Five Star Senior Living : AlerisLife Inc. Investor Presentation January 2022

Five Star Senior Living Inc. Becomes AlerisLife Inc.

Nasdaq: ALR

January 26, 2022

WARNING CONCERNING FORWARD-LOOKING STATEMENTS

This presentation contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Whenever we use words such as "believe", "expect", "anticipate", "intend", "plan", "estimate", "will", "may" and negatives or derivatives of these or similar expressions, we are making forward-looking statements. These forward-looking statements are based upon our present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and our actual results may differ materially from those contained in, or implied by, our forward-looking statements. Forward-looking statements in this presentation relate to various aspects of our business, including the potential benefits from our strategic plan, expansion of our lifestyle services, our potential growth through new ventures and existing businesses, our anticipated announcement of new strategic relationships, our ability to operate our senior living communities profitably, the market opportunity for our Ageility business, changes to our revenue mix and financial performance, our ability to grow revenues at the senior living communities we manage and other sources of revenue, and the potential for demand growth in the senior living industry and trends for supply growing and occupancy. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond our control, such as the impact of conditions in the economy and the capital markets on us and our residents and other customers, competition within the senior living and other health and wellness related services businesses, older adults delaying or forgoing moving into senior living communities or purchasing health and wellness services from us, increases in our labor costs or in costs we pay for goods and services, increases in tort and insurance liability costs, our operating and debt leverage, actual and potential conflicts of interest with our related parties, changes in Medicare or Medicaid policies and regulations, or the possible repeal, replacement or modification of Medicare, Medicaid or other existing or proposed legislation or regulations, which could result in reduced Medicare or Medicaid rates or a failure of such rates to cover our costs or limit the scope or funding of either or both programs, or reductions in private insurance utilization and coverage, delays or non-payments of government payments to us, compliance with, and changes to, federal, state and local laws and regulations that could affect our services or impose requirements, costs and administrative burdens that may reduce our ability to operate our business profitably, our exposure to litigation and regulatory and government proceedings, continued efforts by third party payers to reduce costs, and acts of terrorism, outbreaks of pandemics, including COVID-19, or other human made or natural disasters. For example: (a) challenging conditions in the senior living industry continue to exist and our business and our operations remain subject to substantial risks, many of which are beyond our control; as a result, our operations may not be profitable in the future and we may realize losses; (b) we may not successfully execute our strategic growth and cost rationalization initiatives; (c) we may not successfully integrate, operate and profitably manage our senior living communities and rehabilitation and wellness services clinics; (d) we cannot be sure that we will enter additional management arrangements with Diversified Healthcare Trust (DHC); (e) our belief that the aging of the U.S. population and increasing life spans of older adults will increase demand for senior living communities and services may not be realized or may not result in increased demand for our services; (f) our investments in our workforce and continued focus on reducing our employee turnover level by enhancing our competitiveness in the marketplace with respect to cash compensation and other benefits may not be successful and may not result in the benefits we expect to achieve through such investments; (g) we may not be able to implement each aspect of our strategic plan within the timeframe we expect, or at all, due to a variety of factors, including that we and DHC may not identify and agree to terms with new operators for communities to be transitioned or we may not be able to close certain Ageility clinics or close and reposition certain skilled nursing facilities; (h) the cost of implementing the strategic plan may be more than we expect and we may not realize the anticipated benefits of such plan; (i) our marketing initiatives may not succeed in increasing our occupancy and revenues, and they may cost more than any increased revenues they may generate; (j) our strategic investments to enhance efficiencies in and benefits from our purchasing of services may not be successful or generate the returns or savings we expect; (k) circumstances that adversely affect the ability of older adults or their families to pay for our services, such as economic downturns, weakening housing market conditions, higher levels of unemployment among our residents' or potential residents' family members, lower levels of consumer confidence, stock market volatility and/or changes in demographics generally, could affect the revenues and profitability of our senior living communities;

