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Skilled Healthcare Group, Inc. – ‘PREM14C’ for 12/15/14

On:  Monday, 12/15/14, at 4:51pm ET   ·   For:  12/15/14   ·   Accession #:  1193125-14-442679   ·   File #:  1-33459

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

12/15/14  Skilled Healthcare Group, Inc.    PREM14C    12/15/14    1:4.5M                                   RR Donnelley/FA

Document/Exhibit                   Description                      Pages   Size 

 1: PREM14C     Preliminary Proxy Information Statement -- Merger   HTML   3.34M 
                          or Acquisition                                         

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14C INFORMATION

Information Statement Pursuant to Section 14(c) of the

Securities Exchange Act of 1934

Skilled Healthcare Group, Inc.

(Name of Registrant as Specified in its Charter)

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PRELIMINARY COPY—SUBJECT TO COMPLETION, DATED DECEMBER 15, 2014

NOTICE OF WRITTEN CONSENT AND INFORMATION STATEMENT

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.

[                    ], 2014

Dear Stockholder:

This notice of action by written consent and information statement is being furnished to the holders of shares of common stock of Skilled Healthcare Group, Inc. (“we”, “us”, “Skilled Healthcare” or the “Company”) in connection with the Purchase and Contribution Agreement, dated as of August 18, 2014 (the “Purchase Agreement”), by and between Skilled Healthcare and FC-GEN Operations Investment, LLC (“Genesis”), pursuant to which the operations of Skilled Healthcare and Genesis will be combined (the “Combination”). A copy of the Purchase Agreement is attached as Annex A to this information statement.

If the Combination is completed, the holders of common stock and options of Skilled Healthcare will hold 25.75% of the equity of the combined entity and the holders of equity interests of Genesis, together with Health Care REIT, Inc., a Delaware corporation, and the participants under Genesis’ management incentive compensation plan will hold 74.25% of the equity of the combined entity, calculated on a fully diluted, as-exchanged and as-converted basis.

Our board of directors, at a meeting duly called and held, unanimously adopted resolutions approving the Purchase Agreement, the ancillary agreements, the transactions contemplated by the Purchase Agreement and the transactions contemplated by each of the ancillary agreements.

Consummation of the transactions contemplated by the Purchase Agreement required the affirmative vote or written consent of the holders of shares of our common stock, having a majority of the voting power of all outstanding shares of our common stock. On August 18, 2014, following execution and delivery of the Purchase Agreement by the parties thereto, Onex Real Estate Holdings III Inc., Onex Partners LP and Onex US Principals LP (collectively, the “Onex Group”), which on such date owned shares of our common stock representing approximately 82% of the voting power of the outstanding shares of our common stock, delivered an irrevocable written consent to Skilled Healthcare approving in all respects the Purchase Agreement and the transactions and agreements contemplated thereby, including the Combination. As a result, no further approval of our stockholders is required to approve the Purchase Agreement and the transactions contemplated thereby, and we have not solicited, and will not be soliciting, your vote for approval of the Purchase Agreement and will not be calling a stockholders’ meeting for purposes of voting on the approval of the Purchase Agreement. This notice and information statement constitute notice to you from Skilled Healthcare of the action by written consent taken by the Onex Group contemplated by Section 228 of the DGCL.

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We urge you to read this entire information statement carefully.

By order of the board of directors,

Roland G. Rapp

Executive Vice President, General Counsel, Chief Administrative Officer and Secretary

Neither the U.S. Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the Combination, passed upon the merits or fairness of the Combination or passed upon the adequacy or accuracy of the disclosure in this notice and information statement. Any representation to the contrary is a criminal offense.

The information statement is dated [                    ], 2014 and is first being mailed to stockholders on or about [                    ], 2014.

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SUMMARY

This Summary, together with the “Questions and Answers About The Transactions”, highlights selected information in this information statement and may not contain all of the information about the Transactions (as such term is defined below) that is important to you. We encourage you to read carefully this entire information statement, its annexes and the documents we refer to or incorporate by reference in this information statement. Each item in this Summary includes a page reference directing you to a more complete description of that topic. See “Where You Can Find More Information” beginning on page 169. In this information statement, the terms “Skilled Healthcare”, the “Company”, “we”, “our” and “us” refer to Skilled Healthcare Group, Inc. and its subsidiaries, unless the context requires otherwise. We refer to FC-GEN Operations Investment, LLC, and its subsidiaries, unless the context requires otherwise, as “Genesis.” We refer to Onex Real Estate Holdings III Inc., Onex Partners LP and Onex US Principals LP collectively as the “Onex Group.” When we refer to the “Purchase Agreement,” we mean the Purchase and Contribution Agreement, dated as of August 18, 2014, between Genesis and Skilled Healthcare.

The Parties to the Combination (page 24)

Skilled Healthcare Group, Inc. Skilled Healthcare Group, Inc. is a holding company that owns subsidiary healthcare services companies. All of Skilled Healthcare’s subsidiaries focus on providing high-quality care to the people Skilled Healthcare serves, and Skilled Healthcare’s skilled nursing facility subsidiaries, which comprise the largest portion of its consolidated business, have a strong commitment to treating patients who require a high level of skilled nursing care and extensive rehabilitation therapy. As of September 30, 2014, Skilled Healthcare owned or leased 73 skilled nursing facilities and 22 assisted living facilities, together comprising 10,275 licensed beds. Skilled Healthcare also leases five skilled nursing facilities in California to an unaffiliated third party operator. Its skilled nursing and assisted living facilities are located in California, Texas, Iowa, Kansas, Missouri, Nebraska, Nevada and New Mexico, and are generally clustered in large urban or suburban markets. Skilled Healthcare owned 77% of these facilities as of September 30, 2014. As of September 30, 2014, Skilled Healthcare provided hospice and home health services in Arizona, California, Idaho, Montana, Nevada, and New Mexico. It also provided private duty care services in Idaho, Montana, and Nevada. For the nine months ended September 30, 2014, Skilled Healthcare generated approximately 75% of its revenue from its skilled nursing facilities, including its integrated rehabilitation therapy services at these facilities. The remainder of its revenue is generated from its assisted living services, rehabilitation therapy services provided to third-party facilities, hospice care, home health, and private duty care services. Skilled Healthcare has an administrative service company that provides a full complement of administrative and consultative services that allows its affiliated operators and third-party operators with whom it contracts to better focus on delivery of healthcare services. Skilled Healthcare currently also has one such service agreement with an unaffiliated skilled nursing facility operator.

FC-GEN Operations Investment, LLC. Genesis is a holding company that owns subsidiaries that operate skilled nursing facilities and assisted living facilities that provide rehabilitation therapy and other complementary services. Genesis conducts its operations through two primary business segments: inpatient services and rehabilitation therapy. Genesis offers inpatient services through its network of 413 skilled nursing and assisted living facilities across 28 states, consisting of 379 skilled nursing facilities and 34 assisted living facilities. Of the 413 facilities, 386 are leased, 18 are managed by Genesis, six are joint ventures and three are owned by Genesis. Collectively, Genesis’ skilled nursing and assisted living facilities have 48,922 licensed beds, approximately 49% of which are concentrated in the states of Massachusetts, Maryland, New Jersey, Pennsylvania and West Virginia. For the nine months ended September 30, 2014, approximately 84% of Genesis’ revenues were generated by its inpatient services segment and approximately 13% of Genesis’ revenues were generated by its rehabilitation therapy segment. The remaining revenues were generated by Genesis’ other complementary services, including medical staffing, physician and facility management services.

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The Transactions (page 26)

On August 18, 2014, Skilled Healthcare entered into the Purchase Agreement with Genesis pursuant to which the businesses and operations of Skilled Healthcare and Genesis will be combined (the “Combination”). Immediately following the consummation of the transactions contemplated by the Purchase Agreement, the common stock, par value $0.001 per share (the “Company Common Stock”), and options to purchase shares of Company Common Stock, which will remain outstanding, will represent 25.75% of the equity of the combined entity and the holders of equity interests of Genesis (the “Genesis Members”), Health Care REIT, Inc., a Delaware corporation (“HCN”), and the participants under the management incentive compensation plan of Genesis (the “MIP Participants”, and together with the Genesis Members and HCN, the “Genesis Stakeholders”) will hold 74.25% of the equity of the combined entity, calculated on a fully diluted, as-exchanged and as-converted basis. The following steps constitute the “Combination”:

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Skilled Healthcare will also enter into a tax receivable agreement (the “Tax Receivable Agreement”), the terms of which are summarized under “—Exchange Rights and Tax Receivable Agreement” below and in greater detail in “The Transactions—Tax Receivable Agreement.”

We refer to each of the transactions contemplated by the Purchase Agreement and each ancillary agreement, including each of the steps listed above, as the “Transactions.”

The Purchase Agreement is attached as Annex A to this information statement, and we encourage you to read it carefully and in its entirety because it is the legal document that governs the Transactions.

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Structure of Skilled Healthcare Post-Closing

Below is a diagram of the ownership structure of Skilled Healthcare upon completion of the Transactions, including the Combination.

Stockholder Action by Written Consent (page 100)

The Purchase Agreement required the approval of the Purchase Agreement and the Transactions by the holders of outstanding Company Common Stock, voting together as a single class with the holders of the Company Class A Stock having one vote per share and the holders of Skilled Healthcare’s Class B common stock, par value $0.001 per share (the “Company Class B Stock”), having ten votes per share, representing at least 66 2/3% of all votes entitled to be cast by holders of the outstanding Company Common Stock (such vote, the “Requisite Stockholder Approval”) by irrevocable written consent of the Onex Group which are party to the investor stockholders agreement with SHG Holding Solutions, Inc. (as Skilled Healthcare’s predecessor-in-interest), in the form attached as Exhibit C to the Purchase Agreement (the “Company Written Consent”). Following the execution and delivery of the Purchase Agreement, the Onex Group executed and delivered the Company Written Consent on August 18, 2014, approving in all respects the Purchase Agreement and the Transactions and agreements contemplated thereby, including, without limitation, the Restated Charter.

When the Combination is Expected to be Completed (page 85)

We currently anticipate that the Combination will be completed in the first quarter of 2015. However, there can be no assurance that the Combination will be completed at all or, if completed, when it will be completed in the first quarter of 2015.

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Reasons for the Transactions; Recommendation of the Board of Directors (page 39)

After consideration of various factors as discussed in “The Transactions—Reasons for the Transactions; Recommendation of the Board of Directors” beginning on page 39, the board of directors of Skilled Healthcare (the “Board of Directors”) unanimously:

For a discussion of the material factors considered by the Board of Directors in making its recommendation, see “The Transactions—Reasons for the Transactions; Recommendation of the Board of Directors” beginning on page 39.

Exchange Rights and Tax Receivable Agreement (pages 67 and 59)

Following the consummation of the Transactions, certain Genesis Members will have the right to exchange their Genesis Class A Units for shares of Company Class A Stock or, at Skilled Healthcare’s option, cash. As a result of such exchanges, the number of Genesis Class A Units held by Skilled Healthcare will increase as Skilled Healthcare acquires the exchanged Genesis Class A Units. These exchanges of Genesis Class A Units for shares of Company Class A Stock or cash may result in increases in the tax basis of Genesis’ tangible and intangible assets with respect to Skilled Healthcare. Such increases in tax basis are likely to increase (for tax purposes) depreciation and amortization deductions, and therefore reduce the amount of income tax Skilled Healthcare would otherwise be required to pay in the future. These increases in tax basis may also decrease gain (or increase loss) on future dispositions of certain capital assets to the extent the increase in tax basis is allocated to those capital assets. These increases in tax basis would not be available in the absence of the Transactions and the exchanges of Genesis Class A Units for Company Class A Stock.

Concurrently with the exercise of an exchange of Genesis Class A Units for shares of Company Class A Stock, as described immediately above, a number of shares of Company Class C Stock, equal to the lesser of (1) the number of shares of Company Class A Stock to be issued in exchange for the Genesis Class A Units and (2) the number of shares of Company Class C Stock then outstanding, will automatically be converted into fractional shares of Company Class A Stock (such fraction to be de minimis and determined at Closing).

Concurrently with the consummation of the Transactions, Skilled Healthcare will enter into the Tax Receivable Agreement with Genesis and certain Genesis Members. The Tax Receivable Agreement generally will provide for the payment by Skilled Healthcare to Genesis Members of 90 percent of the cash savings, if any, in U.S. federal, state and local income tax or franchise tax that Skilled Healthcare actually realizes as a result of (1) the increases in tax basis attributable to the exchange by the Genesis Members of Genesis Class A Units for shares of Company Class A Stock and (2) tax benefits related to imputed interest deemed to be paid by Skilled Healthcare as a result of the Tax Receivable Agreement. In certain circumstances (such as certain changes in control, the election of Skilled Healthcare to exercise its right to terminate the Tax Receivable Agreement and make an early termination payment or an Internal Revenue Service (“IRS”) challenge to a tax basis increase), it is possible that cash payments under the Tax Receivable Agreement may exceed actual cash savings to Skilled Healthcare.

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Registration Rights Agreement (page 62)

In connection with the Transactions, Skilled Healthcare entered into an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”), dated as of August 18, 2014 and becoming effective on the date of the Closing (the “Closing Date”), by and among Skilled Healthcare, certain holders of the Company Class B Stock listed on Schedule A attached thereto (collectively, the “Onex Holders”), and certain holders of equity securities of Genesis listed on Schedule B attached thereto (collectively, the “Genesis Holders” and, together with the Onex Holders, the “Investors”; the Investors, together with their respective permitted transferees, the “Holders”), providing for certain registration rights with respect to outstanding Company Class A Stock.

Pursuant to the Registration Rights Agreement, each Holder of Registrable Securities (see “The Transactions—Registration Rights Agreement—Lock-up Agreements” beginning on page 62 for a definition of “Registrable Securities”) has agreed that, except for certain permitted transfers, it shall not dispose of any Registrable Securities or enter into any arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities until the Lock-up Expiration (see “The Transactions—Registration Rights Agreement—Lock-up Agreements” beginning on page 62 for a definition of “Lock-up Expiration”).

The Registration Rights Agreement further provides each Holder of Registrable Securities with shelf registration rights, subject to certain customary exceptions. It also provides the Onex Holders with up to two demand registration rights in the 18-month period following the Closing Date and the Genesis Holders with one demand registration during the 18-month period following the Closing Date and, following the Lock-up Expiration, unlimited demand registrations until such time as the Genesis Holders no longer hold any Registrable Securities.

The Holders also have so-called “piggy-back” rights to participate in any registrations of securities initiated by Skilled Healthcare.

