What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-15 compared with 2021-02-25 · 377 added, 521 removed, 1037 unchanged (46% of the section changed)

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INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of December 31, 2021 and 2020

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Brookdale Senior Living Inc.

The Stockholders and Board of Directors of Brookdale Senior Living Inc.

Opinion on the Financial Statements

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 15, 2022 expressed an unqualified opinion thereon.

Adoption of ASU No.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of Accounting Standards Update (ASU) No.

2016-02, Leases (Topic 842), and the related amendments.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of Goodwill for Impairment

Description of the Matter As of December 31, 2020, the Company's consolidated balance sheet included goodwill of $154.1 million.

As discussed in Notes 2 and 5 to the consolidated financial statements, goodwill is qualitatively, and when necessary quantitatively, tested for impairment at least annually during the fourth quarter at the reporting unit level.

Auditing management's evaluation of goodwill allocated to the health care services reporting unit for impairment was complex and involved a high degree of subjectivity due to the significant estimation required to estimate the fair value of the health care services reporting unit.

In particular, the fair value estimate was sensitive to significant assumptions including the estimation of revenue and expense growth rates, discount rates, and earnings multiples, which are affected by expectations about future market or economic conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company's goodwill impairment review process, including controls over management's review of the significant assumptions described above.

To test the estimated fair value of the Company's health care services reporting unit, we performed audit procedures that included, among others, assessing the methodologies used to estimate fair value, testing the significant assumptions used to develop the fair value estimate, and testing the underlying data used by the Company in its analysis for completeness and accuracy.

We compared the significant assumptions used by management to current industry and economic trends, and evaluated whether changes to the Company's business and other relevant factors would affect the significant assumptions.

The evaluation of the Company's methodology and key assumptions was performed with the assistance of our valuation specialists.

We assessed the historical accuracy of the Company's estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the health care services reporting unit that would result from changes in the significant assumptions.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of Property, Plant and Equipment and Leasehold Intangibles, Net and Operating Lease Right-of-Use Assets for Impairment

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Brookdale Senior Living Inc.

The Stockholders and Board of Directors of Brookdale Senior Living Inc.

Opinion on Internal Control over Financial Reporting

We have audited Brookdale Senior Living Inc.'s (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

We have audited Brookdale Senior Living Inc.'s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Brookdale Senior Living Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedule included in the Index at Item 15 and our report dated February 15, 2022 expressed an unqualified opinion thereon.

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We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitation of Internal Control over Financial Reporting

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

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Goodwill 27,321 154,131

Deferred tax asset 279 —

Other assets, net 17,296 56,259

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Treasury stock, at cost;

10,527,525 and 7,464,757 shares at December 31, 2020 and 2019, respectively

10,527,525 shares at December 31, 2021 and 2020

( 102,774 ) ( 102,774 )

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Asset impairment 23,003 107,308 49,266

Loss (gain) on facility lease termination and modification, net ( 2,303 ) 3,388 162,001

Loss (gain) on facility operating lease termination, net ( 2,003 ) ( 2,303 ) 3,388

Costs incurred on behalf of managed communities 181,445 401,189 790,049

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Financing lease obligations ( 46,282 ) ( 48,534 ) ( 66,353 )

Amortization of deferred financing costs and debt discount ( 6,428 ) ( 4,270 ) ( 8,160 )

Amortization of deferred financing costs ( 7,449 ) ( 6,428 ) ( 4,270 )

Gain (loss) on debt modification and extinguishment, net ( 1,932 ) 10,896 ( 5,247 )

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Issuance of common stock under Associate Stock Purchase Plan — 2 2

Restricted stock, net ( 9 ) 31 26

Restricted stock and restricted stock units, net ( 1 ) ( 9 ) 31

Shares withheld for employee taxes ( 7 ) ( 6 ) ( 5 )

Other, net — — 32

Balance at end of period $ 1,975 $ 1,983 $ 1,996

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Issuance of common stock under Associate Stock Purchase Plan 699 638 1,160

Purchase of capped call transactions ( 15,916 ) — —

Issuance of warrants — 22,883 —

Restricted stock, net 9 ( 31 ) ( 26 )

Restricted stock and restricted stock units, net 1 9 ( 31 )

Shares withheld for employee taxes ( 4,813 ) ( 4,037 ) ( 3,308 )

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Balance at beginning of period $ ( 3,311,184 ) $ ( 3,393,088 ) $ ( 3,069,272 )

Cumulative effect of change in accounting principle (Note 2) ( 115 ) ( 55,885 ) —

Cumulative effect of change in accounting principle — ( 115 ) ( 55,885 )

Net income (loss) ( 99,290 ) 82,019 ( 267,931 )

Other, net — — 280

Balance at end of period $ ( 3,410,474 ) $ ( 3,311,184 ) $ ( 3,393,088 )

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Issuance of common stock under Associate Stock Purchase Plan 124 224 181

Restricted stock, net ( 830 ) 3,073 2,593

Restricted stock and restricted stock units, net ( 159 ) ( 830 ) 3,073

Shares withheld for employee taxes ( 811 ) ( 656 ) ( 476 )

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Distributions from unconsolidated ventures from cumulative share of net earnings 6,191 766 3,472

Amortization of deferred gain — — ( 4,358 )

Amortization of entrance fees ( 1,758 ) ( 2,122 ) ( 1,634 )

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Loss (gain) on sale of assets, net ( 288,835 ) ( 374,532 ) ( 7,245 )

Loss (gain) on facility lease termination and modification, net ( 2,303 ) 3,388 140,957

Loss (gain) on facility operating lease termination, net ( 2,003 ) ( 2,303 ) 3,388

Non-cash stock-based compensation expense 16,270 20,747 23,026

Non-cash interest expense on financing lease obligations — — 10,894

Non-cash management contract termination gain — — ( 969 )

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Refundable fees and deferred revenue ( 10,066 ) 62,614 ( 25,117 )

Operating lease assets and liabilities for lessor capital expenditure reimbursements 22,242 31,305 10,400

Operating lease assets and liabilities for lessor capital expenditure

reimbursements 30,965 22,242 31,305

Operating lease assets and liabilities for lease termination ( 2,380 ) — —

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Proceeds from notes receivable 1,800 5,419 34,109

Property insurance proceeds — — 1,292

Net cash provided by (used in) investing activities 181,457 ( 425,111 ) ( 225,539 )

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Purchase of treasury stock, net of related payables — ( 18,123 ) ( 23,955 )

Purchase of capped call transactions ( 15,916 ) — —

Payment of financing costs, net of related payables ( 3,904 ) ( 19,649 ) ( 7,309 )

Proceeds from refundable entrance fees, net of refunds — — ( 422 )

Payments for lease termination — — ( 12,548 )

Payments of employee taxes for withheld shares ( 4,820 ) ( 4,037 ) ( 3,313 )

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("Brookdale" or the "Company") is an operator of 679 senior living communities throughout the United States.

The Company is committed to providing senior living solutions primarily within properties that are designed, purpose-built, and operated to provide quality service, care, and living accommodations for residents.

The Company is committed to its mission of enriching the lives of the people it serves with compassion, respect, excellence, and integrity.

The Company operates and manages independent living, assisted living, memory care, and continuing care retirement communities ("CCRCs").

The Company also offers a range of home health, hospice, and outpatient therapy services to residents of many of its communities and to seniors living outside of its communities.

The Company has five reportable segments:

The Company's senior living communities and its comprehensive network help to provide seniors with care and services in an environment that feels like home.

As of December 31, 2021, the Company owned 347 communities, representing a majority of the Company's consolidated community portfolio, leased 299 communities, and managed 33 communities.

As of such date, the Company has three reportable segments:

Independent Living;

Assisted Living and Memory Care;

Health Care Services;

and Management Services.

On July 1, 2021, the Company sold 80 % of its equity in its Health Care Services segment, an additional reportable segment prior to that date, as described in Note 4.

The accompanying consolidated financial statements include the financial position, results of operations, and cash flows of the Health Care Services segment through June 30, 2021.

For periods beginning July 1, 2021, the results and financial position of the Health Care Services segment were deconsolidated from the Company's consolidated financial statements and its 20 % equity interest in the Health Care Services venture (the "HCS Venture") is accounted for under the equity method of accounting.

Summary of Significant Accounting Policies

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The Company reports investments in unconsolidated entities over whose operating and financial policies it has the ability to exercise significant influence under the equity method of accounting.

The Company evaluates its potential variable interest entity ("VIE") relationships under certain criteria as provided for in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810, Consolidation ("ASC 810").

The Company continually evaluates its potential variable interest entity ("VIE") relationships under certain criteria as provided for in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810, Consolidation ("ASC 810").

ASC 810 broadly defines a VIE as an entity with one or more of the following characteristics:

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or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity's activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights.

The Company performs this evaluation on an ongoing basis and consolidates any VIEs for which the Company is determined to be the primary beneficiary, as determined by the Company's power to direct the VIE's activities and the obligation to absorb its losses or the right to receive its benefits, which are potentially significant to the VIE.

The Company performs this analysis on an ongoing basis and consolidates any VIEs for which the Company is determined to be the primary beneficiary, as determined by the Company's power to direct the VIE's activities and the obligation to absorb its losses or the right to receive its benefits, which are potentially significant to the VIE.

Use of Estimates

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These amounts are due from residents or third-party payors and include variable consideration for retroactive adjustments from estimated reimbursements, if any, under reimbursement programs.

Performance obligations are

determined based on the nature of the services provided.

Performance obligations are determined based on the nature of the services provided.

Resident fee revenue is recognized as performance obligations are satisfied.

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The Company recognizes revenue under ASC 606, Revenue Recognition from Contracts with Customers ("ASC 606") for its independent living, assisted living, and memory care residency agreements for which it has estimated that the nonlease components of such residency agreements are the predominant component of the contract.

The Company enters into contracts to provide home health, hospice, and outpatient therapy services.

Each service provided under the contract is capable of being distinct, and thus, the services are considered individual and separate performance obligations.

The performance obligations are satisfied as services are provided and revenue is recognized as services are provided.

The Company receives payment for services under various third-party payor programs which include Medicare, Medicaid, and other third-party payors.

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Refer to the Company's revenue recognition policy for discussion of the accounting policy for residency agreements, which include a lease component.

The following is the Company's lease accounting policy subsequent to the adoption of ASC 842 on January 1, 2019.

Refer to Recently Adopted Accounting Pronouncements in this Note 2 for significant changes that resulted from the adoption.

The Company, as lessee, recognizes a right-of-use asset and a lease liability on the Company's consolidated balance sheet for its community, office, and equipment leases.

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For such transactions, the Company recognizes the underlying assets within assets under financing leases as a component of property, plant and equipment and leasehold intangibles, net on the consolidated balance sheets and continues to depreciate the assets over their useful lives.

Additionally, the Company accounts for any amounts received as a financing lease liability and the Company recognizes interest expense on the financing lease liability utilizing the effective interest method with the interest expense limited to an amount that is not greater than the cash payments on the financing lease liability over the term of the lease.

Additionally, the Company accounts for any amounts received as a financing lease liability and the Company recognizes

interest expense on the financing lease liability utilizing the effective interest method with the interest expense limited to an amount that is not greater than the cash payments on the financing lease liability over the term of the lease.

Gain (Loss) on Sale of Assets

The Company regularly enters into real estate transactions which may include the disposition of certain communities, including the associated real estate.

The Company recognizes gain or loss from real estate sales when the transfer of control is complete.

The Company recognizes gain or loss from the sale of equity method investments when the transfer of control is complete and the Company has no continuing involvement with the transferred financial assets.

The Company recognizes a gain or loss from real estate sales when the transfer of control is complete.

The Company recognizes a gain or loss from the sale of equity method investments when the transfer of control is complete and the Company has no continuing involvement with the transferred financial assets.

Purchase Accounting

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Deferred Financing Costs

Third-party fees and costs incurred to obtain debt are recorded as a direct adjustment to the carrying amount of debt and amortized on a straight-line basis, which approximates the effective yield method, over the term of the related debt.

Unamortized deferred financing fees are written-off if the associated debt is retired before the maturity date.

Upon the refinancing of mortgage debt or amendment of the line of credit, unamortized deferred financing fees and additional financing costs incurred are accounted for in accordance with ASC 470-50, Debt Modifications and Extinguishments.

Fees paid to lenders and third-party costs incurred to obtain debt are recorded as a direct adjustment to the carrying amount of debt and amortized on a straight-line basis, which approximates the effective yield method, over the term of the related debt.

Unamortized deferred financing costs are written-off if the associated debt is retired before the maturity date.

Upon the refinancing of mortgage debt or amendment of the line of credit, unamortized deferred financing costs and additional financing costs incurred are accounted for in accordance with ASC 470-50, Debt Modifications and Extinguishments.

Stock-Based Compensation

Measurement of the cost of employee services received in exchange for stock compensation is based on the grant-date fair value of the employee stock awards, which is based on the quoted price of the Company's common shares on the grant date for the majority of the Company's awards.

Generally, this cost is recognized as compensation expense ratably over the employee's requisite service period.

The Company recognizes forfeitures as they occur and any previously recognized compensation expense is reversed for forfeited awards.

Awards that vest over a requisite service period, other than those with performance or market conditions, generally vest ratably in annual installments over a period of three to four years .

Measurement of the cost of employee services received in exchange for stock-based compensation is based on the grant-date fair value of the employee stock awards, which is based on the quoted price of the Company's common shares on the grant date for the majority of the Company's awards.

The Company evaluates if grant-date fair value adjustments are necessary based on whether the Company is in possession of material non-public information at the grant date and the changes in the Company’s stock price subsequent to the release of such information and no adjustments were made.

Generally, the cost is recognized as compensation expense ratably over the employee's requisite service period.

The Company recognizes forfeitures of stock-based awards as they occur and any previously recognized compensation expense is reversed for forfeited awards.

Stock-based awards that vest over a requisite service period, other than those with performance or market conditions, generally vest ratably in annual installments over a period of three to four years .

Incremental compensation costs arising from subsequent modifications of awards after the grant date are recognized when incurred.

Certain of the Company's employee stock awards vest only upon the achievement of performance conditions.

Certain of the Company's employee stock-based awards vest only upon the achievement of performance conditions.

The Company recognizes compensation cost only when achievement of performance conditions is considered probable.

Consequently, the Company’s determination of the amount of stock compensation expense requires judgment in estimating the probability of achievement of these performance conditions.

Consequently, the Company’s determination of the amount of stock-based compensation expense requires judgment in estimating the probability of achievement of these performance conditions.

Performance conditioned awards that vest dependent upon attainment of various levels of performance that equal or exceed threshold levels generally vest based upon performance at the end of a three-year performance period.

The number of shares that ultimately vest can range from 0 % to 125 % of the stock awards granted depending on the level of achievement of the performance criteria.

Certain of the Company's employee stock awards vest only upon the achievement of a market condition where the measurement period is three years and vesting of the awards is based on the Company's level of attainment of a specified total stockholder return relative to the percentage appreciation of a specified index of companies for the respective three-year measurement period.

Compensation expense for awards with market conditions is recognized over the service period, which is generally four

years, and the actual achievement of the market condition does not impact expense recognition.

The number of shares that ultimately vest can range from 0 % to 125 % of the stock-based awards granted depending on the level of achievement of the performance criteria.

Certain of the Company's employee stock-based awards vest only upon the achievement of a market condition where the measurement period is three years and vesting of the awards is based on the Company's level of attainment of a specified total

stockholder return relative to the percentage appreciation of a specified index of companies for the respective three-year measurement period.

Compensation expense for awards with market conditions is recognized over the service period, which is generally four years , and the actual achievement of the market condition does not impact expense recognition.

The Company uses a Monte Carlo valuation model to estimate the grant date fair value of such awards.

Depending on the results achieved during the three-year measurement period, the number of shares that ultimately vest may range from 0 % to 150 % of the stock awards granted.

The expected volatility of the Company's common stock at the date of grant was estimated based on a historical average volatility rate for the approximate three-year performance period and the estimated expected weighted average volatility was 42.5 % and 45.2 % for awards granted in 2020 and 2019, respectively.

The risk-free interest rate assumption was based on observed interest rates consistent with the approximate three-year measurement period and the estimated weighted average risk free interest rate was 1.4 % and 2.4 % for awards granted in 2020 and 2019, respectively.

Depending on the results achieved during the three-year measurement period, the number of shares that ultimately vest may range from 0 % to 150 % of the stock-based awards granted.

The expected volatility of the Company's common stock at the date of grant is estimated based on a historical average volatility rate for the approximate three-year performance period and the estimated expected weighted average volatility was 42.5 % and 45.2 % for awards granted in 2020 and 2019, respectively.

