Genesis Healthcare (GENN) 8-K Reports Second Quarter 2015 Results

Exhibit 99.1

FOR IMMEDIATE RELEASE

Genesis HealthCare Contact:

Investor Relations

610-925-2000

GENESIS HEALTHCARE

REPORTS SECOND QUARTER 2015 RESULTS

·Strong Second Quarter Performance With Pro Forma(1) Adjusted:

·EBITDAR of $198.0 Million

·EBITDA of $76.6 Million

·Diluted EPS of $0.14

·Solid Pro Forma(1) EBITDAR and EBITDA Growth of 5.8% and 10.0%, Respectively

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

Highlights

·Previously announced expense reductions yield $9.0 million of savings in the quarter and $15.5 million of savings through the first six months of 2015; on track to realize $30 to $40 million in 2015;

·Skilled Healthcare integration continues as planned; approximately $3.0 million of transaction synergies realized in the second quarter and $4.0 million through the first six months of 2015; on track to realize $13 million in 2015;

·Controllable routine costs were well managed across all business lines; therapist efficiency of 70% improves 60bp over the prior year second quarter;

·On July 1st, Genesis closed on 91 previously announced new therapy contract starts and a 22- outpatient rehab site acquisition;

·During the quarter, Genesis announced the planned acquisition of Revera Inc.’s 24 skilled nursing facilities and contract rehabilitation business for $240 million; the deal is on track to close by year end, subject to additional due diligence, regulatory and licensing approvals, and other customary conditions;

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

Second Quarter 2015 Results

(Unaudited)

	Three months ended June 30, 2015					Three months ended June 30, 2014				Pro Forma(1) Non-GAAP Growth
				Pro Forma(1)				Pro Forma(1)
(IN THOUSANDS, EXCEPT PER SHARE DATA)	GAAP			Non-GAAP		GAAP		Non-GAAP		Dollars		Percentage
Net Revenues / Adjusted Net Revenues	$	1,419,475		$	1,410,261	$	1,200,651	$	1,403,225	$	7,036	0.5	%
EBITDAR / Adjusted EBITDAR	184,008			197,974		161,599		187,100		10,874		5.8	%
EBITDA / Adjusted EBITDA	145,049			76,557		128,690		69,602		6,955		10.0	%
Fully Diluted EPS / Adjusted Fully Diluted EPS	(0.20		)	0.14		Not applicable as Genesis was privately held

	Six months ended June 30, 2015					Six months ended June 30, 2014				Pro Forma(1) Non-GAAP Growth
				Pro Forma(1)				Pro Forma(1)
(IN THOUSANDS, EXCEPT PER SHARE DATA)	GAAP			Non-GAAP		GAAP		Non-GAAP		Dollars		Percentage
Net Revenues / Adjusted Net Revenues	$	2,762,476		$	2,812,787	$	2,387,195	$	2,795,486	$	17,301	0.6	%
EBITDAR / Adjusted EBITDAR	359,355			383,339		309,854		361,749		21,590		6.0	%
EBITDA / Adjusted EBITDA	283,977			142,778		244,146		129,550		13,228		10.2	%
Fully Diluted EPS / Adjusted Fully Diluted EPS	(1.58		)	0.21		Not applicable as Genesis was privately held

(1) To facilitate comparisons, pro forma results for the three and six months ended June 30, 2015 and 2014 were prepared on a basis assuming the combination of Skilled Healthcare and Genesis HealthCare occurred at the beginning of the respective period presented rather than as of February 2, 2015, which is the actual date of the combination. See reconcilition of pro forma results to GAAP results in the tables in this release.

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

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

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

Assuming Genesis and Skilled Healthcare were combined in all periods presented, adjusted EBITDAR of $383.3 million in the six months ended June 30, 2015 would have increased $21.6 million or 6.0% over the prior year period. Adjusted EBITDAR growth in the six months ended June 30, 2015 was driven by $15.5 million of planned cost reductions and approximately $4.0 million of Skilled Healthcare transaction synergies. GAAP basis loss from continuing operations of $151.6 million in the six months

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ended June 30, 2015 increased $79.9 million over the prior year period principally due to $88.7 million of transaction costs incurred in the Skilled combination and other transactions, offset by the incremental earnings generated by the combined business.

Business Development, Acquisitions and Divestitures

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

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

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

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

2015 Guidance

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

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

Conference Call

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

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About Genesis HealthCare

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

Forward-Looking Statements

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

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

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

·reductions in Medicare reimbursement rates, or changes in the rules governing the Medicare program could have a material adverse effect on our revenue, financial condition and results of operations;

·continued efforts of federal and state governments to contain growth in Medicaid expenditures could adversely affect our revenue and profitability;

·recent federal government proposals could limit the states’ use of provider tax programs to generate revenue for their Medicaid expenditures, which could result in a reduction in our reimbursement rates under Medicaid;

·revenue we receive from Medicare and Medicaid is subject to potential retroactive reduction;

·our success is dependent upon retaining key executive and personnel;

·health reform legislation could adversely affect our revenue and financial condition;

·annual caps that limit the amounts that can be paid for outpatient therapy services rendered to any Medicare beneficiary may negatively affect our results of operations;

·we are subject to a Medicare cap amount for our hospice business. Our net patient service revenue and profitability could be adversely affected by limitations on Medicare payments;

