Senior Living Revenue Increased for Third Consecutive Quarter
Occupancy Increased 120 Basis Points Since the First Quarter of
2018
First Quarter Net Loss of $33.2 million
First Quarter Adjusted EBITDA of $2 million
NEWTON, Mass.--(BUSINESS WIRE)--
Five Star Senior Living Inc. (Nasdaq: FVE) today announced its financial
results for the quarter ended March 31, 2019.
Katherine Potter, Five Star’s President and Chief Executive Officer made
the following statement:
“Following the end of the first quarter, in April 2019, Five Star
entered into an agreement to restructure its business arrangements with
Senior Housing Properties Trust. This restructuring immediately
addressed Five Star's liquidity challenges, materially improves its long
term financial outlook and further aligns Senior Housing Properties
Trust with Five Star's success. Under this restructuring, commencing
February 1, 2019, Five Star's monthly minimum rent payable under its
master leases with Senior Housing Properties Trust is set at $11
million. This change resulted in Five Star paying a total of
approximately $14 million less rent in aggregate for February and March
2019. However, since Five Star did not enter the agreement until April
1, its reported operating results for the first quarter do not reflect
this rent adjustment, which resulted in its recording rent expense for
the quarter in excess of the amount it is obligated to pay and actually
paid. Giving effect to this rent adjustment Five Star's Adjusted EBITDA
was approximately $2 million.”
“Operationally, this was the third consecutive quarter Five Star
reported growth in senior living revenue while experiencing an increase
in occupancy during the same period. With the restructuring announcement
and Five Star's concerns regarding financial uncertainty behind it, Five
Star can place an even greater focus on its residents, clients and team
members, and build on the momentum of its recent results.”
Restructuring of Business Arrangements with Senior Housing
Properties Trust:
In light of Five Star’s substantial operating and liquidity challenges,
a substantial doubt existed about Five Star’s ability to continue as a
going concern. In response to these challenges, in April 2019, as
previously disclosed, Five Star entered into a transaction agreement, or
the Transaction Agreement, with Senior Housing Properties Trust (Nasdaq:
SNH), pursuant to which Five Star and SNH agreed to modify their
existing business arrangements as outlined below, subject to certain
conditions and the receipt of various approvals.
-
Effective January 1, 2020 (or January 1, 2021 if extended under the
Transaction Agreement), or the Conversion Time, Five Star’s existing
five master leases with SNH for SNH’s senior living communities leased
to Five Star, as well as Five Star’s existing management agreements
and pooling agreements with SNH for SNH’s senior living communities
managed by Five Star for SNH’s account, will be terminated and
replaced with new management agreements between Five Star and SNH for
all of these senior living communities.
-
Subject to approval by Five Star’s stockholders, effective at the
Conversion Time, Five Star will issue to SNH a number of Five Star
common shares that, when considered together with SNH's then owned
Five Star common shares, will result in SNH owning approximately 34%
of the then outstanding Five Star common shares, and SNH will declare
a pro rata distribution to SNH’s shareholders of the right to receive,
and Five Star will issue on a pro rata basis to those SNH
shareholders, a number of Five Star common shares which equals
approximately 51% of the then outstanding Five Star common shares; the
noted percentage ownership amounts are after, giving effect to the
issuances of Five Star common shares to SNH and SNH's shareholders
pursuant to the Transaction Agreement.
-
At the Conversion Time, as consideration for the Five Star share
issuances noted above, SNH will provide to Five Star $75.0 million of
additional consideration.
-
Commencing February 1, 2019 and through December 31, 2019, the
aggregate amount of monthly minimum rent payable to SNH by Five Star
under the existing master leases is $11.0 million, subject to
adjustment and extension, and no additional rent is payable to SNH by
Five Star for that period.
-
On April 1, 2019, SNH purchased from Five Star approximately $50.0
million of unencumbered fixed assets and improvements related to SNH’s
senior living communities leased to and operated by Five Star, which
amount is subject to adjustment but will not exceed $60.0 million.
-
In connection with the Transaction Agreement, Five Star entered into a
short term credit agreement with SNH pursuant to which SNH extended to
Five Star a $25.0 million line of credit, which is secured by six
senior living communities owned by Five Star. This line of credit
matures at the Conversion Time, and there is currently no amounts
outstanding under this line of credit.
Because of the continuing relationships between Five Star and SNH, the
transactions contemplated by the Transaction Agreement and the terms
thereof were evaluated, negotiated and recommended to Five Star’s Board
of Directors and SNH’s board of trustees for approval by a special
committee of Five Star’s Board of Directors and a special committee of
SNH’s board of trustees, respectively, comprised solely of Five Star’s
Independent Directors and SNH’s independent trustees, respectively, and
were separately approved and adopted by Five Star’s Independent
Directors and SNH’s independent trustees, respectively, and by Five
Star’s Board of Directors and SNH’s board of trustees, respectively.
Financial Results for the quarter ended
March 31,
2019:
-
Senior living revenue for the first quarter of 2019 increased 0.9% to
$276.9 million from $274.5 million for the same period in
2018, primarily due to increases in occupancy and average monthly
rates for residents who pay privately for services, as well as an
increase in revenues from ancillary services, such as rehabilitation
and wellness services. These increases were partially offset by the
sale of four senior living communities to SNH, which Five Star is
currently managing for SNH, and the sale of one skilled nursing
facility, or SNF, to a third party during the first half of 2018.
