AlerisLife (ALR) 8-K Five Star Quality Care, Inc. Reports First Quarter 2010 Results

400 Centre Street, Newton, MA 02458-2076    tel: (617) 796-8350      fax: (617) 796-8385

FOR IMMEDIATE RELEASE	Contacts:
	Timothy A. Bonang, Vice President, Investor Relations
	Elizabeth A. Heiss, Manager, Investor Relations
	(617) 796-8245
	www.fivestarseniorliving.com

Five Star Quality Care, Inc. Reports First Quarter 2010 Results

____________________________________

Newton, MA (May 3, 2010).  Five Star Quality Care, Inc. (NYSE Amex: FVE) today announced its financial results for the quarter ended March 31, 2010.

First Quarter 2010 Financial Highlights:

■ Total revenues for the first quarter of 2010 increased 5.6% to $310.3 million from $293.8 million for the same period last year.

■ Net income from continuing operations for the first quarter of 2010 was $4.3 million compared to $25.1 million for the same period last year.

■ Net income per share from continuing operations for the first quarter of 2010 was $0.12, basic and diluted, compared to $0.78 and $0.67, basic and diluted, respectively, 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 $0.60 per basic and diluted share, respectively, on our earnings.  These items were a $25.1 million gain on the early extinguishment of debt and a $3.5 million unrealized gain on our holdings of auction rate securities, offset by a $2.9 million loss on impairment of our investments in certain marketable securities held by our captive insurance companies and a $3.5 million unrealized loss on our UBS put right related to auction rate securities.

■ Earnings before interest, taxes, depreciation and amortization, or EBITDA, for the first quarter of 2010 was $9.0 million compared to $29.8 million for the same period last year.  As discussed above, EBITDA for the first quarter of 2009 had items that, in aggregate, had a positive impact of $22.2 million. (See supplemental information page 7 for a reconciliation of income from continuing operations to EBITDA and EBITDA excluding certain items for the three months ended March 31, 2010 and 2009).

■ EBITDA excluding certain items was $9.0 million compared with $7.6 million for the same period last year.

First Quarter 2010 Operating Highlights (Senior Living Communities):

■ Senior living occupancy for the first quarter of 2010 was 86.2% compared to 86.7% for the same period last year and 86.1% for the fourth quarter of 2009.

■ Senior living average daily rate for the first quarter of 2010 increased by 2.8% to $149.09 from $145.07 in the same period last year and increased by 3.1% from $144.64 in the fourth quarter of 2009.

■ The percentage of senior living revenue derived from private and other resources for the first quarter of 2010 increased to 70.0% from 69.4% for the same period last year.

■ For those senior living communities that we have operated continuously since January 1, 2009 (comparable communities), occupancy for the first quarter of 2010 was 86.1% compared to 86.7% for the same period last year.

■ The average daily rate at comparable communities for the first quarter of 2010 increased by 2.9% to $149.22 from $145.07 in the same period last year.

Non-GAAP Financial Measures:

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.  For reconciliations of these non-GAAP financial measures to the current GAAP financial measures, please see page 7 of the supplemental information attached hereto.

Conference Call:

On May 3, 2010 at 5:00 p.m. Eastern Daylight Time, Bruce J. Mackey Jr., President and Chief Executive Officer, and Paul V. Hoagland, Treasurer and Chief Financial Officer, will host a conference call to discuss the first quarter financial results.  Following the Company’s remarks, there will be a question and answer period.

The conference call telephone number is (800) 289-0746.  Participants calling from outside the United States and Canada should dial (913) 643-4197. 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 Monday, May 10, 2010. To hear the replay, dial (719) 457-0820.  The replay pass code is 4482182.

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 217 senior living communities with 22,878 living units located in 30 states.  These communities include independent living, assisted living and skilled nursing communities.  Five Star also operates six institutional pharmacies and two rehabilitation hospitals.  Five Star is headquartered in Newton, Massachusetts.

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Supplemental Information, page 1 of 7

FIVE STAR QUALITY CARE, INC.

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(in thousands, except share data)

(unaudited)

	Three months ended March 31,
	2010			2009
Revenues:
Senior living revenue	$	266,702		$	250,887
Rehabilitation hospital revenue		24,052			24,694
Institutional pharmacy revenue		19,577			18,265
Total revenues		310,331			293,846
Operating expenses:
Senior living wages and benefits		133,791			127,186
Other senior living operating expenses		65,455			61,365
Rehabilitation hospital expenses		22,657			22,899
Institutional pharmacy expenses		19,022			18,373
Rent expense		47,223			43,957
General and administrative		13,147			12,442
Depreciation and amortization		4,099			4,174
Total operating expenses		305,394			290,396
Operating income		4,937			3,450
Interest, dividend and other income		663			1,131
Interest and other expense		(772	)		(1,180	)
Unrealized gain on investments in trading securities		669			3,516
Unrealized loss on UBS put right related to auction rate securities		(670	)		(3,526	)
Equity in losses of Affiliates Insurance Company		(28	)		-
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		4,799			25,569
Provision for income taxes		(493	)		(516	)
Income from continuing operations		4,306			25,053
(Loss) income from discontinued operations		(221	)		319
Net income	$	4,085		$	25,372
Weighted average shares outstanding  - basic		35,669			32,206
Weighted average shares outstanding - diluted		39,492			38,359
Basic income per share from:
Continuing operations	$	0.12		$	0.78
Discontinued operations		-			0.01
Net income per share  - basic	$	0.12		$	0.79
Diluted income per share from:
Continuing operations	$	0.12		$	0.67
Discontinued operations		-			0.01
Net income per share - diluted	$	0.12		$	0.68

