Five Star Quality Care, Inc. Announces Third Quarter 2016 Results
NEWTON, Mass.–(BUSINESS WIRE)–Five Star Quality Care, Inc. (Nasdaq: FVE) today announced its financial
results for the quarter and nine months ended September 30, 2016.
Financial Results for the quarter ended September 30,
2016:
-
Senior living revenue for the third quarter of 2016 decreased 0.8% to
$277.4 million from $279.7 million for the same period in 2015. The
decline in senior living revenue is a result of decreases in
occupancy, partially offset by an increase in average monthly rates to
residents who pay privately for services. Management fee revenue for
the third quarter of 2016 increased 22.8% to $3.3 million from $2.7
million for the same period in 2015. Growth in management fees was
primarily due to the previously disclosed modifications to Five Star’s
management and pooling arrangements with Senior Housing Properties
Trust, or SNH, which took effect on July 1, 2016, an increase in the
number of managed communities compared to the 2015 period and an
increase in average monthly rates to private pay residents at
comparable managed communities, partially offset by a decrease in
occupancy at comparable managed communities. -
Loss from continuing operations for the third quarter of 2016 was $5.8
million, or $0.12 per diluted share, compared to loss from continuing
operations of $26.3 million, or $0.54 per diluted share, for the same
period in 2015. Loss from continuing operations for the third quarter
of 2016 included benefits from income taxes of $0.9 million, or $0.02
per diluted share, related to a reduction of previously accrued
estimated state tax expense resulting primarily from the previously
disclosed June 2016 sale and leaseback transaction with SNH. Loss from
continuing operations for the third quarter of 2015 included a
non-cash charge for goodwill impairment of $25.3 million, or $0.52 per
diluted share, and compliance costs and professional fees of $0.9
million, or $0.02 per diluted share, resulting primarily from the
previously disclosed Medicare compliance assessment at one of Five
Star’s skilled nursing facilities, or the Compliance Assessment. -
Net loss for the third quarter of 2016 was $5.9 million, or $0.12 per
diluted share, compared to net loss of $27.5 million, or $0.57 per
diluted share, for the same period in 2015. -
Earnings from continuing operations before interest, taxes,
depreciation and amortization, or EBITDA, for the third quarter of
2016 was $3.3 million compared to $(17.2) million for the same period
in 2015. EBITDA, excluding certain items noted in the supplemental
information provided below, or Adjusted EBITDA, was $4.3 million and
$9.2 million for the third quarters of 2016 and 2015, respectively.
Adjusted EBITDA excluding rent, or Adjusted EBITDAR, was $54.9 million
and $59.0 million for the third quarters of 2016 and 2015,
respectively. A reconciliation of loss from continuing operations
determined in accordance with U.S. generally accepted accounting
principles, or GAAP, to EBITDA, Adjusted EBITDA and Adjusted EBITDAR
for the quarters ended September 30, 2016 and 2015 appears later in
this press release.
Operating Results for the quarter ended September 30,
2016 (continuing operations):
-
Occupancy at owned and leased senior living communities for the third
quarter of 2016 was 83.8%. For the quarter ended September 30, 2016,
the calculation of occupancy includes only living units categorized as
in service; occupancy calculations for periods prior to 2016 included
certain living units categorized as out of service. -
The average monthly rate at owned and leased senior living communities
for the third quarter of 2016 increased 0.9% to $4,608 from $4,567 for
the same period in 2015. -
The percentage of revenue derived from residents’ private resources at
owned and leased senior living communities for the third quarter of
2016 increased 60 basis points to 78.6% from 78.0% for the same period
in 2015.
Year to Date Financial Results:
-
Senior living revenue for the nine months ended September 30, 2016
increased 0.4% to $836.5 million from $832.8 million for the same
period in 2015. Growth in senior living revenue was the result of
increases in average monthly rates to residents who pay privately for
services, a $1.0 million reversal in revenue reserves recorded in 2016
as a result of the final settlement amount with the United States
Department of Health and Human Services Office of the Inspector
General for the Compliance Assessment being less than the previously
estimated amount, and a revenue reserve recorded in 2015 of $2.4
million related to the Compliance Assessment, partially offset by a
decrease in occupancy at comparable senior living communities.
