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Item 7. Management’s Discussion and Analysis

2026-02-19 compared with 2025-02-19 · 113 added, 147 removed, 450 unchanged (37% of the section changed)

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Risk Factors" of this Annual Report on Form 10-K.

Executive Overview and Recent Developments

For information regarding our business, including our strategy and recent developments regarding macroeconomic conditions, community acquisitions and community lease amendments, refer to "Item 1.

During 2023, we entered into amendments to our existing lease arrangements with Welltower Inc.

(“Welltower”) pursuant to which we continue to lease 74 communities.

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

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

For 2024 compared to 2023, the classification of such lease costs as operating lease expense resulted in a $9.9 million increase in cash lease payments for operating leases and an offsetting decrease in cash lease payments for financing leases.

Refer to Note 3 in “Item 8.

Financial Statements and Supplementary Data" for more information about the amendments.

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

During 2023, we elected not to exercise our lease renewal option under the current terms for a master lease and completed the termination of our triple-net lease obligations on the 18 communities for which the master lease was scheduled to expire on December 31, 2023.

Additionally, we acquired the remaining 50% equity interest in one community during 2023 for $0.6 million.

For information regarding our business, including our strategy and recent developments regarding community acquisitions, dispositions, and mortgage financings, refer to "Item 1.

Business." Refer to Note 3 in "Item 8.

Financial Statements and Supplementary Data" for more information about acquisitions, dispositions, and other significant leasing transactions.

Results of Operations

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• Senior housing operating results and data presented on a same community basis reflect results and data of a consistent population of communities by excluding the impact of changes in the composition of our portfolio of communities.

The operating results exclude natural disaster expense and related insurance recoveries.

operating results exclude natural disaster expense and related insurance recoveries.

We define our same community portfolio as communities consolidated and operational for the full period in both comparison years.

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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.

• 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), 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.

We measure RevPAR at the consolidated level, as well as at the segment level with respect to our Independent Living, Assisted Living and Memory Care, and CCRCs segments.

Our management uses RevPAR for decision making and components of executive compensation, and we believe the measure provides useful information to investors, because the measure is an indicator of senior housing resident fee revenue performance that reflects the impact of both senior housing occupancy and rate.

• RevPOR , or average monthly senior housing resident fee revenue per occupied 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 occupied units in the corresponding portfolio for the period, divided by the number of months in the period.

We measure RevPOR at the consolidated level, as well as at the segment level with respect to our Independent Living, Assisted Living and Memory

Care, and CCRCs segments.

• RevPOR , or average monthly senior housing resident fee revenue per occupied 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), divided by the weighted average number of occupied units in the corresponding portfolio for the period, divided by the number of months in the period.

We measure RevPOR at the consolidated level, as well as at the segment level with respect to our Independent Living, Assisted Living and Memory Care, and CCRCs segments.

Our management uses RevPOR for decision making, and we believe the measure provides useful information to investors, because it reflects the average amount of senior housing resident fee revenue we derive from an occupied unit per month without factoring occupancy rates.

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Resident fees $ 3,042,712 $ 2,972,050 $ 70,662 2.4 %

Other operating income — 9,073 (9,073) (100.0)%

Facility operating expense 2,216,016 2,183,261 32,755 1.5 %

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Adjusted EBITDA 457,819 386,194 71,625 18.5 %

The increase in resident fees was primarily attributable to a 5.8% increase in same community RevPAR, comprised of a 4.1% increase in same community RevPOR and a 120 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 which resulted in $55.2 million less in resident fees compared to the prior year.

During the year ended December 31, 2023, we recognized $9.1 million of government grants related to the COVID-19 pandemic as other operating income based on our estimates of our satisfaction of the conditions of the grants during the year.

The increase in facility operating expense was primarily attributable to a 4.4% 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, an increase in property repair expense primarily as a result of severe weather events, an increase in information technology costs, and an increase in marketing expense compared to the prior year, 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, which resulted in $48.0 million less in facility operating expense during the year ended December 31, 2024 compared to the prior year.

The increase in net loss was primarily attributable to the increase in facility operating expense compared to the prior year, a $36.3 million gain on sale of communities, net recognized during the year ended December 31, 2023 for the sale of our one remaining entrance fee community, an $18.1 million increase in loss on debt modification and extinguishment compared to the prior year, and an increase in depreciation and amortization expense recognized compared to the prior year.

These changes were partially offset by the increase in resident fees and a decrease in asset impairment expense compared to the prior year.

The increase in Adjusted EBITDA was primarily attributable to the increase in resident fees, partially offset by the increase in facility operating expense, the decrease in other operating income, and a $1.2 million increase in cash facility operating lease payments.

The increase in cash facility operating lease payments for the current year compared to the prior year includes 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, partially offset by a $7.8 million decrease in cash paid for operating leases for the community acquisition transactions and the reclassification of lease costs due to financing lease classification.

The increase in resident fees was primarily attributable to a 5.1% increase in same community RevPAR, comprised of a 210 basis point increase in same community weighted average occupancy and a 2.3% increase in same community RevPOR.

The increase was partially offset by the disposition of communities, primarily though lease terminations, since the beginning of the prior year, which resulted in $56.9 million less in resident fees during the year ended December 31, 2025 compared to the prior year.

The increase in facility operating expense was primarily attributable to a 4.7% increase in same community facility operating expense, primarily resulting from increases in wage rates, utilities expense, estimated group health insurance expense, and repairs and maintenance expense.

