Form 8-K Genesis Healthcare, Inc. For: Feb 22
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E-mailSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 22, 2016
Genesis Healthcare, Inc.
(Exact name of registrant as specified in its charter)
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Delaware |
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001-33459 |
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20-3934755 |
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(State or Other Jurisdiction of Incorporation) |
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(Commission File Number) |
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(IRS Employer Identification Number) |
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101 East State Street Kennett Square, PA |
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19348 |
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(Address of Principal Executive Offices) |
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(Zip Code) |
(610) 444-6350
(Registrant’s telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02Results of Operations and Financial Condition.
On February 22, 2016, Genesis Healthcare, Inc. (“Genesis”) issued the press release furnished herewith as Exhibit 99.1 reporting its operating results for the quarter and year ended December 31, 2015.
Certain information contained in the press release furnished as Exhibit 99.1 with this Current Report on Form 8-K refers to Non-GAAP measures and other definitions specific to Genesis’ businesses.
Definitions of key performance indicators and Non-GAAP measures used in the press release:
The following is a glossary of terms for some key performance indicators and Non-GAAP measures used in reference to Genesis:
“Actual Patient Days” is defined as the number of residents occupying a bed (or units in the case of an assisted living center) for one qualifying day in that period.
“Adjusted EBITDA” is defined as EBITDA adjusted for (1) the conversion to cash basis leases (2) newly acquired or constructed businesses with start-up losses and (3) other adjustments. See “Reasons for Non-GAAP Financial Disclosure” for an explanation of the adjustments and a description of Genesis’ uses of, and the limitations associated with non-GAAP measures.
“Adjusted EBITDAR” is defined as EBITDAR adjusted for (1) the conversion to cash basis leases (2) newly acquired or constructed businesses with start-up losses and (3) other adjustments. See “Reasons for Non-GAAP Financial Disclosure” for an explanation of the adjustments and a description of Genesis’ uses of, and the limitations associated with non-GAAP measures.
“Available Patient Days” is defined as the number of available beds (or units in the case of an assisted living center) multiplied by the number of days in that period.
“Average Daily Census” or “ADC” is the number of residents occupying a bed (or units in the case of an assisted living center) over a period of time, divided by the number of calendar days in that period;
“EBITDA” is defined as EBITDAR less lease expense. See “Reasons for Non-GAAP Financial Disclosure” for an explanation of the adjustments and a description of Genesis’ uses of, and the limitations associated with non-GAAP measures.
“EBITDA” is defined as EBITDAR less lease expense. See “Reasons for Non-GAAP Financial Disclosure” for an explanation of the adjustments and a description of our uses of, and the limitations associated with non-GAAP measures.
“EBITDAR” is defined as net income or loss before depreciation and amortization expense, interest expense, lease expense, loss (gain) on extinguishment of debt, other (income) loss, transaction costs, long-lived asset impairment, income tax expense (benefit) and loss from discontinued operations. See “Reasons for Non-GAAP Financial Disclosure” for an explanation of the adjustments and a description of Genesis’ uses of, and the limitations associated with non-GAAP measures.
“Insurance” refers collectively to commercial insurance and managed care payor sources, but does not include managed care payers serving Medicaid residents, which are included in the Medicaid category.
“Occupancy Percentage” is measured as the percentage of Actual Patient Days relative to the Available Patient Days.
“Pro Forma Adjusted EBITDA” is defined as Adjusted EBITDA further adjusted to assume on a pro forma basis that Genesis and Skilled Healthcare Group, Inc. are combined for all periods presented. See “Reasons for Non-GAAP Financial Disclosure” for an explanation of the adjustments and a description of our uses of, and the limitations associated with non-GAAP measures.
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“Pro Forma Adjusted EBITDAR” is defined as Adjusted EBITDAR further adjusted to assume on a pro forma basis that Genesis and Skilled Healthcare Group, Inc. are combined for all periods presented. See “Reasons for Non-GAAP Financial Disclosure” for an explanation of the adjustments and a description of our uses of, and the limitations associated with non-GAAP measures.
“Skilled Mix” refers collectively to Medicare and Insurance payor sources.
“Therapist Efficiency” is computed by dividing billable labor minutes related to patient care by total labor minutes for the period.
Reasons for Non-GAAP Financial Disclosure:
The press release includes references to EBITDAR, Adjusted EBITDAR, Pro Forma Adjusted EBITDAR, EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA which are non-GAAP financial measures (collectively, the Non-GAAP Financial Measures). For purposes of SEC Regulation G, a non-GAAP financial measure is a numerical measure of a registrant’s historical or future financial performance, financial position and cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable financial measure calculated and presented in accordance with GAAP in the statement of operations, balance sheet or statement of cash flows (or equivalent statements) of the registrant; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable financial measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. Pursuant to the requirements of Regulation G, Genesis has provided reconciliations of the Non-GAAP Financial Measures to the most directly comparable GAAP financial measures.
Genesis’ management believes that the presentation of these Non-GAAP Financial Measures provides useful information to investors regarding Genesis’ results of operations because these financial measures are useful for trending, analyzing and benchmarking the performance and value of its business. By excluding certain expenses and other items that may not be indicative of its core business operating results, these Non-GAAP Financial Measures:
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allow investors to evaluate its performance from management’s perspective, resulting in greater transparency with respect to supplemental information used by Genesis in its financial and operational decision making; |
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facilitate comparisons with prior periods and reflect the principal basis on which management monitors financial performance; |
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facilitate comparisons with the performance of others in the post-acute industry; |
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provide better transparency as to the relationship each reporting period between Genesis’ cash basis lease expense and the level of operating earnings available to fund its lease expense; and |
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allow investors to view Genesis’ financial performance and condition in the same manner its significant landlords and lenders require it to report financial information to them in connection with determining its compliance with financial covenants. |
Genesis uses the Non-GAAP Financial Measures primarily as performance measures and believes that the GAAP financial measure most directly comparable to them is net income (loss). Genesis uses the Non-GAAP Financial Measures as measures to assess the relative performance of its operating businesses, as well as the employees responsible for operating such businesses. The Non-GAAP Financial Measures are useful in this regard because they do not include such costs as interest expense, income taxes and depreciation and amortization expense which may vary from business unit to business unit depending upon such factors as the method used to finance the original purchase of the business unit or the tax law in the state in which a business unit operates. By excluding such factors when measuring financial performance, many of which are outside of the control of the employees responsible for operating Genesis’ business units, management is better able to evaluate the operating performance of the business unit and the employees responsible for business unit performance. Consequently, management uses these non-GAAP measures to determine the extent to which Genesis’ employees have met performance goals, and therefore may or may not be eligible for incentive compensation awards.
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Genesis also uses the Non-GAAP Financial Measures in its annual budget process. Genesis believes these non-GAAP measures facilitate internal comparisons to historical operating performance of prior periods and external comparisons to competitors’ historical operating performance. The presentation of these Non-GAAP Financial Measures is consistent with Genesis’ past practice and Genesis believes these measures further enable investors and analysts to compare current non-GAAP measures with non-GAAP measures presented in prior periods.
Although Genesis uses the Non-GAAP Financial Measures as financial measures to assess the performance of Genesis’ business, the use of these non-GAAP measures is limited because they do not consider certain material costs necessary to operate its business. These costs include Genesis’ lease expense (only in the case of EBITDAR, Adjusted EBITDAR and Pro Forma Adjusted EBITDAR), the cost to service its debt, the depreciation and amortization associated with its long-lived assets, losses (gains) on extinguishment of debt, transaction costs, long-lived asset impairment charges, federal and state income tax expenses, the operating results of its discontinued businesses and the income or loss attributed to non-controlling interests. Because the Non-GAAP Financial Measures do not consider these important elements of Genesis’ cost structure, a user of Genesis’ financial information who relies on the Non-GAAP Financial Measures as the only measures of Genesis’ performance could draw an incomplete or misleading conclusion regarding Genesis’ financial performance. Consequently, a user of Genesis’ financial information should consider net income (loss) as an important measure of its financial performance because it provides the most complete measure of Genesis’ performance.
Other companies may define the Non-GAAP Financial Measures differently and, as a result, Genesis’ non-GAAP measures may not be directly comparable to those of other companies. The Non-GAAP Financial Measures do not represent net income (loss), as defined by GAAP. The Non-GAAP Financial Measures should be considered in addition to, not a substitute for, or superior to, GAAP financial measures.
This information and the information contained in the press release shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report on Form 8-K is not incorporated by reference into any filings of the Company made under the Securities Act of 1933, as amended, whether made before or after the date of this Current Report on Form 8-K, regardless of any general incorporation language in the filing, unless specifically stated so therein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit |
Description |
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99.1 |
Earnings Release dated February 22, 2016 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: February 22, 2016 |
GENESIS HEALTHCARE, INC. |
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/s/ Michael S. Sherman |
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Michael S. Sherman |
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Senior Vice President, General Counsel, Secretary and Assistant Treasurer
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EXHIBIT INDEX
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Exhibit |
Description |
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99.1 |
Earnings Release dated February 22, 2016 |
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FOR IMMEDIATE RELEASE
Genesis HealthCare Contact:
Investor Relations
610-925-2000
GENESIS HEALTHCARE
REPORTS FOURTH QUARTER AND FISCAL YEAR END 2015 RESULTS
KENNETT SQUARE, PA – (February 22, 2016) – 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 fourth quarter and fiscal year ended December 31, 2015. Overall results are consistent with the preliminary results issued by the Company on January 25, 2016.
