Capital Senior Living(SNDA) - 2025 Q2 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Sonida Senior Living, Inc. as of June 30, 2025, and for the three and six-month periods then ended Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $849.8 million from $841.9 million at year-end 2024, driven by an increase in property and equipment, while total liabilities rose to $736.0 million from $712.3 million, primarily due to higher long-term debt, and total equity decreased from $78.4 million to $62.5 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $63,451 | $64,089 | | Property and equipment, net | $750,261 | $739,884 | | Total Assets | $849,772 | $841,921 | | Total Current Liabilities | $74,583 | $75,615 | | Long-term debt, net | $660,163 | $635,904 | | Total Liabilities | $736,006 | $712,312 | | Total Equity | $62,517 | $78,360 | | Total Liabilities, redeemable preferred stock and equity | $849,772 | $841,921 | Condensed Consolidated Statements of Operations For the three months ended June 30, 2025, total revenues increased to $93.5 million from $70.2 million year-over-year, resulting in a net loss of $2.0 million, a significant improvement from the $9.8 million net loss in the same period of 2024, while for the six-month period, revenues grew to $185.4 million from $137.6 million, with a net loss of $15.0 million compared to a net income of $17.2 million in the prior year due to a large gain on debt extinguishment Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $93,525 | $70,207 | $185,448 | $137,645 | | Total Expenses | $95,802 | $71,605 | $190,591 | $141,175 | | Other income (expense), net | $618 | ($8,359) | ($8,693) | $21,003 | | Net Income (Loss) | ($1,973) | ($9,816) | ($14,998) | $17,203 | | Net Income (Loss) Attributable to Common Shareholders | ($2,972) | ($11,188) | ($16,910) | $13,071 | | Diluted Net Income (Loss) per Common Share | ($0.16) | ($0.86) | ($0.94) | $1.08 | - The six months ended June 30, 2024 included a significant one-time gain on extinguishment of debt of $38.1 million, which was not present in 2025[18] Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities was $12.8 million, a reversal from $1.6 million used in the prior year period, while net cash used in investing activities was $37.5 million, mainly for community acquisitions and capital expenditures, and net cash provided by financing activities was $19.3 million, driven by proceeds from a credit facility and notes payable, partially offset by repayments and dividends, resulting in an overall decrease of $5.4 million in cash, cash equivalents, and restricted cash Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $12,755 | ($1,624) | | Net cash used in investing activities | ($37,471) | ($42,715) | | Net cash provided by financing activities | $19,326 | $50,372 | | Increase (decrease) in cash, cash equivalents, and restricted cash | ($5,390) | $6,033 | Notes to Condensed Consolidated Financial Statements The notes provide detailed explanations of the company's accounting policies and financial activities, covering business overview, recent acquisitions and investments, debt structure and modifications, revenue sources, and details on contingencies and subsequent events, with the company owning, managing, or investing in 96 senior housing communities as of June 30, 2025 - As of June 30, 2025, the Company owned, managed or invested in 96 senior housing communities in 20 states with a capacity of approximately 10,150 residents[25] - During Q2 2025, the Company recognized $8.8 million in gross Employee Retention Credits (ERC) as other income, related to the CARES Act[54] - On May 30, 2025, the Company acquired a senior living community in Florida for $11.0 million, and on June 1, 2025, acquired another in Georgia for $11.0 million[69][70] - Subsequent to the quarter end, on August 7, 2025, the Company entered into a new senior secured term loan of $137.0 million with Ally Bank to refinance existing debt and finance a recent acquisition[123] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's operational and financial performance, highlighting a 29.6% increase in resident revenue for Q2 2025 compared to Q2 2024, driven by acquisitions and higher rental rates, covering recent acquisitions, investments in joint ventures, and significant financing activities, including a new $137.0 million term loan with Ally Bank subsequent to the quarter's end, with liquidity supported by cash from operations, its credit facility, and an ATM sales agreement Significant Financial and Operational Highlights For Q2 2025, resident revenue grew 29.6% year-over-year to $81.8 million, primarily due to increased average rent rates and the addition of 18 communities acquired in 2024 and 2025, while for the same-store portfolio, weighted average occupancy increased to 86.5% from 86.1%, and the average monthly rental rate rose by 4.4% compared to Q2 2024, with the company also active with acquisitions and investments, including two community purchases in May and June 