The entire seniors housing industry seems to be clawing back its occupancy losses, even during the perennial lackluster first quarter. Brookdale Senior Living ended the first quarter on a high note (it is all relative, we suppose), with its highest occupancy level since the bottom was hit a year ago, reaching 75.0% at the end of March 2022. This was also the highest month-end occupancy since September 2020. For comparison purposes, it was 82.2% at the end of March 2020.
So, bucking the historical trend of first quarter gloom, month-end occupancy in the first quarter 2022 actually increased from December by 50 basis points, even though weighted average occupancy was flat from December to March. Given the pandemic and historical precedent, that is a win.
Perhaps the best news was that there were more than 2,000 move-ins during March, the highest number since August 2019. On the downside, there must have been a lot of move-outs. Otherwise, average and month-end occupancy would have been higher. They did not talk about that.
Census will need to continue to increase, but at a much faster pace for the rest of the year, so that there is sufficient increasing cash flow to cover the ever-rising operating costs, especially labor. The small census increase in the first quarter will be over-shadowed by the operating expense increase, mostly labor, resulting in lower EBITDA levels than forecasted a few months ago. It is a vicious cycle that needs to be broken before Brookdale’s share price can rally. But if they can repeat March’s move-in numbers in April, May and beyond, well, we may see a rally sooner than we thought.
