Skilled Healthcare Group, Inc. (NYSE: SKH) announced its Q1 2010 earnings this week and the acquisition of substantially all the assets of five Medicare-certified hospice companies and three Medicare-certified home health companies. SKH showed total consolidated revenue for the quarter ended March 31, 2010 was $189.3 million, compared to total consolidated revenue of $188.1 million in the first quarter of 2009 and $188.4 million in the fourth quarter of 2009 and net income for Q1 2010 totaled $8.9 million, compared to $10.0 million for the first quarter of 2009.
“Our first quarter results demonstrate improving operating metrics in several key areas. First, our occupancy rate increased to 83.8 percent, or 70 basis points, over the fourth quarter of 2009 as the affiliates increased average daily census by 140 patients. Second, our skilled mix improved by 90 basis points to 23.0 percent as compared to the fourth quarter of 2009. Additionally, the percentage of Medicare days in the upper nine RUG categories reached an all-time high of 46.4 percent. With a continuous focus on high quality of care, these improving operating metrics illustrate the success of initiatives implemented in 2009 to mitigate risk from the challenging economic and competitive environment,” said Boyd Hendrickson, Chairman and Chief Executive Officer.
As part of the acquisition of the five hospice and three home health companies, SKH will enter into a fee-based management agreement for another home health company and be granted an option to acquire substantially all of the assets of such other company. The hospice and home health companies collectively have operations in Idaho, Montana, Nevada and Arizona. Total consideration of the transactions is approximately $62 million consisting of approximately $43 million in cash with the remainder in the form of certain deferred payments payable over a three to five year period. The cash portion of the purchase price will be funded primarily from Skilled Healthcare’s senior credit facilities.
Boyd Hendrickson, Chairman and CEO, noted, “We are very excited about this transaction which comes with strong cash flow, a successful operating platform, a solid management team and higher than Company average EBITDA margins. Additionally, it expands our business lines into home health care and further expands our hospice platform. This lateral diversification expands our footprint to three additional states; thereby, diversifying our revenue stream both geographically and by sector.”