2023[80](index=80&type=chunk) - The Company defaulted on **$69.8 million** of non-recourse mortgage loan agreements with Protective Life Insurance Company for **four communities** in Q1 2023, with discussions ongoing to resolve the matter[81](index=81&type=chunk) [7. Redeemable Preferred Stock](index=20&type=section&id=7.%20Redeemable%20Preferred%20Stock) - The Series A Preferred Stock has an **11% annual dividend**, accrued quarterly and compounded, with **$1.2 million** added to the liquidation preference in Q1 2023 as no dividend was declared[84](index=84&type=chunk) - As of March 31, 2023, the Series A Preferred Stock is carried at its maximum redemption value of **$44.7 million**[13](index=13&type=chunk)[55](index=55&type=chunk) [8. Revenue](index=20&type=section&id=8.%20Revenue) | Revenue Component (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change (YoY) | | :------------------------------- | :---------------------------------- | :---------------------------------- | :----------- | | Housing and support services | $53,791 | $49,438 | $4,353 | | Community fees | $479 | $453 | $26 | | Ancillary services | $273 | $254 | $19 | | Other operating revenue (Provider Relief Funds) | $2,063 | $689 | $1,374 | | Resident revenue | $56,606 | $50,834 | $5,772 | | Management fees | $505 | $628 | $(123) | | Managed community reimbursement revenue | $4,962 | $7,022 | $(2,060) | | Total revenues | $62,073 | $58,484 | $3,589 | - Other operating revenue, primarily Provider Relief Funds from state departments due to COVID-19 financial distress, increased significantly from **$0.7 million** in Q1 2022 to **$2.0 million** in Q1 2023[85](index=85&type=chunk) [9. Net Income (Loss) Per Share](index=20&type=section&id=9.%20Net%20Income%20(Loss)%20Per%20Share) | EPS Metric (in thousands, except per share) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :---------------------------------- | :---------------------------------- | | Net income (loss) attributable to common stockholders | $19,765 | $(17,811) | | Weighted average shares outstanding — basic | 6,855 | 6,341 | | Basic net income (loss) per share | $2.88 | $(2.81) | | Weighted average shares outstanding — diluted | 7,168 | 6,341 | | Diluted net income (loss) per share | $2.76 | $(2.81) | - Securities with an antidilutive effect, including warrants, Series A Preferred Stock (if converted), restricted stock awards, and stock options, totaled **2,335 thousand shares** in Q1 2023 and **2,290 thousand shares** in Q1 2022, and were excluded from diluted EPS calculation[89](index=89&type=chunk) [10. Stock-Based Compensation](index=21&type=section&id=10.%20Stock-Based%20Compensation) | Metric (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------- | :---------------------------------- | :---------------------------------- | | Stock-based compensation expense | $902 | $1,828 | - The Company granted **274 thousand restricted stock awards** with a total grant date fair value of **$2.3 million** during Q1 2023[90](index=90&type=chunk) [11. Commitments and Contingencies](index=21&type=section&id=11.%20Commitments%20and%20Contingencies) - As of March 31, 2023, the Company had contractual commitments of **$2.6 million** for future renovations and technology enhancements, expected to be substantially expended in 2023[91](index=91&type=chunk) - Management believes that claims incurred in the normal course of business, whether or not covered by insurance, should not have a material impact on the condensed consolidated financial statements[92](index=92&type=chunk) [12. Related Party Transactions](index=22&type=section&id=12.%20Related%20Party%20Transactions) - Affiliates of Conversant Capital LLC owned approximately **56.5%** of the Company's outstanding common stock (inclusive of convertible Series A Preferred Stock and warrants) as of March 31, 2023[93](index=93&type=chunk) [13. Fair Value Measurements](index=22&type=section&id=13.%20Fair%20Value%20Measurements) - The fair value of derivative assets (interest rate caps) was **$2.1 million** as of March 31, 2023, determined using Level 2 observable inputs[93](index=93&type=chunk) | Financial Instrument (in thousands) | Carrying Amount (March 31, 2023) | Fair Value (March 31, 2023) | Carrying Amount (December 31, 2022) | Fair Value (December 31, 2022) | | :---------------------------------- | :------------------------------- | :-------------------------- | :---------------------------------- | :----------------------------- | | Cash and cash equivalents | $12,972 | $12,972 | $16,913 | $16,913 | | Restricted cash | $12,174 | $12,174 | $13,829 | $13,829 | | Notes payable, excluding deferred loan costs | $640,593 | $568,769 | $676,298 | $638,485 | [14. Derivatives and Hedging](index=22&type=section&id=14.