FVE - Earnings call transcript Q4 2017

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Operator

Good morning and welcome to the Five Star Senior Living’s Fourth Quarter 2017 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Brad Shepherd, Director of Investor Relations. Please go ahead.

Brad Shepherd

Thank you. Senior XXXX covering results. Star and fourth Five year full to Living’s the call quarter Welcome CFO Scott The presentation President Doyle, by for Bruce Treasurer agenda today’s Mackey, and call CEO; Officer. Chief Operating Herzig, includes a and and Rick

conference the management These to without Following like within conference XXXX. publicly the floor Five of I that to statements Actual from call no Commission prior call Star’s the of XXXX the present the regarding Exchange through call forward-looking today’s are of contains and any SEC the release this Securities with may made written transcription, as beliefs revision is will Reform to this the and XX, company team revise open Securities prohibited in statements. based The question-and-answer a Five obligation results filings expectations presentation, conference Litigation statements session. to the retransmission consent or Private Today’s other of strictly and projected the Star. of in March forward-looking other results note would forward-looking than any on undertakes recording meaning Act reporting of differ forward-looking period. or securities today’s those laws. Wednesday, statements materially today, and

statements. are information factors not forward-looking place now cautioned will Investors filings to cause any that the those could with differences reliance turn Additional Bruce. SEC. concerning over I to our is contained the in undue call upon

Bruce Mackey

Thanks, fourth XXXX on call. quarter our Brad and joining end thanks earnings us and year for everyone

and saddened Barry of extend all he Barry and was our ability Adam managing here was standards to XX of an a I individual vision XX set would I to unexpected his Founder and family Five high condolences Star during passing Before truly was confident as We us friends. say a of Yesterday, prepared like Portnoy, we with remarks, Director at for recent serve our me we directors. have leadership sincere years to great for Barry’s worked and deeply of are the help that take to with amazing Portnoy into minute Barry time. by elected our our one to I and in the lead Star. Star. years worked missed. Five to Adam for over and future. be Five Managing His mentor will begin

quarter year. result to XX $X.X turning fourth million results for after up quarter, of basis for the Now, compliance points and million, from the non-recurring for total costs. both operational adjusting for This living of is adjusted senior assessment revenues was XX last expenses period our same EBITDA down points $X.X down XXXX the the basis

have discuss detail expenses expenses, down more been certain would Our Rick in quarter-over-quarter not total for insurance-related will which if later.

had our source where year. Care data. as open within compared fourth year, care to this to business, in X care not miles we XX% pay the decreases were private because up units memory the NIC year mitigate units memory last X% overcome by past business, been to Memory of Memory the the competition rate new revenues, were these the and pay lines occupancy living a and in are On which independent living This private in according over was increases assisted the memory the quarter of same quarter the past occupancy has to of we basis driven in fourth XX saw care up the living was of of in loss increased over to the year. as down rates of portion XXXX with in revenues assisted X% fiercest a point with quarter living, Care we period last were same compared increase over side independent revenues able able businesses. the

On the our XXXX the $X.X Occupancy coming the revenue XXX basis of million a fourth points in decrease facilities nursing from to the quarter that from skilled we leased with skilled down nursing reimbursement communities. government skilled XX%. majority at nursing side was business, our saw of leased standalone of

and As we the are care have be to to lower organizations government stay, at in lower in resulting for reimbursement rates discussed in continue care care led requiring are and a in lower skilled people by reimbursement decreased nursing and of at bypass alternative. many managed a under cases cost facility length margins. Efforts past, go programs the pressure accountable stay resulting rates home

and communities are skilled leased Xx. us cover Our rent still for to profitable nursing continue standalone by over

of to the Scott of Properties Senior will aggregate apply electronic to Housing approximately call, communities million. announced quarter which backed have in last we mitigate a in living shrinking fourth into Trust including records a margins six price entered for quarter’s continue an strategies sale with of talk our earnings medical $XXX we to On implementation agreement We more that manage senior sales bit. about the sell

