SOURCE: Sun Healthcare Group, Inc.
IRVINE, CA–(Marketwire – October 27, 2010) – Sun Healthcare Group, Inc. (
announced its operating results for the third quarter ended Sept. 30, 2010.
Normalized results for the third-quarter period ended Sept. 30, 2010:
-- consolidated revenues rose 1.1 percent to $476.0 million, compared to
the same period in 2009;
-- increased patient acuity resulted in solid reimbursement rates in
quarter;
-- hospice and rehabilitation therapy businesses showed revenue
growth;
-- consolidated adjusted EBITDAR was $60.6 million and adjusted EBITDAR
margin was 12.7 percent;
-- diluted earnings per share from continuing operations (after giving
effect to the issuance of 30.76 million shares in the Company's equity
offering) were $0.18;
-- diluted earnings per share from continuing operations would have been
$0.23 based on shares outstanding prior to the issuance of
30.76 million shares in the Company's August equity offering and before
the application of the offering proceeds, which equals the mean of
diluted earnings per share from continuing operations estimates for the
third quarter from analysts who publish on First Call;
-- free cash flow was $21.3 million for the quarter; and
-- results have been normalized to exclude the impact of $4.7 million for
transaction costs associated with the separation transaction described
in further detail below in this press release.
Commenting on the Company’s third-quarter results, Richard K. Matros, Sun’s
chairman and chief executive officer, remarked, “Although our sector
continues to experience a tough operating environment, I am pleased with
our ability to turn in a solid quarter, with normalized adjusted EBITDAR
comparable to that achieved in last year’s third quarter.”
Matros added, “With respect to the previously announced separation of our
operating assets and real estate assets, we have completed debt financings
for both the operating company and the real estate company and have
received all necessary regulatory approvals. We look forward to our
stockholders’ meeting on November 4 and to completing the separation
transaction on November 15.”
Segment Updates
On a year-over-year basis for the quarter, revenue growth in Sun’s
inpatient services business totaled $3.8 million, or 0.9 percent, due
principally to revenue growth in its hospice business, SolAmor. SolAmor’s
revenues increased from $7.2 million to $11.3 million, due to census
expansion derived from same store census growth as well as an October 2009
acquisition. SolAmor contributed $2.5 million of adjusted EBITDA for the
quarter and an adjusted EBITDA margin of 22.3 percent. In the quarter,
revenues from SunBridge’s nursing center operations were flat on a
year-over-year basis due to declines in nursing center customer base and
the lingering effect of the October 2009 Medicare rate reduction, partially
offset by acuity-driven rate growth. SunBridge’s acuity growth was
evidenced by its Medicare Rehab RUG use of 91.2 percent, which was up 250
basis points year-over-year, and its Medicare REX utilization of 44.4
percent, which was up 240 basis points year-over-year. On an overall basis,
the inpatient services business reported adjusted EBITDAR of $69.0 million
for the quarter, with an adjusted EBITDAR margin of 16.3 percent.
SunDance, Sun’s rehabilitation therapy services business, experienced
revenue growth of $6.8 million, or 15.0 percent, in the quarter on the
strength of growth in revenue per contract of 8.5 percent and growth in
total non-affiliated contracts of 4.9 percent. Given the strong revenue
results, adjusted EBITDA margin also expanded in the quarter by 190 basis
points, producing an 8.0 percent adjusted EBITDA margin.
Industry demand for temporary medical staffing continues to be down as a
result of the slow economy. Accordingly, revenues from CareerStaff, Sun’s
medical staffing services business, were down compared to revenues in the
same quarter of 2009, resulting in adjusted EBITDA margin of 6.2 percent
for the quarter.
Bill Mathies, president and chief operating officer of SunBridge and chief
operating officer over Sun’s operating subsidiaries, commented on the
segment results: “Our early assessment of the implementation of RUG IV, the
changes to concurrent therapy and the elimination of the look-back period
is that they are neutral on a consolidated basis, with the market basket
rate increases we received on October 1 being accretive to our results. Our
experience to date affirms our positive view of the opportunity that these
changes in the reimbursement system afford us, given our strategy of
serving
clinically-complex patients, as well as the savings the changes will
achieve for the Medicare program. Continuing our focus on short-stay
high-acuity patients requires the expansion of our portfolio of Rehab
Recovery Suites® (RRS). At the end of the quarter, our RRS centers
aggregated 1,647 beds, an increase of 44.6 percent over the number of RRS
beds in service in the third quarter of 2009. Our rehabilitation business
achieved solid revenue growth in the quarter, driven by the increase in
contracts as well as the increase in revenue per contract. Our hospice
business continues to perform consistently with our expectations. Our
medical staffing business, as noted, continued to show a decline in
revenues, EBITDA, and margins but the revenue decline has slowed and
billable hours were actually up for the quarter.”
Conference Call
As previously announced, investors and the general public are invited to
listen to a conference call with Sun’s senior management on Thursday, Oct.
28, 2010, at 10 a.m. Pacific / 1 p.m. Eastern to discuss the Company’s
earnings for the third quarter of 2010.
To listen to the conference call, dial (888) 437-9364 and refer to Sun
Healthcare Group. A recording of the call will be available from 4 p.m.
Eastern on Oct. 28, 2010, until midnight Eastern on Nov. 28, 2010, by
calling (888) 203-1112 and using access code 4118106.
About Sun Healthcare Group, Inc.
Sun Healthcare Group, Inc.’s (
rehabilitative and related specialty healthcare services principally to the
senior population in the United States. Sun’s core business is providing,
through its subsidiaries, inpatient services, primarily through 166 skilled
nursing centers, 16 combined skilled nursing, assisted and independent
living centers, 10 assisted living centers, two independent living centers
and eight mental health centers. On a consolidated basis, Sun has annual
revenues of $1.9 billion and approximately 30,000 employees in 46 states.
At Oct. 1, 2010, SunBridge centers had 23,189 licensed beds located in 25
states, of which 22,407 were available for occupancy. Sun also provides
rehabilitation therapy services to affiliated and non-affiliated centers
through its SunDance subsidiary, medical staffing services through its
CareerStaff Unlimited subsidiary and hospice services through its SolAmor
subsidiary.
In May 2010, Sun announced a plan to restructure its business by separating
its real estate assets and its operating assets into two separate,
publicly-traded companies (the “Separation”), subject to the approval of
stockholders and other conditions. The Separation will be accomplished by
distributing to stockholders the stock of SHG Services, Inc., a Sun
subsidiary that will own and operate the operating subsidiaries.
