10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q/A

Amendment No. 1

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 1-13445

Capital Senior Living Corporation

(Exact Name of Registrant as Specified in its Charter)

Delaware	75-2678809
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

14160 Dallas Parkway, Suite 300, Dallas, Texas	75254
(Address of Principal Executive Offices)	(Zip Code)

(972) 770-5600

(Registrant’s Telephone Number, Including Area Code)

NONE

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   ☑     No   ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes   ☑     No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☑

As of July 28, 2017, the Registrant had 30,339,978 outstanding shares of its Common Stock, $0.01 par value, per share.

EXPLANATORY NOTE

Capital Senior Living Corporation (the “Registrant”) is filing this amendment (the “Form 10-Q/A”) to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (the Form 10-Q), filed with the U.S. Securities and Exchange Commission on August 2, 2017, solely to correct an error on the cover page. The cover page of the Form 10-Q incorrectly stated that the amount of the Registrant’s Common Stock outstanding as of July 28, 2017 was 39,339,978 due to a typographical error. The cover page of this Form 10-Q/A correctly states that the number of shares of outstanding Common Stock of the Registrant on July 28, 2017 was 30,339,978.

The incorrect number of shares outstanding as of July 28, 2017 was also included in Exhibit 101 to the Form 10-Q containing the Registrant’s Extensible Business Reporting Language (“XBRL”) materials for the six-month period ended June 30, 2017. This Form 10-Q/A also amends Item 6, “Exhibits,” specifically by including Exhibit 101 containing the Registrant’s XBRL materials for the six-month period ended June 30, 2017 with the corrected number of shares outstanding as of July 28, 2017.

The Form 10-Q/A should be read in conjunction with the original Form 10-Q, which continues to speak as of the date of the Form 10-Q. Except as specifically noted above, the Form 10-Q/A does not modify or update disclosures in the original Form 10-Q. Accordingly, this Form 10-Q/A does not reflect events occurring after the filing of Form 10-Q or modify or update any related or other disclosures.

2

Part II. OTHER INFORMATION

Item 6. EXHIBITS.

The exhibits to this Form 10-Q/A are listed on the Exhibit Index page hereof, which is incorporated by reference in this Item 6.

3

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Capital Senior Living Corporation

(Registrant)

By:	/s/ Carey P. Hendrickson
	Carey P. Hendrickson
	Senior Vice President and Chief Financial Officer
	(Principal Financial Officer and Duly Authorized Officer)
	Date: August 3, 2017

4

INDEX TO EXHIBITS

The following documents are filed as a part of this report. Those exhibits previously filed and incorporated herein by reference are identified below. Exhibits not required for this report have been omitted.

Exhibit Number		Description
3.1*	—	Amended and Restated Certificate of Incorporation of the Registrant. (Incorporated by reference to exhibit 3.1 to the Registration Statement No. 333-33379 on Form S-1/A filed by the Company with the Securities and Exchange Commission on September 8, 1997.)
3.1.1*	—	Amendment to Amended and Restated Certificate of Incorporation of the Registrant. (Incorporated by reference to exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1999, filed by the Company with the Securities and Exchange Commission.)
3.2*	—	Second Amended and Restated Bylaws of the Registrant. (Incorporated by reference to exhibit 3.1 to the Company’s Current Report filed by the Company with the Securities and Exchange Commission on March 8, 2013.)
4.1*	—	2007 Omnibus Stock and Incentive Plan for Capital Senior Living Corporation. (Incorporated by reference to exhibit 4.6 to the Company’s Registration Statement on Form S-8 filed by the Company with the Securities and Exchange Commission on May 31, 2007.)
4.2*	—	First Amendment to 2007 Omnibus Stock and Incentive Plan for Capital Senior Living Corporation. (Incorporated by reference to exhibit 4.7 to the Company’s Registration Statement on Form S-8 filed by the Company with the Securities and Exchange Commission on May 31, 2007.)
4.3*	—	Amended and Restated Second Amendment to 2007 Omnibus Stock and Incentive Plan for Capital Senior Living Corporation. (Incorporated by reference to exhibit 10.1 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on May 22, 2015.)
31.1**	—	Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a)
31.2**	—	Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)
32.1*	—	Certification of Lawrence A. Cohen pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	—	Certification of Carey P. Hendrickson pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	—	XBRL Instance Document
101.SCH**	—	XBRL Taxonomy Extension Schema Document
101.CAL**	—	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB**	—	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	—	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF**	—	XBRL Taxonomy Extension Definition Linkbase Document

* Previously filed with the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 2, 2017.

** Filed herewith.

5

EX-31.1

EXHIBIT 31.1

CAPITAL SENIOR LIVING CORPORATION

CERTIFICATIONS

I, Lawrence A. Cohen, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of Capital Senior Living Corporation; and

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

/s/ Lawrence A. Cohen

Lawrence A. Cohen

Chief Executive Officer

August 3, 2017

EX-31.2

EXHIBIT 31.2

CAPITAL SENIOR LIVING CORPORATION

CERTIFICATIONS

I, Carey P. Hendrickson, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of Capital Senior Living Corporation; and

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

/s/ Carey P. Hendrickson

Carey P. Hendrickson

Senior Vice President

Chief Financial Officer

August 3, 2017

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Jul. 28, 2017
Document And Entity Information [Abstract]
Document Type	10-Q/A
Amendment Flag	true
Amendment Description	Capital Senior Living Corporation (the “Registrant”) is filing this amendment (the “Form 10-Q/A”) to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (the Form 10-Q), filed with the U.S. Securities and Exchange Commission on August 2, 2017, solely to correct an error on the cover page. The cover page of the Form 10-Q incorrectly stated that the amount of the Registrant’s Common Stock outstanding as of July 28, 2017 was 39,339,978 due to a typographical error. The cover page of this Form 10-Q/A correctly states that the number of shares of outstanding Common Stock of the Registrant on July 28, 2017 was 30,339,978. The incorrect number of shares outstanding as of July 28, 2017 was also included in Exhibit 101 to the Form 10-Q containing the Registrant’s Extensible Business Reporting Language (“XBRL”) materials for the six-month period ended June 30, 2017. This Form 10-Q/A also amends Item 6, “Exhibits,” specifically by including Exhibit 101 containing the Registrant’s XBRL materials for the six-month period ended June 30, 2017 with the corrected number of shares outstanding as of July 28, 2017. The Form 10-Q/A should be read in conjunction with the original Form 10-Q, which continues to speak as of the date of the Form 10-Q. Except as specifically noted above, the Form 10-Q/A does not modify or update disclosures in the original Form 10-Q. Accordingly, this Form 10-Q/A does not reflect events occurring after the filing of Form 10-Q or modify or update any related or other disclosures.
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Trading Symbol	CSU
Entity Registrant Name	CAPITAL SENIOR LIVING CORP
Entity Central Index Key	0001043000
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		30,339,978

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Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 16,218	$ 34,026
Restricted cash	13,367	13,297
Accounts receivable, net	10,488	13,675
Federal and state income taxes receivable	17
Property tax and insurance deposits	11,079	14,665
Prepaid expenses and other	4,391	6,365
Total current assets	55,560	82,028
Property and equipment, net	1,111,903	1,032,430
Other assets, net	20,337	31,323
Total assets	1,187,800	1,145,781
Current liabilities:
Accounts payable	7,995	5,051
Accrued expenses	36,157	39,064
Current portion of notes payable, net of deferred loan costs	17,371	17,889
Current portion of deferred income	15,174	16,284
Current portion of capital lease and financing obligations	2,885	1,339
Federal and state income taxes payable		218
Customer deposits	1,480	1,545
Total current liabilities	81,062	81,390
Deferred income	10,975	12,205
Capital lease and financing obligations, net of current portion	50,734	37,439
Other long-term liabilities	14,727	15,325
Notes payable, net of deferred loan costs and current portion	939,187	882,504
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value: Authorized shares - 15,000; no shares issued or outstanding
Common stock, $.01 par value: Authorized shares - 65,000; issued and outstanding shares - 30,347 and 30,012 in 2017 and 2016, respectively	308	305
Additional paid-in capital	175,652	171,599
Retained deficit	(81,415)	(51,556)
Treasury stock, at cost - 494 shares in 2017 and 2016	(3,430)	(3,430)
Total shareholders' equity	91,115	116,918
Total liabilities and shareholders' equity	$ 1,187,800	$ 1,145,781

