Brookdale Senior Living Q3 Earnings Call Highlights

Key Points

• Brookdale lowered its 2026 outlook, projecting adjusted EBITDA of $495 million to $502 million and RevPAR growth of 7.4% to 7.9%, down from its prior 8% to 9% forecast. The company said weaker-than-expected occupancy growth was the largest factor, with marketing costs and the impact of a Mississippi community fire also weighing on results.
• Third-quarter adjusted EBITDA rose 12% year over year to $124.3 million, but RevPAR growth of 7.5% missed expectations. Occupancy reached 83.1%, while weak lead volume and lower-than-expected move-ins during the peak summer selling season contributed to the shortfall.
• Brookdale is increasing marketing efforts and pursuing property acquisitions, while labor-cost controls improved same-community labor expense as a share of revenue by 120 basis points year over year. Management reiterated its expectation for durable mid-teens annual adjusted EBITDA growth in 2027 and beyond.

Brookdale Senior Living NYSE: BKD lowered its full-year 2026 outlook after occupancy growth fell short of expectations during the summer selling season, even as third-quarter adjusted EBITDA met management’s target.

The senior living operator now expects full-year adjusted EBITDA of $495 million to $502 million and consolidated revenue per available unit, or RevPAR, growth of 7.4% to 7.9%. It previously anticipated RevPAR growth of 8% to 9%.

CEO Nick Stengle said the occupancy shortfall would carry into fourth-quarter results. The revised outlook also reflects increased marketing spending and the estimated impact of an October fire at the company’s 97-unit community in Clinton, Mississippi, which is currently vacant.

Occupancy Growth Slows

Third-quarter adjusted EBITDA rose 12% from a year earlier to $124.3 million. Consolidated RevPAR grew 7.5%, below the approximately 8.2% management had anticipated. Resident fees fell 8.7% to $707 million, as a reduction in average units following portfolio dispositions more than offset the increase in RevPAR.

Consolidated occupancy rose 70 basis points sequentially and 130 basis points year over year to 83.1%. Same-community occupancy also improved 70 basis points from the second quarter, reaching 83.6%, but the increase was less than management expected during what is typically the company’s peak selling season.

Stengle said same-community move-ins were higher than a year earlier but below expectations, while move-outs were slightly higher than anticipated. Lead volume was particularly weak in August and September, he said.

October occupancy growth remained subdued, CFO Dawn Kussow said. Consolidated occupancy was 83.5% and same-community occupancy was 83.9%, each up 10 basis points sequentially for the month. Brookdale now expects full-year consolidated occupancy below 83%.

In response to an analyst’s question, Kussow said the occupancy miss was the largest factor in the reduction to the company’s outlook. She estimated that the Clinton fire would have a fourth-quarter impact of a few million dollars, including lost operating income and the company’s current view of insurance-related costs. She said Brookdale is adequately insured but has exposures such as self-insured retention.

Sales Changes and Pricing

Stengle attributed some of the occupancy weakness to disruption from organizational changes, including a gap in the chief sales officer role from February until Margaret Cabell joined in June. He also said external lead providers have faced declining volume as consumers shift from traditional web searches to AI-powered search.

Most Brookdale leads come from internal sources, but the company relies more heavily on external sources than its peers, Stengle said. Management is increasing marketing spending and asking community sales teams to build more local relationships. Stengle said internally generated leads generally convert at higher rates, cost less to acquire and have longer lengths of stay.

Despite the lead-volume challenges, Stengle said Brookdale’s third-quarter lead-to-move-in conversion rate was near a record high relative to recent years. He said the company does not expect to make major hires for the lead-generation effort, emphasizing training and changes in sales practices instead.

Asked whether affordability concerns might require smaller price increases next year, Stengle said Brookdale expects another meaningful increase for existing residents. He said pricing decisions will differ by community, with higher-occupancy properties able to support larger increases and lower-occupancy properties continuing to use discounts to attract residents. The company plans to provide more detail on 2027 pricing on its next call.

Portfolio and Expense Actions

Brookdale continued to shift toward owning more of its properties. At the end of the third quarter, it completed the purchase of 17 previously leased communities for $160 million, including transaction costs. After the quarter, it agreed to acquire another 30 leased communities for $290 million, with closing expected in the fourth quarter.

Contingent on that acquisition, Brookdale also extended a lease covering 39 communities through June 2036 and amended its purchase option. Management expects the transactions to improve adjusted EBITDA and cash flow.

Of 29 communities identified for sale, five remained under contract as of the call, with closings expected by year-end. The company expects approximately $190 million in net proceeds from its 2026 community dispositions, including completed sales.

Brookdale also reported progress on labor costs after tightening management of administrative staffing. Same-community labor expense as a percentage of revenue improved 120 basis points from a year earlier. Kussow said the actions should benefit the full fourth quarter and provide a tailwind in 2027.

Other facility operating expenses remained elevated, rising 8% year over year on a same-community basis. Kussow said the company expects improvement as it addresses repair and maintenance costs and expenses associated with its 2025 enterprise resource planning system implementation.

Looking beyond the revised 2026 outlook, Stengle and Kussow reiterated their confidence in durable mid-teens annual adjusted EBITDA growth in 2027 and beyond. Stengle said he expects occupancy growth to be stronger than in 2026, though he did not provide a specific forecast.

About Brookdale Senior Living (NYSE:BKD)

Brookdale Senior Living, Inc NYSE: BKD is a U.S.-based operator of senior living communities. The company provides housing, care and support services for older adults through a range of offerings, including independent living, assisted living, memory care and continuing care retirement communities.

Brookdale's services are designed to support residents with different levels of independence and care needs. Its communities generally provide accommodations, dining, wellness programs, social and recreational activities, transportation and assistance with daily living.

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