Brookdale’s first quarter results were met with a negative market reaction, with shares trading down following the earnings announcement. Management attributed the quarter’s performance to operational improvements that drove occupancy gains and tighter expense control, resulting in higher margins. Interim CEO Denise Warren highlighted the company’s progress, stating, “We are pleased with the team’s efforts in the quarter, which enabled us to deliver RevPAR and adjusted EBITDA that exceeded our expectations as well as positive adjusted free cash flow.” Management also noted that labor expense as a percentage of revenue improved, supported by lower employee turnover and focused cost management.
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Brookdale (BKD) Q1 CY2025 Highlights:
- Revenue: $813.9 million vs analyst estimates of $816.9 million (4% year-on-year growth, in line)
- Adjusted EBITDA: $124.1 million vs analyst estimates of $112.8 million (15.3% margin, 10% beat)
- EBITDA guidance for the full year is $445 million at the midpoint, above analyst estimates of $440.4 million
- Operating Margin: 3.9%, up from 2.7% in the same quarter last year
- Market Capitalization: $1.64 billion
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 Brookdale’s Q1 Earnings Call
- Ben Hendrix (RBC) asked about pricing strategy flexibility and local-level guardrails. CFO Dawn Kussow explained that pricing initiatives are targeted, with community-level oversight to ensure rate increases exceed expense growth while still promoting occupancy gains.
- Brian Tanquilut (Jefferies) inquired about the seasonality of margins and expense progression through the year. CEO Denise Warren clarified that Q1 typically delivers the highest margin due to fewer expense days, and that merit increases and other factors create headwinds in subsequent quarters.
- Andrew Mok (Barclays) sought clarification on which occupancy initiatives are already contributing to results versus those that are forward-looking. Kussow detailed that SWAT teams and targeted pricing are underway, while further rollout of these programs is planned for coming quarters.
- Tao Qiu (Macquarie) asked about the rationale for asset dispositions in low-occupancy communities and market appetite for these assets. General Counsel Chad White explained that dispositions focus on underperforming, non-core properties and that many are already under letter of intent, with proceeds expected to improve financial metrics.
- Joanna Gajuk (BofA) questioned the sustainability of improvements from SWAT teams and the impact of macroeconomic uncertainty on guidance. Warren and Kussow affirmed the durability of operational changes and said guidance reflects optimism balanced with caution about external risks.
Catalysts in Upcoming Quarters
Our analysts will be closely tracking (1) continued progress from SWAT teams and occupancy initiatives in underperforming communities, (2) execution and timing of asset dispositions, especially the 14 non-core owned properties and the 55 leased communities, and (3) the evolution of the CEO search and its impact on operational focus. Updates on capital reinvestment and the success of HealthPlus expansion will also serve as important indicators of momentum.
Brookdale currently trades at $7, up from $6.79 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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