Business Wire | Aug 4, 2021 04:15PM EDT

Five Star Senior Living Inc. Announces Second Quarter 2021 Results

Aug. 04, 2021

NEWTON, Mass.--(BUSINESS WIRE)--Aug. 04, 2021--Five Star Senior Living Inc. (Nasdaq: FVE) today announced its financial results for the three months ended June 30, 2021.

Katherine Potter, President and Chief Executive Officer, made the following statement:

"During the second quarter, Five Star executed on our Strategic Plan to transform our business to better address the changing needs and preferences of a growing and aging adult population and position Five Star for long term growth. This quarter we closed 1,473 skilled nursing facility units and a corresponding 27 Ageility inpatient clinics. While all the Ageility inpatient clinics will be closed as part of the Strategic Plan, we remain focused on expanding Ageility's reach and, during the quarter, we opened three net new Ageility outpatient clinics. As of July 31, 2021, Diversified Healthcare Trust has reached agreement to transition the management of 76 of 108 transitioning senior living communities managed by Five Star to new operators. I greatly appreciate the contributions of our residents, clients and team to this transition.

Resident vaccination levels have increased throughout our senior living portfolio, while confirmed resident COVID-19 cases have declined to pandemic lows. We remain on target to vaccinate all community team members by September 1, 2021, which we believe is essential to ensuring the safety and well-being of our residents, team members and clients. In addition, as of July 31, 2021, the 120 communities that we will continue to manage for DHC have regained 140 basis points of occupancy from pandemic lows to 73.8%. We are building momentum toward a sustained recovery by welcoming new residents and clients to our communities and clinics and embracing the return to our full resident, client and team member experience."

Second Quarter Highlights:

* Net loss for the second quarter of 2021 was $12.3 million, or $0.39 per share, which included $15.4 million of expenses related to our restructuring, partially offset by $11.5 million to be reimbursed by Diversified Healthcare Trust, or DHC, related to the new strategic plan announced by FVE on April 9, 2021, or the Strategic Plan, compared to net income of $3.0 million, or $0.10 per share, for the second quarter of 2020. * Earnings before interest, taxes, depreciation and amortization, or EBITDA, for the second quarter of 2021 was $(8.8) million compared to $5.0 million for the second quarter of 2020. Adjusted EBITDA, as described further below, was $(4.5) million for the second quarter of 2021 compared to $7.1 million for the second quarter of 2020. EBITDA and Adjusted EBITDA are non-GAAP financial measures. Reconciliations of net loss determined in accordance with GAAP to EBITDA and Adjusted EBITDA for the second quarter of 2021 and 2020 are presented later in this press release.

The following tables present data on the senior living communities that FVE owns, leases and manages as well as our Ageility rehabilitation clinics, and our comparable community data.

As of and for the Three Months Ended

June 30, March 31, June 30, 2020 2021 2021

Senior Living Segment:

Spot Occupancy

Owned and Leased 69.7 % 68.2 % 76.3 %

Managed 71.3 % 70.2 % 77.5 %



Comparable Communities ^(1)

Spot Occupancy

Owned and Leased 69.7 % 68.6 % 76.6 %

Managed 73.3 % 73.2 % 81.1 %

Operating Margin ^(2) (3)

Owned and Leased (16.2 )% (13.3 )% (1.2 )%

Managed 10.1 % 8.9 % 19.8 %



As of and for the Three Months Ended

June 30, March 31, June 30, 2020 2021 2021

Ageility:

Number of Clinics

Inpatient ^(3) 10 37 40

Outpatient 218 215 206

Number of Visits (in thousands)

Inpatient ^(3) 36 72 84

Outpatient 156 149 139



Comparable Clinics ^(4)

Average revenue per clinic $ 71 $ 68 $ 66

Operating margin ^(3) 12.3 % 14.4 % 12.1 %

_______________________________________

Comparable communities provides data for 23 owned and leased senior living communities and 120 managed senior living communities that FVE continuously owned, leased or managed since April 1, 2020, exclusive of 108 senior living communities with approximately 7,500 living units, that^ FVE currently manages on behalf of DHC that are expected to be(1) transitioned to new operators and approximately 1,500 skilled nursing facility, or SNF, units which have been or are expected to be closed and repositioned in 27 Continuing Care Retirement Communities, or CCRCs, that FVE will continue to manage. It also excludes one community leased by FVE with 51 living units, which has been out of service due to a fire on April 4, 2021.

Operating margin is defined as operating revenue less operating expenses incurred by the business unit divided by operating revenue. It is exclusive of Provider Relief Funds from the Coronavirus Aid, Relief, and^ Economic Security Act, or the CARES Act, and other governmental grants(2) recognized as other income. It is inclusive of approximately 1,500 SNF units, which have been or are expected to be closed and repositioned, in 27 CCRCs that FVE will continue to manage. In addition, it excludes Restructuring Expenses for the three months ended June 30, 2021 of $10.2 million for the comparable managed communities.

^ All Ageility inpatient clinics will be closed as part of the Strategic(3) Plan. During the three months ended June 30, 2021, 27 inpatient clinics were closed as part of the Strategic Plan.

Comparable clinics includes financial data for 195 Ageility outpatient^ clinics that FVE continuously owned and operated since April 1, 2020 and(4) excludes data for 27 Ageility inpatient clinics that were closed during the three months ended June 30, 2021 and an additional ten Ageility inpatient clinics that are expected to be closed during 2021.

