8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION

13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 7, 2008 (May 1, 2008)

FIVE STAR QUALITY CARE, INC.

(Exact Name of Registrant as Specified in Its Charter)

Maryland

(State or Other Jurisdiction of Incorporation)

1-16817	04-3516029
(Commission File No.)	(IRS Employer Identification No.)

400 Centre Street, Newton, Massachusetts	02458
(Address of Principal Executive Offices)	(Zip Code)

617-796-8387

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.  Results of Operations and Financial Condition.

On May 7, 2008, Five Star Quality Care, Inc., or the Company, issued a press release setting forth the Company’s results of operations and financial condition as of and for the quarter and three months ended March 31, 2008.

A copy of the Company’s press release is furnished as Exhibit 99.1 hereto.

Item 5.02.  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On May 1, 2008, the Company entered into a consulting agreement, or the Agreement, with Evrett W. Benton, who, as previously announced, stepped down as the Company’s Chief Executive Officer, effective May 1, 2008.  The Agreement provides that Mr. Benton will provide up to 100 hours per calendar year of consulting services to the Company from the date of the Agreement through November 30, 2011.  During the term of Agreement, the Company will pay Mr. Benton $408,500, one half on May 1, 2008 and one half on February 2, 2009.  The Agreement contains standard restrictive covenants relating to non-competition, confidentiality and non-solicitation of employees and a provision clarifying that the restricted stock Mr. Benton has previously been awarded under various restricted share agreements with the Company will continue to vest until the Agreement expires by its terms or is terminated.

A copy of the Agreement is filed as Exhibit 10.1 and is incorporated herein by reference.

Item 9.01.  Financial Statements and Exhibits.

(d)	Exhibits.
10.1	Consulting Agreement dated May 1, 2008 between Five Star Quality Care, Inc. and Evrett W. Benton. (Filed herewith)
99.1	Press Release dated May 7, 2008. (Furnished herewith)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FIVE STAR QUALITY CARE, INC.

By: /s/ Bruce J. Mackey Jr.   

Name:  Bruce J. Mackey Jr.

Title: President and Chief Financial Officer

Date: May 7, 2008

EX-10.1

Exhibit 10.1

CONSULTING AND NONCOMPETITION AGREEMENT

CONSULTING AND NONCOMPETITION AGREEMENT (“Agreement”) made May 1, 2008 between Five Star Quality Care, Inc. (“Company”) and Evrett W. Benton ("Benton").

RECITAL

Benton is an employee of the Company and has been its President and Chief Executive Officer since 2001.  Benton has determined terminate his full time employment with the Company on the date of this Agreement.  Benton and the Company desire to set forth certain understandings in connection with his termination and to provide for his continuing to provide consulting services to the Company.

NOW, THEREFORE, the parties agree as follows:

Section 1.  Resignation.  By execution of this Agreement, Benton hereby resigns as President and Chief Executive Officer of the Company and of each of the Company’s subsidiaries, effective the date of this Agreement.

Section 2.  Consulting.  From the date of this Agreement through November 30, 2011 (“Consulting Period”), Benton will make himself available for consultation by the Company and its subsidiaries, at reasonable times and on reasonable advance notice, but shall not be obliged to provide more than 100 hours of consulting services in any calendar year during the Consulting Period (prorated for any portion of a calendar year).

Section 3.  Compensation; Restricted Share Agreements.

(a)  During the Consulting Period, Benton will receive aggregate compensation of $408,500, payable one-half on the date of this Agreement and one half on February 2, 2009.  Additionally, the Company shall reimburse Benton for all reasonable travel and lodging expenses incurred at the request of the Company subject to supply of such receipts and other documentation as is consistent with the Company’s policies and procedures in effect from time to time.

(b)  During the Consulting Period, Benton will be entitled to continue to participate in the Company’s group health plans in effect from time to time, provided that Benton shall pay the same portions of the premiums for coverage under such group health plans as are paid from time to time by senior executives of the Company.

