Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | May 04, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-16817 | |
Entity Registrant Name | FIVE STAR SENIOR LIVING INC. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 04-3516029 | |
Entity Address, Address Line One | 400 Centre Street | |
Entity Address, City or Town | Newton | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02458 | |
City Area Code | 617 | |
Local Phone Number | 796-8387 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | FVE | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 31,541,833 | |
Entity Central Index Key | 0001159281 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and cash equivalents | $ 36,641 | $ 31,740 |
Accounts receivable, net of allowance of $4,469 and $4,664, respectively | 10,941 | 34,190 |
Due from related person | 40,949 | 5,533 |
Debt and equity investments, of which $11,208 and $12,622 are restricted, respectively | 19,544 | 21,070 |
Restricted cash and cash equivalents | 24,290 | 23,995 |
Prepaid expenses and other current assets | 16,245 | 17,286 |
Assets held for sale | 0 | 9,554 |
Total current assets | 148,610 | 143,368 |
Property and equipment, net | 164,274 | 167,247 |
Equity investment of an investee | 298 | 298 |
Restricted cash and cash equivalents | 1,438 | 1,244 |
Restricted debt and equity investments | 7,697 | 7,105 |
Right of use assets | 20,161 | 20,855 |
Other long-term assets | 4,270 | 5,676 |
Total assets | 346,748 | 345,793 |
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||
Accounts payable | 20,098 | 30,440 |
Accrued expenses | 15,216 | 53,683 |
Accrued compensation and benefits | 19,449 | 35,629 |
Current portion of lease liabilities | 2,925 | 2,872 |
Due to related persons | 1,145 | 2,247 |
Mortgage note payable | 369 | 362 |
Security deposits and current portion of continuing care contracts | 429 | 434 |
Accrued self-insurance obligations and other current liabilities | 24,326 | 26,089 |
Liabilities held for sale | 0 | 12,544 |
Total current liabilities | 83,957 | 164,300 |
Long-term liabilities: | ||
Mortgage note payable | 7,076 | 7,171 |
Long-term portion of lease liabilities | 18,925 | 19,671 |
Accrued self-insurance obligations | 35,966 | 33,872 |
Other long-term liabilities | 215 | 798 |
Total long-term liabilities | 62,182 | 61,512 |
Commitments and contingencies | ||
Shareholders’ equity: | ||
Common stock, par value $.01: 75,000,000 shares authorized, 31,542,335 and 5,154,892 shares issued and outstanding, respectively | 316 | 52 |
Additional paid-in-capital | 459,606 | 362,450 |
Accumulated deficit | (260,699) | (245,184) |
Accumulated other comprehensive income | 1,386 | 2,663 |
Total shareholders’ equity | 200,609 | 119,981 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 346,748 | $ 345,793 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, net of allowance | $ 4,469 | $ 4,664 |
Investments, restricted | $ 11,208 | $ 12,622 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
Common stock, shares issued (in shares) | 31,542,335 | 5,154,892 |
Common stock, shares outstanding (in shares) | 31,542,335 | 5,154,892 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
REVENUES | ||
Total revenues | $ 297,445,000 | $ 355,523,000 |
OPERATING EXPENSES | ||
General and administrative | 22,865,000 | 26,502,000 |
Rent | 1,177,000 | 54,542,000 |
Depreciation and amortization | 2,701,000 | 8,165,000 |
Long-lived asset impairment | 0 | 3,148,000 |
Total operating expenses | 288,821,000 | 387,360,000 |
Operating income (loss) | 8,624,000 | (31,837,000) |
Interest, dividend and other income | 339,000 | 156,000 |
Interest and other expense | (382,000) | (906,000) |
Unrealized (loss) gain on equity investments | (1,462,000) | 366,000 |
Realized (loss) gain on sale of debt and equity investments | (21,000) | 92,000 |
Loss on termination of leases | (22,899,000) | 0 |
Loss before income taxes and equity in earnings of an investee | (15,801,000) | (32,129,000) |
Provision for income taxes | (1,408,000) | (1,490,000) |
Equity in earnings of an investee | 0 | 404,000 |
Net loss | $ (17,209,000) | $ (33,215,000) |
Weighted average shares outstanding—basic and diluted (in dollars per share) | 31,448 | 5,004 |
Net loss per share—basic and diluted (in shares) | $ (0.55) | $ (6.64) |
Total management and operating revenues | ||
REVENUES | ||
Total revenues | $ 59,432,000 | $ 280,918,000 |
Senior living | ||
REVENUES | ||
Total revenues | 21,338,000 | 266,529,000 |
Management fees | ||
REVENUES | ||
Total revenues | 17,051,000 | 3,983,000 |
Rehabilitation and wellness services | ||
REVENUES | ||
Total revenues | 21,043,000 | 10,406,000 |
OPERATING EXPENSES | ||
Cost of revenues | 16,566,000 | 7,820,000 |
Reimbursed community-level costs incurred on behalf of managed communities | ||
REVENUES | ||
Total revenues | 232,016,000 | 74,605,000 |
OPERATING EXPENSES | ||
Cost of revenues | 232,016,000 | 74,605,000 |
Other reimbursed expenses | ||
REVENUES | ||
Total revenues | 5,997,000 | 0 |
Senior living wages and benefits | ||
OPERATING EXPENSES | ||
Cost of revenues | 10,202,000 | 136,841,000 |
Other senior living operating expenses | ||
OPERATING EXPENSES | ||
Cost of revenues | $ 3,294,000 | $ 75,737,000 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (17,209) | $ (33,215) |
Other comprehensive income (loss): | ||
Unrealized gain (loss) on debt investments, net of tax of $0 and $742, respectively | 427 | (205) |
Equity in unrealized gain of an investee, net of tax | 0 | 65 |
Realized (gain) loss on debt investments reclassified and included in net loss, net of tax of $0 and $0, respectively | (10) | 4 |
Other comprehensive income (loss) | 417 | (136) |
Comprehensive loss | $ (16,792) | $ (33,351) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Tax on unrealized loss on debt investments | $ 0 | $ 742 |
Tax on realized (gain) loss on debt investments | $ 0 | $ 0 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income |
Beginning balance (in shares) at Dec. 31, 2018 | 5,085,345 | ||||
Beginning balance at Dec. 31, 2018 | $ 71,169 | $ 51 | $ 362,012 | $ (292,636) | $ 1,742 |
Comprehensive loss: | |||||
Net loss | (33,215) | (33,215) | |||
Unrealized gain (loss) on investments, net of tax | (205) | (205) | |||
Realized gain (loss) on investments reclassified and included in net loss, net of tax | 4 | 4 | |||
Equity in unrealized gain (loss) of an investee, net of tax | 65 | 65 | |||
Comprehensive loss | (33,351) | (33,215) | (136) | ||
Grants under share award plan and share based compensation | 97 | 97 | |||
Repurchases under share award plan (in shares) | (1,042) | ||||
Ending balance (in shares) at Mar. 31, 2019 | 5,084,303 | ||||
Ending balance at Mar. 31, 2019 | $ 105,388 | $ 51 | 362,109 | (258,378) | 1,606 |
Comprehensive loss: | |||||
Cumulative effect adjustment to beginning accumulated deficit and accumulated other comprehensive income in connection with a reclassification of equity investments previously classified as debt investments | 1,694 | (1,694) | |||
Beginning balance (in shares) at Dec. 31, 2019 | 5,154,892 | 5,154,892 | |||
Beginning balance at Dec. 31, 2019 | $ 119,981 | $ 52 | 362,450 | (245,184) | 2,663 |
Comprehensive loss: | |||||
Net loss | (17,209) | (17,209) | |||
Unrealized gain (loss) on investments, net of tax | 427 | 427 | |||
Realized gain (loss) on investments reclassified and included in net loss, net of tax | (10) | (10) | |||
Comprehensive loss | (16,792) | (17,209) | 417 | ||
Issuance of common shares (in shares) | 26,387,007 | ||||
Issuance of common shares | 97,340 | $ 264 | 97,076 | ||
Grants under share award plan and share based compensation (in shares) | 4,000 | ||||
Grants under share award plan and share based compensation | 81 | 81 | |||
Repurchases under share award plan (in shares) | (3,564) | ||||
Repurchases under share award plan | $ (1) | (1) | |||
Ending balance (in shares) at Mar. 31, 2020 | 31,542,335 | 31,542,335 | |||
Ending balance at Mar. 31, 2020 | $ 200,609 | $ 316 | $ 459,606 | $ (260,699) | $ 1,386 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CASH FLOW FROM OPERATING ACTIVITIES: | ||
Net loss | $ (17,209,000) | $ (33,215,000) |
Adjustments to reconcile net loss to cash provided by operating activities: | ||
Depreciation and amortization | 2,701,000 | 8,165,000 |
Unrealized loss (gain) on equity investments | 1,462,000 | (366,000) |
Realized loss (gain) on sale of debt and equity investments | 21,000 | (92,000) |
Loss on termination of leases | 22,899,000 | 0 |
Long-lived asset impairment | 0 | 3,148,000 |
Equity in earnings of an investee | 0 | (404,000) |
Share based compensation | 80,000 | 97,000 |
Provision for losses on accounts receivable | 510,000 | 1,045,000 |
Other non-cash expense adjustments, net | 69,000 | 201,000 |
Changes in assets and liabilities: | ||
Accounts receivable | 22,739,000 | (3,031,000) |
Due from related person | (15,391,000) | (1,881,000) |
Prepaid expenses and other assets | 2,276,000 | 1,062,000 |
Accounts payable | (10,342,000) | (149,000) |
Accrued expenses | 17,406,000 | 7,652,000 |
Accrued compensation and benefits | (16,180,000) | 7,783,000 |
Due to related persons | (1,102,000) | 17,583,000 |
Other current and long-term liabilities | (144,000) | 737,000 |
Net cash provided by operating activities | 9,795,000 | 8,335,000 |
CASH FLOW FROM INVESTING ACTIVITIES: | ||
Acquisition of property and equipment | (6,341,000) | (12,056,000) |
Purchases of debt and equity investments | (1,588,000) | (1,471,000) |
Proceeds from sale of property and equipment | 2,725,000 | 22,578,000 |
Proceeds from sale of debt and equity investments | 1,453,000 | 2,643,000 |
Net cash (used in) provided by investing activities | (3,751,000) | 11,694,000 |
CASH FLOW FROM FINANCING ACTIVITIES: | ||
Costs related to issuance of common stock | (559,000) | 0 |
Repayments of mortgage note payable | (95,000) | (91,000) |
Net cash used in financing activities | (654,000) | (91,000) |
Change in cash and cash equivalents and restricted cash and cash equivalents | 5,390,000 | 19,938,000 |
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period | 56,979,000 | 50,155,000 |
Cash and cash equivalents and restricted cash and cash equivalents at end of period | 62,369,000 | 70,093,000 |
Reconciliation of cash and cash equivalents and restricted cash and cash equivalents: | ||
Cash and cash equivalents and restricted cash and cash equivalents at end of period | 62,369,000 | 70,093,000 |
Supplemental cash flow information: | ||
Interest paid | 122,000 | 780,000 |
Income taxes (received) paid, net | (117,000) | 120,000 |
Non-cash financing activities: | ||
Liabilities assumed and cash payments receivable related to issuance of our common stock | $ 75,000,000 | $ 0 |
Basis of Presentation and Organ
Basis of Presentation and Organization | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Organization | Basis of Presentation and Organization General. The accompanying condensed consolidated financial statements of Five Star Senior Living Inc. and its subsidiaries are unaudited. Certain information and disclosures required by the rules and regulations of the Securities and Exchange Commission, or SEC, and U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted pursuant to SEC rules and regulations related to interim financial statements. We believe the disclosures made are adequate to make the information presented not misleading. As of March 31, 2020 , we managed or operated 268 senior living communities located in 32 states with 31,272 living units, including 257 primarily independent and assisted living communities with 30,008 living units and 11 primarily skilled nursing facilities, or SNFs, with 1,264 living units. As of March 31, 2020 , we managed 244 of these senior living communities ( 28,960 living units), we owned and operated 20 of these senior living communities ( 2,108 living units) and we leased and operated four of these senior living communities ( 204 living units). Our 268 senior living communities, as of March 31, 2020 , included 11,362 independent living apartments, 16,459 assisted living suites and 3,451 SNF units. The foregoing numbers exclude living units categorized as out of service. Our rehabilitation and wellness services division provides a comprehensive suite of services; for example, our Ageility Physical Therapy Solutions division, or Ageility, provides our residents and others with rehabilitation and wellness services at our senior living communities as well as at outpatient clinics located separately from our senior living communities. As of March 31, 2020 , we operated 41 inpatient rehabilitation clinics in senior living communities of Diversified Healthcare Trust, or DHC, that are managed by us. As of March 31, 2020 , we operated 203 outpatient rehabilitation clinics, of which 152 were located at our managed, leased and owned senior living communities and 51 were located within senior living communities not owned or leased by us or DHC. Restructuring of Business Arrangements with DHC. On April 1, 2019, we entered into a transaction agreement, or the Transaction Agreement, with DHC to restructure our business arrangements with DHC, pursuant to which, effective as of January 1, 2020, or the Conversion Time: • our five then existing master leases with DHC as well as our then existing management and pooling agreements with DHC were terminated and replaced with new management agreements for all of these senior living communities, together with a related omnibus agreement, or collectively, the New Management Agreements; • we issued 10,268,158 of our common shares to DHC and an aggregate of 16,118,849 of our common shares to DHC’s shareholders of record as of December 13, 2019, or, together, the Share Issuances; and • as consideration for the Share Issuances, DHC provided to us $75,000 by assuming certain of our working capital liabilities and through cash payments. Such consideration, the Conversion and the Share Issuances are collectively referred to as the Restructuring Transactions. As of January 1, 2020, we reorganized our business to focus on the different services we offer older adults. In connection with our reorganization, we changed our reporting structure and the composition of our reporting units. As a result, we have reclassified certain prior year amounts to conform to the current year’s presentation. See Note 4 for more information regarding our segment reporting. As of January 1, 2020, we reclassified certain of our investments from debt investments to equity investments to reflect the nature of the investment rather than the nature of the securities held by the investment. As a result, we reclassified the related unrealized gain of $1,694 from accumulated other comprehensive income to accumulated deficit on January 1, 2020. See Note 9 for more information regarding these investments. The accompanying financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2019 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Estimates and Assumptions. