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, 2013. In connection with its previously announced repositioning plan, during the third quarter of 2013, the Company sold 15 hospitals and eight skilled nursing facilities for $227 million in cash and executed an agreement with Ventas, Inc. (“Ventas”) (NYSE:VTR) to exit 59 skilled nursing facilities and close another facility. In addition, during the first half of 2013, the Company successfully exited 54 skilled nursing facilities previously leased from Ventas. Except for the facility to be closed, the Company has reclassified the operations of these facilities (136 in number and approximately $1.3 billion in annualized revenues) as discontinued for all periods presented. 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.
Highlights:
- Consolidated revenues declined 2% to $1.2 billion
-- Federal sequestration cuts of 2% reduced revenues by approximately $13 million in the quarter
- Volume softness in hospital and nursing center divisions dampened overall third quarter results
- Free cash flows (operating cash flows in excess of routine and development capital spending and dividends) excluding certain items, surged to $85 million in the quarter, while year-to-date results totaled $135 million
- Board of Directors declared quarterly cash dividend of $0.12 per share
- Available borrowing capacity under the Company’s revolving credit facility grew to nearly $600 million at September 30, 2013
Recent Ventas Agreement and Announced Home Health and Real Estate Acquisitions Accelerate Company’s Growth and Repositioning Plan
Ventas Agreement
Paul J. Diaz, Chief Executive Officer of the Company, remarked, “Having successfully executed a favorable agreement with Ventas at the end of the third quarter, we have now established a level of certainty within the Ventas relationship that we have never before attained and we are pleased to be moving forward at an accelerated pace with our previously announced repositioning plan. Since the beginning of the year, we have essentially disposed of 136 non-strategic and, in many cases, unprofitable facilities and we are confident that our strategic disposition work will be completed in advance of our previous timeline. More importantly, as we look to the future, our divestiture activities will eliminate substantial rent obligations and provide a significant amount of capital which we intend to redeploy in home health and other strategic acquisitions in our Integrated Care Markets that will create a more valuable enterprise for our patients, employees and shareholders in 2014 and beyond.”
As previously announced, the Company entered into an agreement with Ventas on September 30, 2013, in which the Company renewed certain existing leases covering 22 transitional care (“TC”) hospitals and 26 skilled nursing facilities. In connection with the renewal of certain of these facilities, the Company agreed to pay additional annual rents aggregating $15 million beginning October 1, 2014. For accounting purposes, the Company is required to record the additional rents over the new lease term on a straight-line basis beginning on October 1, 2013, the effective date of the agreement. As a result, the Company will record incremental rent expense aggregating approximately $5 million ($0.05 per diluted share) in the fourth quarter of 2013 and approximately $13 million ($0.15 per diluted share) during the first nine months of fiscal 2014. Cash payments for the additional annual rent will not begin until October 1, 2014.
The agreement with Ventas also provided for the Company’s exit from 59 skilled nursing facilities and the closure of another facility. Under the terms of the agreement, the lease term for these facilities will expire on September 30, 2014. For accounting purposes, the Company classified the 59 skilled nursing facilities as assets held for sale and reflected the related operating results as discontinued operations in the accompanying condensed consolidated statement of operations for all historical periods. The facility scheduled for closure will be reflected as a discontinued operation upon completion of the closure process.
Under the terms of the agreement, the Company paid $20 million ($12 million net of income taxes) to Ventas on October 1, 2013 in exchange for the early termination of certain leases. In addition, the Company recorded an asset impairment charge of $8 million ($5 million net of income taxes) related to leasehold improvements in the early terminated leases. These charges were recorded in discontinued operations in the third quarter of 2013 in the accompanying condensed consolidated statement of operations.
Recent Acquisition Announcements
Earlier this week, the Company announced a definitive agreement to acquire Senior Home Care, Inc. (“Senior Home Care”), one of the largest home health providers in Florida and Louisiana with annualized revenues of approximately $143 million. The Company expects that the Senior Home Care acquisition will increase 2014 earnings by $0.07 to $0.09 per diluted share.
Mr. Diaz noted, “This transaction is another important example of how we are redeploying assets from our divestiture process and repositioning Kindred with a focus on our Integrated Care Markets and our Care Management Division, including Kindred at Home.”
In addition to the Senior Home Care acquisition, the Company also announced this week that it intends to acquire nine skilled nursing facilities that it currently leases from HCP, Inc. (NYSE:HCP) and its affiliates (“HCP”) for approximately $83 million. The annual lease payments for these facilities approximate $9 million. Kindred anticipates that the transaction with HCP will increase 2014 earnings by approximately $0.04 per diluted share.
Mr. Diaz noted, “Purchasing the real estate of these skilled nursing facilities is an important step as we continue to reduce our lease obligations, our most expensive debt, and improve the Company’s capital structure and earnings going forward.”
Third Quarter Results
Continuing Operations
Consolidated revenues for the third quarter ended September 30, 2013 declined 2% to $1.2 billion compared to $1.23 billion in the third quarter last year. The Company reported a loss from continuing operations for the third quarter of 2013 of $20.4 million or $0.39 per diluted share compared to income of $6.8 million or $0.13 per diluted share in the third quarter last year.
Third quarter 2013 operating results included pretax charges of approximately $33 million related to (1) changes in estimates related to pending litigation, (2) costs associated with the closure of a hospital and a home health location, (3) costs associated with certain severance and retirement benefits, (4) charges associated with the modification of certain of the Company’s senior debt, and (5) transaction-related costs. These items reduced income from continuing operations by $23.2 million or $0.44 per diluted share.
Third quarter 2012 operating results included certain charges that reduced income from continuing operations by $1.0 million or $0.02 per diluted share.
Mr. Diaz noted, “Our adjusted third quarter results, while soft, should be viewed in the context of the seasonal volume weakness and this extraordinarily busy period of repositioning activities related to the disposition of non-strategic assets that we have previously discussed with investors. Importantly, we also believe that investors should note the very strong free cash flows being generated by the Company that will enable us to continue to invest in future growth and support our recurring cash dividend to shareholders.”
Mr. Diaz continued, “I have great confidence in our repositioning plan and our “Continue the Care” strategy and we are well on our way in the creation of a company focused on our Integrated Care Markets, our new Care Management Division and Kindred at Home and the many benefits associated with the new business profile of Kindred. In particular, we are moving toward a path to profitability in a smaller, higher acuity, and more market-focused skilled nursing facility business. Additionally, we will improve our home health and hospice operations by investing significant resources to bring together numerous acquisitions and execute on a more standardized operating model. And finally, our hospital and RehabCare divisions continue to perform in line with our expectations so far this year despite significant regulatory headwinds in each of these businesses.”
Discontinued Operations
As previously discussed, in connection with the Company’s long-range plans to reposition its businesses and enhance its Integrated Care Market strategy, the Company has effected various transactions and entered into certain agreements to significantly change its business mix, operating profile and future business prospects during fiscal 2013. During the first nine months of 2013, the Company has exited, sold or agreed to exit 136 facilities (14 TC hospitals, one inpatient rehabilitation hospital (“IRF”) and 121 skilled nursing facilities with annualized revenues approximating $1.3 billion). For accounting purposes, the historical operating results of these businesses have been classified as discontinued operations in the Company’s accompanying condensed consolidated statement of operations for all historical periods.
During the first half of 2013, in connection with a previously executed agreement, the Company exited 54 skilled nursing facilities previously leased from Ventas. No cash consideration was paid by the Company in connection with this divestiture.
In addition to the previously discussed September agreement with Ventas, the Company sold 15 hospitals and eight skilled nursing facilities for $227 million in cash in the third quarter of 2013. Proceeds from these transactions were used to reduce the Company’s borrowings under its revolving credit facility. As previously announced, the Company recorded a significant loss from these sales primarily due to the write-off of a portion of the goodwill and intangible assets recorded in its hospital division. As a result, the loss on divestiture of discontinued operations included in the accompanying condensed consolidated statement of operations reflects a pretax loss of approximately $78 million ($64 million net of income taxes) in the third quarter of 2013 and $96 million ($75 million net of income taxes) for the nine months ended September 30, 2013 associated with these divestitures.
Earnings Guidance – Continuing Operations
The Company’s previously issued earnings guidance for continuing operations reflected the exit from 54 skilled nursing facilities previously leased from Ventas completed in the first half of 2013. However, the earnings guidance did not reflect the impact of (1) the sale of 15 hospitals and eight skilled nursing facilities or (2) the recent agreement with Ventas to exit 59 skilled nursing facilities and close another facility, both of which were completed in the third quarter of 2013.
As a result, the Company has revised its earnings guidance for 2013 to reflect the discontinued operations reclassifications recorded during the third quarter of 2013.
The guidance for earnings and cash flows excludes the effect of (1) a one-time employee bonus distributed in the first quarter of 2013, (2) changes in estimates related to pending litigation, (3) the early lease termination payment to Ventas, (4) costs associated with the closure of a hospital and a home health location, (5) costs associated with certain severance and retirement benefits, (6) any transaction-related costs, (7) charges associated with the modification of certain of the Company’s senior debt, (8) any other reimbursement changes, (9) any further acquisitions or divestitures (unless otherwise noted), (10) any impairment charges, and (11) any repurchases of common stock. A schedule detailing the financial impact of certain of these items is included elsewhere in this press release.
Revised 2013 Continuing Operations Earnings Guidance
The Company expects consolidated revenues for 2013 to approximate $4.9 billion. Operating income, or earnings before interest, income taxes, depreciation, amortization and rent, is expected to range from $657 million to $665 million. Rent expense is expected to approximate $323 million, while depreciation and amortization should approximate $159 million. Net interest expense is expected to approximate $103 million. The Company expects to report income from continuing operations for 2013 between $42 million to $47 million or $0.78 to $0.88 per diluted share (based upon diluted shares of 52.3 million). The Company’s previously issued 2013 guidance for diluted earnings per share ranged from $1.10 to $1.30.
The following table highlights the significant factors impacting the revised 2013 continuing operations earnings guidance:
| Low | High | |||||||||
| Continuing operations diluted earnings per share range as of August 5, 2013 | $ | 1.10 | $ | 1.30 | ||||||
| Estimated full-year impact of discontinued operations reclassification recorded in the third quarter of 2013 (including 23 facilities sold for cash and 59 Ventas facilities to be exited by September 30, 2014) |
(0.25 |
) |
(0.25 |
) |
||||||
| Incremental Ventas rent expense associated with renewal of certain leased facilities |
(0.05 |
) |
(0.05 |
) |
||||||
| Other changes in estimates related to ongoing operations |
(0.02 |
) |
(0.12 |
) |
||||||
| Continuing operations diluted earnings per share range as of November 5, 2013 | $ | 0.78 | $ | 0.88 | ||||||
The Company expects diluted earnings per share from continuing operations to range from $0.10 to $0.20 in the fourth quarter of 2013. Management’s estimate includes the previously discussed incremental rent charge in connection with the Ventas agreement that will reduce fourth quarter earnings by approximately $0.05 per diluted share.
Preliminary 2014 Continuing Operations Earnings Guidance
The Company also announced its preliminary earnings guidance for 2014. Consolidated revenues are expected to approximate $5.1 billion. Operating income should range from $726 million to $744 million, while rent expense is expected to approximate $339 million. Depreciation and amortization should approximate $165 million and net interest expense is expected to approximate $106 million. The Company expects to report income from continuing operations for 2014 between $58 million to $69 million or $1.05 to $1.25 per diluted share (based upon diluted shares of 53.2 million).
The Company’s 2014 earnings per share guidance includes the estimated impact of the previously announced transactions with Senior Home Care and HCP as well as $0.05 to $0.10 for the estimated impact of other acquisitions that the Company expects to complete in 2014.
The following table summarizes the Company’s 2014 preliminary earnings guidance:
| As of November 5, 2013 | ||||||||||
| Low | High | |||||||||
| Operating income | $ | 726 | $ | 744 | ||||||
| Rent | 339 | 339 | ||||||||
| Depreciation and amortization | 165 | 165 | ||||||||
| Interest, net | 106 | 106 | ||||||||
| Income from continuing operations before income taxes | 116 | 134 | ||||||||
| Provision for income taxes | 46 | 53 | ||||||||
| Income from continuing operations | 70 | 81 | ||||||||
| Earnings attributable to noncontrolling interests | (12 | ) | (12 | ) | ||||||
| Income from continuing operations attributable to the Company | 58 | 69 | ||||||||
| Allocation to participating unvested restricted stockholders | (2 | ) | (2 | ) | ||||||
| Available to common stockholders | $ | 56 | $ | 67 | ||||||
|
Earnings per diluted share |
$ |
1.05 |
$ |
1.25 |
||||||
|
Shares used in computing earnings per diluted share |
53.2 |
53.2 |
||||||||
|
|
||||||||||
Cash Flow Guidance
The Company significantly raised its operating cash flow guidance for 2013 and also announced its preliminary cash flow guidance for fiscal 2014. The following table summarizes the Company’s cash flow estimates:
| As of November 5, 2013 | As of August 5, 2013 | ||||||||||||||||||||
| 2013 | 2014 | 2013 | |||||||||||||||||||
| Low | High | Low | High | Low | High | ||||||||||||||||
| Operating cash flows | $ | 250 | $ | 260 | $ | 255 | $ | 265 | $ | 235 | $ | 255 | |||||||||
| Routine capital expenditures | 105 | 115 | 100 | 110 | 112 | 122 | |||||||||||||||
| Adjusted cash flows | 145 | 145 | 155 | 155 | 123 | 133 | |||||||||||||||
| Development capital expenditures | 12 | 12 | 19 | 19 | 20 | 30 | |||||||||||||||
| Payment of cash dividends | 13 | 13 | 26 | 26 | 13 | 13 | |||||||||||||||
| Free cash flows | $ | 120 | $ | 120 | $ | 110 | $ | 110 | $ | 90 | $ | 90 | |||||||||
Management Commentary
Commenting further on the Company’s liquidity and strategic plan, Mr. Diaz noted, “Our revised 2013 guidance reflects the impact of the divestiture portion of our repositioning plan. While initially dilutive, we have created significant levels of free cash flows and enhanced our overall financial strength and liquidity, which will now fuel substantial growth as we look to 2014 and beyond. Notably during this phase, we have:
- raised our 2013 free cash flow guidance to $120 million from $90 million
- announced our estimated 2014 free cash flow guidance (including a full year of cash dividends) at $110 million; and
- increased to nearly $600 million the availability under our revolving credit facility, the highest level in our history.
