LEADERSHIP ASSIGNMENT PART 2

COMPANY PROFILE

Genesis Healthcare, Inc.

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Genesis Healthcare, Inc. TABLE OF CONTENTS

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TABLE OF CONTENTS

Company Overview ........................................................................................................ 3 Key Facts ......................................................................................................................... 3 SWOT Analysis ............................................................................................................... 4

Genesis Healthcare, Inc. Company Overview

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Company Overview

COMPANY OVERVIEW

Genesis Healthcare, Inc. (Genesis) offers post-acute care services through skilled nursing facilities to elderly patients, senior living communities, third-party rehabilitation therapy business and other ancillary services. The company offers inpatient services through network of assisted/senior living facilities and skilled nursing. It also provides staffing services, and other healthcare related services. The company operates in California, Maryland, Connecticut, Massachusetts, New Hampshire, New Jersey, Texas and West Virginia, the US. Genesis is headquartered in Pennsylvania, the US.

The company reported revenues of (US Dollars) US$4,976.7 million for the fiscal year ended December 2018 (FY2018), a decrease of 7.4% over FY2017. The operating profit of the company was US$82 million in FY2018, compared to an operating loss of US$475.8 million in FY2017. The net loss of the company was US$235.2 million in FY2018, compared to a net loss of US$579 million in FY2017.

The company reported revenues of US$1,161.6 million for the first quarter ended March 2019, a decrease of 2% over the previous quarter.

Key Facts

KEY FACTS

Head Office Genesis Healthcare, Inc. 101 East State Street Kennett Square Pennsylvania Kennett Square Pennsylvania USA

Phone 1 610 4446350 Fax 1 610 9254000 Web Address www.genesishcc.com Revenue / turnover (USD Mn) 4,976.7 Financial Year End December Employees 61,300 New York Stock Exchange Ticker GEN

Genesis Healthcare, Inc. SWOT Analysis

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SWOT Analysis

SWOT ANALYSIS

Genesis Healthcare, Inc. (Genesis) provides skilled nursing and rehabilitation therapy in the US. The company's strong clinical capabilities, US presence and broad spectrum care are its strength. Substantial level of Indebtness is a setback for the company, though, it could plan for growth prospects through Collaborations, increasing healthcare expenditure in the US and aging US Population. Intense competition, dearth of nursing professional and stringent regulation remains a threat to the company.

Strength

Strong Clinical Capabilities Strong Geographic Presence: US Broad Spectrum of Care

Weakness

Substantial Level of Indebtedness

Opportunity

Strategic Collaborations Rapidly Aging US Population Likely to Drive Demand for Nursing and Post-Acute Care Services Increasing Healthcare Expenditure in the US

Threat

Intense Competition Threatens to Erode the Market Share of the Company Dearth of Nursing Professionals Stringent Regulations

Strength

Strong Clinical Capabilities

The company’s focus on differentiated clinical capabilities and clinical specialization has attracted higher acuity patients who are typically reimbursed by Medicare or managed care payors. To ensure clinical oversight and continuity of patient care, Genesis employs physicians, physician assistants and nurse practitioners to provide direct patient care. To enhance the quality of care that the company provides to its patients, it has made investments to modernize its physical plant, expand rehabilitation gym capacity and develop clinical specialty units. Since 2007, the number of clinical specialty units in the company’s facilities has increased. These specialty units with its advanced capabilities in post-acute cardiac and pulmonary management, the company is able to differentiate itself in local areas.

Strong Geographic Presence: US

The company has strong geographic presence in regional markets of the US. It has 68% of its licensed skilled nursing beds in nine US states: California, Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, Pennsylvania, Texas and West Virginia. Within these and other US states, Strategically clustered facilities in contiguous markets benefits the company by lowering operating costs through enhanced purchasing power and operating efficiencies, and with the ability to coordinate sales and marketing strategies.

Genesis Healthcare, Inc. SWOT Analysis

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Broad Spectrum of Care

The company’s diverse mix of services allows Genesis to meet the growing requirements of its customers. Genesis provides skilled nursing and rehabilitation therapy in the US. The company offers inpatient services through network of skilled nursing and assisted/senior living facilities. Under rehabilitation therapy it offers pulmonary managament, transitional care, shortstay care, dialysis, cardiac management and neurorehabilitation. It also offers hospice services and memory support services.

Weakness

Substantial Level of Indebtedness

Genesis has a substantial level of indebtedness. As of December 31, 2018, the company’s total indebtedness including capital lease obligations was US$2,175.1 million. Its substantial indebtedness could require Genesis to dedicate a major portion of its cash flow from operations to payments on its indebtedness, which may reduce the availability of its cash flow to fund working capital, capital expenditures and other general corporate purposes. Among other things, the company’s level of indebtedness could limit its flexibility in planning for, or reacting to, changes in its business and the industry in which it operates.