Highlights
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Fiscal 2015 Pro forma Adjusted EBITDA of $249.7 million grew 11.6% over the prior year and fourth quarter 2015 Pro Forma Adjusted EBITDA of $39.7 million grew 14.2% over the prior year quarter; |
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Fiscal 2015 Pro forma Adjusted EBITDAR margins of approximately 13.0% grew 60 bps over fiscal year 2014; |
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Fiscal 2015 fixed charge coverage ratio of 1.31x grew from 1.20x in fiscal year 2014; fixed charge coverage of 1.35x is anticipated at the mid-point of 2016 guidance; |
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On December 1, 2015, Genesis completed the acquisition of 19 Revera, Inc. skilled nursing facilities and Revera’s contract rehabilitation business. |
“We are pleased to report EBITDA growth in excess of 10% for the fourth consecutive quarter,” commented George V. Hager, Jr., Chief Executive Officer of Genesis. “Despite negative industry pressures, Genesis continues generating positive earnings growth, producing strong free cash flow and improving its fixed charge coverage ratio.”
Mr. Hager continued, “As we look ahead, we remain focused on the long-term drivers of our business – providing high-quality, outcome-oriented care, effectively managing our costs, leveraging our scale through strategic growth opportunities and positioning Genesis to succeed in a world that rewards value based providers.”
Fourth Quarter and Full Year 2015 Results
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Three months ended |
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Three months ended |
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Pro Forma1 |
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Pro Forma1 |
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Pro Forma1 |
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(IN THOUSANDS, EXCEPT PER SHARE DATA) |
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GAAP |
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Non-GAAP |
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GAAP |
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Non-GAAP |
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Dollars |
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Percentage |
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Net Revenues / Adjusted Net Revenues |
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$ |
1,440,721 |
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$ |
1,427,223 |
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$ |
1,193,267 |
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$ |
1,397,740 |
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29,483 |
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2.1% |
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EBITDAR / Adjusted EBITDAR |
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155,740 |
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161,031 |
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76,302 |
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153,590 |
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7,441 |
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4.8% |
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EBITDA / Adjusted EBITDA |
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118,497 |
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39,682 |
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43,033 |
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34,754 |
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4,928 |
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14.2% |
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Fully Diluted EPS / Adjusted Fully Diluted EPS |
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(2.98) |
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(0.05) |
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Not applicable as Genesis was privately held |
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Twelve months ended |
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Twelve months ended |
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Pro Forma1 |
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Pro Forma1 |
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Pro Forma1 |
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(IN THOUSANDS, EXCEPT PER SHARE DATA) |
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GAAP |
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Non-GAAP |
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GAAP |
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Non-GAAP |
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Dollars |
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Percentage |
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Net Revenues / Adjusted Net Revenues |
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$ |
5,619,224 |
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$ |
5,645,287 |
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$ |
4,768,080 |
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$ |
5,585,152 |
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$ |
60,135 |
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1.1% |
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EBITDAR / Adjusted EBITDAR |
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697,827 |
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733,150 |
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532,537 |
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692,887 |
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40,263 |
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5.8% |
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EBITDA / Adjusted EBITDA |
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547,551 |
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249,666 |
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400,639 |
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223,688 |
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25,978 |
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11.6% |
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Fully Diluted EPS / Adjusted Fully Diluted EPS |
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(4.96) |
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0.23 |
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Not applicable as Genesis was privately held |
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1 - To facilitate comparisons, pro forma results for the three and twelve months ended December 31, 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 $1,427.2 million in the fourth quarter of 2015 would have increased $29.5 million or 2.1% over the prior year quarter. Revenue growth in the fourth quarter of 2015 was positively impacted by approximately $23.0 million due to the acquisition of the 19 Revera facilities on December 1, 2015. As reported, GAAP basis revenue of $1,440.7 million in the fourth quarter of 2015 increased $247.5 million or 20.7% 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 $5,645.3 million in the full year ended December 31, 2015 would have increased $60.1 million or 1.1% over the prior year period. As was the case for the fourth quarter, revenue growth in the year ended December 31, 2015 was positively impacted by approximately $23.0 million due to the acquisition of the 19 Revera facilities on December 1, 2015. As reported, GAAP basis revenue of $5,619.2 million in the year ended December 31, 2015 increased $851.1 million or 17.9% 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 $161.0 million in the fourth quarter of 2015 would have increased $7.4 million or 4.8% over the prior year quarter. GAAP basis loss from continuing operations of $313.0 million in the fourth quarter of 2015 increased $186.1 million principally due to the establishment of a $217.3 million valuation allowance against our net deferred tax assets, as realization of such assets is no longer more likely than not.
Assuming Genesis and Skilled Healthcare were combined in all periods presented, adjusted EBITDAR of $733.2 million in the year ended December 31, 2015 would have increased $40.3 million or 5.8% over the prior year period. GAAP basis loss from continuing operations of $525.5 million in the year ended December 31, 2015 increased $284.4 million over the prior year period principally due to the establishment of the $217.3 million deferred tax valuation allowance previously noted, with the balance due to transaction costs incurred in the Skilled Healthcare combination and other transactions.
Recurring free cash flow in the year ended December 31, 2015 was approximately $58.0 million, derived from adjusted EBITDA of $249.7 million less $77.0 million of cash interest, $70.0 million of recurring capital expenditures and $45.0 million of recurring cash taxes. Recurring free cash flow in the year ended December 31, 2014 was approximately $33.0 million.
Business Development, Acquisitions and Divestitures
During the fourth quarter, Genesis completed its previously announced acquisition of 19 Revera skilled nursing facilities (15 facilities acquired and four facilities leased) and its contract rehabilitation business for approximately $158.0 million. Genesis expects to acquire the real estate of five additional facilities for approximately $40.0 million upon receipt of regulatory approvals in the state of Vermont, which are still pending. Genesis has committed financing to complete the Revera transaction. In the meantime, Genesis is managing the operations of the five Vermont facilities. The acquisition, excluding consolidation of the Vermont facilities, is expected to contribute $220.0 million and $24.0 million of year-over-year net revenue and EBITDA, respectively, in 2016.
On January 1, 2016, Genesis sold 18 Assisted Living Facilities in Kansas for $67 million and used the sale proceeds to repay $54.2 million of real estate bridge loan debt. The 18 facilities had 807 beds and aggregate revenue and EBITDA of approximately $23.0 million and $7.3 million, respectively, in 2015.
Genesis continues to look to monetize other non-strategic assets that are expected to generate $100 million to $150 million of after tax cash proceeds. Genesis intends to use non-strategic asset sale proceeds to repay indebtedness.
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Financing Activities
The Company is focused on two near term capital strengthening priorities: refinancing approximately $440.0 million of real estate bridge loans by the end of 2016 with lower cost HUD guaranteed mortgages or other permanent financing; and reducing the Company’s overall indebtedness with a combination of non-strategic asset sale proceeds and free cash flow.
“Refinancing real estate bridge loans with more attractive long-term financing will serve to extend maturities significantly and grow our fixed charge coverage,” notes Genesis Chief Financial Officer, Tom DiVittorio. “Our HUD financing activities are on track and we expect to close on the first series of loans near the end of the first quarter of 2016.”
2016 Guidance
The Company reaffirms its previously announced 2016 adjusted net revenue guidance of $5,700.0 million to $5,800.0 million, adjusted EBITDAR guidance of $765.0 million to $795.0 million, adjusted EBITDA guidance of $267.0 million to $297.0 million, and adjusted net income guidance from continuing operations on a diluted basis of $0.19 to $0.29 per share.
Recurring free cash flow in 2016 is projected to be approximately $64.0 million. Projected recurring free cash flow is derived from the mid-point of the Company’s 2016 adjusted EBITDA guidance of $282.0 million further adjusted by projected cash interest of $81.0 million, recurring capital expenditures of $85.0 million and cash taxes of $52.0 million. Cash income taxes assume tax depreciation and amortization expense of approximately $72.0 million and a tax rate of 40%, which further assumes all outstanding stock units are exchanged for common stock.
The 2016 guidance assumes 156.1 million diluted weighted average common shares outstanding and common stock equivalents on a fully-exchanged basis. The 2016 guidance is prepared on the same basis as the Company’s non-GAAP financial information and therefore assumes the conversion of leases to cash basis leases and excludes the income or loss of newly acquired or constructed businesses with start-up losses or newly divested businesses. It also excludes transaction related costs, severance and restructuring costs, regulatory defense and related costs, non-cash stock based compensation expense and non-cash impairment charges.
Conference Call
Genesis HealthCare will hold a conference call at 8:30 a.m. Eastern Time on Tuesday, February 23, 2016 to discuss financial results for the fourth quarter and fiscal year ended 2015. 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.
