Genesis HealthCare Reports Third Quarter 2015 Results

Nov 05, 2015, 16:11 ET from Genesis HealthCare

KENNETT SQUARE, Pa., Nov. 5, 2015 /PRNewswire/ -- 

  • Strong Third Quarter Performance and Growth With Pro Forma1 Adjusted:
    • EBITDAR of $188.8 Million, up 6.3% from Prior Year Quarter
    • EBITDA of $67.2 Million, up 13.1% from Prior Year Quarter
    • Diluted EPS of $0.07
  • Recent HUD Financing Approval Advances Balance Sheet Restructuring Initiatives; Expected to Improve Annual Free Cash Flow $25 - $30 Million

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 nine month periods ended September 30, 2015. 

Highlights

  • Previously announced expense reductions yield $10.2 million of savings in the third quarter and $25.7 million of savings through the first nine months of 2015; on track to realize $35 million in 2015;
  • Skilled Healthcare integration continues as planned; approximately $4.1 million of transaction synergies realized in the third quarter and $8.1 million through the first nine months of 2015; on track to realize $13 million in 2015;
  • Pro forma EBITDAR margins of approximately 13.4% grew 60 bps over the prior year quarter;
  • Genesis received formal portfolio credit approval from the U.S. Department of Housing and Urban Development Program (HUD);
  • Genesis' planned acquisition of Revera Inc.'s 24 skilled nursing facilities and contract rehabilitation business is on track to close by year end, subject to regulatory and licensing approvals and other customary conditions.

"We are pleased to report EBITDA growth in excess of 10% for the third consecutive quarter, exceeding our own expectations," comments George V. Hager, Jr., Chief Executive Officer of Genesis. "Our success managing costs and leveraging our scale through acquisition were the drivers behind our 60 basis points of year-over-year EBITDAR margin expansion. Our focus remains on areas of the business where we can position Genesis for growth, including operational execution, expansion of our rehabilitation therapy segment, and integration of newly acquired and developed inpatient facilities. In the near term, we expect our M&A pipeline, incremental realization of Skilled Healthcare synergies and execution on our other strategic initiatives to position us to sustain our earnings growth rate."

Third Quarter 2015 Results (Unaudited)

Three months ended September 30, 2015

Three months ended September 30, 2014

Pro Forma1 Non-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

$   1,416,027

$   1,405,277

$   1,187,618

$   1,391,925

$            13,352

1.0%

EBITDAR / Adjusted EBITDAR

181,231

188,779

146,384

177,571

11,208

6.3%

EBITDA / Adjusted EBITDA

143,576

67,205

113,463

59,407

7,798

13.1%

Fully Diluted EPS / Adjusted Fully Diluted EPS

(0.32)

0.07

 Not applicable as Genesis was privately held 

Nine months ended September 30, 2015

Nine months ended September 30, 2014

Pro Forma1 Non-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

$   4,178,503

$   4,218,064

$   3,574,813

$   4,187,411

$            30,653

0.7%

EBITDAR / Adjusted EBITDAR

542,086

572,118

456,235

539,338

32,780

6.1%

EBITDA / Adjusted EBITDA

429,053

209,983

357,606

188,975

21,008

11.1%

Fully Diluted EPS / Adjusted Fully Diluted EPS

(1.88)

0.27

 Not applicable as Genesis was privately held 

1 - To facilitate comparisons, pro forma results for the three and nine months ended September 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 reconciliation 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 $1,405.3 million in the third quarter of 2015 would have increased $13.4 million or 1.0% over the prior year quarter.  Revenue growth in the third quarter of 2015 was negatively impacted $14.0 million by the divestiture of six facilities and $8.0 million due to the loss of certain therapy contracts.  As reported GAAP basis revenue of $1,416.0 million in the third quarter of 2015 increased $228.4 million or 19.2% 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 $4,218.1 million in the nine months ended September 30, 2015 would have increased $30.7 million or 0.7% over the prior year period.  Revenue growth in the nine months ended September 30, 2015 was negatively impacted $32.0 million by the divestiture of six facilities and by $24.6 million due to the loss of therapy contacts.  As reported GAAP basis revenue of $4,178.5 million in the nine months ended September 30, 2015 increased $603.7 million or 16.9% 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 $188.8 million in the third quarter of 2015 would have increased $11.2 million or 6.3% over the prior year quarter. Adjusted EBITDAR growth in the third quarter of 2015 was driven by $10.2 million of planned cost reductions and approximately $4.1 million of Skilled Healthcare transaction synergies. GAAP basis loss from continuing operations of $61.0 million in the third quarter of 2015 increased $18.4 million or 43% over the prior year quarter.

Assuming Genesis and Skilled Healthcare were combined in all periods presented, adjusted EBITDAR of $572.1 million in the nine months ended September 30, 2015 would have increased $32.8 million or 6.1% over the prior year period. Adjusted EBITDAR growth in the nine months ended September 30, 2015 was driven by $25.7 million of planned cost reductions and approximately $8.1 million of Skilled Healthcare transaction synergies. GAAP basis loss from continuing operations of $212.6 million in the nine months ended September 30, 2015 increased $98.3 million over the prior year period principally due to 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 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 integration of these new contracts is running smoothly and is on target to contribute an additional $7.5 million in annual EBITDAR.

