Seniors Housing Weekly Update -- First Quarter Earnings Season Improves

May 7, 2013


 

May 7, 2013. 60 Seconds with Steve Monroe. Brookdale Senior Living and Kindred Healthcare both post solid first quarter results, sending their respective share prices up.

First Quarter Earnings Season Improves

Last week we thought the first quarter earnings season might be a little dismal after Five Star Quality Care came out of the blocks and saw its shares plunge by 25% in two days. Brookdale, however, came out on all cylinders, with is assisted living, independent living, rental CCRCs and entrance-fee CCRCs all posting year-over-year occupancy gains between 60 and 110 basis points. And Brookdale’s entrance-fee CCRCs posted a 290 basis point increase in operating margin from a year ago. How did investors react? The stock has increased by 12% since the announcement. On the skilled nursing side, Kindred Healthcare beat analysts’ estimates for “normalized” earnings per share by a wide margin, pushing its shares up by a total of 14% in the past several days. Kindred is like an aircraft carrier that is so large it takes a while to move into position. Once there, it can unleash its vast power. That is management’s goal with their 21 “integrated care markets” offering a wide variety of post-acute services. But we are not sure they are in position yet.

 

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