2016 RBC Capital Markets Global Healthcare Conference
Genesis also announced today that George V. Hager, Jr., Chief Executive Officer, and Tom DiVittorio, Chief Financial Officer, are scheduled to conduct a fireside chat at the 2016 RBC Capital Markets Global Healthcare Conference on Wednesday, February 24, 2016 at 3:35 p.m. Eastern Time.
A live webcast and replay will also be available on the Company’s website at www.genesishcc.com/investor-relations.
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.
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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, anticipated cost management, anticipated acquisitions, anticipated divestitures, anticipated refinancing opportunities and anticipated synergies. 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:
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reductions in Medicare reimbursement rates, or changes in the rules governing the Medicare program could have a material adverse effect on our revenues, financial condition and results of operations; |
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continued efforts of federal and state governments to contain growth in Medicaid expenditures could adversely affect our revenues and profitability; |
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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; |
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revenue we receive from Medicare and Medicaid is subject to potential retroactive reduction; |
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our success is dependent upon retaining key executives and personnel; |
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it can be difficult to attract and retain qualified nurses, therapists, healthcare professionals and other key personnel, which, along with a growing number of minimum wage and compensation related regulations, can increase our costs related to these employees; |
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health reform legislation could adversely affect our revenue and financial condition; |
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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; |
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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; |
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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, including our results of operations, liquidity and financial condition; |
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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; |
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insurance coverages, including professional liability coverage, may become increasingly expensive and difficult to obtain for health care companies, and our self-insurance may expose us to significant losses; |
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we may be unable to reduce costs to offset decreases in our patient census levels or other expenses completely; |
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completed and future acquisitions may use significant resources, may be unsuccessful and could expose us to unforeseen liabilities and integration risks; |
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we lease a significant number of our facilities and may experience risks relating to lease termination, lease expense escalators, lease extensions and special charges; |
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our substantial indebtedness, scheduled maturities and disruptions in the financial markets could affect our ability to obtain financing or to extend or refinance debt as it matures, which could negatively impact our results of operations, liquidity, financial condition and the market price of our common stock; |
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we are subject to numerous covenants and requirements under our various credit and leasing agreements and a breach of any such covenants or requirements could, unless timely and effectively remediated, lead to default and potential cross default under such agreements; |
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the holders of a majority of the voting power of Genesis’ common stock have entered into a voting agreement, and the voting group’s interests may conflict with the interests of other holders; |
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some of our directors are significant stockholders or representatives of significant stockholders, which may |
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present issues regarding diversion of corporate opportunities and other potential conflicts; and |
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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 Annual Report on Form 10-K for the year ended December 31, 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 its forward-looking statements or any of the information contained in this release. Investors are cautioned not to place undue reliance on these forward-looking statements.
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GENESIS HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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Three months ended |
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Twelve months ended |
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2015 |
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2014 |
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2015 |
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2014 |
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Net revenues |
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$ |
1,440,721 |
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$ |
1,193,267 |
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$ |
5,619,224 |
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$ |
4,768,080 |
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Salaries, wages and benefits |
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844,527 |
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742,030 |
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3,289,820 |
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2,904,094 |
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Other operating expenses |
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365,268 |
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311,267 |
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1,358,983 |
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1,109,699 |
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General and administrative costs |
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44,983 |
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38,876 |
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175,889 |
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147,063 |
|
|
Provision for losses on accounts receivable |
|
|
31,666 |
|
|
24,789 |
|
|
100,521 |
|
|
77,670 |
|
|
Lease expense |
|
|
37,243 |
|
|
33,269 |
|
|
150,276 |
|
|
131,898 |
|
|
Depreciation and amortization expense |
|
|
61,574 |
|
|
48,544 |
|
|
237,617 |
|
|
193,675 |
|
|
Interest expense |
|
|
131,573 |
|
|
111,953 |
|
|
507,809 |
|
|
442,724 |
|
|
Loss on extinguishment of debt |
|
|
— |
|
|
453 |
|
|
130 |
|
|
1,133 |
|
|
Investment income |
|
|
(477) |
|
|
(552) |
|
|
(1,677) |
|
|
(3,399) |
|
|
Other loss (income) |
|
|
6,121 |
|
|
499 |
|
|
(1,400) |
|
|
(138) |
|
|
Transaction costs |
|
|
4,358 |
|
|
8,070 |
|
|
96,374 |
|
|
13,353 |
|
|
Long-lived asset impairment |
|
|
28,546 |
|
|
31,399 |
|
|
28,546 |
|
|
31,399 |
|
|
Skilled Healthcare loss contingency expense |
|
|
— |
|
|
— |
|
|
31,500 |
|
|
— |
|
|
Equity in net (income) loss of unconsolidated affiliates |
|
|
(986) |
|
|
555 |
|
|
(2,139) |
|
|
416 |
|
|
Loss before income tax expense (benefit) |
|
|
(113,675) |
|
|
(157,885) |
|
|
(353,025) |
|
|
(281,507) |
|
|
Income tax expense (benefit) |
|
|
199,317 |
|
|
(34,655) |
|
|
172,524 |
|
|
(44,022) |
|
|
Loss from continuing operations |
|
|
(312,992) |
|
|
(123,230) |
|
|
(525,549) |
|
|
(237,485) |
|
|
Income (loss) from discontinued operations, net of taxes |
|
|
352 |
|
|
(8,483) |
|
|
(1,219) |
|
|
(14,044) |
|
|
Net loss |
|
|
(312,640) |
|
|
(131,713) |
|
|
(526,768) |
|
|
(251,529) |
|
|
Less net loss (income) attributable to noncontrolling interests |
|
|
47,149 |
|
|
(1,086) |
|
|
100,573 |
|
|
(2,456) |
|
|
Net loss attributable to Genesis Healthcare, Inc. |
|
$ |
(265,491) |
|
$ |
(132,799) |
|
$ |
(426,195) |
|
$ |
(253,985) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding for basic and diluted loss from continuing operations per share |
|
|
89,197 |
|
|
49,865 |
|
|
85,755 |
|
|
49,865 |
|
|
Basic and diluted net loss per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations attributable to Genesis Healthcare, Inc. |
|
$ |
(2.98) |
|
$ |
(2.49) |
|
$ |
(4.96) |
|
$ |
(4.81) |
|
|
Income (loss) from discontinued operations |
|
|
- |
|
|
(0.17) |
|
|
(0.01) |
|
|
(0.28) |
|
|
Net loss attributable to Genesis Healthcare, Inc. |
|
$ |
(2.98) |
|
$ |
(2.66) |
|
$ |
(4.97) |
|
$ |
(5.09) |
|
6
GENESIS HEALTHCARE, INC.
SELECTED BALANCE SHEET DATA
(UNAUDITED)
(IN THOUSANDS)
|
|
|
December 31, 2015 |
|
December 31, 2014 |
|
||
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
61,543 |
|
$ |
87,548 |
|
|
Total assets |
|
|
6,091,470 |
|
|
5,141,408 |
|
|
Long-term debt, including current maturities |
|
|
1,230,157 |
|
|
538,246 |
|
|
Total liabilities |
|
|
6,710,858 |
|
|
5,598,898 |
|
GENESIS HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
|
|
|
Twelve months ended |
|
||||
|
|
|
2015 |
|
2014 |
|
||
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities (1) |
|
$ |
8,618 |
|
$ |
107,652 |
|
|
Net cash used in investing activities |
|
|
(119,384) |
|
|
(95,675) |
|
|
Net cash provided by financing activities |
|
|
84,761 |
|
|
14,158 |
|
|
Net (decrease) increase in cash and equivalents |
|
|
(26,005) |
|
|
26,135 |
|
|
Beginning of period |
|
|
87,548 |
|
|
61,413 |
|
|
End of period |
|
$ |
61,543 |
|
$ |
87,548 |
|
(1) - Net cash provided by operating activities in the twelve months ended December 31, 2015 include approximately $71 million of cash payments for transaction related costs.