The risk-free interest rate assumption is based on observed interest rates consistent with the approximate three-year measurement period and the estimated weighted average risk free interest rate was 1.4 % and 2.4 % for awards granted in 2020 and 2019, respectively.

For all share-based awards with graded vesting other than performance conditioned awards, the Company records compensation expense for the entire award on a straight-line basis (or, if applicable, on the accelerated method) over the requisite service period.

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The Company designates communities as held for sale when certain criteria are met, including when management has committed to a plan to sell the community and the sale is probable within one year of the reporting date.

The Company records

these assets on the consolidated balance sheet at the lesser of the carrying amount and fair value less estimated selling costs.

The Company records these assets on the consolidated balance sheet at the lesser of the carrying amount and fair value less estimated selling costs.

If the carrying amount is greater than the fair value less the estimated selling costs, the Company records an impairment charge.

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Investment in Unconsolidated Ventures

In accordance with ASC 810, Consolidation, the general partner or managing member of a venture consolidates the venture unless the limited partners or other members have either (1) the substantive ability to dissolve the venture or otherwise remove the general partner or managing member without cause or (2) substantive participating rights in significant decisions of the venture, including authorizing operating and capital decisions of the venture, including budgets, in the ordinary course of business.

The initial carrying amount of investments in unconsolidated ventures is based on the amount paid to purchase the investment interest contributed to the unconsolidated ventures.

The initial carrying amount of investments in unconsolidated ventures is based on the amount paid to purchase the investment or its fair value in the case of a retained noncontrolling interest upon deconsolidation of a former subsidiary.

The Company's reported share of earnings of an unconsolidated venture is adjusted for the impact, if any, of basis differences between its carrying amount of the equity investment and its share of the venture's underlying assets.

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A current fair value of an investment that is less than its carrying amount may indicate a loss in value of the investment.

If the Company determines that an equity method investment

is other than temporarily impaired, it is recorded at its fair value with an impairment charge recognized in asset impairment expense for the difference between its carrying amount and fair value based on Level 3 inputs.

If the Company determines that an equity method investment is other than temporarily impaired, it is recorded at its fair value with an impairment charge recognized in asset impairment expense for the difference between its carrying amount and fair value.

The Company tests goodwill for impairment annually during the fourth quarter or more frequently if indicators of impairment arise.

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The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business.

Although the Company maintains general liability and professional liability insurance policies for its owned, leased, and managed communities under a master insurance program, the Company's current policies provide for deductibles for each and every claim.

As a result, the Company is, in effect, self-insured for claims that are less than the deductible amounts.

As a result, the Company is, in effect, self-insured for claims that are less than the deductible amounts, for claims that exceed the funding level of the Company’s wholly-owned captive insurance company, and for claims or portions of claims that are not covered by such policies and/or exceed the policy limits.

In addition, the Company maintains a high deductible workers compensation program and a self-insured employee medical program.

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In June 2016, the FASB issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") ASU 2016-13 replaces the current incurred loss impairment methodology for credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

Measurement of Credit Losses on Financial Instruments ("ASU 2016-13").

ASU 2016-13 replaces the current incurred loss impairment methodology for credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The Company adopted this standard effective January 1, 2020 and recognized the cumulative effect of the adoption as an immaterial adjustment to beginning accumulated deficit as of January 1, 2020.

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The Company adopted these lease accounting standards effective January 1, 2019 and utilized the modified retrospective transition method with no adjustments to comparative periods presented.

Additionally, the Company elected the package of practical expedients within ASU 2016-02 that allows an entity to not reassess, as of January 1, 2019, its

prior conclusions on whether an existing contract contains a lease, lease classification for existing leases, and whether costs incurred for existing leases qualify as initial direct costs.

Additionally, the Company elected the package of practical expedients within ASU 2016-02

that allows an entity to not reassess, as of January 1, 2019, its prior conclusions on whether an existing contract contains a lease, lease classification for existing leases, and whether costs incurred for existing leases qualify as initial direct costs.

The Company did not elect the hindsight practical expedient which would have allowed it to revisit key assumptions, such as lease term, that were made when it originally entered into the lease.

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Additionally, $ 58.1 million of previously unrecognized right-of-use asset impairments were recognized as a cumulative effect adjustment to beginning accumulated deficit as of January 1, 2019.

As a result of the Company's election of the package of practical expedients within ASU 2016-02, there were no changes to the classification of the Company's existing operating and financing leases as of January 1, 2019 and there were no changes to the amounts recognized on its consolidated balance sheet for its existing financing leases as of January 1, 2019.

Additionally, the application of ASU 2016-02 resulted in a $ 10.2 million increase to the amount of asset impairment expense recognized for operating lease right-of-use assets for the year ended December 31, 2019.

Subsequent to the adoption of ASU 2016-02, lessors are required to separately recognize and measure the lease component of a contract with a customer utilizing the provisions of ASC 842 and the nonlease components utilizing the provisions of ASC 606.

To separately account for the components, the transaction price is allocated among the components based upon the estimated stand-alone selling prices of the components.

Additionally, certain components of a contract which were previously included within the lease element recognized in accordance with ASC 840, Leases ("ASC 840") prior to the adoption of ASU 2016-02 (such as common area maintenance services, other basic services, and executory costs) are recognized as nonlease components subject to the provisions of ASC 606 subsequent to the adoption of ASU 2016-02.

However, entities are permitted to elect the practical expedient under ASU 2018-11 allowing lessors to not separate nonlease components from the associated lease components when certain criteria are met.

Entities that elect to utilize the lease/nonlease component combination practical expedient under ASU 2018-11 upon initial application of ASC 842 are required to apply the practical expedient to all new and existing transactions within a class of underlying assets that qualify for the expedient as of the initial application date.

For the year ended December 31, 2018, the Company recognized revenue for housing services under independent living, assisted living, and memory care residency agreements in accordance with the provisions of the former lease accounting standard, ASC 840, and the Company recognized revenue for assistance with activities of daily living ("ADLs"), memory care services, healthcare, and personalized health services under independent living, assisted living, and memory care residency agreements in accordance with the provisions of ASC 606.

Upon adoption of ASU 2016-02 and ASU 2018-11, the Company elected the lessor practical expedient within ASU 2018-11 and recognizes, measures, presents, and discloses the revenue for housing services under the Company's senior living residency agreements based upon the predominant component, either the lease or nonlease component, of the contracts rather than allocating the consideration and separately accounting for it under ASC 842 and ASC 606.

The nonlease components of the Company's independent living, assisted living, and memory care residency agreements are the predominant component of the contract for the Company's existing agreements as of January 1, 2019.

As a result of the Company's election of the package of practical expedients within ASU 2016-02, the Company continued to recognize revenue for existing contracts as of December 31, 2018 over the lease term.

In addition, ASU 2016-02 has changed the definition of initial direct costs of a lease, with the initial direct costs that are initially deferred and recognized over the term of the lease limited to costs that are both incremental and direct.

The Company concluded that the contract origination costs recognized on the consolidated balance sheet as of December 31, 2018 were in excess of the initial direct costs that would have been deferred under the provisions of ASU 2016-02.

As a result of the Company's election of the package of practical expedients, the contract origination costs recognized on the consolidated balance sheet as of December 31, 2018 continued to be amortized during 2019 over the lease term.

Additionally, the Company concluded that certain costs previously deferred upon new contract origination are recognized within facility operating expense in 2019 as incurred.

In addition to the previously unrecognized right-of-use asset impairment of $ 58.1 million, the Company recognized cumulative effect adjustments to beginning accumulated deficit as of January 1, 2019 for the impact of the adoption of accounting standards by its equity method investees and the deferred tax impact of these adjustments.

The recognition of the right-of-use

assets and corresponding liabilities and the removal of the deferred tax position related to these leases as of December 31, 2018 had a $ 0.3 million impact on the Company's net deferred tax position.

The recognition of the right-of-use assets and corresponding liabilities and the removal of the deferred tax position related to these leases as of December 31, 2018 had a $ 0.3 million impact on the Company's net deferred tax position.

A deferred tax asset of $ 14.1 million and an increase to the valuation allowance of $ 13.8 million was recorded against accumulated deficit reflecting the tax impact of the previously unrecognized right-of-use asset impairments.

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(in millions)

Prepaid expenses and other current assets, net

Property, plant and equipment and leasehold intangibles, net $ ( 11 )

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Other assets, net ( 6 )

Total assets $ 1,305

Liabilities and Equity

Refundable fees and deferred revenue

Operating lease obligations $ 1,618

Deferred liabilities ( 257 )

Other liabilities

Total liabilities 1,361

Total equity ( 56 )

Total liabilities and equity $ 1,305

Recently Issued Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on contracts, hedging relationships, and other transactions that reference the London Inter-Bank Offered Rate ("LIBOR").

The provisions of this standard are available for election through December 31, 2022.

The Company is currently evaluating its contracts and the optional expedients provided by this update.

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"), which provides optional guidance for a limited period of time through December 31, 2022 to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on contracts, hedging relationships, and other transactions that reference the London Inter-Bank Offered Rate ("LIBOR") or other reference rates expected to be discontinued.

The guidance may be elected over time and the Company elected the optional practical expedient provided by ASU 2020-04 for debt contract modifications related to the discontinuation of reference rates.

The adoption of the optional expedient has not had and is not expected to have a material impact on the Company's consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity ("ASU 2020-06"), which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments.

This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method.

Company early adopted ASU 2020-06 effective January 1, 2021 using the modified retrospective method of adoption.

Subsequent to the Company's adoption of ASU 2020-06, the Company's issuance of $ 230.0 million principal amount of 2.00 % convertible senior notes due 2026 (the "Notes") on October 1, 2021 was recognized as a single liability presented as long-term debt measured at its amortized cost within the Company’s consolidated balance sheet rather than separate presentation of the embedded conversion feature at fair value within stockholders’ equity.

Reclassifications

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COVID-19 Pandemic

The COVID-19 pandemic has adversely impacted, and likely will continue to adversely impact the senior living industry and the Company's business.

Due to the average age and prevalence of chronic medical conditions among the Company's residents and patients, they generally are at disproportionately higher risk of hospitalization and adverse outcomes if they contract COVID-19.

The Company continues to serve and care for seniors at its communities and their homes through the pandemic.

Upon confirmation of positive COVID-19 exposure at a community, the Company takes actions intended to minimize further exposure, including associates’ adhering to personal protection protocols, isolating residents or finding placement in an alternate care setting to best address their care needs, and in some cases, restricting new resident admissions as directed by local health authorities.

Seeking to prevent the introduction of COVID-19 into the Company's communities, and to help control further exposure to infections within communities, in March 2020 the Company began restricting visitors at all its communities to essential healthcare personnel and certain compassionate care situations, screening associates and permitted visitors, suspending group outings, modifying communal dining and programming to comply with social distancing guidelines and, in most cases, implementing in-room only dining and activities programming, requesting that residents refrain from leaving the community unless medically necessary, and requiring new residents and residents returning from a hospital or nursing home to

isolate in their apartment for fourteen days.

The Company began easing restrictions on a community-by-community basis in July 2020.

These restrictions may continue for some time, and the Company may revert to more restrictive measures if the pandemic worsens, as necessary to comply with regulatory requirements, or at the direction of local health authorities.

The pandemic, including the related restrictions at the Company's communities, have significantly disrupted demand for senior living communities and the sales process, which typically includes in-person prospective resident visits within communities.

The pandemic began to adversely impact the Company's occupancy and resident fee revenue during March 2020, as new resident leads, visits (including virtual visits), and move-in activity declined significantly compared to typical levels.

Further deterioration of the Company's resident fee revenue will result from lower move-in activity and the resident attrition inherent in its business, which may increase due to the impacts of COVID-19.

The Company's home health average daily census also began to decrease in March 2020 due to lower occupancy in its communities and fewer elective medical procedures and hospital discharges.

Facility operating expense for the year ended December 31, 2020 includes $ 125.5 million of incremental direct costs to prepare for and respond to the pandemic, including costs for:

The COVID-19 pandemic significantly disrupted the senior living industry and the Company's business beginning in March 2020.

The health and wellbeing of the Company's residents and associates has been and continues to be its highest priority.

As of January 31, 2022, substantially all of the Company’s communities were open for new resident move-ins.

The Company may revert to more restrictive measures at its communities, including restrictions on visitors and move-ins, if the pandemic worsens, as a result of infections at a community, as necessary to comply with regulatory requirements, or at the direction of authorities having jurisdiction.

Pandemic-Related Expenses .

In the aggregate, for the years ended December 31, 2021 and 2020, the Company has incurred $ 173.2 million of facility operating expense for incremental direct costs to respond to the pandemic, including $ 47.7 million and $ 125.5 million, for the years ended December 31, 2021 and 2020, respectively.

The direct costs include those for:

acquisition of additional personal protective equipment ("PPE"), medical equipment, and cleaning and disposable food service supplies;

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increased employee-related costs, including labor, workers compensation, and health plan expense;

increased expense for general liability claims;

and COVID-19 testing of residents and associates where not otherwise covered by government payor or third-party insurance sources.

The Company is not able to reasonably predict the total amount of costs it will incur related to the pandemic, and such costs may continue to be substantial.

The Company also recorded non-cash impairment charges in its operating results of $ 105.6 million for the year ended December 31, 2020 for its operating lease right-of-use assets and property, plant and equipment and leasehold intangibles, primarily due to the COVID-19 pandemic and lower than expected operating performance at communities with impaired assets.

The Company has taken, and continues to take, actions to enhance and preserve its liquidity in response to the pandemic.

During the year ended December 31, 2020, the Company completed its financing plans in the regular course of business, including refinancing substantially all of its 2020 and 2021 maturities.

In addition, on August 31, 2020, the Company terminated its $ 250 million revolving credit facility and obtained $ 266.9 million of non-recourse mortgage financing on 16 communities, most of which had secured the credit facility prior to its termination.

See Note 9 for further information regarding the Company's financings.

During the year ended December 31, 2020, the Company accepted $ 109.8 million of cash for grants under the Public Health and Social Services Emergency Fund ("Provider Relief Fund") and $ 87.5 million of accelerated/advanced Medicare payments, and it deferred $ 72.7 million of the employer portion of social security payroll taxes.

These programs were created or expanded under the Coronavirus Aid, Relief, and Economic Security Act of 2020 ("CARES Act"), as described below.

The Company also delayed or canceled a number of elective capital expenditure projects and suspended repurchases under its existing share repurchase program.

On July 26, 2020, the Company restructured its 120 community triple-net master lease with Ventas, Inc.

("Ventas") in a multipart transaction.

The components included, among other things, reducing the Company's initial annual minimum rent to $ 100 million, representing a reduction of approximately $ 86 million over the twelve months ending June 30, 2021, and removal of the prior requirements that the Company satisfy financial covenants and maintain a security deposit with Ventas.

The Company paid a $ 119.2 million one-time cash lease payment to Ventas in connection with the Company's lease restructuring transaction effective July 26, 2020.

See Note 4 for more information about the Ventas lease restructuring.

As of December 31, 2020, the Company's total liquidity was $ 575.5 million, consisting of $ 380.4 million of unrestricted cash and cash equivalents, $ 172.9 million of marketable securities, and $ 22.2 million of availability on its secured credit facility.

The Company continues to seek opportunities to enhance and preserve its liquidity, including through maintaining expense discipline, continuing to evaluate its financing structure and the state of debt markets, and seeking further government-sponsored financial relief related to the COVID-19 pandemic.

There is no assurance that debt financing will continue to be available on terms consistent with the Company's expectations or at all, or that the Company's efforts will be successful in seeking further government-sponsored financial relief or regarding the amount of, or conditions required to qualify for, any such relief.

The CARES Act, signed into law on March 27, 2020, and Paycheck Protection Program and Health Care Enhancement Act, signed into law on April 24, 2020, provide liquidity and financial relief to certain businesses, among other things.

The impacts to the Company of certain provisions of the CARES Act are summarized below.

• During the year ended December 31, 2020, the Company accepted $ 109.8 million of cash for grants from the Provider Relief Fund, under which grants have been made available to eligible healthcare providers for healthcare related expenses or

lost revenues attributable to COVID-19.

The accepted grants were made available pursuant to the following distributions from the Provider Relief Fund:

• $ 101.7 million pursuant to General Distributions, with the aggregate amount ultimately determined based on a percentage of the Company's year-over-year changes in patient care revenue and certain operating and other expenses for the first and second quarters of 2020.

• $ 4.6 million pursuant to the Skilled Nursing Facility Targeted Distribution, which generally related to the Company's certified skilled nursing facilities.

