What changed in this filing

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Item 1. Business

2025-02-19 compared with 2024-02-21 · 126 added, 89 removed, 389 unchanged (36% of the section changed)

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

As of December 31, 2024, we owned 353 communities (32,206 units), leased 266 communities (18,633 units), and managed 28 communities (4,256 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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We believe that we provide highly valuable services to seniors, and we continually strive to expand the number of seniors we serve through targeted efforts to increase our occupancy levels while remaining focused on charging an appropriate rate for the services we provide.

Over the near term, as occupancy continues to recover, we believe we can further improve controllable expense management and margin through leverage of fixed expenses while we continue to meet our residents' needs, provide high-quality care and personalized service, and remain in compliance with applicable regulatory requirements.

Over the near term, as occupancy continues to recover, we believe we can further improve controllable expense management and margin through leverage of fixed expenses while we continue to remain focused on meeting our residents' needs, providing high-quality care and personalized service, and remaining in compliance with applicable regulatory requirements.

With this strategic priority, we are working to ensure that all communities are appropriately priced within their market.

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We are a learning organization that uses multiple tools to obtain feedback from residents, their families, and our associates to improve our services to meet the changing needs of residents.

As we lengthen our associates' tenure, we anticipate an enhanced resident experience.

As we lengthen our associates' tenure, we believe this will translate into an even better resident experience.

The above three priorities coupled with robust supply-demand fundamentals are intended to provide long-term returns to our stockholders by driving organic growth through focusing on growing RevPAR (as defined below), Adjusted EBITDA (as defined below), and cash flow.

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We desire to enable those we serve to live well by offering our residents a high-quality healthcare and wellness platform.

We believe Brookdale is uniquely positioned to be a key senior living leader, and partner to providers and payors, in the value-based healthcare ecosystem.

As an example, we have been piloting our Brookdale HealthPlus program in a growing number of assisted living communities in certain markets.

We believe Brookdale is uniquely positioned to be not only a partner to providers and payors, but to be the senior living leader in the value-based healthcare ecosystem.

As an example, we expanded our Brookdale HealthPlus® program to a growing number of assisted living communities in certain markets.

Brookdale HealthPlus®, which is a community-based, technology-enabled, proactive care coordination program, is designed to help improve residents' quality of life through evidence-based preventative care coordination.

During the pilot, an independent third party found that Brookdale HealthPlus delivered measurable favorable outcomes compared to seniors with similar attributes living at home or in competitive senior living properties;

and as a result, we expect to introduce Brookdale HealthPlus to additional communities.

For the third consecutive year, an independent third party found that Brookdale HealthPlus® delivered measurable favorable outcomes compared to seniors with similar attributes living at home or in competitive senior living properties, with this year's outcomes showing even greater improvement than the previous year.

As a result, we expect to introduce Brookdale HealthPlus® to additional communities.

We also continue to pilot the expansion of our private duty services business to serve those living outside of our communities.

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Macroeconomic Conditions

A confluence of macroeconomic conditions, including labor pressures, high inflation, and increased interest rates, affected our operations during 2023.

A confluence of macroeconomic conditions, including labor pressures, high inflation, and elevated interest rates, continued to affect our operations during 2024.

Labor Pressures

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We began to experience pressures associated with the intensely competitive labor environment during 2021.

The United States unemployment rate remained at or below 4% each month during 2022 and 2023.

Labor pressures have resulted in higher-than-typical associate turnover and wage growth, and we have experienced difficulty in filling open positions timely.

We have increased our recruiting efforts to fill existing open positions, resulting in increasing the size of our workforce since the beginning of 2022.

We continue to analyze wage rates in our markets and make competitive adjustments.

Beginning in 2021, to cover existing open positions, we needed to increase our reliance on more expensive premium labor, primarily contract labor and overtime.

By increasing the number of shifts staffed with full- and part-time Brookdale associates rather than contract labor, our reliance on contract labor has moderated to pre-pandemic levels in the second half of 2023.

We continue to work to reduce our reliance on premium labor while maintaining focus on meeting our residents' needs, providing high-quality care and personalized service, and remaining in compliance with applicable regulatory requirements.

The labor component of our facility operating expense in our same community portfolio increased 11.0% during 2022 compared to the prior year.

