While President Trump had a busy weekend changing course on some of his tariffs, the Board of Brookdale Senior Living was busy as well. After serving as CEO of Brookdale for just over eight years, and as CFO for three years before that, Cindy Baier is out as CEO and Board member effective April 13. The share price initially jumped by 10% on the news.
This does not come as a surprise as the company has struggled financially during most of, if not all of, her tenure. To be fair, she inherited a lot of problems from her predecessor, Andy Smith, including expensive leases, a very bad acquisition and too many buildings. And then two years after she became CEO, the pandemic hit. We are not sure how much better anyone else might have done. But we are now five years after the onset of the pandemic, and while the aftershocks are still being felt by many, Brookdale’s performance has not kept up with the competition. Shareholders were restless.
When Cindy took over as CEO eight years ago, the share price was between $6.00 and $7.00. Recently, the share price has been between $6.00 and $7.00. Hmmm. When the pandemic hit, the price plunged to a low of $1.47 per share in March 2020. It then recovered a bit, but the price also hit a near-term low of $2.27 in March 2023. Many investors thought it should be worth much more, but it was a complicated situation with a lot of hair. Cindy did successfully clean up the balance sheet and most of the company’s leases, but census, margin and profits continued to lag.
While I liked Cindy personally, I was also a vocal critic of the Board, the size of the company and the relatively slow progress post pandemic. I even petitioned to be on the Board, sending in my credentials, because I thought they really needed a few people who understood the industry better than the existing Board members, and people who would work hard for the company’s success. I would have fulfilled both missing elements.
Her final response to me was, “Why would I put you on my Board given the things you have said and written about Brookdale and me.” That is exactly why she should have added me to the Board. The reality is that I called them like I saw them, and to be honest, I was not wrong and never got personal. I also congratulated her and the company when it was deserved, just not enough I suppose. That was also the last time we spoke.
The activist investors have been acting up again, having put forward a slate of six candidates for the Board, all qualified, with some having more seniors housing experience than others. The search is on for a new CEO, and I really hope they don’t stray too far from the industry, something that people often think will be the magic potion to get things changed. They need someone who understands what providers do, understands what needs to be fixed, and who will be able to execute a plan to get the share price on track again. And, someone who will have the confidence of shareholders. I have a few ideas. Unfortunately, I believe many of them will say life is too short and will take a pass. But Cindy, your successor will be thankful that you left them with a much cleaned up capital structure to allow them to focus on operations.
Cindy, I wish you success in whatever your future endeavors may be, which I assume will be at least one Board seat in our sector, maybe with a REIT. Good luck, and I would love to buy you dinner sometime, or even a drink, and maybe you can tell me the things you really wanted to say over the years, but didn’t, or couldn’t. And, of course, off the record if that suits you. In the meantime, after eight years at the helm of the largest seniors housing company in the country, and during the most turbulent times we have ever seen, please take a long vacation. You deserve it.
