LOUISVILLE, Ky.--(BUSINESS WIRE)--Kindred Healthcare, Inc. (“Kindred” or the “Company”) (NYSE:KND) today announced its operating results for the first quarter ended March 31, 2014. The Company has reclassified as discontinued for all periods presented the operations of a transitional care (“TC”) hospital that was divested through the expiration of a lease. 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, operating income and operating margin rose sequentially from last quarter on improvements in each operating segment
- Hospital division performed well despite a challenging backdrop, as strong cost controls partially mitigated the impact of a 2% decline in net revenues from volume softness, sequestration and commercial rate pressures
- RehabCare operating income increased 1% and operating margins improved to 11.4% from 11.1% in the first quarter last year despite regulatory headwinds that became effective April 1, 2013
- Nursing center division revenue growth and solid cost controls drove a 13% increase in operating income, a solid improvement in operating margins and in March, the first profitable month of operations in two years
- Investments in our Care Management division and Kindred at Home led to revenue growth over prior year of 70% and operating income growth of 30%; platform for future growth established
-
Kindred repositioning strategy almost complete
- Divestiture of 59 nursing centers leased from Ventas, Inc. (“Ventas”) (NYSE:VTR) on schedule; 26 nursing centers transferred as of May 1 and all but one facility scheduled to transfer by end of Q3
- The real estate of two previously leased nursing centers was acquired for $22 million reducing annual rents by approximately $2 million
- The refinancing of the Company’s existing secured and unsecured debt on April 9 lowers borrowing costs, extends debt maturities and reduces interest rate risk
-
Kindred is well positioned operationally and financially to grow in
2014 and beyond
- Available borrowing capacity under the Company’s revolving credit facility approximated $377 million after the April 9 refinancing
- Board of Directors declared regular quarterly cash dividend of $0.12 per share payable on June 11, 2014
First Quarter Results
Continuing Operations
Consolidated revenues for the first quarter ended March 31, 2014 increased 2% to $1.30 billion compared to $1.28 billion in the same period in 2013. The Company reported income from continuing operations for the first quarter of 2014 of $16.8 million or $0.31 per diluted share compared to $10.4 million or $0.20 per diluted share in the first quarter of 2013. First quarter 2014 operating results included pretax charges of $0.7 million ($0.4 million net of income taxes) or $0.01 per diluted share related to transaction-related costs. Operating results for the first quarter of 2013 included a one-time bonus paid to employees who did not participate in the Company’s incentive compensation program and transaction-related costs, which reduced income from continuing operations in aggregate by $12.6 million or $0.23 per diluted share.
Management Commentary
Paul J. Diaz, Chief Executive Officer of the Company, commented, “We are very pleased to report a solid start to 2014. As we expected, hospital volumes improved sequentially in the first quarter, which historically has been our seasonally strongest quarter. That said, we continued to experience the same volume and utilization challenges experienced recently by many healthcare providers and successfully managed costs to mitigate the impact.”
Mr. Diaz further noted, “Our RehabCare division continues to make great progress, as evidenced by our operating income increase and margin improvement, notwithstanding Medicare reimbursement reductions. In addition, we added 45 net new skilled nursing rehabilitation sites of service during the quarter. The efforts we have made to reshape our nursing center division are continuing to pay off as we saw a significant improvement in operating margins in the first quarter. We are developing three additional transitional care centers in Indianapolis, Phoenix and Las Vegas, which will add to the momentum in this division.”
“Our Care Management division continues to make operating improvements in our home health and hospice operations as we assimilate numerous acquisitions and execute on a more standardized operating model. Our recent acquisitions of Senior Home Care and Kindred Home Based Primary Care (formerly Western Reserve Senior Care) have performed well and strengthen our commitment to further expand our Care Management division. We have made significant improvements in our management, processes and technology and hope to apply those tools across a larger platform over time.”
Benjamin A. Breier, President and Chief Operating Officer of the Company, commented, “Our recently announced acquisition of the Silver State Accountable Care Organization (‘ACO’) in Las Vegas, Nevada, is a very exciting transaction for Kindred, and the partnership marks our first ownership and direct management of an ACO anywhere in the country. We are always identifying opportunities to learn and grow, and Silver State, along with our home-based primary care physician strategy, and our care transitions programs in many of our integrated markets are all examples of our efforts to develop, test and deploy new care delivery and payment models across our platform. Our stated goal of advancing value-based care models in multiple markets over the next few years remains on track.”
Commenting on the Company’s strategic initiatives, Mr. Diaz commented, “We continue to make great strides in completing our efforts to reposition our business with the ongoing transfer of the 59 Ventas nursing centers. We also closed the previously announced acquisition of two leased nursing centers and terminated the lease of an unprofitable hospital.”
“Our recent $2.25 billion debt refinancing reinforces our capabilities to expand our continuum of post-acute care services in our Integrated Care Markets and provides the flexibility to return capital to our shareholders through a recurring quarterly dividend. We remain committed to improving our long-term growth, profitability and financial position and enhancing our Integrated Care Market capabilities, particularly in home health and hospice services. We also continue to evaluate various opportunities to redeploy our management capabilities, industry leading infrastructure and financial resources as we move forward with the growth phase of our strategic plan.”
Earnings Guidance – Continuing Operations
The Company reaffirmed its previous earnings guidance for 2014 and expects to report income from continuing operations for 2014 between $58 million and $68 million or $1.05 to $1.25 per diluted share (based upon diluted shares of 53.2 million).
The Company also reaffirmed its operating cash flow guidance for 2014 at a range between $245 million and $275 million. Estimated routine capital expenditures for 2014 are expected to range from $100 million to $105 million and estimated costs to develop new or replacement TC hospitals, transitional care nursing centers, and inpatient rehabilitation facilities (“IRFs”) will approximate $20 million to $25 million in 2014. Operating cash flows in excess of the Company’s routine and development capital spending programs are expected to approximate $125 million to $145 million for 2014 and will be available to pay dividends, repay debt and fund acquisitions. Estimated dividend payments for 2014 are expected to approximate $26 million.
Mr. Breier commented, “We have a higher level of confidence in our 2014 earnings and free cash flow guidance after a solid start to the year. We look forward to continued improvements in our hospital business and continuing the solid first quarter performance from our other divisions. We also expect additional cost savings from initiatives across the enterprise, and growth over time from a broad range of internal and external development efforts. Our strategy is continually focused on being the post-acute provider and partner of choice.”
The Company’s earnings and cash flow guidance for 2014 excludes the effect of reimbursement changes, severance, retirement and retention costs, litigation costs, transaction-related costs, any further acquisitions or divestitures, any impairment charges, and any repurchases of common stock.
Quarterly Cash Dividend
The Company also announced that its Board of Directors has approved the payment of the regular quarterly cash dividend to its shareholders of $0.12 per common share to be paid on June 11, 2014 to shareholders of record as of the close of business on May 21, 2014. Future declarations of quarterly dividends will be subject to the approval of Kindred’s Board of Directors.
Conference Call
As previously announced, investors and the general public may access a live webcast of the first quarter 2014 conference call through a link on the Company’s website at http://investors.kindredhealthcare.com. The conference call will be held on May 8 at 10:00 a.m. (Eastern Time).
A telephone replay of the conference call will become available at approximately 1:00 p.m. on May 8 by dialing (719) 457-0820, access code: 5576523. The replay will be available through May 18.
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 the 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 the final rules issued by CMS on July 29, 2011 which significantly reduced Medicare reimbursement to the Company’s nursing centers and changed payments for the provision of group therapy services effective October 1, 2011, (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 instituted an automatic 2% reduction on each claim submitted to Medicare beginning April 1, 2013, (e) the Company’s ability to adjust to the new patient criteria for long-term acute care (“LTAC”) hospitals under the Pathway for SGR Reform Act of 2013, which will reduce the population of patients eligible for the Company’s hospital services and change the basis upon which the Company is paid, (f) the impact of the Taxpayer Relief Act which, among other things, reduces Medicare payments by an additional 25% for subsequent procedures when multiple therapy services are provided on the same day. At this time, the Company believes that the rules related to multiple therapy services will reduce its Medicare revenues by $25 million to $30 million on an annual basis, (g) changes in the reimbursement rates or the methods or timing of payment from third party payors, including commercial payors and the Medicare and Medicaid programs, changes arising from and related to the Medicare prospective payment system for LTAC hospitals, including potential changes in the Medicare payment rules, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, and changes in Medicare and Medicaid reimbursement for the Company’s TC hospitals, nursing centers, IRFs and home health and hospice operations, and the expiration of the Medicare Part B therapy cap exception process, (h) 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, (i) the ability of the Company’s hospitals and nursing centers to adjust to medical necessity reviews, (j) 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, (k) 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, (l) the Company’s ability to successfully redeploy its capital and proceeds of asset sales in pursuit of its business strategy and pursue its development activities, including through acquisitions, and successfully integrate new operations, including the realization of anticipated revenues, economies of scale, cost savings and productivity gains associated with such operations, as and when planned, including the potential impact of unanticipated issues, expenses and liabilities associated with those activities, (m) the Company’s ability to pay a dividend as, when and if declared by the Board of Directors, in compliance with applicable laws and the Company’s debt and other contractual arrangements, (n) the failure of the Company’s facilities to meet applicable licensure and certification requirements, (o) the further consolidation and cost containment efforts of managed care organizations and other third party payors, (p) the Company’s ability to meet its rental and debt service obligations, (q) the Company’s ability to operate pursuant to the terms of its debt obligations, and comply with its covenants thereunder, and the Company’s ability to operate pursuant to its master lease agreements with Ventas, (r) the condition of the financial markets, including volatility and weakness in the equity, capital and credit markets, which could limit the availability and terms of debt and equity financing sources to fund the requirements of the Company’s businesses, or which could negatively impact the Company’s investment portfolio, (s) the Company’s ability to control costs, particularly labor and employee benefit costs, (t) the Company’s ability to successfully reduce (by divestiture of operations or otherwise) its exposure to professional liability and other claims, (u) the Company’s obligations under various laws to self-report suspected violations of law by the Company to various government agencies, including any associated obligation to refund overpayments to government payors, fines and other sanctions, (v) national 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 the last three fiscal years, (aa) changes in generally accepted accounting principles (“GAAP”) or practices, and changes in tax accounting or tax laws (or authoritative interpretations relating to any of these matters), and (bb) the Company’s ability to maintain an effective system of internal control over financial reporting.