In connection with any registration described above, Skilled Healthcare is obligated to indemnify Holders selling Registrable Securities in connection with such registration and, except for any Seller Expense Paid Registration (as defined below in “The Transactions—Registration Rights Agreement—Demand Registration Rights” beginning on page 63), Skilled Healthcare is required to bear all fees, costs and expenses (other than any underwriting discounts or commissions or transfer taxes, if any, and fees of counsel to the selling stockholders attributable to the sale of Registrable Securities) in connection with such registration.

Support Agreement (page 65)

Concurrently with the execution and delivery of the Purchase Agreement, Skilled Healthcare, Genesis, and the Onex Group executed and delivered a support agreement (the “Support Agreement”) pursuant to which the Onex Group agreed to, among other things,

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The Support Agreement terminates upon the earlier of (1) the Closing and (2) the termination of the Purchase Agreement in accordance with its terms.

Restated Charter and Restated Bylaws (pages 66 and 70)

In connection with the Transactions, the Board of Directors approved a Restated Charter, which will become effective upon the consummation of the Transactions. The Onex Group executed and delivered the Company Written Consent on August 18, 2014, approving in all respects the Purchase Agreement and the Transactions, including, without limitation, the Restated Charter. In addition, the Board of Directors adopted and approved the Restated Bylaws, effective as of the consummation of the Transactions.

The Restated Charter changes the name of Skilled Healthcare to “Genesis Healthcare, Inc.” and changes the shares of capital stock that Skilled Healthcare is authorized to issue. Specifically, upon the filing of the Restated Charter with the Secretary of State of the State of Delaware, Skilled Healthcare will have the authority to issue a total of 1,200,000,000 shares of capital stock, consisting of the following classes of capital stock: (1) 1,000,000,000 shares of Company Class A Stock, par value $0.001 per share; (2) 20,000,000 shares of Company Class B Stock; (3) 150,000,000 shares of Company Class C Stock, par value $0.001 per share; and (4) 30,000,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”). Each holder of Company Class A Stock, Company Class B Stock and Company Class C Stock is entitled to one vote for each share of such Company Common Stock, held of record by such holder. This represents a change from the current charter of Skilled Healthcare, which provides that each holder of Company Class B Stock is entitled to 10 votes per share.

Furthermore, the affirmative vote of the holders of at least 66 2/3% of the combined voting power of the shares entitled to vote in connection with the election of directors of Skilled Healthcare is required to amend, alter, change, or repeal, or to adopt any provision inconsistent with the purpose and intent of certain articles of the Restated Charter relating to:

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The Restated Bylaws provide that the Board of Directors is to consist of not less than three nor more than 19 members, divided into three classes, designated Class I, Class II and Class III. Directors in each class serve for a term of three years. For information regarding the post-Closing directors of Skilled Healthcare and their respective classes, see “Management after the Combination—Board of Directors and Management.” The Restated Bylaws may be amended, altered, changed or repealed, in whole or in part, or new bylaws may be adopted by either (1) the affirmative vote of a majority of the entire Board of Directors or (2) the affirmative vote of the holders of a majority of the voting power of the shares of capital stock of Skilled Healthcare entitled to vote in connection with the election of directors of Skilled Healthcare.

Opinion of J.P. Morgan Securities LLC (page 42)

Pursuant to an engagement letter dated August 8, 2014, effective from June 18, 2014, Skilled Healthcare retained J.P. Morgan Securities LLC (“J.P. Morgan”) to deliver a fairness opinion in connection with the proposed Transactions.

At the meeting of the Board of Directors on August 16, 2014, J.P. Morgan rendered its oral opinion to the Board of Directors that, as of such date and based upon and subject to the factors, assumptions and limitations set forth in its opinion, the resulting ownership percentage of Company Common Stock by Skilled Healthcare stockholders of 25.75% of the Company Class A Stock to be outstanding immediately following the Closing or issuable upon exchange or conversion of Company Class B Stock or Genesis Units (but excluding Company Class A Stock issuable upon exchange of Company Class C Stock), calculated on a fully-diluted basis as of immediately following the Closing (which when expressed in terms of an implied ratio that each share of Company Common Stock immediately prior to the consummation of the Transactions would equal immediately following consummation of the Transactions and assuming the full conversion of Genesis Class A Units into Company Class A Stock takes place at such time, will reflect an implied ratio of .2575 to 1 (the “Exchange Ratio”)), was fair, from a financial point of view, to Skilled Healthcare. J.P. Morgan confirmed its August 16, 2014 oral opinion by delivering its written opinion to the Board of Directors, dated August 16, 2014, that, as of such date, the Exchange Ratio in the proposed Transactions was fair, from a financial point of view, to Skilled Healthcare.

The full text of the written opinion of J.P. Morgan dated August 16, 2014, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken, is attached as Annex G to this information statement and is incorporated herein by reference. Skilled Healthcare’s stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion is addressed to the Board of Directors, addresses only the fairness to Skilled Healthcare, from a financial point of view, of the Exchange Ratio in the Transactions and does not constitute a recommendation to any stockholder of Skilled Healthcare as to any matter. The summary of the opinion of J.P. Morgan set forth in this information statement is qualified in its entirety by reference to the full text of such opinion.

Opinion of MTS Securities LLC (page 48)

MTS Securities LLC (together with its affiliates, “MTS”) delivered an oral opinion to the Board of Directors on August 16, 2014, subsequently confirmed in writing, to the effect that, as of August 16, 2014, and based upon and subject to the factors and assumptions set forth in the opinion, the Total Consideration (as defined in the MTS opinion attached hereto as Annex H) to be paid by Skilled Healthcare in the transaction was fair, from a financial point of view, to Skilled Healthcare.

The full text of the written opinion of MTS, dated August 18, 2014, which sets forth the assumptions made, matters considered, and limits on the review undertaken in connection with the opinion, is attached as Annex H

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to this information statement and is incorporated herein by reference. Skilled Healthcare’s stockholders are urged to read the opinion in its entirety. MTS’ written opinion is addressed to the Board of Directors and does not constitute a recommendation to any stockholder of Skilled Healthcare as to any matter. The summary of the opinion of MTS set forth in this information statement is qualified in its entirety by reference to the full text of such opinion.

Conditions to the Combination (page 107)

The obligations of either Genesis or Skilled Healthcare to effect the Transactions are subject to the satisfaction or waiver of the following conditions:

The receipt of the financing contemplated by the financing commitments obtained by Genesis (see “The Transactions—Financing in Connection with the Transactions” beginning on page 72 for a description of the financing commitments) is not a condition to either party’s obligations under the Purchase Agreement.

The obligation of Genesis to effect the Transactions is also subject to the satisfaction or waiver of the following conditions:

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The obligation of Skilled Healthcare to effect the Transactions is also subject to the satisfaction or waiver of the following conditions:

Financing in Connection with the Transactions (page 72)

We estimate that the total amount of funds necessary to complete the Transactions, including the payment of related fees and expenses, will be approximately $108.5 million. Genesis has obtained debt financing commitment letters, each dated August 18, 2014 (collectively, the “Debt Financing Commitment Letters”), to (1) pay costs and expenses related to the Transactions, (2) repay certain indebtedness of Skilled Healthcare and (3) refinance certain of Genesis’ existing credit facilities to the extent required as a result of the consummation of the Transactions.

The Debt Financing Commitment Letters provide for (1) a commitment from General Electric Capital Corporation (“GECC”) for a $75.0 million senior secured asset-based revolving credit facility, available to Genesis, Skilled Healthcare and certain of its subsidiaries, (2) a commitment from GECC for a $475.0 million senior secured asset-based revolving credit facility, available to Genesis HealthCare LLC (“Genesis HealthCare”) and certain of its subsidiaries and (3) a commitment from HCN for a $360.0 million senior secured term loan bridge facility, available to a subsidiary of Genesis and/or subsidiaries of Skilled Healthcare which own the properties serving as the collateral. In addition, Genesis HealthCare and Sun Healthcare Group, Inc. (the “Genesis Term Loan Borrowers”) have obtained an amendment (the “Term Loan Amendment”) to that certain Term Loan Agreement, dated as of December 3, 2012, among the Genesis Term Loan Borrowers, Genesis, the lenders from time to time party thereto, Barclays Bank plc, as administrative agent (“Barclays”), and the other parties thereto (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Existing Term Facility”), which provides for certain amendments to the financial covenants and other provisions of the Existing Term Facility that will allow for and accommodate the Transactions. The availability

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of the debt financing provided for by the Debt Financing Commitment Letters and the effectiveness of the Term Loan Amendment (collectively, the “Debt Financing”) are subject to the satisfaction of the conditions set forth in the Debt Financing Commitment Letters and the Term Loan Amendment, respectively. For a description of these conditions, see “The Transactions—Financing in Connection with the Transactions” beginning on page 72.

We believe that the commitments under the Debt Financing Commitment Letters will be sufficient to allow us to complete the Transactions, but we cannot assure you of that. These commitments might be insufficient if, among other things, one or more of the parties to the Debt Financing Commitment Letters fails to provide its respective financing or if the conditions to such Debt Financing Commitment Letters are not met. Furthermore, if the conditions under the Term Loan Amendment are not met, the Transactions would cause an event of default under the Existing Term Facility, giving the lenders thereunder the right to accelerate the loans. The obligations of Skilled Healthcare and Genesis to consummate the Transactions are not conditioned upon the consummation of the Debt Financing. Pursuant to the terms of the Purchase Agreement, Skilled Healthcare has the right to specifically enforce Genesis’ obligations to use reasonable best efforts to take all actions necessary to obtain the Debt Financing, including, upon satisfaction of all conditions set forth in the Purchase Agreement and the Debt Financing Commitment Letters and at the request of Skilled Healthcare, enforcing the lenders’ funding obligations under the Debt Financing Commitment Letters. Skilled Healthcare may also be permitted to seek damages, specific performance and/or otherwise terminate the Purchase Agreement. See “The Purchase Agreement—Termination of the Purchase Agreement” and “The Purchase Agreement—Specific Performance” beginning on pages 109 and 111.

Landlord Consents (page 75)

Genesis has entered into agreements with some of its landlords pursuant to which the landlords have consented, or agreed to consent, to the Transactions and the Debt Financing. Such consents are subject to certain conditions, which are discussed in greater detail in “The Transactions—Landlord Consents” below. Landlords of facilities leased by Skilled Healthcare have certain consent rights also, but receipt of consents from Skilled Healthcare’s landlords is not a condition to the consummation of the Transactions.

Restrictions on Competing Proposals (page 96)

The Purchase Agreement contains a “no-shop” provision that prohibits Skilled Healthcare from soliciting, initiating or knowingly facilitating or encouraging Competing Proposals (see “The Purchase Agreement—Competing Proposals” beginning on page 96 for the definition of a “Competing Proposal”). The Board of Directors negotiated an exception to the “no-shop” allowing them, subject to the terms and conditions set forth in the Purchase Agreement, to furnish information to, and engage in discussions and negotiations with, any third party that makes an unsolicited Competing Proposal, provided that, among other things, the Board of Directors determined in good faith that such Competing Proposal either constitutes a Superior Proposal or would reasonably be expected to result in a Superior Proposal. This right expired on September 24, 2014 at 11:59 p.m. New York City time. Accordingly, the Board of Directors and Skilled Healthcare can no longer take these actions.

Termination of the Purchase Agreement (page 109)

The Purchase Agreement may be terminated at any time prior to the Closing, whether before or after receipt of the Requisite Stockholder Approval:

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Termination Fee and Other Remedies (page 110)

If the Purchase Agreement is terminated, in certain circumstances, Skilled Healthcare may be required to pay Genesis a cash termination fee of $9,504,000 (such amount, the “Termination Fee”), as described in the section titled “The Purchase Agreement—Termination Fee and Other Remedies” beginning on page 110.

The parties will be entitled to an injunction or injunctions to prevent breaches of the Purchase Agreement and to enforce specifically the terms and provisions of the Purchase Agreement. However, each of Skilled Healthcare and Genesis has agreed that it will not bring or support any suit, action or other proceeding against any Lender Party or parties related to the Lender Parties (see “The Transactions—Financing in Connection with the Transactions” beginning on page 72 for a description of the definition of “Lender Party”) in any way relating to the Purchase Agreement or any of the Transactions.

Except for the right to specific performance described above, the Genesis’ right to receive the Termination Fee is the sole and exclusive remedy for Genesis and its affiliates against Skilled Healthcare and its affiliates for all damages with respect to the Purchase Agreement or the Transactions.

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Interests of Skilled Healthcare’s Directors and Officers in the Transactions (page 76)

In considering the recommendation of the Board of Directors, you should be aware that the equity awards held by some of our directors and officers will vest and/or be settled automatically in accordance with their terms as a result of the Combination. The Board of Directors was aware of this and considered it, among other matters, prior to making its determination to recommend the approval of the Purchase Agreement to our stockholders.

In addition, in November 2014, the compensation committee of the Board of Directors (the “Compensation Committee”) (1) approved retention bonuses for each of Skilled Healthcare’s officers in order to incentivize the officers to remain employed through the closing of the Combination and during a specified transition period thereafter, if applicable, and (2) modified the separation benefits for each of Skilled Healthcare’s officers should the officers not be offered continuing employment with the combined company in a comparable position, with a comparable salary and at a comparable location to facilitate the officers remaining focused on operating the business through the closing of the Combination. Similarly, in November 2014, the Compensation Committee took action to accelerate the vesting of certain equity awards held by Skilled Healthcare’s officers and directors in connection with the Combination.

Governmental and Regulatory Approvals (page 81)

Under the HSR Act and the rules and regulations promulgated thereunder, Skilled Healthcare and Genesis are required to make certain filings with the Antitrust Division of the U.S. Department of Justice (the “DOJ”) and the U.S. Federal Trade Commission (the “FTC”). The Transactions may not be consummated until the applicable waiting periods under the HSR Act have expired or have been terminated. Skilled Healthcare and Genesis filed their respective notification and report forms with the DOJ and the FTC under the HSR Act on September 2, 2014 and requested early termination of the waiting period. On September 16, 2014, early termination of the waiting period was granted.

The operations of both Skilled Healthcare and Genesis are extensively regulated by federal and state regulatory authorities. In connection with the proposed Transactions, Skilled Healthcare and Genesis are required to file notices with, and in some jurisdictions obtain approvals or consents from, various agencies responsible for the licensure or certification of healthcare facilities and other businesses in states in which they conduct business.

Accounting Treatment (page 81)

Skilled Healthcare prepares its financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). Under GAAP, the Transactions will be accounted for as a reverse acquisition under the acquisition method of accounting. Because Genesis’ pre-transaction owners will hold a 74.25% economic and voting interest in the combined entity, Genesis is considered to be the acquirer of Skilled Healthcare for accounting purposes.

