EX-99.1 2 exhibit991.htm EX-99.1 Exhibit

Exhibit 99.1

fve.jpg 
FOR IMMEDIATE RELEASE 
Contact: Brad Shepherd, Director, Investor Relations
 
(617) 796-8245
 
Five Star Quality Care, Inc. Announces Third Quarter 2016 Results

Newton, MA (November 3, 2016).  Five Star Quality Care, Inc. (Nasdaq: FVE) today announced its financial results for the quarter and nine months ended September 30, 2016.

Financial Results for the quarter ended September 30, 2016:
 
▪
Senior living revenue for the third quarter of 2016 decreased 0.8% to $277.4 million from $279.7 million for the same period in 2015.  The decline in senior living revenue is a result of decreases in occupancy, partially offset by an increase in average monthly rates to residents who pay privately for services.  Management fee revenue for the third quarter of 2016 increased 22.8% to $3.3 million from $2.7 million for the same period in 2015.  Growth in management fees was primarily due to the previously disclosed modifications to Five Star's management and pooling arrangements with Senior Housing Properties Trust, or SNH, which took effect on July 1, 2016, an increase in the number of managed communities compared to the 2015 period and an increase in average monthly rates to private pay residents at comparable managed communities, partially offset by a decrease in occupancy at comparable managed communities.

▪
Loss from continuing operations for the third quarter of 2016 was $5.8 million, or $0.12 per diluted share, compared to loss from continuing operations of $26.3 million, or $0.54 per diluted share, for the same period in 2015. Loss from continuing operations for the third quarter of 2016 included benefits from income taxes of $0.9 million, or $0.02 per diluted share, related to a reduction of previously accrued estimated state tax expense resulting primarily from the previously disclosed June 2016 sale and leaseback transaction with SNH. Loss from continuing operations for the third quarter of 2015 included a non-cash charge for goodwill impairment of $25.3 million, or $0.52 per diluted share, and compliance costs and professional fees of $0.9 million, or $0.02 per diluted share, resulting primarily from the previously disclosed Medicare compliance assessment at one of Five Star's skilled nursing facilities, or the Compliance Assessment.

▪
Net loss for the third quarter of 2016 was $5.9 million, or $0.12 per diluted share, compared to net loss of $27.5 million, or $0.57 per diluted share, for the same period in 2015.   

▪
Earnings from continuing operations before interest, taxes, depreciation and amortization, or EBITDA, for the third quarter of 2016 was $3.3 million compared to $(17.2) million for the same period in 2015. EBITDA, excluding certain items noted in the supplemental information provided below, or Adjusted EBITDA, was $4.3 million and $9.2 million for the third quarters of 2016 and 2015, respectively.  Adjusted EBITDA excluding rent, or Adjusted EBITDAR, was $54.9 million and $59.0 million for the third quarters of 2016 and 2015, respectively. A reconciliation of loss from continuing operations determined in accordance with U.S. generally accepted accounting principles, or GAAP, to EBITDA, Adjusted EBITDA and Adjusted EBITDAR for the quarters ended September 30, 2016 and 2015 appears later in this press release.
 



Operating Results for the quarter ended September 30, 2016 (continuing operations):
▪
Occupancy at owned and leased senior living communities for the third quarter of 2016 was 83.8%. For the quarter ended September 30, 2016, the calculation of occupancy includes only living units categorized as in service; occupancy calculations for periods prior to 2016 included certain living units categorized as out of service.

▪
The average monthly rate at owned and leased senior living communities for the third quarter of 2016 increased 0.9% to $4,608 from $4,567 for the same period in 2015.

▪
The percentage of revenue derived from residents’ private resources at owned and leased senior living communities for the third quarter of 2016 increased 60 basis points to 78.6% from 78.0% for the same period in 2015.
 
Year to Date Financial Results:
 
▪
Senior living revenue for the nine months ended September 30, 2016 increased 0.4% to $836.5 million from $832.8 million for the same period in 2015.  Growth in senior living revenue was the result of increases in average monthly rates to residents who pay privately for services, a $1.0 million reversal in revenue reserves recorded in 2016 as a result of the final settlement amount with the United States Department of Health and Human Services Office of the Inspector General for the Compliance Assessment being less than the previously estimated amount, and a revenue reserve recorded in 2015 of $2.4 million related to the Compliance Assessment, partially offset by a decrease in occupancy at comparable senior living communities.  Management fee revenue for the nine months ended September 30, 2016 increased by 12.8% to $9.0 million from $7.9 million for the same period in 2015. Growth in management fees was primarily due to the previously disclosed modifications to Five Star's management and pooling arrangements with SNH which took effect on July 1, 2016, an increase in the number of managed communities compared to the 2015 period and an increase in average monthly rates to private pay residents at comparable managed communities, partially offset by a decrease in occupancy at comparable managed communities.

