Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 7-May-15 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | FIVE STAR QUALITY CARE INC | |
Entity Central Index Key | 1159281 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 48,996,115 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $26,670,000 | $20,988,000 |
Accounts receivable, net of allowance of $4,371 and $3,416 at March 31, 2015 and December 31, 2014, respectively | 39,258,000 | 38,814,000 |
Due from related persons | 7,945,000 | 12,641,000 |
Investments in available for sale securities, of which $9,506 and $8,352 are restricted as of March 31, 2015 and December 31, 2014, respectively | 24,797,000 | 23,436,000 |
Restricted cash | 3,130,000 | 2,945,000 |
Prepaid and other current assets | 17,913,000 | 21,494,000 |
Assets of discontinued operations | 2,451,000 | 1,463,000 |
Total current assets | 122,164,000 | 121,781,000 |
Property and equipment, net | 354,880,000 | 357,186,000 |
Equity investment of an investee | 6,945,000 | 6,827,000 |
Restricted cash | 1,811,000 | 2,170,000 |
Restricted investments in available for sale securities | 16,396,000 | 19,835,000 |
Goodwill and other intangible assets | 25,713,000 | 25,904,000 |
Other long term assets | 2,653,000 | 1,270,000 |
Total assets | 530,562,000 | 534,973,000 |
Current liabilities: | ||
Revolving credit facilities | 30,000,000 | 35,000,000 |
Accounts payable and accrued expenses | 86,830,000 | 85,606,000 |
Accrued compensation and benefits | 40,223,000 | 34,171,000 |
Due to related persons | 19,056,000 | 20,338,000 |
Mortgage notes payable | 1,810,000 | 1,786,000 |
Accrued real estate taxes | 9,279,000 | 11,282,000 |
Security deposits and current portion of continuing care contracts | 7,315,000 | 7,235,000 |
Other current liabilities | 23,097,000 | 19,470,000 |
Liabilities of discontinued operations | 1,907,000 | 504,000 |
Total current liabilities | 219,517,000 | 215,392,000 |
Accrued expenses | 2,300,000 | 3,600,000 |
Long term liabilities: | ||
Mortgage notes payable | 48,911,000 | 49,373,000 |
Continuing care contracts | 1,443,000 | 1,370,000 |
Accrued self-insurance obligations | 33,842,000 | 37,268,000 |
Other long term liabilities | 4,594,000 | 4,788,000 |
Total long term liabilities | 88,790,000 | 92,799,000 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common stock, par value $.01: 75,000,000 shares authorized, 48,996,115 and 48,997,315 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively | 490,000 | 490,000 |
Additional paid in capital | 357,351,000 | 357,051,000 |
Accumulated deficit | -139,751,000 | -134,449,000 |
Accumulated other comprehensive income | 4,165,000 | 3,690,000 |
Total shareholders' equity | 222,255,000 | 226,782,000 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $530,562,000 | $534,973,000 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||||
CONSOLIDATED BALANCE SHEETS | ||||
Accounts receivable, allowance (in dollars) | $4,371 | $3,416 | ||
Investments in available for sale securities, restricted (in dollars) | $9,506 | $8,352 | ||
Common stock, par value (in dollars per share) | $0.01 | $0.01 | $0.01 | $0.01 |
Common stock, shares authorized | 75,000,000 | 75,000,000 | ||
Common stock, shares issued | 48,996,115 | 48,997,315 | ||
Common stock, shares outstanding | 48,996,115 | 48,997,315 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Revenues: | ||
Senior living revenue | $275,173 | $271,781 |
Management fee revenue | 2,523 | 2,425 |
Reimbursed costs incurred on behalf of managed communities | 56,277 | 54,205 |
Total revenues | 333,973 | 328,411 |
Operating expenses: | ||
Senior living wages and benefits | 133,253 | 132,783 |
Other senior living operating expenses | 72,225 | 72,817 |
Costs incurred on behalf of managed communities | 56,277 | 54,205 |
Rent expense | 49,628 | 49,074 |
General and administrative | 17,982 | 19,748 |
Depreciation and amortization | 8,095 | 7,276 |
Total operating expenses | 337,460 | 335,903 |
Operating loss | -3,487 | -7,492 |
Interest, dividend and other income | 220 | 196 |
Interest and other expense | -1,354 | -1,218 |
Gain on sale of available for sale securities reclassified from other comprehensive income | 20 | 313 |
Loss from continuing operations before income taxes and equity in earnings (loss) of an investee | -4,601 | -8,201 |
(Provision for) benefit from income taxes | -304 | 2,431 |
Equity in earnings (loss) of an investee | 72 | -97 |
Loss from continuing operations | -4,833 | -5,867 |
Loss from discontinued operations | -469 | -892 |
Net loss | ($5,302) | ($6,759) |
Weighted average shares outstanding- basic and diluted | 48,364 | 48,002 |
Basic and diluted loss per share from: | ||
Continuing operations | ($0.10) | ($0.12) |
Discontinued operations | ($0.01) | ($0.02) |
Net loss per share - basic and diluted | ($0.11) | ($0.14) |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net loss | ($5,302) | ($6,759) |
Other comprehensive income (loss): | ||
Unrealized gain on investments in available for sale securities, net of tax of $0 and $155, respectively | 450 | 253 |
Equity in unrealized gain of an investee, net of tax | 45 | 19 |
Realized gain on investments in available for sale securities reclassified and included in net loss, net of tax of $0 and $119, respectively | -20 | -194 |
Other comprehensive income | 475 | 78 |
Comprehensive loss | ($4,827) | ($6,681) |
CONSOLIDATED_STATEMENTS_OF_COM1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Unrealized gain on investments in available for sale securities tax | $0 | $155 |
Realized gain in investments in available for sale securities reclassified and included in net loss, tax provision (benefit) | $0 | $119 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash flows from operating activities: | ||
Net loss | ($5,302) | ($6,759) |
Adjustments to reconcile net loss to cash provided by operating activities: | ||
Depreciation and amortization | 8,501 | 7,548 |
Loss from discontinued operations before income tax | 469 | 1,365 |
Gain on sale of available for sale securities | -20 | -313 |
Loss on disposal of property and equipment | 7 | |
Equity in (earnings) loss of an investee | -72 | 97 |
Stock-based compensation | 300 | 256 |
Deferred income taxes | -3,763 | |
Provision for losses on receivables | 1,696 | 1,234 |
Changes in assets and liabilities: | ||
Accounts receivable | -2,140 | -1,860 |
Prepaid expenses and other assets | 1,853 | -2,218 |
Accounts payable and accrued expenses | 2,385 | 4,796 |
Accrued compensation and benefits | 6,052 | 6,386 |
Due to related persons, net | 4,175 | 3,885 |
Other current and long term liabilities | -1,916 | -1,672 |
Cash provided by operating activities | 15,988 | 8,982 |
