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What changed in SONIDA SENIOR LIVING, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of SONIDA SENIOR LIVING, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+364 added−355 removedSource: 10-K (2025-03-17) vs 10-K (2024-03-27)

Top changes in SONIDA SENIOR LIVING, INC.'s 2024 10-K

364 paragraphs added · 355 removed · 216 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

60 edited+10 added−44 removed102 unchanged
Biggest changeJoseph, MO 103 22 71 10 103 100 % 05/13 Waterford at Baytown Baytown, TX 127 25 72 42 139 100 % 03/15 Waterford at Carpenter’s Creek Pensacola, FL 94 — 94 — 94 100 % 02/16 Waterford at Colby Colby, TX 44 — 40 17 57 100 % 01/16 Waterford at College Station College Station, TX 53 — 39 17 56 100 % 03/12 Waterford at Corpus Christi Corpus Christi, TX 52 — 52 — 52 100 % 10/12 Waterford at Creekside Pensacola, FL 84 — — 97 97 100 % 02/16 Waterford at Fairfield Fairfield, OH 120 144 — — 144 100 % 11/00 Waterford at Fitchburg Fitchburg, WI 82 44 39 — 83 100 % 10/13 Waterford at Fort Worth Fort Worth, TX 154 154 — — 154 100 % 06/00 Waterford at Hartford Hartford, WI 39 — 34 21 55 100 % 05/15 Waterford at Highland Colony Jackson, MS 120 120 — — 120 100 % 11/00 Waterford at Ironbridge Springfield, MO 120 120 — — 120 100 % 06/01 Waterford at Levis Commons Toledo, OH 146 83 92 — 175 100 % 04/09 Waterford at Mansfield Mansfield, OH 120 — 117 26 143 100 % 10/00 Waterford at Mesquite Mesquite, TX 154 154 — — 154 100 % 09/99 Waterford at Park Falls Park Falls, WI 36 — 25 12 37 100 % 01/16 Waterford at Plano Plano, TX 136 91 45 — 136 100 % 12/00 Waterford at Plymouth Plymouth, WI 69 15 41 22 78 100 % 08/14 Waterford at Thousand Oaks San Antonio, TX 121 138 — — 138 100 % 05/00 Waterford at Virginia Beach Virginia Beach, VA 110 — 85 35 120 100 % 10/15 Waterford at West Bend West Bend, WI 40 — 20 20 40 100 % 05/15 Waterford at Wisconsin Rapids Wisconsin Rapids, WI 58 — 40 18 58 100 % 01/16 Waterford on Cooper Arlington, TX 98 — 81 28 109 100 % 03/12 9 Table of Contents Resident Capacity Commencement Community Location Units IL AL MC Total Ownership of Operations 1 Waterford on Huebner San Antonio, TX 120 121 — — 121 100 % 04/99 Wellington at Arapaho Richardson, TX 142 99 45 — 144 100 % 05/02 Wellington at Conroe Conroe, TX 44 36 20 — 56 100 % 03/12 Wellington at Dayton Dayton, OH 156 101 37 18 156 100 % 08/08 Wellington at North Bend Crossing Cincinnati, OH 122 54 70 15 139 100 % 11/16 Wellington at North Richland Hills North Richland Hills, TX 119 119 — — 119 100 % 01/02 Wellington at Southport Indianapolis, IN 64 — 51 14 65 100 % 10/12 Wellington at Springfield Springfield, MA 189 97 144 38 279 100 % 09/16 Whispering Pines Village Columbiana, OH 69 24 57 — 81 100 % 07/15 Woodlands of Columbus Columbus, OH 111 — 80 34 114 100 % 10/12 Woodlands of Hamilton Hamilton, OH 77 — 57 28 85 100 % 10/12 Wynnfield Crossing Rochester, IN 51 — 51 — 51 100 % 07/11 Total owned (61 Communities) 5,815 2,497 3,089 964 6,550 Managed: Amberleigh Buffalo, NY 267 201 49 17 267 N/A 01/92 Crown Pointe Omaha, NE 138 41 78 22 141 N/A 08/00 Independence Village of East Lansing East Lansing, MI 146 146 — — 146 N/A 08/00 Independence Village of Olde Raleigh Raleigh, NC 170 181 — — 181 N/A 08/00 Villa Santa Barbara Santa Barbara, CA 125 — 125 — 125 N/A 08/00 West Shores Hot Springs, AR 135 45 91 — 136 N/A 08/00 Whitley Place Keller, TX 47 — 27 20 47 N/A 02/08 Willow Grove Maumelle Maumelle, AR 54 — 37 17 54 N/A 12/21 Southern Meadows Senior Living Mountain Home, AR 57 — 57 — 57 N/A 12/21 Willow Grove Sherwood Sherwood, AR 57 — 57 — 57 N/A 12/21 Total managed (10 Communities) 1,196 614 521 76 1,211 Total 7,011 3,111 3,610 1,040 7,761 _____________________________________________ (1) Indicates the date on which we acquired or commenced operating the community.
Biggest changeJoseph, MO 103 22 64 17 103 100 % 05/13 Waterford at Baytown Baytown, TX 127 49 48 42 139 100 % 03/15 Waterford at Carpenter’s Creek Pensacola, FL 94 — 94 — 94 100 % 02/16 Waterford at Colby Colby, TX 44 — 40 17 57 100 % 01/16 Waterford at College Station College Station, TX 53 — 39 17 56 100 % 03/12 Waterford at Corpus Christi Corpus Christi, TX 52 — 52 — 52 100 % 10/12 Waterford at Creekside Pensacola, FL 84 — — 97 97 100 % 02/16 Waterford at Fairfield Fairfield, OH 120 144 — — 144 100 % 11/00 Waterford at Fitchburg Fitchburg, WI 82 38 45 — 83 100 % 10/13 Waterford at Fort Worth Fort Worth, TX 154 154 — — 154 100 % 06/00 Waterford at Hartford Hartford, WI 39 — 34 21 55 100 % 05/15 Waterford at Highland Colony Jackson, MS 120 120 — — 120 100 % 11/00 Waterford at Ironbridge Springfield, MO 120 120 — — 120 100 % 06/01 Waterford at Levis Commons Toledo, OH 146 71 93 12 176 100 % 04/09 Waterford at Mansfield Mansfield, OH 120 — 117 26 143 100 % 10/00 Waterford at Mesquite Mesquite, TX 154 154 — — 154 100 % 09/99 Waterford at Park Falls Park Falls, WI 36 — 25 12 37 100 % 01/16 Waterford at Plano Plano, TX 136 91 45 — 136 100 % 12/00 Waterford at Plymouth Plymouth, WI 69 20 29 20 69 100 % 08/14 Waterford at Thousand Oaks San Antonio, TX 121 138 — — 138 100 % 05/00 Waterford at Virginia Beach Virginia Beach, VA 110 — 85 35 120 100 % 10/15 Waterford at West Bend West Bend, WI 40 — 20 20 40 100 % 05/15 Waterford at Wisconsin Rapids Wisconsin Rapids, WI 58 — 40 18 58 100 % 01/16 Waterford on Cooper Arlington, TX 98 — 81 28 109 100 % 03/12 Waterford on Huebner San Antonio, TX 120 121 — — 121 100 % 04/99 Wellington at Arapaho Richardson, TX 142 99 45 — 144 100 % 05/02 Wellington at Conroe Conroe, TX 44 36 20 — 56 100 % 03/12 Wellington at Dayton Dayton, OH 156 101 37 18 156 100 % 08/08 Wellington at North Bend Crossing- Hilltop Cincinnati, OH 122 54 70 15 139 100 % 11/16 Wellington at North Bend Crossing- Vista (2) Cincinnati, OH 82 — 50 32 82 100 % 12/24 Wellington at North Richland Hills North Richland Hills, TX 120 120 — — 120 100 % 01/02 Wellington at Southport Indianapolis, IN 64 — 51 14 65 100 % 10/12 7 Table of Contents Resident Capacity Commencement Community Location Units IL AL MC Total Ownership of Operations 1 Wellington at Springfield Springfield, MA 189 97 144 38 279 100 % 09/16 Whispering Pines Village (3) Columbiana, OH 69 24 57 — 81 100 % 07/15 Woodlands of Columbus Columbus, OH 111 — 80 34 114 100 % 10/12 Woodlands of Hamilton Hamilton, OH 77 — 57 28 85 100 % 10/12 Wynnfield Crossing Rochester, IN 51 — 51 — 51 100 % 07/11 Ashton at Mayfield Heights Mayfield Heights, OH 192 99 61 32 192 33 % 05/24 Ashton at Anderson Cincinnati, OH 94 — 60 34 94 33 % 05/24 Ashton on Dorsey Louisville, KY 95 — 53 43 96 33 % 05/24 Ashton on the Plaza Kansas City, MO 89 — 64 28 92 33 % 05/24 Waterford at Shavano Park San Antonio, TX 79 — 62 17 79 51 % 07/24 Waterford at Westover Hills San Antonio, TX 84 — 58 48 106 51 % 07/24 Waterford at Round Rock Round Rock, TX 100 — 70 34 104 51 % 07/24 Waterford at Decatur Decatur, GA 62 — — 70 70 51 % 07/24 Total owned (81 Communities) 7,526 2,617 4,162 1,700 8,479 Managed: Amberleigh Buffalo, NY 267 201 49 17 267 N/A 01/92 Crown Pointe Omaha, NE 138 41 78 22 141 N/A 08/00 Independence Village of East Lansing East Lansing, MI 146 146 — — 146 N/A 08/00 Independence Village of Olde Raleigh Raleigh, NC 170 181 — — 181 N/A 08/00 Lodge at White Bear White Bear Lake, MN 117 120 — — 120 N/A 06/24 Middleton Crossing Middleton, WI 117 117 — — 117 N/A 08/24 Oakwood Hills Eau Claire, WI 116 119 — — 119 N/A 06/24 Southern Meadows Senior Living Mountain Home, AR 57 — 57 — 57 N/A 12/21 Villa Santa Barbara Santa Barbara, CA 125 — 125 — 125 N/A 08/00 West Shores Hot Springs, AR 135 56 80 — 136 N/A 08/00 Whitley Place Keller, TX 47 — 27 20 47 N/A 02/08 Willow Grove Maumelle Maumelle, AR 54 — 37 17 54 N/A 12/21 Willow Grove Sherwood Sherwood, AR 57 — 57 — 57 N/A 12/21 Total managed (13 Communities) 1,546 981 510 76 1,567 Total 9,072 3,598 4,672 1,776 10,046 _____________________________________________ (1) Indicates the date on which we acquired or commenced operating the community.
In addition, third-party payors are increasingly becoming involved in determining the appropriate health care settings for their insureds or clients, based primarily on cost and quality of care. Senior Living Services We provide senior living services to residents aged 75 and greater, including independent living, assisted living, and memory care services.
In addition, third-party payors are increasingly becoming involved in determining the appropriate health care settings for their insureds or clients, based primarily on cost and quality of care. Senior Living Services We provide senior living services primarily to residents aged 75 and greater, including independent living, assisted living, and memory care services.
Each Sales Director’s effectiveness and productivity are monitored on a weekly basis. Their compensation is comprised of a variable component tied into both occupancy and rate benchmarks. A centralized team of sales and marketing resources support communities by developing marketing strategies and campaigns to address the continuously changing resident profile, build brand awareness, increase digital traffic and leads.
Each Sales Director’s effectiveness and productivity are monitored on a weekly basis. Their compensation is comprised of a variable component tied into both occupancy and rate benchmarks. A centralized team of sales and marketing resources support communities by developing marketing strategies and campaigns to address the continuously changing resident profile, build brand awareness, and increase digital traffic and leads.
For seniors who require limited services, independent living residences, supplemented at times by home health care, offers a viable option. Most independent living communities typically offer community living packaged with basic services consisting of meals, housekeeping, laundry, 24-hour staffing, transportation, social and recreational activities and health care monitoring.
For seniors who require limited services, independent living residences, supplemented at times by home health care, offers a viable option. Most independent living communities typically offer community living packaged with basic services consisting of meals, housekeeping, laundry, 24-hour community staffing, transportation, and social and recreational activities.
State Medicaid Fraud and Abuse Units may also investigate assisted living communities even if the community or any of our residents do not receive federal or state funds. Under the Americans with Disabilities Act of 1990, all places of public accommodation are required to meet certain federal requirements related to access and use by disabled persons.
State Medicaid Fraud and Abuse Units may also investigate assisted living communities even if the community or any of our residents do not receive federal or state funds. Under the Americans with Disabilities Act of 1990, as amended, all places of public accommodation are required to meet certain federal requirements related to access and use by disabled persons.
Further legislation may impose additional burdens or restrictions with respect to access by disabled persons and the costs of compliance could be substantial. The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), in conjunction with the federal regulations promulgated thereunder by the U.S.
Further legislation may impose additional burdens or restrictions with respect to access by disabled persons and the costs of compliance could be substantial. The Health Insurance Portability and Accountability Act of 1996, as amended (“HIPAA”), in conjunction with the federal regulations promulgated thereunder by the U.S.
Independent Living Services We provide independent living services to seniors who typically do not yet need assistance or support with ADLs, but who prefer the physical and psychological comfort of a residential community that offers health care and other services. Independent living services provided by us include daily meals, transportation, social and recreational activities, laundry, housekeeping and 24-hour staffing.
Independent Living Services We provide independent living services to seniors who typically do not yet need assistance or support with ADLs, but who prefer the physical and psychological comfort of a residential community that offers health care and other services. 4 Table of Contents Independent living services provided by us include daily meals, transportation, social and recreational activities, laundry, housekeeping and 24-hour community staffing.
Under various U.S. federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or petroleum product releases at or migrating from such property and may be held liable to a governmental entity or to third parties for property damage and for investigation and clean-up costs.
Under various U.S. federal, state, and local environmental laws, ordinances and regulations, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or petroleum product releases at or migrating from such property and may be held liable to a governmental entity or to third parties for property 12 Table of Contents damage and for investigation and clean-up costs.
Failure by us to comply with any applicable regulatory requirements could have a material adverse effect on our business, financial condition and results of operations. Regulation of the assisted living industry is also continually evolving, and we are unable to predict the scope, content or stringency of new regulations and their ultimate effect on our business.
Failure by us to comply with any 11 Table of Contents applicable regulatory requirements could have a material adverse effect on our business, financial condition and results of operations. Regulation of the assisted living industry is also continually evolving, and we are unable to predict the scope, content or stringency of new regulations and their ultimate effect on our business.
Independent living residents typically are not reliant on assistance with activities of daily living (“ADLs”), although some residents may utilize outside vendors for those services. As a senior’s need for assistance increases, care in an assisted living residence is often preferable and more cost-effective than home-based care or nursing home care.
Independent living residents typically are not reliant on assistance with activities of daily living (“ADLs”), although some residents may utilize outside vendors for certain ADL services. As a senior’s need for assistance increases, care in an assisted living residence is often preferable and more cost-effective than home-based care or nursing home care.
We have completed 14 Table of Contents Phase I environmental audits of substantially all of the communities in which we own interests, typically at the time of acquisition or refinancing, and such audits have not revealed as of the date of this Annual Report on Form 10-K any material environmental liabilities that exist with respect to these communities.
We have completed Phase I environmental audits of substantially all of the communities in which we own interests, typically at the time of acquisition or refinancing, and such audits have not revealed as of the date of this Annual Report on Form 10-K any material environmental liabilities that exist with respect to these communities.
In addition, we make certain customized physician, dentistry, podiatry and other health-related rehabilitation and therapy services available to our residents through third-party providers. Operating Communities The table below sets forth certain information with respect to the senior housing communities we operated as of December 31, 2023.
In addition, we may make certain customized physician, dentistry, podiatry and other health-related rehabilitation and therapy services available to our residents through third-party providers. Operating Communities The table below sets forth certain information with respect to the senior housing communities we operated as of December 31, 2024.
Others may offer higher levels of personal assistance for residents with chronic diseases and conditions or memory care services for residents with Alzheimer’s disease or other cognitive frailties. Generally, assisted living residents require higher levels of care than residents of independent living residences but require lower levels of care than 5 Table of Contents residents in skilled nursing facilities.
Others may offer higher levels of personal assistance for residents with chronic diseases and conditions or memory care services for residents with Alzheimer’s disease or other cognitive frailties. Generally, assisted living residents require higher levels of care than residents of independent living residences but require lower levels of care than residents in skilled nursing facilities.
On a routine basis, residents and their family members provide us with valuable input regarding the day-to-day delivery of services. On-site management at each community has fostered and 12 Table of Contents encouraged active resident councils and resident committees who meet independently.
On a routine basis, residents and their family members provide us with valuable input regarding the day-to-day delivery of services. On-site management at each community has fostered and encouraged active resident councils and resident committees who meet independently.
Community expenditures are monitored by territory directors and vice presidents who are accountable for the resident satisfaction and financial performance of the communities in their territory. 11 Table of Contents Territory Management We provide oversight and support to each of our senior housing communities through experienced regional directors and vice presidents.
Community expenditures are monitored by territory directors and vice presidents who are accountable for the resident satisfaction and financial performance of the communities in their territory. Territory Management We provide oversight and support to each of our senior housing communities through experienced regional directors and vice presidents.
