Sonida Senior Living, Inc.: Form 10-Q for the period ended Mar 31, 2026

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help provide an understanding of our business and results of operations. This MD&A should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This report, including the following MD&A, contains forward-looking statements regarding future events or trends that should be read in conjunction with the risks, uncertainties and other factors described under “Cautionary Note Regarding Forward-Looking Statements” above in this Quarterly Report on Form 10-Q and “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 12, 2026, as well as “Item. 1A. Risk Factors” in this Quarterly Report on Form 10-Q. Actual results may differ materially from those projected in such statements as a result of such risks, uncertainties and other factors. Unless otherwise specified or where the context otherwise requires, references in this Quarterly Report on Form 10-Q to “our,” “we,” “us,” “Sonida”, the “Company” and “our business” refer to Sonida Senior Living, Inc., together with its consolidated subsidiaries.

Overview

The following discussion and analysis addresses (i) the Company’s results of operations for the three months ended March 31, 2026 and 2025, and (ii) liquidity and capital resources of the Company.

The Company is one of the largest, pure-play owner-operators and investors in U.S. senior living communities, with a focus on independent living, assisted living and memory care communities and services for senior adults. The Company’s operating strategy is to provide value to its senior living residents by providing quality senior living services at reasonable prices, while achieving and sustaining a strong, competitive position within its geographically concentrated regions, as well as continuing to enhance the performance of its operations. The Company primarily provides senior living services to the 75+ population, including independent living, assisted living, and memory care services at reasonable prices. Many of the Company’s communities offer a continuum of care to meet each of their resident’s needs as they change over time. This continuum of care, which integrates independent living, assisted living, and memory care that may be bridged by home care through independent home care agencies, sustains our residents’ autonomy and independence based on their physical and mental abilities.

As of March 31, 2026, the Company owns, manages or is invested in 165 senior housing communities with over 16,400 total units across 35 states, including 153 owned senior housing communities (inclusive of 54 managed by third-party property managers, 15 leased pursuant to triple-net leases, three owned through a joint venture investment in a consolidated entity and four owned through a joint venture investment in an unconsolidated entity) and 12 communities that the Company manages on behalf of a third-party.

Strategic Merger with CHP

As previously announced, on March 11, 2026, the Company completed the acquisition of CNL Healthcare Properties, Inc. (“CHP”), a public non-traded real estate investment trust which owns a national portfolio of 69 high-quality senior housing communities, pursuant to the definitive merger agreement (the “Merger Agreement”), by and among the Company, CHP and its affiliates (the “CHP Merger”). Under the terms of the Merger Agreement, the Company acquired 100% of the outstanding common stock of CHP in a stock and cash transaction valued at approximately $1.8 billion, with approximately 66% of the consideration paid in the form of newly issued Sonida Common Stock and 34% paid in cash. Specifically, each share of CHP common stock was converted into $2.32 in cash and 0.1318 shares of Sonida common stock, which was determined by dividing (a) $4.58 by (b) the volume weighted average price (“VWAP”) of Sonida common stock during a measurement period prior to closing of the transaction was $35.93 and subject to a collar of 15% below the transaction reference price for the Sonida common stock of $26.74 (the “Transaction Reference Price”) and 30% above the Transaction Reference Price.

In addition, to provide cash funding for the CHP Merger, entities affiliated with Conversant Capital, LLC and Silk Partners LP, two of the Company’s largest shareholders, funded an aggregate amount of $110.0 million, less $1.2 million in issuance costs, in exchange for the issuance of 4,113,688 of Sonida Common Stock on March 11, 2026 in a private placement pursuant to Section 4(a)(2) of the Securities Act at a price per share equal to the Transaction Reference Price of $26.74, in accordance with certain investment agreements. The remainder of the cash consideration was funded with cash from the balance sheets of the Company and CHP along with debt financing as described below.

See “Note 2–CHP Merger” in the Notes to Condensed Consolidated Financial Statements for additional information.

We expect our 2026 results of operations to be materially impacted by the CHP Merger as a result of acquiring 69 senior housing communities.

Financial and Operational Highlights

Operations

For the three months ended March 31, 2026, the Company generated resident revenue of $108.4 million compared to resident revenue of $79.3 million for the three months ended March 31, 2025, representing an increase of 36.7%. The increase in revenue was primarily due to 54 additional SHOP communities acquired in the CHP Merger, 3 SHOP communities acquired in 2025, increased average rent rates, and increased occupancy.

