What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-09 · 177 added, 127 removed, 462 unchanged (40% of the section changed)

47 unchanged sentences

together with its consolidated subsidiaries.

We are the nation's premier operator of senior living communities, operating and managing 649 communities in 41 states as of June 30, 2024, with the ability to serve approximately 59,000 residents.

We are the nation's premier operator of senior living communities, operating and managing 648 communities in 41 states as of September 30, 2024, with the ability to serve approximately 58,000 residents.

We offer our residents access to a broad continuum of services across the most attractive sectors of the senior living industry.

We operate and manage independent living, assisted living, memory care, and continuing care retirement communities ("CCRCs").

As of June 30, 2024, we owned 342 communities (30,970 units), leased 277 communities (19,857 units), and managed 30 communities (4,579 units).

As of September 30, 2024, we owned 342 communities (30,977 units), leased 277 communities (19,860 units), and managed 29 communities (4,362 units).

Our senior living communities and our comprehensive network help to provide seniors with care, connection, and services in an environment that feels like home.

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Community Transactions

Subsequent to the three months ended June 30, 2024, we amended the existing master lease with Omega Healthcare Investors, Inc.

Agreements to Acquire Currently Leased Assets

In September 2024, we entered into three definitive agreements to acquire 41 communities (2,789 units) that are currently leased by us for a combined purchase price of $610.0 million.

These three transactions are expected to close by year-end, subject to the satisfaction of customary closing conditions for real estate transactions.

We expect to fund these acquisitions through the assumption of existing mortgage debt, the net cash proceeds from the sale of the 3.50% convertible senior notes due 2029 (the “2029 New Notes”), proceeds from non-recourse mortgage financing on certain of the assets, and cash on hand.

We expect these three transactions will result in an approximately $46.6 million decrease in cash paid for operating and financing leases for the twelve months ending December 31, 2025 compared to the previously required estimated 2025 lease payments and assuming the renewal of the lease for five of the communities at the end of its current term on December 31, 2024.

We expect the amendment of the leasing arrangements will result in an approximately $8.1 million and $32.8 million decrease in cash paid for operating leases for the three months ending December 31, 2024 and the twelve months ending December 31, 2025, respectively, as a result of the reclassification of lease costs due to financing lease classification and the expected acquisition transactions.

We expect to recognize an approximately $33.0 million loss on extinguishment of the financing obligation upon close of the reacquisition transaction for the amount by which the repurchase price exceeds the previously recognized financing obligation for three communities for which the lease arrangements are accounted for as failed sale-leaseback transactions.

Refer to Notes 6 and 7 to the condensed consolidated financial statements contained in Item 1.

Financial Statements for additional information on the 2029 New Notes and the acquisition transactions, respectively.

Omega Lease Amendment

In August 2024, we amended the existing master lease with Omega Healthcare Investors, Inc.

("Omega") pursuant to which we continue to lease 24 communities (2,555 units) from Omega.

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Under the terms of the amendment, rent will escalate annually per the terms of the existing lease escalator, with a potential minor contingent rent adjustment beginning in 2028 depending on lease performance.

We preliminarily estimate that the lease modification will increase the right-of-use assets and lease obligations recognized on our condensed consolidated balance sheet each by approximately $220.0 million.

Results of Operations

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Consolidated communities excluded from the same community portfolio include communities acquired or disposed of since the beginning of the prior year, communities classified as assets held for sale, certain communities planned for disposition, certain communities that have undergone or are undergoing expansion, redevelopment, and repositioning projects, and certain communities that have experienced a casualty event that significantly impacts their operations.

Our management uses same community operating results and data for decision making and components of executive compensation, and we

believe such results and data provide useful information to investors, because it enables comparisons of revenue, expense, and other operating measures for a consistent portfolio over time without giving effect to the impacts of communities that were not consolidated and operational for the comparison periods, communities acquired or disposed during the comparison periods (or planned for disposition), and communities with results that are or likely will be impacted by completed or in-process development-related capital expenditure projects.

Our management uses same community operating results and data for decision making and components of executive compensation, and we believe such results and data provide useful information to investors, because it enables comparisons of revenue, expense, and other operating measures for a consistent portfolio over time without giving effect to the impacts of communities that were not consolidated and operational for the comparison periods, communities acquired or disposed during the comparison periods (or planned for disposition), and communities with results that are or likely will be impacted by completed or in-process development-related capital expenditure projects.

• RevPAR , or average monthly senior housing resident fee revenue per available unit, is defined as resident fee revenue for the corresponding portfolio for the period (excluding revenue for private duty services provided to seniors living outside of our communities and entrance fee amortization), divided by the weighted average number of available units in the corresponding portfolio for the period, divided by the number of months in the period.

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See "Non-GAAP Financial Measures" below for our definition of the measure and other important information regarding such measure, including reconciliations to the most comparable measure in accordance with generally accepted accounting principles in the United States ("GAAP").

Comparison of Three Months Ended June 30, 2024 and 2023

Comparison of Three Months Ended September 30, 2024 and 2023

Summary Operating Results

The following table summarizes our overall operating results for the three months ended June 30, 2024 and 2023.

The following table summarizes our overall operating results for the three months ended September 30, 2024 and 2023.

Three Months Ended

June 30, Increase (Decrease)

September 30, Increase (Decrease)

(in thousands) 2024 2023 Amount Percent

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Facility operating expense 548,282 537,411 10,871 2.0 %

Net income (loss) (37,742) (4,526) 33,216 NM

Net income (loss) (50,734) (48,811) 1,923 3.9 %

Adjusted EBITDA 92,237 80,220 12,017 15.0 %

The increase in resident fees was primarily attributable to a 5.6% increase in same community RevPAR, comprised of a 4.2% increase in same community RevPOR and a 100 basis point increase in same community weighted average occupancy.

The increase was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $14.4 million less in resident fees during the three months ended June 30, 2024 compared to the prior year period.

The increase in facility operating expense was primarily attributable to a 3.6% increase in same community facility operating expense primarily resulting from broad inflationary pressure and an increase in estimated insurance expense, partially offset by a decrease in the use of premium labor, primarily contract labor and a decrease in estimated incentive compensation costs.

increase was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $12.8 million less in facility operating expense during the three months ended June 30, 2024 compared to the prior year period.