▪
Loss from continuing operations for the nine months ended September 30, 2016 was $16.1 million, or $0.33 per diluted share, compared to loss from continuing operations of $34.4 million, or $0.71 per diluted share, for the same period in 2015. Loss from continuing operations for the nine months ended September 30, 2016 included a $1.5 million, or $0.03 per diluted share, reversal in revenue reserves and accrued liability for estimated penalties related to the Compliance Assessment and a provision for income taxes of $2.8 million, or $0.06 per diluted share, resulting primarily from state tax expense related to the June 2016 sale and leaseback transaction with SNH. Five Star did not recognize any federal tax expense for the 2016 period because its federal taxable income and expense were offset by its federal net operating loss carry forwards and tax credit carry forwards. Loss from continuing operations for the nine months ended September 30, 2015 included a non-cash charge for goodwill impairment of $25.3 million, or $0.52 per diluted share, a revenue reserve of $2.4 million, or $0.05 per diluted share, and penalties, compliance costs and professional fees of $5.3 million, or $0.11 per diluted share, resulting primarily from the Compliance Assessment, partially offset by a gain on early extinguishment of debt of $0.7 million, or $0.01 per diluted share.

▪
Net loss for the nine months ended September 30, 2016 was $16.2 million, or $0.33 per diluted share, compared to net loss of $36.7 million, or $0.76 per diluted share, for the same period in 2015.  

▪
EBITDA for the nine months ended September 30, 2016 was $18.8 million compared to $(6.6) million for the same period in 2015. Adjusted EBITDA was $19.3 million and $26.0 million for the nine months ended September 30, 2016 and 2015, respectively. Adjusted EBITDAR was $170.1 million and $175.0 million for the nine months ended September 30, 2016 and 2015, respectively. A reconciliation of loss from continuing operations determined in accordance with GAAP to EBITDA, Adjusted EBITDA and Adjusted EBITDAR for the nine months ended September 30, 2016 and 2015 appears later in this press release.
 
Acquisition and Disposition Activities:
 
In July 2016, Five Star began managing a senior living community SNH owns located in Alabama with 163 living units.

2


In September 2016, Five Star sold a community it owned with 32 living units that was reported as held for sale and included in discontinued operations in Five Star’s financial statements, for a sales price of $0.2 million, excluding closing costs. As of September 30, 2016, Five Star has no senior living communities reported as held for sale.

In September 2016, Five Star and SNH sold a vacant skilled nursing facility located in Wisconsin for approximately $0.2 million, and as a result of this sale, Five Star's annual rent payable to SNH decreased by approximately $25,000 in accordance with the terms of the applicable lease.

In September 2016, SNH entered into an agreement to acquire two senior living communities with a combined 126 living units located in Illinois for $18.6 million. If these acquisitions are completed, Five Star expects to lease these communities from SNH under one of Five Star's existing master leases with SNH.

In October 2016, Five Star entered into an agreement to acquire an assisted living community with 63 living units located in Illinois for $7.9 million. Five Star currently expects this acquisition to close by year end 2016 and to fund this acquisition with cash on hand.

In October 2016, Five Star agreed to manage four senior living communities SNH owns with approximately 350 living units. Five Star will manage these senior living communities pursuant to management agreements that will be added to an existing or new pooling agreement with terms consistent with the agreements that became effective from and after May 2015 as previously disclosed.

 
Conference Call:
 
On November 3, 2016, at 10:00 a.m. Eastern Time, Five Star will host a conference call to discuss its third quarter 2016 results.  Following management’s presentation, there will be a question and answer period. 
 
The conference call telephone number is (877) 329-4332. Participants calling from outside the United States and Canada should dial (412) 317-5436. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. Eastern Time on Thursday,  November 10, 2016. To hear the replay, dial (412) 317-0088. The replay pass code is 10093012. 
 
