Thanks so much for sticking around and coming so early here. My name is Joanna Gajuk. I work at Bank of America Equity Research, and my pleasure now to host this session with Brookdale Senior Living. They're the largest senior housing operator in the U.S., and today with us is Dawn Kussow, the CFO, and Jessica Hansen from Investor Relations. And thank you so much for coming down here and spending some time with us. So we're gonna go right into questions. So maybe first, we can talk about occupancy, 'cause obviously that's been the area of outperformance, especially, you know, Q4 was pretty good, and then Q1, which tends to be not such a great quarter to start with, and it turned out to be, like, actually a very nice occupancy quarter. So maybe, you know, is there a way to think about the drivers of it? Like, as in, like, you know, what's sustainable, what's not? 'Cause I was thinking, you know, obviously staffing, you know, you guys did a pretty good job on, you know, improving retention and reducing turnover. So I was thinking maybe some of that, and obviously aging demographics. So, you know, is there a way to kind of, you know, quantify or get a sense of, you know, what are the main drivers, too? And, also the last one is, you know, seniors, I guess, returning and kind of behaving more normally. Obviously, that feels like it's already... You know, we should forget about COVID, but it seems like there's maybe still some of that was going on, and now it's, you know, maybe normalizing. Can you talk about all these things and how you think about, you know, what's sustainable there when it comes to occupancy? Of course, Joanna. Thank you, and thank you very much for having us here. Jessica and I are very happy to be here to talk about Brookdale, and just the incredible growth that we've had, and certainly share our story. So as it relates to occupancy, you're exactly right. Typically, the Fourth Quarter to the First Quarter, we see a leveling off of our occupancy, and it tends to go backwards, just because of normal seasonality with the flu season, et cetera. And this year, that backwards trend was better than our historical norms, and so we were excited about that. Or what we saw that was driving that is, we saw our move-ins in the First Quarter to be 7.5% better than our three-year historical average. Really, we are in a unique position where the supply-demand fundamentals are in our favor, excuse me, in our favor, and we saw that coming through with that better than historical, better than our three-year average move-in. Now, on the move-out side, we also saw less move-outs as compared to the prior year because as you know, we do our Rate Increase on January 1st, and so all of our in-place residents get their Rate Increase on January 1st. Last year, as you know, we did our historical high Rate Increase as we're still recovering through the Pandemic. And this year, our Rate Increase was a little bit less than that, but it was still higher than our pre-Pandemic Rate Increases, as we're still recovering and focusing on, you know, charging an appropriate rate. If you compare our move-outs, our financial move-outs, they improved this year as opposed to last year, just with that little bit of a lower Rate Increase. We're really optimistic about occupancy through 2024, with a favorable First Quarter occupancy. Great. Thank you. Thanks for that. And I guess, you know, when thinking about occupancy, you know, as it relates to, profitability and margins, so is there a sort of like an optimal occupancy or the level where you know, you're kind of aspiring to get back to in order for margins to kind of normalize? I mean, the margins did normalize, actually, so we can talk about that too. But, you know, is there, like, do you require to reach a certain level of occupancy to have the- Yeah ... margin return? Yeah, it's a great question. And so what we've been focusing on is getting every room in service at the best profitable rate. So it's really kind of balancing that rate and occupancy. And so we have been very focused on our RevPAR growth. If you think about our historical margins, we were operating at, you know, low- to mid-30% margins pre-Pandemic, and that was at an occupancy rate of 84.5%. And so as we said in our First Quarter Earnings Call, one of the things that we're really proud of is our same community operating income. If you annualize our First Quarter, and you take that on a per-unit basis, it is ahead of where we were from an operating income standpoint on a per-unit basis, ahead of 2019. And so to the point of, you know, recovering our margin, we're excited about that statistic because we still do have occupancy growth, and occupancy recovery, to get to. So that would just lead to that incremental margin and getting back to our historical margins, which we fully expect to do. Right, exactly. And to your point, the occupancy has been recovering. You know, when I look versus the lowest point, right, versus the trough, you recover like more than 800 basis points. So pretty impressive, but it's still like maybe 600 or so below, I guess, where Brookdale's occupancy was, the 84.5 or so. So still, like, you know, there's still more room. So I guess the question is, you know, two parts of... So first, like, why I guess it's taking that long, right? 