Hello, everyone, and welcome to the Brookdale Senior Living first quarter 2024 Earnings Call. My name is Harry, and I will be your operator for today. Now, I will turn the call over to Jessica Hazel, Vice President of Investor Relations, to begin. Please proceed.

Thank you, and good morning. I'd like to welcome you to the First Quarter 2024 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 and certain 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 of the full safe harbor statement. Also, please note that during this call, we'll 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'll turn the call over to Cindy.

Thank you, Jessica. Good morning to all of our shareholders, analysts, and other call participants. Welcome to our first quarter 2024 earnings call. In the first quarter, we made great progress on our key strategic priorities, which are designed to not only pave the way for operational excellence and sustainable long-term growth, but also to support the health and well-being of our residents and associates. At Brookdale, our unwavering commitment is and has been the health and well-being of our residents and associates. We know that aging presents new challenges for seniors, and they, along with their families, often struggle with their evolving needs. Many times, these needs include a significant increase in chronic conditions, increased feelings of loneliness and isolation, and support to complete even the most basic activities of daily living. At Brookdale, we take pride in our ability to help seniors manage these challenges of aging through high-quality care and personalized services, all in a home-like setting surrounded by a community of friends. But our commitment doesn't stop with our residents. Our business depends on people taking care of people, and as such, our greatest asset is our associates. Each Brookdale associate has the meaningful privilege to truly enrich our residents' lives with compassion, respect, excellence, and integrity. Our mission embodies Brookdale's commitment to a culture of caring and excellence. Through our key strategic priorities and our relentless dedication to the health and well-being of our residents and associates, we're seeing meaningful positive outcomes being realized for our residents and associates in our community operations and throughout our financial results. I'll share with you many of these positive first quarter outcomes, including an accelerating year-over-year occupancy growth trend, another year of favorable rate growth that is supporting profitable census increases, and our continued triple-digit same-community margin expansion. It remains undeniable that demand from the target senior demographic is here and rising. We remain focused on our goal to meet this growing demand and to be the nation's first choice in senior living. With the strong start to the new year, including the sustainable growth we continue to deliver, I'm filled with tremendous optimism for our ability to capture the incredible opportunity that lies ahead. In the first quarter, we maintained an intense focus on our key strategic priorities. Building on our strong momentum from 2023 and with the continued successful execution of these priorities, we're proud to report another quarter of positive operational performance, where we once again delivered results within or better than our previously provided guidance ranges. Using our strategic framework as a guide, I'm proud to share with you our recent progress and noteworthy accomplishments. Beginning first with our priority to get every available room in service at the best profitable rate. In the first quarter, on a same community basis, RevPAR grew 6.3% over the prior year, which supported an operating income margin of 27.6%, our highest reported adjusted margin rate since the initial impact of the pandemic. As Dawn will share, this represents an important milestone on our road to pre-pandemic margins and beyond. Our effective January 1 rate increase, coupled with 150 basis points of year-over-year same-community occupancy growth and continued appropriate expense management, contributed to these strong results. We were very pleased that our year-over-year occupancy increased every month of the first quarter, accelerating from our fourth quarter growth level and exceeding our initial expectations. There continues to be robust demand for our services and a recognition for the strong value proposition that Brookdale provides, resulting in more seniors choosing to call Brookdale home. In the first quarter, our move-ins exceeded pre-pandemic levels by 7.5%. Though not quite as high as our prior year first quarter move-in level, we're still pleased with the strong demand that we're seeing. We're also grateful that first quarter move-outs improved relative to both the prior year and pre-pandemic levels. By holding steadfast to our commitment to consistent and profitable year-over-year occupancy increases while continuing to meet our residents' needs, provide high-quality care and personalized service, and remain in compliance with applicable regulations, we're building a significant runway for future revenue and operating income growth as we serve more seniors in the quarters and decades to come. Turning to our next strategic priority to attract, engage, develop, and retain the best associates. A simple philosophy resonates within Brookdale: If we take care of our associates, they, in turn, will take care of our residents. That is why this strategic priority remains critical to our long-term success. With this in mind, I'm very pleased with our incredible progress to attract, engage, develop, and retain the best associates, which has already had a positive impact on our operations performance and financial results while simultaneously strengthening our teams and creating lasting benefits for the future. The pandemic