Brookdale shares plunge following 3Q results

CHICAGO - Shares of Brookdale Senior Living Inc. plummeted Wednesday, a day after the nation's largest provider of senior-care facilities reported a bigger-than-expected loss for the third quarter amid higher operating costs.

Shares fell $1.82, or 16.4 percent, to $9.29 in afternoon trading, more than wiping out the previous day's double-digit increase when investors were hoping for stronger results. The stock has lost close to three-quarters of its value in the past year.

Avondale Partners analyst Derrick Dagnan said that "while sequential growth in occupancy is a welcome sign and pricing growth remained solid at 4.7 percent, margins and cash flow suffered from elevated expense levels for labor, food, and utility and energy costs."

Brookdale reported Tuesday that average occupancy for the third quarter was 89.7 percent, compared with 88.9 percent in the second quarter. Total operating expense rose to $493.2 million during the period ended Sept. 30, from $476.7 million a year ago.

Facility operating margin, however, fell to 32.7 percent in the period from 35.8 percent last year.

"The margin deterioration in the quarter is a disappointment given the improvement in occupancy," Morgan Keegan analyst Robert Mains said in a note to investors.

Brookdale reported a loss of $35.9 million, or 36 cents per share, in the third quarter. That compared with a year-earlier loss of $58.9 million, or 58 cents per share.

Analysts surveyed by Thomson Reuters, on average, had anticipated a per-share loss of 30 cents.

The company said the loss in the just-ended quarter included noncash items for depreciation and amortization, non-cash stock-based compensation expense and straight-line lease expense, which totaled $80.4 million.

Revenue rose 3.8 percent to $482.3 million.

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