Thank you, and good morning. I'd like to welcome you to the second quarter earnings call for Brookdale Senior Living. Joining us today are Denise Warren, Interim CEO and Chairman of the Board; Dawn Kussow, Executive Vice President and Chief Financial Officer; and Chad White, EVP, General Counsel and Secretary. All statements today, which are not historical facts, may be deemed to be forward-looking statements within the meaning of the federal securities laws. These statements are made as of today's date, and Brookdale expressly disclaims any obligation to update these statements in the future. Actual results and performance may differ materially from the forward-looking statements. Certain of the factors that could cause the actual results to differ are detailed in the earnings release Brookdale issued yesterday as well as in the reports Brookdale files with the SEC from time to time, including the risk factors contained in its annual report on Form 10-K and quarterly reports on Form 10-Q. I direct you to the release for the full safe harbor statement. Also, please note that during this call, Brookdale will present non-GAAP financial measures. For reconciliations of each non-GAAP measure from the most comparable GAAP measure, I direct you to the release and supplemental information, which may be found at brookdaleinvestors.com and was furnished on an 8-K yesterday. Now I will now turn the call over to Denise.

Good morning, and welcome to Brookdale's Second Quarter 2025 Earnings Call. It's a pleasure to be here today as Interim CEO. I'm joined by two integral members of the office of the CEO; Dawn Kussow, our Chief Financial Officer; and Chad White, our General Counsel. This morning, I'll provide a high-level review of our second quarter results, followed by an update on the strategic priorities we outlined during the Q1 earnings call. I also will provide updates on a couple of other items of interest. After my remarks, Dawn will present a detailed overview of our second quarter financials, including guidance ranges and our outlook for the remainder of the year. Chad will join us for the Q&A session. Now for second quarter highlights. Brookdale delivered solid second quarter performance. Despite the backdrop surrounding our Annual Shareholder Meeting, the team remained focused and made progress on improving our operations and financial results. We also continued our ongoing portfolio optimization plan. Same community weighted average occupancy for the second quarter came in at 80.7%, growing 190 basis points over the prior year quarter. June month end same-community occupancy came in at 82.8%, which was 240 basis points higher than month-end occupancy in June 2024. July month-end occupancy came in at approximately 83.3%, which was 260 basis points higher than month-end occupancy in July of '24. Recall, roughly the 80% occupancy mark is a critical inflection point for cash flow generation at Brookdale. While delivering occupancy growth, we also held rate as RevPOR on a same community basis grew 2.4% year-over-year. Now that our consolidated portfolio has weighted average occupancy greater than 80%, our focus will be on ensuring rate growth outpaces expense growth while not sacrificing occupancy. We are pleased to report that adjusted EBITDA for the company grew 19.7% quarter-over-quarter…

Thank you, Denise. We were pleased with our continued operational progress, particularly with our occupancy growth during the quarter, which accelerated in May and June. Our operational improvements have been meaningful, and we are seeing the changes in our results. As a result of our progress, occupancy and adjusted EBITDA exceeded our expectations for the quarter, giving us confidence to raise our annual guidance ranges for the second quarter in a row. We had several operational successes this quarter. Our second quarter consolidated average occupancy of 80.1% is the first time we have delivered quarterly weighted average occupancy above 80% on a consolidated basis since the first quarter of 2020. The 80 basis point sequential occupancy growth was the strongest second quarter growth since 2022 and is evidence that our operational SWAT teams and other initiatives to drive occupancy continue to be effective. As a result of these efforts, our sequential occupancy growth was better than the industry average as reported by Nick and better than the healthcare REIT's consolidated SHOP portfolio results. Our same-community portfolio, which excludes the Ventas transition assets, the 12 assets held for sale and 3 other communities had quarterly occupancy of 80.7%, a sequential increase of 70 basis points. We delivered $20 million of adjusted free cash flow, which is our second consecutive quarter of positive adjusted free cash flow. We also showed continued improvement in our occupancy bands with 14 or 10% fewer communities included in the less than 70% band for the second quarter of 2025 compared to the first quarter, while our over 95% occupancy band also grew by 15 communities or 21% and we had continued adjusted annualized leverage improvement. As a result, we have improved our annual guidance for both year-over-year RevPAR growth and for adjusted EBITDA, we are pleased…

[Operator Instructions] And your first question comes from the line of Brian Tanquilut with Jefferies.

Maybe first question, Denise. As I think about the successes that you've shown in driving occupancy, what have you been doing differently since maybe you've stepped into the role and just operationally, what kind of initiatives and the different strategies you've rolled out since?