We are excited to be moving into the growth and capital redeployment phase of our strategic plan. Earlier this week, we announced definitive agreements to:
- acquire Senior Home Care, a premier home health provider with $143 million of annualized revenues and 47 locations in Florida and Louisiana, for $95 million; and
- acquire the real estate for nine of our leased skilled nursing facilities for approximately $83 million.
We believe that these transactions will add meaningfully to our 2014 earnings and beyond. In addition, we plan to aggressively pursue other Integrated Care Market acquisition opportunities that should significantly increase our core earnings over time and provide for stronger earnings growth rates going forward.”
Quarterly Cash Dividend
The Company also announced that its Board of Directors has approved the payment of the regular quarterly cash dividend to its shareholders of $0.12 per common share to be paid on December 9, 2013 to shareholders of record as of the close of business on November 18, 2013. Future declarations of quarterly dividends will be subject to the approval of Kindred’s Board of Directors.
Webcast of Conference Call and Additional Presentation Materials
As previously announced, investors and the general public can access a live webcast of the third quarter 2013 conference call through a link on the Company’s website at www.kindredhealthcare.com or by clicking here. The conference call webcast will feature related presentation materials that will be discussed during the call to be held on November 6 at 10:00 a.m. (Eastern Time).
A telephone replay of the conference call will be available at approximately 12:00 p.m. on November 6 by dialing (719) 457-0820, access code: 9286759. The replay will be available through November 16.
The additional presentation materials are available by clicking here. These materials are also available in the Investor Relations section on the Company’s website.
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. All statements regarding the Company’s expected future financial position, results of operations, cash flows, 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,” “should,” “will,” “intend,” “may” and other similar expressions, are forward-looking statements. Statements in this press release concerning the Company’s business outlook or future economic performance, anticipated profitability, revenues, expenses or other financial items, and product or services line growth, together with other statements that are not historical facts, are forward-looking statements that are estimates reflecting the best judgment of the Company based upon currently available information.
Such forward-looking statements are inherently uncertain, and stockholders and other potential investors must recognize that actual results may differ materially from the Company’s expectations as a result of a variety of factors, including, without limitation, those discussed below. Such forward-looking statements are based upon management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control, that may cause the Company’s actual results or performance to differ materially from any future results or performance 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.
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 impact of final rules issued by CMS on August 1, 2012 which, among other things, will reduce Medicare reimbursement to the Company’s TC hospitals in 2013 and beyond by imposing a budget neutrality adjustment and modifying the short-stay outlier rules, (c) the impact of 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, (d) the impact of the Budget Control Act of 2011 (as amended by the American Taxpayer Relief Act of 2012 (the “Taxpayer Relief Act”)) which will automatically reduce federal spending by approximately $1.2 trillion split evenly between domestic and defense spending. An automatic 2% reduction on each claim submitted to Medicare began on April 1, 2013, (e) the impact of the Taxpayer Relief Act which, among other things, reduces Medicare payments by 50% 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 the Company’s Medicare revenues by $25 million to $30 million on an annual basis, (f) 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 long-term acute care (“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, IRFs and home health and hospice operations, and the expiration of the Medicare Part B therapy cap exception process, (g) 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, (h) the ability of the Company’s hospitals to adjust to potential LTAC certification and medical necessity reviews, (i) the costs of defending and insuring against alleged professional liability and other claims (including those related to pending 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, including the impact of differences in actuarial assumptions and estimates compared to eventual outcomes, (j) the impact of the Company’s significant level of indebtedness on the Company’s funding costs, operating flexibility and ability to fund ongoing operations, development capital expenditures or other strategic acquisitions with additional borrowings, (k) 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, (l) 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, (m) the failure of the Company’s facilities to meet applicable licensure and certification requirements, (n) the further consolidation and cost containment efforts of managed care organizations and other third party payors, (o) the Company’s ability to meet its rental and debt service obligations, (p) the Company’s ability to operate pursuant to the terms of its debt obligations, and comply with its covenants thereunder, and its ability to operate pursuant to its master lease agreements with Ventas, (q) 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, (r) the Company’s ability to control costs, particularly labor and employee benefit costs, (s) the Company’s ability to successfully reduce or mitigate (by divestiture of operations or otherwise) its exposure to professional liability and other claims, (t) 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, (u) the potential for diversion of management time and resources in seeking to transfer the operations of 60 non-strategic nursing centers currently leased from Ventas (v) national and regional 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 2012 and 2011, (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.
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 release to compute certain non-GAAP measurements for the three months and nine months ended September 30, 2013 and 2012 before certain charges or on a core basis. A reconciliation of the non-GAAP measurements to the GAAP measurements is included in this press release.
As noted above, the Company discusses 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, 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.
As noted above, the Company’s earnings release includes a financial measure referred to as operating income, or earnings before interest, income taxes, depreciation, amortization and rent. The Company’s management uses operating income as a meaningful measure of operational performance in addition to other measures. The Company uses operating income to assess the relative performance of its operating divisions as well as the employees that operate these businesses. In addition, the Company believes this measurement is important because securities analysts and investors use this measurement 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.
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 approximately $5 billion and approximately 62,000 employees in 46 states. At September 30, 2013, Kindred through its subsidiaries provided healthcare services in 2,146 locations, including 102 transitional care hospitals, five inpatient rehabilitation hospitals, 102 nursing centers, 21 sub-acute units, 105 Kindred at Home hospice, home health and non-medical home care locations, 99 inpatient rehabilitation units (hospital-based) and a contract rehabilitation services business, RehabCare, which served 1,712 non-affiliated facilities. Ranked as one of Fortune magazine’s Most Admired Healthcare Companies for five 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, | ||||||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||
| Revenues | $ | 1,198,473 | $ | 1,226,159 | $ | 3,705,456 | $ | 3,725,151 | |||||||||||||||||
| Income (loss) from continuing operations | $ | (19,619 | ) | $ | 6,828 | $ | 1,236 | $ | 31,541 | ||||||||||||||||
| Discontinued operations, net of income taxes: | |||||||||||||||||||||||||
| Income (loss) from operations | (21,609 | ) | 3,059 | (24,287 | ) | 13,777 | |||||||||||||||||||
| Loss on divestiture of operations | (65,016 | ) | (2,280 | ) | (77,893 | ) | (3,806 | ) | |||||||||||||||||
| Income (loss) from discontinued operations | (86,625 | ) | 779 | (102,180 | ) | 9,971 | |||||||||||||||||||
| Net income (loss) | (106,244 | ) | 7,607 | (100,944 | ) | 41,512 | |||||||||||||||||||
| Earnings attributable to noncontrolling interests | (754 | ) | (41 | ) | (1,252 | ) | (253 | ) | |||||||||||||||||
| Income (loss) attributable to Kindred | $ | (106,998 | ) | $ | 7,566 | $ | (102,196 | ) | $ | 41,259 | |||||||||||||||
| Amounts attributable to Kindred stockholders: | |||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | (20,373 | ) | $ | 6,787 | $ | (16 | ) | $ | 31,288 | |||||||||||||||
| Income (loss) from discontinued operations | (86,625 | ) | 779 | (102,180 | ) | 9,971 | |||||||||||||||||||
| Net income (loss) | $ | (106,998 | ) | $ | 7,566 | $ | (102,196 | ) | $ | 41,259 | |||||||||||||||
| Earnings (loss) per common share: | |||||||||||||||||||||||||
| Basic: | |||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | (0.39 | ) | $ | 0.13 | $ | - | $ | 0.59 | ||||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||||
| Income (loss) from operations | (0.41 | ) | 0.05 | (0.47 | ) | 0.26 | |||||||||||||||||||
| Loss on divestiture of operations | (1.24 | ) | (0.04 | ) | (1.49 | ) | (0.07 | ) | |||||||||||||||||
| Income (loss) from discontinued operations | (1.65 | ) | 0.01 | (1.96 | ) | 0.19 | |||||||||||||||||||
| Net income (loss) | $ | (2.04 | ) | $ | 0.14 | $ | (1.96 | ) | $ | 0.78 | |||||||||||||||
| Diluted: | |||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | (0.39 | ) | $ | 0.13 | $ | - | $ | 0.59 | ||||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||||
| Income (loss) from operations | (0.41 | ) | 0.05 | (0.47 | ) | 0.26 | |||||||||||||||||||
| Loss on divestiture of operations | (1.24 | ) | (0.04 | ) | (1.49 | ) | (0.07 | ) | |||||||||||||||||
| Income (loss) from discontinued operations | (1.65 | ) | 0.01 | (1.96 | ) | 0.19 | |||||||||||||||||||
| Net income (loss) | $ | (2.04 | ) | $ | 0.14 | $ | (1.96 | ) | $ | 0.78 | |||||||||||||||
| Shares used in computing earnings (loss) per common share: | |||||||||||||||||||||||||
| Basic | 52,323 | 51,676 | 52,218 | 51,648 | |||||||||||||||||||||
| Diluted | 52,323 | 51,709 | 52,218 | 51,675 | |||||||||||||||||||||
| 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, | ||||||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||
| Revenues | $ | 1,198,473 | $ | 1,226,159 | $ | 3,705,456 | $ | 3,725,151 | |||||||||||||||||
| Salaries, wages and benefits | 733,605 | 754,761 | 2,264,525 | 2,282,803 | |||||||||||||||||||||
| Supplies | 81,812 | 85,129 | 251,672 | 261,586 | |||||||||||||||||||||
| Rent | 79,269 | 79,312 | 238,115 | 234,445 | |||||||||||||||||||||
| Other operating expenses | 269,927 | 230,076 | 745,556 | 699,692 | |||||||||||||||||||||
| Other (income) expense | 52 | (3,178 | ) | (983 | ) | (9,479 | ) | ||||||||||||||||||
| Impairment charges | 441 | 406 | 1,085 | 1,015 | |||||||||||||||||||||
| Depreciation and amortization | 37,591 | 41,304 | 119,872 | 121,429 | |||||||||||||||||||||