The increase was partially offset by the disposition of communities, primarily though lease terminations, since the beginning of the prior year, which resulted in $49.2 million less in facility operating expense during the year ended December 31, 2025 compared to the prior year.

The increase in net loss was primarily attributable to a $62.8 million increase in non-cash impairment charges, primarily related to the planned disposition of certain underperforming communities resulting in a change in their intended holding periods, the increase in facility operating expense, and a $32.8 million loss on extinguishment of a financing obligation during the year ended December 31, 2025 for the reacquisition of three communities previously subject to sale-leaseback transactions for the amount by which the repurchase price exceeded the previously recognized financing obligation for such three communities, partially offset by the increase in resident fees.

The increase in Adjusted EBITDA was primarily attributable to the increase in resident fees and a $34.8 million decrease in cash facility operating lease payments due to acquisitions and dispositions of previously leased communities, partially offset by the increase in facility operating expense.

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 years ended December 31, 2025 and 2024 including operating results and data on a same community basis.

The same community portfolio excludes 31 communities, including 29 communities (2,364 units) that we plan to sell during 2026.

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

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Resident fees $ 3,042,712 $ 2,972,050 $ 70,662 2.4 %

Other operating income $ — $ 9,073 $ (9,073) (100.0)%

Facility operating expense $ 2,216,016 $ 2,183,261 $ 32,755 1.5 %

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Resident fees $ 2,626,630 $ 2,499,250 $ 127,380 5.1 %

Other operating income $ — $ 8,708 $ (8,708) (100.0)%

Facility operating expense $ 1,863,451 $ 1,779,710 $ 83,741 4.7 %

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The following table summarizes the operating results and data for our Independent Living segment for the years ended December 31, 2025 and 2024, 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.

(in thousands, except communities, units, occupancy, RevPAR, and RevPOR) Years Ended

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Resident fees $ 593,813 $ 598,922 $ (5,109) (0.9) %

Other operating income $ — $ 487 $ (487) (100.0)%

Facility operating expense $ 396,267 $ 403,840 $ (7,573) (1.9) %

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RevPOR $ 5,061 $ 4,934 $ 127 2.6 %

The increase in the segment's resident fees was primarily attributable to an increase in the segment's RevPAR, comprised of a 4.7% increase in RevPOR and a 100 basis point increase in weighted average occupancy.

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 COVID-19 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 estimated insurance expense, 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 marketing expense compared to the prior year.

Same Community Operating Results and Data

Resident fees $ 446,372 $ 423,854 $ 22,518 5.3 %

Facility operating expense $ 294,741 $ 280,450 $ 14,291 5.1 %

Number of communities 52 52 — — %

Total average units 8,940 8,937 3 — %

RevPAR $ 4,161 $ 3,952 $ 209 5.3 %

Weighted average occupancy 84.1 % 82.4 % 170 bps n/a

RevPOR $ 4,950 $ 4,795 $ 155 3.2 %

The decrease in the segment's resident fees was primarily attributable to the disposition of communities, primarily though lease terminations, since the beginning of the prior year, which resulted in $26.7 million less in resident fees during the year ended December 31, 2025 compared to the prior year.

The decrease was partially offset by an increase in the segment's same community RevPAR, comprised of a 3.2% increase in same community RevPOR and a 170 basis point increase in same community weighted average occupancy.

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

The decrease in the segment's facility operating expense was primarily attributable to the disposition of communities, primarily though lease terminations, since the beginning of the prior year, which resulted in $18.9 million less in facility operating expense during the year ended December 31, 2025 compared to the prior year.

The decrease was partially offset by an increase in the segment's same community facility operating expense, primarily resulting from increases in wage rates, repairs and maintenance expense, utilities expense, and estimated group health insurance expense.

The segment's same community facility operating expense for the year ended December 31, 2024 excludes $1.2 million of natural disaster expense.

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Resident fees $ 2,103,303 $ 2,038,660 $ 64,643 3.2 %

Other operating income $ — $ 8,008 $ (8,008) (100.0)%

Facility operating expense $ 1,539,893 $ 1,505,357 $ 34,536 2.3 %

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Resident fees $ 1,907,034 $ 1,813,739 $ 93,295 5.1 %

Other operating income $ — $ 7,841 $ (7,841) (100.0)%

Facility operating expense $ 1,355,748 $ 1,293,174 $ 62,574 4.8 %

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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 2.3% increase in same community RevPOR and a 220 basis point increase in same community weighted average occupancy.

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 COVID-19 pandemic.

The increase in the segment's resident fees was partially offset by the disposition of communities since the beginning of the prior year, which resulted in $41.0 million less in resident fees during the year ended December 31, 2024 compared to the prior year.

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, an increase in property repair expense primarily as a result of severe weather events, an increase in information technology costs, and an increase in marketing expense compared to the prior year, 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, which resulted in $33.1 million less in facility operating expense during the year ended December 31, 2024 compared to the prior year.

The segment's same community facility operating expense for the year ended December 31, 2024 excludes $5.3 million of natural disaster expense.

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

The increase in the segment's resident fees was partially offset by the disposition of communities, primarily though lease terminations, since the beginning of the prior year, which resulted in $31.5 million less in resident fees during the year ended December 31, 2025 compared to the prior year.

The increase in the segment's facility operating expense was primarily attributable to an increase in the segment's same community facility operating expense, including increases in wage rates, estimated group health insurance expense, repairs and maintenance expense, and utilities expense.

The increase in the segment's facility operating expense was partially offset by the disposition of communities, primarily though lease terminations, since the beginning of the prior year, which resulted in $29.1 million less in facility operating expense during the year ended December 31, 2025 compared to the prior year.

