EX-99.1 2 a12312017-exhibit991.htm EX-99.1 Exhibit
Exhibit 99.1

fvea04.jpg 
FOR IMMEDIATE RELEASE 
Contact: Brad Shepherd, Director, Investor Relations
 
(617) 796-8245
 
Five Star Senior Living Inc. Announces Fourth Quarter and Year End 2017 Results

Newton, MA (March 21, 2018).  Five Star Senior Living Inc. (Nasdaq: FVE) today announced its financial results for the quarter and year ended December 31, 2017.

Financial Results for the quarter ended December 31, 2017:
 
▪
Senior living revenue for the fourth quarter of 2017 decreased 0.6% to $279.2 million from $281.0 million for the same period in 2016, primarily due to an estimated $0.9 million revenue reserve recorded in the fourth quarter of 2017 in connection with the previously disclosed 2017 Medicare compliance assessment, or the 2017 Compliance Assessment, at one of Five Star's skilled nursing facilities, or SNFs, and a decrease in occupancy, partially offset by an increase in average monthly rates to residents who pay privately for services. Management fee revenue for the fourth quarter of 2017 increased 4.5% to $3.5 million from $3.4 million for the same period in 2016, primarily due to an increase in the number of managed communities compared to the same period in 2016.  

▪
Net loss for the fourth quarter of 2017 was $1.0 million, or $0.02 per diluted share, compared to net loss of $5.6 million, or $0.11 per diluted share, for the same period in 2016.  Net loss for the fourth quarter of 2017 included a gain on sale of senior living communities of $7.3 million, or $0.15 per diluted share, in connection with the sale of two senior living communities in December 2017 pursuant to a transaction agreement Five Star entered with Senior Housing Properties Trust (Nasdaq: SNH), or the 2017 Transaction Agreement. Net loss for the fourth quarter of 2017 also included a benefit from income taxes of $3.2 million, or $0.07 per diluted share, resulting primarily from Five Star’s monetization of alternative minimum tax credits, $1.5 million, or $0.03 per diluted share, for estimated revenue reserve, penalties and fees related to the 2017 Compliance Assessment, and $1.6 million, or $0.03 per diluted share, related to long lived asset impairment Five Star recorded to reduce the carrying value of one senior living community classified as held for sale to its estimated fair value less costs to sell. Net loss for the fourth quarter of 2016 included a benefit from income taxes of $0.5 million, or $0.01 per diluted share, related to a reduction of previously accrued estimated state tax expense. 

▪
Earnings from continuing operations before interest, taxes, depreciation and amortization, or EBITDA, for the fourth quarter of 2017 was $5.8 million compared to $3.5 million for the same period in 2016. EBITDA excluding certain items noted in the supplemental information provided below, or Adjusted EBITDA, was $2.1 million and $3.5 million for the fourth quarters of 2017 and 2016, respectively. A reconciliation of loss from continuing operations determined in accordance with U.S. generally accepted accounting principles, or GAAP, to EBITDA and Adjusted EBITDA for the quarters ended December 31, 2017 and 2016 appears later in this press release. 

Operating Results for the quarter ended December 31, 2017:

▪
Occupancy at owned and leased senior living communities for the fourth quarter of 2017 was 82.6% compared to 83.9% for the same period in 2016.




▪
The average monthly rate at owned and leased senior living communities for the fourth quarter of 2017 increased 0.3% to $4,653 from $4,639 for the same period in 2016.

▪
The percentage of revenue derived from residents’ private resources at owned and leased senior living communities for the fourth quarter of 2017 was 77.7% compared to 77.6% for the same period in 2016.
 
Financial Results for the year ended December 31, 2017:
 
▪
Senior living revenue of $1.12 billion for the year ended December 31, 2017 had a slight decrease of 0.1% from 2016. This slight decrease in senior living revenue is primarily a result of an estimated $0.9 million revenue reserve recorded in the fourth quarter of 2017 in connection with the 2017 Compliance Assessment, a decrease in occupancy and a $1.0 million reversal of revenue reserves during 2016 as a result of the final settlement amount in 2016 of the previously disclosed 2014 Medicare compliance assessment, or the 2014 Compliance Assessment, at one of Five Star's SNFs, partially offset by an increase for 2017 in average monthly rates to residents who pay privately for services. Management fee revenue for the year ended December 31, 2017 increased by 14.0% to $14.1 million from $12.4 million for 2016. The increase in management fee revenue was primarily due to an increase in the number of managed communities during 2017 compared to 2016 and the modifications to the calculations of management fees under Five Star's management arrangements with SNH that became effective on July 1, 2016.

