Five Star Quality Care, Inc. Reports Fourth Quarter And Year End 2011 Results

Five Star Quality Care, Inc. (NYSE: FVE) today announced its financial results for the quarter and year ended December 31, 2011.

Fourth Quarter 2011 Financial Highlights:

• Total revenues for the fourth quarter of 2011 increased 7.8% to $332.8 million from $308.8 million for the same period in the previous year.
• Income from continuing operations for the fourth quarter of 2011 was $52.7 million compared to $6.9 million for the same period in the previous year.
• Income per share from continuing operations for the fourth quarter of 2011 was $1.11 and $1.05 per share, basic and diluted, respectively, compared to $0.19 per basic and diluted share for the same period in the previous year.
• Income from continuing operations for the fourth quarter of 2011 included certain items that, in the aggregate, increased our earnings by $51.8 million, or $1.09 and $1.03 per share, basic and diluted, respectively. These items were $50.7 million income tax benefit related to the reversal of our valuation allowance, $1.4 million income tax benefit related to impairment of long lived assets and $3.5 million gain on sale of available for sale securities partially offset by an impairment of long lived assets of $3.5 million and acquisition related costs of $229,000. Income from continuing operations for the fourth quarter of 2010 included certain items that, in aggregate, increased our earnings by $1.0 million, or $0.03 per basic and diluted share. These items were a $933,000 gain on sale of available for sale securities and a $108,000 gain on early extinguishment of debt.
• Earnings before interest, taxes, depreciation and amortization, or EBITDA, for the fourth quarter of 2011 was $8.8 million compared to $11.9 million for the same period in the previous year. EBITDA for the fourth quarter of 2011 included those items noted above that, in aggregate, decreased our EBITDA by a net amount of $269,000, and EBITDA for the fourth quarter of 2010 included those items noted above that, in aggregate, increased our EBITDA by $1.0 million. EBITDA excluding these items was $9.0 million and $10.9 million in the fourth quarters of 2011 and 2010, respectively. A reconciliation of income from continuing operations determined in accordance with U.S. generally accepted accounting principles, or GAAP, to EBITDA and EBITDA excluding certain items for the quarters ended December 31, 2011 and 2010 appears later in this press release.

Fourth Quarter 2011 Operating Highlights:

• Senior living occupancy at our owned and leased senior living communities for the fourth quarter of 2011 was 86.2% compared to 86.0% for the same period in the previous year.
• Senior living average daily rate, or ADR, at our owned and leased senior living communities for the fourth quarter of 2011 decreased by 3.3% to $143.73 from $148.56 for the same period in the previous year.
• The percentage of senior living revenues derived from residents’ private resources at our owned and leased senior living communities for the fourth quarter of 2011 increased to 74.7% from 71.4% for the same period in the previous year.
• For those owned and leased senior living communities that we operated continuously since October 1, 2010, or comparable communities, occupancy for the fourth quarter of 2011 was 85.9% compared to 86.0% for the same period in the previous year.
• The ADR at comparable communities for the fourth quarter of 2011 decreased by 0.5% to $147.85 from $148.56 for the same period in the previous year.

Fiscal Year Financial Highlights:

• Total revenues for the year ended December 31, 2011 increased 5.6% to $1.28 billion from $1.21 billion for the same period in the previous year.
• Income from continuing operations for the year ended December 31, 2011 was $68.3 million compared to $25.6 million for the same period in the previous year.
• Income per share from continuing operations for the year ended December 31, 2011 was $1.62 and $1.54 per share, basic and diluted, respectively, compared to $0.72 and $0.69 per share, basic and diluted, respectively, for the same period in the previous year.
• Income from continuing operations for the year ended December 31, 2011 included certain items that, in aggregate, increased our earnings by $51.0 million, or $1.21 and $1.13 per share, basic and diluted, respectively. These items were a $50.7 million income tax benefit related to the reversal of our valuation allowance, $1.4 million income tax benefit related to impairment of long lived assets, $4.1 million gain on sale of available for sale securities and a $1,000 gain on early extinguishment of debt partially offset by an impairment of long lived assets of $3.5 million and acquisition related costs of $1.8 million. Income from continuing operations for the year ended December 31, 2010 included certain items that, in aggregate, increased our earnings by $1.7 million, or $0.05 and $0.04 per share, basic and diluted, respectively. These items were a $933,000 gain on sale of available for sale securities, a $592,000 gain on early extinguishment of debt and a $142,000 net gain on the divestment of our auction rate securities.
• EBITDA for the year ended December 31, 2011 was $41.5 million compared to $43.8 million for the same period in the previous year. EBITDA for the year ended December 31, 2011 included those items noted above that, in aggregate, decreased our EBITDA by a net amount of $1.1 million, and EBITDA for the year ended December 31, 2010 included those items noted above that, in aggregate, increased our EBITDA by $1.7 million. EBITDA excluding these items was $42.6 million for 2011 compared with $42.2 million for the same period in the previous year. A reconciliation of income from continuing operations determined in accordance with GAAP to EBITDA and EBITDA excluding certain items for the years ended December 31, 2011 and 2010 appears later in this press release.

Conference Call:

On February 16, 2012 at 10:00 a.m. Eastern Standard Time, we will host a conference call to discuss the fourth quarter and year end financial results. Following management’s presentation, there will be a question and answer period.

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