The increase primarily resulted from merit and market wage rate adjustments, more hours worked with higher occupancy during the period, and an increase in the use of premium labor, primarily overtime.

By increasing the number of shifts staffed with full- and part-time Brookdale associates rather than contract labor, our contract labor costs have returned to pre-pandemic inflation-adjusted levels.

We continue to work to reduce our reliance on overtime while committing to remain focused on meeting our residents' needs, providing high-quality care and personalized service, and remaining in compliance with applicable regulatory requirements.

We continue to optimize our recruiting efforts to fill open positions, analyze wage rates in our markets, and make competitive adjustments.

The labor component of our facility operating expense in our same community portfolio increased 3.0% during 2024 compared to the prior year.

The increase primarily resulted from wage rate adjustments, partially offset by a decrease in the use of premium labor, primarily contract labor, as our associate turnover has declined and the size of our workforce has increased since the beginning of 2022.

While the impacts of the intensely competitive labor environment have moderated in 2023, we may continue to experience labor cost pressure as a result of the labor environment conditions described above.

The increase primarily resulted from wage rate adjustments and an additional day of expense during 2024 as a result of the leap year, partially offset by a decrease in the use of premium labor, primarily contract labor.

While the impacts of the intensely competitive labor environment have continued to moderate in 2024, we may continue to experience labor cost pressure as a result of the labor environment conditions described above.

Continued increased competition for, or a shortage of, nurses or other associates and general inflationary pressures have required and may require that we enhance our pay and benefits package to compete effectively for such associates.

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The United States consumer price index increased 21% since December 2020.

Despite our mitigation efforts and with higher occupancy, our non-labor facility operating expense in our same community portfolio increased 7.7% for 2023 compared to the prior year.

Despite our mitigation efforts and with higher occupancy, our non-labor facility operating expense in our same community portfolio increased 7.0% for 2024 compared to the prior year, primarily resulting from broad inflationary pressure, an additional day of expense due to the leap year, and increases in estimated insurance expense, property repair expense primarily as a result of severe weather events, and marketing expense.

Interest Rates

As of December 31, 2023, we had $1.5 billion of long-term variable rate debt outstanding which is indexed to the Secured Overnight Financing Rate ("SOFR") plus a weighted average margin of 239 basis points.

We are highly leveraged and have significant debt obligations.

As of December 31, 2024, we had $4.1 billion of debt outstanding, including $3.0 billion of long-term fixed rate debt at a weighted average interest rate of 4.50% and $1.1 billion of long-term variable rate debt outstanding which is indexed to the Secured Overnight Financing Rate ("SOFR") plus a weighted average margin of 241 basis points.

Accordingly, our annual interest expense related to long-term variable rate debt is directly affected by movements in SOFR.

The SOFR increased since the beginning of 2022, ending 2023 more than 500 basis points higher than year-end 2021.

For 2023, our debt interest expense increased 32.9% compared to the prior year, substantially all due to an increase in our interest expense associated with our long-term variable rate debt.

Increased interest earned on our cash, cash equivalents, and marketable securities partially offset such increased interest expense.

Resident Fee Increases

The rates we charge our residents are highly dependent on local market conditions and the competitive environment in which our communities operate.

Generally, we have increased our monthly rates, including rates for care and other services, for private pay residents on an annual basis beginning in January each year.

The annual rate adjustment effective January 1, 2023 for our in-place private pay residents was higher than our typical annual rate adjustment in order to help offset our recent increased costs as a result of labor pressures, high inflation, and increased interest rates.

As a result of rate and occupancy increases, our consolidated RevPAR (as defined below) for 2023 increased 11.3% compared to the prior year.

We have recently made the annual rate adjustment effective January 1, 2024 for our in-place private pay residents.

The average increase for 2024 was lower than the prior year increase and was again higher than our typical annual rate adjustment in order to help offset our increased costs.

Due to the competitive environment for new residents in our industry, our rate adjustments could slow our occupancy recovery progress or result in a decrease in occupancy in our communities.

Any use of promotional or other discounting would offset a portion of such rate adjustments in our RevPAR and RevPOR (as defined below) results.

In addition, our rate adjustments may not be sufficient to offset our increased costs in the event that labor expenses, inflation, or interest costs grow at rates higher than anticipated.

