Emeritus Announces Operating Results For First Quarter 2010

Seattle, WA - Emeritus Corporation (NYSE: ESC), a national provider of assisted living and memory care services to seniors, today announced its first quarter 2010 results.

Quarter Ended March 31, 2010 Operating Summary Compared to Prior Year First Quarter

• Total revenues increased $13.1 million, or 5.9%, to $234.2 million.
• Same Community average monthly revenue per occupied unit improved by 2.4% to $3,718.
• Total average occupancy increased 110 basis points to 87.2%.
• Same Community average occupancy increased 90 basis points to 87.3%.
• Operating income from continuing operations improved 20.4% to $12.5 million.
• Adjusted EBITDAR increased $1.8 million to $65.2 million.
• CFFO per share was $0.27 compared to $0.29 in the prior year quarter.

"The need-driven fundamentals of our business remain intact, and we continue to gain market share," commented Granger Cobb, President and Co-Chief Executive Officer. "We also continue to successfully pursue external growth as we added nine communities to our consolidated portfolio during the first quarter, and our joint venture was selected as the lead bidder for the acquisition of 149 communities that we would manage if the joint venture successfully acquires these communities."

2010 First Quarter Results

Total revenue in the first quarter of 2010 increased 5.9% to $234.2 million, compared to $221.1 million in the 2009 first quarter. The $13.1 million increase consisted of $7.6 million from improved rate and occupancy in our portfolio of 264 same communities that we have continuously operated since January 1, 2009, and $5.5 million from the acquisition, development, and expansion of 16 communities since the beginning of 2009. The improvement in Same Community revenues consisted of $5.2 million in rate improvement and $2.4 million in occupancy gains.

Average monthly revenue per occupied unit increased 1.8% to $3,699 in the first quarter of 2010 from $3,632 in the first quarter of 2009. On a Same Community basis, average monthly revenue per occupied unit increased 2.4% to $3,718 in the first quarter of 2010 from $3,631 in the corresponding period in 2009.

In the first quarter of 2010, total average occupancy increased 110 basis points to 87.2% compared to 86.1% in first quarter of 2009, and Same Community average occupancy increased 90 basis points to 87.3% compared to 86.4% in the prior year first quarter.

Community operating expenses increased $11.1 million to $155.0 million in the first quarter of 2010 compared to $143.9 million in the prior year first quarter. Approximately $4.7 million of the increase resulted from the acquisition, development, or expansion of 16 communities since the beginning of 2009, and $6.4 million was from our 264 Same Community portfolio. The increase in Same Community operating expenses consisted primarily of a $3.4 million increase in labor and benefits, of which payroll taxes increased $1.3 million and salary and wages increased $0.8 million, or 1.2%. The remaining increase in Same Community operating expenses was due primarily to general expense increases across various other operating expense categories.

Operating income from continuing operations increased $2.1 million to $12.5 million in the first quarter of 2010, compared to $10.4 million in the prior year first quarter. Community operating income (community revenues less community operating expenses) increased $2.1 million, or 2.8%, to $77.8 million in the first quarter of 2010 compared with $75.7 million in the first quarter of 2009.

Community Transactions

In March 2010, the Company announced that the joint venture between Emeritus, Blackstone Real Estate Advisors and Columbia Pacific Advisors was selected as the lead bidder in the joint venture’s proposed acquisition of approximately 149 communities currently operated by an affiliate of Sunwest Management. The Company continues to work with the joint venture to pursue this opportunity, which we anticipate will close in the second half of 2010 if we are selected as the winning bidder.

During the first quarter of 2010, the Company acquired nine additional communities under long-term lease agreements consisting of approximately 424 units. Eight of the communities are accounted for as capital leases and one as a financing lease. As of March 31, 2010, the consolidated Emeritus portfolio consisted of 280 communities, of which 264 communities are included in our Same Community definition.

Balance Sheet

As of March 31, 2010, the Company had $51.4 million of cash and cash equivalents, and had no outstanding borrowings under its $25.0 million line of credit. On March 31, 2010, total assets were $2.1 billion, including $1.7 billion of net investments in properties, total debt was $1.6 billion, including capital lease obligations, and shareholders’ equity was $299.6 million.

Conference Call:

The Company will host a conference call on Monday, May 3, 2010, at 5:00 P.M. Eastern Time to discuss its financial results for the quarter ended March 31, 2010. Hosting the call will be Mr. Daniel Baty, Chairman and Co-Chief Executive Officer, Mr. Granger Cobb, President and Co-Chief Executive Officer, and Mr. Robert Bateman, Executive Vice President and Chief Financial Officer.

The conference call will be webcast live over the internet from the Company’s web site at www.emeritus.com under the “investors” section. The conference call can also be accessed by dialing (877) 407-9039, or for international participants (201) 689-8470. A replay of the conference call will be available after 8:00 P.M. Eastern Time on Monday, May 3, 2010, until midnight Eastern Time, Monday, May 10, 2010. The dial in numbers for the replay are (877) 660-6853, or for international participants (201) 612-7415. To access the telephonic replay, enter account number 3055 along with the conference ID 348963.

Non-GAAP Financial Measures

Adjusted EBITDA/EBITDAR and Cash From Facility Operations (CFFO) are financial measures of operating performance that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). We believe these non-GAAP measures are useful in identifying trends in our day-to-day performance because they exclude items that are of little or no significance to operations and provide indicators to management of progress in achieving optimal operating performance. In addition, these measures are used by many research analysts and investors to evaluate the performance and the value of companies in our industry. We strongly urge you to review the reconciliation of net loss to Adjusted EBITDA/EBITDAR, and the reconciliation of net cash provided by operating activities to CFFO, provided below, along with our consolidated balance sheets, statements of operations, and cash flows. We define Adjusted EBITDA/EBITDAR and CFFO and provide other information about these non-GAAP measures in our annual report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2010, and our quarterly report on Form 10-Q for the three months ended March 31, 2010, to be filed with the SEC on or before May 10, 2010.

The table below shows the reconciliation of net loss to Adjusted EBITDA/EBITDAR for the three months ended March 31, 2010 and 2009 (in thousands):

The following table shows the reconciliation of net cash provided by operating activities to CFFO for the three months ended March 31, 2010 and 2009 (in thousands):

CFFO per weighted average common shares outstanding was $0.27 and $0.29 for the three months ended March 31, 2010 and 2009, respectively. We define recurring capital expenditures as actual costs incurred to maintain our communities for their intended business purpose and exclude expenditures for acquisitions, development, expansions and general corporate purposes.

For a more detailed understanding of Emeritus, please refer to the Company’s annual report on Form 10-K for the year ended December 31, 2009, filed with the SEC on March 15, 2010 and our quarterly report on Form 10-Q for the three months ended March 31, 2010, to be filed with the SEC on or before May 10, 2010, or visit the Company’s Internet site at www.emeritus.com to obtain copies.