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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): October 11, 2006

FIVE STAR QUALITY CARE, INC.
(Exact Name of Registrant as Specified in Its Charter)

Maryland
(State or other jurisdiction
of incorporation)

Commission File No. 1-16817		04-3516029 (IRS Employer Identification No.)
400 Centre Street, Newton, Massachusetts 02458 (Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (617) 796-8387

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))

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Item 8.01.    Other Events

On October 11, 2006, Five Star Quality Care, Inc. (the "Company" or "Five Star") announced that it intends to offer $80,000,000 aggregate principal amount of Convertible Senior Notes due 2026 to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. A press release announcing the proposed offering is attached to this Current Report on Form 8-K as Exhibit 99.1.

WARNING CONCERNING FORWARD LOOKING STATEMENTS

THIS REPORT CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND FEDERAL SECURITIES LAWS, INCLUDING WITH RESPECT TO THE COMPANY'S ISSUANCE OF THE NOTES AND ITS INTENDED USE OF THE PROCEEDS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON THE COMPANY'S PRESENT EXPECTATIONS, BUT THESE STATEMENTS AND THE IMPLICATIONS OF THESE STATEMENTS ARE NOT GUARANTEED.

Summary historical, pro forma and selected financial data of the Company; consolidating subsidiary financial information.

Summary historical and pro forma financial data

The following summary financial data related to our continuing operations has been derived from our historical financial statements for the six months ended June 30, 2006, and shows, for the period or date presented, our summary historical and our pro forma income statement and balance sheet data, giving effect to (1) our April 2006 equity offering; (2) the reduction in our management fees payable in respect of 10 SLS management agreements that we terminated in June 2006; and (3) this offering (assuming the initial purchasers over-allotment option is not exercised and not giving effect to conversion of the notes), as if these events had been completed as of the beginning of the period presented. The following data should be read in conjunction with, and is qualified in its entirety by reference to, our historical financial statements incorporated by reference from our Annual Report on Form 10-K for the year ended December 31, 2005 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2006 and June 30, 2006 and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein, the information contained in this offering memorandum under "Risk Factors" and our unaudited pro forma financial statements contained in this offering memorandum. Our six month historical financial information contains normal recurring adjustments and is not necessarily indicative of results to be expected in a full year. Comparability of financial results from period to period is affected by acquisitions, closures and our termination of SLS management agreements. Pro forma financial information may not be reflective of what our financial results or financial position would have been had the April 2006 equity offering, the reduction in our management fees payable in respect of 10 SLS management agreements that we terminated in June 2006 and this offering been completed as of the dates indicated in our pro forma financial statements. Our pro forma financial information does not give pro forma effect to certain transactions, including, without limitation, the eight senior living communities we began to operate in

2

September and October 2006 and the two rehabilitation hospitals we began to operate in October 2006. You should not place undue reliance on our pro forma financial information.

			For the six months ended June 30, 2006
			Historical			Adjusted for April 2006 equity offering			Adjusted for April 2006 equity offering and 2006 Sunrise terminations			Adjusted for April 2006 equity offering, 2006 Sunrise terminations and convertible senior notes offering
			(amounts in thousands, except per share data)
Statement of Income Data
REVENUES:
	Net revenues from residents		$	365,398		$	365,398		$	365,398		$	365,398
	Pharmacy revenue			24,410			24,410			24,410			24,410
Total revenues				389,808			389,808			389,808			389,808
OPERATING EXPENSES:
Community level operating expenses				281,381			281,381			281,381			281,381
Termination payment to SLS				89,833			89,833			89,833			89,833
Pharmacy expenses				23,189			23,189			23,189			23,189
Management fee to SLS				6,392			6,392			3,059			3,059
Rent expense				52,563			52,563			52,563			52,563
General and administrative				14,635			14,635			14,635			14,635
Depreciation and amortization				4,561			4,561			4,561			4,561
Total operating expenses				472,554			472,554			469,221			469,221
Operating loss				(82,746	)		(82,746	)		(79,413	)		(79,413	)
	Interest and other income			1,140			1,140			1,140			1,140
	Interest expense			(1,633	)		(1,633	)		(1,633	)		(3,294	)(1)
Loss from continuing operations before income taxes				(83,239	)		(83,239	)		(79,906	)		(81,567	)
	Provision for income taxes			—			—			—			—
Loss from continuing operations			$	(83,239	)	$	(83,239	)	$	(79,906	)	$	(81,567	)
Weighted Average Shares Outstanding:
	Basic			25,551			31,581			31,581			31,581
	Fully Diluted			25,551			31,581			31,581			31,581
Basic and diluted income per share from continuing operations:
	Basic		$	(3.26	)	$	(2.64	)	$	(2.53	)	$	(2.58	)(2)
	Fully Diluted		$	(3.26	)	$	(2.64	)	$	(2.53	)	$	(2.58	)(2)
EBITDA
Loss from continuing operations			$	(83,239	)	$	(83,239	)	$	(79,906	)	$	(81,567	)
	Add: income taxes			—			—			—			—
	Add: depreciation and amortization			4,561			4,561			4,561			4,561
	Add: interest expense			1,633			1,633			1,633			3,294
	Less: interest and other income			(1,140	)		(1,140	)		(1,140	)		(1,140	)
EBITDA(3)			$	(78,185	)	$	(78,185	)	$	(74,852	)	$	(74,852	)

3

			As of June 30, 2006
			Actual			Adjusted for convertible senior notes offering
			(dollars in thousands)
Balance Sheet Data
	Cash and cash equivalents		$	23,576		$	101,126
	Total current assets			111,806			189,356
	Total assets			252,334			332,334
	Total current liabilities			83,889			83,889
	Total long term liabilities			71,472			151,472
	Total shareholders' equity		$	96,973		$	96,973

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(1)

We have used an assumed interest rate of 4.0% per annum for the notes offered hereby.