Our target population is comprised of middle market seniors who have, either directly or indirectly through familial support, the financial resources to afford and pay for senior housing communities, including an assisted living alternative to traditional long-term care. Reduced Reliance on Family Care Historically, the family has been the primary provider of care for seniors.
Our target population is comprised of high income seniors who have, either directly or indirectly through familial support, the financial resources to afford and pay for senior housing communities, including an assisted living alternative to traditional long-term care. Reduced Reliance on Family Care Historically, the family has been the primary provider of care for seniors.
Our Dallas Support Center is generally responsible for: (i) establishing Company-wide policies and procedures relating to, among other things, resident care and operations; (ii) performing accounting and legal related functions; (iii) developing employee training programs and materials; (iv) coordinating human resources; (v) coordinating marketing functions; and (vi) providing strategic direction.
Our Dallas Support Center is generally responsible for: (i) establishing Company-wide policies and procedures relating to, among other things, resident care and operations; (ii) performing accounting and legal related functions; (iii) developing employee training programs and materials; (iv) coordinating human resources; (v) coordinating marketing functions; (vi) providing strategic direction; and (vii) providing capital allocation and financing.
Therapy Programs We partner with leading wellness and therapy providers to offer residents onsite access to specialized and tailored programs with the best care for their health. Our therapy programs encompass preventive and restorative services that are provided conveniently through on-site visits and programs.
Therapy Programs We partner with leading wellness and therapy providers to offer residents on-site access to specialized and tailored programs with the best care for their health. These therapy programs encompass preventive and restorative services that are provided conveniently through on-site visits and programs.
Our operating strategy includes the following core principles: 10 Table of Contents Provide a Broad Range of Quality Personalized Care Central to our operating strategy is our focus on providing quality care and services that are personalized and tailored to meet the individual needs of each community resident.
Our operating strategy includes the following core principles: Provide a Broad Range of Quality Personalized Care Central to our operating strategy is our focus on providing quality care and services that are personalized and tailored to meet the individual needs of each community resident.
We are subject to U.S. federal and state laws, regulations, and executive orders relating to healthcare providers’ response to the COVID-19 pandemic, which vary based on provider type and jurisdiction, but generally include mandatory requirements for testing of residents and staff, implementation of infection control standards and procedures, restrictions on new admissions or readmissions of residents, required screening of all persons entering a community, restrictions and/or limitations on who may visit residents and how residents may be visited and mandatory notification requirements to residents, families, staff and regulatory bodies related to positive COVID-19 cases.
We are subject to U.S. federal and state laws, regulations, and executive orders relating to healthcare providers’ response to pandemics, which vary based on provider type and jurisdiction, but generally include mandatory requirements for testing of residents and staff, implementation of infection control standards and procedures, restrictions on new admissions or readmissions of residents, required screening of all persons entering a community, restrictions and/or limitations on who may visit residents and how residents may be visited and mandatory notification requirements to residents, families, staff and regulatory bodies related to positive coronavirus cases.
We believe that, as one of the nation’s leading owner-operators, we have the scale and resources needed to provide the required comprehensive range of senior living services designed to permit our residents to “age in place” within our communities as residents develop further physical or cognitive frailties, whereas smaller providers do not.
We believe that, as one of the nation’s leading owners, operators, and investors in senior housing communities, we have the scale and resources needed to provide the required comprehensive range of senior living services designed to permit our residents to “age in place” within our communities as residents develop further physical or cognitive frailties, whereas smaller providers do not.
Our residences and services are designed to provide a broad range of care that permits residents to thrive and “age in place” as their needs change and as they develop further physical or cognitive frailties.
Our residences and services are designed to provide a broad range of care that permits residents to thrive and “age in place” as their needs change and as they develop further physical or cognitive 8 Table of Contents frailties.
These services include extra transportation services, personal maintenance, extra laundry services and special care services, such as services for residents with certain forms of dementia.
These services include extra transportation services, personal maintenance, extra laundry services and special care services, such as services for residents with certain forms of dementia. Certain of these services require extra charges.
These resident bodies meet with on-site management on a monthly basis to offer input and suggestions as to the quality and delivery of services. In 2022, we implemented a resident and family satisfaction survey in each of our communities.
These resident bodies meet with on-site management on a monthly basis to offer input and suggestions as to the quality and delivery of services. We conduct a resident and family satisfaction survey in each of our communities.
Resident Capacity Commencement Community Location Units IL AL MC Total Ownership of Operations 1 Owned: Aspen Grove Lambertville, MI 79 — 44 41 85 100 % 03/14 8 Table of Contents Resident Capacity Commencement Community Location Units IL AL MC Total Ownership of Operations 1 Autumn Glen Greencastle, IN 50 — 58 — 58 100 % 06/13 Brookview Meadows Green Bay, WI 79 43 37 — 80 100 % 01/15 Chateau of Batesville Batesville, IN 41 — 43 — 43 100 % 10/12 Cottonwood Village Cottonwood, AZ 160 75 64 21 160 100 % 03/91 Country Charm Greenwood, IN 89 — 166 — 166 100 % 10/12 Courtyards at Lake Granbury Granbury, TX 82 — 73 18 91 100 % 03/12 Georgetowne Place Fort Wayne, IN 172 15 144 14 173 100 % 10/05 Good Tree Retirement and Memories Stephenville, TX 59 40 31 8 79 100 % 03/12 Greenbriar Village Indianapolis, IN 105 — 82 43 125 100 % 08/15 Harrison at Eagle Valley Indianapolis, IN 119 — 105 14 119 100 % 03/91 Heritage at the Plains Oneonta, NY 108 94 28 16 138 100 % 05/15 Keystone Woods Assisted Living Anderson, IN 59 — 61 — 61 100 % 07/11 Laurel Hurst Laurel Woods Columbus, NC 80 70 48 32 150 100 % 10/11 Marquis Place of Elkhorn Elkhorn, NE 63 — 43 23 66 100 % 03/13 North Pointe Anderson, SC 41 — 58 24 82 100 % 10/11 Oaks at Brownsburg Brownsburg, IN 97 98 — — 98 100 % 02/22 Oaks at Plainfield Plainfield, IN 60 61 — — 61 100 % 02/22 Riverbend Jeffersonville, IN 97 — 65 48 113 100 % 03/12 Remington at Valley Ranch Irving, TX 128 128 — — 128 100 % 04/12 Residence of Chardon Chardon, OH 42 — 42 — 42 100 % 10/12 Rose Arbor Maple Grove, MN 138 27 76 42 145 100 % 06/06 Rosemont Humble, TX 96 — 79 48 127 100 % 09/16 Summit Place Anderson, SC 76 17 72 48 137 100 % 10/11 Summit Point Living Macedonia, OH 151 68 71 12 151 100 % 08/11 Vintage Gardens St.
Augustine, FL 61 — 40 32 72 100 % 10/24 Addison of West Ashley Charleston, SC 73 — 45 42 87 100 % 10/24 Aspen Grove Lambertville, MI 79 — 44 41 85 100 % 03/14 Autumn Glen Greencastle, IN 50 — 58 — 58 100 % 06/13 Brookview Meadows Green Bay, WI 79 43 37 — 80 100 % 01/15 Chateau of Batesville Batesville, IN 41 — 43 — 43 100 % 10/12 Cottonwood Village Cottonwood, AZ 160 72 67 21 160 100 % 03/91 Country Charm Greenwood, IN 89 — 166 — 166 100 % 10/12 Courtyards at Lake Granbury Granbury, TX 82 — 73 18 91 100 % 03/12 Georgetowne Place Fort Wayne, IN 172 15 144 14 173 100 % 10/05 Good Tree Retirement and Memories Stephenville, TX 59 40 31 8 79 100 % 03/12 Greenbriar Village Indianapolis, IN 105 — 82 43 125 100 % 08/15 Harrison at Eagle Valley Indianapolis, IN 119 — 105 14 119 100 % 03/91 6 Table of Contents Resident Capacity Commencement Community Location Units IL AL MC Total Ownership of Operations 1 Heritage at the Plains Oneonta, NY 108 94 28 16 138 100 % 05/15 Keystone Woods Assisted Living Anderson, IN 59 — 61 — 61 100 % 07/11 Laurel Hurst Laurel Woods Columbus, NC 80 70 48 32 150 100 % 10/11 Marquis Place of Elkhorn Elkhorn, NE 63 — 43 23 66 100 % 03/13 North Pointe Anderson, SC 41 — 58 24 82 100 % 10/11 Oaks at Brownsburg Brownsburg, IN 97 98 — — 98 100 % 02/22 Oaks at Plainfield Plainfield, IN 60 61 — — 61 100 % 02/22 Riverbend Jeffersonville, IN 97 — 65 48 113 100 % 03/12 Remington at Valley Ranch Irving, TX 128 128 — — 128 100 % 04/12 Residence of Chardon Chardon, OH 42 — 42 — 42 100 % 10/12 Rose Arbor Maple Grove, MN 138 28 75 42 145 100 % 06/06 Rosemont Humble, TX 96 — 79 48 127 100 % 09/16 Summit Corners Macedonia, OH 100 — 140 60 200 100 % 05/24 Summit Place Anderson, SC 76 17 72 48 137 100 % 10/11 Summit Point Living Macedonia, OH 151 79 72 — 151 100 % 08/11 Vintage Gardens St.
We generally provide residential housing and services to people aged 75 years and older, including independent living, assisted living, and memory care services.
We primarily provide residential housing and services to people aged 75 years and older, including independent living, assisted living, and memory care services.
We have built a team with a deep sense of purpose for serving seniors and we believe that our engaged group enhances the resident experience each day. 15 Table of Contents Inclusion and Diversity As we serve a diverse group of residents across several states and communities, we also strive to reflect the same diversity in our Company.
We have built a team with a deep sense of purpose for serving seniors and we believe that our engaged group enhances the resident experience each day. Inclusion and Diversity As we serve a diverse group of residents across several states and communities, we also strive to reflect similar diversity in our Company.
We have established a Corporate Quality Assurance Committee, which consists of the President and Chief Executive Officer, Vice Presidents of Operations, Vice President and Chief People Officer, Vice President and Chief Clinical Officer, Quality and Clinical Directors, and Senior Vice President- General Counsel.
We have established a Corporate Quality Assurance Committee, which consists of the President and Chief Executive Officer, Vice Presidents of Operations, Vice President and Chief People Officer, Senior Vice President and Chief Clinical Officer, Quality and Clinical Directors, and Senior Vice President – Chief Legal Officer.
We also foster the wellness of our residents by offering access to health screenings (such as blood pressure checks), periodic special services (such as COVID-19 and influenza inoculations), dietary and similar programs, and ongoing exercise and fitness classes. Classes are given by health care professionals to keep residents informed about health and disease management.
We also foster the wellness of our residents by offering access to third-party provider health screenings (such as blood pressure checks), periodic special services (such as influenza and other inoculations), dietary and similar programs, and ongoing exercise and fitness classes. Classes are given by health care professionals to keep residents informed about health and disease management.
Strong local leadership teams develop engaged, loyal and caring team members by focusing on: • Employee engagement • Community leadership team retention • Labor management and cost control • Contract labor reduction Value.
Strong local leadership teams develop engaged, loyal and caring team members by focusing on: • Employee engagement • Community leadership team retention • Labor management and cost control • Employee training and development Value.
Certain of these services require extra charges. 7 Table of Contents Memory Care Services We maintain programs and special living accommodations at some of our communities for residents with certain forms of dementia, which provide the attention, care and services needed to help these residents maintain a higher quality of life.
Memory Care Services We maintain programs and special living accommodations at some of our communities for residents with certain forms of dementia, which provide the attention, care and services needed to help these residents maintain a higher quality of life.
A regional director will generally cover a geographic area consisting of three to twelve communities, while a vice president generally oversees approximately 24 communities. The executive director at each community reports to a regional director, who in turn reports to a vice president who reports to our Chief Executive Officer.
A regional director will generally cover a geographic area consisting of three to 12 communities, while a vice president generally oversees approximately 24 to 40 communities. 9 Table of Contents The executive director at each community reports to a regional director, who in turn reports to a vice president who reports to our Chief Executive Officer.
ITEM 1. BUSINESS. Overview Sonida Senior Living, Inc. (formerly known as Capital Senior Living Corporation), a Delaware corporation (together with its subsidiaries, “we,” “us,” “our,” or the “Company”), is one of the leading owner-operators of senior housing communities in the United States in terms of resident capacity. The Company and its predecessors have provided senior housing since 1990.
ITEM 1. BUSINESS. Overview Sonida Senior Living, Inc., a Delaware corporation (together with its subsidiaries, “we,” “us,” “our,” “Sonida,” or the “Company”), is a leading owner, operator and investor in senior housing communities in the United States in terms of resident capacity. The Company and its predecessors have provided senior housing since 1990.
The following strategic priorities are intended to complement and enhance our core operational efforts while addressing the Company's financial position and increasing margin penetration against the backdrop of rapidly evolving demographic, economic and regulatory environments. Team.
Our strategic priorities are designed to enhance our performance and position our portfolio for near- and long-term growth. The following strategic priorities are intended to complement and enhance our core operational efforts while addressing the Company's financial position and increasing margin penetration against the backdrop of rapidly evolving demographic, economic and regulatory environments. Team.
We continue to be positioned to provide competitive residential rates and flexible product offerings. Our portfolio is situated in markets where positive demographic trends exist with respect to population growth, income growth, and increased chronic medical conditions relative to the 75+ age group.
We continue to be positioned to provide competitive residential rates and flexible product offerings. Our portfolio is situated in markets where positive demographic trends exist with respect to population growth, income growth, and population density of the 75+ age 2 Table of Contents group.
Management Services As of December 31, 2023, we managed 10 communities on behalf of a third party. Under our existing management arrangements, we receive management fees that are determined by an agreed-upon percentage of gross revenues, incentive management fees (as provided for in the management arrangement), and reimbursement of certain expenses we incur on behalf of the third-party.
Under our existing management arrangements, we receive management fees that are determined by an agreed-upon percentage of gross revenues, incentive management fees (as provided for in the management arrangement), and reimbursement of certain expenses we incur on behalf of the third-party or joint venture.
We operated certain of our communities pursuant to management agreements prior to acquiring interests in or leasing the communities. Operations Overview We believe that the fragmented nature of the senior living industry, the lack of new supply entering the market, and the limited capital resources available to many small, private operators provides us with an attractive opportunity for competitive differentiation.
Operations Overview We believe that the fragmented nature of the senior living industry, the lack of new supply entering the market, and the limited capital resources available to many small, private operators provides us with an attractive opportunity for competitive differentiation.
Our operating philosophy is to provide quality senior housing communities and services to senior citizens and deliver a continuum of care for our residents as their needs change over time in coordination with third party post-acute care providers.
As a result, we believe that we are able to maximize customer satisfaction and avoid the cost of delivering unnecessary services to residents. Our operating philosophy is to provide quality senior housing communities and services to senior citizens and deliver a continuum of care for our residents as their needs change over time in coordination with third-party post-acute care providers.
These individuals partner with our Regional Clinical Managers, Regional Operations, and Sales leadership to provide ongoing training and development, complete Quality Assurance reviews on-site, and review the implementation of clinical or resident service programming.
Each territory designates senior Executive Directors, Wellness Directors, Sales leadership, and Senior Culinary Directors to visit communities across their territory on an ongoing basis. These individuals partner with our Regional Clinical Managers, Regional Operations, and Sales leadership to provide ongoing training and development, complete Quality Assurance reviews on-site, and review the implementation of clinical or resident service programming.
We also offer a 401(k) plan that all eligible employees can participate in as they plan for their futures. Our total rewards design includes many other benefits that can be included at the choice of each employee based on his or her needs, which is our overall strategy to providing engaging and flexible rewards for our people.
Our total rewards design includes many other benefits that can be included at the choice of each employee based on his or her needs, which is our overall strategy to providing engaging and flexible rewards for our people.
They work individually and collectively each day to provide safety, wellness, care and service to our residents. As of December 31, 2023, we employed 3,955 persons (102 of whom are employed at our Dallas Support Center), of which 2,617 were full-time employees and 1,338 were part-time employees. Additionally, we had 18 unfilled community leadership positions as of December 31, 2023.
They work individually and collectively each day to provide safety, wellness, care and service to our residents. As of December 31, 2024, we employed 5,063 persons, of which 3,415 were full-time employees and 1,648 were part-time employees. Additionally, we had 21 unfilled community leadership positions as of December 31, 2024.
Demographics Our portfolio is strategically positioned in (i) attractive, high-growth middle income demographic geographies and (ii) regions where the number of new senior living units needed will continue to grow as a result of the projected increase in the number of chronic conditions in the senior population.
Demographics Our portfolio is strategically positioned in (i) attractive, high income demographic geographies and (ii) regions where the number of new senior living units needed will continue to grow as a result of the projected increase in the number of chronic conditions in the senior population. 3 Table of Contents Senior Affluence The average net worth of senior citizens is typically higher than non-senior citizens, partially as a result of accumulated equity through home ownership.
Cost-Containment Pressures In response to rapidly rising health care costs, governmental and private pay sources have adopted cost containment measures that have reduced admissions and encouraged reduced lengths of stays in hospitals and other acute care settings. 6 Table of Contents Private insurers have begun to limit reimbursement for medical services in general to predetermined charges, and managed care organizations (such as health maintenance organizations) are attempting to limit hospitalization costs by negotiating for discounted rates for hospital and acute care services and by monitoring and reducing hospital use.