| Interest expense | 25,633 | 26,663 | 82,888 | 79,946 | |||||||||||||||||||||
| Investment income | (1,235 | ) | (212 | ) | (2,798 | ) | (753 | ) | |||||||||||||||||
| 1,227,095 | 1,214,261 | 3,699,932 | 3,670,684 | ||||||||||||||||||||||
| Income (loss) from continuing operations before income taxes | (28,622 | ) | 11,898 | 5,524 | 54,467 | ||||||||||||||||||||
| Provision (benefit) for income taxes | (9,003 | ) | 5,070 | 4,288 | 22,926 | ||||||||||||||||||||
| Income (loss) from continuing operations | (19,619 | ) | 6,828 | 1,236 | 31,541 | ||||||||||||||||||||
| Discontinued operations, net of income taxes: | |||||||||||||||||||||||||
| Income (loss) from operations | (21,609 | ) | 3,059 | (24,287 | ) | 13,777 | |||||||||||||||||||
| Loss on divestiture of operations | (65,016 | ) | (2,280 | ) | (77,893 | ) | (3,806 | ) | |||||||||||||||||
| Income (loss) from discontinued operations | (86,625 | ) | 779 | (102,180 | ) | 9,971 | |||||||||||||||||||
| Net income (loss) | (106,244 | ) | 7,607 | (100,944 | ) | 41,512 | |||||||||||||||||||
| Earnings attributable to noncontrolling interests | (754 | ) | (41 | ) | (1,252 | ) | (253 | ) | |||||||||||||||||
| Income (loss) attributable to Kindred | $ | (106,998 | ) | $ | 7,566 | $ | (102,196 | ) | $ | 41,259 | |||||||||||||||
| Amounts attributable to Kindred stockholders: | |||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | (20,373 | ) | $ | 6,787 | $ | (16 | ) | $ | 31,288 | |||||||||||||||
| Income (loss) from discontinued operations | (86,625 | ) | 779 | (102,180 | ) | 9,971 | |||||||||||||||||||
| Net income (loss) | $ | (106,998 | ) | $ | 7,566 | $ | (102,196 | ) | $ | 41,259 | |||||||||||||||
| Earnings (loss) per common share: | |||||||||||||||||||||||||
| Basic: | |||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | (0.39 | ) | $ | 0.13 | $ | - | $ | 0.59 | ||||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||||
| Income (loss) from operations | (0.41 | ) | 0.05 | (0.47 | ) | 0.26 | |||||||||||||||||||
| Loss on divestiture of operations | (1.24 | ) | (0.04 | ) | (1.49 | ) | (0.07 | ) | |||||||||||||||||
| Income (loss) from discontinued operations | (1.65 | ) | 0.01 | (1.96 | ) | 0.19 | |||||||||||||||||||
| Net income (loss) | $ | (2.04 | ) | $ | 0.14 | $ | (1.96 | ) | $ | 0.78 | |||||||||||||||
| Diluted: | |||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | (0.39 | ) | $ | 0.13 | $ | - | $ | 0.59 | ||||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||||
| Income (loss) from operations | (0.41 | ) | 0.05 | (0.47 | ) | 0.26 | |||||||||||||||||||
| Loss on divestiture of operations | (1.24 | ) | (0.04 | ) | (1.49 | ) | (0.07 | ) | |||||||||||||||||
| Income (loss) from discontinued operations | (1.65 | ) | 0.01 | (1.96 | ) | 0.19 | |||||||||||||||||||
| Net income (loss) | $ | (2.04 | ) | $ | 0.14 | $ | (1.96 | ) | $ | 0.78 | |||||||||||||||
| Shares used in computing earnings (loss) per common share: | |||||||||||||||||||||||||
| Basic | 52,323 | 51,676 | 52,218 | 51,648 | |||||||||||||||||||||
| Diluted | 52,323 | 51,709 | 52,218 | 51,675 | |||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||
| Condensed Consolidated Balance Sheet | ||||||||||||||
| (Unaudited) | ||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||
| September 30, | December 31, | |||||||||||||
| 2013 | 2012 | |||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 44,579 | $ | 50,007 | ||||||||||
| Cash - restricted | 3,953 | 5,197 | ||||||||||||
| Insurance subsidiary investments | 93,686 | 86,168 | ||||||||||||
| Accounts receivable less allowance for loss | 929,931 | 1,038,605 | ||||||||||||
| Inventories | 26,291 | 32,021 | ||||||||||||
| Deferred tax assets | 16,543 | 12,663 | ||||||||||||
| Income taxes | 43,309 | 13,573 | ||||||||||||
| Other | 40,032 | 35,532 | ||||||||||||
| 1,198,324 | 1,273,766 | |||||||||||||
| Property and equipment | 1,862,049 | 2,226,903 | ||||||||||||
| Accumulated depreciation | (997,057 | ) | (1,083,777 | ) | ||||||||||
| 864,992 | 1,143,126 | |||||||||||||
| Goodwill | 976,611 | 1,041,266 | ||||||||||||
| Intangible assets less accumulated amortization | 405,771 | 439,767 | ||||||||||||
| Assets held for sale | 22,092 | 4,131 | ||||||||||||
| Insurance subsidiary investments | 149,916 | 116,424 | ||||||||||||
| Deferred tax assets | 6,250 | - | ||||||||||||
| Other | 240,653 | 219,466 | ||||||||||||
| Total assets | $ | 3,864,609 | $ | 4,237,946 | ||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | 169,217 | $ | 210,668 | ||||||||||
| Salaries, wages and other compensation | 354,016 | 389,009 | ||||||||||||
| Due to third party payors | 52,134 | 35,420 | ||||||||||||
| Professional liability risks | 59,439 | 54,088 | ||||||||||||
| Other accrued liabilities | 184,781 | 137,204 | ||||||||||||
| Long-term debt due within one year | 8,225 | 8,942 | ||||||||||||
| 827,812 | 835,331 | |||||||||||||
| Long-term debt | 1,382,385 | 1,648,706 | ||||||||||||
| Professional liability risks | 246,482 | 236,630 | ||||||||||||
| Deferred tax liabilities | - | 9,764 | ||||||||||||
| Deferred credits and other liabilities | 220,202 | 214,671 | ||||||||||||
| Equity: | ||||||||||||||
| Stockholders' equity: | ||||||||||||||
|
Common stock, $0.25 par value; authorized 175,000 shares; issued 54,149 shares - September 30, 2013 and 53,280 shares - December 31, 2012 |
13,537 | 13,320 | ||||||||||||
| Capital in excess of par value | 1,149,521 | 1,145,922 | ||||||||||||
| Accumulated other comprehensive loss | (1,632 | ) | (1,882 | ) | ||||||||||
| Retained earnings (deficit) | (10,275 | ) | 98,799 | |||||||||||
| 1,151,151 | 1,256,159 | |||||||||||||
| Noncontrolling interests | 36,577 | 36,685 | ||||||||||||
| Total equity | 1,187,728 | 1,292,844 | ||||||||||||
| Total liabilities and equity | $ | 3,864,609 | $ | 4,237,946 | ||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||
| Condensed Consolidated Statement of Cash Flows | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||||||
| Net income (loss) | $ | (106,244 | ) | $ | 7,607 | $ | (100,944 | ) | $ | 41,512 | ||||||||||||||
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||||||||||||||||||
| Depreciation and amortization | 42,831 | 50,600 | 142,745 | 149,092 | ||||||||||||||||||||
| Amortization of stock-based compensation costs | 1,553 | 3,132 | 7,641 | 8,011 | ||||||||||||||||||||
| Amortization of deferred financing costs | 2,509 | 2,375 | 9,529 | 7,091 | ||||||||||||||||||||
| Payment of lender fees related to senior debt modifications | (4,589 | ) | - | (6,189 | ) | - | ||||||||||||||||||
| Provision for doubtful accounts | 13,152 | 9,117 | 34,489 | 22,654 | ||||||||||||||||||||
| Deferred income taxes | 2,336 | (1,235 | ) | (22,985 | ) | (18,140 | ) | |||||||||||||||||
| Impairment charges | 8,995 | 708 | 10,077 | 1,904 | ||||||||||||||||||||
| Loss on divestiture of discontinued operations | 65,016 | 2,280 | 77,893 | 3,806 | ||||||||||||||||||||
| Other | 6,316 | 786 | 5,452 | 2,753 | ||||||||||||||||||||
| Change in operating assets and liabilities: | ||||||||||||||||||||||||
| Accounts receivable | 45,862 | 13,175 | 26,745 | (67,913 | ) | |||||||||||||||||||
| Inventories and other assets | 3,467 | (5,490 | ) | 67 | (20,897 | ) | ||||||||||||||||||
| Accounts payable | (12,901 | ) | 5,281 | (31,979 | ) | (7,252 | ) | |||||||||||||||||
| Income taxes | (27,969 | ) | 7,588 | (5,269 | ) | 39,285 | ||||||||||||||||||
| Due to third party payors | 25,931 | 12,627 | 16,716 | 1,688 | ||||||||||||||||||||
| Other accrued liabilities | 44,485 | 32,938 | 25,229 | 27,493 | ||||||||||||||||||||
| Net cash provided by operating activities | 110,750 | 141,489 | 189,217 | 191,087 | ||||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||||||
| Routine capital expenditures | (23,152 | ) | (25,939 | ) | (62,952 | ) | (76,804 | ) | ||||||||||||||||
| Development capital expenditures | (3,235 | ) | (15,177 | ) | (10,709 | ) | (38,175 | ) | ||||||||||||||||
| Acquisitions, net of cash acquired | (12,173 | ) | (71,440 | ) | (39,106 | ) | (139,308 | ) | ||||||||||||||||
| Acquisition deposit | (14,675 | ) | - | (14,675 | ) | - | ||||||||||||||||||
| Sale of assets | 236,397 | - | 248,700 | 1,110 | ||||||||||||||||||||
| Purchase of insurance subsidiary investments | (7,765 | ) | (9,692 | ) | (30,360 | ) | (30,890 | ) | ||||||||||||||||
| Sale of insurance subsidiary investments | 9,899 | 8,063 | 35,427 | 30,073 | ||||||||||||||||||||
| Net change in insurance subsidiary cash and cash equivalents | (1,416 | ) | (685 | ) | (44,294 | ) | (15,171 | ) | ||||||||||||||||
| Change in other investments | (140 | ) | 1,003 | 218 | 1,454 | |||||||||||||||||||
| Other | 79 | (25 | ) | (142 | ) | (1,029 | ) | |||||||||||||||||
| Net cash provided by (used in) investing activities | 183,819 | (113,892 | ) | 82,107 | (268,740 | ) | ||||||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||||||
| Proceeds from borrowings under revolving credit | 238,900 | 364,600 | 1,100,300 | 1,329,300 | ||||||||||||||||||||
| Repayment of borrowings under revolving credit | (519,200 | ) | (390,400 | ) | (1,363,600 | ) | (1,244,900 | ) | ||||||||||||||||
| Repayment of other long-term debt | (92 | ) | (2,665 | ) | (4,818 | ) | (7,976 | ) | ||||||||||||||||
| Payment of deferred financing costs | (683 | ) | (288 | ) | (1,340 | ) | (601 | ) | ||||||||||||||||
| Contribution made by noncontrolling interests | - | - | - | 200 | ||||||||||||||||||||
| Distribution made to noncontrolling interests | (118 | ) | - | (1,628 | ) | (3,521 | ) | |||||||||||||||||
| Purchase of noncontrolling interests | - | (715 | ) | - | (715 | ) | ||||||||||||||||||
| Issuance of common stock | 222 | - | 429 | - | ||||||||||||||||||||
| Dividends paid | (6,499 | ) | - | (6,499 | ) | - | ||||||||||||||||||
| Other | 53 | - | 404 | - | ||||||||||||||||||||
| Net cash provided by (used in) financing activities | (287,417 | ) | (29,468 | ) | (276,752 | ) | 71,787 | |||||||||||||||||
| Change in cash and cash equivalents | 7,152 | (1,871 | ) | (5,428 | ) | (5,866 | ) | |||||||||||||||||
| Cash and cash equivalents at beginning of period | 37,427 | 37,566 | 50,007 | 41,561 | ||||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 44,579 | $ | 35,695 | $ | 44,579 | $ | 35,695 | ||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||||||||||||
| Condensed Consolidated Statement of Operations | ||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||||||||||||||||||
| 2012 Quarters | 2013 Quarters | |||||||||||||||||||||||||||||||||||
| First | Second | Third | Fourth | First | Second | Third | ||||||||||||||||||||||||||||||
| Revenues | $ | 1,269,884 | $ | 1,229,108 | $ | 1,226,159 | $ | 1,247,549 | $ | 1,288,867 | $ | 1,218,116 | $ | 1,198,473 | ||||||||||||||||||||||
| Salaries, wages and benefits | 780,050 | 747,992 | 754,761 | 761,494 | 799,519 | 731,401 | 733,605 | |||||||||||||||||||||||||||||
| Supplies | 89,805 | 86,652 | 85,129 | 85,535 | 86,835 | 83,025 | 81,812 | |||||||||||||||||||||||||||||
| Rent | 76,947 | 78,186 | 79,312 | 79,047 | 78,982 | 79,864 | 79,269 | |||||||||||||||||||||||||||||
| Other operating expenses | 233,198 | 236,418 | 230,076 | 227,873 | 239,402 | 236,227 | 269,927 | |||||||||||||||||||||||||||||
| Other (income) expense | (3,136 | ) | (3,165 | ) | (3,178 | ) | (3,181 | ) | (1,009 | ) | (26 | ) | 52 | |||||||||||||||||||||||
| Impairment charges | 498 | 111 | 406 | 108,127 | 187 | 457 | 441 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 39,470 | 40,655 | 41,304 | 42,623 | 42,650 | 39,631 | 37,591 | |||||||||||||||||||||||||||||
| Interest expense | 26,570 | 26,713 | 26,663 | 27,929 | 28,171 | 29,084 | 25,633 | |||||||||||||||||||||||||||||
| Investment income | (283 | ) | (258 | ) | (212 | ) | (246 | ) | (88 | ) | (1,475 | ) | (1,235 | ) | ||||||||||||||||||||||
| 1,243,119 | 1,213,304 | 1,214,261 | 1,329,201 | 1,274,649 | 1,198,188 | 1,227,095 | ||||||||||||||||||||||||||||||
|
Income (loss) from continuing operations before income taxes |
