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AlerisLife Inc. Announces Second Quarter 2022 Results

AlerisLife Inc. Announces Second Quarter 2022 Results

Occupancy Growth of 110 Basis Points Over Prior Sequential Quarter

Net Loss Reduction of 10% Over Prior Sequential Quarter

Adjusted EBITDA Improvement of $4.1 Million Over Prior Sequential Quarter

Restructuring Plan is Underway to Improve Operating Results

AlerisLife Inc. (Nasdaq: ALR) today announced its financial results for the three months ended June 30, 2022.

“Our second quarter results reflect progress in critical performance areas,” said Jeff Leer, President, Chief Executive Officer and Chief Financial Officer. “Occupancy increased in both the owned and managed senior living communities as we focus on and implement cost reductions. Our second quarter results significantly reduce operating losses on a sequential and year over year basis. During the coming months, we hope to build on this quarter's progress to eventually generate meaningful operating income. To this end, earlier today we began executing on a restructuring plan which includes reducing operating expenses by eliminating certain corporate overhead positions. We plan to complete this restructuring plan by mid-2023. We also ended the quarter with sufficient liquidity to execute on our restructuring plan, with $83.5 million of cash and no debt maturities until 2025."

Second Quarter Summary of Financial Results:

  • Quarter-end occupancy in our owned senior living communities grew 340 basis points, or bps, relative to the end of the first quarter.
  • Quarter-end occupancy in the managed portfolio increased 80 bps relative to the end of the first quarter.
  • Net loss for the second quarter of 2022 was $8.8 million, or $0.28 per diluted share, compared to a net loss of $9.7 million, or $0.31 per diluted share, for the first quarter of 2022, and a net loss of $12.3 million, or $0.39 per diluted share, for the second quarter of 2021, which included $15.4 million of restructuring expenses, partially offset by $11.5 million which was reimbursed by Diversified Healthcare Trust, or DHC.
  • Earnings before interest, taxes, depreciation and amortization, or EBITDA, for the second quarter of 2022 was $(4.4) million compared to $(5.5) million for the first quarter of 2022 and $(8.8) million for the second quarter of 2021. Adjusted EBITDA, as described further below, was $(1.3) million for the second quarter of 2022 compared to $(5.3) million for the first quarter of 2022 and $(4.5) million for the second quarter of 2021. EBITDA and Adjusted EBITDA are non-GAAP financial measures. Reconciliations of net loss determined in accordance with U.S. generally accepted accounting principles, or GAAP, to EBITDA and Adjusted EBITDA for the second quarter of 2022 and 2021 are presented later in this press release. The reconciliation of net loss to EBITDA and Adjusted EBITDA for the first quarter of 2022 is presented in the Form 8-K that we filed on May 3, 2022.
  • RevPAR (resident fee revenues for the corresponding portfolio for the period divided by the average number of available units for the period, divided by the number of months in the period) for the comparable managed communities for the second quarter of 2022 was $3,077 compared to $3,027 for the first quarter of 2022 and $2,961 for the second quarter of 2021, an increase of 1.7% and 3.9%, respectively.
  • RevPAR for the comparable owned communities for the second quarter of 2022 was $2,560 compared to $2,443 for the first quarter of 2022 and $2,357 for the second quarter of 2021, an increase of 4.8% and 8.6%, respectively.

Substantially all of ALR's business is conducted by its two segments: (i) its residential segment through its Five Star Senior Living, or Five Star, brand and (ii) its lifestyle services segment primarily through its brands Ageility Physical Therapy Solutions and Ageility Fitness, or collectively Ageility, and Windsong Home Health. The following tables present data on the owned and leased and managed senior living communities that ALR operates through its Five Star brand, including comparable community data, as well as data on the rehabilitation locations that ALR operates through its Ageility brand, including comparable outpatient location data.

Summary of Operational Results

 

 

As of and for the Three Months Ended

 

 

June 30, 2022

 

March 31, 2022

 

June 30, 2021

Residential Segment:

 

 

 

 

 

 

Five Star:

 

 

 

 

 

 

Number of living units (end of period)

 

 

 

 

 

 

Independent living

 

 

10,460

 

 

 

10,423

 

 

 

10,979

 

Assisted living

 

 

7,696

 

 

 

7,715

 

 

 

12,023

 

Memory care

 

 

1,817

 

 

 

1,861

 

 

 

3,247

 

Skilled nursing

 

 

 

 

 

 

 

 

1,484

 

Total living units

 

 

19,973

 

 

 

19,999

 

 

 

27,733

 

 

 

 

 

 

 

 

RevPAR

 

 

 

 

 

 

Owned and Leased (1)

 

$

2,560

 

 

$

2,443

 

 

$

2,425

 

Managed

 

$

3,077

 

 

$

3,027

 

 

$

3,086

 

Quarter End Occupancy

 

 

 

 

 

 

Owned and Leased (1)

 

 

75.5

%

 

 

72.1

%

 

 

69.7

%

Managed

 

 

75.4

%

 

 

74.6

%

 

 

71.3

%

 

 

 

 

 

 

 

Comparable Communities (2):

 

 

 

 

 

 

RevPAR

 

 

 

 

 

 

Owned

 

$

2,560

 

 

$

2,443

 

 

$

2,357

 

Managed

 

$

3,077

 

 

$

3,027

 

 

$

2,961

 

Quarter End Occupancy

 

 

 

 

 

 

Owned

 

 

75.5

%

 

 

72.1

%

 

 

70.1

%

Managed

 

 

75.4

%

 

 

