What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-08-07 compared with 2025-05-07 · 110 added, 82 removed, 465 unchanged (29% of the section changed)

10 unchanged sentences

Accounts receivable, net 56,061 51,891

Assets held for sale 9,710 —

Prepaid expenses and other current assets, net 112,554 92,371

21 unchanged sentences

Total liabilities 6,034,686 6,121,657

Preferred stock, $ 0.01 par value, 50,000,000 shares authorized at March 31, 2025 and December 31, 2024;

Preferred stock, $ 0.01 par value, 50,000,000 shares authorized at June 30, 2025 and December 31, 2024;

no shares issued and outstanding

Common stock, $ 0.01 par value, 400,000,000 shares authorized at March 31, 2025 and December 31, 2024;

244,530,409 and 210,547,351 shares issued and 234,002,884 and 200,019,826 shares outstanding (including 27,972 unvested restricted shares as of March 31, 2025 and December 31, 2024)

Common stock, $ 0.01 par value, 400,000,000 shares authorized at June 30, 2025 and December 31, 2024;

247,982,005 and 210,547,351 shares issued and 237,454,480 and 200,019,826 shares outstanding (including 16,026 and 27,972 unvested restricted shares), respectively

Additional paid-in-capital 4,353,523 4,352,991

Treasury stock, at cost;

10,527,525 shares at March 31, 2025 and December 31, 2024

10,527,525 shares at June 30, 2025 and December 31, 2024

( 102,774 ) ( 102,774 )

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Resident fees $ 775,614 $ 739,709 $ 1,553,068 $ 1,483,950

9 unchanged sentences

Asset impairment 577 — 2,364 1,708

Loss (gain) on sale of communities, net ( 43 ) — ( 43 ) —

Costs incurred on behalf of managed communities 34,707 35,216 68,497 71,188

23 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Total equity, balance at beginning of period $ 148,135 $ 375,448 $ 213,905 $ 405,153

38 unchanged sentences

(Unaudited, in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash Flows from Operating Activities

Net income (loss) $ ( 108,032 ) $ ( 67,323 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Loss (gain) on debt modification and extinguishment, net 35,335 —

14 unchanged sentences

Operating lease assets and liabilities for lessor capital expenditure reimbursements 11,332 1,300

Net cash provided by (used in) operating activities 23,402 ( 1,146 )

Net cash provided by operating activities 106,966 54,524

Cash Flows from Investing Activities

Purchase of marketable securities — ( 19,591 )

Sale and maturities of marketable securities 20,000 30,000

26 unchanged sentences

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

As of March 31, 2025, the Company owned 383 communities, representing a majority of the Company's community portfolio, leased 236 communities, and managed 28 communities.

As of June 30, 2025, the Company owned 382 communities, representing a majority of the Company's community portfolio, leased 235 communities, and managed 28 communities.

Summary of Significant Accounting Policies

14 unchanged sentences

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

Reclassifications

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

Fair Value Measurements

2 unchanged sentences

The Company has not designated the interest rate cap and swap instruments as hedging instruments and as such, changes in the fair value of the instruments are recognized in earnings in the period of the change.

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

The interest rate derivative positions are valued using models developed by the respective

counterparty that use as their basis readily available observable market parameters (such as forward yield curves) and are classified within Level 2 of the valuation hierarchy.

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

The following table summarizes the Company's Secured Overnight Financing Rate ("SOFR") interest rate cap instruments as of March 31, 2025.

The following table summarizes the Company's Secured Overnight Financing Rate ("SOFR") interest rate cap instruments as of June 30, 2025.

($ in millions)

1 unchanged sentence

Weighted average fixed cap rate 4.27 %

Weighted average remaining term 1.0 year

Weighted average remaining term 0.9 years

Estimated asset fair value (included in other assets, net) $ 3.2

As of December 31, 2024, the estimated fair value of the interest rate cap instruments was $ 4.1 million included in other assets, net.

The following table summarizes the Company's SOFR interest rate swap instrument as of March 31, 2025.

As of December 31, 2024, the estimated fair value of the SOFR interest rate cap instruments was $ 4.1 million included in other assets, net.

The following table summarizes the Company's SOFR interest rate swap instrument as of June 30, 2025.

