Genesis HealthCare Reports Second Quarter 2015 Results

- Strong Second Quarter Performance With Pro Forma1 Adjusted:

- EBITDAR of $198.0 Million

- EBITDA of $76.6 Million

- Diluted EPS of $0.14

- Solid Pro Forma1 EBITDAR and EBITDA Growth of 5.8% and 10.0%, Respectively

Aug 06, 2015, 17:29 ET from Genesis HealthCare

KENNETT SQUARE, Pa., Aug. 6, 2015 /PRNewswire/ -- Genesis HealthCare (Genesis, or the Company) (NYSE: GEN), one of the largest post-acute care providers in the United States, today announced operating results for the quarter and six month periods ended June 30, 2015. 

Highlights

  • Previously announced expense reductions yield $9.0 million of savings in the quarter and $15.5 million of savings through the first six months of 2015; on track to realize $30 to $40 million in 2015;
  • Skilled Healthcare integration continues as planned; approximately $3.0 million of transaction synergies realized in the second quarter and $4.0 million through the first six months of 2015; on track to realize $13 million in 2015;
  • Controllable routine costs were well managed across all business lines; therapist efficiency of 70% improves 60bp over the prior year second quarter;
  • On July 1st, Genesis closed on 91 previously announced new therapy contract starts and a 22- outpatient rehab site acquisition;
  • During the quarter, Genesis announced the planned acquisition of Revera Inc.'s 24 skilled nursing facilities and contract rehabilitation business for $240 million; the deal is on track to close by year end, subject to additional due diligence, regulatory and licensing approvals, and other customary conditions;

"Second quarter earnings exceeded our expectations as we executed a smooth integration of the Skilled Healthcare business and continued to make excellent progress regarding Skilled merger synergies and cost savings initiatives," comments George V. Hager, Jr., Chief Executive Officer of Genesis. "With our performance to date, we are already on a trajectory to exceed the mid-point of our earnings guidance for 2015.  Looking ahead, although we expect industry dynamics to remain challenging to the top line, we anticipate our planned cost reductions, recent and expected acquisition growth initiatives, and planned refinancing activities to allow us to grow our free cash flow meaningfully."

Second Quarter 2015 Results (Unaudited)

Three months ended June 30, 2015

Three months ended June 30, 2014

Pro Forma1Non-GAAP Growth 

Pro Forma1

Pro Forma1

(IN THOUSANDS, EXCEPT PER SHARE DATA)

GAAP

Non-GAAP

GAAP

Non-GAAP

Dollars

Percentage

Net Revenues / Adjusted Net Revenues

$        1,419,475

$        1,410,261

$      1,200,651

$      1,403,225

$          7,036

0.5%

EBITDAR / Adjusted EBITDAR

184,008

197,974

161,599

187,100

10,874

5.8%

EBITDA / Adjusted EBITDA

145,049

76,557

128,690

69,602

6,955

10.0%

Fully Diluted EPS / Adjusted Fully Diluted EPS

(0.20)

0.14

 Not applicable as Genesis was privately held 

Six months ended June 30, 2015

Six months ended June 30, 2014

Pro Forma1Non-GAAP Growth 

Pro Forma1

Pro Forma1

(IN THOUSANDS, EXCEPT PER SHARE DATA)

GAAP

Non-GAAP

GAAP

Non-GAAP

Dollars

Percentage

Net Revenues / Adjusted Net Revenues

$        2,762,476

$        2,812,787

$      2,387,195

$      2,795,486

$        17,301

0.6%

EBITDAR / Adjusted EBITDAR

359,355

383,339

309,854

361,749

21,590

6.0%

EBITDA / Adjusted EBITDA

283,977

142,778

244,146

129,550

13,228

10.2%

Fully Diluted EPS / Adjusted Fully Diluted EPS

(1.58)

0.21

 Not applicable as Genesis was privately held 

1 - To facilitate comparisons, pro forma results for the three and six months ended June 30, 2015 and 2014 were prepared on a basis assuming

the combination of Skilled Healthcare and Genesis HealthCare occurred at the beginning of the respective period presented rather than as of

February 2, 2015, which is the actual date of the combination.  See reconcilition of pro forma results to GAAP results in the tables in this release.

Assuming Genesis and Skilled Healthcare were fully combined in all periods presented, Genesis' adjusted revenue of $1.410 billion in the second quarter of 2015 would have increased $7.0 million or 0.5% over the prior year quarter.  Revenue growth in the second quarter of 2015 was negatively impacted $9.0 million by the divestiture of three facilities and $7.6 million due to the loss of therapy contracts.  Both elements of divested revenue were considered in the Company's full year guidance.  As reported GAAP basis revenue of $1.419 billion in the second quarter of 2015 increased $218.8 million or 18.2% over the prior year quarter, principally due to the combination with Skilled Healthcare in February 2015.

Assuming Genesis and Skilled Healthcare were fully combined in all periods presented, Genesis' adjusted revenue of $2.813 billion in the six months ended June 30, 2015 would have increased $17.3 million or 0.6% over the prior year period.  Revenue growth in the six months ended June 30, 2015 was negatively impacted $18.0 million by the divestiture of three facilities and by $16.6 million due to the loss of therapy contacts.  Both elements of divested revenue were considered in the Company's full year guidance.  As reported GAAP basis revenue of $2.762 billion in the in the six months ended June 30, 2015 would have increased $375.3 million or 15.7% over the prior year period, principally due to the combination with Skilled Healthcare in February 2015.

Assuming Genesis and Skilled Healthcare were combined in all periods presented, adjusted EBITDAR of $198.0 million in the second quarter of 2015 would have increased $10.9 million or 5.8% over the prior year quarter. Adjusted EBITDAR growth in the second quarter of 2015 was driven by $9.0 million of planned cost reductions and approximately $3.0 million of Skilled Healthcare transaction synergies. GAAP basis loss from continuing operations of $33.2 million in the second quarter of 2015 increased $2.4 million or 7.6% over the prior year quarter.

Assuming Genesis and Skilled Healthcare were combined in all periods presented, adjusted EBITDAR of $383.3 million in the six months ended June 30, 2015 would have increased $21.6 million or 6.0% over the prior year period. Adjusted EBITDAR growth in the six months ended June 30, 2015 was driven by $15.5 million of planned cost reductions and approximately $4.0 million of Skilled Healthcare transaction synergies. GAAP basis loss from continuing operations of $151.6 million in the six months ended June 30, 2015 increased $79.9 million over the prior year period principally due to $88.7 million of transaction costs incurred in the Skilled combination and other transactions, offset by the incremental earnings generated by the combined business.