• $ 3.5 million pursuant to the Nursing Home Infection Control Distribution, including incentive payments, which related to the Company's skilled nursing care provided through its CCRCs.

Grants received from the Provider Relief Fund are subject to the terms and conditions of the program, including that such funds may only be used to prevent, prepare for, and respond to COVID-19 and will reimburse only for healthcare related expenses or lost revenues that are attributable to COVID-19 and have not been reimbursed from other sources or that other sources are not obligated to reimburse.

The permissible uses of grants from the Nursing Home Infection Control Distribution are further limited to certain infection control expenses.

The program requires the Company to report to the U.S.

Department of Health and Human Services ("HHS") on its use of the grants, and its reporting is subject to audit.

During the year ended December 31, 2020, the Company recognized $ 109.8 million of the grants as other operating income based upon its estimates of its satisfaction of the conditions of the grants during such period and the cash received for grants has been presented within net cash provided by operating activities within the Company's consolidated statement of cash flows.

• During the year ended December 31, 2020, the Company received $ 87.5 million under the Accelerated and Advance Payment Program administered by CMS, which was temporarily expanded by the CARES Act.

Approximately $ 75.2 million related to the Company's Health Care Services segment and the remainder related to the Company's CCRCs segment.

Under the program, the Company requested acceleration/advancement of 100 % of its Medicare payment amount for a three-month period.

The Continuing Appropriations Act, 2021 and Other Extensions Act, enacted on October 1, 2020, amended the repayment terms for accelerated/advanced payments.

As amended, recoupment of accelerated/advanced payments will begin one year after payments were issued.

Payments will be recouped at a rate of 25 % of Medicare payments for the first eleven months following the anniversary of issuance and at a rate of 50 % of Medicare payments for the next six months .

Any outstanding balance of accelerated/advanced payments will be due following such recoupment period.

As of December 31, 2020, $ 44.6 million was included in refundable fees and deferred revenue and $ 42.9 million was included in other liabilities within the Company's consolidated balance sheets.

The $ 87.5 million received has been presented within net cash provided by operating activities within the Company's consolidated statement of cash flows.

• Under the CARES Act, the Company has elected to defer payment of the employer portion of social security payroll taxes incurred from March 27, 2020 through December 31, 2020.

One-half of such deferral amount will become due on each of December 31, 2021 and December 31, 2022.

As of December 31, 2020, the Company has deferred payment of $ 72.7 million under the program and has presented $ 36.3 million of this amount in accrued expenses and the remainder in other liabilities within the Company's consolidated balance sheets.

• The CARES Act temporarily suspended the 2% Medicare sequestration for the period May 1, 2020 to December 31, 2020, which primarily benefited the Company's Health Care Services segment.

The Consolidated Appropriations Act, 2021, enacted on December 27, 2020, extended the sequestration suspension through March 31, 2021.

In addition to the grants described above, the Company has received and recognized $ 5.9 million of other operating income from grants from other government sources.

For the years ended December 31, 2021 and 2020, the Company recorded $ 23.0 million and $ 105.6 million, respectively, of non-cash impairment charges in its operating results for its operating lease right-of-use assets and property, plant, and equipment and leasehold intangibles, primarily due to the COVID-19 pandemic and lower than expected operating performance at certain communities.

Financial Relief .

The Coronavirus Aid, Relief, and Economic Security Act of 2020 ("CARES Act"), signed into law on March 27, 2020, and Paycheck Protection Program and Health Care Enhancement Act, signed into law on April 24, 2020, provide liquidity and financial relief to certain businesses, among other things.

Certain impacts of such programs are provided below.

• During the years ended December 31, 2021 and 2020, the Company accepted $ 0.8 million and $ 109.8 million, respectively, of cash from grants from the Public Health and Social Services Emergency Fund ("Provider Relief Fund") administered by U.S.

Department of Health and Human Services ("HHS"), under which grants have been made available to eligible healthcare providers for healthcare related expenses or lost revenues attributable to COVID-19.

During the three months ended December 31, 2021, the Company applied for the Phase 4 general distribution from the Provider Relief Fund.

There can be no assurance that the Company will qualify for, or receive, such future grants in the amount it expects, that additional restrictions on the permissible uses or terms and conditions of the grants will not be imposed by HHS, or that future funding programs will be made available for which it qualifies.

• During the year ended December 31, 2020, the Company received $ 87.5 million under the Accelerated and Advance Payment Program administered by the Centers for Medicare & Medicaid Services ("CMS"), $ 75.2 million of which related to its former Health Care Services segment and $ 12.3 million of which related to its CCRCs segment.

Recoupment of advanced payments began one year after payments were issued at a rate of 25 % of Medicare payments for the first eleven months following the anniversary of issuance and at a rate of 50 % of Medicare payments for the next six months.

Any outstanding balance of advanced payments will be due following such recoupment period.

During the year ended December 31, 2021, $ 20.8 million of the advanced payments were recouped.

Pursuant to the sale of 80 % of the Company's equity in its Health Care Services segment (as described in Note 4), $ 63.6 million of such obligations related to its former Health Care Services segment were retained by the unconsolidated HCS Venture.

As of December 31, 2021, the outstanding balance of advanced payments related to the CCRCs segment was $ 3.1 million.

• During the year ended December 31, 2020, the Company deferred payment of $ 72.7 million of the employer portion of social security payroll taxes incurred from March 27, 2020 through December 31, 2020 pursuant to the CARES Act.

Pursuant to the sale of 80 % of the Company's equity in its Health Care Services segment, $ 9.6 million of such obligations related to its former Health Care Services segment were retained by the unconsolidated HCS Venture.

In December 2021,

the Company paid $ 31.6 million of its retained deferred amount and the remaining deferred amount of $ 31.6 million is due December 31, 2022.

• The Company was eligible to claim the employee retention credit for certain of its associates under the CARES Act.

The credit for 2020 was available to employers that fully or partially suspended operations during any calendar quarter in 2020 due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings due to COVID-19, and was equal to 50 % of qualified wages paid after March 12, 2020 through December 31, 2020 to qualified employees, with a maximum credit of $ 5,000 per employee.

During the year ended December 31, 2021, the Company recognized $ 9.9 million of employee retention credits on wages paid from March 12, 2020 to December 31, 2020 within other operating income, for which the Company has received $ 3.4 million in cash as of December 31, 2021.

The Company recognized a receivable for the remaining $ 6.5 million within prepaid expenses and other current assets, net on the consolidated balance sheet as of December 31, 2021.

The credit was modified and extended by subsequent legislation for wages paid from January 1, 2021 through December 31, 2021, and the Company is assessing its eligibility to claim such credit.

There can be no assurance that the Company will qualify for, or receive, credits in the amount or on the timing it expects.

In addition to the grants described above, during the years ended December 31, 2021 and 2020, the Company received and recognized $ 1.7 million and $ 5.9 million, respectively, of other operating income from grants from other government sources.

The Company cannot predict with reasonable certainty the impacts that COVID-19 ultimately will have on its business, results of operations, cash flow, and liquidity, and its response efforts may continue to delay or negatively impact its strategic initiatives, including plans for future growth.

The ultimate impacts of COVID-19 will depend on many factors, some of which cannot be foreseen, including the duration, severity, and breadth of the pandemic and any resurgence of the disease;

the impact of COVID-19 on the nation’s economy and debt and equity markets and the local economies in its markets;

The ultimate impacts of COVID-19 will depend on many factors, some of which cannot be foreseen, including the duration, severity, and breadth of the pandemic and any resurgence or variants of the disease;

the impact of COVID-19 on the nation’s economy and debt and equity markets and the local economies in the Company's markets;

the development, availability, utilization, and efficacy of COVID-19 testing, therapeutic agents, and vaccines and the prioritization of such resources among businesses and demographic groups;

government financial and regulatory relief efforts that may become

available to business and individuals, including its ability to qualify for and satisfy the terms and conditions of financial relief;

government financial and regulatory relief efforts that may become available to business and individuals, including the Company's ability to qualify for and satisfy the terms and conditions of financial relief;

perceptions regarding the safety of senior living communities during and after the pandemic;

changes in demand for senior living communities and the Company's ability to adapt its sales and marketing efforts to meet that demand;

the impact of COVID-19 on its residents’ and their families’ ability to afford its resident fees, including due to changes in unemployment rates, consumer confidence, housing markets, and equity markets caused by COVID-19;

changes in the acuity levels of its residents;

the disproportionate impact of COVID-19 on seniors generally and those residing in its communities;

the duration and costs of its response efforts, including increased equipment, supplies, labor, litigation, testing, vaccination clinic, and other expenses;

the impact of COVID-19 on its ability to complete financings, refinancings, or other transactions (including dispositions) or to generate sufficient cash flow to cover required interest and lease payments and to satisfy financial and other covenants in its debt and lease documents;

increased regulatory requirements, including unfunded, mandatory testing;

the impact of COVID-19 on the Company's residents’ and their families’ ability to afford its resident fees, including due to changes in unemployment rates, consumer confidence, housing markets, and equity markets caused by COVID-19;

changes in the acuity levels of the Company's new residents;

the disproportionate impact of COVID-19 on seniors generally and those residing in the Company's communities;

the duration and costs of the Company's response efforts, including increased equipment, supplies, labor, litigation, testing, vaccination clinic, health plan, and other expenses;

potentially greater use of contract labor and overtime due to COVID-19 and general labor market conditions;

the impact of COVID-19 on the Company's ability to complete financings and refinancings of various assets, or other transactions or to generate sufficient cash flow to cover required debt, interest, and lease payments and to satisfy financial and other covenants in its debt and lease documents;

increased regulatory requirements, including the costs of unfunded, mandatory testing of residents and associates and provision of test kits to the Company's health plan participants;

increased enforcement actions resulting from COVID-19;

government action that may limit its collection or discharge efforts for delinquent accounts;

and the frequency and magnitude of legal actions and liability claims that may arise due to COVID-19 or its response efforts.

government action that may limit the Company's collection or discharge efforts for delinquent accounts;

and the frequency and magnitude of legal actions and liability claims that may arise due to COVID-19 or the Company's response efforts.

Acquisitions, Dispositions, and Other Significant Transactions

During 2018 through 2020, the Company acquired 33 communities that the Company formerly leased or managed, disposed of an aggregate of 43 owned communities (including the conveyance of five communities to Ventas), and sold substantially all of its ownership interests in unconsolidated ventures.

The Company also entered into transactions with Ventas, announced on July 27, 2020, Healthpeak Properties, Inc.

("Healthpeak") announced on October 1, 2019, and Welltower Inc.

("Welltower") announced during 2018, which together restructured a significant portion of the Company's triple-net lease obligations with the Company's largest lessors.

As a result of such transactions, as well as other lease expirations and terminations, the Company's triple-net lease obligations on 104 communities were terminated from 2018 to 2020 ( 89 in 2018, ten in 2019, and five in 2020).

As of December 31, 2020, the Company owned 350 communities, leased 301 communities, and managed 75 communities.

The following table sets forth the amounts included within the Company's consolidated financial statements for the 147 communities that it disposed through sales, conveyances, and lease terminations for the years ended December 31, 2020, 2019, and 2018 through the respective disposition dates:

Year Ended December 31,

Sale of Health Care Services

On July 1, 2021, the Company completed the sale of 80 % of its equity in its Health Care Services segment to affiliates of HCA Healthcare, Inc.

("HCA Healthcare") for a purchase price of $ 400.0 million in cash, subject to certain adjustments set forth in the Securities Purchase Agreement (the "Purchase Agreement") dated February 24, 2021, including a reduction for the remaining outstanding balance as of the closing of Medicare advance payments and deferred payroll tax payments related to the Health Care Services segment (the "HCS Sale").

The Company received net cash proceeds of $ 312.6 million, including $ 305.8 million at closing on July 1, 2021 and $ 6.8 million upon completion of the post-closing net working capital adjustment in October 2021.

The Purchase Agreement also contained certain agreed upon indemnities for the benefit of the purchaser.

At closing of the transaction, the Company retained a 20 % equity interest in the HCS Venture.

The results and financial position of the Health Care Services segment were deconsolidated from its consolidated financial statements as of July 1, 2021 and its 20 % equity interest in the HCS Venture is accounted for under the equity method of accounting subsequent to that date.

As of July 1, 2021, the Company recognized a $ 100.0 million asset within investment in unconsolidated ventures on its consolidated balance sheet for the estimated fair value of its retained 20 % noncontrolling interest in the HCS Venture.

The Company recognized a $ 286.5 million gain on sale, net of transaction costs, within its consolidated

statement of operations for the year ended December 31, 2021 for the HCS Sale.

Refer to Note 21 for selected financial data for the Health Care Services segment through June 30, 2021.

On November 1, 2021, the HCS Venture sold certain home health, hospice, and outpatient therapy agencies in areas not served by HCA Healthcare to LHC Group Inc.

Upon the completion of the sale, the Company received $ 35.0 million of cash distributions from the HCS Venture from the net sale proceeds, which decreased its investment in unconsolidated ventures.

The Company continues to own a 20 % equity interest in the remaining HCS Venture, which continues to operate home health, hospice, and outpatient therapy agencies in areas served by HCA Healthcare.

Community Transactions

The Company entered into transactions with Ventas, Inc.

("Ventas"), announced on July 27, 2020, and Healthpeak Properties, Inc.

("Healthpeak"), announced on October 1, 2019, which together restructured a significant portion of the Company's triple-net lease obligations.

As a result of the transactions with Healthpeak, as well as other community transactions, the Company acquired 27 communities that the Company formerly leased or managed and sold substantially all of its ownership interests in unconsolidated senior housing ventures during 2019 through 2021.

Additionally, the Company disposed of an aggregate of 24 owned communities (including the conveyance of five communities to Ventas) and the Company's triple-net lease obligations on 17 communities were terminated from 2019 to 2021 ( ten in 2019, five in 2020, and two in 2021).

The following table sets forth the amounts included within the Company's consolidated financial statements for the 41 communities that it disposed of through sales, conveyances, and lease terminations for the years ended December 31, 2021, 2020, and 2019 through the respective disposition dates.

Years Ended December 31,

(in thousands) 2021 2020 2019

Resident fees

Independent Living $ — $ — $ 81,279

Assisted Living and Memory Care $ 5,445 $ 24,105 $ 60,204

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Facility operating expense

Independent Living $ — $ — $ 48,161

Assisted Living and Memory Care $ 5,142 $ 22,723 $ 52,228

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Cash lease payments $ 1,726 $ 6,752 $ 11,014

As of December 31, 2020, three communities were classified as held for sale, resulting in $ 16.1 million being recorded as assets held for sale within the consolidated balance sheet.

Two of such communities are in the Assisted Living and Memory Care segment and one is in the CCRCs segment.

The closings of the various pending and expected transactions are, or will be, subject to the satisfaction of various closing conditions, including (where applicable) the receipt of regulatory approvals.

As of December 31, 2021, two communities in the Assisted Living and Memory Care segment were classified as held for sale, resulting in $ 3.6 million being recorded as assets held for sale within the consolidated balance sheet.

The closings of the sales of the communities are subject to the satisfaction of various closing conditions, including (where applicable) the receipt of regulatory approvals.

There can be no assurance that the transactions will close or, if they do, when the actual closings will occur.

Completed Dispositions of Owned Communities

During the year ended December 31, 2021, the Company completed the sale of three owned communities for cash proceeds of $ 16.5 million, net of transaction costs, and recognized a net gain on sale of assets of $ 0.3 million.

In addition to the conveyance of five communities to Ventas, during the year ended December 31, 2020, the Company completed the sale of two owned communities for cash proceeds of $ 38.1 million, net of transaction costs, and recognized a net gain on sale of assets of $ 2.7 million.

During the year ended December 31, 2019, the Company completed the sale of 14 owned communities for cash proceeds of $ 85.4 million, net of transaction costs, and recognized a net gain on sale of assets of $ 5.5 million.

The Company utilized a portion of the cash proceeds from the asset sales to repay approximately $ 5.1 million of associated mortgage debt and debt prepayment penalties.

During the year ended December 31, 2018, the Company completed the sale of 22 owned communities for cash proceeds of $ 380.7 million, net of transaction costs, and recognized a net gain on sale of assets of $ 188.6 million.

The Company utilized a portion of the cash proceeds from the asset sales to repay approximately $ 174.0 million of associated mortgage debt and debt prepayment penalties.

Ventas Lease Restructuring

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Pursuant to the Master Lease, the Company continues to lease 120 communities for an aggregate initial annual minimum rent of approximately $ 100.0 million, which reflects a reduction of approximately $ 83 million of annual minimum rent in effect prior to the transaction.