·we are subject to extensive and complex laws and government regulations. If we are not operating in compliance with these laws and regulations or if these laws and regulations change, we could be required to make significant expenditures or change our operations in order to bring our facilities and operations into compliance;

·we face inspections, reviews, audits and investigations under federal and state government programs and contracts. These audits could have adverse findings that may negatively affect our business;

·significant legal actions, which are commonplace in our professions, could subject us to increased operating costs and substantial uninsured liabilities, which would materially and adversely affect our results of operations, liquidity and financial condition;

·insurance coverage may become increasingly expensive and difficult to obtain for health care companies, and our self-insurance may expose us to significant losses;

·we may be unable to reduce costs to offset decreases in our patient census levels or other expenses completely;

·future acquisitions may use significant resources, may be unsuccessful and could expose us to unforeseen liabilities;

·we lease a significant number of our facilities and may experience risks relating to lease termination, lease extensions and special charges;

·our substantial indebtedness could adversely affect our financial health and prevent us from fulfilling our financial obligations;

·following the combination of FC-GEN Operations Investment LLC and Skilled Healthcare Group, Inc., we may

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not be able to continue to successfully integrate our operations, which could adversely affect us and the market price of our common stock;

·we have incurred substantial costs and expect to incur additional transaction and integration costs in connection with the combination of FC-GEN Operations Investment LLC and Skilled Healthcare Group, Inc;

·the holders of a majority of the voting power of Genesis’ common stock have entered into a voting agreement, and the control group’s interests may conflict with yours;

·some of our directors are significant stockholders or representatives of significant stockholders, which may result in the diversion of corporate opportunities and other potential conflicts; and

·we are a “controlled company” within the meaning of NYSE rules and, as a result, qualify for and rely on exemptions from certain corporate governance requirements.

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

Note Regarding Use of Non-GAAP Financial Measures

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

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GENESIS HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
Net revenues	$	1,419,475		$	1,200,651		$	2,762,476		$	2,387,195
Salaries, wages and benefits	820,926			717,215			1,611,659			1,438,477
Other operating expenses	348,236			269,603			660,797			533,149
General and administrative costs	44,983			35,980			86,516			71,844
Provision for losses on accounts receivable	22,113			17,080			45,509			35,596
Lease expense	38,959			32,909			75,378			65,708
Depreciation and amortization expense	53,605			48,930			113,538			96,430
Interest expense	126,385			109,900			247,698			218,650
Loss on extinguishment of debt	—			181			3,234			680
Investment income	(431		)	(436		)	(847		)	(1,379		)
Transaction costs	2,642			1,298			88,710			3,547
Other loss (income)	50			(667		)	(7,560		)	(667		)
Equity in net income of unconsolidated affiliates	(360		)	(390		)	(513		)	(346		)
Loss before income tax benefit	(37,633		)	(30,952		)	(161,643		)	(74,494		)
Income tax benefit	(4,419		)	(96		)	(10,067		)	(2,850		)
Loss from continuing operations	(33,214		)	(30,856		)	(151,576		)	(71,644		)
Loss from discontinued operations, net of taxes	(1,722		)	(1,176		)	(1,610		)	(4,370		)
Net loss	(34,936		)	(32,032		)	(153,186		)	(76,014		)
Less net loss (income) attributable to noncontrolling interests	15,750			(224		)	21,434			(409		)
Net loss attributable to Genesis Healthcare, Inc.	$	(19,186	)	$	(32,256	)	$	(131,752	)	$	(76,423	)
Loss per common share:
Basic and diluted:
Weighted average shares outstanding for basic and diluted loss from continuing operations per share	89,211			49,865			82,279			49,865
Basic and diluted net loss per common share:
Loss from continuing operations attributable to Genesis Healthcare, Inc.	$	(0.20	)	$	(0.63	)	$	(1.58	)	$	(1.44	)
Loss from discontinued operations	(0.02		)	(0.02		)	(0.02		)	(0.09		)
Net loss attributable to Genesis Healthcare, Inc.	$	(0.22	)	$	(0.65	)	$	(1.60	)	$	(1.53	)

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GENESIS HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(IN THOUSANDS)

	June 30, 2015			December 31, 2014
Assets:
Current assets:
Cash and equivalents	$	82,963		$	87,548
Accounts receivable, net of allowances for doubtful accounts	753,563			605,830
Other current assets	142,302			202,808
Total current assets	978,828			896,186
Property and equipment, net of accumulated depreciation	3,995,294			3,493,250
Identifiable intangible assets, net of accumulated amortization	225,945			173,112
Goodwill	431,515			169,681
Other long-term assets	471,796			409,179
Total assets	$	6,103,378		$	5,141,408
Liabilities and Stockholders’ Deficit:
Current liabilities:
Accounts payable and accrued expenses	$	360,956		$	320,339
Accrued compensation	226,745			192,838
Other current liabilities	162,661			147,405
Total current liabilities	750,362			660,582
Long-term debt	1,031,626			525,728
Capital lease obligations	1,044,208			1,002,762
Financing obligations	2,965,326			2,911,200
Other long-term liabilities	556,398			498,626
Stockholders’ deficit	(244,542		)	(457,490		)
Total liabilities and stockholders’ deficit	$	6,103,378		$	5,141,408

