Five Star Quality Care, Inc. : Reports Third Quarter 2011 Results
10/27/2011| 07:05am US/Eastern
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Five Star Quality Care, Inc. (NYSE: FVE) today announced its financial
results for the quarter and nine months ended September 30, 2011.
Third Quarter 2011 Financial Highlights:
Total revenues for the third quarter of 2011 increased 8.1% to $329.5
million from $304.8 million for the same period in the previous year.
Income from continuing operations for the third quarter of 2011 was
$3.6 million compared to $5.9 million for the same period in the
previous year.
Income per share from continuing operations for the third quarter of
2011 was $0.08 per share, basic and diluted, compared to $0.17 and
$0.16 per share, basic and diluted, respectively, for the same period
in the previous year.
Income from continuing operations for the third quarter of 2011
includes certain items that, in aggregate, increased our earnings by
$303,000, or $0.01 per share, basic and diluted. These items were a
$529,000 gain on sale of available for sale securities offset by
acquisition costs of $226,000. Income from continuing operations for
the third quarter of 2010 includes a gain on early extinguishment of
debt that increased our earnings by $66,000 but did not have an effect
on our earnings per share.
Earnings before interest, taxes, depreciation and amortization, or
EBITDA, for the third quarter of 2011 was $10.3 million compared to
$10.1 million for the same period in the previous year. EBITDA for the
third quarter of 2011 included those items noted above that, in
aggregate, increased our earnings by $303,000, and EBITDA for the
third quarter of 2010 included those items noted above that, in
aggregate, increased our earnings by $66,000. EBITDA excluding these
items was $10.0 million and $10.1 million in the third quarter of 2011
and 2010, respectively. A reconciliation of income from continuing
operations determined in accordance with U.S. generally accepted
accounting principles, or GAAP, to EBITDA for the quarters ended
September 30, 2011 and 2010 appears later in this press release.
Third Quarter 2011 Operating Highlights:
Senior living occupancy at our owned and leased senior living
communities for the third quarter of 2011 was 86.0% compared to 86.2%
for the same period in the previous year.
Senior living average daily rate, or ADR, at our owned and leased
senior living communities for the third quarter of 2011 increased by
0.6% to $147.46 from $146.55 in the same period in the previous year.
The percentage of senior living revenues derived from residents'
private resources at our owned and leased senior living communities
for the third quarter of 2011 increased to 73.0% from 72.4% for the
same period in the previous year.
For those owned and leased senior living communities that we operated
continuously since July 1, 2010 (comparable communities), occupancy
for the third quarter of 2011 was 85.6% compared to 86.2% for the same
period in the previous year.
The ADR at comparable communities for the third quarter of 2011
increased by 2.8% to $150.92 from $146.74 in the same period in the
previous year.
Year to Date Financial Highlights:
Total revenues for the nine months ended September 30, 2011 increased
4.9% to $949.0 million from $904.4 million for the same period in the
previous year.
Income from continuing operations for the nine months ended September
30, 2011 was $15.5 million compared to income from continuing
operations of $18.7 million for the same period in the previous year.
Income per share from continuing operations for the nine months ended
September 30, 2011 was $0.39 and $0.38 per share, basic and diluted,
respectively, compared to $0.52 and $0.51 per share, basic and
diluted, respectively, for the same period in the previous year.
Income from continuing operations for the nine months ended September
30, 2011 includes certain items that, in aggregate, decreased our
earnings by $873,000, or $0.02 per share, basic and diluted. These
items were a $656,000 gain on sale of available for sale securities
and a $1,000 gain on early extinguishment of debt offset by
acquisition costs of $1.5 million. Income from continuing operations
for the nine months ended September 30, 2010 included certain items
that, in aggregate, increased our earnings by $626,000, or $0.02 per
share, basic and diluted. These items were a $484,000 gain on early
extinguishment of debt and a $142,000 net gain on our UBS put right
related to auction rate securities.
EBITDA for the nine months ended September 30, 2011 was $32.7 million
compared to $31.9 million for the same period in the previous year.
