SONIDA SENIOR LIVING, INC.

Previous wording

The following discussion and analysis addresses (i) the Company’s results of operations for the three months ended March 31, 2025 and 2024, and (ii) liquidity and capital resources of the Company.

Current wording

The following discussion and analysis addresses (i) the Company’s results of operations for the three and six months ended June 30, 2025 and 2024, and (ii) liquidity and capital resources of the Company.

Previous wording

As of March 31, 2025, 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 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 manages on behalf of a third party.

Current wording

As of June 30, 2025, the Company owned, managed, or invested in 96 senior housing communities in 20 states with an aggregate capacity of approximately 10,150 residents, including 83 owned senior housing communities (including four 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 manages on behalf of a third party.

Previous wording

During the three months ended March 31, 2025, the Company generated resident revenue of $79.3 million compared to resident revenue of $60.7 million in the three months ended March 31, 2024, representing an increase of 30.6%. The increase in revenue was primarily due to increased occupancy, increased average rent rates, and additional communities acquired in 2024.

Current wording

During the three months ended June 30, 2025, the Company generated resident revenue of $81.8 million compared to resident revenue of $63.1 million in the three months ended June 30, 2024, representing an increase of 29.6%. The increase in revenue was primarily due to increased average rent rates and 18 additional communities acquired during 2024 and 2025 (including one unoccupied community acquired on December 31, 2024).

Previous wording

Weighted average occupancy for the three months ended March 31, 2025 and 2024 for the communities owned by the Company, excluding 2024 acquisitions and repositioning projects, was 86.8% and 85.8%, respectively, reflecting continued occupancy growth. The average monthly rental rate for these owned communities for the three months ended March 31, 2025 increased 5.5% when compared to the three months ended March 31, 2024.

Current wording

Weighted average occupancy for the three months ended June 30, 2025 and 2024 for the communities owned by the Company, excluding 2024 and 2025 acquisitions and repositioning projects, was 86.5% and 86.1%, respectively, reflecting continued occupancy growth. The average monthly rental rate for these owned communities for the three months ended June 30, 2025 increased 4.4% when compared to the three months ended June 30, 2024.

Previous wording

The Company has property management agreements with third parties and its joint ventures pursuant to which the Company manages certain communities on their behalf for a management fee based on gross revenues of the applicable communities, as well as, in some cases, an incentive management fee and other customary terms and conditions. The Company managed 13 and ten communities on behalf of a third party for the three months ended March 31, 2025 and 2024, respectively. The Company also managed four communities on behalf of an unconsolidated joint venture and four communities in consolidated joint ventures for the three months ended March 31, 2025. No such joint ventures in the prior period.

Current wording

The Company has property management agreements with third parties and its joint ventures pursuant to which the Company manages certain communities on their behalf for a management fee based on gross revenues of the applicable communities, as well as, in some cases, an incentive management fee, and other customary terms and conditions. The Company managed 13 and 12 communities on behalf of a third party for the six months ended June 30, 2025 and 2024, respectively. The Company also managed four communities on behalf of an unconsolidated joint venture and four communities in consolidated joint ventures for the six months ended June 30, 2025.

Previous wording

The Company has evaluated its investment in the Stone JV under ASC 810 and determined that it does not have the power to direct the activities of the VIE that most significantly impact its economic performance and is not the primary beneficiary of the VIE. The Company's interests in the VIE are, therefore, accounted for under the equity method of accounting. The carrying amount of the Company's investment in the unconsolidated venture and maximum exposure to loss as a result of the Company's ownership interest in the Stone JV was $10.2 million as of March 31, 2025, which is included in investment in unconsolidated entity on the accompanying condensed consolidated balance sheet. For the three months ended March 31, 2025, the Company received a return of investment of $0.4 million in its unconsolidated entity.

