What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-19 compared with 2025-02-19 · 228 added, 293 removed, 967 unchanged (35% of the section changed)

6 unchanged sentences

Consolidated Statements of Operations for the Years Ended December 31, 2025, 2024, and 2023

Consolidated Statements of Equity for the Years Ended December 31, 2024, 2023, and 2022

Consolidated Statements of Equity (Deficit) for the Years Ended December 31, 2025, 2024, and 2023

Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024, and 2023

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We have audited the accompanying consolidated balance sheets of Brookdale Senior Living Inc.

(the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "consolidated financial statements").

(the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, equity (deficit) and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S.

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The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of operating lease right-of-use assets for impairment

Description of the Matter As of December 31, 2024, the Company’s consolidated balance sheet included operating lease right-of-use assets of $1.1 billion.

As discussed in Note 4 to the consolidated financial statements, operating lease right-of-use assets are routinely evaluated for indicators of impairment.

For operating lease right-of-use assets with indicators of potential impairment, the Company compares the estimated undiscounted future cash flows of each long-lived asset group to its carrying amount.

Evaluation of property, plant and equipment and leasehold intangibles, net and operating lease right-of-use assets for impairment

Description of the Matter As of December 31, 2025, the Company’s consolidated balance sheet included property, plant and equipment and leasehold intangibles, net and operating lease right-of-use assets of $4.3 billion and $1.0 billion, respectively.

As discussed in Note 4 to the consolidated financial statements, property, plant and equipment and leasehold intangibles, net and operating lease right-of-use assets are routinely evaluated for indicators of impairment.

For property, plant and equipment and leasehold intangibles, net and operating lease right-of-use assets with indicators of impairment, the Company compares the estimated undiscounted future cash flows of each long-lived asset group to its carrying amount.

If the long-lived asset group’s carrying amount exceeds its estimated undiscounted future cash flows, the fair value of the long-lived asset group is then estimated by management and compared to its carrying amount.

An impairment charge is recognized on these long-lived assets when the carrying amount exceeds fair value.

Auditing management’s process to evaluate indicators of potential impairment and its evaluation of operating lease right-of-use assets for impairment was complex and involved a high degree of subjectivity due to the significant estimation required to determine the estimated undiscounted future cash flows and fair values of long-lived asset groups where indicators of potential impairment were determined to be present.

In particular, the future cash flows and fair value estimates were sensitive to significant assumptions including the estimation of revenue and expense growth, which are affected by expectations about future market or economic conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process to evaluate operating lease right-of-use assets for impairment, including controls over management’s review of the significant assumptions described above.

To test the Company’s evaluation of operating lease right-of-use assets for impairment, we performed audit procedures that included, among others, assessing the methodologies used to estimate future cash flows and estimate fair values, testing the significant assumptions used to develop the estimates of future cash flows and fair values, and testing the completeness and accuracy of the underlying data used by the Company in its analysis.

An impairment charge is recognized on these long-lived assets when carrying amount exceeds fair value.

Auditing management’s evaluation of property, plant and equipment and leasehold intangibles, net and operating lease right-of-use assets for impairment was complex and involved a high degree of subjectivity due to the significant estimation required to determine the estimated undiscounted future cash flows of long-lived asset groups where indicators of impairment were determined to be present.

In particular, the future cash flow estimates were sensitive to significant assumptions including the estimation of revenue and expense growth, which are affected by expectations about future market or economic conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process to evaluate property, plant and equipment and leasehold intangibles, net and operating lease right-of-use assets for impairment, including controls over management’s review of the significant assumptions described above.

To test the Company’s evaluation of long-lived asset groups for impairment, we performed audit procedures that included, among others, assessing the methodologies used to estimate future cash flows, testing the significant assumptions described above used to develop the estimates of future cash flows, and testing the completeness and accuracy of the underlying data used by the Company in its analysis.

We compared the significant assumptions used by management to current industry and economic trends and evaluated whether changes to the Company’s business and other relevant factors would affect the significant assumptions.

The evaluation of the Company’s methodology and key assumptions was performed with the assistance of our valuation specialists.

We assessed the historical accuracy of the Company’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the undiscounted future cash flows and fair values of the operating lease right-of-use assets that would result from changes in the key assumptions.

We assessed the historical accuracy of the Company’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the undiscounted future cash flows of the long-lived asset groups that would result from changes in the key assumptions.

/s/ Ernst & Young LLP

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations, equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 19, 2025 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, equity (deficit) and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and our report dated February 19, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

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Accounts receivable, net 67,680 51,891

Assets held for sale 77,206 —

Prepaid expenses and other current assets, net 96,705 92,371

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Total assets $ 5,952,243 $ 6,335,562

Liabilities and Equity

Liabilities and Equity (Deficit)

Current liabilities

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

210,547,351 and 198,780,826 shares issued and 200,019,826 and 188,253,301 shares outstanding (including 27,972 unvested restricted shares as of December 31, 2024), respectively

248,274,011 and 210,547,351 shares issued and 237,746,486 and 200,019,826 shares outstanding (including 28,929 and 27,972 unvested restricted shares), respectively

Additional paid-in-capital 4,358,077 4,352,991

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Total Brookdale Senior Living Inc.

stockholders' equity 212,475 403,664

stockholders' equity (deficit) ( 44,753 ) 212,475

Noncontrolling interest 1,376 1,430

Total equity 213,905 405,153

Total liabilities and equity $ 6,335,562 $ 5,573,435

Total equity (deficit) ( 43,377 ) 213,905

Total liabilities and equity (deficit) $ 5,952,243 $ 6,335,562

See accompanying notes to consolidated financial statements.

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Loss (gain) on sale of communities, net ( 2,368 ) — ( 36,296 )

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

Costs incurred on behalf of managed communities 140,501 142,916 139,325

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BROOKDALE SENIOR LIVING INC.

CONSOLIDATED STATEMENTS OF EQUITY

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

(In thousands)

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2025 2024 2023

Total equity, balance at beginning of period $ 405,153 $ 584,153 $ 699,623

Total equity (deficit), balance at beginning of period $ 213,905 $ 405,153 $ 584,153

Common stock:

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Shares issued for warrant exercise ( 57 ) ( 28 ) —

Issuance of tangible equity units, net of issuance costs — — 113,457

Restricted stock and restricted stock units, net ( 34 ) ( 19 ) ( 16 )

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Net income (loss) attributable to noncontrolling interest ( 54 ) ( 59 ) ( 59 )

Noncontrolling interest distribution — — ( 760 )

Balance at end of period $ 1,376 $ 1,430 $ 1,489

Total equity, balance at end of period $ 213,905 $ 405,153 $ 584,153

Total equity (deficit), balance at end of period $ ( 43,377 ) $ 213,905 $ 405,153

Common stock share activity

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Net income (loss) $ ( 262,746 ) $ ( 201,994 ) $ ( 189,070 )

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 40,087 20,762 2,702

9 unchanged sentences

Loss (gain) on sale of assets, net ( 2,368 ) ( 923 ) ( 37,737 )

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

Non-cash stock-based compensation expense 11,937 14,184 11,985

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Operating lease assets and liabilities for lessor capital expenditure reimbursements 32,187 16,362 9,844

Net cash provided by (used in) operating activities 166,177 162,923 3,281

Operating lease assets and liabilities for lease termination ( 5,000 ) — —

Net cash provided by operating activities 218,030 166,177 162,923

Cash Flows from Investing Activities

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Investment in unconsolidated ventures — — ( 7,589 )

Distributions received from unconsolidated ventures — — 966

Proceeds from sale of assets, net 26,147 7,017 83,526

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Repayment of debt and financing lease obligations ( 692,366 ) ( 594,997 ) ( 367,242 )

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

Payment of financing costs, net of related payables ( 18,149 ) ( 25,157 ) ( 10,831 )

Payments of employee taxes for withheld shares ( 6,473 ) ( 3,437 ) ( 1,915 )

Other — — ( 760 )

Net cash provided by (used in) financing activities 201,089 142,061 ( 174,439 )

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

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

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

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

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Under the Company's senior living residency agreements, which are generally for a contractual term of 30 days to one year , the Company provides senior living services to residents for a stated daily or monthly fee.

