Exhibit 99.1
FOR IMMEDIATE RELEASE | Contacts: | Timothy A. Bonang, Vice President, Investor Relations |
| | Elisabeth H. Olmsted, Manager, Investor Relations |
| | (617) 796-8245 |
Five Star Quality Care, Inc. Reports Second Quarter 2013 Results and Announces Intention to Sell 11 Senior Living Communities with 753 Living Units that Receive the Majority of Their Revenues from Medicaid/Medicare
Newton, MA (July 29, 2013). Five Star Quality Care, Inc. (NYSE: FVE) today announced its financial results for the quarter and six months ended June 30, 2013.
Second Quarter 2013 Financial Highlights:
· Total revenues for the second quarter of 2013 increased 9.0% to $351.9 million from $322.8 million for the same period in 2012.
· Earnings before interest, taxes, depreciation and amortization, or EBITDA, for the second quarter of 2013 were $12.3 million compared to $17.1 million for the same period in 2012. EBITDA for the second quarter of 2012 included a gain on settlement of our litigation with Sunrise Senior Living, Inc., or Sunrise, which increased EBITDA by $3.4 million. EBITDA excluding that gain and certain other items was $12.5 million and $13.7 million for the second quarters of 2013 and 2012, 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 June 30, 2013 and 2012 appears later in this press release.
· Income from continuing operations for the second quarter of 2013 was $2.7 million, or $0.06 per basic and diluted share, compared to $5.3 million, or $0.10 per basic and diluted share for the same period in 2012. Income from continuing operations for the second quarter of 2012 included a gain on settlement of our litigation with Sunrise of $1.9 million (net of taxes), or $0.04 per basic and diluted share.
· Net income for the second quarter of 2013 was $825,000, or $0.02 per basic and diluted share, compared to $4.6 million, or $0.09 per basic and diluted share for the same period in 2012. Net income in the 2013 period included a loss from discontinued operations of $1.8 million. Net income in the 2012 period included a gain on settlement of our litigation with Sunrise of $1.9 million (net of taxes) and a loss from discontinued operations of 674,000.
Second Quarter 2013 Operating Highlights:
· Occupancy at our owned and leased senior living communities for the second quarter of 2013 was 85.5% compared to 86.0% for the same period in 2012.
· The average monthly rate at our owned and leased senior living communities for the second quarter of 2013 increased by 0.8% to $4,443 from $4,406 for the same period in 2012.
· The percentage of revenues derived from residents’ private resources for the second quarter of 2013 at our owned and leased senior living communities increased 90 basis points to 76.7% from 75.8% for the same period in 2012.
· Our fee revenues from managed senior living communities in the second quarter of 2013 increased to $2.3 million compared to $1.3 million for the same period in 2012.
Year to Date Financial Highlights:
· Total revenues for the six months ended June 30, 2013 increased 9.7% to $703.1 million from $640.8 million for the same period in 2012.
· EBITDA for the six months ended June 30, 2013 was $22.5 million compared to $26.3 million for the same period in 2012. EBITDA for the six months ended June 30, 2012 included a gain on settlement of our litigation with Sunrise that increased EBITDA by $3.4 million. EBITDA excluding that gain and certain other items was $22.5 million and $22.9 million for the six months ended June 30, 2013 and 2012, respectively. A reconciliation of income from continuing operations determined in accordance with GAAP to EBITDA and EBITDA excluding certain items for the six months ended June 30, 2013 and 2012 appears later in this press release.
· Income from continuing operations for the six months ended June 30, 2013 was $6.1 million, or $0.13 per basic and diluted share, compared to $6.5 million, or $0.14 per basic and diluted share for the same period in 2012. Income from continuing operations for the six months ended June 30, 2013 included an income tax benefit of $1.5 million, or $0.03 per basic and diluted share, relating to a work opportunity tax credit program that expired in 2012 and which was retroactively reinstated in January 2013. Income from continuing operations for the six months ended June 30, 2012 included a gain on settlement of our litigation with Sunrise of $1.9 million (net of taxes), or $0.04 per basic and diluted share.
