Brookdale Senior Living Inc. BKD recently announced that its November 2024 weighted average occupancy grew 110 basis points (bps) from the year-ago level to a new high of 79.5%. Its October 2024 weighted average occupancy grew 80 bps year over year to 79.4%.

The weighted average occupancy for the first three quarters increased 160 bps, 160 bps and 130 bps year over year, respectively. Move-ins and move-outs for the fourth quarter to date have shown improvement compared to the same period last year. This positive trend has supported a 100 basis point increase in weighted average occupancy relative to the fourth quarter to date last year.

What Does This Mean for BKD?

This uptick highlights stronger operational performance and increased demand compared to the prior year's metrics. This positive trend is expected to persist, driven by the projected growth in the senior population. If the company manages to restore its occupancy rate to the pre-pandemic level of 84.5%, it is projected to generate an additional $210 million in revenues. This highlights the significant financial impact of higher occupancy rates.

The company is expected to have witnessed 37 straight months of year-over-year increases in weighted average occupancy, which is contributing to higher resident fee revenues.

In the third quarter of 2024, resident fee revenues increased 3.7% year over year to $743.7 million, while RevPAR (revenue per available unit) and Adjusted EBITDA grew 5.9% and 15% year over year, respectively. However, elevated marketing expenses, reduced property insurance proceeds and a decline in interest income affected its third-quarter profits and offset the positives from higher occupancy.

Per BKD’s guidance, fourth-quarter 2024 RevPAR is expected to grow 5-5.5% year over year, and adjusted EBITDA is projected to be in the $93-$98 million range. The increases in RevPAR and occupancy will likely contribute positively to its results.

But is this enough to excite investors? Let’s see how the estimates stand for BKD.

Earnings Estimates for BKD & Surprise History

The Zacks Consensus Estimate for the fourth-quarter 2024 bottom line is pegged at a loss of 19 cents per share, which witnessed one downward movement in the estimate in the past month against no upward revisions. For full-year 2024 and 2025, the consensus mark for loss per share is pegged at 68 cents and 61 cents, respectively.

It's worth noting that BKD has beaten earnings estimates only once in the last four quarters and missed thrice, the average surprise being negative 40%.

BKD’s Headwinds

Brookdale carries a substantial debt, which could strain its financial health and limit its ability to invest in growth opportunities. Its long-term debt-to-capital ratio stands at 93.5%, well above the industry average of 76.2%. However, the company has made notable progress in clearing its debt maturity obligations through 2026, providing some financial relief.

Rising operating costs in the senior living industry and higher estimated insurance expenses are likely to keep BKD’s margins under pressure.

Zacks Rank & Stocks to Consider

BKD currently carries a Zacks Rank #4 (Sell).

Some better-ranked and promising stocks in the broader Medical sector are Pediatrix Medical Group, Inc. MD, CareDx, Inc. CDNA and Encompass Health Corporation EHC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Pediatrix Medical’s current-year earnings indicates a 7.1% year-over-year growth. MD beat earnings estimates in three of the trailing four quarters and met once, with an average surprise of 9.9%. The consensus mark for its current-year revenues is pegged at $2 billion.

The Zacks Consensus Estimate for CareDx’s current-year earnings indicates a 167.2% year-over-year improvement. CDNA beat earnings estimates in each of the trailing four quarters, with an average surprise of 135.2%. The consensus mark for revenues implies 17.5% growth from the year-ago period.

The Zacks Consensus Estimate for Encompass Health’s 2024 earnings implies a 17.6% increase from the year-ago reported figure. EHC beat earnings estimates in each of the trailing four quarters, with an average surprise of 13.6%. The consensus mark for its current-year revenues is pegged at $5.34 billion, which indicates an 11.2% year-over-year increase.

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Pediatrix Medical Group, Inc. (MD) : Free Stock Analysis Report

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