74.6

%

 

 

73.3

%

Operating Margin (3):

 

 

 

 

 

 

Owned

 

 

(20.1

)%

 

 

(24.2

)%

 

 

(16.0

)%

Managed

 

 

8.4

%

 

 

6.4

%

 

 

10.1

%

 

 

As of and for the Three Months Ended

 

 

June 30, 2022

 

March 31, 2022

 

June 30, 2021

Lifestyle Services Segment:

 

 

 

 

 

 

Ageility:

 

 

 

 

 

 

Number of Clinics and Locations

 

 

 

 

 

 

Inpatient clinics

 

10

 

 

10

 

 

10

 

Outpatient locations (4)

 

202

 

 

201

 

 

218

 

Number of Visits (in thousands)

 

 

 

 

 

 

Inpatient clinics (5)

 

23

 

 

22

 

 

36

 

Outpatient locations

 

153

 

 

144

 

 

156

 

 

 

 

 

 

 

 

Comparable Outpatient Locations (6):

 

 

 

 

 

 

Caseload as a % of occupancy (7)

 

24.8

%

 

24.3

%

 

28.2

%

Operating margin (3)

 

(0.4

)%

 

3.0

%

 

12.5

%

___________________________

(1)

 

The three months ended June 30, 2021 includes four leased communities with approximately 200 living units previously leased from HealthPeak Properties, Inc., or HealthPeak. The lease with HealthPeak was terminated on September 30, 2021.

(2)

 

Comparable communities includes financial data for 20 owned senior living communities and 120 managed senior living communities that ALR continuously owned or managed and operated through its Five Star brand since April 1, 2021, exclusive of 1,532 skilled nursing facility, or SNF, living units that have been closed in 27 Continuing Care Retirement Communities, or CCRCs.

(3)

 

Operating margin is defined as operating revenue less operating expenses divided by operating revenue in each case for the business segment. For the Residential segment, it is inclusive of 1,532 SNF living units, which have been closed in 27 former CCRCs (of which 1,473 living units were closed during the three months ended June 30, 2021). It is exclusive of Provider Relief Funds from the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, and other government grants recognized as other operating income. In addition, it excludes restructuring expenses for the three months ended June 30, 2021 of $10.2 million for the comparable managed communities.

(4)

 

During the three months ended June 30, 2022, ALR opened four locations and closed three locations.

(5)

 

During the three months ended June 30, 2021, ALR closed 27 inpatient rehabilitation clinics.

(6)

 

Comparable outpatient locations includes financial data for 187 outpatient rehabilitation locations that ALR continuously operated since April 1, 2021.

(7)

 

Represents the average number of Ageility customers divided by average total occupancy at each of the senior living communities where we operate Ageility rehabilitation locations. Occupancy is defined as the average total number of residents residing at the senior living communities.

Operational Review

During the quarter ended June 30, 2022, ALR engaged the healthcare consulting arm of Alvarez & Marsal, or A&M, to provide a comprehensive operational review of ALR's business and make recommendations to our Board of Directors. The recommendations made by A&M include general and administrative cost reductions, a corporate reorganization that is designed to enhance accountability and certain operational changes to support team members to ensure the delivery of high-quality experiences to residents and customers and to increase occupancy at ALR's senior living communities, as further described below:

  • Reduce costs annually by a target of approximately $14.0 million, net of investments to be made of approximately $4.0 million as described below, by:
    • Streamlining redundant business processes and reducing investments in non-core functions,
    • rationalizing information technology systems to those that directly support core business functions, and ensuring their optimal utilization, and
    • continually assessing general and administrative expenses to identify cost savings opportunities.
  • Invest approximately $4.0 million to refocus on ALR's core business and invest strategically in projects, processes and systems that will enhance our ability to successfully operate our residential and lifestyle services businesses, including:
    • Re-defining executive leadership team, inclusive of hiring a Chief Operating Officer to oversee field and national operations and a Chief Financial Officer,
    • investing in a scalable and agile national operations infrastructure to drive operational excellence and results, and
    • establishing a centralized sales function with reinstituted regional sales support to focus on both sales and marketing efforts.

Based on A&M's operational review, on August 3, 2022, ALR is executing a restructuring plan in which it intends to eliminate certain positions in its corporate team. ALR expects to complete this restructuring by the middle of 2023. In connection with implementing this restructuring plan, ALR expects to incur non-recurring cash expenses of up to $6.1 million. These expenses are expected to include up to $0.2 million of retention payments, up to $2.6 million of severance, benefits and transition expenses and up to $3.3 million of restructuring expenses. ALR recognized costs of $0.7 million related to the A&M operational review for the three months ended June 30, 2022, which are recorded in general and administrative expenses in our condensed consolidated statements of operations.

Summary of Senior Living Communities and Outpatient Rehabilitation Locations

Presented below is a summary of the communities, units, average occupancy, quarter end occupancy, revenues and residential management fees for the Five Star senior living communities ALR manages for DHC, as of and for the three months ended June 30, 2022 (dollars in thousands):

 

 

Total

 

 

Communities

 

Units

 

Average
Occupancy

 

Quarter End
Occupancy

 

Community
Revenues (1)

 

Management
Fees

Independent and assisted living communities

 

120

 

17,886

 

74.1%

 

75.4%

 

$

165,179

 

$

8,971

_______________________________________

(1)

 

Managed senior living communities' revenues do not represent ALR's revenues, and are included to provide supplemental information regarding the operating results of the Five Star senior living communities from which ALR earns residential management fees.

