Business Wire | Feb 24, 2021 04:06PM EST

Five Star Senior Living Inc. Announces Fourth Quarter 2020 Results

Feb. 24, 2021

NEWTON, Mass.--(BUSINESS WIRE)--Feb. 24, 2021--Five Star Senior Living Inc. (Nasdaq: FVE) today announced its financial results for the quarter ended December 31, 2020.

Katherine Potter, President and Chief Executive Officer, made the following statement regarding the fourth quarter 2020 results:

"Five Star took a significant step toward recovery from the impact of COVID-19 on December 19, 2020, when we began hosting vaccination clinics in our communities for eligible residents and team members. As of February 20, 2021, Five Star has hosted vaccination clinics in 249 of our 252 communities, and 25,319 Five Star residents and team members have received at least one dose of a vaccine, which is an average of more than 630 vaccinations per day. By the end of the first quarter, we expect to have completed vaccination clinics at substantially all our communities, including administering second doses to residents and team members.

"Sales leads, which have been an historic leading indicator of move-in activity and a key component in driving occupancy, are 83% higher so far in 2021, when compared with the rolling four-week average sales leads at the beginning of the fourth quarter. We find this encouraging and believe it is a direct result of our efforts to make the vaccine available in our communities and the growing confidence in our ability to provide an exceptional resident experience.

"During the fourth quarter, Five Star continued to generate net income, despite the ongoing impact of COVID-19 on the senior living industry. Our rehabilitation and wellness services segment generated $20.3 million in revenues for the fourth quarter, which is now 38% of our total management and operating revenues, an increase from 33% of our overall management and operating revenue from the previous year pro forma results. Our liquidity remains strong with $84.4 million of unrestricted cash on our balance sheet and no amounts outstanding on our $65.0 million revolving credit facility, and we generated positive Adjusted EBITDA in every quarter of 2020, including during the COVID-19 pandemic."

Fourth Quarter Highlights:

* On December 19, 2020, eligible residents and team members at certain of our communities and clinics started receiving a COVID-19 vaccine. As of February 20, 2021, approximately 249 communities have held a vaccination clinic for the initial dose of a COVID-19 vaccine, and approximately 183 communities have also held a vaccination clinic for the second dose of a COVID-19 vaccine. As a result, as of that date 87.2% of our residents and 42.5% of our team members have received their initial dose of a COVID-19 vaccine and 52.7% of our residents and 26.9% of our team members have received the second dose of a COVID-19 vaccine. We expect our residents and team members will continue to get vaccinated through the first quarter of 2021.

* At December 31, 2020, 89% of our senior living communities were accepting new residents in at least one service line of business (independent living, assisted living, skilled nursing or memory care), which has increased to 98% as of February 20, 2021. Combined senior living revenues and management fees, including those for communities FVE leased from Diversified Healthcare Trust, or DHC, prior to January 1, 2020, and now manages on behalf of DHC, for the fourth quarter of 2020 decreased to $32.7 million from $253.8 million for the same period in 2019, primarily due to the conversion of the formerly leased senior living communities to managed communities as a result of the Restructuring Transactions, as described in the Selected Pro Forma Condensed Consolidated Financial Information and Other Data in the Supplemental Information of this press release. Average occupancy during the fourth quarter of 2020 declined 320 basis points at the communities FVE owns and operates and 300 basis points at the communities FVE manages on behalf of DHC compared to the third quarter of 2020. As of December 31, 2020, occupancy at FVE's owned and leased communities was 69.7%, and was 70.8% at the communities FVE manages on behalf of DHC. FVE continued to experience declines in average monthly senior living revenue per available unit (RevPAR) throughout the fourth quarter due to the continued occupancy challenges resulting from the impact of the COVID-19 pandemic.

* Rehabilitation and wellness services revenues for the fourth quarter of 2020 increased to $20.3 million from $14.0 million for the same period in 2019, primarily due to the impact of $4.6 million of inpatient rehabilitation clinic revenue at communities FVE previously leased from DHC during the fourth quarter of 2019, which was previously eliminated in consolidation accounting prior to the Restructuring Transactions, as well as the impact resulting from the opening of 34 net new outpatient clinics since October 1, 2019. As compared to the fourth quarter of 2019 pro forma results, revenues increased $1.7 million due to the impact of growth in new clinics throughout the fourth quarter of 2019 and 2020.

* Net income for the fourth quarter of 2020 was $2.9 million, or $0.09 per diluted share, compared to net income of $16.1 million, or $3.15 per diluted share for the fourth quarter of 2019, which included $14.9 million of one-time benefits related to the Restructuring Transactions. Net income decreased by $2.9 million, or 50.3%, compared to the fourth quarter of 2019 pro forma net income of $5.8 million, or $0.18 per diluted share. Net income for the fourth quarter of 2020 was impacted by $1.9 million of Provider Relief Funds received and recognized under the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, related to our independent and assisted living communities and rehabilitation and wellness clinics, which continued to experience a reduction of revenues and increased expenses related to decreased occupancy and other impacts of the COVID-19 pandemic.

* Earnings before interest, taxes, depreciation and amortization, or EBITDA, for the fourth quarter of 2020 was $5.8 million compared to $10.6 million for the fourth quarter of 2019 pro forma results. Adjusted EBITDA, as described further below, was $5.2 million for the fourth quarter of 2020 compared to $10.3 million for the fourth quarter of 2019 pro forma results. EBITDA and Adjusted EBITDA are non-GAAP financial measures. Reconciliations of net income determined in accordance with GAAP to EBITDA and Adjusted EBITDA, both actual and pro forma results, for the fourth quarters of 2020 and 2019 are presented later in this press release.

* As of December 31, 2020, FVE had unrestricted cash and cash equivalents of $84.4 million. In addition, FVE had no amounts outstanding on its $65.0 million revolving credit facility.

Conference Call:

At 1:00 p.m. Eastern Time on February 25, 2021, President and Chief Executive Officer, Katherine Potter, Executive Vice President, Chief Financial Officer and Treasurer, Jeffrey Leer, and Executive Vice President and Chief Operating Officer, Margaret Wigglesworth will host a conference call to discuss FVE's fourth quarter 2020 financial 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. Eastern Time on March 4, 2021. To hear the replay, dial (412) 317-0088. The replay pass code is 10150786.

A live audio webcast of the conference call will also be available in a listen-only mode on FVE's website, www.fivestarseniorliving.com. Participants wanting to access the webcast should visit FVE's website about five minutes before the call. The archived webcast will be available for replay on FVE's website following the call for about a week. The transcription, recording and retransmission in any way ofFVE's fourth quarter ended December 31, 2020 financial results conference callarestrictly prohibited without the prior written consent ofFVE. FVE's website is not incorporated as part of this press release.

About Five Star Senior Living Inc.:

FVE is a senior living and rehabilitation and wellness services company. As of December 31, 2020, FVE operated 252 senior living communities (29,271 living units) located in 31 states, including 228 communities (26,969 living units) that it managed and 24 communities (2,302 living units) that it owned or leased. FVE operates communities that include independent living, assisted living, memory care, continuing care retirement communities and skilled nursing facilities. Additionally, FVE's rehabilitation and wellness services segment includes Ageility Physical Therapy SolutionsTM, or Ageility, a division of FVE, which provides rehabilitation and wellness services within FVE communities as well as to external customers. As of December 31, 2020, Ageility operated 207 outpatient rehabilitation clinics and 37 inpatient rehabilitation clinics in 28 states. FVE is headquartered in Newton, Massachusetts.

Five Star Senior Living Inc.

Condensed Consolidated Statements of Operations

(amounts in thousands, except per share amounts)

(unaudited)



Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

REVENUES

Senior living $ 17,903 $ 249,727 $ 77,015 $ 1,036,498

Management fees 14,822 4,109 62,880 16,169

Rehabilitation and 20,256 13,978 82,032 48,685 wellness services

Total management and 52,981 267,814 221,927 1,101,352 operating revenues

Reimbursedcommunity-level costs 226,264 81,059 916,167 313,792 incurred on behalf ofmanaged communities

Other reimbursed 6,645 - 25,648 - expenses

Total revenues 285,890 348,873 1,163,742 1,415,144



Other operating income 1,936 - 3,435 -



OPERATING EXPENSES

Senior living wages 11,186 127,378 41,819 538,931 and benefits

Other senior living 7,180 68,748 25,470 292,644 operating expenses

Rehabilitation andwellness services 15,901 11,872 64,496 39,903 expenses

Community-level costsincurred on behalf of 226,264 81,059 916,167 313,792 managed communities

General and 20,820 20,740 87,168 87,884 administrative

Rent 1,281 20,513 5,118 141,486

Depreciation and 2,913 2,716 10,997 16,640 amortization

Loss on sale of senior - 6 - 856 living communities

Long-lived asset - 4 - 3,282 impairment

Total operating 285,545 333,036 1,151,235 1,435,418 expenses



Operating income 2,281 15,837 15,942 (20,274 )(loss)



Interest, dividend and 132 379 757 1,364 other income

Interest and other (461 ) (419 ) (1,631 ) (2,615 )expense

Unrealized gain on 640 306 480 782 equity investments

Realized gain on saleof debt and equity 3 2 425 229 investments

Loss on termination of - - (22,899 ) - leases



Income (loss) beforeincome taxes and(loss) equity in 2,595 16,105 (6,926 ) (20,514 )earnings of aninvestee

Benefit (provision) 308 42 (663 ) (56 )for income taxes

(Loss) equity inearnings of an - (42 ) - 575 investee

Net income (loss) $ 2,903 $ 16,105 $ (7,589 ) $ (19,995 )



Weighted averageshares 31,495 5,002 31,471 5,006 outstanding-basic

Weighted averageshares 31,612 5,119 31,471 5,006 outstanding-diluted



Net income (loss) per $ 0.09 $ 3.22 $ (0.24 ) $ (3.99 )share-basic

Net income (loss) per $ 0.09 $ 3.15 $ (0.24 ) $ (3.99 )share-diluted

Five Star Senior Living Inc.