A live audio webcast of the conference call will also be available in a listen only mode on Five Star’s website at www.fivestarseniorliving.com.  Participants wanting to access the webcast should visit Five Star’s website about five minutes before the call.  The archived webcast will be available for replay on Five Star’s website for about one week after the call. The transcription, recording and retransmission in any way of Five Star’s third quarter 2016 conference call are strictly prohibited without the prior written consent of Five Star.    Five Star’s website is not incorporated as part of this press release.
 
About Five Star Quality Care, Inc.:
 
Five Star Quality Care, Inc. is a senior living and healthcare services company.  As of September 30, 2016,  Five Star operated 276 senior living communities with 31,349 living units located in 32 states, including 213 communities (22,947 living units) that it owned or leased and 63 communities (8,402 living units) that it managed.  These communities include independent living, assisted living, continuing care retirement communities and skilled nursing communities.  Five Star is headquartered in Newton, Massachusetts.

3

WARNING CONCERNING FORWARD LOOKING STATEMENTS
 
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER FIVE STAR USES WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, "WILL", “MAY” AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, FIVE STAR IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON FIVE STAR’S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY FIVE STAR’S FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:

•
SNH HAS ENTERED INTO AN AGREEMENT TO ACQUIRE TWO SENIOR LIVING COMMUNITIES IN ILLINOIS. IF THESE ACQUISITIONS ARE COMPLETED, FIVE STAR EXPECTS THAT IT WILL LEASE THESE COMMUNITIES FROM SNH. THIS TRANSACTION IS SUBJECT TO CONDITIONS. AS A RESULT, THESE ACQUISITIONS AND LEASING ARRANGEMENTS MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS MAY CHANGE,

•
FIVE STAR HAS ENTERED INTO AN AGREEMENT TO ACQUIRE A SENIOR LIVING COMMUNITY IN ILLINOIS. THIS TRANSACTION IS SUBJECT TO CONDITIONS. AS A RESULT, THIS TRANSACTION MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS MAY CHANGE, AND

•
FIVE STAR HAS AGREED TO MANAGE FOUR SENIOR LIVING COMMUNITIES SNH OWNS. FIVE STAR'S ASSUMPTION OF THE MANAGEMENT OF THESE COMMUNITIES IS SUBJECT TO CONDITIONS. AS A RESULT, FIVE STAR'S ASSUMPTION OF THE MANAGEMENT OF THESE COMMUNITIES MAY NOT OCCUR OR MAY BE DELAYED.

THE INFORMATION CONTAINED IN FIVE STAR’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER “RISK FACTORS” IN FIVE STAR’S PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE FIVE STAR’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN OR IMPLIED BY FIVE STAR’S FORWARD LOOKING STATEMENTS. FIVE STAR’S FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.

EXCEPT AS REQUIRED BY LAW, FIVE STAR DOES NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

4
Supplemental Information


FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2016
 
2015
 
2016
 
2015
Revenues:
 
 
 
 
 
 
 
 
Senior living revenue
 
$
277,410

 
$
279,685

 
$
836,523

 
$
832,793

Management fee revenue
 
3,336

 
2,717

 
8,955

 
7,939

Reimbursed costs incurred on behalf of managed communities
 
63,965

 
62,170

 
186,378

 
180,082

Total revenues
 
344,711

 
344,572

 
1,031,856

 
1,020,814

Operating expenses:
 
 

 
 

 
 

 
 

Senior living wages and benefits
 
137,190

 
135,133

 
408,886

 
404,737

Other senior living operating expenses
 
70,890

 
72,637

 
212,565

 
216,107

Costs incurred on behalf of managed communities
 
63,965

 
62,170

 
186,378

 
180,082

Rent expense
 
50,625

 
49,730

 
150,837

 
149,015

General and administrative expenses
 
18,542

 
16,587

 
54,218

 
52,750

Depreciation and amortization expense
 
9,398

 
8,419

 
28,847

 
24,637

Goodwill impairment
 
—

 
25,344

 
—

 
25,344

Long lived asset impairment
 
196

 
145

 
502

 
145

Total operating expenses
 
350,806

 
370,165

 
1,042,233

 
1,052,817

 
 
 
 
 
 
 
 
 
Operating loss
 
(6,095
)
 
(25,593
)
 
(10,377
)
 
(32,003
)
 
 
 
 
 
 
 
 
 
Interest, dividend and other income
 
237

 
238

 
766

 
701

Interest and other expense
 
(945
)
 
(1,106
)
 
(3,957
)
 