26,765 | 15,804 | 11,898 | (81,652 | ) | 14,218 | 19,928 | (28,622 | ) | |||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 11,039 | 6,817 | 5,070 | 2,870 | 5,264 | 8,027 | (9,003 | ) | ||||||||||||||||||||||||||||
| Income (loss) from continuing operations | 15,726 | 8,987 | 6,828 | (84,522 | ) | 8,954 | 11,901 | (19,619 | ) | |||||||||||||||||||||||||||
| Discontinued operations, net of income taxes: | ||||||||||||||||||||||||||||||||||||
| Income (loss) from operations | 4,086 | 6,632 | 3,059 | 4,625 | (3,456 | ) | 778 | (21,609 | ) | |||||||||||||||||||||||||||
| Loss on divestiture of operations | (1,170 | ) | (356 | ) | (2,280 | ) | (939 | ) | (2,025 | ) | (10,852 | ) | (65,016 | ) | ||||||||||||||||||||||
| Income (loss) from discontinued operations | 2,916 | 6,276 | 779 | 3,686 | (5,481 | ) | (10,074 | ) | (86,625 | ) | ||||||||||||||||||||||||||
| Net income (loss) | 18,642 | 15,263 | 7,607 | (80,836 | ) | 3,473 | 1,827 | (106,244 | ) | |||||||||||||||||||||||||||
| (Earnings) loss attributable to noncontrolling interests | (451 | ) | 239 | (41 | ) | (790 | ) | (416 | ) | (82 | ) | (754 | ) | |||||||||||||||||||||||
| Income (loss) attributable to Kindred | $ | 18,191 | $ | 15,502 | $ | 7,566 | $ | (81,626 | ) | $ | 3,057 | $ | 1,745 | $ | (106,998 | ) | ||||||||||||||||||||
| Amounts attributable to Kindred stockholders: | ||||||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 15,275 | $ | 9,226 | $ | 6,787 | $ | (85,312 | ) | $ | 8,538 | $ | 11,819 | $ | (20,373 | ) | ||||||||||||||||||||
| Income (loss) from discontinued operations | 2,916 | 6,276 | 779 | 3,686 | (5,481 | ) | (10,074 | ) | (86,625 | ) | ||||||||||||||||||||||||||
| Net income (loss) | $ | 18,191 | $ | 15,502 | $ | 7,566 | $ | (81,626 | ) | $ | 3,057 | $ | 1,745 | $ | (106,998 | ) | ||||||||||||||||||||
| Earnings (loss) per common share: | ||||||||||||||||||||||||||||||||||||
| Basic: | ||||||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.29 | $ | 0.17 | $ | 0.13 | $ | (1.65 | ) | $ | 0.16 | $ | 0.22 | $ | (0.39 | ) | ||||||||||||||||||||
| Discontinued operations: | ||||||||||||||||||||||||||||||||||||
| Income (loss) from operations | 0.08 | 0.13 | 0.05 | 0.09 | (0.06 | ) | 0.01 | (0.41 | ) | |||||||||||||||||||||||||||
| Loss on divestiture of operations | (0.02 | ) | (0.01 | ) | (0.04 | ) | (0.02 | ) | (0.04 | ) | (0.20 | ) | (1.24 | ) | ||||||||||||||||||||||
| Income (loss) from discontinued operations | 0.06 | 0.12 | 0.01 | 0.07 | (0.10 | ) | (0.19 | ) | (1.65 | ) | ||||||||||||||||||||||||||
| Net income (loss) | $ | 0.35 | $ | 0.29 | $ | 0.14 | $ | (1.58 | ) | $ | 0.06 | $ | 0.03 | $ | (2.04 | ) | ||||||||||||||||||||
| Diluted: | ||||||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.29 | $ | 0.17 | $ | 0.13 | $ | (1.65 | ) | $ | 0.16 | $ | 0.22 | $ | (0.39 | ) | ||||||||||||||||||||
| Discontinued operations: | ||||||||||||||||||||||||||||||||||||
| Income (loss) from operations | 0.08 | 0.13 | 0.05 | 0.09 | (0.06 | ) | 0.01 | (0.41 | ) | |||||||||||||||||||||||||||
| Loss on divestiture of operations | (0.02 | ) | (0.01 | ) | (0.04 | ) | (0.02 | ) | (0.04 | ) | (0.20 | ) | (1.24 | ) | ||||||||||||||||||||||
| Income (loss) from discontinued operations | 0.06 | 0.12 | 0.01 | 0.07 | (0.10 | ) | (0.19 | ) | (1.65 | ) | ||||||||||||||||||||||||||
| Net income (loss) | $ | 0.35 | $ | 0.29 | $ | 0.14 | $ | (1.58 | ) | $ | 0.06 | $ | 0.03 | $ | (2.04 | ) | ||||||||||||||||||||
|
Shares used in computing earnings (loss) per common share: |
||||||||||||||||||||||||||||||||||||
| Basic | 51,603 | 51,664 | 51,676 | 51,692 | 52,062 | 52,265 | 52,323 | |||||||||||||||||||||||||||||
| Diluted | 51,638 | 51,675 | 51,709 | 51,692 | 52,083 | 52,284 | 52,323 | |||||||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||||||||||||||
| Condensed Business Segment Data | ||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||||||||
| 2012 Quarters | 2013 Quarters | |||||||||||||||||||||||||||||||||||||
| First | Second | Third | Fourth | First | Second | Third | ||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||
| Hospital division | $ | 683,068 | $ | 648,152 | $ | 636,463 | $ | 647,794 | $ | 677,246 | $ | 623,877 | $ | 608,506 | ||||||||||||||||||||||||
| Nursing center division | 285,032 | 279,353 | 282,223 | 283,451 | 283,771 | 278,191 | 277,668 | |||||||||||||||||||||||||||||||
| Rehabilitation division: | ||||||||||||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services | 253,595 | 253,181 | 252,201 | 244,558 | 257,585 | 248,331 | 243,968 | |||||||||||||||||||||||||||||||
| Hospital rehabilitation services | 74,369 | 73,402 | 71,899 | 73,910 | 74,523 | 69,777 | 68,296 | |||||||||||||||||||||||||||||||
| 327,964 | 326,583 | 324,100 | 318,468 | 332,108 | 318,108 | 312,264 | ||||||||||||||||||||||||||||||||
| Home health and hospice division | 28,432 | 28,872 | 35,943 | 50,093 | 51,621 | 53,039 | 53,801 | |||||||||||||||||||||||||||||||
| 1,324,496 | 1,282,960 | 1,278,729 | 1,299,806 | 1,344,746 | 1,273,215 | 1,252,239 | ||||||||||||||||||||||||||||||||
| Eliminations: | ||||||||||||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services | (28,953 | ) | (28,481 | ) | (27,805 | ) | (26,788 | ) | (30,161 | ) | (30,122 | ) | (29,414 | ) | ||||||||||||||||||||||||
| Hospital rehabilitation services | (25,023 | ) | (24,496 | ) | (23,904 | ) | (24,463 | ) | (24,505 | ) | (23,976 | ) | (23,191 | ) | ||||||||||||||||||||||||
| Nursing centers | (636 | ) | (875 | ) | (861 | ) | (1,006 | ) | (1,213 | ) | (1,001 | ) | (1,161 | ) | ||||||||||||||||||||||||
| (54,612 | ) | (53,852 | ) | (52,570 | ) | (52,257 | ) | (55,879 | ) | (55,099 | ) | (53,766 | ) | |||||||||||||||||||||||||
| $ | 1,269,884 | $ | 1,229,108 | $ | 1,226,159 | $ | 1,247,549 | $ | 1,288,867 | $ | 1,218,116 | $ | 1,198,473 | |||||||||||||||||||||||||
| Income (loss) from continuing operations: | ||||||||||||||||||||||||||||||||||||||
| Operating income (loss): | ||||||||||||||||||||||||||||||||||||||
| Hospital division | $ | 151,491 | $ | 131,933 | $ | 130,798 | $ | 146,649 | $ | 149,644 | $ | 131,958 | $ | 112,290 | (a) | |||||||||||||||||||||||
| Nursing center division | 32,810 | 35,030 | 37,865 | 31,276 | 28,519 | 35,381 | 30,304 | |||||||||||||||||||||||||||||||
| Rehabilitation division: | ||||||||||||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services | 10,904 | 19,519 | 16,996 | 21,074 | 12,074 | 20,307 | (8,571 | ) | (b) | |||||||||||||||||||||||||||||
| Hospital rehabilitation services | 16,116 | 17,860 | 16,977 | 18,792 | 18,132 | 19,573 | 18,215 | (c) | ||||||||||||||||||||||||||||||
| 27,020 | 37,379 | 33,973 | 39,866 | 30,206 | 39,880 | 9,644 | ||||||||||||||||||||||||||||||||
| Home health and hospice division | 2,341 | 2,789 | 3,645 | 4,933 | 2,786 | 3,961 | 1,085 | (d) | ||||||||||||||||||||||||||||||
| Corporate: | ||||||||||||||||||||||||||||||||||||||
| Overhead | (42,728 | ) | (44,723 | ) | (45,883 | ) | (45,729 | ) | (45,582 | ) | (43,199 | ) | (39,151 | ) | (e) | |||||||||||||||||||||||
| Insurance subsidiary | (482 | ) | (600 | ) | (545 | ) | (500 | ) | (509 | ) | (384 | ) | (482 | ) | ||||||||||||||||||||||||
| (43,210 | ) | (45,323 | ) | (46,428 | ) | (46,229 | ) | (46,091 | ) | (43,583 | ) | (39,633 | ) | |||||||||||||||||||||||||
| Impairment charges | (498 | ) | (111 | ) | (406 | ) | (108,127 | ) | (187 | ) | (457 | ) | (441 | ) | ||||||||||||||||||||||||
| Transaction costs | (485 | ) | (597 | ) | (482 | ) | (667 | ) | (944 | ) | (108 | ) | (613 | ) | ||||||||||||||||||||||||
| Operating income | 169,469 | 161,100 | 158,965 | 67,701 | 163,933 | 167,032 | 112,636 | |||||||||||||||||||||||||||||||
| Rent | (76,947 | ) | (78,186 | ) | (79,312 | ) | (79,047 | ) | (78,982 | ) | (79,864 | ) | (79,269 | ) | ||||||||||||||||||||||||
| Depreciation and amortization | (39,470 | ) | (40,655 | ) | (41,304 | ) | (42,623 | ) | (42,650 | ) | (39,631 | ) | (37,591 | ) | ||||||||||||||||||||||||
| Interest, net | (26,287 | ) | (26,455 | ) | (26,451 | ) | (27,683 | ) | (28,083 | ) | (27,609 | ) | (24,398 | ) | (f) | |||||||||||||||||||||||
|
Income (loss) from continuing operations before income taxes |
26,765 | 15,804 | 11,898 | (81,652 | ) | 14,218 | 19,928 | (28,622 | ) | |||||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 11,039 | 6,817 | 5,070 | 2,870 | 5,264 | 8,027 | (9,003 | ) | ||||||||||||||||||||||||||||||
| $ | 15,726 | $ | 8,987 | $ | 6,828 | $ | (84,522 | ) | $ | 8,954 | $ | 11,901 | $ | (19,619 | ) | |||||||||||||||||||||||
| (a) | Includes costs of $5.5 million in connection with the closing of a TC hospital and a litigation charge of $0.7 million. | |||||||||||||||||||||||||||||||||||||
| (b) | Includes $23.1 million of litigation charges. | |||||||||||||||||||||||||||||||||||||
| (c) | Includes $0.3 million of severance and retirement costs. | |||||||||||||||||||||||||||||||||||||
| (d) | Includes $0.6 million of severance and retirement costs and $0.5 million of costs associated with closing a home health location. | |||||||||||||||||||||||||||||||||||||
| (e) | 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. | |||||||||||||||||||||||||||||||||||||
| (f) | Includes $0.1 million of charges associated with the modification of certain of the Company's senior debt. | |||||||||||||||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||||||||||||||||||||
| Condensed Consolidating Statement of Operations | ||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||||||||||||||
| Three months ended September 30, 2013 | ||||||||||||||||||||||||||||||||||||||||||||
| Nursing | Rehabilitation division | Home | Transaction- | |||||||||||||||||||||||||||||||||||||||||
| Hospital | center | Skilled nursing | Hospital | health and | related | |||||||||||||||||||||||||||||||||||||||
| division (a) | division | services (b) | services (c) | Total | hospice (d) | Corporate (e) | costs | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||
| Revenues | $ | 608,506 | $ | 277,668 | $ | 243,968 | $ | 68,296 | $ | 312,264 | $ | 53,801 | $ | - | $ | - | $ | (53,766 | ) | $ | 1,198,473 | |||||||||||||||||||||||
| Salaries, wages and benefits | 269,295 | 134,068 | 220,267 | 45,872 | 266,139 | 43,184 | 21,022 | - | (103 | ) | 733,605 | |||||||||||||||||||||||||||||||||
| Supplies | 65,351 | 13,155 | 750 | 28 | 778 | 2,277 | 251 | - | - | 81,812 | ||||||||||||||||||||||||||||||||||
| Rent | 50,929 | 25,450 | 1,123 | 19 | 1,142 | 1,193 | 555 | - | - | 79,269 | ||||||||||||||||||||||||||||||||||
| Other operating expenses | 161,568 | 100,321 | 31,342 | 4,150 | 35,492 | 7,237 | 18,359 | 613 | (53,663 | ) | 269,927 | |||||||||||||||||||||||||||||||||
| Other (income) expense | 2 | (180 | ) | 180 | 31 | 211 | 18 | 1 | - | - | 52 | |||||||||||||||||||||||||||||||||
| Impairment charges | 418 | 23 | - | - | - | - | - | - | - | 441 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 17,483 | 6,830 | 2,461 | 2,281 | 4,742 | 1,638 | 6,898 | - | - | 37,591 | ||||||||||||||||||||||||||||||||||
| Interest expense | 203 | 13 | 63 | - | 63 | 6 | 25,348 | - | - | 25,633 | ||||||||||||||||||||||||||||||||||
| Investment income | (8 | ) | (19 | ) | (50 | ) | - | (50 | ) | - | (1,158 | ) | - | - | (1,235 | ) | ||||||||||||||||||||||||||||
| 565,241 | 279,661 | 256,136 | 52,381 | 308,517 | 55,553 | 71,276 | 613 | (53,766 | ) | 1,227,095 | ||||||||||||||||||||||||||||||||||
|
Income (loss) from continuing operations before income taxes |
$ | 43,265 | $ | (1,993 | ) | $ | (12,168 | ) | $ | 15,915 | $ | 3,747 | $ | (1,752 | ) | $ | (71,276 | ) | $ | (613 | ) | $ | - | (28,622 | ) | |||||||||||||||||||
| Income tax benefit | (9,003 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Loss from continuing operations | $ | (19,619 | ) | |||||||||||||||||||||||||||||||||||||||||
|
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 | |||||||||||||||||||||||||
| Three months ended September 30, 2012 | ||||||||||||||||||||||||||||||||||||||||||||
| Nursing | Rehabilitation division | Home | Transaction- | |||||||||||||||||||||||||||||||||||||||||
