Brookdale Dodges Seasonal Occupancy Declines in Q1 as Labor Expenses Remain High

Brookdale Senior Living (NYSE: BKD) held on to recent occupancy gains in the first quarter of this year as the company faces headwinds from rising operating expenses and continued staffing challenges.

Brentwood, Tennessee-based Brookdale — the nation’s largest senior living operator with 679 communities — reported more than 2,000 move-ins during March, totaling the highest number of move-ins in a month since August 2019, according to the company. At the same time,average occupancy increased 60 basis points between February and March.

Sequential weighted average occupancy in the first quarter of 2022 was “relatively flat,” an improvement over the seasonal declines the company said it typically sees in early quarters and “representing the best first quarter sequential occupancy change” in a decade.


The occupancy gains seen by Brookdale are also in line with industry trends. Average senior living occupancy ticked up to 80.6% in the first quarter of 2022, according to recent NIC MAP data, showing that the industry held its own despite the challenges of the Covid-19 pandemic.

Courtesy Brookdale Senior Living (NYSE: BKD)

Even so, elevated operating costs continue to weigh on the company’s bottom line, as it does for many other operators in the industry.

In a recent interview with Senior Housing News, Brookdale CEO Cindy Baier said operating expenses at same-community senior housing facilities rose by 2.2% in the fourth quarter of 2021, a $10 million increase. The company attributed that rise to the use of contract labor and overtime to fill staffing gaps amid what Baier referred to as “the worst labor market in my entire life.”


This year, the company is focused on hiring even more full-time associates, Baier noted.

“We historically have had about 33,000 associates, and we’re going to hire more than that,” Baier told SHN in March. “When you have a variant that is infectious, you may have a high percentage of your staff out, so you have to have more part-time people who can fill that need.”

The operator has had recent success recruiting staff, but with that uptick in hiring also comes an expected increase in operating expenses related to onboarding and training, according to Jefferies Analyst Brian Tanquilut.

“The ramp-up and training that new employees require prevented management from avoiding cost duplication in the quarter, causing a likely earnings shortfall versus consensus,” he wrote in an April 12 note to investors.

Despite the elevated expenses, the recent occupancy report “bodes well for upcoming peak leasing seasons, and should support significant earnings growth in 2022,” according to Stifel Analyst Tao Qiu.

“Compared to historical trends, where occupancy typically declines 50 to 100 basis points in 1Q, this performance beats typical seasonality and signals strong demand for senior housing,” Qiu wrote.

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