(2)

The loss per share includes a loss of $(2.84) per share relating to the termination fees we incurred for the six months ended June 30, 2006 in connection with our termination of 10 SLS management agreements.

(3)

We consider earnings before interest, taxes, depreciation and amortization, or EBITDA, to be an indicative measure of our operating performance. We believe EBITDA is also useful in measuring our ability to service debt, fund capital expenditures and expand our business. Furthermore, we believe that EBITDA is a meaningful disclosure that may help shareholders to understand better our financial performance, including comparing our performance to other companies. However, EBITDA as presented may not be comparable to amounts calculated by other companies. This information should not be considered as an alternative to net income, income from continuing operations, operating profit, cash flow from operations, or any other operating or liquidity performance measure prescribed by accounting principles generally accepted in the United States. Other income excluded from EBITDA consists primarily of amortization of deferred gains.

4

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Selected financial data

The following table presents selected financial data related to our continuing operations which has been derived from our historical financial statements for the years ended December 31, 2003, 2004 and 2005, and for the six months ended June 30, 2005 and 2006, all of which have been adjusted to remove the operations of two skilled nursing home communities in the state of Connecticut that we classified as discontinued operations in June 2006. The following information should be read in connection with, and is qualified in its entirety by reference to, our consolidated financial statements and the notes thereto incorporated by reference from our Annual Report on Form 10-K for the year ended December 31, 2005 and from our Quarterly Reports on Form 10-Q for the three months ended March 31, 2006 and the six months ended June 30, 2006. The six month information contains normal recurring adjustments and is not necessarily indicative of the results that may be expected in a full year. Additionally, comparability of financial results from period to period is affected by acquisitions, closures and our termination of SLS management agreements. Accordingly, you should not place undue reliance on our historical financial information.

			Year ended December 31,									Six months ended June 30,
			2003			2004			2005			2005			2006
Revenues:
	Net revenues from residents		$	543,610		$	584,615		$	700,891		$	340,795		$	365,398
	Pharmacy revenue			1,770			13,209			33,476			12,356			24,410
Total revenues				545,380			597,824			734,367			353,151			389,808
Operating expenses:
	Community level operating expenses			434,530			455,755			537,062			260,061			281,381
	Pharmacy expenses			1,666			12,093			32,167			11,451			23,189
	Management fee to SLS			17,272			19,293			21,256			11,240			6,392
	Termination expense for certain SLS management agreements			—			—			86,286			—			89,833
	Rent expense			76,962			82,453			98,890			48,460			52,563
	General and administrative			15,892			18,473			26,559			12,702			14,635
	Depreciation and amortization			3,201			3,371			7,113			3,384			4,561
	Impairment of assets			—			—			2,333			—			—
Total operating expenses				549,523			591,438			811,666			347,298			472,554
Operating (loss) income				(4,143	)		6,386			(77,299	)		5,853			(82,746	)
	Interest and other income			503			1,666			1,543			566			1,140
	Interest expense			(1,439	)		(1,172	)		(3,741	)		(1,860	)		(1,633	)
(Loss) income from continuing operations before income taxes				(5,079	)		6,880			(79,497	)		4,559			(83,239	)
	Provision for income taxes			—			(120	)		—			(73	)		—
(Loss) income from continuing operations			$	(5,079	)	$	6,760		$	(79,497	)	$	4,486		$	(83,239	)
Weighted average shares outstanding				8,482			8,716			14,879			12,219			25,551
Basic and diluted (loss) income per share from:
	Continuing operations		$	(0.60	)	$	0.78		$	(5.34	)	$	0.37		$	(3.26	)
(Loss) income from continuing operations			$	(5,079	)	$	6,760		$	(79,497	)	$	4,486		$	(83,239	)
	Add: income taxes			—			120			—			73			—
	Add: depreciation and amortization			3,201			3,371			7,113			3,384			4,561
	Add: interest expense			1,439			1,172			3,741			1,860			1,633
	Less: interest and other income			(503	)		(1,666	)		(1,543	)		(566	)		(1,140	)
EBITDA			$	(942	)	$	9,757		$	(70,186	)	$	9,237		$	(78,185	)

5

CONSOLIDATING SUBSIDIARY FINANCIAL INFORMATION

Consolidating financial information related to the Company, its guarantor subsidiaries and non-guarantor subsidiaries as of June 30, 2006 and 2005 are reflected below.