Private insurers have begun to limit reimbursement for medical services in general to predetermined charges, and managed care organizations (such as health maintenance organizations) are attempting to limit hospitalization costs by negotiating for discounted rates for hospital and acute care services and by monitoring and reducing hospital use.
Senior Affluence The average net worth of senior citizens is typically higher than non-senior citizens, partially as a result of accumulated equity through home ownership. We believe that a substantial portion of the senior population has historically accumulated significant resources available for their retirement and long-term care needs.
We believe that a substantial portion of the senior population has historically accumulated significant resources available for their retirement and long-term care needs.
Another hallmark of the program is an emphasis on family connections, including ongoing educational opportunities specifically designed to help family members understand dementia and aspects of the disease and its progression. All communities with the Magnolia Trails program use a resident engagement mobile application where family members can receive real-time photos, videos and updates about their loved ones electronically.
All communities with the Magnolia Trails program use a resident engagement mobile application where family members can receive real-time photos, videos and updates about their loved ones electronically.
Talent Acquisition, Development and Retention In our efforts to attract new members to our team, we believe that a local focus, supported by our central talent team, provides the best results. We continue to add new spaces to our recruiting landscape to ensure we are connecting with the best and brightest individuals.
We will continue to strive each day to maintain our inclusive culture through our efforts in recruiting, education, development, and talent progression. 13 Table of Contents Talent Acquisition, Development and Retention In our efforts to attract new members to our team, we believe that a local focus, supported by our central talent team, provides the best results.
We are proud to be an equal opportunity employer. Our diversity is exhibited by the composition of our workforce with 82% female and 50% with a diverse background. We will continue to strive each day to maintain our inclusive culture through our efforts in recruiting, education, development, and talent progression.
We are proud to be an equal opportunity employer. Our diversity is exhibited by the composition of our workforce with 83% female and 54% with a diverse background.
We also offer benefits that are designed to fit a wide variety of needs. For example, our health plans allow participants to enter the plan at an affordable premium and participants automatically receive unlimited free telehealth and local retail clinic visits, along with all other benefits of the plans.
For example, our health plans allow participants to enter the plan at an affordable premium and participants automatically receive unlimited free telehealth and local retail clinic visits, along with all other benefits of the plans. This benefit provides our people quick and easy access to care at no cost to them when they need to access it.
In addition to numeric ratings and industry comparisons, there are also several opportunities for general feedback to ensure residents and families could provide input on any topic. Regular Community Inspections. Each community is inspected in person, on at least a quarterly basis, by a member of the regional and/or operational leadership team, which is also supplemented by virtual site visits.
In 10 Table of Contents addition to numeric ratings and industry comparisons, there are also several opportunities for general feedback to ensure residents and families could provide input on any topic. Regular Community Inspections.
Through this approach, we support our employees’ growth while they continue to work with us in new roles, enhancing our service and care and providing these employees with additional earning potential. Total Rewards We provide fair, competitive, and aligned compensation to all of our people that is reviewed at least annually for both merit and market-based adjustments.
We are proud of our development programs that sponsor our current employees in achieving new levels of education, licensure, and credentials. Through this approach, we support our employees’ growth while they continue to work with us in new roles, enhancing our service and care and providing these employees with additional earning potential.
As of December 31, 2023, the Company operated 71 senior housing communities in 18 states with an aggregate capacity of approximately 8,000 residents, including 61 senior housing communities that the Company owned and 10 communities that the Company managed on behalf of third parties.
As of December 31, 2024, the Company owned, managed, or invested in 94 senior housing communities in 20 states with an aggregate capacity of approximately 10,000 residents, including 81 owned senior housing communities (including four owned through joint venture investments in consolidated entities, four owned through a joint venture investment in an unconsolidated entity, and one unoccupied) and 13 communities that the Company managed on behalf of a third-party.
Included as part of this inspection is the monitoring of the overall appearance and maintenance of the community interiors and grounds. The inspection also includes monitoring staff professionalism and departmental reviews of maintenance, housekeeping, activities, transportation, marketing, administration, dining, and health care services, if applicable.
The inspection also includes monitoring staff professionalism and departmental reviews of maintenance, housekeeping, activities, transportation, marketing, administration, dining, and health care services, if applicable. The inspections also include observing residents in their daily activities and the community’s compliance with governmental regulations. Independent Service Evaluations.
Over the past year we also made significant capital expenditures in our communities, including overall refreshes and technological improvements, to enhance our residents' experience and to drive future growth. 2 Table of Contents We strive to create commercial distinction where our brand presence is synonymous with excellence. Our sales team is focused on customer engagement and performance-based media strategies.
The Company has experience in accessing capital markets, and has the ability to source, underwrite and acquire properties for its growth initiative. We strive to create commercial distinction where our brand presence is synonymous with excellence. Our sales team is focused on customer engagement and performance-based media strategies.
Our marketing activities focus on increasing the volume of leading indicators, including new resident inquiries and tours, so that potential residents and their families can effectively evaluate our portfolio of services. Our overall strategy is focused on organic growth through existing community advancement as well as growth through acquisitions.
Our marketing activities focus on increasing the volume of leading indicators, including new resident inquiries and tours, so that potential residents and their families can effectively evaluate our portfolio of services. We have improved our financial flexibility by modifying the terms on a significant portion of our debt and repurchasing some of our debt at discounts to par.
While some states have not yet enacted specific assisted living regulations, many of our assisted living communities are subject to regulation, licensing and permitting requirements by state and local health care and social service agencies and other governmental regulatory authorities.
Our assisted living communities are subject to regulation, licensing and permitting requirements by state and local health care and social service agencies and other governmental regulatory authorities. While such requirements vary from state to state, they typically relate to staffing, training, physical design, patient privacy, required services and the quality thereof, and resident characteristics.
Quality Assurance and Regional Support Team. The Company deploys a support team including senior level community-based resources to provide onboarding, training, and communication of best practices across each of our territories. Each territory designates senior Executive Directors, Wellness Directors, Sales leadership, and Senior Culinary Directors to visit communities across their territory on an ongoing basis.
At communities where health care is delivered, these consulting service reviews include the on-site handling of medications, recordkeeping and general compliance with all applicable governmental regulations. Quality Assurance and Regional Support Team. The Company deploys a support team including senior level community-based resources to provide onboarding, training, and communication of best practices across each of our territories.
With our robust focus on talent acquisition, we continued to see our average time to fill an open role shorten significantly in 2023. We are proud of our development programs that sponsor our current employees in achieving new levels of education, licensure, and credentials.
We also utilize employee referral programs to bring great new people into our organization who already know our mission through current employees. With our robust focus on talent acquisition, we continued to see our average time to fill an open role shorten significantly in 2024.
The inspections also include observing residents in their daily activities and the community’s compliance with governmental regulations. Independent Service Evaluations. We engage the services of outside professional independent consulting firms to evaluate various components of our communities’ operations. These services include mystery shops, competing community analysis and product positioning.
Periodically, we engage the services of outside professional independent consulting firms to evaluate various components of our communities’ operations. These services include mystery shops, competing community analysis and product positioning. These services provide management with valuable and unbiased product and service information. A plan of action regarding any areas requiring improvement or change is implemented based on the information received.
For example, we utilize local social media pages to identify individuals for the specific communities and geographic regions we serve. We also utilize employee referral programs to bring great new people into our organization who already know our mission through current employees.
We continue to add new spaces to our recruiting landscape to ensure we are connecting with the best and brightest individuals. For example, we utilize local social media pages to identify individuals for the specific communities and geographic regions we serve.
The ERC is a federal payroll tax credit for businesses that had employees and were affected during the COVID-19 pandemic. Industry Background The senior living industry encompasses a broad and diverse range of living accommodations and supportive services that are provided primarily to persons 75 years of age or older.
Over the past several years we also made significant capital expenditures in our communities, including overall refreshes and technological improvements, to enhance our residents' experience and to drive future growth. Industry Background The senior living industry encompasses a broad and diverse range of living accommodations and supportive services that are provided primarily to persons 75 years of age or older.
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Our strategic priorities are designed to enhance our performance and position our portfolio for near- and long-term growth. During our prior year, we introduced a new management plan focused on a number of strategic priorities that are core to the Company's refreshed mission.
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We partner with communities and team members to streamline operations, enhance efficiency, and ensure teams have the resources they need to succeed by focusing on: • Process Optimization: Refining workflows to improve efficiency • Training & Support: Providing guidance and resources to empower teams • Acquisition Integration: Ensuring smooth transitions for new communities • Field Collaboration: Adapting processes based on ongoing feedback • Strategic Initiatives: Implementing high impact programs and solutions Our overall strategy is focused on driving organic growth through rate optimization and margin improvement of existing communities as well as growth through prudent capital deployment into acquisitions and investments.
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By executing on these priorities, we aim to continue our growth and margin expansion and to enhance our market position as a leading owner-operator of senior housing communities in the United States.
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Cost-Containment Pressures In response to rapidly rising health care costs, governmental and private pay sources have adopted cost containment measures that have reduced admissions and encouraged reduced lengths of stays in hospitals and other acute care settings.
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We strive to remove inefficiencies and improve quality in our operations to reinvest in the Company by focusing on: • Rate optimization • Sales and Marketing platform drives continued occupancy growth • Group Purchasing Organization (“GPO”) programs enhance purchasing options, pricing, and co mpliance • Improving liquidity through better collections and cash management As discussed below, during 2023 we modified the terms on a significant portion of our debt, which we believe will provide the Company with additional financial flexibility and position us for further growth.
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Another hallmark of the program is an emphasis on family connections, including ongoing educational opportunities specifically designed to help family members understand dementia and aspects of 5 Table of Contents the disease and its progression.
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Recent Developments Fannie Mae Loan Modification On June 29, 2023, we entered into a forbearance agreement (“ Fannie Forbearance ” and “Fannie Forbearance Agreement”) with the Federal National Mortgage Association (“ Fannie Mae ” ) for all 37 of its encumbered communities, effective as of June 1, 2023 (“Fannie Forbearance Effective Date”).
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Resident Capacity Commencement Community Location Units IL AL MC Total Ownership of Operations 1 Owned: Addison of Bluffton Bluffton, SC 73 — 45 40 85 100 % 10/24 Addison of Florence Florence, SC 72 — 52 23 75 100 % 10/24 Addison of Gwinnett Park Lawrenceville, GA 94 — 48 58 106 100 % 11/24 Addison of Narcoossee St.
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Under the Fannie Forbearance, Fannie Mae agreed to forbear on its remedies otherwise available under the community mortgages and Master Credit Facility (“MCF”) in connection with reduced debt service payments made by us during the forbearance period. In connection with the Fannie Forbearance, we made a $5.0 million principal payment in July 2023.
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Cloud, FL 72 — 52 23 75 100 % 10/24 Addison of Oakleaf Jacksonville, FL 73 — 45 42 87 100 % 10/24 Addison of Oviedo Oviedo, FL 72 — 53 23 76 100 % 10/24 Addison of Port Orange Port Orange, FL 59 — 45 24 69 100 % 10/24 Addison of Sandy Springs Peachtree Corners, GA 84 — 63 26 89 100 % 11/24 Addison of St.
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The Fannie Forbearance was the first of a two-step process to modify all existing mortgage loan agreements with Fannie Mae by October 2023 under proposed loan modification agreements, as defined in the Fannie Forbearance (“Loan Modification Agreements”). We entered into Loan Modification Agreements with Fannie Mae on October 2, 2023.
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(2) This community is not yet opened as of December 31, 2024. (3) This excludes 12 managed units that are owned by a third party.
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Some of the material terms of the Loan Modification Agreements are as follows: • Maturities on 18 community mortgages, ranging from July 2024 to December 2026, have been extended to December 2026.
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Management Services As of December 31, 2024, we managed 13 communities on behalf of a third party and also managed certain joint venture investments.
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The remaining 19 communities under the MCF have existing maturities in January 2029. • We are not required to make scheduled principal payments due under the 18 community mortgages and 19 communities under the MCF through the revised maturity date of December 2026 or 36 months from the Fannie Forbearance Effective Date, respectively. • The monthly interest rate will be reduced by a 1.5% weighted average on all 37 communities for 12 months from the Fannie Forbearance Effective Date and deferred until it is contractually waived in June 2024 so long as there is no event of default (the “Fannie Interest Abatement Period”). • We are required to make a second principal payment of $5.0 million with respect to the Fannie Mae debt which is due on June 1, 2024, the one-year anniversary of the Fannie Forbearance Effective Date. 2023 Ally Loan Amendment On June 29, 2023, and concurrent with the Fannie Forbearance, we executed a second amendment (“2023 Ally Amendment”) to our Refinance Facility (“Ally Term Loan” or “Ally Term Loan Agreement”) and an amended guaranty (“Second Amended Ally Guaranty”) with Ally Bank with terms as follows: • With respect to the Second Amended Ally Guaranty, Ally will grant the Company, as Guarantor, a waiver (“Limited Payment Guaranty Waiver” or “Waiver”) of the liquid assets minimum requirement of $13.0 million for a 12-month period.
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Each community is inspected in person, on at least a quarterly basis, by a member of the regional and/or operational leadership team, which is also supplemented by virtual site visits. Included as part of this inspection is the monitoring of the overall appearance and maintenance of the community interiors and grounds.
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On July 1, 2024, a new Liquid Assets Threshold of $7.0 million will be effective, with such threshold increasing $1.0 million per month through the earlier of the release of the waiver period or December 31, 2024. • During the Waiver period, a new and temporary liquid assets minimum threshold (“Limited Payment Guaranty Waiver Minimum Threshold”) will be established.
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Total Rewards We provide fair, competitive, and aligned compensation to all of our people that is reviewed at least annually for both merit and market-based adjustments. We also offer benefits that are designed to fit a wide variety of needs.
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The Limited Payment Guaranty Waiver Minimum Threshold is $6.0 million and is measured weekly. If breached, the “Excess Cash Flow Sweep” is triggered and all excess cash from the communities collateralizing the Ally Term Loan will be swept into an “Equity Cure Fund”, as defined in the Ally Term Loan Agreement.
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We provide paid time off to both full-time and part-time employees to ensure they have paid time away from work. We also offer a 401(k) plan that all eligible employees can participate in as they plan for their futures.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Our Business, Operations and Strategy • We have incurred losses from operations in each of the last two fiscal years and may do so in the future. • We largely rely on private pay residents and circumstances that adversely affect the ability of the seniors to pay for our services could have a material adverse effect on us. • The senior living services industry is very competitive and some competitors may have substantially greater financial resources than us. • Termination of resident agreements and resident attrition could affect adversely our revenues and earnings. • We have identified a material weakness in our internal control over financial reporting as of December 31, 2023.
Biggest changeRisks Related to Our Business, Operations and Strategy • We have incurred losses from operations in each of the last two fiscal years and may do so in the future. 14 Table of Contents • We may be unsuccessful in integrating recent or future acquisitions into our existing operations or in realizing all or the anticipated benefits of such acquisitions. • We may not accurately estimate the benefits or synergies to be realized from the senior living communities and businesses we acquire. • Our investments in joint ventures could be adversely affected by our lack of exclusive control over these investments, our partners’ insolvency or failure to meet their obligations and disputes between us and our partners. • We largely rely on private pay residents and circumstances that adversely affect the ability of the seniors to pay for our services could have a material adverse effect on us. • Changes in the reimbursement rates, methods, or timing of payment from government reimbursement programs could adversely affect our revenues, results of operations, and cash flow. • The senior living services industry is very competitive and some competitors may have substantially greater financial resources than us. • Termination of resident agreements and resident attrition could affect adversely our revenues and earnings. • We rely on information technology in our operations, and failure to maintain the security and functionality of our information technology and computer systems, or to prevent a cybersecurity attack, breach or other unauthorized access, could adversely affect our business, reputation and relationships with our residents, employees and referral sources and may subject us to remediation costs, government inquiries and liabilities under HIPAA and data and consumer protection laws, any of which could materially and adversely impact our revenues, results of operations, cash flow, and liquidity. • We have identified a material weakness in our internal controls over financial reporting as of December 31, 2024.
Risks Related to Human Capital • We rely on the services of key executive officers and the transition of management or loss of these officers or their services could have a material adverse effect on us. • A significant increase in our labor costs could have a material adverse effect on us. • We are subject to risks related to the provision for employee health care benefits and future health care reform legislation.
Risks Related to Human Capital • A significant increase in our labor costs or labor shortages could have a material adverse effect on us. • We rely on the services of key executive officers and the transition of management or loss of these officers or their services could have a material adverse effect on us. • We are subject to risks related to the provision for employee health care benefits and future health care reform legislation.
If we are unable to remediate this material weakness, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock.
If we are unable to remediate this material weakness, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our financial statements and investor confidence in us and, as a result, the value of our common stock.
