Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Brookdale Senior Living Inc (BKD, Financial) reported a 6.3% year-over-year increase in same-community RevPAR, supporting a strong operating income margin of 27.6%.
- First quarter move-ins exceeded pre-pandemic levels by 7.5%, indicating robust demand for Brookdale's services.
- The company achieved significant improvements in associate retention, with a nearly 70% retention rate for executive directors, enhancing community profitability and stability.
- Brookdale Senior Living Inc (BKD) received external recognition for its services, including certifications and awards that underscore its industry leadership and commitment to quality care.
- Adjusted EBITDA for the first quarter was $98 million, exceeding guidance and demonstrating effective cost management and operational efficiency.
Negative Points
- Despite positive outcomes, first quarter move-outs, although improved, still present an area for potential enhancement in both controllable and non-controllable rates.
- The company faces ongoing challenges with labor expenses, although there has been some improvement due to better retention and reduced reliance on contract labor.
- Brookdale Senior Living Inc (BKD) is still in the process of recovering to pre-pandemic occupancy levels, indicating that there is still room for improvement in filling available units.
- Adjusted free cash flow was negative $26 million for the quarter, influenced by seasonal payouts and unique compensation-related cash outflows.
- While there is optimism for continued recovery, the company acknowledges the need for ongoing efforts to enhance resident satisfaction and operational efficiencies to sustain long-term growth.
Q & A Highlights
Q: What factors give you confidence in outperforming the seasonal occupancy trends through the remainder of the year?
A: Lucinda Baier, President and CEO, highlighted the role of staff retention efforts and market dynamics in outperforming seasonal occupancy trends. She noted the importance of improving resident satisfaction and the impact of this year's rate increase strategy on controlling move-outs.
Q: Can you discuss the expectations for Q2 occupancy compared to historical data?
A: Lucinda Baier explained that the trends might be similar to the previous year but not necessarily in percentage terms. She emphasized the early positive signs shown by April's consistent occupancy rates and an increase in ending occupancy, suggesting a favorable outlook for Q2.
Q: What are the main drivers for the observed improvements in occupancy and how do you view the impact of new supply levels?
A: Lucinda Baier attributed the improvements to a focused strategy on enhancing the executive director role, retaining associates, and increasing resident satisfaction. She also mentioned the lack of new supply in the market as a contributing factor to the positive occupancy trends.
Q: What are your development plans, especially considering changing populations and state demographics?
A: Lucinda Baier stated that Brookdale is currently focused on winning the recovery with its existing portfolio rather than expanding development. She mentioned the integration of healthcare services in their communities as a strategic focus, rather than expanding physical facilities.
Q: How is the rollout of the Brookdale Health Plus program progressing?
A: Lucinda Baier reported that the Brookdale Health Plus program is currently in close to 50 communities, with plans to expand to 130 by year-end. She emphasized the importance of careful and effective scaling of the program to ensure quality and effectiveness.
Q: Are you considering reintroducing charged health services within the communities?
A: Lucinda Baier clarified that Brookdale is more interested in ensuring residents have access to necessary services within the communities rather than adding new charged health services lines. She highlighted the focus on maximizing the potential of their current assets and services to improve occupancy and margins.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