Substantially all of Sun’s owned real estate assets will continue to be
owned by Sun, which will, after the Separation, merge into its subsidiary,
Sabra Health Care REIT, Inc. Following this merger, SHG Services, Inc. will
change its name to Sun Healthcare Group, Inc. The common stock of both
companies is expected to trade on the NASDAQ Global Select Market. The
Separation is expected to be completed on Nov. 15, 2010.
Forward-looking Statement
Statements made in this release that are not historical facts are
“forward-looking” statements (as defined in the Private Securities
Litigation Reform Act of 1995) that involve risks and uncertainties and are
subject to change at any time. These forward-looking statements may
include, but are not limited to, statements containing words such as
“anticipate,” “believe,” “plan,” “estimate,” “expect,” “hope,” “intend,”
“may” and similar expressions. Forward-looking statements in this release
include all statements regarding the Company’s expected future financial
position and results of operations, business strategy, the impact of
reductions in reimbursements and other changes in government reimbursement
programs, the timing and impact of the Separation and transactions related
thereto, growth opportunities and plans and objectives of management for
future operations. Factors that could cause actual results to differ are
identified in the public filings made by the Company with the Securities
and Exchange Commission and include changes in Medicare and Medicaid
reimbursements; the impact that any healthcare reform legislation will have
on the Company’s business; the ability to maintain the occupancy rates and
payor mix at the Company’s healthcare centers; potential liability for
losses not covered by, or in excess of, the insurance; the effects of
government regulations and investigations; the significant amount of the
Company’s indebtedness; covenants in debt agreements that may restrict the
Company’s activities, including the Company’s ability to make acquisitions,
incur more indebtedness and refinance indebtedness on favorable terms;
Sun’s ability to accomplish the Separation and the transactions related
thereto; the impact of the current economic downturn on the business;
increasing labor costs and the shortage of qualified healthcare personnel;
and the Company’s ability to receive increases in reimbursement rates from
government payors to cover increased costs. More information on factors
that could affect the Company’s business and financial results are included
in Sun’s public filings made with the Securities and Exchange Commission,
including its Annual Report on Forms 10-K and Quarterly Reports on Form
10-Q, copies of which are available on Sun’s web site, www.sunh.com. There
may be additional risks of which the Company is presently unaware or that
it currently deems immaterial.
The forward-looking statements involve known and unknown risks,
uncertainties and other factors that are, in some cases, beyond the
Company’s control. Sun cautions investors that any forward-looking
statements made by Sun are not guarantees of future performance and are
only made as of the date of this release. Sun disclaims any obligation to
update any such factors or to announce publicly the results of any
revisions to any of the forward-looking statements to reflect future events
or developments.
Adjusted EBITDA, adjusted EBITDAR and free cash flow, as used in this press
release and in the accompanying tables, which are non-GAAP financial
measures, are each reconciled to their respective GAAP-recognized financial
measures in the accompanying tables. In addition, the normalizing
adjustments to adjusted EBITDAR and earnings per share as discussed in this
press release and shown, together with normalizing adjustments to other
financial measures, in the accompanying tables, are non-GAAP adjustments,
and are reconciled to GAAP financial measures in the accompanying tables.
Additional Information
In connection with the Separation, SHG Services, Inc. has filed with the
SEC a Registration Statement on Form S-1 and Sabra Health Care REIT, Inc.
has filed with the SEC a Registration Statement on Form S-4, each
containing an identical proxy statement/prospectus for the special meeting
of stockholders to be held on Nov. 4, 2010. The definitive proxy
statement/prospectus was mailed to Sun stockholders on or about Oct. 4,
2010. Before making any voting or investment decision, Sun stockholders and
investors are urged to read the proxy statement/prospectus and other
documents filed with the SEC carefully and in their entirety because they
contain important information about the proposed transactions.
Stockholders will be able to obtain these documents free of charge at the
SEC’s website at www.sec.gov. In addition, investors and stockholders of
Sun may obtain free copies of the documents filed with the SEC by
contacting Sun’s investor relations department at (505) 468-2341 (TDD
users, please call (505) 468-4458) or by sending a written request to
Investor Relations, Sun Healthcare Group, Inc. 101 Sun Avenue N.E.,
Albuquerque, N.M. 87109. Investors and stockholders may also obtain a copy
of these documents by requesting them in writing from Sun’s proxy
solicitation agent, Innisfree M&A, at 501 Madison Avenue, New York, NY
10022, or by telephone at (212) 750-5833.
Sun and its directors and executive officers and other members of its
management and employees may be deemed participants in the solicitation of
proxies from the stockholders of Sun in connection with the transactions
described in this release. Information about the directors and executive
officers of Sun and their ownership of shares of Sun common stock are set
forth in the Annual Report on Form 10-K for the year ended Dec. 31, 2009,
filed with the SEC on March 5, 2010, and in the definitive proxy
statement/prospectus for the special meeting of stockholders filed with the
SEC on Sept. 29, 2010. These documents may be obtained free of charge from
the sources indicated above. Additional information regarding the interests
of these participants is also included in the definitive proxy
statement/prospectus for the special meeting.
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
KEY INCOME STATEMENT FIGURES
CONSOLIDATED
(in thousands, except per share data)
For the For the
Three Months Three Months
Ended Ended
September 30, September 30,
2010 2009
---------------- ----------------
Revenue $ 475,997 $ 470,644
Depreciation and amortization 12,733 11,457
Interest expense, net 10,614 12,231
Pre-tax income 13,557 17,759
Income tax expense 5,559 7,220
Income from continuing operations 7,998 10,539
Loss from discontinued operations (442) (881)
---------------- ----------------
Net income $ 7,556 $ 9,658
================ ================
Diluted earnings per share $ 0.13 $ 0.22
================ ================
Adjusted EBITDAR $ 55,858 $ 60,509
Margin - Adjusted EBITDAR 11.7% 12.9%
Adjusted EBITDAR normalized $ 60,605 $ 60,509
Margin - Adjusted EBITDAR normalized 12.7% 12.9%
Adjusted EBITDA $ 36,904 $ 42,319
Margin - Adjusted EBITDA 7.8% 9.0%
Adjusted EBITDA normalized $ 41,651 $ 42,319
Margin - Adjusted EBITDA normalized 8.8% 9.0%
Pre-tax income continuing operations -
normalized $ 18,304 $ 18,631
Income tax expense - normalized $ 7,505 $ 7,578
Income from continuing operations -
normalized $ 10,799 $ 11,053
Diluted earnings per share from
continuing operations - normalized $ 0.18 $ 0.25
Net income - normalized $ 10,357 $ 10,172
Diluted earnings per share -
normalized $ 0.17 $ 0.23
See definitions of Adjusted EBITDA and Adjusted EBITDAR in the table
"Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDAR."
