The Brentwood-based senior living company Brookdale reported a loss and rising operating costs during the third quarter, and investors questions how the company would hit its financial goals for 2019.
Brookdale reported a $79 million loss during the third quarter. That’s more than twice the loss the company reported during the same period last year.
However, 2019 is overall a much better year for the company. It lost about $178 million during the first nine months of 2019, compared to nearly $660 million in 2018.
On a conference call Monday morning, executives said they were disappointed with the number of residents moving out of communities, the cost of operating communities and the performance of its home care and hospice business.
The tight labor market was a big part of the rising cost of operating communities. CEO Cindy Baier said the company will be trying to avoid overtime costs and contract labor going forward.
“In two large markets we’ve already hired recruiters to help staff the communities,” she said. “That takes some of the pressure off our community associates. When you have an appropriate pool of talent, then you don’t have to go to overtime.”
Executives said many of the factors driving up costs in the third quarter were temporary. Chief Financial Officer Steve Swain said operating costs are higher during the hotter summer months, and the company executed an expensive marketing push.
Baier added that she believes some of the challenges that slowed down the hospice and home care business in the third quarter were also temporary, such as turnover in the sales team selling those services.
Despite those challenges, Brookdale still expects to hit the low end of the financial guidance it presented earlier this year.
Swain admitted achieving those numbers would be a big lift—about a 25% quarter over quarter jump in a key financial metric—but he said the company has seen an increase in occupancy rates at its communities.
Occupancy rates grew every month during the third quarter, and Baier said the numbers from the fourth quarter so far seemed promising.
The company also expects to get a big boost in early 2020. In October, the company announced a new deal with HCP.
Brookdale plans to sell its interest in 13 joint venture communities. Additionally, Brookdale will buy some other communities and restructure a number of leases.
On the conference call, Baier thanked departing board members Jackie Clegg and James Seward, and welcomed new board members Vicki Freed and Guy Sansone.
However, she didn’t mention activist investor Land and Buildings, which tried and failed to get two new directors on the board. Land and Buildings has argued for the last several months that Brookdale should split up its business into a real estate trust and an operating business.
Shares of the company fell from $7.50 late last week to $7.25 by Tuesday afternoon.