(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company | |||
Page | ||
September 30, 2020 | December 31, 2019 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Restricted cash and cash equivalents | ||||||||
Accounts receivable, net of allowance of $3,535 and $4,664, respectively | ||||||||
Due from related person | ||||||||
Debt and equity investments, of which $11,013 and $12,622 are restricted, respectively | ||||||||
Prepaid expenses and other current assets | ||||||||
Assets held for sale | ||||||||
Total current assets | ||||||||
Property and equipment, net | ||||||||
Equity investment of an investee, net | ||||||||
Restricted cash and cash equivalents | ||||||||
Restricted debt and equity investments | ||||||||
Operating lease right of use assets | ||||||||
Finance lease right of use assets | ||||||||
Other long-term assets | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | $ | ||||||
Accrued expenses and other current liabilities | ||||||||
Accrued compensation and benefits | ||||||||
Accrued self-insurance obligations | ||||||||
Operating lease liabilities | ||||||||
Finance lease liabilities | ||||||||
Due to related persons | ||||||||
Mortgage note payable | ||||||||
Security deposits and current portion of continuing care contracts | ||||||||
Liabilities held for sale | ||||||||
Total current liabilities | ||||||||
Long-term liabilities: | ||||||||
Accrued self-insurance obligations | ||||||||
Operating lease liabilities | ||||||||
Finance lease liabilities | ||||||||
Mortgage note payable | ||||||||
Other long-term liabilities | ||||||||
Total long-term liabilities | ||||||||
Commitments and contingencies | ||||||||
Shareholders’ equity: | ||||||||
Common stock, par value $0.01: 75,000,000 shares authorized, 31,573,289 and 5,154,892 shares issued and outstanding, respectively | ||||||||
Additional paid-in-capital | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Accumulated other comprehensive income | ||||||||
Total shareholders’ equity | ||||||||
Total liabilities and shareholders' equity | $ | $ | ||||||
Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2020 | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
REVENUES | ||||||||||||||||
Senior living | $ | $ | $ | $ | ||||||||||||
Management fees | ||||||||||||||||
Rehabilitation and wellness services | ||||||||||||||||
Total management and operating revenues | ||||||||||||||||
Reimbursed community-level costs incurred on behalf of managed communities | ||||||||||||||||
Other reimbursed expenses | ||||||||||||||||
Total revenues | ||||||||||||||||
Other operating income | ||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Senior living wages and benefits | ||||||||||||||||
Other senior living operating expenses | ||||||||||||||||
Rehabilitation and wellness services expenses | ||||||||||||||||
Community-level costs incurred on behalf of managed communities | ||||||||||||||||
General and administrative | ||||||||||||||||
Rent | ||||||||||||||||
Depreciation and amortization | ||||||||||||||||
Loss on sale of senior living communities | ||||||||||||||||
Long-lived asset impairment | ||||||||||||||||
Total operating expenses | ||||||||||||||||
Operating income (loss) | ( | ) | ( | ) | ||||||||||||
Interest, dividend and other income | ||||||||||||||||
Interest and other expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Unrealized gain (loss) on equity investments | ( | ) | ||||||||||||||
Realized gain (loss) on sale of debt and equity investments | ( | ) | ||||||||||||||
Loss on termination of leases | ( | ) | ||||||||||||||
Income (loss) before income taxes and equity in earnings of an investee | ( | ) | ( | ) | ( | ) | ||||||||||
(Provision) benefit for income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
Equity in earnings of an investee | ||||||||||||||||
Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
Weighted average shares outstanding—basic | ||||||||||||||||
Weighted average shares outstanding—diluted | ||||||||||||||||
Net income (loss) per share—basic | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
Net income (loss) per share—diluted | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
Other comprehensive income (loss): | |||||||||||||||
Unrealized (loss) gain on debt investments, net of tax of $0 and ($915), and $0 and $251, respectively | ( | ) | |||||||||||||
Equity in unrealized (loss) gain of an investee, net of tax of $0 and $0, and $0 and $0, respectively | ( | ) | |||||||||||||
Realized gain on debt investments reclassified and included in net income, net of tax of $0 and $0, and $0 and $0, respectively | ( | ) | ( | ) | ( | ) | |||||||||
Other comprehensive (loss) income | ( | ) | |||||||||||||
Comprehensive income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
Three and Nine Months Ended September 30, 2020 | ||||||||||||||||||||||
Number of Shares | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Shareholders' Equity | |||||||||||||||||
Balance at January 1, 2020 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||
Net loss | — | — | — | ( | ) | — | ( | ) | ||||||||||||||
Unrealized gain on debt investments, net of tax | — | — | — | — | ||||||||||||||||||
Realized gain on debt investments reclassified and included in net loss, net of tax | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Total comprehensive (loss) income | — | — | — | ( | ) | ( | ) | |||||||||||||||
Cumulative effect adjustment to beginning accumulated deficit and accumulated other comprehensive income in connection with a reclassification of equity investments previously classified as debt investments | — | — | — | ( | ) | — | ||||||||||||||||
Issuance of common shares | — | — | ||||||||||||||||||||
Grants under share award plan and share-based compensation | — | — | — | |||||||||||||||||||
Repurchases under share award plan | ( | ) | — | ( | ) | — | — | ( | ) | |||||||||||||
Balance at March 31, 2020 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||
Unrealized gain on debt investments, net of tax | — | — | — | — | ||||||||||||||||||
Realized gain on debt investments reclassified and included in net income, net of tax | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Total comprehensive income | — | — | — | |||||||||||||||||||
Grants under share award plan and share-based compensation | — | — | — | |||||||||||||||||||
Repurchases under share award plan | ( | ) | — | ( | ) | — | — | ( | ) | |||||||||||||
Balance at June 30, 2020 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||
Unrealized loss on debt investments, net of tax | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Realized gain on debt investments reclassified and included in net income, net of tax | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Total comprehensive income (loss) | — | — | — | ( | ) | |||||||||||||||||
Grants under share award plan and share-based compensation | — | — | — | — | ||||||||||||||||||
Repurchases under share award plan | ( | ) | — | ( | ) | — | — | ( | ) | |||||||||||||
Balance at September 30, 2020 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Three and Nine Months Ended September 30, 2019 | ||||||||||||||||||||||
Number of Shares | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Shareholders' Equity | |||||||||||||||||
Balance at January 1, 2019 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Comprehensive loss: | ||||||||||||||||||||||
Net loss | — | — | — | ( | ) | — | ( | ) | ||||||||||||||
Unrealized loss on debt investments, net of tax | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Realized loss on debt investments reclassified and included in net loss, net of tax | — | — | — | — | ||||||||||||||||||
Equity in unrealized gain of an investee, net of tax | — | — | — | — | ||||||||||||||||||
Total comprehensive loss | — | — | — | ( | ) | ( | ) | ( | ) | |||||||||||||
Cumulative effect adjustment to beginning accumulated deficit in connection with the adoption of ASC Topic 842 | — | — | — | — | ||||||||||||||||||
Grants under share award plan and share-based compensation | — | — | — | — | ||||||||||||||||||
Repurchases under share award plan | ( | ) | — | — | — | — | ||||||||||||||||
Balance at March 31, 2019 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Comprehensive income: | ||||||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||
Unrealized loss on debt investments, net of tax | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Realized gain on debt investments reclassified and included in net income, net of tax | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Equity in unrealized gain of an investee, net of tax | — | — | — | — | ||||||||||||||||||
Total comprehensive income | — | — | — | |||||||||||||||||||
Grants under share award plan and share-based compensation | — | — | — | |||||||||||||||||||
Repurchases under share award plan | ( | ) | — | — | — | |||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Comprehensive (loss) income: | ||||||||||||||||||||||
Net loss | — | — | — | ( | ) | — | ( | ) | ||||||||||||||
Unrealized gain on debt investments, net of tax | — | — | — | — | ||||||||||||||||||
Realized gain on debt investments reclassified and included in net loss, net of tax | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Equity in unrealized loss of an investee, net of tax | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Total comprehensive (loss) income | — | — | — | ( | ) | ( | ) | |||||||||||||||
Repurchase of fractional shares | ( | ) | — | — | — | — | ||||||||||||||||
Grants under share award plan and share-based compensation | — | — | — | — | ||||||||||||||||||
Repurchases under share award plan | ( | ) | — | ( | ) | — | — | ( | ) | |||||||||||||
Balance at September 30, 2019 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
CASH FLOW FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Adjustments to reconcile net loss to cash provided by operating activities: | ||||||||
Depreciation and amortization | ||||||||
Loss on sale of senior living communities | ||||||||
Unrealized loss (gain) on equity securities | ( | ) | ||||||
Realized gain on sale of debt and equity investments | ( | ) | ( | ) | ||||
Loss on termination of leases | ||||||||
Long-lived asset impairment | ||||||||
Equity in earnings of an investee | ( | ) | ||||||
Share-based compensation | ||||||||
Provision for losses on accounts receivables | ||||||||
Amortization of non-cash rent adjustments | ( | ) | ||||||
Other non-cash expense adjustments, net | ||||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | ( | ) | ||||||
Due from related person | ( | ) | ||||||
Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
Accounts payable | ( | ) | ( | ) | ||||
Accrued expenses and other current liabilities | ||||||||
Accrued compensation and benefits | ||||||||
Due to related persons | ( | ) | ||||||
Other current and long-term liabilities | ||||||||
Net cash provided by operating activities | ||||||||
CASH FLOW FROM INVESTING ACTIVITIES: | ||||||||
Acquisition of property and equipment | ( | ) | ( | ) | ||||
Purchases of debt and equity investments | ( | ) | ( | ) | ||||
Proceeds from sale of property and equipment | ||||||||
Proceeds from sale of communities | ( | ) | ||||||
Distributions in excess of earnings from Affiliates Insurance Company | ||||||||
Proceeds from sale of debt and equity investments | ||||||||
Net cash provided by investing activities | ||||||||
CASH FLOW FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from borrowings on revolving credit facility | ||||||||
Repayments of borrowings on revolving credit facility | ( | ) | ||||||
Costs related to issuance of common stock | ( | ) | ||||||
Repayments of mortgage notes payable | ( | ) | ( | ) | ||||
Payment of deferred financing fees | ( | ) | ||||||
Net cash used in financing activities | ( | ) | ( | ) | ||||
Change in cash and cash equivalents and restricted cash and cash equivalents | ||||||||
Restricted cash included in held for sale assets | ( | ) | ||||||
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period | ||||||||
Cash and cash equivalents and restricted cash and cash equivalents at end of period | $ | $ | ||||||
Reconciliation of cash and cash equivalents and restricted cash and cash equivalents: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Current restricted cash and cash equivalents | ||||||||
Other restricted cash and cash equivalents | ||||||||
Cash and cash equivalents and restricted cash and cash equivalents at end of period | $ | $ | ||||||
Supplemental cash flow information: | ||||||||
Interest paid | $ | $ | ||||||
Income taxes received, net | $ | $ | ||||||
Non-cash investing and financing activities: | ||||||||
Liabilities assumed related to issuance of our common stock | $ | $ | ||||||
Right of use assets obtained in exchange for finance lease liabilities | $ | $ | ||||||
• | our |
• | we issued |
• | as consideration for the Share Issuances, DHC provided to us $ |
Three Months Ended September 30, 2020 | |||||||||||
Senior Living | Rehabilitation and Wellness Services | Total | |||||||||
Private payer | $ | $ | $ | ||||||||
Medicare and Medicaid programs | |||||||||||
Other third-party payer programs | |||||||||||
Management fees | |||||||||||
Reimbursed community-level costs incurred on behalf of managed communities | |||||||||||
Other reimbursed expenses | |||||||||||
Total revenues | $ | $ | $ | ||||||||
Three Months Ended September 30, 2019 | |||||||||||
Senior Living | Rehabilitation and Wellness Services | Total | |||||||||
Private payer | $ | $ | $ | ||||||||
Medicare and Medicaid programs | |||||||||||
Other third-party payer programs | |||||||||||
Management fees | |||||||||||
Reimbursed community-level costs incurred on behalf of managed communities | |||||||||||
Total revenues | $ | $ | $ | ||||||||
Nine Months Ended September 30, 2020 | |||||||||||
Senior Living | Rehabilitation and Wellness Services | Total | |||||||||
Private payer | $ | $ | $ | ||||||||
Medicare and Medicaid programs | |||||||||||
Other third-party payer programs | |||||||||||
Management fees | |||||||||||
Reimbursed community-level costs incurred on behalf of managed communities | |||||||||||
Other reimbursed expenses | |||||||||||
Total revenues | $ | $ | $ | ||||||||
Nine Months Ended September 30, 2019 | |||||||||||
Senior Living | Rehabilitation and Wellness Services | Total | |||||||||
Private payer | $ | $ | $ | ||||||||
Medicare and Medicaid programs | |||||||||||
Other third-party payer programs | |||||||||||
Management fees | |||||||||||
Reimbursed community-level costs incurred on behalf of managed communities | |||||||||||
Total revenues | $ | $ | $ | ||||||||
Three Months Ended September 30, 2020 | |||||||||||||||
Senior Living | Rehabilitation and Wellness Services | Corporate and Other | Total | ||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Operating income (loss) | ( | ) | |||||||||||||
Allocated corporate and other costs | ( | ) | ( | ) | |||||||||||
Other (loss) income, net | ( | ) | |||||||||||||
