NEWTON, Mass.--(BUSINESS WIRE)--Five Star Quality Care, Inc. (Nasdaq: FVE) today announced its financial results for the quarter and nine months ended September 30, 2016.
Financial Results for the quarter ended September 30, 2016:
- Senior living revenue for the third quarter of 2016 decreased 0.8% to $277.4 million from $279.7 million for the same period in 2015. The decline in senior living revenue is a result of decreases in occupancy, partially offset by an increase in average monthly rates to residents who pay privately for services. Management fee revenue for the third quarter of 2016 increased 22.8% to $3.3 million from $2.7 million for the same period in 2015. Growth in management fees was primarily due to the previously disclosed modifications to Five Star's management and pooling arrangements with Senior Housing Properties Trust, or SNH, which took effect on July 1, 2016, an increase in the number of managed communities compared to the 2015 period and an increase in average monthly rates to private pay residents at comparable managed communities, partially offset by a decrease in occupancy at comparable managed communities.
- Loss from continuing operations for the third quarter of 2016 was $5.8 million, or $0.12 per diluted share, compared to loss from continuing operations of $26.3 million, or $0.54 per diluted share, for the same period in 2015. Loss from continuing operations for the third quarter of 2016 included benefits from income taxes of $0.9 million, or $0.02 per diluted share, related to a reduction of previously accrued estimated state tax expense resulting primarily from the previously disclosed June 2016 sale and leaseback transaction with SNH. Loss from continuing operations for the third quarter of 2015 included a non-cash charge for goodwill impairment of $25.3 million, or $0.52 per diluted share, and compliance costs and professional fees of $0.9 million, or $0.02 per diluted share, resulting primarily from the previously disclosed Medicare compliance assessment at one of Five Star's skilled nursing facilities, or the Compliance Assessment.
- Net loss for the third quarter of 2016 was $5.9 million, or $0.12 per diluted share, compared to net loss of $27.5 million, or $0.57 per diluted share, for the same period in 2015.
- Earnings from continuing operations before interest, taxes, depreciation and amortization, or EBITDA, for the third quarter of 2016 was $3.3 million compared to $(17.2) million for the same period in 2015. EBITDA, excluding certain items noted in the supplemental information provided below, or Adjusted EBITDA, was $4.3 million and $9.2 million for the third quarters of 2016 and 2015, respectively. Adjusted EBITDA excluding rent, or Adjusted EBITDAR, was $54.9 million and $59.0 million for the third quarters of 2016 and 2015, respectively. A reconciliation of loss from continuing operations determined in accordance with U.S. generally accepted accounting principles, or GAAP, to EBITDA, Adjusted EBITDA and Adjusted EBITDAR for the quarters ended September 30, 2016 and 2015 appears later in this press release.
Operating Results for the quarter ended September 30, 2016 (continuing operations):
- Occupancy at owned and leased senior living communities for the third quarter of 2016 was 83.8%. For the quarter ended September 30, 2016, the calculation of occupancy includes only living units categorized as in service; occupancy calculations for periods prior to 2016 included certain living units categorized as out of service.
- The average monthly rate at owned and leased senior living communities for the third quarter of 2016 increased 0.9% to $4,608 from $4,567 for the same period in 2015.
- The percentage of revenue derived from residents’ private resources at owned and leased senior living communities for the third quarter of 2016 increased 60 basis points to 78.6% from 78.0% for the same period in 2015.
Year to Date Financial Results:
- Senior living revenue for the nine months ended September 30, 2016 increased 0.4% to $836.5 million from $832.8 million for the same period in 2015. Growth in senior living revenue was the result of increases in average monthly rates to residents who pay privately for services, a $1.0 million reversal in revenue reserves recorded in 2016 as a result of the final settlement amount with the United States Department of Health and Human Services Office of the Inspector General for the Compliance Assessment being less than the previously estimated amount, and a revenue reserve recorded in 2015 of $2.4 million related to the Compliance Assessment, partially offset by a decrease in occupancy at comparable senior living communities. Management fee revenue for the nine months ended September 30, 2016 increased by 12.8% to $9.0 million from $7.9 million for the same period in 2015. Growth in management fees was primarily due to the previously disclosed modifications to Five Star's management and pooling arrangements with SNH which took effect on July 1, 2016, an increase in the number of managed communities compared to the 2015 period and an increase in average monthly rates to private pay residents at comparable managed communities, partially offset by a decrease in occupancy at comparable managed communities.
