Alerislife inc. announces second quarter 2022 results
Newton, mass.--(business wire)--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. 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. 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.
