FVE - Earnings call transcript Q4 2020

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Operator

Good day, and welcome to the Five Star Senior Living Fourth Quarter 2020 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Olivia Snyder, Manager of Investor Relations. ahead. go Please

Olivia Snyder

and to call. Welcome revision presentation Senior Thursday, fourth the Treasurer, These Vice Living's President of XX, undertakes company obligation Reform Vice and Thank period. from CFO President, agenda forward-looking Five for Act earnings and President other Star's XXXX. with Executive in Potter, The CEO, Leer, a Litigation to statements. Margaret today's Private based XXXX Wigglesworth; written and Executive followed you. through filings transcription, to no publicly company. Jeff statements Katie Star release strictly revise COO, call are conference SEC, with XXXX by any today, of on today's retransmission conference session question-and-answer would prohibited a forward-looking the or the analysts. I Five those statements Securities today's the like meaning this call forward-looking recording is and consent expectations or call and to any the differ made February laws. forward-looking call materially than statements contains results and Commission, by results present of may regarding research Securities note Today's without prior includes that the of The the the within projected other in Exchange Actual securities beliefs or of reporting of conference as

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

now and news on Reconciliations in the them net call to components pro contain our figures to available will may non-GAAP calculate turn over EBITDA. fivestarseniorliving.com. our income call quarterly and including of non-GAAP numbers, adjusted this results I at available addition, EBITDA the EBITDA, Katie. website release In to are these forma

Katie Potter

residents, of forget. as all, that our courage quarter a I'm and grateful of have pandemic impact operations to we the will our us that positive for Diversified XXXX. everyone, our restructuring never shown dedication stability, turnaround for the the marked and year earnings in each in joining January of been time whole. focus likely us year to their strategic was what Star's On industry to a Above Senior Star us our able of business a arrangements on Olivia, challenges investments business business. this Five liquidity Thanks, with that to clients XXXX optimizing Healthcare on was financial spirit had unending accomplish our XXXX thanks, an our through has allowed and call initiatives despite truly and make for proud the an that future our growth. new on Living also has important members and we Five fourth immediate and with the resilience X, support team transaction and Trust, other. the provided completed shown I am the the of truly a to

the Senior than retaining inspiring industry. and the in Living remains challenge and more talent Now biggest attracting, opportunity before, top ever

response, services for of technology central the no Our our been our has the to COVID-XX Investments platform improve task, pandemic on our our whether resident of our dining, distance is easy as it in connection the will customer subside. been are virtual clients. safe of recovery shared yet unwavering and programming family and impact opportunities for business social shared outdoor resourceful support and strategy the programming to have by the most focus work pandemic, throughout allowed socially declining to but has has are structure, has safety in period assets. integral scale experience despite Sustaining it COVID-XX of team been us achieve the and cost especially important the presented XXXX. the our pandemic. mission the pandemic been commitment members connection, the In and the through to revenue continue our residents their have This during operational always leveraging and occupancy events, well-being and challenges important remained environment drive our efficiency our of maximum to

million Living these will to to anticipate million over of unexpected segment. $X addition cost programs cost cost And million align achieve we last implementation Senior to our resulted In annually targeted lower levels, in savings that sourcing a controls have complete our the initiatives, implemented occupancy with we year. centralized of annualized $X savings in $X.X upon of

pricing performance meet throughout dynamic grow continued the which has well business to a adults. demands our areas our seeking realizes year. focus With optimization, changing also rate management into older always other growth, helped our revenue are support Our opportunities we Management the as Living to models to Senior and drive expand offerings RevPAR as program, evaluating stable of on

total we the the of serve our Demand across has Senior commitment of and revenue revenue, us that Consistent well. XXXX. It environment, X% financial represents stability are can, communities given Our growth have of the our fourth XX% segment to our to quarter year our now to to diversification this in we benefit up first from and through for continuing to results operating into new strategy. continues in and a high, open Services remains challenging clinics Living provided Wellness and the quarter testament rehabilitation a operating services management persisted where restrictions Rehabilitation ago. segment revenue a

partnerships. COVID-XX with As in of restrictions networks vaccines, widespread within our confident availability expansion are we are the of listed and footprint Ageility current alongside new the

near-term impact the to the The across fourth industry. of Senior challenging remain Living pandemic Turning the COVID-XX quarter.