Current wording

The Company has evaluated its investment in the Stone JV under ASC 810 and determined that it does not have the power to direct the activities of the VIE that most significantly impact its economic performance and is not the primary beneficiary of the VIE. The Company's interests in the VIE are, therefore, accounted for under the equity method of accounting. The carrying amount of the Company's investment in the unconsolidated venture and maximum exposure to loss as a result of the Company's ownership interest in the Stone JV was $9.8 million as of June 30, 2025, which is included in investment in unconsolidated entity on the accompanying condensed consolidated balance sheet. For the six months ended June 30, 2025, the Company received a return of investment of $0.4 million in its unconsolidated entity.

Previous wording

The Company evaluates the realization of its investment in unconsolidated entities accounted for using the equity method if circumstances indicate the Company's investment is other than temporarily impaired. For the three months ended March 31, 2025, there were no impairments.

Current wording

The Company evaluates the realization of its investment in unconsolidated entities accounted for using the equity method if circumstances indicate the Company's investment is other than temporarily impaired. For the three and six months ended June 30, 2025, there were no impairments.

Previous wording

In December 2024, the Company and certain of its subsidiaries entered into an Omnibus Amendment to Multifamily Loan and Security Agreements (the “Omnibus Amendment”) with Federal National Mortgage Association (“Fannie Mae”). The Omnibus Amendment amends the terms of each of the loan agreements (each, a “2024 Loan Agreement” and collectively, the “2024 Loan Agreements”) relating to 18 of the Company’s 37 senior living communities encumbered by mortgage agreements with Fannie Mae to, among other things, extend the maturity dates of each 2024 Loan Agreements from December 1, 2026 to January 1, 2029 in exchange for $10.0 million of scheduled principal paydowns on the 2024 Loan Agreements, which included a $2.0 million paydown made at closing and a series of $2.0 million, $3.0 million and $3.0 million due in November 2025, 2026 and 2027, respectively.

Current wording

In December 2024, the Company and certain of its subsidiaries entered into an Omnibus Amendment to Multifamily Loan and Security Agreements (the “Omnibus Amendment”) with Federal National Mortgage Association (“Fannie Mae”). The Omnibus Amendment amended the terms of each of the loan agreements (each, a “2024 Loan Agreement” and collectively, the “2024 Loan Agreements”) relating to 18 of the Company’s 37 senior living communities encumbered by mortgage agreements with Fannie Mae to, among other things, extend the maturity dates of each 2024 Loan Agreements from December 1, 2026 to January 1, 2029 in exchange for $10.0 million of scheduled principal paydowns on the 2024 Loan Agreements, which included a $2.0 million paydown made at closing and a series of payments of $2.0 million, $3.0 million and $3.0 million due in November 2025, 2026 and 2027, respectively.

Previous wording

During 2024, the Company entered into a credit agreement with BMO Bank, N.A. and Royal Bank of Canada for a senior secured revolving credit facility (the “Credit Facility”). The Credit Facility has a borrowing capacity of up to $150.0 million, a term of three years, a leverage-based pricing matrix between SOFR plus 2.10% margin and SOFR plus 2.60% margin and is fully recourse to Sonida Senior Living, Inc. and its applicable subsidiaries. The borrowing base by which borrowing availability under the Credit Facility is determined is generally based upon the value of the senior living communities that secure the Company’s obligations under the Credit Facility. As of March 31, 2025, $60.0 million of borrowings were outstanding under the Credit Facility at a weighted average interest rate of 6.9%, which was secured by 13 of the Company’s senior living communities. As of March 31, 2025, we had an additional borrowing capacity of up to $43.2 million under our Credit Facility. See “Note 17–Subsequent Events” in the Notes to Condensed Consolidated Financial Statements.

