Case hdh11 Doc 660 Filed 06/29/18 Entered 06/29/18 15:35:46 Page 1 of 14

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1 Case hdh11 Doc 660 Filed 06/29/18 Entered 06/29/18 15:35:46 Page 1 of 14 ACCRUAL BASIS JUDGE: Honorable Harlin D. Hale UNITED STATES BANKRUPTCY COURT NORTHERN & EASTERN DISTRICTS OF TEAS REGION 6 MONTHLY OPERATING REPORT MONTH ENDING: May 2018 MONTH YEAR IN ACCORDANCE WITH TITLE 28, SECTION 1746, OF THE UNITED STATES CODE, I DECLARE UNDER PENALTY OF PERJURY THAT I HAVE EAMINED THE FOLLOWING MONTHLY OPERATING REPORT (ACCRUAL BASIS-1 THROUGH ACCRUAL BASIS-7) AND THE ACCOMPANYING ATTACHMENTS AND, TO THE BEST OF MY KNOWLEDGE, THESE DOCUMENTS ARE TRUE, CORRECT, AND COMPLETE. DECLARATION OF THE PREPARER (OTHER THAN RESPONSIBLE PARTY) IS BASED ON ALL INFORMATION OF WHICH PREPARER HAS ANY KNOWLEDGE. REPONSIBLE PARTY: ORIGINAL SIGNATURE OF RESPONSIBLE PARTY Chief Restructuring Officer TITLE Louis E. Robichaux IV PRINTED NAME OF RESPONSIBLE PARTY June 29, 2018 DATE PREPARER: ORIGINAL SIGNATURE OF PREPARER Director of Finance TITLE Amanda J. Sherman PRINTED NAME OF PREPARER June 28, 2018 DATE 1

2 Case hdh11 Doc 660 Filed 06/29/18 Entered 06/29/18 15:35:46 Page 2 of 14 (1) ACCRUAL BASIS-1 COMPARATIVE BALANCE SHEET (2) ASSETS SCHEDULE AMOUNT 3/31/2018 4/30/2018 5/31/2018 MONTH 1. UNRESTRICTED CASH $ 3,832,516 $ 17,255,120 $ 17,384,113 $ 17,343, TOTAL CASH 3,832,516 17,255,120 17,384,113 17,343, ACCOUNTS RECEIVABLE (NET) 53,880,735 53,185,944 53,522,958 53,144, OTHER RECEIVABLES 1,334,107 1,018,166 1,139, , PREPAIDS AND OTHER CURRENT ASSETS 2,296,663 2,116,333 1,605,469 1,448, TOTAL CURRENT ASSETS 61,344,021 73,575,563 73,651,547 72,888, PROPERTY, PLANT & EQUIPMENT 408,157, ,006, ,052, ,225, LESS: ACCUMULATED DEPRECIATION (79,303,687) (80,513,914) (81,916,217) (83,317,068) 10. NET PROPERTY, PLANT & EQUIPMENT (3) (4) 328,854, ,492, ,135, ,908, DEFFERED TA ASSET 2,589,197 2,589,197 2,589,197 2,589, OTHER ASSETS 5,786,994 6,600,161 6,619,328 6,709, INTANGIBLE ASSETS 4,071,925 4,071,925 4,071,925 4,071, GOODWILL (NET) 88,474,254 87,414,432 86,354,610 85,294, TOTAL ASSETS $ 491,120,614 $ 501,743,602 $ 499,422,444 $ 496,462,070 - POSTPETITION LIABILITIES 16. ACCOUNTS PAYABLE AND ACCRUED EPENSES $ 8,634,832 $ 10,050,009 $ 6,794, ACCRUED PAYROLL AND PAYROLL TAES 7,660,847 8,131,846 7,744, ACCRUED TAES 1,043,976 1,273,785 1,690, DIP - REVOLVER/TERM LOAN (5) 25,196,764 25,185,582 25,193, ACCRUED RESTRUCTURING PROFESSIONAL FEES 1,159,000 3,130,806 4,547, ACCRUED US TRUSTEE FEES 299, , , OTHER LIABILITIES ACCRUED CLAIMS - SELF INSURANCE 1,217,910 1,390,209 1,869,347 ACCRUED INCOME TAES (2,224,716) (4,099,617) (6,627,667) 23. TOTAL POSTPETITION LIABILITIES - 42,988,337 45,169,238 41,425,596 - PREPETITION LIABILITIES 23. SECURED DEBT (5) (6) 81,287,403 71,801,174 76,320,334 80,313, PRIORITY DEBT 12,361,960 5,556,712 1,149, , UNSECURED DEBT 80,310,047 70,823,002 71,618,831 74,568, LIABILITIES NOT INCLUDED ON SCHEDULES ACCRUED CLAIMS - SELF INSURANCE 22,758,917 21,272,878 21,066,826 21,017,164 ACCRUED INCOME TAES (62,145,093) (62,145,093) (62,145,093) (62,145,093) OTHER CURRENT LIABILITIES 1,322,981 1,320,686 1,319,686 1,318,866 DEFERRED TA LIABILITY 44,796,675 44,796,675 44,796,675 44,796,675 OMEGA CAPITAL LEASE (5) 510,281, ,349, ,349, ,349, TOTAL PREPETITION LIABILITITES 690,974, ,775, ,476, ,007, TOTAL LIABILITIES 690,974, ,763, ,645, ,433,167 - EQUITY 29. PREPETITION OWNERS' EQUITY (199,853,605) (199,853,605) (199,853,605) (199,853,605) 30. POSTPETITION CUMULATIVE PROFIT OR (LOSS) (5,166,585) (10,369,778) (16,117,491) 31. DIRECT CHARGES TO EQUITY (ATTACH EPLANATION) TOTAL EQUITY (199,853,605) (205,020,190) (210,223,383) (215,971,096) TOTAL LIABILITIES & OWNERS' EQUITY $ 491,120,614 $ 501,743,602 $ 499,422,444 $ 496,462,070 - Notes: (1) On March 6, 2018 (the Petition Date ), each Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. A list of the Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number is attached hereto at Exhibit A. The Debtors continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. Due to the complexity of the Debtors businesses as well as certain limitations inherent to their accounting systems reporting capabilities, except as otherwise noted, the consolidated balance sheet asset and liability information provided herein is based upon data as of the close of business on February 28, (2) The balance sheet is presented on a consolidated basis with the appropriate elimination of intercompany transactions and accounts as of February 28, 2018 and the dates referenced above. (3) Capitalized Leases. Certain of the Debtors are parties to three active leases (and associated subleases), namely (i) the Master Lease Agreement (Indiana Region), effective November 27, 2013, (ii) the Master Lease Agreement (South East Region), effective November 27, 2013, and (iii) the Master Lease Agreement between OHI Asset (SC) Greenville, LLC, OHI Asset (GA) Macon, LLC, OHI Asset (SC) Orangeburg, LLC as Landlords and New Ark Master Tenant, LLC (Laurel Baye), effective June 27, 2014 (collectively, and as amended from time to time thereafter, the Master Leases ). The Master Leases are subject to re-characterization as described in further detail in the Motion of the Debtors for Entry of an Order (I) Approving the Settlement and Compromise of Certain Claims Pursuant to a Settlement Agreement; and (II) Granting Related Relief [Docket No. 101] (the 9019 Motion ). The landlord with respect to the three leases is OHI Asset RO, LLC ( OHI ) or subsidiaries or affiliates of OHI (together, the Omega Parties ). Any reference to Omega in this ( MOR ) means OHI Asset RO, LLC or its subsidiaries or affiliates that are parties to various agreements with the Debtors (the Omega Parties ). Upon request, the Debtors will provide a complete list of the Omega Parties. Under generally accepted accounting principles ( GAAP ), the Debtors are required to record the Master Leases in their financial statements as capitalized leases. Accordingly, for purposes of the Debtors consolidated MOR, the Debtors have recorded the Master Leases as capitalized leases. A capitalized lease is recorded as both an asset and a liability on the lessee s (the Debtors) balance sheet. For purposes of its consolidated balance sheet, the capitalized leases are reflected in the asset account Net Property, Plant & Equipment and the liability account Omega Capital Leases. 2

3 Case hdh11 Doc 660 Filed 06/29/18 Entered 06/29/18 15:35:46 Page 3 of 14 (4) Property, Plant and Equipment Do Not Reflect Impairment. Under GAAP, the Debtors are required to review their long-lived assets for impairment when facts and circumstances indicate that such amounts may not be recoverable from future operations. Recoverability of long-lived assets held for use is assessed by a comparison of the carrying amount of the asset to the estimated future undiscounted net cash flows expected to be generated by the asset. If such cash flows are less than the carrying amount of the asset, the asset is considered impaired and expense is recorded