%20Derivatives%20and%20Hedging) - The Company uses interest rate caps to manage exposure to interest rate fluctuations on variable-rate debt, with an aggregate notional amount of **$138.4 million** as of March 31, 2023[97](index=97&type=chunk)[101](index=101&type=chunk) | Derivative Type (in thousands) | Notional Amount (March 31, 2023) | Fair Value (March 31, 2023) | | :-------------- | :--------------------------------------------- | :---------------------------------------- | | Interest rate cap (LIBOR-based) | $50,260 | $460 | | Interest rate cap (SOFR-based) | $88,125 | $1,671 | | Total derivative assets | $138,385 | $2,131 | - A loss of **$0.6 million** on derivatives not designated as hedges was included in interest expense for the three months ended March 31, 2023[101](index=101&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion of Q1 2023 financial condition and results, covering business, COVID-19, going concern, and liquidity [Overview](index=24&type=section&id=Overview) - Sonida Senior Living is a leading owner-operator of senior housing communities, providing independent living, assisted living, and memory care services primarily to the **75+ population**[104](index=104&type=chunk) - As of March 31, 2023, the Company operated **72 senior housing communities** (**62 owned, 10 managed**) across **18 states**, with an aggregate capacity of approximately **8,000 residents**[105](index=105&type=chunk) [COVID-19 Pandemic](index=24&type=section&id=COVID-19%20Pandemic) - The COVID-19 pandemic negatively impacted occupancy levels, revenues, and operating results, requiring significant additional operating costs for infection control and resident care[106](index=106&type=chunk)[107](index=107&type=chunk) | Metric (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------- | :---------------------------------- | :---------------------------------- | | Direct COVID-19 costs | $33 | $200 | | Provider Relief Funds received | $2,000 | $700 | - All senior living communities were open for new resident move-ins as of March 31, 2023, but the continued impact of the pandemic remains uncertain[106](index=106&type=chunk)[109](index=109&type=chunk) [Going Concern Uncertainty and Related Strategic Cash-Preservation Initiatives](index=25&type=section&id=Going%20Concern%20Uncertainty%20and%20Related%20Strategic%20Cash-Preservation%20Initiatives) - The Company faces substantial doubt about its ability to continue as a going concern for the next 12 months due to factors including COVID-19 impact, inflation, high interest rates, significant debt payments (**$81.2M principal, $38.5M interest**), recurring operating losses, working capital deficit, and mortgage agreement non-compliance[112](index=112&type=chunk) - Strategic initiatives include resident rate reviews, global purchasing, labor mitigants, cash optimization, debt modification discussions, spending reductions, and seeking state grants[114](index=114&type=chunk) - Management could not conclude that its plans would probably mitigate the going concern doubt, as the remediation plan is dependent on external factors and there's a risk of non-compliance with debt covenants, potentially leading to default and debt acceleration[115](index=115&type=chunk) [Significant Financial and Operational Highlights](index=26&type=section&id=Significant%20Financial%20and%20Operational%20Highlights) [Operations](index=26&type=section&id=Operations) | Metric (in millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change (YoY) | | :------------------------------------ | :---------------------------------- | :---------------------------------- | :----------- | | Resident revenue | $56.6 | $50.8 | $5.8 (11.4%) | | Weighted average occupancy (62 owned communities) | 84.0% | 81.8% | 2.2 percentage points | | Average monthly rental rate (62 owned communities) | Higher by 960 basis points | N/A | 9.6% increase | - The increase in resident revenue was primarily driven by increased occupancy, higher average rent rates, and the acquisition of **two new communities** in early 2022[117](index=117&type=chunk) - The Company continues to face workforce challenges in the senior living industry, leading to increased use of overtime, shift bonuses, and contract labor[119](index=119&type=chunk) [2022 Mortgage Refinance](index=26&type=section&id=2022%20Mortgage%20Refinance) - In March 2022, the Company refinanced existing mortgage debt with Ally Bank for **ten communities**, securing an initial term loan of **$80 million**, which was amended in December 2022 to include **two additional communities**, increasing the principal to **$88.1 million**[120](index=120&type=chunk)[121](index=121&type=chunk) - The Refinance Facility includes an additional **$10 million** available as delayed loans and up to an uncommitted **$40 million** for future growth, subject to financial covenant requirements[120](index=120&type=chunk)[121](index=121&type=chunk) - As of March 31, 2023, the Company was in compliance with the financial covenants of the Refinance Facility, but future compliance is not assured[75](index=75&type=chunk) [Other Significant