Brookdale Senior Living(BKD) - 2024 Q4 - Annual Report

Company Operations - Brookdale operates and manages 647 senior living communities across 41 states, serving approximately 58,000 residents as of December 31, 2024[18]. - The company has 647 communities with a total of 55,095 units as of December 31, 2024, with 60.8% in Assisted Living and Memory Care[53]. - The company managed 28 communities (4,256 units) on behalf of others, representing 8% of its senior housing capacity[66]. - The company provides memory care services at 336 communities, totaling 8,962 memory care units, including 107 freestanding memory care communities[62]. - The company owned 353 communities, leased 266 communities, and managed 28 communities on behalf of others as of December 31, 2024[200]. - The total number of communities operated by the company is 55,095, with 353 owned, 266 leased, and 28 managed[201]. Financial Performance - Total resident fee and management fee revenue reached $2,982,571, with Assisted Living and Memory Care contributing 68.3% at$ 2,038,660[55]. - For the year ended December 31, 2024, 93.8% of resident fee revenue was generated from private pay residents[54]. - The company anticipates benefiting from operating leverage as occupancy increases, which will improve margins and drive Adjusted EBITDA growth[22]. - As of December 31, 2024, the company had $4.1 billion of debt outstanding, including$ 3.0 billion of long-term fixed rate debt at a weighted average interest rate of 4.50%[29]. - For the year ended December 31, 2024, debt interest expense increased by $5.8 million, or 2.7%, compared to the prior year[31]. - The company has significant indebtedness and lease obligations, which could adversely affect future operations and stockholder interests[145]. - The company’s debt and lease documents contain financial covenants that, if breached, could lead to acceleration of indebtedness and adverse effects on capital structure[147]. Strategic Initiatives - The company aims to improve occupancy levels and profitability by increasing move-ins and managing controllable expenses, targeting a return to pre-pandemic occupancy and margins[21]. - Brookdale plans to exit non-strategic or underperforming assets and explore growth opportunities through acquisitions and expansions in core markets[25]. - The company is focused on strategic innovation and technology to enhance resident engagement and improve operational efficiency[25]. - The company has implemented centralized support functions, achieving cost efficiencies in procurement, human resources, and other operational areas[70]. - The company plans to implement a new ERP system throughout 2025, which requires significant financial and personnel resources[124]. Labor and Workforce - Labor costs account for approximately two-thirds of total facility operating expenses, with a 3.0% increase in labor expenses in 2024 compared to the prior year due to wage adjustments[26][27]. - The company aims to enhance associate engagement and reduce turnover through improved training and career development opportunities[21]. - The company employed approximately 36,000 associates, with 68% being full-time[77]. - In 2024, the company focused on reducing turnover, resulting in contract labor costs returning to pre-pandemic inflation-adjusted levels[78]. - The company implemented various recruitment strategies, including partnerships with nursing schools and support for military recruitment[80]. Regulatory and Compliance - The company is subject to increasing regulatory scrutiny, which could materially affect its operations and expansion plans[86]. - The company is subject to government reviews and audits related to compliance with Medicare and Medicaid programs, which could result in penalties or loss of participation[101]. - Compliance with evolving regulations may require unanticipated expenditures, adversely affecting results of operations and financial condition[181]. - The company is subject to various federal, state, and local employment-related laws and regulations, which could increase operational costs significantly[186]. - Violations of federal and state laws governing healthcare provider relationships could lead to criminal penalties, civil sanctions, and loss of government reimbursement eligibility[179]. Market and Competition - The senior living industry is projected to see over one million new potential residents per year for the next decade due to demographic trends[45]. - The company faces increased competition from various organizations, including not-for-profit entities, in the senior living industry[48]. - The senior living industry is highly competitive, with numerous organizations offering similar services, which may impact occupancy and revenue[114]. - The geographic concentration of communities in states like California, Florida, and Texas increases vulnerability to local economic downturns and regulatory changes[115]. Risks and Challenges - The company faces risks from environmental regulations that could lead to significant liabilities for hazardous substances on properties[102]. - The management of infectious medical waste is subject to strict regulations, and non-compliance could adversely affect financial condition and operations[105]. - The company acknowledges that future pandemics or health crises could adversely impact business operations and financial performance[136]. - The company may incur significant remediation costs and face negative publicity due to cybersecurity vulnerabilities, which could materially impact revenues and cash flow[123]. - Increased competition for qualified associates and wage pressures could negatively impact the company's operating results and cash flow[160]. Technology and Innovation - The company is undergoing a transformative process to modernize technology platforms, which may disrupt operations if not completed successfully[124]. - Cybersecurity risks are managed by a dedicated Chief Information Security Officer, with ongoing assessments and compliance efforts in place[196]. - The company has engaged external experts to enhance cybersecurity strategies and ensure compliance with legal standards[199]. Stock and Dividends - The company suspended its quarterly cash dividend indefinitely as of December 30, 2008, focusing on capital expenditures and strategic investments[208]. - The stock price performance shows a decline from$ 100 in December 2019 to $69.19 in December 2024[212]. - The company’s common stock is traded on the NYSE under the symbol "BKD"[207]. - Future offerings of debt or equity securities may adversely affect the market price of the company's common stock and dilute existing shareholders[191].