Five Star Quality Care, Inc. Reports First Quarter 2013 Results Business Wire NEWTON, Mass. -- April 29, 2013 Five Star Quality Care, Inc. (NYSE: FVE) today announced its financial results for the quarter ended March 31, 2013. First Quarter 2013 Financial Highlights: *Total revenues for the first quarter of 2013 increased 10.1% to $360.1 million from $327.2 million for the same period in the previous year. *Earnings before interest, taxes, depreciation and amortization, or EBITDA, for the first quarter of 2013 were $9.1 million compared to $9.0 million for the same period in the previous year. A reconciliation of income from continuing operations determined in accordance with U.S. generally accepted accounting principles, or GAAP, to EBITDA and EBITDA excluding certain items for the quarters ended March 31, 2013 and 2012 appears later in this press release. *Income from continuing operations for the first quarter of 2013 was $2.3 million, or $0.05 per basic and diluted share, compared to $1.2 million, or $0.03 per basic and diluted share for the same period in the previous year. Income from continuing operations for the first quarter of 2013 included an income tax benefit of $1.5 million, or $0.03 per basic and diluted share, relating to a work opportunity tax credit program that expired in 2012 and which was retroactively reinstated in January 2013. *Net income for the first quarter of 2013 was $1.9 million, or $0.04 per basic and diluted share, compared to $369,000, or $0.01 per basic and diluted share for the same period in the previous year. Net income in the 2013 period included a loss from discontinued operations of $379,000 compared to a loss from discontinued operations of $853,000 in the 2012 period. First Quarter 2013 Operating Highlights: *Occupancy at our owned and leased senior living communities for the first quarter of 2013 was 85.4% compared to 85.9% for the same period in the previous year. *The average monthly rate at our owned and leased senior living communities for the first quarter of 2013 increased by 2.5% to $4,507 from $4,395 for the same period in the previous year. *The percentage of revenues derived from residents’ private resources for the first quarter of 2013 at our owned and leased senior living communities decreased to 74.3% compared to 74.5% for the same period in the previous year. *Our fee revenues from managed senior living communities in the first quarter of 2013 were $2.3 million compared to $1.1 million for the same period in the previous year. Other Highlights: *On March 15, 2013, we entered into an amendment to our $35.0 million revolving secured line of credit, or our Credit Agreement, which is available for general business purposes, including acquisitions. As a result of this amendment, the maturity date of our Credit Agreement was extended from March 18, 2013 to March 18, 2016. In addition, the interest rate payable on borrowings under our Credit Agreement was reduced from LIBOR (with a floor of 200 basis points) plus a premium of 400 basis points to LIBOR (with no floor) plus a premium of 250 basis points. Conference Call: Later today, April 29, 2013, at 10:00 a.m. Eastern Time, we will host a conference call to discuss the first quarter financial results. Following management’s presentation, there will be a question and answer period. The conference call telephone number is (800) 230-1951. Participants calling from outside the United States and Canada should dial (612) 332-0342. 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, May 6, 2013. To hear the replay, dial (320) 365-3844. The replay pass code is 290591. A live audio webcast of the conference call will also be available in a listen only mode on the Company’s website at www.fivestarseniorliving.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 transcription, recording and retransmission in any way of the Company’s first quarter 2013 conference call is strictly prohibited without the prior written consent of the Company. The Company’s website is not incorporated as part of this press release. About Five Star Quality Care, Inc.: Five Star Quality Care, Inc. is a senior living and healthcare services company. As of March 31, 2013, we operated 261 senior living communities with 30,450 living units located in 31 states, including 31 communities (2,969 living units) that we own and operate, 191 communities (20,799 living units) that we lease and operate and 39 communities (6,682 living units) that we manage. These communities include independent living, assisted living, continuing care and skilled nursing communities. We also operate two rehabilitation hospitals. We are headquartered in Newton, Massachusetts. 