EBITDA for the nine months ended September 30, 2011 included those
items noted above that, in aggregate, decreased our earnings by
$873,000, and EBITDA for the nine months ended September 30, 2010
included those items noted above that, in aggregate, increased our
earnings by $626,000. EBITDA excluding these items was $33.6 million
and $31.3 million in the nine months ended September 30, 2011 and
2010, respectively. A reconciliation of income from continuing
operations determined in accordance with GAAP to EBITDA for the nine
months ended September 30, 2011 and 2010 appears later in this press
release.
Other Highlights:
During the third quarter of 2011, we acquired four senior living
communities containing 541 living units located in Indiana for $82.4
million, excluding closing costs.
During the third quarter of 2011, we commenced leasing one senior living
community from Senior Housing Properties Trust (NYSE: SNH) with a total
of 83 living units located in Florida. We also began to manage three
senior living communities for the account of SNH and one senior living
community for the account of an unaffiliated third party with a total of
481 living units located in Florida and South Carolina.
Conference Call:
On October 27, 2011 at 10:00 a.m. Eastern Daylight Time, Bruce J. Mackey
Jr., President and Chief Executive Officer, and Paul V. Hoagland,
Treasurer and Chief Financial Officer, will host a conference call to
discuss the third quarter financial results. Following the Company's
remarks, there will be a question and answer period.
The conference call telephone number is (877) 777-1968. Participants
calling from outside the United States and Canada should dial (612)
332-0932. 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 Daylight Time Thursday, November 3,
2011. To hear the replay, dial (320) 365-3844. The replay pass code is
218241. A live audio webcast of the conference call will also be
available in a listen only mode on the Company's website at
www.fivestarqualitycare.com. Participants wanting to access the webcast
should visit the Company's website about five minutes before the call.
The archived webcast will be available for replay on the Company's
website for about one week after the call. The recording and
retransmission in any way of Five Star's third quarter 2011 conference
call is strictly prohibited without the prior written consent of Five
Star.
About Five Star Quality Care, Inc.:
Five Star Quality Care, Inc. is a senior living and healthcare services
company. Five Star operates 236 senior living communities with 25,181
living units located in 29 states including: 31 communities (2,954
living units) that we own and operate; 191 communities (20,811 living
units) that we lease and operate; and 14 communities (1,416 living
units) that we manage. These communities include independent living,
assisted living and skilled nursing communities. Five Star also operates
five institutional pharmacies and two leased rehabilitation hospitals.
Five Star is headquartered in Newton, Massachusetts.
FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three months ended September 30,
Nine months ended September 30,
2011
2010
2011
2010
Revenues:
Senior living revenue
$
275,605
$
259,767
$
803,647
$
770,729
Rehabilitation hospital revenue
26,273
24,756
78,235
73,917
Institutional pharmacy revenue
18,914
20,280
57,824
59,770
Management fee revenue
359
-
383
-
Reimbursed costs incurred on behalf of managed communities
8,324
-
8,887
-
Total revenues
329,475
304,803
948,976
904,416
Operating expenses:
Senior living wages and benefits
136,135
129,071
398,975
382,095
Other senior living operating expenses
68,669
62,487
193,123
182,791
Costs incurred on behalf of managed communities
8,324
-
8,887
-
Rehabilitation hospital expenses
23,300
22,579
70,798
68,196
Institutional pharmacy expenses
18,472
19,717
56,003
58,223
Rent expense
50,140
47,176
145,480
140,809
General and administrative
14,418
13,751
42,242
40,975
Depreciation and amortization
5,858
4,047
14,779
11,872
Total operating expenses
