LifeSpire’s financial reports continue to show resurging health and vitality. Although we budgeted a financial loss of $3.0 million, the unaudited 2016 third quarter results show a current loss of only $287,000. This result is $2.3 million better than the previous year’s operating loss of $2.6 million. When compared to 2016 second quarter results, which had an operating loss of $592,000, quarter three actually shows operating income of $242,000.
Both increased revenues and decreased expenses brought about this favorable result for two primary reasons:
- Higher census and payer mix-driven revenues at The Glebe (due to increased overall occupancy) and at Lakewood (due to direct admissions into Skilled Nursing Care based on approval from the Virginia State Health Commissioner earlier this year).
- Net assets released from restrictions and investment income.
These factors combined to offset the loss in Earned Entrance Fees.
The favorable expense variance to budget was primarily due to favorable operating expense results. Specifically, staffing and non-wage operating expenses were $1.2 million and $223,000, respectively, better than budgeted due to late 2015 implementation of the communities’ performance improvement plans and improvements in accountability and stewardship.
Finally, in spite of the year-to-date operating loss, estimated consolidated operating cash flow was positive, primarily because improved operating income results were sufficient to overcome slowing net entrance fee receipts.
In addition to this excellent news from our financial report, another significant 2016 milestone was the refinancing of our debt. In October, BB&T Capital markets closed on our behalf an $85,505,000 Series 2016 Fixed Rate Bond issue. From the proceeds, we retired our existing Series 2006A and Series 2006C Fixed Rate Tax-Exempt Bonds as well as a taxable line of credit.
Refinancing, the first achievement, produced an annual savings of $750,000. The second achievement restructured the taxable line of credit into long-term tax-exempt debt. The original purpose of the taxable line of credit was to enhance liquidity by financing routine capital expenditures.
I am very grateful to our chief financial officer Joe Kelley and our entire finance team for their expertise and commitment to excellence. Their hard work and dedication are positioning LifeSpire for even stronger financial results next year and in the years to come.