Exhibit 99.1
FOR IMMEDIATE RELEASE | Contact: | Timothy A. Bonang, |
| | Manager of Investor Relations |
| | (617) 796-8149 |
| | www.fivestarqualitycare.com |
Five Star
Results for the Periods Ended June 30, 2006
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Newton, MA (August 4, 2006). Five Star Quality Care, Inc. (AMEX: FVE) today announced its financial results for the periods ended June 30, 2006.
Results for the quarter ended June 30, 2006:
Loss from continuing operations was $86.1 million for the quarter ended June 30, 2006, compared to income from continuing operations of $2.2 million for the same period in 2005. (Loss) income from continuing operations per share for the quarters ended June 30, 2006 and 2005 was $(2.78) and $0.18, respectively.
During the second quarter of 2006, Five Star terminated 10 management agreements with Sunrise Senior Living, Inc. (NYSE: SRZ) and recognized a related termination charge of $89.8 million. Without this charge, Five Star would have reported income from continuing operations and income per share from continuing operations in the second quarter of 2006 of $3.8 million and $0.12, respectively. We believe these adjusted amounts are a meaningful disclosure that may help shareholders to understand better our results of operations for the second quarter of 2006. (See page 6 of the Supplemental Information attached hereto for a reconciliation of these adjusted amounts.)
Results for the six months ended June 30, 2006:
The loss from continuing operations was $83.2 million for the six months ended June 30, 2006, compared to income from continuing operations of $4.5 million for the same period in 2005. (Loss) income from continuing operations per share for the six months ended June 30, 2006 and 2005 was $(3.26) and $0.37, respectively. Without the charge related to the termination of the 10 Sunrise management agreements, Five Star would have reported income from continuing operations and income per share from continuing operations for the six months ended June 30, 2006 of $6.6 million and $0.26, respectively. We believe these adjusted amounts are a meaningful disclosure that may help shareholders to understand better our results of operations for the six months ended June 30, 2006. (See page 6 of the Supplemental Information attached hereto for a reconciliation of these adjusted amounts.)
Occupancy and Average Daily Rate:
Five Star’s total occupancy for the quarter ended June 30, 2006 was 91%, compared to 90% for the same period in 2005. Occupancy for communities that Five Star has operated continuously since April 1, 2005 was 91% for the quarter ended June 30, 2006, compared to 90% for the same period in 2005.
The average daily rate for the quarter ended June 30, 2006 was $132, compared to $124 for the same period in 2005. The average daily rate for communities that Five Star has operated continuously since April 1, 2005 was $129 for the quarter ended June 30, 2006, compared to $123 for same period in 2005.
Conference Call:
On Friday, August 4, 2006 at 11:00 a.m. Eastern Time, Evrett W. Benton, president and chief executive officer, and Bruce J. Mackey Jr., treasurer and chief financial officer, will host a conference call to discuss the financial results for the periods ended June 30, 2006. Following the Company’s remarks, there will be a question and answer period.
The conference call telephone number is (800) 765-0709. Participants calling from outside the United States and Canada should dial (913) 981-5564. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through Thursday, August 10, 2006. To hear the replay, dial (719) 457-0820. The replay pass code is 9141433.
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 151 communities with over 16,800 separate living units located in 27 states. These communities include independent living, assisted living and skilled nursing communities. Five Star also operates five institutional pharmacies, one of which also provides mail order pharmaceuticals to the general public. Five Star is headquartered in Newton, Massachusetts.
