Market Overview

Capital Senior Living Corporation Reports Third Quarter 2017 Results

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DALLAS, Nov. 01, 2017 (GLOBE NEWSWIRE) -- Capital Senior Living Corporation (the "Company") (NYSE:CSU), one of the nation's largest operators of senior housing communities, today announced operating and financial results for the third quarter 2017.  Company highlights for the third quarter include:

Operating and Financial Summary (all amounts in this operating and financial summary exclude four communities that are undergoing repositioning, lease-up or significant renovation and conversion, unless otherwise noted; also, see Non-GAAP Financial Measures below and reconciliation of Non-GAAP measures to the most directly comparable GAAP measure on the final page of this release.)

  • Revenue in the third quarter of 2017, including all communities, was $117.3 million, a $5.9 million, or 5.3%, increase from the third quarter of 2016.
     
    • Revenue for consolidated communities, and also excluding the Company's two communities impacted by Hurricane Harvey, was $110.1 million in the third quarter of 2017, an increase of 5.9% as compared to the third quarter of 2016. 
       
    • Occupancy for the Company's consolidated communities, and excluding the Company's two communities impacted by Hurricane Harvey, was 87.2% in the third quarter of 2017, an increase of 30 basis points from the second quarter of 2017 and a decrease of 140 basis points from the third quarter of 2016.  Same-community occupancy was 87.2% in the third quarter of 2017, a 30 basis point increase from the second quarter of 2017 and a 140 basis point decrease from the third quarter of 2016.
       
    • Average monthly rent for the Company's consolidated communities, and excluding the Company's two communities impacted by Hurricane Harvey, in the third quarter of 2017 was $3,600, an increase of $118 per occupied unit, or 3.4%, as compared to the third quarter of 2016.  Same-community average monthly rent was $3,572, an increase of $91 per occupied unit, or 2.6%, from the third quarter of 2016.
       
  • Income from operations, including all communities, was $4.5 million in the third quarter of 2017, which includes the non-cash amortization of resident leases of $2.1 million associated with communities acquired by the Company in the previous 12 months.
     
  • The Company's Net Loss for the third quarter of 2017, including all communities, was $8.1 million, which includes the non-cash amortization of resident leases of $2.1 million associated with communities acquired by the Company in the previous 12 months.    
     
    • Excluding items noted and reconciled on the final page of this release, the Company's adjusted net loss was $2.2 million in the third quarter of 2017.
       
    • Adjusted EBITDAR was $37.9 million in the third quarter of 2017 compared to $38.0 million in the third quarter of 2016. Adjusted EBITDAR is a financial valuation measure, rather than a financial performance measure, used by management and others to evaluate the value of companies in the senior living industry.  The four communities undergoing repositioning, lease-up or significant renovation and conversion, not included in Adjusted EBITDAR, generated an additional $0.9 million of EBITDAR in the third quarter of 2017.
       
    • Adjusted Cash From Facility Operations ("CFFO") was $11.1 million in the third quarter of 2017 compared to $11.6 million in the third quarter of 2016.

"For many years I have been proud of Capital Senior Living's track record of operational excellence but have been disappointed by the more recent operational and sales challenges we have faced," said Lawrence A. Cohen, Chief Executive Officer of the Company.  "We have made a number of broad-based organizational and operational changes that are restoring and strengthening a culture of high reliability.  We are taking immediate action to overcome challenges, drive sustainable profitable growth and enhance shareholder value as we execute a comprehensive strategy to deliver higher revenues, enhance cash flow and maximize the value of our owned real estate.  I am confident in our key initiatives and am pleased with the improvements that we saw as we progressed through the third quarter, including a 90 basis point improvement in same-community occupancy from June to September and 10% growth in same-community net operating income from June to September.

