Senior Housing and Assisted Living

The Ensign Group, Inc. (Nasdaq: ENSG), the parent company of the Ensign(TM) group of skilled nursing, rehabilitative care services, home health, hospice care and assisted living companies, recently reported record results for the first quarter of 2010.  The Ensign Group separately announced the acquisition of two Texas skilled nursing facilities and the operating assets of Horizon Home Health and Hospice, a home health and hospice agency based in Meridian, Idaho.

Financial Highlights Include:

• Adjusted earnings were a record $0.45 per diluted share, up 15.4% over the first quarter of 2009;
• Total revenue was a record $154.2 million, up 18.3% on a consolidated basis;

• Same-store skilled mix increased by 363 basis points to 54.0%;
• The company’s same-store skilled revenue increased by 12.4%, notwithstanding the negative impact of Medicare’s 1.1% net market basket decrease, which took effect on October 1, 2009;
• Consolidated EBITDAR climbed 19.4% to $25.2 million, with consolidated EBITDAR margins of 16.4%; and
• Net income rose 18.0% to $9.3 million for the quarter.

The Ensign Group also announced the acquisition of four long-term care facilities and a home health and hospice business in three separate transactions between January 1, 2010 and May 1, 2010. The real estate and operations were purchased with cash, and include:

• In Idaho, Emmett Care & Rehabilitation Center, a 72-bed skilled nursing facility in Emmett, and Parke View Rehabilitation & Care Center, an 86-bed skilled nursing facility in Burley, on January 1, 2010;
• In Texas, Heritage Gardens Healthcare Center, a 140-bed skilled nursing facility in Carrollton, Texas, and Silver Springs Healthcare Center, a 144-bed skilled nursing facility in Houston, Texas, on May 1, 2010.
• And in Idaho, Horizon Home Health and Hospice, a home health and hospice agency based in Meridian, Idaho, also on May 1, 2010.

Nationwide Health Properties, Inc. (NYSE: NHP) last week announced results of operations for the first quarter ended March 31, 2010. NHP saw revenues increase by 5% compared to Q1 2009 to $102 million.  The company showed a lower net income of $31 million in Q1 2010 versus $49 million in Q1 2009 that included a $21 million gain on sale.  NHP’s diluted funds from operations (FFO) for the first quarter was $64.9 million compared to $61.5 million in 2009.

"We began 2010 with a strong balance sheet and an enviable liquidity position. Leveraging our excellent financial position with improvements in the capital markets and the economy, we acquired during the first quarter seven medical office buildings and made an $80 million loan secured by 26 medical office buildings located in seven states," commented Douglas M. Pasquale, NHP’s Chairman and Chief Executive Officer. "Subsequent to quarter end, we have completed an additional $58 million of investments bringing the year to date total to $438 million," Mr. Pasquale added.

NHP Q1 2010 Earnings Release

Health Care REIT, Inc. (NYSE:HCN) announced operating results for the company’s first quarter ended March 31, 2010 that showed revenues of $152 million vs. $138 million in Q1 2009.  HCN’s profit for Q1 2010 was $31.7 million down from $66 million from the same period in 2009.  Health Care REIT showed increases in expenses for interest cost, depreciation and took a loss of $18 million on the extinguishment of debt.  Some of the other highlights from the quarter include:

"We are off to a strong start to 2010," commented George L. Chapman, chief executive officer of Health Care REIT, Inc. "We completed $700 million of gross investments year-to-date, including a joint venture investment in one of the country’s leading life science campuses in Cambridge, Massachusetts and an acquisition of a medical office building portfolio in Wisconsin master leased to investment grade-rated Aurora Health Care, Inc. As a result, we have increased the high-end of our 2010 acquisition guidance by $200 million. In addition, during the quarter we commenced the development of two MOB projects affiliated with leading health systems, completed the construction of six existing development projects, and stabilized eight properties. On the capital raising front, we recently completed two debt offerings at attractive rates, which extended the duration of our debt while providing additional capacity for new investments."