Genesis previously announced its planned acquisition of Revera Inc.'s 24 skilled nursing facilities and contract rehabilitation business for $240 million.  The acquisition is on track to close by year end, subject to regulatory and licensing approvals and other customary conditions.  The acquisition is expected to contribute $34.0 million in annual EBITDAR.

Genesis continues to look strategically to monetize non-strategic 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 non-strategic assets having the potential to produce $100 million to $150 million of net cash proceeds.

Balance Sheet Restructuring Genesis received formal portfolio credit approval from the U.S. Department of Housing and Urban Development Program (HUD) in October 2015.  Genesis received approval to finance $360 million in HUD insured loans secured by certain facilities previously owned by Skilled Healthcare and $400 million of additional HUD insured loans conditioned upon the submission to and acceptance by HUD of additional qualifying assets. Proceeds from the initial $360 million of HUD insured loan borrowings will be used to refinance a real estate bridge loan at an estimated 400 basis point per annum savings. Individual HUD guaranteed mortgages are expected to close over the course of the first and second quarters of 2016. The Company intends to utilize the additional $400 million of HUD insured loan capacity to refinance 20 properties to be acquired in the previously announced Revera transaction, 20 facility buybacks with its REIT partners and future unidentified transactions.  

"We are keenly focused on increasing our facility ownership and reducing our overall cost of capital," notes Genesis Chief Financial Officer, Tom DiVittorio.  "Our ability to access HUD guaranteed financing, having attractive fixed rates of approximately 4% and 30 year maturities, is a key milestone in this repositioning strategy.  Combined with our announced transactions with our REIT partners, we expect it will increase annual after-tax free cash flow between $25 million and $30 million, a nearly 40% increase off the midpoint of our 2015 guidance."

Skilled Healthcare Loss Contingency Reserve The Company is engaged in discussions with representatives of the Department of Justice in an effort to reach mutually acceptable resolution of two investigations involving therapy matters and staffing matters related to the former Skilled Healthcare business that combined with the Company effective February 2, 2015.  Discussions have progressed to a point where Genesis believes it is appropriate to accrue an estimated loss contingency reserve of $30.0 million.  Recognition of the loss contingency reserve is not an admission of liability or fault by the Company or any of its subsidiaries.  Because these discussions are ongoing, there can be no certainty about the timing or likelihood of a definitive resolution.  As these discussions proceed and additional information becomes available, the amount of the estimated loss contingency reserve may need to be increased or decreased to reflect this new information.

2015 Guidance The Company reaffirms its previously announced 2015 adjusted EBITDAR guidance of $755.0 million to $770.0 million, adjusted EBITDA of $267.6 million to $282.6 million, and net income from continuing operations on a diluted basis 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.

Genesis also reaffirms its 2015 recurring free cash flow guidance of approximately $70.0 million. Projected recurring free cash flow is derived from the mid-point of the Company's 2015 adjusted EBITDA guidance of $275.0 million further adjusted for projected cash interest of $72.0 million, recurring capital expenditures of $76.0 million and recurring cash income taxes of $56.0 million.  Cash income taxes assume tax depreciation and amortization expense of approximately $62.0 million and a tax rate of 40%.

Conference Call Genesis HealthCare will hold a conference call at 8:30 a.m. Eastern Time on Friday, November 6, 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 1,700 healthcare providers in 45 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, anticipated deleveraging opportunities, anticipated balance sheet restructuring and resolution of government investigations. 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, such as the Department of Justice, and contracts. These investigations and 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 September 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 November 5, 2015.                                                                

 

GENESIS HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

Three months ended September 30,

Nine months ended September 30,

2015

2014

2015

2014

Net revenues

$                1,416,027

$             1,187,618

$                4,178,503

$             3,574,813

Salaries, wages and benefits

833,415

723,586

2,445,074

2,162,064

Other operating expenses

332,918

265,283

993,715

798,432

General and administrative costs

46,110

36,341

131,126

108,187

Provision for losses on accounts receivable 

23,346

17,285

68,855

52,881

Lease expense

37,655

32,921

113,033

98,629

Depreciation and amortization expense

62,505

48,701

176,043

145,131

Interest expense

128,538

112,121

376,236

330,771

(Gain) loss on extinguishment of debt

(3,104)

-

130

679

Investment income

(353)

(1,468)

(1,200)

(2,847)

Other loss (income)

38

30

(7,522)

(637)

Transaction costs

3,306

1,736

92,016

5,283

Skilled Healthcare loss contingency expense

30,000

-

31,500

-

Equity in net (income) loss of unconsolidated affiliates

(640)

207

(1,153)

(139)

Loss before income tax benefit

(77,707)

(49,125)

(239,350)

(123,621)

Income tax benefit

(16,726)

(6,518)

(26,793)

(9,368)

Loss from continuing operations

(60,981)

(42,607)

(212,557)

(114,253)

Income (loss) from discontinued operations, net of taxes

39

(1,191)

(1,571)

(5,561)

Net loss

(60,942)

(43,798)

(214,128)

(119,814)

Less net loss (income) attributable to noncontrolling interests

31,990

(961)

53,424

(1,370)

Net loss attributable to Genesis Healthcare, Inc.