Presented below is a summary of the Ageility outpatient rehabilitation locations ALR operated as of and for the three months ended June 30, 2022 (dollars in thousands):

 

 

As of and for the
Three Months Ended June 30, 2022

 

 

Number of
Locations

 

Total
Revenue (1)(2)

 

Caseload as a
% of
occupancy (3)

 

EBITDA
Margin (4)

Outpatient Locations in DHC Owned Communities Managed by Five Star

 

93

 

$

7,572

 

25.6%

 

—%

Outpatient Locations at ALR Owned Communities

 

15

 

 

783

 

27.3%

 

(2.0)%

Outpatient Locations at Other Communities (5)

 

94

 

 

4,339

 

23.0%

 

(2.2)%

Total Outpatient Locations

 

202

 

$

12,694

 

24.5%

 

(0.9)%

_______________________________________

(1)

 

Excludes revenue of $1,736 earned during the three months ended June 30, 2022 for ten Ageility inpatient rehabilitation clinics.

(2)

 

Total Ageility revenue includes fitness revenue. Total Ageility revenue excludes home health care services, which is part of the lifestyle services segment.

(3)

 

Represents the average number of Ageility customers divided by average total occupancy at each of the senior living communities where we operate Ageility rehabilitation locations. Occupancy is defined as the average total number of residents residing at the senior living communities.

(4)

 

EBITDA Margin is a non-GAAP financial measure and represents rehabilitation locations that are in service as of June 30, 2022. A reconciliation of EBITDA Margin is presented later in this press release.

(5)

 

Other communities includes outpatient rehabilitation locations at senior living communities not owned or managed by ALR.

Conference Call Information:

At 1:00 p.m. Eastern Time on August 4, 2022, ALR's President, Chief Executive Officer, Chief Financial Officer and Treasurer, Jeffrey Leer, will host a conference call to discuss ALR's second quarter 2022 financial results.

The conference call telephone number is (877) 329-4332. Participants calling from outside the United States and Canada should dial (412) 317-5436. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. Eastern Time on August 11, 2022. To hear the replay, dial (412) 317-0088. The replay pass code is 5024418.

A live audio webcast of the conference call will also be available in a listen-only mode on ALR’s website, www.alerislife.com. Participants wanting to access the webcast should visit ALR’s website about five minutes before the call. The archived webcast will be available for replay on ALR’s website following the call for about a week. The transcription, recording and retransmission in any way of ALR's second quarter ended June 30, 2022 financial results conference call are strictly prohibited without the prior written consent of ALR. ALR’s website is not incorporated as part of this press release.

About AlerisLife:

AlerisLife enriches and inspires the lives of its older adult customers across the United States by delivering an exceptional and enhanced resident experience to senior living and active adult residents, while also offering lifestyle services to the younger choice-based consumer. The Company is headquartered in Newton, Massachusetts. For more information, visit www.alerislife.com.

AlerisLife Inc.

Condensed Consolidated Statements of Operations

(amounts in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

2021

 

2022

 

2021

REVENUES

 

 

 

 

 

 

 

 

Lifestyle services

 

$

14,645

 

 

$

17,453

 

 

$

28,784

 

 

$

37,006

 

Residential

 

 

16,094

 

 

 

16,378

 

 

 

31,480

 

 

 

33,435

 

Residential management fees

 

 

8,971

 

 

 

12,927

 

 

 

17,903

 

 

 

26,777

 

Total management and operating revenues

 

 

39,710

 

 

 

46,758

 

 

 

78,167

 

 

 

97,218

 

Reimbursed community-level costs incurred on behalf of managed communities

 

 

127,648

 

 

 

195,271

 

 

 

258,584

 

 

 

408,431

 

Other reimbursed expenses

 

 

3,765

 

 

 

16,592

 

 

 

7,515

 

 

 

22,072

 

Total revenues

 

 

171,123

 

 

 

258,621

 

 

 

344,266

 

 

 

527,721

 

 

 

 

 

 

 

 

 

 

Other operating income

 

 

 

 

 

2

 

 

 

42

 

 

 

7,795

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

Lifestyle services expenses

 

 

14,329

 

 

 

15,668

 

 

 

27,550

 

 

 

31,878

 

Residential wages and benefits

 

 

9,159

 

 

 

9,896

 

 

 

17,786

 

 

 

21,909

 

Other residential operating expenses

 

 

4,973

 

 

 

8,968

 

 

 

12,322

 

 

 

15,234

 

Community-level costs incurred on behalf of managed communities

 

 

127,648

 

 

 

195,271

 

 

 

258,584

 

 

 

408,431

 

General and administrative

 

 

17,844

 

 

 

22,748

 

 

 

36,190

 

 

 

45,139

 

Restructuring expenses

 

 

528

 

 

 

15,389

 

 

 

374

 

 

 

15,639

 

Depreciation and amortization

 

 

3,284

 

 

 

2,989

 

 

 

6,447

 

 

 

5,929

 

Total operating expenses

 

 

177,765

 

 

 

270,929

 

 

 

359,253

 

 

 

544,159

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(6,642

)

 

 

(12,306

)

 

 

(14,945

)

 

 

(8,643

)

 

 

 

 

 

 

 

 

 

Interest, dividend and other income

 

 

129

 

 

 

76

 

 

 

209

 

 

 

160

 

Interest and other expense

 

 

(1,251

)

 

 

(409

)

 

 

(2,283

)

 

 

(872

)

Unrealized (loss) gain on equity investments

 

 

(1,050

)

 

 

398

 

 

 

(1,682

)

 

 

533

 