▪
Net loss for the year ended December 31, 2017 was $20.9 million, or $0.42 per diluted share, compared to net loss of $21.8 million, or $0.45 per diluted share, for 2016. Net loss for the year ended December 31, 2017 included a gain on sale of senior living communities of $7.3 million, or $0.15 per diluted share, in connection with the sale of two senior living communities in December 2017 pursuant to the 2017 Transaction Agreement, a benefit from income taxes of $4.5 million, or $0.09 per diluted share, resulting primarily from Five Star’s monetization of alternative minimum tax credits, $1.5 million, or $0.03 per diluted share, for estimated revenue reserve, penalties and fees related to the 2017 Compliance Assessment, and $2.1 million, or $0.04 per diluted share, primarily related to long lived asset impairment Five Star recorded to reduce the carrying value of one senior living community classified as held for sale to its estimated fair value less costs to sell. Net loss for the year ended December 31, 2016 included a $1.5 million, or $0.03 per diluted share, reversal of revenue reserves and accrued liability for estimated penalties related to the 2014 Compliance Assessment and a provision for income taxes of $2.4 million, or $0.05 per diluted share, resulting primarily from state tax expense.  

▪
EBITDA for the year ended December 31, 2017 was $16.3 million compared to $22.3 million for 2016. Adjusted EBITDA was $12.1 million and $22.8 million for the years ended December 31, 2017 and 2016, respectively. A reconciliation of loss from continuing operations determined in accordance with GAAP to EBITDA and Adjusted EBITDA for the years ended December 31, 2017 and 2016 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 and SNH's assumption of approximately $33.5 million of mortgage debt principal secured by certain of these senior living communities as of December 31, 2017, 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 connection with these sales, Five Star entered management and pooling agreements with SNH to manage these senior living communities, and Five Star expects to enter additional management and pooling agreements with SNH concurrent with the sales of the remaining two communities. The closings of the sales of the remaining two communities for an aggregate sales price of approximately $23.3 million, including SNH’s assumption of approximately $16.7 million of mortgage debt principal, are expected to occur as third party approvals are received by the end of the first half of 2018.


2

Conference Call:
 
On Wednesday, March 21, 2018, at 10:00 a.m. Eastern Time, President and Chief Executive Officer, Bruce Mackey, Chief Financial Officer and Treasurer, Richard Doyle, and Senior Vice President and Chief Operating Officer, Scott Herzig, will host a conference call to discuss Five Star's fourth quarter and full year 2017 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 Wednesday, March 28, 2018. To hear the replay, dial (412) 317-0088. The replay pass code is 10115722. 
 
A live audio webcast of the conference call will also be available in a listen only mode on Five Star’s website 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 of Five Star’s fourth quarter 2017 conference call are strictly prohibited without the prior written consent of Five 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 December 31, 2017,  Five Star operated 283 senior living communities with 31,785 living units located in 32 states, including 213 communities (22,742 living units) that it owned or leased and 70 communities (9,043 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.

3

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 USES WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, "WILL", “MAY” AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, FIVE STAR IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON FIVE STAR’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 FIVE STAR’S FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:

•
FIVE STAR HAS AGREED TO SELL TWO SENIOR LIVING COMMUNITIES TO SNH FOR APPROXIMATELY $23.3 MILLION, INCLUDING SNH’S ASSUMPTION OF APPROXIMATELY $16.8 MILLION OF MORTGAGE DEBT, AND FIVE STAR EXPECTS TO ENTER MANAGEMENT AND POOLING AGREEMENTS WITH SNH FOR FIVE STAR TO MANAGE THESE SENIOR LIVING COMMUNITIES. THESE SALES ARE SUBJECT TO CONDITIONS. THESE CONDITIONS MAY NOT BE MET AND THESE SALES AND ANY RELATED MANAGEMENT AND POOLING ARRANGEMENTS MAY NOT OCCUR, MAY BE DELAYED BEYOND THE FIRST HALF OF 2018 OR THEIR TERMS MAY CHANGE.

