Exhibit 99.1
| |
FOR IMMEDIATE RELEASE | Contact: Kimberly Brown, Director, Investor Relations |
| (617) 796-8245 |
Five Star Quality Care, Inc. Reports Second Quarter 2015 Results
Fourteen Managed Communities with 838 Living Units Added During the Second Quarter
Two Senior Living Communities with 152 Private Pay Living Units Under Agreement to Purchase for $26.0 Million
Newton, MA (August 10, 2015). Five Star Quality Care, Inc. (NYSE: FVE) today announced its financial results for the quarter and six months ended June 30, 2015.
Five Star’s President and CEO, Bruce J. Mackey Jr., made the following statement:
“Our operating results at our owned and leased independent and assisted living communities as well at our leased continuing care retirement communities improved year over year, primarily driven by increased average monthly rates and our continued focus on expense controls. Management fee revenues also increased 10.9% year over year primarily because of the growth in the number of managed communities. However, our overall results were adversely affected by a modest, but continuing decline in occupancy.
“We continue executing on our business plan of growing our portfolio of owned, leased and managed private pay senior living communities and selling skilled nursing facilities dependent upon government reimbursement revenue and other underperforming properties. During the second quarter, we added 14 managed communities with 838 living units and we recently sold two skilled nursing facilities with 51 living units. We also currently have two private pay senior living communities with 152 living units under agreement to purchase for our own account.”
Second Quarter 2015 Financial Results:
| § | | Senior living revenues for the second quarter of 2015 increased 0.9% to $277.9 million from $275.4 million for the same period in 2014. Growth in senior living revenues was the result of increases in average monthly rates to residents who pay privately for services, partially offset by decreases in occupancy. Management fee revenue from Five Star’s managed communities for the second quarter of 2015 increased 10.9% to $2.7 million from $2.4 million for the same period in 2014. Growth in management fees was primarily due to an increase in the number of communities managed and an increase in average monthly rates, partially offset by decreases in occupancy at same store comparable communities. |
| § | | Earnings from continuing operations before interest, taxes, depreciation and amortization, or EBITDA, for the second quarter of 2015 were $5.9 million compared to $7.7 million for the same period in 2014. EBITDA, |
excluding certain items described below that Five Star believes may be non-recurring, or Adjusted EBITDA, was $7.1 million and $8.9 million for the second quarter of 2015 and 2014, respectively. Adjusted EBITDA excluding rent, or Adjusted EBITDAR, was $56.8 million for the second quarter of 2015 compared to $58.1 million for the same period in 2014. |
| § | | Loss from continuing operations for the second quarter of 2015 was $3.4 million, or $0.07 per basic and diluted share, compared to loss from continuing operations of $1.0 million, or $0.02 per basic and diluted share, for the same period in 2014. |
| § | | Net loss for the second quarter of 2015 was $3.9 million, or $0.08 per basic and diluted share, compared to net loss of $1.9 million, or $0.04 per basic and diluted share, for the same period in 2014. Net loss for the second quarter of 2015 included a loss from discontinued operations of $0.5 million; net loss for the second quarter of 2014 included a loss from discontinued operations of $0.9 million. |
| § | | EBITDA, EBITDAR, loss from continuing operations and net loss in the second quarter of 2015 included $1.2 million of items that Five Star believes may not be recurring and which included compliance costs and professional fees of $1.9 million, primarily resulting from Medicare records billing deficiencies which Five Star discovered and self-reported as previously disclosed and as described below, offset by a gain of $0.7 million on early extinguishment of debt. EBITDA, EBITDAR, loss from continuing operations and net loss in the second quarter of 2014 included $1.1 million of accounting costs incurred in connection with the restatement of certain previously issued financial statements and the delayed completion of Five Star’s 2013 third quarter and 2013 annual financial reporting which Five Star believes may not be recurring. |
| § | | A reconciliation of loss from continuing operations determined in accordance with U.S. generally accepted accounting principles, or GAAP, to EBITDA, Adjusted EBITDA and Adjusted EBITDAR for the quarters ended June 30, 2015 and 2014 appears later in this press release. |
Second Quarter 2015 Operating Results (continuing operations):
| § | | Occupancy at owned and leased senior living communities for the second quarter of 2015 decreased by 70 basis points (“bps”) to 85.1% from 85.8% for the same period in 2014. |
| § | | The average monthly rate at owned and leased senior living communities for the second quarter of 2015 increased by 1.2% to $4,591 from $4,537 for the same period in 2014. |