($ in millions)

3 unchanged sentences

Estimated fair value (included in other liabilities) $ ( 1.1 )

As of December 31, 2024, the estimated fair value of the interest rate swap instrument was $( 0.1 ) million included in other liabilities, net.

As of December 31, 2024, the estimated fair value of the SOFR interest rate swap instrument was $( 0.1 ) million included in other liabilities, net.

Long-term debt

1 unchanged sentence

The Company estimates the fair value of its convertible senior notes based on valuations provided by third-party pricing services.

The Company had outstanding long-term debt with a carrying amount of approximately $ 4.3 billion and $ 4.1 billion as of March 31, 2025 and December 31, 2024, respectively.

Fair value of the long-term debt is approximately $ 4.2 billion and $ 3.8 billion as of March 31, 2025 and December 31, 2024, respectively.

The Company had outstanding long-term debt with a carrying amount of approximately $ 4.3 billion and $ 4.1 billion as of June 30, 2025 and December 31, 2024, respectively.

Fair value of the long-term debt is approximately $ 4.2 billion and $ 3.8 billion as of June 30, 2025 and December 31, 2024, respectively.

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

Resident fee revenue by payor source is as follows.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Private pay 93.9 % 94.1 % 93.9 % 94.0 %

7 unchanged sentences

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

The Company had total deferred revenue (included within refundable fees and deferred revenue within the condensed consolidated balance sheets) of $ 58.9 million and $ 53.8 million, including $ 33.8 million and $ 29.4 million of monthly resident fees billed and received in advance, as of March 31, 2025 and December 31, 2024, respectively.

For the three months ended March 31, 2025 and 2024, the Company recognized $ 40.7 million and $ 35.2 million, respectively, of revenue that was included in the deferred revenue balance as of January 1, 2025 and 2024, respectively.

The Company had total deferred revenue (included within refundable fees and deferred revenue within the condensed consolidated balance sheets) of $ 54.8 million and $ 53.8 million, including $ 29.1 million and $ 29.4 million of monthly resident fees billed and received in advance, as of June 30, 2025 and December 31, 2024, respectively.

For the six months ended June 30, 2025 and 2024, the Company recognized $ 48.4 million and $ 42.8 million, respectively, of revenue that was included in the deferred revenue balance as of January 1, 2025 and 2024, respectively.

Property, Plant and Equipment and Leasehold Intangibles, Net

As of March 31, 2025 and December 31, 2024, net property, plant and equipment and leasehold intangibles consisted of the following.

(in thousands) March 31, 2025 December 31, 2024

As of June 30, 2025 and December 31, 2024, net property, plant and equipment and leasehold intangibles consisted of the following.

(in thousands) June 30, 2025 December 31, 2024

Land $ 557,695 $ 532,719

8 unchanged sentences

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

The Company recognized depreciation and amortization expense on its property, plant and equipment and leasehold intangibles of $ 91.0 million and $ 86.1 million for the three months ended March 31, 2025 and 2024, respectively.

The Company recognized $ 1.8 million and $ 1.7 million for the three months ended March 31, 2025 and 2024, respectively, of non-cash impairment charges in its operating results for its property, plant and equipment and leasehold intangibles assets.

The Company recognized depreciation and amortization expense on its property, plant and equipment and leasehold intangibles of $ 92.9 million and $ 88.0 million for the three months ended June 30, 2025 and 2024, respectively, and $ 183.8 million and $ 174.2 million for the six months ended June 30, 2025 and 2024, respectively.

The Company recognized $ 0.6 million for the three months ended June 30, 2025 of non-cash impairment charges in its operating results for its property, plant and equipment and leasehold intangibles assets and did no t recognize any impairment charges for the three months ended June 30, 2024.

The Company recognized $ 2.4 million and $ 1.7 million for the six months ended June 30, 2025 and 2024, respectively, of non-cash impairment charges in its operating results for its property, plant and equipment and leasehold intangibles assets.

As of June 30, 2025, 12 communities in the Assisted Living and Memory Care segment were classified as held for sale, resulting in $ 9.7 million of net property, plant and equipment and leasehold intangibles assets being recognized as assets held for sale within the condensed consolidated balance sheet.

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

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

Long-term debt consists of the following.