Effective on January 1 of each lease year, beginning January 1, 2022, the annual minimum rent will be subject to a 3 % escalator.

Effective on January 1 of each lease year, beginning January 1, 2022, the annual minimum rent is subject to a 3 % escalator.

The initial term of the Master Lease ends December 31, 2025, with two 10-year extension options available to the Company.

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The Master Lease removed the prior provision that would have automatically extended the initial term in the event of the consummation of a change of control transaction by the Company.

The Master Lease requires the Company to spend (or escrow with Ventas) a minimum of $ 1,500 per unit on a community-level basis and $ 3,600 per unit on an aggregate basis of all communities, in each case per 24 -month period ending December 31 during the lease term, commencing with the 24 -month period ending December 31, 2021.

In addition, Ventas has agreed to fund costs associated with certain pre-approved capital expenditure projects in the aggregate amount of up to $ 37.8 million.

The Master Lease requires the Company to spend (or escrow with Ventas) a minimum of $ 1,500 per unit on a community-level basis and $ 3,600 per unit on an aggregate basis of all communities, in each case per 24-month period ending December 31 during the lease term, commencing with the 24-month period ended December 31, 2021.

In addition, Ventas agreed to fund costs associated with certain pre-approved capital expenditure projects in the aggregate amount of up to $ 37.8 million.

Upon disbursement of such expenditures, the annual minimum rent under the Master Lease will increase by the amount of the disbursement multiplied by 50 % of the sum of the then current 10-year treasury note rate and 4.5 %.

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Under the terms of the Guaranty, commencing January 1, 2024 (and until such time (if any) as the Company exercises its lease term extension option with respect to the Master Lease), Ventas shall have the right to terminate the Master Lease (with respect to one or more communities), provided that the trailing twelve month coverage ratio of each such community is less than 0.9x and provided further that the removal and termination of any such communities does not result in a portfolio coverage ratio with respect to the remaining communities in the Master Lease that is less than the portfolio coverage ratio prior to such removal and termination.

• On the Effective Date, the Company entered into a Second Amended and Restated Omnibus Agreement with Ventas, which provides that if a default occurs and is continuing under certain other material leases or under certain material financings and if the same continues beyond the permitted cure period or the applicable landlord or lender exercises any material remedies, Ventas shall have the right to transition all or a portion of the communities from the Master Lease to a management arrangement with the Company pursuant to a market management agreement (which is

terminable by either party).

Notwithstanding the foregoing, Ventas may only transition one or more communities from the Master Lease to a management arrangement if such transition does not result in a portfolio coverage ratio with respect to the remaining communities in the Master Lease that is less than the portfolio coverage ratio prior to such transition.

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Upon closing, the parties entered into new terminable, market rate management agreements pursuant to which the Company manages the communities.

The Company also paid to Ventas $ 115.0 million in cash, released all security deposits to Ventas under the former guaranty (which included the release of a $ 42.4 million deposit held by Ventas and the payment of $ 4.2 million in cash as settlement of the amount of letters of credit), and issued a $ 45.0 million unsecured interest-only promissory note to Ventas.

The initial interest rate of the promissory note is 9.0 % per annum and will increase by 0.50 % on each anniversary of the date of issuance.

The Company may prepay the outstanding principal amount in whole or in part at any time without premium or penalty.

The promissory note matures on the earlier of December 31, 2025 or the occurrence of a change of control transaction (as defined in the Guaranty).

The initial interest rate of the promissory note was 9.0 % per annum and was subject to increase by 0.50 % on each anniversary of the date of issuance.

The promissory note was scheduled to mature on the earlier of December 31, 2025 or the occurrence of a change of control transaction (as defined in the Guaranty).

In October 2021, the Company repaid the $ 45.0 million promissory note without premium or penalty.

• On the Effective Date, the Company issued to Ventas a warrant (the "Warrant") to purchase 16.3 million shares of the Company’s common stock, $ 0.01 par value per share, at a price per share of $ 3.00 .

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The parties subsequently amended the agreements to include one additional entry fee CCRC community as part of the sale of the Company's interest in its unconsolidated entry fee CCRC venture with Healthpeak (the "CCRC Venture") (rather than removing the community from the CCRC Venture for joint marketing and sale).

The components of the multi-part transaction include:

The components of the multi-part transaction included:

• CCRC Venture Transaction.

Pursuant to the Purchase Agreement, on January 31, 2020, Healthpeak acquired the Company's 51 % ownership interest in the CCRC Venture, which held 14 entry fee CCRCs, for a total purchase price of $ 289.2 million, net of a $ 5.9 million post-closing net working capital adjustment paid to Healthpeak during the three months ended June 30, 2020 (representing an aggregate valuation of $ 1.06 billion less portfolio debt, subject to a

net working capital adjustment).

The $ 289.2 million of cash received from Healthpeak is presented within net cash used in investing activities for the year ended December 31, 2020.

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Prior to the January 31, 2020 closing, the parties moved the remaining two entry fee CCRCs into a new unconsolidated venture on substantially the same terms as the CCRC Venture to accommodate the sale of such two communities.

Subsequent to these transactions, the Company will have exited substantially all of its entry fee CCRC operations.

• Master Lease Transactions.

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The Company funded the community acquisitions with $ 192.6 million of non-recourse mortgage financing and the proceeds from the multi-part transaction.

In addition, Healthpeak agreed to terminate the lease for one leased community and the Company's triple-net lease obligation with respect to such community was terminated during December 2020.

In addition, Healthpeak agreed to terminate the lease for one leased community, which occurred during December 2020.

As a result of the lease termination, the Company recognized a $ 2.3 million gain on lease termination during the year ended December 31, 2020 for the amount by which the lease obligations exceeded the net carrying amount of the Company's assets under the operating lease as of the lease termination date.

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(ii) the initial annual base rent for the 24 communities is $ 41.7 million and is subject to an escalator of 2.4 % per annum on April 1st of each year;

and (iii) Healthpeak has agreed to make available up to $ 35.0 million for capital expenditures for a five-year period related to the 24 communities at an initial lease rate of 7.0 %.

and (iii) Healthpeak agreed to make available up to $ 35.0 million for capital expenditures for a five-year period related to the 24 communities at an initial lease rate of 7.0 %.

As a result of the community acquisition transaction, the Company recognized a $ 19.7 million gain on debt extinguishment during the year ended December 31, 2020 and derecognized the $ 105.1 million carrying amount of financing lease obligations for eight communities which were previously subject to sale-leaseback transactions in which the Company was deemed to have continuing involvement.

During March 2020, the Company obtained $ 30.0 million of additional non-recourse mortgage financing on the acquired communities.

2018 Welltower Lease and RIDEA Venture Restructuring

On June 27, 2018, the Company announced that it had entered into definitive agreements with Welltower.

The components of the agreements include:

• Lease Terminations.

The Company and Welltower agreed to an early termination of the Company's triple-net lease obligations on 37 communities effective June 30, 2018.

The communities were part of two lease portfolios due to mature in 2020 ( 10 communities) and 2028 ( 27 communities).

The Company paid Welltower an aggregate lease termination fee of $ 58.0 million.

The Company agreed to manage the foregoing 37 communities on an interim basis until the communities have been transitioned to new managers, and such communities are reported in the Management Services segment during such interim period.

The Company recognized a $ 22.6 million loss on lease termination during the year ended December 31, 2018 for the amount by which the aggregate lease termination fee exceeded the net carrying amount of the Company's assets and liabilities under operating and financing leases as of the lease termination date.

• Future Lease Terminations.

The parties separately agreed to allow the Company to terminate leases with respect to, and to remove from the remaining Welltower leased portfolio, a number of communities with annual aggregate base rent up to $ 5.0 million upon Welltower's sale of such communities, and the Company would receive a corresponding 6.25 % rent credit on Welltower's disposition proceeds.

As of December 31, 2020, no leases have been terminated in accordance with the agreement.

• RIDEA Restructuring.

The Company sold its 20 % equity interest in its existing Welltower RIDEA venture to Welltower, effective June 30, 2018 for net proceeds of $ 33.5 million (for which the Company recognized a $ 14.7

million gain on sale).

The Company agreed to continue to manage the communities in the venture on an interim basis until the communities were transitioned to new managers, and such communities were reported in the Management Services segment during such interim period.

The Company also elected not to renew two master leases with Welltower which matured on September 30, 2018 ( 11 communities).

The Company continues to operate 74 communities under triple-net leases with Welltower, and the Company's remaining lease agreements with Welltower contain a change of control standard that allows the Company to engage in certain change of control and other transactions without the need to obtain Welltower's consent, subject to the satisfaction of certain conditions.

2018 Ventas Lease Portfolio Restructuring

On April 26, 2018, the Company entered into several agreements to restructure a portfolio of 128 communities it leased from Ventas as of such date, including a Master Lease and Security Agreement (the "Former Ventas Master Lease"), which was subsequently amended and restated on July 26, 2020 as described above.

The Former Ventas Master Lease amended and restated prior leases comprising an aggregate portfolio of 107 communities into the Former Ventas Master Lease, and the Company and Ventas agreed to observe, perform, and enforce separate leases for 21 additional communities as if they had been combined into the Former Ventas Master Lease effective April 26, 2018, to the extent not in conflict with any mortgage debt underlying such communities.

The transaction agreements with Ventas further provided that the Former Ventas Master Lease and certain other agreements between the Company and Ventas were subject to cross-default provisions.

The Former Ventas Master Lease had an initial term ending December 31, 2025 and provided the Company with two 10 -year extension options.

The transaction agreements provided that if the Company had consummated a change of control transaction on or before December 31, 2025, the initial term of the Former Ventas Master Lease would be extended automatically through December 31, 2029.

The Former Ventas Master Lease and separate lease agreements with Ventas, which were guaranteed at the parent level by the Company, provided for total rent in 2018 of $ 175.0 million for the 128 communities, including the pro-rata portion of an $ 8.0 million annual rent credit for 2018.

The Company received an annual rent credit of $ 8.0 million in 2019 and an annual rent credit of $ 7.0 million in 2020 prior to giving effect to the reduction from the agreements on July 26, 2020 as described above.

The annual minimum rent was subject to an escalator equal to the lesser of 2.25 % or four times the Consumer Price Index ("CPI") increase for the prior year (or zero if there was a CPI decrease).

The Former Ventas Master Lease required the Company to spend (or escrow with Ventas) a minimum of $ 2,000 per unit per 24 -month period commencing with the 24 -month period ended December 31, 2019 and thereafter each 24 -month period ending December 31 during the lease term, subject to annual increases commensurate with the escalator beginning with the second lease year of the first extension term (if any), and provided that if the Company had consummated a change of control transaction, it would have been required within 36 months to invest (or escrow with Ventas) an aggregate of $ 30.0 million in the communities for revenue-enhancing capital projects.

Under the definitive agreements with Ventas, the Company, at the parent level, was required to satisfy certain financial covenants (including tangible net worth and leverage ratios) and may have consummated a change of control transaction without the need for consent of Ventas so long as certain objective conditions were satisfied, including the post-transaction guarantor's satisfying certain enhanced minimum tangible net worth and maximum leverage ratio, having minimum levels of operational experience and reputation in the senior living industry, and paying a change of control fee of $ 25.0 million to Ventas.

Pursuant to the Former Ventas Master Lease, the Company exercised its right to direct Ventas to use its commercially reasonable, diligent efforts to market for sale certain communities.

During 2019, seven communities were sold by Ventas and removed from the Former Ventas Master Lease, and the annual minimum rent was prospectively reduced by $ 1.7 million.

During 2020, one community was sold by Ventas and removed from the Former Ventas Master Lease, and the annual minimum rent was prospectively reduced by $ 0.1 million.

The Company estimated the fair value of each of the elements of the restructuring transactions.

The fair value of the future lease payments was based upon historical and forecasted community cash flows and market data, including a management fee rate of 5% of revenue and a market supported lease coverage ratio (Level 3 inputs).

The Company recognized a $ 125.7 million non-cash loss on lease modification during the year ended December 31, 2018, primarily for the extensions of the triple-net lease obligations for communities with lease terms that are unfavorable to the Company given market conditions on the amendment date in exchange for modifications to the change of control provisions and financial covenant provisions of the community leases.

2017 Healthpeak Multi-Part Transaction

On November 2, 2017, the Company announced that it had entered into a definitive agreement for a multi-part transaction with Healthpeak.

As part of such transaction, the Company entered into an Amended and Restated Master Lease and Security Agreement ("Former Healthpeak Master Lease") with Healthpeak effective as of November 1, 2017.

The components of the multi-part transaction include:

• Master Lease Transactions.

The Company and Healthpeak amended and restated triple-net leases covering substantially all of the communities the Company leased from Healthpeak as of November 1, 2017 into the Former Healthpeak Master Lease.

During the year ended December 31, 2018, the Company acquired two communities formerly leased for an aggregate purchase price of $ 35.4 million and leases with respect to 33 communities were terminated, and such communities were removed from the Former Healthpeak Master Lease, which completed the terminations of leases as provided in the Former Healthpeak Master Lease.

The Company agreed to manage communities for which leases were terminated on an interim basis until the communities were transitioned to new managers, and such communities are reported in the Management Services segment during such interim period.

As of December 31, 2019, the Company continued to lease 43 communities pursuant to the terms of the Former Healthpeak Master Lease, which had the same lease rates and expiration and renewal terms as the applicable prior instruments, except that effective January 1, 2018, the Company received a $ 2.5 million annual rent reduction for two communities.

The Former Healthpeak Master Lease also provides that the Company may engage in certain change in control and other transactions without the need to obtain Healthpeak's consent, subject to the satisfaction of certain conditions.

• RIDEA Ventures Restructuring.

Pursuant to the multi-part transaction agreement, Healthpeak acquired the Company's 10 % ownership interest in one of the Company's RIDEA ventures with Healthpeak in December 2017 for $ 32.1 million (for which the Company recognized a $ 7.2 million gain on sale) and the Company's 10 % ownership interest in the remaining RIDEA venture with Healthpeak in March 2018 for $ 62.3 million (for which the Company recognized a $ 41.7 million gain on sale).

The Company provided management services to 59 communities on behalf of the two RIDEA ventures as of November 1, 2017.

Pursuant to the multi-part transaction agreement, the Company acquired one community for an aggregate purchase price of $ 32.1 million in January 2018 and three communities for an aggregate purchase price of $ 207.4 million in April 2018 and retained management of 18 of such communities.

The amended and restated management agreements for such 18 communities have a term set to expire in 2030, subject to certain early termination rights.

In addition, Healthpeak was entitled to sell or transition operations and/or management of 37 of such communities.

Management agreements for all 37 such communities were terminated by Healthpeak since November of 2017 (for which the Company recognized a $ 9.7 million non-cash management contract termination gain).

The Company financed the foregoing community acquisitions with non-recourse mortgage financing and proceeds from the sales of its ownership interest in the unconsolidated ventures.

See Note 9 for more information regarding the non-recourse first mortgage financing .

In addition, the Company obtained future annual cash rent reductions and waived management termination fees in the multi-part transaction.

As a result of the multi-part transaction, the Company reduced its lease liabilities by $ 9.7 million for the future annual cash rent reductions and recognized a $ 9.7 million deferred liability for the consideration received from Healthpeak in advance of the termination of the management agreements for the 37 communities.

As a result of the modification of the remaining lease term for communities subject to leases (under ASC 840), the Company reduced the carrying amount of lease obligations and assets under leases by $ 145.6 million in 2017.

During the year ended December 31, 2018, the results and financial position of the 33 communities for which leases were terminated were deconsolidated from the Company prospectively upon termination of the lease obligations.

The Company derecognized the $ 332.8 million carrying amount of the assets under financing leases and the $ 378.3 million carrying amount of financing lease obligations for 20 communities which were previously subject to sale-leaseback transactions in which the Company was deemed to have continuing involvement.

The Company recognized a sale for these 20 communities and recorded a non-cash gain on sale of assets of $ 44.2 million for the year ended December 31, 2018.

Additionally, the Company recognized a non-cash gain on lease termination of $ 1.5 million for the year ended December 31, 2018, for the derecognition of the net carrying amount of the Company's assets and liabilities under operating and financing leases at the lease termination date.

During the year ended December 31, 2021, the new unconsolidated entry fee CCRC venture completed the sale of the two remaining entry fee CCRCs for cash proceeds of $ 14.0 million, net of associated mortgage debt repayments and transaction costs.

Subsequent to the sale transaction, the new unconsolidated entry fee CCRC venture has no continuing operations.

