En Route to Privatization, ALC’s Q4 Earnings Remain In the Red

Despite entering into an agreement last month to be acquired by private equity firm TPG for $278.8 million, Assisted Living Concepts (NYSE:ALC) isn’t out of the woods yet. The Menomonee Falls-based assisted living provider reported a net loss of $2.6 million in the fourth quarter ended Dec. 31, 2012, compared to a net income of $7.3 million a year prior. 

Revenues for the fourth quarter were also down slightly to $57 million compared to revenues of $58.9 million in the fourth quarter of 2011. 

Performance also declined on a year-over-year basis for the company, with ALC reporting a net loss of $26.1 million for full-year 2012 as compared to net income of $24.4 million in 2011. 


The fourth quarter’s performance followed a third quarter net loss of $4 million and an announcement that the assisted living provider would be divesting seven of its New Jersey communities and using proceeds to pay down debt. 

The last few quarters have been reminiscent of a roller coaster ride for ALC, fraught with lawsuits, leadership change, and plummeting financial performance that have combined for a substantial loss in value.

The troubled chain has been shopping itself to buyers for about two years before the agreement with TPG. While the transaction has not yet closed, the acquisition price represents an approximately $200 million decrease from where initial proposals placed the potential sale price, according to the Milwaukee Journal Sentinel, citing a recent ALC filing. 


The company has been making a concerted effort to improve care quality and increase census in the last few quarters, following regulatory violations at several communities and an accompanying lawsuit and then lease termination from landlord Ventas Realty.

As part of the company’s turnaround effort, ALC fired its former CEO Laurie Bebo in May 2012, recruiting retired lieutenant general Charles “Chip” Roadman in her place. Still, mounting financial losses led to analyst speculation that ALC would be on the road to privatization.

The company also disclosed in the filing that Bebo filed a whistleblower complaint last summer with the Occupational Safety and Health Administration of the Department of Labor, alleging that her firing was because she suggested ALC delayed releasing its first quarter earnings because of the Ventas lawsuit, says the Journal Sentinel.

During his tenure, Roadman has hired an additional 800 employees and increased employee training as part of the turnaround effort. The company has also been pushing to improve care quality and increase census. 

“In the fourth quarter of 2012, we increased our number of units rented by 131, a significant improvement from recent history,” said Roadman in the earnings statement. “Our continued progress in the regulatory arena combined with quality initiatives were instrumental measures in attaining this improvement.” 

ALC currently operates 210 senior living residences in 20 states. 

Written by Jason Oliva 

Companies featured in this article: