EMERITUS ANNOUNCES OPERATING RESULTS FOR SECOND QUARTER 2011

SEATTLE, WA, August 4, 2011 - Emeritus Corporation (NYSE: ESC), a national provider of senior living services, today announced its second quarter 2011 results.

Operating Summary for Second Quarter 2011 Compared to Second Quarter 2010

• Total revenues increased $68.1 million, or 28.5%, to $307.2 million
• Adjusted EBITDAR increased $17.0 million, or 24.4%, to $86.6 million
• CFFO increased $2.7 million, or 22.4%, to $14.7 million
• CFFO, as adjusted, increased $4.0 million, or 28.6%, to $17.9 million
• Same community average monthly revenue per occupied unit improved by 1.5% to $3,806
• Same community average occupancy decreased 20 basis points to 87.4%
• Same community operating margin for Q2 2011 was 34.5% compared to 35.9%
• Net income of $22.2 million includes a $42.1 million gain resulting from the Company’s purchase of 24 communities previously held in a joint venture

Granger Cobb, President and Chief Executive Officer stated, “Our results for the second quarter reflect an increase in cash from facility operations as we made meaningful progress growing and integrating new capacity to position Emeritus for the future. Over the past few months, we have implemented sustainable cost cuts to improve efficiency and have refocused our efforts on achieving the optimal balance of rate growth and occupancy on a community-by-community basis. Though same community occupancy dipped slightly in the quarter, we have already seen a rebound in July.”

2011 Second Quarter Consolidated Results

Total revenue in the second quarter of 2011 increased 28.5% to $307.2 million. The $68.1 million revenue increase consisted of $2.6 million in the Company’s same community portfolio of 267 communities operated during both periods, $60.5 million from the acquisition of communities (net of dispositions), $4.1 million in management fees primarily from the August 2010 acquisition of communities through a joint venture structure, and $0.9 million primarily from the change in deferral of move-in fee revenues.

Total average monthly revenue per occupied unit for the consolidated portfolio increased 8.7% to $4,057 in the second quarter of 2011 from $3,732 in the second quarter of 2010. This increase in rate was primarily due to the consolidated communities added in the fourth quarter of 2010 that had higher average rates.

In the second quarter of 2011, total average occupancy for the consolidated portfolio was 86.0% compared to 87.2% in the second quarter of 2010 primarily from the acquisition of communities with lower occupancy rates.

Community operating expenses increased $47.9 million to $205.4 million in the second quarter of 2011. Approximately $42.6 million of the increase resulted from the acquisition of communities (net of dispositions) and $5.0 million from same community operating expenses, with the remaining increase of $0.3 million resulting from certain corporate expenses not allocated to communities.

Community operating income increased $16.0 million, or 20.0%, to $96.4 million in the second quarter of 2011 compared with $80.4 million in the second quarter of 2010.

General and administrative expenses as a percent of total operated community revenue, which includes revenues of managed communities, decreased to 5.2% in the second quarter of 2011 from 6.4% in the prior year quarter (4.6% and 5.9%, respectively, excluding stock option compensation expenses). General and administrative expenses increased $4.6 million to $21.7 million in the second quarter of 2011, with the increase resulting primarily from a labor and benefit expense increase of $3.6 million from additional staffing to support the communities added to the Company’s operated portfolio since the second quarter of 2010, as well as an increase in non-cash stock option expenses of $0.9 million.

For the quarter ended June 30, 2011, adjusted earnings before interest, taxes, depreciation and amortization, and rents (“Adjusted EBITDAR”) increased $17.0 million, or 24.4%, to $86.6 million, with the increase primarily driven by the $16.0 million improvement in community operating income. For the same period, cash from facility operations (“CFFO”) increased $2.7 million, or 22.4%, to $14.7 million.

2011 Second Quarter Same Community Results

As of June 30, 2011, the consolidated Emeritus portfolio consisted of 331 communities, of which 267 communities are included in our definition of same communities. Total same community revenue increased $2.6 million to $234.0 million in the second quarter of 2011, as a result of rate improvements. Average monthly revenue per occupied unit increased 1.5% to $3,806 in the second quarter of 2011 from $3,751 in the corresponding period in 2010. Average occupancy decreased 20 basis points to 87.4% in the second quarter of 2011 from 87.6% in the comparative period last year.

The Company’s same community operating expenses increased $5.0 million to $153.4 million in the second quarter of 2011. Operating expenses reflected a $1.7 million, or 2.5%, increase in salary and wages as well as increases in payroll taxes, workers’ compensation, food, repairs and maintenance, utilities and bad debt expenses. As in prior quarters, the increase in salaries and wages included increased hours to care for a greater number of residents who have elected to share living accommodations, which increases the Company’s resident count without a corresponding increase in the occupied units. On a per resident day basis, same community salaries and wages increased by 1.7%.

Same community operating income (community revenues less community operating expenses) decreased $2.4 million to $80.7 million with a 34.5% operating margin in the second quarter of 2011.