(3,597
)
Gain on early extinguishment of debt
 
—

 
—

 
—

 
692

Gain on sale of available for sale securities reclassified from accumulated other comprehensive income
 
12

 
—

 
247

 
38

 
 
 
 
 
 
 
 
 
Loss from continuing operations before income taxes and equity in earnings (losses) of an investee
 
(6,791
)
 
(26,461
)
 
(13,321
)
 
(34,169
)
Benefit from (provision for) income taxes
 
934

 
236

 
(2,841
)
 
(348
)
Equity in earnings (losses) of an investee
 
13

 
(25
)
 
107

 
70

Loss from continuing operations
 
(5,844
)
 
(26,250
)
 
(16,055
)
 
(34,447
)
Loss from discontinued operations
 
(53
)
 
(1,238
)
 
(131
)
 
(2,253
)
 
 
 
 
 
 
 
 
 
Net loss
 
$
(5,897
)
 
$
(27,488
)
 
$
(16,186
)
 
$
(36,700
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding—basic and diluted
 
48,846

 
48,427

 
48,817

 
48,397

 
 
 
 
 
 
 
 
 
Basic and diluted loss per share from:
 
 
 
 

 
 
 
 
Continuing operations
 
$
(0.12
)
 
$
(0.54
)
 
$
(0.33
)
 
$
(0.71
)
Discontinued operations
 
—

 
(0.03
)
 
—

 
(0.05
)
Net loss per share—basic and diluted
 
$
(0.12
)
 
$
(0.57
)
 
$
(0.33
)
 
$
(0.76
)

5
Supplemental Information


FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
 
September 30,
 
December 31,
 
 
2016
 
2015
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
43,174

 
$
14,672

Accounts receivable, net of allowance
 
38,040

 
37,829

Due from related persons
 
8,961

 
9,731

Investments in available for sale securities
 
25,801

 
26,417

Restricted cash
 
11,168

 
3,301

Prepaid expenses and other current assets
 
20,135

 
19,138

Assets of discontinued operations
 
567

 
981

Total current assets
 
147,846

 
112,069

 
 
 
 
 
Property and equipment, net
 
352,561

 
383,858

Restricted cash
 
1,787

 
2,821

Restricted investments in available for sale securities
 
18,511

 
23,166

Equity investment of an investee and other long term assets
 
9,971

 
9,856

Total assets
 
$
530,676

 
$
531,770

 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
Current liabilities:
 
 
 
 
Revolving credit facility
 
$
—

 
$
50,000

Other current liabilities
 
186,909

 
193,920

Total current liabilities
 
186,909

 
243,920

 
 
 
 
 
Mortgage notes payable
 
58,978

 
60,396

Deferred gain on sale and leaseback transaction with Senior Housing Properties Trust
 
74,347

 
—

Other long term liabilities
 
40,352

 
43,002

Shareholders’ equity
 
170,090

 
184,452

Total liabilities and shareholders’ equity
 
$
530,676

 
$
531,770


 
















6
Supplemental Information


FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 
Nine Months Ended September 30,
 
 
2016
 
2015
Cash flows from operating activities:
 
 
 
 
Net loss
 
$
(16,186
)
 
$
(36,700
)
Adjustments to reconcile net loss to cash (used in) provided by operating activities:
 
 
 
 
Depreciation and amortization expense
 
28,847

 
24,637

Gain on early extinguishment of debt
 
—

 
(742
)
Loss from discontinued operations
 
131

 
2,253

Gain on sale of available for sale securities reclassified from accumulated other comprehensive income
 
(247
)
 
(38
)
Loss on disposal of property and equipment
 
70

 
98

Goodwill impairment
 
—

 
25,344

Long lived asset impairment
 
502

 
145

Equity in earnings of an investee
 
(107
)
 
(70
)
Stock based compensation
 
749

 
948

Provision for losses on receivables
 
2,598

 
3,520

Amortization of deferred gain on sale and leaseback transaction with Senior Housing Properties Trust
 
(1,688
)
 
—

Other noncash (income) expense adjustments, net
 
(375
)
 
409

Changes in assets and liabilities:
 
 

 
 
Accounts receivable
 
(2,809
)
 
(2,689
)
Prepaid expenses and other assets
 
(2,314
)
 
(1,962
)
Accounts payable and accrued expenses
 
(22,297
)
 
330

Accrued compensation and benefits
 
8,641

 
9,917

Due to/from related persons, net
 
222

 
1,026

Other current and long term liabilities
 
(2,716
)
 
