Consolidated Revenues of $1.5 Billion, GAAP
Loss from Continuing Operations of $135 Million(1),
GAAP Diluted Loss Per Share from Continuing Operations of
$1.65(1), and EBITDA Loss of $193
Million(2) in the Fourth Quarter
Core EBITDA of $119 Million(3)
and Core Diluted Earnings Per Share from Continuing Operations
of $0.20(3) in the Fourth Quarter
GAAP and Core Results in the Fourth Quarter
include Negative Pretax Earnings Impact of $2 Million and
Diluted EPS Impact of $0.02 from LTAC Hospital Closures
Consolidated Revenues of $6.0 Billion, GAAP
Loss from Continuing Operations of $247 Million, GAAP Diluted Loss
Per Share from Continuing Operations of $3.31, and EBITDA Loss of
$62 Million(3) for the Year
Core EBITDA of $444 Million(3)
and Core Diluted Earnings Per Share from Continuing Operations
of $0.34(3) for the Year
GAAP and Core Results for the Year Include
Negative Pretax Earnings Impact of $16 Million from Hurricanes and
$6 Million from LTAC Hospital Closures and Diluted EPS Impact of
$0.11 from Hurricanes and $0.04 from LTAC Hospital Closures
GAAP Operating Cash Flows of $67 Million in
the Fourth QuarterCore Operating Cash Flows of $87
Million(3) in the Fourth Quarter
GAAP Operating Cash Flows of $76 Million
for the Year; Core Operating Cash Flows of $137
Million(3) for the Year
Core Free Cash Flows of $50
Million(3) in the Fourth Quarter; Core Free Cash
Flows of $6 Million(3) for the Year
Company Reaffirms 2018 Outlook and Does Not
Intend to Provide Future Guidance Updates Due to Pending
Merger
Kindred Healthcare, Inc. (“Kindred” or the “Company”) (NYSE:KND)
today announced its operating results for the fourth quarter and
full year ended December 31, 2017. The Company also today will file
its Annual Report on Form 10-K with the Securities and Exchange
Commission (“SEC”).
On December 19, 2017, the Company announced that its Board of
Directors approved a definitive agreement under which it will be
acquired by a consortium of three companies: TPG Capital (“TPG”),
Welsh, Carson, Anderson & Stowe (“WCAS”) and Humana Inc.
(“Humana”) (NYSE:HUM) (together, the “Consortium”) for
approximately $4.1 billion in cash including the assumption or
repayment of net debt (the “Merger”). Immediately following the
Merger, the home health, hospice and community care businesses will
be separated from the Company and operated as a standalone company
owned 40 percent by Humana, with the remaining 60 percent owned by
TPG and WCAS. The Company’s long-term acute care (“LTAC”)
hospitals, inpatient rehabilitation facilities (“IRFs”) and
contract rehabilitation services businesses will be operated as a
separate specialty hospital company owned by TPG and WCAS.
Benjamin A. Breier, President and Chief Executive Officer of
Kindred, commented, “Our fourth quarter results reflect continued
execution of the Company’s strategy. We are pleased to be moving
forward with the Consortium and look forward to completing the
Merger to deliver immediate and certain value to Kindred
stockholders at a substantial premium and eliminate the significant
risks associated with continuing to operate as a standalone public
company or pursuing other strategic alternatives. We are confident
that the Merger will enhance innovation at both the home care and
specialty hospital companies, further Kindred’s culture of a
patient-first approach to care and create new opportunities for
Kindred employees.”
_______________________________(1) Results reflect after-tax
costs of $163.7 million or $1.86 per diluted share related to
impairment charges, insurance restructuring costs, other
restructuring charges, litigation contingency expense, net change
in deferred tax asset valuation allowance and an adjustment to
reduce deferred tax liabilities based upon certain changes enacted
by the Tax Cuts and Jobs Act of 2017 (“the Tax Reform Act”).(2)
Results reflect pretax costs of $312.0 million related to
impairment charges, insurance restructuring costs, other
restructuring charges and litigation contingency expense. As used
herein, “EBITDA” means earnings before interest, income taxes,
depreciation and amortization. See reconciliation of generally
accepted accounting principles (“GAAP”) results to non-GAAP results
beginning on page 14.(3) See reconciliation of GAAP results to
non-GAAP results beginning on page 14. During the first quarter of
2017, the Company revised its definition of “core” non-GAAP
measures. See “Non-GAAP Measures” beginning on page 14 for a
discussion regarding the revised definitions. For comparability,
core results for 2016 were revised to conform to the current year
presentation.
The agreement is subject to certain conditions to closing,
including, without limitation, the approval of the agreement by the
stockholders of Kindred, the receipt of certain licensure and
regulatory approvals, and other customary closing conditions. The
waiting period for the Merger under the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, as amended, expired on February 20,
2018. The Merger is expected to close during the summer of
2018.
All financial and statistical information included in this
earnings release reflects the continuing operations of the
Company’s businesses for all periods presented unless otherwise
indicated. As previously disclosed, while the operating results,
direct overhead and losses associated with the skilled nursing
facility business divestiture, and elimination of intercompany
profits for certain applicable RehabCare contracts, are classified
as discontinued operations, they do not include any allocations of
indirect overhead related to the skilled nursing facility business.
In the fourth quarter of 2017, the Company reclassified historical
intercompany profits from certain RehabCare contracts that were
retained with new operators of divested skilled nursing facilities
from discontinued operations to continuing operations for all
periods presented. The impact of the retained RehabCare contracts
on fourth quarter 2017 revenues, loss from continuing operations
before income taxes, EBITDA and Core EBITDA was immaterial.