Operating Leases

As of March 31, 2026, the Company owned 15 senior housing properties that were leased to third-party tenants under triple-net operating leases that it acquired as part of the CHP Merger. The operating leases generated $1.7 million of rental income for the three months ended March 31, 2026. Under the terms of the Company’s triple-net lease agreements, each tenant is responsible for the payment of property taxes, general liability insurance, utilities, repairs and maintenance, including structural and roof maintenance expenses. Each tenant is expected to pay real estate taxes directly to the taxing authorities and, therefore, such amounts are not included in the Company’s consolidated financial statements. Sonida is not involved in the property management.

Management Services

The Company has property management agreements with third parties and its joint ventures pursuant to which the Company manages certain communities on their behalf for a management fee based on gross revenues of the applicable communities, as well as, in some cases, an incentive management fee, and other customary terms and conditions. The Company managed 12 communities and 13 communities on behalf of a third party for the three months ended March 31, 2026 and 2025, respectively. The Company also managed four communities on behalf of an unconsolidated joint venture and four communities in consolidated joint ventures for the three months ended March 31, 2026.

Investment in Consolidated VIE

On March 31, 2026, the Company purchased the 49% membership interest of its minority partner PAL SSL Decatur JV, LLC which owns a community in Georgia. Total purchase price for the remaining minority interest was $3.8 million, which includes the assumption of the outstanding mortgage as of the purchase price date. The community is now a wholly-owned subsidiary of the Company. Prior to March 31, 2026, the Company managed four communities owned by subsidiaries of Palatine Capital Partners (“Palatine”) through two joint ventures under a management agreement and also provided reporting services for the joint ventures. The Company will now manage three communities for the remaining Palatine joint venture.

Assets and Liabilities Held for Sale

As of March 31, 2026, the Company classified one of its communities as held for sale in its condensed consolidated balance sheets in accordance with ASC 360, following management’s decision to divest the property and actively market it for sale. The community did not meet the criteria for classification as a discontinued operation under ASC 205-20, as the sale does not represent a strategic shift that has or will have a major effect on the Company’s operations and financial results. See “Note 4–Investments, Acquisitions and Assets Held for Sale” in the Notes to Condensed Consolidated Financial Statements. In April 2026, the Company entered into a non-binding asset purchase agreement to dispose of the community.

Recent Financing

Senior Secured Revolving Credit Facility

As of March 31, 2026, the Company has an amended and restated revolving credit facility (the “Revolving Credit Facility”) which was used to fund a portion of the cash consideration necessary for the CHP Merger along with transaction costs and fund the future liquidity needs of the Company. The Revolving Credit Facility increased the available commitments to $430.0 million, extended the maturity to March 10, 2030, reduced the leverage-based pricing matrix to between SOFR plus 1.35% margin and SOFR plus 2.00% margin, expanded the participating lenders, and effected certain other change. See “Note 2–CHP Merger” in the Notes to condensed consolidated financial statements.

As of March 31, 2026, the Company has $270.0 million of borrowings outstanding under the Revolving Credit Facility at a weighted average interest rate of 6.0%, which was secured by 83 of the Company's senior living communities. See “Note 8–

Debt” in the Notes to condensed consolidated financial statements. See “Note 18–Subsequent Events” in the Notes to condensed consolidated financial statements.

Secured Term Loans

During the three months ended on March 31, 2026, the Company incurred $550.0 million in permanent term loans in two equal tranches (the “Term Loans”) to fund a portion of the cash consideration necessary for the CHP Merger. The Term Loans are comprised of a three-year tranche that matures March 10, 2029 and a five-year tranche that matures March 10, 2031. The Term Loans are subject to a leverage-based pricing matrix between SOFR plus 1.30% margin and SOFR plus 1.95% margin, and is otherwise subject to the same guarantees and security provisions, events of default, corporate covenants and borrowing base availability requirements of the Revolving Credit Facility. The Term Loans are secured by 83 of the Company's senior living communities. The Company entered into a SOFR-based interest rate cap (“IRC”) to reduce exposure to the variable interest rate fluctuations associated with the Term Loans. The IRC has a total cost of $0.6 million, an aggregate notional amount of $262.5 million, a 36-month term and a SOFR-based interest rate cap of 4.50%. See “Note 8–Debt” and “Note 18–Subsequent Events” in the Notes to condensed consolidated financial statements.

