Here's Why Brookdale Senior Living Fell as Much as 17.2% Today

What happened

Shares of Brookdale Senior Living (NYSE: BKD) fell over 17% today after the company reported fourth-quarter and full-year 2018 results. It's the second straight year this has happened to shareholders. The senior housing operator has been attempting to scratch and claw its way back to profitability and out from under its suffocating debt load in recent years. That's proving more difficult than anticipated.

A high-level glance at operating results reveals that the business saw revenue decline and expenses rise from 2017 to 2018. That's not a trend that creates a successful turnaround. Wall Street is also displeased with the initial full-year 2019 guidance provided by management.

As of 12:01 p.m. EST, the stock had settled to a 14.9% loss.

A man banging his fist on a table next to a tablet displaying a falling stock chart.

Image source: Getty Images.

So what

Brookdale Senior Living has been selectively selling off assets in an attempt to shore up the balance sheet, but it hasn't delivered needle-moving results. The business reported a year-over-year revenue decline of 5%, while operating expenses grew 2%. That means margins worsened and losses expanded in 2018 compared to the prior year.




Change (YOY)


$4.53 billion

$4.75 billion


Operating expenses

$5.12 billion

$5.02 billion


Operating loss

($594 million)

($270 million)


Interest expense

$272 million

$313 million


Net income

($528 million)

($571 million)


Data source: Brookdale Senior Living press release. YOY = year over year.

While net income improved slightly last year, that was only made possible after accounting for a $293 million gain from asset sales.

Management expects several important financial metrics to deteriorate even further in the year ahead. Brookdale Senior Living expects adjusted EBITDA and free cash flow to be worse in 2019 compared to 2018 -- with free cash flow changing from an inflow of $20 million to an outflow of as much as $100 million.

Now what

Running independent and assisted living facilities is expensive and difficult. Unfortunately for Brookdale Senior Living, that isn't going to change anytime soon. The business is in a difficult position, as there doesn't seem to be an easy way to balance the demands of shareholders with the more important responsibility to clients.

10 stocks we like better than Brookdale Senior Living
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Brookdale Senior Living wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of January 31, 2019

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance , Stocks
Referenced Symbols: BKD

More from Motley Fool


Motley Fool

Motley Fool

Market News, Investing

Research Brokers before you trade

Want to trade FX?