(in thousands) March 31, 2025 December 31, 2024

(in thousands) June 30, 2025 December 31, 2024

Fixed rate mortgage notes payable due 2026 through 2047;

weighted average interest rate of 4.74 % and 4.65 % as of March 31, 2025 and December 31, 2024, respectively

weighted average interest rate of 4.74 % and 4.65 % as of June 30, 2025 and December 31, 2024, respectively

$ 2,713,084 $ 2,599,028

Variable rate mortgage notes payable due 2026 through 2030;

weighted average interest rate of 6.78 % and 6.89 % as of March 31, 2025 and December 31, 2024, respectively

weighted average interest rate of 6.77 % and 6.89 % as of June 30, 2025 and December 31, 2024, respectively

1,216,769 1,110,642

Convertible notes payable due October 2026;

interest rate of 2.00 % as of both March 31, 2025 and December 31, 2024

interest rate of 2.00 % as of both June 30, 2025 and December 31, 2024

23,297 23,297

Convertible notes payable due October 2029;

interest rate of 3.50 % as of both March 31, 2025 and December 31, 2024

interest rate of 3.50 % as of both June 30, 2025 and December 31, 2024

369,445 369,445

Tangible equity units senior amortizing notes due 2025;

interest rate of 10.25 % as of both March 31, 2025 and December 31, 2024

interest rate of 10.25 % as of both June 30, 2025 and December 31, 2024

Notes payable for insurance premium financing due 2025;

interest rate of 6.16 % as of March 31, 2025

interest rate of 6.16 % as of June 30, 2025

Deferred financing costs, net ( 46,353 ) ( 49,074 )

2 unchanged sentences

Total long-term debt, less current portion $ 4,232,238 $ 4,022,008

As of March 31, 2025, the long-term debt, less current portion within the Company's condensed consolidated balance sheet includes $ 99.8 million of mortgage debt scheduled to mature in January 2026 for which the Company has the unilateral option to extend the maturity for one additional year subject to the satisfaction of certain conditions.

As of March 31, 2025, 87.7 %, or $ 3.8 billion, of the Company's total debt obligations represented non-recourse property-level mortgage financings.

As of March 31, 2025, $ 33.7 million of letters of credit and no cash borrowings were outstanding under the Company's $ 100.0 million secured credit facility.

The Company also had separate letter of credit facilities providing up to $ 37.0 million of letters of credit as of March 31, 2025 under which $ 35.7 million had been issued as of that date.

As of June 30, 2025, the long-term debt, less current portion within the Company's condensed consolidated balance sheet includes $ 98.9 million of mortgage debt scheduled to mature in January 2026 for which the Company has the unilateral option to extend the maturity for one year subject to the satisfaction of certain conditions.

As of June 30, 2025, 88.0 %, or $ 3.8 billion, of the Company's total debt obligations represented non-recourse property-level mortgage financings.

As of June 30, 2025, $ 1.9 million of letters of credit and no cash borrowings were outstanding under the Company's $ 100.0 million secured credit facility.

The Company also had separate letter of credit facilities providing up to $ 85.0 million of letters of credit as of June 30, 2025 under which $ 68.9 million had been issued as of that date.

2025 Mortgage Financings

9 unchanged sentences

The Company's failure to comply with applicable covenants, subject to cure provisions in certain instances, could constitute an event of default under the applicable debt documents.

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

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

documents with other lenders and lessors).

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

As of March 31, 2025, the Company is in compliance with the financial covenants of its debt agreements.

As of March 31, 2025, the Company operated 236 communities under long-term leases ( 227 operating leases and 9 financing leases).

As of June 30, 2025, the Company is in compliance with the financial covenants of its debt agreements.

As of June 30, 2025, the Company operated 235 communities under long-term leases ( 226 operating leases and 9 financing leases).

The substantial majority of the Company's lease arrangements are structured as master leases.

11 unchanged sentences

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

As of March 31, 2025, the Company is in compliance with the financial covenants of its long-term lease agreements.

As of June 30, 2025, the Company is in compliance with the financial covenants of its long-term lease agreements.

Lease right-of-use assets are reviewed for impairment whenever changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company did not recognize any such impairment charges for the three months ended March 31, 2025 and 2024.

The Company did not recognize any such impairment charges for the three and six months ended June 30, 2025 and 2024.

