Excluding Transaction-Related Charges, Company Reports Continuing Operations Diluted EPS of $0.53, Up 26% from Last Year’s Adjusted EPS of $0.42
Company Reports GAAP Continuing Operations Loss of $0.14 per Diluted Share
RehabCare Integration Ahead of Expectations
Company Continues to Execute on Cluster Market Development Strategy
Company Resumes Earnings Guidance Following RehabCare Acquisition
(Continuing operations diluted EPS, excluding transaction-related charges)
Third quarter 2011 - $0.25 to $0.30
Fiscal 2011 - $1.80 to $1.90
Fiscal 2012 - $1.65 to $1.85
LOUISVILLE, Ky.--(BUSINESS WIRE)-- Kindred Healthcare, Inc. (“Kindred” or “the Company”) (NYSE:KND) today announced its operating results for the second quarter ended June 30, 2011. As previously announced, the Company completed the acquisition of RehabCare Group, Inc. (“RehabCare”) (formerly NYSE:RHB) on June 1, 2011. The Company’s consolidated financial statements include the operating results of RehabCare since the closing of the transaction.
Second Quarter Highlights:
- Consolidated revenues rose 20% to $1.3 billion
- RehabCare added $114 million in second quarter revenues
- Same-store revenues grew in each operating division
- Excluding transaction-related charges, the Company reported improved operating margins
- Adjusted operating income rose 22% to $181 million (14.0% of revenues) compared to $149 million (13.8% of revenues) in the second quarter last year
- Adjusted income from continuing operations grew 40% to $23.4 million (1.8% of revenues) from $16.7 million (1.5% of revenues) in the second quarter last year
- RehabCare acquisition was slightly accretive to second quarter earnings
- Company reported solid operational growth in the second quarter compared to last year
- Hospital admissions rose 22% in the quarter; same-store admissions were relatively unchanged
- Nursing center admissions increased 6% compared to the second quarter last year
- Expanding rehabilitation therapy business now reaches 2,200 sites
- The Company continues to generate significant operating cash flows
- Excluding transaction-related payments, year to date operating cash flows were up 42% from last year’s first half
Second Quarter Results
Continuing Operations
Consolidated revenues for the second quarter ended June 30, 2011 rose 20% to $1.3 billion. The Company reported a loss from continuing operations for the second quarter of 2011 totaling $6.1 million or $0.14 per diluted share compared to income of $16.1 million or $0.41 per diluted share in the second quarter last year.
Excluding transaction-related charges, the Company’s income from continuing operations grew 40% to $23.4 million or $0.53 per diluted share from $16.7 million or $0.42 per diluted share in the second quarter of 2010.
Management Commentary
Paul J. Diaz, President and Chief Executive Officer of the Company, remarked, “Our second quarter core operating results were outstanding, with our continued focus on quality, customer service and operating efficiencies leading the way to volume and earnings growth across the Company. We are pleased to report significant core earnings growth in the quarter while also completing the RehabCare acquisition and focusing on its transition.”
Commenting on the RehabCare acquisition, Mr. Diaz further noted, “Having closed the acquisition one month in advance of our expectations, our support center and operating teams successfully completed all of the initial integration activities with minimal disruption to the business units. We have now completed the financial information systems conversions and will begin the roll-out of our hospital clinical information systems in the former RehabCare hospitals. These critical infrastructure investments are the foundation for our operating synergies and the ongoing benefits of our expanded size and scale. Based upon our initial success in this area, we now believe that we will realize approximately $55 million of cost synergies in 2012 and $65 million in cost synergies in 2013, significantly ahead of our previous estimates.”
Mr. Diaz commented on the Company’s ongoing development activities, “As we recently announced, we continue to advance our cluster market strategy through the selective development of our different businesses to meet the needs of our patients, physicians, managed care plans and other healthcare partners in our key markets. The new projects in Charleston, Dayton, Indianapolis, Seattle and Dallas will provide ongoing growth in our long-term acute care hospital, sub-acute and skilled nursing and rehabilitation businesses. In addition, our two new inpatient rehabilitation hospital projects in Austin and Houston will complement our existing operations in both of these markets. These exciting new projects are expected to be accretive to earnings beginning in 2013.”
Finally, Mr. Diaz discussed the Company’s improved liquidity, “Our operating cash flows continue to be a source of financial strength for Kindred as we continue to pursue our cluster market development strategy and reduce our leverage. Excluding transaction-related payments, our operating cash flows in the first half of 2011 increased 42% to $120 million from last year’s adjusted $85 million.”
Recent Regulatory Changes
The Centers for Medicare and Medicaid Services (“CMS”) recently issued final rules that will impact the Company’s businesses effective October 1, 2011.
On July 29, 2011, CMS issued final rules which, among other things, will reduce Medicare payments to nursing centers by 11.1% and change the reimbursement for the provision of group rehabilitation therapy services to Medicare beneficiaries. While the Company had anticipated a negative annual impact of approximately $30 million to $40 million for the budget neutrality adjustments, management now estimates that these rules could reduce the Company’s annual revenues by approximately $85 million to $95 million in its nursing center business and approximately $10 million to $15 million in its rehabilitation therapy business. In addition, the Company believes that other technical changes required under the final rules may increase rehabilitation therapy costs by approximately $10 million to $15 million on an annual basis.
In addition, CMS also issued final rules that provided payment increases to inpatient rehabilitation facilities (“IRFs”) and long-term acute care (“LTAC”) hospitals. Among other things, CMS indicated that Medicare payment rates for IRFs are expected to increase at an annual rate of 2.2% and LTAC hospital payment rates are expected to rise 2.5%. Based upon its review of the final rules, management believes that the Medicare rate increase for the Company’s LTAC hospitals will likely approximate 0.7% in 2012.
Mr. Diaz commented, “We recognize that CMS has a responsibility to achieve budget neutrality under the new RUGs IV reimbursement system. But the same rush to implementation that led to the current overpayments will now likely lead to an overcorrection that will negatively impact the interests of patients, residents, staff and job creation. We will continue to work with policymakers to re-consider a phase-in of the parity adjustment and the impact of the rehabilitation therapy and assessment process changes to maintain the stability of skilled nursing providers, the quality of their services and the accurate achievement of budget neutrality.”
Earnings Guidance – Continuing Operations
Following the completion of the RehabCare acquisition, the Company resumed its prior practice of providing earnings guidance. The Company indicated that the earnings guidance for continuing operations reflects the anticipated impact of the previously discussed final rules recently issued by CMS related to payment rates for nursing centers, LTAC hospitals, IRFs and the Company’s rehabilitation therapy business, all of which will be effective on October 1, 2011. The earnings guidance provided by the Company excludes the effect of (i) any transaction-related charges that have been recorded in prior periods or that may be incurred in the future, (ii) any other reimbursement changes, (iii) any material acquisitions or divestitures, or (iv) any repurchases of common stock.
The Company expects consolidated revenues for 2011 to approximate $5.6 billion. Operating income, or earnings before interest, income taxes, depreciation, amortization and rent, is expected to range from $775 million to $780 million. Rent expense is expected to approximate $400 million, while depreciation and amortization should approximate $164 million. Net interest expense is expected to approximate $69 million. The Company expects to report income from continuing operations for 2011 between $89 million to $93 million or $1.80 to $1.90 per diluted share (based upon diluted shares of 47 million).
Excluding transaction-related charges, the Company has reported diluted earnings per common share of $1.17 in the first half of 2011.
The Company also provided its earnings outlook for the third quarter of 2011, estimating diluted earnings per share between $0.25 and $0.30 (based upon diluted shares of 52 million). Management’s estimated third quarter earnings range includes the expected impact of a $3 million favorable income tax adjustment ($0.05 per diluted share).
In addition, the Company provided its initial preliminary earnings guidance for fiscal 2012. The Company expects consolidated revenues for 2012 to approximate $6.4 billion. Operating income is expected to range from $911 million to $928 million. Rent expense is expected to approximate $445 million, while depreciation and amortization should approximate $200 million. Net interest expense is expected to approximate $110 million. The Company expects to report income from continuing operations for 2012 between $93 million to $104 million or $1.65 to $1.85 per diluted share (based upon diluted shares of 53 million).
Mr. Diaz noted, “When we announced the RehabCare acquisition in February, we provided to investors a pro forma 2011 earnings per diluted share range of $1.95 to $2.15 assuming that the acquisition had occurred on January 1, 2011 and we realized $25 million in pretax operating synergies. While we will operate the combined company for only seven months this year, we are pleased to provide core 2011 earnings guidance at a level that is close to our assumed full-year pro forma estimate.”
Mr. Diaz continued, “Our 2012 preliminary earnings guidance reflects our significant outperformance in the first half of this year, our continuing efforts to grow the Company organically as well as our enhanced view of the operating synergies and lower than expected financing costs associated with the RehabCare acquisition. Despite the significant negative impact of the recently issued CMS rules for nursing centers and rehabilitation therapy, we will continue to find new growth opportunities that are available to us as a result of our diverse lines of business and larger size and scale as we look forward to 2012 and beyond.”
Webcast of Conference Call
As previously announced, investors and the general public can access a live webcast of the second quarter 2011 conference call through a link on the Company’s website at http://investors.kindredhealthcare.com or at www.earnings.com. The conference call will be held August 9, 2011 at 10:00 a.m. (Eastern Time).
A telephone replay of the conference call will be available at approximately 11:30 a.m. on August 9 by dialing (719) 457-0820, access code: 4145869. The replay will be available through August 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 Kindred’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.
Such forward-looking statements are inherently uncertain, and stockholders and other potential investors must recognize that actual results may differ materially from Kindred’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 Kindred is unable to predict or control, that may cause Kindred’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 Kindred’s filings with the Securities and Exchange Commission.