| Hospital | center | Skilled nursing | Hospital | health and | related | |||||||||||||||||||||||||||||||||||||||
| division (f) | division | services | services | Total | hospice | Corporate | costs | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||
| Revenues | $ | 636,463 | $ | 282,223 | $ | 252,201 | $ | 71,899 | $ | 324,100 | $ | 35,943 | $ | - | $ | - | $ | (52,570 | ) | $ | 1,226,159 | |||||||||||||||||||||||
| Salaries, wages and benefits | 283,611 | 138,153 | 224,283 | 50,724 | 275,007 | 26,332 | 32,008 | (350 | ) | - | 754,761 | |||||||||||||||||||||||||||||||||
| Supplies | 67,820 | 14,831 | 704 | 33 | 737 | 1,557 | 184 | - | - | 85,129 | ||||||||||||||||||||||||||||||||||
| Rent | 52,197 | 24,300 | 1,356 | 2 | 1,358 | 805 | 652 | - | - | 79,312 | ||||||||||||||||||||||||||||||||||
| Other operating expenses | 154,286 | 91,769 | 10,216 | 4,165 | 14,381 | 4,409 | 16,969 | 832 | (52,570 | ) | 230,076 | |||||||||||||||||||||||||||||||||
| Other (income) expense | (52 | ) | (395 | ) | 2 | - | 2 | - | (2,733 | ) | - | - | (3,178 | ) | ||||||||||||||||||||||||||||||
| Impairment charges | 284 | 122 | - | - | - | - | - | - | - | 406 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 20,060 | 7,298 | 2,811 | 2,328 | 5,139 | 1,137 | 7,670 | - | - | 41,304 | ||||||||||||||||||||||||||||||||||
| Interest expense | 231 | 15 | 36 | - | 36 | 4 | 26,377 | - | - | 26,663 | ||||||||||||||||||||||||||||||||||
| Investment income | (5 | ) | (17 | ) | - | - | - | - | (190 | ) | - | - | (212 | ) | ||||||||||||||||||||||||||||||
| 578,432 | 276,076 | 239,408 | 57,252 | 296,660 | 34,244 | 80,937 | 482 | (52,570 | ) | 1,214,261 | ||||||||||||||||||||||||||||||||||
|
Income from continuing operations before income taxes |
$ | 58,031 | $ | 6,147 | $ | 12,793 | $ | 14,647 | $ | 27,440 | $ | 1,699 | $ | (80,937 | ) | $ | (482 | ) | $ | - | 11,898 | |||||||||||||||||||||||
| Provision for income taxes | 5,070 | |||||||||||||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 6,828 | ||||||||||||||||||||||||||||||||||||||||||
|
Capital expenditures, excluding acquisitions (including discontinued operations): |
||||||||||||||||||||||||||||||||||||||||||||
| Routine | $ | 9,015 | $ | 4,965 | $ | 707 | $ | 125 | $ | 832 | $ | 160 | $ | 10,967 | $ | - | $ | - | $ | 25,939 | ||||||||||||||||||||||||
| Development | 14,334 | 843 | - | - | - | - | - | - | - | 15,177 | ||||||||||||||||||||||||||||||||||
| $ | 23,349 | $ | 5,808 | $ | 707 | $ | 125 | $ | 832 | $ | 160 | $ | 10,967 | $ | - | $ | - | $ | 41,116 | |||||||||||||||||||||||||
| (a) | Includes costs of $5.5 million in connection with the closing of a TC hospital and a litigation charge of $0.7 million. | |||||||||||||||||||||||||||||||||||||||||||
| (b) | Includes $23.1 million of litigation charges. | |||||||||||||||||||||||||||||||||||||||||||
| (c) | Includes $0.3 million of severance and retirement costs. | |||||||||||||||||||||||||||||||||||||||||||
| (d) | Includes $0.6 million of severance and retirement costs and $0.5 million of costs associated with closing a home health location. | |||||||||||||||||||||||||||||||||||||||||||
| (e) | Includes $1.0 million of severance and retirement costs and $0.6 million of fees and charges associated with the modification of certain of the Company’s senior debt. | |||||||||||||||||||||||||||||||||||||||||||
| (f) | Includes a lease cancellation charge of $0.6 million incurred in connection with the closing of a TC hospital. | |||||||||||||||||||||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||||||||||||||||||||
| Condensed Consolidating Statement of Operations | ||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||||||||||||||
| Nine months ended September 30, 2013 | ||||||||||||||||||||||||||||||||||||||||||||
| Nursing | Rehabilitation division | Home | Transaction- | |||||||||||||||||||||||||||||||||||||||||
| Hospital | center | Skilled nursing | Hospital | health and | Corporate | related | ||||||||||||||||||||||||||||||||||||||
| division (a,b) | division (a) | services (a,c) | services (a,d) | Total | hospice (a,e) | (a,f) | costs | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||
| Revenues | $ | 1,909,629 | $ | 839,630 | $ | 749,884 | $ | 212,596 | $ | 962,480 | $ | 158,461 | $ | - | $ | - | $ | (164,744 | ) | $ | 3,705,456 | |||||||||||||||||||||||
| Salaries, wages and benefits | 837,573 | 408,679 | 674,985 | 144,528 | 819,513 | 123,228 | 75,943 | - | (411 | ) | 2,264,525 | |||||||||||||||||||||||||||||||||
| Supplies | 201,579 | 40,178 | 2,346 | 90 | 2,436 | 6,840 | 639 | - | - | 251,672 | ||||||||||||||||||||||||||||||||||
| Rent | 153,021 | 76,144 | 3,555 | 55 | 3,610 | 3,534 | 1,806 | - | - | 238,115 | ||||||||||||||||||||||||||||||||||
| Other operating expenses | 476,508 | 297,405 | 48,524 | 11,999 | 60,523 | 20,543 | 53,245 | 1,665 | (164,333 | ) | 745,556 | |||||||||||||||||||||||||||||||||
| Other (income) expense | 77 | (836 | ) | 219 | 59 | 278 | 18 | (520 | ) | - | - | (983 | ) | |||||||||||||||||||||||||||||||
| Impairment charges | 1,002 | 83 | - | - | - | - | - | - | - | 1,085 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 56,202 | 21,642 | 8,451 | 6,931 | 15,382 | 4,779 | 21,867 | - | - | 119,872 | ||||||||||||||||||||||||||||||||||
| Interest expense | 564 | 41 | 232 | - | 232 | 6 | 82,045 | - | - | 82,888 | ||||||||||||||||||||||||||||||||||
| Investment income | (16 | ) | (42 | ) | (152 | ) | - | (152 | ) | - | (2,588 | ) | - | - | (2,798 | ) | ||||||||||||||||||||||||||||
| 1,726,510 | 843,294 | 738,160 | 163,662 | 901,822 | 158,948 | 232,437 | 1,665 | (164,744 | ) | 3,699,932 | ||||||||||||||||||||||||||||||||||
|
Income (loss) from continuing operations before income taxes |
$ | 183,119 | $ | (3,664 | ) | $ | 11,724 | $ | 48,934 | $ | 60,658 | $ | (487 | ) | $ | (232,437 | ) | $ | (1,665 | ) | $ | - | 5,524 | |||||||||||||||||||||
| Provision for income taxes | 4,288 | |||||||||||||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 1,236 | ||||||||||||||||||||||||||||||||||||||||||
|
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 | |||||||||||||||||||||||||
| Nine months ended September 30, 2012 | ||||||||||||||||||||||||||||||||||||||||||||
| Nursing | Rehabilitation division | Home | Transaction- | |||||||||||||||||||||||||||||||||||||||||
| Hospital | center | Skilled nursing | Hospital | health and | related | |||||||||||||||||||||||||||||||||||||||
| division (g) | division (h) | services | services | Total | hospice | Corporate | costs | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||
| Revenues | $ | 1,967,683 | $ | 846,608 | $ | 758,977 | $ | 219,670 | $ | 978,647 | $ | 93,247 | $ | - | $ | - | $ | (161,034 | ) | $ | 3,725,151 | |||||||||||||||||||||||
| Salaries, wages and benefits | 864,779 | 418,487 | 682,940 | 155,404 | 838,344 | 68,829 | 92,783 | (350 | ) | (69 | ) | 2,282,803 | ||||||||||||||||||||||||||||||||
| Supplies | 210,106 | 44,697 | 2,251 | 127 | 2,378 | 3,826 | 579 | - | - | 261,586 | ||||||||||||||||||||||||||||||||||
| Rent | 153,790 | 72,487 | 4,204 | 119 | 4,323 | 2,029 | 1,816 | - | - | 234,445 | ||||||||||||||||||||||||||||||||||
| Other operating expenses | 478,923 | 278,697 | 26,365 | 13,163 | 39,528 | 11,817 | 49,778 | 1,914 | (160,965 | ) | 699,692 | |||||||||||||||||||||||||||||||||
| Other (income) expense | (347 | ) | (978 | ) | 2 | 23 | 25 | - | (8,179 | ) | - | - | (9,479 | ) | ||||||||||||||||||||||||||||||
| Impairment charges | 636 | 379 | - | - | - | - | - | - | - | 1,015 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 59,247 | 21,123 | 8,223 | 6,975 | 15,198 | 2,960 | 22,901 | - | - | 121,429 | ||||||||||||||||||||||||||||||||||
| Interest expense | 810 | 52 | 36 | - | 36 | 4 | 79,044 | - | - | 79,946 | ||||||||||||||||||||||||||||||||||
| Investment income | (46 | ) | (39 | ) | (1 | ) | - | (1 | ) | - | (667 | ) | - | - | (753 | ) | ||||||||||||||||||||||||||||
| 1,767,898 | 834,905 | 724,020 | 175,811 | 899,831 | 89,465 | 238,055 | 1,564 | (161,034 | ) | 3,670,684 | ||||||||||||||||||||||||||||||||||
|
Income from continuing operations before income taxes |
$ | 199,785 | $ | 11,703 | $ | 34,957 | $ | 43,859 | $ | 78,816 | $ | 3,782 | $ | (238,055 | ) | $ | (1,564 | ) | $ | - | 54,467 | |||||||||||||||||||||||
| Provision for income taxes | 22,926 | |||||||||||||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 31,541 | ||||||||||||||||||||||||||||||||||||||||||
|
Capital expenditures, excluding acquisitions (including discontinued operations): |
||||||||||||||||||||||||||||||||||||||||||||
| Routine | $ | 28,455 | $ | 12,611 | $ | 1,602 | $ | 231 | $ | 1,833 | $ | 429 | $ | 33,476 | $ | - | $ | - | $ | 76,804 | ||||||||||||||||||||||||
| Development | 35,572 | 2,603 | - | - | - | - | - | - | - | 38,175 | ||||||||||||||||||||||||||||||||||
| $ | 64,027 | $ | 15,214 | $ | 1,602 | $ | 231 | $ | 1,833 | $ | 429 | $ | 33,476 | $ | - | $ | - | $ | 114,979 | |||||||||||||||||||||||||
| (a) |
Includes one-time bonus costs of $20.4 million (hospital division - $8.0 million, nursing center division - $5.0 million, rehabilitation division - $6.3 million (skilled nursing rehabilitation services - $5.0 million and hospital rehabilitation services - $1.3 million), home health and hospice division - $0.8 million and corporate - $0.3 million). |
|||||||||||||||||||||||||||||||||||||||||||
| (b) | Includes costs of $5.5 million in connection with the closing of a TC hospital and a litigation charge of $0.7 million. | |||||||||||||||||||||||||||||||||||||||||||
| (c) | Includes $23.1 million of litigation charges. | |||||||||||||||||||||||||||||||||||||||||||
| (d) | Includes $0.3 million of severance and retirement costs. | |||||||||||||||||||||||||||||||||||||||||||
| (e) | Includes $0.6 million of severance and retirement costs and $0.5 million of costs associated with closing a home health location. | |||||||||||||||||||||||||||||||||||||||||||
| (f) | Includes $1.0 million of severance and retirement costs and $2.0 million of fees and charges associated with the modification of certain of the Company’s senior debt. | |||||||||||||||||||||||||||||||||||||||||||
| (g) |
Includes severance ($2.5 million), other miscellaneous costs ($1.1 million) and lease cancellation charges ($1.5 million) incurred in connection with the closing of a regional office and two TC hospitals and $5.0 million for employment-related lawsuits. |
|||||||||||||||||||||||||||||||||||||||||||
| (h) | Includes $0.9 million incurred in connection with the cancellation of a sub-acute unit project. | |||||||||||||||||||||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||
| Condensed Business Segment Data | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| 2012 Quarters | 2013 Quarters | |||||||||||||||||||||||||
| First | Second | Third | Fourth | First | Second | Third | ||||||||||||||||||||
| Hospital division data: | ||||||||||||||||||||||||||
| End of period data: | ||||||||||||||||||||||||||
| Number of hospitals: | ||||||||||||||||||||||||||
| Transitional care | 104 | 103 | 102 | 102 | 102 | 102 | 102 | |||||||||||||||||||
| Inpatient rehabilitation | 5 | 5 | 5 | 5 | 5 | 5 | 5 | |||||||||||||||||||
| 109 | 108 | 107 | 107 | 107 | 107 | 107 | ||||||||||||||||||||
| Number of licensed beds: | ||||||||||||||||||||||||||
| Transitional care | 7,469 | 7,419 | 7,380 | 7,380 | 7,380 | 7,380 | 7,394 | |||||||||||||||||||
| Inpatient rehabilitation | 185 | 215 | 215 | 215 | 215 | 215 | 215 | |||||||||||||||||||
| 7,654 | 7,634 | 7,595 | 7,595 | 7,595 | 7,595 | 7,609 | ||||||||||||||||||||
| Revenue mix %: | ||||||||||||||||||||||||||
| Medicare | 63 | 62 | 61 | 63 | 63 | 61 | 59 | |||||||||||||||||||
| Medicaid | 6 | 6 | 6 | 6 | 5 | 6 | 7 | |||||||||||||||||||
| Medicare Advantage | 10 | 11 | 11 | 10 | 10 | 11 | 11 | |||||||||||||||||||
| Commercial insurance and other | 21 | 21 | 22 | 21 | 22 | 22 | 23 | |||||||||||||||||||
| Admissions: | ||||||||||||||||||||||||||
| Medicare | 10,767 | 9,989 | 9,831 | 9,936 | 10,649 | 9,756 | 9,266 | |||||||||||||||||||
