Yahoo Finance Brookdale (BKD) Down 3% Post Q1 Earnings: What Lies Ahead?
Brookdale Senior Living Inc.’s BKD shares have declined 2.6% since it reported first-quarter 2024 results on May 7, 2024. Despite a narrower-than-expected loss, which resulted from higher resident fees and increased occupancy rates, investors may have been worried about an elevated expense level. Overall costs took a hit from persistent inflationary pressures.
Revenue per available unit (“RevPAR”) is anticipated to witness 6.25-6.75% growth on a year-over-year basis in the second quarter of 2024 while the metric recorded 11.6% growth in the prior-year quarter. The expected decline in the growth rate of the metric may have further concerned investors since healthy RevPAR growth provides an impetus for the company to grow organically.
Nevertheless, an aging U.S. population is expected to sustain the solid demand for BKD’s healthcare services in the days ahead. As a premier operator of senior living communities, Brookdale along with its affiliates operated and managed 652 communities across 41 states as of Mar 31, 2024. Also, management forecasted adjusted EBITDA to be within $93-$98 million in the second quarter of 2024, the mid-point of which indicates a year-over-year improvement of 17.3%, which should provide some respite to the investors. Weighted average occupancy in the second quarter is also estimated to rise on a sequential basis.
Now, let's delve into the first-quarter results to assess the company's operational performance.
Q1 Performance
BKD incurred a first-quarter adjusted loss of 13 cents per share, narrower than the Zacks Consensus Estimate of a loss of 16 cents per share and the year-ago quarter’s loss of 20 cents per share.
Total revenues and other operating income amounted to $782.8 million, which improved nearly 4% year over year, attributable to growth in resident and management fee revenues.
Brookdale Senior Living Inc. Price, Consensus and EPS Surprise
Brookdale Senior Living Inc. price-consensus-eps-surprise-chart | Brookdale Senior Living Inc. Quote
Resident fees of $744.2 million rose 4.3% year over year on the back of a higher revenue per occupied unit ("RevPOR") and occupancy rate. However, the upside was partly offset by the divestiture of communities mainly in the form of lease terminations. Meanwhile, management fees inched up 1.6% year over year.
RevPOR grew 4.4% resulting from annual rate increases effective from the very beginning of 2024. Weighted average occupancy improved 160 basis points year over year, driven by BKD’s initiatives to restore occupancy levels. RevPAR improved 6.7% year over year.
Facility operating expenses of $542.6 million increased 2.2% year over year due to continued inflationary challenges and an elevated property repair expense level. Nevertheless, the downside was partly offset by the divestiture of communities and lower contract labor costs.
General and administrative costs, including certain items, were $45.7 million, down 5.9% year over year.
However, interest income of $4.8 million tumbled 10.3% year over year. Brookdale incurred a net loss of $29.6 million, narrower than the year-ago quarter’s loss of $44.6 million. The narrower loss resulted from improved resident fees, partly offset by higher facility operating costs.
Adjusted EBITDA rose 10.1% year over year to $97.6 million.
Financial Update (as of Mar 31, 2024)
Brookdale exited the first quarter with cash and cash equivalents of $318.5 million, which advanced 14.6% from the 2023-end level. Total assets of $5.5 billion dipped 0.6% from the level at 2023 end.
Long-term debt, less of the current portion, was $3.7 billion, which inched up 1% from the figure as of Dec 31, 2023. The current portion of long-term debt amounted to $65.7 million.
Total equity of $375.4 million fell 7.3% from the 2023-end figure.
BKD used $1.1 million in cash in operations while it generated net cash from operations of $24 million in the prior-year quarter.
Adjusted free cash outflow was $26.3 million, which compares unfavorably with the $21.2 million outflow recorded in the year-ago quarter.
2024 View Reaffirmed
The company estimates non-development capital expenditures, net of anticipated lessor reimbursements, to be roughly $180 million in 2024.
Zacks Rank
Brookdale currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Medical Sector Releases
Of the Medical sector players that have reported first-quarter 2024 results so far, the bottom-line results of HCA Healthcare, Inc. HCA, Centene Corporation CNC and Molina Healthcare, Inc. MOH beat the respective Zacks Consensus Estimate.
HCA Healthcare reported first-quarter adjusted earnings per share (EPS) of $5.36, which beat the Zacks Consensus Estimate by 7%. The bottom line improved 8.7% year over year. Revenues amounted to $17.3 billion, which improved 11.2% year over year. The top line outpaced the consensus mark by 2.9%. Same-facility equivalent admissions advanced 5.2% while same-facility admissions grew 6.2% year over year.
Same-facility revenue per equivalent admission rose 3.5% year over year. Same-facility inpatient surgeries grew 1.7%. Same-facility outpatient surgeries declined 2.1% year over year. Additionally, same-facility emergency room visits advanced 7.2% . Adjusted EBITDA improved 5.7% to $3.4 billion. HCA operated 188 hospitals and roughly 2,400 ambulatory sites of care across 20 states and the United Kingdom as of Mar 31, 2024.
Centene recorded first-quarter adjusted EPS of $2.26, which outpaced the Zacks Consensus Estimate by 8.1%. The bottom line improved 7.1% year over year. Revenues advanced 3.9% to $40.4 billion. The top line beat the consensus mark by 11%. Revenues from Medicaid amounted to $21.5 billion, which slipped 3% year over year while Medicare revenues inched up 1% to $5.9 billion.
Additionally, commercial revenues of $7.8 billion climbed 48% year over year. Premiums of CNC rose 5% to $35.5 billion. Service revenues of $808 million declined 28.3% year over year. As of Mar 31, 2024, total membership was 28.4 million, which dipped marginally year over year. Adjusted net earnings grew 4.1% to $1.22 billion.
Molina Healthcare reported first-quarter 2024 adjusted EPS of $5.73, which beat the Zacks Consensus Estimate by 5%. However, the bottom line dipped 1.4% year over year. Total revenues amounted to $9.9 billion, which improved 21.9% year over year. Also, the top line outpaced the consensus mark by 4.3%. Premium revenues of $9.5 billion climbed 21%.
Investment income soared 52.1% to $108 million. Adjusted general and administrative expense ratio deteriorated 10 basis points year over year to 7.1%. MOH’s adjusted net income dipped 0.9% to $334 million. The consolidated MCR (medical costs as a percentage of premium revenues) was 88.5%. The metric deteriorated 140 basis points year over year. As of Mar 31, 2024, total membership advanced 9% to around 5.7 million.
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