Supplemental Information, page 1of 6
FIVE STAR QUALITY CARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
| Three months ended June 30, | Six months ended June 30, |
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| 2006 | 2005 | 2006 | 2005 |
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Revenues: | | | | |
Net revenues from residents | $ 183,604 | $ 171,301 | $ 365,398 | $ 340,795 |
Pharmacy revenue | 13,065 | 7,100 | 24,410 | 12,356 |
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Total revenues | 196,669 | 178,401 | 389,808 | 353,151 |
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Operating expenses: | | | | |
Wages and benefits | 95,285 | 86,247 | 186,961 | 174,326 |
Other operating expenses | 45,856 | 44,798 | 94,420 | 85,735 |
Pharmacy expenses | 12,407 | 6,427 | 23,189 | 11,451 |
Management fee to Sunrise Senior Living, Inc. (“Sunrise”) | 2,854 | 5,620 | 6,392 | 11,240 |
Termination expense for certain Sunrise management agreements | 89,833 | - | 89,833 | - |
Rent expense | 26,402 | 24,277 | 52,563 | 48,460 |
General and administrative | 7,734 | 6,093 | 14,635 | 12,702 |
Depreciation and amortization | 2,291 | 1,862 | 4,561 | 3,384 |
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Total operating expenses | 282,662 | 175,324 | 472,554 | 347,298 |
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Operating (loss) income | (85,993) | 3,077 | (82,746) | 5,853 |
Interest and other income | 816 | 320 | 1,140 | 566 |
Interest expense | (875) | (1,166) | (1,633) | (1,860) |
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(Loss) income from continuing operations before income taxes | (86,052) | 2,231 | (83,239) | 4,559 |
Provision for income taxes | - | 38 | - | 73 |
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(Loss) income from continuing operations | (86,052) | 2,193 | (83,239) | 4,486 |
Loss from discontinued operations | (1,139) | (1,026) | (2,293) | (2,066) |
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Net (loss) income | $ (87,191) | $ 1,167 | $ (85,532) | $ 2,420 |
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Weighted average shares outstanding | 30,982 | 12,227 | 25,551 | 12,219 |
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Basic and diluted (loss) income per share from: | | | | | |
Continuing operations | $ (2.78) | $ 0.18 | $ (3.26) | $ 0.37 |
Discontinued operations | (0.04) | (0.08) | (0.09) | (0.17) |
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Net (loss) income per share | $ (2.82) | $ 0.10 | $ (3.35) | $ 0.20 |
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EBITDA(1): | | | | |
Net (loss) income | $ (87,191) | $ 1,167 | $ (85,532) | $ 2,420 |
Add: income taxes | - | 38 | - | 73 |
Add: depreciation and amortization | 2,291 | 1,862 | 4,561 | 3,384 |
Add: interest expense | 875 | 1,166 | 1,633 | 1,860 |
Add: loss from discontinued operations | 1,139 | 1,026 | 2,293 | 2,066 |
Less: interest and other income | (816) | (320) | (1,140) | (566) |
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EBITDA(1) | $ (83,702) | $ 4,939 | $ (78,185) | $ 9,237 |
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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 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 of America. |
Supplemental Information, page 2 of 6
FIVE STAR QUALITY CARE, INC.
SELECTED BALANCE SHEET DATA
(dollars in thousands)
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| At June 30, | | At December 31, |
| 2006 | | 2005 |
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Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ 23,576 | | $ 16,729 |
Accounts receivable, net of reserve | 46,340 | | 46,124 |
Prepaid expenses and other current assets | 41,890 | | 32,027 |
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Total current assets | 111,806 | | 94,880 |
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Property and equipment, net | 102,050 | | 96,743 |
Other long term assets | 38,478 | | 37,317 |
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Total assets | $ 252,334 | | $ 228,940 |
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Liabilities and Shareholders’ Equity | | | |
Current liabilities | $ 83,889 | | $ 89,968 |
Long term liabilities | 27,049 | | 25,465 |
Mortgage notes payable, long term | 44,423 | | 44,703 |
Shareholders’ equity: 31,580,934 and 20,060,934 shares issued and outstanding at June 30, 2006 and December 31, 2005, respectively | 96,973 | | 68,804 |
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Total liabilities and shareholders’ equity | $ 252,334 | | $ 228,940 |
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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 June 30, | Six months ended June 30, |
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| 2006 | 2005 | 2006 | 2005 |
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No. of communities (end of period) | 151 | 151 | 151 | 151 |