The increase in net loss was primarily attributable to a $36.3 million gain on sale of communities, net recognized during the three months ended June 30, 2023 for the sale of our one remaining entrance fee community and the increase in facility operating expense, partially offset by the increase in resident fees.

The increase in Adjusted EBITDA was primarily attributable to the increase in resident fees, partially offset by the increase in facility operating expense, a $4.1 million decrease in other operating income for state government grants recognized in the three months ended June 30, 2023, and the change in classification of $2.5 million of lease payments for 35 communities as cash facility operating lease payments as a result of lease amendments in the prior year period.

The increase was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $14.6 million less in resident fees during the three months ended September 30, 2024 compared to the prior year period.

The increase in facility operating expense was primarily attributable to a 4.1% increase in same community facility operating expense primarily resulting from broad inflationary pressure and an increase in marketing expense, partially offset by a decrease in the use of premium labor, primarily contract labor.

The increase was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $12.8 million less in facility operating expense during the three months ended September 30, 2024 compared to the prior year period.

The increase in net loss was primarily attributable to the increase in facility operating expense, a decrease in property insurance recoveries, a decrease in the fair value of interest rate derivatives in the current period, and an increase in depreciation and amortization expense, partially offset by the increase in resident fees and a decrease in asset impairment expense.

The increase in Adjusted EBITDA was primarily attributable to the increase in resident fees, partially offset by the increase in facility operating expense and a $2.6 million decrease in other operating income for state government grants recognized in the three months ended September 30, 2023.

Operating Results - Senior Housing Segments

The following table summarizes the consolidated operating results and data of our three senior housing segments (Independent Living, Assisted Living and Memory Care, and CCRCs) for the three months ended June 30, 2024 and 2023, including operating results and data on a same community basis.

The following table summarizes the consolidated operating results and data of our three senior housing segments (Independent Living, Assisted Living and Memory Care, and CCRCs) for the three months ended September 30, 2024 and 2023, including operating results and data on a same community basis.

See management's discussion and analysis of the operating results on an individual segment basis on the following pages.

Three Months Ended

June 30, Increase (Decrease)

September 30, Increase (Decrease)

(in thousands, except communities, units, occupancy, RevPAR, and RevPOR) 2024 2023 Amount Percent

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Independent Living Segment

The following table summarizes the operating results and data for our Independent Living segment for the three months ended June 30, 2024 and 2023.

The following table summarizes the operating results and data for our Independent Living segment for the three months ended September 30, 2024 and 2023.

All 68 of the communities in our Independent Living segment are included within our same community portfolio.

Three Months Ended

June 30, Increase (Decrease)

September 30, Increase (Decrease)

(in thousands, except communities, units, occupancy, RevPAR, and RevPOR) 2024 2023 Amount Percent

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The increase in the segment's resident fees was primarily attributable to an increase in the segment's RevPAR, comprised of a 4.8% increase in RevPOR and a 120 basis point increase in weighted average occupancy.

The increase in the segment's RevPOR was primarily the result of annual in-place rate increases effective January 1, 2024.

The increase in the segment's RevPOR was primarily the result of the current year rate increase.

The increase in the segment's weighted average occupancy primarily reflects the impact of our execution on key initiatives to rebuild occupancy lost due to the pandemic.

The increase in the segment's facility operating expense was primarily attributable to broad inflationary pressure and an increase in estimated insurance expense.

The increase in the segment's facility operating expense was primarily attributable to broad inflationary pressure, an increase in insurance expense, and an increase in marketing expense.

Assisted Living and Memory Care Segment

The following table summarizes the operating results and data for our Assisted Living and Memory Care segment for the three months ended June 30, 2024 and 2023, including operating results and data on a same community basis.

The following table summarizes the operating results and data for our Assisted Living and Memory Care segment for the three months ended September 30, 2024 and 2023, including operating results and data on a same community basis.

Three Months Ended

June 30, Increase (Decrease)

September 30, Increase (Decrease)

(in thousands, except communities, units, occupancy, RevPAR, and RevPOR) 2024 2023 Amount Percent

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The increase in the segment's resident fees was primarily attributable to an increase in the segment's same community RevPAR, comprised of a 4.4% increase in same community RevPOR and a 90 basis point increase in same community weighted average occupancy.

The increase in the segment's same community RevPOR was primarily the result of annual in-place rate increases effective January 1, 2024.

The increase in the segment's same community RevPOR was primarily the result of the current year rate increase.

The increase in the segment's same community weighted average occupancy primarily reflects the impact of our execution on key initiatives to rebuild occupancy lost due to the pandemic.

The increase in the segment's resident fees was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $10.5 million less in resident fees during the three months ended June 30, 2024 compared to the prior year period.

The increase in the segment's facility operating expense was primarily attributable to an increase in the segment's same community facility operating expense primarily attributable to broad inflationary pressure and an increase in estimated insurance expense, partially offset by decreases in estimated incentive compensation costs and the use of premium labor, primarily contract labor.

The increase in the segment's facility operating expense was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $8.5 million less in facility operating expense during the three months ended June 30, 2024 compared to the prior year period.

The increase in the segment's resident fees was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $11.9 million less in resident fees during the three months ended September 30, 2024 compared to the prior year period.

The increase in the segment's facility operating expense was primarily attributable to an increase in the segment's same community facility operating expense primarily attributable to broad inflationary pressure and an increase in marketing expense, partially offset by a decrease in the use of premium labor, primarily contract labor.

The increase in the segment's facility operating expense was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $9.6 million less in facility operating expense during the three months ended September 30, 2024 compared to the prior year period.

CCRCs Segment

The following table summarizes the operating results and data for our CCRCs segment for the three months ended June 30, 2024 and 2023, including operating results and data on a same community basis.

The following table summarizes the operating results and data for our CCRCs segment for the three months ended September 30, 2024 and 2023, including operating results and data on a same community basis.