Management fee revenue for the nine months ended September 30, 2016
increased by 12.8% to $9.0 million from $7.9 million for the same
period in 2015. Growth in management fees was primarily due to the
previously disclosed modifications to Five Star’s management and
pooling arrangements with SNH which took effect on July 1, 2016, an
increase in the number of managed communities compared to the 2015
period and an increase in average monthly rates to private pay
residents at comparable managed communities, partially offset by a
decrease in occupancy at comparable managed communities. -
Loss from continuing operations for the nine months ended September
30, 2016 was $16.1 million, or $0.33 per diluted share, compared to
loss from continuing operations of $34.4 million, or $0.71 per diluted
share, for the same period in 2015. Loss from continuing operations
for the nine months ended September 30, 2016 included a $1.5 million,
or $0.03 per diluted share, reversal in revenue reserves and accrued
liability for estimated penalties related to the Compliance Assessment
and a provision for income taxes of $2.8 million, or $0.06 per diluted
share, resulting primarily from state tax expense related to the June
2016 sale and leaseback transaction with SNH. Five Star did not
recognize any federal tax expense for the 2016 period because its
federal taxable income and expense were offset by its federal net
operating loss carry forwards and tax credit carry forwards. Loss from
continuing operations for the nine months ended September 30, 2015
included a non-cash charge for goodwill impairment of $25.3 million,
or $0.52 per diluted share, a revenue reserve of $2.4 million, or
$0.05 per diluted share, and penalties, compliance costs and
professional fees of $5.3 million, or $0.11 per diluted share,
resulting primarily from the Compliance Assessment, partially offset
by a gain on early extinguishment of debt of $0.7 million, or $0.01
per diluted share. -
Net loss for the nine months ended September 30, 2016 was $16.2
million, or $0.33 per diluted share, compared to net loss of $36.7
million, or $0.76 per diluted share, for the same period in 2015. -
EBITDA for the nine months ended September 30, 2016 was $18.8 million
compared to $(6.6) million for the same period in 2015. Adjusted
EBITDA was $19.3 million and $26.0 million for the nine months ended
September 30, 2016 and 2015, respectively. Adjusted EBITDAR was $170.1
million and $175.0 million for the nine months ended September 30,
2016 and 2015, respectively. A reconciliation of loss from continuing
operations determined in accordance with GAAP to EBITDA, Adjusted
EBITDA and Adjusted EBITDAR for the nine months ended September 30,
2016 and 2015 appears later in this press release.
Acquisition and Disposition Activities:
In July 2016, Five Star began managing a senior living community SNH
owns located in Alabama with 163 living units.
In September 2016, Five Star sold a community it owned with 32 living
units that was reported as held for sale and included in discontinued
operations in Five Star’s financial statements, for a sales price of
$0.2 million, excluding closing costs. As of September 30, 2016, Five
Star has no senior living communities reported as held for sale.
In September 2016, Five Star and SNH sold a vacant skilled nursing
facility located in Wisconsin for approximately $0.2 million, and as a
result of this sale, Five Star’s annual rent payable to SNH decreased by
approximately $25,000 in accordance with the terms of the applicable
lease.
In September 2016, SNH entered into an agreement to acquire two senior
living communities with a combined 126 living units located in Illinois
for $18.6 million. If these acquisitions are completed, Five Star
expects to lease these communities from SNH under one of Five Star’s
existing master leases with SNH.
In October 2016, Five Star entered into an agreement to acquire an
assisted living community with 63 living units located in Illinois for
$7.9 million. Five Star currently expects this acquisition to close by
year end 2016 and to fund this acquisition with cash on hand.
In October 2016, Five Star agreed to manage four senior living
communities SNH owns with approximately 350 living units. Five Star will
manage these senior living communities pursuant to management agreements
that will be added to an existing or new pooling agreement with terms
consistent with the agreements that became effective from and after May
2015 as previously disclosed.