In addition to the factors set forth above, other factors that may affect Kindred’s plans or results include, without limitation, (a) the impact of a final rule issued by CMS on July 29, 2011 providing for a 11.1% reduction in Medicare reimbursement to nursing centers as well as changes in payments for the provision of group rehabilitation therapy services, (b) other potential reimbursement changes resulting from the Budget Control Act of 2011, (c) Kindred’s ability to integrate the operations of the acquired hospitals and rehabilitation services operations and realize the anticipated revenues, economies of scale, cost synergies and productivity gains in connection with the RehabCare acquisition and any other acquisitions that may be undertaken during 2011, as and when planned, including the potential for unanticipated issues, expenses and liabilities associated with those acquisitions, (d) the potential for diversion of management time and resources in seeking to integrate RehabCare’s operations, (e) the potential failure to retain key employees of RehabCare, (f) the impact of Kindred’s significantly increased levels of indebtedness as a result of the RehabCare acquisition on Kindred’s funding costs, operating flexibility and ability to fund ongoing operations, development capital expenditures or other strategic acquisitions with additional borrowings, particularly in light of ongoing volatility in the credit and capital markets, (g) the impact of healthcare reform, which will initiate significant reforms 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. Healthcare reform will impact each of Kindred’s businesses in some manner. Due to the substantial regulatory changes that will need to be implemented by CMS and others, and the numerous processes required to implement these reforms, Kindred 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 Kindred’s business, financial position, results of operations and liquidity, (h) changes in the reimbursement rates or the methods or timing of payment from third party payors, including commercial payors and the Medicare and Medicaid programs, changes arising from and related to the Medicare prospective payment system for LTAC hospitals, including potential changes in the Medicare payment rules, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, and changes in Medicare and Medicaid reimbursements for nursing centers, and the expiration of the Medicare Part B therapy cap exception process, (i) the effects of additional legislative changes and government regulations, interpretation of regulations and changes in the nature and enforcement of regulations governing the healthcare industry, (j) Kindred’s ability to successfully 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, (k) the impact of the Medicare, Medicaid and SCHIP Extension Act of 2007 (the “SCHIP Extension Act”), including the ability of Kindred’s hospitals to adjust to potential LTAC certification, medical necessity reviews and the moratorium on future hospital development, (l) the impact of the expiration of several moratoriums under the SCHIP Extension Act which could impact the short stay rules, the budget neutrality adjustment as well as implement the policy known as the “25 Percent Rule,” which would limit certain patient admissions, (m) failure of Kindred’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) Kindred’s ability to meet its rental and debt service obligations, (p) Kindred’s ability to operate pursuant to the terms of its debt obligations and its master lease agreements with Ventas, Inc. (NYSE:VTR), (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 Kindred’s businesses, or which could negatively impact Kindred’s investment portfolio, (r) national and regional economic, financial, business and political conditions, including their effect on the availability and cost of labor, credit, materials and other services, (s) Kindred’s ability to control costs, particularly labor and employee benefit costs, (t) increased operating costs due to shortages in qualified nurses, therapists and other healthcare personnel, (u) Kindred’s ability to attract and retain key executives and other healthcare personnel, (v) the increase in the costs of defending and insuring against alleged professional liability and other claims and the ability to predict the estimated costs related to such claims, including the impact of differences in actuarial assumptions and estimates compared to eventual outcomes, (w) Kindred’s ability to successfully reduce (by divestiture of operations or otherwise) its exposure to professional liability and other claims, (x) Kindred’s ability to successfully dispose of unprofitable facilities, (y) events or circumstances which could result in the impairment of an asset or other charges, (z) 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 (aa) Kindred’s ability to maintain an effective system of internal control over financial reporting. Many of these factors are beyond Kindred’s control. Kindred cautions investors that any forward-looking statements made by Kindred are not guarantees of future performance. Kindred 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 non-GAAP measurements which present operating results and cash flows from operations for the second quarter and six months ended June 30, 2011 and 2010 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’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 from continuing operations is the most comparable GAAP measure. Readers of the Company’s financial information should consider income 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 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 healthcare services company based in Louisville, Kentucky with annual revenues of $6 billion and approximately 76,300 employees in 46 states. At June 30, 2011, Kindred through its subsidiaries provided healthcare services in over 2,200 locations, including 120 long-term acute care hospitals, five inpatient rehabilitation hospitals, 224 nursing and rehabilitation centers, 22 sub-acute units, 20 hospice and home care locations, 104 inpatient rehabilitation units (hospital-based) and a contract rehabilitation services business, RehabCare, which served approximately 1,760 non-affiliated facilities. Ranked as one of Fortune magazine’s Most Admired Healthcare Companies for three 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.
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||
| Financial Summary | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||
| Revenues | $ | 1,292,592 | $ | 1,081,364 | $ | 2,485,013 | $ | 2,171,201 | ||||||||||
| Income (loss) from continuing operations | $ | (6,540 | ) | $ | 16,136 | $ | 15,736 | $ | 31,291 | |||||||||
| Discontinued operations, net of income taxes: | ||||||||||||||||||
| Income (loss) from operations | 587 | 87 | 408 | (67 | ) | |||||||||||||
| Gain (loss) on divestiture of operations | - | 54 | - | (83 | ) | |||||||||||||
| Income (loss) from discontinued operations | 587 | 141 | 408 | (150 | ) | |||||||||||||
| Net income (loss) | (5,953 | ) | 16,277 | 16,144 | 31,141 | |||||||||||||
| Loss attributable to noncontrolling interests | 421 | - | 421 | - | ||||||||||||||
| Income (loss) attributable to Kindred | $ | (5,532 | ) | $ | 16,277 | $ | 16,565 | $ | 31,141 | |||||||||
| Amounts attributable to Kindred stockholders: | ||||||||||||||||||
| Income (loss) from continuing operations | $ | (6,119 | ) | $ | 16,136 | $ | 16,157 | $ | 31,291 | |||||||||
| Income (loss) from discontinued operations | 587 | 141 | 408 | (150 | ) | |||||||||||||
| Net income (loss) | $ | (5,532 | ) | $ | 16,277 | $ | 16,565 | $ | 31,141 | |||||||||
| Earnings (loss) per common share: | ||||||||||||||||||
| Basic: | ||||||||||||||||||
| Income (loss) from continuing operations | $ | (0.14 | ) | $ | 0.41 | $ | 0.39 | $ | 0.79 | |||||||||
| Discontinued operations: | ||||||||||||||||||
| Income (loss) from operations | 0.01 | - | 0.01 | - | ||||||||||||||
| Gain (loss) on divestiture of operations | - | - | - | - | ||||||||||||||
| Net income (loss) | $ | (0.13 | ) | $ | 0.41 | $ | 0.40 | $ | 0.79 | |||||||||
| Diluted: | ||||||||||||||||||
| Income (loss) from continuing operations | $ | (0.14 | ) | $ | 0.41 | $ | 0.38 | $ | 0.79 | |||||||||
| Discontinued operations: | ||||||||||||||||||
| Income (loss) from operations | 0.01 | - | 0.01 | - | ||||||||||||||
| Gain (loss) on divestiture of operations | - | - | - | - | ||||||||||||||
| Net income (loss) | $ | (0.13 | ) | $ | 0.41 | $ | 0.39 | $ | 0.79 | |||||||||
|
Shares used in computing earnings (loss) per common share: |
||||||||||||||||||
| Basic | 43,231 | 38,756 | 41,145 | 38,691 | ||||||||||||||
