Successfully Completed Gentiva Health
Services and Centerre Healthcare Acquisitions and Achieved Key
First Quarter Integration and Synergy Realization
Milestones
Core Diluted EPS from Continuing Operations
of $0.34(1) in the First Quarter
GAAP Loss Per Share from Continuing
Operations of $1.80 in the First Quarter Includes:
-- $1.19 Per Share to Establish a Loss
Contingency Reserve for Previously Disclosed RehabCare
Matter
-- $0.97 Per Share Related to Transaction,
Integration, Financing, Severance and Other Restructuring
Costs
----------------------
Establishes 2015 Core EPS Guidance of $1.20
to $1.40 Per Diluted Share and Adjusted Core EPS Guidance of $1.70
to $1.90 Per Diluted Share
Kindred Healthcare, Inc. (“Kindred” or the “Company”) (NYSE:KND)
today announced its operating results for the first quarter ended
March 31, 2015.
Benjamin A. Breier, President and Chief Executive Officer of the
Company commented, “After our efforts to transform the Company over
the last several years, I am pleased with the strides we made in
the first quarter to strengthen our business and solidify Kindred’s
position as a national leader in post-acute care. Our strong
results and growth would not have been possible without the
dedication of our 103,000 teammates and their commitment to
improving the lives of more than one million patients each
year.”
Mr. Breier further commented, “In the first quarter, we achieved
our integration and synergy objectives for the acquired
organizations and their operating results exceeded expectations.
These strategic additions significantly improved the growth, margin
and cash flow profile of the Company.”
All financial and statistical information included in this press
release reflects the continuing operations of the Company’s
businesses for all periods presented unless otherwise indicated.
The acquisitions of Gentiva Health Services, Inc. (“Gentiva”) and
Centerre Healthcare Corporation (“Centerre”) have been included in
the operating results presented since the date of acquisition.
Prior period segment information has been recast to conform with
the current presentation, including the transfer of five inpatient
rehabilitation hospitals from the Hospital Division to the Hospital
Rehabilitation Services business segment.
First Quarter Consolidated
Highlights(1):
- Core diluted EPS from continuing
operations of $0.34 and adjusted core diluted EPS from continuing
operations of $0.43 based upon 82.4 million weighted average
diluted shares as compared to core diluted EPS of $0.35 and
adjusted core diluted EPS of $0.46 a year ago based upon 52.7
million weighted average diluted shares
- Consolidated revenues increased 32% to
$1.68 billion and earnings before interest, income taxes,
depreciation, amortization, rent and certain charges (“core
EBITDAR”) increased 29% to $234 million, each as compared to the
same period last year primarily due to the acquisitions of Gentiva
on February 2, 2015 and Centerre on January 1, 2015
- Core operating cash flows were $38
million compared to $14 million a year ago; core free cash flows
were $17 million compared to a core free cash flow deficit of $8
million in the first quarter of 2014
- The Kindred Board of Directors declared
regular quarterly cash dividend of $0.12 per share on the Company’s
common stock payable on June 10, 2015
____________
(1) See reconciliation of core and adjusted results to
generally accepted accounting principles (“GAAP”) results beginning
on page 12.
First Quarter Segment Highlights(1):
Kindred at Home (“KAH”) had a very strong start to the year,
with the successful acquisition of Gentiva in February, which
established KAH as the largest combined home health and hospice
operator in the country. The home health segment of KAH experienced
strong growth with combined Medicare admissions increasing 3.3% and
revenues increasing 6.6%, both for the first quarter of 2015 over
the prior year. The hospice segment of KAH is showing signs of
stabilization and has begun a return to sequential admissions and
census growth on a combined basis. In addition, Kindred achieved
key first quarter integration milestones for the Gentiva
acquisition and is on track to realize $35 million of contribution
from synergies in 2015 and a synergy run rate at year end of at
least $55 million.
Kindred’s Hospital Division (“HD”) revenue increased 2.1% over
prior year driven by patient day growth of 3.3%, growth in revenue
per admission of 2.7% offset by an admissions decline of 0.5%. Core
EBITDAR contribution from HD was down 3.4% from prior year, to
$135 million, driven primarily by shifts in payor mix and
patient acuity. We continue to be pleased with the progress our
long-term acute care (“LTAC”) hospital business is making as we
transition through the Affordable Care Act roll-out and with
preparations for the implementation of LTAC criteria, which will
not impact the Company until late 2016.
Kindred’s Rehabilitation Division (“RHB”) had a solid start to
the year with the successful acquisition of Centerre and its 11
freestanding inpatient rehabilitation hospitals (“IRFs”), all of
which are joint ventured with prominent regional health systems.
Strong performance in the quarter from RHB’s freestanding IRFs and
contract hospital rehabilitation services business was offset, in
part, by contract losses in the skilled nursing rehabilitation
services segment.
Kindred’s Nursing Center Division (“NCD”) revenue and admissions
grew 4.5% and 6.0%, respectively, over the prior year. Medicare
average length of stay contracted 2.4% over the prior year,
contributing to a core EBITDAR reduction of 1.6% to
$37 million.
Mr. Breier commented, “Our patient-centered care management
approach to provide the right care, in the right setting, at the
right time - combined with the successful steps we have taken to
expand our operations - are driving value creation for our
patients, healthcare partners and shareholders. We recently issued
our Annual Quality and Social Responsibility Report that highlights
our clinical expertise, capabilities across the continuum and care
innovations. These strengths support smooth transitions between
care settings, produce positive clinical outcomes, and improve the
patient experience.”
Mr. Breier continued, “Our solid start to 2015, together with
the clarity and stability from the permanent “doc fix” and LTAC
preliminary rulemaking in line with expectations, builds upon our
excitement for the future and confidence that our strategy best
positions us for long-term success.”
RehabCare Loss Contingency Reserve
The Company is engaged in active discussions with the United
States Department of Justice in an effort to find a mutually
acceptable resolution to the previously disclosed investigation of
RehabCare Group, Inc., a therapy services company acquired by
Kindred on June 1, 2011. Based on the progress of those
settlement discussions beginning in mid-March and into the second
quarter of 2015, the Company has accrued an estimated loss
contingency reserve of $95 million in the first quarter of 2015. In
the event the Company is able to reach a mutually agreeable
settlement with the Department of Justice, the Company estimates
that the financial component of such a settlement could range from
$95 million to $125 million. The discussions are ongoing, and until
concluded, there can be no certainty about the timing or likelihood
of a definitive resolution, the scope of any potential restrictions
that may be agreed upon in connection with a settlement or the cost
of a final settlement.
____________
(1) See reconciliation of core and adjusted results to GAAP
results beginning on page 12.
