FVE - Earnings call transcript Q2 2021

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Operator

Good afternoon and welcome to the Five Star Senior Living Second Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Ms. Olivia Snyder Manager of Investor Relations. ahead. go please Ma'am

Olivia Snyder

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

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

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

Katie Potter

the of quarter agility offering earnings and on services. thanks reposition second for rehabilitation announced and our three-pronged living repositioning we our for strategy: our call joining management growth the XXXX. senior and everyone Beginning Last of outpatient us of Olivia evolve with our continued quarter Thanks the diversify. services

second the which to Senior optimize as drive of greater intended first made phase Living quarter, strong During Five industry plan conditions progress is portfolio the our this on and Star profitability stabilize.

repositioning completing with new reminder, units by to favorable and business transitioning nursing a in our managed As of smaller to of we strength this continue health the from our aligns operational Closing market exit the care and will areas opportunities the manage our living XXX skilled senior with communities operators. CCRCs, business.

with plan We care initial agility inpatient are the revenue estimates. results reflected anticipated completing execution as health financial units clinics which for the our the CCRCs, all exceeded planned well pleased as and swift is The in closure loss piece of our our XX of a to-date, quarter.

the growth skilled from believe for best exit nursing will we strategic However, and us success. position long-term

net agility the have our and growing increased year-over-year. by revenues second We focus our same-store outpatient quarter clinics and services maintained in three successfully opened rehabilitation X.X% new on

footprint agility additional our offering. our fitness and agility expand growth to continue have to expect We experienced from

a only overall have our XX% past year. the than While still small comprising by increased portion business, more fitness revenues over of

in transition communities be transitioning will have completed XX Trust to-date. we to-date transition transition. and of agreements clinics to transition Turning located community confirmed to remain completed are community XXX end. by the year XX XX remainder entered has agility the Diversified We into in communities, XX communities operators anticipate Healthcare to to the outpatient new the operation. Of of of

communities portfolio that experience transitioning and benefit clinics remaining significant continue communities communities The in living believe services to rehabilitation continue to quarter margin. higher and in basis operating operations. senior to managed we XX our will higher with higher XXX occupancy, the agility basis resident basis EBITDA points XXX continue XXX to the points We the manage and average points a outperformed second expect are the outpatient margin, total for XXX DHC

momentum that key and in Five the rise will requirement on our in and for vaccination components members infection by tours sales of encouraged to Star lost of both insulate We COVID-XX occupancy the are communities control reclaiming which continued of surges cases country. against the across the team leads continuing our that anticipate protocols are We help possible our see variants we communities.

unpredictable and older on driving evolution growing rehabilitation our and focus business Above segment proud the services experience are of delivering customer expanding the preferences across the team's in needs to wellness to the commitment our continue response we adult virus. and the of population. safety We all, unchanged. is an of company enriching serve changing this our our to And and face of well-being

Five As Star. increase part to and which infrastructure of we implementing to are for efficiency savings our will cost improved strategic changes corporate our ultimately drive plan, support operations

expect focus senior remainder into as make progress realizing we management other XXX fully the and living and throughout we we the to transition and G&A targets communities core workforce. on XXXX our expense our services, As our XXXX of towards right-size

customer and growth. discuss phases operational move will the revenue strategic diversification the differentiated drive opportunity our turn plan as we now the services we our to I'll call of of to continue experience future meet resident the evolution base Margaret offering to our market over of well results. As to and through prioritize demand as to

Margaret Wigglesworth

Thanks everyone. Katie good and afternoon

return a continued living senior wellness services this and challenge. and toward advance the for hopeful are recovery momentum rehabilitation environment, of to our we from impact their pre-COVID As unprecedented

as the over members, we business. year, our dedication the also but important now move We changing forward residents to clients of needs as we the are only and with not of transformation thankful past team adapted our have the for strategic our of

well-being and to our will and and safety members a believe customers new clinics we commitment and a Five full the our recovery, to community experience. return As effective residents communities Star team X, work robust announced September all supports as clients. to communities embrace employment our in in safety and welcome is June, to for ensuring members and sustained This which of path COVID-XX vaccination condition team be to who of clinics essential we the