Fourth Quarter Consolidated Results(1):
- Consolidated revenues were $1.5
billion, a 2.3% year-over-year decrease, primarily attributable to
the impact of the closure of seven LTAC hospitals and termination
of over 100 RehabCare sites of service during 2017. GAAP loss from
continuing operations was $135.4 million compared to a loss of $1.9
million in the same period a year ago. EBITDA decreased to a loss
of $192.8 million compared to $88.7 million of income in the prior
year. The increase in the loss from continuing operations and the
adverse change in EBITDA was primarily due to a $241.3 million
increase in impairment charges and a $41.4 million increase in
restructuring charges. Core EBITDA increased to $119.2 million
compared to $108.2 million in the same period of 2016, primarily
due to growth in home health and IRF volumes, growth in home health
and hospice revenue rates, and lower professional liability and
workers compensation costs.
- GAAP operating cash flows were $67.2
million compared to $147.0 million for the same period a year ago.
Core operating cash flows were $86.5 million compared to $142.5
million for the same period a year ago. Core free cash flows were
$49.7 million compared to $104.4 million in the same period a
year ago. GAAP operating cash flows declined compared to the prior
year period due to severance, retention and transaction costs
associated with the skilled nursing facility business divestiture
and other restructuring activities, and an increase in net working
capital. Core operating cash flows and core free cash flows
declined compared to the prior year period due to increases in net
working capital.
- GAAP diluted loss per share from
continuing operations was $1.65 as compared to $0.12 a year ago.
The increase in the GAAP diluted loss per share was primarily due
to the increase in impairment charges and restructuring charges.
Core diluted earnings per share (“EPS”) from continuing operations
increased to $0.20, as compared to core diluted EPS of $0.07 for
the same period last year, primarily due to growth in home health
and IRF volumes, growth in home health and hospice revenue rates,
and lower professional liability and workers compensation
costs.
- The Company recorded a $236.3 million
non-cash goodwill impairment charge in the fourth quarter to
reflect an adjustment to the carrying value of its Hospital
division reporting unit in connection with its annual goodwill
impairment test as of October 1, 2017. The Company also recorded
non-cash impairment charges of $3.2 million for an intangible asset
and $1.9 million for property and equipment, both related to the
Hospital division, and a $3.5 million non-cash intangible
asset impairment charge in the Kindred at Home division
(“KAH”).
Full Year Consolidated Results(1):
- Consolidated revenues were $6.0
billion, a 4.1% year-over-year decrease, primarily attributable to
the impact of the transition to LTAC patient criteria, the sale or
closure of 22 LTAC hospitals since the third quarter of 2016 and
termination of over 100 RehabCare sites of service during 2017.
GAAP loss from continuing operations was $247.2 million
compared to a loss of $597.7 million in the same period a year ago.
The decrease in the loss was primarily due to a $280.3 million
decrease in the deferred tax asset valuation allowance provision as
well as a $130.5 million tax benefit from the reduction of
deferred tax liabilities for certain changes enacted by the Tax
Reform Act. EBITDA declined to a loss of $61.6 million compared to
income of $79.9 million in the prior year, primarily due to an
increase in impairment charges, the impact of LTAC patient
criteria, the sale or closure of LTAC hospitals noted above and
operating losses associated with the one-time impact of Hurricanes
Irma and Harvey (the “Hurricanes”) of $15.8 million in the
third quarter of 2017, partially offset by lower professional
liability and workers compensation costs. Core EBITDA declined to
$443.5 million compared to $508.4 million in the same period
of 2016, primarily due to LTAC patient criteria, the sale or
closure of LTAC hospitals and the Hurricane losses, partially
offset by lower professional liability and workers compensation
costs._______________________________(1) See reconciliation of GAAP
results to non-GAAP results beginning on page 14. During the first
quarter of 2017, the Company revised its definition of “core”
non-GAAP measures. See “Non-GAAP Measures” beginning on page 14 for
a discussion regarding the revised definitions. For comparability,
core results for 2016 were revised to conform to the current year
presentation.
- GAAP diluted loss per share from
continuing operations was $3.31 as compared to $7.29 a year ago.
The decrease in the GAAP diluted loss per share was primarily due
to a decrease in the deferred tax asset valuation allowance
provision as well as a tax benefit from the reduction of deferred
tax liabilities for certain changes enacted by the Tax Reform Act.
Core diluted EPS from continuing operations declined to $0.34, as
compared to core diluted EPS of $0.73 for the same period last
year, primarily due to LTAC patient criteria and the Hurricane
losses in the third quarter of 2017, partially offset by lower
professional liability and workers compensation costs.
- GAAP operating cash flows were $75.7
million compared to $188.2 million for the same period a year ago.
Core operating cash flows were $136.9 million compared to $299.3
million for the same period a year ago. Core free cash flows were
$5.9 million compared to $157.2 million in the same period a
year ago. GAAP and core operating cash flows and core free cash
flows declined compared to the prior year period due to LTAC
patient criteria and increases in net working capital.
Fourth Quarter Segment
Results(1)(2)(3):
KAH recorded fourth quarter revenues that increased 3.0% to
$649.0 million from $630.2 million in the prior year period.
On a same-store basis, home health admissions increased 1.6%, but
same-store hospice admissions decreased 2.0% over the prior year
period. Home health revenue per episode increased 2.6% and hospice
revenues per patient day increased 2.7%. GAAP segment adjusted
operating income and core segment adjusted operating income for the
fourth quarter of 2017 both increased to $103.6 million, an
increase of 14.7% and 16.6%, respectively, as compared to the prior
year period. The improvements are a result of increased home health
volumes, home health and hospice revenue rates, and improved
operating efficiencies compared to the prior year. Home health
direct labor costs per visit declined 2.6% and hospice direct labor
costs per patient day declined 2.1% in the fourth quarter of 2017
both as compared to the fourth quarter of 2016.
