Emeritus Announces Operating Results for First Quarter 2009

SEATTLE--(Business Wire)--
Emeritus Corporation (NYSE: ESC), a national provider of assisted living and
Alzheimer`s and related dementia care services to senior citizens, today
announced its first quarter 2009 results.

First Quarter 2009 Operating Highlights

* Same Store Occupancy Increased Sequentially 10 Basis Points To 87.2%;
* Total Revenues Increased 18.6% To $218.0 Million From The First Quarter 2008;
* Operating Income From Continuing Operations Improved By $14.2 Million From The
First Quarter 2008, And
* Cash Flow From Operations (CFFO) Per Share Increased 50.0% To $0.27 From The
First Quarter 2008.

Total revenue for the first quarter of 2009 was $218.0 million compared to
$183.8 million in the prior year quarter, an increase of $34.2 million or 18.6%.
Same Store average revenue per occupied unit increased approximately 4.2% from
the first quarter of 2008. The average revenue per occupied unit on a total
consolidated basis was approximately $3,655 for the first quarter of 2009.

The first quarter 2009 Same Store average occupancy increased to 87.2% from
87.1% in the fourth quarter of 2008. Total occupancy on March 31, 2009 was
87.8%, compared to 87.5% on December 31, 2008.

During the first quarter of 2009, the Company opened a 38-unit Alzheimer`s and
dementia care community, opened a 22-unit expansion, entered into a lease for an
83-unit assisted living community, and reclassified three communities comprised
of 326 units to discontinued operations. As a result of these changes, the total
consolidated operating portfolio consists of 264 communities with approximately
22,930 operating units as of March 31, 2009. The Same Store portfolio consists
of 241 of the 264 consolidated communities. All prior periods have been adjusted
to reflect the reclassification of the three communities to discontinued
operations.

Mr. Granger Cobb, President and Co-CEO of Emeritus stated, "We are pleased with
our first quarter progress as occupancy momentum developed as the quarter
progressed. Due to the need-driven demand for our services, we are confident
that we will continue to improve our operating performance and cash flow over
the long term."

Balance Sheet

As of March 31, 2009, the Company had approximately $42.8 million of cash and
cash equivalents, and had no outstanding borrowings under its $25.0 million line
of credit. On March 31, 2009, 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 $351.8 million.

The current portion of long-term debt of $44.2 million as of March 31, 2009
includes $36.4 million of debt that matures in 2012 and relates to five
communities held for sale. This debt is classified as current because the
related assets are expected to be sold and the debt paid off from the proceeds
of the sale within the next year. The remaining $7.8 million of current portion
of debt relates to routine debt amortization over the next 12 months.

Conference Call:

The Company will host a conference call on Monday, May 11, 2009, at 5:00 P.M.
Eastern Time to discuss its financial results for the first quarter ended March
31, 2009. 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. Raymond Brandstrom, 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 (888) 806-6229, or for international
participants (913) 312-0379. A replay of the conference call will be available
after 8:00 P.M. Eastern Time on Monday, May 11, 2009, until midnight Eastern
Time on Monday, May 18, 2009, and can be accessed by dialing (888) 203-1112, or
for international participants (719) 457-0820 and entering the passcode 4692911.

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 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.

The table below shows the reconciliation of net loss to Adjusted EBITDAR for the
three months ended March 31, 2009 and 2008 (in thousands):

Three Months Ended
March 31,
2009 2008

Net loss $ (15,095 ) $ (25,968 )
Provision for income taxes 270 210
Equity losses (gains) in unconsolidated joint ventures (624 ) 1,522
Depreciation and amortization 21,428 30,635
Amortization of deferred gains (74 ) (502 )
Non-cash stock option compensation expenses 947 1,382
Interest expense 25,633 20,725
Straight-line rent expense 4,995 2,437
Above/below market rent amortization 2,516 2,524
Development and transaction costs written off 113 -
Deferred revenues 72 1,596
Change in fair value of interest rate swaps (90 ) 838
Interest income (138 ) (855 )
Discontinued operations 1,043 747
Adjusted EBITDA 40,996 35,291
Facility lease expense 21,685 17,354
Adjusted EBITDAR $ 62,681 $ 52,645

The following table shows CFFO for the three months ended March 31, 2009 and
2008 (in thousands):

Three Months Ended
March 31,
2009 2008

Net cash provided by operating activities $ 21,190 $ 20,254
Adjust for changes in operating assets and liabilities (4,203 ) (4,147 )
Recurring capital expenditures, net (4,010 ) (3,469 )
Repayment of capital lease obligations and financing obligations (2,234 ) (5,690 )
Cash From Facility Operations $ 10,743 $ 6,948

CFFO per weighted average common shares outstanding was $.27 and $.18 for the
three months ended March 31, 2009 and 2008, respectively.