| Diluted | 43,231 | 38,914 | 41,661 | 38,881 | ||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||
| Condensed Consolidated Statement of Operations | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||
| Revenues | $ | 1,292,592 | $ | 1,081,364 | $ | 2,485,013 | $ | 2,171,201 | ||||||||||||
| Salaries, wages and benefits | 765,133 | 612,205 | 1,443,828 | 1,239,380 | ||||||||||||||||
| Supplies | 96,718 | 85,455 | 186,740 | 171,341 | ||||||||||||||||
| Rent | 95,677 | 88,981 | 187,130 | 177,300 | ||||||||||||||||
| Other operating expenses | 287,132 | 238,687 | 546,501 | 472,891 | ||||||||||||||||
| Other income | (2,880 | ) | (2,857 | ) | (5,665 | ) | (5,941 | ) | ||||||||||||
| Depreciation and amortization | 37,871 | 29,852 | 70,420 | 60,973 | ||||||||||||||||
| Interest expense | 23,157 | 1,298 | 28,885 | 2,605 | ||||||||||||||||
| Investment (income) loss | (257 | ) | 377 | (752 | ) | (500 | ) | |||||||||||||
| 1,302,551 | 1,053,998 | 2,457,087 | 2,118,049 | |||||||||||||||||
| Income (loss) from continuing operations before income taxes | (9,959 | ) | 27,366 | 27,926 | 53,152 | |||||||||||||||
| Provision (benefit) for income taxes | (3,419 | ) | 11,230 | 12,190 | 21,861 | |||||||||||||||
| Income (loss) from continuing operations | (6,540 | ) | 16,136 | 15,736 | 31,291 | |||||||||||||||
| Discontinued operations, net of income taxes: | ||||||||||||||||||||
| Income (loss) from operations | 587 | 87 | 408 | (67 | ) | |||||||||||||||
| Gain (loss) on divestiture of operations | - | 54 | - | (83 | ) | |||||||||||||||
| Income (loss) from discontinued operations | 587 | 141 | 408 | (150 | ) | |||||||||||||||
| Net income (loss) | (5,953 | ) | 16,277 | 16,144 | 31,141 | |||||||||||||||
| Loss attributable to noncontrolling interests | 421 | - | 421 | - | ||||||||||||||||
| Income (loss) attributable to Kindred | $ | (5,532 | ) | $ | 16,277 | $ | 16,565 | $ | 31,141 | |||||||||||
| Amounts attributable to Kindred stockholders: | ||||||||||||||||||||
| Income (loss) from continuing operations | $ | (6,119 | ) | $ | 16,136 | $ | 16,157 | $ | 31,291 | |||||||||||
| Income (loss) from discontinued operations | 587 | 141 | 408 | (150 | ) | |||||||||||||||
| Net income (loss) | $ | (5,532 | ) | $ | 16,277 | $ | 16,565 | $ | 31,141 | |||||||||||
| Earnings (loss) per common share: | ||||||||||||||||||||
| Basic: | ||||||||||||||||||||
| Income (loss) from continuing operations | $ | (0.14 | ) | $ | 0.41 | $ | 0.39 | $ | 0.79 | |||||||||||
| Discontinued operations: | ||||||||||||||||||||
| Income (loss) from operations | 0.01 | - | 0.01 | - | ||||||||||||||||
| Gain (loss) on divestiture of operations | - | - | - | - | ||||||||||||||||
| Net income (loss) | $ | (0.13 | ) | $ | 0.41 | $ | 0.40 | $ | 0.79 | |||||||||||
| Diluted: | ||||||||||||||||||||
| Income (loss) from continuing operations | $ | (0.14 | ) | $ | 0.41 | $ | 0.38 | $ | 0.79 | |||||||||||
| Discontinued operations: | ||||||||||||||||||||
| Income (loss) from operations | 0.01 | - | 0.01 | - | ||||||||||||||||
| Gain (loss) on divestiture of operations | - | - | - | - | ||||||||||||||||
| Net income (loss) | $ | (0.13 | ) | $ | 0.41 | $ | 0.39 | $ | 0.79 | |||||||||||
|
Shares used in computing earnings (loss) per common share: |
||||||||||||||||||||
| Basic | 43,231 | 38,756 | 41,145 | 38,691 | ||||||||||||||||
| Diluted | 43,231 | 38,914 | 41,661 | 38,881 | ||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||
| Condensed Consolidated Balance Sheet | ||||||||||
| (Unaudited) | ||||||||||
| (In thousands, except per share amounts) | ||||||||||
| June 30, | December 31, | |||||||||
| 2011 | 2010 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 52,399 | $ | 17,168 | ||||||
| Cash - restricted | 5,457 | 5,494 | ||||||||
| Insurance subsidiary investments | 61,519 | 76,753 | ||||||||
| Accounts receivable less allowance for loss | 944,742 | 631,877 | ||||||||
| Inventories | 30,762 | 24,327 | ||||||||
| Deferred tax assets | 29,705 | 13,439 | ||||||||
| Income taxes | 15,770 | 42,118 | ||||||||
| Other | 35,266 | 24,862 | ||||||||
| 1,175,620 | 836,038 | |||||||||
| Property and equipment | 1,939,698 | 1,754,170 | ||||||||
| Accumulated depreciation | (907,710 | ) | (857,623 | ) | ||||||
| 1,031,988 | 896,547 | |||||||||
| Goodwill | 1,097,997 | 242,420 | ||||||||
| Intangible assets less accumulated amortization | 499,920 | 92,883 | ||||||||
| Assets held for sale | 7,073 | 7,167 | ||||||||
| Insurance subsidiary investments | 110,633 | 101,210 | ||||||||
| Deferred tax assets | - | 88,816 | ||||||||
| Other | 133,365 | 72,334 | ||||||||
| Total assets | $ | 4,056,596 | $ | 2,337,415 | ||||||
| LIABILITIES AND EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 217,034 | $ | 174,495 | ||||||
| Salaries, wages and other compensation | 401,014 | 291,116 | ||||||||
| Due to third party payors | 40,293 | 27,115 | ||||||||
| Professional liability risks | 40,583 | 41,555 | ||||||||
| Other accrued liabilities | 119,270 | 87,012 | ||||||||
| Long-term debt due within one year | 10,435 | 91 | ||||||||
| 828,629 | 621,384 | |||||||||
| Long-term debt | 1,433,257 | 365,556 | ||||||||
| Professional liability risks | 227,986 | 207,669 | ||||||||
| Deferred tax liabilities | 36,670 | - | ||||||||
| Deferred credits and other liabilities | 127,304 | 111,047 | ||||||||
| Noncontrolling interests-redeemable | 23,841 | - | ||||||||
| Equity: | ||||||||||
| Stockholders' equity: | ||||||||||
|
Common stock, $0.25 par value; authorized 175,000 shares; issued 52,116 shares - June 30, 2011 and 39,495 shares - December 31, 2010 |
13,029 | 9,874 | ||||||||
| Capital in excess of par value | 1,132,748 | 828,593 | ||||||||
| Accumulated other comprehensive income | 317 | 135 | ||||||||
| Retained earnings | 209,218 | 193,157 | ||||||||
| 1,355,312 | 1,031,759 | |||||||||
| Noncontrolling interests-nonredeemable | 23,597 | - | ||||||||
| Total equity | 1,378,909 | 1,031,759 | ||||||||
| Total liabilities and equity | $ | 4,056,596 | $ | 2,337,415 | ||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||
| Condensed Consolidated Statement of Cash Flows | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||
| Net income (loss) | $ | (5,953 | ) | $ | 16,277 | $ | 16,144 | $ | 31,141 | |||||||||||
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||||||||||||||
| Depreciation and amortization | 37,871 | 29,852 | 70,420 | 60,973 | ||||||||||||||||
| Amortization of stock-based compensation costs | 3,462 | 2,746 | 6,106 | 5,521 | ||||||||||||||||
| Payment of lender fees related to debt issuance | (46,232 | ) | - | (46,232 | ) | - | ||||||||||||||
| Provision for doubtful accounts | 8,426 | 5,846 | 14,256 | 12,277 | ||||||||||||||||
| Deferred income taxes | (1,959 | ) | (3,264 | ) | (2,689 | ) | (10,727 | ) | ||||||||||||
| (Gain) loss on divestiture of discontinued operations | - | (54 | ) | - | 83 | |||||||||||||||
| Other | 2,017 | 1,089 | 2,387 | 926 | ||||||||||||||||
| Change in operating assets and liabilities: | ||||||||||||||||||||
| Accounts receivable | (43,935 | ) | 29,601 | (80,575 | ) | (29,525 | ) | |||||||||||||
| Inventories and other assets | 870 | 4,759 | (2,655 | ) | (6,486 | ) | ||||||||||||||
| Accounts payable | 13,565 | (596 | ) | 1,217 | (8,178 | ) | ||||||||||||||
| Income taxes | (12,950 | ) | (7,533 | ) | 27,673 | 21,753 | ||||||||||||||
| Due to third party payors | 6,577 | (130 | ) | 3,555 | (2,024 | ) | ||||||||||||||
| Other accrued liabilities | 43,093 | 18,349 | 41,681 | 7,212 | ||||||||||||||||
| Net cash provided by operating activities | 4,852 | 96,942 | 51,288 | 82,946 | ||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||
| Routine capital expenditures | (33,950 | ) | (25,670 | ) | (58,668 | ) | (40,485 | ) | ||||||||||||
| Development capital expenditures | (14,309 | ) | (12,288 | ) | (25,418 | ) | (19,855 | ) | ||||||||||||
| Acquisitions, net of cash acquired | (651,952 | ) | (1,794 | ) | (659,979 | ) | (49,490 | ) | ||||||||||||
| Sale of assets | - | - | 1,714 | - | ||||||||||||||||
| Purchase of insurance subsidiary investments | (9,220 | ) | (9,840 | ) | (17,037 | ) | (24,118 | ) | ||||||||||||
| Sale of insurance subsidiary investments | 8,533 | 8,622 | 27,189 | 61,833 | ||||||||||||||||
|
Net change in insurance subsidiary cash and cash equivalents |
(2,744 | ) | (1,926 | ) | (4,044 | ) | (7,501 | ) | ||||||||||||
| Change in other investments | - | 2 | 1,000 | 2 | ||||||||||||||||
| Other | (161 | ) | 609 | (29 | ) | 581 | ||||||||||||||
| Net cash used in investing activities | (703,803 | ) | (42,285 | ) | (735,272 | ) | (79,033 | ) | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||
| Proceeds from borrowings under revolving credit | 654,900 | 262,400 | 1,100,100 | 652,000 | ||||||||||||||||