Current wording

During 2024, the Company entered into a credit agreement with BMO Bank, N.A. and Royal Bank of Canada for a senior secured revolving credit facility (the “Credit Facility”). The Credit Facility has a borrowing capacity of up to $150.0 million, a term of three years, a leverage-based pricing matrix ranging between SOFR plus 2.10% margin and SOFR plus 2.60% margin and is fully recourse to Sonida Senior Living, Inc. and its applicable subsidiaries. The borrowing base by which borrowing availability under the Credit Facility is determined is generally based upon the value of the senior living communities that secure the Company’s obligations under the Credit Facility. As of June 30, 2025, $75.0 million of borrowings were outstanding under the Credit Facility at a weighted average interest rate of 6.9%, which was secured by 13 of the Company’s senior living communities. As of June 30, 2025, we had an additional borrowing capacity of up to $32.9 million under our Credit Facility.

Previous wording

2024 Loan Repurchase Agreement and Ally Term Loan Expansion

Current wording

2024 Loan Repurchase and Ally Term Loan Expansion

Previous wording

We entered into an agreement with one of our previous lenders whereby the Company agreed to purchase the outstanding indebtedness it owed to such lender for a purchase price of $40.2 million (plus the reimbursement of certain amounts advanced to the Company by such lender). On February 2, 2024, the Company completed the purchase of the total outstanding principal balance of $74.4 million from the lender that was secured by seven of the Company’s senior living communities (such transaction, the “2024 Loan Purchase”). The 2024 Loan Purchase was funded by expanding the Company’s existing loan facility with Ally Bank (“Ally”) by $24.8 million (“Ally Third Amendment”) and the remainder was funded by proceeds from the issuance of common stock. The 2024 Loan Purchase and Ally financing closed in February 2024, reduced notes payable by $49.6 million, and resulted in a gain on debt extinguishment, net totaling $38.1 million for the three months ended March 31, 2024. The Company incurred deferred loan costs of $0.5 million as part of the Ally financing that are amortized over the loan term. As part of the Ally Third Amendment, the Company expanded its current interest rate cap to include the additional borrowing at a cost of $0.6 million and increased the monthly interest rate cap reserve (“IRC Reserve”) held by Ally to match the notional amount required under the increased obligation. The expanded Ally debt facility is secured by six of the Company’s senior living communities involved in the transaction.

Current wording

In February 2024, the Company purchased $74.4 million of its outstanding indebtedness it owed to one of its previous lenders, which was secured by seven of the Company’s senior living communities for a purchase price of $40.2 million (plus the reimbursement of certain amounts advanced to the Company by such lender) (such transaction, the “2024 Loan Purchase”). The 2024 Loan Purchase was funded by expanding the Company’s then existing loan facility with Ally by $24.8 million (“Ally Third Amendment”) and proceeds from the issuance of common stock. The 2024 Loan Purchase and Ally financing closed in February 2024, reduced notes payable by $49.6 million, and resulted in a gain on debt extinguishment, net totaling $38.1 million for the six months ended June 30, 2024. The Company incurred deferred loan costs of $0.5 million as part of the Ally financing that are amortized over the loan term. As part of the Ally Third Amendment, the Company expanded its current interest rate cap to include the additional borrowing at a cost of $0.6 million and increased the monthly interest rate cap reserve (“IRC Reserve”) held by Ally to match the notional amount required under the increased obligation. The expanded Ally debt facility is secured by six of the Company’s senior living communities involved in the transaction.

Previous wording

On May 22, 2024, the Company executed an amendment (“Ally Fourth Amendment”) to the Ally term loan agreement. Ally Bank successfully syndicated a portion of its total term loan commitment to Cross River Bank. Following the syndication, Ally Bank and Cross River Bank owned 67.5% and 32.5%, respectively, of the outstanding principal balance. As each lender loans a specific amount to the debtor and has the right to repayment from the debtor this transaction is considered a loan syndication and the guidance in ASC 470-50 was applied to the modified loans on a creditor-by-creditor basis. As Ally Bank was the sole lender prior to the syndication, there is no change in the allocation of deferred loan costs, and they will continue to be amortized over the loan term. As part of the syndication, the IRC reserve spread moved from 2.3% to 3.0%, capping the total interest at 6.0% on the Ally term loan. The Ally Fourth Amendment allows the Company the option to extend the Ally debt maturity by 12 months from March 2026 to March 2027. The Company intends and has the ability to exercise this option.

