LOUISVILLE, Ky.--(BUSINESS WIRE)--Kindred Healthcare, Inc. (“Kindred” or the “Company”) (NYSE:KND) today announced its operating results for the third quarter ended September 30, 2014.
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.
Third Quarter Highlights:
- Consolidated revenues increased 6% and core operating income increased 7% from the same period last year primarily resulting from improved hospital volumes, strong performance in the Care Management division’s Kindred at Home operations, growth from acquisitions and solid cost controls throughout the Company
- Hospital division reported strong results with 3% same-facility admissions growth and less than 1% growth in core operating costs per patient day
- RehabCare division continues to deliver strong results including core operating income growth of 9% and margin improvement to 11.7% from 11.0% compared to the same period a year ago
- Care Management division, including Kindred at Home, delivered 60% revenue growth and core operating income tripled compared to the same period last year
- Nursing Center division core operating income increased 16.1% primarily due to growth in revenues and its operating margins were significantly improved due to ongoing repositioning and cost control initiatives
- Strong sequential cash flows with core operating cash flows of $95 million and core free cash flows of $72 million
- Board of Directors declared regular quarterly cash dividend of $0.12 per share payable on December 9, 2014
(1) See reconciliation of core results to GAAP results on page 20.
Third Quarter Results
Continuing Operations
Consolidated revenues for the third quarter ended September 30, 2014 increased 6% to $1.24 billion compared to $1.18 billion during the same period of 2013, primarily due to improved hospital volumes, strong performance in the Care Management division’s operations, growth from acquisitions and solid cost controls throughout the Company. Kindred reported income from continuing operations for the third quarter of 2014 of $1.7 million or $0.03 per diluted share compared to a loss from continuing operations of $16.6 million or $0.31 per diluted share in the third quarter of 2013. Third quarter 2014 operating results included pretax charges of $7.7 million ($5.3 million net of income taxes) or $0.08 per diluted share related to transaction, customer bankruptcy, severance and restructuring costs. Operating results for the third quarter of 2013 included pretax charges of $32.9 million ($23.2 million net of income taxes) or $0.44 per diluted share related to litigation costs, costs associated with the closure of a hospital and a home health location, costs associated with certain severance and retirement benefits, charges associated with the modification of certain of the Company’s senior debt, and transaction costs.
Management Commentary
Paul J. Diaz, Chief Executive Officer of the Company, commented, “We are very pleased with our operating and financial results for the third quarter of 2014, which were in line with our expectations and reflect further progress in delivering on our promise to provide hope, healing and recovery to the patients we serve. We continued to see improvement in employee engagement and reduced turnover, while improving quality measures, clinical outcomes and patient satisfaction in all of our business segments. We are also pleased to reaffirm and narrow our earnings guidance and reaffirm our free cash flows guidance for the year, which reflects the change in share count in our earnings guidance from our mid-year equity offering, as we achieved revenue and core operating income growth of 6% and 7% year-over-year, respectively.”
Mr. Diaz continued, “We also made progress on a number of internal and external growth initiatives during the quarter that will enhance our Integrated Care Market capabilities, particularly in home health and hospice services. In addition, we continue to evaluate a robust pipeline of external opportunities to deploy our financial resources, industry leading infrastructure and management capabilities. Overall, we remain committed to further improving our patients’ experiences and to the long-term growth, profitability and strengthened financial position of the Company.”
Benjamin A. Breier, President and Chief Operating Officer of the Company, said, “Our hospital division had another strong quarter. Same-facility hospital admissions increased 3% in the third quarter compared to the same period last year. RehabCare continues to make great progress, as evidenced by our 9% increase in operating income and margin improvement to 11.7% from 11.0% compared to the same period a year ago. In addition, we have added 90 net new skilled nursing rehabilitation contracts during 2014. Our efforts to reshape our nursing center division continue to pay off as we achieved a significant improvement in our core operating margins in the third quarter to 13.1% from 11.9%.”
Mr. Breier added, “Lastly, the positive results in our home health and hospice operations reflect continued execution improvement by our Care Management division, including Kindred at Home, which has been enabled through better processes, technology and team. We believe that the merger with Gentiva Health Services, Inc. (“Gentiva”) (NASDAQ:GTIV) will further accelerate these capabilities and our Continue the Care strategy, creating significant value for patients, employees and shareholders.”
Stephen D. Farber, Executive Vice President, Chief Financial Officer, commented, “Our balance sheet at September 30, 2014 is in great shape with no outstanding borrowings under our revolving credit facility, a cash balance of $82 million and borrowing capacity under our revolving credit facility of approximately $650 million. Our core operating cash flows for the third quarter were $95 million and core free cash flows were $72 million, a significant improvement over the first half of 2014. We expect that cash flow improvements will continue over the next several quarters through performance enhancements in our hospital division central business offices. Our core diluted earnings per share from continuing operations of $0.11 per share for the third quarter of 2014 compares to core diluted earnings per share from continuing operations of $0.12 per share for the third quarter of 2013 (or $0.10 per share on a pro forma basis assuming the incremental 9.7 million shares issued in the Company’s equity offering completed in June 2014).”
Acquisition of Gentiva
Kindred announced on October 9, 2014 that a definitive agreement was signed to acquire Gentiva:
- Transaction value is approximately $1.8 billion
- Combined company is expected to have pro forma annual revenues of approximately $7.1 billion and operating income or earnings before interest, income taxes, depreciation, amortization and rent (“EBITDAR”) of approximately $1.0 billion
- Transaction expected to be significantly accretive to Company earnings and cash flows, exclusive of transaction costs, with more than $70 million of expected synergies within two years of closing
Mr. Diaz commented, “The merger with Gentiva will create one of the nation’s premier healthcare service providers with diverse business and revenue mix. We are encouraged by Gentiva’s strong results in the third quarter, which were consistent with our expectations and underscore our confidence in the merits of the combination. We are impressed with the talented team at Gentiva and look forward to working closely together to complete our combination, which will advance our strategy, mission and shared values.”
“We are pleased by the news that after the close of the transaction with Gentiva, David Causby will join our team as President of the combined Kindred at Home business,” stated Mr. Breier. “David is a strong leader with a deep understanding of Gentiva’s operations, people and systems, which will be invaluable to ensuring a smooth transition. David’s appointment will allow for continued focus on our patients and operations, and ensure a successful integration and a higher level of certainty on achieving our cost and revenue synergy goals.”
Earnings Guidance – Continuing Operations
The Company today reaffirmed and narrowed its guidance for income from continuing operations for 2014 of between $59 million and $65 million. Using Kindred’s annual diluted share count of 58.3 million outstanding shares following the mid-year equity offering, income from continuing operations for 2014 equates to $0.98 to $1.08 per diluted share (previously $0.96 to $1.14 per diluted share). As denoted on page 24, based upon the completion of three quarters in 2014, the Company has conformed various line items underlying its earnings guidance, which in aggregate are fully offsetting and had no net impact on its expectations for income from continuing operations attributable to the Company.
The Company also reaffirmed its operating cash flows in excess of routine and development capital spending programs and before dividends (“free cash flows”) guidance range of $85 million to $105 million. Estimated dividend payments for 2014 are expected to approximate $29 million.
Please note the Company’s earnings and free cash flows guidance for 2014 excludes the effect of reimbursement changes, debt refinancing costs, severance, retirement, retention and restructuring costs, customer bankruptcy costs, litigation costs, transaction costs, any further acquisitions or divestitures, any impairment charges, any further issuances of common stock, debt or mandatory convertible equity securities in conjunction with the Gentiva transaction and any repurchases of common stock.
Quarterly Cash Dividend
The Company also announced that its Board of Directors has approved the payment of the regular quarterly cash dividend of $0.12 per common share to be paid on December 9, 2014 to shareholders of record as of the close of business on November 18, 2014. Future declarations of quarterly dividends will be subject to the approval of Kindred’s Board of Directors.
Conference Call
As previously announced, investors and the general public may access a live webcast of the third quarter 2014 conference call through a link on the Company’s website at http://investors.kindredhealthcare.com. The conference call will be held on November 6 at 10:00 a.m. (Eastern Time). The conference call webcast will feature accompanying slides, which will be posted prior to the conference call, and will be accessible through the Investor Relations section of the Company’s website.
A telephone replay of the conference call will become available at approximately 5:30 p.m. on November 6 by dialing (719) 457-0820, access code: 2187635. The replay will be available through November 16.
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 proposed business combination transaction with Gentiva (including financing of the proposed transaction and the benefits, results, effects and timing of a transaction), all statements regarding the Company’s (and the Company’s and Gentiva’s combined) 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 business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends or other financial items, and product or services line growth of the Company (and the combined businesses of the Company and Gentiva), 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 with respect to Gentiva 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 (the “SEC”).
Risks and uncertainties related to the proposed merger include, but are not limited to, the risk that Gentiva’s stockholders do not approve the merger, potential adverse reactions or changes to business relationships resulting from the announcement or completion of the merger, uncertainties as to the timing of the merger, adverse effects on the Company’s stock price resulting from the announcement or completion of the merger, competitive responses to the announcement or completion of the merger, the risk that healthcare regulatory, licensure or other approvals and financing required for the consummation of the merger are not obtained or are obtained subject to terms and conditions that are not anticipated, costs and difficulties related to the integration of Gentiva’s businesses and operations with the Company’s businesses and operations, the inability to obtain, or delays in obtaining, cost savings and synergies from the merger, uncertainties as to whether the completion of the merger or any transaction will have the accretive effect on the Company’s earnings or cash flows that it expects, unexpected costs, liabilities, charges or expenses resulting from the merger, litigation relating to the merger, the inability to retain key personnel, and any changes in general economic and/or industry-specific conditions.
In addition to the factors set forth above, other factors that may affect the Company’s plans, results or stock price include, without limitation, (a) the impact of healthcare reform, which will initiate significant changes to the United States healthcare system, including potential material changes to the delivery of healthcare services and the reimbursement paid for such services by the government or other third party payors, including reforms resulting from the Patient Protection and Affordable Care Act and the Healthcare Education and Reconciliation Act (collectively, the “ACA”) or future deficit reduction measures adopted at the federal or state level. Healthcare reform is affecting each of the Company’s businesses in some manner. Potential future efforts in the U.S. Congress to repeal, amend, modify or retract funding for various aspects of the ACA create additional uncertainty about the ultimate impact of the ACA on the Company and the healthcare industry. Due to the substantial regulatory changes that will need to be implemented by the Centers for Medicare and Medicaid Services (“CMS”) and others, and the numerous processes required to implement these reforms, the Company cannot predict which healthcare initiatives will be implemented at the federal or state level, the timing of any such reforms, or the effect such reforms or any other future legislation or regulation will have on the Company’s business, financial position, results of operations and liquidity, (b) the Company’s ability to adjust to the new patient criteria for long-term acute care (“LTAC”) hospitals under the Pathway for SGR Reform Act of 2013, which will reduce the population of patients eligible for the Company’s hospital services and change the basis upon which the Company is paid, (c) the impact of the final rules issued by CMS on August 1, 2012 which, among other things, reduced Medicare reimbursement to the Company’s transitional care (“TC”) hospitals in 2013 and beyond by imposing a budget neutrality adjustment and modifying the short-stay outlier rules, (d) the impact of the final rules issued by CMS on July 29, 2011 which significantly reduced Medicare reimbursement to the Company’s nursing centers and changed payments for the provision of group therapy services effective October 1, 2011, (e) the impact of the Budget Control Act of 2011 (as amended by the American Taxpayer Relief Act of 2012 (the “Taxpayer Relief Act”)) which instituted an automatic 2% reduction on each claim submitted to Medicare beginning April 1, 2013, (f) the costs of defending and insuring against alleged professional liability and other claims and investigations (including those related to pending investigations and whistleblower and wage and hour class action lawsuits against the Company) and the Company’s ability to predict the estimated costs and reserves related to such claims and investigations, including the impact of differences in actuarial assumptions and estimates compared to eventual outcomes, (g) the impact of the Taxpayer Relief Act which, among other things, reduces Medicare payments by an additional 25% for subsequent procedures when multiple therapy services are provided on the same day. At this time, the Company believes that the rules related to multiple therapy services will reduce its Medicare revenues by $25 million to $30 million on an annual basis, (h) changes in the reimbursement rates or the methods or timing of payment from third party payors, including commercial payors and the Medicare and Medicaid programs, changes arising from and related to the Medicare prospective payment system for LTAC hospitals, including potential changes in the Medicare payment rules, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, and changes in Medicare and Medicaid reimbursement for the Company’s TC hospitals, nursing centers, inpatient rehabilitation hospitals and home health and hospice operations, and the expiration of the Medicare Part B therapy cap exception process, (i) the effects of additional legislative changes and government regulations, interpretation of regulations and changes in the nature and enforcement of regulations governing the healthcare industry, (j) the ability of the Company’s hospitals and nursing centers to adjust to medical necessity reviews, (k) the impact of the Company’s significant level of indebtedness on its funding costs, operating flexibility and ability to fund ongoing operations, development capital expenditures or other strategic acquisitions with additional borrowings, (l) the Company’s ability to successfully redeploy its capital and proceeds of asset sales in pursuit of its business strategy and pursue its development activities, including through acquisitions, and successfully integrate new operations, including the realization of anticipated revenues, economies of scale, cost savings and productivity gains associated with such operations, as and when planned, including the potential impact of unanticipated issues, expenses and liabilities associated with those activities, (m) the Company’s ability to pay a dividend as, when and if declared by the Board of Directors, in compliance with applicable laws and the Company’s debt and other contractual arrangements, (n) the failure of the Company’s facilities to meet applicable licensure and certification requirements, (o) the further consolidation and cost containment efforts of managed care organizations and other third party payors, (p) the Company’s ability to meet its rental and debt service obligations, (q) the Company’s ability to operate pursuant to the terms of its debt obligations, and comply with its covenants thereunder, and the Company’s ability to operate pursuant to its master lease agreements with Ventas, Inc. (NYSE:VTR), (r) the condition of the financial markets, including volatility and weakness in the equity, capital and credit markets, which could limit the availability and terms of debt and equity financing sources to fund the requirements of the Company’s businesses, or which could negatively impact the Company’s investment portfolio, (s) the Company’s ability to control costs, particularly labor and employee benefit costs, (t) the Company’s ability to successfully reduce (by divestiture of operations or otherwise) its exposure to professional liability and other claims, (u) the Company’s obligations under various laws to self-report suspected violations of law by the Company to various government agencies, including any associated obligation to refund overpayments to government payors, fines and other sanctions, (v) national, regional and industry-specific economic, financial, business and political conditions, including their effect on the availability and cost of labor, credit, materials and other services, (w) increased operating costs due to shortages in qualified nurses, therapists and other healthcare personnel, (x) the Company’s ability to attract and retain key executives and other healthcare personnel, (y) the Company’s ability to successfully dispose of unprofitable facilities, (z) events or circumstances which could result in the impairment of an asset or other charges, such as the impact of the Medicare reimbursement regulations that resulted in the Company recording significant impairment charges in the last three fiscal years, (aa) changes in generally accepted accounting principles (“GAAP”) or practices, and changes in tax accounting or tax laws (or authoritative interpretations relating to any of these matters), and (bb) the Company’s ability to maintain an effective system of internal control over financial reporting.
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 and in its reports on Forms 10-Q and 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.
In addition to the results provided in accordance with GAAP, the Company has provided information in this press release to compute certain non-GAAP measurements for the three months and nine months ended September 30, 2014 and 2013 before certain charges or on a core basis and on a pro forma basis. A reconciliation of the non-GAAP measurements to the GAAP measurements is included in this press release.
