8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  March 6, 2019

FIVE STAR SENIOR LIVING INC.

(Exact Name of Registrant as Specified in Its Charter)

Maryland

(State or Other Jurisdiction of Incorporation)

1-16817	04-3516029
(Commission File Number)	(IRS Employer Identification No.)
400 Centre Street, Newton, Massachusetts	02458
(Address of Principal Executive Offices)	(Zip Code)

617-796-8387

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions:
☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange

Act.  ☐

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Item 2.02.  Results of Operations and Financial Condition.

On March 6, 2019, Five Star Senior Living Inc., or the Company, issued a press release regarding the Company’s results of operations and financial condition for the quarter and year ended December 31, 2018.  A copy of the Company’s press release is furnished as Exhibit 99.1 hereto.

Item 9.01.  Financial Statements and Exhibits.

(d)Exhibits.

The Company hereby furnishes the following exhibit:

99.1Press Release dated March 6, 2019.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FIVE STAR SENIOR LIVING INC.

By:	/s/ Richard A. Doyle
	Richard A. Doyle
	Executive Vice President, Chief Financial Officer and Treasurer

Dated:  March 6, 2019

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EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE	Contact: Brad Shepherd, Director, Investor Relations
	(617) 796-8245

Five Star Senior Living Inc. Announces Fourth Quarter and Year End 2018 Results

Newton, MA (March 6, 2019).  Five Star Senior Living Inc. (Nasdaq: FVE) today announced its financial results for the quarter and year ended December 31, 2018.

Financial Results for the quarter endedDecember 31, 2018:

▪Senior living revenue for the fourth quarter of 2018 decreased 1.1% to $276.3 million from $279.2 millionfor the same period in 2017, primarily due to the sale of six senior living communities between December 2017 and June 2018 to Senior Housing Properties Trust (Nasdaq: SNH), which Five Star is currently managing for SNH, and the sale of one skilled nursing facility, or SNF, in June 2018 to a third party, which Five Star had previously leased from SNH. This decrease was partially offset byincreases in occupancy,average monthly rates to residents who pay privately for services and revenues from ancillary services, such as rehabilitation and wellness services, as well as 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 Compliance Assessment, at one of Five Star’s former SNFs. Management fee revenue for the fourth quarter of 2018 increased5.3% to $3.7 million, primarily due to an increase in the number of managed communities compared to the same period in2017.

▪Net loss for the fourth quarter of 2018 was $23.7 million, or $0.47 per diluted share, compared to net loss of $1.0 million, or $0.02 per diluted share, for the same period in 2017.Net loss for the fourth quarter of 2018 included $0.8 million, or $0.02 per diluted share, of netseverance costsincurred in December 2018 related to two former executive officers. 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 to SNH, which Five Star is currently managing for SNH, 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 reserves, penalties and fees related to the 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 at December 31, 2017 to its estimated fair value less costs to sell, which community was subsequently sold in June 2018 to SNH. Five Star is currently managing this community for SNH. 

▪Earnings before interest, taxes, depreciation and amortization, or EBITDA, for the fourth quarter of 2018 was $(13.7) million compared to $5.8 million for the same period in 2017. EBITDA excluding certain items, or Adjusted EBITDA, was $(12.9) million and $2.1 million for the fourth quarters of 2018 and 2017, respectively. A reconciliation of net loss determined in accordance with U.S. generally accepted accounting principles, or GAAP, to EBITDA and Adjusted EBITDA for the quarters ended December 31, 2018 and 2017 appears later in this press release.

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Operating Results for the quarter endedDecember 31, 2018:

▪Occupancy at owned and leased senior living communities for the fourth quarter of 2018increased 30 basis points to82.9%from82.6% for the same period in 2017.

▪Average monthly rates at owned and leased senior living communities for the fourth quarter of 2018increased1.2% to $4,710 from $4,653 for the same period in 2017.

▪The percentage of revenue derived from residents’ private resources at owned and leased senior living communities was 77.7%for thefourth quarter of each of 2018and2017.