Income before income taxes and equity in earnings of an investee | |||||||||||||||
Provision for income taxes | ( | ) | ( | ) | |||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Three Months Ended September 30, 2019 | |||||||||||||||
Senior Living | Rehabilitation and Wellness Services | Corporate and Other | Total | ||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Operating income (loss) | ( | ) | ( | ) | |||||||||||
Allocated corporate and other costs | ( | ) | ( | ) | |||||||||||
Other income, net | |||||||||||||||
(Loss) income before income taxes and equity in earnings of an investee | ( | ) | ( | ) | ( | ) | |||||||||
Benefit for income taxes | |||||||||||||||
Equity in earnings of an investee | |||||||||||||||
Net (loss) income | $ | ( | ) | $ | $ | $ | ( | ) | |||||||
Nine Months Ended September 30, 2020 | |||||||||||||||
Senior Living | Rehabilitation and Wellness Services | Corporate and Other | Total | ||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Other operating income | |||||||||||||||
Operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Operating income (loss) | ( | ) | |||||||||||||
Allocated corporate and other costs | ( | ) | ( | ) | |||||||||||
Other loss, net | ( | ) | ( | ) | ( | ) | |||||||||
Income (loss) before income taxes and equity in earnings of an investee | ( | ) | ( | ) | |||||||||||
Provision for income taxes | ( | ) | ( | ) | |||||||||||
Net income (loss) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||
Nine Months Ended September 30, 2019 | |||||||||||||||
Senior Living | Rehabilitation and Wellness Services | Corporate and Other | Total | ||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Operating income (loss) | ( | ) | ( | ) | |||||||||||
Allocated corporate and other costs | ( | ) | ( | ) | |||||||||||
Other income (loss), net | ( | ) | ( | ) | |||||||||||
(Loss) income before income taxes and equity in earnings of an investee | ( | ) | ( | ) | ( | ) | |||||||||
Provision for income taxes | ( | ) | ( | ) | |||||||||||
Equity in earnings of an investee | |||||||||||||||
Net (loss) income | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||
September 30, 2020 | December 31, 2019 | |||||||
Land | $ | $ | ||||||
Buildings and improvements | ||||||||
Furniture, fixtures and equipment | ||||||||
Property and equipment, at cost | ||||||||
Less: accumulated depreciation | ( | ) | ( | ) | ||||
Property and equipment, net | $ | $ | ||||||
Nine Months Ended September 30, 2020 | ||||||||||||
Equity Investment of an Investee | Investments | Accumulated Other Comprehensive Income | ||||||||||
Balance at January 1, 2020 | $ | ( | ) | $ | $ | |||||||
Cumulative effect adjustment to beginning accumulated deficit and accumulated other comprehensive income in connection with a reclassification of equity investments previously classified as debt investments | ( | ) | ( | ) | ||||||||
Unrealized gain on debt investments, net of tax | ||||||||||||
Equity in unrealized gain of an investee, net of tax | ||||||||||||
Realized gain on debt investments reclassified and included in net income, net of tax | ( | ) | ( | ) | ||||||||
Balance at September 30, 2020 | $ | ( | ) | $ | $ | |||||||
Nine Months Ended September 30, 2019 | ||||||||||||
Equity Investment of an Investee | Investments | Accumulated Other Comprehensive Income | ||||||||||
Balance at January 1, 2019 | $ | ( | ) | $ | $ | |||||||
Unrealized gain on debt investments, net of tax | ||||||||||||
Equity in unrealized gain of an investee, net of tax | ||||||||||||
Balance at September 30, 2019 | $ | ( | ) | $ | $ | |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||
Weighted average shares outstanding—basic | |||||||||||
Effect of dilutive securities: unvested share awards | |||||||||||
Weighted average shares outstanding—diluted (1) | |||||||||||
(1) | For the three months ended September 30, 2019, |
As of September 30, 2020 | ||||||||||||||||
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||
Description | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Cash equivalents (1) | $ | $ | $ | $ | ||||||||||||
Investments: | ||||||||||||||||
Equity investments (2) | ||||||||||||||||
High yield fund (3) | ||||||||||||||||
International bond fund (4) | ||||||||||||||||
Financial services industry | ||||||||||||||||
Healthcare | ||||||||||||||||
Technology | ||||||||||||||||
Other (5) | ||||||||||||||||
Total equity investments | ||||||||||||||||
Debt investments (6) | ||||||||||||||||
Industrial bonds | ||||||||||||||||
Technology bonds | ||||||||||||||||
Government bonds | ||||||||||||||||
Energy bonds | ||||||||||||||||
Financial bonds | ||||||||||||||||
Other | ||||||||||||||||
Total debt investments | ||||||||||||||||
Total investments | ||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||
As of December 31, 2019 | ||||||||||||||||
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||
Description | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Cash equivalents (1) | $ | $ | $ | $ | ||||||||||||
Investments: | ||||||||||||||||
Equity investments (2) | ||||||||||||||||
Financial services industry | ||||||||||||||||
Healthcare | ||||||||||||||||
Technology | ||||||||||||||||
Other | ||||||||||||||||
Total equity investments | ||||||||||||||||
Debt investments (6) | ||||||||||||||||
High yield fund (3) | ||||||||||||||||
International bond fund (4) | ||||||||||||||||
Industrial bonds | ||||||||||||||||
Technology bonds | ||||||||||||||||
Government bonds | ||||||||||||||||
Energy bonds | ||||||||||||||||
Financial bonds (5) | ||||||||||||||||
Other | ||||||||||||||||
Total debt investments | ||||||||||||||||
Total investments | ||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||
(1) | Cash equivalents consist of short-term, highly liquid investments and money market funds held primarily for obligations arising from our self-insurance programs. Cash equivalents are reported in our condensed consolidated balance sheets as cash and cash equivalents and current and long-term restricted cash and cash equivalents. Cash equivalents include $ |
(2) | The fair value of our equity investments is readily determinable. During the nine months ended September 30, 2020 and 2019, we received gross proceeds of $ |
(3) | The investment strategy of this fund is to invest principally in fixed income securities. The fund invests in such securities or investment vehicles it considers appropriate to achieve the fund’s investment objective, which is to provide an above average rate of total return while attempting to limit investment risk by investing in a diversified portfolio of primarily fixed income securities issued by companies with below investment grade ratings. There are no unfunded commitments and the investment can be redeemed weekly. As of January 1, 2020, we reclassified this investment from a debt investment to an equity investment to reflect the nature of the investment rather than the nature of the securities held by the investment. |
(4) | The investment strategy of this fund is to invest principally in fixed income securities issued by non-U.S. issuers. The fund invests in such securities or investment vehicles it considers appropriate to achieve the fund’s investment objective, which is to provide an above average rate of total return while attempting to limit investment risk by investing in a diversified portfolio of U.S. dollar investment-grade fixed income securities. There are no unfunded commitments and the investment can be redeemed weekly. As of January 1, 2020, we reclassified this investment from a debt investment to an equity investment to reflect the nature of the investment rather than the nature of the securities held by the investment. |
(5) | As of January 1, 2020, we reclassified an investment with a fair value of $ |
(6) | As of September 30, 2020, our debt investments, which are classified as available for sale, had a fair value of $ |
Amortized Cost | Fair Value | |||||||
Due in one year or less | $ | $ | ||||||
Due after one year through five years | ||||||||
Due after five years through ten years | ||||||||
Total | $ | $ | ||||||
Balance as of September 30, 2020 | Contractual Stated Interest Rate | Effective Interest Rate | Maturity Date | Monthly Payment | Lender Type | |||||||||||||||||
$ | (1) | % | % | September 2032 | $ | Federal Home Loan Mortgage Corporation | ||||||||||||||||
(1) | Contractual principal payments excluding unamortized discount and debt issuance costs of $ |
• | our |
• | we completed the Share Issuances pursuant to which we issued |
• | as consideration for the Share Issuances, DHC provided to us $ |
• | restricted access to our senior living communities to essential visitors and team members, and only reopened communities when it was determined safe to do so in accordance with applicable federal, state and local regulations and guidelines, and our internal criteria; |
• | re-opened our rehabilitation clinics for in-person services when it was determined safe to do so and in accordance with federal, state and local regulations; |
• | re-opened our corporate office when it was safe to do so at a reduced capacity in accordance with federal, state and local regulations and guidelines; |
• | enhanced infectious disease prevention and control policies, procedures and protocols; |
• | provided additional and enhanced training to team members at all levels of the organization; |
• | worked with vendors to provide adequate supplies and PPE to our senior living communities and rehabilitation clinics; and |
• | effectively transitioned to virtual sales and marketing activities and thoughtfully proceeded with resident move-ins, when appropriate. |
• | provided meals to team members; |
• | provided COVID-19 emergency leave to team members, including paid leave to team members if they were exposed to or tested positive for COVID-19 and offered flexible work schedules; |
• | offered COVID-19 testing to team members; |
• | recognized and rewarded team members with bonuses in addition to our total rewards package; |
• | provided corporate team members with appropriate information technology, including laptop computers, smart phones, computer applications, information technology security applications and technical support, to work remotely during mandatory work from home orders directed by local governments; |
• | promoted access to mental health services and other benefits to support residents' and team members' mental and physical well-being; |
• | hosted virtual all-hands meetings to communicate our policies, procedures and guidelines related to COVID-19 response and re-opening efforts and to ensure team members are supported with assistance and guidance; |
• | implemented new virtual group activities for residents that allow for engagement while maintaining social distancing; |
• | expanded effective communication channels to residents, their families and team members; |
• | provided devices and connectivity options for residents' interactions with family members, virtual programming opportunities and distance learning; and |
• | focused on learning and development opportunities. |
• | our five then existing master leases with DHC as well as our then existing management and pooling agreements with DHC were terminated and replaced with the New Management Agreements; |
• | we effected the Share Issuances pursuant to which we issued 10,268,158 of our common shares to DHC and an aggregate of 16,118,849 of our common shares to DHC’s shareholders of record as of December 13, 2019; and |
• | as consideration for the Share Issuances, DHC provided to us $75.0 million by assuming certain of our working capital liabilities and through cash payments. |
• | HHS has announced a number of additional distributions from the Provider Relief Fund under the CARES Act. These have included, among other things, distributions to eligible providers serving Medicaid and CHIP beneficiaries through the Medicaid and CHIP Targeted Distributions, state licensed or certified private-pay assisted living providers through Phase 2 General Distributions, as well as distributions to nursing homes and long-term care facilities for increased testing, staffing, personal protective equipment and establishment of COVID-19 isolation facilities. The distributions made by HHS were and continue to be subject to various eligibility criteria. During the three months ended September 30, 2020, we did not receive any Phase 2 General Distribution funding for our private-pay assisted living communities, but on October 14, 2020, we received $1.6 million in Medicaid and CHIP Targeted Distribution funds for certain assisted living units within our owned and leased communities. Additionally, we have submitted applications to receive Phase 3 General Distribution funds that were announced by HHS on October 1, 2020. |
• | On August 25, 2020, the Centers for Medicare & Medicaid Services, or CMS published an interim final rule that set forth new COVID-19 testing requirements for long-term care facility residents and staff based on certain parameters. CMS offered guidance on testing residents and staff in cases where a symptomatic individual is identified, where there is an outbreak and where community COVID-19 activity dictates routine testing, as well as guidance on documentation to demonstrate compliance with testing requirements. The interim rule also enhances CMS’s ability to enforce previously issued long-term care facility COVID-19 reporting requirements by imposing civil monetary penalties for failure to report required data to the Centers for Disease Control and Prevention, or CDC. |
Three Months Ended September 30, | Increase/(Decrease) | ||||||||||||||
2020 | 2019 | Amount | Percent | ||||||||||||
REVENUES | |||||||||||||||
Senior living | $ | 18,525 | $ | 257,600 | $ | (239,075 | ) | (92.8 | )% | ||||||
Management fees | 15,302 | 4,053 | 11,249 | 277.5 | % | ||||||||||
Rehabilitation and wellness services | 21,124 | 12,447 | 8,677 | 69.7 | % | ||||||||||
Total management and operating revenues | 54,951 | 274,100 | (219,149 | ) | (80.0 | )% | |||||||||
Reimbursed community-level costs incurred on behalf of managed communities | 233,783 | 80,909 | 152,874 | 188.9 | % | ||||||||||
Other reimbursed expenses | 6,589 | — | 6,589 | n/m | |||||||||||
Total revenues | 295,323 | 355,009 | (59,686 | ) | (16.8 | )% | |||||||||
OPERATING EXPENSES | |||||||||||||||
Senior living wages and benefits | 11,128 | 137,916 | (126,788 | ) | (91.9 | )% | |||||||||
Other senior living operating expenses | 6,717 | 76,929 | (70,212 | ) | (91.3 | )% | |||||||||
Rehabilitation and wellness services expenses | 16,124 | 10,412 | 5,712 | 54.9 | % | ||||||||||
Community-level costs incurred on behalf of managed communities | 233,783 | 80,909 | 152,874 | 188.9 | % | ||||||||||
General and administrative | 19,916 | 20,094 | (178 | ) | (0.9 | )% | |||||||||
Rent | 1,282 | 33,169 | (31,887 | ) | (96.1 | )% | |||||||||
Depreciation and amortization | 2,680 | 2,818 | (138 | ) | (4.9 | )% | |||||||||
Loss on sale of senior living communities | — | 749 | (749 | ) | (100.0 | )% | |||||||||