Realized gain (loss) on sale of debt and equity investments

 

 

 

 

 

97

 

 

 

(45

)

 

 

193

 

Gain on termination of lease

 

 

 

 

 

 

 

 

279

 

 

 

 

Loss before income taxes

 

 

(8,814

)

 

 

(12,144

)

 

 

(18,467

)

 

 

(8,629

)

Benefit (provision) for income taxes

 

 

9

 

 

 

(158

)

 

 

(68

)

 

 

(358

)

Net loss

 

$

(8,805

)

 

$

(12,302

)

 

$

(18,535

)

 

$

(8,987

)

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding—basic and diluted

 

 

31,810

 

 

 

31,552

 

 

 

31,799

 

 

 

31,541

 

 

 

 

 

 

 

 

 

 

Net loss per share—basic and diluted

 

$

(0.28

)

 

$

(0.39

)

 

$

(0.58

)

 

$

(0.28

)

AlerisLife Inc.
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)
(unaudited)

Non-GAAP financial measures are financial measures that are not determined in accordance with GAAP. ALR believes the non-GAAP financial measures presented in the tables below are meaningful supplemental disclosures because they may help investors better understand changes in ALR’s operating results and its ability to meet financial obligations or service debt, make capital expenditures and expand its business. These non-GAAP financial measures may also help investors make comparisons between ALR and other companies on both a GAAP and non-GAAP basis. ALR believes that EBITDA, Adjusted EBITDA, EBITDA Margin and Net Income (Loss) Margin are meaningful financial measures that may help investors better understand its financial performance, including by allowing investors to compare ALR's performance between periods and to the performance of other companies. ALR management uses EBITDA, Adjusted EBITDA, EBITDA Margin and Net Income (Loss) Margin to evaluate ALR’s financial performance and compare ALR’s performance over time and to the performance of other companies. ALR calculates EBITDA, Adjusted EBITDA, EBITDA Margin and Net Income (Loss) Margin as shown below or later in this press release. These measures should not be considered as alternatives to net income (loss) or operating income (loss), as indicators of ALR’s operating performance or as measures of ALR’s liquidity. Also, EBITDA, Adjusted EBITDA, EBITDA Margin and Net Income (Loss) Margin as presented may not be comparable to similarly titled amounts calculated by other companies.

ALR believes that net income (loss) is the most directly comparable financial measure, determined according to GAAP, to ALR’s presentation of EBITDA and Adjusted EBITDA. The following table presents the reconciliation of these non-GAAP financial measures to net income (loss) for the three and six months ended June 30, 2022 and 2021.

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

2021

 

2022

 

2021

Net loss

 

$

(8,805

)

 

$

(12,302

)

 

$

(18,535

)

 

$

(8,987

)

Add (less):

 

 

 

 

 

 

 

 

Interest and other expense

 

 

1,251

 

 

 

409

 

 

 

2,283

 

 

 

872

 

Interest, dividend and other income

 

 

(129

)

 

 

(76

)

 

 

(209

)

 

 

(160

)

(Benefit) provision for income taxes

 

 

(9

)

 

 

158

 

 

 

68

 

 

 

358

 

Depreciation and amortization

 

 

3,284

 

 

 

2,989

 

 

 

6,447

 

 

 

5,929

 

EBITDA

 

 

(4,408

)

 

 

(8,822

)

 

 

(9,946

)

 

 

(1,988

)

Add (less):

 

 

 

 

 

 

 

 

Separation costs (1)

 

 

1,319

 

 

 

 

 

 

1,319

 

 

 

 

Unrealized loss (gain) on equity investments

 

 

1,050

 

 

 

(398

)

 

 

1,682

 

 

 

(533

)

Gain on termination of leases

 

 

 

 

 

 

 

 

(279

)

 

 

 

Transaction costs (2)

 

 

704

 

 

 

 

 

 

704

 

 

 

 

Net restructuring expenses (3)

 

 

54

 

 

 

3,858

 

 

 

(100

)

 

 

4,108

 

Long-lived asset impairment (4)

 

 

 

 

 

890

 

 

 

 

 

 

890

 

Adjusted EBITDA

 

$

(1,281

)

 

$

(4,472

)

 

$

(6,620

)

 

$

2,477

 

_______________________________________

(1)

 

Costs incurred for the three and six months ended June 30, 2022 represent those related to the separation of our former President and Chief Executive Officer during the second quarter of 2022.

(2)

 

The three and six months ended June 30, 2022 includes costs incurred related to the comprehensive operational review by A&M and are included in general and administrative expenses in the condensed consolidated statements of operations.

(3)

 

The three and six months ended June 30, 2022 and 2021 includes costs incurred related to the repositioning of ALR's residential service offerings and are included in restructuring expenses in the condensed consolidated statements of operations, which are reported net of reimbursed expenses of $474 and $11,531 received from DHC, respectively.

(4)

 

Represents asset impairments related to one previously leased community that had a fire on April 4, 2021.

AlerisLife Inc.
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)
(unaudited)

ALR believes that net income (loss) is the most directly comparable financial measure, determined according to GAAP, to ALR’s presentation of EBITDA, Net Loss Margin and EBITDA Margin. The following table presents the reconciliation of these non-GAAP financial measures to net income (loss) for the three months ended June 30, 2022 for Ageility.

