Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Mar. 13, 2015 | Jun. 30, 2014 |
Document and Entity Information | |||
Entity Registrant Name | FIVE STAR QUALITY CARE INC | ||
Entity Central Index Key | 1159281 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $215.60 | ||
Entity Common Stock, Shares Outstanding | 48,997,315 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets: | ||
Cash and cash equivalents | $20,988,000 | $23,628,000 |
Accounts receivable, net of allowance of $3,416 and $4,281 at December 31, 2014 and 2013, respectively | 38,814,000 | 36,940,000 |
Due from related persons | 12,641,000 | 11,659,000 |
Prepaid expenses | 16,463,000 | 13,838,000 |
Investments in available for sale securities, of which $8,352 and $4,690 are restricted as of December 31, 2014 and 2013, respectively | 23,436,000 | 19,150,000 |
Restricted cash | 2,945,000 | 9,003,000 |
Current net deferred tax assets | 13,289,000 | |
Other current assets | 5,031,000 | 6,672,000 |
Assets of discontinued operations | 1,463,000 | 16,705,000 |
Total current assets | 121,781,000 | 150,884,000 |
Property and equipment, net | 357,186,000 | 340,276,000 |
Equity investment in an investee | 6,827,000 | 5,913,000 |
Restricted cash | 2,170,000 | 9,795,000 |
Restricted investments in available for sale securities | 19,835,000 | 11,905,000 |
Goodwill and other intangible assets | 25,904,000 | 26,407,000 |
Long term net deferred tax assets | 41,830,000 | |
Other long term assets | 1,270,000 | 3,173,000 |
Total assets | 534,973,000 | 590,183,000 |
Current liabilities: | ||
Revolving credit facility, secured, principally by real estate | 35,000,000 | 35,000,000 |
Accounts payable and accrued expenses | 85,606,000 | 69,343,000 |
Accrued compensation and benefits | 34,171,000 | 31,888,000 |
Due to related persons | 20,338,000 | 20,587,000 |
Mortgage notes payable | 1,786,000 | 1,159,000 |
Accrued real estate taxes | 11,282,000 | 9,934,000 |
Security deposits and current portion of continuing care contracts | 7,235,000 | 8,025,000 |
Other current liabilities | 19,470,000 | 18,607,000 |
Liabilities of discontinued operations | 504,000 | 3,985,000 |
Total current liabilities | 215,392,000 | 198,528,000 |
Accrued expenses | 2,200,000 | |
Long term liabilities: | ||
Mortgage notes payable | 49,373,000 | 36,461,000 |
Continuing care contracts | 1,370,000 | 1,531,000 |
Accrued self-insurance obligations | 37,268,000 | 38,002,000 |
Other long term liabilities | 4,788,000 | 5,283,000 |
Total long term liabilities | 92,799,000 | 81,277,000 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common stock, par value $.01: 75,000,000 shares authorized, 48,997,315 and 48,613,442 shares issued and outstanding at December 31, 2014 and 2013, respectively | 490,000 | 486,000 |
Additional paid in capital | 357,051,000 | 355,570,000 |
Accumulated deficit | -134,449,000 | -48,996,000 |
Accumulated other comprehensive income | 3,690,000 | 3,318,000 |
Total shareholders' equity | 226,782,000 | 310,378,000 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $534,973,000 | $590,183,000 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance (in dollars) | $3,416 | $4,281 |
Investments in available for sale securities, restricted (in dollars) | $8,352 | $4,690 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 48,997,315 | 48,613,442 |
Common stock, shares outstanding | 48,997,315 | 48,613,442 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues: | |||
Senior living revenue | $1,099,228 | $1,077,062 | $1,074,333 |
Management fee revenue | 9,765 | 9,234 | 5,817 |
Reimbursed costs incurred on behalf of managed communities | 219,082 | 210,491 | 127,656 |
Total revenues | 1,328,075 | 1,296,787 | 1,207,806 |
Operating expenses: | |||
Senior living wages and benefits | 533,549 | 525,733 | 522,444 |
Other senior living operating expenses | 292,457 | 265,945 | 261,857 |
Costs incurred on behalf of managed communities | 219,082 | 210,491 | 127,656 |
Rent expense | 197,359 | 193,820 | 190,184 |
General and administrative | 72,385 | 63,509 | 61,817 |
Depreciation and amortization | 31,834 | 27,022 | 24,480 |
Impairment of long-lived assets | 589 | 186 | |
Gain on settlement | -3,365 | ||
Total operating expenses | 1,347,255 | 1,286,706 | 1,185,073 |
Operating (loss) income | -19,180 | 10,081 | 22,733 |
Interest, dividend and other income | 867 | 781 | 881 |
Interest and other expense | -5,131 | -5,227 | -6,268 |
(Loss) gain on early extinguishment of debt | -599 | 45 | |
Gain on sale of available for sale securities reclassified from other comprehensive income | 392 | -5 | -19 |
(Loss) income from continuing operations before income taxes and equity in earnings (losses) of an investee | -23,052 | 5,031 | 17,372 |
Provision for income taxes | -56,385 | -1,916 | -7,098 |
Equity in (loss) earnings of an investee | 87 | 334 | 316 |
(Loss) income from continuing operations | -79,350 | 3,449 | 10,590 |
(Loss) income from discontinued operations | -6,056 | -5,789 | 11,717 |
Net (loss) income | ($85,406) | ($2,340) | $22,307 |
Weighted average shares outstanding - basic | 48,028 | 48,277 | 47,952 |
Weighted average shares outstanding - diluted | 48,028 | 49,263 | 50,134 |
Basic (loss) income per share from: | |||
Continuing operations (in dollars per share) | ($1.65) | $0.07 | $0.23 |
Discontinued operations (in dollars per share) | ($0.13) | ($0.12) | $0.24 |
Net (loss) income per sharebbasic (in dollars per share) | ($1.78) | ($0.05) | $0.47 |
Diluted (loss) income per share from: | |||
Continuing operations (in dollars per share) | ($1.65) | $0.07 | $0.23 |
Discontinued operations (in dollars per share) | ($0.13) | ($0.12) | $0.23 |
Net (loss) income per share - diluted (in dollars per share) | ($1.78) | ($0.05) | $0.46 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net (loss) income | ($85,406) | ($2,340) | $22,307 |
Other comprehensive income (loss): | |||
Unrealized gain (loss) on investments in available for sale securities, net of tax | 612 | 4 | 214 |
Unrealized gain (loss) of an equity investment in an investee | 2 | -51 | 22 |
Less: Realized (gain) loss on investments in available for sale securities reclassified and included in net income, net of tax | -242 | 2 | 11 |
Other comprehensive (loss) income | 372 | -45 | 247 |
Comprehensive (loss) income | ($85,034) | ($2,385) | $22,554 |
CONSOLIDATED_STATEMENTS_OF_COM1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Unrealized gain on investments in available for sale securities tax | $151 | $138 | $144 |
Realized loss (gain) on investments in available for sale securities reclassified and included in net income, tax provision (benefit) | $150 | $3 | $8 |
CONSOLIDATED_STATEMENTS_OF_SHA
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) | Common Stock | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total |
In Thousands, except Share data, unless otherwise specified | |||||
Balance at Dec. 31, 2011 | $479 | $352,722 | ($68,963) | $3,116 | $287,354 |
Balance (in shares) at Dec. 31, 2011 | 47,899,312 | ||||
Comprehensive income: | |||||
Net income (loss) | 22,307 | 22,307 | |||
Unrealized gain on investments in available for sale securities, net of tax | 214 | 214 | |||
Realized loss on investments in available for sale securities reclassified and included in net income, net of tax | 11 | 11 | |||
Equity in unrealized gain (loss) of an investee, net of tax | 22 | 22 | |||
Comprehensive (loss) income | 22,307 | 247 | 22,554 | ||
Grants under share award plan and share based compensation | 3 | 1,442 | 1,445 | ||
Grants under share award plan and share based compensation (in shares) | 347,050 | ||||
Repurchases under share award plan (in shares) | -12,340 | ||||
Balance at Dec. 31, 2012 | 482 | 354,164 | -46,656 | 3,363 | 311,353 |
Balance (in shares) at Dec. 31, 2012 | 48,234,022 | ||||
Comprehensive income: | |||||
Net income (loss) | -2,340 | -2,340 | |||
Unrealized gain on investments in available for sale securities, net of tax | 4 | 4 | |||
Realized loss on investments in available for sale securities reclassified and included in net income, net of tax | 2 | 2 | |||
Equity in unrealized gain (loss) of an investee, net of tax | -51 | -51 | |||
Comprehensive (loss) income | -2,340 | -45 | -2,385 | ||
Grants under share award plan and share based compensation | 4 | 1,406 | 1,410 | ||
Grants under share award plan and share based compensation (in shares) | 385,400 | ||||
Repurchases under share award plan (in shares) | -5,980 | ||||
Balance at Dec. 31, 2013 | 486 | 355,570 | -48,996 | 3,318 | 310,378 |
Balance (in shares) at Dec. 31, 2013 | 48,613,442 | 48,613,442 | |||
Comprehensive income: | |||||
Net income (loss) | -85,406 | -85,406 | |||
Unrealized gain on investments in available for sale securities, net of tax | 612 | 612 | |||
Realized loss on investments in available for sale securities reclassified and included in net income, net of tax | -242 | -242 | |||
Equity in unrealized gain (loss) of an investee, net of tax | 2 | 2 | |||
Comprehensive (loss) income | -85,406 | 372 | -85,034 | ||
Grants under share award plan and share based compensation | 4 | 1,481 | 1,485 | ||
Grants under share award plan and share based compensation (in shares) | 403,050 | ||||
Repurchases under share award plan (in shares) | -19,177 | -47,000 | -47,000 | ||
Balance at Dec. 31, 2014 | $490 | $357,051 | ($134,449) | $3,690 | $226,782 |
Balance (in shares) at Dec. 31, 2014 | 48,997,315 | 48,997,315 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Cash flows from operating activities: | |||
Net (loss) income | ($85,406) | ($2,340) | $22,307 |
Adjustments to reconcile net (loss) income to cash provided by operating activities: | |||
Depreciation and amortization | 33,470 | 28,109 | 24,480 |
Loss (gain) on early extinguishment of debt | 599 | -45 | |
Loss (gain) from discontinued operations before income tax | 5,977 | 9,327 | -17,158 |
(Gain) loss on sale of available for sale securities | -392 | 5 | 19 |
Impairment of long-lived assets | 589 | 186 | |
Equity in earnings of an investee | -87 | -334 | -316 |
Stock-based compensation | 1,485 | 1,410 | 1,445 |
Deferred income taxes | 55,334 | -2,793 | 10,560 |
Provision for losses on receivables | 4,777 | 6,412 | 4,446 |
Changes in assets and liabilities: | |||
Accounts receivable | -6,651 | -4,147 | -2,431 |
Prepaid expenses and other assets | -279 | 2,334 | -11,357 |
Accounts payable and accrued expenses | 13,387 | -2,565 | 18,623 |
Accrued compensation and benefits | 2,283 | -3,414 | 1,403 |
Due to related persons, net | -1,601 | -1,074 | -6,773 |
Other current and long term liabilities | -549 | 4,062 | 2,305 |
Cash provided by operating activities | 22,337 | 35,777 | 47,508 |
Cash flows from investing activities: | |||
Deposits into (payments from) restricted cash and investment accounts, net | 13,683 | -84 | -9,784 |
Acquisition of property and equipment | -49,916 | -53,766 | -51,805 |
Purchase of available for sale securities | -22,431 | -13,974 | -5,076 |
Investment in an investee | -825 | ||
Acquisition of senior living communities, net of liabilities assumed | -5,926 | ||
Proceeds from disposition of property and equipment held for sale | 25,804 | 24,641 | 24,818 |
Proceeds from sale of available for sale securities | 10,876 | 6,285 | 4,163 |
Cash provided by (used in) investing activities | -28,735 | -36,898 | -37,684 |
Cash flows from financing activities: | |||
Proceeds from borrowings on credit facilities | 20,000 | 85,000 | 62,500 |
Repayments of borrowings on credit facilities | -20,000 | -50,000 | -62,500 |
Repayments of borrowings on a bridge loan from SNH | -38,000 | ||
Purchase and retirement of convertible senior notes | -24,872 | -12,038 | |
Repayments of mortgage notes payable | -1,979 | -1,093 | -1,028 |
Payment of employee tax obligations on withheld shares | -47 | ||
Cash provided by (used in) financing activities | -2,026 | 9,035 | -51,066 |
Cash flows from discontinued operations: | |||
Net cash provided by (used in) operating activities | 5,519 | -7,000 | 1,763 |
Net cash (used in) provided by investing activities | 265 | 5,610 | 35,885 |
Net cash (used in) provided by financing activities | -7,534 | -142 | |
Net cash flows provided by (used in) discontinued operations | 5,784 | -8,924 | 37,506 |
Change in cash and cash equivalents | -2,640 | -1,010 | -3,736 |
Cash and cash equivalents at beginning of period | 23,628 | 24,638 | 28,374 |
Cash and cash equivalents at end of period | 20,988 | 23,628 | 24,638 |
Supplemental cash flow information: | |||
Cash paid for interest | 3,557 | 3,361 | 4,921 |
Cash paid for income taxes, net | 1,179 | 1,884 | 2,132 |
Non-cash activities: | |||
Real estate acquisition | -15,518 | ||
Assumption of mortgage note payable | $15,518 |
Organization_and_Business
Organization and Business | 12 Months Ended |
Dec. 31, 2014 | |
Organization and Business | |
Organization and Business | 1. Organization and Business |
We operate senior living communities, including independent living communities, assisted living communities and skilled nursing facilities, or SNFs. As of December 31, 2014, we operated 258 senior living communities located in 31 states with 30,379 living units, including 227 primarily independent and assisted living communities with 27,557 living units and 31 SNFs with 2,822 living units. As of December 31, 2014, we own and operate 31 communities (3,061 living units), we lease and operate 181 communities (20,040 living units) and we manage 46 communities (7,278 living units). Our 258 senior living communities, as of December 31, 2014, included 10,585 independent living apartments, 14,584 assisted living suites and 5,210 skilled nursing units. The foregoing numbers exclude: (i) one assisted living community with 32 living units that we own which is being offered for sale and is classified as a discontinued operation; and (ii) three SNFs and one assisted living community with a total of 265 living units that are leased by us from SNH that are being offered for sale and are classified as discontinued operations. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Summary of Significant Accounting Policies | ||||||||||||||||||||
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies | |||||||||||||||||||
Basis of Presentation. The accompanying consolidated financial statements include our accounts and those of all of our consolidated subsidiaries. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. | ||||||||||||||||||||
Use of Estimates. Preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that may affect the amounts reported in these financial statements and related notes. Some significant estimates are included in our revenue recognition, self‑insurance reserves, the allowance for doubtful accounts, goodwill and long‑lived assets and contractual allowances. | ||||||||||||||||||||
We are required to estimate income taxes payable in each of the jurisdictions in which we operate. The process involves estimating actual current tax expense along with assessing temporary differences resulting from differing treatment of items for financial statement and tax purposes. These timing differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. We are required to record a valuation allowance to reduce deferred tax assets if we are not able to conclude that it is more likely than not these assets will be realized. | ||||||||||||||||||||
Our actual results could differ from our estimates. We periodically review estimates and assumptions and we reflect the effects of changes, if any, in the consolidated financial statements in the period that they are determined. | ||||||||||||||||||||
Earnings Per Share. We calculate basic earnings per common share, or EPS, by dividing net income (loss) (and income (loss) from continuing operations and income (loss) from discontinued operations) by the weighted average number of common shares outstanding during the year. We calculate diluted EPS using the more dilutive of the two‑class method or the treasury stock method. | ||||||||||||||||||||
Cash and Cash Equivalents. Cash and cash equivalents, consisting of short term, highly liquid investments and money market funds with original maturities of three months or less at the date of purchase, are carried at cost plus accrued interest, which approximates market. | ||||||||||||||||||||
Equity Method Investments. As of December 31, 2014, we and six other shareholders each owned approximately 14.3% of the outstanding equity of Affiliates Insurance Company, or AIC. Although we owned less than 20% of AIC, we use the equity method to account for this investment because we believe that we have significant influence over AIC as all of our Directors are also directors of AIC. Under the equity method, we recorded our percentage share of net earnings from AIC in our consolidated statements of operations. If we determine there is an “other than temporary impairment” in the fair value of this investment, we would record a charge to earnings. In evaluating the fair value of this investment, we have considered, among other things, the assets and liabilities held by AIC, AIC’s overall financial condition and earning trends, and the financial condition and prospects for the insurance industry generally. As of December 31, 2014, we have invested $6,034 in AIC. | ||||||||||||||||||||
Investment Securities. Investment securities that are held principally for resale in the near term are classified as “trading” and are carried at fair value with changes in fair value recorded in earnings. We did not hold any trading securities at December 31, 2014 or 2013. | ||||||||||||||||||||
Securities not classified as “trading” are classified as “available for sale” and carried at fair value, with unrealized gains and losses reported as a separate component of shareholders’ equity and “other than temporary impairment” losses recorded in our consolidated statements of operations. Realized gains and losses on all available for sale securities are recognized based on specific identification. Our available for sale investments at December 31, 2014 and 2013 consisted primarily of debt securities and equities. Restricted investments are kept as security for obligations arising from our self‑insurance programs. At December 31, 2014, these investments had a fair value of $43,271 and an unrealized holding gain of $2,298. At December 31, 2013, these investments had a fair value of $31,055 and an unrealized holding gain of $1,928. | ||||||||||||||||||||
In 2014, 2013 and 2012, our available for sale securities generated interest and dividend income of $788, $693 and $799, respectively, which is included in interest, dividend and other income in our consolidated statements of operations. | ||||||||||||||||||||
The following table summarizes the fair value and gross unrealized losses related to our “available for sale” securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position for the years ending: | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Less than 12 months | Greater than 12 months | Total | ||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||
Fair Value | Loss | Fair Value | Loss | Fair Value | Loss | |||||||||||||||
Investments | $ | 7,761 | $ | 97 | $ | 1,797 | $ | 60 | $ | 9,558 | $ | 157 | ||||||||
December 31, 2013 | ||||||||||||||||||||
Less than 12 months | Greater than 12 months | Total | ||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||
Fair Value | Loss | Fair Value | Loss | Fair Value | Loss | |||||||||||||||
Investments | $ | 7,392 | $ | 257 | $ | — | $ | — | $ | 7,392 | $ | 257 | ||||||||
We routinely evaluate our available for sale investments to determine if they have been impaired. If the fair value of an investment is less than its book or carrying value and we expect that situation to continue for a more than temporary period, we will record an “other than temporary impairment” loss in our consolidated statements of operations. We evaluate the fair value of our available for sale investments by reviewing each security’s current market price, the ratings of the security, the financial condition of the issuer and our intent and ability to retain the investment during temporary market price fluctuations or until maturity. In evaluating the factors described above, we presume a decline in value to be an “other than temporary impairment” if the quoted market price of the security is below the security’s cost basis for an extended period. However, this presumption may be overcome if there is persuasive evidence indicating the value decline is temporary in nature, such as when the operating performance of the obligor is strong or if the market price of the security is historically volatile. Additionally, there may be instances in which impairment losses are recognized even if the decline in value does not fall within the criteria described above, such as if we plan to sell the security in the near term and the fair value is below our cost basis. When we believe that a change in fair value of an available for sale security is temporary, we record a corresponding credit or charge to other comprehensive income for any unrealized gains and losses. When we determine that impairment in the fair value of an available for sale security is an “other than temporary impairment”, we record a charge to earnings. We did not record such an impairment charge for the years ended December 31, 2014, 2013 and 2012. | ||||||||||||||||||||
Restricted Cash. Restricted cash as of December 31, 2014 and 2013 includes cash that we deposited as security for obligations arising from our self‑insurance programs and other amounts for which we are required to establish escrows, including: real estate taxes and capital expenditures as required by our mortgages, indemnification obligations associated with the sale of our pharmacy business and certain resident security deposits. | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Current | Long term | Current | Long term | |||||||||||||||||
Insurance reserves | $ | 913 | $ | 2,170 | $ | 3,859 | $ | 9,795 | ||||||||||||
Real estate taxes and capital expenditures as required by our mortgages | 1,376 | — | 1,182 | — | ||||||||||||||||
Indemnification obligations associated with the sale of our pharmacy business | — | — | 3,248 | — | ||||||||||||||||
Resident security deposits | 656 | — | 714 | — | ||||||||||||||||
Total | $ | 2,945 | $ | 2,170 | $ | 9,003 | $ | 9,795 | ||||||||||||
Accounts Receivable and Allowance for Doubtful Accounts. We record accounts receivable at their estimated net realizable value. Included in accounts receivable as of December 31, 2014 and 2013 are amounts due from the Medicare program of $12,409 and $11,173, respectively, and amounts due from various state Medicaid programs of $11,384 and $10,234, respectively. | ||||||||||||||||||||
We estimate allowances for uncollectible amounts and contractual allowances based upon factors which include, but are not limited to, the age of the receivable and the terms of the agreements, the residents’ or third party payers’ stated intent to pay, the payers’ financial capacity to pay and other factors which may include likelihood and cost of litigation. Accounts receivable allowances are estimates. We periodically review and revise these estimates based on new information and these revisions may be material. Our SNFs record their provision for doubtful accounts as a reduction of revenue, and during 2014, 2013 and 2012, we recorded a provision for doubtful accounts of $1,321, $2,005 and $1,346, respectively. Allowance for doubtful accounts consists of the following: | ||||||||||||||||||||
Balance January 1, 2012 | $ | 3,160 | ||||||||||||||||||
Provision for doubtful accounts | 4,446 | |||||||||||||||||||
Write-offs | -4,814 | |||||||||||||||||||
Balance December 31, 2012 | 2,792 | |||||||||||||||||||
Provision for doubtful accounts | 6,412 | |||||||||||||||||||
Write-offs | -4,923 | |||||||||||||||||||
Balance December 31, 2013 | 4,281 | |||||||||||||||||||
Provision for doubtful accounts | 4,777 | |||||||||||||||||||
Write-offs | -5,642 | |||||||||||||||||||
Balance December 31, 2014 | $ | 3,416 | ||||||||||||||||||
Deferred Finance Costs. We capitalize issuance costs related to borrowings and amortize the deferred costs over the terms of the respective loans. Our unamortized balance of deferred finance costs was $373 and $2,077 at December 31, 2014 and 2013, respectively. Accumulated amortization related to deferred finance costs was $3,414 and $2,263 at December 31, 2014 and 2013, respectively. At December 31, 2014, the weighted average amortization period remaining is approximately 1 year. The amortization expenses to be incurred during the next five years as of December 31, 2014 are $348 in 2015, $15 in 2016 and $2 in 2017, 2018 and 2019. | ||||||||||||||||||||
Property and Equipment. Property and equipment is stated at cost, less accumulated depreciation. We record depreciation on property and equipment on a straight line basis over estimated useful lives of up to 40 years for buildings, up to 15 years for building improvements and up to seven years for personal property. We regularly evaluate whether events or changes in circumstances have occurred that could indicate impairment in the value of our long‑lived assets. If there is an indication that the carrying value of an asset is not recoverable, we determine the amount of impairment loss, if any, by comparing the historical carrying value of the asset to its estimated fair value. We determine estimated fair value through an evaluation of recent financial performance, recent sales of similar assets, market conditions and projected cash flows of properties using standard industry valuation techniques. | ||||||||||||||||||||
Goodwill and Other Intangible Assets. Goodwill represents the costs of business acquisitions in excess of the fair value of identifiable net assets acquired. We review goodwill for impairment annually during the fourth quarter, or more frequently, if events or changes in circumstances exist. If our review indicates that the carrying amount of goodwill exceeds its fair value, we reduce the carrying amount of goodwill to fair value. We evaluate goodwill for impairment at the reporting unit level, which we determined to be the operating segments we operate, by comparing the fair value of the reporting unit as determined by its discounted cash flows and market approaches with its carrying value. The key assumptions used in the discounted cash flow analysis include future revenue growth, gross margins and our weighted average cost of capital. We select a growth rate based on our view of the growth prospect of each of our reporting units. If the carrying value of the reporting unit exceeds its fair value, we compare the implied fair value of the reporting unit’s goodwill with its carrying amount to measure the amount of the potential impairment loss. | ||||||||||||||||||||
