AlerisLife Inc. Announces Third Quarter 2022 Results

November 02, 2022 at 16:15 PM EDT

Combined Sequential Quarter End Occupancy Growth of 180 Basis Points

Sequential Quarter Management and Operating Revenues Growth of $1.8 Million, or 4.6%

Restructuring Plan on Track as Adjusted EBITDA Improvements Continue

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

“We continued to make steady progress implementing our plan to improve our operating results and drive efficiencies in our organization throughout the third quarter,” said Jeff Leer, President and Chief Executive Officer. “Owned and managed community occupancy increased 290 basis points and 160 basis points, respectively, or 180 basis points across all residential senior living communities, as we continue to enhance our sales and marketing strategies. We also rounded out our executive team with the addition of Heather Pereira as our new Chief Financial Officer and Philip Benjamson as our new Chief Operating Officer. We ended the quarter with sufficient liquidity to execute on our restructuring plan and, following approximately $3.8 million of capital improvements invested in our owned senior living communities in the third quarter, we had $79.1 million of cash at quarter-end and no debt maturities until 2025."

Third Quarter Summary of Financial Results:

Quarter-end occupancy in ALR's owned senior living communities grew 290 basis points, or bps, relative to the end of the second quarter.
Quarter-end occupancy for the managed portfolio increased 160 bps relative to the end of the second quarter.
Net loss for the third quarter of 2022 was $8.5 million, or $0.27 per diluted share, which included $1.6 million of costs related to the restructuring plan implemented as a result of Alvarez & Marsal's, or A&M's, operational review, compared to a net loss of $8.8 million, or $0.28 per diluted share, for the second quarter of 2022, and a net loss of $10.2 million, or $0.32 per diluted share, for the third quarter of 2021, which included a $3.3 million loss from a termination of a lease and $1.2 million of restructuring expenses related to the repositioning of ALR's residential service offerings, partially offset by $0.8 million which was reimbursed by Diversified Healthcare Trust, or DHC.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, for the third quarter of 2022 was $(4.1) million compared to $(4.4) million for the second quarter of 2022 and $(7.0) million for the third quarter of 2021. Adjusted EBITDA, as described further below, was $(0.5) million for the third quarter of 2022 compared to $(1.3) million for the second quarter of 2022 and $(3.3) million for the third 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 third quarter of 2022 and 2021 are presented later in this press release. The reconciliation of net loss to EBITDA and Adjusted EBITDA for the second quarter of 2022 is presented in the Form 8-K that ALR furnished on August 3, 2022.
RevPAR (resident fee revenues for the corresponding portfolio for the period divided by the average number of available units for the corresponding portfolio for the period, divided by the number of months in the period) for the comparable managed communities for the third quarter of 2022 was $3,200 compared to $3,077 for the second quarter of 2022 and $2,941 for the third quarter of 2021, an increase of 4.0% and 8.8%, respectively.
RevPAR for the comparable owned communities for the third quarter of 2022 was $2,801 compared to $2,560 for the second quarter of 2022 and $2,354 for the third quarter of 2021, an increase of 9.4% and 19.0%, 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
	September 30, 2022			June 30, 2022			September 30, 2021
Residential Segment:
Five Star:
Number of living units (end of period)
Independent living		10,422			10,460			10,628
Assisted living		7,734			7,696			9,402
Memory care		1,817			1,817			2,454
Skilled nursing		—			—			284
Total living units		19,973			19,973			22,768

RevPAR
Owned and Leased ⁽¹⁾	$	2,801		$	2,560		$	2,411
Managed	$	3,200		$	3,077		$	3,046
Quarter End Occupancy
Owned and Leased		78.4	%		75.5	%		72.9	%
Managed		77.0	%		75.4	%		73.8	%

Comparable Communities ⁽²⁾:
RevPAR
Owned	$	2,801		$	2,560		$	2,354
Managed	$	3,200		$	3,077		$	2,941
Quarter End Occupancy
Owned		78.4	%		75.5	%		72.9	%
Managed		77.0	%		75.4	%		74.6	%
Operating Margin ⁽³⁾:
Owned		(15.9	)%		(20.1	)%		(24.4	)%
Managed		4.7	%		8.4	%		7.1	%