"These initiatives are expected to produce further improvement in our key metrics for the remainder of 2017 and beyond, and provide a strong foundation on which to execute our long-term growth strategy focused on organic growth, accretive acquisitions, conversion of units to higher levels of care and EBITDAR-enhancing capital expenditures.  By diligently executing this strategy, we expect to increase revenues, reduce operating expenses and increase EBITDAR and CFFO. We do not intend to pursue any new acquisitions until the middle part of 2018 so we can focus on implementing these intiatives.  We are committed to returning Capital Senior Living to operational excellence.  With a disciplined focus on our growth strategy and driving operational improvements, we will be well positioned to enhance shareholder value as well as the value of our owned real estate, and further capitalize on our competitive advantages as a leading pure-play private-pay senior housing owner/operator."

Recent Investment Activity

The Company announced today that it has elected not to purchase the community previously expected to close in mid-October.  Upon the successful implementation of important operating initiatives, the Company expects to resume pursuing accretive acquisitions of high-quality communities.

Hurricane Harvey

Two of the Company's communities in Houston were impacted by Hurricane Harvey. None of its Florida communities were impacted by Hurricane Irma.

The two Houston communities were proactively evacuated to ensure the safety of their residents.  The two communities sustained flood damage that has resulted in the temporary suspension of their operations.  Remediation is in progress and both communities are currently expected to begin admitting residents in early 2018.  The Company's property and casualty insurance will cover all damage to the buildings and the Company's business interruption coverage is expected to restore the economic loss related to the suspension of operations.The Company's deductible for the total claim is $0.1 million.

Financial Results - Third Quarter

For the third quarter of 2017, the Company reported revenue of $117.3 million, compared to revenue of $111.4 million in the third quarter of 2016, an increase of 5.3%.  The increase was mostly due to the acquisition of three communities during or since the third quarter of 2016, not including the acquisition of the four previously-leased communities in the first quarter of 2017 which increased Adjusted CFFO but did not result in increases to the Company's revenue or expense.  Revenue for consolidated communities excluding the four communities undergoing repositioning, lease-up or significant renovation and conversion, and the two Houston communities impacted by Hurricane Harvey, increased 5.9% in the third quarter of 2017 as compared to the third quarter of 2016. 

Operating expenses for the third quarter of 2017 were $74.6 million, an increase of $5.0 million from the third quarter of 2016.  The increase was primarily due to the acquisitions of senior housing communities made during or since the third quarter of 2016 and increased contract labor costs for additional staffing required for newly licensed memory care and assisted living units, which decreased during the third quarter as permanent staff was hired and is expected to continue to decrease in the fourth quarter of 2017. Operating expenses include a $0.7 million business interruption insurance credit related to the Company's two Houston communities impacted by Hurricane Harvey to offset the their lost revenues and continuing expenses related to the last seven days of August and the month of September, and to restore the communities' net income for those periods based on an approximate average for the first seven months of 2017.

General and administrative expenses for the third quarter of 2017 were $5.4 million.  This compares to general and administrative expenses of $5.7 million in the third quarter of 2016.  Excluding transaction and conversion costs in both periods, general and administrative expenses decreased $0.3 million in the third quarter of 2017 as compared to the third quarter of 2016, primarily due to a $0.9 million decrease in net healthcare expense year over year.  As a percentage of revenues under management, general and administrative expenses, excluding transaction and conversion costs, were 4.3% in the third quarter of 2017 compared to 4.7% in the third quarter of 2016.

Income from operations for the third quarter of 2017 was $4.5 million.  The Company recorded a net loss on a GAAP basis of $8.1 million in the third quarter of 2017.  Excluding items noted and reconciled on the final page of this release, the Company's adjusted net loss was $2.2 million in the third quarter of 2017. 

The Company's Non-GAAP financial measures exclude four communities that are undergoing repositioning, lease-up of higher-licensed units or significant renovation and conversion (see "Non-GAAP Financial Measures" below), including a community in Massachusetts undergoing significant renovation that was excluded beginning in the third quarter of 2017.

Adjusted EBITDAR for the third quarter of 2017 was $37.9 million as compared to $38.0 million in the third quarter of 2016.  The four communities undergoing repositioning, lease-up or significant renovation and conversion not included in Adjusted EBITDAR generated an additional $0.9 million of EBITDAR.