'Cause it's still, I mean, you did a great job, but I guess there's still more to come. Yes. And then the second part is, you know, how long you think it will take to kind of return to that level? Yeah, it's a great question. And, you know, like I said, I think really what we've been focusing on very diligently over the last five quarters call it is, you know, that RevPAR growth and just making sure that we have that quality top line. We put the historical high Rate Increase last year, that was a little bit lower this year, and just making sure that we are charging an appropriate rate that remains affordable, to the residents, and just balancing that, and making sure that we have that steady and sustainable growth with a quality top line, because we're already seeing the results in our margins. ... When it comes to your guidance, maybe switching a little bit more to the near-term commentary around your second quarter guidance, right? It implies EBITDA essentially be flat or maybe down $5 million or so, quarter-over-quarter, right? So you assume the occupancy, and typically occupancy increases, right? So why is that EBITDA actually declines while occupancy is expected to grow sequentially? Yeah, so we have in our investor presentation laid out normal seasonality factors. So we have several normal seasonality factors if you look at our results quarter-over-quarter. For instance, in the First Quarter, we pay out our bonus payments, and so we expect a little bit of a cash outflow. Those are the things that we're laying out in that last page of the investor presentation. So if you think about First Quarter to Second Quarter, it's normal that our Adjusted EBITDA would step down, and there's a variety of factors. So our occupancy that step down fourth quarter to first quarter, we're kind of making the turn in our occupancy in the Second Quarter, so we have to rebuild that loss of occupancy from Fourth Quarter to First Quarter. And so we would expect that to happen quicker this year. We've said that in our prepared remarks in our quarter Earnings Call, because that step down just was better than historical norms. And so you see that also in our April occupancy. Our average April occupancy was flat with March, but our ending occupancy was up 10 basis points. So that just evidences the fact that, you know, we've been rebuilding that occupancy a little bit sooner. Now, from a rate standpoint, we do our January 1st. On January 1st, we put our in-place Rate Increase, in effect, and typically then, throughout the year, you'll see our rates step down through the quarters. That's a function of a couple of different things. First of all, as we have normal attrition with our residents, usually we see a higher acuity resident that's moving out, and then a lower acuity resident that's moving in, so that'll impact our care rate. Also, we would have our product mix that we see, some seasonality through the quarters with, as well as the fact that we have normal discounting that happens through the year. So our guidance would imply a step down in our revenue, which is normal, from First Quarter to Second Quarter. Now, if you think about the expense side of things, the largest headwind that we have in the Second Quarter comes with our merit. So we put our merit increase in in late, First Quarter. So you have a relatively large labor headwind that comes through in the Second Quarter with getting the full year impact, or excuse me, the full quarter impact of those labor costs. Now, what I would say, is that would be partially offset with the fact that we have some utility costs that we'll see favorability in, in the Second Quarter compared to the First Quarter. And then I'll just remind you that we had winter storm costs in the First Quarter. We wouldn't expect those winter storm costs to continue, but those, favorability, and those expenses would not more than offset that merit. Mm-hmm. The other thing that's really important, I think, in our guidance is, as you go through the math, is that we really do expect, and it's in our guide for Adjusted EBITDA, you know, performance improvement, in from the low end all the way to the top end. So we do expect to continue that performance improvement into the Second Quarter. No, this is great. And you mentioned when it comes to rent increases, right? So this year, much lower, so I guess call it mid-single digits, and you mentioned, you know, discounting. So can you give us a flavor whether there's, like, more or less discounting than normal? What kind of activity are you seeing there? How competitive it is when it comes to rents? Yeah. Yes, so when we put our Rate Increase in place on January 1st, we actually start selling that rate to incoming residents in October of the year before. And so what we saw last year in the Fourth Quarter was a higher level of discounting from our competitors. That was more on the local front, and, you know, certainly our, you know, our EDs in our communities and our salespeople in our communities have the tools and acted appropriately in response to that higher level of discounting that we saw last October. What we have seen is a positive trend in 2024 as it relates to discounting, so our discounts as a percentage of revenue have certainly come down. Oh, great to hear that. And, maybe we switch to another topic that, it feels like, you know, we don't spend that much time, on Earnings Calls, but, HealthPlus program, clearly, right? Mm-hmm. It's been something that the company has working for quite some time now. Mm-hmm. I guess, you know, there's some plans for expanding it to additional communities. Maybe talk about, you know, these plans and, you know, what percent of, I guess, of your communities and units have access to this, to this program, and also, you know, how quickly, I guess, you're capable of expanding it? You