At acquisition, we estimate and record the fair value of purchased intangible assets primarily using discounted cash flow analysis of anticipated cash flows reflecting incremental revenues and/or cost savings resulting from the acquired intangible asset, reflecting market participant assumptions. Amortization of intangible assets with finite lives is recognized over their estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise realized. | ||||||||||||||||||||
Other intangible assets are periodically reviewed for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. If the carrying value of the asset held for use exceeds the sum of the undiscounted expected future cash flows, the carrying value of the asset is generally written down to fair value. | ||||||||||||||||||||
Legal Proceedings and Claims. We have been, are currently, and expect in the future to be involved in claims, lawsuits, and regulatory and other governmental 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 governmental audits, investigations and proceedings may require us to incur significant expense. We account for claims and litigation losses in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards CodificationTM, or ASC, Topic 450, Contingencies. Under ASC 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, is recorded; then, as information becomes known, the minimum loss amount is updated, as appropriate. Occasionally, a minimum or best estimate amount may be increased or decreased when events result in a changed expectation. | ||||||||||||||||||||
Compliance Matters. As previously disclosed, as a result of our compliance program to review medical records related to our Medicare billing practices, during 2014 we discovered potentially inadequate documentation and other issues at one of our leased SNFs. This compliance review was not initiated in response to any specific complaint or allegation, but was a review of the type that we periodically undertake to test our compliance with applicable Medicare billing rules. As a result of these discoveries, we have made a voluntary disclosure of deficiencies to the United States Department of Health and Human Services Office of the Inspector General (the “OIG”) pursuant to the OIG’s Provider Self-Disclosure Protocol. While our assessment of these matters is ongoing, we have informed the OIG that we expect our investigation and assessment to be completed by May 13, 2015. As of December 31, 2014, we have accrued a revenue reserve of $4.3 million to account for historical Medicare payments we expect to repay and we have expensed ($1.4 million) and accrued ($2.2 million) to account for additional costs we have incurred or we expect to incur, including OIG imposed penalties as a result of this matter. As a result of the continuing investigation and assessment of these deficiencies, additional deficiencies may be discovered which could increase our liability to the OIG and other costs. Potential losses associated with such additional compliance deficiencies are reasonably possible but cannot be reasonably estimated at this time. | ||||||||||||||||||||
Self‑Insurance. We self‑insure up to certain limits for workers’ compensation, professional liability claims, automobile claims and property losses. Claims in excess of these limits are insured up to contractual limits, over which we are self‑insured. We fully self‑insure all health related claims for our covered employees. Determining reserves for the casualty, liability, workers’ compensation and healthcare losses and costs that we have incurred as of the end of a reporting period involves significant judgments based upon our experience and our expectations of future events, including projected settlements for pending claims, known incidents that we expect may result in claims, estimates of incurred but not yet reported claims, expected changes in premiums for insurance provided by insurers whose policies provide for retroactive adjustments, estimated litigation costs and other factors. Since these reserves are based on estimates, the actual expenses we incur may differ from the amount reserved. We regularly adjust these estimates to reflect changes in the foregoing factors, our actual claims experience, recommendations from our professional consultants, changes in market conditions and other factors; it is possible that such adjustments may be material. Our total self-insurance reserves were $59,333 and $59,707 as of the year ended December 31, 2014 and 2013, respectively, and are included in accrued compensation and benefits, other current liabilities and accrued self-insurance obligations in our consolidated balance sheets. | ||||||||||||||||||||
Continuing Care Contracts. Residents at one of our communities may enter into continuing care contracts with us. We offer two forms of continuing care contracts to new residents at this community. One form of contract provides that 10% of the resident admission fee becomes non‑refundable upon occupancy, and the remaining 90% becomes non‑refundable at the rate of 1.5% per month of the original amount over the subsequent 60 months. The second form of contract provides that 30% of the resident admission fee is non‑refundable upon occupancy and 70% is refundable. Three other forms of continuing care contracts are in effect for existing residents but are not offered to new residents. One historical form of contract provides that the resident admission fee is 10% non‑refundable upon occupancy and 90% refundable. A second historical form of contract provides that the resident admission fee is 100% refundable. A third historical form of contract provides that the resident admission fee is 1% refundable and 99% non‑refundable upon admission. In each case, we amortize the non‑refundable part of these fees into revenue over the actuarially determined remaining life of the resident, which is the expected period of occupancy by the resident. We pay refunds of our admission fees when residents relocate from our communities. We report the refundable amount of these admission fees as current liabilities and the non‑refundable amount as deferred revenue, a portion of which is classified as a current liability. The balance of refundable admission fees as of December 31, 2014 and 2013 were $3,425 and $3,863, respectively. | ||||||||||||||||||||
Leases. On the inception date of a lease and upon any relevant amendments to such lease, we test the classification of such lease as either a capital lease or an operating lease. None of our leases have met any of the criteria to be classified as a capital lease under FASB ASC Topic 840, Leases, and, therefore, we have accounted for all of our leases as operating leases. | ||||||||||||||||||||
Taxes. FASB ASC Topic 740, Income Taxes, prescribes how we should recognize, measure and present in our consolidated financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. We can recognize a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized. At December 31, 2014, our tax returns filed for the 2005 through 2014 tax years are subject to examination by taxing authorities. | ||||||||||||||||||||
We pay franchise taxes in certain states in which we have operations. We have included franchise taxes in general and administrative and other senior living operating expenses in our consolidated statements of operations. | ||||||||||||||||||||
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences to be included in our financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse, while the effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. | ||||||||||||||||||||
We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. In the future, if we determine that we would be able to realize our deferred tax assets in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance and record an income tax benefit. | ||||||||||||||||||||
Fair Value of Financial Instruments. Our financial instruments are limited to cash and cash equivalents, accounts receivable, available for sale securities, accounts payable and mortgage notes payable. Except for our mortgage notes payable, the fair value of these financial instruments was not materially different from their carrying values at December 31, 2014 and 2013. We estimate the fair values using market quotes when available, discounted cash flow analysis and current prevailing interest rates. | ||||||||||||||||||||
Revenue Recognition. We derive our revenues primarily from services to residents at our senior living communities and we record revenues when services are provided. We receive payment from governments or other third party payers for some of our services. We derived approximately 23%, 23% and 24% of our senior living revenues in 2014, 2013 and 2012, respectively, from payments under Medicare and Medicaid programs. Revenues under some of these programs are subject to audit and retroactive adjustment. | ||||||||||||||||||||
Medicare revenues from continuing operations at our senior living communities totaled $129,212, $132,751 and $134,254 during 2014, 2013 and 2012, respectively. Medicaid revenues from continuing operations at our senior living communities totaled $118,536, $116,220, and $118,505 during 2014, 2013 and 2012, respectively. | ||||||||||||||||||||
Substantially all community fees received are non‑refundable and are recorded initially as deferred revenue and are included in other current liabilities in our consolidated balance sheets. The deferred amounts are amortized over the life of the contract. | ||||||||||||||||||||
Reclassifications. We have made reclassifications to the prior years’ financial statements to conform to the current year’s presentation. These reclassifications had no effect on net income or shareholders’ equity. | ||||||||||||||||||||
Recently Issued Accounting Pronouncements. In June 2014, the FASB issued Accounting Standards Update 2014‑09, Revenue from Contracts with Customers (Topic 606), or ASU 2014‑09. ASU 2014‑09 aims to clarify the principles for recognizing revenue by, among other things, removing inconsistencies in revenue requirements, improving comparability of revenue recognition practices across entities and industries and providing improved disclosure requirements. We are required to retrospectively adopt ASU 2014‑09 for fiscal periods beginning after December 15, 2016 and are currently evaluating the impact the adoption of this ASU will have on our consolidated financial statements. | ||||||||||||||||||||
Segment Information. We have two operating segments: senior living communities and rehabilitation and wellness. In the senior living community segment, we operate for our own account or manage for the account of third parties independent living communities, assisted living communities and SNFs that are subject to centralized oversight and provide housing and services to elderly residents. Our rehabilitation and wellness operating segment does not meet any of the quantitative thresholds of a reportable segment as prescribed under FASB ASC Topic 280, and therefore, we have determined that our business is comprised of one reportable segment, senior living. All of our operations and assets are located in the United States, except for the operations of our captive insurance company subsidiary, which participates in our workers’ compensation, professional liability and automobile insurance programs and which is organized in the Cayman Islands. | ||||||||||||||||||||
Property_and_Equipment
Property and Equipment | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property and Equipment | ||||||||
Property and Equipment | 3. Property and Equipment | |||||||
Property and equipment consists of the following: | ||||||||
December 31, | December 31, | |||||||
2014 | 2013 | |||||||
Land | $ | 24,172 | $ | 22,214 | ||||
Buildings and improvements | 308,779 | 286,467 | ||||||
Furniture, fixtures and equipment | 136,839 | 114,765 | ||||||
Property and equipment, at cost | 469,790 | 423,446 | ||||||
Accumulated depreciation | -112,604 | -83,170 | ||||||
Property and equipment, net | $ | 357,186 | $ | 340,276 | ||||
For the years ended December 31, 2014, 2013 and 2012, we recorded depreciation expense of $29,434, $25,871 and $22,882, respectively, relating to our property and equipment. | ||||||||
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 may not be recoverable. If there is an indication that the carrying value of an asset is not recoverable, we determine the amount of impairment loss, if any, by comparing the historical carrying value of the asset to its estimated fair value. As a result of our long-lived assets impairment review, we recorded $589 and $186 of impairment charges to certain of our long-lived assets in continuing operations for the years ended December 31, 2014 and 2013, respectively. We did not incur any impairment charges for the year ended December 31, 2012. 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 asset or asset groups are expected to generate. The fair values of the impaired assets were $478 and $137 as of December 31, 2014 and 2013, respectively, and are considered to be a Level 3 fair value measurement. | ||||||||
As of December 31, 2013, we had assets of $9,342 included in our property and equipment that we subsequently sold during the year ended December 31, 2014 to SNH for increased rent pursuant to the terms of our leases with SNH. As of December 31, 2014, we had $7,799 of assets included in our property and equipment that we currently expect to request that SNH purchase from us for an increase in future rent; however, we are not obligated to make these sales and SNH is not obligated to fund such amounts. | ||||||||
Goodwill_and_Other_Intangible_
Goodwill and Other Intangible Assets | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Goodwill and Other Intangible Assets | ||||||||
Goodwill and Other Intangible Assets | 4. Goodwill and Other Intangible Assets | |||||||
The goodwill and other intangible assets balance relates to management agreements and trademarks we acquired in connection with a lease we entered into with SNH in 2009, goodwill and resident agreements we acquired in connection with our purchase of senior living communities in 2011 and 2014, and goodwill we recorded in connection with our other senior living community acquisitions in previous years. The changes in the carrying amount of goodwill and other intangible assets for the years ended December 31, 2014 and 2013 are as follows: | ||||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Goodwill | $ | 25,344 | $ | 25,344 | ||||
Other intangible assets, net of accumulated amortization of $5,441 and $3,001 respectively | 560 | 1,063 | ||||||
$ | 25,904 | $ | 26,407 | |||||
Goodwill. We review goodwill for impairment annually during our fourth quarter or more frequently if events or changes in circumstances exist. We evaluate goodwill for impairment at the reporting unit level; our reporting units are equivalent to our operating segments. All of our goodwill is located in our senior living reporting unit. As of October 1, 2014, we evaluated our goodwill for impairment and determined that the fair value of our reporting units exceeded their carrying values on that date. As December 31, 2014, no events or changes in circumstances had occurred that would trigger the need for an additional impairment review. | ||||||||
Intangible assets. We amortize intangible assets using the straight line method over the useful lives of the assets which have identifiable useful lives commencing on the date of acquisition. Total amortization expense for amortizable intangible assets for the years ended December 31, 2014, 2013 and 2012 was $2,440, $1,172 and $1,626, respectively. At December 31, 2014, the weighted average amortization period remaining for these intangible assets is approximately two years. Amortization expense is estimated to be approximately $306 in 2015, $91 in 2016, $84 in 2017, and $80 in 2018. | ||||||||
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Income Taxes | |||||||||||||||||
Income Taxes | 5. Income Taxes | ||||||||||||||||
Significant components of our deferred tax assets and liabilities at December 31, 2014 and 2013, were as follows: | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Current deferred tax assets: | |||||||||||||||||
Continuing care contracts | $ | 124 | $ | 134 | |||||||||||||
Allowance for doubtful accounts | 1,467 | 2,376 | |||||||||||||||
Deferred gains on sale lease back transactions | 1,525 | 1,383 | |||||||||||||||
Insurance reserves | 1,226 | 1,188 | |||||||||||||||
Tax credits | 30 | 352 | |||||||||||||||
Tax loss carry forwards | 610 | 6,679 | |||||||||||||||
Other | 2,794 | 1,746 | |||||||||||||||
Total current deferred tax assets before valuation allowance | 7,776 | 13,858 | |||||||||||||||
Valuation allowance: | -6,528 | -454 | |||||||||||||||
Total current deferred tax assets | 1,248 | 13,404 | |||||||||||||||
Non-current deferred tax assets: | |||||||||||||||||
Continuing care contracts | 565 | 592 | |||||||||||||||
Deferred gains on sale lease back transactions | 579 | 735 | |||||||||||||||
Insurance reserves | 2,773 | 2,880 | |||||||||||||||
Tax credits | 17,160 | 14,883 | |||||||||||||||
Tax loss carry forwards | 56,479 | 32,139 | |||||||||||||||
Impairment of securities | 377 | 470 | |||||||||||||||
Depreciable assets | 3,954 | 5,990 | |||||||||||||||
Other | 800 | 1,054 | |||||||||||||||
Total non-current deferred tax assets before valuation allowance | 82,687 | 58,743 | |||||||||||||||
Valuation allowance: | -70,392 | -3,149 | |||||||||||||||
Total non-current deferred tax assets | 12,295 | 55,594 | |||||||||||||||
Current deferred tax liabilities: | |||||||||||||||||
Employee stock grants | -75 | -115 | |||||||||||||||
Non-current deferred tax liabilities: | |||||||||||||||||
Lease expense | -11,414 | -11,401 | |||||||||||||||
Goodwill | -977 | -1,173 | |||||||||||||||
Identifiable intangibles/other liabilities | -1,292 | -1,190 | |||||||||||||||
Total non-current deferred tax liabilities | -13,683 | -13,764 | |||||||||||||||
Net deferred tax asset (liabilities) | $ | -215 | $ | 55,119 | |||||||||||||
As of December 31, 2014, our federal net operating loss carry forwards, which are scheduled to begin expiring in 2026 if unused, were approximately $112,182, and our tax credit carry forwards, which begin expiring in 2022 if unused, were approximately $17,191. We have an additional $333 of federal net operating loss carry forwards not reflected in the deferred taxes table above, that are attributable to unvested stock grants which will be recorded as an increase to additional paid in capital once they are realized in accordance with FASB ASC Topic 718. Our net operating loss carry forwards and tax credit carry forwards are subject to audit and adjustments by the Internal Revenue Service. | |||||||||||||||||
Management assessed the available positive and negative evidence to estimate if sufficient future taxable income will be generated to realize the existing deferred tax assets. An important piece of objective negative evidence evaluated was the significant losses incurred over the two-year period ending December 31, 2014 and that, as a result of those losses, we expect to be in a cumulative loss position for the three-year period ending December 31, 2015. This objective negative evidence is difficult to overcome and would require a substantial amount of objectively verifiable positive evidence beyond our projections of future income to support the realizability of our deferred tax assets. Accordingly, on the basis of this assessment, as of December 31, 2014, we determined it is more likely than not that our net deferred tax assets will not be realized and concluded that a full valuation allowance is required, and we recorded increases to our valuation allowance totaling $73,318 during the year ended December 31, 2014. 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. | |||||||||||||||||
The changes in our valuation allowance for deferred tax assets were as follows: | |||||||||||||||||
Amounts | |||||||||||||||||
Balance at | Charged/ | Amounts | Amounts | ||||||||||||||
Beginning of | (Credited) To | Charged Off, | Charged to | Balance at | |||||||||||||
Period | Expense | Net of Recoveries | Equity | End of Period | |||||||||||||
Year Ended December 31, 2012 | $ | 3,363 | $ | -1,175 | $ | — | $ | — | $ | 2,188 | |||||||
Year Ended December 31, 2013 | $ | 2,188 | $ | 1,415 | $ | — | $ | — | $ | 3,603 | |||||||
Year Ended December 31, 2014 | $ | 3,603 | $ | 73,470 | $ | — | $ | -152 | $ | 76,921 | |||||||
For the year ended December 31, 2014, we recognized a provision for income taxes from continuing operations of $56,385, of which $848 represents current state tax expense that is payable without regard to our tax loss carry forwards. We also recognized a provision for income taxes from discontinued operations of $79. | |||||||||||||||||
The provision for income taxes from continuing operations is as follows: | |||||||||||||||||
Years Ended December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Current tax provision: | |||||||||||||||||
State | $ | 848 | $ | 1,141 | $ | 1,183 | |||||||||||
Total current tax provision | 848 | 1,141 | 1,183 | ||||||||||||||
Deferred tax (benefit) provision: | |||||||||||||||||
Federal | 43,040 | -1,042 | 4,775 | ||||||||||||||
State | 12,497 | 1,817 | 1,140 | ||||||||||||||
Total deferred tax provision | 55,537 | 775 | 5,915 | ||||||||||||||
Total tax provision | $ | 56,385 | $ | 1,916 | $ | 7,098 | |||||||||||
The principal reasons for the difference between our effective tax rate on continuing operations and the U.S. federal statutory income tax rate are as follows: | |||||||||||||||||
For the years ended December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Taxes at statutory U.S. federal income tax rate | -35 | % | 35.0 | % | 35.0 | % | |||||||||||
State and local income taxes, net of federal tax benefit | -6.5 | % | 35.9 | % | 8.7 | % | |||||||||||
Tax credits | -5.4 | % | -42.1 | % | -4.2 | % | |||||||||||
Change in valuation allowance | 287.5 | % | 2.6 | % | 0.1 | % | |||||||||||
Nondeductible meals and entertainment | 0.5 | % | 1.7 | % | 0.5 | % | |||||||||||
Nondeductible penalties | 4.0 | % | 1.7 | % | 0.7 | % | |||||||||||
Dividend received deduction | -0.3 | % | -1.1 | % | -0.8 | % | |||||||||||
Executive compensation | 0.3 | % | 1.6 | % | 0.3 | % | |||||||||||
Stock‑based compensation | 0.2 | % | 0.6 | % | 0.1 | % | |||||||||||
Other differences, net | 0.3 | % | -0.2 | % | -0.3 | % | |||||||||||
Effective tax rate | 245.6 | % | 35.7 | % | 40.1 | % | |||||||||||
We utilize a two‑step process for the measurement of uncertain tax positions that have been taken or are expected to be taken on a tax return. The first step is a determination of whether the tax position should be recognized in the financial statements. The second step determines the measurement of the tax position. A reconciliation of the beginning and ending amount of unrecognized tax benefits is summarized as follows for the years ended December 31, 2014, 2013 and 2012: | |||||||||||||||||
For the years ended December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Unrecognized tax benefits at January 1 | $ | 1,245 | $ | 1,086 | $ | 893 | |||||||||||
Additions for tax positions of prior years | — | — | — | ||||||||||||||
Additions for tax positions of current year | 134 | 159 | 193 | ||||||||||||||
Unrecognized tax benefits at December 31 | $ | 1,379 | $ | 1,245 | $ | 1,086 | |||||||||||
As of December 31, 2014, the total amount of unrecognized tax benefits totaled $1,379. It is reasonably possible the entire portion will be recognized in the next 12 months; an insignificant amount of which would impact the effective tax rate. | |||||||||||||||||
We recognize interest and penalties related to uncertain tax positions in income tax expense and such amounts were not material for the years ended December 31, 2014, 2013 and 2012. | |||||||||||||||||
Earnings_Per_Share
Earnings Per Share | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Earnings Per Share | ||||||||||||||||||||||||||
Earnings Per Share | 6. Earnings Per Share | |||||||||||||||||||||||||
We computed basic EPS for the years ended December 31, 2014, 2013 and 2012 using the weighted average number of shares outstanding during the periods. Diluted EPS reflects the more dilutive earnings per common share amount calculated using the two‑class method or the treasury stock method. Unvested shares issued under our equity compensation plan are deemed participating securities because they participate equally in earnings with all of our other common shares and are included in the calculation of diluted EPS. The effect of our former convertible senior notes due 2026, or the Notes, for the year ended December 31, 2013 was not included in the calculation of diluted EPS because to do so would have been antidilutive. | ||||||||||||||||||||||||||
The following table provides a reconciliation of income (loss) from continuing operations and income (loss) from discontinued operations and the number of common shares used in the computations of diluted EPS: | ||||||||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||||||||
Income | Per | Income | Per | Income | Per | |||||||||||||||||||||
(loss) | Shares | Share | (loss) | Shares | Share | (loss) | Shares | Share | ||||||||||||||||||
(Loss) income from continuing operations | $ | -79,350 | 48,028 | $ | -1.65 | $ | 3,449 | 48,277 | $ | 0.07 | $ | 10,590 | 47,952 | $ | 0.23 | |||||||||||
Effect of the Notes | — | — | 344 | 986 | 677 | 2,182 | ||||||||||||||||||||
Diluted (loss) income from continuing operations | $ | -79,350 | 48,028 | $ | -1.65 | $ | 3,449 | 48,277 | $ | 0.07 | $ | 11,267 | 50,134 | $ | 0.23 | |||||||||||
Diluted (loss) income from discontinued operations | $ | -6,056 | 48,028 | $ | -0.13 | $ | -5,789 | 48,277 | $ | -0.12 | $ | 11,717 | 50,134 | $ | 0.23 | |||||||||||
Fair_Values_of_Assets_and_Liab
Fair Values of Assets and Liabilities | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Fair Values of Assets and Liabilities | ||||||||||||||
Fair Values of Assets and Liabilities | 7. Fair Values of Assets and Liabilities | |||||||||||||
Our assets recorded at fair value have been categorized based upon 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 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 inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and quoted prices in inactive markets. | ||||||||||||||
Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. | ||||||||||||||
Recurring Fair Value Measures | ||||||||||||||
The table below presents the assets measured at fair value at December 31, 2014 and 2013 categorized by the level of inputs used in the valuation of each asset. | ||||||||||||||
As of December 31, 2014 | ||||||||||||||
Quoted Prices in | ||||||||||||||
Active Markets | Significant Other | Significant | ||||||||||||
for Identical | Observable | Unobservable | ||||||||||||
Assets | Inputs | Inputs | ||||||||||||
Description | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Cash equivalents(1) | $ | 4,632 | $ | 4,632 | $ | — | $ | — | ||||||
Available for sale securities:(2) | ||||||||||||||
Equity securities | ||||||||||||||
Financial services industry | 4,059 | 4,059 | — | — | ||||||||||
REIT industry | 330 | 330 | — | — | ||||||||||
Other | 3,841 | 3,841 | — | — | ||||||||||
Total equity securities | 8,230 | 8,230 | — | — | ||||||||||
Debt securities | ||||||||||||||
International bond fund(3) | 2,385 | — | 2,385 | — | ||||||||||
High yield fund(4) | 2,352 | — | 2,352 | — | ||||||||||
Industrial bonds | 6,577 | — | 6,577 | — | ||||||||||
Government bonds | 11,371 | 5,683 | 5,688 | — | ||||||||||
Financial bonds | 2,704 | — | 2,704 | — | ||||||||||
Other | 9,652 | — | 9,652 | — | ||||||||||
Total debt securities | 35,041 | 5,683 | 29,358 | — | ||||||||||
Total available for sale securities | 43,271 | 13,913 | 29,358 | — | ||||||||||
Total | $ | 47,903 | $ | 18,545 | $ | 29,358 | $ | — | ||||||
As of December 31, 2013 | ||||||||||||||
Quoted Prices in | ||||||||||||||
Active Markets | Significant Other | Significant | ||||||||||||
for Identical | Observable | Unobservable | ||||||||||||
Assets | Inputs | Inputs | ||||||||||||
Description | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Cash equivalents(1) | $ | 14,866 | $ | 14,866 | $ | — | $ | — | ||||||
Available for sale securities:(2) | ||||||||||||||
Equity securities | ||||||||||||||
Financial services industry | 3,668 | 3,668 | — | — | ||||||||||
REIT industry | 704 | 704 | — | — | ||||||||||
Other | 3,875 | 3,875 | — | — | ||||||||||
Total equity securities | 8,247 | 8,247 | — | — | ||||||||||
Debt securities | ||||||||||||||
International bond fund(3) | 2,329 | — | 2,329 | — | ||||||||||
High yield fund(4) | 2,309 | — | 2,309 | — | ||||||||||
Industrial bonds | 5,234 | — | 5,234 | — | ||||||||||
Government bonds | 7,075 | 4,558 | 2,517 | — | ||||||||||
Financial bonds | 1,154 | — | 1,154 | — | ||||||||||
Other | 4,706 | — | 4,706 | — | ||||||||||
Total debt securities | 22,807 | 4,558 | 18,249 | — | ||||||||||
Total available for sale securities | 31,054 | 12,805 | 18,249 | — | ||||||||||
Total | $ | 45,920 | $ | 27,671 | $ | 18,249 | $ | — | ||||||
-1 | Cash equivalents, consisting of short term, highly liquid investments and money market funds held principally for obligations arising from our self-insurance programs. Cash equivalents are reported on our balance sheet as cash and cash equivalents and current and long term restricted cash. Cash equivalents include $2,792 and $13,181 of balances that are restricted at December 31, 2014 and 2013, respectively. | |||||||||||||
-2 | Investments in available for sale securities are reported on our balance sheet as current and long term investments in available for sale securities and are reported at fair value of $23,436 and $19,835, respectively, at December 31, 2014 and $19,150 and $11,905, respectively, at December 31, 2013. Our investments in available for sale securities had amortized costs of $40,974 and $29,127 as of December 31, 2014 and 2013, respectively, had unrealized gains of $2,455 and $2,185 as of December 31, 2014 and 2013, respectively, and had unrealized losses of $157 and $257 as of December 31, 2014 and 2013, respectively. At December 31, 2014, 23 of the securities we hold, with a fair value of $7,761, have been in a loss position for less than 12 months and 10 of the securities we hold, with a fair value of $1,797, have been in a loss position for greater than 12 months. We do not believe these securities 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 securities remain strong with solid fundamentals, or we intend to hold these securities until recovery, and other factors that support our conclusion that the loss is temporary. During the years ended December 31, 2014, 2013 and 2012, we received gross proceeds of $10,876, $6,285 and $4,163, respectively, in connection with the sales of available for sale securities and recorded gross realized gains totaling $478, $329 and $63, respectively, and gross realized losses totaling $86, $334 and $82, respectively. We record gains and losses on the sales of our available for sale securities using the specific identification method. | |||||||||||||
-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 U.S. dollar investment grade fixed income securities. There are no unfunded commitments and the investment can be redeemed weekly. | |||||||||||||
-4 | 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. | |||||||||||||
During the year ended December 31, 2014, 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. Accordingly, there were no transfers of assets or liabilities between levels of the fair value hierarchy during the year ended December 31, 2014. | ||||||||||||||
The carrying values of accounts receivable and accounts payable approximate fair value as of December 31, 2014 and December 31, 2013. The carrying value and fair value of our mortgage notes payable were $51,159 and $56,099, respectively, as of December 31, 2014 and $37,620 and $41,113, respectively, as of December 31, 2013, 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 long-lived 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 3 for discussion of fair value measurements related to impairments of our long-lived assets. | ||||||||||||||
We evaluate the recoverability of goodwill assets on October 1 of each fiscal year, or more frequently if events or changes in circumstances indicate that goodwill or other intangible assets may be impaired. See Note 4 for discussion of our annual review of goodwill impairment. | ||||||||||||||
The fair value of assets held for sale is determined based on the use of appraisals, input from market participants, our experience selling similar assets and/or internally developed cash flow models, all of which are considered to be Level 3 fair value measurements. | ||||||||||||||
See Note 11 for discussion of fair value measurements related to an acquisition that occurred during the second quarter of 2014. | ||||||||||||||
Indebtedness
Indebtedness | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Indebtedness | ||||||||||||
Indebtedness | 8. Indebtedness | |||||||||||
We have a $25,000 revolving secured line of credit, or our Credit Agreement, that is available for general business purposes, including acquisitions. The maturity date of our Credit Agreement is March 18, 2016. Borrowings under our Credit Agreement typically bear interest at LIBOR plus a premium of 250 basis points, or 2.66% as of December 31, 2014. We are also required to pay a quarterly commitment fee of 0.35% per annum on the unused part of our borrowing availability under the Credit Agreement. We may draw, repay and redraw funds until maturity, and no principal repayment is due until maturity. We made no borrowings under our Credit Agreement during the years ended December 31, 2014 and 2013 and, as of December 31, 2014, we had no amounts outstanding under our Credit Agreement. We incurred interest expense and other associated costs related to our Credit Agreement of $192, $386 and $676 for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||||||
We are the borrower under our Credit Agreement and certain of our subsidiaries guarantee our obligations under our Credit Agreement, which is secured by our and our guarantor subsidiaries’ accounts receivable and related collateral. Our Credit Agreement provides for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as a change of control of us, which includes termination of our business management and shared services agreement, or our business management agreement, with Reit Management & Research LLC, or RMR. | ||||||||||||
We also have a $150,000 secured revolving credit facility, or our Credit Facility, that is available for general business purposes, including acquisitions. The maturity date of our Credit Facility was initially April 13, 2015, but, subject to the payment of extension fees and meeting certain other conditions, our Credit Facility includes options for us to extend its stated maturity date for two consecutive one-year periods. In March 2015, we notified the lenders under our Credit Facility of our intent to exercise our first one-year option to extend the maturity date of our Credit Facility to April 13, 2016. Subject to the payment of an extension fee and meeting certain other conditions, the lenders under our Credit Facility have agreed to extend our maturity date one year to April 13, 2016. Borrowings under our Credit Facility typically bear interest at LIBOR plus a premium of 250 basis points, or 2.66% as of December 31, 2014. We are also required to pay a quarterly commitment fee of 0.35% per annum on the unused part of the Credit Facility. We may draw, repay and redraw funds until maturity, and no principal repayment is due until maturity. The weighted average interest rate for borrowings under our Credit Facility was 2.76% and 3.05% for the years ended December 31, 2014 and 2013, respectively. As of December 31, 2014, we had $35,000 outstanding under our Credit Facility. We incurred interest expense and other associated costs related to our Credit Facility of $2,272, $1,985 and $1,746 for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||||||
We are the borrower under our Credit Facility, and certain of our subsidiaries guarantee our obligations under our Credit Facility, which is secured by real estate mortgages on 15 senior living communities with 1,549 living units owned by our guarantor subsidiaries and our guarantor subsidiaries’ accounts receivable and related collateral. Our Credit Facility provides for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as a change of control of us. | ||||||||||||
Our Credit Agreement and our Credit Facility contain a number of financial and other covenants, including covenants that restrict our ability to incur indebtedness or to pay dividends or make other distributions under certain circumstances and require us to maintain financial ratios and a minimum net worth. On March 13, 2015, we and the lenders under our Credit Agreement entered into Amendment No. 3 to the Credit and Security Agreement, which amended the defined term for EBITDA set forth in the Credit Agreement by excluding from the calculation of EBITDA certain costs associated with Medicare compliance deficiencies and made certain changes to the representations and warranties in the Credit Agreement to except certain failures to comply with Medicare billing, recordkeeping, reporting and related practices. | ||||||||||||
In May 2011, we entered into the bridge loan from SNH, or the Bridge Loan, under which SNH agreed to lend us up to $80,000 to fund a part of the purchase price for our acquisitions of certain assets of six senior living communities located in Indiana, or the Indiana Communities. During 2011, we completed our acquisitions of the assets of the Indiana Communities and, in connection with the acquisitions, borrowed $80,000 under the Bridge Loan. During 2011, we repaid $42,000 of this advance with proceeds from a public offering of our common shares and cash generated by operations. In April 2012, we repaid in full the principal amount then outstanding under the Bridge Loan, resulting in termination of the Bridge Loan. We funded the April 2012 repayment of the Bridge Loan with borrowings under our Credit Facility and cash on hand. We incurred interest expense and other associated costs related to the Bridge Loan of $314 for the year ended December 31, 2012. | ||||||||||||
At December 31, 2014, we had six irrevocable standby letters of credit outstanding totaling $963. The six letters of credit are security for our lease obligation to HCP, Inc., or HCP, to an automobile maintenance company and to a mortgagee of our property encumbered by a Federal National Mortgage Association, or FNMA, insured mortgage. The letters of credit are renewed annually. The maturity dates for these letters of credit range from April 2015 to August 2015. Our obligations under these letters of credit are secured by cash. | ||||||||||||
In October 2006, we issued $126,500 principal amount of the Notes. Our net proceeds from this issuance were approximately $122,600. The Notes bore interest at a rate of 3.75% per annum and were convertible into our common shares at any time. The conversion rate, which was subject to adjustment, was 76.9231 common shares per $1 principal amount of the Notes, which represented a conversion price of $13.00 per share. The Notes were guaranteed by certain of our wholly owned subsidiaries. The Notes were scheduled to mature on October 15, 2026. We were entitled to prepay the Notes at any time and the holders were entitled to require us to purchase all or a portion of these Notes on each of October 15, 2013, 2016 and 2021 at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest. We have periodically repurchased Notes in open market transactions or in privately negotiated transactions. During 2012, we purchased and retired $12,410 par value of the outstanding Notes and recorded a gain on early extinguishment of debt, net of unamortized issuance costs, of $45. On July 8, 2013, we redeemed all of the $24,872 principal amount of the Notes then outstanding at a redemption price equal to the principal amount, plus accrued and unpaid interest. We recorded a loss on early extinguishment of debt, net of unamortized issuance costs, of $599. We funded these purchases principally with available cash and borrowings under our Credit Facility. Interest expense and other associated costs related to the Notes was $511 and $1,124 for the years ended December 31, 2013 and 2012, respectively. | ||||||||||||
At December 31, 2014, five of our senior living communities were encumbered by mortgage notes with an aggregate outstanding principal balance of $51,159: (1) two of our communities were encumbered by FNMA mortgage notes and (2) three of our communities were encumbered by Federal Home Loan Mortgage Corporation, or FMCC, mortgage notes. These mortgages contain FNMA and FMCC, respectively, standard mortgage covenants. We recorded a mortgage premium in connection with our assumption of the FNMA and FMCC mortgage notes as part of our acquisitions of the encumbered communities in order to record the assumed mortgage notes at their estimated fair value. We are amortizing the mortgage premiums as a reduction of interest expense until the maturity of the respective mortgage notes. The following table is a summary of these mortgage notes as of December 31, 2014: | ||||||||||||
Balance as of | Contractual Stated | Effective | Monthly | |||||||||
December 31, 2014 | Interest Rate | Interest Rate | Maturity Date | Payment | ||||||||
$ | 15,048 | 6.47 | % | 3.45 | % | Jun-18 | 95 | |||||
18,563 | 6.64 | % | 5.86 | % | Jun-23 | $ | 123 | |||||
5,832 | 8.99 | % | 5.46 | % | Feb-25 | 63 | ||||||
2,699 | 6.36 | % | 6.70 | % | Sep-28 | 25 | ||||||
9,017 | 6.20 | % | 6.70 | % | Sep-32 | 72 | ||||||
$ | 51,159 | 6.77 | %(1) | 5.30 | %(1) | $ | 378 | |||||
-1 | Weighted average interest rate. | |||||||||||
We incurred mortgage interest expense, including premium amortization, of $2,665, $3,010 and $2,843 for the years ended December 31, 2014, 2013 and 2012, respectively, including interest expense recorded in discontinued operations. Our mortgages require monthly payments into escrows for taxes, insurance and property replacement funds; withdrawals from these escrows require applicable FNMA and FMCC approval. As of December 31, 2014, we believe we were in compliance with all applicable covenants under these mortgages. | ||||||||||||
Principal payments due under the terms of these mortgages are as follows: | ||||||||||||
2015 | 1,786 | |||||||||||
2016 | 1,883 | |||||||||||
2017 | 1,986 | |||||||||||
2018 | 14,660 | |||||||||||
2019 | 1,530 | |||||||||||
Thereafter | 29,314 | |||||||||||
$ | 51,159 | |||||||||||
Leases
Leases | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Leases | |||||||||||||
Leases | 9. Leases | ||||||||||||
As of December 31, 2014, we leased 181 senior living communities from SNH under four leases (including four that we have classified as discontinued operations). As of December 31, 2014, we also leased four senior living communities under a lease with HCP. These leases are “triple‑net” leases which require that we pay all costs incurred in the operation of the communities, including the cost of insurance and real estate taxes, maintaining the communities, and indemnifying the landlord for any liability which may arise from the operations during the lease term. | |||||||||||||
Our leases with SNH require us to pay percentage rent at 174 of the senior living communities we lease from SNH equal to 4% of the amount by which gross revenues, as defined in our leases, exceeds gross revenues in a base year. We recorded approximately $5,775, $5,149 and $4,888 in percentage rent to SNH for the years ended December 31, 2014, 2013 and 2012, respectively. Our lease with HCP contains a minimum annual escalator of 2%, but not greater than 4%, depending on increases in certain cost of living indexes. | |||||||||||||
At our request, SNH may purchase renovations and improvements to communities we lease from SNH in return for rent increases according to formulas in the leases; however, SNH is not obligated to purchase these renovations and improvements from us and we are not required to sell them to SNH. In 2014, 2013 and 2012, SNH funded $25,804, $27,208 and $30,520, respectively, for renovations and improvements to some of our communities and, as a result, our annual rent increased by $2,066, $2,177 and $2,456, respectively. | |||||||||||||
The following table is a summary of our real property leases as of December 31, 2014 (including four senior living communities that we have classified as discontinued operations): | |||||||||||||
Annual | |||||||||||||
Minimum Rent | |||||||||||||
as of | |||||||||||||
Number of | December 31, | Current | |||||||||||
Properties | 2014 | Expiration date | Remaining Renewal Options | ||||||||||
1. Lease No. 1 for SNFs and independent and assisted living communities(1) | 86 | $ | 58,475 | December 31, 2024 | Two 15-year renewal options. | ||||||||
2. Lease No. 2 for SNFs and independent and assisted living communities | 49 | 62,889 | June 30, 2026 | Two 10-year renewal options. | |||||||||
3. Lease No. 3 for independent and assisted living communities (2) | 17 | 34,388 | December 31, 2028 | Two 15-year renewal options. | |||||||||
4. Lease No. 4 for SNFs and independent and assisted living communities (3) | 29 | 34,911 | April 30, 2032 | Two 15-year renewal options. | |||||||||
5. One HCP lease | 4 | 2,550 | April 30, 2028 | One 10-year renewal option. | |||||||||
Totals | 185 | $ | 193,213 | ||||||||||
-1 | Lease No. 1 is comprised of two separate leases. One of these two leases exists to accommodate a mortgage financing in effect at the time SNH acquired the property; we have agreed with SNH to combine these two leases into one lease when this mortgage financing is paid in full. | ||||||||||||
-2 | Lease No. 3 exists to accommodate certain mortgage financing by SNH. | ||||||||||||
-3 | Lease No. 4 is comprised of two separate leases. One of these two leases exists to accommodate a mortgage financing in effect at the time SNH acquired the property; we have agreed with SNH to combine these two leases into one lease when the mortgage financing is paid in full. | ||||||||||||
The future minimum rents required by our leases as of December 31, 2014, are as follows: | |||||||||||||
2015 | 193,247 | ||||||||||||
2016 | 193,298 | ||||||||||||
2017 | 193,351 | ||||||||||||
2018 | 193,405 | ||||||||||||
2019 | 193,459 | ||||||||||||
Thereafter | 1,466,796 | ||||||||||||
$ | 2,433,556 | ||||||||||||
Shareholders_Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2014 | |
Shareholders' Equity | |
Shareholders' Equity | 10. Shareholders’ Equity |
We have common shares available for issuance under the terms of our equity compensation plan, or our Share Award Plan. We issued 403,050, 385,400 and 347,050 of our common shares in 2014, 2013 and 2012, respectively, to our Directors, officers and others who provide services to us. We valued these shares at the average price of our common shares on the exchange on which they were listed on the dates of issue, or $1,742 in 2014, based on a $4.32 weighted average share price, $1,758 in 2013, based on a $4.56 weighted average share price, and $1,638 in 2012, based on a $4.72 weighted average share price. Shares issued to Directors vest immediately; one fifth of the shares issued to our officers and others (other than our Directors) vest on the date of grant and on the four succeeding anniversaries of the date of grant. Our unvested common shares totaled 647,330, 611,220 and 546,920 as of the years ended December 31, 2014, 2013 and 2012, respectively. Share based compensation expense is recognized ratably over the vesting period and is included in general and administrative expenses in our consolidated statements of operations. We recorded share based compensation expense of $1,485, $1,410 and $1,445 for the years ended December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014, the estimated future stock compensation expense for unvested shares was $2,789 based on the grant date closing share price for awards granted to our Directors, officers and others, and based on the closing share price of $4.15 on December 31, 2014 for awards granted to non-employees. The weighted average period over which the stock compensation expense will be recorded is approximately 2.1 years. As of December 31, 2014, 4,518,940 of our common shares remain available for issuance under our Share Award Plan. | |
In 2014, employees and officers of ours who are recipients of our share awards were permitted to elect to have us withhold the number of their then vesting common shares with a fair market value equal to, but not greater than, the minimum required tax withholding obligations with respect to their vesting share awards in satisfaction of those withholding obligations. During 2014, we acquired through this share withholding process an aggregate of 11,377 common shares with an aggregate value of $47, which is reflected as an increase to accumulated deficit in our consolidated balance sheet. | |
Acquisition
Acquisition | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Acquisition | ||||
Acquisition | 11. Acquisition | |||
In May 2014, we acquired a senior living community with 116 living units located in Alabama for approximately $19,914, including the assumption of approximately $13,920 of mortgage debt and the assumption of approximately $68 of net working capital liabilities, but excluding closing costs. This community primarily offers independent and assisted living services that are currently 100% paid by residents from their private resources. We funded this acquisition with cash on hand and borrowings under our Credit Facility. We incurred acquisition related costs of $81 during the second quarter of 2014. These costs include transaction costs, professional fees and other acquisition related expenses. The allocation of the purchase price was based on management’s judgment after evaluating several factors, including valuation assessments of tangible and intangible assets, and estimates of the fair value of liabilities assumed. The definite lived intangible assets were valued using the income approach and are categorized in Level 3 of the fair value hierarchy. The valuation of certain tangible assets and liabilities acquired was determined using the cost approach. For personal property, we primarily used the cost approach to estimate reproduction or replacement cost. The fair value of these assets and liabilities are also categorized in Level 3 of the fair value hierarchy. The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed: | ||||
Land | $ | 1,208 | ||
Buildings and improvements | 17,946 | |||
Furniture, fixtures and equipment | 421 | |||
Total property, plant and equipment | 19,575 | |||
Intangible assets | 1,937 | |||
Premium on assumed mortgage debt | -1,598 | |||
$ | 19,914 | |||
Discontinued_Operations
Discontinued Operations | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Discontinued Operations | |||||||||||
Discontinued Operations | 12. Discontinued Operations | ||||||||||
In 2011, we decided to offer for sale two SNFs we owned located in Michigan with a total of 271 living units. On April 30, 2013, we sold these two SNFs for an aggregate sales price of $8,000, which included as part of the sales price the prepayment by the buyer of the then outstanding $7,510 of United States Department of Housing and Urban Development mortgage debt that encumbered these SNFs. | |||||||||||
In September 2012, we completed the sale of our pharmacy business to Omnicare, Inc., or Omnicare. We received $34,298 in sale proceeds from Omnicare, which included $3,789 in working capital. We recorded a pre‑tax capital gain on sale of the pharmacy business of $23,347. In connection with the sale, Omnicare did not acquire the real estate we own associated with one pharmacy located in South Carolina. In July 2014, we sold this real estate for a sales price of $205. We recorded an asset impairment charge of $57 during the fourth quarter of 2013 to reduce the carrying value of this real estate to its estimated fair value, less costs to sell. | |||||||||||
In June 2013, we decided to offer for sale an assisted living community we own with 32 living units located in Alabama. We are in the process of offering this community for sale. | |||||||||||
Please see Note 15 below for a discussion of 11 senior living communities and two rehabilitation hospitals that we lease or had leased from SNH which are included in discontinued operations for all of the periods presented in these consolidated financial statements; seven of which had been sold as of December 31, 2014 and one additional of which was sold in February 2015. | |||||||||||
