Q2 2021 Brookdale Senior Living Inc Earnings Call
Ladies and gentlemen, thank every penny by today's conference is scheduled to begin momentarily until that time. Your line is a GAAP will be.
Just on musical thank you for your patience.
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Good morning. This is Kathy Macdonald I'm very sorry for the technical delay. Thank you for joining us and welcome to the second quarter 2021 earnings call for Brookdale senior living joining us today are Cindy Baier, our president and Chief Executive Officer and.
Steve Swain, our executive Vice President and Chief Financial Officer, All statements today, which are not historical facts may be deemed to be forward looking statements within the meaning of the federal Securities laws. These statements are made as of today's date and we expressly expressly disclaim any obligation to update these statements in the future.
Actual results and performance may differ materially from forward looking statements certain of the factors that could cause actual results to differ are detailed on the earnings release, we issued yesterday as well as in the reports we filed with the SEC from time to time, including the risk factors contained in our annual report on form 10.
K and quarterly reports on form 10-Q, I direct you to the release for the full Safe Harbor statement also please note that during this call global price.
GAAP financial measure for reconciliations of our non-GAAP measure from the most comparable GAAP measure I direct you to the release and supplemental information, which may be found at Brookdale Dot com ports slash investor and was furnished on an 8-K yesterday now I will turn the call over to Cindy. Thank you Kathy.
Good morning to all of our shareholders analysts and other participants I hope that you and those you care about are safe and sound.
Welcome to our second quarter 2021 earnings call.
The COVID-19 pandemic continues to demonstrate brookdale versatility and resilience and those attributes are proving critical as we continue to win the recovery and help save lives.
The economy reopens and our entire industry is in a lease up mode. We are operating in an intense and dynamic environment. We will continue to build on and refine our plans to position Brookdale for long term success.
We've made great progress this year to capitalize on the opportunities I am pleased to report that we have delivered 5 consecutive months of occupancy growth. The June month end occupancy showed a significant step up which led to an even stronger.
July occupancy results.
The work has been hard and has placed tremendous demand on our associates.
The tenacity of our team members at the communities with the diligence on a regional and corporate associates has helped to protect the health and wellbeing of our residents throughout the pandemic and accelerated the COVID-19 vaccination process. So that we can reopen our communities more quickly and with appropriate.
Safety protocols.
Thanks to our hard work the initial phases of recovery occurred earlier than expected and we have been able to stay focused on achieving our growth objectives.
As of July 1st we further strengthened our liquidity position by over $300 million. When we completed the 80 per cent sale and smooth transition of our home health hospice on outpatient therapy business to HCA healthcare.
We are pleased with this value enhancing transaction and that high quality health care services continue to be available to our residents Brooke.
Brookdale residents will benefit from a seamless offering of services across a broad care continuum.
The transaction represents the latest step in our ongoing effort to drive meaningful shareholder value significantly improving our liquidity, while positioning our core senior housing operations for sustained growth.
At the beginning of the year I introduced 3 growth pillars, and our plan to put the pandemic behind us. The first pillar our vaccine clinic strategy is largely complete I believe our success with hosting over 2000 vaccine clinics infor.
Months enabled us to accelerate opening our communities and our occupancy recovery.
We remain diligent in helping protect our communities residents and associates, especially in light of the Delta variant.
We continue to meet with the CDC state and local health officials to help ensure we stay informed of new developments and best practices and implement effective protocol in support of the wellbeing of our residents and associates.
Our ongoing efforts are a testament to our expertise and how helping people with the challenges of aging is 1 of our core strength.
The second pillar with the sharpened our business edge through sales transformation.
Part of our win locally strategy, we have refocused our attention on local outreach engagement.
In addition, during the second quarter, we strategically and Opportunistically allocated marketing dollars to particular areas.
Which is delivering strong returns in our league.
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Taken together, we believe this helped us achieve occupancy gains that outpaced the industry.
We are pleased with the sequential improvement in leads as well as our ability to convert leads to move in particularly in assisted living and memory care.
The third strategic pillar, we announced was to better capitalize on the higher concentration of our portfolio in assisted living and memory care.
In addition, we wanted to better capitalize on our demonstrated leadership position for our residents and prospects. We are well equipped to serve appropriate residents with complex medical conditions.