Long-lived asset impairment | — | 18 | (18 | ) | (100.0 | )% | |||||||||
Total operating expenses | 291,630 | 363,014 | (71,384 | ) | (19.7 | )% | |||||||||
Operating income (loss) | 3,693 | (8,005 | ) | 11,698 | 146.1 | % | |||||||||
Interest, dividend and other income | 104 | 414 | (310 | ) | (74.9 | )% | |||||||||
Interest and other expense | (379 | ) | (384 | ) | 5 | (1.3 | )% | ||||||||
Unrealized gain on equity investments | 435 | 148 | 287 | 193.9 | % | ||||||||||
Realized gain (loss) on sale of debt and equity investments | 327 | (9 | ) | 336 | n/m | ||||||||||
Income (loss) before income taxes and equity in earnings of an investee | 4,180 | (7,836 | ) | 12,016 | 153.3 | % | |||||||||
(Provision) benefit for income taxes | (465 | ) | 687 | (1,152 | ) | (167.7 | )% | ||||||||
Equity in earnings of an investee | — | 83 | (83 | ) | (100.0 | )% | |||||||||
Net income (loss) | $ | 3,715 | $ | (7,066 | ) | $ | 10,781 | 152.6 | % | ||||||
Owned and leased communities: | |||||||||||||||
Number of communities (end of period) | 24 | 190 | (166 | ) | (87.4 | )% | |||||||||
Number of living units (end of period) (1) | 2,312 | 20,948 | (18,636 | ) | (89.0 | )% | |||||||||
Occupancy % | 74.7 | % | 82.9 | % | (8.2 | )% | n/m | ||||||||
RevPAR (2) | $ | 2,665 | $ | 3,943 | $ | (1,278 | ) | (32.4 | )% | ||||||
Three Months Ended September 30, | Increase/(Decrease) | ||||||||||||||
2020 | 2019 | Amount | Percent | ||||||||||||
Managed communities: | |||||||||||||||
Number of communities (end of period) | 239 | 77 | 162 | 210.4 | % | ||||||||||
Number of living units (end of period) (1) | 28,232 | 10,168 | 18,064 | 177.7 | % | ||||||||||
Occupancy % | 75.2 | % | 84.7 | % | (9.5 | )% | n/m | ||||||||
RevPAR (2) | $ | 3,468 | $ | 3,559 | $ | (91 | ) | (2.6 | )% | ||||||
Rehabilitation and wellness services: | |||||||||||||||
Number of inpatient clinics | 40 | 41 | (1 | ) | (2.4 | )% | |||||||||
Number of outpatient clinics | 209 | 173 | 36 | 20.8 | % | ||||||||||
Total clinics | 249 | 214 | 35 | 16.4 | % | ||||||||||
Three Months Ended September 30, | Increase/(Decrease) | ||||||||||||||
2020 | 2019 | Amount | Percent | ||||||||||||
REVENUES | |||||||||||||||
Senior living | $ | 18,489 | $ | 20,499 | $ | (2,010 | ) | (9.8 | )% | ||||||
Management fees | 4,877 | 3,881 | 996 | 25.7 | % | ||||||||||
Rehabilitation and wellness services | 17,563 | 11,921 | 5,642 | 47.3 | % | ||||||||||
Reimbursed community-level costs incurred on behalf of managed communities | 71,505 | 73,680 | (2,175 | ) | (3.0 | )% | |||||||||
OPERATING EXPENSES | |||||||||||||||
Senior living wages and benefits | 10,999 | 10,138 | 861 | 8.5 | % | ||||||||||
Other senior living operating expenses | 6,699 | 6,403 | 296 | 4.6 | % | ||||||||||
Rehabilitation and wellness services expenses | 13,507 | 9,696 | 3,811 | 39.3 | % | ||||||||||
Rent | 1,099 | 1,017 | 82 | 8.1 | % | ||||||||||
Owned and leased communities: | |||||||||||||||
Number of communities (end of period) | 24 | 24 | — | — | % | ||||||||||
Number of living units (end of period) (1) | 2,312 | 2,312 | — | — | % | ||||||||||
Occupancy % | 74.7 | % | 81.3 | % | (6.6 | )% | n/m | ||||||||
RevPAR (2) | $ | 2,665 | $ | 2,954 | (289 | ) | (9.8 | )% | |||||||
Managed communities: | |||||||||||||||
Number of communities (end of period) | 75 | 75 | — | — | % | ||||||||||
Number of living units (end of period) (1) | 9,689 | 9,700 | (11 | ) | (0.1 | )% | |||||||||
Occupancy % | 76.7 | % | 85.5 | % | (8.8 | )% | n/m | ||||||||
RevPAR (2) | $ | 3,221 | $ | 3,561 | (340 | ) | (9.5 | )% | |||||||
Rehabilitation and wellness services: | |||||||||||||||
Number of inpatient clinics | 40 | 40 | — | — | % | ||||||||||
Number of outpatient clinics | 145 | 145 | — | — | % | ||||||||||
Total clinics | 185 | 185 | — | — | % | ||||||||||
Nine Months Ended September 30, | Increase/(Decrease) | ||||||||||||||
2020 | 2019 | Amount | Percent | ||||||||||||
REVENUES | |||||||||||||||
Senior living | $ | 59,112 | $ | 786,771 | $ | (727,659 | ) | (92.5 | )% | ||||||
Management fees | 48,058 | 12,060 | 35,998 | 298.5 | % | ||||||||||
Rehabilitation and wellness services | 61,776 | 34,707 | 27,069 | 78.0 | % | ||||||||||
Total management and operating revenues | 168,946 | 833,538 | (664,592 | ) | (79.7 | )% | |||||||||
Reimbursed community-level costs incurred on behalf of managed communities | 689,903 | 232,733 | 457,170 | 196.4 | % | ||||||||||
Other reimbursed expenses | 19,003 | — | 19,003 | n/m | |||||||||||
Total revenues | 877,852 | 1,066,271 | (188,419 | ) | (17.7 | )% | |||||||||
Other operating income | 1,499 | — | 1,499 | n/m | |||||||||||
OPERATING EXPENSES | |||||||||||||||
Senior living wages and benefits | 30,633 | 411,553 | (380,920 | ) | (92.6 | )% | |||||||||
Other senior living operating expenses | 18,290 | 223,896 | (205,606 | ) | (91.8 | )% | |||||||||
Rehabilitation and wellness services expenses | 48,595 | 28,031 | 20,564 | 73.4 | % | ||||||||||
Community-level costs incurred on behalf of managed communities | 689,903 | 232,733 | 457,170 | 196.4 | % | ||||||||||
General and administrative | 66,348 | 67,144 | (796 | ) | (1.2 | )% | |||||||||
Rent | 3,837 | 120,973 | (117,136 | ) | (96.8 | )% | |||||||||
Depreciation and amortization | 8,084 | 13,924 | (5,840 | ) | (41.9 | )% | |||||||||
Loss on sale of senior living communities | — | 850 | (850 | ) | (100.0 | )% | |||||||||
Long-lived asset impairment | — | 3,278 | (3,278 | ) | (100.0 | )% | |||||||||
Total operating expenses | 865,690 | 1,102,382 | (236,692 | ) | (21.5 | )% | |||||||||
Operating income (loss) | 13,661 | (36,111 | ) | 49,772 | 137.8 | % | |||||||||
Interest, dividend and other income | 625 | 985 | (360 | ) | (36.5 | )% | |||||||||
Interest and other expense | (1,170 | ) | (2,196 | ) | 1,026 | (46.7 | )% | ||||||||
Unrealized (loss) gain on equity investments | (160 | ) | 476 | (636 | ) | (133.6 | )% | ||||||||
Realized gain on sale of debt and equity investments | 422 | 227 | 195 | 85.9 | % | ||||||||||
Loss on termination of leases | (22,899 | ) | — | (22,899 | ) | n/m | |||||||||
Loss before income taxes and equity in earnings of an investee | (9,521 | ) | (36,619 | ) | 27,098 | (74.0 | )% | ||||||||
Provision for income taxes | (971 | ) | (98 | ) | (873 | ) | 890.8 | % | |||||||
Equity in earnings of an investee | — | 617 | (617 | ) | (100.0 | )% | |||||||||
Net loss | $ | (10,492 | ) | $ | (36,100 | ) | $ | 25,608 | (70.9 | )% | |||||
Owned and leased communities: | |||||||||||||||
Number of communities (end of period) | 24 | 190 | (166 | ) | (87.4 | )% | |||||||||
Number of living units (end of period) (1) | 2,312 | 20,948 | (18,636 | ) | (89.0 | )% | |||||||||
Occupancy % | 78.1 | % | 83.0 | % | (4.9 | )% | n/m | ||||||||
RevPAR (2) | $ | 2,803 | $ | 3,975 | $ | (1,172 | ) | (29.5 | )% | ||||||
Managed communities: | |||||||||||||||
Number of communities (end of period) | 239 | 77 | 162 | 210.4 | % | ||||||||||
Number of living units (end of period) (1) | 28,232 | 10,168 | 18,064 | 177.7 | % | ||||||||||
Occupancy % | 78.9 | % | 85.4 | % | (6.5 | )% | n/m | ||||||||
RevPAR (2) | $ | 3,645 | $ | 3,614 | $ | 31 | 0.9 | % | |||||||
Rehabilitation and wellness services: | |||||||||||||||
Number of inpatient clinics | 40 | 41 | (1 | ) | (2.4 | )% | |||||||||
Number of outpatient clinics | 209 | 173 | 36 | 20.8 | % | ||||||||||
Total clinics | 249 | 214 | 35 | 16.4 | % | ||||||||||
Nine Months Ended September 30, | Increase/(Decrease) | ||||||||||||||
2020 | 2019 | Amount | Percent | ||||||||||||
REVENUES | |||||||||||||||
Senior living | $ | 58,336 | $ | 61,744 | $ | (3,408 | ) | (5.5 | )% | ||||||
Management fees | 14,941 | 11,273 | 3,668 | 32.5 | % | ||||||||||
Rehabilitation and wellness services | 47,671 | 31,279 | 16,392 | 52.4 | % | ||||||||||
Reimbursed community-level costs incurred on behalf of managed communities | 206,019 | 210,942 | (4,923 | ) | (2.3 | )% | |||||||||
Other operating income | 1,021 | — | 1,021 | n/m | |||||||||||
OPERATING EXPENSES | |||||||||||||||
Senior living wages and benefits | 30,578 | 29,436 | 1,142 | 3.9 | % | ||||||||||
Other senior living operating expenses | 12,724 | 15,239 | (2,515 | ) | (16.5 | )% | |||||||||
Rehabilitation and wellness services expenses | 38,119 | 24,747 | 13,372 | 54.0 | % | ||||||||||
Rent | 3,112 | 2,876 | 236 | 8.2 | % | ||||||||||
Owned and leased communities: | |||||||||||||||
Number of communities (end of period) | 24 | 24 | — | — | % | ||||||||||
Number of living units (end of period) (1) | 2,312 | 2,312 | — | — | % | ||||||||||
Occupancy % | 78.1 | % | 81.4 | % | (3.3 | )% | n/m | ||||||||
RevPAR (2) | $ | 2,803 | $ | 2,967 | $ | (164 | ) | (5.5 | )% | ||||||
Managed communities: | |||||||||||||||
Number of communities (end of period) | 74 | 74 | — | — | % | ||||||||||
Number of living units (end of period) (1) | 9,371 | 9,382 | (11 | ) | (0.1 | )% | |||||||||
Occupancy % | 80.7 | % | 86.3 | % | (5.6 | )% | n/m | ||||||||
RevPAR (2) | $ | 3,429 | $ | 3,635 | $ | (206 | ) | (5.7 | )% | ||||||
Rehabilitation and wellness services: | |||||||||||||||
Number of inpatient clinics | 40 | 40 | — | — | % | ||||||||||
Number of outpatient clinics | 124 | 124 | — | — | % | ||||||||||
Total clinics | 164 | 164 | — | — | % | ||||||||||
Nine Months Ended September 30, | |||||||||||||||
(in thousands) | 2020 | 2019 | $ Change | % Change | |||||||||||
Net cash provided by operating activities | $ | 62,040 | $ | 12,077 | $ | 49,963 | 413.7 | % | |||||||
Net cash provided by investing activities | 2,270 | 54,785 | (52,515 | ) | (95.9 | )% | |||||||||
Net cash used in financing activities | (847 | ) | (53,027 | ) | 52,180 | (98.4 | )% | ||||||||
Change in cash and cash equivalents and restricted cash and cash equivalents | 63,463 | 13,835 | 49,628 | 358.7 | % | ||||||||||
Restricted cash included in held for sale assets | — | (42 | ) | 42 | (100.0 | )% | |||||||||
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period | 56,979 | 50,155 | 6,824 | 13.6 | % | ||||||||||
Cash and cash equivalents and restricted cash and cash equivalents at end of period | $ | 120,442 | $ | 63,948 | $ | 56,494 | 88.3 | % | |||||||
• | The continued impact of the COVID-19 pandemic on our and DHC's business, results, operations and liquidity, and the impact of the COVID-19 pandemic on the senior living industry in general, |
• | The duration, severity and geographic reach of the COVID-19 pandemic and the development and availability of successful COVID-19 vaccines and therapeutic treatments, |
• | Our ability to operate our senior living communities profitably, |
• | Our ability to grow revenues at the senior living communities we manage and to increase the fees we earn from managing senior living communities, |
• | Our expectation to focus our expansion activities on internal growth from our existing senior living communities and the ancillary services that we may provide, |
• | Our ability to increase the number of senior living communities we operate and residents we serve, and to grow our other sources of revenues, including rehabilitation and wellness services and other services we may provide, |
• | Whether the aging U.S. population and increasing life spans of older adults will increase the demand for senior living communities and health and wellness services, |
• | Our ability to comply and to remain in compliance with applicable Medicare, Medicaid and other federal and state regulatory, rulemaking and rate setting requirements, |
• | Our ability to access or raise debt or equity capital, and |
• | Other matters. |
• | The impact of conditions in the economy and the capital markets on us and our residents, clients and other customers, |
• | Competition within the senior living and other health and wellness related services businesses, |
• | Older adults delaying or forgoing moving into senior living communities or purchasing health and wellness services from us, |
• | Increases in our labor costs or in costs we pay for goods and services, |
• | Increases in tort and insurance liability costs, |
• | Our operating and debt leverage, |
• | Actual and potential conflicts of interest with our related parties, including our Managing Directors, DHC, RMR LLC, ABP Trust and others affiliated with them, |
• | Changes in Medicare or Medicaid policies and regulations or the possible future repeal, replacement or modification of these or other existing or proposed legislation or regulations, which could result in reduced Medicare or Medicaid |
• | Delays or nonpayment of government payments to us, |
• | Compliance with, and changes to, federal, state and local laws and regulations that could affect our services or impose requirements, costs and administrative burdens that may reduce our ability to profitably operate our business, |
• | Our exposure to litigation and regulatory and government proceedings due to the nature of our business, |
• | Continued efforts by third-party payers to reduce costs, and |
• | Acts of terrorism, outbreaks or continuations of public health crises, including COVID-19, or other man-made or natural disasters beyond our control. |
• | Challenging conditions in the senior living industry continue to exist and our business and operations remain subject to substantial risks, many of which are beyond our control. As a result, our operations may not be profitable in the future and we may realize losses, |
• | We may not successfully execute our strategic growth initiatives, |
• | Our ability to operate senior living communities or rehabilitation clinics profitably and increase the revenues generated by us depends upon many factors, including our ability to integrate new communities into our existing operations, as well as some factors that are beyond our control, such as the demand for our services arising from economic conditions generally and competition from other providers of services to older adults. We may not be able to successfully integrate, operate, compete and profitably manage our senior living communities, |
• | We expect to enter management arrangements with DHC for additional senior living communities that DHC owns or may acquire in the future. However, we cannot be sure that we will enter any additional management arrangements with DHC, |
• | Our belief that the aging of the U.S. population and increasing life spans of older adults will increase demand for senior living communities and health and wellness services may not be realized or may not result in increased demand for our services, |
• | Our investments in our workforce and continued focus on reducing our employee turnover level by enhancing our competitiveness in the marketplace with respect to cash compensation and other benefits may not be successful and may not result in the benefits we expect to achieve through such investments, |
• | Our marketing initiatives may not succeed in increasing our revenues, and they may cost more than any increased revenues they may generate, |
• | Our strategic investments to enhance efficiencies in, and benefits from, our purchasing of services may not be successful or generate the returns we expect, |
