Segment Information

9 Months Ended

Sep. 30, 2014

Segment Information [Abstract]

Segment Information

14.  Segment Information

The Company currently has six reportable segments:  retirement centers; assisted living; CCRCs – rental; CCRCs – entry fee; Brookdale Ancillary Services; and management services.  Operating segments are defined as components of an enterprise that engage in business activities from which it may earn revenues and incur expenses; for which separate financial information is available; and whose operating results are regularly reviewed by the chief operating decision maker to assess the performance of the individual segment and make decisions about resources to be allocated to the segment.

During the nine months ended September 30, 2014, two communities were moved from the Retirement Centers segment to the Assisted Living segment to more accurately reflect the underlying product offering of the communities.  The movement did not change the Company's reportable segments, but it did impact the revenues and expenses reported within the Retirement Centers and Assisted Living segments.  Revenue and expenses for the three and nine months ended September 30, 2013 have not been recast.

In connection with the creation of the entry-fee CCRC venture between the Company and HCP on August 29, 2014, the Company contributed to the venture all but two of the communities in the CCRCs - Entry Fee segment.  Accordingly, the two communities not contributed to the venture are included in the CCRCs – Entry Fee segment for the six month period ended June 30, 2014 and the CCRCs – Rental segment for the three month period ended September 30, 2014 based on how operating results are being reviewed by the chief operating decision maker following the creation of the CCRC venture. The venture is accounted for under the equity method of accounting, and the communities contributed to the venture were deconsolidated effective August 29, 2014.

Retirement Centers. The Company's Retirement Centers segment includes owned or leased communities that are primarily designed for middle to upper income senior citizens age 75 and older who desire an upscale residential environment providing the highest quality of service.  The majority of the Company's retirement center communities consist of both independent living and assisted living units in a single community, which allows residents to "age-in-place" by providing them with a continuum of senior independent and assisted living services.

Assisted Living.  The Company's Assisted Living segment includes owned or leased communities that offer housing and 24-hour assistance with activities of daily life to mid-acuity frail and elderly residents.  Assisted living communities include both freestanding, multi-story communities and freestanding single story communities.  The Company also operates memory care communities, which are freestanding assisted living communities specially designed for residents with Alzheimer's disease and other dementias.

CCRCs - Rental. The Company's CCRCs - Rental segment includes large owned or leased communities that offer a variety of living arrangements and services to accommodate all levels of physical ability and health.  Most of the Company's CCRCs have independent living, assisted living and skilled nursing available on one campus or within the immediate market, and some also include memory care/Alzheimer's units.

CCRCs - Entry Fee.  The communities in the Company's CCRCs - Entry Fee segment are similar to those in the Company's CCRCs - Rental segment but allow for residents in the independent living apartment units to pay a one-time upfront entrance fee, which is partially refundable in certain circumstances.  The amount of the entrance fee varies depending upon the type and size of the dwelling unit, the type of contract plan selected, whether the contract contains a lifecare benefit for the resident, the amount and timing of refund, and other variables.  In addition to the initial entrance fee, residents under all entrance fee agreements also pay a monthly service fee, which entitles them to the use of certain amenities and services.  Since entrance fees are received upon initial occupancy, the monthly fees are generally less than fees at a comparable rental community.

Brookdale Ancillary Services. The Company's Brookdale Ancillary Services segment includes the outpatient therapy, home health and hospice services provided to residents of many of the Company's communities, to other senior living communities that the Company does not own or operate and to seniors living outside of the Company's communities.  The Brookdale Ancillary Services segment does not include the therapy services provided in the Company's skilled nursing units, which are included in the Company's CCRCs - Rental and CCRCs - Entry Fee segments.

Management Services.  The Company's management services segment includes communities operated by the Company pursuant to management agreements.  In some of the cases, the controlling financial interest in the community is held by third parties and, in other cases, the community is owned in a venture structure in which the Company has an ownership interest.  Under the management agreements for these communities, the Company receives management fees as well as reimbursed expenses, which represent the reimbursement of expenses it incurs on behalf of the owners.

The accounting policies of the Company's reportable segments are the same as those described in the summary of significant accounting policies.

The following table sets forth certain segment financial and operating data (dollars in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014			2013		2014			2013
Revenue
Retirement Centers(1)	$	155,227		$	133,272	$	421,017		$	392,364
Assisted Living(1)		516,640			262,524		1,071,301			783,636
CCRCs - Rental(1)		144,074			100,076		340,230			297,965
CCRCs - Entry Fee(1)		44,145			74,110		202,414			222,434
Brookdale Ancillary Services(1)		95,426			61,162		224,377			180,053
Management Services(2)		128,423			97,855		320,264			281,281
	$	1,083,935		$	728,999	$	2,579,603		$	2,157,733
Segment operating income(3)
Retirement Centers	$	67,205		$	56,820	$	180,326		$	164,331
Assisted Living		188,154			96,750		397,392			289,216
CCRCs - Rental		34,492			27,013		87,015			81,657
CCRCs - Entry Fee		10,431			18,218		48,433			55,561
Brookdale Ancillary Services		18,146			11,764		43,804			36,078
Management Services		10,428			7,622		25,319			22,975
		328,856			218,187		782,289			649,818
General and administrative (including non-cash stock-based compensation expense)		90,020			45,824		181,693			138,470
Transaction costs		41,572			—		59,224			—
Facility lease expense		91,462			69,232		231,361			207,028
Depreciation and amortization		178,999			68,644		320,403			200,557
Asset impairment		—			504		—			2,658
(Loss) income from operations	$	(73,197	)	$	33,983	$	(10,392	)	$	101,105

	As of
	September 30, 2014		December 31, 2013
Total assets
Retirement Centers	$	1,685,462	$	1,258,294
Assisted Living		6,711,935		1,514,385
CCRCs - Rental		987,813		499,873
CCRCs - Entry Fee		—		960,708
Brookdale Ancillary Services		239,438		94,986
Corporate and Management Services		1,173,066		409,511
Total assets	$	10,797,714	$	4,737,757

(1) All revenue is earned from external third parties in the United States.

(2) Management services segment revenue includes reimbursements for which the Company is the primary obligor of costs incurred on behalf of managed communities.

(3)  Segment operating income is defined as segment revenues less segment operating expenses (excluding depreciation and amortization).