Five Star Quality Care, Inc. Reports Second Quarter 2013 Results and Announces Intention to Sell 11 Senior Living Communities

  Five Star Quality Care, Inc. Reports Second Quarter 2013 Results and
  Announces Intention to Sell 11 Senior Living Communities with 753 Living
  Units that Receive the Majority of Their Revenues from Medicaid/Medicare

Business Wire

NEWTON, Mass. -- July 29, 2013

Five Star Quality Care, Inc. (NYSE: FVE) today announced its financial results
for the quarter and six months ended June 30, 2013.

Second Quarter 2013 Financial Highlights:

  *Total revenues for the second quarter of 2013 increased 9.0% to $351.9
    million from $322.8 million for the same period in 2012.
  *Earnings before interest, taxes, depreciation and amortization, or EBITDA,
    for the second quarter of 2013 were $12.3 million compared to $17.1
    million for the same period in 2012. EBITDA for the second quarter of 2012
    included a gain on settlement of our litigation with Sunrise Senior
    Living, Inc., or Sunrise, which increased EBITDA by $3.4 million. EBITDA
    excluding that gain and certain other items was $12.5 million and $13.7
    million for the second quarters of 2013 and 2012, 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 June 30,
    2013 and 2012 appears later in this press release.
  *Income from continuing operations for the second quarter of 2013 was $2.7
    million, or $0.06 per basic and diluted share, compared to $5.3 million,
    or $0.10 per basic and diluted share for the same period in 2012. Income
    from continuing operations for the second quarter of 2012 included a gain
    on settlement of our litigation with Sunrise of $1.9 million (net of
    taxes), or $0.04 per basic and diluted share.
  *Net income for the second quarter of 2013 was $825,000, or $0.02 per basic
    and diluted share, compared to $4.6 million, or $0.09 per basic and
    diluted share for the same period in 2012. Net income in the 2013 period
    included a loss from discontinued operations of $1.8 million. Net income
    in the 2012 period included a gain on settlement of our litigation with
    Sunrise of $1.9 million (net of taxes) and a loss from discontinued
    operations of 674,000.

Second Quarter 2013 Operating Highlights:

  *Occupancy at our owned and leased senior living communities for the second
    quarter of 2013 was 85.5% compared to 86.0% for the same period in 2012.
  *The average monthly rate at our owned and leased senior living communities
    for the second quarter of 2013 increased by 0.8% to $4,443 from $4,406 for
    the same period in 2012.
  *The percentage of revenues derived from residents’ private resources for
    the second quarter of 2013 at our owned and leased senior living
    communities increased 90 basis points to 76.7% from 75.8% for the same
    period in 2012.
  *Our fee revenues from managed senior living communities in the second
    quarter of 2013 increased to $2.3 million compared to $1.3 million for the
    same period in 2012.

Year to Date Financial Highlights:

  *Total revenues for the six months ended June 30, 2013 increased 9.7% to
    $703.1 million from $640.8 million for the same period in 2012.
  *EBITDA for the six months ended June 30, 2013 was $22.5 million compared
    to $26.3 million for the same period in 2012. EBITDA for the six months
    ended June 30, 2012 included a gain on settlement of our litigation with
    Sunrise that increased EBITDA by $3.4 million. EBITDA excluding that gain
    and certain other items was $22.5 million and $22.9 million for the six
    months ended June 30, 2013 and 2012, respectively. A reconciliation of
    income from continuing operations determined in accordance with GAAP to
    EBITDA and EBITDA excluding certain items for the six months ended June
    30, 2013 and 2012 appears later in this press release.
  *Income from continuing operations for the six months ended June 30, 2013
    was $6.1 million, or $0.13 per basic and diluted share, compared to $6.5
    million, or $0.14 per basic and diluted share for the same period in 2012.
    Income from continuing operations for the six months ended June 30, 2013
    included an income tax benefit of $1.5 million, or $0.03 per basic and
    diluted share, relating to a work opportunity tax credit program that
    expired in 2012 and which was retroactively reinstated in January 2013.
    Income from continuing operations for the six months ended June 30, 2012
    included a gain on settlement of our litigation with Sunrise of $1.9
    million (net of taxes), or $0.04 per basic and diluted share.
  *Net income for the six months ended June 30, 2013 was $2.8 million, or
    $0.06 per basic and diluted share, compared to $5.0 million, or $0.11 per
    basic and diluted share for the same period in 2012. Net income in the
    2013 period included a loss from discontinued operations of $3.4 million.
    Net income in the 2012 period included a gain on settlement of our
    litigation with Sunrise of $1.9 million (net of taxes) and a loss from
    discontinued operations of $1.5 million.