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

Three Months Ended

June 30, Six Months Ended

Operating Leases (in thousands)

2025 2024 2025 2024

Facility operating expense $ 2,075 $ 2,176 $ 4,134 $ 4,096

2 unchanged sentences

Operating lease expense adjustment (1)

4,846 13,483 8,699 26,572

Changes in operating lease assets and liabilities for lessor capital expenditure reimbursements ( 9,319 ) ( 1,051 ) ( 11,332 ) ( 1,300 )

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

Financing Leases (in thousands)

2025 2024 2025 2024

Depreciation and amortization $ 709 $ 2,898 $ 3,234 $ 5,770

4 unchanged sentences

Financing cash outflows from financing leases 297 265 586 527

Changes in financing lease assets and liabilities for lessor capital expenditure reimbursement ( 5 ) — ( 5 ) —

Total net cash outflows from financing leases $ 2,042 $ 5,375 $ 7,931 $ 10,698

The aggregate amounts of future minimum lease payments, including community, office, and equipment leases, recognized on the condensed consolidated balance sheet as of March 31, 2025 are as follows (in millions).

The aggregate amounts of future minimum lease payments (without giving effect to the potential early termination by Ventas, Inc.

("Ventas") of certain of the Company's community leases with maturity dates of December 31, 2025), including community, office, and equipment leases, recognized on the condensed consolidated balance sheet as of June 30, 2025 are as follows (in millions).

Year Ending December 31, Operating Leases Financing Leases

2025 (nine months) $ 174.9 $ 5.3

2025 (six months) $ 116.7 $ 3.6

2026 182.9 7.2

45 unchanged sentences

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

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

In January 2024, the court dismissed one of the two derivative lawsuits—styled Davis v.

Baier et al ., No.

3:20-cv-00929 (M.D.

Tenn.) (the “ Davis Action”).

Plaintiffs have appealed the dismissal of the Davis Action to the United States Court of Appeals for the Sixth Circuit;

that appeal is pending.

The other derivative lawsuit—styled Templin v.

Baier et al ., No.

Tenn.) (the “ Davis Action”) and Templin v.

3:21-cv-00373 (M.D.

Tenn.) (the “ Templin Action”)—remains pending in the Middle District of Tennessee (the “Court”) and asserts claims on behalf of the Company against certain current and former officers and directors for alleged breaches of duties owed to the Company.

The derivative complaints incorporate substantively similar allegations to the securities lawsuit previously described.

On May 2, 2025, plaintiff in the Templin Action filed a motion for preliminary approval of a proposed settlement, together with an executed settlement agreement.

On May 6, 2025, the Court entered an order preliminarily approving the proposed settlement.

The proposed settlement is subject to Court approval.

A settlement hearing is scheduled for July 9, 2025 at 1:00 p.m.

As required by the Court’s order preliminarily approving the settlement, the Company is furnishing the Summary Notice of Proposed Derivative Settlement as Exhibit 10.5 to this Quarterly Report on Form 10-Q.

Tenn.) (the “ Templin Action”).

The complaints in the Davis Action and the Templin Action incorporated substantively similar allegations to the securities lawsuit previously described.

In January 2024, the court dismissed the Davis Action and the plaintiffs subsequently filed an appeal in the United States Court of Appeals for the Sixth Circuit.

On July 9, 2025, the court approved a settlement of the Templin Action and entered a judgment dismissing the case with prejudice.

The appeal in the Davis Action was stayed pending the completion of the settlement approval proceedings in the Templin Action;

the parties informed the Sixth Circuit that they anticipate moving to dismiss the appeal as moot in light of the settlement of the Templin Action.

Stock-Based Compensation

2 unchanged sentences

Three months ended March 31, 2025 2,806 $ 5.12 $ 14,366

Three months ended June 30, 2025 175 $ 6.29 $ 1,100

Earnings Per Share

Potentially dilutive common stock equivalents for the Company include convertible senior notes, warrants, unvested restricted stock, restricted stock units, and, until March 31, 2025, prepaid stock purchase contracts.

As of March 31, 2025, $ 23.3 million in aggregate principal amount of the Company's 2.00 % convertible senior notes due 2026 (the "2026 Notes") remain outstanding and the maximum number of shares issuable upon settlement of the 2026 Notes is 3.9 million (after giving effect to 1.0 million additional shares that would be issuable upon conversion in connection with the occurrence of certain corporate or other events).

