The big question is, why did this not happen earlier? We are talking about Brookdale Senior Living’s occupancy recovery, and why the previous leadership seemed unable to move the needle, but as soon as they were gone, everything has been on an upward trend. Hmmmmm.
Things are not perfect at Brookdale, but they never were. However, same-community occupancy is up by 260 basis points year over year to 82.3%. Even though it lags the rest of the industry, we will take it. Same-community month-end occupancy in October was 84.2%, the highest in years, and a great sign, especially going into the historically tough fourth and first quarters. That represents a 400-basis point increase since January 2024.
Occupancy helps, but it is not everything. The company’s seniors housing operating margin in the third quarter was 26.9%, down from 28.4% in the first quarter, but up a bit from last year’s third quarter. With a 260-basis point increase in census year over year, that means an additional 1,300 units were occupied. At an average RevPOR of $6,300, that should result in an additional $75 million of annualized revenues and $50 million of EBITDA based on a 70% incremental margin. We are not seeing that. We believe it will improve, but from now on it will be all about cash flow. On a same-community basis, the operating margin increased by just 10 basis points year over year. New management should be focusing on this, especially since occupancy is already on the move.
Several years ago, we said the company must get down to around 500 communities to efficiently manage the business. Previous CEO Cindy Baier disagreed with us. New management says their plan is to get to around 550 communities by mid-2026. It can’t happen soon enough, but at least they are on the right track.
One thing we wish the new CEO, and most everyone else, would stop doing is talking about the “silver tsunami’ and how it will propel growth. A tsunami results in death and destruction, and that is not a metaphor we want to use. Just say silver wave instead. Or record new numbers of seniors entering our market. Or unmatched growth. After initially dipping in price, Brookdale’s shares ended up increasing by 3.5%.