Intention to Sell 11 Senior Living Communities with 753 Living Units that
Receive the Majority of Their Revenues from Medicaid/Medicare:

In June 2013, we and Senior Housing Properties Trust, or SNH, agreed that SNH
will offer for sale 10 senior living communities with 721 living units, which
we lease from SNH. Seven of these 10 communities with 578 living units are
skilled nursing facilities, or SNFs, and three of these communities with 143
living units are assisted living communities. Also in June 2013, we decided to
offer for sale one assisted living community we own with 32 living units. In
aggregate, these communities receive the majority of their revenues from
Medicare/Medicaid reimbursements. We are in the process of offering these
communities for sale, but we can provide no assurance that sales of these
communities will occur. With regard to the 10 communities that we lease from
SNH, our rent payable to SNH will be reduced if and as these sales may occur
pursuant to our lease terms with SNH. The operating results of these 11
communities are included in our discontinued operations and they generated net
losses of $1.8 million during the second quarter of 2013.

As of June 30, 2013, we and SNH had entered an agreement to sell one of the 10
communities that we lease from SNH and intend to sell, a SNF with 112 living
units, for a sales price of $2.6 million. We expect the sale of this SNF to
occur before the end of 2013, but completion of this sale is subject to
customary closing conditions and we can provide no assurance that a sale of
this SNF will occur before the end of 2013 or at all or that the terms of the
sale will not change.

Other Highlights:

On April 30, 2013, we completed the sale of two SNFs we owned located in
Michigan with a total of 271 living units for an aggregate sales price of $8.0
million, including the assumption by the buyer of $7.5 million of United
States Department of Housing and Urban Development guaranteed mortgage debt.
The operating results of these two SNFs are included in our discontinued
operations.

On July 8, 2013, we redeemed all $24.9 million principal amount of our 3.75%
convertible senior notes outstanding at a redemption price equal to the
principal amount plus accrued and unpaid interest. We funded this redemption
with cash on hand and borrowings under our revolving credit facility.

Conference Call:

Later today, July 29, 2013, at 5:00 p.m. Eastern Time, we will host a
conference call to discuss the second quarter financial results. Following
management’s presentation, there will be a question and answer period.

The conference call telephone number is (877) 777-1967. Participants calling
from outside the United States and Canada should dial (612) 332-0637. 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, August
5, 2013. To hear the replay, dial (320) 365-3844. The replay pass code is
296748.

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
transcription, recording and retransmission in any way of the Company’s second
quarter 2013 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. As of June 30, 2013, we operated 250 senior living communities
(excluding those senior living communities we have classified as discontinued
operations) with 29,698 living units located in 31 states, including 30
communities (2,946 living units) that we own and operate, 181 communities
(20,074 living units) that we lease and operate, and 39 communities (6,678
living units) that we manage. These communities include independent living,
assisted living, continuing care and skilled nursing communities. We also
operate two rehabilitation hospitals. We are headquartered in Newton,
Massachusetts.