Three Months Ended

June 30, Increase (Decrease)

September 30, Increase (Decrease)

(in thousands, except communities, units, occupancy, RevPAR, and RevPOR) 2024 2023 Amount Percent

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RevPOR $ 7,672 $ 7,584 $ 88 1.2 %

The increase in the segment's resident fees was primarily attributable to an increase in the segment's same community RevPAR, comprised of a 250 basis point increase in same community weighted average occupancy and a 0.5% decrease in the segment's same community RevPOR.

The increase in the segment's resident fees was primarily attributable to an increase in the segment's same community RevPAR, comprised of a 220 basis point increase in same community weighted average occupancy and a 1.2% increase in the segment's same community RevPOR.

The increase in the segment's same community weighted average occupancy primarily reflects the impact of our execution on key initiatives to rebuild occupancy lost due to the pandemic.

The decrease in the segment's same community RevPOR was primarily the result of an occupancy mix shift to more independent living residents and lower skilled nursing revenue, partially offset by annual in-place rate increases effective January 1, 2024.

The increase in the segment's resident fees was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $3.9 million less in resident fees during the three months ended June 30, 2024 compared to the prior year period.

The decrease in the segment's facility operating expense was primarily attributable to the disposition of communities since the beginning of the prior year period, which resulted in $4.3 million less in facility operating expense during the three months ended June 30, 2024 compared to the prior year period.

The decrease in the segment's facility operating expense was partially offset by an increase in the segment's same community facility operating expense primarily attributable to broad inflationary pressure and an increase in estimated insurance expense, partially offset by a decrease in the use of premium labor, primarily contract labor.

The increase in the segment's same community RevPOR was primarily the result of the current year rate increase, partially offset by an occupancy mix shift to more independent living residents.

The increase in the segment's resident fees was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $2.7 million less in resident fees during the three months ended September 30, 2024 compared to the prior year period.

The decrease in the segment's facility operating expense was primarily attributable to the disposition of communities since the beginning of the prior year period, which resulted in $3.2 million less in facility operating expense during the three months ended September 30, 2024 compared to the prior year period.

The decrease in the segment's facility operating expense was partially offset by an increase in the segment's same community facility operating expense primarily attributable to broad inflationary pressure, partially offset by a decrease in the use of premium labor, primarily contract labor.

Operating Results - Other Income and Expense Items

The following table summarizes other income and expense items in our operating results for the three months ended June 30, 2024 and 2023.

The following table summarizes other income and expense items in our operating results for the three months ended September 30, 2024 and 2023.

Three Months Ended

June 30, Increase (Decrease)

September 30, Increase (Decrease)

(in thousands) 2024 2023 Amount Percent

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Asset impairment 934 9,086 (8,152) (89.7) %

Loss (gain) on sale of communities, net — (36,296) (36,296) (100.0)%

Interest income 4,663 6,323 (1,660) (26.3) %

Interest expense 66,316 59,412 6,904 11.6 %

Gain (loss) on debt modification and extinguishment, net (2,267) — 2,267 NM

Equity in earnings (loss) of unconsolidated ventures — (1,426) (1,426) (100.0)%

Non-operating gain (loss) on sale of assets, net 199 860 (661) (76.9) %

Other non-operating income (loss) 3,584 10,166 (6,582) (64.7) %

Benefit (provision) for income taxes (449) (275) 174 63.3 %

Benefit (provision) for income taxes (677) 1,876 (2,553) NM

Reimbursed Costs Incurred on Behalf of Managed Communities.

The increase in reimbursed costs and costs incurred on behalf of managed communities was primarily attributable to an increase in community costs incurred as a result of natural disasters and broad inflationary pressure for communities managed in both periods.

General and Administrative Expense.

The increase in general and administrative expense was primarily attributable to an increase in non-cash stock-based compensation expense compared to the prior year period.

General and administrative expense includes transaction and organizational restructuring costs of $0.1 million for both the three months ended June 30, 2024 and 2023.

Transaction costs include those directly related to acquisition, disposition, financing and leasing activity, and are primarily comprised of legal, finance, consulting, professional fees, and other third-party costs.

Organizational restructuring costs include those related to our efforts to reduce general and administrative expense and our senior leadership changes, including severance costs.

The increase in general and administrative expense was primarily attributable to increases in legal expenses and non-cash stock-based compensation expense compared to the prior year period.

Facility Operating Lease Expense.

The increase in facility operating lease expense was primarily due to the change in classification of lease costs from financing leases to operating leases as a result of lease amendments in the prior year period.

The decrease in facility operating lease expense was primarily due to community lease termination activity since the prior year period.

Depreciation and Amortization .

The increase in depreciation and amortization expense was primarily due to the completion of community renovations, apartment upgrades, and other major building infrastructure projects since the beginning of the prior year period, partially offset by the change in classification of lease costs from financing leases to operating leases as a result of lease amendments in the prior year period.

Loss (Gain) on Sale of Communities, net.

The decrease in gain on sale of communities, net was due to the sale of our one remaining entrance fee community during the three months ended June 30, 2023.

Asset Impairment.

During the three months ended September 30, 2024, we recorded $0.9 million of non-cash impairment charges due to property damage sustained at certain communities.

During the three months ended September 30, 2023, we recorded $9.1 million of non-cash impairment charges, primarily due to the planned disposition of certain underperforming communities that have since been sold.

Interest Expense .

The increase in interest expense was primarily due to an increase in the fair value of interest rate derivatives in the prior period and an increase in interest expense on long-term debt primarily as a result of increases in variable interest rate indices.

The increase in interest expense was primarily due to a decrease in the fair value of interest rate derivatives in the current period and an increase in interest expense on long-term debt.

Gain (Loss) on Debt Modification and Extinguishment, Net.

The increase in loss on debt modification and extinguishment, net was primarily due to debt modification costs recognized during the three months ended September 30, 2024 for the refinancing of mortgage debt previously scheduled to mature in September 2025.

Other Non-operating Income (Loss).

The decrease in other non-operating income is due to decreased income recognized for insurance recoveries from our property and casualty insurance policies.

Benefit (Provision) for Income Taxes.

The difference between our effective tax rate for the three months ended June 30, 2024 and 2023 was primarily due to an increase in the valuation allowance recorded on operating losses during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

We recorded an aggregate deferred federal, state, and local tax benefit of $9.1 million for the three months ended June 30, 2024, which was offset by an increase in the valuation allowance of $9.2 million.