See normalizing adjustments in the table "Normalizing Adjustments -
Quarter Comparison."
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
KEY INCOME STATEMENT FIGURES
CONSOLIDATED
(in thousands, except per share data)
For the For the
Nine Months Nine Months
Ended Ended
September 30, September 30,
2010 2009
---------------- ----------------
Revenue $ 1,423,443 $ 1,406,949
Depreciation and amortization 37,732 33,329
Interest expense, net 34,366 37,422
Pre-tax income 49,205 56,066
Income tax expense 19,990 22,795
Income from continuing operations 29,215 33,271
Loss from discontinued operations (1,488) (3,275)
---------------- ----------------
Net income $ 27,727 $ 29,996
================ ================
Diluted earnings per share $ 0.55 $ 0.68
================ ================
Adjusted EBITDAR $ 177,609 $ 182,485
Margin - Adjusted EBITDAR 12.5% 13.0%
Adjusted EBITDAR normalized $ 184,604 $ 186,785
Margin - Adjusted EBITDAR normalized 13.0% 13.3%
Adjusted EBITDA $ 121,303 $ 127,730
Margin - Adjusted EBITDA 8.5% 9.1%
Adjusted EBITDA normalized $ 128,298 $ 132,030
Margin - Adjusted EBITDA normalized 9.0% 9.4%
Pre-tax income continuing operations -
normalized $ 56,200 $ 61,238
Income tax expense - normalized $ 22,858 $ 24,916
Income from continuing operations -
normalized $ 33,342 $ 36,322
Diluted earnings per share from
continuing operations - normalized $ 0.66 $ 0.83
Net income - normalized $ 31,854 $ 33,395
Diluted earnings per share -
normalized $ 0.63 $ 0.76
See definitions of Adjusted EBITDA and Adjusted EBITDAR in the table
"Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDAR."
See normalizing adjustments in the table "Normalizing Adjustments -
Quarter Comparison."
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
September 30, December 31,
2010 2009
---------------- ----------------
(unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 138,350 $ 104,483
Restricted cash 21,961 24,034
Accounts receivable, net 216,391 220,319
Prepaid expenses and other assets 15,093 21,757
Deferred tax assets 71,940 68,415
---------------- ----------------
Total current assets 463,735 439,008
Property and equipment, net 622,355 622,682
Intangible assets, net 51,428 53,931
Goodwill 338,364 338,296
Restricted cash, non-current 350 3,317
Deferred tax assets 89,818 108,999
Other assets 5,157 4,961
---------------- ----------------
Total assets $ 1,571,207 $ 1,571,194
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 47,799 $ 57,109
Accrued compensation and benefits 60,898 58,953
Accrued self-insurance obligations,
current 45,610 45,661
Income taxes payable 1,605 -
Other accrued liabilities 58,234 55,265
Current portion of long-term debt and
capital lease obligations 39,796 46,416
---------------- ----------------
Total current liabilities 253,942 263,404
Accrued self-insurance obligations,
net of current portion 127,040 121,948
Long-term debt and capital lease
obligations, net of current portion 410,145 654,132
Unfavorable lease obligations, net 10,518 12,663
Other long-term liabilities 60,016 69,983
---------------- ----------------
Total liabilities 861,661 1,122,130
Stockholders' equity:
Preferred stock of $.01 par value,
authorized 10,000,000 shares, no
shares were issued and outstanding
as of September 30, 2010 and
December 31, 2009 - -
Common stock of $.01 par value,
authorized 125,000,000 shares,
74,788,448 and 43,764,240 shares
issued and outstanding as of
September 30, 2010 and
December 31, 2009, respectively 748 438
Additional paid-in capital 885,083 655,667
Accumulated deficit (176,285) (204,012)
Accumulated other comprehensive loss,
net - (3,029)
---------------- ----------------
709,546 449,064
---------------- ----------------
Total liabilities and
stockholders' equity $ 1,571,207 $ 1,571,194
================ ================
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
For the For the
Three Months Three Months
Ended Ended
September 30, September 30,
2010 2009
---------------- ----------------
(unaudited) (unaudited)
Total net revenues $ 475,997 $ 470,644
---------------- ----------------
Costs and expenses:
Operating salaries and benefits 270,052 265,597
Self-insurance for workers'
compensation and general and
professional liability insurance 14,621 14,162
Operating administrative costs 13,343 12,462
Other operating costs 98,089 97,015
Center rent expense 18,954 18,190
General and administrative expenses 14,146 15,586
Depreciation and amortization 12,733 11,457
Provision for losses on accounts
receivable 5,141 5,313
Interest, net of interest income of
$59 and $106, respectively 10,614 12,231
Transaction costs 4,747 -
Restructuring costs - 872
---------------- ----------------
Total costs and expenses 462,440 452,885
---------------- ----------------
Income before income taxes and
discontinued operations 13,557 17,759
Income tax expense 5,559 7,220
---------------- ----------------
Income from continuing operations 7,998 10,539
---------------- ----------------
Discontinued operations:
Loss from discontinued operations,
net of related taxes (442) (862)
Loss on disposal of discontinued
operations, net of related taxes - (19)
---------------- ----------------
Loss from discontinued operations, net (442) (881)
---------------- ----------------
Net income $ 7,556 $ 9,658
================ ================
Basic income per common and common
equivalent share:
Income from continuing operations $ 0.13 $ 0.24
Loss from discontinued operations,
net - (0.02)
---------------- ----------------
Net income $ 0.13 $ 0.22
================ ================
Diluted income per common and common
equivalent share:
Income from continuing operations $ 0.13 $ 0.24
Loss from discontinued operations,
net - (0.02)
---------------- ----------------
Net income $ 0.13 $ 0.22
================ ================
Weighted average number of common and
common equivalent shares outstanding:
Basic 59,516 43,923
Diluted 59,538 44,015
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
For the For the
Nine Months Nine Months
Ended Ended
September 30, September 30,
2010 2009
---------------- ----------------
(unaudited) (unaudited)
Total net revenues $ 1,423,443 $ 1,406,949
---------------- ----------------
Costs and expenses:
Operating salaries and benefits 804,302 789,744
Self-insurance for workers'
compensation and general and
professional liability insurance 43,702 45,617
Operating administrative costs 38,932 38,231
Other operating costs 291,348 287,233
Center rent expense 56,306 54,755
General and administrative expenses 44,570 48,057
Depreciation and amortization 37,732 33,329
Provision for losses on accounts
receivable 15,985 15,582
Interest, net of interest income of
$222 and $310, respectively 34,366 37,422
