Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Five Star Senior Living Inc. Announces Third Quarter 2021 Results


Five Star Senior Living Inc. (Nasdaq: FVE) today announced its financial results for the three months ended September 30, 2021.

Katherine Potter, President and Chief Executive Officer, made the following statement:

"For the third quarter of 2021, we reported a net loss of $10.2 million and an adjusted EBITDA loss of $3.3 million, which represented a $1.2 million improvement sequentially driven largely by occupancy improvement and cost containment measures. More specifically, as part of our strategic repositioning, we began rationalizing our work force and infrastructure during the third quarter.

Occupancy in our portfolio of 20 owned communities increased 280 basis points at quarter end from the prior quarter. Likewise, occupancy in our 120 DHC retained managed communities, increased 130 basis points from the prior quarter. As of October 31, 2021, occupancy for these same 120 DHC retained managed communities has improved further to 74.9%, which represents a 250 basis point increase from pandemic lows.

We are encouraged by the continued occupancy growth within our owned and managed senior living portfolios as we drive efficiency and reposition our communities to fully participate in the upside of the senior living recovery. These positive occupancy trends have come as resident vaccination levels have increased throughout our senior living portfolio, while confirmed resident COVID-19 cases have declined to at or near pandemic lows. In addition, as of September 1, 2021, all community and clinic employees were in compliance with our requirement that they be fully vaccinated against COVID-19.

During the third quarter, we continued to transform our business to better address the changing needs and preferences of a growing older adult population, and to position Five Star for long term growth. We have made great progress on the repositioning phase of our strategic plan and, as of today, have transitioned 99 of the senior living communities with approximately 6,600 living units to new operators, closed 1,532 skilled nursing facility units and 27 of the planned Ageility inpatient clinics. We expect all community transitions to be completed by year end.

We have now shifted our focus to a sustained recovery by welcoming new residents and clients to our communities and clinics and embracing the return to our full resident, client and team member experience. With over $80 million of cash, $6.9 million of debt, and no outstanding balances on our revolving credit facility, our balance sheet remains flexible. We are well positioned to opportunistically diversify our revenue streams and pursue an expansion of our health and wellness services through new outpatient clinics and new service offerings."

Third Quarter Summary of Financial Results:

The following tables present data on the senior living communities that FVE owns, leases and manages as well as FVE's Ageility rehabilitation clinics, and FVE's comparable community data.

 

 

As of and for the Three Months Ended

 

 

September 30, 2021

 

June 30, 2021

 

September 30, 2020

Senior Living Segment:

 

 

 

 

 

 

Month End Occupancy

 

 

 

 

 

 

Owned and Leased

 

72.9

%

 

69.7

%

 

73.0

%

Managed

 

73.8

%

 

71.3

%

 

74.0

%

 

 

 

 

 

 

 

Comparable Communities (1)

 

 

 

 

 

 

Month End Occupancy

 

 

 

 

 

 

Owned

 

72.9

%

 

70.1

%

 

73.7

%

Managed

 

74.6

%

 

73.3

%

 

77.0

%

Operating Margin (2) (3)

 

 

 

 

 

 

Owned

 

(5.1)

%

 

(17.7)

%

 

(8.5)

%

Managed

 

7.1

%

 

10.1

%

 

10.6

%

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

 

September 30, 2021

 

June 30, 2021

 

September 30, 2020

Ageility:

 

 

 

 

 

 

Number of Clinics

 

 

 

 

 

 

Inpatient (3)

 

10

 

 

10

 

 

40

 

Outpatient

 

223

 

 

218

 

 

209

 

Number of Visits (in thousands)

 

 

 

 

 

 

Inpatient (3)

 

20

 

 

36

 

 

82

 

Outpatient

 

147

 

 

156

 

 

155

 

 

 

 

 

 

 

 

Comparable Clinics (4)

 

 

 

 

 

 

Average revenue per clinic

 

$

65

 

 

$

70

 

 

$

72

 

Operating margin (3)

 

9.9

%

 

12.3

%

 

17.9

%

 

_______________________________________

(1)

Comparable communities provides data for 20 owned senior living communities and 120 managed senior living communities that FVE continuously owned or managed since July 1, 2020, exclusive of 108 senior living communities with approximately 7,500 living units, that FVE managed on behalf of DHC which have been or are expected to be transitioned to new operators in 2021, per the Strategic Plan, of which 69 senior living communities with approximately 4,800 living units were transitioned to new operators as of September 30, 2021, and exclusive of 1,532 skilled nursing facility, or SNF, units which have been closed and are in the process of being repositioned in 27 Continuing Care Retirement Communities, or CCRCs, that FVE will continue to manage. See Strategic Plan below for an update on the progress made with respect to the Strategic Plan. Comparable communities also excludes all four leased communities with approximately 200 living units where the leases were terminated on September 30, 2021.

(2)

Operating margin is defined as operating revenue less operating expenses for the business unit divided by operating revenue. It is exclusive of Provider Relief Funds from the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, and other governmental grants recognized as other income. It is inclusive of 1,532 SNF units, which have been closed and are in the process of being repositioned, in 27 CCRCs that FVE will continue to manage. In addition, it excludes restructuring expenses for the three months ended September 30, 2021 of $0.2 million and for the three months ended June 30, 2021 of $10.2 million for the comparable managed communities.

(3)

All Ageility inpatient clinics will be closed as part of the Strategic Plan. During the three months ended June 30, 2021, 27 inpatient clinics were closed as part of the Strategic Plan. There were no inpatient clinics closed during the three months ended September 30, 2021.

(4)

Comparable clinics includes financial data for 199 Ageility outpatient clinics that FVE continuously owned and operated since July 1, 2020 and excludes data for 27 Ageility inpatient clinics that were closed during the three months ended June 30, 2021 and an additional ten Ageility inpatient clinics that are expected to be closed per the Strategic Plan.