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that may affect the amounts reported in these financial statements and related notes. Actual results could differ from those estimates. Significant estimates in our condensed consolidated financial statements relate to revenue recognition, including contractual allowances, the allowance of doubtful accounts, self-insurance reserves, long-lived assets, and estimates concerning our provisions for income taxes. Recently Adopted Accounting Pronouncements. On January 1, 2020, we adopted ASU No. 2018-13, Fair Value Measurement (Topic 820) issued by the Financial Accounting Standards Board, or FASB, which modifies certain disclosure requirements in Topic 820, such as the removal of the need to disclose the amount of and reason for transfers between Level 1 and Level 2 of the fair value hierarchy, and several changes related to Level 3 fair value measurements. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements. On January 1, 2020, we adopted ASU No. 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40) issued by the FASB, using the prospective transition method, which aligns the requirements for capitalizing implementation costs incurred in a cloud computing hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) : Simplifying the Accounting for Income Taxes , which simplifies certain requirements under Topic 740, including eliminating the exception to intraperiod tax allocation when there is a loss from continuing operations and income from other sources, such as other comprehensive income or discontinued operations. We adopted this ASU on January 1, 2020. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) , which requires a financial asset or a group of financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. This ASU eliminates the probable initial recognition threshold and instead requires reflection of an entity’s current estimate of all expected credit losses. In addition, this ASU amends the current available for sale security other-than-temporary impairment model for debt securities. The length of time that the fair value of an available for sale debt security has been below the amortized cost will no longer impact the determination of whether a credit loss exists and credit losses will now be limited to the difference between a security’s amortized cost basis and its fair value. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses , which amends the transition and effective date for nonpublic entities and smaller reporting companies and clarifies that receivables arising from operating leases are not in the scope of this ASU. Entities will apply the provisions of the ASU as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. This ASU is effective for smaller reporting companies for reporting periods beginning after December 15, 2022. We are assessing the potential impact that the adoption of this ASU (and the related clarifying guidance issued by the FASB) will have on our consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides temporary optional expedients and exceptions on contract modifications meeting certain criteria to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to the alternative reference rates. For a contract that meets the criteria, this ASU generally allows an entity to account for and present modifications as an event that does not require remeasurement at the modification date or reassessment of a previous accounting determination. This ASU was effective upon issuance and can be applied through December 31, 2022. We are assessing the potential impact that this ASU will have on our consolidated financial statements. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition We recognize revenue from contracts with customers in accordance with ASC Topic 606, Revenue from Contracts with Customers, or ASC Topic 606, using the practical expedient in paragraph 606-10-10-4 that allows for the use of a portfolio approach, because we have determined that the effect of applying the guidance to our portfolios of contracts within the scope of ASC Topic 606 on our condensed consolidated financial statements would not differ materially from applying the guidance to each individual contract within the respective portfolio or our performance obligations within such portfolio. The five-step model defined by ASC Topic 606 requires us to: (i) identify our contracts with customers; (ii) identify our performance obligations under those contracts; (iii) determine the transaction prices of those contracts; (iv) allocate the transaction prices to our performance obligations in those contracts; and (v) recognize revenue when each performance obligation under those contracts is satisfied. Revenue recognition occurs when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. Senior Living and Rehabilitation and Wellness Services Revenues. A substantial portion of our revenue from our independent living and assisted living communities relates to contracts with residents for housing services that are generally short term in nature and initially are subject to ASC Topic 842, Leases, or ASC Topic 842. As noted above, we have concluded that the non-lease components of these agreements are the predominant components of the contracts; therefore, we recognize revenue for these agreements under ASC Topic 606. We also provide our residents and others with rehabilitation and wellness services at our senior living communities as well as at outpatient clinics located separately from our senior living communities. Our contracts with residents and other customers that are within the scope of ASC Topic 606 are generally short term in nature. We have determined that services performed under those contracts are considered one performance obligation in accordance with ASC Topic 606 as such services are regarded as a series of distinct events with the same timing and pattern of transfer to the resident or customer. Revenue is recognized for those contracts when our performance obligation is satisfied by transferring control of the service provided to the resident or customer, which are generally when the services are provided over time. Resident fees at our independent living and assisted living communities consist of regular monthly charges for basic housing and support services and fees for additional requested services, such as assisted living services, personalized health services and ancillary services. Fees are specified in our agreements with residents, which are generally short term ( 30 days to one year ), with regular monthly charges billed in advance. Funds received from residents in advance of services being provided are not material to our condensed consolidated financial statements. Some of our senior living communities require payment of an upfront entrance fee in advance of a resident moving into the community; substantially all of these community fees are non-refundable and are initially recorded as deferred revenue and included in other current liabilities in our condensed consolidated balance sheets. These deferred amounts are then amortized on a straight-line basis into revenue over the term of the resident's agreement. When the resident no longer resides within our community, the remaining deferred non-refundable fees are recognized in revenue. Revenue recorded and deferred in connection with community fees is not material to our condensed consolidated financial statements. Revenue for basic housing and support services and additional requested services is recognized in accordance with ASC Topic 606 and measured based on the consideration specified in the resident agreement and is recorded when the services are provided. Rehabilitation and wellness services revenues at our Ageility clinics consist of charges for clinically-based rehabilitation services, including physical therapy, speech therapy and occupational therapy, as well as other service-based programs and therapies. Revenue for these services is recognized in accordance with ASC Topic 606 and is recorded when the services are provided. Management Fee Revenues and Reimbursed Community-Level Costs Incurred on Behalf of Managed Communities. We manage senior living communities for the account of DHC pursuant to long term management agreements which provide for periodic management fee payments to us and reimbursement for our direct costs and expenses related to support such communities. Although there are various management and operational activities performed by us under the agreements, we have determined that all community operations management activities constitute a single performance obligation, which is satisfied over time as the services are rendered. We earn management fees equal to 5% of gross revenues realized and 3% of construction costs for construction projects we manage at the senior living communities we manage. We recognize management fee revenues in accordance with ASC Topic 606 in the same period that we provide the management services to DHC, generally monthly. Our estimate of the transaction price for management services also includes the amount of reimbursement due from the owners of the communities for services provided and related costs incurred. Commencing with the 2021 calendar year, we may also earn incentive fees from DHC under the management agreements, which are payable in cash and are contingent performance based fees recognized only when earned at the end of each respective measurement period. Incentive management fees are excluded from the transaction price until it becomes probable that there will not be a significant reversal of cumulative revenue recognized. The incentive fee is equal to 15% of the amount by which the annual earnings before interest, taxes, depreciation and amortization, or EBITDA, of all the managed communities on a combined basis exceeds target EBITDA for those communities on a combined basis for such calendar year, provided that in no event shall the incentive fee be greater than 1.5% of the gross revenues realized at all the managed communities on a combined basis for such calendar year. FASB ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , clarifies how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements, such as service transactions. Where we are the primary obligor and therefore control the transfer of the goods and services with respect to any such operating expenses incurred in connection with the management of these communities, we recognize revenue when the goods have been delivered or the service has been rendered and we are due to be reimbursed from DHC. Such revenue is included in community-level costs incurred on behalf of managed communities in our condensed consolidated statements of operations. The related costs are included in reimbursed community-level costs incurred on behalf of managed communities in our condensed consolidated statements of operations. Amounts due from DHC related to management fees and reimbursed community-level costs incurred on behalf of managed communities are included in due from related persons in our condensed consolidated balance sheets. Other reimbursed expenses. Other reimbursed expenses include reimbursements that arise from certain centralized services we provide pursuant to our management agreements, a significant portion of which are charged or passed through to and are paid by our customers. We have determined that we control the services provided by third parties for our customers and therefore, we account for the cost of these services and the related reimbursement revenue on a gross basis. We recognized other reimbursed expenses reflecting corresponding amounts in revenue and expense of $5,997 for the three months ended March 31, 2020 . We did no t recognize other reimbursed expenses for the three months ended March 31, 2019 . The following tables present revenue from contracts with customers disaggregated by type of payer, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors: Three Months Ended March 31, 2020 Senior Living Rehabilitation and Wellness Services Total Private payer $ 20,501 $ 804 $ 21,305 Medicare and Medicaid programs 716 9,570 10,286 Other third-party payer programs 121 10,669 10,790 Management fees 17,051 — 17,051 Reimbursed community-level costs incurred on behalf of managed communities 232,016 — 232,016 Other reimbursed expenses 5,997 — 5,997 Total revenues $ 276,402 $ 21,043 $ 297,445 Three Months Ended March 31, 2019 Senior Living Rehabilitation and Wellness Services Total Private payer $ 198,875 $ 526 $ 199,401 Medicare and Medicaid programs 59,586 5,443 65,029 Other third-party payer programs 8,068 4,437 12,505 Management fees 3,983 — 3,983 Reimbursed community-level costs incurred on behalf of managed communities 74,605 — 74,605 Total revenues $ 345,117 $ 10,406 $ 355,523 |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Segment Information. Operating segments are components of an enterprise that engages in business activities and for which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision- making group, in determining the allocation of resources and in assessing performance. Our chief operating decision maker is our President and Chief Executive Officer. Effective as of January 1, 2020, we reorganized our business to focus on the different services we offer. As a result of the reorganization, our chief operating decision maker changed the manner in which our performance is assessed and, therefore, we changed our reporting structure and the composition of our operating segments. As a result, we have reclassified certain prior year amounts to conform to the current year's presentation. Subsequent to the reorganization, we operate in two reportable segments: senior living and rehabilitation and wellness services. In the senior living reportable segment, we manage for the account of others and operate for our own account, respectively, independent living communities, assisted living communities and SNFs that are subject to centralized oversight. In the rehabilitation and wellness services segment, we provide therapy and home health services, including physical, occupational, speech and other specialized therapy services, in the inpatient setting and in outpatient clinics, through our Ageility division. Corporate and other amounts excluded from our reportable segments' performance are separately stated below and include amounts related to functional areas such