Reconciliation of Non-GAAP Financial Measures

(dollars 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. FVE believes the non-GAAP financial measures presented in the table below are meaningful supplemental disclosures because they may help investors better understand changes in FVE's operating results and its ability to meet FVE's financial obligations or service debt, make capital expenditures and expand its business. These non-GAAP financial measures may also help investors make comparisons between FVE and other companies on both a GAAP and non-GAAP basis. FVE 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 FVE's performance between periods and to the performance of other companies. FVE management uses EBITDA and Adjusted EBITDA to evaluate FVE's financial performance and compare FVE's performance over time and to the performance of other companies. FVE 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 FVE's operating performance or as measures of FVE's liquidity. Also, EBITDA and Adjusted EBITDA as presented may not be comparable to similarly titled amounts calculated by other companies.

FVE believes that net income (loss) is the most directly comparable financial measure, determined according to GAAP, to FVE's presentation of EBITDA and Adjusted EBITDA. The following table presents the reconciliation of these non-GAAP financial measures from net income (loss) for each of the three months and years ended December 31, 2020 and 2019.

Five Star Senior Living Inc.

Reconciliation of Non-GAAP Financial Measures

(dollars in thousands)

(unaudited)

Non-GAAP financial measures are financial measures that are not determined inaccordance with U.S. generally accepted accounting principles, or GAAP. FVEbelieves the non-GAAP financial measures presented in the table below aremeaningful supplemental disclosures because they may help investors betterunderstand changes in FVE's operating results and its ability to meet FVE'sfinancial obligations or service debt, make capital expenditures and expand itsbusiness. These non-GAAP financial measures may also help investors makecomparisons between FVE and other companies on both a GAAP and non-GAAP basis.FVE believes that EBITDA and Adjusted EBITDA are meaningful financial measuresthat may help investors better understand its financial performance, includingby allowing investors to compare FVE's performance between periods and to theperformance of other companies. FVE management uses EBITDA and Adjusted EBITDAto evaluate FVE's financial performance and compare FVE's performance over timeand to the performance of other companies. FVE calculates EBITDA and AdjustedEBITDA as shown below. These measures should not be considered as alternativesto net income (loss) or operating income (loss), as indicators of FVE'soperating performance or as measures of FVE's liquidity. Also, EBITDA andAdjusted EBITDA as presented may not be comparable to similarly titled amountscalculated by other companies.

FVE believes that net income (loss) is the most directly comparable financialmeasure, determined according to GAAP, to FVE's presentation of EBITDA andAdjusted EBITDA. The following table presents the reconciliation of thesenon-GAAP financial measures from net income (loss) for each of the three monthsand years ended December 31, 2020 and 2019.

Three Months Ended December 31,

Year Ended December 31,

2020

2019

2020

2019

Net income (loss)

$

2,903

$

16,105

$

(7,589

)

$

(19,995

)

Add (less):

Interest and other expense

461

419

1,631

2,615

Interest, dividend and other income

(132

)

(379

)

(757

)

(1,364

)

(Benefit) provision for income taxes

(308

)

(42

)

663

56

Depreciation and amortization

2,913

2,716

10,997

16,640

EBITDA

5,837

18,819

4,945

(2,048

)

Add (less):

Long-lived asset impairment

-

4

-

3,282

Loss on sale of senior living communities

-

6

-

856

Severance (1)

-

-

282

393

Litigation settlement (2)

-

-

2,473

-

Unrealized gain on equity investments

(640

)

(306

)

(480

)

(782

)

Loss on termination of leases (3)

-

-

22,899

-

Transaction costs (4)

36

1,814

1,448

11,952

Lease inducement (5)

-

(12,423

)

-

(12,423

)

Deferred resident fees and deposits (6)

-

(4,242

)

-

(4,242

)

Adjusted EBITDA

$

5,233

$

3,672

$

31,567

$

(3,012

)

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

Net income (loss) $ 2,903 $ 16,105 $ (7,589 ) $ (19,995 )

Add (less):

Interest and other expense 461 419 1,631 2,615

Interest, dividend and other (132 ) (379 ) (757 ) (1,364 )income

(Benefit) provision for (308 ) (42 ) 663 56 income taxes

Depreciation and 2,913 2,716 10,997 16,640 amortization

EBITDA 5,837 18,819 4,945 (2,048 )

Add (less):

Long-lived asset impairment - 4 - 3,282

Loss on sale of senior - 6 - 856 living communities

Severance ^(1) - - 282 393

Litigation settlement ^(2) - - 2,473 -

Unrealized gain on equity (640 ) (306 ) (480 ) (782 )investments

Loss on termination of - - 22,899 - leases ^(3)

Transaction costs ^(4) 36 1,814 1,448 11,952

Lease inducement ^(5) - (12,423 ) - (12,423 )

Deferred resident fees and - (4,242 ) - (4,242 )deposits ^(6)

Adjusted EBITDA $ 5,233 $ 3,672 $ 31,567 $ (3,012 )

(1)

Costs incurred in 2019 represent those related to the retirement or separation of former executives of FVE. Costs incurred during 2020 represent those related to a reduction in workforce as a result of the impact of the COVID-19 pandemic.

(2)

Represents costs incurred related to the settlement of a lawsuit and is included in other senior living operating expenses in our condensed consolidated statements of operations. The settlement was approved by the court, and FVE is awaiting the court's entry of a final judgment on record. Payment is expected to be made in the first half of 2021.

(3)

Represents the excess of the fair value of the Share Issuances of $97,899 compared to the consideration of $75,000 paid by DHC, as described in the Selected Pro Forma Condensed Consolidated Financial Information and Other Data in the Supplemental Information of this press release.

(4)

Includes costs incurred related to the Restructuring Transactions as described in the Selected Pro Forma Condensed Consolidated Financial Information and Other Data in the Supplemental Information of this press release.

(5)

Lease inducement related to the rent reduction recognized for the applicable period in 2019 as a result of the completion of the Restructuring Transactions.

(6)

Deferred resident fees and deposits recognized related to senior living communities FVE previously leased from, and now manages, for the account of DHC, as a result of those leases being terminated in connection with the Restructuring Transactions.

Costs incurred in 2019 represent those related to the retirement or^ separation of former executives of FVE. Costs incurred during 2020(1) represent those related to a reduction in workforce as a result of the impact of the COVID-19 pandemic.

Represents costs incurred related to the settlement of a lawsuit and is^ included in other senior living operating expenses in our condensed(2) consolidated statements of operations. The settlement was approved by the court, and FVE is awaiting the court's entry of a final judgment on record. Payment is expected to be made in the first half of 2021.

Represents the excess of the fair value of the Share Issuances of $97,899^ compared to the consideration of $75,000 paid by DHC, as described in the(3) Selected Pro Forma Condensed Consolidated Financial Information and Other Data in the Supplemental Information of this press release.

Includes costs incurred related to the Restructuring Transactions as^ described in the Selected Pro Forma Condensed Consolidated Financial(4) Information and Other Data in the Supplemental Information of this press release.

^ Lease inducement related to the rent reduction recognized for the(5) applicable period in 2019 as a result of the completion of the Restructuring Transactions.

Deferred resident fees and deposits recognized related to senior living^ communities FVE previously leased from, and now manages, for the account of(6) DHC, as a result of those leases being terminated in connection with the Restructuring Transactions.

Five Star Senior Living Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

(unaudited)

December 31,

2020

2019

ASSETS

Current assets:

Cash and cash equivalents

$

84,351

$

31,740

Restricted cash and cash equivalents

23,877

23,995

Accounts receivable, net of allowance

9,104

34,190

Due from related person

96,357

5,533

Debt and equity investments

19,961

21,070

Prepaid expenses and other current assets

28,658

17,286

Assets held for sale

-

9,554

Total current assets

262,308

143,368

Property and equipment, net

159,251

167,247

Operating lease right-of-use assets

18,030

20,855

Finance lease right-of-use assets

4,493

-

Restricted cash and cash equivalents

1,369

1,244

Restricted debt and equity investments

4,788

7,105

Equity investment of an investee, net

11

298

Other long-term assets

3,956

5,676

Total assets

$

454,206

$

345,793

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

23,454

$

30,440

Accrued expenses and other current liabilities

41,843

55,981

Accrued compensation and benefits

70,543

35,629

Accrued self-insurance obligations

31,355

23,791

Operating lease liabilities

2,567

2,872

Finance lease liabilities

808

-

Due to related persons

6,585

2,247

Mortgage note payable

388

362

Security deposits and current portion of continuing care contracts

365

434

Liabilities held for sale

-

12,544

Total current liabilities

177,908

164,300

Long-term liabilities:

Accrued self-insurance obligations

37,420

33,872

Operating lease liabilities

17,104

19,671

Finance lease liabilities

3,921

-

Mortgage note payable

6,783

7,171

Other long-term liabilities

538

798

Total long term liabilities

65,766

61,512

Shareholders' equity:

Common stock, par value $0.01

317

52

Additional paid-in-capital

460,038

362,450

Accumulated deficit

(251,139

)

(245,184

)

Accumulated other comprehensive income

1,316

2,663

Total shareholders' equity

210,532

119,981

Total liabilities and shareholders' equity

$

454,206

$

345,793

Five Star Senior Living Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

(unaudited)



December 31,

2020 2019

ASSETS

Current assets:

Cash and cash equivalents $ 84,351 $ 31,740

Restricted cash and cash equivalents 23,877 23,995

Accounts receivable, net of allowance 9,104 34,190

Due from related person 96,357 5,533

Debt and equity investments 19,961 21,070

Prepaid expenses and other current assets 28,658 17,286

Assets held for sale - 9,554

Total current assets 262,308 143,368



Property and equipment, net 159,251 167,247

Operating lease right-of-use assets 18,030 20,855

Finance lease right-of-use assets 4,493 -

Restricted cash and cash equivalents 1,369 1,244

Restricted debt and equity investments 4,788 7,105

Equity investment of an investee, net 11 298

Other long-term assets 3,956 5,676

Total assets $ 454,206 $ 345,793



LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 23,454 $ 30,440

Accrued expenses and other current liabilities 41,843 55,981

Accrued compensation and benefits 70,543 35,629

Accrued self-insurance obligations 31,355 23,791

Operating lease liabilities 2,567 2,872

Finance lease liabilities 808 -

Due to related persons 6,585 2,247

Mortgage note payable 388 362

Security deposits and current portion of continuing 365 434 care contracts

Liabilities held for sale - 12,544

Total current liabilities 177,908 164,300



Long-term liabilities:

Accrued self-insurance obligations 37,420 33,872

Operating lease liabilities 17,104 19,671

Finance lease liabilities 3,921 -

Mortgage note payable 6,783 7,171

Other long-term liabilities 538 798

Total long term liabilities 65,766 61,512



Shareholders' equity:

Common stock, par value $0.01 317 52

Additional paid-in-capital 460,038 362,450

Accumulated deficit (251,139 ) (245,184 )

Accumulated other comprehensive income 1,316 2,663

Total shareholders' equity 210,532 119,981

Total liabilities and shareholders' equity $ 454,206 $ 345,793

Five Star Senior Living Inc.