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Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	15,000,000	15,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	65,000,000	65,000,000
Common stock, shares issued	30,347,000	30,012,000
Common stock, shares outstanding	30,347,000	30,012,000
Treasury stock, shares	494,000	494,000

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Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenues:
Resident revenue	$ 116,718	$ 111,034	$ 232,708	$ 220,207
Expenses:
Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below)	73,289	67,162	146,067	133,685
General and administrative expenses	6,083	4,972	12,317	11,220
Facility lease expense	13,968	15,445	28,555	30,650
Loss on facility lease termination			12,858
Stock-based compensation expense	1,941	2,490	3,871	5,003
Depreciation and amortization expense	16,746	15,172	33,959	29,703
Total expenses	112,027	105,241	237,627	210,261
Income (Loss) from operations	4,691	5,793	(4,919)	9,946
Other income (expense):
Interest income	14	19	32	35
Interest expense	(12,404)	(10,345)	(24,409)	(20,330)
Loss on disposition of assets, net		(6)	(125)	(37)
Other income	2	233	5	233
Loss before provision for income taxes	(7,697)	(4,306)	(29,416)	(10,153)
Provision for income taxes	(138)	(140)	(261)	(277)
Net loss	$ (7,835)	$ (4,446)	$ (29,677)	$ (10,430)
Per share data:
Basic net loss per share	$ (0.27)	$ (0.15)	$ (1.01)	$ (0.36)
Diluted net loss per share	$ (0.27)	$ (0.15)	$ (1.01)	$ (0.36)
Weighted average shares outstanding - basic	29,478	28,926	29,384	28,838
Weighted average shares outstanding - diluted	29,478	28,926	29,384	28,838
Comprehensive loss	$ (7,835)	$ (4,446)	$ (29,677)	$ (10,430)

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Operating Activities
Net loss	$ (29,677)	$ (10,430)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	33,959	29,703
Amortization of deferred financing charges	800	567
Amortization of deferred lease costs and lease intangibles	435	191
Amortization of lease incentives	(597)	(375)
Deferred income	(502)	44
Lease incentives	3,655	3,890
Loss on facility lease termination	12,858
Loss on disposition of assets, net	125	37
Provision for bad debts	975	809
Stock-based compensation expense	3,871	5,003
Changes in operating assets and liabilities:
Accounts receivable	(3,828)	(5,872)
Property tax and insurance deposits	3,586	2,926
Prepaid expenses and other	1,974	(1,016)
Other assets	5,380	(566)
Accounts payable	2,944	(2,214)
Accrued expenses	(2,907)	(1,704)
Other liabilities	2,750	5,778
Federal and state income taxes receivable/payable	(235)	(206)
Deferred resident revenue	(517)	(1,136)
Customer deposits	(65)	(121)
Net cash provided by operating activities	34,984	25,308
Investing Activities
Capital expenditures	(21,942)	(29,747)
Cash paid for acquisitions	(85,000)	(64,750)
Proceeds from disposition of assets	13
Net cash used in investing activities	(106,929)	(94,497)
Financing Activities
Proceeds from notes payable	66,584	69,892
Repayments of notes payable	(10,302)	(8,183)
Increase in restricted cash	(70)	(8)
Cash payments for capital lease and financing obligations	(1,161)	(583)
Cash proceeds from the issuance of common stock	3	66
Excess tax benefits on stock options exercised		(27)
Purchases of treasury stock		(2,496)
Deferred financing charges paid	(917)	(1,073)
Net cash provided by financing activities	54,137	57,588
Decrease in cash and cash equivalents	(17,808)	(11,601)
Cash and cash equivalents at beginning of period	34,026	56,087
Cash and cash equivalents at end of period	16,218	44,486
Cash paid during the period for:
Interest	23,265	19,627
Income taxes	$ 529	$ 546

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Basis of Presentation

6 Months Ended

Jun. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

1. BASIS OF PRESENTATION

Capital Senior Living Corporation, a Delaware corporation (together with its subsidiaries, the “Company”), is one of the largest operators of senior housing communities in the United States in terms of resident capacity. The Company owns, operates and manages senior housing communities in geographically concentrated regions throughout the United States. As of June 30, 2017, the Company operated 129 senior housing communities in 23 states with an aggregate capacity of approximately 16,500 residents, including 83 senior housing communities that the Company owned and 46 senior housing communities that the Company leased. As of June 30, 2017, the Company also operated one home care agency. The accompanying consolidated financial statements include the financial statements of Capital Senior Living Corporation and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

The accompanying Consolidated Balance Sheet, as of December 31, 2016, has been derived from audited consolidated financial statements of the Company for the year ended December 31, 2016, and the accompanying unaudited consolidated financial statements, as of and for the three and six month periods ended June 30, 2017 and 2016, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States have not been included pursuant to those rules and regulations. For further information, refer to the financial statements and notes thereto for the year ended December 31, 2016, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2017.

In the opinion of the Company, the accompanying consolidated financial statements contain all adjustments (all of which were normal recurring accruals) necessary to present fairly the Company’s financial position as of June 30, 2017, results of operations for the three and six month periods ended June 30, 2017 and 2016, and cash flows for the six month periods ended June 30, 2017 and 2016. The results of operations for the three and six month periods ended June 30, 2017, are not necessarily indicative of the results for the year ending December 31, 2017.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Lease Accounting

The Company determines whether to account for its leases as operating, capital or financing leases depending on the underlying terms of each lease agreement. This determination of classification is complex and requires significant judgment relating to certain information including the estimated fair value and remaining economic life of the community, the Company’s cost of funds, minimum lease payments and other lease terms. As of June 30, 2017, the Company leased 46 senior housing communities, 44 of which the Company classified as operating leases and two of which the Company classified as capital lease and financing obligations. The Company incurs lease acquisition costs and amortizes these costs over the term of the respective lease agreement. Certain leases entered into by the Company qualified as sale/leaseback transactions, and as such, any related gains have been deferred and are being amortized over the respective lease term. Facility lease expense in the Company’s Consolidated Statements of Operations and Comprehensive Loss includes rent expense plus amortization expense relating to leasehold acquisition costs slightly offset by the amortization of deferred gains and lease incentives. There are various financial covenants and other restrictions in the Company’s lease agreements. The Company was in compliance with all of its lease covenants at June 30, 2017. On January 31, 2017, the Company acquired the underlying real estate associated with four of its operating leases. For additional information refer to Note 3, “Acquisitions.”

Credit Risk and Allowance for Doubtful Accounts

The Company’s resident receivables are generally due within 30 days from the date billed. Accounts receivable are reported net of an allowance for doubtful accounts of $4.6 million and $4.3 million at June 30, 2017, and December 31, 2016, respectively, and represent the Company’s estimate of the amount that ultimately will be collected. The adequacy of the Company’s allowance for doubtful accounts is reviewed on an ongoing basis, using historical payment trends, write-off experience, analyses of receivable portfolios by payor source and aging of receivables, as well as a review of specific accounts, and adjustments are made to the allowance as necessary. Credit losses on resident receivables have historically been within management’s estimates, and management believes that the allowance for doubtful accounts adequately provides for expected losses.

