Exhibit 99.1
FOR
IMMEDIATE RELEASE
Assisted Living Concepts, Inc. Reports Increased Revenues and
Margins for its Third Quarter Along
With an Agreement to Acquire Operations of 541 Leased
Units.
MILWAUKEE, WISCONSIN November 12, 2007
Highlights:
| |
• |
|
Entered into an asset purchase agreement to acquire operations
of 541 leased units in southeastern United States — expected
to add $2.2 million annually to EBITDA |
| |
| |
• |
|
Third quarter revenues up from second quarter 2007 and pro
forma third quarter 2006 |
| |
| |
• |
|
Private pay census up 249 units or 4.9% over the pro forma
third quarter of 2006 |
| |
| |
• |
|
Planned Medicaid census reductions were 223 units from the
second quarter of 2007 |
| |
| |
• |
|
Improved adjusted EBITDAR margins from second quarter of 2007
from 27.1% to 28.0% |
Assisted
Living Concepts, Inc. (“ALC”) (NYSE:ALC) reported net
income of $4.2 million in the 2007 third quarter as compared
to net income and net income from continuing operations of
$0.3 million and $0.5 million, respectively, in the 2006
third quarter and net income and net income from continuing
operations before one-time charges of $3.5 million and
$3.7 million, respectively, in the 2006 third quarter.
ALC
reported net income of $13.1 million in the first three
quarters of 2007 as compared to net income and net income from
continuing operations of $4.4 million and $5.9 million,
respectively, in the first three quarters of 2006 and net income
and net income from continuing operations before one-time charges
in the first three quarters of 2006 of $9.9 million and
$11.4 million, respectively.
In 2006,
one-time charges included transaction fees of $1.2 million and
$3.5 million (net of income tax benefits of $0.2 million
in both periods) for the quarter and three quarters ended September
30, 2006, respectively, and a non-cash charge of $1.9 million
(net of an income tax benefit of $1.2 million) in both the quarter
and three quarters ended September 30, 2006. Transaction fees
in 2006 related to legal, audit and other professional fees
associated with the separation of ALC from Extendicare Inc., now
known as Extendicare Real Estate Investment Trust (TSX:EXE.UN), on
November 10, 2006. The other 2006 non-cash charge related to the
write-down of an impaired property identified prior to the
separation.
“During the third quarter of 2007 we were encouraged by a
record number of private pay move-ins and the continued increase in
revenues from private pay residents. However, due to a record
number of move outs in the same period, we did not achieve the net
private pay growth we expected, “commented Laurie Bebo,
President and Chief Executive Officer of Assisted Living Concepts,
Inc. “We believe the unusually high number of move outs in
the quarter are a result of the exit of private pay residents who
originally moved in with the intention of rolling over into the
Medicaid program. Without the option of rolling into Medicaid
programs, residents with limited funds have opted to reserve
accommodations with operators willing to accept Medicaid
reimbursement. In the third quarter of 2007, revenues from private
pay residents as a percent of overall revenues increased to 86.2%
from 84.4% in the quarter ended June 30, 2007.”
Diluted
earnings per common share for the third quarter and first three
quarters ended September 30, 2007 and 2006 were as follows:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Quarter ended |
|
First Three Quarters |
| |
|
September 30, |
|
ended September 30, |
| |
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
Diluted earnings
per common share from continuing operations
|
|
$ |
0.06 |
|
|
$ |
0.01 |
|
|
$ |
0.19 |
|
|
$ |
0.08 |
|
|
Diluted earnings
per common share
|
|
$ |
0.06 |
|
|
$ |
0.01 |
|
|
$ |
0.19 |
|
|
$ |
0.06 |
|
|
Pro forma diluted
earnings per common share excluding one-time charges*
|
|
$ |
0.06 |
|
|
$ |
0.05 |
|
|
$ |
0.19 |
|
|
$ |
0.16 |
|
|
|
|
| * |
|
Includes pro forma adjustments for 2006. See attached tables
for 2006 pro forma and non-GAAP reconciliations and calculations of
weighted average basic and diluted shares. |
1
Prior to
November 10, 2006, ALC was a wholly owned subsidiary of
Extendicare. The financial results reported until that time reflect
the consolidated historical financial statements of the assisted
living operations of Extendicare in the United States.
Certain
pro forma adjustments in the quarter and three quarters ended
September 30, 2006 are necessary to reflect the ongoing
operations of ALC following the November 10, 2006 separation
of ALC from Extendicare. These adjustments remove data related to
assets and liabilities that were not transferred to ALC in
connection with the separation, including: (i) three assisted
living facilities (168 units) that were closed in the third quarter
of 2006 and (ii) two free-standing assisted living facilities
(141 units) and another 129 assisted living units contained in
skilled nursing facilities that were retained by Extendicare.
Pro
forma income statement information for the quarter and three
quarters ended September 30, 2006 are included for
informational purposes and do not purport to reflect the results of
operations of ALC that would have occurred had ALC operated as a
separate independent company in that period. The pro forma
financial statements do not reflect the additional cost of being a
publicly listed company nor do they remove any interest expense
related to the capital structure prior to the separation.