Strategic Plan

On April 9, 2021, FVE announced our Strategic Plan, including to:

* Reposition the senior living management service offering to focus on larger independent living, assisted living and memory care communities, as well as stand-alone independent living and active adult communities; and exit skilled nursing, * Evolve through the enhanced scalable shared service center to support operations and growth, the development and delivery of differentiated, customer focused resident experiences, * Diversify with a focus on revenue diversification opportunities, including growing Ageility rehabilitation services and expanding ancillary services to provide choice based, financially flexible, resident experience and reach customers outside of FVE's senior living communities.

During the three months ended June 30, 2021, FVE made the following progress with respect to the Strategic Plan:

* Amended its management arrangements with DHC on June 9, 2021. * Closed as of June 30, 2021, 1,473 of the approximately 1,500 SNF living units planned for closure in 26 of the 27 CCRCs and is in the process of repositioning these SNF living units. * Closed as of June 30, 2021, 27 of the planned 37 Ageility inpatient rehabilitation clinics. * In July 2021, DHC entered into agreements to transition the management of 76 of the 108 transitioning senior living communities (approximately 5,200 living units) to new operators in 2021. In connection with the implementation of our Strategic Plan, FVE expects to incur restructuring expenses of up to $20.5 million, approximately $15.0 million of which FVE expects DHC will reimburse. These expenses are expected to include up to $7.5 million of retention bonus payments, up to $10.2 million of severance, benefits and transition expenses, and up to $2.8 million of transaction expenses, of which FVE expects DHC to reimburse approximately $5.9 million, $7.5 million and $1.6 million, respectively. In the three months ended June 30, 2021, FVE recorded expenses of $15.4 million, of which $11.5 million will be reimbursed by DHC.

Presented below is a summary of the units FVE operated (owned, leased and managed) as of June 30, 2021 and the projected number of units to be operated after the conclusion of the Strategic Plan:

As of June 30, 2021 Retained

Units ^(1) Units ^(2)(3)

Independent living 10,979 10,421

Assisted living 12,023 7,854

Memory care 3,247 1,874

Skilled nursing 1,484 -

Total 27,733 20,149

_______________________________________

^ The units operated as of June 30, 2021 include 2,099 owned, 152 leased,(1) and 25,482 managed.

^ Includes 2,099 owned, 152 leased, and 17,898 managed units.(2)

^ Excludes one community leased by FVE with 51 living units, which has been(3) out of service due to a fire on April 4, 2021.

Presented below is a summary of the communities, units, average occupancy, spot occupancy, revenues and management fees for the communities FVE manages for DHC as of and for the three months ended June 30, 2021 and for the retained communities to be managed for DHC after the conclusion of the Strategic Plan (dollars in thousands):

As of and for the Three Months Ended June 30, 2021

Average Spot Community Management Communities Units Occupancy Occupancy Revenues ^ Fees ^(2) (1)

Independentandassisted 209 22,980 70.0 % 71.9 % $ 149,998 $ 8,011 livingcommunities^(4)

Continuingcareretirement 10 1,547 69.1 % 66.3 % 77,637 4,097 communities^(4)

Skillednursing 9 955 65.2 % 66.2 % 16,312 819 facilities

Total 228 25,482 69.5 % 71.3 % $ 243,947 $ 12,927



Retained

Average Spot Community Management Communities Units Occupancy Occupancy Revenues ^ Fees ^(3) (1)

Independentandassisted 120 17,898 72.9 % 73.3 % $ 159,014 $ 8,552 livingcommunities^(4)

Continuingcare - - - % - % - - retirementcommunities

Skillednursing - - - % - % - - facilities

Total 120 17,898 72.9 % 73.3 % $ 159,014 $ 8,552

_______________________________________

Represents the revenues of the senior living communities FVE manages on^ behalf of DHC. Managed senior living communities' revenues do not(1) represent FVE's revenues and are included to provide supplemental information regarding the operating results and financial condition of the communities from which FVE earns management fees.

^ The 1,473 SNF units in 26 CCRCs that were closed in the three months(2) ended June 30, 2021, and are to be repositioned, had management fee revenue of $458 for the three months ended June 30, 2021.

Excludes management fee revenue of $4,378 for the three months ended June 30, 2021 related to (i) 108 senior living communities managed on behalf of DHC, with approximately 7,500 living units that are expected to be^ transitioned to new operators (ii) 1,473 SNF units in 26 CCRCs that were(3) closed during the three months ended June 30, 2021 and are in the process of being repositioned and (iii) an additional 59 SNF units that are expected to be closed and repositioned in one CCRC during the remainder of 2021 that FVE will continue to manage for DHC.

During the three months ended June 30, 2021 FVE closed 1,473 SNF units in 26 CCRCs. Due to these SNF unit closures, these communities are no longer CCRCs and have been included in the community and unit totals and spot^ occupancy as independent and assisted living communities as of June 30,(4) 2021. However, average occupancy, community revenues and management fees for those 26 CCRCs are included in the CCRC totals for the three months ended June 30, 2021. The average occupancy, community revenues and management fees for these communities for the three months ended June 30, 2021 were 69.7%, $56,408 and $3,007, respectively.