know, do you have any targets when you might have it in all communities? Mm-hmm. Yeah. Yes. Yeah, so for those of you that don't know, Brookdale HealthPlus was designed to help improve the quality of life of our residents through evidence-based preventative care coordination. And we are just so proud of this program, which actually just received a Best of the Best award from Argentum, which is one of our industry associations. So it's great to be recognized, you know, externally, in addition to the outcomes that we're seeing internally for Brookdale HealthPlus. We are currently in about 50 communities. We started that rollout right, you know, at the start of the Pandemic in a few communities, added additional ones last summer, and are continuing to see positive outcomes. And so we expect to expand Brookdale HealthPlus to up to 130 communities by the end of this calendar year, would be our total number that we're working towards. One of the things about it is, as an innovative care delivery model with care coordination, we are so proud of the program and think that it really just distinguishes us as the senior living leader in value-based care. We had a third-party study of our Brookdale HealthPlus communities, and what that study found was that residents in those communities actually had 78% fewer emergency room and urgent care visits, and 36% fewer hospitalizations than similar individuals living in private residences. So overall, seeing very positive outcomes from the program, not only in the lives of the residents, but just throughout our entire communities. No, this is great, and I guess I was thinking, so you mentioned you obviously deliver better outcomes, and you've been recognized, so that's great. But, you know, is there a way for us, 'cause obviously, you know, people in this room are, you know, quantitative nature. So any numbers around it in terms of just like how this flow, how it flows through to the bottom line? Mm-hmm. As in, like, are you charging more? You know, are you able to kind of maybe raise the rents a little bit more because of these services in these communities? And then I guess, you know, does it mean that maybe the communities where you offer this program are generating better, you know, margins? Mm-hmm. Yeah, so Brookdale HealthPlus is provided to the residents within those communities at no incremental cost, so we do not charge an additional amount for those residents. From a staffing standpoint, those residents are provided access to a registered nurse care manager, who not only supports the care coordination for the residents, but also just further promotes our residents' overall health and wellness, which is something that is very important to us. The registered nurse care managers are provided with the latest technology and communication tools to really enable that responsive and effective care coordination, and it goes across the resident, their primary care provider, specialists they may be working with, as well as the resident family members. Now, one of the things that we're seeing outside of that third-party analysis that I spoke to is within our HealthPlus communities, we actually have higher resident retention, we have higher move-ins, we have improved associate retention, and we also have improved resident satisfaction. So these are less quantifiable in the short term, but something that we are monitoring and are continuing to see in those communities, and each of those really fits within our key focus areas within our business. So very proud of those positive outcomes. Now, from a cost to Brookdale standpoint, the main incremental costs are that registered nurse care manager, as well as more robust electronic medical records. But what we're seeing is that those costs are largely offset by a payer per member, per month, that we're receiving for the positive outcomes that we're delivering within our HealthPlus communities. So as we look more broadly, we believe that HealthPlus will be profitable to our Brookdale communities, be supportive of lower healthcare costs for our residents and their families, will be beneficial to our Brookdale shareholders, and will ultimately help support lower costs to the overall healthcare system. So definitely seeing positive benefits from our HealthPlus program. So you mentioned that. So, so I guess, is there you offer this this program in communities that have, it's, it's not paid out of pocket, there's, like, a payer involved. Is it Medicare Advantage plans that cover, covers those services? We currently have one payer that we are receiving a PMPM from, and we're in conversations with other potential payers just given the positive outcomes that we're able to see. From this payer, we've received incredible feedback on what they are seeing from their plan participants, compared to other individuals in other communities that are not Brookdale and specifically HealthPlus communities. Right, because the HealthPlus cannot cover the actual stay in the facility, so this is, like, an additional fee you receive from the payer because the members reside in your community, and there's this program. So the payer says, "Okay, we're gonna pay you to cover the cost of the RN and the systems, and then it's gonna accrue to us because the senior is gonna stay healthier in your community. That's exactly right. Okay. It's an... Yes. Okay. It's an incentive because of the positive outcomes that they are seeing and realizing. So you're saying you have this with one plan. Is it regional? Is it multiple markets, or is it just about one community or- It's multiple