Exhibit 99.1
FOR IMMEDIATE RELEASE | Contact: Timothy A. Bonang, Vice President, Investor Relations |
| Elisabeth A. Heiss, Manager, Investor Relations |
| (617) 796-8245 |
| www.fivestarseniorliving.com |
Five Star Quality Care, Inc. Reports Fourth Quarter and Year End 2011 Results
Newton, MA (February 16, 2012). Five Star Quality Care, Inc. (NYSE: FVE) today announced its financial results for the quarter and year ended December 31, 2011.
Fourth Quarter 2011 Financial Highlights:
· Total revenues for the fourth quarter of 2011 increased 7.8% to $332.8 million from $308.8 million for the same period in the previous year.
· Income from continuing operations for the fourth quarter of 2011 was $52.7 million compared to $6.9 million for the same period in the previous year.
· Income per share from continuing operations for the fourth quarter of 2011 was $1.11 and $1.05 per share, basic and diluted, respectively, compared to $0.19 per basic and diluted share for the same period in the previous year.
· Income from continuing operations for the fourth quarter of 2011 included certain items that, in the aggregate, increased our earnings by $51.8 million, or $1.09 and $1.03 per share, basic and diluted, respectively. These items were $50.7 million income tax benefit related to the reversal of our valuation allowance, $1.4 million income tax benefit related to impairment of long lived assets and $3.5 million gain on sale of available for sale securities partially offset by an impairment of long lived assets of $3.5 million and acquisition related costs of $229,000. Income from continuing operations for the fourth quarter of 2010 included certain items that, in aggregate, increased our earnings by $1.0 million, or $0.03 per basic and diluted share. These items were a $933,000 gain on sale of available for sale securities and a $108,000 gain on early extinguishment of debt.
· Earnings before interest, taxes, depreciation and amortization, or EBITDA, for the fourth quarter of 2011 was $8.8 million compared to $11.9 million for the same period in the previous year. EBITDA for the fourth quarter of 2011 included those items noted above that, in aggregate, decreased our EBITDA by a net amount of $269,000, and EBITDA for the fourth quarter of 2010 included those items noted above that, in aggregate, increased our EBITDA by $1.0 million. EBITDA excluding these items was $9.0 million and $10.9 million in the fourth quarters of 2011 and 2010, respectively. A reconciliation of income from continuing operations determined in accordance with U.S. generally accepted accounting principles, or GAAP, to EBITDA and EBITDA excluding certain items for the quarters ended December 31, 2011 and 2010 appears later in this press release.
Fourth Quarter 2011 Operating Highlights:
· Senior living occupancy at our owned and leased senior living communities for the fourth quarter of 2011 was 86.2% compared to 86.0% for the same period in the previous year.
· Senior living average daily rate, or ADR, at our owned and leased senior living communities for the fourth quarter of 2011 decreased by 3.3% to $143.73 from $148.56 for the same period in the previous year.
· The percentage of senior living revenues derived from residents’ private resources at our owned and leased senior living communities for the fourth quarter of 2011 increased to 74.7% from 71.4% for the same period in the previous year.
· For those owned and leased senior living communities that we operated continuously since October 1, 2010, or comparable communities, occupancy for the fourth quarter of 2011 was 85.9% compared to 86.0% for the same period in the previous year.
· The ADR at comparable communities for the fourth quarter of 2011 decreased by 0.5% to $147.85 from $148.56 for the same period in the previous year.
Fiscal Year Financial Highlights:
· Total revenues for the year ended December 31, 2011 increased 5.6% to $1.28 billion from $1.21 billion for the same period in the previous year.
· Income from continuing operations for the year ended December 31, 2011 was $68.3 million compared to $25.6 million for the same period in the previous year.
· Income per share from continuing operations for the year ended December 31, 2011 was $1.62 and $1.54 per share, basic and diluted, respectively, compared to $0.72 and $0.69 per share, basic and diluted, respectively, for the same period in the previous year.
