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Brookdale Senior (BKD) Shares Jump 18.7% Since Q2 Earnings Beat

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Brookdale Senior Living Inc. (BKD - Free Report) shares have risen 18.7% since it reported strong second-quarter results on Aug 7, 2023, supported by increased RevPOR, occupancy rate and resident fee revenues. Investors are also hopeful as the company expects RevPOR to further grow 10-10.5% year over year in the third quarter. However, for the third quarter, the company expects adjusted EBITDA within $73-$78 million, down from the year-ago level of $106.9 million.

Q2 Earnings

Brookdale Senior incurred a second-quarter 2023 adjusted loss of 15 cents per share, narrower than the Zacks Consensus Estimate of a loss of 20 cents. The bottom line also narrowed from an adjusted loss of 45 cents per share in the prior-year quarter.

The top line increased 8.9% year over year to $750.8 million. However, the positives were partially offset by inflationary pressure and higher facility operating expenses.

Q2 Operational Update

Resident fees in the quarter under review jumped 10.9% year over year to $710.2 million, thanks to higher RevPOR and occupancy rate. BKD’s RevPAR for the second quarter jumped 11.6% from a year ago to $4,544, whereas RevPOR rose 8.8% to $5,939 due to in-place rate increases.

Weighted average occupancy climbed 190 basis points in the quarter to 76.5% with the help of the company’s occupancy rebuild initiatives. However, management fees fell 24.6% year over year to $2.5 million. Also, other operating income decreased 51% to $4.1 million from the year-ago period.

Brookdale Senior’s second quarter facility operating expense, excluding certain items, increased 3.4% to $531.1 million due to inflationary pressure, higher incentive compensation and referral source costs. This was partially offset by lower premium labor and primarily contract labor usage.

G&A costs, including certain items, rose 8.6% to $45.3 million in the second quarter. Facility operating lease expenses rose 21.6% to $50.5 million during this period.

The company reported interest income of $6.1 million in the June quarter, up from $0.8 million a year ago. Net loss in the quarter narrowed to $4.5 million from $84.2 million a year ago, thanks to higher resident fee revenues, partially offset by higher facility operating expenses and debt interest expenses.

Adjusted EBITDA jumped 60.5% to $81.4 million.

Financial Update (as of Jun 30, 2023)

Brookdale Senior exited the second quarter with cash and cash equivalents of $336.6 million, which fell from the 2022-end level of $398.9 million. Total assets of $5,904.7 million decreased from the figure of $5,937.1 million at 2022 end.

Long-term debt, less current portion totaled $3,760.6 million, down from the $3,784.1 million figure as of Dec 31, 2022. The current portion of long-term debt was $53.7 million.

Total equity of $539.3 million decreased from the 2022-end level of $584.2 million.

Net cash flow from operations in the second quarter was recorded at $63.8 million, up from $11.6 million in the year-ago period. Adjusted free cash outflow in the quarter was at $7.5 million, narrowed from $48.5 million a year ago.

Zacks Rank & Key Picks

Brookdale Senior currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical space are Select Medical Holdings Corporation (SEM - Free Report) , HCA Healthcare, Inc. (HCA - Free Report) and Encompass Health Corporation (EHC - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Select Medical’s 2023 earnings indicates a 56.9% year-over-year increase to $1.93 per share. It has witnessed one upward estimate revision over the past month against no movement in the opposite direction. SEM beat earnings estimates in one of the last four quarters, met once and missed in the remaining occasions.

The Zacks Consensus Estimate for HCA Healthcare’s 2023 bottom line suggests an 8.6% increase from the prior-year levels. HCA has witnessed six upward estimate revisions in the past 30 days against none in the opposite direction. It beat earnings estimates in three of the last four quarters and missed once, with the average surprise being 5.4%.

The Zacks Consensus Estimate for Encompass Health’s 2023 earnings indicates a 17.9% jump from the year-ago reported figure. It has witnessed five upward estimate revisions over the past week against no movement in the opposite direction. EHC beat earnings estimates in three of the last four quarters and missed once, with the average surprise being 14%.

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