What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-21 compared with 2023-02-22 · 207 added, 371 removed, 984 unchanged (37% of the section changed)

10 unchanged sentences

Report of Independent Registered Public Accounting Firm

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

To the Stockholders and the Board of Directors of Brookdale Senior Living Inc.

Opinion on the Financial Statements

37 unchanged sentences

Report of Independent Registered Public Accounting Firm

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

To the Stockholders and the Board of Directors of Brookdale Senior Living Inc.

Opinion on Internal Control Over Financial Reporting

30 unchanged sentences

Accounts receivable, net 48,393 55,761

Assets held for sale — 3,642

Prepaid expenses and other current assets, net 80,908 106,067

20 unchanged sentences

Operating lease obligations, less current portion 683,876 616,973

Deferred tax liability 5,987 —

Other liabilities 71,679 85,831

3 unchanged sentences

Common stock, $ 0.01 par value, 400,000,000 shares authorized at December 31, 2023 and 2022;

197,776,991 and 197,485,318 shares issued and 187,249,466 and 186,957,793 shares outstanding (including 422,542 and 1,549,059 unvested restricted shares), respectively

198,780,826 and 197,776,991 shares issued and 188,253,301 and 187,249,466 shares outstanding, respectively

Additional paid-in-capital 4,342,362 4,332,302

46 unchanged sentences

common stockholders $ ( 189,011 ) $ ( 238,427 ) $ ( 99,290 )

Net income (loss) per share attributable to Brookdale Senior Living Inc.

Basic and diluted net income (loss) per share attributable to Brookdale Senior Living Inc.

common stockholders $ ( 0.84 ) $ ( 1.25 ) $ ( 0.54 )

Basic $ ( 1.25 ) $ ( 0.54 ) $ 0.45

Diluted $ ( 1.25 ) $ ( 0.54 ) $ 0.44

Weighted average common shares outstanding:

Basic 190,463 184,975 183,498

Diluted 190,463 184,975 184,386

Weighted average shares used in computing basic and diluted net income (loss) per share 225,209 190,463 184,975

See accompanying notes to consolidated financial statements.

7 unchanged sentences

Balance at beginning of period $ 1,978 $ 1,975 $ 1,983

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

Restricted stock and restricted stock units, net 16 9 ( 1 )

7 unchanged sentences

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

Issuance of warrants — — 22,883

Restricted stock and restricted stock units, net ( 16 ) ( 9 ) 1

3 unchanged sentences

Treasury stock:

Balance at beginning of period $ ( 102,774 ) $ ( 102,774 ) $ ( 84,651 )

Purchase of treasury stock — — ( 18,123 )

Balance at end of period $ ( 102,774 ) $ ( 102,774 ) $ ( 102,774 )

Balance at beginning and end of period $ ( 102,774 ) $ ( 102,774 ) $ ( 102,774 )

Accumulated deficit:

Balance at beginning of period $ ( 3,648,901 ) $ ( 3,410,474 ) $ ( 3,311,184 )

Cumulative effect of change in accounting principle — — ( 115 )

Net income (loss) ( 238,427 ) ( 99,290 ) 82,019

Net income (loss) attributable to Brookdale Senior Living Inc.

common stockholders ( 189,011 ) ( 238,427 ) ( 99,290 )

Balance at end of period $ ( 3,837,912 ) $ ( 3,648,901 ) $ ( 3,410,474 )

11 unchanged sentences

Shares withheld for employee taxes ( 576 ) ( 620 ) ( 811 )

Purchase of treasury stock — — ( 3,063 )

Balance at end of period 188,253 187,249 186,958

22 unchanged sentences

Property and casualty insurance income ( 18,920 ) ( 11,379 ) ( 4,689 )

Other non-operating (income) loss ( 2,542 ) — —

Changes in operating assets and liabilities:

8 unchanged sentences

Cash Flows from Investing Activities

Change in lease security deposits and lease acquisition deposits, net 355 ( 100 ) 3,569

Purchase of marketable securities ( 174,476 ) ( 263,669 ) ( 362,257 )

1 unchanged sentence

Capital expenditures, net of related payables ( 233,205 ) ( 196,924 ) ( 176,657 )

Acquisition of assets ( 6,004 ) — ( 472,193 )

Acquisition of assets, net of cash acquired ( 574 ) ( 6,004 ) —

Investment in unconsolidated ventures ( 7,589 ) ( 218 ) ( 5,436 )

1 unchanged sentence

Proceeds from sale of assets, net 83,526 4,653 334,006

Proceeds from notes receivable — 1,800 5,419

Property and casualty insurance proceeds 24,704 — —

Purchase of interest rate cap instruments ( 12,454 ) ( 1,632 ) —

Proceeds from interest rate cap instruments 9,890 788 —

Other ( 286 ) ( 4,141 ) 1,700

Net cash provided by (used in) investing activities ( 113,364 ) ( 67,429 ) 181,457

For the Years Ended December 31,

2023 2022 2021

Cash Flows from Financing Activities

1 unchanged sentence

Repayment of debt and financing lease obligations ( 367,242 ) ( 281,185 ) ( 441,571 )

Proceeds from line of credit — — 166,381

Repayment of line of credit — — ( 166,381 )

Proceeds from issuance of tangible equity units — 139,438 —

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

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

14 unchanged sentences

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

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.

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

As of December 31, 2023, the Company owned 345 communities, representing a majority of the Company's community portfolio, leased 277 communities, and managed 30 communities.

On July 1, 2021, the Company sold 80 % of its equity in its Health Care Services segment.

The accompanying consolidated financial statements include the 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

6 unchanged sentences

Intercompany balances and transactions have been eliminated in consolidation, and net income (loss) is reduced by the portion of net income (loss) attributable to noncontrolling interests.

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 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:

(a) the total equity investment at risk is insufficient to finance the entity's activities without additional subordinated financial support;

(b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity's activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity;

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 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

The preparation of the consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

Estimates are used for, but not limited to, revenue, other operating income, asset impairments, self-insurance reserves, performance-based compensation, the allowance for credit losses, depreciation and amortization, leasing transactions, income taxes, and other contingencies.

Estimates are used for, but not limited to, revenue, asset impairments, self-insurance reserves, performance-based compensation, allowance for credit losses, depreciation and amortization, leasing transactions, income taxes, and other contingencies.

Although these estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from the original estimates.

11 unchanged sentences

Estimates for settlements with third-party payors for retroactive adjustments from estimated reimbursements due to audits, reviews, or investigations are included in the determination of the estimated transaction price for providing services.

The Company estimates the transaction price based on the terms of the contract with the payor, correspondence with the payor, and historical payment trends.

The Company estimates the transaction price based on the terms of the contract with the payor,

correspondence with the payor, and historical payment trends.

Changes to these estimates for retroactive adjustments are recognized in the period the change or adjustment becomes known or when final settlements are determined.

16 unchanged sentences

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

As of the commencement date of a lease, a lease liability and corresponding right-of-use asset is established

on the Company's consolidated balance sheet at the estimated present value of future minimum lease payments.

As of the commencement date of a lease, a lease liability and corresponding right-of-use asset is established on the Company's consolidated balance sheet at the estimated present value of future minimum lease payments.

The Company's community leases generally contain fixed annual rent escalators or annual rent escalators based on an index, such as the consumer price index.

