Brookdale is burning through billions of dollars of cash. Cash is what pays the bills, not reported net income.
Over the last 5 fiscal years, the company burned through over $2.5 billion dollars, and the only way Brookdale covered this is by issuing a total of $3.3 billion dollars of debt and stock. Handling the finances this way is never a good thing.
Short of continuing to issue more debt and stock to cover expenses, I don't see how this company can remain in business.
Note I'm using what Buffet calls "owner earnings" to measure the true profitability of this company. Owner earnings is cash from operations that can be returned to shareholders via dividends, stock buy backs or debt reduction.
Historically, Brookdale hasn't been able to do any of this. So, for me, this stock is a definite pass.
(Disclosure: I am a value investor. I do not trade stocks nor do I short stocks. I buy undervalued stocks and I hold them until they reach their fair value or my target price range, whichever comes first.)
I think the management does a fair job as to operations but the environment is extremely difficult. They have no pricing power given the current real estate malaise and the occupancy rates (while directionally okay) benefit from discounted pricing. Margins will become difficult and they will not achieve a positive EPS for at least twenty four months.