325,316
298,828
930,287
884,961
Operating income
4,159
5,975
18,689
19,455
Interest, dividend and other income
368
321
1,017
1,621
Interest and other expense
(1,034
)
(578
)
(2,405
)
(2,050
)
Acquisition related costs
(226
)
-
(1,530
)
-
Gain on investments in trading securities
-
-
-
4,856
Loss on UBS put right related to auction rate securities
-
-
-
(4,714
)
Equity in income (losses) of Affiliates Insurance Company
28
35
111
(17
)
Gain on early extinguishment of debt
-
66
1
484
Gain on sale of available for sale securities
529
-
656
-
Income from continuing operations before income taxes
3,824
5,819
16,539
19,635
(Provision) benefit for income taxes
(186
)
123
(1,006
)
(930
)
Income from continuing operations
3,638
5,942
15,533
18,705
Loss from discontinued operations
(4,166
)
(784
)
(6,733
)
(1,309
)
Net income (loss)
$
(528
)
$
5,158
$
8,800
$
17,396
Weighted average shares outstanding - basic
47,557
35,724
40,294
35,698
Weighted average shares outstanding - diluted
47,557
38,937
43,169
39,302
Basic income (loss) per share from:
Continuing operations
$
0.08
$
0.17
$
0.39
$
0.52
Discontinued operations
(0.09
)
(0.02
)
(0.17
)
(0.03
)
Net income (loss) per share - basic
$
(0.01
)
$
0.15
$
0.22
$
0.49
Diluted income (loss) per share from:
Continuing operations
$
0.08
$
0.16
$
0.38
$
0.51
Discontinued operations
(0.09
)
(0.02
)
(0.16
)
(0.03
)
Net income (loss) per share - diluted
$
(0.01
)
$
0.14
$
0.22
$
0.48
FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands, except share data)
(unaudited)
September 30, 2011
December 31, 2010
Assets
Current assets:
Cash and cash equivalents
$
41,946
$
20,770
Accounts receivable, net of allowance
59,972
64,806
Investments in available for sale securities
17,283
13,854
Restricted cash
5,171
6,594
Prepaid expenses and other current assets
21,001
17,084
Assets of discontinued operations
8,812
12,857
Total current assets
154,185
135,965
Property and equipment, net
353,639
201,223
Equity investment in Affiliates Insurance Company
5,245
5,076
Restricted cash
4,306
14,535
Restricted investments in available for sale securities
12,987
3,259
Goodwill and other long term assets
18,717
19,736
Total assets
$
549,079
$
379,794
Liabilities and Shareholders' Equity
Current liabilities:
Bridge loan from SNH
$
48,000
$
-
Other current liabilities
160,195
137,911
Total current liabilities
208,195
137,911
Mortgage notes payable
38,977
-
Convertible senior notes
37,282
37,905
Other long term liabilities
36,857
39,211
Shareholders' equity
227,768
164,767
Total liabilities and shareholders' equity
$
549,079
$
379,794
FIVE STAR QUALITY CARE, INC.
SENIOR LIVING COMMUNITY OPERATING DATA(1)
(dollars in thousands, except average daily rate)
Three months ended
Nine months ended
September 30,
September 30,
2011
2010
2011
2010
Number of owned and leased communities (end of period)
222
209
222
209
Number of owned and leased units (end of period)
23,765
22,176
23,765
22,176
Number of living units % growth
7.2%
7.2%
Occupancy
86.0%
86.2%
85.6%
86.3%
Average daily rate (ADR)
$
147.46
$
146.55
$
150.15
$
146.85
ADR % growth
0.6%
2.2%
Percent breakdown of senior living revenues:
Medicaid
12.3%
13.8%
12.6%
13.3%
Medicare
14.7%
13.8%
15.4%
14.1%
Private and other sources
73.0%
72.4%
72.0%
72.6%
Total
100.0%
100.0%
100.0%
100.0%
Senior living revenues
$
275,605
$
259,767
$
803,647
$
770,729
Senior living revenues % growth
6.1%
4.3%
Senior living wages and benefits
$
136,135
$
129,071
$
398,975
$
382,095
Senior living wages and benefits as a % of senior living revenues
49.4%
49.7%
49.6%
49.6%
Other senior living operating expenses
$
68,669
$
62,487
$
193,123
$
182,791
Other senior living operating expenses as a % of senior living
revenues
24.9%
24.1%
24.0%
23.7%
Community expenses % growth (2)
6.9%
4.8%
(1) Excludes data for managed communities and
discontinued senior living operations.
(2) Community expenses consist of senior living wages
and benefits and other senior living operating expenses as shown
on our condensed consolidated statement of operations.
FIVE STAR QUALITY CARE, INC.