2015 Outlook
Kindred today established guidance for its estimated 2015
financial results (1) including:
- 2015 annual revenues of approximately
$7.2 billion
- Core EBITDAR of approximately
$1.0 billion to $1.05 billion (2)
- Core earnings of $1.20 to $1.40 per
diluted share (3)
- Adjusted core earnings of $1.70 to
$1.90 per diluted share(3)(4)
For the second quarter of 2015, the Company expects core diluted
earnings per share from continuing operations to approximate $0.27
to $0.37 and adjusted core diluted earnings per share from
continuing operations to approximate $0.39 to $0.49.
Stephen D. Farber, Executive Vice President and Chief Financial
Officer, commented, “We are encouraged by the strong performance
and integration progress of our Gentiva and Centerre acquisitions,
and our solid consolidated operating results. We are establishing
guidance for the year at levels that represent significant growth,
and we are on track to meet our synergy goal to realize $35 million
of synergy contribution in 2015. Our cash flow and growth profile
will continue to support a strong balance sheet and allow us to
delever while continuing to invest in our businesses and return
significant capital to shareholders through our quarterly cash
dividends.”
The guidance excludes transaction costs, pre-closing financing
costs and post-closing integration costs associated with the
acquisitions of Gentiva and Centerre, the effect of reimbursement
changes, debt refinancing costs, severance, retirement, retention
and restructuring costs, litigation and related contingency
expense, other transaction costs, any further acquisitions or
divestitures, any impairment charges, any further issuances of
common stock or any repurchases of common stock.
Quarterly Cash Dividend
The Company announced that its Board of Directors has approved
the payment of the regular quarterly cash dividend of $0.12 per
share of common stock to be paid on June 10, 2015 to shareholders
of record as of the close of business on May 20, 2015.
Conference Call
As previously announced, investors and the general public may
access a live webcast of the first quarter 2015 conference call
through a link on the Company’s website at
http://investors.kindredhealthcare.com. The conference call will
be held on May 7 at 10:00 a.m. (Eastern Time).
A telephone replay of the conference call will become available
at approximately 1:00 p.m. on May 7 by dialing (719) 457-0820,
access code: 1193715. The replay will be available
through May 15.
____________
(1)
Guidance includes Gentiva for eleven months and Centerre for
the full year.
(2)
Includes $35 million from Gentiva synergies expected to be realized
in the year.
(3)
The earnings per share estimate is based upon an estimated weighted
average annual diluted share count for 2015 of 86 million shares.
The estimated annual diluted share count of 2015 includes
approximately 3.4 million shares of common stock issued in late
February to holders of 78,010 tangible equity units that elected
early conversion settlements.
(4)
Adjusted core earnings per diluted share is calculated by excluding
non-cash expenses, net of the income tax benefit, related to
amortization of intangible assets, stock-based compensation and
deferred financing costs, from core income from continuing
operations.
Forward-Looking Statements and Non-GAAP
Reconciliations
See page 11 for important disclosures regarding our
forward-looking statements and the non-GAAP financial
reconciliations that follow.
About Kindred Healthcare
Kindred Healthcare, Inc., a top-85 private employer in the
United States, is a FORTUNE 500 healthcare services company based
in Louisville, Kentucky with annual revenues of approximately $7.2
billion(1). At March 31, 2015, Kindred through its subsidiaries had
approximately 102,600 employees providing healthcare services in
2,787 locations in 47 states, including 97 transitional care
hospitals, 16 inpatient rehabilitation hospitals, 90 nursing
centers, 21 sub-acute units, 664 Kindred at Home home health,
hospice and non-medical home care sites of service, 100 inpatient
rehabilitation units (hospital-based) and a contract rehabilitation
services business, RehabCare, which served 1,799 non-affiliated
sites of service. Ranked as one of Fortune magazine’s Most Admired
Healthcare Companies for six years, Kindred’s mission is to promote
healing, provide hope, preserve dignity and produce value for each
patient, resident, family member, customer, employee and
shareholder we serve. For more information, go to
www.kindredhealthcare.com. You can also follow us on Twitter and
Facebook.
____________
(1)
Revenues were computed by combining the twelve months ended
December 31, 2014 data for Kindred, Gentiva and Centerre.
KINDRED HEALTHCARE, INC. Condensed Consolidated
Statement of Operations (Unaudited) (In thousands,
except per share amounts)
Three
months ended March 31, 2015 2014
Revenues
$ 1,675,967 $ 1,272,610
Salaries, wages and benefits
847,093 618,694 Supplies
93,271 72,965 Rent
92,140 78,530 Other operating
expenses
197,727 169,530 General and administrative expenses
406,102 231,272 Other income
(480 ) (212 )
Litigation contingency expense
95,000 - Impairment charges
6,726 - Depreciation and amortization
38,935 39,092
Interest expense
62,518 25,799 Investment income
(741 ) (182 )
1,838,291
1,235,488 Income (loss) from continuing operations
before income taxes
(162,324 ) 37,122 Provision
(benefit) for income taxes
(27,736 )
14,195 Income (loss) from continuing operations
(134,588 ) 22,927 Discontinued operations, net of
income taxes: Loss from operations
(3,424 ) (7,442 )
Loss on divestiture of operations
-
(3,006 ) Loss from discontinued operations
(3,424
) (10,448 ) Net income (loss)
(138,012
) 12,479 (Earnings) loss attributable to noncontrolling
interests: Continuing operations
(8,847 ) (4,529 )
Discontinued operations
29 70
(8,818 ) (4,459 ) Income (loss)
attributable to Kindred
$ (146,830 ) $ 8,020
Amounts attributable to Kindred stockholders: Income
(loss) from continuing operations
$ (143,435 )
$ 18,398 Loss from discontinued operations
(3,395
) (10,378 ) Net income (loss)
$
(146,830 ) $ 8,020 Earnings (loss) per