We also have industry, leading customer satisfaction evidenced most recently by our J D Power award for assisted living and memory care communities for ranking highest in customer satisfaction.
Our success with this pillar can be seen in our sequential occupancy growth in the assisted living memory care segment, which is approximately 70% of our portfolio today.
Outsized recovery in our memory care portfolio is particularly notable.
Successful execution of these 3 strategies means that we are ideally positioned to benefit from the broader recovery.
Let me turn to our financial highlights for the second quarter.
The industry as reported by Nic showed that the second quarter senior housing occupancy increased approximately 10 basis points on a sequential basis for stabilized portfolios.
We are pleased Brookdale occupancy grew significantly faster on a same community basis.
During each month within the quarter are moving accelerated of know our same community June move in volume was the strongest since August 2019.
This is particularly positive and see happening in the second quarter since our strongest occupancy growth historically occurred in the third quarter.
For the second quarter on a same community basis, our senior housing occupancy grew 90 basis points with assisted living and memory care occupancy, increasing even faster at 110 basis points on a sequential basis.
Sequentially, our independent living occupancy percentage was relatively flat for the quarter.
We were pleased however to see occupancy turned positive in may and accelerate in June.
I am proud that we were able to continue managing and maintaining overall rate discipline.
While we've seen some competitors with it within the industry use significant discounts during this pandemic related lease up period, our dynamic pricing strategy is working.
By focusing on both price discipline and occupancy growth. We believe we will achieve a better sustainable result.
Turning to operating expenses senior housing expenses were slightly lower on a sequential basis.
When you bifurcate the key elements of Opex. The favorability was from a reduction in COVID-19 related expenses the corresponds with a significant drop in cases in our communities.
As expected the expense increase was mainly labor related along with slightly higher incremental marketing investments.
I want to address labor at our core Brookdale business depend on people taking care of people.
Well the general population is worn out from the challenges of the pandemic those who have been vaccinated are returning to life normal routines.
However, brookdale everyday heroes remain on the frontline.
Our community associates continue to incorporate enhanced protocols to help protect against COVID-19, since our industry helps protect the population that is most vulnerable to this virus due to age and chronic condition.
With the exception of the industry being in lease up mode. I believe the largest current pressure on the industry is related to labor.
We must ensure that the senior living industry continued to be an attractive place for associates to fulfill their purpose.
On competitive compensation and benefit and grow professionally.
With today's intensely competitive environment, we increased our recruiting efforts to fill open positions and actively adjusted wages to remain competitive in the market.
Our goal is to ensure that our communities continue to be staffed with full and part time associates.
When we have openings, however, we use contract labor and overtime.
Which can be expensive.
While we feel this near term pressure, we also believe the environment will improve.
In states that ended the enhanced weekly unemployment payments there has been a recent drop in unemployment claims.
As more people return to the work force and through our extensive internal effort, we expect that our labor costs will stabilize later this year.
As we gain momentum we are mapping a range of positive revpar growth trajectories, we will continue to issue monthly occupancy press releases.
See our progress in a timely manner.
The fierce competitive workforce environment will put near term pressure on our margin, but we expect this will be transitory and that our margins will improve in 2022.
At Brookdale, we provide clinically needed support to help manage the challenges of aging and I strongly believe in the need for senior housing and care.
More than 1 in 4 seniors are at risk for social isolation, and the increased risk of dementia stroke and heart disease that comes with it.
Our communities help satisfy senior society for engagement.
Social and emotional well being and we know the power of community.
Brookdale is ready to meet seniors wherever they are whenever they need us.
We hear the senior living provider of choice with the experience and expertise to help senior thrive.
With that I'll turn the call over to Steve.
Thank you Tony there are 3 key takeaways relating to our financial results first revpar growth improved on a sequential basis.
We outpaced the industry in occupancy growth, while maintaining Rev poor.
Occupancy inflected positive earlier in the year than we expected. This momentum is a good sign as we enter the third quarter, which historically delivered the strongest quarterly sequential occupancy growth.
Consistent with our pricing strategy, we were able to maintain Rev. Pour on a sequential basis, while using targeted discounting in select competitive markets.
Second Opex.
With high resident vaccination rates on fewer COVID-19 cases in our communities on the.