$XX realizing the call. includes mortgage approximately to list general communities close for owned capital portfolios reduces We senior the revenue further debt communities. generating of from improving in to capital We December out Last our of XXXX capital XXXX housing including resident transaction the two closed efficiencies, investment, have XX, at and improve investments quarter. the initiatives million spent XXXX, this of business living funded our in use million. for the by current human strengthened to The investment long-term six second of investments balance. operating $XX $XX in flow programs $XX fourth our start though industry in execution expense will capital of a of remaining initiatives lot and our quarter million opportunities. of leased senior the expansions, which fourth million satisfaction. complement quarter two of of gives to I a talking approximately sold CapEx of on and off I portion and owned from this sale do business year, and of designed expansion leased expenses for us completion spent As backed subsequent the the areas access continue in value leaving These during Scott we announced through initiatives create properties to want future. as occupancy sale approximately manage utilization our each The our you left about all current and good to to operations, in and some oversupply by through capital was properties I living capital and senior approximately We continuing to by well future expect landlord internal Two existing improving this our initiatives and leading quarter and growth the update we during had headway properties. and our environment the properties purposes XX% proceeds our several in in use Rick, end through cash communities. intend for will into so made

sales expense rent accordance result lease approximately our a Our senior capital increase will terms. with $X.X of as of in housing million these

largely our the as portfolio leased called put in underwritten our EBITDA a on Park may bit at the will exceed we increase. coverage we generate at is currently The CCRC the rent largest capital near-term, improvements While Lane. to The growth Dallas, result expect Forum pressure ongoing that of in Texas project these in of a have

which Here be the expected of that are units care. living to units we plan market. level a our of into units. for is create opposed will will them XXXX. assist allow the leaving These have within XX completed of us higher quarter After are some converting in living units care among in us living this and some independent of complete a When service middle is assisted of these apartments out community over since nicest to currently care residents second of the for been conversion memory the this unit units existing of Dallas as the to we year,

our opportunities find markets We to of in projects internally. advantage other take forward on to continue certain expansion and growth move

units two approvals of our We are CCRC construction memory of leased communities. care at begin final awaiting two to

will We Delaware. memory a located a units XX units care CCRC at of be in and XX adding CCRC California in

units awaiting And of that managed a lastly, is assisted begin in XX California. community XX manage. construction begun community final independent unit Tennessee care have we are in memory we at approval living to a We construction that of also will of living

We XX% expect of were be community as XXXX complete to this in middle and the units last the pre-leased. of week almost

the a a One year the program larger capital investment is and to initiatives managed to market. of CCRCs introduced quarter, of Scottsdale, project we in last our in completed the Arizona Home Last talk about. the we and piece that large continue Rehab at community the thus

per of average completion an project have just to our after day to Medicare per XX over from increase census day We residents completion. residents prior project seen the XX

Another was in of Rehab a in right very are these how now. We we leased achieved an Rehab Bloomington, is Indiana gains to examples intended to results. These seen program to prime Home and difficult we of at extremely similar the have operating spite environment this before project skilled work. completed CCRC Home

at Columbus, Ohio for see latest project issue in similar Rehab awaiting license leased to the a the to Home we operate to market. result. opened, are at our a state a We to community expect When

at our as the another well. Home in We work project to market are on starting Rehab to leased Delaware CCRC

of end this We XXXX. to may be completed project expect be

continue evaluate skilled makes other to sense. will We initiative this where units

at with five XXXX. XXXX independent own XXX living Indiana Looking units QX units – we the communities in to in in finished of our portfolio converting living now, assist

respective license We happen are expect are state demand be the second their assisted over past our given to living in several in approve able the markets years. still these the as on they we Once quarter. will better communities compete to in waiting operate approved, the to change which will

so have and new we do compete communities ensure to to into We with the that all investing that will we capital expect seen XXXX. able to have will to be been inventory our continue in and see they

be going we to we industry we are have in are the dynamics As see the said complacent as not to past, improve.

Herzig, help over Star’s we markets position Officer To the the as to better advantage with backed forward flexibility Scott are our of their Operating We to will like the about of to in respective Five the Chief a increase demand manage our would turn now to we call transaction XXXX. going to future. foreseeable capital in us to sale I talk and take maintain move communities extent, now operations. provides in compete that into

Scott Herzig

unexpectedly, normal in of due seasonality the points Thank the activities and the flu. quarter XX.X% fourth Not Total latter down was you, basis XX Bruce. down year-over-year. XXX of move-in slowed fourth impact to part early and occupancy points basis quarter, the some in sequentially

for to quarter the However, total quarter X% XXXX. fourth movements compared the still up fourth of were