 

Strategic Plan

On April 9, 2021, FVE announced the Strategic Plan, including to:

During the nine months ended September 30, 2021, FVE made the following progress with respect to the Reposition phase of the Strategic Plan:

  1. FVE and DHC amended their management arrangements on June 9, 2021,
  2. Transitioned the management of 69 senior living communities with approximately 4,800 living units to new operators, all of which occurred during the three months ended September 30, 2021. During October 2021, we transitioned the management of 27 senior living communities with approximately 1,700 living units to new operators, and DHC has entered into agreements for FVE to transition the management of an additional 11 senior living communities, with approximately 1,000 living units, to new operators in the fourth quarter of 2021. We plan to close one community with approximately 100 living units,
  3. Closed all 1,532 SNF living units in 27 managed CCRCs and began collaborating with DHC to reposition these SNF units,
  4. Closed 27 of the 37 planned Ageility inpatient rehabilitation clinics, and
  5. For six of the Ageility inpatient rehabilitation clinics, FVE has entered into agreements with the new operators to continue to provide these services for 12 months.

During the nine months ended September 30, 2021, FVE made the following progress with respect to the Evolve phase of the Strategic Plan:

  1. Implemented enhancements to its corporate technology infrastructure,
  2. Invested in critical areas of residential experience, including community wireless connectivity, resident transportation services, re-designed community common areas and resident units,
  3. Made enhancements to digital marketing infrastructure and implemented a labor management tool, and
  4. Standardized certain administrative functions through centralization efforts to enhance operating efficiency.

During the nine months ended September 30, 2021, FVE made the following progress with respect to the Diversify phase of the Strategic Plan:

  1. Opened 16 net new Ageility outpatient rehabilitation clinics, bringing its Ageility outpatient rehabilitation clinic total to 223, and
  2. Grew Ageility fitness revenues to $2.4 million or a 41.1% increase over the same period in 2020.

In connection with the implementation of the Strategic Plan, FVE expects to incur restructuring expenses of up to $19.0 million, approximately $13.0 million of which FVE expects DHC will reimburse. These expenses are expected to include up to $7.5 million of retention bonus payments, up to $8.7 million of severance, benefits and transition expenses, and up to $2.8 million of transaction expenses, of which FVE expects DHC to reimburse approximately $5.1 million, $7.2 million and $0.7 million, respectively. During the three months ended September 30, 2021, FVE recorded restructuring expenses of $1.2 million, of which $0.8 million will be reimbursed by DHC.

Presented below is a summary of the units FVE operated (owned and managed) as of September 30, 2021 and the projected number of units to be operated after the conclusion of the Reposition phase of the Strategic Plan:

 

 

Total

 

Retained

 

 

Units (1)

 

Units (2)

Independent living

 

10,628

 

10,422

Assisted living

 

9,402

 

7,715

Memory care

 

2,454

 

1,861

Skilled nursing

 

284

 

?

Total

 

22,768

 

19,998

_______________________________________

(1)

The units operated as of September 30, 2021 include 2,099 owned and 20,669 managed and excludes the approximately 4,800 living units that FVE previously managed for DHC that FVE transitioned to new operators during the three months ended September 30, 2021 and exclusive of approximately 200 living units within its four leased communities for which the leases were terminated on September 30, 2021.

(2)

Includes 2,099 owned and 17,899 managed units.

 

Presented below is a summary of the communities, units, average occupancy, month end occupancy, revenues and management fees for the communities FVE manages for DHC as of and for the three months ended September 30, 2021 and for the retained communities to be managed for DHC after the conclusion of the Strategic Plan (dollars in thousands):

 

 

Total

 

 

Communities

 

Units

 

Average
Occupancy

 

Month End
Occupancy

 

Community
Revenues (1)

 

Management
Fees (2)(3)

Independent and assisted living communities (5)

 

155

 

20,044

 

72.5%

 

74.2%

 

$

184,996

 

 

$

9,944

 

Continuing care retirement communities (5)

 

4

 

625

 

68.1%

 

61.6%

 

17,015

 

 

881

 

Skilled nursing facilities

 

?

 

?

 

67.4%

 

?%

 

8,149

 

 

395

 

Total

 

159

 

20,669

 

72.2%

 

73.8%

 

$

210,160

 

 

$

11,220

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained

 

 

Communities

 

Units

 

Average
Occupancy

 

Month End
Occupancy

 

Community
Revenues (1)

 

Management
Fees (4)

Independent and assisted living communities (5)

 

120

 

17,899

 

73.4%

 

74.6%

 

$

157,930

 

 

$

8,510

 

Continuing care retirement communities

 

?

 

?

 

?%

 

?%

 

?

 

 

?

 

Skilled nursing facilities

 

?

 

?

 

?%

 

?%

 

?

 

 

?

 

Total

 

120

 

17,899

 

73.4%

 

74.6%

 

$

157,930

 

 

$

8,510

 

_______________________________________

(1)

Represents the revenues of the senior living communities FVE manages on behalf of DHC. Managed senior living communities' revenues do not represent FVE's revenues and are included to provide supplemental information regarding the operating results and financial condition of the communities from which FVE earns management fees.

(2)

The 59 SNF units in one CCRC that were closed during the three months ended September 30, 2021, and are to be repositioned, had management fee revenue of $1 for the three months ended September 30, 2021.

(3)

FVE recognized management fee revenue of $1,306 for the three months ended September 30, 2021 from 69 senior living communities with approximately 4,800 living units that were transitioned to new operators during the three months ended September 30, 2021.