We have completed the refinancing of all of our debt maturities due in 2025.

Increases in market interest rates in recent years have resulted in higher interest rates for our recent debt financing and refinancing transactions, which has resulted in an increase in the weighted average interest rate of our fixed rate debt from 3.98% as of September 30, 2023 to 4.50% as of December 31, 2024.

Refer to Note 7 to the consolidated financial statements contained in "Item 8.

Financial Statements and Supplementary Data" for additional information on our recent debt financing and refinancing transactions.

We have approximately $0.7 billion of fixed rate debt maturing in 2026 and 2027 at a weighted average interest rate of 4.54%, which we may need to refinance at higher interest rates.

For the year ended December 31, 2024, our debt interest expense increased $5.8 million, or 2.7%, compared to the prior year, primarily due to higher fixed interest rates on long-term debt obtained subsequent to the beginning of the prior year.

Community Acquisitions

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

In October 2024, we obtained $135.0 million of net cash proceeds from convertible senior notes issuance and exchange transactions in order to fund a portion of the purchase price for these acquisitions.

Refer to Note 7 to the consolidated financial statements contained in "Item 8.

Financial Statements and Supplementary Data" for additional information on the convertible senior notes transactions.

International JV / Welltower Portfolio Acquisition

In September 2024, we entered into a definitive agreement to acquire 11 senior living communities (1,228 units) that we leased from a joint venture between Welltower Inc.

(“Welltower”) and its joint venture partners for a purchase price of $300.0 million.

Effective December 17, 2024, we successfully closed on the acquisition.

As part of this transaction, we assumed $194.5 million of existing 4.92% fixed rate agency debt which is scheduled to mature in March 2027 and the remainder of the purchase price was paid with cash on hand.

Previously, these communities were held in a triple-net lease with annualized cash rent payments of $22.3 million and an initial maturity of August 31, 2028.

Diversified Healthcare Trust Portfolio Acquisition

In September 2024, we entered into a definitive agreement to acquire 25 senior living communities (875 units) that, as of December 31, 2024, we leased from Diversified Healthcare Trust for a purchase price of $135.0 million.

As of December 31, 2024, these communities were held in a triple-net lease with annualized current cash rent payments of $10.2 million and a current maturity of December 31, 2032.

We expect to complete the acquisition transaction in the first quarter of 2025, subject to the satisfaction of customary closing conditions for real estate transactions.

We expect to fund the acquisition of the 25 communities through proceeds from mortgage financing and cash on hand.

Welltower Portfolio Acquisition

In September 2024, we entered into a definitive agreement to acquire five senior living communities (686 units) that are currently leased by us from Welltower for a purchase price of $175.0 million.

As of December 31, 2024, these communities were held in a triple-net lease with annualized current cash rent payments of $13.7 million.

We expect to complete the acquisition transaction in the first quarter of 2025, subject to the satisfaction of customary closing conditions for real estate transactions.

We expect to fund the acquisition of the five communities through proceeds from mortgage financing and cash on hand.

Community Lease Amendments

Ventas Lease Amendment

In December 2024, we and certain of our subsidiaries, and Ventas, Inc.

(“Ventas”) and certain of its subsidiaries, amended the existing master lease arrangement pursuant to which we lease 120 communities (10,180 units).

Beginning January 1, 2026, we will continue to lease 65 communities (4,055 units) (“Renewal Communities”) and the remaining 55 communities (6,125 units) (“Non-renewal Communities”) that are not renewed will either be sold by Ventas or transitioned, with such transitions commencing on or after September 1, 2025.

The amended master lease arrangement provides for an aggregate annual minimum rent for the Renewal Communities of $64.0 million beginning on January 1, 2026.

Effective on January 1, 2027, and on January 1 of each lease year thereafter, the annual minimum rent will continue to be subject to an escalator equal to 3%.

Under the amended master lease arrangement, the term of the leases for the Renewal Communities was extended through December 31, 2035 with one 10-year extension option remaining.

In addition, Ventas has agreed to fund costs associated with capital expenditures at the communities subject to the master lease arrangement in the aggregate amount of up to $35.0 million during the calendar years 2025 to 2027, provided that, with respect to any such amounts funded by Ventas, the annual rent under the master lease arrangement will prospectively increase by the amount of each reimbursement multiplied by the greater of (i) 8% and (ii) the United States 10-Year Treasury Rate plus 3.5%.