Failure to maintain the security and functionality of our information systems, or to prevent a cybersecurity attack or other unauthorized access to our information systems, could expose us to a number of adverse consequences, including: (i) interruptions to our business and operations; (ii) the theft, destruction, loss, misappropriation or release of sensitive information, including proprietary business information and personally identifiable information of our residents, patients, and employees; (iii) significant remediation costs; (iv) negative publicity that could damage our reputation and our relationships with our 22 Table of Contents residents, patients, employees, and referral sources; (v) litigation and potential liability under privacy, security and consumer protection laws, including HIPAA, or other applicable laws, rules or regulations; and (vi) government inquiries that may result in sanctions and other criminal or civil fines or penalties.
Failure to maintain the security and functionality of our information systems, or to prevent a cybersecurity attack or other unauthorized access to our information systems, could expose us to a number of adverse consequences, including: (i) interruptions to our business and operations; (ii) the theft, destruction, loss, misappropriation or release of sensitive information, including proprietary business information and personally identifiable information of our residents, patients, and employees; (iii) significant remediation costs; (iv) negative publicity that could damage our reputation and our relationships with our residents, patients, employees, and referral sources; (v) litigation and potential liability under privacy, security and consumer protection laws, including HIPAA, or other applicable laws, rules or regulations; and (vi) government inquiries that may result in sanctions and other criminal or civil fines or penalties.
Unfavorable economic conditions in the housing, financial and credit markets, rising interest rates, unemployment, decreased consumer confidence, inflation, or other circumstances that adversely affect the ability of seniors to pay for our services could have a material adverse effect on our business, financial condition, cash flows, and results of operations.
Unfavorable economic conditions in the housing, financial and credit markets, elevated interest rates, unemployment, decreased consumer confidence, inflation, or other circumstances that adversely affect the ability of seniors to pay for our services could have a material adverse effect on our business, financial condition, cash flows, and results of operations.
Under the Americans with Disabilities Act of 1990, all places of public accommodation are required to meet federal requirements related to access and use by disabled persons. A number of additional federal, state and local laws exist that also may require modifications to existing and planned communities to create access to the properties by disabled persons.
Under the Americans with Disabilities Act of 1990, as amended, all places of public accommodation are required to meet federal requirements related to access and use by disabled persons. A number of additional federal, state and local laws exist that also may require modifications to existing and planned communities to create access to the properties by disabled persons.
Any newly issued equity securities may have rights, preferences, or privileges senior to those of our common stock. Risks Related to Our Business, Operations and Strategy We have incurred losses from operations in each of the last two fiscal years and may do so in the future. We incurred net losses in fiscal years 2023 and 2022.
Any newly issued equity securities may have rights, preferences, or privileges senior to those of our common stock. Risks Related to Our Business, Operations and Strategy We have incurred losses from operations in each of the last two fiscal years and may do so in the future. We incurred net losses in fiscal years 2024 and 2023.
While we cannot predict the size of future resales or distributions of our common stock, if there is a perception that such resales or distributions could occur, or if the holders of our securities registered for resale sell a large number of the registered securities, the market price for our common stock could be adversely affected.
While we cannot predict the size of future resales or offerings of our common stock, if there is a perception that such resales or offerings could occur, or if the holders of our securities registered for resale sell a large number of the registered securities, the market price for our common stock could be adversely affected.
In general, the future course and impacts of COVID-19, or the potential emergence and effects of a future pandemic, epidemic or outbreak of an infectious disease, on our operational and financial performance is uncertain and will depend on many factors outside of our control, including, among others, the duration, severity and trajectory of the illness, including the possible spread of potentially more contagious and/or virulent forms of the infection, future economic conditions, as well as the impact of government actions and administrative regulations on the senior living industry and broader economy, including through stimulus efforts, the development, availability and widespread use of effective medical treatments and vaccines, the imposition of public safety measures, and perceptions regarding the safety of senior living communities during and after the pandemic.
In general, the future course and impacts of a pandemic, epidemic or outbreak of an infectious disease on our operational and financial performance is uncertain and will depend on many factors outside of our control, including, among others, the duration, severity and trajectory of the illness, including the possible spread of potentially more contagious and/or virulent forms of the infection, future economic conditions, as well as the impact of government actions and administrative regulations on the senior living industry and broader economy, including through stimulus efforts, the development, availability and widespread use of effective medical treatments and vaccines, the imposition of public safety measures, and perceptions regarding the safety of senior living communities during and after the pandemic.
Furthermore, any failure to comply with these laws can result in significant protracted litigation, government investigation, penalties or other damages that could have an adverse effect on our financial condition, results of operations, and cash flow. 25 Table of Contents We may be subject to liability for environmental damages.
Furthermore, any failure to comply with these laws can result in significant protracted litigation, government investigation, penalties or other damages that could have an adverse effect on our financial condition, results of operations, and cash flow. We may be subject to liability for environmental damages.
There can be no assurance that financing or refinancings will be available or that, if available, will be on terms acceptable to us. Moreover, raising additional funds through the issuance of additional equity securities could cause existing stockholders to experience further dilution and could adversely affect the market price of our common stock.
There can be no assurance that financing or refinancings will be available or that, if available, will be on terms acceptable to us. Moreover, raising additional funds through the issuance of additional equity securities could cause existing stockholders to experience further dilution and could adversely affect the market price of our common stock. See “Item 1A.
Our ability to obtain such financing or refinancing on terms acceptable to us would have a material adverse effect on our business, financial condition, cash flows, and results of operations.
Our failure to obtain such financing or refinancing on terms acceptable to us would have a material adverse effect on our business, financial condition, cash flows, and results of operations.
If we are unable to raise additional funds or obtain them on terms acceptable to us, we may have to delay or 19 Table of Contents abandon some or all of our plans or opportunities. Further, if additional funds are raised through the issuance of additional equity securities, the percentage ownership of our stockholders would be diluted.
If we are unable to raise additional funds or obtain them on terms acceptable to us, we may have to delay or abandon some or all of our plans or opportunities. Further, if additional funds are raised through the issuance of additional equity securities, the percentage ownership of our stockholders would be diluted.
A certain number of our properties are located in areas that have experienced, and may experience in the future, catastrophic weather and other natural events from time to time, including snow or ice storms, windstorm, tornados, hurricanes, fires, earthquakes, flooding or other severe weather.
A certain number of our properties are located in areas that have experienced, and may experience in the future, catastrophic weather and other natural events from time to time, including snow or ice storms, windstorm, tornados, hurricanes, fires, earthquakes, freeze events in warmer climates, flooding or other severe weather.
Because labor represents a large portion of our operating expenses, changes in federal, state and local employment-related laws and regulations could increase our cost of doing business.
Because labor represents a large portion of our operating expenses, changes in federal, state and local employment-related laws and regulations, including immigration laws, could increase our cost of doing business.
The provisions of the legislation and other regulations implementing the provisions of the Affordable Care Act or any amended or replacement legislation may increase our costs, adversely affect our revenues, expose us to expanded liability or require us to revise the ways in which we conduct our business.
The provisions of the 24 Table of Contents legislation and other regulations implementing the provisions of the Affordable Care Act or any amended or replacement legislation may increase our costs, adversely affect our revenues, expose us to expanded liability or require us to revise the ways in which we conduct our business.
Accordingly, holders of our common stock must look solely to appreciation of our common stock to realize a gain on their investment. This appreciation may not occur. We cannot predict the potential emergence and effects of a future pandemic, epidemic or outbreak of an infectious disease, on our operations, financial condition and liquidity.
Accordingly, holders of our common stock must look solely to appreciation of our common stock to realize a gain on their investment. This appreciation may not occur. We cannot predict the potential emergence and effects of a severe cold and flu season or a future pandemic, epidemic or outbreak of an infectious disease, on our operations, financial condition and liquidity.
These control deficiencies could result in a material misstatement of our accounts or disclosures that would not be prevented or detected on a timely basis, and accordingly, we determined that these control deficiencies in aggregate constitute a material weakness.
These control deficiencies could result in a material misstatement of our accounts or disclosures that would not be prevented or detected on a timely basis, and accordingly, we determined that these control deficiencies in aggregate constitute a material weakness and has not been remediated.
During the years ended December 31, 2023 and 2022, accrued and unpaid dividends of $5.0 million and $2.3 million, respectively, were added to the liquidation preference of the Series A Preferred Stock, which will be payable under the redemption features.
During the years ended December 31, 2024 and 2023, accrued and unpaid dividends of $2.7 million and $5.0 million, respectively, were added to the liquidation preference of the Series A Preferred Stock, which will be payable under the redemption features.
Further, COVID-19 surges, outbreaks of new variants and future pandemics, epidemics or outbreaks could again exacerbate existing workforce shortages and costs and require us to incur significant additional operating costs and expenses in order to care for our residents, including costs to acquire additional personal protective equipment, cleaning and disposable food services, testing of our residents and employees, and enhanced cleaning and environmental sanitation costs.
Further, pandemics, epidemics or outbreaks could again exacerbate existing workforce shortages and costs and require us to incur significant additional operating costs and expenses in order to care for our residents, including costs to acquire additional personal protective equipment, cleaning and disposable food services, testing of our residents and employees, and enhanced cleaning and environmental sanitation costs.
Risk Factors Summary Risks Related to Our Liquidity and Indebtedness • We have significant debt and our failure to generate cash flow sufficient to cover required interest and principal payments could result in defaults of the related debt. • Our failure to comply with financial covenants and other restrictions contained in our debt instruments could result in the acceleration of the related debt or in the exercise of other remedies. • We may require additional financing and/or refinancing actions in the future and may issue equity securities. • Increases in market interest rates have significantly increased the costs of our variable rate debt obligations, which has affected our liquidity and earnings. 16 Table of Contents • We may need additional capital to fund our operations, capital expenditure plans, and strategic priorities, and we may not be able to obtain it on terms acceptable to us, or at all.
Risk Factors Summary Risks Related to Our Liquidity and Indebtedness • We have significant debt and our failure to generate cash flow sufficient to cover required interest and principal payments could result in defaults of the related debt. • Our failure to comply with financial covenants and other restrictions contained in our debt instruments could result in the acceleration of the related debt or in the exercise of other remedies. • We may require additional financing and/or refinancing actions in the future and may issue equity securities. • Elevated market interest rates, or future interest rate increases, could significantly increase the costs of our variable rate debt obligations, which may affect our cost of capital and, as a result, liquidity and earnings. • We may need additional capital to fund our operations, capital expenditure plans, and strategic priorities, and we may not be able to obtain it on terms acceptable to us, or at all.
Given the location of our communities, we are particularly susceptible to revenue loss, cost increase, or damage caused by severe weather conditions including winter storms or natural disasters such as hurricanes, wildfires, earthquakes, or tornados.
Given the location of our communities, we are particularly susceptible to revenue loss, cost increase, or damage caused by severe weather conditions, including winter storms or natural disasters such as hurricanes, wildfires, earthquakes, freeze events in warmer climates, or tornados.
As of December 31, 2023, we had approximately $137.3 million of long-term variable rate debt outstanding which is indexed to the Secured Overnight Financing Rate (“SOFR”), plus an applicable margin. Accordingly, our annual interest expense related to long-term variable rate debt is directly affected by movements in SOFR.
As of December 31, 2024, we had approximately $253.2 million of long-term variable rate debt outstanding which is indexed to the Secured Overnight Financing Rate (“SOFR”), plus an applicable margin. Accordingly, our annual interest expense related to long-term variable rate debt is directly affected by movements in SOFR.
Unauthorized parties may also attempt to gain access to our systems or facilities, or those of third parties with whom we do business or communicate, through computer viruses, hacking, fraud or other forms of deceiving our employees or contractors such as email phishing attacks.
Unauthorized parties may also attempt to gain access to our systems or facilities, or those of third parties with whom we do business or communicate, through computer viruses, ransomware attacks, data extortion attempts, hacking, social engineering, fraud or other forms of deceiving our employees or contractors such as email phishing attacks.
For 2024, we expect to continue to experience labor cost pressure as a result of the continuing labor conditions previously described and an anticipated increase in hours worked as our occupancy levels grow.
For 2025, we expect to continue to experience labor cost pressure as a result of the continuing labor conditions previously described, changes to immigration laws, and an anticipated increase in hours worked as our occupancy levels grow.
Approximately 89.6% of our total resident revenues from communities that we operated were attributable to private pay sources and approximately 10.4% of our resident revenues from these communities were attributable to reimbursements from Medicaid, in each case, during fiscal year 2023.
Approximately 89.9% of our total resident revenues from communities that we operated were attributable to private pay sources and approximately 10.1% of our resident revenues from these communities were attributable to reimbursements from Medicaid, in each case, during fiscal year 2024.
Actual costs under these plans are subject to variability depending primarily upon participant enrollment and demographics, the actual costs of claims and whether stop-loss insurance covers these claims.
These estimates are then adjusted to reflect actual costs incurred. Actual costs under these plans are subject to variability depending primarily upon participant enrollment and demographics, the actual costs of claims and whether stop-loss insurance covers these claims.
As disclosed in previous filings for the year ended December 31, 2022, and for all the interim quarterly filings during 2023 and 2022, we identified a material weakness in our internal control over financial reporting.
In addition, as disclosed in previous filings for the year ended December 31, 2023, and for all the interim quarterly filings during 2024 and 2023, we identified a material weakness in our internal control over financial reporting which was remediated during the year ended December 31, 2024.
As a result of this concentration, the conditions of local economies and real estate markets, changes in governmental regulations, acts of nature, and other factors that may result in a decrease in demand for senior living services in these areas could have an adverse effect on our financial condition, revenues, results of operations, and cash flow.
As a result of this concentration, the conditions of local economies and real estate markets, changes in governmental regulations, acts of nature, including severe weather conditions or natural disasters, the physical effects of climate change, and other factors that may result in a decrease in demand for senior living services in these areas could have an adverse effect on our financial condition, revenues, results of operations, and cash flow.
Our financial statement close process controls did not consistently operate effectively to ensure account reconciliations and journal entries were performed or reviewed at the appropriate level of precision and on a timely basis. Additionally, we identified deficiencies with our revenue transaction cycle.
Prior to such remediation, our financial statement close process controls did not consistently operate effectively to ensure account reconciliations and journal entries were performed or reviewed at the appropriate level of precision and on a timely basis. Additionally, we identified deficiencies with our revenue transaction cycle during the year ended December 31, 2023.
We have a high concentration of communities in various geographic areas, including the states of Texas, Indiana, Ohio and Wisconsin, which we estimate represented approximately 23%, 18%, 20%, and 10%, respectively, of our resident revenues for the year ended December 31, 2023.
We have a high concentration of communities in various geographic areas, including the states of Texas, Indiana, Ohio and Wisconsin, which we estimate represented approximately 23%, 17%, 19%, and 9%, respectively, of our resident revenues for the year ended December 31, 2024.
Future offerings of equity securities by us may adversely affect the market price of our common stock. We have increased, and may again in the future, attempt to increase, our capital resources by offering additional equity securities. Additional equity offerings may dilute the economic and voting rights of our existing stockholders and/or reduce the market price of our common stock.
Future sales of equity securities by us or certain stockholders may adversely affect the market price of our common stock. We have increased, and may again in the future, attempt to increase, our capital resources by offering additional equity securities.
In addition, government regulation intended to mitigate the impact of climate change, severe weather patterns, or natural disasters could result in additional required capital expenditures to comply with such regulation without a corresponding increase in our revenues.
In addition, government regulation intended to mitigate the impact of climate change, severe weather patterns, or natural disasters, including 22 Table of Contents sustainability-related laws such as emissions reduction, could result in additional required capital expenditures to comply with such regulation without a corresponding increase in our revenues.
Current global economic conditions and uncertainties, the potential for failures or realignments of financial institutions and the related impact on available credit may affect us and our business partners, landlords, counterparties and residents or prospective residents in an adverse manner including, but not limited to, reducing access to liquid funds or credit increasing the cost of credit, limiting our ability to manage interest rate risk, increasing the risk that certain of our business partners, landlords or counterparties would be unable to fulfill their obligations to us, and other impacts which we are unable to fully anticipate.
Current global economic conditions and uncertainties, the potential for failures or realignments of financial institutions and the related impact on available credit may affect us and our business partners, landlords, counterparties and residents or prospective residents in an adverse manner including, but not limited to, reducing access to liquid funds or credit, increasing the cost of credit, limiting our ability to manage operating costs, increasing the risk that certain of our business partners, landlords or counterparties would be unable to fulfill their obligations to us, and other impacts which we are unable to fully anticipate. 28 Table of Contents Our non-labor operating expenses have historically comprised of approximately one-third of our total operating expenses and are subject to the labor force available to us and other factors, including government regulations.
As a result, we are dependent on loans, distributions and other payments from our subsidiaries to generate the funds necessary to meet our financial obligations.
As a result, we are dependent on loans, distributions and other payments from our subsidiaries to generate the funds necessary to meet our financial obligations. Our subsidiaries are legally distinct from us and have no obligation to make funds available to us.
