Brookdale’s third quarter saw a positive market reaction, despite revenue and non-GAAP earnings falling short of Wall Street expectations. Management attributed the momentum to occupancy gains and improved operational efficiency, with CEO Nikolas Stengle highlighting that occupancy reached its highest level since early 2020. Stengle emphasized, “Our SWAT team efforts are working and our ability to deploy targeted CapEx in specific communities is generating outsized RevPAR and EBITDA growth.” The company also pointed to the benefits of portfolio optimization and tighter cost controls as key drivers behind the sequential improvement in operating metrics.

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While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Brookdale’s Q3 Earnings Call

• Brian Tanquilut (Jefferies) asked about balancing pricing, occupancy, and cash generation. CEO Nikolas Stengle explained a new offensive strategy prioritizing operational agility and dynamic pricing, emphasizing investments in communities that drive both occupancy and profitability.
• Ben Hendrix (RBC Capital Markets) questioned the decision to begin disclosing Funds From Operations (FFO). Stengle responded that FFO offers a clearer view of Brookdale’s value as both a senior living operator and real estate owner.
• Joanna Gajuk (Bank of America) inquired about the impact of organizational changes on general and administrative expenses. CFO Dawn Kussow clarified that recent restructuring would result in a net reduction in G&A, with no added headcount or costs.
• Andrew Mok (Barclays) asked about the confidence in projecting mid-teen EBITDA growth. Stengle cited sector scarcity, Brookdale’s heavy focus on assisted living and memory care, and the proven effectiveness of the SWAT team model.
• Joshua Raskin (Nephron Research) questioned how scale benefits would be maintained amid a regionalized structure. Stengle explained that a single operational leader and aligned objectives would preserve best practices while empowering regional leaders with more autonomy.

Catalysts in Upcoming Quarters

Going forward, the StockStory team will be watching (1) the pace of occupancy gains and the effectiveness of the SWAT team approach, (2) the continued transition and sale of non-core communities and their impact on margins, and (3) the company’s ability to execute targeted capital investments that directly support revenue and EBITDA growth. The outcome of these initiatives and updates at the planned Investor Day will be key markers of progress.

Brookdale currently trades at $10.52, up from $9.13 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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