What changed in this filing

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Item 1. Financial Statements

2026-05-07 compared with 2025-11-07 · 67 added, 233 removed, 369 unchanged (45% of the section changed)

3 unchanged sentences

(In thousands, except stock amounts)

September 30,

2026 December 31,

29 unchanged sentences

Total liabilities 5,952,383 5,995,620

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

Preferred stock, $ 0.01 par value, 50,000,000 shares authorized at March 31, 2026 and December 31, 2025;

no shares issued and outstanding

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

248,053,116 and 210,547,351 shares issued and 237,525,591 and 200,019,826 shares outstanding (including 28,929 and 27,972 unvested restricted shares), respectively

Common stock, $ 0.01 par value, 400,000,000 shares authorized at March 31, 2026 and December 31, 2025;

249,316,153 and 248,274,011 shares issued and 238,788,628 and 237,746,486 shares outstanding as of March 31, 2026 and December 31, 2025, respectively (including 28,929 unvested restricted shares as of March 31, 2026 and December 31, 2025)

Additional paid-in-capital 4,353,777 4,358,077

Treasury stock, at cost;

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

10,527,525 shares at March 31, 2026 and December 31, 2025

( 102,774 ) ( 102,774 )

10 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Resident fees $ 722,456 $ 777,454

10 unchanged sentences

Loss (gain) on sale of communities, net ( 4,034 ) —

Loss (gain) on facility operating lease termination, net 4,480 — 4,480 —

Costs incurred on behalf of managed communities 37,027 33,790

7 unchanged sentences

Gain (loss) on debt modification and extinguishment, net ( 2,786 ) ( 35,220 )

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

Other non-operating income (loss) 115 1,358

13 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Total equity (deficit), balance at beginning of period $ ( 43,377 ) $ 213,905

38 unchanged sentences

(Unaudited, in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash Flows from Operating Activities

8 unchanged sentences

Loss (gain) on sale of assets, net ( 4,034 ) —

Loss (gain) on facility operating lease termination, net 4,480 —

Non-cash stock-based compensation expense 3,680 3,979

16 unchanged sentences

Change in lease acquisition deposits, net — 5,000

Purchase of interest rate cap instruments ( 3,563 ) ( 9,282 )

Proceeds from interest rate cap instruments 4,466 14,816

Other ( 518 ) ( 325 )

18 unchanged sentences

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

As of September 30, 2025, the Company owned 372 communities, representing a majority of the Company's community portfolio, leased 221 communities, and managed 30 communities.

As of March 31, 2026, the Company owned 363 communities, leased 176 communities, and managed 29 communities.

Summary of Significant Accounting Policies

16 unchanged sentences

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

Fair Value Measurements

Interest Rate Derivatives

The Company's derivative assets include interest rate cap and swap instruments that effectively manage the risk above certain interest rates for a portion of the Company's long-term variable rate debt.

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

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

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

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

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

($ in millions)

Notional balance $ 892.8

Weighted average fixed cap rate 4.26 %

Weighted average remaining term 0.9 years

Estimated asset fair value (included in other assets, net) $ 2.7

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 September 30, 2025.

($ in millions)

Notional balance $ 230.0

Fixed interest rate 4.06 %

Remaining term 1.0 year

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

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.

Property, Plant and Equipment and Leasehold Intangibles

During the three and nine months ended September 30, 2025 and 2024, the Company evaluated property, plant and equipment and leasehold intangibles for impairment and 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 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 these communities were determined based on valuations provided by third-party pricing services and are classified within Level 3 of the valuation hierarchy.

The Company recorded property, plant and equipment and leasehold intangibles non-cash impairment charges in its operating results of $ 62.7 million and $ 65.1 million for the three and nine months ended September 30, 2025, respectively.

Long-term debt

The Company estimates the fair value of its debt primarily using a discounted cash flow analysis based upon the Company's current borrowing rate for debt with similar maturities and collateral securing the indebtedness.

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

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

Fair value of the long-term debt is approximately $ 4.3 billion and $ 3.8 billion as of September 30, 2025 and December 31, 2024, respectively.

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

Resident fee revenue by payor source is as follows.