Business Development, Acquisitions and Divestitures During the second quarter of 2015, as previously announced, Genesis closed a transaction to acquire two PowerBack-like buildings in Texas.  One facility in Richardson, TX was lease financed.  The other is in San Antonio, TX, and was purchased by Genesis for $13 million, including $8 million of assumed HUD debt.  Genesis intends to convert these facilities to the PowerBack Rehabilitation brand over the next several months. 

Effective July 1, 2015, as previously announced, Genesis Rehab Services (GRS) signed 91 new therapy contracts with four key customers and acquired 22 outpatient sites.  GRS now provides contract therapy services for more than 1,700 locations across 46 states, the District of Columbia and China. The new contracts are expected to contribute an additional $7.5 million in annual EBITDAR and was considered in the Company's full year guidance.

During the second quarter, Genesis announced the planned acquisition of Revera Inc.'s 24 skilled nursing facilities and contract rehabilitation business for $240 million.  Genesis has substantially completed its due diligence period and confirms the acquisition is on track to close by year end, subject to additional due diligence, regulatory and licensing approvals, and other customary conditions.  This acquisition is expected to be accretive to 2016 earnings and increase the Company's fixed charge coverage.  On a pro forma basis, after considering the expected repurchase of 21 currently leased facilities, the Revera transaction will increase Genesis' facility ownership from 15% to 23%.

Genesis continues to strategically look to monetize non-core assets and either redeploy the capital to investments providing greater return to shareholders or to repay Genesis' most expensive debt. Over the next nine months, Genesis looks to sell certain of its non-core assets having the potential to produce $100 million to $150 million of net cash proceeds.

2015 Guidance The Company reaffirms its previously announced 2015 adjusted EBITDAR guidance of $755.0 million to $770.0 million and adjusted EBITDA of $267.6 million to $282.6 million.  In connection with further refinement to projected depreciation and amortization expense, the Company is adjusting its previous 2015 net income from continuing operations on a diluted basis from a range of $0.29 to $0.34 per share to a revised range of $0.34 to $0.39 per share.

The 2015 guidance is based on 154.6 million diluted weighted average common shares outstanding and common stock equivalents on a fully exchanged basis. The Company's earnings guidance was prepared on a pro forma basis to reflect full year estimates assuming the operations of Skilled Healthcare were combined with those of Genesis HealthCare as of January 1, 2015.

Conference Call Genesis HealthCare will hold a conference call at 8:30 a.m. Eastern Time on Friday, August 7, 2015 to discuss financial results for the first quarter.  Investors can access the conference call by calling (855) 849-2198 or live via a listen-only webcast through the Genesis web site at http://www.genesishcc.com/investor-relations/, where a replay of the call will also be posted for one year. 

About Genesis HealthCare Genesis HealthCare (NYSE: GEN) is a holding company with subsidiaries that, on a combined basis, comprise one of the nation's largest post-acute care providers with more than 500 skilled nursing centers and assisted/senior living communities in 34 states nationwide. Genesis subsidiaries also supply rehabilitation and respiratory therapy to more than 1,600 healthcare providers in 46 states, the District of Columbia and China.  References made in this release to "Genesis," "the Company," "we," "us" and "our" refer to Genesis HealthCare and each of its wholly-owned companies. Visit our website at www.genesishcc.com.

Forward-Looking Statements This release includes "forward-looking statements" within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements contain words such as "may," "will," "project," "might," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," "continue," "pursue, "plans" or "prospect," or the negative or other variations thereof or comparable terminology. They include, but are not limited to, statements about Genesis' expectations and beliefs regarding its future financial performance, its anticipated synergy cost savings from the Skilled Healthcare combination, anticipated operating expense reductions, anticipated acquisitions, anticipated divestitures, anticipated development opportunities and anticipated deleveraging opportunities. These forward-looking statements are based on current expectations and projections about future events, including the assumptions stated in this release, and there can be no assurance that they will be achieved or occur, in whole or in part, in the timeframes anticipated by the Company or at all.

Investors are cautioned that forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that cannot be predicted or quantified and, consequently, the actual performance of Genesis may differ materially from that expressed or implied by such forward-looking statements.

These risks and uncertainties include, but are not limited to the following:

  • reductions in Medicare reimbursement rates, or changes in the rules governing the Medicare program could have a material adverse effect on our revenue, financial condition and results of operations;
  • continued efforts of federal and state governments to contain growth in Medicaid expenditures could adversely affect our revenue and profitability;
  • recent federal government proposals could limit the states' use of provider tax programs to generate revenue for their Medicaid expenditures, which could result in a reduction in our reimbursement rates under Medicaid;
  • revenue we receive from Medicare and Medicaid is subject to potential retroactive reduction;
  • our success is dependent upon retaining key executive and personnel;
  • health reform legislation could adversely affect our revenue and financial condition;
  • annual caps that limit the amounts that can be paid for outpatient therapy services rendered to any Medicare beneficiary may negatively affect our results of operations;
  • we are subject to a Medicare cap amount for our hospice business. Our net patient service revenue and profitability could be adversely affected by limitations on Medicare payments;
  • we are subject to extensive and complex laws and government regulations. If we are not operating in compliance with these laws and regulations or if these laws and regulations change, we could be required to make significant expenditures or change our operations in order to bring our facilities and operations into compliance;
  • we face inspections, reviews, audits and investigations under federal and state government programs and contracts. These audits could have adverse findings that may negatively affect our business;
  • significant legal actions, which are commonplace in our professions, could subject us to increased operating costs and substantial uninsured liabilities, which would materially and adversely affect our results of operations, liquidity and financial condition;
  • insurance coverage may become increasingly expensive and difficult to obtain for health care companies, and our self-insurance may expose us to significant losses;
  • we may be unable to reduce costs to offset decreases in our patient census levels or other expenses completely;
  • future acquisitions may use significant resources, may be unsuccessful and could expose us to unforeseen liabilities;
  • we lease a significant number of our facilities and may experience risks relating to lease termination, lease extensions and special charges;
  • our substantial indebtedness could adversely affect our financial health and prevent us from fulfilling our financial obligations;
  • following the combination of FC-GEN Operations Investment LLC and Skilled Healthcare Group, Inc., we may not be able to continue to successfully integrate our operations, which could adversely affect us and the market price of our common stock;
  • we have incurred substantial costs and expect to incur additional transaction and integration costs in connection with the combination of FC-GEN Operations Investment LLC and Skilled Healthcare Group, Inc;
  • the holders of a majority of the voting power of Genesis' common stock have entered into a voting agreement, and the control group's interests may conflict with yours;
  • some of our directors are significant stockholders or representatives of significant stockholders, which may result in the diversion of corporate opportunities and other potential conflicts; and
  • we are a "controlled company" within the meaning of NYSE rules and, as a result, qualify for and rely on exemptions from certain corporate governance requirements.