Skilled Healthcare Group, Inc. (NYSE: SKH) announced its Q1 2010 earnings this week and the acquisition of substantially all the assets of five Medicare-certified hospice companies and three Medicare-certified home health companies.  SKH showed total consolidated revenue for the quarter ended March 31, 2010 was $189.3 million, compared to total consolidated revenue of $188.1 million in the first quarter of 2009 and $188.4 million in the fourth quarter of 2009 and net income for Q1 2010 totaled $8.9 million, compared to $10.0 million for the first quarter of 2009.

“Our first quarter results demonstrate improving operating metrics in several key areas. First, our occupancy rate increased to 83.8 percent, or 70 basis points, over the fourth quarter of 2009 as the affiliates increased average daily census by 140 patients. Second, our skilled mix improved by 90 basis points to 23.0 percent as compared to the fourth quarter of 2009. Additionally, the percentage of Medicare days in the upper nine RUG categories reached an all-time high of 46.4 percent. With a continuous focus on high quality of care, these improving operating metrics illustrate the success of initiatives implemented in 2009 to mitigate risk from the challenging economic and competitive environment,” said Boyd Hendrickson, Chairman and Chief Executive Officer.

As part of the acquisition of the five hospice and three home health companies, SKH will enter into a fee-based management agreement for another home health company and be granted an option to acquire substantially all of the assets of such other company. The hospice and home health companies collectively have operations in Idaho, Montana, Nevada and Arizona.  Total consideration of the transactions is approximately $62 million consisting of approximately $43 million in cash with the remainder in the form of certain deferred payments payable over a three to five year period. The cash portion of the purchase price will be funded primarily from Skilled Healthcare’s senior credit facilities.

Boyd Hendrickson, Chairman and CEO, noted, “We are very excited about this transaction which comes with strong cash flow, a successful operating platform, a solid management team and higher than Company average EBITDA margins. Additionally, it expands our business lines into home health care and further expands our hospice platform. This lateral diversification expands our footprint to three additional states; thereby, diversifying our revenue stream both geographically and by sector.”

Brookdale Senior Living Inc. (NYSE: BKD) announced its financial and operating results for the first quarter of 2010 that shows total revenue for the first quarter was $544.4 million, an increase of $46.5 million, or 9.3%, from the first quarter of 2009.  The increase in revenue was primarily driven by an increase in average monthly revenue per unit, including growing revenues from ancillary services, and an increase in capacity through expansions and acquisitions, while occupancy was flat with the first quarter of 2009.  Some of the operating highlights include:

• Average monthly revenue per unit was $4,386 in the first quarter, an increase of $171, or 4.1%, over the first quarter of 2009.
• Average occupancy for all consolidated communities for the first quarter of 2010 was 86.6%, flat with the first quarter of 2009 and 0.1% lower than the fourth quarter of 2009.
• Excluding expansions and acquisitions from the fourth quarter of 2009 and first quarter of 2010, average occupancy for the first quarter was 86.8%, compared to 87.0% for the fourth quarter of 2009.

For the quarter ended March 31, 2010, Facility Operating Income was $182.0 million, an increase of $9.0 million from the first quarter of 2009, and Adjusted EBITDA was $96.3 million, a $10.4 million increase over the first quarter of 2009.  Cash From Facility Operations was $54.4 million for the first quarter of 2010, or $0.46 per share, and CFFO was $50.2 million for the first quarter of 2009, or $0.49 per share.  Net loss for the first quarter of 2010 was $(14.3) million, or $(0.12) per diluted common share. The loss for the quarter includes non-cash items for depreciation and amortization, non-cash stock-based compensation expense and straight-line lease expense, net of deferred gain amortization.

Bill Sheriff, Brookdale’s CEO, said, "We are very pleased with our first quarter results, which were in line with our expectations. We are starting to see some improving economic signs, although still seeing the impact of the deep recession on our customers. In fact, we ended April at our highest occupancy of the year. Our sales inquiries during the first quarter increased over 9% from the prior year same period and, in our entry fee communities, increased 31% versus the first quarter of 2009. The number of entry fee unit closings was up 40% versus the prior year period. We also saw a decrease in the use of incentives for new residents during the first quarter compared to the fourth quarter."