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the six months ended June 30, 2006

			Parent			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			FVE consolidated
REVENUES:
	Net revenues from residents		$	—		$	163,152		$	202,246		$	—		$	365,398
	Pharmacy revenue			—			—			24,410			—			24,410
Total revenues				—			163,152			226,656			—			389,808
OPERATING EXPENSES:
	Wages and benefits			—			69,435			117,526			—			186,961
	Other operating expenses			—			47,035			47,385			—			94,420
	Termination payment to Sunrise Senior Living Services, Inc. ("SLS")			—			89,833			—			—			89,833
	Pharmacy expenses			—			—			23,189			—			23,189
	Management fee to SLS			—			6,392			—			—			6,392
	Rent expense			—			32,240			20,323			—			52,563
	General and administrative			—			4,241			10,394			—			14,635
	Depreciation and amortization			—			1,967			2,594			—			4,561
Total operating expenses				—			251,143			221,411			—			472,554
Operating (loss) income				—			(87,991	)		5,245			—			(82,746	)
	Interest and other income			—			65			1,075			—			1,140
	Interest expense			—			(3	)		(1,630	)		—			(1,633	)
	Equity in earnings of subsidiaries			(85,532	)		—			—			85,532			—
(Loss) income from continuing operations before income taxes				(85,532	)		(87,929	)		4,690			85,532			(83,239	)
	Provision for income taxes			—			—			—			—			—
(Loss) income from continuing operations				(85,532	)		(87,929	)		4,690			85,532			(83,239	)
Loss from discontinued operations				—			(94	)		(2,199	)		—			(2,293	)
Net (loss) income			$	(85,532	)	$	(88,023	)	$	2,491		$	85,532		$	(85,532	)

6

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the six months ended June 30, 2005

			Parent			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			FVE consolidated
REVENUES:
	Net revenues from residents		$	—		$	156,638		$	184,157		$	—		$	340,795
	Pharmacy revenue			—			—			12,356			—			12,356
Total revenues				—			156,638			196,513			—			353,151
OPERATING EXPENSES:
	Wages and benefits			—			65,697			108,629			—			174,326
	Other operating expenses			—			43,229			42,506			—			85,735
	Termination payment to SLS			—			—			—			—			—
	Pharmacy expenses			—			—			11,451			—			11,451
	Management fee to SLS			—			11,148			92			—			11,240
	Rent expense			—			32,201			16,259			—			48,460
	General and administrative			—			—			12,702			—			12,702
	Depreciation and amortization			—			1,251			2,133			—			3,384
Total operating expenses				—			153,526			193,772			—			347,298
Operating income				—			3,112			2,741			—			5,853
	Interest and other income			—			59			507			—			566
	Interest expense			—			—			(1,860	)		—			(1,860	)
	Equity in earnings of subsidiaries			2,420			—			—			(2,420	)		—
Income (loss) from continuing operations before income taxes				2,420			3,171			1,388			(2,420	)		4,559
	Provision for income taxes			—			—			(73	)		—			(73	)
Income (loss) from continuing operations				2,420			3,171			1,315			(2,420	)		4,486
Loss from discontinued operations				—			(71	)		(1,995	)		—			(2,066	)
(Loss) net income			$	2,420		$	3,100		$	(680	)	$	(2,420	)	$	2,420

7

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
As of June 30, 2006

		Parent			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			FVE consolidated
ASSETS
Current Assets
Cash and cash equivalents		$	—		$	2,499		$	21,077		$	—		$	23,576
Accounts receivable, net			—			13,891			32,449			—			46,340
Prepaid expenses and other current assets			—			2,479			39,411			—			41,890
Total current assets			—			18,869			92,937			—			111,806
Property and equipment, net			—			19,820			82,230			—			102,050
Investment in subsidiary and long term recievable from (to) subsidiaries			200			—			200			(400	)		—
Restricted cash			—			3,673			10,024			—			13,697
Intercompany			227,808			—			—			(227,808	)		—
Mortgage notes receivable			—			—			3,725			—			3,725
Goodwill			—			—			16,901			—			16,901
Other long term assets			—			402			3,753			—			4,155
Total assets		$	228,008		$	42,764		$	209,770		$	(228,208	)	$	252,334
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and other current liabilities		$	—		$	24,005		$	59,258		$	—		$	83,263
Current mortgage notes payable			—			—			626			—			626
Total current liabilities			—			24,005			59,884			—			83,889
Long term liabilities:
Mortgage notes payable			—			—			44,423			—			44,423
Notes payable to related parties			200			—			—			(200	)		—
Other long term liabilities			—			7,128			19,921			—			27,049
Total long term liabilities			200			7,128			64,344			(200	)		71,472
Total shareholders' equity			227,808			11,631			85,542			(228,008	)		96,973
Total liabilities and shareholders' equity		$	228,008		$	42,764		$	209,770		$	(228,208	)	$	252,334

