Skilled Healthcare Group Reports Third Quarter 2013 Adjusted EPS Of $0.06

FOOTHILL RANCH, Calif., Nov. 4, 2013 /PRNewswire/ -- Skilled Healthcare Group, Inc. (NYSE: SKH) today announced its consolidated financial operating results for the three and nine month periods ended September 30, 2013.

"Despite the success of our overhead reductions that were implemented August 1, our Consolidated Adjusted EPS fell to $0.06 for the quarter due primarily to two factors. First, in our long-term care business we continue to see a shift of Medicare patient days to managed care days and have experienced softness in our skilled nursing occupancy rates.  The softness in occupancy rates has resulted from our declining average lengths of stay due to improved rehabilitation outcomes. And second, our self-insured professional liability insurance expense was $1.8 million higher than anticipated in the quarter due to increases in reserves on claims from past years," said Boyd Hendrickson, Chairman and Chief Executive Officer of Skilled Healthcare Group.

Third Quarter 2013 Results
Revenue for the quarter ended September 30, 2013 was $212.4 million, a decrease of 1.9% when compared to $216.6 million in the third quarter of 2012. Skilled mix1 decreased 60 basis points to 21.1% in the third quarter of 2013 from 21.7% in the third quarter of 2012. Occupancy declined 90 basis points to 81.7% in the third quarter of 2013 from 82.6% in the third quarter of 2012. Quality mix2 in the third quarter of 2013 decreased 110 basis points to 67.7%, compared to 68.8% in the prior year period.

Adjusted EBITDA3 was $17.7 million, or 8.3% of revenue, for the quarter ended September 30, 2013, a decrease of 26.6% compared to $24.1 million, or 11.1% of revenue, in the same period a year ago.  Adjusted EBITDAR3 was $22.7 million, or 10.7% of revenue, for the quarter ended September 30, 2013, a decrease of 21.2% compared to $28.8 million, or 13.3% of revenue, for the quarter ended September 30, 2012.

Net loss for the quarter ended September 30, 2013 totaled $12.1 million, as compared to net income of $6.1 million for the third quarter of 2012. Adjusted net income4 for the quarter ended September 30, 2013 totaled $2.2 million, a decrease of 67.6% compared to adjusted net income of $6.8 million for the third quarter of 2012. Adjusted net income excludes certain items as described in the Reconciliation of (Loss) Income Before (Benefit) Provision for Income Taxes to Adjusted Net Income table at the end of this press release.

Net loss per share was $0.32 for the quarter ended September 30, 2013, as compared to net income per diluted share of $0.16 for the same period in 2012. Adjusted net income per diluted share was $0.06 for the quarter ended September 30, 2013, a decrease of 66.6% compared to adjusted net income per diluted share of $0.18 for the quarter ended September 30, 2012.

Long-Term Care Services Segment
Revenue for our long-term care services segment in the quarter ended September 30, 2013 was $162.0 million, a decrease of $2.6 million, or 1.6%, as compared to $164.6 million for the same period a year ago. Revenue for this segment represented 76.3% of total revenue in the third quarter of 2013, compared to 76.0% of total revenue in the third quarter of 2012. 

Therapy Services Segment
Revenue for Hallmark Rehabilitation, our rehabilitation therapy services segment, was $25.3 million for the quarter ended September 30, 2013, a decrease of $0.9 million, or 3.4%, compared to the same period a year ago. Third-party rehabilitation therapy accounted for 11.9% of total revenue in the third quarter of 2013, compared to 12.1% of total revenue in the third quarter of 2012.

Hospice and Home Health Services Segment
Revenue for Signature Hospice and Home Health, our hospice and home health care services segment, was $25.2 million in the third quarter of 2013, a decrease of $0.7 million, or 2.7%, compared to $25.9 million in the third quarter of 2012. Average daily hospice census decreased 14.9% to 1,219 for the three-months ended September 30, 2013, from 1,433 for the three-months ended September 30, 2012. Results for the third quarter of 2013 were negatively affected by hospice cap reserves of $0.3 million for the 2013 cap year and $0.2 million for the 2012 cap year as patients stayed on service for longer than expected.