(c)  Benton and the Company agree that for purposes of Section 2(b) of each of the Restricted Share Agreements between Benton and the Company listed on Exhibit A (collectively, the “Share Agreements”), Benton shall be deemed to be providing “significant services” to the Company through the earlier of (i) November 30, 2011 (i.e., the date on which all the Shares (as defined in the Share Agreements) issued to Benton pursuant to the Share Agreements would be fully vested pursuant to the terms thereof), (ii) the date on which Benton ceases to timely perform consulting services and (iii) the date on which Benton commits a breach of any of the Restrictive Covenants (defined below).

(d)  All payments to Benton under this Agreement shall be reduced by withholdings required by law.  Additionally, if withholding is required and at a time there is no cash payment being made to Benton, Benton agrees, on 3 days prior notice from the Company, to pay to the Company by check or wire transfer of immediately available funds, an amount equal to the estimated withholding tax (as determined by the Company) that will be due and payable.

Section 4.  Covenants.  Benton acknowledges that (i) the Company and its subsidiaries are engaged in the business of operating rehabilitation hospitals and senior living communities, including independent living and congregate care communities, assisted living communities and nursing homes (the “Company’s Business”); (ii) Benton’s work for the Company’s Business has given him, and will continue to give him, trade secrets of, and confidential and/or proprietary information concerning, the Company’s Business; (iii) the agreements and covenants contained in this Section 4 are essential to protect the Company’s Business and the goodwill associated with it.  Accordingly, Benton covenants and agrees as follows:

(a)   Non-Compete.  During the Consulting Period, Benton shall not, in the United States of America and Canada, directly or indirectly, (x) enter the employ of or render any services to any person engaged in a business competitive with the Company’s Business, or (y) have an interest in any such competitor, whether such interest is direct or indirect, and including any interest as a partner, shareholder, trustee, consultant, officer or similarly situated person; provided, however, that in any case, Benton may own solely as an investment, securities of any such competitor that are publicly traded if Benton (i) is not a controlling person and (ii) does not, directly or indirectly, own five percent (5%) or more of any class of securities of such person..

(b)   Confidential Information.  During the Consulting Period and at any time thereafter, Benton shall not (i) disclose to any person not employed by the Company or a subsidiary, or not engaged to render services to the Company or a subsidiary or (ii) use for the benefit of himself or others, any confidential information of the Company, any of the Company’s subsidiaries or of the Company’s Business obtained by him, including, without limitation, “know-how,” trade secrets, details of customers’ or suppliers’ contracts with the Company or any of the Company’s subsidiaries, pricing policies, financial data, operational methods, marketing and sales information, marketing plans or strategies, development techniques or plans, plans to enter into any contract with any person or any strategies relating thereto, technical processes, designs and design projects, and other proprietary information of the Company, the Company’s subsidiaries or of the Company’s Business or the business of any of the Company’s subsidiaries; provided, however, that this provision shall not preclude Benton from (a) making any disclosure required by law or court order or (b) using or disclosing information (i) known generally to the public (other than information known generally to the public as a result of a violation of this Section 4(a) by Benton), (ii) acquired by Benton independently of his affiliation with the Company or any of the Company’s subsidiaries, or (iii) of a general nature (that is, not related specifically to the Company’s Business) that ordinarily would be learned, developed or obtained by individuals similarly active and/or employed in similar capacities by other companies in the same business as the Company or any of the Company’s subsidiaries.  Benton agrees that all confidential information of the Company or any of the Company’s subsidiaries shall remain the Company’s or the Company’s subsidiaries, as the case may be, and to promptly return any confidential

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information embodied in any physical or electronic medium to the owner thereof upon the termination of Benton’s employment with the Company or at any other time on request.

