Business Wire | Nov 5, 2020 07:01AM EST

Five Star Senior Living Inc. Announces Third Quarter 2020 Results

Nov. 05, 2020

NEWTON, Mass.--(BUSINESS WIRE)--Nov. 05, 2020--Five Star Senior Living Inc. (Nasdaq: FVE) today announced its financial results for the quarter ended September 30, 2020.

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

"Five Star's third quarter significant positive cash flow and year-over-year growth in Adjusted EBITDA and net income reflect the benefits of the restructuring of our business arrangements with Diversified Healthcare Trust, effective January 1, 2020, particularly in light of the ongoing adverse effects across the senior living industry from the COVID-19 pandemic. Additionally, our rehabilitation and wellness services division grew operating income over 170% as compared to the same period last year and continues to meaningfully contribute to our overall positive performance. Our balance sheet remains strong with $95.8 million of unrestricted cash and no amounts outstanding on our revolving credit facility.

Operationally, we continue to adapt to the evolving impact of the pandemic. I remain inspired by the dedication of our team members. As always, our priority continues to be the health and wellness of our residents, clients and team members."

Overview and Results for the Quarter EndedSeptember 30, 2020:

* During the third quarter of 2020, FVE continued with a phased re-opening plan for its senior living communities consistent with federal, state and local regulations and internal criteria. At September 30, 2020, 96% of senior living communities were accepting new residents in at least one service line of business (independent living, assisted living, skilled nursing or memory care). Occupancy declines at the communities FVE owns, operates and manages have decelerated compared to the second quarter of 2020. Despite this deceleration, FVE continued to experience declines in average monthly senior living revenue per available unit (RevPAR) throughout the quarter due to occupancy challenges. In contrast, FVE's rehabilitation and wellness services segment grew by adding three net new outpatient rehabilitation clinics and experienced a 6.3% increase in average daily clinic visits in the quarter compared to the second quarter of 2020. Overall, FVE continues to experience increased costs associated with the impact of the COVID-19 pandemic that are expected to continue throughout the remainder of 2020.

* Combined senior living revenues and management fees for communities FVE leased from Diversified Healthcare Trust, or DHC, prior to January 1, 2020, and now manages on behalf of DHC, for the quarter ended September 30, 2020, decreased to $33.8 million from $261.7 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. Additionally, the decline in revenues as compared to the same period of the prior year are impacted by the sale of 15 communities in the third quarter of 2019 that FVE previously leased from DHC. Senior living revenues at communities FVE leased or owned continuously since July 1, 2019 were $18.5 million, which represents a $2.0 million or 9.8% decrease from the same period in 2019, primarily due to a decline in occupancy as a result of the COVID-19 pandemic.

* Rehabilitation and wellness services revenues for the third quarter of 2020 increased to $21.1 million from $12.4 million for the same period in 2019, primarily due to the impact of $5.8 million of inpatient rehabilitation clinic revenue at communities FVE previously leased from DHC during the third quarter of 2019, which was previously eliminated in consolidation accounting prior to the Restructuring Transactions, as well as the opening of 36 net new outpatient clinics since the third quarter of 2019. Revenues increased $2.9 million compared to the September 30, 2019 pro forma results primarily attributable to opening 35 net new clinics since July 1, 2019.

* Net income for the third quarter of 2020 was $3.7 million, or $0.12 per diluted share, compared to net income of $3.5 million, or $0.11 per diluted share, for the September 30, 2019 pro forma results.

* Earnings before interest, taxes, depreciation and amortization, or EBITDA, for the third quarter of 2020 was $7.1 million compared to $7.3 million for the September 30, 2019 pro forma results. Adjusted EBITDA, as described further below, was $6.8 million for the third quarter of 2020 compared to $7.2 million for the September 30, 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 quarters ended September 30, 2020 and 2019 are presented later in this press release.

* As of September 30, 2020, FVE had unrestricted cash and cash equivalents of $95.8 million, of which $12.9 million related to funds received from DHC to fund working capital obligations. In addition, FVE had no amounts outstanding on its revolving credit facility and $7.3 million outstanding on one mortgage note.

Conference Call Information:

At 1:00 p.m. Eastern Time this afternoon, President and Chief Executive Officer, Katherine Potter, Executive Vice President, Chief Financial Officer and Treasurer, Jeffrey Leer, and Senior Vice President and Chief Operating Officer, Margaret Wigglesworth, will host a conference call to discuss FVE's third quarter 2020 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 Thursday, November 12, 2020. To hear the replay, dial (412) 317-0088. The replay pass code is 10148150.

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'sthird quarter2020conference 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 September 30, 2020, FVE operated 263 senior living communities (30,544 living units) located in 31 states, including 239 communities (28,232 living units) that it managed and 24 communities (2,312 living units) that it owned or leased. FVE operates communities that include independent living, assisted living, continuing care retirement and skilled nursing communities. 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 September 30, 2020, Ageility operated 209 outpatient rehabilitation clinics and 40 inpatient rehabilitation clinics. 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 Nine Months Ended September 30, September 30,

2020 2019 2020 2019

REVENUES

Senior living $ 18,525 $ 257,600 $ 59,112 $ 786,771

Management fees 15,302 4,053 48,058 12,060

Rehabilitation and 21,124 12,447 61,776 34,707 wellness services

Total management and 54,951 274,100 168,946 833,538 operating revenues

Reimbursedcommunity-level costs 233,783 80,909 689,903 232,733 incurred on behalf ofmanaged communities

Other reimbursed 6,589 - 19,003 - expenses

Total revenues 295,323 355,009 877,852 1,066,271



Other operating income - - 1,499 -



OPERATING EXPENSES

Senior living wages 11,128 137,916 30,633 411,553 and benefits

Other senior living 6,717 76,929 18,290 223,896 operating expenses

Rehabilitation andwellness services 16,124 10,412 48,595 28,031 expenses

Community-level costsincurred on behalf of 233,783 80,909 689,903 232,733 managed communities

General and 19,916 20,094 66,348 67,144 administrative

Rent 1,282 33,169 3,837 120,973

Depreciation and 2,680 2,818 8,084 13,924 amortization

Loss on sale of senior - 749 - 850 living communities

Long-lived asset - 18 - 3,278 impairment

Total operating 291,630 363,014 865,690 1,102,382 expenses



Operating income 3,693 (8,005) 13,661 (36,111) (loss)



Interest, dividend and 104 414 625 985 other income

Interest and other (379) (384) (1,170) (2,196) expense

Unrealized gain (loss) 435 148 (160) 476 on equity investments

Realized gain (loss)on sale of debt and 327 (9) 422 227 equity investments

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



Income (loss) beforeincome taxes and 4,180 (7,836) (9,521) (36,619) equity in earnings ofan investee

(Provision) benefit (465) 687 (971) (98) for income taxes

Equity in earnings of - 83 - 617 an investee

Net income (loss) $ 3,715 $ (7,066) $ (10,492) $ (36,100)



Weighted averageshares 31,486 5,012 31,465 5,007 outstanding-basic

Weighted averageshares 31,563 5,012 31,465 5,007 outstanding-diluted



Net income (loss) per $ 0.12 $ (1.41) $ (0.33) $ (7.21) share-basic

Net income (loss) per $ 0.12 $ (1.41) $ (0.33) $ (7.21) 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 pay rent 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 each of the three and nine months ended September 30, 2020 and 2019.