· Net income for the six months ended June 30, 2013 was $2.8 million, or $0.06 per basic and diluted share, compared to $5.0 million, or $0.11 per basic and diluted share for the same period in 2012. Net income in the 2013 period included a loss from discontinued operations of $3.4 million. Net income in the 2012 period included a gain on settlement of our litigation with Sunrise of $1.9 million (net of taxes) and a loss from discontinued operations of $1.5 million.
Intention to Sell 11 Senior Living Communities with 753 Living Units that Receive the Majority of Their Revenues from Medicaid/Medicare:
In June 2013, we and Senior Housing Properties Trust, or SNH, agreed that SNH will offer for sale 10 senior living communities with 721 living units, which we lease from SNH. Seven of these 10 communities with 578 living units are skilled nursing facilities, or SNFs, and three of these communities with 143 living units are assisted living communities. Also in June 2013, we decided to offer for sale one assisted living community we own with 32 living units. In aggregate, these communities receive the majority of their revenues from Medicare/Medicaid reimbursements. We are in the process of offering these communities for sale, but we can provide no assurance that sales of these communities will occur. With regard to the 10 communities that we lease from SNH, our rent payable to SNH will be reduced if and as these sales may occur pursuant to our lease terms with SNH. The operating results of these 11 communities are included in our discontinued operations and they generated net losses of $1.8 million during the second quarter of 2013.
As of June 30, 2013, we and SNH had entered an agreement to sell one of the 10 communities that we lease from SNH and intend to sell, a SNF with 112 living units, for a sales price of $2.6 million. We expect the sale of this SNF to occur before the end of 2013, but completion of this sale is subject to customary closing conditions and we can provide no assurance that a sale of this SNF will occur before the end of 2013 or at all or that the terms of the sale will not change.
Other Highlights:
On April 30, 2013, we completed the sale of two SNFs we owned located in Michigan with a total of 271 living units for an aggregate sales price of $8.0 million, including the assumption by the buyer of $7.5 million of United States Department of Housing and Urban Development guaranteed mortgage debt. The operating results of these two SNFs are included in our discontinued operations.
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On July 8, 2013, we redeemed all $24.9 million principal amount of our 3.75% convertible senior notes outstanding at a redemption price equal to the principal amount plus accrued and unpaid interest. We funded this redemption with cash on hand and borrowings under our revolving credit facility.
Conference Call:
Later today, July 29, 2013, at 5:00 p.m. Eastern Time, we will host a conference call to discuss the second quarter financial results. Following management’s presentation, there will be a question and answer period.
The conference call telephone number is (877) 777-1967. Participants calling from outside the United States and Canada should dial (612) 332-0637. 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 Time, August 5, 2013. To hear the replay, dial (320) 365-3844. The replay pass code is 296748.
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 transcription, recording and retransmission in any way of the Company’s second quarter 2013 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. As of June 30, 2013, we operated 250 senior living communities (excluding those senior living communities we have classified as discontinued operations) with 29,698 living units located in 31 states, including 30 communities (2,946 living units) that we own and operate, 181 communities (20,074 living units) that we lease and operate, and 39 communities (6,678 living units) that we manage. These communities include independent living, assisted living, continuing care and skilled nursing communities. We also operate two rehabilitation hospitals. We are headquartered in Newton, Massachusetts.
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WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER WE USE WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE” OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY THESE FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:
· THIS PRESS RELEASE STATES THAT WE AND SNH HAVE DECIDED TO OFFER FOR SALE 10 SENIOR LIVING COMMUNITIES THAT WE LEASE FROM SNH AND WE HAVE DECIDED TO OFFER FOR SALE ONE SENIOR LIVING COMMUNITY THAT WE OWN. WE CAN PROVIDE NO ASSURANCE THAT WE WILL BE ABLE TO SELL THESE COMMUNITIES ON TERMS ACCEPTABLE TO US OR OTHERWISE.