No more than $15.0 million may be funded in each calendar year.

The amended master lease arrangement provides that Ventas will use commercially reasonable efforts to sell 11 of the Non-renewal Communities.

Rent for any Non-renewal Communities to be sold will continue through December 31, 2025 regardless of the date of the sale (subject to a potential rent credit associated with the sale of one large community in the group).

For the remaining 44 Non-renewal Communities, Ventas will begin transitions on or after September 1, 2025.

Rent will terminate with respect to any community that is transitioned on the earlier of the date of such transition or December 31, 2025.

In the event any Non-renewal Community is not sold or transitioned by December 31, 2025, we may manage such communities at a management fee of 5% of managed revenue, generally until the earlier of the transition or sale of such community or December 31, 2026.

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.

The amended master lease has an initial term to expire on December 31, 2037.

As part of the amendment, Omega agreed to make available up to $80.0 million to fund costs associated with capital expenditures for the communities through December 31, 2037.

The annual rent under the lease will not be adjusted upon reimbursements for capital expenditures in the aggregate amount of up to $30.0 million of the $80.0 million pool, which is available in certain tranches through June 30, 2028.

With respect to the remaining $50.0 million of the $80.0 million pool, the annual rent under the lease will prospectively increase by the amount of each reimbursement multiplied by 9.5%.

The $50.0 million is available in certain tranches beginning January 1, 2025, subject to certain annual reimbursement caps specified in the lease.

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.

The Senior Living Industry

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NIC data shows that senior housing occupancy decreased for four consecutive quarters between March 31, 2020 and March 31, 2021, with nearly all markets falling to record low occupancy by the first quarter of 2021.

We cannot predict with reasonable certainty when the senior housing industry occupancy rate will return to pre-pandemic levels or the extent to which the pandemic’s effect on demand may adversely affect the amount of resident fees we are able to collect from our residents.

NIC data shows that new construction starts and openings for the senior housing industry have decreased significantly for 2023 compared to the peaks in the last decade.

Since the record low occupancy in 2021, NIC data shows that senior housing occupancy has returned to pre-pandemic levels through greater demand than historical levels, coupled with low inventory growth .

NIC data shows that new construction starts and openings for the senior housing industry have decreased significantly for 2023 and 2024 compared to the peaks in the decade prior to the start of the COVID-19 pandemic.

The more recent impact of the pandemic, the macroeconomic factors discussed above, higher construction costs, increased interest rates, and tighter credit conditions may continue to impact new constructions starts and competitive new openings for a period of time.

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Consequently, we may encounter competition that could limit our ability to attract and retain residents and associates, raise or maintain resident fees, and expand our business, which could have a material adverse effect on our occupancy, revenues, results of operations, and cash flows.

Due to the industry's current lower than pre-pandemic occupancy levels, certain competitors may price aggressively in order to capture market share.

Our major senior housing competitors include Atria Senior Living Inc., Life Care Services, LLC, Sunrise Senior Living, LLC, Discovery Senior Living, LLC, and Erickson Senior Living, LLC, and multiple regional providers with large localized market presence, as well as a large number of not-for-profit entities.

Additionally, while we believe it has become increasingly difficult for newly developed senior living communities to compete at our price points, certain competitors may price aggressively in order to better capture market share.

Our major senior housing competitors include Atria Senior Living Inc., Life Care Services, LLC, Discovery Senior Living, LLC, Erickson Senior Living, LLC, and Sunrise Senior Living, LLC and multiple regional providers with large localized market presence, as well as a large number of not-for-profit entities.

Over the long term we plan to evaluate and, where opportunities arise, pursue development, investment, and acquisition opportunities.

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In addition, several publicly-traded and non-traded real estate investment trusts ("REITs") and private equity firms have similar objectives as we do, along with greater financial resources and/or lower costs of capital than we are able to obtain.

Partially as a result of tax law changes enacted through REIT Investment Diversification and Empowerment Act ("RIDEA"), we now compete more directly with the various publicly-traded healthcare REITs for the acquisition of senior housing properties, the largest of which are Ventas, Inc.

