Five Star Quality Care, Inc. Reports First Quarter 2012 Results

The conference call telephone number is [phone]. Participants calling from outside the United States and Canada should dial [phone]. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. Eastern Time, May 7, 2012. To hear the replay, dial [phone]. Participants calling from outside the United States and Canada should dial [phone]. The replay pass code is 242631.

A live audio webcast of the conference call will also be available in a listen only mode on the Company’s website at www.fivestarseniorliving.com. Participants wanting to access the webcast should visit the Company’s website about five minutes before the call. The archived webcast will be available for replay on the Company’s website for about one week after the call. The recording and retransmission in any way of the Company’s first quarter 2012 conference call is strictly prohibited without the prior written consent of the Company. The Company’s website is not incorporated as part of this press release.

About Five Star Quality Care, Inc.:

Five Star Quality Care, Inc. is a senior living and healthcare services company. We operate 247 senior living communities with 27,503 living units located in 30 states, including 31 communities (2,954 living units) that we own and operate, 191 communities (20,811 living units) that we lease and operate and 25 communities (3,738 living units) that we manage. These communities include independent living, assisted living and skilled nursing communities. We also operate five institutional pharmacies and two rehabilitation hospitals. We are headquartered in Newton, Massachusetts.

FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share data)
(unaudited)
				Three months ended March 31,
				2012					2011
Revenues:
Senior living revenue				$	276,220				$	262,654
Rehabilitation hospital revenue					26,787					25,625
Institutional pharmacy revenue					18,621					19,337
Management fee revenue					1,088					-
Reimbursed costs incurred on behalf of managed communities					23,405					-
Total revenues					346,121					307,616
Operating expenses:
Senior living wages and benefits					138,374					129,761
Other senior living operating expenses					66,962					62,980
Cost incurred on behalf of managed communities					23,405					-
Rehabilitation hospital expenses					24,119					24,053
Institutional pharmacy expenses					18,750					18,889
Rent expense					50,227					47,499
General and administrative					15,455					13,670
Depreciation and amortization					6,316					4,307
Total operating expenses					343,608					301,159
Operating income					2,513					6,457
Interest, dividend and other income					217					319
Interest and other expense					(1,426)					(501)
Acquisition related costs					-					(102)
Equity in income of Affiliates Insurance Company					45					37
(Loss) gain on sale of available for sale securities   reclassified from other comprehensive income					(1)					76
Income from continuing operations before income taxes					1,348					6,286
Provision for income taxes					(602)					(379)
Income from continuing operations					746					5,907
Loss from discontinued operations					(377)					(1,774)
Net income				$	369				$	4,133
Weighted average shares outstanding - basic					47,899					36,020
Weighted average shares outstanding - diluted					47,899					38,909
Basic income per share from:
Continuing operations				$	0.02				$	0.16
Discontinued operations					(0.01)					(0.04)
Net income per share - basic				$	0.01				$	0.12
Diluted income per share from:
Continuing operations				$	0.02				$	0.15
Discontinued operations					(0.01)					(0.04)
Net income per share - diluted				$	0.01				$	0.11

FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands)
(unaudited)
					March 31, 2012					December 31, 2011
Assets
Current assets:
Cash and cash equivalents					$	26,645				$	28,374
Accounts receivable, net of allowance						65,106					64,265
Investments in available for sale securities						8,773					9,114
Restricted cash						5,749					4,838
Prepaid expenses and other current assets						26,294					26,250
Assets of discontinued operations						8,515					8,675
Total current assets						141,082					141,516
Property and equipment, net						353,539					353,065
Restricted cash						6,317					4,092
Restricted investments in available for sale securities						12,871					13,115
Goodwill, equity investment and other long term assets						71,458					71,689
Total assets					$	585,267				$	583,477
Liabilities and Shareholders' Equity
Current liabilities:
Bridge loan from Senior Housing Properties Trust					$	38,000				$	38,000
Other current liabilities						151,067					151,331
Total current liabilities						189,067					189,331
Mortgage notes payable						38,446					38,714
Convertible senior notes						37,282					37,282
Other long term liabilities						39,505					37,956
Shareholders’ equity						280,967					280,194
Total liabilities and shareholders' equity					$	585,267				$	583,477

FIVE STAR QUALITY CARE, INC.
SENIOR LIVING COMMUNITY OPERATING DATA (1)
(dollars in thousands, except average daily rate)
			Three months ended
			March 31,
			2012			2011
Number of owned and leased communities (end of period)				222			209
Number of owned and leased living units (end of period)				23,765			22,176
Number of living units % growth				7.2%
Occupancy				85.9%			85.6%
Average daily rate (ADR)			$	146.50		$	152.27
ADR % growth				-3.8%
Percent breakdown of senior living revenues:
Medicaid				12.5%			12.8%
Medicare				13.0%			16.0%
Private and other sources				74.5%			71.2%
Total				100.0%			100.0%
Senior living revenues			$	276,220		$	262,654
Senior living revenues % growth				5.2%
Senior living wages and benefits			$	138,374		$	129,761
Senior living wages and benefits as a % of senior living revenues				50.1%			49.4%
Other senior living operating expenses			$	66,962		$	62,980
Other senior living operating expenses as a % of senior living revenues				24.2%			24.0%
Community expenses % growth (2)				6.5%
(1)  Excludes data for managed communities and discontinued senior living operations.
(2)  Community expenses consist of senior living wages and benefits and other senior living operating expenses as       shown on our condensed consolidated statement of income.

