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.
Revenue per Available Room Rises, but Occupancy Lags Expectations
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%.
“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.
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.
Sales Leadership and Operating Structure Changes
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.
Portfolio Recycling and Acquisitions
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.
Balance Sheet and Second-Half Outlook
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.
About Brookdale Senior Living (NYSE:BKD)
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.
