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): November 7, 2007

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 November 7, 2007, 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 nine months ended September 30, 2007. A copy of the Company’s press release is furnished as Exhibit 99.1 hereto.

Item 9.01.  Financial Statements and Exhibits.

(d)           Exhibits.

The Company hereby furnishes the following exhibit:

99.1         Press Release dated November 7, 2007.

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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: Treasurer and Chief Financial
	Officer
Date: November 7, 2007

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EX-99.1

Exhibit 99.1

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

FOR IMMEDIATE RELEASE	Contact: Timothy A. Bonang, Manager of Investor Relations, or
	Katherine L. Johnston, Investor Relations Analyst
	(617) 796-8245
	www.5sqc.com

Five Star Quality Care, Inc. Reports Third Quarter 2007 Results

Newton, MA (November 8, 2007). Five Star Quality Care, Inc. (AMEX: FVE) today announced its financial results for the quarter and nine months ended September 30, 2007.

Third Quarter 2007 Financial Highlights

•Total revenues for the quarter increased to $247.2 million from $200.7 million for the same period last year.

•Net income per share from continuing operations, basic and diluted, for the third quarter were $0.26 and $0.23, respectively, compared to $0.19, basic and diluted, for the same period last year.

•The weighted average number of basic and diluted common shares outstanding totaled 31,704,656 and 41,435,425, respectively for the quarter ended September 30, 2007, and 31,581,456 basic and diluted, for the quarter ended September 30, 2006.

Third Quarter 2007 Operational Highlights

•Overall occupancy for the quarter was 90.4% compared with 91.0% for the same period a year ago.

•For those senior living communities that Five Star has operated continuously since July 1, 2006 (comparable communities), occupancy for the quarter was 90.8% compared with 91.2 % in the third quarter of 2006.

•Average daily rate for the quarter increased by 7%, to $137, over the same period a year ago.

•Comparable communities average daily rate for the quarter increased by 5%, to $140, over the same period a year ago.

•The percent of revenue derived from residents’ private resources in the quarter was 67% compared to 66% for the third quarter of 2006.

•Wages and benefits as a percent of senior living revenues for the quarter were 49.4% compared with 51.6% for the third quarter of 2006.

•General & administrative expenses as a percent of revenues for the quarter was 4.4% compared with 4.3% for the third quarter of 2006.

Nine Month 2007 Financial Highlights

•Total revenues for the nine months ended September 30, 2007 increased to $729.3 million from $588.3 million for the same period last year.

•Net income per share from continuing operations, basic and diluted, for the nine months ended September 30, 2007 were $0.59 and $0.54, respectively, compared to a loss of $2.79, basic and diluted, for the same period last year. During the nine months ended September 30, 2007, Five Star recognized a gain on extinguishment of debt totaling $4.5 million, or $0.14 and $0.11 per share from continuing operations, basic and diluted, respectively. Without the charge related to the termination of Sunrise management agreements, Five Star would have reported net income per share from continuing operations, basic and diluted in the nine months of 2006 of $0.47. We believe this adjusted amount is a meaningful disclosure that may help shareholders to understand better our results of operations for the nine months ended September 30, 2006. (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 31,694,244 and 41,425,013, respectively for the nine months ended September 30, 2007 and 27,583,527 basic and diluted, for the nine months ended September 30, 2006.

Conference Call:

On November 8, 2007 at 10:00 a.m. Eastern Standard Time, Evrett W. Benton, president and chief executive officer, and Bruce J. Mackey Jr., treasurer and chief financial officer, will host a conference call to discuss the third quarter 2007 financial results. Following the company’s remarks, there will be a question and answer period.

The conference call telephone number is (888) 215-6895. Participants calling from outside the United States and Canada should dial (913) 981-5542. 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 2:00 p.m. Eastern Time Thursday, November 15, 2007. To hear the replay, dial (719) 457-0820. The replay pass code is 6481326.

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. As of today, Five Star owns, leases and operates 161 senior living communities with over 17,900 living units located in 29 states. These communities include independent living, assisted living and skilled nursing communities. Five Star also operates six institutional pharmacies, one of which also provides mail order pharmaceuticals to the general public, and two rehabilitation hospitals. Five Star is headquartered in Newton, Massachusetts.