to protocols winter deterioration, across large COVID and headwinds our adherence and been at following highest of The holidays has members our and the safety and wellness a is continued of and industry second of team our residents, severe, the seeing as wave our effect revenue fall country operational the testing and The is pressure and priority health clients result. remains occupancy unchanged.

across of quarter. that December on accelerate. begin time, our making hopeful in end On hosting activity positive to Adoption the of towards Occupancy the clinics portfolio across step an complete the recovery momentum, will response. started sales will vaccination in returning to lease communities by anticipate the members be our has began by vaccination and is and to to detail are fundamentals. more clinics date, vaccine at Margaret a eligible we first XX, our pre-pandemic and substantially communities. some we move-ins we However, strong increase that but are for our shows provide residents the pace to industry we team encouraged all our progress of important will step ever-evolving take see already are build our of new the but

a As data XX result growth investment related made Living XX throughout to XXXX of continued inventory NIC ago. to as that months was showed, Senior

However, demographic construction The positive starts Senior enduring trends grow the rate slowed, in XX-plus XXXX, XXXX. XX% to have the than U.S. from population. Living. to Increasingly reinforce growth overall for Xx more XXXX our by so demand projected population confidence inventory taper off also should in for is the

dynamics the remained industry-wide in business look position a Despite financial support to stabilized As into our has of challenges quarter see a past the impact result, we favorable supply environment. more to COVID-XX the fourth out as discussed, we profitable. and I expect our demand

revenue to and diversification have continued We focus expense net management. our generate on income, reinforcing

EBITDA share $X.XX XXXX, For of $X.X the Rehabilitation over of we diluted our per income the a in Services X% adjusted million, reported fourth and forma net segment of prior year and Wellness pro revenues quarter increase results.

portfolio well offering continuing the and that profitability market; believe and us as the as well remain services and effects competitor will underlying model to and our remain our Star stabilize. services provide for Our a platform. to future and support the program healthy balance drivers Five the revenue; investment service completed including Ageility and continued foundation people endure financial liquidity diversify owned in technologies senior in sheet of the pandemic and business is and strong as shared living of allow our in and position vaccination operating resources our our ancillary differentiate We the and in other a our to leased growth,

always, communities success clinics. and every team around delivering and a who, committed safe our our and centers are fulfilling our day, in As talented members, experience

the to Living quarter. our Now review operations the Senior turn call Margaret I'd over to to for like

Margaret Wigglesworth

and everyone. Katie, afternoon, good Thanks,

by As our XXXX, outlook member encouraged our across to see resident vaccination we we commitment year the we last. stand coming are for team make populations the than by this program begin our and and and inspired together better

XX. began COVID-XX communities December we clinics noted, on Katie As at vaccination our hosting

a members than the than also more XX, than team XXX and first dose second February of residents day. residents have which more a vaccine, received received more members have vaccinations of and team of XX,XXX averaging XX,XXX dose, As the

clinics We XXX have XXX vaccination XXX communities. across our of eligible conducted

will that quarter. end the coordinate to mentioned, seamlessly moved by clinics. substantially be has as the complete anticipate of force task clinics Katie first the we And COVID-XX Our logistics our all of

three eligible first to who for host the clinic, We full receive still clinics team each requirements their ensures according to resident member the community's doses would able missed that This a of expect any vaccine. two be the to dosage. community, at or scheduled

distribution, very see have for logistic of We heartened working each has and with to adopted own as across beyond. by in states, the for mandate, the with residents hopeful of to and living challenges, are timelines vaccine normalcy return. how residents. sense group which its federal seen senior include members a outlook which we've program of community to type different responded industry momentum or we're our Gaining patients with protocols prioritizations Without and age a optimism team the a consideration and of individual

by improved industry-wide used on who Five evaluating Various communication including members we've receive team vaccine of best risks is been member so We whether and each an to the industry team and across about the happy see as that Medical and acceptance our addressing is gain We're to is strategies residents concerns we've and to the At vaccine among what communities a members. that focused informed team has our regular widespread acceptance for make in are motivate alleviated. benefits challenge seen to our from Another believe Officer, education, Star, vaccine. decision. ability our the company, are Chief clients employees. have adoption widespread concerns has our

gaining pandemic case response and effective with our of control evolutionary every is infection day. an the was it initial we're an implementation protocol, process, and ground As