(4)

Excludes management fee revenue of $2,710 earned in the three months ended September 30, 2021 related to (i) 108 senior living communities managed on behalf of DHC, with approximately 7,500 living units that are expected to be transitioned to new operators in 2021; of which 69 senior living communities, with approximately 4,800 living units were transitioned to new operators during the three months ended September 30, 2021, and (ii) 59 SNF units in one CCRC that were closed during the three months ended September 30, 2021, and are to be repositioned in communities that FVE will continue to manage.

(5)

During the three months ended September 30, 2021, FVE closed 59 SNF units in one CCRC. Due to these SNF unit closures, this community is no longer a CCRC and has been included in the community and unit totals and month end occupancy as independent and assisted living community as of September 30, 2021. However, average occupancy, community revenues and management fees for this former CCRC is included in the CCRC totals for the three months ended September 30, 2021. The average occupancy, community revenues and management fees for this former CCRC for the three months ended September 30, 2021 were 74.7%, $4,439 and $233, respectively.

 

Following the completion of the Reposition phase of the Strategic Plan, FVE will continue to manage 120 senior living communities for DHC, representing 17,899 living units and approximately 75.8% of FVE's management fee revenues for the three months ended September 30, 2021, and to operate its existing owned portfolio of 20 communities with approximately 2,100 living units. FVE expects to partially offset the resulting revenue loss from fees FVE earns from the 108 transitioning senior living communities with expense reductions to right-size operations.

The 120 senior living communities that FVE will continue to manage for DHC, after transitioning the 108 communities, outperformed the total DHC managed portfolio (exclusive of the closed and pending repositioning of approximately 1,500 SNF living units in the 27 CCRCs) for the three months ended September 30, 2021 with approximately 370 basis points higher operating margin.

In addition to the transition of 108 managed communities owned by DHC, on September 30, 2021, FVE terminated its leases for four communities with approximately 200 living units that were previously leased from Healthpeak Properties Inc., or PEAK. As of September 30, 2021, FVE no longer operates units within leased communities.

Presented below is a summary of FVE's Ageility rehabilitation clinics as of and for the three months ended September 30, 2021 and the number of clinics to be operated after the implementation of the Strategic Plan (dollars in thousands):

 

 

As of and for the
Three Months Ended September 30, 2021

 

Retained

 

 

Number
of
Clinics

 

Total
Revenue (3)

 

Average
Revenue
per Clinic

 

Adjusted
EBITDA
Margin(5)

 

Number
of
Clinics

 

Total
Revenue (1)(3)

 

Average
Revenue
per Clinic

 

Adjusted
EBITDA
Margin(5)

Inpatient Clinics in DHC Communities

 

10

 

$

1,508

 

 

$

151

 

 

35.3%

 

?

 

$

?

 

 

$

?

 

 

?%

Outpatient Clinics in DHC Communities

 

91

 

7,936

 

 

87

 

 

11.3%

 

91

 

7,936

 

 

87

 

 

11.3%

Outpatient Clinics in Transition Communities(2)

 

45

 

1,776

 

 

39

 

 

16.2%

 

45

 

1,776

 

 

39

 

 

16.2%

Total Clinics at DHC Communities

 

146

 

11,220

 

 

77

 

 

15.3%

 

136

 

9,712

 

 

71

 

 

12.2%

Outpatient Clinics at Other Communities(4)

 

87

 

3,888

 

 

45

 

 

3.4%

 

87

 

3,888

 

 

45

 

 

3.4%

Total Clinics

 

233

 

$

15,108

 

 

$

65

 

 

12.2%

 

223

 

$

13,600

 

 

$

61

 

 

9.6%

_______________________________________

(1)

Excludes revenue of $1,508 earned during the three months ended September 30, 2021 for ten Ageility inpatient rehabilitation clinics which are expected to be closed as part of the transition.

(2)

As part of the transition, FVE expects to transition 108 senior living communities managed on behalf of DHC to new operators in 2021; of which 69 senior living communities were transitioned to new operators during the three months ended September 30, 2021. These communities have 45 Ageility outpatient rehabilitation clinics, of which 29 clinics were within communities that had transitioned to new operators as of September 30, 2021 and that FVE will continue to operate. The remaining 16 clinics, due to the pending transfer of the communities to new operators, may be subject to closure by the new operator.

(3)

Total Ageility revenue excludes home health care services, which are a part of the rehabilitation and wellness services segment.

(4)

Other communities includes outpatient clinics at non-FVE operated or managed communities and 15 outpatient clinics at communities FVE owns.

(5)

Adjusted EBITDA Margin is a non-GAAP financial measure. A reconciliation of operating margin to Adjusted EBITDA Margin is presented later in this press release.

 

FVE expects the rehabilitation and wellness services segment to grow and diversify through its expanded emphasis on fitness and home health care services. Fitness offerings started as an extension of FVE's rehabilitation product and, while representing only 5.5% of segment revenues for the three months ended September 30, 2021, fitness revenues increased by 34.8% to $0.8 million when compared to the same period in 2020.

FVE currently expects to continue to evolve and diversify through growth of its ancillary rehabilitation and wellness service offerings, by opening new clinics and expanding its fitness and other home-based service offerings within and outside of its senior living communities. Since January 1, 2019, FVE has opened 94 net new outpatient rehabilitation clinics, 17 of which were opened in 2020, and 16 of which were opened during the nine months ended September 30, 2021.

Conference Call Information:

At 1:00 p.m. Eastern Time on November 4, 2021, FVE's President and Chief Executive Officer, Katherine Potter, Executive Vice President and Chief Operating Officer, Margaret Wigglesworth, and Executive Vice President, Chief Financial Officer and Treasurer, Jeffrey Leer, will host a conference call to discuss FVE's third quarter 2021 financial 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. Eastern Time on November 11, 2021. To hear the replay, dial (412) 317-0088. The replay pass code is 10160357.