Also in this release, the Company provides the financial measure of free cash flows excluding certain items. The Company recognizes that free cash flows excluding certain items is a non-GAAP measurement and is not intended to replace the presentation of the Company’s cash flows in accordance with GAAP. The Company believes that this non-GAAP measurement provides 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 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. 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. A reconciliation of net cash flows provided by operating activities to free cash flows excluding certain items is included in this press release.
The Company’s earnings release also includes financial measures referred to as operating income, or EBITDAR, and earnings before interest, income taxes, depreciation and amortization (“EBITDA”). The Company’s management uses EBITDAR or EBITDA as meaningful measures of operational performance in addition to other measures. The Company uses EBITDAR or 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. EBITDAR or 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. A reconciliation of EBITDAR or EBITDA to income (loss) from continuing operations provided in the Condensed Business Segment Data is included in this press release. The pro forma EBITDAR total of $1.0 billion included in this press release was computed by combining the mid-point of the Company’s 2014 earnings guidance and 2014 EBITDAR estimate of $232 million for Gentiva, which is based upon Gentiva’s 2014 current average analyst consensus estimates. In addition, pro forma EBITDAR includes full run rate expected cost synergies of $70 million from the transaction.
Additional Information
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This communication may be deemed to be solicitation material in respect of the proposed merger between the Company and Gentiva. In connection with the proposed merger, Gentiva and the Company intend to file a registration statement on Form S-4, containing a proxy statement/prospectus, with the SEC. SHAREHOLDERS OF GENTIVA ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT/PROSPECTUS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Investors and security holders will be able to obtain copies of the proxy statement/prospectus as well as other filings containing information about the Company and Gentiva, without charge, at the SEC’s website, www.sec.gov. Those documents, when filed, as well as the Company’s other public filings with the SEC, may be obtained without charge at the Company’s website at www.kindredhealthcare.com.
Participants in Solicitation
The Company and its directors and executive officers, and Gentiva and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the holders of Gentiva common stock in respect of the proposed merger. Information about the directors and executive officers of the Company is set forth in the proxy statement for the Company’s 2014 Annual Meeting of Shareholders, which was filed with the SEC on April 3, 2014. Information about the directors and executive officers of Gentiva is set forth in the proxy statement for Gentiva’s 2014 Annual Meeting of Shareholders, which was filed with the SEC on March 25, 2014. Investors may obtain additional information regarding the interest of such participants by reading the proxy statement/prospectus regarding the proposed merger when it becomes available.
About Kindred Healthcare
Kindred Healthcare, Inc., a top-150 private employer in the United States, is a FORTUNE 500 healthcare services company based in Louisville, Kentucky with annual revenues of $5 billion and approximately 62,600 employees in 47 states. At September 30, 2014, Kindred through its subsidiaries provided healthcare services in 2,376 locations, including 97 transitional care hospitals, five inpatient rehabilitation hospitals, 99 nursing centers, 22 sub-acute units, 152 Kindred at Home hospice, home health and non-medical home care locations, 102 inpatient rehabilitation units (hospital-based) and a contract rehabilitation services business, RehabCare, which served 1,899 non-affiliated facilities. Ranked as one of Fortune magazine’s Most Admired Healthcare Companies for six years in a row, 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.
| KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||
| Financial Summary | |||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
| Revenues | $ | 1,243,313 | $ | 1,175,445 | $ | 3,806,019 | $ | 3,625,909 | |||||||||||||||||
| Income (loss) from continuing operations | $ | 6,146 | $ | (15,762 | ) | $ | 7,067 | $ | 8,841 | ||||||||||||||||
| Discontinued operations, net of income taxes: | |||||||||||||||||||||||||
| Loss from operations | (7,601 | ) | (25,466 | ) | (22,255 | ) | (31,892 | ) | |||||||||||||||||
| Gain (loss) on divestiture of operations | 1,387 | (65,016 | ) | (3,637 | ) | (77,893 | ) | ||||||||||||||||||
| Loss from discontinued operations | (6,214 | ) | (90,482 | ) | (25,892 | ) | (109,785 | ) | |||||||||||||||||
| Net loss | (68 | ) | (106,244 | ) | (18,825 | ) | (100,944 | ) | |||||||||||||||||
| (Earnings) loss attributable to noncontrolling interests: | |||||||||||||||||||||||||
| Continuing operations | (4,372 | ) | (841 | ) | (13,729 | ) | (1,424 | ) | |||||||||||||||||
| Discontinued operations | 78 | 87 | 401 | 172 | |||||||||||||||||||||
| (4,294 | ) | (754 | ) | (13,328 | ) | (1,252 | ) | ||||||||||||||||||
| Loss attributable to Kindred | $ | (4,362 | ) | $ | (106,998 | ) | $ | (32,153 | ) | $ | (102,196 | ) | |||||||||||||
| Amounts attributable to Kindred stockholders: | |||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 1,774 | $ | (16,603 | ) | $ | (6,662 | ) | $ | 7,417 | |||||||||||||||
| Loss from discontinued operations | (6,136 | ) | (90,395 | ) | (25,491 | ) | (109,613 | ) | |||||||||||||||||
| Net loss | $ | (4,362 | ) | $ | (106,998 | ) | $ | (32,153 | ) | $ | (102,196 | ) | |||||||||||||
| Loss per common share: | |||||||||||||||||||||||||
| Basic: | |||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.03 | $ | (0.31 | ) | $ | (0.12 | ) | $ | 0.14 | |||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||||
| Loss from operations | (0.12 | ) | (0.49 | ) | (0.39 | ) | (0.59 | ) | |||||||||||||||||
| Gain (loss) on divestiture of operations | 0.02 | (1.24 | ) | (0.06 | ) | (1.44 | ) | ||||||||||||||||||
| Loss from discontinued operations | (0.10 | ) | (1.73 | ) | (0.45 | ) | (2.03 | ) | |||||||||||||||||
| Net loss | $ | (0.07 | ) | $ | (2.04 | ) | $ | (0.57 | ) | $ | (1.89 | ) | |||||||||||||
| Diluted: | |||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.03 | $ | (0.31 | ) | $ | (0.12 | ) | $ | 0.14 | |||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||||
| Loss from operations | (0.12 | ) | (0.49 | ) | (0.39 | ) | (0.59 | ) | |||||||||||||||||
| Gain (loss) on divestiture of operations | 0.02 | (1.24 | ) | (0.06 | ) | (1.44 | ) | ||||||||||||||||||
| Loss from discontinued operations | (0.10 | ) | (1.73 | ) | (0.45 | ) | (2.03 | ) | |||||||||||||||||
| Net loss | $ | (0.07 | ) | $ | (2.04 | ) | $ | (0.57 | ) | $ | (1.89 | ) | |||||||||||||
| Shares used in computing loss per common share: | |||||||||||||||||||||||||
| Basic | 62,863 | 52,323 | 56,443 | 52,218 | |||||||||||||||||||||
| Diluted | 62,902 | 52,323 | 56,443 | 52,234 | |||||||||||||||||||||
| Cash dividends declared and paid per common share | $ | 0.12 | $ | 0.12 | $ | 0.36 | $ | 0.12 | |||||||||||||||||
| KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||
| Condensed Consolidated Statement of Operations | |||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
| Revenues | $ | 1,243,313 | $ | 1,175,445 | $ | 3,806,019 | $ | 3,625,909 | |||||||||||||||||
| Salaries, wages and benefits | 756,434 | 718,227 | 2,300,567 | 2,215,711 | |||||||||||||||||||||
| Supplies | 79,394 | 79,498 | 242,176 | 244,247 | |||||||||||||||||||||
| Rent | 80,192 | 76,762 | 241,449 | 230,605 | |||||||||||||||||||||
| Other operating expenses | 257,225 | 261,842 | 768,247 | 720,498 | |||||||||||||||||||||
| Other (income) expense | (353 | ) | 51 | (741 | ) | (984 | ) | ||||||||||||||||||
| Impairment charges | - | 441 | - | 1,066 | |||||||||||||||||||||
| Depreciation and amortization | 39,023 | 36,507 | 117,802 | 116,659 | |||||||||||||||||||||
| Interest expense | 22,516 | 25,624 | 128,845 | 82,857 | |||||||||||||||||||||
| Investment income | (343 | ) | (1,235 | ) | (2,975 | ) | (2,794 | ) | |||||||||||||||||
| 1,234,088 | 1,197,717 | 3,795,370 | 3,607,865 | ||||||||||||||||||||||
| Income (loss) from continuing operations before income taxes | 9,225 | (22,272 | ) | 10,649 | 18,044 | ||||||||||||||||||||
| Provision (benefit) for income taxes | 3,079 | (6,510 | ) | 3,582 | 9,203 | ||||||||||||||||||||
| Income (loss) from continuing operations | 6,146 | (15,762 | ) | 7,067 | 8,841 | ||||||||||||||||||||
| Discontinued operations, net of income taxes: | |||||||||||||||||||||||||
| Loss from operations | (7,601 | ) | (25,466 | ) | (22,255 | ) | (31,892 | ) | |||||||||||||||||
| Gain (loss) on divestiture of operations | 1,387 | (65,016 | ) | (3,637 | ) | (77,893 | ) | ||||||||||||||||||
| Loss from discontinued operations | (6,214 | ) | (90,482 | ) | (25,892 | ) | (109,785 | ) | |||||||||||||||||
| Net loss | (68 | ) | (106,244 | ) | (18,825 | ) | (100,944 | ) | |||||||||||||||||
| (Earnings) loss attributable to noncontrolling interests: | |||||||||||||||||||||||||
| Continuing operations | (4,372 | ) | (841 | ) | (13,729 | ) | (1,424 | ) | |||||||||||||||||
| Discontinued operations | 78 | 87 | 401 | 172 | |||||||||||||||||||||
| (4,294 | ) | (754 | ) | (13,328 | ) | (1,252 | ) | ||||||||||||||||||
| Loss attributable to Kindred | $ | (4,362 | ) | $ | (106,998 | ) | $ | (32,153 | ) | $ | (102,196 | ) | |||||||||||||
| Amounts attributable to Kindred stockholders: | |||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 1,774 | $ | (16,603 | ) | $ | (6,662 | ) | $ | 7,417 | |||||||||||||||
| Loss from discontinued operations | (6,136 | ) | (90,395 | ) | (25,491 | ) | (109,613 | ) | |||||||||||||||||
| Net loss | $ | (4,362 | ) | $ | (106,998 | ) | $ | (32,153 | ) | $ | (102,196 | ) | |||||||||||||
| Loss per common share: | |||||||||||||||||||||||||
| Basic: | |||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.03 | $ | (0.31 | ) | $ | (0.12 | ) | $ | 0.14 | |||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||||
| Loss from operations | (0.12 | ) | (0.49 | ) | (0.39 | ) | (0.59 | ) | |||||||||||||||||
| Gain (loss) on divestiture of operations | 0.02 | (1.24 | ) | (0.06 | ) | (1.44 | ) | ||||||||||||||||||
| Loss from discontinued operations | (0.10 | ) | (1.73 | ) | (0.45 | ) | (2.03 | ) | |||||||||||||||||
| Net loss | $ | (0.07 | ) | $ | (2.04 | ) | $ | (0.57 | ) | $ | (1.89 | ) | |||||||||||||
| Diluted: | |||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.03 | $ | (0.31 | ) | $ | (0.12 | ) | $ | 0.14 | |||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||||
| Loss from operations | (0.12 | ) | (0.49 | ) | (0.39 | ) | (0.59 | ) | |||||||||||||||||
| Gain (loss) on divestiture of operations | 0.02 | (1.24 | ) | (0.06 | ) | (1.44 | ) | ||||||||||||||||||
| Loss from discontinued operations | (0.10 | ) | (1.73 | ) | (0.45 | ) | (2.03 | ) | |||||||||||||||||
| Net loss | $ | (0.07 | ) | $ | (2.04 | ) | $ | (0.57 | ) | $ | (1.89 | ) | |||||||||||||
| Shares used in computing loss per common share: | |||||||||||||||||||||||||
| Basic | 62,863 | 52,323 | 56,443 | 52,218 | |||||||||||||||||||||
| Diluted | 62,902 | 52,323 | 56,443 | 52,234 | |||||||||||||||||||||
| Cash dividends declared and paid per common share | $ | 0.12 | $ | 0.12 | $ | 0.36 | $ | 0.12 | |||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||
| Condensed Consolidated Balance Sheet | ||||||||||||||
| (Unaudited) | ||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||
| September 30, | December 31, | |||||||||||||
| 2014 | 2013 | |||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 81,784 | $ | 35,972 | ||||||||||
| Cash - restricted | 2,390 | 3,713 | ||||||||||||
| Insurance subsidiary investments | 95,425 | 96,295 | ||||||||||||
| Accounts receivable less allowance for loss | 980,723 | 916,529 | ||||||||||||
| Inventories | 25,952 | 25,780 | ||||||||||||
| Deferred tax assets | 57,577 | 37,920 | ||||||||||||
| Income taxes | 35,779 | 36,846 | ||||||||||||
| Other | 42,727 | 43,673 | ||||||||||||
| 1,322,357 | 1,196,728 | |||||||||||||
| Property and equipment | 1,962,492 | 1,906,366 | ||||||||||||
| Accumulated depreciation | (1,056,524 | ) | (979,791 | ) | ||||||||||
| 905,968 | 926,575 | |||||||||||||
| Goodwill | 995,240 | 992,102 | ||||||||||||
| Intangible assets less accumulated amortization | 405,900 | 423,303 | ||||||||||||
| Assets held for sale | 2,222 | 20,978 | ||||||||||||
| Insurance subsidiary investments | 158,394 | 149,094 | ||||||||||||
| Deferred tax assets | - | 17,043 | ||||||||||||
| Other | 234,707 | 220,046 | ||||||||||||
