EMERITUS ANNOUNCES SECOND QUARTER 2013
OPERATING RESULTS
SEATTLE, WA, August 1, 2013 - Emeritus Corporation (NYSE: ESC), a national provider of senior living services, today announced its second quarter 2013 results.
Operating Summary for Second Quarter 2013 Compared to Second Quarter 2012
| · | Community and management fee revenue increased 44.7% to $468.4 million |
| · | Adjusted EBITDAR increased $37.9 million, or 41.2% to $130.0 million |
| · | Adjusted CFFO per share grew 12.5% to $0.54 |
| · | Total Portfolio Same Community (as defined below) average occupancy improved 60 basis points to 86.6% |
| · | Total Portfolio Same Community average monthly revenue per occupied unit increased 2.5% to $4,015 |
Granger Cobb, President and Chief Executive Officer, commented, “We were very pleased to see occupancy rebound with a 20-basis point sequential lift in our same store portfolio after the effects of a rough flu season in the first quarter. The continued integration of home healthcare services into our communities through our Nurse On Call subsidiary is making solid progress, and we look forward to on-boarding 38 high quality communities and benefitting from their operating teams’ experience later in the quarter. Finally, as we celebrate our 20th anniversary, we would like to thank our more than 30,000 dedicated and compassionate employees who care for our 42,000 residents every day as though they were family.”
2013 Second Quarter Consolidated Results
Community and management fee revenues increased $144.6 million, or 44.7% to $468.4 million in the second quarter of 2013, compared to $323.8 million in the second quarter of 2012. The increase in revenues resulted primarily from the Company’s lease and ownership acquisition of 142 communities in the fourth quarter of 2012 and first quarter of 2013 that the Company previously managed for a joint venture (the “Blackstone JV Transaction”). The increase in revenues was also attributable to the Company’s fourth quarter 2012 acquisition of Nurse on Call, Inc.
Total average monthly revenue per occupied unit for the consolidated portfolio was $4,014 in the second quarter of 2013 compared to $4,140 in the second quarter of 2012. The rate decrease was attributable to the acquisition of the Blackstone JV communities, which have lower average rates than the legacy Emeritus communities. In the second quarter of 2013, total average occupancy for the consolidated portfolio grew to 86.7%, compared to 86.4% in the second quarter of 2012.
Revenues for those consolidated communities that Emeritus has continuously operated since January 1, 2012 (“Consolidated Same Community”) increased $7.3 million in the second quarter of 2013 primarily as a result of improved rate per unit. As of June 30, 2013, the consolidated Emeritus portfolio consisted of 463 communities, of which 321 communities are included in the Company’s definition of Consolidated Same Community. Average monthly revenue for this portfolio increased 2.1% to $4,236 in the second quarter of 2013 compared to the second quarter of 2012, and occupancy increased to 86.7% compared to 86.6% over the same period.
As a result of the Blackstone JV transaction, the Company added 133 leased communities and nine owned communities to its consolidated portfolio in the fourth quarter of 2012 and the first quarter of 2013. Substantially all of these communities have been managed by Emeritus since the second half of 2010. For all communities continuously under Emeritus management since January 1, 2012 (“Total Portfolio Same Community”), monthly revenue per occupied unit increased 2.5% in the second quarter of 2013 compared to the second quarter of 2012, and average occupancy improved by 60 basis points when comparing the same periods.
Community and ancillary services operating expenses were $319.9 million in the second quarter of 2013 compared to $213.6 million in the second quarter of 2012. The increase was due primarily to the acquisition of the Blackstone JV communities and Nurse on Call. Community operating expenses in the Consolidated Same Community portfolio increased $5.0 million, or 2.4%, due primarily to increases in professional liability insurance, marketing, and salaries and benefits, offset somewhat by lower health insurance expense resulting from our August 2012 switch to a more efficient network, as well as lower bad debt expense.