Secured Bridge Facility

In order to fund the remaining portion of the CHP Merger, the Company obtained a 364-day senior secured bridge facility (the “Bridge Facility”), which was funded on March 10, 2026 under our A&R Credit Agreement. As of March 31, 2026, the outstanding balance on the Bridge Facility is $220.0 million which is secured by 83 of the Company's senior living communities. The Bridge Facility matures on March 9, 2027 and is subject to a leverage-based pricing matrix between SOFR plus 1.35% margin and SOFR plus 2.00% margin. The Company entered into a SOFR-based IRC to reduce exposure to the variable interest rate fluctuations associated with the Bridge Facility. The IRC has a total cost of $35 thousand, an aggregate notional amount of $270.0 million, a 12-month term and a SOFR-based interest rate cap of 4.25%. The Bridge Facility is subject to the same guarantees and security provisions, events of default, corporate covenants and borrowing base availability requirements as the A&R Credit Agreement. The Company intends to seek further debt financing throughout 2026 to reduce the outstanding balance in the Bridge Facility. See “Note 8–Debt” in the Notes to condensed consolidated financial statements.

Financing Update

On May 7, 2026, the Company added an incremental lender to its Revolving Credit Facility and Term Loan Facility, increasing each by $25.0 million and incurring $0.4 million in deferred loan costs. The funds were used on May 7, 2026 to repay $50.0 million of loans outstanding under our Bridge Facility. As a result of the transaction, the Term Loan Facility increased to $575.0 million in term loans in two equal tranches, the Revolving Credit Facility increased to a commitment of $455.0 million, and the Bridge Facility decreased to $170.0 million.

Application of Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements and related notes. Actual results could differ from those estimates. For a discussion of our critical accounting policies and estimates, please refer to our Annual Report on Form 10-K for the year ended December 31, 2025.

Business Combinations

For a real estate acquisition accounted for as a business combination, we allocate the acquisition consideration (excluding acquisition costs) to the assets acquired and liabilities assumed at fair value as of the acquisition date. Any excess of the consideration transferred relative to the fair value of the net assets acquired is accounted for as goodwill. Acquisition costs related to business combinations are expensed as incurred.

We make estimates as part of our process for allocating acquisition consideration to the various identifiable assets, liabilities, and noncontrolling interests based upon the relative fair value of each asset, liability, or noncontrolling interest. These fair values are determined using standard valuation methodologies, such as the cost, market, and income approach. These methodologies require various assumptions, including those of a market participant. We utilize available market information in our assessment, such as capitalization and discount rates and comparable sale transactions. The most significant components of our allocations are typically buildings as-if-vacant, land, and lease intangibles. In the case of allocating fair value to buildings and intangibles, our fair value estimates will affect the amount of depreciation and amortization we record over the estimated useful life of each asset acquired. In the case of allocating fair value to in-place leases, we make our best estimates based on our evaluation of the specific characteristics of each tenant’s lease. Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, market conditions, and costs to execute similar leases. Our assumptions affect the amount of depreciation and amortization expense that we will recognize over the remaining useful life for the acquired in-place leases.

Recent Accounting Guidance Adopted

See “Note 3–Summary of Significant Accounting Policies” in the Notes to Condensed Consolidated Financial Statements for a discussion of new accounting pronouncements and our assessment of any expected impact of these pronouncements, if known.

Results of Operations

The following discussion should be read in conjunction with our condensed consolidated financial statements and the related notes, which are included in “Item 1. Financial Statements” of this Quarterly Report on Form 10-Q. The results of operations for any particular period are not necessarily indicative of results for any future period.

We use the operating measures described below in connection with operating and managing our business and reporting our results of operations.

Same-Store/Same-Store Portfolio is defined by the Company as SHOP communities that are wholly or partially owned, and operational for the full year in each year beginning as of January 1st of the prior year. The same-store community portfolio excludes the non same-store community portfolio. Our management uses same-store community operating results and data for decision making and components of executive compensation, and we believe such results and data provide useful information to investors, because it enables comparisons of revenue, expense, and other operating measures for a consistent portfolio over time without giving effect to the impacts of communities that were not consolidated and operational for the comparison periods, communities acquired or disposed during the comparison periods (or planned for disposition).