The segment's same community facility operating expense for the year ended December 31, 2025 and 2024 excludes $1.2 million and $4.7 million, respectively, of natural disaster expense.

CCRCs Segment

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Resident fees $ 345,596 $ 334,468 $ 11,128 3.3 %

Other operating income $ — $ 578 $ (578) (100.0)%

Facility operating expense $ 279,856 $ 274,064 $ 5,792 2.1 %

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Resident fees $ 273,224 $ 261,657 $ 11,567 4.4 %

Other operating income $ — $ 380 $ (380) (100.0)%

Facility operating expense $ 212,962 $ 206,086 $ 6,876 3.3 %

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RevPOR $ 7,648 $ 7,601 $ 47 0.6 %

The increase in the segment's resident fees was primarily attributable to an increase in the segment's same community RevPAR, comprised of a 210 basis point increase in same community weighted average occupancy and a 0.9% 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 COVID-19 pandemic.

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.

Additionally, an increase in resident fees at a community whose operations in the prior year were significantly impacted by winter storm damage and for which a repositioning project was completed in the prior year contributed to the increase in the segment’s resident fees.

The increase in the segment's resident fees was partially offset by the disposition of communities since the beginning of the prior year, which resulted in $14.2 million less in resident fees during the year ended December 31, 2024 compared to the prior year.

The decrease in the segment's facility operating expense was primarily attributable to the disposition of communities since the beginning of the prior year, which resulted in $14.9 million less in facility operating expense during the year ended December 31, 2024 compared to the prior year.

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.

The segment's same community facility operating expense for the year ended December 31, 2024 excludes $0.5 million of natural disaster expense.

The increase in the segment's resident fees was primarily attributable to an increase in the segment's same community RevPAR, comprised of a 290 basis point increase in same community weighted average occupancy and a 0.6% increase in the segment's same community RevPOR.

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

Operating Results - Other Income and Expense Items

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Depreciation and amortization 355,527 357,788 (2,261) (0.6) %

Asset impairment 8,557 40,572 (32,015) (78.9) %

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

Asset impairment 71,349 8,557 62,792 NM

Loss (gain) on sale of communities, net (2,368) — 2,368 NM

Loss (gain) on facility operating lease termination, net 4,139 — 4,139 NM

Interest income 12,382 19,162 (6,780) (35.4) %

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Gain (loss) on debt modification and extinguishment, net

(20,762) (2,702) 18,060 NM

Equity in earnings (loss) of unconsolidated ventures — (3,996) (3,996) (100.0)%

(40,087) (20,762) 19,325 93.1 %

Non-operating gain (loss) on sale of assets, net — 923 (923) (100.0)%

Other non-operating income (loss) 3,802 9,376 (5,574) (59.4) %

Benefit (provision) for income taxes (4,646) (8,784) (4,138) (47.1) %

Benefit (provision) for income taxes 1,951 (4,646) 6,597 NM

Reimbursed Costs Incurred on Behalf of Managed Communities and 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 broad inflationary pressure for communities managed in both periods, partially offset by terminations of management agreements subsequent to the beginning of the prior year.

The decrease in reimbursed costs and costs incurred on behalf of managed communities was primarily attributable to terminations of management agreements subsequent to the beginning of the prior year, partially offset by an increase in community labor costs incurred for communities managed in both years.

General and Administrative Expense.

The increase in general and administrative expense was primarily due to $7.0 million of legal expenses for certain pending putative class action litigation previously described in our SEC filings, representing the current estimate of our ultimate cost to resolve such litigation, net of estimated probable insurance recoveries.

The increase in general and administrative expense was primarily due to $9.3 million of organizational restructuring costs related to senior leadership changes and our efforts to reduce general and administrative expense, as we scaled our general and administrative costs in connection with community dispositions, and $8.0 million of transaction costs for stockholder relations advisory matters in the current year, partially offset by $7.0 million of legal expenses recognized in the prior year for certain putative class action litigation.

General and administrative expense includes transaction, legal, and organizational restructuring costs of $18.1 million and $7.9 million for the years ended December 31, 2025 and 2024, respectively.

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.

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

Legal costs include charges associated with putative class action litigation.

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

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.

Facility Operating Lease Expense.

The decrease in facility operating lease expense was primarily due to a $21.7 million decrease attributable to the acquisition of formerly leased communities and a decrease attributable to the termination of community leases during the current year, partially offset by an increase attributable to the extension of community leases during the prior year at a higher annual lease expense.

Asset Impairment .

During the current year, we recognized $8.6 million of non-cash impairment charges, primarily for certain leased communities with lower than expected occupancy and decreased future cash flow estimates over the remaining lease term and for property damage sustained at certain communities during the year.

During the prior year, we recognized $40.6 million of non-cash impairment charges, primarily due to a non-cash impairment charge of $26.0 million on our investment in the Health Care Services venture as a result of our decision to sell our equity interest prior to the recovery of its market value.

The impairment charges during the prior year also include amounts for certain leased communities with lower than expected occupancy and decreased future cash flow estimates.

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 prior year.

During the year ended December 31, 2025, we recorded $71.3 million of non-cash impairment charges, primarily related to the planned disposition of certain underperforming communities resulting in a change in their intended holding periods.

During the year ended December 31, 2024, we recorded $8.6 million of non-cash impairment charges, primarily for certain leased communities with lower than expected occupancy and decreased future cash flow estimates over the remaining lease term and for property damage sustained at certain communities during the year.