Three Months Ended Nine Months Ended September September 30, 30,

2020 2019 2020 2019

Net income (loss) $ 3,715 $ (7,066) $ (10,492) $ (36,100)

Add (less):

Interest and other 379 384 1,170 2,196 expense

Interest, dividend and (104) (414) (625) (985) other income

Provision (benefit) for 465 (687) 971 98 income taxes

Depreciation and 2,680 2,818 8,084 13,924 amortization

EBITDA 7,135 (4,965) (892) (20,867)

Add (less):

Long-lived asset - 18 - 3,278 impairment

Loss on sale of senior - 749 - 850 living communities

Severance ^(1) - - 282 393

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

Unrealized (gain) loss (435) (148) 160 (476) on equity investments

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

Transaction costs ^(4) 142 1,330 1,412 10,138

Adjusted EBITDA $ 6,842 $ (3,016) $ 26,334 $ (6,684)

___________________________________(1) Costs incurred during 2020 represent those related to a reduction in workforce.

(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 agreed upon settlement remains subject to a final definitive settlement agreement and to court and regulatory approvals.

(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.

___________________________________^(1) Costs incurred during 2020 represent those related to a reduction inworkforce.

^(2) Represents costs incurred related to the settlement of a lawsuit and isincluded in other senior living operating expenses in our condensedconsolidated statements of operations. The agreed upon settlement remainssubject to a final definitive settlement agreement and to court and regulatoryapprovals.

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

^(4) Includes costs incurred related to the Restructuring Transactions asdescribed in the Selected Pro Forma Condensed Consolidated FinancialInformation and Other Data in the Supplemental Information of this pressrelease.

Five Star Senior Living Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

(unaudited)

September 30,

December 31,

2020

2019

ASSETS

Current assets:

Cash and cash equivalents

$

95,779

$

31,740

Restricted cash and cash equivalents

23,842

23,995

Accounts receivable, net of allowance

9,755

34,190

Due from related person

79,807

5,533

Debt and equity investments

20,465

21,070

Prepaid expenses and other current assets

21,006

17,286

Assets held for sale

-

9,554

Total current assets

250,654

143,368

Property and equipment, net

160,741

167,247

Equity investment of an investee, net

11

298

Restricted cash and cash equivalents

821

1,244

Restricted debt and equity investments

4,975

7,105

Operating lease right of use assets

18,748

20,855

Finance lease right of use assets

4,515

-

Other long-term assets

3,844

5,676

Total assets

$

444,309

$

345,793

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

21,543

$

30,440

Accrued expenses and other current liabilities

49,960

55,981

Accrued compensation and benefits

67,725

35,629

Accrued self-insurance obligations

28,567

23,791

Operating lease liabilities

2,773

2,872

Finance lease liabilities

386

-

Due to related persons

199

2,247

Mortgage note payable

381

362

Security deposits and current portion of continuing care contracts

375

434

Liabilities held for sale

-

12,544

Total current liabilities

171,909

164,300

Long-term liabilities:

Accrued self-insurance obligations

35,985

33,872

Operating lease liabilities

17,636

19,671

Finance lease liabilities

4,129

-

Mortgage note payable

6,882

7,171

Other long-term liabilities

207

798

Total long-term liabilities

64,839

61,512

Shareholders' equity:

Common stock, par value $0.01

316

52

Additional paid-in-capital

459,851

362,450

Accumulated deficit

(253,982)

(245,184)

Accumulated other comprehensive income

1,376

2,663

Total shareholders' equity

207,561

119,981

Total liabilities and shareholders' equity

$

444,309

$

345,793

Five Star Senior Living Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

(unaudited)

September December 30, 31,

2020 2019

ASSETS

Current assets:

Cash and cash equivalents $ 95,779 $ 31,740

Restricted cash and cash equivalents 23,842 23,995

Accounts receivable, net of allowance 9,755 34,190

Due from related person 79,807 5,533

Debt and equity investments 20,465 21,070

Prepaid expenses and other current assets 21,006 17,286

Assets held for sale - 9,554

Total current assets 250,654 143,368



Property and equipment, net 160,741 167,247

Equity investment of an investee, net 11 298

Restricted cash and cash equivalents 821 1,244

Restricted debt and equity investments 4,975 7,105

Operating lease right of use assets 18,748 20,855

Finance lease right of use assets 4,515 -

Other long-term assets 3,844 5,676

Total assets $ 444,309 $ 345,793



LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 21,543 $ 30,440

Accrued expenses and other current liabilities 49,960 55,981

Accrued compensation and benefits 67,725 35,629

Accrued self-insurance obligations 28,567 23,791

Operating lease liabilities 2,773 2,872

Finance lease liabilities 386 -

Due to related persons 199 2,247

Mortgage note payable 381 362

Security deposits and current portion of continuing 375 434 care contracts

Liabilities held for sale - 12,544

Total current liabilities 171,909 164,300



Long-term liabilities:

Accrued self-insurance obligations 35,985 33,872

Operating lease liabilities 17,636 19,671

Finance lease liabilities 4,129 -

Mortgage note payable 6,882 7,171

Other long-term liabilities 207 798

Total long-term liabilities 64,839 61,512



Shareholders' equity:

Common stock, par value $0.01 316 52

Additional paid-in-capital 459,851 362,450

Accumulated deficit (253,982) (245,184)

Accumulated other comprehensive income 1,376 2,663

Total shareholders' equity 207,561 119,981

Total liabilities and shareholders' equity $ 444,309 $ 345,793

Five Star Senior Living Inc.