We can provide no assurance that we will be able to sell the senior living community that we are offering for sale, or that we and SNH will be able to sell the remaining three senior living communities that we lease from SNH that are being offered for sale, or what the terms or timing of any sales may be. | |||||||||||
We have reclassified our consolidated balance sheets and consolidated statements of operations for all periods presented to show the financial position and results of operations of our pharmacies, rehabilitation hospitals and the communities which have been sold or are expected to be sold as discontinued. Below is a summary of the operating results of these discontinued operations included in the consolidated financial statements for the years ended December 31, 2014, 2013 and 2012: | |||||||||||
2014 | 2013 | 2012 | |||||||||
Revenues | $ | 22,051 | $ | 151,600 | $ | 213,020 | |||||
Expenses | -28,028 | -154,578 | -218,565 | ||||||||
Impairment on discontinued assets | — | -4,153 | -644 | ||||||||
(Provision for) benefit from income taxes | -79 | 3,539 | -5,441 | ||||||||
(Loss) gain on sale | — | -2,197 | 23,347 | ||||||||
(Loss) income from discontinued operations | $ | -6,056 | $ | -5,789 | $ | 11,717 | |||||
Off_Balance_Sheet_Arrangement
Off Balance Sheet Arrangement | 12 Months Ended |
Dec. 31, 2014 | |
Off Balance Sheet Arrangement | |
Off Balance Sheet Arrangement | 13. Off Balance Sheet Arrangement |
We have pledged our accounts receivable and certain other assets, with a carrying value, as of December 31, 2014, of $13,744, arising from our operation of 26 properties owned by SNH and leased to us to secure SNH’s borrowings from its lender, FNMA. As of December 31, 2014, we had no other off balance sheet arrangements that have had or that we expect would be reasonably likely to have a future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. | |
Litigation_Settlement
Litigation Settlement | 12 Months Ended |
Dec. 31, 2014 | |
Litigation Settlement | |
Litigation Settlement | 14. Litigation Settlement |
On May 29, 2012, we entered into a settlement agreement, or the Settlement Agreement, with subsidiaries of Sunrise Senior Living Inc., or Sunrise, pursuant to which we agreed to settle our long running litigation with Sunrise, involving amounts charged by Sunrise to us for certain insurance programs for senior living communities managed by Sunrise for us. Pursuant to the Settlement Agreement, Sunrise paid us $4,000 in cash and we recorded a gain of $3,365, net of legal fees, in our consolidated statements of operations. | |
Related_Person_Transactions
Related Person Transactions | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Related Person Transactions | ||||
Related Person Transactions | 15. Related Person Transactions | |||
We have adopted written Governance Guidelines that describe the consideration and approval of any related person transactions. Under these Governance Guidelines, we may not enter into any transaction in which any Director or executive officer, any member of the immediate family of any Director or executive officer or any other related person, has or will have a direct or indirect material interest unless that transaction has been disclosed or made known to our Board of Directors and our Board of Directors reviews and approves or ratifies the transaction by the affirmative vote of a majority of the disinterested Directors, even if the disinterested Directors constitute less than a quorum. If there are no disinterested Directors, the transaction must be reviewed, authorized and approved or ratified by both (i) the affirmative vote of a majority of our Board of Directors and (ii) the affirmative vote of a majority of our Independent Directors. In determining whether to approve or ratify a transaction, our Board of Directors, or disinterested Directors or Independent Directors, as the case may be, also act in accordance with any applicable provisions of our charter and bylaws, consider all of the relevant facts and circumstances and approve only those transactions that are fair and reasonable to us and our stockholders. All related person transactions described below were reviewed and approved or ratified by a majority of the disinterested Directors or otherwise in accordance with our policies, charter and bylaws, each as described above. In the case of any transaction with us in which any other employee of ours who is subject to our Code of Business Conduct and Ethics and who has a direct or indirect material interest in the transaction, the employee must seek approval from an executive officer who has no interest in the matter for which approval is being requested. Copies of our Governance Guidelines and Code of Business Conduct and Ethics are available on our website, www.fivestarseniorliving.com. | ||||
SNH | ||||
We were formerly a 100% owned subsidiary of SNH, SNH is our largest landlord and our largest stockholder and we manage senior living communities for SNH. In 2001, SNH distributed substantially all of our then outstanding common shares to its shareholders. As of December 31, 2014, SNH owned 4,235,000 of our common shares, or approximately 8.6% of our outstanding common shares. One of our Managing Directors, Mr. Barry Portnoy, is a managing trustee of SNH. Mr. Barry Portnoy’s son, Mr. Adam Portnoy, also serves as a managing trustee of SNH. SNH’s executive officers are officers of RMR and SNH’s President and Chief Operating Officer is a director of RMR. In order to effect this spin‑off and to govern relations after the spin‑off, we entered into agreements with SNH and others. We have entered into various leases with SNH and other agreements that include provisions that confirm and modify these undertakings. Among other matters, these agreements provide that: | ||||
· | so long as SNH remains a real estate investment trust, we may not waive the share ownership restrictions in our charter on the ability of any person or group to acquire more than 9.8% of any class of our equity shares without the consent of SNH; | |||
· | so long as we are a tenant of, or manager for, SNH, we will not permit nor take any action that, in the reasonable judgment of SNH, might jeopardize the tax status of SNH as a real estate investment trust; | |||
· | SNH has the option to cancel all of our rights under the leases and management agreements we have with SNH upon the acquisition by a person or group of more than 9.8% of our voting stock and upon other change in control events affecting us, as defined in those documents, including the adoption of any stockholder proposal (other than a precatory proposal) or the election to our Board of Directors of any individual if such proposal or individual was not approved, nominated or appointed, as the case may be, by vote of a majority of our Directors in office immediately prior to the making of such proposal or the nomination or appointment of such individual; and | |||
· | the resolution of disputes arising from our leases and other agreements with SNH may be resolved by binding arbitration; and | |||
· | so long as we are a tenant of, or manager for, SNH or so long as we have a business management agreement with RMR, we will not acquire or finance any real estate of a type then owned or financed by SNH or any other company managed by RMR without first giving SNH or the other company managed by RMR, as applicable, the opportunity to acquire or finance that real estate. | |||
As of December 31, 2014, we leased 181 senior living communities (including four that we have classified as discontinued operations) from SNH under four combination leases. Under our leases with SNH, we pay SNH minimum rent plus percentage rent based on increases in gross revenues at certain properties. Our total minimum annual rent payable to SNH as of December 31, 2014 was $190,663, excluding percentage rent. Our total rent expense (which includes rent for all properties we lease from SNH, including properties we have classified as discontinued operations) under all of our leases with SNH, net of lease inducement amortization, was $195,538, $202,868 and $200,036 for the years ended December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014 and 2013, we had outstanding rent due and payable to SNH of $17,310 and $17,960, respectively. During the years ended December 31, 2014, 2013 and 2012, pursuant to the terms of our leases with SNH, we sold $25,804, $27,208 and $30,520, respectively, of improvements made to properties leased from SNH and, as a result, our annual rent payable to SNH increased by approximately $2,066, $2,177 and $2,456, respectively. As of December 31, 2014, our property and equipment included $7,799 for similar improvements we have made to properties we lease from SNH that we expected to request that SNH purchase from us for an increase in future rent; however, SNH is not obligated to purchase these improvements. | ||||
In December 2013, pursuant to the Purchase Agreement, we and SNH sold the real estate and transferred the operations at two rehabilitation hospitals and 13 out‑patient clinics affiliated with those rehabilitation hospitals to unrelated third parties. As a result of this transaction, SNH received proceeds of approximately $90,000 for the sale of the real estate associated with those rehabilitation hospitals and we retained certain net assets of approximately $9,591. These rehabilitation hospitals were previously leased to us by SNH under one of our combination leases with SNH, Lease No. 2, and the affiliated clinics were leased to us by third parties. Pursuant to an amendment to Lease No. 2 that we entered into in September 2013 in connection with our and SNH’s agreement to sell the real estate and transfer the operations at the rehabilitation hospitals, Lease No. 2 terminated with respect to the rehabilitation hospitals and our annual rent paid to SNH under Lease No. 2 was reduced by $9,500 upon the closing of this transaction. The lease amendment also provides for an allocation of indemnification obligations under the Purchase Agreement between SNH and us. | ||||
We and SNH previously agreed that SNH would offer for sale 11 senior living communities we lease from SNH, which we have classified as discontinued operations. Our rent payable to SNH is reduced as these sales occur pursuant to terms set in our leases with SNH. In August 2013, we and SNH sold one of these communities, a SNF located in Missouri with 112 living units, for a sale price of $2,550, and as a result of this sale, our annual minimum rent payable to SNH decreased by $255 in accordance with the terms of the applicable lease. In January 2014, we and SNH sold one of these communities, an assisted living community located in Texas with 48 assisted living units, for a sale price of $2,400, and as a result of this sale, our annual minimum rent payable to SNH decreased by $210 in accordance with the terms of the applicable lease. In June 2014, we and SNH sold two of these communities, both of which are SNFs located in Wisconsin, with an aggregate of 139 living units, for a sale price of $4,500, and as a result of this sale, our annual minimum rent payable to SNH decreased by $450 in accordance with the terms of the applicable lease. In October 2014, we and SNH sold one of these communities, an assisted living community in Virginia with 55 assisted living units, for a sale price of $2,850, and as a result of this sale, our annual minimum rent payable to SNH decreased by $285 in accordance with the terms of the applicable lease. Also in October 2014, we and SNH sold an assisted living community and a SNF located in Arizona with an aggregate of 160 living units, for a sale price of $5,900, and as a result of this sale, our annual minimum rent payable to SNH decreased by $590 in accordance with the terms of the applicable lease. In February 2015, we and SNH sold an assisted living community located in Pennsylvania with 103 living units, for a sale price of $250, and as a result of this sale, our annual minimum rent payable to SNH decreased by $23 in accordance with the terms of the applicable lease. We can provide no assurance that we and SNH will be able to sell the remaining three senior living communities we lease from SNH that are being offered for sale, or what the terms or timing of any sales may be. | ||||
In July 2014, we and SNH entered into the Fifth Amendment to the Amended and Restated Master Lease Agreement (Lease No. 4), or Lease No. 4, pursuant to which we exercised the first of our existing lease extension options under Lease No. 4, extending the term from April 30, 2017 to April 30, 2032, and SNH granted us a third option for us to extend the term of Lease No. 4 from May 1, 2047 to April 30, 2062. | ||||
As of December 31, 2014, we managed 46 senior living communities for the account of SNH, each pursuant to long term management agreements on substantially similar terms. With the exception of the management agreement for the senior living community in New York described below, the management agreements for the communities we manage for SNH’s account provide us with a management fee equal to 3% of the gross revenues realized at the communities, plus reimbursement for our direct costs and expenses related to the communities and an incentive fee equal to 35% of the annual net operating income of the communities after SNH realizes an annual return equal to 8% of its invested capital. The management agreements generally expire on December 31, 2031, 2032, 2033 or 2035, and are subject to automatic renewal for two consecutive 15 year terms, unless earlier terminated or timely notice of nonrenewal is delivered. The management agreements provide that we and SNH each have the option to terminate the agreements upon the acquisition by a person or group of more than 9.8% of the other’s voting stock and upon other change in control events affecting the other party, as defined in those documents, including the adoption of any shareholder proposal (other than a precatory proposal) or the election to the board of directors or board of trustees of any individual if such proposal or individual was not approved, nominated or appointed, as the case may be, by vote of a majority of the board of directors or board of trustees in office immediately prior to the making of such proposal or the nomination or appointment of such individual. | ||||
In connection with these management agreements, we and SNH have entered into four combination agreements, or pooling agreements: three pooling agreements combine certain of our management agreements with SNH for communities that include assisted living units, or the AL Pooling Agreements; and a fourth pooling agreement combines our management agreements with SNH for communities that include only independent living units, or the IL Pooling Agreement. The management agreements that are included in each of the pooling agreements are on substantially similar terms. The first AL Pooling Agreement, which we entered into in May 2011, includes 20 identified communities and the second AL Pooling Agreement, which we entered into in October 2012, includes 19 identified communities. We and SNH entered into our third AL Pooling Agreement in November 2013 and that pooling agreement currently includes three identified communities. We entered into the IL Pooling Agreement in August 2012 and that agreement currently includes two identified communities that have only independent living units. The senior living community in New York and the senior living community in California described below that we manage for the account of SNH are not included in any of our pooling agreements. Each of the AL Pooling Agreements and the IL Pooling Agreement aggregates the determination of fees and expenses of the various communities that are subject to such pooling agreement, including determinations of our incentive fees and SNH's return of its invested capital. Under each of the pooling agreements, SNH has the right, after the period of time specified in the agreement has elapsed and subject to our cure rights, to terminate all, but not less than all, of the management agreements that are subject to the pooling agreement if SNH does not receive its minimum return in each of three consecutive years. In addition, under each of the pooling agreements, we have a limited right to require the sale of underperforming communities. Also, under each of the pooling agreements, any nonrenewal notice given by us with respect to a community is deemed a nonrenewal with respect to all the communities that are the subject of the agreement. We earned management fees from SNH $9,765, $9,229 and $5,582 for the years ended December 31, 2014, 2013 and 2012, respectively, with respect to the communities we manage. | ||||
In July 2014, we entered into an agreement with SNH, pursuant to which the management agreement for the assisted living community known as Villa Valencia, which is located in California, was removed from the second AL Pooling Agreement as of July 1, 2014. We expect that the management agreement affecting the Villa Valencia community will not be included in any pooling agreement until after extensive renovations planned at that community are completed. | ||||
In July 2014, we entered into an amendment to the management agreements with SNH that include assisted living units to (i) extend the term of each of the management agreements between us and SNH for Villa Valencia and the 19 assisted living communities currently included in the second AL Pooling Agreement from December 31, 2031 to December 31, 2033 and (ii) extend the term of the management agreement between us and SNH for the senior living community known as Willow Pointe, which is currently included in the third AL Pooling Agreement, from December 31, 2031 to December 31, 2035. In July 2014, we also entered into an amendment to our management agreements with SNH that include only independent living units to extend the term of the management agreements between us and SNH for two independent living communities from December 31, 2031 to December 31, 2032. All of the management agreements that are currently included in the third AL Pooling Agreement expire on December 31, 2035. | ||||
In December 2014, we began managing two senior living communities in Wisconsin. We manage these communities for SNH’s account pursuant to separate long term management agreements for communities that include assisted living units and these agreements are included in the third AL Pooling Agreement below. | ||||
We expect that we may enter into additional management arrangements with SNH for senior living communities that SNH may acquire in the future on terms similar to those management arrangements we currently have with SNH, including management agreements for some of the 38 senior living communities that SNH has recently announced that it expects to acquire, in the event SNH is unable to reach mutually acceptable agreements with the current managers of these properties. | ||||
We manage a portion of a senior living community in New York that is not subject to the requirements of New York healthcare licensing laws, consisting of 199 living units, pursuant to a long term management agreement with SNH. The terms of this management agreement are substantially consistent with the terms of our other management agreements with SNH for communities that include assisted living units, except that the management fee payable to us is equal to 5% of the gross revenues realized at that portion of the community, and there is no incentive fee payable to us under this management agreement. This management agreement expires on December 31, 2031. In order to accommodate certain requirements of New York healthcare licensing laws, SNH subleases a portion of this senior living community that is subject to those requirements, consisting of 111 living units, to an entity, D&R Yonkers LLC, which is owned by SNH’s President and Chief Operating Officer and its Treasurer and Chief Financial Officer. We manage this portion of the community pursuant to a long term management agreement with D&R Yonkers LLC. Pursuant to that management agreement, D&R Yonkers LLC pays us a management fee equal to 3% of the gross revenues realized at that portion of the community and we are not entitled to any incentive fee under that agreement. Our management agreement with D&R Yonkers LLC expires on August 31, 2017, and is subject to renewal for nine consecutive five year terms, unless earlier terminated or timely notice of nonrenewal is delivered. | ||||
As discussed above in Note 8, in May 2011, we and SNH entered into the Bridge Loan, under which SNH loaned us $80,000. In April 2012, we repaid in full the then outstanding principal amount under the Bridge Loan, resulting in termination of the Bridge Loan. The Bridge Loan bore interest at a rate equal to the annual rates of interest applicable to SNH’s borrowings under its revolving credit facility, plus 1%. We incurred interest expense on the Bridge Loan of $314 for the year ended December 31, 2012, which amount is included in interest and other expense in our consolidated statements of operations. | ||||
In August 2012, SNH prepaid certain outstanding debt it had borrowed from FNMA, which debt was secured by certain properties we lease from SNH and other assets relating to those properties. As a result of this prepayment, 11 of the 28 properties securing that debt were released from the mortgage and, in connection with that release, we entered into amendments to our leases with SNH so that these 11 properties were removed from the lease created to accommodate this debt and were added to our other multi‑property leases with SNH. | ||||
RMR | ||||
RMR provides business management and shared services to us pursuant to a business management and shared services agreement, or our business management agreement. One of our Managing Directors, Mr. Barry Portnoy, is Chairman, majority owner and an employee of RMR. Mr. Barry Portnoy's son, Mr. Adam Portnoy, is an owner of RMR and serves as President, Chief Executive Officer and a director of RMR. Our other Managing Director, Mr. Gerard Martin, is a director of RMR. Mr. Bruce Mackey, our President and Chief Executive Officer, and Mr. Paul Hoagland, our Treasurer and Chief Financial Officer, are officers and employees of RMR. Our Independent Directors also serve as independent directors or independent trustees of other public companies to which RMR or its affiliates provide management services. Mr. Barry Portnoy serves as a managing director or managing trustee of those companies and Mr. Adam Portnoy serves as a managing trustee of a majority of those companies. In addition, officers of RMR serve as officers of us and of other companies to which RMR or its affiliates provide management services. | ||||
Because at least 80% of Messrs. Mackey’s and Hoagland’s business time is devoted to services to us, 80% of Messrs. Mackey’s and Hoagland’s total cash compensation (that is, the combined base salary and cash bonus paid by us and RMR) was paid by us and the remainder was paid by RMR. Messrs. Mackey and Hoagland are also eligible to participate in certain RMR benefit plans. We believe the compensation we paid to these officers reasonably reflected their division of business time; however, periodically, these individuals may divide their business time differently than they do currently and their compensation from us may become disproportionate to this division. | ||||
Our Board of Directors has given our Compensation Committee, which is comprised exclusively of our Independent Directors, authority to act on our behalf with respect to our business management agreement with RMR. The charter of our Compensation Committee requires the committee to annually review the terms of the business management agreement, evaluate RMR's performance under this agreement and determine whether to renew, amend or terminate the business management agreement. | ||||
Pursuant to the business management agreement, RMR assists us with various aspects of our business, which may include, but are not limited to, compliance with various laws and rules applicable to our status as a publicly owned company, maintenance of our facilities, evaluation of business opportunities, accounting and financial reporting, capital markets and financing activities, investor relations and general oversight of our daily business activities, including legal and tax matters, human resources, insurance programs, management information systems and the like. Under our business management agreement, we pay RMR an annual business management fee equal to 0.6% of our revenues. Revenues are defined as our total revenues from all sources reportable under generally accepted accounting principles in the United States, or GAAP, less any revenues reportable by us with respect to communities for which we provide management services plus the gross revenues at those communities determined in accordance with GAAP. Additionally, under the business management agreement, RMR has provided information technology services to us until October 1, 2014 in return for our reimbursement of RMR for a percentage of RMR's information technology employee expenses (other than RMR's Chief Information Officer), which percentage was subject to approval by our Compensation Committee. The fees we paid to RMR under the business management agreement, including for information technology services, totaled $12,485, $13,965 and $13,226 for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||
RMR also provides internal audit services to us in return for our share of the total internal audit costs incurred by RMR for us and other companies managed by RMR and its affiliates, which amounts are subject to approval by our Compensation Committee. Our Audit Committee appoints our Director of Internal Audit. Our share of RMR’s costs of providing this internal audit function was approximately $286, $203 and $209 for 2014, 2013 and 2012, respectively. These allocated costs are in addition to the business management fees earned by RMR. | ||||