Kindred’s Hospital division fourth quarter revenues declined
7.3% to $505.8 million from $545.9 million in the prior year
period, primarily due to the elimination of approximately $20
million of revenue related to the closure of seven LTAC hospitals
during 2017 and an 8.2% decline in same-hospital admissions
compared to last year. For the fourth quarter of 2017,
approximately 92% of same-hospital revenue came from LTAC compliant
patients, which include all patients except Medicare site neutral
patients, an increase from approximately 89% in both the third
quarter of 2017 and the prior year period. Same-hospital managed
care and commercial volumes increased 6.0% in the fourth quarter of
2017 compared to the prior year period. GAAP segment adjusted
operating income and core segment adjusted operating income both
declined to $91.0 million, a decrease of 2.9% and 2.3%,
respectively, as compared to a year ago. The declines were
primarily due to the closure of seven LTAC hospitals, which
contributed $1.0 million in both GAAP and core segment operating
income during 2017 compared to $2.3 million in 2016, and
declines in same-hospital admissions.
Kindred Rehabilitation Services division fourth quarter revenues
declined 4.1% to $346.6 million as compared to $361.4 million
in the prior year period, primarily due to operating fewer sites of
service in RehabCare resulting from the sale of the Company’s
affiliated skilled nursing facility business and termination of
unprofitable contracts. GAAP segment adjusted operating income and
core segment adjusted operating income both decreased to $52.4
million, or by 2.7% as compared to the prior year period, primarily
due to the reduction in RehabCare sites of service and lower
affiliated LTAC volumes and sites of service within the Kindred
Hospital Rehabilitation Services (“KHRS”) contract services
business. The KHRS segment achieved revenue growth of 1.4% to
$173.7 million from $171.3 million a year ago. This growth is
primarily due to IRF revenues increasing 7.5% to $97.8 million
as compared to $91.0 million in the prior year as a result of IRF
development and a 2.9%
_______________________________(1) See reconciliation of GAAP
results to non-GAAP results beginning on page 14. During the first
quarter of 2017, the Company revised its definition of “core”
non-GAAP measures. See “Non-GAAP Measures” beginning on page 14 for
a discussion regarding the revised definitions. For comparability,
core results for 2016 were revised to conform to the current year
presentation.(2) See same-hospital and full segment data on pages 9
through 13.(3) For each of the Company’s segments, Segment adjusted
operating income (loss) is a measure of performance used by the
Company’s chief operating decision makers in accordance
with “Accounting Standard Codification 280 – Segment
Reporting.” The Company defines Segment adjusted operating income
(loss) as earnings before interest, income taxes, depreciation,
amortization and total rent for each of the Company’s operating
segments, excluding litigation contingency expense, impairment
charges, restructuring charges, transaction costs, and the
allocation of support center overhead.
Fourth Quarter Segment
Results(1)(2)(Continued):
increase in same-hospital discharges. KHRS GAAP segment adjusted
operating income and core segment adjusted operating income both
declined to $49.0 million or by 1.3%, as compared to the same
period a year ago, primarily as a result of lower affiliated LTAC
volumes and sites of service. The IRFs contributed $33.2 million to
KHRS GAAP segment adjusted operating income, a 19.7% increase over
the prior year. RehabCare revenues declined 9.1% to
$172.9 million from $190.1 million for the fourth quarter of
2016, primarily due to operating fewer sites of service. RehabCare
GAAP segment adjusted operating income and core segment adjusted
operating income both decreased to $3.4 million or 18.5%, as
compared to the prior year period, primarily due to operating fewer
sites of service.
Discontinued Operations
During the fourth quarter of 2017, the Company recorded $33.1
million of pretax charges related to the continued divestiture of
its skilled nursing facility business, including $14.4 million of
transaction, severance and retention costs, $13.2 million
related to asset write downs, a $5.0 million lease guarantee
provision and $0.5 million of lease termination costs.
2018 Outlook and Other Commentary(3)
All forward-looking non-GAAP financial measures used to provide
the “2018 Outlook” are provided only on a non- GAAP basis. This is
due to the inherent difficulty of forecasting the timing or amount
of items that would be included in the most directly comparable
forward-looking GAAP financial measures. As a result,
reconciliation of the forward-looking non-GAAP financial measures
to GAAP financial measures is not available without unreasonable
effort and the Company is unable to assess the probable
significance of the unavailable information.
For the 2018 Outlook, Kindred anticipates:
- Annual revenues of $6.0 billion, with a
range of $5.9 billion to $6.1 billion;
- Core EBITDA of $515 million, with a
range of $500 million to $530 million; and
- Core diluted EPS from continuing
operations of $0.75, with a range of $0.65 to $0.85.
These estimates are identical to the 2018 Outlook provided in
the Company’s third quarter earnings release dated November 6,
2017, with the exception of the annual revenues estimate, which was
adjusted primarily to reflect LTAC hospital closures, a reduction
in RehabCare sites of service and certain adjustments related to
the adoption of a new revenue recognition accounting standard on
January 1, 2018.
The Company noted that its 2018 Outlook incorporates the
estimated near-term impact of the federal budget passed on February
8, 2018. The Company further noted that the estimated future
reimbursement impact on the Company’s LTAC, home health and
rehabilitation businesses from the 2018 federal budget is
consistent with the Company’s longer term expectations.
The Company reaffirmed its previously disclosed 2018 midpoint
estimate of approximately $175 of core free cash flows from
continuing operations and net operating loss (“NOLs”) utilization,
comprising approximately $120 million of core free cash flows
from continuing operations and an anticipated cash benefit of
approximately $55 million from federal and state tax NOLs. In
addition, the Company expects negative free cash flows from
discontinued operations, at the midpoint, of approximately
$80 million in 2018. Combining continuing and discontinuing
operations, on a consolidated basis the Company anticipates 2018
core free cash flow from operations at the midpoint of
approximately $95 million, which includes the $55 million of
anticipated cash NOL benefits noted above. The Company expects to
use approximately $20 million of these cash flows to fund its
previously announced IRF development projects, some of which will
contribute to 2018 results.
