Q2 2022 Alerislife Inc Earnings Call
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Good day and welcome to the Eris life second quarter 2022 earnings call. All participants will be in listen. Only mode should jgenneed assistance. Please signal a conference specialist by pressing star in zero on your telephone key pad. After today's presentation there will be an opportunity to ask questions. To ask a question, you may press star than one on your telephone key pad. To withdraw your question, please press star than two Please note this event is being recorded.
I would now like to turn the conference over to Michael kodes, Director of Investor Relations. Please go ahead.
Thank you. Welcome to erryslide's second quarter 2022 conference call. The agenda for today's call includes the presentation by Jeff weer, presentident and Chief Executive Officer, and Chief Financial Officer, and treasure, followed by a question-and-answer session with research analysts. I would like to note that transcription, recording or retransmission of today's conference call is strictly prohibited without the priority consent of the company.
Today's conference call contains forward-looking statements arewithin the meaning of the Private Securities Litigation Reform Act of 1900 and inety-five other securities laws. These forward-looking statements are based on allariss life's present beliefs and expectations as of today Thursday, August fourth twent, y and twenty-two.
Company irundertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call, other than true filings with the Securities and Exchange Commission or SEC regarding this reporting period.
Actual results may differ materially from those projected in any forward-looking statements. Additional information concerning factors that could cause those differences is contained in our filings with the SEC. Investors are cautioned not to place undue reliance on any forward-looking statements. In addition, this call may contain non-GAAP numbers, including EBITDA, adjusted EBITDA, adjusted net income and adjusted earnings per share. Reconciliations of net income to these non-GAAP figures and the components to calculate them are available in our quarterly results news release or investor presentation available on our website at aris wife com. I will now turn the call over to Jeff. Thanks Michael, good afternoon everyone and thank you for joining our second quarter conference call.
In my prepared remarks today, I will discuss our plan to adopt and execute the recommendations made by the healthcare consulting group of alarez and Marcel, inclusive of the investments we are making in our operational support functions combined with driving cost efficiencies, insight into the improvement of our operational and financial results of the quarter, as well as provide additional detailed commentary surrounding our strategic initiatives to continue driving revenue opportunities in our communities and clinics.
First utilizing the recommendations made by algorithm Marcel. We will continue to drive efficiencies and standardized processes that will enable us to better serve our residents and customers and stabilize our financial performance.
This includes adjustments to the structure of operational support, meaningful reorganization of our sales and marketing programs and continued investment in streamlining processes that will eliminate cost redundancies and enhanced margins.
Many of these augmented targeting strategies and enhanced sales techniques were deployed within our own portfolio as a pilot program during the quarter and we expect to expand these new sales strategies to the broader portfolio this quarter.
In our residential segment, we experienced solid momentum as we progress through the quarter. At the end of the quarter, occupancy in our owned portfolio was 76%, an increase of 340 basis points compared to the end of the first quarter. As a result of this occupancy increase, in addition to a slight increase in rate, RevPAR in our owned portfolio grew 5% sequentially.
In the 120 community portfolio managed on behalf of dhc, occupancy at the end of the quarter was 75%, which represents an increase of 80 basis points from the end of the first quarter.
Revpar in our managed portfolio grew 2% as a result.
While we are encouraged by the quarterly improvement, we believe the June performance will carry into Q3 and are making further investments in sales and marketing to ensure the momentum will continue.
Average occupancy in our own portfolio increased 120 basis points from May to June , while July average occupancy increased in additional 160 basis points compared to June .
Similarly, average occupancy in the managed portfolio increased 50 basis points from M to June and increased in additional 40 basis points in July .
We note that our rev poor results include the impact of concessions which were utilized more significantly at the end of 2021, in the beginning of 2022 and still impacted Q2 results.
We expect the impact of these concessions to lesson as we move into the back half of the year, which we believe will support additional top line revenue growth.
Today we are only utilizing concessions in certain markets on a case-by-case basis rather than as a programmatic strategy to attract prospective residents.
Our leading indicators and execution improved in the quarter as well.
Sales lead volume increased 6% compared to the first quarter, largely driven by continued focus on marketing through our digital leads platform.