Versus the first quarter, we were able to significantly reduce COVID-19 costs, both on a year over year basis, and sequential basis as Cindy detailed they intensely challenging labor environment largely offset this benefit.
Third liquidity with the completion on the sale of our healthcare services segment on July 1 we have incrementally strengthened our liquidity position.
Now let me provide some context for these highlights starting with occupancy.
This is the first time occupancy grew every month in the quarter since 2019 second quarter weighted average occupancy was 74% up 90 basis points from the first quarter on a same community basis, Rev core or rage was 4.2% better on a year over year basis.
Driven primarily by our annual price increase at the beginning of the year on a sequential same community basis, we saw a rate increase slightly the Ann.
Fuel increase and maintaining rate discipline and through the year helps us cover some of the extraordinary costs related to the pandemic.
Turning to operating expenses on a same community basis, the second quarter senior housing operating expense improved 6.1% year over year and was slightly favorable sequentially.
The primary driver of the favorability was a reduction of COVID-19 costs of approximately $45 million on a year over year basis, and $17 million on a sequential basis ex.
Excluding COVID-19 costs labor expense increased sequentially, primarily due to the difficult labor environment as we use contract labor and overtime to mitigate open community positions along with seasonal increases from an extra work day and the annual Merit increase.
For other operating expenses.
Excluding COVID-19 caused the sequential increases were due to higher insurance related expenses, along with incremental marketing investments to help win the recovery.
Health care services operating results were included in the consolidated second quarter report with the transaction completed on July 1 going forward. This segment will be removed from consolidated results and the $306 million of net cash proceeds will be reported as net cash provided.
By investing investing activities.
Turning to G&A, excluding transaction costs and noncash stock based comp the second quarter increased both year over year and sequentially was from higher short term incentive accruals as we gained occupancy earlier than we expected.
G&A expense will be lower in the third quarter as we see the reduction in costs related to health care services associates, who transitioned with the sale of that business.
Adjusted EBITDA for the second quarter was $33 million compared to $45 million for the prior year quarter.
The impact of lower senior housing NOI due to the pandemic was significantly mitigated by the benefit of.
The negotiated cash rent reductions.
This highlights both the need and benefit of last year's win win agreement with on time.
Adjusted free cash flow was $168 million lower than the second quarter compared to the prior year period.
The largest driver on the difference was due to the cares act $146 million was related to the prior year quarter. When we when we received $85 million of Medicare advanced payment accepted $34 million on provider relief fund grants and benefited from 27.
Millions of deferred payments under the payroll tax deferral program in.
In addition for the current quarter, there was a $14 million use of cash for the initial repayment to the Medicare advance payment program.
In the second quarter non development Capex was $14 million higher than the prior year as we continue to make investments across our communities as planned.
Turning to the third key highlight liquidity as of June 30th total liquidity was $388 million compared to $439 million as of March 31 the.
The change was primarily from the impact of adjusted free cash flow.
On July 1st net proceeds from the sale of our health care services business would add $306 million to the quarter end liquidity.
To wrap up let me share some directional financial expectations for the third quarter.
With recent occupancy trends, we expect sequential growth in the third quarter to accelerate we expect revpar to be flat to slightly down based on the competitive nature of the lease up environment in the industry, we will continue to monitor market rates and adjust as necessary.
With our occupancy and rate expectations, Rev par sequential growth could accelerate to nearly double the percentage growth of the second quarter.
With the intense labor market competition, we expect higher costs from contract labor and overtime, along with the seasonal extra day, an extra holiday in the third quarter.
For other operating expenses, we also expect higher marketing investments to help us drive accelerated occupancy gains along with higher seasonal costs such as utilities.
<unk> expense will be lower as the health care services associates transition to HCA healthcare.
Because we expect to provide transition services in connection with the sale. It will take time to see the full indirect expense benefit.
Turning to other key drivers of adjusted free cash flow.
Annual non development Capex investment is expected to remain at approximately $140 million for 2021.
And we will book approximately $5 million of state tax expense related to the health care services sale in the third quarter.
Looking longer term, we remain confident in the growth opportunity of our business based on the 3 key drivers.
<unk> demand day.
<unk> for our communities is returning we are firmly on the path to recovery and gaining momentum.
Notable increase in the senior population is beginning and nearly $30.65 per cent of the target population lives within 20 minutes of a brookdale community.
