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Sale Rumors Have Swirled Before
If sold, Brookdale would join a growing list of senior living companies that have traded hands in recent years, including Foundry Commercials acquisition of Spring Arbor Senior Living the former Holiday Retirement, which is now part of Atria and Tealwood Senior Living, which was acquired by Lifespark.
Other senior living acquisitions in recent years have included Invesques acquisition of Commonwealth Senior Living in 2019.
But this is not the first time Brookdale was rumored to have been imminently trading hands. In 2017, it was reported that real estate investment trust Ventas was considering a buyout of the operator. The company later put those rumors to rest.
Earlier that same year, reports surfaced that private equity giant Blackstone Group was in talks to acquire Brookdale Senior Living, a move that ultimately did not happen.
Additionally, a strategic review ended in 2018 with a after it reportedly received a buyout offer for between $9 and $11 per share. Current CEO Baier took the reins at the same time.
For some investors, this may feel like deja vu, Qiu wrote.
Brookdale also has faced repeated calls over the years from activist investor Land & Buildings to consider more moves to unlock shareholder value by spinning off or selling its real estate.
How Much Does Senior Living Cost
Because we provide several senior living options, the average cost can vary depending on factors like community location, apartment style, amenities and level of care.
But the good news is that whether you want to find an independent living community that handles all the household chores, an assisted living community where you can have a little extra help with personal grooming and managing medication, or a dementia care community where your family member has a daily opportunity to thrive, we have a variety of options at a variety of price points.
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Brookdale Senior Living Third Quarter 2022 Results
Key Financial Results
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Net loss: US$28.4m .
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US$0.15 loss per share .
All figures shown in the chart above are for the trailing 12 month period
Brookdale Senior Living EPS Misses Expectations
Revenue was in line with analyst estimates. Earnings per share missed analyst estimates by 13%.
Looking ahead, revenue is forecast to grow 29% p.a. on average during the next 3 years, compared to a 7.5% growth forecast for the Healthcare industry in the US.
The company’s shares are down 1.4% from a week ago.
Risk Analysis
What about risks? Every company has them, and we’ve spotted 3 warning signs for Brookdale Senior Living you should know about.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Starting Base Rental Rate
In addition to the base rental rate, you may be responsible for other fees, including a one-time fee that covers admission and apartment preparation, which can range from $500 to $5,050.
* The pricing listed is for informational purposes to educate on typical costs in senior housing. Specific community pricing may vary and may be outside of the typical range noted.
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A Look At Brookdale Senior Living’s Liabilities
Zooming in on the latest balance sheet data, we can see that Brookdale Senior Living had liabilities of US$792.9m due within 12 months and liabilities of US$4.90b due beyond that. Offsetting these obligations, it had cash of US$468.5m as well as receivables valued at US$50.0m due within 12 months. So its liabilities outweigh the sum of its cash and receivables by US$5.18b.
The deficiency here weighs heavily on the US$1.01b company itself, as if a child were struggling under the weight of an enormous back-pack full of books, his sports gear, and a trumpet. So we definitely think shareholders need to watch this one closely. After all, Brookdale Senior Living would likely require a major re-capitalisation if it had to pay its creditors today. There’s no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Brookdale Senior Living can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.
In the last year Brookdale Senior Living had a loss before interest and tax, and actually shrunk its revenue by 9.7%, to US$2.5b. That’s not what we would hope to see.
Brookdale Senior Living Refinances $220 Million In Debt
Brentwood TN-based Brookdale Senior Living announced Monday that the company has substantially reduced all 2023 debt maturities with $220 million in refinancing.
I am very pleased Brookdale has now refinanced all 2023 maturities, with the exception of one highly-covered loan secured by an asset planned for sale, Steven Swain, Brookdales executive vice president and chief financial officer, said in a statement. This refinancing has cleared the maturity runway for nearly two years, considering that our next agency debt maturity is September 2024.
The refinancing announcement comes amid rumors that the company is shopping for a buyer, but as of now, the rumors are just that. A Brookdale representative previously toldMcKnights that company executives do not comment on market rumors or speculation.
Last year, Brookdale sold 80% of its home health, hospice and therapy business to HCA Healthcare in a move meant to strengthen the companys liquidity position and enable it to remain judicious with investments.