$                   (28,952)

$                 (44,759)

$                 (160,704)

$               (121,184)

Loss per common share:

Basic and diluted:

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

89,213

49,865

84,615

49,865

Basic and diluted net loss per common share:

Loss from continuing operations attributable to Genesis Healthcare, Inc.

$                       (0.32)

$                     (0.88)

$                       (1.88)

$                     (2.32)

Loss from discontinued operations

0.00

(0.02)

(0.02)

(0.11)

Net loss attributable to Genesis Healthcare, Inc.

$                       (0.32)

$                     (0.90)

$                       (1.90)

$                     (2.43)

 

 

GENESIS HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(IN THOUSANDS)

September 30, 2015

December 31, 2014

Assets:

Current assets:

Cash and equivalents

$                        59,671

$                     87,548

Accounts receivable, net of allowances for doubtful accounts

759,305

605,830

Other current assets

185,184

202,808

Total current assets

1,004,160

896,186

Property and equipment, net of accumulated depreciation 

3,965,527

3,493,250

Identifiable intangible assets, net of accumulated amortization

219,028

173,112

Goodwill

444,446

169,681

Other long-term assets

488,200

409,179

Total assets

$                   6,121,361

$                5,141,408

Liabilities and Stockholders' Deficit:

Current liabilities:

Accounts payable and accrued expenses

$                      395,468

$                   320,339

Accrued compensation

222,689

192,838

Other current liabilities

162,206

147,405

Total current liabilities

780,363

660,582

Long-term debt

1,036,882

525,728

Capital lease obligations

1,053,547

1,002,762

Financing obligations

2,993,670

2,911,200

Other long-term liabilities

563,295

498,626

Stockholders' deficit

(306,396)

(457,490)

Total liabilities and stockholders' deficit

$                   6,121,361

$                5,141,408

 

GENESIS HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN THOUSANDS)

Nine months ended September 30,

2015

2014

Net cash (used in) provided by operating activities

$                     (4,949)

$                    85,364

Net cash used in investing activities

(67,933)

(67,635)

Net cash provided by (used in) financing activities

45,005

(5,575)

Net (decrease) increase in cash and equivalents

(27,877)

12,154

Beginning of period

87,548

61,413

End of period

$                    59,671

$                    73,567

 

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 September 30, 2015

Conversion to cash basis leases (a)

Newly acquired or constructed businesses with start- up losses and newly divested facilities (b)

Other adjustments (c)

Three months ended September 30, 2015

Net revenues

$           1,416,027

$                    -

$                  (10,750)

$                    -

$          1,405,277

Salaries, wages and benefits

833,415

-

(6,616)

(477)

826,322

Other operating expenses

332,918

-

(6,340)

686

327,264

General and administrative costs

46,110

-

-

(5,194)

40,916

Provision for losses on accounts receivable 

23,346

-

(357)

-

22,989

Lease expense

37,655

86,221

(2,302)

-

121,574

Depreciation and amortization expense

62,505

(33,502)

(3,020)

-

25,983

Interest expense

128,538

(105,057)

-

-

23,481

Gain on extinguishment of debt

(3,104)

-

-

3,104

-

Other income

38

-

(38)

-

-

Investment income

(353)

-

-

-

(353)

Transaction costs

3,306

-

(63)

(3,243)

-

Skilled Healthcare loss contingency expense

30,000

-

-

(30,000)

-

Equity in net income of unconsolidated affiliates

(640)

-

-

-

(640)

(Loss) income before income tax benefit

$              (77,707)

$             52,338

$                      7,986

$             35,124

$               17,741

Income tax (benefit) expense

(16,726)

12,149

1,854

8,153

5,430

(Loss) income from continuing operations

$              (60,981)

$             40,189

$                      6,132

$             26,971

$               12,311

Income from discontinued operations, net of taxes

(39)

162

-

-

123

Net (loss) income attributable to noncontrolling interests

(31,990)

21,966

(351)

14,629

4,254

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

$              (28,952)

$             18,061

$                      6,483

$             12,342

$                 7,934

Depreciation and amortization expense

62,505

(33,502)

(3,020)

-

25,983

Interest expense

128,538

(105,057)

-

-

23,481

Gain on extinguishment of debt

(3,104)

-

-

3,104

-

Other income

38

-

(38)

-

-

Transaction costs

3,306

-

(63)

(3,243)

-

Skilled Healthcare loss contingency expense

30,000

-

-

(30,000)

-

Income tax (benefit) expense

(16,726)

12,149

1,854

8,153

5,430

Loss from discontinued operations, net of taxes

(39)

162

-

-

123

Net (loss) income attributable to noncontrolling interests

(31,990)

21,966

(351)

14,629

4,254

EBITDA / Adjusted EBITDA

$              143,576

$           (86,221)