| Total assets | $ | 4,024,788 | $ | 3,945,869 | ||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | 158,397 | $ | 181,772 | ||||||||||
| Salaries, wages and other compensation | 346,957 | 361,192 | ||||||||||||
| Due to third party payors | 47,320 | 33,747 | ||||||||||||
| Professional liability risks | 66,974 | 60,993 | ||||||||||||
| Other accrued liabilities | 138,620 | 146,495 | ||||||||||||
| Long-term debt due within one year | 10,233 | 8,222 | ||||||||||||
| 768,501 | 792,421 | |||||||||||||
| Long-term debt | 1,484,436 | 1,579,391 | ||||||||||||
| Professional liability risks | 243,496 | 246,230 | ||||||||||||
| Deferred tax liabilities | 7,683 | - | ||||||||||||
| Deferred credits and other liabilities | 217,218 | 206,611 | ||||||||||||
| Equity: | ||||||||||||||
| Stockholders' equity: | ||||||||||||||
|
Common stock, $0.25 par value; authorized 175,000 shares; issued 64,612 shares - September 30, 2014 and 54,165 shares - December 31, 2013 |
16,153 | 13,541 | ||||||||||||
| Capital in excess of par value | 1,357,134 | 1,146,193 | ||||||||||||
| Accumulated other comprehensive loss | (905 | ) | (252 | ) | ||||||||||
| Accumulated deficit | (112,044 | ) | (76,825 | ) | ||||||||||
| 1,260,338 | 1,082,657 | |||||||||||||
| Noncontrolling interests | 43,116 | 38,559 | ||||||||||||
| Total equity | 1,303,454 | 1,121,216 | ||||||||||||
| Total liabilities and equity | $ | 4,024,788 | $ | 3,945,869 | ||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||
| Condensed Consolidated Statement of Cash Flows | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||||||
| Net loss | $ | (68 | ) | $ | (106,244 | ) | $ | (18,825 | ) | $ | (100,944 | ) | ||||||||||||
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||||||||||||||||||
| Depreciation and amortization | 39,579 | 42,831 | 121,805 | 142,745 | ||||||||||||||||||||
| Amortization of stock-based compensation costs | 694 | 1,553 | 9,657 | 7,641 | ||||||||||||||||||||
| Amortization of deferred financing costs | 1,982 | 2,509 | 21,211 | 9,529 | ||||||||||||||||||||
| Payment of capitalized lender fees related to debt issuance | - | (4,589 | ) | (19,125 | ) | (6,189 | ) | |||||||||||||||||
| Provision for doubtful accounts | 14,695 | 13,152 | 35,588 | 34,489 | ||||||||||||||||||||
| Deferred income taxes | (32,777 | ) | 2,336 | (11,274 | ) | (22,985 | ) | |||||||||||||||||
| Impairment charges | 9 | 8,995 | 673 | 10,077 | ||||||||||||||||||||
| (Gain) loss on divestiture of discontinued operations | (1,387 | ) | 65,016 | 3,637 | 77,893 | |||||||||||||||||||
| Other | 175 | 6,316 | 2,289 | 5,452 | ||||||||||||||||||||
| Change in operating assets and liabilities: | ||||||||||||||||||||||||
| Accounts receivable | 10,392 | 45,862 | (102,503 | ) | 26,745 | |||||||||||||||||||
| Inventories and other assets | (2,899 | ) | 3,467 | (12,886 | ) | 67 | ||||||||||||||||||
| Accounts payable | (3,592 | ) | (12,901 | ) | (22,469 | ) | (31,979 | ) | ||||||||||||||||
| Income taxes | 29,832 | (27,969 | ) | 18,769 | (5,269 | ) | ||||||||||||||||||
| Due to third party payors | 28,907 | 25,931 | 14,540 | 16,716 | ||||||||||||||||||||
| Other accrued liabilities | 4,497 | 44,485 | (16,765 | ) | 25,229 | |||||||||||||||||||
| Net cash provided by operating activities | 90,039 | 110,750 | 24,322 | 189,217 | ||||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||||||
| Routine capital expenditures | (21,263 | ) | (23,152 | ) | (67,425 | ) | (62,952 | ) | ||||||||||||||||
| Development capital expenditures | (1,570 | ) | (3,235 | ) | (2,693 | ) | (10,709 | ) | ||||||||||||||||
| Acquisitions, net of cash acquired | (38 | ) | (12,173 | ) | (24,136 | ) | (39,106 | ) | ||||||||||||||||
| Acquisition deposit | - | (14,675 | ) | - | (14,675 | ) | ||||||||||||||||||
| Sale of assets | 8,948 | 236,397 | 22,909 | 248,700 | ||||||||||||||||||||
| Purchase of insurance subsidiary investments | (74,101 | ) | (7,765 | ) | (97,394 | ) | (30,360 | ) | ||||||||||||||||
| Sale of insurance subsidiary investments | 8,447 | 9,899 | 34,967 | 35,427 | ||||||||||||||||||||
| Net change in insurance subsidiary cash and cash equivalents | 65,928 | (1,416 | ) | 54,372 | (44,294 | ) | ||||||||||||||||||
| Change in other investments | 317 | (140 | ) | 1,027 | 218 | |||||||||||||||||||
| Other | (3 | ) | 79 | (537 | ) | (142 | ) | |||||||||||||||||
| Net cash provided by (used in) investing activities | (13,335 | ) | 183,819 | (78,910 | ) | 82,107 | ||||||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||||||
| Proceeds from borrowings under revolving credit | 311,500 | 238,900 | 1,468,515 | 1,100,300 | ||||||||||||||||||||
| Repayment of borrowings under revolving credit | (355,100 | ) | (519,200 | ) | (1,724,615 | ) | (1,363,600 | ) | ||||||||||||||||
| Proceeds from issuance of senior unsecured notes | - | - | 500,000 | - | ||||||||||||||||||||
| Proceeds from issuance of term loan, net of discount | - | - | 997,500 | - | ||||||||||||||||||||
| Repayment of senior unsecured notes | - | - | (550,000 | ) | - | |||||||||||||||||||
| Repayment of term loan | (2,500 | ) | - | (786,063 | ) | (3,969 | ) | |||||||||||||||||
| Repayment of other long-term debt | (58 | ) | (92 | ) | (215 | ) | (849 | ) | ||||||||||||||||
| Payment of deferred financing costs | (504 | ) | (683 | ) | (3,152 | ) | (1,340 | ) | ||||||||||||||||
| Equity offering, net of offering costs | 16,376 | - | 220,353 | - | ||||||||||||||||||||
| Issuance of common stock in connection with employee benefit plans | 1,530 | 222 | 6,217 | 429 | ||||||||||||||||||||
| Dividends paid | (7,754 | ) | (6,499 | ) | (20,840 | ) | (6,499 | ) | ||||||||||||||||
| Distributions to noncontrolling interests | (4,009 | ) | (118 | ) | (9,604 | ) | (1,628 | ) | ||||||||||||||||
| Other | 183 | 53 | 2,304 | 404 | ||||||||||||||||||||
| Net cash provided by (used in) financing activities | (40,336 | ) | (287,417 | ) | 100,400 | (276,752 | ) | |||||||||||||||||
| Change in cash and cash equivalents | 36,368 | 7,152 | 45,812 | (5,428 | ) | |||||||||||||||||||
| Cash and cash equivalents at beginning of period | 45,416 | 37,427 | 35,972 | 50,007 | ||||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 81,784 | $ | 44,579 | $ | 81,784 | $ | 44,579 | ||||||||||||||||
| KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||||||||||||||||
| Condensed Consolidated Statement of Operations | |||||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||||||||||||||||||||||
| 2013 Quarters | 2014 Quarters | ||||||||||||||||||||||||||||||||||||||
| First | Second | Third | Fourth | First | Second | Third | |||||||||||||||||||||||||||||||||
| Revenues | $ | 1,259,434 | $ | 1,191,030 | $ | 1,175,445 | $ | 1,209,676 | $ | 1,286,742 | $ | 1,275,964 | $ | 1,243,313 | |||||||||||||||||||||||||
| Salaries, wages and benefits | 781,865 | 715,619 | 718,227 | 738,952 | 773,812 | 770,321 | 756,434 | ||||||||||||||||||||||||||||||||
| Supplies | 84,146 | 80,603 | 79,498 | 78,694 | 81,988 | 80,794 | 79,394 | ||||||||||||||||||||||||||||||||
| Rent | 76,519 | 77,324 | 76,762 | 80,921 | 81,048 | 80,209 | 80,192 | ||||||||||||||||||||||||||||||||
| Other operating expenses | 230,675 | 227,981 | 261,842 | 245,262 | 249,604 | 261,418 | 257,225 | ||||||||||||||||||||||||||||||||
| Other (income) expense | (1,009 | ) | (26 | ) | 51 | (458 | ) | (234 | ) | (154 | ) | (353 | ) | ||||||||||||||||||||||||||
| Impairment charges | 187 | 438 | 441 | 76,127 | - | - | - | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | 41,598 | 38,554 | 36,507 | 37,547 | 39,337 | 39,442 | 39,023 | ||||||||||||||||||||||||||||||||
| Interest expense | 28,159 | 29,074 | 25,624 | 25,152 | 25,799 | 80,530 | 22,516 | ||||||||||||||||||||||||||||||||
| Investment income | (85 | ) | (1,474 | ) | (1,235 | ) | (1,252 | ) | (183 | ) | (2,449 | ) | (343 | ) | |||||||||||||||||||||||||
| 1,242,055 | 1,168,093 | 1,197,717 | 1,280,945 | 1,251,171 | 1,310,111 | 1,234,088 | |||||||||||||||||||||||||||||||||
|
Income (loss) from continuing operations before income taxes |
17,379 | 22,937 | (22,272 | ) | (71,269 | ) | 35,571 | (34,147 | ) | 9,225 | |||||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 6,505 | 9,208 | (6,510 | ) | (20,522 | ) | 13,585 | (13,082 | ) | 3,079 | |||||||||||||||||||||||||||||
| Income (loss) from continuing operations | 10,874 | 13,729 | (15,762 | ) | (50,747 | ) | 21,986 | (21,065 | ) | 6,146 | |||||||||||||||||||||||||||||
| Discontinued operations, net of income taxes: | |||||||||||||||||||||||||||||||||||||||
| Loss from operations | (5,376 | ) | (1,050 | ) | (25,466 | ) | (7,150 | ) | (6,501 | ) | (8,153 | ) | (7,601 | ) | |||||||||||||||||||||||||
| Gain (loss) on divestiture of operations | (2,025 | ) | (10,852 | ) | (65,016 | ) | (5,994 | ) | (3,006 | ) | (2,018 | ) | 1,387 | ||||||||||||||||||||||||||
| Loss from discontinued operations | (7,401 | ) | (11,902 | ) | (90,482 | ) | (13,144 | ) | (9,507 | ) | (10,171 | ) | (6,214 | ) | |||||||||||||||||||||||||
| Net income (loss) | 3,473 | 1,827 | (106,244 | ) | (63,891 | ) | 12,479 | (31,236 | ) | (68 | ) | ||||||||||||||||||||||||||||
| (Earnings) loss attributable to noncontrolling interests: | |||||||||||||||||||||||||||||||||||||||
| Continuing operations | (467 | ) | (116 | ) | (841 | ) | (2,466 | ) | (4,529 | ) | (4,828 | ) | (4,372 | ) | |||||||||||||||||||||||||
| Discontinued operations | 51 | 34 | 87 | 61 | 70 | 253 | 78 | ||||||||||||||||||||||||||||||||
| (416 | ) | (82 | ) | (754 | ) | (2,405 | ) | (4,459 | ) | (4,575 | ) | (4,294 | ) | ||||||||||||||||||||||||||
| Income (loss) attributable to Kindred | $ | 3,057 | $ | 1,745 | $ | (106,998 | ) | $ | (66,296 | ) | $ | 8,020 | $ | (35,811 | ) | $ | (4,362 | ) | |||||||||||||||||||||
| Amounts attributable to Kindred stockholders: | |||||||||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 10,407 | $ | 13,613 | $ | (16,603 | ) | $ | (53,213 | ) | $ | 17,457 | $ | (25,893 | ) | $ | 1,774 | ||||||||||||||||||||||
| Loss from discontinued operations | (7,350 | ) | (11,868 | ) | (90,395 | ) | (13,083 | ) | (9,437 | ) | (9,918 | ) | (6,136 | ) | |||||||||||||||||||||||||
| Net income (loss) | $ | 3,057 | $ | 1,745 | $ | (106,998 | ) | $ | (66,296 | ) | $ | 8,020 | $ | (35,811 | ) | $ | (4,362 | ) | |||||||||||||||||||||
| Earnings (loss) per common share: | |||||||||||||||||||||||||||||||||||||||
| Basic: | |||||||||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.20 | $ | 0.25 | $ | (0.31 | ) | $ | (1.02 | ) | $ | 0.32 | $ | (0.48 | ) | $ | 0.03 | ||||||||||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||||||||||||||||||
| Loss from operations | (0.10 | ) | (0.02 | ) | (0.49 | ) | (0.14 | ) | (0.11 | ) | (0.15 | ) | (0.12 | ) | |||||||||||||||||||||||||
| Gain (loss) on divestiture of operations | (0.04 | ) | (0.20 | ) | (1.24 | ) | (0.11 | ) | (0.06 | ) | (0.04 | ) | 0.02 | ||||||||||||||||||||||||||
| Loss from discontinued operations | (0.14 | ) | (0.22 | ) | (1.73 | ) | (0.25 | ) | (0.17 | ) | (0.19 | ) | (0.10 | ) | |||||||||||||||||||||||||
| Net income (loss) | $ | 0.06 | $ | 0.03 | $ | (2.04 | ) | $ | (1.27 | ) | $ | 0.15 | $ | (0.67 | ) | $ | (0.07 | ) | |||||||||||||||||||||
| Diluted: | |||||||||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.20 | $ | 0.25 | $ | (0.31 | ) | $ | (1.02 | ) | $ | 0.32 | $ | (0.48 | ) | $ | 0.03 | ||||||||||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||||||||||||||||||
| Loss from operations | (0.10 | ) | (0.02 | ) | (0.49 | ) | (0.14 | ) | (0.11 | ) | (0.15 | ) | (0.12 | ) | |||||||||||||||||||||||||
| Gain (loss) on divestiture of operations | (0.04 | ) | (0.20 | ) | (1.24 | ) | (0.11 | ) | (0.06 | ) | (0.04 | ) | 0.02 | ||||||||||||||||||||||||||
| Loss from discontinued operations | (0.14 | ) | (0.22 | ) | (1.73 | ) | (0.25 | ) | (0.17 | ) | (0.19 | ) | (0.10 | ) | |||||||||||||||||||||||||
| Net income (loss) | $ | 0.06 | $ | 0.03 | $ | (2.04 | ) | $ | (1.27 | ) | $ | 0.15 | $ | (0.67 | ) | $ | (0.07 | ) | |||||||||||||||||||||
|
Shares used in computing earnings (loss) per common share: |
|||||||||||||||||||||||||||||||||||||||
| Basic | 52,062 | 52,265 | 52,323 | 52,344 | 52,641 | 53,714 | 62,863 | ||||||||||||||||||||||||||||||||
| Diluted | 52,083 | 52,284 | 52,323 | 52,344 | 52,711 | 53,714 | 62,902 | ||||||||||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||||
| Condensed Business Segment Data | ||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||
| 2013 Quarters | 2014 Quarters | |||||||||||||||||||||||||||
| First | Second | Third | Fourth | First | Second | Third | ||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||
| Hospital division | $ 657,814 | $ 606,604 | $ 594,154 | $ 606,988 | $ 646,458 | $ 632,156 | $ 609,452 | |||||||||||||||||||||
| Nursing center division | 270,205 | 264,847 | 265,696 | 270,080 | 277,902 | 280,255 | 279,561 | |||||||||||||||||||||
| Rehabilitation division: | ||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services | 258,750 | 249,647 | 245,330 | 243,280 | 254,255 | 253,989 | 247,042 | |||||||||||||||||||||
| Hospital rehabilitation services | 74,523 | 69,777 | 68,296 | 74,017 | 73,964 | 75,324 | 74,808 | |||||||||||||||||||||