_______________________________(1) See reconciliation of GAAP
results to non-GAAP results beginning on page 14. During the first
quarter of 2017, the Company revised its definition of “core”
non-GAAP measures. See “Non-GAAP Measures” beginning on page 14 for
a discussion regarding the revised definitions. For comparability,
core results for 2016 were revised to conform to the current year
presentation.(2) For each of the Company’s segments, Segment
adjusted operating income (loss) is a measure of performance used
by the Company’s chief operating decision makers in accordance
with “Accounting Standard Codification 280 – Segment
Reporting.” The Company defines Segment adjusted operating income
(loss) as earnings before interest, income taxes, depreciation,
amortization and total rent for each of the Company’s operating
segments, excluding litigation contingency expense, impairment
charges, restructuring charges, transaction costs, and the
allocation of support center overhead.(3) See Forward-Looking
Statements beginning on page 14.
2018 Outlook and Other Commentary(1)
(Continued):
The Company indicated that its actuarially estimated aggregate
insurance settlement cash outflows from discontinued operations for
all future periods as of December 31, 2017 approximates $100
million, which comprises approximately $30 million of cash
outflows in 2018 and $70 million of cash outflows for periods after
2018. The Company estimated $80 million at the midpoint of
expected negative free cash flows from discontinued operations
described above includes the estimated $30 million related to
insurance settlements, with the remaining estimated $50 million
related to the Company’s completion of its skilled nursing facility
business divestiture.
The Company does not expect the Tax Reform Act to have a
material impact on its book income tax provision for 2018, as the
reduction in the federal statutory rate from 35% to 21% will be
effectively offset for Kindred by the new limitation on interest
expense deductibility and other changes.
The Company updated its preliminary midpoint estimate of
available gross federal NOLs to roughly $775 million at
December 31, 2017, up from a midpoint estimate of available gross
federal NOLs of $575 million included in the Company’s earnings
release on November 6, 2017(2).
The Company noted that while the estimated gross federal NOLs
have increased, the net cash value of the Company’s federal NOLs
has decreased by approximately $40 million. Using the new 21%
federal statutory rate, the Company’s current gross federal NOLs
are estimated to offset approximately $160 million of 2018 and
future federal cash tax liabilities, down from approximately $200
million of expected cash value for the Company’s federal NOL
estimate at November 6, 2017 using the 35% federal statutory rate
prior to the Tax Reform Act. The Company expects the Tax Reform Act
will result in the accelerated utilization of its NOLs,
particularly given the new limitations on the tax deductibility of
interest expense.
Due to the pending Merger, Kindred does not intend to provide
future guidance updates.
Cancellation of Conference Calls
In light of the Merger, the Company has discontinued its
practice of holding quarterly earnings conference calls.
Forward-Looking Statements and Non-GAAP
Reconciliations
See page 14 for important disclosures regarding the Company’s
forward-looking statements and the non-GAAP financial
reconciliations that follow.
About Kindred Healthcare
Kindred Healthcare, Inc., a top-105 private employer in the
United States, is a FORTUNE 500 healthcare services company based
in Louisville, Kentucky with annual revenues of approximately $6.0
billion. At December 31, 2017, Kindred’s continuing operations,
through its subsidiaries, had approximately 85,300 employees
providing healthcare services in 2,471 locations in 45 states,
including 75 LTAC hospitals, 19 inpatient rehabilitation hospitals,
13 sub-acute units, 608 Kindred at Home home health, hospice and
non-medical home care sites of service, 99 inpatient rehabilitation
units (hospital-based) and contract rehabilitation service
businesses which served 1,657 non-affiliated sites of service.
Ranked as one of Fortune magazine’s Most Admired Healthcare
Companies for nine years, Kindred’s mission is to promote healing,
provide hope, preserve dignity and produce value for each patient,
resident, family member, customer, employee and shareholder we
serve. For more information, go to www.kindredhealthcare.com. You
can also follow us on Twitter and Facebook.
_______________________________(1) See Forward-Looking
Statements beginning on page 14.(2) The increase in gross NOLs is
primarily due to certain fourth quarter 2017 changes in book-to-tax
temporary differences, finalization of the Company’s 2017 taxable
loss, the Company’s previously disclosed insurance program
restructuring and additional clarity on the tax attributes of the
Company’s skilled nursing facility business divestiture.
KINDRED HEALTHCARE, INC.