markets. It is multiple markets. Mm-hmm. Mm-hmm. Okay. Yeah. So how long you've had this contract? Oh, gosh, I actually don't know. But given that, you know, prior to last May, we only had HealthPlus in about 19 communities- Mm. It's something that we really see the opportunity to grow as we grow HealthPlus to additional communities, and again, hoping to add additional payers in the future. So you're seeing inbounds from the HealthPlus, where they kind of like, "Hey, like, we heard about this. We wanna do this," or is this more you pursue these contracts with additional payers? You know, one of the things is that as HealthPlus's reputation continues to be recognized, like with the Argentum Best of the Best award, we believe that that's not only gonna help with the referrals that we're receiving at the community level, but also will help with this type of relationship. No, no, it sounds like that, that's definitely something that could resonate well with the, with the plan, so that's definitely great to hear. Maybe, you know, you mentioned the RN, so I was just thinking maybe we should talk about that. So, you know, how, I guess, easy or hard it is to build out this program, you know, to hire these nurses. I mean, it sounds like you just need one FTE per community. Are you also willing, able to share that nurse across the- You are. That nurse is able to be shared across sort of a local cluster of communities, which helps reduce the cost, but it's also an appropriate resident number per registered nurse. So we're really going into this from the standpoint of wanting to be that leader in value-based care, and wanting to ensure that it is beneficial not only to our residents and their families, but also to our Brookdale shareholders and then the broader healthcare community. And when it comes to just your regular staff, I guess, so maybe we can talk about that, too. When it comes to, you know, where you are on the turnover, I guess you guys improve, you know, some of these metrics. So maybe remind the, you know, the audience where you are. And I guess, bless you. Remind the audience, you know, how do you get there? Sort of, you know, what are you doing differently to kind of do better when it comes to retention? Yeah. So one of our key strategic priorities is to attract, engage, develop, and retain the best possible associates, and we have made tremendous progress in improving our key three leadership retention and improving our associate turnover from the impact of the Pandemic and its follow-on effects. We're very proud that our trailing twelve-month executive director retention has reached nearly 70% retention rate, which is actually just slightly below what we were pre-Pandemic. So again, just fantastic progress on that front. Also, for our associates, our hourly associates, the turnover that we have seen, it's not quite back to where we want to be, but we're now within 10 percentage points of where we were pre-Pandemic on that associate turnover. So all of the efforts that we have put into place to really target, whether it's the recruiting processes to attract the right associates, whether it is the new trainings that we've been working on from the executive director level down through our hourly associate level, whether it is just providing them those development opportunities to grow their career with Brookdale over the long term and as the nation's largest operator. I mean, there's nowhere that really someone can come and grow their career within senior housing like at Brookdale. It's those type of programs that we have just seen such great success and seen those efforts translate into the significant progress in what we consider a critical part of our business. No, exactly. And then maybe, you can also talk about premium labor. So you've also been improving it, so are you kind of back to where you think you should be, or is there more room to continue to reduce the reliance on premium labor? Yeah. Yeah, there's no doubt that the Pandemic had a significant impact on our contract labor and the premium labor that we had incurred. As a matter of fact, our premium labor, contract labor, had peaked in December of 2021, now remained elevated through 2022. But last year, we made significant progress with our contract labor and getting our contract labor out of our communities and filling shifts with our own associates. And so you saw that in our results. But kind of the waterfall of premium labor is as you get contract labor out and are filling shifts with your own associates, your overtime has a tendency to spike up as well. And so we've also been making progress and made progress on that in 2023. But I still think, in 2024, we have some progress on the overtime. I think on our contract labor, what I would say is that we would be back to what we would call inflation-adjusted contract labor run rate on a monthly basis. So I think our real opportunity is really focusing on that overtime. And then, as Jessica said, we have made such great progress on our retention and turnover, that we would expect, some productivity coming from our labor costs from that, as well as you naturally get productivity as you, grow your occupancy. We're a high-fixed cost business, and so as we continue to grow that occupancy, we'll, definitely be able to see, and take advantage of, you know, getting, getting that higher occupancy in our high-cost fixed... Or excuse me, our high fixed cost business. No, exactly. And maybe switching gears a little bit to, I guess, balance sheet and cash flow, but the company has been selling