Earnings Release


KENNETT SQUARE, PA – 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 first quarter ended March 31, 2016.


(Unless otherwise noted, all comparisons are made to the first quarter of 2015 presented on a pro forma basis as if the Skilled Healthcare Combination occurred on January 1, 2015)

• First quarter 2016 adjusted EBITDAR was $178.4 million, reflecting $6 million of higher levels of self-insured risk and bad debt expense, compared with pro forma adjusted EBITDAR of $185.4 million in the first quarter of 2015;

• First quarter 2016 adjusted EBITDA was $53.5 million, compared with pro forma adjusted EBITDA of $66.2 million in the first quarter of 2015;

• First quarter 2016 adjusted diluted loss per share was $0.01, compared with pro forma adjusted diluted earnings per share of $0.07 in the first quarter of 2015;

• In January 2016, Genesis HealthCare ACO was selected as one of 100 new ACOs under the Medicare Shared Savings Program (MSSP);

• Completed non-strategic asset sales through May 9, 2016, which resulted in $135.6 million of debt reduction;

• Closed 10 HUD guaranteed mortgages during the first quarter, with $67.9 million of proceeds used to pay down real estate bridge loans; and

• Issues revised guidance for 2016 to reflect current skilled patient mix trends and expectations.

“Our 2015 initiatives to complete growth oriented transactions like the Revera acquisition, deliver on synergies from the Skilled Healthcare combination, expand our rehabilitation therapy business and execute cost reduction initiatives all served partially to offset persistent and greater than anticipated headwinds impacting our and the industry’s overall occupancy and skilled patient mix,” said George V. Hager, Jr., Chief Executive Officer of Genesis.

“As we confront this challenging environment in the evolving world of pay-for-value, we expect continued year-over-year pressure and reduction in skilled patient admissions and length of stay for the balance of 2016. In response, we are intensifying efforts to mitigate the impact of expected weaker demand in order to navigate these near-term changes in the business,” noted Hager.

“Genesis is currently in a transformative phase as we position our operating model to thrive in a world that will increasingly reward value-based providers. It is a future where innovative providers having the best outcomes at the lowest cost will gain a disproportionate market share of post-acute patients. Genesis is participating in multiple value-based initiatives, including our ACO’s inclusion in the Medicare Shared Savings Program, which allows us to gain share in a meaningful way. Our focus on reducing avoidable hospital readmissions, managing down lengths of stay and voluntarily participating in value-based programs are vital to long-term success. However, our success with these initiatives creates near-term pressure on skilled census. Despite this pressure, we are confident and optimistic about the long-term opportunities for Genesis to capitalize on our unique clinical capabilities, the strength of our acute care and managed care relationships, and our market density. We expect these differentiators will position Genesis to capture a disproportionate share of patients coming from acute care providers and payors as they increasingly focus on outcomes and cost,” concluded Hager.

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