significantly affected the workforce in our industry, leading to a nationwide shortage of healthcare workers. In 2022, we increased our internal workforce by approximately 15% with nearly 5,000 net hires, which supported more shifts being filled by our own Brookdale associates rather than contract labor. Then in 2023, we refined the Executive Director role, introduced enhanced leadership training, and focused on enhancing our associate onboarding experience to support better turnover and retention, particularly within the first 90 days. During the first quarter, we've been pleased with our continued improvement in key leadership retention, which includes our Executive Director, Health and Wellness Director, and Sales Director, and in our associate turnover. As part of this, we're incredibly proud that our trailing 12-month Executive Director retention rate through the first quarter has reached nearly 70% retention. This is critical, as we've found that when an Executive Director is in place at least 2 years, those communities have higher overall profitability. Given the significant progress we've made over the last 2 years to stabilize our overall workforce, in 2024, we're refreshing our hourly training to be more engaging and personalized for our associates while ensuring that we continue to provide high-quality care and maintain regulatory compliance. It's still early, but we're excited about this opportunity and the impact it will have for our associates' productivity and growth in their career opportunities. Third is our strategic priority to earn resident and family trust and satisfaction by providing valued, high-quality care and personalized service. At Brookdale, we remain committed to continuous improvement, and we believe feedback is a gift. Thanks to strong engagement from our residents and their families, including approximately 65,000 internal and third-party satisfaction surveys over the past 12 months, we're able to gain meaningful insights. These insights enable us to appropriately address areas of opportunity within our communities, and we've been pleased with the progress we've made to continually improve resident satisfaction. Most recently, our internal resident satisfaction ratings increased each month of the first quarter. I believe this reflects the positive outcomes of our continued efforts in this critical area and speaks to our dedication to compassionate, high-quality care and personalized service. While we believe our customer focus is strong, we feel a deep sense of pride when our industry leadership is recognized externally, whether that's when our individual communities are acknowledged as being the best or when one of our differentiated Brookdale programs receives a notable recognition. In just the last few weeks, we've been honored with 3 unique external distinctions. First, our Clear Bridge Alzheimer's and Dementia Care Training was recently certified by the Alzheimer's Association for its demonstrated commitment to providing evidence-based training with a person-centered focus. We're proud of our industry-leading expertise in the care of those with Alzheimer's and other related dementias. Today, Brookdale operates more than 9,000 memory care units that support residents and their families who are impacted by these diseases. The number of seniors who need these services is growing rapidly. By 2030, the CDC expects 8.5 million Americans will be living with Alzheimer's disease. We're confident in the effectiveness of our Alzheimer's and Dementia Care program to support those living with these chronic conditions, and we're honored to have this certification of our Clear Bridge Training. Second, Brookdale was recognized once again with the most communities on U.S. News & World Report 'Best of' Senior Living Listings. This year, more Brookdale communities were recognized as a 'Best Of' winner than ever in our history, and we're proud to lead the industry in community recognition for the third year in a row. I believe this is a testament to the trust our residents and their families place in us, the quality of the care we're providing, and the unique Brookdale programs that we believe support improved resident outcomes. Third, as yet another recognition of our differentiated programs, Argentum awarded Brookdale as a 2024 Best of the Best winner for our innovative Brookdale HealthPlus program, noting that innovative programs like this show unparalleled passion and commitment to providing an optimal environment for the residents and families we serve. As I've shared before, Brookdale HealthPlus delivers measurable positive outcomes, and we believe that over the long term, through programs like HealthPlus, we'll further improve the quality of life for our residents, increase the satisfaction of our customers and their loved ones, while also reducing costs to residents, their families, and the overall healthcare system, and delivering value to our shareholders. We're very proud of this Argentum Best of the Best Award as we strive to continue to differentiate ourselves through clinical excellence and an emphasis on value-based care. In summary, we entered 2024 with a clear vision, an intense focus, and a dedication to continued positive results. Already this year, we've delivered meaningful positive outcomes across our key strategic priorities. With the first quarter annualized, we've recovered 97% of our 2019 adjusted EBITDA. At the same time, we're keenly focused on the incredible opportunity ahead of us from recovering our pre-pandemic occupancy and margins. Our consistent forward progress each quarter reinforces my confidence that the plans we're executing, combined with industry supply and demand dynamics, and Brookdale's key differentiators, will drive significant growth for decades to come. We're excited to continue our positive momentum in the second quarter and throughout 2024.

