Capital Senior Living saw its first sequential growth and margin improvement in the second quarter. This marked the first time that’s happened since the pandemic began, the senior living operator’s CEO, President and Director Kim Lody said in Thursday’s earnings call.
“[This is] an encouraging sign that recovery has begun,” she said.
CSL has been operating in a revenue constrained environment for several years, and after taking some decisive steps to address the company’s liquidity, Lody said the company is turning the corner on recovery.
“This is a very pivotal time for Capital Senior Living,” Lody said.
The pending strategic investment from Conversant Capital and a proposed rights offering to strengthen its financial profile and raise up to $152.5 million have helped fortify CSL’s balance sheet. The proposed transaction is subject to approval by the company’s stockholders.
“When this transaction is completed, this capital raise will allow Capital Senior Living to quickly pivot from playing defense to playing offense,” Lody said.
The company completed the transition of legal ownership of six communities back to Fannie Mae, recording a gain on extinguishment of debt of $67.2 million.
Revenue in the second quarter of 2021 increased $1.3 million or 2.8% compared to the first quarter of 2021, but still fell short of last year’s figures. Revenues for the second quarter of 2021 were $57 million, compared to $101.5 million during the same period of 2021.
“$39.2 million of the decrease was related to the sales or conversion of 59 properties throughout 2020,” Vice President of Accounting and Financial Reporting Tiffany Dutton said.
The company reported net income and comprehensive income of $49.1 million for the second quarter of 2021, compared to net loss and comprehensive loss of $12.8 million for the second quarter of 2020.
“As we look toward the future, we recognize that we need capital to continue to fund our recovery as well as position the company for future growth,” Dutton said.
CSL continues to divest of underperforming properties with an eye toward transferring 18 properties back to Fannie Mae by the end of the year. In the second quarter, the company transitioned ownership of six communities back to Fannie Mae, resulting in extinguishing $67.2 million of debt. Since the end of the quarter, CSL has transitioned four more properties to Fannie Mae.
“As we look to the future we are beginning to realize the results of the significant improvements we have made to our financial foundation and operating platform during the last two years,” Dutton said.
See more coverage of the earnings call by McKnight’s Senior Living.
