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First Quarter 2009 Financial Highlights:
-- Total revenues for the first quarter of 2009 increased 14.0% to $295.2 million from $258.9 million for the same period last year.
-- Net income for the first quarter of 2009 was $25.4 million compared to net income of $1.6 million for the same period last year.
-- Net income per share from continuing operations for the first quarter of 2009 was $0.78 and $0.67, basic and diluted, respectively, compared to net income per share from continuing operations of $0.14, basic and diluted, for the same period last year.
-- Net income from continuing operations for the first quarter of 2009 included several items that, in aggregate, resulted in a positive impact of $22.2 million, or $0.69 and $0.58 per basic and diluted share, respectively. These items included a $3.5 million unrealized gain on our holdings of auction rate securities; a $2.9 million loss due to the impairment of our investments in certain marketable securities held by our captive insurance companies; a $25.1 million gain due to early extinguishment of debt; and a $3.5 million loss on our UBS put right related to our auction rate securities.
-- Net income from continuing operations for the first quarter of 2008 included a $3.3 million unrealized loss, or $0.10 and $0.08 per basic and diluted share, respectively, on our holdings of auction rate securities.
First Quarter 2009 Operating Highlights (Senior Living Communities):
-- Senior living occupancy for the first quarter of 2009 was 86.5% compared with 89.6% for the same period last year.
-- Senior living average daily rate for the first quarter of 2009 increased by 3.1% to $146.69 from $142.30 in the same period last year.
-- The percentage of senior living revenue derived from private and other sources for the first quarter of 2009 increased to 69.1% from 66.1% for the same period last year.
-- For those senior living communities that we have operated continuously since January 1, 2008 (comparable communities), occupancy for the first quarter of 2009 was 87.5% compared with 89.7% for the same period last year.
-- The average daily rate at comparable communities for the first quarter of 2009 increased by 4.9%, to $149.46, from $142.43 in the same period last year.
First Quarter 2009 Highlights:
In January 2009, we purchased and retired $46.5 million par value of our outstanding 3.75% Convertible Notes (the "Notes") for $20.0 million, plus accrued interest. As a result of this transaction, we recorded a $25.1 million gain net of related unamortized origination costs, on early extinguishment of debt.
We sold one of our institutional pharmacies on January 15, 2009, which resulted in a gain on sale of $1.2 million which is included in discontinued operations. We were unable to sell the mail order pharmacy on acceptable terms and we discontinued its operations on March 31, 2009; our operating loss relating to this shuttered mail order pharmacy is recorded in discontinued operations and amounted to approximately $78,000 during the quarter ended March 31, 2009.
Conference Call:
On May 5, 2009 at 5:00 p.m. Eastern Daylight Time, Bruce J. Mackey Jr., President and Chief Executive Officer, and Francis R. Murphy, III, Treasurer and Chief Financial Officer, will host a conference call to discuss the first quarter 2009 financial results. Following the company's remarks, there will be a question and answer period.
The conference call telephone number is (800) 811-7286. Participants calling from outside the United States and Canada should dial (913) 312-1264. 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 8:00 p.m. Eastern Daylight Time Tuesday, May 12th. To hear the replay, dial (719) 457-0820. The replay pass code is 6043670.
A live audio webcast of the conference call will also be available in a listen only mode on the Company's web site at www.fivestarqualitycare.com. Participants wanting to access the webcast should visit the Company's web site about five minutes before the call. The archived webcast will be available for replay on the Company's web site for about one week after the call.
About Five Star Quality Care, Inc.:
Five Star Quality Care, Inc. is a senior living and healthcare services company. Five Star owns or leases and operates 210 senior living communities with 22,260 living units located in 30 states. These communities include independent living, assisted living and skilled nursing communities. Five Star also operates five institutional pharmacies and two rehabilitation hospitals. Five Star is headquartered in Newton, Massachusetts.