Transactions](index=27&type=section&id=Other%20Significant%20Transactions) - The foreclosure sales of the remaining **two Fannie Mae properties** were completed on January 11, 2023, relieving the Company of related debt and resulting in a **$36.3 million gain on debt extinguishment** for Q1 2023, completing the foreclosure process for all **18 Fannie Mae properties** initiated in 2020[124](index=124&type=chunk) - In Q1 2023, the Company defaulted on **$69.8 million** of non-recourse mortgage loan agreements with Protective Life Insurance Company for **four communities** by electing not to make principal and interest payments[125](index=125&type=chunk) [Application of Critical Accounting Policies and Estimates](index=27&type=section&id=Application%20of%20Critical%20Accounting%20Policies%20and%20Estimates) - There have been no significant changes to the Company's critical accounting policies since December 31, 2022[126](index=126&type=chunk) [Recent Accounting Guidance Adopted](index=27&type=section&id=Recent%20Accounting%20Guidance%20Adopted) - Refer to Note 3 – Summary of Significant Accounting Policies for details on recently adopted accounting pronouncements[127](index=127&type=chunk) [Results of Operations (Three months ended March 31, 2023 as compared to three months ended March 31, 2022)](index=28&type=section&id=Results%20of%20Operations) [Revenues](index=28&type=section&id=Revenues_MD&A) | Revenue Type (in millions) | Q1 2023 | Q1 2022 | Change (YoY) | | :------------------------- | :------ | :------ | :----------- | | Resident revenue | $56.6 | $50.8 | +$5.8 (11.4%) | | Management fee revenue | $0.5 | $0.6 | -$0.1 | | Managed community reimbursement revenue | $5.0 | $7.0 | -$2.0 | - The increase in resident revenue was primarily driven by increased occupancy, higher average rent rates, and the acquisition of **two new communities** in early 2022[128](index=128&type=chunk) - Decreases in management fee and managed community reimbursement revenue were primarily due to managing fewer communities in 2023[129](index=129&type=chunk) [Expenses](index=28&type=section&id=Expenses_MD&A) | Expense Type (in millions) | Q1 2023 | Q1 2022 | Change (YoY) | | :------------------------- | :------ | :------ | :----------- | | Operating expense | $43.8 | $41.9 | +$1.9 (4.5%) | | General and administrative expense | $7.1 | $8.3 | -$1.2 (-14.6%) | | Managed community reimbursement expense | $5.0 | $7.0 | -$2.0 | | Interest expense | $8.9 | $7.6 | +$1.3 | | Gain (loss) on extinguishment of debt | $36.3 | $(0.6) | +$36.9 | - Operating expenses increased due to a **$1.3 million** rise in labor and employee-related expenses and a **$0.6 million** increase in utility costs[130](index=130&type=chunk) - General and administrative expenses decreased primarily due to a **$0.9 million** reduction in stock-based compensation expense from forfeiture credits related to executive personnel changes in 2022[131](index=131&type=chunk) - The **$36.3 million gain on extinguishment of debt** in Q1 2023 resulted from the derecognition of notes payable and liabilities following the transition of legal ownership of **two communities** to Fannie Mae[134](index=134&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) - As of March 31, 2023, the Company had **$13.0 million** in unrestricted cash, with primary liquidity sources including cash from operations, COVID-19 relief grants, debt refinancings/modifications, and asset sales[135](index=135&type=chunk) - The Company's strategic and cash-preservation initiatives aim to provide adequate liquidity for the next 12 months, but success is not assured due to external factors and potential non-compliance with debt covenants[136](index=136&type=chunk) | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change (YoY) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :----------- | | Net cash provided by (used in) operating activities | $3,249 | $(690) | +$3,939 | | Net cash used in investing activities | $(5,086) | $(17,924) | +$12,838 | | Net cash used in financing activities | $(3,759) | $(13,434) | +$9,675 | | Decrease in cash and cash equivalents | $(5,596) | $(32,048) | +$26,452 | [Operating activities](index=29&type=section&id=Operating%20activities) - Net cash provided by operating activities increased by **$3.9 million**, from a net cash use of **$0.7 million** in Q1 2022 to a net cash provision of **$3.2 million** in Q1 2023, driven by improved operations and higher Provider Relief Funds (**$2.0 million** in Q1 2023 vs. **$0.7 million** in Q1 2022)[140](index=140&type=chunk) [Investing activities](index=29&type=section&id=Investing%20activities) - Net cash used in investing activities decreased significantly from **$17.9 million** in Q1 2022 to **$5.1 million** in Q1 2023, primarily due to the acquisition of **two new communities** for **$12.3 million** in Q1 2022 that did not recur in Q1 2023[141](index=141&type=chunk) - Capital expenditures in Q1 2023 included approximately **$2.0 million** for