Sunrise Senior Living, Inc. (NYSE: SRZ) reported financial results for the first quarter of 2010 that showed revenues of $355.2 million in the first quarter of 2010 as compared to $374.7 million for the first quarter of 2009 and its net loss for the first quarter of 2010 was ($16.0) million as compared to net loss of ($18.2) million for the first quarter of 2009.  For the first quarter of 2010, net loss from operations was ($10.6) million, an improvement of $30.4 million as compared to a net loss from operations of ($41.0) million in the first quarter of 2009.  Some of Sunrise’s operational highlights include:

• Comparable community revenues for the first quarter of 2010 increased by 2.4 percent, from $483.7 million for the first quarter of 2009 to $495.3 million for the first quarter of 2010.  Excluding the impact of foreign exchange rates in 2010, comparable community revenues for the first quarter of 2010 increased 1.3 percent to $489.9 million year-over-year.
• Average unit occupancy in comparable communities for the first quarter of 2010 was 86.2 percent, which was down 150 basis points from 87.7 percent for the first quarter of 2009, and down 50 basis points as compared to 86.7 percent in the fourth quarter of 2009. 

• Average daily revenue per occupied unit in comparable communities increased 4.2 percent from $194.99 for the first quarter of 2009 to $203.23 for the first quarter of 2010. Excluding the impact of foreign exchange rates in 2010, average daily revenue per occupied unit for the comparable community portfolio increased 3.1 percent to $201.01 for the first quarter of 2010 as compared to the first quarter of 2009. 
• Comparable community operating expenses for the first quarter of 2010 increased 2.1 percent over the first quarter of 2009 from $358.9 million to $366.5 million. Excluding the foreign exchange rates in 2010, these operating expenses increased 1.0 percent to $362.6 million in the first quarter of 2010.

“In this quarter we continued our operations and balance sheet restructuring efforts to move us toward strengthening our core business results while reducing corporate risk,” said Mark Ordan, Sunrise’s chief executive officer. “Our progress in both areas reinforces our optimism about our future.”

Sunrise continues to express concern over its liquidity position noting that it had $46.5 million of unrestricted cash and no borrowing availability under its credit facility.  As of March 31, 2010, Sunrise had debt of $424.2 million, of which $147.1 million of debt is scheduled to mature in 2010, including $33.4 million under its bank credit facility, which is due in December 2010. Debt that is in default totals $241.3 million, including $187.1 million of debt ($200.4 million face) that is in default as a result of the failure to pay principal and interest to the lenders of Sunrise’s German communities and $25.6 million of U.S. debt that is due to one of our German lenders. Sunrise is seeking waivers with respect to existing defaults to avoid acceleration of these obligations.

Sunrise Senior Living Q1 2010 Conference Call Transcript 

Sunrise Senior Living Q1 2010 Conference Call

Sunrise Senior Living Q1 2010 Earnings Release

Omega Healthcare Investors, Inc. (NYSE:OHI) announced that it has exercised its option to acquire 63 additional long-term care facilities from affiliates of CapitalSource Inc. (“CapitalSource”) for approximately $295 million, consisting of approximately: (i) $34 million in cash to sellers, and (ii) repayment of $261 million of debt at closing.   The 63 facilities represent 6,607 available beds located in 19 states and are part of 30 in-place triple net leases among 18 operators. The 30 leases generate approximately $34 million of annualized revenue.

Omega acquired the option to purchase the 63 facilities in connection with Omega’s previously announced securities purchase agreement with CapitalSource, pursuant to which Omega acquired entities owning 40 facilities on December 22, 2009, and has agreed to acquire 40 other facilities subject to obtaining consent of the U.S. Department of Housing and Urban Development.