Partially as a result of tax law changes enacted through REIT Investment Diversification and Empowerment Act ("RIDEA"), we compete more directly with the various publicly-traded healthcare REITs for the acquisition of senior housing properties, the largest of which are Ventas, Inc.

and Welltower Inc.

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For the year ended December 31, 2024, we generated 93.8% of our resident fee revenue from private pay residents, 4.8% from government reimbursement programs (primarily Medicaid and Medicare), and 1.4% from other payor sources.

Our owned communities generated 58.6% of our resident fee revenue and our leased communities generated 41.4% of our resident fee

Our owned communities generated 58.8% of our resident fee revenue, and our leased communities generated 41.2% of our resident fee revenue.

The table below shows the percentage of our resident fee and management fee revenue attributable to each of our segments or All Other category for the year ended December 31, 2024.

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Residents typically enter an assisted living or memory care community due to a relatively immediate need for services that may have been triggered by a medical event.

Our assisted living and memory care communities include both freestanding, multi-story

communities with more than 50 units, as well as smaller, freestanding, single story communities.

Although building layouts will vary depending on specific location, the community may include (i) private studio, one-bedroom, and one-bedroom deluxe apartments, or (ii) individual rooms for one or two residents in wings or "neighborhoods" scaled to a single-family home, that would include a living room, dining room, patio or enclosed porch, laundry room, and personal care area, as well as a caregiver work station.

Our assisted living and memory care communities include both freestanding, multi-story communities with more than 50 units, as well as smaller, freestanding, single story communities.

We also provide memory care services at freestanding memory care communities that are specifically designed for residents with dementia, including Alzheimer's disease and other forms of cognitive impairment.

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Given our diverse mix of independent living, assisted living, memory care, and CCRCs communities, we are able to meet a wide range of our residents' needs.

Through our comprehensive network of

services, we help to provide seniors with care, connection, and services to support their lifestyle in an environment that feels like home.

Through our comprehensive network of services, we help to provide seniors with care, connection, and services to support their lifestyle in an environment that feels like home.

We believe that we are one of the few companies in the senior living industry with this capability and the ability to do so at scale on a national basis.

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We negotiate contracts for food, insurance, and other goods and services with the advantages that scale provides.

In addition, we have and will continue to leverage our centralized community support functions such as finance, human resources, legal, information technology, and marketing.

In addition, we have and will continue to leverage our centralized community support functions such as finance, human resources, legal, information technology, and marketing to meet individualized community needs.

Our size, geographic footprint, and emergency response expertise enables us to provide effective solutions for our resident population in adverse weather events.

Many of these weather events may result in emergency evacuations.

We have protocols and resources in place that allow our communities to be nimble and move our residents quickly but safely to other Brookdale communities or hotels as needed and respond to the event based on their individual circumstances.

Part of this success is attributable to our practice of ensuring ample staff accompanies the evacuated residents, providing familiar faces and high quality level of care during difficult situations.

• The size of our business allows us to participate in value-based care.

Due to the scale of residents we serve, our organization is uniquely positioned to collaborate with large hospitals, healthcare systems, and nationwide provider groups.

In today’s healthcare landscape, where value-based care is a priority, providers seek strategic partners to close gaps in care and ensure individuals receive the services they need.

Likewise, private insurance companies actively seek partnerships to help improve quality outcomes for their members while reducing overall healthcare costs.

We bring a distinct advantage by offering communities that are strategically located within proximity of each other and by being able to replicate our model across multiple markets and states.

This geographic presence and scalability make us an ideal partner for healthcare companies aiming to expand their impact and achieve system-wide goals.

Our innovative clinical model is designed to align with healthcare providers' objectives, focusing on delivering care directly within our communities.

By emphasizing preventive care and effective management of chronic conditions, we aim to reduce unnecessary emergency room visits and hospitalizations.

This approach improves the convenience and quality of care for residents and aligns with broader healthcare goals of cost reduction and improved health outcomes.

Our senior housing business has typically experienced some seasonality, which we experience in certain regions more than others, due to weather patterns, geography, and higher incidence and severity of flu and other illnesses during winter months.