as finance, information technology, legal, human resources and our captive insurance company subsidiary, which participates in our workers' compensation, professional and general liability and certain automobile insurance programs. All of our operations and assets are located in the United States, except for the operations of our captive insurance company subsidiary, which is organized in the Cayman Islands. We do not allocate assets to operating segments and, therefore, no asset information is provided for reportable segments. Results of operations and selected financial information by reportable segment and the reconciliation to the condensed consolidated financial statements are as follows: Three Months Ended March 31, 2020 Senior Living Rehabilitation and Wellness Services Corporate and Other Total Total revenues $ 276,402 $ 21,043 $ — $ 297,445 Operating income (loss) 20,328 3,881 (15,585 ) 8,624 Income (loss) before income taxes and equity in earnings of an investee 4,735 2,828 (23,364 ) (15,801 ) Net income (loss) 4,735 2,828 (24,772 ) (17,209 ) Three Months Ended March 31, 2019 Senior Living Rehabilitation and Wellness Services Corporate and Other Total Total revenues $ 345,117 $ 10,406 $ — $ 355,523 Operating (loss) income (7,658 ) 2,228 (26,407 ) (31,837 ) (Loss) income before income taxes and equity in earnings of an investee (26,821 ) 1,190 (6,498 ) (32,129 ) Net (loss) income (28,311 ) 1,190 (6,094 ) (33,215 ) |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment, net Property and equipment, net consist of the following: March 31, 2020 December 31, 2019 Land $ 12,155 $ 12,155 Buildings and improvements 202,417 201,447 Furniture, fixtures and equipment 57,932 59,174 Property and equipment, at cost 272,504 272,776 Less: accumulated depreciation (108,230 ) (105,529 ) Property and equipment, net $ 164,274 $ 167,247 We recorded depreciation expense relating to our property and equipment of $2,701 and $8,165 for the three months ended March 31, 2020 and 2019 , respectively. We review the carrying value of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable. If there is an indication that the carrying value of an asset or group of assets is not recoverable, we estimate the recoverability of these assets by comparing projected undiscounted cash flows associated with these assets to their respective historical carrying values. If we conclude that an impairment exists, we determine the amount of impairment loss by comparing the historical carrying value of the asset or group of assets to their estimated fair value. We determine estimated fair value based on input from market participants, our experience selling similar assets, market conditions and internally developed cash flow models that our assets or asset groups are expected to generate, and we consider these estimates to be a Level 3 fair value measurement. As a result of our long-lived assets impairment review, we recorded $3,148 of impairment charges to certain of our long-lived assets for the three months ended March 31, 2019 . The fair value of the impaired assets was $4,520 as of March 31, 2019 . No impairment charges were recorded for the three months ended March 31, 2020 . As of December 31, 2019 , we had $4,813 of net property and equipment classified as held for sale and presented separately in our condensed consolidated balance sheets in connection with the Transaction Agreement. As of March 31, 2020 , we did not have net property and equipment classified as held for sale. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income The following tables detail the changes in accumulated other comprehensive income, net of tax, for the three months ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 Equity Investment of an Investee Investments Accumulated Other Comprehensive Income Balance at January 1, 2020 $ (175 ) $ 2,838 $ 2,663 Cumulative effect adjustment to beginning accumulated deficit and accumulated other comprehensive income in connection with a reclassification of equity investments previously classified as debt investments — (1,694 ) (1,694 ) Unrealized gain on debt investments, net of tax — 427 427 Realized loss on debt investments reclassified and included in net loss, net of tax — (10 ) (10 ) Balance at March 31, 2020 $ (175 ) $ 1,561 $ 1,386 Three Months Ended March 31, 2019 Equity Investment of an Investee Investments Accumulated Other Comprehensive Income Balance at January 1, 2019 $ (266 ) $ 2,008 $ 1,742 Unrealized loss on debt investments, net of tax — (205 ) (205 ) Equity in unrealized gain of an investee, net of tax 65 — 65 Realized gain on debt investments reclassified and included in net loss, net of tax — 4 4 Balance at March 31, 2019 $ (201 ) $ 1,807 $ 1,606 Accumulated other comprehensive income represents the unrealized gains and losses of our debt investments, net of tax, and our share of other comprehensive income of Affiliates Insurance Company, or AIC. The cost of debt investments sold and for which realized gains and losses are reclassified and included in net loss, net of tax are determined on a specific identification basis. See Note 13 for more information regarding our arrangements with AIC. AIC dissolved on February 13, 2020. As of January 1, 2020, we reclassified certain of our investments from debt investments to equity investments to reflect the nature of the investment rather than the nature of the securities held by the investment. As a result, we reclassified the related unrealized gain of $1,694 from accumulated other comprehensive income to accumulated deficit on January 1, 2020. See Note 9 for more information regarding these investments. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We recognized a provision for income taxes of $1,408 and $1,490 for the three months ended March 31, 2020 and 2019 , respectively. The provision for income taxes for the three months ended March 31, 2020 is related to federal income taxes, partially offset by a federal alternative minimum tax, or AMT, credit refund benefit and a federal benefit related to lease termination expense, plus state income taxes, including a state valuation allowance. The provision for income taxes for the three months ended March 31, 2019 , is due to state income taxes, partially offset by the intraperiod tax allocation benefit related to unrealized gains on available for sale securities. We previously determined it was more likely than not that a majority of our net deferred tax assets would not be realized and concluded that a valuation allowance was required, which eliminated the majority of our net deferred tax assets recorded in our condensed consolidated balance sheets. In the future, if we believe that we will more likely than not realize the benefit of these deferred tax assets, we will adjust our valuation allowance and recognize an income tax benefit, which may affect our results of operations. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share We calculated basic earnings per common share, or EPS, using the weighted average number of shares of our common shares outstanding during the periods. When applicable, diluted EPS reflects the more dilutive earnings per common share amount calculated using the two class method or the treasury stock method. For the three months ended March 31, 2020 and 2019 , 123,660 and 108,210 unvested common shares, respectively, were not included in the calculation of diluted EPS because to do so would have been antidilutive. |
Fair Values of Assets and Liabi
Fair Values of Assets and Liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Values of Assets and Liabilities | Fair Values of Assets and Liabilities Our assets recorded at fair value have been categorized based on a fair value hierarchy in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures . We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels. Level 1 - Inputs are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access at the measurement date. Level 2 - Inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments and quoted prices in inactive markets. Level 3 - Inputs are generated from model-based techniques that use significant assumptions that are not observable in the market. Recurring Fair Value Measures The tables below present certain of our assets measured at fair value at March 31, 2020 and December 31, 2019 , categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset. As of March 31, 2020 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Description Total (Level 1) (Level 2) (Level 3) Cash equivalents (1) $ 25,847 $ 25,847 $ — $ — Investments: Equity investments (2) High yield fund (3) 2,608 — 2,608 — International bond fund (4) 2,742 — 2,742 — Financial services industry 1,022 1,022 — — Healthcare 399 399 — — Technology 203 203 — — Other (5) 3,904 3,904 — — Total equity investments 10,878 5,528 5,350 — Debt investments (6) Industrial bonds 1,164 — 1,164 — Technology bonds 1,952 — 1,952 — Government bonds 10,063 10,063 — — Energy bonds 619 — 619 — Financial bonds 1,540 — 1,540 — Other 1,025 — 1,025 — Total debt investments 16,363 10,063 6,300 — Total investments 27,241 15,591 11,650 — Total $ 53,088 $ 41,438 $ 11,650 $ — As of December 31, 2019 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Description Total (Level 1) (Level 2) (Level 3) Cash equivalents (1) $ 27,456 $ 27,456 $ — $ — Investments: Equity investments (2) Financial services industry 1,233 1,233 — — Healthcare 395 395 — — Technology 281 281 — — Other 4,500 4,500 — — Total equity investments 6,409 6,409 — — Debt investments (6) High yield fund (3) 2,977 — 2,977 — International bond fund (4) 2,680 — 2,680 — Industrial bonds 1,180 — 1,180 — Technology bonds 2,189 — 2,189 — Government bonds 9,537 9,537 — — Energy bonds 625 — 625 — Financial bonds (5) 1,853 — 1,853 — Other 725 — 725 — Total debt investments 21,766 9,537 12,229 — Total investments 28,175 15,946 12,229 — Total $ 55,631 $ 43,402 $ 12,229 $ — (1) Cash equivalents consist of short-term, highly liquid investments and money market funds held primarily for obligations arising from our self-insurance programs. Cash equivalents are reported in our condensed consolidated balance sheets as cash and cash equivalents and current and long term restricted cash and cash equivalents. Cash equivalents include $ 23,300 and $ 23,014 of balances that are restricted at March 31, 2020 and December 31, 2019 , respectively. (2) The fair value of our equity investments is readily determinable. During the three months ended March 31, 2020 and 2019 , we received gross proceeds of $45 and $ 1,115 , respectively, in connection with the sales of equity investments and recorded gross realized gains totaling $0 and $136 , respectively, and gross realized losses totaling $30 and $40 , respectively. (3) The investment strategy of this fund is to invest principally in fixed income securities. The fund invests in such securities or investment vehicles as it considers appropriate to achieve the fund’s investment objective, which is to provide an above average rate of total return while attempting to limit investment risk by investing in a diversified portfolio of primarily fixed income securities issued by companies with below investment grade ratings. There are no unfunded commitments and the investment can be redeemed weekly. As of January 1, 2020, we reclassified this investment from a debt investment to an equity investment to reflect the nature of the investment rather than the nature of the securities held by the investment. (4) The investment strategy of this fund is to invest principally in fixed income securities issued by non-U.S. issuers. The fund invests in such securities or investment vehicles as it considers appropriate to achieve the fund’s investment objective, which is to provide an above average rate of total return while attempting to limit investment risk by investing in a diversified portfolio of U.S. dollar investment grade fixed income securities. There are no unfunded commitments and the investment can be redeemed weekly. As of January 1, 2020, we reclassified this investment from a debt investment to an equity investment to reflect the nature of the investment rather than the nature of the securities held by the investment. (5) As of January 1, 2020, we reclassified an investment with a fair value of $286 from a debt investment to an equity investment. (6) As of March 31, 2020 , our debt investments, which are classified as available for sale, had a fair value of $ 16,363 with an amortized cost of $ 15,536 ; the difference between the fair value and amortized cost amounts resulted from unrealized gains of $ 834 , net of unrealized losses of $ 7 . As of December 31, 2019 , our debt investments had a fair value of $ 21,766 with an amortized cost of $ 19,662 ; the difference between the fair value and amortized cost amounts resulted from unrealized gains of $ 2,114 , net of unrealized losses of $ 10 . Debt investments include $12,318 and $12,477 of balances that are restricted as of March 31, 2020 and December 31, 2019 , respectively. At March 31, 2020 , eight of the investments we held, with a fair value of $1,059 , had been in a loss position for less than 12 months and we did not hold any debt investments with a fair value in a loss position for greater than 12 months . We do not believe these investments are impaired primarily because they have not been in a loss position for an extended period of time, the financial conditions of the issuers of these investments remain strong with solid fundamentals as of March 31, 2020 , we do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery, and other factors that support our conclusion that the loss is temporary. During the three months ended March 31, 2020 and 2019 , we received gross proceeds of $ 1,409 and $ 1,528 , respectively, in connection with the sales of debt investments and recorded gross realized gains totaling $ 10 and $ 2 , respectively, and gross realized losses totaling $ 0 and $ 6 , respectively. We record gains and losses on the sales of these investments using the specific identification method. The amortized cost basis and fair value of debt securities at March 31, 2020 , by contractual maturity, are shown below. Amortized Cost Fair Value Due in one year or less $ 1,503 $ 1,512 Due after one year through five years 8,702 9,034 Due after five years through ten years 5,331 5,817 Total $ 15,536 $ 16,363 Our financial assets (which include cash equivalents and investments) have been valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third-party pricing services or other market observable data. During the three months ended March 31, 2020 , we did not change the type of inputs used to determine the fair value of any of our assets and liabilities that we measure at fair value. The carrying value of accounts receivable and accounts payable approximates fair value as of March 31, 2020 and December 31, 2019 . The carrying value and fair value of our mortgage notes payable were $ 7,445 and $ 9,412 , respectively, as of March 31, 2020 and $ 7,533 and $ 8,861 , respectively, as of December 31, 2019 , and are categorized in Level 3 of the fair value hierarchy in their entirety. We estimate the fair values of our mortgage notes payable by using discounted cash flow analyses and currently prevailing market terms as of the measurement date. Non-Recurring Fair Value Measures We review the carrying value of our long-lived assets, including our right of use assets, property and equipment and other intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. See Note 5 for more information regarding fair value measurements related to impairments of our long-lived assets we recorded. |
