Home

Assisted Living Companies In Financial Distress

Wed, 05/31/2000 - 12:00am — Karen Stevenson
Description: 

Grand Court Lifestyles, the operator of about 54 assisted living facilities across the country, is now in bankruptcy. Early in March, the company failed to make payments on $13.6 million in debt. By the end of March, the company had filed for Chapter 11 reorganization. In April, the company was delisted from the NASDAQ stock exchange.

Alterra, the operator of about 350 assisted living residences across the country, reported a first quarter loss of $.24 a share for the year 2000, as compared to income of $.06 a share in the same period of the prior year. Income per share for Sunrise Assisted Living for the first quarter the year dropped from $.35 in 1999 to $.19 in 2000, and first quarter income per share at American Retirement Corp dropped from $.20 a share in 1999 to $.04 in 2000.

Stocks of most publicly-held assisted living companies have been hammered this year, partly because the public doesn't differentiate between the regulatory and reimbursement problems which face the nursing home industry from the very different environment of the assisted living industry, and partly because of the poor financial results many industry leaders had displayed. Industry operators contend their industry is still healthy, and that the poor financial results are primarily due to the upfront costs of investing in land and buildings in new locations, costs will be recouped as the new facilities come online. Some observers counter that the poor results are an indication that the industry has overbuilt and overextended itself.

Grand Court Lifestyles, the operator of about 54 assisted living facilities across the country, is now in bankruptcy. Early in March, the company failed to make payments on $13.6 million in debt. By the end of March, the company had filed for Chapter 11 reorganization. In April, the company was delisted from the NASDAQ stock exchange.

Alterra, the operator of about 350 assisted living residences across the country, reported a first quarter loss of $.24 a share for the year 2000, as compared to income of $.06 a share in the same period of the prior year. Income per share for Sunrise Assisted Living for the first quarter the year dropped from $.35 in 1999 to $.19 in 2000, and first quarter income per share at American Retirement Corp dropped from $.20 a share in 1999 to $.04 in 2000.

Stocks of most publicly-held assisted living companies have been hammered this year, partly because the public doesn't differentiate between the regulatory and reimbursement problems which face the nursing home industry from the very different environment of the assisted living industry, and partly because of the poor financial results many industry leaders had displayed. Industry operators contend their industry is still healthy, and that the poor financial results are primarily due to the upfront costs of investing in land and buildings in new locations, costs will be recouped as the new facilities come online. Some observers counter that the poor results are an indication that the industry has overbuilt and overextended itself.