Risks Related to Regulatory, Compliance, and/or Legal Matters • We are subject to governmental regulations and compliance, some of which are burdensome and some of which may change to our detriment in the future. • Changes in federal, state and local employment-related laws and regulations, or our failure to comply with these laws and regulations, could have an adverse effect on our financial condition, results of operations, and cash flow. • We may be subject to liability for environmental damages. 17 Table of Contents Risks Related to Our Corporate Organization and Structure • Anti-takeover provisions in our governing documents, governing law, and material agreements may discourage, delay or prevent a merger or acquisition that our stockholders may consider favorable or prevent the removal of our current board of directors and management. • A substantial majority of the voting power of our issued and outstanding securities is held by a small group of stockholders. • The issuance of shares of our Series A Preferred Stock reduced the relative voting power of holders of our common stock, and the conversion of those shares into shares of our common stock would dilute the ownership of common stockholders and may adversely affect the market price of our common stock. • Our Series A Preferred Stock has rights, preferences, and privileges that are not held by, and are preferential to the rights of, holders of our common stock, which could adversely affect our liquidity and financial condition. • We are a holding company with no operations and rely on our operating subsidiaries to provide us with funds necessary to meet our financial obligations.
Risks Related to Our Corporate Organization and Structure • Anti-takeover provisions in our governing documents, governing law, and material agreements may discourage, delay or prevent a merger or acquisition that our stockholders may consider favorable or prevent the removal of our current board of directors and management. • A substantial majority of the voting power of our issued and outstanding securities is held by a small group of stockholders. • The issuance of shares of our Series A Preferred Stock reduced the relative voting power of holders of our common stock, and the conversion of those shares into shares of our common stock would dilute the ownership of common stockholders and may adversely affect the market price of our common stock. • Our Series A Preferred Stock has rights, preferences, and privileges that are not held by, and are preferential to the rights of, holders of our common stock, which could adversely affect our liquidity and financial condition. • We are a holding company with no operations and rely on our operating subsidiaries to provide us with funds necessary to meet our financial obligations.
If we fail to comply with any of these requirements, then the related indebtedness could become due and payable prior to their stated dates. We cannot assure that we could pay these debt obligations if they became due prior to their stated dates.
If we fail to comply with any of these requirements, then the related indebtedness could become due and payable prior to their stated dates. We cannot assure that we could pay these debt obligations if they became due prior to their stated dates. We may require additional financing and/or refinancing actions in the future and may issue equity securities.
Thus, holders of our common stock bear the risk of our future offerings reducing the market price of our common stock and diluting their holdings in our Company.
We cannot predict or estimate the amount, timing or nature of our future offerings. Thus, holders of our common stock bear the risk of our future offerings reducing the market price of our common stock and diluting their holdings in our Company.
We use a combination of insurance and self-insurance for employee health care plans. We record expenses under these plans based on estimates of the costs of expected claims, administrative costs, and stop-loss premiums. These estimates are then adjusted to reflect actual costs incurred.
We are subject to risks related to the provision for employee health care benefits and future health care reform legislation. We use a combination of insurance and self-insurance for employee health care plans. We record expenses under these plans based on estimates of the costs of expected claims, administrative costs, and stop-loss premiums.
If a large number of residents elected to or otherwise terminate their resident agreements at or around the same time and/or the living spaces we lease remain unoccupied for a long period of time, our occupancy revenues, cash flows and earnings could be adversely affected. 20 Table of Contents We have identified a material weakness in our internal control over financial reporting as of December 31, 2023.
If a large number of residents elected to or otherwise terminate their resident agreements at or around the same time and/or the living spaces we lease remain unoccupied for a long period of time, our occupancy revenues, cash flows and earnings could be adversely affected.
If we are unable to remediate this material weakness, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock. • There is an inherent risk of liability in the provision of personal and health care services, not all of which may be covered by insurance. • Damage from catastrophic weather and other natural events could result in losses and adversely affect certain of our residents. • The geographic concentration of our communities could leave us vulnerable to an economic downturn, regulatory changes, acts of nature, or the effects of climate change in those areas, which could negatively impact our financial condition, revenues, results of operations, and cash flow. • We rely on information technology in our operations, and failure to maintain the security and functionality of our information technology and computer systems, or to prevent a cybersecurity attack, breach or other unauthorized access, could adversely affect our business, reputation and relationships with our residents, employees and referral sources and may subject us to remediation costs, government inquiries and liabilities under HIPAA and data and consumer protection laws, any of which could materially and adversely impact our revenues, results of operations, cash flow, and liquidity. • Because we do not presently have plans to pay dividends on our common stock, holders of our common stock must look solely to appreciation of our common stock to realize a gain on their investment. • We cannot predict the potential emergence and effects of a future pandemic, epidemic or outbreak of an infectious disease, on our operations, financial condition and liquidity.
If we are unable to remediate this material weakness, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our financial statements and investor confidence in us and, as a result, the value of our common stock. • There is an inherent risk of liability in the provision of personal and health care services, not all of which may be covered by insurance. • Damage from catastrophic weather and other natural events, including climate change, could result in losses and adversely affect us and certain of our residents. • The geographic concentration of our communities could leave us vulnerable to an economic downturn, regulatory changes, acts of nature, including severe weather conditions or natural disasters, or the physical effects of climate change in those areas, which could negatively impact our financial condition, revenues, results of operations, and cash flow. • Because we do not presently have plans to pay dividends on our common stock, holders of our common stock must look solely to appreciation of our common stock to realize a gain on their investment. • We cannot predict the potential emergence and effects of a severe cold and flu season or a future pandemic, epidemic or outbreak of an infectious disease, on our operations, financial condition and liquidity. • Our approach to AI presents risks and challenges that can impact our business and could adversely affect our business.
Our inability, or the inability of these third parties, to continue to maintain and upgrade our information systems could disrupt or reduce the efficiency of our operations.
In addition, we rely on software support of third parties to secure and maintain our information systems and data. Our inability, or the inability of these third parties, to continue to maintain and upgrade our information systems could disrupt or reduce the efficiency of our operations.
Any significant failure by us to control our labor costs or to pass on any increased labor costs to residents through rate increases could have a material adverse effect on our business, financial condition, cash flows, and results of operations. We are subject to risks related to the provision for employee health care benefits and future health care reform legislation.
Any significant failure by us to control our labor costs or to pass on any increased labor costs to residents through rate increases could have a material adverse effect on our business, financial condition, cash flows, and results of operations.
There are various financial covenants and other restrictions in certain of our debt instruments, including provisions which: • require us to meet specified financial tests, which include, but are not limited to, tangible net worth and liquidity requirements; • require us to make payments on time; • require us to meet specified financial tests at the community level; 18 Table of Contents • require us to purchase interest rate derivative instruments; • require us to meet specified reserve requirements; • require us to maintain the physical condition of the community and meet certain minimum spending levels for capital and leasehold improvements; and • require consent for changes in control of us.
Therefore, an event of default under the outstanding indebtedness, subject to cure provisions in certain instances, would give the respective lenders, the right to declare all amounts outstanding to be immediately due and payable, or foreclose on collateral securing the outstanding indebtedness. 16 Table of Contents There are various financial covenants and other restrictions in certain of our debt instruments, including provisions which: • require us to meet specified financial tests, which include, but are not limited to, tangible net worth and liquidity requirements; • require us to make payments on time; • require us to meet specified financial tests at the community level; • require us to purchase interest rate derivative instruments; • require us to meet specified reserve requirements; • require us to maintain the physical condition of the community and meet certain minimum spending levels for capital and leasehold improvements; and • require consent for changes in control of us.
As of December 31, 2023, the Conversant Investors collectively owned a majority of the voting power of the Company’s issued and outstanding securities. 26 Table of Contents Pursuant to our investor rights agreement, Conversant Fund A is entitled to designate four individuals to be appointed to the Company’s board of directors, including the Chairperson, and Silk Partners LP is entitled to designate two individuals to be appointed to the Company’s board of directors, in each case so long as they and their respective permitted transferees and affiliates maintain minimum aggregate holdings of our stock as described in further detail in the investor rights agreement.
Pursuant to our investor rights agreement, Conversant Fund A is entitled to designate four individuals to be appointed to the Company’s board of directors, (which will increase to five individuals on May 3, 2025), including the Chairperson, and Silk Partners LP is entitled to designate two individuals to be appointed to the Company’s board of directors, in each case so long as they and their respective permitted transferees and affiliates maintain minimum aggregate holdings of our stock as described in further detail in the investor rights agreement.
These increases primarily resulted from filling our open positions, merit and market wage rate adjustments, more hours worked with higher occupancy during 2023, and an increase in the use of premium labor, primarily overtime.
In our consolidated community portfolio the labor component of our operating expense increased approximately $15.7 million, or 14.1%, during 2024 compared to 2023. These increases primarily resulted from filling our open positions, merit and market wage rate adjustments, more hours worked with higher occupancy during 2024, and an increase in the use of premium labor, primarily overtime.
Because our trading volume is limited relative to larger public companies, any significant sales of our shares of common stock could cause a decline in the market value and price per share of our common stock. ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
This presence is impacted by general economic and market conditions and investors’ views of us. Because our trading volume is limited relative to larger public companies, any significant sales of our shares of common stock could cause a decline in the market value and price per share of our common stock.
Risks Related to Human Capital We rely on the services of key executive officers and the transition of management or loss of these officers or their services could have a material adverse effect on us. We depend on the services of our executive officers for our management.
We rely on the services of key executive officers and the transition of management or loss of these officers or their services could have a material adverse effect on us. We depend on the services of our executive officers for our management. We have recently undergone changes in our senior management and may experience further changes in the future.
Risk Factors Risks Related to Our Liquidity and Indebtedness We have significant debt and our failure to generate cash flow sufficient to cover required interest and principal payments could result in defaults of the related debt. As of December 31, 2023, we had mortgage and other indebtedness, excluding deferred loan costs, totaling approximately $633.8 million.
Risk Factors Risks Related to Our Liquidity and Indebtedness We have significant debt and our failure to generate cash flow sufficient to cover required interest and principal payments could result in defaults of the related debt.
These events could result in some of our communities losing access to electricity, gas, water and other utilities for a period of time, and could also result in increased electricity and other utility expenses. Damage to facilities or loss of power or water could adversely impact our residents and result in a decline in occupancy at our communities.
These events have intensified in recent years and could result in some of our communities losing access to electricity, gas, water and other utilities for a period of time, and could also result in increased electricity and other utility expenses.
During the first quarter of 2024, we completed the 2024 Private Placement pursuant to which we issued and sold an aggregate of 5,026,318 Shares of our common stock to certain of our largest stockholders, including the Conversant Investors, at a price of $9.50 per share.
During 2024, we completed the 2024 Private Placement pursuant to which we issued and sold an aggregate of 5,026,318 Shares of our common stock to certain of our largest stockholders, including the Conversant Investors, at a price of $9.50 per share, we issued and sold an aggregate of 667,502 shares of our common stock pursuant to our At-the-Market Sales Agreement with Mizuho Securities USA LLC, and we issued and sold 4,830,317 shares of our common stock in an underwritten public offering at a public offering price of $27.00 per share.
Damage to facilities or loss of electricity or water could adversely impact our residents and result in a decline in occupancy at our communities. 21 Table of Contents The geographic concentration of our communities could leave us vulnerable to an economic downturn, regulatory changes, acts of nature, or the effects of climate change in those areas, which could negatively impact our financial condition, revenues, results of operations, and cash flow.
The geographic concentration of our communities could leave us vulnerable to an economic downturn, regulatory changes, acts of nature, including severe weather conditions or natural disasters, or the physical effects of climate change in those areas, which could negatively impact our financial condition, revenues, results of operations, and cash flow.
Increases in market interest rates have significantly increased the costs of our variable rate debt obligations, which has affected our liquidity and earnings. Our variable rate debt obligations and any future indebtedness, if applicable, exposes us to interest rate risk.
Elevated market interest rates, or future interest rate increases, could significantly increase the costs of our variable rate debt obligations, which may affect our cost of capital and, as a result, our liquidity and earnings. Our variable rate debt obligations and any future indebtedness, if applicable, exposes us to interest rate risk.
We believe that such regulation will increase in the future, and we are unable to predict the content of new regulations or their effect on our business, any of which could materially adversely affect our business, financial condition, cash flows, and results of operations. 24 Table of Contents Various states, including several of the states in which we currently operate, control the supply of licensed beds and assisted living communities through a “Certification of Need” requirement or other programs.
We believe that such regulation will increase in the future, and we are unable to predict the content of new regulations or their effect on our business, any of which could materially adversely affect our business, financial condition, cash flows, and results of operations.
For example, the California Consumer Privacy Act became effective in 2020, and we expect additional federal and state legislative and regulatory efforts to regulate consumer privacy protection in the future.
In addition, some states have begun to enact more comprehensive privacy laws and regulations addressing consumer rights to data protection or transparency. For example, the California Consumer Privacy Act became effective in 2020, and we expect additional federal and state legislative and regulatory efforts to regulate consumer privacy protection in the future.
General economic conditions, such as inflation, the consumer price index, commodity costs, fuel and other energy costs, competition in the labor market, costs of salaries, wages, benefits and insurance, interest rates and tax rates, affect our facility operating, general and administrative, and other expense. We have no control or limited ability to control such factors.
General economic conditions, such as elevated labor costs due to shortages of medical and non-medical staff, competition in the labor market, increased costs of salaries, wages and benefits, and immigration laws, the consumer price index, commodity costs, fuel and other energy costs, supply chain disruptions, increased insurance costs, tariffs, elevated interest rates and tax rates, affect our facility operating, general and administrative, and other expense.
We compete with other companies providing independent living, assisted living, home health care and other similar services and care alternatives. In addition, expanded use of telemedicine and home healthcare by seniors, for which regulatory barriers have been relaxed during the pandemic, may result in additional competition for our services.
In addition, expanded use of telemedicine and home healthcare by seniors, for which regulatory barriers have been relaxed during the pandemic, may result in additional competition for our services. We also compete with other health care businesses with respect to attracting and retaining nurses, technicians, aides and other high-quality professional and non-professional employees and managers.
The issuance of shares of our Series A Preferred Stock reduced the relative voting power of holders of our common stock, and the conversion of those shares into shares of our common stock would dilute the ownership of common stockholders and may adversely affect the market price of our common stock.
The issuance of shares of our Series A Preferred Stock reduced the relative voting power of holders of our common stock, and the conversion of those shares into shares of our common stock would dilute the ownership of common stockholders and may adversely affect the market price of our common stock. 27 Table of Contents The holders of our Series A Preferred Stock are entitled to vote, on an as-converted basis, together with holders of our common stock on all matters submitted to a vote of the holders of our common stock, which reduces the relative voting power of the holders of our common stock.
HIPAA has also established standards governing uniform health care transactions, the codes and identifiers to be used by the covered entities and standards governing the security of certain electronic transactions conducted by covered entities. Penalties for violations can range from civil money penalties for errors and negligent acts to criminal fines and imprisonment for knowing and intentional misconduct.
HIPAA has also established standards governing uniform health care transactions, the codes and identifiers to be used by the covered entities and standards governing the security of certain electronic transactions conducted by covered entities.
A public trading market having the desired depth, liquidity and orderliness depends on the presence of a sufficient number of willing buyers and sellers for our common stock at any given time. This presence is impacted by general economic and market conditions and investors’ views of us.
However, the average daily trading volume in our common stock is significantly less than that of larger public companies. A public trading market having the desired depth, liquidity and orderliness depends on the presence of a sufficient number of willing buyers and sellers for our common stock at any given time.
As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our cybersecurity or to investigate and remediate any cybersecurity vulnerabilities, attacks, or incidents. In addition, we rely on software support of third parties to secure and maintain our information systems and data.
As cyber threats continue to evolve, such as threats related to AI, we may be required to expend significant additional resources to 20 Table of Contents continue to modify or enhance our cybersecurity or to investigate and remediate any cybersecurity vulnerabilities, attacks, or incidents.
It is the policy of our board of directors to retain any future earnings to finance the operation and expansion of our business. Accordingly, we have not and do not currently anticipate declaring or paying cash dividends on your common stock in the foreseeable future.
Accordingly, we have not and do not currently anticipate declaring or paying cash dividends on your common stock in the foreseeable future.
Risks Related to Our Corporate Organization and Structure Anti-takeover provisions in our governing documents, governing law, and material agreements may discourage, delay or prevent a merger or acquisition that our stockholders may consider favorable or prevent the removal of our current board of directors and management.
If we become subject to any of these claims, the costs involved could be significant and could have a material adverse effect on our business, financial condition, cash flows and results of operations. 26 Table of Contents Risks Related to Our Corporate Organization and Structure Anti-takeover provisions in our governing documents, governing law, and material agreements may discourage, delay or prevent a merger or acquisition that our stockholders may consider favorable or prevent the removal of our current board of directors and management.
A significant increase in our labor costs or labor shortages could have a material adverse effect on us. We compete with other providers of senior living services with respect to attracting and retaining qualified management personnel responsible for the day-to-day operations of each of our communities and skilled personnel responsible for providing resident care.
We compete with other providers of senior living services with respect to attracting and retaining qualified management personnel responsible for the day-to-day operations of each of our communities and skilled personnel responsible for providing resident care. In light of labor shortages for medical and non-medical workers in many geographic areas, we may increasingly compete to attract qualified and experienced employees.
In addition, our insurance policies must be renewed annually. Based upon poor loss experience and the impact of the COVID-19 pandemic, insurers for the long-term care industry have become increasingly wary of liability exposure.
In addition, our insurance policies must be renewed annually. Based upon poor loss experience and the impact of pandemics, insurers for the long-term care industry have become increasingly wary of liability exposure. A number of insurance carriers have stopped writing coverage to this market or reduced the level of coverage offered, and those remaining have increased premiums and deductibles substantially.
