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Image source: The Motley Fool. Tuesday, Aug. 11, 2026 at 9:00 a.m. ET Vice President of Investor Relations - Michael Grant Chief Executive Officer - Nikolas Stengle Executive Vice President and Chief Financial Officer - Dawn Kussow Executive Vice President, General Counsel and Secretary - Chad White Operator: Hello, everyone. Thank you for joining us, and welcome to the Brookdale Senior Living Second Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Mike Grant, Brookdale's Vice President of Investor Relations. Mike, please go ahead. Michael Grant: Thank you, operator. Good morning, everyone, and welcome to Brookdale Senior Living's Second Quarter 2026 Earnings Call. Participating on today's call are Nick Stengle, Brookdale's Chief Executive Officer; Dawn Kussow, our Executive Vice President and Chief Financial Officer; and Chad White, our Executive Vice President, General Counsel and Secretary. On today's call, we will discuss second quarter 2026 results as well as our financial guidance for the 2026 year. We'll also provide other general business updates. During today's call, our remarks, including our answers to your questions, will include forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act. These statements are made as of today's date, and we expressly disclaim any obligation to update these statements in the future. Actual results and performance may differ materially from forward-looking statements. Certain of the factors that could cause actual results to differ are detailed in the earnings release we issued after market yesterday, as well as in our Securities and Exchange Commission filings, including the risk factors described in our annual report on Form 10-K and quarterly reports on Form 10-Q. I direct you to the earnings release for the full safe harbor statement. Also, please note that during this call, management will discuss non-GAAP financial measures. For reconciliations of each non-GAAP measure to the most comparable GAAP measure, I direct you to the earnings release and to the company's quarterly supplemental financial information, which may be found at brookdaleinvestors.com, and was furnished on an 8-K yesterday. With that, it is my pleasure to turn the call over to our CEO, Nick Stengle. Nikolas Stengle: Thank you, Mike, and good morning, everyone. Thank you for joining us on this morning's call and for your interest in Brookdale Senior Living. The actions we have taken so far through the first half of 2026 and our second quarter results are aligned with our multi-year projection of, first, achieving annual mid-teen adjusted EBITDA growth over the next several years; and second, deleveraging our balance sheet to a less than 6x leverage ratio by the end of 2028. We also remain on-track to deliver on our 2026 annual guidance of 8% to 9% RevPAR growth and adjusted EBITDA in the range of $502 million to $516 million. Our results and recent actions also directly reflect and support the 5-point strategy we have discussed in previous earnings calls, and the Investor Day we hosted in late January 2026. As a reminder, this 5-point strategy is to: number one, improve operating performance; number two, optimize our real estate portfolio; number three, reinvest capital into our communities; number four, reduce leverage; and number five, elevate quality for residents and associates. I would like to take a moment and describe our recent progress on the first 3 points. On point number one, improved operating performance. Our consolidated RevPAR for the second quarter increased 8.2% over the prior year, which is in line with the anticipated quarterly pacing we discussed last quarter. This meets our 8% to 9% full year 2026 RevPAR growth guidance, and we continue to expect an accelerated rate of growth for the second half of this year. Breaking apart the components of RevPAR, our second quarter RevPOR, revenue per occupied room or pricing remains strong. Our second quarter consolidated RevPOR increased 5.2% over last year. As a reminder, we took high single-digit pricing at the start of this year, and we are now beginning to lap the price concessions taken last year. On the occupancy side of the equation, second quarter consolidated occupancy landed at 82.4%, up 230 basis points year-over-year and a 30 basis point sequential improvement from the first quarter of 2026. Candidly, our occupancy growth thus far in 2026, has not inflected as quickly as anticipated. But with our new operating structure and team in place, as well as the actions we have taken, we see underlying improvement that is beginning to bear fruit, as shown through our July occupancy results, which I will cover in a minute. Additionally, given where occupancy stands through mid-year, we have taken steps to ensure that our cost base is scaling in line with our occupancy levels. During the second quarter, we continue to realize improvement within our occupancy bands. We saw a strong expansion in the number of our communities in our top occupancy band, those with greater than 95% occupancy, which now number 99, an increase of 16 communities since the prior quarter. We experienced some improvement in our lower occupied bands, but we recognize the pace of that improvement is not sufficient. Total communities under 80% occupied improved to 211 in the second quarter from 219 in the first quarter. Year-over-year, we had stronger improvement as 281 communities were below 80% in the second quarter of last year. We are taking targeted actions to drive accelerated improvement in those levels through the second half of the year. We are now entering the heart of the summer selling season, and our initiatives are taking hold. As referenced earlier, July occupancy marked a strong acceleration, up 30 basis points sequentially on a same community basis and up 20 basis points sequentially on a consolidated basis. Our month-end occupancy results were also strong, up 30 basis points sequentially for same community and up 40 basis points sequentially for consolidated. This improvement represents our 57th consecutive month of year-over-year occupancy growth. While we are encouraged by the pace of our move-ins and overall occupancy over the last 2 months, we recognize that we can do much more and as a result, are taking further actions to drive improvement. To that end, a key action in the past quarter was the hiring of Margaret Cabell as our new Chief Sales Officer, filling the vacancy we have had in this role since the first quarter of this year. I'm really excited about adding Margaret to our executive leadership team. She brings over 25 years of senior housing experience. While most of this experience has been in sales leadership, she also has meaningful operational and P&L ownership experience, which bolsters our new organizational structure that fully aligns operations with sales. Most recently, she served as Chief Community Relations Officer and Head of Sales for A Place for Mom, which, as many of you know, is the leading senior care referral service in the United States. In the short period Margaret has been with us, we are already seeing measurable changes in key sales leading indicators to include conversion ratios, sales yields, and improvements across our referral channels. These improvements can be directly attributed to changes in our sales strategy, specific actions we are taking within each community and an overall reaffirmation of expectations across our entire organization. Expense management is the other broad component of our operations optimization strategy. As most in the audience know, labor is our single largest expense. On a same community basis, our labor expense declined to 45.2% of revenue from 46.1% in the second quarter of last year. This improvement was a direct result of heightened vigilance and operational focus at all levels of the organization. In fact, we now see additional opportunities to improve labor productivity in the second half of this year. So we would anticipate increased operational leverage over this significant expense driver looking forward. I would also like to take a moment and discuss strategic objectives #2 and #3, which are our portfolio optimization and capital deployment strategy. As we discussed at our Investor Day, Brookdale is now positioned to take a more offensive posture as it relates to deployment of capital given the positive industry environment and Brookdale's significantly improved financial health. Looking at uses of capital, our North Star is to make acquisitions and to invest in projects that bring our shareholders high returns and they correspond to our portfolio strategy, which is to stay within our existing product types and our geographic market footprint. I'll provide more color on both our community reinvestment as well as recent acquisition activity. During 2026, we are increasing reinvestment in our existing communities through a program we call First Impressions. First Impressions projects are significant targeted CapEx investments with a focus on upgrades to community common spaces, including improved flooring, updated lighting, new furniture, and repositioning various areas to be more active and engaging to residents. These upgrades improve visitors' first impressions, hence the name of our communities, and help drive occupancy through higher tour to move-in conversion ratios. These investments also support higher in-place rate increases and decrease future repairs and maintenance expenses. Overall, we see high ROI paybacks on such projects, and we have described 3 recent representative community reinvestment examples in our investor deck on Slide 19. We expect our First Impressions reinvestment to become even more prominent starting in the third quarter of this year and investment in the second half of 2026 will be roughly double our first half pace. Overall, for 2026, we anticipate completing around 30 First Impressions projects with budgets of greater than $250,000. The average spend on our significant First Impressions projects is roughly $500,000 to $600,000. Aligned with our capital deployment and portfolio strategy, we're excited to have recently announced 2 separate acquisitions. The first is the acquisition of the Brookdale Galleria community in Houston for $23.4 million, which closed at the end of June. We're thrilled about this opportunity. We previously managed the Galleria community under a long-term management contract, so we know the property and its occupancy dynamics exceptionally well. The community is in the affluent Galleria submarket of Houston, adjacent to high-end shopping, so it is well located in a market where Brookdale has meaningful density. At 244 units, it's a large community, and we were able to purchase it substantially below replacement cost. From an operational improvement perspective, the Galleria opportunity is compelling to us. The current occupancy at the Galleria community is lower than our Brookdale average. We will be investing additional capital in addition to significant renovations that have recently occurred to reposition the community. Most importantly, we have already closed the skilled nursing operations at the community and expect to replace those units with additional community amenities and other configuration improvements designed to take advantage of market demand, and drive improved economic performance. Now as the owner rather than the manager, operating income expansion will accrue to the benefit of Brookdale and our shareholders. The second is the planned acquisition of 17 communities that we currently lease in a triple net arrangement. These 17 communities are in markets where we have meaningful operating density, and we know these markets and buildings well. The purchase price of approximately $157 million or 735 units represents a per unit acquisition cost of $214,000, which is well below replacement cost. The transaction is expected to close in the fourth quarter of this year. And once it closes, it will further increase our mix of owned versus leased communities, reduce our lease payments and bring us down to 4 remaining lease portfolios, which in their own right, are producing positive cash flow. Importantly, this transaction is expected to increase our 2027 adjusted EBITDA and cash flow. We plan to fund the acquisition with a mix of non-recourse mortgage financing and cash on hand. Both of these acquisitions further bolster the fact that we are the third largest owner of senior living real estate after only Welltower and Ventas. As I shared during our Investor Day, we are an operating company, but we are a company that is built upon a foundation of highly specialized real estate, and this real estate is becoming increasingly scarce with each passing quarter. Pulling all these points together and following our in-line second quarter, we reaffirm our 2026 annual guidance of 8% to 9% RevPAR growth and adjusted EBITDA range of $502 million to $516 million. We also reaffirm our multi-year growth outlook of annual adjusted EBITDA growth in the mid-teens and achieving a leverage ratio of less than 6x by the end of 2028. In summary, the significant changes we've made to our team and structure over the past several quarters are taking hold. I see it in our communities, I hear it from our associates, and it's beginning to show in our results. While we still have work to do, I'm confident that we're building a stronger Brookdale, and that we will accelerate our performance in the second half of the year and create long-term value for our residents, our associates, and our shareholders. I am genuinely excited