EX-99.1 2 ex99-1.htm EXHIBIT 99.1 ex99-1.htm
 
 
 
 
 
 
 400 Centre Street, Newton, MA 02458
 
 tel: (617) 796-8350    fax: (617) 796-8385
 
 
EXHIBIT 99.1

 
FOR IMMEDIATE RELEASE
Contact:  Timothy A. Bonang, Manager of Investor Relations, or
 
Katherine L. Johnston, Investor Relations Analyst
 
(617) 796-8245
 
www.fivestarqualitycare.com


 
Five Star Quality Care, Inc. Reports Fourth Quarter 2007 Results
 
____________________________________

Newton, MA (March 3, 2008).  Five Star Quality Care, Inc. (AMEX: FVE) today announced its financial results for the quarter and year ended December 31, 2007.

Fourth Quarter 2007 Financial Highlights

 
§
Total revenues for the quarter increased to $251.2 million from $234.6 million for the same period last year.
 
 
§
Net income per share from continuing operations, basic and diluted, for the fourth quarter were $0.22 and $0.20, respectively, compared to a loss of $1.04, basic and diluted, for the same period last year.
 
 
§
The weighted average number of basic and diluted common shares outstanding totaled 31,757,755 and 41,488,524, respectively for the quarter ended December 31, 2007, and 31,581,456, basic and diluted, for the quarter ended December 31, 2006.
 

Fourth Quarter 2007 Operational Highlights (senior living communities)

 
§
Overall occupancy for the quarter was 90.3% compared with 90.1% for the same period a year ago.
 
 
§
For those senior living communities that Five Star has operated continuously since October 1, 2006 (comparable communities), occupancy for the quarter was 90.4% compared with 90.7% in the fourth quarter of 2006. 
 
 
§
Average daily rate for the quarter increased by 6%, to $140, over the same period a year ago.
 
 
§
Comparable communities average daily rate for the quarter increased by 6%, to $148, over the same period a year ago.
 
 
§
The percent of revenue derived from residents’ private resources in the quarter was 66% compared to 67% for the fourth quarter of 2006.
 
 
§
Wages and benefits as a percent of senior living revenues for the quarter were 49.8% compared with 51.1% for the fourth quarter of 2006.
 

Results for the year ended December 31, 2007:

 
§
Total revenues for year ended December 31, 2007 increased to $972.9 million from $815.6 million for the same period last year.
 

 
 
 

 
§
Net income per share from continuing operations, basic and diluted, for the year ended December 31, 2007 were $0.82 and $0.75, respectively, compared to a loss of $3.83, basic and diluted, for the same period last year. During the year ended December 31, 2007, Five Star recognized a gain on extinguishment of debt totaling $4.5 million, or $0.14 and $0.11 per share from continuing operations, basic and diluted, respectively.
 
 
§
The weighted average number of basic and diluted common shares outstanding totaled 31,710,252 and 41,488,524, respectively for the year ended December 31, 2007 and 28,604,617 basic and diluted, for the year ended December 31, 2006.
 

Conference Call:

On March 3, 2008 at 11:00 a.m. Eastern Standard Time, Evrett W. Benton, president and chief executive officer, and Bruce J. Mackey Jr., treasurer and chief financial officer, will host a conference call to discuss the fourth quarter and year end 2007 financial results.  Following the company’s remarks, there will be a question and answer period.

The conference call telephone number is (888) 663-2259.  Participants calling from outside the United States and Canada should dial (913) 312-1464. 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 12:00 a.m. Eastern Time Monday, March 10, 2008. To hear the replay, dial (719) 457-0820.  The replay pass code is 7731403.

A live audio webcast of the conference call will also be available in a listen only mode on the company’s web site at www.fivestarqualitycare.com.  Participants wanting to access the webcast should visit the company’s web site about five minutes before the call.  The archived webcast will be available for replay on the company’s web site for about one week after the call.

About Five Star Quality Care, Inc.:

 Five Star Quality Care, Inc. is a healthcare services company which operates healthcare and senior living communities.  Five Star owns, leases and operates 161 senior living communities with over 17,900 living units located in 29 states.  These communities include independent living, assisted living and skilled nursing communities.  Five Star also operates five institutional pharmacies and two rehabilitation hospitals.  Five Star is headquartered in Newton, Massachusetts.