FIVE STAR QUALITY CARE, INC.
COMPARABLE SENIOR LIVING COMMUNITY OPERATING DATA (1)
(dollars in thousands, except average daily rate)
		Three months ended
		March 31, (2)
		2012				2011
Number of owned and leased communities (end of period)			209				209
Number of owned and leased living units (end of period)			22,176				22,176
Occupancy			85.6%				85.6%
Average daily rate (ADR)		$	150.64			$	152.27
ADR % growth			-1.1%
Percent breakdown of senior living revenues:
Medicaid			13.0%				12.8%
Medicare			13.6%				16.0%
Private and other sources			73.4%				71.2%
Total			100.0%				100.0%
Senior living revenues		$	263,606			$	262,654
Senior living revenues % growth			0.4%
Senior living wages and benefits		$	134,142			$	129,761
Senior living wages and benefits as a % of senior living revenues			50.9%				49.4%
Other senior living operating expenses		$	63,797			$	62,980
Other senior living operating expenses as a % of senior living revenues			24.2%				24.0%
Community expenses % growth (3)			2.7%
(1)  Excludes data for managed communities and discontinued senior living operations.
(2)  Communities that we have operated continuously since January 1, 2011.
(3)  Community expenses consist of senior living wages and benefits and other senior living operating expenses as shown       on our condensed consolidated statement of income.

FIVE STAR QUALITY CARE, INC.
SENIOR LIVING COMMUNITY FINANCIAL DATA (1)
(in thousands)
					Three months ended
					March 31,
					2012					2011
Independent and assisted living community revenue					$		223,111			$		207,631
Skilled nursing facility revenue							53,109					55,023
Total senior living revenue					$		276,220			$		262,654
Independent and assisted living community wages and benefits					$		103,912			$		95,245
Skilled nursing facility wages and benefits							34,462					34,516
Total senior living wages and benefits					$		138,374			$		129,761
Independent and assisted living community operating expenses					$		54,138			$		49,666
Skilled nursing facility operating expenses							12,824					13,314
Total other senior living operating expenses					$		66,962			$		62,980
(1)  Excludes data for managed communities and discontinued senior living operations.
COMPARABLE SENIOR LIVING COMMUNITY FINANCIAL DATA (1)
					Three months ended
					March 31, (2)
					2012					2011
Independent and assisted living community revenue					$		210,497			$		207,631
Skilled nursing facility revenue							53,109					55,023
Total senior living revenue					$		263,606			$		262,654
Independent and assisted living community wages and benefits					$		99,680			$		95,245
Skilled nursing facility wages and benefits							34,462					34,516
Total senior living wages and benefits					$		134,142			$		129,761
Independent and assisted living community operating expenses					$		50,973			$		49,666
Skilled nursing facility operating expenses							12,824					13,314
Total other senior living operating expenses					$		63,797			$		62,980
(1)  Excludes data for managed communities and discontinued senior living operations.
(2)  Communities that we have operated continuously since January 1, 2011.

FIVE STAR QUALITY CARE, INC.
OTHER OPERATING DATA (1)
(dollars in thousands, except average daily rate)
		Three months ended
		March 31,
		2012				2011
Number of senior living communities (end of period) (2) :
Assisted and independent living communities, owned			31				24
Assisted and independent living communities, leased			153				147
Assisted and independent living communities, managed			25				-
Total number of assisted and independent living communities			209				171
Skilled nursing communities, leased			38				38
Total number of senior living communities			247				209
Number of senior living units (end of period):
Assisted and independent living communities, owned			2,954				2,089
Assisted and independent living communities, leased (3)			17,388				16,664
Assisted and independent living communities, managed (4)			3,738				-
Total number of assisted and independent living units			24,080				18,753
Skilled nursing communities, leased (5)			3,423				3,423
Total number of senior living units			27,503				22,176
Senior living revenues:
Assisted and independent living communities		$	219,903			$	205,419
Skilled nursing communities			53,109				55,023
Other (6)			3,208				2,212
Total senior living revenues		$	276,220			$	262,654
Senior living data: (7)
Assisted and independent living communities occupancy			86.6%				85.9%
Assisted and independent living communities ADR		$	136.61			$	141.45
Assisted and independent living communities ADR % growth			-3.4%
Skilled nursing communities occupancy			81.6%				83.8%
Skilled nursing communities ADR		$	208.85			$	213.03
Skilled nursing communities ADR % growth			-2.0%
Rehabilitation hospital data:
Rehabilitation hospital units			321				321
Rehabilitation hospital occupancy			60.4%				60.8%
(1)  Excludes data for institutional pharmacy operations and discontinued senior living operations.
(2)  Communities are categorized by the type of living units which constitute a majority of the total living units at the community.
(3)  Includes 2,052 skilled nursing units in communities where assisted living and independent living services are the        predominant services provided for the three months ended March 31, 2012 and 2011.
(4)  Includes 71 skilled nursing units in communities where assisted and independent living services are the predominant        services provided for the three months ended March, 31 2012.
(5)  Includes 77 assisted living and independent living units in communities where skilled nursing services are the predominant        services provided for the three months ended March 31, 2012 and 2011.
(6)  Other senior living revenues relates primarily to rehabilitation and other specialty service revenues provided at residential        facilities and does not include revenues from institutional pharmacy or rehabilitation hospital operations.
(7)  Excludes data for managed communities.

FIVE STAR QUALITY CARE, INC.

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