COMPARABLE SENIOR LIVING COMMUNITY OPERATING DATA(1)
(dollars in thousands, except average daily rate)
Three months ended
Nine months ended
September 30,(2)
September 30,(3)
2011
2010
2011
2010
Number of owned and leased communities (end of period)
208
208
208
208
Number of owned and leased living units (end of period)
22,066
22,066
22,066
22,066
Occupancy
85.6%
86.2%
85.4%
86.3%
Average daily rate (ADR)
$
150.92
$
146.74
$
151.78
$
146.92
ADR % growth
2.8%
3.3%
Percent breakdown of senior living revenues:
Medicaid
12.8%
13.8%
12.8%
13.3%
Medicare
15.2%
13.8%
15.6%
14.1%
Private and other sources
72.0%
72.4%
71.6%
72.5%
Total
100.0%
100.0%
100.0%
100.0%
Senior living revenues
$
265,002
$
259,134
$
788,870
$
770,096
Senior living revenues % growth
2.3%
2.4%
Senior living wages and benefits
$
132,307
$
128,807
$
393,461
$
381,831
Senior living wages and benefits as a % of senior living revenues
49.9%
49.7%
49.9%
49.6%
Other senior living operating expenses
$
65,969
$
62,317
$
189,462
$
182,621
Other senior living operating expenses as a % of senior living
revenues
24.9%
24.0%
24.0%
23.7%
Community expenses % growth (4)
3.7%
3.3%
(1) Excludes data for managed communities and
discontinued senior living operations.
(2) Communities that we have operated continuously
since July 1, 2010.
(3) Communities that we have operated continuously
since January 1, 2010.
(4) Community expenses consist of senior living wages
and benefits and other senior living operating expenses as shown
on our condensed consolidated statement of operations.
FIVE STAR QUALITY CARE, INC.
SENIOR LIVING COMMUNITY FINANCIAL DATA(1)
(dollars in thousands, except average daily rate)
Three months ended
Nine months ended
September 30,
September 30,
2011
2010
2011
2010
Independent and assisted living community revenue
$
220,860
$
204,103
$
640,067
$
607,489
Skilled nursing facility revenue
54,745
55,664
163,580
163,240
Total senior living revenue
$
275,605
$
259,767
$
803,647
$
770,729
Independent and assisted living community wages and benefits
$
101,556
$
94,097
$
295,195
$
277,849
Skilled nursing facility wages and benefits
34,579
34,974
103,780
104,246
Total senior living wages and benefits
$
136,135
$
129,071
$
398,975
$
382,095
Independent and assisted living community operating expenses
$
54,853
$
49,418
$
153,169
$
145,004
Skilled nursing facility operating expenses
13,816
13,069
39,954
37,787
Total other senior living operating expenses
$
68,669
$
62,487
$
193,123
$
182,791
(1) Excludes data for managed communities and
discontinued senior living operations.
COMPARABLE SENIOR LIVING COMMUNITY FINANCIAL DATA(1)
Three months ended
Nine months ended
September 30,(2)
September 30,(3)
2011
2010
2011
2010
Independent and assisted living community revenue
$
210,257
$
203,470
$
625,290
$
606,856
Skilled nursing facility revenue
54,745
55,664
163,580
163,240
Total senior living revenue
$
265,002
$
259,134
$
788,870
$
770,096
Independent and assisted living community wages and benefits
$
97,728
$
93,833
$
289,681
$
277,585
Skilled nursing facility wages and benefits
34,579
34,974
103,780
104,246
Total senior living wages and benefits
$
132,307
$
128,807
$
393,461
$
381,831
Independent and assisted living community operating expenses
$
52,153
$
49,248
$
149,508
$
144,834
Skilled nursing facility operating expenses
13,816
13,069
39,954
37,787
Total other senior living operating expenses
$
65,969
$
62,317
$
189,462
$
182,621
(1) Excludes data for managed communities and
discontinued senior living operations.
(2) Communities that we have operated continuously
since July 1, 2010.
(3) Communities that we have operated continuously
since January 1, 2010.
FIVE STAR QUALITY CARE, INC.