Risks Related to Other Market Factors • Various factors, including general economic conditions such as rising inflation, could adversely affect our financial performance and other aspects of our business. • Future offerings of equity securities by us may adversely affect the market price of our common stock. • The price of our common stock has fluctuated substantially over the past several years and may continue to fluctuate substantially in the future. • Our trading volume may not provide adequate liquidity for investors.
Risks Related to Other Market Factors • Various factors, including general economic conditions such as elevated labor costs , could adversely affect our financial performance and other aspects of our business. • Future sales of equity securities by us or certain stockholders may adversely affect the market price of our common stock. • Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future, and as a result, investors in our common stock could incur substantial losses. • Our trading volume may not provide adequate liquidity for investors. • We may issue debt and preferred equity securities or securities convertible into preferred equity securities, any of which may be senior to our common stock as to distributions and in liquidation.
The resale of a substantial number of shares of common stock in the public market, or the perception that such resale might occur, could cause the market price of our common stock to decline. Any shares sold in a registered resale will be freely tradable without restriction under the Securities Act.
The resale of a substantial number of shares of common stock in the public market, or the perception that such resale might occur, could cause the market price of our common stock to decline and impair our ability to raise capital through the sale of additional equity securities.
The SOFR steadily increased throughout 2023, ending the year approximately 110 basis points higher than as of December 31, 2022. All of our long-term variable rate debt is subject to interest rate cap agreements and include provisions that obligate us to enter into additional interest rate cap agreements upon the maturity of the existing interest rate cap agreements.
The majority of our long-term variable rate debt of $185.1 is subject to interest rate cap agreements and include provisions that obligate us to enter into additional interest rate cap agreements upon the maturity of the existing interest rate cap agreements.
Any of the foregoing could materially and adversely impact our revenues, results of operations, cash flow, and liquidity. Because we do not presently have plans to pay dividends on our common stock, holders of our common stock must look solely to appreciation of our common stock to realize a gain on their investment.
Because we do not presently have plans to pay dividends on our common stock, holders of our common stock must look solely to appreciation of our common stock to realize a gain on their investment. It is the policy of our board of directors to retain any future earnings to finance the operation and expansion of our business.
Our subsidiaries are legally distinct from us and have no obligation to make funds available to us. 27 Table of Contents Risks Related to Other Market Factors Various factors, including general economic conditions such as rising inflation, could adversely affect our financial performance and other aspects of our business.
Risks Related to Other Market Factors Various factors, including general economic conditions such as elevated labor costs, could adversely affect our financial performance and other aspects of our business.
Further, pursuant to the Registration Rights Agreement between the Company and the Conversant Investors in compliance with certain agreements to which the Company is a party, we are required to register the resale of shares of common stock that are either outstanding or issuable upon conversion of Series A Preferred Stock and the exercise of outstanding warrants.
Further, we have registered the resale of shares of common stock issued to certain stockholders that are either outstanding or issuable upon conversion of Series A Preferred Stock and the exercise of outstanding warrants.
In the event of a loss in excess of insured limits, such loss could have a material adverse effect on our business, financial condition, cash flows, and results of operations.
However, there can be no assurance that adverse weather or natural events will not cause substantial damages or losses to our communities that could exceed our insurance coverage. In the event of a loss in excess of insured limits, such loss could have a material adverse effect on our business, financial condition, cash flows, and results of operations.
Our decision to issue equity securities in a future offering will depend on market conditions and other factors, some of which are beyond our control. We cannot predict or estimate the amount, timing or nature of our future offerings.
Additional equity offerings, including sales under our ATM Sales Agreement, may dilute the economic and voting rights of our existing stockholders and/or reduce the market price of our common stock. Our decision to issue equity securities in a future offering will depend on market conditions and other factors, some of which are beyond our control.
We rely upon the quality of our staff as a means to differentiate our services from other providers. A shortage of nurses or trained personnel may require us to enhance our wage and benefits package in order to compete in the hiring and retention of these personnel or to hire more expensive temporary personnel.
A shortage of nurses or trained personnel may require us to enhance our wage and benefits package in order to compete in the hiring and retention of these personnel or to hire more expensive temporary personnel. We also will be dependent on the available labor pool of semi-skilled and unskilled employees in each of the markets in which we operate.
Therefore, any increase in prevailing interest rates such as the current environment would increase our future interest obligations, which could have a material adverse effect on our business, financial condition, cash flows, and results of operations.
Therefore, elevated prevailing interest rates, or future increases in interest rates, could further increase our future interest obligations, which could increase our cost of capital and, in turn, have a material adverse effect on our business, financial condition, cash flows, and results of operations, including our ability to finance operations, acquire and develop senior living communities, and refinance existing indebtedness.
In those states, approval is required for the addition of licensed beds and some capital expenditures at those communities.
Various states, including several of the states in which we currently operate, control the supply of licensed beds and assisted living communities through a “Certification of Need” requirement or other programs. In those states, approval is required for the addition of licensed beds and some capital expenditures at those communities.
We maintain insurance policies, including coverage for business interruption, designed to mitigate financial losses resulting from such adverse weather and natural events. However, there can be no assurance that adverse weather or natural events will not cause substantial damages or losses to our communities that could exceed our insurance coverage.
Damage to facilities or loss of power or water could adversely impact our residents and result in a decline in occupancy at our communities. We maintain insurance policies, including coverage for business interruption, designed to mitigate financial losses resulting from such adverse weather and natural events.
We also will be dependent on the available labor pool of semi-skilled and unskilled employees in each of the markets in which we operate. Historically, labor costs have comprised of approximately two-thirds of our total operating expenses. We experienced pressures associated with the intensely competitive labor environment during 2022, which continued throughout 2023.
Historically, labor costs have comprised of approximately two-thirds of our total operating expenses. We experienced pressures associated with the intensely competitive labor environment during 2023, which continued throughout 2024. The United States’ unemployment rate remained at or below 4.2% each month during 2024 and 2023, and many states experienced record low unemployment rates.
The senior living services industry is very competitive and some competitors may have substantially greater financial resources than us. The senior living services industry is highly competitive, and we expect that all segments of the industry will become increasingly competitive in the future.
The senior living services industry is highly competitive, and we expect that all segments of the industry will become increasingly competitive in the future. We compete with other companies providing independent living, assisted living, home health care and other similar services and care alternatives.
We used a portion of the proceeds from the 2024 Private Placement to fund the remaining cash portion of the purchase price for the Protective Life Loan Purchase. Disruptions in the financial markets may have a significant adverse effect on the market value of our common stock and other adverse effects on us and our business.
Risk Factors— Future sales of equity securities by us or certain stockholders may adversely affect the market price of our common stock .” Disruptions in the financial markets may have a significant adverse effect on the market value of our common stock and other adverse effects on us and our business.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Chief Technology Officer also supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, including by collaborating with 29 Table of Contents external security personnel and internal business stakeholders, and incorporating threat intelligence and other information obtained from governmental, public, or private sources to inform our cybersecurity technologies and processes.
Biggest changeThe Chief Technology Officer also supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, including by collaborating with external security personnel and internal business stakeholders, and incorporating threat intelligence and other information obtained from governmental, public, or private sources to inform our cybersecurity technologies and processes.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy 28 Table of Contents We have developed and implemented a cybersecurity framework intended to assess, identify, and manage risks from threats to the security of our information, systems, products, and network using a risk-based approach.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity framework intended to assess, identify, and manage risks from threats to the security of our information, systems, products, and network using a risk-based approach.
When a cybersecurity incident occurs or we identify a vulnerability, we have a strategic partner (a Managed Security Service Provider (“MSSP”)) that is responsible for leading the initial assessment of priority and severity.
When a cybersecurity incident occurs or we identify a vulnerability, we have a strategic partner (a Managed Security Service Provider (“MSSP”)) that is responsible for leading the initial 30 Table of Contents assessment of priority and severity.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES. Our executive and administrative offices are located at 14755 Preston Road, Suite 810, Dallas, Texas 75254, and consist of approximately 8,900 square feet. Our sublease on the premises extends through January 31, 2025.
Biggest changeITEM 2. PROPERTIES. Our executive and administrative offices are located at 14755 Preston Road, Suite 810, Dallas, Texas 75254, and consist of approximately 12,723 square feet. Our lease on the premises extends through April 30, 2028 with a three-year extension option.
As of December 31, 2023, we owned or managed the senior housing communities referred to in Part I, Item 1 above under the caption “Operating Communities.”
As of December 31, 2024, we owned, managed, or invested in the senior housing communities referred to in Part I, Item 1 above under the caption “Operating Communities.”

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhether or not covered by insurance, these claims, in the opinion of management, and based on advice of legal counsel, should not have a material effect on our consolidated financial statements if determined adversely to us. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 30 Table of Contents PART II
Biggest changeWhether or not covered by insurance, these claims, in the opinion of 31 Table of Contents management, and based on advice of legal counsel, should not have a material effect on our consolidated financial statements if determined adversely to us. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 32 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe used approximately $15.4 million of the proceeds from the Private Placement to fund the remaining cash portion of the purchase price for the Protective Life Loan Purchase. We expect to use the remaining proceeds from the Private Placement for capital expenditure projects at our senior living communities, working capital, potential acquisition opportunities and other general corporate purposes.
Biggest changeWe used approximately $15.4 million of the proceeds from the 2024 Private Placement to fund the remaining cash portion of the purchase price for a buyback of certain of our mortgages. We used the remaining proceeds from the 2024 Private Placement for capital expenditure projects at our senior living communities, working capital, acquisitions and other general corporate purposes.
Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) Total at September 30, 2023 32,941 $ 104.10 32,941 $ 6,570,222 October 1 – October 31, 2023 — — — 6,570,222 November 1 – November 30, 2023 — — — 6,570,222 December 1 – December 31, 2023 — — — 6,570,222 Total at December 31, 2023 32,941 $ 104.10 32,941 $ 6,570,222 _______________________________________ (1) Does not include shares withheld to satisfy tax liabilities due upon the vesting of restricted stock, all of which have been reported in Form 4 filings relating to the Company.
Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) Total at September 30, 2024 32,941 $ 104.10 32,941 $ 6,570,222 October 1 – October 31, 2024 — — — 6,570,222 November 1 – November 30, 2024 — — — 6,570,222 December 1 – December 31, 2024 — — — 6,570,222 Total at December 31, 2024 32,941 $ 104.10 32,941 $ 6,570,222 _______________________________________ (1) Does not include shares withheld to satisfy tax liabilities due upon the vesting of restricted stock, all of which have been reported in Form 4 filings relating to the Company.
The average price paid per share for such share withholding is based on the closing price per share on the vesting date of the restricted stock or, if such date is not a trading day, the trading day immediately prior to such vesting date. 31 Table of Contents (2) On January 22, 2009, the Company’s board of directors approved a share repurchase program that authorized the Company to purchase up to $10.0 million of the Company’s common stock.
The average price paid per share for such share withholding is based on the closing price per share on the vesting date of the restricted stock or, if such date is not a trading day, the trading day immediately prior to such vesting date. 33 Table of Contents (2) On January 22, 2009, the Company’s board of directors approved a share repurchase program that authorized the Company to purchase up to $10.0 million of the Company’s common stock.
(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers. The following information is provided pursuant to Item 703 of Regulation S-K. The information set forth in the table below reflects information regarding the aggregate shares repurchased by the Company pursuant to its share repurchase program (as described below) as of December 31, 2023.
(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers. The following information is provided pursuant to Item 703 of Regulation S-K. The information set forth in the table below reflects information regarding the aggregate shares repurchased by the Company pursuant to its share repurchase program (as described below) as of December 31, 2024.
Securities Authorized for Issuance Under Equity Compensation Plans The following table presents information relating to the Company’s equity compensation plans as of December 31, 2023: Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of the Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column) Equity compensation plans approved by security holders — $ — 601,617 Equity compensation plans not approved by security holders — — — Total — $ — 601,617 (b) Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities.
Securities Authorized for Issuance Under Equity Compensation Plans The following table presents information relating to the Company’s equity compensation plans as of December 31, 2024: Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of the Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column) Equity compensation plans approved by security holders — $ — 809,209 Equity compensation plans not approved by security holders — — — Total — $ — 809,209 (b) Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities.
Market Information and Holders The Company’s shares of common stock are listed for trading on the NYSE under the symbol “SNDA.” As of March 25, 2024 , there were 41 known registered stockholders of record of the Company’s common stock.
Market Information and Holders The Company’s shares of common stock are listed for trading on the New York Stock Exchange under the symbol “SNDA.” As of March 13, 2025 , there were 39 known registered stockholders of record of the Company’s common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYears Ended December 31, 2023 2022 (in thousands) $ % $ % Revenues: Resident revenue $ 232,032 90.9 $ 208,703 87.5 Management fees 2,191 0.9 2,359 1.0 Managed community reimbursement revenue 21,099 8.3 27,371 11.5 Total revenues $ 255,322 100.0 % $ 238,433 100.0 % Expenses: Operating expense 177,323 69.5 171,635 72.0 General and administrative expense 32,198 12.6 30,286 12.7 Depreciation and amortization expense 39,888 15.6 38,448 16.1 Long-lived asset impairment 5,965 2.3 1,588 0.7 Managed community reimbursement expense 21,099 8.3 27,371 11.5 Total expenses 276,473 * 269,328 * Other income (expense): Interest income 608 0.2 235 0.1 Interest expense (36,118) (14.1) (33,025) (13.9) Gain (loss) on extinguishment of debt, net 36,339 14.2 (641) (0.3) Other income (expense), net (532) (0.2) 10,011 4.2 Loss before provision for income taxes (20,854) (8.2) (54,315) (22.8) Provision for income taxes (253) (0.1) (86) — Net loss $ (21,107) (8.3) % $ (54,401) (22.8) % * Represents positive or negative change in excess of 100% Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Revenues Resident revenue for the year ended December 31, 2023 was $232.0 million as compared to $208.7 million for the year ended December 31, 2022, an increase of $23.3 million, or 11.2%.
Biggest changeYears Ended December 31, 2024 2023 (in thousands) $ % $ % Revenues: Resident revenue $ 267,849 88.0 $ 232,032 90.9 Management fees 3,381 1.1 2,191 0.9 Managed community reimbursement revenue 33,096 10.9 21,099 8.3 Total revenues $ 304,326 100.0 % $ 255,322 100.0 % Expenses: Operating expense 202,015 66.4 177,323 69.5 General and administrative expense 39,997 13.1 32,198 12.6 Depreciation and amortization expense 44,051 14.5 39,888 15.6 Long-lived asset impairment — — 5,965 2.3 Managed community reimbursement expense 33,096 10.9 21,099 8.3 Total expenses 319,159 * 276,473 * Other income (expense): Interest income 1,681 0.6 608 0.2 Interest expense (36,990) (12.2) (36,118) (14.1) Gain on extinguishment of debt, net 48,536 15.9 36,339 14.2 Loss from equity method investment (895) (0.3) — — Other expense, net (540) (0.2) (532) (0.2) Loss before provision for income taxes (3,041) (1.0) (20,854) (8.2) Provision for income taxes (239) (0.1) (253) (0.1) Net loss $ (3,280) (1.1) % $ (21,107) (8.3) % Less: Net loss attributable to noncontrolling interests 1,221 0.4 — — Net loss attributable to Sonida shareholders $ (2,059) (0.7) % $ (21,107) (8.3) % * Represents a percentage in excess of 100%.
Critical Accounting Policies The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements and related notes.
Critical Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements and related notes.
Overview The following discussion and analysis addresses (i) the Company’s results of operations on a historical consolidated basis for the years ended December 31, 2023 and 2022, and (ii) liquidity and capital resources of the Company, and should be read in conjunction with the Company’s historical consolidated financial statements and the selected financial data contained elsewhere in this Annual Report on Form 10-K.
Overview The following discussion and analysis addresses (i) the Company’s results of operations on a historical consolidated basis for the years ended December 31, 2024 and 2023, and (ii) liquidity and capital resources of the Company, and should be read in conjunction with the Company’s historical consolidated financial statements and the selected financial data contained elsewhere in this Annual Report on Form 10-K.
The Company generally 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.
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.
Continued increased competition for, or a shortage of, nurses and other employees and general inflationary pressures have required and may require that we enhance our pay and benefits package to compete effectively for such employees. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Continued increased competition for, or a shortage of, nurses and other employees and general inflationary pressures have required and may require that we enhance our pay and benefits package to compete effectively for such employees. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable. 43 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
For 2024, we expect to continue to experience labor cost pressures as a result of the continuing labor conditions previously described and an anticipated increase in hours worked as our occupancy levels grow.
For 2025, we expect to continue to experience labor cost pressures as a result of the continuing labor conditions previously described and an anticipated increase in hours worked as our occupancy levels grow.
Under the Fannie Forbearance, Fannie Mae agreed to forbear on its remedies otherwise available under the community mortgages and Master Credit Facility (“MCF”) in connection with reduced debt service payments made by the Company during the forbearance period. In connection with the Fannie Forbearance, the Company made a $5.0 million principal payment in July 2023.
Under the Fannie Forbearance, Fannie Mae agreed to forbear on its remedies otherwise available under the community mortgages and Master Credit Facility (“MCF”) in connection with reduced debt service payments made by us during the forbearance period. In connection with the Fannie Forbearance, we made a $5.0 million principal payment in July 2023.
