Skilled Healthcare Group Announces Expected Financial Restatement Related to Accounts Receivable Reserves

FOOTHILL RANCH, Calif.--(Business Wire)--
Skilled Healthcare Group, Inc. (NYSE: SKH) today announced that, based on a
preliminary review by management, the Company 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.

The expected restatement relates to understated reserves for accounts
receivables in each of the affected quarters. 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
actual amounts of the adjustments to be made in each of the affected periods are
being determined by management. The adjustments will be audited by year and
reviewed by quarter by Ernst & Young LLP.

Management identified the errors through an internal review of its reserves for
accounts receivable. 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.

The Company 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.

This guidance assumes:

* Market basket increases for Medicare in the fourth quarter of 2009 consistent
with prior years;
* Medicaid increases of approximately two percent for the 2009/2010 fiscal year;

* Development capital expenditures of approximately $30 million for new
facilities and Express Recovery Units;
* Preservation capital expenditures of approximately $18 million or $1,700 per
bed;
* Start-up losses of approximately $1.3 million on our newly completed
developments;
* Current debt structure and existing interest rates in 2009;
* Cost control program to improve efficiencies; and
* Effective tax rate of 39.5%.

Conference Call

A conference call and webcast will be held tomorrow Wednesday, June 10, 2009, at
6:00 a.m. Pacific Time (9:00 a.m. Eastern Time) to discuss Skilled Healthcare's
expected restatement of financial operating results.

To participate in the call, interested parties may dial (800) 901-5218 and
reference passcode 92724610. International participants may dial (617) 786-4511
and reference the same passcode 92724610. Alternatively, interested parties may
access the call in listen-only mode via Skilled Healthcare Group's web site,
www.skilledhealthcaregroup.com. A replay of the conference call will be
available on Skilled Healthcare Group's web site or by dialing (888) 286-8010
and referencing passcode 70383930. The replay will be available through August
10, 2009.

About Skilled Healthcare Group

Skilled Healthcare Group, Inc. companies operate skilled nursing facilities and
a rehabilitation therapy business, which focus on creating a culture that
attracts and retains an innovative, caring and ethical team that provides
high-quality care to patients, and has a strong reputation for treating patients
who require a high level of skilled nursing care and extensive rehabilitation
therapy. We also provide other related healthcare services, including assisted
living care and hospice care. References made in this release to Skilled
Healthcare, "the Company," "we," "us" and "our" refer to Skilled Healthcare
Group, Inc. and each of its wholly-owned companies. More information about
Skilled Healthcare Group is available at its web site --
www.skilledhealthcaregroup.com.

Forward-Looking Statements

This release includes "forward-looking statements". You can identify these
statements by the fact that they do not relate strictly to historical or current
facts. These statements contain words such as "may," "will," "project," "might,"
"expect," "believe," "anticipate," "intend," "could," "would," "estimate,"
"continue" or "pursue," or the negative or other variations thereof or
comparable terminology. Specific forward-looking statements with respect to this
release relate to the Company`s need and ability to restate financial statements
and financial information for the affected periods and to complete the
restatements in a timely manner; the impact of the restatements on the Company`s
previously issued financial statements; the Company`s ability to complete and
make prompt amended filings with respect to the affected periods; and the
Company`s guidance on EBITDA and EBITDAR and earnings per diluted share for
2009. These forward-looking statements are based on current expectations and
projections about future events.

Investors are cautioned that forward-looking statements are not guarantees of
future performance or results and involve risks and uncertainties that cannot be
predicted or quantified and, consequently, the actual performance of Skilled
Healthcare may differ materially from that expressed or implied by such
forward-looking statements. Such risks and uncertainties include, but are not
limited to, unanticipated accounting issues or audit issues regarding the
financial data with respect to the periods to be restated; inability of the
Company or its independent auditor to confirm information or data discovered in
the restatement process; the Company`s inability to design or improve internal
controls to address issues causing the restatement; the detection of wrongdoing
or improper activities related to the restatement; and other risks and
uncertainties discussed more fully in the Company`s Annual Report on Form 10-K
for the year ended December 31, 2008 filed with the Securities and Exchange
Commission (including the sections entitled "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained therein) and in the Company`s subsequent reports on Form 10-Q and Form
8-K.

