Brookdale Senior Living Revamps Sales Strategy To Accelerate Slower-than-expected Occupancy Gains 

Brookdale Senior Living (NYSE: BKD) continues to work to turn a year of organizational changes into stronger performance growth, following a summer selling season that fell short of leadership’s expectations.

“This is an enduring way forward as opposed to a one-off thing,” Brookdale Senior Living CEO Nick Stengle said during Friday’s third-quarter earnings conference call.

During the call, Stengle and Chief Financial Officer Dawn Kussow shared what comes next for Brookdale, which includes resetting the company’s administrative staffing model, more rent growth and an effort to reduce working with third-party referral sources in favor of in-house lead generation.

In June, Brookdale named Margaret Cabell as chief sales officer, who brings over 25 years of senior living experience as A Place for Mom’s chief community relations officer and CEO of Harmony Senior Services. Her role has helped fuel change in sales culture, leadership said on Friday.

Brookdale reported third-quarter adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $124.3 million, up 12% from the previous year. But weaker occupancy growth prompted leadership to lower full-year adjusted EBITDA guidance to between $495 million and $502 million, alongside revenue per available room (RevPAR) growth of 7.4% to 7.9%.

Despite this setback, Stengle and Kussow forecast mid-teens annual adjusted EBITDA growth in 2027 and beyond. Stengle noted that Brookdale had allowed staffing discipline to erode gradually during the company’s pandemic recovery, but leaders believe the company’s third quarter changes reset a mostly fixed labor cost base, specifically around administrative roles.

“It’s just this idea that we have a mostly fixed cost base to our labor. We reset that fixed cost base, specifically around administrative roles,” Stengle said. “That’s where a lot of that lack of discipline had grown.”

He added, “Our staffing model now needs to reflect what life was like before COVID.”

While the company did not note specifics on staffing changes outside of administrative roles, the changes are intended to allow communities to operate more effectively while being aware of differences in community size, building and continuum of care, occupancy rates and overall resident needs, Stengle said.

Brookdale’s same-community labor as a percentage of revenue improved 120 basis points year over year in the third quarter, Kussow said. She added that the operator expects additional expense pressures will begin to ease in the near-term. Operating costs related to Brookdale’s enterprise resource planning implementation are expected to end early next year.

Brookdale leaders taking a more deliberate approach to replacing equipment rather than repeatedly repairing it could reduce annual maintenance expenses by several million dollars, she said.

The company is also nearing the end of its previously announced disposition program with five remaining communities under contract, with closing expected by the end of this year. Since 2025, Brookdale has transitioned out over 100 communities and agreed to buy 30 communities from real estate investment trust Welltower (NYSE: WELL).

Brookdale expects to close a $290 million purchase of the 30 communities it currently leases in the fourth quarter. Their annual cash rent would otherwise total approximately $18 million in 2027, according to Kussow.

At the end of the third quarter, Brookdale acquired 17 previously leased communities, bringing ownership to roughly 80% of consolidated units overall. A lease amendment could also allow Brookdale to have a purchase option on an additional 39 communities, rather than waiting for leases to end, Kussow said.

Stengle also said he expects 2027 capital spending to look similar to this year, but did not provide a budget for what’s ahead. In the third quarter, Brookdale spent $47 million on community capital expenses, with projects prioritized by expected returns under Senior Vice President of Strategic Operations Clark Jones.

“We feel good about that pace,” Stengle said.

Brookdale stock fell 16.65% on Friday, a loss of $1.80 in value to rest at $9.01 per share at market close.

Occupancy comes up short, pricing power remains

Brookdale fell short of leaders’ desired pace of occupancy gains in the third quarter of 2026.

Consolidated occupancy increased 70 basis points sequentially to 83.1% in the third quarter, while same-community occupancy reached 83.6%. But those gains were below internal expectations for the peak summer selling season, according to leadership.