Financial Results for the year endedDecember 31, 2018:

▪Senior living revenue for the year ended December 31, 2018 decreased 2.5% to $1.09 billion from $1.12billionfor the same period in 2017, primarily due to the sale of six senior living communities between December 2017 and June 2018 to SNH, which Five Star is currently managing for SNH, the sale of one SNF in June 2018 to a third party, which Five Star had previously leased from SNH, and a decrease in occupancy, partially offset by increases inaverage monthly rates to residents who pay privately for services and revenues from ancillary services, such as rehabilitation and wellness services, as well as an estimated $0.9 million revenue reserve recorded in the fourth quarter of 2017 in connection with the Compliance Assessment. Management fee revenue for the year ended December 31, 2018increased7.6% to $15.1 million, primarily due to an increase in the number of managed communities compared to the same period in 2017.

▪Net loss for the year ended December 31, 2018 was $74.1 million, or $1.49 per diluted share, compared to net loss of $20.9 million, or $0.42 per diluted share, for the same period in2017. Net loss for the year ended December 31, 2018 included a gain on sale of senior living communities of$7.1 million, or $0.14 per diluted share, primarily due to the sale of four senior living communities in2018 to SNH, which Five Star is currently managing for SNH. Net loss for the year ended December 31, 2018 also included $0.8 million, or $0.02 per diluted share, of netseverancecosts incurred in December 2018 related to two former executive officers. Net loss for December 31, 2017 included a gain on sale of senior living communities of $7.3 million, or $0.06 per diluted share, in connection with the sale of two senior living communities in December 2017 to SNH, which Five Star is currently managing for SNH, a benefit for 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 reserves, penalties and fees related to the 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 at December 31, 2017 to its estimated fair value less costs to sell,which community was subsequently sold in June 2018 to SNH. Five Star is currently managing this communityfor SNH.

▪EBITDA for the year ended December 31, 2018 was $(35.7) million compared to $16.3 million for the same period in 2017. Adjusted EBITDA for the year ended December 31, 2018 was $(41.1) million compared to $12.1 million for the same period in 2017. A reconciliation of net loss determined in accordance with GAAP to EBITDA and Adjusted EBITDA for the years ended December 31, 2018 and 2017 appears later in this press release.

Other:

▪In November 2018, Five Star began managing for SNH a senior living community located in Colorado with 239 living units pursuant to a management agreement with SNH.

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Going Concern:

▪Five Star faces challenges that are currently negatively impacting its revenues, expenses, cash flows and resultsfrom operations, and Five Star expects these challenges to continue at least through 2019. These conditions raisesubstantial doubt about Five Star’s ability to continue as a going concern. Based on Five Star’s cash balance atDecember 31, 2018 and projected cash needs for the next 12 months, Five Star’s management believes that FiveStar will need to increase its revenues, reduce its costs, renew or replace its existing credit facility, reduce its operating leverage and/or pursue other transactions to be able to continue tofund its operating and capital requirements and meet its debt covenant obligations.

▪Five Star currently operates 260 senior living communities under lease and management arrangements with SNH, which represents approximately 91.5% of the total communities Five Star operates. In order to address Five Star's operating and liquidity issues, Five Star'sIndependent Directors and SNH's independent trustees are currently evaluatingFiveStar's arrangements with SNH. As a result, there may be changes toFive Star's arrangements with SNH which could positively impact Five Star's ability to continue as a going concern in the future. Nevertheless, Five Star cannot be sure that it will reach any agreement with SNH to change any ofFive Star's arrangements with them or that any change in Five Star's arrangements with SNH will positively impact Five Star's ability to continue as a going concern in the future.

Conference Call:

At 10:00 a.m. Eastern Time this morning, President and Chief Executive Officer, Katherine Potter, and Executive Vice President, Chief Financial Officer and Treasurer, Richard Doyle, will host a conference call to discuss Five Star's fourth quarter and full year2018financial results.

The conference call telephone number is (877) 329-4332. Participants calling from outside the United States and Canada should dial (412) 317-5436. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. on Wednesday, March 13, 2019. To access the replay, dial (412) 317-0088. The replay pass code is 10127650.

A live audio webcast of the conference call will also be available in a listen-only mode on Five Star’s website, which is located at www.fivestarseniorliving.com. Participants wanting to access the webcast should visit Five Star's website about five minutes before the call. The archived webcast will be available for replay on Five Star's website following the callfor about a week.The transcription, recording and retransmission in any way ofFive Star’sfourth quarter2018conference callarestrictly prohibited without the prior written consent ofFive Star. Five Star’s website is not incorporated as part of this press release.