The current term of the business management agreement ends on December 31, 2015 and automatically renews for successive one year terms unless we or RMR gives notice of non-renewal before the end of an applicable term. On March 16, 2015, we and RMR entered into an amended and restated business management and shared services agreement, which was approved by our Compensation Committee, comprised solely of our Independent Directors. As amended, RMR may terminate the business management agreement upon 120 days’ written notice, and we continue to have the right to terminate the business management agreement upon 60 days’ written notice, subject to approval by a majority vote of our Independent Directors. As amended, if we terminate or elect not to renew the business management agreement other than for cause, as defined, we are obligated to pay RMR a termination fee equal to 2.875 times the sum of the annual base management fee and the annual internal audit services expense, which amounts are based on averages during the 24 consecutive calendar months prior to the date of notice of nonrenewal or termination. Also, as amended, RMR agrees to provide certain transition services to us for 120 days following termination by us or notice of termination by RMR. The business management agreement includes arbitration provisions for resolution of disputes. | ||||
Under our business management agreement with RMR, we acknowledge that RMR also provides management services to other companies, including SNH. The fact that RMR has responsibilities to other entities, including our largest landlord and largest stockholder, SNH, could create conflicts; and in the event of such conflicts between us and RMR, any affiliate of RMR or any other publicly owned entity with which RMR has a relationship, including SNH, our business management agreement allows RMR to act on its own behalf and on behalf of SNH or such other entity rather than on our behalf. Under the business management agreement, we afford SNH and any other company that is managed by RMR a right of first refusal to invest in or finance any real estate of a type then owned or financed by any of them before we do. Under the business management agreement, RMR has agreed not to provide business management services to any other business or enterprise, other than SNH, competitive with our business. | ||||
We are generally responsible for all of our expenses and certain expenses incurred by RMR on our behalf. Pursuant to our business management agreement, RMR may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of services to us. As part of this arrangement, we may enter agreements with RMR and other companies to which RMR provides management services for the purpose of obtaining more favorable terms from such vendors and suppliers. | ||||
We lease our headquarters building from an affiliate of RMR. In December 2014, we and this affiliate agreed to amend this lease to add additional rental space to this lease for increased rent. As amended, this lease requires us to pay current annual rent of approximately $882, which amount is subject to fixed increases. Our rent expense for our headquarters, which included our utilities and real estate taxes that we are required to pay as additional rent, was $1,402, $1,386, and $1,426 for 2014, 2013 and 2012, respectively. We believe the terms of our headquarters’ lease with this affiliate of RMR are commercially reasonable. | ||||
Under our Share Award Plan, we grant restricted shares to certain employees of RMR who are not also Directors, officers or employees of ours. We granted a total of 81,150, 82,300, and 81,050 shares with an aggregate value of $357, $373 and $399 to such persons in 2014, 2013 and 2012, respectively, based upon the price of our common shares on the dates of grants on the New York Stock Exchange. One fifth of those shares vested on the grant dates and one fifth vests on each of the next four anniversaries of the grant dates. These share grants to RMR employees are in addition to both the fees we pay to RMR and our share grants to our Directors, officers and employees. On occasion, we have entered into arrangements with former employees of ours or RMR in connection with the termination of their employment with us or RMR, providing for the acceleration of vesting of restricted shares previously granted to them under our Share Award Plan. Additionally, each of our President and Chief Executive Officer and Treasurer and Chief Financial Officer received grants of restricted shares of other companies to which RMR provides management services, including SNH, in their capacities as officers of RMR. | ||||
AIC | ||||
We, RMR, SNH and four other companies to which RMR provides management services currently own AIC, an Indiana insurance company, and are parties to an amended and restated shareholders agreement regarding AIC. On May 9, 2014, as a result of a change in control of Equity Commonwealth (formerly CommonWealth REIT), or EQC, as defined in the amended and restated shareholders agreement, we and the other AIC shareholders purchased pro rata the AIC shares EQC owned in accordance with the terms of that agreement. Pursuant to that purchase, we purchased 2,857 AIC shares from EQC for $825. Following these purchases, we and the other remaining six AIC shareholders each own approximately 14.3% of AIC. As of December 31, 2014, we have invested $6,034 in AIC since its formation in 2008. | ||||
All of our Directors and most of the trustees and directors of the other AIC shareholders currently serve on the board of directors of AIC. RMR provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC. Our Governance Guidelines provide that any material transaction between us and AIC shall be reviewed, authorized and approved or ratified by the affirmative votes of both a majority of our Board of Directors and a majority of our Independent Directors. The shareholders agreement among us, the other shareholders of AIC and AIC includes arbitration provisions for the resolution of disputes. | ||||
In 2013 and 2012, we and the other shareholders of AIC purchased a one year property insurance policy providing $500,000 of coverage pursuant to an insurance program arranged by AIC and with respect to which AIC is a reinsurer of certain coverage amounts. Our annual premium for this property insurance was $5,428 and $6,264 in 2013 and 2012, before adjustments made for acquisitions or dispositions we made during that period. In June 2014, we and the other shareholders of AIC renewed our participation in this program. In connection with that renewal, we purchased a one year property insurance policy providing $500,000 of coverage, with respect to which AIC is a reinsurer of certain coverage amounts and we paid a premium, including taxes and fees, of approximately $3,901 in connection with that policy. Although we own less than 20% of AIC, we use the equity method to account for this investment because we believe that we have significant influence over AIC as all of our Directors are also directors of AIC. Our investment in AIC had a carrying value of $6,827 and $5,913 as of December 31, 2014 and 2013, respectively. We recognized income of $87, $334 and $316 related to our investment in AIC for 2014, 2013 and 2012, respectively. | ||||
We periodically consider the possibilities for expanding our insurance relationships with AIC to include other types of insurance and may in the future participate in additional insurance offerings AIC may provide or arrange. We may invest additional amounts in AIC in the future if the expansion of this insurance business requires additional capital, but we are not obligated to do so. By participating in this insurance business with RMR and the other companies to which RMR provides management services, we expect that we may benefit financially by possibly reducing our insurance expenses or by realizing our pro rata share of any profits of this insurance business. | ||||
Directors’ and Officers’ Liability Insurance: In July 2013, we, RMR, SNH and four other companies to which RMR provides management services purchased a combined directors’ and officers’ liability insurance policy providing $10,000 in aggregate primary non‑indemnifiable coverage and $5,000 in aggregate excess coverage. We paid a premium of approximately $133 in connection with this policy. In June 2014, we, RMR, SNH and three other companies to which RMR provides management services extended this combined directors’ and officers’ liability insurance policy through August 31, 2014. We paid a premium of approximately $15 for this extension. In September 2014, we purchased a two year combined directors’ and officers’ insurance policy with SNH, RMR and four other companies to which RMR provides management services that provides $10,000 in aggregate primary coverage, including certain errors and omission coverage. At that time, we also purchased separate additional one year directors’ and officers’ liability insurance policies that provide $20,000 of aggregate excess coverage plus $5,000 of excess non‑indemnifiable coverage. The total premium payable by us for these policies purchased in September 2014 was approximately $357. | ||||
Employee_Benefit_Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2014 | |
Employee Benefit Plans | |
Employee Benefit Plans | 16. Employee Benefit Plans |
We have several employee savings plans under the provisions of Section 401(k) of the Internal Revenue Code. All of our employees are eligible to participate in at least one of our plans and are entitled upon termination or retirement to receive their vested portion of the plan assets. For some of our plans, we match a certain amount of employee contributions. We also pay certain expenses related to all of our plans. Expenses for all our plans, including our contributions, were $1,635, $1,617 and $1,565 for the years ended December 31, 2014, 2013 and 2012, respectively. | |
Selected_Quarterly_Financial_D
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Selected Quarterly Financial Data (Unaudited) | ||||||||||||||
Selected Quarterly Financial Data (Unaudited) | 17. Selected Quarterly Financial Data (Unaudited) | |||||||||||||
The following is a summary of unaudited quarterly results of operations for the years ended December 31, 2014 and 2013: | ||||||||||||||
2014 | ||||||||||||||
First | Second | Third | Fourth | |||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||
Revenues | $ | 328,411 | $ | 332,799 | $ | 334,339 | $ | 332,526 | ||||||
Operating loss | -7,492 | -444 | -3,088 | -8,156 | ||||||||||
Net loss from continuing operations | -5,867 | -997 | -2,374 | -70,112 | ||||||||||
Net loss | -6,759 | -1,891 | -3,008 | -73,748 | ||||||||||
Net loss per common share—Basic | $ | -0.14 | $ | -0.04 | $ | -0.06 | $ | -1.53 | ||||||
Net loss per common share—Diluted | $ | -0.14 | $ | -0.04 | $ | -0.06 | $ | -1.53 | ||||||
2013 | ||||||||||||||
First | Second | Third | Fourth | |||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||
Revenues | $ | 323,852 | $ | 323,447 | $ | 324,263 | $ | 325,225 | ||||||
Operating income (loss) | 3,668 | 5,670 | 2,276 | -1,533 | ||||||||||
Net income (loss) from continuing operations | 3,193 | 2,955 | 625 | -3,324 | ||||||||||
Net income (loss) | 2,392 | 1,456 | -758 | -5,430 | ||||||||||
Net income (loss) per common share—Basic | $ | 0.05 | $ | 0.03 | $ | -0.02 | $ | -0.11 | ||||||
Net income (loss) per common share—Diluted | $ | 0.05 | $ | 0.03 | $ | -0.02 | $ | -0.11 | ||||||
Subsequent_Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Event | |
Subsequent Event | |
18. Subsequent Event | |
In March 2015, we entered into agreements to acquire two independent living communities with 68 and 84 living units, respectively, located in Tennessee for approximately $26,000, including the assumption of approximately $17,000 of mortgage debt. We expect to fund this acquisition with cash on hand and borrowings under our Credit Facility. We expect this transaction to close during the second quarter of 2015. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Summary of Significant Accounting Policies | ||||||||||||||||||||
Basis of Presentation | Basis of Presentation. The accompanying consolidated financial statements include our accounts and those of all of our consolidated subsidiaries. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. | |||||||||||||||||||
Use of Estimates | Use of Estimates. Preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that may affect the amounts reported in these financial statements and related notes. Some significant estimates are included in our revenue recognition, self‑insurance reserves, the allowance for doubtful accounts, goodwill and long‑lived assets and contractual allowances. | |||||||||||||||||||
We are required to estimate income taxes payable in each of the jurisdictions in which we operate. The process involves estimating actual current tax expense along with assessing temporary differences resulting from differing treatment of items for financial statement and tax purposes. These timing differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. We are required to record a valuation allowance to reduce deferred tax assets if we are not able to conclude that it is more likely than not these assets will be realized. | ||||||||||||||||||||
Our actual results could differ from our estimates. We periodically review estimates and assumptions and we reflect the effects of changes, if any, in the consolidated financial statements in the period that they are determined. | ||||||||||||||||||||
Earnings Per Share | Earnings Per Share. We calculate basic earnings per common share, or EPS, by dividing net income (loss) (and income (loss) from continuing operations and income (loss) from discontinued operations) by the weighted average number of common shares outstanding during the year. We calculate diluted EPS using the more dilutive of the two‑class method or the treasury stock method. | |||||||||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents. Cash and cash equivalents, consisting of short term, highly liquid investments and money market funds with original maturities of three months or less at the date of purchase, are carried at cost plus accrued interest, which approximates market. | |||||||||||||||||||
Equity Method Investments | Equity Method Investments. As of December 31, 2014, we and six other shareholders each owned approximately 14.3% of the outstanding equity of Affiliates Insurance Company, or AIC. Although we owned less than 20% of AIC, we use the equity method to account for this investment because we believe that we have significant influence over AIC as all of our Directors are also directors of AIC. Under the equity method, we recorded our percentage share of net earnings from AIC in our consolidated statements of operations. If we determine there is an “other than temporary impairment” in the fair value of this investment, we would record a charge to earnings. In evaluating the fair value of this investment, we have considered, among other things, the assets and liabilities held by AIC, AIC’s overall financial condition and earning trends, and the financial condition and prospects for the insurance industry generally. As of December 31, 2014, we have invested $6,034 in AIC. | |||||||||||||||||||
Investment Securities | Investment Securities. Investment securities that are held principally for resale in the near term are classified as “trading” and are carried at fair value with changes in fair value recorded in earnings. We did not hold any trading securities at December 31, 2014 or 2013. | |||||||||||||||||||
Securities not classified as “trading” are classified as “available for sale” and carried at fair value, with unrealized gains and losses reported as a separate component of shareholders’ equity and “other than temporary impairment” losses recorded in our consolidated statements of operations. Realized gains and losses on all available for sale securities are recognized based on specific identification. Our available for sale investments at December 31, 2014 and 2013 consisted primarily of debt securities and equities. Restricted investments are kept as security for obligations arising from our self‑insurance programs. At December 31, 2014, these investments had a fair value of $43,271 and an unrealized holding gain of $2,298. At December 31, 2013, these investments had a fair value of $31,055 and an unrealized holding gain of $1,928. | ||||||||||||||||||||
In 2014, 2013 and 2012, our available for sale securities generated interest and dividend income of $788, $693 and $799, respectively, which is included in interest, dividend and other income in our consolidated statements of operations. | ||||||||||||||||||||
The following table summarizes the fair value and gross unrealized losses related to our “available for sale” securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position for the years ending: | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Less than 12 months | Greater than 12 months | Total | ||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||
Fair Value | Loss | Fair Value | Loss | Fair Value | Loss | |||||||||||||||
Investments | $ | 7,761 | $ | 97 | $ | 1,797 | $ | 60 | $ | 9,558 | $ | 157 | ||||||||
December 31, 2013 | ||||||||||||||||||||
Less than 12 months | Greater than 12 months | Total | ||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||
Fair Value | Loss | Fair Value | Loss | Fair Value | Loss | |||||||||||||||
Investments | $ | 7,392 | $ | 257 | $ | — | $ | — | $ | 7,392 | $ | 257 | ||||||||
We routinely evaluate our available for sale investments to determine if they have been impaired. If the fair value of an investment is less than its book or carrying value and we expect that situation to continue for a more than temporary period, we will record an “other than temporary impairment” loss in our consolidated statements of operations. We evaluate the fair value of our available for sale investments by reviewing each security’s current market price, the ratings of the security, the financial condition of the issuer and our intent and ability to retain the investment during temporary market price fluctuations or until maturity. In evaluating the factors described above, we presume a decline in value to be an “other than temporary impairment” if the quoted market price of the security is below the security’s cost basis for an extended period. However, this presumption may be overcome if there is persuasive evidence indicating the value decline is temporary in nature, such as when the operating performance of the obligor is strong or if the market price of the security is historically volatile. Additionally, there may be instances in which impairment losses are recognized even if the decline in value does not fall within the criteria described above, such as if we plan to sell the security in the near term and the fair value is below our cost basis. When we believe that a change in fair value of an available for sale security is temporary, we record a corresponding credit or charge to other comprehensive income for any unrealized gains and losses. When we determine that impairment in the fair value of an available for sale security is an “other than temporary impairment”, we record a charge to earnings. We did not record such an impairment charge for the years ended December 31, 2014, 2013 and 2012. | ||||||||||||||||||||
Restricted Cash | Restricted Cash. Restricted cash as of December 31, 2014 and 2013 includes cash that we deposited as security for obligations arising from our self‑insurance programs and other amounts for which we are required to establish escrows, including: real estate taxes and capital expenditures as required by our mortgages, indemnification obligations associated with the sale of our pharmacy business and certain resident security deposits. | |||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Current | Long term | Current | Long term | |||||||||||||||||
Insurance reserves | $ | 913 | $ | 2,170 | $ | 3,859 | $ | 9,795 | ||||||||||||
Real estate taxes and capital expenditures as required by our mortgages | 1,376 | — | 1,182 | — | ||||||||||||||||
Indemnification obligations associated with the sale of our pharmacy business | — | — | 3,248 | — | ||||||||||||||||
Resident security deposits | 656 | — | 714 | — | ||||||||||||||||
Total | $ | 2,945 | $ | 2,170 | $ | 9,003 | $ | 9,795 | ||||||||||||
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts. We record accounts receivable at their estimated net realizable value. Included in accounts receivable as of December 31, 2014 and 2013 are amounts due from the Medicare program of $12,409 and $11,173, respectively, and amounts due from various state Medicaid programs of $11,384 and $10,234, respectively. | |||||||||||||||||||
We estimate allowances for uncollectible amounts and contractual allowances based upon factors which include, but are not limited to, the age of the receivable and the terms of the agreements, the residents’ or third party payers’ stated intent to pay, the payers’ financial capacity to pay and other factors which may include likelihood and cost of litigation. Accounts receivable allowances are estimates. We periodically review and revise these estimates based on new information and these revisions may be material. Our SNFs record their provision for doubtful accounts as a reduction of revenue, and during 2014, 2013 and 2012, we recorded a provision for doubtful accounts of $1,321, $2,005 and $1,346, respectively. Allowance for doubtful accounts consists of the following: | ||||||||||||||||||||
Balance January 1, 2012 | $ | 3,160 | ||||||||||||||||||
Provision for doubtful accounts | 4,446 | |||||||||||||||||||
Write-offs | -4,814 | |||||||||||||||||||
Balance December 31, 2012 | 2,792 | |||||||||||||||||||
Provision for doubtful accounts | 6,412 | |||||||||||||||||||
Write-offs | -4,923 | |||||||||||||||||||
Balance December 31, 2013 | 4,281 | |||||||||||||||||||
Provision for doubtful accounts | 4,777 | |||||||||||||||||||
Write-offs | -5,642 | |||||||||||||||||||
Balance December 31, 2014 | $ | 3,416 | ||||||||||||||||||
Deferred Finance Costs | Deferred Finance Costs. We capitalize issuance costs related to borrowings and amortize the deferred costs over the terms of the respective loans. Our unamortized balance of deferred finance costs was $373 and $2,077 at December 31, 2014 and 2013, respectively. Accumulated amortization related to deferred finance costs was $3,414 and $2,263 at December 31, 2014 and 2013, respectively. At December 31, 2014, the weighted average amortization period remaining is approximately 1 year. The amortization expenses to be incurred during the next five years as of December 31, 2014 are $348 in 2015, $15 in 2016 and $2 in 2017, 2018 and 2019. | |||||||||||||||||||
Property and Equipment | Property and Equipment. Property and equipment is stated at cost, less accumulated depreciation. We record depreciation on property and equipment on a straight line basis over estimated useful lives of up to 40 years for buildings, up to 15 years for building improvements and up to seven years for personal property. We regularly evaluate whether events or changes in circumstances have occurred that could indicate impairment in the value of our long‑lived assets. If there is an indication that the carrying value of an asset is not recoverable, we determine the amount of impairment loss, if any, by comparing the historical carrying value of the asset to its estimated fair value. We determine estimated fair value through an evaluation of recent financial performance, recent sales of similar assets, market conditions and projected cash flows of properties using standard industry valuation techniques. | |||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets. Goodwill represents the costs of business acquisitions in excess of the fair value of identifiable net assets acquired. We review goodwill for impairment annually during the fourth quarter, or more frequently, if events or changes in circumstances exist. If our review indicates that the carrying amount of goodwill exceeds its fair value, we reduce the carrying amount of goodwill to fair value. We evaluate goodwill for impairment at the reporting unit level, which we determined to be the operating segments we operate, by comparing the fair value of the reporting unit as determined by its discounted cash flows and market approaches with its carrying value. The key assumptions used in the discounted cash flow analysis include future revenue growth, gross margins and our weighted average cost of capital. We select a growth rate based on our view of the growth prospect of each of our reporting units. If the carrying value of the reporting unit exceeds its fair value, we compare the implied fair value of the reporting unit’s goodwill with its carrying amount to measure the amount of the potential impairment loss. | |||||||||||||||||||
At acquisition, we estimate and record the fair value of purchased intangible assets primarily using discounted cash flow analysis of anticipated cash flows reflecting incremental revenues and/or cost savings resulting from the acquired intangible asset, reflecting market participant assumptions. Amortization of intangible assets with finite lives is recognized over their estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise realized. | ||||||||||||||||||||
Other intangible assets are periodically reviewed for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. If the carrying value of the asset held for use exceeds the sum of the undiscounted expected future cash flows, the carrying value of the asset is generally written down to fair value. | ||||||||||||||||||||
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 governmental 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 governmental audits, investigations and proceedings may require us to incur significant expense. We account for claims and litigation losses in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards CodificationTM, or ASC, Topic 450, Contingencies. Under ASC 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, is recorded; then, as information becomes known, the minimum loss amount is updated, as appropriate. Occasionally, a minimum or best estimate amount may be increased or decreased when events result in a changed expectation. | |||||||||||||||||||
Compliance Matters. As previously disclosed, as a result of our compliance program to review medical records related to our Medicare billing practices, during 2014 we discovered potentially inadequate documentation and other issues at one of our leased SNFs. This compliance review was not initiated in response to any specific complaint or allegation, but was a review of the type that we periodically undertake to test our compliance with applicable Medicare billing rules. As a result of these discoveries, we have made a voluntary disclosure of deficiencies to the United States Department of Health and Human Services Office of the Inspector General (the “OIG”) pursuant to the OIG’s Provider Self-Disclosure Protocol. While our assessment of these matters is ongoing, we have informed the OIG that we expect our investigation and assessment to be completed by May 13, 2015. As of December 31, 2014, we have accrued a revenue reserve of $4.3 million to account for historical Medicare payments we expect to repay and we have expensed ($1.4 million) and accrued ($2.2 million) to account for additional costs we have incurred or we expect to incur, including OIG imposed penalties as a result of this matter. As a result of the continuing investigation and assessment of these deficiencies, additional deficiencies may be discovered which could increase our liability to the OIG and other costs. Potential losses associated with such additional compliance deficiencies are reasonably possible but cannot be reasonably estimated at this time. | ||||||||||||||||||||
