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Five Star Quality Care, Inc. Reports Certain Third Quarter 2013 Financial Data



  Five Star Quality Care, Inc. Reports Certain Third Quarter 2013 Financial
  Data

Business Wire

NEWTON, Mass. -- November 12, 2013

Five Star Quality Care, Inc. (NYSE:FVE) today announced certain preliminary
financial data and information for the quarter and nine months ended September
30, 2013.

As described below, at this time we are not reporting income from continuing
operations, income (loss) from discontinued operations, or net income because
we recently discovered non-cash errors in our historical accounting accruals
for income taxes in certain periods.

Third Quarter 2013 Financial Highlights:

  * Total revenues from continuing operations for the third quarter of 2013
    increased 9.3% to $324.7 million from $297.1 million for the same period
    in 2012. Our senior living revenues and management fee revenues from
    continuing operations for the third quarter of 2013 increased 1.1% to
    $272.7 million from $269.9 million for the same period in 2012.
  * Earnings from continuing operations before interest, taxes, depreciation
    and amortization, or EBITDA from continuing operations, for the third
    quarter of 2013 was $9.3 million compared to $12.1 million for the same
    period in 2012. EBITDA from continuing operations excluding certain items
    was $10.0 million and $12.1 million for the third quarters of 2013 and
    2012, respectively. A reconciliation of income from continuing operations
    before income taxes determined in accordance with U.S. generally accepted
    accounting principles, or GAAP, to EBITDA from continuing operations and
    EBITDA from continuing operations excluding certain items for the quarters
    ended September 30, 2013 and 2012 appears later in this press release.
  * Income from continuing operations before income taxes for the third
    quarter of 2013 was $1.6 million, compared to $4.3 million for the same
    period in 2012. Income from continuing operations before income taxes for
    the third quarter of 2013 included a loss on early extinguishment of debt
    of $599,000.

Third Quarter 2013 Operating Highlights (continuing operations):

  * Occupancy at our owned and leased senior living communities for the third
    quarter of 2013 was 85.9% compared to 86.2% for the same period in 2012.
  * The average monthly rate at our owned and leased senior living communities
    for the third quarter of 2013 increased by 1.5% to $4,411 from $4,345 for
    the same period in 2012.
  * The percentage of revenues derived from residents’ private resources at
    our owned and leased senior living communities for the third quarter of
    2013 increased 50 basis points to 77.1% from 76.6% for the same period in
    2012.

Year to Date Financial Highlights:

  * Total revenues from continuing operations for the nine months ended
    September 30, 2013 increased 9.9% to $972.0 million from $884.8 million
    for the same period in 2012. Our senior living revenues and management fee
    revenues from continuing operations for the nine months ended September
    30, 2013 increased 1.0% to $815.8 million from $808.0 million for the same
    period in 2012.
  * EBITDA from continuing operations for the nine months ended September 30,
    2013 was $30.3 million compared to $38.0 million for the same period in
    2012. EBITDA from continuing operations excluding certain items was $31.0
    million and $34.6 million for the nine months ended September 30, 2013 and
    2012, respectively. A reconciliation of income from continuing operations
    before income taxes determined in accordance with GAAP to EBITDA from
    continuing operations and EBITDA from continuing operations excluding
    certain items for the nine months ended September 30, 2013 and 2012
    appears later in this press release.
  * Income from continuing operations before income taxes for the nine months
    ended September 30, 2013 was $7.2 million compared to $15.6 million for
    the same period in 2012. Income from continuing operations before income
    taxes for the nine months ended September 30, 2013 included a loss on
    early extinguishment of debt of $599,000. Income from continuing
    operations before income taxes for the nine months ended September 30,
    2012 included a gain on settlement of litigation of $3.4 million.

Accounting for Income Taxes:

In connection with the preparation of our Quarterly Report on Form 10-Q for
the quarter ended September 30, 2013, our management identified errors
relating to our accounting for income taxes in prior periods that resulted
primarily from the accounting for our deferred income taxes. These items are
non-cash and the net effect of correcting the errors is expected to increase
our net deferred tax assets and to increase our benefit for income taxes. Our
management is currently evaluating our accounting for these items, and is
working with the Audit Committee of our Board of Directors and Ernst & Young
LLP, our independent registered public accounting firm, to determine what
changes, if any, to our historical or future accounting may be appropriate. We
do not expect to file our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2013 when due; instead, we intend to file a notification of late
filing on Form 12b-25, which form and related rule provide for a five day
extension to file. We can provide no assurances that we will file our
Quarterly Report on Form 10-Q by the expiration of that five day extension
period. We have not concluded if we will be required to restate any previously
issued financial statements or whether any such financial statements should no
longer be relied upon nor have we made a determination as to the effect of
these matters on management’s assessment of the effectiveness of our
disclosure controls and procedures or our internal control over financial
reporting. For these reasons, at this time we are not reporting our income
from continuing operations, income (loss) from discontinued operations, or net
income for the three and nine months ended September 30, 2013 and 2012.