COVID-XX. to response Now community an on update

new As communities accepting COVID-XX attribute XX% thoughtful of are comprehensive to least which business, XX, line of one strategy. in at response of and February we our residents our

routine our have We testing including protocols, testing have and communities our strict steady rates. decline and maintained a screening infection in surveillance seen

from levels the X.X%. basis confirmed most and on a cases case a but two-week prior quarter course fourth team rate average. show we July, pandemic, during Resident trailing member fourth have XX% than a only administered which in tests, to decline have from the above the more peak of resulted XXX,XXX numbers Over our low recent resident quarter the of rose

October. the our further occupancy resident occupancy levels Our in continued decreased our we've decreased occupancy Senior but early our lease in in seen with the have year. the community and quarter the from Living X.X% and current from protocols on are communities Comparable last in quarter We from pandemic owned managed helped fourth X.X% communities to comparable regimented from quarter. average prior our pressure that segment mitigate year. believe widespread X% infection last and portfolio the put XX.X% lowest prior Average decline community our to exposure, since

our our year vaccination the of see and new We that admissions recover occupancy. to deterioration program to efforts this hopeful lost quarter first of expect but continued support completion through will are drive

our We And of portfolio, and February down on are in period significant start XX, move quality comparable were trends the RevPAR step sales and same year leads down a in be our continues focused XX.X% have RevPAR RevPAR rate. indicator our for to and conversion in driving four-week sales in from marketing and the this the remain up quarter. activity, declines of positive comparable as increase as challenged leads to encouraged XX% the and recovery. because on XX.X%. focused is Rolling with leased a leading from historic our see of fourth key We efforts remained community emerging. managed occupancy evaluating portfolio, community last of owned lead future

in in residents less dynamics where and the slight On targeted We in fourth most today, focus Living are In increases commitment owned seeing concessions new rate types on managed and are and COVID quarter for cases, portfolios. the plan our our that the conjunction recovery. implementation despite prior in basis, considered near-term of both revenue competitors optimized to year at recovery. believe importantly that deterioration markets better Most community Five Katie offering deep over significant earlier, operations sequentially attract preserving certain have pressure a revenue favorable. on for step and the Senior demand a our management us, vaccination positions or mentioned RevPAR showed Star leased occupancy we that in long-term environment, programs is with our and our concessions to avoids

are to determination We thanks goal, the making progress dedication great members. residents toward and of our our team and

We with thoughtful experience the unwavering financial results. and Jeff Star's resident rigorous gained to will will along drive for use focus to over business. of knowledge the have protocols on call discussion a I the we advancing measured recovering occupancy the and a Five and to now turn approach safety

Jeff Leer

Margaret. you, Thank

our a with XXXX and foundation, restructuring improved period economic As with in our of immediately and a entered financial our Katie the highlighted, as of agreements unprecedented and start the country industry, at uncertainty. us of position liquidity particular, our strong provided DHC

believe cadence While as the in our and shifted strategic results the control we safety, resident that positioned strength our of XXXX. are sustain in year priorities disrupted initiatives experience We many model, our strategic the initiatives confident resilience of business ways. to have our events laboring, well and of and proven support that the are address we of throughout expense to new XXXX of the

benefit our which net fourth per or diluted million income million per reported quarter fourth $XX.X million to a results. transaction. to diluted the income included $XX.X with $X.X the quarterly night, of of XXXX, $X.XX of restructuring related of $X.XX share we the quarter for compared for to XXXX share of net Moving Last

million, the quarter the XX% from in $X.X million management revenues includes $X.X EBITDA the provider of quarter year was of COVID-XX. of occupancy a QX, X.X% basis, diluted or million Cares with presentation, a For the largely recognized throughout a of from we'll quarter in of $X.XX XXXX, decrease prior the impact due the XXXX income $XX of quarter had income on Adjusted fourth fourth the under $X.X and Living $X.X pandemic closed Living million financial for the the to this the fourth share Senior Act communities transaction per relief and The end a On Fourth following million $X.X DHC quarter share to comparative of represents of or due were operating decrease XX% our with declines and quarter Senior compare of additional expenses. last the in XXXX, for or X, million, more $X.X or fund. was of of income forma and period. of period XXXX of fourth forma $X.XX million as coupled the $XX.X X sale approximately occupancy, during net illustration, if result nine impact quarter's a of to results. year fourth January the diluted for better a same pro the pro as to decrease net QX XXXX, into closure prior evaluate million our compared segment ongoing COVID-XX communities year, revenues our the per XXXX on with