· Income from continuing operations for the year ended December 31, 2011 included certain items that, in aggregate, increased our earnings by $51.0 million, or $1.21 and $1.13 per share, basic and diluted, respectively. These items were a $50.7 million income tax benefit related to the reversal of our valuation allowance, $1.4 million income tax benefit related to impairment of long lived assets, $4.1 million gain on sale of available for sale securities and a $1,000 gain on early extinguishment of debt partially offset by an impairment of long lived assets of $3.5 million and acquisition related costs of $1.8 million. Income from continuing operations for the year ended December 31, 2010 included certain items that, in aggregate, increased our earnings by $1.7 million, or $0.05 and $0.04 per share, basic and diluted, respectively. These items were a $933,000 gain on sale of available for sale securities, a $592,000 gain on early extinguishment of debt and a $142,000 net gain on the divestment of our auction rate securities.
· EBITDA for the year ended December 31, 2011 was $41.5 million compared to $43.8 million for the same period in the previous year. EBITDA for the year ended December 31, 2011 included those items noted above that, in aggregate, decreased our EBITDA by a net amount of $1.1 million, and EBITDA for the year ended December 31, 2010 included those items noted above that, in aggregate, increased our EBITDA by $1.7 million. EBITDA excluding these items was $42.6 million for 2011 compared with $42.2 million for the same period in the previous year. A reconciliation of income from continuing operations determined in accordance with GAAP to EBITDA and EBITDA excluding certain items for the years ended December 31, 2011 and 2010 appears later in this press release.
Conference Call:
On February 16, 2012 at 10:00 a.m. Eastern Standard Time, we will host a conference call to discuss the fourth quarter and year end financial results. Following management’s presentation, there will be a question and answer period.
The conference call telephone number is (877) 260-8898. Participants calling from outside the United States and Canada should dial (612) 332-0718. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. Eastern Standard Time Thursday, February 23, 2012. To hear the replay, dial (320) 365-3844. The replay pass code is 227509.
2
A live audio webcast of the conference call will also be available in a listen only mode on the Company’s website at www.fivestarseniorliving.com. Participants wanting to access the webcast should visit the Company’s website about five minutes before the call. The archived webcast will be available for replay on the Company’s website for about one week after the call. The recording and retransmission in any way of the Company’s fourth quarter 2011 conference call is strictly prohibited without the prior written consent of the Company. The Company’s website is not incorporated as part of this press release.
About Five Star Quality Care, Inc.:
Five Star Quality Care, Inc. is a senior living and healthcare services company. We operate 245 senior living communities with 27,159 living units located in 30 states, including 31 communities (2,954 living units) that we own and operate, 191 communities (20,811 living units) that we lease and operate and 23 communities (3,394 living units) that we manage. These communities include independent living, assisted living and skilled nursing communities. We also operate five institutional pharmacies and two rehabilitation hospitals. We are headquartered in Newton, Massachusetts.
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Supplemental Information, page 1 of 7
FIVE STAR QUALITY CARE, INC.
CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share data)
(unaudited)
| | Three months ended
December 31, | | Year ended
December 31, | |
| | 2011 | | 2010 | | 2011 | | 2010 | |
Revenues: | | | | | | | | | |
Senior living revenue | | $ | 274,733 | | $ | 263,206 | | $ | 1,078,380 | | $ | 1,033,935 | |
Rehabilitation hospital revenue | | 27,085 | | 26,124 | | 105,320 | | 100,041 | |
Institutional pharmacy revenue | | 18,790 | | 19,515 | | 76,614 | | 79,285 | |
Management fee revenue | | 515 | | — | | 898 | | — | |
Reimbursed costs incurred on behalf of managed communities | | 11,665 | | — | | 20,552 | | — | |
Total revenues | | 332,788 | | 308,845 | | 1,281,764 | | 1,213,261 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Senior living wages and benefits | | 137,411 | | 131,367 | | 536,386 | | 513,462 | |
Other senior living operating expenses | | 66,532 | | 61,318 | | 259,655 | | 244,109 | |
Costs incurred on behalf of managed communities | | 11,665 | | — | | 20,552 | | — | |
Rehabilitation hospital expenses | | 24,507 | | 23,994 | | 95,305 | | 92,190 | |
Institutional pharmacy expenses | | 18,433 | | 19,329 | | 74,436 | | 77,552 | |
Rent expense | | 49,935 | | 47,468 | | 195,415 | | 188,304 | |
General and administrative | | 15,298 | | 14,511 | | 57,540 | | 55,486 | |
Depreciation and amortization | | 6,348 | | 4,162 | | 21,127 | | 16,034 | |
Total operating expenses | | 330,129 | | 302,149 | | 1,260,416 | | 1,187,137 | |
| | | | | | | | | |
Operating income | | 2,659 | | 6,696 | | 21,348 | | 26,124 | |
| | | | | | | | | |
Interest, dividend and other income | | 278 | | 195 | | 1,295 | | 1,816 | |
Interest and other expense | | (1,512 | ) | (546 | ) | (3,917 | ) | (2,596 | ) |
Acquisition related costs | | (229 | ) | — | | (1,759 | ) | — | |
Gain on investments in trading securities | | — | | — | | — | | 4,856 | |
Loss on UBS put right related to auction rate securities | | — | | — | | — | | (4,714 | ) |
Equity in income (losses) of Affiliates Insurance Company | | 28 | | 16 | | 139 | | (1 | ) |
Gain on early extinguishment of debt | | — | | 108 | | 1 | | 592 | |
Gain on sale of available for sale securities | | 3,460 | | 933 | | 4,116 | | 933 | |
Impairment of long lived assets | | (3,500 | ) | — | | (3,500 | ) | — | |
| | | | | | | | | |
Income from continuing operations before income taxes | | 1,184 | | 7,402 | | 17,723 | | 27,010 | |
Benefit (provision) for income taxes | | 51,560 | | (518 | ) | 50,554 | | (1,448 | ) |
Income from continuing operations | | 52,744 | | 6,884 | | 68,277 | | 25,562 | |
Income (loss) from discontinued operations | | 2,657 | | (788 | ) | (4,076 | ) | (2,070 | ) |
| | | | | | | | | |
Net income | | $ | 55,401 | | $ | 6,096 | | $ | 64,201 | | $ | 23,492 | |
| | | | | | | | | |
| | | | | | | | | |
Weighted average shares outstanding - basic | | 47,702 | | 35,849 | | 42,161 | | 35,736 | |
| | | | | | | | | |
Weighted average shares outstanding - diluted | | 50,570 | | 38,924 | | 45,034 | | 39,207 | |
| | | | | | | | | |
Basic income per share from: | | | | | | | | | |
Continuing operations | | $ | 1.11 | | $ | 0.19 | | $ | 1.62 | | $ | 0.72 | |
Discontinued operations | | 0.05 | | (0.02 | ) | (0.10 | ) | (0.06 | ) |
Net income per share - basic | | $ | 1.16 | | $ | 0.17 | | $ | 1.52 | | $ | 0.66 | |
| | | | | | | | | |
Diluted income per share from: | | | | | | | | | |
Continuing operations | | $ | 1.05 | | $ | 0.19 | | $ | 1.54 | | $ | 0.69 | |
Discontinued operations | | 0.05 | | (0.02 | ) | (0.09 | ) | (0.05 | ) |
Net income per share - diluted | | $ | 1.10 | | $ | 0.17 | | $ | 1.45 | | $ | 0.64 | |
Supplemental Information, page 2 of 7
FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands)
(unaudited)
| | December 31,
2011 | | December 31,
2010 | |
Assets | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 28,374 | | $ | 20,770 | |
Accounts receivable, net of allowance | | 64,265 | | 64,806 | |
Investments in available for sale securities | | 9,114 | | 13,854 | |
Restricted cash | | 4,838 | | 6,594 | |
Prepaid expenses and other current assets | | 26,250 | | 17,084 | |
Assets of discontinued operations | | 8,675 | | 12,857 | |
Total current assets | | 141,516 | | 135,965 | |
| | | | | |
Property and equipment, net | | 353,065 | | 201,223 | |
Restricted cash | | 4,092 | | 14,535 | |
Restricted investments in available for sale securities | | 13,115 | | 3,259 | |
Goodwill, equity investment and other long term assets | | 71,689 | | 24,812 | |
Total assets | | $ | 583,477 | | $ | 379,794 | |
| | | | | |
Liabilities and Shareholders’ Equity | | | | | |
Current liabilities: | | | | | |
Bridge loan from SNH | | $ | 38,000 | | $ | — | |
Other current liabilities | | 151,331 | | 137,911 | |
Total current liabilities | | 189,331 | | 137,911 | |
| | | | | |
Mortgage notes payable | | 38,714 | | — | |
Convertible senior notes | | 37,282 | | 37,905 | |
Other long term liabilities | | 37,956 | | 39,211 | |
Shareholders’ equity | | 280,194 | | 164,767 | |
Total liabilities and shareholders’ equity | | $ | 583,477 | | $ | 379,794 | |
Supplemental Information, page 3 of 7
FIVE STAR QUALITY CARE, INC.