1 unchanged sentence

The Company recognizes lease expense as incurred for additional variable payments.

For the Company's leases that do not contain an implicit rate, the Company utilizes its estimated incremental borrowing rate to determine the present value of lease payments based on information available at commencement of the lease.

For the Company's leases for which the rate implicit in the lease is not readily determinable, the Company utilizes its estimated incremental borrowing rate to determine the present value of lease payments based on information available at commencement of the lease.

The Company's estimated incremental borrowing rate reflects the fixed rate at which the Company could borrow a similar amount for the same term on a collateralized basis.

23 unchanged sentences

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.

The Company reviews for sale accounting whenever events or changes in circumstances indicate that control may have been transferred and

the Company recognizes an asset sale and lease accounting is applied if the Company has transferred control of the underlying asset.

The Company reviews for sale accounting whenever events or changes in circumstances indicate that control may have been transferred and the Company recognizes an asset sale and lease accounting is applied if the Company has transferred control of the underlying asset.

When an asset sale is recognized for such transactions, the Company removes the transferred assets and financing lease liability from the consolidated balance sheet and a gain or loss on the sale is recognized for the difference between the carrying amount of the asset and the financing lease liability.

7 unchanged sentences

In determining the allocation of the purchase price of companies and communities to net tangible and identified intangible assets acquired and liabilities assumed, the Company makes estimates of fair value using information obtained as a result of pre-acquisition due diligence, marketing, leasing activities, and/or independent appraisals.

In connection with a business combination, the excess of the fair value of liabilities assumed and common stock issued and cash paid over the fair value of identifiable assets acquired is allocated to goodwill.

In connection with a business combination, the excess of the fair value of liabilities assumed and common stock issued and cash paid over the fair

value of identifiable assets acquired is allocated to goodwill.

Transaction costs associated with business combinations are expensed as incurred.

Deferred Financing Costs

Costs and fees incurred with third parties that directly relate to obtaining new long-term debt (excluding the Company's line-of-credit discussed further below) are recorded as a direct adjustment to the carrying amount of long-term debt.

The Company amortizes deferred financing costs on a straight-line basis, which approximates the effective yield method over the term of the related debt.

The Company presents deferred financing costs related to line-of-credit facilities as an asset on the consolidated balance sheet, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.

Costs and fees incurred with third parties that directly relate to obtaining new long-term debt (excluding the Company's line-of-credit) are recorded as a direct adjustment to the carrying amount of long-term debt.

The Company presents deferred financing costs related to line-of-credit facilities in other assets, net on the consolidated balance sheet.

The Company amortizes deferred financing costs on a straight-line basis, which approximates the effective yield method over the term of the related debt arrangements.

Stock-Based Compensation

21 unchanged sentences

A valuation allowance reduces deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

When it is determined that it is more likely than not that the Company will be able to realize deferred tax assets in the future in excess of the net recorded amount, an adjustment to the deferred tax asset is made and reflected in income.

When it is determined that it is more likely than not that the Company will be able to realize deferred tax assets in the future in excess of

the net recorded amount, an adjustment to the deferred tax asset is made and reflected in income.

This determination is made by considering various factors, including the reversal and timing of existing temporary differences, tax planning strategies, and estimates of future taxable income exclusive of the reversal of temporary differences.

20 unchanged sentences

Furniture and equipment 3 – 10

Resident lease intangibles 1 – 3

Resident in-place lease intangibles 1 – 3

Expenditures for ordinary maintenance and repairs are expensed to operations as incurred.

6 unchanged sentences

If this comparison indicates that the carrying amount of an asset group is not recoverable, the Company is required to recognize an impairment loss.

The impairment loss is measured by the amount by which the carrying amount of the asset exceeds its estimated fair value, with any amount in excess of fair value recognized as an expense in the current period.

The impairment loss is measured by the amount by which the carrying amount of the asset exceeds its estimated fair value, with any amount in excess of fair value

recognized as an expense in the current period.

Undiscounted cash flow projections and estimates of fair value amounts are based on a number of assumptions such as revenue and expense growth rates, estimated holding periods, and estimated capitalization rates (Level 3).

Investment in Unconsolidated Ventures

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 initial carrying amount of investment 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.

1 unchanged sentence

Distributions received from an investee are recognized as a reduction in the carrying amount of the investment.

If distributions are received from an investee that would reduce the carrying amount of an equity method investment below zero, the Company evaluates the facts and circumstances of the distributions to determine the appropriate accounting for the excess distribution, including an evaluation of the source of the proceeds and implicit or explicit commitments to fund the investee.

The excess distribution is either recorded as a gain on investment, or in instances where the source of proceeds is from financing activities or the Company has a significant commitment to fund the investee, the excess distribution would result in an equity method liability, and the Company would continue to record its share of the investee's earnings and losses.

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.

4 unchanged sentences

The Company first assesses qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

If so, the Company performs a quantitative goodwill impairment test based upon a

comparison of the estimated fair value of the reporting unit to which the goodwill has been assigned with the reporting unit's carrying amount.

If so, the Company performs a quantitative goodwill impairment test based upon a comparison of the estimated fair value of the reporting unit to which the goodwill has been assigned with the reporting unit's carrying amount.

The fair values used in the quantitative goodwill impairment test are estimated using Level 3 inputs based upon discounted future cash flow projections for the reporting unit.

13 unchanged sentences

The Company accounts for treasury stock under the cost method and includes treasury stock as a component of stockholders' equity.

Recently Adopted Accounting Pronouncements

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.

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.

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.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848) , which deferred the sunset date of this guidance to December 31, 2024.

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.

The 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

Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the Company's consolidated financial position or results of operations.

COVID-19 Pandemic

The COVID-19 pandemic has adversely impacted the Company's occupancy and resident fee revenue beginning in March 2020, resulted in incremental direct costs to respond to the pandemic, and for the year ended December, 31, 2021, resulted in net cash used in operating activities.

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

Government Provided 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, provided liquidity and financial relief to certain businesses, among other things.

Certain impacts of such programs are provided below.

• During the years ended December 31, 2022, 2021, and 2020, the Company accepted $ 61.1 million, $ 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, under which grants have been made available to eligible healthcare providers for healthcare related expenses or lost revenues attributable to COVID-19.

• 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.

During the years ended December 31, 2022 and 2021, $ 3.1 million and $ 20.8 million, respectively, of the advanced payments were recouped per the terms of the program.

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, 2022, the Company has no remaining obligations under the program.

• 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 both December 2021 and 2022, the Company paid $ 31.6 million of its retained deferred amount.

As of December 31, 2022, the Company has no remaining obligations for the deferred payroll tax program.

• The Company was eligible to claim the employee retention credit on wages paid from March 12, 2020 to December 31, 2021 for certain of its associates under the CARES Act and subsequent legislation.

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 $ 4.6 million in cash as of December 31, 2022.

During the year ended December 31, 2022, the Company recognized $ 9.4 million of employee retention credits on wages paid in 2021 within other operating income.

The Company has a receivable for $ 14.7 million and $ 6.5 million included within prepaid expenses and other current assets, net on the consolidated balance sheets as of December 31, 2022 and 2021, respectively.