                WARNING CONCERNING FORWARD LOOKING STATEMENTS

THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER WE USE WORDS SUCH AS
“BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE” OR SIMILAR
EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING
STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT
FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR.
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY
THESE FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:

  *THIS PRESS RELEASE STATES THAT WE AND SNH HAVE DECIDED TO OFFER FOR SALE
    10 SENIOR LIVING COMMUNITIES THAT WE LEASE FROM SNH AND WE HAVE DECIDED TO
    OFFER FOR SALE ONE SENIOR LIVING COMMUNITY THAT WE OWN. WE CAN PROVIDE NO
    ASSURANCE THAT WE WILL BE ABLE TO SELL THESE COMMUNITIES ON TERMS
    ACCEPTABLE TO US OR OTHERWISE.
  *THIS PRESS RELEASE STATES THAT WE AND SNH HAVE AGREED TO SELL ONE OF THE
    10 SENIOR LIVING COMMUNITIES THAT WE LEASE FROM SNH AND THAT WE EXPECT THE
    SALE TO OCCUR PRIOR TO THE END OF 2013. THIS SALE IS SUBJECT TO VARIOUS
    TERMS AND CONDITIONS TYPICAL OF SUCH TRANSACTIONS. THESE TERMS AND
    CONDITIONS MAYNOT BE MET. AS A RESULT, THIS TRANSACTION MAYBE DELAYED OR
    MAYNOT OCCUR OR ITS TERMS MAYCHANGE.

THE INFORMATION CONTAINED IN OUR FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION, OR SEC, INCLUDING UNDER THE CAPTION “RISK FACTORS” IN OUR PERIODIC
REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT
COULD CAUSE DIFFERENCES FROM OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH
THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.

FOR THESE REASONS, AMONG OTHERS, INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE UPON FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE.

FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
                                                            
                     Three months ended                Six months ended

                     June 30,                          June 30,
                     2013            2012              2013            2012
Revenues:
Senior living        $ 269,081       $ 269,040         $ 538,471       $ 535,776
revenue
Rehabilitation
hospital               28,343          26,386            55,824          53,173
revenue
Management fee         2,281           1,302             4,583           2,390
revenue
Reimbursed
costs incurred
on behalf of          52,153        26,098          104,211       49,503  
managed
communities
Total revenues        351,858       322,826         703,089       640,842 
                                                                         
Operating
expenses:
Senior living
wages and              130,466         130,240           263,086         262,026
benefits
Other senior
living                 65,751          63,797            132,090         128,058
operating
expenses
Costs incurred
on behalf of           52,153          26,098            104,211         49,503
managed
communities
Rehabilitation
hospital               24,710          23,872            49,604          47,991
expenses
Rent expense           50,936          49,849            101,129         99,628
General and            15,452          15,389            30,583          30,844
administrative
Depreciation
and                   6,651         6,276           13,089        12,165  
amortization
Total
operating             346,119       315,521         693,792       630,215 
expenses
                                                                         
Operating              5,739           7,305             9,297           10,627
income
                                                                         
Interest,
dividend and           211             234               408             439
other income
Interest and           (1,355  )       (1,605  )         (2,811  )       (3,031  )
other expense
Acquisition            (41     )       -                 (41     )       -
related costs
Equity in
earnings of
Affiliates             79              76                155             121
Insurance

Company
Gain on                -               3,365             -               3,365
settlement
Gain on early
extinguishment         -               45                -               45
of debt
Loss on sale
of available
for sale
securities            (117    )      -               (30     )      (1      )
reclassified
from other
comprehensive
income
                                                                         
Income from
continuing
operations             4,516           9,420             6,978           11,565
before income
taxes
Provision for         (1,854  )      (4,108  )        (850    )      (5,063  )
income taxes
Income from
continuing             2,662           5,312             6,128           6,502
operations
Loss from
discontinued          (1,837  )      (674    )        (3,368  )      (1,495  )
operations
                                                                         
Net income           $ 825          $ 4,638          $ 2,760        $ 5,007   
                                                                         
                                                                         
Weighted
average shares        48,253        47,914          48,244        47,906  
outstanding -
basic
                                                                         
Weighted
average shares        48,253        49,953          48,244        50,360  
outstanding -
diluted
                                                                         
Basic income
per share
from:
Continuing           $ 0.06          $ 0.10            $ 0.13          $ 0.14
operations
Discontinued          (0.04   )      (0.01   )        (0.07   )      (0.03   )
operations
Net income per       $ 0.02         $ 0.09           $ 0.06         $ 0.11    
share - basic
                                                                         