$                      4,865

$               4,985

$               67,205

Lease expense

37,655

86,221

(2,302)

-

121,574

EBITDAR / Adjusted EBITDAR

$              181,231

$                      -

$                      2,563

$               4,985

$             188,779

(Loss) income per common share:

Diluted:

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

89,213

153,671

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

$                  (0.32)

$                   0.07

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

Nine months ended September 30, 2015

Conversion to cash basis leases (a)

Newly acquired or constructed businesses with start-up losses and newly divested facilities (b)

Other adjustments (c)

Nine months ended September 30, 2015

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

Nine months ended September 30, 2015

Net revenues

$           4,178,503

$                    -

$                 (32,115)

$                  388

$          4,146,776

$                   71,288

$            4,218,064

Salaries, wages and benefits

2,445,074

-

(19,129)

(477)

2,425,468

43,926

2,469,394

Other operating expenses

993,715

-

(15,993)

(10,534)

967,188

17,141

984,329

General and administrative costs

131,126

-

-

(7,456)

123,670

1,516

125,186

Provision for losses on accounts receivable 

68,855

-

(608)

-

68,247

1,289

69,536

Lease expense

113,033

254,566

(7,230)

-

360,369

1,766

362,135

Depreciation and amortization expense

176,043

(101,291)

(4,463)

-

70,289

1,998

72,287

Interest expense

376,236

(311,371)

(40)

-

64,825

2,521

67,346

Loss on extinguishment of debt

130

-

-

(130)

-

-

-

Other income

(7,522)

-

(38)

7,560

-

11

11

Investment income

(1,200)

-

-

-

(1,200)

-

(1,200)

Transaction costs

92,016

-

(63)

(91,953)

-

-

-

Skilled Healthcare loss contingency expense

31,500

-

-

(31,500)

-

-

Equity in net income of unconsolidated affiliates

(1,153)

-

-

-

(1,153)

(146)

(1,299)

(Loss) income before income tax benefit

$            (239,350)

$           158,096

$                   15,449

$           134,878

$               69,073

$                     1,266

$                 70,339

Income tax (benefit) expense

(26,793)

36,697

3,586

31,308

44,798

494

45,292

(Loss) income from continuing operations

$            (212,557)

$           121,399

$                   11,863

$           103,570

$               24,275

$                        772

$                 25,047

Loss from discontinued operations, net of taxes

1,571

1,082

-

-

2,653

-

2,653

Net (loss) income attributable to noncontrolling interests

(53,424)

29,591

2,088

27,911

6,166

531

6,697

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

$            (160,704)

$             90,726

$                     9,775

$             75,659

$               15,456

$                        241

$                 15,697

Depreciation and amortization expense

176,043

(101,291)

(4,463)

-

70,289

1,998

72,287

Interest expense

376,236

(311,371)

(40)

-

64,825

2,521

67,346

Loss on extinguishment of debt

130

-

-

(130)

-

-

-

Other income

(7,522)

-

(38)

7,560

-

11

11

Transaction costs

92,016

-

(63)

(91,953)

-

-

-

Skilled Healthcare loss contingency expense

31,500

-

-

(31,500)

-

-

-

Income tax (benefit) expense

(26,793)

36,697

3,586

31,308

44,798

494

45,292

Loss from discontinued operations, net of taxes

1,571

1,082

-

-

2,653

-

2,653

Net (loss) income attributable to noncontrolling interests

(53,424)

29,591

2,088

27,911

6,166

531

6,697

EBITDA / Adjusted EBITDA

$              429,053

$         (254,566)

$                   10,845

$             18,855

$             204,187

$                     5,796

$               209,983

Lease expense

113,033

254,566

(7,230)

-

360,369

1,766

362,135

EBITDAR / Adjusted EBITDAR

$              542,086

$                      -

$                     3,615

$             18,855

$             564,556

$                     7,562

$               572,118

(Loss) income per common share:

Diluted:

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

84,615

153,671

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

$                  (1.88)

$                     0.27

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 September 30, 2014

Conversion to cash basis leases (a)

Newly acquired or constructed businesses with start-up losses and newly divested facilities (b)

Other adjustments (c)

Three months ended September 30, 2014

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

Three months ended September 30, 2014

Net revenues

$              1,187,618

$                    -

$                   (3,533)

$                    -

$                1,184,085

$                 207,840

$                1,391,925

-

Salaries, wages and benefits

723,586

-

(3,444)

(308)

719,834

128,793

848,627

Other operating expenses

265,283

-

(1,744)

(1,290)

262,249

36,122

298,371

General and administrative costs

36,341

-

-

-

36,341

11,789

48,130

Provision for losses on accounts receivable 

17,285

-

-

-

17,285

3,737

21,022

Lease expense

32,921

80,625

(528)

-

113,018

5,146

118,164

Depreciation and amortization expense

48,701

(33,232)

(41)

-

15,428

6,120

21,548

Interest expense

112,121

(99,188)

-

-

12,933

7,836

20,769

Other (income) loss

30

-

-

(30)

-

26

26

Investment income

(1,468)

-

-

-

(1,468)

-

(1,468)

