Sonida Senior Living, Inc. Announces Third Quarter 2023 Results

DALLAS--()--Sonida Senior Living, Inc. (the “Company,” “we,” “our,” or “us”) (NYSE: SNDA) announced results for the third quarter ended September 30, 2023.

“We continue to see growth in both year-over-year occupancy and revenue that is surpassing industry trends. This strong financial performance combined with our improved debt structure has Sonida firmly positioned for strategic expansion within the marketplace,” said Brandon Ribar, President and CEO. “As we close out the year and prepare for 2024, we look forward to bringing our signature programs and services to more seniors and to pursuing new avenues of growth and shareholder value creation.”

Third Quarter Highlights

  • Weighted average occupancy for the Company’s consolidated portfolio increased 150 basis points to 84.9% year-over-year.
  • Resident revenue increased $6.6 million, or 12.6% year-over-year.
  • Net loss for the third quarter was $18.4 million.
  • Adjusted EBITDA, a non-GAAP measure, was $9.3 million for Q3 2023, an increase of $4.8 million year-over-year.
  • Net cash provided by operating activities was $10.6 million year-to-date as compared to $2.9 million for the same period in 2022.
  • Results for the Company’s consolidated portfolio of communities:
    • Q3 2023 vs. Q3 2022:
      • Revenue Per Available Unit (“RevPAR”) increased 13.7% to $3,446.
      • Revenue Per Occupied Unit (“RevPOR”) increased 11.7% to $4,061.
      • Community Net Operating Income, a non-GAAP measure, increased $4.7 million. Adjusted Community Net Operating Income, a non-GAAP measure, which excludes $0.5 million of state grant revenue received in Q3 2023 (none recognized in Q3 2022) was $14.2 million and $10.0 million for Q3 2023 and Q3 2022, respectively.
      • Community Net Operating Income Margin and Adjusted Community Net Operating Income Margin (non-GAAP measures with the latter adjusted for non-recurring state grant revenue) were 24.8% and 24.2%, for Q3 2023, respectively, and 19.0% and 19.0% for Q3 2022, respectively.
    • Q3 2023 vs. Q2 2023:
      • RevPAR increased 4.4% to $3,446.
      • RevPOR increased 3.3% to $4,061.
      • Community Net Operating Income increased $1.1 million. Adjusted Community Net Operating Income, excluding $0.5 million and $0.4 million of state grant revenue received in Q3 2023 and Q2 2023, respectively, was $14.2 million and $13.1 million for Q3 2023 and Q2 2023, respectively.
      • Community Net Operating Income Margin and Adjusted Community Net Operating Income Margin (adjusted for non-recurring state grant revenue) were 24.8% and 24.2% for Q3 2023, respectively, and 23.8% and 23.2% for Q2 2023, respectively.

SONIDA SENIOR LIVING, INC.

SUMMARY OF CONSOLIDATED FINANCIAL RESULTS

THREE MONTHS ENDED SEPTEMBER 30, 2023

(in thousands)

 

 

Three Months Ended September 30,

 

Three Months
Ended June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

Consolidated results

 

 

 

 

 

Resident revenue (1)

$

59,117

 

 

$

52,485

 

 

$

56,960

 

Management fees

 

569

 

 

 

608

 

 

 

531

 

Operating expenses

 

44,486

 

 

 

43,123

 

 

 

44,662

 

General and administrative expenses

 

8,615

 

 

 

5,851

 

 

 

6,574

 

Long-lived asset impairment

 

5,965

 

 

 

 

 

 

 

Loss before provision for income taxes (1)

 

(18,328

)

 

 

(13,739

)

 

 

(12,159

)

Net loss (1)

 

(18,411

)

 

 

(13,739

)

 

 

(12,212

)

Adjusted EBITDA (1) (2)

 

9,270

 

 

 

4,446

 

 

 

7,538

 

Community net operating income (NOI) (2)

 

14,690

 

 

 

9,995

 

 

 

13,549

 

Community net operating income margin (2)

 

24.8

%

 

 

19.0

%

 

 

23.8

%

Weighted average occupancy

 

84.9

%

 

 

83.4

%

 

 

83.9

%

 

(1) Includes $0.5 million, $0.0 million, and $0.4 million of state grant revenue received in Q3 2023, Q3 2022, and Q2 2023, respectively.

(2) Adjusted EBITDA, Community Net Operating Income, and Community Net Operating Income Margin are financial measures that are not calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). See “Reconciliation of Non-GAAP Financial Measures” for the Company's definition of such measures, reconciliations to the most comparable GAAP financial measures, and other information regarding the use of the Company's non-GAAP financial measures.