Management fee revenue for the first quarter of 2019 increased 10.0%
to $4.0 million from $3.6 million for the same period in 2018,
primarily due to an increase in the number of managed communities to
76 from 72 for the same period in 2018.
-
Net loss for the first quarter of 2019 was $33.2 million, or $0.66 per
diluted share, compared to net loss of $7.9 million, or $0.16 per
diluted share, for the same period in 2018. Net loss for the first
quarter of 2019 included $7.7 million, or $0.15 per diluted share, of
costs related to the Transaction Agreement and $3.1 million, or $0.06
per diluted share, related to long lived asset impairment charges Five
Star recorded to reduce the carrying value of certain long lived
assets to their estimated fair values. Net loss for the first quarter
of 2018 included a gain on sale of senior living communities of $5.7
million, or $0.11 per diluted share, in connection with the sale of
two senior living communities in the first quarter of 2018.
-
Earnings before interest, taxes, depreciation and amortization, or
EBITDA, for the first quarter of 2019 was $(22.8) million compared to
$1.7 million for the same period in 2018. EBITDA excluding certain
items, or Adjusted EBITDA, was $2.4 million and $(3.7) million for the
first quarters of 2019 and 2018, respectively. A reconciliation of net
loss determined in accordance with U.S. generally accepted accounting
principles, or GAAP, to EBITDA and Adjusted EBITDA for the quarters
ended March 31, 2019 and 2018 appears later in this press release.
Operating Results for the quarter ended
March 31,
2019:
-
Occupancy at owned and leased senior living communities for the first
quarter of 2019 was 82.9% compared to 81.7% for the same period in
2018.
-
Average monthly rates at owned and leased senior living communities
for the first quarter of 2019 increased 0.5% to $4,818 from $4,796 for
the same period in 2018.
-
The percentage of revenue derived from residents’ private resources at
owned and leased senior living communities for the first quarter of
2019 was 77.7% compared to 77.3% for the same period in 2018.
Other:
-
In April 2019, Five Star and SNH entered into an agreement to sell to
a third party two SNFs located Wisconsin that SNH owns and leases to
Five Star.
-
Also in April 2019, Five Star began managing for SNH a senior living
community SNH owns located in Oregon with 318 living units pursuant to
a management agreement with SNH on terms substantially similar to
those of existing management agreements between us and SNH.
-
In May 2019, Five Star and SNH sold to a third party three SNFs
located in California that SNH owned and leased to Five Star.
Conference Call:
At 10:00 a.m. Eastern Time this morning, President and Chief Executive
Officer, Katherine Potter, and Executive Vice President, Chief Financial
Officer and Treasurer, Richard Doyle, will host a conference call to
discuss Five Star's first quarter 2019 results.
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 Wednesday, May 15, 2019. To
access the replay, dial (412) 317-0088. The replay pass code is 10130001.
A live audio webcast of the conference call will also be available in a
listen-only mode on Five Star’s website, 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 following the call for about
a week. The transcription, recording and retransmission in any way ofFive Star’sfirst quarter2019conference callarestrictly prohibited without the prior written consent ofFive Star. Five Star’s website is not incorporated as part of
this press release.
About Five Star Senior Living Inc.:
Five Star Senior Living Inc. is a senior living and healthcare services
company. As of March 31, 2019, Five Star operated 284 senior living
communities with 31,956 living units located in 32 states, including 208
communities (22,190 living units) that it owned or leased and 76
communities (9,766 living units) that it managed. These communities
include independent living, assisted living, continuing care retirement
and skilled nursing communities. Five Star is headquartered in Newton,
Massachusetts.