Community and ancillary operating income grew $42.9 million, or 40.8%, to $148.0 million in the second quarter of 2013, compared to the second quarter of 2012, primarily as the result of acquisition-related activities. Community and ancillary operating income margin was 31.6% in the 2013 second quarter compared to 33.0% in the 2012 period, and was likewise impacted by acquisition-related activities between the periods, in particular the acquisition of Nurse on Call (which operates at a lower margin percentage than the Company’s historical business). Consolidated Same Community operating income margin was stable at 33.8% for both second-quarter periods, and Total Portfolio Same Community operating margin improved 50 basis points to 33.8% in the second quarter of 2013 as compared to the prior-year quarter.
The consolidated increase in general and administrative expenses in the periods includes the effects of the Company’s acquisition of home healthcare services, which operate at a higher level of such expenditures in relation to the corresponding revenues. Excluding Nurse on Call as well as consolidated noncash stock-based compensation expenses, senior living general and administrative expenses as a percent of total operated senior living community revenue were 4.8% in the second quarter of 2013, compared to 4.7% in the second quarter of 2012. The increase primarily reflects increases in employee compensation and benefits.
For the second quarter of 2013, Adjusted EBITDAR increased $37.9 million, or 41.2%, to $130.0 million, with the increase primarily driven by the increase in community operating income. Adjusted CFFO per share increased 12.5% to $0.54 per share, compared to $0.48 per share in the second quarter of 2012.
Financing and Other Activities
In May 2013, the Company repaid a $30.0 million note payable to a subsidiary of Ventas, Inc., bearing interest at 8.80%. In July 2013, the Company repaid a $15.2 million note payable bearing interest at 8.77%. Year-to-date through July 2013, the Company has repaid a total of $88.1 million of higher-rate notes payable.
On June 27, 2013 the Company announced the lease of 38 communities representing approximately 4,400 units, that are currently owned by a joint venture comprised of Health Care REIT, Inc. and Merrill Gardens. The communities offer independent living, assisted living and memory care services, with a primary focus on independent living. This transaction is expected to close in the third quarter of 2013.
2013 Guidance Update
The Company provides guidance for the Company’s existing portfolio and excludes the impact from future acquisitions and dispositions.
The Company’s guidance for 2013 is as follows:
| · | Community and management fee revenue in the range of $1.85 billion to $1.90 billion |
| · | Routine capital expenditures in the range of $28.0 million to $30.0 million |
| · | Senior living general and administrative expenses as a percent of total senior living operated revenue of approximately 4.9%, excluding non-cash stock-based compensation expenses |
| · | Adjusted CFFO in the range of $2.10 to $2.20 per share |
Webcast and Conference Call
The Company will host a webcast and conference call on Thursday, August 1, 2013, at 5:00 P.M. Eastern Time to discuss its financial results for the second quarter of 2013.
The conference call will be webcast live over the internet from the Company’s web site at www.emeritus.com under the “Investors” section. The conference call can also be accessed by dialing (877) 407-3982, or for international participants (201) 493-6780. A replay of the conference call will be available after 8:00 P.M. Eastern Time on Thursday, August 1, 2013, until midnight Eastern Time on Thursday, August 8, 2013. The dial-in numbers for the replay are (877) 870-5176 or, for international participants, (858) 384-5517. To access the telephonic replay, enter the conference ID 417700.
Non-GAAP Financial Measures
Adjusted EBITDA/EBITDAR and CFFO are financial measures of operating performance that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company believes that these non-GAAP measures are useful in identifying trends in day-to-day performance because they exclude items that are of little or no significance to operations and provide indicators to management of progress in achieving optimal operating performance. In addition, these measures are used by many research analysts and investors to evaluate the performance and the value of companies in the senior living industry. The Company strongly urges you to review the reconciliation of net loss to Adjusted EBITDA/EBITDAR and the reconciliation of net cash provided by operating activities to CFFO, provided below, along with the Company’s consolidated balance sheets, statements of operations, and statements of cash flows. The Company defines Adjusted EBITDA/EBITDAR and CFFO and provides other information about these non-GAAP measures in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, to be filed with the Securities and Exchange Commission.