Thank you, Cindy. Good morning, and thank you for being here today. Cindy shared highlights of our positive first quarter operational and financial progress. I'll provide additional color on our first quarter results, and then I'll speak to our second quarter guidance. Beginning with first quarter revenue. Resident fee revenue grew 4.3% over the prior year first quarter. At the top end of our previously provided first quarter guidance range, consolidated RevPAR grew 6.7% over the prior year first quarter, which was attributable to a 160 basis point increase in weighted average occupancy and a 4.4% RevPOR growth. Marking our tenth consecutive quarter of year-over-year occupancy growth, the first quarter's 160 basis point increase reflects a positive acceleration of our recent occupancy growth trends. We're also pleased to report that the sequential occupancy change from the fourth quarter of 2023 to the first quarter of 2024 was meaningfully better than normal pre-pandemic seasonality for this period. Specific to first quarter RevPOR, as a reminder, while higher than historic norms, we implemented a lower average January 1 rate increase than in the prior year. We remain focused on ensuring appropriate pricing to match the services we deliver in our communities while remaining affordable to our residents and appropriately addressing our costs. As reflected in our results, this year's January 1 increase effectively supported continued RevPOR growth, improved year-over-year financial move-outs, and strong flow-through, as evidenced by our margin growth. Specific to our same community portfolio, first quarter RevPAR increased 6.3% over the prior year, driven by 150 basis points of occupancy growth and a 4.3% increase in RevPOR. We're pleased with our continued top line progress, including first quarter occupancy that was better than normal seasonality, strong demand, and year-over-year improvement in controllable attrition. Moving to first quarter expenses. Consolidated facility operating expense was $543 million, while same community facility operating expense, as shown on Page 8 of our financial supplement, was $528 million. Same community labor expense as a percent of revenue improved 150 basis points compared to the prior year first quarter. This was a result of favorable flow-through of top line growth given the fixed cost nature of our business, reductions in contract labor and overtime, and the favorable impact of improved leadership retention and hourly associate turnover. We're very pleased to realize these favorable outcomes from our strategic priorities, particularly considering the year-over-year incremental expense increase from leap day. Same-community other facility operating expense as a percent of revenue was flat to the prior year. Driving the dollar expense increase over the prior year first quarter were a number of marginal factors, including the higher cost of property and casualty coverage, including higher premiums and higher retained risk, technology enhancements, including upgraded WiFi within our independent living portfolio and outsourcing our data centers, as well as broad inflationary pressure and the impact of an extra day. Importantly, the data center outsourcing is neutral from a cash flow perspective. Our continued favorable same-community revenue to expense spread drove 140 basis points of year-over-year adjusted operating margin expansion to 27.6% of revenue. As Cindy shared, this represents our highest reported adjusted margin rate since the initial impact of the pandemic. Reflecting our tenth consecutive quarter of meaningful year-over-year same community growth, first quarter adjusted operating income increased by 12% over the prior year first quarter. Continued progress on the top line and ongoing appropriate expense management have supported these results, as well as supporting our achievement of a meaningful milestone in our pandemic recovery. On a per available unit basis, our annualized first quarter same-community operating income surpassed our 2019 same-community operating income per available unit. Given the significant runway still available for occupancy growth, we believe this not only reflects a remarkable accomplishment, but also positions us well over the near and long term as occupancy continues to grow. I'm very proud of our continued 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 services, and remain in compliance with applicable regulations. First quarter general and administrative expense was relatively flat to the prior year first quarter, excluding prior year restructuring costs. Cash operating lease payments were $65 million. These financial results culminated in first quarter adjusted EBITDA of $98 million, which exceeded the top end of our guidance range by approximately $3 million. This outperformance was due to favorability in labor expense, driven predominantly by wage adjustments. Compared to the prior year first quarter, adjusted EBITDA increased $9 million or 10%. As we shared previously, when comparing first quarter adjusted EBITDA to the first quarter of 2023, there are several factors that presented a meaningful headwind to year-over-year growth results. First, the prior year first quarter included approximately $2.3 million in government grant revenue. Second, as a result of the May 2023 change in lease classification, we had approximately $7.4 million of lease payments that impacted adjusted EBITDA this year but did not affect last year and did not impact cash rent payments. Third, our current year first quarter adjusted EBITDA results include approximately $2 million of incremental expense from the January winter storms. And lastly, the current year first quarter included an extra day for leap year, which resulted in approximately $3 million of incremental expense, with only a minor impact on revenue. Considering the magnitude of these factors combined, we're very pleased with our year-over-year adjusted EBITDA growth results. Adjusted free cash flow was negative $26 million for the quarter. As expected, our first quarter change in working capital was negative $22 million and represented the largest impact when comparing first quarter adjusted free cash flow to the prior year first quarter, as normal core seasonality and annual incentive compensation payments occurred during the first quarter and are reflected in our change in working capital results. Additionally, unique to this quarter was the impact of cash, long-term incentive payments related to awards that were granted in lieu of equity in 2021 following the satisfaction of certain performance conditions. Given Brookdale's strong 2023 performance and the timing of the unique approximately $4 million long-term incentive grant, the cash impact of our current period incentive compensation payments was larger than in recent prior years. First quarter non-development capital expenditures were $51 million. We continue to anticipate approximately $180 million of net non-development capital expenditures in 2024. First quarter interest expense net was relatively flat to the fourth quarter of 2023. As of March 31, total liquidity was $355 million compared to $341 million at the end of the 2023 fourth quarter. We're pleased with this liquidity position and that we've no mortgage debt maturities without extension options until September 2025. Turning to the second quarter. In yesterday's press release, we guided to second quarter RevPAR growth of 6.25% to 6.75% over the prior year and adjusted EBITDA in the range of $93 million to $98 million. Contributing to our RevPAR expectations, we anticipate our second quarter weighted average occupancy to increase sequentially from the first quarter, representing favorable performance when compared to normal pre-pandemic seasonality for this period. This favorable expectation reflects our strong first quarter move-ins and the anticipation of continued positive recovery from the impact of the pandemic. Regarding RevPOR, we expect a step down sequentially from first quarter RevPOR to second quarter RevPOR. A sequential step down between these 2 quarters is normal course and has varied historically in amount based upon a number of factors, including product mix and care rates as newer residents generally move in with lower acuity and therefore have a lower care rate than existing residents. We're pleased that our top line expectations will support another quarter of meaningful year-over-year revenue growth, particularly considering we received more than $4 million in state grant revenue in the second quarter of 2023. We expect to exit the second quarter with a capacity of 50,950 units, or 1,000 fewer units than at the same time last year, as a result of owned and leased dispositions over the 12-month period. We believe that with our continued expected occupancy recovery as we build upon our strong occupancy start to this year, our year-over-year RevPAR growth rate will further improve throughout the year. When considering our second quarter adjusted EBITDA guidance, we believe that beyond our expected favorable occupancy growth compared to the first quarter and continued appropriate expense management, the cadence of our results will be largely in line as it relates to the seasonal sequential performance as shown on the last page of our investor presentation. In closing, we're pleased to have delivered another quarter of strong year-over-year growth. We're confident that our disciplined approach to achieving positive outcomes and sustainable growth while maintaining a commitment to quality and excellence will yield favorable results in 2024 and for decades to come. I'll now turn the call back over to Cindy.