Self Insurance | Self‑Insurance. We self‑insure up to certain limits for workers’ compensation, professional liability claims, automobile claims and property losses. Claims in excess of these limits are insured up to contractual limits, over which we are self‑insured. We fully self‑insure all health related claims for our covered employees. Determining reserves for the casualty, liability, workers’ compensation and healthcare losses and costs that we have incurred as of the end of a reporting period involves significant judgments based upon our experience and our expectations of future events, including projected settlements for pending claims, known incidents that we expect may result in claims, estimates of incurred but not yet reported claims, expected changes in premiums for insurance provided by insurers whose policies provide for retroactive adjustments, estimated litigation costs and other factors. Since these reserves are based on estimates, the actual expenses we incur may differ from the amount reserved. We regularly adjust these estimates to reflect changes in the foregoing factors, our actual claims experience, recommendations from our professional consultants, changes in market conditions and other factors; it is possible that such adjustments may be material. Our total self-insurance reserves were $59,333 and $59,707 as of the year ended December 31, 2014 and 2013, respectively, and are included in accrued compensation and benefits, other current liabilities and accrued self-insurance obligations in our consolidated balance sheets. | |||||||||||||||||||
Continuing Care Contracts | Continuing Care Contracts. Residents at one of our communities may enter into continuing care contracts with us. We offer two forms of continuing care contracts to new residents at this community. One form of contract provides that 10% of the resident admission fee becomes non‑refundable upon occupancy, and the remaining 90% becomes non‑refundable at the rate of 1.5% per month of the original amount over the subsequent 60 months. The second form of contract provides that 30% of the resident admission fee is non‑refundable upon occupancy and 70% is refundable. Three other forms of continuing care contracts are in effect for existing residents but are not offered to new residents. One historical form of contract provides that the resident admission fee is 10% non‑refundable upon occupancy and 90% refundable. A second historical form of contract provides that the resident admission fee is 100% refundable. A third historical form of contract provides that the resident admission fee is 1% refundable and 99% non‑refundable upon admission. In each case, we amortize the non‑refundable part of these fees into revenue over the actuarially determined remaining life of the resident, which is the expected period of occupancy by the resident. We pay refunds of our admission fees when residents relocate from our communities. We report the refundable amount of these admission fees as current liabilities and the non‑refundable amount as deferred revenue, a portion of which is classified as a current liability. The balance of refundable admission fees as of December 31, 2014 and 2013 were $3,425 and $3,863, respectively. | |||||||||||||||||||
Leases | Leases. On the inception date of a lease and upon any relevant amendments to such lease, we test the classification of such lease as either a capital lease or an operating lease. None of our leases have met any of the criteria to be classified as a capital lease under FASB ASC Topic 840, Leases, and, therefore, we have accounted for all of our leases as operating leases. | |||||||||||||||||||
Taxes | Taxes. FASB ASC Topic 740, Income Taxes, prescribes how we should recognize, measure and present in our consolidated financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. We can recognize a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized. At December 31, 2014, our tax returns filed for the 2005 through 2014 tax years are subject to examination by taxing authorities. | |||||||||||||||||||
We pay franchise taxes in certain states in which we have operations. We have included franchise taxes in general and administrative and other senior living operating expenses in our consolidated statements of operations. | ||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments. Our financial instruments are limited to cash and cash equivalents, accounts receivable, available for sale securities, accounts payable and mortgage notes payable. Except for our mortgage notes payable, the fair value of these financial instruments was not materially different from their carrying values at December 31, 2014 and 2013. We estimate the fair values using market quotes when available, discounted cash flow analysis and current prevailing interest rates. | |||||||||||||||||||
Revenue Recognition | Revenue Recognition. We derive our revenues primarily from services to residents at our senior living communities and we record revenues when services are provided. We receive payment from governments or other third party payers for some of our services. We derived approximately 23%, 23% and 24% of our senior living revenues in 2014, 2013 and 2012, respectively, from payments under Medicare and Medicaid programs. Revenues under some of these programs are subject to audit and retroactive adjustment. | |||||||||||||||||||
Medicare revenues from continuing operations at our senior living communities totaled $129,212, $132,751 and $134,254 during 2014, 2013 and 2012, respectively. Medicaid revenues from continuing operations at our senior living communities totaled $118,536, $116,220, and $118,505 during 2014, 2013 and 2012, respectively. | ||||||||||||||||||||
Substantially all community fees received are non‑refundable and are recorded initially as deferred revenue and are included in other current liabilities in our consolidated balance sheets. The deferred amounts are amortized over the life of the contract. | ||||||||||||||||||||
Reclassifications | Reclassifications. We have made reclassifications to the prior years’ financial statements to conform to the current year’s presentation. These reclassifications had no effect on net income or shareholders’ equity. | |||||||||||||||||||
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements. In June 2014, the FASB issued Accounting Standards Update 2014‑09, Revenue from Contracts with Customers (Topic 606), or ASU 2014‑09. ASU 2014‑09 aims to clarify the principles for recognizing revenue by, among other things, removing inconsistencies in revenue requirements, improving comparability of revenue recognition practices across entities and industries and providing improved disclosure requirements. We are required to retrospectively adopt ASU 2014‑09 for fiscal periods beginning after December 15, 2016 and are currently evaluating the impact the adoption of this ASU will have on our consolidated financial statements. | |||||||||||||||||||
Segment Information | Segment Information. We have two operating segments: senior living communities and rehabilitation and wellness. In the senior living community segment, we operate for our own account or manage for the account of third parties independent living communities, assisted living communities and SNFs that are subject to centralized oversight and provide housing and services to elderly residents. Our rehabilitation and wellness operating segment does not meet any of the quantitative thresholds of a reportable segment as prescribed under FASB ASC Topic 280, and therefore, we have determined that our business is comprised of one reportable segment, senior living. All of our operations and assets are located in the United States, except for the operations of our captive insurance company subsidiary, which participates in our workers’ compensation, professional liability and automobile insurance programs and which is organized in the Cayman Islands. | |||||||||||||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Summary of Significant Accounting Policies | ||||||||||||||||||||
Schedule of fair value and gross unrealized losses related to the entity's available for sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Less than 12 months | Greater than 12 months | Total | ||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||
Fair Value | Loss | Fair Value | Loss | Fair Value | Loss | |||||||||||||||
Investments | $ | 7,761 | $ | 97 | $ | 1,797 | $ | 60 | $ | 9,558 | $ | 157 | ||||||||
December 31, 2013 | ||||||||||||||||||||
Less than 12 months | Greater than 12 months | Total | ||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||
Fair Value | Loss | Fair Value | Loss | Fair Value | Loss | |||||||||||||||
Investments | $ | 7,392 | $ | 257 | $ | — | $ | — | $ | 7,392 | $ | 257 | ||||||||
Schedule of restricted cash includes cash that is deposited as security for obligations arising from self insurance programs and other amounts, which are required to establish escrows, including real estate taxes and capital expenditures as required by mortgages, indemnification obligations associated with the sale of pharmacy business and certain resident security deposits | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Current | Long term | Current | Long term | |||||||||||||||||
Insurance reserves | $ | 913 | $ | 2,170 | $ | 3,859 | $ | 9,795 | ||||||||||||
Real estate taxes and capital expenditures as required by our mortgages | 1,376 | — | 1,182 | — | ||||||||||||||||
Indemnification obligations associated with the sale of our pharmacy business | — | — | 3,248 | — | ||||||||||||||||
Resident security deposits | 656 | — | 714 | — | ||||||||||||||||
Total | $ | 2,945 | $ | 2,170 | $ | 9,003 | $ | 9,795 | ||||||||||||
Schedule of allowance for doubtful accounts | ||||||||||||||||||||
Balance January 1, 2012 | $ | 3,160 | ||||||||||||||||||
Provision for doubtful accounts | 4,446 | |||||||||||||||||||
Write-offs | -4,814 | |||||||||||||||||||
Balance December 31, 2012 | 2,792 | |||||||||||||||||||
Provision for doubtful accounts | 6,412 | |||||||||||||||||||
Write-offs | -4,923 | |||||||||||||||||||
Balance December 31, 2013 | 4,281 | |||||||||||||||||||
Provision for doubtful accounts | 4,777 | |||||||||||||||||||
Write-offs | -5,642 | |||||||||||||||||||
Balance December 31, 2014 | $ | 3,416 | ||||||||||||||||||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property and Equipment | ||||||||
Schedule of property and equipment | ||||||||
December 31, | December 31, | |||||||
2014 | 2013 | |||||||
Land | $ | 24,172 | $ | 22,214 | ||||
Buildings and improvements | 308,779 | 286,467 | ||||||
Furniture, fixtures and equipment | 136,839 | 114,765 | ||||||
Property and equipment, at cost | 469,790 | 423,446 | ||||||
Accumulated depreciation | -112,604 | -83,170 | ||||||
Property and equipment, net | $ | 357,186 | $ | 340,276 | ||||
Goodwill_and_Other_Intangible_1
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Goodwill and Other Intangible Assets | ||||||||
Schedule of the changes in the carrying amount of goodwill and other intangible assets | ||||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Goodwill | $ | 25,344 | $ | 25,344 | ||||
Other intangible assets, net of accumulated amortization of $5,441 and $3,001 respectively | 560 | 1,063 | ||||||
$ | 25,904 | $ | 26,407 | |||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Income Taxes | |||||||||||||||||
Schedule of deferred tax assets and liabilities | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Current deferred tax assets: | |||||||||||||||||
Continuing care contracts | $ | 124 | $ | 134 | |||||||||||||
Allowance for doubtful accounts | 1,467 | 2,376 | |||||||||||||||
Deferred gains on sale lease back transactions | 1,525 | 1,383 | |||||||||||||||
Insurance reserves | 1,226 | 1,188 | |||||||||||||||
Tax credits | 30 | 352 | |||||||||||||||
Tax loss carry forwards | 610 | 6,679 | |||||||||||||||
Other | 2,794 | 1,746 | |||||||||||||||
Total current deferred tax assets before valuation allowance | 7,776 | 13,858 | |||||||||||||||
Valuation allowance: | -6,528 | -454 | |||||||||||||||
Total current deferred tax assets | 1,248 | 13,404 | |||||||||||||||
Non-current deferred tax assets: | |||||||||||||||||
Continuing care contracts | 565 | 592 | |||||||||||||||
Deferred gains on sale lease back transactions | 579 | 735 | |||||||||||||||
Insurance reserves | 2,773 | 2,880 | |||||||||||||||
Tax credits | 17,160 | 14,883 | |||||||||||||||
Tax loss carry forwards | 56,479 | 32,139 | |||||||||||||||
Impairment of securities | 377 | 470 | |||||||||||||||
Depreciable assets | 3,954 | 5,990 | |||||||||||||||
Other | 800 | 1,054 | |||||||||||||||
Total non-current deferred tax assets before valuation allowance | 82,687 | 58,743 | |||||||||||||||
Valuation allowance: | -70,392 | -3,149 | |||||||||||||||
Total non-current deferred tax assets | 12,295 | 55,594 | |||||||||||||||
Current deferred tax liabilities: | |||||||||||||||||
Employee stock grants | -75 | -115 | |||||||||||||||
Non-current deferred tax liabilities: | |||||||||||||||||
Lease expense | -11,414 | -11,401 | |||||||||||||||
Goodwill | -977 | -1,173 | |||||||||||||||
Identifiable intangibles/other liabilities | -1,292 | -1,190 | |||||||||||||||
Total non-current deferred tax liabilities | -13,683 | -13,764 | |||||||||||||||
Net deferred tax asset (liabilities) | $ | -215 | $ | 55,119 | |||||||||||||
Schedule of movement in valuation allowance | |||||||||||||||||
Amounts | |||||||||||||||||
Balance at | Charged/ | Amounts | Amounts | ||||||||||||||
Beginning of | (Credited) To | Charged Off, | Charged to | Balance at | |||||||||||||
Period | Expense | Net of Recoveries | Equity | End of Period | |||||||||||||
Year Ended December 31, 2012 | $ | 3,363 | $ | -1,175 | $ | — | $ | — | $ | 2,188 | |||||||
Year Ended December 31, 2013 | $ | 2,188 | $ | 1,415 | $ | — | $ | — | $ | 3,603 | |||||||
Year Ended December 31, 2014 | $ | 3,603 | $ | 73,470 | $ | — | $ | -152 | $ | 76,921 | |||||||
Schedule of provision (benefit) for income taxes from continuing operations | |||||||||||||||||
Years Ended December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Current tax provision: | |||||||||||||||||
State | $ | 848 | $ | 1,141 | $ | 1,183 | |||||||||||
Total current tax provision | 848 | 1,141 | 1,183 | ||||||||||||||
Deferred tax (benefit) provision: | |||||||||||||||||
Federal | 43,040 | -1,042 | 4,775 | ||||||||||||||
State | 12,497 | 1,817 | 1,140 | ||||||||||||||
Total deferred tax provision | 55,537 | 775 | 5,915 | ||||||||||||||
Total tax provision | $ | 56,385 | $ | 1,916 | $ | 7,098 | |||||||||||
Schedule of difference between effective tax (benefit) rate on continuing operations and the U.S. Federal statutory income tax (benefit) rate | |||||||||||||||||
For the years ended December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Taxes at statutory U.S. federal income tax rate | -35 | % | 35.0 | % | 35.0 | % | |||||||||||
State and local income taxes, net of federal tax benefit | -6.5 | % | 35.9 | % | 8.7 | % | |||||||||||
Tax credits | -5.4 | % | -42.1 | % | -4.2 | % | |||||||||||
Change in valuation allowance | 287.5 | % | 2.6 | % | 0.1 | % | |||||||||||
Nondeductible meals and entertainment | 0.5 | % | 1.7 | % | 0.5 | % | |||||||||||
Nondeductible penalties | 4.0 | % | 1.7 | % | 0.7 | % | |||||||||||
Dividend received deduction | -0.3 | % | -1.1 | % | -0.8 | % | |||||||||||
Executive compensation | 0.3 | % | 1.6 | % | 0.3 | % | |||||||||||
Stock‑based compensation | 0.2 | % | 0.6 | % | 0.1 | % | |||||||||||
Other differences, net | 0.3 | % | -0.2 | % | -0.3 | % | |||||||||||
Effective tax rate | 245.6 | % | 35.7 | % | 40.1 | % | |||||||||||
Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefits | |||||||||||||||||
For the years ended December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Unrecognized tax benefits at January 1 | $ | 1,245 | $ | 1,086 | $ | 893 | |||||||||||
Additions for tax positions of prior years | — | — | — | ||||||||||||||
Additions for tax positions of current year | 134 | 159 | 193 | ||||||||||||||
Unrecognized tax benefits at December 31 | $ | 1,379 | $ | 1,245 | $ | 1,086 | |||||||||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Earnings Per Share | ||||||||||||||||||||||||||
Schedule of reconciliation of income from continuing operations and income (loss) from discontinued operations and the number of common shares used in the computations of diluted EPS | ||||||||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||||||||
Income | Per | Income | Per | Income | Per | |||||||||||||||||||||
(loss) | Shares | Share | (loss) | Shares | Share | (loss) | Shares | Share | ||||||||||||||||||
(Loss) income from continuing operations | $ | -79,350 | 48,028 | $ | -1.65 | $ | 3,449 | 48,277 | $ | 0.07 | $ | 10,590 | 47,952 | $ | 0.23 | |||||||||||
Effect of the Notes | — | — | 344 | 986 | 677 | 2,182 | ||||||||||||||||||||
Diluted (loss) income from continuing operations | $ | -79,350 | 48,028 | $ | -1.65 | $ | 3,449 | 48,277 | $ | 0.07 | $ | 11,267 | 50,134 | $ | 0.23 | |||||||||||
Diluted (loss) income from discontinued operations | $ | -6,056 | 48,028 | $ | -0.13 | $ | -5,789 | 48,277 | $ | -0.12 | $ | 11,717 | 50,134 | $ | 0.23 | |||||||||||
Fair_Values_of_Assets_and_Liab1
Fair Values of Assets and Liabilities (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Fair Values of Assets and Liabilities | ||||||||||||||
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 | ||||||||||||||
As of December 31, 2014 | ||||||||||||||
Quoted Prices in | ||||||||||||||
Active Markets | Significant Other | Significant | ||||||||||||
for Identical | Observable | Unobservable | ||||||||||||
Assets | Inputs | Inputs | ||||||||||||
Description | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Cash equivalents(1) | $ | 4,632 | $ | 4,632 | $ | — | $ | — | ||||||
Available for sale securities:(2) | ||||||||||||||
Equity securities | ||||||||||||||
Financial services industry | 4,059 | 4,059 | — | — | ||||||||||
REIT industry | 330 | 330 | — | — | ||||||||||
Other | 3,841 | 3,841 | — | — | ||||||||||
Total equity securities | 8,230 | 8,230 | — | — | ||||||||||
Debt securities | ||||||||||||||
International bond fund(3) | 2,385 | — | 2,385 | — | ||||||||||
High yield fund(4) | 2,352 | — | 2,352 | — | ||||||||||
Industrial bonds | 6,577 | — | 6,577 | — | ||||||||||
Government bonds | 11,371 | 5,683 | 5,688 | — | ||||||||||
Financial bonds | 2,704 | — | 2,704 | — | ||||||||||
Other | 9,652 | — | 9,652 | — | ||||||||||
Total debt securities | 35,041 | 5,683 | 29,358 | — | ||||||||||
Total available for sale securities | 43,271 | 13,913 | 29,358 | — | ||||||||||
Total | $ | 47,903 | $ | 18,545 | $ | 29,358 | $ | — | ||||||
As of December 31, 2013 | ||||||||||||||
Quoted Prices in | ||||||||||||||
Active Markets | Significant Other | Significant | ||||||||||||
for Identical | Observable | Unobservable | ||||||||||||
Assets | Inputs | Inputs | ||||||||||||
Description | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Cash equivalents(1) | $ | 14,866 | $ | 14,866 | $ | — | $ | — | ||||||
Available for sale securities:(2) | ||||||||||||||
Equity securities | ||||||||||||||
Financial services industry | 3,668 | 3,668 | — | — | ||||||||||
REIT industry | 704 | 704 | — | — | ||||||||||
Other | 3,875 | 3,875 | — | — | ||||||||||
Total equity securities | 8,247 | 8,247 | — | — | ||||||||||
Debt securities | ||||||||||||||
International bond fund(3) | 2,329 | — | 2,329 | — | ||||||||||
High yield fund(4) | 2,309 | — | 2,309 | — | ||||||||||
Industrial bonds | 5,234 | — | 5,234 | — | ||||||||||
Government bonds | 7,075 | 4,558 | 2,517 | — | ||||||||||
Financial bonds | 1,154 | — | 1,154 | — | ||||||||||
Other | 4,706 | — | 4,706 | — | ||||||||||
Total debt securities | 22,807 | 4,558 | 18,249 | — | ||||||||||
Total available for sale securities | 31,054 | 12,805 | 18,249 | — | ||||||||||
Total | $ | 45,920 | $ | 27,671 | $ | 18,249 | $ | — | ||||||
-1 | Cash equivalents, consisting of short term, highly liquid investments and money market funds held principally for obligations arising from our self-insurance programs. Cash equivalents are reported on our balance sheet as cash and cash equivalents and current and long term restricted cash. Cash equivalents include $2,792 and $13,181 of balances that are restricted at December 31, 2014 and 2013, respectively. | |||||||||||||
-2 | Investments in available for sale securities are reported on our balance sheet as current and long term investments in available for sale securities and are reported at fair value of $23,436 and $19,835, respectively, at December 31, 2014 and $19,150 and $11,905, respectively, at December 31, 2013. Our investments in available for sale securities had amortized costs of $40,974 and $29,127 as of December 31, 2014 and 2013, respectively, had unrealized gains of $2,455 and $2,185 as of December 31, 2014 and 2013, respectively, and had unrealized losses of $157 and $257 as of December 31, 2014 and 2013, respectively. At December 31, 2014, 23 of the securities we hold, with a fair value of $7,761, have been in a loss position for less than 12 months and 10 of the securities we hold, with a fair value of $1,797, have been in a loss position for greater than 12 months. We do not believe these securities 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 securities remain strong with solid fundamentals, or we intend to hold these securities until recovery, and other factors that support our conclusion that the loss is temporary. During the years ended December 31, 2014, 2013 and 2012, we received gross proceeds of $10,876, $6,285 and $4,163, respectively, in connection with the sales of available for sale securities and recorded gross realized gains totaling $478, $329 and $63, respectively, and gross realized losses totaling $86, $334 and $82, respectively. We record gains and losses on the sales of our available for sale securities using the specific identification method. | |||||||||||||
-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 U.S. dollar investment grade fixed income securities. There are no unfunded commitments and the investment can be redeemed weekly. | |||||||||||||
-4 | 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. | |||||||||||||
Indebtedness_Tables
Indebtedness (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Indebtedness | ||||||||||||
Summary of mortgage notes | ||||||||||||
Balance as of | Contractual Stated | Effective | Monthly | |||||||||
December 31, 2014 | Interest Rate | Interest Rate | Maturity Date | Payment | ||||||||
$ | 15,048 | 6.47 | % | 3.45 | % | Jun-18 | 95 | |||||
18,563 | 6.64 | % | 5.86 | % | Jun-23 | $ | 123 | |||||
5,832 | 8.99 | % | 5.46 | % | Feb-25 | 63 | ||||||
2,699 | 6.36 | % | 6.70 | % | Sep-28 | 25 | ||||||
9,017 | 6.20 | % | 6.70 | % | Sep-32 | 72 | ||||||
$ | 51,159 | 6.77 | %(1) | 5.30 | %(1) | $ | 378 | |||||
-1 | Weighted average interest rate. | |||||||||||
Schedule of principal payments due under the terms of mortgages (including mortgages included in discontinued operations) | ||||||||||||
2015 | 1,786 | |||||||||||
2016 | 1,883 | |||||||||||
2017 | 1,986 | |||||||||||
2018 | 14,660 | |||||||||||
2019 | 1,530 | |||||||||||
Thereafter | 29,314 | |||||||||||
$ | 51,159 | |||||||||||
Leases_Tables
Leases (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Leases | |||||||||||||
Summary of real property leases (including with respect to 10 senior living communities which the entity has classified as discontinued operations) | |||||||||||||
Annual | |||||||||||||
Minimum Rent | |||||||||||||
as of | |||||||||||||
Number of | December 31, | Current | |||||||||||
Properties | 2014 | Expiration date | Remaining Renewal Options | ||||||||||
1. Lease No. 1 for SNFs and independent and assisted living communities(1) | 86 | $ | 58,475 | December 31, 2024 | Two 15-year renewal options. | ||||||||
2. Lease No. 2 for SNFs and independent and assisted living communities | 49 | 62,889 | June 30, 2026 | Two 10-year renewal options. | |||||||||
3. Lease No. 3 for independent and assisted living communities (2) | 17 | 34,388 | December 31, 2028 | Two 15-year renewal options. | |||||||||
4. Lease No. 4 for SNFs and independent and assisted living communities (3) | 29 | 34,911 | April 30, 2032 | Two 15-year renewal options. | |||||||||
5. One HCP lease | 4 | 2,550 | April 30, 2028 | One 10-year renewal option. | |||||||||
Totals | 185 | $ | 193,213 | ||||||||||
-1 | Lease No. 1 is comprised of two separate leases. One of these two leases exists to accommodate a mortgage financing in effect at the time SNH acquired the property; we have agreed with SNH to combine these two leases into one lease when this mortgage financing is paid in full. | ||||||||||||
-2 | Lease No. 3 exists to accommodate certain mortgage financing by SNH. | ||||||||||||
-3 | Lease No. 4 is comprised of two separate leases. One of these two leases exists to accommodate a mortgage financing in effect at the time SNH acquired the property; we have agreed with SNH to combine these two leases into one lease when the mortgage financing is paid in full. | ||||||||||||
Schedule of future minimum rents | |||||||||||||
2015 | 193,247 | ||||||||||||
2016 | 193,298 | ||||||||||||
2017 | 193,351 | ||||||||||||
2018 | 193,405 | ||||||||||||
2019 | 193,459 | ||||||||||||
Thereafter | 1,466,796 | ||||||||||||
$ | 2,433,556 | ||||||||||||
Acquisition_Tables
Acquisition (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Acquisition | ||||
Summary of allocation of purchase price to the estimated fair values | ||||
Land | $ | 1,208 | ||
Buildings and improvements | 17,946 | |||
Furniture, fixtures and equipment | 421 | |||
Total property, plant and equipment | 19,575 | |||
Intangible assets | 1,937 | |||
Premium on assumed mortgage debt | -1,598 | |||
$ | 19,914 | |||
Discontinued_Operations_Tables
Discontinued Operations (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Discontinued Operations | |||||||||||