The difference between our effective tax rate for the three months ended September 30, 2024 and 2023 was primarily due to an increase in the valuation allowance recorded on operating losses during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

We recorded an aggregate deferred federal, state, and local tax benefit of $12.2 million for the three months ended September 30, 2024, which was offset by an increase in the valuation allowance of $12.5 million.

We evaluate our deferred tax assets each quarter to determine if a valuation allowance is required based on whether it is more likely than not that some portion of the deferred tax asset would not be realized.

Our valuation allowance as of June 30, 2024 and December 31, 2023 was $490.5 million and $474.2 million, respectively.

Comparison of Six Months Ended June 30, 2024 and 2023

Our valuation allowance as of September 30, 2024 and December 31, 2023 was $503.0 million and $474.2 million, respectively.

Comparison of Nine Months Ended September 30, 2024 and 2023

Summary Operating Results

The following table summarizes our overall operating results for the six months ended June 30, 2024 and 2023.

Six Months Ended

June 30, Increase (Decrease)

The following table summarizes our overall operating results for the nine months ended September 30, 2024 and 2023.

Nine Months Ended

September 30, Increase (Decrease)

(in thousands) 2024 2023 Amount Percent

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The increase in resident fees was primarily attributable to a 5.9% increase in same community RevPAR, comprised of a 4.2% increase in same community RevPOR and a 130 basis point increase in same community weighted average occupancy.

The increase was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $30.1 million less in resident fees during the six months ended June 30, 2024 compared to the prior year period.

The increase was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $44.7 million less in resident fees during the nine months ended September 30, 2024 compared to the prior year period.

The increase in facility operating expense was primarily attributable to a 4.0% increase in same community facility operating expense, primarily resulting from broad inflationary pressure, an additional day of expense due to the leap year, an increase in estimated insurance expense, and an increase in property repair expense primarily as a result of severe weather events, partially offset by a decrease in the use of premium labor, primarily contract labor.

The increase was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $26.4 million less in facility operating expense during the six months ended June 30, 2024 compared to the prior year period.

The increase in net loss was primarily attributable to a $36.3 million gain on sale of communities, net recognized during the six months ended June 30, 2023 for the sale of our one remaining entrance fee community, the increase in facility operating expense, a decrease in other operating income, an increase in depreciation and amortization expense, and an increase in debt interest expense compared to the prior year period.

The increase was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $39.2 million less in facility operating expense during the nine months ended September 30, 2024 compared to the prior year period.

The increase in net loss was primarily attributable to a $36.3 million gain on sale of communities, net recognized during the nine months ended September 30, 2023 for the sale of our one remaining entrance fee community, the increase in facility operating expense, a $12.0 million increase in interest expense primarily due to the change in the fair value of derivatives, a decrease in other operating income, and an increase in depreciation and amortization expense compared to the prior year period.

These changes were partially offset by the increase in resident fees.

The increase in Adjusted EBITDA was primarily attributable to the increase in resident fees, partially offset by the increase in facility operating expense and the change in classification of $9.9 million of lease payments for 35 communities as cash facility operating lease payments as a result of lease amendments in the prior year period.

The increase in Adjusted EBITDA was primarily attributable to the increase in resident fees, partially offset by the increase in facility operating expense, the change in classification of $9.9 million of lease payments for 35 communities as cash facility operating lease payments as a result of lease amendments in the prior year period, and a decrease in other operating income.

Operating Results - Senior Housing Segments

The following table summarizes the operating results and data of our three senior housing segments (Independent Living, Assisted Living and Memory Care, and CCRCs) on a combined basis for the six months ended June 30, 2024 and 2023 including operating results and data on a same community basis.

The following table summarizes the operating results and data of our three senior housing segments (Independent Living, Assisted Living and Memory Care, and CCRCs) on a combined basis for the nine months ended September 30, 2024 and 2023 including operating results and data on a same community basis.

See management's discussion and analysis of the operating results on an individual segment basis on the following pages.

Six Months Ended

June 30, Increase (Decrease)

Nine Months Ended

September 30, Increase (Decrease)

(in thousands, except communities, units, occupancy, RevPAR, and RevPOR) 2024 2023 Amount Percent

17 unchanged sentences

Independent Living Segment

The following table summarizes the operating results and data for our Independent Living segment for the six months ended June 30, 2024 and 2023, including operating results and data on a same community basis.

The following table summarizes the operating results and data for our Independent Living segment for the nine months ended September 30, 2024 and 2023, including operating results and data on a same community basis.

All 68 of the communities in our Independent Living segment are included within our same community portfolio.

Six Months Ended

June 30, Increase (Decrease)

Nine Months Ended

September 30, Increase (Decrease)

(in thousands, except communities, units, occupancy, RevPAR, and RevPOR) 2024 2023 Amount Percent

8 unchanged sentences

The increase in the segment's resident fees was primarily attributable to an increase in the segment's RevPAR, comprised of a 4.8% increase in RevPOR and a 110 basis point increase in weighted average occupancy.

The increase in the segment's RevPOR was primarily the result of the annual in-place rate increases effective January 1, 2024.

The increase in the segment's RevPOR was primarily the result of the current year rate increase.

The increase in the segment's weighted average occupancy primarily reflects the impact of our execution on key initiatives to rebuild occupancy lost due to the pandemic.

The increase in the segment's facility operating expense was primarily attributable to broad inflationary pressure, an additional day of expense due to the leap year, an increase in property repair expense primarily as a result of severe weather events, and increased wireless internet access provided for residents, and an increase in estimated insurance expense, partially offset by a decrease in estimated incentive compensation costs.

The segment's same community facility operating expense for the six months ended June 30, 2024 excludes $0.4 million of natural disaster expense.

The increase in the segment's facility operating expense was primarily attributable to broad inflationary pressure, an additional day of expense due to the leap year, an increase in property repair expense primarily as a result of severe weather events, increased wireless internet access provided for residents, and an increase in estimated insurance expense.

The segment's same community facility operating expense for the nine months ended September 30, 2024 excludes $0.5 million of natural disaster expense.