Results of Operations

Three months ended September 30, 2023 as compared to three months ended September 30, 2022

Revenues

Resident revenue for the three months ended September 30, 2023 was $59.1 million as compared to $52.5 million for the three months ended September 30, 2022, an increase of $6.6 million, or 12.6%. The increase in revenue was primarily due to increased occupancy and increased average rent rates.

Expenses

Operating expenses for the three months ended September 30, 2023 were $44.5 million as compared to $43.1 million for the three months ended September 30, 2022, an increase of $1.4 million, or 3.2%. The increase is primarily due to a $2.2 million increase in labor and employee-related expenses and a $0.3 million increase in computer software/ internet costs, partially offset by a reduction in real estate taxes of $0.4 million and $0.7 million in other expenses.

General and administrative expenses for the three months ended September 30, 2023 were $8.6 million as compared to $5.9 million for the three months ended September 30, 2022, representing an increase of $2.7 million. This increase is primarily due to a $1.4 million increase in transaction costs due to our loan modification and a $1.2 million increase in stock-based compensation expense from prior quarter due to forfeiture credits in connection with executive personnel changes.

The Company reported a net loss of $18.4 million for the three months ended September 30, 2023, compared to a net loss of $13.7 million for the three months ended September 30, 2022. A major factor impacting the comparison of net loss for the three months ended September 30, 2023 and September 30, 2022 relates to a non-cash impairment charge of $6.0 million related to one owned community.

Adjusted EBITDA for the three months ended September 30, 2023 was $9.3 million compared to $4.4 million for the three months ended September 30, 2022. See “Reconciliation of Non-GAAP Financial Measures” below.

Nine months ended September 30, 2023 as compared to nine months ended September 30, 2022

Revenues

Resident revenue for the nine months ended September 30, 2023 was $172.7 million as compared to $155.3 million for the nine months ended September 30, 2022, an increase of $17.4 million, or 11.2%. The increase in revenue was primarily due to increased occupancy and increased average rent rates.

Expenses

Operating expenses for the nine months ended September 30, 2023 were $133.0 million as compared to $126.6 million for the nine months ended September 30, 2022, an increase of $6.4 million, or 5.1%. The increase is primarily due to a $5.8 million increase in labor and employee-related expenses, a $0.4 million increase in service contracts, a $0.8 million increase in computer software/ internet costs, partially offset by a $0.6 million decrease in food costs and a $0.2 million decrease in real estate taxes.

General and administrative expenses for the nine months ended September 30, 2023 were $22.3 million as compared to $23.6 million for the nine months ended September 30, 2022, representing a decrease of $1.3 million. This decrease is primarily due to a $1.9 million decrease in recurring general and administrative expenses and a $1.3 million decrease in stock-based compensation expense as a result of prior year forfeiture credits in connection with executive personnel changes. Partially offsetting the decrease in general and administrative expense is an increase of $1.9 million related to transaction costs associated with our 2023 loan modifications.

The Company reported a net loss of $6.5 million for the nine months ended September 30, 2023 compared to a net loss of $37.8 million for the nine months ended September 30, 2022, primarily due to a $36.3 million gain on extinguishment of debt, partially offset by a non-cash impairment charge of $6.0 million during the nine months ended September 30, 2023.

Significant Transactions

Fannie Mae Loan Modification

On June 29, 2023, the Company entered into a binding forbearance agreement (“Fannie Forbearance”) with the Federal National Mortgage Association (“Fannie Mae”) for all 37 of its encumbered communities, effective as of June 1, 2023 (“Fannie Forbearance Effective Date”). Under the Fannie Forbearance, Fannie Mae agreed to forbear on its remedies otherwise available under the community mortgages and Master Credit Facility (“MCF”) in connection with reduced debt service payments made by the Company during the forbearance period. In connection with the Fannie Forbearance, the Company made a $5.0 million principal payment in July 2023. The Fannie Forbearance was the first of a two-step process to modify all existing mortgage agreements with Fannie Mae by October 1, 2023 under proposed loan modification agreements, as defined in the Fannie Forbearance (“Loan Modification Agreements”). Terms outlined in an agreed upon term sheet accompanying the Fannie Forbearance were included in the Loan Modification Agreements as the final step to modify the various 37 Fannie Mae community mortgages and MCF prior to the expiration of the Fannie Forbearance, which was subsequently extended to October 6, 2023. The Company entered into Loan Modification Agreements with Fannie Mae on October 2, 2023. The forbearance and subsequent loan modification provide the Company with additional financial flexibility and increases its liquidity position.

Under the terms of the Loan Modification Agreements, the mortgage principal payments on 18 community mortgages, ranging from July 2024 to December 2026, will be extended to December 2026. The remaining 19 communities under the MCF have existing maturities in December 2028. The Company will not be required to make scheduled principal payments due under the 18 community mortgages and 19 communities under the MCF through (the revised maturity date) December 2026 and June 1, 2026, respectively. The monthly interest rate was reduced by a 1.5% weighted average on all 37 communities for 12 months, resulting in a projected cash savings of $6.1 million over the period of June 1, 2023 through June 1, 2024.