in an amount necessary to reduce the carrying amount of the asset to fair value. Although the cash flows expected to be generated from the operation of the Debtors long-lived assets is less than the carrying values of the respective properties, the Debtors have not recorded impairment of property, plant and equipment. Accordingly, the amount reflected in the asset account Net Property, Plant & Equipment is overstated because it does not reflect impairment changes. (5) (6) The following amounts represent the outstanding debt amounts owed by the Debtors to the Omega Parties as of the dates in the table below: 2/28/2018 3/31/2018 4/30/2018 5/31/2018 DIP - Revolver/Term Loan $ - $ 25,196,764 $ 25,185,582 $ 25,193,481 Secured Debt - Working Capital Loan 15,063,357 15,068,558 15,490,130 15,405,362 Secured Debt - Capital Lease Damage Claim 43,890,677 49,116,044 52,888,308 56,879,857 Omega Capital Lease 510,281, ,349, ,349, ,349,421 $ 569,235,364 $ 599,730,786 $ 603,913,442 $ 607,828,121 The following amounts represent the outstanding debt amounts owed by the Debtors as of the dates in the table below: 2/28/2018 3/31/2018 4/30/2018 5/31/2018 Omega Parties - Capital Lease Damage Claim $ 43,890,677 $ 49,116,044 $ 52,888,308 $ 56,879,857 OHI Asset RO, LLC - Working Capital Loan 15,063,357 15,068,558 15,490,130 15,405,362 Sterling National Bank - Revolving Loan 14,803, New Ark Mezz Holdings, LLC - Subordinated Promissory Note 7,530,078 7,616,573 7,941,896 8,028,391 $ 81,287,403 $ 71,801,174 $ 76,320,334 $ 80,313,609 3

4 Case hdh11 Doc 660 Filed 06/29/18 Entered 06/29/18 15:35:46 Page 4 of 14 ACCRUAL BASIS-2 INCOME STATEMENT March 2018 (1) April 2018 May 2018 MONTH REVENUES 1. INPATIENT REVENUES $ 34,393,660 $ 33,815,010 $ 33,311, OTHER REVENUES NET REVENUE 34,393,660 33,815,010 33,311,870 - OPERATING EPENSES 4. OFFICER / INSIDER COMPENSATION 83, , , GENERAL & ADMINISTRATIVE (SEE BELOW FOR DETAIL) 29,589,705 30,683,813 31,587, RENT & LEASE 437, , , TOTAL OPERATING EPENSES 30,111,269 31,178,820 32,082, INCOME BEFORE NON-OPERATING INCOME & EPENSES 4,282,391 2,636,190 1,228,931 - OTHER INCOME & EPENSES 9. INTEREST EPENSE 5,342,070 5,173,070 4,969, DEPRECIATION & AMORTIZATION 2,465,130 2,462,790 2,462, OTHER (ATTACH LIST) NET OTHER INCOME & EPENSES 7,807,200 7,635,860 7,432,280 - REORGANIZATION EPENSES 13. PROFESSIONAL FEES 2,456,797 1,971,806 1,965, U.S. TRUSTEE FEES 299, , , POST PETITION DIP CLOSING FEES 1,109, OTHER (ATTACH LIST) TOTAL REORGANIZATION EPENSES 3,866,496 2,078,423 2,072, INCOME TA (2,224,720) (1,874,900) (2,528,050) 19. NET PROFIT (LOSS) $ (5,166,585) $ (5,203,193) $ (5,747,713) - Notes: (1) The accrual income statement above represents the activity for the entire month of March GENERAL & ADMINISTRATIVE DETAIL March 2018 April 2018 May 2018 Nursing $ 12,239,450 $ 12,201,310 $ 12,833,690 Ancillaries 4,979,170 4,829,540 4,805,450 Hospice 794, , ,240 Other Support Costs 3,949,760 3,937,280 4,385,370 Facility Costs 1,559,010 1,710,940 1,548,050 Administration & Other 4,584,830 4,246,830 4,469,540 Total Facility Level Expenses 28,106,550 27,669,730 28,823,340 Regional Support Costs 70, , ,760 Corporate Overhead 1,413,045 2,683,243 2,463,861 Total G&A $ 29,589,705 $ 30,683,813 $ 31,587,961 4

