Seniors Housing Weekly Update -- First Quarter Earnings Season Improves
May 7, 2013
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.