About Five Star Senior Living Inc.:

Five Star Senior Living Inc. is a senior living and healthcare services company. As of December 31, 2018, Five Star operated 284 senior living communities with 32,106 living units located in 32 states, including 208 communities (22,250 living units) that it owned or leased and 76 communities (9,766living units) that it managed. These communities include independent living, assisted living, continuing care retirement communities and skilled nursing communities. Five Star is headquartered in Newton, Massachusetts.

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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, INCLUDING:

▪STATEMENTS ABOUT THE CURRENT EVALUATION BY FIVE STAR’S INDEPENDENT DIRECTORS AND SNH'S INDEPENDENT TRUSTEES REGARDING FIVE STAR'SLEASEANDMANAGEMENTARRANGEMENTSWITH SNH MAY IMPLY THAT THERE WILL BE AGREED CHANGES TO FIVE STAR'S ARRANGEMENTS WITH SNH IN THE FUTURE, THAT FIVE STAR’S OPERATING RESULTS AND FINANCIAL CONDITION WILL IMPROVE AS A RESULT AND THAT FIVE STAR WILL BE ABLE TO CONTINUE AS A GOING CONCERN. FIVE STAR CANNOT BE SURE THAT IT WILL REACH ANY AGREEMENT WITH SNH TOCHANGEANYOFFIVE STAR'SARRANGEMENTSWITHSNHORTHATANYCHANGEINFIVE STAR'SARRANGEMENTSWITHSNHWILLPOSITIVELYIMPACTFIVE STAR'SABILITYTO CONTINUE AS A GOING CONCERN IN THEFUTURE.

▪ANY ACTIONS FIVE STAR MAY TAKE TO ADDRESS THE CURRENT SUBSTANTIAL DOUBT AS TO ITS ABILITYTO CONTINUE AS A GOING CONCERN MAY NOT BE SUCCESSFUL. FURTHER, ANY SUCH ACTIONS THATMAY ADDRESS THAT CONCERN MAY ONLY PROVIDE RELIEF IN THE SHORT TERM AND COULD INCREASEFIVE STAR’S FUTURE COSTS AND THEREBY PREVENT OR LIMIT ITS ABILITY TO OPERATE PROFITABLY INTHE INTERMEDIATE OR LONGER TERM.

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.

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Supplemental Information

FIVE STAR SENIOR LIVING INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended				Year Ended
	December 31,				December 31,
	2018		2017		2018		2017
Revenues:
Senior living revenue	$	276,296	$	279,238	$	1,094,404	$	1,122,176
Management fee revenue	3,737		3,549		15,145		14,080
Reimbursed costs incurred on behalf of managed communities	72,836		65,504		280,845		259,850
Total revenues	352,869		348,291		1,390,394		1,396,106
Operating expenses:
Senior living wages and benefits	144,346		137,900		563,263		551,096
Other senior living operating expenses	74,937		74,365		301,239		293,425
Costs incurred on behalf of managed communities	72,836		65,504		280,845		259,850
Rent expense	52,510		52,007		209,150		206,531
General and administrative expenses	20,784		18,479		78,189		75,212
Depreciation and amortization expense	8,965		9,152		35,939		38,192
Gain on sale of senior living communities	—		(7,258)		(7131)		(7,258)
Long lived asset impairment	96		1,584		461		2,112
Total operating expenses	374,474		351,733		1,461,955		1,419,160
Operating loss	(21,605)		(3,442)		(71,561)		(23,054)
Interest, dividend and other income	241		206		818		765
Interest and other expense	(1,245)		(1,108)		(3,018)		(4,308)
Gain on early extinguishment of debt	—		—		—		143
Unrealized loss on equity investments	(817)		—		(690)		—
Realized gain on sale of debt and equity investments, net of tax	107		57		99		408
Loss before income taxes and equity in earnings of an investee	(23,319)		(4,287)		(74,352)		(26,046)
Benefit (provision) for income taxes	27		3,206		(247)		4,536
Equity in earnings of an investee, net of tax	(366)		75		516		608
Net loss	$	(23,658)	$	(1,006)	$	(74,083)	$	(20,902)
Weighted average shares outstanding—basic and diluted	49,818		49,215		49,687		49,204
Net loss per share—basic and diluted	$	(0.47)	$	(0.02)	$	(1.49)	$	(0.42)