Assisted Living and Memory Care Segment

The following table summarizes the operating results and data for our Assisted Living and Memory Care segment for the six months ended June 30, 2024 and 2023, including operating results and data on a same community basis.

Six Months Ended

June 30, Increase (Decrease)

The following table summarizes the operating results and data for our Assisted Living and Memory Care segment for the nine months ended September 30, 2024 and 2023, including operating results and data on a same community basis.

Nine Months Ended

September 30, Increase (Decrease)

(in thousands, except communities, units, occupancy, RevPAR, and RevPOR) 2024 2023 Amount Percent

17 unchanged sentences

The increase in the segment's resident fees was primarily attributable to an increase in the segment's same community RevPAR, comprised of a 4.4% increase in same community RevPOR and a 120 basis point increase in same community weighted average occupancy.

The increase in the segment's same community RevPOR was primarily the result of the annual in-place rate increases effective January 1, 2024.

The increase in the segment's same community RevPOR was primarily the result of the current year rate increase.

The increase in the segment's same community weighted average occupancy primarily reflects the impact of our execution on key initiatives to rebuild occupancy lost due to the pandemic.

The increase in the segment's resident fees was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $19.4 million less in resident fees during the six months ended June 30, 2024 compared to the prior year period.

The increase in the segment's facility operating expense was primarily attributable to an increase in the segment's same community facility operating expense primarily attributable to broad inflationary pressure, an additional day of expense due to the leap year, an increase in estimated insurance expense, and an increase in property repair expense primarily as a result of severe weather events, partially offset by a decrease in the use of premium labor, primarily contract labor, a decrease in estimated incentive compensation costs, and a decrease in credit losses.

The increase in the segment's facility operating expense was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $15.7 million less in facility operating expense during the six months ended June 30, 2024 compared to the prior year period.

The segment's same community facility operating expense for the six months ended June 30, 2024 and 2023 excludes $2.4 million and $0.7 million, respectively, of natural disaster expense.

The increase in the segment's resident fees was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $31.3 million less in resident fees during the nine months ended September 30, 2024 compared to the prior year period.

The increase in the segment's facility operating expense was primarily attributable to an increase in the segment's same community facility operating expense primarily attributable to broad inflationary pressure, an additional day of expense due to the leap year, an increase in estimated insurance expense, and an increase in property repair expense primarily as a result of severe weather events, partially offset by a decrease in the use of premium labor, primarily contract labor.

The increase in the segment's facility operating expense was partially offset by the disposition of communities since the beginning of the prior year period, which resulted in $25.3 million less in facility operating expense during the nine months ended September 30, 2024 compared to the prior year period.

The segment's same community facility operating expense for the nine months ended September 30, 2024 excludes $3.1 million of natural disaster expense.

CCRCs Segment

The following table summarizes the operating results and data for our CCRCs segment for the six months ended June 30, 2024 and 2023, including operating results and data on a same community basis.

Six Months Ended

June 30, Increase (Decrease)

The following table summarizes the operating results and data for our CCRCs segment for the nine months ended September 30, 2024 and 2023, including operating results and data on a same community basis.

Nine Months Ended

September 30, Increase (Decrease)

(in thousands, except communities, units, occupancy, RevPAR, and RevPOR) 2024 2023 Amount Percent

16 unchanged sentences

RevPOR $ 7,729 $ 7,644 $ 85 1.1 %

The decrease in the segment's resident fees was primarily attributable to the disposition of communities since the beginning of the prior year period, which resulted in $10.7 million less in resident fees during the six months ended June 30, 2024 compared to the prior year period.

The decrease in the segment's resident fees was primarily attributable to the disposition of communities since the beginning of the prior year period, which resulted in $13.4 million less in resident fees during the nine months ended September 30, 2024 compared to the prior year period.

The decrease was partially offset by an increase in the segment's same community RevPAR, comprised of a 220 basis point increase in same community weighted average occupancy and a 1.1% increase in same community RevPOR.

The increase in the segment's same community weighted average occupancy primarily reflects the impact of our execution on key initiatives to rebuild occupancy lost due to the pandemic.

The increase in the segment's same community RevPOR was primarily the result of annual in-place rate increases effective January 1, 2024, partially offset by an occupancy mix shift to more independent living residents.

The decrease in the segment's facility operating expense was primarily attributable to the disposition of communities since the beginning of the prior year period, which resulted in $10.7 million less in facility operating expense during the six months ended June 30, 2024 compared to the prior year period.

The increase in the segment's same community RevPOR was primarily the result of the current year rate increase, partially offset by an occupancy mix shift to more independent living residents.

The decrease in the segment's facility operating expense was primarily attributable to the disposition of communities since the beginning of the prior year period, which resulted in $13.9 million less in facility operating expense during the nine months ended September 30, 2024 compared to the prior year period.

The decrease in the segment's facility operating expense was partially offset by an increase in the segment's same community facility operating expense primarily attributable to broad inflationary pressure, an additional day of expense due to the leap year, and an increase in estimated insurance expense, partially offset by a decrease in the use of premium labor, primarily contract labor.

Operating Results - Other Income and Expense Items

The following table summarizes other income and expense items in our operating results for the six months ended June 30, 2024 and 2023.

Six Months Ended

June 30, Increase (Decrease)

The following table summarizes other income and expense items in our operating results for the nine months ended September 30, 2024 and 2023.

Nine Months Ended

September 30, Increase (Decrease)

(in thousands) 2024 2023 Amount Percent

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Depreciation and amortization 264,219 255,314 8,905 3.5 %

Asset impairment 1,708 520 1,188 NM

Asset impairment 2,642 9,606 (6,964) (72.5) %

Loss (gain) on sale of communities, net — (36,296) (36,296) (100.0)%

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Interest expense 185,570 173,558 12,012 6.9 %

Gain (loss) on debt modification and extinguishment, net (2,267) — 2,267 NM

Equity in earnings (loss) of unconsolidated ventures — (3,156) (3,156) (100.0)%

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Other non-operating income (loss) 7,121 16,512 (9,391) (56.9) %

Benefit (provision) for income taxes (409) (847) (438) (51.7) %

Benefit (provision) for income taxes (1,086) 1,029 (2,115) NM

Reimbursed Costs Incurred on Behalf of Managed Communities and Costs Incurred on Behalf of Managed Communities.