GENESIS HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN THOUSANDS)

	Six months ended June 30,
	2015			2014
Net cash (used in) provided by operating activities	$	(7,729	)	$	36,361
Net cash used in investing activities	(28,867		)	(47,495		)
Net cash provided by financing activities	32,011			1,348
Net decrease in cash and equivalents	(4,585		)	(9,786		)
Beginning of period	87,548			61,413
End of period	$	82,963		$	51,627

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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
							Newly acquired or constructed
	Three months ended June 30, 2015			Conversion to cash basis leases (a)			businesses with start-up losses (b)			Other adjustments (c)			Total adjustments			Three months ended June 30, 2015
Net revenues	$	1,419,475		$	—		$	(8,982	)	$	(232	)	$	(9,214	)	$	1,410,261
Salaries, wages and benefits	820,926			—			(5,447		)	—			(5,447		)	815,479
Other operating expenses	348,236			—			(4,183		)	(11,220		)	(15,403		)	332,833
General and administrative costs	44,983			—			—			(2,079		)	(2,079		)	42,904
Provision for losses on accounts receivable	22,113			—			(251		)	—			(251		)	21,862
Lease expense	38,959			84,437			(1,979		)	—			82,458			121,417
Depreciation and amortization expense	53,605			(34,197		)	(199		)	—			(34,396		)	19,209
Interest expense	126,385			(103,980		)	(8		)	—			(103,988		)	22,397
Other income	50			—			—			(50		)	(50		)	—
Investment income	(431		)	—			—			—			—			(431		)
Transaction costs	2,642			—			—			(2,642		)	(2,642		)	—
Equity in net income of unconsolidated affiliates	(360		)	—			—			—			—			(360		)
(Loss) income before income tax benefit	$	(37,633	)	$	53,740		$	3,085		$	15,759		$	72,584		$	34,951
Income tax (benefit) expense	(4,419		)	12,474			716			3,658			16,848			12,429
(Loss) income from continuing operations	$	(33,214	)	$	41,266		$	2,369		$	12,101		$	55,736		$	22,522
Loss from discontinued operations, net of taxes	1,722			460			—			—			460			2,182
Net (loss) income attributable to noncontrolling interests	(15,750		)	15,036			863			4,409			20,308			4,558
Net (loss) income attributable to Genesis Healthcare, Inc.	$	(19,186	)	$	25,770		$	1,506		$	7,692		$	34,968		$	15,782
Depreciation and amortization expense	53,605			(34,197		)	(199		)	—			(34,396		)	19,209
Interest expense	126,385			(103,980		)	(8		)	—			(103,988		)	22,397
Other income	50			—			—			(50		)	(50		)	—
Transaction costs	2,642			—			—			(2,642		)	(2,642		)	—
Income tax (benefit) expense	(4,419		)	12,474			716			3,658			16,848			12,429
Loss from discontinued operations, net of taxes	1,722			460			—			—			460			2,182
Net (loss) income attributable to noncontrolling interests	(15,750		)	15,036			863			4,409			20,308			4,558
EBITDA / Adjusted EBITDA	$	145,049		$	(84,437	)	$	2,878		$	13,067		$	(68,492	)	$	76,557
Lease expense	38,959			84,437			(1,979		)	—			82,458			121,417
EBITDAR / Adjusted EBITDAR	$	184,008		$	—		$	899		$	13,067		$	13,966		$	197,974
(Loss) income per common share:
Diluted:
Weighted average shares outstanding for diluted (loss) income from continuing operations per share (d)	89,211															153,671
Diluted net (loss) income from continuing operations per share (e)	$	(0.20	)													$	0.14

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

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GENESIS HEALTHCARE, INC.

