Five Star Quality Care, Inc. Reports First Quarter 2009 Results

First Quarter 2009 Financial Highlights:

--
Total revenues for the first quarter of 2009 increased 14.0% to $295.2
million from $258.9 million for the same period last year.

--
Net income for the first quarter of 2009 was $25.4 million compared to
net income of $1.6 million for the same period last year.

--
Net income per share from continuing operations for the first quarter
of 2009 was $0.78 and $0.67, basic and diluted, respectively, compared
to net income per share from continuing operations of $0.14, basic and
diluted, for the same period last year.

--
Net income from continuing operations for the first quarter of 2009
included several items that, in aggregate, resulted in a positive
impact of $22.2 million, or $0.69 and $0.58 per basic and diluted
share, respectively. These items included a $3.5 million unrealized
gain on our holdings of auction rate securities; a $2.9 million loss
due to the impairment of our investments in certain marketable
securities held by our captive insurance companies; a $25.1 million
gain due to early extinguishment of debt; and a $3.5 million loss on
our UBS put right related to our auction rate securities.

--
Net income from continuing operations for the first quarter of 2008
included a $3.3 million unrealized loss, or $0.10 and $0.08 per basic
and diluted share, respectively, on our holdings of auction rate
securities.

First Quarter 2009 Operating Highlights (Senior Living
Communities):

--
Senior living occupancy for the first quarter of 2009 was 86.5%
compared with 89.6% for the same period last year.

--
Senior living average daily rate for the first quarter of 2009
increased by 3.1% to $146.69 from $142.30 in the same period last year.

--
The percentage of senior living revenue derived from private and other
sources for the first quarter of 2009 increased to 69.1% from 66.1%
for the same period last year.

--
For those senior living communities that we have operated continuously
since January 1, 2008 (comparable communities), occupancy for the
first quarter of 2009 was 87.5% compared with 89.7% for the same
period last year.

--
The average daily rate at comparable communities for the first quarter
of 2009 increased by 4.9%, to $149.46, from $142.43 in the same period
last year.

First Quarter 2009 Highlights:

In January 2009, we purchased and retired $46.5 million par value of our
outstanding 3.75% Convertible Notes (the "Notes") for $20.0 million,
plus accrued interest. As a result of this transaction, we recorded a
$25.1 million gain net of related unamortized origination costs, on
early extinguishment of debt.

We sold one of our institutional pharmacies on January 15, 2009, which
resulted in a gain on sale of $1.2 million which is included in
discontinued operations. We were unable to sell the mail order pharmacy
on acceptable terms and we discontinued its operations on March 31,
2009; our operating loss relating to this shuttered mail order pharmacy
is recorded in discontinued operations and amounted to approximately
$78,000 during the quarter ended March 31, 2009.

Conference Call:

On May 5, 2009 at 5:00 p.m. Eastern Daylight Time, Bruce J. Mackey Jr.,
President and Chief Executive Officer, and Francis R. Murphy, III,
Treasurer and Chief Financial Officer, will host a conference call to
discuss the first quarter 2009 financial results. Following the
company's remarks, there will be a question and answer period.

The conference call telephone number is (800) 811-7286. Participants
calling from outside the United States and Canada should dial (913)
312-1264. 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 8:00 p.m. Eastern Daylight Time Tuesday, May 12th.
To hear the replay, dial (719) 457-0820. The replay pass code is 6043670.

A live audio webcast of the conference call will also be available in a
listen only mode on the Company's web site at www.fivestarqualitycare.com.
Participants wanting to access the webcast should visit the Company's
web site about five minutes before the call. The archived webcast will
be available for replay on the Company's web site for about one week
after the call.

About Five Star Quality Care, Inc.:

Five Star Quality Care, Inc. is a senior living and healthcare services
company. Five Star owns or leases and operates 210 senior living
communities with 22,260 living units located in 30 states. These
communities include independent living, assisted living and skilled
nursing communities. Five Star also operates five institutional
pharmacies and two rehabilitation hospitals. Five Star is headquartered
in Newton, Massachusetts.