Interest Expense.

The increase in interest expense was primarily due to an increase in interest expense on finance lease obligations as a result of a change in classification of lease costs from operating leases to financing leases as a result of lease classification changes during the current year and an increase in interest expense on long-term debt primarily as a result of higher fixed interest rates on long-term debt obtained subsequent to the beginning of the prior year.

The increase in interest expense was primarily due to debt obtained to finance the acquisition of 36 communities previously subject to operating leases subsequent to the beginning of the prior year.

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

The increase in loss on debt modification and extinguishment, net was primarily due to a loss on debt extinguishment in the current year for the convertible notes issuance and exchange transactions.

The increase in loss on debt modification and extinguishment, net was primarily due to a $32.8 million loss on extinguishment of a financing obligation during the current year for the reacquisition of three communities previously subject to sale-leaseback transactions, partially offset by a $15.5 million loss on debt extinguishment in the prior year for the convertible notes issuance and exchange transactions.

Refer to the "Convertible Senior Notes" section for additional information on the convertible notes issuance and exchange transactions.

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 2023.

Other Non-operating Income (Loss).

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Benefit (Provision) for Income Taxes.

The difference between our effective tax rate for the years ended December 31, 2024 and 2023 was primarily due to an increase in the tax expense resulting from the valuation allowance recorded against operating losses.

The difference between our effective tax rate for the years ended December 31, 2025 and 2024 was primarily due to a decrease in the tax expense resulting from the valuation allowance recorded against the benefit on operating losses.

We recorded an aggregate deferred federal, state, and local tax benefit of $60.0 million for the year ended December 31, 2025, which was offset by an increase in the valuation allowance of $56.7 million.

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(in thousands) 2025 2024 Amount Percent

Net cash provided by (used in) operating activities $ 166,177 $ 162,923 $ 3,254 2.0 %

Net cash provided by operating activities $ 218,030 $ 166,177 $ 51,853 31.2 %

Net cash provided by (used in) investing activities (455,951) (278,066) 177,885 64.0 %

Net cash provided by (used in) financing activities 142,061 (174,439) 316,500 NM

Net cash provided by (used in) financing activities 201,089 142,061 59,028 41.6 %

Net increase (decrease) in cash, cash equivalents, and restricted cash

(36,832) 30,172 (67,004) NM

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

Cash, cash equivalents, and restricted cash at end of year $ 379,840 $ 349,668 $ 30,172 8.6 %

Adjusted Free Cash Flow $ (29,476) $ (47,631) $ 18,155 38.1 %

The increase in net cash provided by operating activities was primarily attributable to an increase in resident fee revenue compared to the prior year, partially offset by an increase in facility operating expense compared to the prior year, $28.3 million in cash received in the prior year associated with government grants and credits, and an increase in incentive compensation payments compared to the prior year.

The increase in net cash used in investing activities was primarily attributable to a $137.1 million decrease in proceeds from sales and maturities of marketable securities, a $107.8 million increase in cash used for the acquisition of assets, and a $76.5 million decrease in net proceeds from the sale of assets compared to the prior year, partially offset by a $125.4 million

decrease in purchases of marketable securities and a $32.0 million decrease in cash paid for capital expenditures compared to the prior year.

The change in net cash provided by (used in) financing activities was primarily attributable to a $560.1 million increase in debt proceeds compared to the prior year, including $147.1 million of proceeds from the issuance of convertible notes, partially offset by a $227.8 million increase in repayment of debt and financing lease obligations compared to the prior year.

The change in Adjusted Free Cash Flow was primarily attributable to a $29.8 million decrease in non-development capital expenditures, net and the increase in net cash provided by operating activities compared to the prior year, partially offset by a $16.2 million decrease in property and casualty insurance proceeds compared to the prior year.

Cash, cash equivalents, and restricted cash at beginning of period 379,840 349,668 30,172 8.6 %

Cash, cash equivalents, and restricted cash at end of period $ 343,008 $ 379,840 $ (36,832) (9.7) %

Adjusted Free Cash Flow $ 22,823 $ (29,476) $ 52,299 NM

The increase in net cash provided by operating activities was primarily attributable to an increase in resident fees and a $34.8 million decrease in cash facility operating lease payments, partially offset by an increase in facility operating expense compared to the prior year.

The increase in net cash used in investing activities was primarily attributable to an increase of $202.6 million of cash paid for the acquisition of formerly leased communities, partially offset by a $19.1 million increase in net proceeds from sale of assets.

The increase in net cash provided by financing activities was primarily attributable to a $152.4 million increase in debt proceeds compared to the prior year, partially offset by a $97.4 million increase in repayment of debt and financing lease obligations compared to the prior year.

The change in Adjusted Free Cash Flow was primarily attributable to the increase in net cash provided by operating activities.

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, including consideration for the acquisition of 30 communities pursuant to agreements with certain of our lessors;

• transaction consideration and related expenses;

• capital expenditures and improvements;

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As of such date, 89.7%, or $3.9 billion, of our total debt obligations represented non-recourse property-level mortgage financings.

As of December 31, 2024, we had $1.6 billion of operating and financing lease obligations, and for the twelve months ending December 31, 2025, we will be required to make approximately $240.0 million of cash lease payments in connection with our existing operating and financing leases (after giving effect to our planned acquisition transactions for 30 communities subsequent to December 31, 2024).

In September 2024, we entered into definitive agreements to acquire 30 senior living communities (1,561 units) that are currently leased by us for a combined purchase price of $310.0 million.