For a more detailed understanding of Emeritus, please refer to the Company`s
annual report on Form 10-K filed with the Securities and Exchange Commission on
March 16, 2009, or visit the Company`s Internet site at www.emeritus.com to
obtain a copy.

ABOUT THE COMPANY

Emeritus Corporation is a national provider of assisted living and Alzheimer`s
and related dementia care services to seniors. 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 309
communities in 36 states representing capacity for approximately 27,200 units
and approximately 32,400 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 re-financings; our
ability to control community operation expenses, including insurance and utility
costs, 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 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,
2008.

EMERITUS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

ASSETS
(unaudited)
March 31, December 31,
Current Assets: 2009 2008
Cash and cash equivalents $ 42,755 $ 27,254
Short-term investments 1,472 1,802
Trade accounts receivable, net of allowance of 13,088 11,596
$922 and $549
Other receivables 5,273 5,556
Tax, insurance, and maintenance escrows 21,643 21,762
Prepaid workers' compensation 19,603 19,288
Other prepaid expenses 8,865 8,170
Property held for sale 33,737 13,712
Total current assets 146,436 109,140
Long-term investments 4,054 4,192
Property and equipment, net of accumulated 1,690,727 1,725,558
depreciation of $159,722 and $144,441
Restricted deposits 12,735 12,337
Lease acquisition costs, net of accumulated 3,907 3,867
amortization of $1,564 and $1,877
Goodwill 73,704 73,704
Other intangible assets, net of accumulated 124,992 131,994
amortization of $83,371 and 76,368
Other assets, net 18,174 18,851
Total assets $ 2,074,729 $ 2,079,643

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 44,236 $ 18,267
Current portion of capital lease and financing 9,448 9,172
obligations
Trade accounts payable 6,449 7,474
Accrued employee compensation and benefits 38,384 32,778
Accrued interest 7,638 7,012
Accrued real estate taxes 8,798 9,791
Accrued professional and general liability 11,325 10,842
Accrued income taxes 2,477 3,715
Other accrued expenses 12,265 12,284
Deferred revenue 12,535 12,463
Unearned rental income 18,328 16,101
Total current liabilities 171,883 139,899
Long-term debt, less current portion 1,328,890 1,355,149
Capital lease and financing obligations, less 178,364 180,684
current portion
Deferred gain on sale of communities 2,593 2,667
Deferred rent 19,017 14,022
Other long-term liabilities 22,148 21,194
Total liabilities 1,722,895 1,713,615

Commitments and contingencies

Shareholders' Equity:
Preferred stock, $.0001 par value. Authorized - -
20,000,000 shares, none issued
Common stock, $.0001 par value. Authorized 4 4
100,000,000 shares; issued and outstanding
39,138,402 and 39,091,648 shares at March 31,
2009, and December 31, 2008, respectively
Additional paid-in capital 721,018 719,903
Accumulated other comprehensive loss (214 ) -
Accumulated deficit (375,387 ) (360,506 )
Total Emeritus Corporation shareholders' equity 345,421 359,401
Non-controlling interest-related party 6,413 6,627
Total shareholders` equity 351,834 366,028
Total liabilities and shareholders' equity $ 2,074,729 $ 2,079,643

EMERITUS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)

Three Months Ended March 31,
2009 2008
Revenues:
Community revenue $ 216,518 $ 182,610
Management fees 1,467 1,159
Total operating revenues 217,985 183,769

Expenses:
Community operations (exclusive of
depreciation and amortization
and facility lease expense shown separately 141,428 119,391
below)
General and administrative 14,980 14,611
Depreciation and amortization 21,428 30,635
Facility lease expense 29,196 22,315
Total operating expenses 207,032 186,952
Operating income (loss) from continuing 10,953 (3,183 )
operations

Other income (expense):
Interest income 138 855
Interest expense (25,633 ) (20,725 )
Change in fair value of interest rate swaps 90 (838 )
Equity earnings (losses) in unconsolidated 624 (1,522 )
joint ventures
Other, net 46 402
Net other expense (24,735 ) (21,828 )

Loss from continuing operations before (13,782 ) (25,011 )
income taxes
Provision for income taxes (270 ) (210 )
Loss from continuing operations (14,052 ) (25,221 )
Loss from discontinued operations (1,043 ) (747 )
Net loss (15,095 ) (25,968 )
Less net loss attributable to the non 214 -
-controlling interest
Net loss attributable to Emeritus $ (14,881 ) $ (25,968 )
Corporation common shareholders

Basic and diluted loss per common share
attributed to
Emeritus Corporation common shareholders:
Continuing operations $ (0.35 ) $ (0.65 )
Discontinued operations (0.03 ) (0.02 )
$ (0.38 ) $ (0.67 )

