- The Washington Times - Monday, March 12, 2001

Sunrise Assisted Living Inc. is a growing company in a turbulent industry. But the company has bucked the trend, recently announcing earnings that beat analysts' expectations.

The McLean provider of assisted-living services said last week net sales for its fourth quarter of 2000 rose 35 percent to $95.87 million from $70.35 million the year before.

At the same time net income shot up 128 percent to $8.8 million (39 cents per diluted share) from $3.86 million (18 cents). Diluted shares reflect the value of options, warrants and other securities convertible into common stock.

The company's earnings for the fiscal year also rose. For 2000, Sunrise said net sales rose 39 percent to $344.79 million from $248.2 million in 1999. During that time net income also rose by 20 percent to $24.28 million ($1.10) from $20.21 million (94 cents).

"I'm very pleased," says Anne Anderson, analyst with Atlantic Investment in Parsippany, N.J. "This company has clearly completed their turnaround. They have guided estimates much higher for 2001."

Sunrise estimates its earnings will grow about 75 percent during 2001.

The company became one of the nation's largest providers of assisted-living services two years ago, when it acquired Karrington Health Inc. Today, the franchise of upscale facilities includes 102 fully owned properties and 41 in joint ventures throughout 25 states and the United Kingdom.

Sunrise has more than 70 other properties under development.

Founded in 1981, Sunrise is one of fewer than a dozen public companies in an industry of several hundred players. Its shares are trading higher than the rest of the sector, said Jerry Doctrow, analyst with Legg Mason Wood Walker in Baltimore.

Sunrise's stock closed at $23 Friday on Nasdaq. Meanwhile, most stocks in the sectors are trading below $5, and some even lower than $1, said Mr. Doctrow.

Behind the industry's demise is a building boom that began in 1997, as the time approached for the Baby Boom generation to retire.

"Companies built too many facilities too quickly," says Mr. Doctrow. "So we saw a number of companies start suffering."

But Sunrise stayed focused, building only in the top 20 metropolitan markets where it was difficult to find real estate, but the customer base was larger. The average occupancy rate at its facilities last year was 91.6 percent, the company says.

"One of the things they are doing now, is they are starting to shift from being an owner of properties to being a manager of properties," says Mr. Doctrow.

During a conference call announcing earnings last week, officials at Sunrise said they will capitalize on the industry's disarray, because companies that are developing facilities are looking for management services. The plan is for Sunrise to enter 10 to 15 third-party management contacts this year.

The company said that with the money from this venture it will buy back some of its outstanding shares. Last week, the board of directors at Sunrise authorized the repurchase of up to $50 million of its common stock. To date, the company has repurchased about 585,000 shares for under $10 million.

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