Supplemental Financial Data

(dollars in thousands)

(unaudited)

Management and Operating Revenues by Product Type

Three Months Ended September 30, 2020

Management and Operating Revenues by Product Type:

Senior Living

Management Fees

Rehabilitation and Wellness Services

Total Revenues

Independent and assisted living community revenues

$

18,525

$

8,751

$

-

$

27,276

Continuing care retirement community revenues

-

5,451

-

5,451

Skilled nursing facility revenues

-

1,100

-

1,100

Rehabilitation and wellness services revenues

-

-

21,124

21,124

Total management and operating revenues

$

18,525

$

15,302

$

21,124

$

54,951

Three Months Ended September 30, 2019

Management and Operating Revenues by Product Type:

Senior Living

Management Fees

Rehabilitation and Wellness Services

Total Revenues

Independent and assisted living community revenues

$

127,201

$

3,207

$

-

$

130,408

Continuing care retirement community revenues

95,746

846

-

96,592

Skilled nursing facility revenues

34,653

-

-

34,653

Rehabilitation and wellness services revenues

-

-

12,447

12,447

Total management and operating revenues

$

257,600

$

4,053

$

12,447

$

274,100

Nine Months Ended September 30, 2020

Management and Operating Revenues by Product Type:

Senior Living

Management Fees

Rehabilitation and Wellness Services

Total Revenues

Independent and assisted living community revenues

$

59,112

$

27,402

$

-

$

86,514

Continuing care retirement community revenues

-

17,273

-

17,273

Skilled nursing facility revenues

-

3,383

-

3,383

Rehabilitation and wellness services revenues

-

-

61,776

61,776

Total management and operating revenues

$

59,112

$

48,058

$

61,776

$

168,946

Nine Months Ended September 30, 2019

Management and Operating Revenues by Product Type:

Senior Living

Management Fees

Rehabilitation and Wellness Services

Total Revenues

Independent and assisted living community revenues

$

380,739

$

9,484

$

-

$

390,223

Continuing care retirement community revenues

290,427

2,576

-

293,003

Skilled nursing facility revenues

115,605

-

-

115,605

Rehabilitation and wellness services revenues

-

-

34,707

34,707

Total management and operating revenues

$

786,771

$

12,060

$

34,707

$

833,538

Five Star Senior Living Inc.

Supplemental Financial Data

(dollars in thousands)

(unaudited)

Management and Operating Revenues by Product Type

Three Months Ended September 30, 2020

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

Independent andassisted living $ 18,525 $ 8,751 $ - $ 27,276 community revenues

Continuing careretirement community - 5,451 - 5,451 revenues

Skilled nursing - 1,100 - 1,100 facility revenues

Rehabilitation andwellness services - - 21,124 21,124 revenues

Total management and $ 18,525 $ 15,302 $ 21,124 $ 54,951 operating revenues



Three Months Ended September 30, 2019

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

Independent andassisted living $ 127,201 $ 3,207 $ - $ 130,408 community revenues

Continuing careretirement community 95,746 846 - 96,592 revenues

Skilled nursing 34,653 - - 34,653 facility revenues

Rehabilitation andwellness services - - 12,447 12,447 revenues

Total management and $ 257,600 $ 4,053 $ 12,447 $ 274,100 operating revenues



Nine Months Ended September 30, 2020

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

Independent andassisted living $ 59,112 $ 27,402 $ - $ 86,514 community revenues

Continuing careretirement community - 17,273 - 17,273 revenues

Skilled nursing - 3,383 - 3,383 facility revenues

Rehabilitation andwellness services - - 61,776 61,776 revenues

Total management and $ 59,112 $ 48,058 $ 61,776 $ 168,946 operating revenues



Nine Months Ended September 30, 2019

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

Independent andassisted living $ 380,739 $ 9,484 $ - $ 390,223 community revenues

Continuing careretirement community 290,427 2,576 - 293,003 revenues

Skilled nursing 115,605 - - 115,605 facility revenues

Rehabilitation andwellness services - - 34,707 34,707 revenues

Total management and $ 786,771 $ 12,060 $ 34,707 $ 833,538 operating 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 September 30, 2020

Management and Operating Revenues by Product Type:

Senior Living

Management Fees

Rehabilitation and Wellness Services

Total Revenues

Independent and assisted living community revenues

$

18,489

$

3,793

$

-

$

22,282

Continuing care retirement community revenues

-

1,084

-

1,084

Rehabilitation and wellness services revenues

-

-

17,563

17,563

Total management and operating revenues

$

18,489

$

4,877

$

17,563

$

40,929

Three Months Ended September 30, 2019

Management and Operating Revenues by Product Type:

Senior Living

Management Fees

Rehabilitation and Wellness Services

Total Revenues

Independent and assisted living community revenues

$

20,499

$

3,146

$

-

$

23,645

Continuing care retirement community revenues

-

735

-

735

Rehabilitation and wellness services revenues

-

-

11,921

11,921

Total management and operating revenues

$

20,499

$

3,881

$

11,921

$

36,301

Nine Months Ended September 30, 2020

Management and Operating Revenues by Product Type:

Senior Living

Management Fees

Rehabilitation and Wellness Services

Total Revenues

Independent and assisted living community revenues

$

58,336

$

11,516

$

-

$

69,852

Continuing care retirement community revenues

-

3,425

-

3,425

Rehabilitation and wellness services revenues

-

-

47,671

47,671

Total management and operating revenues

$

58,336

$

14,941

$

47,671

$

120,948

Nine Months Ended September 30, 2019

Management and Operating Revenues by Product Type:

Senior Living

Management Fees

Rehabilitation and Wellness Services

Total Revenues

Independent and assisted living community revenues

$

61,744

$

9,052

$

-

$

70,796

Continuing care retirement community revenues

-

2,221

-

2,221

Rehabilitation and wellness services revenues

-

-

31,279

31,279

Total management and operating revenues

$

61,744

$

11,273

$

31,279

$

104,296

Five Star Senior Living Inc.

Supplemental Financial Data

(dollars in thousands)

(unaudited)

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

Three Months Ended September 30, 2020

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

Independent andassisted living $ 18,489 $ 3,793 $ - $ 22,282 community revenues

Continuing careretirement community - 1,084 - 1,084 revenues

Rehabilitation andwellness services - - 17,563 17,563 revenues

Total management and $ 18,489 $ 4,877 $ 17,563 $ 40,929 operating revenues



Three Months Ended September 30, 2019

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

Independent andassisted living $ 20,499 $ 3,146 $ - $ 23,645 community revenues

Continuing careretirement community - 735 - 735 revenues

Rehabilitation andwellness services - - 11,921 11,921 revenues

Total management and $ 20,499 $ 3,881 $ 11,921 $ 36,301 operating revenues



Nine Months Ended September 30, 2020

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

Independent andassisted living $ 58,336 $ 11,516 $ - $ 69,852 community revenues

Continuing careretirement community - 3,425 - 3,425 revenues

Rehabilitation andwellness services - - 47,671 47,671 revenues

Total management and $ 58,336 $ 14,941 $ 47,671 $ 120,948 operating revenues



Nine Months Ended September 30, 2019

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

Independent andassisted living $ 61,744 $ 9,052 $ - $ 70,796 community revenues

Continuing careretirement community - 2,221 - 2,221 revenues

Rehabilitation andwellness services - - 31,279 31,279 revenues

Total management and $ 61,744 $ 11,273 $ 31,279 $ 104,296 operating revenues

(1) The tables for the three months ended September 30, 2020 and 2019 include data for 24 owned and leased senior living communities, 75 managed senior living communities and 185 rehabilitation clinics that FVE has continuously owned, continuously leased or continuously managed since July 1, 2019. The tables for the nine months ended September 30, 2020 and 2019 include data for senior living communities and rehabilitation clinics that FVE has continuously owned, continuously leased or continuously managed since January 1, 2019.