7
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 |
|
Conversion to |
|
Newly acquired or |
|
Other |
|
Total |
|
Three months |
|
||||||
|
|
|
|
|
|
|||||||||||||||
|
Net revenues |
|
$ |
1,440,721 |
|
$ |
— |
|
$ |
(13,498) |
|
$ |
— |
|
$ |
(13,498) |
|
$ |
1,427,223 |
|
|
Salaries, wages and benefits |
|
|
844,527 |
|
|
— |
|
|
(6,761) |
|
|
(2,734) |
|
|
(9,495) |
|
|
835,032 |
|
|
Other operating expenses |
|
|
365,268 |
|
|
— |
|
|
(6,749) |
|
|
(68) |
|
|
(6,817) |
|
|
358,451 |
|
|
General and administrative costs |
|
|
44,983 |
|
|
— |
|
|
— |
|
|
(2,074) |
|
|
(2,074) |
|
|
42,909 |
|
|
Provision for losses on accounts receivable |
|
|
31,666 |
|
|
— |
|
|
(403) |
|
|
— |
|
|
(403) |
|
|
31,263 |
|
|
Lease expense |
|
|
37,243 |
|
|
86,464 |
|
|
(2,358) |
|
|
— |
|
|
84,106 |
|
|
121,349 |
|
|
Depreciation and amortization expense |
|
|
61,574 |
|
|
(34,181) |
|
|
(1,456) |
|
|
— |
|
|
(35,637) |
|
|
25,937 |
|
|
Interest expense |
|
|
131,573 |
|
|
(105,662) |
|
|
(122) |
|
|
— |
|
|
(105,784) |
|
|
25,789 |
|
|
Other loss (income) |
|
|
6,121 |
|
|
— |
|
|
(16) |
|
|
(6,105) |
|
|
(6,121) |
|
|
— |
|
|
Investment income |
|
|
(477) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(477) |
|
|
Transaction costs |
|
|
4,358 |
|
|
— |
|
|
(6) |
|
|
(4,352) |
|
|
(4,358) |
|
|
— |
|
|
Long-lived asset impairment |
|
|
28,546 |
|
|
— |
|
|
— |
|
|
(28,546) |
|
|
(28,546) |
|
|
— |
|
|
Equity in net income of unconsolidated affiliates |
|
|
(986) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(986) |
|
|
(Loss) income before income tax expense (benefit) |
|
$ |
(113,675) |
|
$ |
53,379 |
|
$ |
4,373 |
|
$ |
43,879 |
|
$ |
101,631 |
|
$ |
(12,044) |
|
|
Income tax expense (benefit) |
|
|
199,317 |
|
|
12,390 |
|
|
1,015 |
|
|
(207,152) |
|
|
(193,747) |
|
|
5,570 |
|
|
(Loss) income from continuing operations |
|
$ |
(312,992) |
|
$ |
40,989 |
|
$ |
3,358 |
|
$ |
251,031 |
|
$ |
295,378 |
|
$ |
(17,614) |
|
|
(Income) loss from discontinued operations, net of taxes |
|
|
(352) |
|
|
201 |
|
|
— |
|
|
— |
|
|
201 |
|
|
(151) |
|
|
Net (loss) income attributable to noncontrolling interests |
|
|
(47,149) |
|
|
22,403 |
|
|
(1,007) |
|
|
16,093 |
|
|
37,489 |
|
|
(9,660) |
|
|
Net (loss) income attributable to Genesis Healthcare, Inc. |
|
$ |
(265,491) |
|
$ |
18,385 |
|
$ |
4,365 |
|
$ |
234,938 |
|
$ |
257,688 |
|
$ |
(7,803) |
|
|
Depreciation and amortization expense |
|
|
61,574 |
|
|
(34,181) |
|
|
(1,456) |
|
|
— |
|
|
(35,637) |
|
|
25,937 |
|
|
Interest expense |
|
|
131,573 |
|
|
(105,662) |
|
|
(122) |
|
|
— |
|
|
(105,784) |
|
|
25,789 |
|
|
Other loss (income) |
|
|
6,121 |
|
|
— |
|
|
(16) |
|
|
(6,105) |
|
|
(6,121) |
|
|
— |
|
|
Transaction costs |
|
|
4,358 |
|
|
— |
|
|
(6) |
|
|
(4,352) |
|
|
(4,358) |
|
|
— |
|
|
Long-lived asset impairment |
|
|
28,546 |
|
|
— |
|
|
— |
|
|
(28,546) |
|
|
(28,546) |
|
|
— |
|
|
Income tax expense (benefit) |
|
|
199,317 |
|
|
12,390 |
|
|
1,015 |
|
|
(207,152) |
|
|
(193,747) |
|
|
5,570 |
|
|
(Income) loss from discontinued operations, net of taxes |
|
|
(352) |
|
|
201 |
|
|
— |
|
|
— |
|
|
201 |
|
|
(151) |
|
|
Net (loss) income attributable to noncontrolling interests |
|
|
(47,149) |
|
|
22,403 |
|
|
(1,007) |
|
|
16,093 |
|
|
37,489 |
|
|
(9,660) |
|
|
EBITDA / Adjusted EBITDA |
|
$ |
118,497 |
|
$ |
(86,464) |
|
$ |
2,773 |
|
$ |
4,876 |
|
$ |
(78,815) |
|
$ |
39,682 |
|
|
Lease expense |
|
|
37,243 |
|
|
86,464 |
|
|
(2,358) |
|
|
— |
|
|
84,106 |
|
|
121,349 |
|
|
EBITDAR / Adjusted EBITDAR |
|
$ |
155,740 |
|
$ |
— |
|
$ |
415 |
|
$ |
4,876 |
|
$ |
5,291 |
|
$ |
161,031 |
|
|
(Loss) income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding for diluted (loss) income from continuing operations per share (d) |
|
|
89,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153,671 |
|
|
Diluted net loss from continuing operations per share (e) |
|
$ |
(2.98) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(0.05) |
|
See (a), (b), (c), (d) and (e) footnote references contained herein.
8
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 |
|
Pro forma |
|
|||||||||||
|
|
|
Three months |
|
Conversion to |
|
Newly acquired or |
|
Other |
|
Three months |
|
Skilled Healthcare |
|
Three months |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Net revenues |
|
$ |
1,193,267 |
|
$ |
— |
|
$ |
(7,815) |
|
$ |
3,093 |
|
$ |
1,188,545 |
|
$ |
209,195 |
|
$ |
1,397,740 |
|
|
Salaries, wages and benefits |
|
|
742,030 |
|
|
— |
|
|
(7,745) |
|
|
(565) |
|
|
733,720 |
|
|
133,630 |
|
|
867,350 |
|
|
Other operating expenses |
|
|
311,267 |
|
|
— |
|
|
(3,575) |
|
|
(42,238) |
|
|
265,454 |
|
|
40,510 |
|
|
305,964 |
|
|
General and administrative costs |
|
|
38,876 |
|
|
— |
|
|
— |
|
|
— |
|
|
38,876 |
|
|
4,176 |
|
|
43,052 |
|
|
Provision for losses on accounts receivable |
|
|
24,789 |
|
|
— |
|
|
— |
|
|
— |
|
|
24,789 |
|
|
3,213 |
|
|
28,002 |
|
|
Lease expense |
|
|
33,269 |
|
|
81,801 |
|
|
(1,392) |
|
|
— |
|
|
113,678 |
|
|
5,158 |
|
|
118,836 |
|
|
Depreciation and amortization expense |
|
|
48,544 |
|
|
(33,702) |
|
|
(319) |
|
|
— |
|
|
14,523 |
|
|
6,082 |
|
|
20,605 |
|
|
Interest expense |
|
|
111,953 |
|
|
(99,706) |
|
|
— |
|
|
— |
|
|
12,247 |
|
|
7,765 |
|
|
20,012 |
|
|
Loss (gain) on extinguishment of debt |
|
|
453 |
|
|
— |
|
|
— |
|
|
(453) |
|
|
— |
|
|
— |
|
|
— |
|
|
Other loss (income) |
|
|
499 |
|
|
— |
|
|
— |
|
|
(499) |
|
|
— |
|
|
(443) |
|
|
(443) |
|
|
Investment income |
|
|
(552) |
|
|
— |
|
|
— |
|
|
— |
|
|
(552) |
|
|
— |
|
|
(552) |
|
|
Transaction costs |
|
|
8,070 |
|
|
— |
|
|
— |
|
|
(8,070) |
|
|
— |
|
|
— |
|
|
— |
|
|
Long-lived asset impairment |
|
|
31,399 |
|
|
— |
|
|
— |
|
|
(31,399) |
|
|
— |
|
|
— |
|
|
— |
|
|
Equity in net loss of unconsolidated affiliates |
|
|
555 |
|
|
— |
|
|
— |
|
|
— |
|
|
555 |
|
|
(221) |
|
|
334 |
|
|
(Loss) income before income tax (benefit) expense |
|
$ |
(157,885) |
|
$ |
51,607 |
|
$ |
5,216 |
|
$ |
86,317 |
|
$ |
(14,745) |
|
$ |
9,325 |
|
$ |
(5,420) |
|
|
Income tax (benefit) expense |
|
|
(34,655) |
|
|
11,327 |
|
|
1,145 |
|
|
18,946 |
|
|
(3,237) |
|
|
2,995 |
|
|
(242) |
|
|
(Loss) income from continuing operations |
|
$ |
(123,230) |
|
$ |
40,280 |
|
$ |
4,071 |
|
$ |
67,371 |
|
$ |
(11,508) |
|
$ |
6,330 |
|
$ |
(5,178) |
|
|
Loss from discontinued operations, net of taxes |
|
|
8,483 |
|
|
544 |
|
|
— |
|
|
— |
|
|
9,027 |
|
|
— |
|
|
9,027 |
|
|
Net loss attributable to noncontrolling interests |
|
|
1,086 |
|
|
— |
|
|
— |
|
|
— |
|
|
1,086 |
|
|
— |
|
|
1,086 |
|
|
Net (loss) income attributable to Genesis Healthcare, Inc. |
|
$ |
(132,799) |
|
$ |
39,736 |
|
$ |
4,071 |
|
$ |
67,371 |
|
$ |
(21,621) |
|
$ |
6,330 |
|
$ |
(15,291) |
|
|
Depreciation and amortization expense |
|
|
48,544 |
|
|
(33,702) |
|
|
(319) |
|
|
— |
|
|
14,523 |
|
|
6,082 |
|
|
20,605 |
|
|
Interest expense |
|
|
111,953 |
|
|
(99,706) |
|
|
— |
|
|
— |
|
|
12,247 |
|
|
7,765 |
|
|
20,012 |
|
|
Loss (gain) on extinguishment of debt |
|
|
453 |
|
|
— |
|
|
— |
|
|
(453) |
|
|
— |
|
|
— |
|
|
— |
|
|
Other loss (income) |
|
|
499 |
|
|
— |
|
|
— |
|
|
(499) |
|
|
— |
|
|
(443) |
|
|
(443) |
|
|
Transaction costs |
|
|
8,070 |
|
|
— |
|
|
— |
|
|
(8,070) |
|
|
— |
|
|
— |
|
|
— |
|
|
Long-lived asset impairment |
|
|
31,399 |
|
|
— |
|
|
— |
|
|
(31,399) |
|
|
— |
|
|
— |
|
|
— |
|
|
Income tax (benefit) expense |
|
|
(34,655) |
|
|
11,327 |
|
|
1,145 |
|
|
18,946 |
|
|
(3,237) |
|
|
2,995 |
|
|
(242) |
|
|
Loss from discontinued operations, net of taxes |
|
|
8,483 |
|
|
544 |
|
|
— |
|
|
— |
|
|
9,027 |
|
|
— |
|
|
9,027 |
|
|
Net income attributable to noncontrolling interests |
|
|
1,086 |
|
|
— |
|
|
— |
|
|
— |
|
|
1,086 |
|
|
— |
|
|
1,086 |
|
|
EBITDA / Adjusted EBITDA |
|
$ |
43,033 |
|
$ |
(81,801) |
|
$ |
4,897 |
|
$ |
45,896 |
|
$ |
12,025 |
|
$ |
22,729 |
|
$ |
34,754 |
|
|
Lease expense |
|
|
33,269 |
|
|
81,801 |
|
|
(1,392) |
|
|
— |
|
|
113,678 |
|
|
5,158 |
|
|
118,836 |
|
|
EBITDAR / Adjusted EBITDAR |
|
$ |
76,302 |
|
$ |
— |
|
$ |
3,505 |
|
$ |
45,896 |
|
$ |
125,703 |
|
$ |
27,887 |
|
$ |
153,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding for diluted (loss) income from continuing operations per share (d) |
|
|
49,865 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income from continuing operations per share (e) |
|
$ |
(2.49) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not calculated |
|
See (a), (b), (c), (d) and (e) footnote references contained herein.