•
DURING 2017, FIVE STAR RECOGNIZED $1.5 MILLION OF ESTIMATED REVENUE RESERVES, PENALTIES AND FEES RELATED TO THE 2017 COMPLIANCE ASSESSMENT. THE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES OFFICE OF THE INSPECTOR GENERAL, OR THE OIG, HAS NOT AGREED TO THESE AMOUNTS AND WE HAVE NOT ENTERED A SETTLEMENT AGREEMENT WITH THE OIG REGARDING THIS MATTER. AS A RESULT, WE MAY INCUR, RECORD AND PAY LIABILITIES AND EXPENSES GREATER THAN THE AMOUNTS WE RECOGNIZED IN 2017 FOR THIS MATTER AND THOSE ADDITIONAL AMOUNTS COULD BE SIGNIFICANT.

THE INFORMATION CONTAINED IN FIVE STAR’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER “RISK FACTORS” IN FIVE STAR’S PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE FIVE STAR’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN OR IMPLIED BY FIVE STAR’S FORWARD LOOKING STATEMENTS. FIVE STAR’S FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.

EXCEPT AS REQUIRED BY LAW, FIVE STAR DOES NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

4
Supplemental Information


FIVE STAR SENIOR LIVING INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
 
Three Months Ended December 31,
 
Year Ended
December 31,
 
 
2017
 
2016
 
2017
 
2016
Revenues:
 
 
 
 
 
 
 
 
Senior living revenue
 
$
279,238

 
$
280,980

 
$
1,122,176

 
$
1,123,258

Management fee revenue
 
3,549

 
3,395

 
14,080

 
12,350

Reimbursed costs incurred on behalf of managed communities
 
65,504

 
61,877

 
259,850

 
242,500

Total revenues
 
348,291

 
346,252

 
1,396,106

 
1,378,108

Operating expenses:
 
 

 
 

 
 

 
 

Senior living wages and benefits
 
137,965

 
138,669

 
551,102

 
553,310

Other senior living operating expenses
 
74,300

 
71,968

 
293,419

 
284,533

Costs incurred on behalf of managed communities
 
65,504

 
61,877

 
259,850

 
242,500

Rent expense
 
52,007

 
50,830

 
206,531

 
201,667

General and administrative expenses
 
18,479

 
19,298

 
75,212

 
73,516

Depreciation and amortization expense
 
9,152

 
9,205

 
38,192

 
38,052

Gain on sale of senior living communities
 
(7,258
)
 
—

 
(7,258
)
 
—

Long lived asset impairment
 
1,584

 
—

 
2,112

 
502

Total operating expenses
 
351,733

 
351,847

 
1,419,160

 
1,394,080

 
 
 
 
 
 
 
 
 
Operating loss
 
(3,442
)
 
(5,595
)
 
(23,054
)
 
(15,972
)
 
 
 
 
 
 
 
 
 
Interest, dividend and other income
 
206

 
218

 
765

 
984

Interest and other expense
 
(1,108
)
 
(955
)
 
(4,308
)
 
(4,912
)
Gain on early extinguishment of debt
 
—

 
—

 
143

 
—

Gain (loss) on sale of available for sale securities reclassified from accumulated other comprehensive income (loss)
 
57

 
(140
)
 
408

 
107

 
 
 
 
 
 
 
 
 
Loss from continuing operations before income taxes and equity in earnings of an investee
 
(4,287
)
 
(6,472
)
 
(26,046
)
 
(19,793
)
Benefit from (provision for) income taxes
 
3,206

 
490

 
4,536

 
(2,351
)
Equity in earnings of an investee
 
75

 
30

 
608

 
137

Loss from continuing operations
 
(1,006
)
 
(5,952
)
 
(20,902
)
 
(22,007
)
Income from discontinued operations, net of tax
 
—

 
325

 
—

 
194

 
 
 
 
 
 
 
 
 
Net loss
 
$
(1,006
)
 
$
(5,627
)
 
$
(20,902
)
 
$
(21,813
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding—basic and diluted
 
49,215

 
48,807

 
49,204

 
48,815

 
 
 
 
 
 
 
 
 
Basic and diluted (loss) income per share from:
 