	As of and for the Three Months Ended
	September 30, 2022			June 30, 2022			September 30, 2021
Lifestyle Services Segment:
Ageility:
Number of Clinics and Locations ⁽⁴⁾
Inpatient clinics		8			10			10
Outpatient locations		203			202			223
Number of Visits (in thousands)
Inpatient clinics		21			23			20
Outpatient locations		156			153			147

Comparable Outpatient Locations ⁽⁵⁾:
Caseload as a % of occupancy ⁽⁶⁾		24.6	%		24.3	%		24.6	%
Operating margin ⁽³⁾		(1.2	)%		(0.6	)%		10.0	%

___________________________
(1)		The three months ended September 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 July 1, 2021, exclusive of 59 skilled nursing facility, or SNF, living units that have been closed in one former Continuing Care Retirement Community, or CCRC.
(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 59 SNF living units, which have been closed in one former CCRC. 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 September 30, 2021 of $0.2 million for the comparable managed communities. Managed operating margin does not represent ALR's operating margin and is included to provide supplemental information regarding the operating results of the Five Star senior living communities from which ALR earns residential management fees.
(4)		During the three months ended September 30, 2022, ALR opened six outpatient locations, closed five outpatient locations and closed two inpatient clinics.
(5)		Comparable outpatient locations includes financial data for 185 outpatient rehabilitation locations that ALR continuously operated since July 1, 2021.
(6)		Represents the average number of Ageility customers divided by average total occupancy at each of the senior living communities where ALR operates Ageility outpatient 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 A&M to provide a comprehensive operational review of ALR's business and make recommendations to ALR's Board of Directors. The recommendations made by A&M included 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 $2.0 million, net of investments to be made of approximately $3.3 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, ensuring their optimal utilization, and
- continually assessing general and administrative expenses to identify cost savings opportunities.
Invest approximately $3.3 million to refocus on ALR's core business and invest strategically in projects, processes and systems that will enhance ALR's ability to successfully operate ALR's residential and lifestyle services businesses, including:
- Enhancing the executive leadership team with 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 announced a restructuring plan which includes the elimination of certain positions in its corporate team. ALR expects to complete this restructuring by the middle of 2023. As of the date of this press release, ALR made the following progress with respect to the restructuring plan:

Aligned several functions, including sales, marketing, clinical and resident programming, under the national operations support function;
Deployed sales support functions to directly support community level sales directors to focus on improved tour to move-in conversion rate;
Appointed a Chief Financial Officer, effective September 19, 2022, and a Chief Operating Officer, effective October 17, 2022. In addition, ALR continues to invest in the sales and marketing function, including hiring a Vice President of Marketing, effective October 3, 2022, and five sales directors; and
Implemented approximately $2.6 million of labor and non-labor annual cost savings, net of approximately $1.8 million in labor investments.

In addition to the restructuring plan, ALR achieved further cost savings of $4.9 million from the elimination of certain unfilled positions.

In connection with implementing its restructuring plan, ALR expects to incur non-recurring cash expenses of up to $3.0 million. These expenses are expected to include up to $0.4 million of retention payments, up to $2.0 million of severance, benefits and transition expenses and up to $0.6 million of other restructuring expenses. For the three months ended September 30, 2022, ALR recognized $1.6 million of expenses related to the restructuring plan, including $0.1 million of retention payments, $1.4 million of severance, benefits and transition expenses, and $0.1 million of other restructuring expenses, which was recorded in restructuring expenses in ALR's condensed consolidated statements of operations. Additionally, ALR recognized costs of $0.6 million related to the implementation of the A&M operational review for the three months ended September 30, 2022, which are recorded in general and administrative expenses in ALR's 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 September 30, 2022 (dollars in thousands):

	Total
	Communities	Units	Average Occupancy	Quarter End Occupancy	Community Revenues ⁽¹⁾		Management Fees
Independent and assisted living communities	120	17,889	75.3%	77.0%	$	171,684	$	9,477

___________________________
(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 September 30, 2022 (dollars in thousands):

	As of and for the Three Months Ended September 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	94	$	7,789	25.9	%	(0.2	)%
Outpatient Locations at ALR Owned Communities	15		868	29.9	%	4.6	%
Outpatient Locations at Other Communities ⁽⁵⁾	94		4,124	21.7	%	(8.3	)%
Total Outpatient Locations	203	$	12,781	24.3	%	(2.5	)%

___________________________
(1)		Excludes revenue of $1,590 earned during the three months ended September 30, 2022 for ten Ageility inpatient rehabilitation clinics (inclusive of two inpatient rehabilitation clinics that were closed during the three months ended September 30, 2022).
(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 ALR operates Ageility outpatient 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 September 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 November 3, 2022, ALR's President and Chief Executive Officer, Jeffrey Leer, and Senior Vice President, Chief Financial Officer and Treasurer, Heather Pereira, will host a conference call to discuss ALR's third 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 November 10, 2022. To hear the replay, dial (412) 317-0088. The replay pass code is 3979235.