Transaction costs

1,736

-

-

(1,736)

-

-

-

Equity in net loss of unconsolidated affiliates

207

-

-

-

207

(568)

(361)

(Loss) income before income tax benefit

$                  (49,125)

$             51,795

$                     2,224

$               3,364

$                       8,258

$                     8,839

$                     17,097

Income tax (benefit) expense

(6,518)

5,190

194

345

(789)

3,105

2,316

(Loss) income from continuing operations

$                  (42,607)

$             46,605

$                     2,030

$               3,019

$                       9,047

$                     5,734

$                     14,781

Loss (income) from discontinued operations, net of taxes

1,191

(621)

-

-

570

-

570

Net loss attributable to noncontrolling interests

961

-

-

-

961

-

961

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

$                  (44,759)

$             47,226

$                     2,030

$               3,019

$                       7,516

$                     5,734

$                     13,250

Depreciation and amortization expense

48,701

(33,232)

(41)

-

15,428

6,120

21,548

Interest expense

112,121

(99,188)

-

-

12,933

7,836

20,769

Other (income) loss

30

-

-

(30)

-

(7)

(7)

Transaction costs

1,736

-

-

(1,736)

-

-

-

Income tax (benefit) expense

(6,518)

5,190

194

345

(789)

3,105

2,316

Loss (income) from discontinued operations, net of taxes

1,191

(621)

-

-

570

-

570

Net income attributable to noncontrolling interests

961

-

-

-

961

-

961

EBITDA / Adjusted EBITDA

$                 113,463

$           (80,625)

$                     2,183

$               1,598

$                     36,619

$                   22,788

$                     59,407

Lease expense

32,921

80,625

(528)

-

113,018

5,146

118,164

EBITDAR / Adjusted EBITDAR

$                 146,384

$                      -

$                     1,655

$               1,598

$                   149,637

$                   27,934

$                   177,571

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)

$                      (0.88)

 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

Nine months ended September 30, 2014

Conversion to cash basis leases (a)

Newly acquired or constructed businesses with start- up losses and newly divested facilities (b)

Other adjustments (c)

Nine months ended September 30, 2014

Skilled Healthcare Group, Inc. nine months ended September 30, 2014

Nine months ended September 30, 2014

Net revenues

$             3,574,813

$                    -

$                  (10,711)

$               1,166

$              3,565,268

$                 622,143

$              4,187,411

-

Salaries, wages and benefits

2,162,064

-

(8,488)

(2,014)

2,151,562

388,727

2,540,289

Other operating expenses

798,432

-

(4,796)

(2,123)

791,513

125,134

916,647

General and administrative costs

108,187

-

-

-

108,187

24,089

132,276

Provision for losses on accounts receivable 

52,881

-

-

-

52,881

10,215

63,096

Lease expense

98,629

238,505

(1,613)

-

335,521

14,842

350,363

Depreciation and amortization expense

145,131

(98,625)

(114)

-

46,392

18,240

64,632

Interest expense

330,771

(292,256)

-

-

38,515

23,475

61,990

Loss on extinguishment of debt

679

-

-

(679)

-

-

-

Other (income) loss

(637)

-

-

637

-

(136)

(136)

Investment income

(2,847)

-

-

-

(2,847)

-

(2,847)

Transaction costs

5,283

-

-

(5,283)

-

-

-

Equity in net income of unconsolidated affiliates

(139)

-

-

-

(139)

(1,206)

(1,345)

(Loss) income before income tax benefit

$               (123,621)

$           152,376

$                     4,300

$             10,628

$                   43,683

$                   18,763

$                   62,446

Income tax (benefit) expense

(9,368)

11,547

326

805

3,310

7,553

10,863

(Loss) income from continuing operations

$               (114,253)

$           140,829

$                     3,974

$               9,823

$                   40,373

$                   11,210

$                   51,583

Loss from discontinued operations, net of taxes

5,561

(2,585)

-

-

2,976

-

2,976

Net loss attributable to noncontrolling interests

1,370

-

-

-

1,370

-

1,370

-

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

$               (121,184)

$           143,414

$                     3,974

$               9,823

$                   36,027

$                   11,210

$                   47,237

Depreciation and amortization expense

145,131

(98,625)

(114)

-

46,392

18,240

64,632

Interest expense

330,771

(292,256)

-

-

38,515

23,475

61,990

Loss on extinguishment of debt

679

-

-

(679)

-

21

21

Other (income) loss

(637)

-

-

637

-

(114)

(114)

Transaction costs

5,283

-

-

(5,283)

-

-

-

Income tax (benefit) expense

(9,368)

11,547

326

805

3,310

7,553

10,863

Loss (income) from discontinued operations, net of taxes

5,561

(2,585)

-

-

2,976

-

2,976

Net income attributable to noncontrolling interests

1,370

-

-

-

1,370

-

1,370

EBITDA / Adjusted EBITDA

$                357,606

$         (238,505)

$                     4,186

$               5,303

$                 128,590

$                   60,385

$                 188,975

Lease expense

98,629

238,505

(1,613)