During the year ended December 31, 2021, the Company received $ 8.3 million of cash distributions from the new unconsolidated entry fee CCRC venture and recognized $ 13.6 million of equity in earnings of unconsolidated ventures for the Company’s proportionate share of the net income of the new unconsolidated entry fee CCRC venture, which was primarily comprised of a gain on sale of assets for the sale of the two remaining entry fee CCRCs.

Subsequent to these transactions, the Company has exited substantially all of its entry fee CCRC operations.

Fair Value Measurements

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As of December 31, 2021, marketable securities of $ 182.4 million are stated at fair value based on valuations provided by third-party pricing services and are classified within Level 2 of the valuation hierarchy.

Investment in Unconsolidated Ventures

The initial recognized amount of the Company’s 20 % equity interest in the HCS Venture was determined based upon a pro-rata share of the total enterprise value of the HCS Venture considering the $ 400.0 million purchase price paid by HCA Healthcare, as the Company's 20 % interest shares ratably in all of the benefits and losses expected to be generated by the HCS Venture.

The fair value measurement is classified within Level 2 of the valuation hierarchy.

Interest Rate Derivatives

The Company's derivative assets include interest rate caps that effectively manage the risk above certain interest rates for a portion of the Company's variable rate debt.

The derivative positions are valued using models developed internally by the respective counterparty that use as their basis readily available observable market parameters (such as forward yield curves) and are classified within Level 2 of the valuation hierarchy.

are classified within Level 2 of the valuation hierarchy.

The Company considers the credit risk of its counterparties when evaluating the fair value of its derivatives.

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(in millions) 2021 2020 2019

Goodwill $ — $ — $ 351.7

Property, plant and equipment and leasehold intangibles, net 29.3 27.2 78.0

Operating lease right-of-use assets $ 16.6 $ 76.3 $ 10.2

Property, plant and equipment and leasehold intangibles, net 6.4 29.3 27.2

Investment in unconsolidated ventures — 1.5 —

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Refer to Note 3 for additional information on the COVID-19 pandemic.

In estimating the recoverability of asset groups for purposes of the Company’s long-lived asset impairment testing during the year ended December 31, 2020, the Company utilized future cash flow projections that are developed internally.

In estimating the recoverability of asset groups for purposes of the Company’s long-lived asset impairment testing, the Company utilizes future cash flow projections that are developed internally.

Any estimates of future cash flow projections necessarily involve predicting unknown future circumstances and events and require significant management judgments and estimates.

In arriving at the cash flow projections, the Company considers its estimates of the impacts of the pandemic, historic operating results, approved budgets and business plans, future demographic factors, expected growth rates, estimated asset holding periods, and other factors.

As of December 31, 2020 there was a wide range of possible outcomes as a result of the pandemic, as there was a high degree of uncertainty about its ultimate impact.

Management’s estimates of the impact of the pandemic are highly dependent on variables that are difficult to predict, as further described in Note 3.

Future events may indicate differences from management's current judgments and estimates which could, in turn, result in future impairments.

During the three months ended March 31, 2018, the Company identified qualitative indicators of impairment of goodwill, including a significant decline in the Company's stock price and market capitalization for a sustained period during the three months ended March 31, 2018.

As a result, the Company performed an interim quantitative goodwill impairment test as of March 31, 2018, which included a comparison of the estimated fair value of each reporting unit to which the goodwill has been assigned with the reporting unit's carrying amount.

In estimating the fair value of the reporting units for purposes of the quantitative goodwill impairment test, the Company utilized an income approach, which included future cash flow projections that are developed internally.

Any estimates of future cash flow projections necessarily involve predicting unknown future circumstances and events and require significant management judgments and estimates.

In arriving at the cash flow projections, the Company considered its historic operating results, approved budgets and business plans, future demographic factors, expected growth rates, and other factors.

In using the income approach to estimate the fair value of reporting units for purposes of its goodwill impairment test, the Company made certain key assumptions.

Those assumptions include future revenues, facility operating expenses, and cash flows, including sales proceeds that the Company would receive upon a sale of the communities using estimated capitalization rates, all of which are considered Level 3 inputs in the valuation hierarchy.

The Company corroborated the estimated capitalization rates used in these calculations with capitalization rates observable from recent market transactions.

Future cash flows are discounted at a rate that is consistent with a weighted average cost of capital from a market participant perspective.

The weighted average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt holders of a business enterprise.

The Company also considered market based measures such as earnings multiples in its analysis of estimated fair values of its reporting units.

Based on the results of the Company's quantitative goodwill impairment test, the Company determined that the carrying amount of the Company's Assisted Living and Memory Care reporting unit exceeded its estimated fair value by more than the $ 351.7

million carrying amount as of March 31, 2018.

As a result, the Company recorded a non-cash impairment charge of $ 351.7 million to goodwill within the Assisted Living and Memory Care segment for the three months ended March 31, 2018.

During 2020, the Company identified indicators of impairment of goodwill, including the COVID-19 pandemic and a significant decline in the Company's stock price and market capitalization for a sustained period.

Refer to Note 3 for additional information on the COVID-19 pandemic.

As a result, the Company performed an interim quantitative goodwill impairment test as of March 31, 2020.

The Company’s quantitative goodwill impairment test as of March 31, 2020 included reduced estimates of projected future cash flows as a result of changes to significant assumptions using information known or knowable about the COVID-19 pandemic, including current industry and economic trends, changes in business plans, and changes in expected revenue and facility operating expense growth rates.

Additionally, the Company considered the additional risk within the future cash flow estimates when selecting risk-adjusted discount rates.

As of December 31, 2020, the Company also considered that the estimated Health Care Services reporting unit fair value, based upon the transaction price for the Health Care Services segment as described in Note 21, exceeds its carrying amount.

The Company concluded that the remaining goodwill for all reporting units was not impaired as of October 1, 2020 and 2019 (the Company's annual measurement date) and as of December 31, 2020 and 2019.

Goodwill allocated to the Company's Independent Living and Health Care Services reporting units is approximately $ 27.3 million and $ 126.8 million, respectively, as of December 31, 2020 and 2019.

Determining the fair value of the Company's reporting units involves the use of significant estimates and assumptions that are unpredictable and inherently uncertain.

These estimates and assumptions include revenue and expense growth rates and operating margins used to calculate projected future cash flows and risk-adjusted discount rates.

As of December 31, 2021 and 2020 there was a wide range of possible outcomes as a result of the pandemic, as there was a high degree of uncertainty about its ultimate impact.

Management’s estimates of the impact of the pandemic are highly

dependent on variables that are difficult to predict, as further described in Note 3.

Future events may indicate differences from management's current judgments and estimates which could, in turn, result in future impairments.

Future events that may result in impairment charges include differences in the projected occupancy rates or monthly service fee rates, changes in the cost structure of existing communities, changes in reimbursement rates from Medicare for healthcare services, and changes in healthcare reform.

Significant adverse changes in the Company's future revenues and/or operating margins, significant changes in the market for healthcare services, senior housing or the valuation of the real estate of senior living communities, as well as other events and circumstances, including, but not limited to, increased competition, changes in reimbursement rates from Medicare for healthcare services, and changing economic or market conditions, including market control premiums, could result in changes in fair value and the determination that additional goodwill is impaired.

Property, Plant and Equipment and Leasehold Intangibles, Net

During the years ended December 31, 2020, 2019, and 2018, the Company evaluated property, plant and equipment and leasehold intangibles for impairment and identified properties with a carrying amount of the assets in excess of the estimated future undiscounted net cash flows expected to be generated by the assets.

The Company compared the estimated fair value of the assets to their carrying amount for these identified properties and recorded an impairment charge for the excess of carrying amount over fair value.

The Company recorded property, plant and equipment and leasehold intangibles non-cash impairment charges in its operating results of $ 29.3 million, $ 27.2 million, and $ 78.0 million for the years ended December 31, 2020, 2019, and 2018, respectively.

The fair values of the assets of these communities were primarily determined utilizing a discounted cash flow approach or direct capitalization method considering stabilized facility operating income and market capitalization rates.

These fair value measurements are considered Level 3 measurements within the valuation hierarchy.

The range of capitalization rates utilized was 6.5 % to 9.0 %, depending upon the property type, geographical location, and the quality of the respective community.

The Company corroborated the estimated fair values with a sales comparison approach with information observable from recent market transactions.

These impairment charges are primarily due to the COVID-19 pandemic, lower than expected operating performance at these properties, or the Company's decision to dispose of assets and reflect the amount by which the carrying amounts of the assets exceeded their estimated fair value.

Operating Lease Right-of-Use Assets

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The Company compared the estimated fair value of the assets to their carrying amount for these identified communities and recorded an impairment charge for the excess of carrying amount over fair value.

During the year ended December 31, 2021, the Company recognized the right-of-use assets for the operating leases for 11 communities on the consolidated balance sheet at the estimated fair value of $ 31.0 million.

The Company recognized the right-of-use assets for the operating leases for 35 communities on the consolidated balance sheet as of March 31, 2020 at the estimated fair value of $ 106.7 million.

During the three months ended June 30, 2020, the Company recognized the right-of-use assets for the operating leases for nine communities on the consolidated balance sheet at the estimated fair value of $ 10.3 million.

During the three months ended September 30, 2020, the Company recognized the right-of-use assets for the operating leases for two communities on the consolidated balance sheets as of September 30, 2020 at

the estimated fair value of $ 3.0 million.

During the three months ended December 31, 2020, the Company recognized the right-of-use assets for the operating leases for five communities on the consolidated balance sheet at the estimated fair value of $ 2.3 million.

In the aggregate, the Company recorded a non-cash impairment charge of $ 76.3 million and $ 10.2 million for the years ended December 31, 2020 and 2019, respectively, to operating lease right-of-use assets.

These 2020 impairment charges are primarily due to the COVID-19 pandemic and the lower than expected operating performance at these communities and reflect the amount by which the carrying amounts of the assets exceeded their estimated fair value.

The Company's adoption of ASU 2016-02 resulted in the recognition of the right-of-use assets for the operating leases for 25 communities to be recognized on the consolidated balance sheet as of January 1, 2019 at the estimated fair value of $ 56.6 million, and $ 58.1 million of previously unrecognized right-of-use asset impairments were recognized as a cumulative effect adjustment to accumulated deficit as the Company determined that the long-lived assets of such communities were not recoverable as of such date.

In the aggregate, the Company recorded a non-cash impairment charge of $ 16.6 million, $ 76.3 million, and $ 10.2 million for the years ended December 31, 2021, 2020, and 2019, respectively, to operating lease right-of-use assets.

These impairment charges in 2021 and 2020 are primarily due to the COVID-19 pandemic and the lower than expected operating performance at these communities and reflect the amount by which the carrying amounts of the assets exceeded their estimated fair value.

The Company's adoption of ASU 2016-02 resulted in the recognition of the right-of-use assets for the operating leases for 25 communities on the consolidated balance sheet as of January 1, 2019 at the estimated fair value of $ 56.6 million, and $ 58.1 million of previously unrecognized right-of-use asset impairments were recognized as a cumulative effect adjustment to accumulated deficit as the Company determined that the long-lived assets of such communities were not recoverable as of such date.

See Note 2 for more information regarding the recognition of right-of-use assets for operating leases upon the adoption of ASU 2016-02.

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The range of discount rates utilized was 9.0 % to 12.3 %, depending upon the property type, geographical location, and the quality of the respective community.

Investment in Unconsolidated Ventures

The Company evaluates realization of its investment in ventures accounted for using the equity method if circumstances indicate that the Company's investment is other than temporarily impaired.

During the years ended December 31, 2020 and 2018 the Company recorded $ 1.5 million and $ 33.4 million, respectively, of non-cash impairment charges for investments in unconsolidated ventures.

These impairment charges are primarily due to lower than expected operating performance at the communities owned by the unconsolidated ventures and reflect the amount by which the carrying amounts of the investments exceeded their estimated fair value.

During the year ended December 31, 2019, the Company did not record impairment expense for its investment in unconsolidated ventures.

Assets Held for Sale

During the years ended December 31, 2020, 2019, and 2018, the Company recognized $ 0.2 million, $ 1.3 million, and $ 15.6 million, respectively, of impairment charges for assets held for sale.

These impairment charges are primarily due to the excess of carrying amount over the estimated selling price less costs to dispose.

The Company determines the fair value of the communities based primarily on purchase and sale agreements from prospective purchasers (Level 2 input).

Refer to Note 4 for more information about the Company's community dispositions and assets held for sale.

During the years ended December 31, 2019 and 2018, the Company identified indicators of impairment for the Company's home health care licenses, primarily due to significant underperformance relative to historical and projected operating results, the impact of lower reimbursement rates from Medicare for home health care services, and an increased competitive environment in the home health care industry.

The Company performed a quantitative impairment test, which included a comparison of the estimated fair value of the Company's home health care licenses to the carrying amount.

In estimating the fair value of the home health licenses for purposes of the quantitative impairment test, the Company utilized an income approach, which included future cash flow projections that are developed internally.

Any estimates of future cash flow projections necessarily involve predicting unknown future circumstances and events and require significant management judgments and estimates.

Based on the results of the Company's quantitative impairment test, the Company determined that the carrying amount of certain of the Company's home health care licenses exceeded their estimated fair value.

As a result, the Company recorded a non-cash impairment charge of $ 7.6 million and $ 9.1 million for the years ended December 31, 2019 and 2018, respectively, to intangible assets within the Health Care Services segment.

Property, Plant and Equipment and Leasehold Intangibles, Net

During the years ended December 31, 2021, 2020, and 2019, the Company evaluated property, plant and equipment and leasehold intangibles for impairment and identified properties with a carrying amount of the assets in excess of the estimated future undiscounted net cash flows expected to be generated by the assets.

The Company recorded property, plant and equipment and leasehold intangibles non-cash impairment charges in its operating results of $ 6.4 million, $ 29.3 million, and $ 27.2 million for the years ended December 31, 2021, 2020, and 2019, respectively.

These fair value measurements are considered Level 3 measurements within the valuation hierarchy.

The range of capitalization rates utilized was 7.0 % to 9.0 %, depending upon the property type, geographical location, and the quality of the respective community.

The Company corroborated the estimated fair values with a sales comparison approach with information observable from recent market transactions.

Disaggregation of Revenue

The Company disaggregates its revenue from contracts with customers by payor source as the Company believes it best depicts how the nature, amount, timing, and uncertainty of its revenue and cash flows are affected by economic factors.

Resident fee revenue by payor source and reportable segment is as follows.

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Resident fee revenue for standalone or certain healthcare services is generally billed monthly in arrears.

A portion of the Company's reimbursement from Medicare for certain healthcare services is billed near the start of each period of care, and cash is generally received before all services are rendered.

The amount of revenue recognized for periods of care which are incomplete at period end is based on the Company's historical average percentage of days complete on each period of care and any unearned amounts are deferred and recognized when the service is performed.

Additionally, non-refundable community fees are generally billed and collected in advance or upon move-in of a resident under the Company's independent living, assisted living, and memory care residency agreements.

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The Company had total deferred revenue (included within refundable fees and deferred revenue, and other liabilities within the consolidated balance sheets) of $ 67.5 million and $ 138.3 million, including $ 27.5 million and $ 21.1 million of monthly resident fees billed and received in advance, as of December 31, 2021 and 2020, respectively.

Such amount of total deferred revenue as of December 31, 2020 also includes $ 87.5 million received during the year ended December 31, 2020 under a temporary expansion of the Accelerated and Advance Payment Program administered by CMS.

During the year ended December 31, 2020, the Company received $ 87.5 million under the Accelerated and Advance Payment Program administered by CMS, of which $ 3.1 million and $ 87.5 million was included in such total deferred revenue as of December 31, 2021 and 2020, respectively.

Refer to Note 3 for additional information on such program.

For the years ended December 31, 2020, 2019, and 2018 the Company recognized $ 60.6 million, $ 94.6 million, and $ 82.1 million respectively, of revenue that was included in the deferred revenue balance as of January 1,

2020, 2019, and 2018, respectively.

Pursuant to the HCS Sale, $ 63.6 million of such obligations related to the Company's Health Care Services segment were retained by the HCS Venture and therefore derecognized from the Company's consolidated balance sheet.

For the years ended December 31, 2021, 2020, and 2019 the Company recognized $ 60.2 million, $ 60.6 million, and $ 94.6 million respectively, of revenue that was included in the deferred revenue balance as of January 1, 2021, 2020, and 2019, respectively.

The Company applies the practical expedient in ASC 606-10-50-14 and does not disclose amounts for remaining performance obligations that have original expected durations of one year or less.

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Property, plant and equipment and leasehold intangibles, net $ 4,904,292 $ 5,068,060

Assets under financing leases and leasehold improvements includes $ 0.4 billion and $ 0.6 billion of financing lease right-of-use assets, net of accumulated amortization, as of December 31, 2020 and 2019, respectively.

