Exhibit 99.1
FOR IMMEDIATE RELEASE | Contact: | Timothy A. Bonang, |
| | Manager of Investor Relations |
| | (617) 796-8149 |
| | www.fivestarqualitycare.com |
FIVE STAR QUALITY CARE, INC. REPORTS
RESULTS FOR THE PERIODS ENDED DECEMBER 31, 2005
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Newton, MA (March 1, 2006). Five Star Quality Care, Inc. (AMEX: FVE) today announced its financial results for the quarter and year ended December 31, 2005.
Results for the quarter ended December 31, 2005:
The loss from continuing operations was $1.1 million for the quarter ended December 31, 2005, compared to income from continuing operations of $1.5 million for the same quarter last year. Net (loss) income from continuing operations per share for the quarters ended December 31, 2005 and 2004 was $(0.06) and $0.15, respectively.
During the fourth quarter of 2005, Five Star elected to terminate one management agreement with Sunrise Senior Living (NYSE: SRZ) and recognized a related termination charge of $4.8 million. Without this charge, Five Star would have reported income from continuing operations and income per share from continuing operations in the fourth quarter of 2005 of $3.6 million and $0.18, respectively. We believe these adjusted amounts are a meaningful disclosure that may help shareholders to better understand our results of operations for the fourth quarter of 2005. (See page 6 of the Supplemental Information attached hereto for a reconciliation of these amounts.)
Results for the year ended December 31, 2005:
The loss from continuing operations was $81.2 million for the year ended December 31, 2005, compared to income from continuing operations of $5.7 million for the year ended December 31, 2004. Net (loss) income from continuing operations per share for the years ended December 31, 2005 and 2004 was $(5.46) and $0.65, respectively.
Occupancy and Average Daily Rate:
Five Star’s total occupancy for the quarter ended December 31, 2005, was 91%, compared to 89% for the same period in 2004. Occupancy for communities that Five Star has operated continuously since October 1, 2004 was 91% for the quarter ended December 31, 2005, compared to 90% for the same period in 2004.
The average daily rate for the quarter ended December 31, 2005 was $132, compared to $121 for the same period in 2004. The average daily rate for communities that Five Star has operated continuously since October 1, 2004 was $142 the quarter ended December 31, 2005, compared to $134 for same period in 2004.
Conference Call:
On Wednesday, March 1, 2006 at 1:00 p.m. Eastern Time, Evrett Benton, president and chief executive officer, and Bruce Mackey, treasurer and chief financial officer, will host a conference call to discuss the fourth quarter and year end 2005 financial results. Following the company’s remarks, there will be a question and answer period.
The conference call telephone number is (800) 810-0924. Participants calling from outside the United States and Canada should dial (913) 981-4900. No pass code is necessary to access the call from either number. Participants should dial
in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available from 4:00 p.m. on March 1, 2006 through midnight on March 7, 2006. To hear the replay, dial (719) 457-0820. The replay pass code is 2824230.
A live audio webcast of the conference call will also be available in a listen only mode on the Company’s web site at www.fivestarqualitycare.com. Participants wanting to access the webcast should visit the Company’s web site about five minutes before the call. The archived webcast will be available for replay on the company’s web site for about one week after the call.
About Five Star Quality Care, Inc.:
Five Star Quality Care, Inc. is a healthcare services company which operates senior living communities. Five Star owns and leases 153 communities with over 17,100 separate living units located in 28 states. These communities include independent living, assisted living and skilled nursing facilities. Five Star also operates four institutional pharmacies, one of which provides mail order pharmaceuticals to the general public. Five Star is headquartered in Newton, Massachusetts.
Supplemental Information, page 1 of 6
FIVE STAR QUALITY CARE, INC.
