Brookdale Senior Living Q3 earnings call highlights. Brookdale Senior Living (NYSE:BKD) lowered its full-year 2026 outlook after occupancy growth fell short of expectations during the summer selling season, even as third-quarter adjusted EBITDA met management's target. The senior living operator now expects full-year adjusted EBITDA of $495 million to $502 million and consolidated revenue per available unit, or RevPAR, growth of 7.4% to 7.9%. It previously anticipated RevPAR growth of 8% to 9%. CEO Nick Stengle said the occupancy shortfall would carry into fourth-quarter results. The revised outlook also reflects increased marketing spending and the estimated impact of an October fire at the company's 97-unit community in Clinton, Mississippi, which is currently vacant. Occupancy growth slows. Third-quarter adjusted EBITDA rose 12% from a year earlier to $124.3 million. Consolidated RevPAR grew 7.5%, below the approximately 8.2% management had anticipated. Resident fees fell 8.7% to $707 million, as a reduction in average units following portfolio dispositions more than offset the increase in RevPAR. Consolidated occupancy rose 70 basis points sequentially and 130 basis points year over year to 83.1%. Same-community occupancy also improved 70 basis points from the second quarter, reaching 83.6%, but the increase was less than management expected during what is typically the company's peak selling season. Stengle said same-community move-ins were higher than a year earlier but below expectations, while move-outs were slightly higher than anticipated. Lead volume was particularly weak in August and September, he said. October occupancy growth remained subdued, CFO Dawn Kussow said. Consolidated occupancy was 83.5% and same-community occupancy was 83.9%, each up 10 basis points sequentially for the month. Brookdale now expects full-year consolidated occupancy below 83%. In response to an analyst's question, Kussow said the occupancy miss was the largest factor in the reduction to the company's outlook. She estimated that the Clinton fire would have a fourth-quarter impact of a few million dollars, including lost operating income and the company's current view of insurance-related costs. She said Brookdale is adequately insured but has exposures such as self-insured retention. Sales changes and pricing. Stengle attributed some of the occupancy weakness to disruption from organizational changes, including a gap in the chief sales officer role from February until Margaret Cabell joined in June. He also said external lead providers have faced declining volume as consumers shift from traditional web searches to AI-powered search. Most Brookdale leads come from internal sources, but the company relies more heavily on external sources than its peers, Stengle said. Management is increasing marketing spending and asking community sales teams to build more local relationships. Stengle said internally generated leads generally convert at higher rates, cost less to acquire and have longer lengths of stay. Despite the lead-volume challenges, Stengle said Brookdale's third-quarter lead-to-move-in conversion rate was near a record high relative to recent years. He said the company does not expect to make major hires for the lead-generation effort, emphasizing training and changes in sales practices instead. Asked whether affordability concerns might require smaller price increases next year, Stengle said Brookdale expects another meaningful increase for existing residents. He said pricing decisions will differ by community, with higher-occupancy properties able to support larger increases and lower-occupancy properties continuing to use discounts to attract residents. The company plans to provide more detail on 2027 pricing on its next call. Portfolio and expense actions. Brookdale continued to shift toward owning more of its properties. At the end of the third quarter, it completed the purchase of 17 previously leased communities for $160 million, including transaction costs. After the quarter, it agreed to acquire another 30 leased communities for $290 million, with closing expected in the fourth quarter. Contingent on that acquisition, Brookdale also extended a lease covering 39 communities through June 2036 and amended its purchase option. Management expects the transactions to improve adjusted EBITDA and cash flow. Of 29 communities identified for sale, five remained under contract as of the call, with closings expected by year-end. The company expects approximately $190 million in net proceeds from its 2026 community dispositions, including completed sales. Brookdale also reported progress on labor costs after tightening management of administrative staffing. Same-community labor expense as a percentage of revenue improved 120 basis points from a year earlier. Kussow said the actions should benefit the full fourth quarter and provide a tailwind in 2027. Other facility operating expenses remained elevated, rising 8% year over year on a same-community basis. Kussow said the company expects improvement as it addresses repair and maintenance costs and expenses associated with its 2025 enterprise resource planning system implementation. Looking beyond the revised 2026 outlook, Stengle and Kussow reiterated their confidence in durable mid-teens annual adjusted EBITDA growth in 2027 and beyond. Stengle said he expects occupancy growth to be stronger than in 2026, though he did not provide a specific forecast. About Brookdale Senior Living (NYSE:BKD). Brookdale Senior Living, Inc (NYSE: BKD) is a U.S.-based operator of senior living communities. The company provides housing, care and support services for older adults through a range of offerings, including independent living, assisted living, memory care and continuing care retirement communities. Brookdale's services are designed to support residents with different levels of independence and care needs. Its communities generally provide accommodations, dining, wellness programs, social and recreational activities, transportation and assistance with daily living.