In addition to the grants previously described, during the years ended December 31, 2022, 2021, and 2020, the Company recognized $ 10.0 million, $ 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 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 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;

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 the Company's ability to qualify for and satisfy the terms and conditions of financial relief;

restrictions on visitors and move-ins at the Company's communities as a result of infections at a community or as necessary to comply with regulatory requirements or at the direction of authorities having jurisdiction;

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 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;

greater use of contract labor and other premium labor 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 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 Leasing Transactions

Welltower Lease Amendments

During the three months ended June 30, 2023, the Company entered into amendments to its existing lease arrangements with Welltower Inc.

("Welltower") pursuant to which the Company continues to lease 74 communities.

In connection with the amendments, the Company extended the maturity of one lease involving 39 communities from December 31, 2026 until June 30, 2032.

As a result, the Company's amended lease arrangements provide that the current term for 69 of the communities will expire on June 30, 2032 and the current term for five of the communities will expire on December 31, 2024.

The amendments did not change the amount of required lease payments over the previous term of the leases or the annual lease escalators.

In addition, Welltower agreed to make available a pool in the aggregate amount of up to $ 17.0 million to fund costs associated with certain capital expenditure projects for 69 of the communities.

Upon reimbursement of such expenditures, the annual minimum rent under the lease will prospectively increase by the amount of the reimbursement multiplied by the sum of the then current Secured Overnight Financing Rate ("SOFR") (subject to a floor of 3.0 %) and a margin of 4.0 %, and such amount will escalate annually consistent with the minimum rent escalation provisions of the 39 community lease.

The amended leases for 35 of such communities were prospectively classified as operating leases subsequent to the amendment.

For 2023, the classification of such lease costs as operating lease expense resulted in a $ 19.3 million increase in cash lease payments for operating leases and an offsetting decrease in cash lease payments for financing leases.

The amendment to the lease arrangements increased the right-of-use assets and lease obligations recognized on the Company's consolidated balance sheet each by $ 122.3 million.

The amendments replaced the net worth covenant provisions requiring the Company to maintain at least $ 400.0 million of stockholders' equity with a consolidated tangible net worth covenant requiring the Company to maintain at least $ 2.0 billion of tangible net worth, generally calculated as stockholders' equity plus accumulated depreciation and amortization less intangible assets and further adjusted for certain other items.

Such calculation is generally similar to the tangible net worth covenants within certain of the Company’s long-term debt documents.

So long as it maintains tangible net worth as defined in the leases of at least $ 1.5 billion, the Company will also be able to cure any breach by posting collateral with Welltower.

Community Transactions

During the year ended December 31, 2023, the Company completed the sale of two owned CCRCs for cash proceeds of $ 25.6 million, net of $ 29.6 million in mortgage debt repaid and transaction costs, and recognized a net gain on sale of communities of $ 36.3 million.

During the year ended December 31, 2022, the Company completed the sale of two owned communities for cash proceeds of $ 4.4 million, net of transaction costs.

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.

The Company's triple-net lease obligations on 24 communities were terminated from 2021 to 2023 ( 2 in 2021, 4 in 2022, and 18 in 2023), including through the acquisition of one formerly leased community in 2022.

Additionally, the Company acquired the remaining 50 % equity interest in one community during 2023.

Sale of Health Care Services

3 unchanged sentences

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.

At closing of the transaction, the Company retained a 20 % equity interest in the Health Care Services venture (the "HCS Venture").

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

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 was 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.

3 unchanged sentences

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 and hospice 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 28 communities that the Company formerly leased and sold substantially all of its ownership interests in unconsolidated senior housing ventures during 2020 through 2022.

Additionally, the Company completed the disposition of 22 communities from 2020 to 2022 through the sale of seven owned communities, the conveyance of five communities to Ventas, and the termination of the Company's triple-net lease obligations on 10 communities ( five in 2020, two in 2021, and three in 2022).

The following table sets forth the amounts included within the Company's consolidated financial statements for the 22 communities that it disposed of through sales, conveyances, and lease terminations for the years ended December 31, 2022, 2021, and 2020 through the respective disposition dates.

Years Ended December 31,

(in thousands) 2022 2021 2020

Resident fees

Assisted Living and Memory Care $ 6,653 $ 21,702 $ 41,585

CCRCs ( 75 ) 6,471 29,203

Senior housing resident fees $ 6,578 $ 28,173 $ 70,788

Facility operating expense

Assisted Living and Memory Care $ 6,132 $ 20,233 $ 37,291

CCRCs 276 7,680 30,310

Senior housing facility operating expense $ 6,408 $ 27,913 $ 67,601

Completed Dispositions of Owned Communities

During the year ended December 31, 2022, the Company completed the sale of two owned communities for cash proceeds of $ 4.4 million, net of transaction costs.

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.

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.

Ventas Lease Restructuring

On July 26, 2020 (the "Effective Date"), the Company entered into definitive agreements with Ventas in connection with the restructuring of the Company’s lease arrangements with Ventas, including a Master Transaction Letter Agreement (the "Master Agreement").

Pursuant to the Master Agreement:

• On the Effective Date the parties entered into the Amended and Restated Master Lease and Security Agreement (the "Master Lease") and Amended and Restated Guaranty (the "Guaranty"), which amended and restated the prior Master Lease and Security Agreement and prior Guaranty, each dated as of April 26, 2018 and as amended from time to time.

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 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.

The annual minimum rent for the initial lease year of any such renewal term will be the greater of the fair market rental of the communities or the increased annual minimum rent for such lease year applying the foregoing 3 % escalator.

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 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 %.

The transaction agreements with Ventas further provide that the Master Lease and certain other agreements between the parties will be cross-defaulted.

The Company’s subsidiaries’ obligations under the Master Lease are guaranteed at the parent level pursuant to the Guaranty.

The Guaranty removed the prior requirements that the Company satisfy, at the parent level, financial covenants and that the Company maintain a security deposit with Ventas.

The Guaranty also removed the prior right of Ventas to terminate the Master Lease on the basis of parent level financial covenants.

Pursuant to the terms of the Guaranty, the Company may consummate a change of control transaction without the need for consent of Ventas so long as certain objective conditions are satisfied, including the post-transaction guarantor’s maintaining a minimum tangible net worth of at least $ 600.0 million, 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.

The Guaranty removed the prior provisions that would have required that such post-transaction guarantor satisfy a maximum leverage ratio level, that the Company fund additional capital expenditures, and that the Company extend the term upon the occurrence of the change in control transaction.

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 0.9 x 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.

• On the Effective Date, the Company conveyed five owned communities to Ventas in full release and satisfaction of $ 78.4 million principal amount of indebtedness secured by the communities.

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 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 .

The Warrant is exercisable at Ventas' option at any time and from time to time, in whole or in part, until December 31, 2025.

The exercise price and the number of shares issuable on exercise of the Warrant are subject to certain anti-dilution adjustments, including for cash dividends, stock dividends, stock splits, reclassifications, non-cash distributions, certain repurchases of common stock and business combination transactions.

To the extent that the number of shares owned by Ventas (including shares underlying the Warrant) would be more than 9.6 % of the total combined voting power of all the Company’s classes of capital stock or of the total value of shares of all the Company’s classes of capital stock (the "Ownership Cap") (other than as a result of actions taken by Ventas), the Company would generally be required to repurchase the number of shares necessary to avoid Ventas exceeding the Ownership Cap unless Ventas makes an election to require the Company to pay Ventas cash in lieu of issuing shares pursuant to the Warrant in excess of the Ownership Cap.