Adjusted CFFO was $11.1 million in the third quarter of 2017, as compared to $11.6 million in the third quarter of 2016. 

Operating Activities

Same-community results exclude the four communities previously noted that are undergoing repositioning, lease-up or significant renovation and conversion, the two Houston communities impacted by Hurricane Harvey, and three communities that were acquired during or since the third quarter of 2016. Same-community results also exclude certain transaction and conversion costs.  

Same-community revenue in the third quarter of 2017 increased 1.6% versus the third quarter of 2016. 

Same-community operating expenses increased 4.2% from the third quarter of the prior year, excluding conversion costs in both periods.  On the same basis, labor costs, including benefits, increased 4.0%, food costs increased 1.1% and utilities increased 0.4%, all as compared to the third quarter of 2016.  At communities that have not converted units to higher levels of care in the last year, labor costs increased 3.5%.  The most significant expense increase was in contract labor costs, mostly related to additional staffing required for newly licensed memory care and assisted living units.  Contract labor decreased throughout the third quarter of 2017 as permanent staff was hired and is expected to continue to decrease in the fourth quarter of 2017.  Same-community net operating income decreased 2.4% in the third quarter of 2017 as compared to the third quarter of 2016. Execution of a number of recovery initiatives during the third quarter improved same-community results as the quarter progressed. In the month of September, same-community revenues increased 2.3%, expenses decreased 2.3% and net operating income increased 9.1%, all as compared to the prior year.  

Capital expenditures for the third quarter of 2017 were $8.2 million, representing approximately $6.7 million of investment spending and approximately $1.5 million of recurring capital expenditures.

Balance Sheet

The Company ended the quarter with $22.6 million of cash and cash equivalents, including restricted cash.  During the third quarter of 2017, the Company spent $8.2 million on capital improvements. The Company received reimbursements from one of its REIT partners totaling $1.5 million in the third quarter for capital improvements at certain leased communities and expects to receive additional reimbursements as the remaining projects at leased communities are completed.  

As of September 30, 2017, the Company financed its owned communities with mortgages totaling $960.2 million at interest rates averaging 4.7%.  All of the Company's debt is at fixed interest rates, except for two bridge loans totaling approximately $76.6 million at September 30, 2017, one of which matures in the second quarter of 2019 and the other in the first quarter of 2020.  The earliest maturity date for the Company's fixed-rate debt is in 2021. 

The Company's cash on hand and cash flow from operations are expected to be sufficient for working capital, prudent reserves and the equity needed to fund the Company's acquisition, conversion and renovation programs.  

Q3 2017 Conference Call Information

The Company will host a conference call with senior management to discuss the Company's third quarter 2017 financial results.  The call will be held on Wednesday, November 1, 2017, at 5:00 p.m. Eastern Time.  The call-in number is 323-701-0230, confirmation code 5634307.  A link to a simultaneous webcast of the teleconference will be available at www.capitalsenior.com through Windows Media Player or RealPlayer.

For the convenience of the Company's shareholders and the public, the conference call will be recorded and available for replay starting November 1, 2017 at 8:00 p.m. Eastern Time, until November 9, 2017 at 8:00 p.m. Eastern Time.  To access the conference call replay, call 719-457-0820, confirmation code 5634307.  The conference call will also be made available for playback via the Company's corporate website, www.capitalsenior.com.

Non-GAAP Financial Measures of Operating Performance

Adjusted EBITDAR is a financial valuation measure and Adjusted Net Income and Adjusted CFFO are financial performance measures that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP").  Non-GAAP financial measures may have material limitations in that they do not reflect all of the costs associated with our results of operations as determined in accordance with GAAP.  As a result, these non-GAAP financial measures should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP

Adjusted EBITDAR is a valuation measure commonly used by our management, research analysts and investors to value companies in the senior living industry.  Because Adjusted EBITDAR excludes interest expense and rent expense, it allows our management, research analysts and investors to compare the enterprise values of different companies without regard to differences in capital structures and leasing arrangements.