I'd like to close by saying thank you. Thank you to our residents and their families for entrusting us with their care and allowing us the privilege to serve them, to our 36,000 associates for their dedication and commitment to enriching the lives of those we serve, to our shareholders for their continued support in advancing our mission. And lastly, a special thank you to Guy Sansone and Marc Bromley for their years of service to Brookdale's Board of Directors as they notified us that they will not be standing for reelection and will be retiring from our Board at our 2024 Annual Meeting. Guy and Marc have played an important role at Brookdale, and we're grateful for their contributions.

Operator, please open the line for questions. And our first question today is from Ben Hendrix of RBC.

Great. And congratulations on the quarter. Just wanted to get some more details on the factors that give you confidence in outperforming the seasonal occupancy trends for the remainder of the year. Is that largely driven by staff retention efforts and advances you've made there? Or are there other market dynamics? And then just related to that, clearly, strong performance in controllable move-outs this quarter. Is the overall move-out rate kind of where it needs to be at this point? Or how much room to run do we have there?

Ben, thanks so much for the question. This is Cindy. I'll start with a response to the controllable move-out rates, and then Dawn can jump in. I'm really proud of the progress that we made this quarter, and quite honestly, since our recovery began in March of 2021. We'd still like to see improvement in both controllable and non-controllable move-outs relative to pre-pandemic. I think it makes sense to say that we're making progress, and we're focused on improving resident satisfaction, and that is one of the ways that we think that our results will improve. It's also important to note that this year's rate increase was more aggressive than historical norms, but less aggressive than last year, and I think that played a critical role in helping us with controllable move-outs. Now Dawn, if you want to address the rest of the question?