|
|
|
|
|
FIVE STAR SENIOR LIVING INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per share
data)
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Revenues:
|
|
|
|
|
|
|
|
Senior living revenue
|
|
|
$
|
276,935
|
|
|
|
$
|
274,525
|
|
|
Management fee revenue
|
|
|
3,983
|
|
|
|
3,622
|
|
|
Reimbursed costs incurred on behalf of managed communities
|
|
|
74,605
|
|
|
|
67,370
|
|
|
Total revenues
|
|
|
355,523
|
|
|
|
345,517
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Senior living wages and benefits
|
|
|
143,630
|
|
|
|
136,169
|
|
|
Other senior living operating expenses
|
|
|
76,768
|
|
|
|
73,777
|
|
|
Costs incurred on behalf of managed communities
|
|
|
74,605
|
|
|
|
67,370
|
|
|
Rent expense
|
|
|
54,542
|
|
|
|
52,245
|
|
|
General and administrative expenses
|
|
|
26,502
|
|
|
|
19,963
|
|
|
Depreciation and amortization expense
|
|
|
8,165
|
|
|
|
8,860
|
|
|
Gain on sale of senior living communities
|
|
|
—
|
|
|
|
(5,684
|
)
|
|
Long lived asset impairment
|
|
|
3,148
|
|
|
|
—
|
|
|
Total operating expenses
|
|
|
387,360
|
|
|
|
352,700
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(31,837
|
)
|
|
|
(7,183
|
)
|
|
|
|
|
|
|
|
|
Interest, dividend and other income
|
|
|
156
|
|
|
|
167
|
|
|
Interest and other expense
|
|
|
(906
|
)
|
|
|
(703
|
)
|
|
Unrealized gain (loss) on equity investments
|
|
|
366
|
|
|
|
(50
|
)
|
|
Realized gain on sale of debt and equity investments, net of tax
|
|
|
92
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
Loss before income taxes and equity in earnings of an investee
|
|
|
(32,129
|
)
|
|
|
(7,737
|
)
|
|
Provision for income taxes
|
|
|
(1,490
|
)
|
|
|
(256
|
)
|
|
Equity in earnings of an investee, net of tax
|
|
|
404
|
|
|
|
44
|
|
|
Net loss
|
|
|
$
|
(33,215
|
)
|
|
|
$
|
(7,949
|
)
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding—basic and diluted
|
|
|
50,040
|
|
|
|
49,594
|
|
|
|
|
|
|
|
|
|
Net loss per share—basic and diluted
|
|
|
$
|
(0.66
|
)
|
|
|
$
|
(0.16
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIVE STAR SENIOR LIVING INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(dollars in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
49,699
|
|
|
|
$
|
29,512
|
|
|
Accounts receivable, net of allowance
|
|
|
39,744
|
|
|
|
37,758
|
|
|
Due from related persons
|
|
|
9,800
|
|
|
|
7,855
|
|
|
Investments
|
|
|
19,850
|
|
|
|
20,179
|
|
|
Restricted cash
|
|
|
19,464
|
|
|
|
19,720
|
|
|
Prepaid expenses and other current assets
|
|
|
22,571
|
|
|
|
23,029
|
|
|
Assets held for sale
|
|
|
526
|
|
|
|
—
|
|
|
Total current assets
|
|
|
161,654
|
|
|
|
138,053
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
223,195
|
|
|
|
243,873
|
|
|
Equity investment of an investee
|
|
|
9,102
|
|
|
|
8,633
|
|
|
Restricted cash
|
|
|
930
|
|
|
|
923
|
|
|
Restricted investments
|
|
|
8,227
|
|
|
|
8,073
|
|
|
Right of use assets
|
|
|
1,455,568
|
|
|
|
—
|
|
|
Other long term assets
|
|
|
5,375
|
|
|
|
6,069
|
|
|
Total assets
|
|
|
$
|
1,864,051
|
|
|
|
$
|
405,624
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Revolving credit facility
|
|
|
$
|
51,484
|
|
|
|
$
|
51,484
|
|
|
Accounts payable and accrued expenses
|
|
|
82,067
|
|
|
|
69,667
|
|
|
Current portion of lease liabilities
|
|
|
149,381
|
|
|
|
—
|
|
|
Accrued compensation and benefits
|
|
|
43,204
|
|
|
|
35,421
|
|
|
Due to related persons
|
|
|
36,466
|
|
|
|
18,883
|
|
|
Mortgage notes payable
|
|
|
344
|
|
|
|
339
|
|
|
Accrued real estate taxes
|
|
|
10,730
|
|
|
|
12,959
|
|
|
Security deposits and current portion of continuing care contracts
|
|
|
3,093
|
|
|
|
3,468
|
|
|
Other current liabilities
|
|
|
29,850
|
|
|
|
37,472
|
|
|
Total current liabilities
|
|
|
406,619
|
|
|
|
229,693
|
|
|
|
|
|
|
|
|
|
Long term liabilities:
|
|
|
|
|
|
|
|
Mortgage notes payable
|
|
|
7,445
|
|
|
|
7,533
|
|
|
Long term portion of lease liabilities
|
|
|
1,307,868
|
|
|
|
—
|
|
|
Accrued self insurance obligations
|
|
|
34,898
|
|
|
|
33,030
|
|
|
Deferred gain on sale and leaseback transaction
|
|
|
—
|
|
|
|
59,478
|
|
|
Other long term liabilities
|
|
|
1,833
|
|
|
|
4,721
|
|
|
Total long term liabilities
|
|
|
1,352,044
|
|
|
|
104,762
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
Common stock, par value $.01: 75,000,000 shares authorized,
50,843,032 and 50,853,452 shares issued and outstanding at March 31,
2019 and December 31, 2018, respectively
|
|
|
508
|
|
|
|
508
|
|
|
Additional paid in capital
|
|
|
361,652
|
|
|
|
361,555
|
|
|
Accumulated deficit
|
|
|
(258,378
|
)
|
|
|
(292,636
|
)
|
|
Accumulated other comprehensive income
|
|
|
1,606
|
|
|
|
1,742
|
|
|
Total shareholders’ equity
|
|
|
105,388
|
|
|
|
71,169
|
|
|
Total liabilities and shareholders’ equity
|
|
|
$
|
1,864,051