Supplemental Information, page 1 of 6
FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three months ended
March 31,
2009 2008
Revenues:
Senior living revenue $ 252,206 $ 216,927
Rehabilitation hospital revenue 24,694 24,744
Institutional pharmacy revenue 18,265 17,206
Total revenues 295,165 258,877
Operating expenses:
Senior living wages and benefits 128,085 109,094
Other senior living operating expenses 61,828 53,421
Rehabilitation hospital expenses 22,899 22,592
Institutional pharmacy expenses 18,373 16,203
Rent expense 44,000 35,444
General and administrative 12,442 11,133
Depreciation and amortization 4,177 3,635
Total operating expenses 291,804 251,522
Operating income 3,361 7,355
Interest and other income 1,131 2,494
Interest and other expense (1,181 ) (1,594 )
Unrealized gain (loss) on investments in trading securities 3,516 (3,270 )
Unrealized loss on UBS put right related to auction rate securities (3,527 ) -
Gain on early extinguishment of debt 25,125 -
Impairment of investments in available for sale securities (2,947 ) -
Income from continuing operations before income taxes 25,478 4,985
Provision for income taxes (516 ) (566 )
Income from continuing operations 24,962 4,419
Income (loss) from discontinued operations 410 (2,802 )
Net income $ 25,372 $ 1,617
Weighted average shares outstanding - basic 32,206 31,818
Weighted average shares outstanding - diluted 38,359 41,549
Basic income per share from:
Continuing operations $ 0.78 $ 0.14
Discontinued operations 0.01 (0.09 )
Net income per share - basic $ 0.79 $ 0.05
Diluted income per share from:
Continuing operations $ 0.67 $ 0.14
Discontinued operations 0.01 (0.07 )
Net income per share - diluted $ 0.68 $ 0.07
Supplemental Information, page 2 of 6
FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands, except share data)
(unaudited)
March 31, December 31,
2009 2008
Assets
Current assets:
Cash and cash equivalents $ 28,426 $ 16,138
Accounts receivable, net of allowance 60,240 66,023
Prepaid expenses and other current assets 13,833 15,965
Investments in available for sale securities 6,720 7,232
Restricted cash and investments 7,086 7,518
Assets of discontinued operations - 1,385
Total current assets 116,305 114,261
Property and equipment, net 192,710 190,627
Investments in trading securities 66,408 62,866
UBS put right related to auction rate securities 7,554 11,081
Restricted cash and investments 11,922 13,368
Goodwill and other long term assets 19,941 20,435
Total assets $ 414,840 $ 412,638
Liabilities and Shareholders' Equity
Current liabilities $ 135,797 $ 129,139
Secured revolving credit facility 37,137 21,875
Mortgage notes payable, long term 12,403 12,441
Convertible senior notes 79,989 126,500
Other long term liabilities 37,743 37,344
Shareholders' equity (32,205,604 shares issued and outstanding at 111,771 85,339
March 31, 2009 and December 31, 2008)
Total liabilities and shareholders' equity $ 414,840 $ 412,638
Supplemental Information, page 3 of 6
FIVE STAR QUALITY CARE, INC.
SENIOR LIVING COMMUNITY OPERATING DATA (1)
(dollars in thousands, except average daily rate)
Three months ended
March 31,
2009 2008
Number of communities (end of period) 210 183
Number of living units (end of period) 22,260 19,666
Number of living units % growth 13.2% -
Occupancy 86.5% 89.6%
Average daily rate (ADR) $ 146.69 $ 142.30
ADR % growth 3.1% -
Percent breakdown of net senior living revenues:
Medicare 14.9% 16.1%
Medicaid 16.0% 17.8%
Private and other sources 69.1% 66.1%
Total 100.0% 100.0%
Senior living revenues $ 252,206 $ 216,927
Senior living revenues % growth 16.3% -
Senior living wages and benefits $ 128,085 $ 109,094
Senior living wages and benefits as a % of senior living revenues 50.8% 50.3%
Other senior living operating expenses $ 61,828 $ 53,421
Other senior living operating expenses as a % of senior living 24.5% 24.6%
revenues
Community expenses (2) % growth 16.9% -
(1) Excludes data for institutional pharmacy and rehabilitation
hospital operations and discontinued senior living operations
(except for the number of communities and living units).
(2) Community expenses equal senior living wages and benefits and
other senior living operating expenses as shown on our
consolidated statement of operations.
Supplemental Information, page 4 of 6
FIVE STAR QUALITY CARE, INC.
COMPARABLE SENIOR LIVING COMMUNITY OPERATING DATA (1)
(dollars in thousands, except average daily rate)
Three months ended
March 31, (2)
2009 2008
Number of communities (end of period) 168 168
Number of living units (end of period) 18,652 18,652
Occupancy 87.5% 89.7%
Average daily rate (ADR) $ 149.46 $ 142.43
ADR % growth 4.9% -
Percent breakdown of net senior living revenues:
Medicare 16.8% 16.1%
Medicaid 18.0% 17.9%
Private and other sources 65.2% 66.0%
Total 100.0% 100.0%
Senior living revenues $ 217,542 $ 214,752
Senior living revenues % growth 1.3% -
Senior living wages and benefits $ 111,548 $ 107,981
Senior living wages and benefits as a % of senior living revenues 51.3% 50.3%
Other senior living operating expenses $ 53,671 $ 53,026
Other senior living operating expenses as a % of senior living 24.7% 24.7%
revenues
Community expenses (3) % growth 2.6% -
(1) Excludes data for institutional pharmacy and rehabilitation
hospital operations and discontinued senior living discontinued
operations (except for the number of communities and living units).
