Skip to content
    BKD
    Earnings call· Jun 2026(Q2 FY26)

    Brookdale Senior Living Q2 FY26 earnings call BKD

    Aug 11, 2026 Source

    Executive summary

    Brookdale Senior Living Q2 FY26 — Occupancy Growth and Strategic Acquisitions Drive Performance

    Brookdale Senior Living delivered Q2 FY26 results in line with expectations, driven by strong RevPAR growth and strategic capital deployment. While occupancy growth was slower than anticipated, management implemented new sales leadership and cost efficiencies to accelerate performance in the second half. The company also strengthened its balance sheet by refinancing debt and executing two strategic acquisitions, reinforcing its long-term growth and deleveraging targets.

    Highlights

    5

    • Consolidated RevPAR increased 8.2% year-over-year, meeting full-year guidance pacing.

    • Adjusted EBITDA was $122.1 million, up 4.3% year-over-year and slightly ahead of consensus.

    • Total liquidity increased to $566 million as of June 30, 2026, up from $369 million last quarter.

    • Successfully refinanced all remaining 2027 debt maturities, with no debt maturities until 2028.

    • Acquired Brookdale Galleria for $23.4 million and announced acquisition of 17 leased communities for $157 million, both below replacement cost.

    Concerns

    3

    • Occupancy growth has not inflected as quickly as anticipated, coming in slightly below expectations in Q2 FY26.

    • Consolidated resident fees declined 8.7% year-over-year due to a 15.7% reduction in consolidated average units from portfolio optimization.

    • Same community other facility operating expenses were elevated during Q2 FY26.

    Guidance & targets

    11
    CategoryTargetConfidence
    Annual Adjusted EBITDA growth
    mid-teen
    high materiality
    High
    Leverage ratio
    less than 6x
    high materiality
    High
    Full-year 2026 RevPAR growth
    8% to 9%
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    $502 million to $516 million
    high materiality
    High
    Full-year 2026 Consolidated Occupancy
    roughly 83%
    high materiality
    Medium
    Q3 FY26 Year-over-year Adjusted EBITDA Growth
    low double-digit range
    medium materiality
    High
    Q4 FY26 Year-over-year Adjusted EBITDA Growth
    above our mid-teens target growth range
    medium materiality
    High
    Full-year 2026 G&A costs
    approximately $157 million
    medium materiality
    High
    Full-year 2026 Cash Lease Expense
    slightly under $180 million
    medium materiality
    High
    Full-year 2026 Community Dispositions Net Proceeds
    approximately $190 million
    medium materiality
    High
    Full-year 2026 Capital Expenditures
    $175 million to $195 million
    medium materiality
    High

    Operational metrics

    27
    Adjusted EBITDA
    $122.1 millionup 4.3% year-over-year
    Q2 FY26

    In line with suggested pacing and slightly ahead of consensus.

    Resident Fees
    $708 milliondecline of 8.7% from Q2 FY25
    Q2 FY26

    Revenue decline primarily due to portfolio optimization activities.

    Revenue per Occupied Room (RevPOR)
    5.2%over last year
    Q2 FY26

    Pricing remains strong, beginning to lap price concessions from last year.

    Revenue per Occupied Room (RevPOR)
    4.1%versus last year
    Q2 FY26
    Expense per Occupied Unit (ExPOR)
    3%over Q2 FY25
    Q2 FY26

    Resulted in a positive RevPOR over ExPOR spread of 220 basis points.

    Expense per Occupied Unit (ExPOR)
    4%over Q2 FY25
    Q2 FY26

    Generated a 10 basis point positive RevPOR ExPOR spread.

    Operating Margin
    29.5%flat versus last year
    Q2 FY26
    Community Labor Expense as % of Revenue
    45.2%from 46.1% in Q2 FY25 (improved 90 bps)
    Q2 FY26

    Direct result of heightened vigilance and operational focus.

