What happened

Shares of Brookdale Senior Living (NYSE:BKD) fell over 17% today after the company reported fourth-quarter and full-year 2018 results. It's the second straight year this has happened to shareholders. The senior housing operator has been attempting to scratch and claw its way back to profitability and out from under its suffocating debt load in recent years. That's proving more difficult than anticipated. 

A high-level glance at operating results reveals that the business saw revenue decline and expenses rise from 2017 to 2018. That's not a trend that creates a successful turnaround. Wall Street is also displeased with the initial full-year 2019 guidance provided by management.

As of 12:01 p.m. EST, the stock had settled to a 14.9% loss.

Check out the latest Brookdale earnings call transcript.

A man banging his fist on a table next to a tablet displaying a falling stock chart.

Image source: Getty Images.

So what

Brookdale Senior Living has been selectively selling off assets in an attempt to shore up the balance sheet, but it hasn't delivered needle-moving results. The business reported a year-over-year revenue decline of 5%, while operating expenses grew 2%. That means margins worsened and losses expanded in 2018 compared to the prior year.

Metric

2018

2017

Change (YOY)

Revenue

$4.53 billion

$4.75 billion

(4.5%)

Operating expenses

$5.12 billion

$5.02 billion

2.1%

Operating loss

($594 million)

($270 million)

N/A

Interest expense

$272 million

$313 million

(13%)

Net income

($528 million)

($571 million)

N/A

Data source: Brookdale Senior Living press release. YOY = year over year. 

While net income improved slightly last year, that was only made possible after accounting for a $293 million gain from asset sales.

Management expects several important financial metrics to deteriorate even further in the year ahead. Brookdale Senior Living expects adjusted EBITDA and free cash flow to be worse in 2019 compared to 2018 -- with free cash flow changing from an inflow of $20 million to an outflow of as much as $100 million.

Now what

Running independent and assisted living facilities is expensive and difficult. Unfortunately for Brookdale Senior Living, that isn't going to change anytime soon. The business is in a difficult position, as there doesn't seem to be an easy way to balance the demands of shareholders with the more important responsibility to clients.