The Company recognized a non-cash impairment charge of $6.0 million to its “Property and equipment, net” during the year ended December 31, 2023, which related to one owned community. In addition, the Company recognized a non-cash impairment charge of $1.6 million to its “Property and equipment, net” during the year ended December 31, 2022, which related to one owned community.
The Company recognized a non-cash impairment charge of $6.0 million to its “Property and equipment, net” during the year ended December 31, 2023, which related to one owned community.
Financing activities The net cash used in financing activities for the year ended December 31, 2023 primarily results from repayments of notes payable of $13.8 million, deferred financing costs paid of $0.8 million, and purchase of derivative assets of $2.4 million, partially offset by proceeds of $10.0 million from equity draws under the Equity Commitment.
The net cash used in financing activities for the year ended December 31, 2023 of $7.1 million was primarily due to repayments of notes payable of $13.8 million, purchase of derivative assets of $2.4 million, and deferred financing costs paid of $0.8 million, partially offset by proceeds of $10.0 million from equity draws under the equity commitment.
Our non-labor operating expenses have historically comprised of approximately one-third of o ur total operating expenses and are subject to inflationary pressures. The United States consumer price index increased 3.4% during 2023, as compared to an increase of 6.5% in 2022, with food and energy prices increasing approximately 70 basis points.
Our non-labor operating expenses have historically comprised of approximately one-third of o ur total operating expenses and are subject to inflationary pressures. The United States consumer price index increased 2.9% during 2024, as compared to an increase of 3.4% in 2023, with food and energy prices increasing approximately 200 basis points.
The 2024 Private Placement occurred in two tranches. The first tranche occurred on February 1, 2024, in which 3,350,878 Shares were issued and sold to the Investors for a total of approximately $31.8 million. The second tranche occurred on March 22, 2024, in which 1,675,440 Shares were issued and sold to the Investors for a total of approximately $15.9 million.
The 2024 Private Placement occurred in two tranches. The first tranche occurred on February 1, 2024, at which time 3,350,878 shares of common stock were issued and sold to the Investors for $31.8 million. The second tranche occurred on March 22, 2024, at which time 1,675,440 shares of common stock were issued and sold to the Investors for $15.9 million.
The average monthly rental rate for these owned communities for the year ended December 31, 2023 was 9.6% higher when compared to the year ended December 31, 2022.
The average monthly rental rate for these owned communities for the year ended December 31, 2024 was 5.9% higher when compared to the year ended December 31, 2023.
Net loss As a result of the foregoing factors, the Company reported net loss of $21.1 million for the year ended December 31, 2023, compared to $54.4 million for the year ended December 31, 2022.
Net loss As a result of the foregoing factors, the Company reported net loss of $3.3 million for the year ended December 31, 2024, compared to net loss of $21.1 million for the year ended December 31, 2023.
During the first quarter of 2024, we completed the Private Placement Transaction pursuant to which we issued and sold an aggregate of 5,026,318 Shares of our common stock with several shareholders for gross cash proceeds of approximately $47.8 million, which enabled us to purchase all debt outstanding with Protective Life at a substantial discount, as well as fund future working capital and growth initiatives.
During 2024, we completed the 2024 Private Placement pursuant to which we issued and sold an aggregate of approximately 5.0 million shares of our common stock to several of our shareholders for gross cash proceeds of $47.8 million, which enabled us to purchase all the Company's debt then outstanding with a certain lender at a substantial discount, as well as fund future working capital and growth initiatives.
Other income and expense Interest income generally reflects interest earned on the investment of cash balances and escrow funds or interest associated with certain income tax refunds or property tax settlements. Interest income increased by $0.4 million compared to the prior year primarily due to more active cash management and increased investment in money market accounts.
Other income and expense Interest income generally reflects interest earned on the investment of cash balances and escrow funds or interest associated with certain income tax refunds or property tax settlements. Interest income increased by $1.1 million compared to the prior year primarily due to an average increased investment balance in money market accounts.
Liquidity and Capital Resources In addition to approximately $4.1 million of unrestricted cash balances on hand as of December 31, 2023, 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.
Liquidity and Capital Resources In addition to approximately $17.0 million of unrestricted cash balance as of December 31, 2024, 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.
The remaining variance of $0.5 million represents the inflationary impact from the remaining recurring general and administrative expenses. During the year ended December 31, 2023, the Company recorded a non-cash impairment charge of $6.0 million related to one owned community with decreased cash flow estimates as a result of recurring net operating losses.
During the year ended December 31, 2023, the Company recorded a non-cash impairment charge of $6.0 million related to one owned community with decreased cash flow estimates as a result of recurring net operating losses.
At each balance sheet date, the Company reviews the carrying value of its property and equipment to determine if facts and circumstances suggest that they may be impaired or that the depreciation period may need to be changed.
Long-Lived Assets and Impairment The Company continuously reviews the carrying value of its property and equipment to determine if facts and circumstances suggest that they may be impaired or that the depreciation period may need to be changed.
We cannot provide assurance that we would be able to pay the debts if they became due upon acceleration following an event of default. Except for the non-compliance with certain mortgage loan agreements with Protective Life, the Company was in compliance with all other aspects of its outstanding indebtedness as of December 31, 2023.
We cannot provide assurance that we would be able to pay the debts if they became due upon acceleration following an event of default. The Company was in compliance with all financial covenants of its outstanding indebtedness as of December 31, 2024.
Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially could result in materially different results under different assumptions and conditions.
Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially could result in materially different results under different assumptions and conditions. The Company believes the following are our most critical accounting policies and/or typically require management’s most difficult, subjective, and complex judgments.
General and administrative expenses for the year ended December 31, 2023 were $32.2 million as compared to $30.3 million for year ended December 31, 2022, an increase of $1.9 million, or 6.3%.
General and administrative expenses for the year ended December 31, 2024 were $40.0 million as compared to $32.2 million for year ended December 31, 2023, an increase of $7.8 million, or 24.2%.
See “ Note 16–Subsequent Events ” in the Notes to Consolidated Financial Statements. Impact of Inflation The continuation of the current inflationary environment could affect the Company’s future revenues and results of operations because of, among other things, the Company’s dependence on senior residents, many of whom rely primarily on fixed incomes to pay for the Company’s services.
Other Liquidity Factors The continuation of the currently elevated inflationary environment could affect the Company’s future revenues and results of operations because of, among other things, the Company’s dependence on senior residents, many of whom rely primarily on fixed incomes to pay for the Company’s services.
The increase primarily resulted from merit and market wage rate adjustments, more hours worked with higher occupancy during 2023, and an increase in the use of premium labor, primarily contract labor and overtime.
To cover existing open positions, during 2023 and continuing into 2024, we needed to rely on more expensive premium labor, primarily shift bonuses and overtime. The increase primarily resulted from merit and market wage rate adjustments, more hours worked with higher occupancy during 2024, and an increase in the use of premium labor, primarily shift bonuses and overtime.
The Company, from time to time, considers and evaluates financial and capital raising transactions related to its portfolio, including debt refinancings, purchases and sales of assets, equity financings and other transactions.
See “ Note 8 – Debt ” and “ Note 9 –S ec urities 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 refinancings, purchases and sales of assets, equity offerings and other transactions.
For 2024, we expect to continue to experience inflationary pressures. Historically, labor costs have comprised of approximately two-thirds of our total operating expenses. We began to experience pressures associated with the intensely competitive labor environment during 2022, which continued throughout 2023.
Historically, labor costs have comprised of approximately two-thirds of our total operating expenses. We began to experience pressures associated with the intensely competitive labor environment during 2022, which continued throughout 2023 and 2024. Labor pressures have resulted in higher-than-typical associate turnover and wage growth, and we have experienced difficulty in filling open positions timely.
On February 2, 2024, the Company completed the purchase of the total outstanding principal balance of $74.4 million from Protective Life that was secured by seven of the Company’s senior living communities for a purchase price of $40.2 million (such transaction, the “Protective Life Loan Purchase”).
In February 2024, the Company completed the purchase of the total outstanding principal balance of $74.4 million from the lender which loans were secured by seven of the Company’s senior living communities (such transaction, the “2024 Loan Purchase”).
The respective lender would have the right to declare all of the 41 Table of Contents related outstanding amounts of indebtedness immediately due and payable, to foreclose on our mortgaged communities and/or pursue other remedies available to such lender.
Furthermore, our debt is secured by our communities and if an event of default has occurred under any of our debt, subject to cure provisions in certain instances, the respective lender would have the right to declare all of the related outstanding amounts of indebtedness immediately due and payable, to foreclose on our mortgaged communities and/or pursue other remedies available to such lender.
Managed community reimbursement expense for the year ended December 31, 2023 was $21.1 million as compared to $27.4 million for the year ended December 31, 2022, a decrease of $6.3 million, or 22.9%. The decrease was primarily a result of managing fewer communities in 2023.
Managed community reimbursement expense for the year ended December 31, 2024 was $33.1 million as compared to $21.1 million for the year ended December 31, 2023, an increase of $12.0 million, or 56.9%. The increase was primarily a result of managing more communities during the year ended December 31, 2024 as compared to the prior year period.
The remaining 19 communities under the MCF have existing maturities in January 2029. • The Company is not required to make scheduled principal payments due under the 18 community mortgages and 19 communities under the MCF through the revised maturity date of December 2026 or 36 months from the Fannie Forbearance Effective Date, respectively. • The monthly interest rate will be reduced by a 1.5% weighted average on all 37 communities for 12 months from the Fannie Forbearance Effective Date and deferred until it is contractually waived in June 2024 so long as there is no event of default (the “Fannie Interest Abatement Period”). • The Company is required to make a second principal payment of $5.0 million with respect to the Fannie Mae debt which is due on June 1, 2024, the one-year anniversary of the Fannie Forbearance Effective Date. • The Company provided a full corporate guaranty in the amount of $5.0 million related to the second principal payment of $5.0 million (the “Second Payment Guaranty”).
The remaining 19 communities under the MCF have existing maturities in January 2029. • We were not required to make scheduled principal payments due under the 18 community mortgages and 19 communities under the MCF through the initially revised maturity date of December 2026 or 36 months from the Fannie Forbearance Effective Date, respectively. • The monthly interest rate was reduced by a 1.5% weighted average on all 37 communities for 12 months from the Fannie Forbearance Effective Date and deferred until it was contractually waived in June 2024, when the “Fannie Interest Abatement Period” expired because of the Company’s compliance with certain required default covenants. • We were required to make a second principal payment of $5.0 million with respect to the Fannie Mae debt, which was paid in June 2024 on the one-year anniversary of the Fannie Forbearance Effective Date. 2024 Community Mortgage Loans On December 31, 2024, as part of the Cincinnati Acquisition, the Company entered into a non-recourse mortgage loan of $18.3 million for a term of 84-months and 24-month interest waiver with a 3% fixed-interest-only rate thereafter. 36 Table of Contents In May 2024, as part of the Macedonia Acquisition, the Company entered into a $9.4 million mortgage loan with a 60-month term and a variable interest rate equal to 1-month SOFR plus 2.00% margin.
The decrease was primarily a result of managing fewer communities in 2023. Expenses Operating expenses for the year ended December 31, 2023 were $177.3 million as compared to $171.6 million for the year ended December 31, 2022, an increase of $5.7 million.
The increase was primarily a result of managing three more third-party and four unconsolidated joint venture communities during the year ended December 31, 2024. Expenses Operating expenses for the year ended December 31, 2024 were $202.0 million as compared to $177.3 million for the year ended December 31, 2023, an increase of $24.7 million.
See “Note 5–Property and Equipment, net.” New Accounting Pronouncements See “Note 3–Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements for a discussion of new accounting pronouncements. 38 Table of Contents Results of Operations The following table includes our Consolidated Statements of Operations data in thousands of dollars and expressed as a percentage of total revenues for the years ended December 31, 2023 and 2022.
Results of Operations The following table includes our Consolidated Statements of Operations data in thousands of dollars and expressed as a percentage of total revenues for the years ended December 31, 2024 and 2023.
Debt Covenants Certain of our debt agreements contain restrictions and financial covenants, such as those requiring us to maintain prescribed minimum debt service coverage ratios, in each case on a multi-community basis. The debt service coverage ratios are generally calculated as revenues less operating expenses, including an implied management fee, divided by the debt (principal and interest).
See “Note 8–Debt” and “Note 9–Securities Financing” in the Notes to Consolidated Financial Statements. Debt Covenants Certain of our debt agreements contain restrictions and financial covenants, such as those requiring us to maintain prescribed minimum debt service coverage ratios, in each case on a multi-community basis.
Risk Factors.” In summary, the Company’s cash flows were as follows (in thousands): Years Ended December 31, 2023 2022 Net cash provided by (used in) operating activities $ 10,683 $ (2,578) Net cash used in investing activities (16,562) (36,904) Net cash used in financing activities (7,113) (22,652) Decrease in cash and cash equivalents $ (12,992) $ (62,134) Operating activities The net cash provided by operating activities for the year ended December 31, 2023 primarily results from increases in operating assets and liabilities of $13.8 million.
Risk Factors.” In summary, the Company’s cash flows were as follows (in thousands): Years Ended December 31, 2024 2023 $ Change Net cash provided by (used in) operating activities $ (1,782) $ 10,683 $ (12,465) Net cash used in investing activities (208,923) (16,562) $ (192,361) Net cash provided by (used in) financing activities 232,042 (7,113) 239,155 Increase (decrease) in cash and cash equivalents $ 21,337 $ (12,992) $ 34,329 Operating activities Net cash used in operating activities for the year ended December 31, 2024 was $1.8 million as compared to net cash provided by operating activities of $10.7 million for the year ended December 31, 2023.
We mitigated a portion of the increase in food costs with the scale benefit of a higher number of residents, along with appropriate product substitution. As a result of our mitigation efforts, for 2023 our non-labor operating expense in our community portfolio decreased approximately $0.8 million, compared to the prior year.
We mitigated a portion of the increase in food costs with the scale benefit of a higher number of residents, along with appropriate product substitution. For 2024 our non-labor operating expense on the same-store communities increased 2.4% as compared to the prior year. For 2025, we expect to continue to experience increases tied in to overall inflationary pacing.
The Company entered into Loan Modification Agreements with Fannie Mae on October 2, 2023. The material terms of the Loan Modification Agreements are as follows: 32 Table of Contents • Maturities on 18 community mortgages, ranging from July 2024 to December 2026, have been extended to December 2026.
Some of the material terms of the Loan Modification Agreements are as follows: • Maturities on 18 community mortgages, ranging from July 2024 to December 2026, were extended to December 2026 (and were subsequently extended to January 2029, as described below).
Principal sources of liquidity are expected to be cash flows from operations, proceeds from equity financings, proceeds from debt refinancings or loan modifications, and proceeds from the sale of owned assets. During 2023, we entered into l oan modifications with Fannie Mae, an amendment with Ally Bank, including a revised Limited Payment Guaranty, and an Equity Commitment with Conversant.
During 2023, we entered into loan modifications with Fannie Mae, an amendment with Ally Bank, including a revised Limited Payment Guaranty, and an equity commitment with Conversant.
In evaluating our long-lived assets for impairment, we undergo continuous evaluations of property level performance and real estate trends, and management makes several estimates and assumptions, including, but not limited to, the projected date of disposition, estimated sales price, and future cash flows of each property during our estimated holding period.
To estimate fair value management makes several estimates and assumptions, including, but not limited to, the projected date of disposition, estimated sales price, future cash flows of each property during our estimated holding period, and estimated capitalization rates. We corroborate the estimated capitalization rates we use in these calculations with capitalization rates observable from recent market transactions.
During November 2023, the Company modified its payment terms on the Healthpeak note payable to include four quarterly installments beginning in January 2024. 2024 Private Placement Transaction On February 1, 2024, we entered into a securities purchase agreement with certain of our largest shareholders, including the Conversant Investors, pursuant to which the Investors agreed to purchase from us, and we agreed to sell to the Investors, in a private placement transaction (the “2024 Private Placement”) an aggregate of 5,026,318 shares (the “Shares”) of our common stock at a price of $9.50 per share.
During 2024, the Company sold an aggregate of 667,502 shares pursuant to the ATM Sales Agreement for net proceeds of $18.7 million, after applicable commissions. 2024 Private Placement Transaction On February 1, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with affiliates of Conversant Capital, LLC and several other shareholders (together, the “Investors”), pursuant to which the Investors agreed to purchase from the Company, and the Company agreed to sell to the Investors, in a private placement transaction (the “2024 Private Placement”), an aggregate of 5,026,318 shares of the Company’s common stock at a price of $9.50 per share.
The Fannie Forbearance was the first of a two-step process to modify all existing mortgage loan agreements with Fannie Mae by October 2023 under proposed loan modification agreement, as defined in the Fannie Forbearance (“Loan Modification Agreements.”) T erms outlined in an agreed upon term sheet accompanying the Fannie Forbearance were included in the Loan Modification Agreements as the final step to modify the various 37 Fannie Mae community mortgages and MCF prior to the expiration of the Fannie Forbearance, which was subsequently extended to October 6, 2023.
The Fannie Forbearance was the first of a two-step process to modify all existing mortgage loan agreements with Fannie Mae by October 2023 under proposed loan modification agreements, as defined in the Fannie Forbearance (“Loan Modification Agreements”). We entered into Loan Modification Agreements with Fannie Mae in October 2023.
