Skilled Healthcare Group, Inc. (NYSE: SKH) today announced that the Skilled Healthcare Group expects to restate its consolidated financial statements for the quarterly and annual periods from January 1, 2006 through March 31, 2009. As a result, the Audit Committee of the Board of Directors today has concluded that investors should no longer rely on the Company’s historical financial statements nor the reports of Ernst & Young LLP, the Company’s independent registered public accounting firm, for those affected periods. Based on the Company’s preliminary analysis, the Company expects that the correction of the understatement is likely to require cumulative charges against after-tax earnings in the aggregate amount of between $8 million and $9 million over the affected periods. The announcement and restatement relates to understated reserves for accounts receivables in each of the affected quarters. The errors appear to have resulted from improper dating of accounts receivables by a former employee who appears to have acted in ways that were inconsistent with the Company’s accounting policies and practices. With the oversight of the Audit Committee, the Company has initiated a special investigation with respect to the areas in which the former employee was involved, as well as a review of what steps, if any, may be appropriate to ensure future compliance with the Company’s accounting policies and practices relating to accounts receivable reserves. SKH management identified the errors through an internal review of its reserves for accounts receivable and will file its restated financial statements with the Securities and Exchange Commission as soon as practicable following completion of the Audit Committee’s investigation.
The Company is updating its 2009 full year guidance solely to reflect the correction in its accounts receivable reserves. The Company now expects full year EBITDA to be between $121 million and $126 million and EBITDAR to be between $140 million and $145 million. Earnings per diluted share are expected to be between $1.02 and $1.08. EBITDA and EBITDAR reflect the non-GAAP adjustments to net income that are detailed in the table below, which reconciles forecasted net income to forecasted EBITDA and EBITDAR.
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