Skilled Healthcare Presentation

8/2/2019 Skilled Healthcare Presentation

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Credit SuisseNovember, 2011


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The following information contains, or may be deemed to contain, forward-looking statements, including but not limited to 2011 revenue, EDITDAR, EBITDA and EPSguidance. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may notoccur in the future. The future results of the company may vary from the results expressed in, or implied by, the following forward-looking statements, possibly to amaterial degree. For a discussion of some of the important factors that could cause the companys results to differ from those expressed in, or implied by, the followingforward-looking statements, please refer to the companys latest annual report on Form 10-K for the year ended December 31, 2010 filed with the Securities and ExchangeCommission (including sections entitled Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations containedtherein) and in our subsequent reports on Form 10-Q and Form 8-K. Any forward-looking statements are made only as of the date of this presentation. Skilled Healthcaredisclaims any obligation to update or revise any forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements.

Note: References made in these materials and related presentations to Skilled Healthcare, the Company, we, us and our refer to Skilled Healthcare Group,Inc. and each of its wholly-owned companies.

Safe Harbor Statement

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Industry LandscapeHealthcare Providers


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Favorable Demographic Trends

Source: AHCA.

3

40.246.8

54.863.9

72.177.5 81.2

13.0% 14.5%16.3%

18.3% 19.8% 19.9% 20.0%

2010E 2015E 2020E 2025E 2030E 2035E 2040E

65+ Population % of Total Population

(Population, in millions)

65+ Population Growth

5.8 6.36.6 7.2

8.7

11.5

14.2

1.8%1.9% 1.9% 2.0%

2.3%

2.9%

3.5%

2010E 2015E 2020E 2025E 2030E 2035E 2040E

85+ Population % of Total Population

(Population, in millions)

85+ Population Growth


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4

SNFs offer skilled medical care and custodial care in a cost efficient setting

Cost ofpatientservice

Severity of patient illnessYellow sections in which we are involved High

High

Low

Low

AssistedLiving

HomeHealth

Adult DayCare

OutpatientRehab

Hospice

IRFLTAC

Acute CareHospital

InpatientRehab

SNF

Note: Bubbles are an approximation of relative industry size.

SNFs Provide a More Affordable Option


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5

Shift of Patient Care to Lower Cost Alternatives

SNFs deliver effective clinical outcomes at reduced costs Increased Medicare funding for treatment of high-acuity patients

Lower staffing requirements and associated costs

60% rule driving high-acuity patients from in-patient rehab facilities toSNFs

Short stay outlier policy shifting patients from LTACs to SNFs

Shorter length of staysfor SNFs

SNFs Are Lower Cost Setting

Source: Medpac

Comparison of per Case Rates SNF IRF LTACTracheotomy with Vent $10,051 $26,051 $115,463

Respiratory with Vent 7,897 26,051 74,689

Joint Replacement 6,165 17,135 67,104

Hip Fracture 10,618 18,487 44,633

Stroke 8,905 34,196 31,496

Average $8,727 $24,384 $66,677


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Company Overview

Skilled Healthcare Group, Inc. (NYSE: SKH)


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Diversified Health Care Portfolio

7

Long-Term Care

101 Skilled nursing & assistedliving facilities

74% ownership

High-acuity focus driving industry-leading quality mix & EBITDAmargins

Care operations in 7 states

Long-Term Care 97 skilled nursing & assisted living affiliate facilities

operated

5 skilled nursing facilities leased to a third party operator

Award-winning quality care

76.5% property ownership

High-acuity focus driving quality mix & EBITDA margins

Providing care in 8 states

Rehabilitation Therapy Providing physical, speech, and occupational therapy

177 contracts

36% affiliated

64% unaffiliated

Partner vs. vendor approach

Hospice Providing palliative and supportive care to people and

their families who are facing an incurable disease


AZ, CA, ID, MT, NM, NV

Home Health Care Providing professional in-home skilled medical care

Medicare-certified


AZ, CA, ID, MT, NM, NV


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Expanding Geographic Footprint

Texas22 facilities,

22% of revenue

Iowa2 facilities,

1% of revenue

Montana & Idaho3% of revenue

Des Moines

Kansas City

San Antonio

Las Vegas

Eureka

(leased)

21

Houston

California 31 facilities(26 operated & 5 leased),

36% of revenue

Kansas & Missouri33 facilities,17% of revenue

New Mexico10 facilities,

12% of revenue

Nevada3 facilities,8% of revenue

Davenport

Los Angeles

Arizona1% of revenue

Dallas

Billings

Phoenix

Boise

Albuquerque

Note: States represent approximate % of revenue as of September 30, 2011. The Company has a hospice joint venture with Gentiva in

the Kansas/Missouri market.

* The Omaha, Nebraska facility began operating on April 1, 2011 as such there is no revenue for period ended 03/31/11.