The Company's Annual Report on Form 10-K for the year ended December 31, 2014, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the U.S. Securities and Exchange Commission, including the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015 when it is filed, discuss the foregoing risks as well as other important risks and uncertainties of which investors should be aware. Any forward-looking statements contained herein are made only as of the date of this release. Genesis disclaims any obligation to update the forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements.

Note Regarding Use of Non-GAAP Financial Measures For a discussion of the reasons why the Company utilizes non-GAAP financial measures and believes that the presentation of such measures provides useful information to investors regarding the Company's financial condition and results of operations, see the Current Report on Form 8-K furnished to the U.S. Securities and Exchange Commission on August 6, 2015.

GENESIS HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Three months ended June 30,

Six months ended June 30,

2015

2014

2015

2014

Net revenues

$                1,419,475

$             1,200,651

$                2,762,476

$             2,387,195

Salaries, wages and benefits

820,926

717,215

1,611,659

1,438,477

Other operating expenses

348,236

269,603

660,797

533,149

General and administrative costs

44,983

35,980

86,516

71,844

Provision for losses on accounts receivable 

22,113

17,080

45,509

35,596

Lease expense

38,959

32,909

75,378

65,708

Depreciation and amortization expense

53,605

48,930

113,538

96,430

Interest expense

126,385

109,900

247,698

218,650

Loss on extinguishment of debt

-

181

3,234

680

Investment income

(431)

(436)

(847)

(1,379)

Transaction costs

2,642

1,298

88,710

3,547

Other loss (income)

50

(667)

(7,560)

(667)

Equity in net income of unconsolidated affiliates

(360)

(390)

(513)

(346)

Loss before income tax benefit

(37,633)

(30,952)

(161,643)

(74,494)

Income tax benefit

(4,419)

(96)

(10,067)

(2,850)

Loss from continuing operations

(33,214)

(30,856)

(151,576)

(71,644)

Loss from discontinued operations, net of taxes

(1,722)

(1,176)

(1,610)

(4,370)

Net loss

(34,936)

(32,032)

(153,186)

(76,014)

Less net loss (income) attributable to noncontrolling interests

15,750

(224)

21,434

(409)

Net loss attributable to Genesis Healthcare, Inc.

$                   (19,186)

$                 (32,256)

$                 (131,752)

$                 (76,423)

Loss per common share:

Basic and diluted:

Weighted average shares outstanding for basic and diluted loss from continuing operations per share

89,211

49,865

82,279

49,865

Basic and diluted net loss per common share:

Loss from continuing operations attributable to Genesis Healthcare, Inc.

$                       (0.20)

$                     (0.63)

$                       (1.58)

$                     (1.44)

Loss from discontinued operations

(0.02)

(0.02)

(0.02)

(0.09)

Net loss attributable to Genesis Healthcare, Inc.

$                       (0.22)

$                     (0.65)

$                       (1.60)

$                     (1.53)

 

GENESIS HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(IN THOUSANDS)

June 30, 2015

December 31, 2014

Assets:

Current assets:

Cash and equivalents

$                        82,963

$                     87,548

Accounts receivable, net of allowances for doubtful accounts

753,563

605,830

Other current assets

142,302

202,808

Total current assets

978,828

896,186

Property and equipment, net of accumulated depreciation 

3,995,294

3,493,250

Identifiable intangible assets, net of accumulated amortization

225,945

173,112

Goodwill

431,515

169,681

Other long-term assets

471,796

409,179

Total assets

$                   6,103,378

$                5,141,408

Liabilities and Stockholders' Deficit:

Current liabilities:

Accounts payable and accrued expenses

$                      360,956

$                   320,339

Accrued compensation

226,745

192,838

Other current liabilities

162,661

147,405

Total current liabilities

750,362

660,582

Long-term debt

1,031,626

525,728

Capital lease obligations

1,044,208

1,002,762

Financing obligations

2,965,326

2,911,200

Other long-term liabilities

556,398

498,626

Stockholders' deficit

(244,542)

(457,490)

Total liabilities and stockholders' deficit

$                   6,103,378

$                5,141,408

 

GENESIS HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN THOUSANDS)

Six months ended June 30,

2015

2014

Net cash (used in) provided by operating activities

$                     (7,729)

$                    36,361

Net cash used in investing activities

(28,867)

(47,495)

Net cash provided by financing activities

32,011

1,348

Net decrease in cash and equivalents

(4,585)

(9,786)

Beginning of period

87,548

61,413

End of period

$                    82,963

$                    51,627

 

GENESIS HEALTHCARE, INC.

RECONCILIATION OF NET (LOSS) INCOME TO EBITDA, EBITDAR, ADJUSTED EBITDA AND ADJUSTED EBITDAR

(UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

As reported

Adjustments

As adjusted

Three months ended June 30, 2015

Conversion to cash basis leases (a)

Newly acquired or constructed businesses with start-up losses (b)

Other adjustments (c)

Total adjustments

Three months ended June 30, 2015

Net revenues

$           1,419,475

$                    -

$             (8,982)

$                (232)

$             (9,214)

$          1,410,261

Salaries, wages and benefits

820,926

-

(5,447)

-

(5,447)

815,479

Other operating expenses

348,236

-

(4,183)

(11,220)

(15,403)

332,833

General and administrative costs

44,983

-

-

(2,079)

(2,079)

42,904

Provision for losses on accounts receivable 

22,113

-

(251)

-

(251)

21,862

Lease expense

38,959

84,437

(1,979)

-

82,458

121,417

Depreciation and amortization expense

53,605

(34,197)

(199)

-

(34,396)

19,209

Interest expense

126,385

(103,980)

(8)

-

(103,988)

22,397

Other income

50

-

-

(50)

(50)

-

Investment income

(431)

-

-

-

-

(431)

Transaction costs

2,642

-

-

(2,642)

(2,642)

-

Equity in net income of unconsolidated affiliates

(360)

-

-

-

-

(360)

(Loss) income before income tax benefit

$              (37,633)

$             53,740

$               3,085

$             15,759

$             72,584

$               34,951

Income tax (benefit) expense

(4,419)

12,474

716

3,658

16,848

12,429

(Loss) income from continuing operations

$              (33,214)

$             41,266

$               2,369

$             12,101

$             55,736

$               22,522

Loss from discontinued operations, net of taxes

1,722

460

-

-

460

2,182

Net (loss) income attributable to noncontrolling interests

(15,750)

15,036

863

4,409

20,308

4,558

Net (loss) income attributable to Genesis Healthcare, Inc.