No. of living units (end of period) | 16,810 | 16,810 | 16,810 | 16,810 |
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Occupancy | 91% | 90% | 91% | 90% |
Average daily rate (ADR) | $ 132 | $ 124 | $ 132 | $ 124 |
ADR % growth | 6% | -- | 6% | -- |
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Percent breakdown of net revenues from residents: | | | | |
Medicare | 15% | 15% | 15% | 15% |
Medicaid | 19% | 19% | 19% | 19% |
Private | 66% | 66% | 66% | 66% |
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Total | 100% | 100% | 100% | 100% |
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Net revenues from residents | $ 183,604 | $ 171,301 | $ 365,398 | $ 340,795 |
Net revenues from residents % growth | 7% | -- | 7% | -- |
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Community expenses (1) | $ 141,141 | $ 131,045 | $ 281,381 | $ 260,061 |
Community expenses (1) as a % of net revenues from residents | 77% | 76% | 77% | 76% |
| (1) | Community expenses equals wages and benefits and other operating expenses as shown on our consolidated statement of income. |
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 June 30,(1) | Six months ended June 30,(2) |
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| 2006 | 2005 | 2006 | 2005 |
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No. of communities (end of period) | 145 | 145 | 144 | 144 |
No. of living units (end of period) | 16,192 | 16,192 | 16,128 | 16,128 |
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Occupancy | 91% | 90% | 91% | 90% |
Average daily rate (ADR) | $ 129 | $ 123 | $ 128 | $ 124 |
ADR % growth | 5% | -- | 3% | -- |
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Percent breakdown of net revenues from residents: | | | | |
Medicare | 15% | 15% | 15% | 15% |
Medicaid | 19% | 19% | 19% | 19% |
Private | 66% | 66% | 66% | 66% |
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Total | 100% | 100% | 100% | 100% |
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Net revenues from residents | $ 179,382 | $ 169,712 | $ 355,737 | $ 338,637 |
Net revenues from residents % growth | 6% | -- | 5% | -- |
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Community expenses (3) | $ 137,514 | $ 130,188 | $ 273,240 | $ 258,837 |
Community expenses (3) % growth | 6% | -- | 6% | -- |
| (1) | Communities that we operated continuously since April 1, 2005. |
| (2) | Communities that we operated continuously since January 1, 2005. |
| (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 June 30, | Six months ended June 30, |
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| 2006 | 2005 | 2006 | 2005 |
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No. of Communities (1) (end of period): | | | | |
Assisted living & independent living communities | 102 | 102 | 102 | 102 |
Skilled nursing communities | 49 | 49 | 49 | 49 |
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Total no. of communities | 151 | 151 | 151 | 151 |
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No. of living units (end of period): | | | | |
Assisted living & independent living units | 12,403 | 12,403 | 12,403 | 12,403 |
Skilled nursing units | 4,407 | 4,407 | 4,407 | 4,407 |
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Total no. of living units | 16,810 | 16,810 | 16,810 | 16,810 |
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Net revenues from residents | | | | |
Assisted living & independent living communities | $ 123,682 | $ 113,802 | $ 245,523 | $ 225,303 |
Skilled nursing communities | 59,599 | 57,193 | 119,114 | 114,909 |
Other (2) | 323 | 306 | 761 | 583 |
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Total net revenues from residents | $ 183,604 | $ 171,301 | $ 365,398 | $ 340,795 |
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(1) Communities are categorized by the type of living units which constitute a majority (or plurality) 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 from Continuing Operations excluding Termination Charges to Loss from Continuing Operations for the three and six months ended June 30, 2006 (dollars in thousands, except per share data):
| Three months ended June 30, | Six months ended June 30, |
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| Amount | Per Share | Amount | Per Share |
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Income from continuing operations excluding termination charges (1) | $3,781 | $0.12 | $6,594 | $0.26 |
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Termination expense for certain Sunrise management agreements | (89,833) | | (89,833) | |
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Loss from continuing operations | $ (86,052) | $ (2.78) | $ (83,239) | $ (3.26) |
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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 three and six months ended June 30, 2006. 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 of America. |
