Brookdale Senior Living’s continued recovery from the COVID-19 pandemic in the second quarter was highlighted by increased occupancy, improvements in leadership retention and employee turnover, and the implementation of a new marketing initiative, according to President and CEO Lucinda “Cindy” Baier.

During a second-quarter earnings call on Friday, Baier said the Tennessee-based senior living operator has made “strong positive progress” toward full recovery from the pandemic.

Brookdale saw average occupancy growth of 160 basis points compared to the same quarter in 2023 and 20 basis points of growth compared to the first quarter of this year, representing 78.1%. Executive Vice President and Chief Financial Officer Dawn Kussow said she expects occupancy to deliver “meaningful sequential improvement” in the third quarter compared to the second quarter, reflecting the company’s confidence in its community-level sales leaders, the expected impact of targeted sales and marketing initiatives, and the continued benefit from growing demand.

Baier said signups from paid third-party referral sources were relatively low in the second quarter compared to the company’s historical experience. This has led the company to work with those partners to improve performance, launch incremental sales initiatives and increase planned marketing spend.

Those investments are already paying off, as the number of new homes built in the second quarter was still higher than before the pandemic, she said.

“It is easy to visualize the potential for many years of occupancy growth as we capture unprecedented demand for our services as this demographic ages and reaches our new median age,” Baier said. “The focused efforts I have consistently emphasized over the past 18 months are aimed at delivering an appropriate return for the services we provide and are being purposefully put in place ahead of the anticipated rapid increase in demand.”

Total senior housing revenues increased 4.2% year-over-year. The average independent living occupancy of 79.9% was up 100 basis points year-over-year. The average assisted living and memory care occupancy of 77.6% was up 130 basis points year-over-year, while the average continuing care community segment occupancy of 76.1% was up 410 basis points year-over-year.

Key drivers of long-term organic growth, according to company executives, include limited new senior housing supply, rapidly growing demand demographics and Brookdale-specific differentiators, including clinical expertise, personalized services, resident engagement programs and innovative care models such as Brookdale HealthPlus. Baier added that Brookdale’s higher concentration of needs-based offerings — particularly assisted living and memory care — sets it apart from others in the sector, which she said is focused on lower-needs products.

“I am extremely optimistic about our future,” Baier said, adding that the senior living sector is experiencing a positive and growing supply-demand gap. “This imbalance has more potential for occupancy growth than we have ever seen. Brookdale’s unique business strengths and industry-leading programs will continue to differentiate us as a leader in our highly fragmented industry.”

Retention continues to improve

Brookdale also reported that it delivered “meaningful” improvements in both leadership retention and turnover reduction in the second quarter. The company achieved its fourth consecutive quarter of improvements in key leadership retention and its fifth consecutive quarter of improvements in hourly employee turnover compared to prior years, executives said.

Kussow said same-community labor costs improved 190 basis points compared to the second quarter of 2023, driven by higher revenues, reduced use of premium workers and the impact of improved manager retention and hourly employee turnover.

Baier attributed some of the company’s improvements in employee and leadership retention to its HealthPlus program, a care delivery model designed to improve residents’ quality of life through care coordination. With plans to increase the number of HealthPlus communities to 130 by the end of the year, Baier said 50 communities will launch HealthPlus this month.

HealthPlus residents have better outcomes, resulting in longer lengths of stay, which translates into better profitability, the CEO said. The company is “diligently” introducing new medical record technology to its newest HealthPlus communities, implementing new community processes and training employees on the HealthPlus platform.

Omega lease changed

After the quarter, the company and Omega Healthcare Investors amended an existing master lease on 24 communities, which Brookdale will continue to lease from Omega. As part of the amended agreement, Omega committed to making available up to $80 million to fund capital expenditures for the communities through Dec. 31, 2037.

As of June 30, Brookdale operates and manages 649 communities in 41 states.