A live audio webcast of the conference call will also be available in a listen-only mode on FVE's website, https://www.fivestarseniorliving.com/. Participants wanting to access the webcast should visit FVE's website about five minutes before the call. The archived webcast will be available for replay on FVE's website following the call for about a week. The transcription, recording and retransmission in any way of FVE's third quarter ended September 30, 2021 financial results conference call are strictly prohibited without the prior written consent of FVE. FVE's website is not incorporated as part of this press release.

About Five Star Senior Living Inc.:

FVE is a provider of senior living management and rehabilitation and wellness services to over 20,000 older adults. Five Star is the fifth largest senior living operator in the United States and operates independent and assisted living communities. Additionally, FVE's rehabilitation and wellness services segment includes Ageility Physical Therapy SolutionsTM, or Ageility, a division of FVE, which provides rehabilitation and wellness services within FVE communities as well as to external customers. FVE is headquartered in Newton, Massachusetts.

 

Five Star Senior Living Inc.
Condensed Consolidated Statements of Operations
(amounts in thousands, except per share amounts)
(unaudited)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2021

 

2020

 

2021

 

2020

REVENUES

 

 

 

 

 

 

 

 

Rehabilitation and wellness services

 

$

15,382

 

 

$

21,124

 

 

$

52,388

 

 

$

61,776

 

Senior living

 

16,320

 

 

18,525

 

 

49,755

 

 

59,112

 

Management fees

 

11,220

 

 

15,302

 

 

37,997

 

 

48,058

 

Total management and operating revenues

 

42,922

 

 

54,951

 

 

140,140

 

 

168,946

 

Reimbursed community-level costs incurred on behalf of managed communities

 

177,231

 

 

233,783

 

 

585,662

 

 

689,903

 

Other reimbursed expenses

 

5,678

 

 

6,589

 

 

27,750

 

 

19,003

 

Total revenues

 

225,831

 

 

295,323

 

 

753,552

 

 

877,852

 

 

 

 

 

 

 

 

 

 

Other operating income

 

?

 

 

?

 

 

7,795

 

 

1,499

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

Rehabilitation and wellness services expenses

 

13,536

 

 

16,716

 

 

45,414

 

 

50,361

 

Senior living wages and benefits

 

8,547

 

 

11,128

 

 

30,456

 

 

30,633

 

Other senior living operating expenses

 

7,184

 

 

7,407

 

 

22,418

 

 

20,246

 

Community-level costs incurred on behalf of managed communities

 

177,231

 

 

233,783

 

 

585,662

 

 

689,903

 

General and administrative

 

21,817

 

 

19,774

 

 

66,956

 

 

65,051

 

Restructuring expenses

 

1,220

 

 

142

 

 

16,859

 

 

1,412

 

Depreciation and amortization

 

2,983

 

 

2,680

 

 

8,912

 

 

8,084

 

Total operating expenses

 

232,518

 

 

291,630

 

 

776,677

 

 

865,690

 

 

 

 

 

 

 

 

 

 

Operating (loss) income

 

(6,687)

 

 

3,693

 

 

(15,330)

 

 

13,661

 

 

 

 

 

 

 

 

 

 

Interest, dividend and other income

 

84

 

 

104

 

 

244

 

 

625

 

Interest and other expense

 

(507)

 

 

(379)

 

 

(1,379)

 

 

(1,170)

 

Unrealized gain (loss) on equity investments

 

22

 

 

435

 

 

555

 

 

(160)

 

Realized gain on sale of debt and equity investments

 

?

 

 

327

 

 

193

 

 

422

 

Loss on termination of leases

 

(3,277)

 

 

?

 

 

(3,277)

 

 

(22,899)

 

Income (loss) before income taxes

 

(10,365)

 

 

4,180

 

 

(18,994)

 

 

(9,521)

 

(Provision) benefit for income taxes

 

164

 

 

(465)

 

 

(194)

 

 

(971)

 

Net (loss) income

 

$

(10,201)

 

 

$

3,715

 

 

$

(19,188)

 

 

$

(10,492)

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding?basic

 

31,618

 

 

31,486

 

 

31,567

 

 

31,465

 

Weighted average shares outstanding?diluted

 

31,618

 

 

31,563

 

 

31,567

 

 

31,465

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share?basic

 

$

(0.32)

 

 

$

0.12

 

 

$

(0.61)

 

 

$

(0.33)

 

Net (loss) income per share?diluted

 

$

(0.32)

 

 

$

0.12

 

 

$

(0.61)

 

 

$

(0.33)

 

 

Five Star Senior Living Inc.
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)
(unaudited)

Non-GAAP financial measures are financial measures that are not determined in accordance with U.S. generally accepted accounting principles, or GAAP. FVE believes the non-GAAP financial measures presented in the tables below are meaningful supplemental disclosures because they may help investors better understand changes in FVE's operating results and its ability to meet FVE's financial obligations or service debt, make capital expenditures and expand its business. These non-GAAP financial measures may also help investors make comparisons between FVE and other companies on both a GAAP and non-GAAP basis. FVE believes that EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are meaningful financial measures that may help investors better understand its financial performance, including by allowing investors to compare FVE's performance between periods and to the performance of other companies. FVE management uses EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to evaluate FVE's financial performance and compare FVE's performance over time and to the performance of other companies. FVE calculates EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin as shown below. These measures should not be considered as alternatives to net income (loss) or operating income (loss), as indicators of FVE's operating performance or as measures of FVE's liquidity. Also, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin as presented may not be comparable to similarly titled amounts calculated by other companies.

FVE believes that net income (loss) is the most directly comparable financial measure, determined according to GAAP, to FVE's presentation of EBITDA and Adjusted EBITDA. The following table presents the reconciliation of these non-GAAP financial measures to net income (loss) for the three and nine months ended September 30, 2021 and 2020.