Well, Brian, that's a great question. Since I've gotten here, we have focused a lot on the SWAT teams. We had one group that just started to work in the fourth quarter, and we doubled down and emphasized to that group on the actions that we needed to take to really drive profitable occupancy, not just occupancy. We also put in place a second SWAT team to focus on an additional set of assets that would be coming up for refinancing in the 2027 time frame. The goal with those is to maximize the collateral value prior to actually having to renew them. The goal with that is not necessarily to continue to borrow at that level, but to bring collateral assets out of the pool. We have also instilled a new focus on accountability. Some of the things that we have done there is we have put in a daily standup meeting between the operations people and the salespeople and the marketing people. So we have a daily look at what each of those areas is doing to drive our profitable occupancy. If someone is falling behind, we can help them catch up. We can also share ideas. We can take down barriers. The SWAT teams are also focused on how do we remove barriers that have been put in place when you become a very large organization and complex organizations such as Brookdale. So in those groups that need the most help, we can help them bypass to get folks hired more quickly. We can replace executive directors that need to be -- or positions that need to be filled. We can help them with their CapEx spend. There's just a lot of really granular things that we can do in all of those areas to really push the focus on driving it. I think a lot of it is really increasing the sense of urgency that we need to take. And then we've done a lot of work on the culture side of the organization as well. We have really put decision-making into the hands of those that are touching our residents every day and those people that are in the field, those are the most important people to us because they see every day what is wrong and they know how to fix it. And we need to allow them the operational responsibility to make those decisions with guidance from us in Brentwood. But from Brentwood, we can't see what's happening in those facilities. And so we need to travel. We need to be in them more frequently, and we need to be working with our executive directors and our field operators on how do we get the operational improvements that we need.

No, that makes a lot of sense, Denise. And then maybe as I think about just the last part of your comment, right, you kind of giving that level of independence to the community. How should we be thinking about the philosophy between balancing rate and occupancy going forward? And then maybe to drill that down a little bit more, what is that doing in terms of like the occupancy bands within the Brookdale portfolio? And how do you expect that to trend going forward?

Sure. As Dawn said earlier, the occupancy band focus is really important to us. And we brought that up over the last couple of months surrounding our shareholder -- our Annual Shareholder Meeting and talking with a number of investors over that time period. Our less than 70% occupancy bands, we have to get them up. And we have to get them up because we don't start covering our fixed costs until we hit that 80% mark. And so we need to get those properties moving. And I think you saw that from the change in those communities from 143 in the first quarter to 129 in the second quarter. And then I believe we eliminated what we were doing within that 129 mix to further improve that occupancy going into the third quarter. You also saw that we have bifurcated the portfolio, and we're focused on the communities that are greater than 80% occupancy. And you saw that the ones that are actually greater than 95% had a significant move in the occupancy bands there because when you look at what falls to the EBITDA more quickly, it's the ones that have covered their fixed costs. So we have to bifurcate the portfolio to get the under 70s up to 80 and to get the over 80s to really performing exceptionally well, where we're more focused on pricing in those avenues than we are in the under 70s while we're getting them up. And I think Dawn has some additional comments around those occupancy bands, too.

I think what -- as we said in our prepared remarks, we had significant progress in those occupancy bands. And I mean, we really are focused on maximizing our pricing, particularly in the higher level. But in the less than 70%, that's where maybe some of the targeted incentives, some of the spotlight units, as Denise said, just the pure economics of getting those up to that 80%, so they can start to cash flow and contribute. If you look at the less than 70% band, I think we had some prepared remarks on just kind of what was in that band and the actions that we've taken. And when you really do the math, there's very few communities less than that. The other thing that we'll point out is if you look at, we added new Slides 16 through 18 on our investor presentation, and that's really trying to articulate really the value proposition as you peel one layer lower into the profitability of the units in the under 70 and the 70 to 80 and really where we have our future growth from the economics of growing that 70% to 80% band up above the 80%, as Denise just talked about.

And your next question comes from the line of Ben Hendrix with RBC Capital Markets.

I appreciate all the commentary about the profitable occupancy strategy hitting 80% definitely translating to solid cash flow performance. But just wanted to drill in a little bit on the pricing component of that. You talked about this 10 basis point spread between the RevPOR and ExPOR and wanted to get some indication. Is that kind of like how we should think about that 10 basis points spread, how we should think about pricing in the intermediate term? Or is there like a higher target spread there once we cure some of these lower occupancy bands? Just any thoughts on how we think about that normalizing out for longer term.