Assets under financing leases and leasehold improvements includes $ 332.3 million and $ 363.1 million of financing lease right-of-use assets, net of accumulated amortization, as of December 31, 2021 and 2020, respectively.

Refer to Note 10 for further information on the Company's financing leases.

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For the years ended December 31, 2021, 2020, and 2019, the Company recognized depreciation and amortization expense on its property, plant and equipment and leasehold intangibles of $ 337.6 million, $ 359.2 million, and $ 377.6 million, respectively.

The following is a summary of the carrying amount of goodwill presented on a reportable segment basis as of both December 31, 2020 and 2019.

The following is a summary of the carrying amount of goodwill presented on a reportable segment basis.

December 31, 2021

(in thousands) Gross Carrying Amount Dispositions and Other Reductions Accumulated Impairment Net

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Assisted Living and Memory Care 605,469 ( 48,817 ) ( 556,652 ) —

Total $ 633,610 $ ( 49,637 ) $ ( 556,652 ) $ 27,321

December 31, 2020

(in thousands) Gross Carrying Amount Dispositions and Other Reductions Accumulated Impairment Net

Independent Living $ 28,141 $ ( 820 ) $ — $ 27,321

Assisted Living and Memory Care 605,469 ( 48,817 ) ( 556,652 ) —

Health Care Services 126,810 — — 126,810

Total $ 760,420 $ ( 49,637 ) $ ( 556,652 ) $ 154,131

Refer to Note 5 for information on impairment expense for goodwill in 2018.

The Company's Health Care Services segment had a carrying amount of goodwill of $ 126.8 million as of December 31, 2020, which was derecognized upon completion of the HCS Sale on July 1, 2021.

Long-term debt consists of the following.

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$ 2,164,115 $ 2,366,996

Variable mortgage notes payable due 2022 through 2030, weighted average interest rate of 2.49 % and 4.10 % as of December 31, 2020 and 2019, respectively.

1,529,935 1,242,921

Other notes payable due 2021 to 2025;

Variable mortgage notes payable due 2022 through 2030;

weighted average interest rate of 2.44 % and 2.49 % as of December 31, 2021 and 2020, respectively.

1,476,943 1,529,935

Debt discount and deferred financing costs, net ( 27,500 ) ( 16,997 )

Convertible notes payable due October 2026;

weighted average interest rate of 2.00 % as of December 31, 2021.

Other notes payable;

weighted average interest rate of 8.98 % as of December 31, 2020.

Deferred financing costs, net ( 29,846 ) ( 27,500 )

Total long-term debt 3,841,212 3,915,988

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As of December 31, 2021, 94.1 %, or $ 3.6 billion of the Company's total debt obligations represented non-recourse property-level mortgage financings.

The annual aggregate scheduled maturities of long-term debt outstanding as of December 31, 2020 are as follows (in thousands):

The annual aggregate scheduled maturities (including recurring principal payments) of long-term debt outstanding as of December 31, 2021 are as follows (in thousands).

Year Ending December 31,

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Total obligations 3,871,058 3.37 %

Less amount representing debt discount and deferred financing costs, net ( 27,500 )

Less amount representing deferred financing costs, net ( 29,846 )

Total $ 3,841,212

Convertible Debt Offering

On October 1, 2021, the Company issued $ 230.0 million principal amount of 2.00 % convertible senior notes due 2026 (the "Notes").

The Company received net proceeds of $ 224.3 million at closing after the deduction of the initial purchasers' discount.

The Company used $ 15.9 million of the net proceeds to pay the Company’s cost of the capped call transactions described below.

Additionally, the Company used the remaining net proceeds together with cash on hand to repay $ 284.4 million of mortgage debt and a $ 45.0 million note payable.

The Notes were issued pursuant to, and are governed by, the Indenture dated as of October 1, 2021 by and between the Company and American Stock Transfer & Trust Company, LLC, as trustee.

The Notes are the Company’s senior unsecured obligations and rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes, and equal in right of payment to any of the Company’s indebtedness that is not so subordinated.

The Notes are effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness;

and structurally junior to all indebtedness and other liabilities (including trade payables) and any preferred equity of current or future subsidiaries of the Company.

The Notes bear interest at 2.00 % per year, payable semi-annually in arrears in cash on April 15 and October 15 of each year, beginning on April 15, 2022.

The Notes will mature on October 15, 2026, unless earlier converted, redeemed, or repurchased in accordance with their terms.

Holders of the Notes may convert all or any portion of their Notes at their option at any time prior to the close of business on the business day immediately preceding July 15, 2026, only under the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2021 (and only during such calendar quarter), if the last reported sale price of the common stock of the Company for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

(2) during the five business day period after any ten consecutive trading day period (the "measurement period") in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the common stock of the Company and the conversion rate for the Notes on each such trading day;

(3) if the Company calls any or all of the Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date, but only with respect to the Notes called (or deemed called) for redemption;

or (4) upon the occurrence of specified corporate events.

On or after July 15, 2026, holders may convert all or any portion of their Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions.

Upon conversion, the Company will satisfy its conversion obligation by paying or delivering, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock at the Company’s election.

The conversion rate for the Notes is initially 123.4568 shares of the Company’s common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $ 8.10 per share of common stock).

The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest.

In addition, following certain corporate events that occur prior to the maturity date or following the issuance of a notice of redemption, the Company will increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event or who elects to convert any Notes called (or deemed called) for redemption during the related redemption period in certain circumstances.

The Company may not redeem the Notes prior to October 21, 2024.

The Company may redeem for cash all or (subject to certain limitations) any portion of the Notes, at the Company's option, on or after October 21, 2024 and prior to the 51 st scheduled trading day immediately preceding the maturity date if the last reported sale price of the Company's common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 % of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

No sinking fund is provided for the Notes.

The Company has recognized the Notes in their entirety as a liability on the consolidated balance sheet and no portion of the proceeds from the issuance of the convertible debt instrument was accounted for separately as an embedded conversion feature within stockholders’ equity.

The Notes were initially recognized at $ 223.3 million, which reflects $ 230.0 million principal amount less the $ 5.7 million initial purchasers' discount and $ 1.0 million of debt issuance costs.

Capped Call Transactions

In connection with the offering of the Notes, the Company entered into privately negotiated capped call transactions ("Capped Call Transactions") with each of Bank of America, N.A., Royal Bank of Canada, Wells Fargo Bank, National Association or their respective affiliates (the "Capped Call Counterparties").

The Capped Call Transactions initially cover, subject to customary anti-dilution adjustments, the number of shares of the Company’s common stock that initially underlie the Notes and initially have an exercise price of $ 8.10 per share of common stock.

The cap price of the Capped Call Transactions is initially approximately $ 9.90 per share of the Company’s common stock, representing a premium of 65 % above the last reported sale price of $ 6.00 per share of the Company’s common stock on September 28, 2021, and is subject to certain adjustments under the terms of the Capped Call Transactions.

The Capped Call Transactions are expected generally to reduce or offset potential dilution to holders of the Company’s common stock upon conversion of the Notes and/or offset the potential cash payments that the Company could be required to make in excess of the principal amount of any converted Notes upon conversion thereof, with such reduction and/or offset subject to a cap based on the cap price.

The Capped Call Transactions are separate transactions entered into by the Company with the Capped Call counterparties and are not part of the terms of the Notes.

The Capped Call Transactions had a cost of $ 15.9 million, which was paid on October 1, 2021 from the proceeds of the Notes.

The Company accounted for the Capped Call Transactions separately from the Notes and recognized the $ 15.9 million cost as a reduction of additional paid-in capital in the year ended December 31, 2021 as the Capped Call Transactions are indexed to the Company’s common stock.

Credit Facilities

On August 31, 2020, the Company terminated its Fifth Amended and Restated Credit Agreement with Capital One, National Association, as administrative agent, lender, and swingline lender and the other lenders from time to time parties thereto (as amended, the ("Credit Agreement").

The Credit Agreement had a maturity date of January 3, 2024.

Amounts drawn under the facility bore interest at 90-day LIBOR plus an applicable margin.

The applicable margin varied based on the percentage of the total commitment drawn, with a 2.25 % margin at utilization equal to or lower than 35%, a 2.75 % margin at utilization greater than 35% but less than or equal to 50%, and a 3.25 % margin at utilization greater than 50%.

The Credit Agreement had provided commitments for a $ 250.0 million revolving credit facility with a $ 60.0 million sublimit for letters of credit and a $ 50.0 million swingline feature.

The credit facility was secured by first priority mortgages on certain of the Company's communities, and availability varied from time to time based on borrowing base calculations related to the appraised value and performance of the communities securing the credit facility and the Company's consolidated fixed charge coverage ratio.

The Credit Agreement was terminated in connection with the Company obtaining approximately $ 266.9 million of non-recourse mortgage financing on 16 communities on August 31, 2020, most of which had secured the Credit Agreement prior to its termination.

At the closing, the Company repaid the $ 166.4 million outstanding principal amount under the Credit Agreement, together with accumulated interest, and without payment of any termination fee or penalty.

On December 11, 2020, the Company entered into a revolving credit agreement with Capital One, National Association, as administrative agent and lender and the other lenders from time to time parties thereto.

The agreement provides a commitment amount of $ 80 million which can be drawn in cash or as letters of credit.

The agreement provides a commitment amount of up to $ 80.0 million which can be drawn in cash or as letters of credit.

The agreement matures on January 15, 2024.

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Available capacity under the facility will vary from time to time based upon borrowing base calculations related to the appraised value and performance of the communities securing the credit facility.

As of December 31, 2020, no borrowings were outstanding on the revolving credit facility, $ 40.4 million of letters of credit were outstanding, and the revolving credit facility had $ 22.2 million of availability.

The Company also had separate secured and unsecured letter of credit facilities of up to $ 51.6 million of letters of credit as of December 31, 2020 under which $ 40.3 million had been issued as of that date.

As of December 31, 2021, $ 72.6 million of letters of credit and no cash borrowings were outstanding under the Company's $ 80.0 million secured credit facility.

The Company also had a separate secured letter of credit facility providing up to $ 15.0 million of letters of credit as of December 31, 2021 under which $ 13.6 million had been issued as of that date.

2021 Financings

On December 17, 2021, the Company obtained $ 100.0 million of debt secured by the non-recourse first mortgages on 11 communities.

The loan bears interest at a variable rate equal to the 30-day Secured Overnight Financing Rate ("SOFR") plus a margin of 215 basis points and matures in January 2025, with the option to extend for two additional terms of one year each.

2020 Financings

On January 31, 2020, the Company obtained $ 238.2 million of debt secured by the non-recourse first mortgages on 14 communities, including $ 192.6 million of non-recourse first mortgage financing on 13 communities acquired from Healthpeak on such date.

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On March 20, 2020, the Company obtained $ 30.0 million of debt secured by the non-recourse first mortgage on one community acquired from Healthpeak on January 31, 2020.

The loan bears interest at a variable rate equal to the 30-day LIBOR plus a margin of 250 basis points and matures in March 2022.

The loan bears interest at a variable rate equal to the 30-day LIBOR plus a margin of 250 basis points and matures in March 2022, with the option to extend for one year subject to certain financial covenants.

On March 31, 2020, the Company obtained $ 149.3 million of debt secured by the non-recourse first mortgages on 18 communities.

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The debt matures in September 2030.

The $ 266.9 million of proceeds from the financing

were primarily utilized to repay the outstanding principal amount under the Credit Agreement and to cash collateralize letters of credit.

The $ 266.9 million of proceeds from the financing were primarily utilized to repay the outstanding principal amount under the Credit Agreement and to cash collateralize letters of credit.

On September 9, 2020, the Company obtained $ 220.5 million of debt secured by the non-recourse first mortgages on 27 communities.

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The $ 220.5 million of proceeds from the financing were primarily utilized to repay outstanding mortgage debt maturing in 2020 and 2021.

2019 Financings

During the second quarter of 2019, the Company obtained $ 111.1 million of debt secured by the non-recourse first mortgages on 14 communities.

Sixty percent of the principal amount bears interest at a fixed rate of 4.52 %, and the remaining forty percent of the principal amount bears interest at a variable rate equal to the 30-day LIBOR plus a margin of 223 basis points.

The debt matures in June 2029.

The $ 111.1 million of proceeds from the financing along with cash on hand were utilized to repay $ 155.5 million of outstanding mortgage debt maturing in 2019.

During the third quarter of 2019, the Company obtained $ 160.3 million of debt secured by the non-recourse first mortgages on five communities.

Seventy-five percent of the principal amount bears interest at a fixed rate of 3.35 %, and the remaining twenty-five percent of the principal amount bears interest at a variable rate equal to the 30-day LIBOR plus a margin of 217 basis points.

The debt matures in September 2029.

The $ 160.3 million of proceeds from the financing were utilized to repay $ 139.2 million of outstanding mortgage debt maturing in 2020 and 2023.

During the year ended December 31, 2019, the Company recorded $ 5.2 million of debt modification and extinguishment costs on the consolidated statement of operations, primarily related to third party fees directly related to debt modifications.

Financial Covenants

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The leases generally provide for renewal or extension options from 5 to 20 years and in some instances, purchase options.

For accounting purposes, renewal or extension options are included in the lease term when it is reasonably certain that the Company will exercise the option.

For accounting purposes, renewal or extension options are included in the lease term at lease inception or modification when it is reasonably certain that the Company will exercise the option.

Generally, renewal or extension options are not included in the lease term for accounting purposes.

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As of December 31, 2021, the Company is in compliance with the financial covenants of its long-term leases.

A summary of operating and financing lease expense (including the respective presentation on the consolidated statements of operations) and net cash paid from leasing transactions is as follows:

A summary of operating and financing lease expense (including the respective presentation on the consolidated statements of operations) and net cash outflows from leases is as follows.

Years Ended December 31,

Operating Leases (in thousands)

2021 2020 2019

Facility operating expense $ 12,606 $ 19,241 $ 18,677

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Changes in operating lease assets and liabilities for lessor capital expenditure reimbursements ( 30,965 ) ( 22,242 ) ( 31,305 )

Operating cash flows from operating leases $ 357,308 $ 276,491

(1) Represents the difference between the amount of cash operating lease payments and the amount of operating lease expense recognized in accordance with ASC 842.

Operating net cash outflows from operating leases $ 179,279 $ 357,308 $ 276,491

(1) Represents the difference between the amount of cash operating lease payments and the amount of operating lease expense.

Operating cash flows from operating leases for the year ended December 31, 2020 includes the $ 119.2 million one-time cash lease payment made to Ventas in connection with the Company's lease restructuring transaction effective July 26, 2020.

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Financing Leases (in thousands)

2021 2020 2019

Depreciation and amortization $ 30,542 $ 32,647 $ 46,646

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Financing lease expense $ 76,824 $ 81,181 $ 112,999

Operating cash flows from financing leases $ 48,534 $ 66,353

Financing cash flows from financing leases 18,867 22,242

Operating cash outflows from financing leases $ 46,282 $ 48,534 $ 66,353

Financing cash outflows from financing leases 19,874 18,867 22,242

Changes in financing lease assets and liabilities for lessor capital expenditure reimbursement ( 11,135 ) ( 5,603 ) ( 3,504 )

Total cash flows from financing leases $ 61,798 $ 85,091

A summary of facility lease expense and the impact of operating lease expense adjustment, under ASC 840, and deferred gains are as follows:

(in thousands) Year Ended December 31, 2018

Cash basis payment - operating leases $ 324,870

Operating lease expense adjustment ( 17,218 )

Amortization of deferred gain ( 4,358 )

Facility lease expense $ 303,294

Total net cash outflows from financing leases $ 55,021 $ 61,798 $ 85,091

As of December 31, 2021, the weighted average discount rate of the Company's operating and financing leases was 7.2 % and 8.0 %, respectively.

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Total lease obligations $ 830,518 $ 554,287

Supplemental Balance Sheet Information

Accrued Expenses

Accrued expenses reflected within current liabilities on the Company’s consolidated balance sheets consist of the following.

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Insurance reserves 55,309 64,633

Paid time off 37,848 37,415

Deferred payroll taxes (Note 3)

31,553 36,336

Paid time off 26,821 37,848

Real estate taxes 25,826 25,495

Interest 11,239 11,453

Accrued utilities 7,507 7,601

Utilities 7,430 7,507

Taxes payable 1,978 3,806

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Total $ 254,831 $ 287,851

Other assets, net reflected on the Company's consolidated balance sheets consist of the following:

As of December 31,

(in thousands) 2020 2019

Health care licenses (1)

$ 34,060 $ 35,198

Lease security deposit 3,180 49,102

Other 19,019 34,431

Total $ 56,259 $ 118,731

(1) Health care licenses are indefinite-lived intangible assets and are not subject to amortization.