Market Price of the Company Class A Stock (page 167)

The closing sale price of Company Class A Stock on the New York Stock Exchange (the “NYSE”) on August 15, 2014, the last trading day prior to our public announcement that we had entered into the Purchase Agreement, was $6.01 per share. On December 11, 2014, the most recent practicable trading date prior to the date of this information statement, the closing sale price of Company Class  A Stock on the NYSE was $7.24 per share.

Litigation (page 82)

Litigation Related to the Transactions

Skilled Healthcare, the Board of Directors, Onex Corporation, Genesis, and Genesis HealthCare are named as defendants in two purported class action lawsuits filed in the Court of Chancery of the State of Delaware on

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September 5, 2014 and September 16, 2014, respectively, brought by individuals who claim to be stockholders of Skilled Healthcare. The stockholder actions allege, among other things, that the Board of Directors and Onex breached fiduciary duties purportedly owed to Skilled Healthcare’s stockholders and that Onex and the remaining defendants aided and abetted the alleged breach by the individual directors. The complaints seek to enjoin the defendants from completing the Combination on the agreed-upon terms or, in the event that the Combination is consummated, to recover damages resulting from defendants’ alleged wrongful conduct.

On October 2, 2014 the court ordered the consolidation of the two purported class action lawsuits under the caption of In re Skilled Healthcare Group, Inc. Stockholder Litigation, Consol. C.A. No. 10097-VCN. Skilled Healthcare, the Board of Directors, Onex Corporation and Genesis believe that the claims in this action are without merit and intend to defend against them vigorously.

Recent Litigation

On November 25, 2014, the United States of America and the State of Nevada filed suit against Skilled and two of its subsidiaries, Skilled Healthcare, LLC and Creekside Hospice II, LLC (“Creekside”) by intervening in two consolidated lawsuits brought under the whistleblower provisions of the federal False Claims Act (the “FCA”) and the Nevada False Claims Act (the “NFCA”). The lawsuits allege, among other things, that Skilled Healthcare and Creekside knowingly submitted ineligible claims for hospice services and inflated claims for patient visits to government health care programs. The FCA provides for civil and administrative fines and penalties, plus treble damages. The NFCA provides for similar fines and penalties, including treble damages. Violations of those federal or state laws could also subject Skilled Healthcare and/or its subsidiaries to exclusion from participation in the Medicare and Medicaid programs.

While Skilled Healthcare denies the allegations and intends to vigorously defend against this action, including any portion of the action that the private party relators pursue, Skilled Healthcare had previously accrued $6.0 million as a contingent liability in connection with the matter. However, it could ultimately cost more than that amount to settle or otherwise resolve the matter(s), including to satisfy any judgment that might be rendered against Skilled Healthcare or Creekside if the litigation defense were ultimately unsuccessful.

Additional Information (page 169)

You can find more information about Skilled Healthcare in the periodic reports and other information we file with the SEC. The information is available at the SEC’s public reference facilities and at the website maintained by the SEC at www.sec.gov. For a more detailed description of the additional information available, see “Where You Can Find More Information” beginning on page 169.

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QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS

The following questions and answers address briefly some questions you may have regarding the Transactions. These questions and answers may not address all questions that may be important to you as a stockholder of Skilled Healthcare. Please refer to the more detailed information contained elsewhere in this information statement, the annexes to this information statement and the documents we refer to or incorporate by reference in this information statement. You may obtain a list of the documents incorporated by reference into this information statement in the section titled “Where You Can Find More Information” beginning on page 169.

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In addition, the Company Class A Stock is currently registered under the Securities Exchange Act of 1934 (the “Exchange Act”) and is quoted on the NYSE under the symbol “SKH”. After the Closing, the Company Class A Stock will continue to trade on the NYSE under the symbol “GEN.” See “The Transactions—Certain Effects of the Combination” beginning on page 58 for more information regarding the effects of the Combination.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF SKILLED HEALTHCARE GROUP, INC.

The following table sets forth selected consolidated financial data for Skilled Healthcare. The data should be read in conjunction with Skilled Healthcare’s audited consolidated financial statements and related notes for the fiscal years ended December 31, 2013, 2012, 2011, 2010 and 2009 and Skilled Healthcare’s unaudited condensed consolidated financial statements for the nine months ended September 30, 2014 and 2013 that are incorporated by reference into this information statement. See “Where You Can Find More Information” beginning on page 169 for instructions on how to obtain the information that has been incorporated by reference. The summary financial data as of September 30, 2014 and for the nine months ended September 30, 2014 and 2013 are derived from the Skilled Healthcare unaudited condensed consolidated financial statements for such periods, but in the opinion of Skilled Healthcare’s management, reflect all adjustments of a normal recurring nature necessary for a fair statement of Skilled Healthcare’s financial position and results of operations at the dates and for the periods indicated. The results for the nine-month period are not necessarily indicative of results that may be expected for any other interim period or the entire fiscal year. Skilled Healthcare’s historical financial data may not be indicative of the results of operations or financial position to be expected in the future.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF FC-GEN OPERATIONS INVESTMENT, LLC

The following table sets forth selected consolidated financial data for Genesis. The data should be read in conjunction with Genesis’ audited consolidated financial statements and related notes for the three years ended December 31, 2013 and Genesis’ unaudited condensed consolidated financial statements for the nine months ended September 30, 2014 and 2013 that are included in this information statement. The consolidated balance sheet data as of December 31, 2011, 2010 and 2009 and the consolidated statements of operations data for the fiscal years ended December 31, 2010 and 2009 are derived from Genesis’ audited consolidated financial statements that are not included in this information statement. The summary financial data as of September 30, 2014 and for the nine months ended September 30, 2014 and 2013 are derived from the Genesis unaudited condensed consolidated financial statements for such periods, but in the opinion of Genesis’ management, reflect all adjustments of a normal recurring nature necessary for a fair statement of Genesis’ financial position and results of operations at the dates and for the periods indicated. The results for the nine-month periods are not necessarily indicative of results that may be expected for any other interim period or the entire fiscal year. Genesis’ historical financial data may not be indicative of the results of operations or financial position to be expected in the future.

Genesis’ historical consolidated financial information reflects the consolidation of the results of operations of Sun Healthcare Group, Inc. (“Sun”) since December 1, 2012, the date Genesis acquired Sun. Genesis’ financial position at December 31, 2011 includes the impact of the JER Redemption, which has also been accounted for as a business combination using the acquisition method. (See “Genesis Management’s Discussion and Analysis—Recent Transactions—April 1, 2011 Transactions” for a description of the “JER Redemption”). The consolidated financial statements after giving effect to the JER Redemption are designated as “Successor” financial statements. The consolidated financial statements reflecting the results of operations and cash flows of Genesis prior to giving effect to the JER Redemption are designated “Predecessor” financial statements.

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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information gives effect to the transaction between Skilled Healthcare and Genesis which is to be accounted for as a reverse acquisition with Genesis treated as the accounting acquirer. The unaudited pro forma condensed combined statements of operations data for the year ended December 31, 2013 and for the nine months ended September 30, 2014 reflects the transaction as if it occurred on January 1, 2013. The unaudited pro forma condensed combined balance sheet data as of September 30, 2014 reflects the transaction as if it had occurred on September 30, 2014. The pro forma adjustments are based on the information available at the time of the preparation of this information statement. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 149.

The unaudited pro forma condensed combined financial information that follows is presented for informational purposes only and is not intended to represent or be indicative of the combined results of operations or financial position that would have been reported had the transaction been completed as of January 1, 2013 or September 30, 2014, and should not be taken as representative of the future consolidated results of operations or financial position of the combined company. In connection with the unaudited pro forma condensed combined financial information, Genesis allocated the preliminary purchase price to the acquired assets and liabilities based upon their estimated fair value. These estimates are based on financial information available at the time of the preparation of this information statement. Based on the timing of the closing of the Combination and other factors, we and Genesis cannot assure you that the actual adjustments will not differ materially from the pro forma adjustments reflected in the unaudited pro forma condensed combined financial information. It is expected that, following the Combination, the combined company will incur expenses associated with the Combination and integration of the operations of the two companies. These transaction and integration costs are not reflected in this unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial information also does not give effect to the potential impact of any anticipated synergies, operating efficiencies or cost savings that may result from the Combination.

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FORWARD-LOOKING STATEMENTS

Certain statements in this information statement regarding the Transactions, including the Combination, the expected timetable for completing the transaction, benefits of the transaction, future opportunities for Skilled Healthcare and any other statements regarding Skilled Healthcare’s future expectations, beliefs, goals or prospects contained in this information statement constitute “forward-looking statements” under Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. Forward-looking statements may be preceded by, followed by or include the words “may,” “will,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “could,” “might,” or “continue” or the negative or other variations thereof or comparable terminology. A number of important factors could cause actual events or results to differ materially from those indicated by such forward-looking statements, including the parties’ ability to consummate the Transactions; the results and impact of the announcement of the Transactions; the timing for satisfying the conditions to the completion of the Transactions, including the receipt of the regulatory approvals required for the Transactions; the parties’ ability to meet expectations regarding the timing and completion of the Transactions; the occurrence of any event, change or other circumstance that could give rise to the termination of the Purchase Agreement; and other factors described in the most recent Annual Report on Form 10-K of Skilled Healthcare (the “10-K”) and elsewhere in Skilled Healthcare’s filings with the SEC. You should not place undue reliance on any of these forward- looking statements. Any forward-looking statement speaks only as of the date on which it is made, and Skilled Healthcare undertakes no obligation to update any such statement to reflect new information, or the occurrence of future events or changes in circumstances.

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THE PARTIES TO THE COMBINATION

Skilled Healthcare

Skilled Healthcare Group, Inc.

27442 Portola Parkway, Suite 200

Foothill Ranch, California 92610

(949) 282-5800

Skilled Healthcare Group, Inc. is a holding company that owns subsidiary healthcare services companies. All of Skilled Healthcare’s subsidiaries focus on providing high-quality care to the people Skilled Healthcare serves, and Skilled Healthcare’s skilled nursing facility subsidiaries, which comprise the largest portion of its consolidated business, have a strong commitment to treating patients who require a high level of skilled nursing care and extensive rehabilitation therapy. As of September 30, 2014, Skilled Healthcare owned or leased 73 skilled nursing facilities and 22 assisted living facilities, together comprising 10,275 licensed beds. Skilled Healthcare also leases five skilled nursing facilities in California to an unaffiliated third party operator. Its skilled nursing and assisted living facilities are located in California, Texas, Iowa, Kansas, Missouri, Nebraska, Nevada and New Mexico, and are generally clustered in large urban or suburban markets. Skilled Healthcare owned 77% of these facilities as of September 30, 2014. As of September 30, 2014, Skilled Healthcare provided hospice and home health services in Arizona, California, Idaho, Montana, Nevada, and New Mexico. It also provided private duty care services in Idaho, Montana, and Nevada. For the nine months ended September 30, 2014, Skilled Healthcare generated approximately 75% of its revenue from its skilled nursing facilities, including its integrated rehabilitation therapy services at these facilities. The remainder of its revenue is generated from its assisted living services, rehabilitation therapy services provided to third-party facilities, hospice care, home health, and private duty care services. Skilled Healthcare has an administrative service company that provides a full complement of administrative and consultative services that allows its affiliated operators and third-party operators with whom it contracts to better focus on delivery of healthcare services. Skilled Healthcare currently also has one such service agreement with an unaffiliated skilled nursing facility operator.

For more information about us, please visit Skilled Healthcare’s website at www.skilledhealthcaregroup.com. The information provided on Skilled Healthcare’s website is not part of this information statement, and therefore is not incorporated by reference. Detailed descriptions about Skilled Healthcare’s business and financial results are contained in its 10-K for the fiscal year ended December 31, 2013, which we incorporate into this information statement by reference. See “Where You Can Find More Information” beginning on page 169.

The Company Class A Stock is publicly traded on the NYSE under the symbol “SKH”. After the Closing, the Company Class A Stock will continue to trade on the NYSE under the symbol “GEN.”

Genesis

FC-GEN Operations Investment, LLC

101 East State Street

Kennett Square, Pennsylvania 19348

FC-GEN Operations Investment, LLC is a holding company that owns subsidiaries that operate skilled nursing facilities and assisted living facilities and provide rehabilitation therapy and other complimentary services. In this information statement, the term “Genesis” refers to FC-GEN Operations Investment, LLC and its subsidiaries, unless the context requires otherwise. Genesis conducts its operations through two primary business segments: inpatient services and rehabilitation therapy. For the nine months ended September 30, 2014, approximately 84% of Genesis’ revenues were generated by its inpatient services segment and approximately 13% of Genesis’ revenues were generated by its rehabilitation therapy segment. The remaining revenues were generated by Genesis’ other complimentary services, including medical staffing, physician and facility management services.

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Inpatient Services Segment

Through its inpatient services subsidiaries, Genesis is the largest operator of skilled nursing facilities in the United States based on number of beds and facilities. Genesis offers inpatient services through its network of 413 skilled nursing and assisted living facilities across 28 states, consisting of 379 skilled nursing facilities and 34 assisted living facilities. Of the 413 facilities, 386 are leased, 18 are managed by Genesis, six are joint ventures and three are owned by Genesis. Collectively, Genesis’ skilled nursing and assisted living facilities have 48,922 licensed beds, approximately 49% of which are concentrated in the states of Massachusetts, Maryland, New Jersey, Pennsylvania and West Virginia.

Genesis’ inpatient services segment focuses on serving both short-term acute care patients as well as long-term care patients recently released from acute care hospitals. In an effort to continually improve the quality of care provided within its inpatient services segment, Genesis has focused on investing in clinical capabilities and specialization, as well as strengthening its relationships with hospitals and managed care payors. To support the clinical needs of its patients, Genesis utilizes interdisciplinary teams of experienced medical professionals at each of its facilities, including physicians, physician assistants and nurse practitioners, and has established over 180 specialty units across its facilities. These specialty units focus on transitional care, orthopedic rehabilitation, PowerBack Rehabilitation, ventilator care, dialysis or Alzheimer’s care. Genesis has developed numerous partnerships with hospitals that have resulted in reduced re-hospitalization initiatives and other best practices for providing quality care to Genesis’ patients and residents. Genesis has also formed key relationships with managed care payors to align quality goals and reimbursement, creating a coordinated care approach that reduces hospital readmissions and improves care.

Rehabilitation Therapy Segment

Through its rehabilitation therapy subsidiaries, Genesis operates one of the largest post-acute contract therapy services business in the United States based on number of contracts, with nearly 1,400 contracts in 44 states. These services include speech pathology, physical therapy and occupational therapy, which are provided to skilled nursing facilities, assisted living and independent living facilities, hospitals, home health companies, adult day care programs and outpatient clinics. This business segment also provides respiratory therapy services to nearly 675 sites in 32 states. Approximately 75% of Genesis’ nearly 1,400 rehabilitation therapy service contracts are with healthcare facilities operated by third parties, with the remainder of the contracts with facilities operated by Genesis.

