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Assisted Living Concepts, Inc. Announces 2008 First Quarter Results; Reports Improved Mix and Margins
(Marketwire Via Acquire Media NewsEdge) MENOMONEE FALLS, WI, May 5 / MARKET WIRE/ --
Highlights:
-- Private pay mix as a percent of revenue exceeds 90%
-- Adjusted EBITDAR as a percent of revenue exceeds 30%
-- Expansion program construction begins -- on target for fourth quarter
occupancy permits
Assisted Living Concepts, Inc. ("ALC") (NYSE: ALC) reported net income of
$4.1 million in the 2008 first quarter as compared to net income of $4.7
million in the 2007 first quarter.
Diluted earnings per common share for the first quarter of 2008 were $0.06
per share as compared to $0.07 per share for the first quarter of 2007.
"Despite lower same store overall occupancy, we improved revenues and
adjusted EBITDAR through strategic acquisitions and cost reductions due to
lower Medicaid occupancy," commented Laurie Bebo, President and Chief
Executive Officer of Assisted Living Concepts, Inc. "In addition, we are
excited to announce we are in the construction phase of our expansion
program and expect to begin occupying new additions by the fourth quarter
of 2008. To date, costs are in line with our original estimates."
Effective January 1, 2008, ALC completed the acquisition of the operations
of BBLRG, LLC doing business as Cara Vita, consisting of eight assisted
living residences and a total of 541 leased residences for a purchase price
(including expenses) of $14.5 million. On January 1, 2008, the Cara Vita
residences had 481 occupied units, all private pay. The properties
associated with the residences are leased with an initial term expiring in
March 2015 with three five-year renewal options. Results of the operations
of the Cara Vita residences are included in the 2008 financial data
beginning January 1, 2008. ALC does not anticipate making significant
operational changes at the Cara Vita residences; however, certain general
and administrative expenses are expected to be managed at reduced cost.
Certain non-GAAP financial measures are used in the discussions in this
release 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
non-GAAP reconciliation information.
As of March 31, 2008, ALC operated 216 assisted living residences
representing 9,076 units.
Quarters ended March 31, 2008, December 31, 2007, March 31, 2007
Revenues of $60.2 million in the first quarter ended March 31, 2008,
-- increased $3.7 million or 6.6% from $56.5 million in the fourth
quarter of 2007 and
-- increased $2.7 million or 4.7% from $57.5 million in the first quarter
of 2007.
Adjusted EBITDA for the first quarter of 2008 was $13.3 million, 22.1% of
revenues and
-- increased $0.9 million (6.8%) from $12.5 million and 22.1% of revenues
in the fourth quarter of 2007 and
-- increased $0.3 million (1.9%) from $13.1 million and decreased from
22.7% of revenues in the first quarter of 2007.
Adjusted EBITDAR for the first quarter of 2008 was $18.2 million, 30.3% of
revenues and
-- increased $2.2 million (13.7%) from $16.0 million and 28.4% of
revenues in the fourth quarter of 2007 and
-- increased $1.5 million (8.7%) from $16.8 million and 29.2% of revenues
in the first quarter of 2007.
First quarter ended March 31, 2008 compared to the fourth quarter ended
December 31, 2007
Revenues in the first quarter of 2008 increased from the fourth quarter of
2007 primarily due to additional revenues from acquired residences ($4.4
million) and higher average daily revenue as a result of rate increases
($2.3 million), partially offset by a reduction in the number of units
occupied by private pay residents ($1.4 million), the planned reduction in
the number of units occupied by Medicaid residents ($1.0 million), and one
less day in the 2008 quarter ($0.6 million).
Increased adjusted EBITDA and adjusted EBITDAR in the first quarter of 2008
as compared to the fourth quarter of 2007 resulted primarily from higher
revenues as discussed above ($3.7 million) and a reduction in general and
administrative expenses ($0.5 million) partially offset by increases in
residence operations expenses ($2.0 million), and, for EBITDA, an increase
in residence lease expense ($1.3 million). The reduction in general and
administrative expenses was primarily related to decreases in salaries and
benefits and non-repetitive consulting fees primarily associated with
completion of work related to compliance with Sarbanes Oxley Section 404.