Supplemental Financial Data

(dollars in thousands)

(unaudited)

Management and Operating Revenues by Product Type

Three Months Ended December 31, 2020

Management and Operating Revenues by Product Type:

SeniorLiving

Management Fees

Rehabilitation and Wellness Services

TotalRevenues

Independent and assisted living community revenues

$

17,903

$

8,515

$

-

$

26,418

Continuing care retirement community revenues

-

5,272

-

5,272

Skilled nursing facility revenues

-

1,035

-

1,035

Rehabilitation and wellness services revenues

-

-

20,256

20,256

Total management and operating revenues

$

17,903

$

14,822

$

20,256

$

52,981

Three Months Ended December 31, 2019

Management and Operating Revenues by Product Type:

SeniorLiving

Management Fees

Rehabilitation and Wellness Services

TotalRevenues

Independent and assisted living community revenues

$

128,061

$

3,221

$

-

$

131,282

Continuing care retirement community revenues

99,069

888

-

99,957

Skilled nursing facility revenues

22,597

-

-

22,597

Rehabilitation and wellness services revenues

-

-

13,978

13,978

Total management and operating revenues

$

249,727

$

4,109

$

13,978

$

267,814

Year Ended December 31, 2020

Management and Operating Revenues by Product Type:

SeniorLiving

Management Fees

Rehabilitation and Wellness Services

TotalRevenues

Independent and assisted living community revenues

$

77,015

$

35,917

$

-

$

112,932

Continuing care retirement community revenues

-

22,545

-

22,545

Skilled nursing facility revenues

-

4,418

-

4,418

Rehabilitation and wellness services revenues

-

-

82,032

82,032

Total management and operating revenues

$

77,015

$

62,880

$

82,032

$

221,927

Year Ended December 31, 2019

Management and Operating Revenues by Product Type:

SeniorLiving

Management Fees

Rehabilitation and Wellness Services

TotalRevenues

Independent and assisted living community revenues

$

508,800

$

12,704

$

-

$

521,504

Continuing care retirement community revenues

389,496

3,465

-

392,961

Skilled nursing facility revenues

138,202

-

-

138,202

Rehabilitation and wellness services revenues

-

-

48,685

48,685

Total management and operating revenues

$

1,036,498

$

16,169

$

48,685

$

1,101,352

Five Star Senior Living Inc.

Supplemental Financial Data

(dollars in thousands)

(unaudited)

Management and Operating Revenues by Product Type

Three Months Ended December 31, 2020

Management and Senior Management Rehabilitation TotalOperating Revenues Living Fees and Wellness Revenuesby Product Type: Services

Independent andassisted living $ 17,903 $ 8,515 $ - $ 26,418 community revenues

Continuing careretirement - 5,272 - 5,272 community revenues

Skilled nursing - 1,035 - 1,035 facility revenues

Rehabilitation andwellness services - - 20,256 20,256 revenues

Total managementand operating $ 17,903 $ 14,822 $ 20,256 $ 52,981 revenues



Three Months Ended December 31, 2019

Management and Senior Management Rehabilitation TotalOperating Revenues Living Fees and Wellness Revenuesby Product Type: Services

Independent andassisted living $ 128,061 $ 3,221 $ - $ 131,282 community revenues

Continuing careretirement 99,069 888 - 99,957 community revenues

Skilled nursing 22,597 - - 22,597 facility revenues

Rehabilitation andwellness services - - 13,978 13,978 revenues

Total managementand operating $ 249,727 $ 4,109 $ 13,978 $ 267,814 revenues



Year Ended December 31, 2020

Management and Senior Management Rehabilitation TotalOperating Revenues Living Fees and Wellness Revenuesby Product Type: Services

Independent andassisted living $ 77,015 $ 35,917 $ - $ 112,932 community revenues

Continuing careretirement - 22,545 - 22,545 community revenues

Skilled nursing - 4,418 - 4,418 facility revenues

Rehabilitation andwellness services - - 82,032 82,032 revenues

Total managementand operating $ 77,015 $ 62,880 $ 82,032 $ 221,927 revenues



Year Ended December 31, 2019

Management and Senior Management Rehabilitation TotalOperating Revenues Living Fees and Wellness Revenuesby Product Type: Services

Independent andassisted living $ 508,800 $ 12,704 $ - $ 521,504 community revenues

Continuing careretirement 389,496 3,465 - 392,961 community revenues

Skilled nursing 138,202 - - 138,202 facility revenues

Rehabilitation andwellness services - - 48,685 48,685 revenues

Total managementand operating $ 1,036,498 $ 16,169 $ 48,685 $ 1,101,352 revenues

Five Star Senior Living Inc.

Supplemental Financial Data

(dollars in thousands)

(unaudited)

Comparable Management and Operating Revenues by Product Type (1)

Three Months Ended December 31, 2020

Management and Operating Revenues by Product Type:

SeniorLiving

Management Fees

Rehabilitation and Wellness Services

TotalRevenues

Independent and assisted living community revenues

$

17,957

$

3,705

$

-

$

21,662

Continuing care retirement community revenues

-

1,111

-

1,111

Rehabilitation and wellness services revenues

-

-

17,823

17,823

Total management and operating revenues

$

17,957

$

4,816

$

17,823

$

40,596

Three Months Ended December 31, 2019

Management and Operating Revenues by Product Type:

SeniorLiving

Management Fees

Rehabilitation and Wellness Services

TotalRevenues

Independent and assisted living community revenues

$

20,410

$

3,158

$

-

$

23,568

Continuing care retirement community revenues

-

772

-

772

Rehabilitation and wellness services revenues

-

-

12,948

12,948

Total management and operating revenues

$

20,410

$

3,930

$

12,948

$

37,288

Year Ended December 31, 2020

Management and Operating Revenues by Product Type:

SeniorLiving

Management Fees

Rehabilitation and Wellness Services

TotalRevenues

Independent and assisted living community revenues

$

76,293

$

15,119

$

-

$

91,412

Continuing care retirement community revenues

-

4,417

-

4,417

Rehabilitation and wellness services revenues

-

-

60,048

60,048

Total management and operating revenues

$

76,293

$

19,536

$

60,048

$

155,877

Year Ended December 31, 2019

Management and Operating Revenues by Product Type:

SeniorLiving

Management Fees

Rehabilitation and Wellness Services

TotalRevenues

Independent and assisted living community revenues

$

82,154

$

12,098

$

-

$

94,252

Continuing care retirement community revenues

-

2,993

-

2,993

Rehabilitation and wellness services revenues

-

-

41,064

41,064

Total management and operating revenues

$

82,154

$

15,091

$

41,064

$

138,309

Five Star Senior Living Inc.

Supplemental Financial Data

(dollars in thousands)

(unaudited)



Comparable Management and Operating Revenues by Product Type ^(1)



Three Months Ended December 31, 2020

Management and Senior Management Rehabilitation TotalOperating Revenues by Living Fees and Wellness RevenuesProduct Type: Services

Independent andassisted living $ 17,957 $ 3,705 $ - $ 21,662 community revenues

Continuing careretirement community - 1,111 - 1,111 revenues

Rehabilitation andwellness services - - 17,823 17,823 revenues

Total management and $ 17,957 $ 4,816 $ 17,823 $ 40,596 operating revenues



Three Months Ended December 31, 2019

Management and Senior Management Rehabilitation TotalOperating Revenues by Living Fees and Wellness RevenuesProduct Type: Services

Independent andassisted living $ 20,410 $ 3,158 $ - $ 23,568 community revenues

Continuing careretirement community - 772 - 772 revenues

Rehabilitation andwellness services - - 12,948 12,948 revenues

Total management and $ 20,410 $ 3,930 $ 12,948 $ 37,288 operating revenues



Year Ended December 31, 2020

Management and Senior Management Rehabilitation TotalOperating Revenues by Living Fees and Wellness RevenuesProduct Type: Services

Independent andassisted living $ 76,293 $ 15,119 $ - $ 91,412 community revenues

Continuing careretirement community - 4,417 - 4,417 revenues

Rehabilitation andwellness services - - 60,048 60,048 revenues

Total management and $ 76,293 $ 19,536 $ 60,048 $ 155,877 operating revenues



Year Ended December 31, 2019

Management and Senior Management Rehabilitation TotalOperating Revenues by Living Fees and Wellness RevenuesProduct Type: Services

Independent andassisted living $ 82,154 $ 12,098 $ - $ 94,252 community revenues

Continuing careretirement community - 2,993 - 2,993 revenues

Rehabilitation andwellness services - - 41,064 41,064 revenues

Total management and $ 82,154 $ 15,091 $ 41,064 $ 138,309 operating revenues

(1)

The tables for the three months ended December 31, 2020 and 2019 include data for 24 owned and leased senior living communities, 75 managed senior living communities and 203 rehabilitation clinics that FVE has continuously owned, continuously leased or continuously managed since October 1, 2019. The tables for the years ended December 31, 2020 and 2019 include data for 24 owned and leased senior living communities, 74 managed senior living communities and 158 rehabilitation clinics that FVE has continuously owned, continuously leased or continuously managed since January 1, 2019.