-

335,521

14,842

350,363

EBITDAR / Adjusted EBITDAR

$                456,235

$                      -

$                     2,573

$               5,303

$                 464,111

$                   75,227

$                 539,338

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)

$                     (2.32)

 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 September 30, 

Nine months ended September 30,

2015

2014

2015

2014

(in thousands)

Lease expense:

Cash rent - capital leases 

$            23,062

$             22,374

$               68,910

$               66,768

Cash rent - financing obligations

64,736

61,375

191,571

181,007

Non-cash - operating lease arrangements

(1,577)

(3,124)

(5,915)

(9,270)

Lease expense adjustments

$            86,221

$             80,625

$             254,566

$             238,505

Depreciation and amortization expense:

Capital lease accounting

$            (8,495)

$             (8,848)

$              (26,570)

$              (27,128)

Financing obligation accounting

(25,007)

(24,384)

(74,721)

(71,497)

Depreciation and amortization expense adjustments

$          (33,502)

$           (33,232)

$            (101,291)

$              (98,625)

Interest expense:

Capital lease accounting

$          (26,503)

$           (25,287)

$              (78,146)

$              (74,496)

Financing obligation accounting

(78,554)

(73,901)

(233,225)

(217,760)

Interest expense adjustments

$        (105,057)

$           (99,188)

$            (311,371)

$            (292,256)

Total pre-tax lease accounting adjustments

$          (52,338)

$           (51,795)

$            (158,096)

$            (152,376)

(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.  The divestiture of underperforming or non-strategic facilities has also become an important element of our earnings optimization strategy.  We eliminate the results of divested facilities beginning in the quarter in which they become divested.  We view the losses associated with the wind down of such divested facilities as non-recurring and not indicative of the performance of our core business.

(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 September 30, 

Nine months ended September 30, 

2015

2014

2015

2014

(in thousands)

Severance and restructuring (1)

$                 742

$                  507

$                 3,121

$                 2,213

Regulatory defense and related costs (2)

2,293

460

2,755

1,960

New business development costs (3)

-

631

-

1,130

Self insurance adjustment (4)

-

-

10,500

-

Transaction costs (5)

3,243

1,736

91,953

5,283

Skilled Healthcare loss contingency expense (8)

30,000

-

31,500

-

Loss on early extinguishment of debt 

(3,104)

-

130

679

Other income (6)

-

30

(7,560)

(637)

Stock based compensation (7)

1,950

-

2,479

-

Tax benefit from total adjustments

(8,153)

(345)

(31,308)

(805)

Total other adjustments

$            26,971

$               3,019

$             103,570

$                 9,823

 

(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 $6 million of incremental development related to the first nine 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 nine months ended September 30, 2015.

(7)  We incurred $2.0 million of non-cash stock-based compensation related to restricted stock units.

(8) We recognized $31.5 million of loss contingency expense associated with three Skilled Healthcare regulatory matters.

(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 x (1 - 40% tax rate) / diluted weighted average shares on a fully exchanged basis.

 

GENESIS HEALTHCARE, INC.

KEY FINANCIAL PERFORMANCE INDICATORS

(UNAUDITED)

Three months ended September 30,

Nine months ended September 30,

2015

2014

2015

2014

(In thousands)

(In thousands)

Financial Results

Net revenues

$                  1,416,027

$                  1,187,618

$               4,178,503

$               3,574,813

EBITDAR

181,231

146,384

542,086

456,235

EBITDA

143,576

113,463

429,053

357,606

Adjusted EBITDAR

188,779

149,637

564,556

464,111

Adjusted EBITDA

67,205

36,619

204,187

128,590

Pro forma adjusted EBITDAR

188,779

177,571

572,118

539,338

Pro forma adjusted EBITDA

67,205

59,407

209,983

188,975

INPATIENT SEGMENT:

Three months ended September 30,

Nine months ended September 30,

2015

2014

2015

2014

Occupancy Statistics - Inpatient

Available licensed beds in service at end of period

56,499

46,817

56,499

46,817

Available operating beds in service at end of period

55,036

45,454

55,036

45,454

Available patient days based on licensed beds

5,164,465

4,290,770

15,095,406

12,711,149

Available patient days based on operating beds

5,027,803

4,164,658

14,652,995

12,328,771

Actual patient days

4,324,403

3,706,574

12,751,587

11,014,125

Occupancy percentage - licensed beds

83.7%

86.4%

84.5%

86.6%

Occupancy percentage - operating beds

86.0%

89.0%

87.0%

89.3%

Skilled mix

20.6%

21.1%

21.8%

21.8%

Average daily census

47,004

40,289

46,709

40,345

Days in period

92

92

273

273

Revenue per patient day (skilled nursing facilities)

Medicare Part A

$                            503

$                            490

$                         502

$                         491

Medicare total (including Part B)

545

528

540

529

Insurance

451

457

448

450

Private and other

263

314

295

318

Medicaid

216

213

216

213

Medicaid (net of provider taxes)

195

192

195

193

Weighted average (net of provider taxes)

$                            266

$                            267

$                         270

$                         270

Patient days by payor (skilled nursing facilities)

