Brookdale Gains Momentum As Covid Cases Plummet, Needs-Based Demand Proves Resilient

Brookdale Senior Living (NYSE: BKD) CEO Cindy Baier is feeling optimistic about the company’s pandemic recovery in 2021 as move-ins and leads continue to increase and Covid-19 case counts plummet.

The Brentwood, Tennessee-based operator has seen a 95% reduction in the number of Covid-19 cases within its portfolio since December, when national cases were near their peak. Among residents, Brookdale’s vaccine acceptance rate is about 90%, and the operator has successfully completed nearly all of its second vaccination clinics and more than half of its third clinics under the Pharmacy Partnership for Long-Term Care Program.

Given that progress, there is “no question” that Brookdale is currently seeing the benefits of its vaccine clinics, according to CEO Cindy Baier.


“We’ve had eight consecutive weeks of declining active cases, and recently, we’ve seen no resident cases in the last few days,” Baier said Wednesday at the Barclay’s Global Healthcare Virtual Conference. “When you consider that we operate around 700 communities, that is truly amazing.”

Baier expects that, as vaccination rates rise for the rest of the U.S., Covid-19 case counts will continue to fall, accelerating the country’s recovery. Those conditions, coupled with normal positive occupancy seasonality in the spring and summer, gives Baier confidence that the company will see an increase in interest among prospects.

Overall, the operator has seen monthly gains in move-ins, and move-ins and move-outs have improved versus January. Needs-based move-ins, especially in the operator’s memory care communities, have “shown a significant amount of resilience,” according to Baier.


Baier is also optimistic about the company selling an 80% stake in its home health, hospice and outpatient therapy service line to Nashville-based health system HCA Healthcare for $400 million.

She believes the partnership with HCA will only strengthen the company’s health care offerings for residents, and that the business line is set to significantly grow as the pandemic winds down. And for HCA healthcare, there is an opportunity to provide additional services to senior living residents, who often live with multiple chronic conditions.

“We think this is a win for everyone involved,” Baier said.

The deal also provided Brookdale with even more cash on hand to stay flexible with its options during the remainder of the pandemic.

Baier was tight-lipped about how the company might use its upfront net cash proceeds of approximately $300 million, and promised more information in the “not-too-distant future.” But she added that the company is currently scanning the marketplace for opportunities that may have arisen out of the pandemic and its pressures, although caution is still the watchword when it comes to capital.

“Until we see our occupancy turn positive, and until we see our business inflect, I think we’re going to stay nimble with regard to our liquidity,” Baier said.

Margins are also a particular focus for the company as it looks to recover from the pandemic. In 2019, Brookdale’s annualized net operating income (NOI) margins neared 30%. But the company’s margins shrank down closer to 20% a year later as a result of the pandemic and its pressures — a trend the rest of the senior living industry has also seen.

Still, Brookdale CFO Steve Swain is optimistic that the company’s margins will grow closer to 30% when the recovery takes hold and the company starts building census. Improving vaccine rates among the general public, accelerating move-ins, fewer senior living construction starts this year and demographic tailwinds should also contribute to that growth, he said.

The operator is additionally working hard to preserve its rates amid a national battle for occupancy that may include deep discounts and concessions from competitors. And, Brookdale is optimistic that the federal government will provide more funding to address the public health costs of fighting Covid-19.

“I really am filled with hope,” Baier said. “We have overcome so much during the pandemic, and I’m optimistic that, as we see the Covid-19 pandemic recede, we’ll see the benefit of all of our hard work.”

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