The softer performance continued in October. Consolidated occupancy reached 83.5%, while same-community occupancy was 83.9%, each representing a 10-basis-point monthly sequential increase, Kussow said. She now expects full-year consolidated occupancy below 83%.

Stengle characterized 2025 as a strong year and 2026 as a softer one, suggesting future growth could fall between those performances. He attributed the recent slowdown in occupancy to internal disruption, pointing to the lack of a top sales leader and noting that economic uncertainty could be delaying older adults’ choices to transition to senior living. However, needs-based move-ins continue to fuel demand, he said.

“It should be stronger than this year,” Stengle said.

Within the portfolio, the number of communities above 90% occupancy increased to 186 from 167 in the previous quarter. Communities below 70% occupancy declined to 69 from 85, according to Stengle.

“That improvement, that momentum is real,” Stengle added. “It’s just the third quarter came short of our expectations.”

Those shifting occupancy bands will help shape Brookdale’s pricing decisions heading into January, Stengle said. Pricing power “may be a little bit stronger” in 2026 compared to 2025, Stengle noted, when asked about affordability concerns that might require smaller incremental rate increases in 2027.

Brookdale leaders anticipate another meaningful in-place rate increase, with details expected on the company’s next earnings call. Higher-occupancy communities can support stronger increases for existing residents and new move-ins, while lower-occupancy communities will continue using discounts to build census, Stengle said. The company’s leaders are keeping the goal of balancing rate and occupancy to improve revenue per available room (RevPAR) in sight instead of picking one metric over another, he noted.

The company’s revised occupancy guidance takes into account marketing spending and damages from the fire last month at Brookdale’s 97-unit community in Clinton, Mississippi.

For the fourth quarter, the revised outlook assumes occupancy growth remains muted while rates remain relatively firm. Leadership is not counting on a rapid census recovery to reach its updated occupancy target. Brookdale now has the sales and operating leadership needed to improve performance after months of change, which is a positive sign for things to come, Stengle said.

Stronger conversions shift focus to rebuilding lead pipeline

During Friday’s earnings call, Stengle said lead-to-move-in conversions had reached the “highest level” in recent history, but the biggest challenge is generating enough leads as third-party referral volume declines.

“The big question mark and where we’re leaning into is how do we continue filling in the shortage of externally generated leads?” Stengle said.

Stengle attributed some of that decline to artificial intelligence changing consumer search behavior and weakening the advantages third-party aggregators previously gained through marketing spending. Brookdale’s reliance on those sources has made the shift more consequential for the company, he said.

But most Brookdale leads still originate internally, Stengle clarified. Internal lead generation has performed strongly this year, but not strongly enough to offset the external lead decline. Brookdale is working to rebuild community-level relationships with local referral sources, including medical, legal, religious and other community professionals, Stengle said.

Rather than waiting for referrals to arrive, sales teams are expected to build relationships and generate leads themselves. Training and engagement will help reinforce those expectations, Stengle said. While there isn’t an incremental dollar impact expected from this shift, the refocus is dependent on “a behavior change.”

“It’s a paradigm shift,” Stengle added.

In the fourth quarter, Brookdale leaders are increasing the company’s marketing spending, an increase that Kussow does not expect to impact 2027 fundamentals, with more details to be provided in the future. The potential benefit extends beyond increasing the number of inquiries, as internally generated leads convert to visits and move-ins at higher rates than external referrals, Stengle said.

Brookdale closely monitors both lead-to-move-in and visit-to-move-in performance, with visit-to-move-in performance helping leaders assess pricing, sales execution and community performance health after a prospect tours a community.

“There’s a lot that you control within the four walls of the community,” Stengle said.

This distinction matters to the company’s next phase of operational improvement. Leadership expects the existing sales staff structure to become more productive without the need for a hiring push to solve any performance-related shortfall.

Stengle framed the opportunity before the company as a shift that would unfold over several quarters, rather than a quick marketing-driven improvement.

“The upside is how can we continue changing that behavior, continue changing that mix of our internal, more internal, less external over the next several quarters,” Stengle said.

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