|
|
|
|
$
|
405,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIVE STAR SENIOR LIVING INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
thousands)
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(33,215
|
)
|
|
|
$
|
(7,949
|
)
|
|
Adjustments to reconcile net loss to cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
8,165
|
|
|
|
8,860
|
|
|
Gain on sale of senior living communities
|
|
|
—
|
|
|
|
(5,684
|
)
|
|
Unrealized (gain) loss on equity securities
|
|
|
(366
|
)
|
|
|
50
|
|
|
Realized gain on sale of debt and equity investments
|
|
|
(92
|
)
|
|
|
(32
|
)
|
|
Loss on disposal of property and equipment
|
|
|
76
|
|
|
|
—
|
|
|
Long lived asset impairment
|
|
|
3,148
|
|
|
|
—
|
|
|
Equity in earnings of an investee, net of tax
|
|
|
(404
|
)
|
|
|
(44
|
)
|
|
Stock based compensation
|
|
|
97
|
|
|
|
211
|
|
|
Provision for losses on receivables
|
|
|
1,045
|
|
|
|
1,761
|
|
|
Amortization of deferred gain on sale and leaseback transaction
|
|
|
—
|
|
|
|
(1,653
|
)
|
|
Other noncash expense (income) adjustments, net
|
|
|
125
|
|
|
|
246
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(3,031
|
)
|
|
|
(1,222
|
)
|
|
Prepaid expenses and other assets
|
|
|
1,062
|
|
|
|
1,123
|
|
|
Accounts payable and accrued expenses
|
|
|
9,732
|
|
|
|
(4,971
|
)
|
|
Accrued compensation and benefits
|
|
|
7,783
|
|
|
|
3,126
|
|
|
Due from (to) related persons, net
|
|
|
15,702
|
|
|
|
(4,511
|
)
|
|
Other current and long term liabilities
|
|
|
(1,492
|
)
|
|
|
(1,513
|
)
|
|
Cash provided by (used in) operating activities
|
|
|
8,335
|
|
|
|
(12,202
|
)
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Acquisition of property and equipment
|
|
|
(12,056
|
)
|
|
|
(9,639
|
)
|
|
Purchases of investments
|
|
|
(1,471
|
)
|
|
|
(300
|
)
|
|
Proceeds from sale of property and equipment
|
|
|
22,578
|
|
|
|
—
|
|
|
Proceeds from sale of communities
|
|
|
—
|
|
|
|
25,141
|
|
|
Proceeds from sale of investments
|
|
|
2,643
|
|
|
|
1,425
|
|
|
Cash provided by investing activities
|
|
|
11,694
|
|
|
|
16,627
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Repayments of mortgage notes payable
|
|
|
(91
|
)
|
|
|
(189
|
)
|
|
Cash used in financing activities
|
|
|
(91
|
)
|
|
|
(189
|
)
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents and restricted cash
|
|
|
19,938
|
|
|
|
4,236
|
|
|
Cash and cash equivalents and restricted cash at beginning of period
|
|
|
50,155
|
|
|
|
48,478
|
|
|
Cash and cash equivalents and restricted cash at end of period
|
|
|
$
|
70,093
|
|
|
|
$
|
52,714
|
|
|
|
|
|
|
|
|
|
Reconciliation of cash and cash equivalents and restricted cash:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
49,699
|
|
|
|
$
|
31,186
|
|
|
Restricted cash
|
|
|
20,394
|
|
|
|
21,528
|
|
|
Cash and cash equivalents and restricted cash at end of period
|
|
|
$
|
70,093
|
|
|
|
$
|
52,714
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
$
|
780
|
|
|
|
$
|
563
|
|
|
Cash paid for income taxes, net
|
|
|
$
|
120
|
|
|
|
$
|
348
|
|
|
|
|
|
|
|
|
|
Non-cash activities:
|
|
|
|
|
|
|
|
Initial recognition of right of use assets
|
|
|
$
|
1,478,958
|
|
|
|
$
|
—
|
|
|
Initial recognition of lease liabilities
|
|
|
$
|
1,478,958
|
|
|
|
$
|
—
|
|
|
Real estate sale
|
|
|
$
|
—
|
|
|
|
$
|
16,776
|
|
|
Mortgage notes assumed by purchaser in real estate sale
|
|
|
$
|
—
|
|
|
|
$
|
16,776
|
|
|
|
|
|
|
|
|
|
|
|
|
FIVE STAR SENIOR LIVING INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in thousands)
(unaudited)
Non-GAAP financial measures are financial measures that are not
determined in accordance with GAAP. Five Star believes the non-GAAP
financial measures presented in the table below are meaningful
supplemental disclosures because they may help investors 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 make comparisons between Five Star and other companies on both
a GAAP and a non-GAAP basis. Five Star believes that EBITDA and Adjusted
EBITDA are meaningful financial measures that may help investors better
understand its financial performance, including by allowing investors to
compare Five Star’s performance between periods and to the performance
of other companies. EBITDA and Adjusted EBITDA are used by management to
evaluate Five Star’s financial performance and compare Five Star’s
performance over time and to the performance of other companies. Five
Star calculates EBITDA and Adjusted EBITDA as shown below. These
measures should not be considered as alternatives to net income (loss)
or operating income (loss), as indicators of Five Star’s operating
performance or as measures of Five Star’s liquidity. Also, EBITDA and
Adjusted EBITDA as presented may not be comparable to similarly titled
amounts calculated by other companies.
