Five Star Quality Care Inc (FVE) saw its loss narrow to $5.63 million, or $0.11 a share for the quarter ended Dec. 31, 2016. In the previous year period, the company reported a loss of $6.38 million, or $0.13 a share. Revenue during the quarter went up marginally by 0.48 percent to $346.25 million from $344.60 million in the previous year period. Gross margin for the quarter expanded 34 basis points over the previous year period to 21.30 percent. Operating margin for the quarter stood at negative 1.62 percent as compared to a negative 1.46 percent for the previous year period.
Operating loss for the quarter was $5.60 million, compared with an operating loss of $5.02 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $3.50 million compared with $9.45 million in the prior year period. At the same time, adjusted EBITDA margin contracted 173 basis points in the quarter to 1.01 percent from 2.74 percent in the last year period.
Bruce Mackey, president and chief executive officer of Five Star, made the following statement: “During the quarter, we continued to make progress with our operating initiatives that are intended to improve occupancy, ancillary revenues and cash flows from our senior living communities. Despite the recent increased amount of competition in the senior living industry, we are pleased that our occupancy rate remained stable between the third and fourth quarters of 2016. Also during the quarter, we began operating seven new senior living communities with a combined 521 living units. Subsequent to the quarter's end, we entered into a new $100 million secured revolving credit facility which replaced our prior facility that was scheduled to expire in April 2017. This new credit facility adds liquidity to our already conservative balance sheet."
Operating cash flow turns negative
Five Star Quality Care Inc has spent $23.45 million cash to meet operating activities during the year as against cash inflow of $40.54 million in the last year. Cash flow from investing activities was $77.04 million from investing activities during the year as against cash outgo of $53.30 million in the last year. It has incurred net capital expenditure of $33.98 million on net basis during the year, down 25.39 percent or $11.57 million from year ago.
The company has spent $51.65 million cash to carry out financing activities during the year as against cash inflow of $8.61 million in the last year period.
Cash and cash equivalents stood at $16.61 million as on Dec. 31, 2016, up 13.20 percent or $1.94 million from $14.67 million on Dec. 31, 2015.
Working capital remains negative
Working capital of Five Star Quality Care Inc was negative $43.61 million on Dec. 31, 2016 compared with negative $131.85 million on Dec. 31, 2015. Current ratio was at 0.75 as on Dec. 31, 2016, up from 0.46 on Dec. 31, 2015.
Debt comes down significantly
Five Star Quality Care Inc has recorded a decline in total debt over the last one year. It stood at $58.49 million as on Dec. 31, 2016, down 47.01 percent or $51.90 million from $110.40 million on Dec. 31, 2015. Total debt was 11.48 percent of total assets as on Dec. 31, 2016, compared with 20.76 percent on Dec. 31, 2015. Debt to equity ratio was at 0.36 as on Dec. 31, 2016, down from 0.60 as on Dec. 31, 2015.
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