Skilled Healthcare Group (NYSE: SKH) released its second quarter earnings and announced that it has terminated its efforts on the exploration of strategic alternatives, including a potential sale of the real estate assets or the whole company.
SKH reported revenue for the second quarter of $215.5 million, an increase of 7.3% when compared to $201.0 million in the second quarter of 2010. The company’s year to date revenues reflect a 12.3% increase as compared to the first six months of 2010.
“Furthering our diversification efforts, we are pleased to welcome both Altura Homecare & Rehab and Vintage Park at San Martin to the Skilled Healthcare family. Both acquisitions closed in July. Altura Homecare & Rehab serves the Albuquerque, New Mexico market and Vintage Park at San Martin is an assisted living facility located in Las Vegas. We are also pleased to report that cash flow from operations was $45.2 million for the first half of the year. We have reduced debt by $26.7 million and increased cash by $10.8 million since the beginning of the year,” said Boyd Hendrickson, Chairman and Chief Executive Officer of Skilled Healthcare Group, Inc.
Net income for the three-months ended June 30, 2011, including the non-recurring items described in the reconciliation tables below, was $10.6 million, or $0.28 per diluted share, up 133% as compared to net income of $4.5 million, or $0.12 per diluted share, for the same period of 2010.
In conjunction with the earnings release, SKH made the announcement to terminate its search for strategic alternatives in part with the announcement that the Centers for Medicare & Medicaid Services (CMS) was reducing its reimbursement rates. The board of directors for SKH felt that the reduction in rates would significantly diminish the prospects of maximizing shareholder value through a sale of the Company or its real estate assets in the near term.
“While we are extremely disappointed with the announcement by the Centers for Medicare & Medicaid Services (CMS) on Friday, we believe we are well positioned for the future with our conservative model for managing our skilled nursing facility business and diversification of our operations to reduce the exposure to such radical changes in Medicare and Medicaid rates,” noted Hendrickson.
The company is assessing the effects of the CMS ruling on its operations and expects to update its full year guidance upon completion of that process.