(c)  No Solicitation.  During the Consulting Period, Benton shall not, directly or indirectly, (a) solicit any employee to leave the employment of the Company or the employment of any of the Company’s subsidiaries or (b) hire any employee who has left the employ of the Company or the employ of any of the Company’s subsidiaries within six (6) months after termination of such employee’s employment with the Company or such employee’s employment with any of the Company’s subsidiaries, as the case may be (unless such employee was discharged by the Company without cause).

(d)  Cooperation.  From and after the date hereof, Benton shall reasonably cooperate with the Company and its subsidiaries with respect to all matters arising during or related to his employment, including all matters (formal or informal) in connection with any government investigation, internal investigation, litigation (potential or ongoing), regulatory or other proceeding which may have arisen or which may hereafter arise.  The Company will reimburse Benton for all out-of - -pocket expenses (not including lost time or opportunity), and will provide appropriate legal representation in a manner determined by the Company and reasonably acceptable to Benton.

Section 5.  Rights and Remedies upon Breach of Covenants.

(a)  If Benton breaches, or threatens to commit a breach of, any of the provisions of Section 4 (the “Restrictive Covenants”), the Company shall have the right and remedy to have the Restrictive Covenants specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company, that such injury shall be presumed and need not be proven, and that money damages will not provide an adequate remedy to the Company.  Such rights and remedies shall be independent of the others and severally enforceable, and all of which rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company at law or in equity.

(b)  Benton acknowledges and agrees that the Restrictive Covenants are reasonable and valid in temporal scope and in all other respects.  If any court determines that any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder of the Restrictive Covenants shall not thereby be affected and shall be given full effect to the greatest extent possible, without regard to the invalid portions.

(c)  If any court construes any of the Restrictive Covenants, or any part thereof, to be unenforceable because of the duration of such provision or the scope, such court shall have the power to reduce the duration or scope of such provision and, in its reduced form, such provision shall be enforceable and shall be enforced to the greatest extent possible.

Section 6.  Assignment. In the event that the Company shall be merged with, or consolidated into, any other person or entity, or in the event that it shall sell and transfer substantially all of its assets to another person or entity, the terms of this Agreement shall inure to the benefit of, and be assumed by, the person or entity resulting from such merger or

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consolidation, or to which the Company’s assets shall be sold and transferred. This Agreement shall not be assignable by Benton.

Section 7.  Governing Law. This Agreement will be governed by the laws of the Commonwealth of Massachusetts without regard to conflicts of laws principles that might lead to the application of the laws of another jurisdiction.

Section 8.  Jurisdiction; Service of Process. Except as otherwise provided in Section 12, any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may be brought against either of the parties in the state courts of Massachusetts or in the United States District Court in Boston, Massachusetts and each of the parties consents to the jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on either party anywhere in the world.

Section 9.  Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement, but in proving this Agreement, it shall not be necessary to produce more than one of such counterparts.

Section 10.  Section Headings; Construction. The headings of Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All references to “Section” or “Sections” refer to the corresponding Section or Sections of this Agreement unless otherwise specified. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, the word “including” does not limit the preceding words or terms.

Section 11.  Notices. All notices, consents, waivers, and other communications under this Agreement shall be in writing and will be deemed to have been duly given when (a) delivered by hand, (b) sent by facsimile (with a copy sent by nationally recognized overnight delivery service) or (c) when sent by nationally recognized overnight delivery service, in each case to the appropriate addresses set forth below (or to such other addresses as a party may designate by notice to the other parties):

Benton:	16 Bypass Road
	Lincoln, MA 01773
	Facsimile:
the Company:	Five Star Quality Care, Inc.
	400 Centre Street
	Newton, MA
	Attention: President
	Facsimile: 617.796.8385