    General and Administrative Expense (excluding non-cash)
    $38.9 milliondeclined 6% year-over-year
    Q2 FY26

    Reflects scaled G&A cost base due to disposition activity and reduction of managed community portfolio.

    Cash Facility Operating Lease Payments
    $44.8 milliondown $12.7 million year-over-year
    Q2 FY26
    Average Units
    42,820
    Q2 FY26

    Expected to decline to approximately 42,200 in Q3 and 41,500 in Q4.

    Communities with >95% Occupancy
    99increase of 16 communities since prior quarter
    Q2 FY26

    Strong expansion in the number of communities in the top occupancy band.

    Communities under 80% Occupancy
    211from 219 in Q1 FY26 (improved from 281 in Q2 FY25)
    Q2 FY26

    Targeted actions to drive accelerated improvement in these levels.

    Occupancy Sequential Improvement
    30 basis pointssequentially
    July FY26

    Marked a strong acceleration.

    Occupancy Sequential Improvement
    20 basis pointssequentially
    July FY26

    Marked a strong acceleration.

    Month-end Occupancy Sequential Improvement
    30 basis pointssequentially
    July FY26
    Month-end Occupancy Sequential Improvement
    40 basis pointssequentially
    July FY26
    Consecutive Months of Year-over-Year Occupancy Growth
    57th
    July FY26

    This improvement represents the 57th consecutive month of year-over-year occupancy growth.

    Communities Planned for Disposition
    29
    FY26

    Expected to sell 29 communities during 2026.

    Owned Communities Sold
    13
    YTD June 30 FY26

    Net of transaction costs.

    Leased Communities Exited
    2
    YTD June 30 FY26
    Additional Communities Sold
    3
    Post Q2 FY26 (as of Aug 10)

    Expected most of the remaining 13 planned dispositions to close before next earnings call.

    Remaining Planned Dispositions
    13
    as of Aug 10 FY26

    Out of the initial 29 planned for 2026.

    First Impressions Projects
    30
    FY26

    Significant targeted CapEx investments focusing on common spaces. Investment in H2 FY26 will be roughly double H1 pace.

    EBITDA per Available Unit
    $3,800
    annualized

    On average.

    EBITDA per Available Unit
    $21,000
    annualized

    Just below $21,000.

    Communities Below 70% Occupancy
    85from 129 in Q2 FY25
    Q2 FY26

    Meaningful improvement year-over-year.

    Industry KPIs

    2
    MetricValueDetails
    Membership covered lives by line82.4%%
    Adjusted EPS EBITDA leverage guidance$502 million to $516 millionUSD

    Deals & partnerships

    2
    —Acquisition of a previously managed community.$23.4 million

    244 units in Houston Galleria submarket. Purchased substantially below replacement cost (less than $100,000 per unit). Capital investment planned to reposition the community, including closing skilled nursing operations and adding amenities. Funded with line of credit and cash on hand.

    —Acquisition of 17 communities currently leased under a triple net arrangement.$157 million

    735 units. Purchase price represents $214,000 per unit, well below replacement cost. Communities are in markets with meaningful operating density. Will further increase mix of owned vs. leased communities and reduce lease payments. Funded with a mix of non-recourse mortgage financing and cash on hand.

    Risks & headwinds

    3
    Occupancy growth has not inflected as quickly as anticipated.Q2 FY26

    Q2 FY26 consolidated occupancy 82.4%, slightly below expectations.

    Mitigation: New Chief Sales Officer hired, targeted actions to drive improvement in lower occupied communities, cost base scaling in line with occupancy levels, labor efficiencies identified to offset impact on adjusted EBITDA.

    Same community other facility operating expenses were elevated.Q2 FY26

    Up high single digits in Q2 FY26.

    Mitigation: Expects non-labor expense to follow normal seasonality; variability expected.

    Delay in closing planned community dispositions.Q3 FY26 (most expected to close before next earnings call)

    13 of 29 planned communities remain to be sold as of August 10.