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

Three Months Ended March 31,

Private pay 94.4 % 93.9 %

7 unchanged sentences

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

The Company had total deferred revenue (included within refundable fees and deferred revenue within the condensed consolidated balance sheets) of $ 49.0 million and $ 53.8 million, including $ 24.1 million and $ 29.4 million of monthly resident fees billed and received in advance, as of September 30, 2025 and December 31, 2024, respectively.

For the nine months ended September 30, 2025 and 2024, the Company recognized $ 52.8 million and $ 47.0 million, respectively, of revenue that was included in the deferred revenue balance as of January 1, 2025 and 2024, respectively.

The Company had total deferred revenue (included within refundable fees and deferred revenue within the condensed consolidated balance sheets) of $ 51.7 million and $ 51.3 million, including $ 29.8 million and $ 29.1 million of monthly resident fees billed and received in advance, as of March 31, 2026 and December 31, 2025, respectively.

For the three months ended March 31, 2026 and 2025, the Company recognized $ 39.4 million and $ 40.7 million, respectively, of revenue that was included in the deferred revenue balance as of January 1, 2026 and 2025, respectively.

Property, Plant and Equipment and Leasehold Intangibles, Net

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

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

As of March 31, 2026 and December 31, 2025, net property, plant and equipment and leasehold intangibles consisted of the following.

(in thousands) March 31, 2026 December 31, 2025

Land $ 538,001 $ 544,824

8 unchanged sentences

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

The Company recognized depreciation and amortization expense on its property, plant and equipment and leasehold intangibles of $ 94.8 million and $ 90.1 million for the three months ended September 30, 2025 and 2024, respectively, and $ 278.6 million and $ 264.2 million for the nine months ended September 30, 2025 and 2024, respectively.

The Company recognized $ 62.7 million and $ 65.1 million for the three and nine months ended September 30, 2025, respectively, of non-cash impairment charges in its operating results for its property, plant and equipment and leasehold intangibles assets primarily due to the planned disposition of certain underperforming communities resulting in a change in their intended holding periods.

The Company recognized $ 0.9 million and $ 2.6 million for the three and nine months ended

September 30, 2024, respectively, of non-cash impairment charges in its operating results for its property, plant and equipment and leasehold intangibles assets primarily due to property damage sustained at certain communities.

As of September 30, 2025, four communities in the Assisted Living and Memory Care segment and two communities in the CCRCs segment were classified as held for sale, resulting in $ 68.8 million of net property, plant and equipment and leasehold intangibles assets being recognized as assets held for sale within the condensed consolidated balance sheet.

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

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

The Company recognized depreciation and amortization expense on its property, plant and equipment and leasehold intangibles of $ 73.5 million and $ 91.0 million for the three months ended March 31, 2026 and 2025, respectively.

The Company recognized $ 6.1 million and $ 1.8 million for the three months ended March 31, 2026 and 2025, respectively, of non-cash impairment charges in its operating results for its property, plant and equipment and leasehold intangibles assets.

As of March 31, 2026, 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 $ 75.2 million of net property, plant and equipment and leasehold

intangibles assets being recognized as assets held for sale within the condensed consolidated balance sheet.

Subsequent to March 31, 2026, the Company completed the sale of three owned communities for cash proceeds of $ 88 million, net of transaction costs.

The closings of the sales of the additional 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 additional transactions will close or, if they do, when the actual closings will occur.

Long-term debt consists of the following.

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

(in thousands) March 31, 2026 December 31, 2025

Fixed-rate mortgage notes payable due 2027 through 2036;

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

weighted average interest rate of 4.91 % and 4.88 % as of March 31, 2026 and December 31, 2025, respectively

$ 2,875,940 $ 2,897,275

Variable-rate mortgage notes payable due 2027 through 2031;

weighted average interest rate of 6.71 % and 6.89 % as of September 30, 2025 and December 31, 2024, respectively

weighted average interest rate of 6.07 % and 6.18 % as of March 31, 2026 and December 31, 2025, respectively

1,064,116 1,048,308

Convertible notes payable due October 2026;

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

interest rate of 2.00 % as of both March 31, 2026 and December 31, 2025

23,297 23,297

Convertible notes payable due October 2029;

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

interest rate of 3.50 % as of both March 31, 2026 and December 31, 2025

369,445 369,445

Tangible equity units senior amortizing notes due 2025;

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

Notes payable for insurance premium financing due 2026;

interest rate of 6.16 % as of September 30, 2025

interest rate of 5.40 % as of March 31, 2026

Deferred financing costs, net ( 45,388 ) ( 45,828 )

2 unchanged sentences

Total long-term debt, less current portion $ 4,224,369 $ 4,215,005

As of September 30, 2025, the current portion of long-term debt within the Company's condensed consolidated financial statements includes $ 36.0 million of mortgage notes payable secured by assets held for sale.