8

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
As of June 30, 2005

		Parent			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			FVE consolidated
ASSETS
Current Assets
Cash and cash equivalents		$	—		$	11,744		$	6,960		$	—		$	18,704
Accounts receivable, net			—			12,937			26,315			—			39,252
Prepaid expenses and other current assets			—			10,807			15,897			—			26,704
Total current assets			—			35,488			49,172			—			84,660
Property and equipment, net			—			14,444			132,717			—			147,161
Investment in subsidiary and long term recievable from (to) subsidiaries			200			—			200			(400	)		—
Restricted cash			—			13,351			3,280			—			16,631
Intercompany			56,654			—			—			(56,654	)		—
Mortgage notes receivable			—			—			6,036			—			6,036
Goodwill			—			—			14,842			—			14,842
Other long term assets			—			402			1,502			—			1,904
Total assets		$	56,854		$	63,685		$	207,749		$	(57,054	)	$	271,234
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and other current liabilities		$	—		$	27,396		$	46,022		$	—		$	73,418
Current mortgage notes payable			—			—			6,051			—			6,051
Total current liabilities			—			27,396			52,073			—			79,469
Long term liabilities:
Mortgage notes payable			—			—			69,056			—			69,056
Notes payable to related parties			200			—			—			(200	)		—
Other long term liabilities			—			6,825			17,290			—			24,115
Total long term liabilities			200			6,825			86,346			(200	)		93,171
Total shareholders' equity			56,654			29,464			69,330			(56,854	)		98,594
Total liabilities and shareholders' equity		$	56,854		$	63,685		$	207,749		$	(57,054	)	$	271,234

9

UNAUDITED CONDENSED CONSOLIDATING CASH FLOW STATEMENT
For the six months ended June 30, 2006

			Parent			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			FVE consolidated
Cash Flows from operating activities:
Net (loss) income			$	(85,532	)	$	(88,023	)	$	2,491		$	85,532		$	(85,532	)
Undistributed equity in earnings of subsidiaries				85,532			—			—			(85,532	)		—
Adjustments to reconcile net income (loss) to cash provided by (used in) operating acitivities, net				—			86,027			(92,220	)		—			(6,193	)
	Net cash used in operating activities			—			(1,996	)		(89,729	)		—			(91,725	)
Cash Flows from investing activities:
Capital expenditures				—			(8,323	)		(15,263	)		—			(23,586	)
Proceeds from the sale of property and equipment				—			5,746			5,331			—			11,077
Other, net				—			(4	)		(2,694	)		—			(2,698	)
	Net cash used in investing activities			—			(2,581	)		(12,626	)		—			(15,207	)
Cash Flows from financing activities:
Proceeds from issuance of common shares, net				—			—			114,059			—			114,059
Change in borrowings, net				—			—			(280	)		—			(280	)
Other, net				—			—			—			—			—
	Net cash provided by financing activities			—			—			113,779			—			113,779
Change in cash and cash equivalents				—			(4,577	)		11,424			—			6,847
Cash and cash equivalents at beginning of period				—			7,076			9,653			—			16,729
Cash and cash equivalents at end of period			$	—		$	2,499		$	21,077		$	—		$	23,576

10

UNAUDITED CONDENSED CONSOLIDATING CASH FLOW STATEMENT
For the six months ended June 30, 2005

			Parent			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			FVE consolidated
Cash Flows from operating activities:
Net income (loss)			$	2,420		$	3,100		$	(680	)	$	(2,420	)	$	2,420
Undistributed equity in earnings of subsidiaries				(2,420	)		—			—			2,420			—
Adjustments to reconcile net income (loss) to cash provided by operating acitivities, net				—			7,691			8,662			—			16,353
	Net cash provided by operating activities			—			10,791			7,982			—			18,773
Cash Flows from investing activities:
Capital expenditures				—			(6,987	)		(79,827	)		—			(86,814	)
Proceeds from the sale of property and equipment				—			3,988			25,574			—			29,562
Other, net				—			(3,698	)		(2,587	)		—			(6,285	)
	Net cash used in investing activities			—			(6,697	)		(56,840	)		—			(63,537	)
Cash Flows from financing activities:
Proceeds from issuance of common shares, net				—			—			—			—			—
Change in borrowings, net				—			—			32,526			—			32,526
Other, net				—			—			—			—			—
	Net cash provided by financing activities			—			—			32,526			—			32,526
Change in cash and cash equivalents				—			4,094			(16,332	)		—			(12,238	)
Cash and cash equivalents at beginning of period				—			7,650			23,292			—			30,942
Cash and cash equivalents at end of period			$	—		$	11,744		$	6,960		$	—		$	18,704

11

Consolidating financial information related to the Company, its guarantor subsidiaries and non-guarantor subsidiaries as of December 31, 2005, 2004 and 2003 are reflected below.

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the year ended December 31, 2005

			Parent			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			FVE consolidated
REVENUES:
	Net revenues from residents		$	—		$	314,990		$	385,901		$	—		$	700,891
	Pharmacy revenue			—			—			33,476			—			33,476
Total revenues				—			314,990			419,377			—			734,367
OPERATING EXPENSES:
	Wages and benefits			—			131,779			224,588			—			356,367
	Other operating expenses			—			90,368			90,327			—			180,695
	Termination payment to SLS			—			86,286			—			—			86,286
	Pharmacy expenses			—			—			32,167			—			32,167
	Management fee to SLS			—			21,256			—			—			21,256
	Rent expense			—			64,556			34,334			—			98,890
	General and administrative			—			—			26,559			—			26,559
	Depreciation and amortization			—			2,562			4,551			—			7,113
	Impairment of assets			—			—			2,333			—			2,333
Total operating expenses				—			396,807			414,859			—			811,666
Operating (loss) income				—			(81,817	)		4,518			—			(77,299	)
	Interest and other income			—			170			1,373			—			1,543
	Interest expense			—			—			(3,741	)		—			(3,741	)
	Equity in earnings of subsidiaries			(84,159	)		—			—			84,159			—
(Loss) income from continuing operations before income taxes				(84,159	)		(81,647	)		2,150			84,159			(79,497	)
	Provision for income taxes			—			—			—			—			—
(Loss) income from continuing operations				(84,159	)		(81,647	)		2,150			84,159			(79,497	)
Loss from discontinued operations				—			(272	)		(4,390	)		—			(4,662	)
Net (loss) income			$	(84,159	)	$	(81,919	)	$	(2,240	)	$	84,159		$	(84,159	)