Brookdale Senior Living revamps sales strategy to accelerate slower-than-expected occupancy gains. Brookdale Senior Living (NYSE: BKD) continues to work to turn a year of organizational changes into stronger performance growth, following a summer selling season that fell short of leadership's expectations. "This is an enduring way forward as opposed to a one-off thing," Brookdale Senior Living CEO Nick Stengle said during Friday's third-quarter earnings conference call. During the call, Stengle and Chief Financial Officer Dawn Kussow shared what comes next for Brookdale, which includes resetting the company's administrative staffing model, more rent growth and an effort to reduce working with third-party referral sources in favor of in-house lead generation. In June, Brookdale named Margaret Cabell as chief sales officer, who brings over 25 years of senior living experience as A Place for Mom's chief community relations officer and CEO of Harmony Senior Services. Her role has helped fuel change in sales culture, leadership said on Friday. Brookdale reported third-quarter adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $124.3 million, up 12% from the previous year. But weaker occupancy growth prompted leadership to lower full-year adjusted EBITDA guidance to between $495 million and $502 million, alongside revenue per available room (RevPAR) growth of 7.4% to 7.9%. Despite this setback, Stengle and Kussow forecast mid-teens annual adjusted EBITDA growth in 2027 and beyond. Stengle noted that Brookdale had allowed staffing discipline to erode gradually during the company's pandemic recovery, but leaders believe the company's third quarter changes reset a mostly fixed labor cost base, specifically around administrative roles. "It's just this idea that we have a mostly fixed cost base to our labor. We reset that fixed cost base, specifically around administrative roles," Stengle said. "That's where a lot of that lack of discipline had grown." He added, "Our staffing model now needs to reflect what life was like before COVID." While the company did not note specifics on staffing changes outside of administrative roles, the changes are intended to allow communities to operate more effectively while being aware of differences in community size, building and continuum of care, occupancy rates and overall resident needs, Stengle said. Brookdale's same-community labor as a percentage of revenue improved 120 basis points year over year in the third quarter, Kussow said. She added that the operator expects additional expense pressures will begin to ease in the near-term. Operating costs related to Brookdale's enterprise resource planning implementation are expected to end early next year. Brookdale leaders taking a more deliberate approach to replacing equipment rather than repeatedly repairing it could reduce annual maintenance expenses by several million dollars, she said. The company is also nearing the end of its previously announced disposition program with five remaining communities under contract, with closing expected by the end of this year. Since 2025, Brookdale has transitioned out over 100 communities and agreed to buy 30 communities from real estate investment trust Welltower (NYSE: WELL). Brookdale expects to close a $290 million purchase of the 30 communities it currently leases in the fourth quarter. Their annual cash rent would otherwise total approximately $18 million in 2027, according to Kussow. At the end of the third quarter, Brookdale acquired 17 previously leased communities, bringing ownership to roughly 80% of consolidated units overall. A lease amendment could also allow Brookdale to have a purchase option on an additional 39 communities, rather than waiting for leases to end, Kussow said. Stengle also said he expects 2027 capital spending to look similar to this year, but did not provide a budget for what's ahead. In the third quarter, Brookdale spent $47 million on community capital expenses, with projects prioritized by expected returns under Senior Vice President of Strategic Operations Clark Jones. "We feel good about that pace," Stengle said. Brookdale stock fell 16.65% on Friday, a loss of $1.80 in value to rest at $9.01 per share at market close. Occupancy comes up short, pricing power remains. Brookdale fell short of leaders' desired pace of occupancy gains in the third quarter of 2026. Consolidated occupancy increased 70 basis points sequentially to 83.1% in the third quarter, while same-community occupancy reached 83.6%. But those gains were below internal expectations for the peak summer selling season, according to leadership. The softer performance continued in October. Consolidated occupancy reached 83.5%, while same-community occupancy was 83.9%, each representing a 10-basis-point monthly sequential increase, Kussow said. She now expects full-year consolidated occupancy below 83%. Stengle characterized 2025 as a strong year and 2026 as a softer one, suggesting future growth could fall