Cash flows from investing activities: | ||
Deposits into restricted cash and investment accounts, net | 174 | 11,303 |
Acquisition of property and equipment | -11,550 | -13,058 |
Purchase of available for sale securities | -234 | -9,512 |
Proceeds from sale of property and equipment to Senior Housing Properties Trust | 4,060 | 8,614 |
Proceeds from sale of available for sale securities | 2,736 | 4,336 |
Cash (used in) provided by investing activities | -4,814 | 1,683 |
Cash flows from financing activities: | ||
Repayments of borrowings on credit facilities | -5,000 | -20,000 |
Repayments of mortgage notes payable | -438 | -283 |
Cash used in financing activities | -5,438 | -20,283 |
Cash flows from discontinued operations: | ||
Net cash (used in) provided by operating activities | -42 | 7,275 |
Net cash used in investing activities | -12 | |
Net cash flows (used in) provided by discontinued operations | -54 | 7,275 |
Change in cash and cash equivalents | 5,682 | -2,343 |
Cash and cash equivalents at beginning of period | 20,988 | 23,628 |
Cash and cash equivalents at end of period | 26,670 | 21,285 |
Supplemental cash flow information: | ||
Cash paid for interest | 969 | 821 |
Cash paid (refunded) for income taxes, net | $182 | ($21) |
Basis_of_Presentation_and_Orga
Basis of Presentation and Organization | 3 Months Ended |
Mar. 31, 2015 | |
Basis of Presentation and Organization | |
Basis of Presentation and Organization | Note 1. Basis of Presentation and Organization |
General | |
The accompanying condensed consolidated financial statements of Five Star Quality Care, Inc. and its subsidiaries, or we, us or our, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2014, or our Annual Report. In the opinion of our management, all adjustments, which include only normal recurring adjustments, considered necessary for a fair presentation have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. | |
We operate senior living communities, including independent living communities, assisted living communities and skilled nursing facilities, or SNFs. As of March 31, 2015, we operated 258 senior living communities located in 31 states with 30,389 living units, including 227 primarily independent and assisted living communities with 27,582 living units and 31 SNFs with 2,807 living units. As of March 31, 2015, we owned and operated 31 communities (3,064 living units), we leased and operated 181 communities (20,035 living units) and we managed 46 communities (7,290 living units). Our 258 senior living communities, as of March 31, 2015, included 10,586 independent living apartments, 14,619 assisted living suites and 5,184 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 with a total of 167 living units that we lease from Senior Housing Properties Trust or its subsidiaries, or SNH, that are being offered for sale and are classified as discontinued operations. | |
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 Financial Accounting Standards Board, or FASB, Accounting Standards Codification TM, or 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 Cayman Islands organized captive insurance company subsidiary, which participates in our workers’ compensation, professional liability and automobile insurance programs. | |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2015 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 2. Recent Accounting Pronouncements |
In April 2015, the FASB issued Accounting Standards Update 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. This update is effective for interim and annual reporting periods beginning after December 15, 2015 and requires retrospective application. The implementation of this update is not expected to cause any material changes to our consolidated financial statements. | |
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 evaluating the impact the adoption of this ASU will have on our consolidated financial statements. In April 2015, the FASB voted to propose a deferral of the effective date of this ASU by one year, but to permit entities to adopt one year earlier if they choose to do so. We are monitoring the outcome of this proposal. | |
Property_and_Equipment
Property and Equipment | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Property and Equipment | ||||||||
Property and Equipment | Note 3. Property and Equipment | |||||||
Property and equipment consists of the following: | ||||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
Land | $ | 24,172 | $ | 24,172 | ||||
Buildings and improvements | 308,079 | 308,779 | ||||||
Furniture, fixtures and equipment | 143,093 | 136,839 | ||||||
Property and equipment, at cost | 475,344 | 469,790 | ||||||
Accumulated depreciation | -120,464 | -112,604 | ||||||
Property and equipment, net | $ | 354,880 | $ | 357,186 | ||||
For the three months ended March 31, 2015 and 2014, we recorded depreciation expense of $7,867 and $6,993 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. We determine estimated fair value based on input from market participants, our experience selling similar assets, market conditions and internally developed cash flow models that our assets or asset groups are expected to generate. We did not record impairment charges to any of our long-lived assets in continuing operations for the three months ended March 31, 2015 or 2014. | ||||||||
As of March 31, 2015, we had $5,828 of assets included in our property and equipment that we 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. | ||||||||
See Note 13 for information regarding two senior living communities we agreed to acquire in March 2015. | ||||||||
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Accumulated Other Comprehensive Income | ||||||||||
Accumulated Other Comprehensive Income | Note 4. Accumulated Other Comprehensive Income | |||||||||
The following table details the changes in accumulated other comprehensive income, net of tax, for the three months ended March 31, 2015: | ||||||||||
Equity Investment of an Investee | Investments in Available for Sale Securities | Accumulated Other Comprehensive Income | ||||||||
Balance at January 1, 2015 | $ | 50 | $ | 3,640 | $ | 3,690 | ||||
Unrealized gain on investments, net of tax | — | 450 | 450 | |||||||
Equity in unrealized gain of an investee | 45 | — | 45 | |||||||
Reclassification adjustment: | ||||||||||
Realized gain on investments, net of tax | — | -20 | -20 | |||||||
Balance at March 31, 2015 | $ | 95 | $ | 4,070 | 4,165 | |||||
Accumulated other comprehensive income represents the unrealized appreciation of our investments, net of tax, and our share of other comprehensive income of Affiliates Insurance Company, or AIC. | ||||||||||