The Company believes that Adjusted Net Income and Adjusted CFFO are useful as performance measures in identifying trends in day-to-day operations because they exclude the costs associated with acquisitions and conversions and other items that do not ordinarily reflect the ongoing operating results of our primary business.  Adjusted Net Income and Adjusted CFFO provide indicators to management of progress in achieving both consolidated and individual business unit operating performance and are used by research analysts and investors to evaluate the performance of companies in the senior living industry.

The Company strongly urges you to review on the last page of this release the reconciliation of net loss to Adjusted EBITDAR and the reconciliation of net (loss) income to Adjusted Net (Loss) Income and Adjusted CFFO, along with the Company's consolidated balance sheets, statements of operations, and statements of cash flows.

About the Company

Capital Senior Living Corporation is one of the nation's largest operators of residential communities for senior adults. The Company's operating strategy is to provide value to residents by providing quality senior housing services at reasonable prices.  The Company's communities emphasize a continuum of care, which integrates independent living, assisted living, and home care services, to provide residents the opportunity to age in place.  The Company operates 129 senior housing communities in geographically concentrated regions with an aggregate capacity of approximately 16,500 residents.

Safe Harbor

The forward-looking statements in this release are subject to certain risks and uncertainties that could cause results to differ materially, including, but not without limitation to, the Company's ability to find suitable acquisition properties at favorable terms, financing, refinancing, community sales, licensing, business conditions, risks of downturns in economic conditions generally, satisfaction of closing conditions such as those pertaining to licensure, availability of insurance at commercially reasonable rates, and changes in accounting principles and interpretations among others, and other risks and factors identified from time to time in our reports filed with the Securities and Exchange Commission.

For information about Capital Senior Living, visit www.capitalsenior.com.

Contact Carey P. Hendrickson, Chief Financial Officer, at 972-770-5600 for more information.

   
   
CAPITAL SENIOR LIVING CORPORATION  
   
CONSOLIDATED BALANCE SHEETS  
(unaudited, in thousands, except per share data)  
   
   
    September 30,
2017
    December 31,
2016
 
ASSETS                
Current assets:                
Cash and cash equivalents   $ 9,186     $ 34,026  
Restricted cash     13,372       13,297  
Accounts receivable, net     8,680       13,675  
Property tax and insurance deposits     12,912       14,665  
Prepaid expenses and other     3,978       6,365  
Total current assets     48,128       82,028  
Property and equipment, net     1,105,270       1,032,430  
Other assets, net     18,233       31,323  
Total assets   $ 1,171,631     $ 1,145,781  
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
Accounts payable   $ 3,975     $ 5,051  
Accrued expenses     36,663       39,064  
Current portion of notes payable, net of deferred loan costs     16,482       17,889  
Current portion of deferred income     14,245       16,284  
Current portion of capital lease and financing obligations     2,806       1,339  
Federal and state income taxes payable     110       218  
Customer deposits     1,428       1,545  
Total current liabilities     75,709       81,390  
Deferred income     10,504       12,205  
Capital lease and financing obligations, net of current portion     49,857       37,439  
Other long-term liabilities     15,273       15,325  
Notes payable, net of deferred loan costs and current portion     935,345       882,504  
Commitments and contingencies                
Shareholders' equity:                
Preferred stock, $.01 par value:                
Authorized shares – 15,000; no shares issued or outstanding            
Common stock, $.01 par value:                
Authorized shares – 65,000; issued and outstanding
shares – 30,478 and 30,012 in 2017 and 2016, respectively
    310       305  
Additional paid-in capital     177,610       171,599  
Retained deficit     (89,547 )     (51,556 )
Treasury stock, at cost – 494 shares in 2017 and 2016     (3,430 )     (3,430 )
Total shareholders' equity     84,943       116,918  
Total liabilities and shareholders' equity   $ 1,171,631     $ 1,145,781  
   
   


CAPITAL SENIOR LIVING CORPORATION  
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS  
(unaudited, in thousands, except per share data)  
   