The tables for the three months ended December 31, 2020 and 2019 include data for 24 owned and leased senior living communities, 75 managed senior living communities and 203 rehabilitation clinics that FVE has continuously^ owned, continuously leased or continuously managed since October 1, 2019.(1) The tables for the years ended December 31, 2020 and 2019 include data for 24 owned and leased senior living communities, 74 managed senior living communities and 158 rehabilitation clinics that FVE has continuously owned, continuously leased or continuously managed since January 1, 2019.

Five Star Senior Living Inc.

Senior Living Segment Data

(dollars in thousands, except per unit amounts)

(unaudited)

Three Months Ended

December 31,

September 30,

June 30,

March 31,

December 31,

2020

2020

2020

2020

2019

Owned and Leased Communities

Independent and assisted living communities:

Revenues

$

17,903

$

18,525

$

19,590

$

20,997

$

249,727

Other operating income (1)

1,715

-

-

-

-

Operating expenses

21,181

19,661

20,165

17,470

220,390

Operating (loss) income

(1,563

)

(1,136

)

(575

)

3,527

29,337

Operating margin

(8.0

)%

(6.1

)%

(2.9

)%

16.8

%

11.7

%

Number of communities (end of period)

24

24

24

24

190

Number of living units (end of period) (2)

2,302

2,312

2,312

2,312

20,948

Average occupancy

71.5

%

74.7

%

78.3

%

81.3

%

82.9

%

Spot occupancy

69.7

%

73.0

%

76.3

%

80.3

%

82.7

%

RevPAR (3)

$

2,596

$

2,665

$

2,813

$

2,930

$

3,974

Managed Communities(4)

Independent and assisted living communities:

Management fees

$

8,515

$

8,751

$

9,088

$

9,563

$

3,221

Community-level revenues

157,267

167,436

174,634

185,516

81,188

Other operating income (1)

1,677

-

14

-

-

Community-level expenses

139,623

145,399

139,175

143,608

65,899

Community operating income

19,321

22,037

35,473

41,908

15,289

Community operating margin

12.2

%

13.2

%

20.3

%

22.6

%

18.8

%

Number of communities (end of period) (5)

182

189

191

193

69

Number of living units (end of period) (2)(5)

17,440

18,032

18,148

18,395

8,106

Average occupancy

72.5

%

75.5

%

79.1

%

82.9

%

84.0

%

Spot occupancy

71.1

%

74.1

%

77.7

%

82.2

%

83.4

%

RevPAR (3)

$

2,969

$

3,088

$

3,207

$

3,360

$

3,401

Continuing care retirement communities:

Management fees

$

5,272

$

5,451

$

5,485

$

6,337

$

888

Community-level revenues

100,781

100,765

106,937

123,498

27,502

Other operating income (1)

7,997

-

3,792

-

-

Community-level expenses

98,221

102,103

99,071

103,946

24,998

Community operating income

10,557

(1,338

)

11,658

19,552

2,504

Community operating margin

9.7

%

(1.3

)%

10.5

%

15.8

%

9.1

%

Number of communities (end of period)

37

39

39

40

9

Number of living units (end of period) (2)(6)

8,574

8,936

8,936

9,301

2,231

Average occupancy

72.8

%

75.6

%

79.1

%

83.4

%

83.5

%

Spot occupancy

71.2

%

74.4

%

78.3

%

81.3

%

83.6

%

RevPAR (3)

$

3,813

$

3,759

$

3,989

$

4,426

$

4,109

Skilled nursing facilities (7):

Management fees

$

1,035

$

1,100

$

1,132

$

1,151

$

-

Community-level revenues

20,589

21,900

22,532

22,956

-

Other operating income (1)

2,846

-

2,022

-

-

Community-level expenses

23,834

22,831

22,009

21,854

-

Community operating (loss) income

(399

)

(931

)

2,545

1,102

-

Community operating margin

(1.7

)%

(4.3

)%

10.4

%

4.8

%

-

%

Number of communities (end of period)

9

11

11

11

-

Number of living units (end of period) (2)(8)

955

1,264

1,264

1,264

-

Average occupancy

64.2

%

68.8

%

70.1

%

73.3

%

-

%

Spot occupancy

60.3

%

69.2

%

68.5

%

72.6

%

-

%

RevPAR (3)

$

5,655

$

5,775

$

5,942

$

6,054

$

-

Total managed communities:

Management fees

$

14,822

$

15,302

$

15,705

$

17,051

$

4,109

Community-level revenues

278,637

290,101

304,103

331,970

108,690

Other operating income (1)

12,520

-

5,828

-

-

Community-level expenses

261,678

270,333

260,255

269,408

90,897

Community operating income

29,479

19,768

49,676

62,562

17,793

Community operating margin

10.1

%

6.8

%

16.0

%

18.8

%

16.4

%

Number of communities (end of period)

228

239

241

244

78

Number of living units (end of period) (2)

26,969

28,232

28,348

28,960

10,337

Average occupancy

72.2

%

75.2

%

78.7

%

82.6

%

83.9

%

Spot occupancy

70.8

%

74.0

%

77.5

%

81.5

%

83.5

%

RevPAR (3)

$

3,355

$

3,420

$

3,576

$

3,820

$

3,556

Five Star Senior Living Inc.

Senior Living Segment Data

(dollars in thousands, except per unit amounts)

(unaudited)



Three Months Ended

December September June 30, March 31, December 31, 30, 31,

2020 2020 2020 2020 2019



Owned andLeased Communities

Independent andassisted living communities:

Revenues $ 17,903 $ 18,525 $ 19,590 $ 20,997 $ 249,727

Other operating 1,715 - - - - income ^(1)

Operating 21,181 19,661 20,165 17,470 220,390 expenses

Operating (1,563 ) (1,136 ) (575 ) 3,527 29,337 (loss) income

Operating (8.0 ) (6.1 ) (2.9 ) 16.8 % 11.7 %margin % % %

Number ofcommunities 24 24 24 24 190 (end of period)

Number ofliving units 2,302 2,312 2,312 2,312 20,948 (end of period)^(2)

Average 71.5 % 74.7 % 78.3 % 81.3 % 82.9 %occupancy

Spot occupancy 69.7 % 73.0 % 76.3 % 80.3 % 82.7 %

RevPAR ^(3) $ 2,596 $ 2,665 $ 2,813 $ 2,930 $ 3,974



ManagedCommunities ^ (4)

Independent andassisted living communities:

Management fees $ 8,515 $ 8,751 $ 9,088 $ 9,563 $ 3,221

Community-level 157,267 167,436 174,634 185,516 81,188 revenues

Other operating 1,677 - 14 - - income ^(1)

Community-level 139,623 145,399 139,175 143,608 65,899 expenses

Communityoperating 19,321 22,037 35,473 41,908 15,289 income

Communityoperating 12.2 % 13.2 % 20.3 % 22.6 % 18.8 %margin

Number ofcommunities 182 189 191 193 69 (end of period)^(5)

Number ofliving units 17,440 18,032 18,148 18,395 8,106 (end of period)^(2)(5)

Average 72.5 % 75.5 % 79.1 % 82.9 % 84.0 %occupancy

Spot occupancy 71.1 % 74.1 % 77.7 % 82.2 % 83.4 %

RevPAR ^(3) $ 2,969 $ 3,088 $ 3,207 $ 3,360 $ 3,401



Continuing careretirement communities:

Management fees $ 5,272 $ 5,451 $ 5,485 $ 6,337 $ 888

Community-level 100,781 100,765 106,937 123,498 27,502 revenues

Other operating 7,997 - 3,792 - - income ^(1)

Community-level 98,221 102,103 99,071 103,946 24,998 expenses

Communityoperating 10,557 (1,338 ) 11,658 19,552 2,504 income

Community )operating 9.7 % (1.3 % 10.5 % 15.8 % 9.1 %margin

Number ofcommunities 37 39 39 40 9 (end of period)

Number ofliving units 8,574 8,936 8,936 9,301 2,231 (end of period)^ (2)(6)

Average 72.8 % 75.6 % 79.1 % 83.4 % 83.5 %occupancy

Spot occupancy 71.2 % 74.4 % 78.3 % 81.3 % 83.6 %

RevPAR ^(3) $ 3,813 $ 3,759 $ 3,989 $ 4,426 $ 4,109

Skilled nursingfacilities^ (7):

Management fees $ 1,035 $ 1,100 $ 1,132 $ 1,151 $ -

Community-level 20,589 21,900 22,532 22,956 - revenues

Other operating 2,846 - 2,022 - - income ^(1)

Community-level 23,834 22,831 22,009 21,854 - expenses

Communityoperating (399 ) (931 ) 2,545 1,102 - (loss) income

Community ) )operating (1.7 % (4.3 % 10.4 % 4.8 % - %margin

Number ofcommunities 9 11 11 11 - (end of period)

Number ofliving units 955 1,264 1,264 1,264 - (end of period)^(2)(8)

Average 64.2 % 68.8 % 70.1 % 73.3 % - %occupancy

Spot occupancy 60.3 % 69.2 % 68.5 % 72.6 % - %

RevPAR ^(3) $ 5,655 $ 5,775 $ 5,942 $ 6,054 $ -



Total managed communities:

Management fees $ 14,822 $ 15,302 $ 15,705 $ 17,051 $ 4,109

Community-level 278,637 290,101 304,103 331,970 108,690 revenues

Other operating 12,520 - 5,828 - - income ^(1)

Community-level 261,678 270,333 260,255 269,408 90,897 expenses

Communityoperating 29,479 19,768 49,676 62,562 17,793 income

Communityoperating 10.1 % 6.8 % 16.0 % 18.8 % 16.4 %margin

Number ofcommunities 228 239 241 244 78 (end of period)

Number ofliving units 26,969 28,232 28,348 28,960 10,337 (end of period)^(2)

Average 72.2 % 75.2 % 78.7 % 82.6 % 83.9 %occupancy

Spot occupancy 70.8 % 74.0 % 77.5 % 81.5 % 83.5 %

RevPAR ^(3) $ 3,355 $ 3,420 $ 3,576 $ 3,820 $ 3,556

(1)

Other operating income represents income recognized for funds received under the Provider Relief Fund of the CARES Act and other governmental grants.