Investment in Unconsolidated Ventures

As of December 31, 2019, the Company held a 51 % equity interest, and Healthpeak owned a 49 % interest, in the CCRC Venture, which owned and operated 16 entry fee CCRCs.

The Company's ownership interests in the CCRC Venture were accounted for under the equity method of accounting.

Refer to Note 4 for information on the Company's sale of the equity interest in the CCRC Venture on January 31, 2020 and movement of the remaining two entry fee CCRCs into a new unconsolidated venture.

As a result of the recognition of the Company’s investment basis at the carrying amounts of the net assets contributed upon formation of the CCRC Venture and subsequent cash distributions, the Company's carrying amount of its equity method investment in the CCRC Venture property company was reduced below zero and the Company had recorded a $ 66.2 million equity method liability within other liabilities within the consolidated balance sheet as of December 31, 2019.

As of December 31, 2020, other liabilities within the consolidated balance sheet included a $ 10.1 million equity method liability for the new unconsolidated venture which owns the remaining two entry fee CCRCs.

As of December 31, 2021, the Company holds a 20 % equity interest, and HCA Healthcare owns an 80 % interest, in the HCS Venture, and the Company has determined the HCS Venture is a VIE.

The Company does not consolidate this VIE because it does not have the ability to control the activities that most significantly impact this VIE's economic performance.

The Company's interest in the HCS Venture is accounted for under the equity method of accounting.

The carrying amount of the Company's investment in the unconsolidated venture and maximum exposure to loss as a result of the Company's ownership interest in the HCS Venture was $ 62.5 million, which is included in investments in unconsolidated ventures on the accompanying consolidated balance sheet, as of December 31, 2021.

As of December 31, 2021, the Company is not required to provide financial support, through a liquidity arrangement or otherwise, to its unconsolidated VIE.

Refer to Note 4 for information on the formation of the HCS Venture.

Commitments and Contingencies

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Accordingly, the Company is, in effect, self-insured for claims that are less than the deductible amounts and for claims or portions of claims that are not covered by such policies and/or exceed the policy limits.

Similarly, the senior living and healthcare industries are continuously subject to scrutiny by governmental regulators, which could result in reviews, audits, investigations, enforcement activities or litigation related to regulatory compliance matters.

In addition, as a result of the Company's participation in the Medicare and Medicaid programs, the Company is subject to various governmental reviews, audits and investigations, including but not limited to audits under various government programs, such as the Recovery Audit Contractors (RAC), Zone Program Integrity Contractors (ZPIC), and Unified Program Integrity Contractors (UPIC) programs.

The costs to respond to and defend such reviews, audits, and investigations may be significant, and an adverse determination could result in citations, sanctions and other criminal or civil fines and penalties, the refund of overpayments, payment suspensions, termination of participation in Medicare and Medicaid programs, and/or damage to the Company's business reputation.

The senior living and healthcare industries are continuously subject to scrutiny by governmental regulators, which could result in reviews, audits, investigations, enforcement actions, or litigation related to regulatory compliance matters.

In addition, the Company is subject to various government reviews, audits, and investigations to verify compliance with Medicare and Medicaid programs and other applicable laws and regulations.

CMS has engaged third-party firms to review claims data to evaluate appropriateness of billings.

In addition to identifying overpayments, audit contractors can refer suspected violations to government authorities.

An adverse outcome of government scrutiny may result in citations, sanctions, other criminal or civil fines and penalties, the refund of overpayments, payment suspensions, termination of participation in Medicare and Medicaid programs, and damage to the Company’s business reputation.

The Company’s costs to respond to and defend any such audits, reviews, and investigations may be significant.

In June 2020, the Company and several current and former executive officers were named as defendants in a putative class action lawsuit alleging violations of the federal securities laws filed in the federal court for the Middle District of Tennessee.

The lawsuit asserts that the defendants made material misstatements and omissions concerning the Company's business, operational and compliance policies that caused the Company's stock price to be artificially inflated between August 2016 and April 2020.

While the Company cannot predict with certainty the result of this or any other legal proceedings, the Company believes the allegations in the suit are without merit and does not expect this matter to have a material adverse effect on the Company's financial condition, results of operations, or cash flows.

In October 2020, an alleged stockholder of the Company filed a stockholder derivative lawsuit in the federal court for the Middle District of Tennessee, asserting claims on behalf of the Company against certain current and former officers and directors for alleged breaches of duties owed to the Company.

The complaint refers to the securities lawsuit described above and incorporates substantively similar allegations.

The lawsuit asserted that the defendants made material misstatements and omissions concerning the Company's business, operational and compliance policies that caused the Company's stock price to be artificially inflated between August 2016 and April 2020.

The district court dismissed the lawsuit and entered judgment in favor of the defendants in September 2021, and the plaintiffs did not file an appeal.

Between October 2020 and June 2021, alleged stockholders of the Company filed several stockholder derivative lawsuits in the federal courts for the Middle District of Tennessee and the District of Delaware, which was subsequently transferred to the Middle District of Tennessee.

The derivative lawsuits are currently pending and assert claims on behalf of the Company against certain current and former officers and directors for alleged breaches of duties owed to the Company.

The complaints refer to the securities lawsuit described above and incorporate substantively similar allegations.

The Company has employment or letter agreements with certain officers of the Company and has adopted policies to which certain officers of the Company are eligible to participate, which grant these employees the right to receive a portion or multiple of their base salary, pro-rata bonus, bonus, and/or continuation of certain benefits, for a defined period of time, in the event of certain terminations of the officers' employment, as described in those agreements and policies.

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The Company obtains various insurance coverages, including general and professional liability and workers compensation programs, from commercial carriers at stated amounts as defined in the applicable policy.

Losses related to deductible amounts are accrued based on the Company's estimate of expected losses plus incurred but not reported claims.

As of December 31, 2020 and 2019, the Company accrued reserves of $ 153.0 million and $ 155.8 million, respectively, under the Company's insurance programs, of which $ 88.4 million and $ 92.5 million is classified as long-term liabilities as of December 31, 2020 and 2019, respectively.

The Company's current general and

professional liability policies provide for deductibles for each claim and contain various exclusions from coverage.

Losses related to self-insured amounts are accrued based on the Company's estimate of expected losses plus incurred but not reported claims.

As of December 31, 2021 and 2020, the Company accrued reserves of $ 130.7 million and $ 153.0 million, respectively, under the Company's insurance programs, of which $ 75.4 million and $ 88.4 million is classified as other liabilities as of December 31, 2021 and 2020, respectively.

As of December 31, 2021 and 2020, the Company accrued $ 14.3 million and $ 18.0 million, respectively, of estimated amounts receivable from the insurance companies under these insurance programs.

The Company has secured self-insured retention risk under workers' compensation programs with restricted cash deposits of $ 21.9 million and $ 24.0 million as of December 31, 2020 and 2019, respectively.

The Company has secured self-insured retention risk under its primary workers' compensation programs with restricted cash deposits of $ 15.8 million as of both December 31, 2021 and 2020.

Letters of credit securing the programs aggregated to $ 62.1 million and $ 61.3 million as of December 31, 2021 and 2020, respectively.

In addition, the Company also had deposits of $ 6.5 million and $ 7.7 million, as of December 31, 2021 and 2020, respectively, to fund claims paid under a high deductible, collateralized insurance policy.

Effective December 31, 2020, the Company began using its wholly-owned captive insurance company for the purpose of insuring certain portions of its risk retention under its general and professional liability insurance programs.

Stock-Based Compensation

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That cost is expected to be recognized over a weighted average period of 2.2 years and is based on grant date fair value.

During 2020, grants of restricted stock units and stock awards under the Company's 2014 Omnibus Incentive Plan were as follows:

(in thousands, except for per share and unit amounts) Restricted Stock Unit and Stock Award Grants Weighted Average Grant Date Fair Value Total Grant Date Fair Value

During 2021, grants of restricted stock and restricted stock units under the Company's 2014 Omnibus Incentive Plan were as follows.

(in thousands, except for weighted average amounts) Restricted Stock Unit and Stock Award Grants Weighted Average Grant Date Fair Value Total Grant Date Fair Value

Three months ended March 31, 2021 1,961 $ 5.09 $ 9,988

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Three months ended December 31, 2021 14 $ 6.69 $ 97

The Company has an employee stock purchase plan for all eligible employees.

Under the plan, eligible employees of the Company can purchase shares of the Company's common stock on a quarterly basis at a discounted price through accumulated payroll deductions.

Each participating employee may elect to deduct up to 15 % of his or her base pay each quarter and no more than 200 shares may be purchased by a participating employee each quarter.

Subject to certain limitations specified in the plan, on the last trading date of each calendar quarter, the amount deducted from each participant's pay over the course of the quarter will be used to purchase whole shares of the Company's common stock at a purchase price equal to 90 % of the closing market price on the New York Stock Exchange on that date.

The Company reserved 1,800,000 shares of common stock for issuance under the plan.

Through December 31, 2021, the Company had an employee stock purchase plan for all eligible employees.

Under the plan, eligible employees of the Company could purchase shares of the Company's common stock on a quarterly basis at a discounted price through accumulated payroll deductions.

Each participating employee could elect to deduct up to 15 % of his or her base pay each quarter and no more than 200 shares could be purchased by a participating employee each quarter.

Subject to certain limitations specified in the plan, on the last trading date of each calendar quarter, the amount deducted from each participant's pay over the course of the quarter was used to purchase whole shares of the Company's common stock at a purchase price equal to 90 % of the closing market price on the New York Stock Exchange on that date.

This plan was terminated effective December 31, 2021.

Earnings Per Share

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Diluted EPS includes the components of basic EPS and also gives effect to dilutive common stock equivalents.

Under the treasury stock method, diluted EPS reflects the potential dilution that could occur if securities or other instruments that are convertible into common stock were exercised or could result in the issuance of common stock.

Potentially dilutive common stock equivalents include unvested restricted stock, restricted stock units, and convertible debt instruments and warrants.

The following table summarizes the computation of basic and diluted earnings (loss) per share amounts presented in the consolidated financial statements.

Diluted EPS reflects the potential dilution that could occur if securities or other instruments that are convertible into common stock were exercised or could result in the issuance of common stock.

Potentially dilutive common stock equivalents include unvested restricted stock, restricted stock units, the Warrant, and the Notes.

Refer to Note 4 for information on the Warrant.

Refer to Note 9 for information on the issuance of the Notes on October 1, 2021.

The following table summarizes the computation of basic and diluted earnings (loss) per share amounts presented in the consolidated statements of operations.

Years Ended December 31,

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Weighted average shares outstanding - basic 184,975 183,498 185,907

Effect of dilutive securities - Unvested restricted stock, restricted stock units, and warrants 888 — —

Effect of dilutive securities — 888 —

Weighted average shares outstanding - diluted 184,975 184,386 185,907

Basic earnings (loss) per common share:

Net income (loss) per share attributable to common stockholders $ 0.45 $ ( 1.44 ) $ ( 2.82 )

Diluted earnings (loss) per common share:

Net income (loss) per share attributable to common stockholders $ 0.44 $ ( 1.44 ) $ ( 2.82 )

For the purposes of computing diluted EPS, weighted average shares outstanding do not include potentially dilutive securities that are anti-dilutive under the treasury stock method and performance-based equity awards are included based on the attainment of the applicable performance metrics as of the end of the reporting period.

The following potentially dilutive securities were excluded from the computation of diluted EPS:

Years Ended December 31,

Net income (loss) per share attributable to common stockholders - basic $ ( 0.54 ) $ 0.45 $ ( 1.44 )

Net income (loss) per share attributable to common stockholders - diluted $ ( 0.54 ) $ 0.44 $ ( 1.44 )

For the purposes of computing diluted EPS, weighted average shares outstanding do not include potentially dilutive securities that are anti-dilutive under the treasury stock method or if-converted method, and performance-based equity awards are included based on the attainment of the applicable performance metrics as of the end of the reporting period.

The following potentially outstanding shares of common stock were excluded from the computation of diluted net income (loss) per share attributable to common stockholders because including them would have been antidilutive.

As of December 31,

(in millions) 2021 (1)

2020 2019 (1)

Non-performance-based restricted stock and restricted stock units 4.7 6.8 6.4

Performance-based restricted stock and restricted stock units 0.3 1.6 1.1

(1) As a result of the net loss reported for the period, all unvested restricted stock, restricted stock units, convertible debt instruments, and potential shares issuable under warrants were antidilutive for the period and as such were not included in the computation of diluted weighted average shares outstanding.

(2) The option to exercise the warrants to acquire the Company's common stock outstanding at December 31, 2018 expired unexercised in 2019.

For the year ended December 31, 2018, the calculation of diluted weighted average shares outstanding excludes the impact of conversion of the principal amount of $ 316.3 million of the Company's 2.75 % convertible senior notes which were repaid in cash at their maturity on June 15, 2018.

Warrant 16.3 — —

Total 59.6 8.4 7.5

(1) As a result of the net loss reported for the period, all unvested restricted stock, restricted stock units, and potential shares issuable under the Warrant and the Notes were antidilutive for the period and as such were not included in the computation of diluted weighted average shares outstanding.

As of December 31, 2021, the maximum number of shares issuable upon conversion of the Notes is 38.3 million (after giving effect to additional shares that would be issuable upon conversion in connection with the occurrence of certain corporate or other events).

Share Repurchase Program

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Shares of stock repurchased under the program will be held as treasury shares.

As a precautionary measure in light of the COVID-19 pandemic, the Company temporarily suspended purchases under the share repurchase plan in March 2020.

The Company temporarily suspended purchases under the share repurchase plan in March 2020 in response to the COVID-19 pandemic.

Repurchases under the share repurchase program were as follows.

4 unchanged sentences

Aggregate purchase price $ 18,123 $ 19,710

There were no repurchases under the share repurchase program in 2021.

As of December 31, 2021, approximately $ 44.0 million remains available under the share repurchase program.

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Such plan provides that the participants may defer eligible compensation subject to certain Internal Revenue Code maximum amounts.

The Company makes matching contributions in amounts equal to 25.0 % of the employee's contribution to such plan, for contributions up to a maximum of 4.0 % of compensation.

An additional matching contribution of 12.5 %, subject to the same limit on compensation, may be made at the discretion of the Company based upon the Company's performance.

The Company makes matching contributions in amounts equal to 25.0 % of the employee's contribution to such plan, for contributions up to a maximum of 4.0 % of eligible compensation.

An additional matching contribution of 12.5 %, subject to the same limit on eligible compensation, may be made at the discretion of the Company based upon the Company's performance.

For the years ended December 31, 2021, 2020, and 2019, the Company's expense for such plan was $ 4.6 million, $ 6.2 million, and $ 8.0 million, respectively.

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Valuation allowance 13,027 27,913 ( 60,376 )

Goodwill impairment — — ( 88,265 )

Impact of the Tax Cuts and Jobs Act — — ( 6,042 )

Goodwill derecognition ( 31,829 ) — —

Stock compensation ( 1,856 ) ( 2,118 ) ( 2,639 )

Officer compensation ( 1,107 ) ( 280 ) ( 204 )

Meals and entertainment ( 146 ) ( 169 ) ( 416 )

Tax credits — ( 106 ) 688

Other ( 164 ) ( 441 ) ( 1,261 )

4 unchanged sentences

Deferred income tax assets:

Operating loss carryforwards $ 281,384 $ 237,728

Operating lease obligations 208,460 322,122

Financing lease obligations 87,992 90,011

Operating loss carryforwards 237,728 330,983

Accrued expenses 56,151 96,410

8 unchanged sentences

Deferred income tax liabilities:

Operating lease right-of-use assets ( 277,489 ) ( 328,100 )

Property, plant and equipment ( 202,103 ) ( 223,703 )

Operating lease right-of-use assets ( 158,237 ) ( 277,489 )

Investment in unconsolidated ventures ( 15,051 ) —

1 unchanged sentence

Net deferred tax asset (liability) $ 279 $ ( 9,557 )

As of December 31, 2020 and 2019, the Company had federal net operating loss carryforwards generated in 2017 and prior of approximately $ 812.0 million and $ 1.2 billion, respectively which are available to offset future taxable income from 2021 through 2037.

As of December 31, 2021 and 2020, the Company had federal net operating loss carryforwards generated in 2017 and prior of approximately $ 808.7 million and $ 812.0 million, respectively, which are available to offset future taxable income from 2022 through 2037.