Sun Healthcare Group, Inc. (NASDAQ: SUNH) announced its operating results for the first quarter ended March 31, 2010 last week that showed an increase in revenues by 1.1% compared to the same period in 2009.  Revenue increases were attributable to increased patient acuity and its hospice and rehabilitation therapy businesses showed revenue growth.  The company had diluted earnings per share from continuing operations of $0.24.  On a year-over-year basis for the quarter, revenue growth in Sun’s inpatient services business totaled $5.3 million, or 1.3 percent, due principally to revenue growth in SolAmor, the Company’s hospice business. SolAmor’s revenues nearly doubled, growing from $5.8 million to $11.0 million, due to census expansion derived from an October 2009 acquisition and same store census growth. SolAmor contributed $2.1 million of EBITDA for the quarter and a margin of 19.4 percent.

Sun’s rehabilitation therapy services business, SunDance, experienced revenue growth of $6.8 million, or 15.5 percent, in the quarter. EBITDA margin also expanded in the quarter by 110 basis points, producing an 8.0 percent EBITDA margin. These results were favorably impacted by the 11.3 percent growth in revenue per contract. Sun’s medical staffing services business, CareerStaff, continues to be negatively impacted by the slow national economy as revenues were down compared to revenues in the first quarter of 2009. Despite the decline in revenues, CareerStaff experienced a solid EBITDA margin of 7.1 percent for the quarter.

"Although we’re still not seeing positive sustainable trends on the top line for our nursing centers or staffing business, the company turned in a solid quarter, driven by several factors. The acuity of the patients we care for was at an all-time high, increasing our Medicare rates and mitigating, to some extent, soft occupancy and skilled mix. Our hospice and contract rehab businesses delivered strong top-line results, and both segments are poised to have their best years in terms of EBITDA margin. In addition, our corporate overhead costs were well managed, which in turn contributed positively to our EPS results for the quarter. We increased our capital expenditure investments made in the year-over-year quarter by $5.2 million and even with that increased investment were able to generate solid free cash flow for the quarter of $21.0 million," said Richard K. Matros, Sun’s chairman and chief executive officer.

SUNH 2010 Q1 8-K filing

Sunrise Senior Living, Inc. (NYSE: SRZ) announced that, in an oral ruling, the United States District Court for the Eastern District of Virginia granted summary judgment for Sunrise, dismissing all claims in the litigation filed against the Company by HCP, Inc. with respect to management agreements under which Sunrise manages four assisted living communities owned by HCP.  Sunrise expects a formal written order in the coming weeks.

"We are very pleased that the Court has thrown out the baseless case brought against Sunrise by HCP," said Mark Ordan, Sunrise’s chief executive officer. "The Court’s ruling confirms that Sunrise has fulfilled its obligations under the management contracts with HCP. We are grateful for the support of our team members, shareholders, residents and their families throughout this process. The greatest strength of our Company has always been the outstanding service we provide to all of our seniors and we look forward to continuing to serve these communities."

Sunrise Senior Living, Inc. (NYSE: SRZ) announced it has completed the previously announced restructure transactions with three of the lenders to its German subsidiaries, Capmark Finance Inc., Natixis, London Branch, and Fortis Bank, UK Branch. Under the restructure transactions, which were first announced in October 2009, such lenders agreed to settle and compromise claims that they may have had against Sunrise with respect to its German subsidiaries.

Sunrise also announced that it has entered into a partial settlement and waiver declaration with Aareal Bank AG, pursuant to which Sunrise will be released from its operating deficit and payment guarantee obligations with respect to loans previously made by Aareal to certain of Sunrise’s German subsidiaries in exchange for, among other things, a cash payment of EUR 2.1 million (approximately $2.8 million).

Sunrise states that it is working to settle and compromise claims that one remaining lender to its German communities may have against Sunrise.

"I am very grateful for the persistent work of my colleagues, our advisors and our banks to accomplish this restructuring," said Mark Ordan, Sunrise’s chief executive officer.

Click here or the full 8-K