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 ended March 31, 2014 and 2013 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.
Also in this release, the Company provides the financial measure of free cash flows excluding certain items. The Company recognizes that free cash flows excluding certain items is a non-GAAP measurement and is not intended to replace the presentation of the Company’s cash flows in accordance with GAAP. The Company believes that this non-GAAP measurement provides important information to investors related to the amount of discretionary cash flows that are available for other investing and financing activities. In addition, management uses free cash flows excluding certain items in making decisions related to acquisitions, development capital expenditures, dividends, long-term debt repayments and other uses. The Company believes net cash flows provided by operating activities is the most comparable GAAP measure. Readers of the Company’s financial information should consider net cash flows provided by operating activities as an important measure of the Company’s financial performance because it provides the most complete measure of its performance. Free cash flows excluding certain items should be considered in addition to, not as a substitute for, or superior to, financial measures based upon GAAP as an indicator of operating performance. A reconciliation of net cash flows provided by operating activities to free cash flows excluding certain items is included in this press release.
The Company’s earnings release 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. Readers of the Company’s financial information should consider income (loss) from continuing operations as an important measure of the Company’s financial performance because it provides the most complete measure of its performance. Operating income 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 operating income to income (loss) from continuing operations provided in the Condensed Business Segment Data is included in this press release.
About Kindred Healthcare
Kindred Healthcare, Inc., a top-150 private employer in the United States, is a FORTUNE 500 healthcare services company based in Louisville, Kentucky with annual revenues of $5 billion and approximately 63,000 employees in 47 states. At March 31, 2014, Kindred through its subsidiaries provided healthcare services in 2,313 locations, including 100 transitional care hospitals, five inpatient rehabilitation hospitals, 99 nursing centers, 22 sub-acute units, 157 Kindred at Home hospice, home health and non-medical home care locations, 105 inpatient rehabilitation units (hospital-based) and a contract rehabilitation services business, RehabCare, which served 1,825 non-affiliated facilities. Ranked as one of Fortune magazine’s Most Admired Healthcare Companies for six years in a row, Kindred’s mission is to promote healing, provide hope, preserve dignity and produce value for each patient, resident, family member, customer, employee and shareholder we serve. For more information, go to www.kindredhealthcare.com. You can also follow us on Twitter and Facebook.
KINDRED HEALTHCARE, INC. | ||||||||||
Financial Summary | ||||||||||
(Unaudited) | ||||||||||
(In thousands, except per share amounts) | ||||||||||
Three months ended | ||||||||||
March 31, | ||||||||||
2014 | 2013 | |||||||||
Revenues | $ | 1,299,557 | $ | 1,275,659 | ||||||
Income from continuing operations | $ | 21,242 | $ | 10,837 | ||||||
Discontinued operations, net of income taxes: | ||||||||||
Loss from operations | (5,757 | ) | (5,339 | ) | ||||||
Loss on divestiture of operations | (3,006 | ) | (2,025 | ) | ||||||
Loss from discontinued operations | (8,763 | ) | (7,364 | ) | ||||||
Net income | 12,479 | 3,473 | ||||||||
Earnings attributable to noncontrolling interests | (4,459 | ) | (416 | ) | ||||||
Income attributable to Kindred | $ | 8,020 | $ | 3,057 | ||||||
Amounts attributable to Kindred stockholders: | ||||||||||
Income from continuing operations | $ | 16,783 | $ | 10,421 | ||||||
Loss from discontinued operations | (8,763 | ) | (7,364 | ) | ||||||
Net income | $ | 8,020 | $ | 3,057 | ||||||
Earnings per common share: | ||||||||||
Basic: | ||||||||||
Income from continuing operations | $ | 0.31 | $ | 0.20 | ||||||
Discontinued operations: | ||||||||||
Loss from operations | (0.10 | ) | (0.10 | ) | ||||||
Loss on divestiture of operations | (0.06 | ) | (0.04 | ) | ||||||
Loss from discontinued operations | (0.16 | ) | (0.14 | ) | ||||||
Net income | $ | 0.15 | $ | 0.06 | ||||||
Diluted: | ||||||||||
Income from continuing operations | $ | 0.31 | $ | 0.20 | ||||||
Discontinued operations: | ||||||||||
Loss from operations | (0.10 | ) | (0.10 | ) | ||||||
Loss on divestiture of operations | (0.06 | ) | (0.04 | ) | ||||||
Loss from discontinued operations | (0.16 | ) | (0.14 | ) | ||||||
Net income | $ | 0.15 | $ | 0.06 | ||||||
Shares used in computing earnings per common share: | ||||||||||
Basic | 52,641 | 52,062 | ||||||||
Diluted | 52,711 | 52,083 | ||||||||
Cash dividends declared and paid per common share | $ | 0.12 | $ | - | ||||||
KINDRED HEALTHCARE, INC. | ||||||||||
Condensed Consolidated Statement of Operations | ||||||||||
(Unaudited) | ||||||||||
(In thousands, except per share amounts) | ||||||||||
Three months ended | ||||||||||
March 31, | ||||||||||
2014 | 2013 | |||||||||
Revenues | $ | 1,299,557 | $ | 1,275,659 | ||||||
Salaries, wages and benefits | 780,294 | 790,091 | ||||||||
Supplies | 83,294 | 85,682 | ||||||||
Rent | 82,474 | 77,957 | ||||||||
Other operating expenses | 253,480 | 235,100 | ||||||||
Other income | (237 | ) | (1,009 | ) | ||||||
Impairment charges | 74 | 187 | ||||||||
Depreciation and amortization | 40,210 | 42,249 | ||||||||
Interest expense | 25,808 | 28,171 | ||||||||
Investment income | (184 | ) | (87 | ) | ||||||
1,265,213 | 1,258,341 | |||||||||
Income from continuing operations before income taxes | 34,344 | 17,318 | ||||||||
Provision for income taxes | 13,102 | 6,481 | ||||||||
Income from continuing operations | 21,242 | 10,837 | ||||||||
Discontinued operations, net of income taxes: | ||||||||||
Loss from operations | (5,757 | ) | (5,339 | ) | ||||||
Loss on divestiture of operations | (3,006 | ) | (2,025 | ) | ||||||
Loss from discontinued operations | (8,763 | ) | (7,364 | ) | ||||||
Net income | 12,479 | 3,473 | ||||||||
Earnings attributable to noncontrolling interests | (4,459 | ) | (416 | ) | ||||||
Income attributable to Kindred | $ | 8,020 | $ | 3,057 | ||||||
Amounts attributable to Kindred stockholders: | ||||||||||
Income from continuing operations | $ | 16,783 | $ | 10,421 | ||||||
Loss from discontinued operations | (8,763 | ) | (7,364 | ) | ||||||
Net income | $ | 8,020 | $ | 3,057 | ||||||
Earnings per common share: | ||||||||||
Basic: | ||||||||||
Income from continuing operations | $ | 0.31 | $ | 0.20 | ||||||
Discontinued operations: | ||||||||||
Loss from operations | (0.10 | ) | (0.10 | ) | ||||||
Loss on divestiture of operations | (0.06 | ) | (0.04 | ) | ||||||
Loss from discontinued operations | (0.16 | ) | (0.14 | ) | ||||||
Net income | $ | 0.15 | $ | 0.06 | ||||||
Diluted: | ||||||||||
Income from continuing operations | $ | 0.31 | $ | 0.20 | ||||||
Discontinued operations: | ||||||||||
Loss from operations | (0.10 | ) | (0.10 | ) | ||||||
Loss on divestiture of operations | (0.06 | ) | (0.04 | ) | ||||||