• | Circumstances that adversely affect the ability of older adults or their families to pay for our services, such as economic downturns, weakening housing market conditions, higher levels of unemployment among our customers or their family members, lower levels of consumer confidence, stock market volatility and/or changes in demographics generally could affect the revenues and profitability of our business, |
• | Customers who pay for our services with their private resources may become unable to afford our services, resulting in decreased revenues at our senior living communities and rehabilitation clinics, |
• | The various federal and state government agencies that pay us for the services we provide to some of our customers are still experiencing budgetary constraints and may lower the Medicare, Medicaid and other rates they pay us. On August 3, 2020, CMS issued a proposed rule that, if effective, would among other things, result in policy changes for Medicare payments that could reduce our revenues related to outpatient therapy on or after January 1, 2021, |
• | Our preparation efforts in anticipation of continued COVID-19 pandemic challenges may not be sufficient, |
• | We believe that our insurance costs may continue rise as a result of claims or litigation associated with the COVID-19 pandemic, |
• | We may be unable to repay or refinance our debt obligations when they become due, |
• | At September 30, 2020, we had $95.8 million of unrestricted cash and cash equivalents. As of September 30, 2020, we had no borrowings under our credit facility, letters of credit issued in an aggregate amount of $2.4 million and $42.7 million available for borrowing under our credit facility. In addition, we believe that we have adequate financial resources to fund our business for at least the next 12 months. However, we have incurred in prior periods and may continue to incur in future periods operating losses and we have a large accumulated deficit. Moreover, certain aspects of our operations and future growth we may pursue in our business may require significant amounts of working cash and require us to make significant capital expenditures. Further, the impact of the COVID-19 pandemic and resulting economic conditions has adversely impacted us and will likely continue to do so. As a result, we may not have sufficient cash liquidity, |
• | Actual costs under our credit facility will be higher than LIBOR plus a premium because of other fees and expenses associated with our credit facility, |
• | The amount of available borrowings under our credit facility is subject to our having qualified collateral, which is primarily based on the value of the assets securing our obligations under our credit facility. Accordingly, the availability of borrowings under our credit facility at any time may be less than $65.0 million. Also, the availability of borrowings under our credit facility is subject to our satisfying certain financial covenants and other conditions that we may be unable to satisfy. As of September 30, 2020, we had no borrowings under our credit facility, letters of credit issued in an aggregate amount of $2.4 million and $42.7 million available for borrowing under our credit facility, |
• | We intend to conduct our business in a manner that will afford us reasonable access to capital for investment and financing activities. However, we may not be able to successfully carry out this intention. Further, market disruptions, such as may be caused and continued by the COVID-19 pandemic and the current economic conditions, may significantly limit our availability to capital, |
• | Our actions and approach to managing our insurance costs, including our operating an offshore captive insurance company and self-insuring with respect to certain liability matters, may not be successful and could result in our incurring significant costs and liabilities that we will be responsible for funding, |
• | Contingencies in any applicable acquisition or sale agreements we or DHC have entered into, or may enter into, may not be satisfied and our and DHC’s applicable acquisitions or sales, and any related management arrangements we may expect to enter into, may not occur, may be delayed or the terms of such transactions or arrangements may change, |
• | We may be unable to meet collateral requirements related to our workers’ compensation insurance program for future policy years, which may result in increased costs for such insurance program, |
• | We may not be able to sell communities that we own, and DHC may not be able to sell communities we manage, that we or DHC may seek to sell, on acceptable terms, |
• | We believe that our relationships with our related parties, including DHC, RMR LLC, ABP Trust and others affiliated with them may benefit us and provide us with competitive advantages in operating and growing our business. However, the advantages we believe we may realize from these relationships may not materialize, |
• | Our senior living communities and rehabilitation clinics are subject to extensive government regulation, licensure and oversight. We sometimes have regulatory issues in the operation of our senior living communities and rehabilitation clinics and, as a result, some of our communities and clinics may periodically be prohibited from admitting new residents or clients, or our license to continue operations at a community or clinic may be suspended or revoked. Also, operating deficiencies or a license revocation at one or more of our senior living communities or rehabilitation clinics may have an adverse impact on our ability to operate, obtain licenses for, or attract residents or clients to, our other communities and clinics, and |
• | We expect that the COVID-19 pandemic will continue to adversely affect our business, operating results and financial condition, due to continual deterioration of occupancy of our senior living communities, staffing pressures and potential medical and food supply shortages that may have an adverse effect on our operating costs of our senior living facilities. |
Exhibit Number | Description | |
3.1 | ||
3.2 | ||
4.1 | ||
4.2 | ||
31.1 | ||
31.2 | ||
32.1 | ||
101.INS | XBRL Instance Document- the instance document does not appear in the Interactive Date File because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. (Filed herewith.) | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.) | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.) | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.) | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.) | |
104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). | |
FIVE STAR SENIOR LIVING INC. | |
/s/ Katherine E. Potter | |
Katherine E. Potter | |
President and Chief Executive Officer | |
(Principal Executive Officer) | |
Dated: November 5, 2020 | |
/s/ Jeffrey C. Leer | |
Jeffrey C. Leer | |
Executive Vice President, Chief Financial Officer and Treasurer | |
(Principal Financial Officer) | |
Dated: November 5, 2020 | |
/s/ Ellen E. Snow | |
Ellen E. Snow | |
Chief Accounting Officer | |
(Principal Accounting Officer) | |
Dated: November 5, 2020 | |
1. | I have reviewed this Quarterly Report on Form 10-Q of Five Star Senior Living Inc.; |
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; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Katherine E. Potter | |
Date: November 5, 2020 | Katherine E. Potter |
President and Chief Executive Officer | |
1. | I have reviewed this Quarterly Report on Form 10-Q of Five Star Senior Living Inc.; |
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; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Jeffrey C. Leer | |
Date: November 5, 2020 | Jeffrey C. Leer |
Executive Vice President, Chief Financial Officer and Treasurer | |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Katherine E. Potter | |
Katherine E. Potter | |
President and Chief Executive Officer | |
/s/ Jeffrey C. Leer | |
Jeffrey C. Leer | |
Executive Vice President, Chief Financial Officer and Treasurer | |
Date: November 5, 2020 | |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Accounts receivable, net of allowance | $ 3,535 | $ 4,664 |
| Investments, restricted | $ 11,013 | $ 12,622 |
| Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
| Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
| Common stock, shares issued (in shares) | 31,573,289 | 5,154,892 |
| Common stock, shares outstanding (in shares) | 31,573,289 | 5,154,892 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Statement of Comprehensive Income [Abstract] | ||||
| Net income (loss) | $ 3,715 | $ (7,066) | $ (10,492) | $ (36,100) |
| Other comprehensive income (loss): | ||||
| Unrealized (loss) gain on debt investments, net of tax of $0 and ($915), and $0 and $251, respectively | (20) | 1,085 | 710 | 864 |
| Equity in unrealized (loss) gain of an investee, net of tax of $0 and $0, and $0 and $0, respectively | 0 | (46) | 0 | 90 |
| Realized gain on debt investments reclassified and included in net income, net of tax of $0 and $0, and $0 and $0, respectively | (290) | (1) | (303) | 0 |
| Other comprehensive (loss) income | (310) | 1,038 | 407 | 954 |
| Comprehensive income (loss) | $ 3,405 | $ (6,028) | $ (10,085) | $ (35,146) |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Statement of Comprehensive Income [Abstract] | ||||
| Tax on unrealized loss on debt investments | $ 0 | $ (915) | $ 0 | $ 251 |
| Tax on equity in unrealized gain an investee | 0 | 0 | 0 | 0 |
| Tax on realized (gain) loss on debt investments | $ 0 | $ 0 | $ 0 | $ 0 |
Basis of Presentation and Organization |
9 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 | |||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
| Basis of Presentation and Organization | Basis of Presentation and Organization General. The accompanying condensed consolidated financial statements of Five Star Senior Living Inc. and its subsidiaries are unaudited. Certain information and disclosures required by the rules and regulations of the Securities and Exchange Commission, or SEC, and U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted pursuant to SEC rules and regulations related to interim financial statements. We believe the disclosures made are adequate to make the information presented not misleading. As of September 30, 2020, we managed or operated 263 senior living communities located in 31 states with 30,544 living units, including 252 primarily independent and assisted living communities with 29,280 living units and 11 primarily skilled nursing facilities, or SNFs, with 1,264 living units. As of September 30, 2020, we managed 239 of these senior living communities (28,232 living units), we owned and operated 20 of these senior living communities (2,108 living units) and we leased and operated four of these senior living communities (204 living units). Our 263 senior living communities, as of September 30, 2020, included 11,023 independent living apartments, 16,124 assisted living suites and 3,397 SNF units. The foregoing numbers exclude living units categorized as out of service. Ageility Physical Therapy Solutions, or Ageility, provides a comprehensive suite of rehabilitation and wellness services at our senior living communities as well as at outpatient clinics located separately from our senior living communities. As of September 30, 2020, we operated 40 inpatient rehabilitation clinics in senior living communities owned by Diversified Healthcare Trust, or DHC, which are managed by us. As of September 30, 2020, we operated 209 outpatient rehabilitation clinics, of which 153 were located at our managed, leased and owned senior living communities and 56 were located within senior living communities not owned or leased by us or managed on behalf of DHC. Restructuring of Business Arrangements with DHC. On April 1, 2019, we entered into a transaction agreement, or the Transaction Agreement, with DHC to restructure our business arrangements with DHC, pursuant to which, effective as of January 1, 2020, or the Conversion Time:
As of January 1, 2020, we reorganized our business to better align with the different services we offer older adults. In connection with our reorganization, we changed our reporting structure and the composition of our reporting units. We have reclassified certain prior year amounts to conform to the current year’s presentation. See Note 4 for more information regarding our segment reporting. As of January 1, 2020, we reclassified certain of our investments from debt investments to equity investments to reflect the nature of the investment rather than the nature of the securities held by the investment. As a result, we reclassified the related unrealized gain of $1,694 from accumulated other comprehensive income to accumulated deficit on January 1, 2020. See Note 9 for more information regarding these investments. |
Summary of Significant Accounting Policies |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| Accounting Policies [Abstract] | |
| Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Estimates and Assumptions. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that may affect the amounts reported in these financial statements and related notes. Actual results could differ from those estimates. Significant estimates in our condensed consolidated financial statements relate to revenue recognition, including contractual allowances, the allowance of doubtful accounts, self-insurance reserves, long-lived assets and estimates concerning our provisions for income taxes. Recently Issued Accounting Pronouncements Not Yet Adopted. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires a financial asset or a group of financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. This ASU eliminates the probable initial recognition threshold and instead requires reflection of an entity’s current estimate of all expected credit losses. In addition, this ASU amends the current other-than-temporary impairment model for available for sale debt securities. The length of time that the fair value of an available for sale debt security has been below the amortized cost will no longer impact the determination of whether a credit loss exists and credit losses will now be limited to the difference between a security’s amortized cost basis and its fair value. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which amends the transition and effective date for nonpublic entities and smaller reporting companies and clarifies that receivables arising from operating leases are not in the scope of this ASU. Entities will apply the provisions of the ASU as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. This ASU is effective for smaller reporting companies for reporting periods beginning after December 15, 2022. We are assessing the potential impact that the adoption of this ASU (and the related clarifying guidance issued by the FASB) will have on our consolidated financial statements.