assets, right? Also exiting leases. Very recently, you sold the rest of your healthcare services, you know, business. Also, you know, there were some leases and even one of the CCRCs. So, you know, is there more portfolio pruning? Is there... You know, are you guys done, or you think there's still more to come when it comes to that? Yes, it's a great question. What I would say is we always prioritize shareholder value as we think about our capital allocation and, you know, what is best for the business. And so, as you pointed out, we've done a couple of transactions through the more recent years. But I think what, and you've seen this in our portfolio, is we find value in owning our properties. We get more value out of that ownership. That's evidenced by the fact that we have 55% of our communities are owned, and that's shifted over the last several years. Now, as we think about our own communities, I think that there certainly could be a level of pruning. Maybe we're not in the right market or... You know, it just maybe isn't the right fit for us, but that certainly would be on the margins. I think our biggest opportunity is with the expiration of our leases that are coming up. And so as our leases are coming due, we will be looking at, you know, can we renew them at favorable terms that are going to be favorable to Brookdale, favorable to our shareholders? And if not, then, you know, we would be walking away from the leases. And so I think that is evidenced by, we did that with a lease at the end of last year, where, I think we had originally terminated the lease, and then we ended up with terms that were for a portion of the lease that were favorable to the company. And so we're seeing that in our results this year, and so I think that's where most of our opportunity lies. You mentioned that 55% of assets are owned by Brookdale. Do you guys have a goal in mind on where you wanna be? I guess, what are the, you know, in your view, the benefits of owning versus leasing assets? Yeah, we've definitely, over the last several years, really consciously shifted our portfolio to where we have a higher concentration of owned assets. When you look at it on a by-unit basis, we actually have about 61% of our units are owned, so it's an even higher percent across our portfolio. When you think about owned assets, we believe that those are the ones that are gonna provide the largest opportunity to capitalize overall on the powerful senior housing recovery and the powerful supply and demand dynamics that we are seeing and will continue to see for many years to come. Whereas historically, leases were used to grow a portfolio without having to invest that upfront equity on the property. So when you look longer term, we're very pleased that we've grown our owned asset percent, and we would expect to remain at a higher owned percent for the foreseeable future. Mm-hmm. Is there a strategy where you wanna be, like, 60 or 70? I don't know that we have a specific strategy around it. I think it's more of what, you know, what is going to increase shareholder value as we see our lease terminations, or our lease expirations coming up. I think we'll look at opportunities on capital deployment, any other opportunities. But certainly, it's just as we're making those decisions, acknowledging of the ownership of the assets, and just the benefit that we get from owning our assets. And maybe, I guess as it ties to those portfolio and, you know, owning versus leasing and I guess, you know, break even or get to the positive free cash flow and kind of the timeframe? That is certainly our number one priority, is getting to Adjusted Free Cash Flow positive. And we have made incredible progress. So last year, we improved our Adjusted Free Cash Flow by 76%, so we're incredibly proud of that. And, you know, with our focus on, the quality of top line, we expect to continue to make progress in 2024. Now, what I would say is, if you look at by quarter, typically our working capital will play into what our Adjusted Free Cash Flow is every quarter. I mentioned earlier in our call, we have our, incentive comp payments that come through in the First Quarter. That's typically a larger cash outflow. We saw that in our Adjusted Free Cash Flow, in the first quarter. And so we would, expect that working capital to kind of normalize throughout the year. But certainly, we have been very vocal and still think that, you know, that low 80% is where we would consistently get to our Adjusted Free Cash Flow breakeven, and I don't know that we've changed on that, you know, kind of that occupancy level, given the macro environment. I think I would add to that, one of the things that, you know, is incredible when you think about that 76% improvement in Adjusted Free Cash Flow in 2023, that alone is an amazing number. But then you consider that in 2022, we had about $60 million of Provider Relief Funds that we were comping over, and in 2023, we had the impact of the elevated interest rate environment that directly impacted our Adjusted Free Cash Flow. So really, that number is just, to me, that much more impressive. And as Dawn said, you know, outside of our overarching Brookdale priority, that is the health and well-being of our residents and associates, getting to positive Adjusted Free Cash Flow and producing that cash is our number one business and financial priority. Oh, great. I think this is pretty much the time we have. Yeah. Let's end it here. Perfect ... on a high note, and thank you so much. Yeah. Thanks everyone. Thank you so much, Joanna. Thank you, Joanna. Thank you.