^(1) The tables for the three months ended September 30, 2020 and 2019 includedata for 24 owned and leased senior living communities, 75 managed seniorliving communities and 185 rehabilitation clinics that FVE has continuouslyowned, continuously leased or continuously managed since July 1, 2019. Thetables for the nine months ended September 30, 2020 and 2019 include data forsenior living communities and rehabilitation clinics that FVE has continuouslyowned, 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

September 30,

June 30,

March 31,

December 31,

September 30,

2020

2020

2020

2019

2019

Owned and Leased Communities

Independent and assisted living communities:

Revenues

$

18,525

$

19,590

$

20,997

$

249,726

$

257,600

Operating expenses

19,661

20,165

17,470

220,389

250,840

Operating (loss) income

(1,136)

(575)

3,527

29,337

6,760

Operating margin

(6.1)

%

(2.9)

%

16.8

%

11.7

%

2.6

%

Number of communities (end of period)

24

24

24

190

190

Number of living units (end of period) (1)

2,312

2,312

2,312

20,948

20,948

Occupancy

74.7

%

78.3

%

81.3

%

82.9

%

82.9

%

RevPAR (2)

$

2,665

$

2,813

$

2,938

$

3,974

$

3,943

Managed Communities (3)

Independent and assisted living communities:

Management fees

$

8,751

$

9,088

$

9,563

$

3,221

$

3,207

Community-level revenues

167,436

174,648

184,455

81,188

81,380

Community-level expenses

145,399

139,175

143,105

65,899

64,491

Community operating income

22,037

35,473

41,350

15,289

16,889

Community operating margin

13.2

%

20.3

%

22.4

%

18.8

%

20.8

%

Number of communities (end of period)

189

(4)

191

(4)

193

(4)

69

(4)

68

Number of living units (end of period) (1)

18,032

(4)

18,148

(4)

18,395

(4)

8,106

(4)

7,937

Occupancy

75.5

%

79.1

%

82.9

%

84.0

%

85.3

%

RevPAR (2)

$

3,088

$

3,208

$

3,360

$

3,401

$

3,448

Continuing care retirement communities:

Management fees

$

5,451

$

5,485

$

6,337

$

888

$

846

Community-level revenues

104,770

110,729

123,498

27,502

26,436

Community-level expenses

99,816

99,071

103,946

24,998

25,002

Community operating income

4,954

11,658

19,552

2,504

1,434

Community operating margin

4.7

%

10.5

%

15.8

%

9.1

%

5.4

%

Number of communities (end of period)

39

39

40

9

9

Number of living units (end of period) (1)(5)

8,936

8,936

9,301

2,231

2,231

Occupancy

75.6

%

79.1

%

83.4

%

83.5

%

82.8

%

RevPAR (2)

$

3,908

$

4,131

$

4,426

$

4,109

$

3,950

Skilled nursing facilities (6):

Management fees

$

1,100

$

1,132

$

1,151

$

-

$

-

Community-level revenues

21,900

24,554

22,956

-

-

Community-level expenses

22,831

22,009

21,854

-

-

Community operating (loss) income

(931)

2,545

1,102

-

-

Community operating margin

(4.3)

%

10.4

%

4.8

%

-

%

-

%

Number of communities (end of period)

11

11

11

-

-

Number of living units (end of period) (1)(7)

1,264

1,264

1,264

-

-

Occupancy

68.8

%

70.1

%

73.3

%

-

%

-

%

RevPAR (2)

$

5,775

$

6,475

$

6,054

$

-

$

-

Total managed communities:

Management fees

$

15,302

$

15,705

$

17,051

$

4,109

$

4,053

Community-level revenues

294,106

309,931

330,909

108,690

107,816

Community-level expenses

268,046

260,255

268,905

90,897

89,493

Community operating income

26,060

49,676

62,004

17,793

18,323

Community operating margin

8.9

%

16.0

%

18.7

%

16.4

%

17.0

%

Number of communities (end of period)

239

(4)

241

(4)

244

78

77

Number of living units (end of period) (1)

28,232

(4)

28,348

(4)

28,960

10,337

10,168

Occupancy

75.2

%

78.7

%

82.6

%

83.9

%

84.7

%

RevPAR (2)

$

3,468

$

3,644

$

3,820

$

3,556

$

3,559

Five Star Senior Living Inc.

Senior Living Segment Data

(dollars in thousands, except per unit amounts)

(unaudited)

Three Months Ended

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

2020 2020 2020 2019 2019



Owned andLeased Communities

Independent andassisted living communities:

Revenues $ 18,525 $ 19,590 $ 20,997 $ 249,726 $ 257,600

Operating 19,661 20,165 17,470 220,389 250,840 expenses

Operating (1,136) (575) 3,527 29,337 6,760 (loss) income

Operating (6.1) % (2.9) % 16.8 % 11.7 % 2.6 %margin

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

Number ofliving units 2,312 2,312 2,312 20,948 20,948 (end of period)^(1)

Occupancy 74.7 % 78.3 % 81.3 % 82.9 % 82.9 %

RevPAR ^(2) $ 2,665 $ 2,813 $ 2,938 $ 3,974 $ 3,943



ManagedCommunities ^ (3)

Independent andassisted living communities:

Management fees $ 8,751 $ 9,088 $ 9,563 $ 3,221 $ 3,207

Community-level 167,436 174,648 184,455 81,188 81,380 revenues

Community-level 145,399 139,175 143,105 65,899 64,491 expenses

Communityoperating 22,037 35,473 41,350 15,289 16,889 income

Communityoperating 13.2 % 20.3 % 22.4 % 18.8 % 20.8 %margin

Number of ^ ^ ^ ^communities 189 (4) 191 (4) 193 (4) 69 (4) 68 (end of period)