In addition to providing quality therapy services, Genesis offers its third-party rehabilitation therapy services customers support in the areas of regulatory and reimbursement management, compliance review, medical direction, census development and clinical programming. By providing rehabilitation therapy services, Genesis is able to diversify its revenue stream and reduce its exposure to reimbursement risk, as Genesis receives a majority of its rehabilitation therapy services revenue directly from the third-party facilities that utilize Genesis’ services.

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THE TRANSACTIONS

Background of the Transactions

In February 2011, the Board of Directors formed a special transaction committee (the “Initial Transaction Committee”) composed of the following four members of the Board of Directors: Robert M. Le Blanc, Glenn S. Schafer, Bernard Puckett and William Scott, to retain and direct advisors to assist Skilled Healthcare in exploring strategic alternatives to maximize stockholder value. In March 2011, J.P. Morgan entered into an engagement letter with Skilled Healthcare to act as a financial advisor and assist Skilled Healthcare in exploring strategic alternatives to maximize stockholder value, including a potential sale and leaseback of its real estate assets or a sale of the whole company. The Board of Directors had determined that the then-current market conditions were favorable and that a strategic transaction could enhance stockholder value. The Board of Directors selected J.P. Morgan as a financial advisor based on its reputation and experience, as well as its familiarity with Skilled Healthcare. In March and April 2011, J.P. Morgan began contacting potential acquirors, including strategic buyers, financial buyers and real estate investment trusts. During this period, J.P. Morgan contacted 46 potential acquirors, of which 27 entered into confidentiality agreements with Skilled Healthcare. None of the confidentiality agreements contained standstill provisions. Of those who signed confidentiality agreements, 22 potential acquirors requested and received confidential information memoranda. From April 6, 2011 through April 8, 2011, three of the potential acquirors, including a group of investors (“Formation Capital”) that separately owned a controlling equity interest in Genesis, submitted proposals to acquire Skilled Healthcare, and another three of the potential acquirors submitted proposals to acquire Skilled Healthcare’s real estate assets. The proposals for the purchase of Skilled Healthcare ranged from $14.00 - $16.00 per share:

The proposals for the purchase of all or a portion of Skilled Healthcare’s real estate assets ranged from $800 million to $1,023 million:

J.P. Morgan evaluated the proposals made by Bidder C, Bidder D and Bidder E and advised the Board of Directors that the implied share price for these proposals reflected a range from $13.26 per share to $17.62 per share.

On April 6, 2011, the day that the proposals were due, the Class A common stock of Skilled Healthcare had a closing price of $14.93 per share; its volume weighted average price for the previous three months, six months and twelve months was $12.63, $9.49 and $5.96 per share, respectively.

On April 11, 2011, Skilled Healthcare announced in a press release that its Board of Directors engaged J.P. Morgan to assist Skilled Healthcare in exploring strategic alternatives to maximize stockholder value, including a potential sale of Skilled Healthcare’s real estate assets or the whole company.

Between April 20, 2011 and April 28, 2011, Skilled Healthcare granted access to an electronic data room containing due diligence materials to four of the bidders: Formation Capital and Bidders A, B and C, and their respective advisors.

Also in April 2011, six other potential acquirors contacted J.P. Morgan and indicated interest in participating in the process of acquiring Skilled Healthcare or its real estate assets. On April 19, 2011, Skilled Healthcare entered into confidentiality agreements with two of these potential acquirors and J.P. Morgan distributed confidential information memoranda to each of them. None of the confidentiality agreements

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contained standstill provisions. On April 22 and 23, 2011, each of these two potential acquirors submitted proposals, one to acquire Skilled Healthcare, and the other to acquire Skilled Healthcare’s real estate assets. On April 26, 2011, Skilled Healthcare granted access to an electronic data room containing due diligence materials to one of these potential acquirors (“Bidder F”) and its advisors.

Between April 20 and April 28, 2011, each of Formation Capital and Bidders A, B, C and F participated in presentations delivered by members of management of Skilled Healthcare.

In May and June 2011, Skilled Healthcare met with J.P. Morgan on several occasions to discuss the proposal of the Centers for Medicare & Medicaid Services (“CMS”) to reduce Medicare reimbursement rates as well as proposed changes to the Medicare patient classification system to be implemented pursuant to Research Utilization Group Version IV, each to take effect in 2012. J.P. Morgan presented the Board of Directors with an overview of the possible market reaction if these proposals were to be adopted, and the Board of Directors determined that it would await definitive developments with respect to these proposals prior to continuing to engage in ongoing efforts to enter into a sale transaction involving Skilled Healthcare or its real estate assets, because the proposed reduced reimbursement rates were expected to have a negative impact on the price to be paid for Skilled Healthcare. On July 29, 2011, as anticipated by the Board of Directors, CMS announced significantly reduced Medicare reimbursement rates for skilled nursing and other long-term care services. The next trading day, the closing price of Skilled Healthcare Class A common stock on the New York Stock Exchange, which had been $8.80 on July 29th, fell to $5.06. In August 2011, in light of the impact on Skilled Healthcare’s stock price, business and operations created by the CMS announcement, and based upon concerns expressed by potential acquirors participating in the sale process as to their ability to pay their indicated price as a result of the CMS announcements, the Board of Directors determined that the reduction in Medicare reimbursement rates diminished the prospects of maximizing stockholder value in a sale transaction at that time and, accordingly, terminated its exploration of strategic alternatives.

On August 2, 2011, Skilled Healthcare announced in a press release that its Board of Directors determined to conclude Skilled Healthcare’s previously announced exploration of strategic alternatives, including a potential sale of the Company’s real estate assets or the whole company.

On August 1, 2012, J.P. Morgan presented the Board of Directors with information regarding market changes for long-term care companies and real estate investment trusts. On August 6, 2012, the Board of Directors authorized J.P. Morgan to conduct a confidential process to solicit interest in a sale of Skilled Healthcare, having determined that a sale of the whole company would be preferable to a sale of Skilled Healthcare’s real estate assets. The Board of Directors also appointed an evaluation committee (the “Evaluation Committee”) composed of the following four members of the Board of Directors: Boyd Hendrickson, Mr. Le Blanc, Mr. Schafer and Mr. Pucket, to oversee the potential sale process. As part of the sale process, at the direction of the Board of Directors, J.P. Morgan contacted 10 potential acquirors, including Formation Capital, Bidder C and Bidder E, and other competitors of Skilled Healthcare, private equity funds and real estate investors, and, of which nine entered into confidentiality agreements with Skilled Healthcare. None of the confidentiality agreements contained standstill provisions.

Beginning in August 2012, J.P. Morgan distributed confidential information memoranda to eight of the potential acquirors. In September 2013, five of the potential acquirors, including Formation Capital, Bidder C, and three other potential acquirors (“Bidders G, H and I”), submitted formal indications of interest, having purchase price ranges for an acquisition of the whole company as indicated below:

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On September 17, 2012, the day that the formal indications of interest were due, the Class A common stock of Skilled Healthcare had a closing price of $6.70 per share; its volume weighted average price for the previous three months, six months and twelve months was $5.78, $6.48 and $5.52 per share, respectively.

Skilled Healthcare and its representatives commenced discussions and preliminary negotiations with each of the five potential acquirors. In September 2012, J.P. Morgan contacted each of the potential acquirors to discuss their indications of interest. Following additional discussion with Skilled Healthcare and its representatives, Formation Capital and Bidder I revised their bids to acquire the whole company as follows:

Bidder C also revised its bid to a value of $650,000,000 for the acquisition of all of Skilled Healthcare’s real estate.

In October 2012, the Board of Directors authorized J.P. Morgan to inform Formation Capital, the highest bidder, that it would be permitted to commence due diligence activities subject to an increase in its proposed purchase price to $11.00 per share. On October 9, 2012, Skilled Healthcare entered into an Exclusivity Agreement with Formation Capital that obligated it not to negotiate, or enter into an agreement with respect to, a potential acquisition of Skilled Healthcare with anyone other than Formation Capital until November 13, 2012. On October 18, 2012, Latham & Watkins LLP (“Latham & Watkins”), counsel for Skilled Healthcare, prepared an initial draft merger agreement, which was distributed to Formation Capital.

On October 31, 2012, the California Bureau of Medi-Cal Fraud and Elder Abuse (the “BMFEA”) filed criminal charges against Skilled Healthcare and two of its subsidiaries related to allegations of substandard care at one of its affiliated nursing facilities in 2008. Representatives of Skilled Healthcare and Formation Capital met on November 30, 2012 to discuss this litigation matter as well as other threatened litigation matters involving, among other things, the DOJ. In connection with these discussions, on December 20, 2012, Skilled Healthcare entered into a new Exclusivity Agreement with Formation Capital that obligated Skilled Healthcare not to negotiate, or enter into an agreement with respect to, a potential acquisition of Skilled Healthcare with anyone other than Formation Capital until January 17, 2013. From December 2012 until May 2013, the Evaluation Committee, Skilled Healthcare and Formation Capital engaged in negotiations and due diligence efforts, including detailed discussions on proposals as to the purchase price per share to be paid to the Skilled Healthcare stockholders, multiple site visits to facilities of Skilled Healthcare and proposals relating to the strategy for management of the litigation matters involving the BMFEA and the DOJ, including possible settlements in respect thereof. On March 8, 2013, Skilled Healthcare entered into a new Exclusivity Agreement with Formation Capital that obligated it not to negotiate, or enter into an agreement with respect to, a potential acquisition of Skilled Healthcare with anyone other than Formation Capital until April 4, 2013. In April 2013, counsel for Formation Capital distributed a revised draft of the merger agreement, and the parties negotiated terms of a possible merger, however, the parties had not yet agreed upon a final purchase price for the merger at this time. In May 2013, following additional discussions and negotiations among Skilled Healthcare, Formation Capital and their respective representatives, Skilled Healthcare and Formation Capital mutually determined that they would not be able to come to terms on a transaction, including mutually acceptable pricing terms, and further discussions were terminated.

In June 2013, Skilled Healthcare’s then-current Chief Executive Officer, Boyd Hendrickson, advised the Board of Directors that he desired to retire by the end of 2013.

On November 25, 2013, Skilled Healthcare announced that Robert H. Fish had been selected by the Board of Directors to become the Company’s new Chief Executive Officer, effective immediately. The Board of Directors also appointed Mr. Fish to serve as a member of the Board of Directors. Upon his commencement of service, Mr. Fish began an assessment and evaluation of Skilled Healthcare’s strengths, as well as areas of opportunity that were potentially available to the Company.

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In December 2013, Skilled Healthcare entered into a Consulting Agreement with Valentine Associates, LLC (“Valentine Associates”) and engaged Valentine Associates through its managing member, James V. McKeon, III, an experienced healthcare industry professional, to provide Skilled Healthcare with financial consulting services. From 1994 through 2003, Mr. McKeon held various positions with Genesis’ predecessor entity, Genesis Health Ventures, Inc., including serving as its Senior Vice President and Corporate Controller from November 2000 through December 2003 and serving as the Chief Financial Officer of Genesis from December 2003 until October 2008. Since that time, Valentine Associates has also performed consulting services for Genesis. See “Management After the Combination—Board of Directors and Management—James V. McKeon.” The Board of Directors was informed of Mr. McKeon’s background and relationships with Genesis and its affiliates.

On January 14, 2014, at the annual J.P. Morgan healthcare conference in San Francisco, Mr. Fish met with George V. Hager, the Chief Executive Officer of Genesis, as well as Steven Fishman and Arnold Whitman, who are board members of Genesis and principals of Formation Capital. At the meeting, Mr. Fish provided an update on the litigation matters involving the BMFEA and the DOJ. Messrs. Hager, Fishman and Whitman indicated that Formation Capital or Genesis might be interested in a possible transaction with Skilled Healthcare, but also indicated that any transaction was still under consideration internally and that they would contact Mr. Fish in the future if they remained interested in pursuing further discussions. Mr. Fish updated the Board of Directors regarding the discussions that took place at this meeting at a meeting of the Board of Directors that was held on February 5, 2014.

During the week of February 10, 2014, Mr. Fishman telephoned Mr. Le Blanc and indicated that there was interest in reengaging in discussions about a potential transaction for the acquisition of Skilled Healthcare. Mr. Le Blanc advised Mr. Fishman that Skilled Healthcare was in the process of considering and evaluating a number of operational initiatives and other strategic options, and that he believed that Genesis would likely not, at that time, ascribe sufficient value to the anticipated financial benefits that Skilled Healthcare’s stockholders might receive from Skilled Healthcare’s ongoing performance improvement initiatives and general turnaround efforts. Mr. Le Blanc subsequently informed the Board of Directors of his conversation with Mr. Fishman.

On February 18, 2014, Skilled Healthcare engaged MTS, an experienced investment banking and strategic advisory services firm that focuses on the healthcare industry, to provide Skilled Healthcare with financial consulting and strategic advisory services and to otherwise aid in Mr. Fish’s assessment and evaluation of Skilled Healthcare’s strategic, operational and financial positioning, as well as potential strategic opportunities, and to assist in the execution of any initiatives that might come from those efforts.

In early March 2014, Mr. Hager telephoned Mr. Fish and indicated that he understood Skilled Healthcare’s hesitation to pursue potential sale discussions, but he advised Mr. Fish that Genesis was now interested in discussing a potential combination of the two companies in which Skilled Healthcare would remain as the surviving publicly traded company so that Skilled Healthcare’s stockholders would, as continuing stockholders of the surviving company, be able to participate in Skilled Healthcare’s continuing turnaround efforts and benefit from the anticipated synergies that would result from combining the two companies. Mr. Fish advised Mr. Le Blanc and Mr. Schafer, the Chairman of the Board of Directors, of Genesis’ expression of interest, and indicated that he believed that the Genesis proposal should be considered by the Board of Directors in addition to the other alternative strategic and operational improvements that the Board of Directors was considering.

Following Mr. Fish’s receipt of the phone call from Mr. Hager, Mr. Fish requested that MTS perform preliminary analyses on behalf of Skilled Healthcare to assess the potential of a combination of the two companies.

On March 11, 2014, Mr. Hager, Mr. Fish and Valentine Associates met at the Barclays Global Healthcare Conference in Miami, Florida to have further discussions regarding Genesis’ interest in a potential combination transaction with Skilled Healthcare.

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On March 26, 2014, Messrs. Hager, Fish and Le Blanc and Valentine Associates met in New York City to further discuss Genesis’ interest in combining with Skilled Healthcare. At that meeting, Genesis described its vision for a combined company and the possibility of effectuating a potential combination transaction.