Medicare

538,503

507,110

1,691,696

1,575,033

Insurance

288,314

221,984

883,236

670,590

Total skilled mix days

826,817

729,094

2,574,932

2,245,623

Private and other

299,153

247,528

862,777

728,496

Medicaid

2,879,447

2,480,315

8,392,143

7,314,657

Total Days

4,005,417

3,456,937

11,829,852

10,288,776

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

Medicare

13.4%

14.7%

14.3%

15.3%

Insurance

7.2%

6.4%

7.5%

6.5%

Skilled mix

20.6%

21.1%

21.8%

21.8%

Private and other

7.5%

7.2%

7.3%

7.1%

Medicaid

71.9%

71.7%

70.9%

71.1%

Total

100.0%

100.0%

100.0%

100.0%

Facilities at end of period

Skilled nursing facilities

Leased

383

358

383

358

Owned

33

2

33

2

Joint Venture

5

5

5

5

Managed *

32

14

32

14

Total skilled nursing facilities

453

379

453

379

Total licensed beds

54,545

46,160

54,545

46,160

Assisted living facilities:

Leased

30

28

30

28

Owned

22

1

22

1

Joint Venture

1

1

1

1

Managed

3

4

3

4

Total assisted living facilities

56

34

56

34

Total licensed beds

4,437

2,762

4,437

2,762

Total facilities

509

413

509

413

Total Jointly Owned and Managed– (Unconsolidated)

16

17

16

17

REHABILITATION THERAPY SEGMENT:

Three months ended September 30,

Nine months ended September 30,

2015

2014

2015

2014

Revenue mix %:

Company-operated

37%

37%

38%

37%

Non-affiliated

63%

63%

62%

63%

Sites of service (at end of period)

1,602

1,379

1,602

1,379

Revenue per site

$                     168,797

$                     170,912

$                  497,731

$                  521,110

Therapist efficiency %

68%

66%

69%

69%

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

 

 

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 September 30, 2014

Adjust

Three months ended September 30, 2014

Nine months ended September 30, 2014

Adjust

Nine months ended September 30, 2014

Net revenues

$        71,288

$            -

$        71,288

$        208,618

$         (778)

$         207,840

$           622,897

$           (754)

$          622,143

-

-

-

-

-

-

Salaries, wages and benefits

44,842

(916)

43,926

129,198

(405)

128,793

389,444

(717)

388,727

Other operating expenses

17,486

(345)

17,141

43,829

(7,707)

36,122

141,796

(16,662)

125,134

General and administrative costs

1,516

-

1,516

12,780

(991)

11,789

26,151

(2,062)

24,089

Provision for losses on accounts receivable 

1,289

-

1,289

3,737

-

3,737

10,362

(147)

10,215

Lease expense

1,766

-

1,766

5,146

-

5,146

14,842

-

14,842

Depreciation and amortization expense

1,998

-

1,998

6,120

-

6,120

18,240

-

18,240

Interest expense

2,521

-

2,521

7,836

-

7,836

23,475

-

23,475

Loss on extinguishment of debt

-

-

-

21

(21)

-

843

(843)

-

Impairment of long-lived assets

-

-

-

-

-

-

82

(82)

-

Other (income) loss

11

-

11

26

26

(136)

-

(136)

Transaction costs

4,638

(4,638)

-

-

-

Equity in net income of unconsolidated affiliates

(146)

-

(146)

(568)

-

(568)

(1,206)

-

(1,206)

Income tax (benefit) expense

(1,807)

2,301

494

(150)

3,255

3,105

(153)

7,706

7,553

Depreciation and amortization expense

1,998

-

1,998

6,120

-

6,120

18,240

-

18,240

Interest expense

2,521

-

2,521

7,836

-

7,836

23,475

-

23,475

Loss on extinguishment of debt

-

-

-

-

-

-

843

(822)

21

Transaction costs

4,638

(4,638)

-

Impairment of long-lived assets

-

-

-

-

-

-

82

(82)

-

Other (income) loss

11

-

11

(7)

(7)

(114)

-

(114)

Income tax (benefit) expense

(1,807)

2,301

494

(150)

3,255

3,105

(153)

7,706

7,553

EBITDA / Adjusted EBITDA

4,535

1,261

5,796

14,442

8,346

22,788

41,530

18,855

60,385

Lease expense

1,766

-

1,766

5,146

-

5,146

14,842

-

14,842

EBITDAR / Adjusted EBITDAR

$          6,301

$       1,261

$          7,562

$          19,588

$       8,346

$           27,934

$             56,372

$        18,855

$            75,227

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 September 30, 2014

Nine months ended September 30, 2014

Severance and restructuring

$       1,220

$          359

$          1,430

Regulatory defense and related costs

41

-

-

Exist costs of divested facilities

-

57

397

Professional fees related to non-routine matters

-

6,377

13,896

Losses at skilled nursing facility not at full operation

-

450

583

Loss on disposal of asset

-

68

68

Loss on extinguishment of debt

-

21

843

Non-cash stock compensation

371

1,014

2,460

Impairment of long-lived assets

-

-

82

Transaction costs

4,267

-

-

Tax benefit of total adjustments

(2,301)