Indebtedness
Indebtedness | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Indebtedness | Indebtedness In June 2019, we entered into a second amended and restated credit agreement with Citibank, N.A., as administrative agent and lender, and a syndicate of other lenders pursuant to which we obtained a $65,000 secured revolving credit facility scheduled to mature on June 12, 2021. At our option, we may extend the maturity date for a one year period, which is subject to payment of an extension fee and meeting other conditions. We paid fees of $1,271 in 2019 in connection with the closing of our credit facility, which these fees were deferred and are being amortized over the initial term of our credit facility. Our credit facility is available for general business purposes, including acquisitions, and provides for the issuance of letters of credit. We are required to pay interest at a rate of LIBOR plus a premium of 250 basis points per annum, or at a base rate, as defined in our credit agreement, plus 150 basis points per annum, on borrowings under our credit facility; the effective annual interest rates, as of March 31, 2020 , were 3.49% and 4.75% , respectively. We are also required to pay a quarterly commitment fee of 0.35% per annum on the unused portion of the available borrowings under our credit facility. We did not borrow any funds under our credit facility during the three months ended March 31, 2020 . The weighted average annual interest rate for borrowings under our prior credit facility was 5.00% for the three months ended March 31, 2019 . As of March 31, 2020 , we had no borrowings outstanding under our credit facility. As of March 31, 2020 , we had letters of credit issued in an aggregate amount of $3,238 and $54,450 available for borrowings under our credit facility. We incurred aggregate interest expense and other associated costs related to our credit facilities of $254 and $772 for the three months ended March 31, 2020 and 2019 , respectively. Our credit facility is secured by real estate mortgages on 11 senior living communities with a combined 1,245 living units owned by certain of our subsidiaries that guarantee our obligations under our credit facility. Our credit facility is also secured by these subsidiaries’ accounts receivable and related collateral. The amount of available borrowings under our credit facility is subject to our having qualified collateral, which is primarily based on the value of the communities securing our obligations under our credit facility. Our credit facility provides for acceleration of payment of all amounts outstanding under our credit facility upon the occurrence and continuation of certain events of default, including a change of control of us, as defined in our credit agreement. Our credit agreement contains financial and other covenants, including those that restrict our ability to pay dividends or make other distributions to our shareholders in certain circumstances. At March 31, 2020 , we had seven irrevocable standby letters of credit outstanding, totaling $28,626 . One of these letters of credit in the amount of $25,388 , which secures our workers' compensation insurance program, is currently collateralized by approximately $21,707 of cash equivalents and $6,586 of debt and equity investments. This letter of credit currently expires in June 2020 and is automatically extended for one year terms unless notice of nonrenewal is provided by the issuing bank prior to the end of the applicable term. As of May 4, 2020, we have not received a notice of nonrenewal. We expect that our workers' compensation insurance program will require an increase in the amount of this letter of credit in June 2020. At March 31, 2020 , the cash equivalents collateralizing this letter of credit, including accumulated interest, were classified as short-term restricted cash and cash equivalents in our condensed consolidated balance sheets, and the debt and equity investments collateralizing this letter of credit are classified as short-term investments in our condensed consolidated balance sheets. The remaining six irrevocable standby letters of credit outstanding at March 31, 2020 , totaling $3,238 , secure certain of our other obligations. As of March 31, 2020 , these letters of credit are scheduled to mature between June 2020 and October 2020 and are required to be renewed annually. As of March 31, 2020 , our obligations under these six letters of credit, totaling $3,238 , remain issued and outstanding under our credit facility. At March 31, 2020 , one of our senior living communities was encumbered by a mortgage that secured a note. This mortgage note contains standard mortgage covenants. We recorded a discount in connection with the assumption of this mortgage note as part of our acquisition of the community secured by this mortgage in order to record this mortgage note at its estimated fair value. We amortize this discount as an increase in interest expense until the maturity of this mortgage note. This mortgage note requires payments of principal and interest monthly until maturity. The following table is a summary of this mortgage note as of March 31, 2020 : Balance as of March 31, 2020 Contractual Stated Interest Rate Effective Interest Rate Maturity Date Monthly Payment Lender Type $ 7,691 (1) 6.20 % 6.70 % September 2032 $ 72 Federal Home Loan Mortgage Corporation (1) Contractual principal payment excluding unamortized discount and debt issuance costs of $246 . We incurred interest expense, net of discount amortization, of $128 and $134 with respect to the mortgage note for the three months ended March 31, 2020 and 2019 , respectively. Our mortgage note requires monthly payments into escrows for taxes, insurance and property replacement funds; certain withdrawals from escrows require Federal Home Loan Mortgage Corporation approval. As of March 31, 2020 , we believe we were in compliance with all applicable covenants under our credit facility and mortgage note. See Note 11 for information regarding the $25,000 credit facility we obtained from DHC on April 1, 2019. The DHC credit facility matured and was terminated on January 1, 2020, in connection with the completion of the Restructuring Transactions. There were no borrowings outstanding under the DHC credit facility at the time of such termination and we did not borrow any funds under the DHC credit facility during its term. |
Business Management Agreement w
Business Management Agreement with RMR LLC | 3 Months Ended |
Mar. 31, 2020 | |
Management Agreement [Abstract] | |
Business Management Agreement with RMR LLC | Business Management Agreement with RMR LLC The RMR Group LLC, or RMR LLC, provides us certain services pursuant to a business management agreement. Pursuant to our business management agreement with RMR LLC, we incurred aggregate fees and certain cost reimbursements payable to RMR LLC of $2,351 and $2,364 for the three months ended March 31, 2020 and 2019 , respectively, which amounts include reimbursements for our share of RMR LLC’s costs for providing our internal audit function. These amounts are included in general and administrative expenses in our condensed consolidated statements of operations. For further information about our relationship with RMR LLC, see our Annual Report. |
Leases and Management Agreement
Leases and Management Agreements with DHC | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases and Management Agreements with DHC | Leases and Management Agreements with DHC As of December 31, 2019, we leased 166 senior living communities from DHC pursuant to five master leases and we managed for DHC's account 78 senior living communities pursuant to management agreements. Effective as of January 1, 2020, we restructured our business arrangements with DHC as further described below, and after giving effect to the Restructuring Transactions, we manage 244 senior living communities for the account of DHC pursuant to the New Management Agreements. Restructuring our Business Arrangements with DHC . Pursuant to the Transaction Agreement as of the Conversion Time: • our five then existing master leases with DHC as well as our then existing management and pooling agreements with DHC were terminated and replaced with the New Management Agreements; • we completed the Share Issuances pursuant to which we issued 10,268,158 of our common shares to DHC and an aggregate of 16,118,849 of our common shares to DHC’s shareholders of record as of December 13, 2019; and • as consideration for the Share Issuances, DHC provided to us $75,000 by assuming certain of our working capital liabilities and through cash payments; we recognized $22,899 in loss on termination of leases, representing the excess of the fair value of the Share Issuances of $97,899 compared to the consideration of $75,000 paid by DHC. As of March 31, 2020 , DHC assumed $51,547 of our working capital liabilities. We received cash of $23,453 from DHC subsequent to March 31, 2020 . Also pursuant to the Transaction Agreement: (1) commencing February 1, 2019, the aggregate amount of monthly minimum rent payable to DHC by us under our master leases with DHC was reduced to $11,000 , subject to adjustment, and subsequently reduced in accordance with the Transaction Agreement as a result of DHC’s subsequent sales of certain of the leased senior living communities, and no additional rent was payable to DHC by us from such date through the Conversion Time; and (2) as of April 1, 2019, DHC purchased from us $49,155 of unencumbered Qualifying PP&E (as defined in the Transaction Agreement) related to DHC's senior living communities leased and operated by us. In accordance with ASC Topic 842, the reduction in the monthly minimum rent payable to DHC under our then- existing master leases with DHC pursuant to the Transaction Agreement was determined to be a modification of these master leases, and we reassessed the classification of these master leases based on the modified terms and determined that these master leases continued to be classified as long-term operating leases until certain contingent events were achieved. The remaining contingent events were achieved and accordingly, we remeasured the lease liability and right of use asset recorded in our condensed consolidated balance sheets as of December 31, 2019, to zero. Pursuant to the Transaction Agreement, we agreed to expand our Board of Directors within six months of January 1, 2020, to add an Independent Director (as defined in our Bylaws) reasonably satisfactory to DHC. As a result, on February 26, 2020, our Board of Directors elected Michael E. Wagner, M.D. as an Independent Director. Pursuant to the New Management Agreements, we will receive a management fee equal to 5% of the gross revenues realized at the applicable senior living communities plus reimbursement for our direct costs and expenses related to such communities, as well as, commencing with the 2021 calendar year, an annual incentive fee equal to 15% of the amount by which the annual EBITDA, of all communities on a combined basis exceeds the target EBITDA for all communities on a combined basis for such calendar year, provided that in no event shall the incentive fee be greater than 1.5% of the gross revenues realized at all communities on a combined basis for such calendar year. The New Management Agreements expire in 2034, subject to our right to extend them for two consecutive five-year terms if we achieve certain performance targets for the combined managed communities portfolio, unless earlier terminated or timely notice of nonrenewal is delivered. The New Management Agreements provide DHC with the right to terminate any New Management Agreement for a community that does not earn 90% of the target EBITDA for such community for two consecutive calendar years or in any two of three consecutive calendar years, with the measurement period commencing January 1, 2021 (and the first termination not possible until the beginning of calendar year 2023); provided DHC may not in any calendar year terminate communities representing more than 20% of the combined revenues for all communities for the calendar year prior to such termination. Pursuant to a guaranty agreement dated as of January 1, 2020, made by us in favor of DHC’s applicable subsidiaries, we have guaranteed the payment and performance of each of our applicable subsidiary’s obligations under the applicable New Management Agreements. We recognized transaction costs of $1,095 related to the Transaction Agreement for the three months ended March 31, 2020 . In connection with the Transaction Agreement, we entered into the DHC credit facility pursuant to which DHC extended to us a $25,000 line of credit. The DHC credit facility matured and was terminated on January 1, 2020, in connection with the completion of the Restructuring Transactions. There were no borrowings outstanding under the DHC credit facility at the time of such termination and we did not make any borrowings under the DHC credit facility during its term. Senior Living Communities Formerly Leased from DHC . Prior to the Conversion Time, we were DHC's largest tenant and DHC was our largest landlord. Under our prior master leases with DHC, we paid DHC annual rent plus percentage rent equal to 4.0% of the increase in gross revenues at the applicable senior living communities over base year gross revenues as specified in the applicable lease. Pursuant to the Transaction Agreement, we were no longer required to pay any additional rent to DHC beginning February 1, 2019. Our total rent expense under all of our leases with DHC was $53,782 for the three months ended March 31, 2019 , which amount included estimated percentage rent of $1,549 for the three months ended March 31, 2019 . Pursuant to the Transaction Agreement, our rent payable to DHC was reduced by a total of $13,840 in aggregate for February and March 2019 and we did not pay such amount to DHC. However, as the Transaction Agreement was not entered into until April 1, 2019, our rent expense for the three months ended March 31, 2019, was not adjusted for the rent reduction for February and March 2019. Instead, the rent reduction for February and March 2019 was determined to be a lease inducement, for which a liability for the $13,840 was recorded as a reduction of the right of use asset on our condensed consolidated balance sheets as of March 31, 2019, and was amortized as a reduction of rent expense over the remaining terms of our master leases. As of December 31, 2019, we had no outstanding rent obligation to DHC. Our previously existing leases with DHC were “triple net” leases, which generally required us to pay rent and all property operating expenses, to obtain, maintain and comply with all applicable permits and licenses necessary to operate the leased communities, to indemnify DHC from liability which may arise by reason of its ownership of the communities, to maintain the communities at our expense, to remove and dispose of hazardous substances on the communities in compliance with applicable laws and to maintain insurance on the communities for DHC’s and our benefit. Prior to the Transaction Agreement, under our previously existing leases with DHC, we could request that DHC purchase certain improvements to the leased communities in return for increases in annual rent in accordance with a formula specified in the applicable lease. Pursuant to the Transaction Agreement, the $22,578 of capital improvements to the leased communities that we sold to DHC during the three months ended March 31, 2019 , did not result in increased rent. In accordance with FASB ASC Topic 840, Leases , the sale and leaseback transaction we completed in June 2016 with DHC qualified for sale-leaseback accounting and we classified the related lease as an operating lease. Accordingly, the gain generated from the sale of $82,644 was deferred and was being amortized as a reduction of rent expense over the initial term of the related lease. Upon our adoption of ASC Topic 842 on January 1, 2019, we recorded a cumulative effect adjustment through retained earnings of $67,473 , eliminating our remaining deferred gain. Senior Living Communities Managed for the Account of DHC and its Related Entities . As of March 31, 2020 and 2019 , we managed 244 and 76 senior living communities, respectively, for the account of DHC. We earned management fees of $16,462 and $3,718 from the senior living communities we managed for the account of DHC for the three months ended March 31, 2020 and 2019 , respectively. In addition, we earned fees for our management of capital expenditure projects at the communities we managed for the account of DHC of $462 and $195 for the three months ended March 31, 2020 and 2019 , respectively. These amounts are included in management fee revenue in our condensed consolidated statements of operations. In connection with the completion of the Restructuring Transactions, effective as of January 1, 2020, we and DHC terminated the long-term management and pooling agreements and replaced them with the New Management Agreements, the terms of which are discussed above. We also provide certain other services to residents at some of the senior living communities we manage for the account of DHC, such as rehabilitation services. At senior living communities we manage for the account of DHC where we provide rehabilitation services on an outpatient basis, the residents, third party payers or government programs pay us for those rehabilitation services. At senior living communities we manage for the account of DHC where we provide inpatient rehabilitation services, DHC generally pays us for these services and charges for such services are included in amounts charged to residents, third party payers or government programs. We earned revenues of $8,057 and $1,675 for the three months ended March 31, 2020 and 2019 , respectively, for rehabilitation services we provided at senior living communities we manage for the account of DHC and that are payable by DHC. These amounts are included in rehabilitation and wellness services in our condensed consolidated statements of operations. Consistent with our historical accounting for these services at our managed communities, the revenues earned at these inpatient clinics that were previously located at senior living communities that we leased from DHC but as of the Conversion Time, we now manage, no longer constitute intercompany revenues and thus will not be eliminated in consolidation and will be recognized and reported as rehabilitation and wellness services revenues in our condensed consolidated statements of operations. We earned management fees of $127 and $70 for the three months ended March 31, 2020 and 2019 , respectively, for management services at a part of a senior living community DHC subleases to an affiliate, which amounts are included in management fee revenue in our condensed consolidated statements of operations. |
Related Person Transactions
Related Person Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Person Transactions | Related Person Transactions We have relationships and historical and continuing transactions with DHC, RMR LLC and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors and officers who are also our Directors or officers. The RMR Group Inc., or RMR Inc., is the managing member of RMR LLC. The Chair of our Board and one of our Managing Directors, Adam D. Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. and is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. Jennifer B. Clark, our other Managing Director and our Secretary, also serves as a managing director and the executive vice president, general counsel and secretary of RMR Inc., an officer and employee of RMR LLC and an officer of ABP Trust. Certain of our officers, and DHC’s officers, are also officers and employees of RMR LLC. Some of our Independent Directors also serve as independent trustees or independent directors of other public companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves as the chair of the boards of trustees or boards of directors of several of these public companies and as a managing director or managing trustee of these companies. Other officers of RMR LLC, including Ms. Clark, serve as managing trustees or managing directors of certain of these companies. DHC . DHC is currently our largest shareholder, owning, as of March 31, 2020 , 10,691,658 of our common shares, or 33.9% of our outstanding common shares. We manage for the account of DHC a substantial majority of the senior living communities we operate. RMR LLC provides management services to both us and DHC and Adam Portnoy is chair of the board of trustees and a managing trustee of DHC. Jennifer Clark is a managing trustee and the secretary of DHC. Effective as of January 1, 2020, we completed the Restructuring Transactions, pursuant to which we restructured our existing business arrangements with DHC. See Note 11 for more information regarding our relationships, agreements and transactions with DHC and certain parties related to it and us. RMR LLC. We have an agreement with RMR LLC to provide business management services to us. See Note 12 for more information regarding our relationship with RMR LLC. ABP Trust. ABP Trust and its subsidiaries, owned 1,972,783 of our common shares, representing 6.3% of our outstanding common shares as of March 31, 2020 . We lease our headquarters from a subsidiary of ABP Trust. Our rent expense for our headquarters, including utilities and real estate taxes that we pay as additional rent, was $435 and $520 for the three months ended March 31, 2020 and 2019 , respectively. The adoption of ASC Topic 842 resulted in the recognition of a lease liability and right of use asset, which amount was $1,215 and $2,119 as of March 31, 2020 and 2019 , respectively, with respect to our headquarters lease, using an incremental borrowing rate of 4.4% . The right of use asset has been reduced by the amount of accrued lease payments, which amounts are not material to our condensed consolidated financial statements. AIC . Until its dissolution on February 13, 2020, we, ABP Trust, DHC and four other companies to which RMR LLC provides management services owned AIC in equal amounts. Certain of our Directors and certain trustees or directors of the other AIC shareholders served on the board of directors of AIC. We and the other AIC shareholders historically participated in a combined property insurance program arranged and insured or reinsured in part by AIC. The policies under that program expired on June 30, 2019, and we and the other AIC shareholders elected not to renew the AIC property insurance program; we have instead purchased standalone property insurance coverage from unrelated third-party insurance providers. At both March 31, 2020 and December 31, 2019 , our investment in AIC had a carrying value of $298 . These amounts are presented as equity investment of an investee in our condensed consolidated balance sheets. We did not recognize any income related to our investment in AIC for the three months ended March 31, 2020 , and recognized income of $404 for the three months ended March 31, 2019 , which amounts are presented as equity in earnings of an investee in our condensed consolidated statements of operations. Our other comprehensive income for the three months ended March 31, 2019 , includes our proportionate part of unrealized gains (losses) on securities that are owned by AIC related to our investment in AIC. Retirement and Separation Arrangements . In connection with his retirement, we entered into a retirement agreement with our former officer, Bruce J. Mackey Jr. Additionally, we entered into a separation agreement with our former Senior Vice President, Senior Living Operations, R. Scott Herzig. Pursuant to these agreements, we made cash payments of $600 and $510 to Mr. Mackey and Mr. Herzig, respectively, in January 2019. In addition, we made release and transition payments to Mr. Mackey, in cash, totaling $110 and $132 for the three months ended March 31, 2020 and 2019, respectively. The full severance costs for Messrs. Mackey and Herzig were recorded during the fourth quarter of 2018 as they met the criteria in FASB ASC Topic 420, Exit or Disposal Cost Obligations , or ASC Topic 420. For further information about these and other such relationships and certain other related person transactions, see our Annual Report. |
Legal Proceedings and Claims
Legal Proceedings and Claims | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings and Claims | Legal Proceedings and Claims We have been, are currently, and expect in the future to be involved in claims, lawsuits, and regulatory and other government audits, investigations and proceedings arising in the ordinary course of our business, some of which may involve material amounts. Also, the defense and resolution of these claims, lawsuits, and regulatory and other government audits, investigations and proceedings may require us to incur significant expense. We account for claims and litigation losses in accordance with FASB ASC Topic 450, Contingencies , or ASC Topic 450. Under ASC Topic 450, loss contingency provisions are recorded for probable and estimable losses at our best estimate of a loss or, when a best estimate cannot be made, at our estimate of the minimum loss. These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment and are refined as additional information becomes known. Accordingly, we are often initially unable to develop a best estimate of loss and therefore the estimated minimum loss amount, which could be zero |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events As of May 5, 2020, we settled all outstanding amounts due from DHC associated with the Share Issuances. See Notes 1 and 11 for more information regarding the Share Issuances. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Estimates and Assumptions | Estimates and Assumptions. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that may affect the amounts reported in these financial statements and related notes. Actual results could differ from those estimates. Significant estimates in our condensed consolidated financial statements relate to revenue recognition, including contractual allowances, the allowance of doubtful accounts, self-insurance reserves, long-lived assets, and estimates concerning our provisions for income taxes. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements. On January 1, 2020, we adopted ASU No. 2018-13, Fair Value Measurement (Topic 820) issued by the Financial Accounting Standards Board, or FASB, which modifies certain disclosure requirements in Topic 820, such as the removal of the need to disclose the amount of and reason for transfers between Level 1 and Level 2 of the fair value hierarchy, and several changes related to Level 3 fair value measurements. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements. On January 1, 2020, we adopted ASU No. 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40) issued by the FASB, using the prospective transition method, which aligns the requirements for capitalizing implementation costs incurred in a cloud computing hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) : Simplifying the Accounting for Income Taxes , which simplifies certain requirements under Topic 740, including eliminating the exception to intraperiod tax allocation when there is a loss from continuing operations and income from other sources, such as other comprehensive income or discontinued operations. We adopted this ASU on January 1, 2020. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) , which requires a financial asset or a group of financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. This ASU eliminates the probable initial recognition threshold and instead requires reflection of an entity’s current estimate of all expected credit losses. In addition, this ASU amends the current available for sale security other-than-temporary impairment model for debt securities. The length of time that the fair value of an available for sale debt security has been below the amortized cost will no longer impact the determination of whether a credit loss exists and credit losses will now be limited to the difference between a security’s amortized cost basis and its fair value. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses , which amends the transition and effective date for nonpublic entities and smaller reporting companies and clarifies that receivables arising from operating leases are not in the scope of this ASU. Entities will apply the provisions of the ASU as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. This ASU is effective for smaller reporting companies for reporting periods beginning after December 15, 2022. We are assessing the potential impact that the adoption of this ASU (and the related clarifying guidance issued by the FASB) will have on our consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides temporary optional expedients and exceptions on contract modifications meeting certain criteria to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to the alternative reference rates. For a contract that meets the criteria, this ASU generally allows an entity to account for and present modifications as an event that does not require remeasurement at the modification date or reassessment of a previous accounting determination. This ASU was effective upon issuance and can be applied through December 31, 2022. We are assessing the potential impact that this ASU will have on our consolidated financial statements. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue [Table Text Block] | The following tables present revenue from contracts with customers disaggregated by type of payer, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors: Three Months Ended March 31, 2020 Senior Living Rehabilitation and Wellness Services Total Private payer $ 20,501 $ 804 $ 21,305 Medicare and Medicaid programs 716 9,570 10,286 Other third-party payer programs 121 10,669 10,790 Management fees 17,051 — 17,051 Reimbursed community-level costs incurred on behalf of managed communities 232,016 — 232,016 Other reimbursed expenses 5,997 — 5,997 Total revenues $ 276,402 $ 21,043 $ 297,445 Three Months Ended March 31, 2019 Senior Living Rehabilitation and Wellness Services Total Private payer $ 198,875 $ 526 $ 199,401 Medicare and Medicaid programs 59,586 5,443 65,029 Other third-party payer programs 8,068 4,437 12,505 Management fees 3,983 — 3,983 Reimbursed community-level costs incurred on behalf of managed communities 74,605 — 74,605 Total revenues $ 345,117 $ 10,406 $ 355,523 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | Results of operations and selected financial information by reportable segment and the reconciliation to the condensed consolidated financial statements are as follows: Three Months Ended March 31, 2020 Senior Living Rehabilitation and Wellness Services Corporate and Other Total Total revenues $ 276,402 $ 21,043 $ — $ 297,445 Operating income (loss) 20,328 3,881 (15,585 ) 8,624 Income (loss) before income taxes and equity in earnings of an investee 4,735 2,828 (23,364 ) (15,801 ) Net income (loss) 4,735 2,828 (24,772 ) (17,209 ) Three Months Ended March 31, 2019 Senior Living Rehabilitation and Wellness Services Corporate and Other Total Total revenues $ 345,117 $ 10,406 $ — $ 355,523 Operating (loss) income (7,658 ) 2,228 (26,407 ) (31,837 ) (Loss) income before income taxes and equity in earnings of an investee (26,821 ) 1,190 (6,498 ) (32,129 ) Net (loss) income (28,311 ) 1,190 (6,094 ) (33,215 ) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment, net consist of the following: March 31, 2020 December 31, 2019 Land $ 12,155 $ 12,155 Buildings and improvements 202,417 201,447 Furniture, fixtures and equipment 57,932 59,174 Property and equipment, at cost 272,504 272,776 Less: accumulated depreciation (108,230 ) (105,529 ) Property and equipment, net $ 164,274 $ 167,247 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Schedule of changes in accumulated other comprehensive income, net of tax | The following tables detail the changes in accumulated other comprehensive income, net of tax, for the three months ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 Equity Investment of an Investee Investments Accumulated Other Comprehensive Income Balance at January 1, 2020 $ (175 ) $ 2,838 $ 2,663 Cumulative effect adjustment to beginning accumulated deficit and accumulated other comprehensive income in connection with a reclassification of equity investments previously classified as debt investments — (1,694 ) (1,694 ) Unrealized gain on debt investments, net of tax — 427 427 Realized loss on debt investments reclassified and included in net loss, net of tax — (10 ) (10 ) Balance at March 31, 2020 $ (175 ) $ 1,561 $ 1,386 Three Months Ended March 31, 2019 Equity Investment of an Investee Investments Accumulated Other Comprehensive Income Balance at January 1, 2019 $ (266 ) $ 2,008 $ 1,742 Unrealized loss on debt investments, net of tax — (205 ) (205 ) Equity in unrealized gain of an investee, net of tax 65 — 65 Realized gain on debt investments reclassified and included in net loss, net of tax — 4 4 Balance at March 31, 2019 $ (201 ) $ 1,807 $ 1,606 |
Fair Values of Assets and Lia_2
Fair Values of Assets and Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities measured at fair value on a recurring and non recurring basis, categorized by the level of inputs used in the valuation of each asset | The tables below present certain of our assets measured at fair value at March 31, 2020 and December 31, 2019 , categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset. As of March 31, 2020 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Description Total (Level 1) (Level 2) (Level 3) Cash equivalents (1) $ 25,847 $ 25,847 $ — $ — Investments: Equity investments (2) High yield fund (3) 2,608 — 2,608 — International bond fund (4) 2,742 — 2,742 — Financial services industry 1,022 1,022 — — Healthcare 399 399 — — Technology 203 203 — — Other (5) 3,904 3,904 — — Total equity investments 10,878 5,528 5,350 — Debt investments (6) Industrial bonds 1,164 — 1,164 — Technology bonds 1,952 — 1,952 — Government bonds 10,063 10,063 — — Energy bonds 619 — 619 — Financial bonds 1,540 — 1,540 — Other 1,025 — 1,025 — Total debt investments 16,363 10,063 6,300 — Total investments 27,241 15,591 11,650 — Total $ 53,088 $ 41,438 $ 11,650 $ — As of December 31, 2019 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Description Total (Level 1) (Level 2) (Level 3) Cash equivalents (1) $ 27,456 $ 27,456 $ — $ — Investments: Equity investments (2) Financial services industry 1,233 1,233 — — Healthcare 395 395 — — Technology 281 281 — — Other 4,500 4,500 — — Total equity investments 6,409 6,409 — — Debt investments (6) High yield fund (3) 2,977 — 2,977 — International bond fund (4) 2,680 — 2,680 — Industrial bonds 1,180 — 1,180 — Technology bonds 2,189 — 2,189 — Government bonds 9,537 9,537 — — Energy bonds 625 — 625 — Financial bonds (5) 1,853 — 1,853 — Other 725 — 725 — Total debt investments 21,766 9,537 12,229 — Total investments 28,175 15,946 12,229 — Total $ 55,631 $ 43,402 $ 12,229 $ — (1) Cash equivalents consist of short-term, highly liquid investments and money market funds held primarily for obligations arising from our self-insurance programs. Cash equivalents are reported in our condensed consolidated balance sheets as cash and cash equivalents and current and long term restricted cash and cash equivalents. Cash equivalents include $ 23,300 and $ 23,014 of balances that are restricted at March 31, 2020 and December 31, 2019 , respectively. (2) The fair value of our equity investments is readily determinable. During the three months ended March 31, 2020 and 2019 , we received gross proceeds of $45 and $ 1,115 , respectively, in connection with the sales of equity investments and recorded gross realized gains totaling $0 and $136 , respectively, and gross realized losses totaling $30 and $40 , respectively. (3) The investment strategy of this fund is to invest principally in fixed income securities. The fund invests in such securities or investment vehicles as it considers appropriate to achieve the fund’s investment objective, which is to provide an above average rate of total return while attempting to limit investment risk by investing in a diversified portfolio of primarily fixed income securities issued by companies with below investment grade ratings. There are no unfunded commitments and the investment can be redeemed weekly. As of January 1, 2020, we reclassified this investment from a debt investment to an equity investment to reflect the nature of the investment rather than the nature of the securities held by the investment. (4) The investment strategy of this fund is to invest principally in fixed income securities issued by non-U.S. issuers. The fund invests in such securities or investment vehicles as it considers appropriate to achieve the fund’s investment objective, which is to provide an above average rate of total return while attempting to limit investment risk by investing in a diversified portfolio of U.S. dollar investment grade fixed income securities. There are no unfunded commitments and the investment can be redeemed weekly. As of January 1, 2020, we reclassified this investment from a debt investment to an equity investment to reflect the nature of the investment rather than the nature of the securities held by the investment. (5) As of January 1, 2020, we reclassified an investment with a fair value of $286 from a debt investment to an equity investment. (6) As of March 31, 2020 , our debt investments, which are classified as available for sale, had a fair value of $ 16,363 with an amortized cost of $ 15,536 ; the difference between the fair value and amortized cost amounts resulted from unrealized gains of $ 834 , net of unrealized losses of $ 7 . As of December 31, 2019 , our debt investments had a fair value of $ 21,766 with an amortized cost of $ 19,662 ; the difference between the fair value and amortized cost amounts resulted from unrealized gains of $ 2,114 , net of unrealized losses of $ 10 . Debt investments include $12,318 and $12,477 of balances that are restricted as of March 31, 2020 and December 31, 2019 , respectively. At March 31, 2020 , eight of the investments we held, with a fair value of $1,059 , had been in a loss position for less than 12 months and we did not hold any debt investments with a fair value in a loss position for greater than 12 months . We do not believe these investments are impaired primarily because they have not been in a loss position for an extended period of time, the financial conditions of the issuers of these investments remain strong with solid fundamentals as of March 31, 2020 , we do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery, and other factors that support our conclusion that the loss is temporary. During the three months ended March 31, 2020 and 2019 , we received gross proceeds of $ 1,409 and $ 1,528 , respectively, in connection with the sales of debt investments and recorded gross realized gains totaling $ 10 and $ 2 , respectively, and gross realized losses totaling $ 0 and $ 6 , respectively. We record gains and losses on the sales of these investments using the specific identification method. |
Schedule of debt securities | The amortized cost basis and fair value of debt securities at March 31, 2020 , by contractual maturity, are shown below. Amortized Cost Fair Value Due in one year or less $ 1,503 $ 1,512 Due after one year through five years 8,702 9,034 Due after five years through ten years 5,331 5,817 Total $ 15,536 $ 16,363 |
Indebtedness (Tables)
Indebtedness (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Summary of mortgages | The following table is a summary of this mortgage note as of March 31, 2020 : Balance as of March 31, 2020 Contractual Stated Interest Rate Effective Interest Rate Maturity Date Monthly Payment Lender Type $ 7,691 (1) 6.20 % 6.70 % September 2032 $ 72 Federal Home Loan Mortgage Corporation (1) Contractual principal payment excluding unamortized discount and debt issuance costs of $246 . |
Basis of Presentation and Org_2
Basis of Presentation and Organization (Details) $ in Thousands | Jan. 01, 2020USD ($)shares | Apr. 01, 2019lease | Dec. 31, 2019USD ($)lease | Mar. 31, 2020statecommunitybedliving_unitpropertysuiteapartment | Mar. 31, 2019property | Jan. 01, 2019USD ($) |
Real estate properties | ||||||
Cumulative effect adjustment to beginning accumulated deficit and accumulated other comprehensive income in connection with a reclassification of equity investments previously classified as debt investments | $ | $ 67,473 | |||||
Senior Living Communities | ||||||
Real estate properties | ||||||
Number of properties operated | 268 | |||||
Number of states in which real estate properties are located | state | 32 | |||||
Number of properties owned and operated | 20 | |||||
Number of living units in properties operated | living_unit | 31,272 | |||||
Number of living units in properties owned and operated | living_unit | 2,108 | |||||
Number of communities operating | community | 4 | |||||
Number of units in properties leased and operated | living_unit | 204 | |||||
Number of units in properties managed | living_unit | 28,960 | |||||
Independent and Assisted Living Communities | ||||||
Real estate properties | ||||||
Number of properties operated | 257 | |||||
Number of living units in properties operated | living_unit | 30,008 | |||||
SNF | ||||||
Real estate properties | ||||||
Number of properties operated | 11 | |||||
Number of living units in properties operated | living_unit | 1,264 | |||||
Independent Living Apartment | ||||||
Real estate properties | ||||||
Number of living units in properties operated | apartment | 11,362 | |||||
Assisted Living Suites | ||||||
Real estate properties | ||||||
Number of living units in properties operated | suite | 16,459 | |||||
Skilled Nursing Units | ||||||
Real estate properties | ||||||
Number of living units in properties operated | bed | 3,451 | |||||
Affiliated Entity | Senior Living Communities | ||||||
Real estate properties | ||||||
Number of properties managed | 76 | |||||
Transaction Agreement | Affiliated Entity | ||||||
Real estate properties | ||||||
Number of properties managed | community | 244 | |||||
Number of master leases | lease | 5 | |||||
Transaction Agreement | Affiliated Entity | Senior Living Communities | ||||||
Real estate properties | ||||||
Number of master leases | lease | 5 | |||||
Diversified Healthcare Trust | Inpatient Rehabilitation Clinics | ||||||
Real estate properties | ||||||
Number of properties operated | 41 | |||||
Diversified Healthcare Trust | Outpatient Rehabilitation Clinics | ||||||
Real estate properties | ||||||
Number of properties operated | 203 | |||||
Number of properties owned and operated | 152 | |||||
Number of properties owned or leased | 51 | |||||
Shares Issued | Transaction Agreement | Affiliated Entity | ||||||
Real estate properties | ||||||
