Assisted Living Concepts, Inc. (“ALC”) (NYSE:ALC) saw fourth quarter net income of $4.3 million, a 43% increase over same period results in 2008. Revenues in the fourth quarter of 2009 increased from the fourth quarter of 2008 primarily due to higher average daily revenue as a result of rate increases ($2.7 million), partially offset by the planned reduction in the number of units occupied by Medicaid residents ($2.1 million). ALC stated that it was able to lower its overall expenses based upon the increase in private-pay residents and that economic conditions were favorable for higher new employees at lower wage rates.
ALC, which owns over 200 assisted living facilities, reported reported net income from continuing operations of $0.8 million and a net loss of $0.2 million for FY 2009, compared to net income from continuing operations and net income of $14.7 million and $14.3 million, respectively, in the year ended December 31, 2008. The 2009 net income from continuing operations was negatively impacted by a $14.7 million write-off of goodwill in the first quarter of 2009 and a non-cash non-recurring write-off of $0.1 million related to ALC’s decision not to exercise a purchase option under a capital lease in the third quarter of 2009.
“Our private pay strategy gained significant momentum in the fourth quarter of 2009,” commented Laurie Bebo, President and Chief Executive Officer. “We saw private pay occupancy gains in each month of the quarter, and
at December 31, 2009, achieved our highest private pay occupancy of the year. Our results in 2009 put us in good position to further enhance profitability in 2010 and beyond. We are now substantially out of Medicaid programs, achieving over 96% of our revenues from private pay sources. Four years ago that number was 70%. A higher percentage of revenues from private pay sources helps our margins because private pay rates in 2009 exceeded Medicaid reimbursement rates by approximately $38 per day. We continue to be focused on private pay occupancy. Headwinds caused by the economic recession constrained our ability to increase private pay census. We were able to achieve strong margins through prudent management of leverage and expenses. Despite the continuing effects of the recession, we saw steady improvement in private pay occupancy in the second half of 2009. The combination of our exiting from Medicaid programs, attention to expenses, and increases in private pay occupancy resulted in significant improvement in margins and provides an excellent platform for future profitability improvement."
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