about our direction and our bright future at Brookdale. We remain firmly on-track to unlock the intrinsic value of Brookdale's specialized services and real estate assets. I will now turn the call over to Brookdale's CFO, Dawn Kussow, for more details on our financial performance and outlook. Dawn? Dawn Kussow: Thanks, Nick. This morning, I'll review 4 key areas: Brookdale's second quarter financial performance, recent improvements to our balance sheet, progress we're making on our ongoing portfolio transition, and our outlook for the remainder of 2026. Starting with our financial performance. Our second quarter results were consistent with the progression we outlined last quarter. Let me highlight a few key points. Second quarter adjusted EBITDA was $122.1 million, up 4.3% year-over-year and in line with our suggested pacing of a low- to mid-single-digit increase and slightly ahead of consensus. RevPAR for the quarter increased 8.2% over the prior year, also in line with the pacing we outlined. Although it is not a component of our guidance, I'll also highlight that our adjusted free cash flow was $38.2 million for the quarter, and we are now meaningfully positive for the year. That said, occupancy came in slightly below our expectations during the second quarter. On a consolidated basis, occupancy increased 230 basis points year-over-year to 82.4%. On a same community basis, occupancy grew 110 basis points over last year to 82.9%. We now expect full year consolidated occupancy to come in at roughly 83%, and we continue to expect to deliver on our 8% to 9% RevPAR growth guidance. Our operations team has identified additional efficiencies through our realignment and our continued focus on maintaining an appropriate expense structure to align with our business while continuing to provide high-quality care and service to our residents. We expect those savings, which will begin to be realized in the third quarter, to fully offset the impact of that slightly lower occupancy on our adjusted EBITDA target. As a result, we remain on-track to deliver our 2026 adjusted EBITDA guidance of $502 million to $516 million. For the second quarter, Brookdale resident fees were $708 million, a decline of 8.7% from the second quarter of last year. The primary drivers of the year-over-year revenue decline were a 15.7% reduction in consolidated average units driven by portfolio optimization activities, partially offset by an 8.2% RevPAR increase. On a same community basis, RevPAR increased 5.5%. Revenue per occupied unit, or RevPOR, remained strong and continued to support revenue growth during the quarter. During the second quarter, RevPOR improved 5.2% versus last year on a consolidated basis and 4.1% on a same community basis. While RevPOR typically moderates over the course of the year, we expect year-over-year RevPOR performance to become increasingly favorable over the back half of the year as we annualize the concessions embedded in last year's results. Overall, we expect year-over-year RevPAR growth to accelerate during the second half of the year, driven by improving occupancy, healthy RevPOR and the favorable mix impact of the dispositions. As a reminder, we guided to 8% to 9% consolidated RevPAR growth for 2026. Through the first half of the year, we've performed within that range, and we continue to expect to deliver on this component of our guidance. Now let's turn to expenses. On a consolidated basis, second quarter expense per occupied unit, or ExPOR, increased 3% over the second quarter of 2025, resulting in a positive RevPOR over ExPOR spread of 220 basis points. On a same community basis, ExPOR increased 4%, generating a 10 basis point positive RevPOR ExPOR spread. On a same community basis, our operating margin was flat versus last year at 29.5%. On a same community basis, community labor expense performed favorably as our labor as a percentage of revenue improved 90 basis points year-over-year. While this is a strong improvement, we continue to see meaningful opportunity on the expense side. We continue to evaluate and make sure our expenses are appropriately aligned with our occupancy levels, and we are already expecting a positive impact from the efficiency actions I mentioned earlier. For the third and fourth quarters of the year, we expect labor as a percentage of senior housing revenue to slightly improve sequentially despite those quarters containing an additional day and holiday. Our same community other facility operating expenses were elevated during the second quarter. There is always a level of variability in our other expenses, and we expect other facility operating expenses to follow normal seasonal trends. General and administrative expense, excluding non-cash stock-based compensation expense and transaction, legal, and organizational restructuring costs declined 6% year-over-year to $38.9 million for the second quarter. The second quarter results reflect that we scaled our G&A cost base to reflect both disposition activity and the reduction of our managed community portfolio. We continue to expect approximately $157 million for the full year G&A costs. Cash facility operating lease payments during the second quarter of 2026 were $44.8 million, down $12.7 million year-over-year, primarily due to the Ventas lease dispositions, which occurred in the second half of the year, coupled with the contractual step-up on lease payments on the retained Ventas leases. Turning to our balance sheet. Our balance sheet strengthened during the quarter. Our annualized leverage improved to 8.4x from 8.8x at the end of the prior quarter. Total liquidity increased to $566 million as of June 30, 2026, up from $369 million at the end of last quarter, reflecting both the expansion of our revolving credit facility, and higher cash balances resulting from positive operating cash flow and disposition proceeds. During June, we completed 2 financing transactions, which addressed a portion of our 2027 debt maturities while also expanding and extending our revolving credit facility. As a result of these transactions, we repaid $200 million of outstanding mortgage debt with $188 million in new non-recourse first lien mortgages. These new loans are interest-only for 5 years and mature in 2036. Additionally, we expanded our revolving credit agreement to $200 million, an increase of up to $100 million from our prior line. The facility now extends through April 2029 and includes 2 1-year extension options. More recently, in August, we announced the refinancing of all of our remaining 2027 mortgage maturities. Specifically, we obtained $249 million of fixed rate financing and used the proceeds to repay $244 million of mortgage debt scheduled to mature in 2027. These transactions demonstrate our continued proactive approach to managing the balance sheet well ahead of upcoming maturities. We appreciate our key lending partners for their support and their confidence in Brookdale's business outlook. We now have no remaining debt maturities until 2028. Adjusted free cash flow for the second quarter was a positive $38 million, reflecting the growth in adjusted EBITDA, lower use of cash for working capital and a timing-related reduction in non-development capital expenditures. Now turning to the progress we're making on our ongoing portfolio optimization. We continue to execute on our capital recycling strategy, which includes the disposition of non-strategic or underperforming owned and leased communities. Earlier this year, we said that we expect to sell 29 communities, comprising 2,364 units during 2026. Through June 30, we sold 13 owned communities, comprising 1,108 units for proceeds of $147 million, net of transaction costs. And we also exited 2 lease communities with 152 units. We've continued to close transactions since the end of the quarter. And as of August 10, we have closed the sale of an additional 3 communities with 228 units for net proceeds of $2.5 million. Today, 13 of the planned 29 communities identified for disposition remain. We expect most of those to close before the next earnings call. In total, we now expect proceeds for 2026 community dispositions, including completed transactions to generate net proceeds of approximately $190 million. As Nick mentioned, we also completed 1 acquisition at the end of the second quarter and announced a second acquisition expected to close in the fourth quarter. At the end of June, we acquired the 244-unit Brookdale Galleria in Houston, a community we previously managed for approximately $23 million. We closed the Galleria transaction using our line of credit and cash on hand. Last week, we announced the acquisition of a 17-community portfolio, which we currently lease, comprising 735 units, for a purchase price of approximately $157 million. We expect to close the second acquisition using a mix of non-recourse mortgage financing and cash on hand. We're excited about both of these acquisitions of high-quality communities. Both were purchased below replacement costs and are expected to improve our intermediate and long-term financial results. Now let's turn to our outlook for the remainder of 2026. We remain on-track to deliver our 2026 guidance of 8% to 9% RevPAR growth and $502 million to $516 million of 2026 adjusted EBITDA. Here is the path to delivering our guidance for the remainder of 2026. And note that the highlights of this are also included on Slide 12 of our second quarter investor presentation, which we posted to our IR website yesterday. Average units, which were 42,820 in the second quarter, are expected to decline to approximately 42,200 in the third quarter and 41,500 in the fourth quarter. The decline reflects the tail end of our previously described capital recycling program and the impact of our Galleria acquisition. Remember, the acquisition of the leased assets will not change the expected unit average as those units were already included in the expected average unit count. Consolidated occupancy should be approximately 83% for the full year. 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. Both quarters should show stronger sequential expansion than what we reported earlier in the year. RevPOR, or rate, is expected to show greater year-over-year growth in the third and fourth quarters than in the first half of the year. RevPOR, or rate, is expected to show greater year-over-year growth in the third and fourth quarters than in the first half of the year as a result of dispositions as well as the comparison against discounting in the prior year. As a result of improved occupancy and rate, the sequential RevPAR growth for the second half of the year is expected to mark an accelerating trend from the first half of the year. Labor costs, as I mentioned earlier in my remarks, should slightly decline as a percentage of revenue in the third quarter and further again in the fourth quarter. We project $157 million in annual G&A expense. We now expect cash lease expense of slightly under $180 million for the year as we realize the initial benefit of the 17 community portfolio acquisition we announced earlier this month. Summing it up, we expect adjusted EBITDA growth to accelerate into the third and fourth quarters of this year. Specifically, we expect third quarter year-over-year adjusted EBITDA growth to be in the low double-digit range. For fourth quarter, we anticipate adjusted EBITDA growth to come in above our mid-teens target growth range. In closing, while we delivered on our overall expectations for the second quarter, occupancy growth hasn't moved as quickly as we initially expected. We've taken decisive action to further drive growth in the back half of the year and to identify additional cost efficiencies. We continue to expect to deliver on our 2026 guidance. We're confident in our strategy, and our team's ability to execute and in our ability to continue creating long-term shareholder value. Operator, we will now open the call for questions. Operator: [Operator Instructions] Your first question comes from Ben Hendrix with RBC Capital Markets. Benjamin Hendrix: I was wondering if we could talk a little bit more about the guidance for the second half. The RevPAR guidance, it seems like you were expecting about 100 basis points better in 3Q and 4Q. Now we're kind of pushing that inflection a little bit more into 4Q. Maybe you can kind of talk about some of the dynamics there. It seems like you put through some really good RevPOR growth, but maybe the move-ins were a little bit still kind of down 5%. Maybe you can talk about kind of receptivity to those rate updates and how that's impacting your RevPOR outlook. Dawn Kussow: Thanks, Ben. This is Dawn. I appreciate the question. Yes, 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. So we had some delay in the dispositions where we would expect to get that accretion. We're expecting to get that accretion now in the fourth quarter. But just to take a step back, reminding you, our RevPAR growth of 8.2% year-over-year is really something that we're proud of. We had -- this is our -- this is the highest RevPAR in the last 2 years. And so just taking a step back and looking at that. When you think about the fourth quarter, our RevPAR growth there is going to get the benefit from the full occupancy from our summer selling season and then that disposition timing, we would expect to get that accretion there where we expect an acceleration in the growth. Nikolas Stengle: And what I'll also add, Ben, part of the focus as a team has been truly on RevPAR and tackling both sides of that equation, both the occupancy and the rate side of it. So this year, we're