Following the implementation of the Strategic Plan, FVE will continue to manage 120 senior living communities for DHC, representing 17,898 living units and approximately 65% of FVE's management fee revenues for the three months ended June 30, 2021, and to operate its existing owned portfolio of 20 communities with approximately 2,100 living units. FVE expects to partially offset the resulting revenue loss from fees we earn from the 108 transitioning senior living communities with expense reductions to right-size operations.

The 120 senior living communities that FVE will continue to manage for DHC after the Transition outperformed the total DHC managed portfolio (exclusive of the closed and pending closing and repositioning of approximately 1,500 SNF units in 27 of the CCRCs) for the three months ended June 30, 2021 with approximately 270 basis points higher operating margin.

In addition to the Transition of 108 managed communities owned by DHC, the landlord of our four leased senior living communities with approximately 200 living units is currently marketing these properties for sale and FVE is unlikely to operate those communities long-term. One of these leased communities with 51 living units has been out of service due to a fire on April 4, 2021.

Presented below is a summary of FVE's Ageility rehabilitation clinics as of June 30, 2021 and the number of clinics to be operated after the implementation of the Strategic Plan (dollars in thousands):

As of and for the Retained Three Months Ended June 30, 2021

Number Total Average Adjusted Number Total Average Adjusted of Revenue ^ Revenue EBITDA of Revenue ^ Revenue EBITDA Clinics (3) per Margin Clinics (1)(3) per Margin Clinic Clinic

InpatientClinics in 10 $ 2,630 $ n/m 4.8 % - $ - $ - - %DHCCommunities

OutpatientClinics in 91 8,354 92 13.3 % 91 8,354 92 13.3 %DHCCommunities

OutpatientClinics inTransition 44 1,919 44 17.1 % 44 1,919 44 17.1 %Communities^(2)

TotalClinics at 145 12,903 89 12.1 % 135 10,273 76 14.0 %DHCCommunities

OutpatientClinics atOther 83 4,242 51 8.5 % 83 4,242 51 8.5 %Communities^(4)

Total 228 $ 17,145 $ 75 11.2 % 218 $ 14,515 $ 67 12.4 %Clinics

_______________________________________

n/m - not meaningful, as the revenues represent revenue earned from 37inpatient clinics but at June 30, 2021 there were only ten inpatient clinics

Excludes revenue of $2,630 for the three months ended June 30, 2021 for^ 27 Ageility inpatient clinics that were closed during the three months(1) ended June 30, 2021 and an additional ten Ageility inpatient clinics, which are expected to be closed during the remainder of 2021 as part of the Transition.

As part of the Transition, FVE expects 108 senior living communities^ managed on behalf of DHC to be transitioned to new operators. These(2) communities have 44 Ageility outpatient rehabilitation clinics, which, due to the transfer to a new operator, may be subject to closure by the new operator.

^ Total Ageility revenue excludes home health care services, which are a(3) part of the rehabilitation and wellness services segment.

^ Other communities includes outpatient clinics at non-FVE operated or(4) managed communities and 16 outpatient clinics at communities FVE owns.

FVE expects the rehabilitation and wellness services segment to grow and diversify through our expanded emphasis on fitness and home health care services. Fitness offerings started as an extension of FVE's rehabilitation product and, while representing only 4.7% of segment revenues for the three months ended June 30, 2021, fitness revenues increased by 56.0% to $0.8 million when compared to the same period in 2020.

FVE currently expects to continue to evolve and diversify through growth of our ancillary rehabilitation and wellness service offerings, including rehabilitation and wellness services, by opening new clinics and expanding our fitness and other home-based service offerings within and outside of its senior living communities. Since January 1, 2019, FVE has opened 89 net new outpatient rehabilitation clinics, 17 of which were opened in 2020, and 11 of which were opened during the six months ended June 30, 2021.

Conference Call Information:

At 1:00 p.m. Eastern Time on August 5, 2021, our President and Chief Executive Officer, Katherine Potter, Executive Vice President and Chief Operating Officer, Margaret Wigglesworth, and Executive Vice President, Chief Financial Officer and Treasurer, Jeffrey Leer, will host a conference call to discuss FVE's second quarter 2021 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 August 12, 2021. To hear the replay, dial (412) 317-0088. The replay pass code is 10157589.

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 of FVE'ssecond quarter endedJune 30, 2021financial 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 provider of senior living management and rehabilitation and wellness services to over 23,000 older adults. Five Star is the fifth largest senior living operator in the United States and operates independent and assisted living communities. Additionally, FVE's rehabilitation and wellness services segment includes Ageility Physical Therapy Solutions(tm), or Ageility, a division of FVE, which provides rehabilitation and wellness services within FVE communities as well as to external customers. 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 June Six Months Ended June 30, 30,

2021 2020 2021 2020

REVENUES

Rehabilitation and $ 17,453 $ 19,268 $ 37,006 $ 40,652 wellness services

Senior living 16,378 19,590 33,435 40,587

Management fees 12,927 15,705 26,777 32,756

Total management and 46,758 54,563 97,218 113,995 operating revenues

Reimbursedcommunity-level costs 195,271 224,104 408,431 456,120 incurred on behalf ofmanaged communities

Other reimbursed expenses 16,592 6,417 22,072 12,414

Total revenues 258,621 285,084 527,721 582,529



Other operating income 2 1,499 7,795 1,499



OPERATING EXPENSES

Rehabilitation andwellness services 15,668 16,144 31,878 33,645 expenses

Senior living wages and 9,896 9,705 21,909 19,505 benefits

Other senior living 8,968 9,016 15,234 12,954 operating expenses

Community-level costsincurred on behalf of 195,271 224,104 408,431 456,120 managed communities