Let me on operation. with and wellness start rehabilitation update our an

As increased revenues and three overall clinics the over revenues the pandemic outpatient in Katie year clinic our over comparable increased strategic with new to plan. mentioned, XX,XXX X.X% increased of On basis, increased second XX a offset or XX.X% prior by Agility visits fitness the quarter partially restrictions. due XX visits easing part period. the clinic segment to reflecting prior And inpatient visits have prior in total as and X.X% net XX% also in a growing basis on the increased ancillary broader clinics quarter, decrease agility year-over-year. services second over the we and as successfully a opened year reach year the customer which XX.X% closure of XX.X% experience sequentially differentiated our of Outpatient support on focus comparable by by clinic base. a the sequentially the period revenues of our

the our Since vaccination round declined since the confirmed to Living level clinics have the first the throughout completion segment. of of to Turning began. lowest Senior communities, COVID-XX pandemic our cases

several leads increase activity, continued have surpassing strong to past as quarters. sales in particularly over We an the levels pre-pandemic and well web referral with rate as conversion see

from increased activity including tour XX% XX% notable quarter repeat in increase a tours. QX Second

first basis, Our of and XXXX community the XX occupancy basis quarter since points average. XXXX and conversion off only rate in is fourth a at its the the comparable spot On highest owned leased the was basis improvement from quarter. the XX points of end an from end second portfolio quarter of of XXX the end of at July points basis XX.X%, the the and

This the sequentially, sequential Second managed prior quarter quarter or of X.X% end repositioning, increased portfolio XX the our July XX average year. occupancy was which over XX points and second end and decreased occupancy points improvement points reflect an the declining comparable the first the is of prior decline the average an of basis adjusted from improvement basis the communities, following the to past is the quarters at points quarter. Spot posted several occupancy occupancy sequentially declines greater. basis only XX of retained from XX.X% XX.X%, which managed while basis average of basis end the points from In year. XXX from

communities. We across to expect in to increases our continue see occupancy gradual

XX.X%. in of last for the recent across However, due industry. US to we RevPAR are leased community be same the continues managed variant comparable and keenly for that RevPAR operations period portfolio the challenged XX.X% community the impact down rise comparable may the cases COVID-XX owned in with down to aware portfolio RevPAR our year. occupancy depressed from And

in our expanded remain programs concession have competitive market. the to We

However, comparable community year. in the from portfolio second up quarter improvement X.X% showed the last managed of slight RevPOR

a vaccination with to will a place results. While pandemic, I turnaround workplace strategic against levels industry we will safe to continued support robust it's And call community and execution of the as the rising along recovery. will now call and of sustained discussion a the choice. pre-COVID toward our for over of a home turn financial to difficult return for a our backdrop our plan Jeff a the to of predict momentum conditions expect support

Jeff Leer

you, Margaret. Thank

we quarter for or to made strong the second loss Last compared of of diluted share quarter $X.XX the income $X.XX on results majority million $XX.X the reported million per repositioning the plan, of of strategic share our for second progress financial second $X the per or XXXX net of XXXX. night, for which net the During quarter we quarter. our of phase a drives

for Our the will year was from negative included DHC. costs in was restructuring which $X.X the EBITDA a million $X.X net be quarter for to by reimbursed the period. $XX.X loss remove our or million, of quarter $XX.X of net related loss of $X.XX share. net plan prior million to restructuring $X.X the of strategic $X.X per million Adjusted $XX.X million, million costs Adjusted million decrease

the the million one inpatient $XXX,XXX of quarter revenues incurred agility impairment decrease from primarily year, health leased X,XXX care of senior as repositioning. And units a were $XX.X a approximately part of which community XX $X.X of million, Second the fire a closure as due of charge. XX.X% April clinics or in living our result impact approximately an to operating and asset of prior and management the closure

inpatient the segment and by inpatient and $X.X of prior plan since clinics clinics, opening our as part reported first due decline XX% partially XX X.X% of closure the the as in of revenues of the of offset to The strategic million, of X from $X.X Rehabilitation outpatient resulted a a million new of period, Wellness closure mentioned compared in year million clinics $XX.X revenues XX quarter. Our the sequential or Services primarily net decrease to XXXX. April

management and represent sequential earned fees Of basis. at Living total the and a of construction revenues X.X% Senior million. a fees management year reported compared on million prior management communities. $XX.X to decline $XX.X a were operating managed period segment the Total decline Our revenues attributable X.X% $XXX,XXX to in

a As to reminder capital. Star fee Five capital a all receive management X% continue on recurring will