Summary of the operating results of discontinued operations included in the financial statements | |||||||||||
2014 | 2013 | 2012 | |||||||||
Revenues | $ | 22,051 | $ | 151,600 | $ | 213,020 | |||||
Expenses | -28,028 | -154,578 | -218,565 | ||||||||
Impairment on discontinued assets | — | -4,153 | -644 | ||||||||
(Provision for) benefit from income taxes | -79 | 3,539 | -5,441 | ||||||||
(Loss) gain on sale | — | -2,197 | 23,347 | ||||||||
(Loss) income from discontinued operations | $ | -6,056 | $ | -5,789 | $ | 11,717 | |||||
Selected_Quarterly_Financial_D1
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Selected Quarterly Financial Data (Unaudited) | ||||||||||||||
Summary of unaudited quarterly results of operations | 2014 | |||||||||||||
First | Second | Third | Fourth | |||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||
Revenues | $ | 328,411 | $ | 332,799 | $ | 334,339 | $ | 332,526 | ||||||
Operating loss | -7,492 | -444 | -3,088 | -8,156 | ||||||||||
Net loss from continuing operations | -5,867 | -997 | -2,374 | -70,112 | ||||||||||
Net loss | -6,759 | -1,891 | -3,008 | -73,748 | ||||||||||
Net loss per common share—Basic | $ | -0.14 | $ | -0.04 | $ | -0.06 | $ | -1.53 | ||||||
Net loss per common share—Diluted | $ | -0.14 | $ | -0.04 | $ | -0.06 | $ | -1.53 | ||||||
2013 | ||||||||||||||
First | Second | Third | Fourth | |||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||
Revenues | $ | 323,852 | $ | 323,447 | $ | 324,263 | $ | 325,225 | ||||||
Operating income (loss) | 3,668 | 5,670 | 2,276 | -1,533 | ||||||||||
Net income (loss) from continuing operations | 3,193 | 2,955 | 625 | -3,324 | ||||||||||
Net income (loss) | 2,392 | 1,456 | -758 | -5,430 | ||||||||||
Net income (loss) per common share—Basic | $ | 0.05 | $ | 0.03 | $ | -0.02 | $ | -0.11 | ||||||
Net income (loss) per common share—Diluted | $ | 0.05 | $ | 0.03 | $ | -0.02 | $ | -0.11 | ||||||
Organization_and_Business_Deta
Organization and Business (Details) | Dec. 31, 2014 | 31-May-11 |
property | property | |
Real estate properties | ||
Number of properties leased and operated | 185 | |
Senior living communities | ||
Real estate properties | ||
Number of properties operated | 258 | |
Number of states in which real estate properties are located | 31 | |
Number of living units in properties operated | 30,379 | |
Number of properties owned and operated | 31 | |
Number of living units in properties owned and operated | 3,061 | |
Number of properties leased and operated | 181 | |
Number of units in properties leased and operated | 20,040 | |
Number of properties managed | 46 | |
Number of units in properties managed | 7,278 | |
Independent and assisted living communities | ||
Real estate properties | ||
Number of properties operated | 227 | |
Number of living units in properties operated | 27,557 | |
SNF | ||
Real estate properties | ||
Number of properties operated | 31 | |
Number of living units in properties operated | 2,822 | |
Number of real estate properties classified as discontinued operations | 3 | |
Independent living apartment | ||
Real estate properties | ||
Number of living units in properties operated | 10,585 | |
Assisted living suites | ||
Real estate properties | ||
Number of living units in properties operated | 14,584 | |
Skilled nursing units | ||
Real estate properties | ||
Number of living units in properties operated | 5,210 | |
Assisted living communities | ||
Real estate properties | ||
Number of real estate properties classified as discontinued operations | 1 | |
Number of units in real estate property classified as discontinued operations | 32 | |
SNF And Assisted Living Communities Member | ||
Real estate properties | ||
Number of units in real estate property classified as discontinued operations | 265 | |
SNH | ||
Real estate properties | ||
Number of real estate properties classified as discontinued operations | 4 | |
SNH | Senior living communities | ||
Real estate properties | ||
Number of properties operated | 6 | |
Number of properties leased and operated | 181 | |
Number of properties managed | 46 | |
Number of units in properties managed | 2 | |
Number of real estate properties classified as discontinued operations | 4 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Equity Method Investments | ||
Equity investment in an investee | $6,827 | $5,913 |
AIC | ||
Equity Method Investments | ||
Number of other current shareholders of the related party | 6 | |
Ownership percentage | 14.30% | |
Equity investment in an investee | $6,034 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Restricted cash | |||
Current | $2,945 | $9,003 | |
Long term | 2,170 | 9,795 | |
Investment Securities | |||
Available for sale securities, fair value | 43,271 | 31,055 | |
Unrealized holding gain | 2,298 | 1,928 | |
Available for sale securities, interest and dividend income | 788 | 693 | 799 |
Available for sale securities | |||
Available for sale securities, Fair Value, Less than 12 months | 7,761 | 7,392 | |
Available for sale securities, Unrealized Loss , Less than 12 months | 97 | 257 | |
Available for sale securities, Fair Value, Greater than 12 months | 1,797 | ||
Available for sale securities, Unrealized Loss, Greater than 12 months | 60 | ||
Available for sale securities, Fair Value, Total | 9,558 | 7,392 | |
Available for sale securities, Unrealized Loss, Total | 157 | 257 | |
Insurance reserves | |||
Restricted cash | |||
Current | 913 | 3,859 | |
Long term | 2,170 | 9,795 | |
Real estate taxes and capital expenditures as required by the entity's mortgages | |||
Restricted cash | |||
Current | 1,376 | 1,182 | |
Indemnification obligations associated with the sale of the entity's pharmacy business | |||
Restricted cash | |||
Current | 3,248 | ||
Resident security deposits | |||
Restricted cash | |||
Current | $656 | $714 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 3) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Deferred Finance Costs | |||
Unamortized gross balance of deferred financing costs | $373 | $2,077 | |
Accumulated amortization related to deferred financing costs | 3,414 | 2,263 | |
Weighted average amortization period of deferred financing costs | 1 year | ||
Amortization of deferred financing fees | |||
2015 | 348 | ||
2016 | 15 | ||
2017 | 2 | ||
2018 | 2 | ||
2019 | 2 | ||
Amounts due from the Medicare program | 12,409 | 11,173 | |
Amounts due from various state Medicaid programs | 11,384 | 10,234 | |
Allowance for doubtful accounts | |||
Balance at the beginning of the period | 4,281 | 2,792 | 3,160 |
Provision for doubtful accounts | 4,777 | 6,412 | 4,446 |
Write-offs | -5,642 | -4,923 | -4,814 |
Balance at the end of the period | 3,416 | 4,281 | 2,792 |
SNF | |||
Allowance for doubtful accounts | |||
Provision for doubtful accounts | $1,321 | $2,005 | $1,346 |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Details 4) (Maximum) | 12 Months Ended |
Dec. 31, 2014 | |
Buildings | |
Property and Equipment | |
Estimated useful lives | 40 years |
Building improvements | |
Property and Equipment | |
Estimated useful lives | 15 years |
Personal property | |
Property and Equipment | |
Estimated useful lives | 7 years |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies (Details 5) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
item | ||
Continuing care contracts | ||
Estimated minimum loss amount | $0 | |
Revenue reserve for payment of historical Medicare obligations | 4,300,000 | |
Accrued costs and penalties expected to incur related to the compliance assessment | 2,200,000 | |
Investigation costs incurred related to the compliance assessment | 1,400,000 | |
Self insurance reserve | 59,333,000 | 59,707,000 |
Number of forms of contracts offered to new residents | 2 | |
Number of forms of contracts offered to existing residents | 3 | |
Refundable admission fees | $3,425,000 | $3,863,000 |
One form | ||
Continuing care contracts | ||
Percentage of resident admission fee that becomes non-refundable | 10.00% | |
Remaining percentage of resident admission fee that becomes non-refundable | 90.00% | |
Monthly reduction in refundable fee, as a percentage of original admission fee | 1.50% | |
Period during which admission fee becomes non-refundable | 60 months | |
Second form | ||
Continuing care contracts | ||
Percentage of resident admission fee that becomes non-refundable | 30.00% | |
Percentage of admission fee that become refundable | 70.00% | |
Historical form | ||
Continuing care contracts | ||
Percentage of resident admission fee that becomes non-refundable | 10.00% | |
Percentage of admission fee that become refundable | 90.00% | |
Second historical form | ||
Continuing care contracts | ||
Percentage of admission fee that become refundable | 100.00% | |
Third historical form | ||
Continuing care contracts | ||
Percentage of resident admission fee that becomes non-refundable | 99.00% | |
Percentage of admission fee that become refundable | 1.00% |
Summary_of_Significant_Account8
Summary of Significant Accounting Policies (Details 6) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Segment Information | |||
Number of operating segments | 2 | ||
Number of reportable segments | 1 | ||
Senior living communities | |||
Revenue recognition | |||
Percentage of revenues derived from payments under the Medicare and Medicaid programs | 23.00% | 23.00% | 24.00% |
Medicare revenues | $129,212 | $132,751 | $134,254 |
Medicaid revenues | $118,536 | $116,220 | $118,505 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Property and Equipment | |||
Property and equipment, gross | $469,790 | $423,446 | |
Accumulated depreciation | -112,604 | -83,170 | |
Property and equipment, net | 357,186 | 340,276 | |
Depreciation expense | 29,434 | 25,871 | 22,882 |
Impairment of long-lived assets | 589 | 186 | |
Level 3 | |||
Property and Equipment | |||
Fair values of the impaired assets | 478 | 137 | |
SNH | |||
Property and Equipment | |||
Assets held for sale for increased rent pursuant to the terms of leases with SNH | 7,799 | 9,342 | |
Land | |||
Property and Equipment | |||
Property and equipment, gross | 24,172 | 22,214 | |
Building and Improvements | |||
Property and Equipment | |||
Property and equipment, gross | 308,779 | 286,467 | |
Furniture, fixtures and equipment | |||
Property and Equipment | |||
Property and equipment, gross | $136,839 | $114,765 |
Goodwill_and_Other_Intangible_2
Goodwill and Other Intangible Assets (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Goodwill and Other Intangible Assets | |||
Amortization of intangibles | $2,440 | $1,172 | $1,626 |
Weighted average amortization period | 2 years | ||
Estimated amortization expense | |||
2015 | 306 | ||
2016 | 91 | ||
2017 | 84 | ||
2018 | 80 | ||
Changes in the carrying amount of goodwill and other intangible assets | |||
Goodwill | 25,344 | 25,344 | |
Other intangible assets, net of accumulated amortization of $5,441 and $3,001 respectively | 560 | 1,063 | |
Total | 25,904 | 26,407 | |
Accumulated amortization of other intangible assets | $5,441 | $3,001 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Current deferred tax assets: | |||
Continuing care contracts | $124 | $134 | |
Allowance for doubtful accounts | 1,467 | 2,376 | |
Deferred gains on sale lease back transactions | 1,525 | 1,383 | |
Insurance reserves | 1,226 | 1,188 | |
Tax credits | 30 | 352 | |
Tax loss carry forwards | 610 | 6,679 | |
Assessment period to identify significant losses occured | 2 years | ||
Valuation allowance period increase (decrease) | 73,318 | ||
Other | 2,794 | 1,746 | |
Total current deferred tax assets before valuation allowance | 7,776 | 13,858 | |
Valuation allowance: | -6,528 | -454 | |
Total current deferred tax assets | 1,248 | 13,404 | |
Non-current deferred tax assets: | |||
Continuing care contracts | 565 | 592 | |
Deferred gains on sale lease back transactions | 579 | 735 | |
Insurance reserves | 2,773 | 2,880 | |
Tax credits | 17,160 | 14,883 | |
Tax loss carry forwards | 56,479 | 32,139 | |
Impairment of securities | 377 | 470 | |
Depreciable assets | 3,954 | 5,990 | |
Other | 800 | 1,054 | |
Total non-current deferred tax assets before valuation allowance | 82,687 | 58,743 | |
Valuation allowance: | -70,392 | -3,149 | |
Total non-current deferred tax assets | 12,295 | 55,594 | |
Current deferred tax liabilities: | |||
Employee stock grants | -75 | -115 | |
Non-current deferred tax liabilities: | |||
Lease expense | -11,414 | -11,401 | |
Goodwill | -977 | -1,173 | |
Identifiable intangibles/other liabilities | -1,292 | -1,190 | |
Total non-current deferred tax liabilities | -13,683 | -13,764 | |
Net deferred tax asset | -215 | 55,119 | |
Movement in valuation allowance for deferred tax assets | |||
Balance at Beginning of Period | 3,603 | 2,188 | 3,363 |
Amounts Charged/ (Credited) To Expense | 73,470 | 1,415 | -1,175 |
Amounts Charged to Equity | -152 | ||
Balance at End of Period | $76,921 | $3,603 | $2,188 |
Forecast | |||
Current deferred tax assets: | |||
Period expected to be in cumulative loss position | 3 years |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Taxes | |||
Tax credit carry forward, which begins to expire in 2022 if unused | $17,191 | ||
Tax benefit recognized from discontinued operations | 79 | -3,539 | 5,441 |
Income tax expense from continuing operations | 56,385 | ||
Total tax provision (benefit) | 56,385 | 1,916 | 7,098 |
State | 848 | 1,141 | 1,183 |
Federal | |||
Income Taxes | |||
Net operating loss carry forward, which begins to expire in 2026 if unused | 112,182 | ||
Net operating losses attributable to stock option exercises | $333 |
Income_Taxes_Details_3
Income Taxes (Details 3) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Current tax provision: | |||
State | $848 | $1,141 | $1,183 |
Total current tax provision | 848 | 1,141 | 1,183 |
Deferred tax (benefit) provision: | |||
Federal | 43,040 | -1,042 | 4,775 |
State | 12,497 | 1,817 | 1,140 |
Total deferred tax provision (benefit) | 55,537 | 775 | 5,915 |
Total tax provision (benefit) | 56,385 | 1,916 | 7,098 |
Difference between the entity's effective tax (benefit) rate on continuing operations and the U.S. Federal statutory income tax (benefit) rate | |||
Taxes at statutory U.S. federal income tax rate (as a percent) | -35.00% | 35.00% | 35.00% |
State and local income taxes, net of federal tax benefit (as a percent) | -6.50% | 35.90% | 8.70% |
Tax credits (as a percent) | -5.40% | -42.10% | -4.20% |
Change in valuation allowance (as a percent) | 287.50% | 2.60% | 0.10% |
Nondeductible meals and entertainment | 0.50% | 1.70% | 0.50% |
Nondeductible penalties | 4.00% | 1.70% | 0.70% |
Dividend received deduction | -0.30% | -1.10% | -0.80% |
Executive compensation | 0.30% | 1.60% | 0.30% |
Stock-based compensation | 0.20% | 0.60% | 0.10% |
Other differences, net (as a percent) | 0.30% | -0.20% | -0.30% |
Effective tax rate (as a percent) | 245.60% | 35.70% | 40.10% |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | |||
Unrecognized tax benefits at beginning of the year | 1,245 | 1,086 | 893 |
Additions for tax positions of current year | 134 | 159 | 193 |
Unrecognized tax benefits at end of the year | $1,379 | $1,245 | $1,086 |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Shares | |||||||||||
(Loss) income from continuing operations (in shares) | 48,028 | 48,277 | 47,952 | ||||||||
Effect of the Notes (in shares) | 986 | 2,182 | |||||||||
Diluted (loss) income from continuing operations (in shares) | 48,028 | 48,277 | 50,134 | ||||||||
Diluted loss from discontinued operations (in shares) | 48,028 | 48,277 | 50,134 | ||||||||
(Loss) income from continuing operations | ($70,112) | ($2,374) | ($997) | ($5,867) | ($3,324) | $625 | $2,955 | $3,193 | ($79,350) | $3,449 | $10,590 |
Effect of the Notes | 344 | 677 | |||||||||
Diluted (loss) income from continuing operations | -79,350 | 3,449 | 11,267 | ||||||||
Diluted income (loss) from discontinued operations | ($6,056) | ($5,789) | $11,717 | ||||||||
Per Share | |||||||||||
(Loss) income from continuing operations (in dollars per share) | ($1.65) | $0.07 | $0.23 | ||||||||
Diluted (loss) income from continuing operations (in dollars per share) | ($1.65) | $0.07 | $0.23 | ||||||||
Diluted loss from discontinued operations (in dollars per share) | ($0.13) | ($0.12) | $0.23 |
Fair_Values_of_Assets_and_Liab2
Fair Values of Assets and Liabilities (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
item | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | $43,271 | $31,055 | |
Restricted cash equivalents | 2,792 | 13,181 | |
Available for sale securities, current | 23,436 | 19,150 | |
Long term investments in available for sale securities | 19,835 | 11,905 | |
Amortized cost of available for sale securities | 40,974 | 29,127 | |
Unrealized gains on available for sale securities | 2,455 | 2,185 | |
Unrealized losses on available for sale securities | 157 | 257 | |
Number of available for sale securities in a loss position less than 12 months | 23 | ||
Fair value of securities which are in loss position for less than 12 months | 7,761 | ||
Number of available for sale securities in a loss position 12 months or longer | 10 | ||
Fair value of securities which are in loss position for greater than 12 months | 1,797 | ||
Gross proceeds from sale of available for sale securities | 10,876 | 6,285 | 4,163 |
Gross realized gains recorded on sale of available for sale securities | 478 | 329 | 63 |
Gross realized losses recorded on sale of available for sale securities | 86 | 334 | 82 |
International bond fund | |||
Fair Values of Assets and Liabilities | |||
Unfunded commitment | 0 | ||
High yield fund | |||
Fair Values of Assets and Liabilities | |||
Unfunded commitment | 0 | ||
Total | |||
Fair Values of Assets and Liabilities | |||
Cash equivalents | 4,632 | 14,866 | |
Available for sale securities | 43,271 | 31,054 | |
Total | 47,903 | 45,920 | |
Total | Equity securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 8,230 | 8,247 | |
Total | Financial services industry | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 4,059 | 3,668 | |
Total | REIT industry | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 330 | 704 | |
Total | Other | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 3,841 | 3,875 | |
Total | Debt securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 35,041 | 22,807 | |
Total | International bond fund | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,385 | 2,329 | |
Total | High yield fund | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,352 | 2,309 | |
Total | Industrial bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 6,577 | 5,234 | |
Total | Government bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 11,371 | 7,075 | |
Total | Financial bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,704 | 1,154 | |
Total | Other | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 9,652 | 4,706 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair Values of Assets and Liabilities | |||
Cash equivalents | 4,632 | 14,866 | |
Available for sale securities | 13,913 | 12,805 | |
Total | 18,545 | 27,671 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 8,230 | 8,247 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Financial services industry | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 4,059 | 3,668 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | REIT industry | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 330 | 704 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 3,841 | 3,875 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Debt securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 5,683 | 4,558 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Government bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 5,683 | 4,558 | |
Significant Other Observable Inputs (Level 2) | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 29,358 | 18,249 | |
Total | 29,358 | 18,249 | |
Significant Other Observable Inputs (Level 2) | Debt securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 29,358 | 18,249 | |
Significant Other Observable Inputs (Level 2) | International bond fund | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,385 | 2,329 | |
Significant Other Observable Inputs (Level 2) | High yield fund | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,352 | 2,309 | |
Significant Other Observable Inputs (Level 2) | Industrial bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 6,577 | 5,234 | |
Significant Other Observable Inputs (Level 2) | Government bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 5,688 | 2,517 | |
Significant Other Observable Inputs (Level 2) | Financial bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,704 | 1,154 | |
Significant Other Observable Inputs (Level 2) | Other | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | $9,652 | $4,706 |
Fair_Values_of_Assets_and_Liab3
Fair Values of Assets and Liabilities (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Carrying value and fair value | ||
Transfers of assets between Level 1 to Level 2 | $0 | |
Transfers of liabilities between Level 1 to Level 2 | 0 | |
Mortgage notes payable | 49,373 | 36,461 |
Carrying value | Level 3 | ||
Carrying value and fair value | ||
Mortgage notes payable | 51,159 | 37,620 |
Total | Level 3 | ||
Carrying value and fair value | ||
Mortgage notes payable | $56,099 | $41,113 |
Indebtedness_Details
Indebtedness (Details) (USD $) | 12 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Apr. 30, 2013 | Jun. 30, 2014 | Aug. 31, 2013 | Jul. 08, 2013 | Oct. 31, 2006 | Sep. 30, 2013 | Dec. 31, 2011 | 31-May-11 | Sep. 08, 2014 |
property | property | property | property | |||||||||
Indebtedness | ||||||||||||
Amount borrowed during the period | $20,000 | $85,000 | $62,500 | |||||||||
Gain, net of related unamortized costs, on early extinguishment of debt | -599 | 45 | ||||||||||
Repayments of borrowing | 38,000 | |||||||||||
Standby letters of credit | ||||||||||||
Indebtedness | ||||||||||||
Maximum borrowing capacity | 963 | |||||||||||
Standby letters of credit | HCP | ||||||||||||
Indebtedness | ||||||||||||
Number of irrevocable standby letters of credit | 6 | |||||||||||
SNF | ||||||||||||
Indebtedness | ||||||||||||
Number of real estate properties sold | 2 | |||||||||||
Senior living communities | ||||||||||||
Indebtedness | ||||||||||||
Number of properties operated | 258 | |||||||||||
SNH | SNF | ||||||||||||
Indebtedness | ||||||||||||
Number of real estate properties sold | 2 | 1 | ||||||||||
SNH | Senior living communities | ||||||||||||
Indebtedness | ||||||||||||
Number of properties operated | 6 | |||||||||||
Credit Agreement | ||||||||||||
Indebtedness | ||||||||||||
Maximum borrowing capacity | 25,000 | |||||||||||
Interest rate at period end (as a percent) | 2.66% | |||||||||||
Quarterly commitment fee on the unused part of borrowing availability (as a percent) | 0.35% | |||||||||||
Principal repayment | 0 | |||||||||||
Amount borrowed during the period | 0 | |||||||||||
Amount outstanding under credit facility | 0 | 0 | ||||||||||
Interest expense and other associated costs incurred | 192 | 386 | 676 | |||||||||
Credit Agreement | LIBOR | ||||||||||||
Indebtedness | ||||||||||||
Basis spread (as a percent) | 2.50% | |||||||||||
Credit Facility | ||||||||||||
Indebtedness | ||||||||||||
Maximum borrowing capacity | 150,000 | |||||||||||
Interest rate at period end (as a percent) | 2.66% | |||||||||||
Quarterly commitment fee on the unused part of borrowing availability (as a percent) | 0.35% | |||||||||||
Principal repayment | 0 | |||||||||||
Amount outstanding under credit facility | 35,000 | |||||||||||
Number of extensions to maturity date | 2 | |||||||||||
Extension period available | 1 year | |||||||||||
Weighted average interest rate (as a percent) | 2.76% | 3.05% | ||||||||||
Interest expense and other associated costs incurred | 2,272 | 1,985 | 1,746 | |||||||||
Credit Facility | Senior living communities | ||||||||||||
Indebtedness | ||||||||||||
Number of real estate properties securing borrowings on the new credit facility | 15 | |||||||||||
Number of units in real estate properties securing borrowings on the new credit facility | 1,549 | |||||||||||
Credit Facility | LIBOR | ||||||||||||
Indebtedness | ||||||||||||
Basis spread (as a percent) | 2.50% | |||||||||||
Notes | ||||||||||||
Indebtedness | ||||||||||||
Loan amount | 126,500 | |||||||||||
Proceeds from issue of notes | 122,600 | |||||||||||
Interest rate (as a percent) | 3.75% | |||||||||||
Conversion ratio, number of common shares per $1,000 principal amount | 76.9231 | |||||||||||
Initial conversion price of shares (in dollars per share) | $13 | |||||||||||
Percentage of principal amount at which notes may be required to be repurchased in event of fundamental change | 100.00% | |||||||||||
Amount of notes outstanding redeemed | 24,872 | |||||||||||
Outstanding notes purchased and retired | 12,410 | |||||||||||
Gain, net of related unamortized costs, on early extinguishment of debt | 45 | 599 | ||||||||||
Interest expense and other associated costs incurred | 511 | 1,124 | ||||||||||
Mortgage notes | ||||||||||||
Indebtedness | ||||||||||||
Interest expense and other associated costs incurred | 2,665 | 3,010 | 2,843 | |||||||||
Mortgage notes | FNMA | ||||||||||||
Indebtedness | ||||||||||||
Number of real estate properties mortgaged | 2 | |||||||||||
Mortgage notes | FMCC | ||||||||||||
Indebtedness | ||||||||||||
Number of real estate properties mortgaged | 3 | |||||||||||
Mortgage notes | Senior living communities | ||||||||||||
Indebtedness | ||||||||||||
Number of real estate properties mortgaged | 5 | |||||||||||
Mortgage notes, total | 51,159 | |||||||||||
Bridge Loan | SNH | ||||||||||||
Indebtedness | ||||||||||||
Loan amount | 80,000 | 80,000 | ||||||||||
Repayments of borrowing | 42,000 | |||||||||||
Interest expense and other associated costs incurred | $314 |
Indebtedness_Details_2
Indebtedness (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Indebtedness | |||
Mortgage Notes | $51,159 | ||
Principal payments due under terms of mortgages | |||
2015 | 1,786 | ||
2016 | 1,883 | ||
2017 | 1,986 | ||
2018 | 14,660 | ||
2019 | 1,530 | ||
Thereafter | 29,314 | ||
Mortgage Notes | 51,159 | ||
Mortgage notes | |||
Indebtedness | |||
Mortgage Notes | 51,159 | ||
Effective Interest Rate (as a percent) | 6.77% | ||
Cash Interest Rate (as a percent) | 5.30% | ||
Monthly Payment | 378 | ||
Interest expense and other associated costs incurred | 2,665 | 3,010 | 2,843 |
Principal payments due under terms of mortgages | |||
Mortgage Notes | 51,159 | ||
Jun-18 | |||
Indebtedness | |||
Mortgage Notes | 15,048 | ||