Condensed Consolidated Statement of Operations (In
thousands, except per share amounts)
Three months ended Year ended December
31, December 31, 2017
2016 2017 2016
Revenues
$ 1,480,982 $ 1,515,086
$ 6,034,123 $ 6,292,529
Salaries, wages and benefits
814,811 846,232
3,318,885 3,392,263 Supplies
72,694 79,386
303,923 343,065 Building rent
63,577 64,350
257,516 264,306 Equipment rent
8,571 8,649
34,856 39,929 Other operating expenses
143,830
156,005
640,764 656,792 General and administrative expenses
269,271 258,703
1,069,764 1,107,648 Other income
(565 ) (2,387 )
(3,460 ) (5,066 )
Litigation contingency expense
3,435 -
7,435 2,840
Impairment charges
244,876 3,534
381,179 314,729
Restructuring charges
53,305 11,913
84,861 96,126
Depreciation and amortization
24,526 32,072
104,805
131,819 Interest expense
60,136 59,214
241,411
234,612 Investment income
(57 ) (589 )
(3,499 ) (3,108 )
1,758,410 1,517,082
6,438,440 6,575,955 Loss from
continuing operations before income taxes
(277,428 )
(1,996 )
(404,317 ) (283,426 ) Provision (benefit)
for income taxes
(142,009 ) (116 )
(157,116 ) 314,262 Loss from
continuing operations
(135,419 ) (1,880 )
(247,201 ) (597,688 ) Discontinued operations, net of
income taxes: Income (loss) from operations
(12,683 )
6,655
(16,854 ) (6,192 ) Loss on divestiture of
operations
(29,392 ) (6,923 )
(379,260 ) (6,744 ) Loss from discontinued
operations
(42,075 ) (268 )
(396,114 ) (12,936 ) Net loss
(177,494
) (2,148 )
(643,315 ) (610,624 ) Earnings
attributable to noncontrolling interests: Continuing operations
(9,942 ) (8,575 )
(42,176 ) (34,847 )
Discontinued operations
(264 ) (4,684 )
(12,861 ) (18,759 )
(10,206 ) (13,259 )
(55,037
) (53,606 ) Loss attributable to Kindred
$
(187,700 ) $ (15,407 )
$ (698,352
) $ (664,230 ) Amounts attributable to Kindred
stockholders: Loss from continuing operations
$
(145,361 ) $ (10,455 )
$ (289,377
) $ (632,535 ) Loss from discontinued operations
(42,339 ) (4,952 )
(408,975
) (31,695 ) Net loss
$ (187,700
) $ (15,407 )
$ (698,352 ) $ (664,230 )
Loss per common share: Basic: Loss from continuing
operations
$ (1.65 ) $ (0.12 )
$
(3.31 ) $ (7.29 ) Discontinued operations: Loss from
operations
(0.15 ) 0.02
(0.34 ) (0.28 )
Loss on divestiture of operations
(0.33 )
(0.08 )
(4.33 ) (0.08 ) Loss
from discontinued operations
(0.48 )
(0.06 )
(4.67 ) (0.36 ) Net loss
$ (2.13 ) $ (0.18 )
$ (7.98
) $ (7.65 ) Diluted: Loss from continuing operations
$ (1.65 ) $ (0.12 )
$ (3.31
) $ (7.29 ) Discontinued operations: Loss from operations
(0.15 ) 0.02
(0.34 ) (0.28 ) Loss on
divestiture of operations
(0.33 ) (0.08
)
(4.33 ) (0.08 ) Loss from
discontinued operations
(0.48 ) (0.06 )
(4.67 ) (0.36 ) Net loss
$
(2.13 ) $ (0.18 )
$ (7.98 ) $
(7.65 ) Shares used in computing loss per common share:
Basic
87,902 86,904
87,525 86,800 Diluted
87,902 86,904
87,525 86,800 Cash dividends
declared and paid per common share
$ - $ 0.12
$ 0.12 $ 0.48
KINDRED HEALTHCARE, INC. Condensed Consolidated
Balance Sheet (In thousands, except per share amounts)
December
31, December 31, 2017
2016 ASSETS Current assets: Cash and cash
equivalents
$ 160,254 $ 137,061 Insurance subsidiary
investments
22,546 108,966 Accounts receivable less
allowance for loss
1,122,532 1,172,078 Inventories
21,716 22,438 Income taxes
4,546 10,067 Assets held
for sale
17,335 289,450 Other
60,610
63,693
1,409,539 1,803,753 Property and
equipment
1,682,965 1,531,598 Accumulated depreciation
(946,986 ) (912,978 )
735,979
618,620 Goodwill
2,188,566 2,427,074 Intangible
assets less accumulated amortization
604,338 770,108
Insurance subsidiary investments
28,988 204,929 Other
265,307 288,240 Total assets
$
5,232,717 $ 6,112,724
LIABILITIES AND
EQUITY Current liabilities: Accounts payable
$
191,827 $ 203,925 Salaries, wages and other compensation
352,179 397,486 Due to third party payors
35,321
41,320 Professional liability risks
60,767 65,284 Accrued
lease termination fees
7,610 5,224 Other accrued liabilities
263,977 264,512 Long-term debt due within one year
14,638 27,977
926,319 1,005,728
Long-term debt
3,146,972 3,215,062 Professional
liability risks
276,829 295,311 Deferred tax liabilities
36,881 201,808 Deferred credits and other liabilities
497,954 353,294 Equity: Stockholders' equity:
Common stock, $0.25 par value; authorized
175,000 shares; issued 91,454 shares - December 31, 2017 and 85,166
shares - December 31, 2016
22,864 21,291 Capital in excess of par value
1,713,179 1,710,231 Accumulated other comprehensive income
6,179 1,573 Accumulated deficit
(1,618,896
) (920,544 )
123,326 812,551 Noncontrolling
interests