    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2017     2016     2017     2016  
Revenues:                                
Resident revenue   $ 117,318     $ 111,436     $ 350,026     $ 331,643  
Expenses:                                
Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below)     74,636       69,622       220,703       203,307  
General and administrative expenses     5,361       5,749       17,678       16,969  
Facility lease expense     13,943       15,500       42,498       46,150  
Loss on facility lease termination                 12,858        
Stock-based compensation expense     1,962       2,479       5,833       7,482  
Depreciation and amortization expense     16,903       14,400       50,862       44,103  
Total expenses     112,805       107,750       350,432       318,011  
Income (Loss) from operations     4,513       3,686       (406 )     13,632  
Other income (expense):                                
Interest income     19       15       51       50  
Interest expense     (12,531 )     (10,636 )     (36,940 )     (30,966 )
Loss on disposition of assets, net     (1 )     (16 )     (126 )     (53 )
Other income     1             6       233  
Loss before provision for income taxes     (7,999 )     (6,951 )     (37,415 )     (17,104 )
Provision for income taxes     (133 )     (126 )     (394 )     (403 )
Net loss   $ (8,132 )   $ (7,077 )   $ (37,809 )   $ (17,507 )
Per share data:                                
Basic net loss per share   $ (0.28 )   $ (0.24 )   $ (1.28 )   $ (0.61 )
Diluted net loss per share   $ (0.28 )   $ (0.24 )   $ (1.28 )   $ (0.61 )
Weighted average shares outstanding — basic     29,512       28,959       29,427       28,879  
Weighted average shares outstanding — diluted     29,512       28,959       29,427       28,879  
Comprehensive loss   $ (8,132 )   $ (7,077 )   $ (37,809 )   $ (17,507 )
   
   


CAPITAL SENIOR LIVING CORPORATION  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(unaudited, in thousands)  
   
    Nine Months Ended
September 30,
 
    2017     2016  
Operating Activities                
Net loss   $ (37,809 )   $ (17,507 )
Adjustments to reconcile net loss to net cash provided by operating activities:                
Depreciation and amortization     50,862       44,103  
Amortization of deferred financing charges     1,216       870  
Amortization of deferred lease costs and lease intangibles     647       434  
Amortization of lease incentives     (950 )     (563 )
Deferred income     (899 )     15  
Lease incentives     5,159       5,858  
Loss on facility lease termination     12,858        
Loss on disposition of assets, net     126       53  
Provision for bad debts     1,355       1,214  
Stock-based compensation expense     5,833       7,482  
Changes in operating assets and liabilities:                
Accounts receivable     (3,834 )     (8,883 )
Property tax and insurance deposits     1,753       1,189  
Prepaid expenses and other     2,387       (2,112 )
Other assets     5,149       (462 )
Accounts payable     (1,076 )     (1,053 )
Accrued expenses     (2,400 )     (1,586 )
Other liabilities     3,649       8,652  
Federal and state income taxes receivable/payable     (108 )     (97 )
Deferred resident revenue     (1,520 )     (784 )
Customer deposits     (117 )     (249 )
Net cash provided by operating activities     42,281       36,574  
Investing Activities                
Capital expenditures     (30,165 )     (47,311 )
Cash paid for acquisitions     (85,000 )     (109,750 )
Proceeds from disposition of assets     16       32  
Net cash used in investing activities     (115,149 )     (157,029 )
Financing Activities                
Proceeds from notes payable     66,584       112,492  
Repayments of notes payable     (15,414 )     (12,881 )
Increase in restricted cash     (75 )     (133 )
Cash payments for capital lease and financing obligations     (2,117 )     (989 )
Cash proceeds from the issuance of common stock           66  
Excess tax benefits on stock options exercised           (27 )
Purchases of treasury stock           (2,496 )
Deferred financing charges paid     (950 )     (1,830 )
Net cash provided by financing activities     48,028       94,202  
Decrease in cash and cash equivalents     (24,840 )     (26,253 )
Cash and cash equivalents at beginning of period     34,026       56,087  
Cash and cash equivalents at end of period   $ 9,186     $ 29,834  
Supplemental Disclosures                
Cash paid during the period for:                
Interest   $ 35,108     $ 30,056  
Income taxes   $ 534     $ 564  
   