Five Star believes that net income (loss) is the most directly
comparable financial measure, determined according to GAAP, to Five
Star’s presentation of EBITDA and Adjusted EBITDA. The following table
presents the reconciliation of these non-GAAP financial measures to net
loss for each of the three months ended March 31, 2019 and 2018.
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Net loss
|
|
|
$
|
(33,215
|
)
|
|
|
$
|
(7,949
|
)
|
|
Add (less):
|
|
|
|
|
|
|
|
Interest and other expense
|
|
|
906
|
|
|
|
703
|
|
|
Provision for income taxes
|
|
|
1,490
|
|
|
|
256
|
|
|
Depreciation and amortization expense
|
|
|
8,165
|
|
|
|
8,860
|
|
|
Interest, dividend and other income
|
|
|
(156
|
)
|
|
|
(167
|
)
|
|
EBITDA
|
|
|
(22,810
|
)
|
|
|
1,703
|
|
|
Add (less):
|
|
|
|
|
|
|
|
Long lived asset impairment
|
|
|
3,148
|
|
|
|
—
|
|
|
Costs related to compliance assessment
|
|
|
—
|
|
|
|
(138
|
)
|
|
Employee litigation matter
|
|
|
—
|
|
|
|
381
|
|
|
Gain on sale of senior living communities
|
|
|
—
|
|
|
|
(5,684
|
)
|
|
Transaction costs (1) |
|
|
7,675
|
|
|
|
—
|
|
|
Rent reduction (2) |
|
|
14,379
|
|
|
|
—
|
|
|
Adjusted EBITDA
|
|
|
$
|
2,392
|
|
|
|
$
|
(3,738
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
|
Costs incurred by Five Star related to the Transaction Agreement.
|
|
2.
|
|
|
Pursuant to the Transaction Agreement, Five Star's rent payable to
SNH was reduced by a total of $14,379 in aggregate for February and
March 2019 and Five Star is not obligated to pay, and did not pay,
such amount to SNH. However, as the Transaction Agreement was not
entered into until April 1, 2019, Five Star's actual rent expense
under GAAP for the three months ended March 31, 2019, was not
adjusted for the rent reduction for February and March 2019.
|
|
|
|
|
|
|
|
|
|
FIVE STAR SENIOR LIVING INC.
SENIOR LIVING COMMUNITY
FINANCIAL DATA(1)
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended March
31,
|
|
|
|
2019
|
|
|
2018
|
|
Senior living revenue:
|
|
|
|
|
|
|
|
Independent and assisted living community revenue (owned)
|
|
|
$
|
18,276
|
|
|
|
$
|
19,718
|
|
|
Independent and assisted living community revenue (leased)
|
|
|
107,975
|
|
|
|
107,294
|
|
|
Continuing care retirement community revenue (leased)
|
|
|
97,495
|
|
|
|
97,778
|
|
|
Skilled nursing facility revenue (leased)
|
|
|
42,783
|
|
|
|
41,085
|
|
|
Ageility physical therapy revenue
|
|
|
10,406
|
|
|
|
8,650
|
|
|
Total senior living revenue
|
|
|
$
|
276,935
|
|
|
|
$
|
274,525
|
|
|
|
|
|
|
|
|
|
Senior living wages and benefits:
|
|
|
|
|
|
|
|
Independent and assisted living community wages and benefits (owned)
|
|
|
$
|
8,716
|
|
|
|
$
|
8,382
|
|
|
Independent and assisted living community wages and benefits (leased)
|
|
|
49,645
|
|
|
|
46,450
|
|
|
Continuing care retirement community wages and benefits (leased)
|
|
|
50,257
|
|
|
|
49,942
|
|
|
Skilled nursing facility wages and benefits (leased)
|
|
|
28,789
|
|
|
|
26,806
|
|
|
Ageility physical therapy wages and benefits
|
|
|
6,789
|
|
|
|
5,674
|
|
|
Insurance and other (2) |
|
|
(566
|
)
|
|
|
(1,085
|
)
|
|
Total senior living wages and benefits
|
|
|
$
|
143,630
|
|
|
|
$
|
136,169
|
|
|
|
|
|
|
|
|
|
Other senior living operating expenses:
|
|
|
|
|
|
|
|
Independent and assisted living community other operating expenses
(owned)
|
|
|
$
|
5,726
|
|
|
|
$
|
5,676
|
|
|
Independent and assisted living community other operating expenses
(leased)
|
|
|
29,628
|
|
|
|
28,208
|
|
|
Continuing care retirement community other operating expenses
(leased)
|
|
|
27,548
|
|
|
|
26,439
|
|
|
Skilled nursing facility other operating expenses (leased)
|
|
|
12,902
|
|
|
|
12,972
|
|
|
Ageility physical therapy other operating expenses
|
|
|
1,031
|
|
|
|
466
|
|
|
Insurance and other (2) |
|
|
(67
|
)
|
|
|
16
|
|
|
Total other senior living operating expenses
|
|
|
$
|
76,768
|
|
|
|
$
|
73,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
|
Excludes data for managed communities.
|
|
2.
|
|
|
Insurance and other expenses primarily relate to Five Star's captive
insurance company subsidiary, which mainly participates in Five
Star's workers' compensation and professional and general liability
insurance programs. Credit balances in senior living wages and
benefits for insurance and other represent premiums earned by Five
Star's captive insurance company subsidiary in excess of expenses
recorded in the applicable period.
|
|
|
|
|
|
|
|
|
|
FIVE STAR SENIOR LIVING INC.