| Repayment of borrowings under revolving credit | (814,900 | ) | (319,000 | ) | (1,275,100 | ) | (659,600 | ) | ||||||||||||
| Proceeds from issuance of senior unsecured notes | 550,000 | - | 550,000 | - | ||||||||||||||||
| Proceeds from issuance of term loan, net of discount | 693,000 | - | 693,000 | - | ||||||||||||||||
| Repayment of other long-term debt | (345,666 | ) | (21 | ) | (345,688 | ) | (42 | ) | ||||||||||||
| Payment of deferred financing costs | (6,443 | ) | (31 | ) | (6,860 | ) | (53 | ) | ||||||||||||
| Issuance of common stock | 1,604 | - | 3,019 | 35 | ||||||||||||||||
| Other | 355 | 222 | 744 | 346 | ||||||||||||||||
| Net cash provided by (used in) financing activities | 732,850 | (56,430 | ) | 719,215 | (7,314 | ) | ||||||||||||||
| Change in cash and cash equivalents | 33,899 | (1,773 | ) | 35,231 | (3,401 | ) | ||||||||||||||
| Cash and cash equivalents at beginning of period | 18,500 | 14,675 | 17,168 | 16,303 | ||||||||||||||||
| Cash and cash equivalents at end of period | $ | 52,399 | $ | 12,902 | $ | 52,399 | $ | 12,902 | ||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||||||
| Condensed Consolidated Statement of Operations | ||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||||||||||||
| 2010 Quarters | 2011 Quarters | |||||||||||||||||||||||||||||
| First | Second | Third | Fourth | First | Second | |||||||||||||||||||||||||
| Revenues | $ | 1,089,837 | $ | 1,081,364 | $ | 1,053,012 | $ | 1,135,484 | $ | 1,192,421 | $ | 1,292,592 | ||||||||||||||||||
| Salaries, wages and benefits | 627,175 | 612,205 | 613,607 | 652,703 | 678,695 | 765,133 | ||||||||||||||||||||||||
| Supplies | 85,886 | 85,455 | 83,753 | 87,103 | 90,022 | 96,718 | ||||||||||||||||||||||||
| Rent | 88,319 | 88,981 | 89,295 | 90,777 | 91,453 | 95,677 | ||||||||||||||||||||||||
| Other operating expenses | 234,204 | 238,687 | 234,968 | 240,750 | 259,369 | 287,132 | ||||||||||||||||||||||||
| Other income | (3,084 | ) | (2,857 | ) | (2,794 | ) | (2,687 | ) | (2,785 | ) | (2,880 | ) | ||||||||||||||||||
| Depreciation and amortization | 31,121 | 29,852 | 29,167 | 31,412 | 32,549 | 37,871 | ||||||||||||||||||||||||
| Interest expense | 1,307 | 1,298 | 1,642 | 2,843 | 5,728 | 23,157 | ||||||||||||||||||||||||
| Investment (income) loss | (877 | ) | 377 | (403 | ) | (342 | ) | (495 | ) | (257 | ) | |||||||||||||||||||
| 1,064,051 | 1,053,998 | 1,049,235 | 1,102,559 | 1,154,536 | 1,302,551 | |||||||||||||||||||||||||
|
Income (loss) from continuing operations before income taxes |
25,786 | 27,366 | 3,777 | 32,925 | 37,885 | (9,959 | ) | |||||||||||||||||||||||
| Provision (benefit) for income taxes | 10,631 | 11,230 | (1,323 | ) | 13,170 | 15,609 | (3,419 | ) | ||||||||||||||||||||||
| Income (loss) from continuing operations | 15,155 | 16,136 | 5,100 | 19,755 | 22,276 | (6,540 | ) | |||||||||||||||||||||||
| Discontinued operations, net of income taxes: | ||||||||||||||||||||||||||||||
| Income (loss) from operations | (154 | ) | 87 | (260 | ) | 1,125 | (179 | ) | 587 | |||||||||||||||||||||
| Gain (loss) on divestiture of operations | (137 | ) | 54 | 86 | (456 | ) | - | - | ||||||||||||||||||||||
| Income (loss) from discontinued operations | (291 | ) | 141 | (174 | ) | 669 | (179 | ) | 587 | |||||||||||||||||||||
| Net income (loss) | 14,864 | 16,277 | 4,926 | 20,424 | 22,097 | (5,953 | ) | |||||||||||||||||||||||
| Loss attributable to noncontrolling interests | - | - | - | - | - | 421 | ||||||||||||||||||||||||
| Income (loss) attributable to Kindred | $ | 14,864 | $ | 16,277 | $ | 4,926 | $ | 20,424 | $ | 22,097 | $ | (5,532 | ) | |||||||||||||||||
| Amounts attributable to Kindred stockholders: | ||||||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 15,155 | $ | 16,136 | $ | 5,100 | $ | 19,755 | $ | 22,276 | $ | (6,119 | ) | |||||||||||||||||
| Income (loss) from discontinued operations | (291 | ) | 141 | (174 | ) | 669 | (179 | ) | 587 | |||||||||||||||||||||
| Net income (loss) | $ | 14,864 | $ | 16,277 | $ | 4,926 | $ | 20,424 | $ | 22,097 | $ | (5,532 | ) | |||||||||||||||||
| Earnings (loss) per common share: | ||||||||||||||||||||||||||||||
| Basic: | ||||||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.38 | $ | 0.41 | $ | 0.13 | $ | 0.50 | $ | 0.56 | $ | (0.14 | ) | |||||||||||||||||
| Discontinued operations: | ||||||||||||||||||||||||||||||
| Income (loss) from operations | - | - | (0.01 | ) | 0.03 | - | 0.01 | |||||||||||||||||||||||
| Gain (loss) on divestiture of operations | - | - | - | (0.01 | ) | - | - | |||||||||||||||||||||||
| Net income (loss) | $ | 0.38 | $ | 0.41 | $ | 0.12 | $ | 0.52 | $ | 0.56 | $ | (0.13 | ) | |||||||||||||||||
| Diluted: | ||||||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.38 | $ | 0.41 | $ | 0.13 | $ | 0.50 | $ | 0.55 | $ | (0.14 | ) | |||||||||||||||||
| Discontinued operations: | ||||||||||||||||||||||||||||||
| Income (loss) from operations | - | - | (0.01 | ) | 0.03 | - | 0.01 | |||||||||||||||||||||||
| Gain (loss) on divestiture of operations | - | - | - | (0.01 | ) | - | - | |||||||||||||||||||||||
| Net income (loss) | $ | 0.38 | $ | 0.41 | $ | 0.12 | $ | 0.52 | $ | 0.55 | $ | (0.13 | ) | |||||||||||||||||
|
Shares used in computing earnings (loss) per common share: |
||||||||||||||||||||||||||||||
| Basic | 38,626 | 38,756 | 38,778 | 38,790 | 39,035 | 43,231 | ||||||||||||||||||||||||
| Diluted | 38,859 | 38,914 | 38,838 | 39,089 | 39,543 | 43,231 | ||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||||||||
| Condensed Business Segment Data | |||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||
| 2010 Quarters | 2011 Quarters | ||||||||||||||||||||||||||||||
| First | Second | Third | Fourth | First | Second | ||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||
| Hospital division | $ | 507,062 | $ | 493,401 | $ | 465,198 | $ | 507,660 | $ | 558,974 | $ | 593,425 | |||||||||||||||||||
| Nursing center division | 539,321 | 542,215 | 539,914 | 566,435 | 567,472 | 568,199 | |||||||||||||||||||||||||
| Rehabilitation division: | |||||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services | 98,997 | 101,148 | 103,807 | 117,325 | 122,656 | 172,074 | |||||||||||||||||||||||||
| Hospital rehabilitation services | 21,147 | 20,913 | 20,436 | 21,182 | 22,490 | 38,291 | |||||||||||||||||||||||||
| 120,144 | 122,061 | 124,243 | 138,507 | 145,146 | 210,365 | ||||||||||||||||||||||||||
| 1,166,527 | 1,157,677 | 1,129,355 | 1,212,602 | 1,271,592 | 1,371,989 | ||||||||||||||||||||||||||
| Eliminations | (76,690 | ) | (76,313 | ) | (76,343 | ) | (77,118 | ) | (79,171 | ) | (79,397 | ) | |||||||||||||||||||
| $ | 1,089,837 | $ | 1,081,364 | $ | 1,053,012 | $ | 1,135,484 | $ | 1,192,421 | $ | 1,292,592 | ||||||||||||||||||||
| Income (loss) from continuing operations: | |||||||||||||||||||||||||||||||
| Operating income (loss): | |||||||||||||||||||||||||||||||
| Hospital division | $ | 95,440 | $ | 91,790 | $ | 75,784 | $ | 97,343 | $ | 108,385 | $ | 108,465 | |||||||||||||||||||
| Nursing center division | 70,614 | 76,529 | 69,363 | 86,912 | 87,350 | 93,532 | |||||||||||||||||||||||||
| Rehabilitation division: | |||||||||||||||||||||||||||||||
| Skilled nursing rehabilitation services | 9,537 | 9,307 | 9,486 | 5,307 | 9,149 | 15,531 | |||||||||||||||||||||||||
| Hospital rehabilitation services | 5,146 | 4,793 | 4,728 | 4,302 | 5,332 | 8,033 | |||||||||||||||||||||||||
| 14,683 | 14,100 | 14,214 | 9,609 | 14,481 | 23,564 | ||||||||||||||||||||||||||
| Corporate: | |||||||||||||||||||||||||||||||
| Overhead | (33,831 | ) | (32,799 | ) | (34,329 | ) | (33,002 | ) | (38,315 | ) | (43,801 | ) | |||||||||||||||||||
| Insurance subsidiary | (480 | ) | (791 | ) | (783 | ) | (1,099 | ) | (602 | ) | (420 | ) | |||||||||||||||||||
| (34,311 | ) | (33,590 | ) | (35,112 | ) | (34,101 | ) | (38,917 | ) | (44,221 | ) | ||||||||||||||||||||
| Transaction costs (a) | (770 | ) | (955 | ) | (771 | ) | (2,148 | ) | (4,179 | ) | (34,851 | ) | |||||||||||||||||||
| Operating income | 145,656 | 147,874 | 123,478 | 157,615 | 167,120 | 146,489 | |||||||||||||||||||||||||
| Rent | (88,319 | ) | (88,981 | ) | (89,295 | ) | (90,777 | ) | (91,453 | ) | (95,677 | ) | |||||||||||||||||||
| Depreciation and amortization | (31,121 | ) | (29,852 | ) | (29,167 | ) | (31,412 | ) | (32,549 | ) | (37,871 | ) | |||||||||||||||||||
| Interest, net | (430 | ) | (1,675 | ) | (1,239 | ) | (2,501 | ) | (5,233 | ) | (22,900 | ) | (b) | ||||||||||||||||||
|
Income (loss) from continuing operations before income taxes |
25,786 | 27,366 | 3,777 | 32,925 | 37,885 | (9,959 | ) | ||||||||||||||||||||||||
| Provision (benefit) for income taxes | 10,631 | 11,230 | (1,323 | ) | 13,170 | 15,609 | (3,419 | ) | |||||||||||||||||||||||