Non Same-Store Portfolio is defined by the Company as SHOP communities that are wholly or partially owned and either (i) not operational or not owned for the full year in each year beginning as of January 1st of the prior year or (ii) have undergone or are undergoing strategic repositioning as a result of significant changes in the business model, care offerings, and/or capital re-investment plans, that in each case, have disrupted, or are expected to disrupt, normal course operations. These communities will be included in the Same-Store Community Portfolio once operating under normal course operating structures for the full year in each year beginning as of January 1st of the prior year.

**Senior Housing / Senior Housing Operating Properties (SHOP) “**Senior Housing” is defined as residential real estate assets designed to accommodate the needs of senior residents, including but not limited to independent living, assisted living, and memory care facilities. Within this category, "Senior Housing Operating Properties" (SHOP) refers exclusively to those properties in which the Company, directly or through third-party management agreements, maintains operational control and bears the associated risks and rewards of ownership, including but not limited to occupancy, revenue generation, and operating expenses. For the avoidance of doubt, this definition expressly excludes senior housing properties subject to triple net lease (“NNN”) agreements. Under such agreements, operational responsibilities, including property management, operating expenses, and financial performance, are borne solely by the lessee, and the Company’s involvement is limited to receiving fixed rental payments. As such, NNN Portfolio assets are not included within the scope of the SHOP portfolio.

NNN Portfolio is defined by the Company as wholly owned seniors housing properties that are leased to third-party tenants under triple-net or similar lease structures, where the tenant bears all or substantially all of the costs (including cost for real estate taxes, utilities, insurance and ordinary repairs). The Company is not involved in property management.

Community Operating Expense is a financial measure not calculated in accordance with GAAP. It is defined by the Company as community operating expenses excluding casualty loss, non-recurring settlement fees, non-income tax and non-property tax. Please see “—Non-GAAP Financial Measures” below for more information.

RevPAR, or average monthly revenue per available unit, is defined by the Company as resident revenue for the period, divided by the weighted average number of available units in the corresponding portfolio for the period, divided by the number of months in the period. The RevPAR calculation does not include rental income. Our management uses RevPAR for decision making and components of executive compensation, and we believe the measure provides useful information to investors, because the measure is an indicator of senior housing resident fee revenue performance that reflects the impact of both senior housing occupancy and rate.

RevPOR, or average monthly revenue per occupied unit, is defined by the Company as resident revenue for the period, divided by the weighted average number of occupied units in the corresponding portfolio for the period, divided by the number of months in the period. The RevPOR calculation does not include rental income. Our management uses RevPOR for decision making, and we believe the measure provides useful information to investors, because it reflects the average amount of resident revenue we derive from an occupied unit per month without factoring occupancy rates. RevPOR is a significant driver of our senior housing revenue performance.

Weighted Average Occupancy reflects the percentage of units at our owned communities being utilized by residents over a reporting period. We measure occupancy rates on both a consolidated community portfolio basis and a same-store community portfolio basis. Our management uses weighted average occupancy, and we believe the measure provides useful information to investors, because it is a significant driver of our resident revenue performance.

This section includes the non-GAAP performance measure Adjusted EBITDA. See “—Non-GAAP Financial Measures” below for our definition of the measure and other important information regarding such measure, including reconciliations to the most comparable measure in accordance with GAAP.

Three months ended March 31, 2026 as compared to three months ended March 31, 2025

Summary Operating Results

The following table summarizes our overall operating results for the three months ended March 31, 2026 and 2025:

(in thousands)

(1) Q1 2026 and Q1 2025 excludes casualty loss, non-recurring settlement fees, income tax and personal property tax of $1.3 million.

(2) See “Non-GAAP Financial Measures.”

The following table summarizes our segment data for the three months ended March 31, 2026 and 2025, including operating results and data for our segment portfolio.

(in thousands, except communities, units, occupancy, RevPAR, and RevPOR)

(1) Q1 2026 and Q1 2025 excludes casualty loss, non-recurring settlement fees, income tax and personal property tax of $1.3 million.

(2) Excludes four unconsolidated communities.

(3) Q1 2026 excludes unconsolidated entities and 27 non same-store consolidated communities. Q1 2025 excludes 13 non same-store consolidated communities.

The increase in resident revenue was primarily attributable to an additional 54 senior housing operating properties (“SHOP”) acquired in connection with the CHP Merger, and a 12.3% increase in same-store average rent rates, comprised of a 9.5% increase in same-store portfolio RevPOR and a 260 basis point increase in same-store weighted average occupancy.

The increase in rental income of $1.7 million was derived from the 15 triple-net senior housing communities that were acquired in connection with the CHP Merger.