| § | | The percentage of revenues derived from residents’ private resources at owned and leased senior living communities for the second quarter of 2015 increased by 50 bps to 77.6% from 77.1% for the same period in 2014. |
Year to Date Financial Results:
| § | | Senior living revenues for the six months ended June 30, 2015 increased 1.1% to $553.1 million from $547.2 million for the same period in 2014. Growth in senior living revenues was the result of increases in average monthly rates to residents who pay privately for services, partially offset by decreases in occupancy and a revenue reserve Five Star recorded in the 2015 period, as further described below. Management fee revenue from Five Star’s managed communities for the six months ended June 30, 2015 increased by 7.5% to $5.2 million from $4.9 million for the same period in 2014. Growth in management fees was primarily due to an increase in the number of communities managed and an increase in average monthly rates, partially offset by decreases in occupancy at same store comparable communities. |
| § | | EBITDA for the six months ended June 30, 2015 was $10.6 million compared to $7.7 million for the same period in 2014. Adjusted EBITDA was $16.7 million and $11.6 million for the six months ended June 30, 2015 and |
2014, respectively. Adjusted EBITDAR was $116.0 million for the six months ended June 30, 2015 compared to $109.9 million for the same period in 2014. |
| § | | Loss from continuing operations for the six months ended June 30, 2015 was $8.2 million, or $0.17 per basic and diluted share, compared to loss from continuing operations of $6.9 million, or $0.14 per basic and diluted share, for the same period in 2014. |
| § | | Net loss for the six months ended June 30, 2015 was $9.2 million, or $0.19 per basic and diluted share, compared to net loss of $8.7 million, or $0.18 per basic and diluted share, for the same period in 2014. Net loss for the six months ended June 30, 2015 included a loss from discontinued operations of $1.0 million; net loss for the six months ended June 30, 2014 included a loss from discontinued operations of $1.8 million. |
| § | | EBITDA, EBITDAR, loss from continuing operations and net loss in the six months ended June 30, 2015 included $6.1 million of items that Five Star believes may not be recurring and which included a revenue reserve of $2.4 million and estimated penalties, compliance costs and professional fees of $4.4 million, primarily resulting from Medicare records billing deficiencies which Five Star discovered and self-reported as previously disclosed and as described below, offset by a gain of $0.7 million on early extinguishment of debt. EBITDA, EBITDAR, loss from continuing operations and net loss in the six months ended June 30, 2014 included $4.1 million of accounting costs incurred in connection with the restatement of certain previously issued financial statements and the delayed completion of Five Star’s 2013 third quarter and 2013 annual financial reporting which Five Star believes may not be recurring. |
| § | | A reconciliation of loss from continuing operations determined in accordance with GAAP to EBITDA, Adjusted EBITDA and Adjusted EBITDAR for the six months ended June 30, 2015 and 2014 appears later in this press release. |
Expansion and Disposition Activities:
Since April 1, 2015, Five Star began managing 15 senior living communities with a combined 878 living units for Senior Housing Properties Trust, or SNH:
| § | | In May 2015, Five Star began managing 14 assisted living communities in four states with a combined 838 living units which were acquired by SNH at that time. |
| § | | Also in May 2015, Five Star began managing a newly constructed senior living community with 40 private pay independent living units located in Georgia, which is located adjacent to another community that Five Star manages for SNH. Five Star now manages these communities as a single integrated community under the same management agreement. |
In March 2015, Five Star entered an agreement to acquire two private pay independent living communities with a combined total of 152 living units located in Tennessee for $26.0 million, including the assumption of approximately $17.0 million of mortgage debt and excluding closing costs. Five Star currently expects this acquisition to close by year end 2015 and to fund this acquisition with cash on hand and borrowings under its revolving credit facility.
In July and August 2015, Five Star and SNH sold two skilled nursing facilities, or SNFs, which are included in discontinued operations, with a combined total of 51 living units for approximately $1.0 million. As a result of these sales, Five Star’s annual minimum rent payable to SNH decreased by $0.1 million in accordance with the terms of the applicable leases.
As of the date of this press release, Five Star is continuing to market for sale one community it owns with 32 living units and Five Star and SNH are continuing to jointly market for sale one community that Five Star leases from SNH
with 116 living units, both of which are reported as held for sale and discontinued operations in Five Star’s financial statements.