224,436 228,970 Total
equity
347,762 1,041,521 Total
liabilities and equity
$ 5,232,717 $ 6,112,724
KINDRED HEALTHCARE,
INC.Condensed Consolidated Statement of Cash Flows(In
thousands)
Three months
ended Year ended December 31,
December 31, 2017
2016 2017
2016
Cash flows from operating activities:
Net loss
$ (177,494 ) $ (2,148 )
$
(643,315 ) $ (610,624 ) Adjustments to reconcile net
loss to net cash provided by operating activities: Depreciation
expense
23,480 32,660
102,481 135,966 Amortization of
intangible assets
2,728 5,422
14,637 23,673
Amortization of stock-based compensation costs
3,933 3,367
17,249 16,425 Amortization of deferred financing costs
4,342 4,005
17,189 15,267 Payment of capitalized
lender fees related to debt amendments
- -
(5,403
) (7,375 ) Provision for doubtful accounts
10,773
9,849
68,284 40,804 Deferred income taxes
(145,086
) 1,868
(164,694 ) 310,338 Impairment charges
244,876 4,351
382,447 342,559 Loss on divestiture of
discontinued operations
29,392 6,923
379,260 6,744
Other
1,823 5,152
17,935 12,414 Change in operating
assets and liabilities: Accounts receivable
82,303 84,922
(20,896 ) (59,031 ) Inventories and other assets
32,371 (20,704 )
22,854 (24,226 ) Accounts payable
13,946 1,764
(12,267 ) 26,215 Income taxes
3,524 1,882
10,242 4,350 Due to third party payors
(13,470 ) (16,625 )
(5,999 ) 3,692
Other accrued liabilities
(50,258 )
24,313
(104,309 ) (48,955 ) Net
cash provided by operating activities
67,183
147,001
75,695 188,236
Cash flows from investing activities:
Routine capital expenditures
(24,006 ) (27,349 )
(69,806 ) (96,052 ) Development capital expenditures
(8,184 ) (7,713 )
(25,895 ) (34,825 )
Acquisitions, net of cash acquired
(3,000 ) (1,800 )
(9,650 ) (78,840 ) Acquisition deposits
- -
- 18,489 Sale of assets
(77,049 ) 21,025
(71,555 ) 25,987 Purchase of insurance subsidiary
investments
(5,006 ) (22,318 )
(113,661
) (97,740 ) Sale of insurance subsidiary investments
125,753 17,010
243,616 95,488 Net change in insurance
subsidiary cash and cash equivalents
110,146 (7,602 )
133,618 877 Net change in other investments
19,793
577
24,637 (32,770 ) Other
42
1,022
7 (255 ) Net cash provided
by (used in) investing activities
138,489
(27,148 )
111,311 (199,641 )
Cash flows from financing activities:
Proceeds from borrowings under revolving credit
155,400
376,100
1,369,700 1,643,300 Repayment of borrowings under
revolving credit
(311,600 ) (473,600 )
(1,432,200 ) (1,689,400 ) Proceeds from issuance of
term loan, net of discount
- -
- 198,100 Proceeds
from other long-term debt
- -
- 750 Repayment of term
loan
(3,509 ) (3,508 )
(14,034 )
(13,527 ) Repayment of other long-term debt
(205 )
(278 )
(1,045 ) (1,104 ) Payment of deferred
financing costs
(114 ) (180 )
(413 )
(522 ) Issuance of common stock in connection with employee benefit
plans
- -
32 - Payment of dividend for mandatory
redeemable preferred stock
(3,177 ) (2,956 )
(12,372 ) (11,514 ) Dividends paid
- (10,221 )
(10,228 ) (40,738 ) Contributions made by
noncontrolling interests
392 3,253
505 14,514
Distributions to noncontrolling interests
(12,854 )
(10,745 )
(61,226 ) (45,985 ) Purchase of
noncontrolling interests
- -
- (1,000 ) Payroll tax
payments for equity awards issuance
(115 )
(87 )
(2,532 ) (3,166 ) Net cash
provided by (used in) financing activities
(175,782
) (122,222 )
(163,813 )
49,708
Change in cash and cash equivalents
29,890 (2,369 )
23,193 38,303
Cash and cash equivalents at beginning of
period
130,364 139,430
137,061 98,758
Cash and cash equivalents at end of
period
$ 160,254 $ 137,061
$
160,254 $ 137,061
KINDRED HEALTHCARE, INC. Condensed
Consolidated and Business Segment Data (Unaudited) (In
thousands, except per share amounts)
Fourth quarter 2016
Quarters 2017 Quarters % change v. First
Second Third Fourth Year First
Second Third Fourth Year prior
year Condensed consolidated statement of operations
data: GAAP presentation: Revenues $ 1,604,214 $
1,609,169 $ 1,564,060 $ 1,515,086 $ 6,292,529 $ 1,539,490 $
1,535,831 $ 1,477,820 $ 1,480,982 $ 6,034,123 (2.3 ) Operating
expenses 1,403,467 1,390,562 1,760,982 1,353,386 5,908,397
1,364,751 1,498,396 1,338,547 1,601,657 5,803,351 18.3 Building
rent 65,985 67,025 66,946 64,350 264,306 64,656 64,861 64,422
63,577 257,516 (1.2 ) Equipment rent 10,158 11,211 9,911 8,649
39,929 8,887 8,861 8,537 8,571 34,856 (0.9 ) Depreciation and
amortization 33,554 33,198 32,995 32,072 131,819 29,820 25,651
24,808 24,526 104,805 (23.5 ) Interest, net 57,253
57,567 58,059 58,625
231,504 58,819 58,573
60,441 60,079 237,912 2.5
Income (loss) from continuing operations