(2) Communities that we have operated continuously since January
1, 2008.
(3) Community expenses equal senior living wages and benefits and
other senior living operating expenses as shown on our
consolidated statement of operations.
Supplemental Information, page 5 of 6
FIVE STAR QUALITY CARE, INC.
OTHER OPERATING DATA (1)
(dollars in thousands, except average daily rate)
Three months ended
March 31,
2009 2008
Number of senior living communities (2)
(end of period):
Assisted and independent living communities, owned 23 13
Assisted and independent living communities, leased 138 121
Total number of assisted and independent living communities 161 134
Skilled nursing communities, owned 2 2
Skilled nursing communities, leased 47 47
Total number of skilled nursing communities 49 49
Total number of senior living communities 210 183
Number of senior living units (end of period):
Assisted and independent living units, owned 1,976 1,060
Assisted and independent living units, leased (3) 15,870 14,194
Total number of assisted and independent living units 17,846 15,254
Skilled nursing communities, owned 271 271
Skilled nursing communities, leased (4) 4,143 4,141
Total number of skilled nursing units 4,414 4,412
Total number of senior living units 22,260 19,666
Senior living revenues:
Assisted and independent living communities $ 183,273 $ 149,322
Skilled nursing communities 66,227 65,596
Other (5) 2,706 2,009
Total senior living revenues $ 252,206 $ 216,927
Senior living data:
Assisted and independent living communities occupancy 86.8% 90.4%
Assisted and independent living communities ADR $ 132.77 $ 127.11
Assisted and independent living communities ADR % growth 4.5% -
Skilled nursing communities occupancy 85.3% 87.1%
Skilled nursing communities ADR $ 195.45 $ 187.60
Skilled nursing communities ADR % growth 4.2% -
Rehabilitation hospital data:
Rehabilitation hospital units 321 321
Rehabilitation hospital occupancy 62.2% 65.7%
(1) Excludes data for institutional pharmacy operations
and discontinued senior living operations (except for the number
of communities and living units).
(2) Communities are categorized by the type of living
units which constitute a majority of the total living units at the
community.
(3) Includes 1,934 and 1,869 skilled nursing units in
communities where assisted living and independent living services
are the predominant services provided for the three months ended
March 31, 2009 and 2008, respectively.
(4) Includes 66 assisted living and independent living
units in communities where skilled nursing services are the
predominant services provided for the three months ended March 31,
2009 and 2008, respectively.
(5) Other senior living revenues relates primarily to
rehabilitation and other specialty service revenues provided at
residential facilities and does not include revenues from
institutional pharmacy or rehabilitation hospital operations.
Supplemental Information, page 6 of 6
FIVE STAR QUALITY CARE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
Earnings before interest, taxes, depreciation and amortization, or
EBITDA, and EBITDA excluding certain items are not financial
measures determined according to generally accepted accounting
principles, or GAAP. We consider EBITDA and EBITDA excluding
certain items to be a meaningful disclosure because we believe
that the inclusion of these non-GAAP financial measures may help
investors to gain a better understanding of changes in our core
operating results, and can also help investors who wish to make
comparisons between us and other companies on both a GAAP and a
non-GAAP basis. EBITDA and EBITDA excluding certain items as
presented may not, however, always be comparable to amounts
calculated by other companies. These non-GAAP financial measures
are used by management to evaluate financial performance and
resource allocation for our communities and for us as a whole and
for comparing such performance to that of prior periods and to the
performance of our competitors. These measures also are used by
management to aid in our financial and operating decision making.
This information should not be considered as an alternative to net
income or any other financial operating or performance measure
established by GAAP. Reconciliation of income from continuing
operations to EBITDA and EBITDA excluding certain items, for the
three months ended March 31, 2009 and 2008 is as follows:
For the three months
ended March 31,
2009 2008
Income from continuing operations $ 24,962 $ 4,419
Add: income taxes 516 566
Add: depreciation and amortization 4,177 3,635
Add: interest and other expense 1,181 1,594
Less: interest and other income (1,131 ) (2,494 )
EBITDA 29,705 7,720
Less: unrealized gain on investments in trading securities (3,516 ) -
Add: unrealized loss in investments in trading securities - 3,270
Add: loss on UBS put right related to auction rate securities 3,527 -
Less: gain on early extinguishment of debt (25,125 ) -
Add: impairment of certain investments 2,947 -
EBITDA excluding certain items $ 7,538 $ 10,990
SOURCE: Five Star Quality Care, Inc.
Five Star Quality Care, Inc. Timothy A. Bonang, 617-796-8245 Director of Investor Relations or Katherine L. Johnston, 617-796-8245 Manager of Investor Relations www.fivestarqualitycare.com
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