Senior living is at a “positive inflection point” as sales and move-ins trend up, vaccination numbers increase and COVID-19 cases decrease, Brookdale Senior Living President and CEO Lucinda “Cindy” Baier said Friday during the company’s first-quarter 2021 earnings call.
Calling the pandemic the “toughest battle in the company’s history,” Baier said that battle is not over and that the Brentwood, TN-based senior living company has created and implemented “highly effective” tools to meet the challenge.
“Early on, we realized the importance of the vaccine and took a leadership role in successfully advocating for priority vaccine access for assisted living residents and associates, and worked closely with public and private officials to improve the vaccine rollout,” Baier said. “We believe the COVID-19 vaccines are critically important in changing our business trends.”
All communities completed at last three vaccine clinics, with a 93% resident vaccine acceptance rate. COVID-19-positive resident cases have decreased by 97% since peaking in December. During the first quarter, the company continued evaluating restrictions on its communities on a community-by-community basis. As of April 30, all communities have opened for visitors and new prospects.
“With the high vaccination rate, we believe that we have broken the link with COVID-19 case trends in the metropolitan areas surrounding our communities,” Baier said. “We remain diligent with our science-based approach to help protect our communities through PPE use, cleaning protocols and other best practices.”
Steven Swain, executive vice president and chief financial officer, said he expects a 50% stepdown in COVID-19-related expenses in the second quarter — compared with the $27.3 million in COVID-related costs in the first quarter — due to lower coronavirus case numbers.
Swain said he was encouraged by several leading business indicators, including positive inflection in occupancy, the company’s maintenance of its rate discipline through the toughest part of the pandemic, slow construction starts and increasing leads based on demand for higher needs-based care and services.
Brookdale’s senior housing and healthcare services in the first quarter recognized $11 million in Coronavirus Aid, Relief, and Economic Security (CARES) Act income — $9 million was for the employee retention credit, along with about $2 million in government grants. Swain said the company will look for the federal government to provide updates on use of the remaining Provider Relief Funds and the opportunity to submit requests to mitigate second-half 2020 COVID-related expenses and lost revenue.
Net move-ins and move-outs turned positive in March for the first time since the pandemic began and remained positive in April. Sequentially, monthly weighted average occupancy grew slightly in March and increased 50 basis points (0.5%) in April.
Move-ins increased 29% from the fourth quarter 2020 to the first quarter, which began with the pandemic’s third wave. Baier said the sales force transformation is delivering results and driving positive momentum, with leads and visits increasing.
Swain said that although occupancy changed positively in March and April, Brookdale maintained rate discipline with its pricing strategy. Most Brookdale communities, he added, implemented annual price increases at the beginning of the year. Swain said that communities are discounting selectively, where necessary, to increase occupancy, but that strategy being used in a targeted way.
On a same-community basis, first-quarter senior housing operating expenses improved 1% year over year, primarily due to variable costs of supplies and food as well as lower occupancy levels through 2020. That improvement, however, was more than offset by higher wage rates resulting from a difficult labor environment and incremental staffing related to the pandemic.
Baier said that demand for Brookdale communities is returning and gaining momentum, and the company is at a positive inflection point.
“Based on our recent experience, and with the dramatically lower construction starts and the accelerating demographic tailwinds, I am confident demand will continue to improve. I am very optimistic about our future,” the CEO said. “Our business, at its core, is providing high-quality, needs-based services for a rapidly growing senior population. We enable seniors to spend more time doing the things that give their lives meaning and provide joy by helping them manage the challenges of aging.”