rebuild activities from Winter Storm Elliott, with **$1.1 million** anticipated in insurance reimbursements[141](index=141&type=chunk) [Financing activities](index=29&type=section&id=Financing%20activities) - Net cash used in financing activities decreased from **$13.4 million** in Q1 2022 to **$3.8 million** in Q1 2023, primarily due to lower repayments of notes payable compared to the prior year's debt refinancing[142](index=142&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No applicable quantitative and qualitative disclosures about market risk for the Company in this report [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Discusses effectiveness of disclosure controls and internal control over financial reporting, noting an unremediated material weakness [Effectiveness of Controls and Procedures](index=29&type=section&id=Effectiveness%20of%20Controls%20and%20Procedures) - The Company's CEO and CFO concluded that disclosure controls and procedures were **ineffective** as of March 31, 2023, due to a material weakness identified in the Annual Report on Form 10-K[145](index=145&type=chunk) [Remediation Plan](index=30&type=section&id=Remediation%20Plan) - The material weakness in internal control over financial reporting, stemming from challenges in hiring and maintaining accounting staffing levels, remained **unremediated** as of March 31, 2023[147](index=147&type=chunk) - A remediation plan has been initiated to develop and maintain appropriate management review and process level controls, with expected implementation by the end of Q4 2023[148](index=148&type=chunk) [Part II. Other Information](index=31&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) Management believes normal course claims are insurance-covered and will not materially impact financial statements - Management believes that claims incurred in the normal course of business are covered by insurance and are not expected to have a material effect on the condensed consolidated financial statements[151](index=151&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the 2022 Annual Report on Form 10-K - No material changes to the risk factors previously disclosed in the 2022 Annual Report on Form 10-K[152](index=152&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No common stock repurchases in Q1 2023 under the existing $10.0 million share repurchase program | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program | | :-------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------- | :----------------------------------------------------------------------------- | | January 1 – January 31, 2023 | — | — | — | 6,570,222 | | February 1 – February 28, 2023 | — | — | — | 6,570,222 | | March 1 – March 31, 2023 | — | — | — | 6,570,222 | - The Company's board of directors approved a share repurchase program in 2009 (continued in 2016) authorizing up to **$10.0 million** of common stock purchases, with no stated expiration date[153](index=153&type=chunk) [Item 3. Defaults Upon Senior Securities](index=31&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Company defaulted on $69.8 million of non-recourse mortgage loans with Protective Life in Q1 2023 - As of March 31, 2023, the Company was in default on **$69.8 million** of non-recourse mortgage loan agreements with Protective Life for **four communities** due to missed debt service payments[154](index=154&type=chunk) - An additional **$48.7 million** was outstanding under other loan agreements with Protective Life on **six communities**, for which the Company was not in default as of March 31, 2023[154](index=154&type=chunk) [Item 4. Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the Company [Item 5. Other Information](index=31&type=section&id=Item%205.%20Other%20Information) No other information to report in this section [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications - The exhibits include various corporate governance documents such as the Amended and Restated Certificate of Incorporation and its amendments, Second Amended and Restated Bylaws and its amendment, and the Certificate of Designation for Series A Convertible Preferred Stock[158](index=158&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a) and Section 906 of the Sarbanes-Oxley Act of 2002, are filed herewith[158](index=158&type=chunk)