9
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 |
|
Pro forma |
|
|||||||||||
|
|
|
Twelve months |
|
Conversion to |
|
Newly acquired or |
|
Other |
|
Twelve months |
|
Skilled Healthcare |
|
Twelve months |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Net revenues |
|
$ |
5,619,224 |
|
$ |
— |
|
$ |
(45,613) |
|
$ |
388 |
|
$ |
5,573,999 |
|
$ |
71,288 |
|
$ |
5,645,287 |
|
|
Salaries, wages and benefits |
|
|
3,289,820 |
|
|
— |
|
|
(25,890) |
|
|
(3,211) |
|
|
3,260,719 |
|
|
43,926 |
|
|
3,304,645 |
|
|
Other operating expenses |
|
|
1,358,983 |
|
|
— |
|
|
(22,742) |
|
|
(10,602) |
|
|
1,325,639 |
|
|
17,141 |
|
|
1,342,780 |
|
|
General and administrative costs |
|
|
175,889 |
|
|
— |
|
|
— |
|
|
(9,530) |
|
|
166,359 |
|
|
1,516 |
|
|
167,875 |
|
|
Provision for losses on accounts receivable |
|
|
100,521 |
|
|
— |
|
|
(1,011) |
|
|
— |
|
|
99,510 |
|
|
1,289 |
|
|
100,799 |
|
|
Lease expense |
|
|
150,276 |
|
|
341,030 |
|
|
(9,588) |
|
|
— |
|
|
481,718 |
|
|
1,766 |
|
|
483,484 |
|
|
Depreciation and amortization expense |
|
|
237,617 |
|
|
(135,472) |
|
|
(5,919) |
|
|
— |
|
|
96,226 |
|
|
1,998 |
|
|
98,224 |
|
|
Interest expense |
|
|
507,809 |
|
|
(417,033) |
|
|
(162) |
|
|
— |
|
|
90,614 |
|
|
2,521 |
|
|
93,135 |
|
|
Loss on extinguishment of debt |
|
|
130 |
|
|
— |
|
|
— |
|
|
(130) |
|
|
— |
|
|
— |
|
|
— |
|
|
Other income (loss) |
|
|
(1,400) |
|
|
— |
|
|
(55) |
|
|
1,455 |
|
|
— |
|
|
11 |
|
|
11 |
|
|
Investment income |
|
|
(1,677) |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,677) |
|
|
— |
|
|
(1,677) |
|
|
Transaction costs |
|
|
96,374 |
|
|
— |
|
|
(69) |
|
|
(96,305) |
|
|
— |
|
|
— |
|
|
— |
|
|
Long-lived asset impairment |
|
|
28,546 |
|
|
— |
|
|
— |
|
|
(28,546) |
|
|
— |
|
|
— |
|
|
— |
|
|
Skilled Healthcare loss contingency expense |
|
|
31,500 |
|
|
— |
|
|
— |
|
|
(31,500) |
|
|
— |
|
|
— |
|
|
— |
|
|
Equity in net income of unconsolidated affiliates |
|
|
(2,139) |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,139) |
|
|
(146) |
|
|
(2,285) |
|
|
(Loss) income before income tax benefit |
|
$ |
(353,025) |
|
$ |
211,475 |
|
$ |
19,823 |
|
$ |
178,757 |
|
$ |
57,030 |
|
$ |
1,266 |
|
$ |
58,296 |
|
|
Income tax expense (benefit) |
|
|
172,524 |
|
|
49,088 |
|
|
4,601 |
|
|
(175,844) |
|
|
50,369 |
|
|
494 |
|
|
50,863 |
|
|
(Loss) income from continuing operations |
|
$ |
(525,549) |
|
$ |
162,387 |
|
$ |
15,222 |
|
$ |
354,601 |
|
$ |
6,661 |
|
$ |
772 |
|
$ |
7,433 |
|
|
Loss from discontinued operations, net of taxes |
|
|
1,219 |
|
|
1,283 |
|
|
— |
|
|
— |
|
|
2,502 |
|
|
— |
|
|
2,502 |
|
|
Net (loss) income attributable to noncontrolling interests |
|
|
(100,573) |
|
|
29,591 |
|
|
2,088 |
|
|
27,911 |
|
|
(40,983) |
|
|
531 |
|
|
(40,452) |
|
|
Net (loss) income attributable to Genesis Healthcare, Inc. |
|
$ |
(426,195) |
|
$ |
131,513 |
|
$ |
13,134 |
|
$ |
326,690 |
|
$ |
45,142 |
|
$ |
241 |
|
$ |
45,383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
|
237,617 |
|
|
(135,472) |
|
|
(5,919) |
|
|
— |
|
|
96,226 |
|
|
1,998 |
|
|
98,224 |
|
|
Interest expense |
|
|
507,809 |
|
|
(417,033) |
|
|
(162) |
|
|
— |
|
|
90,614 |
|
|
2,521 |
|
|
93,135 |
|
|
Loss on extinguishment of debt |
|
|
130 |
|
|
— |
|
|
— |
|
|
(130) |
|
|
— |
|
|
— |
|
|
— |
|
|
Other income (loss) |
|
|
(1,400) |
|
|
— |
|
|
(55) |
|
|
1,455 |
|
|
— |
|
|
11 |
|
|
11 |
|
|
Transaction costs |
|
|
96,374 |
|
|
— |
|
|
(69) |
|
|
(96,305) |
|
|
— |
|
|
— |
|
|
— |
|
|
Long-lived asset impairment |
|
|
28,546 |
|
|
— |
|
|
— |
|
|
(28,546) |
|
|
— |
|
|
— |
|
|
— |
|
|
Skilled Healthcare loss contingency expense |
|
|
31,500 |
|
|
— |
|
|
— |
|
|
(31,500) |
|
|
— |
|
|
— |
|
|
— |
|
|
Income tax expense (benefit) |
|
|
172,524 |
|
|
49,088 |
|
|
4,601 |
|
|
(175,844) |
|
|
50,369 |
|
|
494 |
|
|
50,863 |
|
|
Loss from discontinued operations, net of taxes |
|
|
1,219 |
|
|
1,283 |
|
|
— |
|
|
— |
|
|
2,502 |
|
|
— |
|
|
2,502 |
|
|
Net (loss) income attributable to noncontrolling interests |
|
|
(100,573) |
|
|
29,591 |
|
|
2,088 |
|
|
27,911 |
|
|
(40,983) |
|
|
531 |
|
|
(40,452) |
|
|
EBITDA / Adjusted EBITDA |
|
$ |
547,551 |
|
$ |
(341,030) |
|
$ |
13,618 |
|
$ |
23,731 |
|
$ |
243,870 |
|
$ |
5,796 |
|
$ |
249,666 |
|
|
Lease expense |
|
|
150,276 |
|
|
341,030 |
|
|
(9,588) |
|
|
— |
|
|
481,718 |
|
|
1,766 |
|
|
483,484 |
|
|
EBITDAR / Adjusted EBITDAR |
|
$ |
697,827 |
|
$ |
— |
|
$ |
4,030 |
|
$ |
23,731 |
|
$ |
725,588 |
|
$ |
7,562 |
|
$ |
733,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding for diluted (loss) income from continuing operations per share (d) |
|
|
85,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153,671 |
|
|
Diluted net (loss) income from continuing operations per share (e) |
|
$ |
(4.96) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.23 |
|
See (a), (b), (c), (d) and (e) footnote references contained herein.