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Income Taxes | |
Income Taxes | Note 5. Income Taxes |
For the three months ended March 31, 2015, we recognized tax expense from continuing operations of $304. 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 included in the $112,182, that are attributable to unvested stock grants which will be recorded as an increase to additional paid in capital after they are realized in accordance with FASB ASC Topic 718. Our net operating loss carry forwards and tax credit carry forwards are subject to possible audits and adjustments by the Internal Revenue Service. | |
During the year ended December 31, 2014, we determined it was more likely than not that our net deferred tax assets would not be realized and concluded that a full valuation allowance is required. In the future, if we believe that we will more likely than not realize the benefit of these deferred tax assets, we will adjust our valuation allowance and recognize an income tax benefit, which may affect our results of operations. | |
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | |||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Earnings Per Share | Note 6. Earnings Per Share | |||||||||||||||||
We computed basic earnings per common share, or EPS, for the three months ended March 31, 2015 and 2014 using the weighted average number of shares of our common stock, $.01 par value per share, or our common 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 plans 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 following table provides a reconciliation of loss from continuing operations and loss from discontinued operations and the number of common shares used in the computations of diluted EPS: | ||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||
2015 | 2014 | |||||||||||||||||
Income | Per | Income | Per | |||||||||||||||
(loss) | Shares | Share | (loss) | Shares | Share | |||||||||||||
Loss from continuing operations | $ | -4,833 | 48,364 | $ | -0.1 | $ | -5,867 | 48,002 | $ | -0.12 | ||||||||
Dilutive effect of unvested restricted shares | — | — | — | — | ||||||||||||||
Diluted loss from continuing operations | $ | -4,833 | 48,364 | $ | -0.1 | $ | -5,867 | 48,002 | $ | -0.12 | ||||||||
Diluted loss from discontinued operations | $ | -469 | 48,364 | $ | -0.01 | $ | -892 | 48,002 | $ | -0.02 | ||||||||
Fair_Values_of_Assets_and_Liab
Fair Values of Assets and Liabilities | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Fair Values of Assets and Liabilities | |||||||||||||
Fair Values of Assets and Liabilities | Note 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 tables below present the assets measured at fair value at March 31, 2015 and December 31, 2014 categorized by the level of inputs used in the valuation of each asset. | |||||||||||||
As of March 31, 2015 | |||||||||||||
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) | $ | 4,524 | $ | 4,524 | $ | — | $ | — | |||||
Available for sale securities:(2) | |||||||||||||
Equity securities | |||||||||||||
Financial services industry | 4,131 | 4,131 | — | — | |||||||||
REIT industry | 346 | 346 | — | — | |||||||||
Other | 3,866 | 3,866 | — | — | |||||||||
Total equity securities | 8,343 | 8,343 | — | — | |||||||||
Debt securities | |||||||||||||
International bond fund(3) | 2,409 | — | 2,409 | — | |||||||||
High yield fund(4) | 2,399 | — | 2,399 | — | |||||||||
Industrial bonds | 6,113 | — | 6,113 | — | |||||||||
Government bonds | 9,911 | 4,936 | 4,975 | — | |||||||||
Financial bonds | 2,732 | — | 2,732 | — | |||||||||
Other | 9,286 | — | 9,286 | — | |||||||||
Total debt securities | 32,850 | 4,936 | 27,914 | — | |||||||||
Total available for sale securities | 41,193 | 13,279 | 27,914 | — | |||||||||
Total | $ | 45,717 | $ | 17,803 | $ | 27,914 | $ | — | |||||
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 | $ | — | |||||
-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 $2,627 and $2,792 of balances that are restricted at March 31, 2015 and December 31, 2014, 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 $24,797 and $16,396, respectively, at March 31, 2015, and $23,436 and $19,835, respectively, at December 31, 2014. Our investments in available for sale securities had amortized costs of $38,466 and $40,974 as of March 31, 2015 and December 31, 2014, respectively, had unrealized gains of $2,884 and $2,455 as of March 31, 2015 and December 31, 2014, respectively, and had unrealized losses of $157 as of March 31, 2015 and December 31, 2014. At March 31, 2015, 14 of the securities we hold, with a fair value of $3,014, have been in a loss position for less than 12 months and eight of the securities we hold, with a fair value of $1,445, 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 three months ended March 31, 2015 and 2014, we received gross proceeds of $2,736 and $4,336, respectively, in connection with the sales of available for sale securities and recorded gross realized gains totaling $20 and $324, respectively, and gross realized losses totaling $0 and $11, 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 three months ended March 31, 2015, 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 three months ended March 31, 2015. | |||||||||||||
The carrying values of accounts receivable and accounts payable approximate fair value as of March 31, 2015 and December 31, 2014. The carrying value and fair value of our mortgage notes payable were $50,721 and $56,088, respectively, as of March 31, 2015 and $51,159 and $56,099, respectively, as of December 31, 2014, 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 a discussion of fair value measurements related to impairments of our long-lived assets. | |||||||||||||
We evaluate the recoverability of goodwill assets in the fourth quarter of each fiscal year, or more frequently if events or changes in circumstances indicate that goodwill or other intangible assets may be impaired. 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 of March 31, 2015, no events or changes in circumstances had occurred since October 1, 2014, that would trigger the need for an additional impairment review. | |||||||||||||
Goodwill was valued primarily using discounted cash flow models that incorporate assumptions for each reporting unit’s short and long term revenue growth rates, operating margins, and discount rates, which represent our best estimates of current and forecasted market conditions, current cost structure, and the implied rate of return that management believes a market participant would require for an investment in a company having similar risks and business characteristics to the reporting unit being assessed. | |||||||||||||