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Concentrated network of SNF/ALF affiliates

Urban/suburban cluster market focus

8,814 SNF beds

1,308 ALF units

Growth opportunity for home health care in

existing SNF markets

SNF/ALF Locations

SNF/Hospice/Home Care Locations

Hospice/Home Care Locations

Omaha

Nebraska*1 facility

0% of revenue


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Outstanding Recognition for High Quality Focus

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71 facilities were awarded Bronze National Quality Awards from the AHCA/NCAL

within last 3 years.

- 13 facilities were awarded the Bronze National Quality Award

in 2011.

3 facilities were awarded Silver National Quality Awards from the AHCA/NCAL within

the last 2 years.

- 2 facilities were awarded the Silver National Quality Award in 2011.

Fort Worth Center of Rehabilitation

- Opened in July 2010

- 2nd new state-of-the-art skilled

nursing development


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Industry-Leading Real Estate Ownership Skilled Healthcare owns an INDUSTRY-LEADING 76.5% of its

facilities Ownership provides greater operating and financial flexibility

Ownership eliminates exposure to rising rents

Ability to accelerate build-out of Express RecoveryTM units

Consistent reinvestment in facilities

Access to capital / high leveragability of real estate

Ability to easily manage and sell facilities

67%

8% 3%

SKH ENSG KND SUNH

Owned Facilities

Note: KND ownership represents SNF facility ownership, JPMorgan

report 12/15/09. SUNH ownership reflects recent spin-off.

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76.5%


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New Developments Raise BarFor Industry Standard

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Skilled Nursing Facilities

Baylor Healthcare System alliance offersthe right to build on Baylor acute campuses

2 state-of-the-art facilities with high-acuity capabilities

Dallas, TX 128-bed SNF

Fort Worth, TX 128-bed SNF

Selectively targeting other markets to accommodate SNF high-acuity

patients

Assisted Living Facilities Completed 2 developments of 41 units each in Ottawa and Tonganoxie, Kansas


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Innovative Express Recovery Units

Dedicated unit in a skilled nursing facility- 61 units with 2,197 beds at Q3 2011

Focus on high-acuity, short-term stay

Lower cost than LTACs & IRFs, high quality care

Specialty Variations in Select Markets Renew tm

A Rehabilitation Unit Designed for Women

Pulmonary Advantage tmA Respiratory Specialty Unit

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Financial & Operating Performance


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Expanding Revenue Mix

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80%

11% 7%2%

Revenue by Segment Q3 2011

Skilled Nursing & Assisted LivingHallmark Rehabilitation

HospiceHome Care


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High-Acuity Focus Drives Quality & Skilled Mix

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Skilled Healthcare is an industry leader in skilled and quality mix percentages

Express Recovery tmUnitsDrive Skilled Mix

25.1%

12.9%

Skilled Mix

ERU Non-ERUSource: Based on public filings, available data for each of the reported periods as of 09/30/2011.

* Peer average includes the weighted average for SUNH, KND, and ENSG for each for the reported periods.

Skilled Mix

22.6% 22.5% 24.5% 23.5% 22.7%

20.1% 19.9%

21.9% 21.5%20.9%

Q3'10 Q4'10 Q1'11 Q2'11 Q3'11Skilled Healthcare Peer Avg.*

Quality Mix

68.5% 69.1%72.1% 71.5% 70.8%

58.6% 58.3%

62.3% 61.8% 61.4%

Q3'10 Q4'10 Q1'11 Q2'11 Q3'11Skilled Healthcare Peer Avg.*


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Stable Occupancy Trends

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Occupancy in the skilled nursing affiliate facilities has remained steady in adifficult economic environment

SNF Occupancy(1)

83.4% 82.9% 83.8% 82.5% 83.0%

Q3'10* Q4'10* Q1'11 Q2'11 Q3'11

(1) Occupancy based on available beds. Note: Occupancy excludes ALFs.

* Occupancy excludes Fort Worth Center of Rehabilitation which opened in July 2010.


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Solid Operating Performance

Adjusted EBITDA(1)($ in millions)($ in millions)

2011 vs. 2010 growth: 5.8% 2011 vs. 2010 growth: 6.6%

$634.6

$733.3$759.8

$820.2$868

2007 2008 2009 2010 2011E

$98.9$109.8 $110.9

$121.5$129.5

2007 2008 2009 2010 2011E

(1) Adjusted for special charges and non-recurring/non- operating items. See reconciliation of Adjusted EBITDA for the respective periods

referenced in our regulatory filings listed on our Web site.

(2) 2011 represents the mid-point of the updated numbers per the 2011 guidance issued on September 8, 2011.

Revenue

22

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Sustained Margin Advantage Over Peers

Note: EBITDA adjusted for non-recurring and non-operating charges for SKH. See reconciliation of EBITDA for the respective periods

referenced in our regulatory filings listed on our Web site. Source: Based on public filings and Q3 2011 company press releases.

* Peer average includes the weighted average for SUNH, KND, and ENSG for each for the reported periods.