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

(UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

	As reported			Adjustments												As adjusted			Non-GAAP as adjusted			Pro forma adjusted
	Six months ended June 30, 2015			Conversion to cash basis leases (a)			Newly acquired or constructed businesses with start-up losses (b)			Other adjustments (c)			Total adjustments			Six months ended June 30, 2015			Skilled Healthcare Group, Inc. one month ended January 31, 2015			Six months ended June 30, 2015
Net revenues	$	2,762,476		$	—		$	(21,365	)	$	388		$	(20,977	)	$	2,741,499		$	71,288		$	2,812,787
Salaries, wages and benefits	1,611,659			—			(12,513		)	—			(12,513		)	1,599,146			43,926			1,643,072
Other operating expenses	660,797			—			(9,653		)	(11,220		)	(20,873		)	639,924			19,946			659,870
General and administrative costs	86,516			—			—			(3,762		)	(3,762		)	82,754			—			82,754
Provision for losses on accounts receivable	45,509			—			(251		)	—			(251		)	45,258			—			45,258
Lease expense	75,378			168,345			(4,928		)	—			163,417			238,795			1,766			240,561
Depreciation and amortization expense	113,538			(67,789		)	(1,443		)	—			(69,232		)	44,306			1,998			46,304
Interest expense	247,698			(206,314		)	(40		)	—			(206,354		)	41,344			2,521			43,865
Loss on extinguishment of debt	3,234			—			—			(3,234		)	(3,234		)	—			—			—
Other income	(7,560		)	—			—			7,560			7,560			—			11			11
Investment income	(847		)	—			—			—			—			(847		)	—			(847		)
Transaction costs	88,710			—			—			(88,710		)	(88,710		)	—			—			—
Equity in net income of unconsolidated affiliates	(513		)	—			—			—			—			(513		)	(146		)	(659		)
(Loss) income before income tax benefit	$	(161,643	)	$	105,758		$	7,463		$	99,754		$	212,975		$	51,332		$	1,266		$	52,598
Income tax (benefit) expense	(10,067		)	24,548			1,732			23,155			49,435			39,368			494			39,862
(Loss) income from continuing operations	$	(151,576	)	$	81,210		$	5,731		$	76,599		$	163,540		$	11,964		$	772		$	12,736
Loss from discontinued operations, net of taxes	1,610			920			—			—			920			2,530			—			2,530
Net (loss) income attributable to noncontrolling interests	(21,434		)	29,591			2,088			27,911			59,590			38,156			531			38,687
Net (loss) income attributable to Genesis Healthcare, Inc.	$	(131,752	)	$	50,699		$	3,643		$	48,688		$	103,030		$	(28,722	)	$	241		$	(28,481	)
Depreciation and amortization expense	113,538			(67,789		)	(1,443		)	—			(69,232		)	44,306			1,998			46,304
Interest expense	247,698			(206,314		)	(40		)	—			(206,354		)	41,344			2,521			43,865
Loss on extinguishment of debt	3,234			—			—			(3,234		)	(3,234		)	—			—			—
Other income	(7,560		)	—			—			7,560			7,560			—			11			11
Transaction costs	88,710			—			—			(88,710		)	(88,710		)	—			—			—
Income tax (benefit) expense	(10,067		)	24,548			1,732			23,155			49,435			39,368			494			39,862
Loss from discontinued operations, net of taxes	1,610			920			—			—			920			2,530			—			2,530
Net (loss) income attributable to noncontrolling interests	(21,434		)	29,591			2,088			27,911			59,590			38,156			531			38,687
EBITDA / Adjusted EBITDA	$	283,977		$	(168,345	)	$	5,980		$	15,370		$	(146,995	)	$	136,982		$	5,796		$	142,778
Lease expense	75,378			168,345			(4,928		)	—			163,417			238,795			1,766			240,561
EBITDAR / Adjusted EBITDAR	$	359,355		$	—		$	1,052		$	15,370		$	16,422		$	375,777		$	7,562		$	383,339
(Loss) income per common share:
Diluted:
Weighted average shares outstanding for diluted (loss) income from continuing operations per share (d)	82,279																					153,671
Diluted net (loss) income from continuing operations per share (e)	$	(1.58	)																			$	0.21

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

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 adjusted			Pro forma adjusted
	Three months ended June 30, 2014			Conversion to cash basis leases (a)			Newly acquired or constructed businesses with start-up losses (b)			Other adjustments (c)			Total adjustments			Three months ended June 30, 2014			Skilled Healthcare Group, Inc. three months ended June 30, 2014			Three months ended June 30, 2014
Net revenues	$	1,200,651		$	—		$	(4,294	)	$	—		$	(4,294	)	$	1,196,357		$	206,868		$	1,403,225
				—
Salaries, wages and benefits	717,215			—			(3,302		)	94			(3,208		)	714,007			128,515			842,522
Other operating expenses	269,603			—			(1,800		)	(714		)	(2,514		)	267,089			44,052			311,141
General and administrative costs	35,980			—			—			—			—			35,980			6,656			42,636
Provision for losses on accounts receivable	17,080			—			—			—			—			17,080			3,664			20,744
Lease expense	32,909			80,317			(650		)	—			79,667			112,576			4,922			117,498
Depreciation and amortization expense	48,930			(33,525		)	(22		)	—			(33,547		)	15,383			6,034			21,417
Interest expense	109,900			(97,660		)	—			—			(97,660		)	12,240			7,643			19,883
Loss (gain) on extinguishment of debt	181			—			—			(181		)	(181		)	—			—			—
Other (income) loss	(667		)	—			—			667			667			—			(123		)	(123		)
Investment income	(436		)	—			—			—			—			(436		)	—			(436		)
Transaction costs	1,298			—			—			(1,298		)	(1,298		)	—			—			—
Equity in net income of unconsolidated affiliates	(390		)	—			—			—			—			(390		)	(92		)	(482		)
(Loss) income before income tax benefit	$	(30,952	)	$	50,868		$	1,480		$	1,432		$	53,780		$	22,828		$	5,597		$	28,425
Income tax (benefit) expense	(96		)	3,215			94			91			3,400			3,304			2,447			5,751
(Loss) income from continuing operations	$	(30,856	)	$	47,653		$	1,386		$	1,341		$	50,380		$	19,524		$	3,150		$	22,674
Loss (income) from discontinued operations, net of taxes	1,176			(437		)	—			—			(437		)	739			—			739
Net loss attributable to noncontrolling interests	224			—			—			—			—			224			—			224
Net (loss) income attributable to Genesis Healthcare, Inc.	$	(32,256	)	$	48,090		$	1,386		$	1,341		$	50,817		$	18,561		$	3,150		$	21,711
Depreciation and amortization expense	48,930			(33,525		)	(22		)	—			(33,547		)	15,383			6,034			21,417
Interest expense	109,900			(97,660		)	—			—			(97,660		)	12,240			7,643			19,883
Loss (gain) on extinguishment of debt	181			—			—			(181		)	(181		)	—			—			—
Other (income) loss	(667		)	—			—			667			667			—			(123		)	(123		)
Transaction costs	1,298			—			—			(1,298		)	(1,298		)	—			—			—
Income tax (benefit) expense	(96		)	3,215			94			91			3,400			3,304			2,447			5,751
Loss (income) from discontinued operations, net of taxes	1,176			(437		)	—			—			(437		)	739			—			739
Net income attributable to noncontrolling interests	224			—			—			—			—			224			—			224
EBITDA / Adjusted EBITDA	$	128,690		$	(80,317	)	$	1,458		$	620		$	(78,239	)	$	50,451		$	19,151		$	69,602
Lease expense	32,909			80,317			(650		)	—			79,667			112,576			4,922			117,498
EBITDAR / Adjusted EBITDAR	$	161,599		$	—		$	808		$	620		$	1,428		$	163,027		$	24,073		$	187,100
Loss per common share:
Diluted:
Weighted average shares outstanding for diluted (loss) income from continuing operations per share (d)	49,865
Diluted net (loss) income from continuing operations per share (e)	$	(0.63	)																			Not calculated