Supplemental Information, page 2 of 7

FIVE STAR QUALITY CARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(in thousands, except share data)

(unaudited)

	March 31, 2010		December 31, 2009
Assets
Current assets:
Cash and cash equivalents	$	18,564	$	11,299
Accounts receivable, net of allowance		60,106		61,418
Investments in trading securities		60,580		65,961
Investments in available for sale securities, of which $3,221       and $2,809 are restricted as of March 31, 2010 and December 31, 2009		12,706		11,893
Restricted cash		5,407		5,418
UBS put right related to auction rate securities		7,652		8,322
Prepaid expenses and other current assets		17,559		20,162
Total current assets		182,574		184,473
Property and equipment, net		194,665		192,742
Equity investment in Affiliates Insurance Company		4,992		5,000
Restricted cash and investments		10,041		10,567
Goodwill and other long term assets		20,714		20,318
Total assets	$	412,986	$	413,100
Liabilities and Shareholders' Equity
Current liabilities:
UBS secured revolving credit facility related to       auction rate securities	$	36,348	$	39,141
Other current liabilities		138,967		139,063
Total current liabilities		175,315		178,204
Long term liabilities		31,266		33,590
Mortgage notes payable		12,243		12,284
Convertible senior notes		49,707		49,707
Shareholders’ equity (35,668,814 shares issued    and outstanding at March 31, 2010 and December 31, 2009)		144,455		139,315
	$	412,986	$	413,100

Supplemental Information, page 3 of 7

FIVE STAR QUALITY CARE, INC.

SENIOR LIVING COMMUNITY OPERATING DATA(1)

(dollars in thousands, except average daily rate)

	Three months ended
	March 31,
	2010			2009
Number of communities (end of period)		217			206
Number of living units (end of period)		22,878			21,926
Number of living units % growth		4.3	%
Occupancy		86.2	%		86.7	%
Average daily rate (ADR)	$	149.09		$	145.07
ADR % growth		2.8	%
Percent breakdown of net senior living revenues:
Private and other sources		70.0	%		69.4	%
Medicare		14.3	%		14.8	%
Medicaid		15.7	%		15.8	%
Total		100.0	%		100.0	%
Senior living revenues	$	266,702		$	250,887
Senior living revenues % growth		6.3	%
Senior living wages and benefits	$	133,791		$	127,186
Senior living wages and benefits as a %    of senior living revenues		50.2	%		50.7	%
Other senior living operating expenses	$	65,455		$	61,365
Other senior living operating expenses as a %    of senior living revenues		24.5	%		24.5	%
Community expenses(2) % growth		5.7	%

(1)	Excludes data for institutional pharmacy, rehabilitation hospital operations and discontinuedsenior living operations.
(2)	Community expenses equal senior living wages and benefits and other senior livingoperating expenses as shown on our consolidated statement of operations.

Supplemental Information, page 4 of 7

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)
	2010			2009
Number of communities (end of period)		206			206
Number of living units (end of period)		21,926			21,926
Occupancy		86.1	%		86.7	%
Average daily rate (ADR)	$	149.22		$	145.07
ADR % growth		2.9	%
Percent breakdown of net senior living revenues:
Medicare		14.7	%		14.8	%
Medicaid		16.0	%		15.8	%
Private and other sources		69.3	%		69.4	%
Total		100.0	%		100.0	%
Senior living revenues	$	255,642		$	250,887
Senior living revenues % growth		1.9	%
Senior living wages and benefits	$	128,291		$	127,186
Senior living wages and benefits as a % of senior living    revenues		50.2	%		50.7	%
Other senior living operating expenses	$	62,941		$	61,365
Other senior living operating expenses as a % of senior living    revenues		24.6	%		24.5	%
Community expenses(3) % growth		1.4	%

(1)	Excludes data for institutional pharmacy, rehabilitation hospital operations and discontinued senior living operations.
(2)	Communities that we have operated continuously since January 1, 2009.
(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 7

FIVE STAR QUALITY CARE, INC.