Transaction costs 6,995 -
Loss on sale of assets, net - 41
Restructuring costs - 872
---------------- ----------------
Total costs and expenses 1,374,238 1,350,883
---------------- ----------------
Income before income taxes and
discontinued operations 49,205 56,066
Income tax expense 19,990 22,795
---------------- ----------------
Income from continuing operations 29,215 33,271
---------------- ----------------
Discontinued operations:
Loss from discontinued operations,
net of related taxes (1,488) (2,941)
Loss on disposal of discontinued
operations, net of related taxes - (334)
---------------- ----------------
Loss from discontinued operations, net (1,488) (3,275)
---------------- ----------------
Net income $ 27,727 $ 29,996
================ ================
Basic income per common and common
equivalent share:
Income from continuing operations $ 0.58 $ 0.76
Loss from discontinued operations,
net (0.03) (0.08)
---------------- ----------------
Net income $ 0.55 $ 0.68
================ ================
Diluted income per common and common
equivalent share:
Income from continuing operations $ 0.58 $ 0.76
Loss from discontinued operations,
net (0.03) (0.08)
---------------- ----------------
Net Income $ 0.55 $ 0.68
================ ================
Weighted average number of common and
common equivalent shares outstanding:
Basic 50,184 43,807
Diluted 50,251 43,926
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the For the
Three Months Three Months
Ended Ended
September 30, September 30,
2010 2009
---------------- ----------------
(unaudited) (unaudited)
Cash flows from operating activities:
Net income $ 7,556 $ 9,658
Adjustments to reconcile net income
to net cash provided by operating
activities, including discontinued
operations:
Depreciation and amortization 12,736 11,460
Amortization of favorable and
unfavorable lease intangibles (504) (474)
Provision for losses on accounts
receivable 5,289 5,318
Loss on sale of assets, including
discontinued operations, net - 31
Stock-based compensation expense 1,661 1,476
Deferred taxes 3,286 5,500
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable (1,307) 1,079
Restricted cash 2,769 (710)
Prepaid expenses and other assets 5,399 382
Accounts payable (4,909) (6,762)
Accrued compensation and benefits (2,117) 4,561
Accrued self-insurance obligations 199 4
Income taxes payable 1,267 -
Other accrued liabilities 4,429 9,355
Other long-term liabilities (676) (1,004)
---------------- ----------------
Net cash provided by operating
activities 35,078 39,874
---------------- ----------------
Cash flows from investing activities:
Capital expenditures (13,774) (16,456)
---------------- ----------------
Net cash used for investing
activities (13,774) (16,456)
---------------- ----------------
Cash flows from financing activities:
Borrowings of long-term debt 20,500 20,822
Principal repayments of long-term
debt and capital lease obligations (234,116) (22,562)
Proceeds from issuance of common
stock 226,001 55
Deferred financing costs (2,312) -
---------------- ----------------
Net cash used for financing
activities 10,073 (1,685)
---------------- ----------------
Net (decrease) increase in cash and
cash equivalents 31,377 21,733
Cash and cash equivalents at beginning
of period 106,973 95,672
---------------- ----------------
Cash and cash equivalents at end of
period $ 138,350 $ 117,405
================ ================
Reconciliation of net cash provided by
operating activities to free cash
flow:
Net cash provided by operating
activities $ 35,078 $ 39,874
Capital expenditures (13,774) (16,456)
---------------- ----------------
Free cash flow $ 21,304 $ 23,418
================ ================
Free cash flow is defined as net cash flow provided by operating activities
less cash used for capital expenditures. Free cash flow is used by
management to evaluate discretionary cash flow potentially available for
debt service and other financing activities.
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the For the
Nine Months Nine Months
Ended Ended
September 30, September 30,
2010 2009
---------------- ----------------
(unaudited) (unaudited)
Cash flows from operating activities:
Net income $ 27,727 $ 29,996
Adjustments to reconcile net income
to net cash provided by operating
activities, including discontinued
operations:
Depreciation and amortization 37,744 33,336
Amortization of favorable and
unfavorable lease intangibles (1,452) (1,350)
Provision for losses on accounts
receivable 16,428 15,599
Loss on sale of assets, including
discontinued operations, net - 607
Stock-based compensation expense 4,748 4,385
Deferred taxes 14,976 18,019
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable (12,500) (20,588)
Restricted cash 5,040 8,811
Prepaid expenses and other assets 8,012 144
Accounts payable (3,628) (11,825)
Accrued compensation and benefits 1,945 4,927
Accrued self-insurance obligations 5,041 1,255
Income taxes payable 1,605 -
Other accrued liabilities 4,442 8,530
Other long-term liabilities (5,775) 177
---------------- ----------------
Net cash provided by operating
activities 104,353 92,023
---------------- ----------------
Cash flows from investing activities:
Capital expenditures (41,488) (41,458)
Purchase of leased real estate - (3,275)
Proceeds from sale of assets held for
sale - 2,174
---------------- ----------------
Net cash used for investing
activities (41,488) (42,559)
---------------- ----------------
Cash flows from financing activities:
Borrowings of long-term debt 20,500 20,822
Principal repayments of long-term
debt and capital lease obligations (271,093) (44,249)
Payment to non-controlling interest (2,025) (311)
Distribution to non-controlling
interest (69) (549)
Proceeds from issuance of common
stock 226,001 75
Deferred financing costs (2,312) -
---------------- ----------------
Net cash used for financing
activities (28,998) (24,212)
---------------- ----------------
Net increase in cash and cash
equivalents 33,867 25,252
Cash and cash equivalents at beginning
of period 104,483 92,153
---------------- ----------------
Cash and cash equivalents at end of
period $ 138,350 $ 117,405
================ ================
Reconciliation of net cash provided by
operating activities to free cash
flow:
Net cash provided by operating
activities $ 104,353 $ 92,023
Capital expenditures (41,488) (41,458)
---------------- ----------------
Free cash flow $ 62,865 $ 50,565
================ ================
Free cash flow is defined as net cash flow provided by operating activities
less cash used for capital expenditures. Free cash flow is used by
management to evaluate discretionary cash flow potentially available for
debt service and other financing activities.