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. | |||||||||||||
Indebtedness
Indebtedness | 3 Months Ended |
Mar. 31, 2015 | |
Indebtedness | |
Indebtedness | Note 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 2.68% as of March 31, 2015. 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 either of the three months ended March 31, 2015 and 2014 and, as of March 31, 2015, we had no amounts outstanding under our Credit Agreement. We incurred interest expense and other associated costs related to our Credit Agreement of $48 for each of the three months ended March 31, 2015 and 2014. | |
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, including 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 April 2015, we exercised our first one-year option and extended the maturity date of our Credit Facility to April 13, 2016, for which we paid a fee of $300. Borrowings under our Credit Facility typically bear interest at LIBOR plus a premium of 250 basis points, or 2.68% as of March 31, 2015. We are also required to pay a quarterly commitment fee of 0.35% per annum on the unused part of our borrowing availability under our 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 2.74% and 2.83% for the three months ended March 31, 2015 and 2014, respectively. As of March 31, 2015, we had $30,000 outstanding under our Credit Facility. We incurred interest expense and other associated costs related to our Credit Facility of $609 and $593 for the three months ended March 31, 2015 and 2014, 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, including 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 from events which may cause our default. | |
At March 31, 2015, five of our senior living communities were encumbered by mortgage notes with an aggregate outstanding principal balance of $50,721: (1) two of our communities were encumbered by Federal National Mortgage Association, or 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 standard mortgage covenants, respectively. 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 weighted average interest rate on these five notes was 6.76% as of March 31, 2015. Payments of principal and interest are due monthly under these mortgage notes until maturities at varying dates ranging from June 2018 to September 2032. We incurred mortgage interest expense, including premium amortization, of $697 and $577 for the three months ended March 31, 2015 and 2014, respectively. Our mortgages require monthly payments into escrows for taxes, insurance and property replacement funds; withdrawals from these escrows require applicable FNMA and FMCC approvals. As of March 31, 2015, we believe we were in compliance with all applicable covenants under these mortgages. | |
See Note 13 for information regarding mortgage debt we expect to assume in connection with our pending acquisition of two senior living communities. | |
Off_Balance_Sheet_Arrangements
Off Balance Sheet Arrangements | 3 Months Ended |
Mar. 31, 2015 | |
Off Balance Sheet Arrangements | |
Off Balance Sheet Arrangements | Note 9. Off Balance Sheet Arrangements |
We have pledged our accounts receivable and certain other assets, with a carrying value, as of March 31, 2015, of $13,603, 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 March 31, 2015, 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. | |
Related_Person_Transactions
Related Person Transactions | 3 Months Ended |
Mar. 31, 2015 | |
Related Person Transactions | |
Related Person Transactions | Note 10. Related Person Transactions |
We have relationships and historical and continuing transactions with SNH and RMR and others affiliated with RMR, including other companies to which RMR provides management services and which have directors, trustees and officers who are also directors or officers of us or RMR. For further information about these and other such relationships and certain other related person transactions, please refer to our Annual Report. | |
SNH: As of March 31, 2015, we leased 180 senior living communities from SNH. Our total minimum annual rent payable to SNH as of March 31, 2015 and 2014 was $191,007 and $190,614, respectively, excluding percentage rent. Our total rent expense under our leases with SNH, net of lease inducement amortization, was $48,941 and $48,758 for the three months ended March 31, 2015 and 2014, respectively. As of March 31, 2015 and December 31, 2014, we had outstanding rent due and payable to SNH of $17,324 and $17,310, respectively. During the three months ended March 31, 2015 and 2014, pursuant to the terms of our leases with SNH, we sold $4,060 and $8,614, respectively, of improvements made to properties leased from SNH, and, as a result, our annual rent payable to SNH increased by approximately $328 and $689, respectively. As of March 31, 2015, our property and equipment included $5,828 for similar improvements we have made to properties we lease from SNH that we typically 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. | |
In February 2015, SNH acquired a land parcel adjacent to a senior living community we lease from SNH for $490. This property was added to the lease for that senior living community and our annual rent payable to SNH increased by $39 as a result. | |
In February 2015, we and SNH sold a vacant assisted living community located in Pennsylvania for $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. | |
As of March 31, 2015, we managed 46 senior living communities for SNH. Pursuant to these management agreements with SNH, we earned management fees of $2,523 and $2,425 for the three months ended March 31, 2015 and 2014, respectively. | |
In April 2015, SNH agreed to acquire a senior living community with 40 private pay independent living units located in Cumming, GA. We expect to enter into a management agreement with SNH to manage this community. This community is adjacent to another community that we manage for SNH. This acquisition is subject to various conditions. Accordingly, we can provide no assurance that SNH will purchase this property, that the acquisition and related expected management arrangement will not be delayed or that the terms will not change. | |
In May 2015, we began managing 14 senior living communities that SNH acquired at that time. | |
Pursuant to our management agreement with D&R Yonkers LLC, we earned management fees of $54 and $59 for the three months ended March 31, 2015 and 2014, respectively. SNH’s executive officers are the principals of D&R Yonkers LLC, which was established in order to accommodate certain state licensing requirements. | |