Number ofliving units 18,032 ^ 18,148 ^ 18,395 ^ 8,106 ^ 7,937 (end of period) (4) (4) (4) (4)^(1)

Occupancy 75.5 % 79.1 % 82.9 % 84.0 % 85.3 %

RevPAR ^(2) $ 3,088 $ 3,208 $ 3,360 $ 3,401 $ 3,448



Continuing careretirement communities:

Management fees $ 5,451 $ 5,485 $ 6,337 $ 888 $ 846

Community-level 104,770 110,729 123,498 27,502 26,436 revenues

Community-level 99,816 99,071 103,946 24,998 25,002 expenses

Communityoperating 4,954 11,658 19,552 2,504 1,434 income

Communityoperating 4.7 % 10.5 % 15.8 % 9.1 % 5.4 %margin

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

Number ofliving units 8,936 8,936 9,301 2,231 2,231 (end of period)^(1)(5)

Occupancy 75.6 % 79.1 % 83.4 % 83.5 % 82.8 %

RevPAR ^(2) $ 3,908 $ 4,131 $ 4,426 $ 4,109 $ 3,950

Skilled nursingfacilities ^ (6):

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

Community-level 21,900 24,554 22,956 - - revenues

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

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

Communityoperating (4.3) % 10.4 % 4.8 % - % - %margin

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

Number ofliving units 1,264 1,264 1,264 - - (end of period)^(1)(7)

Occupancy 68.8 % 70.1 % 73.3 % - % - %

RevPAR ^(2) $ 5,775 $ 6,475 $ 6,054 $ - $ -



Total managed communities:

Management fees $ 15,302 $ 15,705 $ 17,051 $ 4,109 $ 4,053

Community-level 294,106 309,931 330,909 108,690 107,816 revenues

Community-level 268,046 260,255 268,905 90,897 89,493 expenses

Communityoperating 26,060 49,676 62,004 17,793 18,323 income

Communityoperating 8.9 % 16.0 % 18.7 % 16.4 % 17.0 %margin

Number of ^ ^communities 239 (4) 241 (4) 244 78 77 (end of period)

Number ofliving units 28,232 ^ 28,348 ^ 28,960 10,337 10,168 (end of period) (4) (4)^(1)

Occupancy 75.2 % 78.7 % 82.6 % 83.9 % 84.7 %

RevPAR ^(2) $ 3,468 $ 3,644 $ 3,820 $ 3,556 $ 3,559

________________________________________(1) 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.

(2) 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 period ended December 31, 2019, excludes approximately $4,200 of deferred resident fees and deposits recognized due to the Restructuring Transactions.

(3) Senior living segment data for 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.

(4) Includes one active adult community with 168 units.

(5) Includes 2,186 skilled nursing units in communities where assisted living and independent living services are the predominant services provided.

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

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

________________________________________^(1) Includes living units categorized as in service. As a result, the numberof living units may vary from period to period for reasons other than theacquisition or disposition of senior living communities.

^(2) RevPAR is defined by FVE as resident fee revenues for the correspondingportfolio for the period divided by the average number of available units forthe period, divided by the number of months in the period. Data for the periodended December 31, 2019, excludes approximately $4,200 of deferred residentfees and deposits recognized due to the Restructuring Transactions.

^(3) Senior living segment data for managed communities, other than FVE'smanagement fees, represents financial data of communities FVE manages for theaccount of DHC and does not represent financial results of FVE. Managedcommunities data is included to provide supplemental information regarding theoperating results and financial condition of the communities from which FVEearns management fees.

^(4) Includes one active adult community with 168 units.

^(5) Includes 2,186 skilled nursing units in communities where assisted livingand independent living services are the predominant services provided.

^(6) FVE did not manage skilled nursing facilities prior to January 1, 2020.

^(7) Includes 53 assisted living and independent living units in communitieswhere 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

September 30,

June 30,

March 31,

December 31,

September 30,

2020

2020

2019

2019

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)

2,312

2,312

2,312

2,312

2,312

Occupancy

74.7

%

78.3

%

81.3

%

81.4

%

81.3

%

RevPAR (3)

$

2,665

$

2,813

$

2,930

$

2,941

$

2,954

Managed Communities(1)(4):

Number of communities (end of period)

75

75

75

75

75

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

9,689

9,689

9,697

9,700

9,700

Occupancy

76.7

%

80.1

%

83.9

%

84.5

%

85.5

%

RevPAR (3)

$

3,221

$

3,398

$

3,548

$

3,559

$

3,561

Five Star Senior Living Inc.

Comparable Communities Senior Living Segment Data

(dollars in thousands, except per unit amounts)

(unaudited)

Three Months Ended

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

2020 2020 2019 2019 2019

Owned and Leased Communities ^(1):

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

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

Occupancy 74.7 % 78.3 % 81.3 % 81.4 % 81.3 %

RevPAR ^(3) $ 2,665 $ 2,813 $ 2,930 $ 2,941 $ 2,954



Managed Communities ^(1)(4):

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

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

Occupancy 76.7 % 80.1 % 83.9 % 84.5 % 85.5 %

RevPAR ^(3) $ 3,221 $ 3,398 $ 3,548 $ 3,559 $ 3,561

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

(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.

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

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

^(3) RevPAR is defined by FVE as resident fee revenues for the correspondingportfolio for the period divided by the average number of available units forthe period, divided by the number of months in the period.

^(4) Senior living segment data for comparable managed communities representsfinancial data of communities FVE manages for the account of DHC and does notrepresent financial results of FVE. Managed communities data is included toprovide supplemental information regarding the operating results and financialcondition 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

September 30,

June 30,

March 31,

December 31,

September 30,

2020

2020

2020

2019

2019

Rehabilitation and Wellness Services:

Revenues (1)(2)

$

21,124

$

19,268

$

21,384

$

13,978

$

12,447

Other operating income (3)

-

1,499

-

-

-

Operating expenses

16,833

16,259

17,616

12,384

10,861

Operating income (1)

4,291

4,508

3,768

1,594

1,586

Operating margin(1)

20.3

%

21.7

%

17.6

%

11.4

%

12.7

%

Number of inpatient clinics (end of period)

40

40

41

41

41

Number of outpatient clinics (end of period)

209

206

203

190

173

Five Star Senior Living Inc.