12

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the year ended December 31, 2004

			Parent			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			FVE consolidated
REVENUES:
	Net revenues from residents		$	—		$	302,760		$	281,855		$	—		$	584,615
	Pharmacy revenue			—			—			13,209			—			13,209
Total revenues				—			302,760			295,064			—			597,824
OPERATING EXPENSES:
	Wages and benefits			—			126,868			175,414			—			302,282
	Other operating expenses			—			88,287			65,186			—			153,473
	Termination payment to SLS			—			—			—			—			—
	Pharmacy expenses			—			—			12,093			—			12,093
	Management fee to SLS			—			19,293			—			—			19,293
	Rent expense			—			64,023			18,430			—			82,453
	General and administrative			—			—			18,473			—			18,473
	Depreciation and amortization			—			1,339			2,032			—			3,371
Total operating expenses				—			299,810			291,628			—			591,438
Operating income				—			2,950			3,436			—			6,386
	Interest and other income			—			66			1,600			—			1,666
	Interest expense			—			—			(1,172	)		—			(1,172	)
	Equity in earnings of subsidiaries			3,291			—			—			(3,291	)		—
Income (loss) from continuing operations before income taxes				3,291			3,016			3,864			(3,291	)		6,880
	Provision for income taxes			—			—			(120	)		—			(120	)
Income (loss) from continuing operations				3,291			3,016			3,744			(3,291	)		6,760
Loss from discontinued operations				—			(692	)		(2,777	)		—			(3,469	)
Net income (loss)			$	3,291		$	2,324		$	967		$	(3,291	)	$	3,291

13

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the year ended December 31, 2003

			Parent			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			FVE consolidated
REVENUES:
	Net revenues from residents		$	—		$	289,882		$	253,728		$	—		$	543,610
	Pharmacy revenue			—			—			1,770			—			1,770
Total revenues				—			289,882			255,498			—			545,380
OPERATING EXPENSES:
	Wages and benefits			—			125,605			166,029			—			291,634
	Other operating expenses			—			85,587			57,309			—			142,896
	Termination payment to SLS			—			—			—			—			—
	Pharmacy expenses			—			—			1,666			—			1,666
	Management fee to SLS			—			17,272			—			—			17,272
	Rent expense			—			63,728			13,234			—			76,962
	General and administrative			—			—			15,892			—			15,892
	Depreciation and amortization			—			419			2,782			—			3,201
Total operating expenses				—			292,611			256,912			—			549,523
Operating loss				—			(2,729	)		(1,414	)		—			(4,143	)
	Interest and other income			—			57			446			—			503
	Interest expense			—			—			(1,439	)		—			(1,439	)
	Equity in earnings of subsidiaries			(7,939	)		—			—			7,939			—
(Loss) income from continuing operations before income taxes				(7,939	)		(2,672	)		(2,407	)		7,939			(5,079	)
	Provision for income taxes			—			—			—			—			—
(Loss) income from continuing operations				(7,939	)		(2,672	)		(2,407	)		7,939			(5,079	)
Loss from discontinued operations				—			(803	)		(2,057	)		—			(2,860	)
Net (loss) income			$	(7,939	)	$	(3,475	)	$	(4,464	)	$	7,939		$	(7,939	)

14

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2005

		Parent			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			FVE consolidated
ASSETS
Current assets
Cash and cash equivalents		$	—		$	7,076		$	9,653		$	—		$	16,729
Accounts receivable, net			—			15,535			30,589			—			46,124
Prepaid expenses and other current assets			—			6,143			25,884			—			32,027
Total current assets			—			28,754			66,126			—			94,880
Property and equipment, net			—			19,200			77,543			—			96,743
Investment in subsidiary and long term recievable from (to) subsidiaries			200			—			200			(400	)		—
Restricted cash			—			3,798			9,159			—			12,957
Intercompany			113,749			—			—			(113,749	)		—
Mortgage notes receivable			—			—			5,971			—			5,971
Goodwill			—			—			14,059			—			14,059
Other long term assets			—			402			3,928			—			4,330
Total assets		$	113,949		$	52,154		$	176,986		$	(114,149	)	$	228,940
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and other current liabilities		$	—		$	25,262		$	64,080		$	—		$	89,342
Current mortgage notes payable			—			—			626			—			626
Total current liabilities			—			25,262			64,706			—			89,968
Long term liabilities:
Mortgage notes payable			—			—			44,703			—			44,703
Notes payable to related parties			200			—			—			(200	)		—
Other long term liabilities			—			6,179			19,286			—			25,465
Total long term liabilities			200			6,179			63,989			(200	)		70,168
Total shareholders' equity			113,749			20,713			48,291			(113,949	)		68,804
Total liabilities and shareholders' equity		$	113,949		$	52,154		$	176,986		$	(114,149	)	$	228,940