General and 22,748 23,392 45,139 45,162 administrative

Restructuring expenses 15,389 175 15,639 1,270

Depreciation and 2,989 2,703 5,929 5,404 amortization

Total operating expenses 270,929 285,239 544,159 574,060



Operating (loss) income (12,306 ) 1,344 (8,643 ) 9,968



Interest, dividend and 76 182 160 521 other income

Interest and other (409 ) (409 ) (872 ) (791 )expense

Unrealized gain (loss) on 398 867 533 (595 )equity investments

Realized gain on sale ofdebt and equity 97 116 193 95 investments

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

Income (loss) before (12,144 ) 2,100 (8,629 ) (13,701 )income taxes

(Provision) benefit for (158 ) 902 (358 ) (506 )income taxes

Net (loss) income $ (12,302 ) $ 3,002 $ (8,987 ) $ (14,207 )



Weighted average shares 31,552 31,460 31,541 31,454 outstanding-basic

Weighted average shares 31,552 31,582 31,541 31,454 outstanding-diluted



Net (loss) income per $ (0.39 ) $ 0.10 $ (0.28 ) $ (0.45 )share-basic

Net (loss) income per $ (0.39 ) $ 0.10 $ (0.28 ) $ (0.45 )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 to net income (loss) for the three and six months ended June 30, 2021 and 2020.

Three Months Ended June Six Months Ended June 30, 30,

2021 2020 2021 2020

Net (loss) income $ (12,302 ) $ 3,002 $ (8,987 ) $ (14,207 )

Add (less):

Interest and other expense 409 409 872 791

Interest, dividend and (76 ) (182 ) (160 ) (521 )other income

(Benefit) provision for 158 (902 ) 358 506 income taxes

Depreciation and 2,989 2,703 5,929 5,404 amortization

EBITDA (8,822 ) 5,030 (1,988 ) (8,027 )

Add (less):

Severance ^(1) - 282 - 282

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

Unrealized gain (loss) on (398 ) (867 ) (533 ) 595 equity investments

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

Net restructuring expenses 3,858 175 4,108 1,270 ^(4)

Long-lived asset 890 - 890 - impairment ^(5)

Adjusted EBITDA $ (4,472 ) $ 7,093 $ 2,477 $ 19,492

_______________________________________

^ Costs incurred for the three and six months ended June 30, 2020 represent(1) those related to a reduction in workforce.

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 paid by FVE on May 12, 2021.

Represents the excess of the fair value of the shares issued to DHC as of^ January 1, 2020 of $97,899, compared to the consideration of $75,000 paid(3) by DHC as part of the transaction agreement to restructure FVE's business arrangements with DHC, or the Restructuring Transactions.

Includes costs incurred related to the Strategic Plan announced on April 9, 2021 and the Restructuring Transactions for the three and six months^ ended June 30, 2021 and 2020, respectively, and are included in(4) restructuring expenses in the Condensed Consolidated Statements of Operations, net of reimbursed expenses of $11,531 to be received for the three and six months ended June 30, 2021 from DHC.

^ Represents asset impairments related to one leased community that had a(5) fire on April 4, 2021.

Five Star Senior Living Inc. Condensed Consolidated Balance Sheets (dollars in thousands, except per share amounts)(unaudited)

June 30,

December 31,

2021

2020

ASSETS

Current assets:

Cash and cash equivalents

$

99,270

$

84,351

Restricted cash and cash equivalents

23,707

23,877

Accounts receivable, net of allowance

9,036

9,104

Due from related person

80,369

96,357

Debt and equity investments

19,444

19,961

Prepaid expenses and other current assets

20,716

28,658

Total current assets

252,542

262,308

Property and equipment, net

157,636

159,251

Operating lease right-of-use assets

26,277

18,030

Finance lease right-of-use assets

3,929

4,493

Restricted cash and cash equivalents

1,234

1,369

Restricted debt and equity investments

3,945

4,788

Equity investment of an investee, net

11

11

Other long-term assets

6,103

3,956

Total assets

$

451,677

$

454,206

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

21,833

$

23,454

Accrued expenses and other current liabilities

32,231

41,843

Accrued compensation and benefits

80,720

70,543

Accrued self-insurance obligations

30,921

31,355

Operating lease liabilities

2,201

2,567

Finance lease liabilities

840

808

Due to related persons

4,637

6,585

Mortgage note payable

401

388

Security deposits and current portion of continuing care contracts

318

365

Total current liabilities

174,102

177,908

Long-term liabilities:

Accrued self-insurance obligations

39,286

37,420

Operating lease liabilities

25,832

17,104

Finance lease liabilities

3,494

3,921

Mortgage note payable

6,579

6,783

Other long-term liabilities

410

538

Total long-term liabilities

75,601

65,766

Shareholders' equity:

Common stock, par value $0.01

318

317

Additional paid-in-capital

460,737

460,038

Accumulated deficit

(260,129

)

(251,139

)

Accumulated other comprehensive income

1,048

1,316

Total shareholders' equity

201,974

210,532

Total liabilities and shareholders' equity

$

451,677

$

454,206

Five Star Senior Living Inc.Condensed Consolidated Balance Sheets(dollars in thousands, except per share amounts)(unaudited)

