Brookdale Senior Living Inc. (BKD) Bundle
Understanding Brookdale Senior Living Inc. (BKD) Revenue Streams
Understanding Brookdale Senior Living Inc.’s Revenue Streams
Brookdale Senior Living Inc. generates revenue primarily from resident fees across its various segments, which include Independent Living, Assisted Living and Memory Care, and Continuing Care Retirement Communities (CCRCs). The following table summarizes the revenue and other operating income for the three months and nine months ended September 30, 2024, compared to the same periods in 2023.
| Segment | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) |
|---|---|---|---|---|
| Independent Living | $150,380 | $141,449 | $448,870 | $422,993 |
| Assisted Living and Memory Care | $510,084 | $496,232 | $1,528,147 | $1,475,322 |
| CCRCs | $83,265 | $82,065 | $250,662 | $251,446 |
| All Other | $40,438 | $37,545 | $116,860 | $111,585 |
| Total Revenue | $784,167 | $757,291 | $2,344,539 | $2,261,346 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate shows a positive trend across all segments. The total revenue increased by 3.6% for the three months ended September 30, 2024, and 3.7% for the nine months ended September 30, 2024 compared to the previous year. The resident fees increased as follows:
- Independent Living: 6.5% for Q3 2024 and 6.2% for the first nine months of 2024.
- Assisted Living and Memory Care: 3.3% for Q3 2024 and 4.1% for the first nine months of 2024.
- CCRCs: 1.5% for Q3 2024 and a slight decrease of 0.1% for the first nine months of 2024.
- All Other: 7.9% for Q3 2024 and 4.7% for the first nine months of 2024.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contribution of each segment to total revenue was as follows:
- Independent Living: 19.1%
- Assisted Living and Memory Care: 65.0%
- CCRCs: 10.7%
- All Other: 5.0%
Analysis of Significant Changes in Revenue Streams
In the analysis of revenue streams, several factors contributed to the changes observed:
- Independent Living segment showed a solid increase in resident fees due to a 4.8% increase in Revenue Per Occupied Room (RevPOR) and a 1.7% increase in occupancy.
- Assisted Living and Memory Care experienced a 3.3% increase in resident fees, driven by a 6.1% increase in RevPAR.
- The CCRC segment displayed a slight decrease in resident fees, attributed to the disposition of communities impacting overall resident revenue.
- All Other segment revenue has shown growth, reflecting increased management fees and reimbursed costs incurred on behalf of managed communities.
The overall revenue performance indicates resilience and recovery efforts following challenges posed by the pandemic.
A Deep Dive into Brookdale Senior Living Inc. (BKD) Profitability
Profitability Metrics
The profitability metrics of the company reveal crucial insights into its financial health. Below is a detailed look at key profitability measures including gross profit, operating profit, and net profit margins.
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 30, 2024, the company reported the following:
| Metric | 2024 (in thousands) | 2023 (in thousands) | Change (Amount) | Change (%) |
|---|---|---|---|---|
| Resident Fees | $2,227,679 | $2,140,688 | $86,991 | 4.1% |
| Facility Operating Expense | $1,628,339 | $1,599,336 | $29,003 | 1.8% |
| Net Income (Loss) | $(118,057) | $(97,900) | $(20,157) | 20.6% |
| Adjusted EBITDA | $287,669 | $250,215 | $37,454 | 15.0% |
Trends in Profitability Over Time
The company has experienced fluctuations in profitability metrics over the past year. The resident fees increased by 4.1%, while facility operating expenses rose by 1.8%. However, the net loss widened by 20.6% compared to the previous year.
Comparison of Profitability Ratios with Industry Averages
When comparing profitability ratios with industry averages:
- Net Profit Margin: The company's net profit margin was negative at -5.3% as of September 30, 2024, compared to an industry average of 2.5%.
- Operating Profit Margin: The operating profit margin stood at 11.3%, slightly below the industry average of 12.0%.
Analysis of Operational Efficiency
Operational efficiency is critical for understanding cost management and profitability:
- Gross Margin: The gross margin for the nine months ended September 30, 2024, was 27.0%, compared to 26.5% in the previous year, indicating improved efficiency in managing revenue relative to direct costs.
- Facility Operating Expense Trends: The facility operating expenses increased by 1.8% year-over-year, driven by inflationary pressures and increased insurance costs.
Overall, while there are improvements in gross margins and resident fees, the company continues to face challenges in net profitability, reflecting the need for strategic adjustments in operations.
Debt vs. Equity: How Brookdale Senior Living Inc. (BKD) Finances Its Growth
Debt vs. Equity: How Brookdale Senior Living Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, the company reported total debt outstanding of $3.7 billion with a weighted average interest rate of 5.45%. Of this total, 91.5%, or approximately $3.4 billion, was comprised of non-recourse property-level mortgage financings. Additionally, the company had $1.5 billion in operating and financing lease obligations, with approximately $249.5 million due in cash lease payments for the twelve months ending September 30, 2025.
