Brookdale Senior Living Inc. (NYSE: BKD) (the "Company") today reported financial and operating results for the fourth quarter and full year 2012.
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Cash From Facility Operations ("CFFO") was $68.7 million, or $0.56 per share, excluding $7.2 million of integration, transaction-related and electronic medical records ("EMR") roll-out costs in the fourth quarter of 2012.
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Average occupancy was 88.7%, a 70 basis point sequential increase from the third quarter of 2012 and a 90 basis point increase from the fourth quarter of 2011.
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Average monthly revenue per unit for the senior housing portfolio improved by 2.9% to $4,282 for the fourth quarter of 2012 from $4,160 for the fourth quarter of 2011.
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Entry Fee CCRCs completed 121 independent living entry fee unit closings and produced $15.1 million of net cash flow, an increase of $5.7 million over the fourth quarter of 2011.
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Adjusted EBITDA was $109.2 million, a 4.7% increase from $104.4 million in the fourth quarter of 2011, excluding integration, transaction-related and EMR roll-out costs in both periods.
Bill Sheriff, Brookdale's CEO, said, "We had a strong finish to the year as evidenced by the fourth quarter's occupancy increases across our segments and another good entry fee sales quarter. We are seeing some signs of improvements in the general economy that lend themselves to driving demand for our products. At the same time, we are positioning the Company to maximize its opportunities with an empowered, resident-focused field organization and a sales and marketing organization with the appropriate resources. With the Company positioned for success, we are excited about our prospects for 2013."
Mark Ohlendorf, Co-President and CFO of Brookdale, commented, "A 70 basis point sequential increase in the fourth quarter occupancy is very strong for a portfolio our size. We experienced it across all of our segments and across multiple geographies. In fact, we saw occupancy increases in 16 of our top 20 markets during the quarter. The strong occupancy increases were a result of improving fundamentals, focused execution and the benefit of the capital we have invested and continue to spend on our portfolio."
Financial Results
Total revenue for the fourth quarter was $699.7 million, an increase of $27.8 million, or 4.1%, from the fourth quarter of 2011. Revenue for the full year 2012 was $2.8 billion, a 12.7% increase from $2.5 billion for the full year 2011. Fourth quarter 2012 total revenue is comprised of resident fee revenue of $609.1 million, which increased $24.5 million, or 4.2%, from the fourth quarter of 2011, management fee revenue of $8.4 million, which increased $1.1 million, or 14.8%, from the fourth quarter of 2011, and managed community reimbursed costs of $82.2 million.
Resident fee revenue increased primarily as a result of an increase in the average monthly revenue per unit compared to the prior year period and an increase in occupancy. Average monthly revenue per unit for the senior housing portfolio was $4,282 in the fourth quarter, an increase of $122, or 2.9%, over the fourth quarter of 2011. Average occupancy for all consolidated communities for the fourth quarter of 2012 was 88.7%, compared to 87.8% for the fourth quarter of 2011 and 88.0% for the third quarter of 2012. For the managed community portfolio, which includes a number of pre-stabilized communities in the initial fill-up phase, average occupancy for the fourth quarter was 85.4%, a 110 basis point increase from 84.3% in the third quarter of 2012.
For the full year of 2012, resident fee revenue increased from $2.3 billion to $2.4 billion. Average monthly revenue per unit increased to $4,271 for the full year of 2012, a 1.9% increase over the full year of 2011. Average occupancy for all consolidated communities for the full year was 88.0%, compared to 87.3% for the full year of 2011.
Facility operating expenses for the fourth quarter were $417.2 million, an increase of $27.2 million, or 7.0%, from the fourth quarter of 2011, primarily due to additional expense related to occupancy increases, inflationary cost increases and increases in health and property insurance expenses. Facility operating expenses for the full year 2012 were $1.6 billion, an 8.1% increase from $1.5 billion for the full year 2011.
General and administrative expenses for the fourth quarter were $44.6 million. Excluding integration, transaction-related and EMR roll-out costs of $7.2 million and $8.0 million in the fourth quarters of 2012 and 2011, respectively, and non-cash stock-based compensation expense from both periods, general and administrative expenses were $31.0 million in the fourth quarter of 2012 versus $28.8 million for the prior year same period. Demonstrating the Company's efficient platform, general and administrative expenses were 4.0% of resident fee revenue (including resident fee revenues under management) in the fourth quarter of 2012.
Brookdale's management utilizes Adjusted EBITDA and CFFO to evaluate the Company's performance and liquidity because these metrics exclude non-cash items such as depreciation and amortization, asset impairment charges, non-cash stock-based compensation expense, gain on facility lease termination and straight-line lease expense, net of deferred gain amortization. Adjusted EBITDA and Cash From Facility Operations include integration, transaction-related and EMR roll-out costs of $7.2 million and $23.5 million for the three months and year ended December 31, 2012, respectively, and $8.0 million and $14.4 million for the three months and year ended December 31, 2011, respectively. Brookdale also uses Facility Operating Income to assess the performance of its communities.
For the quarter ended December 31, 2012, Facility Operating Income was $187.3 million, a decrease of $0.8 million, or 0.4%, over the fourth quarter of 2011, and Adjusted EBITDA, excluding integration, transaction-related and EMR roll-out costs in 2012 and 2011, was $109.2 million, an increase of $4.9 million, or 4.7%, over the fourth quarter of 2011. For the year ended December 31, 2012, Facility Operating Income was $758.8 million, an increase of $1.1 million, or 0.1%, over the full year of 2011, and Adjusted EBITDA, excluding integration, transaction-related and EMR roll-out costs in 2012 and 2011, was $433.4 million, an increase of $16.4 million, or 3.9%, over the full year of 2011.
Cash From Facility Operations was $61.4 million for the fourth quarter of 2012, or $0.50 per share. CFFO, excluding integration, transaction-related and EMR roll-out costs for both periods, was $68.7 million for the fourth quarter of 2012, or $0.56 per share, an increase of $3.9 million, or 6.0%, over CFFO of $64.8 million, or $0.54 per share, for the fourth quarter of 2011. CFFO, excluding integration, transaction-related and EMR roll-out costs for both periods, was $262.4 million for the year ended December 31, 2012, or $2.15 per share, an increase of $8.1 million, or 3.2%, over CFFO of $254.3 million, or $2.11 per share, for the full year of 2011.
Net loss for the fourth quarter of 2012 was $(24.5) million, or $(0.20) per diluted common share. The loss for the quarter includes non-cash items for depreciation and amortization, asset impairment, non-cash stock-based compensation expense, gain on facility lease termination and straight-line lease expense, net of deferred gain amortization.
Operating Activities
The Company reports information on six segments. Four segments (Retirement Centers, Assisted Living, CCRCs – Rental and CCRCs – Entry Fee) constitute the Company's consolidated senior housing portfolio. The fifth segment, Innovative Senior Care, includes the Company's outpatient therapy, home health and hospice services. The sixth segment, Management Services, includes the services provided to unconsolidated communities that are operated under management agreements.
Senior Housing