LifeCare Holdings 8/27/2019

LifeCare 2.0 Diligence Request List as of 8/27/2019 DRAFT - SUBJECT TO CHANGE

Date Date
# Business Unit Assessment / Questions HL Status Received Responded Resp. Party LifeCare 2.0 Comments HL Comments
1. Receivables Detailed file with payments, charges and adjustments by financial class, by facility, for December 2018 and Complete 8/22/2019 8/27/2019 Company Detail Trans file 12/18 and 3/19 Refer to LTD ME Revenue File for June19
March 2019. This will be used to pull static pool testing samples. and Dec18, transaction level by charge line
item is not available.

Box: 1.23_2018-12_ME_RevRpt_VFINAL
June 2019:
Box: 1.22_2019-06_ME_RevRpt_VFINAL

Box: 2 AR > 2.11 AR Recon to 06-19 10-Q

(includes tab for T6M)

Box: 2.26 Additional Files > Folder: AR at XX-

XX-XX.xlxs

Box: 2.26 Additional Files > Folder: AR Days

and Reserve Calculation

Box: 2.26 Additional Files > Folder: Static

Pool Analysis
2. Receivables Past 12 months summary A/R agings from date of service, by major financial class (Medicare, Medicaid, Complete 8/22/2019 8/27/2019 Company Please separate In-house, DNFB and Merrill: 1.3.16 AR Days and Reserve
Managed Medicare, Medicare Exhaust, Managed Medicaid, Commercial, workers comp, etc.), in 30-day other unbilled A/R. Calculation June 2019
buckets to at least 180 days (in Excel), by facility. Box: 2 AR>2.26 Additional Files>AR Days
and Reserve Calculation folder (files 6/19)
Box: 2 AR > "MMYY Final BBC" files

3. Receivables Most recent month-end aging by major financial class (Medicare, Medicaid, Managed Medicare, Medicare Complete 8/22/2019 8/27/2019 Company Please separate In-house, DNFB and Merrill: 1.3.16 AR Days and Reserve
Exhaust, Managed Medicaid, Commercial, workers comp, etc.), in 30-day buckets up to at least 180 days other unbilled A/R. Calculation June 2019
(in Excel), by facility. Box: 2 AR > 0619 Final BBC file
4. Receivables Most recent month-end Credit Balance aging by major financial class (Medicare, Medicaid, Managed Complete 8/22/2019 8/27/2019 Company Merrill: 1.3.16 AR Days and Reserve
Medicare, Medicare Exhaust, Managed Medicaid, Commercial, workers comp, etc.), in 30-day buckets up to Calculation June 2019
at least 180 days (in Excel), by facility. Box: 2 AR > 0619 Final BBC file
5. Receivables Static Pool and Patient Validity Test sample information (sample items will be selected by West Fork from Open 8/22/2019 Company To be selected from above Refer to #1 - WF to select from above
item #1 above).
6. Receivables List of all relevant software - billing, accounting, etc. that the new operator will use or implement. Complete 8/22/2019 8/27/2019 LC 2.0 Please see AR Matrix on tab 2 of LC 2.0 to provide
request list-Chris/Jim
7. Receivables Reconciliation of most recent month-end A/R aging to general ledger and financial statements. Complete 8/22/2019 8/27/2019 Company Box: 2.26 Additional Files > Folder: AR
Reconciliations
Merrill: 1.3.17 AR Balances and Aging as of
063019
8. Receivables Most recent month-end general ledger trial balance and financial statements. Complete 8/22/2019 8/27/2019 Company Merrill: 1.5.18 063019 consolidation
Merrill: 1.6.12 PKG IS TREND 0619
Box: 1.15_06-19 TRIAL BALANCE
9. Receivables A/R Rollforward Reports - monthly for past 12 - 18 months, by facility and by payor if available. Complete 8/22/2019 8/27/2019 Company Box: 2.23_June RevenueARRollForward
10. Receivables Copies of 2 recent EOBs for major payors for each facility. Open 8/22/2019 Company WF to select which accounts and which
payors
11. Receivables Details around potential changes in the charge master Complete 8/22/2019 8/27/2019 LC 2.0 None Per LifeCare 2.0, none
12. Cost Reporting and Third Party 5-year schedule of cost report results by year and facility, showing due to/due from, at "as submitted", Complete 8/22/2019 8/27/2019 Company We're looking for claims, Merrill: 2.8.2 Cost Reports
Items "desk review" and "final" stages. recoupments, set-offs, adjustments
and other liabilities relating to
Medicare and Medicaid.
13. Cost Reporting and Third Party If applicable, summary of Medicare PIP by location (bi-weekly payments) along with a GL showing the PIP Complete 8/22/2019 8/27/2019 Company Medicare PIP Letter Merrill: 2.5.1 PIP Letters
Items clearing accounts. Merrill: 2.8.2.14 06302019 - Due To-From
Summary
14. Cost Reporting and Third Party Detailed description of the anticipated CHOW process, assignment and assumption of manage care Complete 8/22/2019 8/27/2019 LC 2.0 Jim to provide LC 2.0 to provide
Items contracts, timing of Medicare Tie-in-Notices and the Medicaid application process in each state.
15. Cost Reporting and Third Party Cost reports not yet submitted - expectation for current cost reporting year. Open 8/22/2019 Company
Items
16. Cost Reporting and Third Party A summary of settlement of outstanding obligations to 3rd-party payors. Complete 8/22/2019 8/27/2019 Company Refer to credit AR file in #4
Items
17. Cost Reporting and Third Party RAC schedule including reviews, amounts assessed, amounts paid, and amounts due by facility Complete 8/22/2019 8/27/2019 Company N/A - none due
Items
18. Cost Reporting and Third Party Copies of all licenses and assumed Medicare and Medicaid provider agreements and JCAHO certifications Complete 8/22/2019 8/27/2019 Company Merrill: 4.3 Licenses & Certifications
Items and assumed permits.
19. Cost Reporting and Third Party Summary/Schedule of anticipated DSH, GME and waiver payments. Open 8/22/2019 Company
Items
20. Cost Reporting and Third Party Schedule and copies of DOH survey results for each facility. Open 8/22/2019 Company
Items