June 30, December 31,

2021 2020

ASSETS

Current assets:

Cash and cash equivalents $ 99,270 $ 84,351

Restricted cash and cash equivalents 23,707 23,877

Accounts receivable, net of allowance 9,036 9,104

Due from related person 80,369 96,357

Debt and equity investments 19,444 19,961

Prepaid expenses and other current assets 20,716 28,658

Total current assets 252,542 262,308



Property and equipment, net 157,636 159,251

Operating lease right-of-use assets 26,277 18,030

Finance lease right-of-use assets 3,929 4,493

Restricted cash and cash equivalents 1,234 1,369

Restricted debt and equity investments 3,945 4,788

Equity investment of an investee, net 11 11

Other long-term assets 6,103 3,956

Total assets $ 451,677 $ 454,206



LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 21,833 $ 23,454

Accrued expenses and other current liabilities 32,231 41,843

Accrued compensation and benefits 80,720 70,543

Accrued self-insurance obligations 30,921 31,355

Operating lease liabilities 2,201 2,567

Finance lease liabilities 840 808

Due to related persons 4,637 6,585

Mortgage note payable 401 388

Security deposits and current portion of continuing 318 365 care contracts

Total current liabilities 174,102 177,908



Long-term liabilities:

Accrued self-insurance obligations 39,286 37,420

Operating lease liabilities 25,832 17,104

Finance lease liabilities 3,494 3,921

Mortgage note payable 6,579 6,783

Other long-term liabilities 410 538

Total long-term liabilities 75,601 65,766



Shareholders' equity:

Common stock, par value $0.01 318 317

Additional paid-in-capital 460,737 460,038

Accumulated deficit (260,129 ) (251,139 )

Accumulated other comprehensive income 1,048 1,316

Total shareholders' equity 201,974 210,532

Total liabilities and shareholders' equity $ 451,677 $ 454,206

Five Star Senior Living Inc. Senior Living Segment Data (dollars in thousands, except per unit amounts)(unaudited)

Three Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

Owned and Leased Communities

Independent and assisted living communities:

Revenues

$

16,378

$

17,057

$

17,903

$

18,525

$

19,590

Other operating income (1)

2

7,774

1,715

-

-

Operating expenses

21,012

20,414

21,181

19,661

20,165

Operating income (loss)

(4,632

)

4,417

(1,563

)

(1,136

)

(575

)

Operating margin

(28.3

)%

17.8

%

(8.0

)%

(6.1

)%

(2.9

)%

Number of communities (end of period)

24

24

24

24

24

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

2,251

2,302

2,302

2,312

2,312

Average occupancy

68.1

%

68.3

%

71.5

%

74.7

%

78.3

%

Spot occupancy

69.7

%

68.2

%

69.7

%

73.0

%

76.3

%

RevPAR (3)

$

2,425

$

2,479

$

2,596

$

2,665

$

2,813

RevPOR (4)

$

3,524

$

3,630

$

3,550

$

3,492

$

3,555

Managed Communities (5)

Management fees

$

12,927

$

13,850

$

14,822

$

15,302

$

15,705

Community-level revenues

243,947

259,966

278,637

290,101

304,103

Other operating income (1)

16,564

1,617

12,520

-

5,828

Community-level expenses (6)

237,461

247,171

261,678

270,333

260,255

Community operating income

23,050

14,412

29,479

19,768

49,676

Community operating margin

8.8

%

5.5

%

10.1

%

6.8

%

16.0

%

Number of communities (end of period)

228

228

228

239

241

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

25,482

26,963

26,969

28,232

28,348

Average occupancy

69.5

%

69.5

%

72.2

%

75.2

%

78.7

%

Spot occupancy

71.3

%

70.2

%

70.8

%

74.0

%

77.5

%

RevPAR (3)

$

3,086

$

3,213

$

3,355

$

3,420

$

3,576

RevPOR (4)

$

4,389

$

4,623

$

4,543

$

4,447

$

4,496

_______________________________________

Five Star Senior Living Inc.Senior Living Segment Data(dollars in thousands, except per unit amounts)(unaudited)

Three Months Ended

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

2021 2021 2020 2020 2020



Owned andLeased Communities

Independent andassisted living communities:

Revenues $ 16,378 $ 17,057 $ 17,903 $ 18,525 $ 19,590

Other operating 2 7,774 1,715 - - income ^(1)

Operating 21,012 20,414 21,181 19,661 20,165 expenses

Operating (4,632 ) 4,417 (1,563 ) (1,136 ) (575 )income (loss)

Operating (28.3 ) 17.8 % (8.0 ) (6.1 ) (2.9 )margin % % % %

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

Number ofliving units 2,251 2,302 2,302 2,312 2,312 (end of period)^(2)

Average 68.1 % 68.3 % 71.5 % 74.7 % 78.3 %occupancy

Spot occupancy 69.7 % 68.2 % 69.7 % 73.0 % 76.3 %

RevPAR ^(3) $ 2,425 $ 2,479 $ 2,596 $ 2,665 $ 2,813

RevPOR ^(4) $ 3,524 $ 3,630 $ 3,550 $ 3,492 $ 3,555



ManagedCommunities ^ (5)