The table below shows the reconciliation of net loss to Adjusted EBITDA/EBITDAR for the three months and six months ended June 30, 2013 and 2012 (in thousands):
| | | Three Months Ended | | Six Months Ended |
| | | June 30, | | June 30, |
| | | 2013 | | 2012 | | 2013 | | 2012 |
| Net loss | | $ (36,333) | | $ (21,753) | | $ (75,998) | | $ (41,148) |
| Depreciation and amortization | 45,194 | | 32,993 | | 90,412 | | 65,563 |
| Interest income | (118) | | (98) | | (228) | | (202) |
| Interest expense | 72,090 | | 38,587 | | 144,289 | | 77,632 |
| Net equity losses for unconsolidated joint ventures | (5) | | 80 | | 7 | | 472 |
| Income tax provision | 1,190 | | 324 | | 2,296 | | 596 |
| Loss from discontinued operations | 5,368 | | 5,007 | | 5,368 | | 5,007 |
| Amortization of above/below market rents | 1,225 | | 1,624 | | 2,471 | | 3,378 |
| Amortization of deferred gains | (242) | | (264) | | (490) | | (533) |
| Loss (gain) on early extinguishment of debt | | 14 | | (55) | | (479) | | (55) |
| Stock-based compensation | 3,478 | | 2,834 | | 6,809 | | 5,679 |
| Change in fair value of derivative financial | | | | | | | |
| instruments | | (172) | | 534 | | (177) | | 745 |
| Deferred revenue | 248 | | (151) | | 2,336 | | (450) |
| Deferred straight-line rent | 78 | | 1,096 | | 294 | | 2,298 |
| Impairment of long-lived assets | – | | – | | – | | 2,135 |
| Loss on lease termination | | 486 | | – | | 486 | | – |
| Transaction and financing costs | 895 | | 1,167 | | 1,542 | | 1,488 |
| Self-insurance reserve adjustments | 5,654 | | 1,849 | | 13,136 | | 2,246 |
| Adjusted EBITDA | 99,050 | | 63,774 | | 192,074 | | 124,851 |
| Community lease expense | 30,936 | | 28,296 | | 61,438 | | 56,511 |
| Adjusted EBITDAR | $ 129,986 | | $ 92,070 | | $ 253,512 | | $ 181,362 |
The following table shows the reconciliation of net cash provided by operating activities to CFFO, and Adjusted CFFO (in thousands):
| | | Three Months Ended | | Six Months Ended |
| | | June 30, | | June 30, |
| | | 2013 | | 2012 | | 2013 | | 2012 |
| Net cash provided by operating activities | $ 28,328 | | $ 42,324 | | $ 56,089 | | $ 68,516 |
| Changes in operating assets and liabilities, net | 2,836 | | (16,009) | | (2,208) | | (17,273) |
| Repayment of capital lease and financing obligations | (6,809) | | (4,183) | | (12,810) | | (8,077) |
| Recurring capital expenditures | (5,770) | | (3,718) | | (11,431) | | (8,173) |
| Distributions from unconsolidated joint ventures (1) | 251 | | 61 | | 428 | | 87 |
| Cash From Facility Operations | 18,836 | | 18,475 | | 30,068 | | 35,080 |
| Transaction costs | 895 | | 882 | | 1,542 | | 1,188 |
| Self-insurance reserve adjustments, prior years | 5,654 | | 1,849 | | 13,136 | | 2,246 |
| Adjusted Cash From Facility Operations | $ 25,385 | | $ 21,206 | | $ 44,746 | | $ 38,514 |
| | | | | | | | | |
| CFFO per share | $ 0.40 | | $ 0.41 | | $ 0.65 | | $ 0.79 |
| Adjusted CFFO per share | 0.54 | | 0.48 | | 0.97 | | 0.86 |
| | | | | | | | | |
| (1) | Excludes distributions resulting from the Blackstone JV Transaction, the sale of communities and refinancing of debt. |
Recurring capital expenditures are actual costs incurred to maintain the Company’s communities for their intended business purpose and exclude expenditures for community acquisitions, expenditures incurred in the months immediately following acquisition (and specifically excludes the $30.0 million capital commitment under the lease for the former Blackstone JV communities), new construction and expansions, ROI-designated projects, computer hardware and software, and vehicles.