On March 28, 2014, Mr. Fish provided Mr. Schafer with an update regarding the discussions of the March 26th meeting. Following the update, Skilled Healthcare directed MTS to perform additional analyses, including to refine (1) the initial estimate of the potential synergies that a combination with Genesis might provide and (2) the costs and expenses that could be anticipated in connection with a combination of the two companies.

On April 4, 2014, MTS presented an updated analysis to Mr. Fish and Mr. LeBlanc, which included refined change of control costs, transaction fees and potential synergy benefits of a combination transaction.

Also on April 4, 2014, Mr. Fish e-mailed the Board of Directors to advise them of the discussions with Genesis and to schedule a telephonic board meeting for April 8, 2014.

On April 8, 2014, the Board of Directors met by telephone. Roland Rapp, Skilled Healthcare’s general counsel, and Latham & Watkins were also present. At the meeting, the Board of Directors discussed Genesis’ preliminary indication of interest and vision for the combined company and the preliminary work that MTS and management had performed to date. Latham & Watkins advised the Board of Directors as to their fiduciary duties under the circumstances and responded to questions. The Board of Directors authorized Mr. Fish to engage in further discussions with Genesis and to report back to the Board of Directors. The Board of Directors determined that it would further discuss a potential transaction with Genesis and other strategic and performance improvement opportunities at a Board of Directors meeting that was scheduled for April 28, 2014.

On April 9, 2014, Mr. Fish, Mr. Hager and Valentine Associates met in Indianapolis, Indiana, to review a preliminary analysis of the potential pro forma financial and operational impact of a combination of the two companies. At the meeting, Mr. Fish and Mr. Hager discussed preliminary terms of a combination of the two companies. Mr. Fish proposed on behalf of Skilled Healthcare, among other things:

At the meeting, Mr. Fish and Mr. Hager also discussed a potential transaction timeline.

On April 11, 2014, Skilled Healthcare announced the appointment of Paxton L. Wiffler to serve as the company’s Chief Operating Officer. Mr. Wiffler had previously served as the Senior Vice President of Operations for Genesis from October 2011 to May 2014.

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On April 15, 2014, Skilled Healthcare and Genesis entered into a mutual confidentiality agreement, which includes an 18-month mutual standstill provision.

On April 20, 2014, Bank of America Merrill Lynch, co-financial advisor to Genesis, sent Genesis’ counter-proposal to MTS for forwarding to Skilled Healthcare, which counter-proposal was forwarded to the Board of Directors and included the following:

Also on April 20, 2014, Mr. Hager telephoned Mr. Fish to discuss the counter-proposal.

On April 24, 2014, the Board of Directors met by telephone. Mr. Rapp and Kaye Scholer LLP (“Kaye Scholer”) were also present. Mr. Rapp introduced Kaye Scholer and informed the Board of Directors that Kaye Scholer had been retained to act as counsel to Skilled Healthcare in connection with the strategic and financial options under consideration. At the meeting, Mr. Rapp informed the Board of Directors that Kaye Scholer would also be acting as counsel for the Onex Group in connection with these matters and that Kaye Scholer had represented the Onex Group and their affiliates in a variety of matters and had done so for more than 25 years. The Board of Directors discussed the engagement of Kaye Scholer and determined that the interests of the Onex Group in any potential transaction were aligned with the interests of Skilled Healthcare and its other stockholders and that Kaye Scholer’s concurrent representation of Skilled Healthcare and the Onex Group did not present a conflict of interest. Mr. Fish presented the Board of Directors with an update regarding the April 20, 2014 Genesis proposal. Mr. Fish advised the Board of Directors that he was working with Skilled Healthcare’s advisors to prepare materials for a more detailed discussion to be held at a Board of Directors meeting that was scheduled for April 28, 2014.

On April 28, 2014, the Board of Directors met in Newport Beach, California, for its regularly scheduled quarterly meeting. Members of management of Skilled Healthcare and Kaye Scholer were also present. At the meeting, management presented its perspectives on the potential opportunities, risks, timing and magnitude of the various operational turnaround and improvement initiatives that management, with the assistance of MTS and Valentine Associates, had identified. The Board of Directors also reviewed potential strategic alternatives for Skilled Healthcare, including the potential combination with Genesis and the related financial analyses that MTS and management had prepared. The Board of Directors determined that it was in the Company’s best interest to continue discussions with Genesis regarding a potential combination transaction, and to counter Genesis’ proposed 23.5% pro forma ownership of the combined company by Skilled Healthcare stockholders with a proposal of 24.5% pro forma ownership. Additionally, the Board of Directors formed a special transaction committee (the “Transaction Committee”) composed of the following two members of the Board of Directors: Mr. Schafer and Michael E. Boxer, to retain and direct advisors to engage in diligence of Genesis. Subsequently, at a Board of Directors meeting on May 29, 2014, the Board of Directors added Mr. Le Blanc as a third member of the Transaction Committee and expanded its authority to include (1) directing the process of evaluating and negotiating the combination transaction on behalf of Skilled Healthcare, (2) interviewing, selecting and retaining, on behalf of Skilled Healthcare and at Skilled Healthcare’s expense, legal, financial and other advisors that the Transaction Committee determined necessary for purposes of evaluating and negotiating the contemplated combination transaction and (3) taking such other actions as the Transaction Committee might deem necessary, proper or advisable to carry out the intent of the foregoing items. At the April 28th meeting, Kaye Scholer also discussed with the Board of Directors their fiduciary duties under Delaware law, including how those duties

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applied in connection with a strategic combination transaction of the type contemplated to be entered into with Genesis. The Board of Directors also determined that MTS should be requested to analyze the fairness, from a financial point of view, of the contemplated combination transaction, and that J.P. Morgan should be engaged as a second financial advisor to advise the Board of Directors concerning equity capital markets matters and to analyze the fairness, from a financial point of view, of the contemplated combination transaction.

On April 29, 2014, Mr. Fish and MTS telephoned Mr. Hager to communicate Skilled Healthcare’s counterproposal of an equity split of 24.5% for Skilled Healthcare stockholders and 75.5% for Genesis equityholders.

On April 30, 2014, Mr. Hager telephoned Mr. Fish to confirm Genesis’ acceptance in principle of Skilled Healthcare’s counterproposal regarding equity ownership in the combined company (subject to continued due diligence and definitive documentation). Mr. Hager and Mr. Fish also discussed the diligence process and a transaction timeline during this telephone conversation.

On May 1, 2014, Kaye Scholer and Skadden, Arps, Slate, Meagher and Flom LLP (“Skadden”), legal counsel for Genesis, met by telephone to discuss potential transaction structures for the proposed combination, including tax impacts to the equity holders of both companies that would be expected to result from a variety of transaction structures. In those discussions, counsel tentatively agreed to recommend to their respective clients a combination transaction utilizing an “Up-C” transaction structure, whereby existing Genesis members would retain direct interests in Genesis that are exchangeable for shares of Company Class A stock. More specifically, the stockholders of Skilled Healthcare would retain shares of Common Stock representing 24.5% of the combined equity of the post-combination company, while the equityholders of Genesis would own 75.5% of the combined equity of the post-combination company, in each case, calculated on a fully diluted, as-exchanged and as-converted basis. The effectuation of such a combination transaction would involve, among other steps, the following:

Skadden also proposed on behalf of Genesis that Skilled Healthcare and equityholders of Genesis enter into a customary agreement regarding the realization of, and compensation to the applicable legacy Genesis equity holders for, certain tax receivable attributes that would result from the transaction.

Also on May 1, 2014, the Transaction Committee and Mr. Fish met by telephone to discuss the scope of engagement of legal, financial and operational consultants to assist Skilled Healthcare with the contemplated combination transaction, including the engagement of J.P. Morgan to provide capital markets advice and a fairness opinion.

On May 12, 2014, the Transaction Committee, Mr. Fish, MTS, Valentine Associates and Kaye Scholer met by telephone to discuss the scope of due diligence to be performed by Skilled Healthcare’s regulatory and financial advisors. The Transaction Committee noted the past and current relationships between Mr. McKeon of Valentine and Genesis and concluded that it was advisable to for Skilled Healthcare to continue to utilize the services of Valentine and Mr. McKeon.

On May 14, 2014, Skilled Healthcare granted access to an electronic data room containing due diligence materials to Genesis and its advisors, including Skadden, Barclays Bank PLC (“Barclays”), co-financial advisor to Genesis, and Bank of America Merrill Lynch. Other Genesis representatives, including legal and operational advisors, as well as prospective lenders, were also subsequently given access to the electronic data room.

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On May 15, 2014, Genesis granted access to an electronic data room containing due diligence materials to Skilled Healthcare, the Onex Group and their respective advisors, including Kaye Scholer, MTS and Valentine Associates. Other Skilled Healthcare representatives, including legal and operational advisors, were also subsequently given access to the electronic data room.

On May 19, 2014, Skilled Healthcare, Genesis, MTS, Valentine Associates, Barclays and Bank of America Merrill Lynch met at Genesis’ office in Kennett Square, Pennsylvania. At this meeting, Genesis made a detailed presentation of its business, operations and financial condition. On May 20, 2014, the representatives of Skilled Healthcare were given a tour of a nearby Genesis facility.

On May 21, 2014, Kaye Scholer and Skadden met by telephone to discuss elements of the structure of the potential transaction.

On May 22 and 23, 2014, Kaye Scholer, Skadden, Genesis and MTS met by telephone to conduct legal due diligence of Genesis.

On May 27, 2014, Kaye Scholer, Skadden and the general counsel of each of Skilled Healthcare and Genesis met by telephone to identify third parties that provided litigation and insurance services to Skilled Healthcare and Genesis. Skilled Healthcare and Genesis agreed that such third party providers either would not work on the transaction or would be used solely to provide due diligence information, but would not provide advice and analysis relating to the proposed transaction to either party.

On May 28, 2014, Skilled Healthcare, Genesis, MTS, Valentine Associates, Barclays and Bank of America Merrill Lynch met in New York City to discuss the preliminary work that Skilled Healthcare and its financial advisors performed with respect to (1) the identification of potential synergies that might be realized by combining the two companies, (2) a potential pro forma valuation of a combined company, (3) a financing structure for a combined company and (4) general analyses of the potential transaction. J.P. Morgan also attended this meeting by telephone.

Also on May 28, 2014, Kaye Scholer and Skadden met by telephone to discuss the structure of the potential transaction.

On May 29, 2014, the Board of Directors met by telephone. Members of management of Skilled Healthcare, MTS, Valentine Associates and Kaye Scholer were also present. At the meeting, Mr. Fish, MTS and Kaye Scholer updated the Board of Directors on the status of discussions and negotiations with Genesis and its representatives regarding the potential transaction.

Thereafter Skilled Healthcare’s management and its legal, strategic and financial advisors, under the direction of the Transaction Committee, continued discussions and negotiations with Genesis and its representatives regarding the potential transaction by numerous telephone calls, email exchanges and the exchange of draft transaction documents.

On June 2, 2014, Genesis, MTS, Barclays, Kaye Scholer and Skadden met by telephone to discuss the potential financing arrangements for the potential transaction.

On each of June 3, 4 and 5, 2014, Kaye Scholer, Skadden and Morgan, Lewis & Bockius (“Morgan Lewis”), and the general counsel of each of Skilled Healthcare and Genesis met by telephone to discuss various legal matters with respect to which Morgan Lewis was representing Skilled Healthcare or Genesis. Morgan Lewis did not represent either party in connection with the transaction and participated in these telephone calls solely as a source of due diligence information. McDermott, Will & Emery was engaged to conduct healthcare regulatory due diligence on behalf of Skilled Healthcare and advise the Board of Directors with respect thereto.

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Throughout June and July 2014, each of Skilled Healthcare and Genesis, directly and through their respective representatives, continued to conduct due diligence activities with respect to the other party.

On June 11, 2014, Kaye Scholer and Skadden met by telephone to discuss elements of the structure of the potential transaction and due diligence issues.

On June 20, 2014, the Transaction Committee, members of management of Skilled Healthcare, MTS, J.P. Morgan and Kaye Scholer met by telephone. At the meeting, J.P. Morgan provided an overview of the potential trading ranges for a pro forma company comprised of Skilled Healthcare and Genesis, which was subject to certain factors, assumptions and limitations that were discussed during the presentation. Following the meeting, the Transaction Committee requested that J.P. Morgan prepare an analysis of Skilled Healthcare’s potential unaffected trading value and provide additional information regarding a potential share offering by the pro forma combined company following a potential transaction involving a combination of Skilled Healthcare and Genesis.

Also on June 20, 2014, Skadden distributed to Kaye Scholer an initial draft of the Purchase Agreement.

On June 23, 2014, the Board of Directors met by telephone. Members of management of Skilled Healthcare, MTS, J.P. Morgan, Valentine Associates and Kaye Scholer were also present. At the meeting, MTS provided the Board of Directors with an update regarding ongoing due diligence efforts, and MTS and J.P. Morgan presented to the Board of Directors their respective overviews of the potential trading ranges for a pro forma company comprised of Skilled Healthcare and Genesis that had previously been presented to the Transaction Committee and an analysis of Skilled Healthcare’s potential unaffected trading value and additional information regarding a potential share offering by the pro forma combined company following a potential transaction involving a combination of Skilled Healthcare and Genesis, as previously requested by the Transaction Committee.

On June 30, 2014, the Transaction Committee, members of management of Skilled Healthcare, MTS, J.P. Morgan, Valentine Associates and Kaye Scholer met by telephone. At the meeting, Kaye Scholer discussed with the Transaction Committee key aspects of negotiations of the Purchase Agreement and other transaction documents, including Genesis’ proposed approach to obtaining approval from its equityholders for the potential transaction and its proposals regarding transaction terms in the definitive agreement. A thorough discussion ensued with Kaye Scholer responding to questions.

On July 3, 2014, the Board of Directors, members of management of Skilled Healthcare and Kaye Scholer met by telephone. At the meeting, Kaye Scholer updated the Board of Directors on Genesis’ proposed approach to obtaining approval from its equityholders for the potential transaction and its proposals regarding deal protection terms in the definitive agreement, as well as Kaye Scholer’s and the Transaction Committee’s concerns regarding the Genesis proposals. The Transaction Committee expressed its desire that, should Skilled Healthcare elect to enter into a transaction with Genesis, the contract terms would provide a reasonable opportunity for Skilled Healthcare to actively seek and accept a superior proposal, commonly referred to as a “go-shop,” and generally enable the Board of Directors to act in the interest of, and maximize value for, Skilled Healthcare’s stockholders. The initial draft Purchase Agreement that was previously distributed by Skadden did not include such a provision and proposed that, with certain exceptions for unsolicited proposals received prior to receipt of stockholder approval, Skilled Healthcare would not be permitted to, among other things, solicit, initiate, cause or knowingly facilitate or encourage (including by way of furnishing information) the submission of any competing proposal. The Board of Directors authorized Kaye Scholer to make a counterproposal to Genesis consistent with the Transaction Committee’s recommendation and the discussion at the telephonic meeting. The Transaction Committee also determined that there was not a need to perform a private market check, publicly announce the process or approach other potential acquirors, as the Company had completed two recent auction processes for a sale of Skilled Healthcare.