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Revenue and Other Operating Income |
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| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue and Other Operating Income | Revenue and Other Operating Income We recognize revenue from contracts with customers in accordance with ASC Topic 606, Revenue from Contracts with Customers, or ASC Topic 606, using the practical expedient in paragraph 606-10-10-4 that allows for the use of a portfolio approach, because we have determined that the effect of applying the guidance to our portfolios of contracts within the scope of ASC Topic 606 on our condensed consolidated financial statements would not differ materially from applying the guidance to each individual contract within the respective portfolio or our performance obligations within such portfolio. The five-step model defined by ASC Topic 606 requires us to: (i) identify our contracts with customers; (ii) identify our performance obligations under those contracts; (iii) determine the transaction prices of those contracts; (iv) allocate the transaction prices to our performance obligations in those contracts; and (v) recognize revenue when each performance obligation under those contracts is satisfied. Revenue recognition occurs when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. Senior Living and Rehabilitation and Wellness Services Revenues. A substantial portion of our revenue from our independent living and assisted living communities relates to contracts with residents for housing services that are generally short term in nature and initially are subject to ASC Topic 842, Leases, or ASC Topic 842. As noted above, we have concluded that the non-lease components of these agreements are the predominant components of the contracts; therefore, we recognize revenue for these agreements under ASC Topic 606. We also provide our residents and others with rehabilitation and wellness services at our senior living communities as well as at outpatient clinics located separately from our senior living communities. Our contracts with residents and other customers that are within the scope of ASC Topic 606 are generally short term in nature. We have determined that services performed under those contracts are considered one performance obligation in accordance with ASC Topic 606 as such services are regarded as a series of distinct events with the same timing and pattern of transfer to the resident or customer. Revenue is recognized for those contracts when our performance obligation is satisfied by transferring control of the service provided to the resident or customer, which are generally when the services are provided over time. Resident fees at our independent living and assisted living communities consist of regular monthly charges for basic housing and support services and fees for additional requested services, such as assisted living services, personalized health services and ancillary services. Fees are specified in our agreements with residents, which are generally short term (30 days to one year), with regular monthly charges billed in advance. Funds received from residents in advance of services provided are not material to our condensed consolidated financial statements. Some of our senior living communities require payment of an upfront entrance fee in advance of a resident moving into the community; substantially all of these community fees are non-refundable and are initially recorded as deferred revenue and included in other current liabilities in our condensed consolidated balance sheets. These deferred amounts are then amortized on a straight-line basis into revenue over the term of the resident's agreement. When the resident no longer resides within our community, the remaining deferred non-refundable fees are recognized in revenue. Revenue recorded and deferred in connection with community fees is not material to our condensed consolidated financial statements. Revenue for basic housing and support services and additional requested services is recognized in accordance with ASC Topic 606 and measured based on the consideration specified in the resident agreement and is recorded when the services are provided. Rehabilitation and wellness services revenues at our Ageility clinics consist of charges for clinically-based rehabilitation services, including physical therapy, speech therapy and occupational therapy, as well as other service-based programs and therapies. Revenue for these services is recognized in accordance with ASC Topic 606 and is recorded when the services are provided. Management Fee Revenues and Reimbursed Community-Level Costs Incurred on Behalf of Managed Communities. We manage senior living communities for the account of DHC pursuant to long-term management agreements which provide for periodic management fee payments to us and reimbursement for our direct costs and expenses related to support such communities. Although there are various management and operational activities performed by us under the New Management Agreements, we have determined that all community operations and management activities constitute a single performance obligation, which is satisfied over time as the services are rendered. We earn management fees equal to 5% of gross revenues realized and 3% of construction costs for construction projects we manage at the senior living communities we manage. We recognize management fee revenues in accordance with ASC Topic 606 in the same period that we provide the management services to DHC, generally monthly. Our estimate of the transaction price for management services also includes the amount of reimbursement due from the owners of the communities for services provided and related costs incurred. Commencing with the 2021 calendar year, we may also earn incentive fees from DHC under the New Management Agreements, which are payable in cash and are contingent, performance-based fees recognized only when earned at the end of each respective measurement period. Incentive management fees are excluded from the transaction price until it becomes probable that there will not be a significant reversal of cumulative revenue recognized. The incentive fee is equal to 15% of the amount by which the annual earnings before interest, taxes, depreciation and amortization, or EBITDA, of all the managed communities on a combined basis exceeds target EBITDA for those communities on a combined basis for such calendar year, provided that in no event shall the incentive fee be greater than 1.5% of the gross revenues realized at all the managed communities on a combined basis for such calendar year. The target EBITDA for those communities on a combined basis is increased annually based on the greater of the annual increase of the Consumer Price Index, or CPI, or 2%, plus 6% of any capital investments funded at the managed communities on a combined basis in excess of target amounts. Unless otherwise agreed, the target capital investment increases annually based on the greater of the annual increase of CPI or 2%. ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), clarifies how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements, such as service transactions. Where we are the primary obligor and, therefore, control the transfer of the goods and services with respect to any such operating expenses incurred in connection with the management of these communities, we recognize revenue when the goods have been delivered or the service has been rendered and we are due to be reimbursed from DHC pursuant to the New Management Agreements. Such revenue is included in community-level costs incurred on behalf of managed communities in our condensed consolidated statements of operations. The related costs are included in reimbursed community-level costs incurred on behalf of managed communities in our condensed consolidated statements of operations. Amounts due from DHC related to management fees and reimbursed community-level costs incurred on behalf of managed communities are included in due from related person in our condensed consolidated balance sheets. Other reimbursed expenses. Other reimbursed expenses include reimbursements that arise from certain centralized services we provide pursuant to our management agreements, a significant portion of which are charged or passed through to and are paid by our customers. We have determined that we control the services provided by third parties for our customers and, therefore, we account for the cost of these services and the related reimbursement revenue on a gross basis. We recognized revenue from other reimbursed expenses of $6,589 for the three months ended September 30, 2020 and $19,003 for the nine months ended September 30, 2020. We did not recognize revenue from other reimbursed expenses for the three and nine months ended September 30, 2019. The following tables present revenue from contracts with customers disaggregated by type of payer, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors:
Other operating income. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law. Under the CARES Act, the U.S. Department of Health and Human Services, or HHS, established the Provider Relief Fund. Retention and use of the funds received under the CARES Act are subject to certain terms and conditions, including certain reporting requirements. Other operating income includes income recognized for funds we have received pursuant to the Provider Relief Fund of the CARES Act that we have determined are in compliance with the terms and conditions of the Provider Relief Fund of the CARES Act. We recognize other operating income to the extent we estimate we have incurred losses that the CARES Act is intended to compensate. The amount of income we recognize for these estimated losses is limited to the amount of funds we received during the period in which the estimated losses have been recognized or, if funds were received subsequently, the period in which the funds were received. We recognized other operating income of $0 and $1,499 for the three and nine months ended September 30, 2020, respectively. At September 30, 2020, accrued expenses and other current liabilities included $241 of funds received under the CARES Act for which we are evaluating if we meet, or will meet, the required terms and conditions for the retention and use of such funds, and which we may need to return. See Note 15 for more information.
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Segment Information |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Information | Segment Information Segment Information. Operating segments are components of an enterprise that engages in business activities and for which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in determining the allocation of resources and in assessing performance. Our chief operating decision maker is our President and Chief Executive Officer. Effective as of January 1, 2020, we reorganized our business to better align with the different services we offer to older adults. As a result of the reorganization, our chief operating decision maker changed the manner in which our performance is assessed and, therefore, we changed our reporting structure and the composition of our operating segments. As a result, we have reclassified certain prior year amounts to conform to the current year's presentation. Since the reorganization of our business on January 1, 2020, we operate in two reportable segments: (1) senior living and (2) rehabilitation and wellness services. In the senior living reportable segment, we manage for the account of others and operate for our own account, independent living communities, assisted living communities and SNFs that are subject to centralized oversight. In the rehabilitation and wellness services segment, we primarily provide a comprehensive suite of rehabilitation and wellness services, including physical, occupational, speech and other specialized therapy services, in inpatient and outpatient clinics through our Ageility division. Corporate and other amounts excluded from our reportable segments' performance are separately stated below and include amounts related to functional areas such as finance, information technology, legal, human resources and our captive insurance company subsidiary, which participates in our workers' compensation, professional and general liability and certain automobile insurance programs. We allocate corporate and other amounts to our senior living and rehabilitation and wellness services segments to assist in determining the allocation of resources and assessing the performance of our segments. Corporate and other allocation amounts are determined by applying an estimated cost rate to the revenues of each division within the reportable segments. Estimated cost rates used to allocate corporate and other amounts vary by division. All of our operations and assets are located in the United States, except for the operations of our captive insurance company subsidiary, which is organized in the Cayman Islands. We do not allocate assets to operating segments and, therefore, no asset information is provided for reportable segments. Results of operations and selected financial information by reportable segment and the reconciliation to the condensed consolidated financial statements are as follows:
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Property and Equipment, net |
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| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment, net | Property and Equipment, net Property and equipment, net consist of the following:
We recorded depreciation expense relating to our property and equipment of $2,680 and $2,818 for the three months ended September 30, 2020 and 2019, respectively, and $8,084 and $13,924 for the nine months ended September 30, 2020 and 2019, respectively. We review the carrying value of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable. If there is an indication that the carrying value of an asset or group of assets is not recoverable, we estimate the recoverability of these assets by comparing projected undiscounted cash flows associated with these assets to their respective historical carrying values. If we conclude that an impairment exists, we determine the amount of impairment loss by comparing the historical carrying value of the asset or group of assets to their estimated fair value. We determine estimated fair value based on input from market participants, our experience selling similar assets, market conditions and internally developed cash flow models that our assets or asset groups are expected to generate, and we consider these estimates to be a Level 3 fair value measurement. As a result of our long-lived assets impairment review, we recorded $3,148 of impairment charges to certain of our long-lived assets for the nine months ended September 30, 2019. The fair value of the impaired assets was $4,520 as of September 30, 2019. We also recorded long-lived impairment charges of $18 and $130 for the three and nine months ended September 30, 2019, respectively, to reduce the carrying value of senior living communities we and DHC sold to their estimated fair value less costs to sell. No impairment charges were recorded for the three and nine months ended September 30, 2020. As of December 31, 2019, we had $4,813 of property and equipment, net classified as held for sale and presented separately in our condensed consolidated balance sheets that we transferred to DHC in connection with the Transaction Agreement. As of September 30, 2020, we did not have property and equipment classified as held for sale.
