Brookdale Senior Living’s continued COVID-19 pandemic recovery in the second quarter was highlighted by occupancy gains, improvements in leadership retention and associate turnover, and the implementation of a new marketing initiative, according to President and CEO Lucinda “Cindy” Baier.
During a second-quarter earnings call on Friday, Baier said the Tennessee-based senior living operator demonstrated “powerful positive progress” toward full recovery from the pandemic.
Brookdale saw average occupancy growth of 160 basis points compared with the same quarter in 2023 and 20 basis points of growth from the first quarter of this year, landing at 78.1%. Executive Vice President and Chief Financial Officer Dawn Kussow said she expects third-quarter occupancy to provide “meaningful sequential improvement” from the second quarter, reflecting the company’s confidence in its community-level sales leaders, the anticipated effects of targeted sales and marketing initiatives, and continued benefit from growing demand.
Second-quarter move-ins from paid third-party referral sources were relatively soft compared with the company’s historical experience, Baier said, leading the company to work with those partners to improve performance, launch incremental sales initiatives and increase planned spending on marketing.
Those investments already are paying off, as move-ins continued to exceed pre-pandemic results in the second quarter, she said.
“It’s easy to visualize the opportunities for many years of occupancy growth as we capture the unprecedented demand for our services as this population ages into our new average resident age,” Baier said. “The targeted efforts I have consistently highlighted over the last 18 months are aimed at delivering an appropriate return for the services we are providing and are purposely being established before the expected rapid surge in demand.”
Total senior living revenue was up 4.2% year over year. Independent living average occupancy of 79.9% was a 100 basis point gain year over year. Assisted living and memory care average occupancy of 77.6% was a 130 basis point increase year-over-year gain, whereas the continuing care retirement community segment average occupancy of 76.1% was a 410 basis point year-over-year gain.
Key drivers of long-term organic growth, according to company executives, include limited new senior living supply, rapidly growing demographic demand, and Brookdale-specific differentiators, including clinical expertise, personalized services, resident engagement programs and innovative healthcare models such as Brookdale HealthPlus. Baier added that Brookdale’s higher concentration of needs-based offerings — particularly assisted living and memory care — distinguishes it from others in the industry, which she said is skewed toward lower-needs products.
“I have tremendous optimism for our future,” Baier said, adding that the senior living industry is experiencing a positive and growing gap between supply and demand. “This imbalance has more potential for occupancy increases than we have ever seen. Brookdale’s unique company strengths and industry leading programs will continue to differentiate us as a leader within our highly fragmented industry.”
Retention continues to improve
Brookdale also reported delivering “meaningful” improvements in both leadership retention and employee turnover reduction in the second quarter. The company realized its fourth consecutive quarter of improvements in the retention of key leaders and the fifth consecutive quarter of hourly employee turnover improvements compared with prior-year periods, executives said.
Kussow said that same-community labor expenses improved 190 basis points compared with the second quarter in 2023 due to revenue increases, reductions in the use of premium labor, and the effect of improved leadership retention and hourly worker turnover.
Baier attributed some of the company’s labor and leadership retention improvements to its HealthPlus program, a care delivery model designed to improve resident quality of life through care coordination. With plans to increase the number of HealthPlus communities to 130 by the end of the year, Baier said, 50 communities will launch HealthPlus this month.
HealthPlus residents have better outcomes, which result in longer lengths of stay, creating better profitability, the CEO said. The company is “diligently” introducing new medical record technology in its newest HealthPlus communities, implementing new community processes and training employees on the HealthPlus platform.
Omega lease amended
After the quarter ended, the company and Omega Healthcare Investors amended an existing master lease on 24 communities, which Brookdale will continue to lease from Omega. As part of the amended agreement, Omega committed to making available up to $80 million to fund capital expenditures for the communities through Dec. 31, 2037.
As of June 30, Brookdale operates and manages 649 communities in 41 states.
