Skilled Healthcare Group Q2 2014 revenue decreases 1.5% to $207 million

Skilled Healthcare Group, Inc. (NYSE: SKH) today announced its consolidated financial operating results for the three and six month period ended June 30, 2014.

"I am pleased with our second quarter results and the progress we have made in executing on our strategic plan. During the second quarter, we opened a state-of-the-art skilled nursing facility adjacent to the University of Kansas Medical Center and made some meaningful headway in stabilizing our core long-term care services segment," said Robert Fish, Chief Executive Officer of Skilled Healthcare Group. "During the quarter we also amended our credit agreement, giving us additional cushion with our covenants including new flexibility for non-cash reserves."

Second Quarter 2014 Results

Continuing Operations

Revenue for the quarter ended June 30, 2014 was $207.0 million, a decrease of 1.5% when compared to $210.2 million in the second quarter of 2013. Skilled mix remained constant at 22.0% in the second quarter of 2014 and 2013. Occupancy decreased 30 basis points to 81.7% in the second quarter of 2014 from 82.0% in the second quarter of 2013. Quality mix² in the second quarter of 2014 decreased 200 basis points to 67.0%, compared to 69.0% in the prior year period.

Adjusted EBITDA³ was $18.3 million, or 8.8% of revenue, for the quarter ended June 30, 2014, and remained unchanged at $18.3 million, or 8.7% of revenue, in the same period a year ago. Adjusted EBITDAR³ was $23.2 million, or 11.2% of revenue, for the quarter ended June 30, 2014, an increase of 0.9% compared to $23.0 million, or 10.9% of revenue, for the quarter ended June 30, 2013.

Net loss for the quarter ended June 30, 2014 totaled $2.8 million, as compared to net income of $1.5 million for the second quarter of 2013. Adjusted net income⁴ for the quarter ended June 30, 2014 totaled $2.9 million, a decrease of 22.0% compared to adjusted net income of $3.7 million for the second quarter of 2013. Adjusted net income excludes certain items as described in the Reconciliation of (Loss) Income From Continuing Operations Before Provision for Income Taxes to Adjusted Net Income table at the end of this press release.

Net loss per share was $0.07 for the quarter ended June 30, 2014, as compared to net income per diluted share of $0.04 for the same period in 2013. Adjusted net income per diluted share⁴ was $0.07 for the quarter ended June 30, 2014, a decrease of 30.0% compared to adjusted net income per diluted share of $0.10 for the quarter ended June 30, 2013.

Long-Term Care Services Segment

Revenue for our long-term care services segment in the quarter ended June 30, 2014 was $163.1 million, an increase of $4.8 million, or 3.0%, as compared to $158.3 million for the same period a year ago. Revenue for this segment represented 78.8% of total revenue in the second quarter of 2014, compared to 75.3% of total revenue in the second quarter of 2013.

Therapy Services Segment

Revenue for Hallmark Rehabilitation, our rehabilitation therapy services segment, was $23.1 million for the quarter ended June 30, 2014, a decrease of $3.5 million, or 13.4%, compared to the same period a year ago. Third-party rehabilitation therapy accounted for 11.1% of total revenue in the second quarter of 2014, compared to 12.7% of total revenue in the second quarter of 2013.

Hospice and Home Health Services Segment

Revenue for Signature Hospice and Home Health, our hospice and home health services segment, was $20.8 million in the second quarter of 2014, a decrease of $4.4 million, or 17.5%, compared to $25.3 million in the second quarter of 2013. Average daily hospice census decreased 22.1% to 1,032 for the second quarter of 2014, from 1,324 for the second quarter of 2013.

First Six Months 2014 Results

Continuing Operations

Revenue for the six months ended June 30, 2014 was $414.3 million, a decrease of 2.6% when compared to $425.3 million for the six months ended June 2013. Skilled mix decreased 20 basis points to 22.2% for the six months ended June 30, 2014 from 22.4% for the six months ended June 30, 2013. Occupancy decreased 40 basis points to 82.1% for the six months ended June 30, 2014 from 82.5% for the six months ended June 30, 2013. Quality mix for the six months ended June 30, 2014 decreased 220 basis points to 67.3%, compared to 69.5% in the prior year period.

Adjusted EBITDA was $36.1 million, or 8.7% of revenue, for the six months ended June 30, 2014, a decrease of 3.3% compared to $37.4 million, or 8.8% of revenue, in the same period a year ago. Adjusted EBITDAR was $45.8 million, or 11.1% of revenue, for the six months ended June 30, 2014, a decrease of 1.9% compared to $46.7 million, or 11.0% of revenue, for the six months ended June 30, 2013.

Net loss for the six months ended June 30, 2014 totaled $1.5 million, as compared to net income of $4.6 million for the six months ended June 30, 2013. Adjusted net income for the six months ended June 30, 2014 totaled $5.1 million, a decrease of 32.4% compared to adjusted net income of $7.6 million for the six months ended June 30, 2013. Adjusted net income excludes certain items as described in the Reconciliation of (Loss) Income From Continuing Operations Before Provision for Income Taxes to Adjusted Net Income table at the end of this press release.

Net loss per share was $0.04 for the six months ended June 30, 2014, as compared to net income per diluted share of $0.12 for the same period in 2013. Adjusted net income per diluted share was $0.13 for the six months ended June 30, 2014, a decrease of 35.0% compared to adjusted net income per diluted share of $0.20 for the six months ended June 30, 2013.

Long-Term Care Services Segment

Revenue for our long-term care services segment for the six months ended June 30, 2014 was $324.4 million, an increase of $4.3 million, or 1.3%, as compared to $320.2 million for the same period a year ago. Revenue for this segment represented 78.3% of total revenue for the six months ended June 30, 2014, compared to 75.3% of total revenue for the six months ended June 30, 2013.

Therapy Services Segment

Revenue for Hallmark Rehabilitation, our rehabilitation therapy services segment, was $46.1 million for the six months ended June 30, 2014, a decrease of $7.6 million, or 14.1%, compared to the same period a year ago. Third-party rehabilitation therapy accounted for 11.1% of total revenue for the six months ended June 30, 2014, compared to 12.7% of total revenue for the six months ended June 30, 2013.

Hospice and Home Health Services Segment

Revenue for Signature Hospice and Home Health, our hospice and home health services segment, was $43.7 million for the six months ended June 30, 2014, a decrease of $7.7 million, or 14.9%, compared to $51.4 million for the six months ended June 30, 2013. Average daily hospice census decreased 20.5% to 1,058 for the six months ended June 30, 2014, from 1,330 for the six months ended June 30, 2013.