Brookdale Q3 Earnings Miss on Marketing Cost Hike, Shares Decline 18%

Core Viewpoint - Brookdale Senior Living Inc. (BKD) experienced a significant decline in share price, losing 17.5% since the release of its third-quarter 2024 results, primarily due to increased marketing expenses, reduced property insurance proceeds, and a drop in interest income, leading to a wider net loss [1] Financial Performance - BKD reported an adjusted loss of 22 cents per share for Q3, which was worse than the Zacks Consensus Estimate of a 16-cent loss, remaining flat year over year [2] - Total revenues and other operating income increased by 3.5% year over year to $784.2 million, driven by higher resident and management fee revenues [2] - Resident fees rose to $743.7 million, a 3.7% increase year over year, supported by improved revenue per occupied unit (RevPOR) and occupancy rates [3] - Management fees grew by 4.3% year over year to $2.7 million [3] Key Metrics - RevPOR increased by 4.3% year over year due to annual rate increases, while weighted average occupancy improved by 130 basis points to 78.9% [4] - Facility operating expenses rose by 2% year over year to $548.3 million, influenced by inflation and marketing costs, although partially offset by divestitures and reduced contract labor costs [5] - Interest income fell by 26.3% year over year to $4.7 million, contributing to a net loss of $50.7 million, which was wider than the previous year's loss of $48.8 million [6] - Adjusted EBITDA was reported at $92.2 million, reflecting a 15% year-over-year increase [6] Financial Position - As of September 30, 2024, BKD had cash and cash equivalents of $254.7 million, down 8.4% from the end of 2023 [7] - Total assets increased by 6.6% to $5.9 billion, while long-term debt slightly decreased to $3.7 billion [7] - Total equity fell by 27.4% from the end of 2023 to $294.3 million [8] - Net cash generated from operations surged by 45.2% year over year to $66.5 million, although adjusted free cash outflow increased more than five-fold to $13.9 million [8] Outlook - Management anticipates a year-over-year growth in RevPAR for Q4 2024 in the range of 5-5.5% and expects adjusted EBITDA to be between $93 million and $98 million [9] - Cash facility operating lease payments are projected to be around $56 million for Q4, with non-development capital expenditures estimated at approximately $180 million for 2024 [10]