Shares of Brookdale Senior Living Inc. jumped more than 15 percent Feb. 15 after the company’s executives forecast revenue per available room will climb at least 10 percent this year and said their labor situation is improving.
Brentwood, Tennessee-based Brookdale reported a fourth-quarter net loss of $81.7 million on revenues of $605 million versus a loss of $44.1 million on $586 million in sales in late 2020. Adjusted for various items, pre-tax earnings were $35.8 million versus $98.6 million in 2020’s Q4.
But investors appeared more focused on what one analyst said is a feeling that the company is turning the corner on the COVID-19 pandemic: Since March, the company has grown its weighted average senior housing occupancy growth 10 consecutive months, ending the year at 73.6 percent versus 70 percent in January 2021. On top of that, President and CEO Cindy Baier said on a conference call that the company, which runs more than 670 facilities in 41 states, has been able to push through price increases with little pushback.
Baier and CFO Steve Swain said the price increases will help offset labor costs and enable Brookdale to grow its revenue per available room between 10 percent and 12 percent this year, which will help grow adjusted EBITDA – which was $138 million in 2021 – by around $250 million this year. Baier also said the relatively lack of construction of new senior-living facilities during most of the COVID pandemic has constrained supply and created “a window of opportunity” for Brookdale and others for the next 18 to 24 months to further push occupancy rates toward pre-pandemic levels.
Another positive trend – and one analysts on the company’s focused on heavily – is Brookdale’s workforce situation. The company needed to lean a lot on contract labor during the fourth quarter and in January but Baier said her team has raised wages and reworked its recruiting model to good effect. Net hiring turned positive in late 2021, she said, and improved further in January. Since October, Brookdale has been able to able to add “hundreds” of people to its payrolls, Baier said, which will help it reduce its reliance on far more expensive contract workers.
“It’s going to take us a few months to get net hiring where we want it to be,” Baier said. “But we’re making great progress.”
During the afternoon of Feb. 15, Brookdale stock (Ticker: BKD) were changing hands around $6.35, up nearly 18 percent from where they ended the previous day’s session. The move has taken them back to where they were trading in mid-November before the omicron variant began spreading across the United States.