- Loss from continuing operations for the nine months ended September 30, 2016 was $16.1 million, or $0.33 per diluted share, compared to loss from continuing operations of $34.4 million, or $0.71 per diluted share, for the same period in 2015. Loss from continuing operations for the nine months ended September 30, 2016 included a $1.5 million, or $0.03 per diluted share, reversal in revenue reserves and accrued liability for estimated penalties related to the Compliance Assessment and a provision for income taxes of $2.8 million, or $0.06 per diluted share, resulting primarily from state tax expense related to the June 2016 sale and leaseback transaction with SNH. Five Star did not recognize any federal tax expense for the 2016 period because its federal taxable income and expense were offset by its federal net operating loss carry forwards and tax credit carry forwards. Loss from continuing operations for the nine months ended September 30, 2015 included a non-cash charge for goodwill impairment of $25.3 million, or $0.52 per diluted share, a revenue reserve of $2.4 million, or $0.05 per diluted share, and penalties, compliance costs and professional fees of $5.3 million, or $0.11 per diluted share, resulting primarily from the Compliance Assessment, partially offset by a gain on early extinguishment of debt of $0.7 million, or $0.01 per diluted share.
- Net loss for the nine months ended September 30, 2016 was $16.2 million, or $0.33 per diluted share, compared to net loss of $36.7 million, or $0.76 per diluted share, for the same period in 2015.
- EBITDA for the nine months ended September 30, 2016 was $18.8 million compared to $(6.6) million for the same period in 2015. Adjusted EBITDA was $19.3 million and $26.0 million for the nine months ended September 30, 2016 and 2015, respectively. Adjusted EBITDAR was $170.1 million and $175.0 million for the nine months ended September 30, 2016 and 2015, respectively. A reconciliation of loss from continuing operations determined in accordance with GAAP to EBITDA, Adjusted EBITDA and Adjusted EBITDAR for the nine months ended September 30, 2016 and 2015 appears later in this press release.
Acquisition and Disposition Activities:
In July 2016, Five Star began managing a senior living community SNH owns located in Alabama with 163 living units.
In September 2016, Five Star sold a community it owned with 32 living units that was reported as held for sale and included in discontinued operations in Five Star’s financial statements, for a sales price of $0.2 million, excluding closing costs. As of September 30, 2016, Five Star has no senior living communities reported as held for sale.
In September 2016, Five Star and SNH sold a vacant skilled nursing facility located in Wisconsin for approximately $0.2 million, and as a result of this sale, Five Star's annual rent payable to SNH decreased by approximately $25,000 in accordance with the terms of the applicable lease.
In September 2016, SNH entered into an agreement to acquire two senior living communities with a combined 126 living units located in Illinois for $18.6 million. If these acquisitions are completed, Five Star expects to lease these communities from SNH under one of Five Star's existing master leases with SNH.
In October 2016, Five Star entered into an agreement to acquire an assisted living community with 63 living units located in Illinois for $7.9 million. Five Star currently expects this acquisition to close by year end 2016 and to fund this acquisition with cash on hand.
In October 2016, Five Star agreed to manage four senior living communities SNH owns with approximately 350 living units. Five Star will manage these senior living communities pursuant to management agreements that will be added to an existing or new pooling agreement with terms consistent with the agreements that became effective from and after May 2015 as previously disclosed.
Conference Call:
On November 3, 2016, at 10:00 a.m. Eastern Time, Five Star will host a conference call to discuss its third quarter 2016 results. Following management’s presentation, there will be a question and answer period.
The conference call telephone number is (877) 329-4332. Participants calling from outside the United States and Canada should dial (412) 317-5436. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. Eastern Time on Thursday, November 10, 2016. To hear the replay, dial (412) 317-0088. The replay pass code is 10093012.
A live audio webcast of the conference call will also be available in a listen only mode on Five Star’s website at www.fivestarseniorliving.com. Participants wanting to access the webcast should visit Five Star’s website about five minutes before the call. The archived webcast will be available for replay on Five Star’s website for about one week after the call. The transcription, recording and retransmission in any way of Five Star’s third quarter 2016 conference call are strictly prohibited without the prior written consent of Five Star. Five Star’s website is not incorporated as part of this press release.
About Five Star Quality Care, Inc.:
Five Star Quality Care, Inc. is a senior living and healthcare services company. As of September 30, 2016, Five Star operated 276 senior living communities with 31,349 living units located in 32 states, including 213 communities (22,947 living units) that it owned or leased and 63 communities (8,402 living units) that it managed. These communities include independent living, assisted living, continuing care retirement communities and skilled nursing communities. Five Star is headquartered in Newton, Massachusetts.