Second new supply has dropped dramatically and this will provide us a positive tailwind for the next several years.
Finally, there is demand for high quality needs based services due to a significantly higher presence on chronic conditions and overtime fewer unpaid caregivers importantly.
Our community associates have the skills and desire to provide these services.
With this solid foundation for growth returning just to 2019 pre pandemic occupancy and margin levels would drive over $300 million of additional NOI.
I will now turn the call back over to Sandy. Thank you Steve in summary, the completion of the HCA healthcare transaction has strengthened our liquidity position as we continue to have an ongoing interest in our growing home health and hospice business.
Our senior living business has delivered 5 months of consecutive occupancy growth and in the second quarter, we outperformed the industry sequential occupancy growth I remain optimistic as we enter the third quarter, which historically has been the highest occupancy growth period of the.
Year over the past 3 years, including the recent health care services transaction, we have made significant transformational changes to reshape our business. We are in a better position to capture a larger share of the robust silver wave of senior demographic demand.
And drive meaningful shareholder value operator, if you would open the line for questions. Thank you.
Thank you as a reminder, we have a question. Please press star 1 on your telephone keypad. Once again Thats Star..1. Your first question comes from the line of Josh Raskin from Nephron.
Hi, Hi, good morning, Matt.
Good evening and good morning.
So my question I guess first thing I just wanted to follow up on Steve's comment I heard the 2019 occupancy levels. If we return there would drive 300 million of additional NOI could you just help us understand what that means and what that is relative to was that relative to the.
The $30 million $33 million run rate that we saw on the quarter or what exactly was that intended to say.
Good morning, Josh.
That's generally what.
On the basis.
So.
Kind of on a run rate close to $500 million or so.
And then plus 300.
And the $800 million.
Okay. Okay. So it's okay I see what youre, saying is totally down from that so you think that's what the.
Current situations on pressures et cetera, and I assume that means labor normalizes or something like that.
My My real question, just how should we think about the risk and I hate to be the downer on the party here, but how should we think about the risk of community closures and the potential for stopping move ins and maybe you could just remind us the metrics that the states were using.
Last spring and what triggers sort of that decision for US day to act and stop move ins and then I don't know if theres any specific internal brookdale rules that you guys have in place or rules of thumb, where you start thinking about community closures.
Sure Josh Theres no question that the Delta variant is challenging but what's different today than at the beginning of the beginning of the pandemic is that we have added highly effective vaccines to our strategy to help protect residents and associates throughout the pandemic, we've been able to demonstrate our ability to balance safety and engaged.
And at the conclusion of over 2000 vaccine clinics 93 per cent of our residents receive the vaccine. So we are building on the steps that we've already taken with a vaccine requirement for our associates with limited exceptions, given the widespread access to the vaccine we're in a much better position to.
To handle the pandemic now what we see is that because of all of these things even if there is a COVID-19 positive resident case, we have the protocols in place in many cases to remain open to new move in so I think that we're monitoring it carefully we have strong.
On infection control protocols, and we're proceeding accordingly.
I guess I was thinking more about you know when the state acts and says you know because I think if you look back a year year and a half ago. It was.
Measurements of ventilators that were available ICU bed capacity or even hospital occupancy levels in that sort of stuff. So.
I think some of it is kind of out of your hands, but it sounds like you think even if delta continues to rise because of the vaccinations and protocols you have in place. It sounds like you don't envision a scenario where brookdale communities are actually closing on.
Not saying that we'll never have a brookdale community close I want to be clear about that it's possible, but what I'm, saying is the risk profile is significantly different to day, given the high vaccination rates of our associates and the fact that the vaccines are highly effective at preventing severe illness on hospitalization. So we'll work with our local.
Health departments of course to make sure that we're doing everything that we can to help protect our residents and associates, but what we have seen and what we've heard in the industry is that the health departments are comfortable with the safety protocols that we have and they take that into consideration when deciding whether.
Our our community needs to close are reopened and that is different than a year ago in the regard that a year ago. The resident didn't have access to the vaccine.
And so that's a very big change and I think the health Department appropriately recognizes that and we are continuing all of the safety protocols that we put in place during 2020 with hand, washing and social distancing and masking and now our continued focused on vaccines.
