AlerisLife Inc. Announces Second Quarter 2022 Results

Rhea-AI Summary

AlerisLife Inc. (ALR) reported its second quarter 2022 financial results, showing occupancy growth of 110 basis points sequentially and a net loss reduction of 10% compared to the prior quarter. Adjusted EBITDA improved by $4.1 million over the previous quarter. The company is implementing a restructuring plan aimed at reducing operating expenses and enhancing profitability, with $83.5 million in cash on hand and no debt obligations until 2025. Significant increases in RevPAR were observed across both owned and managed communities, indicating a positive trend in revenue generation.

Positive

• Occupancy grew by 110 basis points sequentially, with a 340 bps increase in owned communities.
• Net loss decreased by 10% compared to the previous quarter, from $9.7 million to $8.8 million.
• Adjusted EBITDA improved by $4.1 million over the prior quarter.
• Sufficient liquidity with $83.5 million in cash and no debt maturities until 2025.
• RevPAR increased by 4.8% in owned communities and 1.7% in managed communities compared to the previous quarter.

Negative

• Continued net losses of $8.8 million indicate ongoing financial challenges.
• Operating margin for owned communities remained negative at -20.1%.

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

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.
• 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220803005888/en/

Michael Kodesch, Director, Investor Relations

(617) 796-8245

Source: AlerisLife

FAQ

What financial performance did AlerisLife report for Q2 2022?

AlerisLife reported a net loss of $8.8 million for Q2 2022, a 10% reduction compared to Q1 2022.

How much did AlerisLife improve its adjusted EBITDA in Q2 2022?

AlerisLife improved its adjusted EBITDA by $4.1 million in Q2 2022 compared to the prior quarter.

What was the occupancy growth in AlerisLife's senior living communities?

Occupancy grew by 110 basis points in AlerisLife's communities during the second quarter of 2022.

What restructuring plans are in place for AlerisLife?

AlerisLife is executing a restructuring plan to improve operating results, including reducing corporate overhead positions.

What is AlerisLife's cash position as of Q2 2022?

As of Q2 2022, AlerisLife had $83.5 million in cash and no debt maturities until 2025.