Any forward-looking statements are made only as of the date of this release.
Skilled Healthcare disclaims any obligation to update the forward-looking
statements. Investors are cautioned not to place undue reliance on these
forward-looking statements.

Reconciliation of Forecasted Net Income to Forecasted EBITDA and EBITDAR

EBITDA and EBITDAR are supplemental measures of our performance that are not
required by, or presented in accordance with generally accepted accounting
principles, or GAAP. We define EBITDA as net income before depreciation,
amortization and interest expense (net of interest income) and the provision for
(benefit from) income taxes. We define EBITDAR as net income before
depreciation, amortization and interest expense (net of interest income), the
provision for (benefit from) income taxes and facility rent expense. We believe
that the presentation of EBITDA and EBITDAR provide useful information to
investors regarding our operational performance because they enhance an
investor`s overall understanding of the financial performance and prospects for
the future of our core business activities. Specifically, we believe that a
report of EBITDA and EBITDAR provide consistency in our financial reporting and
provide a basis for the comparison of results of core business operations
between our current, past and future periods. EBITDA and EBITDAR are primary
indicators management uses for planning and forecasting in future periods,
including trending and analyzing the core operating performance of our business
from period-to-period without the effect of U.S. GAAP, expenses, revenues and
gains that are unrelated to the day-to-day performance of our business. We also
use EBITDA and EBITDAR to benchmark the performance of our business against
expected results, to analyze year-over-year trends, as described below, and to
compare our operating performance to that of our competitors.

Management uses EBITDA and EBITDAR to assess the performance of our core
business operations, to prepare operating budgets and to measure our performance
against those budgets on an administrative services, segment and a facility by
facility level. We typically use EBITDA and EBITDAR to compare the operating
performance of each skilled nursing and assisted living facility, as well as to
assess the performance of our operating segments: long term care services, which
includes the operation of our skilled nursing and assisted living facilities;
and ancillary services, which includes our rehabilitation therapy and hospice
businesses. EBITDA and EBITDAR are useful in this regard because they do not
include such costs as interest expense (net of interest income), income taxes,
depreciation and amortization expense, which may vary from business unit to
business unit and period to period depending upon various factors, including the
method used to finance the business, the amount of debt that we have determined
to incur, whether a facility is owned or leased, the date of acquisition of a
facility or business, the original purchase price of a facility or business unit
or the tax law of the state in which a business unit operates. EBITDAR excludes
facility rent expense and is useful in comparing leased facilities to owned
facilities. These types of charges are dependent on factors unrelated to our
underlying business. Additionally, we believe that the use of EBITDA provides a
meaningful and consistent comparison of our underlying business between periods
by eliminating certain items required by GAAP, which have little or no
significance in our day-to-day operations.

We also make capital allocations to each of our facilities based on expected
EBITDA returns and establish compensation programs and bonuses for our operating
companies` facility level employees that are based in part upon the achievement
of pre-established EBITDA targets.

Skilled Healthcare Group, Inc.
Reconciliation of Forecasted Net Income to Forecasted EBITDA and Forecasted EBITDAR
Year Ending December 31, 2009
(in millions)

Outlook
Low High
GAAP net income guidance $ 37.6 $ 39.8
Interest expense, net of interest income 36.4 36.9
Provision for income taxes 24.5 25.8
Depreciation and amortization expense 22.5 23.5
EBITDA guidance 121.0 126.0
Rent cost of revenue 19.0 19.0
EBITDAR guidance $ 140.0 $ 145.0

Media Contact:
Abernathy MacGregor Group
Dan Hilley, 213-630-6550
DCH@abmac.com
or
Investor Contact:
Skilled Healthcare Group
Dev Ghose or Shelly Hubbard
949-282-5800

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