As of September 30, 2025, the long-term debt, less current portion within the Company's condensed consolidated balance sheet includes $ 98.8 million of mortgage debt scheduled to mature in January 2026 for which the Company has the unilateral option to extend the maturity for one year subject to the satisfaction of certain conditions.

As of September 30, 2025, 88.1 %, or $ 3.8 billion, of the Company's total debt obligations represented non-recourse property-level mortgage financings.

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

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

2025 Mortgage Financings

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 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 held a final maturity date of February 2029.

As of March 31, 2026, the current portion of long-term debt within the Company's condensed consolidated financial statements includes $ 6.2 million of mortgage notes payable secured by assets held for sale.

As of March 31, 2026, 89.3 %, or $ 3.9 billion, of the Company's total debt obligations represented non-recourse property-level mortgage financings.

As of March 31, 2026, $ 1.4 million of letters of credit and no cash borrowings were outstanding under the Company's $ 100.0 million secured credit facility.

The Company also had separate letter of credit facilities providing up to $ 68.0 million of letters of credit as of March 31, 2026 under which $ 59.2 million had been issued as of that date.

On March 31, 2026, the Company obtained an aggregate $ 184.9 million of debt on 7 communities and repaid $ 190.6 million of outstanding mortgage debt secured by 11 communities previously scheduled to mature in March 2027.

The principal amounts of the new loans are secured by non-recourse first mortgages, bear interest at a fixed rate of 5.38 %, are interest only for the first two years , and mature in April 2033.

Financial Covenants

4 unchanged sentences

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

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

As of September 30, 2025, the Company operated 221 communities under long-term leases ( 212 operating leases and 9 financing leases).

As of March 31, 2026, the Company is in compliance with the financial covenants of its debt agreements.

As of March 31, 2026, the Company operated 176 communities under long-term leases ( 167 operating leases and 9 financing leases).

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

8 unchanged sentences

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 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).

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.

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

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

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

Operating Leases (in thousands)

2025 2024 2025 2024

Facility operating expense $ 1,971 $ 1,999 $ 6,105 $ 6,095

Facility lease expense 51,993 51,937 157,520 154,397

Operating lease expense 53,964 53,936 163,625 160,492

Operating lease expense adjustment (1)

4,685 12,489 13,384 39,061

Changes in operating lease assets and liabilities for lessor capital expenditure reimbursements ( 8,706 ) ( 6,432 ) ( 20,038 ) ( 7,732 )

Operating net cash outflows from operating leases $ 49,943 $ 59,993 $ 156,971 $ 191,821

(1) Represents the difference between the amount of cash operating lease payments and the amount of operating lease expense.

Three Months Ended

September 30, Nine Months Ended

September 30,

Financing Leases (in thousands)

2025 2024 2025 2024

Depreciation and amortization $ 715 $ 2,651 $ 3,949 $ 8,421

Interest expense:

financing lease obligations 1,764 5,062 9,114 15,233

Financing lease expense $ 2,479 $ 7,713 $ 13,063 $ 23,654

Operating cash outflows from financing leases $ 1,764 $ 5,062 $ 9,114 $ 15,233

Financing cash outflows from financing leases 304 273 890 800

Changes in financing lease assets and liabilities for lessor capital expenditure reimbursement ( 35 ) — ( 40 ) —

Total net cash outflows from financing leases $ 2,033 $ 5,335 $ 9,964 $ 16,033

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

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

Year Ending December 31, Operating Leases Financing Leases

2025 (three months) $ 57.1 $ 1.8

2026 183.5 7.2

2027 186.4 6.4

2028 183.9 6.3

2029 186.4 6.3

Thereafter 1,096.1 15.6

Total lease payments 1,893.4 43.6

Imputed interest and variable lease payments ( 685.2 ) ( 38.4 )

Non-cash gain on future sale of property — 20.7

Total lease obligations $ 1,208.2 $ 25.9

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 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 6 for information on the mortgage financing.

