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Five Star Senior Living Inc. Announces Second Quarter 2018 Results

August 9, 2018

NEWTON, Mass.--(BUSINESS WIRE)--Aug 9, 2018--Five Star Senior Living Inc. (Nasdaq: FVE) today announced its financial results for the quarter ended June 30, 2018.

Financial Results for the quarter ended June 30, 2018:

Senior living revenue for the second quarter of 2018 decreased 3.5% to $270.9 million from $280.9 million for the same period in 2017, primarily due to Five Star’s sale of four senior living communities in December 2017, January 2018 and February 2018 to Senior Housing Properties Trust (Nasdaq: SNH) pursuant to a transaction agreement between Five Star and SNH, or the 2017 Transaction Agreement, and a decrease in occupancy. Management fee revenue for the second quarter of 2018 increased 6.3% to $3.8 million, primarily due to an increase in the number of managed communities compared to the same period in 2017. Net loss for the second quarter of 2018 was $20.9 million, or $0.42 per diluted share, compared to net loss of $6.5 million, or $0.13 per diluted share, for the same period in 2017. Net loss for the second quarter of 2018 included a gain on sale of senior living communities of $1.5 million, or $0.03 per diluted share, primarily relating to Five Star’s sale of two senior living communities in June 2018 pursuant to the 2017 Transaction Agreement. Net loss for the second quarter of 2018 included a benefit for income taxes of $1.4 million, or $0.03 per diluted share, resulting primarily from Five Star’s monetization of alternative minimum tax credits during the second quarter of 2017. Earnings before interest, taxes, depreciation and amortization, or EBITDA, for the second quarter of 2018 was $(11.3) million compared to $2.8 million for the same period in 2017. EBITDA excluding certain items noted in the supplemental information provided below, or Adjusted EBITDA, was $(12.2) million and $3.0 million for the second quarters of 2018 and 2017, respectively. A reconciliation of net loss determined in accordance with U.S. generally accepted accounting principles, or GAAP, to EBITDA and Adjusted EBITDA for the quarters ended June 30, 2018 and 2017 appears later in this press release.

Operating Results for the quarter ended June 30, 2018:

Occupancy at owned and leased senior living communities for the second quarter of 2018 was 81.4% compared to 83.1% for the same period in 2017. The average monthly rate at owned and leased senior living communities for the second quarter of 2018 decreased 0.1% to $4,709 from $4,715 for the same period in 2017. The percentage of revenue derived from residents’ private resources at owned and leased senior living communities for the second quarter of 2018 was 78.0% compared to 77.7% for the same period in 2017.

Financial Results for the six months ended June 30, 2018:

Senior living revenue for the six months ended June 30, 2018 decreased 3.2% to $545.4 million from $563.3 million for the same period in 2017, primarily due to Five Star’s sale of four senior living communities in December 2017, January 2018 and February 2018 pursuant to the 2017 Transaction Agreement and a decrease in occupancy. Management fee revenue for the six months ended June 30, 2018 increased 4.0% to $7.4 million, primarily due to an increase in the number of managed communities compared to the same period in 2017. Net loss for the six months ended June 30, 2018 was $28.8 million, or $0.58 per diluted share, compared to net loss of $13.3 million, or $0.27 per diluted share, for the same period in 2017. Net loss for the six months ended June 30, 2018 included a gain on sale of senior living communities of $7.2 million, or $0.14 per diluted share, primarily due to Five Star’s sale of four senior living communities in January, February and June 2018 pursuant to the 2017 Transaction Agreement. Net loss for the six months ended June 30, 2017 included a benefit for income taxes of $1.3 million, or $0.03 per diluted share, resulting primarily from Five Star’s monetization of alternative minimum tax credits during the second quarter of 2017. EBITDA for the six months ended June 30, 2018 was $(9.5) million compared to $6.4 million for the same period in 2017. Adjusted EBITDA for the six months ended June 30, 2018 was $(15.9) million compared to $6.8 million for the same period in 2017. A reconciliation of net loss determined in accordance with GAAP to EBITDA and Adjusted EBITDA for the six months ended June 30, 2018 and 2017 appears later in this press release.

Other:

As previously disclosed, in November 2017, Five Star agreed to sell six senior living communities to SNH pursuant to the 2017 Transaction Agreement for an aggregate sales price of $104.4 million, including $2.4 million of mortgage debt principal that Five Star prepaid in December 2017 in connection with the sale of one of these communities, SNH’s assumption of approximately $33.5 million of mortgage debt principal secured by certain of these senior living communities and excluding closing costs. In December 2017, Five Star sold two of these communities for an aggregate sales price of approximately $39.2 million, excluding closing costs. In January 2018, Five Star sold one of these communities for approximately $19.7 million, excluding closing costs. In February 2018, Five Star sold one of these communities for approximately $22.2 million, including SNH’s assumption of approximately $16.8 million of mortgage debt principal and excluding closing costs. In June 2018, Five Star sold the remaining two senior living communities for an aggregate sales price of approximately $23.3 million, including SNH’s assumption of approximately $16.6 million of mortgage debt principal and excluding closing costs. Concurrently with these sales, Five Star entered management and pooling agreements with SNH to manage these senior living communities.

In June 2018, Five Star and SNH sold to a third party a skilled nursing facility located in California which was previously leased to Five Star for a sales price of approximately $6.5 million, excluding closing costs. As a result of this sale, Five Star’s annual minimum rent payable to SNH decreased by 10% of the net proceeds that SNH received from this sale, in accordance with the terms of the applicable lease.

In June 2018, Five Star began managing for SNH a senior living community located in California with 98 living units pursuant to a management agreement and Five Star’s existing Pooling Agreement No. 12 with SNH, which Five Star and SNH concurrently amended and restated to include that senior living community.

Conference Call:

At 10:00 a.m. Eastern Time this morning, President and Chief Executive Officer, Bruce Mackey, and Executive Vice President, Chief Financial Officer and Treasurer, Richard Doyle, will host a conference call to discuss Five Star’s second quarter 2018 results.

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. on Thursday, August 16, 2018. To access the replay, dial (412) 317-0088. The replay pass code is 10121837.

A live audio webcast of the conference call will also be available in a listen-only mode on Five Star’s website, which is located 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 ofFive Star’ssecond quarter2018conference callarestrictly prohibited without the prior written consent ofFive Star. Five Star’s website is not incorporated as part of this press release.

About Five Star Senior Living Inc.:

Five Star Senior Living Inc. is a senior living and healthcare services company. As of June 30, 2018, Five Star operated 283 senior living communities with 31,800 living units located in 32 states, including 208 communities (22,290 living units) that it owned or leased and 75 communities (9,510 living units) that it managed. These communities include independent living, assisted living, continuing care retirement communities and skilled nursing communities. Five Star is headquartered in Newton, Massachusetts.

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