Rehabilitation and Wellness Services Segment Data

(dollars in thousands)

(unaudited)

Three Months Ended

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

2020 2020 2020 2019 2019

Rehabilitationand Wellness Services:

Revenues ^(1) $ 21,124 $ 19,268 $ 21,384 $ 13,978 $ 12,447 (2)

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

Operating 16,833 16,259 17,616 12,384 10,861 expenses

Operating 4,291 4,508 3,768 1,594 1,586 income^ (1)

Operating 20.3 % 21.7 % 17.6 % 11.4 % 12.7 %margin ^(1)

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

Number ofoutpatient 209 206 203 190 173 clinics (endof period)

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

(2) Prior to 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 revenues recognized for funds received under the Provider Relief Fund of the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, for which FVE has determined that it complies with the associated terms and conditions that permit FVE to retain these funds.

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

^(2) Prior to the effective date of the Transaction Agreement (as definedbelow), revenue related to inpatient clinics at communities we previouslyleased from DHC was eliminated in consolidation pursuant to GAAP.

^(3) Other operating income represents revenues recognized for funds receivedunder the Provider Relief Fund of the Coronavirus Aid, Relief, and EconomicSecurity Act, or the CARES Act, for which FVE has determined that it complieswith the associated terms and conditions that permit FVE to retain these funds.

Five Star Senior Living Inc.

Comparable Rehabilitation and Wellness Services Segment Data

(dollars in thousands)

(unaudited)

Three Months Ended

September 30,

June 30,

March 31,

December 31,

September 30,

2020

2020

2020

2019

2019

Rehabilitation and Wellness Services:

Revenues (1)(2)

$

17,563

$

16,756

$

18,938

$

12,433

$

11,921

Other operating income (3)

-

1,103

-

-

-

Operating expenses

14,000

13,924

15,210

10,413

9,698

Operating income (1)

3,563

3,935

3,728

2,020

2,223

Operating margin(1)

20.3

%

22.0

%

19.7

%

16.2

%

18.6

%

Number of inpatient clinics (end of period)

40

40

40

40

40

Number of outpatient clinics (end of period)

145

145

145

145

145

Five Star Senior Living Inc.

Comparable Rehabilitation and Wellness Services Segment Data

(dollars in thousands)

(unaudited)

Three Months Ended

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

2020 2020 2020 2019 2019

Rehabilitationand Wellness Services:

Revenues ^(1) $ 17,563 $ 16,756 $ 18,938 $ 12,433 $ 11,921 (2)

Otheroperating - 1,103 - - - income ^(3)

Operating 14,000 13,924 15,210 10,413 9,698 expenses

Operating 3,563 3,935 3,728 2,020 2,223 income^ (1)

Operating 20.3 % 22.0 % 19.7 % 16.2 % 18.6 %margin ^(1)

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

Number ofoutpatient 145 145 145 145 145 clinics (endof period)

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

(2) Prior to 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 revenues recognized for funds received under the Provider Relief Fund of the CARES Act for which FVE has determined that it complies with the associated terms and conditions that permit FVE to retain these funds.

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

^(2) Prior to the effective date of the Transaction Agreement (as definedbelow), revenue related to inpatient clinics at communities we previouslyleased from DHC was eliminated in consolidation pursuant to GAAP.

^(3) Other operating income represents revenues recognized for funds receivedunder the Provider Relief Fund of the CARES Act for which FVE has determinedthat it complies with the associated terms and conditions that permit FVE toretain these funds.

Five Star Senior Living Inc.

Owned Senior Living Communities as of and for the Three Months Ended September 30, 2020

(dollars in thousands)

(unaudited)

No.

Community Name

State

Property Type (1)

Living Units

Senior Living Revenues

Gross Carrying Value

Net Carrying Value

Date Acquired

Year Built or Most Recent Renovation

1

Morningside of Decatur (2)

Alabama

AL

49

$

333

$

3,666

$

2,176

11/19/2004

1999

2

Morningside of Auburn

Alabama

AL

42

402

2,292

1,540

11/19/2004

1997

3

The Palms of Fort Myers (2)

Florida

IL

218

1,753

30,764

15,108

4/1/2002

1988

4

Five Star Residences of Banta Pointe (3)

Indiana

AL

121

807

18,273

12,743

9/29/2011

2006

5

Five Star Residences of Fort Wayne (2)

Indiana

AL

154

1,136

25,675

17,752

9/29/2011

1998

6

Five Star Residences of Clearwater

Indiana

AL

88

366

9,766

5,547

6/1/2011

1999

7

Five Star Residences of Lafayette (2)

Indiana

AL

109

521

15,878

10,943

6/1/2011

2000

8

Five Star Residences of Noblesville (2)

Indiana

AL

151

1,248

25,161

17,706

7/1/2011

2005

9

The Villa at Riverwood (2)

Missouri

IL

110

642

6,876

3,198

4/1/2002

1986

10

Carriage House Senior Living

North Carolina

AL

98

1,049

8,407

5,366

12/1/2008

1997

11

Forest Heights Senior Living

North Carolina

AL

111

883

13,593

8,922

12/1/2008

1998

12

Fox Hollow Senior Living (2)

North Carolina

AL

77

874

11,034

7,258

7/1/2000

1999

13

Legacy Heights Senior Living (2)

North Carolina

AL

116

1,437

12,668

8,156

12/1/2008

1997

14

Morningside at Irving Park

North Carolina

AL

91

775

6,973

3,902

11/19/2004

1997

15

Voorhees Senior Living (2)

New Jersey

AL

104

941

10,245

6,100

7/1/2008

1999

16

Washington Township Senior Living (2)

New Jersey

AL

103

866

10,177

6,094

7/1/2008

1998

17

The Devon Senior Living

Pennsylvania

AL

84

613

6,881

3,858

7/1/2008

1985

18

The Legacy of Anderson

South Carolina

IL

101

580

1,371

467

12/1/2008

2003

19

Morningside of Springfield (2)

Tennessee

AL

54

407

3,654

1,738

11/19/2004

1984

20

Huntington Place

Wisconsin

AL

127

829

17,504

11,309

7/15/2010

1999

Total

2,108

$

16,462

$

240,858

$

149,883

Five Star Senior Living Inc.

