We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Brookdale Senior Living Inc. (BKD - Free Report) recently announced that its third-quarter 2024 weighted average occupancy grew 130 basis points (bps) from the year-ago level to 78.9%. The weighted average occupancy for the first and second quarters increased 160 bps year over year each.
While its August 2024 weighted average occupancy grew 130 bps year over year to a new high (78.9%) for the company since it started on the recovery path in March 2021, the same for September grew 30 bps sequentially and 100 bps from a year ago to 79.2%.
Greater than pre-pandemic average move-in volumes and lower move-outs are expected to have aided the metric. This positive trend is expected to persist, driven by the projected growth in the senior population.
What Does This Mean for BKD?
The company has witnessed 35 straight months of year-over-year increases in weighted average occupancy, which is contributing to higher resident fee revenues.
In the second quarter of 2024, resident fee revenues increased 4.2% year over year to $739.7 million, while RevPAR (revenue per available unit) and Adjusted EBITDA grew 6.4% and 20.2% year over year, respectively. However, increased expenses and declining interest income affected its second-quarter profits and offset the positives from higher occupancy. Its adjusted free cash flow was at a negative $5.5 million in that quarter.
Per BKD’s guidance, third-quarter 2024 RevPAR is expected to grow 6.25-6.75% from a year ago, and adjusted EBITDA is projected to be in the $90-$95 million range. The increases in RevPAR and occupancy will likely contribute positively to its results. Nevertheless, rising operating costs due to inflationary challenges in the senior living industry and higher estimated insurance expenses are likely to keep BKD’s margins under pressure.
Countering Rising Costs
A similar trend of increasing expense levels is observed within the healthcare sector due to multiple factors including staffing challenges (which are easing now), inflationary pressures on supplies, higher benefits, administrative expenses, and costs related to growth in occupancy level. To tackle this, they are increasingly adopting AI, automation, and analytics to enhance patient care, streamline workflows, cut costs, and optimize margins.
BKD, along with other healthcare companies, including Community Health Systems, Inc. (CYH - Free Report) , HCA Healthcare, Inc. (HCA - Free Report) and Tenet Healthcare Corporation (THC - Free Report) , are partnering with tech firms to adopt new technologies to support clinical decision-making, automate administrative processes and enhance patient engagement.
Brookdale Senior partnered with Mastek late last year to streamline its workflow, support its cloud adoption journey and enhance productivity. Earlier this week, Community Health Systems partnered with Denim Health to integrate conversational AI technology into its Patient Access Center. HCA Healthcare uses AI to monitor patient conditions in real-time and predict potential health risks. Tenet has been using AI-powered systems to help streamline workflows and modernize its payroll processes.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Brookdale Q3 2024 Occupancy Jumps, Logs 35th Straight Monthly Boost
Brookdale Senior Living Inc. (BKD - Free Report) recently announced that its third-quarter 2024 weighted average occupancy grew 130 basis points (bps) from the year-ago level to 78.9%. The weighted average occupancy for the first and second quarters increased 160 bps year over year each.
While its August 2024 weighted average occupancy grew 130 bps year over year to a new high (78.9%) for the company since it started on the recovery path in March 2021, the same for September grew 30 bps sequentially and 100 bps from a year ago to 79.2%.
Greater than pre-pandemic average move-in volumes and lower move-outs are expected to have aided the metric. This positive trend is expected to persist, driven by the projected growth in the senior population.
What Does This Mean for BKD?
The company has witnessed 35 straight months of year-over-year increases in weighted average occupancy, which is contributing to higher resident fee revenues.
In the second quarter of 2024, resident fee revenues increased 4.2% year over year to $739.7 million, while RevPAR (revenue per available unit) and Adjusted EBITDA grew 6.4% and 20.2% year over year, respectively. However, increased expenses and declining interest income affected its second-quarter profits and offset the positives from higher occupancy. Its adjusted free cash flow was at a negative $5.5 million in that quarter.
Per BKD’s guidance, third-quarter 2024 RevPAR is expected to grow 6.25-6.75% from a year ago, and adjusted EBITDA is projected to be in the $90-$95 million range. The increases in RevPAR and occupancy will likely contribute positively to its results. Nevertheless, rising operating costs due to inflationary challenges in the senior living industry and higher estimated insurance expenses are likely to keep BKD’s margins under pressure.
Countering Rising Costs
A similar trend of increasing expense levels is observed within the healthcare sector due to multiple factors including staffing challenges (which are easing now), inflationary pressures on supplies, higher benefits, administrative expenses, and costs related to growth in occupancy level. To tackle this, they are increasingly adopting AI, automation, and analytics to enhance patient care, streamline workflows, cut costs, and optimize margins.
BKD, along with other healthcare companies, including Community Health Systems, Inc. (CYH - Free Report) , HCA Healthcare, Inc. (HCA - Free Report) and Tenet Healthcare Corporation (THC - Free Report) , are partnering with tech firms to adopt new technologies to support clinical decision-making, automate administrative processes and enhance patient engagement.
Brookdale Senior partnered with Mastek late last year to streamline its workflow, support its cloud adoption journey and enhance productivity. Earlier this week, Community Health Systems partnered with Denim Health to integrate conversational AI technology into its Patient Access Center. HCA Healthcare uses AI to monitor patient conditions in real-time and predict potential health risks. Tenet has been using AI-powered systems to help streamline workflows and modernize its payroll processes.