$              (19,186)

$             25,770

$               1,506

$               7,692

$             34,968

$               15,782

Depreciation and amortization expense

53,605

(34,197)

(199)

-

(34,396)

19,209

Interest expense

126,385

(103,980)

(8)

-

(103,988)

22,397

Other income

50

-

-

(50)

(50)

-

Transaction costs

2,642

-

-

(2,642)

(2,642)

-

Income tax (benefit) expense

(4,419)

12,474

716

3,658

16,848

12,429

Loss from discontinued operations, net of taxes

1,722

460

-

-

460

2,182

Net (loss) income attributable to noncontrolling interests

(15,750)

15,036

863

4,409

20,308

4,558

EBITDA / Adjusted EBITDA

$              145,049

$           (84,437)

$               2,878

$             13,067

$           (68,492)

$               76,557

Lease expense

38,959

84,437

(1,979)

-

82,458

121,417

EBITDAR / Adjusted EBITDAR

$              184,008

$                      -

$                  899

$             13,067

$             13,966

$             197,974

(Loss) income per common share:

Diluted:

Weighted average shares outstanding for diluted (loss) income from continuing operations per share (d)

89,211

153,671

Diluted net (loss) income from continuing operations per share (e)

$                  (0.20)

$                   0.14

See (a), (b), (c), (d) and (e) footnote references contained herein.

 

GENESIS HEALTHCARE, INC.

RECONCILIATION OF NET (LOSS) INCOME TO EBITDA, EBITDAR, ADJUSTED EBITDA AND ADJUSTED EBITDAR

(UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

As reported

Adjustments

As adjusted

Non-GAAP as adjusted

Pro forma adjusted

Six months ended June 30, 2015

Conversion to cash basis leases (a)

Newly acquired or constructed businesses with start-up losses (b)

Other adjustments (c)

Total adjustments

Six months ended June 30, 2015

Skilled Healthcare Group, Inc. one month ended January 31, 2015

Six months ended June 30, 2015

Net revenues

$           2,762,476

$                    -

$           (21,365)

$                  388

$           (20,977)

$          2,741,499

$                   71,288

$            2,812,787

Salaries, wages and benefits

1,611,659

-

(12,513)

-

(12,513)

1,599,146

43,926

1,643,072

Other operating expenses

660,797

-

(9,653)

(11,220)

(20,873)

639,924

19,946

659,870

General and administrative costs

86,516

-

-

(3,762)

(3,762)

82,754

-

82,754

Provision for losses on accounts receivable 

45,509

-

(251)

-

(251)

45,258

-

45,258

Lease expense

75,378

168,345

(4,928)

-

163,417

238,795

1,766

240,561

Depreciation and amortization expense

113,538

(67,789)

(1,443)

-

(69,232)

44,306

1,998

46,304

Interest expense

247,698

(206,314)

(40)

-

(206,354)

41,344

2,521

43,865

Loss on extinguishment of debt

3,234

-

-

(3,234)

(3,234)

-

-

-

Other income

(7,560)

-

-

7,560

7,560

-

11

11

Investment income

(847)

-

-

-

-

(847)

-

(847)

Transaction costs

88,710

-

-

(88,710)

(88,710)

-

-

-

Equity in net income of unconsolidated affiliates

(513)

-

-

-

-

(513)

(146)

(659)

(Loss) income before income tax benefit

$            (161,643)

$           105,758

$               7,463

$             99,754

$           212,975

$               51,332

$                     1,266

$                 52,598

Income tax (benefit) expense

(10,067)

24,548

1,732

23,155

49,435

39,368

494

39,862

(Loss) income from continuing operations

$            (151,576)

$             81,210

$               5,731

$             76,599

$           163,540

$               11,964

$                        772

$                 12,736

Loss from discontinued operations, net of taxes

1,610

920

-

-

920

2,530

-

2,530

Net (loss) income attributable to noncontrolling interests

(21,434)

29,591

2,088

27,911

59,590

38,156

531

38,687

Net (loss) income attributable to Genesis Healthcare, Inc.

$            (131,752)

$             50,699

$               3,643

$             48,688

$           103,030

$              (28,722)

$                        241

$               (28,481)

Depreciation and amortization expense

113,538

(67,789)

(1,443)

-

(69,232)

44,306

1,998

46,304

Interest expense

247,698

(206,314)

(40)

-

(206,354)

41,344

2,521

43,865

Loss on extinguishment of debt

3,234

-

-

(3,234)

(3,234)

-

-

-

Other income

(7,560)

-

-

7,560

7,560

-

11

11

Transaction costs

88,710

-

-

(88,710)

(88,710)

-

-

-

Income tax (benefit) expense

(10,067)

24,548

1,732

23,155

49,435

39,368

494

39,862

Loss from discontinued operations, net of taxes

1,610

920

-

-

920

2,530

-

2,530

Net (loss) income attributable to noncontrolling interests

(21,434)

29,591

2,088

27,911

59,590

38,156

531

38,687

EBITDA / Adjusted EBITDA

$              283,977

$         (168,345)

$               5,980

$             15,370

$         (146,995)

$             136,982

$                     5,796

$               142,778

Lease expense

75,378

168,345

(4,928)

-

163,417

238,795

1,766

240,561

EBITDAR / Adjusted EBITDAR

$              359,355

$                      -

$               1,052

$             15,370

$             16,422

$             375,777

$                     7,562

$               383,339

(Loss) income per common share:

Diluted:

Weighted average shares outstanding for diluted (loss) income from continuing operations per share (d)

82,279

153,671

Diluted net (loss) income from continuing operations per share (e)

$                  (1.58)

$                     0.21

See (a), (b), (c), (d) and (e) footnote references contained herein.

 

GENESIS HEALTHCARE, INC.