· THIS PRESS RELEASE STATES THAT WE AND SNH HAVE AGREED TO SELL ONE OF THE 10 SENIOR LIVING COMMUNITIES THAT WE LEASE FROM SNH AND THAT WE EXPECT THE SALE TO OCCUR PRIOR TO THE END OF 2013. THIS SALE IS SUBJECT TO VARIOUS TERMS AND CONDITIONS TYPICAL OF SUCH TRANSACTIONS. THESE TERMS AND CONDITIONS MAY NOT BE MET. AS A RESULT, THIS TRANSACTION MAY BE DELAYED OR MAY NOT OCCUR OR ITS TERMS MAY CHANGE.
THE INFORMATION CONTAINED IN OUR FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER THE CAPTION “RISK FACTORS” IN OUR PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.
FOR THESE REASONS, AMONG OTHERS, INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE.
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Supplemental Information, page 1 of 7
FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
| | Three months ended
June 30, | | Six months ended
June 30, | |
| | 2013 | | 2012 | | 2013 | | 2012 | |
Revenues: | | | | | | | | | |
Senior living revenue | | $ | 269,081 | | $ | 269,040 | | $ | 538,471 | | $ | 535,776 | |
Rehabilitation hospital revenue | | 28,343 | | 26,386 | | 55,824 | | 53,173 | |
Management fee revenue | | 2,281 | | 1,302 | | 4,583 | | 2,390 | |
Reimbursed costs incurred on behalf of managed communities | | 52,153 | | 26,098 | | 104,211 | | 49,503 | |
Total revenues | | 351,858 | | 322,826 | | 703,089 | | 640,842 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Senior living wages and benefits | | 130,466 | | 130,240 | | 263,086 | | 262,026 | |
Other senior living operating expenses | | 65,751 | | 63,797 | | 132,090 | | 128,058 | |
Costs incurred on behalf of managed communities | | 52,153 | | 26,098 | | 104,211 | | 49,503 | |
Rehabilitation hospital expenses | | 24,710 | | 23,872 | | 49,604 | | 47,991 | |
Rent expense | | 50,936 | | 49,849 | | 101,129 | | 99,628 | |
General and administrative | | 15,452 | | 15,389 | | 30,583 | | 30,844 | |
Depreciation and amortization | | 6,651 | | 6,276 | | 13,089 | | 12,165 | |
Total operating expenses | | 346,119 | | 315,521 | | 693,792 | | 630,215 | |
| | | | | | | | | |
Operating income | | 5,739 | | 7,305 | | 9,297 | | 10,627 | |
| | | | | | | | | |
Interest, dividend and other income | | 211 | | 234 | | 408 | | 439 | |
Interest and other expense | | (1,355 | ) | (1,605 | ) | (2,811 | ) | (3,031 | ) |
Acquisition related costs | | (41 | ) | — | | (41 | ) | — | |
Equity in earnings of Affiliates Insurance Company | | 79 | | 76 | | 155 | | 121 | |
Gain on settlement | | — | | 3,365 | | — | | 3,365 | |
Gain on early extinguishment of debt | | — | | 45 | | — | | 45 | |
Loss on sale of available for sale securities reclassified from other comprehensive income | | (117 | ) | — | | (30 | ) | (1 | ) |
| | | | | | | | | |
Income from continuing operations before income taxes | | 4,516 | | 9,420 | | 6,978 | | 11,565 | |
Provision for income taxes | | (1,854 | ) | (4,108 | ) | (850 | ) | (5,063 | ) |
Income from continuing operations | | 2,662 | | 5,312 | | 6,128 | | 6,502 | |
Loss from discontinued operations | | (1,837 | ) | (674 | ) | (3,368 | ) | (1,495 | ) |
| | | | | | | | | |
Net income | | $ | 825 | | $ | 4,638 | | $ | 2,760 | | $ | 5,007 | |