COMPARABLE SENIOR LIVING
COMMUNITY FINANCIAL DATA(1)
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
(2)
|
|
|
|
2019
|
|
|
2018
|
|
Senior living revenue:
|
|
|
|
|
|
|
|
Independent and assisted living community revenue (owned)
|
|
|
$
|
18,276
|
|
|
|
$
|
18,185
|
|
|
Independent and assisted living community revenue (leased)
|
|
|
107,975
|
|
|
|
107,294
|
|
|
Continuing care retirement community revenue (leased)
|
|
|
97,495
|
|
|
|
97,778
|
|
|
Skilled nursing facility revenue (leased)
|
|
|
42,782
|
|
|
|
39,107
|
|
|
Ageility physical therapy revenue
|
|
|
8,801
|
|
|
|
8,530
|
|
|
Total senior living revenue
|
|
|
$
|
275,329
|
|
|
|
$
|
270,894
|
|
|
|
|
|
|
|
|
|
Senior living wages and benefits:
|
|
|
|
|
|
|
|
Independent and assisted living community wages and benefits (owned)
|
|
|
$
|
8,716
|
|
|
|
$
|
7,884
|
|
|
Independent and assisted living community wages and benefits (leased)
|
|
|
49,645
|
|
|
|
46,450
|
|
|
Continuing care retirement community wages and benefits (leased)
|
|
|
50,257
|
|
|
|
49,942
|
|
|
Skilled nursing facility wages and benefits (leased)
|
|
|
28,773
|
|
|
|
25,585
|
|
|
Ageility physical therapy wages and benefits
|
|
|
5,715
|
|
|
|
5,540
|
|
|
Insurance and other (3) |
|
|
(566
|
)
|
|
|
(1,085
|
)
|
|
Total senior living wages and benefits
|
|
|
$
|
142,540
|
|
|
|
$
|
134,316
|
|
|
|
|
|
|
|
|
|
Other senior living operating expenses:
|
|
|
|
|
|
|
|
Independent and assisted living community other operating expenses
(owned)
|
|
|
$
|
5,721
|
|
|
|
$
|
5,147
|
|
|
Independent and assisted living community other operating expenses
(leased)
|
|
|
29,628
|
|
|
|
28,208
|
|
|
Continuing care retirement community other operating expenses
(leased)
|
|
|
27,548
|
|
|
|
26,439
|
|
|
Skilled nursing facility other operating expenses (leased)
|
|
|
12,881
|
|
|
|
12,308
|
|
|
Ageility physical therapy other operating expenses
|
|
|
884
|
|
|
|
1,035
|
|
|
Insurance and other (3) |
|
|
(67
|
)
|
|
|
16
|
|
|
Total other senior living operating expenses
|
|
|
$
|
76,595
|
|
|
|
$
|
73,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
|
Excludes data for managed communities.
|
|
2.
|
|
|
Includes data for senior living communities that Five Star has owned
or leased continuously since January 1, 2018.
|
|
3.
|
|
|
Insurance and other expenses primarily relate to Five Star's captive
insurance company subsidiary, which mainly participates in Five
Star's workers' compensation and professional and general liability
insurance programs. Credit balances in senior living wages and
benefits for insurance and other represent premiums earned by Five
Star's captive insurance company subsidiary in excess of expenses
recorded in the applicable period.
|
|
|
|
|
|
|
|
|
|
FIVE STAR SENIOR LIVING INC.
