December 10, 2023

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5 Star Senior Residing to Shut or Changeover All Expert Nursing Property in Marketplace Exit

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Five Star Senior Residing (NYSE: FVE) on Friday declared that it will exit the experienced nursing company as section of a broader plan to trim its footprint and change its aim towards impartial living and lively adult attributes.

The Newton, Mass.-dependent 5 Star will shut or changeover the skilled nursing models at all of its continuing treatment retirement communities (CCRCs), for a whole get rid of of 1,500 models, in a procedure envisioned to conclude by the conclude of 2021.

The nursing home exodus will come as the operator also appears to be to offload 108 “smaller senior dwelling communities” owned by genuine estate financial commitment trust (REIT) landlord Diversified Healthcare Believe in (Nasdaq: DHC). That transfer will see 5 Star offload 7,500 models to other operators, in accordance to the enterprise.

“The implementation of Five Star’s new strategic approach makes it possible for us to make on our operational strengths at larger senior living communities and stand-by itself energetic grownup and impartial residing communities though continuing to evolve our choice-primarily based, monetarily adaptable rehabilitation and wellness expert services choices to meet up with the shifting needs and preferences of more mature older people,” 5 Star CEO Katherine Potter stated in a statement.

Once the transactions are full, 5 Star will continue on to run a overall of 144 senior dwelling communities, like 120 for DHC, minus the competent nursing units the organization also indicated a want to broaden its outpatient rehab providers into the long term.

“We imagine that this change in our focus is vital to the long term achievement of Five Star and superior positions us to expand our senior living management organization and proceed to diversify revenue resources in the long run,” Potter stated. “More specifically, the implementation of this new strategic prepare will showcase the operational strengths of Five Star to current and likely associates and prospects in the foreseeable future.”

DHC, in the meantime, framed the shift as a way to bolster the health of its senior housing functioning (Shop) portfolio, in accordance to a statement from president and main running officer Jennifer Francis.

“More especially, we believe the transition of administration of our 108 smaller sized communities to a diverse team of most effective-in-class operators will increase their general performance and we have already initiated discussions with quite a few opportunity new operators,” Francis reported. “We also assume that the benefits for the 120 communities that 5 Star will go on to regulate for DHC will enhance for the reason that these communities are larger sized and provider decrease acuity citizens, which are locations of operational power for 5 Star and where it designs aim its enterprise in the upcoming.”

Five Star has telegraphed a partial or finish exit from the expert nursing place for some time, with former CEO Bruce Mackey highlighting occupancy declines and reimbursement pressures back in the summer months of 2018.

“We are in the course of action of assessing all of our proficient nursing units in just our CCRCs and inspecting the feasibility and profitability of repurposing some or all of these units,” Mackey said at the time. “We will ascertain if experienced models will be [as] profitable as other kinds of senior dwelling operations wherever the demand from customers is obvious.”

At the similar time, the operator’s rehab and wellness companies — presented underneath the Ageility brand — have emerged as a dazzling place, accounting for 38{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of its annual revenues in 2020, or an enhance of 5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} from the year ahead of. Buoyed by these success, Five Star intends to aggressively broaden its Ageility choices in the year forward, with a goal of incorporating two to 4 new outpatient clinics for every quarter, Potter reported in February.

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