Loss from discontinued operations | (0.16 | ) | (0.14 | ) | ||||||
Net income | $ | 0.15 | $ | 0.06 | ||||||
Shares used in computing earnings per common share: | ||||||||||
Basic | 52,641 | 52,062 | ||||||||
Diluted | 52,711 | 52,083 | ||||||||
Cash dividends declared and paid per common share | $ | 0.12 | $ | - | ||||||
KINDRED HEALTHCARE, INC. | ||||||||||
Condensed Consolidated Balance Sheet | ||||||||||
(Unaudited) | ||||||||||
(In thousands, except per share amounts) | ||||||||||
March 31, | December 31, | |||||||||
2014 | 2013 | |||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 49,048 | $ | 35,972 | ||||||
Cash - restricted | 3,689 | 3,713 | ||||||||
Insurance subsidiary investments | 95,855 | 96,295 | ||||||||
Accounts receivable less allowance for loss | 979,598 | 916,529 | ||||||||
Inventories | 25,633 | 25,780 | ||||||||
Deferred tax assets | 32,258 | 37,920 | ||||||||
Income taxes | 9,090 | 36,846 | ||||||||
Other | 46,554 | 43,673 | ||||||||
1,241,725 | 1,196,728 | |||||||||
Property and equipment | 1,937,826 | 1,906,366 | ||||||||
Accumulated depreciation | (1,007,623 | ) | (979,791 | ) | ||||||
930,203 | 926,575 | |||||||||
Goodwill | 992,214 | 992,102 | ||||||||
Intangible assets less accumulated amortization | 417,182 | 423,303 | ||||||||
Assets held for sale | 17,555 | 20,978 | ||||||||
Insurance subsidiary investments | 157,567 | 149,094 | ||||||||
Deferred tax assets | 18,659 | 17,043 | ||||||||
Other | 221,201 | 220,046 | ||||||||
Total assets | $ | 3,996,306 | $ | 3,945,869 | ||||||
LIABILITIES AND EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 167,552 | $ | 181,772 | ||||||
Salaries, wages and other compensation | 351,581 | 361,192 | ||||||||
Due to third party payors | 31,734 | 33,747 | ||||||||
Professional liability risks | 65,439 | 60,993 | ||||||||
Other accrued liabilities | 129,478 | 146,495 | ||||||||
Long-term debt due within one year | 8,218 | 8,222 | ||||||||
754,002 | 792,421 | |||||||||
Long-term debt | 1,660,596 | 1,579,391 | ||||||||
Professional liability risks | 248,740 | 246,230 | ||||||||
Deferred credits and other liabilities | 207,067 | 206,611 | ||||||||
Equity: | ||||||||||
Stockholders’ equity: |
||||||||||
Common stock, $0.25 par value; authorized 175,000 shares; issued 54,777 shares - March 31, 2014 and 54,165 shares - December 31, 2013 |
13,694 | 13,541 | ||||||||
Capital in excess of par value | 1,144,204 | 1,146,193 | ||||||||
Accumulated other comprehensive loss | (797 | ) | (252 | ) | ||||||
Retained deficit | (71,285 | ) | (76,825 | ) | ||||||
1,085,816 | 1,082,657 | |||||||||
Noncontrolling interests | 40,085 | 38,559 | ||||||||
Total equity | 1,125,901 | 1,121,216 | ||||||||
Total liabilities and equity | $ | 3,996,306 | $ | 3,945,869 | ||||||
KINDRED HEALTHCARE, INC. | ||||||||||
Condensed Consolidated Statement of Cash Flows | ||||||||||
(Unaudited) | ||||||||||
(In thousands) | ||||||||||
Three months ended | ||||||||||
March 31, | ||||||||||
2014 | 2013 | |||||||||
Cash flows from operating activities: | ||||||||||
Net income | $ | 12,479 | $ | 3,473 | ||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
||||||||||
Depreciation and amortization | 41,304 | 52,954 | ||||||||
Amortization of stock-based compensation costs | 2,585 | 2,248 | ||||||||
Amortization of deferred financing costs | 2,397 | 2,613 | ||||||||
Provision for doubtful accounts | 8,760 | 11,266 | ||||||||
Deferred income taxes | 3,975 | (344 | ) | |||||||
Impairment charges | 518 | 436 | ||||||||
Loss on divestiture of discontinued operations | 3,006 | 2,025 | ||||||||
Other | 2,044 | 420 | ||||||||
Change in operating assets and liabilities: | ||||||||||
Accounts receivable | (71,829 | ) | (67,411 | ) | ||||||
Inventories and other assets | (6,218 | ) | (8,147 | ) | ||||||
Accounts payable | (13,526 | ) | (15,790 | ) | ||||||
Income taxes | 29,413 | 12,675 | ||||||||
Due to third party payors | (2,013 | ) | (1,028 | ) | ||||||
Other accrued liabilities | (28,649 | ) | 29,443 | |||||||
Net cash provided by (used in) operating activities | (15,754 | ) | 24,833 | |||||||
Cash flows from investing activities: | ||||||||||
Routine capital expenditures | (21,677 | ) | (22,370 | ) | ||||||
Development capital expenditures | (751 | ) | (2,388 | ) | ||||||
Acquisitions, net of cash acquired | (22,715 | ) | - | |||||||
Sale of assets | 5,034 | 5,060 | ||||||||
Purchase of insurance subsidiary investments | (10,114 | ) | (10,836 | ) | ||||||
Sale of insurance subsidiary investments | 8,762 | 10,002 | ||||||||
Net change in insurance subsidiary cash and cash equivalents | (6,599 | ) | (33,096 | ) | ||||||
Change in other investments | 640 | 319 | ||||||||
Other | (551 | ) | (144 | ) | ||||||
Net cash used in investing activities | (47,971 | ) | (53,453 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Proceeds from borrowings under revolving credit | 508,700 | 483,500 | ||||||||
Repayment of borrowings under revolving credit | (425,800 | ) | (459,200 | ) | ||||||
Repayment of other long-term debt | (2,059 | ) | (2,666 | ) | ||||||
Payment of deferred financing costs | (270 | ) | (202 | ) | ||||||
Distribution made to noncontrolling interests | (2,933 | ) | (491 | ) | ||||||
Issuance of common stock | 3,804 | 4 | ||||||||
Dividends paid | (6,514 | ) | - | |||||||
Other | 1,873 | 332 | ||||||||
Net cash provided by financing activities | 76,801 | 21,277 | ||||||||
Change in cash and cash equivalents | 13,076 | (7,343 | ) | |||||||
Cash and cash equivalents at beginning of period | 35,972 | 50,007 | ||||||||
Cash and cash equivalents at end of period | $ | 49,048 | $ | 42,664 | ||||||
KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||||||
Condensed Consolidated Statement of Operations | ||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||||||||
First | ||||||||||||||||||||||||||||||
2013 Quarters | Quarter | |||||||||||||||||||||||||||||
First | Second | Third | Fourth | Year | 2014 | |||||||||||||||||||||||||
Revenues | $ | 1,275,659 | $ | 1,205,661 | $ | 1,188,057 | $ | 1,222,332 | $ | 4,891,709 | $ | 1,299,557 | ||||||||||||||||||
Salaries, wages and benefits | 790,091 | 722,710 | 725,007 | 745,153 | 2,982,961 | 780,294 | ||||||||||||||||||||||||
Supplies | 85,682 | 81,862 | 80,714 | 79,954 | 328,212 | 83,294 | ||||||||||||||||||||||||
Rent | 77,957 | 78,796 | 78,228 | 82,381 | 317,362 | 82,474 | ||||||||||||||||||||||||
Other operating expenses | 235,100 | 232,229 | 266,098 | 249,141 | 982,568 | 253,480 | ||||||||||||||||||||||||
Other (income) expense | (1,009 | ) | (26 | ) | 52 | (457 | ) | (1,440 | ) | (237 | ) | |||||||||||||||||||
Impairment charges | 187 | 438 | 441 | 76,127 | 77,193 | 74 | ||||||||||||||||||||||||
Depreciation and amortization | 42,249 | 39,228 | 37,190 | 38,361 | 157,028 | 40,210 | ||||||||||||||||||||||||
Interest expense | 28,171 | 29,084 | 25,633 | 25,161 | 108,049 | 25,808 | ||||||||||||||||||||||||
Investment income | (87 | ) | (1,475 | ) | (1,234 | ) | (1,255 | ) | (4,051 | ) | (184 | ) | ||||||||||||||||||
1,258,341 | 1,182,846 | 1,212,129 | 1,294,566 | 4,947,882 | 1,265,213 | |||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes |
17,318 | 22,815 | (24,072 | ) | (72,234 | ) | (56,173 | ) | 34,344 | |||||||||||||||||||||
Provision (benefit) for income taxes | 6,481 | 9,160 | (7,217 | ) | (20,903 | ) | (12,479 | ) | 13,102 | |||||||||||||||||||||
