Brookdale Senior Living Inc. (BKD)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 delivered strong operating momentum: consolidated weighted average occupancy reached 81.8% (highest since early 2020) and same community occupancy hit 82.3%, driving RevPAR up 5.9% YoY and Adjusted EBITDA up 20.4% YoY to $111.1M .
• Versus Wall Street consensus, BKD posted a mixed print: revenue missed consensus (actual $777.8M vs $826.0M), EPS slightly below expectations (−$0.48 vs −$0.17), but EBITDA and free cash flow were above consensus, aided by occupancy strength and reduced cash lease payments; FY25 Adjusted EBITDA guidance was raised to $455–$460M, a clear positive catalyst for the stock . Values with asterisks retrieved from S&P Global*.
• Net loss widened to −$114.7M largely due to a $62.7M non-cash impairment charge tied to planned dispositions, while Adjusted Free Cash Flow improved to $21.8M; total liquidity ended Q3 at $351.6M .
• Strategic portfolio optimization continued: 13 Ventas-leased communities were transitioned in Q3 and nine owned communities sold; management reiterated plan to exit remaining non-renewed Ventas assets by year-end and market ~25 owned communities in 2025, supporting further margin and cash flow improvement .

What Went Well and What Went Wrong

What Went Well

• Occupancy momentum and pricing: “Our third quarter weighted average consolidated occupancy of 81.8% was our highest since the onset of the pandemic… and our occupancy exhibited positive momentum during the quarter and into October” .
• Operating leverage and cash conversion: Adjusted EBITDA rose 20.4% YoY to $111.1M and Adjusted Free Cash Flow reached $21.8M; CFO highlighted reduced cash operating lease payments ($56.7M vs $64.4M last year) after acquiring formerly leased communities .
• Guidance raised and strategic clarity: FY25 Adjusted EBITDA guidance increased to $455–$460M; CEO emphasized a more “offensive posture,” targeted CapEx, and SWAT teams reducing sub‑70% occupancy communities from 129 (Q2) to 89 (Q3) to unlock mid‑teen % Adjusted EBITDA growth over the next several years on the ongoing portfolio .

What Went Wrong

• GAAP loss widened: Net loss increased to −$114.7M (from −$50.7M YoY), driven by $62.7M impairment related to anticipated dispositions and higher D&A, partially offset by higher resident fees .
• Expense pressures: Facility operating expense rose 3.4% YoY on wage rates, group health insurance, and utilities; G&A increased due to $5.1M of transaction/legal/organizational restructuring costs tied to leadership changes and stockholder advisory matters .
• Revenue below consensus: Total Senior Housing and All Other Revenue was $777.8M; sequential RevPOR dipped modestly as incentive moderation and mix effects balanced pricing actions (management noted typical seasonal RevPOR step down into Q4) .

Financial Results

Core KPIs and Profitability vs Prior Periods

Estimates vs Actuals (Q3 2025)

Values with asterisk retrieved from S&P Global. EBITDA consensus refers to S&P Global’s EBITDA consensus; company reports Adjusted EBITDA.

• Revenue missed; EPS missed; EBITDA beat; FCF beat. Drivers: occupancy and RevPAR strength alongside lower cash lease payments supported profit and cash flow; GAAP EPS impacted by non‑cash impairments and higher D&A .

Segment Breakdown (Senior Housing)

Additional KPIs (Trajectory Across 2025)

Guidance Changes

Management also noted seasonal Q4 cash outflow drivers (real estate taxes, transitions) and typical RevPOR step down into Q4 .

Earnings Call Themes & Trends

Management Commentary

• CEO strategic posture: “We’re going to be changing the underpinnings… we’re going to take a far more offensive posture… we are an operating company built upon a real estate foundation” .
• Growth outlook: “We are projecting annual adjusted EBITDA growth in the mid‑teen % range over the next several years on our ongoing portfolio… expect to achieve a ratio of below six [leverage] by the end of that period” .
• Execution proof points: “Our SWAT team efforts are working… targeted CapEx… generating outsized RevPAR and EBITDA growth” .
• CFO on Q3 drivers and outlook: “Cash operating lease payments were $56.7M, down $7.7M… We delivered $21.8M of adjusted free cash flow… We expect cash operating lease expense to be ~ $46M for Q4” .

Q&A Highlights

• Pricing vs occupancy: Management aims to deploy a “far more dynamic” pricing system, driving rate particularly in highly occupied communities while balancing occupancy in lower-occupied bands .
• New FFO disclosure rationale: To reflect Brookdale as “an operating company built upon a foundation of real estate,” aligning investor lens with asset value and operations .
• G&A structure and 2026 outlook: Organization reshaped into six regions; net G&A step down expected; early FY26 G&A view ~$162M (inclusive of merit and inflation) .
• Mid‑teens EBITDA growth conviction: Scarcity tailwinds (demand surge, muted supply), SWAT playbook, targeted CapEx, and pricing discipline underpin multi‑year growth starting now .
• Market share and retention: Sequential same-store occupancy growth ~150 bps vs NIC comp ~50 bps; controllable move‑outs improving with rising resident satisfaction/NPS .

Estimates Context

• Consensus vs actual (Q3): Revenue and EPS were below expectations, while EBITDA and FCF exceeded. This likely prompts upward estimate revisions for EBITDA/free cash flow, supported by raised FY25 EBITDA guidance and lower lease expense trajectory; revenue models may be recalibrated for portfolio transitions and seasonal RevPOR dynamics . Values with asterisks retrieved from S&P Global*.
• Near‑term consensus: Q4 2025 EPS −$0.18*, revenue ~$753.6M*, EBITDA ~$106.8M*; Q1 2026 EPS −$0.11*, revenue ~$758.6M*, EBITDA ~$126.3M*. Management flagged typical Q4 RevPOR step down and working capital cash outflow, and expects greater G&A savings realization into 2026 . Values with asterisks retrieved from S&P Global*.

Key Takeaways for Investors

• Occupancy momentum above the 80% inflection point supports margin flow‑through; targeted pricing and CapEx can sustain RevPAR/EBITDA growth even as RevPOR seasonally moderates in Q4 .
• The raised FY25 Adjusted EBITDA guidance and lower Q4 cash lease expense are positive for near‑term estimate revisions and sentiment; watch for continued occupancy strength into October/November per monthly trends .
• Portfolio optimization (Ventas transitions, asset sales) is an ongoing catalyst to lift operating income and free cash flow; monitor closing cadence and any regulatory dependencies .
• Leverage math is improving: adjusted annualized leverage ~9.0x now, with a multi‑year path toward <6x on the ongoing portfolio—this de‑risks the equity case and increases financial flexibility .
• Expect Q4 seasonal headwinds to RevPOR and working capital; focus on underlying same‑community margin spreads (RevPOR vs ExPOR) and G&A step‑down trajectory into 2026 .
• The CEO’s “offensive posture” and regional operating design should enhance execution speed and accountability, supporting mid‑teens Adjusted EBITDA growth over several years on the ongoing base .
• Upcoming Investor Day (early 2026) may introduce multi‑year targets and normalized FFO perspectives—potentially a narrative catalyst to re-rate shares alongside improving fundamentals .

Footnote: Values with asterisks are retrieved from S&P Global.