| 333,273 | 319,424 | 313,626 | 317,297 | 328,219 | 329,313 | 321,850 | ||||||||||||||||||||||
| Care management division | 51,621 | 53,039 | 53,801 | 66,466 | 87,704 | 87,986 | 86,186 | |||||||||||||||||||||
| 1,312,913 | 1,243,914 | 1,227,277 | 1,260,831 | 1,340,283 | 1,329,710 | 1,297,049 | ||||||||||||||||||||||
| Eliminations: | ||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services | (28,657) | (28,660) | (28,151) | (28,157) | (29,646) | (30,031) | (30,788) | |||||||||||||||||||||
| Hospital rehabilitation services | (23,609) | (23,223) | (22,520) | (22,123) | (23,233) | (22,855) | (22,172) | |||||||||||||||||||||
| Nursing centers | (1,213) | (1,001) | (1,161) | (875) | (662) | (860) | (776) | |||||||||||||||||||||
| (53,479) | (52,884) | (51,832) | (51,155) | (53,541) | (53,746) | (53,736) | ||||||||||||||||||||||
| $ 1,259,434 | $ 1,191,030 | $ 1,175,445 | $ 1,209,676 | $ 1,286,742 | $ 1,275,964 | $ 1,243,313 | ||||||||||||||||||||||
| Income (loss) from continuing operations: | ||||||||||||||||||||||||||||
| Operating income (loss): | ||||||||||||||||||||||||||||
| Hospital division | $ 147,493 | (a) | $ 129,366 | $ 112,483 | (c) | $ 126,788 | (i) | $ 145,395 | $ 132,878 | (k) | $ 121,744 | (o) | ||||||||||||||||
| Nursing center division | 29,145 |
(a) |
36,018 | 31,505 | 35,585 | 38,471 | 36,880 | (l) | 36,179 | (o) | ||||||||||||||||||
| Rehabilitation division: | ||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services |
13,239 |
(a) |
21,623 | (7,209) |
(d) |
14,260 | (j) | 18,328 | 19,982 | (l) | 17,552 | (o) | ||||||||||||||||
| Hospital rehabilitation services | 18,132 | (a) | 19,573 | 18,215 | (e) | 18,005 | (j) | 19,820 | 20,084 | (l) | 18,273 | (p) | ||||||||||||||||
| 31,371 | 41,196 | 11,006 | 32,265 | 38,148 | 40,066 | 35,825 | ||||||||||||||||||||||
| Care management division | 2,786 | (a) | 3,961 | 1,085 | (f) | 2,131 | (j) | 4,697 | 7,065 | (l) | 6,789 | (o) | ||||||||||||||||
| Corporate: | ||||||||||||||||||||||||||||
| Overhead | (45,585) | (a) | (43,196) | (39,157) | (g) | (48,557) | (j) | (44,050) | (48,365) | (l) | (45,173) | (o) | ||||||||||||||||
| Insurance subsidiary | (509) | (384) | (482) | (539) | (406) | (443) | (637) | |||||||||||||||||||||
| (46,094) | (43,580) | (39,639) | (49,096) | (44,456) | (48,808) | (45,810) | ||||||||||||||||||||||
| Impairment charges | (187) | (438) | (441) | (76,127) | - | - | - | |||||||||||||||||||||
| Transaction costs | (944) | (108) | (613) | (447) | (683) | (4,496) | (4,114) | |||||||||||||||||||||
| Operating income (EBITDAR) | 163,570 | 166,415 | 115,386 | 71,099 | 181,572 | 163,585 | 150,613 | |||||||||||||||||||||
| Rent | (76,519) | (77,324) | (76,762) | (80,921) | (81,048) | (80,209) |
(m) |
(80,192) | ||||||||||||||||||||
| EBITDA | 87,051 | 89,091 | 38,624 | (9,822) | 100,524 | 83,376 | 70,421 | |||||||||||||||||||||
| Depreciation and amortization | (41,598) | (38,554) | (36,507) | (37,547) | (39,337) | (39,442) | (39,023) | |||||||||||||||||||||
| Interest, net | (28,074) | (27,600) |
(b) |
(24,389) | (h) | (23,900) | (25,616) | (78,081) | (n) | (22,173) | ||||||||||||||||||
|
Income (loss) from continuing operations before income taxes |
17,379 | 22,937 | (22,272) | (71,269) | 35,571 | (34,147) | 9,225 | |||||||||||||||||||||
| Provision (benefit) for income taxes | 6,505 | 9,208 | (6,510) | (20,522) | 13,585 | (13,082) | 3,079 | |||||||||||||||||||||
| $ 10,874 | $ 13,729 | $ (15,762) | $ (50,747) | $ 21,986 | $ (21,065) | $ 6,146 | ||||||||||||||||||||||
| (a) |
Includes one-time bonus costs of $19.8 million (hospital division - $7.8 million, nursing center division - $4.6 million, rehabilitation division - $6.3 million (skilled nursing rehabilitation services - $5.0 million and hospital rehabilitation services - $1.3 million), care management division - $0.8 million and corporate - $0.3 million). |
|||||||||||||||||||||||||||
| (b) | Includes $1.4 million of charges associated with the modification of certain of the Company's senior debt. | |||||||||||||||||||||||||||
| (c) | Includes costs of $5.5 million in connection with the closing of a TC hospital and a litigation charge of $0.7 million. | |||||||||||||||||||||||||||
| (d) | Includes $23.1 million of litigation charges. | |||||||||||||||||||||||||||
| (e) | Includes $0.3 million of severance and retirement costs. | |||||||||||||||||||||||||||
| (f) | Includes $0.6 million of severance and retirement costs and $0.5 million of costs associated with closing a home health location. | |||||||||||||||||||||||||||
| (g) | Includes $1.0 million of severance and retirement costs and $0.5 million of fees associated with the modification of certain of the Company's senior debt. | |||||||||||||||||||||||||||
| (h) | Includes $0.1 million of charges associated with the modification of certain of the Company's senior debt. | |||||||||||||||||||||||||||
| (i) | Includes costs of $0.5 million in connection with the closing of a TC hospital and a litigation charge of $7.0 million. | |||||||||||||||||||||||||||
| (j) |
Includes severance and retirement costs of $3.7 million (rehabilitation division - $1.2 million (skilled nursing rehabilitation services - $0.1 million and hospital rehabilitation services - $1.1 million), care management division - $0.1 million and corporate - $2.4 million). |
|||||||||||||||||||||||||||
| (k) | Includes litigation costs of $4.6 million. | |||||||||||||||||||||||||||
| (l) |
Includes severance and other costs related to restructuring activities of $4.9 million (nursing center division - $3.2 million, rehabilitation division - $0.3 million (skilled nursing rehabilitation services - $0.2 million and hospital rehabilitation services - $0.1 million), care management division - $0.8 million and corporate - $0.6 million). |
|||||||||||||||||||||||||||
| (m) | Includes lease cancellation charges of $0.3 million incurred in connection with restructuring activities. | |||||||||||||||||||||||||||
| (n) | Includes $56.6 million of charges associated with debt refinancing. | |||||||||||||||||||||||||||
| (o) |
Includes severance costs of $1.8 million and other operating (income) expenses of ($0.1) million related to restructuring activities (hospital division - $0.6 million, nursing center division - $0.5 million, skilling nursing rehabilitation services - ($0.2) million, care management division - $0.4 million and corporate - $0.4 million). |
|||||||||||||||||||||||||||
| (p) | Includes $1.9 million allowance for doubtful account related to a customer bankruptcy. | |||||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||||||||||||||||||||
| Condensed Consolidating Statement of Operations | ||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||||||||||||||
| Three months ended September 30, 2014 | ||||||||||||||||||||||||||||||||||||||||||||
| Nursing |
Rehabilitation division |
Care | ||||||||||||||||||||||||||||||||||||||||||
| Hospital | center | Skilled nursing | Hospital | management | Corporate | Transaction | ||||||||||||||||||||||||||||||||||||||
| division (a) | division (a) | services (a) | services (b) | Total | division (a) | (a) | costs | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||
| Revenues | $ | 609,452 | $ | 279,561 | $ | 247,042 | $ | 74,808 | $ | 321,850 | $ | 86,186 | $ | - | $ | - | $ | (53,736 | ) | $ | 1,243,313 | |||||||||||||||||||||||
| Salaries, wages and benefits | 269,119 | 127,954 | 220,913 | 50,097 | 271,010 | 64,883 | 24,705 | - | (1,237 | ) | 756,434 | |||||||||||||||||||||||||||||||||
| Supplies | 64,618 | 10,855 | 680 | 24 | 704 | 3,034 | 183 | - | - | 79,394 | ||||||||||||||||||||||||||||||||||
| Rent | 52,509 | 23,865 | 1,041 | 22 | 1,063 | 2,155 | 600 | - | - | 80,192 | ||||||||||||||||||||||||||||||||||
| Other operating expenses | 153,909 | 104,846 | 8,046 | 6,408 | 14,454 | 11,479 | 20,922 | 4,114 | (52,499 | ) | 257,225 | |||||||||||||||||||||||||||||||||
| Other (income) expense | 62 | (273 | ) | (149 | ) | 6 | (143 | ) | 1 | - | - | - | (353 | ) | ||||||||||||||||||||||||||||||
| Depreciation and amortization | 16,851 | 7,881 | 2,866 | 2,364 | 5,230 | 2,105 | 6,956 | - | - | 39,023 | ||||||||||||||||||||||||||||||||||
| Interest expense | 189 | 13 | 49 | - | 49 | 12 | 22,253 | - | - | 22,516 | ||||||||||||||||||||||||||||||||||
| Investment income | (63 | ) | (6 | ) | (91 | ) | - | (91 | ) | - | (183 | ) | - | - | (343 | ) | ||||||||||||||||||||||||||||
| 557,194 | 275,135 | 233,355 | 58,921 | 292,276 | 83,669 | 75,436 | 4,114 | (53,736 | ) | 1,234,088 | ||||||||||||||||||||||||||||||||||
|
Income from continuing operations before income taxes |
$ | 52,258 | $ | 4,426 | $ | 13,687 | $ | 15,887 | $ | 29,574 | $ | 2,517 | $ | (75,436 | ) | $ | (4,114 | ) | $ | - | 9,225 | |||||||||||||||||||||||
| Provision for income taxes | 3,079 | |||||||||||||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 6,146 | ||||||||||||||||||||||||||||||||||||||||||
|
Capital expenditures, excluding acquisitions (including discontinued operations): |
||||||||||||||||||||||||||||||||||||||||||||
| Routine | $ | 6,470 | $ | 5,024 | $ | 489 | $ | 62 | $ | 551 | $ | 228 | $ | 8,990 | $ | - | $ | - | $ | 21,263 | ||||||||||||||||||||||||
| Development | - | 1,570 | - | - | - | - | - | - | - | 1,570 | ||||||||||||||||||||||||||||||||||
| $ | 6,470 | $ | 6,594 | $ | 489 | $ | 62 | $ | 551 | $ | 228 | $ | 8,990 | $ | - | $ | - | $ | 22,833 | |||||||||||||||||||||||||
| Three months ended September 30, 2013 | ||||||||||||||||||||||||||||||||||||||||||||
| Nursing | Rehabilitation division | Care | ||||||||||||||||||||||||||||||||||||||||||
| Hospital | center | Skilled nursing | Hospital | management | Transaction | |||||||||||||||||||||||||||||||||||||||
| division (c) | division | services (d) | services (e) | Total | division (f) | Corporate (g) | costs | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||
| Revenues | $ | 594,154 | $ | 265,696 | $ | 245,330 | $ | 68,296 | $ | 313,626 | $ | 53,801 | $ | - | $ | - | $ | (51,832 | ) | $ | 1,175,445 | |||||||||||||||||||||||
| Salaries, wages and benefits | 261,743 | 126,245 | 220,267 | 45,872 | 266,139 | 43,184 | 21,019 | - | (103 | ) | 718,227 | |||||||||||||||||||||||||||||||||
| Supplies | 63,877 | 12,343 | 750 | 28 | 778 | 2,277 | 223 | - | - | 79,498 | ||||||||||||||||||||||||||||||||||
| Rent | 49,761 | 24,111 | 1,123 | 19 | 1,142 | 1,193 | 555 | - | - | 76,762 | ||||||||||||||||||||||||||||||||||
| Other operating expenses | 156,049 | 95,784 | 31,342 | 4,150 | 35,492 | 7,237 | 18,396 | 613 | (51,729 | ) | 261,842 | |||||||||||||||||||||||||||||||||
| Other (income) expense | 2 | (181 | ) | 180 | 31 | 211 | 18 | 1 | - | - | 51 | |||||||||||||||||||||||||||||||||
| Impairment charges | 418 | 23 | - | - | - | - | - | - | - | 441 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 16,750 | 6,479 | 2,461 | 2,281 | 4,742 | 1,638 | 6,898 | - | - | 36,507 | ||||||||||||||||||||||||||||||||||
| Interest expense | 203 | 4 | 63 | - | 63 | 6 | 25,348 | - | - | 25,624 | ||||||||||||||||||||||||||||||||||
| Investment income | (8 | ) | (19 | ) | (50 | ) | - | (50 | ) | - | (1,158 | ) | - | - | (1,235 | ) | ||||||||||||||||||||||||||||
| 548,795 | 264,789 | 256,136 | 52,381 | 308,517 | 55,553 | 71,282 | 613 | (51,832 | ) | 1,197,717 | ||||||||||||||||||||||||||||||||||
|
Income (loss) from continuing operations before income taxes |
$ | 45,359 | $ | 907 | $ | (10,806 | ) | $ | 15,915 | $ | 5,109 | $ | (1,752 | ) | $ | (71,282 | ) | $ | (613 | ) | $ | - | (22,272 | ) | ||||||||||||||||||||
| Income tax benefit | (6,510 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Loss from continuing operations | $ | (15,762 | ) | |||||||||||||||||||||||||||||||||||||||||
|
Capital expenditures, excluding acquisitions (including discontinued operations): |
||||||||||||||||||||||||||||||||||||||||||||
| Routine | $ | 6,421 | $ | 5,584 | $ | 860 | $ | 31 | $ | 891 | $ | 522 | $ | 9,734 | $ | - | $ | - | $ | 23,152 | ||||||||||||||||||||||||
| Development | 3,235 | - | - | - | - | - | - | - | - | 3,235 | ||||||||||||||||||||||||||||||||||
| $ | 9,656 | $ | 5,584 | $ | 860 | $ | 31 | $ | 891 | $ | 522 | $ | 9,734 | $ | - | $ | - | $ | 26,387 | |||||||||||||||||||||||||
| (a) |
Includes severance costs (included in salaries, wages and benefits) of $1.8 million, other operating expenses of $0.1 million and other income of $0.2 million related to restructuring activities (hospital division - $0.6 million, nursing center division - $0.5 million, skilled nursing rehabilitation services - $0.2 million income, care management division - $0.4 million and corporate - $0.4 million). |
|||||||||||||||||||||||||||||||||||||||||||
| (b) | Includes $1.9 million allowance for doubtful account (included in other operating expenses) related to a customer bankruptcy. | |||||||||||||||||||||||||||||||||||||||||||
| (c) |
Includes costs of $5.5 million ($0.2 million included in salaries, wages and benefits and $5.3 million included in other operating expenses) in connection with the closing of a TC hospital and a litigation charge (included in other operating expenses) of $0.7 million. |
