Sonida Senior Living, Inc. (SNDA) Earnings

Management highlights

### Phase 3 Strategic Transition - Sonita has completed phase one (survival) and phase two (stabilization), which focused on strengthening operations, repairing the balance sheet, improving portfolio quality, and building scalable operating capabilities - The company is now entering phase three (compounding), which leverages the built foundation to generate growing shareholder value as a scaled pure-play senior housing owner-operator - The CHP acquisition closed on March 11, 2026; all financial discussions use pro forma results that include CHP for the full quarter, while GAAP results only include CHP from the closing date onward ### Operational Platform Improvements - The company has rolled out SPIN (Sonita Performance Insight Navigator), its proprietary technology platform that integrates resident care, workforce, and operational data into a single real-time framework - SPIN enables decentralized, data-driven local decision making, optimizes labor and non-labor costs based on occupancy, acuity and care levels, and drives incremental margin expansion - SPIN is continuously improved with more data from newly added communities, which enhances performance insights and protects NOI from day one of new asset integration - Labor efficiency improved in Q1: same-store total labor costs as a percentage of revenue fell 100 bps year-over-year, driven by SPIN-enabled productivity tracking and pay-for-performance initiatives that increased retention and reduced unnecessary labor hours - Non-labor expenses are well controlled, with expense growth significantly below revenue growth, delivering a 320 bps expansion in the revenue-expense spread due to procurement efficiencies and scale benefits ### Capital Allocation Framework - The new framework is grounded in three core principles: 1) Improve portfolio quality by investing in high-growth assets and markets, while recycling capital out of lower-growth/non-core assets (approximately 10% of communities by count, less than 10% of total Q1 NOI); 2) Only deploy capital where returns meaningfully exceed the cost of capital, with the core goal of compounding per-share value, not just scale; 3) Maintain disciplined leverage to reach a near-term target of 6-6.5x, with a long-term goal of lower leverage to preserve flexibility during market volatility - Capital is deployed in priority order: first to high-conviction internal opportunities to optimize existing portfolio occupancy, REV4, and margins; second to accretive external acquisitions that fit strategically and deliver operational upside, with a focus on densification in top MSAs to compound operating leverage - The company's 2024 acquisition cohort of 19 assets is tracking ahead of plan, with an annualized 11.5% yield on cost in Q1, above the underwritten 10%+ target ### CHP Acquisition Integration - 6 communities have already been transitioned to the Sonita platform, with an additional 11 communities scheduled for transition in summer 2026; the company will retain strategic long-term partnerships with a select group of third-party operators - Third-party manager relationships from the CHP acquisition are a source of incremental deal flow, such as the recent preferred equity investment in a Texas full continuum senior community that delivered an attractive risk-adjusted return - Unmodeled synergies are expected from internalization of management (currently paying 5% of revenue to third-party operators, with internal operating costs coming in below 5%) as well as labor, procurement, and insurance efficiencies

Guidance

- Management expects the strong same-store operating performance seen in Q1 2026 to continue into Q2 2026 - Unmodeled synergies from CHP acquisition integration are expected to begin being realized toward the back half of 2026, with additional detail to be provided as integration progresses - Non-core asset dispositions are expected to primarily occur in Q3 and Q4 2026 - The outstanding $170 million bridge loan is expected to be refinanced with new mortgage debt by the end of Q2 2026 or early Q3 2026 at the latest - Management expects continued year-over-year NOI growth through the remainder of 2026, with additional earnings upside from integrated communities as operational improvements take hold - Over the long term, management expects to internalize the significant majority of the 54 CHP communities, with only a small number of strategic third-party partnerships retained

Segment performance

Sonita reports results across three portfolio segments: 1) Same-store: Year-over-year, weighted average occupancy increased 220 bps to 87.2%, resident revenue grew 7.6%, REV4 increased 5%, NOI rose 14% to $48 million, and NOI margins expanded 170 bps to 31.2%. This segment makes up the core stabilized portfolio of the company. 2) Non-same store: This segment includes non-core assets targeted for disposition, recently acquired communities, and communities undergoing reinvestment or care model conversions. It contributed to near-term margin dilution as the portfolio is integrated and stabilized. 3) Triple net lease: This segment holds 15 communities with operating leases maturing between May 2030 and July 2032, with tenant renewal options available. For the total portfolio on a pro forma basis: weighted average occupancy increased 100 bps year-over-year to 85.7%, the share of communities with occupancy over 90% rose from 39% to 52%, the share of communities below 80% occupancy fell from 28% to 20%, REV4 increased 4.9%, resident revenue grew 8.5%, total community NOI reached $51.3 million, and NOI margin expanded 70 bps year-over-year.

Risks & headwinds

- Forward-looking statements are subject to material risks that could cause actual results to differ from projections, as detailed in the company's SEC filings including Form 10-K and Form 10-Q risk factors - Near-term operational disruption is possible during the transition of acquired third-party managed communities to the Sonita platform - Market competition for acquisitions has tightened, leading to slightly compressed potential returns compared to 2024 transactions - Newly acquired and transitioning communities create near-term NOI margin dilution before integration and stabilization are complete

Analyst Q&A

• Q: What pace of future capital deployment and acquisition should investors expect, and will acquisitions be large portfolio transactions or smaller one-off deals? What return hurdles are targeted for new acquisitions going forward?

  A: The company remains active in the acquisition market, pursuing both large portfolio transactions and individual asset acquisitions while integrating the CHP portfolio. It expects to continue acquiring at the same consistent pace seen in 2024 and 2025, with a robust current pipeline. While market competition has slightly compressed returns, the company's operating capabilities allow it to still target strong high-single-digit to low-double-digit yields, matching the quality of 2024 acquisitions that are already outperforming underwriting.

• Q: Is the SPIN platform used in acquisition underwriting, will the company continue to invest in SPIN, and when will unmodeled CHP synergies be realized, and when will non-core dispositions occur?

  A: SPIN is already used in underwriting to benchmark potential acquisitions against the existing 153-community portfolio, and it enables real-time operational decision making for labor, clinical tracking, and rate optimization. The company will continue investing in SPIN, particularly for advanced AI-enabled analytics. Unmodeled synergies from 2026 community transitions will begin to be realized in the back half of 2026, with 5% of revenue currently paid to third-party operators expected to fall significantly after internalization. Non-core dispositions are expected to occur primarily in Q3 and Q4 2026.

• Q: Will the company still significantly reduce the $19 million annual third-party management fee even as it retains some strategic third-party operator relationships, and what is the pacing of earnings, dispositions, and M&A for the rest of the year? When will the $170 million bridge loan be refinanced?

  A: The company still expects to significantly reduce the $19 million annual management fee, with the long-term plan to internalize the large majority of the 54 CHP communities, only retaining a small number of strategic third-party relationships. Management expects continued year-over-year NOI improvement through the rest of the year, with active processes underway for the targeted 10% of non-core communities. The bridge loan will be refinanced by the end of Q2 or early Q3 2026, with strong lender demand supporting attractive pricing and participation.