The Company has elected the lessor practical expedient within ASC 842, Leases ("ASC 842") and recognizes, measures, presents, and discloses the revenue for services under the Company's senior living residency agreements based upon the predominant component, either the lease or nonlease component, of the contracts.

The Company has elected the lessor practical expedient within Accounting Standards Codification ("ASC") 842, Leases and recognizes, measures, presents, and discloses the revenue for services under the Company's senior living residency agreements based upon the predominant component, either the lease or nonlease component, of the contracts.

The Company has determined that the services included under the Company's independent living, assisted living, and memory care residency agreements have the same timing and pattern of transfer and are performance obligations that are satisfied over time.

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The related costs are included in costs incurred on behalf of managed communities on the consolidated statements of operations.

Government Grants

The Company recognizes income for government grants on a systematic and rational basis over the periods in which the Company recognizes the related expenses or loss of revenue for which the grants are intended to compensate when there is reasonable assurance that the Company will comply with the applicable terms and conditions of the grant and there is reasonable assurance that the grant will be received.

Lease Accounting

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The right-of-use asset is generally reduced each period by an amount equal to the difference between the operating lease expense and the amount of expense on the lease liability utilizing the effective interest method.

Subsequent to the impairment of an operating lease right-of-use asset, the Company recognizes operating lease expense consisting of the reduction of the right-of-use asset on a straight-line basis over the remaining lease term and the amount of expense on the lease liability utilizing the effective interest method.

Subsequent to the impairment of an operating lease right-of-use asset, the Company recognizes operating lease

expense consisting of the reduction of the right-of-use asset on a straight-line basis over the remaining lease term and the amount of expense on the lease liability utilizing the effective interest method.

Financing Leases

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

In connection with a

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

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

Transaction costs associated with business combinations are expensed as incurred.

Deferred Financing Costs

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

Costs and fees incurred with third parties that directly relate to obtaining new long-term debt (excluding the Company's line-of-

credit) are recorded as a direct adjustment to the carrying amount of long-term debt.

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

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The number of shares that ultimately vest can range from 0 % to 150 % of the stock-based awards granted depending on the level of achievement of the performance criteria.

Certain of the Company's employee stock-based awards vest only upon the achievement of a market condition where the measurement period is three years and vesting of the awards is based on the Company's level of attainment of a specified total stockholder return relative to the percentage appreciation of a specified index of companies for the respective three-year measurement period.

Certain of the Company's employee stock-based awards vest only upon the achievement of a market condition, where the measurement period is three years , and vesting of the awards is based on the Company's level of attainment of a specified total stockholder return relative to the percentage appreciation of a specified index of companies for the respective measurement period.

Certain of the Company's employee stock-based awards vest only upon the achievement of a market condition, where the measurement date is three years from the grant date, and vesting of the awards is based on the Company's average closing stock price over the 20-trading days ending on (or if such date is not a trading date, the last trading day immediately prior to) the measurement date.

Compensation expense for awards with market conditions is recognized over the service period, which is generally three to four years , and the actual achievement of the market condition does not impact expense recognition.

The Company uses a Monte Carlo valuation model to estimate the grant date fair value of such awards.

Depending on the results achieved during the three-year measurement period, the number of shares that ultimately vest may range from 0 % to 150 % of the stock-based awards granted.

Depending on the results achieved, the number of shares that ultimately vest may range from 0 % to 300 % of the stock-based awards with market conditions that were outstanding as of December 31, 2025.

The expected volatility of the Company's common stock at the date of grant is estimated based on a historical average volatility rate for the approximate three-year performance period and the estimated expected weighted average volatility was 58.2 %, 61.5 %, and 83.3 % for awards granted in 2025, 2024, and 2023, respectively.

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The Company accounts for income taxes under the asset and liability approach which requires recognition of deferred tax assets and liabilities for the differences between the financial reporting and tax basis of assets and liabilities using the tax rates in effect for the year in which the differences are expected to affect taxable income.

A valuation allowance reduces deferred tax

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

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

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

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

This determination is made by

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

Fair Value of Financial Instruments

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Recoverability of an asset group is assessed by comparing its carrying amount to the estimated future undiscounted net cash flows expected to be generated by the asset group through operation or disposition, calculated utilizing the lowest level of identifiable cash flows.

If this comparison indicates that the carrying amount of an asset

group is not recoverable, the Company is required to recognize an impairment loss.

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

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

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

Undiscounted cash flow projections and estimates of fair value amounts are

based on a number of assumptions such as revenue and expense growth rates, estimated holding periods, and estimated selling prices (Level 3).

Investment in Unconsolidated Ventures

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Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires expanded annual and interim disclosures for significant segment expenses.

The Company adopted ASU 2023-07 for the year ended December 31, 2024.

Refer to Note 20 for disclosures of segment information.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which standardizes categories for the effective tax rate reconciliation, requires disaggregation of income taxes and additional income tax-related disclosures.

This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is evaluating the effect this pronouncement will have on its income tax disclosures.

The Company adopted ASU 2023-09 for the year ended December 31, 2025 and applied the new disclosure requirements prospectively to the current year.

Refer to Note 17 for disclosures of income tax information.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), which requires disaggregated disclosure of income statement expenses.

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Acquisitions, Dispositions, and Other Significant Leasing Transactions

Ventas Lease Amendment

Ventas Lease Amendments

In December 2024, the Company and certain of its subsidiaries, and Ventas, Inc.

(“Ventas”) and certain of its subsidiaries, amended the existing master lease arrangement pursuant to which the Company leases 120 communities.

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

(“Ventas”) and certain of its subsidiaries, amended the existing master lease arrangement pursuant to which the Company, at the time of the amendment, leased 120 communities previously subject to a maturity of December 31, 2025.

As of January 1, 2026, the Company continues to lease 65 communities (“Renewal Communities”) under the master lease arrangement, which was extended through December 31, 2035 with one 10-year extension option remaining.

The leases for the remaining 55 communities (“Non-renewal Communities”) were terminated during 2025, with such terminations commencing on September 1, 2025.

As of January 1, 2026, the Company continued to manage eight of the Non-renewal Communities, which were not transitioned to other operators by December 31, 2025, at a management fee of 5 % of managed revenue.

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

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

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

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

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

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

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

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

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

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

In the event any Non-renewal Community is not sold or transitioned by December 31, 2025, the Company may manage such communities at a

management fee of 5 % of managed revenue, generally until the earlier of the transition or sale of such community or December 31, 2026.

The amendment to the lease arrangements increased the operating lease right-of-use assets and lease obligations recognized on the Company's consolidated balance sheet each by $ 434.9 million.