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

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 adjusted			Pro forma adjusted
	Six months ended June 30, 2014			Conversion to cash basis leases (a)			Newly acquired or constructed businesses with start-up losses (b)			Other adjustments (c)			Total adjustments			Six months ended June 30, 2014			Skilled Healthcare Group, Inc. six months ended June 30, 2014			Six months ended June 30, 2014
Net revenues	$	2,387,195		$	—		$	(7,178	)	$	1,166		$	(6,012	)	$	2,381,183		$	414,303		$	2,795,486
				—
Salaries, wages and benefits	1,438,477			—			(5,044		)	(1,706		)	(6,750		)	1,431,727			259,934			1,691,661
Other operating expenses	533,149			—			(3,052		)	(833		)	(3,885		)	529,264			89,012			618,276
General and administrative costs	71,844			—			—			—			—			71,844			12,300			84,144
Provision for losses on accounts receivable	35,596			—			—			—			—			35,596			6,478			42,074
Lease expense	65,708			157,880			(1,085		)	—			156,795			222,503			9,696			232,199
Depreciation and amortization expense	96,430			(65,393		)	(73		)	—			(65,466		)	30,964			12,120			43,084
Interest expense	218,650			(193,068		)	—			—			(193,068		)	25,582			15,639			41,221
Loss (gain) on extinguishment of debt	680			—			—			(680		)	(680		)	—			—			—
Other (income) loss	(667		)	—			—			667			667			—			(162		)	(162		)
Investment income	(1,379		)	—			—			—			—			(1,379		)	—			(1,379		)
Transaction costs	3,547			—			—			(3,547		)	(3,547		)	—			—			—
Equity in net income of unconsolidated affiliates	(346		)	—			—			—			—			(346		)	(638		)	(984		)
(Loss) income before income tax benefit	$	(74,494	)	$	100,581		$	2,076		$	7,265		$	109,922		$	35,428		$	9,924		$	45,352
Income tax (benefit) expense	(2,850		)	6,357			132			460			6,949			4,099			4,448			8,547
(Loss) income from continuing operations	$	(71,644	)	$	94,224		$	1,944		$	6,805		$	102,973		$	31,329		$	5,476		$	36,805
Loss (income) from discontinued operations, net of taxes	4,370			(1,964		)	—			—			(1,964		)	2,406			—			2,406
Net loss attributable to noncontrolling interests	409			—			—			—			—			409			—			409
Net (loss) income attributable to Genesis Healthcare, Inc.	$	(76,423	)	$	96,188		$	1,944		$	6,805		$	104,937		$	28,514		$	5,476		$	33,990
Depreciation and amortization expense	96,430			(65,393		)	(73		)	—			(65,466		)	30,964			12,120			43,084
Interest expense	218,650			(193,068		)	—			—			(193,068		)	25,582			15,639			41,221
Loss (gain) on extinguishment of debt	680			—			—			(680		)	(680		)	—			—			—
Other (income) loss	(667		)	—			—			667			667			—			(107		)	(107		)
Transaction costs	3,547			—			—			(3,547		)	(3,547		)	—			—			—
Income tax (benefit) expense	(2,850		)	6,357			132			460			6,949			4,099			4,448			8,547
Loss (income) from discontinued operations, net of taxes	4,370			(1,964		)	—			—			(1,964		)	2,406			—			2,406
Net income attributable to noncontrolling interests	409			—			—			—			—			409			—			409
EBITDA / Adjusted EBITDA	$	244,146		$	(157,880	)	$	2,003		$	3,705		$	(152,172	)	$	91,974		$	37,576		$	129,550
Lease expense	65,708			157,880			(1,085		)	—			156,795			222,503			9,696			232,199
EBITDAR / Adjusted EBITDAR	$	309,854		$	—		$	918		$	3,705		$	4,623		$	314,477		$	47,272		$	361,749
Loss per common share:
Diluted:
Weighted average shares outstanding for diluted (loss) income from continuing operations per share (d)	49,865
Diluted net (loss) income from continuing operations per share (e)	$	(1.44	)																			Not calculated

