Asset Sales, Labor Costs Hit Brookdale’s Bottom Line

About two months after Brookdale Senior Living Inc. (NYSE: BKD) ended a strategic review and named a new CEO, the nation’s largest senior housing provider has posted a $457.2 million net loss for the first quarter of 2018. Impairment charges related to its ongoing portfolio repositioning contributed $351.7 million to that loss, in the form of goodwill related mainly to assisted living sales.

By comparison, in the first quarter of 2017, Brookdale reported a net loss of $126.4 million.

Brookdale also saw an increase in community labor expenses last quarter, as well as in insurance expenses, which together contributed to the financial results, according to a press release.


The provider’s first-quarter 2018 net loss included $430.4 million of non-cash impairment expense, including the impairment charges of $351.7 million for goodwill within the assisted living segment and $40.8 million for plant, property and equipment and leasehold intangibles for, primarily, assisted living communities.

Resident fees, meanwhile, were $906.3 million for the first quarter of 2018, a drop of 10.9% from the first quarter of last year. The decrease in resident fees was primarily a result of the disposition of 111 communities through lease terminations and asset sales since Jan. 1, 2017.

Brookdale also reported transaction and organizational restructuring costs of $17.2 million for the quarter.


Additionally, Brookdale’s same-community facility operating expenses for the first quarter of this year were 5.8% greater than they were in the first quarter of 2017. The expenses were fueled mainly by an increase in community labor costs stemming from wage rate increases.

Going forward, Brookdale President and CEO Lucinda Baier intends for the senior housing behemoth to concentrate on local markets while taking advantage of its scale.

“It is about winning locally, while leveraging industry-leading scale and experience,” Baier in a Monday press release. “While our financial results reflect that we are a smaller company as a result of our portfolio optimization initiative and operating in a difficult competitive environment, we are making progress on our turnaround strategy.”

Baier is spending at least 20% of her time visiting Brookdale offices and communities around the country, she recently told Senior Housing News.

Written by Mary Kate Nelson

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