RMR: Pursuant to our business management agreement with RMR, we recognized business management fees of $2,127 and $2,006, and administrative and information system service fees of $0 and $1,519, for the three months ended March 31, 2015 and 2014, respectively. These amounts are included in general and administrative expenses in our condensed consolidated statements of operations. Our rent expense for our headquarters that we lease from an affiliate of RMR was $411 and $355 for the three months ended March 31, 2015 and 2014, respectively. | |
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. | |
AIC: As of March 31, 2015, our investment in AIC had a carrying value of $6,945. We recognized income (loss) of $72 and $(97) related to our investment in AIC for the three months ended March 31, 2015 and 2014, respectively. | |
Discontinued_Operations
Discontinued Operations | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Discontinued Operations | ||||||||
Discontinued Operations | Note 11. Discontinued Operations | |||||||
In June 2013, we decided to offer for sale one assisted living community we own with 32 living units. We are in the process of offering this community for sale. As of March 31, 2015, we have three senior living communities that we lease from SNH which are being offered for sale and are included in discontinued operations. 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 condensed consolidated balance sheets and condensed consolidated statements of operations for all periods presented to show the financial position and results of operations of our senior living communities that 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 condensed consolidated financial statements for the three months ended March 31, 2015 and 2014: | ||||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Revenues | $ | 2,604 | $ | 7,501 | ||||
Expenses | -3,073 | -8,866 | ||||||
Benefit from income taxes | — | 473 | ||||||
Loss from discontinued operations | $ | -469 | $ | -892 | ||||
Legal_Proceedings_and_Claims
Legal Proceedings and Claims | 3 Months Ended |
Mar. 31, 2015 | |
Legal Proceedings and Claims | |
Legal Proceedings and Claims | Note 12. 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 ASC Topic 450, Contingencies, or ASC 450. 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; and then, as information becomes known, the minimum loss amount is updated, as appropriate. A minimum or best estimate amount may be increased or decreased when events result in a changed expectation. | |
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, or the OIG, pursuant to the OIG’s Provider Self-Disclosure Protocol. We have completed our investigation and assessment of these matters and expect to submit a final supplemental disclosure to the OIG in May 2015. In the first quarter of 2015 we accrued an additional revenue reserve of $2.4 million to account for historical Medicare payments we expect to repay (the total revenue reserve recorded at December 31, 2014 and March 31, 2015 was $4.3 million and $6.7 million, respectively). In addition, we have recorded expense for additional costs we have incurred or we expect to incur, including OIG imposed penalties, as a result of this matter totaling $3.6 million and $2.3 million for the year ending December 31, 2014 and the quarter ending March 31, 2015, respectively, of which $5.1 million remains accrued and not paid at March 31, 2015. As part of the OIG’s Self-Disclosure Protocol, we expect the OIG will review and evaluate our investigation and assessment of these deficiencies. The OIG may not agree with our assessment and also may require additional investigation and assessment of these deficiencies and additional deficiencies may be discovered as a result, which could increase our liability to the OIG and other costs. Potential losses associated with any such disagreement or with such additional investigation and assessment and/or additional compliance deficiencies are reasonably possible but cannot be reasonably estimated at this time. | |
Subsequent_Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Event | |
Subsequent Event | Note 13. Subsequent Event |
In March 2015, we entered into an agreement to acquire two independent living communities with 68 and 84 living units, respectively, located in Tennessee for an aggregate purchase price of 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 2015; however, this acquisition is subject to various conditions. Accordingly, we can provide no assurance that we will acquire these communities, that the acquisition will not be delayed or that the terms or timing will not change. | |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Property and Equipment | ||||||||
Schedule of property and equipment | ||||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
Land | $ | 24,172 | $ | 24,172 | ||||
Buildings and improvements | 308,079 | 308,779 | ||||||
Furniture, fixtures and equipment | 143,093 | 136,839 | ||||||
Property and equipment, at cost | 475,344 | 469,790 | ||||||
Accumulated depreciation | -120,464 | -112,604 | ||||||
Property and equipment, net | $ | 354,880 | $ | 357,186 | ||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Tables) | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Accumulated Other Comprehensive Income | ||||||||||
Schedule of changes in accumulated other comprehensive income, net of tax | ||||||||||
Equity Investment of an Investee | Investments in Available for Sale Securities | Accumulated Other Comprehensive Income | ||||||||
Balance at January 1, 2015 | $ | 50 | $ | 3,640 | $ | 3,690 | ||||
Unrealized gain on investments, net of tax | — | 450 | 450 | |||||||
Equity in unrealized gain of an investee | 45 | — | 45 | |||||||
Reclassification adjustment: | ||||||||||
Realized gain on investments, net of tax | — | -20 | -20 | |||||||
Balance at March 31, 2015 | $ | 95 | $ | 4,070 | 4,165 | |||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | |||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||
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 | ||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||
2015 | 2014 | |||||||||||||||||
Income | Per | Income | Per | |||||||||||||||
(loss) | Shares | Share | (loss) | Shares | Share | |||||||||||||
Loss from continuing operations | $ | -4,833 | 48,364 | $ | -0.1 | $ | -5,867 | 48,002 | $ | -0.12 | ||||||||
Dilutive effect of unvested restricted shares | — | — | — | — | ||||||||||||||
Diluted loss from continuing operations | $ | -4,833 | 48,364 | $ | -0.1 | $ | -5,867 | 48,002 | $ | -0.12 | ||||||||
Diluted loss from discontinued operations | $ | -469 | 48,364 | $ | -0.01 | $ | -892 | 48,002 | $ | -0.02 | ||||||||
Fair_Values_of_Assets_and_Liab1
Fair Values of Assets and Liabilities (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