SENIOR LIVING OTHER OPERATING
DATA
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
September 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2018
|
|
|
2018
|
|
|
2018
|
|
Independent and assisted living communities (owned):
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of communities (end of period)
|
|
|
20
|
|
|
|
|
20
|
|
|
|
20
|
|
|
|
20
|
|
|
|
22
|
|
|
Number of units (end of period)
|
|
|
2,108
|
|
|
|
|
2,108
|
|
|
|
2,108
|
|
|
|
2,108
|
|
|
|
2,259
|
|
|
Occupancy(2) |
|
|
81.5
|
%
|
|
|
|
82.3
|
%
|
|
|
81.5
|
%
|
|
|
81.1
|
%
|
|
|
80.7
|
%
|
|
Avg. monthly rate(3) |
|
|
$
|
3,527
|
|
|
|
|
$
|
3,458
|
|
|
|
$
|
3,442
|
|
|
|
$
|
3,392
|
|
|
|
$
|
3,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent and assisted living communities (leased):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of communities (end of period)
|
|
|
128
|
|
|
|
|
128
|
|
|
|
128
|
|
|
|
128
|
|
|
|
128
|
|
|
Number of units (end of period)
|
|
|
10,506
|
|
|
|
|
10,520
|
|
|
|
10,520
|
|
|
|
10,519
|
|
|
|
10,510
|
|
|
Occupancy(2) |
|
|
83.8
|
%
|
|
|
|
84.2
|
%
|
|
|
83.7
|
%
|
|
|
83.6
|
%
|
|
|
83.4
|
%
|
|
Avg. monthly rate(3) |
|
|
$
|
4,077
|
|
|
|
|
$
|
3,991
|
|
|
|
$
|
3,991
|
|
|
|
$
|
4,024
|
|
|
|
$
|
4,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing care retirement communities (leased):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of communities (end of period)
|
|
|
31
|
|
|
|
|
31
|
|
|
|
31
|
|
|
|
31
|
|
|
|
31
|
|
|
Number of units (end of period)(4) |
|
|
7,070
|
|
|
|
|
7,117
|
|
|
|
7,157
|
|
|
|
7,158
|
|
|
|
7,158
|
|
|
Occupancy(2) |
|
|
83.7
|
%
|
|
|
|
82.9
|
%
|
|
|
81.3
|
%
|
|
|
80.6
|
%
|
|
|
81.5
|
%
|
|
Avg. monthly rate(3) |
|
|
$
|
5,484
|
|
|
|
|
$
|
5,383
|
|
|
|
$
|
5,427
|
|
|
|
$
|
5,433
|
|
|
|
$
|
5,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Skilled nursing facilities (leased):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of communities (end of period)
|
|
|
29
|
|
|
|
|
29
|
|
|
|
29
|
|
|
|
29
|
|
|
|
30
|
|
|
Number of units (end of period)(5) |
|
|
2,506
|
|
|
|
|
2,505
|
|
|
|
2,505
|
|
|
|
2,505
|
|
|
|
2,602
|
|
|
Occupancy(2) |
|
|
78.4
|
%
|
|
|
|
77.9
|
%
|
|
|
76.9
|
%
|
|
|
74.7
|
%
|
|
|
75.7
|
%
|
|
Avg. monthly rate(3) |
|
|
$
|
7,258
|
|
|
|
|
$
|
7,049
|
|
|
|
$
|
6,874
|
|
|
|
$
|
6,926
|
|
|
|
$
|
6,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total senior living communities (owned and leased):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of communities (end of period)
|
|
|
208
|
|
|
|
|
208
|
|
|
|
208
|
|
|
|
208
|
|
|
|
211
|
|
|
Number of units (end of period)
|
|
|
22,190
|
|
|
|
|
22,250
|
|
|
|
22,290
|
|
|
|
22,290
|
|
|
|
22,529
|
|
|
Occupancy(2) |
|
|
82.9
|
%
|
|
|
|
82.9
|
%
|
|
|
82.0
|
%
|
|
|
81.4
|
%
|
|
|
81.7
|
%
|
|
Avg. monthly rate(3) |
|
|
$
|
4,818
|
|
|
|
|
$
|
4,710
|
|
|
|
$
|
4,701
|
|
|
|
$
|
4,709
|
|
|
|
$
|
4,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Managed communities:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of communities (end of period)
|
|
|
76
|
|
|
|
|
76
|
|
|
|
75
|
|
|
|
75
|
|
|
|
72
|
|
|
Number of units (end of period)(6) |
|
|
9,766
|
|
|
|
|
9,766
|
|
|
|
9,515
|
|
|
|
9,510
|
|
|
|
9,258
|
|
|
Occupancy(2) |
|
|
86.3
|
%
|
|
|
|
86.5
|
%
|
|
|
86.7
|
%
|
|
|
86.1
|
%
|
|
|
86.0
|
%
|
|
Avg. monthly rate(3) |
|
|
$
|
4,275
|
|
|
|
|
$
|
4,149
|
|
|
|
$
|
4,164
|
|
|
|
$
|
4,242
|
|
|
|
$
|
4,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other ancillary services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of ageility physical therapy inpatient clinics (end of period)
|
|
|
46
|
|
|
|
|
47
|
|
|
|
47
|
|
|
|
47
|
|
|
|
47
|
|
|
Number of ageility physical therapy outpatient clinics (end of
period)
|
|
|
137
|
|
|
|
|
128
|
|
|
|
120
|
|
|
|
111
|
|
|
|
108
|
|
|
Number of home health communities served (end of period)
|
|
|
12
|
|
|
|
|
10
|
|
|
|
12
|
|
|
|
12
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
|
(Occupancy and average monthly rate for the three months ended June
30, 2018 and March 31, 2018 include data for the senior living
communities that were sold to SNH during those periods as owned
until the time of sale and as managed from the time of sale through
the end of such periods.
|
|
2.
|
|
|
Includes living units categorized as in service. As a result, the
number of living units may change from period to period for reasons
other than the acquisition or disposition of senior living
communities.
|
|
3.
|
|
|
Average monthly rate is calculated by taking the average daily rate,
which is defined as total operating revenues for senior living
services divided by occupied units during the period, and
multiplying it by 30 days.
|
|
4.
|
|
|
Includes 1,813 skilled nursing units in communities where assisted
living and independent living services are the predominant services
provided.
|
|
5.
|
|
|
Includes 76 assisted living and independent living units in
communities where skilled nursing services are the predominant
services provided.
|
|
6.
|
|
|
Includes 427 skilled nursing units in communities where assisted
living and independent living services are the predominant services
provided.
|
|
|
|
|
|
|
|
|
|
FIVE STAR SENIOR LIVING INC.