common share: Basic: Income (loss) from continuing operations
$ (1.80 ) $ 0.34 Discontinued operations: Loss
from operations
(0.04 ) (0.13 ) Loss on divestiture
of operations
- (0.06 ) Loss from
discontinued operations
(0.04 ) (0.19 )
Net income (loss)
$ (1.84 ) $ 0.15
Diluted: Income (loss) from continuing operations
$
(1.80 ) $ 0.34 Discontinued operations: Loss from
operations
(0.04 ) (0.13 ) Loss on divestiture of
operations
- (0.06 ) Loss from
discontinued operations
(0.04 ) (0.19 )
Net income (loss)
$ (1.84 ) $ 0.15
Shares used in computing earnings (loss) per common share:
Basic
79,575 52,641 Diluted
79,575 52,711 Cash
dividends declared and paid per common share
$ 0.12 $
0.12
KINDRED HEALTHCARE, INC. Condensed
Consolidated Balance Sheet (Unaudited) (In thousands,
except per share amounts)
March
31, December 31, 2015 2014 ASSETS
Current assets: Cash and cash equivalents
$ 96,525 $
164,188 Insurance subsidiary investments
110,700 99,951
Accounts receivable less allowance for loss
1,255,450
944,219 Inventories
27,151 25,702 Deferred tax assets
93,449 82,391 Income taxes
17,805 8,575 Interest
deposit on senior unsecured notes held in escrow
- 23,438
Other
72,788 41,598
1,673,868 1,390,062 Property and equipment
2,061,373 1,978,153 Accumulated depreciation
(1,107,611 ) (1,076,049 )
953,762
902,104 Goodwill
2,633,661 997,597 Intangible assets
less accumulated amortization
809,597 400,700 Assets held
for sale
2,432 3,475 Insurance subsidiary investments
183,122 166,045 Deferred tax assets
10,509 11,174
Proceeds from senior unsecured notes held in escrow
-
1,350,000 Acquisition deposit
- 195,000 Other
314,380 236,807 Total assets
$
6,581,331 $ 5,652,964
LIABILITIES AND
EQUITY Current liabilities: Accounts payable
$
195,397 $ 175,725 Salaries, wages and other compensation
451,564 358,857 Due to third party payors
48,044
43,957 Professional liability risks
66,752 64,137 Other
accrued liabilities
340,846 189,980 Long-term debt due
within one year
33,240 24,607
1,135,843 857,263 Long-term debt
3,242,780
2,852,531 Professional liability risks
260,781 243,614
Deferred credits and other liabilities
293,271 213,584
Equity:
Stockholders’ equity:
Common stock, $0.25 par value; authorized
175,000 shares; issued 83,424 shares - March 31, 2015 and 69,977
shares - December 31, 2014
20,856 17,494 Capital in excess of par value
1,748,599 1,586,692 Accumulated other comprehensive loss
(3,607 ) (2,551 ) Accumulated deficit
(308,616 ) (159,768 )
1,457,232
1,441,867
Noncontrolling interests
191,424
44,105 Total equity
1,648,656
1,485,972 Total liabilities and equity
$ 6,581,331 $ 5,652,964
KINDRED HEALTHCARE, INC. Condensed Consolidated Statement
of Cash Flows (Unaudited) (In thousands)
Three months ended March 31,
2015 2014 Cash flows from operating activities: Net
income (loss)
$ (138,012 ) $ 12,479
Adjustments to reconcile net income (loss) to net cash used in
operating activities: Depreciation and amortization
39,077
41,304 Amortization of stock-based compensation costs
5,824
2,585 Amortization of deferred financing costs
3,062 2,397
Payment of capitalized lender fees related to debt issuance
(28,012 ) - Provision for doubtful accounts
8,292 8,760 Deferred income taxes
(25,580 )
3,975 Impairment charges
6,726 444 Loss on divestiture of
discontinued operations
- 3,006 Other
1,997 2,044
Change in operating assets and liabilities: Accounts receivable
(31,656 ) (71,829 ) Inventories and other assets
53,022 (6,218 ) Accounts payable
465 (13,452 ) Income
taxes
(5,768 ) 29,413 Due to third party payors
(15,419 ) (2,013 ) Other accrued liabilities
(13,620 ) (28,649 ) Net cash used in operating
activities
(139,602 ) (15,754 )
Cash flows from investing activities: Routine capital expenditures
(20,769 ) (21,677 ) Development capital expenditures
(5,788 ) (751 ) Acquisitions, net of cash acquired
(659,071 ) (22,715 ) Acquisition deposit
195,000 - Sale of assets
948 5,034 Proceeds from
senior unsecured notes offering held in escrow
1,350,000 -
Interest in escrow for senior unsecured notes
23,438 -
Purchase of insurance subsidiary investments
(25,918
) (10,114 ) Sale of insurance subsidiary investments
22,029 8,762 Net change in insurance subsidiary cash and
cash equivalents
(558 ) (6,599 ) Change in other
investments
24 640 Other
5 (551
) Net cash provided by (used in) investing activities
879,340 (47,971 ) Cash flows from
financing activities: Proceeds from borrowings under revolving
credit
807,450 508,700 Repayment of borrowings under
revolving credit
(610,050 ) (425,800 ) Proceeds from
issuance of term loan, net of discount
199,000 - Repayment
of Gentiva debt
(1,177,363 ) - Repayment of term loan
- (1,969 ) Repayment of other long-term debt
(441
) (90 ) Payment of deferred financing costs
(2,538
) (270 ) Issuance of common stock in connection with
employee benefit plans
66 3,804 Payment of costs associated
with issuance of common stock and tangible equity units
(915
) - Payment of dividend for mandatory redeemable preferred
stock
(2,778 ) - Dividends paid
(9,975
) (6,514 ) Distributions to noncontrolling interests
(11,019 ) (2,933 ) Other
1,162
1,873 Net cash provided by (used in) financing
activities
(807,401 ) 76,801
Change in cash and cash equivalents
(67,663 ) 13,076
Cash and cash equivalents at beginning of period
164,188 35,972 Cash and cash
equivalents at end of period
$ 96,525 $ 49,048
KINDRED HEALTHCARE, INC. Condensed
Business Segment Data (a) (Unaudited) (In
thousands)
First First quarter
2014 Quarters Quarter % change v. First
Second Third Fourth 2015 prior
year Consolidated income statement data: Revenues $
1,272,610 $ 1,261,397 $ 1,228,918 $ 1,264,674 $ 1,675,967 31.7
Core EBITDAR $ 181,044 $ 175,865 $ 157,218 $ 170,088 $
234,211 29.4 Rent 78,530 77,452
77,643 79,167 91,199 16.1
Core EBITDA
102,514 98,413 79,575 90,921 143,012 39.5 Depreciation and
amortization 39,092 39,172 38,748 38,558 38,935 (0.4 ) Interest,
net 25,617 21,438 22,171
21,857 44,346 73.1
Income from continuing operations before
income taxes
37,805 37,803 18,656 30,506 59,731 58.0 Provision for income taxes
14,445 13,612 6,168
8,471 22,466 55.5 Income from
continuing operations 23,360 24,191 12,488 22,035 37,265 59.5