10
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 |
|
Pro forma |
|
|||||||||||
|
|
|
Twelve months |
|
Conversion to |
|
Newly acquired or |
|
Other |
|
Twelve months |
|
Skilled Healthcare |
|
Twelve months |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Net revenues |
|
$ |
4,768,080 |
|
$ |
— |
|
$ |
(18,526) |
|
$ |
4,260 |
|
$ |
4,753,814 |
|
$ |
831,338 |
|
$ |
5,585,152 |
|
|
Salaries, wages and benefits |
|
|
2,904,094 |
|
|
— |
|
|
(16,233) |
|
|
(2,579) |
|
|
2,885,282 |
|
|
522,357 |
|
|
3,407,639 |
|
|
Other operating expenses |
|
|
1,109,699 |
|
|
— |
|
|
(8,372) |
|
|
(44,361) |
|
|
1,056,966 |
|
|
165,644 |
|
|
1,222,610 |
|
|
General and administrative costs |
|
|
147,063 |
|
|
— |
|
|
— |
|
|
— |
|
|
147,063 |
|
|
28,265 |
|
|
175,328 |
|
|
Provision for losses on accounts receivable |
|
|
77,670 |
|
|
— |
|
|
— |
|
|
— |
|
|
77,670 |
|
|
13,428 |
|
|
91,098 |
|
|
Lease expense |
|
|
131,898 |
|
|
320,306 |
|
|
(3,005) |
|
|
— |
|
|
449,199 |
|
|
20,000 |
|
|
469,199 |
|
|
Depreciation and amortization expense |
|
|
193,675 |
|
|
(132,326) |
|
|
(434) |
|
|
— |
|
|
60,915 |
|
|
24,322 |
|
|
85,237 |
|
|
Interest expense |
|
|
442,724 |
|
|
(391,962) |
|
|
— |
|
|
— |
|
|
50,762 |
|
|
31,240 |
|
|
82,002 |
|
|
Loss (gain) on extinguishment of debt |
|
|
1,133 |
|
|
— |
|
|
— |
|
|
(1,133) |
|
|
— |
|
|
— |
|
|
— |
|
|
Other (income) loss |
|
|
(138) |
|
|
— |
|
|
— |
|
|
138 |
|
|
— |
|
|
(579) |
|
|
(579) |
|
|
Investment income |
|
|
(3,399) |
|
|
— |
|
|
— |
|
|
— |
|
|
(3,399) |
|
|
— |
|
|
(3,399) |
|
|
Transaction costs |
|
|
13,353 |
|
|
— |
|
|
— |
|
|
(13,353) |
|
|
— |
|
|
— |
|
|
— |
|
|
Long-lived asset impairment |
|
|
31,399 |
|
|
— |
|
|
— |
|
|
(31,399) |
|
|
— |
|
|
— |
|
|
— |
|
|
Equity in net income of unconsolidated affiliates |
|
|
416 |
|
|
— |
|
|
— |
|
|
— |
|
|
416 |
|
|
(1,427) |
|
|
(1,011) |
|
|
(Loss) income before income tax (benefit) expense |
|
$ |
(281,507) |
|
$ |
203,982 |
|
$ |
9,518 |
|
$ |
96,947 |
|
$ |
28,940 |
|
$ |
28,088 |
|
$ |
57,028 |
|
|
Income tax (benefit) expense |
|
|
(44,022) |
|
|
31,899 |
|
|
1,488 |
|
|
15,161 |
|
|
4,526 |
|
|
10,548 |
|
|
15,074 |
|
|
(Loss) income from continuing operations |
|
$ |
(237,485) |
|
$ |
172,083 |
|
$ |
8,030 |
|
$ |
81,786 |
|
$ |
24,414 |
|
$ |
17,540 |
|
$ |
41,954 |
|
|
Loss (income) from discontinued operations, net of taxes |
|
|
14,044 |
|
|
(2,041) |
|
|
— |
|
|
— |
|
|
12,003 |
|
|
— |
|
|
12,003 |
|
|
Net loss attributable to noncontrolling interests |
|
|
2,456 |
|
|
— |
|
|
— |
|
|
— |
|
|
2,456 |
|
|
— |
|
|
2,456 |
|
|
Net (loss) income attributable to Genesis Healthcare, Inc. |
|
$ |
(253,985) |
|
$ |
174,124 |
|
$ |
8,030 |
|
$ |
81,786 |
|
$ |
9,955 |
|
$ |
17,540 |
|
$ |
27,495 |
|
|
Depreciation and amortization expense |
|
|
193,675 |
|
|
(132,326) |
|
|
(434) |
|
|
— |
|
|
60,915 |
|
|
24,322 |
|
|
85,237 |
|
|
Interest expense |
|
|
442,724 |
|
|
(391,962) |
|
|
— |
|
|
— |
|
|
50,762 |
|
|
31,240 |
|
|
82,002 |
|
|
Loss (gain) on extinguishment of debt |
|
|
1,133 |
|
|
— |
|
|
— |
|
|
(1,133) |
|
|
— |
|
|
— |
|
|
— |
|
|
Other (income) loss |
|
|
(138) |
|
|
— |
|
|
— |
|
|
138 |
|
|
— |
|
|
(579) |
|
|
(579) |
|
|
Transaction costs |
|
|
13,353 |
|
|
— |
|
|
— |
|
|
(13,353) |
|
|
— |
|
|
— |
|
|
— |
|
|
Long-lived asset impairment |
|
|
31,399 |
|
|
— |
|
|
— |
|
|
(31,399) |
|
|
— |
|
|
— |
|
|
— |
|
|
Income tax (benefit) expense |
|
|
(44,022) |
|
|
31,899 |
|
|
1,488 |
|
|
15,161 |
|
|
4,526 |
|
|
10,548 |
|
|
15,074 |
|
|
Loss (income) from discontinued operations, net of taxes |
|
|
14,044 |
|
|
(2,041) |
|
|
— |
|
|
— |
|
|
12,003 |
|
|
— |
|
|
12,003 |
|
|
Net income attributable to noncontrolling interests |
|
|
2,456 |
|
|
— |
|
|
— |
|
|
— |
|
|
2,456 |
|
|
— |
|
|
2,456 |
|
|
EBITDA / Adjusted EBITDA |
|
$ |
400,639 |
|
$ |
(320,306) |
|
$ |
9,084 |
|
$ |
51,200 |
|
$ |
140,617 |
|
$ |
83,071 |
|
$ |
223,688 |
|
|
Lease expense |
|
|
131,898 |
|
|
320,306 |
|
|
(3,005) |
|
|
— |
|
|
449,199 |
|
|
20,000 |
|
|
469,199 |
|
|
EBITDAR / Adjusted EBITDAR |
|
$ |
532,537 |
|
$ |
— |
|
$ |
6,079 |
|
$ |
51,200 |
|
$ |
589,816 |
|
$ |
103,071 |
|
$ |
692,887 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
|
$ |
(4.81) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not calculated |
|
See (a), (b), (c), (d) and (e) footnote references contained herein.