We conducted over 6334 tours throughout the quarter, of which 1000 sevenmhundred and 59 were repeat ours.
In addition to the improved toour volume growth this quarter, our toour to sales conversion rate was 27% in the quarter, which is an increase of 450 basis points sequentially and highlights our immense focus on enhancing our sales tactics to improve occupancy.
On a consolidated basis, our lifestyle services revenue increased $5 thousand compared to the first quarter due to increased outpatient utilization.
Looking ahead, we are planning to roll out a new structure within our agility rehabilitation offering, which includes introducing a more scaled approach to therapists and labor providing these services.
As a result, we expect the new structure will help reduce our overall Star costs, drive increased utilization and shorten the location stabilization period.
Moving to expenses.
Wages and benefits as a percentage of revenues was 50% in the second quarter, a decrease of 210 basis points from the sequential quarter.
Annualized employee turnover also moved lower from the first quarter, decreasing overver 1000 basis points to 6,3% and.
We will continue to make investments in our labor force to attract and retain top care talent within our residential segment, which in turn, will reduce turnover, the need for costly agency labor and ultimately, lower the expense level needed to operate our owned and manage communities.
Despite U's inflation at record levels, operating expenses decreased approximately $3.7 million, or 2% from the sequential quarter.
Base wages were up to 6% from the first quarter, while other residential expenses, excluding the $1.7 million decrease related to self insurance reserves, decreased approximately $7 thousand.
Notably, contract labor costs decreased by almost $5 thousand, or 12% from the sequential quarter, resulting from our focus on hiring of key positions.
Shifting to our financial results for the quarter.
In the second quarter, management operating revenues for approximately $39.7 million, an increase of $1.3 million from the sequential quarter, primarily driven by the residential improvement I discussed earlier.
Our residential segment reported total management and operating revenues of $25.1 million, an increase of approximately $75 thousand from the first quarter.
Of the $9 million of management fees earned, approximately $7 thousand were attributable to construction managment fees, as we deployed $24 million of capital on behalf of the managed portfolio this quarter for routteen community capital improvements.
As a reminder, Aleris life will continue to receive a 3% capital management fee on all routine capital.
We expect to deploy approximately $54 million of capital on behalf of the managed communities for the remainder of 2020 -two.
Within our lifestyle services segment. Clinic and daily visitation levels continue to tren dand upward and we had one net location opening in the second quarter.
Looking ahead to next quarter, we expect the implementation of the new agility go-to-market structure to be rolled out modestly over time and, as such, we expect the measured increase in net locations over the next few quarters.
General and administrative expense for the second quarter was $17.8 million, which included $3.3 million reimbursed by dhc.
This GNA figure also included approximately $2 million related to nonrecurring severance and consulting costs.
As a result, Excluding these two items, our net GNA expense was approximately $12.5 million, which represents a decrease of $1.9 million. With thirteen point 2% from the first quarter and since the second quarter of 2021 , we have reduced our quarterly net general ministrative cost by five point two million dollars, or approximately $21 million on an annualized basis.
We expect that while we continue to evaluate opportunities to reduce our general and administrative costs.
We are committed to streamlining our processes and making the necessary investments in our people.
For the second quarter, we reported a net loss of $8.8 million, or 28 cents per share, compared to $9.7 million, or a 31 cents per share loss in the first quarter of 2020 -two.
Adjusted EBITDA for the quarter was negative $1.3 million, a $4 million improvement compared to a loss of $5.3 million reported for the previous quarter.
At quarter end we had approximately $83.5 million of unrestricted cash in our balance sheet, excluding CapEx and nonrecurring impacts such as severance to consulting fees. Cash loss from operations was about $2.5 million during the second quarter.
Additionally, throughout the remainder of 2022, we expect to invest up to $1 million in our own portfolio and one to $2 million for investments in technology.
deack concludes our prepared remarks. Operator, please open the line for quest.
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At this time. We will pause momentarily to assemble our roster.
This concludes our question-and-answer session at the oeris life: second quarter 2022 earnings call. Thank you for attending today's presentation. You may now disconnect.