Significant Second Quarter 2011 Transactions

In June 2011, the Company closed a previously announced transaction with affiliates of Blackstone to acquire 24 assisted living communities comprised of approximately 1,897 units. The 24 communities were owned by the Blackstone JV, a joint venture with Blackstone in which the Company owned a 19.0% interest and Blackstone an 81.0% interest. The Company had been operating these communities since late 2006 under management agreements for a fee equal to 5.0% of collected revenues. As a result of the transaction, the Company paid $42.8 million in cash and recognized a gain of $42.1 million primarily from the increased value of its 19.0% interest, which included a preferential distribution as a result of the Company’s successful efforts in improving the operating results of the communities. This transaction is immediately cash flow accretive to the Company.

In May 2011, the Company purchased a 90-unit assisted living, independent living, and memory care community located in New Hampshire for $19.1 million. The purchase was financed with mortgage debt of $14.1 million and cash of $5.0 million. The 10-year mortgage debt is due in June 2021 and bears interest at an annual fixed rate of 6.03%.

In addition to the acquisitions noted above, in May 2011 the Company sold two communities in Florida for $8.5 million, which proceeds were used to pay down long-term debt. The two communities consisted of 138 units.

Subsequent Events

In July 2011, the Company completed the acquisition of two communities consisting of 135 assisted living units located in Texas for a total purchase price of $19.7 million. These acquisitions were financed with mortgage debt of approximately $14.7 million and cash of $5.0 million. The 10-year mortgage debt is due in August 2021 and bears interest at an annual fixed rate of 6.02%.

In July 2011, the Company purchased a 101-unit assisted living, independent living, and memory care community located in Vermont for $20.9 million. The purchase was financed with mortgage debt of $15.8 million and cash of $5.1 million. The 10-year mortgage debt is due in August 2021 and bears interest at an annual fixed rate of 6.06%.

In August 2011, the Company sold a 170-unit assisted living community located in Texas for $5.8 million. The proceeds were used to pay off mortgage debt in the amount of $5.3 million.

2011 Guidance Update

The Company provides annual guidance in certain key categories. The guidance pertains to the Company’s existing portfolio and excludes future acquisitions.

The Company has updated its guidance for 2011 as follows:

• Consolidated revenue in the range of $1.23 billion to $1.28 billion, an increase from the previously announced range of $1.20 to $1.25 billion.
• Routine capital expenditures in the range of $16.0 million to $18.0 million, unchanged from the previously announced dollar range, which equates to about $540 to $610 per consolidated unit as recalculated based on increased capacity.
• General and administrative expenses as a percent of total operated revenue to be approximately 5.4%, a decrease from the previously announced guidance of 5.8%. New general and administrative expense guidance excluding non-cash stock compensation expense is 4.8%.

Conference Call

The Company will host a conference call on Thursday, August 4, 2011, at 5:00 P.M. Eastern Time to discuss its financial results for the second quarter of 2011.

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) 407-0789, or for international participants (201) 689-8562. A replay of the conference call will be available after 8:00 P.M. Eastern Time on Thursday, August 4, 2011, until midnight Eastern Time, Thursday, August 11, 2011. The dial in numbers for the replay are (877) 870-5176, or for international participants (858) 384-5517. To access the telephonic replay, enter the conference ID 375813.

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 income (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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, to be filed with the Securities and Exchange Commission (the “SEC”).

The table below shows the reconciliation of net income (loss) to Adjusted EBITDA/EBITDAR for the three and six month periods ended June 30, 2011 and 2010 (in thousands):

The following table shows the reconciliation of net cash provided by operating activities to CFFO and CFFO, as adjusted for self-insurance reserves relating to prior years, for the three and six month periods ended June 30, 2011 and 2010 (in thousands):

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, 2010, filed with the SEC and any subsequent Quarterly Reports on Form 10-Q, or visit the Company’s Internet site at www.emeritus.com to obtain copies.

ABOUT THE COMPANY

Emeritus Corporation is a national provider of senior living services. Emeritus is one of the largest and most experienced operators of freestanding assisted living communities located throughout the United States. These communities provide a residential housing alternative for senior citizens who need assistance with the activities of daily living, with an emphasis on personal care services, which provides support to the residents in the aging process. Emeritus currently operates 485 communities in 44 states representing capacity for approximately 43,400 units and approximately 50,500 residents. Our common stock is traded on the New York Stock Exchange under the symbol ESC, and our home page can be found on the Internet at www.emeritus.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: A number of the matters and subject areas discussed in this report that are not historical or current facts deal with potential future circumstances, operations, and prospects. The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may materially differ from our actual future experience as a result of such factors as: the effects of competition and economic conditions on the occupancy levels in our communities; our ability under current market conditions to maintain and increase our resident charges in accordance with our rate enhancement programs without adversely affecting occupancy levels; increases in interest costs as a result of refinancings; our ability to control community operation expenses without adversely affecting the level of occupancy and the level of resident charges; our ability to generate cash flow sufficient to service our debt and other fixed payment requirements; our ability to find sources of financing and capital on satisfactory terms to meet our cash requirements to the extent that they are not met by operations, and uncertainties related to professional liability and workers’ compensation claims. We have attempted to identify, in context, certain of the factors that we currently believe may cause actual future experience and results to differ from our current expectations regarding the relevant matter or subject area. These and other risks and uncertainties are detailed in our reports filed with the Securities and Exchange Commission, including “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010 and any subsequent Quarterly Report on Form 10-Q. The Company undertakes no obligation to update the information provided herein.

Contact:

Investor Relations

(206) 298-2909