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER FIVE STAR USES WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, "WILL", “MAY” AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, FIVE STAR IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON FIVE STAR’S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY FIVE STAR’S FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:
- SNH HAS ENTERED INTO AN AGREEMENT TO ACQUIRE TWO SENIOR LIVING COMMUNITIES IN ILLINOIS. IF THESE ACQUISITIONS ARE COMPLETED, FIVE STAR EXPECTS THAT IT WILL LEASE THESE COMMUNITIES FROM SNH. THIS TRANSACTION IS SUBJECT TO CONDITIONS. AS A RESULT, THESE ACQUISITIONS AND LEASING ARRANGEMENTS MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS MAY CHANGE,
- FIVE STAR HAS ENTERED INTO AN AGREEMENT TO ACQUIRE A SENIOR LIVING COMMUNITY IN ILLINOIS. THIS TRANSACTION IS SUBJECT TO CONDITIONS. AS A RESULT, THIS TRANSACTION MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS MAY CHANGE, AND
- FIVE STAR HAS AGREED TO MANAGE FOUR SENIOR LIVING COMMUNITIES SNH OWNS. FIVE STAR'S ASSUMPTION OF THE MANAGEMENT OF THESE COMMUNITIES IS SUBJECT TO CONDITIONS. AS A RESULT, FIVE STAR'S ASSUMPTION OF THE MANAGEMENT OF THESE COMMUNITIES MAY NOT OCCUR OR MAY BE DELAYED.
THE INFORMATION CONTAINED IN FIVE STAR’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER “RISK FACTORS” IN FIVE STAR’S PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE FIVE STAR’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN OR IMPLIED BY FIVE STAR’S FORWARD LOOKING STATEMENTS. FIVE STAR’S FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY LAW, FIVE STAR DOES NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
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FIVE STAR QUALITY CARE, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(in thousands, except per share data) |
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(unaudited) |
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Three Months Ended |
Nine Months Ended |
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September 30, |
September 30, |
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| 2016 | 2015 | 2016 | 2015 | |||||||||||||||
| Revenues: | ||||||||||||||||||
| Senior living revenue | $ | 277,410 | $ | 279,685 | $ | 836,523 | $ | 832,793 | ||||||||||
| Management fee revenue | 3,336 | 2,717 | 8,955 | 7,939 | ||||||||||||||
| Reimbursed costs incurred on behalf of managed communities | 63,965 | 62,170 | 186,378 | 180,082 | ||||||||||||||
| Total revenues | 344,711 | 344,572 | 1,031,856 | 1,020,814 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Senior living wages and benefits | 137,190 | 135,133 | 408,886 | 404,737 | ||||||||||||||
| Other senior living operating expenses | 70,890 | 72,637 | 212,565 | 216,107 | ||||||||||||||
| Costs incurred on behalf of managed communities | 63,965 | 62,170 | 186,378 | 180,082 | ||||||||||||||
| Rent expense | 50,625 | 49,730 | 150,837 | 149,015 | ||||||||||||||
| General and administrative expenses | 18,542 | 16,587 | 54,218 | 52,750 | ||||||||||||||
| Depreciation and amortization expense | 9,398 | 8,419 | 28,847 | 24,637 | ||||||||||||||
| Goodwill impairment | — | 25,344 | — | 25,344 | ||||||||||||||
| Long lived asset impairment | 196 | 145 | 502 | 145 | ||||||||||||||
| Total operating expenses | 350,806 | 370,165 | 1,042,233 | 1,052,817 | ||||||||||||||
| Operating loss | (6,095 | ) | (25,593 | ) | (10,377 | ) | (32,003 | ) | ||||||||||
| Interest, dividend and other income | 237 | 238 | 766 | 701 | ||||||||||||||
| Interest and other expense | (945 | ) | (1,106 | ) | (3,957 | ) | (3,597 | ) | ||||||||||
| Gain on early extinguishment of debt | — | — | — | 692 | ||||||||||||||
| Gain on sale of available for sale securities reclassified from accumulated other comprehensive income | 12 | — | 247 | 38 | ||||||||||||||
| Loss from continuing operations before income taxes and equity in earnings (losses) of an investee | (6,791 | ) | (26,461 | ) | (13,321 | ) | (34,169 | ) | ||||||||||
| Benefit from (provision for) income taxes | 934 | 236 | (2,841 | ) | (348 | ) | ||||||||||||
| Equity in earnings (losses) of an investee | 13 | (25 | ) | 107 | 70 | |||||||||||||
| Loss from continuing operations | (5,844 | ) | (26,250 | ) | (16,055 | ) | (34,447 | ) | ||||||||||
| Loss from discontinued operations | (53 | ) | (1,238 | ) | (131 | ) | (2,253 | ) | ||||||||||
| Net loss | $ | (5,897 | ) | $ | (27,488 | ) | $ | (16,186 | ) | $ | (36,700 | ) | ||||||
