After Year of Struggles, Five Star Installs New CEO

Five Star Senior Living (Nasdaq: FVE) president and CEO Bruce Mackey is stepping down at the end of December, the Newton, Mass.-based provider announced Tuesday.

Katherine Potter, who currently serves as Five Star’s executive vice president and general counsel, will assume the roles of president and CEO effective New Year’s Day. Potter first joined Five Star in 2012; before joining the senior living provider, Potter practiced law at firms Sullivan & Worcester LLP and Burns & Levinson LLP.

Mackey — who has been with Five Star since its founding in 2001 and has served as president and CEO since 2008 — has agreed to remain a non-officer employee of Five Star until the end of 2019.

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Five Star as of Sept. 30 owned, leased or managed 283 senior housing communities in 32 states, a total that includes 29 skilled nursing facilities. Five Star is the fourth-largest senior housing operator in the country by unit count, according to recent data from industry association Argentum.

Potter joins Five Star at a challenging time. The company is currently considering a wide range of options as it faces operational and financial woes — which together “raise substantial doubt about our ability to continue as a going concern,” Mackey said during a third-quarter earnings call in November.

Five Star struggled throughout the year, with the Nasdaq stock exchange issuing a delisting warning to the provider in October. It reported a loss of $50.4 million in 2018 during the third quarter and said that it would have to make changes to survive.

“Five Star faces challenges that are currently negatively impacting its revenues, expenses, cash flows and results from operations, and Five Star expects these challenges to continue at least through 2019,” Five Star wrote in its third quarter earnings release.

Throughout the year, the company also put some of the blame for its troubles on its skilled nursing properties. In the second quarter, Mackey said that the operator was “evaluating all of our skilled nursing units within our CCRCs [continuing care retirement communities] and examining the feasibility and profitability of repurposing some or all of these units.”

The company also experienced SNF occupancy issues in the first quarter, with census at Five Star’s standalone skilled nursing facilities dropping to 75.7% in that timeframe.

Written by Maggie Flynn and Tim Regan

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