    Mitigation: The benefit from the acquisition of the 17 leased assets is expected to offset the drag from disposition delays.

    What to watch in Q3 FY26

    5

    Consolidated Occupancy Growth

    Q3 FY26
    Current82.4% (Q2 FY26), July sequential improvement 20 bps consolidated
    TargetStronger sequential expansion in Q3 and Q4, reaching roughly 83% for FY26.

    Why it matters

    Occupancy growth is a key driver for RevPAR and overall financial performance, especially with new sales leadership and initiatives in place.

    We expect stronger growth in the third quarter, including the 30 basis points of sequential same community occupancy improvement achieved in July, followed by continued expansion in the fourth quarter.

    Q&A highlights

    5

    Why is the RevPAR inflection pushing more into Q4, and how are rate updates impacting RevPOR outlook given slower move-ins?

    Management clarified that Q3 RevPAR growth is expected to be similar to Q2 due to slower occupancy and disposition timing. Q4 will benefit from full occupancy from the summer selling season and disposition accretion. RevPOR is expected to remain firm in H2, which is atypical, due to dispositions and pricing strategy.

    “our RevPAR growth, what we expect for the third quarter -- we did tap that down a little bit in that we expect that RevPAR growth to be similar to our 2Q growth that we reported, and that's driven by the slower occupancy that we talked about, both Nick and I, in our prepared remarks and then the disposition timing.”

    asked by Ben Hendrix · answered by Dawn Kussow

    2 min read6 chapters

    Detailed Narrative

    01

    Operational Performance & Occupancy Initiatives

    Brookdale's Q2 FY26 consolidated RevPAR increased 8.2% year-over-year, driven by a 5.2% increase in RevPOR. Consolidated occupancy reached 82.4%, up 230 basis points year-over-year, but slower than anticipated. To address this, the company hired Margaret Cabell as Chief Sales Officer, whose initiatives have already led to measurable changes in key sales indicators and a 30 basis point sequential occupancy improvement in July.

    02

    Expense Management & Labor Productivity

    Labor expense on a same community basis declined to 45.2% of revenue from 46.1% last year, a 90 basis point improvement. Management sees further opportunities for labor productivity improvements in H2 FY26, expecting labor as a percentage of revenue to slightly improve sequentially in Q3 and Q4, despite seasonal headwinds. This focus on efficiency is expected to offset the impact of slightly lower occupancy on adjusted EBITDA targets.

    03

    Portfolio Optimization & Capital Deployment

    Brookdale is adopting a more offensive capital deployment strategy, focusing on targeted acquisitions within existing product types and geographic footprints to increase density. This includes significant reinvestment in existing communities through the "First Impressions" program, with 30 projects budgeted over $250,000 expected in FY26, averaging $500,000-$600,000 per project.

    04

    Strategic Acquisitions

    The company completed the acquisition of Brookdale Galleria in Houston for $23.4 million (less than $100,000 per unit) and announced the planned acquisition of 17 currently leased communities for $157 million (approximately $214,000 per unit). Both acquisitions are below replacement cost, are in markets with existing Brookdale density, and are expected to improve intermediate and long-term financial results by converting managed/leased assets to owned.

    05

    Balance Sheet Strengthening

    Brookdale's balance sheet strengthened with annualized leverage improving to 8.4x from 8.8x. Total liquidity increased to $566 million. The company proactively addressed 2027 debt maturities by refinancing $200 million of mortgage debt with new 5-year interest-only loans maturing in 2036 and refinancing an additional $244 million of 2027 mortgage debt, resulting in no remaining debt maturities until 2028.

    06

    Organizational Structure & Leadership

    Significant changes have been made to the organizational structure, creating a single line of accountability from the CEO down to the community level. This includes bolstering the "Key Three" leaders (operations, sales, clinical) within communities and replicating this model at district and regional levels. This new structure aims to improve organizational effectiveness, empowerment, and accountability, contributing to improved performance.

    AI-generated summary of the company’s earnings call. Not investment advice.