• RevPAR Growth: Increased 6.1% for the full year 2024; fourth quarter growth was 5.5%.
• Weighted Average Occupancy: Grew 140 basis points for the full year 2024; fourth quarter occupancy increased 100 basis points year-over-year.
• Adjusted EBITDA: Grew over 15% for the full year 2024; fourth quarter adjusted EBITDA was approximately $99 million.
• Adjusted Free Cash Flow: Improved nearly 40% for the full year 2024, turning positive in the second half of the year.
• Resident Fee Revenue: Fourth quarter revenue grew 3.9% over the prior year quarter.
• Same Community Operating Income: Increased 4.4% year-over-year in the fourth quarter.
• Cash Operating Lease Payments: Fourth quarter payments were $56 million.
• Total Liquidity: $389 million as of December 31, 2024.
• Annualized Leverage: 10.4 times as of year-end 2024, normalizing to 9.9 times.
• 2025 RevPAR Guidance: Expected growth of 4.75% to 5.75% over the prior year.
• 2025 Adjusted EBITDA Guidance: Expected to be in the range of $430 million to $445 million.

• Warning! GuruFocus has detected 6 Warning Signs with BKD.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Brookdale Senior Living Inc (NYSE:BKD) recorded fourth quarter RevPAR at the top and adjusted EBITDA above previously provided guidance ranges.
• Weighted average occupancy grew by 140 basis points, and RevPAR increased by 6.1% in 2024.
• Adjusted EBITDA grew over 15%, and adjusted free cash flow improved nearly 40%, turning positive for the back half of 2024.
• The company successfully addressed more than $1 billion of future maturities, eliminating all 2025 debt maturities.
• Brookdale Health Plus program showed positive outcomes, with residents experiencing 80% fewer emergency room visits and 66% fewer hospitalizations.

Negative Points

• Occupancy fell below expectations beginning in the second quarter of 2024, impacting annual financial results.
• 2024 move-ins were below expectations due to a persistent disruption in lead flow from two large third-party paid referral partners.
• Natural disaster expenses in the fourth quarter amounted to approximately $3.5 million, primarily related to hurricanes.
• Fourth quarter adjusted free cash flow was approximately $12 million negative, primarily due to seasonal real estate tax payments.
• The company anticipates continued high costs in food and utilities, despite some moderation.

Q & A Highlights

Q: Can you elaborate on the impact of the Ventas lease amendment on the 2025 revPAR guidance? A: Dawn Kussow, CFO, explained that the 4.75% to 5.75% revPAR guidance for 2025 includes the expected impact of the Ventas lease amendment. The guidance assumes move-ins and move-outs based on past performance and accounts for potential disruptions from the 55 communities involved in the lease amendment.

Q: How does Brookdale plan to accelerate growth and create shareholder value beyond 2025? A: CEO Lucinda Baier highlighted Brookdale's strategic priorities, including expanding Brookdale Health Plus to 60 additional communities and implementing Brookdale Engagement Plus to enhance resident experiences. The company aims to capitalize on favorable supply-demand dynamics and differentiate itself through comprehensive care coordination and personalized resident experiences.

Q: How does Brookdale view the political landscape and potential changes to Medicaid? A: Lucinda Baier noted that Brookdale has a low reliance on Medicaid, with less than 4% of residents using it. The company focuses on profitable occupancy growth and has walked away from some Medicaid business due to inadequate reimbursement rates. Brookdale continues to engage with policymakers to shape favorable federal policies for the senior living industry.

Q: What is Brookdale's long-term EBITDA growth outlook, and how does it relate to pre-pandemic occupancy levels? A: Lucinda Baier emphasized disciplined profitable growth over reaching specific occupancy targets. While pre-pandemic occupancy was around 84.5%, the focus is on maintaining profitability per unit, which is already 8% above pre-pandemic levels. The company sees significant growth opportunities as it increases occupancy in available units.

Q: Can you provide more details on the Brookdale Engagement Plus initiative? A: Lucinda Baier described Brookdale Engagement Plus as a proprietary program designed to personalize resident experiences by matching residents with similar interests to foster meaningful relationships. The initiative aims to address loneliness and enhance residents' quality of life.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.