In October 2025, the Company and Ventas amended the existing master lease arrangement.

Pursuant to the amendment, the Company paid $ 5.0 million to Ventas in 2025 in conjunction with the termination of the leases for the Non-renewal Communities.

The Company recognized $ 3.6 million within loss on facility operating lease termination, net in 2025 for the $ 5.0 million paid to Ventas, partially offset by the derecognition of the remaining operating lease obligations and right-of-use assets upon the termination of the leases for the Non-renewal Communities.

In addition, Ventas agreed to fund up to an additional $ 2.5 million of costs associated with capital expenditures at the Renewal Communities during the calendar years 2026 to 2027 under the same terms as the funding in the December 2024 amendment described above.

International JV / Welltower Portfolio Acquisition

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

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

Previously, these communities were held in a

triple-net lease with annualized cash rent payments of $ 22.3 million and an initial maturity of August 31, 2028.

The leases for the 11 communities were previously classified as operating leases and were prospectively classified as financing leases from the purchase agreement date through the date of the acquisition.

Diversified Healthcare Trust Portfolio Acquisition

In September 2024, the Company entered into a definitive agreement to acquire 25 senior living communities that were leased by the Company as of December 31, 2024 from Diversified Healthcare Trust for a purchase price of $ 135.0 million.

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

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

The Company expects to fund the acquisition of the 25 communities through proceeds from mortgage financing and cash on hand.

The leases for the 25 communities were previously classified as operating leases and have been prospectively classified as financing leases subsequent to the amendment of the leasing arrangement through the date of acquisition.

The amendment of the leasing arrangement resulted in the following changes to the amounts recognized on the Company's consolidated balance sheet.

(in millions)

Property, plant and equipment and leasehold intangibles, net $ 128.6

Operating lease right-of-use assets ( 40.4 )

Total assets $ 88.2

Financing lease obligations $ 135.0

Operating lease obligations ( 46.8 )

Total liabilities $ 88.2

In September 2024, the Company entered into a definitive agreement to acquire 25 senior living communities that were leased by the Company from Diversified Healthcare Trust for a purchase price of $ 135.0 million.

Effective February 27, 2025, the Company successfully closed the acquisition.

The Company funded the acquisition of the 25 communities through proceeds from mortgage financings and cash on hand.

Refer to Note 7 for information on the mortgage financing.

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

The leases for the 25 communities were previously classified as operating leases and were prospectively classified as financing leases subsequent to the amendment of the leasing arrangement through the date of acquisition.

Welltower Portfolio Acquisition

In September 2024, the Company entered into a definitive agreement to acquire five senior living communities that are currently leased by the Company from Welltower for a purchase price of $ 175.0 million.

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

The term of the lease was previously scheduled to expire in December 2024, but has been extended through the date of the acquisition.

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

The Company expects to fund the acquisition of the five communities through proceeds from mortgage financing and cash on hand.

In September 2024, the Company entered into a definitive agreement to acquire five senior living communities that were leased by the Company from Welltower for a purchase price of $ 175.0 million.

Effective February 27, 2025, the Company successfully closed the acquisition.

The Company funded the acquisition of the five communities through proceeds from mortgage financings and cash on hand.

Refer to Note 7 for information on the mortgage financing.

Previously, these communities were held in a triple-net lease with annualized cash rent payments of $ 13.7 million and an initial maturity of December 2024, which had been extended through the acquisition date.

The definitive agreement included the finalization of the purchase price under the provisions of a purchase option arrangement with a variable price component based upon the fair value of the assets.

The amendment of the leasing arrangement increased the financing lease right-of-use assets and lease obligations recognized for two of these communities on the Company's consolidated balance sheet each by $ 17.7 million.

The leasing arrangements for three of these communities are accounted for as failed sale-leaseback transactions as the Company has not previously transferred control of the underlying assets for accounting purposes under a sale and leaseback arrangement with a purchase option.

The leasing arrangements for three of these communities were accounted for as failed sale-leaseback transactions as the Company did not transfer control of the underlying assets under a sale and leaseback arrangement with a purchase option.

For the year ended December 31, 2025, the Company recognized a $ 32.8 million loss on extinguishment of the financing obligation for the amount by which the repurchase price exceeded the previously recognized financing obligation for such three communities.

Omega Lease Amendment

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

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

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

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

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Welltower Lease Amendments

During the three months ended June 30, 2023, the Company entered into amendments to its existing lease arrangements with Welltower pursuant to which the Company continues to lease 74 communities.

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

Welltower pursuant to which the Company continued to lease 74 communities.

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

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

The remaining five communities are subject to an agreement to be purchased by the Company as described above.

In 2025, the remaining five communities were purchased by the Company as described above.

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

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

Master Lease Amendment

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

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

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

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

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

qualification as a sale.

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

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

The amendment of the leasing arrangement resulted in the following changes to the amounts recognized on the Company's consolidated balance sheet.

(in millions)

Property, plant and equipment and leasehold intangibles, net $ ( 220.5 )

Operating lease right-of-use assets 91.6

Total assets $ ( 128.9 )

Financing lease obligations $ ( 294.4 )

Operating lease obligations 91.6

(Loss) gain on sale of communities, net 73.9

Total liabilities and equity $ ( 128.9 )

Completed Dispositions of Owned Communities

During the year ended December 31, 2025, the Company completed the sale of 12 owned communities for cash proceeds of $ 26.1 million, net of transaction costs, and recognized a net gain on sale of communities of $ 2.4 million for the Company's Assisted Living and Memory Care segment.

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

Fair Value Measurements

2 unchanged sentences

Marketable Securities

As of December 31, 2024 and 2023, marketable securities of $ 19.9 million and $ 29.8 million, respectively, are stated at fair value based on valuations provided by third-party pricing services and are classified within Level 2 of the valuation hierarchy.

As of December 31, 2025, the Company did not hold any marketable securities.

As of December 31, 2024, marketable securities of $ 19.9 million are stated at fair value based on valuations provided by third-party pricing services and are classified within Level 2 of the valuation hierarchy.

Interest Rate Derivatives

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Weighted average remaining term 0.9 years

Estimated asset fair value (included in other assets, net) $ 4.1

As of December 31, 2023, the estimated asset fair value of the interest rate cap instruments was $ 13.3 million included in other assets, net.

Estimated fair value (included in other assets, net) $ 1.7

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 December 31, 2025.

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

As of December 31, 2023, the estimated asset fair value of the interest rate swap instrument was $ 1.6 million included in other assets, 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

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

Fair value of the long-term debt is approximately $ 3.8 billion and $ 3.4 billion as of December 31, 2024 and 2023, respectively.

The estimated fair value of the long-term debt was approximately $ 4.4 billion and $ 3.8 billion as of December 31, 2025 and 2024, respectively.

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

As part of the acquisition of 11 senior living communities on December 17, 2024, the Company assumed $ 194.5 million of existing 4.92 % fixed rate agency debt which is scheduled to mature in March 2027.

The Company estimated the fair value of the assumed debt using a discounted cash flow analysis based upon the Company's current borrowing rate for debt with similar maturities and collateral securing the indebtedness (Level 2).

The Company recognized $ 188.6 million of long-term debt as of the acquisition date based upon on its estimated fair value.

On October 1, 2021, the Company issued $ 230.0 million principal amount of 2.00 % convertible senior notes due 2026 (the "2026 Notes").