Ben, this is Dawn. That's a great question. I would say just a couple of things. And Denise and I both talked about the margin growth that we would be focused on as you think about continuing to grow our margin. We did deliver net operating income growth, but we certainly do expect to have margin expansion, particularly as we get into 2026. But what I would say about the RevPOR to ExPOR differential, the 10 basis points is there is a level of noise in some of our expenses as you think about -- we're self-insured. Last year, we saw the movement from the third party noise, we had a little bit more visibility into that early in the year, which impacted some of our incentive plans. And so as you think about that margin spread, we certainly would expect that to get a little bit more of a growth between the two. And so I think that as we go through the year and we grow our occupancy, we focus on some of our pricing and our targeted incentives, we would certainly expect that to get better.

Yes. And Ben, this is Chad. The other thing I would say on this, I think it's really important with the supply-demand fundamentals of the industry over the longer term, we see a real opportunity here to increase pricing over the rate of expense inflation. And you'll see in the new slide that Dawn mentioned that we added, one of the new slides we added into the investor deck on Slide 17 sort of shows what some of that impact is to creating value for the company going forward. We see a lot of ability that over the longer term as we look at rate and pricing, if we can continue to deliver rate growth greater than our expense growth, that really compounds over time and creates a lot of value.

Great. Appreciate that commentary. Just also one follow-up on some of those marketing and targeted pricing efforts. You have made good progress with move-in activity. I wondered if you could talk about progress you've made on controllable move-outs and if any of these pricing -- targeted pricing actions have gone to control the move-out activity?

Yes. I would say that if you think about on our controllable move-outs that our attrition rate in total, we've seen some favorability in our attrition rate. I think our controllable move-outs have moved around a little bit quarter-over-quarter. But where we see progress is on our NPS scores, the turnover in our communities, which we would fully expect to continue to -- where we continue to see improvements on our controllable move-outs.

Also, Ben, we have asked our marketing department to put together a program to focus on retention of our residents because reducing those controllable move-outs is very important to our occupancy numbers, and it is a lot less expensive to keep the residents that you have than to go out and get new ones. And so we are heavily going to focus on how do we retain not only our great employees, but also our residents in our facilities longer.

And your next question comes from the line of Andrew Mok with Barclays.

I appreciate all the color on the sub 70% occupancy band. Are there any targets you can share for how many communities you think you can move out of that lower band over the next 12 months outside of the Ventas lease communities? And I think I heard in the prepared remarks that there was some softness in move-ins early in the quarter. Can you elaborate on what you're seeing there and how that impacts the occupancy outlook for the balance of the year?

Yes. Thank you. This is Dawn. I think the insight that we've given the under 70% occupancy band is Denise had shared that there's -- between the disposition 1, 2 and the Ventas communities, it's 50 communities. And so we would expect that the Ventas and the disposition 1 kind of group, the 14 that we originally talked about last quarter would be out by the end of the year. The other dispositions, we said 12 to 18 months, so call it 18 months, the 15 communities -- or excuse me, the 50 communities would be out. We fully expect our SWAT efforts to take hold and to continue to move those assets out, and there were 38 of those in the band. Whether that's by the end of the year or early into next year, certainly would expect those to kind of move up. And then with 1, 2 or 3 units, just I think that there is a level of variability because it could be 1, 2 or 3 units up or 1, 2 or 3 units down, but where we are very focused is on making sure that we're focused on the smaller communities, making sure that we are getting those above that occupancy level. So I think significant progress was made in the second quarter, and we would expect that to continue throughout the year, just both operationally and through the disposition efforts that we had.

And can you comment on the softness that you quoted?

Sorry, I appreciate that reminder. The softness in the market, if you remember, as we came out in the April in our first quarter earnings call, we were impacted with kind of the macroeconomic uncertainty. If you remember, the tariffs were in discussions. And I think as we saw some of that subside, along with all of the operational focus that we've had, what we saw is our occupancy move-ins towards the end of May, but more notably in the month of June, where we saw our efforts from all of the move-in activity. You can see it in our results with having between May to June, a 50 basis point occupancy increase and then June to July, a 60 basis point occupancy increase on a consolidated basis. I think one thing that I would say about the quarter is there is -- we do expect the acceleration of the occupancy. We're just coming into our summer selling season. And with having as strong of a June as we had with as many move-ins coming through, again, you saw it in the July occupancy. You're just not seeing the economics in the second quarter. We fully expect to see that and capture that as well as the summer selling season coming through the third quarter.