As of March 31, 2025, $ 369.4 million in aggregate principal amount of the Company’s 3.50 % convertible senior notes due 2029 (the “2029 Notes”) remain outstanding and the maximum number of shares issuable upon settlement of the 2029 Notes is 55.0 million (after giving effect to 13.9 million additional shares that would be issuable upon conversion in connection with the occurrence of certain corporate or other events).

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

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

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

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

During the three months ended March 31, 2025, the Company issued 2.6 million shares of common stock, upon the partial exercise of the Warrant by Ventas for 5.6 million shares, net of shares withheld to satisfy the aggregate exercise price.

As of March 31, 2025, the Warrant remains outstanding for the right to purchase 5.6 million shares of the Company's common stock.

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

Prior to June 30, 2025, the potentially dilutive common stock equivalents for the Company also included warrants and prepaid stock purchase contracts.

As of June 30, 2025, $ 23.3 million in aggregate principal amount of the Company's 2.00 % convertible senior notes due 2026 (the "2026 Notes") remain outstanding and the maximum number of shares issuable upon settlement of the 2026 Notes is 3.9 million (after giving effect to 1.0 million additional shares that would be issuable upon conversion in connection with the occurrence of certain corporate or other events).

As of June 30, 2025, $ 369.4 million in aggregate principal amount of the Company’s 3.50 % convertible senior notes due 2029 (the “2029 Notes”) remain outstanding and the maximum number of shares issuable upon settlement of the 2029 Notes is 55.0 million (after giving effect to 13.9 million additional shares that would be issuable upon conversion in connection with the occurrence of certain corporate or other events).

On July 26, 2020, the Company issued to Ventas a warrant (the "Warrant") to purchase 16.3 million shares of the Company’s common stock, $ 0.01 par value per share, at a price per share of $ 3.00 .

During the six months ended June 30, 2025, the Company issued 5.7 million shares of common stock, upon the exercise of the Warrant by Ventas for the remaining 11.1 million shares, net of shares withheld to satisfy the aggregate exercise price.

As of June 30, 2025, the Company had no outstanding warrants.

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

1 unchanged sentence

In March 2025, the Company elected to exercise its right to settle the remaining outstanding 2,291,338 prepaid stock purchase contracts, pursuant to the early settlement right in the purchase contract agreement, and the Company delivered 29,636,386 shares of the Company's common stock upon settlement.

As of March 31, 2025, the Company had no outstanding prepaid stock purchase contracts and $ 7.2 million payable in 2025 for the senior amortizing notes component of the Units.

As of June 30, 2025, the Company had no outstanding prepaid stock purchase contracts and $ 1.5 million payable in 2025 for the senior amortizing notes component of the Units.

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

The following table summarizes the computation of basic weighted average shares presented in the condensed consolidated statements of operations.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2025 2024 2025 2024

6 unchanged sentences

The Company has the following potentially outstanding shares of common stock, which were excluded from the computation of diluted net income (loss) per share attributable to common stockholders in both periods as a result of the net loss.

As of March 31,

As of June 30,

(in millions) 2025 2024

7 unchanged sentences

Total 63.4 64.7

The difference between the Company's effective tax rate for the three months ended March 31, 2025 and 2024 was primarily due to an increase in the benefit recorded on operational losses during the three months ended March 31, 2025.

The Company recorded an aggregate deferred federal, state, and local tax benefit of $ 15.9 million for the three months ended March 31, 2025, which was partially offset by an increase to the valuation allowance of $ 14.7 million.

The Company recorded an aggregate deferred federal, state, and local tax benefit of $ 7.6 million for the three months ended March 31, 2024, which was partially offset by an increase to the valuation allowance of $ 7.2 million.

The difference between the Company's effective tax rate for the three and six months ended June 30, 2025 and 2024 was primarily due to an increase in the benefit recorded on operational losses during the three and six months ended June 30, 2025.

The Company recorded an aggregate deferred federal, state, and local tax benefit of $ 9.1 million for the three months ended June 30, 2025, which was partially offset by an increase to the valuation allowance of $ 8.3 million.