Now turning to operating expenses.

year Excluding and X.X% the decreased the and of expenses expenses or connection total inpatient same costs last care million to due which in second reimbursed closure expenses, reimbursed General from health of clinics. decreased quarter and was the and level restructuring wages included $X.X the our with period community primarily $XX.X by benefits impact our units for operating $XXX,XXX administrative million, DHC.

million service of approximately Our in strategic infrastructure period for the of plan. due shared made as $XX.X our our or phase increased of net part primarily X.X% year the prior evolve to G&A investments $XXX,XXX expense

increased vaccination protocols been and expenses. health refined. COVID-XX-related certain have With safety to Moving levels,

maintained treatment costs liquidity plan. are are that health of and testing to insurance remainder to strong self-insured we remain due foundation a delays elevated well of our We financial execute the and COVID processing in vaccination confident strategic positioned administration. However, our for

of As $X XXXX. million $XX.X million outstanding we approximately cash form June debt XX, mortgage only unrestricted cash of and of maturing in and one obligations equivalents in of note the had

ready As any are not on Operator our for of open outstanding That today, questions. credit remarks. the borrowings facility. to line prepared concludes we do have our we

Operator

gentlemen question FBR. Our time period. ahead. we and this from Instructions] Riley Ladies begin Please at today Menges [Operator the go B. question-and-answer comes first will Kyle from

Kyle Menges

plan you once G&A and communities Kyle, you close out talk for the little is of bit remaining was I it where more clinics agility XXX on Good you transitioned. shake XX the will think And kind This about a if hoping are Bryan. after that to. afternoon. you could

Jeff Leer

Yes.

transition the through successfully and think we'll agility several the able clinics. I of we in or communities to transition patient next the G&A as our be quarters over think the structure through normalize

Kyle Menges

those normalized communities the your happen some thereafter? And in will in how Do in after that you quarters think targets? Okay. reach normalized long it yet deck will it immediately, targets are wages will to few next then some for do and your take put You benefits transitioned, you pretty take slide time think G&A. or

Jeff Leer

period the That strategic time implement section the after transition will our take a with of we strategies It through that strategic our of these both headway. normalization as would But made evolve phase significant which out is well successfully next plan complete some associated we've as likely hitting some likely the quarters. plan, come several thereafter.

Katie Potter

would I continuing add also that that successful operations. there's just Kyle, And -- that no on COVID impact assumes to

Kyle Menges

you. and looks reposition those units. X,XXX all have It time it those kind pretty And Thank that the closing what's plan to most do get you frame refilled? about SNF helpful. take That's units repositioning Okay. closed. of also those then of already And much like been And on of those? then you're will

Katie Potter

opportunities closed -- them. some think best for have those units for time of working to to take will work those been through units. There and that us with closely are evaluate it with for use I the we All DHC

So I process that probably them. take be an time ongoing will all will it reposition to but expect of some

Kyle Menges

and last to to see And lot would a say, by as to then go that me. a get occupancy We're starting work school. think back you back people Okay. to of about can where from mean Labor year-end? materialize? I occupancy we Day And get kind hearing you're post boost you do in how should

Katie Potter

tour definitely we're as interest given -- and our seeing a solution. activity, we're think definitely in I living senior lead increased

who I solutions. are home to in to have out about the be going think in taking Those their past, to as talk been to and potentially seeking member one we care school going going we've loved back will September. family of back people work or talked

time So during we fall uptick expect in an of the that there will be frame. occupancy the September or

Kyle Menges

for Thank Okay. That’s me all you.

Katie Potter

Kyle. Thanks,

Operator

for And that floor ladies the we'll back Potter, question-and-answer remarks. with any to and conclude Katie over closing to session. today's like turn gentlemen I'd

Katie Potter

joining us this afternoon. you Thank for

operations repositioning on on strategic to particularly these growing a you focus service the support made offering We transformation core a in on plan, are progress pleased We as This coming demographic. our with months. growing will our on updating forward first changes improved target of exciting the important the phase. look phase capitalize on and we --

Operator

We today's call. thank with and we'll Ladies that for conclude gentlemen conference you attending.

You may now lines. disconnect your

AlerisLife (ALR) 8 Aug 212021 Q2 Earnings call transcript