Current wording

On May 22, 2024, the Company executed an amendment (“Ally Fourth Amendment”) to the Ally term loan agreement. Ally successfully syndicated a portion of its total term loan commitment to Cross River Bank. Following the syndication, Ally and Cross River Bank owned 67.5% and 32.5%, respectively, of the outstanding principal balance. As each lender loans a specific amount to the debtor and has the right to repayment from the debtor this transaction is considered a loan syndication and the guidance in ASC 470-50 was applied to the modified loans on a creditor-by-creditor basis. As Ally Bank was the sole lender prior to the syndication, there is no change in the allocation of deferred loan costs, and they will continue to be amortized over the loan term. As part of the syndication, the IRC Reserve spread moved from 2.3% to 3.0%, capping the total interest at 6.5% on the Ally term loan. The Ally Fourth Amendment allows the Company the option to extend the Ally debt maturity by 12 months from March 2026 to March 2027, which the Company currently intends to exercise.

Previous wording

Resident revenue for the three months ended March 31, 2025 was $79.3 million as compared to $60.7 million for the three months ended March 31, 2024, representing an increase of $18.6 million, or 30.6%. The increase in revenue was primarily due to increased occupancy, increased average rent rates, and 16 additional operating communities acquired during 2024 (including one unoccupied community).

Current wording

Resident revenue for the three months ended June 30, 2025 was $81.8 million as compared to $63.1 million for the three months ended June 30, 2024, representing an increase of $18.7 million, or 29.6%. The increase in revenue was primarily due to increased average rent rates, and 18 additional operating communities acquired during 2024 and 2025 (including one unoccupied community).

Previous wording

Management fee revenue for the three months ended March 31, 2025 increased by $0.5 million as compared to the three months ended March 31, 2024, primarily as a result of managing three more third-party and four unconsolidated joint venture communities as compared to prior period.

Current wording

Management fee revenue for the three months ended June 30, 2025 increased by $0.4 million as compared to the three months ended June 30, 2024, primarily as a result of managing one more third-party community as compared to prior period.

Previous wording

Operating expenses for the three months ended March 31, 2025 were $60.4 million as compared to $46.3 million for the three months ended March 31, 2024, representingan increase of $14.1 million, or 30.5%. The increase was attributable to $11.5 million in operating expenses related to the 16 additional communities acquired during 2024 (including one unoccupied community acquired on December 31, 2024), and an increase of $2.6 million in operating expenses related to the remaining owned communities, driven by $1.4 million increases in labor and $1.2 million increases in other operating expenses.

Current wording

Operating expenses for the three months ended June 30, 2025 were $61.4 million as compared to $46.0 million for the three months ended June 30, 2024, representingan increase of $15.4 million, or 33.5%. The increase was attributable to $12.5 million in operating expenses related to the 18 additional communities acquired during 2024 and 2025 (including one unoccupied community acquired on December 31, 2024), and an increase of $2.9 million in operating expenses related to the remaining owned communities, driven by a $2.2 million increase in labor and $0.7 million increase in other operating expenses.

Previous wording

Transaction, transition and restructuring costs were $0.6 million and $0.4 million for the three months ended March 31, 2025 and 2024, respectively. The costs include legal, audit, banking and other costs to support the Company’s recent debt, restructuring, as well as investments by the Company.

Current wording

Transaction, transition and restructuring costs were $0.5 million for the three months ended June 30, 2025 and 2024. The costs include legal, audit, banking and other costs to support the Company’s recent debt, restructuring, and investments by the Company.

Previous wording

Interest expense for the three months ended March 31, 2025 was $9.4 million as compared to $8.6 million for the three months ended March 31, 2024, representing an increase of $0.8 million primarily 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.