SENIOR LIVING COMMUNITY OPERATING DATA(1)
(dollars in thousands, except average daily rate)
| | Three months ended | | Year ended | |
| | December 31, | | December 31, | |
| | 2011 | | 2010 | | 2011 | | 2010 | |
| | | | | | | | | |
Number of owned and leased communities (end of period) | | 222 | | 209 | | 222 | | 209 | |
Number of owned and leased units (end of period) | | 23,765 | | 22,176 | | 23,765 | | 22,176 | |
Number of living units % growth | | 7.2 | % | — | | 7.2 | % | — | |
| | | | | | | | | |
Occupancy | | 86.2 | % | 86.0 | % | 85.8 | % | 86.2 | % |
Average daily rate (ADR) | | $ | 143.73 | | $ | 148.56 | | $ | 148.47 | | $ | 147.28 | |
ADR % growth | | -3.3 | % | — | | 0.8 | % | — | |
| | | | | | | | | |
Percent breakdown of senior living revenues: | | | | | | | | | |
Medicaid | | 12.8 | % | 13.4 | % | 12.7 | % | 13.3 | % |
Medicare | | 12.5 | % | 15.2 | % | 14.6 | % | 14.4 | % |
Private and other sources | | 74.7 | % | 71.4 | % | 72.7 | % | 72.3 | % |
Total | | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
| | | | | | | | | |
Senior living revenues | | $ | 274,733 | | $ | 263,206 | | $ | 1,078,380 | | $ | 1,033,935 | |
Senior living revenues % growth | | 4.4 | % | — | | 4.3 | % | — | |
| | | | | | | | | |
Senior living wages and benefits | | $ | 137,411 | | $ | 131,367 | | $ | 536,386 | | $ | 513,462 | |
Senior living wages and benefits as a % of senior living revenues | | 50.0 | % | 49.9 | % | 49.7 | % | 49.7 | % |
Other senior living operating expenses | | $ | 66,532 | | $ | 61,318 | | $ | 259,655 | | $ | 244,109 | |
Other senior living operating expenses as a % of senior living revenues | | 24.2 | % | 23.3 | % | 24.1 | % | 23.6 | % |
Community expenses % growth(2) | | 5.8 | % | — | | 5.1 | % | — | |
(1) Excludes data for managed communities and discontinued senior living operations.
(2) Community expenses consist of senior living wages and benefits and other senior living operating expenses as shown on our consolidated statement of income.
Supplemental Information, page 4 of 7
FIVE STAR QUALITY CARE, INC.