   


Capital Senior Living Corporation
Supplemental Information
 
                  Average        
          Communities   Resident Capacity   Average Units
          Q3 17   Q3 16   Q3 17   Q3 16   Q3 17   Q3 16
Portfolio Data                        
  I. Community Ownership / Management                    
    Consolidated communities                        
      Owned   83     78     10,767     9,771     8,119     7,255  
      Leased   46     50     5,756     6,333     4,414     4,900  
      Total   129     128     16,523     16,104     12,533     12,155  
                             
    Independent living           6,879     6,911     5,158     5,227  
    Assisted living           9,644     9,193     7,375     6,928  
      Total           16,523     16,104     12,533     12,155  
                               
                           
  II. Percentage of Operating Portfolio                        
    Consolidated communities                        
      Owned   64.3 %   60.9 %   65.2 %   60.7 %   64.8 %   59.7 %
      Leased   35.7 %   39.1 %   34.8 %   39.3 %   35.2 %   40.3 %
      Total   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %
                               
    Independent living           41.6 %   42.9 %   41.2 %   43.0 %
    Assisted living           58.4 %   57.1 %   58.8 %   57.0 %
      Total           100.0 %   100.0 %   100.0 %   100.0 %



Capital Senior Living Corporation
           
Supplemental Information (excludes four communities being repositioned/leased up and
  two Houston communities impacted by Hurricane Harvey)
         
Selected Operating Results   Q3 17   Q3 16    
  I. Owned communities            
    Number of communities     78       73      
    Resident capacity     9,841       8,845      
    Unit capacity (1)     7,469       6,528      
    Financial occupancy (2)   88.7 %   89.5 %    
    Revenue (in millions)   69.6     59.4      
    Operating expenses (in millions) (3)   44.1     37.2      
    Operating margin (3)   37 %   37 %    
    Average monthly rent     3,500       3,389      
  II. Leased communities            
    Number of communities     45       49      
    Resident capacity     5,530       6,107      
    Unit capacity (1)     4,227       4,713      
    Financial occupancy (2)   84.5 %   87.3 %    
    Revenue (in millions)   40.6     44.6      
    Operating expenses (in millions) (3)   23.6     24.9      
    Operating margin (3)   42 %   44 %    
    Average monthly rent     3,785       3,612      
  III. Consolidated communities            
    Number of communities     123        122      
    Resident capacity     15,371       14,952      
    Unit capacity     11,696       11,241      
    Financial occupancy (2)   87.2 %   88.6 %    
    Revenue (in millions)   110.1     104.0      
    Operating expenses (in millions) (3)   67.7     62.1      
    Operating margin (3)   39 %   40 %    
    Average monthly rent     3,600       3,482      
  IV. Communities under management            
    Number of communities     123        122      
    Resident capacity     15,371       14,952      
    Unit capacity (1)     11,696       11,241      
    Financial occupancy (2)   87.2 %   88.6 %    
    Revenue (in millions)   110.1     104.0      
    Operating expenses (in millions) (3)   67.7     62.1      
    Operating margin (3)   39 %   40 %    
    Average monthly rent     3,600       3,482      
  V. Same communities under management            
    Number of communities     120       120      
    Resident capacity     14,815       14,617      
    Unit capacity (1)     11,294       11,234      
    Financial occupancy (2)   87.2 %   88.6 %    
    Revenue (in millions)   105.5     103.9      
    Operating expenses (in millions) (3)   64.6     62.0      
    Operating margin (3)   39 %   40 %    
    Average monthly rent     3,572       3,481      
  VI. General and Administrative expenses as a percent of Total Revenues under Management  
    Third quarter (4)   4.3 %   4.7 %    
    Year to date (4)   4.6 %   4.6 %    
  VII. Consolidated Mortgage Debt Information (in thousands, except interest rates)  
    (excludes insurance premium financing)            
    Total fixed rate mortgage debt     883,607       861,657      
    Total variable rate mortgage debt     76,565       11,800      
    Weighted average interest rate   4.7 %   4.6 %    
  (1)   Due to conversion and refurbishment projects completed at certain communities, unit capacity is higher in Q3 17 than Q3 16 for same communities under management, which affects all groupings of communities.  
  (2)   Financial occupancy represents actual days occupied divided by total number of available days during the month of the quarter.      
  (3)   Excludes management fees, provision for bad debts and transaction and conversion costs.   
  (4)   Excludes transaction and conversion costs.          
                 