Management fees $ 12,927 $ 13,850 $ 14,822 $ 15,302 $ 15,705

Community-level 243,947 259,966 278,637 290,101 304,103 revenues

Other operating 16,564 1,617 12,520 - 5,828 income ^(1)

Community-level 237,461 247,171 261,678 270,333 260,255 expenses ^(6)

Communityoperating 23,050 14,412 29,479 19,768 49,676 income

Communityoperating 8.8 % 5.5 % 10.1 % 6.8 % 16.0 %margin

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

Number ofliving units 25,482 26,963 26,969 28,232 28,348 (end of period)^(2)

Average 69.5 % 69.5 % 72.2 % 75.2 % 78.7 %occupancy

Spot occupancy 71.3 % 70.2 % 70.8 % 74.0 % 77.5 %

RevPAR ^(3) $ 3,086 $ 3,213 $ 3,355 $ 3,420 $ 3,576

RevPOR ^(4) $ 4,389 $ 4,623 $ 4,543 $ 4,447 $ 4,496

_______________________________________

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

^ Includes living units categorized as in service. As a result, the number(2) of 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(3) the three months ended June 30, 2020, December 31, 2020, March 31, 2021 and June 30, 2021 exclude income received by communities under the CARES Act and other governmental grants.

RevPOR is defined by FVE as resident fee revenues for the corresponding portfolio for the period divided by the average number of occupied units^ for the period, divided by the number of months in the period. Data for(4) the three months ended June 30, 2020, December 31, 2020, March 31, 2021 and June 30, 2021 exclude income received by communities under the CARES Act and other governmental grants.

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(5) included to provide supplemental information regarding the operating results and financial condition of the communities from which FVE earns management fees.

^ The three months ended June 30, 2021 includes restructuring expense of(6) $11,531.

Five Star Senior Living Inc. Comparable Communities Senior Living Segment Data (dollars in thousands, except per unit amounts)(unaudited)

Three Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

Owned and Leased Communities(1):

Number of communities (end of period)

23

23

23

23

23

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

2,251

2,251

2,250

2,260

2,260

Average Occupancy

68.0

%

68.6

%

72.1

%

75.1

%

78.6

%

Spot Occupancy

69.7

%

68.6

%

70.0

%

73.5

%

76.6

%

RevPAR (3)

$

2,421

$

2,480

$

2,605

$

2,668

$

2,811

RevPOR (4)

$

3,520

$

3,613

$

3,534

$

3,475

$

3,538

Managed Communities(1)(5):

Number of communities (end of period)

120

120

120

120

120

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

17,898

17,906

17,910

17,929

17,929

Average Occupancy

72.9

%

72.7

%

75.6

%

78.5

%

82.6

%

Spot Occupancy

73.3

%

73.2

%

74.2

%

77.0

%

81.1

%

RevPAR (3)

$

2,961

$

2,946

$

3,054

$

3,139

$

3,301

RevPOR (4)

$

4,018

$

4,051

$

3,954

$

3,942

$

3,953

_______________________________________

Five Star Senior Living Inc.Comparable Communities Senior Living Segment Data(dollars in thousands, except per unit amounts)(unaudited)

Three Months Ended

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

2021 2021 2020 2020 2020

Owned and Leased Communities ^(1):

Number ofcommunities (end of 23 23 23 23 23 period)

Number of livingunits (end of 2,251 2,251 2,250 2,260 2,260 period) ^(2)

Average Occupancy 68.0 % 68.6 % 72.1 % 75.1 % 78.6 %

Spot Occupancy 69.7 % 68.6 % 70.0 % 73.5 % 76.6 %

RevPAR ^(3) $ 2,421 $ 2,480 $ 2,605 $ 2,668 $ 2,811

RevPOR ^(4) $ 3,520 $ 3,613 $ 3,534 $ 3,475 $ 3,538



Managed Communities ^(1)(5):

Number ofcommunities (end of 120 120 120 120 120 period)

Number of livingunits (end of 17,898 17,906 17,910 17,929 17,929 period) ^(2)

Average Occupancy 72.9 % 72.7 % 75.6 % 78.5 % 82.6 %

Spot Occupancy 73.3 % 73.2 % 74.2 % 77.0 % 81.1 %

RevPAR ^(3) $ 2,961 $ 2,946 $ 3,054 $ 3,139 $ 3,301

RevPOR ^(4) $ 4,018 $ 4,051 $ 3,954 $ 3,942 $ 3,953

_______________________________________

Includes data for senior living communities that FVE has continuously owned, leased or managed since April 1, 2020. Per the Strategic Plan, the summary of operations for comparable communities excludes (i) 108 senior living communities managed on behalf of DHC, with approximately 7,500 living units, that are expected to be transitioned to new operators and (ii) 1,473 SNF units in 26 CCRCs that were closed during the three months^ ended June 30, 2021 and are in the process of being repositioned and an(1) additional 59 SNF units that are expected to be closed and repositioned in one CCRC that FVE will continue to manage for DHC. Comparable communities also excludes one leased community with 51 living units that has been out of service due to a fire on April 4, 2021. In addition, the landlord of three leased communities included in the 23 owned and leased senior living communities data above is currently marketing these properties for sale and FVE is unlikely to operate these communities long-term.

^ Includes living units categorized as in service. As a result, the number(2) of 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^ for the period, divided by the number of months in the period. Data for(3) the three months ended June 30, 2020, December 31, 2020, March 31, 2021 and June 30, 2021 exclude income received by communities under the CARES Act and other governmental grants.