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2021

 

2020

 

2021

 

2020

Net (loss) income

 

$

(10,201)

 

 

$

3,715

 

 

$

(19,188)

 

 

$

(10,492)

 

Add (less):

 

 

 

 

 

 

 

 

Interest and other expense

 

507

 

 

379

 

 

1,379

 

 

1,170

 

Interest, dividend and other income

 

(84)

 

 

(104)

 

 

(244)

 

 

(625)

 

(Benefit) provision for income taxes

 

(164)

 

 

465

 

 

194

 

 

971

 

Depreciation and amortization

 

2,983

 

 

2,680

 

 

8,912

 

 

8,084

 

EBITDA

 

(6,959)

 

 

7,135

 

 

(8,947)

 

 

(892)

 

Add (less):

 

 

 

 

 

 

 

 

Severance (1)

 

?

 

 

?

 

 

?

 

 

282

 

Litigation settlement (2)

 

?

 

 

?

 

 

?

 

 

2,473

 

Unrealized gain (loss) on equity investments

 

(22)

 

 

(435)

 

 

(555)

 

 

160

 

Loss on termination of leases (3)

 

3,277

 

 

?

 

 

3,277

 

 

22,899

 

Net restructuring expenses (4)

 

407

 

 

142

 

 

4,515

 

 

1,412

 

Long-lived asset impairment (5)

 

?

 

 

?

 

 

890

 

 

?

 

Adjusted EBITDA

 

$

(3,297)

 

 

$

6,842

 

 

$

(820)

 

 

$

26,334

 

_______________________________________

(1)

Costs incurred for the three and nine months ended September 30, 2020 represent those related to a reduction in workforce.

(2)

Represents costs incurred related to the settlement of a lawsuit and is included in other senior living operating expenses in FVE's condensed consolidated statements of operations. The settlement was approved by the court, and paid by FVE on May 12, 2021.

(3)

For the 2021 periods, represents the lease termination expenses related to the termination of all four leased communities on September 30, 2021 as well as the write off of certain assets at those communities. For the 2020 periods, represents the excess of the fair value of the shares issued to DHC as of January 1, 2020 of $97,899, compared to the consideration of $75,000 paid by DHC as part of the transaction agreement to restructure FVE's business arrangements with DHC, or the Restructuring Transactions.

(4)

Includes costs incurred related to the Strategic Plan announced on April 9, 2021 and the Restructuring Transactions for the three and nine months ended September 30, 2021 and 2020, respectively, and are included in restructuring expenses in the Condensed Consolidated Statements of Operations, net of reimbursed expenses of $813 and $12,344 to be received for the three and nine months ended September 30, 2021, respectively, from DHC.

(5)

Represents asset impairments related to one leased community that had a fire on April 4, 2021.

 

Five Star Senior Living Inc.
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)
(unaudited)

FVE believes that net income is the most directly comparable financial measure, determined according to GAAP, to FVE's presentation of EBITDA and Adjusted EBITDA. The following table presents the reconciliation of these non-GAAP financial measures to net income for the three months ended September 30, 2021 for the rehabilitation and wellness services segment.

 

 

Three Months Ended
September 30, 2021

 

 

Total

 

Retained

Rehabilitation and wellness services:

 

 

 

 

Revenue

 

$

15,382

 

 

$

15,382

 

Less: Home health services

 

274

 

 

274

 

Less: Inpatient

 

?

 

 

1,508

 

Total Ageility revenue

 

$

15,108

 

 

$

13,600

 

 

 

 

 

 

Ageility:

 

 

 

 

Net income

 

$

2,033

 

 

$

1,203

 

Add: Depreciation

 

120

 

 

109

 

EBITDA

 

2,153

 

 

1,312

 

Add: Restructuring expenses

 

(310)

 

 

?

 

Adjusted EBITDA

 

$

1,843

 

 

$

1,312

 

Adjusted EBITDA Margin

 

12.2

%

 

9.6

%

 

Five Star Senior Living Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands, except per share amounts)

 

 

 

September 30,

 

December 31,

 

 

2021

 

2020

 

 

(unaudited)

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

80,188

 

 

$

84,351

 

Restricted cash and cash equivalents

 

23,615

 

 

23,877

 

Accounts receivable, net of allowance of $3,709 and $3,149, respectively

 

8,647

 

 

9,104

 

Due from related person

 

33,215

 

 

96,357

 

Debt and equity investments, of which $8,689 and $11,125 are restricted, respectively

 

19,498

 

 

19,961

 

Prepaid expenses and other current assets

 

19,990

 

 

28,658

 

Total current assets

 

185,153

 

 

262,308

 

 

 

 

 

 

Property and equipment, net

 

157,028

 

 

159,251

 

Operating lease right-of-use assets

 

9,452

 

 

18,030

 

Finance lease right-of-use assets

 

3,698

 

 

4,493

 

Restricted cash and cash equivalents

 

1,137

 

 

1,369

 

Restricted debt and equity investments

 

3,841

 

 

4,788

 

Equity investment of an investee, net

 

11

 

 

11

 

Other long-term assets

 

10,119

 

 

3,956

 

Total assets

 

$

370,439

 

 

$

454,206

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

16,440

 

 

$

23,454

 

Accrued expenses and other current liabilities

 

32,000

 

 

41,843

 

Accrued compensation and benefits

 

38,072

 

 

70,543

 

Accrued self-insurance obligations

 

30,461

 

 

31,355

 

Operating lease liabilities

 

417

 

 

2,567

 

Finance lease liabilities

 

856

 

 

808

 

Due to related persons

 

3,413

 

 

6,585

 

Mortgage note payable

 

409

 

 

388

 

Security deposits and current portion of continuing care contracts

 

303

 

 

