Brookdale Senior Living Inc.’s BKD shares lost 17.5% since it reported third-quarter 2024 results on Nov. 6, 2024. The quarterly results were hurt by elevated marketing expenses, reduced property insurance proceeds and a decline in interest income, all of which contributed to a wider net loss.

Nevertheless, the downside was partly offset by higher resident fees, driven by increased revenue per occupied unit (RevPOR) and occupancy rates. 

BKD incurred a third-quarter adjusted loss of 22 cents per share, wider than the Zacks Consensus Estimate of a loss of 16 cents. The metric remained flat year over year. 

Total revenues and other operating income rose 3.5% year over year to $784.2 million on the back of higher resident and management fee revenues.

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BKD’s Q3 Key Performances

Resident fees of $743.7 million advanced 3.7% year over year on the back of an improved RevPOR and occupancy rate. Meanwhile, management fees grew 4.3% year over year to $2.7 million. 

RevPOR increased 4.3% year over year in the third quarter as a result of annual rate increases. Weighted average occupancy improved 130 basis points year over year to 78.9%, attributable to successful implementation of key strategies aimed at recovering occupancy levels lost during the pandemic. RevPAR advanced 5.9% year over year.

Facility operating expenses increased 2% year over year to $548.3 million due to continued inflationary challenges and elevated marketing expenses. Nevertheless, the downside was partly offset by the divestiture of communities and reduced contract labor costs.  

General and administrative costs, including certain items, of $44.9 million increased 4.3% year over year.  

Interest income dropped 26.3% year over year to $4.7 million. Brookdale incurred a net loss of $50.7 million, wider than the year-ago quarter’s loss of $48.8 million. The metric was affected by increased facility operating expenses, reduced property insurance proceeds, lower fair value of interest rate derivatives during the period and elevated depreciation and amortization expenses.

Adjusted EBITDA was $92.2 million, which climbed 15% year over year.

Brookdale’s Financial Update (As of Sept. 30, 2024)

Brookdale exited the third quarter with cash and cash equivalents of $254.7 million, which declined 8.4% from the 2023-end level. 

Total assets of $5.9 billion increased 6.6% from the figure at 2023-end. 

Long-term debt, less of the current portion, was $3.7 billion, which dipped marginally from the figure as of Dec. 31, 2023. The current portion of long-term debt amounted to $51.5 million.

Total equity of $294.3 million tumbled 27.4% from the 2023-end level.  

BKD generated $66.5 million of net cash from operations, which surged 45.2% year over year.  Adjusted free cash outflow of $13.9 million increased more than five-fold year over year.

BKD’s Outlook

Management estimates fourth-quarter 2024 RevPAR to witness year-over-year growth in the range of 5-5.5%. Also, it forecasts adjusted EBITDA to be in the range of $93-$98 million. 

It anticipates cash facility operating lease payments at around $56 million for the fourth quarter.

The company continues to estimate non-development capital expenditures, net of anticipated lessor reimbursements and property and casualty insurance proceeds, to be roughly $180 million in 2024.

BKD’s Zacks Rank

Brookdale currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Medical Sector Releases

Of the Medical sector players that have reported third-quarter 2024 results so far, the bottom-line results of Tenet Healthcare Corporation THC, Acadia Healthcare Company, Inc. ACHC and The Ensign Group, Inc. ENSG beat the Zacks Consensus Estimate.

Tenet Healthcare reported third-quarter 2024 adjusted earnings per share (EPS) of $2.93, which surpassed the Zacks Consensus Estimate by 25.8%. The bottom line more than doubled year over year.  Net operating revenues increased 1.1% year over year to $5.12 billion. The top line beat the consensus mark by 1.5%. Adjusted net income was $282 million, which soared 84.3% year over year. Adjusted EBITDA advanced 14.5% year over year to $978 million. 

Adjusted EBITDA margin of 19.1% improved 220 bps year over year. The Hospital Operations and Services segment recorded net operating revenues of $3.98 billion, which fell 3.4% year over year. Adjusted EBITDA rose 11.4% year over year to $539 million. The Ambulatory Care unit’s net operating revenues climbed 21% year over year to $1.14 billion. Adjusted EBITDA of $439 million rose 18.6% year over year. 

Acadia Healthcare’s adjusted third-quarter earnings of 91 cents per share beat the Zacks Consensus Estimate by 1.1%. The bottom line was flat year over year. Total revenues increased 8.7% year over year to $815.6 million. The top line missed the consensus mark by a whisker. Same-facility revenues of $802.6 million rose 8.6% year over year. The year-over-year improvement was driven by 3.6% growth in revenue per patient day and a 4.7% increase in patient days.

Admissions grew 2% year over year. The average length of stay grew 2.7% year over year. In the overall facility, patient days improved 4.6% year over year, while admissions grew 2.4% year over year. Revenue per patient day improved 3.9% year over year. The average length of stay rose 2.1% year over year. Adjusted EBITDA climbed 10.5% year over year to $194.3 million. Adjusted EBITDA margin deteriorated 50 bps year over year to 28.2%. 

Ensign Group reported a third-quarter adjusted EPS of $1.39, which beat the Zacks Consensus Estimate by 1.5%. The bottom line increased 15.8% year over year. Operating revenues of $1.08 billion improved 15% year over year The top line outpaced the consensus mark by 1.7%. Ensign Group’s adjusted net income grew 17.7% year over year to $81.1 million. 

Same-store occupancy improved 280 bps year over year, while transitioning occupancy expanded 480 bps year over year. The Skilled Services segment’s revenues rose 14.4% year over year to $1 billion in the third quarter. Segment income of $128.5 million improved 9.1% year over year. Skilled nursing and campus operations of the segment totaled 282 and 29, respectively, at the third-quarter end.

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