For a more detailed understanding of Emeritus, please refer to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, to be filed with the SEC, or visit the Company’s web site at www.emeritus.com to obtain copies.
About Emeritus
Emeritus Senior Living is the largest assisted living and memory care provider in the United States, with the ability to serve nearly 50,000 residents. Over 30,000 employees support approximately 480 communities throughout 45 states coast to coast. Emeritus offers the spectrum of senior residential choices, care options, and life enrichment programs that fulfill individual needs and promote purposeful living during the aging process. Senior living service offerings include independent living, assisted living, memory care, skilled nursing, home health care, and rehabilitation services. Emeritus experts provide insights on senior living, care, wellness, brain health, and family topics at www.emeritus.com, which also offers details on the organization’s family-focused philosophy and services. Emeritus’ common stock is traded on the New York Stock Exchange under the symbol ESC.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: A number of the matters and subject areas discussed in this report that are not historical or current facts deal with potential future circumstances, operations, and prospects. The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may materially differ from our actual future experience as a result of such factors as: the effects of competition and economic conditions on the occupancy levels in our communities; our ability under current market conditions to maintain and increase our resident charges without adversely affecting occupancy levels; successfully integrating home health agency services into our senior living communities; uncertainties regarding government-reimbursement programs for our services; increases in interest costs as a result of refinancings; our ability to control community operation expenses without adversely affecting the level of occupancy and the level of resident charges; our ability to generate cash flow sufficient to service our debt and other fixed payment requirements; our ability to find sources of financing and capital on satisfactory terms to meet our cash requirements to the extent that they are not met by operations, and uncertainties related to professional liability and workers’ compensation claims. We have attempted to identify, in context, certain of the factors that we currently believe may cause actual future experience and results to differ from our current expectations regarding the relevant matter or subject area. These and other risks and uncertainties are detailed in our reports filed with the Securities and Exchange Commission, including “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC. The Company undertakes no obligation to update the information provided herein.
Contact:
Investor Relations
(206) 298-2909
Media Contacts:
Liz Brady
Liz.brady@icrinc.com
646-277-1226
Sari Martin
Sari.martin@icrinc.com
203-682-8345
EMERITUS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands, except share data)
| ASSETS |
| | | | |
| | June 30, | | December 31, |
| | 2013 | | 2012 |
| Current Assets: | | | |
| Cash and cash equivalents | $ 133,867 | | $ 59,795 |
| Short-term investments | | | 4,910 |
| Trade accounts receivable, net of allowance of $8,318 and $7,179 | 56,164 | | 53,138 |
| Other receivables | 8,616 | | 28,533 |
| Tax, insurance, and maintenance escrows | 25,756 | | 23,813 |
| Prepaid insurance expense | 23,398 | | 24,297 |