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| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income The following tables detail the changes in accumulated other comprehensive income (loss), net of tax, for the nine months ended September 30, 2020 and 2019:
Accumulated other comprehensive income represents the unrealized gains and losses of our debt investments, net of tax, and our share of other comprehensive income (loss) relating to our former investment in Affiliates Insurance Company, or AIC. The cost of debt investments sold and for which realized gains and losses are reclassified and included in net income (loss) are determined on a specific identification basis. See Note 13 for more information regarding our arrangements with AIC. AIC dissolved on February 13, 2020. As of January 1, 2020, we reclassified certain of our investments from debt investments to equity investments to reflect the nature of the investment rather than the nature of the securities held by the investment. As a result, we reclassified the related unrealized gain of $1,694 from accumulated other comprehensive income to accumulated deficit on January 1, 2020. See Note 9 for more information regarding these investments.
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Income Taxes |
9 Months Ended |
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Sep. 30, 2020 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes We recognized a provision for income taxes of $465 and $971 for the three and nine months ended September 30, 2020, respectively. We recognized a benefit for income taxes of $687 and a provision for income taxes of $98 for the three and nine months ended September 30, 2019, respectively. The provision for income taxes for the three months ended September 30, 2020 is related to an increase in the annual projection for state income taxes. The provision for income taxes for the nine months ended September 30, 2020 is related to federal income taxes, partially offset by a federal alternative minimum tax, or AMT, credit benefit and a federal benefit related to a loss on the termination of leases, plus state income taxes, including a state valuation allowance. See Note 15 for more information regarding the impact of certain provisions of the CARES Act relating to income and other taxes. The benefit for income taxes for the three months ended September 30, 2019 is related to a decrease to our cumulative federal and state income taxes through September 30, 2019 compared to June 30, 2019, and the provision for income taxes for the nine months ended September 30, 2019 is related to federal and state income taxes. We previously determined it was more likely than not that a majority of our net deferred tax assets would not be realized and concluded that a valuation allowance was required, which eliminated the majority of our net deferred tax assets recorded in our condensed consolidated balance sheets. In the future, if we believe that we will more likely than not realize the benefit of these deferred tax assets, we will adjust our valuation allowance and recognize an income tax benefit, which may affect our results of operations.
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Fair Values of Assets and Liabilities |
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| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Values of Assets and Liabilities | Fair Values of Assets and Liabilities Our assets recorded at fair value have been categorized based on a fair value hierarchy in accordance with ASC Topic 820, Fair Value Measurements and Disclosures. We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels. Level 1 - Inputs are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access at the measurement date. Level 2 - Inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments and quoted prices in inactive markets. Level 3 - Inputs are generated from model-based techniques that use significant assumptions that are not observable in the market. Recurring Fair Value Measures The tables below present certain of our assets measured at fair value at September 30, 2020 and December 31, 2019, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.
The amortized cost basis and fair value of debt securities at September 30, 2020, by contractual maturity, are shown below.
Our financial assets (which include cash equivalents and investments) have been valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third-party pricing services or other market observable data. During the nine months ended September 30, 2020, we did not change the type of inputs used to determine the fair value of any of our assets and liabilities that we measure at fair value. The carrying value of accounts receivable and accounts payable approximates fair value as of September 30, 2020 and December 31, 2019. The carrying value and fair value of our mortgage notes payable were $7,264 and $8,346, respectively, as of September 30, 2020 and $7,533 and $8,861, respectively, as of December 31, 2019, and are categorized in Level 3 of the fair value hierarchy. We estimate the fair value of our mortgage note payable by using discounted cash flow analyses and currently prevailing market terms as of the measurement date. Non-Recurring Fair Value Measures We review the carrying value of our long-lived assets, including our right of use assets, property and equipment and other intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. See Note 5 for more information regarding fair value measurements related to impairments of our long-lived assets.
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Net Income (Loss) Per Share |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income (Loss) Per Share | Net Income (Loss) Per Share We calculated net income (loss) per share—basic using the weighted average number of shares of our common shares outstanding during the periods. When applicable, net income (loss) per share—diluted reflects the more dilutive earnings per share using the weighted average number of our common shares calculated using the two-class method or the treasury stock method. The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted net income (loss) per share (in thousands):
(1) For the three months ended September 30, 2019, 122 of our unvested common shares were not included in the calculation of net loss per share—diluted because to do so would have been antidilutive. For the nine months ended September 30, 2020 and 2019, 108 and 122, respectively, of our unvested common shares were not included in the calculation of net loss per share—diluted because to do so would have been antidilutive.
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Indebtedness |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Indebtedness | Indebtedness In June 2019, we entered into a second amended and restated credit agreement with Citibank, N.A., as administrative agent and lender, and a syndicate of other lenders pursuant to which we obtained a $65,000 secured revolving credit facility, or our credit facility, scheduled to mature on June 12, 2021. At our option, we may extend the maturity date for a one-year period, which is subject to payment of an extension fee and other conditions. We paid fees of $1,271 in 2019 in connection with the closing of our credit facility, which were deferred and are being amortized over the initial term of our credit facility. Our credit facility is available for general business purposes, including acquisitions, and provides for the issuance of letters of credit. We are required to pay interest at a rate of LIBOR plus a premium of 250 basis points per annum, or at a base rate, as defined in our credit agreement, plus 150 basis points per annum, on borrowings under our credit facility; the effective annual interest rates, as of September 30, 2020, were 2.65% and 4.75%, respectively. We are also required to pay a quarterly commitment fee of 0.35% per annum on the unused portion of the available capacity under our credit facility. The weighted average annual interest rate for borrowings under our credit facility was 4.69% for the nine months ended September 30, 2019. As of September 30, 2020, we had no borrowings outstanding under our credit facility. As of September 30, 2020, we had letters of credit issued in an aggregate amount of $2,442 and $42,728 available for borrowings under our credit facility. We incurred aggregate interest expense and other associated costs related to our credit facilities of $253 and $253 for the three months ended September 30, 2020 and 2019, respectively, and $792 and $1,801 for the nine months ended September 30, 2020 and 2019, respectively. Our credit facility is secured by 11 senior living communities we own with a combined 1,245 living units owned by certain of our subsidiaries that guarantee our obligations under our credit facility. Our credit facility is also secured by these subsidiaries’ accounts receivable and related collateral. The amount of available borrowings under our credit facility is subject to our having qualified collateral, which is primarily based on the value of the communities securing our obligations under our credit facility. Our credit facility provides for acceleration of payment of all amounts outstanding under our credit facility upon the occurrence and continuation of certain events of default, including a change of control of us, as defined in our credit agreement. Our credit agreement contains financial and other covenants, including those that restrict our ability to pay dividends or make other distributions to our shareholders in certain circumstances. At September 30, 2020, we had seven irrevocable standby letters of credit outstanding, totaling $29,292. One of these letters of credit in the amount of $26,850, which secures our workers' compensation insurance program, is collateralized by approximately $21,553 of cash equivalents and $7,114 of debt and equity investments. This letter of credit expires in June 2021 and is automatically extended for one-year terms unless notice of nonrenewal is provided prior to the end of the applicable term. At September 30, 2020, the cash equivalents collateralizing this letter of credit, including accumulated interest, were classified as short-term restricted cash and cash equivalents in our condensed consolidated balance sheets, and the debt and equity investments collateralizing this letter of credit are classified as short-term restricted investments in our condensed consolidated balance sheets. The remaining six irrevocable standby letters of credit outstanding at September 30, 2020, totaling $2,442, secure certain of our other obligations. As of November 5, 2020, these letters of credit were scheduled to mature between June 2021 and September 2021 and are required by the beneficiaries to be renewed annually. As of September 30, 2020, our obligations under these six letters of credit, totaling $2,442, remain issued and outstanding under our credit facility. At September 30, 2020, one of our senior living communities was encumbered by a mortgage that secured a note. This mortgage note contains standard mortgage covenants. We recorded a discount in connection with the assumption of this mortgage note as part of our acquisition of the community secured by this mortgage in order to record this mortgage note at its estimated fair value. We amortize this discount as an increase in interest expense until the maturity of this mortgage note. This mortgage note requires payments of principal and interest monthly until maturity. The following table is a summary of this mortgage note as of September 30, 2020:
We incurred interest expense, net of discount amortization, of $125 and $131 with respect to the mortgage note for the three months ended September 30, 2020 and 2019, respectively, and $378 and $395 for the nine months ended September 30, 2020 and 2019, respectively. Our mortgage note requires monthly payments into escrows for taxes, insurance and property replacement funds; certain withdrawals from escrows require Federal Home Loan Mortgage Corporation approval. We believe we were in compliance with all applicable covenants under our credit facility and mortgage note as of September 30, 2020. On April 1, 2019, we obtained from DHC a $25,000 credit facility in connection with the Restructuring Transactions. The DHC credit facility matured and was terminated on January 1, 2020, in connection with the completion of the Restructuring Transactions. There were no borrowings outstanding under the DHC credit facility at the time of such termination and we did not borrow any funds under the DHC credit facility during its term.
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Leases and Management Agreements with DHC |
9 Months Ended | ||||||||||||
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Sep. 30, 2020 | |||||||||||||
| Leases [Abstract] | |||||||||||||
| Leases and Management Agreements with DHC | Leases and Management Agreements with DHC As of December 31, 2019, we leased 166 senior living communities from DHC pursuant to five master leases and we managed for DHC's account 78 senior living communities pursuant to management agreements. Effective as of January 1, 2020, we restructured our business arrangements with DHC as further described below, and after giving effect to the Restructuring Transactions, all the senior living communities owned by DHC that we operate are pursuant to management agreements. As of September 30, 2020, we managed 239 senior living communities for the account of DHC pursuant to the New Management Agreements. Restructuring our Business Arrangements with DHC. Pursuant to the Transaction Agreement as of the Conversion Time:
Also pursuant to the Transaction Agreement: (1) commencing February 1, 2019, the aggregate amount of monthly minimum rent payable to DHC by us under our master leases with DHC was reduced to $11,000, subject to adjustment, and subsequently reduced in accordance with the Transaction Agreement as a result of DHC’s subsequent sales of certain of the leased senior living communities, and no additional rent was payable to DHC by us from such date through the Conversion Time; and (2) as of April 1, 2019, DHC purchased from us $49,155 of unencumbered Qualifying PP&E (as defined in the Transaction Agreement) related to DHC's senior living communities leased and operated by us. In accordance with ASC Topic 842, the reduction in the monthly minimum rent payable to DHC under our then- existing master leases with DHC pursuant to the Transaction Agreement was determined to be a modification of these master leases, and we reassessed the classification of these master leases based on the modified terms and determined that these master leases continued to be classified as long-term operating leases until certain contingent events were achieved. The remaining contingent events were achieved and accordingly, we remeasured the lease liability and right of use asset recorded in our condensed consolidated balance sheets as of December 31, 2019, to zero. Pursuant to the New Management Agreements, we receive a management fee equal to 5% of the gross revenues realized at the applicable senior living communities plus reimbursement for our direct costs and expenses related to such communities. Commencing with the 2021 calendar year, we may receive an annual incentive fee equal to 15% of the amount by which the annual EBITDA, of all communities on a combined basis exceeds the target EBITDA for all communities on a combined basis for such calendar year, provided that in no event shall the incentive fee be greater than 1.5% of the gross revenues realized at all communities on a combined basis for such calendar year. The target EBITDA for those communities on a combined basis is increased annually based on the greater of the annual increase of the CPI or 2%, plus 6% of any capital investments funded at the managed communities on a combined basis in excess of the target capital investment. Unless otherwise agreed, the target capital investment increases annually based on the greater of the annual increase of CPI or 2%. The New Management Agreements expire in 2034, subject to our right to extend them for two consecutive five-year terms if we achieve certain performance targets for the combined managed communities portfolio, unless earlier terminated or timely notice of nonrenewal is delivered. The New Management Agreements provide DHC with the right to terminate any New Management Agreement for a community that does not earn 90% of the target EBITDA for such community for two consecutive calendar years or in any two of three consecutive calendar years, with the measurement period commencing January 1, 2021 (and the first termination not possible until the beginning of calendar year 2023); provided DHC may not in any calendar year terminate communities representing more than 20% of the combined revenues for all communities for the calendar year prior to such termination. Pursuant to a guaranty agreement dated as of January 1, 2020, made by us in favor of DHC’s applicable subsidiaries, we have guaranteed the payment and performance of each of our applicable subsidiary’s obligations under the applicable New Management Agreements. We recognized transaction costs of $142 and $1,330 related to the Transaction Agreement for the three months ended September 30, 2020 and 2019, respectively, and $1,412 and $10,138 for the nine months ended September 30, 2020 and 2019, respectively. Senior Living Communities Formerly Leased from DHC. Prior to the Conversion Time, we were DHC's largest tenant and DHC was our largest landlord. Under our prior master leases with DHC, we paid DHC annual rent plus percentage rent equal to 4.0% of the increase in gross revenues at the applicable senior living communities over base year gross revenues as specified in the applicable lease. Pursuant to the Transaction Agreement, we were no longer required to pay any additional rent to DHC beginning February 1, 2019. Our total rent expense under all of our leases with DHC was $32,375 and $118,647 for the three and nine months ended September 30, 2019, respectively, which