Brookdale Senior Living’s recently added healthcare expertise in the C-suite and boardroom will benefit residents and shareholders as the company looks to forge stronger ties with healthcare providers and payers, executives of the Brentwood, TN-based company said Wednesday.
“As healthcare systems continue to shift from a fee-for-service to a value-based, outcome-driven model, building deeper relationships with healthcare providers and payers will allow us to attract new residents more quickly and to improve the quality of our residents’ lives,” President and CEO Lucinda “Cindy” Baier said during the company’s fourth-quarter and full-year 2019 earnings call.
To help build those relationships, Baier said, Cindy Kent, executive vice president and president of senior living, joined the company last month.
“Cindy has a proven track record of collaboration with payers, physician groups and hospitals to innovate and grow her business,” Baier said, noting Kent’s prior experience in 3M’s Infection Prevention Division as well as in global commercialization roles at Medtronic and Eli Lilly. “Given the rapid change in the healthcare industry, Cindy’s strategic insights will prove invaluable as we look to accelerate our growth,” the CEO added.
More than 60% of Brookdale’s board members have assumed their roles since early 2018, Baier said, adding that the company has added healthcare and hospitality experience to its base of real estate expertise. “Together, our board has the experience to provide valuable oversight as we execute our strategy and achieve strong returns for our shareholders,” she said.
Improvements since Emeritus merger
Meanwhile, Brookdale is encouraged by recent assisted living trends, since assisted living is the largest part of the company’s business, Baier said. In 2019, she noted, citing data from the National Investment Center for Seniors Housing & Care, absorption (change in occupied units from the previous quarter) in assisted living reached a record high and outpaced supply for the first time in seven years.
“We expect this trend will continue in 2020,” Baier said. “In addition, more baby boomers are entering senior living communities. The silver wave represents 9 percent of our residents and approximately 15 percent of our move-ins. For Brookdale, this represents a great opportunity for the next few years.”
Brookdale has seen positive sequential occupancy since the second quarter of 2019 and saw a higher occupancy rate than the overall industry for the second half of 2019, Baier said.
In fact, Brookdale Executive Vice President and Chief Financial Officer Steve Swain said, Brookdale in 2019 saw the best in-year occupancy improvement since before its merger with Emeritus Senior Living in 2014, as same-community occupancy increased sequentially in the third and fourth quarters. Fourth-quarter occupancy increased 50 basis points on a sequential basis and outperformed NIC by 20 basis points, he said.
Assisted living occupancy, Baier said, “will really be the engine for profit growth that will drive our performance higher.”
Citing other trends, Baier noted that construction starts in the fourth quarter were down 71% since the peak in the second quarter of 2015, and the construction pipeline is reduced 20% from a peak in the first quarter 2018.
“We have been in the center of the storm in assisted living, in particular, which is the vast majority of our portfolio,” she said. “I personally am very excited about the improving competitive environment for assisted living in particular.”
Brookdale reduced the size of its community portfolio by 14% and reduced the number of managed communities in its portfolio by more than 50% in 2019, Baier said. “Our portfolio is now a third smaller than it was after we completed the Emeritus merger in 2014,” she said.
For 2020, Baier said, the company expects adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to grow on a year-over-year basis for the first time since the Emeritus merger.