|||||||||||||||||||||||||||||||||||||||||||
| (d) | Includes $23.1 million of litigation charges (included in other operating expenses). | |||||||||||||||||||||||||||||||||||||||||||
| (e) | Includes $0.3 million of severance and retirement costs (included in salaries, wages and benefits). | |||||||||||||||||||||||||||||||||||||||||||
| (f) | Includes $0.6 million of severance and retirement costs (included in salaries, wages and benefits) and $0.5 million of costs (included in other operating expenses) associated with closing a home health location. | |||||||||||||||||||||||||||||||||||||||||||
| (g) |
Includes $1.0 million of severance and retirement costs (included in salaries, wages and benefits) and $0.6 million of fees and charges ($0.5 million included in other operating expenses and $0.1 million included in interest expense) associated with refinancing certain of the Company’s senior debt. |
|||||||||||||||||||||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||||||||||||||||||||
| Condensed Consolidating Statement of Operations | |||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||||||
| Nine months ended September 30, 2014 | |||||||||||||||||||||||||||||||||||||||||||
| Nursing | Rehabilitation division | Care | |||||||||||||||||||||||||||||||||||||||||
| Hospital | center | Skilled nursing | Hospital | management | Corporate | Transaction | |||||||||||||||||||||||||||||||||||||
| division (a,b) | division (b,c) | services (b) | services (b,d) | Total | division (b) | (b,e) | costs | Eliminations | Consolidated | ||||||||||||||||||||||||||||||||||
| Revenues | $ | 1,888,066 | $ | 837,718 | $ | 755,286 | $ | 224,096 | $ | 979,382 | $ | 261,876 | $ | - | $ | - | $ | (161,023 | ) | $ | 3,806,019 | ||||||||||||||||||||||
| Salaries, wages and benefits | 815,047 | 384,349 | 669,427 | 150,399 | 819,826 | 200,376 | 82,356 | 339 | (1,726 | ) | 2,300,567 | ||||||||||||||||||||||||||||||||
| Supplies | 198,295 | 32,183 | 2,096 | 91 | 2,187 | 8,966 | 545 | - | - | 242,176 | |||||||||||||||||||||||||||||||||
| Rent | 158,170 | 71,673 | 3,197 | 95 | 3,292 | 6,588 | 1,726 | - | - | 241,449 | |||||||||||||||||||||||||||||||||
| Other operating expenses | 474,723 | 310,272 | 28,041 | 15,412 | 43,453 | 33,979 | 56,163 | 8,954 | (159,297 | ) | 768,247 | ||||||||||||||||||||||||||||||||
| Other (income) expense | (16 | ) | (616 | ) | (140 | ) | 17 | (123 | ) | 4 | 10 | - | - | (741 | ) | ||||||||||||||||||||||||||||
| Depreciation and amortization | 50,844 | 23,109 | 8,446 | 7,416 | 15,862 | 6,369 | 21,618 | - | - | 117,802 | |||||||||||||||||||||||||||||||||
| Interest expense | 561 | 25 | 158 | - | 158 | 34 | 128,067 | - | - | 128,845 | |||||||||||||||||||||||||||||||||
| Investment income | (81 | ) | (27 | ) | (375 | ) | - | (375 | ) | (1 | ) | (2,491 | ) | - | - | (2,975 | ) | ||||||||||||||||||||||||||
| 1,697,543 | 820,968 | 710,850 | 173,430 | 884,280 | 256,315 | 287,994 | 9,293 | (161,023 | ) | 3,795,370 | |||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||
|
Income from continuing operations before income taxes |
$ | 190,523 | $ | 16,750 | $ | 44,436 | $ | 50,666 | $ | 95,102 | $ | 5,561 | $ | (287,994 | ) | $ | (9,293 | ) | $ | - | 10,649 | ||||||||||||||||||||||
| Provision for income taxes | 3,582 | ||||||||||||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 7,067 | |||||||||||||||||||||||||||||||||||||||||
|
Capital expenditures, excluding acquisitions (including discontinued operations): |
|||||||||||||||||||||||||||||||||||||||||||
| Routine | $ | 23,097 | $ | 15,242 | $ | 1,931 | $ | 162 | $ | 2,093 | $ | 704 | $ | 26,289 | $ | - | $ | - | $ | 67,425 | |||||||||||||||||||||||
| Development | 562 | 2,131 | - | - | - | - | - | - | - | 2,693 | |||||||||||||||||||||||||||||||||
| $ | 23,659 | $ | 17,373 | $ | 1,931 | $ | 162 | $ | 2,093 | $ | 704 | $ | 26,289 | $ | - | $ | - | $ | 70,118 | ||||||||||||||||||||||||
| Nine months ended September 30, 2013 | |||||||||||||||||||||||||||||||||||||||||||
| Nursing | Rehabilitation division | Care | |||||||||||||||||||||||||||||||||||||||||
| Hospital | center | Skilled nursing | Hospital | management | Corporate | Transaction | |||||||||||||||||||||||||||||||||||||
| division (f,g) | division (f) | services (f,h) | services (f,i) | Total | division (f,j) | (f,k) | costs | Eliminations | Consolidated | ||||||||||||||||||||||||||||||||||
| Revenues | $ | 1,858,572 | $ | 800,748 | $ | 753,727 | $ | 212,596 | $ | 966,323 | $ | 158,461 | $ | - | $ | - | $ | (158,195 | ) | $ | 3,625,909 | ||||||||||||||||||||||
| Salaries, wages and benefits | 812,762 | 384,670 | 674,985 | 144,528 | 819,513 | 123,228 | 75,949 | - | (411 | ) | 2,215,711 | ||||||||||||||||||||||||||||||||
| Supplies | 196,760 | 37,625 | 2,346 | 90 | 2,436 | 6,840 | 586 | - | - | 244,247 | |||||||||||||||||||||||||||||||||
| Rent | 149,564 | 72,091 | 3,555 | 55 | 3,610 | 3,534 | 1,806 | - | - | 230,605 | |||||||||||||||||||||||||||||||||
| Other operating expenses | 459,631 | 282,622 | 48,524 | 11,999 | 60,523 | 20,543 | 53,298 | 1,665 | (157,784 | ) | 720,498 | ||||||||||||||||||||||||||||||||
| Other (income) expense | 77 | (837 | ) | 219 | 59 | 278 | 18 | (520 | ) | - | - | (984 | ) | ||||||||||||||||||||||||||||||
| Impairment charges | 1,002 | 64 | - | - | - | - | - | - | - | 1,066 | |||||||||||||||||||||||||||||||||
| Depreciation and amortization | 53,997 | 20,634 | 8,451 | 6,931 | 15,382 | 4,779 | 21,867 | - | - | 116,659 | |||||||||||||||||||||||||||||||||
| Interest expense | 564 | 10 | 232 | - | 232 | 6 | 82,045 | - | - | 82,857 | |||||||||||||||||||||||||||||||||
| Investment income | (14 | ) | (40 | ) | (152 | ) | - | (152 | ) | - | (2,588 | ) | - | - | (2,794 | ) | |||||||||||||||||||||||||||
| 1,674,343 | 796,839 | 738,160 | 163,662 | 901,822 | 158,948 | 232,443 | 1,665 | (158,195 | ) | 3,607,865 | |||||||||||||||||||||||||||||||||
|
Income (loss) from continuing operations before income taxes |
$ | 184,229 | $ | 3,909 | $ | 15,567 | $ | 48,934 | $ | 64,501 | $ | (487 | ) | $ | (232,443 | ) | $ | (1,665 | ) | $ | - | 18,044 | |||||||||||||||||||||
| Provision for income taxes | 9,203 | ||||||||||||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 8,841 | |||||||||||||||||||||||||||||||||||||||||
|
Capital expenditures, excluding acquisitions (including discontinued operations): |
|||||||||||||||||||||||||||||||||||||||||||
| Routine | $ | 22,285 | $ | 15,662 | $ | 1,929 | $ | 108 | $ | 2,037 | $ | 1,056 | $ | 21,912 | $ | - | $ | - | $ | 62,952 | |||||||||||||||||||||||
| Development | 10,702 | 7 | - | - | - | - | - | - | - | 10,709 | |||||||||||||||||||||||||||||||||
| $ | 32,987 | $ | 15,669 | $ | 1,929 | $ | 108 | $ | 2,037 | $ | 1,056 | $ | 21,912 | $ | - | $ | - | $ | 73,661 | ||||||||||||||||||||||||
| (a) | Includes litigation costs (included in other operating expenses) of $4.6 million. | ||||||||||||||||||||||||||||||||||||||||||
| (b) |
Includes severance costs (included in salaries, wages and benefits) of $6.6 million, other operating expenses of $0.2 million and other income of $0.2 million related to restructuring activities (hospital division - $0.6 million, nursing center division - $3.7 million, rehabilitation division - $0.1 million (skilled nursing rehabilitation services - $0.2 million expense as well as $0.2 million income and hospital rehabilitation services - $0.1 million), care management division - $1.2 million and corporate - $1.0 million). |
||||||||||||||||||||||||||||||||||||||||||
| (c) | Includes lease cancellation charges (included in rent) of $0.3 million incurred in connection with restructuring activities. | ||||||||||||||||||||||||||||||||||||||||||
| (d) | Includes $1.9 million allowance for doubtful account (included in other operating expenses) related to a customer bankruptcy. | ||||||||||||||||||||||||||||||||||||||||||
| (e) | Includes $56.6 million of charges (included in interest expense) associated with debt refinancing. | ||||||||||||||||||||||||||||||||||||||||||
| (f) |
Includes one-time bonus costs (included in salaries, wages and benefits) of $19.8 million (hospital division - $7.8 million, nursing center division - $4.6 million, rehabilitation division - $6.3 million (skilled nursing rehabilitation services - $5.0 million and hospital rehabilitation services - $1.3 million), care management division - $0.8 million and corporate - $0.3 million). |
||||||||||||||||||||||||||||||||||||||||||
| (g) |
Includes costs of $5.5 million ($0.2 million included in salaries, wages and benefits and $5.3 million included in other operating expenses) in connection with the closing of a TC hospital and a litigation charge (included in other operating expenses) of $0.7 million. |
||||||||||||||||||||||||||||||||||||||||||
| (h) | Includes $23.1 million of litigation charges (included in other operating expenses). | ||||||||||||||||||||||||||||||||||||||||||
| (i) | Includes $0.3 million of severance and retirement costs (included in salaries, wages and benefits). | ||||||||||||||||||||||||||||||||||||||||||
| (j) | Includes $0.6 million of severance and retirement costs (included in salaries, wages and benefits) and $0.5 million of costs (included in other operating expenses) associated with closing a home health location. | ||||||||||||||||||||||||||||||||||||||||||
| (k) |
Includes $1.0 million of severance and retirement costs (included in salaries, wages and benefits) and $2.0 million of fees and charges ($0.5 million included in other operating expenses and $1.5 million included in interest expense) associated with refinancing certain of the Company’s senior debt. |
||||||||||||||||||||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||
| Condensed Business Segment Data | |||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||
| 2013 Quarters | 2014 Quarters | ||||||||||||||||||||||||
| First | Second | Third | Fourth | First | Second | Third | |||||||||||||||||||
| Hospital division data: | |||||||||||||||||||||||||
| End of period data: | |||||||||||||||||||||||||
| Number of hospitals: | |||||||||||||||||||||||||
| Transitional care | 97 | 97 | 97 | 97 | 97 | 97 | 97 | ||||||||||||||||||
| Inpatient rehabilitation | 5 | 5 | 5 | 5 | 5 | 5 | 5 | ||||||||||||||||||
| 102 | 102 | 102 | 102 | 102 | 102 | 102 | |||||||||||||||||||
| Number of licensed beds: | |||||||||||||||||||||||||
| Transitional care | 7,059 | 7,059 | 7,073 | 7,105 | 7,145 | 7,145 | 7,145 | ||||||||||||||||||
| Inpatient rehabilitation | 215 | 215 | 215 | 215 | 215 | 215 | 215 | ||||||||||||||||||
| 7,274 | 7,274 | 7,288 | 7,320 | 7,360 | 7,360 | 7,360 | |||||||||||||||||||
| Revenue mix %: | |||||||||||||||||||||||||
| Medicare | 62.5 | 60.7 | 59.1 | 59.3 | 60.2 | 58.9 | 57.6 | ||||||||||||||||||
| Medicaid | 5.4 | 5.9 | 6.9 | 6.2 | 6.5 | 6.6 | 6.7 | ||||||||||||||||||
| Medicare Advantage | 10.2 | 11.1 | 11.1 | 11.7 | 11.2 | 11.0 | 10.4 | ||||||||||||||||||
| Medicaid Managed | 1.9 | 1.9 | 2.0 | 1.9 | 2.3 | 2.9 | 3.7 | ||||||||||||||||||
| Commercial insurance and other | 20.0 | 20.4 | 20.9 | 20.9 | 19.8 | 20.6 | 21.6 | ||||||||||||||||||
| Admissions: | |||||||||||||||||||||||||
| Medicare | 10,274 | 9,432 | 9,010 | 9,255 | 9,858 | 9,410 | 9,221 | ||||||||||||||||||
| Medicaid | 685 | 744 | 788 | 712 | 835 | 914 | 831 | ||||||||||||||||||
| Medicare Advantage | 1,519 | 1,474 | 1,422 | 1,450 | 1,515 | 1,449 | 1,305 | ||||||||||||||||||
| Medicaid Managed | 209 | 208 | 225 | 252 | 317 | 381 | 511 | ||||||||||||||||||
| Commercial insurance and other | 1,951 | 1,869 | 1,874 | 1,818 | 2,107 | 2,055 | 1,873 | ||||||||||||||||||
| 14,638 | 13,727 | 13,319 | 13,487 | 14,632 | 14,209 | 13,741 | |||||||||||||||||||
| Admissions mix %: | |||||||||||||||||||||||||
| Medicare | 70.2 | 68.7 | 67.6 | 68.6 | 67.4 | 66.2 | 67.1 | ||||||||||||||||||
| Medicaid | 4.7 | 5.4 | 5.9 | 5.3 | 5.7 | 6.4 | 6.1 | ||||||||||||||||||
| Medicare Advantage | 10.4 | 10.8 | 10.7 | 10.7 | 10.3 | 10.2 | 9.5 | ||||||||||||||||||
| Medicaid Managed | 1.4 | 1.5 | 1.7 | 1.9 | 2.2 | 2.7 | 3.7 | ||||||||||||||||||
| Commercial insurance and other | 13.3 | 13.6 | 14.1 | 13.5 | 14.4 | 14.5 | 13.6 | ||||||||||||||||||
| Patient days: | |||||||||||||||||||||||||
| Medicare | 252,195 | 234,490 | 223,639 | 226,662 | 239,759 | 230,122 | 222,704 | ||||||||||||||||||
| Medicaid | 28,765 | 30,425 | 31,569 | 29,799 | 32,909 | 32,821 | 30,786 | ||||||||||||||||||
| Medicare Advantage | 43,016 | 43,040 | 41,842 | 43,784 | 44,979 | 44,094 | 40,901 | ||||||||||||||||||
| Medicaid Managed | 8,808 | 8,342 | 8,264 | 8,238 | 10,733 | 13,247 | 16,595 | ||||||||||||||||||
| Commercial insurance and other | 63,227 | 57,091 | 59,575 | 57,334 | 62,858 | 61,892 | 60,187 | ||||||||||||||||||
| 396,011 | 373,388 | 364,889 | 365,817 | 391,238 | 382,176 | 371,173 | |||||||||||||||||||
| Average length of stay: | |||||||||||||||||||||||||
| Medicare | 24.5 | 24.9 | 24.8 | 24.5 | 24.3 | 24.5 | 24.2 | ||||||||||||||||||
| Medicaid | 42.0 | 40.9 | 40.1 | 41.9 | 39.4 | 35.9 | 37.0 | ||||||||||||||||||
| Medicare Advantage | 28.3 | 29.2 | 29.4 | 30.2 | 29.7 | 30.4 | 31.3 | ||||||||||||||||||