The increase in community operating expense was primarily attributable to an increase in operating expenses related to the 54 additional SHOP communities acquired in 2026.

The increase in net loss was primarily attributable to the increase in transaction, transition and restructuring costs related to the CHP Merger, an increase in community operating expense, and an increase in depreciation and amortization expense, partially offset by the increase in resident fees and rental income.

The increase in Adjusted EBITDA was primarily attributable to new communities added during the year and an increase in resident fees, partially offset by the increase in community operating expense.

Expenses and Other

(in thousands)

General and administrative expense for the three months ended March 31, 2026 increased as compared to the three months ended March 31, 2025, primarily due to a result of an increase in stock-based compensation of $1.4 million combined with an increase in labor and employee related expenses of $0.8 million to support the Company’s growth initiatives, partially offset by a $0.2 million decrease in other expenses.

Transaction, transition and restructuring costs increased for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The costs incurred during the three months ended March 31, 2026 primarily include legal, audit, banking and other costs to support the Company’s recent debt and restructuring activities in connection with the CHP Merger.

Other income (expense), net for the three months ended March 31, 2026 increased as compared to the three months ended March 31, 2025, primarily driven by $0.6 million in other income for recognized gross employee retention credits received from Coronavirus Aid, Relief, and Economic Security Act funding for businesses that had certain employee costs and were affected by the coronavirus pandemic.

Liquidity and Capital Resources

In addition to approximately $84.3 million of unrestricted cash as of March 31, 2026, our future liquidity will depend in part upon our operating performance, which will be affected by prevailing economic conditions, and financial, business and other factors, some of which are beyond our control. Principal sources of liquidity are expected to be cash flows from operations, proceeds from our A&R Credit Agreement, proceeds from debt financings, refinancings or loan modifications, and proceeds from equity offerings. These transactions are expected to provide additional financial flexibility to us and increase our liquidity position. On March 11, 2026, the holders of all of the outstanding shares of Series A Preferred Stock converted all of such shares to shares of our common stock. As a result, dividends will no longer be payable on any shares of Series A Preferred

Stock. See “Note 2–CHP Merger”, “Note 8–Debt”, and “Note 9–Securities Financing” in the Notes to Consolidated Financial Statements.

The Company, from time to time, considers and evaluates financial and capital raising transactions related to its portfolio, including debt financings and refinancings, purchases and sales of assets, equity offerings and other transactions. There can be no assurance that the Company will continue to generate cash flows at or above current levels, or that the Company will be able to obtain the capital necessary to meet the Company’s short- and long-term capital requirements.

On May 7, 2026, the Company added an incremental lender to its Revolving Credit Facility and Term Loan Facility, increasing each by $25.0 million and incurring $0.4 million in deferred loan costs. The funds were used on May 7, 2026 to repay $50.0 million of loans outstanding under our Bridge Facility. As a result of the transaction, the Term Loans increased to $575.0 million in term loans in two equal tranches, the Revolving Credit Facility increased to a commitment of $455.0 million, and the Bridge Facility decreased to $170.0 million.

We will need to refinance all or a portion of our indebtedness on or before maturity, including the $170.0 million Bridge Facility (inclusive of the May 7, 2026 financing described above) that will mature in March 2027. We expect to repay the Bridge Facility in 2026 with the net proceeds of additional financing transactions secured by certain of the CHP properties, including any property-level agency or mortgage financing. We cannot assure you that we will be able to refinance any of our indebtedness on attractive terms on or before maturity or on commercially reasonable terms or at all.

Recent changes in the current economic environment, and other future changes, could result in decreases in the fair value of assets, slowing of transactions, and the tightening of liquidity and credit markets. These impacts could make securing debt or refinancings for the Company or buyers of the Company’s properties more difficult or on terms not acceptable to the Company. The Company’s actual liquidity and capital funding requirements depend on numerous factors, including its operating results, its capital expenditures for community investment, and general economic conditions, as well as other factors described in “Item 1A. Risk Factors” of our 2025 Annual Report on Form 10-K filed with the SEC on March 12, 2026.

In summary, the Company’s cash flows were as follows (in thousands):

Operating activities

Net cash used in operating activities for the three months ended March 31, 2026 was $35.9 million as compared to net cash provided by operating activities of $3.8 million for the three months ended March 31, 2025. The change of $39.7 million was primarily due to the net loss inclusive of the transaction costs associated with the CHP Merger and the change in deferred resident revenue during the three months ended March 31, 2026 compared to the prior year period.