Supplemental Information

FIVE STAR QUALITY CARE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share data)

	Three months ended  September 30,						Nine months ended  September 30,
	2007			2006			2007			2006
Revenues:
Senior living revenue	$	203,656		$	186,642		$	601,319		$	550,079
Hospital revenue	25,361			—			76,711			—
Pharmacy revenue	18,141			14,023			51,303			38,240
Total revenues	247,158			200,665			729,333			588,319
Operating expenses:
Senior living wages and benefits	100,659			96,374			306,497			281,693
Other senior living operating expenses	50,988			44,881			149,399			139,163
Hospital expenses	22,588			—			69,585			—
Pharmacy expenses	17,493			13,895			49,763			36,891
Management fee to Sunrise	—			1,400			—			7,792
Termination expense for certain Sunrise management agreements	—			—			—			89,833
Rent expense	32,507			26,556			96,737			78,009
General and administrative expenses	10,757			8,629			31,703			23,867
Depreciation and amortization	3,580			2,557			10,024			7,114
Total operating expenses	238,572			194,292			713,708			664,362
Operating income (loss)	8,586			6,373			15,625			(76,043		)
Interest and other income	1,511			413			4,343			1,553
Interest expense	(1,464		)	(786		)	(4,919		)	(2,419		)
Gain on extinguishment of debt	—			—			4,491			—
Income (loss) from continuing operations before income taxes	8,633			6,000			19,540			(76,909		)
Provision for income taxes	277			—			760			—
Income (loss) from continuing operations	8,356			6,000			18,780			(76,909		)
Loss from discontinued operations	(595		)	(2,804		)	(2,176		)	(5,426		)
Net income (loss)	$	7,761		$	3,196		$	16,604		$	(82,335	)
Weighted average shares outstanding - basic	31,705			31,581			31,694			27,584
Weighted average shares outstanding - diluted	41,436			31,581			41,425			27,584
Basic income (loss) per share from:
Continuing operations	$	0.26		$	0.19		$	0.59		$	(2.79	)
Discontinued operations	(0.02		)	(0.09		)	(0.07		)	(0.20		)
Net income (loss) per share	$	0.24		$	0.10		$	0.52		$	(2.99	)
Diluted income (loss) per share from:
Continuing operations	$	0.23		$	0.19		$	0.54		$	(2.79	)
Discontinued operations	(0.01		)	(0.09		)	(0.05		)	(0.20		)
Net income (loss) per share	$	0.22		$	0.10		$	0.49		$	(2.99	)
EBITDA(1):
Income (loss) from continuing operations:	$	8,356		$	6,000		$	18,780		$	(76,909	)
Add: income taxes	277			—			760			—
Add: depreciation and amortization	3,580			2,557			10,024			7,114
Add: interest expense	1,464			786			4,919			2,419
Less: interest and other income	(1,511		)	(413		)	(4,343		)	(1,553		)
EBITDA(2)	$	12,166		$	8,930		$	30,140		$	(68,929	)

(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 or liquidity performance measure established by accounting principles generally accepted in the United States.

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FIVE STAR QUALITY CARE, INC.

SELECTED BALANCE SHEET DATA

(dollars in thousands)

	September 30,		December 31,
	2007		2006
Assets
Current assets:
Cash and cash equivalents	$	19,875	$	46,241
Accounts receivable, net of reserve	58,632		67,791
Prepaid expenses and other current assets	29,691		41,294
Investment securities:
Investments in trading securities	69,125		46,100
Investments in available-for-sale securities	8,347		4,334
Total current assets	185,670		205,760
Long term assets:
Property and equipment, net	132,876		114,898
Other long term assets	43,549		45,753
Total assets	$	362,095	$	366,411
Liabilities and Shareholders’ Equity
Current liabilities	$	109,323	$	132,929
Long term liabilities	28,045		28,098
Mortgage notes payable, long term	15,909		11,454
Convertible Senior notes	126,500		126,500
Shareholders’ equity: 31,708,134 and 31,682,134 shares issued and outstanding at September 30, 2007 and December 31, 2006, respectively	82,318		67,430
Total liabilities and shareholders’ equity	$	362,095	$	366,411

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FIVE STAR QUALITY CARE, INC.

SENIOR LIVING COMMUNITY OPERATING DATA (1)

(dollars in thousands, except average daily rate)

	Three months ended  September 30,						Nine months ended  September 30,
	2007			2006			2007			2006
No. of communities (end of period)	161			154			161			154
No. of living units (end of period)	17,911			17,401			17,911			17,401
Occupancy	90.4		%	91.0		%	90.4		%	91.2		%
Average daily rate (ADR)	$	137		$	128		$	136		$	127
ADR % growth	7		%	—			7		%	—
Percent breakdown of net senior living revenues:
Medicare	15		%	15		%	15		%	16		%
Medicaid	18		%	19		%	18		%	19		%
Private	67		%	66		%	67		%	65		%
Total	100		%	100		%	100		%	100		%
Net senior living revenues	$	203,656		$	186,642		$	601,319		$	550,079
Net senior living revenues % growth	9		%	—			9		%	—
Community expenses (2)	$	151,647		$	141,255		$	455,896		$	420,856
Community expenses (2) as a % of net senior living revenues	74		%	76		%	76		%	77		%
Community expenses (2) % growth	7		%	—			8		%	—

(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.