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General and Administrative Expense.

The decrease in general and administrative expense was primarily attributable to a decrease in organizational restructuring costs compared to the prior year period, primarily for severance costs for our senior leadership changes during the six months ended June 30, 2023, partially offset by an increase in non-cash stock-based compensation expense compared to the prior year period.

General and administrative expense includes transaction and organizational restructuring costs of $0.5 million and $3.7 million for the six months ended June 30, 2024 and 2023, respectively.

General and administrative expense includes transaction and organizational restructuring costs of $0.6 million and $3.8 million for the nine months ended September 30, 2024 and 2023, respectively.

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Asset Impairment.

During the nine months ended September 30, 2024, we recorded $2.6 million of non-cash impairment charges primarily due to non-cash impairment charges for property damage sustained at certain communities.

During the nine months ended September 30, 2023, we recorded $9.6 million of non-cash impairment charges, primarily related to the planned disposition of certain underperforming communities that have since been sold.

Loss (Gain) on Sale of Communities, net .

The decrease in gain on sale of communities, net was due to the sale of our one remaining entrance fee community during the six months ended June 30, 2023.

The decrease in gain on sale of communities, net was due to the sale of our one remaining entrance fee community during the nine months ended September 30, 2023.

Interest Expense.

The increase in interest expense was primarily due to an increase in interest expense on long-term debt primarily as a result of increases in variable interest rate indices.

The increase in interest expense was primarily due to an increase in the fair value of interest rate derivatives in the prior year and an increase in interest expense on long-term debt primarily as a result of increases in variable interest rate indices.

Gain (Loss) on Debt Modification and Extinguishment, Net.

The increase in loss on debt modification and extinguishment, net was primarily due to debt modification costs recognized during the nine months ended September 30, 2024 for the refinancing of mortgage debt previously scheduled to mature in September 2025.

Equity in Earnings (Loss) of Unconsolidated Ventures.

The decrease in equity in loss of unconsolidated ventures was due to the sale of our equity interest in the Health Care Services venture in December 2023.

Other Non-operating Income (Loss).

The decrease in other non-operating income is due to decreased income recognized for insurance recoveries from our property and casualty insurance policies.

Benefit (Provision) for Income Taxes.

The difference between our effective tax rate for the six months ended June 30, 2024 and 2023 was primarily due to an increase in the tax benefit on the vesting of restricted stock units for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

We recorded an aggregate deferred federal, state, and local tax benefit of $16.7 million for the six months ended June 30, 2024, which was partially offset by an increase in the valuation allowance of $16.3 million.

We recorded an aggregate deferred federal, state, and local tax benefit of $10.8 million for the six months ended June 30, 2023, which was offset by an increase to the valuation allowance of $11.0 million.

The difference between our effective tax rate for the nine months ended September 30, 2024 and 2023 was primarily due to an increase in the tax benefit on the vesting of restricted stock units for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

We recorded an aggregate deferred federal, state, and local tax benefit of $28.9 million for the nine months ended September 30, 2024, which was partially offset by an increase in the valuation allowance of $28.8 million.

We recorded an aggregate deferred federal, state, and local tax benefit of $23.0 million for the nine months ended September 30, 2023, which was partially offset by an increase to the valuation allowance of $21.0 million.

Liquidity and Capital Resources

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The following is a summary of cash flows from operating, investing, and financing activities, as reflected in the condensed consolidated statements of cash flows, and our Adjusted Free Cash Flow.

Six Months Ended

June 30, Increase (Decrease)

Nine Months Ended

September 30, Increase (Decrease)

(in thousands) 2024 2023 Amount Percent

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Net cash provided by (used in) investing activities (133,516) (135,747) (2,231) (1.6) %

Net cash provided by (used in) financing activities 33,715 (49,922) 83,637 NM

Net increase (decrease) in cash, cash equivalents, and restricted cash 12,836 (65,966) 78,802 NM

Net cash provided by (used in) financing activities (5,086) (69,154) (64,068) (92.6) %

Net increase (decrease) in cash, cash equivalents, and restricted cash (17,623) (71,272) (53,649) (75.3) %

Cash, cash equivalents, and restricted cash at beginning of period 349,668 474,548 (124,880) (26.3) %

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The decrease in net cash used in investing activities was primarily attributable to a $120.6 million decrease in purchases of marketable securities and a $23.8 million decrease in cash paid for capital expenditures compared to the prior year period.

These changes were partially offset by a reduction in net proceeds from sale of assets of $36.0 million and a reduction in the sale and maturities of marketable securities of $35.1 million.

The change in net cash provided by (used in) financing activities was primarily attributable to $50.0 million of debt secured by first priority mortgages on 11 communities in the current year period and the repayment of $29.6 million of mortgage debt upon the sale of our one remaining entrance fee community in the prior year period.

The change in Adjusted Free Cash Flow was primarily attributable to the decrease in net cash provided by operating activities, partially offset by a $24.8 million decrease in non-development capital expenditures, net compared to the prior year period.

These changes were partially offset by a reduction in the sale and maturities of marketable securities of $105.1 million and net proceeds from sale of assets of $36.2 million.

The decrease in net cash used in financing activities was primarily attributable to $50.0 million of debt secured by first priority mortgages on 11 communities in February 2024.

The change in Adjusted Free Cash Flow was primarily attributable to a $30.3 million decrease in non-development capital expenditures, net compared to the prior year period, partially offset by the decrease in net cash provided by operating activities and a decrease in property and casualty insurance proceeds.

Our principal sources of liquidity have historically been from:

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• investment in our healthcare and wellness initiatives;

• transaction consideration and related expenses;

• transaction consideration and related expenses, including consideration for the acquisition of 41 communities pursuant to agreements with certain of our lessors;

• capital expenditures and improvements;

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• other corporate initiatives (including information systems and other strategic projects).

In addition, we may use liquidity to the extent that we identify potential lease restructuring opportunities or exercise available lease purchase options.

In addition, we may use liquidity to the extent that we identify potential lease restructuring opportunities.

We are highly leveraged and have significant debt and lease obligations.