Noncontrolling interests (4,529 ) (4,828 )
(4,372 ) (5,143 ) (8,847 ) 95.3 Net income
attributable to Kindred $ 18,831 $ 19,363 $ 8,116
$ 16,892 $ 28,418 50.9 Core EPS $ 0.35
$ 0.35 $ 0.13 $ 0.26 $ 0.34 (2.9 ) Adjusted Core EPS $ 0.46 $ 0.50
$ 0.20 $ 0.38 $ 0.43 (6.5 ) Diluted shares 52,711 53,792 62,902
63,163 82,422 56.4
Revenues by segment: Hospital
division $ 627,245 $ 612,517 $ 591,121 $ 619,185 $ 640,483 2.1
Kindred at Home: Home health 74,791 75,502 74,026 74,588 300,867
302.3 Hospice 12,913 12,484
12,160 12,538 119,057 822.0
87,704 87,986 86,186 87,126 419,924 378.8 Rehabilitation division:
Hospital rehabilitation services 93,177 94,963 93,139 92,922
151,564 62.7 Skilled nursing rehabilitation services 253,943
253,694 246,732 252,667
252,595 (0.5 ) 347,120 348,657 339,871 345,589
404,159 16.4 Nursing center division 262,590
264,437 263,897 271,625
274,308 4.5 1,324,659 1,313,597 1,281,075 1,323,525
1,738,874 31.3 Eliminations (52,049 ) (52,200 )
(52,157 ) (58,851 ) (62,907 ) 20.9 $ 1,272,610
$ 1,261,397 $ 1,228,918 $ 1,264,674 $
1,675,967 31.7
Core EBITDAR by segment:
Hospital division $ 139,505 $ 131,990 $ 117,604 $ 134,791 $ 134,786
(3.4 ) Kindred at Home: Home health 2,845 5,769 5,961 7,398 46,798
1,544.9 Hospice 1,852 2,139
1,149 524 16,996 817.7 4,697
7,908 7,110 7,922 63,794 1,258.2 Rehabilitation division: Hospital
rehabilitation services 25,710 25,742 24,887 23,884 44,564 73.3
Skilled nursing rehabilitation services 18,016
19,863 17,080 16,029
16,493 (8.5 ) 43,726 45,605 41,967 39,913 61,057 39.6
Nursing center division 37,572 38,614 35,920 38,810 36,963 (1.6 )
Support center (44,456 ) (48,252 ) (45,383 )
(51,348 ) (62,389 ) 40.3 $ 181,044 $ 175,865
$ 157,218 $ 170,088 $ 234,211 29.4
Core EBITDAR margin by segment: Hospital division
22.2 21.5 19.9 21.8 21.0 (5.4 ) Kindred at Home: Home health 3.8
7.6 8.1 9.9 15.6 310.5 Hospice 14.3 17.1 9.4 4.2 14.3 - Kindred at
Home 5.4 9.0 8.2 9.1 15.2 181.5 Rehabilitation division: Hospital
rehabilitation services 27.6 27.1 26.7 25.7 29.4 6.5 Skilled
nursing rehabilitation services 7.1 7.8 6.9 6.3 6.5 (8.5 )
Rehabilitation division 12.6 13.1 12.3 11.5 15.1 19.8 Nursing
center division 14.3 14.6 13.6 14.3 13.5 (5.6 ) Consolidated 14.2
13.9 12.8 13.4 14.0 (1.4 )
____________
(a) See reconciliation of core and
adjusted results to GAAP results beginning on page 12.
KINDRED HEALTHCARE, INC. Condensed Business
Segment Data (Continued) (Unaudited)
First First quarter 2014 Quarters
Quarter % change v. First Second
Third Fourth 2015 prior year
Hospital division: End of period data: Number of
transitional care hospitals 97 97 97 97 97 Number of licensed beds
7,145 7,145 7,145 7,147 7,147 Revenue mix %: Medicare 59.8 58.2
57.0 57.0 56.8 Medicaid 6.6 6.8 6.9 6.0 5.5 Medicare Advantage 11.4
11.2 10.5 10.5 11.9 Medicaid Managed 2.4 3.0 3.8 4.5 4.7 Commercial
insurance and other 19.8 20.8 21.8 22.0 21.1 Admissions: Medicare
9,038 8,555 8,460 8,525 8,775 (2.9 ) Medicaid 819 896 805 750 610
(25.5 ) Medicare Advantage 1,435 1,389 1,250 1,359 1,555 8.4
Medicaid Managed 317 381 511 572 643 102.8 Commercial insurance and
other 1,914 1,885 1,703 1,696
1,868 (2.4 ) 13,523 13,106 12,729
12,902 13,451 (0.5 ) Patient days: Medicare 230,350 220,035
213,170 220,548 228,483 (0.8 ) Medicaid 32,712 32,619 30,480 30,454
28,663 (12.4 ) Medicare Advantage 44,025 43,027 39,938 41,260
48,448 10.0 Medicaid Managed 10,733 13,191 16,556 20,000 22,013
105.1 Commercial insurance and other 59,567 59,293
57,486 59,295 62,241 4.5 377,387
368,165 357,630 371,557 389,848 3.3 Average
length of stay: Medicare 25.5 25.7 25.2 25.9 26.0 2.0 Medicaid 39.9
36.4 37.9 40.6 47.0 17.8 Medicare Advantage 30.7 31.0 32.0 30.4
31.2 1.6 Medicaid Managed 33.9 34.6 32.4 35.0 34.2 0.9 Commercial
insurance and other 31.1 31.5 33.8 35.0 33.3 7.1 Weighted average
27.9 28.1 28.1 28.8 29.0 3.9 Revenues per admission: Medicare $
41,492 $ 41,670 $ 39,828 $ 41,425 $ 41,483 - Medicaid 50,894 46,106
50,344 49,760 57,594 13.2 Medicare Advantage 49,666 49,352 49,814
47,756 48,908 (1.5 ) Medicaid Managed 47,803 48,814 44,321 48,691
46,740 (2.2 ) Commercial insurance and other 64,858 67,679 75,591
80,167 72,395 11.6 Weighted average 46,384 46,736 46,439 47,991
47,616 2.7 Revenues per patient day: Medicare $ 1,628 $ 1,620 $
1,581 $ 1,601 $ 1,593 (2.1 ) Medicaid 1,274 1,266 1,330 1,225 1,226
(3.8 ) Medicare Advantage 1,619 1,593 1,559 1,573 1,570 (3.0 )
Medicaid Managed 1,412 1,410 1,368 1,393 1,365 (3.3 ) Commercial
insurance and other 2,084 2,152 2,239 2,293 2,173 4.3 Weighted
average 1,662 1,664 1,653 1,666 1,643 (1.1 )
Medicare case mix index (discharged
patients only)
1.173 1.182 1.157 1.139 1.166 (0.6 ) Average daily census 4,193
4,046 3,887 4,039 4,332 3.3 Occupancy % 67.3 64.6 62.1 64.5 69.2
2.8
KINDRED HEALTHCARE, INC. Condensed
Business Segment Data (Continued) (Unaudited)
First First quarter 2014
Quarters Quarter % change v. First
Second Third Fourth 2015 prior
year
Kindred at Home (data combined to
include Kindred and Gentiva for each historical period):
Home Health: Sites of service (at end of period) 447 440 439 427
415 Revenue mix %: Medicare 81.8 81.5 80.7 80.7 80.9 Medicaid 2.7
2.6 2.4 2.2 2.1 Commercial and other 9.1 9.0 8.9 6.7 7.3 Commercial
paid at episodic rates 6.4 6.9 8.0 10.4 9.7 Episodic revenues ($
000s) $ 281,226 $ 294,208 $ 292,675 $ 305,668 $ 308,317 9.6 Total
episodic admissions 65,077 63,676 65,049 65,183 69,936 7.5 Medicare
episodic admissions 59,248 58,140 57,921 57,372 61,186 3.3 Total
episodes 103,758 103,689 105,906 106,708 110,980 7.0 Episodes per
admission 1.59 1.63 1.63 1.64 1.59 - Revenue per episode $ 2,710 $
2,837 $ 2,764 $ 2,865 $ 2,778 2.5 Hospice: Sites of service (at end
of period) 216 200 199 193 190 Admissions 13,807 12,751 12,088
12,151 13,164 (4.7 ) Average length of stay 103 106 103 103 95 (7.8
) Patient days 1,252,787 1,251,301 1,236,792 1,215,209 1,150,841
(8.1 ) Revenue per patient day $ 150 $ 148 $ 149 $ 154 $ 151 0.7
Average daily census 13,920 13,751 13,443 13,209 12,787 (8.1 )
Rehabilitation division: Hospital rehabilitation
services: Freestanding IRFs: End of period data: Number of IRFs 5 5