taking a far more disciplined, far more deliberate approach to our in-place rate increase for sure, but even our market rate increases as new move-ins come out or new move-ins come into our communities and they replace a move out where naturally we're just really driving to that RevPAR number. So as you look at occupancy, as you look at rate, the overall kind of push on RevPAR, and I think the points that Dawn made on the acceleration for Q3 and Q4, part of it is also coming from rate in addition to the occupancy growth. Benjamin Hendrix: So we should expect RevPOR to continue to tick up as we get through the back half of the year then? Dawn Kussow: That's right, Ben. If you remember what we talked about at the beginning of the year on our RevPOR is you see the benefit of the rate increase in the first quarter. Typically, we see that RevPOR stepping down every sequential quarter from acuity and discounting. What we said at the beginning of the year and remains the same is that, that RevPOR we expect our RevPOR to remain firm in the back half of the year. So we'll expect that little bit of a step-up in the third quarter, and then it will remain firm. When I say remain firm sequentially, we don't expect that step down. Nikolas Stengle: Which is atypical for our company and the industry really. So it's a little bit of a change this year based on the dispositions and based on this pricing strategy that we've implemented. Operator: Your next question comes from Rob Simone with Compass Point. Robert Simone: Kind of a high-level or big picture question for you. So I mean, obviously, the company has changed pretty dramatically over the last several years. And I wouldn't use the word tumultuous, but like there's obviously been lots of changes at the higher level management ranks over the past year or so. I was just wondering if you can maybe elaborate on what changes you guys made at kind of like the local and regional operational level? Like what has been done behind the scenes to kind of get you guys where you need to be and give you the confidence that the next like year or so, you'll add -- you gradually add on to occupancy. Nikolas Stengle: Yes, Rob, I love the question and really appreciate it because it is sort of defined who we are and who we will be for the next year is exactly the kind of the question you're alluding to. And the first point I'll make is the changes that we have made, all very appropriate, a bit disruptive, maybe even tumultuous, that's the word you use. But the cool thing is the table is now set. And the pace of change is more or less behind us and now we're looking forward to the new team, the new structure, the new organizational effectiveness that we have going forward. So that's kind of the first point. As far as the specifics of the changes that have happened, it really starts with our communities. So I'll start at the bottom of the organ and quickly move on the way up. But at the core of it, we have what we call our Key Three, and many of our peers use a similar term. It's basically our operations leader, executive director, our sales leader, and our clinical leader. We have truly bolstered what that looks like within communities, the reporting relationships, the authority they have, the empowerment they have and the accountability that they have. In fact, to that point, our Key Three turnover is the lowest it has been since COVID. The number of communities that we have ED openings is the lowest it has been since COVID. So some real performance improvement around the engagement of our leaders across our 500-plus communities. And that's a big part of what I brought to the table as a new CEO, and what the management team has really leaned into is the leadership within the community. Now stepping up one level right above that, we call it a district is what we call it in our company. We have replicated and that was a meaningful change in the middle of Q1. We have replicated the same organizational model at the district level, and it was not that way. So our sales, operations, and clinical leaders all report up through the operations -- through our District Director of Operations, which, again, in some ways, some people would say that's not that meaningful of a change. I will tell you it's a very meaningful change because then it creates clear accountability, clear empowerment, clear authority through the district into the community. So instead of having 2, 3, 4 leaders district leaders reaching into a community and providing guidance and authority and all those things, there's now a single line of accountability, which goes right to the regional level, where we did the exact same thing all the way to the COO. So practically, what I'm describing is a single line from me as the CEO down through our executive ranks, the regional ranks, the district ranks into the community. And with that single line, you have a single line of empowerment, enablement, oh by the way, accountability, and reporting that reaches into each of our communities. And another big part of the change -- and this happened late last year, is that we now are structured at 6 regions of about 100 communities or so, 90 communities or so, where we're in effect operating like a regional company of 6 -- we're basically operating as 6 companies, but so with the capabilities, the funding that a company of our size has. Robert Simone: It's good color for folks. Maybe just one unrelated question, and it's kind of been hit on, but to the extent you can, what gives you the confidence or what points give you the confidence that besides the price that you've already taken and your view into occupancy like thus far into August, that you're actually going to be able to accelerate RevPAR and maintain or hit your guidance as the year goes on? Just any like anecdotal data points or qualitative things that could kind of give people more comfort might be helpful. Dawn Kussow: Rob, this is Dawn. I'll start. And I think when we think about the sequencing of our quarterly adjusted EBITDA, really the July occupancy coming into our summer selling season gives us confidence. The move-ins we saw kind of coming out of the second quarter, that July occupancy growth is really kind of gives us confidence coming into August and September. Now as you know, our third quarter has an additional day and additional holiday. We expect kind of that occupancy growth to offset that natural step-up in our expense base. But what we said in our prepared remarks was the labor efficiencies that we saw with the structuring that Nick was just talking about, the labor efficiencies and the expense savings with that lower occupancy than expected growth in the second quarter, we expect our labor and have specific actions around making sure that labor savings is happening in our expense base. In my prepared remarks, I had mentioned that we expect our labor as a percentage of our revenue to slightly improve in the third and the fourth quarter. That's atypical of our seasonality because of the additional day and holiday in the third and the fourth quarter. So those expense savings, we would expect to see coming through both in the third and the fourth quarter. And so that gives us the confidence with the step-up in the adjusted EBITDA that we're talking about. Operator: Your next question comes from Brian Tanquilut with Jefferies. Meghan Holtz: This is Meghan Holtz on for Brian Tanquilut. I appreciate the color you guys gave on the 2 acquisitions, but I was hoping you can elaborate a little bit more on maybe the strategic rationale of these communities that you're now going to own in any financial or operational metrics. Nikolas Stengle: Yes. I appreciate the question, Meghan. I'll step in first, and Chad will probably provide a few more details. And I guess the first point is the overall strategy that we've articulated during the Investor Day and even reiterated throughout the earnings calls that we've had since then. And that's this idea that we are, for the first time in many years, kind of more in an offensive posture. We have the wherewithal. We have the capital, we have the free cash flow. We have leases that are generating free cash flow. Like we have the freedom now to make decisions like this, and that's exactly what we are doing. And specifically, we're looking for very targeted deliberate acquisitions. So it's not an opportunistic. We're not looking for portfolios. We're not looking for broad swaths. In fact, to be even more specific, we're currently in 41 states, 0 desire to be in 42 states. We're in roughly 125 markets, 0 desire to be in 126 markets. That is a growth strategy some companies have. That's not our growth strategy. Our growth strategy around acquisitions is to acquire in markets that we already have a meaningful presence where we're looking to create even more density, even more focus and really leverage the strength of a company of our scale. And that's exactly what these 2 acquisitions have done. So Galleria in Houston, very affluent, great market. We know the building well. And now as the owner as opposed to the manager, we have some real freedom. And then similarly with our lease acquisitions. Chad, anything else to add? Chad White: Sure. I'll start with Galleria. We were very excited to be able to execute that acquisition at an incredible per unit purchase price that's substantially below replacement value. Nick mentioned that it's in an affluent area. It's -- we view that real estate as effectively irreplaceable. It's located next door to the Galleria Mall, a great shopping area there in Houston. So we're very excited about that. From an underwriting standpoint, we know the asset, we know its potential, and we had a unique vantage point as the existing manager of the property. We view this as a very low-risk and very high reward transaction. We purchased the community for a purchase price of just over $23 million, which was less than $100,000 per unit. Importantly, Brookdale Galleria had already benefited from tens of millions of dollars of capital expenditures over the last several years that had been funded by the prior owner. Much of that was related to updating major systems and refreshing the aesthetics of the community. Frankly, the community looks great, as you can see in pictures available on our website, but we have plans to further improve it with relatively limited additional capital investment. As the owner of the community, we now have much more flexibility to implement changes we believe will help drive value creation for our shareholders. We didn't have this flexibility as a manager of the community. For example, we've already shut down the underperforming and negative NOI skilled nursing operations at the community, and we have plans to reposition the community as a high-end hospitality-focused, multi-product line senior living community. Through modest development capital expenditure investments, we plan to add additional amenities along with additional changes designed to take advantage of demand dynamics in the Houston market. The changes we have implemented since we closed the transaction just over a month ago have already resulted in improved NOI, and we see much more potential in the months and years ahead. We're confident that the acquisition will provide intermediate-term adjusted EBITDA and cash flow accretion that will drive value creation for our shareholders. Now briefly on the leased acquisition. We were happy to reach a win-win transaction with our landlord to effectuate the purchase of that 17 community portfolio. We were -- effectively, we were able to accelerate our exercise of a purchase option on the portfolio, but we did it at an attractive price, again, with minimal risk and high upside given that we were already the operator of the communities. As Nick mentioned, we know these buildings, we know these markets. We're confident that we can continue to drive occupancy and NOI growth here. Similar to other lease acquisition transactions we've completed over the last few years, this allows our shareholders to capture the full SHOP-equivalent economics of the portfolio and reduce rent exposure. Dawn mentioned earlier, this transaction improves our 2027 adjusted EBITDA by about $11 million, but it also will meaningfully improve our annual cash flow as we're replacing high-cost lease financing with lower-cost mortgage debt. Meghan Holtz: Okay. And then just touching base on the new Chief Sales Officer hire, what are some of the actions you're putting in place to drive occupancy? Nikolas Stengle: Yes, Meghan, really appreciate that question. So again, as I shared, very excited to have Margaret join the team. So if you look at our July occupancy, in fact, and again, I hate to kind of go into the second order, but take a look at the month-end versus the weighted average, which is indicative of what the following months will look like. Those numbers are not accidental. Obviously, there's a supply-demand component that underpins it. That is the context. But Margaret has come on board and very quickly, she joined us early about 1.5 months ago in June. There's some real activity. There was a very specific campaign, specific initiatives that we launched in the month of July that are more activity-based than outcome-based. So the previous approach had been more around looking at outcomes, which are very important. But the reality is we're asking 500-plus community sales professionals in those communities to do specific actions with specific accountability. And that's exactly what Margaret brought immediately. And again, in July, our numbers reflect that. So very