9,278

Cash (used in) provided by operating activities
 
(6,979
)
 
35,704

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Increase in restricted cash and investment accounts, net
 
(6,833
)
 
(417
)
Acquisition of property and equipment
 
(40,825
)
 
(40,867
)
Purchase of intangible assets
 
—

 
(191
)
Purchases of available for sale securities
 
(6,780
)
 
(10,717
)
Proceeds from sale of property and equipment to Senior Housing Properties Trust
 
15,180

 
16,425

Proceeds from sale and leaseback transaction with Senior Housing Properties Trust
 
112,350

 
—

Proceeds from sale of available for sale securities
 
13,508

 
6,469

Cash provided by (used in) investing activities
 
86,600

 
(29,298
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Proceeds from borrowings on revolving credit facility
 
25,000

 
20,000

Repayments of borrowings on revolving credit facility
 
(75,000
)
 
(20,000
)
Repayments of mortgage notes payable
 
(934
)
 
(5,732
)
Payment of deferred financing fees
 
(300
)
 
(300
)
Cash used in financing activities
 
(51,234
)
 
(6,032
)
 
 
 
 
 
Cash flows from discontinued operations:
 
 
 
 
Net cash provided by (used in) operating activities
 
130

 
(1,512
)
Net cash used in investing activities
 
(15
)
 
(24
)
Net cash flows provided by (used in) discontinued operations
 
115

 
(1,536
)
 
 
 
 
 
Change in cash and cash equivalents
 
28,502

 
(1,162
)
Cash and cash equivalents at beginning of period
 
14,672

 
20,988

Cash and cash equivalents at end of period
 
$
43,174

 
$
19,826

 
 
 
 
 
Supplemental cash flow information:
 
 
 
 
Cash paid for interest
 
$
3,920

 
$
3,078

Cash paid for income taxes, net
 
$
2,657

 
$
805


7
Supplemental Information


FIVE STAR QUALITY CARE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands)
(unaudited)
 
Non-GAAP financial measures are financial measures that are not determined in accordance with U.S. generally accepted accounting principles, or GAAP. Five Star considers these Non-GAAP financial measures to be meaningful supplemental disclosures because it believes that the presentation of these Non-GAAP financial measures may help investors to gain a better understanding of changes in Five Star’s operating results and its ability to pay rent or service debt, make capital expenditures and expand its business. These Non-GAAP financial measures also may help investors who wish to make comparisons between Five Star and other companies on both a GAAP and a non-GAAP basis. In addition to presenting EBITDA and Adjusted EBITDA, Five Star also presents the non-GAAP financial measure Adjusted EBITDAR. Five Star leases a majority of the senior living communities that it operates. Five Star believes that presenting investors with Adjusted EBITDAR amounts may help them to compare Five Star’s results with other companies that may own their properties and finance that ownership with debt financing or to consider how Five Star’s results might compare if Five Star owned its leased senior living communities and financed that ownership with debt. The interest expense related to debt financings would be added when calculating EBITDA; Five Star believes that presenting Adjusted EBITDAR may help investors better understand the form, extent and implications of Five Star’s form of leverage for the senior living communities it leases. The Non-GAAP financial measures presented are used by management to evaluate Five Star’s financial performance and for comparing Five Star’s performance over time and to the performance of its competitors.  This supplemental information should not be considered as an alternative to income (loss) from continuing operations or net income (loss), as an indicator of Five Star’s operating performance or as a measure of Five Star’s liquidity.  Non-GAAP financial measures as presented by Five Star may not be comparable to amounts calculated by other companies.  
 
Five Star believes that income from continuing operations is the most directly comparable financial measure determined according to GAAP to Five Star’s presentation of EBITDA, Adjusted EBITDA and Adjusted EBITDAR from continuing operations. The following table presents the reconciliation of these Non-GAAP financial measures to loss from continuing operations, the most directly comparable financial measure under GAAP reported in Five Star’s condensed consolidated financial statements, for the three and nine months ended September 30, 2016 and 2015.  
 