RevPOR is defined by FVE as resident fee revenues for the corresponding portfolio for the period divided by the average number of occupied units^ for the period, divided by the number of months in the period. Data for(4) the three months ended June 30, 2020, December 31, 2020, March 31, 2021 and June 30, 2021 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(5) 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

June 30,

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

Rehabilitation and Wellness Services (1):

Revenues

$

17,453

$

19,553

$

20,256

$

21,124

$

19,268

Other operating income (2)

-

19

221

-

1,499

Operating expenses (3)

17,517

16,338

16,613

16,833

16,259

Operating (loss) income

(64

)

3,234

3,864

4,291

4,508

Operating margin

(0.4

)%

16.5

%

18.9

%

20.3

%

21.7

%

Number of inpatient clinics (end of period)

10

37

37

40

40

Number of outpatient clinics (end of period)

218

215

207

209

206

_______________________________________

Five Star Senior Living Inc.Rehabilitation and Wellness Services Segment Data(dollars in thousands)(unaudited)

Three Months Ended

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

2021 2021 2020 2020 2020

Rehabilitationand Wellness Services ^(1):

Revenues $ 17,453 $ 19,553 $ 20,256 $ 21,124 $ 19,268

Otheroperating - 19 221 - 1,499 income ^(2)

Operating 17,517 16,338 16,613 16,833 16,259 expenses ^(3)

Operating (64 ) 3,234 3,864 4,291 4,508 (loss) income

Operating (0.4 ) 16.5 % 18.9 % 20.3 % 21.7 %margin %

Number ofinpatient 10 37 37 40 40 clinics (endof period)

Number ofoutpatient 218 215 207 209 206 clinics (endof period)

_______________________________________

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

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

^ The three months ended June 30, 2021 includes restructuring expenses of(3) $1,720.

Five Star Senior Living Inc. Comparable Rehabilitation and Wellness Services Segment Data (dollars in thousands)(unaudited)

Three Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

Rehabilitation and Wellness Services (1):

Revenues

$

14,151

$

13,457

$

13,800

$

14,493

$

13,292

Other operating income (2)

-

19

221

-

848

Operating expenses

12,564

11,679

12,112

12,087

11,772

Operating income

1,587

1,797

1,909

2,406

2,368

Operating margin

11.2

%

13.3

%

13.6

%

16.6

%

16.7

%

Number of inpatient clinics (end of period)

-

-

-

-

-

Number of outpatient clinics (end of period)

195

195

195

195

195

_______________________________________

Five Star Senior Living Inc.Comparable Rehabilitation and Wellness Services Segment Data(dollars in thousands)(unaudited)

Three Months Ended

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

2021 2021 2020 2020 2020

Rehabilitationand Wellness Services ^(1):

Revenues $ 14,151 $ 13,457 $ 13,800 $ 14,493 $ 13,292

Otheroperating - 19 221 - 848 income ^(2)

Operating 12,564 11,679 12,112 12,087 11,772 expenses

Operating 1,587 1,797 1,909 2,406 2,368 income

Operating 11.2 % 13.3 % 13.6 % 16.6 % 16.7 %margin

Number ofinpatient - - - - - clinics (endof period)

Number ofoutpatient 195 195 195 195 195 clinics (endof period)

_______________________________________

Includes Ageility clinics and home health operations. Comparable clinics includes data for 195 outpatient clinics that FVE has continuously owned^ and operated since April 1, 2020, exclusive of 27 Ageility inpatient(1) rehabilitation clinics that were closed during the three months ended June 30, 2021 and an additional ten Ageility inpatient rehabilitation clinics that are expected to be closed during the remainder of 2021.

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

Five Star Senior Living Inc. Owned Senior Living Communities as of and for the Three Months Ended June 30, 2021 (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

$

271

$

6,938

$

3,736

11/19/2004

1999

2

Morningside of Auburn

Alabama

AL

42

297

1,578

586

11/19/2004

1997

3

The Palms of Fort Myers (2)

Florida

IL

218

1,601

6,990

3,755

4/1/2002

1988

4

Five Star Residences of Banta Pointe (3)

Indiana

AL

121

664

10,575

6,232

9/29/2011

2006

5

Five Star Residences of Fort Wayne (2)

Indiana

AL

154

1,021

8,495

5,244

9/29/2011

1998

6

Five Star Residences of Clearwater

Indiana

AL

88

341

13,871

8,928

6/1/2011

1999

7

Five Star Residences of Lafayette (2)

Indiana

AL

109

532

11,144

7,144

6/1/2011

2000

8

Five Star Residences of Noblesville (2)

Indiana

AL

151

1,033

12,900

8,085

7/1/2011

2005

9

The Villa at Riverwood (2)

Missouri

IL

111

635

4,160

2,583

4/1/2002

1986

10

Voorhees Senior Living (2)

New Jersey

AL

104

892

19,004

13,062

7/1/2008

1999

11

Washington Township Senior Living (2)

New Jersey

AL

93

958

26,010

17,545

7/1/2008

1998

12

Carriage House Senior Living

North Carolina

AL

98

845

9,813

5,403

12/1/2008

1997

13

Forest Heights Senior Living

North Carolina

AL

111

710

16,085

10,806

12/1/2008

1998

14

Fox Hollow Senior Living (2)