RECONCILIATION OF NET (LOSS) INCOME TO EBITDA, EBITDAR, ADJUSTED EBITDA AND ADJUSTED EBITDAR

(UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

As reported

Adjustments

As adjusted

Non-GAAP as adjusted

Pro forma adjusted

Three months ended June 30, 2014

Conversion to cash basis leases (a)

Newly acquired or constructed businesses with start-up losses (b)

Other adjustments (c)

Total adjustments

Three months ended June 30, 2014

Skilled Healthcare Group, Inc. three months ended June 30, 2014

Three months ended June 30, 2014

Net revenues

$              1,200,651

$                    -

$             (4,294)

$                    -

$             (4,294)

$                1,196,357

$                 206,868

$                1,403,225

-

Salaries, wages and benefits

717,215

-

(3,302)

94

(3,208)

714,007

128,515

842,522

Other operating expenses

269,603

-

(1,800)

(714)

(2,514)

267,089

44,052

311,141

General and administrative costs

35,980

-

-

-

-

35,980

6,656

42,636

Provision for losses on accounts receivable 

17,080

-

-

-

-

17,080

3,664

20,744

Lease expense

32,909

80,317

(650)

-

79,667

112,576

4,922

117,498

Depreciation and amortization expense

48,930

(33,525)

(22)

-

(33,547)

15,383

6,034

21,417

Interest expense

109,900

(97,660)

-

-

(97,660)

12,240

7,643

19,883

Loss (gain) on extinguishment of debt

181

-

-

(181)

(181)

-

-

-

Other (income) loss

(667)

-

-

667

667

-

(123)

(123)

Investment income

(436)

-

-

-

-

(436)

-

(436)

Transaction costs

1,298

-

-

(1,298)

(1,298)

-

-

-

Equity in net income of unconsolidated affiliates

(390)

-

-

-

-

(390)

(92)

(482)

(Loss) income before income tax benefit

$                  (30,952)

$             50,868

$               1,480

$               1,432

$             53,780

$                     22,828

$                     5,597

$                     28,425

Income tax (benefit) expense

(96)

3,215

94

91

3,400

3,304

2,447

5,751

(Loss) income from continuing operations

$                  (30,856)

$             47,653

$               1,386

$               1,341

$             50,380

$                     19,524

$                     3,150

$                     22,674

Loss (income) from discontinued operations, net of taxes

1,176

(437)

-

-

(437)

739

-

739

Net loss attributable to noncontrolling interests

224

-

-

-

-

224

-

224

Net (loss) income attributable to Genesis Healthcare, Inc.

$                  (32,256)

$             48,090

$               1,386

$               1,341

$             50,817

$                     18,561

$                     3,150

$                     21,711

Depreciation and amortization expense

48,930

(33,525)

(22)

-

(33,547)

15,383

6,034

21,417

Interest expense

109,900

(97,660)

-

-

(97,660)

12,240

7,643

19,883

Loss (gain) on extinguishment of debt

181

-

-

(181)

(181)

-

-

-

Other (income) loss

(667)

-

-

667

667

-

(123)

(123)

Transaction costs

1,298

-

-

(1,298)

(1,298)

-

-

-

Income tax (benefit) expense

(96)

3,215

94

91

3,400

3,304

2,447

5,751

Loss (income) from discontinued operations, net of taxes

1,176

(437)

-

-

(437)

739

-

739

Net income attributable to noncontrolling interests

224

-

-

-

-

224

-

224

EBITDA / Adjusted EBITDA

$                 128,690

$           (80,317)

$               1,458

$                  620

$           (78,239)

$                     50,451

$                   19,151

$                     69,602

Lease expense

32,909

80,317

(650)

-

79,667

112,576

4,922

117,498

EBITDAR / Adjusted EBITDAR

$                 161,599

$                      -

$                  808

$                  620

$               1,428

$                   163,027

$                   24,073

$                   187,100

Loss per common share:

Diluted:

Weighted average shares outstanding for diluted (loss) income from continuing operations per share (d)

49,865

Diluted net (loss) income from continuing operations per share (e)

$                      (0.63)

 Not calculated 

See (a), (b), (c), (d) and (e) footnote references contained herein.

 

GENESIS HEALTHCARE, INC.

RECONCILIATION OF NET (LOSS) INCOME TO EBITDA, EBITDAR, ADJUSTED EBITDA AND ADJUSTED EBITDAR

(UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

As reported

Adjustments

As adjusted

Non-GAAP as adjusted

Pro forma adjusted

Six months ended June 30, 2014

Conversion to cash basis leases (a)

Newly acquired or constructed businesses with start-up losses (b)

Other adjustments (c)

Total adjustments

Six months ended June 30, 2014

Skilled Healthcare Group, Inc. six months ended June 30, 2014

Six months ended June 30, 2014

Net revenues

$             2,387,195

$                    -

$             (7,178)

$               1,166

$             (6,012)

$              2,381,183

$                 414,303

$              2,795,486

-

Salaries, wages and benefits

1,438,477

-

(5,044)

(1,706)

(6,750)

1,431,727

259,934

1,691,661

Other operating expenses

533,149

-

(3,052)

(833)

(3,885)

529,264

89,012

618,276

General and administrative costs

71,844

-

-

-

-

71,844

12,300

84,144

Provision for losses on accounts receivable 

35,596

-

-

-

-

35,596

6,478

42,074

Lease expense

65,708

157,880

(1,085)

-

156,795

222,503

9,696

232,199

Depreciation and amortization expense

96,430

(65,393)

(73)

-

(65,466)

30,964

12,120

43,084

Interest expense

218,650

(193,068)

-

-

(193,068)

25,582

15,639

41,221

Loss (gain) on extinguishment of debt

680

-

-

(680)

(680)

-

-

-

Other (income) loss

(667)

-

-

667

667

-

(162)

(162)

Investment income

(1,379)

-

-

-

-

(1,379)

-

(1,379)

Transaction costs

3,547

-

-

(3,547)

(3,547)

-

-

-

Equity in net income of unconsolidated affiliates

(346)

-

-

-

-

(346)

(638)

(984)

(Loss) income before income tax benefit

$                 (74,494)

$           100,581

$               2,076

$               7,265

$           109,922

$                   35,428

$                     9,924

$                   45,352

Income tax (benefit) expense

(2,850)

6,357

132

460

6,949

4,099

4,448

8,547

(Loss) income from continuing operations

$                 (71,644)

$             94,224

$               1,944

$               6,805

$           102,973

$                   31,329

$                     5,476

$                   36,805

Loss (income) from discontinued operations, net of taxes

4,370

(1,964)

-

-

(1,964)

2,406

-

2,406

Net loss attributable to noncontrolling interests

409

-

-

-

-

409

-

409

Net (loss) income attributable to Genesis Healthcare, Inc.