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

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 June 30,						Six months ended June 30,
	2015			2014			2015			2014
	(in thousands)
Lease expense:
Cash rent - capital leases	$	22,923		$	22,384		$	45,848		$	44,394
Cash rent - financing obligations	64,065			61,097			126,835			119,632
Non-cash - operating lease arrangements	(2,551		)	(3,164		)	(4,338		)	(6,146		)
Lease expense adjustments	$	84,437		$	80,317		$	168,345		$	157,880
Depreciation and amortization expense:
Capital lease accounting	$	(9,296	)	$	(9,281	)	$	(18,075	)	$	(18,280	)
Financing obligation accounting	(24,901		)	(24,244		)	(49,714		)	(47,113		)
Depreciation and amortization expense adjustments	$	(34,197	)	$	(33,525	)	$	(67,789	)	$	(65,393	)
Interest expense:
Capital lease accounting	$	(26,157	)	$	(25,087	)	$	(51,643	)	$	(49,209	)
Financing obligation accounting	(77,823		)	(72,573		)	(154,671		)	(143,859		)
Interest expense adjustments	$	(103,980	)	$	(97,660	)	$	(206,314	)	$	(193,068	)
Total pre-tax lease accounting adjustments	$	(53,740	)	$	(50,868	)	$	(105,758	)	$	(100,581	)

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

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

12

	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
	(in thousands)
Severance and restructuring (1)	$	720		$	(94	)	$	2,379		$	1,706
Regulatory defense and related costs (2)	1,317			714			1,961			1,500
New business development costs (3)	—			—			—			499
Self insurance adjustment (4)	10,500			—			10,500			—
Transaction costs (5)	2,642			1,298			88,710			3,547
Loss on early extinguishment of debt	—			181			3,234			680
Other income (6)	50			(667		)	(7,560		)	(667		)
Stock based compensation (7)	530			—			530			—
Tax benefit from total adjustments	(3,658		)	(91		)	(23,155		)	(460		)
Total other adjustments	$	12,101		$	1,341		$	76,599		$	6,805

(1)  We incurred costs related to the termination, severance and restructuring of certain components of the Company’s business.

(2)  We incurred legal defense and other related costs in connection with certain matters in dispute or under appeal with regulatory agencies.

(3)  We incurred business development costs in connection with the evaluation and start-up of services outside our existing service offerings.

(4) We incurred a self-insured program adjustment for the actuarially developed GLPL and worker’s compensation claims related to policy periods 2014 and prior.  The Company also recorded approximately $3.6 million of incremental development related to the first six months of 2015, which has not been excluded from our non GAAP results.

(5)  We incurred costs associated with transactions including the combination with Skilled Healthcare Group, Inc. and other transactions.

(6)  We realized a net gain on the sale of certain assets in the six months ended June 30, 2015.

(7)  We incurred $0.5 million of non-cash stock-based compensation related to restricted stock units.

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

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

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
	reported						adjusted			reported						adjusted			reported						adjusted
	One month						One month			Three months						Three months			Six months						Six months
	ended January						ended January			ended June						ended June			ended June						ended June 30,
	31, 2015			Adjust			31, 2015			30, 2014			Adjust			30, 2014			30, 2014			Adjust			2014
Net revenues	$	71,288		$	—		$	71,288		$	206,979		$	(111	)	$	206,868		$	414,279		$	24		$	414,303
Salaries, wages and benefits	44,842			(916		)	43,926			128,819			(304		)	128,515			260,246			(312		)	259,934
Other operating expenses	17,486			(345		)	17,141			51,990			(7,938		)	44,052			97,967			(8,955		)	89,012
General and administrative costs	1,516						1,516			7,287			(631		)	6,656			13,371			(1,071		)	12,300
Provision for losses on accounts receivable	1,289			—			1,289			3,720			(56		)	3,664			6,625			(147		)	6,478
Lease expense	1,766			—			1,766			4,922			—			4,922			9,696			—			9,696
Depreciation and amortization expense	1,998			—			1,998			6,034			—			6,034			12,120			—			12,120
Interest expense	2,521			—			2,521			7,643			—			7,643			15,639			—			15,639
Loss on extinguishment of debt	—			—			—			822			(822		)	—			822			(822		)	—
Impairment of long-lived assets	—			—			—			82			(82		)	—			82			(82		)	—
Other (income) loss	11			—			11			(123		)	—			(123		)	(162		)	—			(162		)
Transaction costs	4,638			(4,638		)	—			—			—			—			—			—			—
Equity in net income of unconsolidated affiliates	(146		)	—			(146		)	(92		)	—			(92		)	(638		)	—			(638		)
Income tax (benefit) expense	(1,807		)	2,301			494			(1,345		)	3,792			2,447			(3		)	4,451			4,448
Net (loss) income	$	(2,826	)	$	3,598		$	772		$	(2,780	)	$	5,930		$	3,150		$	(1,486	)	$	6,962		$	5,476
Depreciation and amortization expense	1,998			—			1,998			6,034			—			6,034			12,120			—			12,120
Interest expense	2,521			—			2,521			7,643			—			7,643			15,639			—			15,639
Loss on extinguishment of debt	—			—			—			822			(822		)	—			822			(822		)	—
Impairment of long-lived assets	—			—			—			82			(82		)	—			82			(82		)	—
Other (income) loss	11			—			11			(123		)				(123		)	(107		)	—			(107		)
Transaction costs	4,638			(4,638		)	—			—			—			—			—			—			—
Income tax (benefit) expense	(1,807		)	2,301			494			(1,345		)	3,792			2,447			(3		)	4,451			4,448
EBITDA / Adjusted EBITDA	4,535			1,261			5,796			10,333			8,818			19,151			27,067			10,509			37,576
Lease expense	1,766			—			1,766			4,922			—			4,922			9,696			—			9,696
EBITDAR / Adjusted EBITDAR	$	6,301		$	1,261		$	7,562		$	15,255		$	8,818		$	24,073		$	36,763		$	10,509		$	47,272