2025 Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Resident Revenue | $81.8 million | $63.1 million | +29.6% | | Same-Store Weighted Avg. Occupancy | 86.5% | 86.1% | +0.4 p.p. | | Same-Store Avg. Monthly Rental Rate | - | - | +4.4% | - The company acquired one community in Florida for $11.0 million in May 2025 and one in Georgia for $11.0 million in June 2025[135][136] Results of Operations Comparing Q2 2025 to Q2 2024, the 29.6% increase in resident revenue was accompanied by a 33.5% rise in operating expenses, largely due to the 18 newly acquired communities, with general and administrative expenses increasing by $1.0 million, and other income at $9.1 million in Q2 2025, boosted by $8.8 million in Employee Retention Credits (ERC), while for the six-month period, revenue grew 30.1%, and operating expenses increased 32.0%, noting the prior year's six-month results included a $38.1 million gain on debt extinguishment, which was absent in 2025 - For Q2 2025, resident revenue increased by $18.7 million (29.6%) YoY, primarily due to acquisitions and higher rent rates[149] - Operating expenses for Q2 2025 increased by $15.4 million (33.5%) YoY, with $12.5 million of the increase attributable to newly acquired communities[152] - Other income for Q2 2025 was $9.1 million, which included $8.8 million from ERC funds under the CARES Act[157] Liquidity and Capital Resources As of June 30, 2025, the company had $14.1 million in unrestricted cash, with principal sources of liquidity including cash flows from operations, a secured Credit Facility, and an ATM sales agreement, and had $75.0 million outstanding on its credit facility with an additional $32.9 million available, while for the first six months of 2025, operating activities provided $12.8 million in cash, a significant improvement from the $1.6 million used in the same period of 2024 - Principal sources of liquidity are cash flows from operations, a secured Credit Facility, an ATM sales agreement, debt refinancings, and asset sales[168] - As of June 30, 2025, the Company had $14.1 million of unrestricted cash and $32.9 million of additional borrowing capacity under its Credit Facility[168] Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $12,755 | ($1,624) | $14,379 | | Net cash used in investing activities | ($37,471) | ($42,715) | $5,244 | | Net cash provided by financing activities | $19,326 | $50,372 | ($31,046) | Item 3. Quantitative and Qualitative Disclosures About Market Risk This item is marked as 'Not applicable' in the report - The company has indicated that this section is not applicable for this reporting period[176] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were ineffective as of June 30, 2025, due to a previously identified material weakness related to ineffective user access controls for certain financial systems, including the payroll system, which creates a lack of segregation of duties, with a remediation plan underway and testing expected to be completed in late 2025 - The CEO and CFO have concluded that the Company's disclosure controls and procedures are ineffective as of June 30, 2025[178] - A material weakness exists due to ineffective system user access controls for certain financial systems, particularly the payroll system, leading to a lack of segregation of duties[179] - A remediation plan has been implemented, including restricting user access, enhancing user access reviews, and retaining a third-party firm for validation; testing is anticipated to be completed in late 2025[181][183] Part II. Other Information Item 1. Legal Proceedings The company is involved in litigation and claims arising in the normal course of business, which management believes are comparable to others in the senior living industry, with most claims expected to be covered by insurance, and management does not believe they will have a material effect on the company's financial statements - The Company is subject to litigation and claims typical for the senior living and healthcare industries, most of which are believed to be covered by insurance and are not expected to have a material adverse effect[185] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors from the Annual Report on Form 10-K for the year ended December 31, 2024, have been reported[186] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company has a share repurchase program authorizing up to $10.0 million in common stock purchases, but no shares were repurchased under this program during the quarter ended June 30, 2025 Share Repurchases for Quarter Ended June 30, 2025 | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased | | :--- | :--- | :--- | :--- | | April 1 – April 30, 2025 | — | — | $6,570,222 | | May 1 – May 31, 2025 | — | — | $6,570,222 | | June 1 – June 30, 2025 | — | — | $6,570,222 | Item 6. Exhibits This section lists the documents filed as part of the quarterly report, including corporate governance documents, certifications from the CEO and CFO, and financial data formatted in iXBRL