$                 (76,423)

$             96,188

$               1,944

$               6,805

$           104,937

$                   28,514

$                     5,476

$                   33,990

Depreciation and amortization expense

96,430

(65,393)

(73)

-

(65,466)

30,964

12,120

43,084

Interest expense

218,650

(193,068)

-

-

(193,068)

25,582

15,639

41,221

Loss (gain) on extinguishment of debt

680

-

-

(680)

(680)

-

-

-

Other (income) loss

(667)

-

-

667

667

-

(107)

(107)

Transaction costs

3,547

-

-

(3,547)

(3,547)

-

-

-

Income tax (benefit) expense

(2,850)

6,357

132

460

6,949

4,099

4,448

8,547

Loss (income) from discontinued operations, net of taxes

4,370

(1,964)

-

-

(1,964)

2,406

-

2,406

Net income attributable to noncontrolling interests

409

-

-

-

-

409

-

409

EBITDA / Adjusted EBITDA

$                244,146

$         (157,880)

$               2,003

$               3,705

$         (152,172)

$                   91,974

$                   37,576

$                 129,550

Lease expense

65,708

157,880

(1,085)

-

156,795

222,503

9,696

232,199

EBITDAR / Adjusted EBITDAR

$                309,854

$                      -

$                  918

$               3,705

$               4,623

$                 314,477

$                   47,272

$                 361,749

Loss per common share:

Diluted:

Weighted average shares outstanding for diluted (loss) income from continuing operations per share (d)

49,865

Diluted net (loss) income from continuing operations per share (e)

$                     (1.44)

 Not calculated 

See (a), (b), (c), (d) and (e) footnote references contained herein.

(a)  Our leases are classified as either operating leases, capital leases or financing obligations pursuant to applicable guidance under U.S. GAAP.  We view the primary provisions and economics of these leases, regardless of their accounting treatment, as being nearly identical.  Virtually all of our leases are structured with triple net terms, have fixed annual rent escalators and have long-term initial maturities with renewal options.  Accordingly, in connection with our evaluation of the financial performance of the Company, we reclassify all of our leases to operating lease treatment and reflect lease expense on a cash basis.  This approach allows us to better understand the relationship in each reporting period of our operating performance, as measured by EBITDAR and Adjusted EBITDAR, to the cash basis obligations to our landlords in that reporting period, regardless of the lease accounting treatment.  This presentation and approach is also consistent with the financial reporting and covenant compliance requirements contained in all of our major lease and loan agreements.  The following table summarizes the reclassification adjustments necessary to present all leases as operating leases on a cash basis.

Three months ended June 30, 

Six months ended June 30,

2015

2014

2015

2014

(in thousands)

Lease expense:

Cash rent - capital leases 

$            22,923

$             22,384

$               45,848

$               44,394

Cash rent - financing obligations

64,065

61,097

126,835

119,632

Non-cash - operating lease arrangements

(2,551)

(3,164)

(4,338)

(6,146)

Lease expense adjustments

$            84,437

$             80,317

$             168,345

$             157,880

Depreciation and amortization expense:

Capital lease accounting

$            (9,296)

$             (9,281)

$              (18,075)

$              (18,280)

Financing obligation accounting

(24,901)

(24,244)

(49,714)

(47,113)

Depreciation and amortization expense adjustments

$          (34,197)

$           (33,525)

$              (67,789)

$              (65,393)

Interest expense:

Capital lease accounting

$          (26,157)

$           (25,087)

$              (51,643)

$              (49,209)

Financing obligation accounting

(77,823)

(72,573)

(154,671)

(143,859)

Interest expense adjustments

$        (103,980)

$           (97,660)

$            (206,314)

$            (193,068)

Total pre-tax lease accounting adjustments

$          (53,740)

$           (50,868)

$            (105,758)

$            (100,581)

(b)  The acquisition and construction of new businesses has become an important element of our growth strategy.  Many of the businesses we acquire have a history of operating losses and continue to generate operating losses in the months that follow our acquisition.  Newly constructed or developed businesses also generate losses while in their start-up phase.  We view these losses as both temporary and an expected component of our long-term investment in the new venture.  We adjust these losses when computing Adjusted EBITDAR and Adjusted EBITDA in order to better evaluate the performance of our core business.  The activities of such businesses are adjusted when computing Adjusted EBITDAR and Adjusted EBITDA until such time as a new business generates positive Adjusted EBITDA.  The operating performance of new businesses are no longer adjusted when computing Adjusted EBITDAR and Adjusted EBITDA beginning the period in which a new business generates positive Adjusted EBITDA and all periods thereafter.  There were seven acquired or newly constructed businesses eliminated from our reported results when computing adjusted results for the three and six months ended June 30, 2015 and 2014, respectively.  The results for the six months ended June 30, 2015 were also adjusted for losses incurred in our rehabilitation services start-up activities in China.

(c)  Other adjustments represent costs or gains associated with transactions or events that we do not believe are reflective of our core recurring operating business.  Other adjustments also include the effect of expensing non-cash stock-based compensation related to restricted stock units.  The following items were realized in the periods presented.

Three months ended June 30, 

Six months ended June 30,

2015

2014

2015

2014

(in thousands)

Severance and restructuring (1)

$                 720

$                  (94)

$                 2,379

$                 1,706

Regulatory defense and related costs (2)

1,317

714

1,961

1,500

New business development costs (3)

-

-

-

499

Self insurance adjustment (4)

10,500

-

10,500

-

Transaction costs (5)

2,642

1,298

88,710

3,547

Loss on early extinguishment of debt 

-

181

3,234

680

Other income (6)

50

(667)

(7,560)

(667)

Stock based compensation (7)

530

-

530

-

Tax benefit from total adjustments

(3,658)

(91)

(23,155)

(460)

Total other adjustments

$            12,101

$               1,341

$               76,599

$                 6,805

  1. We incurred costs related to the termination, severance and restructuring of certain components of the Company's business.
  2. We incurred legal defense and other related costs in connection with certain matters in dispute or under appeal with regulatory agencies.
  3. We incurred business development costs in connection with the evaluation and start-up of services outside our existing service offerings.
  4. We incurred a self-insured program adjustment for the actuarially developed GLPL and worker's compensation claims related to policy periods 2014 and prior.  The Company also recorded approximately $3.6 million of incremental development related to the first six months of 2015, which has not been excluded from our non GAAP results.
  5. We incurred costs associated with transactions including the combination with Skilled Healthcare Group, Inc. and other transactions.
  6. We realized a net gain on the sale of certain assets in the six months ended June 30, 2015.
  7. We incurred $0.5 million of non-cash stock-based compensation related to restricted stock units.

(d)  Assumes 153.7 million diluted weighted average common shares outstanding and common stock equivalents on a fully exchanged basis.

(e)  Pro forma adjusted income from continuing operations per share assumes a calculated tax rate of 40%, and is computed as follows:  Pro forma adjusted income before income taxes of $17.6 million x (1 - 40% tax rate) / 153.7 million diluted weighted average shares on a fully exchanged basis.

SKILLED HEALTHCARE GROUP, INC.