| | | | | | | | | |
Weighted average shares outstanding - basic | | 48,253 | | 47,914 | | 48,244 | | 47,906 | |
| | | | | | | | | |
Weighted average shares outstanding - diluted | | 48,253 | | 49,953 | | 48,244 | | 50,360 | |
| | | | | | | | | |
Basic income per share from: | | | | | | | | | |
Continuing operations | | $ | 0.06 | | $ | 0.10 | | $ | 0.13 | | $ | 0.14 | |
Discontinued operations | | (0.04 | ) | (0.01 | ) | (0.07 | ) | (0.03 | ) |
Net income per share - basic | | $ | 0.02 | | $ | 0.09 | | $ | 0.06 | | $ | 0.11 | |
| | | | | | | | | |
Diluted income per share from: | | | | | | | | | |
Continuing operations | | $ | 0.06 | | $ | 0.10 | | $ | 0.13 | | $ | 0.14 | |
Discontinued operations | | (0.04 | ) | (0.01 | ) | (0.07 | ) | (0.03 | ) |
Net income per share - diluted | | $ | 0.02 | | $ | 0.09 | | $ | 0.06 | | $ | 0.11 | |
Supplemental Information, page 2 of 7
FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS DATA
(in thousands)
(unaudited)
| | June 30,
2013 | | December 31,
2012 | |
Assets | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 19,311 | | $ | 24,638 | |
Accounts receivable, net of allowance | | 56,763 | | 49,886 | |
Due from related persons | | 5,810 | | 6,881 | |
Investments in available for sale securities | | 16,352 | | 12,920 | |
Restricted cash | | 11,202 | | 6,548 | |
Prepaid expenses and other current assets | | 19,382 | | 29,394 | |
Assets of discontinued operations | | 4,978 | | 16,285 | |
Total current assets | | 133,798 | | 146,552 | |
| | | | | |
Property and equipment, net | | 331,172 | | 333,335 | |
Restricted cash | | 11,196 | | 12,166 | |
Restricted investments in available for sale securities | | 6,979 | | 10,580 | |
Goodwill, equity investment and other long term assets | | 75,741 | | 75,604 | |
Total assets | | $ | 558,886 | | $ | 578,237 | |
| | | | | |
Liabilities and Shareholders’ Equity | | | | | |
Current liabilities: | | | | | |
Revolving credit facility, secured, principally by real estate | | $ | — | | $ | — | |
Revolving credit facility, secured, principally by accounts receivable | | — | | — | |
Convertible senior notes | | 24,872 | | 24,872 | |
Other current liabilities | | 148,010 | | 165,969 | |
Total current liabilities | | 172,882 | | 190,841 | |
| | | | | |
Mortgage notes payable | | 37,050 | | 37,621 | |
Other long term liabilities | | 39,141 | | 42,970 | |
Shareholders’ equity | | 309,813 | | 306,805 | |
Total liabilities and shareholders’ equity | | $ | 558,886 | | $ | 578,237 | |
Supplemental Information, page 3 of 7
FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| | Three months ended June 30, | | Six months ended June 30, | |
| | 2013 | | 2012 | | 2013 | | 2012 | |
| | | | | | | | | |
Cash flows from operating activities: | | | | | | | | | |
Net income | | $ | 825 | | $ | 4,638 | | $ | 2,760 | | $ | 5,007 | |
Adjustments to reconcile net income to cash provided by operating activities: | | | | | | | | | |
Depreciation and amortization | | 6,651 | | 6,276 | | 13,089 | | 12,165 | |
Gain on early extinguishment of debt | | — | | (45 | ) | — | | (45 | ) |
Loss from discontinued operations | | 1,837 | | 674 | | 3,368 | | 1,495 | |
