The Street Agrees:
Brookdale Is Well-Positioned to Enhance Value for ALL Shareholders

“Given the strength BKD saw in Q1 -- where occupancy moved notably above historical trends throughout the quarter -- the continued improvement in trends through Q2 QTD is a positive indicator of the ongoing improvement in sector fundamentals (i.e., demand-supply dynamics) that are being driven by demographic factors, which we believe will translate to NT EBITDA/FCF upside. As we look past 2025, we expect increasing demand matched by modest supply growth to translate to further occupancy gains and EBITDA/FCF acceleration for BKD that should translate to notable stock upside over the next few years.”

“On Monday (6/9) after market close, BKD reported May weighted average occupancy of 80.0%, up 20 bps sequentially and 190 bps y/y. This is the first time the company has delivered 80% occupancy since April 2020 and marks a significant milestone in the multi-year recovery effort. QTD occupancy is now tracking at 79.9%, which is 50 bps ahead of our 2Q estimate and points to another solid RevPAR and EBITDA beat. Recall, on the 1Q earnings call BKD highlighted a number of strategic initiatives to boost profitable occupancy including the deployment of high-impact response (SWAT) teams and dynamic pricing strategies - both of which appear to be paying off.”

“Brookdale remains well-positioned to accelerate its recovery and capitalize on favorable demographic trends and constrained industry supply. Brookdale is currently in a strategic search for a new CEO with prior proven industry experience and ability to drive occupancy growth and operational improvement. With HealthPlus, strategic portfolio actions, and marketing refinements, we believe BKD is uniquely equipped to drive profitable growth moving forward.”

“Our positive thesis on BKD since our initiation last year has been predicated on the view that an aging baby boomer population (i.e., seniors are now getting to the age where more of them are needing to move into institutional care/residential settings) will drive a significant increase in demand for senior housing units, just as new supply growth remains tempered due to financing and construction costs. This thesis is starting to play out, in our view, and we point to BKD’s Q1 results as a good indicator of how demand strength is translating to improved occupancy, pricing power, and margins. As occupancy trends have come in higher than typical seasonality patterns, we expect BKD to outperform investor expectations throughout the year, even after mgmt’s guidance raise post-Q1. As BKD continues to rebuild its earnings and cash flow track record, we expect further upside to the stock.”

“We believe BKD is moving in the right direction in organic growth and portfolio activities. Against a favorable supply demand backdrop, matching senior living peer performance and unlocking value should be the core mission of the next CEO. We welcome a proactive approach taken by the interim team and expect BKD to outperform if they can consistently execute on the current performance plan.”

“With BKD undertaking a CEO transition, we remain optimistic around the  company’s positioning amid demographic tailwinds and upside from operating leverage as occupancy returns to pre-pandemic levels.”

“A majority of the news for 1Q25 came three weeks ago with the announced CEO transition and Board refreshment. As a reminder, within that April 14th release the company noted that 1Q25 results were running favorable to internal projections as well as the consensus at the time. That was clearly the case with adjusted EBITDA coming in well above our estimate, mainly on better than expected cost management at the facility level. We would guess that the upside was larger than most expected post the positive pre-announcement. This is all being met with a modest boost to guidance as well.”

“We were pleased to see BKD report strong 1Q results on strong occupancy momentum and operational cost controls, prompting management to raise its 2025 EBITDA guidance range by $7.5MM at the midpoint. Brookdale’s first quarter results came in comfortably ahead of our estimate, consensus, and management’s internal expectations, driven by solid occupancy momentum, as previewed in early April, and impressive cost containment.”

“Deerfield has been a long-term shareholder of Brookdale Senior Living and is one of Brookdale's largest capital partners. Our enthusiasm about Brookdale's future has never been greater and we support the Board's efforts to extend Brookdale's leadership in patient care and financial performance.

We believe demand for Brookdale's services will well outstrip supply in a few short years due to demographics alone. Revitalizing existing communities and executing a growth strategy made possible through rising operating cash flows can allow the company to close the growth and valuation gap with peers. In our view, this can comfortably yield a significantly higher equity value.

Articulating a clear vision and establishing an incentive system to align stakeholders is foundational for the company to reach its potential. We look forward to supporting Brookdale as it brings new talent and energy to the Board and executive team.”

“BKD's CEO change underscores the Board's focus on positioning the company to take advantage of these secular tailwinds, which we view positively.”

“We believe Brookdale is on the right path to improve cash flow and shareholder returns. We think Brookdale is a relatively high-risk, high-reward play on the private-pay senior housing industry benefiting from favorable supply and demand.”