 
 
 

 
 
 
 
Continuing operations
 
$
(0.02
)
 
$
(0.12
)
 
$
(0.42
)
 
$
(0.45
)
Discontinued operations
 
—

 
0.01

 
—

 
—

Net loss per share—basic and diluted
 
$
(0.02
)
 
$
(0.11
)
 
$
(0.42
)
 
$
(0.45
)

5
Supplemental Information


FIVE STAR SENIOR LIVING INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
 
December 31,
 
December 31,
 
 
2017
 
2016
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
26,255

 
$
16,608

Accounts receivable, net of allowance
 
38,673

 
38,324

Due from related persons
 
4,774

 
17,010

Investments in available for sale securities
 
22,524

 
24,081

Restricted cash
 
20,747

 
15,059

Prepaid expenses and other current assets
 
25,132

 
17,295

Assets held for sale
 
59,080

 
1,010

Total current assets
 
197,185

 
129,387

 
 
 
 
 
Property and equipment, net
 
251,504

 
351,929

Restricted cash
 
1,476

 
1,909

Restricted investments in available for sale securities
 
10,758

 
16,589

Equity investment of an investee and other long term assets
 
14,985

 
9,920

Total assets
 
$
475,908

 
$
509,734

 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
Current liabilities:
 
 
 
 
Revolving credit facility
 
$
—

 
$
—

Accounts payable and accrued expenses
 
74,734

 
68,453

Accrued compensation and benefits
 
37,893

 
35,939

Due to related persons
 
18,683

 
18,378

Accrued real estate taxes
 
11,801

 
12,784

Other current liabilities
 
40,750

 
37,432

Liabilities held for sale
 
34,781

 
7

Total current liabilities
 
218,642

 
172,993

 
 
 
 
 
Mortgage notes payable
 
7,872

 
58,494

Deferred gain on sale and leaseback transaction
 
66,087

 
72,695

Other long term liabilities
 
38,313

 
41,286

Shareholders’ equity
 
144,994

 
164,266

Total liabilities and shareholders’ equity
 
$
475,908

 
$
509,734


 
















6
Supplemental Information


FIVE STAR SENIOR LIVING INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 
Year Ended December 31,
 
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
Net loss
 
$
(20,902
)
 
$
(21,813
)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
 
 
 
 
Depreciation and amortization expense
 
38,192

 
38,052

Gain on sale of senior living communities
 
(7,258
)
 
—

Gain on early extinguishment of debt
 
(298
)
 
—

Income from discontinued operations before income tax
 
—

 
(194
)
Gain on sale of available for sale securities reclassified from accumulated other comprehensive income
 
(408
)
 
(107
)
Loss on disposal of property and equipment
 
277

 
121

Long lived asset impairment
 
2,112

 
502

Equity in earnings of an investee
 
(608
)
 
(137
)
Share based compensation
 
1,094

 
1,194

Provision for losses on receivables
 
4,697

 
4,033

Amortization of deferred gain on sale and leaseback transaction
 
(6,608
)
 
(3,340
)
Other non-cash income adjustments, net
 
703

 
(531
)
Changes in assets and liabilities:
 
 

 
 
Accounts receivable
 
(5,046
)
 
(4,528
)
Prepaid expenses and other assets
 
(10,650
)
 
521

Accounts payable and accrued expenses
 
6,306

 
(24,661
)
Accrued compensation and benefits
 
1,954

 
3,812

Due from (to) related persons, net
 
11,439

 
(7,923
)
Other current and long term liabilities
 
1,120

 
(8,454
)
Cash provided by (used in) operating activities
 
16,116

 
(23,453
)
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Increase in restricted cash and investment accounts, net
 
(5,255
)
 
(10,846
)
Acquisition of property and equipment
 
(71,095
)
 
(55,419
)
Purchases of available for sale securities
 
(14,409
)
 
(8,388
)
Proceeds from sale of property and equipment
 
39,800

 
21,437

Proceeds from sale of land
 
750

 
—

Proceeds from sale of communities
 
39,076

 
112,350

Proceeds from sale of available for sale securities
 
22,382

 
17,905

Cash provided by investing activities
 
11,249

 
77,039

 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Proceeds from borrowings on credit facilities
 
