EX-99.2 3 w16370exv99w2.htm RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA. exv99w2
 

Exhibit 99.2
Net Income to Adjusted EBITDA Reconciliation
(In thousands)
(unaudited)
     The following table reconciles net income to Adjusted EBITDA for the Company. Adjusted EBITDA is used by the Company to report its segment performance in accordance with SFAS No. 131. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization, income from discontinued operations, loss on early retirement of debt, merger related charges, stock compensation expense, long-term incentive compensation, and minority interest. We believe that the presentation of Adjusted EBITDA is important to investors because Adjusted EBITDA is used by management to evaluate financial performance and determine resource allocation for each of our operating units.
     Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles. Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to, or substitute for, net income, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because Adjusted EBITDA is not a measurement determined in accordance with generally accepted accounting principles and is thus susceptible to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies.
                                                                 
                                                    For the Nine Months Ended
    For the Twelve Months Ended December 31,   September 30,
    1999   2000   2001   2002   2003   2004   2004   2005
         
Net income (loss)
   $ (13,106 )   $ 5,712     $ 29,681     $ 44,231     $ 74,471     $ 118,184     $ 88,358     $ (39,941 )
Income from discontinued operations, net of tax
     —       —       —       —       (251 )     (752 )     (802 )     —  
Income tax expense (benefit)
     2,811       9,979       3,124       28,576       48,597       79,602       59,121       (18,547 )
Equity in income from joint ventures
     —       —       —       —       (824 )     —       —       —  
Minority interest
     3,662       4,144       3,491       2,022       2,402       3,448       2,772       2,804  
Interest expense, net
     21,099       35,187       29,209       26,614       25,404       31,051       23,900       64,049  
Loss on early retirement of debt
     5,814       6,247       14,223       —       —       —       —       42,736  
Merger related charges
     —       —       —       —       —       —       —       12,025  
Stock compensation expense
     —       —       —       —       —       —       —       149,780  
Long-term incentive compensation
     —       —       —       —       —       —       —       14,453  
Special charge
     5,223       —       —       —       —       —       —       —  
Depreciation and amortization
     16,741       30,401       32,290       25,836       34,654       39,977       29,533       35,075  
         
Adjusted EBITDA
   $ 42,244     $ 91,670     $ 112,018     $ 127,279     $ 184,453     $ 271,510     $ 202,882     $ 262,434  
         
Specialty hospitals
   $ 35,929     $ 44,550     $ 57,556     $ 70,891     $ 145,650     $ 236,181     $ 174,966     $ 235,190  
Outpatient rehabilitation
     22,697       65,420       76,127       81,136       74,988       81,616       64,427       62,321  
Other
     (16,382 )     (18,300 )     (21,665 )     (24,748 )     (36,185 )     (46,287 )     (36,511 )     (35,077 )
         
Adjusted EBITDA
   $ 42,244     $ 91,670     $ 112,018     $ 127,279     $ 184,453     $ 271,510     $ 202,882     $ 262,434  
         
 
                                                                
Net revenue:
                                                                
Specialty hospitals
   $ 307,464     $ 378,910     $ 503,021     $ 625,238     $ 849,260     $ 1,089,538     $ 807,944     $ 1,029,283  
Outpatient rehabilitation
     141,740       416,775       440,791       485,101       529,262       558,097       423,465       416,116  
Other
     6,771       10,212       15,144       16,220       13,844       13,156       9,867       6,838  
         
Net Revenue
   $ 455,975     $ 805,897     $ 958,956     $ 1,126,559     $ 1,392,366     $ 1,660,791     $ 1,241,276     $ 1,452,237  
         
 
                                                                
EBITDA margin:
                                                                
Specialty hospitals
     11.7 %     11.8 %     11.4 %     11.3 %     17.2 %     21.7 %     21.7 %     22.8 %
Outpatient rehabilitation
     16.0 %     15.7 %     17.3 %     16.7 %     14.2 %     14.6 %     15.2 %     15.0 %
Other
   NM   NM   NM   NM   NM   NM   NM   NM
         
Total
     9.3 %     11.4 %     11.7 %     11.3 %     13.2 %     16.3 %     16.3 %     18.1 %
         
NM — Not meaningful