(3,255)

(7,706)

Total adjustments

$       3,598

$       5,091

$        12,053

 

 

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 and newly divested facilities (b)

Other adjustments (c)

Twelve months ended December 31, 2015

 Net revenues 

$           5,660,915

$                       -

$              (42,865)

$                     388

$           5,618,438

 Salaries, wages and benefits 

3,315,945

-

(25,745)

(1,393)

3,288,807

 Other operating expenses 

1,347,860

-

(22,333)

(13,914)

1,311,613

 General and administrative costs 

177,340

-

-

(9,406)

167,934

 Provision for losses on accounts receivable 

99,049

-

(965)

-

98,084

 Lease expense 

159,721

334,941

(7,230)

-

487,432

 Depreciation and amortization expense 

236,299

(137,324)

(4,463)

-

94,512

 Interest expense 

507,243

(421,251)

(40)

-

85,952

 Loss (gain) on extinguishment of debt 

130

-

-

(130)

-

 Other (income) loss 

(7,522)

-

(38)

7,560

-

 Investment income 

(2,000)

-

-

-

(2,000)

 Transaction costs 

96,654

-

(63)

(96,591)

-

 Skilled Healthcare loss contingency expense 

31,500

-

-

(31,500)

-

 Equity in net income of unconsolidated affiliates 

(1,050)

-

-

-

(1,050)

 (Loss) income before income tax expense 

(300,254)

223,634

18,012

145,762

87,154

 Income tax expense (benefit) 

(120,102)

89,454

7,205

58,305

34,862

 Income (loss) from continuing operations 

(180,152)

134,180

10,807

87,457

52,292

 Earnings (loss) per share, diluted: 

$                  (1.17)

$                    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 

236,299

(137,324)

(4,463)

-

94,512

 Interest expense 

507,243

(421,251)

(40)

-

85,952

 Loss (gain) on extinguishment of debt 

130

-

-

(130)

-

 Other (income) loss 

(7,522)

-

(38)

7,560

-

 Transaction costs 

96,654

-

(63)

(96,591)

-

 Skilled Healthcare loss contingency expense 

31,500

-

-

(31,500)

-

 Income tax expense (benefit) 

(120,102)

89,454

7,205

58,305

34,862

 EBITDA / Adjusted EBITDA 

$              564,050

$            (334,941)

$                13,408

$                25,101

$              267,618

 Lease expense 

159,721

334,941

(7,230)

-

487,432

 EBITDAR / Adjusted EBITDAR 

$              723,771

$                       -

$                  6,178

$                25,101

$              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 and newly divested facilities (b)

Other adjustments (c)

 Twelve months ended December 31, 2015 

 Net revenues 

$           5,740,915

$                       -

$              (42,865)

$                     388

5,698,438

 Salaries, wages and benefits 

3,363,604

-

(25,745)

(1,393)

3,336,466

 Other operating expenses 

1,365,422

-

(22,333)

(13,914)

1,329,175

 General and administrative costs 

177,340

-

-

(9,406)

167,934

 Provision for losses on accounts receivable 

100,791

-

(965)

-

99,826

 Lease expense 

159,721

334,941

(7,230)

-

487,432

 Depreciation and amortization expense 

237,303

(137,324)

(4,463)

-

95,516

 Interest expense 

508,043

(421,251)

(40)

-

86,752

 Loss (gain) on extinguishment of debt 

130

-

-

(130)

-

 Other (income) loss 

(7,522)

-

(38)

7,560

-

 Investment income 

(3,000)

-

-

-

(3,000)

 Transaction costs 

96,654

-

(63)

(96,591)

-

 Skilled Healthcare loss contingency expense 

31,500

-

-

(31,500)

-

 Equity in net income of unconsolidated affiliates 

(2,000)

-

-

-

(2,000)

 (Loss) income before income tax expense 

(287,071)

223,634

18,012

145,762

100,337

 Income tax (benefit) expense 

(114,828)

89,454

7,205

58,305

40,136

 Income (loss) from continuing operations 

(172,243)

134,180

10,807

87,457

60,201

 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 

237,303

(137,324)

(4,463)

-

95,516

 Interest expense 

508,043

(421,251)

(40)

-

86,752

 Loss (gain) on extinguishment of debt 

130

-

-

(130)

-

 Other (income) loss 

(7,522)

-

(38)

7,560

-

 Transaction costs 

96,654

-

(63)

(96,591)

-

 Skilled Healthcare loss contingency expense 

31,500

-

-

(31,500)

-

 Income tax (benefit) expense 

(114,828)

89,454

7,205

58,305

40,136

 EBITDA / Adjusted EBITDA 

$              579,037

$            (334,941)

$                13,408

$                25,101

282,605

 Lease expense 

159,721

334,941

(7,230)

-

487,432

 EBITDAR / Adjusted EBITDAR 

$              738,758

$                         -

$                  6,178

$                25,101

770,037

Genesis HealthCare Contact:    Investor Relations  610-925-2000

SOURCE Genesis HealthCare



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