Diluted income
per share
from:
Continuing           $ 0.06          $ 0.10            $ 0.13          $ 0.14
operations
Discontinued          (0.04   )      (0.01   )        (0.07   )      (0.03   )
operations
Net income per
share -              $ 0.02         $ 0.09           $ 0.06         $ 0.11    
diluted
                                                                         
                                                                         

FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS DATA
(in thousands)
(unaudited)
                                                          
                                                June 30,          December 31,

                                                2013              2012
Assets
Current assets:
Cash and cash equivalents                       $   19,311        $   24,638
Accounts receivable, net of allowance               56,763            49,886
Due from related persons                            5,810             6,881
Investments in available for sale                   16,352            12,920
securities
Restricted cash                                     11,202            6,548
Prepaid expenses and other current assets           19,382            29,394
Assets of discontinued operations                 4,978            16,285
Total current assets                              133,798          146,552
                                                                      
Property and equipment, net                         331,172           333,335
Restricted cash                                     11,196            12,166
Restricted investments in available for             6,979             10,580
sale securities
Goodwill, equity investment and other             75,741           75,604
long term assets
Total assets                                    $  558,886       $   578,237
                                                                      
Liabilities and Shareholders' Equity
Current liabilities:
Revolving credit facility, secured,             $   -             $   -
principally by real estate
Revolving credit facility, secured,                 -                 -
principally by accounts receivable
Convertible senior notes                            24,872            24,872
Other current liabilities                         148,010          165,969
Total current liabilities                         172,882          190,841
                                                                      
Mortgage notes payable                              37,050            37,621
Other long term liabilities                         39,141            42,970
Shareholders’ equity                              309,813          306,805
Total liabilities and shareholders'             $  558,886       $   578,237
equity
                                                                      
                                                                      

FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                                                            
                     Three months ended June 30,       Six months ended June 30,
                     2013            2012              2013            2012
                                                                         
Cash flows
from operating
activities:
Net income           $ 825           $ 4,638           $ 2,760         $ 5,007
Adjustments to
reconcile net
income to cash
provided by
operating
activities:
Depreciation
and                    6,651           6,276             13,089          12,165
amortization
Gain on early
extinguishment         -               (45     )         -               (45     )
of debt
Loss from
discontinued           1,837           674               3,368           1,495
operations
Loss on sale
of available           117             -                 30              1
for sale
securities
Equity in
earnings of
Affiliates             (79     )       (76     )         (155    )       (121    )
Insurance
Company
Stock-based            383             273               588             490
compensation
Provision for
losses on              1,606           1,074             2,842           2,153
receivables
Changes in
assets and
liabilities:
Accounts               (5,145  )       256               (9,719  )       (1,722  )
receivable
Prepaid
expenses and           2,283           4,003             9,377           3,515
other assets
Accounts
payable and            (2,795  )       1,783             (15,623 )       2,140
accrued
expenses
Accrued
compensation           (357    )       611               3,088           5,101
and benefits
Due from (to)
related                201             2,489             1,315           (2,703  )
persons, net
Other current
and long term         1,095         (10     )        (1,473  )      984     
liabilities
Cash provided
by operating          6,622         21,946          9,487         28,460  
activities
                                                                         
Net cash
provided by
(used in)             2,955         747             (81     )      1,390   
discontinued
operations
                                                                         
Cash flows
from investing
activities:
Acquisition of
property and           (13,717 )       (15,235 )         (26,255 )       (27,770 )
equipment
Payments from
restricted
cash and               (1,518  )       (754    )         (3,684  )       (3,890  )
investment
accounts, net
Purchase of
available for          (451    )       (4,554  )         (5,333  )       (4,554  )
sale
securities
Proceeds from
disposition of
property and           7,731           7,668             15,901          13,967
equipment held
for sale
Proceeds from
sale of
available for         2,804         -               5,213         772     
sale
securities
Cash used in
investing             (5,151  )      (12,875 )        (14,158 )      (21,475 )
activities
                                                                         