| Medicaid | 925 | 919 | 915 | 839 | 685 | 744 | 789 | |||||||||||||||||||
| Medicare Advantage | 1,532 | 1,649 | 1,494 | 1,453 | 1,583 | 1,537 | 1,461 | |||||||||||||||||||
| Commercial insurance and other | 2,546 | 2,342 | 2,357 | 2,247 | 2,226 | 2,121 | 2,144 | |||||||||||||||||||
| 15,770 | 14,899 | 14,597 | 14,475 | 15,143 | 14,158 | 13,660 | ||||||||||||||||||||
| Admissions mix %: | ||||||||||||||||||||||||||
| Medicare | 68 | 67 | 68 | 69 | 70 | 69 | 68 | |||||||||||||||||||
| Medicaid | 6 | 6 | 6 | 6 | 5 | 5 | 6 | |||||||||||||||||||
| Medicare Advantage | 10 | 11 | 10 | 10 | 10 | 11 | 11 | |||||||||||||||||||
| Commercial insurance and other | 16 | 16 | 16 | 15 | 15 | 15 | 15 | |||||||||||||||||||
| Patient days: | ||||||||||||||||||||||||||
| Medicare | 264,930 | 250,081 | 244,189 | 248,315 | 261,311 | 241,790 | 230,780 | |||||||||||||||||||
| Medicaid | 32,848 | 30,568 | 33,671 | 31,697 | 28,776 | 30,447 | 31,608 | |||||||||||||||||||
| Medicare Advantage | 43,392 | 46,071 | 44,138 | 42,458 | 44,639 | 44,695 | 43,391 | |||||||||||||||||||
| Commercial insurance and other | 75,351 | 73,331 | 72,394 | 69,552 | 73,512 | 66,706 | 68,583 | |||||||||||||||||||
| 416,521 | 400,051 | 394,392 | 392,022 | 408,238 | 383,638 | 374,362 | ||||||||||||||||||||
| Average length of stay: | ||||||||||||||||||||||||||
| Medicare | 24.6 | 25.0 | 24.8 | 25.0 | 24.5 | 24.8 | 24.9 | |||||||||||||||||||
| Medicaid | 35.5 | 33.3 | 36.8 | 37.8 | 42.0 | 40.9 | 40.1 | |||||||||||||||||||
| Medicare Advantage | 28.3 | 27.9 | 29.5 | 29.2 | 28.2 | 29.1 | 29.7 | |||||||||||||||||||
| Commercial insurance and other | 29.6 | 31.3 | 30.7 | 31.0 | 33.0 | 31.5 | 32.0 | |||||||||||||||||||
| Weighted average | 26.4 | 26.9 | 27.0 | 27.1 | 27.0 | 27.1 | 27.4 | |||||||||||||||||||
| KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||||||||||
| Condensed Business Segment Data (Continued) | |||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||
| 2012 Quarters | 2013 Quarters | ||||||||||||||||||||||||||||||||
| First | Second | Third | Fourth | First | Second | Third | |||||||||||||||||||||||||||
| Hospital division data (continued): | |||||||||||||||||||||||||||||||||
| Revenues per admission: | |||||||||||||||||||||||||||||||||
| Medicare | $ | 39,802 | $ | 40,043 | $ | 39,423 | $ | 40,963 | $ | 39,956 | $ | 38,884 | $ | 39,078 | |||||||||||||||||||
| Medicaid | 42,937 | 42,150 | 41,591 | 43,487 | 51,441 | 48,141 | 51,891 | ||||||||||||||||||||||||||
| Medicare Advantage | 44,297 | 42,661 | 46,465 | 45,790 | 44,397 | 45,348 | 46,793 | ||||||||||||||||||||||||||
| Commercial insurance and other | 57,715 | 59,384 | 60,002 | 61,313 | 65,694 | 65,537 | 63,947 | ||||||||||||||||||||||||||
| Weighted average | 43,314 | 43,503 | 43,602 | 44,752 | 44,723 | 44,065 | 44,546 | ||||||||||||||||||||||||||
| Revenues per patient day: | |||||||||||||||||||||||||||||||||
| Medicare | $ | 1,618 | $ | 1,599 | $ | 1,587 | $ | 1,639 | $ | 1,628 | $ | 1,569 | $ | 1,569 | |||||||||||||||||||
| Medicaid | 1,209 | 1,267 | 1,130 | 1,151 | 1,225 | 1,176 | 1,295 | ||||||||||||||||||||||||||
| Medicare Advantage | 1,564 | 1,527 | 1,573 | 1,567 | 1,574 | 1,559 | 1,576 | ||||||||||||||||||||||||||
| Commercial insurance and other | 1,950 | 1,897 | 1,954 | 1,981 | 1,989 | 2,084 | 1,999 | ||||||||||||||||||||||||||
| Weighted average | 1,640 | 1,620 | 1,614 | 1,652 | 1,659 | 1,626 | 1,625 | ||||||||||||||||||||||||||
|
Medicare case mix index (discharged patients only) |
1.18 | 1.18 | 1.16 | 1.15 | 1.18 | 1.18 | 1.16 | ||||||||||||||||||||||||||
| Average daily census | 4,577 | 4,396 | 4,287 | 4,261 | 4,536 | 4,216 | 4,069 | ||||||||||||||||||||||||||
| Occupancy % | 68.3 | 64.9 | 63.9 | 63.6 | 67.5 | 62.5 | 60.0 | ||||||||||||||||||||||||||
| Annualized employee turnover % | 22.0 | 21.5 | 20.2 | 19.8 | 22.2 | 21.6 | 21.1 | ||||||||||||||||||||||||||
| Nursing center division data: | |||||||||||||||||||||||||||||||||
| End of period data: | |||||||||||||||||||||||||||||||||
| Number of facilities: | |||||||||||||||||||||||||||||||||
| Nursing and rehabilitation centers: | |||||||||||||||||||||||||||||||||
| Owned or leased | 99 | 99 | 99 | 98 | 98 | 98 | 98 | ||||||||||||||||||||||||||
| Managed | 4 | 4 | 4 | 4 | 4 | 4 | 4 | ||||||||||||||||||||||||||
| Assisted living facilities | 6 | 6 | 6 | 6 | 6 | 6 | 6 | ||||||||||||||||||||||||||
| 109 | 109 | 109 | 108 | 108 | 108 | 108 | |||||||||||||||||||||||||||
| Number of licensed beds: | |||||||||||||||||||||||||||||||||
| Nursing and rehabilitation centers: | |||||||||||||||||||||||||||||||||
| Owned or leased | 12,747 | 12,795 | 12,795 | 12,741 | 12,741 | 12,741 | 12,741 | ||||||||||||||||||||||||||
| Managed | 485 | 485 | 485 | 485 | 485 | 485 | 485 | ||||||||||||||||||||||||||
| Assisted living facilities | 413 | 341 | 341 | 341 | 341 | 341 | 341 | ||||||||||||||||||||||||||
| 13,645 | 13,621 | 13,621 | 13,567 | 13,567 | 13,567 | 13,567 | |||||||||||||||||||||||||||
| Revenue mix %: | |||||||||||||||||||||||||||||||||
| Medicare | 35 | 35 | 34 | 35 | 35 | 34 | 33 | ||||||||||||||||||||||||||
| Medicaid | 36 | 37 | 37 | 37 | 36 | 36 | 39 | ||||||||||||||||||||||||||
| Medicare Advantage | 8 | 8 | 8 | 7 | 8 | 8 | 7 | ||||||||||||||||||||||||||
| Private and other | 21 | 20 | 21 | 21 | 21 | 22 | 21 | ||||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||||||||||
| Condensed Business Segment Data (Continued) | |||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||
| 2012 Quarters | 2013 Quarters | ||||||||||||||||||||||||||||||||
| First | Second | Third | Fourth | First | Second | Third | |||||||||||||||||||||||||||
| Nursing center division data (continued): | |||||||||||||||||||||||||||||||||
| Patient days (a): | |||||||||||||||||||||||||||||||||
| Medicare | 184,273 | 178,799 | 173,627 | 170,509 | 175,642 | 166,291 | 161,181 | ||||||||||||||||||||||||||
| Medicaid | 548,718 | 549,131 | 554,260 | 549,053 | 533,317 | 533,032 | 542,265 | ||||||||||||||||||||||||||
| Medicare Advantage | 55,238 | 50,688 | 50,355 | 48,687 | 55,478 | 54,593 | 47,565 | ||||||||||||||||||||||||||
| Private and other | 238,158 | 232,488 | 238,386 | 239,446 | 228,210 | 228,875 | 228,698 | ||||||||||||||||||||||||||
| 1,026,387 | 1,011,106 | 1,016,628 | 1,007,695 | 992,647 | 982,791 | 979,709 | |||||||||||||||||||||||||||
| Patient day mix % (a): | |||||||||||||||||||||||||||||||||
| Medicare | 18 | 18 | 17 | 17 | 18 | 17 | 17 | ||||||||||||||||||||||||||
| Medicaid | 54 | 54 | 55 | 54 | 54 | 54 | 55 | ||||||||||||||||||||||||||
| Medicare Advantage | 5 | 5 | 5 | 5 | 5 | 6 | 5 | ||||||||||||||||||||||||||
| Private and other | 23 | 23 | 23 | 24 | 23 | 23 | 23 | ||||||||||||||||||||||||||
| Revenues per patient day (a): | |||||||||||||||||||||||||||||||||
| Medicare Part A | $ | 504 | $ | 505 | $ | 515 | $ | 536 | $ | 525 | $ | 525 | $ | 524 | |||||||||||||||||||
| Total Medicare (including Part B) | 546 | 550 | 560 | 574 | 562 | 564 | 566 | ||||||||||||||||||||||||||
| Medicaid | 185 | 187 | 188 | 190 | 190 | 190 | 199 | ||||||||||||||||||||||||||
| Medicaid (net of provider taxes) (b) | 163 | 165 | 166 | 167 | 168 | 167 | 177 | ||||||||||||||||||||||||||
| Medicare Advantage | 427 | 421 | 422 | 429 | 427 | 431 | 427 | ||||||||||||||||||||||||||
| Private and other | 248 | 244 | 249 | 253 | 262 | 261 | 255 | ||||||||||||||||||||||||||
| Weighted average | 278 | 276 | 277 | 281 | 286 | 283 | 283 | ||||||||||||||||||||||||||
| Average daily census (a) | 11,279 | 11,111 | 11,050 | 10,953 | 11,029 | 10,800 | 10,649 | ||||||||||||||||||||||||||
| Admissions (a) | 11,538 | 10,646 | 10,482 | 10,814 | 11,475 | 10,708 | 10,387 | ||||||||||||||||||||||||||
| Occupancy % (a) | 83.7 | 82.6 | 82.0 | 81.5 | 82.2 | 80.5 | 79.4 | ||||||||||||||||||||||||||
| Medicare average length of stay (a) | 30.4 | 31.3 | 31.9 | 30.7 | 30.2 | 31.0 | 31.6 | ||||||||||||||||||||||||||
| Annualized employee turnover % | 38.4 | 40.4 | 39.8 | 39.6 | 41.0 | 43.8 | 43.5 | ||||||||||||||||||||||||||
| Rehabilitation division data: | |||||||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services: | |||||||||||||||||||||||||||||||||
| Revenue mix %: | |||||||||||||||||||||||||||||||||
| Company-operated | 11 | 11 | 11 | 11 | 12 | 12 | 12 | ||||||||||||||||||||||||||
| Non-affiliated | 89 | 89 | 89 | 89 | 88 | 88 | 88 | ||||||||||||||||||||||||||
| Sites of service (at end of period) | 1,722 | 1,730 | 1,735 | 1,726 | 1,729 | 1,713 | 1,768 | ||||||||||||||||||||||||||
| Revenue per site | $ | 147,268 | $ | 146,347 | $ | 145,361 | $ | 141,690 | $ | 148,979 | $ | 144,968 | $ | 137,991 | |||||||||||||||||||
| Therapist productivity % | 80.3 | 80.4 | 80.5 | 80.5 | 81.1 | 80.4 | 80.4 | ||||||||||||||||||||||||||
| Hospital rehabilitation services: | |||||||||||||||||||||||||||||||||
| Revenue mix %: | |||||||||||||||||||||||||||||||||
| Company-operated | 34 | 33 | 33 | 33 | 33 | 34 | 34 | ||||||||||||||||||||||||||
| Non-affiliated | 66 | 67 | 67 | 67 | 67 | 66 | 66 | ||||||||||||||||||||||||||
| Sites of service (at end of period): | |||||||||||||||||||||||||||||||||
| Inpatient rehabilitation units | 100 | 102 | 104 | 105 | 103 | 103 | 99 | ||||||||||||||||||||||||||
| LTAC hospitals | 125 | 125 | 123 | 123 | 123 | 123 | 122 | ||||||||||||||||||||||||||
| Sub-acute units | 19 | 20 | 20 | 21 | 8 | 8 | 7 | ||||||||||||||||||||||||||
| Outpatient units | 111 | 115 | 117 | 119 | 98 | 104 | 104 | ||||||||||||||||||||||||||
| Other | 5 | 5 | 5 | 5 | - | - | - | ||||||||||||||||||||||||||
| 360 | 367 | 369 | 373 | 332 | 338 | 332 | |||||||||||||||||||||||||||
| Revenue per site | $ | 206,580 | $ | 200,006 | $ | 194,849 | $ | 198,150 | $ | 224,466 | $ | 206,441 | $ | 205,711 | |||||||||||||||||||
| Annualized employee turnover % | 19.6 | 16.9 | 17.3 | 16.9 | 10.4 | 13.2 | 14.0 | ||||||||||||||||||||||||||
| (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, | ||||||||||||||||||||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||||||||||||||
| 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 | $ | (20,373 | ) | $ | (20,373 | ) | $ | 6,787 | $ | 6,787 | $ | (16 | ) | $ | (16 | ) | $ | 31,288 | $ | 31,288 | |||||||||||||||||||
|
Allocation to participating unvested restricted stockholders |
- | - | (173 | ) | (172 | ) | - | - | (660 | ) | (659 | ) | |||||||||||||||||||||||||||
| Available to common stockholders | $ | (20,373 | ) | $ | (20,373 | ) | $ | 6,614 | $ | 6,615 | $ | (16 | ) | $ | (16 | ) | $ | 30,628 | $ | 30,629 | |||||||||||||||||||
| Discontinued operations, net of income taxes: | |||||||||||||||||||||||||||||||||||||||
| Income (loss) from operations: | |||||||||||||||||||||||||||||||||||||||
| As reported in Statement of Operations | $ | (21,609 | ) | $ | (21,609 | ) | $ | 3,059 | $ | 3,059 | $ | (24,287 | ) | $ | (24,287 | ) | $ | 13,777 | $ | 13,777 | |||||||||||||||||||
|
Allocation to participating unvested restricted stockholders |
- | - | (78 | ) | (78 | ) | - | - | (290 | ) | (290 | ) | |||||||||||||||||||||||||||
| Available to common stockholders | $ | (21,609 | ) | $ | (21,609 | ) | $ | 2,981 | $ | 2,981 | $ | (24,287 | ) | $ | (24,287 | ) | $ | 13,487 | $ | 13,487 | |||||||||||||||||||
| Loss on divestiture of operations: | |||||||||||||||||||||||||||||||||||||||
| As reported in Statement of Operations | $ | (65,016 | ) | $ | (65,016 | ) | $ | (2,280 | ) | $ | (2,280 | ) | $ | (77,893 | ) | $ | (77,893 | ) | $ | (3,806 | ) | $ | (3,806 | ) | |||||||||||||||
|
Allocation to participating unvested restricted stockholders |
- | - | 58 | 58 | - | - | 80 | 80 | |||||||||||||||||||||||||||||||
| Available to common stockholders | $ | (65,016 | ) | $ | (65,016 | ) | $ | (2,222 | ) | $ | (2,222 | ) | $ | (77,893 | ) | $ | (77,893 | ) | $ | (3,726 | ) | $ | (3,726 | ) | |||||||||||||||
| Income (loss) from discontinued operations: | |||||||||||||||||||||||||||||||||||||||
| As reported in Statement of Operations | $ | (86,625 | ) | $ | (86,625 | ) | $ | 779 | $ | 779 | $ | (102,180 | ) | $ | (102,180 | ) | $ | 9,971 | $ | 9,971 | |||||||||||||||||||