up X, October effects challenges While the attributable Wellness Fitness Rehabilitation our Services year clinics majority revenues. to is $XX.X primarily X.X% opening the and $X.X to or XX segment prior million, period. related Senior Living of continues net reported an these of revenues XXXX. the since increase compared pandemic, as new to and Rehabilitation the experienced to the million This of of ongoing of Ageility segment ongoing our make

from which we in totaled spend of in $X of was period parties. from a sequential management to in capital management of revenues prior capital of community was fees X% of expenses DHC. represents behalf million $XX.X was Living a And fees reimbursed from on year level managed represent on $XX.X million of attributable decline managed compared behalf DHC. and on community million earned, segment DHC attributable $XX.X and third million million, $XXX.X Construction Of X.X% to communities that the XX.X% a an Senior total projects behalf a manage costs behalf fees on a basis. sequential and of on to managed on $XX.X projects represents construction on increase was $XXX.X total, million the decline Our earned million management lease derived incurred reported other X.X% communities. basis.

We managed communities. expect Senior $XX.X that as community at capital restrictions ease, DHC our will spend. continue capital we consistent In a to of XXXX, likely approximately experience million Living spent

million the $XXX.X We period total and operating quarter. last to expenses. fourth from a a operating X.X% turning expenses Now year of quarter, X.X% in decrease prior incurred of from the

expenses, continued related including and testing residents $XXX,XXX increase across million million to remaining response secured benefited $XX.X communities aside from care. have PPE to health insurance reductions to the PPE managing our set we to self-insured offset potential Of costs decreased $X.X to for approximately to has expense of have amount, focus deployed an amounts communities in occupancy combat protect increased pandemic, use to COVID by and prefunded reductions claims, been Since members labor in in during partially pandemic. of our on throughout We this due high-cost the needs in costs and to team our reserves XXXX. the related and

program costs we DHC, was total that prefunded to million We throughout half the PPE related on is on million the this $X.X decline majority pressure pandemic likely basis. will of represent communities result quarter of a were insurance These our will to million, the the put continue believe manage. and $X.X related self-insured delivered by expenses Fourth DHC. of sequential managed reimbursed the XXXX. X.X% our health on first a PPE medical spent be $X.X reminder, of the as a As COVID-XX and including it approximately communities supplies. to

infection and follow. However, reimbursed testing are that costs as was expense for administrative million see rates million, hopeful fourth $XX.X treatment we decline, General included COVID DHC. by the which $X.X we and will quarter

$XX.X expense Excluding G&A costs, these million. was reimbursed

expense as expect We shared in G&A we services our will be technology infrastructure. throughout and continue XXXX, elevated make further to investments

sheet. our to Moving balance

unrestricted of million of As approximately and we December cash equivalents. XX, $XX.X had cash

Senior We have Rehabilitation revenues, segment, strong note our questions. not and do path effects of drive on only That only our believe growing mortgage will rebound borrowings our our as support concludes of Wellness today, spending any credit for of to impact we Services remarks. the open maturing $X.X our in million on growth. in have our subside adverse also of the help form And with obligations along the and but We our XXXX. prepared position, outstanding business of continues not Living have facility. finance COVID-XX debt stable to as as to pandemic line our Operator, are we ready future one

Operator

now Instructions] The the will Please question from comes with session. Maher question-and-answer FBR. ahead. B. [Operator We first go begin Riley Bryan

Bryan Maher

and all that or do vaccine? percentage way, for with dose individuals you guess for don't population that least end XX% it? many do Good vaccine? eventually we Katie, the the detail. it asked individuals the afternoon different if too a have what get in received to the the all of I'm the XX% it think everybody the is this we'll the Or sure you the Margaret. of or communities do getting you expect do I But up get what have at not asked of question that residents and thanks is first vaccine, for as more to if relates communities

Katie Potter

high really to vaccine. in terms take a rate had we've our residents of positivity Bryan, the wanting

why a you're percentage. I such think high that's seeing

I number and go through the clinics, As to that we'll the clinics, see we we second think rise. roll third continue through

question we high answer don't so as going as of through the will expect. second we And move let that reach terms expect I'm And it pretty in high might your as communities clinics. I to Margaret then remain

