Seniors Housing Weekly Update -- First Quarter Earnings Results Are Coming In

April 30, 2013


 

April 30, 2013. 60 Seconds with Steve Monroe. Five Star Quality Care shares plunge on weak occupancy numbers.

First Quarter Earnings Results Are Coming In

Earnings season is upon us again, and for the first operating company out of the blocks, it was not a pretty sight, at least in terms of how shareholders reacted. Five Star Quality Care reported an increase in revenues and a very small increase in EBITDA compared with the year-ago quarter. But what caused the problem for investors was the 50 basis point drop in occupancy for its senior living portfolio compared with the year-ago quarter, and a larger sequential decline from the fourth quarter. Yes, they had a bad flu season, which can be common, but the biggest problem was with the company’s skilled nursing portfolio of 38 leased facilities. These had a whopping 260 basis point decline in occupancy from a year ago, and an 80 basis point drop from the fourth quarter. The results sent Five Star’s shares plummeting by 17% on heavy volume, which could represent a buying opportunity. Not all is bad in the world of occupancy, however, as Ventas reported that its Atria Senior Living and Sunrise properties had a combined 220 basis point increase in same-facility occupancy year over year, and that is certainly good news.

 

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first quarter earnings

Matt, skilled nursing occupancy is declining for the obvious reasons of cost and alternatives, but also because the lengths of stay are declining because of increased short-term stay rehab. So, lower occupancy for SNFs is not always a bad thing.

First qtr earnings

Steve, across the country I've heard that there are reductions in occupancy for SNF. But what is not reported is the cause. I would expect that after a period of time, SNF attrition would be at 100%. So what are the root causes for such attrition? Are seniors leaving due to costs, care, siblings taking on the home health care option? Your talking about a large difference in a year. Matt

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