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Section 12.  Arbitration.  Notwithstanding Section 8, if requested in writing by either Benton or the Company, any claim or controversy arising out of or relating to the interpretation, construction and performance of this Agreement, or any alleged breach hereof, shall be finally resolved by arbitration conducted in accordance with such rules as may be agreed upon by the parties within thirty (30) days following written notice by either party to the other identifying the issue in dispute and the position of the party giving notice, or failing to achieve such agreement, in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association.  Any award rendered in connection with the foregoing arbitration shall be in writing and shall be final and binding upon the parties, and judgment upon any such award may be entered and enforced in any court of competent jurisdiction in accordance with the Federal Arbitration Act.  The forum for such arbitration shall be in Boston, Massachusetts and the governing law shall be the laws of the Commonwealth of Massachusetts without giving effect to conflict of laws provisions.  Notwithstanding any provision in this Section 12 to the contrary, the Company shall have the right and power to seek and obtain equitable relief in accordance with Section 5.

Section 13.  Entire Agreement. This Agreement and the Share Agreements constitute the entire agreement between the Company and Benton with respect to the subject matter and supersedes all prior written and oral agreements and understandings between the Company and Benton with respect thereto. This Agreement may not be amended except by a written agreement executed by the party to be charged with the amendment.

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EXECUTED under seal as of the date first above written.

Five Star Quality Care, Inc.

By:  /s/ Bruce J. Mackey, Jr.

        Bruce J. Mackey, Jr., President

        /s/Evrett W. Benton

        Evrett W. Benton

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EXHIBIT A

Restricted Share Agreement between Evrett W. Benton and Five Star Quality Care, Inc. dated November 17, 2004

Restricted Share Agreement between Evrett W. Benton and Five Star Quality Care, Inc. dated November 11, 2005

Restricted Share Agreement between Evrett W. Benton and Five Star Quality Care, Inc. dated November 15, 2006

Restricted Share Agreement between Evrett W. Benton and Five Star Quality Care, Inc. dated November 19, 2007

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE	Contact:  Timothy A. Bonang, Manager of Investor Relations, or
	Katherine L. Johnston, Investor Relations Analyst
	(617) 796-8245
	www.fivestarqualitycare.com

Five Star Quality Care, Inc. Reports First Quarter 2008 Results

____________________________________

Newton, MA (May 7, 2008).  Five Star Quality Care, Inc. (AMEX: FVE) today announced its financial results for the quarter ended March 31, 2008.

First Quarter 2008 Financial Highlights:

§ Total revenues for the first quarter of 2008 increased 9.1% to $258.9 million from $237.2 million for the same period last year.

§ Net income per share from continuing operations for the first quarter of 2008 was $0.14, basic and diluted, compared to $0.18 and $0.17, basic and diluted, respectively, for the same period last year.

§ Net income per share from continuing operations in the three months ended March 31, 2007 included a gain from early extinguishment of debt of $3.6 million, or $0.11 per share and $0.09 per share, basic and diluted, respectively.  Without the gain related to the early extinguishment of debt, we would have reported net income per share from continuing operations for the first quarter of 2007 of $0.07, basic and diluted.  We believe this adjusted net income per share from continuing operations is a meaningful disclosure that may help shareholders to better understand our results of operations for the three months ended March 31, 2007. (See page 6 of the Supplemental Information attached hereto for a reconciliation of these adjusted amounts.)

§ During the three months ended March 31, 2008, we recognized a $3.3 million loss, or $0.10 and $0.08 per share, basic and diluted, respectively, as a result of our holdings in auction rate securities.

§ Without the loss related to the auction rate securities and the gain related to a 2003 sale of property, we would have reported net income per share from continuing operations, basic and diluted, in the three months ended March 31, 2008 of $0.24 and $0.22, respectively. We believe this adjusted net income per share is a meaningful disclosure that may help shareholders to better understand our results of operations for the three months ended March 31, 2008. (See page 6 of the Supplemental Information attached hereto for a reconciliation of these adjusted amounts.)

§ The weighted average number of basic and diluted common shares outstanding totaled 31,818,144 and 41,548,913, respectively, for the quarter ended March 31, 2008, and 31,683,601 and 41,414,903, respectively, for the quarter ended March 31, 2007.