| $ | 15,155 | $ | 16,136 | $ | 5,100 | $ | 19,755 | $ | 22,276 | $ | (6,540 | ) | |||||||||||||||||||
| (a) Transaction-related charges for the 2010 periods have been reclassified to conform with the current period presentation. | |||||||||||||||||||||||||||||||
| (b) Includes $11.8 million of financing costs associated with the acquisition of RehabCare. | |||||||||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||||||||||||||||||||||
| Condensed Consolidating Statement of Operations | |||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||
| Second Quarter 2011 | |||||||||||||||||||||||||||||||||||||||||||||
| Nursing | Rehabilitation division | ||||||||||||||||||||||||||||||||||||||||||||
| Hospital | center | Skilled nursing | Hospital | Transaction | |||||||||||||||||||||||||||||||||||||||||
| division | division | services | services | Total | Corporate | costs | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||
| Revenues | $ | 593,425 | $ | 568,199 | $ | 172,074 | $ | 38,291 | $ | 210,365 | $ | - | $ | - | $ | (79,397 | ) | $ | 1,292,592 | ||||||||||||||||||||||||||
| Salaries, wages and benefits | 273,260 | 270,347 | 148,236 | 28,086 | 176,322 | 30,354 | 14,866 | (16 | ) | 765,133 | |||||||||||||||||||||||||||||||||||
| Supplies | 67,612 | 27,870 | 1,006 | 37 | 1,043 | 193 | - | - | 96,718 | ||||||||||||||||||||||||||||||||||||
| Rent | 43,997 | 49,562 | 1,791 | 33 | 1,824 | 294 | - | - | 95,677 | ||||||||||||||||||||||||||||||||||||
| Other operating expenses | 144,088 | 176,450 | 7,301 | 2,135 | 9,436 | 16,554 | 19,985 | (79,381 | ) | 287,132 | |||||||||||||||||||||||||||||||||||
| Other income | - | - | - | - | - | (2,880 | ) | - | - | (2,880 | ) | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 16,572 | 13,038 | 1,339 | 819 | 2,158 | 6,103 | - | - | 37,871 | ||||||||||||||||||||||||||||||||||||
| Interest expense | 66 | 22 | - | - | - | 11,266 | 11,803 | - | 23,157 | ||||||||||||||||||||||||||||||||||||
| Investment income | (2 | ) | (20 | ) | (1 | ) | - | (1 | ) | (234 | ) | - | - | (257 | ) | ||||||||||||||||||||||||||||||
| 545,593 | 537,269 | 159,672 | 31,110 | 190,782 | 61,650 | 46,654 | (79,397 | ) | 1,302,551 | ||||||||||||||||||||||||||||||||||||
|
Income (loss) from continuing operations before income taxes |
$ | 47,832 | $ | 30,930 | $ | 12,402 | $ | 7,181 | $ | 19,583 | $ | (61,650 | ) | $ | (46,654 | ) | $ | - | (9,959 | ) | |||||||||||||||||||||||||
| Provision (benefit) for income taxes | (3,419 | ) | |||||||||||||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | (6,540 | ) | ||||||||||||||||||||||||||||||||||||||||||
|
Capital expenditures, excluding acquisitions (including discontinued operations): |
|||||||||||||||||||||||||||||||||||||||||||||
| Routine | $ | 11,809 | $ | 8,000 | $ | 217 | $ | 72 | $ | 289 | $ | 13,852 | $ | - | $ | - | $ | 33,950 | |||||||||||||||||||||||||||
| Development | 6,423 | 7,705 | 181 | - | 181 | - | - | - | 14,309 | ||||||||||||||||||||||||||||||||||||
| $ | 18,232 | $ | 15,705 | $ | 398 | $ | 72 | $ | 470 | $ | 13,852 | $ | - | $ | - | $ | 48,259 | ||||||||||||||||||||||||||||
| Second Quarter 2010 | |||||||||||||||||||||||||||||||||||||||||||||
| Nursing | Rehabilitation division | ||||||||||||||||||||||||||||||||||||||||||||
| Hospital | center | Skilled nursing | Hospital | Transaction | |||||||||||||||||||||||||||||||||||||||||
| division | division | services | services | Total | Corporate | costs | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||
| Revenues | $ | 493,401 | $ | 542,215 | $ | 101,148 | $ | 20,913 | $ | 122,061 | $ | - | $ | - | $ | (76,313 | ) | $ | 1,081,364 | ||||||||||||||||||||||||||
| Salaries, wages and benefits | 221,086 | 264,653 | 86,551 | 15,431 | 101,982 | 24,484 | - | - | 612,205 | ||||||||||||||||||||||||||||||||||||
| Supplies | 57,150 | 27,448 | 704 | 22 | 726 | 131 | - | - | 85,455 | ||||||||||||||||||||||||||||||||||||
| Rent | 38,043 | 49,439 | 1,445 | 25 | 1,470 | 29 | - | - | 88,981 | ||||||||||||||||||||||||||||||||||||
| Other operating expenses | 123,375 | 173,585 | 4,586 | 667 | 5,253 | 11,832 | 955 | (76,313 | ) | 238,687 | |||||||||||||||||||||||||||||||||||
| Other income | - | - | - | - | - | (2,857 | ) | - | - | (2,857 | ) | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 12,549 | 11,185 | 558 | 68 | 626 | 5,492 | - | - | 29,852 | ||||||||||||||||||||||||||||||||||||
| Interest expense | 1 | 29 | - | - | - | 1,268 | - | - | 1,298 | ||||||||||||||||||||||||||||||||||||
| Investment (income) loss | - | (17 | ) | (2 | ) | (1 | ) | (3 | ) | 397 | - | - | 377 | ||||||||||||||||||||||||||||||||
| 452,204 | 526,322 | 93,842 | 16,212 | 110,054 | 40,776 | 955 | (76,313 | ) | 1,053,998 | ||||||||||||||||||||||||||||||||||||
|
Income (loss) from continuing operations before income taxes |
$ | 41,197 | $ | 15,893 | $ | 7,306 | $ | 4,701 | $ | 12,007 | $ | (40,776 | ) | $ | (955 | ) | $ | - | 27,366 | ||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 11,230 | ||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 16,136 | |||||||||||||||||||||||||||||||||||||||||||
|
Capital expenditures, excluding acquisitions (including discontinued operations): |
|||||||||||||||||||||||||||||||||||||||||||||
| Routine | $ | 7,954 | $ | 9,135 | $ | 258 | $ | 23 | $ | 281 | $ | 8,300 | $ | - | $ | - | $ | 25,670 | |||||||||||||||||||||||||||
| Development | 10,209 | 2,079 | - | - | - | - | - | - | 12,288 | ||||||||||||||||||||||||||||||||||||
| $ | 18,163 | $ | 11,214 | $ | 258 | $ | 23 | $ | 281 | $ | 8,300 | $ | - | $ | - | $ | 37,958 | ||||||||||||||||||||||||||||
| KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||||||||||||||||||||||
| Condensed Consolidating Statement of Operations (Continued) | |||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||
| Six months ended June 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||
| Nursing | Rehabilitation division | ||||||||||||||||||||||||||||||||||||||||||||
| Hospital | center | Skilled nursing | Hospital | Transaction | |||||||||||||||||||||||||||||||||||||||||
| division | division | services | services | Total | Corporate | costs | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||
| Revenues | $ | 1,152,399 | $ | 1,135,671 | $ | 294,730 | $ | 60,781 | $ | 355,511 | $ | - | $ | - | $ | (158,568 | ) | $ | 2,485,013 | ||||||||||||||||||||||||||
| Salaries, wages and benefits | 526,322 | 543,517 | 256,419 | 44,734 | 301,153 | 58,020 | 14,866 | (50 | ) | 1,443,828 | |||||||||||||||||||||||||||||||||||
| Supplies | 129,459 | 54,995 | 1,890 | 60 | 1,950 | 336 | - | - | 186,740 | ||||||||||||||||||||||||||||||||||||
| Rent | 84,296 | 98,946 | 3,489 | 61 | 3,550 | 338 | - | - | 187,130 | ||||||||||||||||||||||||||||||||||||
| Other operating expenses | 279,768 | 356,277 | 11,741 | 2,622 | 14,363 | 30,447 | 24,164 | (158,518 | ) | 546,501 | |||||||||||||||||||||||||||||||||||
| Other income | - | - | - | - | - | (5,665 | ) | - | - | (5,665 | ) | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 30,850 | 24,831 | 2,098 | 916 | 3,014 | 11,725 | - | - | 70,420 | ||||||||||||||||||||||||||||||||||||
| Interest expense | 66 | 51 | - | - | - | 14,966 | 13,802 | - | 28,885 | ||||||||||||||||||||||||||||||||||||
| Investment income | (3 | ) | (40 | ) | (2 | ) | - | (2 | ) | (707 | ) | - | - | (752 | ) | ||||||||||||||||||||||||||||||
| 1,050,758 | 1,078,577 | 275,635 | 48,393 | 324,028 | 109,460 | 52,832 | (158,568 | ) | 2,457,087 | ||||||||||||||||||||||||||||||||||||
|
Income from continuing operations before income taxes |
$ | 101,641 | $ | 57,094 | $ | 19,095 | $ | 12,388 | $ | 31,483 | $ | (109,460 | ) | $ | (52,832 | ) | $ | - | 27,926 | ||||||||||||||||||||||||||
| Provision for income taxes | 12,190 | ||||||||||||||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 15,736 | |||||||||||||||||||||||||||||||||||||||||||
|
Capital expenditures, excluding acquisitions (including discontinued operations): |
|||||||||||||||||||||||||||||||||||||||||||||
| Routine | $ | 23,953 | $ | 16,155 | $ | 472 | $ | 97 | $ | 569 | $ | 17,991 | $ | - | $ | - | $ | 58,668 | |||||||||||||||||||||||||||
| Development | 14,200 | 11,027 | 191 | - | 191 | - | - | - | 25,418 | ||||||||||||||||||||||||||||||||||||
| $ | 38,153 | $ | 27,182 | $ | 663 | $ | 97 | $ | 760 | $ | 17,991 | $ | - | $ | - | $ | 84,086 | ||||||||||||||||||||||||||||
| Six months ended June 30, 2010 | |||||||||||||||||||||||||||||||||||||||||||||
| Nursing | Rehabilitation division | ||||||||||||||||||||||||||||||||||||||||||||
| Hospital | center | Skilled nursing | Hospital | Transaction | |||||||||||||||||||||||||||||||||||||||||
| division (a) | division (a) | services | services | Total | Corporate (a) | costs | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||
| Revenues |
$ |
1,000,463 |