5 5 16 Number of licensed beds 215 215 215 215 829 Discharges (a)
1,053 1,121 1,004 1,046 3,806 261.4 Occupancy % (a) 71.6 71.6 68.5
69.6 73.2 2.2 Average length of stay (a) 13.2 12.5 13.5 13.2 13.7
3.8 Revenue per discharge (a) $ 18,246 $ 17,519 $ 18,259 $ 17,039 $
19,517 7.0 Contract services: Sites of service (at end of period):
Inpatient rehabilitation units 105 104 102 100 100 LTAC hospitals
121 118 117 117 120 Sub-acute units 10 9 10 10 8 Outpatient units
143 143 139 138 138 379
374 368 365 366 Revenue per site
$ 195,157 $ 201,400 $ 203,284 $ 205,749 $ 211,151 8.2
Skilled nursing rehabilitation services: Sites of service (at end
of period) 1,851 1,863 1,896 1,935 1,829 Revenue per site $ 137,193
$ 136,175 $ 130,133 $ 130,576 $ 138,106 0.7
Nursing
center division: End of period data: Number of nursing centers
89 89 90 90 90 Number of licensed beds 11,503 11,491 11,575 11,535
11,535 Admissions (b) 9,789 9,621 9,746 9,616 10,376 6.0 Medicare
average length of stay (b) 29.6 29.8 29.9 29.0 28.9 (2.4 ) Patient
days (b) 861,340 858,772 865,415 871,976 861,278 - Revenues per
patient day (b) $ 305 $ 308 $ 305 $ 312 $ 319 4.6 Average daily
census (b) 9,570 9,437 9,407 9,478 9,570 - Occupancy % (b) 81.7
80.7 80.1 80.5 81.3 (0.5 )
____________
(a) Excludes non-consolidating IRF.
(b) Excludes managed facilities.
Forward-Looking Statements This press
release includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements include, but are not limited to,
statements regarding the Company’s acquisitions of Gentiva and
Centerre (including the benefits, results and effects of such
acquisitions), all statements regarding the Company’s expected
future financial position, results of operations, cash flows,
dividends, financing plans, business strategy, budgets, capital
expenditures, competitive positions, growth opportunities, plans
and objectives of management, and statements containing the words
such as “anticipate,” “approximate,” “believe,” “plan,” “estimate,”
“expect,” “project,” “could,” “would,” “should,” “will,” “intend,”
“may,” “potential,” “upside,” and other similar expressions.
Statements in this press release concerning the Company’s business
outlook or future economic performance, anticipated profitability,
revenues, expenses, dividends or other financial items, and product
or services line growth, together with other statements that are
not historical facts, are forward-looking statements that are
estimates reflecting the best judgment of the Company based upon
currently available information. Such forward-looking
statements are inherently uncertain, and stockholders and other
potential investors must recognize that actual results may differ
materially from the Company’s expectations as a result of a variety
of factors, including, without limitation, those discussed below.
Such forward-looking statements are based upon management’s current
expectations and include known and unknown risks, uncertainties and
other factors, many of which the Company is unable to predict or
control, that may cause the Company’s actual results, performance
or plans to differ materially from any future results, performance
or plans expressed or implied by such forward-looking statements.
These statements involve risks, uncertainties and other factors
discussed below and detailed from time to time in the Company’s
filings with the Securities and Exchange Commission. Risks
and uncertainties related to the Company’s acquisitions of Gentiva
and Centerre include, but are not limited to, uncertainties as to
whether the acquisitions will have the accretive effect on the
Company’s earnings or cash flows that it expects, the inability to
obtain, or delays in obtaining, cost savings and synergies from the
acquisitions, costs and difficulties related to the integration of
Gentiva’s and Centerre’s businesses and operations with the
Company’s businesses and operations, unexpected costs, liabilities,
charges or expenses resulting from the acquisitions, adverse
effects on the Company’s stock price resulting from the
acquisitions, the inability to retain key personnel, and potential
adverse reactions, changes to business relationships or competitive
responses resulting from the acquisitions. In addition to
the factors set forth above, other factors that may affect the
Company’s plans, results or stock price are set forth in the
Company’s Annual Report on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K. Many of these factors
are beyond the Company’s control. The Company cautions investors
that any forward-looking statements made by the Company are not
guarantees of future performance. The Company disclaims any
obligation to update any such factors or to announce publicly the
results of any revisions to any of the forward-looking statements
to reflect future events or developments.
Non-GAAP
Measurements In addition to the results provided in
accordance with GAAP, the Company has provided information in this
release to compute certain non-GAAP measurements for the three
months ended March 31, 2015 and 2014 before certain charges or on a
core and adjusted core basis. The use of these non-GAAP measures
are not intended to replace the presentation of the Company’s
financial results in accordance with GAAP. The Company believes
that the presentation of core operating results provides additional
information to investors to facilitate the comparison between
periods by excluding certain charges that are not representative of
its ongoing operations due to the materiality and nature of the
charges. The Company believes the presentation of adjusted core
operating results, which excludes non-cash expenses related to
amortization of intangible assets, stock-based compensation and
deferred financing costs from core operating results, is a useful
performance measure used by some investors, equity analysts and
others to make informed investment decisions and for comparability
to other companies that use similar measures. The Company’s
earnings release also includes financial measures referred to as
operating income, or EBITDAR or core EBITDAR, and earnings before
interest, income taxes, depreciation and amortization (“EBITDA”).