Conference Call:
On November 3, 2016, at 10:00 a.m. Eastern Time, Five Star will host a
conference call to discuss its third quarter 2016 results. Following
management’s presentation, there will be a question and answer period.
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 Thursday, November 10,
2016. To hear the replay, dial (412) 317-0088. The replay pass code is
10093012.
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 third quarter 2016 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 Quality Care, Inc.:
Five Star Quality Care, Inc. is a senior living and healthcare services
company. As of September 30, 2016, Five Star operated 276 senior living
communities with 31,349 living units located in 32 states, including 213
communities (22,947 living units) that it owned or leased and 63
communities (8,402 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.
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:
-
SNH HAS ENTERED INTO AN AGREEMENT TO ACQUIRE TWO SENIOR LIVING
COMMUNITIES IN ILLINOIS. IF THESE ACQUISITIONS ARE COMPLETED, FIVE
STAR EXPECTS THAT IT WILL LEASE THESE COMMUNITIES FROM SNH. THIS
TRANSACTION IS SUBJECT TO CONDITIONS. AS A RESULT, THESE ACQUISITIONS
AND LEASING ARRANGEMENTS MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS
MAY CHANGE, -
FIVE STAR HAS ENTERED INTO AN AGREEMENT TO ACQUIRE A SENIOR LIVING
COMMUNITY IN ILLINOIS. THIS TRANSACTION IS SUBJECT TO CONDITIONS. AS A
RESULT, THIS TRANSACTION MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS
MAY CHANGE, AND -
FIVE STAR HAS AGREED TO MANAGE FOUR SENIOR LIVING COMMUNITIES SNH
OWNS. FIVE STAR’S ASSUMPTION OF THE MANAGEMENT OF THESE COMMUNITIES IS
SUBJECT TO CONDITIONS. AS A RESULT, FIVE STAR’S ASSUMPTION OF THE
MANAGEMENT OF THESE COMMUNITIES MAY NOT OCCUR OR MAY BE DELAYED.
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.
|
FIVE STAR QUALITY CARE, INC. |
||||||||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||||
|
(in thousands, except per share data) |
||||||||||||||||||
|
(unaudited) |
||||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||||
|
September 30, |
September 30, |
|||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||||
| Revenues: | ||||||||||||||||||
| Senior living revenue | $ | 277,410 | $ | 279,685 | $ | 836,523 | $ | 832,793 | ||||||||||
| Management fee revenue | 3,336 | 2,717 | 8,955 | 7,939 | ||||||||||||||
| Reimbursed costs incurred on behalf of managed communities | 63,965 | 62,170 | 186,378 | 180,082 | ||||||||||||||
| Total revenues | 344,711 | 344,572 | 1,031,856 | 1,020,814 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Senior living wages and benefits | 137,190 | 135,133 | 408,886 | 404,737 | ||||||||||||||
| Other senior living operating expenses | 70,890 | 72,637 | 212,565 | 216,107 | ||||||||||||||
| Costs incurred on behalf of managed communities | 63,965 | 62,170 | 186,378 | 180,082 | ||||||||||||||
| Rent expense | 50,625 | 49,730 | 150,837 | 149,015 | ||||||||||||||
| General and administrative expenses | 18,542 | 16,587 | 54,218 | 52,750 | ||||||||||||||
| Depreciation and amortization expense | 9,398 | 8,419 | 28,847 | 24,637 | ||||||||||||||
| Goodwill impairment | — | 25,344 | — | 25,344 | ||||||||||||||
| Long lived asset impairment | 196 | 145 | 502 | 145 | ||||||||||||||
| Total operating expenses | 350,806 | 370,165 | 1,042,233 | 1,052,817 | ||||||||||||||
| Operating loss | (6,095 | ) | (25,593 | ) | (10,377 | ) | (32,003 | ) | ||||||||||
| Interest, dividend and other income | 237 | 238 | 766 | 701 | ||||||||||||||
| Interest and other expense | (945 | ) | (1,106 | ) | (3,957 | ) | (3,597 | ) | ||||||||||
| Gain on early extinguishment of debt | — | — | — | 692 | ||||||||||||||
|