Although our seasonal pattern varies from year to year and occupancy patterns have been affected by the COVID-19 pandemic, historically our average monthly occupancy has generally begun to decline sequentially toward the end of the fourth quarter of the year, and we have generally expected average monthly occupancy to begin to increase towards the end of the second quarter each year with the third quarter historically being the highest occupancy growth period of the year.

Although our seasonal pattern varies from year to year, our average monthly occupancy generally begins to decline sequentially toward the end of the fourth quarter of the year, and we generally expect average monthly occupancy to begin to increase towards the end of the second quarter each year with the third quarter historically being the highest occupancy growth period of the year.

Utility expenses trend seasonally high in the first quarter and third quarter of each year.

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Approximately 1,400 centralized and regional community support associates support our community-based associates.

As of December 31, 2023, approximately 80% of our associates are women, who comprise approximately 70% of the leadership roles at our communities and community support centers.

Approximately 60% of our associates and 17% of individuals in our leadership roles are people of color.

During 2024, we continued to focus on hiring the best associates and reducing turnover in order to decrease our use of more expensive premium labor.

We seek to ensure that our communities are staffed with full and part-time associates.

By increasing

the number of shifts staffed with full- and part-time Brookdale associates rather than contract labor, our reliance on contract labor has moderated to pre-pandemic levels in the second half of 2023.

We seek to ensure that our communities are staffed with the appropriate mix of full and part-time associates.

By increasing the number of shifts staffed with our full- and part-time associates rather than contract labor, our contract labor costs have returned to pre-pandemic inflation-adjusted levels.

We continue to work to reduce our reliance on overtime while remaining focused on meeting our residents' needs, providing high-quality care and personalized service, and remaining in compliance with applicable regulatory requirements.

We continue to optimize our recruiting efforts to fill open positions, analyze wage rates in our markets, and make competitive adjustments.

Inclusion and Diversity

To attract and retain associates, we are committed to maintaining a welcoming and inclusive environment where people have an equal chance to grow and succeed.

We support our associates by providing an open door policy, offering training to help our people grow and to understand our commitment to providing a workplace free from discrimination and harassment, consistently enforcing our policies, and maintaining the expectation that all our associates will be treated with dignity and respect.

Brookdale is committed to inclusion and diversity – built on a foundation of trust, partnership, courage, and passion.

We define diversity as the representation of associates from different groups, ideas, perspectives, and values.

We define inclusion as a culture of policies and practices that actively engages and provides each of our associates with the opportunity to be successful at Brookdale.

We believe an inclusive and diverse culture can help achieve our mission by:

• Attracting and retaining the best talent by recruiting from a broad array of backgrounds for all levels of the organization and investing in our talent;

• Increasing growth, productivity, and engagement by fostering a workplace where all associates feel valued and contribute to their fullest potential;

• Making Brookdale the place for top talent, driving outstanding service for our residents, and increasing stockholder value;

• Equipping our associates with resources to serve the changing demographics and needs of residents.

In 2022, we launched our first six-month long development program focused on identifying a diverse mix of associates interested in an Executive Director career path, which continued with the selection of our second cohort in 2023.

Approximately 40% of the program participants identify as people of color.

This program helps equip future leaders with the skills they need to advance their career with Brookdale.

Talent Acquisition, Engagement, Development, and Retention

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We optimized our field recruiting strategy through close collaboration with local operational leadership on current and anticipated workforce planning needs, leveraging an agile market and region-based approach to provide targeted hiring support, while continuously improving systems and processes.

We implemented additional ways to support recruiting from military settings.

Additionally, we continue to source from employment websites created for under-represented groups to expand our pipeline of candidates.

We offer learning opportunities for our associates when they join Brookdale and throughout their careers to better serve our residents and to grow their career.

Additionally, we have implemented ways to support recruiting from military settings, including veterans.

We also actively work to partner with nursing schools, nationally and locally, to recruit nursing students to work in assisted living.

We offer ongoing learning opportunities for our associates beyond the onboarding programs they participate in when they join Brookdale to ensure they have learning solutions available to them to build long-term careers at Brookdale and better serve our residents throughout their careers.

Our Brookdale University provides training and leadership development for leaders across the organization.

In addition to internal development opportunities, we have also launched multiple programs to advance fees and tuition assistance for certain associates to pursue relevant certifications.

