Brookdale Senior Living is “seeing the green shoots of recovery,” President and CEO Lucinda “Cindy” Baier said yesterday at the Capital Markets Global Health Care Conference.
Baier said there are “numerous indications” that the company is climbing out of recovery and reaching an inflection point.
For starters, she said, occupancy levels are on the upswing. Baier said inquiries increased from the fourth quarter of 2020 to the first quarter of 2021. The net of move-ins and move-outs was positive for March, which the CEO said was “earlier than expected.” The month of March represented the highest net increase since August 2017, Baier said.
“Our [proprietary] survey shows that healthcare providers are more willing to recommend senior housing now that vaccines are being administered, she said.
“The most significant driver of our turnaround is improving occupancy, without a doubt. With our current staffing levels, we should be able to increase occupancy.” Executive Vice President and Chief Financial Officer Steve Swain said.
According to Swain, construction starts are down 80% compared with the first quarter of 2020.
“Even sequentially from the first quarter 2021, they are down 24%,” Swain said. “The lower construction starts, we believe, will provide a tailwind for several years.”
He added, “We believe that most companies that started construction during the pandemic were committed to completing their projects.”
Swain said that decreasing COVID-19-related costs will significantly lower expenses overall. COVID-19 cases at Brookdales’ properties have dropped by about 97% since December, he added. The reduction allows the communities to decrease expenses associated with things such as special care units, personal protective equipment, testing and related premium pay. Swain said he expects COVID-19 related costs to go down by 15 to 17% from $27 million in the second quarter.
“We were very pleased that our recent occupancy improvement came while we retained rate discipline even in a very difficult, competitive market. Because of the pandemic, the industry as a whole is in reset mode,” Baier said.
“We are sharpening our analytical focus to identify communities that are in locations where adjusting rates can drive incremental volume to maximize RevPAR, or revenue per available room,” she said.