5 Case hdh11 Doc 660 Filed 06/29/18 Entered 06/29/18 15:35:46 Page 5 of 14 ACCRUAL BASIS-3-1 CASH RECEIPTS AND DISBURSEMENTS March 2018 (1) April 2018 May 2018 QUARTER 1. CASH - BEGINNING OF MONTH $ 3,832,516 $ 17,255,120 17,384,113 RECEIPTS FROM OPERATIONS 2. CASH SALES COLLECTION OF ACCOUNTS RECEIVABLE 3. PREPETITION & POSTPETITION 34,420,120 33,500,041 33,367, TOTAL OPERATING RECEIPTS 34,420,120 33,500,041 33,367,368 - NON-OPERATING RECEIPTS 5. LOANS & ADVANCES 29,000, OTHER (ATTACH LIST) 7. TOTAL NON-OPERATING RECEIPTS 29,000, TOTAL RECEIPTS 63,420,120 33,500,041 33,367, TOTAL CASH AVAILABLE 67,252,636 50,755,160 50,751,481 - OPERATING DISBURSEMENTS 10. OFFICER COMPENSATION 83, , , GENERAL & ADMINISTRATIVE 28,540,529 32,079,405 31,653, RENT & LEASE 158, ,489 1,105, OTHER (ATTACH LIST) TOTAL OPERATING DISBURSEMENTS 28,782,454 33,072,622 32,859,079 - REORGANIZATION EPENSES 15. PROFESSIONAL FEES 1,297, , U.S. TRUSTEE FEES - 298, PAYOFF OF NON DIP LINE AND DIP CLOSING FEES 19,917, OTHER (ATTACH LIST) 19. TOTAL REORGANIZATION EPENSES 21,215, , , TOTAL DISBURSEMENTS 49,997,516 33,371,047 33,408, NET CASH FLOW 13,422, ,994 (40,993) CASH - END OF MONTH $ 17,255,120 $ 17,384,113 $ 17,343,121 - Notes: (1) The cash receipts and disbursements schedule above represents the activity for the entire month of March The Debtors' accounting system does not allow for the split of collections between pre and post petition dates of service. 5

6 Case hdh11 Doc 660 Filed 06/29/18 Entered 06/29/18 15:35:46 Page 6 of 14 ACCRUAL BASIS-3-2 STATEMENT OF RECEIPTS AND DISBURSEMENTS BY DEBTOR (1) May 2018 Case Number Receipts Disbursements West Holdings, Inc. $ - $ 68, Orianna Health Systems, LLC 31,664,290 35,147, Palladium Hospice and Palliative Care, LLC 1,703, ,077 Subtotal $ 33,367,368 $ 35,924, West Investors, LLC Aiken RE, LLC Ambassador Rehabilitation and Healthcare Center, LLC Anchor Rehabilitation and Healthcare Center of Aiken, LLC Anderson RE T, LLC Anderson RE, LLC Ark II Real Estate, LLC Ark III Real Estate, LLC Ark Mississippi Holding Company, LLC Ark Real Estate, LLC Ark South Carolina Holding Company, LLC Ark Texas Holding Company, LLC Battle Ground RE, LLC Brushy Creek Rehabilitation and Healthcare Center, LLC Bryan RE, LLC Burleson RE, LLC Capstone Rehabilitation and Healthcare Center, LLC Charlottesville Pointe Rehabilitation and Healthcare Center, LLC Charlottesville RE, LLC Cleveland RE, LLC Clinton RE, LLC Cobblestone Rehabilitation and Healthcare Center, LLC Collierville RE, LLC Columbia RE, LLC Columbia Rehabilitation and Healthcare Center, LLC Comfort RE, LLC Connersville RE, LLC Corinth RE, LLC Cornerstone Rehabilitation and Healthcare Center, LLC Crystal Rehabilitation and Healthcare Center, LLC Delta Rehabilitation and Healthcare Center of Cleveland, LLC Descending Dove, LLC Diboll RE, LLC Easley RE II, LLC Easley RE, LLC Edgefield RE, LLC Farmville RE, LLC Farmville Rehabilitation and Healthcare Center, LLC Fleetwood Rehabilitation and Healthcare Center, LLC Fortress Health & Rehab of Rock Prairie, LLC Granbury RE, LLC Great Oaks RE, LLC Great Oaks Rehabilitation and Healthcare Center, LLC Greenville RE II, LLC Greenville RE, LLC Greenville Rehabilitation and Healthcare Center, LLC Greenwood RE, LLC Greer RE, LLC Greer Rehabilitation and Healthcare Center, LLC Grenada RE, LLC Grenada Rehabilitation and Healthcare Center, LLC Heritage Park Rehabilitation and Healthcare Center, LLC - - 6