Loss on sale of available for sale securities | | 117 | | — | | 30 | | 1 | |
Equity in earnings of Affiliates Insurance Company | | (79 | ) | (76 | ) | (155 | ) | (121 | ) |
Stock-based compensation | | 383 | | 273 | | 588 | | 490 | |
Provision for losses on receivables | | 1,606 | | 1,074 | | 2,842 | | 2,153 | |
Changes in assets and liabilities: | | | | | | | | | |
Accounts receivable | | (5,145 | ) | 256 | | (9,719 | ) | (1,722 | ) |
Prepaid expenses and other assets | | 2,283 | | 4,003 | | 9,377 | | 3,515 | |
Accounts payable and accrued expenses | | (2,795 | ) | 1,783 | | (15,623 | ) | 2,140 | |
Accrued compensation and benefits | | (357 | ) | 611 | | 3,088 | | 5,101 | |
Due from (to) related persons, net | | 201 | | 2,489 | | 1,315 | | (2,703 | ) |
Other current and long term liabilities | | 1,095 | | (10 | ) | (1,473 | ) | 984 | |
Cash provided by operating activities | | 6,622 | | 21,946 | | 9,487 | | 28,460 | |
| | | | | | | | | |
Net cash provided by (used in) discontinued operations | | 2,955 | | 747 | | (81 | ) | 1,390 | |
| | | | | | | | | |
Cash flows from investing activities: | | | | | | | | | |
Acquisition of property and equipment | | (13,717 | ) | (15,235 | ) | (26,255 | ) | (27,770 | ) |
Payments from restricted cash and investment accounts, net | | (1,518 | ) | (754 | ) | (3,684 | ) | (3,890 | ) |
Purchase of available for sale securities | | (451 | ) | (4,554 | ) | (5,333 | ) | (4,554 | ) |
Proceeds from disposition of property and equipment held for sale | | 7,731 | | 7,668 | | 15,901 | | 13,967 | |
Proceeds from sale of available for sale securities | | 2,804 | | — | | 5,213 | | 772 | |
Cash used in investing activities | | (5,151 | ) | (12,875 | ) | (14,158 | ) | (21,475 | ) |
| | | | | | | | | |
Cash flows from financing activities: | | | | | | | | | |
Proceeds from borrowings on credit facilities | | — | | 47,500 | | 20,000 | | 47,500 | |
Repayments of borrowings on credit facilities | | — | | (10,000 | ) | (20,000 | ) | (10,000 | ) |
Repayments of borrowing on the bridge loan from Senior Housing Properties Trust | | — | | (38,000 | ) | — | | (38,000 | ) |
Purchase and retirement of convertible senior notes | | — | | (12,038 | ) | — | | (12,038 | ) |
Repayments of mortgage notes payable | | (271 | ) | (290 | ) | (575 | ) | (576 | ) |
Cash used in financing activities | | (271 | ) | (12,828 | ) | (575 | ) | (13,114 | ) |
| | | | | | | | | |
Change in cash and cash equivalents during the period | | 4,155 | | (3,010 | ) | (5,327 | ) | (4,739 | ) |
Cash and cash equivalents at beginning of period | | 15,156 | | 26,645 | | 24,638 | | 28,374 | |
Cash and cash equivalents at end of period | | $ | 19,311 | | $ | 23,635 | | $ | 19,311 | | $ | 23,635 | |
| | | | | | | | | |
Supplemental cash flow information: | | | | | | | | | |
Cash paid for interest | | $ | 1,079 | | $ | 1,749 | | $ | 1,788 | | $ | 2,751 | |
Cash paid for income taxes | | $ | 1,098 | | $ | 1,113 | | $ | 1,394 | | $ | 1,235 | |
| | | | | | | | | |
Non-cash activities: | | | | | | | | | |
Issuance of common stock | | $ | 182 | | $ | 114 | | $ | 182 | | $ | 114 | |
Supplemental Information, page 4 of 7
FIVE STAR QUALITY CARE, INC.