 
 
 

Supplemental Information, page 1of 6

FIVE STAR QUALITY CARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)

 
   
Three months ended
 December 31,
    
Year ended
December 31,
   
2007
    
2006
        
 2007
 
    
 2006
  
Revenues:
                  
    Senior living revenue
   $ 208,615     $ 196,299     $ 809,934     $ 744,897  
    Hospital revenue
     25,294       25,494       102,005       25,494  
    Pharmacy revenue
     17,251       12,777       60,985       45,195  
Total revenues
     251,160       234,570       972,924       815,586  
                                 
Operating expenses:
                                
Senior living wages and benefits
     103,950       100,390       410,447       382,093  
Other senior living operating expenses
     52,795       47,473       202,194       186,396  
Hospital expenses
     22,864       22,722       92,449       22,954  
Pharmacy expenses
     16,171       13,406       58,012       44,579  
Management fee to Sunrise
     -       952       -       8,744  
Termination expense for certain Sunrise management agreements
     -       40,080       -       129,913  
Rent expense
     32,453       31,248       129,190       109,256  
General and administrative expenses
     11,670       9,962       43,373       33,829  
Depreciation and amortization
     3,654       2,803       13,595       9,851  
Total operating expenses
     243,557       269,036       949,260       927,615  
                                 
Operating income (loss)
     7,603       (34,466 )     23,664       (112,029 )
Interest and other income
     1,809       3,772       6,152       6,806  
Interest and other expense
     (1,883 )     (1,946 )     (6,802 )     (4,364 )
Gain on extinguishment of debt
     -       -       4,491       -  
                                 
Income (loss) from continuing operations before income taxes
     7,529       (32,640 )     27,505       (109,587 )
Provision for income taxes
     650       -       1,410       -  
Income (loss) from continuing operations
     6,879       (32,640 )     26,095       (109,587 )
                                 
Loss from discontinued operations
     (157 )     (1,690 )     (2,769 )     (7,078 )
                                 
Net income (loss)
   $ 6,722     $ (34,330 )   $ 23,326     $ (116,665 )
                                 
Weighted average shares outstanding  - basic
     31,758       31,581       31,710       28,605  
                                 
Weighted average shares outstanding  - diluted
     41,489       31,581       41,441       28,605  
                                 
Basic income (loss) per share from:
                                
Continuing operations
   $ 0.22     $ (1.04 )   $ 0.82     $ (3.83 )
Discontinued operations
     (0.01 )     (0.05 )     (0.08 )     (0.25 )
Net income (loss) per share
   $ 0.21     $ (1.09 )   $ 0.74     $ (4.08 )
                                 
Diluted income (loss) per share from:
                                
Continuing operations
   $ 0.20     $ (1.04 )   $ 0.75     $ (3.83 )
Discontinued operations
     (0.01 )     (0.05 )     (0.07 )     (0.25 )
Net income (loss) per share
   $ 0.19     $ (1.09 )   $ 0.68     $ (4.08 )
                                 
EBITDA(1):
                                
Income (loss) from continuing operations:
   $ 6,879     $ (32,640 )   $ 26,095     $ (109,587 )
Add: income taxes
     650       -       1,410       -  
Add: depreciation and amortization
     3,654       2,803       13,595       9,851  
Add: interest and other expense
     1,883       1,946       6,802       4,364  
Less: interest and other income
     (1,809 )     (3,772 )     (6,152 )     (6,806 )
EBITDA
   $ 11,257     $ (31,663 )   $ 41,750     $ (102,178 )
 
 
(1)
We consider earnings before interest, taxes, depreciation and amortization, or EBITDA, to be a meaningful measure of our operating performance because it is useful in measuring our ability to service debt, fund capital expenditures and expand our business.  We believe that EBITDA is a meaningful disclosure that may help shareholders to understand better our financial performance, including comparing our performance to similar numbers reported by other companies; however, EBITDA as presented may be not always comparable to amounts calculated by other companies.  This information should not be considered as an alternative to net income, income from continuing operations, operating income, cash flow from operations, or any other operating or liquidity performance measure established by accounting principles generally accepted in the United States.