Current wording

Interest expense for the three months ended June 30, 2025 was $9.3 million as compared to $9.0 million for the three months ended June 30, 2024, representing an increase of $0.3 million which was primarily due to the incremental borrowings associated with the Company's recent community acquisitions, partially offset by a decrease in the Company’s SOFR-based variable rate debt.

Previous wording

Managed community reimbursement revenue for the three months ended March 31, 2025 was $11.6 million as compared to $6.1 million for the three months ended March 31, 2024, representing an increase of $5.5 million, or 90.2%. The increase was primarily a result of managing more communities.

Current wording

Managed community reimbursement revenue for the six months ended June 30, 2025 was $22.2 million as compared to $12.5 million for the six months ended June 30, 2024, an increase of $9.7 million or 77.6%. The increase was primarily a result of managing more communities in the six months ended June 30, 2025 as compared to the prior period.

Previous wording

General and administrative expenses for the three months ended March 31, 2025 were $8.5 million as compared to $6.8 million for the three months ended March 31, 2024, representing an increase of $1.7 million. The increase was primarily a result of an increase in labor and employee related expenses of $1.5 million to support the Company’s 2024 acquisitions and growth initiatives, and a $0.4 million increase in stock-based compensation expense, partially offset by a net decrease in other expenses of $0.2 million.

Current wording

General and administrative expenses for the six months ended June 30, 2025 were $18.2 million as compared to $15.5 million for the six months ended June 30, 2024, representing an increase of$2.7 million. The increase was primarily a result of an increase in labor and employee related expenses of $3.2 million to support the Company’s growth initiatives and an increase in stock-based compensation of $0.4 million, offset by a $0.9 million decrease in other expenses.

Previous wording

Managed community reimbursement expense for the three months ended March 31, 2025 was $11.6 million as compared to $6.1 million for the three months ended March 31, 2024, representing an increase of $5.5 million or 90.2%. The increase was primarily a result of managing more communities for the three months ended March 31, 2025 as compared to the prior period.

Current wording

Managed community reimbursement expense for the six months ended June 30, 2025 was $22.2 million as compared to $12.5 million for the six months ended June 30, 2024, an increase of $9.7 million or 77.6%. The increase was primarily a result of managing more communities in the six months ended June 30, 2025 as compared to the prior period.

Previous wording

Gain on extinguishment of debt, net for the three months ended March 31, 2024 was $38.1 million related to the derecognition of notes payable and liabilities as a result of the 2024 Loan Purchase.

Current wording

Gain onextinguishment of debtfor the six months ended June 30, 2024 was$38.1 million and was related to the derecognition of notes payable and liabilities as a result of the transition of legal ownership of two communities to Fannie Mae, the holder of the related non-recourse debt.

Previous wording

In addition to $14.0 million of unrestricted cash as of March 31, 2025, our future liquidity will depend in part upon our operating performance, which will be affected by prevailing economic conditions, and financial, business and other factors, some of which are beyond our control. Principal sources of liquidity are expected to be cash flows from operations, proceeds from our secured Credit Facility, proceeds from equity offerings, including sales of common stock under our ATM sales agreement, proceeds from debt, proceeds from debt refinancings or loan modifications, and proceeds from the sale of owned assets. On April 1, 2024, the Company entered into the At-the-Market Issuance Sales Agreement (the “ATM Sales Agreement”), whereby the Company may sell, at its option, shares of its common stock up to an aggregate offering price of $75,000,000. During August 2024, the Company entered into its Credit Facility in which borrowing availability is determined based upon the value of the senior living communities securing the Credit Facility. As of March 31, 2025, the Company had outstanding borrowings under its Credit Facility of $60.0 million and availability of $43.2 million. These transactions are expected to provide additional financial flexibility for the Company and increase our liquidity position. See “Note 7–Debt” in the Notes to Condensed Consolidated Financial Statements.