Interest expense for the year ended December 31, 2023 was $36.1 million as compared to $33.0 million for the year ended December 31, 2022, an increase of $3.1 million, or 9.4%, due to increased interest rates associated with the Company’s variable rate mortgages and the additional interest expense on the two Indiana communities financed during December 2022.
Interest expense for the year ended December 31, 2024 was $37.0 million as compared to $36.1 million for the year ended December 31, 2023, an increase of $0.9 million, or 2.4%, due to the incremental borrowings associated with the Company's 2024 community acquisitions, partially offset by a decrease in the Company's SOFR-based variable rate debt.
As of December 31, 2023, the Company operated 71 senior housing communities in 18 states with an aggregate capacity of approximately 8,000 residents, including 61 senior housing communities that the Company owned and 10 communities that the Company managed on behalf of third parties.
As of December 31, 2024, the Company owned, managed, or invested in 94 senior housing communities in 20 states with an aggregate capacity of approximately 10,000 residents, including 81 owned senior housing communities (including four owned through joint venture investments in consolidated entities, four owned through a joint venture investment in an unconsolidated entity, and one unoccupied) and 13 communities that the Company managed on behalf of a third party.
The increase in revenue was primarily due to increased occupancy, increased average rent rates, and the acquisition of two new communities in Q1 2022.
The increase in revenue was primarily due to increased occupancy, increased average rent rates, and 16 additional consolidated communities acquired during 2024 (including one unoccupied community).
The increase in revenue was primarily due to increased occupancy and increased average rent rates. Managed community reimbursement revenue for the year ended December 31, 2023 was $21.1 million as compared to $27.4 million for the year ended December 31, 2022, representing a decrease of $6.3 million, or 22.9%.
Management fee revenue for the year ended December 31, 2024 increased by $1.2 million as compared to the year ended December 31, 2023, primarily as a result of managing more communities in 2024. 40 Table of Contents Managed community reimbursement revenue for the year ended December 31, 2024 was $33.1 million as compared to $21.1 million for the year ended December 31, 2023, representing an increase of $12.0 million, or 56.9%.
Investing activities The net cash used in investing activities for the year ended December 31, 2023 primarily results from ongoing capital improvements and refurbishments at the Company’s senior housing communities of $17.9 million , offset by $1.4 million from the proceeds from sale of assets.
The net cash used in investing activities for the year ended December 31, 2023 was primarily due to ongoing capital improvements and refurbishments at the Company’s senior housing communities of $17.9 million, partially offset by the proceeds from sale of assets of $1.4 million. 42 Table of Contents Financing activities The net cash provided by financing activities for the year ended December 31, 2024 of $232.0 million was primarily due to net proceeds from the issuance of common stock of $190.5 million, proceeds from our Credit Facility of $68.7 million, proceeds of $56.0 million from notes payable, and proceeds from noncontrolling investors of $7.8 million, partially offset by repayments of notes payable of $72.0 million, repayments of our Credit Facility of $8.7 million, deferred loan costs paid of $3.7 million, purchase of derivative assets of $3.3 million, and dividends paid of $2.8 million.
Significant Financial and Operational Highlights Operations The Company derives its revenue primarily by providing senior living and healthcare services to seniors. During the year ended December 31, 2023, the Company generated resident revenue of approximately $232.0 million compared to resident revenue of approximately $208.7 million in the prior year, representing an increase of approximately $23.3 million.
During the year ended December 31, 2024, the Company generated resident revenue of approximately $267.8 million compared to resident revenue of approximately $232.0 million in the prior year, representing an increase of approximately $35.8 million.
Corporate Transactions Fannie Mae Loan Modification On June 29, 2023, the Company entered into a forbearance agreement (“ Fannie Forbearance ” and “Fannie Forbearance Agreement”) with Fannie Mae for all 37 of its encumbered communities, effective as of June 1, 2023 (“Fannie Forbearance Effective Date”).
In June 2023, we entered into a forbearance agreement (“Fannie Forbearance” and “Fannie Forbearance Agreement”) with the Federal National Mortgage Association (“Fannie Mae”) for all 37 of its encumbered communities.
See “Note 4–Impairment of Long-Lived Assets.” Upon the acquisition of new communities accounted for as an acquisition of assets, we recognize the assets acquired and the liabilities assumed as of the acquisition date, measured at their relative fair values once we have determined the fair value of each of these assets and liabilities.
Acquisitions of Senior Living Communities Upon the acquisition of new senior living communities, we recognize the assets acquired and the liabilities assumed as of the acquisition date, measured at their fair values using Level 3 inputs at the date of acquisition.
Additional financing of $24.8 million for the debt purchase was provided by Ally Bank through an expansion of the Company’s existing Ally Bank term loan. See “ Note 16–Subsequent Events ” in the Notes to Consolidated Financial Statements. Other Debt Related Transactions The Company had deferred notes payable related to rent payments due to Healthpeak Properties, Inc.
Additional financing of $24.8 million for the debt purchase was provided by an expansion of the Company’s existing Ally Bank term loan.
(collectively, “Ventas”) in which the Company manages certain communities for Ventas, and Ventas pays the Company a management fee based on gross revenues of the applicable communities, and other customary terms and conditions. The Company managed ten communities on behalf of Ventas during the years ended December 31, 2023 and 2022.
New Management Agreements The Company has property management agreements with a third-party owner 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 an incentive management fee, and other customary terms and conditions.
In February 2024, in order to comply with the lender’s requirements, the Company expanded its SOFR-based interest rate cap for an aggregate notional amount of $24.8 million at a cost of $0.6 million. The interest rate cap agreement has a 12-month term and caps the floating interest rate portion of our indebtedness with Ally Bank at 2.25%.
The Company purchased a Secured Overnight Financing Rate (“SOFR”) based interest rate cap (“IRC”) to reduce exposure to the variable interest rate fluctuations associated with the new mortgage. The total cost of the IRC was $0.2 million and has an aggregate notional amount of $9.4 million. The IRC has a 24-month term and caps SOFR at 6.00%.
Weighted average occupancy for the years ended December 31, 2023 and 2022 for the communities owned by the Company during both periods was 84.6% and 83.0%, respectively, reflecting continued occupancy recovery following the onset 35 Table of Contents of the COVID-19 pandemic.
Weighted average occupancy for the year ended December 31, 2024 for the communities owned by the Company excluding 2024 acquisitions was 86.4% as compared to a weighted average occupancy for the year ended December 31, 2023 of 84.6%, reflecting continued occupancy growth.
The Company is one of the leading owner-operators of senior housing communities in the United States.
The Company is a leading owner, operator and investor in independent living, assisted living and memory care communities and services for senior adults in the United States in terms of resident capacity.
For the years ended December 31, 2023 and 2022, the Company received approximately $2.9 million and $1.2 million, respectively, in various relief funds received from state departments due to financial distress impacts of COVID-19 (“State Relief Funds”).
The change of $12.5 million is primarily due to the settlement of accounts payable and accrued expenses during the year ended December 31, 2024 compared to the prior year. Additionally, we received grants of $2.9 million in the year ended December 31, 2023 from state departments due to financial distress impacts of the coronavirus.
Consistent with the Ally Term Loan, all amounts held in escrow (i.e., Debt Service Escrow and IRC Reserve (defined below)) will be included and combined with the Company’s unrestricted cash for purposes of measurement against the Limited Payment Guaranty Waiver Minimum Threshold. • During the Waiver period, Ally will collect the equivalent of the monthly Ally Term Loan principal payment (as provided for in the Ally Term Loan Agreement) of approximately $117,000 through an Ally controlled escrow (“Waiver Principal Reserve Account”). • Upon meeting the Ally Term Loan’s Liquid Assets Threshold of $13.0 million, the Company may elect to remove the Waiver, with initial terms in the Ally Term Loan applicable again, except as described further below. • In July 2023, we were required to fund $2.3 million to an interest rate cap reserve (“IRC Reserve”) held by Ally, which represented the quoted cost of a one-year interest rate cap on the full $88.1 million notional value of the Ally Term Loan at a 2.25% SOFR strike rate.
Additionally, the Company was required to make monthly payments of approximately $117,000 through an Ally controlled escrow (“Waiver Principal Reserve”), as well as a $2.3 million payment to an interest rate cap reserve account (“IRC Reserve”) held by Ally, which represented the quoted cost of a one-year interest rate cap on the full notional value of the Ally Term Loan.
In addition, the Company paid $3.1 million in transaction costs related to the loan modifications that was expensed as general and administrative expenses in the year ended December 31, 2023. 2023 Ally Loan Amendment On June 29, 2023, and concurrent with the Fannie Forbearance, we executed a second amendment (“2023 Ally Amendment”) to our Refinance Facility (“Ally Term Loan” or “Ally Term Loan Agreement”) and an amended guaranty (“Second Amended Ally Guaranty”) with Ally Bank with terms as follows: • With respect to the Second Amended Ally Guaranty, Ally will grant the Company, as guarantor, a waiver (“Limited Payment Guaranty Waiver” or “Waiver”) of the Liquid Assets minimum requirement of $13.0 million for a 12-month period.
Under the terms of the Second Amended Ally Guaranty, Ally granted the Company, as Guarantor, a waiver (“Limited Payment Guaranty Waiver” or “Waiver”) of the liquid assets minimum requirement of $13.0 million for a 12-month period, which expired on December 31, 2024.
The increase is due to $4.0 million year-over-year change in transaction costs related to our 2023 loan modifications and other transaction related expenses, partially offset by a $1.6 million decrease in stock-based compensation expense as a result of prior year forfeiture credits in connection with executive personnel changes and $1.0 million decrease in insurance costs in connection with the Company's transition to a new 39 Table of Contents broker.
The increase is due to a $6.6 million increase in labor costs to support the Company's 2024 acquisitions and a $1.6 million increase in stock-based compensation expense, partially offset by a $0.4 million decrease in other costs. During the year ended December 31, 2024, there were no impairments on long-lived assets.
Indiana Acquisition On February 1, 2022, the Company completed the acquisition of two senior living communities located in Indiana for a combined purchase price of $12.3 million. The communities consist of a total of 157 independent living units.
Recent Acquisitions Cincinnati Acquisition In December 2024, the Company closed on the acquisition of an unoccupied single senior living community located in Cincinnati, Ohio for a purchase price of $16.3 million.
Removed
This guaranty will fully expire upon payment of the second $5.0 million principal payment. • In addition to the Second Payment Guaranty above, the Company also provided a $10.0 million guaranty (the “Supplemental Fannie Guaranty”).
Added
Sonida funded the transaction with $18.3 million of senior mortgage debt, including $2.0 million for capital expenditure investment into the facility, which is expected to be utilized to furnish and update the community prior to opening. The non-recourse mortgage has an 84-month term and 24-month interest waiver to support lease-up and stabilization, with a 3% fixed-interest-only rate thereafter.
Removed
After the expiration of 24 months from the Fannie Forbearance Effective Date, Sonida may discharge the full amount of the Supplemental Fannie Guaranty by making a $5.0 million principal payment to Fannie Mae on its community mortgages and/or its MCF. • In the first twelve months following the effective date of the Loan Modification Agreements, the Company is required to escrow 50% of Net Cash Flow less Debt Service (as defined in the Fannie mortgages and MCF) on an aggregate basis over all 37 Fannie Mae communities.
Added
The asset acquisition was recorded at relative fair value. The Company recorded $16.4 million in “Property and equipment, net” for tangible assets purchased in the Company’s consolidated balance sheets. Atlanta Acquisition In October 2024, the Company entered into a purchase and sale agreement (“Atlanta PSA”) to acquire 2 senior living communities in the Atlanta, Georgia market for $29.0 million.
Removed
The excess cash flow will be deposited into a lender-controlled capital expenditure reserve on a monthly basis to support the re-investment into certain communities, as mutually determined by the Company and Fannie Mae. The Company will be able to draw down such amounts on qualifying projects as the capital expenditures are incurred.
Added
On November 1, 2024, the Company closed on the acquisition of these 2 senior living communities. The asset acquisition was recorded at relative fair value.
Removed
As of December 31, 2023, the Company has funded $0.2 million into such escrow account. As of December 31, 2023, the Company had drawn down $10.0 million of the Equity Commitment as more fully described in the “ Conversant Equity Commitmen t” below. As of December 31, 2023, $3.5 million remains in the Equity Commitment.
Added
The Company recorded 34 Table of Contents $24.7 million in “Property and equipment, net” for tangible assets purchased; $4.8 million in “Intangible assets, net” for in-place leases; and $0.1 million in “Other long-term liabilities” for below-market leases in the Company’s consolidated balance sheets.
Removed
The Company has determined that the Fannie loan modification is a troubled debt restructuring where the total cash outflows exceed the current carrying value of the debt. The Company incurred restructuring costs of $0.7 million in the year ended December 31, 2023.
Added
Palm Acquisition In August 2024, the Company entered into eight asset purchase agreements (the “Palm PSAs”) with various affiliates of Principal Senior Living Group, pursuant to which the Company acquired eight senior living communities (collectively, the “Palm Communities”) for an aggregate cash purchase price of $102.9 million (such acquisition, the “Palm Acquisition”).
Removed
These costs are included in deferred loan costs as of December 31, 2023 and will be amortized over the new lives of the Fannie Mae loans.
Added
The Company closed on the Palm Acquisition on October 1, 2024. Five of the Palm Communities are located in Florida and the other three Palm Communities are located in South Carolina. The asset acquisition was recorded at relative fair value.
Removed
On July 1, 2024, a new Liquid Assets Threshold of $7.0 million will be effective, with such threshold increasing $1.0 million per month through the earlier of the release of the Waiver period or December 31, 2024. • During the Waiver period, a new and temporary Liquid Assets minimum threshold (“Limited Payment Guaranty Waiver Minimum Threshold”) will be established.
Added
The Company recorded $89.2 million in “Property and equipment, net” for tangible assets purchased; $15.6 million in “Intangible assets, net” for in-place leases; and $0.4 million in “Other long-term liabilities” for below-market leases in the Company’s consolidated balance sheets.
Removed
The Limited Payment Guaranty Waiver Minimum Threshold is $6.0 million and is measured weekly. If breached, the “Excess Cash Flow Sweep” is triggered and all excess cash from the communities collateralizing the Ally Term Loan will be swept into an “Equity Cure Fund”, as defined in the Ally Term Loan Agreement.
Added
Macedonia Acquisition In April 2024, the Company entered into an asset purchase agreement to acquire a community located in Macedonia, Ohio for a purchase price of $10.7 million plus transaction costs of $0.4 million. In May 2024, the Company closed on the acquisition and entered into a mortgage loan totaling $9.4 million.
Removed
As provided for in the Ally Amendment, the Excess Cash Flow Sweep, if triggered, will cease upon the achievement of meeting or exceeding the Limited Payment Guaranty Waiver Minimum Threshold for four 33 Table of Contents consecutive weeks.
Added
See “ Note 8–Debt ” and “ Note 14–Fair Value .” The asset acquisition was recorded at relative fair value. We recorded $10.0 million in “Property and equipment, net” for tangible assets purchased; $1.2 million in “Intangible assets, net” for in-place leases; and $0.1 million in “Other liabilities” for below-market leases for this acquisition in our consolidated balance sheet.
Removed
On December 1, 2023, the Company entered into a new SOFR-based interest rate cap transaction for an aggregate notional amount of $88.1 million at a cost of $2.4 million. The interest rate cap agreement has a 12-month term and caps the floating interest rate portion of our indebtedness with Ally Bank at 2.25%.
Added
Recent Investments Investment in Consolidated VIE On July 1, 2024, the Company entered into two joint ventures (collectively, the “Palatine JVs”) with affiliates of Palatine Capital Partners, which acquired four senior living communities located in Texas (3) and Georgia (1).
Removed
Until the terms of the Limited Payment Guaranty Waiver have expired or have been met and elected at the Company’s discretion, the IRC Reserve is required to be replenished to its replacement cost. • To the extent either the Second Payment Guaranty or Supplemental Fannie Guaranty have not been discharged, any uncured monetary event of default under the Fannie Forbearance will constitute a cross default under the Ally Amendment, resulting in the immediate trigger of a full excess cash flow sweep for the communities collateralizing the Ally Term Loan as well as additional performance and liquidity reporting requirements. • Subsequent to the Waiver period, all funds in the Waiver Principal Reserve Account as well as any funds swept into the Equity Cure Fund will be released to the Company.
Added
The Palatine JVs acquired these communities for a purchase price of $32.8 million plus transaction costs of $0.1 million for net cash of $11.2 million and financing of $21.7 million of senior mortgage debt. The Company is a 51% owner in the Palatine JVs. The Company has evaluated its investment in the Palatine JVs under ASC 810.
Removed
The foregoing description of the Fannie Forbearance, the 2023 Ally Amendment, Second Amended Ally Guaranty, and the Loan Modification Agreements and the transactions contemplated thereby do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the Fannie Forbearance, the Ally Amendment and Second Amended Ally Guaranty which are filed as Exhibits 10.21, 10.22 and 10.23, respectively, and the Loan Modification Agreements, which are filed as Exhibits 10.24 and 10.25 to this Annual Report on Form 10-K.

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