amount included estimated percentage rent of $0 and $1,547 for the three and nine months ended September 30, 2019, respectively. Pursuant to the Transaction Agreement, our rent payable to DHC was reduced by a total of $13,840 in aggregate for February and March 2019 and we did not pay such amount to DHC. However, as the Transaction Agreement was not entered into until April 1, 2019, our rent expense for the three months ended March 31, 2019 was not adjusted for the rent reduction for February and March 2019. Instead, the rent reduction for February and March 2019 was determined to be a lease inducement, for which a liability for the $13,840 was recorded as a reduction of the right of use asset on our condensed consolidated balance sheets as of March 31, 2019, and was amortized as a reduction of rent expense over the remaining terms of our master leases. As of December 31, 2019, we had no outstanding rent obligation to DHC. Our previously existing leases with DHC were “triple net” leases, which generally required us to pay rent and all property operating expenses, to obtain, maintain and comply with all applicable permits and licenses necessary to operate the leased communities, to indemnify DHC from liability which may arise by reason of its ownership of the communities, to maintain the communities at our expense, to remove and dispose of hazardous substances at the communities in compliance with applicable laws and to maintain insurance on the communities for DHC’s and our benefit. Prior to the Transaction Agreement, under our previously existing leases with DHC, we could request that DHC purchase certain improvements to the leased communities in return for increases in annual rent in accordance with a formula specified in the applicable lease. Pursuant to the Transaction Agreement, the $11,902 and $90,822, respectively, of capital improvements to the leased communities that we sold to DHC during the three and nine months ended September 30, 2019, did not result in increased rent. In accordance with ASC Topic 840, Leases, the sale and leaseback transaction we completed in June 2016 with DHC qualified for sale-leaseback accounting and we classified the related lease as an operating lease. Accordingly, the gain generated from the sale of $82,644 was deferred and was being amortized as a reduction of rent expense over the initial term of the related lease. Upon our adoption of ASC Topic 842 on January 1, 2019, we recorded a cumulative effect adjustment through retained earnings of $67,473, eliminating our remaining deferred gain. Senior Living Communities Managed for the Account of DHC and its Related Entities. As of September 30, 2020 and 2019, we managed 239 and 77 senior living communities, respectively, for the account of DHC. We earned management fees of $14,609 and $3,763 from the senior living communities we managed for the account of DHC for the three months ended September 30, 2020 and 2019, respectively, and $46,206 and $11,284 for the nine months ended September 30, 2020 and 2019, respectively. In addition, we earned fees for our management of capital expenditure projects at the communities we managed for the account of DHC of $573 and $221 for the three months ended September 30, 2020 and 2019, respectively, and $1,479 and $568 for the nine months ended September 30, 2020 and 2019, respectively. These amounts are included in management fee revenue in our condensed consolidated statements of operations. In connection with the completion of the Restructuring Transactions, effective as of January 1, 2020, we and DHC terminated the long-term management and pooling agreements and replaced them with the New Management Agreements, the terms of which are discussed above. We also provide certain other services to residents at some of the senior living communities we manage for the account of DHC, such as rehabilitation and wellness services. At senior living communities we manage for the account of DHC where we provide rehabilitation and wellness services on an outpatient basis, the residents, third party payers or government programs pay us for those rehabilitation and wellness services. At senior living communities we manage for the account of DHC where we provide inpatient rehabilitation and wellness services, DHC generally pays us for these services and charges for such services are included in amounts charged to residents, third party payers or government programs. We earned revenues of $5,972 and $1,478 for the three months ended September 30, 2020 and 2019, respectively, and $19,843 and $4,667 for the nine months ended September 30, 2020 and 2019, respectively, for rehabilitation and wellness services we provided at senior living communities we manage for the account of DHC and that are payable by DHC. These amounts are included in rehabilitation and wellness services in our condensed consolidated statements of operations. Consistent with our historical accounting for these services at our managed communities, the revenues earned at these clinics that were previously located at senior living communities that we leased from DHC but as of the Conversion Time, we now manage, no longer constitute intercompany revenues and thus will not be eliminated in consolidation and will be recognized and reported as rehabilitation and wellness services revenues in our condensed consolidated statements of operations. We earned management fees of $120 and $69 for the three months ended September 30, 2020 and 2019, respectively, and $372 and $208 for the nine months ended September 30, 2020 and 2019, respectively, for management services at a part of a senior living community DHC subleases to an affiliate, which amounts are included in management fee revenues in our condensed consolidated statements of operations. We lease space from DHC at certain of the senior living communities that we manage for DHC. We use this leased space for outpatient rehabilitation clinics. We recognized rent expense of $392 and $1,175 for the three and nine months ended September 30, 2020 with respect to these leases. Since January 1, 2020, DHC has sold six senior living communities that we previously managed. DHC has also identified 20 additional senior living communities and one building in one community for possible sale or closure. If and when these sales and closures are completed, our management agreements with DHC for those communities will terminate. For the three and nine months ended September 30, 2020, we recognized $886 and $3,124, respectively, of management fees related to these communities.
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Business Management Agreement with RMR LLC |
9 Months Ended |
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Sep. 30, 2020 | |
| Management Agreement [Abstract] | |
| Business Management Agreement with RMR LLC | Business Management Agreement with RMR LLC The RMR Group LLC, or RMR LLC, provides us certain services pursuant to a business management agreement. Pursuant to our business management agreement with RMR LLC, we incurred aggregate fees and certain cost reimbursements payable to RMR LLC of $2,061 and $2,349 for the three months ended September 30, 2020 and 2019, respectively, and $6,535 and $7,122 for the nine months ended September 30, 2020 and 2019, respectively, which amounts include reimbursements for our share of RMR LLC’s costs for providing internal audit services. These amounts are included in general and administrative expenses in our condensed consolidated statements of operations. For further information about our relationship with RMR LLC, see our Annual Report.
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Related Person Transactions |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| Related Party Transactions [Abstract] | |
| Related Person Transactions | Related Person Transactions We have relationships and historical and continuing transactions with DHC, RMR LLC and others affiliated with them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors and officers who are also our Directors or officers. The RMR Group Inc., or RMR Inc., is the managing member of RMR LLC. The Chair of our Board and one of our Managing Directors, Adam D. Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. and is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. Jennifer B. Clark, our other Managing Director and our Secretary, also serves as a managing director and the executive vice president, general counsel and secretary of RMR Inc., an officer and employee of RMR LLC and an officer of ABP Trust. Certain of our officers, and DHC’s officers, are also officers and employees of RMR LLC. Some of our Independent Directors also serve as independent trustees or independent directors of other public companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves as the chair of the boards of trustees or boards of directors of several of these public companies and as a managing director or managing trustee of these companies. Other officers of RMR LLC, including Ms. Clark, serve as managing trustees or managing directors of certain of these companies. DHC. DHC is currently our largest shareholder, owning, as of September 30, 2020, 10,691,658 of our common shares, or 33.9% of our outstanding common shares. We manage for the account of DHC a substantial majority of the senior living communities we operate. RMR LLC provides management services to both us and DHC and Adam Portnoy is chair of the board of trustees and a managing trustee of DHC. Jennifer Clark is a managing trustee and the secretary of DHC. Effective as of January 1, 2020, we completed the Restructuring Transactions, pursuant to which we restructured our existing business arrangements with DHC. We participate in a DHC property insurance program for the senior living communities we own and lease. The premiums we pay for this coverage are allocated pursuant to a formula based on the profiles of the properties included in the program. Our program cost for the policy year ended June 30, 2021 is $500. See Note 11 for more information regarding our relationships, agreements and transactions with DHC and certain parties related to it and us. RMR LLC. We have an agreement with RMR LLC to provide business management services to us. See Note 12 for more information regarding our relationship with RMR LLC. ABP Trust. ABP Trust and its subsidiaries, owned 1,972,783 of our common shares, representing 6.2% of our outstanding common shares as of September 30, 2020. We lease our headquarters from a subsidiary of ABP Trust. Our rent expense for our headquarters, including utilities and real estate taxes that we pay as additional rent, was $442 and $467 for the three months ended September 30, 2020 and 2019, respectively, and $1,302 and $1,438 for the nine months ended September 30, 2020 and 2019, respectively. The adoption of ASC Topic 842 resulted in the recognition of a lease liability and right of use asset, which amount was $740 and $1,675 as of September 30, 2020 and 2019, respectively, with respect to our headquarters lease, using an incremental borrowing rate of 4.6%. The right of use asset has been reduced by the amount of accrued lease payments, which amounts are not material to our condensed consolidated financial statements. AIC. Until its dissolution on February 13, 2020, we, ABP Trust, DHC and four other companies to which RMR LLC provides management services owned AIC in equal amounts. Certain of our Directors and certain trustees or directors of the other AIC shareholders served on the board of directors of AIC. We and the other AIC shareholders historically participated in a combined property insurance program arranged and insured or reinsured in part by AIC. The policies under that program expired on June 30, 2019, and we and the other AIC shareholders elected not to renew the AIC property insurance program; we have instead purchased standalone property insurance coverage from unrelated third-party insurance providers. At September 30, 2020 and December 31, 2019, our investment in AIC had a carrying value of $11 and $298, respectively. These amounts are presented as equity investment of an investee in our condensed consolidated balance sheets. In June 2020, we received $287 in connection with AIC's dissolution. We did not recognize any income related to our investment in AIC for the three or nine months ended September 30, 2020, and recognized income of $83 and $617 for the three and nine months ended September 30, 2019, respectively, which amounts are presented as equity in earnings of an investee in our condensed consolidated statements of operations. Our other comprehensive income for the three and nine months ended September 30, 2019, includes our proportionate part of unrealized gains (losses) on securities that are owned by AIC related to our investment in AIC. Retirement and Separation Arrangements. In connection with their respective retirements, we entered into retirement agreements with our former officers, Bruce J. Mackey Jr. and Richard A. Doyle. Additionally, we entered into a separation agreement with our former Senior Vice President, Senior Living Operations, R. Scott Herzig. Pursuant to these agreements, we made cash payments of $600 and $510 to Mr. Mackey and Mr. Herzig, respectively, in January 2019, and made cash payments of $260 to Mr. Doyle in each of June 2019 and January 2020. In addition, we made release and transition payments to Mr. Mackey, in cash, totaling $132 and $400 for the three and nine months ended September 30, 2019, respectively, and transition payments to Mr. Doyle, in cash, totaling $22 and $30 for the three and nine months ended September 30, 2019, respectively. The full severance costs for Messrs. Mackey and Herzig were recorded during the fourth quarter of 2018 and the full severance cost for Mr. Doyle was recorded during the second quarter of 2019, as they met the criteria in ASC Topic 420, Exit or Disposal Cost Obligations. For further information about these and other such relationships and certain other related person transactions, see our Annual Report.
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Legal Proceedings and Claims |
9 Months Ended |
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Sep. 30, 2020 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Legal Proceedings and Claims | Legal Proceedings and Claims We have been, are currently, and expect in the future to be involved in claims, lawsuits, and regulatory and other government audits, investigations and proceedings arising in the ordinary course of our business, some of which may involve material amounts. Also, the defense and resolution of these claims, lawsuits, and regulatory and other government audits, investigations and proceedings may require us to incur significant expense. We account for claims and litigation losses in accordance with ASC Topic 450, Contingencies, or ASC Topic 450. Under ASC Topic 450, loss contingency provisions are recorded for probable and estimable losses at our best estimate of a loss or, when a best estimate cannot be made, at our estimate of the minimum loss. These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment and are refined as additional information becomes known. Accordingly, we are often initially unable to develop a best estimate of loss and, therefore, the estimated minimum loss amount, which could be zero, is recorded; then, as information becomes known, the minimum loss amount is updated, as appropriate. A minimum or best estimate amount may be increased or decreased when events result in a changed expectation. We are defendants in two lawsuits filed by former employees in California. The first lawsuit, Lefevre v. Five Star Quality Care, Inc. was filed in San Bernardino County Superior Court in May 2015 and the second lawsuit, Mandviwala v. Five Star Quality Care, Inc. d/b/a Five Star Quality Care - CA, Inc. and FVE Managers, Inc., our wholly owned subsidiary, was filed in Orange County Superior Court in July 2015. The claims asserted against us in the similar, though not identical, complaints include: (i) failure to pay all wages due, (ii) failure to pay overtime, (iii) failure to provide meal and rest breaks, (iv) failure to provide itemized, printed wage statements, (v) failure to keep accurate payroll records and (vi) failure to reimburse business expenses. Both plaintiffs asserted causes of action on behalf of themselves and on behalf of other similarly situated employees, including causes of action pursuant to the California Labor Code Private Attorney General Act, or PAGA. On July 10, 2020, the parties of Lefevre v. Five Star Quality Care, Inc., agreed, without admitting fault, to settle their individual and PAGA claims. The settlement remains subject to a final definitive settlement agreement and to court and regulatory approvals. The settlement will effectively extinguish the Mandviwala v. Five Star Quality Care, Inc. d/b/a Five Star Quality Care - CA, Inc. and FVE Managers, Inc. lawsuit. We recognized $0 and $2,473 in other senior living operating expenses related to the settlement of these claims during the three and nine months ended September 30, 2020. As a result of routine monitoring protocols that are a part of our compliance program activities related to Medicare billing, we discovered potentially inadequate documentation at a SNF that we manage on behalf of DHC. This monitoring was not initiated in response to any specific complaint or allegation, but was monitoring of the type that we periodically undertake to test compliance with applicable Medicare billing rules. As a result of this discovery, we, along with DHC made a voluntary disclosure to HHS, Office of the Inspector General, or the OIG, pursuant to the OIG's Provider Self-Disclosure Protocol. We completed our review and assessment of these matters and together, we will submit final supplemental disclosure to the OIG in November 2020. We expect to recognize $120 during the fourth quarter of 2020 as a reduction in management fees from DHC for the management fees that were previously paid to us with respect to the historical Medicare payments DHC received that are expected to be repaid.