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 third quarter ended September 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 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 September 30,						Nine Months Ended September 30,
		2022			2021			2022			2021
REVENUES
Lifestyle services	$	14,546		$	15,382		$	43,330		$	52,388
Residential		17,514			16,320			48,994			49,755
Residential management fees		9,477			11,220			27,380			37,997
Total management and operating revenues		41,537			42,922			119,704			140,140
Reimbursed community-level costs incurred on behalf of managed communities		137,768			177,231			396,352			585,662
Other reimbursed expenses		3,354			5,678			10,869			27,750
Total revenues		182,659			225,831			526,925			753,552

Other operating income		2			—			44			7,795

OPERATING EXPENSES
Lifestyle services expenses		14,562			13,536			42,112			45,414
Residential wages and benefits		10,156			8,547			27,942			30,456
Other residential operating expenses		5,804			7,184			18,126			22,418
Community-level costs incurred on behalf of managed communities		137,768			177,231			396,352			585,662
General and administrative		17,015			21,817			53,205			66,956
Restructuring expenses		1,570			1,220			1,944			16,859
Depreciation and amortization		3,088			2,983			9,535			8,912
Total operating expenses		189,963			232,518			549,216			776,677

Operating loss		(7,302	)		(6,687	)		(22,247	)		(15,330	)

Interest, dividend and other income		225			84			434			244
Interest and other expense		(1,474	)		(507	)		(3,757	)		(1,379	)
Unrealized (loss) gain on equity investments		(1,997	)		22			(3,679	)		555
Realized gain on sale of debt and equity investments		1,573			—			1,528			193
Gain (loss) on termination of lease		498			(3,277	)		777			(3,277	)
Loss before income taxes		(8,477	)		(10,365	)		(26,944	)		(18,994	)
(Provision) benefit for income taxes		(31	)		164			(99	)		(194	)
Net loss	$	(8,508	)	$	(10,201	)	$	(27,043	)	$	(19,188	)

Weighted average shares outstanding—basic and diluted		31,875			31,618			31,825			31,567

Net loss per share—basic and diluted	$	(0.27	)	$	(0.32	)	$	(0.85	)	$	(0.61	)

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. ALR believes that EBITDA, Adjusted EBITDA, EBITDA Margin and Net Income (Loss) Margin also may help investors better understand its financial performance, including by allowing investors to compare ALR's performance between periods and against the performance of other companies on both a GAAP and non-GAAP basis. 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 nine months ended September 30, 2022 and 2021.

	Three Months Ended September 30,						Nine Months Ended September 30,
		2022			2021			2022			2021
Net loss	$	(8,508	)	$	(10,201	)	$	(27,043	)	$	(19,188	)
Add (less):
Interest and other expense		1,474			507			3,757			1,379
Interest, dividend and other income		(225	)		(84	)		(434	)		(244	)
Provision (benefit) for income taxes		31			(164	)		99			194
Depreciation and amortization		3,088			2,983			9,535			8,912
EBITDA		(4,140	)		(6,959	)		(14,086	)		(8,947	)
Add (less):
Separation costs ⁽¹⁾		—			—			1,319			—
Unrealized loss (gain) on equity investments		1,997			(22	)		3,679			(555	)
(Gain) loss on termination of leases		(498	)		3,277			(777	)		3,277
Transaction costs ⁽²⁾		574			—			1,278			—
Net restructuring expenses ⁽³⁾		1,568			407			1,468			4,515
Long-lived asset impairment ⁽⁴⁾		—			—			—			890
Adjusted EBITDA	$	(499	)	$	(3,297	)	$	(7,119	)	$	(820	)

___________________________
(1)		Costs incurred for the nine months ended September 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 nine months ended September 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 nine months ended September 30, 2022 and 2021 includes (i) costs incurred related to the repositioning of ALR's residential service offerings, which are reported net of reimbursed expenses received from DHC of $2 and $476, respectively, for the three and nine months ended September 30, 2022, and $813 and $12,344, respectively, for the three and nine months ended September 30, 2021, and (ii) costs incurred related to the restructuring plan executed as a part of A&M's operational review. All of these costs are included in restructuring expenses in the condensed consolidated statements of operations.
(4)		The nine months ended September 30, 2021 represents 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 Income (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 September 30, 2022 for Ageility.

