Five Star Quality Care (FVE) Tops Q4 EPS by 3c, Revenues Beat

Five Star Quality Care (NASDAQ: FVE) reported Q4 EPS of ($0.47), $0.03 better than the analyst estimate of ($0.50). Revenue for the quarter came in at $352.87 million versus the consensus estimate of $342.22 million.

• Senior living revenue for the fourth quarter of 2018 decreased 1.1% to $276.3 million from $279.2 million for 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 by increases 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 increased 5.3% to $3.7 million, primarily due to an increase in the number of managed communities compared to the same period in 2017.
• 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 net severance costs incurred 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.

For earnings history and earnings-related data on Five Star Quality Care (FVE) click here.

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