 

 

Three Months Ended June 30, 2022

Lifestyle services:

 

 

Revenue

 

$

14,645

 

Less: Home health services

 

 

215

 

Less: Inpatient rehabilitation clinics (1)

 

 

1,736

 

Total Ageility revenue (2)

 

$

12,694

 

 

 

 

Ageility:

 

 

Net loss

 

$

(204

)

Add: Depreciation

 

 

96

 

EBITDA

 

$

(108

)

 

 

 

Net Loss Margin (3)

 

 

(1.6

)%

EBITDA Margin (4)

 

 

(0.9

)%

_______________________________________

(1)

 

Revenue for ten Ageility inpatient rehabilitation clinics that currently remain operated by Ageility.

(2)

 

Total Ageility revenue includes revenue from outpatient rehabilitation locations and fitness.

(3)

 

Net Loss Margin is defined by ALR as net loss for the period divided by total revenue for the period.

(4)

 

EBITDA Margin is defined by ALR as EBITDA for the period divided by total revenue for the period.

AlerisLife Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

(unaudited)

 

 

 

June 30,

 

December 31,

 

 

2022

 

2021

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

83,460

 

 

$

66,987

 

Restricted cash and cash equivalents

 

 

21,902

 

 

 

24,970

 

Accounts receivable, net

 

 

8,816

 

 

 

9,244

 

Due from related person

 

 

50,368

 

 

 

41,664

 

Debt and equity investments, of which $7,086 and $7,609 are restricted, respectively

 

 

16,381

 

 

 

19,535

 

Prepaid expenses and other current assets

 

 

24,175

 

 

 

24,433

 

Total current assets

 

 

205,102

 

 

 

186,833

 

 

 

 

 

 

Property and equipment, net

 

 

160,791

 

 

 

159,843

 

Operating lease right-of-use assets

 

 

6,004

 

 

 

9,197

 

Finance lease right-of-use assets

 

 

3,005

 

 

 

3,467

 

Restricted cash and cash equivalents

 

 

974

 

 

 

982

 

Restricted debt and equity investments

 

 

3,198

 

 

 

3,873

 

Other long-term assets

 

 

10,932

 

 

 

12,082

 

Total assets

 

$

390,006

 

 

$

376,277

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

14,969

 

 

$

37,516

 

Accrued expenses and other current liabilities

 

 

38,297

 

 

 

31,488

 

Accrued compensation and benefits

 

 

33,080

 

 

 

34,295

 

Accrued self-insurance obligations

 

 

29,772

 

 

 

31,739

 

Operating lease liabilities

 

 

419

 

 

 

699

 

Finance lease liabilities

 

 

1,182

 

 

 

872

 

Due to related persons

 

 

3,206

 

 

 

3,879

 

Current portion of debt

 

 

429

 

 

 

419

 

Total current liabilities

 

 

121,354

 

 

 

140,907

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

Accrued self-insurance obligations

 

 

29,662

 

 

 

34,744

 

Operating lease liabilities

 

 

6,083

 

 

 

9,366

 

Finance lease liabilities

 

 

2,588

 

 

 

3,050

 

Long-term debt

 

 

67,072

 

 

 

6,364

 

Other long-term liabilities

 

 

236

 

 

 

256

 

Total long-term liabilities

 

 

105,641

 

 

 

53,780

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

Common stock, par value $0.01: 75,000,000 shares authorized, 32,638,395 and 32,662,649 shares issued and outstanding, respectively

 

 

326

 

 

 

327

 

Additional paid-in-capital

 

 

462,038

 

 

 

461,298

 

Accumulated deficit

 

 

(299,599

)

 

 

(281,064

)

Accumulated other comprehensive income

 

 

246

 

 

 

1,029

 

Total shareholders’ equity

 

 

163,011

 

 

 

181,590

 

Total liabilities and shareholders' equity

 

$

390,006

 

 

$

376,277

 

AlerisLife Inc.

Residential Segment Data

(dollars in thousands, except per unit amounts)

(unaudited)

 

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

 

2022

 

2022

 

2021

 

2021

 

2021

 

 

 

 

 

 

 

 

 

 

 

Owned and Leased Senior Living Communities

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

16,094

 

 

$

15,386

 

 

$

14,883

 

 

$

16,320

 

 

$

16,378

 

Other operating income (1)

 

 

 

 

 

42

 

 

 

 

 

 

 

 

 

2

 

Operating expenses

 

 

18,861

 

 

 

19,371

 

 

 

18,574

 

 

 

17,895

 

 

 

21,012

 

Operating loss

 

 

(2,767

)

 

 

(3,943

)

 

 

(3,691

)

 

 

(1,575

)

 

 

(4,632

)

Operating margin

 

 

(17.2

)%

 

 

(25.6

)%

 

 

(24.8

)%

 

 

(9.7

)%

 

 

(28.3

)%

Number of communities (end of period)

 

 

20

 

 

 

20

 

 

 

20

 

 

 

20

 

 

 

24

 

Number of living units (end of period) (2)

 

 

2,087

 

 

 

2,100

 

 

 

2,100

 

 

 

2,099

 

 

 

2,251

 

Average occupancy

 

 

72.5

%

 

 

71.0

%

 

 

72.0

%

 

 

69.9

%

 

 

68.1

%

Quarter end occupancy

 

 

75.5

%

 

 

72.1

%

 

 

72.7

%

 

 

72.9

%

 

 

69.7

%

RevPAR (3)

 

$

2,560

 

 

$

2,443

 

 

$

2,349

 

 

$

2,411

 

 

$

2,425

 

RevPOR (4)

 

$

3,492

 

 

$

3,444

 

 

$

3,192

 

 

$

3,375

 

 

$

3,524

 

 

 

 

 

 

 

 

 

 

 

 