Cash flows
from financing
activities:
Proceeds from
borrowings on          -               47,500            20,000          47,500
credit
facilities
Repayments of
borrowings on          -               (10,000 )         (20,000 )       (10,000 )
credit
facilities
Repayments of
borrowing on
the bridge
loan from              -               (38,000 )         -               (38,000 )
Senior Housing
Properties
Trust
Purchase and
retirement of          -               (12,038 )         -               (12,038 )
convertible
senior notes
Repayments of
mortgage notes        (271    )      (290    )        (575    )      (576    )
payable
Cash used in
financing             (271    )      (12,828 )        (575    )      (13,114 )
activities
                                                                         
Change in cash
and cash
equivalents            4,155           (3,010  )         (5,327  )       (4,739  )
during the
period
Cash and cash
equivalents at        15,156        26,645          24,638        28,374  
beginning of
period
Cash and cash
equivalents at       $ 19,311       $ 23,635         $ 19,311       $ 23,635  
end of period
                                                                         
Supplemental
cash flow
information:
Cash paid for        $ 1,079         $ 1,749           $ 1,788         $ 2,751
interest
Cash paid for        $ 1,098         $ 1,113           $ 1,394         $ 1,235
income taxes
                                                                         
Non-cash
activities:
Issuance of          $ 182           $ 114             $ 182           $ 114
common stock
                                                                         
                                                                         

FIVE STAR QUALITY CARE, INC.
SENIOR LIVING COMMUNITY FINANCIAL DATA^(1)
(dollars in thousands, except average monthly rate)
                                                          
                                                                       
                     Three months ended                Six months ended
                    June 30,^(2)                     June 30,^(2)
                   2013            2012              2013            2012
Senior
living
communities:
Number of
communities          211             211               211             211
(end of
period)
Number of
units (end           23,020          23,020            23,020          23,020
of period)
Occupancy            85.5    %       86.0    %         85.8    %       86.2    %
Avg. monthly       $ 4,443         $ 4,406           $ 4,458         $ 4,383
rate^(3)
                                                                       
Senior
living
revenue:
Independent
and assisted
living             $ 124,242       $ 121,975         $ 247,443       $ 243,184
community
revenue
Continuing
care
retirement           97,020          96,954            194,456         194,387
community
revenue
Skilled
nursing              44,671          46,745            90,050          91,632
facility
revenue
Other ^(4)           3,148           3,366             6,522           6,573
                                                                
Total senior
living             $ 269,081      $ 269,040        $ 538,471      $ 535,776 
revenue
                                                                       
Senior
living wages
and
benefits:
Independent
and assisted
living             $ 52,753        $ 52,650          $ 106,432       $ 105,962
community
wages and
benefits
Continuing
care
retirement           48,029          47,702            97,006          96,220
community
wages and
benefits
Skilled
nursing
facility             28,404          28,540            57,256          57,203
wages and
benefits
Other ^(4)           1,280           1,348             2,392           2,641
                                                                
Total senior
living wages       $ 130,466      $ 130,240        $ 263,086      $ 262,026 
and benefits
                                                                       
Senior
living other
operating
expenses:
Independent
and assisted
living
community          $ 29,879        $ 28,620          $ 59,364        $ 57,943
other
operating
expenses
Continuing
care
retirement
community            24,528          23,403            49,623          47,271
other
operating
expenses
Skilled
nursing
facility             11,220          11,131            22,493          21,652
other
operating
expenses
Other ^(4)           124             643               610             1,192
                                                                
Total senior
living other       $ 65,751       $ 63,797         $ 132,090      $ 128,058 
operating
expenses
                                                                       

^(1) Excludes data for managed communities, rehabilitation hospitals and
discontinued senior living operations.

^(2) The number of communities operated continuously from January 1, 2012,
through June 30, 2013, did not change; as such, there is no separate
comparable senior living community financial data presented.

^(3) Average monthly rate is calculated by taking the average daily rate,
which is defined as total operating revenue divided by occupied units, during
the period and multiplying it by 30 days.

