Brookdale Senior Living Reports Strong Q3 Performance

Brookdale Senior Living Inc. ((BKD)) has held its Q3 earnings call. Read on for the main highlights of the call.

Brookdale Senior Living Inc. Reports Strong Occupancy Growth and Improved EBITDA in Latest Earnings Call

The recent earnings call for Brookdale Senior Living Inc. was marked by a positive sentiment, driven by strong occupancy growth and significant improvements in adjusted EBITDA. The company has raised its financial guidance, reflecting confidence in its operational performance and strategic initiatives, despite high leverage levels that have shown improvement.

Occupancy Growth

Brookdale Senior Living Inc. reported a notable increase in occupancy rates, achieving a weighted average of 81.8% and 82.3% on a same community basis, the highest since the pandemic. The company highlighted a remarkable 38% improvement in communities with occupancy below 70% over just two quarters, showcasing the effectiveness of their strategic efforts.

Adjusted EBITDA Increase

The company’s adjusted EBITDA saw a 20% increase in Q3 compared to the previous year and a 23% rise year-to-date. Brookdale also generated a positive adjusted free cash flow of $21.8 million, marking a 57% increase from the prior year, indicating strong financial health and operational efficiency.

Raised Financial Guidance

Brookdale has revised its full-year 2025 adjusted EBITDA guidance upward, now expecting a range of $455 million to $460 million. This adjustment reflects the company’s robust operational performance and its anticipation of exceeding the midpoint of their RevPAR growth range of 5.25% to 6% year-over-year.

Portfolio Optimization

As part of its strategic initiatives, Brookdale plans to exit a total of 55 leased assets by the end of the year, with 43 already completed. This move is expected to enhance occupancy, RevPAR, adjusted EBITDA, and free cash flow, aligning with the company’s optimization goals.

SWAT-Team Approach Success

The implementation of a SWAT-team approach has significantly reduced the number of communities with occupancy below 70%, from 143 in Q1 to 89 in Q3, representing a 38% improvement. This strategy has been pivotal in driving occupancy growth and operational success.

Leverage Levels

Brookdale’s adjusted annualized leverage at the end of the third quarter was 9.0x adjusted EBITDA, showing improvement from 9.9x at the end of the previous year. While leverage remains high, the reduction is a positive sign of financial management.

Non-GAAP Financial Measures

The earnings call included discussions on non-GAAP financial measures, which may not fully align with GAAP results and require additional reconciliations. Investors are advised to consider these measures carefully when evaluating the company’s financial performance.

Forward-Looking Guidance

Looking ahead, Brookdale has revised its full-year adjusted EBITDA guidance upward, reflecting strong operational performance and strategic initiatives. The company anticipates continued improvements in occupancy rates and plans to optimize its portfolio further, aiming to reduce leverage and reinvest in its communities. Brookdale projects mid-teen percentage annual growth in adjusted EBITDA over the coming years, signaling a positive outlook.

In conclusion, Brookdale Senior Living Inc.’s latest earnings call conveyed a positive sentiment, underscored by strong occupancy growth and improved financial metrics. The company’s strategic initiatives, including portfolio optimization and a SWAT-team approach, have driven significant improvements, leading to raised financial guidance and a promising outlook for future growth.