SENIOR LIVING COMMUNITY FINANCIAL DATA(1)
(dollars in thousands, except average monthly rate)
| | Three months ended | | Six months ended | |
| | June 30,(2) | | June 30,(2) | |
| | 2013 | | 2012 | | 2013 | | 2012 | |
Senior living communities: | | | | | | | | | |
Number of communities (end of period) | | 211 | | 211 | | 211 | | 211 | |
Number of units (end of period) | | 23,020 | | 23,020 | | 23,020 | | 23,020 | |
Occupancy | | 85.5 | % | 86.0 | % | 85.8 | % | 86.2 | % |
Avg. monthly rate(3) | | $ | 4,443 | | $ | 4,406 | | $ | 4,458 | | $ | 4,383 | |
| | | | | | | | | |
Senior living revenue: | | | | | | | | | |
Independent and assisted living community revenue | | $ | 124,242 | | $ | 121,975 | | $ | 247,443 | | $ | 243,184 | |
Continuing care retirement community revenue | | 97,020 | | 96,954 | | 194,456 | | 194,387 | |
Skilled nursing facility revenue | | 44,671 | | 46,745 | | 90,050 | | 91,632 | |
Other (4) | | 3,148 | | 3,366 | | 6,522 | | 6,573 | |
| | | | | | | | | |
Total senior living revenue | | $ | 269,081 | | $ | 269,040 | | $ | 538,471 | | $ | 535,776 | |
| | | | | | | | | |
Senior living wages and benefits: | | | | | | | | | |
Independent and assisted living community wages and benefits | | $ | 52,753 | | $ | 52,650 | | $ | 106,432 | | $ | 105,962 | |
Continuing care retirement community wages and benefits | | 48,029 | | 47,702 | | 97,006 | | 96,220 | |
Skilled nursing facility wages and benefits | | 28,404 | | 28,540 | | 57,256 | | 57,203 | |
Other (4) | | 1,280 | | 1,348 | | 2,392 | | 2,641 | |
| | | | | | | | | |
Total senior living wages and benefits | | $ | 130,466 | | $ | 130,240 | | $ | 263,086 | | $ | 262,026 | |
| | | | | | | | | |
Senior living other operating expenses: | | | | | | | | | |
Independent and assisted living community other operating expenses | | $ | 29,879 | | $ | 28,620 | | $ | 59,364 | | $ | 57,943 | |
Continuing care retirement community other operating expenses | | 24,528 | | 23,403 | | 49,623 | | 47,271 | |
Skilled nursing facility other operating expenses | | 11,220 | | 11,131 | | 22,493 | | 21,652 | |
Other (4) | | 124 | | 643 | | 610 | | 1,192 | |
| | | | | | | | | |
Total senior living other operating expenses | | $ | 65,751 | | $ | 63,797 | | $ | 132,090 | | $ | 128,058 | |
(1) Excludes data for managed communities, rehabilitation hospitals and discontinued senior living operations.
(2) The number of communities operated continuously from January 1, 2012, through June 30, 2013, did not change; as such, there is no separate comparable senior living community financial data presented.
(3) Average monthly rate is calculated by taking the average daily rate, which is defined as total operating revenue divided by occupied units, during the period and multiplying it by 30 days.
(4) Other senior living relates primarily to rehabilitation and other specialty service revenues and expenses provided at our residential facilities and does not include revenue and expenses from our rehabilitation hospital operations.
Supplemental Information, page 5 of 7
FIVE STAR QUALITY CARE, INC.
PERCENT BREAKDOWN OF SENIOR LIVING COMMUNITY REVENUES(1)
| | Three months ended | | Six months ended | |
| | June 30, | | June 30, | |
| | 2013 | | 2012 | | 2013 | | 2012 | |
Independent and assisted living communities: | | | | | | | | | |
Private and other sources | | 99.1 | % | 99.0 | % | 99.1 | % | 99.0 | % |
Medicaid | | 0.9 | % | 1.0 | % | 0.9 | % | 1.0 | % |
Total | | 100 | % | 100 | % | 100 | % | 100 | % |
| | | | | | | | | |
Continuing care retirement communities: | | | | | | | | | |
Private and other sources | | 71.7 | % | 70.6 | % | 70.9 | % | 70.6 | % |
Medicare | | 22.4 | % | 22.7 | % | 23.0 | % | 22.7 | % |
Medicaid | | 5.9 | % | 6.7 | % | 6.1 | % | 6.7 | % |
Total | | 100 | % | 100 | % | 100 | % | 100 | % |
| | | | | | | | | |
Skilled nursing facilities: | | | | | | | | | |
Private and other sources | | 26.0 | % | 26.3 | % | 26.0 | % | 26.4 | % |
Medicare | | 26.1 | % | 25.4 | % | 26.5 | % | 26.0 | % |
Medicaid | | 47.9 | % | 48.3 | % | 47.5 | % | 47.6 | % |
Total | | 100 | % | 100 | % | 100 | % | 100 | % |
| | | | | | | | | |
Total senior living communities: | | | | | | | | | |
Private and other sources | | 76.7 | % | 75.8 | % | 76.3 | % | 75.9 | % |
Medicare | | 12.6 | % | 12.8 | % | 12.9 | % | 12.9 | % |
Medicaid | | 10.7 | % | 11.4 | % | 10.8 | % | 11.2 | % |
Total | | 100 | % | 100 | % | 100 | % | 100 | % |
(1) Excludes data for managed communities, rehabilitation hospitals and discontinued senior living operations.