| Medicaid Managed | 42.1 | 40.1 | 36.7 | 32.7 | 33.9 | 34.8 | 32.5 | ||||||||||||||||||
| Commercial insurance and other | 32.4 | 30.5 | 31.8 | 31.5 | 29.8 | 30.1 | 32.1 | ||||||||||||||||||
| Weighted average | 27.1 | 27.2 | 27.4 | 27.1 | 26.7 | 26.9 | 27.0 | ||||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||||||||
| Condensed Business Segment Data (Continued) | ||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||
| 2013 Quarters | 2014 Quarters | |||||||||||||||||||||||||||||||
| First | Second | Third | Fourth | First | Second | Third | ||||||||||||||||||||||||||
| Hospital division data (continued): | ||||||||||||||||||||||||||||||||
| Revenues per admission: | ||||||||||||||||||||||||||||||||
| Medicare | $ | 40,051 | $ | 39,004 | $ | 38,993 | $ | 38,869 | $ | 39,482 | $ | 39,559 | $ | 38,088 | ||||||||||||||||||
| Medicaid | 51,450 | 48,221 | 51,934 | 52,635 | 50,201 | 45,392 | 49,204 | |||||||||||||||||||||||||
| Medicare Advantage | 44,326 | 45,709 | 46,429 | 49,051 | 47,739 | 48,067 | 48,586 | |||||||||||||||||||||||||
| Medicaid Managed | 58,770 | 55,496 | 52,771 | 46,112 | 47,781 | 48,953 | 44,406 | |||||||||||||||||||||||||
| Commercial insurance and other | 67,389 | 66,306 | 66,170 | 69,876 | 60,679 | 63,315 | 70,078 | |||||||||||||||||||||||||
| Weighted average | 44,939 | 44,190 | 44,609 | 45,006 | 44,181 | 44,490 | 44,353 | |||||||||||||||||||||||||
| Revenues per patient day: | ||||||||||||||||||||||||||||||||
| Medicare | $ | 1,632 | $ | 1,569 | $ | 1,571 | $ | 1,587 | $ | 1,623 | $ | 1,618 | $ | 1,577 | ||||||||||||||||||
| Medicaid | 1,225 | 1,179 | 1,296 | 1,258 | 1,274 | 1,264 | 1,328 | |||||||||||||||||||||||||
| Medicare Advantage | 1,565 | 1,565 | 1,578 | 1,624 | 1,608 | 1,580 | 1,550 | |||||||||||||||||||||||||
| Medicaid Managed | 1,395 | 1,384 | 1,437 | 1,411 | 1,411 | 1,408 | 1,367 | |||||||||||||||||||||||||
| Commercial insurance and other | 2,079 | 2,171 | 2,081 | 2,216 | 2,034 | 2,102 | 2,181 | |||||||||||||||||||||||||
| Weighted average | 1,661 | 1,625 | 1,628 | 1,659 | 1,652 | 1,654 | 1,642 | |||||||||||||||||||||||||
|
Medicare case mix index (discharged patients only) |
1.18 | 1.18 | 1.16 | 1.16 | 1.17 | 1.18 | 1.16 | |||||||||||||||||||||||||
| Average daily census | 4,400 | 4,103 | 3,966 | 3,976 | 4,347 | 4,200 | 4,034 | |||||||||||||||||||||||||
| Occupancy % | 68.3 | 63.5 | 61.1 | 61.4 | 67.4 | 64.9 | 62.3 | |||||||||||||||||||||||||
| Annualized employee turnover % | 22.1 | 21.7 | 21.4 | 21.3 | 20.7 | 20.8 | 21.5 | |||||||||||||||||||||||||
| Nursing center division data: | ||||||||||||||||||||||||||||||||
| End of period data: | ||||||||||||||||||||||||||||||||
| Number of facilities: | ||||||||||||||||||||||||||||||||
| Nursing centers: | ||||||||||||||||||||||||||||||||
| Owned or leased | 94 | 94 | 94 | 94 | 94 | 94 | 95 | |||||||||||||||||||||||||
| Managed | 4 | 4 | 4 | 4 | 4 | 4 | 4 | |||||||||||||||||||||||||
| Assisted living facilities | 6 | 6 | 6 | 6 | 6 | 6 | 6 | |||||||||||||||||||||||||
| 104 | 104 | 104 | 104 | 104 | 104 | 105 | ||||||||||||||||||||||||||
| Number of licensed beds: | ||||||||||||||||||||||||||||||||
| Nursing centers: | ||||||||||||||||||||||||||||||||
| Owned or leased | 11,921 | 11,921 | 11,921 | 11,921 | 11,921 | 11,909 | 11,993 | |||||||||||||||||||||||||
| Managed | 485 | 485 | 485 | 485 | 485 | 485 | 485 | |||||||||||||||||||||||||
| Assisted living facilities | 341 | 341 | 341 | 341 | 341 | 341 | 341 | |||||||||||||||||||||||||
| 12,747 | 12,747 | 12,747 | 12,747 | 12,747 | 12,735 | 12,819 | ||||||||||||||||||||||||||
| Revenue mix %: | ||||||||||||||||||||||||||||||||
| Medicare | 35.0 | 34.0 | 33.1 | 32.1 | 32.0 | 31.8 | 31.1 | |||||||||||||||||||||||||
| Medicaid | 35.7 | 36.4 | 38.8 | 39.8 | 40.4 | 39.7 | 40.2 | |||||||||||||||||||||||||
| Medicare Advantage | 8.2 | 8.3 | 7.3 | 7.8 | 8.6 | 8.1 | 8.6 | |||||||||||||||||||||||||
| Medicaid Managed | 3.4 | 3.5 | 3.5 | 3.5 | 3.2 | 3.6 | 4.5 | |||||||||||||||||||||||||
| Private and other | 17.7 | 17.8 | 17.3 | 16.8 | 15.8 | 16.8 | 15.6 | |||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||||||||
| Condensed Business Segment Data (Continued) | ||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||
| 2013 Quarters | 2014 Quarters | |||||||||||||||||||||||||||||||
| First | Second | Third | Fourth | First | Second | Third | ||||||||||||||||||||||||||
| Nursing center division data (continued): | ||||||||||||||||||||||||||||||||
| Patient days (a): | ||||||||||||||||||||||||||||||||
| Medicare | 167,391 | 158,780 | 154,562 | 148,179 | 148,957 | 149,385 | 144,903 | |||||||||||||||||||||||||
| Medicaid | 505,962 | 506,025 | 515,789 | 522,071 | 516,487 | 506,917 | 508,368 | |||||||||||||||||||||||||
| Medicare Advantage | 51,695 | 51,337 | 45,338 | 48,537 | 54,404 | 51,355 | 55,188 | |||||||||||||||||||||||||
| Medicaid Managed | 52,500 | 52,532 | 53,740 | 53,100 | 49,857 | 55,997 | 70,634 | |||||||||||||||||||||||||
| Private and other | 163,641 | 163,167 | 162,506 | 159,518 | 152,807 | 155,530 | 147,326 | |||||||||||||||||||||||||
| 941,189 | 931,841 | 931,935 | 931,405 | 922,512 | 919,184 | 926,419 | ||||||||||||||||||||||||||
| Patient day mix % (a): | ||||||||||||||||||||||||||||||||
| Medicare | 17.8 | 17.0 | 16.6 | 15.9 | 16.1 | 16.3 | 15.6 | |||||||||||||||||||||||||
| Medicaid | 53.7 | 54.3 | 55.3 | 56.1 | 56.0 | 55.1 | 54.9 | |||||||||||||||||||||||||
| Medicare Advantage | 5.5 | 5.5 | 4.9 | 5.2 | 5.9 | 5.6 | 6.0 | |||||||||||||||||||||||||
| Medicaid Managed | 5.6 | 5.7 | 5.8 | 5.7 | 5.4 | 6.1 | 7.6 | |||||||||||||||||||||||||
| Private and other | 17.4 | 17.5 | 17.4 | 17.1 | 16.6 | 16.9 | 15.9 | |||||||||||||||||||||||||
| Revenues per patient day (a): | ||||||||||||||||||||||||||||||||
| Medicare Part A | $ | 528 | $ | 527 | $ | 527 | $ | 542 | $ | 552 | $ | 551 | $ | 551 | ||||||||||||||||||
| Total Medicare (including Part B) | 565 | 567 | 569 | 586 | 597 | 597 | 599 | |||||||||||||||||||||||||
| Medicaid | 191 | 190 | 200 | 206 | 217 | 220 | 221 | |||||||||||||||||||||||||
| Medicaid (net of provider taxes) (b) | 168 | 168 | 178 | 184 | 195 | 197 | 202 | |||||||||||||||||||||||||
| Medicare Advantage | 427 | 430 | 428 | 435 | 441 | 442 | 436 | |||||||||||||||||||||||||
| Medicaid Managed | 177 | 177 | 175 | 177 | 178 | 180 | 180 | |||||||||||||||||||||||||
| Private and other | 292 | 289 | 283 | 284 | 288 | 302 | 296 | |||||||||||||||||||||||||
| Weighted average | 287 | 284 | 285 | 290 | 301 | 305 | 302 | |||||||||||||||||||||||||
| Average daily census (a) | 10,458 | 10,240 | 10,130 | 10,124 | 10,250 | 10,101 | 10,070 | |||||||||||||||||||||||||
| Admissions (a) | 10,806 | 10,066 | 9,824 | 9,842 | 10,252 | 10,170 | 10,221 | |||||||||||||||||||||||||
| Occupancy % (a) | 83.3 | 81.5 | 80.5 | 80.2 | 81.2 | 80.2 | 79.6 | |||||||||||||||||||||||||
| Medicare average length of stay (a) | 30.4 | 31.1 | 31.8 | 31.5 | 29.8 | 29.7 | 30.2 | |||||||||||||||||||||||||
| Annualized employee turnover % | 41.3 | 44.0 | 44.3 | 42.8 | 39.4 | 40.7 | 42.9 | |||||||||||||||||||||||||
| Rehabilitation division data: | ||||||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services: | ||||||||||||||||||||||||||||||||
| Revenue mix %: | ||||||||||||||||||||||||||||||||
| Company-operated | 11 | 11 | 11 | 12 | 12 | 12 | 12 | |||||||||||||||||||||||||
| Non-affiliated | 89 | 89 | 89 | 88 | 88 | 88 | 88 | |||||||||||||||||||||||||
| Sites of service (at end of period) | 1,729 | 1,713 | 1,768 | 1,806 | 1,851 | 1,863 | 1,896 | |||||||||||||||||||||||||
| Revenue per site | $ | 149,653 | $ | 145,736 | $ | 138,762 | $ | 134,707 | $ | 137,361 | $ | 136,333 | $ | 130,296 | ||||||||||||||||||
| Therapist productivity % | 81.1 | 80.4 | 79.8 | 79.5 | 80.0 | 79.8 | 79.6 | |||||||||||||||||||||||||
| Hospital rehabilitation services: | ||||||||||||||||||||||||||||||||
| Revenue mix %: | ||||||||||||||||||||||||||||||||
| Company-operated | 32 | 33 | 33 | 30 | 31 | 30 | 30 | |||||||||||||||||||||||||
| Non-affiliated | 68 | 67 | 67 | 70 | 69 | 70 | 70 | |||||||||||||||||||||||||
| Sites of service (at end of period): | ||||||||||||||||||||||||||||||||
| Inpatient rehabilitation units | 103 | 103 | 99 | 104 | 105 | 104 | 102 | |||||||||||||||||||||||||
| LTAC hospitals | 123 | 123 | 122 | 121 | 121 | 118 | 117 | |||||||||||||||||||||||||
| Sub-acute units | 8 | 8 | 7 | 10 | 10 | 9 | 10 | |||||||||||||||||||||||||
| Outpatient units | 98 | 104 | 104 | 144 | 143 | 143 | 139 | |||||||||||||||||||||||||
| 332 | 338 | 332 | 379 | 379 | 374 | 368 | ||||||||||||||||||||||||||
| Revenue per site | $ | 224,466 | $ | 206,441 | $ | 205,711 | $ | 195,296 | $ | 195,157 | $ | 201,400 | $ | 203,284 | ||||||||||||||||||
| Annualized employee turnover % | 10.4 | 13.2 | 14.0 | 13.7 | 12.5 | 14.7 | 15.7 | |||||||||||||||||||||||||
| (a) | Excludes managed facilities. | |||||||||||||||||||||||||||||||
| (b) | Provider taxes are recorded in other operating expenses for all periods presented. | |||||||||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||||||||||||||||||||
| Earnings (Loss) Per Common Share Reconciliation (a) | ||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||||||||||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||||||||||||||||||
| Basic | Diluted | Basic | Diluted | Basic | Diluted | Basic | Diluted | |||||||||||||||||||||||||||||||||||||
| Earnings (loss): | ||||||||||||||||||||||||||||||||||||||||||||
| Amounts attributable to Kindred stockholders: | ||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations: | ||||||||||||||||||||||||||||||||||||||||||||
| As reported in Statement of Operations | $ | 1,774 | $ | 1,774 | $ | (16,603 | ) | $ | (16,603 | ) | $ | (6,662 | ) | $ | (6,662 | ) | $ | 7,417 | $ | 7,417 | ||||||||||||||||||||||||
|
Allocation to participating unvested restricted stockholders |
(45 | ) | (45 | ) | - | - | - | - | (234 | ) | (234 | ) | ||||||||||||||||||||||||||||||||
| Available to common stockholders | $ | 1,729 | $ | 1,729 | $ | (16,603 | ) | $ | (16,603 | ) | $ | (6,662 | ) | $ | (6,662 | ) | $ | 7,183 | $ | 7,183 | ||||||||||||||||||||||||
| Discontinued operations, net of income taxes: | ||||||||||||||||||||||||||||||||||||||||||||
| Loss from operations: | ||||||||||||||||||||||||||||||||||||||||||||
| As reported in Statement of Operations | $ | (7,523 | ) | $ | (7,523 | ) | $ | (25,379 | ) | $ | (25,379 | ) | $ | (21,854 | ) | $ | (21,854 | ) | $ | (31,720 | ) | $ | (31,720 | ) | ||||||||||||||||||||
|
Allocation to participating unvested restricted stockholders |
191 | 191 | - | - | - | - | 1,000 | 1,000 | ||||||||||||||||||||||||||||||||||||
| Available to common stockholders | $ | (7,332 | ) | $ | (7,332 | ) | $ | (25,379 | ) | $ | (25,379 | ) | $ | (21,854 | ) | $ | (21,854 | ) | $ | (30,720 | ) | $ | (30,720 | ) | ||||||||||||||||||||
| Gain (loss) on divestiture of operations: | ||||||||||||||||||||||||||||||||||||||||||||
| As reported in Statement of Operations | $ | 1,387 | $ | 1,387 | $ | (65,016 | ) | $ | (65,016 | ) | $ | (3,637 | ) | $ | (3,637 | ) | $ | (77,893 | ) | $ | (77,893 | ) | ||||||||||||||||||||||
|
Allocation to participating unvested restricted stockholders |
(35 | ) | (35 | ) | - | - | - | - | 2,456 | 2,455 | ||||||||||||||||||||||||||||||||||
| Available to common stockholders | $ | 1,352 | $ | 1,352 | $ | (65,016 | ) | $ | (65,016 | ) | $ | (3,637 | ) | $ | (3,637 | ) | $ | (75,437 | ) | $ | (75,438 | ) | ||||||||||||||||||||||
| Loss from discontinued operations: | ||||||||||||||||||||||||||||||||||||||||||||
| As reported in Statement of Operations | $ | (6,136 | ) | $ | (6,136 | ) | $ | (90,395 | ) | $ | (90,395 | ) | $ | (25,491 | ) | $ | (25,491 | ) | $ | (109,613 | ) | $ | (109,613 | ) | ||||||||||||||||||||
|
Allocation to participating unvested restricted stockholders |
156 | 156 | - | - | - | - | 3,456 | 3,455 | ||||||||||||||||||||||||||||||||||||
| Available to common stockholders | $ | (5,980 | ) | $ | (5,980 | ) | $ | (90,395 | ) | $ | (90,395 | ) | $ | (25,491 | ) | $ | (25,491 | ) | $ | (106,157 | ) | $ | (106,158 | ) | ||||||||||||||||||||
| Net loss: | ||||||||||||||||||||||||||||||||||||||||||||
| As reported in Statement of Operations | $ | (4,362 | ) | $ | (4,362 | ) | $ | (106,998 | ) | $ | (106,998 | ) | $ | (32,153 | ) | $ | (32,153 | ) | $ | (102,196 | ) | $ | (102,196 | ) | ||||||||||||||||||||
|
Allocation to participating unvested restricted stockholders |
111 | 111 | - | - | - | - | 3,222 | 3,221 | ||||||||||||||||||||||||||||||||||||
| Available to common stockholders | $ | (4,251 | ) | $ | (4,251 | ) | $ | (106,998 | ) | $ | (106,998 | ) | $ | (32,153 | ) | $ | (32,153 | ) | $ | (98,974 | ) | $ | (98,975 | ) | ||||||||||||||||||||
| Shares used in the computation: | ||||||||||||||||||||||||||||||||||||||||||||
|
Weighted average shares outstanding - basic computation |
62,863 | 62,863 | 52,323 | 52,323 | 56,443 | 56,443 | 52,218 | 52,218 | ||||||||||||||||||||||||||||||||||||
| Dilutive effect of employee stock options | 39 | - | - | 16 | ||||||||||||||||||||||||||||||||||||||||