365

 

Total current liabilities

 

122,371

 

 

177,908

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

Accrued self-insurance obligations

 

36,664

 

 

37,420

 

Operating lease liabilities

 

9,552

 

 

17,104

 

Finance lease liabilities

 

3,274

 

 

3,921

 

Mortgage note payable

 

6,473

 

 

6,783

 

Other long-term liabilities

 

338

 

 

538

 

Total long-term liabilities

 

56,301

 

 

65,766

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

Common stock, par value $0.01: 75,000,000 shares authorized, 31,753,484 and 31,679,207 shares issued and outstanding, respectively

 

318

 

 

317

 

Additional paid-in-capital

 

460,798

 

 

460,038

 

Accumulated deficit

 

(270,330)

 

 

(251,139)

 

Accumulated other comprehensive income

 

981

 

 

1,316

 

Total shareholders' equity

 

191,767

 

 

210,532

 

Total liabilities and shareholders' equity

 

$

370,439

 

 

$

454,206

 

 

Five Star Senior Living Inc.
Senior Living Segment Data
(dollars in thousands, except per unit amounts)
(unaudited)

 

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

 

2021

 

2021

 

2021

 

2020

 

2020

 

 

 

 

 

 

 

 

 

 

 

Owned and Leased Communities

 

 

 

 

 

 

 

 

 

 

Independent and assisted living communities:

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

16,320

 

 

$

16,378

 

 

$

17,057

 

 

$

17,903

 

 

$

18,525

 

Other operating income (1)

 

?

 

 

2

 

 

7,774

 

 

1,715

 

 

?

 

Operating expenses

 

17,895

 

 

21,012

 

 

20,414

 

 

21,181

 

 

19,661

 

Operating (loss) income

 

(1,575)

 

 

(4,632)

 

 

4,417

 

 

(1,563)

 

 

(1,136)

 

Operating margin

 

(9.7)

%

 

(28.3)

%

 

17.8

%

 

(8.0)

%

 

(6.1)

%

Number of communities (end of period)

 

20

 

 

24

 

 

24

 

 

24

 

 

24

 

Number of living units (end of period) (2)

 

2,099

 

 

2,251

 

 

2,302

 

 

2,302

 

 

2,312

 

Average occupancy

 

69.9

%

 

68.1

%

 

68.3

%

 

71.5

%

 

74.7

%

Month end occupancy

 

72.9

%

 

69.7

%

 

68.2

%

 

69.7

%

 

73.0

%

RevPAR (3)

 

$

2,411

 

 

$

2,425

 

 

$

2,479

 

 

$

2,596

 

 

$

2,665

 

RevPOR (4)

 

$

3,375

 

 

$

3,524

 

 

$

3,630

 

 

$

3,550

 

 

$

3,492

 

 

 

 

 

 

 

 

 

 

 

 

Managed Communities (5)

 

 

 

 

 

 

 

 

 

 

Management fees

 

$

11,220

 

 

$

12,927

 

 

$

13,850

 

 

$

14,822

 

 

$

15,302

 

Community-level revenues

 

210,160

 

 

243,947

 

 

259,966

 

 

278,637

 

 

290,101

 

Other operating income (1)

 

786

 

 

16,564

 

 

1,617

 

 

12,520

 

 

?

 

Community-level expenses (6)

 

203,756

 

 

237,461

 

 

247,171

 

 

261,678

 

 

270,333

 

Community operating income

 

7,190

 

 

23,050

 

 

14,412

 

 

29,479

 

 

19,768

 

Community operating margin

 

3.4

%

 

8.8

%

 

5.5

%

 

10.1

%

 

6.8

%

Number of communities (end of period)

 

159

 

 

228

 

 

228

 

 

228

 

 

239

 

Number of living units (end of period) (2)

 

20,669

 

 

25,482

 

 

26,963

 

 

26,969

 

 

28,232

 

Average occupancy

 

72.2

%

 

69.5

%

 

69.5

%

 

72.2

%

 

75.2

%

Month end occupancy

 

73.8

%

 

71.3

%

 

70.2

%

 

70.8

%

 

74.0

%

RevPAR (3)

 

$

3,046

 

 

$

3,086

 

 

$

3,213

 

 

$

3,355

 

 

$

3,420

 

RevPOR (4)

 

$

4,129

 

 

$

4,389

 

 

$

4,623

 

 

$

4,543

 

 

$

4,447

 

_______________________________________

(1)

Other operating income represents income recognized for funds received under the CARES Act and other governmental grants.

(2)

Includes living units categorized as in service. As a result, the number of living units may vary from period to period for reasons other than the acquisition or disposition of senior living communities.

(3)

RevPAR is defined by FVE as resident fee revenues for the corresponding portfolio for the period divided by the average number of available units for the period, divided by the number of months in the period. Data for the three months ended December 31, 2020, March 31, 2021, June 30, 2021 and September 30, 2021 exclude income received by communities under the CARES Act and other governmental grants.

(4)

RevPOR is defined by FVE as resident fee revenues for the corresponding portfolio for the period divided by the average number of occupied units for the period, divided by the number of months in the period. Data for the three months ended December 31, 2020, March 31, 2021, June 30, 2021 and September 30, 2021 exclude income received by communities under the CARES Act and other governmental grants.

(5)

Managed communities, other than FVE's management fees, represents financial data of communities FVE manages for the account of DHC and does not represent financial results of FVE. Managed communities' data is included to provide supplemental information regarding the operating results and financial condition of the communities from which FVE earns management fees.

(6)

The three months ended September 30, 2021 and June 30, 2021 includes restructuring expense of $813 and $11,531, respectively.