Supplemental Information, page 1 of 6
FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
(unaudited)
                                                                     Three months ended
                                                                     March 31,
                                                                           2009         2008
Revenues:
Senior living revenue                                                $     252,206    $ 216,927
Rehabilitation hospital revenue                                            24,694       24,744
Institutional pharmacy revenue                                             18,265       17,206
Total revenues                                                             295,165      258,877
Operating expenses:
Senior living wages and benefits                                           128,085      109,094
Other senior living operating expenses                                     61,828       53,421
Rehabilitation hospital expenses                                           22,899       22,592
Institutional pharmacy expenses                                            18,373       16,203
Rent expense                                                               44,000       35,444
General and administrative                                                 12,442       11,133
Depreciation and amortization                                              4,177        3,635
Total operating expenses                                                   291,804      251,522
Operating income                                                           3,361        7,355
Interest and other income                                                  1,131        2,494
Interest and other expense                                                 (1,181  )    (1,594  )
Unrealized gain (loss) on investments in trading securities                3,516        (3,270  )
Unrealized loss on UBS put right related to auction rate securities        (3,527  )    -
Gain on early extinguishment of debt                                       25,125       -
Impairment of investments in available for sale securities                 (2,947  )    -
Income from continuing operations before income taxes                      25,478       4,985
Provision for income taxes                                                 (516    )    (566    )
Income from continuing operations                                          24,962       4,419
Income (loss) from discontinued operations                                 410          (2,802  )
Net income                                                           $     25,372     $ 1,617
Weighted average shares outstanding - basic                                32,206       31,818
Weighted average shares outstanding - diluted                              38,359       41,549
Basic income per share from:
Continuing operations                                                $     0.78       $ 0.14
Discontinued operations                                                    0.01         (0.09   )
Net income per share - basic                                         $     0.79       $ 0.05
Diluted income per share from:
Continuing operations                                                $     0.67       $ 0.14
Discontinued operations                                                    0.01         (0.07   )
Net income per share - diluted                                       $     0.68       $ 0.07

Supplemental Information, page 2 of 6
FIVE STAR QUALITY CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands, except share data)
(unaudited)
                                                                   March 31,      December 31,
                                                                         2009            2008
Assets
Current assets:
Cash and cash equivalents                                          $     28,426   $      16,138
Accounts receivable, net of allowance                                    60,240          66,023
Prepaid expenses and other current assets                                13,833          15,965
Investments in available for sale securities                             6,720           7,232
Restricted cash and investments                                          7,086           7,518
Assets of discontinued operations                                        -               1,385
Total current assets                                                     116,305         114,261
Property and equipment, net                                              192,710         190,627
Investments in trading securities                                        66,408          62,866
UBS put right related to auction rate securities                         7,554           11,081
Restricted cash and investments                                          11,922          13,368
Goodwill and other long term assets                                      19,941          20,435
Total assets                                                       $     414,840  $      412,638
Liabilities and Shareholders' Equity
Current liabilities                                                $     135,797  $      129,139
Secured revolving credit facility                                        37,137          21,875
Mortgage notes payable, long term                                        12,403          12,441
Convertible senior notes                                                 79,989          126,500
Other long term liabilities                                              37,743          37,344
Shareholders' equity (32,205,604 shares issued and outstanding at        111,771         85,339
March 31, 2009 and December 31, 2008)
Total liabilities and shareholders' equity                         $     414,840  $      412,638

Supplemental Information, page 3 of 6
FIVE STAR QUALITY CARE, INC.
SENIOR LIVING COMMUNITY OPERATING DATA (1)
(dollars in thousands, except average daily rate)
                                                                   Three months ended
                                                                   March 31,
                                                                             2009         2008
Number of communities (end of period)                                        210          183
Number of living units (end of period)                                       22,260       19,666
Number of living units % growth                                              13.2%        -
Occupancy                                                                    86.5%        89.6%
Average daily rate (ADR)                                           $         146.69     $ 142.30
ADR % growth                                                                 3.1%         -
Percent breakdown of net senior living revenues:
Medicare                                                                     14.9%        16.1%
Medicaid                                                                     16.0%        17.8%
Private and other sources                                                    69.1%        66.1%
Total                                                                        100.0%       100.0%
Senior living revenues                                             $         252,206    $ 216,927
Senior living revenues % growth                                              16.3%        -
Senior living wages and benefits                                   $         128,085    $ 109,094
Senior living wages and benefits as a % of senior living revenues            50.8%        50.3%
Other senior living operating expenses                             $         61,828     $ 53,421
Other senior living operating expenses as a % of senior living               24.5%        24.6%
revenues
Community expenses (2) % growth                                              16.9%        -
(1) Excludes data for institutional pharmacy and rehabilitation
hospital operations and discontinued senior living operations
(except for the number of communities and living units).
(2) Community expenses equal senior living wages and benefits and
other senior living operating expenses as shown on our
consolidated statement of operations.

Supplemental Information, page 4 of 6
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)
                                                                             2009         2008
Number of communities (end of period)                                        168          168
Number of living units (end of period)                                       18,652       18,652
Occupancy                                                                    87.5%        89.7%
Average daily rate (ADR)                                           $         149.46     $ 142.43
ADR % growth                                                                 4.9%         -
Percent breakdown of net senior living revenues:
Medicare                                                                     16.8%        16.1%
Medicaid                                                                     18.0%        17.9%
Private and other sources                                                    65.2%        66.0%
Total                                                                        100.0%       100.0%
Senior living revenues                                             $         217,542    $ 214,752
Senior living revenues % growth                                              1.3%         -
Senior living wages and benefits                                   $         111,548    $ 107,981
Senior living wages and benefits as a % of senior living revenues            51.3%        50.3%
Other senior living operating expenses                             $         53,671     $ 53,026
Other senior living operating expenses as a % of senior living               24.7%        24.7%
revenues
Community expenses (3) % growth                                              2.6%         -
(1) Excludes data for institutional pharmacy and rehabilitation
hospital operations and discontinued senior living discontinued
operations (except for the number of communities and living units).
(2) Communities that we have operated continuously since January
1, 2008.
(3) Community expenses equal senior living wages and benefits and
other senior living operating expenses as shown on our
consolidated statement of operations.