Yes, Ben. Reflecting on our strong performance from the fourth quarter to the first quarter, we experienced a 50 basis point decline in occupancy. As Cindy noted, our move-ins were 7.5% higher than pre-pandemic levels, which we are pleased about. In terms of move-outs, we noticed fewer financial move-outs compared to the previous year. We continue to observe the balance of supply and demand, alongside a rate increase that was lower than last year's. Cindy also mentioned our progress in retention and turnover, which we believe contributes to this positive trend, and we expect it to persist throughout the year.

Our next question today is from the line of Joanna Gajuk of Bank of America.

I’d like to talk about occupancy for a moment. You mentioned that you expect the positive trend from Q1 to carry on into Q2, and you anticipate sequential growth. When I review historical data from 2018 and 2019, I see that occupancy was down quarter-over-quarter due to new supply pressure. However, last year, Q2 showed a 20 basis point increase compared to Q1. Is this what you’re referencing? Should we expect a similar magnitude of growth in occupancy from Q1 to Q2?

I think, Joanna, the way to approach this is that it would generally follow a similar trend as the previous year, though perhaps not in the same percentage. If we consider what happened from Q2 into Q1 of '22 into '23, our occupancy remains relatively flat as we continue to recover from the pandemic. We're observing some positive trends, so we are not experiencing a decline from Q4 into Q1 of this year. In fact, we are making that transition earlier. This is reflected in the April occupancy data we shared last night, where our average occupancy remained steady compared to March, and our ending occupancy improved by 10 basis points over March. Thus, we anticipate making this turnaround earlier, and you should see that reflected in our Q2 occupancy.

That makes sense. Regarding occupancy, it continues to exceed expectations, with improvements occurring at a quicker pace this quarter. In relation to the previous question, could you share your thoughts on the key drivers behind this trend? I recognize you have been focusing on this not just in the last quarter but over the past couple of years. Are there specific examples you can highlight about what’s contributing to this? While I understand that the absence of new supply is beneficial, are there other industry-level factors at play as well as company-specific ones? Additionally, your slides mentioned aiming to return to pre-2019 levels, and I gather you are thinking more about the peak prior to that, around 2014 or 2015. Could you provide any updated insights on how long it might take to achieve an occupancy rate of 84% or higher?

Yes, Joanna, let me start, and then Dawn can jump in if she has something to add. First, our goal really is to get back to our 2019 profitability. And as I mentioned, we were incredibly proud of the fact that this quarter, if you annualize our first quarter results, we're back to 97% of pre-pandemic. And if you look at our same-community adjusted operating income on a per unit basis, then you annualize the first quarter results, we're actually better than 2019. And so unlike many in the industry, we really focused on recovering the cash flow of our business. And so we focused very hard on what was the rate that we were charging for the services and what were the costs that went into making a resident experience differentiated from our competition, and I think that has boded well. What I can tell you that as a team, there really are those 3 priorities that are really going to drive our recovery, right? We've to make sure that everyone in the company is focused on getting every unit available in service at the best profitable rate as quickly as we can. That's going to be easier in some markets than others, but everybody is focused on that. And last year, we improved the Executive Director job description to ensure they focus on driving sales while providing quality care to our existing residents and enhancing their satisfaction. Additionally, we have made significant progress in retaining our associates. We understand that when an Executive Director remains in place for at least two years, the community experiences improved profitability. Furthermore, stability within our leadership team leads to stability among the community's hourly associates. This stability is crucial because our teams develop relationships with the residents. Moreover, when they have been in their positions for a longer time, they become more effective in serving the residents. This, in turn, results in higher resident satisfaction, which is our third priority of earning both resident and family trust by delivering high-quality, valued services. The reason that is important is when you've residents who are happy with the care that you're providing, they want their friends to live with them, and they've a longer length of stay. So that helps you build occupancy in the communities. So what I can say is we've had a playbook that is working quite effectively. I think that we're going to continue to sort of drill down on the training that we did last year on the Brookdale Way. We're pleased with our progress, but we've a long way to go in terms of getting back to pre-pandemic occupancy and margins and beyond. And that's why it's such an exciting time to enter Brookdale stock because we've demonstrated that we can execute our plan successfully. And at the same time, there's still a lot of opportunity in front of us, backed by strong supply and demand fundamentals. And you'll continue to see us roll out Brookdale HealthPlus because we're just so far ahead of the industry in terms of our ability to participate in value-based care and to really provide a differentiated experience on the clinical side for our residents.