On July 8, 2014, the Transaction Committee, members of Skilled Healthcare management, MTS, J.P. Morgan and Valentine Associates met by telephone. At the meeting, Mr. Fish and MTS provided the

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members of the Transaction Committee with an update regarding due diligence and financial aspects of the potential transaction. Members of the Transaction Committee asked a number of questions regarding the matters presented to it by Mr. Fish and MTS and discussion ensued.

On July 10, 2014, the Transaction Committee, MTS, J.P. Morgan, Valentine Associates and Kaye Scholer met by telephone to discuss the status of the potential transaction, including status of outstanding landlord consents, financing and diligence matters. MTS, Valentine Associates and Kaye Scholer responded to questions from the Transaction Committee regarding the matters presented and discussion ensued.

On July 14, 2014, Kaye Scholer distributed a revised draft of the Purchase Agreement to members of management of Skilled Healthcare for review and, following input from such members of management, on July 16, 2014, Kaye Scholer distributed the revised draft of the Purchase Agreement to Skadden.

Also on July 16, 2014, Skadden distributed initial drafts of the LLC Agreement, the Tax Receivable Agreement and the Registration Rights Agreement to Kaye Scholer. At this time, Skilled Healthcare had indicated that it was still considering whether entering into a Tax Receivable Agreement would be appropriate or not.

On July 25, 2014, the Transaction Committee met by telephone to discuss sharing confidential information of Skilled Healthcare with lenders to Genesis and the terms of a non-disclosure agreement being negotiated with one of Genesis’ lenders.

On July 27, 2014, Skadden distributed a revised draft of the Purchase Agreement to Kaye Scholer.

On July 28, 2014, Kaye Scholer distributed a revised draft of the LLC Agreement to Skadden.

On July 29, 2014, two of Genesis’ financing sources executed non-disclosure agreements.

During July and early August 2014, seven landlords of Genesis executed non-disclosure agreements in connection with the landlord consents Genesis sought to obtain in respect of the potential transaction. Genesis then began discussions with the relevant parties relating to, among other things, the required landlord consents and prospective financing.

On July 30, 2014, Kaye Scholer, Skadden and the general counsel of Genesis met at the offices of Kaye Scholer in New York, New York. At the meeting, discussions and negotiations took place with regard to the various transaction documents, including the Purchase Agreement, the LLC Agreement, the Tax Receivable Agreement and the Registration Rights Agreement. At this time Skilled Healthcare had still not agreed to enter into a Tax Receivable Agreement, and Genesis’ proposal was that the Tax Receivable Agreement would provide the legacy Genesis equity holders with 80% of certain tax receivable attributes that would result from the transaction.

Also on July 30, 2014, Kaye Scholer distributed a revised draft of the Registration Rights Agreement to Skadden.

On July 31, 2014, the Board of Directors met by telephone. Members of management of Skilled Healthcare, MTS, Valentine Associates and Kaye Scholer were also present. At the meeting, management and Skilled Healthcare’s financial advisors presented a revised assessment of the relative contemplated equity value splits in a combined company as of the closing, between the Skilled Healthcare stockholders and the legacy Genesis equity holders, based upon the due diligence conducted by Skilled Healthcare on Genesis, and vice versa. Management and MTS also discussed with the Board of Directors the estimated potential value to, and allocation of value between, Skilled Healthcare and the applicable legacy Genesis equity holders under a proposed tax receivable agreement related to the contemplated combination. Based on that discussion, the Board of Directors

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directed Mr. Fish and MTS to propose to Genesis an increased equity split of 26.0% ownership of the combined company for the Skilled Healthcare stockholders in exchange for agreeing to a tax receivable agreement, which would provide the legacy Genesis equity holders with 90% of certain tax receivable attributes that would result from the transaction.

Also on July 31, 2014, Mr. Fish telephoned Mr. Hager regarding Skilled Healthcare’s proposal of a 26.0% equity split for the Skilled Healthcare stockholders. Between telephone calls that Mr. Fish had with Mr. Hager, Mr. Fish consulted with the members of the Transaction Committee. During the call, Mr. Fish and Mr. Hager also discussed the possibility of entering into a tax receivable agreement as well as the duration of a “fiduciary out” period following the time of signing of a contemplated agreement in respect of a combination of Skilled Healthcare and Genesis. Following negotiations during the call, Mr. Fish and Mr. Hager agreed in principle, subject to the approval of their respective boards of directors, that, if an agreement was ultimately reached for the potential transaction, at closing the Skilled Healthcare stockholders would collectively own 25.75% of the pro forma fully-diluted equity of the combined company (with the legacy Genesis equityholders owning 74.25% of the pro forma fully-diluted equity of the combined company), a tax receivable agreement would be entered into on the basis proposed by the Board of Directors, and the duration of a “fiduciary out” period would be 37 days.

On August 1, 2014, Skilled Healthcare, Genesis, MTS, Valentine Associates, Kaye Scholer and Skadden met at the offices of Skadden in New York, New York. At the meeting, discussions and negotiations took place with regard to the various transaction documents, including the Purchase Agreement, the LLC Agreement, the Tax Receivable Agreement and the Registration Rights Agreement. In addition, at the meeting, the parties confirmed the tentative agreements reached on the prior day with respect to the equity split and tax receivable agreement, as well as agreement that the Purchase Agreement would permit Skilled Healthcare to terminate the agreement in order to be able to accept a Superior Proposal for a period of 37 days following the signing of the Purchase Agreement (see “The Purchase Agreement—Competing Proposals” beginning on page 96). At the meeting, Skilled Healthcare and Genesis also agreed that the Purchase Agreement would include a break-up fee payable by Skilled Healthcare to Genesis in the amount of 4% of the equity value of the combined company in the event the Purchase Agreement was terminated in connection with Skilled Healthcare entering into a Superior Proposal and confirmed the mechanics of the matching right to which Genesis would be entitled in the event a Superior Proposal were to be proposed by a third party.

On August 3, 2014 and August 4, 2014, respectively, Kaye Scholer distributed revised drafts of the Tax Receivable Agreement and Purchase Agreement to Skadden.

On August 5, 2014, the chief executive officer of Bidder G, a competitor of Skilled Healthcare, which received a confidentiality agreement in connection with Skilled Healthcare’s 2011 sale process, but did not elect to participate, and which participated in connection with Skilled Healthcare’s 2012-2013 sale process, placed telephone calls to Mr. Le Blanc and Mr. Fish. After discussion with Mr. Fish and Kaye Scholer, Mr. Le Blanc returned Bidder G’s call and the chief executive officer of Bidder G indicated that if Skilled Healthcare was to conduct a sale process, Bidder G would be interested in participating. Mr. Le Blanc informed the chief executive officer of Bidder G that he was not able to react to Bidder G’s inquiry but would discuss the inquiry with others at Skilled Healthcare.

On August 6, 2014, the Transaction Committee, members of management of Skilled Healthcare, MTS and Kaye Scholer met by telephone. At the meeting, Mr. Le Blanc informed the Transaction Committee of the telephone call with Bidder G. The Transaction Committee and the other parties at the meeting discussed the issues raised by the call and agreed that a meeting of the Board of Directors should be scheduled to review the matter. A telephonic meeting of the Board of Directors was thereafter scheduled for August 8, 2014.

Also on August 6, 2014, Skadden distributed a revised draft of the Registration Rights Agreement to Kaye Scholer.

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On August 7, 2014, Skadden distributed revised drafts of the Purchase Agreement, LLC Agreement and Tax Receivable Agreement to Kaye Scholer.

On August 8, 2014, the Board of Directors met by telephone to discuss the contact by Bidder G. MTS and Kaye Scholer were also present. Following discussion, the Board of Directors directed MTS to contact Bidder G with the objective of obtaining a better understanding of Bidder G’s interest in a strategic transaction with Skilled Healthcare.

On August 9, 2014, MTS telephoned the chief executive officer of Bidder G to discuss Bidder G’s interest in a potential transaction with Skilled Healthcare. During the call Bidder G’s chief executive officer expressed general interest in a potential transaction with Skilled Healthcare. MTS inquired whether Bidder G had a contemplated value in mind and also asked how such a transaction would relate to another acquisition that Bidder G had publicly announced its intention to engage in. Bidder G’s chief executive officer indicated that he did not have a value to propose or a plan with respect to the other publicly announced potential acquisition.

Also on August 9, 2014, Kaye Scholer distributed a revised draft of the Registration Rights Agreement to Skadden.

On August 11, 2014, a financial advisor to Bidder G contacted MTS to further discuss Bidder G’s potential interest in participating in a sale process by Skilled Healthcare, but no proposal was made and no indication of value was provided by Bidder G’s financial advisor.

Also on August 11, 2014, Skilled Healthcare issued a press release announcing its operating results for the three months and six months ended June 30, 2014.

Between August 12, 2014 and August 14, 2014, Skadden and Kaye Scholer exchanged multiple drafts of the Purchase Agreement, the LLC Agreement, the Tax Receivable Agreement and the Registration Rights Agreement.

Also on August 14, 2014, Kaye Scholer delivered the then-current drafts of the Purchase Agreement and the other transaction documents to the Board of Directors.

On August 16, 2014, prior to a meeting of the Board of Directors, Kaye Scholer delivered substantially complete definitive transaction documentation to the Board of Directors, including copies marked to show the revisions that had been made to the August 14, 2014 drafts.

Also on August 16, 2014, the Board of Directors met by telephone. Members of management of Skilled Healthcare, MTS, J.P. Morgan, Valentine Associates and Kaye Scholer were also present. At the meeting, Kaye Scholer summarized the key transaction documents and the proposed transaction structure and contemplated financing, as well as the terms of the “fiduciary out” that had been negotiated with Genesis. MTS and J.P. Morgan discussed the valuation analyses that they had each performed and each of MTS and J.P. Morgan also orally conveyed the conclusions of the fairness analyses prepared by their respective firms, at the request of the Board of Directors, indicating that, subject to there being no further material changes in the negotiated terms of the potential transaction from those upon which their analyses were based, their respective firms were prepared to confirm their fairness opinions in writing. J.P. Morgan subsequently rendered its written opinion, dated August 16, 2014, to the Board of Directors that, as of such date and based upon and subject to the factors, assumptions and limitations set forth in its opinion, the Exchange Ratio was fair, from a financial point of view, to Skilled Healthcare. MTS subsequently rendered its written opinion, dated August 18, 2014, to the Board of Directors that, as of August 16, 2014, and based upon and subject to the factors and assumptions set forth in the opinion, the Total Consideration (as defined in the MTS opinion attached hereto as Annex H) to be paid by Skilled Healthcare in the transaction was fair, from a financial point of view, to Skilled Healthcare. The full text of the fairness opinions of MTS and J.P. Morgan, each of which sets forth the assumptions made, procedures followed, factors considered and limitations of the undertaken review in connection with such opinions, are

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attached as Annex G and Annex H hereto, respectively. Following discussions and the presentations of MTS and J.P. Morgan, for the reasons discussed below in “Reasons for the Transactions; Recommendation of the Board of Directors,” the Board of Directors unanimously:

From August 16, 2014 through August 18, 2014 the parties and their respective representatives finalized the transaction documents.

Also on August 18, 2014, the Transaction Committee authorized the execution and delivery of the transaction documents.

Shortly after the close of trading on the New York Stock Exchange on August 18, 2014, Skilled Healthcare and Genesis entered into the Purchase Agreement. Immediately thereafter, both Skilled Healthcare and Genesis issued separate press releases to announce the transaction. Shortly after the execution by both parties of the Purchase Agreement, the Onex Group executed and delivered to Skilled the Written Consent. Additionally, on August 18, 2014, Skilled Healthcare filed a Current Report on Form 8-K with the Securities and Exchange Commission, which both disclosed the transaction and included copies of the Purchase Agreement (with its related exhibits) and additional information regarding Skilled Healthcare, Genesis and the transaction.

On August 22, 2014 a representative of MTS received a telephone call from a financial advisor to Bidder G, who stated that he had reviewed the provisions of the Purchase Agreement with respect to Skilled Healthcare’s abilities to accept a competing offer and wished to confirm his understanding that it could do so until September 24, 2014. The MTS representative referred him to the agreements that had been filed with the SEC on August 18, 2014.

On August 23, 2014 Skilled Healthcare provided notice of that contact to Genesis as required by the Purchase Agreement.

There were no further communications from Bidder G and, at 11:59 p.m. (EDT) on September 24, 2014, Skilled Healthcare’s right under the Purchase Agreement to terminate the agreement in order to accept a Superior Proposal expired.

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Reasons for the Transactions; Recommendation of the Board of Directors

The Board of Directors, with the assistance of Skilled Healthcare’s legal and financial advisors, evaluated the proposed Transactions, including the terms and conditions of the Purchase Agreement. At a meeting on August 16, 2014, the Board of Directors unanimously adopted resolutions:

In the course of reaching its determination and recommendation, the Board of Directors consulted with Skilled Healthcare’s management, as well as Skilled Healthcare’s legal and financial advisors, and considered the following potentially positive or favorable factors (which are not intended to be exhaustive and are not listed in any relative order of importance):

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In the course of reaching its determination and recommendation, the Board of Directors also considered a number of potentially negative factors in its deliberations concerning the Transactions, including the following factors (which are not intended to be exhaustive and are not listed in any relative order of importance):

In addition, the Board of Directors was aware of and considered the interests that certain of the Skilled Healthcare directors and officers have with respect to the Transactions that differ from, or are in addition to,

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their interests as stockholders of Skilled Healthcare, as described in “—Interests of Skilled Healthcare’s Directors and Officers in the Transactions” beginning on page 76.

The foregoing discussion of the information and factors considered by the Board of Directors is not intended to be exhaustive, but includes the material factors considered by the Board of Directors. In view of the wide variety of factors considered by the Board of Directors in evaluating the Purchase Agreement and the Transactions, the Board of Directors did not find it practicable, and did not attempt, to quantify, rank or otherwise assign relative weights to the foregoing factors in reaching its conclusion. In addition, the Board of Directors did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate decision, but rather the Board of Directors conducted an overall analysis of the factors described above, including discussions with Skilled Healthcare’s management and its financial and legal advisors. Also, individual members of the Board of Directors may have given different weights to different factors and may have viewed some factors more positively or negatively than others. The Board of Directors’ determination and recommendation described above were based upon the totality of the information presented to and considered by it.