(2)

Includes living units categorized as in service. As a result, the number of living units may vary from period to period for reasons other than the acquisition or disposition of senior living communities.

(3)

RevPAR is defined by FVE as resident fee revenues for the corresponding portfolio for the period divided by the average number of available units for the period, divided by the number of months in the period. Data for the three months ended June 30, 2020 and December 31, 2020 exclude income received by communities under the CARES Act and other governmental grants. Data for the three months ended December 31, 2019, excludes approximately $4,200 of deferred resident fees and deposits recognized related to senior living communities FVE previously leased from, and now manages, for the account of DHC, as a result of those leases being terminated in connection with the Restructuring Transactions.

(4)

Managed communities, other than FVE's management fees, represents financial data of communities FVE manages for the account of DHC and does not represent financial results of FVE. Managed communities' data is included to provide supplemental information regarding the operating results and financial condition of the communities from which FVE earns management fees.

(5)

Includes one active adult community with 167 units.

(6)

Includes 2,055 skilled nursing units in communities where assisted living and independent living services are the predominant services provided.

(7)

FVE did not manage skilled nursing facilities prior to January 1, 2020.

(8)

Includes 53 assisted living and independent living units in communities where skilled nursing services are the predominant services provided.

^ Other operating income represents income recognized for funds received(1) under the Provider Relief Fund of the CARES Act and other governmental grants.

^ Includes living units categorized as in service. As a result, the number of(2) living units may vary from period to period for reasons other than the acquisition or disposition of senior living communities.

RevPAR is defined by FVE as resident fee revenues for the corresponding portfolio for the period divided by the average number of available units for the period, divided by the number of months in the period. Data for the three months ended June 30, 2020 and December 31, 2020 exclude income^ received by communities under the CARES Act and other governmental grants.(3) Data for the three months ended December 31, 2019, excludes approximately $4,200 of deferred resident fees and deposits recognized related to senior living communities FVE previously leased from, and now manages, for the account of DHC, as a result of those leases being terminated in connection with the Restructuring Transactions.

Managed communities, other than FVE's management fees, represents financial data of communities FVE manages for the account of DHC and does not^ represent financial results of FVE. Managed communities' data is included(4) to provide supplemental information regarding the operating results and financial condition of the communities from which FVE earns management fees.

^ Includes one active adult community with 167 units.(5)

^ Includes 2,055 skilled nursing units in communities where assisted living(6) and independent living services are the predominant services provided.

^ FVE did not manage skilled nursing facilities prior to January 1, 2020.(7)

^ Includes 53 assisted living and independent living units in communities(8) where skilled nursing services are the predominant services provided.

Five Star Senior Living Inc.

Comparable Communities Senior Living Segment Data

(dollars in thousands, except per unit amounts)

(unaudited)

Three Months Ended

December 31,

September 30,

June 30,

March 31,

December 31,

2020

2020

2020

2020

2019

Owned and Leased Communities(1):

Number of communities (end of period)

24

24

24

24

24

Number of living units (end of period) (2)

2,302

2,312

2,312

2,312

2,312

Average occupancy

71.5

%

74.7

%

78.3

%

81.3

%

81.4

%

RevPAR (3)

$

2,596

$

2,665

$

2,813

$

2,930

$

2,941

Managed Communities(1)(4):

Number of communities (end of period)

75

75

75

75

75

Number of living units (end of period) (2)

9,620

9,689

9,689

9,697

9,700

Average occupancy

73.7

%

76.7

%

80.1

%

83.9

%

84.5

%

RevPAR (3)

$

3,120

$

3,084

$

3,340

$

3,548

$

3,559

Five Star Senior Living Inc.

Comparable Communities Senior Living Segment Data

(dollars in thousands, except per unit amounts)

(unaudited)



Three Months Ended

December September June 30, March 31, December 31, 30, 31,

2020 2020 2020 2020 2019

Owned and Leased Communities ^(1):

Number ofcommunities (end of 24 24 24 24 24 period)

Number of livingunits (end of 2,302 2,312 2,312 2,312 2,312 period) ^(2)

Average occupancy 71.5 % 74.7 % 78.3 % 81.3 % 81.4 %

RevPAR ^(3) $ 2,596 $ 2,665 $ 2,813 $ 2,930 $ 2,941



Managed Communities ^(1)(4):

Number ofcommunities (end of 75 75 75 75 75 period)

Number of livingunits (end of 9,620 9,689 9,689 9,697 9,700 period) ^(2)

Average occupancy 73.7 % 76.7 % 80.1 % 83.9 % 84.5 %

RevPAR ^(3) $ 3,120 $ 3,084 $ 3,340 $ 3,548 $ 3,559

(1)

Includes data for senior living communities that FVE has continuously owned, continuously leased or continuously managed since October 1, 2019.

(2)

Includes living units categorized as in service. As a result, the number of living units may vary from period to period for reasons other than the acquisition or sale of senior living communities.

(3)

RevPAR is defined by FVE as resident fee revenues for the corresponding portfolio for the period divided by the average number of available units for the period, divided by the number of months in the period. Data for the three months ended June 30, 2020 and December 31, 2020 exclude income received by communities under the CARES Act and other governmental grants.

(4)

Senior living segment data for comparable managed communities represents financial data of communities FVE manages for the account of DHC and does not represent financial results of FVE. Managed communities' data is included to provide supplemental information regarding the operating results and financial condition of the communities from which FVE earns management fees.

^ Includes data for senior living communities that FVE has continuously(1) owned, continuously leased or continuously managed since October 1, 2019.

^ Includes living units categorized as in service. As a result, the number of(2) living units may vary from period to period for reasons other than the acquisition or sale of senior living communities.

RevPAR is defined by FVE as resident fee revenues for the corresponding^ portfolio for the period divided by the average number of available units(3) for the period, divided by the number of months in the period. Data for the three months ended June 30, 2020 and December 31, 2020 exclude income received by communities under the CARES Act and other governmental grants.

Senior living segment data for comparable managed communities represents financial data of communities FVE manages for the account of DHC and does^ not represent financial results of FVE. Managed communities' data is(4) included to provide supplemental information regarding the operating results and financial condition of the communities from which FVE earns management fees.

Five Star Senior Living Inc.

Rehabilitation and Wellness Services Segment Data

(dollars in thousands)

(unaudited)

Three Months Ended

December 31,

September 30,

June 30,

March 31,

December 31,

2020

2020

2020

2020

2019

Rehabilitation and Wellness Services(1):

Revenues (2)

$

20,256

$

21,124

$

19,268

$

21,384

$

13,978

Other operating income (3)

221

-

1,499

-

-

Operating expenses

16,613

16,833

16,259

17,616

12,384

Operating income

3,864

4,291

4,508

3,768

1,594

Operating margin

18.9

%

20.3

%

21.7

%

17.6

%

11.4

%

Number of inpatient clinics (end of period)

37

40

40

41

41

Number of outpatient clinics (end of period)

207

209

206

203

190

Five Star Senior Living Inc.

Rehabilitation and Wellness Services Segment Data

(dollars in thousands)

(unaudited)



Three Months Ended

December September June 30, March 31, December 31, 30, 31,

2020 2020 2020 2020 2019

Rehabilitationand Wellness Services ^(1):

Revenues ^(2) $ 20,256 $ 21,124 $ 19,268 $ 21,384 $ 13,978

Otheroperating 221 - 1,499 - - income^ (3)

Operating 16,613 16,833 16,259 17,616 12,384 expenses

Operating 3,864 4,291 4,508 3,768 1,594 income

Operating 18.9 % 20.3 % 21.7 % 17.6 % 11.4 %margin

Number ofinpatient 37 40 40 41 41 clinics (endof period)

Number ofoutpatient 207 209 206 203 190 clinics (endof period)

(1)

Includes Ageility clinics and home health operations.

(2)

Prior to January 1, 2020, which was the effective date of the Transaction Agreement (as defined below), revenue related to inpatient clinics at communities we previously leased from DHC was eliminated in consolidation pursuant to GAAP.

(3)

Other operating income represents income recognized for funds received under the Provider Relief Fund of the CARES Act, and other governmental grants.

^ Includes Ageility clinics and home health operations.(1)

Prior to January 1, 2020, which was the effective date of the Transaction^ Agreement (as defined below), revenue related to inpatient clinics at(2) communities we previously leased from DHC was eliminated in consolidation pursuant to GAAP.

^ Other operating income represents income recognized for funds received(3) under the Provider Relief Fund of the CARES Act, and other governmental grants.

Five Star Senior Living Inc.

Comparable Rehabilitation and Wellness Services Segment Data

(dollars in thousands)

(unaudited)

Three Months Ended

December 31,

September 30,

June 30,

March 31,

December 31,

2020

2020

2020

2020

2019

Rehabilitation and Wellness Services(1):

Revenues (2)

$

17,823

$

18,553

$

17,412

$

19,326

$

12,948

Other operating income (3)

252

-

1,285

-

-

Operating expenses

14,637

14,807

14,602

15,725

11,309

Operating income

3,438

3,746

4,095

3,601

1,639

Operating margin

19.0

%

20.2

%

21.9

%

18.6

%

12.7

%

Number of inpatient clinics (end of period)

37

37

37

37

37

Number of outpatient clinics (end of period)

166

166

166

166

166

Five Star Senior Living Inc.