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Supplemental Information

FIVE STAR SENIOR LIVING INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

	December 31,		December 31,
	2018		2017
Assets
Current assets:
Cash and cash equivalents	$	29,512	$	26,255
Accounts receivable, net of allowance	37,758		38,673
Due from related persons	7,855		4,774
Investments	20,179		22,524
Restricted cash	19,720		20,747
Prepaid expenses and other current assets	23,029		25,132
Assets held for sale	—		59,080
Total current assets	138,053		197,185
Property and equipment, net	243,873		251,504
Equity investment of an investee	8,633		8,185
Restricted cash	923		1,476
Restricted investments	8,073		10,758
Other long term assets	6,069		6,800
Total assets	$	405,624	$	475,908
Liabilities and Shareholders’ Equity
Current liabilities:
Revolving credit facility	$	51,484	$	—
Accounts payable and accrued expenses	69,667		74,734
Accrued compensation and benefits	35,421		37,893
Due to related persons	18,883		18,683
Mortgage notes payable	339		316
Accrued real estate taxes	12,959		11,801
Security deposits and current portion of continuing care contracts	3,468		4,073
Other current liabilities	37,472		36,361
Liabilities held for sale	—		34,781
Total current liabilities	229,693		218,642
Long term liabilities:
Mortgage notes payable	7,533		7,872
Accrued self insurance obligations	33,030		33,082
Deferred gain on sale and leaseback transaction	59,478		66,087
Other long term liabilities	4,721		5,231
Total long term liabilities	104,762		112,272
Shareholders’ equity:
Common stock, par value $.01: 75,000,000 shares authorized, 50,852,052 and 50,524,424 shares issued and outstanding at December 31, 2018 and 2017, respectively	508		505
Additional paid in capital	361,555		360,942
Accumulated deficit	(292,636)		(220,489)
Accumulated other comprehensive income	1,742		4,036
Total shareholders’ equity	71,169		144,994
Total liabilities and shareholders’ equity	$	405,624	$	475,908

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Supplemental Information

FIVE STAR SENIOR LIVING INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Year Ended December 31,
	2018		2017
Cash flows from operating activities:
Net loss	$	(74,083)	$	(20,902)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization expense	35,939		38,192
Gain on sale of senior living communities	(7,131)		(7,258)
Gain on early extinguishment of debt	—		(166)
Unrealized loss on equity investments	690		—
Realized gain on sale of debt and equity investments	(99)		(408)
Loss on disposal of property and equipment	16		277
Long lived asset impairment	461		2,112
Equity in earnings of an investee, net of tax	(516)		(608)
Stock based compensation	616		1,094
Provision for losses on receivables	4,904		4,697
Amortization of deferred gain on sale and leaseback transaction	(6,609)		(6,608)
Other noncash expense adjustments, net	1,192		703
Changes in assets and liabilities:
Accounts receivable	(3,989)		(5,046)
Prepaid expenses and other assets	1,535		(10,650)
Accounts payable and accrued expenses	(4,211)		6,306
Accrued compensation and benefits	(2,472)		1,954
Due (from) to related persons, net	(1,683)		11,439
Other current and long term liabilities	1,217		1,120
Cash (used in) provided by operating activities	(54,223)		16,248
Cash flows from investing activities:
Acquisition of property and equipment	(48,980)		(71,095)
Purchases of investments	(5,297)		(14,409)
Proceeds from sale of property and equipment	17,956		39,800
Proceeds from sale of land	—		750
Proceeds from sale of communities	31,819		39,076
Proceeds from sale of investments	9,438		22,382
Cash provided by investing activities	4,936		16,504
Cash flows from financing activities:
Proceeds from borrowings on revolving credit facility	76,484		65,000
Repayments of borrowings on revolving credit facility	(25,000)		(65,000)
Repayments of mortgage notes payable	(509)		(16,766)
Prepayment fees on early extinguishment of debt	—		(132)
Payment of deferred financing fees	—		(1,889)
Payment of employee tax obligations on withheld shares	(11)		(66)
Cash provided by (used in) financing activities	50,964		(18,853)
Cash flows from discontinued operations:
Net cash provided by operating activities	—		1,003
Net cash flows provided by discontinued operations	—		1,003
Change in cash and cash equivalents and restricted cash	1,677		14,902
Cash and cash equivalents and restricted cash at beginning of period	48,478		33,576
Cash and cash equivalents and restricted cash at end of period	$	50,155	$	48,478
Reconciliation of cash and cash equivalents and restricted cash
Cash and cash equivalents	$	29,512	$	26,255
Restricted cash	20,643		22,223
Cash and cash equivalents and restricted cash at end of period	$	50,155	$	48,478
Supplemental cash flow information:
Cash paid for interest	$	1,577	$	3,932
Cash paid (received) for income taxes, net	$	311	$	(1,399)
Non-cash activities:
Real estate sales	$	33,364	$	—
Mortgage notes assumed by purchaser in real estate sales	$	33,364	$	—

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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 net income (loss) or operating 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 net income (loss) 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 net loss for the three months and years endedDecember 31, 2018 and 2017.