15

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2004

		Parent			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			FVE consolidated
ASSETS
Current assets
Cash and cash equivalents		$	—		$	7,650		$	23,292		$	—		$	30,942
Accounts receivable, net			—			11,676			25,066			—			36,742
Prepaid expenses and other current assets			—			12,498			15,476			—			27,974
Total current assets			—			31,824			63,834			—			95,658
Property and equipment, net			—			12,671			82,518			—			95,189
Investment in subsidiary and long term recievable from (to) subsidiaries			200			—			200			(400	)		—
Restricted cash			—			8,842			1,907			—			10,749
Intercompany			56,551			—			—			(56,551	)		—
Mortgage notes receivable			—			—			6,099			—			6,099
Goodwill			—			—			11,548			—			11,548
Other long term assets			—			402			3,340			—			3,742
Total assets		$	56,751		$	53,739		$	169,446		$	(56,951	)	$	222,985
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and other current liabilities		$	—		$	24,597		$	41,838		$	—		$	66,435
Current mortgage notes payable			—			—			463			—			463
Total current liabilities			—			24,597			42,301			—			66,898
Long term liabilities:
Mortgage notes payable			—			—			42,118			—			42,118
Notes payable to related parties			200			—			—			(200	)		—
Other long term liabilities			—			6,320			11,745			—			18,065
Total long term liabilities			200			6,320			53,863			(200	)		60,183
Total shareholders' equity			56,551			22,822			73,282			(56,751	)		95,904
Total liabilities and shareholders' equity		$	56,751		$	53,739		$	169,446		$	(56,951	)	$	222,985

16

UNAUDITED CONDENSED CONSOLIDATING CASH FLOW STATEMENT
For the year ended December 31, 2005

			Parent			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			FVE consolidated
Cash Flows from operating activities:
Net (loss) income			$	(84,159	)	$	(81,919	)	$	(2,240	)	$	84,159		$	(84,159	)
Undistributed equity in earnings of subsidiaries				84,159			—			—			(84,159	)		—
Adjustments to reconcile net (loss) income to cash provided by (used in) operating acitivities, net				—			80,502			(53,220	)		—			27,282
	Net cash used in operating activities			—			(1,417	)		(55,460	)		—			(56,877	)
Cash Flows from investing activities:
Capital expenditures				—			(19,722	)		(90,632	)		—			(110,354	)
Proceeds from the sale of property and equipment				—			7,769			88,379			—			96,148
Other, net				—			12,796			(15,287	)		—			(2,491	)
	Net cash provided by (used in) investing activities			—			843			(17,540	)		—			(16,697	)
Cash Flows from financing activities:
Proceeds from issuance of common shares, net				—			—			56,613			—			56,613
Change in borrowings, net				—			—			2,748			—			2,748
Other, net				—			—			—			—			—
	Net cash provided by financing activities			—			—			59,361			—			59,361
Change in cash and cash equivalents				—			(574	)		(13,639	)		—			(14,213	)
Cash and cash equivalents at beginning of period				—			7,650			23,292			—			30,942
Cash and cash equivalents at end of period			$	—		$	7,076		$	9,653		$	—		$	16,729

17

UNAUDITED CONDENSED CONSOLIDATING CASH FLOW STATEMENT
For the year ended December 31, 2004

			Parent			Subsidiaries			Non-guarantor subsidiaries			Eliminations			FVE consolidated
Cash Flows from operating activities:
Net income (loss)			$	3,291		$	2,324		$	967		$	(3,291	)	$	3,291
Undistributed equity in earnings of subsidiaries				(3,291	)		—			—			3,291			—
Adjustments to reconcile net income (loss) to cash provided by (used in) operating acitivities, net				—			7,721			(11,370	)		—			(3,649	)
	Net cash provided by (used in) operating activities			—			10,045			(10,403	)		—			(358	)
Cash Flows from investing activities:
Capital expenditures				—			(18,813	)		(123,648	)		—			(142,461	)
Proceeds from the sale of property and equipment				—			5,746			126,393			—			132,139
Other, net				—			(2,484	)		4,262			—			1,778
	Net cash (used in) provided by investing activities			—			(15,551	)		7,007			—			(8,544	)
Cash Flows from financing activities:
Proceeds from issuance of common shares, net				—			—			27,685			—			27,685
Change in borrowings, net				—			—			(5,452	)		—			(5,452	)
Other, net				—			—			—			—			—
	Net cash provided by financing activities			—			—			22,233			—			22,233
Change in cash and cash equivalents				—			(5,506	)		18,837			—			13,331
Cash and cash equivalents at beginning of period				—			13,156			4,455			—			17,611
Cash and cash equivalents at end of period			$	—		$	7,650		$	23,292		$	—		$	30,942

18

UNAUDITED CONDENSED CONSOLIDATING CASH FLOW STATEMENT
For the year ended December 31, 2003