OTHER OPERATING DATA(1)
(dollars in thousands, except average daily rate)
Three months ended
Nine months ended
September 30,
September 30,
2011
2010
2011
2010
Number of senior living communities(2)
(end of period):
Assisted and independent living communities, owned
31
24
31
24
Assisted and independent living communities, leased
153
147
153
147
Assisted and independent living communities, managed
14
-
14
-
Total number of assisted and independent living communities
198
171
198
171
Skilled nursing communities, leased
38
38
38
38
Total number of senior living communities
236
209
236
209
Number of senior living units (end of period):
Assisted and independent living communities, owned
2,954
2,089
2,954
2,089
Assisted and independent living communities, leased(3)
17,388
16,664
17,388
16,664
Assisted and independent living communities, managed
1,416
-
1,416
-
Total number of assisted and independent living units
21,758
18,753
21,758
18,753
Skilled nursing communities, leased(4)
3,423
3,423
3,423
3,423
Total number of senior living units
25,181
22,176
25,181
22,176
Senior living revenues(5):
Assisted and independent living communities
$
217,829
$
201,729
$
631,796
$
600,824
Skilled nursing communities
54,745
55,664
163,580
163,228
Other(6)
3,031
2,374
8,271
6,677
Total senior living revenues
$
275,605
$
259,767
$
803,647
$
770,729
Senior living data(5):
Assisted and independent living communities occupancy
86.7%
86.4%
86.2%
86.6%
Assisted and independent living communities ADR
$
136.89
$
135.76
$
139.59
$
136.42
Assisted and independent living communities ADR % growth
0.8%
2.3%
Skilled nursing communities occupancy
81.7%
85.1%
82.5%
84.7%
Skilled nursing communities ADR
$
212.82
$
205.87
$
212.19
$
204.44
Skilled nursing communities ADR % growth
3.4%
3.8%
Rehabilitation hospital data:
Rehabilitation hospital units
321
321
321
321
Rehabilitation hospital occupancy
54.5%
54.8%
55.0%
54.7%
(1) Excludes data for institutional pharmacy operations
and discontinued senior living operations.
(2) Communities are categorized by the type of living
units which constitute a majority of the total living units at the
community.
(3) Includes 2,026 skilled nursing units in communities
where assisted living and independent living services are the
predominant services provided for the three and nine months ended
September 30, 2011 and 2010.
(4) Includes 95 assisted living and independent living
units in communities where skilled nursing services are the
predominant services provided for the three and nine months ended
September 30, 2011 and 2010.
(5) Excludes data for managed communities.
(6) Other senior living revenues relates primarily to
rehabilitation and other specialty service revenues provided at
residential facilities and does not include revenues from
institutional pharmacy or rehabilitation hospital operations.
FIVE STAR QUALITY CARE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
Earnings before interest, taxes, depreciation and amortization, or
EBITDA, and EBITDA excluding certain items are not financial
measures determined according to U.S. generally accepted
accounting principles, or GAAP. We consider EBITDA and EBITDA
excluding certain items to be a meaningful disclosure because we
believe that the presentation of these non-GAAP financial measures
may help investors to gain a better understanding of changes in
our operating results, and may also help investors who wish to
make comparisons between us and other companies on both a GAAP and
a non-GAAP basis. These non-GAAP financial measures are used by
management to evaluate our financial performance and for comparing
our performance over time to the performance of our competitors.
EBITDA and EBITDA excluding certain items as presented may not,
however, always be comparable to amounts calculated by other
companies. This information should not be considered as an
alternative to income from continuing operations, net income from
continuing operations, net income or any other financial operating
or performance measure established by GAAP. The reconciliation of
income from continuing operations to EBITDA and EBITDA excluding
certain items is as follows:
Three months ended
Nine months ended
September 30,
September 30,
2011
2010
2011
2010
Income from continuing operations
$
3,638
$
5,942
$
15,533
$
18,705
Add: interest and other expense
1,034
578
2,405
2,050
Add: income tax expense (benefit)
186
(123
)
1,006
930
Add: depreciation and amortization
5,858
4,047
14,779
11,872
Less: interest, dividend and other income
(368
)
(321
)
(1,017
)
(1,621
)
EBITDA
10,348
10,123
32,706
31,936
Add: acquisition related costs
226
-
1,530
-
Add: loss on UBS put right related to auction rate securities
-
-
-
4,714
Less: gain on sale of investments in available for sale securities
(529
)
-
(656
)
-
Less: gain on investments in trading securities
-
-
-
(4,856
)
Less: gain on early extinguishment of debt
-
(66
)
(1
)
(484
)
EBITDA excluding certain items
$
10,045
$
10,057
$
33,579
$
31,310
Five Star Quality Care, Inc. Timothy A. Bonang, 617-796-8245 Vice
President, Investor Relations or Elisabeth A. Heiss,
617-796-8245 Manager, Investor Relations www.fivestarseniorliving.com
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