between those performances. He attributed the recent slowdown in occupancy to internal disruption, pointing to the lack of a top sales leader and noting that economic uncertainty could be delaying older adults' choices to transition to senior living. However, needs-based move-ins continue to fuel demand, he said. "It should be stronger than this year," Stengle said. Within the portfolio, the number of communities above 90% occupancy increased to 186 from 167 in the previous quarter. Communities below 70% occupancy declined to 69 from 85, according to Stengle. "That improvement, that momentum is real," Stengle added. "It's just the third quarter came short of our expectations." Those shifting occupancy bands will help shape Brookdale's pricing decisions heading into January, Stengle said. Pricing power "may be a little bit stronger" in 2026 compared to 2025, Stengle noted, when asked about affordability concerns that might require smaller incremental rate increases in 2027. Brookdale leaders anticipate another meaningful in-place rate increase, with details expected on the company's next earnings call. Higher-occupancy communities can support stronger increases for existing residents and new move-ins, while lower-occupancy communities will continue using discounts to build census, Stengle said. The company's leaders are keeping the goal of balancing rate and occupancy to improve revenue per available room (RevPAR) in sight instead of picking one metric over another, he noted. The company's revised occupancy guidance takes into account marketing spending and damages from the fire last month at Brookdale's 97-unit community in Clinton, Mississippi. For the fourth quarter, the revised outlook assumes occupancy growth remains muted while rates remain relatively firm. Leadership is not counting on a rapid census recovery to reach its updated occupancy target. Brookdale now has the sales and operating leadership needed to improve performance after months of change, which is a positive sign for things to come, Stengle said. Stronger conversions shift focus to rebuilding lead pipeline. During Friday's earnings call, Stengle said lead-to-move-in conversions had reached the "highest level" in recent history, but the biggest challenge is generating enough leads as third-party referral volume declines. "The big question mark and where we're leaning into is how do we continue filling in the shortage of externally generated leads?" Stengle said. Stengle attributed some of that decline to artificial intelligence changing consumer search behavior and weakening the advantages third-party aggregators previously gained through marketing spending. Brookdale's reliance on those sources has made the shift more consequential for the company, he said. But most Brookdale leads still originate internally, Stengle clarified. Internal lead generation has performed strongly this year, but not strongly enough to offset the external lead decline. Brookdale is working to rebuild community-level relationships with local referral sources, including medical, legal, religious and other community professionals, Stengle said. Rather than waiting for referrals to arrive, sales teams are expected to build relationships and generate leads themselves. Training and engagement will help reinforce those expectations, Stengle said. While there isn't an incremental dollar impact expected from this shift, the refocus is dependent on "a behavior change." "It's a paradigm shift," Stengle added. In the fourth quarter, Brookdale leaders are increasing the company's marketing spending, an increase that Kussow does not expect to impact 2027 fundamentals, with more details to be provided in the future. The potential benefit extends beyond increasing the number of inquiries, as internally generated leads convert to visits and move-ins at higher rates than external referrals, Stengle said. Brookdale closely monitors both lead-to-move-in and visit-to-move-in performance, with visit-to-move-in performance helping leaders assess pricing, sales execution and community performance health after a prospect tours a community. "There's a lot that you control within the four walls of the community," Stengle said. This distinction matters to the company's next phase of operational improvement. Leadership expects the existing sales staff structure to become more productive without the need for a hiring push to solve any performance-related shortfall. Stengle framed the opportunity before the company as a shift that would unfold over several quarters, rather than a quick marketing-driven improvement. "The upside is how can we continue changing that behavior, continue changing that mix of our internal, more internal, less external over the next several quarters," Stengle said. Companies featured in this article: Austin Montgomery is a reporter for Senior Housing News as part of WTWH Media. When he isn't writing, find him at a local disc golf course or at the driving range working on his golf swing.