			Parent			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			FVE consolidated
Cash Flows from operating activities:
Net (loss) income			$	(7,939	)	$	(3,475	)	$	(4,464	)	$	7,939		$	(7,939	)
Undistributed equity in earnings of subsidiaries				7,939			—			—			(7,939	)		—
Adjustments to reconcile net income (loss) to cash provided by operating acitivities, net				—			26,226			625			—			26,851
	Net cash provided by (used in) operating activities			—			22,731			(3,839	)		—			18,912
Cash Flows from investing activities:
Capital expenditures				—			(4,365	)		(14,522	)		—			(18,887	)
Proceeds from the sale of property and equipment				—			2,750			24,335			—			27,085
Other, net				—			(10,633	)		(3,449	)		—			(14,082	)
	Net cash (used in) provided by investing activities			—			(12,248	)		6,364			—			(5,884	)
Cash Flows from financing activities:
Proceeds from issuance of common shares, net				—			—			—			—			—
Change in borrowings, net				—			—			(5,687	)		—			(5,687	)
Other, net				—			—			—			—			—
	Net cash used in financing activities			—			—			(5,687	)		—			(5,687	)
Change in cash and cash equivalents				—			10,503			(3,162	)		—			7,341
Cash and cash equivalents at beginning of period				—			2,654			7,616			—			10,270
Cash and cash equivalents at end of period			$	—		$	13,157		$	4,454		$	—		$	17,611

19

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Five Star Quality Care, Inc.


UNAUDITED PRO FORMA FINANCIAL INFORMATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of June 30, 2006
(dollars in thousands)

		Historical			Adjustments for convertible senior notes offering		Adjusted for convertible senior notes offering
ASSETS
Current assets
Cash and cash equivalents		$	23,576		$77,550	(A)	$101,126
Accounts receivable, net			46,340		—		46,340
Prepaid expenses and other current assets			41,890		—		41,890
Total current assets			111,806		77,550		189,356
Property and equipment, net			102,050		—		102,050
Restricted cash			13,697		—		13,697
Mortgage notes receivable			3,725		—		3,725
Goodwill			16,901		—		16,901
Other long term assets			4,155		2,450	(B)	6,605
Total assets		$	252,334		$80,000		$332,334
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities		$	83,889		$—		$83,889
Mortgage notes payable			44,423		—		44,423
% Convertible Senior Notes due 2026			—		80,000	(C)	80,000
Other long term liabilities			27,049		—		27,049
Total liabilities			155,361		80,000		235,361
Total shareholders' equity			96,973		—		96,973
Total liabilities and shareholders' equity		$	252,334		$80,000		$332,334

20

---

Five Star Quality Care, Inc.


UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
For the six months ended June 30, 2006
(dollars in thousands)

			Historical			Adjustments for April 2006 equity offering			Adjusted for April 2006 equity offering			Adjustments for 2006 Sunrise termination			Adjusted for April 2006 equity offering and 2006 Sunrise termination			Adjustments for convertible senior note offering			Adjusted for April 2006 equity offering, 2006 Sunrise termination and convertible senior note offering
REVENUES:
	Net revenues from residents		$	365,398		$	—		$	365,398		$	—		$	365,398		$	—		$	365,398
	Pharmacy revenue			24,410			—			24,410			—			24,410			—			24,410
Total revenues				389,808			—			389,808			—			389,808			—			389,808
OPERATING EXPENSES:
	Property level operating expenses			281,381			—			281,381			—			281,381			—			281,381
	Termination payment to Sunrise Senior Living Services, Inc.			89,833			—			89,833			—			89,833			—			89,833
	Pharmacy expenses			23,189			—			23,189			—			23,189			—			23,189
	Management fee to Sunrise Senior Living Services, Inc.			6,392			—			6,392			(3,333	)(E)		3,059			—			3,059
	Rent expense			52,563			—			52,563			—			52,563			—			52,563
	General and administrative			14,635			—			14,635			—			14,635			—			14,635
	Depreciation and amortization			4,561			—			4,561			—			4,561			—			4,561
Total operating expenses				472,554			—			472,554			(3,333	)		469,221			—			469,221
Operating loss				(82,746	)		—			(82,746	)		3,333			(79,413	)		—			(79,413	)
	Interest and other income			1,140			—			1,140			—			1,140			—			1,140
	Interest expense			(1,633	)		—			(1,633	)		—			(1,633	)		(1,661	)(F)		(3,294	)
(Loss) income from continuing operations before income taxes				(83,239	)		—			(83,239	)		3,333			(79,906	)		(1,661	)		(81,567	)
	Provision for income taxes			—			—			—			—			—			—			—
(Loss) income from continuing operations			$	(83,239	)	$	—		$	(83,239	)	$	3,333		$	(79,906	)	$	(1,661	)	$	(81,567	)
Weighted Average Shares Outstanding:
	Basic			25,551			6,030	(D)		31,581			—			31,581			—			31,581
	Fully Diluted			25,551			6,030			31,581			—			31,581			—			31,581
Basic and diluted loss per share from:
	Basic		$	(3.26	)				$	(2.64	)				$	(2.53	)				$	(2.58	)
	Fully Diluted		$	(3.26	)				$	(2.64	)				$	(2.53	)				$	(2.58	)

21

Five Star Quality Care, Inc.

---

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share amounts)

INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The unaudited pro forma consolidated balance sheet as of June 30, 2006, presents the consolidated financial position of Five Star as if this convertible senior notes offering had been completed as of June 30, 2006, as described in the notes thereto. The unaudited pro forma consolidated statement of operations for the six months ended June 30, 2006, presents the consolidated results of operations of Five Star as if (1) our April 2006 equity offering; (2) the reduction in our management fees payable in respect of 10 Sunrise Senior Living Services, Inc., or SLS, management agreements that we terminated in June 2006; and (3) this convertible senior notes offering (assuming the initial purchasers' over-allotment option is not exercised and not giving effect to the conversion of the notes), had been completed as of January 1, 2006, as described in the notes thereto.