	Three Months Ended				Year Ended
	December 31,				December 31,
	2018		2017		2018		2017
Net loss	$	(23,658)	$	(1,006)	$	(74,083)	$	(20,902)
Add (less):
Interest and other expense	1,245		1,108		3,018		4,308
(Benefit) provision for income taxes (1)	(27)		(3,206)		247		(4,536)
Depreciation and amortization expense	8,965		9,152		35,939		38,192
Interest, dividend and other income	(241)		(206)		(818)		(765)
EBITDA	(13,716)		5,842		(35,697)		16,297
Add (less):
Long lived asset impairment	96		1,584		461		2,112
Costs related to compliance assessment	—		1,546		(106)		1,546
Severance, net (2)	756		—		756		—
Employee litigation matter	—		345		605		345
Litigation recovery	—		—		—		(800)
Gain on sale of senior living communities	—		(7,258)		(7,131)		(7,258)
Gain on early extinguishment of debt	—		—		—		(143)
Adjusted EBITDA	$	(12,864)	$	2,059	$	(41,112)	$	12,099

(1) 2017 data includes Five Star's monetization of alternative minimum tax credits.

(2) Represents an aggregate $1.7 million of severance costs related to two former executive officers, net of $0.9 million of previously accrued compensation and benefits expenserelated to these former employees.

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Supplemental Information

FIVE STAR SENIOR LIVING INC.

SENIOR LIVING COMMUNITY FINANCIAL DATA⁽¹⁾

(in thousands)

(unaudited)

	Three Months Ended				Year Ended
	December 31,				December 31,
	2018		2017		2018		2017
Senior living revenue:
Independent and assisted living community revenue (owned)	$	18,456	$	23,703	$	76,040	$	95,148
Independent and assisted living community revenue (leased)	108,669		108,330		431,461		434,111
Continuing care retirement community revenue (leased)	97,473		97,631		387,184		391,364
Skilled nursing facility revenue (leased)(2)	42,229		41,389		164,290		170,717
Ageility physical therapy revenue	9,469		8,185		35,429		30,836
Total senior living revenue	$	276,296	$	279,238	$	1,094,404	$	1,122,176
Senior living wages and benefits:
Independent and assisted living community wages and benefits (owned)	$	8,722	$	9,973	$	34,504	$	39,664
Independent and assisted living community wages and benefits (leased)	50,591		46,790		194,652		186,434
Continuing care retirement community wages and benefits (leased)	51,054		49,547		202,556		199,141
Skilled nursing facility wages and benefits (leased)	28,485		27,236		110,113		108,053
Ageility physical therapy wages and benefits	6,654		5,719		24,243		20,972
Insurance and other (3)	(1,160)		(1,365)		(2,805)		(3,168)
Total senior living wages and benefits	$	144,346	$	137,900	$	563,263	$	551,096
Other senior living operating expenses:
Independent and assisted living community other operating expenses (owned)	$	5,447	$	6,500	$	22,450	$	25,344
Independent and assisted living community other operating expenses (leased)	29,722		27,732		115,904		108,676
Continuing care retirement community other operating expenses (leased)	27,225		25,591		108,931		102,994
Skilled nursing facility other operating expenses (leased)(4)	11,209		11,744		48,065		46,752
Ageility physical therapy other operating expenses	938		622		2,848		2,048
Insurance and other (3)	396		2,176		3,041		7,611
Total other senior living operating expenses	$	74,937	$	74,365	$	301,239	$	293,425

(1)Excludes data for managed communities.

(2)Skilled nursing facility revenue (leased) for the year ended December 31, 2018 includes a$0.1 millionreversal of estimated revenue reservesrelated to the Compliance Assessment. Skilled nursing facility revenue (leased) for the three months and year ended December 31, 2017 includes an estimated $0.9 million revenue reserve related to the Compliance Assessment.

