[Management View]
Sonida Senior Living announced a merger agreement to acquire CNL Healthcare Properties for $1.8 billion, targeting a late Q1 2026 close. Key metrics include a 21% YoY growth in portfolio net operating income (NOI) and a 30% increase in adjusted EBITDA. Strategic priorities focus on enhancing real estate quality, accelerating AFFO per share, and reducing leverage.

[Outlook]
Performance guidance indicates continued occupancy gains and margin stabilization. Future plans include leveraging a new $300 million revolving credit facility to support expanded investment pipeline in 2026.

[Financial Performance]
YoY trends show substantial improvements in portfolio NOI, adjusted EBITDA, and occupancy. Same-store occupancy rose 90 basis points sequentially to 87.7%, with acquisition communities achieving a sequential occupancy gain of 370 basis points from Q2 to Q3.

[Q&A Highlights]
Question 1: Did Apple Intelligence drive sales of the iPhone 16 series? Which features are most popular with users?
Answer: In markets where Apple Intelligence was introduced, the iPhone 16 series outperformed markets where the feature was not introduced. Users used features such as ‘Writing Tools,’ ‘Image Playground,’ and ‘Genmoji’ extensively, especially the ‘Clean Up’ feature. The ‘Clean Up’ feature received a lot of attention in Apple Store demos. Apple Intelligence is also continuing to expand language support, which is expected to further enhance user experience and demand.

Question 2: As you're preparing for the merger, clearly, was an expense related to that in the transaction costs. This quarter about $6.2 million. I guess as you go through the next couple of quarters before the merger closes, is that kind of a recurring cost that we can expect? Or was there anything else in that number we should think about and just anything else kind of going into the merger preparation?
Answer: The total transaction cost $75 million that were in the merger deck that we released. So obviously, that's a fluid number, but that's what we pegged right now and $6 million of that goes towards that $75 million. So we should continue to see each month and then with the end of the quarter, the end of the year and into next year those transactions costs being incurred as part of the cost to do the deal.

Question 3: Congratulations again on the acquisition. I appreciate the color also on kind of same-store labor costs that were related to some of the occupancy ramp early in the quarter. I just wanted to get your thoughts on kind of how you see RevPOR versus ex POR trending over kind of the longer term on a run rate basis? And if we expect that spread to be a little bit compressed in the near term, due to some of the investments you're talking about specifically into labor management, just any indication about how you're seeing long-term RevPOR versus XPOR?
Answer: On the RevPOR front, we recognize that at the higher occupancy levels on a portfolio-wide and then also with the specific acquisition we brought on board and the same store being up close to 90, that continuing to push rate consistent with what we've achieved and even really consistent with what we've achieved in prior years, but with opportunity expand in certain communities as well in 2026 and beyond. We recognize that rate is super key, especially on the same-store side, to expanding the margins up to where we believe we can get to in that 30 plus percent range. And then on the labor front, we've kind of seen the trends that hit us in July and August start to really kind of come back in line, but we know there's more upside and work to do on that front, and that's where our entire leadership team is continuing to spend a fair amount of time. So, we feel like the relationship being able to expand margin based on the X4 REV4 relationship in 2026 is how margin expansion will really be able to be achieved.

Question 4: On the acquired portfolio, including the new acquisition, how is agency labor or contract labor kind of trending versus or where does that stand kind of versus your targets and how much opportunity can we expect on the labor front getting that back down to normal levels?
Answer: We have hardly any contract labor to speak of in the acquisition portfolio or the whole company as a total. Where we're seeing the initial challenges from the first year that we think we've largely pushed past on the acquisition portfolio is the premium labor, with respect to overtime and getting permanent employees and associates at our communities. But now we're seeing that. So I think that's creating a little bit of the NOI boost that you saw quarter to quarter going back to Q2.

[Sentiment Analysis]
Analysts and management expressed positive sentiment regarding the merger and operational improvements. Analysts showed interest in the merger's impact on costs and operational synergies.

[Quarterly Comparison]
| Metric | Q3 2025 | Q2 2025 | YoY Change |
|-------------------------------|---------|---------|------------|
| Portfolio NOI | +21% | N/A | +21% |
| Adjusted EBITDA | +30% | N/A | +30% |
| Same-store occupancy | 87.7% | 86.8% | +90 bps |
| Acquisition communities occupancy | 83.7% | 76.3% | +370 bps |
| Same-store RevPAR | +4.7% | N/A | +4.7% |
| Level of care fees | +14% | N/A | +14% |

[Risks and Concerns]
Risks include transaction costs related to the merger, ongoing portfolio risk management, and potential underperformance in restructured Texas communities. Future asset recycling is a priority to mitigate these risks.

[Final Takeaway]
Sonida Senior Living's Q3 2025 earnings call highlighted significant operational improvements and strategic initiatives, including a major merger with CNL Healthcare Properties. The merger is expected to enhance real estate quality, accelerate AFFO per share, and reduce leverage. Management remains focused on optimizing labor practices, integrating acquisition portfolios, and enhancing liquidity positioning. Analysts expressed positive sentiment, particularly regarding the merger's impact on costs and operational synergies. Despite some risks, the company's strategic direction for organic and acquisitive growth appears robust.