Opinion of J.P. Morgan Securities LLC

Pursuant to an engagement letter dated August 8, 2014, effective from June 18, 2014, Skilled Healthcare retained J.P. Morgan to deliver a fairness opinion in connection with the proposed Transactions.

At the meeting of the Board of Directors on August 16, 2014, J.P. Morgan rendered its oral opinion to the Board of Directors that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the resulting ownership percentage of Company Common Stock by Skilled Healthcare stockholders of 25.75% of the Company Class A Stock to be outstanding immediately following the Closing or issuable upon exchange or conversion of Company Class B Stock or Genesis Units (but excluding Company Class A Stock issuable upon exchange of Company Class C Stock), calculated on a fully-diluted basis as of immediately following the Closing, which when expressed in terms of an implied ratio that each share of Company Common Stock immediately prior to the consummation of the Transactions would equal immediately following consummation of the Transactions and assuming the full conversion of Genesis Class A Units into Company Class A Stock takes place at such time, will reflect the Exchange Ratio was fair, from a financial point of view, to Skilled Healthcare. J.P. Morgan confirmed its August 16, 2014 oral opinion by delivering its written opinion to the Board of Directors, dated August 16, 2014, that, as of such date, the Exchange Ratio in the proposed Transactions was fair, from a financial point of view, to Skilled Healthcare. No limitations were imposed by the Board of Directors upon J.P. Morgan with respect to the investigations made or procedures followed by it in rendering its opinions.

The full text of the written opinion of J.P. Morgan dated August 16, 2014, which sets forth the assumptions made, matters considered and limits on the review undertaken, is attached as Annex G to this information statement and is incorporated herein by reference. Skilled Healthcare’s stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion is addressed to the Board of Directors, and is directed only to the Exchange Ratio in the Transactions and does not constitute a recommendation to any stockholder of Skilled Healthcare as to any matter. The summary of the opinion of J.P. Morgan set forth in this information statement is qualified in its entirety by reference to the full text of such opinion.

In arriving at its opinions, J.P. Morgan, among other things:

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J.P. Morgan also held discussions with certain members of the management of Skilled Healthcare with respect to certain aspects of the Transactions, and the past and current business operations of Skilled Healthcare and Genesis, the financial condition and future prospects and operations of Skilled Healthcare and Genesis, the effects of the Transactions on the financial condition and future prospects of Skilled Healthcare and Genesis, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.

J.P. Morgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by Skilled Healthcare and Genesis or otherwise reviewed by or for J.P. Morgan, including the capitalization of Skilled Healthcare as of August 14, 2014, and J.P. Morgan did not independently verify (nor did it assume responsibility or liability for independently verifying) any such information or its accuracy or completeness. J.P. Morgan did not conduct or was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of Skilled Healthcare or Genesis under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to it, including the Synergies and Tax Benefits referred to above, J.P. Morgan assumed that they were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of Skilled Healthcare and Genesis to which such analyses or forecasts relate. J.P. Morgan expressed no view as to such analyses or forecasts (including the Synergies or Tax Benefits) or the assumptions on which they were based. J.P. Morgan also assumed that the Transactions will have the tax consequences described in this information statement, and in discussions with, and materials furnished to J.P. Morgan by, representatives of Skilled Healthcare, that the other Transactions will be consummated as described in the Purchase Agreement and this information statement, and that the definitive Purchase Agreement would not differ in any material respect from the draft thereof provided to J.P. Morgan. J.P. Morgan also assumed that the representations and warranties made by Skilled Healthcare and Genesis in the Purchase Agreement and the related agreements are and will be true and correct in all respects material to its analysis. J.P. Morgan is not a legal, regulatory or tax expert and relied on the assessments made by advisors to Skilled Healthcare with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the Transactions will be obtained without any adverse effect on Skilled Healthcare or Genesis or on the contemplated benefits of the Transactions. J.P. Morgan assumed, at the direction of Skilled Healthcare, that (1) no shares of capital stock of Skilled Healthcare or securities convertible or exchangeable into, or exercisable for, shares of capital stock of Skilled Healthcare have been, or will be, issued following August 14, 2014 and (2) the value of the Company Class C Stock to be issued to certain Genesis Members pursuant to the Purchase Agreement is de minimis and not material to its analysis. J.P. Morgan also assumed that any adjustment pursuant to the True-Up (as defined in the section entitled “The Purchase Agreement—The Transactions—Issuance and Sale of Company Class A Stock and Company Class C Stock” beginning on page 83) would not be material to its analysis.

The Skilled (JPM) Projections and Genesis (JPM) Projections (as such terms are defined in “The Transactions—Certain Projections”) furnished to J.P. Morgan for Skilled Healthcare and Genesis were prepared

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by the management of Skilled Healthcare and Genesis, respectively. Neither Skilled Healthcare nor Genesis publicly discloses internal management projections of the type provided to J.P. Morgan in connection with J.P. Morgan’s analysis of the Transactions, and such projections were not prepared with a view toward public disclosure. These projections were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of management, including, without limitation, factors related to general economic and competitive conditions and prevailing interest rates. Accordingly, actual results could vary significantly from those set forth in such projections.

J.P. Morgan’s opinion is based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion. Subsequent developments may affect J.P. Morgan’s opinion, and J.P. Morgan does not have any obligation to update, revise, or reaffirm such opinion. J.P. Morgan’s opinion is limited to the fairness, from a financial point of view, to Skilled Healthcare, of the Exchange Ratio in the proposed Transactions, and J.P. Morgan has expressed no opinion as to the fairness of any consideration to be paid in connection with the Transactions to the holders of any other class of securities, creditors or other constituencies of Skilled Healthcare or the underlying decision by Skilled Healthcare to engage in the Transactions. Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the Transactions, or any class of such persons relative to the Exchange Ratio or with respect to the fairness of any such compensation. J.P. Morgan expressed no opinion as to the price at which the Company’s Common Stock or the Genesis Common Units will trade at any future time, whether before or after the Closing of the Transactions.

In addition, J.P. Morgan was not requested to and did not provide advice concerning the structure, the specific Exchange Ratio, or any other aspects of the Transactions, or to provide services other than the delivery of its opinion. During 2014, J.P. Morgan was not authorized to and did not solicit any expressions of interest from any other parties with respect to the sale of all or any part of Skilled Healthcare or any other alternative transaction. J.P. Morgan also notes that it did not participate in negotiations with respect to the terms of the Transaction and related transactions.

In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methods in reaching its opinion. The following is a summary of the material financial analyses utilized by J.P. Morgan in connection with providing its opinion.

Public Trading Multiples—Skilled Healthcare. Using publicly available information, J.P. Morgan compared selected financial data of Skilled Healthcare with similar data for selected publicly traded companies engaged in businesses which J.P. Morgan judged to be analogous to Skilled Healthcare. The companies selected by J.P. Morgan (collectively, the “Selected Companies”) were Kindred Healthcare, Inc., Ensign Group, Inc. and Extendicare Health Services, Inc. These companies were selected, among other reasons, because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of Skilled Healthcare. However, none of the companies selected is identical or directly comparable to Skilled Healthcare. Accordingly, J.P. Morgan made judgments and assumptions concerning differences in financial and operating characteristics of the Selected Companies and other factors that could affect the public trading value of the Selected Companies. Using publicly available information, J.P. Morgan calculated for each of the Selected Companies its adjusted firm value as a multiple of estimated earnings (excluding stock-based compensation expense and other non-recurring items) before interest expense, income taxes, depreciation and amortization and rent (“EBITDAR”) for calendar year 2014 (the “2014 FV/EBITDAR”) and calendar year 2015 (the “2015 FV/EBITDAR”). J.P. Morgan also calculated the same multiples for Skilled Healthcare based on the Skilled (JPM) Projections and publicly available information.

J.P. Morgan identified the mean and median value for the multiples of the Selected Companies, specifically: 8.68x and 8.32x for the 2014 FV/EBITDAR mean and median, respectively, and 8.07x and 7.65x for the 2015 FV/EBITDAR mean and median, respectively. J.P. Morgan then applied a 2014 FV/EBITDAR multiple reference range of 7.5x to 9.0x and a 2015 FV/EBITDAR multiple reference range of 7.25x to 8.5x to Skilled Healthcare’s EBITDAR estimate for calendar year 2014 of $93 million and EBITDAR for calendar year 2015 of

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$101 million, respectively, as provided to J.P. Morgan by Company management, yielding an implied equity value for Skilled Healthcare of approximately $140 million to $280 million for calendar year 2014 and an implied equity value for Skilled Healthcare of approximately $175 million to $300 million for calendar year 2015, reflecting a per share equity value for the Company Common Stock, rounded to the nearest $0.05, of $3.55 to $7.05 for calendar year 2014 and an implied per share equity value for the Company Common Stock, rounded to the nearest $0.05, of $4.40 to $7.55 for calendar year 2015.

Public Trading Multiples—Genesis. Using publicly available information, J.P. Morgan compared selected financial data of Genesis with similar data for the Selected Companies. The Selected Companies were selected, among other reasons, because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of Genesis. However, none of the companies selected is identical or directly comparable to Genesis. Accordingly, J.P. Morgan made judgments and assumptions concerning differences in financial and operating characteristics of the Selected Companies and other factors that could affect the public trading value of the Selected Companies. Using publicly available information, J.P. Morgan calculated for each of the Selected Companies its adjusted firm value as a multiple of EBITDAR for calendar year 2014 and calendar year 2015.

J.P. Morgan identified the mean and median value for the multiples of the Selected Companies, specifically: 8.68x and 8.32x for the 2014 FV/EBITDAR mean and median, respectively, and 8.07x and 7.65x for the 2015 FV/EBITDAR, respectively. J.P. Morgan then applied a 2014 FV/EBITDAR multiple reference range of 7.5x to 8.25x and a 2015 FV/EBITDAR multiple reference range of 7.0x to 7.75x to Skilled Healthcare’s estimate of Genesis’ EBITDAR for calendar year 2014 of $629 million and EBITDAR for calendar year 2015 of $661 million, respectively, as provided to J.P. Morgan by Company management, yielding an implied equity value for Genesis of approximately $720 million to $1,190 million for calendar year 2014 and an implied equity value for Genesis of approximately $630 million to $1,125 million for calendar year 2015.

Discounted Cash Flow Analysis—Skilled Healthcare. J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining the fully diluted equity value per share for the Company’s Common Stock. J.P. Morgan calculated the unlevered free cash flows that Skilled Healthcare is expected to generate during fiscal years 2014 through 2024 based upon the Skilled (JPM) Projections. J.P. Morgan also calculated a range of terminal adjusted firm values of Skilled Healthcare at the end of the 11-year period ending December 31, 2024 by applying a terminal growth rate ranging from 1.5% to 2.5% of the unlevered free cash flow of Skilled Healthcare during the final year of the 11-year period. The unlevered free cash flows and the range of terminal adjusted firm values were then discounted to present values using a range of discount rates from 7.5% to 8.0%, which were chosen by J.P. Morgan based upon an analysis of the estimated weighted average cost of capital of Skilled Healthcare, which included, among other things, an analysis of the Selected Companies. The present value of the unlevered free cash flows and the range of terminal adjusted firm values were then adjusted for Skilled Healthcare’s estimated net debt of $389.2 million as of December 31, 2014, including a tax adjusted benefit of a one-time intergovernmental transfer payment assuming a tax rate of 39.5%. Based on the foregoing, the discounted cash flow analysis indicated a range of equity values of between $350 million to $510 million, reflecting an implied per share equity value of the Company Common Stock of $8.86 to $12.91.

Discounted Cash Flow Analysis—Genesis. J.P. Morgan also conducted a discounted cash flow analysis for the purpose of determining the fully diluted equity value of Genesis. J.P. Morgan calculated the unlevered free cash flows that Genesis is expected to generate during fiscal years 2014 through 2024 based upon the Genesis (JPM) Projections and publicly available information. J.P. Morgan also calculated a range of terminal adjusted firm values of Genesis at the end of the 11-year period ending December 31, 2024 by applying a perpetual growth rate ranging from 1.5% to 2.5% of the unlevered free cash flow of Genesis during the final year of the 11-year period. The unlevered free cash flows and the range of terminal adjusted firm values were then discounted to present values using a range of discount rates from 7.5% to 8.0%, which were chosen by J.P. Morgan based upon an analysis of the estimated weighted average cost of capital of Genesis, which included, among other things, an analysis of the Selected Companies. The present value of the unlevered free cash flows

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and the range of terminal asset values were then adjusted for Genesis’ estimated net debt of $412 million as of December 31, 2014. Based on the foregoing, the discounted cash flow analysis indicated a range of equity values of between $877 million and $1,158 million of Genesis.

Contribution Analysis. J.P. Morgan analyzed the contribution of each of Skilled Healthcare and Genesis to the pro forma combined company with respect to EBITDAR and earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the calendar years ending December 31, 2014 and December 31, 2015, using the Skilled (JPM) Projections and the Genesis (JPM) Projections.

For purposes of the contribution analysis, J.P. Morgan assumed that the contributions with respect to EBITDAR and EBITDA reflected each company’s contribution to the combined company’s pro forma adjusted firm value. Equity value contributions and relative ownership percentages were then derived by adjusting adjusted firm value contributions for outstanding net debt.

The analysis indicated that the contribution of Skilled Healthcare to the combined company with respect to EBITDAR and EBITDA, for each calendar year analyzed, ranged from 13% to 29%.

Relative Value Analysis. Based upon a comparison of the implied equity values for each of Skilled Healthcare and Genesis calculated pursuant to the public trading multiples and discounted cash flow analysis described above, J.P. Morgan calculated an implied range of the pro forma equity ownership of the holders of the Company Common Stock in the combined company. This analysis indicated the following implied range of pro forma equity ownership for Skilled Healthcare’s stockholders in the combined company:

J.P. Morgan then compared the range of implied pro forma equity ownership values to the pro-forma equity ownership value provided for in the Transaction.