 
 
 


Supplemental Information, page 2 of 6

FIVE STAR QUALITY CARE, INC.
SELECTED BALANCE SHEET DATA
(dollars in thousands)

       
   
December 31,
    
December 31,
  
   
2007
    
2006
  
Assets
            
Current assets:
            
  Cash and cash equivalents
   $ 30,999     $ 46,241  
  Accounts receivable, net of reserve
     58,803       67,791  
  Prepaid expenses and other current assets
     23,782       41,294  
  Investment securities:
                
  Investments in trading securities
     61,800       46,100  
  Investments in available-for-sale securities
     7,455       4,334  
 Assets of discontinued operations
     3,178       -  
Total current assets
     186,017       205,760  
                 
Long term assets:
                
Property and equipment, net
     131,705       114,898  
Other long term assets
     42,732       45,753  
Total assets
   $ 360,454     $ 366,411  
                 
Liabilities and Shareholders’ Equity
                
Current liabilities
   $ 104,063     $ 132,929  
Long term liabilities
     27,259       28,098  
Mortgage notes payable, long term
     15,810       11,454  
Convertible Senior notes
     126,500       126,500  
Shareholders’ equity: 31,818,144 and 31,682,134 shares
   issued and outstanding at December 31, 2007 and
   2006, respectively
        86,822         67,430  
Total liabilities and shareholders’ equity
   $ 360,454     $ 366,411  


















 
 
 

Supplemental Information, page 3 of 6


FIVE STAR QUALITY CARE, INC.
SENIOR LIVING COMMUNITY OPERATING DATA(1)
(dollars in thousands, except average daily rate)


   
Three months ended
December 31,
    
Year ended
December 31,
  
   
2007
    
2006
    
2007
    
2006
  
                         
No. of communities (end of period)
     161       160       161       160  
No. of living units (end of period)
     17,906       17,935       17,906       17,935  
                                 
Occupancy
     90.3 %     90.1 %     90.3 %     90.9 %
Average daily rate (ADR)
   $ 140     $ 132     $ 137     $ 125  
ADR % growth
     6 %     --       10 %     --  
                                 
Percent breakdown of net senior living revenues:
                                
Medicare
     15 %     14 %     15 %     14 %
Medicaid
     19 %     19 %     19 %     19 %
Private
     66 %     67 %     66 %     67 %
   Total
     100 %     100 %     100 %     100 %
                                 
Net senior living revenues
   $ 208,615     $ 196,299     $ 809,934     $ 744,897  
Net senior living revenues % growth
     6 %     --       9 %     --  
                                 
Community expenses (2)
   $ 156,745     $ 147,863     $ 612,641     $ 568,489  
Community expenses (2) as a % of net senior living revenues
     75 %     75 %     76 %     76 %
Community expenses (2) % growth
     6 %     --       8 %     --  



 
(1)
Excludes data for discontinued operations and for pharmacy and hospital operations.
 
(2)
Community expenses equal senior living wages and benefits and other senior living operating expenses as shown on our consolidated statement of income.

 
 
 

Supplemental Information, page 4 of 6


FIVE STAR QUALITY CARE, INC.
COMPARABLE SENIOR LIVING COMMUNITY OPERATING DATA(1)
(dollars in thousands, except average daily rate)



   
Three months ended
December 31, (2)
    
Year ended
December 31, (3)
  
   
2007
    
2006
    
2007
    
2006
  
                         
No. of communities (end of period)
     154       154       149       149  
No. of living units (end of period)
     17,342       17,434       16,594       16,594  
                                 
Occupancy
     90.4 %     90.7 %     90.8 %     91.1 %
Average daily rate (ADR)
   $ 148     $ 140     $ 140     $ 133  
ADR % growth
     6 %     --       5 %     --  
                                 
Percent breakdown of net senior living revenues:
                                
Medicare
     16 %     15 %     16 %     14 %
Medicaid
     19 %     19 %     19 %     19 %
Private
     65 %     66 %     65 %     67 %
   Total
     100 %     100 %     100 %     100 %
                                 
Senior living revenues
   $ 204,129     $ 193,170     $ 772,602     $ 735,122  
Senior living revenues  % growth
     6 %     --       5 %     --  
                                 
Community expenses (4)
   $ 153,123     $ 145,508     $ 581,624     $ 561,000  
Community expenses (4) as a % of net senior living revenues
     75 %     75 %     75 %     76 %
Community expenses (4) % growth
     5 %     --       4 %     --  




 
(1)
Excludes data for discontinued operations and for pharmacy and hospital operations.
 
(2)
Communities that we operated continuously since October 1, 2006.
 
(3)
Communities that we operated continuously since January 1, 2006.
 
