After Five Star Rebranding, AlerisLife Prepares to Expand Lifestyle Services in 2022

AlerisLife (Nasdaq: ALR) continues to expand its lifestyle service offerings, and company executives are optimistic about continued growth in the short and long term.

The Newton, Mass.-based company, formerly known as Five Star Senior Living, changed its name last month to a new name, marking its continued evolution from a company that is primarily a residence owner and operator. for older people to a society that is a “more diverse and comprehensive partner”. ”

To achieve these goals, the company plans to further expand its lifestyle service offerings, such as its Ageility rehabilitation and fitness business line, which is a growing source of revenue. AlerisLife is already collaborating with Compass Group on Restoration Services and Dispatch Health to bring more acute care to residents.

“We are actively pursuing the expansion of our lifestyle services and look forward to announcing new partnerships and our strategic investments in events this year,” CEO Katie Potter said on Thursday’s fourth quarter earnings conference call. the company with investors and analysts.

AlerisLife also begins 2022 with a lighter portfolio than last year, after agreeing to transfer 107 Five Star Senior Living communities to 10 other operators as part of a restructuring effort with real estate investment trust (REIT) Diversified Healthcare. Trust (Nasdaq: DHC).

Now, AlerisLife’s senior living operations include 120 diversely owned and 20 owner-managed communities, with a mix of units that is much more heavily focused on “lower-acuity, life-based customers.” choice,” Potter noted.

AlerisLife’s focus on new services is driven by the belief that diversifying its senior living offerings will lead to longer, stronger relationships with customers, which Potter has noted in past conversations. with Senior Housing News.

“We’ve been focused on meeting changing customer demands and capturing residential and lifestyle needs earlier in the customer lifecycle,” she said on the earnings call. Thursday.

AlerisLife posted a net loss of $10.7 million in the fourth quarter of 2021, which included $2.3 million of DHC restructuring expenses.

The average occupancy rate of the company’s retirement residence portfolio reached nearly 73% at the end of December, an increase of 210 basis points compared to the company’s third quarter occupancy rate. The average occupancy rate of the company’s managed portfolio increased by 150 basis points compared to the third quarter of 2021, reaching 75.2% at the end of the 4th quarter.

The value of AlerisLife stock fell nearly 4.8%, hitting $2.59 at the close of trading on Thursday.

“Significant potential”

One offering that exemplifies AlerisLife’s lifestyle services strategy is its Ageility service line, which has consistently driven the company’s revenue growth and operating results and forms the core of the company’s services in this segment.

During the fourth quarter of 2021, AlerisLife Fitness revenue increased to $3.3 million, an increase of 38.1% over the same period in 2020. Overall, segment revenue of the company’s lifestyle services grew 1.6% from the third quarter,

The company opened outpatient rehabilitation clinics at a compound annual growth rate of 22% over five years. Company executives also noted that their data shows a 36% reduction in the rate of resident falls and a 31% increase in length of stay when an outpatient clinic is added to a community.

“With minimal investment [of about $20,000 to $30,000] needed to open new clinics and a market share of less than 1% of the estimated market opportunity for this service, we believe there is significant potential to continue to grow this business,” Potter said.

Total outpatient rehab visits in the fourth quarter of 2021 reached approximately 148,000, a gain of approximately 4% from pandemic lows for the business.

Going forward, Five Star is looking to expand its range of service offerings inside and outside the communities it manages. For example, the company is looking to expand its offerings in the home care sector.

“As we grow and expand the segments, we plan to add additional lines of business operated through new and existing brands representing a diverse offering of services to support older adults as they get older,” Potter said.

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