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA and EBITDAR
(in thousands)
For the For the
Three Months Three Months
Ended Ended
September 30, September 30,
2010 2009
---------------- ----------------
(unaudited) (unaudited)
Total net revenues $ 475,997 $ 470,644
---------------- ----------------
Net income $ 7,556 $ 9,658
---------------- ----------------
Income from continuing operations 7,998 10,539
Income tax expense 5,559 7,220
Interest, net 10,614 12,231
Depreciation and amortization 12,733 11,457
---------------- ----------------
EBITDA $ 36,904 $ 41,447
Restructuring costs - 872
---------------- ----------------
Adjusted EBITDA $ 36,904 $ 42,319
Center rent expense 18,954 18,190
---------------- ----------------
Adjusted EBITDAR $ 55,858 $ 60,509
================ ================
EBITDA is defined as earnings before loss on discontinued operations,
income taxes, interest, net, depreciation and amortization. Adjusted
EBITDA is defined as EBITDA before restructuring costs and loss on sale of
assets, net. Adjusted EBITDAR is defined as Adjusted EBITDA before center
rent expense. Adjusted EBITDA and Adjusted EBITDAR are used by management
to evaluate financial performance and resource allocation for each entity
within the operating units and for the Company as a whole. Adjusted EBITDA
and Adjusted EBITDAR are commonly used as analytical indicators within the
healthcare industry and also serve as measures of leverage capacity and
debt service ability. Adjusted EBITDA and Adjusted EBITDAR should not be
considered as measures of financial performance under generally accepted
accounting principles. As the items excluded from Adjusted EBITDA and
Adjusted EBITDAR are significant components in understanding and assessing
finance performance, Adjusted EBITDA and Adjusted EBITDAR should not be
considered in isolation or as alternatives to net income, cash flows
generated by or used in operating, investing or financing activities or
other financial statement data presented in the consolidated financial
statements as indicators of financial performance or liquidity. Because
Adjusted EBITDA and Adjusted EBTIDAR are not measurements determined in
accordance with U.S. generally accepted accounting principles and are thus
susceptible to varying calculations. Adjusted EBITDA and Adjusted EBITDAR
as presented may not be comparable to other similarly titled measures of
other companies.
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA and ADJUSTED EBITDAR
(in thousands)
For the For the
Nine Months Nine Months
Ended Ended
September 30, September 30,
2010 2009
---------------- ----------------
(unaudited) (unaudited)
Total net revenues $ 1,423,443 $ 1,406,949
---------------- ----------------
Net income $ 27,727 $ 29,996
---------------- ----------------
Income from continuing operations 29,215 33,271
Income tax expense 19,990 22,795
Interest, net 34,366 37,422
Depreciation and amortization 37,732 33,329
---------------- ----------------
EBITDA $ 121,303 $ 126,817
Loss on sale of assets, net - 41
Restructuring costs - 872
---------------- ----------------
Adjusted EBITDA $ 121,303 $ 127,730
Center rent expense 56,306 54,755
---------------- ----------------
Adjusted EBITDAR $ 177,609 $ 182,485
================ ================
EBITDA is defined as earnings before loss on discontinued operations,
income taxes, interest, net, depreciation and amortization. Adjusted
EBITDA is defined as EBITDA before restructuring costs and loss on sale of
assets, net. Adjusted EBITDAR is defined as Adjusted EBITDA before center
rent expense. Adjusted EBITDA and Adjusted EBITDAR are used by management
to evaluate financial performance and resource allocation for each entity
within the operating units and for the Company as a whole. Adjusted EBITDA
and Adjusted EBITDAR are commonly used as analytical indicators within the
healthcare industry and also serve as measures of leverage capacity and
debt service ability. Adjusted EBITDA and Adjusted EBITDAR should not be
considered as measures of financial performance under generally accepted
accounting principles. As the items excluded from Adjusted EBITDA and
Adjusted EBITDAR are significant components in understanding and assessing
finance performance, Adjusted EBITDA and Adjusted EBITDAR should not be
considered in isolation or as alternatives to net income, cash flows
generated by or used in operating, investing or financing activities or
other financial statement data presented in the consolidated financial
statements as indicators of financial performance or liquidity. Because
Adjusted EBITDA and Adjusted EBTIDAR are not measurements determined in
accordance with U.S. generally accepted accounting principles and are thus
susceptible to varying calculations. Adjusted EBITDA and Adjusted EBITDAR
as presented may not be comparable to other similarly titled measures of
other companies.
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF INCOME (LOSS) FROM CONTINUING OPERATIONS TO ADJUSTED
EBITDA and ADJUSTED EBITDAR
($ in thousands)
For the Three Months Ended September 30, 2010
(unaudited)
Rehabil- Elimination
itation Medical of
Inpatient Therapy Staffing Other & Affiliated Consoli-
Services Services Services Corp Seg Revenue dated
-------- -------- -------- -------- -------- --------
Nonaffiliated
revenue $424,160 $ 30,342 $ 21,481 $ 14 $ - $475,997
Affiliated
revenue - 21,397 724 - (22,121) -
-------- -------- -------- -------- -------- --------
Total revenue $424,160 $ 51,739 $ 22,205 $ 14 $(22,121) $475,997
-------- -------- -------- -------- -------- --------
Income (loss)
from
continuing
operations $ 36,134 $ 3,961 $ 1,195 $(33,292) $ - $ 7,998
Income tax
expense - - - 5,559 - 5,559
Interest, net 2,570 - - 8,044 - 10,614
Depreciation
and
amortization 11,630 173 181 749 - 12,733
-------- -------- -------- -------- -------- --------
EBITDA $ 50,334 $ 4,134 $ 1,376 $(18,940) $ - $ 36,904
Restructuring
costs - - - - - -
-------- -------- -------- -------- -------- --------
Adjusted
EBITDA $ 50,334 $ 4,134 $ 1,376 $(18,940) $ - $ 36,904
Center rent
expense 18,629 123 202 - - 18,954
-------- -------- -------- -------- -------- --------
Adjusted
EBITDAR $ 68,963 $ 4,257 $ 1,578 $(18,940) $ - $ 55,858
======== ======== ======== ======== ======== ========
Normalized
Adjusted
EBITDA $ 50,334 $ 4,134 $ 1,376 $(14,193) $ - $ 41,651
Normalized
Adjusted
EBITDAR $ 68,963 $ 4,257 $ 1,578 $(14,193) $ - $ 60,605
Adjusted EBITDA
margin 11.9% 8.0% 6.2% 7.8%
Adjusted
EBITDAR margin 16.3% 8.2% 7.1% 11.7%
Normalized
Adjusted
EBITDA margin 11.9% 8.0% 6.2% 8.8%
Normalized
Adjusted
EBITDAR margin 16.3% 8.2% 7.1% 12.7%
See definitions of Adjusted EBITDA and Adjusted EBITDAR in the table
"Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDAR."