The carrying amount for the $ 23.3 million principal amount outstanding 2026 Notes was $ 23.2 million and $ 23.1 million, net of deferred financing costs, as of December 31, 2025 and 2024, respectively.

The estimated fair value of the 2026 Notes was approximately $ 32.0 million and $ 22.0 million as of December 31, 2025 and 2024, respectively (Level 2).

Refer to Note 7 for additional information on the 2026 Notes.

On October 3, 2024, the Company issued $ 369.4 million aggregate principal amount of its 3.50 % convertible senior notes due 2029 (the “2029 Notes”) pursuant to convertible notes issuance and exchange transactions.

The Company estimated the fair value of the issued debt based upon the cash proceeds obtained for the new subscriptions in the issuance transactions (Level 2).

The Company recognized $ 362.2 million of long-term debt as of the date of the exchange and subscription transactions based upon on its estimated fair value.

The Company recognized $ 362.2 million of long-term debt as of the date of the exchange and subscription transactions based upon the estimated fair value of the 2029 Notes.

Refer to Note 7 for additional information on the convertible notes issuance and exchange transactions.

The carrying amount for the $ 369.4 million principal amount outstanding 2029 Notes was $ 358.3 million and $ 355.3 million, net of deferred financing costs, as of December 31, 2025 and 2024, respectively.

The estimated fair value of the 2029 Notes was approximately $ 516.0 million and $ 331.0 million as of December 31, 2025 and 2024, respectively (Level 2).

As part of the acquisition of 11 senior living communities on December 17, 2024, the Company assumed $ 194.5 million of existing 4.92 % fixed-rate agency debt which is scheduled to mature in March 2027.

The Company recognized $ 188.6 million of long-term debt as of the acquisition date based upon on its estimated fair value.

Asset Impairment Expense

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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

Investment in unconsolidated ventures — — 26.0

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

Property, Plant and Equipment and Leasehold Intangibles, Net

During the years ended December 31, 2025, 2024, and 2023, the Company evaluated property, plant and equipment and leasehold intangibles for impairment and identified properties with a carrying amount of the assets in excess of the estimated future undiscounted net cash flows expected to be generated by the assets.

The Company compared the estimated fair value of the assets to their carrying amount for these identified properties and recorded an impairment charge for the excess of carrying amount over fair value.

The Company recorded property, plant and equipment and leasehold intangibles non-cash impairment charges in its operating results of $ 69.4 million, $ 4.0 million, and $ 6.3 million for the years ended December 31, 2025, 2024, and 2023, respectively.

These impairment charges are primarily due to identified properties with a carrying value of the assets in excess of the estimated future undiscounted net cash flows expected to be generated by the assets primarily due to an expectation that certain underperforming communities will be or have been disposed of, resulting in a change in their intended holding periods.

As a result of this change in intent, the Company compared the estimated fair value of the assets to their carrying value for these identified properties and recorded an impairment charge for the excess of carrying value over estimated fair value.

The estimates of fair values of the property, plant and equipment of the communities with impairments recognized in 2025 were determined based on valuations provided by third-party pricing services and/or sale agreements with purchasers.

Operating Lease Right-of-Use Assets

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The Company compared the estimated fair value of the assets to their carrying amount for these identified communities and recorded an impairment charge for the excess of carrying amount over fair value.

During the year ended December 31, 2024, 2023, and 2022 the Company recognized the right-of-use assets for the operating leases for 22 communities, 12 communities, and eight communities, respectively, on the consolidated balance sheet at the estimated fair value of $ 7.3 million, $ 16.4 million, and $ 30.9 million, respectively.

In the aggregate, the Company recorded a non-cash impairment charge of $ 1.9 million, $ 4.6 million, and $ 8.3 million for the years ended December 31, 2025, 2024, and 2023, respectively, to operating lease right-of-use assets.

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The estimated future cash flows were discounted at a rate that is consistent with a weighted average cost of capital from a market participant perspective.

Property, Plant and Equipment and Leasehold Intangibles, Net

During the years ended December 31, 2024, 2023, and 2022, the Company evaluated property, plant and equipment and leasehold intangibles for impairment and identified properties with a carrying amount of the assets in excess of the estimated future undiscounted net cash flows expected to be generated by the assets.

The Company recorded property, plant and equipment and leasehold intangibles non-cash impairment charges in its operating results of $ 4.0 million, $ 6.3 million, and $ 15.9 million for the years ended December 31, 2024, 2023, and 2022, respectively.

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

Investment in Unconsolidated Ventures

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

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

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

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

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For the years ended December 31, 2025, 2024, and 2023, the Company recognized depreciation and amortization expense on its property, plant and equipment and leasehold intangibles of $ 355.5 million, $ 357.8 million, and $ 342.7 million, respectively.

As of December 31, 2025, eight communities in the Assisted Living and Memory Care segment and one community in the CCRCs segment were classified as held for sale, resulting in $ 77.2 million of net property, plant and equipment and leasehold intangibles assets being recognized as assets held for sale within the 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.

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Convertible notes payable due October 2029;

interest rate of 3.50 % as of December 31, 2024

Tangible equity units senior amortizing notes due November 2025;

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

369,445 369,445

Tangible equity units senior amortizing notes due November 2025;

interest rate of 10.25 % as of December 31, 2024

Deferred financing costs, net ( 45,828 ) ( 49,074 )

2 unchanged sentences

Total long-term debt, less current portion $ 4,215,005 $ 4,022,008

As of December 31, 2025, the current portion of long-term debt within the Company's consolidated financial statements includes $ 19.6 million of mortgage notes payable secured by assets held for sale.

As of December 31, 2025, 89.7 %, or $ 3.9 billion of the Company's total debt obligations represented non-recourse property-level mortgage financings.

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).

Year Ending December 31,

2025 $ 54,534 5.79 %

Debt Weighted

2026 $ 71.1 3.79 %

6 unchanged sentences

Total $ 4,292.5

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

(1) Includes the maturities of $ 357.8 million of mortgage debt for which the Company has the option to extend the maturity for two additional terms of one year each subject to the satisfaction of certain conditions.

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

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

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

2026 Convertible Senior Notes

On October 1, 2021, the Company issued $ 230.0 million principal amount of 2.00 % convertible senior notes due 2026 (the "2026 Notes").

On October 1, 2021, the Company issued $ 230.0 million principal amount of 2.00 % convertible senior notes due 2026.

The 2026 Notes were issued pursuant to, and are governed by, the Indenture dated as of October 1, 2021 by and between the Company and Equiniti Trust Company, LLC (f/k/a American Stock Transfer & Trust Company, LLC) ("EQ") as trustee.

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On or after July 15, 2026, holders may convert all or any portion of their 2026 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions.

Upon conversion, the Company will satisfy its conversion obligation by paying or delivering, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock at the Company’s election.

Upon conversion, the Company will satisfy its

conversion obligation by paying or delivering, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock at the Company’s election.

The conversion rate for the 2026 Notes is initially 123.4568 shares of the Company’s common stock per $1,000 principal amount of the 2026 Notes (equivalent to an initial conversion price of approximately $ 8.10 per share of common stock).

14 unchanged sentences

The Company accounted for the Capped Call Transactions separately from the 2026 Notes and recognized the $ 15.9 million cost as a reduction of additional paid-in capital in the year ended December 31, 2021 as the Capped Call Transactions are indexed to the Company’s common stock.