Ally Loan Amendment

On June 29, 2023 and concurrent with the Fannie Forbearance, the Company executed a second amendment (“Ally Amendment”) to its refinance facility (“Ally Term Loan”) and amended limited payment guaranty with Ally Bank (“Second Amended and Restated Limited Payment Guaranty”) with terms that include a waiver of its current $13.0 million liquid assets requirement through June 30, 2024. During the waiver period (June 30, 2023 through July 1, 2024 under the Ally Amendment, the “Waiver Period”), a new and temporary liquid assets minimum threshold will be established at $6.0 million and measured weekly. Beginning on July 1, 2024, a new liquid assets requirement of $7.0 million will be effective, with such threshold increasing $1.0 million per month rising to $13.0 million by the earlier of the release of the Waiver Period or December 31, 2024. In addition, the Company must replace its interest rate cap (“IRC”) on the $88.1 million notional value and a 2.25% SOFR strike rate when the current IRC expires on November 30, 2023. In July 2023, the Company funded a $2.3 million interest rate cap reserve to Ally Bank with an additional $0.1 million added during the remainder of Q3.

Conversant Equity Commitment

In connection with the Fannie Forbearance and Ally Amendment signed on June 29, 2023, the Company entered into a $13.5 million equity commitment agreement (“Equity Commitment”) with Conversant Dallas Parkway (A) LP and Conversant Dallas Parkway (B) LP, (together “Conversant”) for a term of 18 months. The Equity Commitment had a commitment fee of $675,000 payable through the issuance of 67,500 shares of common stock of the Company. Sonida shall have the right, but not the obligation, to utilize Conversant’s equity commitment and may draw on the commitment in whole or in part. The Company made a $6.0 million equity draw in July 2023 in exchange for 600,000 shares of common stock of the Company. Subsequent to September 30, 2023, the Company elected to draw down an additional $4.0 million of the Conversant Equity Commitment in October which was received on November 1, 2023. The Company issued 400,000 shares of common stock to Conversant on November 1, 2023.

The foregoing description of the Fannie Forbearance, the Ally Amendment, Second Amended & Restated Limited Payment Guaranty, Loan Modification Agreements, and Equity Commitment and related transactions contemplated do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the Fannie Forbearance, the Ally Amendment, Second Amended and Restated Limited Payment Guaranty, and Equity Commitment which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, to the Company’s Form 8-K filed on July 5, 2023, incorporated herein by reference. In addition, the full text of the Loan Modification Agreements are filed as Exhibits 10.2 and 10.3 to the Company’s Form 8-K filed on October 6, 2023, incorporated herein by reference.

Liquidity and Capital Resources

Cash flows

The table below presents a summary of the Company’s net cash provided by (used in) operating, investing, and financing activities (in thousands):

 

Nine months ended September 30,

 

 

2023

 

 

 

2022

 

Net cash provided by operating activities

$

10,643

 

 

$

2,903

 

Net cash used in investing activities

 

(12,792

)

 

 

(30,659

)

Net cash used in financing activities

 

(7,441

)

 

 

(24,304

)

Decrease in cash and cash equivalents

$

(9,590

)

 

$

(52,060

)

In addition to $3.6 million of unrestricted cash on hand as of September 30, 2023, our future liquidity will depend in part upon our operating performance, which will be affected by prevailing economic conditions, including those related to the COVID-19 pandemic, and financial, business and other factors, some of which are beyond our control. Principal sources of liquidity are expected to be cash flows from operations, proceeds from debt refinancings or loan modifications, proceeds from the issuance of common or preferred stock, COVID-19 or related relief grants from various state agencies, and/or proceeds from the sale of owned assets. In June 2023, the Company entered into the Fannie Forbearance, the Ally Amendment, Second Amended and Restated Limited Payment Guaranty, and the Equity Commitment, as disclosed above. The Company entered into Loan Modification Agreements with Fannie Mae on October 2, 2023. These transactions are expected to provide additional financial flexibility to the Company and increase its liquidity position. In March 2022, the Company completed the refinancing of certain existing mortgage debt, which was further amended in December 2022 and June 2023.

The Company has implemented plans, which include strategic and cash-preservation initiatives, designed to provide the Company with adequate liquidity to meet its obligations for at least the 12-month period following the date its third quarter 2023 financial statements are issued. While the Company’s plans are designed to provide it with adequate liquidity to meet its obligations for at least the 12-month period following the date its financial statements are issued, the remediation plan is dependent on conditions and matters that may be outside of the Company’s control, and no assurance can be given that certain options will be available on terms acceptable to the Company, or at all. If the Company is unable to successfully execute all of the planned initiatives or if the plan does not fully mitigate the Company’s liquidity challenges, the Company’s operating plans and resulting cash flows along with its cash and cash equivalents and other sources of liquidity may not be sufficient to fund operations for the 12-month period following the date the financial statements are issued.