These unaudited pro forma consolidated financial statements do not represent our consolidated financial condition or results of operations for any future date or period. Actual future results may be materially different from pro forma results. Differences could arise from many factors, including, but not limited to, those set forth under "Risk factors" and "Warning concerning forward looking statements." These unaudited pro forma consolidated financial statements should be read in conjunction with our historical financial statements incorporated by reference from our Annual Report on Form 10-K for the year ended December 31, 2005 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2006 and June 30, 2006 and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein and the information contained in this offering memorandum under "Risk Factors." These unaudited pro forma consolidated financial statements do not give pro forma effect to certain transactions, including, without limitation, the eight senior living communities we began to operate in September and October 2006 and the two rehabilitation hospitals we began to operate in October 2006.

Pro forma consolidated balance sheet as of June 30, 2006 adjustments

A.

Represents the proceeds we received from our issuance of our convertible senior notes offered hereby as follows:

Convertible senior notes issued		$	80,000
Initial purchasers discount and commissions and other offering costs, estimated			2,450
Net proceeds		$	77,550

B.

Represents deferred finance costs we expect to incur as a result of our issuance of the convertible senior notes offered hereby. Amounts represent estimated initial purchasers discount and commissions and other offering costs which will be amortized over the expected term of the convertible senior notes offered hereby.

C.

Represents the principal amount of the convertible senior notes offered hereby.

Pro forma consolidated statement of operations for the six months ended June 30, 2006 adjustments

D.

Represents our issuance of common shares in our April 2006 equity offering. The adjustment has been weighted to reflect shares actually outstanding as of June 30, 2006.

22

E.

Represents the elimination of the contractual management fee with SLS. In connection with the termination of 10 management agreements with SLS, we will no longer be required to make these payments.

F.

Represents the interest expense we will incur on the convertible senior notes offered hereby, as well as amortization of deferred finance fees. The adjustment is calculated as follows:

Interest expense for six months on the $80,000 of convertible senior notes offered hereby at an assumed rate of 4.0% per annum			(1,600	)
Amortization of deferred finance fees (see Note B) for six months. Deferred finance costs amortized over expected term of the convertible debt, or 20 years			(61	)
Total adjustment		$	(1,661	)

23

Item 9.01.    Financial Statements and Exhibits.

(d)

Exhibits.

10.1		Seventh Amendment to Second Amended and Restated Lease Agreement, dated as of October 1, 2006, by and among Ellicott City Land I LLC, Ellicott City Land II LLC, HRES2 Properties Trust, SNH CHS Properties Trust, SPTIHS Properties Trust, SPT-Michigan Trust, SPTMNR Properties Trust, SNH/LTA Properties Trust and SNH/LTA Properties GA LLC, as Landlord, and Five Star Quality Care Trust, as Tenant.
10.2		Fourth Amendment to Credit and Security Agreement, dated as of October 11, 2006, by and among Five Star Quality Care, Inc., each of the Guarantors party thereto and Wachovia Bank, National Association.
99.1		Press release of Five Star Quality Care, Inc., dated October 11, 2006.

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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/ Evrett W. Benton
		Name:		Evrett W. Benton
		Title:		President and Chief Executive Officer

Date: October 11, 2006

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THIS REPORT CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND FEDERAL SECURITIES LAWS, INCLUDING WITH RESPECT TO THE COMPANY'S ISSUANCE OF THE NOTES AND ITS INTENDED USE OF THE PROCEEDS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON THE COMPANY'S PRESENT EXPECTATIONS, BUT THESE STATEMENTS AND THE IMPLICATIONS OF THESE STATEMENTS ARE NOT GUARANTEED.
Summary historical and pro forma financial data
Selected financial data

CONSOLIDATING SUBSIDIARY FINANCIAL INFORMATION
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For the six months ended June 30, 2006
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For the six months ended June 30, 2005

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET As of June 30, 2006
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET As of June 30, 2005

UNAUDITED CONDENSED CONSOLIDATING CASH FLOW STATEMENT For the six months ended June 30, 2006
UNAUDITED CONDENSED CONSOLIDATING CASH FLOW STATEMENT For the six months ended June 30, 2005

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For the year ended December 31, 2005
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For the year ended December 31, 2004

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET As of December 31, 2005

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET As of December 31, 2004
UNAUDITED CONDENSED CONSOLIDATING CASH FLOW STATEMENT For the year ended December 31, 2005

UNAUDITED CONDENSED CONSOLIDATING CASH FLOW STATEMENT For the year ended December 31, 2004
UNAUDITED CONDENSED CONSOLIDATING CASH FLOW STATEMENT For the year ended December 31, 2003

Five Star Quality Care, Inc. UNAUDITED PRO FORMA FINANCIAL INFORMATION UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET As of June 30, 2006 (dollars in thousands)
Five Star Quality Care, Inc. UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT For the six months ended June 30, 2006 (dollars in thousands)

INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

SIGNATURES