Financing Activities:
In April 2015, Five Star exercised the first of two one year options to extend the maturity date of its $150.0 million revolving credit facility, extending the maturity date of the facility to April 13, 2016.
In June 2015, Five Star prepaid a 8.99% mortgage note that had a principal balance of approximately $4.9 million. In connection with this repayment, Five Star recorded a gain of approximately $0.7 million on early extinguishment of debt, net of unamortized premiums and a 1% prepayment penalty, in the second quarter of 2015.
Compliance Update:
As previously disclosed, as a result of Five Star’s compliance program to review medical records related to its Medicare billing practices, during 2014 Five Star discovered potentially inadequate documentation and other issues at one of its leased SNFs. This compliance review was not initiated in response to any specific complaint or allegation, but was a review of the type that Five Star periodically undertakes to test its own compliance with applicable Medicare billing rules. As a result of these discoveries, in February 2015, Five Star 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. Five Star completed its investigation and assessment of these matters and submitted a final supplemental disclosure to the OIG in May 2015. At December 31, 2014, Five Star had accrued a revenue reserve of $4.3 million for historical Medicare repayments Five Star expects to repay as a result of these deficiencies. For the quarter ended March 31, 2015, this revenue reserve was increased by $2.4 million so it now totals $6.7 million. In addition, Five Star has recorded expense for additional costs Five Star incurred or expects to incur, including OIG imposed penalties, as a result of this matter totaling $3.6 million for the year ending December 31, 2014, and $1.9 million and $4.2 million for the three and six months ending June 30, 2015, respectively, of which $5.1 million remains accrued and not paid at June 30, 2015. As part of the OIG’s Self-Disclosure Protocol, Five Star expects that the OIG will review and evaluate Five Star’s investigation and assessment of these deficiencies and that review could result in further investigation and a possible increase in Five Star’s liabilities.
Loss Contingency:
In the ordinary course of Five Star’s business, Five Star is periodically subject to claims by residents of its senior living communities alleging improper care and services. Five Star maintains insurance for such claims subject to a self-insured retention. In May 2015, in a case brought in the Superior Court of Maricopa County, Arizona, jury verdicts were awarded against Five Star on such a claim for $2.5 million of compensatory damages plus approximately $16.7 million of punitive damages. The self insured retention applicable to the policy covering this claim is $0.5 million. If the compensatory part of this jury verdict is sustained, Five Star expects that the full compensatory award will be payable by Five Star’s insurer. Although it is investigating the issue, Five Star believes that it may have a basis to recover from its insurer some or all of the punitive damages awarded by the jury verdict. Five Star also believes that it is more likely than not that these jury verdicts, including the punitive damages award, will be set aside. Because Five Star has determined that losses beyond costs already incurred in defending the lawsuit are not probable and Five Star is unable to reasonably estimate its potential liability for this matter, Five Star has not recorded a reserve for this matter. Although Five Star cannot predict the ultimate outcome of this claim, Five Star believes the jury’s verdicts were wrong and the result of significant trial error. Five Star intends to vigorously pursue its position in post trial motions and, if those motions are unsuccessful, on appeal.
Conference Call:
Later this morning, August 10, 2015, at 8:30 a.m. Eastern Time, Five Star will host a conference call to discuss its second quarter 2015 results. Following management’s presentation, there will be a question and answer period.
The conference call telephone number is (877) 329-4332. Participants calling from outside the United States and Canada should dial (412) 317-5436. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. Eastern Time on Monday, August 17, 2015.To hear the replay, dial (412) 317-0088. The replay pass code is 10070303.
A live audio webcast of the conference call will also be available in a listen only mode on Five Star’s website at www.fivestarseniorliving.com. Participants wanting to access the webcast should visit Five Star’s website about five minutes before the call. The archived webcast will be available for replay on Five Star’s website for about one week after the call. The transcription, recording and retransmission in any way of Five Star’s second quarter 2015 conference call are strictly prohibited without the prior written consent of Five Star. Five Star’s website is not incorporated as part of this press release.
About Five Star Quality Care, Inc.:
Five Star Quality Care, Inc. is a senior living and healthcare services company. As of June 30, 2015, Five Star operated 272 senior living communities (excluding those senior living communities it has classified as discontinued operations) with 31,267 living units located in 32 states, including 212 communities (23,099 living units) that it owns or leases and 60 communities (8,168 living units) that it manages. These communities include independent living, assisted living, continuing care and skilled nursing communities. Five Star is headquartered in Newton, Massachusetts.