Residence operations and residence lease expenses increased primarily from
the Cara Vita acquisition, partially offset by cost reductions due to lower
Medicaid occupancy.
First quarter ended March 31, 2008 compared to the first quarter ended
March 31, 2007
Revenues in the first quarter of 2008 increased from the first quarter of
2007 primarily due to additional revenues from acquired residences ($5.1
million), higher average daily revenue as a result of rate increases ($4.0
million), and one additional day in the 2008 quarter ($0.6 million),
partially offset by the planned reduction in the number of units occupied
by Medicaid residents ($5.4 million), a reduction in the number of units
occupied by private pay residents ($1.4 million), and revenue from leasing
ALC's corporate office ($0.2 million) in the 2007 period only.
Adjusted EBITDA and adjusted EBITDAR increased in the first quarter of 2008
primarily due to increased revenues discussed above ($2.7 million),
partially offset by an increase in residence operations expenses ($1.1
million), an increase in general and administrative expenses ($0.1
million), and, for adjusted EBITDA, an increase in rental expense ($1.2
million). Residence operations and residence lease expenses
increased primarily from the Cara Vita acquisition, partially offset by
cost reductions due to lower Medicaid occupancy.
Share repurchase program
On December 14, 2006, ALC announced a share repurchase program for up to
$20 million of its Class A common stock. On August 20, 2007 and December
18, 2007, ALC announced that its Board of Directors authorized increases to
the stock repurchase program of $20 million and $25 million, respectively,
bringing the total authorization to $65 million. In the first quarter of
2008, ALC repurchased 1.5 million shares of its Class A common stock at an
aggregate cost of $9.1 million and an average price of $6.01 per share.
Under the share repurchase program, ALC has repurchased in the aggregate
6.2 million shares of its Class A common stock at an aggregate cost of
$48.2 million and an average price of $7.77 per share.
Expansion Program Update
As of the date of this release ALC has begun construction for the
expansion units in its program to add 400 units onto existing ALC
residences. We are awaiting construction bids on only a few projects. To
date, cost estimates have been consistent with our original estimates of
$125,000 per unit. Construction is expected to be completed during the
second half of 2008.
Financing Activities
As of March 31, 2008 ALC had availability of $61million under its revolving
credit facility.
Investor Call
ALC has scheduled a conference call for tomorrow, May 6, 2008, at 10:00
a.m. (Eastern Time) to discuss financial results for the first quarter.
The toll-free number for the live call is 877-764-2008, or international
612-332-1020. A taped rebroadcast will be available approximately one
hour following the live call until midnight on June 6, 2008. To access the
rebroadcast of the call, dial 800-475-6701, or international 320-365-3844;
the access code is 909438.
About Us
Assisted Living Concepts, Inc. and its subsidiaries operate 216 assisted
living residences with capacity for over 9,000 residents in 20 states.
ALC's assisted living facilities typically consist of 40 to 60 units and
offer residents a supportive, home-like setting and assistance with the
activities of daily living. ALC employs approximately 4,800 people.
Forward-looking Statements
Statements contained in this release other than statements of historical
fact, including statements regarding anticipated financial performance,
business strategy and management's plans and objectives for future
operations including managements expectations about improving private payer
mix, are forward-looking statements. These forward-looking statements
generally include words such as "expect," "intend," "will," "anticipate,"
"believe," "estimate," "plan," "strategy" or "objective." Forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those expressed or implied. In addition
to the risks and uncertainties referred to in the release in connection
with forward-looking statements, other risks and uncertainties are
identified in ALC's' filings with United States Securities and Exchange
Commissions and include, but are not limited to, the following: changes in
the health care industry in general and the long-term senior care industry
in particular because of political and economic influences; changes in
regulations governing the industry and ALC's compliance with such
regulations; changes in government funding levels for health care services;
resident care litigation, including exposure for punitive damage claims and
increased insurance costs, and other claims asserted against ALC; ALC's
ability to maintain and increase census levels; ALC's ability to attract
and retain qualified personnel; the availability and terms of capital to
fund ALC's capital expenditures; changes in competition; and demographic
changes. Given these risks and uncertainties, readers are cautioned not to
place undue reliance on ALC's forward-looking statements. All
forward-looking statements contained in this report are necessarily
estimates reflecting the best judgment of the party making such statements
based upon current information. ALC assumes no obligation to update any
forward-looking statement.