Comparable Rehabilitation and Wellness Services Segment Data

(dollars in thousands)

(unaudited)



Three Months Ended

December September June 30, March 31, December 31, 30, 31,

2020 2020 2020 2020 2019

Rehabilitationand Wellness Services ^(1):

Revenues ^(2) $ 17,823 $ 18,553 $ 17,412 $ 19,326 $ 12,948

Otheroperating 252 - 1,285 - - income^ (3)

Operating 14,637 14,807 14,602 15,725 11,309 expenses

Operating 3,438 3,746 4,095 3,601 1,639 income

Operating 19.0 % 20.2 % 21.9 % 18.6 % 12.7 %margin

Number ofinpatient 37 37 37 37 37 clinics (endof period)

Number ofoutpatient 166 166 166 166 166 clinics (endof period)

(1)

Includes Ageility clinics and home health operations.

(2)

Prior to January 1, 2020, which was the effective date of the Transaction Agreement (as defined below), revenue related to inpatient clinics at communities we previously leased from DHC was eliminated in consolidation pursuant to GAAP.

(3)

Other operating income represents income recognized for funds received under the Provider Relief Fund of the CARES Act, and other governmental grants.

^ Includes Ageility clinics and home health operations.(1)

Prior to January 1, 2020, which was the effective date of the Transaction^ Agreement (as defined below), revenue related to inpatient clinics at(2) communities we previously leased from DHC was eliminated in consolidation pursuant to GAAP.

^ Other operating income represents income recognized for funds received(3) under the Provider Relief Fund of the CARES Act, and other governmental grants.

Five Star Senior Living Inc.

Owned Senior Living Communities as of and for the Three Months Ended December 31, 2020

(dollars in thousands)

(unaudited)

No.

Community Name

State

Property Type (1)

Living Units

Senior Living Revenues (4)

Gross Carrying Value

Net Carrying Value

Date Acquired

Year Built or Most Recent Renovation

1

Morningside of Decatur (2)

Alabama

AL

49

$

318

$

3,668

$

2,149

11/19/2004

1999

2

Morningside of Auburn

Alabama

AL

42

360

2,341

1,560

11/19/2004

1997

3

The Palms of Fort Myers (2)

Florida

IL

218

1,587

30,938

14,914

4/1/2002

1988

4

Five Star Residences of Banta Pointe (3)

Indiana

AL

121

719

18,328

12,666

9/29/2011

2006

5

Five Star Residences of Fort Wayne (2)

Indiana

AL

154

1,102

25,806

17,704

9/29/2011

1998

6

Five Star Residences of Clearwater

Indiana

AL

88

384

9,793

5,511

6/1/2011

1999

7

Five Star Residences of Lafayette (2)

Indiana

AL

109

498

15,880

10,833

6/1/2011

2000

8

Five Star Residences of Noblesville (2)

Indiana

AL

151

1,209

25,214

17,596

7/1/2011

2005

9

The Villa at Riverwood (2)

Missouri

IL

110

624

6,972

3,236

4/1/2002

1986

10

Voorhees Senior Living (2)

New Jersey

AL

104

1,069

10,290

6,067

7/1/2008

1999

11

Washington Township Senior Living (2)

New Jersey

AL

93

918

10,261

6,093

7/1/2008

1998

12

Carriage House Senior Living

North Carolina

AL

98

980

8,436

5,324

12/1/2008

1997

13

Forest Heights Senior Living

North Carolina

AL

111

866

13,656

8,896

12/1/2008

1998

14

Fox Hollow Senior Living (2)

North Carolina

AL

77

839

11,061

7,213

7/1/2000

1999

15

Legacy Heights Senior Living (2)

North Carolina

AL

116

1,418

12,677

8,065

12/1/2008

1997

16

Morningside at Irving Park

North Carolina

AL

91

818

6,983

3,857

11/19/2004

1997

17

The Devon Senior Living

Pennsylvania

AL

84

633

6,890

3,807

7/1/2008

1985

18

The Legacy of Anderson

South Carolina

IL

101

550

1,387

455

12/1/2008

2003

19

Morningside of Springfield (2)

Tennessee

AL

54

410

3,704

1,740

11/19/2004

1984

20

Huntington Place

Wisconsin

AL

127

766

17,545

11,200

7/15/2010

1999

Total

2,098

$

16,068

$

241,830

$

148,886

Five Star Senior Living Inc.

Owned Senior Living Communities as of and for the Three Months Ended December31, 2020

(dollars in thousands)

(unaudited)

Senior Year Built Community Property Living Living Gross Net Date orNo. Name State Type ^ Units Revenues ^ Carrying Carrying Acquired Most (1) (4) Value Value Recent Renovation

Morningside 11/19/1 of Decatur Alabama AL 49 $ 318 $ 3,668 $ 2,149 2004 1999 ^(2)

2 Morningside Alabama AL 42 360 2,341 1,560 11/19/ 1997 of Auburn 2004

The Palms3 of Fort Florida IL 218 1,587 30,938 14,914 4/1/2002 1988 Myers ^(2)

Five Star4 Residences Indiana AL 121 719 18,328 12,666 9/29/ 2006 of Banta 2011 Pointe ^(3)

Five Star5 Residences Indiana AL 154 1,102 25,806 17,704 9/29/ 1998 of Fort 2011 Wayne ^(2)

Five Star6 Residences Indiana AL 88 384 9,793 5,511 6/1/2011 1999 of Clearwater

Five Star Residences7 of Indiana AL 109 498 15,880 10,833 6/1/2011 2000 Lafayette ^ (2)

Five Star Residences8 of Indiana AL 151 1,209 25,214 17,596 7/1/2011 2005 Noblesville ^(2)

The Villa9 at Missouri IL 110 624 6,972 3,236 4/1/2002 1986 Riverwood ^ (2)

Voorhees10 Senior New Jersey AL 104 1,069 10,290 6,067 7/1/2008 1999 Living ^(2)

Washington11 Township New Jersey AL 93 918 10,261 6,093 7/1/2008 1998 Senior Living ^(2)

Carriage12 House North AL 98 980 8,436 5,324 12/1/ 1997 Senior Carolina 2008 Living

Forest13 Heights North AL 111 866 13,656 8,896 12/1/ 1998 Senior Carolina 2008 Living

Fox Hollow North14 Senior Carolina AL 77 839 11,061 7,213 7/1/2000 1999 Living ^(2)

Legacy15 Heights North AL 116 1,418 12,677 8,065 12/1/ 1997 Senior Carolina 2008 Living ^(2)

Morningside North 11/19/16 at Irving Carolina AL 91 818 6,983 3,857 2004 1997 Park

The Devon17 Senior Pennsylvania AL 84 633 6,890 3,807 7/1/2008 1985 Living

18 The Legacy South IL 101 550 1,387 455 12/1/ 2003 of Anderson Carolina 2008

Morningside19 of Tennessee AL 54 410 3,704 1,740 11/19/ 1984 Springfield 2004 ^(2)

20 Huntington Wisconsin AL 127 766 17,545 11,200 7/15/ 1999 Place 2010

Total 2,098 $ 16,068 $ 241,830 $ 148,886

(1)

AL is primarily an assisted living community and IL is primarily an independent living community.

(2)

Encumbered property under our $65,000 revolving credit facility.

(3)

Encumbered property under our $7,171 mortgage note.

(4)

Excludes funds received under the Provider Relief Fund of the CARES Act and other governmental grants recognized as other income.

Selected Pro Forma Condensed Consolidated Financial Information and Other Data

As previously announced, FVE entered into a transaction agreement, or the Transaction Agreement, with DHC to restructure our business arrangements pursuant to which, effective January 1, 2020:

* FVE's then existing five master leases with DHC as well as FVE's existing management and pooling agreements with DHC were terminated and replaced with new management agreements for all of these senior living communities, together with a related omnibus agreement, the New Management Agreements;

* FVE issued 10,268,158 of its common shares to DHC and an aggregate of 16,118,849 of its common shares to DHC's shareholders of record as of December 13, 2019, or together, the Share Issuances; and

* as consideration for the Share Issuances, DHC provided to FVE $75.0 million by assuming certain of FVE's working capital liabilities and through cash payments. The fair value of this consideration was $97.9 million. Such consideration, the New Management Agreements and the Share Issuances are collectively referred to as the Restructuring Transactions.

The following is a summary of selected financial and other data presented on a pro forma basis after giving effect to the completion of the Restructuring Transactions. The unaudited pro forma condensed consolidated statement of operations includes adjustments related to the Restructuring Transactions described above, and assumes that the Restructuring Transactions occurred as of January 1, 2019. In the opinion of management, all adjustments necessary to reflect the effects of the Restructuring Transactions have been included. The unaudited pro forma condensed consolidated statement of operations and the selected financial and other data are primarily based on, and should be read in conjunction with, FVE's audited consolidated financial statements and accompanying notes included in FVE's Annual Reports on Form 10-K for the years ended December 31, 2020 and December 31, 2019.

The historical consolidated financial information for FVE included in the unaudited condensed consolidated pro forma statement of operations and selected financial and other data has been adjusted to give effect to pro forma events that are (1) directly attributable to the Restructuring Transactions, (2) factually supportable and (3) expected to have a continuing impact on FVE's results of operations. The unaudited pro forma condensed consolidated statement of operations and pro forma selected financial and other data should be read in conjunction with the accompanying notes. The unaudited pro forma condensed consolidated statement of operations and other selected financial and other data are provided for informational purposes only.

^ AL is primarily an assisted living community and IL is primarily an(1) independent living community.

^ Encumbered property under our $65,000 revolving credit facility.(2)

^ Encumbered property under our $7,171 mortgage note.(3)

^ Excludes funds received under the Provider Relief Fund of the CARES Act and(4) other governmental grants recognized as other income.

Selected Pro Forma Condensed Consolidated Financial Information and Other Data

As previously announced, FVE entered into a transaction agreement, or the Transaction Agreement, with DHC to restructure our business arrangements pursuant to which, effective January 1, 2020:

* FVE's then existing five master leases with DHC as well as FVE's existing management and pooling agreements with DHC were terminated and replaced with new management agreements for all of these senior living communities, together with a related omnibus agreement, the New Management Agreements;

* FVE issued 10,268,158 of its common shares to DHC and an aggregate of 16,118,849 of its common shares to DHC's shareholders of record as of December 13, 2019, or together, the Share Issuances; and

* as consideration for the Share Issuances, DHC provided to FVE $75.0 million by assuming certain of FVE's working capital liabilities and through cash payments. The fair value of this consideration was $97.9 million. Such consideration, the New Management Agreements and the Share Issuances are collectively referred to as the Restructuring Transactions.