| Deferred tax asset | 31,430 | | 33,781 |
| Other prepaid expenses and current assets | 9,618 | | 12,185 |
| Property held for sale | 16,082 | | - |
| Total current assets | 311,182 | | 240,452 |
| Investments in unconsolidated joint ventures | 2,082 | | 2,513 |
| Property and equipment, net of accumulated depreciation of $617,187 and $533,710 | 3,960,640 | | 4,011,884 |
| Restricted deposits and escrows | 55,967 | | 50,671 |
| Goodwill | 186,745 | | 186,756 |
| Other intangible assets, net of accumulated amortization of $37,036 and $47,547 | 127,186 | | 131,971 |
| Other assets, net | 29,074 | | 36,503 |
| Total assets | $ 4,672,876 | | $ 4,660,750 |
| | | | |
| LIABILITIES, SHAREHOLDERS' EQUITY AND NONCONTROLLING INTEREST | |
| | | | |
| Current Liabilities: | | | |
| Current portion of long-term debt | | | $ 49,381 |
| Current portion of capital lease and financing obligations | 29,742 | | 25,736 |
| Trade accounts payable | 25,774 | | 14,244 |
| Accrued employee compensation and benefits | 47,165 | | 53,606 |
| Accrued interest | 7,702 | | 8,467 |
| Accrued real estate taxes | 15,444 | | 16,432 |
| Accrued insurance liabilities | 40,328 | | 44,867 |
| Other accrued expenses | 31,043 | | 30,291 |
| Deferred revenue | 24,867 | | 22,417 |
| Unearned rental income | 23,772 | | 30,552 |
| Total current liabilities | 319,780 | | 295,993 |
| Long-term debt obligations, less current portion | | | 1,558,936 |
| Capital lease and financing obligations, less current portion | 2,480,634 | | 2,384,857 |
| Deferred gain on sale of communities | 3,253 | | 3,743 |
| Deferred straight-line rent | 69,826 | | 63,920 |
| Other long-term liabilities | 130,446 | | 128,472 |
| Total liabilities | 4,479,947 | | 4,435,921 |
| Redeemable noncontrolling interest | 10,488 | | 10,105 |
| Commitments and contingencies | | | |
| Shareholders' Equity and Noncontrolling Interest: | | | |
| Preferred stock, $0.0001 par value. Authorized 20,000,000 shares, none issued | – | | – |
| Common stock, $0.0001 par value. Authorized 100,000,000 shares, issued and | | | |
| outstanding 47,681,063 and 45,814,988 shares | 5 | | 5 |
| Additional paid-in capital | 883,430 | | 839,511 |
| Accumulated deficit | (703,806) | | (628,093) |
| Total Emeritus Corporation shareholders' equity | 179,629 | | 211,423 |
| Noncontrolling interest | | | 3,301 |
| Total shareholders' equity | 182,441 | | 214,724 |
| Total liabilities, shareholders' equity, and noncontrolling interest | $ 4,672,876 | | $ 4,660,750 |
| | | | |
EMERITUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)
| | Three Months Ended | | Six Months Ended |
| | June 30, | | June 30, |
| | 2013 | | 2012 | | 2013 | | 2012 |
| Revenues: | | | | | | | |
| Community and ancillary services revenue | $ 467,810 | | $ 318,628 | | $ 930,529 | | $ 636,551 |
| Management fees | 595 | | 5,141 | | 1,380 | | 10,197 |
| Community, ancillary services and management fee revenue | 468,405 | | 323,769 | | 931,909 | | 646,748 |
| Reimbursed costs incurred on behalf of managed communities | 7,521 | | 51,033 | | 16,385 | | 102,645 |
| Total operating revenues | 475,926 | | 374,802 | | 948,294 | | 749,393 |
| | | | | | | | |
| Expenses: | | | | | | | |
| Community and ancillary services operations | 319,848 | | 213,571 | | 643,589 | | 427,044 |
| General and administrative | 28,891 | | 22,987 | | 58,331 | | 46,410 |
| Transaction costs | 895 | | 882 | | 1,542 | | 1,188 |
| Impairments of long-lived assets | – | | – | | – | | 2,135 |
| Depreciation and amortization | 45,194 | | 32,993 | | 90,412 | | 65,563 |
| Community leases | 32,239 | | 31,016 | | 64,203 | | 62,187 |