	Three Months Ended September 30, 2022
Lifestyle services:
Revenue	$	14,546
Less: Home health services		175
Less: Inpatient rehabilitation clinics ⁽¹⁾		1,590
Total Ageility revenue ⁽²⁾	$	12,781

Ageility:
Net loss	$	(413	)
Add: Depreciation		98
EBITDA	$	(315	)

Net Loss Margin ⁽³⁾		(3.2	)%
EBITDA Margin ⁽⁴⁾		(2.5	)%

___________________________
(1)		Revenue for ten Ageility inpatient rehabilitation clinics that were operated by Ageility during the three months ended September 30, 2022 (inclusive of two inpatient rehabilitation clinics that were closed during the three months ended September 30, 2022).
(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)

	September 30,			December 31,
		2022			2021
ASSETS
Current assets:
Cash and cash equivalents	$	79,126		$	66,987
Restricted cash and cash equivalents		21,317			24,970
Accounts receivable, net		9,676			9,244
Due from related person		56,497			41,664
Debt and equity investments, of which $7,100 and $7,609 are restricted, respectively		10,890			19,535
Prepaid expenses and other current assets		21,817			24,433
Total current assets		199,323			186,833

Property and equipment, net		162,785			159,843
Operating lease right-of-use assets		5,796			9,197
Finance lease right-of-use assets		2,773			3,467
Restricted cash and cash equivalents		991			982
Restricted debt and equity investments		2,715			3,873
Other long-term assets		8,155			12,082
Total assets	$	382,538		$	376,277

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	16,367		$	37,516
Accrued expenses and other current liabilities		44,861			31,488
Accrued compensation and benefits		33,413			34,295
Accrued self-insurance obligations		26,701			31,739
Operating lease liabilities		501			699
Finance lease liabilities		1,351			872
Due to related persons		2,500			3,879
Current portion of debt		437			419
Total current liabilities		126,131			140,907

Long-term liabilities:
Accrued self-insurance obligations		27,007			34,744
Operating lease liabilities		5,331			9,366
Finance lease liabilities		2,351			3,050
Long-term debt		67,161			6,364
Other long-term liabilities		227			256
Total long-term liabilities		102,077			53,780

Commitments and contingencies

Shareholders’ equity:
Common stock, par value $0.01: 75,000,000 shares authorized, 32,609,009 and 32,662,649 shares issued and outstanding, respectively		326			327
Additional paid-in-capital		462,144			461,298
Accumulated deficit		(308,107	)		(281,064	)
Accumulated other comprehensive (loss) income		(33	)		1,029
Total shareholders’ equity		154,330			181,590
Total liabilities and shareholders' equity	$	382,538		$	376,277

AlerisLife Inc. Residential Segment Data (dollars in thousands, except per unit amounts) (unaudited)

	Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
		2022			2022			2022			2021			2021

Owned and Leased Senior Living Communities
Revenues	$	17,514		$	16,094		$	15,386		$	14,883		$	16,320
Other operating income ⁽¹⁾		2			—			42			—			—
Operating expenses		20,182			18,861			19,371			18,574			17,895
Operating loss		(2,666	)		(2,767	)		(3,943	)		(3,691	)		(1,575	)
Operating margin		(15.2	)%		(17.2	)%		(25.6	)%		(24.8	)%		(9.7	)%
Number of communities (end of period)		20			20			20			20			20
Number of living units (end of period) ⁽²⁾		2,084			2,087			2,100			2,100			2,099
Average occupancy		76.0	%		72.5	%		71.0	%		72.0	%		69.9	%
Quarter end occupancy		78.4	%		75.5	%		72.1	%		72.7	%		72.9	%
RevPAR ⁽³⁾	$	2,801		$	2,560		$	2,443		$	2,349		$	2,411
RevPOR ⁽⁴⁾	$	3,604		$	3,492		$	3,444		$	3,192		$	3,375

Managed Senior Living Communities ⁽⁵⁾:
Residential management fees	$	9,477		$	8,971		$	8,932		$	9,482		$	11,220