$ | 1,081,536 | $ | 200,145 | $ | 42,060 | $ | 242,205 | $ | - | $ | - | $ | (153,003 | ) | $ | 2,171,201 | ||||||||||||||||||||||||||
| Salaries, wages and benefits | 448,727 | 537,895 | 171,574 | 30,920 | 202,494 | 50,264 | - | - | 1,239,380 | ||||||||||||||||||||||||||||||||||||
| Supplies | 115,084 | 54,576 | 1,370 | 43 | 1,413 | 268 | - | - | 171,341 | ||||||||||||||||||||||||||||||||||||
| Rent | 75,458 | 98,831 | 2,894 | 51 | 2,945 | 66 | - | - | 177,300 | ||||||||||||||||||||||||||||||||||||
| Other operating expenses | 249,422 | 341,922 | 8,357 | 1,158 | 9,515 | 23,310 | 1,725 | (153,003 | ) | 472,891 | |||||||||||||||||||||||||||||||||||
| Other income | - | - | - | - | - | (5,941 | ) | - | - | (5,941 | ) | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 25,563 | 23,298 | 1,081 | 130 | 1,211 | 10,901 | - | - | 60,973 | ||||||||||||||||||||||||||||||||||||
| Interest expense | 3 | 60 | - | - | - | 2,542 | - | - | 2,605 | ||||||||||||||||||||||||||||||||||||
| Investment income | (1 | ) | (35 | ) | (3 | ) | (1 | ) | (4 | ) | (460 | ) | - | - | (500 | ) | |||||||||||||||||||||||||||||
| 914,256 | 1,056,547 | 185,273 | 32,301 | 217,574 | 80,950 | 1,725 | (153,003 | ) | 2,118,049 | ||||||||||||||||||||||||||||||||||||
|
Income from continuing operations before income taxes |
$ | 86,207 | $ | 24,989 | $ | 14,872 | $ | 9,759 | $ | 24,631 | $ | (80,950 | ) | $ | (1,725 | ) | $ | - | 53,152 | ||||||||||||||||||||||||||
| Provision for income taxes | 21,861 | ||||||||||||||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 31,291 | |||||||||||||||||||||||||||||||||||||||||||
|
Capital expenditures, excluding acquisitions (including discontinued operations): |
|||||||||||||||||||||||||||||||||||||||||||||
| Routine | $ | 14,019 | $ | 13,184 | $ | 486 | $ | 62 | $ | 548 | $ | 12,734 | $ | - | $ | - | $ | 40,485 | |||||||||||||||||||||||||||
| Development | 15,983 | 3,872 | - | - | - | - | - | - | 19,855 | ||||||||||||||||||||||||||||||||||||
| $ | 30,002 | $ | 17,056 | $ | 486 | $ | 62 | $ | 548 | $ | 12,734 | $ | - | $ | - | $ | 60,340 | ||||||||||||||||||||||||||||
| (a) | Includes $2.9 million in aggregate of severance and retirement costs in salaries, wages and benefits (Hospital division - $ 1.1 million, Nursing center division - $0.5 million and Corporate - $1.3 million). |
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||
| Condensed Business Segment Data | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| 2010 Quarters | 2011 Quarters | |||||||||||||||||
| First | Second | Third | Fourth | First | Second | |||||||||||||
| Hospital data: | ||||||||||||||||||
| End of period data: | ||||||||||||||||||
| Number of hospitals: | ||||||||||||||||||
| Long-term acute care | 83 | 83 | 83 | 89 | 89 | 120 | ||||||||||||
| Inpatient rehabilitation | - | - | - | - | - | 5 | ||||||||||||
| 83 | 83 | 83 | 89 | 89 | 125 | |||||||||||||
| Number of licensed beds: | ||||||||||||||||||
| Long-term acute care | 6,580 | 6,576 | 6,563 | 6,887 | 6,889 | 8,609 | ||||||||||||
| Inpatient rehabilitation | - | - | - | - | - | 183 | ||||||||||||
| 6,580 | 6,576 | 6,563 | 6,887 | 6,889 | 8,792 | |||||||||||||
| Revenue mix %: | ||||||||||||||||||
| Medicare | 56 | 56 | 55 | 58 | 60 | 60 | ||||||||||||
| Medicaid | 9 | 9 | 9 | 9 | 8 | 8 | ||||||||||||
| Medicare Advantage | 10 | 10 | 10 | 9 | 10 | 10 | ||||||||||||
| Commercial insurance and other | 25 | 25 | 26 | 24 | 22 | 22 | ||||||||||||
| Admissions: | ||||||||||||||||||
| Medicare | 7,432 | 7,125 | 6,769 | 7,640 | 8,504 | 8,913 | ||||||||||||
| Medicaid | 997 | 990 | 1,022 | 1,034 | 1,085 | 1,163 | ||||||||||||
| Medicare Advantage | 1,129 | 1,106 | 936 | 1,071 | 1,172 | 1,348 | ||||||||||||
| Commercial insurance and other | 2,262 | 2,048 | 1,978 | 2,020 | 2,282 | 2,290 | ||||||||||||
| 11,820 | 11,269 | 10,705 | 11,765 | 13,043 | 13,714 | |||||||||||||
| Admissions mix %: | ||||||||||||||||||
| Medicare | 63 | 63 | 63 | 65 | 65 | 65 | ||||||||||||
| Medicaid | 8 | 9 | 10 | 9 | 8 | 8 | ||||||||||||
| Medicare Advantage | 10 | 10 | 9 | 9 | 9 | 10 | ||||||||||||
| Commercial insurance and other | 19 | 18 | 18 | 17 | 18 | 17 | ||||||||||||
| Patient days: | ||||||||||||||||||
| Medicare | 202,882 | 195,964 | 179,324 | 198,129 | 219,213 | 237,257 | ||||||||||||
| Medicaid | 47,813 | 45,952 | 48,514 | 46,596 | 45,650 | 45,746 | ||||||||||||
| Medicare Advantage | 34,524 | 36,000 | 31,186 | 32,868 | 35,639 | 39,503 | ||||||||||||
| Commercial insurance and other | 75,483 | 70,651 | 70,198 | 69,585 | 70,522 | 72,759 | ||||||||||||
| 360,702 | 348,567 | 329,222 | 347,178 | 371,024 | 395,265 | |||||||||||||
| Average length of stay: | ||||||||||||||||||
| Medicare | 27.3 | 27.5 | 26.5 | 25.9 | 25.8 | 26.6 | ||||||||||||
| Medicaid | 48.0 | 46.4 | 47.5 | 45.1 | 42.1 | 39.3 | ||||||||||||
| Medicare Advantage | 30.6 | 32.5 | 33.3 | 30.7 | 30.4 | 29.3 | ||||||||||||
| Commercial insurance and other | 33.4 | 34.5 | 35.5 | 34.4 | 30.9 | 31.8 | ||||||||||||
| Weighted average | 30.5 | 30.9 | 30.8 | 29.5 | 28.4 | 28.8 | ||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||
| Condensed Business Segment Data (Continued) | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| 2010 Quarters | 2011 Quarters | |||||||||||||||||||||||
| First | Second | Third | Fourth | First | Second | |||||||||||||||||||
| Hospital data (continued): | ||||||||||||||||||||||||
| Revenues per admission: | ||||||||||||||||||||||||
| Medicare | $ | 38,078 | $ | 38,938 | $ | 37,675 | $ | 38,368 | $ | 39,439 | $ | 40,089 | ||||||||||||
| Medicaid | 45,738 | 42,774 | 42,910 | 41,704 | 42,432 | 41,576 | ||||||||||||||||||
| Medicare Advantage | 45,187 | 46,169 | 48,122 | 44,744 | 46,217 | 42,708 | ||||||||||||||||||
| Commercial insurance and other | 56,344 | 59,842 | 61,314 | 61,131 | 54,065 | 56,850 | ||||||||||||||||||
| Weighted average | 42,899 | 43,784 | 43,456 | 43,150 | 42,856 | 43,271 | ||||||||||||||||||
| Revenues per patient day: | ||||||||||||||||||||||||
| Medicare | $ | 1,395 | $ | 1,416 | $ | 1,422 | $ | 1,479 | $ | 1,530 | $ | 1,506 | ||||||||||||
| Medicaid | 954 | 922 | 904 | 925 | 1,009 | 1,057 | ||||||||||||||||||
| Medicare Advantage | 1,478 | 1,418 | 1,444 | 1,458 | 1,520 | 1,457 | ||||||||||||||||||
| Commercial insurance and other | 1,688 | 1,735 | 1,728 | 1,775 | 1,749 | 1,789 | ||||||||||||||||||
| Weighted average | 1,406 | 1,416 | 1,413 | 1,462 | 1,507 | 1,501 | ||||||||||||||||||
| Medicare case mix index (discharged patients only) | 1.21 | 1.21 | 1.19 | 1.17 | 1.21 | 1.22 | ||||||||||||||||||
| Average daily census | 4,008 | 3,830 | 3,579 | 3,774 | 4,122 | 4,344 | ||||||||||||||||||
| Occupancy % | 68.2 | 66.1 | 62.0 | 64.0 | 68.7 | 65.5 | ||||||||||||||||||
| Annualized employee turnover % | 21.8 | 22.6 | 22.3 | 22.0 | 21.2 | 22.1 | ||||||||||||||||||
| Nursing and rehabilitation center data: | ||||||||||||||||||||||||
| End of period data: | ||||||||||||||||||||||||
| Number of facilities: | ||||||||||||||||||||||||
| Nursing and rehabilitation centers: | ||||||||||||||||||||||||
| Owned or leased | 218 | 219 | 222 | 222 | 220 | 220 | ||||||||||||||||||
| Managed | 4 | 4 | 4 | 4 | 4 | 4 | ||||||||||||||||||
| Assisted living facilities | 6 | 7 | 7 | 7 | 6 | 6 | ||||||||||||||||||
| 228 | 230 | 233 | 233 | 230 | 230 | |||||||||||||||||||
| Number of licensed beds: | ||||||||||||||||||||||||
| Nursing and rehabilitation centers: | ||||||||||||||||||||||||
| Owned or leased | 26,711 | 26,760 | 27,030 | 26,957 | 26,767 | 26,687 | ||||||||||||||||||
| Managed | 485 | 485 | 485 | 485 | 485 | 485 | ||||||||||||||||||
| Assisted living facilities | 327 | 463 | 463 | 463 | 413 | 413 | ||||||||||||||||||
| 27,523 | 27,708 | 27,978 | 27,905 | 27,665 | 27,585 | |||||||||||||||||||
| Revenue mix %: | ||||||||||||||||||||||||
| Medicare | 35 | 34 | 33 | 36 | 38 | 37 | ||||||||||||||||||
| Medicaid | 41 | 41 | 41 | 39 | 37 | 38 | ||||||||||||||||||
| Medicare Advantage | 6 | 7 | 7 | 7 | 7 | 7 | ||||||||||||||||||
| Private and other | 18 | 18 | 19 | 18 | 18 | 18 | ||||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||
| Condensed Business Segment Data (Continued) | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| 2010 Quarters | 2011 Quarters | |||||||||||||||||||||||
| First | Second | Third | Fourth | First | Second | |||||||||||||||||||
| Nursing and rehabilitation center data (continued): | ||||||||||||||||||||||||
| Patient days (excludes managed facilities): | ||||||||||||||||||||||||
| Medicare | 369,102 | 363,149 | 346,837 | 344,018 | 370,395 | 358,760 | ||||||||||||||||||
| Medicaid | 1,312,517 | 1,292,246 | 1,289,643 | 1,287,739 | 1,232,620 | 1,229,517 | ||||||||||||||||||
| Medicare Advantage | 87,692 | 92,051 | 91,643 | 94,336 | 97,460 | 94,483 | ||||||||||||||||||