CONSOLIDATED STATEMENT OF INCOME
(dollars in thousands, except per share data)
| Three months ended December 31, | Year ended December 31, |
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| 2005 | 2004 | 2005 | 2004 |
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Revenues: | | | | |
Net revenues from residents | $ 188,916 | $ 162,013 | $ 724,051 | $ 606,805 |
Pharmacy revenue | 10,835 | 4,628 | 33,476 | 13,209 |
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Total revenues | 199,751 | 166,641 | 757,527 | 620,014 |
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Operating expenses: | | | | |
Wages and benefits | 95,189 | 84,843 | 376,061 | 319,580 |
Other operating expenses | 50,092 | 42,096 | 183,891 | 157,495 |
Pharmacy expenses | 10,835 | 4,333 | 32,167 | 12,093 |
Management fee to Sunrise | 4,345 | 5,096 | 21,256 | 19,293 |
Termination expense for certain Sunrise management agreements | 4,750 | - | 86,286 | - |
Rent expense | 25,920 | 22,217 | 99,691 | 83,235 |
General and administrative | 7,714 | 5,264 | 27,775 | 19,635 |
Depreciation and amortization | 1,828 | 796 | 7,114 | 3,372 |
Impairment of assets | - | - | 2,333 | - |
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Total operating expenses | 200,673 | 164,645 | 836,574 | 614,703 |
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Operating (loss) income | (922) | 1,996 | (79,047) | 5,311 |
Interest and other income | 526 | 96 | 1,543 | 1,666 |
Interest expense | (719) | (621) | (3,743) | (1,172) |
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(Loss) income from continuing operations before income taxes | (1,115) | 1,471 | (81,247) | 5,805 |
Provision for income taxes | - | (8) | - | (120) |
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(Loss) income from continuing operations | (1,115) | 1,463 | (81,247) | 5,685 |
Loss from discontinued operations | (1,090) | (398) | (2,912) | (2,394) |
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Net (loss) income | $ (2,205) | $ 1,065 | $ (84,159) | $ 3,291 |
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Weighted average shares outstanding | 20,030 | 9,290 | 14,879 | 8,716 |
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Basic and diluted (loss) income per share from: | | | | | |
Continuing operations | $ (0.06) | $ 0.15 | $ (5.46) | $ 0.65 |
Discontinued operations | (0.05) | (0.04) | (0.20) | (0.27) |
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Net (loss) income per share | $ (0.11) | $ 0.11 | $ (5.66) | $ 0.38 |
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EBITDA(1): | | | | |
Net (loss) income | $ (2,205) | $ 1,065 | $ (84,159) | $ 3,291 |
Add: income taxes | - | 8 | - | 120 |
Add: depreciation and amortization | 1,828 | 796 | 7,114 | 3,372 |
Add: interest expense | 719 | 621 | 3,743 | 1,172 |
Add: loss from discontinued operations | 1,090 | 398 | 2,912 | 2,394 |
Less: interest and other income | (526) | (96) | (1,543) | (1,666) |
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EBITDA(1) | $ 906 | $ 2,792 | $ (71,993) | $ 8,683 |
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(1) | We consider earnings before interest, taxes, depreciation and amortization, or EBITDA, to be an indicative measure of our operating performance. EBITDA is also useful in measuring our ability to service debt, fund capital expenditures and expand our business. We believe that EBITDA is a meaningful disclosure that may help shareholders to understand better our financial performance, including comparing our performance to similar numbers reported by other companies. However, EBITDA as presented may not be comparable to amounts calculated by other companies. This information should not be considered as an alternative to net income, income from continuing operations, operating profit, cash flow from operations, or any other operating or liquidity performance measure prescribed by accounting principles generally accepted in the United States. |
Supplemental Information, page 2 of 6
FIVE STAR QUALITY CARE, INC.
SELECTED BALANCE SHEET DATA
(dollars in thousands)
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| As of December 31, |
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| 2005 | | 2004 |
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Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ 16,729 | | $ 30,942 |
Accounts receivable, net of reserve | 46,124 | | 36,742 |
Prepaid expenses and other current assets | 32,027 | | 27,974 |
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Total current assets | 94,880 | | 95,658 |
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Property and equipment, net | 96,743 | | 95,189 |
Other long term assets | 37,317 | | 32,138 |
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Total assets | $228,940 | | $222,985 |
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Liabilities and Shareholders’ Equity | | | |
Current liabilities | $89,968 | | $66,898 |
Long term liabilities | 25,465 | | 18,065 |
Mortgages payable, long term | 44,703 | | 42,118 |
Shareholders’ equity: 20,060,934 and 12,096,634 shares outstanding at December 31, 2005 and 2004, respectively | 68,804 | | 95,904 |
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Total liabilities and shareholders’ equity | $228,940 | | $222,985 |
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Supplemental Information, page 3 of 6
FIVE STAR QUALITY CARE, INC.