The Company’s management uses core EBITDAR or core EBITDA as
meaningful measures of operational performance in addition to other
measures. The Company uses core EBITDAR or core EBITDA to assess
the relative performance of its operating divisions as well as the
employees that operate these businesses. In addition, the Company
believes these measurements are important because securities
analysts and investors use these measurements to compare the
Company’s performance to other companies in the healthcare
industry. The Company believes that income (loss) from continuing
operations is the most comparable GAAP measure. Readers of the
Company’s financial information should consider income (loss) from
continuing operations as an important measure of the Company’s
financial performance because it provides the most complete measure
of its performance. Operating results presented on a core and
adjusted core basis and core EBITDAR or core EBITDA should be
considered in addition to, not as a substitute for, or superior to,
financial measures based upon GAAP as an indicator of operating
performance. Reconciliations of the non-GAAP measurements to the
GAAP measurements are included in the following pages of this press
release. Also in this press release, the Company provides
the financial measures of operating cash flows and free cash flows
excluding certain items, which the Company refers to as core
operating cash flows and core free cash flows. The Company
recognizes that operating cash flows and free cash flows excluding
certain items are non-GAAP measurements and are not intended to
replace the presentation of the Company’s cash flows in accordance
with GAAP. The Company believes that these non-GAAP measurements
provide important information to investors for comparability to
other companies that use similar measures. In addition, management
uses operating cash flows and free cash flows excluding certain
items in making decisions related to acquisitions, development
capital expenditures, dividends, long-term debt repayments and
other uses. The Company believes net cash flows provided by
operating activities is the most comparable GAAP measure. Readers
of the Company’s financial information should consider net cash
flows provided by operating activities as an important measure of
the Company’s financial performance because it provides the most
complete measure of its performance. Operating cash flows and free
cash flows excluding certain items should be considered in addition
to, not as a substitute for, or superior to, financial measures
based upon GAAP as an indicator of operating performance.
Reconciliations of net cash flows provided by operating activities
to operating cash flows and free cash flows excluding certain items
are included in this press release.
KINDRED
HEALTHCARE, INC. Reconciliation of Non-GAAP Measurements to
GAAP Results (Unaudited) (In thousands, except per share
amounts and statistics) In addition to
the results provided in accordance with GAAP, the Company has
provided information in this release to compute certain non-GAAP
measurements for the three months ended March 31, 2015 and 2014
before certain charges or on a core basis. The charges that were
excluded from core operating results are denoted in the tables
below. The income tax benefit associated with the excluded
charges was calculated using an effective income tax rate of 22.6%
and 36.6% for the three months ended March 31, 2015 and 2014,
respectively. The difference in the effective income tax rate for
the three months ended March 31, 2015 compared to the same prior
year period is attributable to the composition of charges that are
non-deductible for income tax purposes, including the litigation
contingency expense.
The use of these non-GAAP measures are not
intended to replace the presentation of the Company’s financial
results in accordance with GAAP. The Company believes that the
presentation of core operating results provides additional
information to investors to facilitate the comparison between
periods by excluding certain charges for the three months ended
March 31, 2015 and 2014 that are not representative of its ongoing
operations due to the materiality and the nature of the charges.
The Company’s core operating results also represent a key
performance measure for the purpose of evaluating performance
internally. The Company believes the presentation of adjusted core
operating results, which excludes non-cash expenses related to
amortization of intangible assets, stock-based compensation and
deferred financing costs from core operating results, is a
performance measure used by some investors, equity analysts and
others to make informed investment decisions and for comparability
to other companies that use similar measures.
Three months ended March 31, Detail of
charges:
2015 2014 Litigation contingency expense
($95,000 ) $ - Retirement and severance costs (4,961 ) (339 ) Home
health and hospice closings (1,619 ) - Development project
cancellation and other restructuring costs (1,027 ) - Gentiva
transaction and integration costs: Professional and consulting fees
(32,134 ) - Severance and retention (54,464 ) - Lease termination
(charged to rent expense) (589 ) - Pre-closing financing charges
(charged to general and administrative expenses) (6,005 ) -
Pre-closing financing charges (charged to interest expense) (17,431
) - Trade name impairment charges (6,726 ) - Other transaction
costs (2,099 ) (344 ) (222,055 ) (683 ) Income tax
benefit 50,202 250 Charges net of
income taxes (171,853 ) (433 ) Allocation to participating unvested
restricted stockholders - 13 Available
to common stockholders ($171,853 ) ($420 )
Weighted average diluted shares outstanding 79,575
52,711 Diluted loss per common share related
to charges ($2.16 ) ($0.01 ) Reconciliation of
income from continuing operations before charges: Amounts
attributable to Kindred stockholders: Income from continuing
operations before charges $ 28,418 $ 18,831 Charges net of income
taxes (171,853 ) (433 ) Reported income (loss) from
continuing operations ($143,435 ) $ 18,398
Reconciliation of diluted earnings per common share from continuing
operations before charges: Diluted earnings per common share before
charges (a) $ 0.34 $ 0.35 Charges net of income taxes (2.16 ) (0.01
) Other 0.02 - Reported diluted
earnings (loss) per common share from continuing operations
($1.80 ) $ 0.34
Weighted average diluted shares used to
compute earnings per common share from continuing operations before
charges
82,422 52,711 Reconciliation of
effective income tax rate before charges: Effective income tax rate
before charges 37.6 % 38.2 % Impact of charges on effective income
tax rate -20.5 % - Reported effective income
tax rate 17.1 % 38.2 %
____________
(a) For purposes of computing diluted
earnings per common share before charges, income from continuing
operations before charges was reduced by $0.5 million and $0.6
million for the three months ended March 31, 2015 and 2014,
respectively, for the allocation of income to participating
unvested restricted stockholders.
KINDRED HEALTHCARE, INC. Reconciliation of
Non-GAAP Measurements to GAAP Results (Continued)
(Unaudited) (In thousands, except per share amounts and
statistics)
A reconciliation of adjusted core earnings
follows:
First 2014 Quarters Quarter
Reconciliation of adjusted core earnings:
First
Second Third Fourth 2015
Income from continuing operations before
charges (as calculated and reconciled to GAAP measurement on the
following pages)
$ 18,831 $ 19,363 $ 8,116 $ 16,892 $ 28,418 Add back non-cash
expenses: Amortization of intangible assets 5,560 5,513 5,378 5,215
6,932 Amortization of stock-based compensation costs 2,585 5,924
748 5,073 3,141 Amortization of deferred financing costs
2,397 1,950 1,982 2,044 3,062 10,542
13,387 8,108 12,332 13,135 Income tax benefit related to non-cash
expenses 4,148 5,268 3,190 4,853
5,169 Non-cash expenses, net of income taxes 6,394
8,119 4,918 7,479 7,966 Adjusted core earnings
$ 25,225 $ 27,482 $ 13,034 $ 24,371 $ 36,384 Reconciliation
of diluted adjusted core earnings from continuing operations:
Diluted income per common share before
charges (as calculated on the following pages)
$ 0.35 $ 0.35 $ 0.13 $ 0.26 $ 0.34 Non-cash expenses, net of income
taxes 0.11 0.15 0.07 0.12 0.09
Diluted adjusted core earnings per common
share from continuing operations
$ 0.46 $ 0.50 $ 0.20 $ 0.38 $ 0.43
Weighted average diluted shares used to
compute adjusted core earnings per common share
52,711 53,792 62,902 63,163
82,422 A reconciliation of combined Kindred
and Gentiva home health revenues (excluding community care) for
each historical period follows:
First First
quarter 2014 Quarters Quarter % change v.