11
|
(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 December 31, |
|
Twelve months ended December 31, |
|
||||||||
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
||||
|
|
|
|
(in thousands) |
|
|||||||||
|
Lease expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash rent - capital leases |
|
$ |
22,989 |
|
$ |
22,602 |
|
$ |
91,899 |
|
$ |
89,683 |
|
|
Cash rent - financing obligations |
|
|
65,550 |
|
|
61,911 |
|
|
257,121 |
|
|
242,918 |
|
|
Non-cash - operating lease arrangements |
|
|
(2,075) |
|
|
(2,712) |
|
|
(7,990) |
|
|
(12,295) |
|
|
Lease expense adjustments |
|
$ |
86,464 |
|
$ |
81,801 |
|
$ |
341,030 |
|
$ |
320,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital lease accounting |
|
$ |
(8,974) |
|
$ |
(8,257) |
|
$ |
(35,544) |
|
$ |
(35,385) |
|
|
Financing obligation accounting |
|
|
(25,207) |
|
|
(25,445) |
|
|
(99,928) |
|
|
(96,941) |
|
|
Depreciation and amortization expense adjustments |
|
$ |
(34,181) |
|
$ |
(33,702) |
|
$ |
(135,472) |
|
$ |
(132,326) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital lease accounting |
|
$ |
(26,514) |
|
$ |
(26,350) |
|
$ |
(104,660) |
|
$ |
(100,846) |
|
|
Financing obligation accounting |
|
|
(79,148) |
|
|
(73,356) |
|
|
(312,373) |
|
|
(291,116) |
|
|
Interest expense adjustments |
|
$ |
(105,662) |
|
$ |
(99,706) |
|
$ |
(417,033) |
|
$ |
(391,962) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pre-tax lease accounting adjustments |
|
$ |
(53,379) |
|
$ |
(51,607) |
|
$ |
(211,475) |
|
$ |
(203,982) |
|
|
(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. |
12
|
|
|
Three months ended December 31, |
|
Twelve months ended December 31, |
|
||||||||
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
||||
|
|
|
|
(in thousands) |
|
|||||||||
|
Severance and restructuring (1) |
|
$ |
364 |
|
$ |
6,762 |
|
$ |
3,485 |
|
$ |
8,975 |
|
|
Regulatory defense and related costs (2) |
|
|
2,237 |
|
|
3,124 |
|
|
4,992 |
|
|
5,085 |
|
|
New business development costs (3) |
|
|
— |
|
|
511 |
|
|
— |
|
|
1,641 |
|
|
Self-insurance adjustment (4) |
|
|
— |
|
|
35,499 |
|
|
10,500 |
|
|
35,499 |
|
|
Transaction costs (5) |
|
|
4,352 |
|
|
8,070 |
|
|
96,305 |
|
|
13,353 |
|
|
Long-lived asset impairment (9) |
|
|
28,546 |
|
|
31,399 |
|
|
28,546 |
|
|
31,399 |
|
|
Skilled Healthcare loss contingency expense (8) |
|
|
— |
|
|
— |
|
|
31,500 |
|
|
— |
|
|
Loss on early extinguishment of debt |
|
|
— |
|
|
453 |
|
|
130 |
|
|
1,133 |
|
|
Other loss (income) (6) |
|
|
6,105 |
|
|
499 |
|
|
(1,455) |
|
|
(138) |
|
|
Stock based compensation (7) |
|
|
2,275 |
|
|
— |
|
|
4,754 |
|
|
— |
|
|
Tax benefit from total adjustments |
|
|
(10,185) |
|
|
(18,946) |
|
|
(41,493) |
|
|
(15,161) |
|
|
Deferred tax valuation allowance adjustment (10) |
|
|
217,337 |
|
|
— |
|
|
217,337 |
|
|
— |
|
|
Total other adjustments |
|
$ |
251,031 |
|
$ |
67,371 |
|
$ |
354,601 |
|
$ |
81,786 |
|
|
(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) |
In the twelve months ended December 31, 2015, we incurred a self-insured program adjustment of $10.5 million for the actuarially developed GLPL and worker's compensation claims related to policy periods 2014 and prior. In the three and twelve months ended December 31, 2014 we incurred a self-insured program adjustment of $35.5 million for the actuarial developed GLPL and workers' compensation claims related to prior policy years specifically related to the Sun Healthcare business acquired in December 2012. |
|
(5) |
We incurred costs associated with transactions including the combination with Skilled Healthcare Group, Inc. and other transactions. |
|
(6) |
We realized net gains and losses on the sale of certain assets in the years ended December 31, 2015 and 2014. |
|
(7) |
We incurred 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. |
|
(9) |
We incurred non-cash charges in connection with long-lived asset impairment testing. |
(10) We established a valuation allowance against our net deferred tax assets, as realization of such assets is no longer more likely than not.
|
(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. |
13
SKILLED HEALTHCARE GROUP, INC.
RECONCILIATION OF NET (LOSS) INCOME TO EBITDA, EBITDAR, ADJUSTED EBITDA AND ADJUSTED EBITDAR
(UNAUDITED)
(IN THOUSANDS)
|
|
|
GAAP as |
|
|
|
Non-GAAP as |
|
GAAP as |
|
|
|
|
Non-GAAP as |
|
GAAP as |
|
|
|
|
Non-GAAP as |
|
|||||||
|
|
|
One month |
|
Adjust |
|
One month |
|
Three months |
|
Adjust |
|
Three months |
|
Twelve months |
|
Adjust |
|
Twelve months |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
|
$ |
71,288 |
|
$ |
— |
|
$ |
71,288 |
|
$ |
210,359 |
|
$ |
(1,164) |
|
$ |
209,195 |
|
$ |
833,256 |
|
$ |
(1,918) |
|
$ |
831,338 |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
Salaries, wages and benefits |
|
|
44,842 |
|
|
(916) |
|
|
43,926 |
|
|
134,121 |
|
|
(491) |
|
|
133,630 |
|
|
523,565 |
|
|
(1,208) |
|
|
522,357 |
|
|
Other operating expenses |
|
|
17,486 |
|
|
(345) |
|
|
17,141 |
|
|
42,005 |
|
|
(1,495) |
|
|
40,510 |
|
|
183,801 |
|
|
(18,157) |
|
|
165,644 |
|
|
General and administrative costs |
|
|
1,516 |
|
|
— |
|
|
1,516 |
|
|
13,838 |
|
|
(9,662) |
|
|
4,176 |
|
|
39,989 |
|
|
(11,724) |
|
|
28,265 |
|
|
Provision for losses on accounts receivable |
|
|
1,289 |
|
|
— |
|
|
1,289 |
|
|
3,213 |
|
|
— |
|
|
3,213 |
|
|
13,575 |
|
|
(147) |
|
|
13,428 |
|
|
Lease expense |
|
|
1,766 |
|
|
— |
|
|
1,766 |
|
|
5,158 |
|
|
— |
|
|
5,158 |
|
|
20,000 |
|
|
— |
|
|
20,000 |
|
|
Depreciation and amortization expense |
|
|
1,998 |
|
|
— |
|
|
1,998 |
|
|
6,082 |
|
|
— |
|
|
6,082 |
|
|
24,322 |
|
|
— |
|
|
24,322 |
|
|
Interest expense |
|
|
2,521 |
|
|
— |
|
|
2,521 |
|
|
7,765 |
|
|
— |
|
|
7,765 |
|
|
31,240 |
|
|
— |
|
|
31,240 |
|
|
Loss on extinguishment of debt |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
843 |
|
|
(843) |
|
|
— |
|
|
Impairment of long-lived assets |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
82 |
|
|
(82) |
|
|
— |
|
|
Other (income) loss |
|
|
11 |
|
|
— |
|
|
11 |
|
|
(443) |
|
|
|
|
|
(443) |
|
|
(579) |
|
|
— |
|
|
(579) |
|
|
Transaction costs |
|
|
4,638 |
|
|
(4,638) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Equity in net income of unconsolidated affiliates |
|
|
(146) |
|
|
— |
|
|
(146) |
|
|
(221) |
|
|
— |
|
|
(221) |
|
|
(1,427) |
|
|
— |
|
|
(1,427) |
|
|
Income tax (benefit) expense |
|
|
(1,807) |
|
|
2,301 |
|
|
494 |
|
|
(1,094) |
|
|
4,089 |
|
|
2,995 |
|
- |
(1,247) |
|
|
11,795 |
|
|
10,548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
|
(2,826) |
|
|
3,598 |
|
|
772 |
|
|
(65) |
|
|
6,395 |
|
|
6,330 |
|
|
(908) |
|
|
18,448 |
|
|
17,540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
|
1,998 |
|
|
— |
|
|
1,998 |
|
|
6,082 |
|
|
— |
|
|
6,082 |
|
|
24,322 |
|
|
— |
|
|
24,322 |
|
|
Interest expense |
|
|
2,521 |
|
|
— |
|
|
2,521 |
|
|
7,765 |
|
|
— |
|
|
7,765 |
|
|
31,240 |
|
|
— |
|
|
31,240 |
|
|
Loss on extinguishment of debt |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
843 |
|
|
(843) |
|
|
— |
|
|
Transaction costs |
|
|
4,638 |
|
|
(4,638) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Impairment of long-lived assets |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
82 |
|
|
(82) |
|
|
— |
|
|
Other (income) loss |
|
|
11 |
|
|
— |
|
|
11 |
|
|
(443) |
|
|
— |
|
|
(443) |
|
|
(579) |
|
|
— |
|
|
(579) |
|
|
Income tax (benefit) expense |
|
|
(1,807) |
|
|
2,301 |
|
|
494 |
|
|
(1,094) |
|
|
4,089 |
|
|
2,995 |
|
|
(1,247) |
|
|
11,795 |
|
|
10,548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA / Adjusted EBITDA |
|
|
4,535 |
|
|
1,261 |
|
|
5,796 |
|
|
12,245 |
|
|
10,484 |
|
|
22,729 |
|
|
53,753 |
|
|
29,318 |
|
|
83,071 |
|
|
Lease expense |
|
|
1,766 |
|
|
— |
|
|
1,766 |
|
|
5,158 |
|
|
— |
|
|
5,158 |
|
|
20,000 |
|
|
— |
|
|
20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAR / Adjusted EBITDAR |
|
$ |
6,301 |
|
$ |
1,261 |
|
$ |
7,562 |
|
$ |
17,403 |
|
$ |
10,484 |
|
$ |
27,887 |
|
$ |
73,753 |
|
$ |
29,318 |
|
$ |
103,071 |
|
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 |
|
|
Three months |
|
|
Twelve months |
|
|
Severance and restructuring |
|
$ |
1,220 |
|
$ |
162 |
|
$ |
1,592 |
|
|
Regulatory defense and related costs |
|
|
41 |
|
|
— |
|
|
— |
|
|
Exist costs of divested facilities |
|
|
— |
|
|
— |
|
|
397 |
|
|
Professional fees related to non-routine matters |
|
|
— |
|
|
8,086 |
|
|
21,982 |
|
|
Losses at skilled nursing facility not at full operation |
|
|
— |
|
|
442 |
|
|
1,025 |
|
|
Loss on disposal of asset |
|
|
— |
|
|
— |
|
|
68 |
|
|
Loss on extinguishment of debt |
|
|
— |
|
|
— |
|
|
843 |
|
|
Non-cash stock compensation |
|
|
371 |
|
|
1,794 |
|
|
4,254 |
|
|
Impairment of long-lived assets |
|
|
— |
|
|
— |
|
|
82 |
|
|
Transaction costs |
|
|
4,267 |
|
|
— |
|
|
— |
|
|
Tax benefit of total adjustments |
|
|
(2,301) |
|
|
(4,089) |
|
|
(11,795) |
|
|
Total adjustments |
|
$ |
3,598 |
|
$ |
6,395 |
|
$ |
18,448 |
|
14
GENESIS HEALTHCARE, INC.