65,000

 
25,000

Repayments of borrowings on credit facilities
 
(65,000
)
 
(75,000
)
Repayments of mortgage notes payable
 
(16,766
)
 
(1,260
)
Payment of deferred financing fees
 
(1,889
)
 
(300
)
Payment of employee tax obligations on withheld shares
 
(66
)
 
(86
)
Cash used in financing activities
 
(18,721
)
 
(51,646
)
 
 
 
 
 
Cash flows from discontinued operations:
 
 
 
 
Net cash provided by operating activities
 
1,003

 
11

Net cash used in investing activities
 
—

 
(15
)
Net cash flows provided by (used in) discontinued operations
 
1,003

 
(4
)
 
 
 
 
 
Change in cash and cash equivalents
 
9,647

 
1,936

Cash and cash equivalents at beginning of period
 
16,608

 
14,672

Cash and cash equivalents at end of period
 
$
26,255

 
$
16,608

 
 
 
 
 
Supplemental cash flow information:
 
 
 
 
Cash paid for interest
 
$
3,932

 
$
4,855

Cash (received) paid for income taxes, net
 
$
(1,399
)
 
$
3,213



7
Supplemental Information


FIVE STAR SENIOR LIVING INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands)
(unaudited)
 
Non-GAAP financial measures are financial measures that are not determined in accordance with GAAP. Five Star believes the non-GAAP financial measures presented in the table below are meaningful supplemental disclosures because they may help investors gain a better understanding of changes in Five Star’s operating results and its ability to pay rent or service debt, make capital expenditures and expand its business. These non-GAAP financial measures also may help investors make comparisons between Five Star and other companies on both a GAAP and a non-GAAP basis. Five Star believes that EBITDA and Adjusted EBITDA are meaningful financial measures that may help investors better understand its financial performance, including by allowing investors to compare Five Star’s performance between periods and to the performance of other companies. EBITDA and Adjusted EBITDA are used by management to evaluate Five Star’s financial performance and compare Five Star’s performance over time and to the performance of other companies. Five Star calculates EBITDA and Adjusted EBITDA as shown below. These measures should not be considered as alternatives to income (loss) from continuing operations or net income (loss), as indicators of Five Star’s operating performance or as measures of Five Star’s liquidity. Also, EBITDA and Adjusted EBITDA as presented may not be comparable to similarly titled amounts calculated by other companies.

Five Star believes that income (loss) from continuing operations is the most directly comparable financial measure, determined according to GAAP, to Five Star’s presentation of EBITDA and Adjusted EBITDA. The following table presents the reconciliation of these non-GAAP financial measures to loss from continuing operations for the three months and years ended December 31, 2017 and 2016.
 
 
 
For the three months ended December 31,
 
 
 
For the year
ended December 31,
 
 
 
2017
 
 
 
2016
 
 
 
2017
 
 
 
2016
 
Loss from continuing operations
 
$
(1,006
)
 
 
 
$
(5,952
)
 
 
 
$
(20,902
)
 
 
 
$
(22,007
)
 
Add: interest and other expense
 
1,108

 
 
 
955

 
 
 
4,308

 
 
 
4,912

 
Add: (benefit from) provision for income taxes (1)
 
(3,206
)
 
 
 
(490
)
 
 
 
(4,536
)
 
 
 
2,351

 
Add: depreciation and amortization expense
 
9,152

 
 
 
9,205

 
 
 
38,192

 
 
 
38,052

 
Less: interest, dividend and other income
 
(206
)
 
 
 
(218
)
 
 
 
(765
)
 
 
 
(984
)
 
EBITDA
 
5,842

 
 
 
3,500

 
 
 
16,297

 
 
 
22,324

 
Add (less):
 
 

 
 
 
 

 
 
 
 
 
 
 
 
 
Long lived asset impairments
 
1,584

 
 
 
—

 
 
 
2,112

 
 
 
502

 
Costs related to compliance assessments
 
1,546

(2) 
 
 
—

 
 
 
1,546

(2) 
 
 
(1,498
)
(3) 
Litigation recovery
 
—

 
 
 
—

 
 
 
(800
)
 
 
 
—

 
Employee litigation matter
 
345

 
 
 
—

 
 
 
345

 
 
 
—

 
Gain on sale of senior living communities
 
(7,258
)
 