First Quarter 2008 Operating Highlights (senior living communities):

§ Overall occupancy for the first quarter of 2008 was 89.6% compared with 90.2% for the same period a year ago.

§ Overall average daily rate for the first quarter of 2008 increased by 5% to $142.30, over the same period a year ago.

§ For those senior living communities that we have operated continuously since January 1, 2007 (comparable communities), occupancy for the first quarter of 2008 was 89.6% compared with 90.2% in the first quarter of 2007.

§ Comparable communities average daily rate for the first quarter of 2008 increased by 6%, to $143.56, over the same period a year ago.

§ The percentage of revenue derived from residents’ private resources remained unchanged at 66% compared to the first quarter of 2007.

§ Wages and benefits as a percentage of senior living revenues for the first quarter of 2008 were 50.3% compared with 51.8% for the first quarter of 2007.

§ In the first quarter of 2008, we leased an additional 22 senior living communities with 1,743 units which Senior Housing acquired from third parties.  Twenty-one of these communities are assisted living communities (one of which offers some skilled nursing services and one of which offers some independent living services) and one is a continuing care retirement community which offers independent living, assisted living and skilled nursing services.  

Conference Call:

On May 7, 2008 at 5:00 p.m. Eastern Standard Time, Bruce J. Mackey Jr., President and Chief Executive Officer, and Francis R. Murphy, III, Chief Financial Officer, will host a conference call to discuss the first quarter 2008 financial results.  Following the company’s remarks, there will be a question and answer period.

The conference call telephone number is (866) 550-6338.  Participants calling from outside the United States and Canada should dial (347) 284-6930. 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 Time Wednesday, May 14, 2008. To hear the replay, dial (719) 457-0820.  The replay pass code is 7853746.

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 healthcare services company which operates healthcare and senior living communities.  Five Star owns, leases and operates 183 senior living communities with over 19,600 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 1of 6

FIVE STAR QUALITY CARE, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

	Three months ended  March 31,
	2008			2007
Revenues:
Senior living revenue	$	216,927		$	197,222
Hospital revenue		24,744			26,129
Pharmacy revenue		17,206			13,835
Total revenues		258,877			237,186
Operating expenses:
Senior living wages and benefits		109,094			102,092
Other senior living operating expenses		53,421			49,910
Hospital expenses		22,592			23,624
Pharmacy expenses		16,203			13,591
Rent expense		35,444			32,171
General and administrative expenses		11,133			10,059
Depreciation and amortization		3,635			3,151
Total operating expenses		251,522			234,598
Operating income		7,355			2,588
Interest and other income		2,494			1,420
Interest expense		(1,594	)		(1,778	)
Unrealized loss on investments in trading securities		(3,270	)		-
Gain on extinguishment of debt		-			3,557
Income from continuing operations before income taxes		4,985			5,787
Provision for income taxes		566			208
Income from continuing operations		4,419			5,579
Loss from discontinued operations		(2,802	)		(815	)
Net income	$	1,617		$	4,764
Weighted average shares outstanding  - basic		31,818			31,684
Weighted average shares outstanding  - diluted		41,549			41,415
Basic income  per share from:
Continuing operations	$	0.14		$	0.18
Discontinued operations		(0.09	)		(0.03	)
Net income per share	$	0.05		$	0.15
Diluted income  per share from:
Continuing operations	$	0.14		$	0.17
Discontinued operations		(0.07	)		(0.02	)
Net income  per share	$	0.07		$	0.15
EBITDA(1):
Income from continuing operations:	$	4,419		$	5,579
Add: income taxes		566			208
Add: depreciation and amortization		3,635			3,151
Add: interest expense		1,594			1,778
Less: interest and other income		(2,494	)		(1,420	)
EBITDA	$	7,720		$	9,296