Gain on sale of available for sale securities reclassified from accumulated other comprehensive income |
12 | — | 247 | 38 | ||||||||||||||
|
Loss from continuing operations before income taxes and equity in earnings (losses) of an investee |
(6,791 | ) | (26,461 | ) | (13,321 | ) | (34,169 | ) | ||||||||||
| Benefit from (provision for) income taxes | 934 | 236 | (2,841 | ) | (348 | ) | ||||||||||||
| Equity in earnings (losses) of an investee | 13 | (25 | ) | 107 | 70 | |||||||||||||
| Loss from continuing operations | (5,844 | ) | (26,250 | ) | (16,055 | ) | (34,447 | ) | ||||||||||
| Loss from discontinued operations | (53 | ) | (1,238 | ) | (131 | ) | (2,253 | ) | ||||||||||
| Net loss | $ | (5,897 | ) | $ | (27,488 | ) | $ | (16,186 | ) | $ | (36,700 | ) | ||||||
| Weighted average shares outstanding—basic and diluted | 48,846 | 48,427 | 48,817 | 48,397 | ||||||||||||||
| Basic and diluted loss per share from: | ||||||||||||||||||
| Continuing operations | $ | (0.12 | ) | $ | (0.54 | ) | $ | (0.33 | ) | $ | (0.71 | ) | ||||||
| Discontinued operations | — | (0.03 | ) | — | (0.05 | ) | ||||||||||||
| Net loss per share—basic and diluted | $ | (0.12 | ) | $ | (0.57 | ) | $ | (0.33 | ) | $ | (0.76 | ) | ||||||
|
FIVE STAR QUALITY CARE, INC. |
|||||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||||
|
(in thousands) |
|||||||||
|
(unaudited) |
|||||||||
| September 30, | December 31, | ||||||||
| 2016 | 2015 | ||||||||
|
Assets |
|||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 43,174 | $ | 14,672 | |||||
| Accounts receivable, net of allowance | 38,040 | 37,829 | |||||||
| Due from related persons | 8,961 | 9,731 | |||||||
| Investments in available for sale securities | 25,801 | 26,417 | |||||||
| Restricted cash | 11,168 | 3,301 | |||||||
| Prepaid expenses and other current assets | 20,135 | 19,138 | |||||||
| Assets of discontinued operations | 567 | 981 | |||||||
| Total current assets | 147,846 | 112,069 | |||||||
| Property and equipment, net | 352,561 | 383,858 | |||||||
| Restricted cash | 1,787 | 2,821 | |||||||
| Restricted investments in available for sale securities | 18,511 | 23,166 | |||||||
| Equity investment of an investee and other long term assets | 9,971 | 9,856 | |||||||
| Total assets | $ | 530,676 | $ | 531,770 | |||||
| Liabilities and Shareholders’ Equity | |||||||||
| Current liabilities: | |||||||||
| Revolving credit facility | $ | — | $ | 50,000 | |||||
| Other current liabilities | 186,909 | 193,920 | |||||||
| Total current liabilities | 186,909 | 243,920 | |||||||
| Mortgage notes payable | 58,978 | 60,396 | |||||||
|
Deferred gain on sale and leaseback transaction with Senior Housing Properties Trust |
74,347 | — | |||||||
| Other long term liabilities | 40,352 | 43,002 | |||||||
| Shareholders’ equity | 170,090 | 184,452 | |||||||
| Total liabilities and shareholders’ equity | $ | 530,676 | $ | 531,770 | |||||
|
FIVE STAR QUALITY CARE, INC. |
||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||
|
(in thousands) |
||||||||||
|
(unaudited) |
||||||||||
| Nine Months Ended September 30, | ||||||||||
| 2016 | 2015 | |||||||||
| Cash flows from operating activities: | ||||||||||
| Net loss | $ | (16,186 | ) | $ | (36,700 | ) | ||||
|
Adjustments to reconcile net loss to cash (used in) provided by operating activities: |
||||||||||
| Depreciation and amortization expense | 28,847 | 24,637 | ||||||||
| Gain on early extinguishment of debt | — | (742 | ) | |||||||
| Loss from discontinued operations | 131 | 2,253 | ||||||||
|
Gain on sale of available for sale securities reclassified from accumulated other comprehensive income |
(247 | ) | (38 | ) | ||||||
| Loss on disposal of property and equipment | 70 | 98 | ||||||||