WARNING CONCERNING FORWARD LOOKING STATEMENTS
this press release contains statements THAT constitute forward looking statements within the meaning of the private securities litigation reform act of 1995 and other securities laws. aLSO, whenever Five star uses words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate” or similar expressions, it is making forward looking statements. these forward looking statements are based upon five star’s PRESENT intent, beliefs or expectations, but FORWARD LOOKING STATEMENTS are not guaranteed to occur and may not occur. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY THESE FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FoR EXAMPLE:
| · | | THIS PRESS RELEASE STATES THAT FIVE STAR HAS AGREED TO ACQUIRE TWO INDEPENDENT LIVING COMMUNITIES FOR $26.0 MILLION, INCLUDING THE ASSUMPTION OF APPROXIMATELY $17.0 MILLION OF MORTGAGE DEBT AND EXCLUDING CLOSING COSTS, AND THAT THIS ACQUISITION IS EXPECTED TO CLOSE BY YEAR END 2015. THIS TRANSACTION IS SUBJECT TO CLOSING CONDITIONS. THESE CONDITIONS MAY NOT BE SATISFIED AND THIS ACQUISITION MAY NOT OCCUR, MAY BE DELAYED OR THE PRICE AND TERMS MAY CHANGE. |
| · | | THIS PRESS RELEASE STATES THAT FIVE STAR IS CONTINUING TO MARKET FOR SALE ONE COMMUNITY IT OWNS AND FIVE STAR AND SNH ARE CONTINUING TO JOINTLY MARKET FOR SALE ONE COMMUNITY THAT FIVE STAR LEASES FROM SNH. FIVE STAR AND SNH MAY NOT BE ABLE TO SELL THESE COMMUNITIES ON ACCEPTABLE TERMS OR OTHERWISE, AND THE SALES OF THESE COMMUNITIES MAY NOT OCCUR. |
| · | | in february 2015, FIVE STAR MADE A VOLUNTARY DISCLOSURE OF CERTAIN DOCUMENTATION DEFICIENCIES RELATED TO MEDICARE RECORDS AND OTHER MATTERS TO THE OIG. FIVE STAR COMPLETED ITS INVESTIGATION AND ASSESSMENT OF THESE MATTERS AND submitted A FINAL SUPPLEMENTAL DISCLOSURE TO THE OIG IN MAY 2015. ALTHOUGH FIVE STAR HAS ACCRUED A REVENUE RESERVE FOR REPAYMENT OF HISTORICAL MEDICARE REVENUES FIVE STAR EXPECTS TO REPAY AND HAS ACCRUED A RESERVE FOR ASSOCIATED ADDITIONAL COSTS FIVE STAR INCURRED OR EXPECTS TO INCUR, INCLUDING OIG IMPOSED PENALTIES, THERE CAN BE NO ASSURANCE THAT FIVE STAR’S RESERVES WILL BE ADEQUATE TO COVER THE REPAYMENT OBLIGATIONS IT IS FINALLY DETERMINED TO OWE OR ASSOCIATED ADDITIONAL COSTS. ALSO, ADDITIONAL DEFICIENCIES MAY BE DISCOVERED THAT COULD INCREASE FIVE STAR’S LIABILITY TO THE OIG AND THE ASSOCIATED COSTS. |
| · | | THIS PRESS RELEASE STATES THAT FIVE STAR BELIEVES THE JURY’S VERDICTS AWARDED IN THE ARIZONA CASE AGAINST IT WERE WRONG AND THE RESULT OF SIGNIFICANT TRIAL ERROR AND THAT FIVE STAR INTENDS TO VIGOROUSLY PURSUE ITS POSITION IN POST TRIAL MOTIONS AND, IF THOSE MOTIONS ARE UNSUCCESSFUL, ON APPEAL. THIS PRESS RELEASE ALSO STATES THAT BECAUSE FIVE STAR HAS DETERMINED THAT LOSSES BEYOND COSTS ALREADY INCURRED IN DEFENDING THE LAWSUIT ARE NOT PROBABLE AND FIVE STAR IS UNABLE TO REASONABLY ESTIMATE ITS POTENTIAL LIABILITY FOR THIS MATTER, FIVE STAR HAS NOT RECORDED A RESERVE FOR THIS MATTER. THESE STATEMENTS MAY IMPLY THAT FIVE STAR WILL BE SUCCESSFUL IN THE ARIZONA CASE AND WILL NOT HAVE TO PAY ANY AMOUNTS IN CONNECTION WITH THE JURY VERDICTS IN ADDITION TO COSTS ALREADY INCURRED IN DEFENDING THE LAWSUIT. HOWEVER, LITIGATION CAN BE UNPREDICTABLE AND OFTEN HAS UNANTICIPATED RESULTS. THERE CAN BE NO ASSURANCE THAT FIVE STAR WILL BE SUCCESSFUL IN ITS |