Certain
non-GAAP financial measures are used in the discussions below in
evaluating the performance of the business. See attached tables for
definitions of adjusted EBITDA and adjusted EBITDAR,
reconciliations of net income to adjusted EBITDA and adjusted
EBITDAR, calculations of adjusted EBITDA and adjusted EBITDAR as a
percentage of total revenues, and pro forma and non-GAAP
reconciliation information.
As of
September 30, 2007, ALC operated 208 assisted living
residences representing 8,535 units.
Quarters ended September 30, 2007, June 30, 2007,
September 30, 2006 and pro forma September 30,
2006
Revenues
of $57.9 million in the third quarter ended September 30,
2007,
| • |
|
increased $0.5 million or 0.8% from $57.4 million in
the second quarter ended June 30, 2007, |
| • |
|
decreased $0.9 million or 1.6% from $58.8 million in
the third quarter ended September 30, 2006,and |
| • |
|
increased $0.4 million or 0.6% from $57.5 million in
the pro forma third quarter ended September 30, 2006. |
Adjusted
EBITDA for the third quarter of 2007 was $12.6 million, 21.8%
of revenues and
| • |
|
increased $0.5 million or 4.3% from $12.1 million and
21.1% of revenues in the second quarter of 2007, |
| • |
|
decreased $0.3 million or 2.0% from $12.9 million and
21.9% of revenues in the third quarter of 2006, and |
| • |
|
equaled in dollars and decreased from 22.0% of revenues from
the pro forma third quarter of 2006. |
Adjusted EBITDAR for the third quarter of 2007 was
$16.2 million, 28.0% of revenues and
| • |
|
increased $0.6 million or 4.2% from $15.6 million and
27.1% of revenues in the second quarter of 2007, |
| • |
|
decreased $0.2 million or 1.4% from $16.4 million and
equaled the percent of revenues in the third quarter of 2006,
and |
| • |
|
equaled in dollars and decreased from 28.2% of revenues from
the pro forma third quarter of 2006. |
Pro
forma adjustments to the third quarter of 2006 remove the revenue,
adjusted EBITDA, and adjusted EBITDAR associated with properties
retained by Extendicare ($1.3 million, $0.2 million and
$0.2 million, respectively). No pro forma adjustments were
necessary in the 2007 financial information.
Third quarter ended September 30, 2007 compared to the
second quarter ended June 30, 2007
Revenues
in the third quarter of 2007 increased from the second quarter of
2007 primarily due to an increase in units occupied by private pay
residents ($0.6 million), an additional day in the third
quarter 2007 reporting period (92 days in the quarter ended
September 30, 2007 vs. 91 in the quarter ended June 30,
2007) ($0.6 million), and higher average daily revenue as a
result of rate increases ($0.5 million), partially offset by
the planned reduction in the number of units occupied by Medicaid
residents ($1.0 million ) and a reduction in other revenue
from the prior tenant of ALC’s corporate office
($0.2 million.)
2
Increased adjusted EBITDA and adjusted EBITDAR resulted primarily
from higher revenues in the third quarter of 2007 as compared to
the second quarter of 2007 as discussed above ($0.5 million)
and a decrease in general and administrative expense
($0.8 million), partially offset by an increase in residence
operations expenses ($0.7 million) and, for adjusted EBITDA,
an increase in residence lease expense ($0.1 million).
Decreased general and administrative expenses were primarily due to
ALC’s annual conference which took place in the second
quarter and a reduction in public company expenses based on the
timing of costs associated with the annual report. Increased
residence operations expense were primarily attributable to the
additional day in the third quarter 2007 reporting period.
Third quarter ended September 30, 2007 compared to the
third quarter ended September 30, 2006
Revenues
in the quarter ended September 30, 2007 decreased primarily
due to a decrease of 767 units occupied by Medicaid residents
($4.7 million), decreases in revenues associated with the
properties retained by Extendicare (270 units) that were included
only in the 2006 period ($1.3 million), and the elimination of
revenues associated with the amortization of below market leases
from Extendicare’s 2005 acquisition of ALC which ended in
January 2007 ($0.3 million), partially offset by higher
average daily revenue as a result of an increase of 249 units
occupied by private pay residents ($2.0 million), private pay
rate increases ($3.0 million), and Medicaid rate increases
($0.4 million).
Adjusted
EBITDA and adjusted EBITDAR decreased in the third quarter of 2007
primarily due to decreased revenues discussed above
($0.9 million), an increase in general and administrative
expense items ($0.1 million), and, for adjusted EBITDA, an
increase in rental expense ($0.1 million), partially offset by a
reduction in residence operations expenses ($0.8 million).
Residence operations expense decreased primarily as a result of the
elimination of expenses associated with properties retained by
Extendicare and reduced census, partially offset by inflationary
factors.
Third quarter ended September 30, 2007 compared to the
pro forma third quarter ended September 30, 2006
Revenue
increases in the quarter ended September 30, 2007 were for the
reasons discussed above in the comparison of the third quarter
ended September 30, 2007 to the third quarter ended September
30, 2006 and because of the pro forma adjustment to revenues of
$1.3 million associated with properties retained by
Extendicare.