The Company, from time to time, considers and evaluates financial and capital raising transactions related to its portfolio, including debt refinancings and modifications, purchases and sales of assets and other transactions. There can be no assurance that the Company will continue to generate cash flows at or above current levels, or that the Company will be able to obtain the capital necessary to meet the Company’s short and long-term capital requirements.

Recent changes in the current economic environment, and other future changes, could result in decreases in the fair value of assets, slowing of transactions, and the tightening of liquidity and credit markets. These impacts could make securing debt or refinancings for the Company or buyers of the Company’s properties more difficult or on terms not acceptable to the Company. The Company’s actual liquidity and capital funding requirements depend on numerous factors, including its operating results, its capital expenditures for community investment, and general economic conditions, as well as other factors described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 30, 2023.

Conference Call Information

The Company will host a conference call with senior management to discuss the Company’s financial results for the three months ended September 30, 2023, on Tuesday November 14, 2023, at 4:00 p.m. Eastern Time. To participate, dial 877-407-0989 (no passcode required). A link to the simultaneous webcast of the teleconference will be available at: https://www.webcast-eqs.com/register/sonidaseniorliving_q32023_en/en.

For the convenience of the Company’s shareholders and the public, the conference call will be recorded and available for replay starting November 15, 2023 through November 29, 2023. To access the conference call replay, call 877-660-6853, passcode 13742296. A transcript of the call will be posted in the Investor Relations section of the Company’s website.

About the Company

Dallas-based Sonida Senior Living, Inc. is a leading owner-operator of independent living, assisted living and memory care communities and services for senior adults. As of September 30, 2023, the Company operated 71 communities, with capacity for approximately 8,000 residents across 18 states, which provide comfortable, safe, affordable environment where residents can form friendships, enjoy new experiences and receive personalized care from dedicated team members who treat them like family. For more information, visit www.sonidaseniorliving.com or connect with the Company on Facebook, Twitter or LinkedIn.

Definitions of RevPAR and RevPOR

RevPAR, or average monthly revenue per available unit, is defined by the Company as resident revenue for the period, divided by the weighted average number of available units in the corresponding portfolio for the period, divided by the number of months in the period.

RevPOR, or average monthly revenue per occupied unit, is defined by the Company as resident revenue for the period, divided by the weighted average number of occupied units in the corresponding portfolio for the period, divided by the number of months in the period.

Safe Harbor

This release contains forward-looking statements which are subject to certain risks and uncertainties that could cause our actual results and financial condition of Sonida Senior Living, Inc. (the “Company,” “we,” “our” or “us”) to differ materially from those indicated in the forward-looking statements, including, among others, the risks, uncertainties and factors set forth under “Item. 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2023, and also include the following: the impact of COVID-19, including the actions taken to prevent or contain the spread of COVID-19, the transmission of its highly contagious variants and sub-lineages and the development and availability of vaccinations and other related treatments, or another epidemic, pandemic or other health crisis; the Company’s ability to generate sufficient cash flows from operations, additional proceeds from debt financings or refinancings, and proceeds from the sale of assets to satisfy its short- and long-term debt obligations and to make capital improvements to the Company’s communities; increases in market interest rates that increase the cost of certain of our debt obligations; increased competition for, or a shortage of, skilled workers, including due to the COVID-19 pandemic or general labor market conditions, along with wage pressures resulting from such increased competition, low unemployment levels, use of contract labor, minimum wage increases and/or changes in overtime laws; the Company’s ability to obtain additional capital on terms acceptable to it; the Company’s ability to extend or refinance its existing debt as such debt matures, including the Company’s ability to complete the modifications to its loan agreements; the Company’s compliance with its debt agreements, including certain financial covenants and the risk of cross-default in the event such non-compliance occurs; the Company’s ability to complete acquisitions and dispositions upon favorable terms or at all; the risk of oversupply and increased competition in the markets which the Company operates; the Company’s ability to improve and maintain controls over financial reporting and remediate the identified material weakness discussed in its recent Quarterly and Annual Reports filed with the SEC; the departure of the Company’s key officers and personnel; the cost and difficulty of complying with applicable licensure, legislative oversight, or regulatory changes; risks associated with current global economic conditions and general economic factors such as inflation, the consumer price index, commodity costs, fuel and other energy costs, competition in the labor market, costs of salaries, wages, benefits, and insurance, interest rates, and tax rates; and changes in accounting principles and interpretations.

