Brookdale Posts Growing Losses, Cites Industry Headwinds

For the largest senior housing provider in the country, the struggle goes on. Brookdale Senior Living’s (NYSE: BKD) net loss for the fourth quarter of 2016 increased by more than 50% on a year-over-year basis. Its quarterly revenue of $1.21 billion missed analyst expectations by $10 million.

Specifically, Brentwood, Tennessee-based Brookdale posted a net loss of $268.6 million in the fourth quarter of 2016 compared to $174.3 million for the fourth quarter of 2015, which is a 54.1% increase, according to earnings results released Monday.

It’s just the latest round of bad results for the senior living giant, which attained its current massive scale of about 1,100 communities following the acquisition of rival Emeritus Corp. in 2014. Integration troubles and, more recently, challenges related to new supply, labor costs, and other factors have had the company’s share price in a tailspin since 2015.

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After numerous calls for significant restructuring, rumors began circulating last month of a potential acquisition by private equity firm Blackstone Group. Brookdale’s share price leaped after the Blackstone rumor circulated; it dove 4.31% in after-hours trading on Monday after the earnings release.

Total revenue for quarter four of 2016 was down to $1.21 billion from $1.24 billion in the fourth quarter of 2015. Net cash provided by operating activities in the fourth quarter was down to $88.5 million, which was a decrease of $1.7 million when compared to the fourth quarter of 2015.

Still, CEO Andy Smith was quick to point to more positive financial results, achieved despite stiff headwinds affecting the industry.

“We are operating in a difficult environment with intense supply pressure and a competitive labor market. Despite these macro-economic conditions, we were able to grow both fourth quarter adjusted EBITDA and adjusted free cash flow over the prior year quarter,” Smith said in the press release announcing the earnings. “With the fourth quarter results, we achieved results at the upper end of our full year guidance range provided last quarter.”

The competitive pressures from new supply already took a bite out of Brookdale’s earnings in the third quarter of 2016, and the company is not alone is expecting that the issue will persist well into 2017. Smith reiterated plans for meeting these challenges.

“We believe that supply and labor pressures will continue for the majority of 2017 and we have reflected this impact into our guidance,” Smith said. “We have prioritized our efforts in marketing, pricing, product positioning, community management retention and capital expenditures in markets where we are experiencing or expect heightened competitive pressure. We remain focused on creating shareholder value while enriching the lives of the seniors we serve.”

Written by Alana Stramowski

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