Owned Senior Living Communities as of and for the Three Months Ended September30, 2020

(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 Renovation

Morningside 11/19/1 of Decatur Alabama AL 49 $ 333 $ 3,666 $ 2,176 2004 1999 ^(2)

2 Morningside Alabama AL 42 402 2,292 1,540 11/19/ 1997 of Auburn 2004

The Palms3 of Fort Florida IL 218 1,753 30,764 15,108 4/1/2002 1988 Myers ^(2)

Five Star4 Residences Indiana AL 121 807 18,273 12,743 9/29/ 2006 of Banta 2011 Pointe ^(3)

Five Star5 Residences Indiana AL 154 1,136 25,675 17,752 9/29/ 1998 of Fort 2011 Wayne ^(2)

Five Star6 Residences Indiana AL 88 366 9,766 5,547 6/1/2011 1999 of Clearwater

Five Star Residences7 of Indiana AL 109 521 15,878 10,943 6/1/2011 2000 Lafayette ^ (2)

Five Star Residences8 of Indiana AL 151 1,248 25,161 17,706 7/1/2011 2005 Noblesville ^(2)

The Villa9 at Missouri IL 110 642 6,876 3,198 4/1/2002 1986 Riverwood ^ (2)

Carriage10 House North AL 98 1,049 8,407 5,366 12/1/ 1997 Senior Carolina 2008 Living

Forest11 Heights North AL 111 883 13,593 8,922 12/1/ 1998 Senior Carolina 2008 Living

Fox Hollow North12 Senior Carolina AL 77 874 11,034 7,258 7/1/2000 1999 Living ^(2)

Legacy13 Heights North AL 116 1,437 12,668 8,156 12/1/ 1997 Senior Carolina 2008 Living ^(2)

Morningside North 11/19/14 at Irving Carolina AL 91 775 6,973 3,902 2004 1997 Park

Voorhees15 Senior New Jersey AL 104 941 10,245 6,100 7/1/2008 1999 Living ^(2)

Washington16 Township New Jersey AL 103 866 10,177 6,094 7/1/2008 1998 Senior Living ^(2)

The Devon17 Senior Pennsylvania AL 84 613 6,881 3,858 7/1/2008 1985 Living

18 The Legacy South IL 101 580 1,371 467 12/1/ 2003 of Anderson Carolina 2008

Morningside19 of Tennessee AL 54 407 3,654 1,738 11/19/ 1984 Springfield 2004 ^(2)

20 Huntington Wisconsin AL 127 829 17,504 11,309 7/15/ 1999 Place 2010

Total 2,108 $ 16,462 $ 240,858 $ 149,883

(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 $7,263 mortgage note.

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. 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 unaudited condensed consolidated financial statements and accompanying notes included in FVE's Quarterly Report on Form 10-Q for the three months ended September 30, 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.

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

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

^(3) Encumbered property under our $7,263 mortgage note.

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. 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 unaudited condensed consolidated financial statements and accompanying notes included in FVE's Quarterly Report on Form 10-Q for the three months ended September 30, 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 September 30,

2020 Pro Forma 2019 ^(1)

REVENUES

Senior living $ 18,525 $ 20,499

Management fees 15,302 17,801

Rehabilitation and wellness services 21,124 18,248

Total management and operating revenues 54,951 56,548

Reimbursed community-level costs incurred on behalf 233,783 263,029 of managed communities

Other reimbursed expenses 6,589 -

Total revenues 295,323 319,577



OPERATING EXPENSES

Senior living wages and benefits 11,128 9,815

Other senior living operating expenses 6,717 7,334

Rehabilitation and wellness services expenses 16,124 16,213

Community-level costs incurred on behalf of managed 233,783 263,029 communities

General and administrative 19,916 15,051

Rent 1,282 1,044

Depreciation and amortization 2,680 2,754

Total operating expenses 291,630 315,240



Operating income 3,693 4,337



Interest, dividend and other income 104 414

Interest and other expense (379) (281)

Unrealized gain on equity investments 435 148

Realized gain (loss) on sale of debt and equity 327 (9) investments



Income before income taxes and equity in earnings 4,180 4,609 of an investee

Provision for income taxes (465) (1,225)

Equity in earnings of an investee - 83

Net income $ 3,715 $ 3,467

Add (less):

Interest and other expense 379 281

Interest, dividend and other income (104) (414)

Provision for income taxes 465 1,225

Depreciation and amortization 2,680 2,754

EBITDA $ 7,135 $ 7,313

Add (less):

Unrealized gain on equity investments (435) (148)

Transaction costs 142 -

Adjusted EBITDA $ 6,842 $ 7,165



Weighted average shares outstanding-basic 31,486 31,400

Weighted average shares outstanding-diluted 31,563 31,522

Net income per share-basic $ 0.12 $ 0.11

Net income per share-diluted $ 0.12 $ 0.11

Five Star Senior Living Inc.

Pro Forma Condensed Consolidated Statement of Operations

(amounts in thousands, except per share amounts)

(unaudited)

Three Months Ended September 30, 2019

As Reported

Restructuring Transactions

Note

Pro Forma

REVENUES

Senior living

$

257,600

$

(237,101)

2(a)

$

20,499

Management fees

4,053

13,748

2(b)

17,801

Rehabilitation and wellness services

12,447

5,801

2(c)

18,248

Reimbursed community-level costs incurred on behalf of managed communities

80,909

182,120

2(d)

263,029

Total revenue

355,009

(35,432)

319,577

OPERATING EXPENSES

Senior living wages and benefits

137,916

(128,101)

2(e)

9,815

Other senior living operating expenses

76,929

(69,595)

2(f)

7,334

Rehabilitation and wellness services expenses

10,412

5,801

2(c)

16,213

Community-level costs incurred on behalf of managed communities

80,909

182,120

2(d)

263,029

General and administrative

20,094

(5,043)

2(g)

15,051

Rent

33,169

(32,125)

2(h)

1,044

Depreciation and amortization

2,818

(64)

2(i)

2,754

Loss on sale of senior living communities

749

(749)

-

Long-lived asset impairment

18

(18)

-

Total operating expenses

363,014

(47,774)

315,240

Operating (loss) income

(8,005)

12,342

4,337

Interest, dividend and other income

414

-

414

Interest and other expense

(384)

103

2(j)

(281)

Unrealized gain on equity investments

148

-

148

Realized loss on sale of debt and equity investments

(9)

-

(9)

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

(7,836)

12,445

4,609

Benefit (provision) for income taxes

687

(1,912)

2(k)

(1,225)

Equity in earnings of an investee

83

-

83

Net (loss) income

$

(7,066)

$

10,533

$

3,467

Add (less):

Interest and other expense

384

(103)

281

Interest, dividend and other income

(414)

-

(414)

(Benefit) provision for income taxes

(687)

1,912

1,225

Depreciation and amortization

2,818

(64)

2,754

EBITDA

$

(4,965)

$

12,278

$

7,313

Add (less):

Loss on sale of senior living communities

749

(749)

-

Long-lived asset impairment

18

(18)

-

Unrealized gain on equity investments

(148)

-

(148)

Transaction costs

1,330

(1,330)

-

Adjusted EBITDA

$

(3,016)

$

10,181

$

7,165

Weighted average shares outstanding-basic

5,012

26,388

2(l)

31,400

Weighted average shares outstanding-diluted

5,012

26,510

2(l)

31,522

Net income per share-basic

$

(1.41)