For information about Sonida Senior Living, visit www.sonidaseniorliving.com

Sonida Senior Living, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenues:

 

 

 

 

 

 

 

Resident revenue

$

59,117

 

 

$

52,485

 

 

$

172,683

 

 

$

155,315

 

Management fees

 

569

 

 

 

608

 

 

 

1,605

 

 

 

1,836

 

Managed community reimbursement revenue

 

4,989

 

 

 

7,694

 

 

 

15,314

 

 

 

21,757

 

Total revenues

 

64,675

 

 

 

60,787

 

 

 

189,602

 

 

 

178,908

 

Expenses:

 

 

 

 

 

 

 

Operating expense

 

44,486

 

 

 

43,123

 

 

 

132,956

 

 

 

126,562

 

General and administrative expense

 

8,615

 

 

 

5,851

 

 

 

22,252

 

 

 

23,563

 

Depreciation and amortization expense

 

9,943

 

 

 

9,691

 

 

 

29,751

 

 

 

28,940

 

Long-lived asset impairment

 

5,965

 

 

 

 

 

 

5,965

 

 

 

 

Managed community reimbursement expense

 

4,989

 

 

 

7,694

 

 

 

15,314

 

 

 

21,757

 

Total expenses

 

73,998

 

 

 

66,359

 

 

 

206,238

 

 

 

200,822

 

Other income (expense):

 

 

 

 

 

 

 

Interest income

 

139

 

 

 

44

 

 

 

521

 

 

 

47

 

Interest expense

 

(9,020

)

 

 

(8,205

)

 

 

(26,445

)

 

 

(23,728

)

Gain (loss) on extinguishment of debt, net

 

 

 

 

 

 

 

36,339

 

 

 

(641

)

Gain (loss) on sale of assets, net

 

(34

)

 

 

 

 

 

217

 

 

 

 

Other income (expense), net

 

(90

)

 

 

(6

)

 

 

(269

)

 

 

8,663

 

Loss before provision for income taxes

 

(18,328

)

 

 

(13,739

)

 

 

(6,273

)

 

 

(37,573

)

Provision for income taxes

 

(83

)

 

 

 

 

 

(205

)

 

 

(254

)

Net loss

 

(18,411

)

 

 

(13,739

)

 

 

(6,478

)

 

 

(37,827

)

Dividends on Series A convertible preferred stock

 

 

 

 

 

 

 

 

 

 

(2,267

)

Undeclared dividends on Series A convertible preferred stock

 

(1,265

)

 

 

(1,134

)

 

 

(3,693

)

 

 

(1,134

)

Undistributed net income allocated to participating securities

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to common stockholders

$

(19,676

)

 

$

(14,873

)

 

$

(10,171

)

 

$

(41,228

)

 

 

 

 

 

 

 

 

Weighted average common shares outstanding — basic

 

7,050

 

 

 

6,364

 

 

 

6,602

 

 

 

6,357

 

Weighted average common shares outstanding — diluted

 

7,050

 

 

 

6,364

 

 

 

6,602

 

 

 

6,357

 

 

 

 

 

 

 

 

 

Basic net loss per common share

$

(2.79

)

 

$

(2.34

)

 

$

(1.54

)

 

$

(6.49

)

Diluted net loss per common share

$

(2.79

)

 

$

(2.34

)

 

$

(1.54

)

 

$

(6.49

)

Sonida Senior Living, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share amounts)

 

 

September 30,
2023

 

December 31,
2022

 

 

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

3,562

 

 

$

16,913

 

Restricted cash

 

17,590

 

 

 

13,829

 

Accounts receivable, net

 

8,124

 

 

 

6,114

 

Prepaid expenses and other assets

 

3,540

 

 

 

4,099

 

Derivative assets

 

745

 

 

 

2,611

 

Total current assets

 

33,561

 

 

 

43,566

 

Property and equipment, net

 

594,116

 

 

 

615,754

 

Other assets, net

 

1,412

 

 

 

1,948

 

Total assets

$

629,089

 

 

$

661,268

 

Liabilities and Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

10,067

 

 

$

7,272

 

Accrued expenses

 

41,532

 

 

 

36,944

 

Current portion of notes payable, net of deferred loan costs

 

64,309

 

 

 

46,029

 

Deferred income

 

3,790

 

 

 

3,419

 

Federal and state income taxes payable

 

158

 

 

 

 

Other current liabilities

 

548

 

 

 

653

 

Total current liabilities

 

120,404

 

 

 

94,317

 

Notes payable, net of deferred loan costs and current portion

 

565,149

 

 

 

625,002

 

Other liabilities

 

61

 

 

 

113

 

Total liabilities

 

685,614

 

 

 

719,432

 

Commitments and contingencies

 

 

 

Redeemable preferred stock:

 

 

 

Series A convertible preferred stock, $0.01 par value; 41 shares authorized, 41 shares issued and outstanding as of September 30, 2023 and December 31, 2022

 

47,243

 

 

 

43,550

 