To really help keep our residents safe as we can as well as our associates.
Perfect. Thanks, Thank you.
Your next question comes from <unk> from Stifel.
Good morning Tao.
Hey, good morning, and thank you for having me on the call.
Congrats on the near completion of the Baskin clinics, which is very reassuring.
Right off the telco variant.
My first question is regarding the <unk> on look I think Steve you mentioned sequential increase to double each <unk> were you referring to occupancy you operating income I missed that part.
Yeah. The first day of answer is I'm going to just ask everybody on the call I hope you've gotten vaccinated I hope you've got your family vaccinated. Your friends vaccinated together, we can really stop COVID-19, if if if we really focus on vaccination Steve.
You bet.
Sure Tom.
Was I was talking about a rev par sequential growth.
The first to second quarter and that was 1.7% revpar growth.
And as I mentioned that could nearly double.
From second quarter to third quarter.
Got you.
So the month on month exploration in Occupancies and impressive could you talk about the leading indicators you are seeing right now that may have contributed to that improved outlook.
We are definitely seeing an increase in inquiries and leads and visits as well as conversion. So all of those things are coming together to result in improvements and are moving in as on a sequential basis.
So we feel like the environment is improving we feel like our sales transformation efforts are gaining momentum we think that the marketing investments that we've made are great and we're just so proud of the fact that our July occupancy in a single month built almost as much occupancy as the entire second quarter.
Yeah.
Mhm.
Got you.
And the second part of it was on the <unk>.
Poor I think it can be more resilient.
Dan I had expected given the broader discounting environment with generally seen right now, especially on the low acuity products could you maybe expand a little bit on your comment regarding dynamic pricing or other factors driving low price decisions similar or different compared to apartments on lodging.
Absolutely we are proud of our revpar growth on a year over year basis and have maintained pricing discipline. We operate in 41 States. We've got a variety of community types and a competitive environment is different and every single community you know that our industry.
Has more than 2500 different operators and so our pricing strategy has to be local and it has to reflect the occupancy of our communities the competitive environment that we're seeing as well as our ability to move in as many residents as possible at the highest achievable right.
And so we're constantly balancing the rates that we have in our local market, our discounting strategy and looking to see whether changes in pricing would accelerate our revpar growth and that's something that I think the team is just very focused on.
Okay.
Mhm.
So did you develop that dynamic pricing mechanism in house are you using any third party products, we are not using third party products.
Hey, Hey, Pal I wanted I didn't give enough time for the other analyst. So we can follow up with you after the call.
Okay sounds good I mean, just 1 last question from me the $14 million of equity earnings from unconsolidated investment is that related to the sale of the Juicy Trc from Eliza J D. You had we said choppy.
Yeah.
I believe so all I can give on that.
The last remaining part of the.
The JV correct.
Okay sounds good thank you and congrats.
Thanks Todd.
Your next question comes from Brian <unk> from Jefferies.
Hi, Brian Hey, good morning.
First question to Andy just to clarify on the vaccination rates to Josh <unk> question earlier. So it looks like your residents are highly vaccinated in the 90 plus percent range and then you said majority of associates are but are you putting out a mandate now on vaccination and are you able to use that maybe from a marketing perspective, and then I guess the flip side of that you consider.
And that could drive some increased employee turnover if you are mandating vaccinations.
Our North Star is the health and wellbeing of our residents on our associates and we have been focused over Oh gosh since before the vaccines, where even available on education about the importance of vaccines, we've made our vaccines.
Readily available for our residents and associates and our residents led the way I mean, 93% resident vaccination just incredible we have seen a large majority of our associates get vaccinated, but we think with the spread of the Delta variant, it's really time to take the next step and to require our associates to get back.
Ex Natus now of course, there will be limited exceptions, including medical and sincerely held religious beliefs and there are some.
Jurisdictions, where we cannot require our associates to get mandate, but we think it's really important for.
For the trust of our residents and their families. So we do think it will be talking about with prospects as they to our communities.
Hope that we don't lose a single Brookdale associate, but I do recognize that not everyone is going to agree with the decision that we made to require vaccinations and so we will be proactive about providing education to associate to understanding where they're coming from.
To working through the process on medical and religious accommodation.
And if necessary, we will bring additional associates into the Brookdale family because our objective is to have our community staffed with full and part time associates and we want them to be vaccinated.