First Nine Months 2013 Results
Revenue for the nine months ended September 30, 2013 was $645.0 million, a decrease of 1.3% when compared to $653.4 million in the nine months ended September 30, 2012. Skilled mix1 decreased 20 basis points to 22.1% for the first nine months of 2013 as compared to 22.3% for the same period a year ago. Occupancy declined 80 basis points to 82.2% in the first nine months of 2013 from 83.0% in the first nine months of 2012. Quality mix2 for the first nine months of 2013 decreased 90 basis points to 68.8%, compared to 69.7% in the prior year period.

Adjusted EBITDA3 was $53.3 million, or 8.3% of revenue, for the nine months ended September 30, 2013, a decrease of 30.8% compared to $77.0 million, or 11.8% of revenue, for the same period a year ago.  Adjusted EBITDAR3 was $67.9 million, or 10.5% of revenue, for the first nine months of 2013, a decrease of 25.1% compared to $90.7 million, or 13.9% of revenue, for the first nine months of 2012.

Net loss for the nine months ended September 30, 2013 totaled $7.5 million, as compared to a net income of $15.9 million for the same period in 2012. Adjusted net income4 decreased 52.8% to $9.3 million for the nine months ended September 30, 2013 from adjusted net income of $19.7 million for the first nine months of 2012.

Net loss per share was $0.20 for the nine months ended September 30, 2013, as compared to net income per diluted share of $0.42 for the same period in 2012. Adjusted net income per diluted share was $0.24 for the first nine months of 2013, a decrease of 54.7% compared to adjusted net income per diluted share of $0.53 for the nine months ended September 30, 2012.

Long-Term Care Services Segment
Revenue for our long-term care services segment in the nine months ended September 30, 2013 was $489.5 million, a decrease of $6.2 million, or 1.3%, as compared to $495.7 million for the same period a year ago. Revenue for this segment increased to 75.9% of total revenue in the first nine months of 2013, as compared to 75.8% for the same period in 2012. 

Therapy Services Segment
Revenue for Hallmark Rehabilitation, our rehabilitation therapy services segment, was $79.0 million for the nine months ended September 30, 2013, an increase of $0.3 million, or 0.4%, compared to the same period a year ago. Third-party rehabilitation therapy accounted for 12.3% of total revenue in the first nine months of 2013, compared to 12.1% of total revenue in the same period of 2012.

Hospice and Home Health Services Segment
Revenue for Signature Hospice and Home Health, our hospice and home health care services segment, was $76.5 million in the first nine months of 2013, a decrease of $2.5 million, or 3.2%, compared to $79.0 million in the first nine months of 2012. Average daily hospice census decreased 8.0% to 1,292 for the nine months ended September 30, 2013, from 1,404 for the nine months ended September 30, 2012. Results for the nine months ended September 30, 2013 were negatively affected by hospice cap reserves of $0.2 million for the 2011 cap year, $2.3 million for the 2012 cap year, and $0.9 million for the 2013 cap year as patients stayed on service for longer than expected.

2013 Updated Guidance
Skilled Healthcare Group, Inc. expects full year 2013 consolidated revenue to be between $858 million and $863 million, adjusted EBITDA to be in the range of $75 million to $77 million, adjusted EBITDAR to be in the range of $94.5 million to $96.5 million and adjusted net income per diluted share to be between $0.35 and $0.39. This guidance includes the results of the first nine months of 2013 and assumes the following:

  • Medicare increase of 1.3% beginning October 1, 2013
  • 2013 capital expenditures of approximately $14 to $17 million
  • Average interest rate on outstanding debt of approximately 7.8%
  • An effective tax rate of 36%
  • Weighted average shares outstanding of 38.0 million
  • No additional acquisitions, developments or divestitures

Conference Call
A conference call and webcast will be held tomorrow, Tuesday, November 5th, at 9:00 a.m. Pacific Time (12:00 noon Eastern Time) to discuss Skilled Healthcare Group's consolidated financial results for the third quarter of 2013 and its outlook for 2013.

To participate in the call, interested parties may dial (800) 847-9525 and reference conference 18745998. Alternatively, interested parties may access the call in listen-only mode at www.skilledhealthcaregroup.com. A replay of the conference call will be available after 12:00 noon Pacific Time at www.skilledhealthcaregroup.com.