7 Case hdh11 Doc 660 Filed 06/29/18 Entered 06/29/18 15:35:46 Page 7 of 14 Case Number Receipts Disbursements Hillsville RE, LLC Hillsville Rehabilitation and Healthcare Center, LLC Holly Lane Rehabilitation and Healthcare Center, LLC Holly RE, LLC Holly Springs RE, LLC Holly Springs Rehabilitation and Healthcare Center, LLC Indianola RE, LLC Indianola Rehabilitation and Healthcare Center, LLC Italy RE, LLC Iva RE, LLC Iva Rehabilitation and Healthcare Center, LLC Johns Island Rehabilitation and Healthcare Center, LLC Joy of Bryan, LLC Lampstand Health & Rehab of Bryan, LLC Linley Park Rehabilitation and Healthcare Center, LLC Macon Rehabilitation and Healthcare Center, LLC Magnified Health & Rehab of Anderson, LLC Manna Rehabilitation and Healthcare Center, LLC Marietta RE, LLC McCormick RE, LLC McCormick Rehabilitation and Healthcare Center, LLC Memphis RE, LLC Midland RE, LLC Midland Rehabilitation and Healthcare Center, LLC Moultrie RE, LLC Mountain View Rehabilitation and Healthcare Center, LLC Natchez RE, LLC Natchez Rehabilitation and Healthcare Center, LLC New Ark Master Tenant, LLC New Ark Operator Holdings, LLC New Redeemer Health & Rehab of Pickens, LLC Olive Leaf Holding Company, LLC Olive Leaf, LLC Omega Health & Rehab of Greenville, LLC Orianna Holding Company, LLC Orianna Investment, Inc Orianna SC Operator Holdings, Inc Patewood Rehabilitation and Healthcare Center, LLC Picayune RE, LLC Picayune Rehabilitation and Healthcare Center, LLC Pickens RE II, LLC Pickens RE, LLC Piedmont RE, LLC Poinsett Rehabilitation and Healthcare Center, LLC Poplar Oaks Rehabilitation and Healthcare Center, LLC Portland RE, LLC Provo RE, LLC Rainbow Rehabilitation and Healthcare Center, LLC River Falls Rehabilitation and Healthcare Center, LLC Riverside Rehabilitation and Healthcare Center, LLC Rock Prairie RE, LLC Rocky Mount RE, LLC Rocky Mount Rehabilitation and Healthcare Center, LLC Roy RE, LLC Scepter Rehabilitation and Healthcare Center, LLC Scepter Senior Living Center, LLC Simpsonville RE II, LLC Simpsonville RE, LLC Simpsonville Rehabilitation and Healthcare Center, LLC Snellville RE, LLC Southern Oaks Rehabilitation and Healthcare Center, LLC The Bluffs Rehabilitation and Healthcare Center, LLC The Ridge Rehabilitation and Healthcare Center, LLC Trinity Mission Health & Rehab of Connersville, LLC Trinity Mission of Burleson, LLC - - 7

8 Case hdh11 Doc 660 Filed 06/29/18 Entered 06/29/18 15:35:46 Page 8 of 14 Case Number Receipts Disbursements Trinity Mission of Comfort, LLC Trinity Mission of Diboll, LLC Trinity Mission of Granbury, LLC Trinity Mission of Italy, LLC Trinity Mission of Winnsboro, LLC Utah Valley Rehabilitation and Healthcare Center, LLC Vicksburg RE, LLC Victory Rehabilitation and Healthcare Center, LLC Wadesboro RE, LLC Wide Horizons RE, LLC Wide Horizons Residential Care Facility, LLC Winnsboro RE, LLC Woodlands Rehabilitation and Healthcare Center, LLC Yazoo City RE, LLC Yazoo City Rehabilitation and Healthcare Center, LLC - - Total $ 33,367,368 $ 35,924,296 Notes: (1) The Statement of Receipts and Disbursements by Debtor excludes transfers made between Debtors as explained in greater detail in the Motion of the Debtors for Entry of Interim and Final Orders Authorizing (I) Continued Use of Existing Cash Management System, (II) Maintenance of Existing Bank Accounts and (III) Continue Use of Existing Business Forms, and (IV) Extension of Time to Comply with 11 U.S.C. 345(b) Deposit and Investment Requirements [Docket No. 8] (the Cash Management Motion ). 8

