Brookdale targets mid-teen adjusted EBITDA growth through 2026 as occupancy and portfolio optimization advance

Earnings Call Insights: Brookdale Senior Living Inc. (BKD) Q3 2025

MANAGEMENT VIEW

* Nick Stengle, CEO, opened his first call by stating, "Brookdale delivered another solid performance. Many of the positive trends seen in the first half of the year continued into the third quarter." He highlighted improved occupancy growth and strong adjusted EBITDA as key achievements, with occupancy at its highest level since Q1 2020 and a closing day consolidated occupancy of 83.8%.
* Stengle outlined the company's ongoing five-pillar strategy, emphasizing improvements in operating performance, portfolio optimization, capital reinvestment, leverage reduction, and quality elevation. He noted, "We are projecting annual adjusted EBITDA growth in the mid-teen percentage range over the next several years on our ongoing portfolio."
* Portfolio optimization continues, with Brookdale planning to reduce its community count to approximately 550 by mid-2026. Stengle reported, "We plan to exit a total of 55 leased assets by year-end. 43 of those are now complete."
* The company is implementing a new regional operating structure to enhance operational excellence, consolidating operations under a single leader with six regional vice presidents.
* Dawn Kussow, CFO, commented, "Occupancy and adjusted EBITDA exceeded our expectations, providing us the confidence to increase our fiscal 2025 guidance range."

OUTLOOK

* Management raised its full-year 2025 adjusted EBITDA guidance to a range of $455 million to $460 million, up from $445 million to $455 million.
* The company expects to be above the midpoint of its RevPAR growth range of 5.25% to 6% year-over-year.
* Guidance assumes all 55 Ventas nonrenewal communities will transition by year-end. Kussow stated, "We expect cash operating lease expense to be approximately $46 million for the fourth quarter."
* Management projects annual adjusted EBITDA growth in the mid-teen percentage range for the next several years and aims to reduce leverage below 6x by the end of that period.

FINANCIAL RESULTS

* Third quarter consolidated weighted average occupancy was 81.8%; same-community occupancy was 82.3%.
* Resident and management fees reached $778 million, a 4.2% year-over-year increase, driven by a 5.9% increase in RevPAR.
* Q3 adjusted EBITDA was $111.1 million, up $18.8 million or 20.4% year-over-year. Year-to-date, adjusted EBITDA is 22.5% higher than last year.
* Adjusted free cash flow in Q3 was $21.8 million, the third consecutive quarter of positive free cash flow.
* Year-to-date adjusted free cash flow totaled $45.5 million, $63.4 million ahead of last year.
* As of September 30, total liquidity was $351.6 million.
* Adjusted annualized leverage improved to 9.0x adjusted EBITDA on a trailing 12-month basis.

Q&A

* Brian Tanquilut, Jefferies: Asked about opportunities within the Brookdale portfolio and the balance between pricing, occupancy, and cash generation. Stengle responded that Brookdale is shifting to a "far more offensive posture" and focusing on being "an operating company built upon a real estate foundation," including a new regional structure and more strategic CapEx deployment.
* Tanquilut followed up on RevPOR and discounting. Kussow replied the focus is on "driving rate at the high occupancy and driving rate across the organization" and ensuring in-place rate increases exceed expense growth in 2026.
* Ben Hendrix, RBC: Inquired about new FFO disclosure and its implications. Stengle explained providing FFO helps internal and external stakeholders view Brookdale's performance alongside other real estate companies.
* Joanna Gajuk, BofA: Sought clarity on the G&A impact of the new organizational structure. Stengle and Kussow clarified G&A is reducing and the $162 million projection for 2026 includes merit increases and reflects a step down.
* Gajuk also asked why free cash flow guidance was unchanged despite higher EBITDA. Kussow said fourth quarter is typically a working capital cash outflow due to real estate tax payments and community transitions.
* Gajuk asked about plans for 2026 maturities. Kussow said the company plans to extend and refinance bank debt and roll a small single asset loan into broader refinancing efforts.
* Andrew Mok, Barclays: Asked about conviction behind the mid-teen EBITDA growth projection. Stengle cited industry dynamics, supply scarcity, and the effectiveness of the SWAT teams. Mok also asked about the source of occupancy gains; Kussow indicated strong sequential occupancy growth and asset dispositions are driving further gains.
* Joshua Raskin, Nephron Research: Asked how best practices are maintained with the regional structure. Stengle explained centralized goal-setting and support with regional empowerment. Raskin asked about margin growth; Stengle and Kussow clarified the mid-teen growth targets apply to the ongoing portfolio, with details to come at Investor Day.

SENTIMENT ANALYSIS

* Analysts focused on operational strategy, pricing, occupancy gains, and capital deployment, with a generally positive but probing tone. There were clarifying questions about strategic priorities, guidance, and cost structure.
* Management displayed confidence throughout, with Stengle stating, "We are confident in the intrinsic value of the company, and we intend to accelerate our operational and financial performance improvement."
* Compared to the previous quarter, analyst tone remained probing but showed increased interest in strategic execution under new leadership. Management’s tone shifted from cautious optimism to greater confidence and clarity about offensive strategies and future growth.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for adjusted EBITDA increased to $455 million–$460 million from $445 million–$455 million, and the company now expects to be above the midpoint of RevPAR growth guidance.
* Management transitioned from a focus on defensive portfolio optimization and cost control to a more proactive, "offensive" strategy emphasizing operational excellence and dynamic pricing.
* The new CEO’s operational background and strategic approach were prominent, with significant organizational changes announced.
* Analysts continued to focus on occupancy, pricing, and margin expansion, but this quarter saw more emphasis on execution and future growth prospects.
* Management’s confidence in achieving mid-teen EBITDA growth and further deleveraging was more explicit than in the previous call.

RISKS AND CONCERNS

* Management referenced the need to successfully transition the remaining Ventas assets by year-end and to complete asset sales as planned.
* There are seasonal headwinds in Q4, including expected working capital cash outflows and real estate tax payments.
* Management noted that nearly all debt is refinanced through 2026, with attention on bank debt and 2027 maturities.
* Analysts inquired about G&A expense control, CapEx flexibility, and occupancy band improvements, underscoring concerns about maintaining margin growth.

FINAL TAKEAWAY

Brookdale’s Q3 2025 call highlighted a shift toward a more proactive operational strategy under new CEO Nick Stengle, with raised adjusted EBITDA guidance, continued occupancy and margin gains, and a clear plan to streamline the portfolio. Management projects sustained mid-teen percentage adjusted EBITDA growth in coming years, supported by a disciplined approach to pricing, targeted capital deployment, and an empowered regional structure. The company aims to further reduce leverage and optimize asset value while maintaining focus on operational excellence and shareholder returns.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/bkd/earnings/transcripts]

MORE ON BROOKDALE SENIOR LIVING

* Brookdale Senior Living Inc. (BKD) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4840641-brookdale-senior-living-inc-bkd-q3-2025-earnings-call-transcript]
* Brookdale Senior Living Inc. 2025 Q3 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4840269-brookdale-senior-living-inc-2025-q3-results-earnings-call-presentation]
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