About Skilled Healthcare Group, Inc.
Skilled Healthcare Group, Inc., based in Foothill Ranch, California, is a holding company with subsidiary healthcare services companies, which in the aggregate had trailing twelve month revenue of approximately $864 million and approximately 15,000 employees as of September 30, 2013. Skilled Healthcare Group and its wholly-owned companies, collectively referred to as the "Company," operate long-term care facilities and provide a wide range of post-acute care services, with a strategic emphasis on sub-acute specialty health care. The Company operates long-term care facilities in California, Iowa, Kansas, Missouri, Nebraska, Nevada, New Mexico and Texas, including 74 skilled nursing facilities that offer sub-acute care and rehabilitative and specialty health skilled nursing care, and 22 assisted living facilities that provide room and board and social services. In addition, the Company provides physical, occupational and speech therapy in Company-operated facilities and unaffiliated facilities. Furthermore, the Company provides hospice and home health care in Arizona, California, Idaho, Montana, New Mexico and Nevada. The Company leases 5 skilled nursing facilities in California to an unaffiliated third party operator. More information about Skilled Healthcare is available at www.skilledhealthcaregroup.com.

Footnotes
(1)   Skilled mix represents the number of Medicare and non-Medicaid managed care patient days at Skilled Healthcare Group's affiliated skilled nursing facilities divided by the total number of patient days at Skilled Healthcare Group's affiliated skilled nursing facilities for any given period.
(2)   Quality mix represents non-Medicaid revenue as a percentage of total revenue.
(3)   EBITDA is net income before depreciation, amortization and interest expense (net of interest income) and the provision for income taxes. EBITDAR is EBITDA excluding facility rent expense. Adjusted earnings before interest, taxes, depreciation and amortization, or Adjusted EBITDA, reflects the non-GAAP adjustments to net income that are reflected in the Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Adjusted EBITDAR in this press release.
(4)   Adjusted net income per diluted share and adjusted net income each reflect the non-GAAP adjustments to income before provision for income taxes that are reflected in the Reconciliation of Income Before Provision for Income Taxes to Adjusted Net Income table in this press release. 

Forward-Looking Statements
This release includes "forward-looking statements." 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" or "pursue," or the negative or other variations thereof or comparable terminology. They include statements about Skilled Healthcare's expectations for 2013 full year consolidated revenue, EBITDA, EBITDAR and net income per diluted share. These forward-looking statements are based on current expectations and projections about future events, including the assumptions stated in this release.

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 Skilled Healthcare may differ materially from that expressed or implied by such forward-looking statements.

Additionally, the Company faces a number of other risks and uncertainties, including, but not limited to, the factors described in Skilled Healthcare's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission (including the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein) and in our subsequent reports on Form 10-Q and Form 8-K.

Any forward-looking statements are made only as of the date of this release. Skilled Healthcare disclaims any obligation to update the forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements.

 

Skilled Healthcare Group, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)



Three Months Ended September. 30,


Nine Months Ended September 30,


2013


2012


2013


2012

Revenue:

(Unaudited)


(Unaudited)

Net patient service revenue

$

211,658


$

215,854


$

642,677


$

651,120

Lease facility revenue

787


769


2,335


2,291


212,445


216,623


645,012


653,411







Expenses:






Cost of services (exclusive of rent cost of revenue and depreciation and amortization shown below)

184,627


182,243


561,140


545,589

Rent cost of revenue

4,950


4,639


14,590


13,734

General and administrative

6,490


6,021


19,782


18,548

Change in fair value of contingent consideration

79


85


(2,082)


715

Depreciation and amortization

6,130


6,173


18,396


18,409

Impairment of long-lived assets

19,000



19,000



221,276


199,161


630,826


596,995







Other (expenses) income:






Interest expense

(8,744)


(8,790)


(26,153)


(28,876)

Interest income

63


125


287


402

Other (expense) income, net

(49)


(57)


(111)


20

Equity in earnings of joint venture

508


461


1,469


1,422

Debt modification/retirement costs

(432)


(168)


(1,520)


(4,126)

Total other (expenses) income, net

(8,654)


(8,429)


(26,028)


(31,158)

(Loss) income before provision for income taxes

(17,485)


9,033


(11,842)


25,258

(Benefit) provision for income taxes

(5,410)


2,965


(4,360)


9,356

Net (loss) income

$

(12,075)


$

6,068


$

(7,482)


$

15,902







Net (loss) income per share, basic

$

(0.32)


$

0.16


$

(0.20)


$

0.42

Net (loss) income per share, diluted

$

(0.32)


$

0.16


$

(0.20)


$

0.42







Weighted-average common shares outstanding, basic

37,499


37,431


37,567


37,372

Weighted-average common shares outstanding, diluted

37,499


37,503


37,567


37,534

 

Skilled Healthcare Group, Inc.