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LifeCare Holdings 8/27/2019
LifeCare 2.0 Diligence Request List as of 8/27/2019 DRAFT - SUBJECT TO CHANGE

Date Date
# Business Unit Assessment / Questions HL Status Received Responded Resp. Party LifeCare 2.0 Comments HL Comments
21. Payables and Other Liabilities Summary of Assumed A/P ($750K cap), PTO Liability and Cure Amounts. Complete 8/22/2019 8/27/2019 LC 2.0 Other than potential 3rd party LC 2.0 to provide
liabilities, confirm that these are the
only liabilities being assumed.
22. Payables and Other Liabilities Listing and associated on-going cost of Assumed Contracts Complete 8/22/2019 8/27/2019 LC 2.0 LC 2.0 to provide
23. Payables and Other Liabilities Copies of real property leases and a schedule and go-forward rental cost of real property Complete 8/22/2019 8/27/2019 Company Merrill: 4.2 Leases & Lease Documentation
24. Payables and Other Liabilities Listing of transferred employees, those under a union contract and potential liabilities associated with the Complete 8/22/2019 8/27/2019 LC 2.0 LC 2.0 to provide
WARN Act.
25. Payables and Other Liabilities Other liabilities to buyers pursuant to the transaction agreements. Complete 8/22/2019 8/27/2019 LC 2.0 LC 2.0 to provide
26. Payables and Other Liabilities Schedule of anticipated debt as of the closing date, including interest rate, amortization, collateral, term, Complete 8/22/2019 8/27/2019 LC 2.0 LC 2.0 to provide
etc.
27. Payables and Other Liabilities Description of who will be processing payroll post closing and their related responsibility (i.e. remitting Complete 8/22/2019 8/27/2019 LC 2.0 LC 2.0 to provide
payroll taxes?)
28. Insurance Insurance Schedule - type of insurance, amount of coverage, expiration date, policy number, policy issuer, Complete 8/22/2019 8/27/2019 Company Merrill: 5 Insurance & Benefits
etc at the closing date
29. Bank Accounts and Cash List of bank accounts and purpose of each, including account # per bank records and G/L account # Complete 8/22/2019 8/27/2019 LC 2.0 Jim & David LC 2.0 to provide
expected at the closing date.
30. Bank Accounts and Cash Bank statements from the prior owner (if possible) for all accounts that receive revenue by facility, for the Complete 8/22/2019 8/27/2019 Company Box: 4.4 Additional Information > Folder: 3.3
past 6 months. Bank Statements - LTCH
31. Financial Statement Info Most current interim financial statements (year-to-date and trailing 12 months), including income statement, Complete 8/22/2019 8/27/2019 Company Received 6/30/19 YTD. Would like to Merrill: 1.5 Consolidated Financials
balance sheet and statement of cash flows (in Excel, if possible). see it by month Merrill: 1.6 Monthly Trend Reports
32. Financial Statement Info Pro forma closing balance sheet Complete 8/22/2019 8/27/2019 LC 2.0 Jim LC 2.0 to provide
33. Financial Statement Info Projected P&L, BS and statement of cash flows Complete 8/22/2019 8/27/2019 LC 2.0 Jim LC 2.0 to provide
34. Other Corporate legal structure/organization chart with correct legal names. Complete 8/22/2019 8/27/2019 Company Merrill: 1.14.1 LifeCare Entity Org Chart with
Provider Numbers
35. Other Short bios for each member of senior management team. Complete 8/22/2019 8/27/2019 LC 2.0 LC 2.0 to provide
36. Other Monthly census data by payor class, by facility, for the past 24 months. Complete 8/22/2019 8/27/2019 Company Merrill: 2.2.1 All Hospitals_ADC...Census by
Financial Class [through March 2019]
Merrill: 2.2.2 Last 12 months trended census
data 0618-0519
37. Other List of any affiliates and related companies and description of all transactions with the Company. Complete 8/22/2019 8/27/2019 LC 2.0 Meridian Per LC 2.0, Meridian
38. Other Summaries of union contracts and discussion of labor relation history. Complete 8/22/2019 8/27/2019 LC 2.0 None Per LifeCare 2.0, none
39. Other Copies of management contracts and agreements, if applicable Complete 8/22/2019 8/27/2019 LC 2.0 N/A - applicable contracts to be provided by
LC 2.0

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