Employee Health and Dental Benefits, Workers’ Compensation, and Insurance Reserves

The Company offers certain full-time employees an option to participate in its health and dental plans. The Company is self-insured up to certain limits and is insured if claims in excess of these limits are incurred. The cost of employee health and dental benefits, net of employee contributions, is shared between the corporate office and the senior housing communities based on the respective number of plan participants. Funds collected are used to pay the actual program costs including estimated annual claims, third-party administrative fees, network provider fees, communication costs, and other related administrative costs incurred by the plans. Claims are paid as they are submitted to the Company’s third-party administrator. The Company records a liability for outstanding claims and claims that have been incurred but not yet reported. This liability is based on the historical claim reporting lag and payment trends of health insurance claims. Management believes that the liability for outstanding losses and expenses is adequate to cover the ultimate cost of losses and expenses incurred at June 30, 2017; however, actual claims and expenses may differ. Any subsequent changes in estimates are recorded in the period in which they are determined.

The Company uses a combination of insurance and self-insurance for workers’ compensation. Determining the reserve for workers’ compensation losses and costs that the Company has incurred as of the end of a reporting period involves significant judgments based on projected future events including potential settlements for pending claims, known incidents which may result in claims, estimates of incurred but not yet reported claims, changes in insurance premiums, estimated litigation costs and other factors. The Company regularly adjusts these estimates to reflect changes in the foregoing factors. However, since this reserve is based on estimates, the actual expenses incurred may differ from the amounts reserved. Any subsequent changes in estimates are recorded in the period in which they are determined.

Income Taxes

Income taxes are computed using the asset and liability method and current income taxes are recorded based on amounts refundable or payable in the current year. The effective tax rates for the three and six month periods ended June 30, 2017 and 2016 differ from the statutory tax rates due to state income taxes, permanent tax differences, and changes in the deferred tax asset valuation allowance. The Company is impacted by the Texas Margin Tax (“TMT”), which effectively imposes tax on modified gross revenues for communities within the State of Texas. During each of the three and six month periods ended June 30, 2017 and 2016, the Company consolidated 38 and 37 Texas communities, respectively, and the TMT increased the overall provision for income taxes.

Deferred income taxes are recorded based on the estimated future tax effects of loss carryforwards and temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income in the years in which we expect those carryforwards and temporary differences to be recovered or settled. Management regularly evaluates the future realization of deferred tax assets and provides a valuation allowance, if considered necessary, based on such evaluation. As part of the evaluation, management has evaluated taxable income in carryback years, future reversals of taxable temporary differences, feasible tax planning strategies, and future expectations of income. Based upon this analysis, an adjustment to the valuation allowance of $3.0 million and $1.5 million was recorded during the second quarters of fiscal 2017 and 2016, respectively, to increase the valuation allowance provided to $46.9 million and $25.7 million at June 30, 2017 and 2016, respectively, and reduce the Company’s net deferred tax assets to the amount that is more likely than not to be realized. Cumulative adjustments to the valuation allowance for the first six months of fiscal 2017 and 2016 were $16.1 million and $3.4 million, respectively. The adjustment to the valuation allowance during the first six months of fiscal 2017 included an increase of $5.3 million for the adoption of ASU 2016-09, which was effective for the Company as of January 1, 2017, to recognize net operating loss carryforwards attributable to excess tax benefits on stock compensation that had not been previously recognized to additional paid in capital. However, in the event that we were to determine that it would be more likely than not that the Company would realize the benefit of deferred tax assets in the future in excess of their net recorded amounts, adjustments to deferred tax assets would increase net income in the period such determination was made. The benefits of the net deferred tax assets might not be realized if actual results differ from expectations.

The Company evaluates uncertain tax positions through consideration of accounting and reporting guidance on criteria, measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide better financial statement comparability among different companies. The Company is required to recognize a tax benefit in its financial statements for an uncertain tax position only if management’s assessment is that such position is “more likely than not” (i.e., a greater than 50% likelihood) to be upheld on audit based only on the technical merits of the tax position. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as income tax expense. The Company is generally no longer subject to federal and state income tax audits for tax years prior to 2013.

Net Loss Per Share

Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Potentially dilutive securities consist of unvested restricted shares and shares that could be issued under outstanding stock options. Potentially dilutive securities are excluded from the computation of net loss per common share if their effect is antidilutive.

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except for per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net loss	$	(7,835	)	$	(4,446	)	$	(29,677	)	$	(10,430	)
Net loss allocated to unvested restricted shares		—			—			—			—
Undistributed net loss allocated to common shares	$	(7,835	)	$	(4,446	)	$	(29,677	)	$	(10,430	)
Weighted average shares outstanding – basic		29,478			28,926			29,384			28,838
Effects of dilutive securities:
Employee equity compensation plans		—			—			—			—
Weighted average shares outstanding – diluted		29,478			28,926			29,384			28,838
Basic net loss per share – common shareholders	$	(0.27	)	$	(0.15	)	$	(1.01	)	$	(0.36	)
Diluted net loss per share – common shareholders	$	(0.27	)	$	(0.15	)	$	(1.01	)	$	(0.36	)

Awards of unvested restricted stock representing approximately 846,000 and 1,052,000 shares were outstanding for the three months ended June 30, 2017 and 2016, respectively, and awards of unvested restricted stock representing approximately 848,000 and 1,043,000 shares were outstanding for the six months ended June 30, 2017 and 2016, respectively, and were antidilutive.

Treasury Stock

The Company accounts for treasury stock under the cost method and includes treasury stock as a component of stockholders’ equity. All shares acquired by the Company have been purchased in open-market transactions. There were no repurchases of the Company’s common stock during the six month period ended June 30, 2017.

Recently Issued Accounting Guidance

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations – Clarifying the Definition of a Business. ASU 2017-01 provides guidance in accounting for business combinations when determining if the transaction represents acquisitions or disposals of assets or of a business. Under ASU 2017-01, when determining whether an integrated set of assets and activities constitutes a business, entities must compare the fair value of gross assets acquired to the fair value of a single identifiable asset or group of similar identifiable assets. If substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in the single identifiable assets or group of similar identifiable assets, the integrated set of assets and activities is not characterized as a business. ASU 2017-01 is applied prospectively and is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early application is permitted. Management does not expect the adoption of ASU 2017-01 to have a material impact on the Company’s financial position, results of operations or cash flows.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force). ASU 2016-18 requires an entity to include in its cash and cash-equivalent balances in the statement of cash flows those amounts that are deemed to be restricted cash and restricted cash equivalents. ASU 2016-18 is effective for interim and annual reporting periods beginning after December 15, 2017. Management does not expect the adoption of ASU 2016-18 to have a material impact on the Company’s financial position, results of operations or cash flows.

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 amends the guidance in Accounting Standards Codification (“ASC”) 230, which often requires judgment to determine the appropriate classification of cash flows as operating, investing or financing activities and has resulted in diversity in practice in how certain cash receipts and cash payments are classified. ASU 2016-15 is effective for interim and annual reporting periods beginning after December 15, 2017 and should be applied on a retrospective basis. Management does not expect the adoption of ASU 2016-15 to have a material impact on the Company’s cash flows.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-based Payment Accounting. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in ASU 2016-09 are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early application is permitted. The Company adopted the provisions of ASU 2016-09 on January 1, 2017, and incorporated the provisions of this update into its consolidated financial statements upon adoption. Upon adoption, the Company elected to change its accounting policy to account for forfeitures as they occur. This change was applied on a modified retrospective basis with a cumulative effect adjustment to retained earnings of $0.2 million. Additionally, the adoption of ASU 2016-09 resulted in the Company recording an adjustment of $5.3 million, which resulted in an increase to the Company’s deferred tax asset valuation allowance, to recognize net operating loss carryforwards attributable to excess tax benefits on stock compensation that had not been previously recognized to additional paid in capital. Excess tax benefits for share-based payments are now included in net operating activities rather than net financing activities within the Company’s Consolidated Statements of Cash Flows. As a result of the adoption of ASU 2016-09, these reporting changes have been applied prospectively and prior periods have not been adjusted.

