Brookdale Senior Dwelling (NYSE: BKD) is increasing an engagement-focused program to enrich its rising HealthPlus service line – simply one of many methods the corporate is in search of to maximise profitability within the months and years forward, in line with CEO Cindy Baier.
The Brentwood, Tennessee-based firm detailed its new program, Engagement Plus, which is designed to “assist our residents construct significant friendships sooner” and supply a “life-style that displays their distinctive pursuits,” Baier mentioned in the course of the firm’s fourth-quarter 2024 earnings name Wednesday.
As it’s increasing its new engagement program, Brookdale is also narrowing its concentrate on maximizing profitability in 2025. The operator has steadily grown its occupancy in recent times, with expectations to proceed gaining floor amidst an industrywide supply-demand imbalance.
The corporate’s 4Q24 common occupancy price of 79.4% lagged behind its pre-pandemic common occupancy price of 84.5%. However Baier famous that in 2024, Brookdale exceeded its working earnings per unit by about 8% and its income per out there room (RevPAR) by about 18% in comparison with 2019.
Whereas Brookdale’s leaders consider the operator has a possibility to push its occupancy price larger sooner or later, Baier mentioned the corporate has “taken one among two paths” – the trail of specializing in producing more healthy income as a substitute of gaining occupancy in any respect prices.
“We might have pursued occupancy no matter whether or not that occupancy would have pushed improved money move, or we might have pursued cash-flow progress,” Baier mentioned. “We selected the trail to pursue cash-flow progress, and searching again, I’m actually assured that that was the appropriate path.”
Brookdale is the nation’s largest senior residing operator with 647 communities in 41 states. Within the fourth quarter of 2024, the corporate reported a internet lack of $83.9 million, an enchancment over its internet lack of $91.2 million a yr prior.
Brookdale continues rollout of ‘Plus’ companies
Brookdale has steadily expanded its HealthPlus program since its launch 5 years in the past. Now, the corporate has added EngagementPlus to that rollout, with plans to develop it in an analogous approach.
Based on Brookdale’s web site, the EngagementPlus mannequin facilities engagement associates, who “encourage and empower residents to guide a category, tutor an affiliate or attend a studying occasion with outdoors consultants from the neighborhood.”
Baier famous the corporate is increasing this system to a number of communities and mentioned she is going to present extra data on it later this yr.
Brookdale can be persevering with to increase its HealthPlus program, because it has in earlier quarters. At its core, this system coordinates well being care and different companies for residents in an effort to maintain them properly for longer. In 2024, the operator expanded this system to 80 extra communities, with plans so as to add 60 extra communities to this system later this yr. All instructed, the corporate expects to have deployed this system in 190 communities by the tip of 2025.
As Brookdale has famous earlier than, residents residing in communities that take part in HealthPlus have 80% fewer visits to pressing care clinics and 66% fewer hospitalizations than related older adults residing at residence.
The common age of Brookdale residents now skews about six months youthful than roughly 5 years in the past – a incontrovertible fact that Baier mentioned she is especially enthusiastic about.
“If you consider having youthful residents transfer in with us, we might suppose that may imply that they are going to stick with us longer, which ought to be very optimistic as we go into the longer term,” she mentioned.
Each EngagementPlus and HealthPlus are wrapped up in Brookdale’s quest to generate larger income and margins within the months and years forward. Ought to the corporate return to its pre-pandemic occupancy price of 84.5%, it could acquire “at the very least $190M of incremental income,” with an “alternative for progress as RevPOR potential surpasses inflation in future years,” in line with its fourth-quarter earnings presentation.
By way of Feb. 19 Brookdale earnings presentationNow that Brookdale has “greater than recovered” its pre-pandemic profitability per unit, Baier mentioned it has “rather more alternative for progress” forward.
“Now we have communities which have rooms that aren’t at present serving residents. As these models change into occupied, it’s going to drive larger RevPAR and the next profitability,” she mentioned.
She added: “What we’re going to have a look at each single day is, how will we profitably develop our enterprise? How will we differentiate Brookdale to supply a greater expertise to our residents and our associates?”
In current weeks, the Trump administration has enabled Elon Musk and “DOGE” to halt spending for a number of longstanding authorities applications, like USAID, and within the course of elevating authorized issues and including to senior residing uncertainty. The billionaire and his workforce have been granted entry to U.S. Medicare and Medicaid knowledge earlier this month. Moreover, Republicans have just lately proposed reducing Medicaid and including new necessities for recipients.
However Baier mentioned that Brookdale has little publicity to fluctuations in Medicare and Medicaid applications given 94% of its income comes from non-public resident charges. She additionally cited knowledge that 18% of assisted residing residents depend on Medicaid for day by day companies, larger than Brookdale’s publicity to this system.
“In the event you run a Medicaid neighborhood, often you’re operating a really excessive occupancy neighborhood – typically 95 to 100% occupancy – nevertheless it’s at a a lot decrease margin,” she mentioned. “Due to our concentrate on profitability, we completely selected to stroll away from some Medicaid enterprise as a result of the reimbursement price didn’t preserve tempo with the price of offering companies.”
Brookdale lays to relaxation ‘single-largest capital difficulty’ in 10 years
Along with launching and increasing its applications, Brookdale spent final yr retooling its leases with landlords and growing its variety of owned senior residing communities.
Final yr, the corporate’s achievements included extending its grasp lease with landlord Omega Healthcare Traders (NYSE: OHI) whereas securing $80 million in landlord-funded CapEx, inking a $610 million deal to amass 41 communities from Welltower (NYSE: WELL) and Diversified Healthcare Belief (NYSE: DHC), and an settlement with Ventas (NYSE: VTR) to proceed managing 65 high-performing communities from a 120-community portfolio.
“These 2024 portfolio administration transactions are anticipated to drive significant enhancements in money move and liquidity, improve the proportion of our personal actual property portfolio to over 75% of consolidated models by year-end and help significant worth creation for our shareholders,” Baier mentioned.
The corporate additionally within the final yr has addressed greater than $1 billion in loans, within the course of eliminating its 2025 debt maturities and decreasing its 2026 debt maturities to $44 million. The corporate additionally has refinanced greater than $300 million of 2027 debt maturities at a decrease rate of interest than earlier than. That’s “notably significant” on condition that the senior residing trade at present holds $10 billion in debt maturities due in 2025, in line with NIC knowledge Baier cited.
“Because of the sturdy relationships we have now cultivated with Fannie Mae and Freddie Mac and a number of lending companions, we stay assured in our potential to efficiently deal with these loans properly earlier than their maturity dates,” she mentioned.