PERCENT BREAKDOWN OF SENIOR
LIVING COMMUNITY REVENUE(1)
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Independent and assisted living communities (owned):
|
|
|
|
|
|
|
|
Private and other sources
|
|
|
98.9
|
%
|
|
|
98.8
|
%
|
|
Medicaid
|
|
|
1.1
|
%
|
|
|
1.2
|
%
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
Independent and assisted living communities (leased):
|
|
|
|
|
|
|
|
Private and other sources
|
|
|
98.8
|
%
|
|
|
99.0
|
%
|
|
Medicaid
|
|
|
1.2
|
%
|
|
|
1.0
|
%
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
Continuing care retirement communities (leased):
|
|
|
|
|
|
|
|
Private and other sources
|
|
|
74.8
|
%
|
|
|
73.0
|
%
|
|
Medicare
|
|
|
17.2
|
%
|
|
|
19.5
|
%
|
|
Medicaid
|
|
|
8.0
|
%
|
|
|
7.5
|
%
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
Skilled nursing facilities (leased):
|
|
|
|
|
|
|
|
Private and other sources
|
|
|
21.9
|
%
|
|
|
20.9
|
%
|
|
Medicare
|
|
|
18.0
|
%
|
|
|
19.6
|
%
|
|
Medicaid
|
|
|
60.1
|
%
|
|
|
59.5
|
%
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
Total senior living communities (owned and leased):
|
|
|
|
|
|
|
|
Private and other sources
|
|
|
77.7
|
%
|
|
|
77.3
|
%
|
|
Medicare
|
|
|
9.2
|
%
|
|
|
10.2
|
%
|
|
Medicaid
|
|
|
13.1
|
%
|
|
|
12.5
|
%
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
|
Excludes data for managed communities.
|
|
|
|
|
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. Forward-looking statements involve known and
unknown risks, uncertainties and other factors, some of which are beyond
Five Star’s control. For example:
-
This press release states that Five Star entered into the Transaction
Agreement to modify its existing business arrangements with SNH. As
described herein, certain of the transactions contemplated by the
Transaction Agreement are expected to be effective January 1, 2020.
These transactions are subject to conditions, including, among others,
the receipt of approval by Five Star’s stockholders and certain
regulatory approvals. Five Star cannot be sure that any or all of such
conditions will be satisfied. Accordingly, these transactions may not
become effective as of January 1, 2020 or at all, or the terms of such
transactions may change.
-
The share issuance contemplated by the Transaction Agreement will
require approval by Five Star’s stockholders, as well as the
effectiveness of a registration statement on Form S-1 to be filed by
Five Star with the Securities and Exchange Commission, or SEC, to
register the Five Star common shares to be issued. The process of
preparing the Form S-1 is time consuming and the time before the SEC
declares the registration statement effective is beyond Five Star’s
control. Accordingly, Five Star cannot be sure that the Transaction
Agreement and the restructuring transactions will be completed within
a specified time period or at all.
-
If Five Star’s stockholders fail to approve the share issuances
contemplated by the Transaction Agreement by December 31, 2019, the
Transaction Agreement will terminate, including the current rent
reductions, and Five Star’s existing master leases and management
agreements and pooling agreements with SNH will remain in effect. If
that occurs, Five Star does not expect to be able to fund its
operating and capital expenses or debt service obligations, and it may
not then be able to continue as a going concern.
-
This press release states that the transactions contemplated by the
Transaction Agreement and the terms thereof were evaluated, negotiated
and recommended to Five Star’s Board of Directors and SNH’s board of
trustees for approval by a special committee of Five Star’s Board of
Directors and a special committee of SNH’s board of trustees,
respectively, comprised solely of Five Star’s Independent Directors
and SNH’s independent trustees, respectively, and were separately
approved and adopted by Five Star’s Independent Directors and SNH’s
independent trustees, respectively, and by Five Star’s Board of
Directors and SNH’s board of trustees, respectively. Despite this
process, Five Star could be subject to claims challenging the
Transaction Agreement or the restructuring transactions or Five Star’s
entry into the Transaction Agreement and related agreements because of
the multiple relationships among Five Star, SNH related persons and
entities or other reasons, and defending even meritless claims could
be expensive and distracting to management.
-
The actions Five Star has taken, including entering into the
Transaction Agreement, and any additional actions Five Star may take
in the future, to address its operating and liquidity challenges may
not be successful. Further, any such actions that may address that
concern may only provide relief in the short term and could increase
Five Star’s future costs and thereby prevent or limit its ability to
operate profitably in the intermediate or longer term. Despite the
actions Five Star has taken and may in the future take, it may fail to
continue as a going concern.
-
Five Star’s credit facility with unrelated lenders matures on June 28,
2019, and Five Star is currently evaluating options to renew or
restructure that credit facility. Five Star may be unable to repay
amounts outstanding on its credit facility at that time or to
refinance its credit facility or obtain additional debt financing.
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.
View source version on businesswire.com:
https://www.businesswire.com/news/home/20190508005191/en/
Brad Shepherd, Director, Investor Relations
(617) 796-8245
Source: Five Star Senior Living Inc.