As of June 30, 2024, we had $3.7 billion of debt outstanding at a weighted average interest rate of 5.61%.

As of September 30, 2024, we had $3.7 billion of debt outstanding at a weighted average interest rate of 5.45%.

As of such date, 91.5%, or $3.4 billion, of our total debt obligations represented non-recourse property-level mortgage financings.

As of June 30, 2024, we had $0.9 billion of operating and financing lease obligations, and for the twelve months ending June 30, 2025, we will be required to make approximately $274.6 million of cash lease payments in connection with our existing operating and financing leases.

Total liquidity of $345.8 million as of June 30, 2024 included $290.0 million of unrestricted cash and cash equivalents (excluding restricted cash of $72.5 million), $19.7 million of marketable securities, and $36.1 million of availability on our secured credit facility.

Total liquidity as of June 30, 2024 increased $5.2 million from total liquidity of $340.7 million as of December 31, 2023.

The increase was primarily attributable to $50.0 million of mortgage debt proceeds, partially offset by negative $31.8 million of Adjusted Free Cash Flow and repayments of mortgage debt.

As of September 30, 2024, we had $1.5 billion of operating and financing lease obligations, and for the twelve months ending September 30, 2025, we will be required to make approximately $249.5 million of cash lease payments in connection with our existing operating and financing leases (after giving effect to our planned acquisition transactions for 41 communities).

In September 2024, we entered into privately negotiated agreements with certain of the holders of our outstanding 2.00% convertible senior notes due 2026 (the “2026 Notes”) to exchange a portion of our existing 2026 Notes for a newly issued series of 2029 New Notes.

On October 3, 2024, pursuant to the agreements, we issued $369.4 million principal amount of a newly issued series of 2029 New Notes.

Approximately $219.4 million principal amount of the 2029 New Notes was issued in exchange for $206.7 million principal amount of the 2026 Notes and $150.0 million principal amount of the 2029 New Notes was issued for cash.

Our net cash proceeds were approximately $135.0 million after subtracting fees, discounts, and estimated expenses in connection with the financings.

Refer to Note 6 to the condensed consolidated financial statements contained in Item 1.

Financial Statements for additional information on the convertible senior notes transactions.

In September 2024, we entered into three definitive agreements to acquire 41 communities that are currently leased by us for a combined purchase price of $610.0 million.

These three transactions are expected to close by year-end, subject to the satisfaction of customary closing conditions for real estate transactions.

We expect to fund these acquisitions through the assumption of approximately $194.5 million existing mortgage debt, the net cash proceeds from the sale of the 2029 New Notes, proceeds from non-recourse mortgage financing on certain of the assets, and cash on hand.

Total liquidity of $324.1 million as of September 30, 2024 included $254.7 million of unrestricted cash and cash equivalents (excluding restricted cash of $77.3 million), $29.7 million of marketable securities, and $39.7 million of availability on our secured credit facility.

Total liquidity as of September 30, 2024 decreased $16.6 million from total liquidity of $340.7 million as of December 31, 2023.

The decrease was primarily attributable to negative $18.0 million of Adjusted Free Cash Flow.

As described above, we received net cash proceeds of approximately $135.0 million for the exchange and issuance of convertible senior notes, net of fees, discounts, and estimated expenses in October 2024, which subsequently increased our current liquidity.

The Company intends to use the proceeds to fund the planned acquisitions and for general corporate purposes.

Our actual liquidity and capital funding requirements depend on numerous factors, including our operating results, our actual level of capital expenditures, general economic conditions, and the cost of capital, as well as other factors described in "Item 1A.

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In addition, our inability to satisfy underwriting criteria for individual communities may limit our access to our historical lending sources for such communities, including Fannie Mae and Freddie Mac.

As of June 30, 2024, 9% of our owned communities were unencumbered by mortgage debt.

As of June 30, 2024, our current liabilities exceeded current assets by $129.3 million.

As of September 30, 2024, 10% of our owned communities were unencumbered by mortgage debt.

As of September 30, 2024, our current liabilities exceeded current assets by $110.3 million.

Included in our current liabilities is $152.0 million of the current portion of operating and financing lease obligations, for which the associated right-of-use assets are excluded from current assets on our condensed consolidated balance sheets.

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There is no assurance that financing will continue to be available on terms consistent with our expectations or at all, or that our efforts will be successful in monetizing certain assets or exercising extension options.

We have completed the refinancing of all of our mortgage debt maturities due in 2024.

We have $100.0 million and $220.0 million of mortgage notes payable scheduled to mature in January 2025 and October 2025, respectively, with two one-year extension options, exercisable by us subject to the satisfaction of certain conditions.

We expect to satisfy the conditions to exercise the options to extend the mortgage notes payable for the first additional one-year term.

We have completed the refinancing of all of our other mortgage debt maturities due in 2024 and 2025.

Our inability to exercise available extension options or obtain refinancing proceeds sufficient to cover 2026 and later maturing indebtedness could adversely impact our liquidity, and may cause us to seek additional alternative sources of financing, which may be less attractive or unavailable.

Shortfalls in cash flows from estimated operating results or other principal sources of liquidity may have an

adverse impact on our ability to fund our planned capital expenditures or to fund investments to support our strategy.

Shortfalls in cash flows from estimated operating results or other principal sources of liquidity may have an adverse impact on our ability to fund our planned capital expenditures or to fund investments to support our strategy.

In order to continue some of these activities at historical or planned levels, we may incur additional indebtedness or lease financing to provide additional funding.

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Development capital expenditures include community expansions, major community redevelopment and repositioning projects, and the development of new communities.

The following table summarizes our capital expenditures for the six months ended June 30, 2024 for our consolidated business.

The following table summarizes our capital expenditures for the nine months ended September 30, 2024 for our consolidated business.

(in thousands)

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(2) Amount is included in Adjusted Free Cash Flow.

In the aggregate, we expect our full-year 2024 non-development capital expenditures, net of anticipated lessor reimbursements, to be approximately $180.0 million.

In the aggregate, we expect our full-year 2024 non-development capital expenditures, net of anticipated lessor reimbursements and property and casualty insurance proceeds, to be approximately $180.0 million.