The Company recorded an aggregate deferred federal, state, and local tax benefit of $ 24.9 million for the six months ended June 30, 2025, which was partially offset by an increase to the valuation allowance of $ 23.0 million.

The Company 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 to the valuation allowance of $ 9.2 million.

The Company 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 to the valuation allowance of $ 16.3 million.

The Company evaluates its 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.

The Company's valuation allowance as of March 31, 2025 and December 31, 2024 was $ 536.2 million and $ 521.5 million, respectively.

The increase in the valuation allowance for the three months ended March 31, 2025 and 2024 is the result of current operating losses during the three months ended March 31, 2025 and 2024 and by the anticipated reversal of future tax liabilities offset by future tax deductions.

The Company recorded interest charges related to its tax contingency reserve for cash tax positions for the three months ended March 31, 2025 and 2024 which are included in income tax expense or benefit for the period.

As of March 31, 2025, tax returns for years 2020 through 2023 are subject to future examination by tax authorities.

The Company's valuation allowance as of June 30, 2025 and December 31, 2024 was $ 544.5 million and $ 521.5 million, respectively.

The increase in the valuation allowance for the six months ended June 30, 2025 and 2024 is the result of current operating losses during the six months ended June 30, 2025 and 2024 and by the anticipated reversal of future tax liabilities offset by future tax deductions.

The Company recorded interest charges related to its tax contingency reserve for cash tax positions for the three and six months ended June 30, 2025 and 2024 which are included in income tax expense or benefit for the period.

As of June 30, 2025, tax returns for years 2020 through 2023 are subject to future examination by tax authorities.

In addition, the net operating losses from prior years are subject to adjustment under examination.

Supplemental Disclosure of Cash Flow Information

Three Months Ended

Six Months Ended

(in thousands) 2025 2024

13 unchanged sentences

Net cash paid $ 311,028 $ —

Proceeds from sale of assets, net:

Prepaid expenses and other assets, net $ — $ ( 362 )

Property, plant and equipment and leasehold intangibles, net ( 1,004 ) ( 6,311 )

Other liabilities — 559

Non-operating loss (gain) on sale of assets, net — ( 903 )

Loss (gain) on sale of communities, net ( 43 ) —

Net cash received $ ( 1,047 ) $ ( 7,017 )

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

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sums to the total of the same such amounts shown in the condensed consolidated statements of cash flows.

(in thousands) March 31, 2025 December 31, 2024

(in thousands) June 30, 2025 December 31, 2024

Reconciliation of cash, cash equivalents, and restricted cash:

11 unchanged sentences

Independent Living .

The Company's Independent Living segment includes owned or leased communities that are primarily designed for middle to upper income seniors who desire to live in a residential setting that feels like home, without the efforts of ownership.

of ownership.

The majority of the Company's independent living communities consist of both independent and assisted living units in a single community, which allows residents to age-in-place by providing them with a broad continuum of senior independent and assisted living services to accommodate their changing needs.

1 unchanged sentence

The Company's Assisted Living and Memory Care segment includes owned or leased communities that offer housing and 24-hour assistance with activities of daily living for the Company's residents.

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

smaller, freestanding, single story communities.

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

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

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands) 2025 2024 2025 2024

32 unchanged sentences

Assisted Living and Memory Care 377 — 1,764 1,708

CCRCs 200 — 600 —

Loss (gain) on sale of communities, net ( 43 ) — ( 43 ) —

Income (loss) from operations $ 14,907 $ 19,162 $ 44,483 $ 38,408

Three Months Ended

June 30, Six Months Ended

(in thousands) 2025 2024 2025 2024

11 unchanged sentences

Total capital expenditures $ 58,141 $ 53,591 $ 101,290 $ 104,649

(in thousands) March 31, 2025 December 31, 2024

(in thousands) June 30, 2025 December 31, 2024

Independent Living (4)

7 unchanged sentences

(3) Segment operating income is defined as segment revenues less segment facility operating expenses (excluding facility depreciation and amortization) and costs incurred on behalf of managed communities.

(4) The Company's total carrying amount of goodwill is included within the Independent Living segment and was $ 27.3 million as of both March 31, 2025 and December 31, 2024.

(4) The Company's total carrying amount of goodwill is included within the Independent Living segment and was $ 27.3 million as of both June 30, 2025 and December 31, 2024.

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 1. Financial Statements