BKD

Core Strategic Progress

• Improved operating performance: 57 consecutive months of year-over-year occupancy growth, with July 2026 posting 30 basis points of sequential same-community occupancy growth and 40 basis points of sequential consolidated occupancy growth, marking a clear acceleration after slower than expected inflection in the first half of the year.
• Hired Margaret Cabell as new Chief Sales Officer, filling a vacancy open since Q1 2026. Cabell brings 25+ years of senior housing sales and operational experience, and has already delivered measurable improvements to conversion ratios, sales yields, and referral channel performance.
• Optimized organizational structure: Implemented a single clear line of accountability from the CEO down to community-level leadership, with aligned sales, operations, and clinical teams at the district, regional, and community levels. Key community leadership turnover is the lowest it has been since the COVID-19 pandemic, with fewer open executive director positions than at any point since COVID.

Portfolio Optimization & Capital Deployment

• Completed the $23.4 million acquisition of Brookdale Galleria (244 units) in Houston, TX, a community Brookdale already managed under contract. The property is located in an affluent submarket, purchased well below replacement cost, and Brookdale has already closed underperforming on-site skilled nursing operations to reconfigure space for high-value amenities.
• Announced the planned acquisition of 17 currently triple-net leased communities (735 total units) for $157 million, expected to close in Q4 2026. All communities are located in existing Brookdale markets, and the transaction will add $11 million to 2027 adjusted EBITDA while reducing remaining lease portfolios to 4 cash flow positive groups.
• Launched the "First Impressions" CapEx reinvestment program for existing communities, focusing on common space upgrades to improve first impressions, increase tour-to-move-in conversion, and support higher rental rates. 30+ projects over $250,000 are planned for 2026, with H2 2026 investment double the H1 pace, and average project spend between $500,000 and $600,000.

Balance Sheet Improvement

• Annualized leverage improved to 8.4x from 8.8x at the end of Q1 2026. Total liquidity increased to $566 million as of June 30, 2026, up from $369 million at the end of Q1, driven by revolving credit facility expansion, positive operating cash flow, and disposition proceeds.
• Proactively addressed all 2027 debt maturities, completing refinancing transactions in June and August 2026, with no remaining debt maturities until 2028. New 5-year interest-only non-recourse mortgages were secured at attractive terms, and the revolving credit facility was extended to April 2029.

Capital Recycling Progress

• On track to sell 29 non-strategic/underperforming communities (2,364 total units) in 2026. As of August 10, 2026, 16 communities (1,336 total units) have been sold for $149.5 million in net proceeds, with 13 remaining dispositions expected to close before the next earnings call. Total 2026 net disposition proceeds are projected to hit ~$190 million.

• Management reaffirms full-year 2026 guidance, maintaining the prior range of 8-9% consolidated REVPAR growth and an adjusted EBITDA range of $502 to $516 million. Cost saving actions from improved labor productivity will fully offset the impact of lower than expected first half occupancy, keeping adjusted EBITDA on track.
• REVPAR growth is expected to accelerate in the second half of 2026, driven by improving occupancy, stronger REVPOR growth (as the company lapping last year's price concessions), and accretion from completed dispositions. REVPOR is expected to remain firm sequentially in H2 2026, defying traditional seasonal declines.
• Consolidated full-year 2026 occupancy is projected to reach ~83%, with stronger sequential occupancy growth in Q3 and Q4 than the first half of the year. Adjusted EBITDA growth is expected to hit the low double-digit range year-over-year in Q3 2026, and exceed the mid-teens growth range in Q4 2026.
• Full-year 2026 adjusted G&A expense is projected to remain ~$157 million, with cash lease expense expected to come in slightly under $180 million after the 17-community lease portfolio acquisition.
• Full-year 2026 CapEx is projected to be $175 to $195 million, with full-year adjusted free cash flow expected to be significantly higher than 2025's $23 million.