Great. And maybe just one more on the cash flow. I think operating cash flow finished above $80 million in the quarter and increased 50% year-over-year. It looks like there were some favorable working capital changes in addition to the better operating performance. Can you flesh out the drivers there? And with the better cash flow profile, how are you thinking about the capital priorities from here, including growth and maintenance CapEx?

I'll start with the adjusted free cash flow. Certainly, there is working capital variability. If you remember, we just finished our activist site in the month of July. So there would be some accruals there with the change in leadership. Accruals related to severance there. And we would expect working capital to turn in the normal course. There's always a level of variability. But really the driver of the adjusted free cash flow change is in the operations, the underlying operations of the business. As we continue to see the business improve and delivering 20% year-over-year adjusted EBITDA, we certainly expect our adjusted free cash flow to continue. Again, we haven't changed our guidance. And as we start to cash flow and the strategic -- as we're thinking about this, how we would use that cash, I think Denise had some of that in our prepared remarks with the dispositions. We certainly are looking at our CapEx. We talked about $10 million of additional CapEx on fresh impressions and kind of front-of- the-house CapEx at the beginning of the year. We'll continue to evaluate what that CapEx deployment will look like or if there would be other initiatives that we would want to invest in.

We'll certainly use some of the proceeds from the disposition transactions along with the growing and improving cash flow to reinvest back in the portfolio. And we've been seeing some really good results from our initial first impressions investments that we're making as part of some of the high opportunity SWAT team efforts. You're seeing some really good impacts from that. We know that sort of you've got to -- through the SWAT team efforts, one of the first things you look at is the facility, the property condition itself. Does it need some refreshments? Does it need some carpet paint, furniture, et cetera. We've been making those investments on the sort of the front of the house to improve the look of the buildings. And I think that actually is helping in our results. So as we go forward, we certainly will continue to reinvest in a prudent manner. And I think that creates a lot of more upside opportunity.

And your next question comes from the line of Joanna Gajuk with Bank of America.

Actually, a question first a follow-up on the free cash flow. So with EBITDA guidance higher, why is the adjusted free cash flow guidance not going up? Is it those items you had mentioned around the severance and proxy fight or is there something else?

That's exactly right, Joanna, is that there's just the level of variability with the working capital.

Okay. And then on the -- if I may, on the cost, right? So you talked about there's some, I guess, call it, cost burden in the quarter, right? And you expect the kind of fruits of that burden to play out the rest of the year. So can you help us quantify some of these additional costs in the quarter, whether marketing or other efforts, I guess, to understand the cost structure going forward?

Yes. I think, Joanna, what we talked about for the current quarter is really the incentives that we had. We pivoted marketing costs. We may have had a small amount of incremental marketing costs, but pivoted marketing costs that maybe were better suited for digital in certain markets or direct mail in certain markets. But I certainly would say what -- I think there's a timing difference from the normal incentives that you would see versus the timing of when we're going to get the economic impact of that occupancy. So the occupancy coming through in June later of the quarter, you will see that the economics of those occupancy increases coming through, and we did see it in July. It's just because it came later in the quarter and the spend was earlier, there's just a timing.

Okay. So there was nothing else to call out when it comes to the cost?

Correct.

And your next question comes from the line of Josh Raskin with Nephron Research.

I was wondering if you could speak to your local market strategy and maybe how that's evolved under the new leadership. I'm specifically interested in how you differentiate Brookdale from peers at the local level beyond just sort of pricing and maybe what resonates most with prospective residents and families in terms of additional services and things that you guys are providing?

Yes, I'll start. And then -- thank you, Josh. It's a great question. I'll start and then if Chad or Denise wants to chime in. I think that what -- how we're differentiating ourselves really is the quality of care that we provide. And so if you think about -- Denise just mentioned, our EDs are really in the local markets, pushing the decision-making to the ED level, making sure that they are connected in the local markets and they are knowledgeable about what discounting or what strategy or we talked about CapEx or our NPS scores increasing, just how we're thinking about that locally, and it will differ market to market. I think what differentiates Brookdale is really, like I said, the quality of care that we provide to our residents. And so with the rollout of Health Plus in our communities, we, by the end of the year, we expect it to have it in just under 200 communities. And so I think that, that is certainly something that we have absolutely seen as a differentiator, and we market that at the local level.