excited by what this means. If anything, it has brought a new energy, a new pep, a new strength in how we approach our sales process. And it really has kind of the organizational structure of ops, sales, and clinical truly working together. Every single layer of the organization has been a pretty meaningful change. And again, it's showing up as an early indicator in our July numbers and excited by what August, September, October will bring as we continue selling in the summer season. Operator: Your next question comes from Raj Kumar with Stephens. Raj Kumar: Maybe just one on kind of thinking about the operating leverage of the business, specifically on the labor component. One, would love to get any updated thoughts on kind of hiring trends that you saw in the second quarter? And then secondly, as we kind of think about the opportunity ahead across the different portfolio bands, it would be kind of helpful to illustrate kind of the operating leverage magnitude, especially kind of just, for example, kind of considering maybe a 90% occupancy is well equipped to service a 95%-plus occupancy. So kind of that type of leverage dynamic, just would be kind of curious on any color commentary there. Nikolas Stengle: Yes, Raj. So from an overall hiring perspective, it still feels very much like an employer type job market. We have more applicants per open req than we've ever had for sure since COVID. By the way, it's underpinned by the lowest turnover even since before COVID. So earlier, I referenced the lowest turnover of our Key Three leaders, best since COVID. The overall turnover of the company is even better even than before COVID. So I will tell you, from an employer perspective, we feel like we are an employer of choice. We're able to hire the right people who have a real passion for senior living and service, and we're able to keep them in a much better pace than we've ever had, specifically through 2023, 2024, but even as recently as last year. So this year is feeling really, really good, and we're able to manage our labor, our talent more effectively than we've ever had. So that feels good from an overall perspective. As far as the occupancy bands, and I'm glad you asked the question. So in our investor deck, and for those of us who have been with a while, I've seen this slide for a while, on Slide 18, we clearly show that as occupancy goes up, the EBITDA, the NOI that's available per unit goes up meaningfully. So as an example, in the under 70% occupancy band, on average, we generate $3,800 of EBITDA per available unit on an annualized basis. Just by jumping up the next band, you more than double it and then you jump up to the band of the over 80% and now you're just below $21,000. So that fixed cost operating leverage component is very, very real. And in my prepared remarks, I discussed the fact that we have more communities that are above that 90% occupancy band than we've ever had. And we've been steadily making progress on the below 70% occupancy band quite meaningfully. And just to reiterate a couple of points. So in the end of Q2, we just reported 85 total communities that are below 70% occupancy. A year ago, in 2025, we had 129. So a meaningful improvement in those numbers. And to kind of distill that a bit more, within that 85, 9 of them are on the disposition list, and that should be no surprise. We are disposing the lower-performing communities. So very naturally, that number will decrease as we effectuate those dispositions this quarter and maybe going early into next quarter. But the more interesting part is a meaningful part of those 85, call it, around half are just more recent erosion. So it's communities that were above it. And as the seasonality of our industry kind of took hold, they dipped momentarily below that 70%. In fact, almost all of them just need between 1 and 3 units to be sold and will jump up above that 70%, which will naturally happen as we continue our sales effort and as the summer season continues. Really, it's around -- it's less than half that are, I'll say, in a more of a consistent nature. And we have launched the SWAT team. In fact, in some ways, relaunched the SWAT team under our SVP of Strategic Operations, Clark Jones, and we'll be tackling those that have been more consistently in that under 70, to really make some meaningful changes in that small cohort that are in that position. Raj Kumar: And then maybe just a follow-up, as you kind of think about the free cash flow trajectory for the second half, I know you called out some kind of incremental investments or accelerated investments kind of related to just facility uplifts and whatnot. So I guess maybe any framing on the back half here free cash flow would be helpful. Dawn Kussow: Yes. So if you look at our second quarter, we were $38 million of adjusted free cash flow. We said that we expect to be significantly adjusted free cash flow positive for the year. Last year, we had $23 million of adjusted free cash flow, and our expectation is that we would be much higher than that. And so as we think about the second half of the year -- we expect that during the quarters, we wouldn't give specific guidance quarter-by-quarter. You have some level of variability with your working capital. We expect to spend about $175 million to $195 million of CapEx and on top of that, still be significantly adjusted free cash flow positive. Operator: Your next question comes from Joanna Gajuk with Bank of America. Joanna Gajuk: So maybe coming back to the discussion about the guidance, and I appreciate the comments around the occupancy a little bit less and some of the cost efficiencies. But also the other dynamic you mentioned is the delay or I guess, delay of these dispositions, right? So you're holding these underperforming assets a little bit longer on your books. So can you help us understand this dynamic? How big of a drag is the fact that these asset sales are delayed? And also, is this being also offset by, call it, $3 million or so from the benefit in Q4 from the purchase of the 17 leased assets? Dawn Kussow: Joanna, that's a very good question. I appreciate the question and the clarification is that's exactly how we're thinking about the acquisition of the leased assets. We will start to benefit from those leased assets changing from a lease into the owned in our cash lease payments, which is why we adjusted our language around the full year guide on those cash lease payments. So how we're thinking about the drag on the dispositions is that lease payment or that buyout of the lease portfolio, that benefit should be offsetting that drag. Joanna Gajuk: If I may, last one on the move-in, the slide there that shows the move-ins declining year-over-year, I guess, for some time now. So can you kind of walk us through like why is that happening? Nikolas Stengle: Yes, I'll take the first pass at that, Joanna, and then Chad and Dawn may add some more because they were here in that time period. So you've got to realize move-in pace and pricing go hand in hand. Last year, we made some very deliberate and I'd argue potentially appropriate at that time, discounting to really get things moving in the June, July time period. And this year, we're taking a very different approach, both with our in-place rate increase, much more meaningful this year as compared to last year and then a much more deliberate, disciplined move-in pricing approach. So at the end of the day, as a team, we are focused on RevPAR. And obviously, the constituent components of it, but we can't lose sight of our RevPAR, which again, I'll reiterate 8.2% with an 8% to 9% guide. So we are really threading the needle between balancing rate and balancing move-in pace. And if anything, it's a bit of a 2-speed world. In our 90%-plus occupied communities, and we're having more and more of those, we can drive rate more meaningfully. And then in the lower occupied communities, and I briefly discussed the 70% and less in the previous question, we will do discounting. So we're really trying to balance those 2 components to drive the overall RevPAR. So as you look at our move-in pace and the comparison, I think it's on Slide 9, is probably the one you're referencing, there's some real pricing components to that math. Chad White: I think I'd also look at the recent monthly -- the recent results that we've seen. Nick mentioned earlier some of the changes we made with bringing in a new Chief Sales Officer, et cetera. And so some of those changes are starting to take hold, and you can see that with the July results in particular. And so in my mind, a lot of the work that has been done this year has set the stage for a successful summer selling season as we move forward. Joanna Gajuk: And if I may, last one, sorry, on the summer season comment there. So I appreciate you gave us the July data point there because honestly, the 30 basis points, I know it's a solid number. But I guess when we think about last year, it was the growth sequentially in July versus June was much stronger. So I understand because you just answered the question around what was happening sort of like where do you stand right now in terms of your selling season and incremental color you might have already on the early, I guess, activity in August? Nikolas Stengle: Yes. Joanna, take a look at the month-end and compared it to the weighted average for the month. And again, I hate to go to the second order and third order type math, but we do provide it, we do publicly disclose it. So if you look at that gap this year and compare it to previous years, you can see it's fairly healthy, and that's a fairly good indicator of what the follow-on month looks like. And again, I'm going to go back to all the changes we have made in our sales organization, our structure, our leadership, and that's not accidental that number is there. And by the way, again, it's underpinned by a real contextual thing that's happening in the senior living industry, and we're taking full advantage of that. So we feel really good about what August, September will look like just based on all the indicators that we have available and what you can see yourself with that July number. Operator: Your next question comes from Andrew Mok with Barclays. Andrew Mok: It's still not clear to me exactly what's driving the occupancy shortfall in the quarter, and you noted some of the issues with the year-over-year comparisons shown on Slide 9. So I guess, very simply, was the shortfall against expectations more of a move-in issue or a move-out issue? And would love to just hear more color on the drivers of the variance. Nikolas Stengle: Yes. I'll chime in first and again, Dawn and Chad may fill in some gaps. And it's a great question, Andrew. So obviously, occupancy is driven by both move-in and move-out metrics. So it's both sides of the coin. Move-outs, we have controlled and uncontrolled, uncontrolled being more obviously, things that we don't necessarily control directly based on the status of the resident. I will tell you -- and again, we don't specifically tease this out, especially on the month-to-month because then it just gets -- now we're talking third and fourth order type insight that can get a little muddy. But I've actually -- we've been actually very happy with our move-in pace. The move-out has vacillated, but it also does. There's a lot of cyclicality. And again, this is an industry-wide thing where you will have several months of good move-outs only for a month or 2 of poor move-outs. Again, most of them usually on the uncontrolled side, residents that need a higher skill level, residents that just are no longer appropriate for senior living. And that's been a little bit of our occupancy story where our move-in pace actually very strong. In fact, with some of our results, we've actually articulated that it's kind of a record level, highest in the month type numbers through the summer months. But then you counterbalance that with move-outs that did not maybe go as well as we had hoped out of our control. I will tell you all that seems to stabilize. Again, it's 1 month, July. By no means is that a trend other than to say that the move-out pace is sometimes quite cyclical. Dawn Kussow: And Andrew, I would just add that as Nick and Chad both just alluded to is that the new sales leader -- not having a sales leader in since middle of the first quarter, bringing that sales leader in -- and Margaret has been great, a different energy, very actionable, where she's very interactive, strategic on driving sales within the organization at the community level. You can feel it in the company, you can feel it in the organization, and that certainly has made a difference. And I think that, that void also contributed partially to what we thought was just a little bit of volatility in the occupancy from a month-to-month basis. Andrew Mok: And maybe just a follow-up on the expense side. Same community other facility operating expenses, I think, were up high single digits in the quarter. Can you provide more color on what drove that pressure specifically and elaborate on the initiatives you're pursuing on labor productivity to help offset the occupancy pressure? Dawn Kussow: Sure. It's a great question. I'll start with the non-labor expense. We did see a little bit more in the way of headwinds around our repairs and maintenance expense, some of our insurance expense and some of our bad debt expense. We talked about that in our public documents in the press release in the Q. What I would say there is we expect our non-labor expense to follow the normal seasonality. There's always a level of variability on that expense on that expense line item. But the expectation for the year is that we would -- it would follow our normal seasonal trends. On the labor side, in my prepared remarks, we said that it would -- our labor would slightly improve as a percentage of revenue in the third and the fourth quarter. That's not traditional that we have an extra day and holiday, which is a labor headwind when you think about sequential second quarter to third quarter. But what we would say there is we've looked at under the new operating structure, looked at our labor productivity, looked at the labor at the community level and taken specific actions around kind of what that expectation is given the variability -- the variable labor as it relates to our occupancy levels. And we've been very specific about the actions that we've been looking at there in the back half of the year and expect that those expense savings to come through, which is why we guided to our revenue -- our consolidated labor as a percentage of revenue to slightly improve in the back half of the year. Operator: There are no further questions at this time. I will now turn the call back to CEO, Nick Stengle, for closing remarks. Nikolas Stengle: Excellent. Thank you, Rebecca. I'll just close it out the same way I started it first by thanking our associates every day, they care for our residents, they care for each other. And at the end of the day, that's fundamentally what we provide against the backdrop of the real estate that we own that we've talked about so much. I'd like to thank our family members and our residents who put their trust in us for their care and for the service that we provide. I'd like to thank our shareholders for their continued trust in this management team and for continued interest in Brookdale. With that, I recommend we shut down the call. Thanks, Rebecca. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Brookdale Senior Living, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Brookdale Senior Living wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Brookdale Senior Living (BKD) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Brookdale’s second quarter was met with a negative market reaction, reflecting investor concerns around the company’s revenue shortfall relative to Wall Street expectations. Management attributed the performance to ongoing portfolio optimization initiatives, including the sale of underperforming communities and a disciplined approach to pricing and occupancy. CEO Nikolas Stengle acknowledged, “Occupancy growth thus far in 2026 has not inflected as quickly as anticipated,” and emphasized targeted actions designed to accelerate improvement, such as the addition of a new Chief Sales Officer and heightened sales accountability at the community level. Is now the time to buy BKD? Find out in our full research report (it’s free). Revenue: $718.6 million vs analyst estimates of $735.7 million (11.6% year-on-year decline, 2.3% miss) Adjusted EPS: -$0.02 vs analyst estimates of -$0.04 ($0.02 beat) Adjusted EBITDA: $122.1 million vs analyst estimates of $121.3 million (17% margin, 0.6% beat) EBITDA guidance for the full year is $509 million at the midpoint, in line with analyst expectations Operating Margin: 12.4%, up from 1.8% in the same quarter last year Market Capitalization: $3.02 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Benjamin Hendrix (RBC Capital Markets) pressed for clarity on the timing and drivers of accelerated RevPAR in the back half of the year. CFO Dawn Kussow explained that RevPAR growth would benefit from improved occupancy during the summer selling season and delayed accretion from asset dispositions, with rate increases also playing a significant role. Robert Simone (Compass Point) inquired about the impact of recent structural and leadership changes at the community and district levels. CEO Nikolas Stengle responded that streamlined reporting lines and lower turnover among key leaders have improved accountability and operational effectiveness. Meghan Holtz (Jefferies) asked about the strategic rationale for recent acquisitions. General Counsel Chad White highlighted that both the Houston Galleria and leased portfolio deals were in markets where Brookdale already had density, allowing for operational synergies and lower acquisition risk. Raj Kumar (Stephens) sought insight into labor trends and operating leverage potential. Stengle stated that current labor turnover is at its lowest since before the pandemic, and incremental occupancy gains will drive significant EBITDA improvements due to fixed-cost leverage. Joanna Gajuk (Bank of America) questioned the effect of delayed asset sales and declining move-in activity. Kussow noted that acquisition benefits would offset disposition delays, while Stengle explained that move-in pace is being balanced with pricing discipline to optimize overall RevPAR. Looking forward, the StockStory team will be closely monitoring (1) the pace of occupancy recovery and success of the summer selling season, (2) evidence that labor productivity gains and expense controls translate into sustained margin improvement, and (3) the successful execution and integration of newly acquired communities. Further progress on asset dispositions and capital reinvestment in key properties will also be important signposts for Brookdale’s strategic execution. Brookdale currently trades at $12.63, down from $13.69 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members). ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies. Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

Interested in Brookdale Senior Living Inc.? Here are five stocks we like better. Brookdale reaffirmed its 2026 outlook after second-quarter adjusted EBITDA rose 4.3% to $122.1 million. The company continues to target 8%–9% RevPAR growth and $502 million–$516 million in adjusted EBITDA. RevPAR increased 8.2% year over year, but occupancy growth was slower than expected, prompting management to lower its full-year consolidated occupancy expectation to roughly 83%. Brookdale said pricing, labor savings and other efficiency efforts should offset the impact. Brookdale is reshaping its portfolio and balance sheet by selling nonstrategic communities, pursuing targeted acquisitions and refinancing debt. Leverage improved to 8.4 times, liquidity rose to $566 million, and the company has no remaining debt maturities until 2028. Brookdale Senior Living (NYSE:BKD) reaffirmed its 2026 guidance after reporting second-quarter adjusted EBITDA of $122.1 million, up 4.3% from a year earlier, as stronger pricing and cost-management efforts helped offset slower-than-expected occupancy progress. The senior living operator said it continues to expect full-year RevPAR growth of 8% to 9% and adjusted EBITDA of $502 million to $516 million. Chief Executive Officer Nick Stengle said the company remains focused on a multiyear plan to produce annual adjusted EBITDA growth in the mid-teens and reduce leverage to less than six times by the end of 2028. → SoundHound AI Sends a Loud Signal After Its Q2 Earnings Beat Consolidated revenue per available room, or RevPAR, increased 8.2% year over year in the second quarter. The result reflected a 5.2% increase in revenue per occupied room, or RevPOR, and a 230-basis-point increase in consolidated occupancy to 82.4%. Brookdale’s same-community occupancy was 82.9%, up 110 basis points from the prior year. However, management said occupancy growth during the first half did not improve as quickly as expected. Chief Financial Officer Dawn Kussow said the company now expects consolidated full-year occupancy of roughly 83%. → 3 Dividend Champion Utilities for a Market That Can't Sit Still “Occupancy came in slightly below our expectations during the second quarter,” Kussow said, adding that identified labor and other efficiency opportunities are expected to offset the EBITDA effect of lower occupancy. Management pointed to an improvement in July, when same-community occupancy increased 30 basis points sequentially and consolidated occupancy rose 20 basis points. Month-end occupancy improved 30 basis points sequentially for same communities and 40 basis points for the consolidated portfolio. → Is Wingstop's Growth Story Losing Steam? Stengle said the company’s July results represented its 57th consecutive month of year-over-year occupancy growth. Brookdale also expanded the number of communities with occupancy above 95% to 99, up 16 from the first quarter. The number of communities below 80% occupied declined to 211 from 219 sequentially and from 281 a year earlier. Brookdale recently hired Margaret Cabell as chief sales officer, filling a position that had been vacant since the first quarter. Cabell previously served as chief community relations officer and head of sales at A Place for Mom, according to Stengle. Stengle said the company has seen early improvements in sales conversion ratios, sales yields and referral-channel performance since Cabell joined. He also described a revised organizational structure intended to create clearer accountability from the corporate leadership team through regional and district operations and into individual communities. The company has aligned operations, sales and clinical leadership under district operational leaders, Stengle said. Brookdale operates through six regions, each overseeing roughly 90 to 100 communities. On labor, Brookdale’s same-community labor expense declined to 45.2% of revenue from 46.1% a year earlier. Kussow said the company expects labor expense as a percentage of senior housing revenue to decline slightly in both the third and fourth quarters, despite an additional day and holiday in those periods. Brookdale reported that same-community operating margin was flat year over year at 29.5%. Same-community other facility operating expenses increased during the quarter, driven in part by repairs and maintenance, insurance and bad debt costs, Kussow said. The company expects those costs to follow normal seasonal patterns for the remainder of the year. Resident fees totaled $708 million in the second quarter, down 8.7% from a year earlier. Kussow attributed the decline primarily to a 15.7% reduction in consolidated average units resulting from portfolio optimization activity, partially offset by RevPAR growth. Brookdale has been selling non-strategic or underperforming communities. Through June 30, it sold 13 owned communities with 1,108 units for $147 million in net proceeds and exited two leased communities with 152 units. Since quarter-end, it sold three additional communities with 228 units for $2.5 million in net proceeds. The company said 13 of its previously identified 29 planned dispositions remain outstanding and that it expects most to close before its next earnings call. Brookdale now expects about $190 million of net proceeds from 2026 community dispositions. At the same time, the company is pursuing targeted acquisitions within markets where it already has a significant presence. In June, Brookdale acquired the 244-unit Brookdale Galleria community in Houston for $23.4 million. The company had previously managed the property. Chad White, executive vice president, general counsel and secretary, said the company acquired the property for less than $100,000 per unit and plans to reposition it as a high-end, hospitality-focused, multiproduct senior living community. Brookdale has shut down its underperforming skilled nursing operation at the location and plans to replace those units with amenities and other configuration changes. Brookdale also announced plans to acquire 17 communities it currently leases, totaling 735 units, for approximately $157 million. The transaction is expected to close in the fourth quarter and is expected to improve 2027 adjusted EBITDA by about $11 million, White said. The company plans to fund the deal with non-recourse mortgage financing and cash on hand. Brookdale’s annualized leverage improved to 8.4 times at June 30 from 8.8 times at the end of the first quarter. Total liquidity rose to $566 million from $369 million, reflecting an expanded revolving credit facility, positive operating cash flow and disposition proceeds. During June, Brookdale repaid $200 million of mortgage debt with $188 million in new non-recourse first-lien mortgages. In August, it obtained $249 million of fixed-rate financing to repay $244 million of mortgage debt scheduled to mature in 2027. Kussow said the company now has no remaining debt maturities until 2028. Adjusted free cash flow was $38.2 million in the second quarter. Brookdale expects capital expenditures of roughly $175 million to $195 million for 2026, including expanded investment in its “First Impressions” community upgrade program. The company expects to complete about 30 projects with budgets exceeding $250,000, with significant projects averaging approximately $500,000 to $600,000. Looking ahead, Brookdale expects adjusted EBITDA growth to accelerate in the second half. Management projected low-double-digit year-over-year adjusted EBITDA growth in the third quarter and growth above its mid-teens target range in the fourth quarter. Brookdale Senior Living Inc (NYSE: BKD) is one of the nation's largest operators of senior living communities, offering a full spectrum of living options that includes independent living, assisted living, memory care, continuing care retirement communities, respite care and skilled nursing services. The company emphasizes programs and amenities that support wellness, social engagement and overall quality of life for older adults. Across the United States and Puerto Rico, Brookdale manages more than 700 communities serving tens of thousands of residents. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Brookdale Senior Living Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Adjusted EBITDA: $122.1 million in Q2 2026, up 4.3% year-over-year. RevPAR Growth: Consolidated RevPAR increased 8.2% year-over-year; same-community RevPAR increased 5.5%. Occupancy: Consolidated occupancy reached 82.4%, up 230 basis points year-over-year; same-community occupancy was 82.9%, up 110 basis points. Resident Fees: $708 million in Q2, down 8.7% year-over-year due to a 15.7% reduction in average units, partially offset by RevPAR growth. RevPOR: Consolidated RevPOR improved 5.2% year-over-year; same-community RevPOR improved 4.1%. Expense per Occupied Unit (Ex-POR): Consolidated ex-POR increased 3% year-over-year; same-community ex-POR increased 4%. Operating Margin: Same-community operating margin was flat year-over-year at 29.5%. Labor Expense: Same-community labor expense declined to 45.2% of revenue from 46.1% in Q2 2025. G&A Expense: Declined 6% year-over-year to $38.9 million (excluding non-cash stock-based compensation and transaction costs). Adjusted Free Cash Flow: Positive $38.2 million for Q2 2026. Leverage: Annualized leverage improved to 8.4 times from 8.8 times at the end of Q1 2026. Liquidity: Total liquidity increased to $566 million as of June 30, 2026, up from $369 million at the end of Q1. Cash Facility Operating Lease Payments: $44.8 million in Q2 2026, down $12.7 million year-over-year. 2026 Guidance: Reaffirmed RevPAR growth of 8% to 9% and adjusted EBITDA of $502 million to $516 million. Portfolio Activity: Sold 13 owned communities (1,108 units) for $147 million in net proceeds through June 30; acquired the 244-unit Brookdale Galleria for $23.4 million; announced acquisition of 17 leased communities (735 units) for approximately $157 million. Warning! GuruFocus has detected 6 Warning Signs with BKD. Is BKD fairly valued? Test your thesis with our free DCF calculator. Release Date: August 11, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Brookdale Senior Living Inc (NYSE:BKD) reported a strong 8.2% year-over-year RevPAR growth in Q2 2026, in line with its full-year guidance of 8% to 9%. The company saw a 230 basis point year-over-year increase in consolidated occupancy to 82.4%, with July showing a strong acceleration of 30 basis points sequentially on a same-community basis. Labor efficiency improved, with same-community labor expense declining to 45.2% of revenue from 46.1% in the prior year, and further savings are expected in the second half. Brookdale Senior Living Inc (NYSE:BKD) completed two strategic acquisitions (Brookdale Galleria and a 17-community lease portfolio) at prices below replacement cost, expected to boost 2027 adjusted EBITDA and cash flow. The company strengthened its balance sheet by refinancing all 2027 debt maturities, expanding its revolving credit facility to $200 million, and improving annualized leverage to 8.4 times from 8.8 times. Occupancy growth in Q2 2026 was slower than anticipated, with consolidated occupancy at 82.4% versus expectations, though July showed improvement. The company experienced elevated other facility operating expenses in Q2, including higher repairs and maintenance, insurance, and bad debt costs. Move-in pace was impacted by a deliberate pricing strategy, with year-over-year move-ins declining due to higher rates and less discounting, though this is part of a RevPAR-focused approach. The delay in dispositions of underperforming communities created a drag on financial results, partially offset by the lease portfolio acquisition benefit. Brookdale Senior Living Inc (NYSE:BKD) still has a high leverage ratio of 8.4 times, and the company faces ongoing challenges in improving occupancy in lower-performing communities, with 85 communities below 70% occupancy. Q: Can you elaborate on the strategic rationale and financial metrics for the two recent acquisitions (Brookdale Galleria and the 17-community lease portfolio)? A: CEO Nick Stengel and General Counsel Chad White explained that both acquisitions align with the strategy of increasing density in existing markets rather than expanding to new ones. The Galleria community in Houston was purchased for $23.4 million (under $100,000 per unit), substantially below replacement cost, and had already benefited from significant prior capital expenditures. As the new owner, Brookdale has already closed the underperforming skilled nursing operations and plans to reposition it as a high-end, hospitality-focused community. The 17-community lease portfolio acquisition for $157 million ($214,000 per unit) is expected to increase 2027 adjusted EBITDA by approximately $11 million and meaningfully improve annual cash flow by replacing high-cost lease financing with lower-cost mortgage debt. Q: What is driving the occupancy shortfall in the second quarter, and was it more of a move-in or move-out issue? A: CEO Nick Stengel noted that occupancy is driven by both move-ins and move-outs. While the company has been very happy with its move-in pace, which reached record levels during the summer months, move-outs have been more volatile, particularly on the uncontrolled side where residents require a higher level of care. CFO Dawn Kussow added that the vacancy in the Chief Sales Officer role since the first quarter contributed to some of the volatility, and the new hire, Margaret Cabell, has brought a different energy and actionable strategy that is already making a difference. Q: Can you provide more color on the second-half guidance, particularly the RevPAR acceleration and the dynamics around rate and occupancy? A: CFO Dawn Kussow explained that third-quarter RevPAR growth is expected to be similar to the second quarter's 8.2% growth, with the acceleration pushed more into the fourth quarter due to slower occupancy and disposition timing. However, the company expects RevPOR (rate) to remain firm in the back half of the year, which is atypical for the industry, driven by the favorable mix impact of dispositions and lapping last year's price concessions. CEO Nick Stengel added that the team is taking a far more disciplined approach to both in-place rate increases and market-rate increases for new move-ins, focusing on overall RevPAR growth. Q: What changes have been made at the local and regional operational level to drive occupancy growth and give confidence in the outlook? A: CEO Nick Stengel detailed a significant organizational restructuring that creates a single line of accountability from the CEO down through regional, district, and community levels. The company has bolstered its "key three" leadership model (operations, sales, and clinical) within communities, with turnover at its lowest since COVID. The company is now structured into six regions of approximately 90-100 communities each, operating like six regional companies with the capabilities and funding of a large organization. This new structure has created clear accountability, empowerment, and authority, which is beginning to show results. Q: What gives you confidence that you can accelerate RevPAR and hit guidance for the rest of the year, given the pricing already taken? A: CFO Dawn Kussow pointed to the strong July occupancy growth of 30 basis points sequentially on a same-community basis, which came during the heart of the summer selling season. She also highlighted specific labor efficiency actions that are expected to offset the slightly lower occupancy, with labor as a percentage of revenue expected to slightly improve in the third and fourth quarters despite the additional day and holiday, which is atypical of normal seasonality. These expense savings, combined with the occupancy growth, give management confidence in the step-up in adjusted EBITDA for the back half of the year. Q: Can you elaborate on the hiring trends and the operating leverage opportunity across different occupancy bands? A: CEO Nick Stengel noted that the job market feels like an employer's market, with more applicants per open position than ever since COVID and the lowest turnover rates, even better than pre-COVID levels. Regarding operating leverage, he highlighted that communities in the under-70% occupancy band generate approximately $3,800 of EBITDA per available unit annually, while communities above 80% occupancy generate just below $21,000. The company has made meaningful progress, reducing communities below 70% occupancy from 129 a year ago to 85 at the end of Q2, with about half of those needing only one to three units sold to move above that threshold. Q: What drove the elevated same-community other facility operating expenses in the quarter, and what initiatives are being pursued on labor productivity? A: CFO Dawn Kussow attributed the elevated non-labor expenses to headwinds in repairs and maintenance, insurance, and bad debt expense, but expects these to follow normal seasonal trends for the year. On the labor side, she explained that under the new operating structure, the company has looked at labor productivity at the community level and taken specific actions to align variable labor with occupancy levels. These actions are expected to drive expense savings in the back half of the year, with consolidated labor as a percentage of revenue expected to slightly improve in Q3 and Q4. Q: How is the new Chief Sales Officer, Margaret Cabell, driving occupancy, and what specific actions has she implemented? A: CEO Nick Stengel explained that Margaret has brought a very specific, activity-based campaign approach rather than just focusing on outcomes. She has implemented specific actions with specific accountability for the 500-plus community sales professionals. The new approach has brought new energy and strength to the sales process, with sales and clinical teams now working together at every layer of the organization. These changes are already showing up in early indicators, including the strong July occupancy results, and management is excited about the momentum heading into August, September, and October. Q: Can you provide framing on the free cash flow trajectory for the second half of the year? A: CFO Dawn Kussow stated that the company expects to be significantly adjusted free cash flow positive for the year, much higher than the $23 million generated in 2025. While not providing specific quarterly guidance due to working capital variability, she noted the company expects to spend approximately $175 to $195 million on capital expenditures, including the accelerated "First Impressions" reinvestment projects, while still remaining significantly adjusted free cash flow positive. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributed the 8.2% RevPAR growth to a disciplined pricing strategy, including high single-digit increases at the start of the year and the lapping of prior-year concessions. The company implemented a new organizational structure that creates a single line of accountability from the CEO down to the community level, aiming to improve operational efficiency and leadership engagement. Occupancy growth in the first half of 2026 was slower than anticipated, which management partially attributed to a leadership vacancy in the sales department and cyclical move-out volatility. The hiring of Margaret Cabell as Chief Sales Officer in June is driving a shift from outcome-based to activity-based sales accountability, resulting in immediate improvements in conversion ratios and July occupancy. Brookdale is shifting to a more offensive capital posture, focusing on increasing density in existing markets through targeted acquisitions rather than expanding into new geographic footprints. Labor productivity improved as labor expense as a percentage of revenue declined to 45.2%, driven by the lowest associate turnover rates since before the COVID-19 pandemic. Management reaffirmed full-year 2026 adjusted EBITDA guidance of $502 million to $516 million, assuming that cost efficiencies will offset the impact of slightly lower-than-expected occupancy. RevPAR growth is expected to accelerate in the second half of 2026, supported by the summer selling season and the accretion benefit from the tail end of the capital recycling program. The company expects labor as a percentage of revenue to improve sequentially in Q3 and Q4, an atypical projection intended to counter the seasonal headwinds of additional holidays and days in those quarters. Strategic reinvestment through the 'First Impressions' program will double in the second half of 2026, targeting high-ROI common space upgrades to drive higher tour-to-move-in conversion rates. The long-term deleveraging target remains a leverage ratio of less than 6x by the end of 2028, supported by mid-teen annual adjusted EBITDA growth projections. Acquired the Brookdale Galleria in Houston for $23.4 million, immediately closing underperforming skilled nursing units to reposition the asset as a high-end hospitality-focused community. Announced the planned $157 million acquisition of 17 leased communities, a move expected to increase 2027 adjusted EBITDA by $11 million by replacing high-cost lease financing with mortgage debt. The 2026 disposition program is nearing completion, with 16 of 29 planned communities already sold or exited, expected to generate total net proceeds of approximately $190 million. Other facility operating expenses were elevated in Q2 due to headwinds in repairs, maintenance, insurance, and bad debt, though management expects these to normalize seasonally. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management explained that while Q3 RevPAR growth was slightly tempered due to disposition timing, Q4 will see significant acceleration as the full benefit of summer move-ins and portfolio accretion takes hold. RevPOR is expected to remain firm or tick up in the back half of the year, which is atypical for the industry, due to the specific pricing strategy and the mix impact of dispositions. The CEO detailed a shift to a 'Key Three' leadership model at the community level, now replicated at the district level to ensure a single line of authority and accountability. The company is now operating as six regional companies of approximately 90-100 communities each, allowing for regional agility backed by the funding and scale of a national provider. Acquiring managed or leased assets like the Galleria allows Brookdale the freedom to reposition real estate, such as removing negative-NOI service lines, which was not possible under management contracts. Management emphasized that these acquisitions are low-risk because they already know the buildings, markets, and occupancy dynamics intimately as the current operator. The shortfall was attributed to a combination of move-in pace being balanced against disciplined pricing and a period of high 'uncontrolled' move-outs (residents requiring higher care levels). Management noted that the lack of a Chief Sales Officer for part of the year created a temporary void in strategic sales leadership that has since been addressed.