Brookdale Senior Living operates a single core segment of senior living communities, with the following Q2 2026 financial performance: total resident fees reached $708 million, a year-over-year decline of 8.7%, driven by a 15.7% reduction in consolidated average units from portfolio optimization, which was partially offset by 8.2% consolidated REVPAR growth. Consolidated REVPAR (revenue per available room) increased 8.2% year-over-year, while same-community REVPAR rose 5.5%. Revenue per occupied room (REVPOR) increased 5.2% year-over-year on a consolidated basis, and 4.1% on a same-community basis. Consolidated occupancy hit 82.4%, up 230 basis points year-over-year and 30 basis points sequentially from Q1 2026. Adjusted EBITDA for the quarter was $122.1 million, up 4.3% year-over-year, in-line with management expectations and slightly ahead of consensus. Adjusted free cash flow was a positive $38 million in Q2 2026. Consolidated expense per occupied unit (EXPOOR) increased 3% year-over-year, resulting in a positive 220 basis point REVPOR-EXPOOR spread. General and administrative expense (adjusted for non-recurring and non-cash items) declined 6% year-over-year to $38.9 million. Cash facility operating lease payments were $44.8 million, down $12.7 million year-over-year.

• Occupancy growth in the first half of 2026 inflected more slowly than management initially anticipated, driven partially by a multi-month vacancy in the Chief Sales Officer role and month-to-month cyclicality in uncontrolled move-outs (resident departures for higher acuity care that are largely out of the company's control).
• Non-labor facility operating expenses (including repairs and maintenance, insurance, and bad debt) were elevated in Q2 2026, introducing variability to operating results, though management expects this to revert to normal seasonal trends in the second half of the year.
• Disposition of non-core underperforming communities has been delayed, pushing the expected accretion from these transactions from Q3 to Q4 2026, though this drag is expected to be fully offset by benefits from the 17-community lease portfolio acquisition.

Q: Can you explain the REVPAR growth dynamics for H2 2026 after slower than expected occupancy growth in the first half, and what the trajectory for REVPOR will be? / A: Management confirmed Q3 2026 REVPAR growth is expected to be similar to Q2's 8.2% due to slower occupancy and delayed disposition accretion, with acceleration pushed to Q4 2026 when it will benefit from full summer selling season occupancy and completed dispositions. REVPOR will tick up sequentially in Q3 and remain firm through Q4 2026, defying the traditional seasonal sequential decline, due to the company's new disciplined pricing strategy and lapping last year's price concessions.

Q: Can you elaborate on the strategic rationale for the two recent acquisitions and their value creation potential? / A: Both acquisitions align with Brookdale's targeted growth strategy of adding high-quality assets in existing markets where the company already has density and operating scale, rather than expanding into new geographies. The Brookdale Galleria acquisition was purchased at less than $100,000 per unit, well below replacement cost, and as owner (instead of just manager) Brookdale can reposition the underperforming skilled nursing space into high-demand amenities to drive NOI growth. The 17-community lease portfolio acquisition is expected to add $11 million to 2027 adjusted EBITDA by replacing high-cost lease financing with lower-cost mortgage debt, while capturing full operating economics for shareholders.

Q: What operational changes at the local and regional level give management confidence that occupancy growth will accelerate in H2 2026? / A: The company implemented a full restructuring that created a single clear line of accountability from the CEO down to community-level leadership, aligning sales, operations, and clinical teams at every level. The company has bolstered community-level core leadership (executive director, sales leader, clinical leader), with turnover for these roles now at the lowest level since COVID, and far fewer open leadership positions. The restructuring created six regional operating units of ~90 communities each, combining the scale benefits of a large company with regional accountability.

Q: Was the Q2 2026 occupancy shortfall driven by slower move-ins or higher move-outs, and what is driving the recent improvement? / A: The shortfall stemmed from a combination of factors, including the multi-month vacancy in the Chief Sales Officer role that created month-to-month sales volatility, plus temporary cyclical elevation in uncontrolled move-outs (departures for higher acuity care) that are largely out of the company's control. Move-in pace was actually stronger than many observers assumed, and the recent hiring of a new Chief Sales Officer has already injected new energy and accountability into the sales organization, which is reflected in the strong July 2026 occupancy acceleration results.