 
For the three months
ended September 30,
 
 
 
For the nine months
ended September 30,
 
 
 
2016
 
 
 
2015
 
 
 
2016
 
 
 
2015
 
Loss from continuing operations
 
$
(5,844
)
 
 
 
$
(26,250
)
 
 
 
$
(16,055
)
 
 
 
$
(34,447
)
 
Add: interest expense
 
945

 
 
 
1,106

 
 
 
3,957

 
 
 
3,597

 
Add: (benefit from) provision for income taxes
 
(934
)
 
 
 
(236
)
 
 
 
2,841

 
 
 
348

 
Add: depreciation and amortization expense
 
9,398

 
 
 
8,419

 
 
 
28,847

 
 
 
24,637

 
Less: interest and dividend income
 
(237
)
 
 
 
(238
)
 
 
 
(766
)
 
 
 
(701
)
 
EBITDA
 
3,328

 
 
 
(17,199
)
 
 
 
18,824

 
 
 
(6,566
)
 
Add (less):
 
 

 
 
 
 

 
 
 
 
 
 
 
 
 
Goodwill and other long lived asset impairments
 
196

 
 
 
25,489

 
 
 
502

 
 
 
25,489

 
Costs related to the Compliance Assessment
 
—

 
 
 
928

(1) 

 
(1,498
)
(2) 

 
7,489

(3) 
Financial accounting restatement and remediation costs
 
—

 
 
 
21

 
 
 
—

 
 
 
249

 
Transaction costs
 
730



 
—

 
 
 
1,480



 
41

 
Gain on early extinguishment of debt
 
—

 
 
 
—

 
 
 
—

 
 
 
(692
)
 
Adjusted EBITDA
 
4,254

 
 
 
9,239

 
 
 
19,308

 
 
 
26,010

 
Add: Rent expense
 
50,625

 
 
 
49,730

 
 
 
150,837

 
 
 
149,015

 
Adjusted EBITDAR
 
$
54,879

 
 
 
$
58,969

 
 
 
$
170,145

 
 
 
$
175,025

 
 

(1)
Includes compliance costs and professional fees related to the Compliance Assessment.
(2)
Includes a $1.5 million reversal in revenue reserves and accrued liability for estimated penalties related to the Compliance Assessment.
(3)
Includes a $2.4 million revenue reserve and $5.1 million of estimated penalties, compliance costs and professional fees related to the Compliance Assessment.   

 

8
Supplemental Information


FIVE STAR QUALITY CARE, INC.
SENIOR LIVING COMMUNITY FINANCIAL DATA(1) 
(in thousands)
(unaudited) 
 
 
Three months ended September 30, (2)
 
Nine months ended September 30, (2)
 
 
2016
 
2015
 
2016
 
2015
Senior living revenue:
 
 
 
 
 
 
 
 
Independent and assisted living community revenue (owned)(3)
 
$
23,632

 
$
29,618

 
$
70,518

 
$
88,673

Independent and assisted living community revenue (leased)(3)
 
108,364

 
101,948

 
326,413

 
302,917

Continuing care retirement community revenue (leased)
 
97,629

 
98,717

 
294,234

 
298,554

Skilled nursing facility revenue (leased)(4)
 
42,626

 
45,223

 
130,733

 
130,446

Other(5)
 
5,159

 
4,179

 
14,625

 
12,203

Total senior living revenue (owned and leased)
 
$
277,410

 
$
279,685

 
$
836,523

 
$
832,793

 
 
 
 
 
 
 
 
 
Senior living wages and benefits:
 
 
 
 
 
 
 
 
Independent and assisted living community wages and benefits (owned)(3)
 
$
10,053

 
$
12,377

 
$
29,656

 
$
36,691

Independent and assisted living community wages and benefits (leased)(3)
 
46,541

 
43,128

 
138,787

 
128,393

Continuing care retirement community wages and benefits (leased)
 
50,074

 
49,347

 
149,334

 
149,238

Skilled nursing facility wages and benefits (leased)
 
28,274

 
28,339

 
83,509

 
83,996

Other(5)
 
2,248

 
1,942

 
7,600

 
6,419

Total senior living wages and benefits (owned and leased)
 
$
137,190

 
$
135,133

 
$
408,886

 
$
404,737

 
 
 
 
 
 
 
 
 
Other senior living operating expenses:
 
 
 
 
 
 
 
 
Independent and assisted living community other operating expenses (owned)(3)
 
$
6,161

 
$
7,620

 
$
18,676

 
$
22,044

Independent and assisted living community other operating expenses (leased)(3)
 
26,530

 
25,635

 
79,905

 
75,327

Continuing care retirement community other operating expenses (leased)
 
25,405

 
26,047

 
75,939

 
77,262

Skilled nursing facility other operating expenses (leased)(6)
 
