Sonida Senior Living, Inc. (SNDA) Cash Flow Statement

The gap between net income and operating cash flow is stark, with OCF/NI ratios swinging from -5.71 to 0.87 across quarters. In 2026Q2, a $24.5M net loss converted to $8.7M positive OCF, driven by $43.2M in D&A, indicating that reported losses overstate cash consumption. However, the negative OCF in 2026Q1 (-$35.9M) and 2025Q4 (-$0.4M) reveals that cash generation is inconsistent, and the reliance on non-cash add-backs suggests earnings quality remains weak.

The FCF trajectory is erratic, with only two quarters (2025Q3 and 2025Q2) posting positive FCF, and those were marginal at $3.0M and $1.9M. The 2026Q2 FCF of -$3.7M, despite a revenue surge, suggests that growth is consuming cash rather than generating it. Compared to peers like ENSG with a 7.6% FCF margin, Sonida's negative margins highlight a structural inability to convert revenue into free cash flow, likely due to high fixed costs and capital intensity.

CapEx/Revenue ratios have ranged from 5.5% to 10.8%, with no clear trend, but the absolute spend of $12.4M in 2026Q2 is the highest in the period. Given the company's negative gross margins, this CapEx appears more maintenance-oriented than growth-focused, as the facilities likely require constant reinvestment to remain competitive. The D&A of $43.2M in 2026Q2 far exceeds CapEx, suggesting that depreciation is outpacing investment, which may indicate underinvestment in the asset base and future competitive pressure.

The working capital swings are significant, with negative changes in most quarters, suggesting that cash is being tied up in operations, possibly due to slower collections or inventory build-up. The 2026Q1 WC change of -$18.5M was a major drag on OCF, while the positive changes in 2025Q3 and 2025Q4 provided temporary relief. This volatility indicates that management has limited control over working capital efficiency, which may be a symptom of the broader operational instability.

The company paid dividends in only four quarters, totaling $5.3M, and made no buybacks, reflecting a constrained cash position. Instead, significant cash outflows for acquisitions, including -$916.6M in 2026Q1 and -$150M in 2024Q4, suggest an aggressive expansion strategy funded by debt. This deployment pattern, combined with a debt-to-equity ratio of 12.26, indicates that the company is prioritizing growth over financial stability, which may strain liquidity if cash flows do not improve.

The cumulative gap between net income and OCF is $134M, driven by substantial D&A and impairment charges, which suggests that the company's losses are not fully cash-consuming. However, the fact that OCF is still negative over the period indicates that the business is not generating enough cash to sustain operations without external financing. This divergence implies that while the earnings picture may look worse than cash reality, the underlying cash flow is still insufficient to cover capital needs, reinforcing the need for continued debt or equity infusions.