See normalizing adjustments in the table "Normalizing Adjustments -
Quarter Comparison."
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF INCOME (LOSS) FROM CONTINUING OPERATIONS TO ADJUSTED
EBITDA and ADJUSTED EBITDAR
($ in thousands)
For the Nine Months Ended September 30, 2010
(unaudited)
Rehabil- Elimination
itation Medical of
Inpatient Therapy Staffing Other & Affiliated
Services Services Services Corp Seg Revenue Consolidated
---------- -------- -------- --------- -------- ----------
Nonaffiliated
revenue $1,265,980 $ 89,723 $ 67,712 $ 28 $ - $1,423,443
Affiliated
revenue - 63,584 1,364 - (64,948) -
---------- -------- -------- --------- -------- ----------
Total
revenue $1,265,980 $153,307 $ 69,076 $ 28 $(64,948) $1,423,443
---------- -------- -------- --------- -------- ----------
Income
(loss)
from
continuing
opera-
tions $ 113,355 $ 11,757 $ 4,479 $(100,376) $ - $ 29,215
Income tax
expense - - - 19,990 - 19,990
Interest,
net 8,087 - (1) 26,280 - 34,366
Depreciation
and
amortization 34,320 484 543 2,385 - 37,732
---------- -------- -------- --------- -------- ----------
EBITDA $ 155,762 $ 12,241 $ 5,021 $ (51,721) $ - $ 121,303
Loss on
sale of
assets,
net - - - - - -
Restructuring
costs - - - - - -
---------- -------- -------- --------- -------- ----------
Adjusted
EBITDA $ 155,762 $ 12,241 $ 5,021 $ (51,721) $ - $ 121,303
Center
rent
expense 55,326 364 616 - - 56,306
---------- -------- -------- --------- -------- ----------
Adjusted
EBITDAR $ 211,088 $ 12,605 $ 5,637 $ (51,721) $ - $ 177,609
========== ======== ======== ========= ======== ==========
Normalized
Adjusted
EBITDA $ 155,762 $ 12,241 $ 5,021 $ (44,726) $ - $ 128,298
Normalized
Adjusted
EBITDAR $ 211,088 $ 12,605 $ 5,637 $ (44,726) $ - $ 184,604
Adjusted
EBITDA
margin 12.3% 8.0% 7.3% 8.5%
Adjusted
EBITDAR
margin 16.7% 8.2% 8.2% 12.5%
Normalized
Adjusted
EBITDA
margin 12.3% 8.0% 7.3% 9.0%
Normalized
Adjusted
EBITDAR
margin 16.7% 8.2% 8.2% 13.0%
See definitions of Adjusted EBITDA and Adjusted EBITDAR in the table
"Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDAR."
See normalizing adjustments in the table "Normalizing Adjustments -
Quarter Comparison."
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF INCOME (LOSS) FROM CONTINUING OPERATIONS TO ADJUSTED
EBITDA and ADJUSTED EBITDAR
($ in thousands)
For the Three Months Ended September 30, 2009
(unaudited)
Rehabil- Elimination
itation Medical of
Inpatient Therapy Staffing Other & Affiliated Consoli-
Services Services Services Corp Seg Revenue dated
-------- -------- -------- -------- -------- --------
Nonaffiliated
revenue $420,374 $ 26,394 $ 23,864 $ 12 $ - $470,644
Affiliated
revenue - 18,592 545 - (19,137) -
-------- -------- -------- -------- -------- --------
Total revenue $420,374 $ 44,986 $ 24,409 $ 12 $(19,137) $470,644
-------- -------- -------- -------- -------- --------
Income (loss)
from
continuing
operations $ 39,481 $ 2,606 $ 2,091 $(33,639) $ - $ 10,539
Income tax
expense - - - 7,220 - 7,220
Interest, net 3,024 - (1) 9,208 - 12,231
Depreciation
and
amortization 10,480 140 179 658 - 11,457
-------- -------- -------- -------- -------- --------
EBITDA $ 52,985 $ 2,746 $ 2,269 $(16,553) $ - $ 41,447
Restructuring
costs - - - 872 - 872
-------- -------- -------- -------- -------- --------
Adjusted
EBITDA $ 52,985 $ 2,746 $ 2,269 $(15,681) $ - $ 42,319
Center rent
expense 17,848 119 223 - - 18,190
-------- -------- -------- -------- -------- --------
Adjusted
EBITDAR $ 70,833 $ 2,865 $ 2,492 $(15,681) $ - $ 60,509
======== ======== ======== ======== ======== ========
Normalized
Adjusted
EBITDA $ 52,985 $ 2,746 $ 2,269 $(15,681) $ - $ 42,319
Normalized
Adjusted
EBITDAR $ 70,833 $ 2,865 $ 2,492 $(15,681) $ - $ 60,509
Adjusted EBITDA
margin 12.6% 6.1% 9.3% 9.0%
Adjusted
EBITDAR margin 16.8% 6.4% 10.2% 12.9%
Normalized
Adjusted
EBITDA margin 12.6% 6.1% 9.3% 9.0%
Normalized
Adjusted
EBITDAR margin 16.8% 6.4% 10.2% 12.9%
See definitions of Adjusted EBITDA and Adjusted EBITDAR in the table
"Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDAR."
See normalizing adjustments in the table "Normalizing Adjustments -
Quarter Comparison."