ASSISTED LIVING CONCEPTS, INC.
Consolidated Statements of Income
(In thousands, except earnings per share)
Three Months Ended
March 31,
---------------------
2008 2007
---------- ----------
Revenues $ 60,247 $ 57,521
---------- ----------
Expenses:
Residence operations (exclusive of depreciation
and amortization and residence
lease expense shown below) 38,925 37,758
General and administrative 3,090 2,987
Residence lease expense 4,898 3,699
Depreciation and amortization 4,896 4,181
Transaction costs -- 56
---------- ----------
Total operating expenses 51,809 48,681
---------- ----------
Income from operations 8,438 8,840
Other expense:
Interest income 179 466
Interest expense (2,083) (1,681)
---------- ----------
Income before income taxes 6,534 7,625
Income tax expense (2,483) (2,898)
---------- ----------
Net income $ 4,051 $ 4,727
========== ==========
Weighted average common shares:
Basic 64,545 69,482
Diluted 65,199 70,205
Per share data:
Basic earnings per common share $ 0.06 $ 0.07
========== ==========
Diluted earnings per common share $ 0.06 $ 0.07
========== ==========
Adjusted EBITDA (1) $ 13,337 $ 13,083
========== ==========
Adjusted EBITDAR (1) $ 18,235 $ 16,782
========== ==========
(1) See attached tables for definitions of adjusted EBITDA and adjusted
EBITDAR and reconciliations of net income to adjusted EBITDA and
adjusted EBITDAR.
ASSISTED LIVING CONCEPTS, INC.
Consolidated Balance Sheets
(In thousands, except share and per share data)
March 31, December
ASSETS 2008 31, 2007
Current assets: (Unaudited)
Cash and cash equivalents $ 14,142 $ 14,066
Investments 3,608 4,596
Accounts receivable, less allowances of $971 and
$992, respectively 3,555 3,746
Supplies, prepaid expenses and other current
assets 7,325 6,733
Deferred income taxes 4,287 4,080
--------- ---------
Total current assets 32,917 33,221
Property and equipment, net 395,554 395,141
Goodwill and other intangible assets, net 30,892 20,736
Restricted cash 3,800 8,943
Cash designated for acquisition -- 14,864
Other assets 3,440 3,336
--------- ---------
Total assets $ 466,603 $ 476,241
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,842 $ 7,800
Accrued liabilities 18,116 17,951
Deferred revenue 6,989 6,346
Accrued income taxes 127 198
Current maturities of long-term debt 26,260 26,543
Current portion of self-insured liabilities 300 300
--------- ---------
Total current liabilities 59,634 59,138
Accrual for self-insured liabilities 1,028 941
Long-term debt 99,735 103,176
Deferred income taxes 7,822 9,008
Other long-term liabilities 9,523 9,444
Commitments and contingencies
--------- ---------
Total Liabilities 177,742 181,707
--------- ---------
Preferred Stock, par value $0.01 per share,
25,000,000 shares authorized, none
issued or outstanding -- --
Class A Common Stock, par value $0.01 per share,
400,000,000 shares authorized, 54,628,796 and
56,131,873 issued and outstanding, respectively 595 595
Class B Common Stock, par value $0.01 per share,
75,000,000 shares authorized, 8,717,573 and
8,727,458 issued and outstanding, respectively 100 100
Additional paid-in capital 313,551 313,548
Accumulated other comprehensive (loss) income (524) 103
Retained earnings 23,369 19,318
Treasury stock at cost, Class A Common Stock
6,204,760 and 4,691,060 shares, respectively (48,230) (39,130)
--------- ---------
Total Stockholders' Equity 288,861 294,534
--------- ---------
Total Liabilities and Stockholders' Equity $ 466,603 $ 476,241
========= =========
ASSISTED LIVING CONCEPTS, INC.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
March 31,
------------------
2008 2007
-------- --------
OPERATING ACTIVITIES:
Net income $ 4,051 $ 4,727
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,896 4,181
Amortization of purchase accounting adjustments for:
Leases and debt (215) (215)
Below market resident leases -- (39)