We expect to complete the acquisition transactions 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 30 communities through proceeds from mortgage financing and cash on hand.

As of December 31, 2025, we had $1.2 billion of operating and financing lease obligations, and for the twelve months ending December 31, 2026, we will be required to make approximately $191.6 million of cash lease payments in connection with our existing operating and financing leases.

As of December 31, 2025, we had $1.4 million of letters of credit and no cash borrowings were outstanding under our $100.0 million secured credit facility.

We also had separate letter of credit facilities providing for up to $68.0 million of letters of credit as of December 31, 2025, under which $59.2 million had been issued as of that date.

Total liquidity of $389.3 million as of December 31, 2024 included $308.9 million of unrestricted cash and cash equivalents (excluding restricted cash of $70.9 million), $60.5 million of availability on our secured credit facility, and $19.9 million of marketable securities.

Total liquidity as of December 31, 2024 increased $48.6 million from total liquidity of $340.7 million as of December 31, 2023.

Total liquidity of $377.7 million as of December 31, 2025 included $279.1 million of unrestricted cash and cash equivalents (excluding restricted cash of $63.9 million) and $98.6 million of availability on our secured credit facility.

Total liquidity as of December 31, 2025 decreased $11.6 million from total liquidity of $389.3 million as of December 31, 2024.

During 2026, we plan to sell 29 owned communities (2,364 units), which we believe will generate approximately $200.0 million of proceeds.

The closings of the expected sales of assets are subject (where applicable) to our successful marketing of such assets on terms acceptable to us.

Further, the closings of the expected sales of assets are, or will be, subject to the satisfaction of various 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.

As of December 31, 2025, our current liabilities exceeded current assets by $14.0 million.

Included in our current liabilities is $111.1 million of the current portion of operating lease obligations, for which the associated right-of-use assets are excluded from current assets on our consolidated balance sheet.

We currently estimate our historical principal sources of liquidity, primarily our cash flows from operations, together with cash balances on hand, cash equivalents, and marketable securities, and proceeds from financings and refinancings of various assets will be sufficient to fund our liquidity needs for at least the next 12 months.

Included in our current liabilities is $75.7 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 consolidated balance sheets.

We currently estimate our historical principal sources of liquidity, primarily our cash flows from operations, together with cash balances on hand, and cash equivalents, availability on our secured credit facility, and proceeds from financings and refinancings of various assets will be sufficient to fund our liquidity needs for at least the next 12 months.

We continue to focus on increasing our RevPAR, maintaining appropriate expense discipline, continuing to refinance or exercise available extension options for maturing debt, continuing to evaluate our capital structure and the state of debt and equity markets, and monetizing non-strategic or underperforming owned assets.

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As of December 31, 2025, 11% of our owned communities were unencumbered by mortgage debt.

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

O ur inability to 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.

As of December 31, 2025, the current portion of long-term debt was $77.5 million, which includes $23.3 million of our 2.00% convertible senior notes due October 15, 2026 and $19.6 million of mortgage notes payable secured by assets held for sale.

We have completed the refinancing of all of our mortgage debt maturities due in 2026.

Our inability to obtain refinancing proceeds sufficient to cover 2027 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.

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

In the aggregate, we expect our full-year 2025 non-development capital expenditures, net of anticipated lessor reimbursements and property and casualty insurance proceeds, to be $175.0 million to 180.0 million.

In the aggregate, we expect our full-year 2026 non-development capital expenditures, net of anticipated lessor reimbursements, to be approximately $175.0 million to $195.0 million.

We anticipate that our 2026 capital expenditures will be funded from cash on hand, cash equivalents, cash flows from operations, and reimbursements from lessors.

As of December 31, 2025, the average age of the buildings in our consolidated senior housing portfolio was approximately 28 years.

Our community-level non-development capital expenditures, net of lessor reimbursements, were $2,965 per unit in 2024, and our 2025 plans equate to approximately $3,000 per unit.

To support our strategy and to protect the value of our community portfolio and ensure that our communities are in appropriate physical condition, over the intermediate term, we expect that our community-level non-development capital expenditures, net of lessor reimbursements, will be at annual levels in a similar range of recent and 2025 projected per unit spend.

Over the longer term, we expect that we will also continue to invest in our development capital expenditures program through which we expand, reposition, and redevelop selected existing senior living communities where economically advantageous.

We expect our full-year 2025 development capital expenditures to be funded from reimbursements from lessors.

As of December 31, 2025, we had $4.3 billion of debt outstanding, at a weighted average interest rate of 5.06%.

As of such date, 89.7%, or $3.9 billion, of our total debt obligations represented non-recourse property-level mortgage financings.

As of December 31, 2024, we had $3.0 billion of long-term fixed rate debt (including our $23.3 million principal amount of 2.00% convertible senior notes due 2026, our $369.4 million principal amount of 3.50% convertible senior notes due 2029, and our $9.4 million principal amount of the senior amortizing notes component of our tangible equity units), at a weighted average interest rate of 4.50%.

As of December 31, 2024, we had $1.1 billion of long-term variable rate debt, at a weighted average interest rate of 6.89%.

As of December 31, 2025, we had $3.3 billion of long-term fixed-rate debt (including our $23.3 million principal amount of 2.00% convertible senior notes due 2026 and our $369.4 million principal amount of 3.50% convertible senior notes due 2029), at a weighted average interest rate of 4.70%.

As of December 31, 2025, we had $1.0 billion of long-term variable-rate debt, which is indexed to Secured Overnight Financing Rate ("SOFR") plus a weighted average margin of 244 basis points, at a weighted average interest rate of 6.18%.