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 WE USE WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE” OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR 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 THESE FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE: *RESIDENTS AND PATIENTS WHO PAY FOR OUR SERVICES WITH THEIR PRIVATE RESOURCES MAY BECOME UNABLE TO AFFORD OUR SERVICES WHICH COULD RESULT IN DECREASED OCCUPANCY AND REVENUES AT OUR SENIOR LIVING COMMUNITIES AND REHABILITATION HOSPITALS AND INCREASED RELIANCE ON GOVERNMENT AND OTHER PAYERS. *THE AMOUNT OF AVAILABLE BORROWINGS UNDER OUR EXTENDED CREDIT AGREEMENT IS SUBJECT TO OUR HAVING QUALIFIED COLLATERAL, WHICH IS PRIMARILY BASED ON THE VALUE OF OUR ACCOUNTS RECEIVABLE SECURING OUR CREDIT AGREEMENT. ACCORDINGLY, THE AVAILABILITY OF BORROWINGS UNDER OUR CREDIT AGREEMENT AT ANY TIME MAY BE LESS THAN $35.0 MILLION. *ACTUAL COSTS UNDER OUR CREDIT AGREEMENT WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF OTHER FEES AND EXPENSES ASSOCIATED WITH OUR CREDIT AGREEMENT. THE INFORMATION CONTAINED IN OUR FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER THE CAPTION “RISK FACTORS” IN OUR PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV. FOR THESE REASONS, AMONG OTHERS, INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE. FIVE STAR QUALITY CARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (unaudited) Three months ended March 31, 2013 2012 Revenues: Senior living revenue $ 278,211 $ 275,870 Rehabilitation hospital 27,481 26,787 revenue Management fee revenue 2,302 1,088 Reimbursed costs incurred on behalf of 52,058 23,405 managed communities Total revenues 360,052 327,150 Operating expenses: Senior living wages and 139,212 138,374 benefits Other senior living 68,960 66,612 operating expenses Costs incurred on behalf 52,058 23,405 of managed communities Rehabilitation hospital 24,894 24,119 expenses Rent expense 50,877 50,225 General and 15,132 15,455 administrative Depreciation and 6,514 5,959 amortization Total operating expenses 357,647 324,149 Operating income 2,405 3,001 Interest, dividend and 197 205 other income Interest and other (1,456 ) (1,426 ) expense Equity in earnings of Affiliates Insurance 76 45 Company Gain (loss) on sale of available for sale securities 87 (1 ) reclassified from other comprehensive income Income from continuing operations before income 1,309 1,824 taxes Benefit (provision) for 1,005 (602 ) income taxes Income from continuing 2,314 1,222 operations Loss from discontinued (379 ) (853 ) operations Net income $ 1,935 $ 369 Weighted average shares outstanding - basic and 48,234 47,899 diluted Basic and diluted income per share from: Continuing operations $ 0.05 $ 0.03 Discontinued operations (0.01 ) (0.02 ) Net income per share - $ 0.04 $ 0.01 basic and diluted FIVE STAR QUALITY CARE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS DATA (in thousands) (unaudited) March 31, December 31, 2013 2012 Assets Current assets: Cash and cash $ 15,156 $ 24,638 equivalents Accounts receivable, net 56,547 53,134 of allowance Due from related persons 5,581 6,881 Investments in available 17,602 12,920 for sale securities Restricted cash 11,502 6,548 Prepaid expenses and 21,156 29,644 other current assets Assets of discontinued 12,634 10,430 operations Total current assets 140,178 144,195 Property and equipment, 333,773 335,612 net Restricted cash 9,378 12,166 Restricted investments in available for sale 8,472 10,580 securities Goodwill, equity investment and other 76,852 75,684 long term assets Total assets $ 568,653 $ 578,237 Liabilities and Shareholders' Equity Current liabilities: Convertible senior notes $ 24,872 $ 24,872 Other current 158,134 165,969 liabilities Total current 183,006 190,841 liabilities Mortgage notes payable 37,337 37,621 Other long term 39,359 42,970 liabilities Shareholders’ equity 308,951 306,805 Total liabilities and $ 568,653 $ 578,237 shareholders' equity FIVE STAR QUALITY CARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three months ended March 31, 2013 2012 Cash flows from operating activities: Net income $ 1,935 $ 369 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and 6,514 5,959 amortization Loss from discontinued 379 853 operations (Gain) loss on sale of available for sale (87 ) 1 securities Equity in earnings of Affiliates Insurance (76 ) (45 ) Company Stock-based compensation 