In addition to internal development opportunities, we have also developed a program to build business acumen skills to drive improved community performance, and associates continue to have opportunities for professional development through our advanced fee and tuition assistance programs.

We believe the performance of our individual communities and of our company as a whole are correlated to retention of our key community leaders.

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As a result of our retention initiatives, our retention of key community leaders in our same community portfolio increased for 2024 compared to 2023.

We also believe that it is important to hear from our associates as a way to engage and retain them.

To that end, in 2023, we conducted engagement pulse surveys for specific populations to focus on certain actions to engage and retain them.

We also believe that it is important to hear from our associates as a way to engage and retain them and have various listening systems that are utilized for feedback.

To that end, in 2024, we conducted an associate engagement survey for all associates to focus on certain actions to engage and retain them.

Total Rewards

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We also know maintaining overall well-being is important, which is why we offer benefits to cover a spectrum of needs.

For example, full-time associates enrolled in one of our medical plans can receive a wellness incentive for completing their annual physical.

Associates enrolled in a Brookdale medical plan are also eligible to participate in a free coach-led digital program for chronic back, knee, or hip pain.

They also are able to use a mobile phone application to help individuals process and cope with life’s challenges, for free.

Brookdale also recognizes the importance of financial wellbeing, which is why we offer access to a financial wellness program for all associates.

For example, all associates have access to free short-term counseling and well-being coaching.

In addition, full-time associates enrolled in one of our medical plans can receive a wellness incentive for completing their annual physical.

Associates enrolled in a Brookdale medical plan are also eligible to participate in a free coach-led digital program for weight loss, diabetes management and reversal, as well as chronic back, knee, or hip pain.

We also recognize the importance of financial wellbeing, which is why we offer access to a financial wellness program for all associates.

Welcoming and Inclusive Environment

To attract and retain associates, we are committed to maintaining a welcoming and inclusive environment built on a foundation of trust, partnership, courage, and passion where people have an equal chance to grow and succeed.

We define diversity as the representation of associates from different groups, ideas, perspectives, and values.

We define inclusion as a culture of policies and practices that actively engages and provides each of our associates with the opportunity to be successful at Brookdale.

We believe an inclusive and diverse culture can help achieve our mission by:

• Attracting and retaining the best talent by recruiting from a broad array of backgrounds for all levels of the organization and investing in our talent;

• Increasing growth, productivity, and engagement by fostering a workplace where all associates feel valued and contribute to their fullest potential;

• Making Brookdale the place for top talent, driving outstanding service for our residents, and increasing stockholder value;

• Equipping our associates with resources to serve the changing demographics and needs of residents.

Industry Regulation

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Federal, state, and local officials are increasingly focusing their efforts on enforcement of these laws and regulations.

This is particularly true for large for-profit, multi-community providers like us.

This can be particularly true for large for-profit, multi-community providers like us.

Some of the laws and regulations that impact our industry include:

state and local laws impacting licensure, protecting consumers against unfair and deceptive trade practices, and generally affecting the communities' management of property and equipment and how we otherwise conduct our operations, such as fire, health, safety, and privacy laws and regulations;

federal and state laws governing Medicare and Medicaid, which regulate allowable costs, pricing, quality of services, quality of care, food service, resident rights (including abuse and neglect) and fraud;

federal and state laws governing Medicare and Medicaid, which regulate reimbursable costs, rates, quality of services, quality of care, food service, resident rights (including abuse and neglect) and fraud;

federal and state residents' rights statutes and regulations;

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From time to time in the ordinary course of business, we receive survey reports from state or federal regulatory bodies citing deficiencies resulting from such inspections or surveys.

Most inspection deficiencies are resolved through a plan of corrective action relating to the community's operations, but the reviewing agency may have the authority to take further action against a licensed or certified community, which could result in the imposition of fines, imposition of a provisional or conditional license, suspension or revocation of a license, suspension or denial of admissions or denial of payment for admissions, loss of certification as a provider under federal and/or state reimbursement programs, or imposition of

other sanctions, including criminal penalties.

Loss, suspension, or modification of a license may also cause us to default under our debt and lease documents and/or trigger cross-defaults.

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The Health Insurance Portability and Accountability Act of 1996, or HIPAA, and the Balanced Budget Act of 1997 expanded the penalties for healthcare fraud.