before income taxes
33,797 49,606 (364,833 ) (1,996 ) (283,426 ) 12,557 (120,511 )
(18,935 ) (277,428 ) (404,317 ) n/m Provision (benefit) for income
taxes 11,817 19,379 283,182
(116 ) 314,262 2,234
(16,116 ) (1,225 ) (142,009 ) (157,116
) n/m Income (loss) from continuing operations 21,980 30,227
(648,015 ) (1,880 ) (597,688 ) 10,323 (104,395 ) (17,710 ) (135,419
) (247,201 ) n/m Noncontrolling interests (7,851 )
(8,847 ) (9,574 ) (8,575 ) (34,847 )
(10,483 ) (10,791 ) (10,960 ) (9,942 )
(42,176 ) 15.9 Net income (loss) attributable to Kindred $ 14,129
$ 21,380 $ (657,589 ) $ (10,455 ) $ (632,535 ) $ (160
) $ (115,186 ) $ (28,670 ) $ (145,361 ) $ (289,377 ) n/m
Diluted EPS $ 0.16 $ 0.23 $ (7.57 ) $ (0.12 ) $ (7.29 ) $ - $ (1.32
) $ (0.32 ) $ (1.65 ) $ (3.31 ) n/m Diluted shares 87,249 87,500
86,869 86,904 86,800 87,085 87,506 87,597 87,902 87,525 1.1
Core presentation (a): Building rent $ 65,985 $ 67,025 $
66,674 $ 64,350 $ 264,034 $ 64,656 $ 64,861 $ 64,422 $ 63,577 $
257,516 (1.2 ) Equipment rent 10,158 11,211 9,911 8,649 39,929
8,887 8,861 8,537 8,571 34,856 (0.9 ) EBITDA 136,697 153,732
109,770 108,151 508,350 111,676 128,093 84,571 119,199 443,539 10.2
Provision (benefit) for income taxes 16,099 21,253 4,262 2,230
43,844 9,407 13,333 (2,062 ) 6,323 27,001 183.5 Noncontrolling
interests (7,851 ) (9,863 ) (9,862 ) (8,575 ) (36,151 ) (10,483 )
(11,111 ) (10,960 ) (9,942 ) (42,496 ) 15.9 Net income (loss)
attributable to Kindred 21,940 31,851 4,592 6,649 65,032 3,147
19,425 (9,576 ) 18,329 31,325 175.7 Core diluted EPS $ 0.25
$ 0.35 $ 0.05 $ 0.07 $ 0.73 $ 0.03 $ 0.21 $ (0.11 ) $ 0.20 $ 0.34
185.7 Diluted shares 87,249 87,500 87,529 87,641 87,491 87,744
88,165 87,597 88,485 88,200 1.0
Revenues by segment:
Kindred at Home: Home health $ 430,035 $ 438,556 $ 449,958 $
444,073 $ 1,762,622 $ 450,831 $ 459,176 $ 453,684 $ 458,666 $
1,822,357 3.3 Hospice 176,426 185,641
188,575 186,161 736,803
179,378 185,281 188,414
190,370 743,443 2.3 606,461 624,197
638,533 630,234 2,499,425 630,209 644,457 642,098 649,036 2,565,800
3.0 Hospital division 654,098 645,406 588,943 545,864 2,434,311
556,646 540,809 503,138 505,782 2,106,375 (7.3 ) Kindred
Rehabilitation Services: Kindred Hospital Rehabilitation Services
167,045 171,095 170,308 171,352 679,800 178,115 178,439 173,638
173,723 703,915 1.4 RehabCare 202,023 193,964
190,756 190,053 776,796
198,126 194,715 179,774
172,852 745,467 (9.1 )
369,068 365,059 361,064
361,405 1,456,596 376,241
373,154 353,412 346,575
1,449,382 (4.1 ) 1,629,627 1,634,662 1,588,540 1,537,503
6,390,332 1,563,096 1,558,420 1,498,648 1,501,393 6,121,557 (2.3 )
Eliminations (25,413 ) (25,493 ) (24,480 )
(22,417 ) (97,803 ) (23,606 ) (22,589 )
(20,828 ) (20,411 ) (87,434 ) (8.9 ) $
1,604,214 $ 1,609,169 $ 1,564,060 $ 1,515,086
$ 6,292,529 $ 1,539,490 $ 1,535,831 $
1,477,820 $ 1,480,982 $ 6,034,123 (2.3 )
(a) See reconciliation of
GAAP results to non-GAAP results beginning on page 14. During the
first quarter of 2017, the Company revised its definitions of
“core” non-GAAP measures. See “Non-GAAP Measures” beginning on page
14 for a discussion regarding the revised definitions. For
comparability, core results for 2016 were revised to conform to the
current year presentation. n/m = not meaningful.
KINDRED HEALTHCARE, INC.
Condensed Consolidated and Business Segment Data (Continued)
(Unaudited) (In thousands, except statistics)
Fourth quarter
2016 Quarters 2017 Quarters % change v.
First Second Third Fourth Year
First Second Third Fourth Year
prior year Segment adjusted operating income (loss):
Kindred at Home: Home health $ 66,941 $ 76,030 $ 75,073 $ 61,487 $
279,531 $ 63,750 $ 76,592 $ 66,431 $ 69,445 $ 276,218 12.9 Hospice
24,866 31,329 31,326
28,805 116,326 27,581
32,784 34,761 34,147
129,273 18.5 91,807 107,359 106,399 90,292 395,857
91,331 109,376 101,192 103,592 405,491 14.7 Hospital division
136,416 127,510 83,940 93,778 441,644 93,438 91,580 61,455 91,014
337,487 (2.9 ) Kindred Rehabilitation Services: Kindred Hospital
Rehabilitation Services 48,119 50,729 49,759 49,728 198,335 51,760
53,422 49,151 49,059 203,392 (1.3 ) RehabCare 9,762
11,158 7,524 4,142
32,586 8,704 (13,492 ) 8,298
3,374 6,884 (18.5 ) 57,881
61,887 57,283 53,870 230,921 60,464 39,930 57,449 52,433 210,276
(2.7 )
Core segment adjusted operating income (a):
Kindred at Home: Home health $ 65,803 $ 75,859 $ 75,073 $ 61,185 $
277,920 $ 63,750 $ 75,797 $ 66,431 $ 69,445 $ 275,423 13.5 Hospice
24,866 31,329 31,326
27,668 115,189 27,581
32,784 34,761 34,147
129,273 23.4 90,669 107,188 106,399 88,853 393,109
91,331 108,581 101,192 103,592 404,696 16.6 Hospital division