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Covid-19 Pandemic |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| Unusual or Infrequent Items, or Both [Abstract] | |
| COVID-19 Pandemic | COVID-19 Pandemic On March 11, 2020, the World Health Organization declared the disease caused by the novel coronavirus SARS-CoV-2, or COVID-19, a pandemic. The global spread of COVID-19 has created significant volatility, uncertainty and economic disruption worldwide. Governments in affected regions have implemented and may continue to implement, safety precautions, including quarantines, travel restrictions, business closures and other public safety measures. On March 13, 2020, the pandemic was declared a national emergency by the President of the United States effective as of March 1, 2020, or the National Emergency, and it has significantly disrupted, and likely will continue to significantly disrupt, the United States economy, our business and the senior living industry as a whole. In response to the COVID-19 pandemic, the CARES Act was enacted on March 27, 2020. The CARES Act, among other things, provides billions of dollars of relief to certain individuals and businesses suffering from the impact of the COVID-19 pandemic. Under the CARES Act, a Provider Relief Fund was established for allocation by HHS. On April 10, 2020, HHS began to distribute these funds, or the Phase 1 General Distribution, to healthcare providers who received Medicare fee-for-service reimbursement in 2018 and 2019. Each healthcare provider's allocation of the Phase 1 General Distribution was determined based on 2.0% of a provider's 2018 (or most recent complete tax year) gross receipts, regardless of the provider's payer mix. We received $1,740 in Phase 1 General Distribution funds primarily for our rehabilitation clinics and home health operations that participate in Medicare as of September 30, 2020. We recognized $0 and $1,499 as other operating income for the three and nine months ended September 30, 2020, respectively, for Phase 1 General Distribution funds for which we believe we met the required terms and conditions. On September 19, 2020, HHS released reporting requirements that differed materially from the original terms and conditions of the Provider Relief Fund. On October 22, 2020, HHS provided clarification and updated guidance related to the original terms and conditions and the reporting requirements provided on September 19, 2020. As of September 30, 2020, we had $241 of funds, for which we are evaluating whether we can retain such funds, included in accrued expenses and other current liabilities in the condensed consolidated financial statements at September 30, 2020. As of September 30, 2020, we believe we met the required terms and conditions to retain the funds recognized as other operating income and will continue to assess our compliance with the terms and conditions as necessary. On June 9, 2020, HHS announced additional distributions from the Provider Relief Fund, or Phase 2 General Distributions, including the Medicaid and Children's Health Insurance Program programs, or the Medicaid and CHIP Targeted Distribution. HHS stated that it would disburse a payment that, at a minimum, is equal to 2.0% of reported total revenue from patient care to eligible providers serving Medicaid and CHIP beneficiaries. Providers who had not yet received a disbursement from the Phase 1 General Distribution are eligible for the Medicaid and CHIP Targeted Distribution. On October 14, 2020, we received $1,562 in Medicaid and CHIP Targeted Distribution funds for certain assisted living units in our owned and leased communities. We did not recognize any of these funds as other operating income for the three and nine months ended September 30, 2020. The terms and conditions of the Provider Relief Fund require that the funds are utilized to compensate for lost revenues that are attributable to the COVID-19 pandemic and for eligible costs to prevent, prepare for and respond to the COVID-19 pandemic that are not covered by other sources. In addition Provider Relief Funds recipients are subject to other terms and conditions, including certain reporting requirements. Any funds not used in accordance with the terms and conditions, must be returned to HHS. The CARES Act also delays the payment of required federal tax deposits for certain payroll taxes, including the employer's share of Old-Age, Survivors, and Disability Insurance Tax, or Social Security, employment taxes, incurred between March 27, 2020 and December 31, 2020. Amounts will be considered timely paid if 50% of the deferred amount is paid by December 31, 2021, and the remainder by December 31, 2022. As of September 30, 2020, we have deferred $18,157 of employer payroll taxes, of which $14,627 are required to be funded by us and will be reimbursed by DHC pursuant to the New Management Agreements, and are included in accrued compensation and benefits in the condensed consolidated financial statements. The Sequestration Transparency Act of 2012 subjected all Medicare fee-for-service payments to a 2% sequestration reduction, or the 2% Medicare Sequestration. The CARES Act temporarily suspends the 2% Medicare Sequestration for the period from May 1, 2020 to December 31, 2020, which may benefit our rehabilitation and wellness services segment and the senior living communities we manage in the form of increased rates for services provided and the management fees we earn from these communities as a result. Increases in rates are recognized in revenue in the period services are provided. The Tax Cuts and Jobs Act of 2017 repealed the AMT and allowed corporations to fully offset regular tax liability with AMT credits. Any remaining AMT credit amount became refundable incrementally from tax years 2018 through 2021. The CARES Act accelerates the refund schedule, permitting corporate taxpayers to claim the refund in full in either tax year 2018 or 2019. We have applied an AMT credit refund of $554 for tax year 2019 to our 2020 tax return. In connection with the COVID-19 pandemic, we have experienced occupancy declines, increased labor costs and increased costs related to COVID-19 testing, medical and sanitation supplies and certain other costs. Additionally, we have purchased personal protective equipment, or PPE, to be used at our senior living communities and rehabilitation and wellness clinics. At September 30, 2020, $11,101 of PPE for future use was included in prepaid expenses and other current assets as of September 30, 2020. PPE that is deployed to senior living communities that we manage on behalf of DHC is reimbursable to us by DHC. We cannot predict the extent and duration of the COVID-19 pandemic or the severity and duration of its economic impact, but we expect it will be substantial. We also cannot predict the extent the relief provided by the CARES Act will offset the financial losses caused by the COVID-19 pandemic, or if we will receive additional funds under the other Provider Relief Fund or other programs, but we expect it will not make us whole.
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Summary of Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | |
| Estimates and Assumptions | Estimates and Assumptions. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that may affect the amounts reported in these financial statements and related notes. Actual results could differ from those estimates. Significant estimates in our condensed consolidated financial statements relate to revenue recognition, including contractual allowances, the allowance of doubtful accounts, self-insurance reserves, long-lived assets and estimates concerning our provisions for income taxes. |
| Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires a financial asset or a group of financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. This ASU eliminates the probable initial recognition threshold and instead requires reflection of an entity’s current estimate of all expected credit losses. In addition, this ASU amends the current other-than-temporary impairment model for available for sale debt securities. The length of time that the fair value of an available for sale debt security has been below the amortized cost will no longer impact the determination of whether a credit loss exists and credit losses will now be limited to the difference between a security’s amortized cost basis and its fair value. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which amends the transition and effective date for nonpublic entities and smaller reporting companies and clarifies that receivables arising from operating leases are not in the scope of this ASU. Entities will apply the provisions of the ASU as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. This ASU is effective for smaller reporting companies for reporting periods beginning after December 15, 2022. We are assessing the potential impact that the adoption of this ASU (and the related clarifying guidance issued by the FASB) will have on our consolidated financial statements.
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Revenue and Other Operating Income (Tables) |
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| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disaggregation of revenue | The following tables present revenue from contracts with customers disaggregated by type of payer, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors:
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Segment Information (Tables) |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of segment information | Results of operations and selected financial information by reportable segment and the reconciliation to the condensed consolidated financial statements are as follows:
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Property and Equipment, net (Tables) |
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| Schedule of property and equipment, net | Property and equipment, net consist of the following:
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Accumulated Other Comprehensive Income (Tables) |
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| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of changes in accumulated other comprehensive income, net of tax | The following tables detail the changes in accumulated other comprehensive income (loss), net of tax, for the nine months ended September 30, 2020 and 2019:
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Fair Values of Assets and Liabilities (Tables) |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of assets and liabilities measured at fair value on a recurring and non recurring basis, categorized by the level of inputs used in the valuation of each asset | The tables below present certain of our assets measured at fair value at September 30, 2020 and December 31, 2019, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.
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| Schedule of debt securities | The amortized cost basis and fair value of debt securities at September 30, 2020, by contractual maturity, are shown below.
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Net Income (Loss) Per Share Net Income (Loss) Per Share (Tables) |
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Weighted Average Number of Shares | The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted net income (loss) per share (in thousands):
(1) For the three months ended September 30, 2019, 122 of our unvested common shares were not included in the calculation of net loss per share—diluted because to do so would have been antidilutive. For the nine months ended September 30, 2020 and 2019, 108 and 122, respectively, of our unvested common shares were not included in the calculation of net loss per share—diluted because to do so would have been antidilutive.
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Indebtedness (Tables) |
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of mortgages | The following table is a summary of this mortgage note as of September 30, 2020:
(1) Contractual principal payments excluding unamortized discount and debt issuance costs of $235.
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Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
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| Income Tax Disclosure [Abstract] | ||||
| Provision (benefit) for income taxes | $ 465 | $ (687) | $ 971 | $ 98 |
Net Income (Loss) Per Share (Details) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
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| Earnings Per Share [Abstract] | ||||
| Weighted average shares outstanding—basic (in shares) | 31,486 | 5,012 | 31,465 | 5,007 |
| Effect of dilutive securities: unvested share awards (in shares) | 77 | 0 | 0 | 0 |
| Weighted average shares outstanding—diluted (in shares) | 31,563 | 5,012 | 31,465 | 5,007 |
| Potentially dilutive restricted unvested common shares, not included in diluted EPS calculation (in shares) | 122 | 108 | 122 | |
Fair Values of Assets and Liabilities Fair Values of Assets and Liabilities - Debt Securities, Contractual Maturities (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Amortized Cost | ||
| Due in one year or less | $ 1,001 | |
| Due after one year through five years | 6,645 | |
| Due after five years through ten years | 4,540 | |
| Total | 12,186 | $ 19,662 |
| Fair Value | ||
| Due in one year or less | 1,008 | |
| Due after one year through five years | 6,986 | |
| Due after five years through ten years | 5,008 | |
| Total | $ 13,002 | $ 21,766 |
Indebtedness - Payments of Principal and Interest (Details) - September 2032 $ in Thousands |
9 Months Ended |
|---|---|
|
Sep. 30, 2020
USD ($)
| |
| Indebtedness | |
| Unamortized discount and debt issuance costs | $ 235 |
| Mortgage Notes | |
| Indebtedness | |
| Debt outstanding | $ 7,263 |
| Contractual Stated Interest Rate | 6.20% |
| Effective Interest Rate | 6.70% |
| Monthly Payment | $ 72 |
Business Management Agreement with RMR LLC - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
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| Reit Management And Research LLC | ||||
| Business Management Agreement [Line Items] | ||||
| Business management fees and costs | $ 2,061 | $ 2,349 | $ 6,535 | $ 7,122 |
Legal Proceedings and Claims (Details) |
3 Months Ended | 9 Months Ended | |
|---|---|---|---|
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Dec. 31, 2020
USD ($)
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Sep. 30, 2020
USD ($)
employee
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Sep. 30, 2020
USD ($)
employee
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| Office of the Inspector General | |||
| Loss Contingencies [Line Items] | |||
| Estimated minimum loss | $ 0 | $ 0 | |
| Lefevre v. Five Star Quality Care, Inc. | |||
| Loss Contingencies [Line Items] | |||
| Number of lawsuits | employee | 2 | 2 | |
| Litigation settlement expense | $ 0 | $ 2,473,000 | |
| Forecast | DHC | |||
| Loss Contingencies [Line Items] | |||
| Reduction in management fees | $ 120,000 | ||
Covid-19 Pandemic Covid-19 Pandemic - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Oct. 14, 2020 |
Apr. 10, 2020 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Dec. 31, 2019 |
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| Unusual or Infrequent Item, or Both [Line Items] | |||||||
| Other operating income | $ 0 | $ 0 | $ 1,499 | $ 0 | |||
| Accrued expenses and other current liabilities | 49,960 | 49,960 | $ 55,981 | ||||
| COVID-19 | |||||||
| Unusual or Infrequent Item, or Both [Line Items] | |||||||
| Revenues | $ 1,740 | ||||||
| Accrued expenses and other current liabilities | 241 | 241 | |||||
| Deferred payroll taxes | 18,157 | 18,157 | |||||
| Payment of deferred taxes | 14,627 | ||||||
| AMT amount | $ 554 | 554 | |||||
| Payments for protective equipment | $ 11,101 | ||||||
| Subsequent Event | COVID-19 | |||||||
| Unusual or Infrequent Item, or Both [Line Items] | |||||||
| Revenues | $ 1,562 | ||||||