| Adjusted weighted average shares outstanding - | ||||||||||||||||||||||||||||||||||||||||||||
| diluted computation |
|
62,902 |
|
52,323 |
|
56,443 |
|
52,234 | ||||||||||||||||||||||||||||||||||||
| Earnings (loss) per common share: | ||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.03 | $ | 0.03 | $ | (0.31 | ) | $ | (0.31 | ) | $ | (0.12 | ) | $ | (0.12 | ) | $ | 0.14 | $ | 0.14 | ||||||||||||||||||||||||
| Discontinued operations: | ||||||||||||||||||||||||||||||||||||||||||||
| Loss from operations | (0.12 | ) | (0.12 | ) | (0.49 | ) | (0.49 | ) | (0.39 | ) | (0.39 | ) | (0.59 | ) | (0.59 | ) | ||||||||||||||||||||||||||||
| Gain (loss) on divestiture of operations | 0.02 | 0.02 | (1.24 | ) | (1.24 | ) | (0.06 | ) | (0.06 | ) | (1.44 | ) | (1.44 | ) | ||||||||||||||||||||||||||||||
| Loss from discontinued operations | (0.10 | ) | (0.10 | ) | (1.73 | ) | (1.73 | ) | (0.45 | ) | (0.45 | ) | (2.03 | ) | (2.03 | ) | ||||||||||||||||||||||||||||
| Net loss | $ | (0.07 | ) | $ | (0.07 | ) | $ | (2.04 | ) | $ | (2.04 | ) | $ | (0.57 | ) | $ | (0.57 | ) | $ | (1.89 | ) | $ | (1.89 | ) | ||||||||||||||||||||
| (a) | Earnings (loss) per common share are based upon the weighted average number of common shares outstanding during the respective periods. The diluted calculation of earnings per common share includes the dilutive effect of stock options. The Company follows the provisions of the authoritative guidance for determining whether instruments granted in share-based payment transactions are participating securities, which requires that certain unvested restricted stock be included as a participating security in the basic and diluted earnings per common share calculation pursuant to the two-class method. | |||||||||||||||||||||||||||||||||||||||||||
| 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 and nine months ended September 30, 2014 and 2013 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 31.2% and 29.6% for the three months ended September 30, 2014 and 2013, respectively, and 36.5% and 33.9% for the nine months ended September 30, 2014 and 2013, respectively. The difference in the effective income tax rate for the three months and nine months ended September 30, 2014 compared to the same prior year periods is attributable to the composition of charges that are non-deductible for income tax purposes. |
||||||||||||||||||||||
|
The use of these non-GAAP measurements 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 and nine months ended September 30, 2014 and 2013 that the Company believes are not representative of its ongoing operations due to the materiality and nature of the charges. The Company's core operating results also represent a key performance measure for the purpose of evaluating performance internally. |
||||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
| Detail of charges: | ||||||||||||||||||||||
| One-time bonus costs | $ | - | $ | - | $ | - | ($19,842 | ) | ||||||||||||||
| Severance, retirement and other restructuring costs | (1,686 | ) | (1,894 | ) | (6,636 | ) | (1,894 | ) | ||||||||||||||
| Customer bankruptcy | (1,857 | ) | - | (1,857 | ) | - | ||||||||||||||||
| Facility closing costs | - | (6,043 | ) | - | (6,043 | ) | ||||||||||||||||
| Litigation costs | - | (23,850 | ) | (4,600 | ) | (23,850 | ) | |||||||||||||||
| Debt refinancing charges (other operating expenses) | - | (459 | ) | - | (459 | ) | ||||||||||||||||
| Transaction costs | (4,114 | ) | (613 | ) | (9,293 | ) | (1,665 | ) | ||||||||||||||
| Lease cancellation charges (rent expense) | - | - | (247 | ) | - | |||||||||||||||||
| Debt refinancing charges (interest expense) | - | (96 | ) | (56,643 | ) | (1,461 | ) | |||||||||||||||
| (7,657 | ) | (32,955 | ) | (79,276 | ) | (55,214 | ) | |||||||||||||||
| Income tax benefit | 2,391 | 9,767 | 28,936 | 18,728 | ||||||||||||||||||
| Charges net of income taxes | (5,266 | ) | (23,188 | ) | (50,340 | ) | (36,486 | ) | ||||||||||||||
| Allocation to participating unvested restricted stockholders | 133 | - | - | 1,150 | ||||||||||||||||||
| Available to common stockholders | ($5,133 | ) | ($23,188 | ) | ($50,340 | ) | ($35,336 | ) | ||||||||||||||
| Weighted average diluted shares outstanding | 62,902 | 52,323 | 56,443 | 52,234 | ||||||||||||||||||
| Diluted loss per common share related to charges | ($0.08 | ) | ($0.44 | ) | ($0.89 | ) | ($0.67 | ) | ||||||||||||||
| Reconciliation of operating income (EBITDAR) before charges: | ||||||||||||||||||||||
| Operating income (EBITDAR) before charges | $ | 158,270 | $ | 148,245 | $ | 518,156 | $ | 499,124 | ||||||||||||||
| Detail of charges excluded from core operating results: | ||||||||||||||||||||||
| One-time bonus costs | - | - | - | (19,842 | ) | |||||||||||||||||
| Severance, retirement and other restructuring costs | (1,686 | ) | (1,894 | ) | (6,636 | ) | (1,894 | ) | ||||||||||||||
| Customer bankruptcy | (1,857 | ) | - | (1,857 | ) | - | ||||||||||||||||
| Facility closing costs | - | (6,043 | ) | - | (6,043 | ) | ||||||||||||||||
| Litigation costs | - | (23,850 | ) | (4,600 | ) | (23,850 | ) | |||||||||||||||
| Debt refinancing charges (other operating expenses) | - | (459 | ) | - | (459 | ) | ||||||||||||||||
| Transaction costs | (4,114 | ) | (613 | ) | (9,293 | ) | (1,665 | ) | ||||||||||||||
| (7,657 | ) | (32,859 | ) | (22,386 | ) | (53,753 | ) | |||||||||||||||
| Reported operating income (EBITDAR) | $ | 150,613 | $ | 115,386 | $ | 495,770 | $ | 445,371 | ||||||||||||||
| Reconciliation of income from continuing operations before charges: | ||||||||||||||||||||||
| Amounts attributable to Kindred stockholders: | ||||||||||||||||||||||
| Income from continuing operations before charges | $ | 7,040 | $ | 6,585 | $ | 43,678 | $ | 43,903 | ||||||||||||||
| Charges net of income taxes | (5,266 | ) | (23,188 | ) | (50,340 | ) | (36,486 | ) | ||||||||||||||
| Reported income (loss) from continuing operations | $ | 1,774 | ($16,603 | ) | ($6,662 | ) | $ | 7,417 | ||||||||||||||
|
Reconciliation of diluted income per common share from continuing operations before charges: |
||||||||||||||||||||||
| Diluted income per common share before charges (a) | $ | 0.11 | $ | 0.12 | $ | 0.75 | $ | 0.81 | ||||||||||||||
| Charges net of income taxes | (0.08 | ) | (0.44 | ) | (0.89 | ) | (0.67 | ) | ||||||||||||||
| Other | - | 0.01 | 0.02 | - | ||||||||||||||||||
| Reported diluted income (loss) per common share from continuing operations | $ | 0.03 | ($0.31 | ) | ($0.12 | ) | $ | 0.14 | ||||||||||||||
|
Weighted average diluted shares used to compute income per common share from continuing operations before charges |
62,902 | 52,333 | 56,506 | 52,234 | ||||||||||||||||||
| Pro forma diluted income per common share before charges | $ | 0.10 | $ | 0.77 | ||||||||||||||||||
|
Weighted average diluted shares used to compute pro forma income per common share from continuing operations before charges (b) |
61,954 | 55,674 | ||||||||||||||||||||
| Reconciliation of effective income tax rate before charges: | ||||||||||||||||||||||
| Effective income tax rate before charges | 32.4 | % | 30.5 | % | 36.2 | % | 38.1 | % | ||||||||||||||
| Impact of charges on effective income tax rate | 1.0 | % | -1.3 | % | -2.6 | % | 12.9 | % | ||||||||||||||
| Reported effective income tax rate | 33.4 | % | 29.2 | % | 33.6 | % | 51.0 | % | ||||||||||||||
| (a) | For purposes of computing diluted earnings per common share before charges, income from continuing operations before charges was reduced by $0.2 million for both the three months ended September 30, 2014 and 2013, and $1.2 million and $1.4 million for the nine months ended September 30, 2014 and 2013, respectively, for the allocation of income to participating unvested restricted stockholders. | |||||||||||||||||||||
| (b) | Includes the incremental 9.7 million shares, on a weighted average basis, issued in connection with the Company's equity offering completed in June 2014. | |||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Non-GAAP Measurements to GAAP Results (Continued) | ||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||||||||||||||
| Three months ended September 30, 2014 | ||||||||||||||||||||||||||||||||||||||||||||
| Charges | ||||||||||||||||||||||||||||||||||||||||||||
| Severance | ||||||||||||||||||||||||||||||||||||||||||||
| Before | and other | Customer | Transaction | As | ||||||||||||||||||||||||||||||||||||||||
| charges | restructuring | bankruptcy | costs | Total | reported | |||||||||||||||||||||||||||||||||||||||
| Income from continuing operations: | ||||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss): | ||||||||||||||||||||||||||||||||||||||||||||
| Hospital division | $ | 122,361 | $ | (617 | ) | $ | - | $ | - | $ | (617 | ) | $ | 121,744 | ||||||||||||||||||||||||||||||
| Nursing center division | 36,662 | (483 | ) | - | - | (483 | ) | 36,179 | ||||||||||||||||||||||||||||||||||||
| Rehabilitation division: | ||||||||||||||||||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services | 17,390 | 162 | - | - | 162 | 17,552 | ||||||||||||||||||||||||||||||||||||||
| Hospital rehabilitation services | 20,130 | - | (1,857 | ) | - | (1,857 | ) | 18,273 | ||||||||||||||||||||||||||||||||||||
| 37,520 | 162 | (1,857 | ) | - | (1,695 | ) | 35,825 | |||||||||||||||||||||||||||||||||||||
| Care management division | 7,110 | (321 | ) | - | - | (321 | ) | 6,789 | ||||||||||||||||||||||||||||||||||||
| Corporate: | ||||||||||||||||||||||||||||||||||||||||||||
| Overhead | (44,746 | ) | (427 | ) | - | - | (427 | ) | (45,173 | ) | ||||||||||||||||||||||||||||||||||
| Insurance subsidiary | (637 | ) | - | - | - | - | (637 | ) | ||||||||||||||||||||||||||||||||||||
| (45,383 | ) | (427 | ) | - | - | (427 | ) | (45,810 | ) | |||||||||||||||||||||||||||||||||||
| Transaction costs | - | - | - | (4,114 | ) | (4,114 | ) | (4,114 | ) | |||||||||||||||||||||||||||||||||||
| Operating income (EBITDAR) | 158,270 | (1,686 | ) | (1,857 | ) | (4,114 | ) | (7,657 | ) | 150,613 | ||||||||||||||||||||||||||||||||||
| Rent | (80,192 | ) | - | - | - | - | (80,192 | ) | ||||||||||||||||||||||||||||||||||||
| EBITDA | 78,078 | (1,686 | ) | (1,857 | ) | (4,114 | ) | (7,657 | ) | 70,421 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (39,023 | ) | - | - | - | - | (39,023 | ) | ||||||||||||||||||||||||||||||||||||
| Interest, net | (22,173 | ) | - | - | - | - | (22,173 | ) | ||||||||||||||||||||||||||||||||||||
|
Income from continuing operations before income taxes |
16,882 | (1,686 | ) | (1,857 | ) | (4,114 | ) | (7,657 | ) | 9,225 | ||||||||||||||||||||||||||||||||||
| Provision for income taxes | 5,470 | (923 | ) | (1,017 | ) | (451 | ) | (2,391 | ) | 3,079 | ||||||||||||||||||||||||||||||||||
| $ | 11,412 | $ | (763 | ) | $ | (840 | ) | $ | (3,663 | ) | $ | (5,266 | ) | $ | 6,146 | |||||||||||||||||||||||||||||
| Three months ended September 30, 2013 | ||||||||||||||||||||||||||||||||||||||||||||
| Charges | ||||||||||||||||||||||||||||||||||||||||||||
| Severance | ||||||||||||||||||||||||||||||||||||||||||||
| Before | and | Facility | Debt | Transaction | As | |||||||||||||||||||||||||||||||||||||||
| charges | retirement | closing | Litigation | refinancing | costs | Total | reported | |||||||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations: | ||||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss): | ||||||||||||||||||||||||||||||||||||||||||||
| Hospital division | $ | 118,710 | $ | - | $ | (5,527 | ) | $ | (700 | ) | $ | - | $ | - | $ | (6,227 | ) | $ | 112,483 | |||||||||||||||||||||||||
| Nursing center division | 31,569 | - | (64 | ) | - | - | - | (64 | ) | 31,505 | ||||||||||||||||||||||||||||||||||
| Rehabilitation division: | ||||||||||||||||||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services | 15,941 | - | - | (23,150 | ) | - | - | (23,150 | ) | (7,209 | ) | |||||||||||||||||||||||||||||||||
| Hospital rehabilitation services | 18,503 | (288 | ) | - | - | - | - | (288 | ) | 18,215 | ||||||||||||||||||||||||||||||||||
| 34,444 | (288 | ) | - | (23,150 | ) | - | - | (23,438 | ) | 11,006 | ||||||||||||||||||||||||||||||||||
| Care management division | 2,138 | (601 | ) | (452 | ) | - | - | - | (1,053 | ) | 1,085 | |||||||||||||||||||||||||||||||||
| Corporate: | ||||||||||||||||||||||||||||||||||||||||||||
| Overhead | (37,693 | ) | (1,005 | ) | - | - | (459 | ) | - | (1,464 | ) | (39,157 | ) | |||||||||||||||||||||||||||||||
| Insurance subsidiary | (482 | ) | - | - | - | - | - | - | (482 | ) | ||||||||||||||||||||||||||||||||||
| (38,175 | ) | (1,005 | ) | - | - | (459 | ) | - | (1,464 | ) | (39,639 | ) | ||||||||||||||||||||||||||||||||
| Impairment charges | (441 | ) | - | - | - | - | - | - | (441 | ) | ||||||||||||||||||||||||||||||||||
| Transaction costs | - | - | - | - | - | (613 | ) | (613 | ) | (613 | ) | |||||||||||||||||||||||||||||||||
| Operating income (EBITDAR) | 148,245 | (1,894 | ) | (6,043 | ) | (23,850 | ) | (459 | ) | (613 | ) | (32,859 | ) | 115,386 | ||||||||||||||||||||||||||||||
| Rent | (76,762 | ) | - | - | - | - | - | - | (76,762 | ) | ||||||||||||||||||||||||||||||||||