Other Highlights:

In August 2013, we began managing a senior living community in Georgia with 93
living units. Also in October 2013, we began managing two senior living
communities in Georgia with a combined total of 153 living units and a senior
living community in Tennessee with 60 living units. In November 2013, we began
managing a senior living community in Wisconsin with 68 living units. These
five communities are owned by Senior Housing Properties Trust, or SNH, in a
taxable subsidiary.

In June 2013, we agreed to offer for sale 11 senior living communities with
753 living units. Seven of these communities with 578 living units are skilled
nursing facilities, or SNFs, and four of these communities with 175 living
units are assisted living communities. Ten of these communities are owned by
and leased from SNH and one community is owned by us. In August 2013, SNH
completed the sale of one of these communities, a SNF with 112 living units.
As a result of this sale, our annual minimum rent payable to SNH decreased by
$255,000 in accordance with the terms of our applicable lease with SNH. The
remaining 10 communities identified in June 2013 are currently being offered
for sale. Also, one additional assisted living community with 102 living units
which is leased by us from SNH that we agreed to offer for sale prior to June
2013 continues to be offered for sale. As of September 30, 2013, the results
of operations for all these communities which either are currently being
offered for sale (11 communities) or have been recently sold (one community)
are classified as discontinued operations, and, in aggregate, the majority of
revenues generated from these communities came from government funded
programs, such as Medicare and Medicaid.

In August 2013, we and SNH entered into an agreement with certain unrelated
third parties, pursuant to which SNH agreed to sell two rehabilitation
hospitals that we lease and where the majority of revenues are paid by
Medicare. In connection with this sale, we agreed to transfer the operations
of these hospitals and several leased in-patient and out-patient clinics that
are affiliated with these hospitals. Upon completion of the sale and transfer
of operations, our annual rent payable to SNH and others will decrease by
approximately $11.5 million and we currently expect to realize cash proceeds
of between $6.5 and $7.5 million by retaining our working capital investment
in these hospitals. The transfer of the operations of these hospitals and
related operations is subject to various closing conditions, including the new
operator’s obtaining appropriate licenses and regulatory approvals. We
currently expect that this transaction may be completed by mid-2014. During
the third quarter of 2013, we classified our rehabilitation hospital business
as discontinued operations.

In July 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. In
connection with this redemption, in the third quarter of 2013 we recorded a
loss on early extinguishment of debt of $599,000, net, for unamortized
issuance costs.

Conference Call:

Later today, November 12, 2013, at 10:00 a.m. Eastern Time, we will host a
conference call to discuss the third quarter financial information. Following
management’s presentation, there will be a question and answer period.

The conference call telephone number is (800) 700-7860. Participants calling
from outside the United States and Canada should dial (612) 332-0820. 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,
November 19, 2013. To hear the replay, dial (320) 365-3844. The replay pass
code is 305216.

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 third
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 September 30, 2013, we operated 251 senior living communities
(excluding those senior living communities we have classified as discontinued
operations) with 29,743 living units located in 31 states, including 30
communities (2,946 living units) that we own and operate, 181 communities
(20,026 living units) that we lease and operate, and 40 communities (6,771
living units) that we manage. These communities include independent living,
assisted living, continuing care and skilled nursing communities. We also
operate two rehabilitation hospitals which we have classified as discontinued
operations. 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 OUR
FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:

  * THIS PRESS RELEASE REPORTS CERTAIN PRELIMINARY FINANCIAL DATA AND
    INFORMATION FOR THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2013. THIS
    PRELIMINARY FINANCIAL DATA AND INFORMATION IS SUBJECT TO CHANGE AFTER WE
    COMPLETE OUR ACCOUNTING FOR THE PERIODS PRESENTED.
  * THIS PRESS RELEASE STATES THAT THERE ARE 11 SENIOR LIVING COMMUNITIES
    CURRENTLY BEING OFFERED FOR SALE THAT EITHER WE LEASE FROM SNH (10
    COMMUNITIES) OR WE OWN (ONE COMMUNITY). SNH AND WE MAY NOT RECEIVE OFFERS
    TO PURCHASE THESE COMMUNITIES ON TERMS SNH AND WE ARE WILLING TO ACCEPT;
    FOR THESE OR OTHER REASONS, SOME OR ALL OF THESE 11 COMMUNITIES MAY NOT BE
    SOLD IN THE FUTURE.
  * THIS PRESS RELEASE STATES THAT WE HAVE AGREED TO TRANSFER THE OPERATIONS
    OF TWO REHABILITATION HOSPITALS AND SEVERAL AFFILIATED IN-PATIENT AND
    OUT-PATIENT CLINICS AND THAT WE EXPECT THE TRANSFER MAY OCCUR BY MID-2014.
    THIS TRANSFER IS SUBJECT TO COMPLETION OF SNH’S SALE OF THE REHABILITATION
    HOSPITALS’ REAL ESTATE ASSETS AND VARIOUS OTHER CLOSING CONDITIONS,
    INCLUDING THE NEW OPERATOR’S OBTAINING APPROPRIATE LICENSES AND REGULATORY
    APPROVALS. SOME OF THESE CONDITIONS MAY NOT BE MET. AS A RESULT, THIS
    TRANSACTION MAY NOT OCCUR, THIS TRANSACTION MAY BE DELAYED OR THE TERMS
    MAY CHANGE.
  * THIS PRESS RELEASE STATES THAT WE EXPECT TO REALIZE CASH PROCEEDS OF
    BETWEEN $6.5 MILLION AND $7.5 MILLION BY RETAINING OUR WORKING CAPITAL
    INVESTMENT IN OUR REHABILITATION HOSPITAL BUSINESS. THIS EXPECTED AMOUNT
    IS BASED ON AMOUNTS OF OUR WORKING CAPITAL INVESTMENTS IN THESE HOSPITALS
    AND RELATED OPERATIONS AS OF SEPTEMBER 30, 2013. THE AMOUNT OF NET WORKING
    CAPITAL WE RETAIN WILL DEPEND ON MANY FACTORS, INCLUDING THE FINANCIAL
    RESULTS OF THE OPERATIONS OF THE REHABILITATION HOSPITALS PRIOR TO
    TRANSFER. ACCORDINGLY, THE AMOUNT OF NET WORKING CAPITAL THAT WE MAY
    RETAIN IS NOT ASSURED AND MAY BE LESS THAN $6.5 MILLION.
  * THIS PRESS RELEASE STATES THAT OUR ACCOUNTING FOR INCOME TAXES FOR CERTAIN
    PERIODS HAS NOT BEEN COMPLETED, THAT WE ARE WORKING WITH OUR AUDIT
    COMMITTEE AND ERNST & YOUNG LLP, OUR INDEPENDENT REGISTERED PUBLIC
    ACCOUNTING FIRM, TO DETERMINE WHAT CHANGES, IF ANY, TO OUR HISTORICAL AND
    FUTURE ACCOUNTING MAY BE APPROPRIATE, THAT WE DO NOT EXPECT TO FILE OUR
    QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2013, BY
    THE DUE DATE AND THAT WE INTEND TO FILE A FORM 12b-25 TO OBTAIN A FIVE DAY
    EXTENSION TO FILE OUR FORM 10-Q. THESE STATEMENTS MAY IMPLY THAT WE WILL
    RESOLVE THESE MATTERS AND BE ABLE TO FILE OUR FORM 10-Q BY THE REQUIRED
    DEADLINE, AS IT MAY BE EXTENDED. HOWEVER, THERE CAN BE NO ASSURANCES THIS
    WILL OCCUR. IF WE FAIL TO FILE OUR FORM 10-Q BY THE EXTENDED DEADLINE, OUR
    ABILITY TO USE OUR CURRENTLY EFFECTIVE SHELF REGISTRATION STATEMENT ON
    FORM S-3 WILL BE RESTRICTED AND WE MAY INCUR OTHER NEGATIVE EFFECTS.
  * THIS PRESS RELEASE STATES THAT THE NET EFFECT OF CORRECTING OUR ACCOUNTING
    FOR INCOME TAXES IS EXPECTED TO RESULT IN AN INCREASE IN OUR NET DEFERRED
    TAX ASSETS AND TO INCREASE OUR BENEFIT FOR INCOME TAXES. HOWEVER, THE
    CHANGES, IF ANY, HAVE NOT BEEN DETERMINED AND HOW WE ULTIMATELY ACCOUNT
    FOR THESE MATTERS MAY DIFFER FROM OUR CURRENT EXPECTATIONS.
  * THIS PRESS RELEASE STATES THAT WE HAVE NOT CONCLUDED IF WE WILL BE
    REQUIRED TO RESTATE ANY PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR WHETHER
    ANY SUCH FINANCIAL STATEMENTS SHOULD NO LONGER BE RELIED UPON. THESE
    DECISIONS INVOLVE DETAILED ANALYSES AND CONSIDERATIONS, WHICH HAVE NOT
    BEEN COMPLETED. WE CANNOT PROVIDE ANY ASSURANCE WHETHER WE WILL BE
    REQUIRED TO RESTATE ANY OF OUR PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR
    WHETHER ANY SUCH FINANCIAL STATEMENTS SHOULD NO LONGER BE RELIED UPON. IF
    WE ARE REQUIRED TO RESTATE ANY OF OUR PREVIOUSLY ISSUED FINANCIAL
    STATEMENTS, WE DO NOT KNOW WHICH FINANCIAL STATEMENTS OR RELATED FILINGS
    MAY NEED TO BE RESTATED OR AMENDED OR THE TIMING FOR COMPLETING THOSE
    RESTATEMENTS OR AMENDMENTS. ANY DETERMINATION TO RESTATE PREVIOUSLY ISSUED
    FINANCIAL STATEMENTS COULD RESULT IN A SIGNIFICANT DELAY IN OUR FILING OUR
    QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2013,
    AND OTHER APPLICABLE FILINGS.
  * THIS PRESS RELEASE STATES THAT WE HAVE NOT MADE A DETERMINATION AS TO THE
    EFFECT OF INTERNAL CONTROL DEFICIENCIES RELATED TO OUR ACCOUNTING FOR
    INCOME TAXES ON OUR MANAGEMENT’S ASSESSMENT OF THE EFFECTIVENESS OF OUR
    DISCLOSURE CONTROLS AND PROCEDURES OR OUR INTERNAL CONTROL OVER FINANCIAL
    REPORTING. IF WE DETERMINE THAT OUR DISCLOSURE CONTROLS AND PROCEDURES ARE
    OR WERE INEFFECTIVE OR IF WE OR OUR INDEPENDENT REGISTERED PUBLIC
    ACCOUNTING FIRM DETERMINE THAT WE HAVE OR HAD A MATERIAL WEAKNESS IN OUR
    INTERNAL CONTROL OVER FINANCIAL REPORTING, WE MAY BE REQUIRED TO AMEND
    CERTAIN OF OUR PRIOR FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION,
    OR THE SEC, TO REFLECT SUCH CHANGES.