|
Allocation to participating unvested restricted stockholders |
- | - | (20 | ) | (20 | ) | - | - | (210 | ) | (210 | ) | |||||||||||||||||||||||||||
| Available to common stockholders | $ | (86,625 | ) | $ | (86,625 | ) | $ | 759 | $ | 759 | $ | (102,180 | ) | $ | (102,180 | ) | $ | 9,761 | $ | 9,761 | |||||||||||||||||||
| Net income (loss): | |||||||||||||||||||||||||||||||||||||||
| As reported in Statement of Operations | $ | (106,998 | ) | $ | (106,998 | ) | $ | 7,566 | $ | 7,566 | $ | (102,196 | ) | $ | (102,196 | ) | $ | 41,259 | $ | 41,259 | |||||||||||||||||||
|
Allocation to participating unvested restricted stockholders |
- | - | (193 | ) | (192 | ) | - | - | (870 | ) | (869 | ) | |||||||||||||||||||||||||||
| Available to common stockholders | $ | (106,998 | ) | $ | (106,998 | ) | $ | 7,373 | $ | 7,374 | $ | (102,196 | ) | $ | (102,196 | ) | $ | 40,389 | $ | 40,390 | |||||||||||||||||||
| Shares used in the computation: | |||||||||||||||||||||||||||||||||||||||
|
Weighted average shares outstanding - basic computation |
52,323 | 52,323 | 51,676 | 51,676 | 52,218 | 52,218 | 51,648 | 51,648 | |||||||||||||||||||||||||||||||
| Dilutive effect of employee stock options | - | 33 | - | 27 | |||||||||||||||||||||||||||||||||||
|
Adjusted weighted average shares outstanding - diluted computation |
|
52,323 |
|
51,709 |
|
52,218 |
|
51,675 | |||||||||||||||||||||||||||||||
| Earnings (loss) per common share: | |||||||||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | (0.39 | ) | $ | (0.39 | ) | $ | 0.13 | $ | 0.13 | $ | - | $ | - | $ | 0.59 | $ | 0.59 | |||||||||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||||||||||||||||||
| Income (loss) from operations | (0.41 | ) | (0.41 | ) | 0.05 | 0.05 | (0.47 | ) | (0.47 | ) | 0.26 | 0.26 | |||||||||||||||||||||||||||
| Loss on divestiture of operations | (1.24 | ) | (1.24 | ) | (0.04 | ) | (0.04 | ) | (1.49 | ) | (1.49 | ) | (0.07 | ) | (0.07 | ) | |||||||||||||||||||||||
| Income (loss) from discontinued operations | (1.65 | ) | (1.65 | ) | 0.01 | 0.01 | (1.96 | ) | (1.96 | ) | 0.19 | 0.19 | |||||||||||||||||||||||||||
| Net income (loss) | $ | (2.04 | ) | $ | (2.04 | ) | $ | 0.14 | $ | 0.14 | $ | (1.96 | ) | $ | (1.96 | ) | $ | 0.78 | $ | 0.78 | |||||||||||||||||||
| (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, 2013 and 2012 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 29.6% and 15.5% for the three months ended September 30, 2013 and 2012, respectively, and 33.8% and 36.7% for the nine months ended September 30, 2013 and 2012, respectively. The change in the effective income tax rates between periods is attributable to certain 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, 2013 and 2012 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, | |||||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||
| Detail of charges: | ||||||||||||||||||||||||
| One-time bonus costs | $ | - | $ | - | ($20,458 | ) | $ | - | ||||||||||||||||
| Severance, retirement and other costs | (2,353 | ) | (51 | ) | (2,353 | ) | (4,527 | ) | ||||||||||||||||
| Costs associated with the closing of a TC hospital and a home health location | (6,043 | ) | - | (6,043 | ) | - | ||||||||||||||||||
| Litigation | (23,850 | ) | - | (23,850 | ) | (5,000 | ) | |||||||||||||||||
| Transaction costs | (613 | ) | (482 | ) | (1,665 | ) | (1,564 | ) | ||||||||||||||||
| Lease cancellation charges (rent expense) | - | (596 | ) | - | (1,515 | ) | ||||||||||||||||||
| Senior debt modification charges (interest expense) | (96 | ) | - | (1,461 | ) | - | ||||||||||||||||||
| (32,955 | ) | (1,129 | ) | (55,830 | ) | (12,606 | ) | |||||||||||||||||
| Income tax benefit | 9,747 | 175 | 18,885 | 4,622 | ||||||||||||||||||||
| Charges net of income taxes | (23,208 | ) | (954 | ) | (36,945 | ) | (7,984 | ) | ||||||||||||||||
| Allocation to participating unvested restricted stockholders | - | 24 | - | 168 | ||||||||||||||||||||
| Available to common stockholders | ($23,208 | ) | ($930 | ) | ($36,945 | ) | ($7,816 | ) | ||||||||||||||||
| Weighted average diluted shares outstanding | 52,323 | 51,709 | 52,218 | 51,675 | ||||||||||||||||||||
| Diluted loss per common share related to charges | ($0.44 | ) | ($0.02 | ) | ($0.71 | ) | ($0.15 | ) | ||||||||||||||||
| Reconciliation of operating income before charges: | ||||||||||||||||||||||||
| Operating income before charges | $ | 145,495 | $ | 159,498 | $ | 497,970 | $ | 500,625 | ||||||||||||||||
| Detail of charges excluded from core operating results: | ||||||||||||||||||||||||
| One-time bonus costs | - | - | (20,458 | ) | - | |||||||||||||||||||
| Severance, retirement and other costs | (2,353 | ) | (51 | ) | (2,353 | ) | (4,527 | ) | ||||||||||||||||
| Costs associated with the closing of a TC hospital and a home health location | (6,043 | ) | - | (6,043 | ) | - | ||||||||||||||||||
| Litigation | (23,850 | ) | - | (23,850 | ) | (5,000 | ) | |||||||||||||||||
| Transaction costs | (613 | ) | (482 | ) | (1,665 | ) | (1,564 | ) | ||||||||||||||||
| (32,859 | ) | (533 | ) | (54,369 | ) | (11,091 | ) | |||||||||||||||||
| Reported operating income | $ | 112,636 | $ | 158,965 | $ | 443,601 | $ | 489,534 | ||||||||||||||||
| Reconciliation of income from continuing operations before charges: | ||||||||||||||||||||||||
| Amounts attributable to Kindred stockholders: | ||||||||||||||||||||||||
| Income from continuing operations before charges | $ | 2,835 | $ | 7,741 | $ | 36,929 | $ | 39,272 | ||||||||||||||||
| Charges net of income taxes | (23,208 | ) | (954 | ) | (36,945 | ) | (7,984 | ) | ||||||||||||||||
| Reported income (loss) from continuing operations | ($20,373 | ) | $ | 6,787 | ($16 | ) | $ | 31,288 | ||||||||||||||||
|
Reconciliation of diluted income per common share from continuing operations before charges: |
||||||||||||||||||||||||
| Diluted income per common share before charges (a) | $ | 0.05 | $ | 0.15 | $ | 0.68 | $ | 0.74 | ||||||||||||||||
| Charges net of income taxes | (0.44 | ) | (0.02 | ) | (0.71 | ) | (0.15 | ) | ||||||||||||||||
| Other | - | - | 0.03 | - | ||||||||||||||||||||
| Reported diluted income (loss) per common share from continuing operations | ($0.39 | ) | $ | 0.13 | $ | - | $ | 0.59 | ||||||||||||||||
|
Weighted average diluted shares used to compute diluted income per common share from continuing operations before charges |
52,333 | 51,709 | 52,234 | 51,675 | ||||||||||||||||||||
| Reconciliation of effective income tax rate before charges: | ||||||||||||||||||||||||
| Effective income tax rate before charges | 17.2 | % | 40.3 | % | 37.8 | % | 41.1 | % | ||||||||||||||||
| Impact of charges on effective income tax rate | 14.3 | % | 2.3 | % | 39.8 | % | 1.0 | % | ||||||||||||||||
| Reported effective income tax rate | 31.5 | % | 42.6 | % | 77.6 | % | 42.1 | % | ||||||||||||||||
| (a) | For purposes of computing diluted earnings per common share before charges, income from continuing operations before charges was reduced by $0.1 million and $0.2 million for the three months ended September 30, 2013 and 2012, respectively, and $1.2 million and $0.8 million for the nine months ended September 30, 2013 and 2012, respectively, for the allocation of income to participating unvested restricted stockholders. | |||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||||||||||||||||
| Reconciliation of Non-GAAP Measurements to GAAP Results (Continued) | |||||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||
| Three months ended September 30, 2013 | |||||||||||||||||||||||||||||||||||||||
| Charges | |||||||||||||||||||||||||||||||||||||||
| Severance | Facility | Senior debt | |||||||||||||||||||||||||||||||||||||
| Before | and retirement | closing | Transaction | modification | As | ||||||||||||||||||||||||||||||||||
| charges | costs | costs | Litigation | costs | charges | Total | reported | ||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations: | |||||||||||||||||||||||||||||||||||||||
| Operating income (loss): | |||||||||||||||||||||||||||||||||||||||
| Hospital division | $ | 118,517 | $ | - | $ | (5,527 | ) | $ | (700 | ) | $ | - | $ | - | $ | (6,227 | ) | $ | 112,290 | ||||||||||||||||||||
| Nursing center division | 30,368 | - | (64 | ) | - | - | - | (64 | ) | 30,304 | |||||||||||||||||||||||||||||
| Rehabilitation division: | |||||||||||||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services | 14,579 | - | - | (23,150 | ) | - | - | (23,150 | ) | (8,571 | ) | ||||||||||||||||||||||||||||
| Hospital rehabilitation services | 18,503 | (288 | ) | - | - | - | - | (288 | ) | 18,215 | |||||||||||||||||||||||||||||
| 33,082 | (288 | ) | - | (23,150 | ) | - | - | (23,438 | ) | 9,644 | |||||||||||||||||||||||||||||
| Home health and hospice division | 2,138 | (601 | ) | (452 | ) | - | - | - | (1,053 | ) | 1,085 | ||||||||||||||||||||||||||||
| Corporate: | |||||||||||||||||||||||||||||||||||||||
| Overhead | (37,687 | ) | (1,005 | ) | - | - | - | (459 | ) | (1,464 | ) | (39,151 | ) | ||||||||||||||||||||||||||
| Insurance subsidiary | (482 | ) | - | - | - | - | - | - | (482 | ) | |||||||||||||||||||||||||||||
| (38,169 | ) | (1,005 | ) | - | - | - | (459 | ) | (1,464 | ) | (39,633 | ) | |||||||||||||||||||||||||||
| Impairment charges | (441 | ) | - | - | - | - | - | - | (441 | ) | |||||||||||||||||||||||||||||
| Transaction costs | - | - | - | - | (613 | ) | - | (613 | ) | (613 | ) | ||||||||||||||||||||||||||||
| Operating income | 145,495 | (1,894 | ) | (6,043 | ) | (23,850 | ) | (613 | ) | (459 | ) | (32,859 | ) | 112,636 | |||||||||||||||||||||||||
| Rent | (79,269 | ) | - | - | - | - | - | - | (79,269 | ) | |||||||||||||||||||||||||||||
| Depreciation and amortization | (37,591 | ) | - | - | - | - | - | - | (37,591 | ) | |||||||||||||||||||||||||||||
| Interest, net | (24,302 | ) | - | - | - | - | (96 | ) | (96 | ) | (24,398 | ) | |||||||||||||||||||||||||||
|
Income (loss) from continuing operations before income taxes |
4,333 | (1,894 | ) | (6,043 | ) | (23,850 | ) | (613 | ) | (555 | ) | (32,955 | ) | (28,622 | ) | ||||||||||||||||||||||||
| Provision (benefit) for income taxes | 744 | (743 | ) | (2,111 | ) | (6,470 | ) | (205 | ) | (218 | ) | (9,747 | ) | (9,003 | ) | ||||||||||||||||||||||||
| $ | 3,589 | $ | (1,151 | ) | $ | (3,932 | ) | $ | (17,380 | ) | $ | (408 | ) | $ | (337 | ) | $ | (23,208 | ) | $ | (19,619 | ) | |||||||||||||||||
| Three months ended September 30, 2012 | |||||||||||||||||||||||||||||||||||||||
| Charges | |||||||||||||||||||||||||||||||||||||||
| Lease | |||||||||||||||||||||||||||||||||||||||
| Before | Severance | Transaction | cancellation | As | |||||||||||||||||||||||||||||||||||
| charges | and other | costs | charges | Total | reported | ||||||||||||||||||||||||||||||||||
| Income from continuing operations: | |||||||||||||||||||||||||||||||||||||||
| Operating income (loss): | |||||||||||||||||||||||||||||||||||||||
| Hospital division | $ | 130,848 | $ | (50 | ) | $ | - | $ | - | $ | (50 | ) | $ | 130,798 | |||||||||||||||||||||||||
| Nursing center division | 37,866 | (1 | ) | - | - | (1 | ) | 37,865 | |||||||||||||||||||||||||||||||
| Rehabilitation division: | |||||||||||||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services | 16,996 | - | - | - | - | 16,996 | |||||||||||||||||||||||||||||||||
| Hospital rehabilitation services | 16,977 | - | - | - | - | 16,977 | |||||||||||||||||||||||||||||||||
| 33,973 | - | - | - | - | 33,973 | ||||||||||||||||||||||||||||||||||
| Home health and hospice division | 3,645 | - | - | - | - | 3,645 | |||||||||||||||||||||||||||||||||
| Corporate: | |||||||||||||||||||||||||||||||||||||||
| Overhead | (45,883 | ) | - | - | - | - | (45,883 | ) | |||||||||||||||||||||||||||||||
| Insurance subsidiary | (545 | ) | - | - | - | - | (545 | ) | |||||||||||||||||||||||||||||||
| (46,428 | ) | - | - | - | - | (46,428 | ) | ||||||||||||||||||||||||||||||||
| Impairment charges | (406 | ) | - | - | - | - | (406 | ) | |||||||||||||||||||||||||||||||