North Carolina

AL

77

1,000

25,487

17,537

7/1/2000

1999

15

Legacy Heights Senior Living (2)

North Carolina

AL

116

1,012

7,048

3,195

12/1/2008

1997

16

Morningside at Irving Park

North Carolina

AL

91

746

3,731

1,675

11/19/2004

1997

17

The Devon Senior Living

Pennsylvania

AL

84

481

31,580

14,808

7/1/2008

1985

18

The Legacy of Anderson

South Carolina

IL

101

549

10,617

6,231

12/1/2008

2003

19

Morningside of Springfield (2)

Tennessee

AL

54

428

17,613

10,973

11/19/2004

1984

20

Huntington Place

Wisconsin

AL

127

826

2,355

1,514

7/15/2010

1999

Total

2,099

$

14,842

$

245,994

$

149,042

_______________________________________

Five Star Senior Living Inc.Owned Senior Living Communities as of and for the Three Months Ended June 30,2021(dollars in thousands)(unaudited)

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

Morningside 11/19/1 of Decatur Alabama AL 49 $ 271 $ 6,938 $ 3,736 2004 1999 ^(2)

2 Morningside Alabama AL 42 297 1,578 586 11/19/ 1997 of Auburn 2004

The Palms3 of Fort Florida IL 218 1,601 6,990 3,755 4/1/2002 1988 Myers ^(2)

Five Star4 Residences Indiana AL 121 664 10,575 6,232 9/29/ 2006 of Banta 2011 Pointe ^(3)

Five Star5 Residences Indiana AL 154 1,021 8,495 5,244 9/29/ 1998 of Fort 2011 Wayne ^(2)

Five Star6 Residences Indiana AL 88 341 13,871 8,928 6/1/2011 1999 of Clearwater

Five Star Residences7 of Indiana AL 109 532 11,144 7,144 6/1/2011 2000 Lafayette ^ (2)

Five Star Residences8 of Indiana AL 151 1,033 12,900 8,085 7/1/2011 2005 Noblesville ^(2)

The Villa9 at Missouri IL 111 635 4,160 2,583 4/1/2002 1986 Riverwood ^ (2)

Voorhees10 Senior New Jersey AL 104 892 19,004 13,062 7/1/2008 1999 Living ^(2)

Washington11 Township New Jersey AL 93 958 26,010 17,545 7/1/2008 1998 Senior Living ^(2)

Carriage12 House North AL 98 845 9,813 5,403 12/1/ 1997 Senior Carolina 2008 Living

Forest13 Heights North AL 111 710 16,085 10,806 12/1/ 1998 Senior Carolina 2008 Living

Fox Hollow North14 Senior Carolina AL 77 1,000 25,487 17,537 7/1/2000 1999 Living ^(2)

Legacy15 Heights North AL 116 1,012 7,048 3,195 12/1/ 1997 Senior Carolina 2008 Living ^(2)

Morningside North 11/19/16 at Irving Carolina AL 91 746 3,731 1,675 2004 1997 Park

The Devon17 Senior Pennsylvania AL 84 481 31,580 14,808 7/1/2008 1985 Living

18 The Legacy South IL 101 549 10,617 6,231 12/1/ 2003 of Anderson Carolina 2008

Morningside19 of Tennessee AL 54 428 17,613 10,973 11/19/ 1984 Springfield 2004 ^(2)

20 Huntington Wisconsin AL 127 826 2,355 1,514 7/15/ 1999 Place 2010

Total 2,099 $ 14,842 $ 245,994 $ 149,042

_______________________________________

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

(2) Encumbered property under FVE's $65,000 revolving credit facility.

(3) Encumbered property under FVE's $6,980 mortgage note.

(4) Excludes funds received under the CARES Act recognized as other operating income.

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:

* This press release includes statements regarding the actions that have occurred and steps that are expected to be taken in connection with the implementation of FVE's Strategic Plan and the anticipated timing, costs, savings and benefits related to such steps, as well as FVE's expectations for the operation and performance of the business following implementation of the Strategic Plan. FVE may not be able to implement each of its strategic initiatives in a timely manner or at all, the costs of such initiatives may be more than it expects, it may not realize the benefits it anticipates from the Strategic Plan, and it may not be able to achieve its objectives following implementation of such Strategic Plan, including partially offsetting the revenue loss from the communities it intends to transition with expense reductions to right-size operations, on the anticipated timeline or at all. * Ms. Potter states that COVID-19 vaccination levels have increased across FVE's senior living portfolio and FVE remains on target to vaccinate all community team members by September 1, 2021. However, FVE may not achieve its goal of vaccinating all team member by September 1, 2021 and, despite the high rate of vaccinations, certain residents, team members and clients may still become infected with COVID-19, and the perception of potential infections may reduce the number of new residents moving into FVE's communities, which could impact FVE's operations and financial performance. * Ms. Potter states that FVE is encouraged by positive momentum in occupancy trends. However, these trends may not continue and occupancy could decline due to a variety of factors, including as a result of the COVID-19 pandemic. * This press release includes statements regarding FVE's intent to expand its Ageility business and growing and diversifying FVE's rehabilitation and wellness offerings. FVE may not be able to achieve these objectives, including if its growth is adversely impacted by the COVID-19 pandemic, and if it does not have sufficient resources to fund the expansion or does not identify new opportunities to grow or diversify the business.

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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