SNDA

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended March 31, 2026 for Sonida Senior Living, Inc. (SNDA). The Company is a leading owner, operator, and investor in independent living, assisted living, and memory care communities. As of March 31, 2026, the portfolio included 165 communities with over 16,400 units across 35 states. The reporting period was significantly impacted by the completion of the merger with CNL Healthcare Properties, Inc. ("CHP") on March 11, 2026, which added 69 communities to the portfolio.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Total revenues increased 33.4% to $122.6 million, driven primarily by the acquisition of 54 additional Senior Housing Operating Properties (SHOP) from the CHP Merger and a 12.3% increase in same-store average rent rates.
• Net Loss Expansion: Net loss widened to $41.5 million from $13.0 million. This was primarily due to $26.1 million in transaction, transition, and restructuring costs related to the CHP Merger, increased depreciation and amortization ($19.9 million vs. $13.7 million), and higher operating expenses from the expanded portfolio.
• Debt Structure: Total debt increased significantly to $1.64 billion to fund the CHP Merger. New financing included a $550 million Term Loan Facility, a $220 million Bridge Facility (as of March 31), and an expanded Revolving Credit Facility with $270 million outstanding.
• Liquidity: Cash and cash equivalents rose to $84.3 million from $11.0 million, supported by $1.03 billion in net cash provided by financing activities, including debt proceeds and a $108.8 million private equity placement.
• Equity Changes: The Company issued 27 million shares of common stock net of issuances, including shares for the CHP Merger consideration and a private placement. Series A Convertible Preferred Stock was fully converted to common stock on March 11, 2026.

Guidance, Outlook, and Risks

• Merger Integration: Management expects 2026 results to be materially impacted by the CHP Merger. The Company is actively integrating 69 new communities and expects to achieve synergies and cost savings.
• Refinancing Needs: The Company holds a $220 million Bridge Facility maturing in March 2027. Management intends to refinance this facility in 2026 using proceeds from property-level agency or mortgage financing secured by CHP properties. There is no assurance that refinancing will be available on attractive terms.
• Subsequent Events: On May 7, 2026, the Company added an incremental lender, increasing the Term Loan Facility to $575 million and the Revolving Credit Facility to $455 million, using proceeds to repay $50 million of the Bridge Facility.
• Risk Factors: Key risks include the ability to refinance the Bridge Facility, elevated interest rates, labor shortages and wage pressures, litigation related to the CHP Merger, and the ability to successfully integrate the acquired business.
• Unusual Items: The quarter included a $19.1 million deemed dividend on the induced conversion of Series A Preferred Stock and $25.6 million in merger-related transaction costs.

Investor Verification Checklist

• Bridge Facility Refinancing: Verify the Company's progress in securing permanent financing to replace the $220 million (as of March 31) Bridge Facility maturing in March 2027.
• Merger Synergies: Monitor the realization of anticipated cost savings and operational synergies from the CHP Merger integration.
• Debt Covenants: Confirm continued compliance with financial covenants, particularly leverage ratios and liquidity requirements, given the significant increase in debt load.
• Transaction Costs: Assess the impact of the $26.1 million in transaction costs on future earnings and whether similar one-time costs are expected in subsequent quarters.
• Same-Store Performance: Review same-store RevPAR and occupancy trends to gauge organic growth independent of the acquisition.