Managed Senior Living Communities (5):

 

 

 

 

 

 

 

 

 

 

Residential management fees

 

$

8,971

 

 

$

8,932

 

 

$

9,482

 

 

$

11,220

 

 

$

12,927

 

 

 

 

 

 

 

 

 

 

 

 

Community-level revenues

 

 

165,179

 

 

 

162,552

 

 

 

161,907

 

 

 

210,160

 

 

 

243,947

 

Other operating income (1)

 

 

75

 

 

 

199

 

 

 

602

 

 

 

786

 

 

 

75

 

Community-level expenses (6)

 

 

151,906

 

 

 

152,892

 

 

 

159,329

 

 

 

203,756

 

 

 

237,461

 

Community operating income

 

 

13,348

 

 

 

9,859

 

 

 

3,180

 

 

 

7,190

 

 

 

6,561

 

Community operating margin

 

 

8.1

%

 

 

6.1

%

 

 

2.0

%

 

 

3.4

%

 

 

2.7

%

Number of communities (end of period)

 

 

120

 

 

 

120

 

 

 

121

 

 

 

159

 

 

 

228

 

Number of living units (end of period) (2)

 

 

17,886

 

 

 

17,899

 

 

 

18,005

 

 

 

20,669

 

 

 

25,482

 

Average occupancy

 

 

74.1

%

 

 

74.1

%

 

 

73.7

%

 

 

72.2

%

 

 

69.5

%

Quarter end occupancy

 

 

75.4

%

 

 

74.6

%

 

 

74.8

%

 

 

73.8

%

 

 

71.3

%

RevPAR (3)

 

$

3,077

 

 

$

3,027

 

 

$

2,919

 

 

$

3,046

 

 

$

3,086

 

RevPOR (4)

 

$

4,109

 

 

$

4,084

 

 

$

3,875

 

 

$

4,129

 

 

$

4,389

 

_______________________________________

(1)

 

Other operating income represents income recognized for funds received under the CARES Act and other government grants.

(2)

 

Includes living units categorized as in service. As a result, the number of living units may vary from period to period for reasons other than the acquisition or disposition of senior living communities.

(3)

 

RevPAR is defined by ALR as resident fee revenues for the corresponding portfolio for the period divided by the average number of available units for the period, divided by the number of months in the period. Data for the three months ended June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021 exclude income received by senior living communities under the CARES Act and other government grants.

(4)

 

RevPOR is defined by ALR as resident fee revenues for the corresponding portfolio for the period divided by the average number of occupied units for the period, divided by the number of months in the period. Data for the three months ended June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021 exclude income received by senior living communities under the CARES Act and other government grants.

(5)

 

Managed senior living communities, other than ALR's residential management fees, represents financial data of senior living communities managed for DHC and does not represent financial results of ALR. Managed senior living communities' data is included to provide supplemental information regarding the operating results of the senior living communities from which ALR earns residential management fees.

(6)

 

The three months ended June 30, 2022, December 31, 2021, September 30, 2021 and June 30, 2021 includes restructuring expense of $474, $966, $813 and $11,531, respectively.

AlerisLife Inc.

Comparable Communities Residential Segment Data

(dollars in thousands, except per unit amounts)

(unaudited)

 

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

 

2022

 

2022

 

2021

 

2021

 

2021

Owned Senior Living Communities (1):

 

 

 

 

 

 

 

 

 

 

Number of communities (end of period)

 

 

20

 

 

 

20

 

 

 

20

 

 

 

20

 

 

 

20

 

Number of living units (end of period) (2)

 

 

2,087

 

 

 

2,100

 

 

 

2,100

 

 

 

2,099

 

 

 

2,099

 

Average occupancy

 

 

72.5

%

 

 

71.0

%

 

 

72.0

%

 

 

70.4

%

 

 

68.3

%

Quarter end occupancy

 

 

75.5

%

 

 

72.1

%

 

 

72.7

%

 

 

72.9

%

 

 

70.1

%

RevPAR (3)

 

$

2,560

 

 

$

2,443

 

 

$

2,349

 

 

$

2,354

 

 

$

2,357

 

RevPOR (4)

 

$

3,492

 

 

$

3,444

 

 

$

3,192

 

 

$

3,270

 

 

$

3,413

 

 

 

 

 

 

 

 

 

 

 

 

Managed Senior Living Communities (1)(5):

 

 

 

 

 

 

 

 

 

 

Number of communities (end of period)

 

 

120

 

 

 

120

 

 

 

120

 

 

 

120

 

 

 

120

 

Number of living units (end of period) (2)

 

 

17,886

 

 

 

17,899

 

 

 

17,899

 

 

 

17,899

 

 

 

17,898

 

Average occupancy

 

 

74.1

%

 

 

74.1

%

 

 

74.1

%

 

 

73.4

%

 

 

72.9

%

Quarter end occupancy

 

 

75.4

%

 

 

74.6

%

 

 

75.2

%

 

 

74.6

%

 

 

73.3

%

RevPAR (3)

 

$

3,077

 

 

$

3,027

 

 

$

2,900

 

 

$

2,941

 

 

$

2,961

 

RevPOR (4)

 

$

4,109

 

 

$

4,084

 

 

$

3,831

 

 

$

3,922

 

 

$

4,018

 

_______________________________________

(1)

 

Includes data for Five Star senior living communities that ALR has continuously owned or managed since April 1, 2021. The summary of operations for comparable communities excludes 1,532 SNF living units that have been closed in 27 former CCRCs that Five Star presently manages as independent or assisted living communities.