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 March 31, 2015 | |||||||||||||
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) | $ | 4,524 | $ | 4,524 | $ | — | $ | — | |||||
Available for sale securities:(2) | |||||||||||||
Equity securities | |||||||||||||
Financial services industry | 4,131 | 4,131 | — | — | |||||||||
REIT industry | 346 | 346 | — | — | |||||||||
Other | 3,866 | 3,866 | — | — | |||||||||
Total equity securities | 8,343 | 8,343 | — | — | |||||||||
Debt securities | |||||||||||||
International bond fund(3) | 2,409 | — | 2,409 | — | |||||||||
High yield fund(4) | 2,399 | — | 2,399 | — | |||||||||
Industrial bonds | 6,113 | — | 6,113 | — | |||||||||
Government bonds | 9,911 | 4,936 | 4,975 | — | |||||||||
Financial bonds | 2,732 | — | 2,732 | — | |||||||||
Other | 9,286 | — | 9,286 | — | |||||||||
Total debt securities | 32,850 | 4,936 | 27,914 | — | |||||||||
Total available for sale securities | 41,193 | 13,279 | 27,914 | — | |||||||||
Total | $ | 45,717 | $ | 17,803 | $ | 27,914 | $ | — | |||||
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 | $ | — | |||||
-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 $2,627 and $2,792 of balances that are restricted at March 31, 2015 and December 31, 2014, 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 $24,797 and $16,396, respectively, at March 31, 2015, and $23,436 and $19,835, respectively, at December 31, 2014. Our investments in available for sale securities had amortized costs of $38,466 and $40,974 as of March 31, 2015 and December 31, 2014, respectively, had unrealized gains of $2,884 and $2,455 as of March 31, 2015 and December 31, 2014, respectively, and had unrealized losses of $157 as of March 31, 2015 and December 31, 2014. At March 31, 2015, 14 of the securities we hold, with a fair value of $3,014, have been in a loss position for less than 12 months and eight of the securities we hold, with a fair value of $1,445, 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 three months ended March 31, 2015 and 2014, we received gross proceeds of $2,736 and $4,336, respectively, in connection with the sales of available for sale securities and recorded gross realized gains totaling $20 and $324, respectively, and gross realized losses totaling $0 and $11, 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. | ||||||||||||
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. | |||||||||||||
Discontinued_Operations_Tables
Discontinued Operations (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Discontinued Operations | ||||||||
Summary of the operating results of discontinued operations included in the financial statements | ||||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Revenues | $ | 2,604 | $ | 7,501 | ||||
Expenses | -3,073 | -8,866 | ||||||
Benefit from income taxes | — | 473 | ||||||
Loss from discontinued operations | $ | -469 | $ | -892 | ||||
Organization_and_Business_Deta
Organization and Business (Details) | 3 Months Ended |
Mar. 31, 2015 | |
segment | |
Segment Information | |
Number of operating segments | 2 |
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 | 30,389 |
Number of properties owned and operated | 31 |
Number of living units in properties owned and operated | 3,064 |
Number of properties leased and operated | 181 |
Number of units in properties leased and operated | 20,035 |
Number of properties managed | 46 |
Number of units in properties managed | 7,290 |
Independent and assisted living communities | |
Real estate properties | |
Number of properties operated | 227 |
Number of living units in properties operated | 27,582 |
SNF | |
Real estate properties | |
Number of properties operated | 31 |
Number of living units in properties operated | 2,807 |
Independent living apartment | |
Real estate properties | |
Number of living units in properties operated | 10,586 |
Assisted living suites | |
Real estate properties | |
Number of living units in properties operated | 14,619 |
Skilled nursing units | |
Real estate properties | |
Number of living units in properties operated | 5,184 |
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 |
SNH | Senior living communities | |
Real estate properties | |
Number of properties leased and operated | 180 |
Number of properties managed | 46 |
SNH | SNF | |
Real estate properties | |
Number of real estate properties classified as discontinued operations | 3 |
SNH | Assisted living communities | |
Real estate properties | |
Number of living units in properties owned and operated | 167 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 3 Months Ended | 1 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Dec. 31, 2014 |
community | ||||
Property and Equipment | ||||
Property and equipment, gross | $475,344 | 475,344 | $469,790 | |
Accumulated depreciation | -120,464 | -120,464 | -112,604 | |
Property and equipment, net | 354,880 | 354,880 | 357,186 | |
Depreciation expense | 7,867 | 6,993 | ||
SNH | ||||
Property and Equipment | ||||
Assets held for sale for increased rent pursuant to the terms of leases with SNH | 5,828 | 5,828 | ||
Land | ||||
Property and Equipment | ||||
Property and equipment, gross | 24,172 | 24,172 | 24,172 | |
Building and Improvements | ||||
Property and Equipment | ||||
Property and equipment, gross | 308,079 | 308,079 | 308,779 | |
Furniture, fixtures and equipment | ||||
Property and Equipment | ||||
Property and equipment, gross | $143,093 | 143,093 | $136,839 | |
Independent living community | ||||
Property and Equipment | ||||
Number of independent living communities acquired | 2 |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2013 |
Changes in accumulated other comprehensive income | ||
Balance at the beginning of the period | $3,690 | $3,690 |
Unrealized gain (loss) on investments, net of tax | 450 | |
Equity interest in an investee's unrealized gain (loss) on investments | 45 | |
Realized gain on investments, net of tax | -20 | |
Balance at the end of the period | 4,165 | 3,690 |
Equity Investment in Affiliates Insurance Company | ||
Changes in accumulated other comprehensive income | ||
Balance at the beginning of the period | 50 | |
Equity interest in an investee's unrealized gain (loss) on investments | 45 | |
Balance at the end of the period | 95 | 50 |
Investments in Available for Sale Securities | ||
Changes in accumulated other comprehensive income | ||
Balance at the beginning of the period | 3,640 | |
Unrealized gain (loss) on investments, net of tax | 450 | |
Realized gain on investments, net of tax | -20 | |
Balance at the end of the period | $4,070 | $3,640 |
Income_Taxes_Detail
Income Taxes (Detail) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