And Joanna, this is Dawn. What I'd point back to as well, just adding on to what Cindy said, is Slide 24 and 25 in our Investor presentation, where we laid out our pre-pandemic operating margins. We're nearing, as Cindy had said in our prepared remarks, we're over our 2019 on a per unit basis operating margin. But you can see how close we're to those pre-pandemic operating margins and then just the runway that we've from an occupancy standpoint and how excited we're about that.

Yes, that's what I was referring to. Since Cindy mentioned the HealthPlus program line, it was also on my list regarding the roll-up. Do you have information on how many communities currently have it in place? What are the plans for the rollout and how aggressively are you working to implement this across the portfolio?

Sure, today, Brookdale HealthPlus is in close to 50 communities, and our goal is to have it in 130 communities by year-end. One of the things that we think about with regard to the rollout is we're scaling a clinical program that involves changing every single aspect of community operations. So we want to move quickly, but we also want to move carefully to make sure that we're able to appropriately source RN Care Managers, who can help us with that, and that we're able to train our people so that the HealthPlus communities operate effectively. And we're excited about the fact that by year-end, we'll be at 130 communities. And again, I couldn't be more excited about the fact that our industry trade association, Argentum, recognized Brookdale HealthPlus as one of the Best of the Best programs. And that just is a testament to how far we're ahead of the industry in this area.

And our next question today is from Josh Raskin of Nephron Research.

Maybe just taking a step back, if you could speak about your development plans, I guess, both sort of short or intermediate term and then the long term. And I'm specifically interested in how you're thinking about changing populations and state demographics and things like that. I'm curious also, as we've seen a big ramp in home-based health care services, are you seeing any impact from that on demand or individuals able to live at home longer in specific areas?

Good question, Josh. We currently don't have a lot of development plans at Brookdale. We're very focused on winning the recovery with our existing portfolio. As we think about what the right answer is, we're very focused on serving residents in their homes, which are our communities. And we think that Brookdale HealthPlus and adding health care into our communities is the right answer. One of the things that you may or may not know is that we have physicians and nurse practitioners, who are available in many of our communities. And so our residents are able to get health care services right at home. We're continuing to look to see what additional health care services could be provided by third parties in our communities. I think you probably know that historically, we've had home health and hospice within our communities. We're continuously focusing on the quality of the programs within our communities, whether that is quality dining and nutrition, whether that is our resident social engagement, whether that's the whole life setting without the burdens of homeownership, but most particularly health and wellness. And what you'll see over the longer term, though, is we'll look to increase the density in the markets, where we think there's growth and where we've got a strong presence.

Yes, I'm sorry. I've misspoken the word development. I meant more of a... go ahead, sorry.

I was going to say the last part of questions was on the home base; we've not seen an impact of home-based services at this point in time. And the age of our residents over the last few years hasn't really changed in terms of the age that they're moving in at. In fact, what we've actually seen is a lower acuity resident moving into Brookdale, and that is even compared to pre-pandemic.

Got you. Got you. I was going to say, I sort of misspoken. I shouldn't have used the word development. I meant more around sort of like your development CapEx at the local level, like sort of developing more memory care. Is that more targeted? Or is there sort of a general thought on that? I know those numbers have been relatively low in recent years.

We aren't currently doing much in terms of capital development in terms of changing the configuration of the community from assisted living to memory care. We're very pleased with the mix that we've. We're much higher in assisted living and memory care than the industry and lower in terms of skilled nursing at 1% to 2% of our portfolio. So we're pretty pleased with the position of our portfolio, and we're really looking forward to improving the execution and capturing the opportunities in front of us.

Got you. You mentioned this earlier, Cindy, but I understand that Brookdale HealthPlus is an additional charge for residents and is incorporated into the rents. However, is there any consideration for re-entering health services and charging for specific services? I know you sold the home base and the joint venture to HCA, but I'm curious if there is interest in adding other value-added services.

It's a good question, Josh. And I'm very proud of the transaction that we had with HCA. I think we've got a very good exit from that service line. I think we're more interested at this point in making sure that our residents have access to the services within our communities and less with adding a new business line. If you look at just the Investor presentation and the opportunity that's in front of us, there is so much opportunity from getting back to our pre-pandemic and our historical high occupancy and margins. That's where we're focused. And I think that's the right answer for us today.

With no further questions in the queue at this time, this will conclude the Brookdale Senior Living 1Q 2024 Earnings Call. Thank you to everyone who has joined us today. You may now disconnect your lines.