 

Five Star Senior Living Inc.
Comparable Communities Senior Living Segment Data
(dollars in thousands, except per unit amounts)
(unaudited)

 

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

 

2021

 

2021

 

2021

 

2020

 

2020

Owned Communities (1):

 

 

 

 

 

 

 

 

 

 

Number of communities (end of period)

 

20

 

 

20

 

 

20

 

 

20

 

 

20

 

Number of living units (end of period) (2)

 

2,099

 

 

2,099

 

 

2,099

 

 

2,098

 

 

2,108

 

Average occupancy

 

70.4

%

 

68.3

%

 

68.9

%

 

72.4

%

 

75.1

%

Month end occupancy

 

72.9

%

 

70.1

%

 

69.0

%

 

70.2

%

 

73.7

%

RevPAR (3)

 

$

2,354

 

 

$

2,357

 

 

$

2,421

 

 

$

2,549

 

 

$

2,602

 

RevPOR (4)

 

$

3,270

 

 

$

3,413

 

 

$

3,515

 

 

$

3,445

 

 

$

3,388

 

 

 

 

 

 

 

 

 

 

 

 

Managed Communities (1)(5):

 

 

 

 

 

 

 

 

 

 

Number of communities (end of period)

 

120

 

 

120

 

 

120

 

 

120

 

 

120

 

Number of living units (end of period) (2)

 

17,899

 

 

17,898

 

 

17,906

 

 

17,910

 

 

17,929

 

Average occupancy

 

73.4

%

 

72.9

%

 

72.7

%

 

75.6

%

 

78.5

%

Month end occupancy

 

74.6

%

 

73.3

%

 

73.2

%

 

74.2

%

 

77.0

%

RevPAR (3)

 

$

2,941

 

 

$

2,961

 

 

$

2,946

 

 

$

3,054

 

 

$

3,139

 

RevPOR (4)

 

$

3,922

 

 

$

4,018

 

 

$

4,051

 

 

$

3,954

 

 

$

3,942

 

_______________________________________

(1)

Includes data for senior living communities that FVE has continuously owned or managed since July 1, 2020. Per the Strategic Plan, the summary of operations for comparable communities excludes (i) 108 senior living communities managed on behalf of DHC, with approximately 7,500 living units that are expected to be transitioned to new operators in 2021, of which 69 senior living communities, with approximately 4,800 living units have been transitioned to new operators as of September 30, 2021 and (ii) 1,532 SNF units in 27 CCRCs that were closed during the six months ended September 30, 2021 and are in the process of being repositioned that FVE will continue to manage for DHC. Comparable communities also excludes all four leased communities with approximately 200 living units where the leases were terminated on September 30, 2021.

(2)

Includes living units categorized as in service. As a result, the number of living units may vary from period to period for reasons other than the acquisition or sale of senior living communities.

(3)

RevPAR is defined by FVE as resident fee revenues for the corresponding portfolio for the period divided by the average number of available units for the period, divided by the number of months in the period. Data for the three months ended December 31, 2020, March 31, 2021, June 30, 2021 and September 30, 2021 exclude income received by communities under the CARES Act and other governmental grants.

(4)

RevPOR is defined by FVE as resident fee revenues for the corresponding portfolio for the period divided by the average number of occupied units for the period, divided by the number of months in the period. Data for the three months ended December 31, 2020, March 31, 2021, June 30, 2021 and September 30, 2021 exclude income received by communities under the CARES Act and other governmental grants.

(5)

Senior living segment data for comparable managed communities represents financial data of communities FVE manages for the account of DHC and does not represent financial results of FVE. Managed communities' data is included to provide supplemental information regarding the operating results and financial condition of the communities from which FVE earns management fees.

 

Five Star Senior Living Inc.
Rehabilitation and Wellness Services Segment Data
(dollars in thousands)
(unaudited)

 

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

 

2021

 

2021

 

2021

 

2020

 

2020

Rehabilitation and Wellness Services (1):

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

15,382

 

 

$

17,453

 

 

$

19,553

 

 

$

20,256

 

 

$

21,124

 

Other operating income (2)

 

?

 

 

?

 

 

19

 

 

221

 

 

?

 

Operating expenses (3)

 

13,348

 

 

17,517

 

 

16,338

 

 

16,613

 

 

16,833

 

Operating (loss) income

 

2,034

 

 

(64)

 

 

3,234

 

 

3,864

 

 

4,291

 

Operating margin

 

13.2

%

 

(0.4)

%

 

16.5

%

 

18.9

%

 

20.3

%

Number of inpatient clinics (end of period)

 

10

 

 

10

 

 

37

 

 

37

 

 

40

 

Number of outpatient clinics (end of period)

 

223

 

 

218

 

 

215

 

 

207

 

 

209

 

_______________________________________

(1)

Includes Ageility clinics and home health operations.

(2)

Other operating income represents income recognized for funds received under the CARES Act and other governmental grants.

(3)

The three months ended September 30, 2021 and June 30, 2021 includes restructuring expenses of $(310) and $1,720, respectively.

 

Five Star Senior Living Inc.
omparable Rehabilitation and Wellness Services Segment Data
(dollars in thousands)
(unaudited)

 

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

 

2021

 

2021

 

2021

 

2020

 

2020

Rehabilitation and Wellness Services (1):

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

13,294

 

 

$

14,289

 

 

$

13,603

 

 

$

13,960

 

 

$

14,664

 

Other operating income (2)

 

?

 

 

?

 

 

20

 

 

36

 

 

?

 

Operating expenses

 

11,997

 

 

12,700

 

 

11,804

 

 

12,204

 

 

12,226

 

Operating income

 

1,297

 

 

1,589

 

 

1,819

 

 

1,792

 

 

2,438

 

Operating margin

 

9.8

%

 

11.1

%

 

13.4

%

 

12.8

%

 

16.6

%

Number of inpatient clinics (end of period)

 

?

 

 

?