XXXX of despite the is construction by XXXX still all for which outpaced communities. Additionally, nearly impacting move-ins of our new total negatively continued our impact X%

Our ability space our revenue year’s our this to of of combined main drivers quickly dominance many were the communities digital manage for and improvement effectively move-ins. year-over-year with increased the with

fact movements. and total directly for In website from Star Five move-ins up our XX% now account XX% our year-over-year of were

you the living competition. we combined increased against the This stay in continues level new further our is that higher only senior community third Star living of The average growing homes to their as two rates new rates on move-outs, our positive communities, to discharges staying and to the in showcasing of different additional by and including the due care. related seniors communities of have unlike to increasing focus of higher emphasizes a available length number occupancy the where opposed customers battle why levels fourth options importance new accompanied superior move-ins However, fact of caused and to to their supply. lower quarter with by age by to and industry of driving barriers frailty move-ins to from benefited outpaced attrition Five the quarter of overcome and residents mortality our in

was ahead close communities only to handful compares during admissions Overall, at last move-in the slightly because year, of admissions flu. challenge our the Looking of at a This and this better. some we of for despite February quarter more point month months even two of in pace of fourth the year’s activity good to us first communities close this having the of are than XX period XXXX. was January to of for a

illnesses we flu, to a to time this quarantining communities and have successful related Our treating and couple been to our at only of unable have aggressive admit. approach

of Physical Ageility to XX% and this $X.X XXXX. pleased our Therapy be quarter now the the Turning fourth we over Revenues continued performance division. of to increase growth quarter fourth division, for million, with the were a

$XX of approximately with million for the affiliated For was XXXX Ageility a which total six ended XX up community. We in compared Five of XXXX, which are revenues million Star XXXX. clinics year to not were $X.X opened

CCRC the today, platform. in electronic which have more our our our a Star referral environment. conversion now community. involve with And In improves proceed update nursing with in As Five all medical records total our convert to of X platform. outcomes this on to skilled the Star assisted our now is operate nursing outpace units. organized reduces platform to and both medical vital Phase of conversion existing records errors an would to rather With all electronic we easily our XXX medical Phase medical healthcare living not clinics, project which will adding non-Five year’s Being of units to programs. us significant complete, our X Earlier units conversion physicians, and that I communications with of pleased am are our records electronic X of to began with we report CCRC of we participation Five in transcription records affiliated and to slightly XXXX, and initiative. And we all to will Star clinics sources, beginning the those outpatient outpatient like with share now completed electronic allows we project units XXXX, clinics to an of of to key our medication skilled freestanding outpatient of

Resident of company Dining the and Program. updates higher branded profile to initiatives, Moving our company our MyChoice on Star to Program Rising couple a related

pubs at shows restaurants, communities find fully offer you program utilizing and has dining living any place. coffee dining These and correlated directly put dining managed multiple difference marketing and a are maker sports MyChoice point-of-sale and leased. a is now fine new of would or restaurant espresso which our to improvements that each café. occupancy positive what residents from our in of that X to had CCRC been operational ranging We Program with large at it bistros has research to extremely system Feedback venues Dining the similar independent now public is where X been prospective communities, are X and in to this and site

Star we which executive initiation the senior continue Five on of to the and of will whom existing leading which in in Star training remainder of both the training response this program program, who Program. of have we identified back focused shortage The program graduated Five year. in We and their of in as stages inside throughout industry and Star working XX executive industry are our Since operate add course with training, living various Rising In ongoing one-of-a-kind communities and to director successfully late the successfully Star to to we directors call participants experiencing, this our that Star XXXX the qualified community. continue communities will XXXX, of executive in them X have Five Five detailed time, remaining beyond. directors, is leaders Five executive quality initiated provided community new graduates are of currently and Star those throughout a X directors. Since how as have participants, enrolled placed outside

now We Chief turn and to are Star will students will Financial I the and over the graduate Rick hiring the this we continue progress throughout Doyle, very XXXX. with candidates of program more call our Rising pleased we Officer.