No I appreciate that and then I guess on the cost side Cindy as we see Delta pick up are you thinking of ramping up testing are preparing to ramp up testing and ramp up PPE use.
Just as the infection.
Infection rates across the country are picking up right now.
We have masking requirements and our communities for our associates and so that's been in place since the beginning of the pandemic and there are.
State and local requirements as it relates to testing now that's largely focused on on vaccinated individuals. So to the extent that we are having on increasing percentage of our associates and residents vaccinated those testing costs are.
Or not necessarily something that would would increase as much but of course, it's going to depend on whether we have a positive case in the community and if so that will involve more testing.
But I feel like we've got the right strategy in place, we're taking the appropriate steps to manage effectively through the pandemic with the prioritization of the health and wellbeing of our residents and associates and quite honestly, if you think about or our medical costs with our health care plans the more of our Soc.
It's that we get vaccinated that should help us over the longer term as well.
Last question wondering on interest.
I'm sorry go ahead.
Yes.
Covid related expenses from second quarter to third quarter on kind of pre adult Jogger, Inc.
We expect it to go down slightly on.
As Anthony mentioned, others, there are unknowns, so to the extent it doesn't go down quite as much.
So it was in.
Projection my projection on it.
It has to be seen.
Thanks, Steve.
Since I got you just last question from me.
Got some questions about your 2020 maturity. So just wondering if you can make any comment on your debt refinancing strategy going forward.
You bet.
Looking at Big picture are we strengthened our liquidity position by over $300 million on July 1 after closing the healthcare services transaction with HCA and were evaluating potential uses of that cash such as deleveraging some communities as we refinance our 2020.
2 maturities, perhaps a small paydown of a higher interest rate debt.
Our targeted investments to accelerate growth.
We continue to focus on enhancing liquidity through occupancy growth and expense discipline at the same time, we're pursuing provider relief fund grants. So overall on cash flow and liquidity, our priority and will continue to continue to take proactive steps on the balance sheet.
Evaluating opportunities and executing on our core business.
Awesome. Thank you.
Thank you so much.
Your next question comes from Steven Valiquette from Barclays.
Hi, Steven.
Great. Good morning, everybody. Thanks for taking the question here.
This was touched on a little bit earlier, but just as far as the July occupancy trends pretty encouraging.
But as we do dig in a little bit deeper on your geographic mix, Texas, Florida, and California are the 3 largest states from Brookdale on number of units.
On a state youre seeing a lot of the new Covid cases, where it's most prevalent or at least in 2 of those 3 states for sure I guess I'm just curious as you analyze your on occupancy gains are you seeing any correlation of.
Better gains in states, where there is fewer new COVID-19 cases, and is it perhaps a little slower where those new cases are more prevalent by state any trends worth calling out or is there really no correlation just curious to get some additional observations around that thanks.
Yeah.
And I think we've seen.
The growth in Covid cases is largely among on vaccinated individuals and a much younger population than we saw during 2020 I don't know that we have seen any correlation between increasing COVID-19 trends and our occupancy trends I think the important thing to remember is.
But we are a needs driven business and so where we have seen the outperformance is really in our memory care communities in particular, there on performance.
Performance during the second quarter was absolutely phenomenal and we've got a strategic focus there which helps of course and then what we've seen softness and is really independent living and that's something I think that's across the industry as well.
But I don't think it's related to the.
The surge in the Delta Fireeye on.
Okay. So at the end of the day, it's more related to product offering that any geographic mix. Okay. Just wanted to reinforce that thanks. Thanks.
Thanks Steven.
Your next question comes from Joanna <unk>.
From Bank of America.
Joanna Hey, good morning, Thank you for taking the question here.
So if my if I might just follow up a couple of these things Oh.
That's been discussed so 1 is on the on labor side, obviously, we see a lot of commentary from different providers pressure there equally.
A highlight on you you expect you know some good day.
English notice.
Contract labor.
Pressure on fees in the near term.
Can you kind of confirm that what you're seeing in the market.
And also how do you think about going forward do you think that 1.
Like you mentioned you saw supplemental benefits unemployment benefits expired and it's gonna be Oh.
You know somewhat easier to.
And can you talk about that.
On the turnover.