Increases in prevailing interest rates as a result of inflation or other factors will increase our payment obligations on our variable-rate obligations to the extent they are unhedged and may increase our future borrowing and hedging costs.

In the normal course of business, we enter into interest rate agreements with major financial institutions to manage our risk above certain interest rates on variable-rate debt.

Although we have interest rate cap or swap agreements in place for a majority of our long-term variable-rate debt, these agreements only limit our exposure to increases in interest rates above certain levels and generally must be renewed every one to three years.

As of December 31, 2024, our $1.1 billion of outstanding long-term variable rate debt is indexed to SOFR plus a weighted average margin of 241 basis points.

As of such date, $1.0 billion, or 91%, of our long-term variable rate debt is subject to interest rate cap or swap agreements, and $0.1 billion of our long-term variable rate debt is not subject to any interest rate cap or swap agreements.

Although we have interest rate cap or swap agreements in place for all of our $1.0 billion of outstanding long-term variable-rate debt as of December 31, 2025, these agreements only limit our exposure to increases in interest rates above certain levels and only for the remaining term of the existing interest rate cap or swap agreements.

For our SOFR interest rate cap and swap agreements as of December 31, 2025, the weighted average fixed interest rate is 4.25%, and the weighted average remaining term is 0.9 years.

Many of our long-term variable-rate debt instruments include provisions that obligate us to obtain additional interest rate cap agreements upon the maturity of the existing interest rate cap agreements.

The annual aggregate scheduled maturities (including recurring principal payments) of long-term debt outstanding as of December 31, 2024 are as follows (in thousands).

The annual aggregate scheduled maturities (including recurring principal payments) of long-term debt outstanding as of December 31, 2025 are as follows (in millions).

Years Ending December 31,

Debt Weighted Rate

Fixed Rate Maturities Variable Rate Maturities Recurring Principal Payments Long-term Debt Weighted

2026 $ 23.3 $ — $ 47.8 $ 71.1 3.79 %

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Total $ 4,292.5

(1) Includes the maturities of $326.1 million of mortgage debt for which we have the option to extend the maturities for one additional year subject to the satisfaction of certain conditions.

(1) Variable rate maturities include the maturities of $357.8 million of mortgage debt for which we have the option to extend the maturity for two additional terms of one year each subject to the satisfaction of certain conditions.

Convertible Senior Notes

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

In addition, following certain corporate events that occur prior to the maturity date or following the issuance of a notice of redemption, we will

increase the conversion rate for a holder who elects to convert its 2026 Notes in connection with such a corporate event or who elects to convert any 2026 Notes called (or deemed called) for redemption during the related redemption period in certain circumstances.

In addition, following certain corporate events that occur prior to the maturity date or following the issuance of a notice of redemption, we will increase the conversion rate for a holder who elects to convert its 2026 Notes in connection with such a corporate event or who elects to convert any 2026 Notes called (or deemed called) for redemption during the related redemption period in certain circumstances.

We may redeem for cash all or (subject to certain limitations) any portion of the 2026 Notes, at our option, on or after October 21, 2024 and prior to the 51st scheduled trading day immediately preceding the maturity date if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

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We account for Capped Call Transactions separately from the 2026 Notes and recognized the cost as a reduction of additional paid-in capital in the year ended December 31, 2021 as the Capped Call Transactions are indexed to our common stock.

Subsequent to our convertible notes exchange transactions on October 3, 2024, the Capped Call Transactions remain outstanding with the terms unchanged and continue to cover the number of shares of our common stock that initially underlie the $230.0 million initial principal amount of 2026 Notes.

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

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2029 Convertible Senior Notes

On September 30, 2024, we entered into privately negotiated exchange and subscription agreements (the “Exchange and Subscription Agreements”) with certain holders (the "Investors") of the 2026 Notes.

On September 30, 2024, we entered into privately negotiated exchange and subscription agreements (the “Exchange and Subscription Agreements”) with certain holders of the 2026 Notes.

On October 3, 2024, pursuant to the Exchange and Subscription Agreements, we issued $369.4 million aggregate principal amount of 3.50% convertible senior notes due 2029 (the "2029 Notes").

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The 2029 Notes will mature on October 15, 2029, unless earlier converted or repurchased in accordance with their terms.

Holders of the 2029 Notes may convert all or any portion of their 2029 Notes at their option at any

time prior to the close of business on the business day immediately preceding July 15, 2029, only under the following circumstances:

Holders of the 2029 Notes may convert all or any portion of their 2029 Notes at their option at any time prior to the close of business on the business day immediately preceding July 15, 2029, only under the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2024 (and only during such calendar quarter), if the last reported sale price of our the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

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Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.

Under the 2029 Notes Indenture, we will not be obligated to deliver any shares of common stock to any holder upon any conversion of the 2029 Notes whereby such holder would beneficially own a number of shares of Company common stock in excess of 19.9% of the total number of shares of Company common stock issued and outstanding immediately following such conversion.

Under the 2029 Notes Indenture, we will not be obligated to deliver any shares of common stock to any holder upon any conversion of the 2029 Notes

whereby such holder would beneficially own a number of shares of Company common stock in excess of 19.9% of the total number of shares of Company common stock issued and outstanding immediately following such conversion.

The conversion rate for the 2029 Notes will initially be 111.1111 shares of common stock per $1,000 principal amount of the 2029 Notes (equivalent to an initial conversion price of approximately $9.00 per share of common stock).