In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in 2019. Early adoption of ASU 2016-02 as of its issuance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting the new leases standard on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. Under ASU 2014-09, an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. ASU 2014-09 is effective for annual periods beginning after December 15, 2017. The Company is currently evaluating the impact the adoption of ASU 2014-09 will have on the Company’s consolidated financial statements and disclosures; however, based on our initial assessment we do not believe it will have a significant impact on the Company’s financial statements. The Company is currently planning to adopt the standard under the modified retrospective adoption.

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Acquisitions

6 Months Ended

Jun. 30, 2017

Business Combinations [Abstract]

Acquisitions

3. ACQUISITIONS

Fiscal 2017

Effective January 31, 2017 (the “Closing Date”), the Company acquired the underlying real estate through an asset acquisition associated with four of the senior housing communities previously leased from Ventas, Inc. (“Ventas”) for an acquisition price of $85.0 million (the “Four Property Lease Transaction”). The Company obtained interest only, bridge financing from Berkadia Commercial Mortgage LLC (“Berkadia”) for $65.0 million of the acquisition price with an initial variable interest rate of LIBOR plus 4.0% and a 36-month term, with the balance of the acquisition price paid from the Company’s existing cash resources. Additionally, the Company agreed to continue paying $2.3 million of the annual rents associated with the four communities acquired over the remaining lease term of the seven communities remaining in the Ventas Lease Portfolio. As such, the total additional lease payments to be paid over the remaining lease term were discounted back to the Closing Date utilizing a credit-adjusted risk-free rate to calculate $16.0 million for the fair value of the lease termination financing obligation. The fair value of the four communities acquired was determined to approximate $88.1 million. The fair values of the property, plant, and equipment of the acquired communities were determined utilizing a direct capitalization method considering facility net operating income and market capitalization rates. These fair value measurements were based on current market conditions as of the acquisition date and are considered Level 3 measurements (fair value measurements using significant unobservable inputs) within the fair value hierarchy of ASC 820-10, Fair Value Measurement. The range of capitalization rates utilized was 7.25% to 8.50%, depending upon the property type, geographical location, and overall quality of each respective community. The acquisition price of $85.0 million and lease termination obligation of $16.0 million resulted in total aggregate consideration by the Company for the acquisition of the four communities of $101.0 million. The Company recorded the difference between the total aggregate consideration ($101.0 million) and the estimated fair value of the four communities acquired ($88.1 million) of $12.9 million as a loss on facility lease termination during the first quarter of fiscal 2017. Additionally, the Company incurred approximately $0.4 million in transaction costs related to this acquisition which have been capitalized as a component of the cost of the assets acquired.

As a result of this acquisition, the Company recorded additions to property and equipment of approximately $88.1 million within the Company’s Consolidated Balance Sheets which will be depreciated or amortized over the estimated useful lives. The purchase accounting for the Springfield Transaction and Cincinnati Transaction, which closed during fiscal 2016, was finalized during the first quarter of fiscal 2017 and valuation adjustments resulted in the Company reclassifying approximately $1.3 million from property and equipment to other assets to reflect the final purchase price allocation.

Fiscal 2016

Effective November 2, 2016, the Company closed the acquisition of one senior housing community located in Cincinnati, Ohio, for $29.0 million (the “Cincinnati Transaction”). The community consists of 45 independent living units and 77 assisted living units. The Company incurred approximately $0.2 million in transaction costs related to this acquisition which have been included in general and administrative expenses within the Company’s Consolidated Statements of Operations and Comprehensive Loss. The Company obtained financing from Fannie Mae for approximately $22.0 million of the acquisition price at a fixed interest rate of 4.24% with a 10-year term with the balance of the acquisition price paid from the Company’s existing cash resources.

Effective September 30, 2016, the Company closed the acquisition of one senior housing community located in Springfield, Massachusetts, for $27.0 million (the “Springfield Transaction”). The community consists of 97 independent living units and 90 assisted living units. The Company incurred approximately $0.3 million in transaction costs related to this acquisition which have been included in general and administrative expenses within the Company’s Consolidated Statements of Operations and Comprehensive Loss. The Company obtained financing from Fannie Mae for $20.3 million of the acquisition price at a fixed interest rate of 4.10% with a 10-year term with the balance of the acquisition price paid from the Company’s existing cash resources.

Effective September 27, 2016, the Company closed the acquisition of one senior housing community located in Kingwood, Texas for $18.0 million (the “Kingwood Transaction”). The community consists of 96 assisted living units. The Company incurred approximately $0.2 million in transaction costs related to this acquisition which have been included in general and administrative expenses within the Company’s Consolidated Statements of Operations and Comprehensive Loss. The Company obtained financing from Protective Life Insurance Company (“Protective Life”) for $13.0 million of the acquisition price at a fixed interest rate of 4.13% with a 15-year term with the balance of the acquisition price paid from the Company’s existing cash resources.

Effective February 16, 2016, the Company closed the acquisition of two senior housing communities located in Pensacola, Florida, for $48.0 million (the “Pensacola Transaction”). The two communities consist of 179 assisted living units. The Company incurred approximately $0.3 million in transaction costs related to this acquisition which have been included in general and administrative expenses within the Company’s Consolidated Statements of Operations and Comprehensive Loss. The Company obtained financing from Protective Life for $35.0 million of the acquisition price at a fixed interest rate of 4.38% with a 10-year term with the balance of the acquisition price paid from the Company’s existing cash resources.

Effective January 26, 2016, the Company closed the acquisition of three senior housing communities located in Colby, Park Falls, and Wisconsin Rapids, Wisconsin, for approximately $16.8 million (the “Pine Ridge Transaction”). The three communities consist of 138 assisted living units. The Company incurred approximately $0.1 million in transaction costs related to this acquisition which have been included in general and administrative expenses within the Company’s Consolidated Statements of Operations and Comprehensive Loss. The Company obtained financing from Protective Life for $11.3 million of the acquisition price at a fixed interest rate of 4.50% with a 10-year term with the balance of the acquisition price paid from the Company’s existing cash resources.

As a result of these acquisitions, the Company recorded additions to property and equipment of approximately $126.0 million and other assets of approximately $12.8 million, primarily consisting of in-place lease intangibles, within the Company’s Consolidated Balance Sheets which will be depreciated or amortized over the estimated useful lives.

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Debt Transactions

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Debt Transactions

4. DEBT TRANSACTIONS

On January 31, 2017, in conjunction with the Four Property Lease Transaction, the Company obtained $65.0 million of mortgage debt from Berkadia. The new mortgage loan is interest-only and has a 3-year term with an initial variable interest rate of LIBOR plus 4.00%. The Company incurred approximately $0.9 million in deferred financing costs related to this loan, which are being amortized over 3 years.

The Company issued standby letters of credit, totaling approximately $3.9 million, for the benefit of Hartford Financial Services (“Hartford”) associated with the administration of workers compensation.

The Company issued standby letters of credit, totaling approximately $6.7 million, for the benefit of Welltower, Inc. (“Welltower”), formerly Healthcare REIT, Inc. on certain leases between Welltower and the Company.