Current wording

In addition to $14.1 million of unrestricted cash as of June 30, 2025, our future liquidity will depend in part upon our operating performance, which will be affected by prevailing economic conditions, and financial, business and other factors, some of which are beyond our control. Principal sources of liquidity are expected to be cash flows from operations, proceeds from our secured Credit Facility, proceeds from equity offerings, including sales of common stock under our ATM sales agreement, proceeds from debt, proceeds from debt refinancings or loan modifications, and proceeds from the sale of owned assets. On April 1, 2024, the Company entered into the At-the-Market Issuance Sales Agreement (the “ATM Sales Agreement”), whereby the Company may sell, at its option, shares of its common stock up to an aggregate offering price of $75.0 million. During August 2024, the Company entered into its Credit Facility in which borrowing availability is determined based upon the value of the senior living communities securing the Credit Facility. As of June 30, 2025, the Company had outstanding borrowings under its Credit Facility of $75.0 million and availability of $32.9 million. These transactions are expected to provide additional financial flexibility for the Company and increase our liquidity position. See “Note 7–Debt” in the Notes to Condensed Consolidated Financial Statements.

Previous wording

Net cash provided by operating activities for the three months ended March 31, 2025 was $3.8 million as compared to net cash used inoperating activities of $4.1 million for the three months ended March 31, 2024. The change of $7.9 million is primarily due to the change in accounts receivable and the improvement in net income inclusive of the non-cash adjustments to earnings during the three months ended March 31, 2025 compared to the prior year period.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2025 was $12.8 million as compared to net cash used inoperating activities of $1.6 million for the six months ended June 30, 2024. The change of $14.4 million was primarily due to the improvement in net income inclusive of the non-cash adjustments to earnings and the change in accounts payable and accrued expenses receivable during the six months ended June 30, 2025 compared to the prior year period.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2025 was $7.9 million primarily due to $8.3 million in ongoing capital improvements combined with select refurbishment projects, as well as refurbishment projects associated with the 2024 acquired communities, partially offset by a return of investment of $0.4 million in our unconsolidated entity. Net cash used in investing activities of $5.1 million for the three months ended March 31, 2024 was primarily resulted from ongoing capital improvements and refurbishments at the Company’s senior housing communities of $5.8 million, partially offset by $0.6 million from the proceeds from the sale of an unencumbered land parcel in January 2024.

Current wording

Net cash used in investing activities for the six months ended June 30, 2025 was $37.5 million, which wasprimarily due to the acquisition of two new communities of $22.5 million, and $15.3 million in ongoing capital improvements combined with select refurbishment projects, as well as refurbishment projects associated with the 2024 acquired communities, partially offset by a return of investment of $0.4 million in our unconsolidated entity. Net cash used in investing activities of $42.7 million for the six months ended June 30, 2024 was primarily due to the acquisition of a new community of $11.1 million, the acquisition of unconsolidated entities of $22.3 million, and ongoing capital improvements combined with refurbishments at the Company’s senior housing communities of $9.9 million, partially offset by $0.6 million from the proceeds from the sale of an unencumbered land parcel in January 2024.

Previous wording

Net cash used by financing activities for the three months ended March 31, 2025 was $2.5 million primarily due to dividends paid of $1.4 million and repayments of notes payable of $0.9 million. The net cash provided by financing activities for the three months ended March 31, 2024 was $29.1 million primarily due to net proceeds received from the issuance of common stock of $47.6 million and proceeds of $24.8 million from the Ally financing, partially offset by repayments of notes payable of $42.0 million.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2025 was $19.3 million primarily due to proceeds from our Credit Facility of $20.0 million and proceeds from notes payable of $9.0 million in connection with the Alpharetta acquisition, partially offset by repayments of our Credit Facility of $5.0 million, dividends paid of $2.8 million, and repayments of notes payable of $1.6 million. The net cash provided by financing activities for the six months ended June 30, 2024 was $50.4 million primarily due to net proceeds received from the issuance of common stock of $65.1 million and proceeds of $36.6 million from notes payable, partially offset by repayments of notes payable of $48.5 and purchases of derivative assets of $1.9 million.