9 Case hdh11 Doc 660 Filed 06/29/18 Entered 06/29/18 15:35:46 Page 9 of 14 ACCRUAL BASIS-4 ACCOUNTS RECEIVABLE AGING 2/28/2018 3/31/2018 4/30/2018 5/31/2018 MONTH $ 23,464,417 $ 25,323,967 $ 24,628,263 $ 23,965, ,151,696 6,805,918 8,054,968 6,621, ,629,501 4,697,702 3,960,925 4,574, ,138,187 23,039,430 23,515,630 22,888, TOTAL ACCOUNTS RECEIVABLE 60,383,801 59,867,018 60,159,786 58,049, AMOUNT CONSIDERED UNCOLLECTIBLE 6,503,066 6,681,073 6,636,828 4,905, ACCOUNTS RECEIVABLE (NET) $ 53,880,735 $ 53,185,944 $ 53,522,958 $ 53,144,290 - AGING OF POSTPETITION TAES AND PAYABLES MONTH: May TAES PAYABLE 0-30 DAYS DAYS DAYS 91+ DAYS TOTAL 1. FEDERAL $ 253,333 $ - $ - $ - $ 253, STATE / LOCAL 422, , ,334-1,690, OTHER (ATTACH LIST) TOTAL TAES PAYABLE $ 675,969 $ 938,811 $ 329,334 $ - $ 1,944, ACCOUNTS PAYABLE $ 5,826,398 $ 653,526 $ 314,437 $ - $ 6,794,362 STATUS OF POSTPETITION TAES MONTH: May BEGINNING AMOUNT AMOUNT ENDING TA TA WITHHELD AND PAID LIABILITY FEDERAL LIABILITY / OR ACCRUED 1. WITHHOLDING $ - $ 2,803,663 $ 2,550,330 $ 253, FUTA - 10,654 10, SUI - 43,729 43, OTHER (ATTACH LIST) TOTAL FEDERAL TAES - 2,858,046 2,604, ,333 STATE AND LOCAL 6. WITHHOLDING - 424, , SALES 641 3,410 3, ECISE REAL PROPERTY 645, , , PROVIDER TA 615, , , , FRANCHISE TA 11,666 5,833 5,000 12, OTHER TOTAL STATE & LOCAL 1,273,786 1,520,868 1,103,874 1,690, TOTAL TAES $ 1,273,786 $ 4,378,914 $ 3,708,586 $ 1,944,113 9

10 Case hdh11 Doc 660 Filed 06/29/18 Entered 06/29/18 15:35:46 Page 10 of 14 ACCRUAL BASIS-5 MONTH: May BANK RECONCILIATIONS Account #1 Account #2 Account #3 Account #4 Account #5 Account #6 Account #7 Account #8 Account #9 Account #10 Account #11 Account #12 Account #13 A. BANK: BOA CBIC CBIC Sterling Sterling Sterling CBIC Sterling CBIC BOA CBIC Sterling Sterling B. ACCOUNT NUMBER: TOTAL C. PURPOSE (TYPE): 4 West-Disbursement OHS-Master OP OHS-Depository OHS-Concentration OHS-Operating OHS-Payroll Palladium-Payroll Tax OHS-Payroll Tax Palladium-Master 4 West - APP OHS-New Disb OHS-Old Disb OHS-Payroll Tax 1. BALANCE PER BANK STATEMENT $ 851 $ 14,017,558 $ 846,100 $ 644,365 $ 1,733,922 $ - $ - $ - $ 855,725 $ 292,446 $ - $ - $ - $ 18,390, ADD: TOTAL DEPOSITS NOT CREDITED SUBTRACT: OUTSTANDING CHECKS (12,300) - - (95,067) - (744,512) - - (851,879) 4. OTHER RECONCILING ITEMS - 273,042 (349,697) (302,545) - (1,579) , ,964 (369,754) - (318,988) 5. MONTH END BALANCE PER BOOKS $ 851 $ 14,290,600 $ 496,404 $ 341,820 $ 1,733,922 $ (13,879) $ - $ - $ 791,239 $ 292,446 $ (343,548) $ (369,754) $ - $ 17,220, NUMBER OF LAST CHECK WRITTEN N/A N/A N/A N/A N/A N/A N/A N/A N/A INVESTMENT ACCOUNTS BANK, ACCOUNT NAME & NUMBER DATE OF PURCHASE TOTAL INVESTMENTS TYPE OF INSTRUMENT PURCHASE PRICE CURRENT VALUE CASH 12. CURRENCY ON HAND $ 123, TOTAL CASH - END OF MONTH $ 17,343,121 10

11 Case hdh11 Doc 660 Filed 06/29/18 Entered 06/29/18 15:35:46 Page 11 of 14 ACCRUAL BASIS-6 PAYMENTS TO OFFICERS AND PROFESSIONALS (1) OFFICERS SALARIES & EPENSES TYPE OF PAYMENT AMOUNT PAID TOTAL PAID TO DATE NAME 1. Michelle D. Meer 2. Diane Parker 3. Dawn Michelle Teachey 4. David Maiorana TOTAL PAYMENTS TO OFFICERS $ 100,492 $ 297,043 PROFESSIONALS (1) DATE OF COURT ORDER AUTHORIZING AMOUNT AMOUNT TOTAL TOTAL PAID TO APPROVED & NAME PAYMENT APPROVED PAID DATE UNPAID * 1. All Environmental Inc 3/9/2018 n/a $ 42,050 $ 42,050 $ 42, Houlihan Lokey 4/17/ , , , Bryan Cave Leighton Paisner LLP 4/17/ ,692 62,692 62, Bryan Cave Leighton Paisner LLP 5/15/ ,871 79,871 79, Mr. John Brecker 5/14/ ,383 26,383 26, TOTAL PAYMENTS TO PROFESSIONALS $ 549,283 $ 591,333 $ 591,333 $ 42,050 POSTPETITION STATUS OF SECURED NOTES, LEASES PAYABLE AND ADEQUATE PROTECTION PAYMENTS (1) NAME OF CREDITOR PAYMENTS DUE AMOUNTS PAID DURING MONTH TOTAL UNPAID POSTPETITION 1. OHI Asset RO, LLC (2) $ 2,000,000 $ 1,000,000 $ 1,000, OHI Asset RO, LLC (3) 381, , , TOTAL $ 2,381,256 $ 1,113,791 $ 1,267,465 Notes: (1) The transfers noted above reflect payments made during the post-petition period. (2) This amount represents the post-petition rent owed by the Debtors to OHI Asset RO, LLC under the Restructuring Support Agreement. Pursuant to the Restructuring Support Agreement, the Debtors obligation for monthly post-petition rent is $1,000,