 
 
—

 
 
 
(7,258
)
 
 
 
—

 
Transaction costs
 
—

 
 
 
—

 
 
 
—

 
 
 
1,480

 
Gain on early extinguishment of debt
 
—

 
 
 
—

 
 
 
(143
)
 
 
 
—

 
Adjusted EBITDA
 
$
2,059

 
 
 
$
3,500

 
 
 
$
12,099

 
 
 
$
22,808

 
 

(1)
2017 data includes Five Star's monetization of alternative minimum tax credits.
(2)
Consists of an estimated $0.9 million revenue reserve and $0.7 million of estimated penalties, compliance costs and professional fees related to the 2017 Compliance Assessment.
(3)
Consists of a $1.5 million reversal of revenue reserves and accrued liability for estimated penalties related to the 2014 Compliance Assessment.

 

8
Supplemental Information


FIVE STAR SENIOR LIVING INC.
SENIOR LIVING COMMUNITY FINANCIAL DATA(1) 
(in thousands)
(unaudited) 
 
 
Three months ended
December 31, (2)
 
Year ended
December 31, (2)
 
 
2017
 
2016
 
2017
 
2016
Senior living revenue:
 
 
 
 
 
 
 
 
Independent and assisted living community revenue (owned)(3)
 
$
23,703

 
$
23,886

 
$
95,148

 
$
94,404

Independent and assisted living community revenue (leased)(3)
 
108,330

 
107,804

 
434,111

 
434,217

Continuing care retirement community revenue (leased)
 
97,631

 
98,267

 
391,364

 
392,501

Skilled nursing facility revenue (leased)(4)
 
41,389

 
43,950

 
170,717

 
174,682

Ageility physical therapy revenue
 
8,185

 
7,073

 
30,836

 
27,454

Total senior living revenue (owned and leased)
 
$
279,238

 
$
280,980

 
$
1,122,176

 
$
1,123,258

 
 
 
 
 
 
 
 
 
Senior living wages and benefits:
 
 
 
 
 
 
 
 
Independent and assisted living community wages and benefits (owned)(3)
 
$
9,972

 
$
10,034

 
$
39,659

 
$
39,689

Independent and assisted living community wages and benefits (leased)(3)
 
46,783

 
47,039

 
186,407

 
185,826

Continuing care retirement community wages and benefits (leased)
 
49,541

 
50,233

 
199,115

 
199,567

Skilled nursing facility wages and benefits (leased)
 
27,233

 
27,987

 
109,551

 
111,496

Ageility physical therapy wages and benefits
 
5,718

 
5,243

 
20,964

 
19,659

Insurance and other (5)
 
(1,282
)
 
(1,867
)
 
(4,594
)
 
(2,927
)
Total senior living wages and benefits (owned and leased)
 
$
137,965

 
$
138,669

 
$
551,102

 
$
553,310

 
 
 
 
 
 
 
 
 
Other senior living operating expenses:
 
 
 
 
 
 
 
 
Independent and assisted living community other operating expenses (owned)(3)
 
$
6,502

 
$
6,187

 
$
25,350

 
$
24,863

Independent and assisted living community other operating expenses (leased)(3)
 
27,739

 
27,251

 
108,703

 
107,156

Continuing care retirement community other operating expenses (leased)
 
25,597

 
26,333

 
103,020

 
102,272

Skilled nursing facility other operating expenses (leased)(6)
 
11,748

 
11,176

 
46,766

 
45,084

Ageility physical therapy other operating expenses
 
625

 
360

 
2,055

 
1,448

Insurance and other (5)
 
2,089

 
661

 
7,525

 
3,710

Total senior living operating expenses (owned and leased)
 
$
74,300

 
$
71,968

 
$
293,419

 
$
284,533

 