THE INFORMATION CONTAINED IN OUR FILINGS WITH THE 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 FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES
(in thousands)
(unaudited)
                                                                      
                       Three months ended              Nine months ended

                       September 30,                   September 30,
                       2013            2012            2013            2012
Revenues:
Senior living          $ 270,410       $ 268,584       $ 808,882       $ 804,359
revenue
Management fee           2,290           1,277           6,873           3,666
revenue
Reimbursed
costs incurred
on behalf of             51,983          27,247          156,195         76,750

managed
communities
Total revenues           324,683         297,108         971,950         884,775
                                                                                    
Operating
expenses:
Senior living
wages and                130,843         131,362         393,929         393,387
benefits
Other senior
living                   68,227          64,189          200,317         192,247
operating
expenses
Costs incurred
on behalf of
managed                  51,983          27,247          156,195         76,750

communities
Rent expense             48,657          47,698          145,036         142,568
General and              15,080          14,602          45,664          45,445
administrative
Depreciation
and                      6,757           6,195           19,750          18,255
amortization
Total
operating                321,547         291,293         960,891         868,652
expenses
                                                                                    
Operating                3,136           5,815           11,059          16,123
income
                                                                                    
Interest,
dividend and             190             199             599             638
other income
Interest and             (1,179)         (1,762)         (3,990)         (4,793)
other expense
Acquisition              (78)            (100)           (119)           (100)
related costs
Equity in
earnings of
Affiliates               64              115             219             236
Insurance

Company
Gain on                  -               -               -               3,365
settlement
(Loss) gain on
early                    (599)           -               (599)           45
extinguishment
of debt
Gain on sale
of available
for sale
securities
                         36              63              6               62
reclassified
from other
comprehensive
income
                                                                                    