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF INCOME (LOSS) FROM CONTINUING OPERATIONS TO ADJUSTED
EBITDA and ADJUSTED EBITDAR
($ in thousands)
For the Nine Months Ended September 30, 2009
(unaudited)
Rehabil- Elimina-
itation Medical tion of
Inpatient Therapy Staffing Other & Affiliated
Services Services Services Corp Seg Revenue
Consolidated
---------- -------- -------- --------- -------- ----------
Nonaffiliated
revenue $1,251,524 $ 78,063 $ 77,335 $ 27 $ - $1,406,949
Affiliated
revenue - 55,168 1,668 - (56,836) -
---------- -------- -------- --------- -------- ----------
Total
revenue $1,251,524 $133,231 $ 79,003 $ 27 $(56,836) $1,406,949
---------- -------- -------- --------- -------- ----------
Income
(loss)
from
continuing
opera-
tions $ 120,395 $ 8,572 $ 6,401 $(102,097) $ - $ 33,271
Income tax
expense - - - 22,795 - 22,795
Interest,
net 9,345 (2) (1) 28,080 - 37,422
Depreciation
and
amortization 30,323 399 601 2,006 - 33,329
---------- -------- -------- --------- -------- ----------
EBITDA $ 160,063 $ 8,969 $ 7,001 $ (49,216) $ - $ 126,817
Loss on sale
of assets,
net 7 34 - - - 41
Restructuring
costs - - - 872 - 872
---------- -------- -------- --------- -------- ----------
Adjusted
EBITDA $ 160,070 $ 9,003 $ 7,001 $ (48,344) $ - $ 127,730
Center
rent
expense 53,707 348 700 - - 54,755
---------- -------- -------- --------- -------- ----------
Adjusted
EBITDAR $ 213,777 $ 9,351 $ 7,701 $ (48,344) $ - $ 182,485
========== ======== ======== ========= ======== ==========
Normalized
Adjusted
EBITDA $ 164,370 $ 9,003 $ 7,001 $ (48,344) $ - $ 132,030
Normalized
Adjusted
EBITDAR $ 218,077 $ 9,351 $ 7,701 $ (48,344) $ - $ 186,785
Adjusted
EBITDA
margin 12.8% 6.8% 8.9% 9.1%
Adjusted
EBITDAR
margin 17.1% 7.0% 9.7% 13.0%
Normalized
Adjusted
EBITDA
margin 13.1% 6.8% 8.9% 9.4%
Normalized
Adjusted
EBITDAR
margin 17.4% 7.0% 9.7% 13.3%
See definitions of Adjusted EBITDA and Adjusted EBITDAR in the table
"Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDAR."
See normalizing adjustments in the table "Normalizing Adjustments -
Quarter Comparison."
Sun Healthcare Group, Inc. and Subsidiaries
Selected Operating Statistics
Continuing Operations
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- ---------------------------
2010 2009 2010 2009
Consolidated
Company
-------- -------- ---------- ----------
Revenues -
Non-
affiliated
(in
thousands)
Skilled
Nursing
and
similar
facilit-
ies $412,295 $412,550 1,230,684 1,230,551
Hospice 11,277 7,242 33,633 19,249
Other -
Inpatient
Services 588 582 1,663 1,724
-------- -------- ---------- ----------
Inpatient
Services 424,160 420,374 1,265,980 1,251,524
Rehabili-
tation
Therapy
Services 30,342 26,394 89,723 78,063
Medical
Staffing
Services 21,481 23,864 67,712 77,335
Other -
non-core
businesses 14 12 28 27
-------- -------- ---------- ----------
Total $475,997 $470,644 $1,423,443 $1,406,949
======== ======== ========== ==========
Revenue Mix
-
Non-
affiliated
(in
thousands)
Medicare $138,125 29% $137,857 29% 421,398 30% 417,059 30%
Medicaid 194,936 41% 189,878 40% 574,856 40% 559,358 40%
Private
and
Other 113,610 24% 114,143 25% 339,492 24% 341,424 24%
Managed
Care /
Insurance 24,178 5% 24,393 5% 72,636 5% 76,591 5%
Veterans 5,148 1% 4,373 1% 15,061 1% 12,517 1%
-------- --- -------- --- ---------- --- ---------- ---
Total $475,997 100% $470,644 100% $1,423,443 100% $1,406,949 100%
======== === ======== === ========== === ========== ===
Inpatient
Services
Stats
Number of
centers: 202 202 202 202
Number of
available
beds: 22,407 22,331 22,407 22,331
Occupancy
%: 86.9% 88.1% 87.1% 88.3%
Payor Mix
% based
on
patient
days:
Medicare
- SNF
Beds 14.7% 15.3% 15.2% 15.8%
Managed
care /
Ins. -
SNF
Beds 3.9% 3.9% 4.0% 4.1%
-------- -------- ---------- ----------
Total
SNF
skilled
mix 18.6% 19.2% 19.2% 19.9%
-------- -------- ---------- ----------
Medicare 13.4% 14.0% 13.9% 14.4%
Medicaid 62.5% 60.6% 62.2% 60.4%
Private
and
Other 19.4% 20.8% 19.1% 20.4%
Managed
Care /
Insurance 3.5% 3.6% 3.6% 3.8%
Veterans 1.2% 1.0% 1.2% 1.0%
Revenue
Mix % of
revenues:
Medicare
- SNF
Beds 31.1% 32.2% 31.9% 32.9%
Managed
care /
Ins. -
SNF
Beds 6.0% 6.1% 6.0% 6.4%
-------- -------- ---------- ----------
Total
SNF
skilled
mix 37.1% 38.3% 37.9% 39.3%
-------- -------- ---------- ----------
Medicare 31.4% 31.9% 32.2% 32.4%
Medicaid 46.0% 45.2% 45.4% 44.7%
Private
and
Other 15.8% 16.1% 15.5% 15.8%
Managed
Care /
Insurance 5.6% 5.8% 5.7% 6.1%
Veterans 1.2% 1.0% 1.2% 1.0%
Revenues
PPD:
LTC only
Medicare
(Part A) $ 463.36 $ 457.79 $ 464.46 $ 454.15
Medicare
Blended
Rate
(Part A
& B) $ 505.73 $ 496.11 $ 504.05 $ 491.94
Medicaid $ 173.49 $ 172.06 $ 173.29 $ 170.86
Private
and
Other $ 182.95 $ 175.29 $ 184.95 $ 175.82
Managed
Care /
Insurance$ 375.76 $ 371.09 $ 369.09 $ 373.86
Veterans $ 238.74 $ 234.74 $ 241.44 $ 229.95
Rehab
contracts
Affiliated 132 121 132 121
Non-affiliated 344 328 344 328
Average
Qtrly
Revenue
per
Contract
(in thou-
sands) $ 109 $ 100 $ 107 $ 99
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
NORMALIZING ADJUSTMENTS - QUARTER COMPARISON
(in thousands, except per share data)
AS REPORTED - 3rd QUARTER 2010
-------------------------------------------------------------
Income
from
Adjusted Adjusted Continuing Disc Net
Revenue EBITDAR EBITDA Pre-tax Operations Ops Income
-------- ------- ------- ------- ------- ------- -------
As Reported
3rd QUARTER