Illustrative Value Creation Analysis. J.P. Morgan conducted an illustrative value creation analysis that compared the implied equity value of Skilled Healthcare derived from a discounted cash flow valuation on a standalone basis to the pro forma combined company implied equity value. J.P. Morgan determined the pro forma combined company implied equity value by calculating: the sum of (1) the implied equity value of Skilled Healthcare using the midpoint value determined in J.P. Morgan’s discounted cash flow analysis described above in “—Discounted Cash Flow Analysis—Skilled Healthcare”, (2) the implied equity value of Genesis using the midpoint value determined in J.P. Morgan’s discounted cash flow analysis described above in “—Discounted Cash Flow Analysis—Genesis”, (3) 100% of the estimated present value of Skilled Healthcare’s synergy estimates, net of transaction costs, discounted to present value using a discount rate of 7.5% to 8.0% and perpetuity growth rate of 0% to 2% and (4) 100% of the present value of the free cash flow of the estimated Tax Benefits, discounted to present value using a discount rate of 7.5% to 8.0% and perpetuity growth rate of 0% to 2%. The analysis indicated, on an illustrative basis, that the Transaction created hypothetical implied value of approximately 8% for the holders of Company Common Stock.

Historical Trading Range. For reference purposes only and not as a component of its fairness analysis, J.P. Morgan presented to the Board the 52-week trading range of the Company Common Stock, rounded to the nearest $0.05, which was $4.10 per share to $7.15 per share.

Analyst Price Targets. For reference purposes only and not as a component of its fairness analysis, J.P. Morgan also reviewed with the Board certain 12-month price targets of six public analysts for Skilled Healthcare, which analysts were selected by J.P. Morgan in the exercise of its professional judgment and noted that the range of such price targets was $5.00 per share to $7.00 per share.

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J.P. Morgan noted that the contribution analysis, illustrative value creation analysis, historical stock trading and analyst price targets analyses are not valuation methodologies but were presented merely for informational purposes.

The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion. Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be bought or sold. None of the Selected Companies reviewed as described in the above summary is identical to Skilled Healthcare, and none of the selected transactions reviewed was identical to the Transaction. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of Skilled Healthcare. The transactions selected were similarly chosen because their participants, size and other factors, for purposes of J.P. Morgan’s analysis, may be considered similar to the Transactions. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies compared to Skilled Healthcare and the transactions compared to the Transactions.

As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for estate, corporate and other purposes. J.P. Morgan was selected to deliver an opinion to the Board of Directors with respect to the Transactions on the basis of such experience and its familiarity with Skilled Healthcare.

For the delivery of its opinion, Skilled Healthcare has agreed to pay J.P. Morgan a fee of $2,500,000. In addition, Skilled Healthcare has agreed to reimburse J.P. Morgan for its expenses incurred in connection with its services, including the fees and disbursements of counsel, and will indemnify J.P. Morgan against certain liabilities, including liabilities arising under the Federal securities laws.

Except as described herein, during the past two years preceding the date of its opinion, neither J.P. Morgan nor its affiliates have had any material financial advisory or other material commercial or investment banking relationships with Skilled Healthcare, Genesis, Onex or Formation Capital. During the past two years, J.P. Morgan’s commercial banking affiliate is acting as an agent bank and a lender under outstanding credit facilities of Skilled Healthcare, for which it received approximately $59,000 in fees. During the past two years, J.P. Morgan and its affiliates have provided financial advisory services to Onex and its portfolio companies for which J.P. Morgan and its affiliates have received approximately $12 million in fees. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities of Skilled Healthcare or Genesis for their own accounts or for the accounts of customers and, accordingly, they may at any time hold long or short positions in such securities.

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Opinion of MTS Securities LLC

MTS delivered an oral opinion to the Board of Directors on August 16, 2014, subsequently confirmed in writing, to the effect that, as of August 16, 2014, and based upon and subject to the factors and assumptions set forth in the opinion, the Total Consideration (as defined in the MTS opinion attached hereto as Annex H) to be paid by Skilled Healthcare in the transaction was fair, from a financial point of view, to Skilled Healthcare.

The full text of the written opinion of MTS, dated August 18, 2014, which sets forth the assumptions made, matters considered, and limit on the review undertaken in connection with the opinion, is attached as Annex H to this information statement and is incorporated herein by reference. Skilled Healthcare’s stockholders are urged to read the opinion in its entirety. MTS’ written opinion is addressed to the Board of Directors and does not constitute a recommendation to any stockholder of Skilled Healthcare as to any matter. The summary of the opinion of MTS set forth in this information statement is qualified in its entirety by reference to the full text of such opinion.

In the course of performing its review and analyses for rendering the opinion set forth below, MTS:

In arriving at its opinion, MTS assumed and relied upon, without assuming liability or responsibility for independent verification, the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information that was publicly available or was provided to, or discussed with or reviewed by MTS. MTS and its personnel are not legal, regulatory, tax or financial reporting experts and relied, with the consent of the Board of Directors, on the assessments made by management of Skilled Healthcare and Genesis, and certain of their respective advisors, with respect to such issues. MTS did not conduct any independent verification of any financial forecasts, projections, estimates and other forward-looking information reviewed by MTS. Without limiting the generality of the foregoing, with respect to the financial forecasts, projections, estimates and other forward-looking information prepared or furnished by management of Skilled Healthcare and Genesis, MTS assumed, without independent verification, that they were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Skilled Healthcare and Genesis, respectively,

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of the future results of operations and financial performance of Skilled Healthcare and Genesis, respectively. MTS expressed no view as to any of such financial forecasts, projections, estimates or forward-looking information or the assumptions on which they are based.

In arriving at its opinion, MTS did not make any analysis of, and expressed no opinion as to, the adequacy of the reserves of Skilled Healthcare and Genesis and relied upon information supplied to MTS by Skilled Healthcare and Genesis as to such adequacy. In addition, MTS did not make any independent evaluations or appraisals of the assets or liabilities (including any contingent derivatives or off-balance-sheet assets or liabilities) of Skilled Healthcare or Genesis or any of their respective subsidiaries, and was not furnished with any such evaluations or appraisals, nor did MTS evaluate the solvency of Skilled Healthcare, Genesis or any other entity under any state or federal law relating to bankruptcy, insolvency or similar matters. The analyses performed by MTS in connection with its opinion were going concern analyses. MTS expressed no opinion regarding the liquidation value of Skilled Healthcare, Genesis or any other entity. Without limiting the generality of the foregoing, MTS undertook no independent analysis of any pending or threatened litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which Skilled Healthcare, Genesis or any of their respective affiliates is a party or may be subject, and at the direction of Skilled Healthcare and with its consent, MTS made no assumption concerning, and therefore did not consider, the possible assertion of claims, outcomes or damages arising out of any such matters in rendering its opinion. MTS also assumed that neither Skilled Healthcare nor Genesis is party to any material pending transaction, including without limitation any financing, recapitalization, acquisition or merger, divestiture or spin-off, other than the Transactions.

MTS assumed that the representations and warranties of each party contained in the Purchase Agreement and in all other related documents and instruments that are referred to therein are and will be true and correct as of the date or dates made or deemed made, that each party will fully and timely perform all of the covenants and agreements required to be performed by it under the Purchase Agreement, that the Transactions will be consummated pursuant to the terms of the Purchase Agreement without amendments thereto, and that all conditions to the consummation of the Transactions will be satisfied without waiver thereof. MTS assumed that the final form of the Purchase Agreement would be in all material respects identical to the draft copies of the Agreement reviewed by MTS prior to the delivery of the MTS opinion. MTS also assumed that any governmental, regulatory and other consents and approvals contemplated by the Purchase Agreement will be obtained and that, in the course of obtaining any of those consents, no restrictions will be imposed or waivers made that would have an adverse effect on Skilled Healthcare, Genesis or the contemplated benefits of the Transactions.

The MTS opinion was necessarily based on economic, market, financial and other conditions existing, and on the information made available to MTS, as of the date of its opinion, and although subsequent developments may affect the conclusions reached in its opinion, MTS assumed no obligation to update, revise or reaffirm its opinion. The MTS opinion addresses solely the fairness, from a financial point of view, to Skilled Healthcare of the Total Consideration (as defined in the MTS opinion attached hereto as Annex H) and does not address any other terms or agreement relating to the Transactions or any other terms of the Purchase Agreement. The MTS opinion does not address Skilled Healthcare’s underlying business decision to proceed with the Transactions, the relative merits of the Transactions compared to other alternatives available to Skilled Healthcare, or whether such alternatives exist. MTS expressed no opinion as to the prices or ranges of prices at which shares of Company Common Stock will trade at any time following the announcement of the Transactions or at any future time. The MTS opinion does not in any manner address the amount or nature of compensation to any of the officers, directors or employees of any party to the Transactions, or any class of such persons, relative to the compensation to be paid to the public stockholders of Skilled Healthcare or to any equity holders of Genesis in the Transactions or with respect to the fairness of any such compensation.

In accordance with customary investment banking practice, MTS employed generally accepted valuation methods in reaching its opinion. The MTS opinion was reviewed and approved by a fairness committee of MTS.

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Summary of Financial Analysis

The following summarizes the material financial analyses presented by MTS to the Board of Directors in connection with the Board of Directors meeting on August 16, 2014 during which MTS rendered its opinion orally. Following the August 16, 2014 meeting of the Board of Directors, MTS delivered its written opinion, as of such date, based upon and subject to the factors and assumptions set forth in the opinion, including the composition and amount of the total transaction consideration.

The following summary does not purport to be a complete description of the financial analyses performed by MTS. The order of analyses described does not represent the relative importance or weight given to those analyses by MTS. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of MTS’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before August 14, 2014, and is not necessarily indicative of current market conditions.

Historical Stock Price Performance

MTS reviewed the share price trading history of Company Common Stock for the three-year period beginning on August 12, 2011 and ending on August 14, 2014.

MTS considered that during this period, the Company Common Stock traded as low as $3.40 per share and as high as $8.02 per share, compared to the closing price of Company Common Stock on August 14, 2014 of $6.05 per share. MTS also considered that the Company Common Stock traded as low as $4.20 per share and as high as $7.00 per share for the one-year period ending August 14, 2014. In addition, MTS considered the average closing prices per share of Company Common Stock over the 30 trading-day, 120 trading-day, 180 trading-day, 360 trading-day, and three-year periods ending on August 14, 2014. These average closing prices are set forth in the table below:

MTS also noted that at the end of each fiscal quarter from the second quarter of 2011 through the fourth quarter of 2013, Skilled Healthcare traded at a discount to the industry average, defined as The Ensign Group, Extendicare Inc., Kindred Healthcare Inc. and Skilled Healthcare, Inc., with respect to its Forward AEV/EBITDA multiple (AEV as defined below).

Equity Research Analyst Estimates

MTS reviewed the estimates of potential future value of Company Common Stock (commonly referred to as price targets) of nine independent research analysts currently covering Skilled. The range of price targets represents the most recent estimates, as of August 14, 2014, and is noted in the table below:

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Among the nine analysts’ recommendations for Company Common Stock, six recommended the Company Common Stock as neutral or market perform, two recommended the Company Common Stock as outperform and one recommended the Company Common Stock as under-perform.

Public Equity Trading Comparables

MTS reviewed and compared certain financial and operating information for Skilled Healthcare and certain other publicly-listed companies that are focused on the ownership and operation of skilled nursing facilities. Although none of the selected companies is directly comparable to Skilled Healthcare, the companies included were chosen because they are publicly traded companies with a material portion of their business that is focused on skilled nursing facilities and/or have operations that, for purposes of analysis, may be considered similar to certain operations of Skilled Healthcare. Note that, unlike Skilled Healthcare, some of these companies lease a majority of their real estate assets and accordingly have rental costs that are substantially higher than those incurred by Skilled Healthcare. Accordingly, AEV-based valuations were used, in lieu of enterprise value-based valuations, to adjust for the difference between cash flows of companies having a majority of owned versus leased assets by using an industry convention of capitalizing rents at 8.0x their annual rental amounts. MTS compared selected publicly available financial information, multiples and other data for Skilled Healthcare and the following selected post-acute care companies with a focus on skilled nursing services:

MTS calculated and compared the following multiples for each of the Selected Companies and Skilled Healthcare:

For purposes of this analysis, the AEV of each of the companies was calculated by multiplying the closing price per share of common stock of such company as of August 14, 2014 by the number of such company’s fully diluted outstanding shares and adding to that result such company’s net debt, preferred stock, minority interests and capitalized rent (using an industry-standard 8.0x multiple applied to each company’s last four quarters’ rent expense), in each case as disclosed in such company’s most recent SEC filings. MTS adjusted Ensign’s last four quarters’ rent expense for the pro forma impact of that company’s July 2014 sale-leaseback transaction.

MTS derived a high and low valuation multiple range for 2014 AEV/EBITDAR, 2015 AEV/EBITDAR and 2015 P/E for both Skilled Healthcare and Genesis. Skilled Healthcare’s high and low valuation multiple range was based on the high and low ranges of Skilled Healthcare’s comparable public company universe, defined as Skilled Healthcare, Kindred and Ensign. Genesis’ high and low valuation multiple range was based on the high and low ranges of Genesis’ comparable public company universe, defined as Kindred and Ensign. Skilled Healthcare was excluded as a comparable company to Genesis as Skilled Healthcare owns a majority of its real estate assets, whereas Genesis does not own any of its real estate assets. Kindred and Ensign do not own a material portion of their respective real estate assets.

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MTS applied the high and low multiple ranges to the respective valuation metrics of both Skilled Healthcare and Genesis to derive high and low equity valuations based upon each metric. MTS then compared the following combinations of high and low equity values of both companies to determine the implied range of current Skilled Healthcare ownership in the combined company:

The table below notes the pro forma common stock ownership resulting from applying the multiple valuation methodologies in each of the equity value scenarios described directly above.

Discounted Cash Flow Analysis

MTS performed a discounted cash flow analysis to determine ranges of implied present values per share of Skilled Healthcare equity value as of August 14, 2014, for the period from August 14, 2014 to August 13, 2019. Using discount rates ranging from 7.1% to 9.1%, reflecting calculated estimates of Skilled Healthcare’s weighted average cost of capital, based upon MTS’ analysis of the cost of capital for Skilled Healthcare’s comparable company universe, MTS derived a range of implied enterprise values for Skilled Healthcare by discounting to present value (1) the expected unlevered free cash flow of Skilled Healthcare over the period from August 14, 2014 through August 13, 2019 and (2) the implied range of terminal enterprise values for Skilled Healthcare as of August 13, 2019 by applying terminal EBITDAR multiples ranging from 7.5x to 8.5x, reflecting MTS’ judgment of appropriate multiples to use for terminal values five-years forward, based upon the current and historical trading ranges for comparable companies, to Skilled Healthcare’s projected EBITDAR for the year ending December 31, 2019, and subtracting capitalized rent (using an industry-standard 8.0x multiple applied to its last four quarters rent expense at such time). To calculate the implied present value range of equity value for Skilled Healthcare, MTS then subtracted from the range of implied enterprise values for Skilled Healthcare the amount of Skilled Healthcare’s net debt as disclosed in Skilled Healthcare’s most recent SEC filing prior to August 14, 2014.