COMPARABLE SENIOR LIVING COMMUNITY FINANCIAL DATA(1)

(dollars in thousands, except average daily rate)

	Three months ended
	March 31,
	2010		2009
Independent and assisted living community revenue(2)	$	201,141	$	185,079
Skilled nursing facility revenue		65,561		65,808
Total senior living revenue	$	266,702	$	250,887
Independent and assisted living community wages and benefits	$	91,231	$	84,571
Skilled nursing facility wages and benefits		42,560		42,615
Total senior living wages and benefits	$	133,791	$	127,186
Independent and assisted living community operating expenses	$	49,249	$	45,430
Skilled nursing facility operating expenses		16,206		15,935
Total other senior living operating expenses	$	65,455	$	61,365

(1)	Excludes data for discontinued senior living operations.
(2)	Includes rehabilitation and other specialty service revenues provided at residential facilities and expenses associated with our captive insurance company.

COMPARABLE SENIOR LIVING COMMUNITY FINANCIAL DATA(1)

	Three months ended
	March 31,(2)
	2010		2009
Independent and assisted living community revenue(3)	$	190,081	$	185,079
Skilled nursing facility revenue		65,561		65,808
Total senior living revenue	$	255,642	$	250,887
Independent and assisted living community wages and benefits	$	85,731	$	84,571
Skilled nursing facility wages and benefits		42,560		42,615
Total senior living wages and benefits	$	128,291	$	127,186
Independent and assisted living community operating expenses	$	46,735	$	45,430
Skilled nursing facility operating expenses		16,206		15,935
Total other senior living operating expenses	$	62,941	$	61,365

(1)	Excludes data for discontinued senior living operations.
(2)	Communities that we have continuously operated since January 1, 2009.
(3)	Includes rehabilitation and other specialty service revenues provided at residential facilities and expenses associated with our captive insurance company.

Supplemental Information, page 6 of 7

FIVE STAR QUALITY CARE, INC.

OTHER OPERATING DATA(1)

(dollars in thousands, except average daily rate)

	Three months ended
	March 31,
	2010			2009
Number of senior living communities(2)  (end of period):
Assisted and independent living communities, owned		23			23
Assisted and independent living communities, leased		147			136
Total number of assisted and independent living communities		170			159
Skilled nursing communities, owned		2			2
Skilled nursing communities, leased		45			45
Total number of skilled nursing communities		47			47
Total number of senior living communities		217			206
Number of senior living units (end of period):
Assisted and independent living communities, owned		1,972			1,972
Assisted and independent living communities, leased(3)		16,666			15,714
Total number of assisted and independent living units		18,638			17,686
Skilled nursing communities, owned		271			271
Skilled nursing communities, leased(4)		3,969			3,969
Total number of skilled nursing units		4,240			4,240
Total number of senior living units		22,878			21,926
Senior living revenues:
Assisted and independent living communities	$	198,957		$	183,273
Skilled nursing communities		65,561			65,808
Other(5)		2,184			1,806
Total senior living revenues	$	266,702		$	250,887
Senior living data:
Assisted and independent living communities occupancy		86.5	%		86.7	%
Assisted and independent living communities ADR	$	137.08		$	132.77
Assisted and independent living communities ADR % growth		3.2	%
Skilled nursing communities occupancy		84.6	%		86.6	%
Skilled nursing communities ADR	$	203.15		$	196.46
Skilled nursing communities ADR % growth		3.4	%
Rehabilitation hospital data:
Rehabilitation hospital units		321			321
Rehabilitation hospital occupancy		54.7	%		62.2	%

(1)	Excludes data for institutional pharmacy operations and discontinued senior living operations.
(2)	Communities are categorized by the type of living units which constitute a majority of the total living units at the community.
(3)	Includes 2,036 and 1,896 skilled nursing units in communities where assisted living and independent living services are the predominant services provided for the three months ended March 31, 2010 and 2009, respectively.
(4)	Includes 87 assisted living and independent living units in communities where skilled nursing services are the predominant services provided for the three months ended March 31, 2010 and 2009.
(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 7 of 7

FIVE STAR QUALITY CARE, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

 (in thousands, except per share data)

Reconciliation of income from continuing operations to earnings before interest, taxes, depreciation and amortization, or EBITDA, and EBITDA excluding certain items for the three months ended March 31, 2010 is outlined below.  EBITDA and EBITDA excluding certain items are not financial measures determined according to U.S. 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 co mparable 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.  This information should not be considered as an alternative to net income or any other financial operating or performance measure established by GAAP.

	For the three months
	ended March 31,
	2010			2009
Income from continuing operations	$	4,306		$	25,053
Add: interest and other expense		772			1,180
Add: income tax expense		493			516
Add: depreciation and amortization		4,099			4,174
Less: interest, dividend and other income		(663	)		(1,131	)
EBITDA		9,007			29,792
Add: impairment of certain investments		-			2,947
Add: unrealized loss on UBS put right related to       auction rate securities		670			3,526
Less: unrealized gain on investments in trading       securities		(669	)		(3,516	)
Less: gain on early extinguishment of debt		-			(25,125	)
EBITDA excluding certain items	$	9,008		$	7,624