| Weighted average shares outstanding—basic and diluted | 48,846 | 48,427 | 48,817 | 48,397 | ||||||||||||||
| Basic and diluted loss per share from: | ||||||||||||||||||
| Continuing operations | $ | (0.12 | ) | $ | (0.54 | ) | $ | (0.33 | ) | $ | (0.71 | ) | ||||||
| Discontinued operations | — | (0.03 | ) | — | (0.05 | ) | ||||||||||||
| Net loss per share—basic and diluted | $ | (0.12 | ) | $ | (0.57 | ) | $ | (0.33 | ) | $ | (0.76 | ) | ||||||
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FIVE STAR QUALITY CARE, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(in thousands) |
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(unaudited) |
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| September 30, | December 31, | ||||||||
| 2016 | 2015 | ||||||||
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Assets |
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| Current assets: | |||||||||
| Cash and cash equivalents | $ | 43,174 | $ | 14,672 | |||||
| Accounts receivable, net of allowance | 38,040 | 37,829 | |||||||
| Due from related persons | 8,961 | 9,731 | |||||||
| Investments in available for sale securities | 25,801 | 26,417 | |||||||
| Restricted cash | 11,168 | 3,301 | |||||||
| Prepaid expenses and other current assets | 20,135 | 19,138 | |||||||
| Assets of discontinued operations | 567 | 981 | |||||||
| Total current assets | 147,846 | 112,069 | |||||||
| Property and equipment, net | 352,561 | 383,858 | |||||||
| Restricted cash | 1,787 | 2,821 | |||||||
| Restricted investments in available for sale securities | 18,511 | 23,166 | |||||||
| Equity investment of an investee and other long term assets | 9,971 | 9,856 | |||||||
| Total assets | $ | 530,676 | $ | 531,770 | |||||
| Liabilities and Shareholders’ Equity | |||||||||
| Current liabilities: | |||||||||
| Revolving credit facility | $ | — | $ | 50,000 | |||||
| Other current liabilities | 186,909 | 193,920 | |||||||
| Total current liabilities | 186,909 | 243,920 | |||||||
| Mortgage notes payable | 58,978 | 60,396 | |||||||
| Deferred gain on sale and leaseback transaction with Senior Housing Properties Trust | 74,347 | — | |||||||
| Other long term liabilities | 40,352 | 43,002 | |||||||
| Shareholders’ equity | 170,090 | 184,452 | |||||||
| Total liabilities and shareholders’ equity | $ | 530,676 | $ | 531,770 | |||||
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FIVE STAR QUALITY CARE, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(in thousands) |
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(unaudited) |
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| Nine Months Ended September 30, | ||||||||||
| 2016 | 2015 | |||||||||
| Cash flows from operating activities: | ||||||||||
| Net loss | $ | (16,186 | ) | $ | (36,700 | ) | ||||
| Adjustments to reconcile net loss to cash (used in) provided by operating activities: | ||||||||||
| Depreciation and amortization expense | 28,847 | 24,637 | ||||||||
| Gain on early extinguishment of debt | — | (742 | ) | |||||||
| Loss from discontinued operations | 131 | 2,253 | ||||||||
| Gain on sale of available for sale securities reclassified from accumulated other comprehensive income | (247 | ) | (38 | ) | ||||||
| Loss on disposal of property and equipment | 70 | 98 | ||||||||
| Goodwill impairment | — | 25,344 | ||||||||
| Long lived asset impairment | 502 | 145 | ||||||||
| Equity in earnings of an investee | (107 | ) | (70 | ) | ||||||
| Stock based compensation | 749 | 948 | ||||||||
| Provision for losses on receivables | 2,598 | 3,520 | ||||||||
| Amortization of deferred gain on sale and leaseback transaction with Senior Housing Properties Trust | (1,688 | ) | — | |||||||
| Other noncash (income) expense adjustments, net | (375 | ) | 409 | |||||||
| Changes in assets and liabilities: | ||||||||||
| Accounts receivable | (2,809 | ) | (2,689 | ) | ||||||
| Prepaid expenses and other assets | (2,314 | ) | (1,962 | ) | ||||||
| Accounts payable and accrued expenses | (22,297 | ) | 330 | |||||||
| Accrued compensation and benefits | 8,641 | 9,917 | ||||||||
| Due to/from related persons, net | 222 | 1,026 | ||||||||
| Other current and long term liabilities | (2,716 | ) | 9,278 | |||||||
| Cash (used in) provided by operating activities | (6,979 | ) | 35,704 | |||||||
| Cash flows from investing activities: | ||||||||||
| Increase in restricted cash and investment accounts, net | (6,833 | ) | (417 | ) | ||||||