First Second Third Fourth 2015
prior year Kindred $ 67,266 $ 67,830 $ 65,954 $ 66,491 $
254,965 Gentiva 253,895 267,018 266,340
275,342 87,520 $ 321,161 $ 334,848 $ 332,294 $ 341,833 $
342,485 6.6
KINDRED HEALTHCARE, INC.
Reconciliation of Non-GAAP Measurements to GAAP Results
(Continued) (Unaudited) (In thousands)
Three months ended March 31, 2015
Charges Home health Development Gentiva
Gentiva Retirement and project
pre-closing transaction Before and
hospice cancellation Litigation
Impairment financing and Other
As charges severance closings and
other contingency charges costs
integration transaction Total reported
Income (loss) from continuing operations: Operating income
(loss) (EBITDAR): Hospital division $ 134,786 $ - $ - $ (675 ) $ -
$ - $ - $ - $ - $ (675 ) $ 134,111 Kindred at Home: Home
health 46,798 - (1,102 ) - - - - - - (1,102 ) 45,696 Hospice
16,996 - (517 ) -
- - - - -
(517 ) 16,479 63,794
- (1,619 ) - -
- - - -
(1,619 ) 62,175 Rehabilitation
division: Hospital rehabilitation services 44,564 - - - - - - - - -
44,564 Skilled nursing rehabilitation services 16,493
(785 ) - - -
- - - -
(785 ) 15,708 61,057 (785
) - - - -
- - - (785 )
60,272 Nursing center division 36,963 - - - -
- - - - - 36,963 Support center (62,389 ) (4,176 ) - - - - -
- - (4,176 ) (66,565 ) Litigation contingency expense - - - -
(95,000 ) - - - - (95,000 ) (95,000 ) Transaction costs - - - - - -
(6,005 ) (86,598 ) (2,099 ) (94,702 ) (94,702 ) Impairment charges
- - - -
- (6,726 ) - -
- (6,726 ) (6,726 ) Operating income
(EBITDAR) 234,211 (4,961 ) (1,619 ) (675 ) (95,000 ) (6,726 )
(6,005 ) (86,598 ) (2,099 ) (203,683 ) 30,528 Rent (91,199 )
- - (352 ) -
- - (589 ) -
(941 ) (92,140 ) EBITDA 143,012 (4,961 ) (1,619 )
(1,027 ) (95,000 ) (6,726 ) (6,005 ) (87,187 ) (2,099 ) (204,624 )
(61,612 ) Depreciation and amortization (38,935 ) - - - - - - - - -
(38,935 ) Interest, net (44,346 ) - -
- - -
(17,431 ) - - (17,431 )
(61,777 )
Income (loss) from continuing operations
before income taxes
59,731 (4,961 ) (1,619 ) (1,027 ) (95,000 ) (6,726 ) (23,436 )
(87,187 ) (2,099 ) (222,055 ) (162,324 ) Provision (benefit) for
income taxes 22,466 (2,133 ) (696 )
(442 ) - (2,891 ) (10,075 )
(33,063 ) (902 ) (50,202 ) (27,736 )
37,265 $ (2,828 ) $ (923 ) $ (585 ) $ (95,000 ) $ (3,835 ) $
(13,361 ) $ (54,124 ) $ (1,197 ) $ (171,853 ) (134,588 )
Noncontrolling interests (8,847 ) (8,847 ) Net income
attributable to Kindred $ 28,418 $ (143,435 ) Diluted
earnings (loss) per common share $ 0.34 $ (1.80 )
Diluted shares used in computing earnings
(loss) per common share
82,422 79,575
Three months ended March 31, 2014
Charges Before Transaction As
charges costs reported Income from
continuing operations: Operating income (loss) (EBITDAR):
Hospital division $ 139,505 $ - $ 139,505 Kindred at Home:
Home health 2,845 - 2,845 Hospice 1,852 -
1,852 4,697 -
4,697 Rehabilitation division: Hospital
rehabilitation services 25,710 - 25,710 Skilled nursing
rehabilitation services 18,016 -
18,016 43,726 - 43,726
Nursing center division 37,572 - 37,572
Support center (44,456 ) - (44,456 ) Transaction costs -
(683 ) (683 ) Operating income (EBITDAR)
181,044 (683 ) 180,361 Rent (78,530 ) -
(78,530 ) EBITDA 102,514 (683 ) 101,831 Depreciation and
amortization (39,092 ) - (39,092 ) Interest, net (25,617 )
- (25,617 )
Income from continuing operations before
income taxes
37,805 (683 ) 37,122 Provision for income taxes 14,445
(250 ) 14,195 23,360 $ (433 ) 22,927
Noncontrolling interests (4,529 ) (4,529 ) Net income
attributable to Kindred $ 18,831 $ 18,398
Diluted earnings per common share $ 0.35 $ 0.34
Diluted shares used in computing earnings
per common share
52,711 52,711
KINDRED HEALTHCARE, INC.