COMMUNITY OPERATING DATA
(dollars in thousands, except average daily rate)
| Three months ended | Year ended |
| December 31,
| December 31,
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| 2005 | 2004 | 2005 | 2004 |
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No. of communities (end of period) | 153 | 146 | 153 | 146 |
No. of living units (end of period) | 17,110 | 16,354 | 17,110 | 16,354 |
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Occupancy | 91% | 89% | 90% | 89% |
Average daily rate (ADR) | $ 132 | $121 | $129 | $ 114 |
ADR % growth | 9% | -- | 13% | -- |
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Percent breakdown of net revenues from residents: | | | | |
Medicare | 15% | 17% | 15% | 18% |
Medicaid | 21% | 23% | 21% | 24% |
Private | 64% | 60% | 64% | 58% |
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Total | 100% | 100% | 100% | 100% |
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Net revenues from residents | $188,916 | $162,013 | $ 724,051 | $ 606,805 |
Net revenues from residents % growth | 17% | -- | 19% | -- |
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Community expenses(1) | $145,281 | $ 126,939 | $ 559,952 | $477,075 |
Community expenses(1) as a % of net revenues from residents | 77% | 78% | 77% | 79% |
(1) | Community expenses equals wages and benefits and other operating expenses. |
Supplemental Information, page 4 of 6
FIVE STAR QUALITY CARE, INC.
SAME STORE COMMUNITY OPERATING DATA
(dollars in thousands, except average daily rate)
| Three months ended | Year ended |
| December 31, (1) | December 31, (2) |
| 2005 | 2004 | 2005 | 2004 |
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No. of communities (end of period) | 99 | 99 | 99 | 99 |
No. of living units (end of period) | 13,710 | 13,710 | 13,710 | 13,710 |
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Occupancy | 91% | 90% | 90% | 90% |
Average daily rate (ADR) | $142 | $134 | $139 | $133 |
ADR % growth | 6% | -- | 5% | -- |
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Percent breakdown of net revenues from residents: | | | | |
Medicare | 17% | 18% | 17% | 18% |
Medicaid | 25% | 25% | 25% | 25% |
Private | 58% | 57% | 58% | 57% |
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Total | 100% | 100% | 100% | 100% |
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Net revenues from residents | $162,616 | $152,350 | $ 628,127 | $597,142 |
Net revenues from residents % growth | 7% | -- | 5% | -- |
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Community expenses(3) | $126,993 | $119,345 | $491,952 | $469,481 |
Community expenses(3) % growth | 6% | -- | 5% | -- |
(1) | Communities that we operated continuously since October 1, 2004. |
(2) | Communities that we operated continuously since January 1, 2004. |
(3) | Community expenses equals wages and benefits and other operating expenses. |
Supplemental Information, page 5 of 6
FIVE STAR QUALITY CARE, INC.
OTHER OPERATING DATA
(dollars in thousands)
| Three months ended | Year Ended |
| December 31, | December 31, |
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| 2005 | 2004 | 2005 | 2004 |
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No. of Communities (1) (end of period): | | | | |
Assisted living & independent living communities | 102 | 95 | 102 | 95 |
Skilled nursing communities | 51 | 51 | 51 | 51 |
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Total no. of communities | 153 | 146 | 153 | 146 |
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No. of living units (end of period): | | | | |
Assisted living & independent living units | 10,968 | 10,204 | 10,968 | 10,204 |
Skilled nursing units | 6,142 | 6,150 | 6,142 | 6,150 |
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Total no. of living units | 17,110 | 16,354 | 17,110 | 16,354 |
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Net revenues from residents: | | | | |
Assisted living & independent living communities | $119,692 | $98,543 | $ 462,858 | $360,566 |
Skilled nursing communities | 68,528 | 62,871 | 259,111 | 244,494 |
Other (2) | 696 | 599 | 2,082 | 1,745 |
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Total net revenues from residents | $188,916 | $162,013 | $724,051 | $606,805 |
(1) Communities are categorized by the type of living units which constitute a majority of the total living units at each community.
(2) Other net revenues from residents relates primarily to rehabilitation and other specialty service revenues.
Supplemental Information, page 6 of 6
Reconciliation of Income for the quarter ended December 31, 2005 from Continuing Operations excluding Termination Charges to Loss from Continuing Operations (dollars in thousands, except per share data):
| For the three months ended December 31, 2005 |
| Amount | | Per Share |
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Income from continuing operations excluding termination charge(1) | $ 3,635 | | $0.18 |
Termination expense for a certain Sunrise Senior Living management agreement |
(4,750)
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Loss from continuing operations | $ (1,115) | | $(0.06) |
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(1) | We believe these adjusted amounts are a meaningful disclosure that may help shareholders to understand better our results of operations for the fourth quarter of 2005. This information should not be considered as an alternative to income (loss) from continuing operations or income (loss) from continuing operations per share or any other operating or performance measure prescribed by accounting principles generally accepted in the United States. |