(4)
Community expenses equal senior living wages and benefits and other senior living operating expenses.

 
 
 

Supplemental Information, page 5 of 6


FIVE STAR QUALITY CARE, INC.
OTHER OPERATING DATA(1)
(dollars in thousands)

   
Three months ended
December 31,
    
Year ended
December 31,
  
   
2007
    
2006
    
2007
    
2006
  
No. of communities (2) (end of period):
                        
Assisted living & independent living communities, owned
     13       12       13       12  
Assisted living & independent living communities, leased
     99       99       99       99  
   Total no. of assisted living & independent living communities
     112       111       112       111  
                                 
Skilled nursing communities, owned
     2       2       2       2  
Skilled nursing communities, leased
     47       47       47       47  
   Total no. of skilled nursing communities
     49       49       49       49  
                                 
        Total no. of communities
     161       160       161       160  
                                 
No. of living units (end of period):
                                
Assisted living & independent living communities, owned
     1,068       1,007       1,068       1,007  
Assisted living & independent living communities, leased (3)
     12,434       12,512       12,434       12,512  
   Total no. of assisted living & independent living units
     13,502       13,519       13,502       13,519  
                                 
Skilled nursing communities, owned
     271       273       271       273  
Skilled nursing communities, leased (4)
     4,133       4,143       4,133       4,143  
   Total no. of skilled nursing living units
     4,404       4,416       4,404       4,416  
                                 
         Total no. of living units
     17,906       17,935       17,906       17,935  
                                 
Rehabilitation hospital units
     321       321       321       321  
                                 
Senior living revenues:
                                
Assisted living & independent living communities
   $ 140,733     $ 132,830     $ 549,622     $ 499,504  
Skilled nursing communities
     66,203       62,448       254,756       242,843  
Other (5)
     1,679       1,021       5,556       2,550  
   Total senior living revenues
   $ 208,615     $ 196,299     $ 809,934     $ 744,897  
                                 

Assisted living & independent living communities occupancy
     91.1 %     90.7 %     91.1 %     91.8 %
Assisted living & independent living communities ADR
   $ 124     $ 118     $ 122     $ 110  
Assisted living & independent living communities ADR % growth
     5 %     -       11 %     -  
                                 
Skilled nursing communities occupancy
     87.8 %     88.5 %     87.8 %     88.5 %
Skilled nursing communities ADR
   $ 186     $ 174     $ 181     $ 170  
Skilled nursing communities ADR % growth
     7 %     -       6 %     -  
                                 
Rehabilitation hospital occupancy
     62.1 %     63.7 %     63.5 %     63.7 %
 
 

(1)
Excludes data for discontinued operations and for pharmacy and hospital operations.
(2)
Communities are categorized by the type of living units which constitute a majority (or plurality) of the total living units at the community.
(3)
Includes 1,718 and 1,654 skilled nursing units in communities where assisted living and independent living services are the predominant services provided for the three months and year ended December 31, 2007 and 2006, respectively.
(4)
Includes 66 and 95 assisted living and independent living units in communities where skilled nursing services are the predominant services provided for the three months and year ended December 31, 2007 and 2006, respectively.
(5)
Other senior living revenue relates primarily to rehabilitation and other specialty service revenues provided at residential facilities and does not include pharmacy or hospital operations.

 
Supplemental Information, page 6 of 6

 

Reconciliation of Income from Continuing Operations excluding Termination Charges to Loss from Continuing Operations for the three months and year ended December 31, 2006 (dollars in thousands, except per share data):


   
For the three months ended
December 31, 2006
    
For the year ended
December 31, 2006
  
   
Amount
    
Per Share(2)
    
Amount
    
Per Share(2)
  
Income from continuing operations excluding termination charges(1)
   $ 7,440     $ 0.24     $ 20,326     $ 0.71  
 
Termination expense for certain Sunrise management agreements
     (40,080 )             (129,913 )        
                                 
Loss from continuing operations
   $ (32,640 )   $ (1.03 )   $ (109,587 )   $ (3.83 )
                                 


(1)
We believe these adjusted amounts are a meaningful disclosure that may help shareholders to understand better our results of operations for the periods shown.  This information should not be considered as an alternative to income (loss) from continuing operations or income (loss) from continuing operations per share or any other operating or performance measure established by accounting principles generally accepted in the United States.

(2)
Both basic and diluted.