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
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 of Five Star’s first
quarter 2019 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 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 EndedMarch
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
March31,
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 EndedMarch 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 EndedMarch
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
Five Star Senior Living (NASDAQ:FVE)
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