Condensed Consolidated Balance Sheet and Cash Flow Data

(In thousands)






September 30, 2013


December 31, 2012


(Unaudited)


(Audited)

Balance Sheet Data:




ASSETS




Cash and cash equivalents

$

2,595


$

2,003

Accounts receivable, less allowance for doubtful accounts of $13,548 and $15,646 at September 30, 2013 and December 31, 2012, respectively

107,109


107,245

Other current assets

30,618


29,577

Property and equipment and leased facility assets, net

372,446


380,658

Goodwill

69,065


85,609

Other assets

80,079


77,544

Total assets

$

661,912


$

682,636





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities less current portion of long-term debt

$

93,043


$

90,965

Other long-term liabilities

39,515


42,873

Long-term debt

434,809


448,967

Stockholders' equity

94,545


99,831

Total liabilities and stockholders' equity

$

661,912


$

682,636




Nine Months Ended September 30,


2013


2012


(Unaudited)


(Unaudited)

Cash Flows Data:




Net cash provided by operating activities

$

36,832


$

30,936

Net cash used in investing activities

(9,977)


(12,516)

Net cash used in financing activities

(26,263)


(31,238)

Increase (decrease) in cash and cash equivalents

592


(12,818)

Cash and cash equivalents at beginning of period

2,003


16,017

Cash and cash equivalents at end of period

$

2,595


$

3,199

 

 

Skilled Healthcare Group, Inc.

Consolidated Key Performance Indicators

(Unaudited)

 

The following table summarizes our key performance indicators, along with other statistics, for each of the dates or periods indicated



Three Months Ended September 30,


Nine Months Ended September 30,


2013


2012


2013


2012

Occupancy statistics (skilled nursing facilities):








Available beds in service at end of period

8,809



8,813



8,809



8,813


Available patient days

810,242



810,303



2,405,099



2,413,572


Actual patient days

661,934



669,531



1,977,861



2,003,210


Occupancy percentage

81.7

%


82.6

%


82.2

%


83.0

%

Average daily number of patients

7,195



7,278



7,245



7,311


Hospice average daily census

1,219



1,433



1,292



1,404


Home health episodic-based admissions

1,996



2,083



6,329



6,167


Home health episodic-based recertifications

479



459



1,445



1,152


EBITDA (in thousands)

$

(2,674)



$

23,871



$

32,420



$

72,141


Adjusted EBITDA (in thousands)

$

17,713



$

24,124



$

53,283



$

76,982


Adjusted EBITDA margin

8.3

%


11.1

%


8.3

%


11.8

%

Adjusted EBITDAR (in thousands)

$

22,663



$

28,763



$

67,873



$

90,716


Adjusted EBITDAR margin

10.7

%


13.3

%


10.5

%


13.9

%









Revenue per patient day (skilled nursing facilities prior to intercompany eliminations):








LTC only Medicare (Part A)

$

515



$

510



$

518



$

510


Medicare blended rate (Part A & B)

567



574



567



572


Managed care (Part A)

398



382



389



383


Managed care blended rate (Part A & B)

406



391



398



392


Medicaid

163



160



162



158


Private and other

170



167



172



171


Weighted-average for all

$

234



$

235



$

236



$

237


Patient days by payor (skilled nursing facilities):








Medicare

75,587



85,591



239,950



267,315


Managed care

64,392



59,396



196,672



179,882


Total skilled mix days

139,979



144,987



436,622



447,197


Private pay and other

105,742



108,126



316,012



319,568


Medicaid

416,213



416,418



1,225,227



1,236,445


Total days

661,934



669,531



1,977,861



2,003,210


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








Medicare

11.4

%


12.8

%


12.1

%


13.3

%

Managed care

9.7



8.9



10.0



9.0


Skilled Mix

21.1



21.7



22.1



22.3


Private pay and other

16.0



16.1



16.0



16.0


Medicaid

62.9



62.2



61.9



61.7


Total

100.0

%


100.0

%


100.0

%


100.0

%

Revenue from (total company):








Medicare

30.2

%


32.9

%


31.3

%


33.9

%

Managed care, private pay, and other

37.5



35.9



37.5



35.8


Quality mix

67.7



68.8



68.8



69.7


Medicaid

32.3



31.2



31.2



30.3


Total

100.0

%


100.0

%


100.0

%


100.0

%

 

Skilled Healthcare Group, Inc.

