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Five Star Battles Occupancy Pressures With Rehab Brand

Though Five Star Senior Living (Nasdaq: FVE) is currently suffering from an anemic occupancy rate, the nationwide provider says the future looks healthier thanks to its plan to grow ancillary services, which is on track and entering a new phase with third-party customers.

The Newton, Massachusetts-based company is moving full steam ahead with a six-point plan, which includes providing outpatient rehabilitation at Senior Living Communities operated by unaffiliated providers, and in some cases, direct competitors.

The provider now has 81 outpatient rehabilitation clinics and plans to open 15 more this year. Five Star also plans to have its first unaffiliated customers online by the end of the second quarter this year, CEO Bruce Mackey said Friday on an earnings call with analysts.

Occupancy continues to lag

It appears as though Five Star’s occupancy issues did not bottom out last quarter as its leadership hoped.

The company logged an occupancy rate of 83.6% at owned and leased senior living communities for the first quarter of 2017. That’s around what it was last quarter, and also down from a reported occupancy rate of 85.1% for the same quarter in 2016.

Overall, the company recorded a net loss of $6.8 million in the first quarter of 2017. Total revenues landed at $280.5 million, a 0.1% increase from the $280.1 million in the same period of 2016. Five Star attributed the slight uptick in revenue to rate increases at its leased properties and $1 million extra income from ancillary services versus its results from last year.

New competition and this year’s flu season hit the company especially hard. Five Star saw a 3% increase in of resident deaths when comparing this year and last year, said COO Scott Herzig on the earnings call.

Another issue that might threaten Five Star’s bottom line is wages. Though the company says its wages and benefits are competitive but “well controlled,” minimum wage increases in some states might make increased pay inevitable.

But Five Star has better days ahead, Herzig added. The provider will break ground on assisted living and memory care expansions at communities in Delaware and Tennessee, and is looking at adding new memory units to two of its communities in California, he said.

Shares were flat Friday afternoon following the earnings call.

Written by Tim Regan

The post Five Star Battles Occupancy Pressures With Rehab Brand appeared first on Senior Housing News.



This post first appeared on Business Insight And Information - Senior Housing News, please read the originial post: here

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Five Star Battles Occupancy Pressures With Rehab Brand

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