| Costs incurred on behalf of managed communities | 7,521 | | 51,033 | | 16,385 | | 102,645 |
| Total operating expenses | 434,588 | | 352,482 | | 874,462 | | 707,172 |
| Operating income from continuing operations | 41,338 | | 22,320 | | 73,832 | | 42,221 |
| | | | | | | | |
| Other income (expense): | | | | | | | |
| Interest income | 118 | | 98 | | 228 | | 202 |
| Interest expense | (72,090) | | (38,587) | | (144,289) | | (77,632) |
| Change in fair value of derivative financial instruments | 172 | | (534) | | 177 | | (745) |
| Net equity earnings (losses) for unconsolidated joint ventures | 5 | | (80) | | (7) | | (472) |
| Other, net | 682 | | 361 | | 1,725 | | 881 |
| Net other expense | (71,113) | | (38,742) | | (142,166) | | (77,766) |
| | | | | | | | |
| Loss from continuing operations before income taxes | (29,775) | | (16,422) | | (68,334) | | (35,545) |
| Provision for income taxes | (1,190) | | (324) | | (2,296) | | (596) |
| Loss from continuing operations | (30,965) | | (16,746) | | (70,630) | | (36,141) |
| Loss from discontinued operations | (5,368) | | (5,007) | | (5,368) | | (5,007) |
| Net loss | (36,333) | | (21,753) | | (75,998) | | (41,148) |
| Net loss attributable to the noncontrolling interests | 376 | | 34 | | 285 | | 48 |
| Net loss attributable to Emeritus Corporation | | | | | | | |
| common shareholders | $ (35,957) | | $ (21,719) | | $ (75,713) | | $ (41,100) |
| | | | | | | | |
| Basic and diluted loss per common share attributable to | | | | | | | |
| Emeritus Corporation common shareholders: | | | | | | | |
| Continuing operations | $ (0.66) | | $ (0.38) | | $ (1.52) | | $ (0.81) |
| Discontinued operations | (0.11) | | (0.11) | | (0.12) | | (0.11) |
| | $ (0.77) | | $ (0.49) | | $ (1.64) | | $ (0.92) |
| | | | | | | | |
| Weighted average common shares outstanding | 46,805 | | 44,612 | | 46,115 | | 44,597 |
EMERITUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)
| | Six Months Ended June 30, |
| | 2013 | | 2012 |
| Cash flows from operating activities: | | | |
| Net loss | $ (75,998) | | $ (41,148) |
| Adjustments to reconcile net loss to net cash provided by | | | |
| operating activities: | | | |
| Depreciation and amortization | �� 90,412 | | 65,563 |
| Amortization of above/below market rents | 2,471 | | 3,378 |
| Amortization of deferred gains | (490) | | (533) |
| Loss on lease termination | 505 | | – |
| (Gain) loss on early extinguishment of debt | (479) | | 625 |
| Impairments of long-lived assets | 5,206 | | 6,678 |
| Amortization of loan fees | 1,552 | | 1,680 |
| Allowance for doubtful receivables | 4,384 | | 5,225 |
| Equity investment losses | 7 | | 472 |
| Loss (gain) on sale of assets | 119 | | (205) |
| Stock-based compensation | 6,809 | | 5,679 |
| Change in fair value of derivative financial instruments | (177) | | 745 |
| Deferred straight-line rent | 294 | | 2,298 |
| Deferred revenue | 2,336 | | (450) |
| Non-cash interest expense | 16,279 | | 1,309 |
| Other | 651 | | (73) |
| Change in other operating assets and liabilities | 2,208 | | 17,273 |
| Net cash provided by operating activities | 56,089 | | 68,516 |
| | | | |
| Cash flows from investing activities: | | | |
| Purchase of property and equipment | (31,844) | | (11,399) |
| Acquisitions | (4,881) | | – |
| Proceeds from sale of assets | 25,338 | | 3,725 |
| Advances from affiliates and other managed communities, net | 13,078 | | 481 |
| Distributions from unconsolidated joint ventures, net | 46,147 | | (637) |
| Other assets | (749) | | (179) |
| Net cash provided by (used in) investing activities | 47,089 | | (8,009) |