Facility Ownership

(Unaudited)



As of September 30,


2013



2012

Facilities:





Skilled nursing facilities operated:





Owned

52



52


Leased

22



22


Total skilled nursing facilities operated

74



74


Total licensed beds

9,193



9,181


Skilled nursing facilities leased to unaffiliated third party operator

5



5


Assisted living facilities





Owned

21



21


Leased

1



1


Total assisted living facilities

22



22


Total licensed beds

1,212



1,228


Total facilities

101



101


Percentage owned facilities

77.2

%


77.2

%

 

Skilled Healthcare Group, Inc.

Reconciliation of Net (Loss) Income to EBITDA, EBITDAR, Adjusted EBITDA, and Adjusted EBITDAR

(In thousands)

(Unaudited)



Three Months Ended September 30,


Nine Months Ended September 30,


2013


2012


2013


2012







Net (Loss) Income

$

(12,075)


$

6,068


$

(7,482)


$

15,902

Interest expense, net of interest income

8,681


8,665


25,866


28,474

(Benefit) provision for income taxes

(5,410)


2,965


(4,360)


9,356

Depreciation and amortization expense

6,130


6,173


18,396


18,409

EBITDA

(2,674)


23,871


32,420


72,141

Rent cost of revenue

4,950


4,639


14,590


13,734

EBITDAR

2,276


28,510


47,010


85,875

EBITDA

(2,674)


23,871


32,420


72,141

Change in fair value of contingent consideration

79


85


(2,082)


715

Organization restructure costs

457



2,006


Debt modification/retirement costs

432


168


1,520


4,126

Impairment of long-lived assets

19,000



19,000


Closure of California home health agency

419



419


Adjusted EBITDA

17,713


24,124


53,283


76,982

Rent cost of revenue

4,950


4,639


14,590


13,734

Adjusted EBITDAR

$

22,663


$

28,763


$

67,873


$

90,716

 

Skilled Healthcare Group, Inc.

Reconciliation of (Loss) Income Before (Benefit) Provision for Income Taxes to Adjusted Net Income

(In thousands, except per share data)

(Unaudited)



Three Months Ended September 30,


Nine Months Ended September 30,


2013


2012


2013


2012









(Loss) income before (benefit) provision for income taxes

$

(17,485)



$

9,033



$

(11,842)



$

25,258


Debt modification/retirement costs

432



168



1,520



4,126


Legal expense for non-routine matters

722



592



2,115



592


Organization restructure costs

457





2,006




Impairment of long lived assets

19,000





19,000




Closure of California home health agency

419





419




IT outsourcing evaluation costs



374





404


Double bond interest expense for bond







1,192


Adjusted income before provision for income taxes

3,545



10,167



13,218



31,572


Adjusted provision for income taxes

2,847



3,404



5,459



11,830


California Enterprise Zone tax credit valuation allowance

(1,500)





(1,500)




Adjusted net income

$

2,198



$

6,763



$

9,259



$

19,742










Weighted-average common shares outstanding, diluted

37,849



37,503



37,998



37,534


Adjusted net income per share, diluted

$

0.06



$

0.18



$

0.24



$

0.53


Effective tax rate

38.0

%


33.5

%


30.0

%


37.5

%

 

Skilled Healthcare Group, Inc.