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

	One month ended January 31, 2015			Three months ended June 30, 2014			Six months ended June 30, 2014
Severance and restructuring	$	1,220		$	631		$	1,071
Regulatory defense and related costs	41			—			—
Exist costs of divested facilities	—			(27		)	340
Professional fees related to non-routine matters	—			7,205			7,519
Losses at skilled nursing facility not at full operation	—			133			133
Loss on extinguishment of debt	—			822			822
Non-cash stock compensation	371			876			1,446
Impairment of long-lived assets	—			82			82
Transaction costs	4,267			—			—
Tax benefit of total adjustments	(2,301		)	(3,792		)	(4,451		)
Total adjustments	$	3,598		$	5,930		$	6,962

14

GENESIS HEALTHCARE, INC.

KEY FINANCIAL PERFORMANCE INDICATORS

(UNAUDITED)

	Three months ended June 30,				Six months ended June 30,
	2015		2014		2015		2014
	(In thousands)				(In thousands)
Financial Results
Net revenues	$	1,419,475	$	1,200,651	$	2,762,476	$	2,387,195
EBITDAR	184,008		161,599		359,355		309,854
EBITDA	145,049		128,690		283,977		244,146
Adjusted EBITDAR	197,974		163,027		375,777		314,477
Adjusted EBITDA	76,557		50,451		136,982		91,974
Pro forma adjusted EBITDAR	197,974		187,100		383,339		361,749
Pro forma adjusted EBITDA	76,557		69,602		142,778		129,550

INPATIENT SEGMENT:

	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
Occupancy Statistics - Inpatient
Available licensed beds in service at end of period	56,730			46,451			56,730			46,451
Available operating beds in service at end of period	55,087			45,057			55,087			45,057
Available patient days based on licensed beds	5,154,768			4,231,255			9,930,941			8,420,379
Available patient days based on operating beds	4,996,311			4,103,685			9,625,192			8,164,113
Actual patient days	4,338,337			3,675,482			8,427,184			7,307,551
Occupancy percentage - licensed beds	84.2		%	86.9		%	84.9		%	86.8		%
Occupancy percentage - operating beds	86.8		%	89.6		%	87.6		%	89.5		%
Skilled mix	21.8		%	22.2		%	22.3		%	22.2		%
Average daily census	47,674			40,390			46,559			40,373
Revenue per patient day (skilled nursing facilities)
Medicare Part A	$	503		$	493		$	502		$	492
Medicare total (including Part B)	543			531			538			530
Insurance	454			448			446			447
Private and other	310			319			312			320
Medicaid	217			213			216			213
Medicaid (net of provider taxes)	195			193			195			193
Weighted average (net of provider taxes)	$	272		$	271		$	273		$	271
Patient days by payor (skilled nursing facilities)
Medicare	573,295			537,626			1,153,193			1,067,923
Insurance	307,163			224,319			594,922			448,606
Total skilled mix days	880,458			761,945			1,748,115			1,516,529
Private and other	277,038			239,345			563,624			480,968
Medicaid	2,866,194			2,434,581			5,512,696			4,834,342
Total Days	4,023,690			3,435,871			7,824,435			6,831,839
Patient days as a percentage of total patient days (skilled nursing facilities)
Medicare	14.2		%	15.6		%	14.7		%	15.6		%
Insurance	7.6		%	6.5		%	7.6		%	6.6		%
Skilled mix	21.8		%	22.1		%	22.3		%	22.2		%
Private and other	6.9		%	7.0		%	7.2		%	7.0		%
Medicaid	71.3		%	70.9		%	70.5		%	70.8		%
Total	100.0		%	100.0		%	100.0		%	100.0		%

15

GENESIS HEALTHCARE, INC.