                 


CAPITAL SENIOR LIVING CORPORATION
NON-GAAP RECONCILIATIONS
(In thousands, except per share data)
               
  Three Months Ended September 30,    Nine Months Ended September 30,
    2017       2016       2017       2016  
Adjusted EBITDAR              
Net loss $   (8,132 )   $   (7,077 )   $   (37,809 )   $   (17,507 )
Depreciation and amortization expense      16,903         14,400         50,862         44,103  
Stock-based compensation expense     1,962         2,479         5,833         7,482  
Facility lease expense     13,943         15,500         42,498         46,150  
Loss on facility lease termination     -          -          12,858          -   
Provision for bad debts     380         405         1,355         1,214  
Interest income     (19 )       (15 )        (51 )       (50 )
Interest expense     12,531         10,636         36,940         30,966  
Loss (Gain) on disposition of assets, net     1          16         126         53  
Other income     (1 )       -          (6 )       (233 )
Provision for income taxes       133         126         394         403  
Casualty losses     704         634         1,727         1,069  
Transaction and conversion costs     439         1,663         1,992         3,063  
Communities excluded due to repositioning/lease-up     (927 )       (779 )       (2,740 )        (2,434 )
Adjusted EBITDAR $   37,917     $   37,988     $   113,979     $   114,279  
               
Adjusted Revenues              
Total revenues $   117,318     $   111,436     $    350,026     $   331,643  
Communities excluded due to repositioning/lease-up     (5,820 )       (4,399 )       (15,161 )       (13,198 )
Adjusted revenues $   111,498     $    107,037     $   334,865     $   318,445  
               
Adjusted net loss and Adjusted net loss per share            
Net loss $   (8,132 )   $   (7,077 )   $   (37,809 )   $   (17,507 )
Casualty losses     704         634         1,727         1,069  
Transaction and conversion costs     517         1,663         2,554          2,831  
Resident lease amortization     2,085         2,583         7,407         9,593  
Loss on facility lease termination     -          -           12,859         -   
Loss (Gain) on disposition of assets     1         16         126         53  
Tax impact of Non-GAAP adjustments (37%)      (1,224 )       (1,812 )       (9,129 )       (5,012 )
Deferred tax asset valuation allowance     3,086         2,976         14,020         6,398  
Communities excluded due to repositioning/lease-up     750         334         1,787         994  
Adjusted net (loss) income $   (2,213 )   $   (683 )   $    (6,458 )   $   (1,581 )
               
Diluted shares outstanding   29,512       28,959       29,427       28,879  
               
Adjusted net (loss) income per share $   (0.07 )   $   (0.02 )   $   (0.22 )   $    (0.05 )
               
Adjusted CFFO              
Net loss $   (8,132 )   $   (7,077 )   $   (37,809 )   $   (17,507 )
Non-cash charges, net     20,628         19,597          76,207         59,466  
Lease incentives     (1,504 )       (1,968 )       (5,159 )       (5,858 )
Recurring capital expenditures     (1,186 )       (1,155 )       (3,559 )       (3,451 )
Casualty losses     735         634         1,759         1,069  
Transaction and conversion costs     517          1,663         2,329         2,831  
Tax impact of Spring Meadows Transaction     -          (106 )       -          (318 )
Communities excluded due to repositioning/lease-up     29         (1 )       (203 )       (92 )
Adjusted CFFO $   11,087     $   11,587     $   33,565     $    36,140  

PRESS CONTACT:
Carey Hendrickson, Chief Financial Officer 
Phone: 1-972-770-5600

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