The Company issued standby letters of credit, totaling approximately $2.8 million, for the benefit of HCP, Inc. (“HCP”) on certain leases between HCP and the Company.

The senior housing communities owned by the Company and encumbered by mortgage debt are provided as collateral under their respective loan agreements. At June 30, 2017 and December 31, 2016, these communities carried a total net book value of approximately $1.0 billion and $935.6 million, respectively, with total mortgage loans outstanding, excluding deferred loan costs, of approximately $964.1 million and $907.2 million, respectively.

In connection with the Company’s loan commitments described above, the Company incurred financing charges that were deferred and amortized over the terms of the respective notes. At June 30, 2017 and December 31, 2016, the Company had gross deferred loan costs of approximately $13.7 million and $12.8 million, respectively. Accumulated amortization was approximately $3.8 million and $3.0 million at June 30, 2017 and December 31, 2016, respectively. The Company was in compliance with all aspects of its outstanding indebtedness at June 30, 2017, and December 31, 2016.

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Equity

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Equity

5. EQUITY

Preferred Stock

The Company is authorized to issue preferred stock in series and to fix and state the voting powers and such designations, preferences and relative participating, optional or other special rights of the shares of each such series and the qualifications, limitations and restrictions thereof. Such action may be taken by the Company’s board of directors without stockholder approval. The rights, preferences and privileges of holders of common stock are subject to the rights of the holders of preferred stock. No preferred stock was outstanding as of June 30, 2017 and December 31, 2016.

Share Repurchases

On January 22, 2009, the Company’s board of directors approved a share repurchase program that authorized the Company to purchase up to $10.0 million of the Company’s common stock. Purchases may be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or block trades, or by any combination of such methods, in accordance with applicable insider trading and other securities laws and regulations. The size, scope and timing of any purchases will be based on business, market and other conditions and factors, including price, regulatory and contractual requirements or consents, and capital availability. The repurchase program does not obligate the Company to acquire any particular amount of common stock and the share repurchase authorization has no stated expiration date. Shares of stock repurchased under the program will be held as treasury shares. Pursuant to this authorization, during fiscal 2009, the Company purchased 349,800 shares at an average cost of $2.67 per share for a total cost to the Company of approximately $0.9 million. On January 14, 2016, the Company announced that its board of directors approved a continuation of the share repurchase program. Pursuant to this authorization, during the first quarter of fiscal 2016, the Company purchased 144,315 shares of its common stock at an average cost of $17.29 per share for a total cost to the Company of approximately $2.5 million. All such purchases were made in open market transactions. The Company did not purchase any additional shares of its common stock pursuant to the Company’s share repurchase program during the six month period ended June 30, 2017.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

6. STOCK-BASED COMPENSATION

The Company recognizes compensation expense for share-based stock awards to certain employees and directors, including grants of employee stock options and awards of restricted stock, in the Company’s Consolidated Statements of Operations and Comprehensive Loss based on their fair values.

On May 8, 2007, the Company’s stockholders approved the 2007 Omnibus Stock and Incentive Plan for Capital Senior Living Corporation (as amended, the “2007 Plan”), which provides for, among other things, the grant of restricted stock awards and stock options to purchase shares of the Company’s common stock. The 2007 Plan authorizes the Company to issue up to 4.6 million shares of common stock and the Company has reserved shares of common stock for future issuance pursuant to awards under the 2007 Plan. Effective May 8, 2007, the 1997 Omnibus Stock and Incentive Plan (as amended, the “1997 Plan”) was terminated and no additional shares will be granted under the 1997 Plan.

Stock Options

Although the Company has not granted stock options in recent years, the Company’s stock option program is a long-term retention program that is intended to attract, retain and provide incentives for employees, officers and directors and to more closely align stockholder interests with those of our employees and directors. The Company’s stock options generally vest over a period of one to five years and the related expense is amortized on a straight-line basis over the vesting period. No stock options were outstanding at June 30, 2017.

Restricted Stock

The Company may grant restricted stock awards and units to employees, officers, and directors in order to attract, retain, and provide incentives for such individuals and to more closely align stockholder and employee interests. For restricted stock awards and units without performance and market-based vesting conditions, the Company records compensation expense for the entire award on a straight-line basis over the requisite service period, which is generally a period of one to four years, unless the award is subject to certain accelerated vesting requirements. Restricted stock awards are considered outstanding at the time of grant since the holders thereof are entitled to dividends, upon vesting, and voting rights. For restricted stock awards with performance and market-based vesting conditions, total compensation expense is recognized over the requisite service period for each separately vesting tranche of the award as if the award is, in substance, multiple awards once the performance target is deemed probable of achievement. Performance goals are evaluated periodically, and if such goals are not ultimately met or it is not probable the goals will be achieved, no compensation expense is recognized and any previously recognized compensation expense is reversed for performance-based awards.

The Company recognizes compensation expense of a restricted stock award over its respective vesting or performance period based on the fair value of the award on the grant date, net of actual forfeitures. A summary of the Company’s restricted stock awards activity and related information for the six-month period ended June 30, 2017 is presented below:

	Outstanding at Beginning of Period		Granted		Vested			Cancelled			Outstanding at End of Period
Shares		829,766		379,337		(315,429	)		(47,252	)		846,422

The restricted stock outstanding at June 30, 2017 had an intrinsic value of approximately $12.9 million.

During the six month period ended June 30, 2017, the Company awarded 379,337 shares of restricted common stock to certain employees and directors of the Company, of which 147,847 shares were subject to performance and market-based vesting conditions. The average market value of the common stock on the date of grant was $13.88. These awards of restricted stock vest over a one to four-year period and had an intrinsic value of approximately $5.2 million on the date of grant. Additionally, during the six month period ended June 30, 2017, the Company awarded 26,787 restricted stock units to certain directors of the Company with an average market value of $13.44 on the date of grant. These awards of restricted stock units vest over a one-year period and had an intrinsic value of approximately $360,000 on the date of grant.

Unrecognized stock-based compensation expense is $10.9 million as of June 30, 2017. If all awards are earned, the Company expects this expense to be recognized over a one to three-year period for performance-based stock awards and a one to four-year period for nonperformance-based stock awards and units.

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Contingencies

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Contingencies

7. CONTINGENCIES

The Company has claims incurred in the normal course of its business. Most of these claims are believed by management to be covered by insurance, subject to normal reservations of rights by the insurance companies and possibly subject to certain exclusions in the applicable insurance policies. Whether or not covered by insurance, these claims, in the opinion of management, based on advice of legal counsel, should not have a material effect on the consolidated financial statements of the Company if determined adversely to the Company.

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

8. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and fair values of financial instruments at June 30, 2017, and December 31, 2016, are as follows (in thousands):

	2017				2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	16,218	$	16,218	$	34,026	$	34,026
Restricted cash		13,367		13,367		13,297		13,297
Notes payable, excluding deferred loan costs		966,516		925,290		910,234		879,448

The following methods and assumptions were used in estimating the Company’s fair value disclosures for financial instruments:

Cash and cash equivalents and Restricted cash: The carrying amounts reported in the Company’s Consolidated Balance Sheets for cash and cash equivalents and restricted cash approximate fair value, which represent level 1 inputs as defined in the accounting standards codification.

Notes payable: The fair value of notes payable is estimated using discounted cash flow analysis, based on current incremental borrowing rates for similar types of borrowing arrangements, which represent level 2 inputs as defined in the accounting standards codification.

