Skilled Healthcare Group updates 2010 full year non-GAAP earnings estimates

Jan 6 2011

Skilled Healthcare Group, Inc. (NYSE: SKH) (the "Company") today announced it has updated its 2010 full year non-GAAP earnings estimates and expects consolidated revenue to be approximately $816 million to $819 million, Adjusted EBITDAR to be approximately $138.9 million to $140.7 million and Adjusted EBITDA to be approximately $119.7 million to $121.5 million.  The Company expects adjusted earnings per diluted share for 2010 to be between $1.01 and $1.04.

Additionally, the Company issued its initial earnings guidance for 2011 and expects full year consolidated revenue to be between $880 million and $900 million, EBITDAR to be in the range of $156.2 million to $163.5 million, EBITDA to be in the range of $137.2 million to $144.5 million and net income per common share to be between $1.22 and $1.32. This guidance assumes the following:

• No change in fiscal 2012 Medicaid rates. Fiscal 2011 rates include a net increase of 2% in California which was effective August 2010 and a decrease of 1% in Texas effective February 2011.
• Full year of Hospice and Home Healthcare companies' operations.
• 2011 capital expenditures of approximately $20 million.
• Average interest rate on outstanding debt of approximately 8 percent.
• An effective tax rate of 39 percent.
• No additional acquisitions, developments or divestitures.

Boyd Hendrickson, Chairman & Chief Executive Officer commented, "We are pleased to introduce our 2011 earnings guidance and increase our 2010 earnings estimates as events in the fourth quarter of 2010 have provided greater clarity into that quarter’s operations and anticipated 2011 performance. During the fourth quarter of 2010, the Company completed the initial phases of its initiatives in preparation for the  Medicare program changes which took effect October 1, 2010.  Implementation of these initiatives are ongoing and include staffing enhancements, training programs, and enhanced audit and compliance measures. We also expect occupancy rates and skilled mix in our Long-term care business to increase in 2011 as our newest skilled nursing facilities in Dallas and Fort Worth, Texas continue to progress.”

Mr. Hendrickson continued, ”The performance of our hospice and home healthcare businesses has exceeded our expectations and these businesses are expected to grow further.  Additionally, we anticipate some declines in revenue and margin in 2011 in our Therapy business as a result of the elimination of concurrent therapy reimbursements and the Part B rate reduction that took effect January 1, 2011."

Commenting on a recent tax-deferred real estate transaction, Mr. Hendrickson noted, "In December 2010, the Company sold its West Side Campus of Care facility and operations in Texas and used the funds to purchase three previously leased facilities; St. Luke Healthcare and Rehabilitation Center and Woodland Care Center, both of which are in California, and St. Joseph Rehabilitation Center in Nevada.  Our property ownership now stands at 77 percent of our aggregate properties.  Assuming that the Company continues to experience strong free cash flow, we intend to utilize a portion of the available funds to pay down debt to reduce our debt-to-EBITDA leverage ratio (as defined in our existing credit agreement) to approximately 3.5 by the end of 2011."

SOURCE Skilled Healthcare Group, Inc.