EFFORTS TO OVERTURN THE JURY VERDICTS AND FIVE STAR MAY HAVE TO FUND SIGNIFICANT AMOUNTS TO SATISFY THESE JURY VERDICTS. |
| · | | THIS PRESS RELEASE STATES THAT FIVE STAR BELIEVES THAT IT MAY HAVE A BASIS TO RECOVER FROM ITS INSURER SOME OR ALL OF THE PUNITIVE DAMAGES AWARDED IN THE ARIZONA CASE. FIVE STAR IS CURRENTLY INVESTIGATING WHETHER ITS INSURER MAY BE RESPONSIBLE UNDER THE TERMS OF FIVE STAR’S INSURANCE OR OTHERWISE UNDER APPLICABLE LAW TO PAY SOME OR ALL OF ANY PUNITIVE DAMAGES AWARD THAT MAY BE SUSTAINED. FIVE STAR’S INSURER HAS DENIED ANY RESPONSIBILITY FOR THE PUNITIVE DAMAGES AWARD AND THERE CAN BE NO ASSURANCE THAT FIVE STAR WILL HAVE INSURANCE COVERAGE IN THE EVENT THE PUNITIVE DAMAGES AWARD IS NOT SET ASIDE OR REVERSED ON APPEAL. |
THE INFORMATION CONTAINED IN FIVE STAR’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR THE SEC, INCLUDING UNDER THE CAPTION “RISK FACTORS” IN FIVE STAR’S PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM FIVE STAR’S FORWARD LOOKING STATEMENTS. FIVE STAR’S FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY LAW, FIVE STAR DOES NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
Supplemental Information, page 5 of 7
FIVE STAR QUALITY CARE, INC.
PERCENT BREAKDOWN OF SENIOR LIVING COMMUNITY REVENUES(1)
| | | | | | | | | | | | |
| | Three months ended June 30, | | Six months ended June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
Independent and assisted living communities (owned): | | | | | | | | | | | | |
Private and other sources | | | 99.5% | | | 99.2% | | | 99.5% | | | 99.2% |
Medicaid | | | 0.5% | | | 0.8% | | | 0.5% | | | 0.8% |
Total | | | 100.0% | | | 100.0% | | | 100.0% | | | 100.0% |
| | | | | | | | | | | | |
Independent and assisted living communities (leased): | | | | | | | | | | | | |
Private and other sources | | | 98.9% | | | 99.2% | | | 99.0% | | | 99.1% |
Medicaid | | | 1.1% | | | 0.8% | | | 1.0% | | | 0.9% |
Total | | | 100.0% | | | 100.0% | | | 100.0% | | | 100.0% |
| | | | | | | | | | | | |
Continuing care retirement communities (leased): | | | | | | | | | | | | |
Private and other sources | | | 72.6% | | | 72.1% | | | 72.4% | | | 72.0% |
Medicare | | | 20.7% | | | 22.0% | | | 21.0% | | | 22.1% |
Medicaid | | | 6.7% | | | 5.9% | | | 6.6% | | | 5.9% |
Total | | | 100.0% | | | 100.0% | | | 100.0% | | | 100.0% |
| | | | | | | | | | | | |
Skilled nursing facilities (leased): | | | | | | | | | | | | |
Private and other sources | | | 25.7% | | | 25.4% | | | 25.7% | | | 25.0% |
Medicare | | | 23.5% | | | 25.2% | | | 24.4% | | | 25.1% |
Medicaid | | | 50.8% | | | 49.4% | | | 49.9% | | | 49.9% |
Total | | | 100.0% | | | 100.0% | | | 100.0% | | | 100.0% |
| | | | | | | | | | | | |
Total senior living communities (owned and leased): | | | | | | | | | | | | |
Private and other sources | | | 77.6% | | | 77.1% | | | 77.4% | | | 76.9% |
Medicare | | | 11.3% | | | 12.2% | | | 11.7% | | | 12.3% |
Medicaid | | | 11.1% | | | 10.7% | | | 10.9% | | | 10.8% |
Total | | | 100.0% | | | 100.0% | | | 100.0% | | | 100.0% |
| (1) | | Excludes data for managed communities and discontinued operations. |
Supplemental Information, page 6 of 7
FIVE STAR QUALITY CARE, INC.