(1)
Excludes data for managed communities and discontinued operations.
(2)
The number of owned and leased communities between January 1, 2016 and December 31, 2017 decreased by one due to the sale in September 2016 of one leased community that was not classified as held for sale and the sale of two senior living communities to SNH in December 2017 pursuant to the 2017 Transaction Agreement, partially offset by the leasing of two additional senior living communities from SNH in December 2016; separate comparable senior living community financial data is not presented because the differences between that data and the data for all owned and leased communities is not material to Five Star’s operating results.
(3)
Data presents the seven communities that were sold to SNH in June 2016 pursuant to a sale and leaseback transaction as leased for all periods presented.
(4)
Skilled nursing facility revenue for the three months and year ended December 31, 2017 includes an estimated $0.9 million revenue reserve related to the 2017 Compliance Assessment. Skilled nursing facility revenue for the year ended December 31, 2016 includes a $1.0 million reversal of revenue reserves related to the 2014 Compliance Assessment.
(5)
Insurance and other expenses primarily relate to Five Star's captive insurance company subsidiary, which mainly participates in Five Star's workers' compensation and professional and general liability insurance programs.
(6)
Skilled nursing facility other operating expenses for the three months and year ended December 31, 2017 includes $0.7 million expense related to estimated penalties, compliance costs and professional fees for the 2017 Compliance Assessment. Skilled nursing facility other operating expenses for the year ended December 31, 2016 includes a $0.5 million reversal of accrued liability for estimated penalties related to the 2014 Compliance Assessment.








9
Supplemental Information


FIVE STAR SENIOR LIVING INC.
SENIOR LIVING OTHER OPERATING DATA(1) 
(unaudited) 
 
 
Three months ended 
 
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
 
2017
 
2017
 
2017
 
2017
 
2016
Independent and assisted living communities (owned):(2)(3)
 
 
 
 
 
 
 
 
 
 
Number of communities (end of period)
 
24

 
26

 
26

 
26

 
26

Number of units (end of period)(4)
 
2,474

 
2,703

 
2,703

 
2,703

 
2,703

Occupancy(4)
 
82.7
%
 
82.9
%
 
83.4
%
 
83.6
%
 
84.6
%
Avg. monthly rate(5)
 
$
3,408

 
$
3,410

 
$
3,427

 
$
3,437

 
$
3,346

 
 
 
 
 
 
 
 
 
 
 
Independent and assisted living communities (leased):(2)
 
 
 
 
 
 
 
 
 
 
Number of communities (end of period)
 
128

 
128

 
128

 
128

 
128

Number of units (end of period)(4)
 
10,507

 
10,537

 
10,537

 
10,536

 
10,567

Occupancy(4)
 
84.4
%
 
84.6
%
 
84.6
%
 
85.0
%
 
85.4
%
Avg. monthly rate(5)
 
$
3,978

 
$
3,981

 
$
4,006

 
$
4,016

 
$
3,925

 
 
 
 
 
 
 
 
 
 
 
Continuing care retirement communities (leased):
 
 
 
 
 
 
 
 
 
 
Number of communities (end of period)
 
31

 
31

 
31

 
31

 
31

Number of units (end of period)(4)(6)
 
7,159

 
7,163

 
7,172

 
7,171

 
7,171

Occupancy(4)
 
81.8
%
 
81.6
%
 
81.8
%
 
82.9
%
 
82.8
%
Avg. monthly rate(5)
 
$
5,433

 
$
5,400

 
$
5,490

 
$
5,562

 
$
5,391

 
 
 
 
 
 
 
 
 
 
 
Skilled nursing facilities (leased):
 
 
 
 
 
 
 
 
 
 
Number of communities (end of period)
 
30

 
30

 
30

 
30

 
30

Number of units (end of period)(4)(7)
 
2,602

 
2,602

 
2,602

 
2,601

 
2,601

Occupancy(4)
 
77.8
%
 
80.1
%
 
79.7
%
 
79.8
%
 
80.0
%
Avg. monthly rate(5)
 
$
6,721

 
$
6,725

 
$
6,973

 
$
7,079

 
$
6,977

 
 
 
 
 
 
 
 
 
 
 
Total senior living communities (owned and leased):
 
 
 
 
 
 
 
 
 
 
Number of communities (end of period)
 
213

 
215

 
215

 
215

 
215

Number of units (end of period)(4)
 
22,742

 
23,005

 
23,014

 
23,011

 
23,042

Occupancy(4)
 
82.6
%
 
83.0
%
 
83.1
%
 
83.6
%
 
83.9
%
Avg. monthly rate(5)
 
$
4,653

 
$
4,648

 
$
4,715

 
$
4,756

 
$
4,639

 
 
 
 
 
 
 
 