Income (loss) from continuing operations | 10,837 | 13,655 | (16,855 | ) | (51,331 | ) | (43,694 | ) | 21,242 | |||||||||||||||||||||
Discontinued operations, net of income taxes: | ||||||||||||||||||||||||||||||
Loss from operations | (5,339 | ) | (976 | ) | (24,373 | ) | (6,566 | ) | (37,254 | ) | (5,757 | ) | ||||||||||||||||||
Loss on divestiture of operations | (2,025 | ) | (10,852 | ) | (65,016 | ) | (5,994 | ) | (83,887 | ) | (3,006 | ) | ||||||||||||||||||
Loss from discontinued operations | (7,364 | ) | (11,828 | ) | (89,389 | ) | (12,560 | ) | (121,141 | ) | (8,763 | ) | ||||||||||||||||||
Net income (loss) | 3,473 | 1,827 | (106,244 | ) | (63,891 | ) | (164,835 | ) | 12,479 | |||||||||||||||||||||
Earnings attributable to noncontrolling interests | (416 | ) | (82 | ) | (754 | ) | (2,405 | ) | (3,657 | ) | (4,459 | ) | ||||||||||||||||||
Income (loss) attributable to Kindred | $ | 3,057 | $ | 1,745 | $ | (106,998 | ) | $ | (66,296 | ) | $ | (168,492 | ) | $ | 8,020 | |||||||||||||||
Amounts attributable to Kindred stockholders: | ||||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 10,421 | $ | 13,573 | $ | (17,609 | ) | $ | (53,736 | ) | $ | (47,351 | ) | $ | 16,783 | |||||||||||||||
Loss from discontinued operations | (7,364 | ) | (11,828 | ) | (89,389 | ) | (12,560 | ) | (121,141 | ) | (8,763 | ) | ||||||||||||||||||
Net income (loss) | $ | 3,057 | $ | 1,745 | $ | (106,998 | ) | $ | (66,296 | ) | $ | (168,492 | ) | $ | 8,020 | |||||||||||||||
Earnings (loss) per common share: | ||||||||||||||||||||||||||||||
Basic: | ||||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 0.20 | $ | 0.25 | $ | (0.33 | ) | $ | (1.03 | ) | $ | (0.91 | ) | $ | 0.31 | |||||||||||||||
Discontinued operations: | ||||||||||||||||||||||||||||||
Loss from operations | (0.10 | ) | (0.02 | ) | (0.47 | ) | (0.13 | ) | (0.71 | ) | (0.10 | ) | ||||||||||||||||||
Loss on divestiture of operations | (0.04 | ) | (0.20 | ) | (1.24 | ) | (0.11 | ) | (1.61 | ) | (0.06 | ) | ||||||||||||||||||
Loss from discontinued operations | (0.14 | ) | (0.22 | ) | (1.71 | ) | (0.24 | ) | (2.32 | ) | (0.16 | ) | ||||||||||||||||||
Net income (loss) | $ | 0.06 | $ | 0.03 | $ | (2.04 | ) | $ | (1.27 | ) | $ | (3.23 | ) | $ | 0.15 | |||||||||||||||
Diluted: | ||||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 0.20 | $ | 0.25 | $ | (0.33 | ) | $ | (1.03 | ) | $ | (0.91 | ) | $ | 0.31 | |||||||||||||||
Discontinued operations: | ||||||||||||||||||||||||||||||
Loss from operations | (0.10 | ) | (0.02 | ) | (0.47 | ) | (0.13 | ) | (0.71 | ) | (0.10 | ) | ||||||||||||||||||
Loss on divestiture of operations | (0.04 | ) | (0.20 | ) | (1.24 | ) | (0.11 | ) | (1.61 | ) | (0.06 | ) | ||||||||||||||||||
Loss from discontinued operations | (0.14 | ) | (0.22 | ) | (1.71 | ) | (0.24 | ) | (2.32 | ) | (0.16 | ) | ||||||||||||||||||
Net income (loss) | $ | 0.06 | $ | 0.03 | $ | (2.04 | ) | $ | (1.27 | ) | $ | (3.23 | ) | $ | 0.15 | |||||||||||||||
Shares used in computing earnings (loss) per common share: |
||||||||||||||||||||||||||||||
Basic | 52,062 | 52,265 | 52,323 | 52,344 | 52,249 | 52,641 | ||||||||||||||||||||||||
Diluted | 52,083 | 52,284 | 52,323 | 52,344 | 52,249 | 52,711 | ||||||||||||||||||||||||
KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||||||
Condensed Business Segment Data | ||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||
First | ||||||||||||||||||||||||||||||
2013 Quarters | Quarter | |||||||||||||||||||||||||||||
First | Second | Third | Fourth | Year | 2014 | |||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||
Hospital division | $ | 671,206 | $ | 618,598 | $ | 604,169 | $ | 616,721 | $ | 2,510,694 | $ | 657,453 | ||||||||||||||||||
Nursing center division | 275,141 | 269,501 | 270,210 | 274,908 | 1,089,760 | 281,572 | ||||||||||||||||||||||||
Rehabilitation division: | ||||||||||||||||||||||||||||||
Skilled nursing rehabilitation services | 257,884 | 248,710 | 244,384 | 242,376 | 993,354 | 253,285 | ||||||||||||||||||||||||
Hospital rehabilitation services | 74,523 | 69,777 | 68,296 | 74,017 | 286,613 | 73,964 | ||||||||||||||||||||||||
332,407 | 318,487 | 312,680 | 316,393 | 1,279,967 | 327,249 | |||||||||||||||||||||||||
Care management division | 51,621 | 53,039 | 53,801 | 66,466 | 224,927 | 87,704 | ||||||||||||||||||||||||
1,330,375 | 1,259,625 | 1,240,860 | 1,274,488 | 5,105,348 | 1,353,978 | |||||||||||||||||||||||||
Eliminations: | ||||||||||||||||||||||||||||||
Skilled nursing rehabilitation services | (29,303 | ) | (29,257 | ) | (28,698 | ) | (28,728 | ) | (115,986 | ) | (30,070 | ) | ||||||||||||||||||
Hospital rehabilitation services | (24,200 | ) | (23,706 | ) | (22,944 | ) | (22,553 | ) | (93,403 | ) | (23,689 | ) | ||||||||||||||||||
Nursing centers | (1,213 | ) | (1,001 | ) | (1,161 | ) | (875 | ) | (4,250 | ) | (662 | ) | ||||||||||||||||||
(54,716 | ) | (53,964 | ) | (52,803 | ) | (52,156 | ) | (213,639 | ) | (54,421 | ) | |||||||||||||||||||
$ | 1,275,659 | $ | 1,205,661 | $ | 1,188,057 | $ | 1,222,332 | $ | 4,891,709 | $ | 1,299,557 | |||||||||||||||||||
Income (loss) from continuing operations: | ||||||||||||||||||||||||||||||
Operating income (loss): | ||||||||||||||||||||||||||||||
Hospital division | $ | 149,698 | $ | 131,676 | $ | 113,147 | $ | 127,898 | $ | 522,419 | $ | 146,895 | ||||||||||||||||||
Nursing center division | 29,844 | 36,678 | 32,146 | 36,694 | 135,362 | 39,095 | ||||||||||||||||||||||||
Rehabilitation division: | ||||||||||||||||||||||||||||||
Skilled nursing rehabilitation services | 12,373 | 20,686 | (8,155 | ) | 13,356 | 38,260 | 17,358 | |||||||||||||||||||||||
Hospital rehabilitation services | 18,132 | 19,573 | 18,215 | 18,005 | 73,925 | 19,820 | ||||||||||||||||||||||||
30,505 | 40,259 | 10,060 | 31,361 | 112,185 | 37,178 | |||||||||||||||||||||||||
Care management division | 2,786 | 3,961 | 1,085 | 2,131 | 9,963 | 4,697 | ||||||||||||||||||||||||
Corporate: | ||||||||||||||||||||||||||||||
Overhead | (45,585 | ) | (43,196 | ) | (39,157 | ) | (48,557 | ) | (176,495 | ) | (44,050 | ) | ||||||||||||||||||
Insurance subsidiary | (509 | ) | (384 | ) | (482 | ) | (539 | ) | (1,914 | ) | (406 | ) | ||||||||||||||||||
(46,094 | ) | (43,580 | ) | (39,639 | ) | (49,096 | ) | (178,409 | ) | (44,456 | ) | |||||||||||||||||||
Impairment charges | (187 | ) | (438 | ) | (441 | ) | (76,127 | ) | (77,193 | ) | (74 | ) | ||||||||||||||||||
Transaction costs | (944 | ) | (108 | ) | (613 | ) | (447 | ) | (2,112 | ) | (683 | ) | ||||||||||||||||||
Operating income | 165,608 | 168,448 | 115,745 | 72,414 | 522,215 | 182,652 | ||||||||||||||||||||||||
Rent | (77,957 | ) | (78,796 | ) | (78,228 | ) | (82,381 | ) | (317,362 | ) | (82,474 | ) | ||||||||||||||||||
Depreciation and amortization | (42,249 | ) | (39,228 | ) | (37,190 | ) | (38,361 | ) | (157,028 | ) | (40,210 | ) | ||||||||||||||||||
Interest, net | (28,084 | ) | (27,609 | ) | (24,399 | ) | (23,906 | ) | (103,998 | ) | (25,624 | ) | ||||||||||||||||||
Income (loss) from continuing operations before income taxes |
17,318 | 22,815 | (24,072 | ) | (72,234 | ) | (56,173 | ) | 34,344 | |||||||||||||||||||||
Provision (benefit) for income taxes | 6,481 | 9,160 | (7,217 | ) | (20,903 | ) | (12,479 | ) | 13,102 | |||||||||||||||||||||
$ | 10,837 | $ | 13,655 | $ | (16,855 | ) | $ | (51,331 | ) | $ | (43,694 | ) | $ | 21,242 | ||||||||||||||||
KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Statement of Operations | ||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
First Quarter 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||
Nursing | Rehabilitation division | Care | Transaction- | |||||||||||||||||||||||||||||||||||||||||||||
Hospital | center | Skilled nursing | Hospital | management | related | |||||||||||||||||||||||||||||||||||||||||||
division | division | services | services | Total | division | Corporate | costs | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||||
Revenues | $ | 657,453 | $ | 281,572 | $ | 253,285 | $ | 73,964 | $ | 327,249 | $ | 87,704 | $ | - | $ | - | $ | (54,421 | ) | $ | 1,299,557 | |||||||||||||||||||||||||||
Salaries, wages and benefits | 279,782 | 129,290 | 224,607 | 49,999 | 274,606 | 68,689 | 27,838 | 339 | (250 | ) | 780,294 | |||||||||||||||||||||||||||||||||||||
Supplies | 68,282 | 10,961 | 736 | 35 | 771 | 3,099 | 181 | - | - | 83,294 | ||||||||||||||||||||||||||||||||||||||
Rent | 54,233 | 24,280 | 1,089 | 51 | 1,140 | 2,256 | 565 | - | - | 82,474 | ||||||||||||||||||||||||||||||||||||||
Other operating expenses | 162,527 | 102,430 | 10,589 | 4,105 | 14,694 | 11,219 | 16,437 | 344 | (54,171 | ) | 253,480 | |||||||||||||||||||||||||||||||||||||
Other (income) expense | (33 | ) | (204 | ) | (5 | ) | 5 | - | - | - | - | - | (237 | ) | ||||||||||||||||||||||||||||||||||
Impairment charges | - | 74 | - | - | - | - | - | - | - | 74 | ||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 17,453 | 7,947 | 2,695 | 2,564 | 5,259 | 2,125 | 7,426 | - | - | 40,210 | ||||||||||||||||||||||||||||||||||||||
Interest expense | 185 | 14 | 58 | - | 58 | 10 | 25,541 | - | - | 25,808 | ||||||||||||||||||||||||||||||||||||||
Investment income | (3 | ) | (11 | ) | (59 | ) | - | (59 | ) | - | (111 | ) | - | - | (184 | ) | ||||||||||||||||||||||||||||||||
582,426 | 274,781 | 239,710 | 56,759 | 296,469 | 87,398 | 77,877 | 683 | (54,421 | ) | 1,265,213 | ||||||||||||||||||||||||||||||||||||||
Income from continuing operations before income taxes |
$ | 75,027 | $ | 6,791 | $ | 13,575 | $ | 17,205 | $ | 30,780 | $ | 306 | $ | (77,877 | ) | $ | (683 | ) | $ | - | 34,344 | |||||||||||||||||||||||||||
Provision for income taxes | 13,102 | |||||||||||||||||||||||||||||||||||||||||||||||
Income from continuing operations | $ | 21,242 | ||||||||||||||||||||||||||||||||||||||||||||||
Capital expenditures, excluding acquisitions (including discontinued operations): |
||||||||||||||||||||||||||||||||||||||||||||||||
Routine | $ | 8,402 | $ | 5,055 | $ | 849 | $ | 56 | $ | 905 | $ | 308 | $ | 7,007 | $ | - | $ | - | $ | 21,677 | ||||||||||||||||||||||||||||
Development | 511 | 240 | - | - | - | - | - | - | - | 751 | ||||||||||||||||||||||||||||||||||||||
$ | 8,913 | $ | 5,295 | $ | 849 | $ | 56 | $ | 905 | $ | 308 | $ | 7,007 | $ | - | $ | - | $ | 22,428 | |||||||||||||||||||||||||||||
First Quarter 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||
Nursing | Rehabilitation division | Care | Transaction- | |||||||||||||||||||||||||||||||||||||||||||||
Hospital | center | Skilled nursing | Hospital | management | related | |||||||||||||||||||||||||||||||||||||||||||
division (a) | division (a) | services (a) | services (a) | Total | division (a) | Corporate (a) | costs | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||||
Revenues | $ | 671,206 | $ | 275,141 | $ | 257,884 | $ | 74,523 | $ | 332,407 | $ | 51,621 | $ | - | $ | - | $ | (54,716 | ) | $ | 1,275,659 | |||||||||||||||||||||||||||
Salaries, wages and benefits | 295,761 | 137,305 | 234,844 | 52,420 | 287,264 | 40,314 | 29,688 | - | (241 | ) | 790,091 | |||||||||||||||||||||||||||||||||||||
Supplies | 69,449 | 12,947 | 811 | 32 | 843 | 2,238 | 205 | - | - | 85,682 | ||||||||||||||||||||||||||||||||||||||
Rent | 50,609 | 24,287 | 1,235 | 17 | 1,252 | 1,186 | 623 | - | - | 77,957 | ||||||||||||||||||||||||||||||||||||||
Other operating expenses | 156,403 | 95,446 | 9,856 | 3,919 | 13,775 | 6,283 | 16,724 | 944 | (54,475 | ) | 235,100 | |||||||||||||||||||||||||||||||||||||
Other (income) expense | (105 | ) | (401 | ) | - | 20 | 20 | - | (523 | ) | - | - | (1,009 | ) | ||||||||||||||||||||||||||||||||||
Impairment charges | 176 | 11 | - | - | - | - | - | - | - | 187 | ||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 20,168 | 7,546 | 3,112 | 2,331 | 5,443 | 1,526 | 7,566 | - | - | 42,249 | ||||||||||||||||||||||||||||||||||||||
Interest expense | 182 | 17 | 96 | - | 96 | - | 27,876 | - | - | 28,171 | ||||||||||||||||||||||||||||||||||||||
Investment income | (5 | ) | (9 | ) | (28 | ) | - | (28 | ) | - | (45 | ) | - | - | (87 | ) | ||||||||||||||||||||||||||||||||
592,638 | 277,149 | 249,926 | 58,739 | 308,665 | 51,547 | 82,114 | 944 | (54,716 | ) | 1,258,341 | ||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes |
$ | 78,568 | $ | (2,008 | ) | $ | 7,958 | $ | 15,784 | $ | 23,742 | $ | 74 | $ | (82,114 | ) | $ | (944 | ) | $ | - | 17,318 | ||||||||||||||||||||||||||
Provision for income taxes | 6,481 | |||||||||||||||||||||||||||||||||||||||||||||||
Income from continuing operations | $ | 10,837 | ||||||||||||||||||||||||||||||||||||||||||||||
Capital expenditures, excluding acquisitions (including discontinued operations): |
||||||||||||||||||||||||||||||||||||||||||||||||
Routine | $ | 10,271 | $ | 5,819 | $ | 605 | $ | 32 | $ | 637 | $ | 195 | $ | 5,448 | $ | - | $ | - | $ | 22,370 | ||||||||||||||||||||||||||||
Development | 2,388 | - | - | - | - | - | - | - | - | 2,388 | ||||||||||||||||||||||||||||||||||||||
$ | 12,659 | $ | 5,819 | $ | 605 | $ | 32 | $ | 637 | $ | 195 | $ | 5,448 | $ | - | $ | - | $ | 24,758 | |||||||||||||||||||||||||||||
______ |
||||||||||||||||||||||||||||||||||||||||||||||||
(a) Includes one-time bonus costs of $20.1 million (hospital division - $8.0 million, nursing center division - $4.7 million, rehabilitation division - $6.3 million (skilled nursing rehabilitation services - $5.0 million and hospital rehabilitation services - $1.3 million), care management division - $0.8 million and corporate - $0.3 million). |
||||||||||||||||||||||||||||||||||||||||||||||||
KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||
Condensed Business Segment Data | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
First | ||||||||||||||||||||||||
2013 Quarters | Quarter | |||||||||||||||||||||||
First | Second | Third | Fourth | Year | 2014 | |||||||||||||||||||
Hospital division data: | ||||||||||||||||||||||||
End of period data: | ||||||||||||||||||||||||
Number of hospitals: | ||||||||||||||||||||||||
Transitional care | 100 | 100 | 100 | 100 | 100 | |||||||||||||||||||
Inpatient rehabilitation | 5 | 5 | 5 | 5 | 5 | |||||||||||||||||||
105 | 105 | 105 | 105 | 105 | ||||||||||||||||||||
Number of licensed beds: | ||||||||||||||||||||||||
Transitional care | 7,238 | 7,238 | 7,252 | 7,284 | 7,324 | |||||||||||||||||||
Inpatient rehabilitation | 215 | 215 | 215 | 215 | 215 | |||||||||||||||||||
7,453 | 7,453 | 7,467 | 7,499 | 7,539 | ||||||||||||||||||||
Revenue mix %: | ||||||||||||||||||||||||
Medicare | 63 | 61 | 59 | 59 | 61 | 61 | ||||||||||||||||||
Medicaid | 5 | 6 | 7 | 6 | 6 | 6 | ||||||||||||||||||
Medicare Advantage | 10 | 11 | 11 | 12 | 11 | 11 | ||||||||||||||||||
Commercial insurance and other | 22 | 22 | 23 | 23 | 22 | 22 | ||||||||||||||||||
Admissions: | ||||||||||||||||||||||||
Medicare | 10,541 | 9,652 | 9,197 | 9,467 | 38,857 | 10,044 | ||||||||||||||||||