| Private and other | 397,550 | 415,921 | 437,413 | 453,357 | 425,414 | 435,667 | ||||||||||||||||||
| 2,166,861 | 2,163,367 | 2,165,536 | 2,179,450 | 2,125,889 | 2,118,427 | |||||||||||||||||||
| Patient day mix %: | ||||||||||||||||||||||||
| Medicare | 17 | 17 | 16 | 16 | 17 | 17 | ||||||||||||||||||
| Medicaid | 61 | 60 | 60 | 59 | 58 | 58 | ||||||||||||||||||
| Medicare Advantage | 4 | 4 | 4 | 4 | 5 | 4 | ||||||||||||||||||
| Private and other | 18 | 19 | 20 | 21 | 20 | 21 | ||||||||||||||||||
| Revenues per patient day: | ||||||||||||||||||||||||
| Medicare Part A | $ | 470 | $ | 469 | $ | 468 | $ | 534 | $ | 537 | $ | 544 | ||||||||||||
| Total Medicare (including Part B) | 513 | 515 | 519 | 587 | 579 | 589 | ||||||||||||||||||
| Medicaid | 168 | 171 | 171 | 171 | 172 | 173 | ||||||||||||||||||
| Medicare Advantage | 398 | 400 | 405 | 432 | 416 | 420 | ||||||||||||||||||
| Private and other | 238 | 234 | 232 | 228 | 235 | 240 | ||||||||||||||||||
| Weighted average | 249 | 250 | 249 | 260 | 267 | 268 | ||||||||||||||||||
| Average daily census | 24,076 | 23,773 | 23,538 | 23,690 | 23,621 | 23,279 | ||||||||||||||||||
| Admissions (excludes managed facilities) | 19,026 | 18,924 | 19,383 | 19,118 | 20,619 | 20,143 | ||||||||||||||||||
| Occupancy % | 89.0 | 87.3 | 86.8 | 86.4 | 86.9 | 85.9 | ||||||||||||||||||
| Medicare average length of stay | 33.7 | 35.2 | 34.3 | 33.0 | 32.9 | 33.4 | ||||||||||||||||||
| Annualized employee turnover % | 36.7 | 38.8 | 39.8 | 39.6 | 37.8 | 39.8 | ||||||||||||||||||
| Rehabilitation data: | ||||||||||||||||||||||||
| Skilled nursing rehabilitation services: | ||||||||||||||||||||||||
| Revenue mix %: | ||||||||||||||||||||||||
| Company-operated | 57 | 56 | 55 | 49 | 47 | 34 | ||||||||||||||||||
| Non-affiliated | 43 | 44 | 45 | 51 | 53 | 66 | ||||||||||||||||||
| Sites of service (at end of period) | 554 | 568 | 595 | 635 | 641 | 1,848 | ||||||||||||||||||
| Revenue per site | $ | 172,498 | $ | 171,254 | $ | 167,832 | $ | 174,896 | $ | 178,812 | $ | 137,316 | ||||||||||||
| Therapist productivity % | 83.8 | 84.2 | 82.1 | 78.6 | 80.6 | 81.6 | ||||||||||||||||||
| Hospice and home care revenues | $ | 3,434 | $ | 3,875 | $ | 3,947 | $ | 6,266 | $ | 8,038 | $ | 10,828 | ||||||||||||
| Hospital rehabilitation services: | ||||||||||||||||||||||||
| Revenue mix %: | ||||||||||||||||||||||||
| Company-operated | 96 | 96 | 95 | 95 | 94 | 54 | ||||||||||||||||||
| Non-affiliated | 4 | 4 | 5 | 5 | 6 | 46 | ||||||||||||||||||
| Sites of service (at end of period): | ||||||||||||||||||||||||
| Inpatient rehabilitation units | - | - | - | 1 | 1 | 104 | ||||||||||||||||||
| LTAC hospitals | 85 | 85 | 85 | 91 | 93 | 97 | ||||||||||||||||||
| Sub-acute units | 7 | 7 | 7 | 7 | 8 | 22 | ||||||||||||||||||
| Outpatient units | 10 | 11 | 11 | 12 | 12 | 119 | ||||||||||||||||||
| Other | 2 | 2 | 4 | 4 | 5 | 8 | ||||||||||||||||||
| 104 | 105 | 107 | 115 | 119 | 350 | |||||||||||||||||||
| Revenue per site | $ | 203,337 | $ | 199,174 | $ | 190,986 | $ | 184,193 | $ | 188,989 | $ | 199,661 | ||||||||||||
| Annualized employee turnover % | 12.6 | 14.2 | 15.4 | 14.4 | 14.5 | 17.1 | ||||||||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||||||||||||||||||
| Earnings (Loss) Per Common Share Reconciliation (a) | ||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||||||||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||||||||||||||
| 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 | $ | (6,119 | ) | $ | (6,119 | ) | $ | 16,136 | $ | 16,136 | $ | 16,157 | $ | 16,157 | $ | 31,291 | $ | 31,291 | ||||||||||||||||||||||
|
Allocation to participating unvested restricted stockholders |
- | - | (300 | ) | (299 | ) | (296 | ) | (292 | ) | (578 | ) | (575 | ) | ||||||||||||||||||||||||||
| Available to common stockholders | $ | (6,119 | ) | $ | (6,119 | ) | $ | 15,836 | $ | 15,837 | $ | 15,861 | $ | 15,865 | $ | 30,713 | $ | 30,716 | ||||||||||||||||||||||
| Discontinued operations, net of income taxes: | ||||||||||||||||||||||||||||||||||||||||
| Income (loss) from operations: | ||||||||||||||||||||||||||||||||||||||||
| As reported in Statement of Operations | $ | 587 | $ | 587 | $ | 87 | $ | 87 | $ | 408 | $ | 408 | $ | (67 | ) | $ | (67 | ) | ||||||||||||||||||||||
|
Allocation to participating unvested restricted stockholders |
- | - | (2 | ) | (2 | ) | (7 | ) | (7 | ) | 1 | 1 | ||||||||||||||||||||||||||||
| Available to common stockholders | $ | 587 | $ | 587 | $ | 85 | $ | 85 | $ | 401 | $ | 401 | $ | (66 | ) | $ | (66 | ) | ||||||||||||||||||||||
| Gain (loss) on divestiture of operations: | ||||||||||||||||||||||||||||||||||||||||
| As reported in Statement of Operations | $ | - | $ | - | $ | 54 | $ | 54 | $ | - | $ | - | $ | (83 | ) | $ | (83 | ) | ||||||||||||||||||||||
|
Allocation to participating unvested restricted stockholders |
- | - | (1 | ) | (1 | ) | - | - | 2 | 2 | ||||||||||||||||||||||||||||||
| Available to common stockholders | $ | - | $ | - | $ | 53 | $ | 53 | $ | - | $ | - | $ | (81 | ) | $ | (81 | ) | ||||||||||||||||||||||
| Net income (loss): | ||||||||||||||||||||||||||||||||||||||||
| As reported in Statement of Operations | $ | (5,532 | ) | $ | (5,532 | ) | $ | 16,277 | $ | 16,277 | $ | 16,565 | $ | 16,565 | $ | 31,141 | $ | 31,141 | ||||||||||||||||||||||
|
Allocation to participating unvested restricted stockholders |
- | - | (303 | ) | (302 | ) | (303 | ) | (299 | ) | (575 | ) | (572 | ) | ||||||||||||||||||||||||||
| Available to common stockholders | $ | (5,532 | ) | $ | (5,532 | ) | $ | 15,974 | $ | 15,975 | $ | 16,262 | $ | 16,266 | $ | 30,566 | $ | 30,569 | ||||||||||||||||||||||
| Shares used in the computation: | ||||||||||||||||||||||||||||||||||||||||
|
Weighted average shares outstanding - basic computation |
43,231 | 43,231 | 38,756 | 38,756 | 41,145 | 41,145 | 38,691 | 38,691 | ||||||||||||||||||||||||||||||||
| Dilutive effect of employee stock options | - | 158 | 516 | 190 | ||||||||||||||||||||||||||||||||||||
|
Adjusted weighted average shares outstanding - diluted computation |
43,231 | 38,914 | 41,661 | 38,881 | ||||||||||||||||||||||||||||||||||||
| Earnings (loss) per common share: | ||||||||||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | (0.14 | ) | $ | (0.14 | ) | $ | 0.41 | $ | 0.41 | $ | 0.39 | $ | 0.38 | $ | 0.79 | $ | 0.79 | ||||||||||||||||||||||
| Discontinued operations: | ||||||||||||||||||||||||||||||||||||||||
| Income (loss) from operations | 0.01 | 0.01 | - | - | 0.01 | 0.01 | - | - | ||||||||||||||||||||||||||||||||
| Gain (loss) on divestiture of operations | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Net income (loss) | $ | (0.13 | ) | $ | (0.13 | ) | $ | 0.41 | $ | 0.41 | $ | 0.40 | $ | 0.39 | $ | 0.79 | $ | 0.79 | ||||||||||||||||||||||
| (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 (loss) 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 (loss) 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 a non-GAAP measurement which presents operating results for the second quarter and six months ended June 30, 2011 and 2010 before certain transaction-related charges or on a core basis. The charges that were excluded from core operating results for the second quarter and six months ended June 30, 2011 relate to transaction, financing and severance costs. The charges that were excluded from core operating results for the second quarter ended June 30, 2010 relate to transaction costs. The charges that are excluded from core operating results for the six months ended June 30, 2010 relate to transaction, severance and retirement costs. |
|
The income tax benefit associated with the excluded charges was calculated using an effective income tax rate of 36.7% for the second quarter and six months ended June 30, 2011 and an effective income tax rate of 38.5% for the second quarter and six months ended June 30, 2010. Certain of the excluded charges for the second quarter and six months ended June 30, 2011 are not deductible for income tax purposes thus resulting in a lower effective income tax rate than the comparable prior year periods. |
|
This non-GAAP measurement is 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 second quarter and six months ended June 30, 2011 and 2010 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 purposes of evaluating performance internally. |
| Three months ended | Six months ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||
| Detail of transaction-related charges excluded from core operating results: | ||||||||||||||||||||
| Transaction costs | ($19,985 | ) | ($955 | ) | ($24,164 | ) | ($1,725 | ) | ||||||||||||
| Financing costs (in connection with the RehabCare acquisition) | (11,803 | ) | - | (13,802 | ) | - | ||||||||||||||