Subsequent to the Company’s 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 the Company’s common stock that initially underlie the $ 230.0 million initial principal amount of 2026 Notes.

2029 Convertible Senior Notes

On September 30, 2024, the Company 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, the Company 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, the Company issued $ 369.4 million aggregate principal amount of its 2029 Notes.

At closing, $ 219.4 million principal amount of the 2029 Notes were issued in exchange for $ 206.7 million principal amount of the 2026 Notes and $ 150.0 million principal amount of the 2029 Notes were issued for cash.

As part of such transactions, $ 29.7 million principal amount of the 2029 Notes were issued in exchange for $ 28.0 million principal amount of the 2026 Notes in transactions with one holder and its affiliates whom beneficially owned more than 10 % of the shares of the Company's common stock as of such date and at closing.

stock as of such date and at closing.

The 2029 Notes were issued pursuant to, and are governed by, an Indenture (the “2029 Notes Indenture”), dated as of October 3, 2024 between the Company and EQ as trustee.

10 unchanged sentences

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

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, the Company 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).

4 unchanged sentences

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

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

The 2029 Notes were initially recognized at the $ 362.2 million estimated fair value, which reflects $ 369.4 million principal amount less the $ 7.2 million discount in the exchange and subscription transactions.

10 unchanged sentences

The Company also had separate letter of credit facilities providing 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.

2024 Financing

2025 Mortgage Financing

In February 2025, the Company obtained an aggregate of $ 130.1 million of debt secured by non-recourse first priority mortgages on five communities.

The debt bears interest at a fixed rate of 6.47 %, is interest only for the first five years , and matures in March 2035.

In February 2025, the Company obtained $ 161.0 million of debt secured by first priority mortgages on 36 communities.

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

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

The loan bears interest at a variable rate based on SOFR plus a margin of 300 basis points, and is interest only for the first year.

The debt has an initial three-year term and two one-year extension options, exercisable subject to certain performance criteria, with a final maturity date, including extension options, of February 2030.

At the time of closing, the Company repaid $ 50.0 million of outstanding mortgage debt on 11 communities, which was obtained in February 2024 and held a final maturity date of February 2029.

In December 2025, the Company obtained $ 245.8 million of debt secured by first mortgages on 17 communities.

Approximately 90 % of the principal, or $ 221.2 million, of the loan bears interest at a fixed rate of 5.69 %, is interest-only for the first five years , and matures in January 2036.

The remaining $ 24.6 million of the loan bears interest at a variable rate equal to one-month SOFR plus 2.11 %, is interest-only for the first three years , and matures in January 2031.

In addition to provisions allowing the Company to convert all or a portion of the variable-rate note to a fixed-rate note and subsequently extend the maturity date, the credit facility structure provides future optionality for asset substitutions, borrow-ups, and partial releases.

In December 2025, the Company obtained an aggregate of $ 146.1 million of debt secured by first mortgages on nine communities.

The non-recourse loans bear interest at a fixed rate of 5.48 %, are interest-only for the first two years , and mature in January 2033.

At the time of closing of the aforementioned two December 2025 financings, the Company used the loan proceeds and cash on hand to repay $ 398.9 million of existing mortgage debt which was scheduled to mature in 2026 and 2027.

In December 2025, the Company also completed a non-recourse financing for $ 205.0 million secured by first mortgages on 16 communities.

The loan bears interest at a variable rate equal to the one-month SOFR plus 2.30 % and is interest-only for the first three years .

The loan is scheduled to mature in December 2028 and has two one-year extension options available to the Company subject to the satisfaction of certain conditions.

The financing also contains an option for the Company to obtain up to $ 20.0 million of additional loan proceeds in the future upon meeting certain requirements in the loan agreement.

In connection with this transaction, the Company refinanced $ 146.8 million of mortgage debt scheduled to mature in 2026.

2024 Mortgage Financing

In September 2024, the Company obtained $ 182.5 million of debt secured by first priority mortgages on 16 communities.

2 unchanged sentences

At the closing, the Company repaid $ 197.1 million of outstanding mortgage debt, which was scheduled to mature in September 2025, using proceeds from the $ 182.5 million debt and cash on hand.

In November 2024, the Company entered into an amendment to extend the maturity date of $ 220.0 million of its mortgage debt secured by first priority mortgages on 24 communities to October 2026 and to obtain the delayed draw term loan advance of $ 10.0 million, bringing the aggregate outstanding principal amount of the loan to $ 230.0 million.

The loan bears interest at a variable rate equal to SOFR plus a margin of 245 basis points.

The Company has the right to extend the term of the loan for one additional year, subject to the satisfaction of certain conditions.

In December 2024, as part of the acquisition of 11 senior living communities the Company assumed $ 194.5 million of existing 4.92 % fixed-rate agency debt which is scheduled to mature in March 2027.

2 unchanged sentences

At the closing, the Company repaid $ 312.5 million of debt under the mortgage facility, which was scheduled to mature in 2027, using proceeds from the $ 344.2 million loan.

2023 Financing

In December 2023, the Company obtained $ 179.5 million of debt secured by non-recourse first mortgages on 47 communities, which also continued to secure $ 580.4 million of additional outstanding mortgages with maturities in 2027.

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

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

Financial Covenants

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

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

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

The Company's failure to comply with applicable covenants could constitute an event of default under the applicable debt documents.

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).

6 unchanged sentences

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

The leases relating to substantially all of the Company's leased communities are fixed-rate leases with annual escalators that are fixed.

The Company is responsible for all operating costs, including repairs and maintenance, property taxes, and insurance.

2 unchanged sentences

As of December 31, 2025, none of the Company's renewal or extension option periods for community leases are included in the lease term for accounting purposes.

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 the Company to maintain prescribed minimum liquidity, net worth, and stockholders' equity levels and lease coverage ratios, in each case on a consolidated, portfolio-wide, multi-community, single-community and/or entity basis.

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 the Company to maintain prescribed minimum liquidity and net worth levels and lease coverage ratios, in each case on a consolidated, portfolio-wide, multi-community, single-community and/or entity basis.

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

The Company's failure to comply with applicable covenants could constitute an event of default under the applicable lease documents.

Many of the Company's debt and lease 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).

Certain leases contain cure provisions, which generally allow the Company to post an additional lease security deposit

if the required covenant is not met.

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

Certain leases contain cure provisions, which generally allow the Company to post an additional lease security deposit if the required covenant is not met.

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.

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Total net cash outflows from financing leases $ 11,604 $ 28,247 $ 29,948

As of December 31, 2024, the weighted average discount rate of the Company's operating and financing leases was 8.8 % and 7.8 %, respectively.

As of December 31, 2025, the weighted average discount rate of the Company's operating leases was 8.7 %.

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

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Total lease payments 1,842.8 41.8

Purchase price for communities subject to acquisition agreements — 310.0

Reacquisition price in excess of sale-leaseback proceeds — ( 32.8 )

Imputed interest and variable lease payments ( 644.7 ) ( 36.9 )

Other financing obligations — 20.6

Non-cash gain on future sale of property — 20.7

Total lease obligations $ 1,198.1 $ 25.6

1 unchanged sentence

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

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

Each Unit is comprised of a prepaid stock purchase contract and a senior amortizing note with an initial principal amount of $ 8.8996 .