Additionally, as of December 31, 2021 and 2020, the Company had federal net operating loss carryforwards generated after 2017 of $ 335.8 million and $ 181.1 million, respectively, which have an indefinite life, but with usage limited to 80% of taxable income in any given year.

The Company had state capital loss carryforwards as of December 31, 2020, which are available to offset future capital gains through 2023.

The Company had state capital loss carryforwards of $ 2.2 million and $ 2.3 million as of December 31, 2021 and 2020, respectively, which are available to offset future capital gains through 2023.

The Company determined that a valuation allowance was required after consideration of the Company's estimated future reversal of existing timing differences as of December 31, 2021 and 2020.

The Company does not consider estimates of future taxable income in its determination due to the existence of cumulative historical operating losses.

For the year ended December 31, 2020, the Company recorded a reduction of approximately $ 27.9 million to reflect the required valuation allowance of $ 381.0 million as of December 31, 2020.

A summary of the change in the Company's valuation allowance is as follows:

For the Years Ended December 31,

(in thousands) 2020 2019

Increase (decrease) before consideration of adoption of ASC 842 $ ( 27,913 ) $ 60,376

Increase due to the adoption of ASC 842 — 13,790

Other decrease during the year — ( 1,680 )

Total increase (decrease) in valuation allowance $ ( 27,913 ) $ 72,486

For the years ended December 31, 2021 and 2020, the Company recorded a reduction to the valuation allowance of approximately $ 13.0 million and $ 27.9 million, respectively, to reflect the required valuation allowance of $ 368.0 million and $ 381.0 million as of December 31, 2021 and 2020, respectively.

The Company has recorded valuation allowances of $ 315.3 million and $ 328.4 million against its federal and state net operating losses as of December 31, 2021 and 2020, respectively.

The Company has recorded a valuation allowance against its state capital loss carryforward of $ 2.2 million as of December 31, 2021.

The Company had recorded a valuation allowance against its federal and state capital loss carryforwards of $ 40.7 million as of December 31, 2019.

The Company's sale of its ownership interest in the CCRC Venture in 2020 utilized all of the capital loss carryforward for federal tax purposes and a portion of its net operating losses.

The Company recorded a decrease in the valuation allowance of $ 117.6 million for the year ended December 31, 2020 as a result of the Healthpeak transaction.

The Company also recorded a valuation allowance against federal and state credits of $ 50.3 million as of both December 31, 2020 and 2019.

The Company recorded a decrease in the valuation allowance of $ 95.2 million for the year ended December 31, 2021 as a result of the HCS Sale that occurred on July 1, 2021, offset by an increase in the valuation allowance of $ 82.2 million established against current operating losses during the year ended December 31, 2021.

The Company also recorded a valuation allowance against federal and state credits of $ 50.4 million and $ 50.3 million as of December 31, 2021 and 2020, respectively.

As of December 31, 2021 and 2020, the Company had gross tax affected unrecognized tax benefits of $ 18.1 million and $ 18.4 million, respectively, of which, if recognized, would result in an income tax benefit recorded in the consolidated statement of operations.

21 unchanged sentences

Capital expenditures - non-development - reimbursable 42,100 27,846 34,809

Capital expenditures - development - reimbursable — — 1,709

Trade accounts payable ( 6,061 ) 4,766 8,891

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Net cash paid $ — $ 119,180 $ —

For the Years Ended December 31,

2020 2019 2018

Proceeds from HCS Sale, net:

Accounts receivable, net $ ( 57,582 ) $ — $ —

Property, plant and equipment and leasehold intangibles, net ( 1,806 ) — —

Operating lease right-of-use assets ( 8,145 ) — —

Investments in unconsolidated ventures 100,000 — —

Goodwill ( 126,810 ) — —

Prepaid expenses and other assets, net ( 32,963 ) — —

Trade accounts payable 1,387 — —

Accrued expenses 25,226 — —

Refundable fees and deferred revenue 57,314 — —

Operating lease obligations 8,145 — —

Other liabilities 9,165 — —

Loss (gain) on sale of assets, net ( 286,489 ) — —

Net cash received $ ( 312,558 ) $ — $ —

Acquisition of other assets, net of related payables and cash received:

2 unchanged sentences

Financing lease obligations — 64,260 —

Other liabilities — — 2,433

Net cash paid $ — $ 64,944 $ 497

10 unchanged sentences

Investments in unconsolidated ventures — — ( 156 )

Financing lease obligations — — 93,514

Refundable fees and deferred revenue — — 8,632

Other liabilities ( 75 ) ( 786 ) ( 1,479 )

1 unchanged sentence

Net cash received $ ( 21,448 ) $ ( 42,091 ) $ ( 92,735 )

Lease termination and modification, net:

Prepaid expenses and other assets, net $ — $ — $ ( 2,804 )

Property, plant and equipment and leasehold intangibles, net — — ( 87,464 )

Financing lease obligations — — 58,099

Deferred liabilities — — 70,835

Loss (gain) on sale of assets, net — — ( 5,761 )

Loss (gain) on facility lease termination and modification, net — — 34,283

Net cash paid (1)

$ — $ — $ 67,188

Supplemental Schedule of Non-cash Operating, Investing and Financing Activities:

Purchase of treasury stock:

Treasury stock $ — $ — $ 4,244

Accounts payable — — ( 4,244 )

Net $ — $ — $ —

For the Years Ended December 31,

Assets designated as held for sale:

Prepaid expenses and other assets, net $ — $ — $ ( 517 )

Assets held for sale $ 3,612 $ 7,935 $ 28,608

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Financing lease obligations ( 4,056 ) ( 15,483 ) —

Deferred liabilities — — ( 122,304 )

Other liabilities — ( 77 ) ( 731 )

Loss (gain) on sale of assets, net — — ( 37,731 )

Loss (gain) on facility lease termination and modification, net ( 2,332 ) 3,388 127,718

Loss (gain) on facility operating lease termination, net — ( 2,332 ) 3,388

Net $ — $ — $ —

(1) The net cash paid to terminate community leases is presented within the consolidated statements of cash flows based upon the lease classification of the terminated leases.

Net cash paid of $ 54.6 million for the termination of operating leases is presented within net cash provided by operating activities and net cash paid of $ 12.5 million for the termination of financing leases is presented within net cash used in financing activities for the year ended December 31, 2018.

During 2019, the Company and its venture partner contributed cash in an aggregate amount of $ 13.3 million to a consolidated venture which owns two senior housing communities as of December 31, 2021.

2 unchanged sentences

Refer to Note 2 for a schedule of the non-cash adjustments to the Company's consolidated balance sheet as of January 1, 2019 as a result of the adoption of new accounting standards.

Restricted cash consists principally of escrow deposits for real estate taxes, property insurance, and capital expenditures, debt service reserve accounts required by certain lenders under mortgage debt agreements, and deposits as security for self-insured retention risk under workers' compensation programs and property insurance programs.

Restricted cash consists principally of deposits as security for self-insured retention risk under workers' compensation programs and property insurance programs, escrow deposits for real estate taxes, property insurance, and capital expenditures, and debt service reserve accounts required by certain lenders under mortgage debt agreements.

The components of restricted cash are as follows.

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Segment Information

The Company has five reportable segments:

As of December 31, 2021, the Company has three reportable segments:

Independent Living;

Assisted Living and Memory Care;

Health Care Services;

and Management Services.

Operating segments are defined as components of an enterprise that engage in business activities from which it may earn revenues and incur expenses;

1 unchanged sentence

and whose operating results are regularly reviewed by the chief operating decision maker to assess the performance of the individual segment and make decisions about resources to be allocated to the segment.

Prior to July 1, 2021, the Company had an additional reportable segment, Health Care Services.

On July 1, 2021, the Company sold 80 % of its equity in its Health Care Services segment, as described in Note 4.

For periods beginning July 1, 2021, the results and financial position of its Health Care Services segment were deconsolidated from the Company's consolidated financial statements and its 20 % equity interest in the HCS Venture is accounted for under the equity method of accounting as of that date.

As of December 31, 2021, the Company's Management Services operating segment is no longer identified as a reportable segment as a result of the reduction in the number of communities it manages, which has reduced the operating segment's revenue, operating income, and assets below the reporting threshold.

Management services operations are reported within the All Other category.

All prior period segment disclosures reflect this reportable segment change.

Independent Living .

The Company's Independent Living segment includes owned or leased communities are primarily designed for middle to upper income seniors who desire to live in a residential setting that feels like home, without the efforts of ownership.

The Company's Independent Living segment includes owned or leased communities that are primarily designed for middle to upper income seniors who desire to live in a residential setting that feels like home, without the efforts of ownership.

The majority of the Company's independent living communities consist of both independent and assisted living units in a single community, which allows residents to age-in-place by providing them with a broad continuum of senior independent and assisted living services to accommodate their changing needs.

Assisted Living and Memory Care.

The Company's Assisted Living and Memory Care segment includes owned or leased communities that offer housing and 24-hour assistance with ADLs for mid-acuity and frail elderly residents.

The Company's Assisted Living and Memory Care segment includes owned or leased communities that offer housing and 24-hour assistance with activities of daily living for the Company's residents.

The Company's assisted living and memory care communities include both freestanding, multi-story communities, as well as smaller, freestanding, single story communities.

1 unchanged sentence

The Company's CCRCs segment includes large owned or leased communities that offer a variety of living arrangements and services to accommodate a broad spectrum of physical ability and healthcare needs.

Most of the Company's

CCRCs have independent living, assisted living, memory care, and skilled nursing available on one campus or within the immediate area.

Most of the Company's CCRCs have independent living, assisted living, memory care, and skilled nursing available on one campus or within the immediate area.

All Other includes communities operated by the Company pursuant to management agreements.

Under the management agreements for these communities, the Company receives management fees as well as reimbursement of expenses it incurs on behalf of the owners.

Health Care Services .

The Company's Health Care Services segment includes the home health, hospice, and outpatient therapy services provided to residents of many of its communities and to seniors living outside its communities.

The Health Care Services segment does not include the skilled nursing and inpatient healthcare services provided in the Company's skilled nursing units, which are included in the Company's CCRCs segment.

Management Services.

The Company's Management Services segment includes communities operated by the Company pursuant to management agreements.

In some of the cases, the controlling financial interest in the community is held by third parties and, in other cases, the community is owned in a venture structure in which the Company has an ownership interest.

Under the management agreements for these communities, the Company receives management fees as well as reimbursed expenses, which represent the reimbursement of expenses it incurs on behalf of the owners.

The Company's former Health Care Services segment included the home health, hospice, and outpatient therapy services provided to residents of many of its communities and to seniors living outside its communities.

The Health Care Services segment did not include the skilled nursing and inpatient healthcare services provided in the Company's skilled nursing units, which are included in the Company's CCRCs segment.

The accounting policies of the Company's reportable segments are the same as those described in the summary of significant accounting policies in Note 2.

8 unchanged sentences

306,213 340,337 402,175

Health Care Services (1)(2)

All Other (3)

202,043 531,879 847,157

Management Services (3)

Health Care Services (1)(2)

177,269 389,697 447,260

4 unchanged sentences

CCRCs 34,109 53,180 72,072

All Other 20,598 130,690 57,108

Health Care Services 5,816 1,863 24,987

Management Services 130,690 57,108 71,986

Total segment operating income 500,951 797,147 876,544

General and administrative (including non-cash stock-based compensation expense) 206,575 219,289 259,475

General and administrative expense (including non-cash stock-based compensation expense) 184,916 206,575 219,289

Facility operating lease expense:

2 unchanged sentences

CCRCs 15,932 20,406 24,248

Corporate and Management Services 5,282 5,915 6,226

Corporate and All Other 5,147 5,282 5,915

Depreciation and amortization:

2 unchanged sentences

CCRCs 37,891 38,426 44,163

Corporate and All Other 23,783 24,458 28,704

Health Care Services 340 749 2,247

Corporate and Management Services 24,458 28,704 37,439

For the Years Ended December 31,

(in thousands) 2020 2019 2018

Asset impairment:

2 unchanged sentences

CCRCs 4,790 12,413 4,983

Corporate and All other 346 1,938 2,664

Health Care Services — — 7,578

Corporate and Management Services 1,938 2,664 35,264

Loss (gain) on facility lease termination and modification, net ( 2,303 ) 3,388 162,001

Loss (gain) on facility operating lease termination, net ( 2,003 ) ( 2,303 ) 3,388

Income (loss) from operations $ ( 216,936 ) $ ( 97,692 ) $ ( 44,498 )

3 unchanged sentences

CCRCs 18,756 19,928 27,426

Corporate and Management Services 10,154 8,105 20,281

Corporate and All Other 9,390 10,154 8,105

$ 195,140 $ 208,779 $ 248,341

3 unchanged sentences

CCRCs 19,086 18,709 33,535

Corporate and All Other 21,463 23,638 24,506

Health Care Services — 515 484

Corporate and Management Services 23,638 24,506 16,033

$ 182,718 $ 181,105 $ 295,201

5 unchanged sentences

CCRCs 693,386 738,121

Corporate and All Other 766,596 723,010

Health Care Services — 233,178

Corporate and Management Services 723,010 595,647

Total assets $ 6,410,467 $ 6,901,758

(1) All revenue is earned from external third parties in the United States.

(2) The Independent Living, Assisted Living and Memory Care, CCRCs, and Health Care Services segments include $ 11.8 million, $ 62.6 million, $ 18.5 million, and $ 22.9 million, respectively, for the year ended December 31, 2020 of other operating income recognized for grants pursuant to the Provider Relief Fund described in Note 3 and other government sources.

Allocations to the applicable segment generally reflect the segment's receipt and acceptance of the amounts or the segment's proportional utilization of the grant.

(3) Management services segment revenue includes reimbursements for which the Company is the primary obligor of costs incurred on behalf of managed communities.

(4) Segment operating income is defined as segment revenues less segment facility operating expenses (excluding facility depreciation and amortization) and costs incurred on behalf of managed communities.

Subsequent Events

On February 24, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with affiliates of HCA Healthcare, Inc., providing for the sale of 80 % of the Company’s equity in its Health Care Services segment for a purchase price of $ 400 million in cash, subject to certain adjustments set forth in the Purchase Agreement, including a reduction for the remaining outstanding balance as of the closing of Medicare advance payments and deferred payroll tax payments related to the Health Care Services segment, which were $ 75.2 million and $ 8.2 million, respectively, as of December 31, 2020.

The Purchase Agreement also contains certain agreed upon indemnities for the benefit of the purchaser.

The closing of the sale transaction is anticipated to occur in the late first half or early second half of 2021, subject to receipt of applicable regulatory approvals and satisfaction of other customary closing conditions set forth in the Purchase Agreement.

Pursuant to the Purchase Agreement, at closing of the transaction, the Company will retain a 20 % equity interest in the business.

There can be no assurance that the transaction will close or, if it does, when the actual closing will occur.

(1) All revenue and other operating income is earned from external third parties in the United States.

(2) Includes other operating income recognized for the credits or grants pursuant to the employee retention credit, Provider Relief Fund, and other government sources, as described in Note 3.

Allocations to the applicable segment generally reflect the credits earned by the segment, the segment’s receipt and acceptance of the grant, or the segment’s proportional utilization of the grant.

Other operating income by segment is as follows.

For the Years Ended December 31,

(in thousands) 2021 2020

Independent Living 1,512 $ 11,823

Assisted Living and Memory Care 5,963 62,585

CCRCs 1,788 18,454

Health Care Services 3,105 22,887

Total other operating income $ 12,368 $ 115,749

(3) All Other revenue and other operating income includes management fees and reimbursements of costs incurred on behalf of managed communities.

For the years ended December 31, 2021, 2020, and 2019, revenue and other operating income includes $ 17.2 million, $ 67.2 million, and $ 329.9 million of revenue earned from unconsolidated ventures in which the Company had or has an ownership interest.

(4) Segment operating income is defined as segment revenues and other operating income less segment facility operating expenses (excluding facility depreciation and amortization) and costs incurred on behalf of managed communities.

VALUATION AND QUALIFYING ACCOUNTS

6 unchanged sentences

Year ended December 31, 2021 $ 380,990 $ ( 13,027 ) (4) $ — $ — $ 367,963

(1) Additional valuation allowance for the Tax Cuts and Jobs Act of $ 6,042 and federal credits of $ 207 , partially offset by reduction of valuation allowance for federal and state net operating losses and federal credits of $ 5,919 .

(1) Additional valuation allowance for federal and state net operating losses.

1 unchanged sentence

(3) Reduction of valuation allowance for federal and state net operating losses.

(4) Reduction of valuation allowance for federal and state net operating losses and credits.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data