Medicaid | 685 | 744 | 788 | 712 | 2,929 | 835 | ||||||||||||||||||
Medicare Advantage | 1,543 | 1,512 | 1,446 | 1,472 | 5,973 | 1,542 | ||||||||||||||||||
Commercial insurance and other | 2,203 | 2,106 | 2,132 | 2,113 | 8,554 | 2,459 | ||||||||||||||||||
14,972 | 14,014 | 13,563 | 13,764 | 56,313 | 14,880 | |||||||||||||||||||
Admissions mix %: | ||||||||||||||||||||||||
Medicare | 70 | 69 | 68 | 69 | 69 | 67 | ||||||||||||||||||
Medicaid | 5 | 5 | 6 | 5 | 5 | 6 | ||||||||||||||||||
Medicare Advantage | 10 | 11 | 10 | 11 | 11 | 10 | ||||||||||||||||||
Commercial insurance and other | 15 | 15 | 16 | 15 | 15 | 17 | ||||||||||||||||||
Patient days: | ||||||||||||||||||||||||
Medicare | 258,870 | 239,574 | 228,589 | 231,462 | 958,495 | 244,814 | ||||||||||||||||||
Medicaid | 28,776 | 30,447 | 31,569 | 29,799 | 120,591 | 32,909 | ||||||||||||||||||
Medicare Advantage | 43,805 | 44,122 | 42,616 | 44,381 | 174,924 | 45,651 | ||||||||||||||||||
Commercial insurance and other | 72,926 | 66,197 | 68,410 | 66,257 | 273,790 | 74,493 | ||||||||||||||||||
404,377 | 380,340 | 371,184 | 371,899 | 1,527,800 | 397,867 | |||||||||||||||||||
Average length of stay: | ||||||||||||||||||||||||
Medicare | 24.6 | 24.8 | 24.9 | 24.4 | 24.7 | 24.4 | ||||||||||||||||||
Medicaid | 42.0 | 40.9 | 40.1 | 41.9 | 41.2 | 39.4 | ||||||||||||||||||
Medicare Advantage | 28.4 | 29.2 | 29.5 | 30.2 | 29.3 | 29.6 | ||||||||||||||||||
Commercial insurance and other | 33.1 | 31.4 | 32.1 | 31.4 | 32.0 | 30.3 | ||||||||||||||||||
Weighted average | 27.0 | 27.1 | 27.4 | 27.0 | 27.1 | 26.7 | ||||||||||||||||||
Revenues per admission: | ||||||||||||||||||||||||
Medicare | $ | 40,020 | $ | 38,957 | $ | 39,039 | $ | 38,729 | $ | 39,209 | $ | 39,528 | ||||||||||||
Medicaid | 51,441 | 48,142 | 51,890 | 52,599 | 51,005 | 50,215 | ||||||||||||||||||
Medicare Advantage | 44,576 | 45,647 | 46,537 | 48,899 | 46,387 | 47,639 | ||||||||||||||||||
Commercial insurance and other | 65,971 | 65,408 | 64,232 | 66,561 | 65,545 | 58,987 | ||||||||||||||||||
Weighted average | 44,831 | 44,141 | 44,545 | 44,807 | 44,585 | 44,184 | ||||||||||||||||||
Revenues per patient day: | ||||||||||||||||||||||||
Medicare | $ | 1,630 | $ | 1,570 | $ | 1,571 | $ | 1,584 | $ | 1,590 | $ | 1,622 | ||||||||||||
Medicaid | 1,225 | 1,176 | 1,295 | 1,257 | 1,239 | 1,274 | ||||||||||||||||||
Medicare Advantage | 1,570 | 1,564 | 1,579 | 1,622 | 1,584 | 1,609 | ||||||||||||||||||
Commercial insurance and other | 1,993 | 2,081 | 2,002 | 2,123 | 2,048 | 1,947 | ||||||||||||||||||
Weighted average | 1,660 | 1,626 | 1,628 | 1,658 | 1,643 | 1,652 | ||||||||||||||||||
Medicare case mix index (discharged patients only) | 1.18 | 1.18 | 1.16 | 1.15 | 1.17 | 1.17 | ||||||||||||||||||
Average daily census | 4,493 | 4,180 | 4,035 | 4,042 | 4,186 | 4,421 | ||||||||||||||||||
Occupancy % | 67.9 | 62.9 | 60.4 | 60.8 | 63.0 | 66.7 | ||||||||||||||||||
Annualized employee turnover % | 22.1 | 21.6 | 21.3 | 21.2 | 20.6 | |||||||||||||||||||
KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||
Condensed Business Segment Data (Continued) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
First | ||||||||||||||||||||||||
2013 Quarters | Quarter | |||||||||||||||||||||||
First | Second | Third | Fourth | Year | 2014 | |||||||||||||||||||
Nursing center division data: | ||||||||||||||||||||||||
End of period data: | ||||||||||||||||||||||||
Number of facilities: | ||||||||||||||||||||||||
Nursing centers: | ||||||||||||||||||||||||
Owned or leased | 96 | 96 | 96 | 96 | 95 | |||||||||||||||||||
Managed | 4 | 4 | 4 | 4 | 4 | |||||||||||||||||||
Assisted living facilities | 6 | 6 | 6 | 6 | 6 | |||||||||||||||||||
106 | 106 | 106 | 106 | 105 | ||||||||||||||||||||
Number of licensed beds: | ||||||||||||||||||||||||
Nursing centers: | ||||||||||||||||||||||||
Owned or leased | 12,153 | 12,153 | 12,153 | 12,153 | 12,018 | |||||||||||||||||||
Managed | 485 | 485 | 485 | 485 | 485 | |||||||||||||||||||
Assisted living facilities | 341 | 341 | 341 | 341 | 341 | |||||||||||||||||||
12,979 | 12,979 | 12,979 | 12,979 | 12,844 | ||||||||||||||||||||
Revenue mix %: | ||||||||||||||||||||||||
Medicare | 35 | 34 | 33 | 32 | 34 | 32 | ||||||||||||||||||
Medicaid | 36 | 37 | 39 | 40 | 37 | 40 | ||||||||||||||||||
Medicare Advantage | 8 | 8 | 7 | 8 | 8 | 9 | ||||||||||||||||||
Private and other | 21 | 21 | 21 | 20 | 21 | 19 | ||||||||||||||||||
Patient days (a): | ||||||||||||||||||||||||
Medicare | 171,881 | 162,488 | 158,458 | 152,185 | 645,012 | 152,037 | ||||||||||||||||||
Medicaid | 515,970 | 516,103 | 525,625 | 532,378 | 2,090,076 | 524,417 | ||||||||||||||||||
Medicare Advantage | 52,460 | 52,064 | 45,865 | 49,319 | 199,708 | 54,821 | ||||||||||||||||||
Private and other | 218,175 | 217,914 | 218,845 | 214,946 | 869,880 | 204,848 | ||||||||||||||||||
958,486 | 948,569 | 948,793 | 948,828 | 3,804,676 | 936,123 | |||||||||||||||||||
Patient day mix % (a): | ||||||||||||||||||||||||
Medicare | 18 | 17 | 17 | 16 | 17 | 16 | ||||||||||||||||||
Medicaid | 54 | 54 | 55 | 56 | 55 | 56 | ||||||||||||||||||
Medicare Advantage | 5 | 6 | 5 | 5 | 5 | 6 | ||||||||||||||||||
Private and other | 23 | 23 | 23 | 23 | 23 | 22 | ||||||||||||||||||
Revenues per patient day (a): | ||||||||||||||||||||||||
Medicare Part A | $ | 527 | $ | 526 | $ | 526 | $ | 540 | $ | 530 | $ | 551 | ||||||||||||
Total Medicare (including Part B) | 564 | 566 | 568 | 584 | 570 | 595 | ||||||||||||||||||
Medicaid | 190 | 190 | 199 | 205 | 196 | 216 | ||||||||||||||||||
Medicaid (net of provider taxes) (b) | 167 | 167 | 177 | 183 | 174 | 194 | ||||||||||||||||||
Medicare Advantage | 427 | 430 | 427 | 437 | 431 | 442 | ||||||||||||||||||
Private and other | 264 | 262 | 256 | 258 | 260 | 261 | ||||||||||||||||||
Weighted average | 287 | 284 | 285 | 290 | 287 | 301 | ||||||||||||||||||
Average daily census (a) | 10,650 | 10,424 | 10,313 | 10,313 | 10,424 | 10,401 | ||||||||||||||||||
Admissions (a) | 11,044 | 10,305 | 10,045 | 10,048 | 41,442 | 10,424 | ||||||||||||||||||
Occupancy % (a) | 83.3 | 81.5 | 80.5 | 80.3 | 81.4 | 81.2 | ||||||||||||||||||
Medicare average length of stay (a) | 30.2 | 30.9 | 31.6 | 31.4 | 31.0 | 29.8 | ||||||||||||||||||
Annualized employee turnover % | 41.8 | 44.7 | 44.8 | 42.8 | 38.5 | |||||||||||||||||||
______ |
||||||||||||||||||||||||
(a) Excludes managed facilities. |
||||||||||||||||||||||||
(b) Provider taxes are recorded in other operating expenses for all periods presented. |
||||||||||||||||||||||||
KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||
Condensed Business Segment Data (Continued) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
First | ||||||||||||||||||||||||
2013 Quarters | Quarter | |||||||||||||||||||||||
First | Second | Third | Fourth | Year | 2014 | |||||||||||||||||||
Rehabilitation division data: | ||||||||||||||||||||||||
Skilled nursing rehabilitation services: | ||||||||||||||||||||||||
Revenue mix %: | ||||||||||||||||||||||||
Company-operated | 11 | 12 | 12 | 12 | 12 | 12 | ||||||||||||||||||
Non-affiliated | 89 | 88 | 88 | 88 | 88 | 88 | ||||||||||||||||||
Sites of service (at end of period) | 1,729 | 1,713 | 1,768 | 1,806 | 1,851 | |||||||||||||||||||
Revenue per site | $ | 149,152 | $ | 145,189 | $ | 138,227 | $ | 134,206 | $ | 566,774 | $ | 136,837 | ||||||||||||
Therapist productivity % | 81.1 | 80.4 | 79.8 | 79.5 | 80.2 | 80.0 | ||||||||||||||||||