Financial Data and Key Metrics Changes - The company achieved an 8th consecutive quarter of occupancy growth, with a revenue increase of 6% in Q1 2023, contributing to a 26% increase in community NOI and a 7.5% increase in adjusted NOI [13][8][4] - The overall rate increase was 9.1% on approximately 1,500 leases, leading to adjusted RevPOR increases of 5.6% year-over-year and 2.6% quarter-over-quarter [18][9] - Operating margin reached 24.3% in March, up 440 basis points from Q4 2022 and 530 basis points from Q1 2022 [13] Business Line Data and Key Metrics Changes - The Midwest region experienced significant operating improvement, with 600 basis points of margin expansion over Q4 2022 [14] - Texas and Wisconsin, two traditionally strong states, reported a combined NOI margin exceeding 31% [14] Market Data and Key Metrics Changes - The company’s owned portfolio averaged 84% occupancy in Q1, with expectations for further growth in Q2 and throughout 2023 [13] - The company noted a historical trend of Q1 seasonality softening returning to the industry [8] Company Strategy and Development Direction - The company focuses on three primary efforts: accelerated margin expansion, strengthening the balance sheet, and portfolio expansion through strategic management arrangements and real estate acquisitions [3][7] - The company aims to present itself as a primary transaction partner for owners, operators, and lenders in the senior living market [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving substantial value for shareholders through ongoing margin expansion and operational improvements [15][27] - The company is optimistic about discussions with lending partners to provide short-term liquidity and stabilize the capital structure [26][27] Other Important Information - The total cost of labor declined sequentially for the first time in recent years, with a 50% reduction in contract labor [6] - The company reported a noncash GAAP gain on extinguishment of debt of $36.3 million due to the transition of communities related to a previous asset transfer [21] Q&A Session Summary Question: Future cash flow generation and occupancy recovery - Management indicated that they are not yet ready to provide specific cash flow generation ranges but emphasized the importance of ongoing rate improvements and occupancy recovery [45][49] Question: Debt restructuring specifics - Management stated they cannot provide specific ranges regarding debt restructuring but are aiming for meaningful improvements that support the investment thesis [52][41] Question: Involvement of investors in debt discussions - Management confirmed that representatives from major shareholders are involved in discussions and provide insights, ensuring productive discussions regarding the company's direction [54]

Form 10-K (Mark One) Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________________________________________________________ x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2022 Or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-13445 Sonida Senior Living, I ...

Financial Performance - The weighted average occupancy for owned communities in Q4 2022 was 83.9%[1] - In 2022, the company's resident revenue was $208.7 million, a 9.9% increase compared to $189.8 million in 2021[26] - The company's NOI (Net Operating Income) for 62 properties was $41.6 million in 2022, up 8.7% from $38.3 million in 2021[26] - As of December 31, 2022, fixed-rate debt accounted for 74% ($503.3 million) of the total debt structure[12] Operational Initiatives - The company is implementing a new level of care program, simplified to 4 levels, with completion targeted for Q2 2023[5] - A single lease renewal date initiative has begun, targeting 1,500 leases updated by March 1, 2023[4] - The company is implementing a comprehensive resident rate review program and accelerated rent increases in 2023[15] Portfolio and Services - The company has 72 communities, including 62 owned and 10 managed, with a resident capacity of approximately 8,000[21, 29] - The company's communities are primarily focused on private pay residents, representing 90% of the resident base[20] - The company reinvested $10 million into the portfolio at 18 communities for market defensive and revenue-generating projects[45] - Memory Care revenue growth of $4.0 million, a 12.5% increase vs 2021[46]

Sonida Senior Living, Inc. (NYSE:SNDA) Q4 2022 Earnings Conference Call March 30, 2023 2:30 PM ET Company Participants Brandon Ribar - Chief Executive Officer Kevin Detz - Chief Financial Officer Conference Call Participants Operator Good afternoon. And welcome to the Sonida Senior Living Fourth Quarter and Full Year 2022 Earnings Conference Call. Today’s conference is being recorded. All statements today which are not historical facts may be deemed to be forward-looking statements within the meaning of the ...

Sonida Senior Living, Inc. (NYSE:SNDA) Q3 2022 Earnings Conference Call November 14, 2022 1:00 PM ET Company Participants Brandon Ribar - President and CEO Kevin Detz - CFO Conference Call Participants Steven Valiquette - Barclays Operator Good day, and welcome to the Sonida Senior Living Third Quarter 2022 Earnings Conference Call. Today's conference is being recorded. All statements today, which are not historical facts, may be deemed to be forward-looking statements within the meaning of the federal secu ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-13445 Sonida Senior Living, Inc. (Exact Name of Registrant as Specified in its Charter) (State or Other Jurisdiction of Incor ...