Previously, 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 were leased by the Company from Welltower Inc.

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 6 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 31, 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 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 three months ended March 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.

As of March 31, 2026, the Company is in compliance with the financial covenants of its long-term lease agreements.

The Company has been and is currently involved in litigation and claims incidental to the conduct of its business, which it believes are generally comparable to other companies in the senior living and healthcare industries.

1 unchanged sentence

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 recorded $ 7.0 million in litigation expense for the three months ended December 31, 2024, representing its estimate of the Company’s ultimate cost to resolve such litigation, net of estimated probable insurance recoveries.

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 continues to vigorously defend against the pending putative class action litigation.

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.

7 unchanged sentences

In addition, states' Attorneys General vigorously enforce consumer protection laws as those laws relate to the senior living industry.

An adverse outcome of government scrutiny may result in citations, sanctions, other criminal or civil fines and penalties, the refund of overpayments, payment suspensions, termination of participation in Medicare and Medicaid programs, and damage to the Company's business reputation.

An adverse outcome of government scrutiny may result in citations, sanctions, other criminal or civil fines and penalties, the refund of overpayments, payment suspensions,

termination of participation in Medicare and Medicaid programs, and damage to the Company's business reputation.

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, styled Davis v.

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

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

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

Tenn.) (the “ Templin Action”).

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

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

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

The appeal in the Davis Action was stayed pending the completion of the settlement approval proceedings in the Templin Action, and on August 12, 2025, the Sixth Circuit granted the motion to dismiss the appeal as moot in light of the settlement of the Templin Action.

Stock-Based Compensation

2 unchanged sentences

Three months ended March 31, 2026 1,529 $ 16.30 $ 24,934

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

Three months ended September 30, 2025 13 $ 7.75 $ 100

Earnings Per Share

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

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

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

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

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

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

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

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

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

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

As of September 30, 2025, the Company had no outstanding prepaid stock purchase contracts and $ 0.8 million payable in 2025 for the senior amortizing notes component of the Units.

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

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

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

As of March 31, 2026, $ 369.4 million in aggregate principal amount of the Company’s 3.50 % convertible senior notes due 2029 (the “2029 Notes”) remain outstanding and the maximum number of shares issuable upon settlement of the 2029 Notes is 55.0 million (after giving effect to 13.9 million additional shares that would be issuable upon conversion in connection with the occurrence of certain corporate or other events).

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

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

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2026 2025

6 unchanged sentences

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

As of September 30,

As of March 31,

(in millions) 2026 2025

5 unchanged sentences

Restricted stock and restricted stock units 4.0 6.2

Incremental shares issuable under purchase contracts — 5.2

Total 62.9 70.7

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

The Company recorded an aggregate deferred federal, state, and local tax benefit of $ 27.8 million for the three months ended September 30, 2025, which was partially offset by an increase to the valuation allowance of $ 27.5 million.

The Company recorded an aggregate deferred federal, state, and local tax benefit of $ 52.7 million for the nine months ended September 30, 2025, which was partially offset by an increase to the valuation allowance of $ 50.5 million.

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

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

The difference between the Company's effective tax rate for the three months ended March 31, 2026 and 2025 was primarily due to an increase in tax expense from the change in valuation allowance relative to the tax benefit recorded on operational losses during the three months ended March 31, 2026.

The Company recorded an aggregate deferred federal, state, and local tax benefit of $ 8.1 million for the three months ended March 31, 2026, which was partially offset by an increase to the valuation allowance of $ 7.1 million.

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

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

The Company's valuation allowance as of September 30, 2025 and December 31, 2024 was $ 572.0 million and $ 521.5 million, respectively.

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

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

As of September 30, 2025, tax returns for years 2020 through 2024 are subject to future examination by tax authorities.

The Company's valuation allowance as of March 31, 2026 and December 31, 2025 was $ 585.3 million and $ 578.2 million, respectively.

The increase in the valuation allowance for the three months ended March 31, 2026 and 2025 is the result of current operating losses during the three months ended March 31, 2026 and 2025 and by the anticipated reversal of future tax liabilities offset by future tax deductions.

