AlerisLife announced its third quarter earnings results, and the good news was that its owned portfolio including 20 senior living properties saw a 290-basis point increase in quarter-end occupancy from 75.5% in Q2:22 to 78.4% Q3:22. Its managed portfolio of 120 senior living properties increased a more modest 160 basis points to 77.0% over the same period, but both figures are healthy increases. Operators need to make the most of third quarter occupancy gains before winter weather and the flu season hamper their efforts, so this is good news for Aleris. But average occupancy still falls below 80%, so there is a long way to go.
The company reported a net loss for the third quarter of 2022 of $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 operational review conducted in the second quarter. The loss compares to an $8.8 million, or $0.28 per diluted share, loss in the second quarter of 2022. The same-store owned portfolio saw its operating margin (exclusive of Provider Relief Funds) improve from -20.1% in Q2:22 to -15.9% in Q3:22, while the same-store managed portfolio reported a decline from 8.4% in Q2:22 to 4.7% in Q3:22.
RevPAR increased for the same-store managed communities in the third quarter of 2022 to $3,200 from $3,077 in Q2:22 and $2,941 in Q3:21. For same-store owned communities, RevPAR also rose in Q3:22 to $2,801 from $2,560 in Q2:22 and from $2,354 in Q3:21. So, rent increases have made an impact, but reigning in expenses is the important (and probably harder) next step.
Alvarez & Marsal’s (A&M) operational view has already yielded some results, namely in the restructuring of AlerisLife’s corporate team. Based on the recommendation to hire a CFO and COO to implement and oversee the scaling up of a national operations infrastructure, AlerisLife appointed Heather Pereira as its new CFO and Philip Benjamson as its new COO, in addition to hiring a VP of Marketing and five sales directors. AlerisLife also found cost savings of $4.9 million by eliminating certain unfilled positions.
Other goals include reducing annual costs by approximately $2.0 million, net of around $3.3 million of investments to be made, through streamlining redundant business processes, reducing investments in non-core functions and scrutinizing its current IT systems. Controlling labor expenses will be another challenge.