Additional consideration from share issuances | $ | $ 75,000 | |||||
Shares Issued | Diversified Healthcare Trust | Transaction Agreement | Affiliated Entity | ||||||
Real estate properties | ||||||
Number of shares sold (in shares) | shares | 10,268,158 | |||||
Shares Issued | Diversified Healthcare Trust Shareholders | Transaction Agreement | Affiliated Entity | ||||||
Real estate properties | ||||||
Number of shares sold (in shares) | shares | 16,118,849 | |||||
Accumulated Other Comprehensive Income | ||||||
Real estate properties | ||||||
Cumulative effect adjustment to beginning accumulated deficit and accumulated other comprehensive income in connection with a reclassification of equity investments previously classified as debt investments | $ | $ (1,694) | $ (1,694) | ||||
Accumulated Deficit | ||||||
Real estate properties | ||||||
Cumulative effect adjustment to beginning accumulated deficit and accumulated other comprehensive income in connection with a reclassification of equity investments previously classified as debt investments | $ | $ 1,694 | $ 1,694 | $ 67,473 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Management fees as a percentage of gross revenues | 5.00% | |
Management fee as a percentage of construction costs | 3.00% | |
Incentive fee percentage | 15.00% | |
Incentive management fee maximum | 1.50% | |
Total revenues | $ 297,445,000 | $ 355,523,000 |
Private payer | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 21,305,000 | 199,401,000 |
Medicare and Medicaid programs | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 10,286,000 | 65,029,000 |
Other third-party payer programs | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 10,790,000 | 12,505,000 |
Management fees | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 17,051,000 | 3,983,000 |
Total revenues | 17,051,000 | 3,983,000 |
Reimbursed community-level costs incurred on behalf of managed communities | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 232,016,000 | 74,605,000 |
Total revenues | 232,016,000 | 74,605,000 |
Other reimbursed expenses | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 5,997,000 | |
Total revenues | 5,997,000 | 0 |
Senior Living | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 276,402,000 | 345,117,000 |
Senior Living | Operating Segments | Private payer | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 20,501,000 | 198,875,000 |
Senior Living | Operating Segments | Medicare and Medicaid programs | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 716,000 | 59,586,000 |
Senior Living | Operating Segments | Other third-party payer programs | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 121,000 | 8,068,000 |
Senior Living | Operating Segments | Management fees | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 17,051,000 | 3,983,000 |
Senior Living | Operating Segments | Reimbursed community-level costs incurred on behalf of managed communities | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 232,016,000 | 74,605,000 |
Senior Living | Operating Segments | Other reimbursed expenses | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 5,997,000 | |
Rehabilitation and Wellness Services | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 21,043,000 | 10,406,000 |
Rehabilitation and Wellness Services | Operating Segments | Private payer | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 804,000 | 526,000 |
Rehabilitation and Wellness Services | Operating Segments | Medicare and Medicaid programs | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 9,570,000 | 5,443,000 |
Rehabilitation and Wellness Services | Operating Segments | Other third-party payer programs | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 10,669,000 | 4,437,000 |
Rehabilitation and Wellness Services | Operating Segments | Management fees | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 0 | 0 |
Rehabilitation and Wellness Services | Operating Segments | Reimbursed community-level costs incurred on behalf of managed communities | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 0 | $ 0 |
Rehabilitation and Wellness Services | Operating Segments | Other reimbursed expenses | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | $ 0 | |
Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Payment term | 30 days | |
Maximum | ||
Disaggregation of Revenue [Line Items] | ||
Payment term | 1 year |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments | segment | 2 | |
Total revenues | $ 297,445 | $ 355,523 |
Operating income (loss) | 8,624 | (31,837) |
Loss before income taxes and equity in earnings of an investee | (15,801) | (32,129) |
Net loss | (17,209) | (33,215) |
Operating Segments | Senior Living | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 276,402 | 345,117 |
Operating income (loss) | 20,328 | (7,658) |
Loss before income taxes and equity in earnings of an investee | 4,735 | (26,821) |
Net loss | 4,735 | (28,311) |
Operating Segments | Rehabilitation and Wellness Services | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 21,043 | 10,406 |
Operating income (loss) | 3,881 | 2,228 |
Loss before income taxes and equity in earnings of an investee | 2,828 | 1,190 |
Net loss | 2,828 | 1,190 |
Corporate and Other | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 0 | 0 |
Operating income (loss) | (15,585) | (26,407) |
Loss before income taxes and equity in earnings of an investee | (23,364) | (6,498) |
Net loss | $ (24,772) | $ (6,094) |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Property and Equipment | |||
Property and equipment, at cost | $ 272,504,000 | $ 272,776,000 | |
Less: accumulated depreciation | (108,230,000) | (105,529,000) | |
Property and equipment, net | 164,274,000 | 167,247,000 | |
Depreciation expense | 2,701,000 | $ 8,165,000 | |
Impairment charges recorded as a result of long lived assets | 0 | 3,148,000 | |
Fair value of impaired assets | $ 4,520,000 | ||
Disposal Group, Held-for-sale, Not Discontinued Operations | |||
Property and Equipment | |||
Amount of improvements for property and equipment under lease agreement | 4,813,000 | ||
Land | |||
Property and Equipment | |||
Property and equipment, at cost | 12,155,000 | 12,155,000 | |
Buildings and improvements | |||
Property and Equipment | |||
Property and equipment, at cost | 202,417,000 | 201,447,000 | |
Furniture, fixtures and equipment | |||
Property and Equipment | |||
Property and equipment, at cost | $ 57,932,000 | $ 59,174,000 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2020 | Mar. 31, 2019 | Jan. 01, 2020 | Dec. 31, 2019 | Jan. 01, 2019 | |
Changes in accumulated other comprehensive income | |||||
Beginning balance | $ 119,981 | $ 71,169 | |||
Cumulative effect adjustment to beginning accumulated deficit and accumulated other comprehensive income in connection with a reclassification of equity investments previously classified as debt investments | $ 67,473 | ||||
Unrealized loss on debt investments, net of tax | 427 | (205) | |||
Equity in unrealized gain of an investee, net of tax | 0 | 65 | |||
Realized gain (loss) on debt investments reclassified and included in net loss, net of tax | (10) | 4 | |||
Ending balance | 200,609 | 105,388 | |||
Equity Investment of an Investee | |||||
Changes in accumulated other comprehensive income | |||||
Beginning balance | (175) | (266) | |||
Cumulative effect adjustment to beginning accumulated deficit and accumulated other comprehensive income in connection with a reclassification of equity investments previously classified as debt investments | $ 0 | ||||
Unrealized loss on debt investments, net of tax | 0 | 0 | |||
Equity in unrealized gain of an investee, net of tax | 65 | ||||
Realized gain (loss) on debt investments reclassified and included in net loss, net of tax | 0 | 0 | |||
Ending balance | (175) | (201) | |||
Investments | |||||
Changes in accumulated other comprehensive income | |||||
Beginning balance | 2,838 | 2,008 | |||
Cumulative effect adjustment to beginning accumulated deficit and accumulated other comprehensive income in connection with a reclassification of equity investments previously classified as debt investments | (1,694) | ||||
Unrealized loss on debt investments, net of tax | 427 | (205) | |||
Equity in unrealized gain of an investee, net of tax | 0 | ||||
Realized gain (loss) on debt investments reclassified and included in net loss, net of tax | (10) | 4 | |||
Ending balance | 1,561 | 1,807 | |||
Accumulated Other Comprehensive Income | |||||
Changes in accumulated other comprehensive income | |||||
Beginning balance | 2,663 | 1,742 | |||
Cumulative effect adjustment to beginning accumulated deficit and accumulated other comprehensive income in connection with a reclassification of equity investments previously classified as debt investments | $ (1,694) | (1,694) | |||
Ending balance | 1,386 | 1,606 | |||
Accumulated Deficit | |||||
Changes in accumulated other comprehensive income | |||||
Beginning balance | (245,184) | (292,636) | |||
Cumulative effect adjustment to beginning accumulated deficit and accumulated other comprehensive income in connection with a reclassification of equity investments previously classified as debt investments | $ 1,694 | $ 1,694 | $ 67,473 | ||
Ending balance | $ (260,699) | $ (258,378) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Provision (benefit) for income taxes | $ 1,408 | $ 1,490 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Potentially dilutive restricted unvested common shares, not included in diluted EPS calculation (in shares) | 123,660 | 108,210 |
Fair Values of Assets and Lia_3
Fair Values of Assets and Liabilities - Recurring Measurements (Details) $ in Thousands | Jan. 01, 2020USD ($) | Mar. 31, 2020USD ($)security | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) |
Fair Values of Assets and Liabilities | ||||
Cash equivalents | $ 25,847 | $ 27,456 | ||
Equity investments | 10,878 | 6,409 | ||
Debt investments | 16,363 | 21,766 | ||
Total investments | 27,241 | 28,175 | ||
Total | 53,088 | 55,631 | ||
Restricted cash | 23,300 | 23,014 | ||
Gross proceeds from sale of equity securities | 45 | $ 1,115 | ||
Gross realized gains recorded on sale of equity securities | 0 | 136 | ||
Gross realized losses recorded on sale of equity securities | 30 | 40 | ||
Reclassification from debt to equity investments | $ 286 | |||
Amortized cost of available for sale debt securities | 15,536 | 19,662 | ||
Unrealized gains on available for sale debt securities | 834 | 2,114 | ||
Unrealized losses on available for sale debt securities | $ 7 | 10 | ||
Number of available for sale debt securities in a loss position less than 12 months | security | 8 | |||
Fair value of debt securities which are in loss position for less than 12 months | $ 1,059 | |||
Gross proceeds from sale of available for sale debt securities | 1,409 | 1,528 | ||
Gross realized gains recorded on sale of debt securities | 10 | 2 | ||
Gross realized losses recorded on sale of debt securities | 0 | $ 6 | ||
Mortgage note payable | 7,076 | 7,171 | ||
High yield fund | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 2,608 | |||
Debt investments | 2,977 | |||
International bond fund | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 2,742 | |||
Debt investments | 2,680 | |||
Financial services industry | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 1,022 | 1,233 | ||
Healthcare | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 399 | 395 | ||
Technology | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 203 | 281 | ||
Other(5) | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 3,904 | 4,500 | ||
Industrial bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 1,164 | 1,180 | ||
Technology bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 1,952 | 2,189 | ||
Government bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 10,063 | 9,537 | ||
Energy bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 619 | 625 | ||
Financial bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 1,540 | 1,853 | ||
Other | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 1,025 | 725 | ||
Restricted debt securities | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 12,318 | 12,477 | ||
Quoted Prices in Active Markets for Identical Assets | ||||
Fair Values of Assets and Liabilities | ||||
Cash equivalents | 25,847 | 27,456 | ||
Equity investments | 5,528 | 6,409 | ||
Debt investments | 10,063 | 9,537 | ||
Total investments | 15,591 | 15,946 | ||
Total | 41,438 | 43,402 | ||
Quoted Prices in Active Markets for Identical Assets | High yield fund | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 0 | |||
Debt investments | 0 | |||
Quoted Prices in Active Markets for Identical Assets | International bond fund | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 0 | |||
Debt investments | 0 | |||
Quoted Prices in Active Markets for Identical Assets | Financial services industry | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 1,022 | 1,233 | ||
Quoted Prices in Active Markets for Identical Assets | Healthcare | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 399 | 395 | ||
Quoted Prices in Active Markets for Identical Assets | Technology | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 203 | 281 | ||
Quoted Prices in Active Markets for Identical Assets | Other(5) | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 3,904 | 4,500 | ||
Quoted Prices in Active Markets for Identical Assets | Industrial bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 0 | 0 | ||
Quoted Prices in Active Markets for Identical Assets | Technology bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 0 | 0 | ||
Quoted Prices in Active Markets for Identical Assets | Government bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 10,063 | 9,537 | ||
Quoted Prices in Active Markets for Identical Assets | Energy bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 0 | 0 | ||
Quoted Prices in Active Markets for Identical Assets | Financial bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 0 | 0 | ||
Quoted Prices in Active Markets for Identical Assets | Other | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 0 | 0 | ||
Significant Other Observable Inputs | ||||
Fair Values of Assets and Liabilities | ||||
Cash equivalents | 0 | 0 | ||
Equity investments | 5,350 | 0 | ||
Debt investments | 6,300 | 12,229 | ||
Total investments | 11,650 | 12,229 | ||
Total | 11,650 | 12,229 | ||
Significant Other Observable Inputs | High yield fund | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 2,608 | |||
Debt investments | 2,977 | |||
Significant Other Observable Inputs | International bond fund | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 2,742 | |||
