Sector Snap: Nursing home operators

Ryan Daniels and Kristina Blaschek said Brookdale Senior Living Inc. and Sunrise Senior Living Inc. have kept stable occupancy rates. Brookdale has stepped up sales efforts and is keeping occupancy rates above 90 percent, they said, and Sunrise is becoming more flexible on its rates to attract more patients.

Both companies made presentations at the William Blair Annual Growth Stock Conference on Thursday.

The analysts said Sunrise described most of its revenue as coming from "need-driven" services like assisted living and skilled nursing--services that customers won't cut back on, regardless of economic difficulties. Its independent living business is more vulnerable to cuts in discretionary spending.

Sunrise also explained how it has increased price flexibility for its smaller housing units: it is accepting smaller deposits, and patients who want one-bedroom units are being moved into studio apartments temporarily.

They said Brookdale has stepped up sales efforts as well. Daniels and Blaschek said the company believes it is feeling only minimal effects from the housing market slump, and those effects could reverse themselves once customers see improvement in the housing market.

Brookdale said it has increased prices slightly, and has not felt any pressure to cut prices because its supply and demand are balanced. They kept an "Outperform" rating on the stock.

The analysts said Sunrise is working to open new facilities, which will help increase cash. The analysts retained a "Market Perform" rating due to the ongoing restatement of its past financial results.

In afternoon trading, Brookdale stock slipped 64 cents, or 2.7 percent, to $23.16, and Sunrise shares fell 55 cents, or 2.3 percent, to $24.52.

Brookdale and Sunrise are both scheduled to make presentations at a Jefferies & Co. health care conference Tuesday.