| Goodwill impairment | — | 25,344 | ||||||||
| Long lived asset impairment | 502 | 145 | ||||||||
| Equity in earnings of an investee | (107 | ) | (70 | ) | ||||||
| Stock based compensation | 749 | 948 | ||||||||
| Provision for losses on receivables | 2,598 | 3,520 | ||||||||
|
Amortization of deferred gain on sale and leaseback transaction with Senior Housing Properties Trust |
(1,688 | ) | — | |||||||
| Other noncash (income) expense adjustments, net | (375 | ) | 409 | |||||||
| Changes in assets and liabilities: | ||||||||||
| Accounts receivable | (2,809 | ) | (2,689 | ) | ||||||
| Prepaid expenses and other assets | (2,314 | ) | (1,962 | ) | ||||||
| Accounts payable and accrued expenses | (22,297 | ) | 330 | |||||||
| Accrued compensation and benefits | 8,641 | 9,917 | ||||||||
| Due to/from related persons, net | 222 | 1,026 | ||||||||
| Other current and long term liabilities | (2,716 | ) | 9,278 | |||||||
| Cash (used in) provided by operating activities | (6,979 | ) | 35,704 | |||||||
| Cash flows from investing activities: | ||||||||||
| Increase in restricted cash and investment accounts, net | (6,833 | ) | (417 | ) | ||||||
| Acquisition of property and equipment | (40,825 | ) | (40,867 | ) | ||||||
| Purchase of intangible assets | — | (191 | ) | |||||||
| Purchases of available for sale securities | (6,780 | ) | (10,717 | ) | ||||||
|
Proceeds from sale of property and equipment to Senior Housing Properties Trust |
15,180 | 16,425 | ||||||||
|
Proceeds from sale and leaseback transaction with Senior Housing Properties Trust |
112,350 | — | ||||||||
| Proceeds from sale of available for sale securities | 13,508 | 6,469 | ||||||||
| Cash provided by (used in) investing activities | 86,600 | (29,298 | ) | |||||||
| Cash flows from financing activities: | ||||||||||
| Proceeds from borrowings on revolving credit facility | 25,000 | 20,000 | ||||||||
| Repayments of borrowings on revolving credit facility | (75,000 | ) | (20,000 | ) | ||||||
| Repayments of mortgage notes payable | (934 | ) | (5,732 | ) | ||||||
| Payment of deferred financing fees | (300 | ) | (300 | ) | ||||||
| Cash used in financing activities | (51,234 | ) | (6,032 | ) | ||||||
| Cash flows from discontinued operations: | ||||||||||
| Net cash provided by (used in) operating activities | 130 | (1,512 | ) | |||||||
| Net cash used in investing activities | (15 | ) | (24 | ) | ||||||
| Net cash flows provided by (used in) discontinued operations | 115 | (1,536 | ) | |||||||
| Change in cash and cash equivalents | 28,502 | (1,162 | ) | |||||||
| Cash and cash equivalents at beginning of period | 14,672 | 20,988 | ||||||||
| Cash and cash equivalents at end of period | $ | 43,174 | $ | 19,826 | ||||||
| Supplemental cash flow information: | ||||||||||
| Cash paid for interest | $ | 3,920 | $ | 3,078 | ||||||
| Cash paid for income taxes, net | $ | 2,657 | $ | 805 | ||||||
FIVE STAR QUALITY CARE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in thousands)
(unaudited)
Non-GAAP financial measures are financial measures that are not
determined in accordance with U.S. generally accepted accounting
principles, or GAAP. Five Star considers these Non-GAAP financial
measures to be meaningful supplemental disclosures because it believes
that the presentation of these Non-GAAP financial measures may help
investors to 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 who wish to make comparisons between
Five Star and other companies on both a GAAP and a non-GAAP basis. In
addition to presenting EBITDA and Adjusted EBITDA, Five Star also
presents the non-GAAP financial measure Adjusted EBITDAR. Five Star
leases a majority of the senior living communities that it operates.