12 Case hdh11 Doc 660 Filed 06/29/18 Entered 06/29/18 15:35:46 Page 12 of 14 (3) Pursuant to the Interim Order: (I) Authorizing The Debtors to (A) Obtain Senior Secured Priming Superpriority Postpetition Financing, (B) Grant Liens and Superpriority Administrative Expense Status, (C) Use Cash Collateral of Prepetition Secured Parties, and (D) Grant Adequate Protection to Prepetition Secured Parties; (II) Scheduling a Final Hearing; and (III) Granting Related Relief [Docket No. 53] and the Order Amending Interim DIP Order [Docket No. 296] (together the Financing Order ), the Bankruptcy Court granted the Debtors authority to pay monthly adequate protection interest relating to the Working Capital Note, which is calculated at the default interest rate and payable to OHI Asset RO, LLC. 12

13 Case hdh11 Doc 660 Filed 06/29/18 Entered 06/29/18 15:35:46 Page 13 of 14 ACCRUAL BASIS-7 MONTH: May QUESTIONNAIRE YES NO 1. HAVE ANY ASSETS BEEN SOLD OR TRANSFERRED OUTSIDE THE NORMAL COURSE OF BUSINESS THIS REPORTING PERIOD? 2. HAVE ANY FUNDS BEEN DISBURSED FROM ANY ACCOUNT OTHER THAN A DEBTOR IN POSSESSION ACCOUNT? 3. ARE ANY POSTPETITION RECEIVABLES (ACCOUNTS, NOTES, OR LOANS) DUE FROM RELATED PARTIES? 4. HAVE ANY PAYMENTS BEEN MADE ON PREPETITION LIABILITIES THIS REPORTING PERIOD? 5. HAVE ANY POSTPETITION LOANS BEEN RECEIVED BY THE DEBTOR FROM ANY PARTY? 6. ARE ANY POSTPETITION PAYROLL TAES PAST DUE? 7. ARE ANY POSTPETITION STATE OR FEDERAL INCOME TAES PAST DUE? 8. ARE ANY POSTPETITION REAL ESTATE TAES PAST DUE? 9. ARE ANY OTHER POSTPETITION TAES PAST DUE? 10. ARE ANY AMOUNTS OWED TO POSTPETITION CREDITORS DELINQUENT? 11. HAVE ANY PREPETITION TAES BEEN PAID DURING THE REPORTING PERIOD? 12. ARE ANY WAGE PAYMENTS PAST DUE? IF THE ANSWER TO ANY OF THE ABOVE QUESTION IS "YES", PROVIDE A DETAILED EPLANATION OF EACH ITEM. ATTACH ADDITIONAL SHEETS IF NECESSARY. (4) Pursuant to the Interim Order Authorizing Debtors To (I) Pay Prepetition Wages, Compensation, and Employee Benefits, (II) Continue Certain Employee Benefit Programs In The Ordinary Course, and (III) Granting Related Relief [Docket No. 56] and the Final Order Authorizing Debtors to (I) Pay Prepetition Wages, Compensation, and Employee Benefits, (II) Continue Certain Employee Benefit Programs in the Ordinary Course, and (III) Granting Related Relief [Docket No. 257] (together the Wage Orders ), the Bankruptcy Court granted the Debtors authority to pay or honor certain pre-petition obligations for wages, salaries and other compensation and employee medical and similar benefits. Pursuant to the Interim Order Authorizing Debtors to Pay or Honor Prepetition Obligations to Critical Vendors [Docket No. 54] and the Final Order Authorizing Debtors To Pay Or Honor Prepetition Obligations To Critical Vendors [Docket No. 261] (together the Critical Vendor Orders ), the Bankruptcy Court granted the Debtors authority to pay prepetition debts owed to critical vendors. Pursuant to the Interim Order Authorizing the Debtors to (I) Maintain, Administer and Modify Their Refund Programs and Practices, and (II) Honor Obligations Related Thereto [Docket No. 58] and the Final Order Authorizing the Debtors to (I) Maintain, Administer and Modify Their Refund Programs and Practices, and (II) Honor Obligations Related Thereto [Docket No. 260] (together the Refund Orders ), the Bankruptcy Court granted the Debtors authority to pay prepetition patient refunds. Pursuant to the Interim Order: (I) Authorizing The Debtors to (A) Obtain Senior Secured Priming Superpriority Postpetition Financing, (B) Grant Liens and Superpriority Administrative Expense Status, (C) Use Cash Collateral of Prepetition Secured Parties, and (D) Grant Adequate Protection to Prepetition Secured Parties; (II) Scheduling a Final Hearing; and (III) Granting Related Relief [Docket No. 53] and the Order Amending Interim DIP Order [Docket No. 296] (together the Financing Order ), the Bankruptcy Court granted the Debtors authority to pay the Sterling Bank, N.A. ( Sterling ) obligations and obtain post-petition financing from OHI Asset RO, LLC. Pursuant to the Interim Order Authorizing, But Not Directing, The Debtors to Pay Certain Prepetition Taxes and Related Relief [Docket No. 57] and the Final Order Authorizing, But Not Directing, The Debtors to Pay Certain Prepetition Taxes 13

14 Case hdh11 Doc 660 Filed 06/29/18 Entered 06/29/18 15:35:46 Page 14 of 14 Relief [Docket No. 57] and the Final Order Authorizing, But Not Directing, The Debtors to Pay Certain Prepetition Taxes and Related Relief [Docket No. 258] (together the Tax Orders ), the Bankruptcy Court granted the Debtors authority to pay prepetition taxes. (5) (11) Pursuant to the Interim Order: (I) Authorizing The Debtors to (A) Obtain Senior Secured Priming Superpriority Postpetition Financing, (B) Grant Liens and Superpriority Administrative Expense Status, (C) Use Cash Collateral of Prepetition Secured Parties, and (D) Grant Adequate Protection to Prepetition Secured Parties; (II) Scheduling a Final Hearing; and (III) Granting Related Relief [Docket No. 53] and the Order Amending Interim DIP Order [Docket No. 296] (together the Financing Order ), the Bankruptcy Court granted the Debtors authority to pay the Sterling obligations and obtain post-petition financing from OHI Asset RO, LLC. Pursuant to the Interim Order Authorizing, But Not Directing, The Debtors to Pay Certain Prepetition Taxes and Related Relief [Docket No. 57] and the Final Order Authorizing, But Not Directing, The Debtors to Pay Certain Prepetition Taxes and Related Relief [Docket No. 258] (together the Tax Orders ), the Bankruptcy Court granted the Debtors authority to pay prepetition taxes. INSURANCE YES ARE WORKER'S COMPENSATION, GENERAL LIABILITY AND OTHER NECESSARY 1. INSURANCE COVERAGES IN EFFECT? 2. ARE ALL PREMIUM PAYMENTS PAID CURRENT? 3. PLEASE ITEMIZE POLICIES BELOW. NO IF THE ANSWER TO ANY OF THE ABOVE QUESTIONS IS "NO", OR IF ANY POLICIES HAVE BEEN CANCELLED OR NOT RENEWED DURING THIS REPORTING PERIOD, PROVIDE AN EPLANATION BELOW. ATTACH ADDITIONAL SHEETS IF NECESSARY. INSTALLMENT PAYMENTS TYPE OF POLICY CARRIER EPIRATION DATE D&O / Fiduciary Federal Ins. Co. 12/31/2018 D&O - Ark - 6 year Run-Off Federal Ins. Co. 11/26/2019 Excess D&O - Ark - 6 year Run-Off Ace American Ins. Co. 11/26/2019 PL / GL Liability Hudson Excess Ins. Co. 12/31/2018 Personal Director's Liability Insurance Federal Ins. Co. 6/4/2019 Policy Business Auto American Zurich Insurance Co. 6/30/2018 Property Affiliated FM 11/1/2018 Crime Beazley Insurance Co. 12/1/2018 Workers Compensation American Zurich Insurance Co. 6/30/2018 PAYMENT AMOUNT & FREQUENCY $41,803 Annually $ - $ - $125,000 Annually; $100,000 Monthly $15,000 Annually $108,824 Annualy $269,279 Annually $15,885 Annually $279,291 Annually 14