Opportunity

Strategic Collaborations

Strategic collaborations are an important element of the company’s growth. Recently, Genesis and Kindred Healthcare (Kindred) announced a strategic clinical collaboration to improve quality, outcomes and care transitions across the post-acute continuum. The new relationship would include comprehensive data tracking and analysis on discharges, readmissions, length of stay, and other key quality and episode of care statistical information in order to develop evidence-based clinical protocols, quality standards and benchmarks for the benefit of the patients. These collaborations may further enhance the company’s customer base and presence in the US. The company also collaborated with University of New Mexico (UNM) Health System to open a new Mental Health Recovery unit. The new 26-bed Mental Health and Recovery Unit at Sandia Ridge will offer recovery-based program of services to patients with mental health conditions by a highly trained, knowledgeable team working together with the UNM mental health specialists.

Rapidly Aging US Population Likely to Drive Demand for Nursing and Post-Acute Care Services

Rapidly aging US population would significantly contribute to Genesis' growth. According to the US Department of Health and Human Services (HHS), 70% of the US population over the age of 65 years can expect to use some form of post-acute care during their lives. Post-acute care spending is expected to rise as the populations of people in the US over the ages of 65 years are expected to increase 56 million in 2020 and to 98 million older persons by 2060. As the average life expectancy continues to increase and as the elderly population becomes a greater proportion of the overall US population, the

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company expects that there would be an increasing demand for nursing and post-acute care services. This in turn would spur the demand for the company’s nursing and post-acute care services in the US.

Increasing Healthcare Expenditure in the US

Increasing healthcare expenditure in the US provides significant opportunities for the company to generate higher revenue. According to the US government's Center for Medicare and Medicaid Services (CMS), national health expenditure as a percentage of GDP is expected to increase from 17.8% in 2019 to 19.4% by 2027. National Health Spending growth is projected to average 5.7% from 4.8% in 2019, and reach nearly $6.0 trillion by 2027According to the Congressional Budget Office, if the growth in healthcare spending continues at its current pace, CMS spending and private health costs will increase from the current 16% of GDP to 25% in 2025.The increase in costs is due to increased demand from aging population and changes in lifestyle. The company can use its innovative products to capture the increase in healthcare expenditure and increase its revenue.

Threat

Intense Competition Threatens to Erode the Market Share of the Company

The company faces intense competition in the markets it operates in. Its skilled nursing facilities compete primarily on a local and regional basis with other skilled nursing facilities and with assisted/senior living facilities, from national and regional chains to smaller providers owning as few as a single facility. Competitors include other for-profit providers as well as non-profits, religiously-affiliated facilities, and government-owned facilities. Genesis also competes under certain circumstances with inpatient rehabilitation facilities and long-term acute care hospitals. The company’s other services, such as assisted/senior living facilities and rehabilitation therapy provided to third-party facilities, also compete with local, regional, and national companies. Few of its competitors include Kindred Healthcare Inc., The Ensign Group Inc., Sunrise Senior Living LLC., Diversicare Healthcare Services Inc., and others. Some of the company’s competitors have greater financial and other resources than Genesis. Competing companies may also offer newer facilities or different programs or services than Genesis. Intense competition could limit the company’s ability to attract and retain patients, and to expand its business. This in turn may threatens to erode the company’s market share.

Dearth of Nursing Professionals

The US healthcare industry is likely to face shortage of healthcare professionals in the future, which could affect the growth of the industry, and the organization. The supply of caregivers is not keeping up with the increasing demand, resulting in their shortage. In the health care sector, especially the hospitals, the demand for trained nurses is substantial. Nursing professionals include registered nurses (RNs), licensed practical nurses (LPNs) and certified nursing assistants (CNAs). The ability of a healthcare service provider organization to provide quality care depends on the skills of its healthcare professionals. Organizations across the world have been spending heavily to recruit and train their healthcare staff. The labor market is already constrained and as a result, competition for skilled healthcare professionals is increasing. It could lead to an increase in the company’s wage bill. If Brookdale fails to recruit and retain adequate number of healthcare professionals, the quality of its services would fall.

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Stringent Regulations

The healthcare industry should comply with federal, state, and local governmental regulations. All the healthcare service providers should comply with these regulations, to be certified and qualified to participate in government programs, including the Medicare and Medicaid programs. These requirements relate to the adequacy of medical care, personnel, equipment, operating policies and procedures, maintenance of adequate records, rate-setting, environmental protection laws and compliance with building codes. If the company fails to comply with applicable laws and regulations, it is subject to criminal penalties and civil sanctions, and the organization can lose its brand image. The existing government regulations may change, which will result in the changes in the facilities, personnel, equipment, and services. The federal, state, and local authorities may inspect the hospitals to determine compliance with applicable regulations and requirements necessary for licensing and certification.

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