Brookdale Senior Living and HCP, Inc. were the first to report on fourth quarter earnings, and investors did not like what they heard.
I really don’t know what to say about the news that came out yesterday, other than it had a disastrous impact on the market. Investors were hoping for something positive out of Brookdale Senior Living’s earnings call, but what they got was that a sale of the company was off the table, they may do a stock buyback, and slow growth is what can be expected now. The reaction? The stock plunged by 25% in two hours.
HCP, Inc. announced its fourth quarter results, which included announcing they were writing down their HCR ManorCare investment by $817 million, and that despite the restructuring of the leases last year, the coverage ratio dropped from 1.17x for the first half of the year to 0.97x for the second half. And we presume that is the coverage at the corporate level, so it is even lower at the property level. That is bad, real bad. And, they lowered overall 2016 forecasts.
All of this bad news resulted in the publicly traded senior care companies and healthcare REITs combined dropping by more than $7 billion in value in one morning. People, it’s just not that bad out there.