205 217 Provision for losses on 1,772 1,161 receivables Changes in assets and liabilities: Accounts receivable (5,185 ) (1,551 ) Prepaid expenses and 7,102 (355 ) other assets Accounts payable and (14,018 ) 1,356 accrued expenses Accrued compensation and 3,705 4,788 benefits Due from (to) related 1,114 (5,192 ) persons, net Other current and long (1,349 ) (169 ) term liabilities Cash provided by 2,011 7,392 operating activities Net cash (used in) provided by discontinued (2,161 ) 107 operations Cash flows from investing activities: Payments from restricted cash and investment (2,166 ) (3,136 ) accounts, net Acquisition of property (12,560 ) (12,896 ) and equipment Purchase of available (4,882 ) - for sale securities Proceeds from disposition of property 8,171 6,318 and equipment held for sale Proceeds from sale of available for sale 2,409 772 securities Cash used in investing (9,028 ) (8,942 ) activities Cash flows from financing activities: Proceeds from borrowings 20,000 - on credit facilities Repayments of borrowings (20,000 ) - on credit facilities Repayments of mortgage (304 ) (286 ) notes payable Cash used in financing (304 ) (286 ) activities Change in cash and cash equivalents during the (9,482 ) (1,729 ) period Cash and cash equivalents at beginning 24,638 28,374 of period Cash and cash equivalents at end of $ 15,156 $ 26,645 period Supplemental cash flow information: Cash paid for interest $ 709 $ 1,002 Cash paid for income $ 296 $ 122 taxes FIVE STAR QUALITY CARE, INC. SENIOR LIVING COMMUNITY FINANCIAL DATA^(1) (dollars in thousands, except average monthly rate) Three months ended March 31,^(2) 2013 2012 Senior living communities: Number of communities 222 222 (end of period) Number of units (end 23,768 23,768 of period) Occupancy 85.4% 85.9% Avg. monthly $ 4,507 $ 4,395 rate^(3) Senior living revenue: Independent and assisted living $ 124,099 $ 122,470 community revenue Continuing care retirement 97,435 97,433 community revenue Skilled nursing 53,302 52,759 facility revenue Other ^(4) 3,375 3,208 Total senior living $ 278,211 $ 275,870 revenue Senior living wages and benefits: Independent and assisted living $ 54,413 $ 54,101 community wages and benefits Continuing care retirement 48,977 48,518 community wages and benefits Skilled nursing facility 34,711 34,462 wages and benefits Other ^(4) 1,111 1,293 Total senior living wages $139,212 $138,374 and benefits Senior living other operating expenses: Independent and assisted living community $ 29,831 $ 29,722 other operating expenses Continuing care retirement community 25,093 23,868 other operating expenses Skilled nursing facility 13,549 12,474 other operating expenses Other ^(4) 487 548 Total senior living other $68,960 $66,612 operating expenses ^(1) Excludes data for managed communities, rehabilitation hospitals and discontinued senior living operations. The number of communities operated continuously from January 1, 2012, ^(2) through March 31, 2013, did not change; as such, there is no separate comparable senior living community financial data. Average monthly rate is calculated by taking the average daily rate, ^(3) which is defined as total operating revenue divided by occupied units, during the period and multiplying it by 30 days. Other senior living relates primarily to rehabilitation and other ^(4) specialty service revenues and expenses provided at our residential facilities and does not include revenue and expenses from our rehabilitation hospital operations. FIVE STAR QUALITY CARE, INC. PERCENT BREAKDOWN OF SENIOR LIVING COMMUNITY REVENUES^(1) Three months ended March 31, 2013 2012 Independent and assisted living communities: Private and other sources 99.1% 99.0% Medicaid 0.9% 1.0% Total 100% 100% Continuing care retirement communities: Private and other sources 70.0% 70.7% Medicare 23.5% 22.7% Medicaid 6.5% 6.6% Total 100% 100% Skilled nursing facilities: Private and other sources 25.1% 25.2% Medicare 25.7% 25.1% Medicaid 49.2% 49.7% Total 100% 100% Total senior living communities: Private and other sources 74.3% 74.5% Medicare 13.4% 13.0% Medicaid 12.3% 12.5% Total 100% 100% ^(1) Excludes data for managed communities, rehabilitation hospitals and discontinued senior living operations. FIVE STAR QUALITY CARE, INC. SENIOR LIVING OTHER OPERATING DATA^(1) (dollars in thousands, except average monthly rate) Three months ended March31, December31, September June 30, March 2013 2012 30, 2012 31, 2012 2012 Independent and assisted living communities (owned): Number of communities 31 31 31 31 31 (end of