| Transaction costs | - | - | (482 | ) | - | (482 | ) | (482 | ) | ||||||||||||||||||||||||||||||
| Operating income | 159,498 | (51 | ) | (482 | ) | - | (533 | ) | 158,965 | ||||||||||||||||||||||||||||||
| Rent | (78,716 | ) | - | - | (596 | ) | (596 | ) | (79,312 | ) | |||||||||||||||||||||||||||||
| Depreciation and amortization | (41,304 | ) | - | - | - | - | (41,304 | ) | |||||||||||||||||||||||||||||||
| Interest, net | (26,451 | ) | - | - | - | - | (26,451 | ) | |||||||||||||||||||||||||||||||
|
Income from continuing operations before income taxes
|
13,027 | (51 | ) | (482 | ) | (596 | ) | (1,129 | ) | 11,898 | |||||||||||||||||||||||||||||
| Provision for income taxes | 5,245 | (20 | ) | 76 | (231 | ) | (175 | ) | 5,070 | ||||||||||||||||||||||||||||||
| $ | 7,782 | $ | (31 | ) | $ | (558 | ) | $ | (365 | ) | $ | (954 | ) | $ | 6,828 | ||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Non-GAAP Measurements to GAAP Results (Continued) | |||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||||||
| Nine months ended September 30, 2013 | |||||||||||||||||||||||||||||||||||||||||||
| Charges | |||||||||||||||||||||||||||||||||||||||||||
| Severance | Facility | Senior debt | |||||||||||||||||||||||||||||||||||||||||
| Before | One-time | and retirement | closing | Transaction | modification | As | |||||||||||||||||||||||||||||||||||||
| charges | bonus | costs | costs | Litigation | costs | charges | Total | reported | |||||||||||||||||||||||||||||||||||
| Income from continuing operations: | |||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss): | |||||||||||||||||||||||||||||||||||||||||||
| Hospital division | $ | 408,156 | $ | (8,037 | ) | $ | - | $ | (5,527 | ) | $ | (700 | ) | $ | - | $ | - | $ | (14,264 | ) | $ | 393,892 | |||||||||||||||||||||
| Nursing center division | 99,234 | (4,966 | ) | - | (64 | ) | - | - | - | (5,030 | ) | 94,204 | |||||||||||||||||||||||||||||||
| Rehabilitation division: | |||||||||||||||||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services | 52,012 | (5,052 | ) | - | - | (23,150 | ) | - | - | (28,202 | ) | 23,810 | |||||||||||||||||||||||||||||||
| Hospital rehabilitation services | 57,463 | (1,255 | ) | (288 | ) | - | - | - | - | (1,543 | ) | 55,920 | |||||||||||||||||||||||||||||||
| 109,475 | (6,307 | ) | (288 | ) | - | (23,150 | ) | - | - | (29,745 | ) | 79,730 | |||||||||||||||||||||||||||||||
| Home health and hospice division | 9,718 | (833 | ) | (601 | ) | (452 | ) | - | - | - | (1,886 | ) | 7,832 | ||||||||||||||||||||||||||||||
| Corporate: | |||||||||||||||||||||||||||||||||||||||||||
| Overhead | (126,153 | ) | (315 | ) | (1,005 | ) | - | - | - | (459 | ) | (1,779 | ) | (127,932 | ) | ||||||||||||||||||||||||||||
| Insurance subsidiary | (1,375 | ) | - | - | - | - | - | - | - | (1,375 | ) | ||||||||||||||||||||||||||||||||
| (127,528 | ) | (315 | ) | (1,005 | ) | - | - | - | (459 | ) | (1,779 | ) | (129,307 | ) | |||||||||||||||||||||||||||||
| Impairment charges | (1,085 | ) | - | - | - | - | - | - | - | (1,085 | ) | ||||||||||||||||||||||||||||||||
| Transaction costs | - | - | - | - | - | (1,665 | ) | - | (1,665 | ) | (1,665 | ) | |||||||||||||||||||||||||||||||
| Operating income | 497,970 | (20,458 | ) | (1,894 | ) | (6,043 | ) | (23,850 | ) | (1,665 | ) | (459 | ) | (54,369 | ) | 443,601 | |||||||||||||||||||||||||||
| Rent | (238,115 | ) | - | - | - | - | - | - | - | (238,115 | ) | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | (119,872 | ) | - | - | - | - | - | - | - | (119,872 | ) | ||||||||||||||||||||||||||||||||
| Interest, net | (78,629 | ) | - | - | - | - | - | (1,461 | ) | (1,461 | ) | (80,090 | ) | ||||||||||||||||||||||||||||||
|
Income from continuing operations before income taxes |
61,354 | (20,458 | ) | (1,894 | ) | (6,043 | ) | (23,850 | ) | (1,665 | ) | (1,920 | ) | (55,830 | ) | 5,524 | |||||||||||||||||||||||||||
| Provision for income taxes | 23,173 | (8,030 | ) | (743 | ) | (2,111 | ) | (6,629 | ) | (618 | ) | (754 | ) | (18,885 | ) | 4,288 | |||||||||||||||||||||||||||
| $ | 38,181 | $ | (12,428 | ) | $ | (1,151 | ) | $ | (3,932 | ) | $ | (17,221 | ) | $ | (1,047 | ) | $ | (1,166 | ) | $ | (36,945 | ) | $ | 1,236 | |||||||||||||||||||
| Nine months ended September 30, 2012 | |||||||||||||||||||||||||||||||||||||||||||
| Charges | |||||||||||||||||||||||||||||||||||||||||||
| Lease | |||||||||||||||||||||||||||||||||||||||||||
| Before | Severance | Transaction | cancellation | As | |||||||||||||||||||||||||||||||||||||||
| charges | and other | Litigation | costs | charges | Total | reported | |||||||||||||||||||||||||||||||||||||
| Income from continuing operations: | |||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss): | |||||||||||||||||||||||||||||||||||||||||||
| Hospital division | $ | 422,757 | $ | (3,535 | ) | $ | (5,000 | ) | $ | - | $ | - | $ | (8,535 | ) | $ | 414,222 | ||||||||||||||||||||||||||
| Nursing center division | 106,615 | (910 | ) | - | - | - | (910 | ) | 105,705 | ||||||||||||||||||||||||||||||||||
| Rehabilitation division: | |||||||||||||||||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services | 47,455 | (36 | ) | - | - | - | (36 | ) | 47,419 | ||||||||||||||||||||||||||||||||||
| Hospital rehabilitation services | 50,964 | (11 | ) | - | - | - | (11 | ) | 50,953 | ||||||||||||||||||||||||||||||||||
| 98,419 | (47 | ) | - | - | - | (47 | ) | 98,372 | |||||||||||||||||||||||||||||||||||
| Home health and hospice division | 8,775 | - | - | - | - | - | 8,775 | ||||||||||||||||||||||||||||||||||||
| Corporate: | |||||||||||||||||||||||||||||||||||||||||||
| Overhead | (133,299 | ) | (35 | ) | - | - | - | (35 | ) | (133,334 | ) | ||||||||||||||||||||||||||||||||
| Insurance subsidiary | (1,627 | ) | - | - | - | - | - | (1,627 | ) | ||||||||||||||||||||||||||||||||||
| (134,926 | ) | (35 | ) | - | - | - | (35 | ) | (134,961 | ) | |||||||||||||||||||||||||||||||||
| Impairment charges | (1,015 | ) | - | - | - | - | - | (1,015 | ) | ||||||||||||||||||||||||||||||||||
| Transaction costs | - | - | - | (1,564 | ) | - | (1,564 | ) | (1,564 | ) | |||||||||||||||||||||||||||||||||
| Operating income | 500,625 | (4,527 | ) | (5,000 | ) | (1,564 | ) | - | (11,091 | ) | 489,534 | ||||||||||||||||||||||||||||||||
| Rent | (232,930 | ) | - | - | (1,515 | ) | (1,515 | ) | (234,445 | ) | |||||||||||||||||||||||||||||||||
| Depreciation and amortization | (121,429 | ) | - | - | - | - | - | (121,429 | ) | ||||||||||||||||||||||||||||||||||
| Interest, net | (79,193 | ) | - | - | - | - | - | (79,193 | ) | ||||||||||||||||||||||||||||||||||
|
Income from continuing operations before income taxes |
67,073 | (4,527 | ) | (5,000 | ) | (1,564 | ) | (1,515 | ) | (12,606 | ) | 54,467 | |||||||||||||||||||||||||||||||
| Provision for income taxes | 27,548 | (1,660 | ) | (1,833 | ) | (574 | ) | (555 | ) | (4,622 | ) | 22,926 | |||||||||||||||||||||||||||||||
| $ | 39,525 | $ | (2,867 | ) | $ | (3,167 | ) | $ | (990 | ) | $ | (960 | ) | $ | (7,984 | ) | $ | 31,541 | |||||||||||||||||||||||||
| 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 other financing activities. In addition, management uses free cash flows in making decisions related to acquisitions, development capital expenditures, 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 39.3% for the three months and nine months ended September 30, 2013 and 38.8% for the three months and nine months ended September 30, 2012. | |||||||||||||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||
|
Reconciliation of net cash flows provided by operating activities to free cash flows: |
|||||||||||||||||||||||||
| Net cash flows provided by operating activities | $ | 110,750 | $ | 141,489 | $ | 189,217 | $ | 191,087 | |||||||||||||||||
| Less routine capital expenditures | (23,152 | ) | (25,939 | ) | (62,952 | ) | (76,804 | ) | |||||||||||||||||
| Adjusted net cash flows provided by operating activities | 87,598 | 115,550 | 126,265 | 114,283 | |||||||||||||||||||||
| Less: | |||||||||||||||||||||||||
| Development capital expenditures | (3,235 | ) | (15,177 | ) | (10,709 | ) | (38,175 | ) | |||||||||||||||||
| Payment of cash dividends | (6,499 | ) | - | (6,499 | ) | - | |||||||||||||||||||
| (9,734 | ) | (15,177 | ) | (17,208 | ) | (38,175 | ) | ||||||||||||||||||
| Free cash flows including certain items | 77,864 | 100,373 | 109,057 | 76,108 | |||||||||||||||||||||
|
Adjustments to remove certain payments (including payments made for discontinued operations) included in net cash flows provided by operating activities: |
|||||||||||||||||||||||||
| One-time employee bonus | - | - | 26,345 | - | |||||||||||||||||||||
| Lenders fees related to senior debt modifications | 4,589 | - | 6,189 | - | |||||||||||||||||||||
| Transaction costs | 6,362 | 1,366 | 8,550 | 2,472 | |||||||||||||||||||||
| Severance and retention | 686 | 245 | 1,655 | 2,115 | |||||||||||||||||||||
| Lease cancellation | - | 1,515 | - | 3,265 | |||||||||||||||||||||
|
Benefit of reduced income tax payments resulting from certain payments |
(4,567 | ) | (1,212 | ) | (16,775 | ) | (3,043 | ) | |||||||||||||||||
| 7,070 | 1,914 | 25,964 | 4,809 | ||||||||||||||||||||||
| Free cash flows excluding certain items | $ | 84,934 | $ | 102,287 | $ | 135,021 | $ | 80,917 | |||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||||||||||||
| Reconciliation of Earnings Guidance for 2013 and 2014 - Continuing Operations | ||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||
| (In millions, except per share amounts) | ||||||||||||||||||||||||||||||||||||
| As of November 5, 2013 | As of August 5, 2013 | |||||||||||||||||||||||||||||||||||
| 2013 (a) | 2014 (a) | 2013 (a) | ||||||||||||||||||||||||||||||||||
| Low | High | Low | High | Low | High | |||||||||||||||||||||||||||||||
| Operating income | $ | 657 | $ | 665 | $ | 726 | $ | 744 | $ | 797 | $ | 813 | ||||||||||||||||||||||||
| Rent | 323 | 323 | 339 | 339 | 392 | 392 | ||||||||||||||||||||||||||||||
| Depreciation and amortization | 159 | 159 | 165 | 165 | 192 | 192 | ||||||||||||||||||||||||||||||
| Interest, net | 103 | 103 | 106 | 106 | 109 | 109 | ||||||||||||||||||||||||||||||
| Income from continuing operations before income taxes | 72 | 80 | 116 | 134 | 104 | 120 | ||||||||||||||||||||||||||||||
| Provision for income taxes | 28 | 31 | 46 | 53 | 43 | 49 | ||||||||||||||||||||||||||||||
| Income from continuing operations | 44 | 49 | 70 | 81 | 61 | 71 | ||||||||||||||||||||||||||||||
| Earnings attributable to noncontrolling interests | (2 | ) | (2 | ) | (12 | ) | (12 | ) | (1 | ) | (1 | ) | ||||||||||||||||||||||||
|
Income from continuing operations attributable to the Company |
42 | 47 | 58 | 69 | 60 | 70 | ||||||||||||||||||||||||||||||
| Allocation to participating unvested restricted stockholders | (1 | ) | (1 | ) | (2 | ) | (2 | ) | (2 | ) | (2 | ) | ||||||||||||||||||||||||
| Available to common stockholders | $ | 41 | $ | 46 | $ | 56 | $ | 67 | $ | 58 | $ | 68 | ||||||||||||||||||||||||
| Earnings per diluted share | $ | 0.78 | $ | 0.88 | $ | 1.05 | $ | 1.25 | $ | 1.10 | $ | 1.30 | ||||||||||||||||||||||||
|
Shares used in computing earnings per diluted share |
52.3 | 52.3 | 53.2 | 53.2 | 52.5 | 52.5 | ||||||||||||||||||||||||||||||
| (a) | The earnings guidance excludes the effect of (1) a one-time employee bonus distributed in the first quarter of 2013, (2) changes in estimates related to pending litigation, (3) the early lease termination payment to Ventas, (4) costs associated with the closure of a hospital and a home health location, (5) costs associated with certain severance and retirement benefits, (6) any transaction-related costs, (7) charges associated with the modification of certain of the Company's senior debt, (8) any other reimbursement changes, (9) any further acquisitions or divestitures (unless otherwise noted), (10) any impairment charges, and (11) any repurchases of common stock. | |||||||||||||||||||||||||||||||||||