SENIOR LIVING OTHER OPERATING DATA(1)
| | | | | | | | | | | | | | | |
| | Three months ended |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| | 2015 | | 2015 | | 2014 | | 2014 | | 2014 |
Independent and assisted living communities (owned): | | | | | | | | | | | | | | | |
Number of communities (end of period) | | | 31 | | | 31 | | | 31 | | | 31 | | | 31 |
Number of units (end of period) | | | 3,064 | | | 3,064 | | | 3,061 | | | 3,061 | | | 3,061 |
Occupancy | | | 87.1% | | | 87.9% | | | 88.7% | | | 88.2% | | | 87.6% |
Avg. monthly rate(2) | | | $ 3,602 | | | $ 3,594 | | | $ 3,492 | | | $ 3,472 | | | $ 3,469 |
| | | | | | | | | | | | | | | |
Independent and assisted living communities (leased): | | | | | | | | | | | | | | | |
Number of communities (end of period) | | | 119 | | | 119 | | | 119 | | | 119 | | | 119 |
Number of units (end of period)(3) | | | 9,909 | | | 9,909 | | | 9,896 | | | 9,858 | | | 9,858 |
Occupancy(3) | | | 87.7% | | | 88.0% | | | 89.3% | | | 89.5% | | | 88.9% |
Avg. monthly rate(2) | | | $ 3,819 | | | $ 3,820 | | | $ 3,734 | | | $ 3,723 | | | $ 3,744 |
| | | | | | | | | | | | | | | |
CCRC communities (leased): | | | | | | | | | | | | | | | |
Number of communities (end of period) | | | 31 | | | 31 | | | 31 | | | 31 | | | 31 |
Number of units (end of period)(4) | | | 7,319 | | | 7,319 | | | 7,322 | | | 7,322 | | | 7,322 |
Occupancy | | | 83.3% | | | 83.8% | | | 83.6% | | | 83.2% | | | 83.3% |
Avg. monthly rate(2) | | | $ 5,384 | | | $ 5,450 | | | $ 5,317 | | | $ 5,304 | | | $ 5,375 |
| | | | | | | | | | | | | | | |
Skilled nursing facilities (leased): | | | | | | | | | | | | | | | |
Number of communities (end of period) | | | 31 | | | 31 | | | 31 | | | 31 | | | 31 |
Number of units (end of period)(5) | | | 2,807 | | | 2,807 | | | 2,822 | | | 2,822 | | | 2,822 |
Occupancy | | | 78.4% | | | 78.6% | | | 79.3% | | | 79.3% | | | 79.7% |
Avg. monthly rate(2) | | | $ 6,652 | | | $ 6,752 | | | $ 6,535 | | | $ 6,543 | | | $ 6,603 |
| | | | | | | | | | | | | | | |
Total senior living communities (owned and leased): | | | | | | | | | | | | | | | |
Number of communities (end of period) | | | 212 | | | 212 | | | 212 | | | 212 | | | 212 |
Number of units (end of period)(3) | | | 23,099 | | | 23,099 | | | 23,101 | | | 23,063 | | | 23,063 |
Occupancy(3) | | | 85.1% | | | 85.5% | | | 86.2% | | | 86.1% | | | 85.8% |
Avg. monthly rate(2) | | | $ 4,591 | | | $ 4,623 | | | $ 4,503 | | | $ 4,492 | | | $ 4,537 |
| | | | | | | | | | | | | | | |
Managed communities: | | | | | | | | | | | | | | | |
Number of communities (end of period) | | | 60 | | | 46 | | | 46 | | | 44 | | | 44 |
Number of units (end of period)(6) | | | 8,168 | | | 7,290 | | | 7,278 | | | 7,051 | | | 7,051 |
Occupancy | | | 88.1% | | | 88.0% | | | 88.4% | | | 88.2% | | | 88.5% |
Avg. monthly rate(2) | | | $ 4,215 | | | $ 4,300 | | | $ 4,162 | | | $ 4,152 | | | $ 4,176 |
| | | | | | | | | | | | | | | |
Other ancillary services: | | | | | | | | | | | | | | | |
Rehabilitation and wellness inpatient clinics (end of period) | | | 48 | | | 48 | | | 48 | | | 48 | | | 48 |
Rehabilitation and wellness outpatient clinics (end of period) | | | 60 | | | 58 | | | 56 | | | 55 | | | 54 |
Home health communities served (end of period) | | | 15 | | | 13 | | | 13 | | | 6 | | | 6 |
| (1) | | Excludes data for discontinued operations. |
| (2) | | Average monthly rate is calculated by taking the average daily rate, which is defined as total operating revenues divided by occupied units during the period, and multiplying it by 30 days. |
| (3) | | The number of units for the quarters ended September 30, 2014 and June 30, 2014 excludes 38 living units in one senior living community that was temporarily closed for a major renovation during those time periods. |