COMPARABLE SENIOR LIVING COMMUNITY OPERATING DATA(1)
(dollars in thousands, except average daily rate)
| | Three months ended | | Year ended | |
| | December 31,(2) | | December 31,(3) | |
| | 2011 | | 2010 | | 2011 | | 2010 | |
| | | | | | | | | |
Number of owned and leased communities (end of period) | | 209 | | 209 | | 208 | | 208 | |
Number of owned and leased living units (end of period) | | 22,176 | | 22,176 | | 22,066 | | 22,066 | |
| | | | | | | | | |
Occupancy | | 85.9 | % | 86.0 | % | 85.5 | % | 86.2 | % |
Average daily rate (ADR) | | $ | 147.85 | | $ | 148.56 | | $ | 150.86 | | $ | 147.41 | |
ADR % growth | | -0.5 | % | — | | 2.3 | % | — | |
| | | | | | | | | |
Percent breakdown of senior living revenues: | | | | | | | | | |
Medicaid | | 13.3 | % | 13.4 | % | 12.9 | % | 13.4 | % |
Medicare | | 13.1 | % | 15.2 | % | 15.1 | % | 14.4 | % |
Private and other sources | | 73.6 | % | 71.4 | % | 72.0 | % | 72.2 | % |
Total | | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
| | | | | | | | | |
Senior living revenues | | $ | 262,302 | | $ | 263,206 | | $ | 1,050,202 | | $ | 1,032,357 | |
Senior living revenues % growth | | -0.3 | % | — | | 1.7 | % | — | |
| | | | | | | | | |
Senior living wages and benefits | | $ | 133,221 | | $ | 131,367 | | $ | 526,256 | | $ | 512,755 | |
Senior living wages and benefits as a % of senior living revenues | | 50.8 | % | 49.9 | % | 50.1 | % | 49.7 | % |
Other senior living operating expenses | | $ | 63,310 | | $ | 61,318 | | $ | 252,546 | | $ | 243,762 | |
Other senior living operating expenses as a % of senior living revenues | | 24.1 | % | 23.3 | % | 24.0 | % | 23.6 | % |
Community expenses % growth(4) | | 2.0 | % | — | | 2.9 | % | — | |
(1) Excludes data for managed communities and discontinued senior living operations.
(2) Communities that we have operated continuously since October 1, 2010.
(3) Communities that we have operated continuously since January 1, 2010.
(4) Community expenses consist of senior living wages and benefits and other senior living operating expenses as shown on our consolidated statement of income.
Supplemental Information, page 5 of 7
FIVE STAR QUALITY CARE, INC.
SENIOR LIVING COMMUNITY FINANCIAL DATA(1)
(in thousands)
| | Three months ended | | Year ended | |
| | December 31, | | December 31, | |
| | 2011 | | 2010 | | 2011 | | 2010 | |
| | | | | | | | | |
Independent and assisted living community revenue | | $ | 221,696 | | $ | 207,142 | | $ | 861,763 | | $ | 814,632 | |
Skilled nursing facility revenue | | 53,037 | | 56,064 | | 216,617 | | 219,303 | |
Total senior living revenue | | $ | 274,733 | | $ | 263,206 | | $ | 1,078,380 | | $ | 1,033,935 | |
| | | | | | | | | |
Independent and assisted living community wages and benefits | | $ | 102,906 | | $ | 96,315 | | $ | 398,101 | | $ | 374,164 | |
Skilled nursing facility wages and benefits | | 34,505 | | 35,052 | | 138,285 | | 139,298 | |
Total senior living wages and benefits | | $ | 137,411 | | $ | 131,367 | | $ | 536,386 | | $ | 513,462 | |
| | | | | | | | | |
Independent and assisted living community operating expenses | | $ | 53,530 | | $ | 48,711 | | $ | 206,699 | | $ | 193,715 | |
Skilled nursing facility operating expenses | | 13,002 | | 12,607 | | 52,956 | | 50,394 | |
Total other senior living operating expenses | | $ | 66,532 | | $ | 61,318 | | $ | 259,655 | | $ | 244,109 | |
(1) Excludes data for managed communities and discontinued senior living operations.