Supplemental Information, page 6 of 7
FIVE STAR QUALITY CARE, INC.
SENIOR LIVING OTHER OPERATING DATA(1)
(dollars in thousands, except average monthly rate)
| | Three months ended | |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, | |
| | 2013 | | 2013 | | 2012 | | 2012 | | 2012 | |
Independent and assisted living communities (owned): | | | | | | | | | | | |
Number of communities (end of period) | | 30 | | 30 | | 30 | | 30 | | 30 | |
Number of units (end of period) | | 2,946 | | 2,946 | | 2,946 | | 2,946 | | 2,946 | |
Occupancy | | 87.6 | % | 87.5 | % | 87.8 | % | 86.1 | % | 85.2 | % |
Avg. monthly rate(2) | | $ | 3,379 | | $ | 3,374 | | $ | 3,292 | | $ | 3,306 | | $ | 3,333 | |
| | | | | | | | | | | |
Independent and assisted living communities (leased): | | | | | | | | | | | |
Number of communities (end of period) | | 119 | | 119 | | 119 | | 119 | | 119 | |
Number of units (end of period) | | 9,906 | | 9,906 | | 9,906 | | 9,906 | | 9,906 | |
Occupancy | | 88.0 | % | 88.5 | % | 89.1 | % | 88.8 | % | 88.5 | % |
Avg. monthly rate(2) | | $ | 3,669 | | $ | 3,662 | | $ | 3,590 | | $ | 3,586 | | $ | 3,604 | |
| | | | | | | | | | | |
Continuing care retirement communities (leased): | | | | | | | | | | | |
Number of communities (end of period) | | 31 | | 31 | | 31 | | 31 | | 31 | |
Number of units (end of period)(3) | | 7,346 | | 7,346 | | 7,346 | | 7,346 | | 7,346 | |
Occupancy | | 83.3 | % | 83.7 | % | 83.4 | % | 84.0 | % | 83.9 | % |
Avg. monthly rate(2) | | $ | 5,230 | | $ | 5,280 | | $ | 5,204 | | $ | 5,117 | | $ | 5,185 | |
| | | | | | | | | | | |
Skilled nursing facilities (leased): | | | | | | | | | | | |
Number of communities (end of period) | | 31 | | 31 | | 31 | | 31 | | 31 | |
Number of units (end of period)(4) | | 2,822 | | 2,822 | | 2,822 | | 2,822 | | 2,822 | |
Occupancy | | 80.7 | % | 81.5 | % | 82.2 | % | 83.0 | % | 83.9 | % |
Avg. monthly rate(2) | | $ | 6,496 | | $ | 6,644 | | $ | 6,460 | | $ | 6,219 | | $ | 6,484 | |
| | | | | | | | | | | |
Total senior living communities (owned and leased): | | | | | | | | | | | |
Number of communities (end of period) | | 211 | | 211 | | 211 | | 211 | | 211 | |
Number of units (end of period) | | 23,020 | | 23,020 | | 23,020 | | 23,020 | | 23,020 | |
Occupancy | | 85.5 | % | 86.0 | % | 86.3 | % | 86.2 | % | 86.0 | % |
Avg. monthly rate(2) | | $ | 4,443 | | $ | 4,474 | | $ | 4,385 | | $ | 4,337 | | $ | 4,406 | |
| | | | | | | | | | | |
Managed communities: | | | | | | | | | | | |
Number of communities (end of period) | | 39 | | 39 | | 39 | | 30 | | 25 | |
Number of units (end of period)(5) | | 6,678 | | 6,678 | | 6,678 | | 4,488 | | 3,735 | |
Occupancy | | 87.4 | % | 87.2 | % | 87.7 | % | 87.6 | % | 87.6 | % |
Avg. monthly rate(2) | | $ | 4,215 | | $ | 4,296 | | $ | 4,144 | | $ | 3,962 | | $ | 4,000 | |
| | | | | | | | | | | |
Rehabilitation hospitals (leased): | | | | | | | | | | | |
Number of hospitals (end of period) | | 2 | | 2 | | 2 | | 2 | | 2 | |
Number of units (end of period) | | 321 | | 321 | | 321 | | 321 | | 321 | |
Occupancy | | 61.9 | % | 63.7 | % | 60.2 | % | 60.7 | % | 59.8 | % |
| | | | | | | | | | | |
Other ancillary services: | | | | | | | | | | | |
