Assisted Living Concepts, Inc. ("ALC") (NYSE: ALC) reported net income from continuing operations and net income of $4.2 million and $3.4 million, respectively, in the third quarter of 2009 compared to net income from continuing operations and net income of $3.1 million and $3.0 million, respectively in the third quarter of 2008.
"We continue to be pleased with the results of the private pay transition plan we began in 2006. Not only did we increase private pay occupancy in the third quarter but October was an even stronger month for us. We increased the percentage of revenues from private pay residents from 78.9% in the third quarter of 2006 to 95.7% in the third quarter of 2009," commented Laurie Bebo, President and Chief Executive Officer of Assisted Living Concepts, Inc. "The private pay transition, together with reduced administrative costs, resulted in record adjusted EBITDAR margins."
During the third quarter of 2009, ALC elected not to exercise a purchase option on five residences it operates under a master lease agreement and will cease operations at four of the five residence at the end of 2009. ALC will continue to operate the remaining residence (consisting of 39 units) under an operating lease which expires in February 2014. As a result of not exercising the purchase option, ALC recorded a non-cash, non-recurring write-off of $0.9 million (net of tax benefits of $0.5 million) resulting from the remaining book value of assets to be retained by the lessor, partially offset by the elimination of the remaining capital lease obligation. Approximately $0.1 million and $0.8 million of the net non-cash, non-recurring write-off was recorded in continuing and discontinued operations, respectively. Excluding this charge both net income from continuing operations and net income for the quarter ended September 30, 2009 would have been $4.3 million.