(1) We consider earnings before interest, taxes, depreciation and amortization, or EBITDA, to be a meaningful measure of our operating performance because it is useful in measuring our ability to service debt, fund capital expenditures and expand our business.  We believe that EBITDA is a meaningful disclosure that may help shareholders to understand better our financial performance, including comparing our performance to similar numbers reported by other companies; however, EBITDA as presented may be not always comparable to amounts calculated by other companies.  This information should not be considered as an alternative to net income, income from continuing operations, operating income, cash flow from operations, or any other operating performance or liquidity measure established by accounting principles generally accepted in the United States.  We have not made any adjustments to reported EBITDA for the three months ended March 31, 2008 and 2007, respectively, relating to the unrealized loss and gain on extinguishment of debt shown in the reconciliations discussed on page 6 of 6 of the supplemental information in this earnings release.

Supplemental Information, page 2 of 6

FIVE STAR QUALITY CARE, INC.

SELECTED BALANCE SHEET DATA

(in thousands, except share data)

	March 31,		December 31,
	2008		2007
Assets
Current assets:
Cash and cash equivalents	$	52,029	$	30,999
Accounts receivable, net of reserve		61,056		58,803
Prepaid expenses and other current assets		23,176		23,782
Investment securities:
Investments in trading securities		-		61,800
Investments in available for sale securities		7,756		7,455
Assets of discontinued operations		2,297		3,178
Total current assets		146,314		186,017
Long term assets:
Property and equipment, net		127,505		131,705
Investments in trading securities		71,580		-
Other long term assets		41,071		42,732
Total assets	$	386,470	$	360,454
Liabilities and Shareholders’ Equity
Current liabilities	$	124,980	$	104,063
Long term liabilities		29,942		27,259
Mortgage notes payable, long term		15,768		15,810
Convertible Senior notes		126,500		126,500
Shareholders’ equity: 31,818,144 shares    issued and outstanding at March 31, 2008 and    December 31, 2007		89,280		86,822
Total liabilities and shareholders’ equity	$	386,470	$	360,454

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,
	2008			2007
No. of communities (end of period)		183			160
No. of living units (end of period)		19,666			17,909
Occupancy		89.6	%		90.2	%
Average daily rate (ADR)	$	142.30		$	135.65
ADR % growth		5	%
Percent breakdown of net senior living revenues:
Medicare		16	%		16	%
Medicaid		18	%		18	%
Private		66	%		66	%
Total		100	%		100	%
Net senior living revenues	$	216,927		$	197,222
Net senior living revenues % growth		10	%
Community expenses (2)	$	162,515		$	152,002
Community expenses (2) as a % of net senior living revenues		75	%		77	%
Community expenses (2) % growth		7	%

(1)	Excludes data for discontinued operations and for pharmacy and hospital operations.
(2)	Community expenses equal senior living wages and benefits and other senior living operating expenses as shown on our consolidated statement of income

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)
	2008			2007
No. of communities (end of period)		160			160
No. of living units (end of period)		17,867			17,867
Occupancy		89.6	%		90.2	%
Average daily rate (ADR)	$	143.56		$	135.65
ADR % growth		6	%
Percent breakdown of net senior living revenues:
Medicare		16	%		16	%
Medicaid		18	%		18	%
Private		66	%		66	%
Total		100	%		100	%
Senior living revenues	$	209,102		$	197,222
Senior living revenues  % growth		6	%
Community expenses (3)	$	156,739		$	152,002
Community expenses (3) as a % of net senior living revenues		75	%		77	%
Community expenses (3) % growth		3	%

(1) Excludes data for discontinued operations and for pharmacy and hospital operations.

(2) Communities that we operated continuously since January 1, 2007.

(3) Community expenses equal senior living wages and benefits and other senior living operating expenses.