Reconciliation of Non-GAAP Measurements to GAAP Results
(Continued) (Unaudited) (In thousands)
Three months ended December 31, 2014
Charges Severance LTAC Gentiva
Before and other criteria pre-closing
As charges restructuring consulting
financing Transaction Total reported
Income (loss) from continuing operations: Operating income
(loss) (EBITDAR): Hospital division $ 134,791 $ (318 ) $ - $ - $ -
$ (318 ) $ 134,473 Kindred at Home: Home health 7,398 (828 )
- - - (828 ) 6,570 Hospice 524 (106 ) -
- - (106 ) 418
7,922 (934 ) - -
- (934 ) 6,988
Rehabilitation division: Hospital rehabilitation services 23,884 -
- - - - 23,884 Skilled nursing rehabilitation services
16,029 - - -
- - 16,029 39,913
- - - -
- 39,913 Nursing center
division 38,810 (500 ) - - - (500 ) 38,310 Support center
(51,348 ) (10,193 ) (2,460 ) - - (12,653 ) (64,001 ) Transaction
costs - - - -
(8,690 ) (8,690 ) (8,690 ) Operating
income (EBITDAR) 170,088 (11,945 ) (2,460 ) - (8,690 ) (23,095 )
146,993 Rent (79,167 ) - -
- - - (79,167 )
EBITDA 90,921 (11,945 ) (2,460 ) - (8,690 ) (23,095 ) 67,826
Depreciation and amortization (38,558 ) - - - - - (38,558 )
Interest, net (21,857 ) - -
(17,041 ) - (17,041 ) (38,898 )
Income (loss) from continuing operations
before income taxes
30,506 (11,945 ) (2,460 ) (17,041 ) (8,690 ) (40,136 ) (9,630 )
Provision (benefit) for income taxes 8,471
(4,251 ) (875 ) (5,975 ) (2,197 )
(13,298 ) (4,827 ) 22,035 $ (7,694 ) $ (1,585 ) $ (11,066 )
$ (6,493 ) $ (26,838 ) (4,803 ) Noncontrolling interests
(5,143 ) (5,143 ) Net income attributable to Kindred $
16,892 $ (9,946 ) Diluted earnings (loss) per common
share $ 0.26 $ (0.15 )
Diluted shares used in computing earnings
(loss) per common share
63,163 65,135
Three months ended September 30, 2014
Charges Severance Before and other
Customer As charges restructuring
bankruptcy Transaction Total reported
Income from continuing operations: Operating income (loss)
(EBITDAR): Hospital division $ 117,604 $ (617 ) $ - $ - $ (617 ) $
116,987 Kindred at Home: Home health 5,961 (275 ) - - (275 )
5,686 Hospice 1,149 (46 ) -
- (46 ) 1,103 7,110
(321 ) - - (321 )
6,789 Rehabilitation division: Hospital
rehabilitation services 24,887 - (1,857 ) - (1,857 ) 23,030 Skilled
nursing rehabilitation services 17,080 162
- - 162
17,242 41,967 162 (1,857
) - (1,695 ) 40,272
Nursing center division 35,920 (483 ) - - (483 ) 35,437
Support center (45,383 ) (427 ) - - (427 ) (45,810 ) Transaction
costs - - - (4,114
) (4,114 ) (4,114 ) Operating income (EBITDAR)
157,218 (1,686 ) (1,857 ) (4,114 ) (7,657 ) 149,561 Rent
(77,643 ) - - - -
(77,643 ) EBITDA 79,575 (1,686 ) (1,857 ) (4,114 )
(7,657 ) 71,918 Depreciation and amortization (38,748 ) - - - -
(38,748 ) Interest, net (22,171 ) - -
- - (22,171 )
Income (loss) from continuing operations
before income taxes
18,656 (1,686 ) (1,857 ) (4,114 ) (7,657 ) 10,999 Provision
(benefit) for income taxes 6,168 (923 )
(1,017 ) (451 ) (2,391 ) 3,777 12,488 $
(763 ) $ (840 ) $ (3,663 ) $ (5,266 ) 7,222 Noncontrolling
interests (4,372 ) (4,372 ) Net income attributable
to Kindred $ 8,116 $ 2,850 Diluted earnings
per common share $ 0.13 $ 0.04
Diluted shares used in computing earnings
per common share
62,902 62,902
KINDRED HEALTHCARE, INC.
Reconciliation of Non-GAAP Measurements to GAAP Results
(Continued) (Unaudited) (In thousands)
Three months ended June 30, 2014
Charges Severance Before and other
Debt As charges restructuring
Litigation refinancing Transaction
Total reported Income (loss) from continuing
operations: Operating income (loss) (EBITDAR): Hospital
division $ 131,990 $ - $ (4,600 ) $ - $ - $ (4,600 ) $ 127,390
Kindred at Home: Home health 5,769 (721 ) - - - (721 ) 5,048
Hospice 2,139 (122 ) - -
- (122 ) 2,017
7,908 (843 ) - - -
(843 ) 7,065 Rehabilitation
division: Hospital rehabilitation services 25,742 (170 ) - - - (170
) 25,572 Skilled nursing rehabilitation services 19,863
(176 ) - - -
(176 ) 19,687 45,605
(346 ) - - -
(346 ) 45,259 Nursing center division
38,614 (3,205 ) - - - (3,205 ) 35,409 Support center (48,252
) (556 ) - - - (556 ) (48,808 ) Transaction costs -
- - - (4,496 )
(4,496 ) (4,496 ) Operating income (EBITDAR) 175,865
(4,950 ) (4,600 ) - (4,496 ) (14,046 ) 161,819 Rent (77,452
) (247 ) - - -
(247 ) (77,699 ) EBITDA 98,413 (5,197 ) (4,600 ) -
(4,496 ) (14,293 ) 84,120 Depreciation and amortization (39,172 ) -
- - - - (39,172 ) Interest, net (21,438 ) -
- (56,643 ) - (56,643 )
(78,081 )
Income (loss) from continuing operations
before income taxes
37,803 (5,197 ) (4,600 ) (56,643 ) (4,496 ) (70,936 ) (33,133 )
Provision (benefit) for income taxes 13,612
(1,985 ) (1,757 ) (21,639 ) (914 )
(26,295 ) (12,683 ) 24,191 $ (3,212 ) $ (2,843 ) $ (35,004 )
$ (3,582 ) $ (44,641 ) (20,450 ) Noncontrolling interests
(4,828 ) (4,828 ) Net income attributable to Kindred $
19,363 $ (25,278 ) Diluted earnings (loss) per common
share $ 0.35 $ (0.47 )
Diluted shares used in computing earnings
(loss) per common share
53,792 53,714
KINDRED HEALTHCARE, INC.
Reconciliation of Non-GAAP Measurements to GAAP Results
(Continued) (Unaudited) (In thousands)
The Company recognizes that operating cash
flows and free cash flows excluding certain items, which the
Company refers to as core operating cash flows and core free cash
flows, are non-GAAP measurements and are not intended to replace
the presentation of the Company’s cash flows in accordance with
GAAP. The Company believes that these non-GAAP measurements provide
important information to investors related to the amount of
discretionary cash flows that are available for other investing and
financing activities. In addition, management uses operating cash
flows and free cash flows excluding certain items in making
decisions related to acquisitions, development capital
expenditures, dividends, long-term debt repayments and other
uses.
Three months ended March 31, 2015
2014 Reconciliation of net cash flows used in
operating activities to free cash flows: Net cash flows used in
operating activities
($139,602 ) ($15,754 )
Adjustments to remove certain payments
(including payments made for discontinued operations) included in
net cash flows used in operating activities:
Transaction, severance, retirement and
retention
82,340
4,187
Ventas, Inc. lease termination fee
40,000 - Capitalized
lender fees related to debt refinancing
28,012 - Other debt
refinancing costs (expensed)
27,001 - Lease cancellation
charges
353 - Litigation
- 25,150
177,706 29,337 Benefit of reduced income tax payments
resulting from certain payments (a)
- -
177,706 29,337
Net cash flows provided by operating
activities excluding certain items (core operating cash flows)
38,104 13,583 Less routine capital expenditures
(20,769 ) (21,677 ) Free cash flows excluding
certain items (core free cash flows)
$ 17,335
($8,094 )
____________
(a) No tax deposits were due in first
quarter of 2015 or 2014.
Kindred Healthcare, Inc.Susan E. Moss, 502-596-6569Investor
Relations
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