Rehabilitation and wellness inpatient clinics (end of period) | | 51 | | 53 | | 50 | | 50 | | 48 | |
Rehabilitation and wellness outpatient clinics (end of period) | | 51 | | 49 | | 49 | | 46 | | 44 | |
Home health communities served (end of period) | | 6 | | 6 | | 6 | | 6 | | 6 | |
(1) Excludes data for discontinued operations.
(2) Average monthly rate is calculated by taking the average daily rate, which is defined as total operating revenue divided by occupied units, during the period and multiplying it by 30 days.
(3) Includes 2,024 skilled nursing units in communities where assisted living and independent living services are the predominant services provided.
(4) Includes 69 assisted living and independent living units in communities where skilled nursing services are the predominant services provided.
(5) Includes 412 skilled nursing units in communities where assisted living and independent living services are the predominant services provided.
Supplemental Information, page 7 of 7
FIVE STAR QUALITY CARE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands)
Earnings before interest, taxes, depreciation and amortization, or EBITDA, and EBITDA excluding certain items, or collectively, Non-GAAP Financial Measures, are not financial measures determined according to U.S. generally accepted accounting principles, or GAAP. We consider these Non-GAAP Financial Measures 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 a non-GAAP basis. These Non-GAAP Financial Measures are used by management to evaluate our financial performance and for comparing our performance over time and to the performance of our competitors. These Non-GAAP Financial Measures 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, cash flows from operating activities or any other financial operating or performance or liquidity measure established by GAAP. The following table includes the reconciliation of these Non-GAAP Financial Measures to income from continuing operations, the most directly comparable financial measure under GAAP reported in our condensed consolidated financial statements, for the three and six months ended June 30, 2013 and 2012.
| | Three months ended | | Six months ended | |
| | June 30, | | June 30, | |
| | 2013 | | 2012 | | 2013 | | 2012 | |
Income from continuing operations | | $ | 2,662 | | $ | 5,312 | | $ | 6,128 | | $ | 6,502 | |
Add: interest and other expense | | 1,355 | | 1,605 | | 2,811 | | 3,031 | |
Add: income tax expense | | 1,854 | | 4,108 | | 2,318 | | 5,063 | |
Add: depreciation and amortization | | 6,651 | | 6,276 | | 13,089 | | 12,165 | |
Less: interest, dividend and other income | | (211 | ) | (234 | ) | (408 | ) | (439 | ) |
Less: income tax benefit | | — | | — | | (1,468 | ) | — | |
EBITDA | | 12,311 | | 17,067 | | 22,470 | | 26,322 | |
Add (less): | | | | | | | | | |
Acquisition related costs | | 41 | | — | | 41 | | — | |
Loss on sale of investments in available for sale securities | | 117 | | — | | 30 | | 1 | |
Gain on settlement | | — | | (3,365 | ) | — | | (3,365 | ) |
Gain on early extinguishment of debt | | — | | (45 | ) | — | | (45 | ) |
EBITDA excluding certain items | | $ | 12,469 | | $ | 13,657 | | $ | 22,541 | | $ | 22,913 | |