The Warrant and the shares issuable upon exercise thereof were issued in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

On the Effective Date, the parties entered into a Registration Rights Agreement, pursuant to which Ventas and its permitted transferees are entitled to certain registration rights.

Pursuant to the terms of the agreement, the Company filed a shelf registration statement with the SEC with respect to the shares of common stock underlying the Warrant, which was declared effective on August 17, 2020.

Ventas is entitled to customary underwritten offering, piggyback, and additional demand registration rights with respect to the shares underlying the Warrant.

As a result of the modification of the community leases with Ventas, the Company reduced the carrying amount of lease obligations and assets under leases by $ 370.0 million and $ 159.5 million, respectively, in the three months ended September 30, 2020.

As the Company's community leases do not contain an implicit rate, the Company utilized its incremental borrowing rate based on information available on the Effective Date to determine the present value of remaining lease payments for the community leases with Ventas.

Additionally, the results and financial position of the five communities conveyed to Ventas were deconsolidated from the Company's financial statements prospectively as of the Effective Date.

As of the Effective Date, the Warrant was recognized as a component of stockholders’ equity at its estimated fair value of $ 22.9 million.

The Company’s net cash provided by operating activities for the year ended December 31, 2020 includes the $ 119.2 million one-time cash lease

payment made to Ventas in connection with its lease restructuring transaction effective July 26, 2020.

See Note 20 for more information regarding the adjustments to the Company’s consolidated balance sheet as a result of this transaction.

Healthpeak CCRC Venture and Master Lease Transactions

On October 1, 2019, the Company entered into definitive agreements, including a Master Transactions and Cooperation Agreement (the "MTCA") and an Equity Interest Purchase Agreement (the "Equity Purchase Agreement"), providing for a multi-part transaction with Healthpeak.

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 included:

• CCRC Venture Transaction.

Pursuant to the Equity 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.

The Company recognized a $ 369.8 million gain on sale of assets for the year ended December 31, 2020, and the Company derecognized the net equity method liability for the sale of the ownership interest in the CCRC Venture.

At the closing, the parties terminated the Company's existing management agreements with the 14 entry fee CCRCs, Healthpeak paid the Company a $ 100.0 million management agreement termination fee, and the Company transitioned operations of the entry fee CCRCs to a new operator.

The Company recognized $ 100.0 million of management fee revenue for the three months ended March 31, 2020 for the management termination fee.

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.

• Master Lease Transactions.

Pursuant to the MTCA, on January 31, 2020, the parties amended and restated the existing master lease pursuant to which the Company continued to lease 25 communities from Healthpeak, and the Company acquired 18 formerly leased communities from Healthpeak, at which time the 18 communities were removed from the master lease.

At the closing, the Company paid $ 405.5 million to acquire such communities and to reduce its annual rent under the amended and restated master lease.

The $ 405.5 million of cash paid to Healthpeak and $ 1.7 million of direct acquisition costs are presented within net cash used in investing activities for the year ended December 31, 2020.

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, 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.

With respect to the continuing 24 communities, the Company's amended and restated master lease:

(i) has an initial term to expire on December 31, 2027;

(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 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 mortgage financing on the acquired communities.

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.

During the three months ended September 30, 2023, the Company contributed $ 7.5 million to the HCS Venture.

During the three months ended December 31, 2023, the Company recognized a non-cash impairment charge of $ 26.0 million on its investment in the HCS Venture as a result of the Company's decision to sell its equity interest prior to the recovery of its market value.

In December 2023, the Company completed the sale of its 20 % equity interest in the HCS Venture to HCA Healthcare for cash proceeds of $ 27.4 million.

Master Lease Amendment

In the three months ended December 31, 2022, the Company and a lessor entered into an amendment to the Company’s existing master lease pursuant to which the Company continues to lease 24 communities.

The amendment removed certain asset repurchase clauses and adjusted the extension option provisions.

The amendment did not change the amount of required lease payments or the initial term of the lease.

The leases for 16 of these communities were previously accounted for as failed sale-leaseback transactions as the Company had not previously transferred control of the underlying assets for accounting purposes.

The Company determined that the adjustment of the extension option provisions and the removal of the asset repurchase clauses in December 2022 resulted in the transfer of control of the assets of the 16 communities for accounting purposes and resulted in qualification as a sale.

The Company recognized a $ 73.9 million non-cash gain on sale of communities for the transaction in the three months ended December 31, 2022.

In addition, the amended leases for such communities are prospectively classified as operating leases as of December 31, 2022, the effective date of the amendment.

For 2023, the reclassification of such lease costs as operating lease expense resulted in a $ 22.2 million increase in cash lease payments for operating leases and an offsetting decrease in cash lease payments for financing leases.

See Note 18 for more information regarding the impact to the Company’s consolidated balance sheet as a result of this transaction.

Fair Value Measurements

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As of December 31, 2023 and 2022, marketable securities of $ 29.8 million and $ 48.7 million, respectively, 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

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

The following table summarizes the Company's LIBOR and Secured Overnight Financing Rate ("SOFR") interest rate cap instruments as of December 31, 2022.

The following table summarizes the Company's SOFR interest rate cap instruments as of December 31, 2023.

($ in thousands)

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Estimated asset fair value (included in other assets, net) at December 31, 2022 $ 10,599

The following table summarizes the Company's SOFR interest rate swap instrument, purchased in November 2022, as of December 31, 2022.

The following table summarizes the Company's SOFR interest rate swap instrument as of December 31, 2023.

($ in thousands)

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Estimated asset fair value (included in other assets, net) at December 31, 2023 $ 1,611

Estimated asset fair value (included in other assets, net) at December 31, 2022 $ 4,834

Long-Term Debt

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The Company had outstanding long-term debt with a carrying amount of approximately $ 3.7 billion and $ 3.9 billion as of December 31, 2023 and 2022, respectively.

Fair value of the long-term debt is approximately $ 3.4 billion as of December 31, 2022 and approximates the carrying amount as of December 31, 2021.

Fair value of the long-term debt is approximately $ 3.4 billion as of both December 31, 2023 and 2022.

The Company's fair value of long-term debt disclosure is classified within Level 2 of the valuation hierarchy.

On July 26, 2020, the Company issued to Ventas a warrant to purchase up to 16.3 million shares of the Company’s common stock, at a price per share of $ 3.00 .

The fair value of this warrant of $ 22.9 million as of July 26, 2020 was estimated using the Black-Scholes option-pricing model utilizing a stock price volatility assumption of 65 % which is considered a Level 2 input of the valuation hierarchy.

Asset Impairment Expense

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Investment in unconsolidated ventures 26.0 — —

Assets held for sale — — 0.2

Asset impairment $ 40.6 $ 29.6 $ 23.0

Although the Company cannot predict with reasonable certainty the ultimate impacts of the COVID-19 pandemic, the Company concluded that the impacts of the pandemic have adversely affected the Company’s projections of revenue, expense, and cash flow for its senior housing community long-lived assets and constitute an indicator of potential impairment.

Accordingly, the Company assessed its long-lived assets for recoverability.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset group may not be recoverable.

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 revenue and expense growth rates, estimated asset holding periods, estimated capitalization rates, and other factors.

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.

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

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

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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, 2022, the Company recognized the right-of-use assets for the operating leases for eight communities on the consolidated balance sheet at the estimated fair value of $ 30.9 million.