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,
	2008		2007
No. of communities (2) (end of period):
Assisted living & independent living communities, owned		13		12
Assisted living & independent living communities, leased		121		99
Total no. of assisted living & independent living communities		134		111
Skilled nursing communities, owned		2		2
Skilled nursing communities, leased		47		47
Total no. of skilled nursing communities		49		49
Total no. of communities		183		160
No. of living units (end of period):
Assisted living & independent living communities, owned		1,060		1,022
Assisted living & independent living communities, leased (3)		14,194		12,471
Total no. of assisted living & independent living units		15,254		13,493
Skilled nursing communities, owned		271		273
Skilled nursing communities, leased (4)		4,141		4,143
Total no. of skilled nursing living units		4,412		4,416
Total no. of living units		19,666		17,909
Rehabilitation hospital units		321		321
Senior living revenues:
Assisted living & independent living communities	$	149,322	$	134,420
Skilled nursing communities		65,596		61,488
Other (5)		2,009		1,314
Total senior living revenues	$	216,927	$	197,222

Assisted living & independent living communities occupancy		90.4	%		91.1	%
Assisted living & independent living communities ADR	$	127.11		$	121.54
Assisted living & independent living communities ADR % growth		5	%
Skilled nursing communities occupancy		87.1	%		87.6	%
Skilled nursing communities ADR	$	187.58		$	176.61
Skilled nursing communities ADR % growth		6	%
Rehabilitation hospital occupancy		65.7	%		65.2	%

(1)	Excludes data for discontinued operations and for pharmacy operations.
(2)	Communities are categorized by the type of living units which constitute a majority (or plurality) of the total living units at the community.
(3)	Includes 1,869 and 1,654 skilled nursing units in communities where assisted living and independent living services are the predominant services provided for the three months and year ended March 31, 2008 and 2007, respectively.
(4)	Includes 66 and 95 assisted living and independent living units in communities where skilled nursing services are the predominant services provided for the three months and year ended March 31, 2008 and 2007, respectively.
(5)	Other senior living revenue relates primarily to rehabilitation and other specialty service revenues provided at residential facilities and does not include pharmacy or hospital operations.

Supplemental Information, page 6 of 6

Reconciliation of Income from Continuing Operations to Income from Continuing Operations excluding the unrealized loss related to the auction rate securities for the three months ended March 31, 2008 (in thousands, except per share data):

	For the three months ended March 31, 2008
	Amount		Per ShareBasic		Per ShareDiluted
Income from continuing operations	$	4,419	$	0.14	$	0.14
Add unrealized loss related to the auction rate securities		3,270		0.10		0.08
Income from continuing operations excluding the loss related to auction rate securities (1)	$	7,689	$	0.24	$	0.22

(1) We believe this adjusted amount is a meaningful disclosure that may help shareholders to understand better our results of operations for the three months ended March 31, 2008.  This information should not be considered as an alternative to income from continuing operations or income from continuing operations per share or any other operating or performance measure established by accounting principles generally accepted in the United States.

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Reconciliation of Income from Continuing Operations to Income from Continuing Operations excluding the gain on extinguishment of debt for the three months ended March 31, 2007 (in thousands, except per share data):

	For the three months ended March 31, 2007
	Amount			Per ShareBasic			Per ShareDiluted(1)
Income from continuing operations	$	5,579		$	0.18		$	0.17
Deduct gain on extinguishment of debt		(3,557	)		(0.11	)		(0.09	)
Income from continuing operations excluding the gain related to extinguishment of debt (2)	$	2,022		$	0.07		$	0.07

(1) The effect of our 3.75% convertible senior notes on income from continuing operations excluding the gain related to extinguishment of debt is anti-dilutive for the three months ended March 31, 2007.

(2) We believe this adjusted amount is a meaningful disclosure that may help shareholders to understand better our results of operations for the three months ended March 31, 2007.  This information should not be considered as an alternative to income from continuing operations or income from continuing operations per share or any other operating or performance measure established by accounting principles generally accepted in the United States.