Brookdale Senior Living (NYSE: BKD) is continuing to grow and expand its HealthPlus program, with another 50 communities launching the program over the next month.
That’s according to Brookdale President and CEO Cindy Baier, who added the Brentwood, Tennessee-based company is looking to expand the care model to a total of 130 communities by the end of 2024, equaling around a third of the communities in its 649-property portfolio. Earlier this year, the program was in 49 communities.
Baier has not been shy about touting the program and its effectiveness in recent quarters. The company has previously shared how communities using HealthPlus have 78% fewer urgent care visits, 36% fewer resident hospitalizations and 63% more completed annual resident wellness visits.
As Baier and other senior housing leaders have also noted in the past, the industry is facing a big increase in demand from the baby boomers in the coming years. And looking ahead, she believes it will be programs like HealthPlus that make a difference with the incoming generation of older adults.
“Our higher mix of needs-based product offerings – primarily assisted living and memory care – distinguish us from the industry, which is skewed towards lower acuity products,” she said during the second-quarter call with investors and analysts Friday. “This is so important, given the rising difficulties faced by today’s seniors and Brookdale’s ability to serve these diverse needs with our strong clinical expertise, personalized services and resident engagement programs and innovative healthcare models like Brookdale HealthPlus.”
Also in the quarter, Brookdale extended a master lease with landlord Omega Healthcare Investors (NYSE: OHI) in a “mutually beneficial exchange” that includes tens of millions of dollars for CapEx spending in the coming years.
Brookdale posted a net loss for the second quarter of 2024 of $37.7 million. Brookdale’s stock is currently valued at $6.81 per share, down 7%* from the previous close.
HealthPlus aimed at long-term growth
Through HealthPlus, Brookdale residents can get wellness visits, immunizations, and health screenings along with care coordination from nurses and other staffers.
At the heart of the company’s current strategy to grow the program is the fact that it keeps residents well for longer, and therefore translates into better length of stay and occupancy. Baier added that HealthPlus is well-liked among the company’s associates, and that is leading to better retention in communities offering the program.
“All of those things should work together to create better profitability for our HealthPlus communities,” she said during Friday’s call.
Brookdale doesn’t charge residents a fee for the service. Instead, it gets a per-member, per-month cut for every resident who also is enrolled in a Medicare Advantage (MA) plan payer that Brookdale has a partnership with.
“We’ve been very pleased with that revenue stream,” she said.
Baier added that the company’s MA partners have seen better outcomes for their plans.
“We’re excited that we’ve got a number of healthcare practitioners grounding in our communities, because it makes healthcare more convenient for the residents that they serve,” she said.
She added: “Whether we would simply want to own those services, like we traditionally did with home health and hospice [segment], I think that remains to be seen. We’re doing such a great job focusing on the core of our business today that we want to capture the opportunity that’s in front of us.”
Brookdale’s average weighted occupancy ticked up to 78.1% in the second quarter of 2024, an increase over the operator’s average occupancy rate of 76.5% in 2Q23.
Average revenue per occupied room (RevPOR) grew to nearly $6,200 in the second quarter of 2024, a slight decrease compared to the first quarter of 2024.
The company has matched its marketing dollars to demand in the third quarter – the industry’s “key selling season” – and Baier noted that the operator’s marketing spend will likely rise in the months ahead as advertising becomes more expensive amid the U.S. Presidential Election. . Dawn Kussow, executive vice president and chief financial officer for Brookdale, said the additional marketing expenses are currently going to support sales initiatives.
She added the company has also shifted its marketing expense associated with customer acquisition costs from fees paid to third party referral sources to other marketing and advertising channels.
“We’re seeing strong conversions by the sales team. In fact, our conversions have improved relative to historical performance,” Baier said.
Omega master lease renewed, Baier ‘happy’ with current portfolio
Subsequent to the end of the second quarter of 2024, Brookdale agreed to extend a triple-net lease with Omega covering 24 communities until 2037. The portfolio is made up of communities in the operator’s core markets, according to Baier.
Brookdale renewed the lease early, and as such Omega has agreed to fund $80 million in CapEx for the subset of communities, $30 million of which will be made available prior to July 2028 on a rent-free basis.
“What that will do in the near-term is, it will improve our cash-flow performance as well as our liquidity. So that is a very attractive offer for us,” she said.
Brookdale sold three communities during the second quarter of 2024, which Baier described as “very small.” The communities’ valuation was dependent on the asset and size of the market, she said, adding they were not “representative of the entire Brookdale portfolio.”
Since ascending to the CEO role in 2018, Baier has pared down the company’s overall portfolio significantly. Baier said Brookdale is now “generally happy” with the assets it is operating going forward, though if the opportunity presents itself to improve the portfolio, the company will do so.
As a whole, Baier is optimistic about the coming years for Brookdale and its portfolio.
“I believe that remaining discipline in our commitment to profitable occupancy growth remains the best path forward, and that by being thoughtful in our approach to growth, we are continuing to position Brookdale to deliver incredible results, not just over the near term, but for many years to come,” Baier said.