^(4) Other senior living relates primarily to rehabilitation and other
specialty service revenues and expenses provided at our residential facilities
and does not include revenue and expenses from our rehabilitation hospital
operations.



FIVE STAR QUALITY CARE, INC.
PERCENT BREAKDOWN OF SENIOR LIVING COMMUNITY REVENUES^(1)
                                                                   
                                           
                                     Three months ended       Six months ended
                                     June 30,                 June 30,
                                     2013         2012        2013       2012
Independent and assisted
living communities:
Private and other sources            99.1%        99.0%       99.1%      99.0%
Medicaid                             0.9%         1.0%        0.9%       1.0%
Total                                100%         100%        100%       100%
                                                                         
Continuing care retirement
communities:
Private and other sources            71.7%        70.6%       70.9%      70.6%
Medicare                             22.4%        22.7%       23.0%      22.7%
Medicaid                             5.9%         6.7%        6.1%       6.7%
Total                                100%         100%        100%       100%
                                                                         
Skilled nursing facilities:
Private and other sources            26.0%        26.3%       26.0%      26.4%
Medicare                             26.1%        25.4%       26.5%      26.0%
Medicaid                             47.9%        48.3%       47.5%      47.6%
Total                                100%         100%        100%       100%
                                                                         
Total senior living
communities:
Private and other sources            76.7%        75.8%       76.3%      75.9%
Medicare                             12.6%        12.8%       12.9%      12.9%
Medicaid                             10.7%        11.4%       10.8%      11.2%
Total                                100%         100%        100%       100%
                                                                         

^(1) Excludes data for managed communities, rehabilitation hospitals and
discontinued senior living operations.



FIVE STAR QUALITY CARE, INC.
SENIOR LIVING OTHER OPERATING DATA^(1)
(dollars in thousands, except average monthly rate)
                                                                     
                      Three months ended
                     June 30,       March 31,      December       September      June 30,
                                                   31,            30,
                     2013         2013         2012         2012         2012
Independent
and assisted
living
communities
(owned):
Number of
communities            30             30             30             30             30
(end of
period)
Number of
units (end of          2,946          2,946          2,946          2,946          2,946
period)
Occupancy              87.6   %       87.5   %       87.8   %       86.1   %       85.2   %
Avg. monthly         $ 3,379        $ 3,374        $ 3,292        $ 3,306        $ 3,333
rate^(2)
                                                                  
Independent
and assisted
living
communities
(leased):
Number of
communities            119            119            119            119            119
(end of
period)
Number of
units (end of          9,906          9,906          9,906          9,906          9,906
period)
Occupancy              88.0   %       88.5   %       89.1   %       88.8   %       88.5   %
Avg. monthly         $ 3,669        $ 3,662        $ 3,590        $ 3,586        $ 3,604
rate^(2)
                                                                  
Continuing
care
retirement
communities
(leased):
Number of
communities            31             31             31             31             31
(end of
period)
Number of
units (end of          7,346          7,346          7,346          7,346          7,346
period)^(3)
Occupancy              83.3   %       83.7   %       83.4   %       84.0   %       83.9   %
Avg. monthly         $ 5,230        $ 5,280        $ 5,204        $ 5,117        $ 5,185
rate^(2)
                                                                  
Skilled
nursing
facilities
(leased):
Number of
communities            31             31             31             31             31
(end of
period)
Number of
units (end of          2,822          2,822          2,822          2,822          2,822
period)^(4)
Occupancy              80.7   %       81.5   %       82.2   %       83.0   %       83.9   %
Avg. monthly         $ 6,496        $ 6,644        $ 6,460        $ 6,219        $ 6,484
rate^(2)
                                                              
Total senior
living
communities
(owned and
leased):
Number of
communities            211            211            211            211            211
(end of
period)
Number of
units (end of          23,020         23,020         23,020         23,020         23,020
period)
Occupancy              85.5   %       86.0   %       86.3   %       86.2   %       86.0   %
Avg. monthly      $ 4,443     $ 4,474     $ 4,385     $ 4,337     $ 4,406  
rate^(2)
                                                                                   