Margaret Wigglesworth

on are we the hours in the especially clinics rate fence. counseling the working members increased used team of of the Yes, might Officer office of in encourage we've support be second peer-to-peer We've conversations. a get services communities bringing an on seen as diligently journey. holding started who and along for our to And education Chief aspect members, Medical underway. our we And program adoption team

Bryan Maher

be just you Okay. the to require is might you And table? that in get think do Or direction you headed where off it? team all members a the

Margaret Wigglesworth

ultimately, of Well, supportive we our competitors if initiative. think not will of the and cons most, seen are healthcare do require that are that have it. some and all, evaluating of and it settings pros that We,

And along path. so that we're moving at looking

Bryan Maher

of Okay. maybe Great. gears that How And your kind some growth about clinics shifting allocating think new money to your growth. into either liquidity to of Ageility you do and and or liquidity even capital? look ones you housing are that thoughts give for about good some some DHC. think senior in maybe you from XXXX deploying buying how condition, Can facilities at you maybe us deploying

Katie Potter

Senior business communities our we we're business primarily clinics acquiring for Living Ageility in Sure. and we that X quarter, grow as be think, is Obviously, to best looking for the and approximately capital capital, But XXXX. of that certainly include noted stabilizing own our our looking portfolio. business. in to to XXXX current going to I last for grow But growth throughout to on X on focused terms always continue expect, a be new at our line to quarter support the focused uses And could of growth. future

Bryan Maher

the for on guys manage, maybe you that? opt deal get much to call sell to how a Okay. how they DHC to that and with And about look prepare And do income? talked that time today, lost when earlier that we do replace you you as property lead

Katie Potter

dialogue it's that the those regularly opportunities I are think to an and DHC. underperforming. We discuss meet communities ongoing with review for

think I may in disposition understand or connection regularly that for So considered be things we foreclosure. and are

Bryan Maher

in you have them what are quarters? are about pushback in, for increase move know Okay. about potential getting rate prospects of What and sales the in leads? And the that guys talked leads. And you getting you a can talk from bit overcoming the conversion next on to little I the residents? couple

Katie Potter

an we've from increase last are prospects – conversion rate good. But pretty our seen in is think year. down We I tours. our

is pent-up out way demand that is and generation up there. think we there lead Our

Bryan Maher

at And this trigger pent-up to kind nothing When we and move They're dam but does there's in, have about theoretically, – one when because actually that demand? looking kind And hold to of anything that question okay, they get pent-up thing demand, you're things that to that do can break? that I point you a right? like, of get point lot. can you the

Katie Potter

Yes. we of see a Bryan, the I in think I that often seeing care. materialize in little more demand line pent-up particular, – the needs-based memory business, we're think,

if imagine, pandemic. caregiver you might for been you a That's caring were family As someone probably with the dementia through challenge. significant a

addition, start and we've office spaces caregivers to reopen that In solutions are people for go family for to noticed work, as back looking that.

we're baselines independent that pent-up business living. needs with demand to opposed baseline the I business in be more So of going choice the as line think of to of see

Bryan Maher

on and not where for the with where turned XXXX your more nicely the helpful. heads occupancies That's now the are or when pent-up occupancies you in now? And demand it. stabilize, land the lay and here, to quarter down go February have kind But continue of vaccines from here as we're looking are guidance fourth currently, Got call, that at. positive with are year the just more of a talking look at from suspect we where you do

Katie Potter

positive Obviously, through momentum cannot that the December February. there's of Bryan, predict think, in I anything very is future. challenged from end at we've if this seen the were some we Well, and learned January. into things We've pandemic

I be or take as But it remarks, more very pre to time pandemic. our to occupancy. we to think, of it's where our was in certainly hope back normal levels say. it's to to difficult remarks, rebuild So said said We back I that some probably going we'll in

Operator

conference Katie session. I back for any turn closing This concludes would Potter like remarks. to our the question-and-answer over to

Katie Potter

Thank to and Operator, to you We in continue you lives to consistent dedication here Five and our months. of that leadership response. COVID-XX and step impressed and coming embark at wellness forward for in be and proud The collective the on our pandemic look unforeseen this on and to in We updating we has concludes I progress our as wish ways, Star continued by our the call. next health entire joining us team team all. business today. our impact the encouraged our

Operator

has conference attending concluded. Thank now for The today's presentation. you

disconnect. may You now

AlerisLife (ALR) 27 Feb 212020 Q4 Earnings call transcript