During the year ended December 31, 2023, the Company recognized the right-of-use assets for the operating leases for 12 communities on the consolidated balance sheet at the estimated fair value of $ 16.4 million.

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.

In the aggregate, the Company recorded a non-cash impairment charge of $ 8.3 million, $ 13.7 million, and $ 16.6 million for the years ended December 31, 2023, 2022, and 2021, respectively, to operating lease right-of-use assets.

These impairment charges are primarily due to decreased occupancy and cash flow estimates at these

communities as a result of 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.

These impairment charges are primarily due to decreased occupancy and future cash flow estimates at certain leased communities, including as a result of the impacts of the COVID-19 pandemic, and reflect the amount by which the carrying amounts of the assets exceeded their estimated fair value.

The fair values of the operating lease right-of-use assets were estimated utilizing a discounted cash flow approach based upon projected community cash flows and market data, including management fees and a market supported lease coverage ratio, all of which are considered Level 3 inputs within the valuation hierarchy.

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The Company recorded property, plant and equipment and leasehold intangibles non-cash impairment charges in its operating results of $ 6.3 million, $ 15.9 million, and $ 6.4 million for the years ended December 31, 2023, 2022, and 2021, 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 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 certain communities, or property damage sustained at certain communities and reflect the amount by which the carrying amounts of the assets exceeded their estimated fair value.

These impairment charges are primarily due to property damage sustained at certain communities, decreased occupancy and future cash flow estimates at certain communities, including as a result of the impacts of the COVID-19 pandemic, and/or the completed or potential disposition of underperforming communities and reflect the amount by which the carrying amounts of the assets exceeded their estimated fair value.

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 shared 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.

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

The Company determined the $ 27.4 million fair value of its investment based primarily on the sale agreements with the purchasers.

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

Resident fee revenue by payor source is as follows.

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

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.

Additionally, certain of the Company's revenue-generating contracts include non-refundable fees that 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.

Amounts of revenue that are collected from residents in advance are recognized as deferred revenue until the performance obligations are satisfied.

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Furniture and equipment 1,111,408 1,055,304

Resident and leasehold operating intangibles 286,122 303,737

Resident in-place lease intangibles 282,411 286,122

Construction in progress 33,905 41,778

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Property, plant and equipment and leasehold intangibles, net $ 4,330,629 $ 4,535,702

Assets under financing leases and leasehold improvements includes $ 98.4 million and $ 332.3 million of financing lease right-of-use assets, net of accumulated amortization, as of December 31, 2022 and 2021, respectively.

Refer to Note 9 for further information on the Company's financing leases.

Long-lived assets with definite useful lives are depreciated or amortized on a straight-line basis over their estimated useful lives (or, in certain cases, the shorter of their estimated useful lives or the lease term) and are tested for impairment whenever indicators of impairment arise.

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Fixed mortgage notes payable due 2025 through 2047;

weighted average interest rate of 4.14 % as of both December 31, 2022 and 2021.

weighted average interest rate of 4.26 % and 4.14 %, as of December 31, 2023 and 2022, respectively.

$ 1,953,414 $ 2,055,867

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Tangible equity units senior amortizing notes due November 2025;

interest rate of 10.25 % as of December 31, 2022.

interest rate of 10.25 % as of both December 31, 2023 and 2022.

17,990 25,586

Deferred financing costs, net ( 28,998 ) ( 29,866 )

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Total $ 3,697,313

(1) Includes the initial maturity of $ 320.0 million of mortgage debt for which the Company has the option to extend the maturity for two additional terms of one year each subject to the satisfaction of certain conditions.

The Company's remaining variable rate mortgage notes payable arrangements indexed to London Interbank Offered Rate ("LIBOR") were modified to reference SOFR rather than LIBOR prospectively after the discontinuance of LIBOR in July 2023.

The Company applied the optional expedient provided by Accounting Standards Codification 848, Reference Rate Reform , for debt contract modifications related to the discontinuation of reference rates to ease the potential burden in accounting for reference rate reform.

Convertible Debt Offering

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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.

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.

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:

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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.

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).

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Credit Facilities

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 up to $ 80.0 million which can be drawn in cash or as letters of credit.

The credit facility matures on January 15, 2024 and the Company has the option to extend the facility for two additional terms of one year each subject to the satisfaction of certain conditions.

The revolving credit agreement was amended in 2022 to reference SOFR rather than LIBOR due to the expected discontinuance of LIBOR.

In December 2023, the Company amended its revolving credit agreement with Capital One, National Association, as administrative agent and lender and the other lenders from time to time parties thereto.

The amended agreement provides an expanded commitment amount of up to $ 100.0 million which can be drawn in cash or as letters of credit.

The credit facility matures in January 2027, and the Company has the option to extend the facility for two additional terms of approximately one year each subject to the satisfaction of certain conditions.

Amounts drawn under the facility will bear interest at SOFR plus an applicable margin which was 3.00 % as of December 31, 2023.

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The revolving credit facility is currently secured by first priority mortgages and negative pledges on certain of the Company’s communities.

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 and the variable interest rate of the credit facility.

Available capacity under the facility will vary from time to time based upon certain calculations related to the appraised value and performance of the communities securing the credit facility and the variable interest rate of the credit facility.

As of December 31, 2023, $ 63.6 million of letters of credit and no cash borrowings were outstanding under the Company's $ 100.0 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, 2023 under which $ 14.5 million had been issued as of that date.

2022 Financings

On October 13, 2022, the Company obtained $ 220.0 million of debt secured by first priority mortgages on 24 communities.

2024 Financing

On February 9, 2024, the Company obtained $ 50.0 million of debt secured by first priority mortgages on 11 communities.

The loan bears interest at a variable rate equal to SOFR plus a margin of 350 basis points.

The debt matures in February 2027 with two one-year renewal options, exercisable subject to certain performance criteria.

2023 Financing

In December 2023, the Company obtained $ 179.5 million of debt secured by non-recourse first mortgages on 47 communities, which also continue to secure $ 580.4 million of additional outstanding mortgages with a later maturity.

The $ 179.5 million loan bears interest at a fixed rate of 5.97 %, and matures in January 2031.

The mortgage facility includes certain provisions allowing for the Company to obtain additional funding based on the performance of the underlying communities.

At the closing, the Company repaid $ 260.1 million of debt under the mortgage facility, which was scheduled to mature in 2024, using proceeds from the $ 179.5 million loan and cash on hand.

2022 Financing

In October 2022, the Company obtained $ 220.0 million of debt secured by first priority mortgages on 24 communities.

The loan bears interest at a variable rate equal to SOFR plus a margin of 245 basis points and is interest only for the first three years .

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The interest rate swap instrument has a $ 220.0 million notional amount, a fixed interest rate of 3.0 %, and a term of eighteen months .

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 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.

Financial Covenants

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Many of the Company's debt documents contain cross-default provisions so that a default under one of these instruments could cause a default under other debt and lease documents (including documents with other lenders and lessors).

Furthermore, the Company's debt is secured by its communities and, in certain cases, a guaranty by the Company and/or one or more of its subsidiaries.

Furthermore, the Company's mortgage debt is secured by its communities and, in certain cases, a guaranty by the Company and/or one or more of its subsidiaries.

As of December 31, 2023, the Company is in compliance with the financial covenants of its debt agreements.