(2)

 

Includes living units categorized as in service. As a result, the number of living units may vary from period to period for reasons other than the acquisition or disposition of senior living communities.

(3)

 

RevPAR is defined by ALR as resident fee revenues for the corresponding portfolio for the period divided by the average number of available units for the period, divided by the number of months in the period. Data for the three months ended June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021 exclude income received by senior living communities under the CARES Act and other government grants.

(4)

 

RevPOR is defined by ALR as resident fee revenues for the corresponding portfolio for the period divided by the average number of occupied units for the period, divided by the number of months in the period. Data for the three months ended June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021 exclude income received by senior living communities under the CARES Act and other government grants.

(5)

 

Residential segment data for comparable managed senior living communities represents financial data of senior living communities managed for DHC and does not represent financial results of ALR. Managed senior living communities' data is included to provide supplemental information regarding the operating results of the senior living communities from which ALR earns residential management fees.

AlerisLife Inc.

Lifestyle Services Segment Data

(dollars in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

 

2022

 

2022

 

2021

 

2021

 

2021

Lifestyle Services (1):

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

14,645

 

 

$

14,139

 

 

$

15,626

 

 

$

15,382

 

 

$

17,453

 

Outpatient

 

 

11,753

 

 

 

11,165

 

 

 

12,848

 

 

 

12,747

 

 

 

13,688

 

Fitness

 

 

941

 

 

 

881

 

 

 

890

 

 

 

853

 

 

 

827

 

Other

 

 

1,951

 

 

 

2,093

 

 

 

1,888

 

 

 

1,782

 

 

 

2,938

 

Operating expenses (2)

 

 

14,438

 

 

 

13,334

 

 

 

14,045

 

 

 

13,348

 

 

 

17,517

 

Operating income (loss)

 

 

207

 

 

 

805

 

 

 

1,581

 

 

 

2,034

 

 

 

(64

)

Operating margin (3)

 

 

1.4

%

 

 

5.7

%

 

 

10.1

%

 

 

13.2

%

 

 

(0.4

)%

Number of inpatient clinics (end of period)

 

 

10

 

 

 

10

 

 

 

10

 

 

 

10

 

 

 

10

 

Number of outpatient locations (end of period)

 

 

202

 

 

 

201

 

 

 

205

 

 

 

223

 

 

 

218

 

Number of fitness locations (end of period)

 

 

76

 

 

 

73

 

 

 

60

 

 

 

61

 

 

 

43

 

_______________________________________

(1)

 

Includes Ageility rehabilitation locations and fitness operations as well as home healthcare operations.

(2)

 

The three months ended December 31, 2021, September 30, 2021 and June 30, 2021 includes restructuring expenses of $23, $(310) and $1,720, respectively.

(3)

 

Operating margin is defined as operating revenue less operating expenses divided by operating revenue in each period.

AlerisLife Inc.

Comparable Lifestyle Services Segment Data

(dollars in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

 

2022

 

2022

 

2021

 

2021

 

2021

Lifestyle Services (1)(2):

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

12,332

 

 

$

11,834

 

 

$

13,154

 

 

$

13,047

 

 

$

13,983

 

Outpatient

 

 

11,200

 

 

 

10,812

 

 

 

12,075

 

 

 

11,964

 

 

 

12,892

 

Fitness

 

 

917

 

 

 

852

 

 

 

845

 

 

 

809

 

 

 

783

 

Other

 

 

215

 

 

 

170

 

 

 

234

 

 

 

274

 

 

 

308

 

Operating expenses

 

 

12,346

 

 

 

11,503

 

 

 

11,852

 

 

 

11,709

 

 

 

12,399

 

Operating (loss) income

 

 

(14

)

 

 

331

 

 

 

1,302

 

 

 

1,338

 

 

 

1,584

 

Operating margin (3)

 

 

(0.1

)%

 

 

2.8

%

 

 

9.9

%

 

 

10.3

%

 

 

11.3

%

Number of outpatient locations (end of period)

 

 

187

 

 

 

187

 

 

 

187

 

 

 

187

 

 

 

187

 

Number of fitness locations (end of period)

 

 

71

 

 

 

69

 

 

 

52

 

 

 

58

 

 

 

40

 

_______________________________________

(1)

 

Includes Ageility outpatient rehabilitation locations and fitness operations as well as home healthcare operations that ALR has continuously operated since April 1, 2021.

(2)

 

Excludes ten Ageility inpatient rehabilitation clinics.

(3)

 

Operating margin is defined as operating revenue less operating expenses divided by operating revenue in each period.

AlerisLife Inc.

Owned Senior Living Communities as of and for the Three Months Ended June 30, 2022

(dollars in thousands)

(unaudited)

 

No.