KEY FINANCIAL PERFORMANCE INDICATORS
(UNAUDITED)
|
|
|
Three months ended December 31, |
|
Twelve months ended December 31, |
|
||||||||
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
||||
|
|
|
|
(In thousands) |
|
|
(In thousands) |
|
||||||
|
Financial Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
|
$ |
1,440,721 |
|
$ |
1,193,267 |
|
$ |
5,619,224 |
|
$ |
4,768,080 |
|
|
EBITDAR |
|
|
155,740 |
|
|
76,302 |
|
|
697,827 |
|
|
532,537 |
|
|
EBITDA |
|
|
118,497 |
|
|
43,033 |
|
|
547,551 |
|
|
400,639 |
|
|
Adjusted EBITDAR |
|
|
161,031 |
|
|
125,703 |
|
|
725,588 |
|
|
589,816 |
|
|
Adjusted EBITDA |
|
|
39,682 |
|
|
12,025 |
|
|
243,870 |
|
|
140,617 |
|
|
Pro forma adjusted EBITDAR |
|
|
161,031 |
|
|
153,590 |
|
|
733,150 |
|
|
692,887 |
|
|
Pro forma adjusted EBITDA |
|
|
39,682 |
|
|
34,754 |
|
|
249,666 |
|
|
223,688 |
|
|
INPATIENT SEGMENT: |
|
Three months ended December 31, |
|
Twelve months ended December 31, |
|
||||||||
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
||||
|
|
|
|
|
|
|
|
|
||||||
|
Occupancy Statistics - Inpatient |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available licensed beds in service at end of period |
|
|
58,841 |
|
|
46,407 |
|
|
58,841 |
|
|
46,407 |
|
|
Available operating beds in service at end of period |
|
|
57,325 |
|
|
45,058 |
|
|
57,325 |
|
|
45,058 |
|
|
Available patient days based on licensed beds |
|
|
5,121,285 |
|
|
4,256,802 |
|
|
20,216,691 |
|
|
16,967,951 |
|
|
Available patient days based on operating beds |
|
|
5,010,717 |
|
|
4,134,842 |
|
|
19,663,712 |
|
|
16,463,613 |
|
|
Actual patient days |
|
|
4,310,058 |
|
|
3,665,213 |
|
|
17,061,645 |
|
|
14,679,338 |
|
|
Occupancy percentage - licensed beds |
|
|
84.2 |
% |
|
86.1 |
% |
|
84.4 |
% |
|
86.5 |
% |
|
Occupancy percentage - operating beds |
|
|
86.0 |
% |
|
88.6 |
% |
|
86.8 |
% |
|
89.2 |
% |
|
Skilled mix |
|
|
20.3 |
% |
|
21.4 |
% |
|
21.4 |
% |
|
21.7 |
% |
|
Average daily census |
|
|
46,848 |
|
|
39,839 |
|
|
46,744 |
|
|
40,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per patient day (skilled nursing facilities) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medicare Part A |
|
$ |
510 |
|
$ |
495 |
|
$ |
504 |
|
$ |
492 |
|
|
Medicare total (including Part B) |
|
|
553 |
|
|
532 |
|
|
543 |
|
|
530 |
|
|
Insurance |
|
|
447 |
|
|
450 |
|
|
448 |
|
|
450 |
|
|
Private and other |
|
|
295 |
|
|
312 |
|
|
295 |
|
|
316 |
|
|
Medicaid |
|
|
217 |
|
|
215 |
|
|
216 |
|
|
213 |
|
|
Medicaid (net of provider taxes) |
|
|
196 |
|
|
194 |
|
|
195 |
|
|
193 |
|
|
Weighted average (net of provider taxes) |
|
$ |
268 |
|
$ |
269 |
|
$ |
270 |
|
$ |
270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patient days by payor (skilled nursing facilities) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medicare |
|
|
522,488 |
|
|
501,239 |
|
|
2,214,184 |
|
|
2,076,272 |
|
|
Insurance |
|
|
289,540 |
|
|
230,073 |
|
|
1,172,776 |
|
|
900,663 |
|
|
Total skilled mix days |
|
|
812,028 |
|
|
731,312 |
|
|
3,386,960 |
|
|
2,976,935 |
|
|
Private and other |
|
|
297,293 |
|
|
243,004 |
|
|
1,160,070 |
|
|
971,500 |
|
|
Medicaid |
|
|
2,880,344 |
|
|
2,444,435 |
|
|
11,272,487 |
|
|
9,759,092 |
|
|
Total Days |
|
|
3,989,665 |
|
|
3,418,751 |
|
|
15,819,517 |
|
|
13,707,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patient days as a percentage of total patient days (skilled nursing facilities) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medicare |
|
|
13.1 |
% |
|
14.7 |
% |
|
14.0 |
% |
|
15.1 |
% |
|
Insurance |
|
|
7.2 |
% |
|
6.7 |
% |
|
7.4 |
% |
|
6.6 |
% |
|
Skilled mix |
|
|
20.3 |
% |
|
21.4 |
% |
|
21.4 |
% |
|
21.7 |
% |
|
Private and other |
|
|
7.5 |
% |
|
7.1 |
% |
|
7.3 |
% |
|
7.1 |
% |
|
Medicaid |
|
|
72.2 |
% |
|
71.5 |
% |
|
71.3 |
% |
|
71.2 |
% |
|
Total |
|
|
100.0 |
% |
|
100.00 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facilities at end of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Skilled nursing facilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leased |
|
|
381 |
|
|
359 |
|
|
381 |
|
|
359 |
|
|
Owned |
|
|
49 |
|
|
2 |
|
|
49 |
|
|
2 |
|
|
Joint Venture |
|
|
5 |
|
|
5 |
|
|
5 |
|
|
5 |
|
|
Managed * |
|
|
40 |
|
|
14 |
|
|
40 |
|
|
14 |
|
|
Total skilled nursing facilities |
|
|
475 |
|
|
380 |
|
|
475 |
|
|
380 |
|
|
Total licensed beds |
|
|
58,046 |
|
|
46,204 |
|
|
58,046 |
|
|
46,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
3,985 |
|
|
2,762 |
|
|
3,985 |
|
|
2,762 |
|
|
Total facilities |
|
|
531 |
|
|
414 |
|
|
531 |
|
|
414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Jointly Owned and Managed– (Unconsolidated) |
|
|
22 |
|
|
17 |
|
|
22 |
|
|
17 |
|
15
|
REHABILITATION THERAPY SEGMENT: |
|
Three months ended December 31, |
|
Twelve months ended December 31, |
|
||||||||
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
||||
|
Revenue mix %: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated |
|
|
37 |
% |
|
38 |
% |
|
38 |
% |
|
37 |
% |
|
Non-affiliated |
|
|
63 |
% |
|
62 |
% |
|
62 |
% |
|
63 |
% |
|
Sites of service (at end of period) |
|
|
1,670 |
|
|
1,358 |
|
|
1,670 |
|
|
1,358 |
|
|
Revenue per site |
|
$ |
165,622 |
|
$ |
163,218 |
|
$ |
672,296 |
|
$ |
687,782 |
|
|
Therapist efficiency % |
|
|
68 |
% |
|
65 |
% |
|
69 |
% |
|
68 |
% |
*In 2015, includes 20 facilities located in Texas for which the real estate is owned by Genesis.
16
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