| EBITDA | 71,483 | (1,894 | ) | (6,043 | ) | (23,850 | ) | (459 | ) | (613 | ) | (32,859 | ) | 38,624 | ||||||||||||||||||||||||||||||
| Depreciation and amortization | (36,507 | ) | - | - | - | - | - | - | (36,507 | ) | ||||||||||||||||||||||||||||||||||
| Interest, net | (24,293 | ) | - | - | - | (96 | ) | - | (96 | ) | (24,389 | ) | ||||||||||||||||||||||||||||||||
|
Income (loss) from continuing operations before income taxes |
10,683 | (1,894 | ) | (6,043 | ) | (23,850 | ) | (555 | ) | (613 | ) | (32,955 | ) | (22,272 | ) | |||||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 3,257 | (2,044 | ) | (5,805 | ) | (756 | ) | (599 | ) | (563 | ) | (9,767 | ) | (6,510 | ) | |||||||||||||||||||||||||||||
| $ | 7,426 | $ | 150 | $ | (238 | ) | $ | (23,094 | ) | $ | 44 | $ | (50 | ) | $ | (23,188 | ) | $ | (15,762 | ) | ||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Non-GAAP Measurements to GAAP Results (Continued) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Nine months ended September 30, 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Charges | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Severance | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Before | and other | Customer | Debt | Transaction | As | ||||||||||||||||||||||||||||||||||||||||||||||
| charges | restructuring | bankruptcy | Litigation | refinancing | costs | Total | reported | ||||||||||||||||||||||||||||||||||||||||||||
| Income from continuing operations: | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Hospital division | $ | 405,234 | $ | (617 | ) | $ | - | $ | (4,600 | ) | $ | - | $ | - | $ | (5,217 | ) | $ | 400,017 | ||||||||||||||||||||||||||||||||
| Nursing center division | 115,218 | (3,688 | ) | - | - | - | - | (3,688 | ) | 111,530 | |||||||||||||||||||||||||||||||||||||||||
| Rehabilitation division: | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services | 55,876 | (14 | ) | - | - | - | - | (14 | ) | 55,862 | |||||||||||||||||||||||||||||||||||||||||
| Hospital rehabilitation services | 60,204 | (170 | ) | (1,857 | ) | - | - | - | (2,027 | ) | 58,177 | ||||||||||||||||||||||||||||||||||||||||
| 116,080 | (184 | ) | (1,857 | ) | - | - | - | (2,041 | ) | 114,039 | |||||||||||||||||||||||||||||||||||||||||
| Care management division | 19,715 | (1,164 | ) | - | - | - | - | (1,164 | ) | 18,551 | |||||||||||||||||||||||||||||||||||||||||
| Corporate: | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Overhead | (136,605 | ) | (983 | ) | - | - | - | - | (983 | ) | (137,588 | ) | |||||||||||||||||||||||||||||||||||||||
| Insurance subsidiary | (1,486 | ) | - | - | - | - | - | - | (1,486 | ) | |||||||||||||||||||||||||||||||||||||||||
| (138,091 | ) | (983 | ) | - | - | - | - | (983 | ) | (139,074 | ) | ||||||||||||||||||||||||||||||||||||||||
| Transaction costs | - | - | - | - | - | (9,293 | ) | (9,293 | ) | (9,293 | ) | ||||||||||||||||||||||||||||||||||||||||
| Operating income (EBITDAR) | 518,156 | (6,636 | ) | (1,857 | ) | (4,600 | ) | - | (9,293 | ) | (22,386 | ) | 495,770 | ||||||||||||||||||||||||||||||||||||||
| Rent | (241,202 | ) | (247 | ) | - | - | - | - | (247 | ) | (241,449 | ) | |||||||||||||||||||||||||||||||||||||||
| EBITDA | 276,954 | (6,883 | ) | (1,857 | ) | (4,600 | ) | - | (9,293 | ) | (22,633 | ) | 254,321 | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (117,802 | ) | - | - | - | - | - | - | (117,802 | ) | |||||||||||||||||||||||||||||||||||||||||
| Interest, net | (69,227 | ) | - | - | - | (56,643 | ) | - | (56,643 | ) | (125,870 | ) | |||||||||||||||||||||||||||||||||||||||
|
Income from continuing operations before income taxes |
89,925 | (6,883 | ) | (1,857 | ) | (4,600 | ) | (56,643 | ) | (9,293 | ) | (79,276 | ) | 10,649 | |||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 32,518 | (2,700 | ) | (729 | ) | (1,805 | ) | (22,222 | ) | (1,480 | ) | (28,936 | ) | 3,582 | |||||||||||||||||||||||||||||||||||||
| $ | 57,407 | $ | (4,183 | ) | $ | (1,128 | ) | $ | (2,795 | ) | $ | (34,421 | ) | $ | (7,813 | ) | $ | (50,340 | ) | $ | 7,067 | ||||||||||||||||||||||||||||||
| Nine months ended September 30, 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Charges | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Severance | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Before | One-time | and | Facility | Debt | Transaction | As | |||||||||||||||||||||||||||||||||||||||||||||
| charges | bonus | retirement | closing | Litigation | refinancing | costs | Total | reported | |||||||||||||||||||||||||||||||||||||||||||
| Income from continuing operations: | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Hospital division | $ | 403,332 | $ | (7,763 | ) | $ | - | $ | (5,527 | ) | $ | (700 | ) | $ | - | $ | - | $ | (13,990 | ) | $ | 389,342 | |||||||||||||||||||||||||||||
| Nursing center division | 101,356 | (4,624 | ) | - | (64 | ) | - | - | - | (4,688 | ) | 96,668 | |||||||||||||||||||||||||||||||||||||||
| Rehabilitation division: | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services | 55,855 | (5,052 | ) | - | - | (23,150 | ) | - | - | (28,202 | ) | 27,653 | |||||||||||||||||||||||||||||||||||||||
| Hospital rehabilitation services | 57,463 | (1,255 | ) | (288 | ) | - | - | - | - | (1,543 | ) | 55,920 | |||||||||||||||||||||||||||||||||||||||
| 113,318 | (6,307 | ) | (288 | ) | - | (23,150 | ) | - | - | (29,745 | ) | 83,573 | |||||||||||||||||||||||||||||||||||||||
| Care management division | 9,718 | (833 | ) | (601 | ) | (452 | ) | - | - | - | (1,886 | ) | 7,832 | ||||||||||||||||||||||||||||||||||||||
| Corporate: | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Overhead | (126,159 | ) | (315 | ) | (1,005 | ) | - | - | (459 | ) | - | (1,779 | ) | (127,938 | ) | ||||||||||||||||||||||||||||||||||||
| Insurance subsidiary | (1,375 | ) | - | - | - | - | - | - | - | (1,375 | ) | ||||||||||||||||||||||||||||||||||||||||
| (127,534 | ) | (315 | ) | (1,005 | ) | - | - | (459 | ) | - | (1,779 | ) | (129,313 | ) | |||||||||||||||||||||||||||||||||||||
| Impairment charges | (1,066 | ) | - | - | - | - | - | - | - | (1,066 | ) | ||||||||||||||||||||||||||||||||||||||||
| Transaction costs | - | - | - | - | - | - | (1,665 | ) | (1,665 | ) | (1,665 | ) | |||||||||||||||||||||||||||||||||||||||
| Operating income (EBITDAR) | 499,124 | (19,842 | ) | (1,894 | ) | (6,043 | ) | (23,850 | ) | (459 | ) | (1,665 | ) | (53,753 | ) | 445,371 | |||||||||||||||||||||||||||||||||||
| Rent | (230,605 | ) | - | - | - | - | - | - | (230,605 | ) | |||||||||||||||||||||||||||||||||||||||||
| EBITDA | 268,519 | (19,842 | ) | (1,894 | ) | (6,043 | ) | (23,850 | ) | (459 | ) | (1,665 | ) | (53,753 | ) | 214,766 | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (116,659 | ) | - | - | - | - | - | - | - | (116,659 | ) | ||||||||||||||||||||||||||||||||||||||||
| Interest, net | (78,602 | ) | - | - | - | - | (1,461 | ) | - | (1,461 | ) | (80,063 | ) | ||||||||||||||||||||||||||||||||||||||
|
Income from continuing operations before income taxes |
73,258 | (19,842 | ) | (1,894 | ) | (6,043 | ) | (23,850 | ) | (1,920 | ) | (1,665 | ) | (55,214 | ) | 18,044 | |||||||||||||||||||||||||||||||||||
| Provision for income taxes | 27,931 | (11,869 | ) | (1,133 | ) | (3,218 | ) | (419 | ) | (1,148 | ) | (941 | ) | (18,728 | ) | 9,203 | |||||||||||||||||||||||||||||||||||
| $ | 45,327 | $ | (7,973 | ) | $ | (761 | ) | $ | (2,825 | ) | $ | (23,431 | ) | $ | (772 | ) | $ | (724 | ) | $ | (36,486 | ) | $ | 8,841 | |||||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||
| Reconciliation of Non-GAAP Measurements to GAAP Results (Continued) | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| The Company recognizes that free cash flows excluding certain items is a non-GAAP measurement and is not intended to replace the presentation of the Company's cash flows in accordance with GAAP. The Company believes that this non-GAAP measurement provides 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 free cash flows excluding certain items in making decisions related to acquisitions, development capital expenditures, dividends, long-term debt repayments and other uses. | ||||||||||||||||||||||||
| The income tax benefit associated with the excluded payments was calculated using an effective income tax rate of 21.7% and 24.8% for the three months ended September 30, 2014 and 2013, respectively, and 30.3% and 34.1% for the nine months ended September 30, 2014 and 2013, respectively. The difference in the effective income tax rate for the three months and nine months ended September 30, 2014 compared to the same prior year periods is attributable to the composition of excludable payments that are non-deductible for income tax purposes. | ||||||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
|
Reconciliation of net cash flows provided by operating activities to free cash flows: |
||||||||||||||||||||||||
| Net cash flows provided by operating activities | $ | 90,039 | $ | 110,750 | $ | 24,322 | $ | 189,217 | ||||||||||||||||
|
Adjustments to remove certain payments (including payments made for discontinued operations) included in net cash flows provided by operating activities: |
||||||||||||||||||||||||
| Litigation | - | - | 25,850 | - | ||||||||||||||||||||
| One-time employee bonus | - | - | - | 26,345 | ||||||||||||||||||||
| Capitalized lender fees related to debt refinancing | - | 4,589 | 19,125 | 6,189 | ||||||||||||||||||||
| Other debt refinancing costs (expensed) | - | - | 40,373 | - | ||||||||||||||||||||
| Severance, retirement and retention | 1,271 | 1,181 | 6,649 | 4,789 | ||||||||||||||||||||
| Transaction costs | 4,565 | 6,362 | 8,741 | 8,550 | ||||||||||||||||||||
| 5,836 | 12,132 | 100,738 | 45,873 | |||||||||||||||||||||
|
Benefit of reduced income tax payments resulting from certain payments |
(1,269 | ) | (3,013 | ) | (30,477 | ) | (15,649 | ) | ||||||||||||||||
| 4,567 | 9,119 | 70,261 | 30,224 | |||||||||||||||||||||
| Net cash flows provided by operating activities excluding certain items | 94,606 | 119,869 | 94,583 | 219,441 | ||||||||||||||||||||
| Less: | ||||||||||||||||||||||||
| Routine capital expenditures | (21,263 | ) | (23,152 | ) | (67,425 | ) | (62,952 | ) | ||||||||||||||||
| Development capital expenditures | (1,570 | ) | (3,235 | ) | (2,693 | ) | (10,709 | ) | ||||||||||||||||
| (22,833 | ) | (26,387 | ) | (70,118 | ) | (73,661 | ) | |||||||||||||||||
| Free cash flows excluding certain items | $ | 71,773 | $ | 93,482 | $ | 24,465 | $ | 145,780 | ||||||||||||||||
| KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||
| Reconciliation of Earnings Guidance for 2014 - Continuing Operations (a) | |||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||
| (In millions, except per share amounts) | |||||||||||||||||||||||||
| As of November 5, 2014 | As of August 6, 2014 | ||||||||||||||||||||||||
| Low | High | Low | High | ||||||||||||||||||||||
| Revenues | $ | 5,100 | $ | 5,100 | $ | 5,100 | $ | 5,100 | |||||||||||||||||
| Operating income (EBITDAR) | $ | 692 | $ | 702 | $ | 707 | $ | 724 | |||||||||||||||||
| Rent | 322 | 322 | 330 | 330 | |||||||||||||||||||||
| EBITDA | 370 | 380 | 377 | 394 | |||||||||||||||||||||
| Depreciation and amortization | 157 | 157 | 161 | 161 | |||||||||||||||||||||
| Interest, net | 92 | 92 | 98 | 98 | |||||||||||||||||||||
| Income from continuing operations before income taxes | 121 | 131 | 118 | 135 | |||||||||||||||||||||
| Provision for income taxes | 44 | 48 | 45 | 52 | |||||||||||||||||||||
| Income from continuing operations | 77 | 83 | 73 | 83 | |||||||||||||||||||||
| Earnings attributable to noncontrolling interests | (18 | ) | (18 | ) | (15 | ) | (15 | ) | |||||||||||||||||
| Income from continuing operations attributable to the Company | 59 | 65 | 58 | 68 | |||||||||||||||||||||
| Allocation to participating unvested restricted stockholders | (2 | ) | (2 | ) | (2 | ) | (2 | ) | |||||||||||||||||
| Available to common stockholders | $ | 57 | $ | 63 | $ | 56 | $ | 66 | |||||||||||||||||
| Earnings per diluted share | $ | 0.98 | $ | 1.08 | $ | 0.96 | $ | 1.14 | |||||||||||||||||
| Shares used in computing earnings per diluted share | 58.3 | 58.3 | 58.3 | 58.3 | |||||||||||||||||||||
| As of November 5, 2014 | |||||||||||||||||||||||||
| Various non-cash expenses included in earnings guidance above: | Low | High | |||||||||||||||||||||||
| Amortization of stock-based compensation | $ | 13 | $ | 13 | |||||||||||||||||||||
| Amortization of deferred financing fees | 8 | 8 | |||||||||||||||||||||||
| Straight-line rent expense | 9 | 9 | |||||||||||||||||||||||
| (a) | The earnings guidance excludes the effect of reimbursement changes, debt refinancing costs, severance, retirement, retention and restructuring costs, customer bankruptcy costs, litigation costs, transaction costs, any further acquisitions or divestitures, any impairment charges, any further issuances of common stock, debt or mandatory convertible equity securities in conjunction with the Gentiva transaction and any repurchases of common stock. | ||||||||||||||||||||||||