 

Community Name

 

State

 

Property
Type (1)

 

Living
Units

 

Residential
Revenues (4)

 

Gross Carrying
Value

 

Net Carrying
Value

 

Date Acquired

 

Most Recent
Renovation

1

 

Morningside of Decatur (2)

 

Alabama

 

AL

 

49

 

$

386

 

$

7,697

 

$

4,205

 

11/19/2004

 

2021

2

 

Morningside of Auburn (2)

 

Alabama

 

AL

 

42

 

 

375

 

 

2,424

 

 

1,262

 

11/19/2004

 

1997

3

 

The Palms of Fort Myers (2)

 

Florida

 

IL

 

218

 

 

1,829

 

 

7,358

 

 

3,886

 

4/1/2002

 

1988

4

 

Five Star Residences of Banta Pointe (3)

 

Indiana

 

AL

 

121

 

 

807

 

 

11,070

 

 

6,354

 

9/29/2011

 

2006

5

 

Five Star Residences of Fort Wayne (2)

 

Indiana

 

AL

 

154

 

 

962

 

 

9,295

 

 

5,755

 

9/29/2011

 

1998

6

 

Five Star Residences of Clearwater

 

Indiana

 

AL

 

88

 

 

343

 

 

14,647

 

 

9,278

 

6/1/2011

 

1999

7

 

Five Star Residences of Lafayette

 

Indiana

 

AL

 

109

 

 

604

 

 

11,878

 

 

7,532

 

6/1/2011

 

2000

8

 

Five Star Residences of Noblesville (2)

 

Indiana

 

AL

 

151

 

 

1,180

 

 

13,971

 

 

8,697

 

7/1/2011

 

2005

9

 

The Villa at Riverwood (2)

 

Missouri

 

IL

 

112

 

 

736

 

 

4,993

 

 

3,223

 

4/1/2002

 

1986

10

 

Voorhees Senior Living (2)

 

New Jersey

 

AL

 

91

 

 

925

 

 

20,097

 

 

13,552

 

7/1/2008

 

1999

11

 

Washington Township Senior Living

 

New Jersey

 

AL

 

93

 

 

853

 

 

26,482

 

 

17,265

 

7/1/2008

 

1998

12

 

Carriage House Senior Living (2)

 

North Carolina

 

AL

 

98

 

 

967

 

 

9,981

 

 

5,307

 

12/1/2008

 

1997

13

 

Forest Heights Senior Living (2)

 

North Carolina

 

AL

 

111

 

 

774

 

 

16,267

 

 

10,516

 

12/1/2008

 

1998

14

 

Fox Hollow Senior Living (2)

 

North Carolina

 

AL

 

77

 

 

1,184

 

 

26,065

 

 

17,421

 

7/1/2000

 

1999

15

 

Legacy Heights Senior Living (2)

 

North Carolina

 

AL

 

116

 

 

741

 

 

7,749

 

 

3,626

 

12/1/2008

 

1997

16

 

Morningside at Irving Park (2)

 

North Carolina

 

AL

 

91

 

 

801

 

 

3,829

 

 

1,593

 

11/19/2004

 

1997

17

 

The Devon Senior Living

 

Pennsylvania

 

AL

 

84

 

 

467

 

 

33,188

 

 

14,842

 

7/1/2008

 

1985

18

 

The Legacy of Anderson (2)

 

South Carolina

 

IL

 

101

 

 

632

 

 

11,369

 

 

6,622

 

12/1/2008

 

2003

19

 

Morningside of Springfield (2)

 

Tennessee

 

AL

 

54

 

 

505

 

 

18,934

 

 

11,658

 

11/19/2004

 

1984

20

 

Huntington Place

 

Wisconsin

 

AL

 

127

 

 

995

 

 

2,478

 

 

1,512

 

7/15/2010

 

1999

 

 

Total

 

 

 

 

 

2,087

 

$

16,066

 

$

259,772

 

$

154,106

 

 

 

 

_______________________________________

(1)

 

AL is primarily an assisted living community and IL is primarily an independent living community.

(2)

 

Encumbered property under ALR's $95,000 Loan.

(3)

 

Encumbered property under ALR's mortgage note having an aggregate principal amount outstanding of $6,769 as of June 30, 2022.

(4)

 

Excludes funds received under the CARES Act recognized as other operating income.

Warning Concerning Forward-Looking Statements

This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever ALR uses words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, "will", “may” and negatives or derivatives of these or similar expressions, ALR is making forward-looking statements. These forward-looking statements are based upon ALR’s present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained in or implied by ALR’s forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond ALR's control. For example:

  • This press release includes statements regarding the comprehensive operational review performed by Alvarez & Marsal, and the recommendations made to the Board of Directors to incorporate into the restructuring plan, including general and administrative cost reductions and certain operational changes, which ALR has begun to execute on. ALR may not be able to implement the recommendations in a timely manner or at all, the costs to implement those recommendations may be more than it expects, it may not realize the benefits it anticipates from implementing the recommendations, and it may not be able to achieve its objectives from the implementation of the recommendations.
  • Mr. Leer refers to progress ALR made in the second quarter of 2022, noting improvements in occupancy in both ALR's owned and managed senior living communities, which was accomplished while ALR continued to focus on cost reductions, and that ALR hopes to build on this progress to eventually generate meaningful operating income. However, this progress may not continue as occupancy could decline, ALR's costs could increase due to a variety of factors, including factors outside its controls such as the COVID-19 pandemic, inflation, labor availability constraints and other possible negative market conditions among others, and ALR may not achieve meaningful operating income.
  • Mr. Leer states that ALR has sufficient liquidity to execute on the restructuring plan and no debt maturities until 2025. However, the costs to implement the restructuring plan may be more than it anticipates, or the cost of normal business operations may increase due to factors outside of ALR's control, and the current liquidity may not be sufficient.

The information contained in ALR’s filings with the Securities and Exchange Commission, or SEC, including under “Risk Factors” in ALR’s periodic reports, or incorporated therein, identifies other important factors that could cause ALR’s actual results to differ materially from those stated in or implied by ALR’s forward-looking statements. ALR’s filings with the SEC are available on the SEC’s website at www.sec.gov.

You should not place undue reliance upon forward-looking statements.

Except as required by law, ALR does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.

Michael Kodesch, Director, Investor Relations
(617) 796-8245

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