Brookdale Senior Living reported its first quarter earnings results, and it appears to be building on the momentum started at the end of 2024. In addition, month-end occupancy in April topped 81.0%, marking the ninth straight month with ending occupancy above 80.0%. While it is great the company is making progress, there is still a lot more work to do.
After declining in the second half of 2024, the seniors housing operating margin increased to 28.4% in the first quarter. This represents a 130-basis point increase from the year-ago quarter, but a whopping 290-basis point increase sequentially. Meanwhile, RevPOR increased by 3.0% year over year and 4.6% sequentially, contributing to the increase in EBITDA and margins. That said, management stated that margins are always the highest in the first quarter, so we will have to wait and see if they can build on this for the remainder of the year.
Breaking the numbers down by segment, IL census declined by 20 basis points sequentially, but increased by 160 basis points year over year. Despite the weak sequential occupancy rate, the sequential operating margin increased by 290 basis points to 34.5%, and increased 180 basis points year over year. Assisted living and memory care census decreased 30 basis points sequentially and while increasing by 120 basis points year over year, but just like the IL segment, operating margins increased. From a census perspective, the CCRC segment performed the best, with a 110-basis point increase in occupancy sequentially and 240 basis points year over year.
On the earnings call, it was disclosed that the Board started talking with Spencer Stuart late last year about a new CEO. Already, several candidates have been identified, and they are looking for someone with operational expertise and a strong vision to propel the company into the future. Good. They expect to make the hire within six months. On the call, management was very optimistic about the future, but they have been optimistic for a few years. It did sound a little like deja vu all over again.
We expect the uncertainty about who the new CEO will be will have an impact on morale, both good and bad. However, management has increased its guidance for the full year based on first quarter results and the current momentum. The share price, however, dropped by more than 9% in early trading after the earnings release. Oh well.