COMPARABLE SENIOR LIVING COMMUNITY FINANCIAL DATA(1)
(in thousands)
| | Three months ended | | Year ended | |
| | December 31,(2) | | December 31,(3) | |
| | 2011 | | 2010 | | 2011 | | 2010 | |
| | | | | | | | | |
Independent and assisted living community revenue | | $ | 209,265 | | $ | 207,142 | | $ | 833,585 | | $ | 813,054 | |
Skilled nursing facility revenue | | 53,037 | | 56,064 | | 216,617 | | 219,303 | |
Total senior living revenue | | $ | 262,302 | | $ | 263,206 | | $ | 1,050,202 | | $ | 1,032,357 | |
| | | | | | | | | |
Independent and assisted living community wages and benefits | | $ | 98,716 | | $ | 96,315 | | $ | 387,971 | | $ | 373,457 | |
Skilled nursing facility wages and benefits | | 34,505 | | 35,052 | | 138,285 | | 139,298 | |
Total senior living wages and benefits | | $ | 133,221 | | $ | 131,367 | | $ | 526,256 | | $ | 512,755 | |
| | | | | | | | | |
Independent and assisted living community operating expenses | | $ | 50,308 | | $ | 48,711 | | $ | 199,590 | | $ | 193,368 | |
Skilled nursing facility operating expenses | | 13,002 | | 12,607 | | 52,956 | | 50,394 | |
Total other senior living operating expenses | | $ | 63,310 | | $ | 61,318 | | $ | 252,546 | | $ | 243,762 | |
(1) Excludes data for managed communities and discontinued senior living operations.
(2) Communities that we have operated continuously since October 1, 2010.
(3) Communities that we have operated continuously since January 1, 2010.
Supplemental Information, page 6 of 7
FIVE STAR QUALITY CARE, INC.
OTHER OPERATING DATA(1)
(dollars in thousands, except average daily rate)
| | Three months ended
December 31, | | Year ended
December 31, | |
| | 2011 | | 2010 | | 2011 | | 2010 | |
Number of senior living communities(2) (end of period): | | | | | | | | | |
Assisted and independent living communities, owned | | 31 | | 24 | | 31 | | 24 | |
Assisted and independent living communities, leased | | 153 | | 147 | | 153 | | 147 | |
Assisted and independent living communities, managed | | 23 | | — | | 23 | | — | |
Total number of assisted and independent living communities | | 207 | | 171 | | 207 | | 171 | |
| | | | | | | | | |
Skilled nursing communities, leased | | 38 | | 38 | | 38 | | 38 | |
| | | | | | | | | |
Total number of senior living communities | | 245 | | 209 | | 245 | | 209 | |
| | | | | | | | | |
Number of senior living units (end of period): | | | | | | | | | |
Assisted and independent living communities, owned | | 2,954 | | 2,089 | | 2,954 | | 2,089 | |
Assisted and independent living communities, leased(3) | | 17,388 | | 16,664 | | 17,388 | | 16,664 | |
Assisted and independent living communities, managed(4) | | 3,394 | | — | | 3,394 | | — | |
Total number of assisted and independent living units | | 23,736 | | 18,753 | | 23,736 | | 18,753 | |
| | | | | | | | | |
Skilled nursing communities, leased(5) | | 3,423 | | 3,423 | | 3,423 | | 3,423 | |
| | | | | | | | | |
Total number of senior living units | | 27,159 | | 22,176 | | 27,159 | | 22,176 | |
| | | | | | | | | |
Senior living revenues: | | | | | | | | | |
Assisted and independent living communities | | $ | 218,815 | | $ | 204,988 | | $ | 851,790 | | $ | 806,579 | |
Skilled nursing communities | | 53,037 | | 56,064 | | 216,617 | | 219,303 | |
Other(6) | | 2,881 | | 2,154 | | 9,973 | | 8,053 | |
Total senior living revenues | | $ | 274,733 | | $ | 263,206 | | $ | 1,078,380 | | $ | 1,033,935 | |
| | | | | | | | | |
Senior living data:(7) | | | | | | | | | |
Assisted and independent living communities occupancy | | 87.1 | % | 86.3 | % | 86.4 | % | 86.4 | % |
Assisted and independent living communities ADR | | $ | 133.79 | | $ | 137.48 | | $ | 138.05 | | $ | 136.68 | |
Assisted and independent living communities ADR % growth | | -2.7 | % | — | | 1.0 | % | — | |
| | | | | | | | | |
Skilled nursing communities occupancy | | 81.4 | % | 84.6 | % | 82.2 | % | 85.2 | % |
Skilled nursing communities ADR | | $ | 206.94 | | $ | 210.52 | | $ | 210.88 | | $ | 205.96 | |
Skilled nursing communities ADR % growth | | -1.7 | % | — | | 2.4 | % | — | |
| | | | | | | | | |
Rehabilitation hospital data: | | | | | | | | | |
Rehabilitation hospital units | | 321 | | 321 | | 321 | | 321 | |
Rehabilitation hospital occupancy | | 55.3 | % | 52.5 | % | 55.1 | % | 54.2 | % |
(1) Excludes data for institutional pharmacy operations and discontinued senior living operations.