Effective Interest Rate (as a percent) | 6.47% | ||
Cash Interest Rate (as a percent) | 3.45% | ||
Monthly Payment | 95 | ||
Principal payments due under terms of mortgages | |||
Mortgage Notes | 15,048 | ||
Jun-23 | |||
Indebtedness | |||
Mortgage Notes | 18,563 | ||
Effective Interest Rate (as a percent) | 6.64% | ||
Cash Interest Rate (as a percent) | 5.86% | ||
Monthly Payment | 123 | ||
Principal payments due under terms of mortgages | |||
Mortgage Notes | 18,563 | ||
Feb-25 | |||
Indebtedness | |||
Mortgage Notes | 5,832 | ||
Effective Interest Rate (as a percent) | 8.99% | ||
Cash Interest Rate (as a percent) | 5.46% | ||
Monthly Payment | 63 | ||
Principal payments due under terms of mortgages | |||
Mortgage Notes | 5,832 | ||
Sep-28 | |||
Indebtedness | |||
Mortgage Notes | 2,699 | ||
Effective Interest Rate (as a percent) | 6.36% | ||
Cash Interest Rate (as a percent) | 6.70% | ||
Monthly Payment | 25 | ||
Principal payments due under terms of mortgages | |||
Mortgage Notes | 2,699 | ||
Sep-32 | |||
Indebtedness | |||
Mortgage Notes | 9,017 | ||
Effective Interest Rate (as a percent) | 6.20% | ||
Cash Interest Rate (as a percent) | 6.70% | ||
Monthly Payment | 72 | ||
Principal payments due under terms of mortgages | |||
Mortgage Notes | $9,017 |
Leases_Details
Leases (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
property | |||
Leases | |||
Number of properties leased and operated | 185 | ||
Annual minimum rent | $193,213 | ||
Lease No. 1 | Two 15-year renewal options | |||
Leases | |||
Number of properties leased and operated | 86 | ||
Annual minimum rent | 58,475 | ||
Number of renewal options | 2 | ||
Renewal term | 15 years | ||
Lease No. 2 | Two 10-year renewal options | |||
Leases | |||
Number of properties leased and operated | 49 | ||
Annual minimum rent | 62,889 | ||
Number of renewal options | 2 | ||
Renewal term | 10 years | ||
Lease No. 3 | Two 15-year renewal options | |||
Leases | |||
Number of properties leased and operated | 17 | ||
Annual minimum rent | 34,388 | ||
Number of renewal options | 2 | ||
Renewal term | 15 years | ||
Lease No. 4 | Two 15-year renewal options | |||
Leases | |||
Number of properties leased and operated | 29 | ||
Annual minimum rent | 34,911 | ||
Number of renewal options | 2 | ||
Renewal term | 15 years | ||
One HCP lease | One 10-year renewal options | |||
Leases | |||
Number of properties leased and operated | 4 | ||
Annual minimum rent | 2,550 | ||
Number of renewal options | 1 | ||
Renewal term | 10 years | ||
SNH | |||
Leases | |||
Amount funded for leasehold improvements | 25,804 | 27,208 | 30,520 |
Increase (decrease) in annual lease rent payable | 2,066 | 2,177 | 2,456 |
Number of real estate properties classified as discontinued operations | 4 | ||
SNH | Lease No. 4 | |||
Leases | |||
Number of leases | 2 | ||
Number of property leases, which exist to accommodate mortgage financing | 1 | ||
Number of leases combined into as and when mortgage financings are paid | 1 | ||
Senior living communities | |||
Leases | |||
Number of properties leased and operated | 181 | ||
Senior living communities | Lease No. 1 | |||
Leases | |||
Number of leases | 2 | ||
Number of property leases, which exist to accommodate mortgage financing | 1 | ||
Number of leases combined into as and when mortgage financings are paid | 1 | ||
Senior living communities | HCP | |||
Leases | |||
Number of properties leased and operated | 4 | ||
Senior living communities | SNH | |||
Leases | |||
Number of properties under percentage rent | 174 | ||
Percentage of gross revenue | 4.00% | ||
Percentage rent | $5,775 | $5,149 | $4,888 |
Number of properties leased and operated | 181 | ||
Number of real estate properties classified as discontinued operations | 4 | ||
Number of leases | 4 | ||
Minimum | Senior living communities | HCP | |||
Leases | |||
Minimum annual escalator percentage rent | 2.00% | ||
Maximum | Senior living communities | HCP | |||
Leases | |||
Minimum annual escalator percentage rent | 4.00% |
Leases_Details_2
Leases (Details 2) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Future minimum rents | |
2015 | $193,247 |
2016 | 193,298 |
2017 | 193,351 |
2018 | 193,405 |
2019 | 193,459 |
Thereafter | 1,466,796 |
Total | $2,433,556 |
Shareholders_Equity_Details
Shareholders' Equity (Details) (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Shareholders' Equity | |||
Weighted average amortization period stock based compensation | 2 years 1 month 6 days | ||
Directors, officers and others | |||
Shareholders' Equity | |||
Common shares issued (in shares) | 403,050 | 385,400 | 347,050 |
Aggregate market value of shares issued | $1,742 | $1,758 | $1,638 |
Weighted average share price (in dollars per share) | $4.32 | $4.56 | $4.72 |
Officers and others | |||
Shareholders' Equity | |||
Portion of awards that vest on the date of grant | one fifth | ||
Vesting period | 4 years | ||
Share Award Plans | |||
Shareholders' Equity | |||
Weighted average share price (in dollars per share) | $4.15 | ||
unvested common shares | 647,330 | 611,220 | 546,920 |
Share based compensation | 1,485 | 1,410 | 1,445 |
Estimated future stock based compensation expense | 2,789 | ||
Remaining common shares available for issuance | 4,518,940 | ||
Share Award Plans | Officers and others | |||
Shareholders' Equity | |||
Shares acquired | 11,377 | ||
Aggregare acquired price | $47 |
Acquisition_Details
Acquisition (Details) (Alabama senior living community, USD $) | 1 Months Ended | 3 Months Ended |
In Thousands, unless otherwise specified | 31-May-14 | Jun. 30, 2014 |
item | ||
Alabama senior living community | ||
Acquisitions | ||
Number of units in properties managed | 116 | |
Gross amount paid on acquisition | $19,914 | |
Mortgage debt assumed | 13,920 | |
Net working capital liabilities assumed | 68 | |
Percentage amount of living services paid by residents | 100.00% | |
Acquisition related expenses | 81 | |
Allocation of purchase price to the estimated fair values | ||
Land | 1,208 | |
Building and improvements | 17,946 | |
Furniture, fixtures and equipment | 421 | |
Total property, plant and equipment | 19,575 | |
Intangible assets | 1,937 | |
Premium on assumed mortgage debt | -1,598 | |
Total assets acquired and liabilities assumed | $19,914 |
Discontinued_Operations_Detail
Discontinued Operations (Details) (USD $) | 12 Months Ended | 1 Months Ended | 3 Months Ended | 0 Months Ended | 1 Months Ended | |||||||||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Feb. 28, 2015 | Oct. 31, 2014 | Jan. 31, 2014 | Sep. 30, 2012 | Jul. 31, 2014 | Dec. 31, 2013 | Apr. 30, 2013 | Jun. 30, 2014 | Aug. 31, 2013 | Jun. 30, 2013 | Aug. 31, 2012 | Dec. 31, 2011 |
item | item | property | property | property | property | property | property | item | property | item | ||||||
item | item | item | item | property | ||||||||||||
Discontinued Operations | ||||||||||||||||
Gains (losses) on sale | ($2,197) | $23,347 | ||||||||||||||
Impairment on discontinued assets | 4,153 | 644 | ||||||||||||||
Summary of the operating results of discontinued operations | ||||||||||||||||
Revenues | 22,051 | 151,600 | 213,020 | |||||||||||||
Expenses | -28,028 | -154,578 | -218,565 | |||||||||||||
Impairment on discontinued assets | -4,153 | -644 | ||||||||||||||
(Provision for) benefit from income taxes | -79 | 3,539 | -5,441 | |||||||||||||
(Loss) gain on sale | -2,197 | 23,347 | ||||||||||||||
(Loss) income from discontinued operations | -6,056 | -5,789 | 11,717 | |||||||||||||
SNH | ||||||||||||||||
Discontinued Operations | ||||||||||||||||
Number of properties offered for sale | 4 | 4 | ||||||||||||||
SNH and others | ||||||||||||||||
Discontinued Operations | ||||||||||||||||
Number of real estate properties sold | 7 | |||||||||||||||
SNH and others | Subsequent event | ||||||||||||||||
Discontinued Operations | ||||||||||||||||
Number of real estate properties sold | 1 | |||||||||||||||
Assisted living communities | Alabama | ||||||||||||||||
Discontinued Operations | ||||||||||||||||
Number of properties offered for sale | 32 | |||||||||||||||
Assisted living communities | SNH | ||||||||||||||||
Discontinued Operations | ||||||||||||||||
Number of real estate properties offered for sale classified as discontinued operations | 55 | 48 | ||||||||||||||
Number of real estate properties sold | 1 | 1 | ||||||||||||||
Sale consideration | 2,850 | 2,400 | ||||||||||||||
Assisted living communities | SNH | Subsequent event | ||||||||||||||||
Discontinued Operations | ||||||||||||||||
Number of real estate properties offered for sale classified as discontinued operations | 103 | |||||||||||||||
Sale consideration | 250 | |||||||||||||||
Senior living communities | SNH | ||||||||||||||||
Discontinued Operations | ||||||||||||||||
Number of properties offered for sale | 3 | 3 | ||||||||||||||
Number of real estate properties offered for sale classified as discontinued operations | 11 | |||||||||||||||
Number of properties in process of being offered for sale by the related party | 11 | 11 | ||||||||||||||
Pharmacy business | ||||||||||||||||
Discontinued Operations | ||||||||||||||||
Proceeds from sale of real estate | 34,298 | |||||||||||||||
Working capital included in proceeds from sale of business | 3,789 | |||||||||||||||
Gains (losses) on sale | 23,347 | |||||||||||||||
Summary of the operating results of discontinued operations | ||||||||||||||||
(Loss) gain on sale | 23,347 | |||||||||||||||
Pharmacy business | South Carolina | ||||||||||||||||
Discontinued Operations | ||||||||||||||||
Number of real estate properties sold | 1 | |||||||||||||||
Sale consideration | 205 | |||||||||||||||
Impairment on discontinued assets | 57 | |||||||||||||||
Summary of the operating results of discontinued operations | ||||||||||||||||
Impairment on discontinued assets | -57 | |||||||||||||||
Rehabilitation hospitals | SNH | ||||||||||||||||
Discontinued Operations | ||||||||||||||||
Number of properties in process of being offered for sale by the related party | 2 | 2 | ||||||||||||||
SNF | ||||||||||||||||
Discontinued Operations | ||||||||||||||||
Number of real estate properties sold | 2 | |||||||||||||||
Sale consideration | 8,000 | |||||||||||||||
HUD mortgage debt to be prepaid by the buyer | 7,510 | |||||||||||||||
SNF | Michigan | ||||||||||||||||
Discontinued Operations | ||||||||||||||||
Number of properties offered for sale | 2 | |||||||||||||||
Number of units in real estate property offered for sale | 271 | |||||||||||||||
SNF | SNH | ||||||||||||||||
Discontinued Operations | ||||||||||||||||
Number of real estate properties offered for sale classified as discontinued operations | 139 | 112 | ||||||||||||||
Number of real estate properties sold | 2 | 1 | ||||||||||||||
Sale consideration | $4,500 | $2,550 |
Off_Balance_Sheet_Arrangement_
Off Balance Sheet Arrangement (Details) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2014 |
property | |
Off Balance Sheet Arrangement | |
Carrying value of accounts receivable and other assets pledged | $13,744 |
Number of properties leased from SNH on which pledge arises | 26 |
Off balance sheet arrangements, asset | 0 |
Off balance sheet arrangements, liability | $0 |
Litigation_Settlement_Details
Litigation Settlement (Details) (USD $) | 12 Months Ended | 0 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2012 | 29-May-12 |
Litigation Settlement | ||
Gain on settlement, net of legal fees | $3,365 | |
Settlement Agreement with Sunrise for certain insurance programs | ||
Litigation Settlement | ||
Cash received pursuant to the Settlement Agreement | 4,000 | |
Gain on settlement, net of legal fees | $3,365 |
Related_Person_Transactions_De
Related Person Transactions (Details) (USD $) | 12 Months Ended | 0 Months Ended | 1 Months Ended | ||||||||||||||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Apr. 30, 2013 | Jun. 30, 2014 | Aug. 31, 2013 | Oct. 31, 2014 | Jan. 31, 2014 | Apr. 30, 2012 | Feb. 28, 2015 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Jul. 10, 2014 | Aug. 31, 2012 | Dec. 31, 2011 | 31-May-11 |
property | property | property | property | property | property | item | property | item | community | item | |||||||
item | item | item | item | property | |||||||||||||
Related person transactions | |||||||||||||||||
Number of real estate properties leased | 185 | ||||||||||||||||
Total minimum annual rent payable | $2,433,556 | ||||||||||||||||
Management fee revenue | 9,765 | 9,234 | 5,817 | ||||||||||||||
SNF | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of real estate properties sold | 2 | ||||||||||||||||
Sales price | 8,000 | ||||||||||||||||
Alabama | Assisted living communities | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of real estate properties classified as discontinued operations | 32 | ||||||||||||||||
First AL Pooling Agreements | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of properties managed | 20 | ||||||||||||||||
Second AL Pooling Agreements | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of properties managed | 19 | ||||||||||||||||
Third AL Pooling Agreement [Member] | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of communities | 3 | ||||||||||||||||
IL Pooling Agreement | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of communities | 2 | ||||||||||||||||
Senior living communities | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of real estate properties leased | 181 | ||||||||||||||||
Number of properties managed | 46 | ||||||||||||||||
Number of units in properties managed | 7,278 | ||||||||||||||||
SNH | |||||||||||||||||
Related person transactions | |||||||||||||||||
Ownership percentage by former parent | 100.00% | ||||||||||||||||
Number of shares owned | 4,235,000 | ||||||||||||||||
Percentage of outstanding common shares owned | 8.60% | ||||||||||||||||
Minimum percentage of ownership interest beyond which consent of related party required | 9.80% | ||||||||||||||||
Minimum percentage of ownership interest of voting stock above which the option to cancel all the lease rights exist | 9.80% | ||||||||||||||||
Number of real estate properties classified as discontinued operations | 4 | ||||||||||||||||
Total minimum annual rent payable | 190,663 | ||||||||||||||||
Rent expense under leases, net of lease inducement amortization | 195,538 | 202,868 | 200,036 | ||||||||||||||
Outstanding rent due and payable | 17,310 | 17,960 | 17,960 | ||||||||||||||
Real estate improvements sold | 25,804 | 27,208 | 30,520 | ||||||||||||||
Increase (decrease) in annual lease rent payable | 2,066 | 2,177 | 2,456 | ||||||||||||||
Assets held for sale for increased rent pursuant to the terms of leases with SNH | 7,799 | 9,342 | 9,342 | ||||||||||||||
Incentive fee as a percentage of the annual net operating income after the entity realizes an annual return equal to 8% of invested capital | 35.00% | ||||||||||||||||
Annual return as a percentage of invested surplus specified as a base for determining incentive fee | 8.00% | ||||||||||||||||
Number of consecutive renewal terms of agreement | 2 | ||||||||||||||||
Renewal term of the property management agreement | 15 years | ||||||||||||||||
Minimum percentage of ownership interest of lessee's voting stock above which the entity has the option to cancel all its rights | 9.80% | ||||||||||||||||
Number of combination agreements | 4 | ||||||||||||||||
Management fee revenue | 9,765 | 9,229 | 5,582 | ||||||||||||||
Number of independent living communities for which agreement is entered for extension of term | 2 | ||||||||||||||||
Management fees receivable under property management agreement as a percentage of gross revenues | 3.00% | ||||||||||||||||
Number of properties securing a debt released as a result of repayment of related debt | 11 | ||||||||||||||||
Number of properties securing a debt | 28 | ||||||||||||||||
SNH | Senior living communities | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of real estate properties classified as discontinued operations | 3 | ||||||||||||||||
Number of real estate properties offered for sale classified as discontinued operations | 11 | ||||||||||||||||
SNH | SNF | |||||||||||||||||
Related person transactions | |||||||||||||||||
Decrease in annual lease rent payable | 450 | 255 | |||||||||||||||
Number of real estate properties offered for sale classified as discontinued operations | 139 | 112 | |||||||||||||||
Number of real estate properties sold | 2 | 1 | |||||||||||||||
Sales price | 4,500 | 2,550 | |||||||||||||||
SNH | Assisted living communities | |||||||||||||||||
Related person transactions | |||||||||||||||||
Decrease in annual lease rent payable | 285 | 210 | |||||||||||||||
Number of real estate properties offered for sale classified as discontinued operations | 55 | 48 | |||||||||||||||
Number of real estate properties sold | 1 | 1 | |||||||||||||||
Sales price | 2,850 | 2,400 | |||||||||||||||
SNH | SNF and assisted living communities | |||||||||||||||||
Related person transactions | |||||||||||||||||
Decrease in annual lease rent payable | 590 | ||||||||||||||||
Number of real estate properties offered for sale classified as discontinued operations | 160 | ||||||||||||||||
Sales price | 5,900 | ||||||||||||||||
SNH | Forecast | Senior living communities | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of real estate properties offered for sale classified as discontinued operations | 3 | ||||||||||||||||
SNH | AL Pooling Agreements | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of consecutive periods during which the entity must not receive the minimum return for the property management agreement to be subject to the pooling agreement | 3 years | ||||||||||||||||
SNH | IL Pooling Agreement | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of pooling agreements for communities that include assisted living units | 3 | ||||||||||||||||
SNH | Bridge Loan | |||||||||||||||||
Related person transactions | |||||||||||||||||
Loan amount | 80,000 | 80,000 | |||||||||||||||
Interest expense | 314 | ||||||||||||||||
SNH | Bridge Loan | Annual rates of interest applicable to borrowings under revolving credit facility | |||||||||||||||||
Related person transactions | |||||||||||||||||
Interest rate margin over base rate | 1.00% | ||||||||||||||||
SNH | Subsequent event | Assisted living communities | |||||||||||||||||
Related person transactions | |||||||||||||||||
Decrease in annual lease rent payable | 23 | ||||||||||||||||
Number of real estate properties offered for sale classified as discontinued operations | 103 | ||||||||||||||||
Sales price | 250 | ||||||||||||||||
SNH | Senior living communities | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of real estate properties leased | 181 | ||||||||||||||||
Number of real estate properties classified as discontinued operations | 4 | ||||||||||||||||
Number of properties managed | 46 | ||||||||||||||||
Number of units in properties managed | 2 | ||||||||||||||||
SNH | Senior living communities | Forecast | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of communities | 38 | ||||||||||||||||
SNH | Senior living communities | New York | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of units in properties managed | 199 | ||||||||||||||||
Management fees receivable under property management agreement as a percentage of gross revenues | 5.00% | ||||||||||||||||
Incentive fee payable under the management agreement | 0 | ||||||||||||||||
SNH | Senior living communities | D&R Yonkers LLC | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of consecutive renewal terms of agreement | 9 | ||||||||||||||||
Renewal term of the property management agreement | 5 years | ||||||||||||||||
Management fees receivable under property management agreement as a percentage of gross revenues | 3.00% | ||||||||||||||||
SNH | Senior living communities | D&R Yonkers LLC | New York | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of units in properties managed | 111 | ||||||||||||||||
SNH | Rehabilitation hospitals | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of real estate properties sold | 2 | ||||||||||||||||
Proceeds from sale of real estate | 90,000 | ||||||||||||||||
Net assets retained | 9,591 | 9,591 | |||||||||||||||
SNH | Rehabilitation hospitals | Lease No. 2 | |||||||||||||||||
Related person transactions | |||||||||||||||||
Increase (decrease) in annual lease rent payable | ($9,500) | ||||||||||||||||
SNH | Outpatient clinics | |||||||||||||||||
Related person transactions | |||||||||||||||||
Number of real estate properties sold | 13 |
Related_Person_Transactions_De1
Related Person Transactions (Details 2) (USD $) | 12 Months Ended | 1 Months Ended | 24 Months Ended | 0 Months Ended | ||||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Jul. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | 9-May-14 |
item | item | |||||||
Related person transactions | ||||||||
Renewal period | 1 year | |||||||
Period before which notice is required for termination of business management agreement | 120 days | |||||||
Period before which notice is required for termination of business management agreement with Independent Director approval | 60 days | |||||||
Termination fee factor | 2.875 | |||||||
Number consecutive months for average fees and expenses | 24 months | |||||||
Period of transition services provided by related party after termination of agreement | 120 days | |||||||
Utilities and real estate taxes | $197,359 | $193,820 | $190,184 | |||||
Equity investment in an investee | 6,827 | 5,913 | 5,913 | |||||
Income (loss) arising from investment | 87 | 334 | 316 | |||||
RMR | ||||||||
Related person transactions | ||||||||
Number of Managing Directors also serving as Chairman, majority owner and an employee | 1 | |||||||
Percentage of total cash compensation paid | 80.00% | |||||||
Management fees receivable under property management agreement as a percentage of gross revenues | 0.60% | |||||||
Business management fees | 12,485 | 13,965 | 13,226 | |||||
Share in cost of providing internal audit function | 286 | 203 | 209 | |||||
Annual rent expense under leases | 882 | |||||||
Utilities and real estate taxes | 1,402 | 1,386 | 1,426 | |||||
Annual premiums | 15 | |||||||
Number of entities to whom RMR provides management services | 3 | |||||||
Aggregate coverage of combined directors' and officers' liability insurance policy purchased by the related party | 10,000 | 10,000 | ||||||
Aggregate excess layer coverage of combined directors' and officers' liability insurance policy purchased by the related party | 20,000 | 5,000 | ||||||
Period for which directors' and officers' insurance coverage | 2 years | |||||||
Number of entities to whom RMR manages | 4 | 4 | ||||||
Period for which additional directors' and officers' insurance coverage | 1 year | |||||||
Aggregate excess non-indemnifiable coverage of combined directors' and officers' liability insurance policy purchased by the related party | 5,000 | |||||||
Premium paid for combined directors' and officers' liability insurance policy | 357 | 133 | ||||||
RMR | Share Award Plans | Restricted shares | ||||||||
Related person transactions | ||||||||
Awards granted (in shares) | 81,150,000 | 82,300,000 | 81,050,000 | |||||
Aggregate value of awards granted during the period | 357 | 373 | 399 | |||||
Portion of the awards granted that vested on the grant date (as a percent) | 20.00% | |||||||
Portion of the awards granted, which will vest on each of the next four anniversaries of the grant date (as percent) | 20.00% | |||||||
Number of anniversaries of the grant date over which the awards vest | 4 years | |||||||
AIC | ||||||||
Related person transactions | ||||||||
Number of other current shareholders of the related party | 4 | |||||||
Ownership percentage | 14.30% | |||||||
Amount invested in equity investee | 6,034 | |||||||
Equity investment in an investee | 6,827 | 5,913 | 5,913 | |||||
Income (loss) arising from investment | 87 | 334 | 316 | |||||
Period for which property insurance coverage | 1 year | |||||||
Coverage of property insurance | 500,000 | |||||||
Annual premiums | 5,428 | 6,264 | 3,901 | |||||
Remaining share holders holds the percentage | 6 | |||||||
AIC | CWH | ||||||||
Related person transactions | ||||||||
Shares issued by related party | 2,857 | |||||||
Value of shares issued by related party | $825 | |||||||
AIC | Maximum | ||||||||
Related person transactions | ||||||||
Ownership percentage | 20.00% | |||||||
Messrs. Mackey, Hoagland and Larkin | ||||||||
Related person transactions | ||||||||
Minimum percentage of business time devoted for services | 80.00% |
Employee_Benefit_Plans_Details
Employee Benefit Plans (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Employee Benefit Plans | |||
Expenses for plans including contributions | $1,635 | $1,617 | $1,565 |
Minimum | |||
Employee Benefit Plans | |||
Number of plans in which employees may participate | 1 |
Selected_Quarterly_Financial_D2
Selected Quarterly Financial Data (Unaudited) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Selected Quarterly Financial Data (Unaudited) | |||||||||||
Revenues | $332,526 | $334,339 | $332,799 | $328,411 | $325,225 | $324,263 | $323,447 | $323,852 | $1,328,075 | $1,296,787 | $1,207,806 |
Operating income (loss) | -8,156 | -3,088 | -444 | -7,492 | -1,533 | 2,276 | 5,670 | 3,668 | -19,180 | 10,081 | 22,733 |
Net income (loss) from continuing operations | -70,112 | -2,374 | -997 | -5,867 | -3,324 | 625 | 2,955 | 3,193 | -79,350 | 3,449 | 10,590 |
Net income (loss) | ($73,748) | ($3,008) | ($1,891) | ($6,759) | ($5,430) | ($758) | $1,456 | $2,392 | ($85,406) | ($2,340) | $22,307 |
Net income (loss) per share - basic (in dollars per share) | ($1.53) | ($0.06) | ($0.04) | ($0.14) | ($0.11) | ($0.02) | $0.03 | $0.05 | ($1.78) | ($0.05) | $0.47 |
Net income (loss) per share - diluted (in dollars per share) | ($1.53) | ($0.06) | ($0.04) | ($0.14) | ($0.11) | ($0.02) | $0.03 | $0.05 | ($1.78) | ($0.05) | $0.46 |
Subsequent_Event_Details
Subsequent Event (Details) (USD $) | 12 Months Ended | 1 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Mar. 31, 2015 |
community | ||
Subsequent Event | ||
Assumption of mortgage debt | $15,518 | |
Subsequent event | Tennessee | ||
Subsequent Event | ||
Number of living units in properties acquired | 2 | |
Aggregate purchase price of properties acquired, excluding closing costs | 26,000 | |
Assumption of mortgage debt | $17,000 | |
Independent living community one | Subsequent event | Tennessee | ||
Subsequent Event | ||
Number of living units in properties acquired | 68 | |
Independent living community two | Subsequent event | Tennessee | ||
Subsequent Event | ||
Number of living units in properties acquired | 84 |