(3) Insurance and other expenses primarily relate to Five Star's captive insurance company subsidiary, which mainly participates in Five Star's workers' compensation andprofessional and general liability insurance programs. Credit balances in senior living wages and benefits for insurance and other represent premiums earned by Five Star's captive insurance company subsidiary in excess of expenses recorded in the applicable period.

(4) Skilled nursing facility other operating expenses(leased) for the three months and year ended December 31, 2017 includes $0.7 million expensefor estimated penalties, compliance costs and professional fees related to the Compliance Assessment.

9

Supplemental Information

FIVE STAR SENIOR LIVING INC.

COMPARABLE SENIOR LIVING COMMUNITY FINANCIAL DATA⁽¹⁾

(in thousands)

(unaudited)

	Three Months Ended				Year Ended
	December 31, (2)				December 31, (3)
	2018		2017		2018		2017
Senior living revenue:
Independent and assisted living community revenue (owned)	$	18,456	$	18,525	$	73,563	$	73,961
Independent and assisted living community revenue (leased)	108,669		108,330		431,461		434,111
Continuing care retirement community revenue (leased)	97,473		97,631		387,184		391,364
Skilled nursing facility revenue (leased)(4)	42,228		39,632		161,227		163,200
Ageility physical therapy revenue	7,631		8,100		28,027		29,250
Total senior living revenue	$	274,457	$	272,218	$	1,081,462	$	1,091,886
Senior living wages and benefits:
Independent and assisted living community wages and benefits (owned)	$	8,729	$	8,131	$	33,611	$	32,357
Independent and assisted living community wages and benefits (leased)	50,591		46,790		194,652		186,434
Continuing care retirement community wages and benefits (leased)	51,054		49,547		202,556		199,141
Skilled nursing facility wages and benefits (leased)	28,485		26,112		108,065		103,160
Ageility physical therapy wages and benefits	5,357		5,645		19,218		19,865
Insurance and other (5)	(1,160)		(1,365)		(2,805)		(3,168)
Total senior living wages and benefits	$	143,056	$	134,860	$	555,297	$	537,789
Other senior living operating expenses:
Independent and assisted living community other operating expenses (owned)	$	5,480	$	5,147	$	21,548	$	19,998
Independent and assisted living community other operating expenses (leased)	29,722		27,732		115,904		108,676
Continuing care retirement community other operating expenses (leased)	27,225		25,591		108,931		102,994
Skilled nursing facility other operating expenses (leased)(6)	11,173		11,180		46,901		44,112
Ageility physical therapy other operating expenses	764		563		2,296		1,827
Insurance and other (5)	396		2,176		3,041		7,611
Total other senior living operating expenses	$	74,760	$	72,389	$	298,621	$	285,218

(1)Excludes data for managed communities.

(2)Includes data for senior living communities that Five Star has owned or leased continuously since October 1, 2017.

(3)Includes data for senior living communities that Five Star has owned or leased continuously since January 1, 2017.

(4)Skilled nursing facility revenue (leased) for the year ended December 31, 2018 includes a $0.1 million reversal of estimated revenue reserves related to the Compliance Assessment. Skilled nursing facility revenue (leased) for the three months and year ended December 31, 2017 includes an estimated $0.9 million revenue reserve related to the 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. Credit balances in senior living wages and benefits for insurance and other represent premiums earned by Five Star's captive insurance company subsidiary in excess of expenses recorded in the applicable period.

(6)Skilled nursing facility other operating expenses (leased) for the three months and year ended December 31, 2017 includes $0.7 million expense for estimated penalties, compliance costs and professional fees related to the Compliance Assessment.

10

Supplemental Information

FIVE STAR SENIOR LIVING INC.

SENIOR LIVING OTHER OPERATING DATA

(unaudited)

	Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2018			2018			2018			2018			2017
Independent and assisted living communities (owned):(1)
Number of communities (end of period)	20			20			20			22			24
Number of units (end of period)	2,108			2,108			2,108			2,259			2,474
Occupancy(2)	82.3		%	81.5		%	81.1		%	80.7		%	82.7		%
Avg. monthly rate(3)	$	3,458		$	3,442		$	3,392		$	3,464		$	3,408
Independent and assisted living communities (leased):
Number of communities (end of period)	128			128			128			128			128
Number of units (end of period)	10,520			10,520			10,519			10,510			10,507
Occupancy(2)	84.2		%	83.7		%	83.6		%	83.4		%	84.4		%
Avg. monthly rate(3)	$	3,991		$	3,991		$	4,024		$	4,070		$	3,978
Continuing care retirement communities (leased):
Number of communities (end of period)	31			31			31			31			31
Number of units (end of period)(4)	7,117			7,157			7,158			7,158			7,159
Occupancy(2)	82.9		%	81.3		%	80.6		%	81.5		%	81.8		%
Avg. monthly rate(3)	$	5,383		$	5,427		$	5,433		$	5,584		$	5,433
Skilled nursing facilities (leased):
Number of communities (end of period)	29			29			29			30			30
Number of units (end of period)(5)	2,505			2,505			2,505			2,602			2,602
Occupancy(2)	77.9		%	76.9		%	74.7		%	75.7		%	77.8		%
Avg. monthly rate(3)	$	7,049		$	6,874		$	6,926		$	6,951		$	6,721
Total senior living communities (owned and leased):
Number of communities (end of period)	208			208			208			211			213
Number of units (end of period)	22,250			22,290			22,290			22,529			22,742
Occupancy(2)	82.9		%	82.0		%	81.4		%	81.7		%	82.6		%
Avg. monthly rate(3)	$	4,710		$	4,701		$	4,709		$	4,796		$	4,653
Managed communities:(1)
Number of communities (end of period)	76			75			75			72			70
Number of units (end of period)(6)	9,766			9,515			9,510			9,258			9,043
Occupancy(2)	86.5		%	86.7		%	86.1		%	86.0		%	86.0		%
Avg. monthly rate(3)	$	4,149		$	4,164		$	4,242		$	4,301		$	4,254
Other ancillary services:
Number of ageility physical therapy inpatient clinics (end of period)	47			47			47			47			47
Number of ageility physical therapy outpatient clinics (end of period)	128			120			111			108			92
Number of home health communities served (end of period)	10			12			12			12			15

(1)Occupancy and average monthly rate for the three months ended December 31, 2017, March 31, 2018 and June 30, 2018 include data for the senior living communities thatwere sold to SNH during those periods as owned until the time of sale and as managed from the time of sale through the end of such periods.

(2)Includes 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 ofsenior living communities.

(3)Average monthly rate is calculated by taking the average daily rate, which is defined as total operating revenues for senior living services divided by occupied units during the period, and multiplying it by 30 days.

(4)Includes 1,916 skilled nursing units in communities where assisted living and independent living services are the predominant services provided.

(5)Includes 76 assisted living and independent living units in communities where skilled nursing services are the predominant services provided.

(6)Includes 427 skilled nursing units in communities where assisted living and independent living services are the predominant services provided.

11

Supplemental Information

FIVE STAR SENIOR LIVING INC.

PERCENT BREAKDOWN OF SENIOR LIVING COMMUNITY REVENUE⁽¹⁾

(unaudited)

	Three Months Ended				Year Ended
	December 31,				December 31,
	2018		2017		2018		2017
Independent and assisted living communities (owned):
Private and other sources	98.7	%	99.2	%	98.7	%	99.0	%
Medicaid	1.3	%	0.8	%	1.3	%	1.0	%
Total	100.0	%	100.0	%	100.0	%	100.0	%
Independent and assisted living communities (leased):
Private and other sources	98.8	%	98.9	%	98.9	%	99.0	%
Medicaid	1.2	%	1.1	%	1.1	%	1.0	%
Total	100.0	%	100.0	%	100.0	%	100.0	%
Continuing care retirement communities (leased):
Private and other sources	74.3	%	74.1	%	74.1	%	73.9	%
Medicare	17.5	%	18.4	%	18.1	%	19.0	%
Medicaid	8.2	%	7.5	%	7.8	%	7.1	%
Total	100.0	%	100.0	%	100.0	%	100.0	%
Skilled nursing facilities (leased):
Private and other sources	22.0	%	19.1	%	21.0	%	21.7	%
Medicare	17.1	%	18.9	%	18.2	%	20.5	%
Medicaid	60.9	%	62.0	%	60.8	%	57.8	%
Total	100.0	%	100.0	%	100.0	%	100.0	%
Total senior living communities (owned and leased):
Private and other sources	77.7	%	77.7	%	77.7	%	77.8	%
Medicare	9.1	%	9.5	%	9.4	%	10.0	%
Medicaid	13.2	%	12.8	%	12.9	%	12.2	%
Total	100.0	%	100.0	%	100.0	%	100.0	%

(1)Excludes data for managed communities.

(end)

12