The following is a summary of selected financial and other data presented on a pro forma basis after giving effect to the completion of the Restructuring Transactions. The unaudited pro forma condensed consolidated statement of operations includes adjustments related to the Restructuring Transactions described above, and assumes that the Restructuring Transactions occurred as of January 1, 2019. In the opinion of management, all adjustments necessary to reflect the effects of the Restructuring Transactions have been included. The unaudited pro forma condensed consolidated statement of operations and the selected financial and other data are primarily based on, and should be read in conjunction with, FVE's audited consolidated financial statements and accompanying notes included in FVE's Annual Reports on Form 10-K for the years ended December 31, 2020 and December 31, 2019.

The historical consolidated financial information for FVE included in the unaudited condensed consolidated pro forma statement of operations and selected financial and other data has been adjusted to give effect to pro forma events that are (1) directly attributable to the Restructuring Transactions, (2) factually supportable and (3) expected to have a continuing impact on FVE's results of operations. The unaudited pro forma condensed consolidated statement of operations and pro forma selected financial and other data should be read in conjunction with the accompanying notes. The unaudited pro forma condensed consolidated statement of operations and other selected financial and other data are provided for informational purposes only.

Five Star Senior Living Inc.

Condensed Consolidated Statement of Operations

(amounts in thousands, except per share amounts)

(unaudited)

Three Months Ended December 31,

2020 Pro Forma 2019 ^(1)

REVENUES

Senior living $ 17,903 $ 20,411

Management fees 14,822 17,489

Rehabilitation and wellness services 20,256 18,551

Total management and operating revenues 52,981 56,451

Reimbursed community-level costs incurred on behalf 226,264 250,993 of managed communities

Other reimbursed expenses 6,645 -

Total revenues 285,890 307,444



Other operating income^ (2) 1,936 -



OPERATING EXPENSES

Senior living wages and benefits 11,186 9,053

Other senior living operating expenses 7,180 5,267

Rehabilitation and wellness services expenses 15,901 16,445

Community-level costs incurred on behalf of managed 226,264 250,993 communities

General and administrative 20,820 14,247

Rent 1,281 1,133

Depreciation and amortization 2,913 2,710

Total operating expenses 285,545 299,848



Operating income 2,281 7,596



Interest, dividend and other income 132 379

Interest and other expense (461 ) (330 )

Unrealized gain on equity investments 640 306

Realized gain on sale of debt and equity investments 3 2



Income before income taxes and equity in earnings of 2,595 7,953 an investee

Benefit (provision) for income taxes 308 (2,065 )

Equity (loss) in earnings of an investee - (42 )

Net income $ 2,903 $ 5,846

Add (less):

Interest and other expense $ 461 $ 330

Interest, dividend and other income (132 ) (379 )

(Benefit) provision for income taxes (308 ) 2,065

Depreciation and amortization 2,913 2,710

EBITDA $ 5,837 $ 10,572

Add (less):

Unrealized gain on equity investments $ (640 ) $ (306 )

Transaction costs 36 -

Adjusted EBITDA $ 5,233 $ 10,266



Weighted average shares outstanding-basic 31,495 31,389

Weighted average shares outstanding-diluted 31,612 31,623

Net income per share-basic $ 0.09 $ 0.19

Net income per share-diluted $ 0.09 $ 0.18

(1)

See following reconciliation.

(2)

Other operating income represents income recognized for funds received under the Provider Relief Fund of the CARES Act and other governmental grants.

^ See following reconciliation.(1)

^ Other operating income represents income recognized for funds received(2) under the Provider Relief Fund of the CARES Act and other governmental grants.

Five Star Senior Living Inc.

Pro Forma Condensed Consolidated Statement of Operations

(amounts in thousands, except per share amounts)

(unaudited)

Three Months Ended December 31, 2019

As Reported

Restructuring Transactions

Note

Pro Forma

REVENUES

Senior living

$

249,727

$

(229,316

)

2(a)

$

20,411

Management fees

4,109

13,380

2(b)

17,489

Rehabilitation and wellness services

13,978

4,573

2(c)

18,551

Reimbursed community-level costs incurred on behalf of managed communities

81,059

169,934

2(d)

250,993

Total revenues

348,873

(41,429

)

307,444

OPERATING EXPENSES

Senior living wages and benefits

127,378

(118,325

)

2(e)

9,053

Other senior living operating expenses

68,748

(63,481

)

2(f)

5,267

Rehabilitation and wellness services expenses

11,872

4,573

2(c)

16,445

Community-level costs incurred on behalf of managed communities

81,059

169,934

2(d)

250,993

General and administrative

20,740

(6,493

)

2(g)

14,247

Rent

20,513

(19,380

)

2(h)

1,133

Depreciation and amortization

2,716

(6

)

2(i)

2,710

Loss on sale of senior living communities

6

(6

)

-

Long-lived asset impairment

4

(4

)

-

Total operating expenses

333,036

(33,188

)

299,848

Operating income (loss)

15,837

(8,241

)

7,596

Interest, dividend and other income

379

-

379

Interest and other expense

(419

)

89

2(j)

(330

)

Unrealized gain on equity investments

306

-

306

Realized gain on sale of debt and equity investments

2

-

2

Income (loss) before income taxes and equity in earnings of an investee

16,105

(8,152

)

7,953

Benefit (provision) for income taxes

42

(2,107

)

2(k)

(2,065

)

Loss in earnings of an investee

(42

)

-

(42

)

Net income (loss)

$

16,105

$

(10,259

)

$

5,846

Add (less):

Interest and other expense

$

419

$

(89

)

$

330

Interest, dividend and other income

(379

)

-

(379

)

(Benefit) provision for income taxes

(42

)

2,107

2,065

Depreciation and amortization

2,716

(6

)

2,710

EBITDA

$

18,819

$

(8,247

)

$

10,572

Add (less):

Loss on sale of senior living communities

$

6

$

(6

)

$

-

Long-lived asset impairment

4

(4

)

-

Unrealized gain on equity investments

(306

)

-

(306

)

Lease inducement

(12,423

)

12,423

-

Deferred resident fees and deposits

(4,242

)

4,242

-

Transaction costs

1,814

(1,814

)

-

Adjusted EBITDA

$

3,672

$

6,594

$

10,266

Weighted average shares outstanding-basic

5,002

26,387

2(l)

31,389

Weighted average shares outstanding-diluted

5,119

26,504

2(l)

31,623

Net income per share-basic

$

3.22

$

0.19

Net income per share-diluted

$

3.15

$

0.18

See accompanying notes. Five Star Senior Living Inc. Notes to Pro Forma Condensed Consolidated Statement of Operations (in thousands, except per share amounts)(unaudited)

Note 1. Basis of Presentation

The unaudited pro forma condensed consolidated statement of operations was derived from FVE's historical financial statements prepared in accordance with GAAP, and should be read in conjunction with the audited consolidated financial statements and notes thereto included in FVE's Annual Reports on Form 10-K for the years ended December 31, 2020 and December 31, 2019.

The unaudited pro forma condensed consolidated statement of operations is presented for informational purposes only and is not necessarily indicative of what FVE's actual results of operations would have been had the Restructuring Transactions described herein been completed as of the assumed dates, or of FVE's expected results of operations for any future period. Differences could result from many factors, including future changes in FVE's capital structure, operating expenses, revenues and cash flows.

Note 2. Pro Forma Restructuring Transactions Adjustments

The unaudited pro forma condensed consolidated statement of operations includes adjustments related to the Restructuring Transactions described herein, including the conversion of all of FVE's then existing leases and management arrangements with DHC to the New Management Agreements and the Share Issuances.

FVE's historical consolidated financial information has been adjusted in the pro forma condensed consolidated statement of operations to give effect to events that are (1) directly attributable to the Restructuring Transactions, (2) factually supportable and (3) expected to have a continuing impact on the results of operations.

Pro Forma Condensed Consolidated Statement of Operations

a. Senior living revenues

The adjustment to senior living revenues is related to the termination and conversion of the then existing master leases to the New Management Agreements. The resulting revenues earned will be recognized and reported as management fee revenues in FVE's consolidated statements of operations.

b. Management fees

Adjustments to management fee revenues are comprised as follows:

Five Star Senior Living Inc.

Pro Forma Condensed Consolidated Statement of Operations

(amounts in thousands, except per share amounts)

(unaudited)



Three Months Ended December 31, 2019

As Reported Restructuring Note Pro Forma Transactions

REVENUES

Senior living $ 249,727 $ (229,316 ) 2(a) $ 20,411

Management fees 4,109 13,380 2(b) 17,489

Rehabilitation and wellness 13,978 4,573 2(c) 18,551 services

Reimbursed community-levelcosts incurred on behalf of 81,059 169,934 2(d) 250,993 managed communities

Total revenues 348,873 (41,429 ) 307,444



OPERATING EXPENSES

Senior living wages and 127,378 (118,325 ) 2(e) 9,053 benefits

Other senior living operating 68,748 (63,481 ) 2(f) 5,267 expenses

Rehabilitation and wellness 11,872 4,573 2(c) 16,445 services expenses

Community-level costsincurred on behalf of managed 81,059 169,934 2(d) 250,993 communities

General and administrative 20,740 (6,493 ) 2(g) 14,247

Rent 20,513 (19,380 ) 2(h) 1,133

Depreciation and amortization 2,716 (6 ) 2(i) 2,710

Loss on sale of senior living 6 (6 ) - communities

Long-lived asset impairment 4 (4 ) -

Total operating expenses 333,036 (33,188 ) 299,848



Operating income (loss) 15,837 (8,241 ) 7,596



Interest, dividend and other 379 - 379 income

Interest and other expense (419 ) 89 2(j) (330 )