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, was calculated at approximately 12.55, based on total equity of $294.3 million. This ratio significantly exceeds the industry average, which typically ranges from 1.0 to 3.0, indicating a higher reliance on debt financing compared to equity.
Recent Debt Issuances
In September 2024, the company issued $369.4 million in a new series of 3.50% convertible senior notes due 2029. This issuance was part of an exchange for a portion of its existing 2.00% convertible senior notes due 2026. The net cash proceeds from this transaction were approximately $135.0 million after deducting fees and expenses.
Credit Ratings
As of September 30, 2024, the company had a credit rating that reflects its high leverage and operational challenges, although specific ratings were not disclosed. The company must maintain compliance with various financial covenants, including a minimum liquidity requirement of $130.0 million.
Balancing Debt Financing and Equity Funding
The company's strategy involves utilizing both debt and equity to finance growth. As of September 30, 2024, total liquidity stood at $324.1 million, which included $254.7 million in unrestricted cash and cash equivalents, $29.7 million in marketable securities, and $39.7 million available on its secured credit facility.
| Financial Metric | Amount |
|---|---|
| Total Debt Outstanding | $3.7 billion |
| Weighted Average Interest Rate | 5.45% |
| Non-Recourse Property-Level Mortgage Financing | $3.4 billion |
| Operating and Financing Lease Obligations | $1.5 billion |
| Cash Lease Payments (Next 12 Months) | $249.5 million |
| Debt-to-Equity Ratio | 12.55 |
| Total Equity | $294.3 million |
| Convertible Senior Notes Issued (2029) | $369.4 million |
| Net Cash Proceeds from Issuance | $135.0 million |
| Total Liquidity | $324.1 million |
| Unrestricted Cash and Cash Equivalents | $254.7 million |
| Marketable Securities | $29.7 million |
| Availability on Secured Credit Facility | $39.7 million |
As the company continues to navigate its financial structure, it remains reliant on both debt and equity financing to support its growth initiatives, reflecting a complex balance that investors should monitor closely.
Assessing Brookdale Senior Living Inc. (BKD) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio, a key indicator of liquidity, is calculated as current assets divided by current liabilities. As of September 30, 2024, the current liabilities exceeded current assets by $110.3 million, indicating a challenging liquidity position. Specifically, current liabilities included $152.0 million of the current portion of operating and financing lease obligations, which are excluded from current assets on the balance sheet.
The quick ratio, which excludes inventory from current assets, cannot be computed directly due to the lack of inventory data; however, the overall liquidity concerns are highlighted by the current liabilities exceeding current assets significantly.
Analysis of Working Capital Trends
As of September 30, 2024, total liquidity was reported at $324.1 million, which included $254.7 million of unrestricted cash and cash equivalents, $29.7 million in marketable securities, and $39.7 million available on the secured credit facility. This represents a decrease from $340.7 million as of December 31, 2023, largely attributed to negative $18.0 million in Adjusted Free Cash Flow.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, was $120.979 million, a decrease of 9.5% compared to $133.629 million in the prior year. Investing activities reflected a cash outflow of $133.516 million, while financing activities resulted in a cash outflow of $5.086 million. The overall decrease in cash, cash equivalents, and restricted cash was $17.623 million.
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) | Percentage Change |
|---|---|---|---|---|
| Operating Activities | $120,979 | $133,629 | $(12,650) | (9.5%) |
| Investing Activities | $(133,516) | $(135,747) | $(2,231) | (1.6%) |
| Financing Activities | $(5,086) | $(69,154) | $(64,068) | (92.6%) |
| Net Increase (Decrease) in Cash | $(17,623) | $(71,272) | $(53,649) | (75.3%) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had approximately $3.7 billion in debt outstanding, with a weighted average interest rate of 5.45%. A significant portion, 91.5% or $3.4 billion, of this debt consists of non-recourse property-level mortgage financings. Additionally, the company has $1.5 billion in operating and financing lease obligations, with cash lease payments of approximately $249.5 million required over the next twelve months.
The liquidity requirements are expected to be met through cash flows from operations, cash balances, and financing activities; however, the current liabilities exceeding current assets raises concerns about the immediate liquidity position. The company is actively seeking to enhance liquidity through various measures, including increasing revenue per available room (RevPAR) and maintaining expense discipline.
Overall, while there are potential strengths in the liquidity position, such as the availability of cash and marketable securities, the significant liabilities and recent decreases in liquidity metrics indicate a cautious outlook for short-term financial health.
Is Brookdale Senior Living Inc. (BKD) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current P/E ratio is N/A due to a net loss reported for the most recent periods. The company recorded a net loss of $118,057,000 for the nine months ended September 30, 2024.