Are you seeing on higher turnover, you've seen in different markets.
Yeah sure.
It's all covered by the news the labor market is fiercely competitive and we have increased our recruiting efforts to fill open positions.
When we have an opening we do use overtime and contract labor as necessary and of course, we actively adjust wages to remain competitive.
Looking forward, we do expect that the labor market will improve gradually as people return to work after the supplemental unemployment benefits and if schools reopen so I think that that's important to note. So I think all of the things that you've talked about yes, we see it we have experienced it we think it will continue into.
To the third quarter, but we over arching, we believe that the labor market will return on.
On to more of a normal level.
In the not too distant future.
Okay.
Hopefully, they're on them and I guess to debt and are you seeing hum.
Increased interest from.
On applications on what not only requires 444 jobs Inc.
Housing on I know there's some.
You know maybe some some shifting interest people moving you know say from nursing homes or elsewhere high acuity settings to senior housing any of that is happening.
You know as the quarter has has been a little bit of a roller coaster ride I think particularly early in the quarter, we didn't see as much interest in our postings when.
There was an economic incentive to stay on unemployment and there were just massive increases in jobs available in the economy I do think more recently, we've seen increased interest in our postings and so that's something that we're encourage it encouraged about I think the 1 thing that our industry offers that few others do.
Is it 1 of the associate goes home after a day at Brookdale no that they've made a difference in someone's life, most employers cant offer that.
And so we really do attract a work force that genuinely wants to make a difference and genuinely wants to be part of something bigger than themselves and when you remove the barrier of supplemental unemployment benefits.
Moms, who have their kids at home and art in school and some of the concerns around the COVID-19 variant that the vaccine help solve it's much easier to operate a business.
No. Thank you I appreciate it.
Thanks Joanna.
Your next question comes from Frank Morgan from RBC capital markets.
Good morning, Frank Good morning, most amount have been answered, but just a couple of random ones here going back to the mandatory vaccine.
Thank you mentioned there are some states where that would not be allowed but could you share with us share with us what states those or that will not allow you to enforce mandatory vaccines for employers.
Oregon, Oregon comes to mind, there are a few states, but top of line for me is Oregon, and we can follow up with the list with you separately.
Got you, Okay, and then I guess I would just be real curious from what Youre seeing out in the field. When you look at your competitors.
During this period, where people are coming back out and move ins are improving.
Any change in their behavior regarding.
Pricings or incentives.
And how do you think they will actually handle.
The surge in Covid and what do you think are you hearing that other.
Providers out there or considering doing the mandates for vaccines as well.
Yes, I will say that the environment is pretty competitive and because we've got 2500 competitors and many operate 5 or fewer communities. We see just about everything that you can imagine some of the things that we see quite honestly, we don't think are sustainable and so that is something that.
I think we're taking the strategy that we think will yield the best result, and the longest term on a sustainable basis and we're really proud of the fact that we had such strong occupancy growth outperforming the industry in the second quarter, while being able to maintain rate discipline I do think that a number of people in our industry are going.
On to move to a mandate a vaccine mandate and we're seeing that already in health care. Overall, if you look at the statements that have come out from the American Physicians Association, The American Nurses Association and all sorts of leading health care institutions people.
Recognize that vaccines are important and more and more health care systems Hospital systems or are taking that step to help protect their associates as well as their patients and residents.
Maybe I'll ask 1 last 1 just in terms of geographic.
Markets.
Any particular areas, where youre seeing things getting better at a faster rate than average and then by the same token anything any markets, where it's lagging. Thanks.
You know I don't know that there is anything that I would say that just jumps out on a market basis I think that what we tend to see is that our communities that have leadership teams that are in place.
Tend to recover the quickest we know in particular at Brookdale is an executive director has been with US 2 years or more they tend to perform better and so we've got about 2 thirds I think 65% of our executive directors who've been with us for at least 2 years and our community and that's really where we see the fastest recover.
Great.
And of course, if you go back to our memory care communities, they're just performing incredibly well during the recovery and so where we have a higher concentration of memory care communities, we are performing better.
Okay are there any more questions operator.
That's I think that's it so thank.
Thank you for your interest in Brookdale and joining us this morning.
Operator, you can now close the call.
This concludes today's conference you may now disconnect.
Okay.
[music].