Shareholders’ deficit:

 

 

 

Authorized shares - 15,000 as of September 30, 2023 and December 31, 2022; none issued or outstanding, except Series A convertible preferred stock as noted above

 

 

 

 

 

Authorized shares - 15,000 as of September 30, 2023 and December 31, 2022; 7,778 and 6,670 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

78

 

 

 

67

 

Additional paid-in capital

 

299,690

 

 

 

295,277

 

Retained deficit

 

(403,536

)

 

 

(397,058

)

Total shareholders’ deficit

 

(103,768

)

 

 

(101,714

)

Total liabilities, redeemable preferred stock and shareholders’ deficit

$

629,089

 

 

$

661,268

 

Sonida Senior Living, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

 

Net loss

$

(6,478

)

 

$

(37,827

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

29,751

 

 

 

28,940

 

Amortization of deferred loan costs

 

1,130

 

 

 

946

 

Gain on sale of assets, net

 

(217

)

 

 

 

Long-lived asset impairment

 

5,965

 

 

 

 

Write-off of other assets

 

 

 

 

535

 

Unrealized (gain) loss on interest rate cap, net

 

1,958

 

 

 

(206

)

(Gain) loss on extinguishment of debt

 

(36,339

)

 

 

641

 

Provision for bad debt

 

582

 

 

 

908

 

Non-cash stock-based compensation expense

 

2,144

 

 

 

3,479

 

Other non-cash items

 

(7

)

 

 

7

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

 

(2,592

)

 

 

(1,760

)

Prepaid expenses and other assets

 

2,997

 

 

 

6,755

 

Other assets, net

 

(45

)

 

 

(115

)

Accounts payable and accrued expense

 

11,276

 

 

 

566

 

Federal and state income taxes payable

 

158

 

 

 

(423

)

Deferred income

 

371

 

 

 

414

 

Other current liabilities

 

(11

)

 

 

43

 

Net cash provided by operating activities

 

10,643

 

 

 

2,903

 

Cash flows from investing activities:

 

 

 

Acquisition of new communities

 

 

 

 

(12,342

)

Capital expenditures

 

(14,168

)

 

 

(18,317

)

Proceeds from sale of assets

 

1,376

 

 

 

 

Net cash used in investing activities

 

(12,792

)

 

 

(30,659

)

Cash flows from financing activities:

 

 

 

Proceeds from notes payable

 

 

 

 

80,000

 

Repayments of notes payable

 

(12,508

)

 

 

(98,535

)

Proceeds from issuance of common stock

 

6,000

 

 

 

(263

)

Dividends paid on Series A convertible preferred stock

 

 

 

 

(2,987

)

Purchase of interest rate cap

 

 

 

 

(258

)

Deferred loan costs paid

 

(825

)

 

 

(2,180

)

Other financing costs

 

(108

)

 

 

(81

)

Net cash used in financing activities

 

(7,441

)

 

 

(24,304

)

Decrease in cash and cash equivalents and restricted cash

 

(9,590

)

 

 

(52,060

)

Cash, cash equivalents, and restricted cash at beginning of period

 

30,742

 

 

 

92,876

 

Cash, cash equivalents, and restricted cash at end of period

$

21,152

 

 

$

40,816

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)

This earnings release contains the financial measures (1) Community Net Operating Income and Adjusted Community Net Operating Income, (2) Community Net Operating Income Margin and Adjusted Community Net Operating Income Margin, (3) Adjusted EBITDA, (4) Revenue per Occupied Unit (RevPOR) and (5) Revenue per Available Unit (RevPAR), all of which are not calculated in accordance with U.S. GAAP. Presentations of these non-GAAP financial measures are intended to aid investors in better understanding the factors and trends affecting the Company’s performance and liquidity. However, investors should not consider these non-GAAP financial measures as a substitute for financial measures determined in accordance with GAAP, including net income (loss), income (loss) from operations, net cash provided by (used in) operating activities, or revenue. Investors are cautioned that amounts presented in accordance with the Company’s definitions of these non-GAAP financial measures may not be comparable to similar measures disclosed by other companies because not all companies calculate non-GAAP measures in the same manner. Investors are urged to review the following reconciliations of these non-GAAP financial measures from the most comparable financial measures determined in accordance with GAAP.

Community Net Operating Income and Consolidated Community Net Operating Income Margin are non-GAAP performance measures for the Company’s consolidated owned portfolio of communities that the Company defines as net income (loss) excluding: general and administrative expenses (inclusive of stock-based compensation expense), interest income, interest expense, other income/expense, provision for income taxes, settlement fees and expenses, revenue and operating expenses from the Company’s disposed properties; and further adjusted to exclude income/expense associated with non-cash, non-operational, transactional, or organizational restructuring items that management does not consider as part of the Company’s underlying core operating performance and impacts the comparability of performance between periods. For the periods presented herein, such other items include depreciation and amortization expense, gain(loss) on extinguishment of debt, gain(loss) on disposition of assets, long-lived asset impairment, and loss on non-recurring settlements with third parties. The Community Net Operating Income Margin is calculated by dividing Community Net Operating Income by community resident revenue. Adjusted Community Net Operating Income and Adjusted Community Net Operating Income Margin are further adjusted to exclude the impact from non-recurring state grant funds received.

