Success is often bittersweet.
I am pleased to announce today the organization has embarked on the sale of Five Star Senior Living to several senior living constituents. Once completed, we will have increased the value by 4x in three years! While AlerisLife will come to a close, the positive impact we made will live on.
At the start of my journey as a first time CEO three years ago, if you had asked me if what we have just achieved was possible, I would have been highly skeptical. There was constant turnover at all levels of the company. The organization was still reeling from the social and economic impacts of COVID. At the time, we were still a public company, bogged down by corporate governance that inhibited necessary change. I helped lead a going-private transaction, completed a sale of a non-core asset that netted a favorable return to shareholders, and generally retooled the cost structure.
The real value-add, however, was in operations. Yes, we drove revenue growth by nearly 30% and transformed a money-losing business into a highly profitable company, with a profit improvement of more than 200%. But it was HOW we did it that was most noteworthy. Our commitment to evaluating and improving both process and culture were the root cause of the improvements. This investment in operationalizing trust and agency, the core tenets of the red helicopter operating system, created value that is not easily measured, by traditional accounting metrics. Annualized turnover decreased by 15%. We made a commitment to a program, Nourish You, that has served over one million nutritious meals to team members since inception. We didn’t stop there; we also doubled down on our ‘people promise’ by investing over $8 million in team members' base pay and implemented company match contributions to our 401k program. We also made a commitment to further develop community leaders through the investment in a pilot launch of the red helicopter training program that made agency understandable and practical on a day in, day out basis.
All of this helped make us a Great Place to Work for the past two years in a row, and one of Fortune’s Top 25 best senior living companies. We also were invited to keynote the industry’s leading conference in 2024. The scope of our transformation was that remarkable.
It was hard work, but it was all worth it.
I am very grateful to my majority shareholders and The RMR Group for giving me the opportunity to transform, for all of your support, and for entrusting me with this difficult task.
And thanks to James C. Rhee and the red helicopter – I will miss our weekly strategy sessions over two plain bagels. You helped me see what was possible.
Here’s the bittersweet part - I will miss working with the team members, the interactions with the residents, and our key business partners... YOU all were the true value to Five Star & AlerisLife I wish you all the best of luck and I want to remind you to protect and embrace your Agency.