RECONCILIATION OF NET (LOSS) INCOME TO EBITDA, EBITDAR, ADJUSTED EBITDA AND ADJUSTED EBITDAR

(UNAUDITED)

(IN THOUSANDS)

GAAP as reported

Non-GAAP as adjusted

GAAP as reported

Non-GAAP as adjusted

GAAP as reported

Non-GAAP as adjusted

One month ended January 31, 2015

Adjust

One month ended January 31, 2015

Three months ended June 30, 2014

Adjust

Three months ended June 30, 2014

Six months ended June 30, 2014

Adjust

Six months ended June 30, 2014

Net revenues

$            71,288

$            -

$           71,288

$      206,979

$        (111)

$      206,868

$      414,279

$            24

$         414,303

-

-

-

-

-

-

Salaries, wages and benefits

44,842

(916)

43,926

128,819

(304)

128,515

260,246

(312)

259,934

Other operating expenses

17,486

(345)

17,141

51,990

(7,938)

44,052

97,967

(8,955)

89,012

General and administrative costs

1,516

1,516

7,287

(631)

6,656

13,371

(1,071)

12,300

Provision for losses on accounts receivable 

1,289

-

1,289

3,720

(56)

3,664

6,625

(147)

6,478

Lease expense

1,766

-

1,766

4,922

-

4,922

9,696

-

9,696

Depreciation and amortization expense

1,998

-

1,998

6,034

-

6,034

12,120

-

12,120

Interest expense

2,521

-

2,521

7,643

-

7,643

15,639

-

15,639

Loss on extinguishment of debt

-

-

-

822

(822)

-

822

(822)

-

Impairment of long-lived assets

-

-

-

82

(82)

-

82

(82)

-

Other (income) loss

11

-

11

(123)

-

(123)

(162)

-

(162)

Transaction costs

4,638

(4,638)

-

-

-

-

-

-

-

Equity in net income of unconsolidated affiliates

(146)

-

(146)

(92)

-

(92)

(638)

-

(638)

Income tax (benefit) expense

(1,807)

2,301

494

(1,345)

3,792

2,447

(3)

4,451

4,448

Net (loss) income 

$            (2,826)

$       3,598

$                772

$         (2,780)

$       5,930

$          3,150

$         (1,486)

$       6,962

$             5,476

Depreciation and amortization expense

1,998

-

1,998

6,034

-

6,034

12,120

-

12,120

Interest expense

2,521

-

2,521

7,643

-

7,643

15,639

-

15,639

Loss on extinguishment of debt

-

-

-

822

(822)

-

822

(822)

-

Impairment of long-lived assets

-

-

-

82

(82)

-

82

(82)

-

Other (income) loss

11

-

11

(123)

(123)

(107)

-

(107)

Transaction costs

4,638

(4,638)

-

-

-

-

-

-

-

Income tax (benefit) expense

(1,807)

2,301

494

(1,345)

3,792

2,447

(3)

4,451

4,448

EBITDA / Adjusted EBITDA

4,535

1,261

5,796

10,333

8,818

19,151

27,067

10,509

37,576

Lease expense

1,766

-

1,766

4,922

-

4,922

9,696

-

9,696

EBITDAR / Adjusted EBITDAR

$              6,301

$       1,261

$             7,562

$        15,255

$       8,818

$        24,073

$        36,763

$     10,509

$           47,272

The following adjustments represent costs or gains associated with transactions or events that we do not believe are reflective of Skilled Healthcare Group's recurring operating business.  

One month ended January 31, 2015

Three months ended June 30, 2014

Six months ended June 30, 2014

Severance and restructuring

$       1,220

$          631

$       1,071

Regulatory defense and related costs

41

-

-

Exist costs of divested facilities

-

(27)

340

Professional fees related to non-routine matters

-

7,205

7,519

Losses at skilled nursing facility not at full operation

-

133

133

Loss on extinguishment of debt

-

822

822

Non-cash stock compensation 

371

876

1,446

Impairment of long-lived assets

-

82

82

Transaction costs

4,267

-

-

Tax benefit of total adjustments

(2,301)

(3,792)

(4,451)

Total adjustments

$       3,598

$       5,930

$       6,962

 

GENESIS HEALTHCARE, INC.

KEY FINANCIAL PERFORMANCE INDICATORS

(UNAUDITED)

Three months ended June 30,

Six months ended June 30,

2015

2014

2015

2014

(In thousands)

(In thousands)

Financial Results

Net revenues

$                  1,419,475

$                  1,200,651

$               2,762,476

$               2,387,195

EBITDAR

184,008

161,599

359,355

309,854

EBITDA

145,049

128,690

283,977

244,146

Adjusted EBITDAR

197,974

163,027

375,777

314,477

Adjusted EBITDA

76,557

50,451

136,982

91,974

Pro forma adjusted EBITDAR

197,974

187,100

383,339

361,749

Pro forma adjusted EBITDA

76,557

69,602

142,778

129,550

INPATIENT SEGMENT:

Three months ended June 30,

Six months ended June 30,

2015

2014

2015

2014

Occupancy Statistics - Inpatient

Available licensed beds in service at end of period

56,730

46,451

56,730

46,451

Available operating beds in service at end of period

55,087

45,057

55,087

45,057

Available patient days based on licensed beds

5,154,768

4,231,255

9,930,941

8,420,379

Available patient days based on operating beds

4,996,311

4,103,685

9,625,192

8,164,113

Actual patient days

4,338,337

3,675,482

8,427,184

7,307,551

Occupancy percentage - licensed beds

84.2%

86.9%

84.9%

86.8%

Occupancy percentage - operating beds

86.8%

89.6%

87.6%

89.5%

Skilled mix

21.8%

22.1%

22.3%

22.2%

Average daily census

47,674

40,390

46,559

40,373

Revenue per patient day (skilled nursing facilities)

Medicare Part A

$                            503

$                            493

$                         502

$                         492

Medicare total (including Part B)

543

531

538

530

Insurance

454

448

446

447

Private and other

310

319

312

320

Medicaid

217

213

216

213

Medicaid (net of provider taxes)

195

193

195

193

Weighted average (net of provider taxes)

$                            272

$                            271

$                         273

$                         271

Patient days by payor (skilled nursing facilities)

Medicare

573,295

537,626

1,153,193

1,067,923

Insurance

307,163

224,319

594,922

448,606

Total skilled mix days

880,458

761,945

1,748,115

1,516,529

Private and other

277,038

239,345

563,624

480,968

Medicaid

2,866,194

2,434,581

5,512,696

4,834,342

Total Days

4,023,690

3,435,871

7,824,435

6,831,839

Patient days as a percentage of total patient days (skilled nursing facilities)