We anticipate that our 2024 capital expenditures will be funded from cash on hand, cash equivalents, cash flows from operations, reimbursements from lessors, and reimbursement from our property and casualty insurance policies.

We received $6.3 million of such insurance reimbursements in the nine months ended September 30, 2024.

Credit Facilities

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Amounts drawn under the facility will bear interest at the Secured Overnight Financing Rate ("SOFR") plus an applicable margin ranging from 2.5% to 3.0% based upon the percentage of the total commitment drawn.

Additionally, a quarterly commitment fee of 0.25% per annum was applicable on the unused portion of the facility as of June 30, 2024.

Additionally, a quarterly commitment fee of 0.25% per annum was applicable on the unused portion of the facility as of September 30, 2024.

The revolving credit facility is currently secured by first priority mortgages and negative pledges on certain of our communities.

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 June 30, 2024, $58.8 million of letters of credit and no cash borrowings were outstanding under our $100.0 million secured credit facility and the facility had $36.1 million of availability.

We also had a separate secured letter of credit facility providing up to $17.0 million of letters of credit as of June 30, 2024 under which $15.7 million had been issued as of that date.

As of September 30, 2024, $58.5 million of letters of credit and no cash borrowings were outstanding under our $100.0 million secured credit facility and the facility had $39.7 million of availability.

We also had a separate secured letter of credit facility providing up to $17.0 million of letters of credit as of September 30, 2024 under which $15.7 million had been issued as of that date.

Long-Term Leases

As of June 30, 2024, we operated 277 communities under long-term leases (263 operating leases and 14 financing leases).

As of September 30, 2024, we operated 277 communities under long-term leases (227 operating leases and 50 financing leases).

The substantial majority of our lease arrangements are structured as master leases.

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The leases relating to these communities are generally fixed rate leases with annual escalators that are either fixed or based upon changes in the consumer price index or leased property revenue.

Approximately 88% of our community lease payments for the six months ended June 30, 2024 are subject to a weighted average maximum annual increase of 2.7% for community leases subject to fixed annual escalators or variable annual escalators based on the consumer price index subject to a cap.

Approximately 88% of our community lease payments for the nine months ended September 30, 2024 are subject to a weighted average maximum annual increase of 2.7% for community leases subject to fixed annual escalators or variable annual escalators based on the consumer price index subject to a cap.

The remaining community lease payments are subject to variable annual escalators primarily based upon the change in the consumer price index.

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

The existing lease maturities of our senior housing community leases as of September 30, 2024 are as follows

(without giving effect to future renewals or extension options and assuming the closing of the pending lease acquisition transactions involving 41 communities described above).

Years Ending December 31,

Community Count Total Units

2025 122 10,347

Thereafter 110 6,283

Subtotal 236 17,071

Communities subject to acquisition agreements 41 2,789

Total 277 19,860

In the aggregate, our cash flow from our leased portfolio is negative after giving effect to capital expenditures and allocated general and administrative expense.

We expect to renew, extend, or restructure leases with respect to certain leases where economically advantageous.

One master lease reflected in the table above covers 120 communities and is scheduled to mature on December 31, 2025.

Pursuant to the terms of the master lease, our renewal notice deadline expires at the end of November 2024.

To the extent we do not renew the lease and otherwise do not reach agreement on a restructured arrangement with the landlord prior to the lease maturity, the lease would expire in accordance with its terms.

The community leases contain other customary terms, which may include assignment and change of control restrictions, maintenance and capital expenditure obligations, termination provisions, and financial covenants, such as those requiring us to maintain prescribed minimum liquidity, net worth, and stockholders' equity levels and lease coverage ratios.

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These radius restrictions could negatively affect our ability to expand, develop, or acquire senior housing communities and operating companies.

For the six months ended June 30, 2024 and 2023, our cash lease payments for our operating leases were $133.1 million and $122.4 million, respectively, and for our financing leases were $10.7 million and $20.0 million, respectively.

For the twelve months ending June 30, 2025, we will be required to make $274.6 million of cash lease payments in connection with our existing operating and financing leases.

For the nine months ended September 30, 2024 and 2023, our cash lease payments for our operating leases were $199.6 million and $188.8 million, respectively, and for our financing leases were $16.0 million and $25.2 million, respectively.

For the twelve months ending September 30, 2025, we will be required to make $249.5 million of cash lease payments in connection with our existing operating and financing leases (after giving effect to our planned acquisition transactions for 41 communities).

Debt and Lease Covenants

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These covenants include a requirement contained in certain of our long-term debt documents for us to maintain liquidity of at least $130.0 million at each quarter-end determination date.

As of June 30, 2024, our liquidity was $345.8 million.

As of September 30, 2024, our liquidity was $324.1 million.

In addition, our debt and lease documents generally contain non-financial covenants, such as those requiring us to comply with Medicare or Medicaid provider requirements and maintain insurance coverage.

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Furthermore, our mortgage debt is secured by our communities and, in certain cases, our long-term debt and leases are secured by a guaranty by us and/or one or more of our subsidiaries.

Therefore, if an event of default has occurred under any of our debt or lease documents, subject to cure provisions in certain instances, the respective lender or lessor would have the right to declare all the related outstanding amounts of indebtedness or cash lease obligations immediately due and payable, to foreclose on our mortgaged communities, to terminate our leasehold interests, to foreclose on other collateral securing the indebtedness and leases, to discontinue our operation of leased communities, and/or to pursue other remedies available to such lender or

Further, an event of default could trigger cross-default provisions in our other debt and lease documents (including documents with other lenders or lessors).

We cannot provide assurance that we would be able to pay the debt or lease obligations if they became due upon acceleration following an event of default.

As of June 30, 2024, we are in compliance with the financial covenants of our debt agreements and long-term lease agreements.

As of September 30, 2024, we are in compliance with the financial covenants of our debt agreements and long-term lease agreements.

Non-GAAP Financial Measures

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

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Equity in (earnings) loss of unconsolidated ventures — 1,426 — 3,156

Loss (gain) on debt modification and extinguishment, net 2,267 — 2,267 —

Non-operating loss (gain) on sale of assets, net (20) — (923) (860)

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

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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-Q

Item 2. Management’s Discussion and Analysis