period) Number of units (end of 2,969 2,969 2,969 2,969 2,969 period) Occupancy 87.4% 88.2% 86.7% 85.7% 85.4% Avg. monthly $ 3,368 $ 3,287 $ 3,300 $ 3,327 $ 3,293 rate^(2) Independent and assisted living communities (leased): Number of communities 122 122 122 122 122 (end of period) Number of units (end of 10,046 10,046 10,046 10,046 10,046 period) Occupancy 88.1% 88.6% 88.3% 88.2% 88.4% Avg. monthly $ 3,656 $ 3,584 $ 3,580 $ 3,597 $ 3,580 rate^(2) Continuing care retirement communities (leased): Number of communities 31 31 31 31 31 (end of period) Number of units (end of 7,330 7,330 7,330 7,330 7,330 period)^(3) Occupancy 83.9% 83.5% 84.1% 84.0% 84.8% Avg. monthly $ 5,280 $ 5,204 $ 5,117 $ 5,185 $ 5,166 rate^(2) Skilled nursing facilities (leased): Number of communities 38 38 38 38 38 (end of period) Number of units (end of 3,423 3,423 3,423 3,423 3,423 period)^(4) Occupancy 79.0% 79.8% 80.2% 80.9% 81.6% Avg. monthly $ 6,628 $ 6,453 $ 6,221 $ 6,474 $ 6,265 rate^(2) Total senior living communities (owned and leased): Number of communities 222 222 222 222 222 (end of period) Number of units (end of 23,768 23,768 23,768 23,768 23,768 period) Occupancy 85.4% 85.7% 85.7% 85.5% 85.9% Avg. monthly $ 4,507 $ 4,418 $ 4,367 $ 4,437 $ 4,395 rate^(2) Managed communities: Number of communities 39 39 30 25 25 (end of period) Number of units (end of 6,682 6,682 4,498 3,736 3,736 period)^(5) Occupancy 87.1% 87.5% 87.4% 87.6% 87.3% Avg. monthly $ 4,296 $ 4,144 $ 3,962 $ 4,000 $ 3,960 rate^(2) Rehabilitation hospitals (leased): Number of hospitals (end 2 2 2 2 2 of period) Number of units (end of 321 321 321 321 321 period) Occupancy 63.7% 60.2% 60.7% 59.8% 60.4% Other ancillary services: Rehabilitation and wellness inpatient 53 50 50 48 47 clinics (end of period) Rehabilitation and wellness outpatient 49 49 46 44 41 clinics (end of period) Home health communities 6 6 6 6 6 served (end of period) ^(1) Excludes data for discontinued operations. Average monthly rate is calculated by taking the average daily rate, ^(2) which is defined as total operating revenue divided by occupied units, during the period and multiplying it by 30 days. Includes 2,014 skilled nursing units in communities where assisted ^(3) living and independent living services are the predominant services provided. ^(4) Includes 87 assisted living and independent living units in communities where skilled nursing services are the predominant services provided. ^(5) Includes 472 skilled nursing units in communities where assisted living and independent living services are the predominant services provided. FIVE STAR QUALITY CARE, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in thousands) Earnings before interest, taxes, depreciation and amortization, or EBITDA, and EBITDA excluding certain items, or collectively, Non-GAAP Financial Measures, are not financial measures determined according to U.S. generally accepted accounting principles, or GAAP. We consider these Non-GAAP Financial Measures to be meaningful disclosures 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 and to the performance of our competitors. These Non-GAAP Financial Measures as presented may not, however, be comparable to amounts calculated by other companies. This information should not be considered as an alternative to income from continuing operations, net income, cash flows from operating activities or any other financial operating or performance or liquidity measure established by GAAP. The following table includes the reconciliation of these Non-GAAP Financial Measures to income from continuing operations, the most directly comparable financial measure under GAAP reported in our condensed consolidated financial statements, for the three months ended March 31, 2013 and 2012. For the three months ended March 31, 2013 2012 Income from continuing $ 2,314 $ 1,222 operations Add: interest and 1,456 1,426 other expense Add: income tax 463 602 expense Add: depreciation 6,514 5,959 and amortization Less: interest, dividend and other (197 ) (205 ) income Less: income tax (1,468 ) - benefit EBITDA 9,082 9,004 Add: loss on sale of investments in - 1 available for sale securities Less: gain on sale of investments in (87 ) - available for sale securities EBITDA excluding $ 8,995 $ 9,005 certain items Contact: Five Star Quality Care, Inc. Timothy A. Bonang, Vice President, Investor Relations Elisabeth H. Olmsted, Manager, Investor Relations 617-796-8245
Five Star Quality Care, Inc. Reports First Quarter 2013 Results
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