BRENTWOOD, Tenn., Aug. 10, 2026 /PRNewswire/ -- Brookdale Senior Living Inc. (NYSE: BKD) ("Brookdale" or the "Company") announced results for the quarter ended June 30, 2026. HIGHLIGHTS Increased second quarter 2026 consolidated revenue per available unit (RevPAR) by 8.2% year-over-year. Improved second quarter 2026 consolidated weighted average occupancy by 230 basis points year-over-year to 82.4%. Net income for the second quarter of 2026 was $23 million compared to a net loss of $43 million for the second quarter of 2025. Adjusted EBITDA(1) of $122 million for the second quarter of 2026 grew 4.3% over the second quarter of 2025. Received approximately $150 million of cash proceeds for communities sold in 2026 to date. Refinanced all of the Company's remaining 2027 mortgage debt maturities. Recently agreed to acquire 17 communities that the Company currently leases for a purchase price of approximately $157 million. "We continue to execute on our strategy to optimize Brookdale's operating performance and real estate portfolio for the immense senior housing opportunity ahead of us as the baby boom generation begins to reach age 80," said Nick Stengle, Brookdale's Chief Executive Officer. "We achieved our expectations for RevPAR and Adjusted EBITDA during the second quarter, and remain on track to deliver on our 2026 guidance of 8% to 9% RevPAR year-over-year growth and $502 million to $516 million in Adjusted EBITDA. We are very excited about our two recently announced acquisitions, both of which increase our owned community portfolio at below replacement cost, while positively impacting our intermediate and longer-term Adjusted EBITDA results. Additionally, we continue to strengthen our balance sheet, with annualized leverage continuing to decline and the completion of the refinancing of all of our mortgage debt maturities until 2028." SUMMARY OF SECOND QUARTER FINANCIAL RESULTS Consolidated summary of operating results and metrics: Same community(2) summary of operating results and metrics: SUMMARY OF OCCUPANCY TREND Recent consolidated occupancy trend: Recent same community occupancy trend: Brookdale intends to discontinue monthly occupancy reporting beginning in 2027 and will publish December 2026 occupancy results as the last monthly report. OVERVIEW OF RESULTS: 2Q 2026 vs 2Q 2025 Resident fees: Facility operating expense: General and administrative expense: The decrease was primarily due to $5.1 million of transaction costs for stockholder relations advisory matters in the prior year period and the Company's efforts to reduce general and administrative expense as the Company scaled its general and administrative costs in connection with community dispositions. Cash facility operating lease payments: The decrease was primarily attributable to the disposition of communities through lease terminations. Net income (loss): The increase was primarily attributable to a $45.4 million gain on sale of communities in the second quarter of 2026 and a decrease in depreciation and amortization expense attributable to the disposition of communities since the beginning of the prior year period. Adjusted EBITDA: The increase was primarily attributable to the increase in same community resident fees, partially offset by the increase in same community facility operating expense. TRANSACTION AND FINANCING UPDATE Community Transactions Subsequent to June 30, 2026, the Company entered into an agreement to acquire 17 communities (735 units) that are currently leased by the Company for a purchase price of approximately $157 million plus transaction costs. The Company expects to complete the acquisition transaction in the fourth quarter of 2026, subject to the satisfaction of customary closing conditions for real estate transactions. The Company expects to fund the acquisition of the 17 communities through proceeds from non-recourse mortgage financing and cash on hand. In June 2026, the Company acquired a previously managed community (244 units) in Houston, Texas for a purchase price of $23.4 million, representing a substantial discount to replacement cost and an attractive per-unit cost for a high-quality real estate asset in a premier location. During the second quarter of 2026, the Company completed the sale of six owned communities (778 units) and received cash proceeds of $125.3 million, net of transaction costs and recognized a gain on sale of communities of $45.4 million. Subsequent to June 30, 2026, the Company completed the sale of three owned communities (228 units) and received cash proceeds of $2.5 million, net of transaction costs. As previously announced, the Company plans to sell 13 additional owned communities (898 units) during 2026. The closings of the expected sales of assets are subject (where applicable) to the Company's successful marketing of such assets on terms acceptable to the Company. Further, the closings of the expected sales of assets are, or will be, subject to the satisfaction of various conditions, including (where applicable) the receipt of regulatory approvals. There can be no assurance that the transactions will close or, if they do, when the actual closings will occur. Financing Transactions In July 2026, the Company obtained $248.9 million of debt secured by non-recourse first mortgages on 45 communities, which also continue to secure $518.5 million of additional outstanding mortgages with maturities in 2031 and 2032. The $248.9 million loan bears interest at a fixed rate of 6.16% and matures in 2031. At the closing, the Company repaid $244.1 million of debt under the mortgage facility, which was scheduled to mature in 2027, using proceeds from the loan. The closing of this transaction results in no remaining mortgage debt maturities until 2028. In June 2026, the Company obtained an aggregate of $188.0 million of debt and repaid $199.9 million of outstanding mortgage debt secured by 22 communities previously scheduled to mature in 2027. The principal amounts of the new loans are secured by non-recourse first mortgages on 13 communities, bear interest at a fixed rate of 5.97%, are interest only for the first five years, and mature in July 2036. In June 2026, the Company amended its revolving credit agreement. The amended agreement provides an expanded commitment of up to $200 million, representing up to a $100 million increase from the existing facility. The amended credit facility matures in April 2029, with options to extend the facility for two additional one-year terms, subject to the satisfaction of certain conditions. LIQUIDITY Total liquidity of $565.8 million as of June 30, 2026 included $370.4 million of unrestricted cash and cash equivalents (excluding restricted cash of $71.1 million), $19.9 million of marketable securities, and $175.6 million of availability on the Company's secured credit facility. Total liquidity as of June 30, 2026 increased $197.1 million from March 31, 2026. 2026 OUTLOOK The Company is reiterating the following guidance: Full year 2026 guidance reflects management's current expectations for transaction activity. Reconciliation of the non-GAAP financial measure included in the foregoing guidance to the most comparable GAAP financial measure is not available without unreasonable effort due to the inherent difficulty in forecasting the timing or amounts of items required to reconcile Adjusted EBITDA from the Company's net income (loss). Variability in the timing or amounts of items required to reconcile the measure may have a significant impact on the Company's future GAAP results. SUPPLEMENTAL INFORMATION The Company will post on its website at brookdaleinvestors.com supplemental information relating to the Company's second quarter results, an updated investor presentation, and a copy of this earnings release. The supplemental information and a copy of this earnings release will also be furnished in a Form 8-K to be filed with the SEC. EARNINGS CONFERENCE CALL Brookdale's management will conduct a conference call to discuss the financial results for the second quarter on August 11, 2026 at 9:00 AM ET. A live webcast of the conference call will be available to the public on a listen-only basis at brookdaleinvestors.com. Please allow extra time before the call to download the necessary software required to listen to the internet broadcast. A replay of the webcast will be available through the website following the call. ABOUT BROOKDALE SENIOR LIVING Brookdale Senior Living Inc. is the nation's premier operator of senior living communities. With 541 communities across 41 states and the ability to serve approximately 46,000 residents as of June 30, 2026, Brookdale is committed to its mission of enriching the lives of seniors through compassionate care, clinical expertise, and exceptional service. The Company, through its affiliates, operates independent living, assisted living, memory care, and continuing care retirement communities, offering tailored solutions that help empower seniors to live with dignity, connection, and purpose. Leveraging deep expertise in healthcare, hospitality, and real estate, Brookdale creates opportunities for wellness, personal growth, and meaningful relationships in settings that feel like home. Guided by its four cornerstones of passion, courage, partnership, and trust, Brookdale is committed to delivering exceptional value and redefining senior living for a brighter, healthier future. Brookdale's stock trades on the New York Stock Exchange under the ticker symbol BKD. For more information, visit brookdale.com or connect with Brookdale on Facebook or YouTube. DEFINITIONS OF REVPAR AND REVPOR RevPAR, or average monthly senior housing resident fee revenue per available unit, is defined by the Company as resident fee revenue for the corresponding portfolio for the period (excluding revenue for private duty services provided to seniors living outside of the Company's communities), divided by the weighted average number of available units in the corresponding portfolio for the period, divided by the number of months in the period. RevPOR, or average monthly senior housing resident fee revenue per occupied unit, is defined by the Company as resident fee revenue for the corresponding portfolio for the period (excluding revenue for private duty services provided to seniors living outside of the Company's communities), divided by the weighted average number of occupied units in the corresponding portfolio for the period, divided by the number of months in the period. SAFE HARBOR Certain statements in this press release and the associated earnings call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to various risks and uncertainties and include all statements that are not historical statements of fact and those regarding the Company's intent, belief, or expectations. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "could," "would," "potential," "intend," "expect," "endeavor," "seek," "anticipate," "estimate," "believe," "project," "predict," "continue," "plan," "target," or other similar words or expressions, and include statements regarding the Company's expected financial and operational results. These forward-looking statements are based on certain assumptions and expectations, and the Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Although the Company believes that expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its assumptions or expectations will be attained and actual results and performance could differ materially from those projected. Factors which could have a material adverse effect on the Company's operations and future prospects or which could cause events or circumstances to differ from the forward-looking statements include, but are not limited to, events which adversely affect the ability of seniors to afford resident fees, including downturns in the economy, housing market, consumer confidence, or the equity markets and unemployment among resident family members; the effects of senior housing construction and development, lower industry occupancy, and increased competition; conditions of housing markets, regulatory changes, acts of nature, and the effects of climate change in geographic areas where the Company is concentrated; terminations of the Company's resident agreements and vacancies in the living spaces it leases; changes in reimbursement rates, methods, or timing under governmental reimbursement programs including the Medicare and Medicaid programs; failure to maintain the security and functionality of the Company's information systems, to prevent a cybersecurity attack or breach, or to comply with applicable privacy and consumer protection laws, including HIPAA; the Company's ability to complete its capital expenditures in accordance with its plans; the Company's ability to identify and pursue development, investment, and acquisition opportunities and its ability to successfully integrate acquisitions; competition for the acquisition of assets; the Company's ability to complete pending or expected disposition, acquisition, or other transactions on agreed upon terms or at all, including in respect of the satisfaction of closing conditions, the risk that regulatory approvals are not obtained or are subject to unanticipated conditions, and uncertainties as to the timing of closing, and the Company's ability to identify and pursue any such opportunities in the future; risks related to the implementation of the Company's strategy, including initiatives undertaken to execute on the Company's strategic priorities and their effect on its results; limits on the Company's ability to use net operating loss carryovers to reduce future tax payments; delays in obtaining regulatory approvals; the risks associated with tariffs and the uncertain duration of trade conflicts; disruptions in the financial markets or decreases in the appraised values or performance of the Company's communities that affect the Company's ability to obtain financing or extend or refinance debt as it matures and the Company's financing costs; the Company's ability to generate sufficient cash flow to cover required interest, principal, and long-term lease payments and to fund its planned capital projects; the effect of any non-compliance with any of the Company's debt or lease agreements (including the financial or other covenants contained therein), including the risk of lenders or lessors declaring a cross default in the event of the Company's non-compliance with any such agreements and the risk of loss of the Company's property securing leases and indebtedness due to any resulting lease terminations and foreclosure actions; the inability to renew, restructure, or extend leases, or exercise purchase options at or prior to the end of any existing lease term; the effect of the Company's indebtedness and long-term leases on the Company's liquidity and its ability to operate its business; increases in market interest rates that increase the costs of the Company's debt obligations; the Company's ability to obtain additional capital on terms acceptable to it; departures of key officers and potential disruption caused by changes in management; increased competition for, or a shortage of, associates, wage pressures resulting from increased competition, low unemployment levels, minimum wage increases and changes in overtime laws, and union activity; an adverse determination or resolution of complaints filed against the Company, including putative class action complaints; negative publicity with respect to any lawsuits, claims, or other legal or regulatory proceedings; costs to respond to, and adverse determinations resulting from, government inquiries, reviews, audits, and investigations; the cost and difficulty of complying with increasing and evolving regulation, including new disclosure obligations; changes in, or its failure to comply with, employment-related laws and regulations; environmental contamination at any of the Company's communities; failure to comply with existing environmental laws; the risks associated with current global economic conditions and general economic factors on the Company and the Company's business partners such as inflation, commodity costs, fuel and other energy costs, competition in the labor market, costs of salaries, wages, benefits, and insurance, interest rates, tax rates, tariffs, and geopolitical tensions or conflicts, the impact of seasonal contagious illness or other contagious disease in the markets in which the Company operates; actions of activist stockholders; as well as other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission ("SEC"), including those set forth in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in such SEC filings. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect management's views as of the date of this press release and/or associated earnings call. The Company cannot guarantee future results, levels of activity, performance or achievements, and, except as required by law, it expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained in this press release and/or associated earnings call to reflect any change in the Company's expectations with regard thereto or change in events, conditions, or circumstances on which any statement is based. Non-GAAP Financial Measure This earnings release contains the financial measure Adjusted EBITDA, which is not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). Presentations of this non-GAAP financial measure is intended to aid investors in better understanding the factors and trends affecting the Company's performance. However, investors should not consider this non-GAAP financial measure as a substitute for financial measures determined in accordance with GAAP, including net income (loss) or income (loss) from operations. The Company cautions investors that amounts presented in accordance with the Company's definitions of this non-GAAP financial measure may not be comparable to similar measures disclosed by other companies because not all companies calculate non-GAAP measures in the same manner. The Company urges investors to review the following reconciliation of this non-GAAP financial measure from the most comparable financial measure determined in accordance with GAAP. Adjusted EBITDA Adjusted EBITDA is a non-GAAP performance measure that the Company defines as net income (loss) excluding: benefit/provision for income taxes, non-operating income/expense items, and depreciation and amortization; and further adjusted to exclude income/expense associated with non-cash, non-operational, transactional, legal, cost reduction, or organizational restructuring items that management does not consider as part of the Company's underlying core operating performance and that management believes impact the comparability of performance between periods. For the periods presented herein, such other items include non-cash impairment charges, operating lease expense adjustment, non-cash stock-based compensation expense, gain/loss on sale of communities, gain/loss on facility operating lease termination, and transaction, legal, and organizational restructuring costs. Transaction costs include those directly related to acquisition, disposition, financing, and leasing activity and stockholder relations advisory matters, and are primarily comprised of legal, finance, consulting, professional fees, and other third-party costs. Legal costs include charges associated with putative class action litigation. Organizational restructuring costs include those related to the Company's efforts to reduce general and administrative expense and its senior leadership changes, including severance. The Company believes that presentation of Adjusted EBITDA as a performance measure is useful to investors because (i) it is one of the metrics used by the Company's management for budgeting and other planning purposes, to review the Company's historic and prospective core operating performance, and to make day-to-day operating decisions; (ii) it provides an assessment of operational factors that management can impact in the short-term, namely revenues and the controllable cost structure of the organization, by eliminating items related to the Company's financing and capital structure and other items that management does not consider as part of the Company's underlying core operating performance and that management believes impact the comparability of performance between periods; (iii) the Company believes that this measure is used by research analysts and investors to evaluate the Company's operating results and to value companies in its industry; and (iv) the Company uses the measure for components of executive compensation. Adjusted EBITDA has material limitations as a performance measure, including: (i) excluded interest and income tax are necessary to operate the Company's business under its current financing and capital structure; (ii) excluded depreciation, amortization, and impairment charges may represent the wear and tear and/or reduction in value of the Company's communities, goodwill, and other assets and may be indicative of future needs for capital expenditures; and (iii) the Company may incur income/expense similar to those for which adjustments are made, such as gain/loss on sale of assets, facility operating lease termination, or debt modification and extinguishment, non-cash stock-based compensation expense, and transaction, legal, and other costs, and such income/expense may significantly affect the Company's operating results. The table below reconciles Adjusted EBITDA from net income (loss). 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Senior living provider Brookdale Senior Living (NYSE:BKD) missed Wall Street’s revenue expectations in Q2 CY2026, with sales falling 11.6% year on year to $718.6 million. Its GAAP profit of $0.10 per share was significantly above analysts’ consensus estimates. Is now the time to buy Brookdale? Find out in our full research report. Revenue: $718.6 million vs analyst estimates of $735.7 million (11.6% year-on-year decline, 2.3% miss) EPS (GAAP): $0.10 vs analyst estimates of -$0.06 (significant beat) Adjusted EBITDA: $122.1 million vs analyst estimates of $121.3 million (17% margin, 0.6% beat) EBITDA guidance for the full year is $509 million at the midpoint, in line with analyst expectations Operating Margin: 11.9%, up from 1.8% in the same quarter last year Free Cash Flow Margin: 6.1%, up from 3.6% in the same quarter last year Market Capitalization: $3.40 billion "We continue to execute on our strategy to optimize Brookdale's operating performance and real estate portfolio for the immense senior housing opportunity ahead of us as the baby boom generation begins to reach age 80," said Nick Stengle, Brookdale's Chief Executive Officer. With a network of over 650 communities serving approximately 59,000 residents across 41 states, Brookdale Senior Living (NYSE:BKD) operates senior living communities across the United States, offering independent living, assisted living, memory care, and continuing care retirement communities. A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Brookdale struggled to consistently increase demand as its $3.05 billion of sales for the trailing 12 months was close to its revenue five years ago. This wasn’t a great result and is a sign of lacking business quality. We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Just like its five-year trend, Brookdale’s revenue over the last two years was flat, suggesting it is in a slump. This quarter, Brookdale missed Wall Street’s estimates and reported a rather uninspiring 11.6% year-on-year revenue decline, generating $718.6 million of revenue. Looking ahead, sell-side analysts expect revenue to decline by 1.9% over the next 12 months, a slight deceleration versus the last two years. This projection is underwhelming and suggests its products and services will see some demand headwinds. WHILE YOU’RE HERE: The Next Palantir? One satellite company captures images of every point on Earth. Every single day. The Pentagon wants it. Hedge funds are using it to beat earnings. You’ve probably never heard of it. This is what the early days of Palantir looked like before it became a giant. Same playbook. Different technology. If you missed Palantir, you need to see this. Claim The Stock Ticker for Free HERE. Brookdale was profitable over the last five years but held back by its large cost base. Its average adjusted operating margin of 1.5% was weak for a healthcare business. On the plus side, Brookdale’s adjusted operating margin rose by 12.3 percentage points over the last five years. Zooming in on its more recent performance, we can see the company’s trajectory is intact as its margin has also increased by 4.4 percentage points on a two-year basis. In Q2, Brookdale generated an adjusted operating margin profit margin of 12.4%, up 8.8 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was more efficient because it scaled down its expenses. Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions. Although Brookdale’s full-year earnings are still negative, it reduced its losses and improved its EPS by 21.6% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability. In Q2, Brookdale reported EPS of $0.10, up from negative $0.18 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Brookdale to improve its earnings losses. Analysts forecast its full-year EPS will improve from negative $0.58 to negative $0.02. It was good to see Brookdale beat analysts’ EPS expectations this quarter. On the other hand, its revenue missed. Looking ahead, full-year EBITDA guidance was in line. Overall, this quarter was mixed. The stock traded up 1.4% to $13.91 immediately after reporting. Is Brookdale an attractive investment opportunity at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.