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

CAHF CEO Conference

Documents

genesis healthcare corporation

genesis health ventures

livinggenesis healthcare

initiation of public

historygrowth phase

combined value

large investment firmseptember

public company sarbanes