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Our net cash proceeds from the exchange and issuance transactions, after subtracting fees, discounts and expenses, were $135.0 million.

We intend to use the proceeds to fund acquisitions and for general corporate purposes.

We recognized a $15.5 million loss on debt extinguishment in the year ended December 31, 2024 for the completed exchange and issuance transactions.

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

After giving effect to our planned acquisition transactions for 30 leased communities subsequent to December 31, 2024, the leases relating to substantially all of our remaining leased communities are fixed rate leases with annual escalators that are fixed.

We are responsible for all operating costs, including repairs, property taxes, and insurance.

The leases relating to substantially all of our leased communities are fixed-rate leases with annual escalators that are fixed.

We are responsible for all operating costs, including repairs and maintenance, property taxes, and insurance.

As of December 31, 2025, the weighted average remaining lease term of our operating and financing leases was 9.9 and 6.3 years, respectively.

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Community Count Total Units

2025 58 6,464

Thereafter 158 9,605

Subtotal 236 17,072

Communities subject to acquisition agreements 30 1,561

Total 178 10,608

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.

We are required to spend approximately $23.0 million in aggregate for the 24-month period ending December, 31, 2027 for capital expenditures under certain of our community leases and approximately $116.0 million in aggregate thereafter under the initial lease terms of such leases.

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Debt and Lease Covenants

Certain of our long-term debt and lease documents contain restrictions and financial covenants, such as those requiring us to maintain prescribed minimum liquidity, net worth, and stockholders' equity levels and debt service and lease coverage ratios, and requiring us not to exceed prescribed leverage ratios, in each case on a consolidated, portfolio-wide, multi-community, single-community, and/or entity basis.

Net worth is generally calculated as stockholders' equity as calculated in accordance with GAAP, and in certain circumstances, reduced by intangible assets or liabilities and/or increased by accumulated depreciation and amortization, and/or further adjusted for certain other specified adjustments.

The debt service and lease coverage ratios are generally calculated as revenues less operating expenses, including an implied management fee and a reserve for capital expenditures, divided by the debt (principal and interest) or lease payment.

Certain of our long-term debt and lease documents contain restrictions, maintenance and capital expenditure obligations, and financial covenants, such as those requiring us to maintain prescribed minimum liquidity and net worth levels and debt service and lease coverage ratios, and requiring us not to exceed prescribed leverage ratios, in each case on a consolidated, portfolio-wide, multi-community, single-community, and/or entity basis.

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.

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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 lessor.

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 lessor.

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

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Lease obligations 191.6 193.8 190.8 193.3 185.9 929.2 1,884.6

243.9 189.1 191.3 188.6 191.1 1,104.8 2,108.8

Total long-term debt and lease obligations $ 482.9 $ 1,069.0 $ 1,292.7 $ 1,143.1 $ 1,095.5 $ 2,005.1 $ 7,088.3

(1) Principal on long-term debt includes the maturities of $326.1 million of mortgage debt for which we have the option to extend the maturities for one additional year subject to the satisfaction of certain conditions.

(1) Principal on long-term debt includes the maturities of $357.8 million of mortgage debt for which we have the option to extend the maturity for two additional terms of one year each subject to the satisfaction of certain conditions.

(2) Excludes deferred financing costs of $45.8 million as of December 31, 2025.

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We are subject to market risks from changes in interest rates and increases or decreases in prevailing interest rates would change our payment obligations on our variable-rate obligations.

(4) Reflects future minimum lease payments prior to giving effect to variable payments after giving effect to our planned acquisition transactions for 30 communities subsequent to December 31, 2024.

In September 2024, the Company entered into two definitive agreements to acquire 30 communities (1,561 units) that are currently leased by the Company for a combined purchase price of $310.0 million.

The Company expects to complete the acquisition transactions in the first quarter of 2025, subject to the satisfaction of customary closing conditions for real estate transactions.

Critical Accounting Estimates

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In estimating the recoverability of asset groups for purposes of our long-lived asset impairment testing, we utilize future cash flow projections that are generally developed internally.

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

Any estimates of future cash flow projections necessarily involve

predicting unknown future circumstances and events and require significant management judgments and estimates.

In arriving at our cash flow projections, we consider our historic operating results, approved budgets and business plans, future demographic factors, expected growth rates, estimated asset holding periods, and other factors.

In estimating the future cash flows of asset groups for purposes of our long-lived asset impairment test, we make certain key assumptions.

Those assumptions include asset holding periods, future revenues, facility operating expenses, and cash flows, including sales proceeds that we would receive upon a sale of the assets using estimated capitalization rates in the case of communities.

We corroborate the estimated capitalization rates we use in these calculations with capitalization rates observable from recent market transactions.

Those assumptions include asset holding periods, future revenues, facility operating expenses, and cash flows, including sales proceeds that we would receive upon a sale of the assets.

We corroborate the estimated asset sale proceeds we use in these calculations with capitalization rates or sales prices observable from recent market transactions.

Determining the future cash flows of an asset group involves the use of significant estimates and assumptions that are unpredictable and inherently uncertain.

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(in millions) 2025 2024 2023

Operating lease right-of-use assets $ 4.6 $ 8.3 $ 13.7

Property, plant and equipment and leasehold intangibles, net $ 69.4 $ 4.0 $ 6.3

Operating lease right-of-use assets 1.9 4.6 8.3

Total $ 71.3 $ 8.6 $ 14.6

These impairment charges are primarily due to lower than expected occupancy and decreased future cash flow estimates at certain communities, and reflect the amount by which the carrying amounts of the assets exceeded their estimated fair value.