Provision for bad debt 21 150
Provision for professional/general liability
insurance 224 150
Payments for professional/general liability
insurance (126) (143)
Deferred income taxes 2,101 551
Equity-based compensation expense 3 6
Changes in assets and liabilities:
Accounts receivable 170 65
Supplies, prepaid expenses and other current assets (592) 350
Accounts payable 42 (1,014)
Accrued liabilities (464) (1,520)
Deferred revenue 643 1,962
Income taxes payable/receivable 290 2,461
Other non-current assets 5,039 887
Other long-term liabilities 176 353
-------- --------
Cash provided by operating activities 16,259 12,912
-------- --------
INVESTING ACTIVITIES:
Payment for acquisition (14,524) --
Cash designated for acquisition 14,864 --
Payments for new construction projects (249) (1,152)
Payments for purchases of property and equipment (3,557) (2,827)
-------- --------
Cash used in investing activities (3,466) (3,979)
-------- --------
FINANCING ACTIVITIES:
Capital contributions from Extendicare -- 73
Purchase of treasury stock (9,100) --
Repayment of revolving credit facility (3,000) --
Payments of long-term debt (617) (561)
-------- --------
Cash used in financing activities (12,717) (488)
-------- --------
Increase in cash and cash equivalents 76 8,445
Cash and cash equivalents, beginning of year 14,066 19,951
-------- --------
Cash and cash equivalents, end of period $ 14,142 $ 28,396
======== ========
Supplemental schedule of cash flow information:
Cash paid during the period for:
Interest $ 2,172 $ 1,792
Income tax payments, net of refunds 96 (113)
ASSISTED LIVING CONCEPTS, INC.
Financial and Operating Statistics
All continuing residences* Three months ended
----------------------------
March December March
31, 31, 31,
2008 2007 2007
-------- -------- --------
Average Occupied Units by Payer Source
Private 5,631 5,316 5,219
Medicaid 873 1,032 1,741
-------- -------- --------
Total 6,504 6,348 6,960
======== ======== ========
Occupancy Mix by Payer Source
Private 86.6% 83.7% 75.0%
Medicaid 13.4% 16.3% 25.0%
Percent of Revenue by Payer Source
Private 90.6% 88.1% 81.4%
Medicaid 9.4% 11.9% 18.6%
Average Revenue per Occupied Unit Day
by Payer Source
Private $ 106.51 $ 101.75 $ 99.18
Medicaid $ 71.31 $ 70.97 $ 67.98
Combined $ 101.79 $ 96.75 $ 91.38
Occupancy Percentage 71.7% 74.4% 83.7%
ASSISTED LIVING CONCEPTS, INC.
Financial and Operating Statistics
Same residence basis** Three months ended
----------------------------
March December March
31, 31, 31,
2008 2007 2007
-------- -------- --------
Average Occupied Units by Payer Source
Private 5,065 5,231 5,219
Medicaid 873 1,032 1,741
-------- -------- --------
Total 5,938 6,263 6,960
======== ======== ========
Occupancy Mix by Payer Source
Private 85.3% 83.5% 75.0%
Medicaid 14.7% 16.5% 25.0%
Percent of Revenue by Payer Source
Private 89.7% 88.0% 81.4%
Medicaid 10.3% 12.0% 18.6%
Average Revenue per Occupied Unit Day by
Payer Source
Private $ 107.38 $ 102.22 $ 99.18
Medicaid $ 71.31 $ 70.97 $ 67.98
Combined $ 102.08 $ 97.07 $ 91.38
Occupancy Percentage 71.1% 75.0% 83.7%
** Same residence basis excludes the impact of residents added from the
acquisition of the 185 unit residence in Dubuque, Iowa purchased on
July 20, 2008 and the Cara Vita Acquisition.
Weighted Average Basic and Diluted Shares
The basic weighted average number of shares of common stock is based upon
the number of shares of Class A and Class B common stock of ALC
outstanding. For purposes of determining the diluted weighted average
number of shares, the Class B shares were deemed to have been converted
into Class A shares at the 1 to 1.075 conversion rate applicable to the
Class B common stock. This resulted in an additional 0.7 million shares
included in the fully diluted weighted average number of shares outstanding
in both the quarters ended March 31, 2008 and 2007.
Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDAR
Adjusted EBITDA is defined as net income from continuing operations before
income taxes, interest expense net of interest income, depreciation and
amortization, equity based compensation expense, transaction costs and
non-cash, non-recurring gains and losses, including disposal of assets and
impairment of long-lived assets and loss on refinancing and retirement of
debt. Adjusted EBITDAR is defined as adjusted EBITDA before rent expenses
incurred for leased assisted living properties. Adjusted EBITDA and
adjusted EBITDAR are not measures of performance under accounting
principles generally accepted in the United States of America, or GAAP. We
use adjusted EBITDA and adjusted EBITDAR as key performance indicators and
adjusted EBITDA and adjusted EBITDAR expressed as a percentage of total
revenues as a measurement of margin.
We understand that EBITDA and EBITDAR, or derivatives thereof, are
customarily used by lenders, financial and credit analysts, and many
investors as a performance measure in evaluating a company's ability to
service debt and meet other payment obligations or as a common valuation
measurement in the long-term care industry. Moreover, ALC's revolving
credit facility contains covenants in which a form of EBITDA is used as a
measure of compliance, and we anticipate EBITDA will be used in covenants
in any new financing arrangements that we may establish. We believe
adjusted EBITDA and adjusted EBITDAR provide meaningful supplemental
information regarding our core results because these measures exclude the
effects of non-operating factors related to our capital assets, such as the
historical cost of the assets.
We report specific line items separately, and exclude them from adjusted
EBITDA and adjusted EBITDAR because such items are transitional in nature
and would otherwise distort historical trends. In addition, we use
adjusted EBITDA and adjusted EBITDAR to assess our operating performance
and in making financing decisions. In particular, we use adjusted EBITDA
and adjusted EBITDAR in analyzing potential acquisitions and internal
expansion possibilities. Adjusted EBITDAR performance is also used in
determining compensation levels for our senior executives. Adjusted EBITDA
and adjusted EBITDAR should not be considered in isolation or as a
substitute for net income, cash flows from operating activities, and other
income or cash flow statement data prepared in accordance with GAAP, or as
a measure of profitability or liquidity. We present adjusted EBITDA and
adjusted EBITDAR on a consistent basis from period to period, thereby
allowing for comparability of operating performance.
Adjusted EBITDA and Adjusted EBITDAR Reconciliation Information
The following table sets forth a reconciliation of net income to adjusted
EBITDA and adjusted EBITDAR:
Three Months
Ended
March 31,
-----------------
2008 2007
-------- --------
(In thousands,
unaudited)
Net income $ 4,051 $ 4,727
Provision for income taxes 2,483 2,898
-------- --------
Income from operations before income taxes 6,534 7,625
Add:
Depreciation and amortization 4,896 4,181
Interest expense, net 1,904 1,215
Transaction costs -- 56
Non-cash equity based compensation 3 6
-------- --------
Adjusted EBITDA 13,337 13,083
Add: Lease expense 4,898 3,699
-------- --------
Adjusted EBITDAR $ 18,235 $ 16,782
======== ========
The following table sets forth the calculations of adjusted EBITDA and
adjusted EBITDAR as percentages of total revenue:
Three Months Ended
March 31,
------------------
2008 2007
-------- --------
(Dollars in
thousands,
unaudited)
Revenues $ 60,247 $ 57,521
-------- --------
Adjusted EBITDA $ 13,337 $ 13,083
-------- --------
Adjusted EBITDAR $ 18,235 $ 16,782
-------- --------
Adjusted EBITDA as percent of total revenue 22.1% 22.7%
-------- --------
Adjusted EBITDAR as percent of total revenue 30.3% 29.2%
-------- --------
For further information, contact:
Assisted Living Concepts, Inc.
John Buono
Sr. Vice President, Chief Financial Officer and Treasurer
Phone: (262) 257-8999
Fax: (262) 251-7562
Email: Email Contact
Visit ALC's Website @ www.alcco.com
Copyright ? 2008 Marketwire
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