Brookdale scales up in response to industry dynamics



Brookdale and post-acute care services

Brookdale Senior Living Inc. (BKD) has a presence in the top 31 US markets. It’s ranked number one in 18 of these markets.

Brookdale is seeking to become a provider of high-quality post-acute care services. These services are provided to patients in the form of nursing once they leave the hospital. Currently, Brookdale provides some of these services, but it wants to add more services to become an integrated service provider with cost benefits.

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Strong US demographic trends

Brookdale provides services to the aging population in the United States. Thus, demographics play a major role in the company’s growth. Following are some significant demographic data:

  • The US population above 75 years old is estimated to grow three times faster than the base population.
  • According to the U.S. Census Bureau, the population aged 75 and above with incomes of $50,000 and above is expected to grow at the rate of 39% from 2013 to 2018.
  • About 40% of the population aged 85 years and above is expected to have Alzheimer’s.

High demand in the industry

According to the National Investment Center for Seniors Housing & Care (or NIC), there are currently 24 senior housing units per 100 senior citizens aged 75 and above with incomes over $50,000. To maintain the same ratio, the industry needs to add 55,000 units annually through 2018.

To quickly respond to industry dynamics, Brookdale Senior Living is scaling up through acquisitions and joint ventures.

You can gain exposure to Brookdale Senior Living (BKD) by investing in the iShares Russell 1000 Growth ETF (IWF). BKD accounts for 0.06% of IWF. IWF also invests in other healthcare companies such as Gilead Sciences Inc. (GILD), Allergan, Inc. (AGN), and Amgen Inc. (AMGN).

In the next part of this series, we’ll look at Brookdale Senior Living’s (BKD) fourth quarter results for 2014.


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