Income from
continuing
operations             $ 1,570         $ 4,330         $ 7,175         $ 15,576
before income
taxes

                                                                                   
  FIVE STAR QUALITY CARE, INC.
  SENIOR LIVING COMMUNITY FINANCIAL DATA^(1)
  (dollars in thousands, except average monthly rate)
                                                                       
                                                                                     
                          Three months ended              Nine months ended
                          September 30,^(2)               September 30,^(2)
                          2013            2012            2013            2012
  Senior living
  communities:
  Number of
  communities             211             211             211             211
  (end of
  period)
  Number of
  units (end              22,972          22,972          22,972          22,972
  of
  period)^(3)
  Occupancy               85.9%           86.2%           85.8%           86.2%
  Avg.
  monthly               $ 4,411         $ 4,345         $ 4,447         $ 4,377
  rate^(4)
                                                                                     
  Senior
  living
  revenue:
  Independent
  and assisted
  living                $ 125,706       $ 123,491       $ 373,149       $ 366,676
  community
  revenue
  Continuing
  care
  retirement              97,193          96,810          291,649         291,196
  community
  revenue
  Skilled
  nursing                 44,483          44,971          134,533         136,602
  facility
  revenue
  Other ^(5)              3,028           3,312           9,551           9,885
                                                                           
  Total senior
  living                $ 270,410       $ 268,584       $ 808,882       $ 804,359
  revenue
                                                                                     
  Senior living
  wages and
  benefits:
  Independent
  and assisted
  living                $ 53,193        $ 53,053        $ 159,625       $ 159,015
  community
  wages and
  benefits
  Continuing
  care
  retirement              47,833          47,889          144,839         144,109
  community
  wages and
  benefits
  Skilled
  nursing
  facility                28,049          28,294          85,306          85,496
  wages and
  benefits
  Other ^(5)              1,768           2,126           4,159           4,767
                                                                           
  Total senior
  living wages          $ 130,843       $ 131,362       $ 393,929       $ 393,387
  and benefits
                                                                                     
  Senior living
  other
  operating
  expenses:
  Independent
  and assisted
  living
  community             $ 30,720        $ 29,304        $ 90,084        $ 87,248
  other
  operating
  expenses
  Continuing
  care
  retirement
  community               25,120          23,829          74,742          71,101
  other
  operating
  expenses
  Skilled
  nursing
  facility                10,975          10,734          33,468          32,385
  other
  operating
  expenses
  Other ^(5)              1,412           322             2,023           1,513
                                                                           
  Total senior
  living other          $ 68,227        $ 64,189        $ 200,317       $ 192,247
  operating
  expenses
               

(1)   Excludes data for managed communities and discontinued operations.
      The number of communities operated between January 1, 2012 and September
(2)   30, 2013 did not change; as a result, there is no separate same property
      comparable senior living community financial data presented.
(3)   Excludes 48 units of one senior living community that has been
      temporarily closed for renovations.
(4)   Average monthly rate is calculated as total operating revenues divided
      by occupied units during the period, multiplied by 30 days.
      Other senior living relates primarily to rehabilitation and other
(5)   specialty service revenues and expenses provided at our residential
      facilities.

                                                                            
                                                                              
FIVE STAR QUALITY CARE, INC.
PERCENT BREAKDOWN OF SENIOR LIVING COMMUNITY REVENUES^(1)
                                                                    
                                        
                           Three months ended          Nine months ended
                           September 30,               September 30,
                           2013          2012          2013          2012
Independent and
assisted living
communities:
Private and                99.1%         98.8%         99.1%         98.9%
other sources
Medicaid                   0.9%          1.2%          0.9%          1.1%
Total                      100%          100%          100%          100%
                                                                              
Continuing care
retirement
communities:
Private and                72.7%         71.1%         71.5%         70.8%
other sources
Medicare                   20.9%         22.3%         22.3%         22.6%
Medicaid                   6.4%          6.6%          6.2%          6.6%
Total                      100%          100%          100%          100%
                                                                              
Skilled nursing
facilities:
Private and                25.2%         27.5%         25.8%         26.7%
other sources
Medicare                   25.8%         25.3%         26.2%         25.8%
Medicaid                   49.0%         47.2%         48.0%         47.5%
Total                      100%          100%          100%          100%
                                                                              
Total senior
living
communities:
Private and                77.1%         76.6%         76.5%         76.1%
other sources
Medicare                   12.0%         12.5%         12.6%         12.8%
Medicaid                   10.9%         10.9%         10.9%         11.1%
Total                      100%          100%          100%          100%
                                                                              