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Under a master lease, numerous communities are leased through an indivisible lease.

The Company typically guarantees the performance and lease payment obligations of its subsidiary lessees under the master leases.

In certain cases, the Company guarantees the performance and lease payment obligations of its subsidiary lessees under the master leases.

An event of default related to an individual property or limited number of properties within a master lease portfolio may result in a default on the entire master lease portfolio.

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As of December 31, 2023, the weighted average remaining lease term of the Company's operating and financing leases was 5.7 and 2.3 years, respectively.

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

The leases generally provide for renewal or

extension options from 5 to 20 years and in some instances, purchase options.

As of December 31, 2023, none of the Company's renewal or extension option periods are included in the lease term for accounting purposes.

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(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.

Years Ended December 31,

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As of December 31, 2023, the weighted average discount rate of the Company's operating and financing leases was 8.4 % and 10.3 %, respectively.

The amendment removed certain asset repurchase clauses and adjusted the extension option provisions.

The amendment did not change the amount of required lease payments or the initial term of the lease.

The Company recognized a $ 73.9 million non-cash gain on sale of communities for the transaction in the three months ended December 31, 2022.

In addition, the amended leases for such communities are prospectively classified as operating leases as of December 31, 2022, the effective date of the amendment.

The prospective reclassification of such lease costs to operating lease expense resulted in a $ 22.2 million increase in minimum lease payments due for operating leases in 2023 and an offsetting decrease in minimum lease payments due for financing leases in 2023.

See Note 20 for more information regarding the impact to the Company’s consolidated balance sheet as a result of this transaction.

The aggregate amounts of future minimum lease payments, including community, office, and equipment leases, recognized on the consolidated balance sheet as of December 31, 2022 (after giving effect to the change in lease classification for the lease amendment previously described) are as follows (in thousands).

Year Ending December 31, Operating Leases Financing Leases

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Tangible Equity Units

During the three months ended December 31, 2022, the Company issued 2,875,000 of its 7.00 % tangible equity units (the “Units”) at a public offering price of $ 50.00 per Unit for an aggregate offering of $ 143.8 million.

During 2022, the Company issued 2,875,000 of its 7.00 % tangible equity units (the “Units”) at a public offering price of $ 50.00 per Unit for an aggregate offering of $ 143.8 million.

The Company received proceeds of $ 139.4 million after the deduction of the underwriters’ discount.

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(in thousands) 2023 2022

Insurance reserves $ 65,757 $ 55,309

Employee compensation $ 104,322 $ 85,610

Insurance reserves 54,834 65,757

Real estate taxes 26,988 26,661

Paid time off 20,772 26,821

Interest 17,838 17,569

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Income taxes payable 2,071 2,081

Deferred payroll taxes (Note 3) — 31,553

Other 28,171 30,937

Total $ 242,668 $ 237,148

Investment in Unconsolidated Ventures

As of December 31, 2022, 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 HCS Venture operates home health and hospice agencies in the United States.

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 $ 49.8 million, which is included in investment in unconsolidated ventures on the accompanying consolidated balance sheet, as of December 31, 2022.

As of December 31, 2022, the Company is not required to provide financial support, through a liquidity arrangement or otherwise, to the HCS Venture.

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

Commitments and Contingencies

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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.

The Centers for Medicare & Medicaid Services ("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.

In addition, states' Attorneys General vigorously enforce consumer protection laws as those laws relate to the senior living industry.

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.

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.

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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 were 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 incorporate substantively similar allegations to the securities lawsuit previously described.

In January 2024, the court dismissed one of the two derivative lawsuits.

Plaintiffs have appealed the dismissal to the United States Court of Appeals for the Sixth Circuit.

The other derivative lawsuit remains pending with the Middle District of Tennessee and asserts 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 incorporates substantively similar allegations to the securities lawsuit previously described.

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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Accordingly, 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.

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

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

As of December 31, 2023 and 2022, the Company accrued reserves of $ 122.6 million and $ 135.9 million, respectively, under the Company's insurance programs, of which $ 67.8 million and $ 70.2 million is classified as other liabilities as of December 31, 2023 and 2022, respectively.

As of December 31, 2023 and 2022, the Company accrued $ 4.3 million and $ 9.9 million, respectively, of estimated amounts receivable from the insurance companies under these insurance programs.

The Company has secured self-insured retention risk under its primary workers' compensation programs with restricted cash deposits of $ 8.4 million and $ 15.8 million as of December 31, 2022 and 2021, respectively.

Letters of credit securing the programs aggregated to $ 62.1 million as of both December 31, 2022 and 2021.

In addition, the Company also had deposits of $ 6.1 million and $ 6.5 million as of December 31, 2022 and 2021, respectively, to fund claims paid under a high deductible, collateralized workers' compensation insurance policy.

The Company has secured self-insured retention risk under its primary workers' compensation programs with restricted cash deposits and other deposits of $ 8.3 million and $ 14.5 million and letters of credit of $ 57.2 million and $ 62.1 million as of December 31, 2023 and 2022, respectively.

Additionally, the Company’s wholly-owned captive insurance company had restricted cash and other deposits of $ 10.3 million and $ 6.0 million as of December 31, 2023 and 2022, respectively.

Stock-Based Compensation

The following table sets forth information about the Company's restricted stock awards and restricted stock units.

(in thousands, except value per share and unit) Number of Restricted Stock Units and Stock Awards Weighted

The following table sets forth information about the Company's restricted stock units and stock awards.

(in thousands, except for weighted average amounts) Number of Restricted Stock Units and Stock Awards Weighted

Grant Date Fair Value

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Outstanding on December 31, 2023 6,403 4.17

As of December 31, 2022, there was $ 20.3 million of total unrecognized compensation cost related to outstanding, unvested share-based compensation awards.

As of December 31, 2023, there was $ 15.8 million of total unrecognized compensation cost related to outstanding, unvested share-based compensation.

That cost is expected to be recognized over a weighted average period of 2.3 years and is based on grant date fair value.

During 2022, grants of restricted stock and restricted stock units under the Company's 2014 Omnibus Incentive Plan were as follows.

As of December 31, 2022, the Company's outstanding shares included 422,542 unvested restricted shares.

The Company did not have any unvested restricted shares as of December 31, 2023.

During 2023, grants of restricted stock units and stock awards 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

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Earnings Per Share

Potentially dilutive common stock equivalents for the Company include convertible senior notes, warrants, unvested restricted stock, restricted stock units, and prepaid stock purchase contracts.

As of December 31, 2023, the maximum number of shares issuable upon settlement 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).

On July 26, 2020, the Company issued to Ventas, Inc.

("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 .

The Warrant is exercisable at Ventas' option at any time and from time to time, in whole or in part, until December 31, 2025.

The exercise price and the number of shares issuable on exercise of the Warrant are subject to certain anti-dilution adjustments, including for cash dividends, stock

dividends, stock splits, reclassifications, non-cash distributions, certain repurchases of common stock, and business combination transactions.

As of December 31, 2023, the maximum number of shares issuable upon settlement of the Units' prepaid stock purchase contracts is 43.7 million.

Basic earnings per share ("EPS") is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding, after giving effect to the minimum number of shares issuable upon settlement of the prepaid stock purchase contract component of the Units.

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

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, the Notes, and the prepaid stock purchase contract component of the Units.