These impairment charges are primarily due to the planned disposition of certain underperforming communities resulting in a change in their intended holding periods and reflect the amount by which the carrying amounts of the assets exceeded their estimated fair value.

Our impairment loss assessment contains uncertainties because it requires us to apply judgment to estimate whether there have been changes in circumstances that indicate the carrying amount may not be recoverable, the recoverability of asset groups, and, if necessary, the fair value of our assets.

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The actuarial methods develop estimates of the future ultimate claim costs based on the claims incurred as of the balance sheet date.

We review the adequacy of our accruals related to these liabilities on an ongoing basis, using historical claims, actuarial valuations, third-party administrator estimates, consultants, advice from legal counsel, and industry data, and adjust accruals periodically.

We review the adequacy of our accruals related to these liabilities on an ongoing basis, using historical claims, actuarial valuations, third-party administrator estimates,

consultants, advice from legal counsel, and industry data, and adjust accruals periodically.

Estimated costs related to these self-insurance programs are accrued based on known claims and projected claims incurred but not yet reported.

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Subsequent changes in actual experience are monitored and estimates are updated as information becomes available.

As of December 31, 2024, we accrued reserves of $117.1 million for general liability, professional liability, and workers' compensation programs.

During the year ended December 31, 2024, we increased our estimate of the amount of aggregate accrued liabilities for these programs based on recent claims experience, resulting in an increase to operating expenses of $13.5 million.

As of December 31, 2025, we accrued liabilities of $109.0 million for general liability, professional liability, and workers' compensation programs.

During the years ended December 31, 2025 and 2024, we increased our estimate of the amount of aggregate accrued liabilities for these programs based on recent claims experience, resulting in an increase to operating expenses of $2.5 million and $13.5 million, respectively.

During the year ended December 31, 2023, there was no significant adjustment to our operating expenses for any change in our estimate of the amount of these liabilities.

During the year ended December 31, 2022, we reduced our estimate of the amount of aggregate accrued liabilities for these programs based on recent claims experience, resulting in a decrease to operating expenses of $12.0 million.

Non-GAAP Financial Measures

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Presentations of these non-GAAP financial measures are intended to aid investors in better understanding the factors and trends affecting our performance and liquidity.

However, investors should not consider these non-GAAP financial measures as a substitute for financial measures determined in accordance with GAAP, including net income (loss), income (loss) from operations, or net cash provided by (used in) operating activities.

We caution investors that amounts presented in accordance with our definitions of these non-GAAP financial measures may not be comparable to similar measures disclosed by other companies because not all companies calculate non-GAAP measures in the same manner.

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and further adjusted to exclude income/expense associated with non-cash, non-operational, transactional, legal, cost reduction, or organizational restructuring items that management does not consider as part of our underlying core operating performance and that management believes impact the comparability of performance between periods.

For the periods presented herein, such other items include non-cash impairment charges, operating lease expense adjustment, non-cash stock-based compensation expense, gain/loss on sale of communities, and transaction, legal, and organizational restructuring costs.

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.

For the periods presented herein, such other items include non-cash impairment charges, operating lease expense adjustment, non-cash stock-based compensation expense, gain/loss on sale of communities, gain/loss on facility operating lease termination, and transaction, legal, and organizational restructuring costs.

Legal costs include charges associated with putative class action litigation.

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Provision (benefit) for income taxes (1,951) 4,646

Equity in (earnings) loss of unconsolidated ventures — 3,996

Loss (gain) on debt modification and extinguishment, net 40,087 20,762

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Loss (gain) on sale of communities, net (2,368) —

Loss (gain) on facility operating lease termination, net 4,139 —

Operating lease expense adjustment (14,349) (48,793)

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Adjusted Free Cash Flow

Adjusted Free Cash Flow is a non-GAAP liquidity measure that we define as net cash provided by (used in) operating activities before:

Adjusted Free Cash Flow is a non-GAAP liquidity measure that we define as net cash provided by operating activities before:

distributions from unconsolidated ventures from cumulative share of net earnings, changes in prepaid insurance premiums financed with notes payable, changes in operating lease assets and liabilities for lease termination, cash paid/received for gain/loss on facility operating lease termination, and lessor capital expenditure reimbursements under operating leases;

property and casualty insurance proceeds and proceeds from refundable entrance fees, net of refunds;

property and casualty insurance proceeds;

non-development capital expenditures and payment of financing lease obligations.

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and (iii) the impact of timing of cash expenditures, including the timing of non-development capital expenditures, limits the usefulness of the measure for short-term comparisons.

The table below reconciles Adjusted Free Cash Flow from net cash provided by (used in) operating activities.

The table below reconciles Adjusted Free Cash Flow from net cash provided by operating activities.

Years Ended December 31,

(in thousands) 2025 2024

Net cash provided by (used in) operating activities $ 166,177 $ 162,923

Net cash provided by operating activities $ 218,030 $ 166,177

Net cash provided by (used in) investing activities (455,951) (278,066)

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$ (36,832) $ 30,172

Net cash provided by (used in) operating activities $ 166,177 $ 162,923

Distributions from unconsolidated ventures from cumulative share of net earnings — (430)

Net cash provided by operating activities $ 218,030 $ 166,177

Changes in operating lease assets and liabilities for lease termination 5,000 —

Changes in assets and liabilities for lessor capital expenditure reimbursements under operating leases (32,187) (16,362)

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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 7. Management’s Discussion and Analysis