Five Star believes that presenting investors with Adjusted EBITDAR
amounts may help them to compare Five Star’s results with other
companies that may own their properties and finance that ownership with
debt financing or to consider how Five Star’s results might compare if
Five Star owned its leased senior living communities and financed that
ownership with debt. The interest expense related to debt financings
would be added when calculating EBITDA; Five Star believes that
presenting Adjusted EBITDAR may help investors better understand the
form, extent and implications of Five Star’s form of leverage for the
senior living communities it leases. The Non-GAAP financial measures
presented are used by management to evaluate Five Star’s financial
performance and for comparing Five Star’s performance over time and to
the performance of its competitors. This supplemental information should
not be considered as an alternative to income (loss) from continuing
operations or net income (loss), as an indicator of Five Star’s
operating performance or as a measure of Five Star’s liquidity. Non-GAAP
financial measures as presented by Five Star may not be comparable to
amounts calculated by other companies.
Five Star believes that income from continuing operations is the most
directly comparable financial measure determined according to GAAP to
Five Star’s presentation of EBITDA, Adjusted EBITDA and Adjusted EBITDAR
from continuing operations. The following table presents the
reconciliation of these Non-GAAP financial measures to loss from
continuing operations, the most directly comparable financial measure
under GAAP reported in Five Star’s condensed consolidated financial
statements, for the three and nine months ended September 30, 2016 and
2015.
|
For the three months |
For the nine months |
||||||||||||||||||||||||
|
ended September 30, |
ended September 30, |
||||||||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||
| Loss from continuing operations | $ | (5,844 | ) | $ | (26,250 | ) | $ | (16,055 | ) | $ | (34,447 | ) | |||||||||||||
| Add: interest expense | 945 | 1,106 | 3,957 | 3,597 | |||||||||||||||||||||
| Add: (benefit from) provision for income taxes | (934 | ) | (236 | ) | 2,841 | 348 | |||||||||||||||||||
| Add: depreciation and amortization expense | 9,398 | 8,419 | 28,847 | 24,637 | |||||||||||||||||||||
| Less: interest and dividend income | (237 | ) | (238 | ) | (766 | ) | (701 | ) | |||||||||||||||||
| EBITDA | 3,328 | (17,199 | ) | 18,824 | (6,566 | ) | |||||||||||||||||||
| Add (less): | |||||||||||||||||||||||||
| Goodwill and other long lived asset impairments | 196 | 25,489 | 502 | 25,489 | |||||||||||||||||||||
| Costs related to the Compliance Assessment | — | 928 | (1) | (1,498 | ) | (2) | 7,489 | (3) | |||||||||||||||||
| Financial accounting restatement and remediation costs | — | 21 | — | 249 | |||||||||||||||||||||
| Transaction costs | 730 | — | 1,480 | 41 | |||||||||||||||||||||
| Gain on early extinguishment of debt | — | — | — | (692 | ) | ||||||||||||||||||||
| Adjusted EBITDA | 4,254 | 9,239 | 19,308 | 26,010 | |||||||||||||||||||||
| Add: Rent expense | 50,625 | 49,730 | 150,837 | 149,015 | |||||||||||||||||||||
| Adjusted EBITDAR | $ | 54,879 | $ | 58,969 | $ | 170,145 | $ | 175,025 | |||||||||||||||||
|
|
|||||||||||||||||||||||||
(1) Includes compliance costs and professional fees related to the
Compliance Assessment.
(2) Includes a $1.5 million reversal in
revenue reserves and accrued liability for estimated penalties related
to the Compliance Assessment.
(3) Includes a $2.4 million revenue
reserve and $5.1 million of estimated penalties, compliance costs and
professional fees related to the Compliance Assessment.
Contacts
Five Star Quality Care, Inc.
Brad Shepherd, 617-796-8245
Director,
Investor Relations