(Provision) benefit for income taxes | $304 | ($2,431) | |
Tax benefit recognized from discontinued operations | -473 | ||
Tax credit carry forward, which begins to expire in 2022 if unused | 17,191 | ||
Federal | |||
Net operating loss carry forward, which begins to expire in 2026 if unused | 112,182 | ||
Net operating losses that are attributable to unvested stock grants | $333 |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Shares | ||
(Loss) income from continuing operations (in shares) | 48,364 | 48,002 |
Diluted (loss) income from continuing operations (in shares) | 48,364 | 48,002 |
Diluted loss from discontinued operations (in shares) | 48,364 | 48,002 |
(Loss) income from continuing operations | ($4,833) | ($5,867) |
Diluted (loss) income from continuing operations | -4,833 | -5,867 |
Diluted income (loss) from discontinued operations | ($469) | ($892) |
Per Share | ||
(Loss) income from continuing operations (in dollars per share) | ($0.10) | ($0.12) |
Diluted (loss) income from continuing operations (in dollars per share) | ($0.10) | ($0.12) |
Diluted loss from discontinued operations (in dollars per share) | ($0.01) | ($0.02) |
Fair_Values_of_Assets_and_Liab2
Fair Values of Assets and Liabilities (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
item | |||
Fair Values of Assets and Liabilities | |||
Restricted cash equivalents | $2,627 | $2,792 | |
Available for sale securities, current | 24,797 | 23,436 | |
Long term investments in available for sale securities | 16,396 | 19,835 | |
Amortized cost of available for sale securities | 38,466 | 40,974 | |
Unrealized gains on available for sale securities | 2,884 | 2,455 | |
Unrealized losses on available for sale securities | 157 | ||
Number of available for sale securities in a loss position less than 12 months | 14 | ||
Fair value of securities which are in loss position for less than 12 months | 3,014 | ||
Number of available for sale securities in a loss position 12 months or longer | 8 | ||
Fair value of securities which are in loss position for greater than 12 months | 1,445 | ||
Gross proceeds from sale of available for sale securities | 2,736 | 4,336 | |
Gross realized gains recorded on sale of available for sale securities | 20 | 324 | |
Gross realized losses recorded on sale of available for sale securities | 0 | 11 | |
Total | |||
Fair Values of Assets and Liabilities | |||
Cash equivalents | 4,524 | 4,632 | |
Available for sale securities | 41,193 | 43,271 | |
Total | 45,717 | 47,903 | |
Total | Equity securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 8,343 | 8,230 | |
Total | Financial services industry | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 4,131 | 4,059 | |
Total | REIT industry | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 346 | 330 | |
Total | Other | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 3,866 | 3,841 | |
Total | Debt securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 32,850 | 35,041 | |
Total | International bond fund | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,409 | 2,385 | |
Total | High yield fund | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,399 | 2,352 | |
Total | Industrial bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 6,113 | 6,577 | |
Total | Government bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 9,911 | 11,371 | |
Total | Financial bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,732 | 2,704 | |
Total | Other | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 9,286 | 9,652 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair Values of Assets and Liabilities | |||
Cash equivalents | 4,524 | 4,632 | |
Available for sale securities | 13,279 | 13,913 | |
Total | 17,803 | 18,545 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 8,343 | 8,230 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Financial services industry | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 4,131 | 4,059 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | REIT industry | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 346 | 330 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 3,866 | 3,841 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Debt securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 4,936 | 5,683 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Government bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 4,936 | 5,683 | |
Significant Other Observable Inputs (Level 2) | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 27,914 | 29,358 | |
Total | 27,914 | 29,358 | |
Significant Other Observable Inputs (Level 2) | Debt securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 27,914 | 29,358 | |
Significant Other Observable Inputs (Level 2) | International bond fund | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,409 | 2,385 | |
Significant Other Observable Inputs (Level 2) | High yield fund | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,399 | 2,352 | |
Significant Other Observable Inputs (Level 2) | Industrial bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 6,113 | 6,577 | |
Significant Other Observable Inputs (Level 2) | Government bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 4,975 | 5,688 | |
Significant Other Observable Inputs (Level 2) | Financial bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,732 | 2,704 | |
Significant Other Observable Inputs (Level 2) | Other | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | $9,286 | $9,652 |
Fair_Values_of_Assets_and_Liab3
Fair Values of Assets and Liabilities (Details 2) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Carrying value and fair value | ||
Transfers of assets between Level 1 to Level 2 | $0 | |
Transfers of assets between Level 2 to Level 1 | 0 | |
Mortgage notes payable | 48,911 | 49,373 |
Level 3 | ||
Carrying value and fair value | ||
Mortgage notes payable | 56,088 | 56,099 |
Carrying value | ||
Carrying value and fair value | ||
Mortgage notes payable | $50,721 | $51,159 |
Indebtedness_Details
Indebtedness (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
item | |||
Indebtedness | |||
Mortgage notes payable outstanding principal balance | $48,911 | $49,373 | |
Number of extensions to maturity date | 2 | ||
Subsequent event Member | Standby letters of credit | |||
Indebtedness | |||
Extension Fee | 300 | ||
Senior living communities | |||
Indebtedness | |||
Number of properties operated | 258 | ||
Credit Agreement | |||
Indebtedness | |||
Maximum borrowing capacity | 25,000 | ||
Basis spread (as a percent) | 2.50% | ||
Interest rate at period end (as a percent) | 2.68% | ||
Quarterly commitment fee on the unused part of borrowing availability (as a percent) | 0.35% | ||