Refer to Notes 4, 8, and 10 for more information on the Warrant, Notes, and Units, respectively.

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

For both the years ended December 31, 2023 and 2022, 37.2 million shares are included in weighted average basic shares outstanding for the minimum number of shares issuable upon settlement of the Units' prepaid stock purchase contracts.

Years Ended December 31,

(in thousands, except for per share amounts) 2022 2021 2020

Net income (loss) attributable to Brookdale Senior Living Inc.

stockholders $ ( 238,427 ) $ ( 99,290 ) $ 82,019

(in thousands) 2023 2022 2021

Weighted average common shares outstanding 188,023 186,574 184,975

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Weighted average shares outstanding - basic 225,209 190,463 184,975

Effect of dilutive securities

Restricted stock and restricted stock units — — 137

Warrants — — 751

Weighted average shares outstanding - diluted 190,463 184,975 184,386

Net income (loss) per share attributable to Brookdale Senior Living Inc.

common stockholders - basic $ ( 1.25 ) $ ( 0.54 ) $ 0.45

Net income (loss) per share attributable to Brookdale Senior Living Inc.

common stockholders - diluted $ ( 1.25 ) $ ( 0.54 ) $ 0.44

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

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.

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 Company has the following potentially outstanding shares of common stock, which were excluded from the computation of diluted net income (loss) per share attributable to common stockholders in periods in which including them would have been antidilutive.

As of December 31,

(in millions) 2023 2022 2021

Restricted stock and restricted stock units 5.4 5.0 8.4

Convertible senior notes 38.3 38.3 38.3

Warrants 16.3 16.3 16.3

Restricted stock and restricted stock units 6.4 5.4 5.0

Incremental shares issuable under purchase contracts 6.5 6.5 —

Convertible senior notes 38.3 38.3 —

Total 67.5 66.5 59.6

(1) As a result of the net loss reported for the period, the potentially dilutive common stock equivalents were antidilutive for the period and as such were not included in the computation of diluted weighted average shares outstanding.

As of December 31, 2022, the maximum number of shares issuable upon conversion of convertible senior 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).

As of December 31, 2022, the maximum number of shares issuable upon settlement of the Units' prepaid stock purchase contracts is 43.7 million, of which 37.2 million are included in the computation of weighted average basic shares outstanding for 2022.

Refer to Notes 7 and 9 for more information on the Notes and the Units, respectively.

Share Repurchase Program

On November 1, 2016, the Company announced that its Board of Directors had approved a share repurchase program that authorizes the Company to purchase up to $ 100.0 million in the aggregate of the Company's common stock.

In 2016, the Company's Board of Directors approved a share repurchase program that authorizes the Company to purchase up to $ 100.0 million in the aggregate of the Company's common stock.

The share repurchase program is intended to be implemented through purchases made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions, or block trades, or by any combination of these methods, in accordance with applicable insider trading and other securities laws and regulations.

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

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

There were no repurchases under the share repurchase program in either 2022 or 2021.

For the year ended December 31, 2020, 3.1 million shares were repurchased for an aggregate purchase price of $ 18.1 million at an average price of $ 5.92 per share.

The Company temporarily suspended purchases under the share repurchase plan in March 2020.

For the years ended December 31, 2023, 2022, and 2021, there were no repurchases under the share repurchase program.

As of December 31, 2023, approximately $ 44.0 million remains available under the share repurchase program.

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Investment in unconsolidated ventures — ( 12,064 )

Financing lease obligations ( 10,273 ) —

Other ( 2,579 ) —

Total gross deferred income tax liability ( 273,830 ) ( 284,322 )

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A reconciliation of the beginning and ending amounts of the deferred tax valuation allowance is as follows:

Year Ended Balance at beginning of period Charged to costs and expenses Charged to other accounts Deductions Balance at end of period

Year Ended Balance at beginning of period Charged to deferred income tax (benefit) provision Balance at end of period

December 31, 2021 $ 380,990 $ ( 13,027 ) (1) $ 367,963

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December 31, 2023 $ 425,043 $ 49,109 (2) $ 474,152

(1) Reduction of valuation allowance for federal and state net operating losses.

(1) Reduction of valuation allowance for federal and state net operating losses and credits.

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Additionally, as of December 31, 2023 and 2022, the Company had federal net operating loss carryforwards generated after 2017 of $ 799.3 million and $ 659.7 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 of $ 2.1 million and $ 2.2 million as of December 31, 2022 and 2021, respectively, which are available to offset future capital gains through 2023, and are fully offset by a valuation allowance.

The Company had state capital loss carryforwards of $ 2.1 million as of both December 31, 2023 and 2022, which are available to offset future capital gains through 2024, and are fully offset by a valuation allowance.

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, 2023 and 2022.

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

The required valuation allowance as of December 31, 2022 and 2021 was $ 425.0 million and $ 368.0 million, respectively.

The Company's valuation allowance as of December 31, 2023 and 2022 was $ 474.2 million and $ 425.0 million, respectively.

The Company has recorded valuation allowances of $ 421.6 million and $ 372.5 million against its federal and state net operating losses as of December 31, 2023 and 2022, respectively.

The Company has recorded a valuation allowance against its state capital loss carryforward of $ 2.1 million and $ 2.2 million as of December 31, 2022 and 2021, respectively.

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 $ 95.2 million for the year

ended December 31, 2021 as a result of the HCS Sale that occurred on July 1, 2021, partially 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 has recorded a valuation allowance against its state capital loss carryforward of $ 2.1 million as of both December 31, 2023 and 2022.

The Company also recorded a valuation allowance against federal and state credits of $ 50.4 million as of both December 31, 2023 and 2022.

As of both December 31, 2022 and 2021, the Company had gross tax affected unrecognized tax benefits of $ 18.1 million, which, if recognized, would result in an income tax benefit recorded in the consolidated statement of operations.

As of December 31, 2023 and 2022, the Company had gross tax affected unrecognized tax benefits of $ 18.2 million and $ 18.1 million, respectively, which, if recognized, would result in an income tax benefit recorded in the consolidated statement of operations.

Interest and penalties related to these tax positions are classified as tax expense in the Company's consolidated financial statements.

Total interest and penalties reserved is $ 0.1 million as of both December 31, 2022 and 2021.

Total interest and penalties reserved is $ 0.2 million and $ 0.1 million as of December 31, 2023 and 2022, respectively.

As of December 31, 2023, the Company's tax returns for years 2019 through 2022 are subject to future examination by tax authorities.