With respect to our participation in federal healthcare reimbursement programs, the government or private individuals acting on behalf of the government may bring an action under the False Claims Act alleging that a healthcare provider has defrauded the government and seek treble damages for false claims and the payment of additional monetary civil penalties.

With respect to our participation in federal healthcare reimbursement programs, the government or private individuals acting on behalf of the

government may bring an action under the False Claims Act alleging that a healthcare provider has defrauded the government and seek treble damages for false claims and the payment of additional monetary civil penalties.

The False Claims Act allows a private individual with knowledge of fraud to bring a claim on behalf of the federal government and earn a percentage of the federal government's recovery.

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Authorities have interpreted this statute very broadly to apply to many practices and relationships between healthcare providers and sources of patient referral.

If we were to violate the federal Anti-Kickback Statute, we may face criminal penalties and civil sanctions, including fines and possible exclusion from government reimbursement programs, which

may also cause us to default under our debt and lease documents and/or trigger cross-defaults.

If we were to violate the federal Anti-Kickback Statute, we may face criminal penalties and civil sanctions, including fines and possible exclusion from government reimbursement programs, which may also cause us to default under our debt and lease documents and/or trigger cross-defaults.

Adverse consequences may also result if we violate federal Stark laws related to certain Medicare and Medicaid physician referrals.

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To the best of our knowledge, we are in compliance with these rules.

In addition, states have begun to enact more comprehensive privacy laws and regulations addressing consumer rights to data protection or transparency.

There are five states with comprehensive privacy laws effective in 2023.

Additional state legislative and regulatory efforts to regulate consumer privacy protection have passed in 2023 with laws becoming effective in 2024 and beyond.

States have continued to enact and enforce comprehensive privacy laws and regulations addressing individual consumer rights regarding data protection and/or transparency.

These legislative and regulatory developments will continue to influence the design and operation of our business and our privacy and security efforts.

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Medicaid is a medical assistance program administered by each state, funded with federal and state funds pursuant to which healthcare benefits are available to certain indigent or disabled patients.

We receive reimbursements under Medicaid (including state Medicaid waiver programs) for many of our assisted living and memory care communities.

We receive reimbursements under Medicaid for certain of our CCRC communities and through state Medicaid waiver programs for many of our skilled nursing and assisted living and memory care units.

Reimbursement levels under the Medicare and Medicaid programs may not remain at levels comparable to present levels or may not be sufficient to cover the costs allocable to patients eligible for reimbursement.

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Generally, these rates are adjusted annually for inflation.

However, those adjustments may not reflect actual

increases of the cost of providing healthcare services.

However, those adjustments may not reflect actual increases of the cost of providing healthcare services.

In addition, Medicaid reimbursement can be impacted negatively by state budgetary pressures, which may lead to reduced reimbursement or delays in receiving payments.

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and protection of the environment and natural resources in connection with development or construction of our properties.

Some of our communities generate infectious or other hazardous medical waste due to the illness or physical condition of the residents, including, for example, blood-contaminated bandages, swabs and other medical waste products, and incontinence products of those residents diagnosed with an infectious disease.

products of those residents diagnosed with an infectious disease.

The management of infectious medical waste, including its handling, storage, transportation, treatment, and disposal, is subject to regulation under various federal, state, and local environmental laws.

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The regulations may affect the value of a building containing asbestos-containing materials and potential asbestos-containing materials in which we have invested.

Federal, state, and local laws and regulations also govern the removal,

encapsulation, disturbance, handling, and/or disposal of asbestos-containing materials and potential asbestos-containing materials when such materials are in poor condition or in the event of construction, remodeling, renovation, or demolition of a building.

Federal, state, and local laws and regulations also govern the removal, encapsulation, disturbance, handling, and/or disposal of asbestos-containing materials and potential asbestos-containing materials when such materials are in poor condition or in the event of construction, remodeling, renovation, or demolition of a building.

Such laws may impose liability for improper handling or a release to the environment of asbestos-containing materials and potential asbestos-containing materials and may provide for fines to, and for third parties to seek recovery from, owners or operators of real properties for personal injury or improper work exposure associated with asbestos-containing materials and potential asbestos-containing materials.

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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-K

Item 1. Business