| Acquisition of property and equipment | (40,825 | ) | (40,867 | ) | ||||||
| Purchase of intangible assets | — | (191 | ) | |||||||
| Purchases of available for sale securities | (6,780 | ) | (10,717 | ) | ||||||
| Proceeds from sale of property and equipment to Senior Housing Properties Trust | 15,180 | 16,425 | ||||||||
| Proceeds from sale and leaseback transaction with Senior Housing Properties Trust | 112,350 | — | ||||||||
| Proceeds from sale of available for sale securities | 13,508 | 6,469 | ||||||||
| Cash provided by (used in) investing activities | 86,600 | (29,298 | ) | |||||||
| Cash flows from financing activities: | ||||||||||
| Proceeds from borrowings on revolving credit facility | 25,000 | 20,000 | ||||||||
| Repayments of borrowings on revolving credit facility | (75,000 | ) | (20,000 | ) | ||||||
| Repayments of mortgage notes payable | (934 | ) | (5,732 | ) | ||||||
| Payment of deferred financing fees | (300 | ) | (300 | ) | ||||||
| Cash used in financing activities | (51,234 | ) | (6,032 | ) | ||||||
| Cash flows from discontinued operations: | ||||||||||
| Net cash provided by (used in) operating activities | 130 | (1,512 | ) | |||||||
| Net cash used in investing activities | (15 | ) | (24 | ) | ||||||
| Net cash flows provided by (used in) discontinued operations | 115 | (1,536 | ) | |||||||
| Change in cash and cash equivalents | 28,502 | (1,162 | ) | |||||||
| Cash and cash equivalents at beginning of period | 14,672 | 20,988 | ||||||||
| Cash and cash equivalents at end of period | $ | 43,174 | $ | 19,826 | ||||||
| Supplemental cash flow information: | ||||||||||
| Cash paid for interest | $ | 3,920 | $ | 3,078 | ||||||
| Cash paid for income taxes, net | $ | 2,657 | $ | 805 | ||||||
FIVE STAR QUALITY CARE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in thousands)
(unaudited)
Non-GAAP financial measures are financial measures that are not determined in accordance with U.S. generally accepted accounting principles, or GAAP. Five Star considers these Non-GAAP financial measures to be meaningful supplemental disclosures because it believes that the presentation of these Non-GAAP financial measures may help investors to gain a better understanding of changes in Five Star’s operating results and its ability to pay rent or service debt, make capital expenditures and expand its business. These Non-GAAP financial measures also may help investors who wish to make comparisons between Five Star and other companies on both a GAAP and a non-GAAP basis. In addition to presenting EBITDA and Adjusted EBITDA, Five Star also presents the non-GAAP financial measure Adjusted EBITDAR. Five Star leases a majority of the senior living communities that it operates. Five Star believes that presenting investors with Adjusted EBITDAR amounts may help them to compare Five Star’s results with other companies that may own their properties and finance that ownership with debt financing or to consider how Five Star’s results might compare if Five Star owned its leased senior living communities and financed that ownership with debt. The interest expense related to debt financings would be added when calculating EBITDA; Five Star believes that presenting Adjusted EBITDAR may help investors better understand the form, extent and implications of Five Star’s form of leverage for the senior living communities it leases. The Non-GAAP financial measures presented are used by management to evaluate Five Star’s financial performance and for comparing Five Star’s performance over time and to the performance of its competitors. This supplemental information should not be considered as an alternative to income (loss) from continuing operations or net income (loss), as an indicator of Five Star’s operating performance or as a measure of Five Star’s liquidity. Non-GAAP financial measures as presented by Five Star may not be comparable to amounts calculated by other companies.
Five Star believes that income from continuing operations is the most directly comparable financial measure determined according to GAAP to Five Star’s presentation of EBITDA, Adjusted EBITDA and Adjusted EBITDAR from continuing operations. The following table presents the reconciliation of these Non-GAAP financial measures to loss from continuing operations, the most directly comparable financial measure under GAAP reported in Five Star’s condensed consolidated financial statements, for the three and nine months ended September 30, 2016 and 2015.