Hospital rehabilitation services: | ||||||||||||||||||||||||
Revenue mix %: | ||||||||||||||||||||||||
Company-operated | 32 | 34 | 34 | 30 | 33 | 32 | ||||||||||||||||||
Non-affiliated | 68 | 66 | 66 | 70 | 67 | 68 | ||||||||||||||||||
Sites of service (at end of period): | ||||||||||||||||||||||||
Inpatient rehabilitation units | 103 | 103 | 99 | 104 | 105 | |||||||||||||||||||
LTAC hospitals | 123 | 123 | 122 | 121 | 121 | |||||||||||||||||||
Sub-acute units | 8 | 8 | 7 | 10 | 10 | |||||||||||||||||||
Outpatient units | 98 | 104 | 104 | 144 | 143 | |||||||||||||||||||
332 | 338 | 332 | 379 | 379 | ||||||||||||||||||||
Revenue per site | $ | 224,466 | $ | 206,441 | $ | 205,711 | $ | 195,296 | $ | 831,914 | $ | 195,157 | ||||||||||||
Annualized employee turnover % | 10.4 | 13.2 | 14.0 | 13.7 | 12.5 | |||||||||||||||||||
KINDRED HEALTHCARE, INC. | ||||||||||||||||||||
Earnings Per Common Share Reconciliation (a) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||
Three months ended March 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Basic | Diluted | Basic | Diluted | |||||||||||||||||
Earnings: | ||||||||||||||||||||
Amounts attributable to Kindred stockholders: | ||||||||||||||||||||
Income from continuing operations: | ||||||||||||||||||||
As reported in Statement of Operations | $ | 16,783 | $ | 16,783 | $ | 10,421 | $ | 10,421 | ||||||||||||
Allocation to participating unvested restricted stockholders | (521 | ) | (521 | ) | (294 | ) | (294 | ) | ||||||||||||
Available to common stockholders | $ | 16,262 | $ | 16,262 | $ | 10,127 | $ | 10,127 | ||||||||||||
Discontinued operations, net of income taxes: | ||||||||||||||||||||
Loss from operations: | ||||||||||||||||||||
As reported in Statement of Operations | $ | (5,757 | ) | $ | (5,757 | ) | $ | (5,339 | ) | $ | (5,339 | ) | ||||||||
Allocation to participating unvested restricted stockholders | 179 | 179 | 151 | 151 | ||||||||||||||||
Available to common stockholders | $ | (5,578 | ) | $ | (5,578 | ) | $ | (5,188 | ) | $ | (5,188 | ) | ||||||||
Loss on divestiture of operations: | ||||||||||||||||||||
As reported in Statement of Operations | $ | (3,006 | ) | $ | (3,006 | ) | $ | (2,025 | ) | $ | (2,025 | ) | ||||||||
Allocation to participating unvested restricted stockholders | 93 | 93 | 57 | 57 | ||||||||||||||||
Available to common stockholders | $ | (2,913 | ) | $ | (2,913 | ) | $ | (1,968 | ) | $ | (1,968 | ) | ||||||||
Loss from discontinued operations: | ||||||||||||||||||||
As reported in Statement of Operations | $ | (8,763 | ) | $ | (8,763 | ) | $ | (7,364 | ) | $ | (7,364 | ) | ||||||||
Allocation to participating unvested restricted stockholders | 272 | 272 | 208 | 208 | ||||||||||||||||
Available to common stockholders | $ | (8,491 | ) | $ | (8,491 | ) | $ | (7,156 | ) | $ | (7,156 | ) | ||||||||
Net income: | ||||||||||||||||||||
As reported in Statement of Operations | $ | 8,020 | $ | 8,020 | $ | 3,057 | $ | 3,057 | ||||||||||||
Allocation to participating unvested restricted stockholders | (249 | ) | (249 | ) | (86 | ) | (86 | ) | ||||||||||||
Available to common stockholders | $ | 7,771 | $ | 7,771 | $ | 2,971 | $ | 2,971 | ||||||||||||
Shares used in the computation: | ||||||||||||||||||||
Weighted average shares outstanding - basic computation | 52,641 | 52,641 | 52,062 | 52,062 | ||||||||||||||||
Dilutive effect of employee stock options | 70 | 21 | ||||||||||||||||||
Adjusted weighted average shares outstanding - diluted computation | 52,711 | 52,083 | ||||||||||||||||||
Earnings per common share: | ||||||||||||||||||||
Income from continuing operations | $ | 0.31 | $ | 0.31 | $ | 0.20 | $ | 0.20 | ||||||||||||
Discontinued operations: | ||||||||||||||||||||
Loss from operations | (0.10 | ) | (0.10 | ) | (0.10 | ) | (0.10 | ) | ||||||||||||
Loss on divestiture of operations | (0.06 | ) | (0.06 | ) | (0.04 | ) | (0.04 | ) | ||||||||||||
Loss from discontinued operations | (0.16 | ) | (0.16 | ) | (0.14 | ) | (0.14 | ) | ||||||||||||
Net income | $ | 0.15 | $ | 0.15 | $ | 0.06 | $ | 0.06 | ||||||||||||
______ |
||||||||||||||||||||
(a) Earnings 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 ended March 31, 2014 and 2013 before certain charges or on a core basis. The charges that were excluded from core operating results are denoted in the tables below. | ||||||||||
The income tax benefit associated with the excluded charges was calculated using an effective income tax rate of 36.6% and 40.5% for the three months ended March 31, 2014 and 2013, respectively. | ||||||||||
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 ended March 31, 2014 and 2013 that the Company believes are not representative of its ongoing operations due to the materiality and nature of the charges. The Company’s core operating results also represent a key performance measure for the purpose of evaluating performance internally. |
||||||||||
Three months ended | ||||||||||
March 31, | ||||||||||
2014 | 2013 | |||||||||
Detail of charges: | ||||||||||
Severance costs | ($339 | ) | $ | - | ||||||
One-time bonus costs | - | (20,124 | ) | |||||||
Transaction costs | (344 | ) | (944 | ) | ||||||
(683 | ) | (21,068 | ) | |||||||
Income tax benefit | 250 | 8,527 | ||||||||
Charges net of income taxes | (433 | ) | (12,541 | ) | ||||||
Allocation to participating unvested restricted stockholders | 13 | 354 | ||||||||
Available to common stockholders | ($420 | ) | ($12,187 | ) | ||||||
Weighted average diluted shares outstanding | 52,711 | 52,083 | ||||||||
Diluted loss per common share related to charges | ($0.01 | ) | ($0.23 | ) | ||||||
Reconciliation of operating income before charges: | ||||||||||
Operating income before charges | $ | 183,335 | $ | 186,676 | ||||||
Detail of charges excluded from core operating results: | ||||||||||
Severance costs | (339 | ) | - | |||||||
One-time bonus costs | - | (20,124 | ) | |||||||
Transaction costs | (344 | ) | (944 | ) | ||||||
(683 | ) | (21,068 | ) | |||||||
Reported operating income | $ | 182,652 | $ | 165,608 | ||||||
Reconciliation of income from continuing operations before charges: | ||||||||||
Amounts attributable to Kindred stockholders: | ||||||||||
Income from continuing operations before charges | $ | 17,216 | $ | 22,962 | ||||||
Charges net of income taxes | (433 | ) | (12,541 | ) | ||||||
Reported income from continuing operations | $ | 16,783 | $ | 10,421 | ||||||
Reconciliation of diluted income per common share from continuing operations before charges: | ||||||||||
Diluted income per common share before charges (a) | $ | 0.32 | $ | 0.43 | ||||||
Charges net of income taxes | (0.01 | ) | (0.23 | ) | ||||||
Reported diluted income per common share from continuing operations | $ | 0.31 | $ | 0.20 | ||||||
Reconciliation of effective income tax rate before charges: | ||||||||||
Effective income tax rate before charges | 38.1 | % | 39.1 | % | ||||||
Impact of charges on effective income tax rate | - | -1.7 | % | |||||||
Reported effective income tax rate | 38.1 | % | 37.4 | % | ||||||
______ |
||||||||||
(a) For purposes of computing diluted earnings per common share before charges, income from continuing operations before charges was reduced by $0.5 million and $0.6 million for the three months ended March 31, 2014 and 2013, 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 March 31, 2014 | |||||||||||||||||||||||||
Charges | |||||||||||||||||||||||||