The estimated fair value of these assets and liabilities could be affected by market changes and this effect could be material.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Lease Accounting

Lease Accounting

The Company determines whether to account for its leases as operating, capital or financing leases depending on the underlying terms of each lease agreement. This determination of classification is complex and requires significant judgment relating to certain information including the estimated fair value and remaining economic life of the community, the Company’s cost of funds, minimum lease payments and other lease terms. As of June 30, 2017, the Company leased 46 senior housing communities, 44 of which the Company classified as operating leases and two of which the Company classified as capital lease and financing obligations. The Company incurs lease acquisition costs and amortizes these costs over the term of the respective lease agreement. Certain leases entered into by the Company qualified as sale/leaseback transactions, and as such, any related gains have been deferred and are being amortized over the respective lease term. Facility lease expense in the Company’s Consolidated Statements of Operations and Comprehensive Loss includes rent expense plus amortization expense relating to leasehold acquisition costs slightly offset by the amortization of deferred gains and lease incentives. There are various financial covenants and other restrictions in the Company’s lease agreements. The Company was in compliance with all of its lease covenants at June 30, 2017. On January 31, 2017, the Company acquired the underlying real estate associated with four of its operating leases. For additional information refer to Note 3, “Acquisitions.”

Credit Risk and Allowance for Doubtful Accounts

Credit Risk and Allowance for Doubtful Accounts

The Company’s resident receivables are generally due within 30 days from the date billed. Accounts receivable are reported net of an allowance for doubtful accounts of $4.6 million and $4.3 million at June 30, 2017, and December 31, 2016, respectively, and represent the Company’s estimate of the amount that ultimately will be collected. The adequacy of the Company’s allowance for doubtful accounts is reviewed on an ongoing basis, using historical payment trends, write-off experience, analyses of receivable portfolios by payor source and aging of receivables, as well as a review of specific accounts, and adjustments are made to the allowance as necessary. Credit losses on resident receivables have historically been within management’s estimates, and management believes that the allowance for doubtful accounts adequately provides for expected losses.

Employee Health and Dental Benefits, Workers' Compensation, and Insurance Reserves

Employee Health and Dental Benefits, Workers’ Compensation, and Insurance Reserves

The Company offers certain full-time employees an option to participate in its health and dental plans. The Company is self-insured up to certain limits and is insured if claims in excess of these limits are incurred. The cost of employee health and dental benefits, net of employee contributions, is shared between the corporate office and the senior housing communities based on the respective number of plan participants. Funds collected are used to pay the actual program costs including estimated annual claims, third-party administrative fees, network provider fees, communication costs, and other related administrative costs incurred by the plans. Claims are paid as they are submitted to the Company’s third-party administrator. The Company records a liability for outstanding claims and claims that have been incurred but not yet reported. This liability is based on the historical claim reporting lag and payment trends of health insurance claims. Management believes that the liability for outstanding losses and expenses is adequate to cover the ultimate cost of losses and expenses incurred at June 30, 2017; however, actual claims and expenses may differ. Any subsequent changes in estimates are recorded in the period in which they are determined.

The Company uses a combination of insurance and self-insurance for workers’ compensation. Determining the reserve for workers’ compensation losses and costs that the Company has incurred as of the end of a reporting period involves significant judgments based on projected future events including potential settlements for pending claims, known incidents which may result in claims, estimates of incurred but not yet reported claims, changes in insurance premiums, estimated litigation costs and other factors. The Company regularly adjusts these estimates to reflect changes in the foregoing factors. However, since this reserve is based on estimates, the actual expenses incurred may differ from the amounts reserved. Any subsequent changes in estimates are recorded in the period in which they are determined.

Income Taxes

Income Taxes

Income taxes are computed using the asset and liability method and current income taxes are recorded based on amounts refundable or payable in the current year. The effective tax rates for the three and six month periods ended June 30, 2017 and 2016 differ from the statutory tax rates due to state income taxes, permanent tax differences, and changes in the deferred tax asset valuation allowance. The Company is impacted by the Texas Margin Tax (“TMT”), which effectively imposes tax on modified gross revenues for communities within the State of Texas. During each of the three and six month periods ended June 30, 2017 and 2016, the Company consolidated 38 and 37 Texas communities, respectively, and the TMT increased the overall provision for income taxes.

Deferred income taxes are recorded based on the estimated future tax effects of loss carryforwards and temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income in the years in which we expect those carryforwards and temporary differences to be recovered or settled. Management regularly evaluates the future realization of deferred tax assets and provides a valuation allowance, if considered necessary, based on such evaluation. As part of the evaluation, management has evaluated taxable income in carryback years, future reversals of taxable temporary differences, feasible tax planning strategies, and future expectations of income. Based upon this analysis, an adjustment to the valuation allowance of $3.0 million and $1.5 million was recorded during the second quarters of fiscal 2017 and 2016, respectively, to increase the valuation allowance provided to $46.9 million and $25.7 million at June 30, 2017 and 2016, respectively, and reduce the Company’s net deferred tax assets to the amount that is more likely than not to be realized. Cumulative adjustments to the valuation allowance for the first six months of fiscal 2017 and 2016 were $16.1 million and $3.4 million, respectively. The adjustment to the valuation allowance during the first six months of fiscal 2017 included an increase of $5.3 million for the adoption of ASU 2016-09, which was effective for the Company as of January 1, 2017, to recognize net operating loss carryforwards attributable to excess tax benefits on stock compensation that had not been previously recognized to additional paid in capital. However, in the event that we were to determine that it would be more likely than not that the Company would realize the benefit of deferred tax assets in the future in excess of their net recorded amounts, adjustments to deferred tax assets would increase net income in the period such determination was made. The benefits of the net deferred tax assets might not be realized if actual results differ from expectations.

The Company evaluates uncertain tax positions through consideration of accounting and reporting guidance on criteria, measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide better financial statement comparability among different companies. The Company is required to recognize a tax benefit in its financial statements for an uncertain tax position only if management’s assessment is that such position is “more likely than not” (i.e., a greater than 50% likelihood) to be upheld on audit based only on the technical merits of the tax position. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as income tax expense. The Company is generally no longer subject to federal and state income tax audits for tax years prior to 2013.

Net Loss Per Share

Net Loss Per Share

Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Potentially dilutive securities consist of unvested restricted shares and shares that could be issued under outstanding stock options. Potentially dilutive securities are excluded from the computation of net loss per common share if their effect is antidilutive.

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except for per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net loss	$	(7,835	)	$	(4,446	)	$	(29,677	)	$	(10,430	)
Net loss allocated to unvested restricted shares		—			—			—			—
Undistributed net loss allocated to common shares	$	(7,835	)	$	(4,446	)	$	(29,677	)	$	(10,430	)
Weighted average shares outstanding – basic		29,478			28,926			29,384			28,838
Effects of dilutive securities:
Employee equity compensation plans		—			—			—			—
Weighted average shares outstanding – diluted		29,478			28,926			29,384			28,838
Basic net loss per share – common shareholders	$	(0.27	)	$	(0.15	)	$	(1.01	)	$	(0.36	)
Diluted net loss per share – common shareholders	$	(0.27	)	$	(0.15	)	$	(1.01	)	$	(0.36	)

Awards of unvested restricted stock representing approximately 846,000 and 1,052,000 shares were outstanding for the three months ended June 30, 2017 and 2016, respectively, and awards of unvested restricted stock representing approximately 848,000 and 1,043,000 shares were outstanding for the six months ended June 30, 2017 and 2016, respectively, and were antidilutive.

Treasury Stock

Treasury Stock

The Company accounts for treasury stock under the cost method and includes treasury stock as a component of stockholders’ equity. All shares acquired by the Company have been purchased in open-market transactions. There were no repurchases of the Company’s common stock during the six month period ended June 30, 2017.