Rick Doyle

good everyone. Scott morning Thanks, and

$XXX reserve a For of same XXXX. to that decreased of a decrease senior revenue we the XXXX, Approximately $X.X basis period living in half million the monthly the increase our the the result revenue result or Ageility XX points was by quarter our of fourth an of our of during million remainder the in an offset increase that quarter. in revenue and division. Physical occupancy Therapy both average revenue rates decrease recorded decline is The in from compared

in manage reported benefit from tax of operations to from operating a We as loss communities. a The to increase fluctuations living XXXX, The senior minimum our period to million workers’ increase XXXX rent of This from has offset a were across with was of live a in entire approximately of income decrease compared leasing consulting costs an decrease health last This minimal insurance were in both fourth million year, professional as communities value programs liability insurance quarter, per senior to in the benefits $X.X continuing General loss is a approximately percentage net and expense of continuing X December from to have losses approximately loss year. sold carrying million same approximately increase consulting living approximately by net in daily price decrease rules decrease decrease includes Our or the of to enacted now the year. operations This use a went managed compared period X.X% up wages quarter the tax the same revenue held quarter million were implementation charge increase of million same increase recognition of of benefits compared was revenue $XX corporate to last increase salaries and own, last labor to of $XXX of was our landlord an were the administrative to for in was ERP our were for as a at since over last well primarily includes an of compared have deeper, associated $X.X last accounting living for same have the to same January to December taxes they for the for million compared share and The period as XXXX. The was an we impact additional primarily fourth classified to credits. our lower down quarter fees. same the general quarter is the expenses two increases that only communities in period to per fourth of by offset an fees the $XX the Other labor an revenue. additional of $X.X of of period to on claims were the demonstrates that of quarter senior by Rent fourth managed This expenses on X.X% the XXXX million, decrease we of to due in the fee all accommodate our million portfolio. the was quarter In operate fourth XX, staff from the is same XXXX period our an revenue continuing or relates X, same which new to increase expenses an sale. living leased bit $XX.X increase $XXX,XXX benefits well-controlled year. due we to as new operating our to Senior compared operations $X.XX cost compensation improvements controlled recognized benefits of compared communities that we X% XXXX. operating close we of $X.X less federal a This relates quarter lease alternative new compared occupancy. and overall for and revenues. of monetizing XX.X% revenue. the living impairment $X.X capital year. communities a for XXXX. compared and to the expenses. as the the asset X.X% senior adjust million and G&A that Drilling the system XXXX X%. from XX.X% share nominal offset quarter, the This senior decrease end for in from X.X%. in $XX to of million, where law back in was $X.XX reduce living successfully XX.X% we as and year. at remain due The insurance our

one second sell with sold during with and that of we XXXX and of had approximately flows cash and remaining cash credit remaining At at equivalents our liquidity, balance net be living included And January yet back will approximately estimate equipment mortgage net our four of equipment properties selected million the included senior the rate and the our to million obviously $XX six communities February, to the as items, third-party be $XX.X is senior for closing to manage sale call million secured that of we we property relation $X.X $XXX approximately living transaction. the quarter. owned approvals sale Bruce two will and complete, communities, the six $XX had on After X.X% agreed sheet of million of XX, from debt note to of and ten cash we $XXX the encumbering for million year debt four own mortgage With two turn approximately turning million $XX three In of and revolving expect of end remarks. to by outstanding December, communities have I the communities. due approximately September our sold. to in we one million of for we held that nothing communities. Now, million communities December XX facility assume million. SNH for mortgage an have close of to classified transaction assumed backed in $XX interest of property $XX to of

Bruce Mackey

Thanks Rick.

throughout I As at call we a beginning new on expected from this prepared each remarks, senior a have have to XXXX. the supply of initiatives we for introduced competition list them. demonstrated year progress the tremendous made will throughout XXXX of XXXX. in recapped continue Earlier was we and industry challenging of the And living that increase my

to outstanding fundamentals by to of And success. times are quality work determine business progress I focus the now with at services. In Five And to make as strive class strategic for company. many coupled adapting, evolves. our choice the said living will questions. our turn initiatives continue We I much that XXXX, the and of initiatives the operative in while profitability combined increasing our have as care providing that with we back do. the our continually aimed our execution Star these However, senior before, through believe we more strengthened growing operator forward improving look it best fundamentals to industry will has on we passionately

Bruce Mackey

I would like for joining And look to quarter our us progress forward Thank earnings future everyone updating on on thank calls. on you. fourth call. to future we you

Operator

Your now concluded. conference is Thank you for attending today’s presentation.

now disconnect. may You

AlerisLife (ALR) 21 Mar 182017 Q4 Earnings call transcript