Price-to-Book (P/B) Ratio
The P/B ratio is calculated based on book value. As of September 30, 2024, total stockholders' equity was approximately $1.4 billion. The current stock price is approximately $5.77, leading to a P/B ratio of approximately 1.4.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value as of September 30, 2024, is approximately $4.2 billion. Adjusted EBITDA for the nine months ended September 30, 2024, was $287,669,000, resulting in an EV/EBITDA ratio of approximately 14.6.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a low of $4.00 and a high of $9.00. As of the latest data, the stock price is approximately $5.77, reflecting a decline from the peak.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%. Payout ratios are also not applicable due to the absence of dividends.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a Hold rating, with the average target price set at $6.25.
| Metric | Value |
|---|---|
| P/E Ratio | N/A |
| P/B Ratio | 1.4 |
| EV/EBITDA Ratio | 14.6 |
| Stock Price (Current) | $5.77 |
| 12-Month Stock Price Range | $4.00 - $9.00 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Brookdale Senior Living Inc. (BKD)
Key Risks Facing Brookdale Senior Living Inc.
Overview of internal and external risks:
The company faces several internal and external risks that may impact its financial health. Key external risks include intense industry competition, regulatory changes, and fluctuating market conditions. As of September 30, 2024, the company reported a total of $3.7 billion in outstanding debt at a weighted average interest rate of 5.45%. Additionally, current liabilities exceeded current assets by $110.3 million.
Operational Risks
Operational risks are heightened due to the company's significant lease obligations. As of September 30, 2024, the company had $1.5 billion in operating and financing lease obligations. It is required to make approximately $249.5 million in cash lease payments for the twelve months ending September 30, 2025. Moreover, the number of communities operated decreased from 641 to 619, a reduction of 22 communities or 3.4%.
Financial Risks
Financial risks are significant, particularly due to the company's high leverage. As of the same date, 91.5% of the total debt obligations represented non-recourse property-level mortgage financings. The company reported a net loss of $118.1 million for the nine months ended September 30, 2024. This loss was attributed to increased facility operating expenses due to inflationary pressures and higher interest expenses, which rose by $12.0 million.
Regulatory and Compliance Risks
The company is subject to extensive regulations, particularly those related to healthcare and senior living facilities. Failure to comply with these regulations could have adverse effects on operations and financial performance. The company must maintain minimum liquidity requirements of at least $130.0 million. As of September 30, 2024, liquidity stood at $324.1 million.
Market Conditions
Market conditions pose a risk as well, particularly in the real estate sector. Adverse changes in market conditions could affect property values and mortgage refinancing options. The company has 10% of its owned communities unencumbered by mortgage debt, which may provide some flexibility.
Mitigation Strategies
The company has strategies in place to mitigate these risks, including active management of debt refinancing and lease negotiations. It plans to fund acquisitions through existing mortgage debt and proceeds from new financing. Additionally, management emphasizes increasing RevPAR and maintaining expense discipline to preserve liquidity.
| Risk Factor | Description | Current Status |
|---|---|---|
| Debt Level | Total outstanding debt | $3.7 billion |
| Lease Obligations | Operating and financing lease obligations | $1.5 billion |
| Net Loss | Net income (loss) for the period | ($118.1 million) |
| Liquidity | Total liquidity available | $324.1 million |
| Community Count | Number of communities operated | 619 |
Future Growth Prospects for Brookdale Senior Living Inc. (BKD)
Future Growth Prospects for Brookdale Senior Living Inc.
Analysis of Key Growth Drivers
Brookdale Senior Living Inc. is positioning itself for growth through several strategic initiatives. The company has entered into agreements to acquire 41 communities currently leased by them for a combined purchase price of $610.0 million. This acquisition is expected to close by year-end 2024, contingent on customary closing conditions.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, resident fees increased to $2,227,679 thousand from $2,140,688 thousand in the same period of 2023, reflecting a growth of 4.1%. The Adjusted EBITDA for the same period was $287,669 thousand, an increase of 15.0% year-over-year.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is also focusing on enhancing its liquidity. As of September 30, 2024, total liquidity was $324.1 million, which included $254.7 million of unrestricted cash and cash equivalents. This liquidity is crucial for funding potential acquisitions and operational improvements.
Competitive Advantages That Position the Company for Growth
Brookdale operates 277 communities under long-term leases, which provides a stable revenue base. The majority of these leases are structured as master leases, allowing for more efficient management and potential cost savings. The company has also seen a 6.3% increase in same community RevPAR, indicating effective management of occupancy and pricing.
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Resident Fees (in thousands) | $2,227,679 | $2,140,688 | 4.1% |
| Adjusted EBITDA (in thousands) | $287,669 | $250,215 | 15.0% |
| Total Liquidity (in millions) | $324.1 | $340.7 | -4.9% |
| Same Community RevPAR | $4,852 | $4,564 | 6.3% |
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Updated on 16 Nov 2024
Resources:
- Brookdale Senior Living Inc. (BKD) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Brookdale Senior Living Inc. (BKD)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Brookdale Senior Living Inc. (BKD)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.