Before | Transaction | As | |||||||||||||||||||||||
charges | costs | reported | |||||||||||||||||||||||
Income from continuing operations: | |||||||||||||||||||||||||
Operating income (loss): | |||||||||||||||||||||||||
Hospital division | $ | 146,895 | $ | - | $ | 146,895 | |||||||||||||||||||
Nursing center division | 39,095 | - | 39,095 | ||||||||||||||||||||||
Rehabilitation division: | |||||||||||||||||||||||||
Skilled nursing rehabilitation services | 17,358 | - | 17,358 | ||||||||||||||||||||||
Hospital rehabilitation services | 19,820 | - | 19,820 | ||||||||||||||||||||||
37,178 | - | 37,178 | |||||||||||||||||||||||
Care management division | 4,697 | - | 4,697 | ||||||||||||||||||||||
Corporate: | |||||||||||||||||||||||||
Overhead | (44,050 | ) | - | (44,050 | ) | ||||||||||||||||||||
Insurance subsidiary | (406 | ) | - | (406 | ) | ||||||||||||||||||||
(44,456 | ) | - | (44,456 | ) | |||||||||||||||||||||
Impairment charges | (74 | ) | - | (74 | ) | ||||||||||||||||||||
Transaction costs | - | (683 | ) | (683 | ) | ||||||||||||||||||||
Operating income | 183,335 | (683 | ) | 182,652 | |||||||||||||||||||||
Rent | (82,474 | ) | - | (82,474 | ) | ||||||||||||||||||||
Depreciation and amortization | (40,210 | ) | - | (40,210 | ) | ||||||||||||||||||||
Interest, net | (25,624 | ) | - | (25,624 | ) | ||||||||||||||||||||
Income from continuing operations before income taxes |
35,027 | (683 | ) | 34,344 | |||||||||||||||||||||
Provision for income taxes | 13,352 | (250 | ) | 13,102 | |||||||||||||||||||||
$ | 21,675 | $ | (433 | ) | $ | 21,242 | |||||||||||||||||||
Three months ended March 31, 2013 | |||||||||||||||||||||||||
Charges | |||||||||||||||||||||||||
Before | One-time | Transaction | As | ||||||||||||||||||||||
charges | bonus | costs | Total | reported | |||||||||||||||||||||
Income from continuing operations: | |||||||||||||||||||||||||
Operating income (loss): | |||||||||||||||||||||||||
Hospital division | $ | 157,661 | $ | (7,963 | ) | $ | - | $ | (7,963 | ) | $ | 149,698 | |||||||||||||
Nursing center division | 34,550 | (4,706 | ) | - | (4,706 | ) | 29,844 | ||||||||||||||||||
Rehabilitation division: | |||||||||||||||||||||||||
Skilled nursing rehabilitation services | 17,425 | (5,052 | ) | - | (5,052 | ) | 12,373 | ||||||||||||||||||
Hospital rehabilitation services | 19,387 | (1,255 | ) | - | (1,255 | ) | 18,132 | ||||||||||||||||||
36,812 | (6,307 | ) | - | (6,307 | ) | 30,505 | |||||||||||||||||||
Care management division | 3,619 | (833 | ) | - | (833 | ) | 2,786 | ||||||||||||||||||
Corporate: | |||||||||||||||||||||||||
Overhead | (45,270 | ) | (315 | ) | - | (315 | ) | (45,585 | ) | ||||||||||||||||
Insurance subsidiary | (509 | ) | - | - | - | (509 | ) | ||||||||||||||||||
(45,779 | ) | (315 | ) | - | (315 | ) | (46,094 | ) | |||||||||||||||||
Impairment charges | (187 | ) | - | - | - | (187 | ) | ||||||||||||||||||
Transaction costs | - | - | (944 | ) | (944 | ) | (944 | ) | |||||||||||||||||
Operating income | 186,676 | (20,124 | ) | (944 | ) | (21,068 | ) | 165,608 | |||||||||||||||||
Rent | (77,957 | ) | - | - | - | (77,957 | ) | ||||||||||||||||||
Depreciation and amortization | (42,249 | ) | - | - | - | (42,249 | ) | ||||||||||||||||||
Interest, net | (28,084 | ) | - | - | - | (28,084 | ) | ||||||||||||||||||
Income from continuing operations before income taxes |
38,386 | (20,124 | ) | (944 | ) | (21,068 | ) | 17,318 | |||||||||||||||||
Provision for income taxes | 15,008 | (8,145 | ) | (382 | ) | (8,527 | ) | 6,481 | |||||||||||||||||
$ | 23,378 | $ | (11,979 | ) | $ | (562 | ) | $ | (12,541 | ) | $ | 10,837 | |||||||||||||
KINDRED HEALTHCARE, INC. | |||||||||
Reconciliation of Non-GAAP Measurements to GAAP Results (Continued) | |||||||||
(Unaudited) | |||||||||
(In thousands) | |||||||||
The Company recognizes that free cash flows excluding certain items is a non-GAAP measurement and is not intended to replace the presentation of the Company’s cash flows in accordance with GAAP. The Company believes that this non-GAAP measurement provides important information to investors related to the amount of discretionary cash flows that are available for other investing and financing activities. In addition, management uses free cash flows excluding certain items in making decisions related to acquisitions, development capital expenditures, dividends, long-term debt repayments and other uses. |
|||||||||
The income tax benefit associated with the excluded payments was calculated using an effective income tax rate of 39.4% and 39.3% for the three months ended March 31, 2014 and 2013. | |||||||||
Three months ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Reconciliation of net cash flows provided by (used in) operating activities to free cash flows: |
|||||||||
Net cash flows provided by (used in) operating activities | ($15,754 | ) | $ | 24,833 | |||||
Less: | |||||||||
Routine capital expenditures | (21,677 | ) | (22,370 | ) | |||||
Development capital expenditures | (751 | ) | (2,388 | ) | |||||
(22,428 | ) | (24,758 | ) | ||||||
Free cash flows including certain items | (38,182 | ) | 75 | ||||||
Adjustments to remove certain payments (including payments made for discontinued operations) included in net cash flows provided by (used in) operating activities: |
|||||||||
Litigation | 25,150 | - | |||||||
One-time employee bonus | - | 26,345 | |||||||
Transaction costs | 1,738 | 1,114 | |||||||
Severance, retirement and retention | 2,449 | 1,063 | |||||||
Benefit of reduced income tax payments resulting from certain payments |
(11,544 | ) | (11,195 | ) | |||||
17,793 | 17,327 | ||||||||
Free cash flows excluding certain items | ($20,389 | ) | $ | 17,402 | |||||
KINDRED HEALTHCARE, INC. | ||||||||||||||||||||
Reconciliation of Earnings Guidance for 2014 - Continuing Operations (a) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||||||
As of May 7, 2014 | As of February 20, 2014 | |||||||||||||||||||
Low | High | Low | High | |||||||||||||||||
Operating income | $ | 715 | $ | 732 | $ | 725 | $ | 742 | ||||||||||||
Rent | 335 | 335 | 338 | 338 | ||||||||||||||||
Depreciation and amortization | 163 | 163 | 165 | 165 | ||||||||||||||||
Interest, net | 98 | 98 | 106 | 106 | ||||||||||||||||
Income from continuing operations before income taxes | 119 | 136 | 116 | 133 | ||||||||||||||||
Provision for income taxes | 46 | 53 | 45 | 52 | ||||||||||||||||
Income from continuing operations | 73 | 83 | 71 | 81 | ||||||||||||||||
Earnings attributable to noncontrolling interests | (15 | ) | (15 | ) | (13 | ) | (13 | ) | ||||||||||||
Income from continuing operations attributable to the Company | 58 | 68 | 58 | 68 | ||||||||||||||||
Allocation to participating unvested restricted stockholders | (2 | ) | (2 | ) | (2 | ) | (2 | ) | ||||||||||||
Available to common stockholders | $ | 56 | $ | 66 | $ | 56 | $ | 66 | ||||||||||||
Earnings per diluted share | $ | 1.05 | $ | 1.25 | $ | 1.05 | $ | 1.25 | ||||||||||||
Shares used in computing earnings per diluted share |
53.2 | 53.2 | 53.2 | 53.2 | ||||||||||||||||
_______ |
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(a)The earnings guidance excludes the effect of reimbursement changes, severance, retirement and retention costs, litigation costs, transaction-related costs, any further acquisitions or divestitures, any impairment charges, and any repurchases of common stock. | ||||||||||||||||||||