| (4) | | Includes 1,973 skilled nursing units in communities where assisted living and independent living services are the predominant services provided. |
| (5) | | Includes 68 assisted living and independent living units in communities where skilled nursing services are the predominant services provided. |
| (6) | | Includes 472 skilled nursing units in communities where assisted living and independent living services are the predominant services provided. |
Supplemental Information, page 7 of 7
FIVE STAR QUALITY CARE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands)
Non-GAAP financial measures are financial measures that are not determined in accordance with U.S. generally accepted accounting principles, or GAAP. Five Star considers these Non-GAAP financial measures to be meaningful disclosures because it believes that the presentation of these Non-GAAP financial measures may help investors to gain a better understanding of changes in its operating results, and may also help investors who wish to make comparisons between Five Star and other companies on both a GAAP and a non-GAAP basis. These Non-GAAP financial measures are used by management to evaluate Five Star’s financial performance and for comparing Five Star’s performance over time and to the performance of its competitors. These Non-GAAP financial measures as presented may not, however, be comparable to amounts calculated by other companies. This information should not be considered as an alternative to income (loss) from continuing operations, net income (loss), cash flows from operating activities or any other financial operating or performance or liquidity measure established by GAAP. The following table presents the reconciliation of these Non-GAAP financial measures to loss from continuing operations, the most directly comparable financial measure under GAAP reported in Five Star’s condensed consolidated financial statements, for the three and six months ended June 30, 2015 and 2014.
| | | | | | | | | | | | |
| | For the three months
ended June 30, | | For the six months
ended June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
Loss from continuing operations | | $ | (3,364) | | $ | (997) | | $ | (8,197) | | $ | (6,864) |
Add: interest and other expense | | | 1,137 | | | 1,261 | | | 2,491 | | | 2,479 |
Add: income tax expense (benefit) | | | 280 | | | (364) | | | 584 | | | (2,795) |
Add: depreciation and amortization | | | 8,123 | | | 7,975 | | | 16,218 | | | 15,251 |
Less: interest, dividend and other income | | | (243) | | | (213) | | | (463) | | | (409) |
EBITDA | | | 5,933 | | | 7,662 | | | 10,633 | | | 7,662 |
Add (less): | | | | | | | | | | | | |
Costs related to compliance assessment | | | 1,856 | (1) | | - | | | 6,561 | (2) | | - |
Financial accounting restatement and remediation costs | | | 18 | | | 1,113 | | | 228 | | | 4,143 |
Acquisition related costs | | | - | | | 138 | | | 41 | | | 157 |
Gain on sale of investments in available for sale securities | | | (18) | | | (13) | | | (38) | | | (326) |
Gain on early extinguishment of debt | | | (692) | | | - | | | (692) | | | - |
Adjusted EBITDA | | | 7,097 | | | 8,900 | | | 16,733 | | | 11,636 |
Add: Rent expense | | | 49,657 | | | 49,203 | | | 99,285 | | | 98,277 |
Adjusted EBITDAR | | $ | 56,754 | | $ | 58,103 | | $ | 116,018 | | $ | 109,913 |
| (1) | | Includes compliance costs and professional fees related to estimated Medicare payments Five Star expects to repay. |
| (2) | | Includes $2.4 million of reserve for the estimated Medicare payments Five Star expects to repay and $4.2 million for estimated penalties, compliance costs and professional fees related to these Medicare repayments. |
