SONIDA SENIOR LIVING, INC. Q4 FY2024 earnings call

• Achievements in 2024: 19% and 27% year-over-year growth in same-store adjusted community NOI and adjusted EBITDA; 180 basis points occupancy improvement; nearly 6% RevPOR growth; integrated 20 owned and 3 managed communities (near 30% increase in total units).
• Capital allocation: Executed six transactions totaling over $250 million, including three in Q4 with 11 communities and 817 units, driving 11% sequential total NOI at share growth.
• 2025 goals: Achieve same-store NOI growth in the high end of the peer group; benefit from higher incremental flow-through from stabilized communities; employee turnover decreased nearly 10% in 2024; focus on regional density for more efficient marketing, rate optimization, shared resources; operational excellence with business intelligence tools and technology; sales and marketing emphasis on technology to drive down acquisition costs.

In 2024, Sonida Senior Living, Inc. saw significant segment performance. Same-store adjusted community NOI grew 19% year-over-year, and adjusted EBITDA grew 27% year-over-year. Same-store occupancy improved by 180 basis points, and RevPOR grew nearly 6% year-over-year. In Q4 2024, the weighted average occupancy was 86.6%, a 40 basis point decrease from Q3. Annually, same-store revenues increased 7.5% due to an occupancy gain of 180 basis points and nearly a 6% RevPOR increase. Pro forma annual year-over-year adjusted community NOI (excluding one-time real estate tax credits) increased 21% or $11.4 million. Level of care revenues on the same-store portfolio increased $1.1 million or 8.3% year-over-year.

• 2025 goal: Achieve same-store NOI growth in the high end of the peer group.
• Early Q1 trends show strong rate improvement.
• 2024 acquisition communities had a weighted average occupancy of 76% and NOI margin of 21.7%; expect NOI growth to outpace the stable same-store portfolio.
• Anticipate March 2025 rate renewal to be directionally consistent with 2024's 6.3% increase.
• Target a $100 million NOI run rate with upside potential.

• Medicaid-related aging in Indiana causing structural changes, with residents needing reapplication, pushing rent collection cycles or losing coverage.
• Dependence on third-party sales referral partners, though reliance is expected to wane with digital marketing efforts.

Q: Hey. Just two quick ones for me. Just starting a little bit on the fundamentals. I know you have the $100 million target out there and so forth. Just where is sort of pricing going out today? How does that compare to sort of what it was last year? And, you know, I know you mentioned about sort of the labor costs were getting better. Just a little bit more color there as well, what you are anticipating as immigration sort of gets going?

A: Thank you, Ron. Good morning, and good to catch up with you. So a couple of things just on the overall landscape and the trajectory of the recovery. I would say that, you know, from a first-off pricing perspective, you know, we do feel like 2025 is going to be another strong year in line with the types of gains that we saw in 2024. So we feel like with occupancy levels where they are at, especially in the same store, that we can continue to push forward on pricing. So, again, I think a good story there. And then on the community that we have acquired, we have seen really good kind of initial performance, especially on the expense management side. Our focus for 2025 is accelerating the recovery really top line on those new communities that we have brought on board because they do have occupancy opportunity with a Q4 average at 76%. So we think there is good room to grow there. And then the revenue profile of those new communities just from a rate perspective is higher than our same store as well. So we feel like with that good occupancy opportunity, you know, there is also the transfer for margin expansion going into 2025. So I think really focused on strong acceleration of occupancy recovery for newly acquired communities. Good continued growth in the same store profile, in line with the top end of our peers. And then on the labor front, just really diligently manage those labor expenses for 2025. We have not seen any major shifts in the market related to any impacts around any changes in immigration. I think, you know, we have some comfort in that the majority of our employees are certified and that, you know, we have not seen any immediate material impact on the labor front. So really kind of controlling those, you know, right around the same levels we have, you know, in the past year or so. Should allow us the opportunity to really grow the business from a margin perspective and get those dollars, you know, closer to, you know, as you mentioned, that kind of $100 million run rate as quickly as we can.