| | | | |
| Cash flows from financing activities: | | | |
| Sale of stock, net | 41,823 | | 623 |
| Proceeds from lease extensions | 6,055 | | – |
| Distributions to noncontrolling interests, net | (3,726) | | – |
| Increase in restricted deposits | (1,190) | | (1,655) |
| Debt issuance and other financing activities | (888) | | (1,118) |
| Proceeds from long-term borrowings and financings | 50,000 | | 10,553 |
| Repayment of long-term borrowings and financings | (108,370) | | (29,711) |
| Repayment of capital lease and financing obligations | (12,810) | | (8,077) |
| Net cash used in financing activities | (29,106) | | (29,385) |
| | | | |
| Net increase in cash and cash equivalents | 74,072 | | 31,122 |
| Cash and cash equivalents at the beginning of the period | 59,795 | | 43,670 |
| Cash and cash equivalents at the end of the period | $ 133,867 | | $ 74,792 |
| Emeritus Corporation |
| Cash Lease and Interest Expense |
| Three Months Ended June 30, 2013 |
| (In thousands) |
| | | | | | |
| | | | Projected |
| | Actual | | Range |
| | Q2-13 | | Q2-2013 |
| Facility lease expense - GAAP | $ 32,239 | | $ 32,000 | — | $ 33,000 |
| Less: | | | | | |
| Above/below market rents | (1,225) | | (1,200) | — | (1,300) |
| Plus: | | | | | |
| Capital lease interest | 47,302 | | 47,500 | — | 48,000 |
| Capital lease interest - noncash | (8,304) | | (8,000) | — | (9,000) |
| Capital lease principal | 6,689 | | 6,000 | — | 7,000 |
| Straight-line rents | (78) | | 200 | | 300 |
| Facility lease expense - CASH | $ 76,623 | | $ 76,500 | — | $ 78,000 |
| | | | | | |
| Interest expense - GAAP | $ 72,090 | | $ 71,000 | — | $ 72,000 |
| Less: | | | | | |
| Capital lease interest | (47,302) | | (47,500) | — | (48,000) |
| �� Loan fee amortization and other | (810) | | (700) | — | (800) |
| Interest expense - CASH | $ 23,978 | | $ 22,800 | — | $ 23,200 |
| | | | | | |
| Depreciation - owned assets | $ 20,303 | | $ 20,000 | — | $ 21,000 |
| Depreciation - capital leases | 24,439 | | 24,000 | — | 25,000 |
| Amortization - intangible assets | 452 | | 400 | — | 500 |
| Total depreciation and amortization | $ 45,194 | | $ 44,400 | — | $ 46,500 |
| EMERITUS CORPORATION |
| Consolidated Supplemental Financial Information |
| For the Quarters Ended |
| (unaudited) |
| (Dollars in thousands, except non-financial and per-unit data) |
| | | | | | | |
| Non-Financial Data: | Q2 2012 | Q3 2012 | Q4 2012 | Q1 2013 | Q2 2013 | |
| Average consolidated communities | 327.3 | 325.3 | 414.3 | 462.7 | 464.7 | |
| Average available units | 29,629 | 29,513 | 36,672 | 40,524 | 40,757 | |
| Average occupied units | 25,603 | 25,719 | 31,842 | 35,007 | 35,333 | |
| Average occupancy | 86.4% | 87.1% | 86.8% | 86.4% | 86.7% | |
| Average monthly revenue per occupied unit | $ 4,140 | $ 4,189 | $ 4,077 | $ 4,012 | $ 4,014 | |
| Calendar days | 91 | 92 | 92 | 90 | 91 | |
| | | | | | | |
| Community and ancillary services revenues: | | | | | | |
| Community revenues | $ 313,555 | $ 318,915 | $ 385,888 | $ 417,581 | $ 422,288 | |
| Move-in fees | 5,816 | 5,753 | 5,503 | 5,503 | 5,430 | |
| Move-in incentives | (1,358) | (1,434) | (1,953) | (1,722) | (2,282) | |
| Total community revenues | 318,013 | 323,234 | 389,438 | 421,362 | 425,436 | |
| Ancillary services revenues | 615 | 640 | 20,156 | 41,357 | 42,374 | |
| Total community and ancillary services revenues | 318,628 | 323,874 | 409,594 | 462,719 | 467,810 | |
| | | | | | | |
| Community and ancillary services operating expenses: | | | | | | |
| Salaries and wages - regular and overtime | 97,850 | 99,334 | 119,305 | 127,713 | 129,904 | |