Debt investments | 2,680 | |||
Significant Other Observable Inputs | Financial services industry | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 0 | 0 | ||
Significant Other Observable Inputs | Healthcare | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 0 | 0 | ||
Significant Other Observable Inputs | Technology | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 0 | 0 | ||
Significant Other Observable Inputs | Other(5) | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 0 | 0 | ||
Significant Other Observable Inputs | Industrial bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 1,164 | 1,180 | ||
Significant Other Observable Inputs | Technology bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 1,952 | 2,189 | ||
Significant Other Observable Inputs | Government bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 0 | 0 | ||
Significant Other Observable Inputs | Energy bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 619 | 625 | ||
Significant Other Observable Inputs | Financial bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 1,540 | 1,853 | ||
Significant Other Observable Inputs | Other | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 1,025 | 725 | ||
Significant Unobservable Inputs | ||||
Fair Values of Assets and Liabilities | ||||
Cash equivalents | 0 | 0 | ||
Equity investments | 0 | 0 | ||
Debt investments | 0 | 0 | ||
Total investments | 0 | 0 | ||
Total | 0 | 0 | ||
Significant Unobservable Inputs | High yield fund | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 0 | |||
Debt investments | 0 | |||
Significant Unobservable Inputs | International bond fund | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 0 | |||
Debt investments | 0 | |||
Significant Unobservable Inputs | Financial services industry | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 0 | 0 | ||
Significant Unobservable Inputs | Healthcare | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 0 | 0 | ||
Significant Unobservable Inputs | Technology | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 0 | 0 | ||
Significant Unobservable Inputs | Other(5) | ||||
Fair Values of Assets and Liabilities | ||||
Equity investments | 0 | 0 | ||
Significant Unobservable Inputs | Industrial bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 0 | 0 | ||
Significant Unobservable Inputs | Technology bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 0 | 0 | ||
Significant Unobservable Inputs | Government bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 0 | 0 | ||
Significant Unobservable Inputs | Energy bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 0 | 0 | ||
Significant Unobservable Inputs | Financial bonds | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 0 | 0 | ||
Significant Unobservable Inputs | Other | ||||
Fair Values of Assets and Liabilities | ||||
Debt investments | 0 | 0 | ||
Carrying Value | ||||
Fair Values of Assets and Liabilities | ||||
Mortgage note payable | 7,445 | 9,412 | ||
Estimated Fair Value | Significant Unobservable Inputs | ||||
Fair Values of Assets and Liabilities | ||||
Mortgage note payable | $ 7,533 | $ 8,861 |
Fair Values of Assets and Lia_4
Fair Values of Assets and Liabilities - Debt Securities, Contractual Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Amortized Cost | ||
Due in one year or less | $ 1,503 | |
Due after one year through five years | 8,702 | |
Due after five years through ten years | 5,331 | |
Total | 15,536 | $ 19,662 |
Fair Value | ||
Due in one year or less | 1,512 | |
Due after one year through five years | 9,034 | |
Due after five years through ten years | 5,817 | |
Total | $ 16,363 | $ 21,766 |
Indebtedness - Debt Instruments
Indebtedness - Debt Instruments Summary (Details) | 3 Months Ended | ||
Mar. 31, 2020USD ($)communityagreementliving_unit | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Indebtedness | |||
Letters of credit outstanding | $ 28,626,000 | ||
Mortgage Notes | |||
Indebtedness | |||
Interest expense and other associated costs incurred | $ 128,000 | $ 134,000 | |
Senior Living Communities | Mortgage Notes | |||
Indebtedness | |||
Number of real estate properties mortgaged | community | 1 | ||
Revolving Credit Facility | Line of Credit | |||
Indebtedness | |||
Interest expense and other associated costs incurred | $ 254,000 | $ 772,000 | |
Standby Letters of Credit | |||
Indebtedness | |||
Number of irrevocable standby letters of credit agreements | agreement | 7 | ||
Standby Letters of Credit | Workers' Compensation Insurance Program | |||
Indebtedness | |||
Letter of credit amount securing workers' compensation insurance program | $ 25,388,000 | ||
Extension term | 1 year | ||
Standby Letters of Credit | Certain of Our Other Obligations | |||
Indebtedness | |||
Number of irrevocable standby letters of credit agreements | agreement | 6 | ||
Prior Secured Revolving Credit Facility, Maturing June 2019 | Revolving Credit Facility | Line of Credit | |||
Indebtedness | |||
Amount of fees paid in connection with closing credit facility | $ 1,271,000 | ||
Weighted average annual interest rate | 5.00% | ||
Secured Revolving Credit Facility Maturing June 2021 | Revolving Credit Facility | Line of Credit | |||
Indebtedness | |||
Maximum borrowing capacity | $ 65,000,000 | ||
Extension term | 1 year | ||
Quarterly commitment fee on the unused part of borrowing availability | 0.35% | ||
Debt outstanding | $ 0 | ||
Letters of credit outstanding | $ 3,238,000 | $ 54,450,000 | |
Secured Revolving Credit Facility Maturing June 2021 | Revolving Credit Facility | Senior Living Communities | |||
Indebtedness | |||
Number of real estate properties securing borrowings on the new credit facility | community | 11 | ||
Number of units in real estate properties securing borrowings on the new credit facility | living_unit | 1,245 | ||
Secured Revolving Credit Facility Maturing June 2021 | LIBOR | Revolving Credit Facility | Line of Credit | |||
Indebtedness | |||
Variable rate basis | 2.50% | ||
Interest rate at period end | 3.49% | ||
Secured Revolving Credit Facility Maturing June 2021 | Base Rate | Revolving Credit Facility | Line of Credit | |||
Indebtedness | |||
Variable rate basis | 1.50% | ||
Interest rate at period end | 4.75% | ||
September 2032 | |||
Indebtedness | |||
Unamortized discount and debt issuance costs | $ 246,000 | ||
September 2032 | Mortgage Notes | |||
Indebtedness | |||
Debt outstanding | $ 7,691,000 | ||
Contractual stated interest rate | 6.20% | ||
Cash Equivalents | Standby Letters of Credit | Workers' Compensation Insurance Program | |||
Indebtedness | |||
Collateral securing workers' compensation insurance program | $ 21,707,000 | ||
Debt and Equity Investments | Standby Letters of Credit | Workers' Compensation Insurance Program | |||
Indebtedness | |||
Collateral securing workers' compensation insurance program | $ 6,586,000 | ||
Affiliated Entity | Transaction Agreement | DHC Credit Facility Due January1 2020 | Line of Credit | |||
Indebtedness | |||
Maximum borrowing capacity | $ 25,000,000 |
Indebtedness - Payments of Prin
Indebtedness - Payments of Principal and Interest (Details) - September 2032 $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Indebtedness | |
Unamortized discount and debt issuance costs | $ 246 |
Mortgage Notes | |
Indebtedness | |
Debt outstanding | $ 7,691 |
Contractual Stated Interest Rate | 6.20% |
Effective Interest Rate | 6.70% |
Monthly Payment | $ 72 |
Business Management Agreement_2
Business Management Agreement with RMR LLC - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Reit Management And Research LLC | ||
Business Management Agreement [Line Items] | ||
Business management fees and costs | $ 2,351 | $ 2,364 |
Leases and Management Agreeme_2
Leases and Management Agreements with DHC - Narrative (Details) | Jan. 01, 2020USD ($)shares | Apr. 01, 2019USD ($)lease | May 07, 2020USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2019USD ($)property | Mar. 31, 2020USD ($)community | Mar. 31, 2019USD ($)property | Dec. 31, 2019USD ($)termcommunitylease | Jan. 01, 2019USD ($) |
Leases | |||||||||
Loss on termination of leases | $ 22,899,000 | $ 0 | |||||||
Percentage of fees related to the new management agreement | 15.00% | ||||||||
Incentive management fee maximum | 1.50% | ||||||||
Due to related persons | $ (1,102,000) | 17,583,000 | |||||||
Cumulative effect in connection with the adoption of FASB ASU | $ 67,473,000 | ||||||||
Revenues form senior living communities | 297,445,000 | 355,523,000 | |||||||
Management Fee Revenue | |||||||||
Leases | |||||||||
Revenues form senior living communities | $ 17,051,000 | 3,983,000 | |||||||
SNH | |||||||||
Leases | |||||||||
Sale from leaseback transaction | $ 82,644,000 | ||||||||
Number of communities managed | community | 78 | ||||||||
SNH | Transaction Agreement | |||||||||
Leases | |||||||||
Number of master leases | lease | 5 | ||||||||
Number of properties managed | community | 244 | ||||||||
Monthly minimum rent | $ 11,000,000 | ||||||||
Management fee as a percent of gross revenues | 5.00% | ||||||||
Percentage of fees related to the new management agreement | 15.00% | ||||||||
Incentive management fee maximum | 1.50% | ||||||||
Management fee, number of renewal terms | term | 2 | ||||||||
Management fee renewal term | 5 years | ||||||||
Percentage, target EBITDA threshold | 90.00% | ||||||||
Related Party Transaction, Management Fee, Termination Threshold, Percentage | 20.00% | ||||||||
EBITDA threshold, consecutive measurement period | 2 years | ||||||||
EBITDA threshold, measurement period | term | 2 | ||||||||
EBITDA threshold, consecutive measurement period | 3 years | ||||||||
Transaction cost | $ 1,095,000 | ||||||||
Related Party Transaction Rent As Percentage Of Gross Revenue | 4.00% | ||||||||
Rent | 53,782,000 | ||||||||
Percentage rent - 840 | 1,549,000 | ||||||||
Decrease in rent payable to SNH | $ 13,840,000 | ||||||||
Due to related persons | $ 13,840,000 | ||||||||
Outstanding rent due and payable to SNH | $ 0 | ||||||||
SNH | Other Services Provided to Residents at Managed Communities | |||||||||
Leases | |||||||||
Rehabilitation service revenue | 8,057,000 | 1,675,000 | |||||||
SNH | Management Fee Revenue | |||||||||
Leases | |||||||||
Revenues form senior living communities | 16,462,000 | 3,718,000 | |||||||
SNH | Disposal Group, Disposed of by Sale, Not Discontinued Operations | Transaction Agreement | |||||||||
Leases | |||||||||
Property and equipment related to the carrying value of senior living communities | $ 49,155,000 | ||||||||
SNH | Improvements to Communities | |||||||||
Leases | |||||||||
Leasehold improvements sold to lessor | $ 22,578,000 | ||||||||
SNH | Line of Credit | DHC Credit Facility Due January1 2020 | Transaction Agreement | |||||||||
Leases | |||||||||
Line of credit from SNH in connection with the transaction agreement | $ 25,000,000 | ||||||||
SNH | Senior Living Communities | |||||||||
Leases | |||||||||
Number of properties managed | property | 76 | 76 | |||||||
SNH | Senior Living Communities | Transaction Agreement | |||||||||
Leases | |||||||||
Number of properties leased and operated | community | 166 | ||||||||
Number of master leases | lease | 5 | ||||||||
SNH | Senior Living Communities | Management Fee Revenue | |||||||||
Leases | |||||||||
Revenues form senior living communities | 462,000 | $ 195,000 | |||||||
SNH | Senior Living Communities | Management Fee Revenue | D&R Yonkers LLC | |||||||||
Leases | |||||||||
Revenues form senior living communities | 127,000 | $ 70,000 | |||||||
Shares Issued | SNH | Transaction Agreement | |||||||||
Leases | |||||||||
Additional consideration from share issuances | $ 75,000,000 | ||||||||
Excess fair value of shares issued | $ 97,899,000 | ||||||||
Shares Issued | SNH | Diversified Healthcare Trust | Transaction Agreement | |||||||||
Leases | |||||||||
Number of shares sold (in shares) | shares | 10,268,158 | ||||||||
Shares Issued | SNH | Diversified Healthcare Trust Shareholders | Transaction Agreement | |||||||||
Leases | |||||||||
Number of shares sold (in shares) | shares | 16,118,849 | ||||||||
Subsequent Event | SNH | Transaction Agreement | |||||||||
Leases | |||||||||
Decrease in working capital liabilities | $ 51,547,000 | ||||||||
Subsequent Event | Shares Issued | SNH | Transaction Agreement | |||||||||
Leases | |||||||||
Additional consideration from share issuances | $ 23,453,000 |
Related Person Transactions (De
Related Person Transactions (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Jan. 31, 2019USD ($) | Mar. 31, 2020USD ($)companyshares | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Related Party Transaction [Line Items] | ||||
Right of use assets | $ 20,161 | $ 20,855 | ||
Equity investment of an investee | 298 | 298 | ||
Equity in earnings of an investee | 0 | $ 404 | ||
Severance, Cash Payment | Chief Executive Officer | ||||
Related Party Transaction [Line Items] | ||||
Cash payments for severance | $ 600 | |||
Severance, Cash Payment | Senior Vice President | ||||
Related Party Transaction [Line Items] | ||||
Cash payments for severance | $ 510 | |||
Severance, Release Payments | Chief Executive Officer | ||||
Related Party Transaction [Line Items] | ||||
Cash payments for severance | $ 110 | 132 | ||
SNH | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Number of shares owned (in shares) | shares | 10,691,658 | |||
Percentage of outstanding common shares owned | 33.90% | |||
ABP Trust | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Number of shares owned (in shares) | shares | 1,972,783 | |||
Percentage of outstanding common shares owned | 6.30% | |||
Rent expense | $ 435 | 520 | ||
Incremental borrowing rate | 4.40% | |||
AIC | ||||
Related Party Transaction [Line Items] | ||||
Equity investment of an investee | $ 298 | $ 298 | ||
AIC | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Number of companies in related party entity | company | 4 | |||
Headquarters | ABP Trust | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Lease liability | $ 1,215 | 2,119 | ||
Right of use assets | $ 1,215 | $ 2,119 |
Legal Proceedings and Claims (D
Legal Proceedings and Claims (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Office of the Inspector General | |
Loss Contingencies [Line Items] | |
Estimated minimum loss | $ 0 |
Uncategorized Items - a3312020-
Label | Element | Value |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | $ 19,464,000 |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | 24,290,000 |
Other Restricted Cash And Cash Equivalents | fve_OtherRestrictedCashAndCashEquivalents | 930,000 |
Other Restricted Cash And Cash Equivalents | fve_OtherRestrictedCashAndCashEquivalents | $ 1,438,000 |