 

 

?

 

 

?

 

 

?

 

Number of outpatient clinics (end of period)

 

199

 

 

199

 

 

199

 

 

199

 

 

199

 

_______________________________________

(1)

Includes Ageility clinics and home health operations. Comparable clinics includes data for 199 outpatient clinics that FVE has continuously owned and operated since July 1, 2020, exclusive of 27 Ageility inpatient rehabilitation clinics that were closed during the three months ended June 30, 2021 and an additional ten Ageility inpatient rehabilitation clinics that are expected to be closed.

(2)

Other operating income represents income recognized for funds received under the CARES Act and other governmental grants.

 
 

Five Star Senior Living Inc.
Owned Senior Living Communities as of and for the Three Months Ended September 30, 2021
(dollars in thousands)
(unaudited)

 

No.

 

Community Name

 

State

 

Property
Type (1)

 

Living
Units

 

Senior Living
Revenues (4)

 

Gross Carrying
Value

 

Net Carrying
Value

 

Date Acquired

 

Year Built or Most
Recent Renovation

1

 

Morningside of Decatur (2)

 

Alabama

 

AL

 

49

 

$

253

 

 

$

7,025

 

 

$

3,762

 

 

11/19/2004

 

2021

2

 

Morningside of Auburn

 

Alabama

 

AL

 

42

 

292

 

 

1,805

 

 

776

 

 

11/19/2004

 

1997

3

 

The Palms of Fort Myers (2)

 

Florida

 

IL

 

218

 

1,675

 

 

6,999

 

 

3,711

 

 

4/1/2002

 

1988

4

 

Five Star Residences of Banta Pointe (3)

 

Indiana

 

AL

 

121

 

720

 

 

10,561

 

 

6,127

 

 

9/29/2011

 

2006

5

 

Five Star Residences of Fort Wayne (2)

 

Indiana

 

AL

 

154

 

999

 

 

8,526

 

 

5,205

 

 

9/29/2011

 

1998

6

 

Five Star Residences of Clearwater

 

Indiana

 

AL

 

88

 

342

 

 

14,267

 

 

9,227

 

 

6/1/2011

 

1999

7

 

Five Star Residences of Lafayette (2)

 

Indiana

 

AL

 

109

 

513

 

 

11,417

 

 

7,340

 

 

6/1/2011

 

2000

8

 

Five Star Residences of Noblesville (2)

 

Indiana

 

AL

 

151

 

1,012

 

 

13,008

 

 

8,088

 

 

7/1/2011

 

2005

9

 

The Villa at Riverwood (2)

 

Missouri

 

IL

 

111

 

667

 

 

4,873

 

 

3,263

 

 

4/1/2002

 

1986

10

 

Voorhees Senior Living (2)

 

New Jersey

 

AL

 

104

 

926

 

 

19,369

 

 

13,281

 

 

7/1/2008

 

1999

11

 

Washington Township Senior Living (2)

 

New Jersey

 

AL

 

93

 

900

 

 

26,143

 

 

17,492

 

 

7/1/2008

 

1998

12

 

Carriage House Senior Living

 

North Carolina

 

AL

 

98

 

874

 

 

9,827

 

 

5,353

 

 

12/1/2008

 

1997

13

 

Forest Heights Senior Living

 

North Carolina

 

AL

 

111

 

740

 

 

16,126

 

 

10,731

 

 

12/1/2008

 

1998

14

 

Fox Hollow Senior Living (2)

 

North Carolina

 

AL

 

77

 

1,048

 

 

25,530

 

 

17,410

 

 

7/1/2000

 

1999

15

 

Legacy Heights Senior Living (2)

 

North Carolina

 

AL

 

116

 

755

 

 

7,130

 

 

3,217

 

 

12/1/2008

 

1997

16

 

Morningside at Irving Park

 

North Carolina

 

AL

 

91

 

785

 

 

3,745

 

 

1,644

 

 

11/19/2004

 

1997

17

 

The Devon Senior Living

 

Pennsylvania

 

AL

 

84

 

511

 

 

31,945

 

 

14,796

 

 

7/1/2008

 

1985

18

 

The Legacy of Anderson

 

South Carolina

 

IL

 

101

 

571

 

 

10,730

 

 

6,262

 

 

12/1/2008

 

2003

19

 

Morningside of Springfield (2)

 

Tennessee

 

AL

 

54

 

436

 

 

17,775

 

 

10,986

 

 

11/19/2004

 

1984

20

 

Huntington Place

 

Wisconsin

 

AL

 

127

 

807

 

 

2,408

 

 

1,536

 

 

7/15/2010

 

1999

 

 

Total

 

 

 

 

 

2,099

 

$

14,826

 

 

$

249,209

 

 

$

150,207

 

 

 

 

 

_______________________________________

(1)

AL is primarily an assisted living community and IL is primarily an independent living community.

(2)

Encumbered property under FVE's $65,000 revolving credit facility.

(3)

Encumbered property under FVE's $6,882 mortgage note.

(4)

Excludes funds received under the CARES Act recognized as other operating income.

 

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 Senior Living Inc. uses words such as "believe", "expect", "anticipate", "intend", "plan", "estimate", "will", "may" and negatives or derivatives of these or similar expressions, FVE is making forward-looking statements. These forward-looking statements are based upon FVE'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 FVE's forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond FVE's control. For example:

The information contained in FVE's filings with the Securities and Exchange Commission, or SEC, including under "Risk Factors" in FVE's periodic reports, or incorporated therein, identifies other important factors that could cause FVE's actual results to differ materially from those stated in or implied by FVE's forward-looking statements. FVE's filings with the SEC are available on the SEC's website at https://www.sec.gov/.

You should not place undue reliance upon forward-looking statements.

Except as required by law, FVE does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.


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