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For the three months |
For the nine months |
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ended September 30, |
ended September 30, |
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| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||
| Loss from continuing operations | $ | (5,844 | ) | $ | (26,250 | ) | $ | (16,055 | ) | $ | (34,447 | ) | |||||||||||||
| Add: interest expense | 945 | 1,106 | 3,957 | 3,597 | |||||||||||||||||||||
| Add: (benefit from) provision for income taxes | (934 | ) | (236 | ) | 2,841 | 348 | |||||||||||||||||||
| Add: depreciation and amortization expense | 9,398 | 8,419 | 28,847 | 24,637 | |||||||||||||||||||||
| Less: interest and dividend income | (237 | ) | (238 | ) | (766 | ) | (701 | ) | |||||||||||||||||
| EBITDA | 3,328 | (17,199 | ) | 18,824 | (6,566 | ) | |||||||||||||||||||
| Add (less): | |||||||||||||||||||||||||
| Goodwill and other long lived asset impairments | 196 | 25,489 | 502 | 25,489 | |||||||||||||||||||||
| Costs related to the Compliance Assessment | — | 928 | (1) | (1,498 | ) | (2) | 7,489 | (3) | |||||||||||||||||
| Financial accounting restatement and remediation costs | — | 21 | — | 249 | |||||||||||||||||||||
| Transaction costs | 730 | — | 1,480 | 41 | |||||||||||||||||||||
| Gain on early extinguishment of debt | — | — | — | (692 | ) | ||||||||||||||||||||
| Adjusted EBITDA | 4,254 | 9,239 | 19,308 | 26,010 | |||||||||||||||||||||
| Add: Rent expense | 50,625 | 49,730 | 150,837 | 149,015 | |||||||||||||||||||||
| Adjusted EBITDAR | $ | 54,879 | $ | 58,969 | $ | 170,145 | $ | 175,025 | |||||||||||||||||
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(1) Includes compliance costs and professional fees related to the
Compliance Assessment.
(2) Includes a $1.5 million reversal in
revenue reserves and accrued liability for estimated penalties related
to the Compliance Assessment.
(3) Includes a $2.4 million revenue
reserve and $5.1 million of estimated penalties, compliance costs and
professional fees related to the Compliance Assessment.
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FIVE STAR QUALITY CARE, INC. |
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SENIOR LIVING COMMUNITY FINANCIAL DATA(1) |
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(in thousands) |
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(unaudited) |
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Three months ended |
Nine months ended |
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September 30, (2) |
September 30, (2) |
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| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Senior living revenue: | |||||||||||||||||
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Independent and assisted living community revenue (owned)(3) |
$ | 23,632 | $ | 29,618 | $ | 70,518 | $ | 88,673 | |||||||||
| Independent and assisted living community revenue (leased)(3) | 108,364 | 101,948 | 326,413 | 302,917 | |||||||||||||
| Continuing care retirement community revenue (leased) | 97,629 | 98,717 | 294,234 | 298,554 | |||||||||||||
| Skilled nursing facility revenue (leased)(4) | 42,626 | 45,223 | 130,733 | 130,446 | |||||||||||||
| Other(5) | 5,159 | 4,179 | 14,625 | 12,203 | |||||||||||||
| Total senior living revenue (owned and leased) | $ | 277,410 | $ | 279,685 | $ | 836,523 | $ | 832,793 | |||||||||
| Senior living wages and benefits: | |||||||||||||||||
| Independent and assisted living community wages and benefits (owned)(3) | $ | 10,053 | $ | 12,377 | $ | 29,656 | $ | 36,691 | |||||||||
| Independent and assisted living community wages and benefits (leased)(3) | 46,541 | 43,128 | 138,787 | 128,393 | |||||||||||||
| Continuing care retirement community wages and benefits (leased) | 50,074 | 49,347 | 149,334 | 149,238 | |||||||||||||
| Skilled nursing facility wages and benefits (leased) | 28,274 | 28,339 | 83,509 | 83,996 | |||||||||||||
| Other(5) | 2,248 | 1,942 | 7,600 | 6,419 | |||||||||||||
| Total senior living wages and benefits (owned and leased) | $ | 137,190 | $ | 135,133 | $ | 408,886 | $ | 404,737 | |||||||||
| Other senior living operating expenses: | |||||||||||||||||
| Independent and assisted living community other operating expenses (owned)(3) | $ | 6,161 | $ | 7,620 | $ | 18,676 | $ | 22,044 | |||||||||
| Independent and assisted living community other operating expenses (leased)(3) | 26,530 | 25,635 | 79,905 | 75,327 | |||||||||||||
| Continuing care retirement community other operating expenses (leased) | 25,405 | 26,047 | 75,939 | 77,262 | |||||||||||||
| Skilled nursing facility other operating expenses (leased)(6) | 11,258 | 12,690 | 33,908 | 39,832 | |||||||||||||
| Other(5) | 1,536 | 645 | 4,137 | 1,642 | |||||||||||||
| Total senior living operating expenses (owned and leased) | $ | 70,890 | $ | 72,637 | $ | 212,565 | $ | 216,107 | |||||||||
(1) Excludes data for managed communities and discontinued operations.