The Company believes that presentation of Community Net Operating Income, Community Net Operating Income Margin, Adjusted Community Net Operating Income, and Adjusted Community Net Operating Income Margin as performance measures are useful to investors because (i) they are one of the metrics used by the Company’s management to evaluate the performance of our core consolidated owed portfolio of communities, to review the Company’s comparable historic and prospective core operating performance of the consolidated owned communities, and to make day-to-day operating decisions; (ii) they provide an assessment of operational factors that management can impact in the short-term, namely revenues and the controllable cost structure of the organization, by eliminating items related to the Company’s financing and capital structure and other items that management does not consider as part of the Company’s underlying core operating performance, and impacts the comparability of performance between periods.

Community Net Operating Income, Net Community Operating Income Margin, Adjusted Community Net Operating Income, and Adjusted Community Net Operating Income Margin have material limitations as a performance measure, including: (i) excluded general and administrative expenses are necessary to operate the Company and oversee its communities; (ii) excluded interest is necessary to operate the Company’s business under its current financing and capital structure; (iii) excluded depreciation, amortization, and impairment charges may represent the wear and tear and/or reduction in value of the Company’s communities, and other assets and may be indicative of future needs for capital expenditures; and (iv) the Company may incur income/expense similar to those for which adjustments are made, such as gain (loss) on debt extinguishment, gain(loss) on disposition of assets, loss on settlements, non-cash stock-based compensation expense, and transaction and other costs, and such income/expense may significantly affect the Company’s operating results.

(in thousands)

Three Months Ended
September 30,

 

Three Months Ended
June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

Consolidated Community Net Operating Income

 

 

 

 

 

Net loss

$

(18,411

)

 

$

(13,739

)

 

$

(12,212

)

General and administrative expense

 

8,615

 

 

 

5,851

 

 

 

6,574

 

Depreciation and amortization expense

 

9,943

 

 

 

9,691

 

 

 

9,927

 

Long-lived asset impairment

 

5,965

 

 

 

 

 

 

 

Interest income

 

(139

)

 

 

(44

)

 

 

(188

)

Interest expense

 

9,020

 

 

 

8,205

 

 

 

8,558

 

Loss on sale of assets, net

 

34

 

 

 

 

 

 

 

Other expense

 

90

 

 

 

6

 

 

 

117

 

Provision for income taxes

 

83

 

 

 

 

 

 

53

 

Settlement (income) fees and expense, net (1)

 

(510

)

 

 

25

 

 

 

559

 

Other taxes

 

 

 

 

 

 

 

161

 

Consolidated community net operating income

 

14,690

 

 

 

9,995

 

 

 

13,549

 

Resident revenue

$

59,117

 

 

$

52,485

 

 

$

56,960

 

Consolidated community net operating income margin

 

24.8

%

 

 

19.0

%

 

 

23.8

%

 

 

 

 

 

 

COVID-19 state relief grants (2)

 

478

 

 

 

 

 

 

411

 

Adjusted resident revenue

 

58,639

 

 

 

52,485

 

 

 

56,549

 

Adjusted community net operating income

$

14,212

 

 

$

9,995

 

 

$

13,138

 

Adjusted community net operating income margin

 

24.2

%

 

 

19.0

%

 

 

23.2

%

 

(1) Settlement fees and expenses relate to non-recurring settlements with third parties for contract terminations, insurance claims, and related fees.

(2) COVID-19 relief revenue are grants and other funding received from third parties to aid in the COVID-19 response and includes state relief funds received.

ADJUSTED EBITDA (UNAUDITED)

Adjusted EBITDA is a non-GAAP performance measures that the Company defines as net income (loss) excluding: depreciation and amortization expense, interest income, interest expense, other expense/income, provision for income taxes; and further adjusted to exclude income/expense associated with non-cash, non-operational, transactional, or organizational restructuring items that management does not consider as part of the Company’s underlying core operating performance and impacts the comparability of performance between periods. For the periods presented herein, such other items include stock-based compensation expense, provision for bad debts, gain (loss) on extinguishment of debt, gain on sale of assets, long-lived asset impairment, casualty losses, and transaction and conversion costs.

The Company believes that presentation of Adjusted EBITDA’s impact as a performance measure is useful to investors because it provides an assessment of operational factors that management can impact in the short-term, namely revenues and the controllable cost structure of the organization, by eliminating items related to the Company’s financing and capital structure and other items that management does not consider as part of the Company’s underlying core operating performance and that management believes impact the comparability of performance between periods.