| Severance and retirement costs | (14,866 | ) | - | (14,866 | ) | (2,906 | ) | |||||||||||||
| (46,654 | ) | (955 | ) | (52,832 | ) | (4,631 | ) | |||||||||||||
| Income tax benefit | 17,114 | 368 | 19,337 | 1,783 | ||||||||||||||||
| Charges net of income taxes | (29,540 | ) | (587 | ) | (33,495 | ) | (2,848 | ) | ||||||||||||
| Allocation to participating unvested restricted stockholders | - | 11 | 606 | 52 | ||||||||||||||||
| Available to common stockholders | ($29,540 | ) | ($576 | ) | ($32,889 | ) | ($2,796 | ) | ||||||||||||
| Weighted average diluted shares outstanding | 43,231 | 38,914 | 41,661 | 38,881 | ||||||||||||||||
| Diluted loss per common share related to charges | ($0.68 | ) | ($0.01 | ) | ($0.79 | ) | ($0.07 | ) | ||||||||||||
| Reconciliation of adjusted operating income before transaction-related charges: | ||||||||||||||||||||
| Operating income before transaction-related charges | $ | 181,340 | $ | 148,829 | $ | 352,639 | $ | 298,161 | ||||||||||||
| Detail of transaction-related charges excluded from core operating results: | ||||||||||||||||||||
| Transaction costs | (19,985 | ) | (955 | ) | (24,164 | ) | (1,725 | ) | ||||||||||||
| Severance and retirement costs | (14,866 | ) | - | (14,866 | ) | (2,906 | ) | |||||||||||||
| (34,851 | ) | (955 | ) | (39,030 | ) | (4,631 | ) | |||||||||||||
| Reported operating income | $ | 146,489 | $ | 147,874 | $ | 313,609 | $ | 293,530 | ||||||||||||
|
Reconciliation of adjusted income (loss) from continuing operations before transaction-related charges: |
||||||||||||||||||||
| Amounts attributable to Kindred stockholders: | ||||||||||||||||||||
| Income from continuing operations before transaction-related charges | $ | 23,421 | $ | 16,723 | $ | 49,652 | $ | 34,139 | ||||||||||||
| Charges net of income taxes | (29,540 | ) | (587 | ) | (33,495 | ) | (2,848 | ) | ||||||||||||
| Reported income (loss) from continuing operations | ($6,119 | ) | $ | 16,136 | $ | 16,157 | $ | 31,291 | ||||||||||||
|
Reconciliation of diluted income (loss) per common share from continuing operations before transaction-related charges: |
||||||||||||||||||||
| Diluted income per common share before transaction-related charges | $ | 0.53 | $ | 0.42 | $ | 1.17 | $ | 0.86 | ||||||||||||
| Charges net of income taxes | (0.68 | ) | (0.01 | ) | (0.79 | ) | (0.07 | ) | ||||||||||||
| Other | 0.01 | - | - | - | ||||||||||||||||
| Reported diluted income (loss) per common share from continuing operations | ($0.14 | ) | $ | 0.41 | $ | 0.38 | $ | 0.79 | ||||||||||||
|
Weighted average diluted shares used to compute diluted income (loss) per common share from continuing operations before transaction-related charges |
43,756 | 38,914 | 41,661 | 38,881 | ||||||||||||||||
| Weighted average diluted shares outstanding | 43,231 | 38,914 | 41,661 | 38,881 | ||||||||||||||||
| Reconciliation of effective income tax rate before transaction-related charges: | ||||||||||||||||||||
| Effective income tax rate before transaction-related charges | 37.3 | % | 40.9 | % | 39.0 | % | 40.9 | % | ||||||||||||
| Impact of transaction-related charges on effective income tax rate | (3.0 | )% | 0.1 | % | 4.6 | % | 0.2 | % | ||||||||||||
| Reported effective income tax rate | 34.3 | % | 41.0 | % | 43.6 | % | 41.1 | % | ||||||||||||
| KINDRED HEALTHCARE, INC. |
| Reconciliation of Non-GAAP Measurements to GAAP Results (Continued) |
| (Unaudited) |
| (In thousands) |
|
In addition to the results provided in accordance with GAAP, the Company has provided a non-GAAP measurement which presents operating cash flows for the second quarter and six months ended June 30, 2011 and 2010 excluding certain payments, net of income tax benefit, or on an adjusted basis. The payments that were excluded from adjusted operating cash flows for the second quarter and six months ended June 30, 2011 relate to financing, transaction and severance costs, net of income tax benefit. The payments that were excluded from adjusted operating cash flows for the second quarter ended June 30, 2010 relate to transaction costs, net of income tax benefit. The payments that are excluded from adjusted operating cash flows for the six months ended June 30, 2010 relate to transaction, severance and retirement costs, net of income tax benefit. |
|
The income tax benefit associated with the excluded payments was calculated using an effective income tax rate of 36.7% for the second quarter and six months ended June 30, 2011 and an effective income tax rate of 38.5% for the second quarter and six months ended June 30, 2010. Certain of the excluded payments for the second quarter and six months ended June 30, 2011 are not deductible for income tax purposes thus resulting in a lower effective income tax rate than the comparable prior year periods. |
|
This non-GAAP measurement is not intended to replace the presentation of the Company's operating cash flows in accordance with GAAP. The Company believes that the presentation of adjusted operating cash flows provides additional information to investors to facilitate the comparison between periods by excluding certain payments for the second quarter and six months ended June 30, 2011 and 2010 that the Company believes are not representative of its ongoing operations due to the materiality and nature of the payments. The Company's adjusted operating cash flows also represent a key cash flow measure for the purposes of evaluating cash flows internally. |
| Three months ended | Six months ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||
|
Reconciliation of net cash flows provided by operating activities to adjusted cash flows: |
||||||||||||||||||||
| Net cash provided by operating activities | $ | 4,852 | $ | 96,942 | $ | 51,288 | $ | 82,946 | ||||||||||||
| Adjustments to remove certain payments: | ||||||||||||||||||||
| Financing costs: | ||||||||||||||||||||
| Capitalized as deferred financing costs | 46,232 | - | 46,232 | - | ||||||||||||||||
| Charged to interest expense | 13,074 | - | 13,074 | - | ||||||||||||||||
| Transaction costs | 19,601 | 616 | 22,063 | 755 | ||||||||||||||||
| Severance and retirement costs | 6,970 | - | 6,970 | 2,689 | ||||||||||||||||
|
Benefit of reduced income tax payments resulting from financing, transaction and severance costs |
(17,114 | ) | (368 | ) | (19,337 | ) | (1,783 | ) | ||||||||||||
| 68,763 | 248 | 69,002 | 1,661 | |||||||||||||||||
| Adjusted operating cash flows | $ | 73,615 | $ | 97,190 | $ | 120,290 | $ | 84,607 | ||||||||||||
| KINDRED HEALTHCARE, INC. | ||||||||||||||||
| Reconciliation of Earnings Guidance for 2011 and 2012 - Continuing Operations | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (In millions, except per share amounts) | ||||||||||||||||
| Earnings Guidance Ranges as of August 8, 2011 (a) | ||||||||||||||||
| 2011 | 2012 | |||||||||||||||
| Low | High | Low | High | |||||||||||||
| Operating income | $ | 775 | $ | 780 | $ | 911 | $ | 928 | ||||||||
| Rent | 400 | 400 | 445 | 445 | ||||||||||||
| Depreciation and amortization | 164 | 164 | 200 | 200 | ||||||||||||
| Interest, net | 69 | 69 | 110 | 110 | ||||||||||||
| Income from continuing operations before income taxes | 142 | 147 | 156 | 173 | ||||||||||||
| Provision for income taxes | 53 | 54 | 63 | 69 | ||||||||||||
| Income from continuing operations | 89 | 93 | 93 | 104 | ||||||||||||
| Earnings attributable to noncontrolling interests | 2 | 2 | 4 | 4 | ||||||||||||
| Income attributable to the Company | 87 | 91 | 89 | 100 | ||||||||||||
| Allocation to participating unvested restricted stockholders | 2 | 2 | 2 | 2 | ||||||||||||
| Available to common stockholders | $ | 85 | $ | 89 | $ | 87 | $ | 98 | ||||||||
| Earnings per diluted share | $ | 1.80 | $ | 1.90 | $ | 1.65 | $ | 1.85 | ||||||||
| Shares used in computing earnings per diluted share | 47.0 | 47.0 | 53.0 | 53.0 | ||||||||||||
| (a) |
The Company's earnings guidance reflects the anticipated impact of the final rules recently issued by CMS related to payment rates for nursing centers, LTAC hospitals, IRFs and the Company's rehabilitation therapy business, all of which will be effective on October 1, 2011. The Company's earnings guidance excludes the effect of (i) any transaction-related charges that have been recorded in prior periods or that may be incurred in the future, (ii) any other reimbursement changes, (iii) any material acquisitions or divestitures, or (iv) any repurchases of common stock. |
CONTACT:
Kindred Healthcare, Inc.
Richard A. Lechleiter
Executive Vice President and Chief Financial Officer
502-596-7734
KEYWORDS: United States North America Kentucky
INDUSTRY KEYWORDS: Health Hospitals Other Health Nursing Managed Care
MEDIA:
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