The Company recorded interest charges related to its tax contingency reserve for cash tax positions for the three months ended March 31, 2026 and 2025 which are included in income tax expense or benefit for the period.

As of March 31, 2026, tax returns for years 2021 through 2024 are subject to future examination by tax authorities.

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

Supplemental Disclosure of Cash Flow Information

Nine Months Ended

September 30,

Three Months Ended

(in thousands) 2026 2025

17 unchanged sentences

Other liabilities 338 —

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

Loss (gain) on sale of communities, net ( 4,034 ) —

Net cash received $ ( 22,059 ) $ —

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

Non-cash lease transactions, net:

Prepaid expenses and other assets, net $ ( 871 ) $ —

Property, plant and equipment and leasehold intangibles, net ( 171 ) 427,444

Operating lease right-of-use assets 1,925 170,867

Financing lease obligations ( 57 ) ( 452,897 )

Operating lease obligations ( 306 ) ( 145,414 )

Accrued expenses ( 5,000 ) —

Loss (gain) on facility operating lease termination, net 4,480 —

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

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

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

(in thousands) March 31, 2026 December 31, 2025

Reconciliation of cash, cash equivalents, and restricted cash:

3 unchanged sentences

Total cash, cash equivalents, and restricted cash $ 333,653 $ 343,008

Fair Value Measurements

Long-term debt

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

The Company had outstanding mortgage notes payable with a carrying amount of approximately $ 3.9 billion as of both March 31, 2026 and December 31, 2025.

Fair value of the mortgage notes payable approximates the carrying amount as of both March 31, 2026 and December 31, 2025.

The Company's fair value of the mortgage notes payable disclosure is classified within Level 2 of the valuation hierarchy.

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

The estimated fair value of the 2026 Notes was approximately $ 40.0 million and $ 32.0 million as of March 31, 2026 and December 31, 2025, respectively (Level 2).

The carrying amount for the $ 369.4 million principal amount of outstanding 2029 Notes was $ 359.0 million and $ 358.3 million, net of deferred financing costs, as of March 31, 2026 and December 31, 2025, respectively.

The estimated fair value of the 2029 Notes was approximately $ 611.0 million and $ 516.0 million as of March 31, 2026 and December 31, 2025, respectively (Level 2).

Segment Information

4 unchanged sentences

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.

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.

Independent Living .

11 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2026 2025

21 unchanged sentences

Facility operating lease expense 43,981 52,874

Independent Living 9,649 9,815 29,072 28,592

Assisted Living and Memory Care 38,827 38,543 117,834 114,238

CCRCs 3,227 3,369 9,748 9,584

Corporate and All Other 290 210 866 1,983

Depreciation and amortization 73,463 90,976

Independent Living 28,097 23,526 80,427 68,430

Assisted Living and Memory Care 53,004 51,110 157,500 150,089

CCRCs 9,147 8,843 26,710 26,569

Corporate and All Other 4,544 6,585 13,984 19,131

Asset impairment 6,115 1,787

Independent Living 14,624 233 14,624 233

Assisted Living and Memory Care 47,883 701 49,647 2,409

CCRCs 189 — 789 —

Loss (gain) on sale of communities, net ( 4,034 ) —

Loss (gain) on facility operating lease termination, net 4,480 — 4,480 —

Income (loss) from operations $ 51,777 $ 29,576

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2025 2024 2025 2024

Interest expense:

Independent Living $ 15,750 $ 16,301 $ 46,952 $ 48,666

Assisted Living and Memory Care 37,438 36,617 112,290 108,995

CCRCs 5,056 5,997 15,425 17,756

Corporate and All Other 5,330 7,401 17,019 10,153

Total interest expense $ 63,574 $ 66,316 $ 191,686 $ 185,570

Capital expenditures:

4 unchanged sentences

Total capital expenditures $ 53,155 $ 43,149

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

Independent Living (4)

$ 1,165,714 $ 1,252,736

Assisted Living and Memory Care 3,810,548 3,983,311

CCRCs 631,390 640,720

Corporate and All Other 405,056 458,795

Total assets $ 6,012,708 $ 6,335,562

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

1 unchanged sentence

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

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

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 both March 31, 2026 and December 31, 2025.

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

What changed 10-Q

Item 1. Financial Statements