Recently Issued Accounting Guidance

Recently Issued Accounting Guidance

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations – Clarifying the Definition of a Business. ASU 2017-01 provides guidance in accounting for business combinations when determining if the transaction represents acquisitions or disposals of assets or of a business. Under ASU 2017-01, when determining whether an integrated set of assets and activities constitutes a business, entities must compare the fair value of gross assets acquired to the fair value of a single identifiable asset or group of similar identifiable assets. If substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in the single identifiable assets or group of similar identifiable assets, the integrated set of assets and activities is not characterized as a business. ASU 2017-01 is applied prospectively and is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early application is permitted. Management does not expect the adoption of ASU 2017-01 to have a material impact on the Company’s financial position, results of operations or cash flows.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force). ASU 2016-18 requires an entity to include in its cash and cash-equivalent balances in the statement of cash flows those amounts that are deemed to be restricted cash and restricted cash equivalents. ASU 2016-18 is effective for interim and annual reporting periods beginning after December 15, 2017. Management does not expect the adoption of ASU 2016-18 to have a material impact on the Company’s financial position, results of operations or cash flows.

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 amends the guidance in Accounting Standards Codification (“ASC”) 230, which often requires judgment to determine the appropriate classification of cash flows as operating, investing or financing activities and has resulted in diversity in practice in how certain cash receipts and cash payments are classified. ASU 2016-15 is effective for interim and annual reporting periods beginning after December 15, 2017 and should be applied on a retrospective basis. Management does not expect the adoption of ASU 2016-15 to have a material impact on the Company’s cash flows.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-based Payment Accounting. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in ASU 2016-09 are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early application is permitted. The Company adopted the provisions of ASU 2016-09 on January 1, 2017, and incorporated the provisions of this update into its consolidated financial statements upon adoption. Upon adoption, the Company elected to change its accounting policy to account for forfeitures as they occur. This change was applied on a modified retrospective basis with a cumulative effect adjustment to retained earnings of $0.2 million. Additionally, the adoption of ASU 2016-09 resulted in the Company recording an adjustment of $5.3 million, which resulted in an increase to the Company’s deferred tax asset valuation allowance, to recognize net operating loss carryforwards attributable to excess tax benefits on stock compensation that had not been previously recognized to additional paid in capital. Excess tax benefits for share-based payments are now included in net operating activities rather than net financing activities within the Company’s Consolidated Statements of Cash Flows. As a result of the adoption of ASU 2016-09, these reporting changes have been applied prospectively and prior periods have not been adjusted.

In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in 2019. Early adoption of ASU 2016-02 as of its issuance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting the new leases standard on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. Under ASU 2014-09, an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. ASU 2014-09 is effective for annual periods beginning after December 15, 2017. The Company is currently evaluating the impact the adoption of ASU 2014-09 will have on the Company’s consolidated financial statements and disclosures; however, based on our initial assessment we do not believe it will have a significant impact on the Company’s financial statements. The Company is currently planning to adopt the standard under the modified retrospective adoption.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Computation of Basic and Diluted Net Loss Per Share

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except for per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net loss	$	(7,835	)	$	(4,446	)	$	(29,677	)	$	(10,430	)
Net loss allocated to unvested restricted shares		—			—			—			—
Undistributed net loss allocated to common shares	$	(7,835	)	$	(4,446	)	$	(29,677	)	$	(10,430	)
Weighted average shares outstanding – basic		29,478			28,926			29,384			28,838
Effects of dilutive securities:
Employee equity compensation plans		—			—			—			—
Weighted average shares outstanding – diluted		29,478			28,926			29,384			28,838
Basic net loss per share – common shareholders	$	(0.27	)	$	(0.15	)	$	(1.01	)	$	(0.36	)
Diluted net loss per share – common shareholders	$	(0.27	)	$	(0.15	)	$	(1.01	)	$	(0.36	)

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Restricted Common Stock Awards Activity and Related Information

A summary of the Company’s restricted stock awards activity and related information for the six-month period ended June 30, 2017 is presented below:

	Outstanding at Beginning of Period		Granted		Vested			Cancelled			Outstanding at End of Period
Shares		829,766		379,337		(315,429	)		(47,252	)		846,422

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Carrying Amounts and Fair Values of Financial Instruments

The carrying amounts and fair values of financial instruments at June 30, 2017, and December 31, 2016, are as follows (in thousands):

	2017				2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	16,218	$	16,218	$	34,026	$	34,026
Restricted cash		13,367		13,367		13,297		13,297
Notes payable, excluding deferred loan costs		966,516		925,290		910,234		879,448

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Basis of Presentation - Additional Information (Detail)	Jun. 30, 2017 Community Independent_Living_Unit State Resident
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Senior housing communities operated by company	129
Number of states in which senior housing communities operated | State	23
Aggregate capacity of residents in company operated senior housing communities | Resident	16,500
Senior housing communities owned by company	83
Senior housing communities on lease by company	46
Number of home care agency | Independent_Living_Unit	1

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Summary of Significant Accounting Policies - Additional Information (Detail) $ in Millions	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2017 USD ($) Community shares	Jun. 30, 2016 USD ($) Community shares	Mar. 31, 2016 shares	Jun. 30, 2017 USD ($) Community shares	Jun. 30, 2016 USD ($) Community shares	Dec. 31, 2009 shares	Mar. 31, 2017 Community	Jan. 31, 2017 Community	Dec. 31, 2016 USD ($)
Accounting Policies [Line Items]
Senior housing communities on lease by company | Community	46			46
Communities on operating lease | Community	44			44
Senior housing communities on capital lease and financing obligations | Community	2			2
Resident receivables due period				30 days
Allowance for doubtful accounts	$ 4.6			$ 4.6					$ 4.3
Adjustments to valuation allowance	$ 3.0	$ 1.5
Uncertain tax position maximum percentage				50.00%
Outstanding unvested restricted stock | shares	846,000	1,052,000		848,000	1,043,000
Repurchase of common stock | shares			144,315	0		349,800
Valuation Allowance, Operating Loss Carryforwards [Member]
Accounting Policies [Line Items]
Adjustments to valuation allowance				$ 16.1	$ 3.4
Deferred tax assets valuation allowance	$ 46.9	$ 25.7		46.9	$ 25.7
Deferred Compensation, Share-based Payments [Member] | Valuation Allowance, Operating Loss Carryforwards [Member]
Accounting Policies [Line Items]
Adjustments to valuation allowance				$ 5.3
Texas [Member]
Accounting Policies [Line Items]
Number of communities consolidated | Community	38	37		38	37
Ventas [Member]
Accounting Policies [Line Items]
Acquisition of senior housing community | Community							4	4
ASU 2016-09 [Member]
Accounting Policies [Line Items]
Cumulative tax effect adjustment to retained earnings				$ 0.2

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Summary of Significant Accounting Policies - Computation of Basic and Diluted Net Loss Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Accounting Policies [Abstract]
Net loss	$ (7,835)	$ (4,446)	$ (29,677)	$ (10,430)
Net loss allocated to unvested restricted shares	0	0	0	0
Undistributed net loss allocated to common shares	$ (7,835)	$ (4,446)	$ (29,677)	$ (10,430)
Weighted average shares outstanding - basic	29,478	28,926	29,384	28,838
Effects of dilutive securities:
Employee equity compensation plans	0	0	0	0
Weighted average shares outstanding - diluted	29,478	28,926	29,384	28,838
Basic net loss per share - common shareholders	$ (0.27)	$ (0.15)	$ (1.01)	$ (0.36)
Diluted net loss per share - common shareholders	$ (0.27)	$ (0.15)	$ (1.01)	$ (0.36)