Managed
communities:
Number of
communities            39             39             39             30             25
(end of
period)
Number of
units (end of          6,678          6,678          6,678          4,488          3,735
period)^(5)
Occupancy              87.4   %       87.2   %       87.7   %       87.6   %       87.6   %
Avg. monthly         $ 4,215        $ 4,296        $ 4,144        $ 3,962        $ 4,000
rate^(2)
                                                                                   
Rehabilitation
hospitals
(leased):
Number of
hospitals (end         2              2              2              2              2
of period)
Number of
units (end of          321            321            321            321            321
period)
Occupancy              61.9   %       63.7   %       60.2   %       60.7   %       59.8   %
                                                                                   
Other
ancillary
services:
Rehabilitation
and wellness
inpatient              51             53             50             50             48
clinics (end
of period)
Rehabilitation
and wellness
outpatient             51             49             49             46             44
clinics (end
of period)
Home health
communities            6              6              6              6              6
served (end of
period)
                                                                                   

^(1) Excludes data for discontinued operations.

^(2) Average monthly rate is calculated by taking the average daily rate,
which is defined as total operating revenue divided by occupied units, during
the period and multiplying it by 30 days.

^(3) Includes 2,024 skilled nursing units in communities where assisted living
and independent living services are the predominant services provided.

^(4) Includes 69 assisted living and independent living units in communities
where skilled nursing services are the predominant services provided.

^(5) Includes 412 skilled nursing units in communities where assisted living
and independent living services are the predominant services provided.

                         FIVE STAR QUALITY CARE, INC.
                RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
                                (in thousands)

Earnings before interest, taxes, depreciation and amortization, or EBITDA, and
EBITDA excluding certain items, or collectively, Non-GAAP Financial Measures,
are not financial measures determined according to U.S. generally accepted
accounting principles, or GAAP. We consider these Non-GAAP Financial Measures
to be meaningful disclosures because we believe that the presentation of these
Non-GAAP Financial Measures may help investors to gain a better understanding
of changes in our operating results, and may also help investors who wish to
make comparisons between us and other companies on both a GAAP and a non-GAAP
basis. These Non-GAAP Financial Measures are used by management to evaluate
our financial performance and for comparing our performance over time and to
the performance of our competitors. These Non-GAAP Financial Measures as
presented may not, however, be comparable to amounts calculated by other
companies. This information should not be considered as an alternative to
income from continuing operations, net income, cash flows from operating
activities or any other financial operating or performance or liquidity
measure established by GAAP. The following table includes the reconciliation
of these Non-GAAP Financial Measures to income from continuing operations, the
most directly comparable financial measure under GAAP reported in our
condensed consolidated financial statements, for the three and six months
ended June 30, 2013 and 2012.

                  Three months ended           Six months ended
                     June 30,                        June 30,
                     2013         2012             2013         2012
Income from
continuing           $ 2,662        $ 5,312          $ 6,128        $ 6,502
operations
Add: interest
and other              1,355          1,605            2,811          3,031
expense
Add: income            1,854          4,108            2,318          5,063
tax expense
Add:
depreciation           6,651          6,276            13,089         12,165
and
amortization
Less:
interest,              (211   )       (234   )         (408   )       (439   )
dividend and
other income
Less: income          -            -              (1,468 )      -      
tax benefit
EBITDA                 12,311         17,067           22,470         26,322
Add (less):
Acquisition            41             -                41             -
related costs
Loss on sale
of investments
in available           117            -                30             1
for sale
securities
Gain on                -              (3,365 )         -              (3,365 )
settlement
Gain on early
extinguishment        -            (45    )        -            (45    )
of debt
EBITDA
excluding            $ 12,469      $ 13,657        $ 22,541      $ 22,913 
certain items

Contact:

Five Star Quality Care, Inc.
Timothy A. Bonang, Vice President, Investor Relations
or
Elisabeth H. Olmsted, Manager, Investor Relations
617-796-8245
 
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