$

0.11

Net income per share-diluted

$

(1.41)

$

0.11

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 unaudited condensed consolidated financial statements and notes thereto included in FVE's Quarterly Report on Form 10-Q for the quarter ended September 30, 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 condensed 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 September 30, 2019

As Reported Restructuring Note Pro Forma Transactions

REVENUES

Senior living $ 257,600 $ (237,101) 2(a) $ 20,499

Management fees 4,053 13,748 2(b) 17,801

Rehabilitation and wellness 12,447 5,801 2(c) 18,248 services

Reimbursed community-levelcosts incurred on behalf of 80,909 182,120 2(d) 263,029 managed communities

Total revenue 355,009 (35,432) 319,577



OPERATING EXPENSES

Senior living wages and 137,916 (128,101) 2(e) 9,815 benefits

Other senior living operating 76,929 (69,595) 2(f) 7,334 expenses

Rehabilitation and wellness 10,412 5,801 2(c) 16,213 services expenses

Community-level costsincurred on behalf of managed 80,909 182,120 2(d) 263,029 communities

General and administrative 20,094 (5,043) 2(g) 15,051

Rent 33,169 (32,125) 2(h) 1,044

Depreciation and amortization 2,818 (64) 2(i) 2,754

Loss on sale of senior living 749 (749) - communities

Long-lived asset impairment 18 (18) -

Total operating expenses 363,014 (47,774) 315,240



Operating (loss) income (8,005) 12,342 4,337



Interest, dividend and other 414 - 414 income

Interest and other expense (384) 103 2(j) (281)

Unrealized gain on equity 148 - 148 investments

Realized loss on sale of debt (9) - (9) and equity investments



(Loss) Income before incometaxes and equity in earnings (7,836) 12,445 4,609 of an investee

Benefit (provision) for 687 (1,912) 2(k) (1,225) income taxes

Equity in earnings of an 83 - 83 investee

Net (loss) income $ (7,066) $ 10,533 $ 3,467

Add (less):

Interest and other expense 384 (103) 281

Interest, dividend and other (414) - (414) income

(Benefit) provision for (687) 1,912 1,225 income taxes

Depreciation and amortization 2,818 (64) 2,754

EBITDA $ (4,965) $ 12,278 $ 7,313

Add (less):

Loss on sale of senior living 749 (749) - communities

Long-lived asset impairment 18 (18) -

Unrealized gain on equity (148) - (148) investments

Transaction costs 1,330 (1,330) -

Adjusted EBITDA $ (3,016) $ 10,181 $ 7,165



Weighted average shares 5,012 26,388 2(l) 31,400 outstanding-basic

Weighted average shares 5,012 26,510 2(l) 31,522 outstanding-diluted

Net income per share-basic $ (1.41) $ 0.11

Net income per share-diluted $ (1.41) $ 0.11

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 unaudited condensed consolidated financial statements and notes thereto included in FVE's Quarterly Report on Form 10-Q for the quarter ended September 30, 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 condensed consolidated statements of operations.

b. Management fees

Adjustments to management fee revenues are comprised as follows:

Three Months Ended September 30, 2019

Adjustment to increase management fee revenues for then existingmanagement agreements from 3% to 5% per the New Management $ 1,558 Agreements

5% management fee relating to the termination and conversion of 11,855 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 335 Management Agreements

Net adjustment to management fee revenues $ 13,748

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

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

expenses at these inpatient clinics no longer constitute intercompany revenues and expenses and thus are not eliminated in consolidation and recognized and reported as rehabilitation and wellness services revenue and rehabilitation and wellness services expenses in FVE's condensed 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 condensed consolidated statements of operations (with an offsetting reimbursement from DHC recognized as revenues in the condensed 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 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 September 30, 2019

Adjustment of certain reimbursable costs to directly support $ (3,748) managed communities

Adjustment to remove non-recurring transaction costs we (1,330) previously incurred relating to the Restructuring Transactions

Increase in management fee to The RMR Group LLC due to increase 35 in Ageility revenue

Net adjustment to general and administrative expenses $ (5,043)

h. Rent

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

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

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 condensed 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 September 30, 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 based on the number of FVE common shares outstanding on December 31, 2019. FVE's diluted weighted average common shares outstanding is also impacted by the potentially dilutive restricted unvested common shares of 122,412 for the three months ended September 30, 2019. This diluted share impact is directly related to FVE's 2014 Equity Compensation Plan and was originally excluded from the as reported numbers as 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 in this press release that FVE's third quarter significant positive cash flow and year-over-year growth in Adjusted EBITDA and net income reflect the benefits of restructuring FVE's business arrangements with DHC, in light of the ongoing adverse effects across the senior living industry from the COVID-19 pandemic and that the rehabilitation and wellness services division continues to meaningfully contribute to FVE's overall positive performance. This may imply that FVE is outperforming other companies in the senior living industry, that FVE will be profitable in the future and that its rehabilitation and wellness services division will grow; however, FVE's business remains subject to various risks, including overall macro-economic factors in addition to market conditions of the senior living and rehabilitation and wellness industries and consumer demand and preferences of older adults in addition to the continuing impact of the COVID-19 pandemic. In addition, some of the improvements in net income resulted in a change following the Restructuring Transactions in how FVE accounts for its rehabilitation and wellness services revenues at the senior living communities FVE manages for, and previously leased from, DHC. As a result, FVE may not outperform other companies in the senior living industry, may not be profitable in the future, any future improvements in net income may be less, the deceleration of occupancy declines at its senior living communities may reverse, its rehabilitation and wellness services division may fail to continue to grow and any growth it may realize may not be profitable to FVE.

* Ms. Potter's statement that FVE's balance sheet remains strong with $95.8 million of unrestricted cash on hand and no borrowings outstanding on its revolving credit facility may imply that FVE has adequate cash and availability under its revolving credit facility; 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 $42.7 million as of September 30, 2020 and may be lower in amount or not available in the future.

* Ms. Potter states that FVE continues to adapt to the evolving impact of the pandemic. This may imply that the adaptation is adequate to protect FVE from potential liabilities and declines in financial results. FVE may not be able, or may fail, to make all the necessary changes to adequately protect itself from the potential challenges and impacts of the COVID-19 pandemic.

* This press release states that negative trends due to the COVID-19 pandemic are expected to continue throughout at least the remainder of 2020. The extent and duration of the COVID-19 pandemic or the severity and duration of its economic impact cannot be predicted, but are expected to be substantial, and could continue beyond December 31, 2020 for an indefinite period.

* 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201105005341/en/

CONTACT: Olivia Snyder, Manager, Investor Relations (617) 796-8245