Investing activities

Net cash used in investing activities for the three months ended March 31, 2026 was $923.3 million, which was primarily due to the acquisition of the CHP communities, net of cash acquired, for $913 million, $6.8 million in ongoing capital improvements, and the acquisition of the non-controlling interest of a joint-venture for $3.6 million. Net cash used in investing activities for the three months ended March 31, 2025 of $7.9 million was primarily due to $8.3 million in ongoing capital improvements, partially offset by a return of investment of $0.4 million in our unconsolidated entity. See “Note 2–CHP Merger”.

Financing activities

Net cash provided by financing activities for the three months ended March 31, 2026 was $1,029.2 million primarily due to proceeds from issuance of new debt related to the CHP Merger of $1,102.5 million, which includes the Term Loan Facility of $550.0 million, the Bridge Facility of $270.0 million and additional borrowings under the Revolving Credit Facility of $282.5 million. Additionally, in connection with the CHP merger, the Company completed the private placement of Sonida common stock for $108.8 million of consideration. The consideration was used to fund a portion of the cash consideration required for the CHP Merger and fund transaction costs. See “Note 2–CHP Merger”. The proceeds were partially offset by repayments on the Credit Facility of $107.6 million, repayment on the Bridge Facility of $50.0 million, repayments on outstanding mortgages of $1.4 million, deferred financing costs paid of $15.2 million, Series A convertible preferred conversions of $5.1 million, preferred dividends paid of $1.1 million, and interest rate cap purchase premiums paid of $1.2 million. The net cash used in financing activities for the three months ended March 31, 2025 was $2.5 million primarily due to repayments of notes payable of $0.9 million, and preferred dividends paid of $1.4 million. See “Note 18–Subsequent Events” in the Notes to Consolidated Financial Statements.

Non-GAAP Financial Measures

Community Net Operating Income and Net Operating Income Margin

Community Net Operating Income and Net Operating Income Margin are non-GAAP performance measures that the Company defines as net income (loss) excluding: general and administrative expenses (inclusive of stock-based compensation expense), interest income, interest expense, other income (expense), provision for income taxes, management fees, and further adjusted to exclude income/expense associated with non-cash, non-operational, transactional, or organizational restructuring items that management does not consider as part of the Company’s underlying core operating performance and that management believes impact the comparability of performance between periods. For the periods presented herein, such other items include depreciation and amortization expense, transaction, transition and restructuring costs, loss from equity method investment, casualty loss, non-recurring settlement fees, non-income tax, and non-property tax. Net Operating Income Margin is calculated by dividing Net Operating Income by resident revenue. The Company presents these non-GAAP measures on a consolidated community and same-store community basis.

The following table presents a reconciliation of the Non-GAAP Financial Measures of Net Operating Income and Net Operating Income Margin, in each case, on a consolidated community and same-store community basis to the most directly comparable GAAP financial measure of net income (loss) for the periods indicated:

(Dollars in thousands)

(1) Q1 2026 excludes 27 non same-store consolidated communities. Q1 2025 excludes 13 non same-store consolidated communities.

(2) Includes casualty loss, non-recurring settlement fees, income tax and personal property tax.

(3) Q1 2026 excludes 15 senior living communities acquired in 2026 that are leased to third-party tenants.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP performance measure that the Company defines as net income (loss) excluding: depreciation and amortization expense, interest income, interest expense, other expense/income, provision for income taxes; and further adjusted to exclude income/expense associated with non-cash, non-operational, transactional, or organizational restructuring items that management does not consider as part of the Company’s underlying core operating performance and that management believes impact the comparability of performance between periods. For the periods presented herein, such other items include stock-based compensation expense, provision for credit losses, casualty losses, and transaction, transition and restructuring costs.

The following table presents a reconciliation of the non-GAAP financial measures of adjusted EBITDA to the most directly comparable GAAP financial measure of net income (loss) for the periods indicated:

(In thousands)

(1) Casualty losses relate to non-recurring insured claims for unexpected events.

(2) Transaction, transition and restructuring costs relate to legal and professional fees incurred for transactions, restructuring projects, or related projects, including the CHP transaction.

Effectiveness of Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The Company’s disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to the Company’s management, including the CEO and CFO as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer each concluded that, as of March 31, 2026, our disclosure controls and procedures were effective.

Changes in Internal Controls over Financial Reporting

There were no changes during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to the risk factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025.