Editor’s Note: This article has been corrected from a previous version which wrongly attributed quotes from CEO Larry Cohen to Brett Lee. Lee is joining Capital Senior Living on Aug. 14 as COO. The article also has been updated to reflect that 10 communities were impacted by costs related to temporary labor, not one community as originally stated.
Capital Senior Living (NYSE: CSU) missed revenue projections by about $330,000 in the second quarter of 2017, which the company attributes to a rough flu season early in the year.
However, Capital executives say that company performance has been strong since and should improve in the second half of the year.
“We clearly had a deep hole to come out of,” said CEO Larry Cohen on Capital’s second quarter earnings call on Tuesday. “We’re disappointed that the revenue is off as much as it is… we’ve had great rate growth since January and we’re still building demand. It’s really what happened in January that filtered through the balance of the second and third quarters because we had the deep hole, but the fundamentals in those quarters [were] actually very good in all aspects.”
July saw a sequential gain in financial occupancy and Capital has a strong ratio of deposits on-hand to move-out notices that should manifest in August, Cohen said.
Capital, one of the largest senior living providers in the country, reached $116.7 million in revenue in the second quarter, which is a 5.1% increase from the second quarter of 2016, despite missing analysts’ projections.
The company’s second-quarter earnings per share came in at negative 8 cents, beating analysts’ projections by 15 cents.
Capital’s occupancy stabilized in quarter two, but the company had hoped for greater growth. This miscalculation contributed to missed revenue expectations, Cohen noted.
Additionally, higher costs of temporary labor utilized after renovations at 10 Capital communities negatively impacted revenue. The transition to permanent staff in the coming months will improve those costs, he said.
When one analyst referenced this morning’s HCP Inc. (NYSE: HCP) earnings call and issues that Brookdale Senior Living (NYSE: BKD) has faced with high turnover of executive directors, Cohen said that this was not at all an issue at Capital communities.
“We’re not Brookdale and we’re not going through the integration challenges and all the other issues that they have faced,” he said. “We have an executive director that has been with us since 1988 and one that has been with us since 1996. The turnover of our executive directors is the lowest threshold of our staff and has been very consistent.”
Written by Elizabeth Jakaitis