(2)
The number of owned and leased communities between January 1, 2015 and
September 30, 2016 increased by one due to the acquisition of two senior
living communities in November 2015 and the sale in September 2016 of
one community we leased from SNH that was not classified as held for
sale; separate comparable senior living community financial data is not
presented because the differences between that data and the data for all
owned and leased communities are not material.
(3) 2016 data
presents the seven communities that were sold to SNH as part of the June
2016 sale and leaseback transaction as leased; 2015 data presents those
communities as owned.
(4) Skilled nursing facility revenue for the
nine months ended September 30, 2016 includes a $1.0 million reversal in
revenue reserves related to the Compliance Assessment. Skilled nursing
facility revenue for the nine months ended September 30, 2015 includes a
$2.4 million revenue reserve related to the Compliance Assessment.
(5)
Other senior living revenue and expenses primarily relate to
rehabilitation and other specialty service revenues and expenses
provided at owned and leased senior living communities.
(6) Skilled
nursing facility other operating expenses for the nine months ended
September 30, 2016 includes a $0.5 million reversal in accrued liability
for estimated penalties related to the Compliance Assessment. Skilled
nursing facility other operating expenses for the three and nine months
ended September 30, 2015 includes $0.9 million and $4.5 million,
respectively, of estimated penalties, compliance costs and professional
fees related to the Compliance Assessment.
|
FIVE STAR QUALITY CARE, INC. |
||||||||||||||||||||||
|
SENIOR LIVING OTHER OPERATING DATA(1) |
||||||||||||||||||||||
|
(unaudited) |
||||||||||||||||||||||
| Three months ended | ||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||||
| 2016 | 2016 | 2016 | 2015 | 2015 | ||||||||||||||||||
| Independent and assisted living communities (owned):(2) | ||||||||||||||||||||||
| Number of communities (end of period) | 26 | 26 | 33 | 33 | 31 | |||||||||||||||||
| Number of units (end of period)(3) | 2,703 | 2,703 | 3,211 | 3,215 | 3,064 | |||||||||||||||||
| Occupancy(3) | 83.5 | % | 83.6 | % | 85.5 | % | 85.9 | % | 86.3 | % | ||||||||||||
| Avg. monthly rate(4) | $ | 3,354 | $ | 3,390 | $ | 3,630 | $ | 3,569 | $ | 3,596 | ||||||||||||
| Independent and assisted living communities (leased):(2) | ||||||||||||||||||||||
| Number of communities (end of period) | 126 | 126 | 119 | 119 | 119 | |||||||||||||||||
| Number of units (end of period)(3) | 10,439 | 10,441 | 9,891 | 9,908 | 9,909 | |||||||||||||||||
| Occupancy(3) | 85.7 | % | 86.6 | % | 87.5 | % | 88.2 | % | 87.8 | % | ||||||||||||
| Avg. monthly rate(4) | $ | 3,942 | $ | 3,964 | $ | 3,891 | $ | 3,825 | $ | 3,815 | ||||||||||||
| Continuing care retirement communities (leased): | ||||||||||||||||||||||
| Number of communities (end of period) | 31 | 31 | 31 | 31 | 31 | |||||||||||||||||
| Number of units (end of period)(3)(5) | 7,204 | 7,207 | 7,208 | 7,297 | 7,319 | |||||||||||||||||
| Occupancy(3) | 82.3 | % | 82.3 | % | 83.2 | % | 82.9 | % | 82.8 | % | ||||||||||||
| Avg. monthly rate(4) | $ | 5,366 | $ | 5,434 | $ | 5,432 | $ | 5,368 | $ | 5,313 | ||||||||||||
| Skilled nursing facilities (leased): | ||||||||||||||||||||||
| Number of communities (end of period) | 30 | 31 | 31 | 31 | 31 | |||||||||||||||||
| Number of units (end of period)(3)(6) | 2,601 | 2,601 | 2,601 | 2,807 | 2,807 | |||||||||||||||||
| Occupancy(3) | 80.2 | % | 81.3 | % | 81.2 | % | 78.5 | % | 79.3 | % | ||||||||||||
| Avg. monthly rate(4) | $ | 6,668 | $ | 6,783 | $ | 6,893 | $ | 6,632 | $ | 6,632 | ||||||||||||
| Total senior living communities (owned and leased): | ||||||||||||||||||||||
| Number of communities (end of period) | 213 | 214 | 214 | 214 | 212 | |||||||||||||||||
| Number of units (end of period)(3) | 22,947 | 22,952 | 22,911 | 23,227 | 23,099 | |||||||||||||||||
| Occupancy(3) | 83.8 | % | 84.3 | % | 85.1 | % | 85.0 | % | 85.0 | % | ||||||||||||