11,258

 
12,690

 
33,908

 
39,832

Other(5)
 
1,536

 
645

 
4,137

 
1,642

Total senior living operating expenses (owned and leased)
 
$
70,890

 
$
72,637

 
$
212,565

 
$
216,107

 

(1)
Excludes data for managed communities and discontinued operations.
(2)
The number of owned and leased communities between January 1, 2015 and September 30, 2016 increased by one due to the acquisition of two senior living communities in November 2015 and the sale in September 2016 of one community we leased from SNH that was not classified as held for sale; separate comparable senior living community financial data is not presented because the differences between that data and the data for all owned and leased communities are not material.
(3)
2016 data presents the seven communities that were sold to SNH as part of the June 2016 sale and leaseback transaction as leased; 2015 data presents those communities as owned.
(4)
Skilled nursing facility revenue for the nine months ended September 30, 2016 includes a $1.0 million reversal in revenue reserves related to the Compliance Assessment. Skilled nursing facility revenue for the nine months ended September 30, 2015 includes a $2.4 million revenue reserve related to the Compliance Assessment.
(5)
Other senior living revenue and expenses primarily relate to rehabilitation and other specialty service revenues and expenses provided at owned and leased senior living communities.
(6)
Skilled nursing facility other operating expenses for the nine months ended September 30, 2016 includes a $0.5 million reversal in accrued liability for estimated penalties related to the Compliance Assessment. Skilled nursing facility other operating expenses for the three and nine months ended September 30, 2015 includes $0.9 million and $4.5 million, respectively, of estimated penalties, compliance costs and professional fees related to the Compliance Assessment.








9
Supplemental Information


FIVE STAR QUALITY CARE, INC.
SENIOR LIVING OTHER OPERATING DATA(1) 
(unaudited) 
 
 
Three months ended 
 
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
 
2016
 
2016
 
2016
 
2015
 
2015
Independent and assisted living communities (owned):(2)
 
 
 
 
 
 
 
 
 
 
Number of communities (end of period)
 
26

 
26

 
33

 
33

 
31

Number of units (end of period)(3)
 
2,703

 
2,703

 
3,211

 
3,215

 
3,064

Occupancy(3)
 
83.5
%
 
83.6
%
 
85.5
%
 
85.9
%
 
86.3
%
Avg. monthly rate(4)
 
$
3,354

 
$
3,390

 
$
3,630

 
$
3,569

 
$
3,596

 
 
 
 
 
 
 
 
 
 
 
Independent and assisted living communities (leased):(2)
 
 
 
 
 
 
 
 
 
 
Number of communities (end of period)
 
126

 
126

 
119

 
119

 
119

Number of units (end of period)(3)
 
10,439

 
10,441

 
9,891

 
9,908

 
9,909

Occupancy(3)
 
85.7
%
 
86.6
%
 
87.5
%
 
88.2
%
 
87.8
%
Avg. monthly rate(4)
 
$
3,942

 
$
3,964

 
$
3,891

 
$
3,825

 
$
3,815

 
 
 
 
 
 
 
 
 
 
 
Continuing care retirement communities (leased):
 
 
 
 
 
 
 
 
 
 
Number of communities (end of period)
 
31

 
31

 
31

 
31

 
31

Number of units (end of period)(3)(5)
 
7,204

 
7,207

 
7,208

 
7,297

 
7,319

Occupancy(3)
 
82.3
%
 
82.3
%
 
83.2
%
 
82.9
%
 
82.8
%
Avg. monthly rate(4)
 
$
5,366

 
$
5,434

 
$
5,432

 
$
5,368

 
$
5,313

 
 
 
 
 
 
 
 
 
 
 
Skilled nursing facilities (leased):
 
 
 
 
 
 
 
 
 
 
Number of communities (end of period)
 
30

 
31

 
31

 
31

 
31

Number of units (end of period)(3)(6)
 
2,601

 
2,601

 
2,601

 
2,807

 
2,807

Occupancy(3)
 
80.2
%
 
81.3
%
 
81.2
%
 
78.5
%
 
79.3
%
Avg. monthly rate(4)
 
$
6,668

 
$
6,783

 
$
6,893

 
$
6,632

 
$
6,632

 
 
 
 
 
 
 
 
 
 
 
Total senior living communities (owned and leased):
 
 
 
 
 
 
 
 
 
 
Number of communities (end of period)
 