Under each purchase contract, the Company is obligated to deliver to the holder on November 15, 2025 a minimum of 12.9341 , and a maximum of 15.1976 , shares of the Company’s common stock depending on the daily volume-weighted average price ("VWAPs") of its common stock for the 20 trading days preceding the settlement date.

Each amortizing note bears interest at the rate of 10.25 % per annum, requires quarterly installment payments of principal and interest, and has a final installment payment date of November 15, 2025.

The cash installment payments will be equivalent to 7.00 % per year with respect to each $ 50.00 stated amount of Unit.

The Units, purchase contracts, and amortizing notes are subject to the terms and conditions set forth in the Purchase Contract Agreement dated November 21, 2022 between the Company and EQ as purchase contract agent, and the Indenture and First Supplemental Indenture, each dated November 21, 2022, between the Company and EQ as trustee, including certain early settlement, repurchase, and adjustment events as set forth therein.

Subsequent to issuance, each Unit may be legally separated into the two components, both of which are freestanding instruments and separate units of account.

The Company allocated the proceeds from the issuance of the Units to the purchase contracts and amortizing notes based on the relative fair values of the respective components, determined as of the date of issuance of the Units.

The Company recognized the issuance of the purchase contract portion of the Units, net of issuance costs, as additional paid-in-capital on the consolidated balance sheet.

The Company separately recognized the amortizing notes portion of the Units, net of issuance costs, as long-term debt on the consolidated balance sheet.

The proceeds from the issuance of the Units were allocated to equity and debt based on the relative fair value of the respective components of each Unit as follows:

(in thousands, except value per unit) Equity Component Debt Component Total

Value per unit $ 41.10 $ 8.90 $ 50.00

Gross proceeds $ 118,164 $ 25,586 $ 143,750

underwriters' discount ( 3,544 ) ( 768 ) ( 4,312 )

Proceeds from issuance of Units $ 114,620 $ 24,818 $ 139,438

issuance costs ( 1,163 ) ( 252 ) ( 1,415 )

Net proceeds $ 113,457 $ 24,566 $ 138,023

Unless settled early in accordance with the terms of the instruments, each prepaid stock purchase contract will automatically settle on November 15, 2025 (the mandatory settlement date) for a number of shares of the Company’s common stock based on the arithmetic average of the VWAPs of the Company’s common stock on each of the 20 consecutive trading days beginning on, and including, the 21st scheduled trading day immediately preceding November 15, 2025 (applicable market value) with reference to the following settlement rates:

Applicable Market Value Common Stock Issued

Equal to or greater than the threshold appreciation price 12.9341 shares (minimum settlement rate)

Less than the threshold appreciation price, but greater than the reference price $ 50 divided by applicable market value

Less than or equal to the reference price 15.1976 shares (maximum settlement rate)

The threshold appreciation price is initially approximately equal to $ 3.87 and the reference price is initially approximately equal to $ 3.29 .

Each Unit was comprised of a prepaid stock purchase contract and a senior amortizing note with an initial principal amount of $ 8.8996 .

During the year ended December 31, 2024, 583,662 of the Units were separated at the election of the holders into the two components, prepaid stock purchase contracts and senior amortizing notes, and the Company delivered 7,549,141 shares of the Company’s common stock upon settlement of such prepaid stock purchase contracts.

As of December 31, 2024, 2,291,338 prepaid stock purchase contracts remain outstanding, and the maximum number of shares issuable upon settlement of the Units' prepaid stock purchase contracts is 34.8 million.

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.

In November 2025, the Company repaid the remaining outstanding balance of the senior amortizing notes component of the Units.

As of December 31, 2025, the Company had no outstanding prepaid stock purchase contracts.

Accrued Expenses

3 unchanged sentences

Employee compensation $ 121,080 $ 107,710

Insurance reserves 72,501 54,834

Insurance liabilities 72,848 72,501

Real estate taxes 25,005 27,300

8 unchanged sentences

Certain claims and lawsuits allege large damage amounts, seek injunctive relief, and may require (and have required) significant costs to defend and resolve.

The Company continues to vigorously defend against the putative class action cases.

Based on the information that has been received as of the date hereof related to certain pending putative class action litigation discussed above, the Company took a charge for this litigation of $ 7.0 million for the year ended December 31, 2024, representing its current estimate of the Company’s ultimate cost to resolve such litigation, net of estimated probable insurance recoveries.

The final outcome of the litigation is dependent on many factors that are difficult to predict.

Accordingly the Company’s ultimate cost related to this matter may be materially different than the amount of the Company’s current estimate and accruals.

The Company took a charge for this litigation of $ 7.0 million for the year ended December 31, 2024, representing its estimate of the Company’s ultimate cost to resolve such litigation, net of estimated probable insurance recoveries.

The final outcome of the pending class action litigation is dependent on many factors that are difficult to predict.

Accordingly the Company’s ultimate cost related to these matters may be materially different than the amount of the Company’s current estimate and accruals.

The Company continues to vigorously defend against the pending putative class action cases.

The Company maintains general liability, professional liability, excess liability, and other insurance policies in amounts and with coverage and deductibles the Company believes are appropriate, based on the nature and risks of its business, historical experience, availability, and industry standards.

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In addition, the Company is subject to various government reviews, audits, and investigations to verify compliance with Medicare and Medicaid programs and other applicable laws and regulations.

The Centers for Medicare & Medicaid Services ("CMS") has engaged third-party firms to review claims data to evaluate appropriateness of billings.

The Centers for Medicare & Medicaid Services has engaged

third-party firms to review claims data to evaluate appropriateness of billings.

In addition to identifying overpayments, audit contractors can refer suspected violations to government authorities.

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The Company's costs to respond to and defend any such audits, reviews, and investigations may be significant.

In June 2020, the Company and several current and former executive officers were named as defendants in a putative class action lawsuit alleging violations of the federal securities laws filed in the federal court for the Middle District of Tennessee.

The lawsuit asserted that the defendants made material misstatements and omissions concerning the Company's business, operational and compliance policies, compliance with applicable regulations and statutes, and staffing practices that caused the Company's stock price to be artificially inflated between August 2016 and April 2020.

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.

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

The other derivative lawsuit remains pending with the Middle District of Tennessee and asserts claims on behalf of the Company against certain current and former officers and directors for alleged breaches of duties owed to the Company.

The complaint incorporates substantively similar allegations to the securities lawsuit previously described.

The Company has employment or letter agreements with certain officers of the Company and has adopted policies to which certain officers of the Company are eligible to participate, which grant these employees the right to receive a portion or multiple of their base salary, pro-rata bonus, bonus, and/or continuation of certain benefits, for a defined period of time, in the event of certain terminations of the officers' employment, as described in those agreements and policies.

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

As of December 31, 2024 and 2023, the Company accrued reserves of $ 140.0 million and $ 122.6 million, respectively, under the Company's insurance programs, of which $ 67.5 million and $ 67.8 million is classified as other liabilities as of December 31, 2024 and 2023, respectively.

As of December 31, 2025 and 2024, the Company accrued liabilities of $ 129.2 million and $ 140.0 million, respectively, under the Company's insurance programs, of which $ 56.3 million and $ 67.5 million is classified as other liabilities as of December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024, the Company accrued $ 13.5 million and $ 13.8 million, respectively, of estimated amounts receivable from the insurance companies under these insurance programs.