 
 
 
Managed communities:(3)
 
 
 
 
 
 
 
 
 
 
Number of communities (end of period)
 
70

 
68

 
68

 
68

 
68

Number of units (end of period)(4)(8)
 
9,043

 
8,807

 
8,806

 
8,798

 
8,788

Occupancy(4)
 
86.0
%
 
85.8
%
 
85.7
%
 
86.0
%
 
86.6
%
Avg. monthly rate(5)
 
$
4,254

 
$
4,243

 
$
4,297

 
$
4,322

 
$
4,222

 
 
 
 
 
 
 
 
 
 
 
Other ancillary services:
 
 
 
 
 
 
 
 
 
 
Ageility physical therapy inpatient clinics (end of period)
 
47

 
47

 
47

 
48

 
48

Ageility physical therapy outpatient clinics (end of period)
 
92

 
88

 
85

 
80

 
76

Home health communities served (end of period)
 
15

 
15

 
13

 
18

 
16

 
(1)
Excludes data for discontinued operations.
(2)
Data presents the seven communities that were sold to SNH in June 2016 pursuant to a sale and leaseback transaction as leased for all periods presented.
(3)
Occupancy and average monthly rate for the three months ended December 31, 2017 include data for the two senior living communities that were sold to SNH in December 2017 pursuant to the 2017 Transaction Agreement as owned until the time of sale and as managed from the time of sale through the end of the period.
(4)
Includes only living units categorized as in service. As a result, the number of living units may change from period to period for reasons other than the acquisition or disposition of senior living communities.
(5)
Average monthly rate is calculated by taking the average daily rate, which is defined as total operating revenues divided by occupied units during the period, and multiplying it by 30 days.
(6)
Includes 1,916 skilled nursing units in communities where assisted living and independent living services are the predominant services provided.
(7)
Includes 69 assisted living and independent living units in communities where skilled nursing services are the predominant services provided.
(8)
Includes 427 skilled nursing units in communities where assisted living and independent living services are the predominant services provided.


10
Supplemental Information


FIVE STAR SENIOR LIVING INC.
PERCENT BREAKDOWN OF SENIOR LIVING COMMUNITY REVENUE(1) 
(unaudited)
 
 
 
Three Months Ended December 31,
 
Year Ended
December 31,
 
 
2017
 
2016
 
2017
 
2016
Independent and assisted living communities (owned):(2)
 
 
 
 
 
 
 
 
Private and other sources
 
99.2
%
 
99.1
%
 
99.0
%
 
99.0
%
Medicaid
 
0.8
%
 
0.9
%
 
1.0
%
 
1.0
%
Total
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
Independent and assisted living communities (leased):(2)
 
 
 
 
 
 
 
 
Private and other sources
 
98.9
%
 
99.0
%
 
99.0
%
 
99.0
%
Medicaid
 
1.1
%
 
1.0
%
 
1.0
%
 
1.0
%
Total
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
Continuing care retirement communities (leased):
 
 
 
 
 
 
 
 
Private and other sources
 
74.1
%
 
73.2
%
 
73.9
%
 
73.8
%
Medicare
 
18.4
%
 
19.8
%
 
18.9
%
 
19.3
%
Medicaid
 
7.5
%
 
7.0
%
 
7.2
%
 
6.9
%
Total
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
Skilled nursing facilities (leased):
 
 
 
 
 
 
 
 
Private and other sources
 
19.0
%
 
24.6
%
 
21.8
%
 
25.5
%
Medicare
 
18.9
%
 
21.3
%
 
20.5
%
 
20.7
%
Medicaid
 
62.1
%
 
54.1
%
 
57.7
%
 
53.8
%
Total
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
Total senior living communities (owned and leased):
 
 
 
 
 
 
 
 
Private and other sources
 
77.7
%
 
77.6
%
 
77.8
%
 
78.2
%
Medicare
 
9.5
%
 
10.6
%
 
10.0
%
 
10.3
%
Medicaid
 
12.8
%
 
11.8
%
 
12.2
%
 
11.5
%
Total
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 

(1)
Excludes data for managed communities and discontinued operations.
(2)
Data presents the seven communities that were sold to SNH in June 2016 pursuant to a sale and leaseback transaction as leased for all periods presented.


(end)

11