Unrealized gain on equity 306 - 306 investments

Realized gain on sale of debt 2 - 2 and equity investments



Income (loss) before incometaxes and equity in earnings 16,105 (8,152 ) 7,953 of an investee

Benefit (provision) for 42 (2,107 ) 2(k) (2,065 )income taxes

Loss in earnings of an (42 ) - (42 )investee

Net income (loss) $ 16,105 $ (10,259 ) $ 5,846

Add (less):

Interest and other expense $ 419 $ (89 ) $ 330

Interest, dividend and other (379 ) - (379 )income

(Benefit) provision for (42 ) 2,107 2,065 income taxes

Depreciation and amortization 2,716 (6 ) 2,710

EBITDA $ 18,819 $ (8,247 ) $ 10,572

Add (less):

Loss on sale of senior living $ 6 $ (6 ) $ - communities

Long-lived asset impairment 4 (4 ) -

Unrealized gain on equity (306 ) - (306 )investments

Lease inducement (12,423 ) 12,423 -

Deferred resident fees and (4,242 ) 4,242 - deposits

Transaction costs 1,814 (1,814 ) -

Adjusted EBITDA $ 3,672 $ 6,594 $ 10,266



Weighted average shares 5,002 26,387 2(l) 31,389 outstanding-basic

Weighted average shares 5,119 26,504 2(l) 31,623 outstanding-diluted

Net income per share-basic $ 3.22 $ 0.19

Net income per share-diluted $ 3.15 $ 0.18

See accompanying notes. Five Star Senior Living Inc. Notes to Pro Forma Condensed Consolidated Statement of Operations (in thousands, except per share amounts)(unaudited)

Note 1. Basis of Presentation

The unaudited pro forma condensed consolidated statement of operations was derived from FVE's historical financial statements prepared in accordance with GAAP, and should be read in conjunction with the audited consolidated financial statements and notes thereto included in FVE's Annual Reports on Form 10-K for the years ended December 31, 2020 and December 31, 2019.

The unaudited pro forma condensed consolidated statement of operations is presented for informational purposes only and is not necessarily indicative of what FVE's actual results of operations would have been had the Restructuring Transactions described herein been completed as of the assumed dates, or of FVE's expected results of operations for any future period. Differences could result from many factors, including future changes in FVE's capital structure, operating expenses, revenues and cash flows.

Note 2. Pro Forma Restructuring Transactions Adjustments

The unaudited pro forma condensed consolidated statement of operations includes adjustments related to the Restructuring Transactions described herein, including the conversion of all of FVE's then existing leases and management arrangements with DHC to the New Management Agreements and the Share Issuances.

FVE's historical consolidated financial information has been adjusted in the pro forma condensed consolidated statement of operations to give effect to events that are (1) directly attributable to the Restructuring Transactions, (2) factually supportable and (3) expected to have a continuing impact on the results of operations.

Pro Forma Condensed Consolidated Statement of Operations

a. Senior living revenues

The adjustment to senior living revenues is related to the termination and conversion of the then existing master leases to the New Management Agreements. The resulting revenues earned will be recognized and reported as management fee revenues in FVE's consolidated statements of operations.

b. Management fees

Adjustments to management fee revenues are comprised as follows:

Three Months Ended December 31, 2019

Adjustment to increase management fee revenues for then existingmanagement agreements from 3% to 5% per the New Management $ 1,607 Agreements

5% management fee relating to the termination and conversion of 11,254 the then existing master leases to the New Management Agreements

3% construction management fee relating to the termination andconversion of the then existing master leases to the New 519 Management Agreements

Net adjustment to management fee revenues $ 13,380

c. Rehabilitation and wellness services revenues and rehabilitation and wellness services expenses

Adjustments to rehabilitation and wellness services revenues and expenses are attributable to Ageility inpatient clinics at communities where FVE leased and operated the business and where revenues and expenses were previously considered to be intercompany revenues and expenses and hence were eliminated pursuant to consolidation accounting. Upon the consummation of the Restructuring Transactions, and consistent with the existing managed communities, the revenues and expenses at these inpatient clinics no longer constitute intercompany revenues and expenses and thus are not eliminated in consolidation and are now recognized and reported as rehabilitation and wellness services revenue and rehabilitation and wellness services expenses in FVE's consolidated statements of operations.

d. Reimbursed community-level costs incurred on behalf of managed communities and community-level costs incurred on behalf of managed communities

Adjustments to both reimbursed community-level costs incurred on behalf of managed communities and community-level costs incurred on behalf of managed communities were related to the conversion of FVE's master leases with DHC to the New Management Agreements, which provide for reimbursement of FVE's direct costs and expenses related to such communities, inclusive of certain costs that are directly attributable to managing the communities, including personnel-related costs.

e. Senior living wages and benefits

The adjustment to senior living wages and benefits is related to the conversion of all FVE's leases with DHC to the New Management Agreements. Certain of these expenses were recognized and reported as community-level costs incurred on behalf of managed communities in FVE's consolidated statements of operations (with an offsetting reimbursement from DHC recognized as revenues in the consolidated statements of operations). See 2.d above.

f. Other senior living operating expenses

Adjustments to other senior living operating expenses are related to the conversion of all of FVE's leases with DHC to the New Management Agreements and include, but are not limited to, utilities, housekeeping, dietary, repairs and maintenance, insurance and community-level administrative costs. These costs were reimbursable costs and treated as described in 2.d above.

g. General and administrative

Adjustments to general and administrative expenses are comprised as follows:

Three Months Ended December 31, 2019

Adjustment of certain reimbursable costs to directly support $ (4,706 )managed communities

Adjustment to remove non-recurring transaction costs we (1,814 )previously incurred relating to the Restructuring Transactions

Increase in management fee to The RMR Group LLC due to increase 27 in Ageility revenue

Net adjustment to general and administrative expenses $ (6,493 )

h. Rent

The reduction to rent expense is for rent under the then existing master leases converted to the New Management Agreements.

i. Depreciation and amortization

In connection with the Transaction Agreement, on April 1, 2019, we sold $49,200 of assets to DHC. Prior to that sale, we recorded depreciation and amortization expense with respect to those assets in operating expenses in our consolidated statements of operations. Adjustments to depreciation and amortization expense reflect the amounts previously recognized during the periods presented for depreciation and amortization expense with respect to those assets.

j. Interest and other expense

Interest and other expense has been adjusted to give effect to the assumed repayment of our outstanding borrowings under our credit facility.

k. Provision for income taxes

Adjustments to provision for income taxes reflect the income tax effect of the pro forma adjustments based on the estimated effective tax rate of approximately 26.1% for the three months ended December 31, 2019.

l. Weighted average common shares outstanding - basic and diluted

The increase in FVE's basic and diluted weighted average common shares outstanding is a result of the issuance of 10,268,158 and 16,118,849 common shares to DHC and to the applicable DHC shareholders, respectively, in connection with the completion of the Restructuring Transactions. FVE's diluted weighted average common shares outstanding is also impacted by the potentially dilutive restricted unvested common shares of 116,710 for the three months ended December 31, 2019. This diluted share impact is directly related to FVE's 2014 Equity Compensation Plan and was originally excluded from the as reported numbers because to include them would be antidilutive.

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 Senior Living Inc. uses words such as "believe", "expect", "anticipate", "intend", "plan", "estimate", "will", "may" and negatives or derivatives of these or similar expressions, FVE is making forward-looking statements. These forward-looking statements are based upon FVE'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 FVE's forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond FVE's control. For example:

* Ms. Potter states that FVE expects to have completed vaccination clinics at substantially all of its communities by the end of the first quarter. However, FVE may not be able to accomplish this goal due to factors outside of its control, including the capacity of vaccine manufacturers and federal, state and local governments to manufacture and distribute a vaccine in sufficient quantities. Completing vaccination clinics may imply that all residents and team members have been vaccinated but that is not the case. In addition, Ms. Potter refers to FVE's belief that its vaccination clinics are a significant step towards its recovery from the COVID-19 pandemic. However, even if its vaccination clinics are successful, the adverse impacts from the COVID-19 pandemic on the senior living industry and FVE's business may continue for various reasons, including reduced demand of older adults for its services.

* Ms. Potter states that sales leads are increasing as compared to the fourth quarter, that they have historically been a leading indicator of move-in activity and a key component in driving occupancy and that FVE finds this encouraging. However, sales leads may not result in increased occupancy. Occupancy at our senior living communities has experienced declines during the COVID-19 pandemic and we expect continuing declines over a sustained period. In addition, we may be required, or we may determine, to place holds on the admission of new residents at certain of our communities due to the COVID-19 pandemic.

* Ms. Potter states in this press release that FVE continued to generate net income in the fourth quarter, despite the ongoing impact of COVID-19 on the senior living industry. Ms. Potter also references increases in the revenues of FVE's rehabilitation and wellness services division and the increased proportion of that division's revenues to certain of FVE's revenues. This may imply that this division will continue to grow and increasingly become a larger part of FVE's business. However, FVE's rehabilitation and wellness services division is subject to various risks, including the COVID-19 pandemic, and its revenues may not grow and it may not increase in proportion of FVE's business and operating results and it could realize declines.

* Ms. Potter's statement that FVE's liquidity remains strong with $84.4 million of unrestricted cash on hand and no borrowings outstanding on its revolving credit facility may imply that FVE will continue to have adequate liquidity; however, FVE's business remains subject to various risks, some of which are beyond FVE's control, including the disruption of the COVID-19 pandemic and economic downturn. In addition, FVE's ability to borrow under its revolving credit facility is subject to it satisfying certain conditions and limited to the amount of qualified collateral; the maximum borrowing capacity was $42.1 million as of December 30, 2020 and may be lower in amount or not available in the future.

The information contained in FVE's filings with the Securities and Exchange Commission, or SEC, including under "Risk Factors" in FVE's periodic reports, or incorporated therein, identifies other important factors that could cause FVE's actual results to differ materially from those stated in or implied by FVE's forward-looking statements. FVE'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, FVE 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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CONTACT: Olivia Snyder, Manager, Investor Relations (617) 796-8245