| Avg. monthly rate(4) | $ | 4,608 | $ | 4,657 | $ | 4,654 | $ | 4,577 | $ | 4,567 | ||||||||||||
| Managed communities: | ||||||||||||||||||||||
| Number of communities (end of period) | 63 | 62 | 60 | 60 | 60 | |||||||||||||||||
| Number of units (end of period)(3)(7) | 8,402 | 8,239 | 8,140 | 8,190 | 8,211 | |||||||||||||||||
| Occupancy(3) | 86.4 | % | 86.7 | % | 87.3 | % | 87.5 | % | 87.5 | % | ||||||||||||
| Avg. monthly rate(4) | $ | 4,207 | $ | 4,270 | $ | 4,270 | $ | 4,174 | $ | 4,151 | ||||||||||||
| Other ancillary services: | ||||||||||||||||||||||
| Rehabilitation and wellness inpatient clinics (end of period) | 48 | 49 | 49 | 49 | 49 | |||||||||||||||||
| Rehabilitation and wellness outpatient clinics (end of period) | 76 | 71 | 67 | 63 | 61 | |||||||||||||||||
| Home health communities served (end of period) | 16 | 16 | 16 | 14 | 15 | |||||||||||||||||
(1) Excludes data for discontinued operations.
(2) Second and third
quarter 2016 data presents the seven communities that were sold to SNH
as part of the June 2016 sale and leaseback transaction as leased; data
for all other periods presents those communities as owned.
(3) For
2016, the calculation of occupancy includes in service living units
only; prior period occupancy calculations included certain living units
categorized as out of service.
(4) Average monthly rate is
calculated by taking the average daily rate, which is defined as total
operating revenues divided by occupied units during the period, and
multiplying it by 30 days.
(5) Includes 1,949 skilled nursing units
in communities where assisted living and independent living services are
the predominant services provided.
(6) Includes 69 assisted living
and independent living units in communities where skilled nursing
services are the predominant services provided.
(7) Includes 463
skilled nursing units in communities where assisted living and
independent living services are the predominant services provided.
|
FIVE STAR QUALITY CARE, INC. |
||||||||||||||
|
PERCENT BREAKDOWN OF SENIOR LIVING COMMUNITY REVENUE(1) |
||||||||||||||
|
(unaudited) |
||||||||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||||||||
|
September 30, |
September 30, |
|||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||
| Independent and assisted living communities (owned):(2) | ||||||||||||||
| Private and other sources | 99.0 | % | 99.5 | % | 98.9 | % | 99.5 | % | ||||||
| Medicaid | 1.0 | % | 0.5 | % | 1.1 | % | 0.5 | % | ||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
| Independent and assisted living communities (leased):(2) | ||||||||||||||
| Private and other sources | 99.0 | % | 98.9 | % | 99.0 | % | 99.0 | % | ||||||
| Medicaid | 1.0 | % | 1.1 | % | 1.0 | % | 1.0 | % | ||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
| Continuing care retirement communities (leased): | ||||||||||||||
| Private and other sources | 74.2 | % | 74.1 | % | 74.0 | % | 73.0 | % | ||||||
| Medicare | 18.8 | % | 19.2 | % | 19.2 | % | 20.4 | % | ||||||
| Medicaid | 7.0 | % | 6.7 | % | 6.8 | % | 6.6 | % | ||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
| Skilled nursing facilities (leased): | ||||||||||||||
| Private and other sources | 26.0 | % | 25.9 | % | 25.8 | % | 25.8 | % | ||||||
| Medicare | 19.7 | % | 22.6 | % | 20.5 | % | 23.7 | % | ||||||
| Medicaid | 54.3 | % | 51.5 | % | 53.7 | % | 50.5 | % | ||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
| Total senior living communities (owned and leased): | ||||||||||||||
| Private and other sources | 78.6 | % | 78.0 | % | 78.4 | % | 77.6 | % | ||||||
| Medicare | 9.9 | % | 10.6 | % | 10.1 | % | 11.3 | % | ||||||
| Medicaid | 11.5 | % | 11.4 | % | 11.5 | % | 11.1 | % | ||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
(1) Excludes data for managed communities and discontinued operations.
(2)
2016 data presents the seven communities that were sold to SNH as part
of the June 2016 sale and leaseback transaction as leased; 2015 data
presents those communities as owned.