Monday, Brookdale said it obtained the $220 million of mortgage debt from Capital One, National Association as the administrative agent, joint lead arranger and lender, and Synovus Bank as the joint lead arranger and lender. CBRE Capital Markets was the financial adviser to Brookdale in securing the loan.
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Follow Trends Affecting The Local Economy
Brookdale has fulfilled the “minimum” obligations for its facilities, an office spokesperson said.
But some Regency Oaks residents wonder whether Brookdale would be able to pay the promissory notes if its financial condition deteriorates further. In a community with many well-educated, articulate seniors, the voicing of concerns has led to tensions between Brookdale’s fans and its critics.
“I’m not worried, my board of directors isn’t worried, we have outstanding management,” said Don Infante, a retired Army general who is president of the residents’ board. “We are among the most financially secure in the shaky Brookdale structure.”
Infante has been at odds with Jim Harpham, a former GTE Mobilnet president who says he was kicked off the board’s finance committee for asking too many questions. Among them: Why did Brookdale, which paid $36 million for Regency Oaks in a joint venture deal four years ago, take out a $75 million mortgage on the community?
“I don’t like that that’s not good,” Harpham said. He also wonders how much of the money generated by Regency Oaks what Infante calls a “cash cow” is being spent on other Brookdale facilities.
“Tampa is a very big and important market for us,” Gee said.
Contact Susan Taylor Martin at smartin@tampabay.com or 893-8642. Follow @susanskate
What Am I Paying For
Independent living is a great option for seniors who want to enjoy the freedom of life without the hassle of things like cleaning, cooking and maintaining a home. Its a vacation-style, carefree environment that gives you the opportunity to do more of the things you love.
Curious to know more? Here are just a few things you could enjoy when you make your home at an independent living community:*
- A number of free activities, helping your entertainment budget go farther every single month
- A home-like living space with safety features, making sure you have time to enjoy your hobbies
- Fresh daily meals, giving you the energy you need to make the most of your day
- A staff that’s available 24 hours a day, seven days a week to be alerted to an emergency
- Low property maintenance, giving you the chance to enjoy home sweet home without any of the upkeep
- Housekeeping and laundry, so you can spend less time dealing with chores and more time doing the things you love
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Independent Living Price Ranges
Independent living is often a rewarding experience for seniors. The best part is that you get to leave the responsibilities of home behind. Instead of losing time to sweeping, dusting and mowing the yard, you can socialize, have fun, participate in lively activities and pursue your hobbies with renewed enthusiasm.
If you can provide for your needs but want someone else to handle the meals, housekeeping, linen service and maintenance, its probably a great option for you.
But how much does independent living cost?
Brookdale Senior Living Center Settles California Case Over Inflated Ratings For $325 Million
A California judge barred the largest chain of senior living centers in the United States from fudging the number of hours nurses care for residents in order to get better ratings.
BAKERSFIELD, Calif. California Attorney General Rob Bonta announced a $3.25 million settlement Friday with Brookdale Senior Living over claims of negligence toward residents and the doctoring of records to pad the companys bottom line.
According to a complaint that Bonta brought with Kern County District Attorney Cynthia Zimmer, Brookdale didnt provide timely notification and preparation when transferring or discharging residents, and inflated the number of hours its nurses spent caring for residents in its reports to the Centers for Medicare & Medicaid. Though based in Tennessee, Brookdale has 10 facilities in California.
Brookdale did not admit to any wrongdoing as part of the settlement.
We strongly disagree with the characterizations made by the other parties in the case,” a spokesperson for Brookdale said in a statement. “There are no findings Brookdale violated any laws or engaged in wrongdoing. Brookdale continues to deny any liability. … Resolving this case for an amount equal to the continued cost of defense was in the best interests of our residents, and we are pleased to put this behind us.
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Seniors Worry About Financial Health Of Brookdale Continuing Care Centers
CLEARWATER –For those who can afford it, Regency Oaks is the epitome of comfortable senior living.
From their well-maintained apartments, the 500-plus residents look out on spacious grounds with azaleas and live oaks. Amenities include a tavern, beauty salon, putting green and two dining rooms with a wide array of menu selections.