1. residents who pay for our services with their private resources may become unable to afford our services, resulting in decreased occupancy and decreased revenues at our senior living communities; (m) the various federal and state government agencies that pay us for the services we provide to some of our residents are experiencing budgetary constraints and may lower the Medicare, Medicaid and other rates they pay us; (n) we may be unable to repay or refinance our debt obligations when they become due; (o) certain aspects of our operations and future growth we may pursue in our business may require significant amounts of working capital and require us to make significant capital expenditures; accordingly, we may not have sufficient cash liquidity; (p) the amount of available borrowings under our credit facility is subject to our having qualified collateral, which is primarily based on the value of the assets securing our obligations under our credit facility; (q) the availability of borrowings under our credit facility is subject to our satisfying certain financial covenants and other conditions that we may be unable to satisfy; (r) insurance costs may continue to rise and our actions and approach to managing our insurance costs may not be successful and could result in our incurring significant costs and liabilities that we will be responsible for funding; (s) contingencies in any applicable acquisition or sale agreements we or DHC have entered into, or may enter into, may not be satisfied and our and DHC's applicable acquisitions or sales, and any related management arrangements we may expect to enter into, may not occur, may be delayed or the terms may change; (t) we and DHC may not be able to sell communities that we or DHC may seek to sell on acceptable terms; (u) the advantages we believe we may realize from our relationships with related parties may not materialize; (v) operating deficiencies or a license revocation at one or more of our senior living communities may have an adverse impact on our ability to operate, obtain licenses for, or attract residents to, our other communities; (w) we may be unable to meet collateral requirements related to our workers' compensation insurance program, which may result in higher costs; and (x) the COVID-19 pandemic may continue to adversely affect our business, operating results and financial condition for an indefinite period of time, including by decreasing the occupancy of our senior living communities, causing staffing and supply shortages and increasing the costs of operating our senior living communities and our efforts to mitigate the effects of the COVID-19 pandemic may be insufficient. Our Annual Report on Form 10-K for the year ended December 31, 2020, our Quarterly Reports on Form 10-Q for the periods ended March 31, 2021, June 30, 2021 and September 30, 2021, and our other filings with the Securities and Exchange Commission (SEC) identify other important factors that could cause differences from our forward-looking statements. Our filings with the SEC are available on the SEC's website at www.sec.gov. You should not place undue reliance upon our forward-looking statements. Except as required by law, we do not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.

This presentation contains non-GAAP financial measures, including adjusted net income, adjusted earnings per diluted share and earnings before interest, taxes, depreciation and amortization (EBITDA) margin. Reconciliations for these metrics to the closest U.S. generally accepted accounting principles (GAAP) metrics are included later in this investor presentation. We believe the non-GAAP financial measures included in this investor presentation are meaningful supplemental disclosures because they may help investors better understand changes in our operating results and ability to meet financial obligations or service debt, make capital expenditures and expand our business. We believe that these non-GAAP financial measures are meaningful financial measures that may help investors better understand our financial performance, including by allowing investors to compare our performance between periods and to the performance of other companies. Our management uses these non-GAAP financial measures to evaluate our financial performance and compare it over time and against competitors. These measures should not be considered as alternatives to net income (loss) or operating (loss) income, as indicators of our operating performance or as measures of our liquidity.

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Re-Branding to AlerisLife

THE NEXT STEP IN ONGOING STRATEGIC PLAN

Q2 2019

Q1 2021

Announced plan to change 184 communities from triple net lease structure to managed- only structure.

• Reduced 2019 rent by approximately 34%.
• Significantly reduced senior living operating risk by converting to management contracts.
• Increased cash balance by approximately $125M via agreement.
• No longer expressed doubt to continue as a going concern.

Announced new strategic plan to focus operations on larger, lower acuity senior living communities.

• Formal exit of the skilled nursing business.
• Renewed focus on operational strengths within senior living.
• Repositioning the company to grow and diversify revenue streams through lifestyle services.

On January 26, changed the company name to AlerisLife.

• Continue delivery of an exceptional resident experience to senior living and active adult residents, while also offering lifestyle services to the younger "choice- based" consumer, building an earlier trusted partnership.
• Continue lifestyle services growth through new ventures and existing businesses, such as our Ageility rehabilitation.
• Announce strategic relationships to further enrich the customer experience and position AlerisLife as a provider of a wide range of services that its current and future customers desire.

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WHAT IS ALERISLIFE?

"Aleris" is a Latin word meaning "to foster, nourish and develop," signifying the Company's intent to continue developing and expanding its lifestyle services. The name change reflects the significant organizational restructuring of the Company over the past two years and its strategic decision to continue delivering an exceptional and enhanced resident experience to senior living and active adults, while also offering lifestyle services to younger "choice-based" consumers, utilizing the following Vision, Mission and Purpose:

Vision:

A world in which quality of life is ageless.

Mission:

To enrich and inspire the journey of life, one experience at a time.

Purpose:

To never stop advancing by building a passion for life that endures, grows and moves forward.

Service

Capabilities

Residential

Lifestyle Services

Owned	Managed	Rehabilitation	Fitness	Windsong	Home Services/
Services	Home Health	Concierge

TM

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