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That cost is expected to be recognized over a weighted average period of 2.1 years and is based on grant date fair value.

As of December 31, 2024, the Company's outstanding shares included 27,972 unvested restricted shares.

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

During 2024, grants of restricted stock units and stock awards under the Company's 2014 and 2024 Omnibus Incentive Plans were as follows.

As of December 31, 2025 and 2024, the Company's outstanding shares included 28,929 and 27,972 unvested restricted shares, respectively.

During 2025, grants of restricted stock units and stock awards under the Company's 2024 Omnibus Incentive Plan were as follows.

(in thousands, except for weighted average amounts) Restricted Stock Unit and Stock Award Grants Weighted Average Grant Date Fair Value Total Grant Date Fair Value

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Earnings Per Share

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

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

Prior to December 31, 2025, the potentially dilutive common stock equivalents for the Company also included warrants and prepaid stock purchase contracts.

As of December 31, 2025, 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).

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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 .

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 year ended December 31, 2024, the Company issued 2.9 million shares of common stock upon the partial exercise of the Warrant by Ventas for 5.2 million shares, net of shares withheld to satisfy the aggregate exercise price.

As of December 31, 2024, the Warrant remains outstanding for the right to purchase 11.1 million shares of the Company's common stock.

As of December 31, 2024, the maximum number of shares issuable upon settlement of the Units' prepaid stock purchase contracts is 34.8 million.

Refer to Note 9 for more information on 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 minimum number of shares issuable upon settlement of the prepaid stock purchase contract component of the Units.

During the year ended December 31, 2025, the Company issued 5.7 million shares of common stock upon the partial 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 December 31, 2025, the Company had no outstanding warrants.

As of December 31, 2025, the Company had no outstanding prepaid stock purchase contracts.

Refer to Note 9 for more information on the prepaid stock purchase contract 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 during the period, after giving effect to the weighted average minimum number of shares during the period issuable upon settlement of the prepaid stock purchase contract component of the Units.

Years Ended December 31,

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The benefit (provision) for income taxes is comprised of the following:

For the Years Ended December 31,

Years Ended December 31,

(in thousands) 2025 2024 2023

Current $ 122 $ ( 183 ) $ ( 17 )

Deferred ( 3,617 ) ( 7,590 ) 1,325

Total federal ( 3,495 ) ( 7,773 ) 1,308

Current ( 1,151 ) ( 1,011 ) 251

Deferred (included in federal above) — — —

Total state ( 1,151 ) ( 1,011 ) 251

Total $ ( 4,646 ) $ ( 8,784 ) $ 1,559

A reconciliation of the benefit (provision) for income taxes to the amount computed at the U.S.

Federal statutory rate of 21 % is as follows.

Current tax benefit (provision):

federal $ 80 $ 122 $ ( 183 )

state and local ( 1,417 ) ( 1,151 ) ( 1,011 )

Total current tax benefit (provision) ( 1,337 ) ( 1,029 ) ( 1,194 )

Deferred tax benefit (provision):

federal 2,511 ( 3,617 ) ( 7,590 )

state and local (1)

Total deferred tax benefit (provision) 3,288 ( 3,617 ) ( 7,590 )

Total income tax benefit (provision) $ 1,951 $ ( 4,646 ) $ ( 8,784 )

(1) Prior to the adoption of ASU 2023-09 prospectively for the year ended December 31, 2025, U.S.

state and local deferred tax benefit (provision) was presented within the U.S.

federal amount.

Reconciliations of the benefit (provision) for income taxes to the amount computed at the U.S.

federal statutory tax rate of 21% are as follows.

For the Year Ended December 31, 2025

(in thousands) Amount Percent of pre-tax loss

federal statutory tax rate $ 55,575 21.0 %

state and local taxes, net of U.S.

federal income tax (1)

( 640 ) ( 0.2 ) %

Tax credits ( 485 ) ( 0.2 ) %

Changes in U.S.

federal income tax valuation allowance ( 48,690 ) ( 18.4 ) %

Nontaxable or nondeductible items:

Officers' compensation ( 3,342 ) ( 1.3 ) %

Other 171 0.1 %

Changes in unrecognized tax benefits 67 — %

Other adjustments ( 705 ) ( 0.3 ) %

Effective income tax rate $ 1,951 0.7 %

(1) State taxes in Texas comprised the majority of this category.

For the Years Ended December 31,

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statutory rate $ 41,431 $ 37,848

State taxes, net of federal income tax 5,125 5,766 10,811

state and local taxes, net of U.S.

federal income tax 5,125 5,766

Valuation allowance ( 47,345 ) ( 49,109 )

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Total $ ( 4,646 ) $ ( 8,784 )

Income taxes paid (net of refunds received) consisted of the following:

(in thousands) For the Year Ended December 31, 2025

All other states 45

Total income taxes paid (net of refunds) $ 1,437

Significant components of the Company's deferred tax assets and liabilities are as follows.

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December 31, 2025 $ 521,497 $ 56,728 (1) $ 578,225

(1) Increase to valuation allowance for federal and state net operating losses and credits.

(1) Increase to valuation allowance for U.S.

federal and state net operating losses and credits.

As of both December 31, 2025 and 2024, the Company had federal net operating loss carryforwards generated in 2017 and prior of approximately $ 790.8 million, which are available to offset future taxable income from 2026 through 2037.

Additionally, as of December 31, 2024 and 2023, the Company had federal net operating loss carryforwards generated after 2017 of $ 934.1 million and $ 799.3 million, respectively, which have an indefinite life, but with usage limited to 80% of taxable income in any given year.

The Company had state capital loss carryforwards of $ 2.1 million as of December 31, 2023.

Additionally, as of December 31, 2025 and 2024, the Company had federal net operating loss carryforwards generated after 2017 of $ 1.2 billion and $ 0.9 billion, respectively, which have an indefinite life, but with usage limited to 80% of taxable income in any given year.

The Company had federal and state capital loss carryforwards of $ 0.7 million as of December 31, 2025.

The Company determined that a valuation allowance was required after consideration of the Company's estimated future reversal of existing timing differences as of December 31, 2025 and 2024.

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The Company has recorded valuation allowances of $ 528.2 million and $ 471.1 million against its federal and state net operating losses as of December 31, 2025 and 2024, respectively.

The Company has recorded a valuation allowance against its state capital loss carryforward of $ 2.1 million as of December 31, 2023.

The Company also recorded a valuation allowance against federal and state credits of $ 50.4 million as of both December 31, 2024 and 2023.

As of December 31, 2024 and 2023, the Company had gross tax affected unrecognized tax benefits of $ 18.1 million and $ 18.2 million, respectively, which, if recognized, would result in an income tax benefit recorded in the consolidated statement of operations.

The Company has recorded a valuation allowance against its federal and state capital loss carryforward of $ 0.1 million as of December 31, 2025.

The Company also recorded a valuation allowance against federal and state credits of $ 49.9 million and $ 50.4 million as of December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024, the Company had gross tax affected unrecognized tax benefits of $ 18.0 million and $ 18.1 million, respectively, which, if recognized, would result in an income tax benefit recorded in the consolidated statement of operations and would affect the annual effective tax rate.

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

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

The Company does not expect that unrecognized tax benefits for tax positions taken with respect to 2024 and prior years will significantly change in 2025.

A reconciliation of the unrecognized tax benefits is as follows.

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Balance at beginning of period $ 18,101 $ 18,205

Additions for tax positions related to prior years — 173

Reductions for tax positions related to prior years ( 69 ) ( 104 )

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Long-term debt — ( 188,634 ) —

Financing lease obligations — — 6,000

Operating lease obligations — 71,016 —

Financing lease obligations 277,208 — —

Loss on debt modification and extinguishment, net 32,792 — —

Other liabilities — — ( 384 )

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Prepaid expenses and other assets, net $ ( 195 ) $ ( 362 ) $ ( 1,889 )

Assets held for sale — — ( 3,668 )

Property, plant and equipment and leasehold intangibles, net ( 23,584 ) ( 6,291 ) ( 36,545 )

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

For the Years Ended December 31,

(in thousands) 2024 2023 2022

Non-cash lease transactions, net:

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Operating lease right-of-use assets 13,241 660,756 223,309

Other assets, net ( 481 ) — —

Operating lease obligations ( 13,252 ) ( 654,352 ) ( 260,611 )

Financing lease obligations — ( 152,975 ) 88,820

Loss (gain) on sale of assets, net — — ( 73,850 )

Loss (gain) on facility operating lease termination, net 492 — —

Net $ — $ — $ —

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.

Restricted cash consists principally of escrow deposits for real estate taxes, property insurance, interest rate caps, 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 components of restricted cash are as follows.

(in thousands) 2025 2024

Interest rate cap escrows $ 16,861 $ 17,843

Real estate tax and property insurance escrows $ 20,156 $ 16,307

Interest rate cap escrows 7,901 16,861

Replacement reserve escrows 4,920 6,452

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Debt service reserve 6,222 2,147

Letters of credit collateral 112 110

Subtotal 30,659 31,044

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Total cash, cash equivalents, and restricted cash $ 343,008 $ 379,840

COVID-19 Pandemic

The COVID-19 pandemic has adversely impacted the Company's occupancy and resident fee revenue beginning in March 2020 and resulted in incremental direct costs to respond to the pandemic.

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

Government Provided Financial Relief .

The Coronavirus Aid, Relief, and Economic Security Act of 2020 ("CARES Act"), signed into law on March 27, 2020, and Paycheck Protection Program and Health Care Enhancement Act, signed into law on April 24, 2020, provided liquidity and financial relief to certain businesses, among other things.

Certain impacts of such programs are provided below.

• During the year ended December 31, 2022, the Company accepted $ 61.1 million of cash from grants from the Public Health and Social Services Emergency Fund ("Provider Relief Fund") administered by U.S.

Department of Health and Human Services, under which grants have been made available to eligible healthcare providers for healthcare related expenses or lost revenues attributable to the COVID-19 pandemic.

• During the year ended December 31, 2020, the Company deferred payment of $ 72.7 million of the employer portion of social security payroll taxes incurred from March 27, 2020 through December 31, 2020 pursuant to the CARES Act.

Pursuant to the sale of 80 % of the Company's equity in its Health Care Services segment, $ 9.6 million of such obligations related to its former Health Care Services segment were retained by the unconsolidated HCS Venture.

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

As of December 31, 2024 and 2023, the Company has no remaining obligations for the deferred payroll tax program.

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

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

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

As of December 31, 2024 and 2023, the Company has no remaining receivables under the program.

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

Segment Information

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for which separate financial information is available;

and whose operating results are regularly reviewed by the chief operating decision maker to assess the performance of the individual segment and make decisions about resources to be allocated to the segment.

The Company's chief operating decision maker is its President and Chief Executive Officer.

and whose operating results are regularly reviewed by the Chief Operating Decision Maker ("CODM") to assess the performance of the individual segment and make decisions about resources to be allocated to the segment.

The Company's CODM is its Chief Executive Officer.

Independent Living .

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The accounting policies of the Company's reportable segments are the same as those described in the summary of significant accounting policies in Note 2.

The following tables set forth selected segment financial data.

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Facility operating lease expense 200,263 200,587 202,410

Independent Living 37,824 39,114 39,700

Assisted Living and Memory Care 147,899 146,166 106,961

CCRCs 13,052 12,943 13,883

Corporate and All Other 1,812 4,187 4,750

Depreciation and amortization 355,527 357,788 342,712

Independent Living 92,785 83,637 79,521

Assisted Living and Memory Care 202,996 196,994 207,344

CCRCs 34,882 36,951 38,039

Corporate and All Other 27,125 25,130 22,540

Asset impairment 71,349 8,557 40,572

Independent Living 2,285 1,647 10,893

Assisted Living and Memory Care 5,927 11,574 11,613

CCRCs 345 1,368 5,970

Corporate and All Other — 25,983 1,142

Loss (gain) on sale of communities, net ( 2,368 ) — ( 36,296 )

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

Income (loss) from operations $ 13,498 $ 46,528 $ 18,412

For the Years Ended December 31,

(in thousands) 2024 2023 2022

Total interest expense:

Independent Living $ 65,342 $ 61,624 $ 48,788

Assisted Living and Memory Care 150,610 141,330 133,139

CCRCs 23,595 24,889 21,251

Corporate and All Other 13,028 10,431 1,539

$ 252,575 $ 238,274 $ 204,717

Total capital expenditures for property, plant and equipment, and leasehold intangibles:

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$ 203,288 $ 204,350 $ 228,592

As of December 31,

(in thousands) 2024 2023

Total assets:

Independent Living (6)

$ 1,252,736 $ 1,206,021

Assisted Living and Memory Care 3,983,311 3,315,921

CCRCs 640,720 612,521

Corporate and All Other 458,795 438,972

Total assets $ 6,335,562 $ 5,573,435

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

(2) Includes other operating income recognized for the credits or grants pursuant to the Provider Relief Fund, employee retention credit, and other government sources, as described in Note 19.

Allocations to the applicable segment generally reflect the credits earned by the segment, the segment’s receipt and acceptance of the grant, or the segment’s proportional utilization of the grant.

Other operating income by segment is as follows.

For the Years Ended December 31,

(in thousands) 2024 2023 2022

Independent Living $ — $ 487 $ 10,906

Assisted Living and Memory Care — 8,008 60,630

CCRCs — 578 8,933

Total other operating income $ — $ 9,073 $ 80,469

(2) During the year ended December 31, 2023, the Company recognized $ 9.1 million of other operating income from grants from states and other local government sources.

The Independent Living, Assisted Living and Memory Care, and CCRCs segments recognized $ 0.5 million, $ 8.0 million, and $ 0.6 million, respectively, in other operating income for the year ended December 31, 2023.

(3) All Other revenue and other operating income includes management fees and reimbursements of costs incurred on behalf of managed communities.

For the years ended December 31, 2023, and 2022, revenue and other operating income includes $ 0.9 million and $ 4.2 million of revenue earned from unconsolidated ventures in which the Company had an ownership interest.

For the year ended December 31, 2023, revenue and other operating income includes $ 0.9 million of revenue earned from unconsolidated ventures in which the Company had an ownership interest.

(4) Other facility operating expenses is primarily comprised of costs for food, utilities, maintenance, real estate taxes, insurance, marketing, paid referral fees, and other costs of operating the Company's communities.

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

The Company does not report total assets by segment because this is not a metric used by the CODM to allocate resources or evaluate segment performance.

The Company's total carrying amount of goodwill is included on the Independent Living segment and was $ 27.3 million as of December 31, 2025, 2024, and 2023.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data