KEY FINANCIAL PERFORMANCE INDICATORS

(UNAUDITED)

	Three months ended June 30,		Six months ended June 30,
	2015	2014	2015	2014
Facilities at end of period
Skilled nursing facilities
Leased	384	356	384	356
Owned	33	2	33	2
Joint Venture	5	5	5	5
Managed *	36	14	36	14
Total skilled nursing facilities	458	377	458	377
Total licensed beds	55,605	45,964	55,605	45,964
Assisted living facilities:
Leased	29	27	29	27
Owned	22	1	22	1
Joint Venture	1	1	1	1
Managed	4	4	4	4
Total assisted living facilities	56	33	56	33
Total licensed beds	3,962	2,731	3,962	2,731
Total facilities	514	410	514	410
Total Jointly Owned and Managed– (Unconsolidated)	19	17	19	17

REHABILITATION THERAPY SEGMENT:

	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
Revenue mix %:
Company-operated	39		%	37		%	39		%	37		%
Non-affiliated	61		%	63		%	61		%	63		%
Sites of service (at end of period)	1,499			1,367			1,499			1,367
Revenue per site	$	171,570		$	176,104		$	336,478		$	352,856
Therapist efficiency %	70		%	69		%	70		%	70		%

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

16

GENESIS HEALTHCARE, INC.

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

2015 GUIDANCE - LOW END OF RANGE

(IN THOUSANDS, EXCEPT EPS)

				Adjustments									As adjusted
							Newly acquired or
	Twelve months ended December 31, 2015			Conversion to cash basis leases (a)			constructed businesses with start-up losses (b)			Other adjustments (c)			Twelve months ended December 31, 2015
Net revenues	$	5,684,197		$	—		$	(25,759	)	$	—		$	5,658,438
Salaries, wages and benefits	3,506,752			—			(16,175		)	—			3,490,577
Other operating expenses	1,427,595			—			(11,734		)	—			1,415,861
Lease expense	157,874			334,941			(5,383		)	—			487,432
Depreciation and amortization expense	234,511			(137,324		)	(2,675		)	—			94,512
Interest expense	507,203			(421,251		)	—			—			85,952
Investment income	(2,000		)	—			—			—			(2,000		)
Transaction costs	88,989			—			—			(88,989		)	—
Equity in net income of unconsolidated affiliates	(1,050		)	—			—			—			(1,050		)
(Loss) income before income tax expense	$	(235,677	)	$	223,634		$	10,208		$	88,989		$	87,154
Income tax expense (benefit)	(94,271		)	89,454			4,083			35,596			34,862
Income (loss) from continuing operations	$	(141,406	)	$	134,180		$	6,125		$	53,393		$	52,292
Earnings (loss) per share, diluted:	$	(0.91	)										$	0.34
Weighted-average common shares outstanding, diluted, on a fully exchanged basis	154,603												154,603
Adjustments to Compute EBITDA/Adjusted EBITDA and EBITDAR / Adjusted EBITDAR
Depreciation and amortization expense	234,511			(137,324		)	(2,675		)	—			94,512
Interest expense	507,203			(421,251		)	—			—			85,952
Transaction costs	88,989			—			—			(88,989		)	—
Income tax expense (benefit)	(94,271		)	89,454			4,083			35,596			34,862
EBITDA / Adjusted EBITDA	$	595,026		$	(334,941	)	$	7,533		$	—		$	267,618
Lease expense	157,874			334,941			(5,383		)	—			487,432
EBITDAR / Adjusted EBITDAR	$	752,900		$	—		$	2,150		$	—		$	755,050

17

GENESIS HEALTHCARE, INC.

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

2015 GUIDANCE - HIGH END OF RANGE

(IN THOUSANDS, EXCEPT EPS)

				Adjustments									As adjusted
							Newly acquired or
	Twelve months ended December 31, 2015			Conversion to cash basis leases (a)			constructed businesses with start-up losses (b)			Other adjustments (c)			Twelve months ended December 31, 2015
Net revenues	$	5,764,197		$	—		$	(25,759	)	$	—		$	5,738,438
Salaries, wages and benefits	3,554,512			—			(16,175		)	—			3,538,337
Other operating expenses	1,446,798			—			(11,734		)	—			1,435,064
Lease expense	157,874			334,941			(5,383		)	—			487,432
Depreciation and amortization expense	235,515			(137,324		)	(2,675		)	—			95,516
Interest expense	508,003			(421,251		)	—			—			86,752
Investment income	(3,000		)	—			—			—			(3,000		)
Transaction costs	88,989			—			—			(88,989		)	—
Equity in net income of unconsolidated affiliates	(2,000		)	—			—			—			(2,000		)
(Loss) income before income tax expense	$	(222,494	)	$	223,634		$	10,208		$	88,989		$	100,337
Income tax (benefit) expense	(88,998		)	89,454			4,083			35,596			40,135
Income (loss) from continuing operations	$	(133,496	)	$	134,180		$	6,125		$	53,393		$	60,202
Earnings (loss) per share, diluted:	$	(0.86	)										$	0.39
Weighted-average common shares outstanding, diluted, on a fully exchanged basis	154,603												154,603
Adjustments to Compute EBITDA/Adjusted EBITDA and EBITDAR / Adjusted EBITDAR
Depreciation and amortization expense	235,515			(137,324		)	(2,675		)	—			95,516
Interest expense	508,003			(421,251		)	—			—			86,752
Transaction costs	88,989			—			—			(88,989		)	—
Income tax (benefit) expense	(88,998		)	89,454			4,083			35,596			40,135
EBITDA / Adjusted EBITDA	$	610,013		$	(334,941	)	$	7,533		$	—		$	282,605
Lease expense	157,874			334,941			(5,383		)	—			487,432
EBITDAR / Adjusted EBITDAR	$	767,887		$	—		$	2,150		$	—		$	770,037

18