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Balance at beginning of period $ 18,088 $ 18,089

Additions for tax positions related to the current year — —

Additions for tax positions related to prior years 173 —

Reductions for tax positions related to prior years ( 56 ) ( 1 )

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Capital expenditures - development, net 1,762 6,193 3,208

Capital expenditures - non-development - reimbursable 25,650 42,100 27,846

Capital expenditures - non-development - reimbursable from lessor 10,319 25,650 42,100

Trade accounts payable 4,613 ( 3,085 ) ( 6,061 )

Net cash paid $ 233,205 $ 196,924 $ 176,657

Acquisition of communities from Healthpeak:

Property, plant and equipment and leasehold intangibles, net $ — $ — $ 286,734

Operating lease right-of-use assets — — ( 63,285 )

Financing lease obligations — — 129,196

Operating lease obligations — — 74,335

Loss (gain) on debt modification and extinguishment, net — — ( 19,731 )

Net cash paid $ — $ — $ 407,249

For the Years Ended December 31,

(in thousands) 2023

Acquisition of other assets:

Acquisition of assets, net of cash acquired:

Prepaid expenses and other assets, net $ 23 $ — $ —

Property, plant and equipment and leasehold intangibles, net 6,872 4 —

Investment in unconsolidated ventures ( 3,395 ) — —

Financing lease obligations — 6,000 —

Other liabilities ( 384 ) — —

Other non-operating loss (income) ( 2,542 ) — —

Net cash paid $ 574 $ 6,004 $ —

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Net cash received $ — $ — $ ( 312,558 )

Proceeds from sale of CCRC Venture, net:

Investment in unconsolidated ventures $ — $ — $ ( 14,848 )

Current portion of long-term debt — — 34,706

Other liabilities — — 60,748

Non-operating loss (gain) on sale of assets, net — — ( 369,831 )

Net cash received $ — $ — $ ( 289,225 )

Proceeds from sale of other assets, net:

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Property, plant and equipment and leasehold intangibles, net ( 36,545 ) ( 107 ) ( 878 )

Investment in unconsolidated ventures ( 27,392 ) — —

Refundable fees and deferred revenue 9,347 — —

Other liabilities 10,690 1,025 ( 75 )

Non-operating loss (gain) on sale of assets, net ( 1,441 ) ( 595 ) ( 2,346 )

Loss (gain) on sale of communities, net ( 36,296 ) — —

Net cash received $ ( 83,526 ) $ ( 4,653 ) $ ( 21,448 )

Master Agreement with Ventas:

Property, plant and equipment and leasehold intangibles, net $ — $ — $ ( 66,444 )

Operating lease right-of-use assets — — ( 153,213 )

Other assets, net — — ( 42,354 )

Long-term debt — — 34,053

Financing lease obligations — — 7,077

Operating lease obligations — — 362,944

Additional paid-in-capital — — ( 22,883 )

Net cash paid $ — $ — $ 119,180

Supplemental Schedule of Non-cash Operating, Investing and Financing Activities:

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(in thousands) 2023

Assets designated as held for sale:

Assets held for sale $ — $ 3,612 $ 7,935

Property, plant and equipment and leasehold intangibles, net — ( 3,612 ) ( 7,935 )

Net $ — $ — $ —

Healthpeak master lease modification:

Property, plant and equipment and leasehold intangibles, net $ — $ — $ ( 57,462 )

Operating lease right-of-use assets — — 88,044

Financing lease obligations — — 70,874

Operating lease obligations — — ( 101,456 )

Net $ — $ — $ —

Gain on sale for master lease amendment:

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Financing lease obligations 88,820 ( 6,338 ) ( 4,056 )

Other liabilities — — ( 77 )

Loss (gain) on facility operating lease termination, net — — ( 2,332 )

Net $ — $ — $ —

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, regulatory reserves for certain CCRCs, and debt service reserve accounts required by certain lenders under mortgage debt agreements.

Restricted cash consists principally of escrow deposits for interest rate caps, real estate taxes, property insurance, capital expenditures, and debt service reserves required by certain lenders under mortgage debt agreements, deposits as security for self-insured retention risk under workers' compensation programs and property insurance programs, and regulatory reserves for certain CCRCs.

The components of restricted cash are as follows.

(in thousands) 2023 2022

Interest rate cap escrows $ 17,843 $ 3,797

Real estate tax and property insurance escrows 16,061 15,722

Replacement reserve escrows 7,194 7,999

Interest rate cap escrows 3,797 585

Other 243 217

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Total cash, cash equivalents, and restricted cash $ 349,668 $ 474,548

COVID-19 Pandemic

While the Federal COVID-19 Public Health Emergency Declaration expired on May 11, 2023, the Company cannot predict with reasonable certainty the impacts that the COVID-19 pandemic and the continued recovery ultimately will have on the Company's business, results of operations, cash flow, and liquidity.

Government Provided Financial Relief .

Certain impacts of such programs are provided below.

• During the years ended December 31, 2022 and 2021, the Company accepted $ 61.1 million and $ 0.8 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, under which grants have been made available to eligible healthcare providers for healthcare related expenses or lost revenues attributable to the COVID-19 pandemic.

• During the year ended December 31, 2020, the Company received $ 87.5 million under the Accelerated and Advance Payment Program administered by 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.

During the years ended December 31, 2022 and 2021, $ 3.1 million and $ 20.8 million, respectively, of the advanced payments were recouped per the terms of the program.

Pursuant to the sale of 80 % of the Company's equity in its Health Care Services segment (as described in Note 3), $ 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, 2023, the Company has no remaining obligations under the program.

In both December 2021 and 2022, the Company paid $ 31.6 million of its retained deferred amount.

As of December 31, 2023, the Company has no remaining obligations for the deferred payroll tax program.

During the years ended December 31, 2022 and 2021, the Company recognized $ 9.4 million and $ 9.9 million, respectively, of employee retention credits on wages paid from March 12, 2020 to December 31, 2021 within other operating income.

During the years ended December 31, 2023 and 2022, the Company received cash of $ 14.7 million and $ 4.6 million, respectively, for such employee retention credits.

As of December 31, 2023, the Company has no remaining receivables under the program.

The Company had a receivable for $ 14.7 million included within prepaid expenses and other current assets, net on the consolidated balance sheet as of December 31, 2022.

In addition to the grants previously described, during the years ended December 31, 2023, 2022, and 2021, the Company recognized $ 9.1 million, $ 10.0 million, and $ 1.7 million, respectively, of other operating income from grants from other government sources.

Segment Information

As of December 31, 2022, the Company has three reportable segments:

The Company has three reportable segments:

Independent Living;

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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.

Prior to July 1, 2021, the Company had an additional reportable segment, Health Care Services, as described in Note 3.

Independent Living .

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.

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 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.

The Company's assisted living and memory care communities include both freestanding, multi-story communities, as well as smaller, freestanding, single story communities.

The Company also provides memory care services at freestanding memory care communities that are specially designed for residents with Alzheimer's disease and other dementias.

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Health Care Services (1)(2)

— 177,269 389,697

Total revenue and other operating income 3,015,829 2,825,379 2,758,259

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Total segment operating income 746,704 594,413 500,951

For the Years Ended December 31,

(in thousands) 2023 2022 2021

General and administrative expense (including non-cash stock-based compensation expense) 178,894 168,594 184,916

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Corporate and All Other 18,750 22,707 21,463

Health Care Services — — 515

$ 228,592 $ 200,009 $ 182,718

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Total assets $ 5,573,435 $ 5,937,062

$ 5,937,062 $ 6,410,467

(1) All revenue and other operating income is earned from external third parties in the United States.

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(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.

(5) The Company's total carrying amount of goodwill was $ 27.3 million, $ 27.3 million, and $ 154.1 million as of December 31, 2022, December 31, 2021, and December 31, 2020, respectively.

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 and accounted for the reduction in total goodwill for the year ended December 31, 2021.

The Company's Independent Living segment had a carrying amount of goodwill of $ 27.3 million as of December 31, 2022, December 31, 2021, and December 31, 2020.

(5) The Company's total carrying amount of goodwill is included on the Independent Living segment and was $ 27.3 million as of December 31, 2023, 2022, and 2021.

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