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FIVE STAR QUALITY CARE, INC.

COMPARABLE SENIOR LIVING COMMUNITY OPERATING DATA (1)

(dollars in thousands, except average daily rate)

	Three months ended  September 30, (2)				Nine months ended  September 30, (3)
	2007		2006		2007		2006
No. of communities (end of period)	149		149		149		149
No. of living units (end of period)	16,618		16,618		16,618		16,618
Occupancy	90.8	%	91.2	%	90.7	%	91.3	%
Average daily rate (ADR)	$140		$133		$139		$132
ADR % growth	5	%	—		5	%	—
Percent breakdown of net senior living revenues:
Medicare	15	%	15	%	16	%	16	%
Medicaid	19	%	19	%	19	%	19	%
Private	66	%	66	%	65	%	65	%
Total	100	%	100	%	100	%	100	%
Net senior living revenues	$194,116		$185,021		$573,969		$548,458
Net senior living revenues % growth	5	%	—		5	%	—
Community expenses (4)	$143,787		$140,277		$433,213		$419,880
Community expenses (4) as a % of net senior living revenues	74	%	76	%	75	%	77	%
Community expenses (4) % growth	3	%	—		3	%	—

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

(2)Communities that we operated continuously since July 1, 2006.

(3)Communities that we operated continuously since January 1, 2006.

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

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FIVE STAR QUALITY CARE, INC.

OTHER OPERATING DATA (1)

(dollars in thousands)

	Three months ended  September 30,						Nine months ended  September 30,
	2007			2006			2007			2006
No. of communities (2) (end of period):
Assisted living & independent living communities, owned	13			12			13			12
Assisted living & independent living communities, leased	99			93			99			93
Total no. of assisted living & independent living communities	112			105			112			105
Skilled nursing communities, owned	2			2			2			2
Skilled nursing communities, leased	47			47			47			47
Total no. of skilled nursing communities	49			49			49			49
Total no. of communities	161			154			161			154
No. of living units (end of period):
Assisted living & independent living communities, owned	1,066			986			1,066			986
Assisted living & independent living communities, leased (3)	12,441			12,008			12,441			12,008
Total no. of assisted living & independent living units	13,507			12,994			13,507			12,994
Skilled nursing communities, owned	271			273			271			273
Skilled nursing communities, leased (4)	4,133			4,134			4,133			4,134
Total no. of skilled nursing living units	4,404			4,407			4,404			4,407
Total no. of living units	17,911			17,401			17,911			17,401
Senior living revenues:
Assisted living & independent living communities	$	138,110		$	124,554		$	408,889		$	368,116
Skilled nursing communities	64,051			61,281			188,553			180,395
Other (5)	1,495			807			3,877			1,568
Total senior living revenues	$	203,656		$	186,642		$	601,319		$	550,079
Assisted living & independent living communities occupancy	91.1		%	91.8		%	91.2		%	92.1		%
Assisted living & independent living communities ADR	$	122		$	113		$	122		$	113
Assisted living & independent living communities ADR % growth	8		%	—			8		%	—
Skilled nursing communities occupancy	88.1		%	88.8		%	87.8		%	88.7		%
Skilled nursing communities ADR	$	179		$	170		$	179		$	169
Skilled nursing communities ADR % growth	5		%	—			6		%	—
Rehabilitation hospital occupancy	60		%	—			60		%	—

(1)Excludes data for discontinued operations and for pharmacy and hospital 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 1,718 and 1,590 skilled nursing units in communities where assisted living and independent living services are the predominant services provided for the three and nine months ended September 30, 2007 and 2006, respectively.

(4)Includes 73 and 95 assisted living and independent living units in communities where skilled nursing services are the predominant services provided for the three and nine months ended September 30, 2007 and 2006, 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.

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Reconciliation of Income from Continuing Operations excluding Termination Charges to Loss from Continuing Operations for the nine months ended September 30, 2006 (dollars in thousands, except per share data):

	For the nine months ended  September 30, 2006
	Amount			Per Share
Income from continuing operations excluding termination charges(1)	$	12,924		$	0.47
Termination expense for certain Sunrise management agreements	(89,833		)
Loss from continuing operations	$	(76,909	)	$	(2.79	)

(1)We believe these adjusted amounts are a meaningful disclosure that may help shareholders to understand better our results of operations for the periods shown. This information should not be considered as an alternative to income (loss) from continuing operations or income (loss) 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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