Brookdale Senior Living, Inc. (NYSE:BKD) Poised at Critical Support Line

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Bleak third quarter results, lowered guidance and a restructuring transaction combined to drag Brookdale Senior Living, Inc. (NYSE:BKD) shares lower on Tuesday.

The stock plunged 18.23% to close at $11.80 on large volume of 24.53 million shares, nearly 8X the average volume of 3.16 million shares.

If you were to look at the long term monthly chart of the stock, yesterday’s sharp decline has placed it perilously near the long term support line of $11.00.

Moreover, on the weekly chart, the stock has made a rounding top pattern since February 2016 with bearish implications.

If the $11 line is broken, those implications will be realized.

Brookdale Senior Living, Inc. (NYSE:BKD) has a forgettable third quarter

During the third quarter, the company reported EPS of $-0.28, which missed by $0.17 and revenue of $1.25 billion, which missed by $10 million and was down by 0.8%.

Andy Smith, President and CEO, said in a statement: “We grew average occupancy by 40 basis points sequentially.  However, during the quarter we saw an unprecedented number of new competitive openings in our mid-sized markets that caused us to fall short of our revenue expectations.  We are focused on regaining market share and improved profitability through providing consistent quality service, positioning our products properly and improving sales execution.”

The company also agreed to acquire for $170 million a 15% stake in a proposed JV that will hold a portfolio of 64 properties totaling 5,967 housing units (currently leased to Brookdale by HCP Inc) which are being sold by HCP Inc to Blackstone Real Estate Partners VIII L.P. for $1.125 billion, or $189,000 per unit.

Brookdale Senior Living, Inc. (NYSE:BKD) guidance

For the full year, Brookdale now estimates revenue from senior housing and ancillary services in the range $4.15 billion and $4.20 billion, down from the previous range of $4.20 billion and $4.30 billion.

Adjusted EBITDA is projected in the range $818 million to $828 million, down from $870 million to $890 million.

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