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Acquisitions - Additional Information (Detail) $ in Millions						2 Months Ended	3 Months Ended	6 Months Ended
	Nov. 02, 2016 USD ($) Community Independent_Living_Unit Assisted_Living_Unit	Sep. 30, 2016 USD ($) Community Independent_Living_Unit Assisted_Living_Unit	Sep. 27, 2016 USD ($) Community Assisted_Living_Unit	Feb. 16, 2016 USD ($) Community Assisted_Living_Unit	Jan. 26, 2016 USD ($) Community Assisted_Living_Unit	Mar. 31, 2017 USD ($) Community	Mar. 31, 2017 USD ($) Community	Jun. 30, 2017 USD ($)	Jan. 31, 2017 Community
Business Acquisition [Line Items]
Additions to property and equipment								$ 126.0
Other Asset [Member]
Business Acquisition [Line Items]
Finite lived intangible asset acquired in place leases during period								$ 12.8
Springfield Massachusetts [Member]
Business Acquisition [Line Items]
Acquisition cost		$ 27.0
Number of acquisition closed | Community		1
Long term fixed interest rate		4.10%
Transaction cost related to acquisition		$ 0.3
Number of independent living units | Independent_Living_Unit		97
Number of assisted living units | Assisted_Living_Unit		90
Long term finance		$ 20.3
Maximum period for expansion of permanent financing		10 years
Kingwood Texas [Member]
Business Acquisition [Line Items]
Acquisition cost			$ 18.0
Number of acquisition closed | Community			1
Long term fixed interest rate			4.13%
Transaction cost related to acquisition			$ 0.2
Number of assisted living units | Assisted_Living_Unit			96
Long term finance			$ 13.0
Maximum period for expansion of permanent financing			15 years
Pensacola Florida [Member]
Business Acquisition [Line Items]
Acquisition cost				$ 48.0
Number of acquisition closed | Community				2
Long term fixed interest rate				4.38%
Transaction cost related to acquisition				$ 0.3
Number of assisted living units | Assisted_Living_Unit				179
Long term finance				$ 35.0
Maximum period for expansion of permanent financing				10 years
Colby Park Falls [Member]
Business Acquisition [Line Items]
Acquisition cost					$ 16.8
Number of acquisition closed | Community					3
Long term fixed interest rate					4.50%
Transaction cost related to acquisition					$ 0.1
Number of assisted living units | Assisted_Living_Unit					138
Long term finance					$ 11.3
Maximum period for expansion of permanent financing					10 years
Cincinnati, Ohio [Member]
Business Acquisition [Line Items]
Acquisition cost	$ 29.0
Number of acquisition closed | Community	1
Long term fixed interest rate	4.24%
Transaction cost related to acquisition	$ 0.2
Number of independent living units | Independent_Living_Unit	45
Number of assisted living units | Assisted_Living_Unit	77
Long term finance	$ 22.0
Maximum period for expansion of permanent financing	10 years
Ventas [Member]
Business Acquisition [Line Items]
Acquisition cost						$ 85.0	$ 85.0
Number of acquisition closed | Community						4	4		4
Payments for rent						$ 2.3
Number of remaining lease communities | Community						7
Lease termination obligation						$ 16.0	$ 16.0
Estimated fair value of the acquired entities						88.1	88.1
Business acquisition, aggregate consideration						101.0	101.0
Transaction cost related to acquisition						0.4	0.4
Loss on facility lease termination							12.9
Additions to property and equipment							88.1
Reclassification of property and equipment to other assets							1.3
Ventas [Member] | Bridge Loan [Member]
Business Acquisition [Line Items]
Acquisition cost						$ 65.0	$ 65.0
Initial variable interest rate						4.00%	4.00%
Bridge loan period						36 months
Ventas [Member] | Minimum [Member]
Business Acquisition [Line Items]
Long term fixed interest rate						7.25%	7.25%
Ventas [Member] | Maximum [Member]
Business Acquisition [Line Items]
Long term fixed interest rate						8.50%	8.50%

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Debt Transactions - Additional Information (Detail) - USD ($) $ in Millions	Jan. 31, 2017	Jun. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Mortgage debt		$ 964.1	$ 907.2
Deferred financing cost		13.7	12.8
Net book value of housing communities		1.0	935.6
Accumulated amortization		3.8	$ 3.0
Ventas [Member] | 4.00% Mortgage Loan [Member]
Debt Instrument [Line Items]
Mortgage debt	$ 65.0
Term period of mortgage loans	3 years
Fixed interest rate	4.00%
Deferred financing cost	$ 0.9
Deferred financing costs amortization period	3 years
HCP, Inc. [Member]
Debt Instrument [Line Items]
Letters of credit		2.8
Hartford Financial Services [Member]
Debt Instrument [Line Items]
Letters of credit		3.9
Welltower, Inc. [Member]
Debt Instrument [Line Items]
Letters of credit		$ 6.7

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Equity - Additional Information (Detail) - USD ($)	3 Months Ended	6 Months Ended	12 Months Ended
	Mar. 31, 2016	Jun. 30, 2017	Dec. 31, 2009	Dec. 31, 2016	Jan. 22, 2009
Equity [Abstract]
Preferred stock, shares outstanding		0		0
Authorization for purchase of company's common stock					$ 10,000,000
Purchase common stock shares	144,315	0	349,800
Average cost of per share		$ 17.29	$ 2.67
Purchase common stock value		$ 2,500,000	$ 900,000

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Stock-Based Compensation - Additional Information (Detail) - USD ($)		6 Months Ended
	May 08, 2007	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options vesting period, Minimum		1 year
Stock options vesting period, Maximum		5 years
Number of stock options outstanding		0
Period of recognition for compensation expense, Minimum		1 year
Period of recognition for compensation expense, Maximum		4 years
Unrecognized stock based compensation expense, net of estimated forfeitures		$ 10,900,000
2007 Omnibus Stock and Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Authorized shares of common stock	4,600,000
1997 Omnibus Stock and Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of additional shares granted under the plan	0
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense recognized		0
Restricted stock outstanding, intrinsic value		$ 12,900,000
Restricted common stock, Granted		379,337
Average market value of common stock awarded to certain employees and directors of company		$ 13.88
Restricted stock award vesting period, Minimum		1 year
Restricted stock award vesting period, Maximum		4 years
Restricted stock outstanding		$ 5,200,000
Performance and market based restricted stock, Granted		147,847
Restricted Stock [Member] | Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted common stock, Granted		26,787
Average market value of common stock awarded to certain employees and directors of company		$ 13.44
Restricted stock outstanding		$ 360,000
Restricted stock award vesting period		1 year
Performance Based Stock Awards [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected period of expenses		1 year
Performance Based Stock Awards [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected period of expenses		3 years
Nonperformance Based Stock Awards [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected period of expenses		1 year
Nonperformance Based Stock Awards [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected period of expenses		4 years

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Stock-Based Compensation - Restricted Stock Awards Activity and Related Information (Detail) - Restricted Stock [Member]	6 Months Ended
	Jun. 30, 2017 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Outstanding at Beginning of Period	829,766
Shares, Granted	379,337
Shares, Vested	(315,429)
Shares, Cancelled	(47,252)
Shares, Outstanding End of Period	846,422

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Fair Value of Financial Instruments - Carrying Amounts and Fair Values of Financial Instruments (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Restricted cash	$ 13,367	$ 13,297
Carrying Amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	16,218	34,026
Restricted cash	13,367	13,297
Notes payable, excluding deferred loan costs	966,516	910,234
Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	16,218	34,026
Restricted cash	13,367	13,297
Notes payable, excluding deferred loan costs	$ 925,290	$ 879,448