2010 $475,997 $55,858 $36,904 $13,557 $ 7,998 $ (442) $ 7,556
Percent of
Revenue 11.7% 7.8% 2.8% 1.7% -0.1% 1.6%
Normalizing
Adjustments:
REIT
separation
transaction
costs - 4,747 4,747 4,747 2,801 - 2,801
-------- ------- ------- ------- ------- ------- -------
Normalized
As Reported
- 3rd
QUARTER
2010 $475,997 $60,605 $41,651 $18,304 $10,799 $ (442) $10,357
======== ======= ======= ======= ======= ======= =======
Percent of
Revenue 12.7% 8.8% 3.8% 2.3% -0.1% 2.2%
Diluted EPS:
As Reported $ 0.13 $ - $ 0.13
As Normalized $ 0.18 $ (0.01) $ 0.17
Weighted average
number of common
and common
equivalent
shares
outstanding
on a diluted Diluted
basis: Shares
-------
As Reported
/ As
Normalized
diluted
shares 59,538
Stock
offering
impact on
diluted
shares (15,412)
-------
As Adjusted
diluted
shares 44,126
=======
AS REPORTED - 3rd QUARTER 2009
-------------------------------------------------------------
Income
from
Adjusted Adjusted Continuing Disc Net
Revenue EBITDAR EBITDA Pre-tax Operations Ops Income
-------- ------- ------- ------- ------- ------- -------
As Reported
- 3rd
QUARTER
2009 $470,644 $60,509 $42,319 $17,759 $10,539 $ (881) $ 9,658
Percent of
Revenue 12.9% 9.0% 3.8% 2.2% -0.2% 2.1%
Normalizing
Adjustments:
Restructuring
costs - - - 872 514 - 514
-------- ------- ------- ------- ------- ------- -------
Normalized
As Reported
- 3rd
QUARTER
2009 $470,644 $60,509 $42,319 $18,631 $11,053 $ (881) $10,172
======== ======= ======= ======= ======= ======= =======
Percent of
Revenue 12.9% 9.0% 4.0% 2.3% -0.2% 2.2%
Diluted EPS:
As Reported $ 0.24 $ (0.02) $ 0.22
As Normalized $ 0.25 $ (0.02) $ 0.23
See definitions of Adjusted EBITDA and Adjusted EBITDAR in the table
"Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDAR."
Normalizing adjustments are transactions or adjustments not related to
ongoing operations and consist of REIT separation transaction costs and
restructuring costs.
Normalizing adjustments do not include any adjustment for the August 2010
equity offering or the use of proceeds to pay down debt, avoiding interest
expense.
Since normalizing adjustments are not measurements determined in
accordance with U.S. generally accepted accounting principles and are thus
susceptible to varying calculations and interpretations, the information
presented herein may not be comparable to other similarly described
information of other companies.
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
NORMALIZING ADJUSTMENTS - YEAR TO DATE COMPARISON
(in thousands, except per share data)
AS REPORTED -NINE MONTHS 2010
-------------------------------------------------------------
Income
from
Continuing
Adjusted Adjusted Pre- Opera- Disc Net
Revenue EBITDAR EBITDA tax tions Ops Income
---------- -------- -------- ------ ------ ------ ------
As Reported
- Nine
Months 2010 $1,423,443 $177,609 $121,303 $49,205 $29,215 $(1,488)$27,727
Percent of
Revenue 12.5% 8.5% 3.5% 2.1% -0.1% 1.9%
Normalizing
Adjustments:
REIT
separation
transaction
costs - 6,995 6,995 6,995 4,127 - 4,127
---------- -------- -------- ------ ------ ------ ------
Normalized
As Reported
- Nine
Months 2010 $1,423,443 $184,604 $128,298 $56,200 $33,342 $(1,488)$31,854
========== ======== ======== ====== ====== ====== ======
Percent of
Revenue 13.0% 9.0% 3.9% 2.3% -0.1% 2.2%
Diluted EPS:
As Reported $ 0.58 $(0.03) $ 0.55
As
Normalized $ 0.66 $(0.03) $ 0.63
Weighted average
number of common and
common equivalent
shares
outstanding
on a diluted Diluted
basis: Shares
------
As Reported
/ As
Normalized
diluted
shares 50,251
Stock
offering
impact on
diluted
shares (5,879)
------
As Adjusted
diluted
shares 44,372
======
AS REPORTED - NINE MONTHS 2009
-------------------------------------------------------------
Income
from
Continuing
Adjusted Adjusted Pre- Opera- Disc Net
Revenue EBITDAR EBITDA tax tions Ops Income
---------- -------- -------- ------ ------ ------ ------
As Reported
- Nine
Months 2009 $1,406,949 $182,485 $127,730 $56,066 $33,271 $(3,275)$29,996
Percent of
Revenue 13.0% 9.1% 4.0% 2.4% -0.2% 2.1%
Normalizing
Adjustments:
Restructuring
costs - - - 872 514 - 514
Prior
periods'
self-
insurance
costs - 4,300 4,300 4,300 2,537 348 2,885
---------- -------- -------- ------ ------ ------ ------
Normalized
As Reported
- Nine
Months 2009 $1,406,949 $186,785 $132,030 $61,238 $36,322 $(2,927)$33,395
========== ======== ======== ====== ====== ====== ======
Percent of
Revenue 13.3% 9.4% 4.4% 2.6% -0.2% 2.4%
Diluted EPS:
As Reported $ 0.76 $(0.08) $ 0.68
As Normalized $ 0.83 $(0.07) $ 0.76
See definitions of Adjusted EBITDA and Adjusted EBITDAR in the table
"Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDAR."
Normalizing adjustments are transactions or adjustments not related to
ongoing operations and consist of REIT separation transaction costs,
restructuring costs and prior periods' self-insurance costs.
Normalizing adjustments do not include any adjustment for the August 2010
equity offering or the use of proceeds to pay down debt, avoiding interest
expense.
Since normalizing adjustments are not measurements determined in
accordance with U.S. generally accepted accounting principles and are thus
susceptible to varying calculations and interpretations, the information
presented herein may not be comparable to other similarly described
information of other companies.
Investor Inquiries
(505) 468-2341
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