14.5% 14.6% 15.5%16.5% 15.8% 15.6%

9.1%

8.2%

9.5%

8.9%

9.6%

8.9%

Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11

Adjusted EBITDA Margins - YTD 2011

Skilled Healthcare Peer Avg.*

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$131

$151

$354

$495

$139

$157

$359

$525

$146$162

$369

$557

$151

$169

$379

$578

$154 $175

$388

$633

Medicaid Private Other Managed Care Medicare

2007 2008 2009 2010 YTD 2011 (as of 09/30/2011)

High Acuity Model Driving Higher Revenues

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Improving Revenue PPDs(SNFs only, before eliminations)

28.8% 22.8% 10.0% 38.4%As % of SNF revenue (as of 09/30/2011):


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Strong Operating Cash Flow($ millions)

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$30.0

$45.0

$60.0

$75.0

$90.0

2008 2009 2010* YTD Q3 2011

$67.5$74.9

$88.8

$66.2

*2010 has been adjusted for legal settlement charges which occurred in Q310.


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Continuous Business Reinvestment

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Routine CapEx as% of Total Revenues:

Total Capital Expenditures: $65.2 $117.8 $73.0 $41.2 $73.1 $24.7

1.3% 1.4% 2.5% 2.7% 1.8% 3.8%

7.0 8.818.5 20.3 14.3 10.33.4

4.512.8 8.7

5.60.7

11.8 16.1

18.37.2

7.90.1

43.0

88.423.4

5.045.3

13.6

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

2006 2007 2008 2009 2010 YTD Q3 2011

AcquisitionsDevelopmentsERURoutine CapEx


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Improving Debt Covenants

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Debt StructureTerm Loan - $360 million, due April 2016

Revolver - $100 million, due April 2015

11% Notes - $130 million, due June 2014

All-in interest rate of ~ 7.8% (09/30/11) Leverage ratio (09/30/11) 3.5X

maximum debt covenant ratio 5.4X

Fixed charge coverage ratio (09/30/11) 3.5X minimum debt covenant ratio 1.5X

Term Loan 11% Notes Other Revolver

$352

$130

$10 $0

Long-term Debt Structure($ millions, 9/30/11)


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Reimbursement Update

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Medicare CMS issued a Medicare rate cut of 11.1% effective October 1, 2011

Decrease in therapy business from elimination of group therapy and OMRA.

Medicaid Average rate = $154 PPD for Q3 2011

FY 2012 Rate Environment

43.0%2.5%

51.8%

91.2%

5.2% 6.3%

0%20%40%

60%80%

100%

Q3 2010 Q3 2011

% of Medicare Patient Days in RUG Categories

Non-RehabRehab (ex-Upper 9)Upper 9 Rehab


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2011 Guidance Full Year($ millions, except EPS)

Note: Guidance as of 09/08/11. The Company undertakes no obligation to update this guidance.

Guidance assumes: Decline in skilled nursing Medicare revenue of approximately $7.0 million for the fourth quarter of 2011 due to

the CMS rate reduction.

Combined decrease in revenue and increase in expense for rehabilitation therapy of approximately $3.5 million forthe fourth quarter of 2011.

Other state Medicaid revenue reductions of approximately $1.0 million for the fourth quarter of 2011 as a result

of state rate reductions.

Of an anticipated combined negative annualized impact of approximately $45 million from the aforementioned

CMS final rule and from Medicaid reductions, the Company expects to be able to mitigate approximately $15

million on an annualized basis through a combination of enterprise-wide cost savings and productivity

improvements in its rehabilitation therapy business. A portion of the cost savings will be effective immediately and

the remainder will be phased in through the end of the Company's fiscal year 2012. The Company anticipates

that approximately $2.0 million of the projected $15 million mitigation will be realized during the fourth quarter

of 2011.

No additional Medicare or Medicaid rate reductions.

2011 capital expenditures of approximately $15 million to $18 million.

Average interest rate on outstanding debt of approximately 8%.

An effective tax rate of 38.5%.

No material acquisitions, developments or divestitures.

No goodwill or intangible asset impairment charge, excluding the goodwill and long-lived asset impairment charge

recognized in Q3 2011.

No material variations in the Company's occupancy and skilled mix from what the Company experienced through

the second quarter, adjusted for seasonal trends typically experienced in the second half of the year.

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LOW HIGH

Revenue $865.0 $870.0

EBITDAR $147.0 $150.0

EDITDA $128.0 $131.0

EPS $1.07 $1.12


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Summary

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Strong reputation for providing high quality patient care with favorable clinical outcomes

Attractive industry fundamentals

Integrated SNF / Rehab model with emphasis on high-acuity patients

Diversified healthcare portfolio

Superior operating and financial performance

Significant facility ownership with strong underlying value

Strategic focus on referral relationships in local markets and regional payor networks

Proven acquisition and development strategy

Experienced and proven management team

Strong risk management protocol


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