Principal repayment | 0 | ||
Amount borrowed during the period | 0 | 0 | |
Amount outstanding under credit facility | 0 | ||
Facility costs | 48 | 48 | |
Credit Agreement | LIBOR | |||
Indebtedness | |||
Variable rate basis | LIBOR | ||
Credit Facility | |||
Indebtedness | |||
Maximum borrowing capacity | 150,000 | ||
Basis spread (as a percent) | 2.50% | ||
Interest rate at period end (as a percent) | 2.68% | ||
Quarterly commitment fee on the unused part of borrowing availability (as a percent) | 0.35% | ||
Amount outstanding under credit facility | 30,000 | ||
Extension period available | 1 year | ||
Weighted average interest rate (as a percent) | 2.74% | 2.83% | |
Interest expense and other associated costs incurred | 609 | 593 | |
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 | |||
Variable rate basis | LIBOR | ||
Mortgage notes | |||
Indebtedness | |||
Weighted average interest rate (as a percent) | 6.76% | ||
Interest expense and other associated costs incurred | 697 | 577 | |
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 | $50,721 |
Off_Balance_Sheet_Arrangement_
Off Balance Sheet Arrangement (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
property | |
Off Balance Sheet Arrangements | |
Carrying value of accounts receivable and other assets pledged | $13,603 |
Number of properties leased from SNH on which pledge arises | 26 |
Off balance sheet arrangements, liability | $0 |
Related_Person_Transactions_De
Related Person Transactions (Details) (USD $) | 3 Months Ended | 1 Months Ended | ||||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Feb. 28, 2015 | Jun. 30, 2013 | Dec. 31, 2014 | Apr. 30, 2015 |
property | property | |||||
Related person transactions | ||||||
Management fee revenue | $2,523 | $2,425 | ||||
Assisted living communities | ||||||
Related person transactions | ||||||
Number of properties to be sold | 1 | |||||
D&R Yonkers LLC | ||||||
Related person transactions | ||||||
Management fee revenue | 54 | 59 | ||||
Senior living communities | ||||||
Related person transactions | ||||||
Number of real estate properties leased | 181 | |||||
Number of properties managed | 46 | |||||
Number of units in properties managed | 7,290 | |||||
SNH | ||||||
Related person transactions | ||||||
Total minimum annual rent payable | 191,007 | 190,614 | ||||
Rent expense under leases, net of lease inducement amortization | 48,941 | 48,758 | ||||
Outstanding rent due and payable | 17,324 | 17,310 | ||||
Real estate improvements sold | 4,060 | 8,614 | ||||
Increase (decrease) in annual lease rent payable | 328 | 689 | ||||
Assets held for sale for increased rent pursuant to the terms of leases with SNH | 5,828 | |||||
Management fee revenue | 2,523 | 2,425 | ||||
SNH | Assisted living communities | ||||||
Related person transactions | ||||||
Number of real estate properties offered for sale classified as discontinued operations | 3 | |||||
SNH | Subsequent event Member | Georgia | ||||||
Related person transactions | ||||||
Number of properties managed | 40 | |||||
SNH | Senior living communities | ||||||
Related person transactions | ||||||
Number of real estate properties leased | 180 | |||||
Gross amount paid on acquisition | 490 | |||||
Increase (decrease) in annual lease rent payable | 39 | |||||
Number of properties managed | 46 | |||||
SNH | Senior living communities | Texas | ||||||
Related person transactions | ||||||
Decrease in annual lease rent payable | 23 | |||||
Sales price | $250 | |||||
SNH | Senior living communities | Subsequent event Member | ||||||
Related person transactions | ||||||
Number of properties managed | 14 |
Related_Person_Transactions_De1
Related Person Transactions (Details 2) (USD $) | 3 Months Ended | 0 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 16, 2015 | Dec. 31, 2014 |
Related person transactions | ||||
Utilities and real estate taxes | $49,628 | $49,074 | ||
Equity investment of an investee | 6,945 | 6,827 | ||
Income (loss) arising from investment | 72 | -97 | ||
RMR | ||||
Related person transactions | ||||
Business management fees | 2,127 | 2,006 | ||
Administrative and information system service fees | 0 | 1,519 | ||
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 | |||
Period of transition services provided by related party after termination of agreement | 120 days | |||
Utilities and real estate taxes | 411 | 355 | ||
AIC | ||||
Related person transactions | ||||
Equity investment of an investee | 6,945 | |||
Income (loss) arising from investment | $72 | ($97) |
Discontinued_Operations_Detail
Discontinued Operations (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Jun. 30, 2013 |
item | |||
property | |||
Summary of the operating results of discontinued operations | |||
Revenues | $2,604 | $7,501 | |
Expenses | -3,073 | -8,866 | |
(Provision for) benefit from income taxes | 473 | ||
(Loss) income from discontinued operations | ($469) | ($892) | |
Assisted living communities | |||
Discontinued Operations | |||
Number of properties to be sold | 1 | ||
Number of living units in property to be sold | 32 | ||
Assisted living communities | SNH | |||
Discontinued Operations | |||
Number of real estate properties offered for sale classified as discontinued operations | 3 |
Legal_Proceedings_and_Claims_D
Legal Proceedings and Claims (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
item | ||
Legal Proceedings and Claims | ||
Estimated minimum loss | $0 | |
Number of leased SNFs with potentially inadequate documentation | 1 | |
Revenue reserve for payment of historical Medicare obligations | 6,700,000 | 4,300,000 |
Additional revenue reserve for payment of historical Medicare obligations | 2,400,000 | |
Accrued costs and penalties expected to incur related to the compliance assessment | 2,300,000 | 3,600,000 |
Accrued costs and penalties expected to incur related to the compliance assessment not yet paid | $5,100,000 |
Subsequent_Event_Details
Subsequent Event (Details) (USD $) | 1 Months Ended | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2015 |
community | ||
Tennessee | ||
Subsequent Event | ||
Aggregate purchase price of properties acquired, excluding closing costs | $26,000 | |
Assumption of mortgage debt | $17,000 | |
Independent living community | ||
Subsequent Event | ||
Number of independent living communities acquired | 2 | |
Independent living community | Tennessee | ||
Subsequent Event | ||
Number of independent living communities acquired | 2 | |
Independent living community one | Tennessee | ||
Subsequent Event | ||
Number of living units in properties acquired | 68 | 68 |
Independent living community two | Tennessee | ||
Subsequent Event | ||
Number of living units in properties acquired | 84 | 84 |