Adjusted EBITDA has material limitations as a performance measure, including: (i) excluded interest is necessary to operate the Company’s business under its current financing and capital structure; (ii) excluded depreciation, amortization and impairment charges may represent the wear and tear and/or reduction in value of the Company’s communities and other assets and may be indicative of future needs for capital expenditures; and (iii) the Company may incur income/expense similar to those for which adjustments are made, such as bad debts, gain(loss) on sale of assets, or gain(loss) on debt extinguishment, non-cash stock-based compensation expense and transaction and other costs, and such income/expense may significantly affect the Company’s operating results.

(In thousands)

Three Months Ended
September 30,

 

Three Months Ended
June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

Adjusted EBITDA

 

 

 

 

 

Net loss

$

(18,411

)

 

$

(13,739

)

 

$

(12,212

)

Depreciation and amortization expense

 

9,943

 

 

 

9,691

 

 

 

9,927

 

Stock-based compensation expense, net

 

641

 

 

 

(588

)

 

 

601

 

Provision for bad debt

 

249

 

 

 

386

 

 

 

96

 

Interest income

 

(139

)

 

 

(44

)

 

 

(188

)

Interest expense

 

9,020

 

 

 

8,205

 

 

 

8,558

 

Long-lived asset impairment

 

5,965

 

 

 

 

 

 

 

Loss on sale of assets, net

 

34

 

 

 

 

 

 

 

Other expense, net

 

90

 

 

 

6

 

 

 

117

 

Provision for income taxes

 

83

 

 

 

 

 

 

53

 

Casualty losses (1)

 

204

 

 

 

372

 

 

 

456

 

Transaction and conversion costs (2)

 

1,591

 

 

 

157

 

 

 

130

 

Adjusted EBITDA

$

9,270

 

 

$

4,446

 

 

$

7,538

 

 

(1) Casualty losses relate to non-recurring insured claims for unexpected events.

(2) Transaction and conversion costs relate to legal and professional fees incurred for transactions, restructure projects, or related projects.

SUPPLEMENTAL INFORMATION

 

 

Third Quarter

 

 

(Dollars in thousands)

2023

 

2022

 

Increase

(decrease)

 

Second
Quarter
2023

 

Sequential
increase
(decrease)

Selected Operating Results

 

 

 

 

 

 

 

 

 

I. Consolidated community portfolio

 

 

 

 

 

 

 

 

 

Number of communities

61

 

62

 

(1)

 

62

 

(1)

Unit capacity

5,718

 

5,771

 

(53)

 

5,753

 

(35)

Weighted average occupancy (1)

84.9%

 

83.4%

 

1.5%

 

83.9%

 

1.0%

RevPAR

$3,446

 

$3,032

 

$414

 

$3,300

 

$146

RevPOR

$4,061

 

$3,636

 

$425

 

$3,932

 

$129

Consolidated community net operating income

$14,690

 

$9,995

 

$4,695

 

$13,549

 

$1,141

Consolidated community net operating income margin (3)

24.8%

 

19.0%

 

5.8%

 

23.8%

 

1.0%

Consolidated community net operating income, net of general and administrative expenses (2)

$6,716

 

$3,556

 

$3,160

 

$7,576

 

$(860)

Consolidated community net operating income margin, net of general and administrative expenses (2)

11.4%

 

6.8%

 

4.6%

 

13.3%

 

(1.9)%

II. Consolidated Debt Information

 

 

 

 

 

 

 

 

 

(Excludes insurance premium financing)

 

 

 

 

 

 

 

 

 

Total variable rate mortgage debt (4)

$137,320

 

$129,727

 

N/A

 

$137,253

 

N/A

Total fixed rate debt

$493,436

 

$538,128

 

N/A

 

$499,078

 

N/A

 

(1) Weighted average occupancy represents actual days occupied divided by total number of available days during the quarter.

(2) General and administrative expenses exclude stock-based compensation expense in order to remove the fluctuation in fair value due to market volatility.

(3) Includes $0.5 million, $0.0 million, and $0.4 million of state grant revenue received in Q3 2023, Q3 2022, and Q2 2023, respectively. Excluding the grant revenue, Q3 2023 consolidated community NOI margin was 24.2%.

(4) As of September 30, 2023, the entire balance of our outstanding variable-rate debt obligations were covered by interest rate cap agreements.

 

Contacts

Investor Contact: Kevin J. Detz, Chief Financial Officer, at 972-308-8343
Press Contact: media@sonidaliving.com

$Cashtags

Contacts

Investor Contact: Kevin J. Detz, Chief Financial Officer, at 972-308-8343
Press Contact: media@sonidaliving.com