(1) Excludes data for managed communities and discontinued operations.
                                                                              

                                                                                               
FIVE STAR QUALITY CARE, INC.
SENIOR LIVING OTHER OPERATING DATA^(1)
(dollars in thousands, except average monthly rate)
                                                                                 
                       Three months ended
                       September       June 30,       March          December       September
                       30,                            31,            31,            30,
                       2013            2013           2013           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              88.2    %       87.6   %       87.5   %       87.8   %       86.1    %
Avg. monthly         $ 3,375         $ 3,379        $ 3,374        $ 3,292        $ 3,306
rate^(2)
                                                                                     
Independent
and assisted
living
communities
(leased):
Number of
communities            119             119            119            119            119
(end of
period)
Number of
units (end of          9,858           9,858          9,858          9,858          9,858
period)^(3)
Occupancy              89.0    %       88.1   %       88.6   %       89.2   %       88.9    %
Avg. monthly         $ 3,645         $ 3,683        $ 3,676        $ 3,604        $ 3,601
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)^(4)
Occupancy              82.9    %       83.3   %       83.7   %       83.4   %       84.0    %
Avg. monthly         $ 5,207         $ 5,230        $ 5,280        $ 5,204        $ 5,117
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)^(5)
Occupancy              80.8    %       80.7   %       81.5   %       82.2   %       83.0    %
Avg. monthly         $ 6,409         $ 6,496        $ 6,644        $ 6,460        $ 6,219
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          22,972          22,972         22,972         22,972         22,972
period)^(3)
Occupancy              85.9    %       85.6   %       86.0   %       86.3   %       86.2    %
Avg. monthly         $ 4,411         $ 4,450        $ 4,481        $ 4,392        $ 4,345    
rate^(2)
                                                                                               
Managed
communities:
Number of
communities            40              39             39             39             30
(end of
period)
Number of
units (end of          6,771           6,678          6,678          6,678          4,488
period)^(6)
Occupancy              87.6    %       87.4   %       87.2   %       87.7   %       87.6    %
Avg. monthly         $ 4,140         $ 4,215        $ 4,296        $ 4,144        $ 3,962
rate^(2)
                                                                                               
Other
ancillary
services:
Rehabilitation
and wellness
inpatient              50              51             53             50             50
clinics (end
of period)
Rehabilitation
and wellness
outpatient             51              51             49             49             46
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 as total operating revenues divided
      by occupied units during the period, multiplied by 30 days.
(3)   Excludes 48 units of one senior living community that has been
      temporarily closed for renovations.
      Includes 2,031 skilled nursing units in communities where assisted
(4)   living and independent living services are the predominant services
      provided.
(5)   Includes 69 assisted living and independent living units in communities
      where skilled nursing services are the predominant services provided.
(6)   Includes 472 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 from continuing operations before interest, taxes, depreciation and
amortization, or EBITDA from continuing operations, and EBITDA from continuing
operations 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
before income taxes, which we consider to be the most directly comparable
financial measure under GAAP for the three and nine months ended September 30,
2013 and 2012. As further noted above, we are reporting income from continuing
operations before income taxes, rather than income from continuing operations,
and reconciling EBITDA from continuing operations and EBITDA from continuing
operations excluding certain items to income from continuing operations before
income taxes.

                                                                                                
                         Three months ended                     Nine months ended
                         September 30,                          September 30,
                             2013              2012                 2013               2012
Income from
continuing
operations               $   1,570         $   4,330            $   7,175          $   15,576
before income
taxes
Add: interest
and other                    1,179             1,762                3,990              4,793
expense
Add:
depreciation                 6,757             6,195                19,750             18,255
and
amortization
Less:
interest,                    (190)             (199)                (599)              (638)
dividend and
other income
EBITDA from
continuing                   9,316             12,088               30,316             37,986
operations
Add (less):
Acquisition                  78                100                  119                100
related costs
Gain on sale
of investments
in available                 (36)              (63)                 (6)                (62)
for sale

securities
Gain on
litigation                   -                 -                    -                  (3,365)
settlement
Loss (gain) on
early                        599               -                    599                (45)
extinguishment
of debt
EBITDA from
continuing
operations               $   9,957         $   12,125           $   31,028         $   34,614
excluding
certain items
                                                                                                  

Contact:

Five Star Quality Care, Inc.
Timothy A. Bonang, 617-796-8245
Vice President, Investor Relations
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