Supplemental Information, page 5 of 6
FIVE STAR QUALITY CARE, INC.
OTHER OPERATING DATA (1)
(dollars in thousands, except average daily rate)
                                                             Three months ended
                                                             March 31,
                                                                       2009         2008
Number of senior living communities (2)
(end of period):
Assisted and independent living communities, owned                     23           13
Assisted and independent living communities, leased                    138          121
Total number of assisted and independent living communities            161          134
Skilled nursing communities, owned                                     2            2
Skilled nursing communities, leased                                    47           47
Total number of skilled nursing communities                            49           49
Total number of senior living communities                              210          183
Number of senior living units (end of period):
Assisted and independent living units, owned                           1,976        1,060
Assisted and independent living units, leased (3)                      15,870       14,194
Total number of assisted and independent living units                  17,846       15,254
Skilled nursing communities, owned                                     271          271
Skilled nursing communities, leased (4)                                4,143        4,141
Total number of skilled nursing units                                  4,414        4,412
Total number of senior living units                                    22,260       19,666
Senior living revenues:
Assisted and independent living communities                  $         183,273    $ 149,322
Skilled nursing communities                                            66,227       65,596
Other (5)                                                              2,706        2,009
Total senior living revenues                                 $         252,206    $ 216,927
Senior living data:
Assisted and independent living communities occupancy                  86.8%        90.4%
Assisted and independent living communities ADR              $         132.77     $ 127.11
Assisted and independent living communities ADR % growth               4.5%         -
Skilled nursing communities occupancy                                  85.3%        87.1%
Skilled nursing communities ADR                              $         195.45     $ 187.60
Skilled nursing communities ADR % growth                               4.2%         -
Rehabilitation hospital data:
Rehabilitation hospital units                                          321          321
Rehabilitation hospital occupancy                                      62.2%        65.7%
(1) Excludes data for institutional pharmacy operations
and discontinued senior living operations (except for the number
of communities and living units).
(2) Communities are categorized by the type of living
units which constitute a majority of the total living units at the
community.
(3) Includes 1,934 and 1,869 skilled nursing units in
communities where assisted living and independent living services
are the predominant services provided for the three months ended
March 31, 2009 and 2008, respectively.
(4) Includes 66 assisted living and independent living
units in communities where skilled nursing services are the
predominant services provided for the three months ended March 31,
2009 and 2008, respectively.
(5) 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.

Supplemental Information, page 6 of 6
FIVE STAR QUALITY CARE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
Earnings before interest, taxes, depreciation and amortization, or
EBITDA, and EBITDA excluding certain items are not financial
measures determined according to generally accepted accounting
principles, or GAAP. We consider EBITDA and EBITDA excluding
certain items to be a meaningful disclosure because we believe
that the inclusion of these non-GAAP financial measures may help
investors to gain a better understanding of changes in our core
operating results, and can also help investors who wish to make
comparisons between us and other companies on both a GAAP and a
non-GAAP basis. EBITDA and EBITDA excluding certain items as
presented may not, however, always be comparable to amounts
calculated by other companies. These non-GAAP financial measures
are used by management to evaluate financial performance and
resource allocation for our communities and for us as a whole and
for comparing such performance to that of prior periods and to the
performance of our competitors. These measures also are used by
management to aid in our financial and operating decision making.
This information should not be considered as an alternative to net
income or any other financial operating or performance measure
established by GAAP. Reconciliation of income from continuing
operations to EBITDA and EBITDA excluding certain items, for the
three months ended March 31, 2009 and 2008 is as follows:
                                                               For the three months
                                                               ended March 31,
                                                                       2009         2008
Income from continuing operations                              $       24,962     $ 4,419
Add: income taxes                                                      516          566
Add: depreciation and amortization                                     4,177        3,635
Add: interest and other expense                                        1,181        1,594
Less: interest and other income                                        (1,131  )    (2,494  )
EBITDA                                                                 29,705       7,720
Less: unrealized gain on investments in trading securities             (3,516  )    -
Add: unrealized loss in investments in trading securities              -            3,270
Add: loss on UBS put right related to auction rate securities          3,527        -
Less: gain on early extinguishment of debt                             (25,125 )    -
Add: impairment of certain investments                                 2,947        -
EBITDA excluding certain items                                 $       7,538      $ 10,990

SOURCE: Five Star Quality Care, Inc.

Five Star Quality Care, Inc. 
Timothy A. Bonang, 617-796-8245 
Director of Investor Relations 
or 
Katherine L. Johnston, 617-796-8245 
Manager of Investor Relations 
www.fivestarqualitycare.com

For full details on Five Star Quality Care Inc (FVE) FVE. Five Star Quality Care Inc (FVE) has Short Term PowerRatings at TradingMarkets. Details on Five Star Quality Care Inc (FVE) Short Term PowerRatings is available at This Link.