Yes. It's absolutely a key differentiator. I think it's something that we will be continuing to focus on. Dawn mentioned that we're rolling this out. We'll have it in almost 200 of our communities by year-end. We are seeing that the feedback, Brookdale Health Plus is a unique innovative program. It's our care coordination program that I think has been very well received in terms of it improves resident outcomes. We believe it will actually improve length of stay, and it's also improving our financial results. And so we think it's a key differentiator for Brookdale. It's something that we're going to continue to lean in on very heavily. It's something that I think we're already seeing anecdotally, the comments we received from the field where we have a Health Plus community. It is something that is differentiating us from a sales standpoint and able to lead to new move-ins. And ultimately, it's something good for residents. I mean our residents who've had in Brookdale Health Plus communities get 80% fewer urgent care visits, 66% fewer hospitalizations. Those are really key things that you can sell to residents and family members that if you come to a Brookdale community, you are going to be getting a better quality experience. You won't be spending a lot of money going out to ER visits and hospitalizations because we're driving improved results there. And so we really are focused on our residents. We're really focused on driving resident satisfaction. Dawn mentioned earlier, we're seeing improvements in our Net Promoter Score ratings this year that have continued over the last couple of years. We're continuing to focus on that. And so ultimately, it's driving a great resident experience and making sure that we're focused on them.

That's perfect. And maybe just -- I hate to keep going back to the discounting, but are there any metrics you can share, maybe what percentage of move-ins saw discounts versus last year or maybe the average percentage discount versus last year? Just anything that can help us track this because I think there is some attention on that 10 basis point spread at this point.

Right, I think that we certainly wouldn't put anything out regarding discounting because there's always this kind of a level of discounting that we have. You see that in our step down in our RevPOR. Maybe looking at the RevPOR step down is something that I would point to. Again, we'll focus on that. If I look at the ExPOR, RevPOR year-over-year, Josh, what I would say is that there is some level of variability in the base here that's causing that to be a little bit closer than we would like. Just again, last year, we saw the move-in disruption from the third-party referrals. We had some visibility into our incentive plans. And so again, there's variability quarter-by-quarter, but we're certainly very focused on making sure that we are appropriately discounting, which is why I think Denise is talking about, Chad talked about the incentives that we're running are more local. They're more targeted at the occupancy bands as opposed to spread throughout. We're being very conscious of where that is being done and what we're doing.

And your next question comes from the line of Tao Qiu with Macquarie Group.

Could you help us bridge the 5% RevPAR growth that you achieved in the first half of the year to your higher full year RevPAR guidance range given the trade-off in occupancy and rate we saw? And also, how much of the lift will be coming from organic performance and how much from asset and lease divestment? If you could also talk about kind of the EBITDA and free cash flow expectation for the dispositions. I heard some headwind mentioned on the timing of the Ventas lease transition, but just wanted to size up the potential benefits in the second half.

Tao, it's a great question. I think the bridge on the RevPAR is certainly the Ventas. We were very clear on that when the Ventas dispositions the 55 communities we're transitioning off that it would be a benefit to our metrics, our occupancy, our RevPAR metrics. And so I think that would be the bridge from a modeling perspective from first half into second half. We expect -- if you look at our historical trends, if you look at kind of second quarter to third quarter historical trends, I think the step down between third quarter to fourth quarter, which I addressed -- excuse me, between second quarter to third quarter, which I addressed in my prepared remarks, that step down in '24 would be generally indicative of what we would expect in 2025. And then I think the Ventas impact of the transition communities would generally be in the fourth quarter.

Got it. And Denise, I heard that earlier comment about the work you're doing on the collateralized assets up for refinancing in 2027. I think you said that the plan is to bring them out of the collateral pool. Just wondering if you could elaborate a little bit more on the plan there. And also curious, the second SWAT team that you deploy there, are they doing anything different versus Team 1?

Okay. Yes. As you know, about 88% of our debt is nonrecourse and is held as mortgages at the property level. And so we have a debt pool that is coming up in 2027. And how do you uphold the amount of your loan is through your collateral value. So the higher your collateral value, the more dollars you can receive from that loan. Our intention is not to receive more dollars from the loan, but to pull assets out of the collateral pool. So we will hold them as unencumbered assets that we can then use later on for additional growth or whatever we need to do as an unencumbered asset. So that's how we're focused on driving the performance of the collateral pool so we can remove assets, hold them as unencumbered to use later on. And the second SWAT team, it's really no different than the first SWAT team. You're still working on how do you improve the operational performance. It's just a different set of assets and each asset has its own need. And they are very much our local needs. Some might need dining room chairs, some might need paint and wallpaper, some might need a total redo. It runs the gamut, and it really is property by property by property.

Thank you. And ladies and gentlemen, that ends our question-and-answer session for today. Ladies and gentlemen, this now concludes today's conference call. You may now disconnect.