Five Star Quality Care Inc. (NYSE:FVE) Q3 2019 Earnings Conference Call - Final Transcript

Nov 06, 2019 • 01:00 pm ET

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Five Star Quality Care Inc. (NYSE:FVE) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Five Star Senior Living Third Quarter 2019 Financial Results Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Michael Kodesch, Director of Investor Relations. Please go ahead.

Executive
Michael Kodesch

Thank you. Welcome to Five Star Senior Living's call covering the third quarter 2019 results. The agenda for today's call includes a presentation by Katie Potter, President and CEO; Margaret Wigglesworth, Senior Vice President and COO; and Jeff Leer, Executive Vice President, CFO and Treasurer. Following this presentation, the management team will open the floor to a question-and-answer session with research analysts.

I would like to note that the transcription, recording and retransmission of today's conference call is strictly prohibited without the prior written consent of Five Star.

Today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are based on Five Star's present beliefs and expectations as of today, Wednesday, November 6, 2019. The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call other than through filings with the Securities and Exchange Commission or SEC regarding this reporting period.

In addition, this call may contain non-GAAP numbers, including EBITDA, adjusted EBITDA and pro forma EBITDA. Reconciliations of net income attributable to common shareholders to these non-GAAP figures and the components to calculate EBITDA, adjusted EBITDA and pro forma EBITDA are in our quarterly news release available on our website at www.fivestarseniorliving.com.

Actual results may differ materially from those projected in any forward-looking statements. Additional information concerning factors that could cause those differences is contained in our filings with the SEC. Investors are cautioned not to place undue reliance upon any forward-looking statements.

I will now turn the call over to Katie.

Executive
Katherine Potter

Thanks, Michael, and thanks, everyone, for joining us on our third quarter earnings call. The third quarter of 2019 marked another period of demonstrated progress in Five Star's transformation. The transaction to restructure our existing business arrangements with SNH remains on track to close January 1, 2020. While one-time non-recurring expenses incurred in the quarter, along with our continued investment in our workforce, weighed heavily on quarterly results through outsized expense growth, we note that these investments were by design and within management's expectations as we build a strong operational foundation moving into the New Year.

As a direct result of these initiatives, Five Star reported a net loss of $7.1 million and a $2.9 million loss in adjusted EBITDA in the third quarter. However, giving effect to the completion of the restructuring transaction with SNH, Five Star would have generated net income of $4.1 million and EBITDA of $8.3 million on a pro forma basis.

As a reminder, the restructuring transaction principally includes terminating