| Average daily salary and wages | 1,075 | 1,080 | 1,297 | 1,419 | 1,428 | |
| Average daily wages per occupied unit | $42.00 | $41.98 | $40.73 | $40.54 | $40.40 | |
| | | | | | | |
| Payroll taxes and employee benefits | 33,185 | 32,132 | 36,854 | 45,523 | 40,981 | |
| Percent of salaries and wages | 33.9% | 32.3% | 30.9% | 35.6% | 31.5% | |
| | | | | | | |
| Prior year self-insurance reserve adjustments | 1,849 | 190 | 3,560 | 7,482 | 5,654 | |
| | | | | | | |
| Utilities | 12,141 | 14,805 | 15,328 | 18,595 | 16,963 | |
| Average monthly cost per occupied unit | 158 | 192 | 160 | 177 | 160 | |
| | | | | | | |
| Facility maintenance and repairs | 8,427 | 8,643 | 9,787 | 11,830 | 11,674 | |
| Average monthly cost per occupied unit | 110 | 112 | 102 | 113 | 110 | |
| | | | | | | |
| All other community operating expenses | 59,762 | 61,277 | 75,365 | 81,140 | 81,970 | |
| Average monthly cost per occupied unit | 778 | 794 | 789 | 773 | 773 | |
| | | | | | | |
| Community operating expenses | 213,214 | 216,381 | 260,199 | 292,283 | 287,146 | |
| Ancillary services operating expenses | 357 | 562 | 15,449 | 31,458 | 32,702 | |
| Total community and ancillary services operating expenses | 213,571 | 216,943 | 275,648 | 323,741 | 319,848 | |
| | | | | | | |
| Community operating income | $ 104,799 | $ 106,853 | $ 129,238 | $ 129,079 | $ 138,290 | |
| Consolidated operating income | $ 105,057 | $ 106,931 | $ 133,946 | $ 138,978 | $ 147,962 | |
| | | | | | | |
| Operating income margin - Communities | 33.0% | 33.1% | 33.2% | 30.6% | 32.5% | |
| Operating income margin - Consolidated | 33.0% | 33.0% | 32.7% | 30.0% | 31.6% | |
| EMERITUS CORPORATION | |
| Selected Consolidated and Same Community Information | |
| For the Quarters Ended | |
| (unaudited) | |
| (Community and ancillary revenue and operating expense in thousands) | |
| | | | | | |
| | | | | | |
| | Q2 2012 | Q3 2012 | Q4 2012 | Q1 2013 | Q2 2013 |
| Consolidated: | | | | | |
| Average consolidated communities | 327.3 | 325.3 | 414.3 | 462.7 | 464.7 |
| Community and ancillary revenue | $ 318,628 | $ 323,874 | $ 409,594 | $ 462,719 | $ 467,810 |
| Community and ancillary operating expense | 213,571 | 216,943 | 275,648 | 323,741 | 319,848 |
| Average occupancy | 86.4% | 87.1% | 86.8% | 86.4% | 86.7% |
| Average monthly revenue per unit | $ 4,140 | $ 4,189 | $ 4,077 | $ 4,012 | $ 4,014 |
| Operating income margin | 33.0% | 33.0% | 32.7% | 30.0% | 31.6% |
| | | | | | |
| Consolidated Same Community: | | | | | |
| Average consolidated communities | 321.0 | 321.0 | 321.0 | 321.0 | 321.0 |
| Community revenue | $ 314,770 | $ 320,726 | $ 322,474 | $ 321,893 | $ 322,096 |
| Community operating expense | 208,221 | 214,326 | 211,129 | 217,850 | 213,212 |
| Average occupancy | 86.6% | 87.3% | 87.2% | 86.6% | 86.7% |
| Average monthly revenue per unit | $ 4,148 | $ 4,192 | $ 4,222 | $ 4,240 | $ 4,236 |
| Operating income margin | 33.8% | 33.2% | 34.5% | 32.3% | 33.8% |
| | | | | | |
| Total Portfolio Same Community: | | | | | |
| Average consolidated communities | 473.0 | 473.0 | 473.0 | 473.0 | 473.0 |
| Community revenue | $ 420,481 | $ 428,279 | $ 431,362 | $ 432,147 | $ 434,149 |
| Community operating expense | 280,268 | 288,156 | 283,797 | 291,670 | 287,357 |
| Management fees | 5,190 | 5,232 | 2,429 | 700 | 552 |
| Average occupancy | 86.0% | 86.7% | 86.7% | 86.4% | 86.6% |
| Average monthly revenue per unit | $ 3,916 | $ 3,958 | $ 3,987 | $ 4,008 | $ 4,015 |
| Operating income margin | 33.3% | 32.7% | 34.2% | 32.5% | 33.8% |
| | | | | | |