Adjusted
EBITDA and adjusted EBITDAR decreased for the reasons discussed
above in the comparison of the third quarter ended
September 30, 2007 to the third quarter ended
September 30, 2006, offset by the pro forma adjustment to both
adjusted EBITDA and adjusted EBITDAR of $0.2 million
associated with properties retained by Extendicare.
Three Quarters ended September 30, 2007,
September 30, 2006 and pro forma September 30,
2006
Revenues
in the three quarters ended September 30, 2007 of
$172.8 million,
| • |
|
increased $0.3 million or 0.1% from $172.6 in the three
quarters ended September 30, 2006 and |
| • |
|
increased $4.3 million or 2.5% from $168.6 million in
the pro forma three quarters of 2006. |
Adjusted
EBITDA for the three quarters of 2007 was $37.8 million, 21.9%
of revenues and
| • |
|
decreased $1.4 million or 3.6% from $39.2 million and
22.7% of revenues in the three quarters of 2006, and |
| • |
|
decreased $0.7 million or 1.7% from $38.5 million and
22.8% of revenue in the pro forma three quarters of 2006. |
Adjusted
EBITDAR for the three quarters of 2007 was $48.5 million,
28.1% of revenues and
| • |
|
decreased $1.3 million or 2.5% from $49.8 million and
28.9% of revenues in the three quarters of 2006, and |
| • |
|
decreased $0.5 million or 1.0% from $49.0 million and
29.1% of revenues in the pro forma three quarters of 2006. |
Pro
forma adjustments to the three quarters of 2006 remove the revenue,
adjusted EBITDA, and adjusted EBITDAR associated with properties
retained by Extendicare ($4.0 million, $0.7 million and
$0.7 million, respectively). No pro forma adjustments were
necessary in the 2007 financial information.
Three quarters ended September 30, 2007 compared to the
three quarters ended September 30, 2006
Increased revenues in the first three quarters of 2007 resulted
primarily from higher average daily revenue as a result of an
increase of units occupied by private pay residents ($7.2 million),
private pay rate increases ($6.2 million), Medicaid rate
3
increases ($1.1 million), and revenue from the prior tenant of
ALC’s corporate office ($0.4 million), partially offset by a
decrease in the number of units occupied by Medicaid residents
($9.6 million), decreases in revenues associated with
properties retained by Extendicare (270 units) that were included
only in the 2006 period ($4.0 million), and from the
elimination of non-recurring revenues associated with the
amortization of below market leases from Extendicare’s 2005
acquisition of ALC which ended in January 2007
($1.0 million).
Adjusted
EBITDA and adjusted EBITDAR decreased primarily from increased
general and administrative expense ($2.0 million) and, for
adjusted EBITDA only, rental expense ($0.2 million), partially
offset by decreased residence operations expenses
($0.5 million) and the growth in revenues discussed above
($0.3 million). Increased general and administrative expenses
were primarily associated with additional expenses from being a
public company in 2007. Decreased residence operations expenses
resulted from the inclusion of properties retained by Extendicare
in the 2006 residence operations expense, partially offset by
additional insurance expense and expenses associated with new
marketing materials.
Three quarters ended September 30, 2007 compared to the
pro forma three quarters ended September 30,
2006
Revenues
increased in the three quarters ended September 30, 2007 for
the reasons discussed above in the comparison of the three quarters
ended September 30, 2007 to the three quarters ended
September 30, 2006 and the pro forma adjustment to revenues of
$4.0 million associated with properties retained by
Extendicare.
Adjusted
EBITDA and adjusted EBITDAR decreased for the reasons discussed
above in the comparison of the three quarters ended
September 30, 2007 to the three quarters ended
September 30, 2006 and because of the pro forma adjustments to
both adjusted EBITDA and adjusted EBITDAR of $0.7 million
associated with properties retained by Extendicare.
Share buyback program
On
December 14, 2006, ALC announced a share buyback program
enabling ALC to repurchase up to $20 million of its Class A
common stock. On August 20, 2007, ALC announced that its Board
of Directors authorized an increase of its Class A common
stock repurchase program by an additional $20 million. In the
third quarter of 2007, ALC purchased a total of 2.8 million
shares of Class A common stock at a total cost of $24.9 and an
average price of $9.03 per share. For the first three quarters of
2007, ALC repurchased a total of 3.0 million shares of
Class A common stock at a total cost of $27.7 and an average
price of $9.17 per share.
Acquisitions
As of
November 9, 2007, ALC entered into an asset purchase agreement
to acquire the operations of eight assisted living residences
consisting of a total of 541 leased units for a purchase price of
$14.4 million. The units, located in the southeast United
States, are currently 92% occupied with all private pay residents
and are expected to generate post acquisition annual revenue,
EBITDAR and EBITDA of $18.0 million, $7.1 million and
$2.2 million, respectively. The lease has an initial term
expiring in March 2015 with three five-year renewal options.
Completion of the transaction is subject to customary closing
conditions.
Expansion Pl
| 