Reconciliation of Forecasted Net (loss) Income to Forecasted EBITDA and Forecasted EBITDAR

Year Ending December 31, 2013

(In millions)

(Unaudited)



Outlook


Low


High

Net (loss) income guidance

$

(3.5)


$

(2.2)

Debt modification costs, net of tax

0.9


0.9

Organization restructure costs, net of tax

1.2


1.2

Legal expense for non-routine matters, net of tax

1.3


1.3

Impairment of long lived assets, net of tax

11.6


11.6

Closure of California home health agency, net of tax

0.3


0.3

California Enterprise Zone credit valuation allowance

1.5


1.5

Adjusted net income guidance

13.3


14.6

Legal expense for non-routine matters

(2.1)


(2.1)

Interest expense, net of interest income

33.5


33.5

Adjusted provision for income taxes

7.3


8.0

Depreciation, amortization, and change in fair value of contingent consideration

23.0


23.0

Adjusted EBITDA guidance

75.0


77.0

Rent cost of revenue

19.5


19.5

Adjusted EBITDAR guidance

$

94.5


$

96.5

 

We believe that a report of adjusted net income per share, EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR provides consistency in our financial reporting and provides a basis for the comparison of results of core business operations between our current, past and future periods. Adjusted net income per share, EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR are primary indicators management uses for planning and forecasting in future periods, including trending and analyzing the core operating performance of our business from period-to-period without the effect of expenses, revenues and gains (losses) that are unrelated to the day-to-day performance of our consolidated and segmented business but are required to reported in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). We also use adjusted net income per share, EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR to benchmark the performance of our consolidated and segmented business against expected results, analyzing year-over-year trends as described below and to compare our operating performance to that of our competitors.

Management uses adjusted net income per share, EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR to assess the performance of our core business operations, to prepare operating budgets and to measure our performance against those budgets on a consolidated and segment level. Segment management uses these metrics to measure performance on a business unit by business unit basis. We typically use adjusted net income per share, Adjusted EBITDA and Adjusted EBITDAR for these purposes on a consolidated basis as the adjustments to adjusted net income per share, EBITDA and EBITDAR are not generally allocable to any individual business unit and we typically use EBITDA and EBITDAR to compare the operating performance of each skilled nursing and assisted living facility, as well as to assess the performance of our operating segments. EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR are useful in this regard because they do not include such costs as interest expense (net of interest income), income taxes, depreciation and amortization expense, rent cost of revenue (in the case of EBITDAR and Adjusted EBITDAR) and special charges, which may vary from business unit to business unit and period-to-period depending upon various factors, including the method used to finance the business, the amount of debt that we have determined to incur, whether a facility is owned or leased, the date of acquisition of a facility or business, the original purchase price of a facility or business unit or the tax law of the state in which a business unit operates. These types of charges are dependent on factors unrelated to the underlying business unit performance. As a result, we believe that the use of adjusted net income per share, EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR provides a meaningful and consistent comparison of our underlying business units between periods by eliminating certain items required by U.S. GAAP which have little or no significance to their day-to-day operations.

The use of adjusted net income per share, EBITDA, EBITDAR, Adjusted EBITDA, Adjusted EBITDAR and other non-GAAP financial measures has certain limitations. Our presentation of adjusted net income per share, EBITDA, EBITDAR, Adjusted EBITDA, Adjusted EBITDAR or other non-GAAP financial measures may be different from the presentation used by other companies and therefore comparability may be limited. Depreciation and amortization expense, interest expense, income taxes and other items have been and will be incurred and are not reflected in the presentation of adjusted net income per share, EBITDA, EBITDAR, Adjusted EBITDA or Adjusted EBITDAR. Each of these items should also be considered in the overall evaluation of our results. Additionally, adjusted net income per share, EBITDA, EBITDAR, Adjusted EBITDA, Adjusted EBITDAR do not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation and amortization, interest and income taxes, capital expenditures and other items both in our reconciliations to the U.S. GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance.

Adjusted net income per share, EBITDA, EBITDAR, Adjusted EBITDA, Adjusted EBITDAR and certain other non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with U.S. GAAP. Adjusted net income per share, EBITDA, EBITDAR, Adjusted EBITDA, Adjusted EBITDAR and other non-GAAP financial measures should not be considered as an alternative to net income, operating income, or any other operating performance measure prescribed by U.S. GAAP, nor should these measures be relied upon to the exclusion of U.S. GAAP financial measures. Adjusted net income per share, EBITDA, EBITDAR, Adjusted EBITDA, Adjusted EBITDAR and other non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our U.S. GAAP results and the reconciliations to the corresponding U.S. GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. You are strongly encouraged to review our financial information in its entirety and not to rely on any single financial measure.

Investor Contact:
Skilled Healthcare Group, Inc.
Chris Felfe
(949) 282-5800

SOURCE Skilled Healthcare Group, Inc.



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http://www.skilledhealthcaregroup.com

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