Medicare

14.2%

15.6%

14.7%

15.6%

Insurance

7.6%

6.5%

7.6%

6.6%

Skilled mix

21.8%

22.1%

22.3%

22.2%

Private and other

6.9%

7.0%

7.2%

7.0%

Medicaid

71.3%

70.9%

70.5%

70.8%

Total

100.0%

100.0%

100.0%

100.0%

Three months ended June 30,

Six months ended June 30,

2015

2014

2015

2014

Facilities at end of period

Skilled nursing facilities

Leased

384

356

384

356

Owned

33

2

33

2

Joint Venture

5

5

5

5

Managed *

36

14

36

14

Total skilled nursing facilities

458

377

458

377

Total licensed beds

55,605

45,964

55,605

45,964

Assisted living facilities:

Leased

29

27

29

27

Owned

22

1

22

1

Joint Venture

1

1

1

1

Managed

4

4

4

4

Total assisted living facilities

56

33

56

33

Total licensed beds

3,962

2,731

3,962

2,731

Total facilities

514

410

514

410

Total Jointly Owned and Managed– (Unconsolidated)

19

17

19

17

REHABILITATION THERAPY SEGMENT:

Three months ended June 30,

Six months ended June 30,

2015

2014

2015

2014

Revenue mix %:

Company-operated

39%

37%

39%

37%

Non-affiliated

61%

63%

61%

63%

Sites of service (at end of period)

1,499

1,367

1,499

1,367

Revenue per site

$                     171,570

$                     176,104

$                  336,478

$                  352,856

Therapist efficiency %

70%

69%

70%

70%

* In 2015, includes 20 facilities located in Texas for which the real estate is owned by Genesis.

 

GENESIS HEALTHCARE, INC.

RECONCILIATION OF NET (LOSS) INCOME TO EBITDA, EBITDAR, ADJUSTED EBITDA AND ADJUSTED EBITDAR

2015 GUIDANCE - LOW END OF RANGE

(IN THOUSANDS, EXCEPT EPS)

Adjustments

As adjusted

Twelve months ended December 31, 2015

Conversion to cash basis leases (a)

Newly acquired or constructed businesses with start-up losses (b)

Other adjustments (c)

Twelve months ended December 31, 2015

 Net revenues 

$           5,684,197

$                       -

$              (25,759)

$                       -

$           5,658,438

 Salaries, wages and benefits 

3,506,752

-

(16,175)

-

3,490,577

 Other operating expenses 

1,427,595

-

(11,734)

-

1,415,861

 Lease expense 

157,874

334,941

(5,383)

-

487,432

 Depreciation and amortization expense 

234,511

(137,324)

(2,675)

-

94,512

 Interest expense 

507,203

(421,251)

-

-

85,952

 Investment income 

(2,000)

-

-

-

(2,000)

 Transaction costs 

88,989

-

-

(88,989)

-

 Equity in net income of unconsolidated affiliates 

(1,050)

-

-

-

(1,050)

 (Loss) income before income tax expense 

$            (235,677)

$              223,634

$                10,208

$                88,989

$                87,154

 Income tax expense (benefit) 

(94,271)

89,454

4,083

35,596

34,862

 Income (loss) from continuing operations 

$            (141,406)

$              134,180

$                  6,125

$                53,393

$                52,292

 Earnings (loss) per share, diluted: 

$                  (0.91)

$                    0.34

 Weighted-average common shares outstanding, diluted,  

 on a fully exchanged basis 

154,603

154,603

Adjustments to Compute EBITDA/Adjusted EBITDA and EBITDAR / Adjusted EBITDAR

 Depreciation and amortization expense 

234,511

(137,324)

(2,675)

-

94,512

 Interest expense 

507,203

(421,251)

-

-

85,952

 Transaction costs 

88,989

-

-

(88,989)

-

 Income tax expense (benefit) 

(94,271)

89,454

4,083

35,596

34,862

 EBITDA / Adjusted EBITDA 

$              595,026

$            (334,941)

$                  7,533

$                       -

$              267,618

 Lease expense 

157,874

334,941

(5,383)

-

487,432

 EBITDAR / Adjusted EBITDAR 

$              752,900

$                       -

$                  2,150

$                       -

$              755,050

 

GENESIS HEALTHCARE, INC.

RECONCILIATION OF NET (LOSS) INCOME TO EBITDA, EBITDAR, ADJUSTED EBITDA AND ADJUSTED EBITDAR

2015 GUIDANCE - HIGH END OF RANGE

(IN THOUSANDS, EXCEPT EPS)

Adjustments

As adjusted

Twelve months ended December 31, 2015

Conversion to cash basis leases (a)

Newly acquired or constructed businesses with start-up losses (b)

Other adjustments (c)

Twelve months ended December 31, 2015

 Net revenues 

$           5,764,197

$                       -

$              (25,759)

$                       -

$           5,738,438

 Salaries, wages and benefits 

3,554,512

-

(16,175)

-

3,538,337

 Other operating expenses 

1,446,798

-

(11,734)

-

1,435,064

 Lease expense 

157,874

334,941

(5,383)

-

487,432

 Depreciation and amortization expense 

235,515

(137,324)

(2,675)

-

95,516

 Interest expense 

508,003

(421,251)

-

-

86,752

 Investment income 

(3,000)

-

-

-

(3,000)

 Transaction costs 

88,989

-

-

(88,989)

-

 Equity in net income of unconsolidated affiliates 

(2,000)

-

-

-

(2,000)

 (Loss) income before income tax expense 

$            (222,494)

$              223,634

$                10,208

$                88,989

$              100,337

 Income tax (benefit) expense 

(88,998)

89,454

4,083

35,596

40,135

 Income (loss) from continuing operations 

$            (133,496)

$              134,180

$                  6,125

$                53,393

$                60,202

 Earnings (loss) per share, diluted: 

$                  (0.86)

$                    0.39

 Weighted-average common shares outstanding, diluted,  

 on a fully exchanged basis 

154,603

154,603

Adjustments to Compute EBITDA/Adjusted EBITDA and EBITDAR / Adjusted EBITDAR

 Depreciation and amortization expense 

235,515

(137,324)

(2,675)

-

95,516

 Interest expense 

508,003

(421,251)

-

-

86,752

 Transaction costs 

88,989

-

-

(88,989)

-

 Income tax (benefit) expense 

(88,998)

89,454

4,083

35,596

40,135

 EBITDA / Adjusted EBITDA 

$              610,013

$            (334,941)

$                  7,533

$                       -

$              282,605

 Lease expense 

157,874

334,941

(5,383)

-

487,432

 EBITDAR / Adjusted EBITDAR 

$              767,887

$                       -

$                  2,150

$                       -

$              770,037

 

Genesis HealthCare Contact:    Investor Relations                                             610-925-2000

SOURCE Genesis HealthCare



RELATED LINKS

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