Five Star Announces Reverse Stock Split in Latest Restructuring Move

After posting its first quarterly profit in six years in the second quarter of 2019, Five Star Senior Living (Nasdaq: FVE) is taking steps to make itself a viable publicly traded company.

The Newton, Massachusetts-based senior housing operator’s board of directors approved a reverse stock split intended to bring Five Star to the minimum $1 bid price per share requirement set by Nasdaq.

A reverse split takes multiple shares from investors and replaces them with smaller shares, serving the dual purpose of increasing the average share price of stock while not changing the total value of the issuing company.


The reverse split will take effect after trading closes on Sept. 30. At that point, every 10 Five Star common shares outstanding will be converted into one issued and outstanding Five Star common share. The split will reduce the number of issued and outstanding Five Star common shares from 50.8 million to 5.1 million, and adding a multiplier of 10 to each Five Star share when trading closes on the 30th.

Five Star stock has traded at around $0.50 per share since early April, and only flirted with the minimum Nasdaq threshold a handful of times over the past year. It posted a 52-week high of $1.05 per share in March, and a low of $0.31 per share in mid-December 2018.

The reverse stock split announcement comes as Five Star continues an organizational restructuring. Notably, Five Star and Newton, Massachusetts-based health care real estate investment trust, Senior Housing Properties Trust (Nasdaq: SNH) agreed to a major lease restructuring in April which terminated all master leases in favor of RIDEA structures that will go into effect in Q1 2020, and transfers a substantial portion of Five Star ownership to SNH.


SNH also bought $50 million in unencumbered fixed assets from Five Star in April, and extended a $25 million line of credit to the provider, secured by six communities.

Five Star also named Magaret Wigglesworth as its new chief operating officer in late June. She replaced Scott Herzig, who left the operator in December 2018.

Wigglesworth was most recently executive vice president of the International Council of Shopping Centers (ICSC), where she expanded and diversified the organization’s membership to include new tenant classes including health care; improved communication and collaboration among members; and created programming to respond to changes in demographics, tenant classes, spending and lifestyle related to retail activity.