Most attractive, though, is the promise of lifetime care. For that, residents pay up to $300,000 to secure an apartment plus monthly fees averaging $2,500 to $3,000 a month. With so much at stake, they have been rattled by financial woes dogging the community’s owner, Brookdale Senior Living Solutions.
The nation’s largest senior housing provider, Tennessee-based Brookdale, recently announced it lost $517 million last year. Last week, a new CEO took over, warning of “painful but necessary” steps like layoffs and the sale of assets, perhaps including some of the 34 nursing homes and independent and assisted living facilities Brookdale owns in the Tampa Bay area.
The company’s financial struggles are particularly unsettling for the thousands of residents of its five local life care communities Regency Oaks, Lake Seminole Square and Freedom Square in Seminole and Freedom Plaza and Homewood in Sun City Center.
Why Does Debt Bring Risk
Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Part and parcel of capitalism is the process of ‘creative destruction’ where failed businesses are mercilessly liquidated by their bankers. However, a more frequent occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. When we think about a company’s use of debt, we first look at cash and debt together.
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Private Equity Reit Buyers Possible
While Brookdale stock jumped on Friday on Bloombergs report, the companys stock price earlier this week had dipped to a 52-week low of $3.88, according to a report on SeekingAlpha.
But the new report from Bloomberg should serve to validate Brookdales strategic value and put a floor under the stock, wrote Stifel Analyst Tao Qiu.
Qiu also speculated that a buyer of the operator could potentially be private equity firm or one of the major health care REITs that the operator works with or has worked with, such as Ventas or Welltower .
However, we think it is unlikely they would be stepping forward this time since both have been shedding exposure to Brookdale in the recent past, Qiu wrote. Having said that, recent lease restructurings with the big three have also modified certain change-of-control provisions, making it easier for Brookdale to strike a deal.
Brookdale has made progress in recent years on the turnaround plan CEO Cindy Baier laid out when she first took the reins in 2018. Back then, the operator was in worse operational shape, with an unwieldy portfolio of more than 1,000 communities, multiple underwater lease arrangements and a host of other pressures.
But thanks to a multi-year effort to renegotiate leases and grow the companys total owned assets, Baier believes the operator now has a portfolio where we have the ability to win.
Brookdales senior housing operating margins neared 21% in the second quarter of 2022.
A Year After Offloading Home Health Assets Brookdale Senior Living Exploring Sale
Last year, Brookdale Senior Living offloaded the majority of its struggling home health assets to HCA Healthcare .
Now its reportedly exploring a sale of the entire company. At the beginning of the month, its shares were at a 52-week low. They shot up Friday when the reports of a possible sale surfaced.
A sale is not yet a certainty, according to Seeking Alpha. But the company is working with advisers to find the best path forward. Bloomberg first reported the exploration of strategic alternatives.
As a matter of policy, we dont comment on market rumors or speculation, Kathy MacDonald, senior VP of investor relations for Brookdale, told Home Health Care News sister site Senior Housing News.
The last two years for Brookdale have been volatile ones. As senior living occupancy dropped during the pandemic, offloading the majority of its home health segment to HCA Healthcare seemed to make sense. That transaction became effective in July 2021.
The $400 million sale of 80% of the segment helped offload heightened costs from COVID-19 and its struggling health care services business. Maintaining a 20% stake allowed Brookdale the ability to still provide those services to residents.
In September of 2021, LHC Group announced an agreement to purchase agencies in 22 states from the Brookdale-HCA Healthcare venture.
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Brookdale Senior Living Cost
| $2,500 â $5,000 | N/A |
Brookdale senior living costs vary greatly based on the type of care and location you choose. It is also important to note that Medicare or Medicaid may cover a significant portion of the costs for skilled nursing care, home health care, or hospice care. Independent living, assisted living, memory care, and continuing care retirement communities are typically not covered by Medicare or Medicaid.
Pro Tip: Health insurance will likely pay for some of the costs of Brookdale Senior Living’s services and housing, but you should still expect to pay at least 50 percent of the basic costs out of pocket.
You may still be able to get help with the costs through private health insurance. Additionally, Original Medicare or Medicare Advantage will pay for certain services you get within an assisted living facility, like fitness or medical costs. Lastly, when compared to similar senior living communities, Brookdale Senior Living offers competitive prices, especially when you consider the breadth and quality of care.