213

 
214

 
214

 
214

 
212

Number of units (end of period)(3)
 
22,947

 
22,952

 
22,911

 
23,227

 
23,099

Occupancy(3)
 
83.8
%
 
84.3
%
 
85.1
%
 
85.0
%
 
85.0
%
Avg. monthly rate(4)
 
$
4,608

 
$
4,657

 
$
4,654

 
$
4,577

 
$
4,567

 
 
 
 
 
 
 
 
 
 
 
Managed communities:
 
 
 
 
 
 
 
 
 
 
Number of communities (end of period)
 
63

 
62

 
60

 
60

 
60

Number of units (end of period)(3)(7)
 
8,402

 
8,239

 
8,140

 
8,190

 
8,211

Occupancy(3)
 
86.4
%
 
86.7
%
 
87.3
%
 
87.5
%
 
87.5
%
Avg. monthly rate(4)
 
$
4,207

 
$
4,270

 
$
4,270

 
$
4,174

 
$
4,151

 
 
 
 
 
 
 
 
 
 
 
Other ancillary services:
 
 
 
 
 
 
 
 
 
 
Rehabilitation and wellness inpatient clinics (end of period)
 
48

 
49

 
49

 
49

 
49

Rehabilitation and wellness outpatient clinics (end of period)
 
76

 
71

 
67

 
63

 
61

Home health communities served (end of period)
 
16

 
16

 
16

 
14

 
15

 
(1)
Excludes data for discontinued operations.
(2)
Second and third quarter 2016 data presents the seven communities that were sold to SNH as part of the June 2016 sale and leaseback transaction as leased; data for all other periods presents those communities as owned.
(3)
For 2016, the calculation of occupancy includes in service living units only; prior period occupancy calculations included certain living units categorized as out of service.
(4)
Average monthly rate is calculated by taking the average daily rate, which is defined as total operating revenues divided by occupied units during the period, and multiplying it by 30 days.
(5)
Includes 1,949 skilled nursing units in communities where assisted living and independent living services are the predominant services provided.
(6)
Includes 69 assisted living and independent living units in communities where skilled nursing services are the predominant services provided.
(7)
Includes 463 skilled nursing units in communities where assisted living and independent living services are the predominant services provided.


10
Supplemental Information


FIVE STAR QUALITY CARE, INC.
PERCENT BREAKDOWN OF SENIOR LIVING COMMUNITY REVENUE(1) 
(unaudited)
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2016
 
2015
 
2016
 
2015
Independent and assisted living communities (owned):(2)
 
 
 
 
 
 
 
 
Private and other sources
 
99.0
%
 
99.5
%
 
98.9
%
 
99.5
%
Medicaid
 
1.0
%
 
0.5
%
 
1.1
%
 
0.5
%
Total
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
Independent and assisted living communities (leased):(2)
 
 
 
 
 
 
 
 
Private and other sources
 
99.0
%
 
98.9
%
 
99.0
%
 
99.0
%
Medicaid
 
1.0
%
 
1.1
%
 
1.0
%
 
1.0
%
Total
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
Continuing care retirement communities (leased):
 
 
 
 
 
 
 
 
Private and other sources
 
74.2
%
 
74.1
%
 
74.0
%
 
73.0
%
Medicare
 
18.8
%
 
19.2
%
 
19.2
%
 
20.4
%
Medicaid
 
7.0
%
 
6.7
%
 
6.8
%
 
6.6
%
Total
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
Skilled nursing facilities (leased):
 
 
 
 
 
 
 
 
Private and other sources
 
26.0
%
 
25.9
%
 
25.8
%
 
25.8
%
Medicare
 
19.7
%
 
22.6
%
 
20.5
%
 
23.7
%
Medicaid
 
54.3
%
 
51.5
%
 
53.7
%
 
50.5
%
Total
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
Total senior living communities (owned and leased):
 
 
 
 
 
 
 
 
Private and other sources
 
78.6
%
 
78.0
%
 
78.4
%
 
77.6
%
Medicare
 
9.9
%
 
10.6
%
 
10.1
%
 
11.3
%
Medicaid
 
11.5
%
 
11.4
%
 
11.5
%
 
11.1
%
Total
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 

(1)
Excludes data for managed communities and discontinued operations.
(2)
2016 data presents the seven communities that were sold to SNH as part of the June 2016 sale and leaseback transaction as leased; 2015 data presents those communities as owned.


(end)

11