CAHF CEO Conference

CAHF CEO Conference

May 31, 2012

• Genesis HealthCare Overview

• “Go Private” Transaction Overview

• OPCO/PROPCO – REIT Transaction

• Questions and Answers

Today’s Agenda

3

Genesis HealthCare Overview

Genesis operates more than 200 skilled nursing and assisted living facilities in 13 states along the east coast

Focused on higher acuity & medically complex patients

A team of 10,000 Genesis Rehabilitation therapists provide rehabilitation and respiratory therapy services in more than 1,100 sites (including Genesis).

Genesis HealthCare (Skilled Nursing & Assisted Living)Genesis HealthCare is one of the

nation’s largest long-term care providers.

HistoryGrowth Phase:

• 1985: Genesis Health Ventures formed & initiation of public co.

• 1993 – 1998: Six Major acquisitions

• 1998: Purchased Vitalink (now LTC and Pharmacy)

• 1993 – 1998: Raised $2.0 Billion in Capital:• Bank Financing• Public Subordinated Debt• Convertible Debentures• Convertible Preferred Securities• Private Equity• Public Equity

HistoryBankruptcy Phase:

• Balanced Budget Act of 1998 creates a quantum change in funding

• > 70% of revenue came from federal and state gov’t

• Government slashed reimbursement by 30%

• 5 major long term care companies file for Bankruptcy

• GHV files for bankruptcy in June 2000

HistoryRestructuring Phase:

• October 2001: GHV emerges from bankruptcy

• 2001: Combined value is $1.5 Billion

• 2003: Board decides that the LTC and pharmacy businesses should be separated; combined value only at $1.3 Billion

• December 2003: Genesis HealthCare Corporation is spun-off from GHV

• February 2004: Omnicare launches hostile takeover. Closes deal at $1.6 Billion

HistoryRestructuring Phase:

• Genesis HealthCare embarks on an integrated operational, financial and technical strategy. Focuses on internal modernization and select acquisitions.

• EV at spin-off = $900 million; grows to $1.3 Billion

• In June 2006, the company looks at strategic alternatives for creating value.





Today’s Agenda

“Go Private” Transaction OverviewWhy should Genesis consider going

private?• Market liquidity

• Cost of being a public company• Sarbanes Oxley

• Managing performance to quarterly expectations

• Stable reimbursement environment

• Hostile takeover environment

• Needed to consider all constituents:• Patients and residents

• Government regulators

• Board of Directors

• Employees

• Shareholders

• Board decides it is in the best interest of the company to go private. Final deal at $1.9 Billion (July 2007).

Transaction/ Bidding OverviewEvent Date Price

Large Investment Firm approached management w/ management-led buyout offer

June 2006

Board forms independent special committee

August 2006

Large Investment Firm

September 2006 $51.50 per share


October 2006 $53.00 per share

Special Committee Opens Bidding Process

November 2006



Early December 2006

$54.00 per share

JER/Formation Early December 2006

$60.00 per share

Fillmore Early December 2006

$58 - $60 per share


January 14, 2007 $57.50 per share

JER/Formation January 14, 2007 $62.50 per share

Fillmore January 14, 2007 $63.00 per share

JER/Formation January 15, 2007 $63.00 per share

JER/Formation and Genesis sign a merger agreement.

January 16, 2007


Annual meeting postponed and merger agreement amended for smaller break-up fee and removal of standstills

April 19, 2007

Fillmore April 25, 2007 $64.25 per share

Fillmore April 30, 2007 $65.25 per share in cash along with 6% per annum, or $0.01073 per day, increase in price beginning August 15, 2007 until the transaction closes.

Formation May 1, 2007 $65.25 per share in cash along with 9% per annum, or $0.01609 per day, increase in price beginning July 31, 2007 until the transaction closes.


Fillmore May 7, 2007 $67.25 per share, no interest

Formation May 10, 2007 $67.50, with Interest at 9% Beginning July 31, and 10% Beginning September 1

Fillmore May 10, 2007 $69.00 per share, no interest

Formation May 15, 2007 $68.15, Increasing at 9% per annum Beginning July 31, and at 10% per annum Beginning September 1.

Fillmore May 15, 2007 $69.25 per Share in Cash, Increasing at 8% per annum Beginning September 1 .

Fillmore bid determined superior

May 15, 2007


Formation May 19, 2007 $69.35 per Share in Cash, Increasing at 9% per annum Beginning July 31, and at 10% per annum Beginning September 1.

Genesis Shareholders approve JER/Formation merger agreement for $69.35 per share with a 9% per annum, or $0.01710 per day increase in price from July 31, 2007 through August 31, 2007, and by approximately 10% per annum, or $0.01900 per day, from September 1, 2007 until the transaction closes.

May 30, 2007

JER/Formation finalize privatization of Genesis HealthCare

July 13, 2007

Lessons Learned

• Consider impact on all constituents

• Effective communication with Board

• Know your shareholders

• Understand market dynamics

• Be prepared to lose control of the process

• Execution and earnings growth in GHC





Today’s Agenda

OPCO/ PROPCO – REIT Transaction

• Transaction Rationale

• Company Performance

• REIT Capital Markets Analysis

• Transaction Preparation

REIT Transaction Rationale

• Strategic alignment with REIT partner

• Maximize investor value

• Access to capital

• Support corporate growth

Genesis Performance

$183.0

$231.5$249.4

$280.0

$316.9

$355.6

$100

$150

$200

$250

$300

$350

2006 2007 2008 2009 2010* 2011P

Annual Consolidated EBITDAR

Health Care REIT’s Trends

REITs Driving Recent Transaction Activity

Transaction Preparation

• OPCO/PROPCO Split• Legal• Tax• Finance• Systems

* Don’t underestimate the magnitude of this process

• Market timing

• Execution

• Post transaction capital needs





Today’s Agenda

Documents

CAHF CEO Conference