Community-level revenues		171,684			165,179			162,552			161,907			210,160
Other operating income ⁽¹⁾		125			75			199			602			786
Community-level expenses ⁽⁶⁾		164,044			151,906			152,892			159,329			203,756
Community operating income		7,765			13,348			9,859			3,180			7,190
Community operating margin		4.5	%		8.1	%		6.1	%		2.0	%		3.4	%
Number of communities (end of period)		120			120			120			121			159
Number of living units (end of period) ⁽²⁾		17,889			17,886			17,899			18,005			20,669
Average occupancy		75.3	%		74.1	%		74.1	%		73.7	%		72.2	%
Quarter end occupancy		77.0	%		75.4	%		74.6	%		74.8	%		73.8	%
RevPAR ⁽³⁾	$	3,200		$	3,077		$	3,027		$	2,919		$	3,046
RevPOR ⁽⁴⁾	$	4,158		$	4,109		$	4,084		$	3,875		$	4,129

___________________________
(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 corresponding portfolio for the period, divided by the number of months in the period. Data for the three months ended September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 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 corresponding portfolio for the period, divided by the number of months in the period. Data for the three months ended September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 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 September 30, 2022, June 30, 2022, December 31, 2021 and September 30, 2021 includes restructuring expense of $2, $474, $966, and $813, respectively.

AlerisLife Inc. Comparable Communities Residential Segment Data (dollars in thousands, except per unit amounts) (unaudited)

	Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
		2022			2022			2022			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⁾		2,084			2,087			2,100			2,100			2,099
Average occupancy		76.0	%		72.5	%		71.0	%		72.0	%		70.4	%
Quarter end occupancy		78.4	%		75.5	%		72.1	%		72.7	%		72.9	%
RevPAR ⁽³⁾	$	2,801		$	2,560		$	2,443		$	2,349		$	2,354
RevPOR ⁽⁴⁾	$	3,604		$	3,492		$	3,444		$	3,192		$	3,270

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⁾		17,889			17,886			17,899			17,899			17,899
Average occupancy		75.3	%		74.1	%		74.1	%		74.1	%		73.4	%
Quarter end occupancy		77.0	%		75.4	%		74.6	%		75.2	%		74.6	%
RevPAR ⁽³⁾	$	3,200		$	3,077		$	3,027		$	2,900		$	2,941
RevPOR ⁽⁴⁾	$	4,158		$	4,109		$	4,084		$	3,831		$	3,922

___________________________
(1)		Includes data for Five Star senior living communities that ALR has continuously owned or managed since July 1, 2021. The summary of operations for comparable communities excludes 59 SNF living units that have been closed in one former CCRC that Five Star presently manages as an assisted living community.
(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 corresponding portfolio for the period, divided by the number of months in the period. Data for the three months ended September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 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 corresponding portfolio for the period, divided by the number of months in the period. Data for the three months ended September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 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
	September 30,			June 30,			March 31,			December 31,			September 30,
		2022			2022			2022			2021			2021
Lifestyle Services ⁽¹⁾:
Revenues	$	14,546		$	14,645		$	14,139		$	15,626		$	15,382
Outpatient		11,837			11,753			11,165			12,848			12,747
Fitness		944			941			881			890			853
Other		1,765			1,951			2,093			1,888			1,782
Operating expenses ⁽²⁾		14,672			14,438			13,334			14,045			13,348
Operating (loss) income		(126	)		207			805			1,581			2,034
Operating margin ⁽³⁾		(0.9	)%		1.4	%		5.7	%		10.1	%		13.2	%
Number of inpatient clinics (end of period)		8			10			10			10			10
Number of outpatient locations (end of period)		203			202			201			205			223
Number of fitness locations (end of period)		67			76			73			60			61

___________________________
(1)		Includes Ageility rehabilitation locations and fitness operations as well as home healthcare operations.
(2)		The three months ended December 31, 2021 and September 30, 2021 includes restructuring expenses of $23 and $(310), 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
	September 30,			June 30,			March 31,			December 31,			September 30,
		2022			2022			2022			2021			2021
Lifestyle Services ⁽¹⁾⁽²⁾:
Revenues	$	12,183		$	12,057		$	11,533		$	12,892		$	12,823
Outpatient		11,091			10,944			10,520			11,825			11,754
Fitness		917			898			835			832			795
Other		175			215			178			235			274
Operating expenses		12,291			12,095			11,251			11,621			11,563
Operating (loss) income		(108	)		(38	)		282			1,271			1,260
Operating margin ⁽³⁾		(0.9	)%		(0.3	)%		2.4	%		9.9	%		9.8	%
Number of outpatient locations (end of period)		185			185			185			185			185
Number of fitness locations (end of period)		62			73			73			51			57

