Five Star Quality Care CEO: Declining occupancy, slow renovations 2007 challenges
Five Star Quality Care, Inc. (AMEX: FVE) CEO Evrett Benton said declining occupancy rates and slower-than-expected hospital renovations were two major challenges during 2007. Benton made the comments during a midday conference call. Benton is stepping down on May 1 as chief executive and will be replaced by CFO Bruce Mackey Jr. Benton said he will devote his time to missionary work in Buenos Aires, Argentina, for three years.
“It is a bittersweet parting. The company is in tremendous shape and our future prospects are bright. I leave knowing that Five Star is in the capable hands of Bruce Mackey,” Benton said. “But remember, like all bad pennies, I will return.”
Before the opening, Five Star Quality Care reported fourth-quarter net income of $6.7 million, or $0.19 per share, up from a loss of $34.3 million, or $1.09 per share, a year earlier. Wall Street analysts, on average, projected earnings of $0.18 per share.
Quarterly revenue rose 7% to $251.2 million, from $234.6 million during the year-ago period. Analysts expected revenue of $250.7 million.
“The fourth quarter was a strong one for Five Star,” Benton said.
Total occupancy rate for the quarter was 90.3%, slightly up from 90.1% during the fourth quarter of 2006. Average daily rate for the fourth quarter rose 6% to $140. Mackey said the company is projecting “healthy rate increases” for 2008.
Benton said two issues challenged Five Star during 2007: the declining occupancy rate during the first half of the fiscal year and hospital renovation plans went slower than projected.
Mackey said the company plans to acquire at least 30 assisted-living properties during 2008. The properties will include senior residents with dementia.
“We think 30 is a good target number to bring in the door,” Mackey said. “A number of our buildings service dementia across the country. We do well servicing dementia residents.”
In midday trading, FVE shares are down 1.67%, or $0.12, at $7.05. Over the last 52 weeks, shares have ranged from $6.07 to $11.33.