(2) Communities are categorized by the type of living units which constitute a majority of the total living units at the community.
(3) Includes 2,026 skilled nursing units in communities where assisted living and independent living services are the predominant services provided for the three months and year ended December 31, 2011 and 2010.
(4) Includes 29 skilled nursing units in communities where assisted living and independent living services are the predominant services for the three months and year ended December 31,2011.
(5) Includes 87 assisted living and independent living units in communities where skilled nursing services are the predominant services provided for the three months and year ended December 31, 2011 and 2010.
(6) Other senior living revenues relates primarily to rehabilitation and other specialty service revenues provided at residential facilities and does not include revenues from institutional pharmacy or rehabilitation hospital operations.
(7) Excludes data for managed communities.
Supplemental Information, page 7 of 7
FIVE STAR QUALITY CARE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
Earnings before interest, taxes, depreciation and amortization, or EBITDA, and EBITDA excluding certain items are not financial measures determined according to U.S. generally accepted accounting principles, or GAAP. We consider EBITDA and EBITDA excluding certain items to be meaningful disclosures because we believe that the presentation of these non-GAAP financial measures may help investors to gain a better understanding of changes in our operating results, and may also help investors who wish to make comparisons between us and other companies on both a GAAP and non-GAAP basis. These non-GAAP financial measures are used by management to evaluate our financial performance and for comparing our performance over time to the performance of our competitors. EBITDA and EBITDA excluding certain items as presented may not, however, be comparable to amounts calculated by other companies. This information should not be considered as an alternative to income from continuing operations, net income from continuing operations, net income or any other financial operating or performance measure established by GAAP. The reconciliation of income from continuing operations to EBITDA and EBITDA excluding certain items is as follows:
| | For the three months | | For the year | |
| | ended December 31, | | ended December 31, | |
| | 2011 | | 2010 | | 2011 | | 2010 | |
Income from continuing operations | | $ | 52,744 | | $ | 6,884 | | $ | 68,277 | | $ | 25,562 | |
Add: interest and other expense | | 1,512 | | 546 | | 3,917 | | 2,596 | |
Add: income tax expense | | — | | 518 | | 157 | | 1,448 | |
Add: depreciation and amortization | | 6,348 | | 4,162 | | 21,127 | | 16,034 | |
Less: income tax benefit | | (51,560 | ) | — | | (50,711 | ) | — | |
Less: interest, dividend and other income | | (278 | ) | (195 | ) | (1,295 | ) | (1,816 | ) |
EBITDA | | 8,766 | | 11,915 | | 41,472 | | 43,824 | |
Add: impairment of long lived assets | | 3,500 | | — | | 3,500 | | — | |
Add: acquisition related costs | | 229 | | — | | 1,759 | | — | |
Add: loss on UBS put right related to auction rate securities | | — | | — | | — | | 4,714 | |
Less: gain on investments in trading securities | | — | | — | | — | | (4,856 | ) |
Less: gain on sale of investments in available for sale securities | | (3,460 | ) | (933 | ) | (4,116 | ) | (933 | ) |
Less: gain on early extinguishment of debt | | — | | (108 | ) | (1 | ) | (592 | ) |
EBITDA excluding certain items | | $ | 9,035 | | $ | 10,874 | | $ | 42,614 | | $ | 42,157 | |