___________________________
(1)		Includes Ageility outpatient rehabilitation locations and fitness operations as well as home healthcare operations that ALR has continuously operated since July 1, 2021.
(2)		Excludes eight 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 September 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	$	414	$	7,805	$	4,232	11/19/2004	2021
2	Morningside of Auburn ⁽²⁾	Alabama	AL	42		415		2,339		1,119	11/19/2004	1997
3	The Palms of Fort Myers ⁽²⁾	Florida	IL	218		1,965		7,452		3,912	4/1/2002	1988
4	Five Star Residences of Banta Pointe ⁽³⁾	Indiana	AL	121		859		12,052		7,235	9/29/2011	2006
5	Five Star Residences of Fort Wayne ⁽²⁾	Indiana	AL	154		1,000		9,355		5,726	9/29/2011	1998
6	Five Star Residences of Clearwater	Indiana	AL	88		400		15,259		9,780	6/1/2011	1999
7	Five Star Residences of Lafayette	Indiana	AL	109		665		12,406		7,961	6/1/2011	2000
8	Five Star Residences of Noblesville ⁽²⁾	Indiana	AL	151		1,232		14,005		8,588	7/1/2011	2005
9	The Villa at Riverwood ⁽²⁾	Missouri	IL	112		754		5,056		3,231	4/1/2002	1986
10	Voorhees Senior Living ⁽²⁾	New Jersey	AL	91		909		20,591		13,883	7/1/2008	1999
11	Washington Township Senior Living	New Jersey	AL	93		994		26,586		17,178	7/1/2008	1998
12	Carriage House Senior Living ⁽²⁾	North Carolina	AL	98		1,075		10,065		5,319	12/1/2008	1997
13	Forest Heights Senior Living ⁽²⁾	North Carolina	AL	111		875		16,328		10,457	12/1/2008	1998
14	Fox Hollow Senior Living ⁽²⁾	North Carolina	AL	74		1,253		26,639		17,816	7/1/2000	1999
15	Legacy Heights Senior Living ⁽²⁾	North Carolina	AL	116		895		7,845		3,641	12/1/2008	1997
16	Morningside at Irving Park ⁽²⁾	North Carolina	AL	91		869		3,848		1,565	11/19/2004	1997
17	The Devon Senior Living	Pennsylvania	AL	84		566		33,437		14,686	7/1/2008	1985
18	The Legacy of Anderson ⁽²⁾	South Carolina	IL	101		662		11,840		6,994	12/1/2008	2003
19	Morningside of Springfield ⁽²⁾	Tennessee	AL	54		565		19,114		11,633	11/19/2004	1984
20	Huntington Place	Wisconsin	AL	127		1,152		2,499		1,502	7/15/2010	1999
	Total			2,084	$	17,519	$	264,521	$	156,458

___________________________
(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 $6,659 as of September 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 A&M and the restructuring plan ALR has implemented as a result and has begun to execute. In addition, Mr. Leer notes the recent additions of ALR's Chief Financial Officer and Chief Operating Officer. ALR may not be able to successfully execute the restructuring plan on the timing it expects or at all, the costs to implement the restructuring plan may be more than it expects and it may not realize the benefits it anticipates from the restructuring plan.
Mr. Leer refers to the steady progress ALR has made in implementing its plan to improve its operating results and drive efficiencies in its organization throughout the third quarter of 2022, noting improvements in occupancy in both ALR's owned and managed senior living communities. However, this progress may not continue and its operating results may not improve and occupancy could decline as a result of current economic conditions, including inflation, high interest rates, geopolitical risks and possible economic recession.
Mr. Leer states that ALR ended the quarter with sufficient liquidity to execute on the restructuring plan and that it has no debt maturities until 2025. However, the costs to implement the restructuring plan may be more than it anticipates, it may not generate sufficient cash flow from its operations, and its current liquidity may prove to be insufficient.

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20221102005873/en/

Contacts

Michael Kodesch, Director, Investor Relations

(617) 796-8245

AlerisLife Inc. Announces Third Quarter 2022 Results

Contacts

Sections

Services

Contact Information

Follow Us