Weighted average common shares outstanding 39,117 39,036
-basic and diluted

EMERITUS CORPORATION
(unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended March 31,
2009 2008
Cash flows from operating activities:
Net loss $ (15,095 ) $ (25,968 )
Adjustments for noncash items:
Depreciation and amortization 21,428 30,635
Amortization of above/below market rents 2,516 2,524
Amortization of deferred gain (74 ) (502 )
Impairment of long-lived assets 1,063 -
Amortization of loan fees 755 511
Allowance for doubtful receivables 754 491
Equity investment (gains) losses and (624 ) 1,522
distributions
Stock option compensation 947 1,382
Change in fair value of interest rate swaps (90 ) 838
Other 340 641
Changes in operating assets and liabilities:
Deferred revenue 72 1,596
Deferred rent 4,995 2,437
Change in other operating assets and liabilities 4,203 4,147
Net cash provided by operating activities 21,190 20,254

Cash flows from investing activities:
Acquisition of property and equipment (6,135 ) (9,463 )
Acquisition deposits - (5,030 )
Sale of property and equipment 2,677 -
Lease and contract acquisition costs (153 ) (322 )
Payments from (to) affiliates and other managed 109 (235 )
communities, net
Distributions from (investments in) 548 (2,925 )
unconsolidated joint ventures
Net cash used in investing activities (2,954 ) (17,975 )

Cash flows from financing activities:
Proceeds from sale of stock 168 286
Restricted deposits (246 ) (385 )
Debt issuance and other financing costs (133 ) (540 )
Financing deposits - (4,938 )
Proceeds from long-term debt 938 31,794
Repayment of long-term debt (1,228 ) (286 )
Repayment of capital lease and financing (2,234 ) (5,690 )
obligations
Net cash provided by (used in) financing activities (2,735 ) 20,241
Net increase in cash and cash equivalents 15,501 22,520
Cash and cash equivalents at the beginning of the period 27,254 67,710
Cash and cash equivalents at the end of the period $ 42,755 $ 90,230

EMERITUS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)

Three Months Ended
March 31, 2009 December 31, 2008
Revenues:
Community revenue $ 216,518 $ 200,123
Management fees 1,467 1,384
Total operating revenues 217,985 201,507

Expenses:
Community operations (exclusive of
depreciation and amortization
and facility lease expense shown separately 141,428 121,581
below)
General and administrative 14,980 14,751
Impairment of long-lived assets - 753
Depreciation and amortization 21,428 29,081
Facility lease expense 29,196 24,391
Total operating expenses 207,032 190,557
Operating income (loss) from continuing 10,953 10,950
operations

Other income (expense):
Interest income 138 377
Interest expense (25,633 ) (25,608 )
Change in fair value of interest rate swaps 90 (1,574 )
Equity earnings (losses) in unconsolidated 624 (1,313 )
joint ventures
Other, net 46 (7,499 )
Net other expense (24,735 ) (35,617 )

Loss from continuing operations before (13,782 ) (24,667 )
income taxes
Provision for income taxes (270 ) (270 )
Loss from continuing operations (14,052 ) (24,937 )
Loss from discontinued operations (1,043 ) (5,724 )
Net loss (15,095 ) (30,661 )
Less net loss attributable to the non 214 188
-controlling interest
Net loss attributable to Emeritus $ (14,881 ) $ (30,473 )
Corporation common shareholders

Basic and diluted loss per common share
attributable to
Emeritus Corporation common shareholders:
Continuing operations $ (0.35 ) $ (0.63 )
Discontinued operations (0.03 ) (0.15 )
$ (0.38 ) $ (0.78 )

Weighted average common shares outstanding 39,117 39,122
-basic and diluted

Emeritus Corporation
Cash lease and interest expense
Three Months Ended
(unaudited)
(In thousands)

Projected
Actual Range
March 31, 2008 June 30,2009
Facility lease expense - GAAP $ 29,196 $29,200 - $29,500
Less:
Straight-line rents (4,995 ) (4,900) - (5,000)
Above/below market rents (2,516 ) (2,500) - (2,600)
Plus:
Capital lease interest 3,728 3,600 - 3,700
Capital lease principal 2,081 2,100 - 2,200
Facility lease expense - CASH $ 27,494 $27,500 - $27,800

Interest expense - GAAP $ 25,633 $25,820 - $26,300
Less:
Straight-line interest (34 ) (40) - (50)
Capital lease interest (3,728 ) (3,600) - (3,700)
Capitalized interest 20 20 - 50
Loan fee amortization (755 ) (800) - (900)
Interest expense - CASH $ 21,136 $21,400 - $21,700

Depreciation - owned assets $ 13,941 $14,000 - 14,200
Depreciation - capital and financing 3,229 3,240 - 3,325
leases
Amortization - intangible assets 4,258 60 - 75
Total depreciation and amortization $ 21,428 $17,300 - $17,600

Emeritus Corporation
Investor Relations
Brad Cohen, 206-298-2909

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