136,416 127,510 83,940 93,148 441,014 93,438 90,572 61,455 91,014
336,479 (2.3 ) Kindred Rehabilitation Services: Kindred Hospital
Rehabilitation Services 48,119 50,729 49,759 49,728 198,335 51,760
53,422 49,151 49,059 203,392 (1.3 ) RehabCare 9,762
11,158 7,524 4,142
32,586 8,704 11,812 6,055
3,374 29,945 (18.5 ) 57,881
61,887 57,283 53,870 230,921 60,464 65,234 55,206 52,433 233,337
(2.7 ) Support center expenses (71,159 ) (64,265 ) (59,535 )
(54,334 ) (249,293 ) (60,014 ) (62,572 ) (60,323 ) (55,692 )
(238,601 ) 2.5 Litigation contingency expense (885 ) (180 ) - -
(1,065 ) - - - - - Transaction costs (82 ) (172 )
(1,732 ) (387 ) (2,373 ) -
- - - - $
212,840 $ 231,968 $ 186,355 $ 181,150 $
812,313 $ 185,219 $ 201,815 $ 157,530 $
191,347 $ 735,911 5.6
Segment adjusted
operating income (loss) margin: Kindred at Home: Home health
15.6 17.3 16.7 13.8 15.9 14.1 16.7 14.6 15.1 15.2 1.3 Hospice 14.1
16.9 16.6 15.5 15.8 15.4 17.7 18.4 17.9 17.4 2.4 Kindred at Home
15.1 17.2 16.7 14.3 15.8 14.5 17.0 15.8 16.0 15.8 1.7 Hospital
division 20.9 19.8 14.3 17.2 18.1 16.8 16.9 12.2 18.0 16.0 0.8
Kindred Rehabilitation Services: Kindred Hospital Rehabilitation
Services 28.8 29.6 29.2 29.0 29.2 29.1 29.9 28.3 28.2 28.9 (0.8 )
RehabCare 4.8 5.8 3.9 2.2 4.2 4.4 (6.9 ) 4.6 2.0 0.9 (0.2 ) Kindred
Rehabilitation Services 15.7 17.0 15.9 14.9 15.9 16.1 10.7 16.3
15.1 14.5 0.2
Core segment adjusted operating income
margin (a): Kindred at Home: Home health 15.3 17.3 16.7 13.8
15.8 14.1 16.5 14.6 15.1 15.1 1.3 Hospice 14.1 16.9 16.6 14.9 15.6
15.4 17.7 18.4 17.9 17.4 3.0 Kindred at Home 15.0 17.2 16.7 14.1
15.7 14.5 16.8 15.8 16.0 15.8 1.9 Hospital division 20.9 19.8 14.3
17.1 18.1 16.8 16.7 12.2 18.0 16.0 0.9 Kindred Rehabilitation
Services: Kindred Hospital Rehabilitation Services 28.8 29.6 29.2
29.0 29.2 29.1 29.9 28.3 28.2 28.9 (0.8 ) RehabCare 4.8 5.8 3.9 2.2
4.2 4.4 6.1 3.4 2.0 4.0 (0.2 ) Kindred Rehabilitation Services 15.7
17.0 15.9 14.9 15.9 16.1 17.5 15.6 15.1 16.1 0.2 Consolidated 13.3
14.4 11.9 12.0 12.9 12.0 13.1 10.7 12.9 12.2 0.9
(a)
See reconciliation of GAAP results to
non-GAAP results beginning on page 14. During the first quarter of
2017, the Company revised its definitions of “core” non-GAAP
measures. See “Non-GAAP Measures” beginning on page 14 for a
discussion regarding the revised definitions. For comparability,
core results for 2016 were revised to conform to the current year
presentation.
KINDRED HEALTHCARE,
INC. Condensed Business Segment Data (Unaudited)
Fourth
quarter 2016 Quarters 2017 Quarters % change
v. First Second Third Fourth
Year First Second Third Fourth
Year prior year Kindred at Home: Home Health:
Sites of service (at end of period) 384 384 395 390 379 377 376 375
Revenue mix %: Medicare 79.8 79.3 78.1 77.9 78.8 76.7 75.7 74.0
73.8 75.0 Medicaid 2.1 2.1 2.5 1.9 2.1 1.7 1.7 1.7 1.6 1.7
Commercial and other 8.4 8.2 8.6 10.6 8.9 11.5 11.4 12.7 12.7 12.1
Commercial paid at episodic rates 9.7 10.4 10.8 9.6 10.2 10.1 11.2
11.6 11.9 11.2 Episodic revenues ($ 000s) $ 325,821 $ 332,193 $
332,562 $ 323,398 $ 1,313,974 $ 326,881 $ 334,420 $ 320,279 $
332,595 $ 1,314,175 2.8 Total admissions 88,696 87,084 86,761
87,148 349,689 94,510 89,018 87,156 88,224 358,908 1.2 Same-store
total admissions 87,394 85,922 85,511 86,619 345,446 93,922 88,300
86,312 88,004 356,538 1.6 Total episodic admissions 71,426 70,212
69,219 67,501 278,358 73,270 69,657 67,790 67,858 278,575 0.5
Same-store total episodic admissions 70,416 69,317 68,285 67,119
275,137 72,911 69,207 67,191 67,650 276,959 0.8 Medicare episodic
admissions 62,011 60,730 59,823 59,540 242,104 62,404 58,575 56,772
56,829 234,580 (4.6 ) Total episodes 113,887 113,278 113,256
111,164 451,585 114,964 113,579 111,488 111,411 451,442 0.2
Episodes per admission 1.59 1.61 1.64 1.65 1.62 1.57 1.63 1.64 1.64
1.62 (0.6 ) Revenue per episode $ 2,861 $ 2,933 $ 2,936 $ 2,909 $
2,910 $ 2,843 $ 2,944 $ 2,873 $ 2,985 $ 2,911 2.6 Hospice: Sites of
service (at end of period) 177 177 185 183 180 177 178 178
Admissions 13,234 13,149 12,916 12,660 51,959 13,649 12,561 12,236
12,274 50,720 (3.0 ) Same-store admissions 12,761 12,743 12,541
12,413 50,458 13,332 12,363 11,997 12,162 49,854 (2.0 ) Average
length of stay 92 91 98 100 95 96 94 97 96 96 (4.0 ) Patient days
1,183,908 1,238,584 1,277,125 1,246,152 4,945,769 1,193,061
1,215,619 1,239,094 1,243,574 4,891,348 (0.2 ) Average daily census
13,010 13,611 13,882 13,545 13,513 13,256 13,358 13,468 13,517
13,401 (0.2 ) Revenue per patient day $ 149 $ 150 $ 148 $ 149 $ 149
$ 150 $ 152 $ 152 $ 153 $ 152 2.7
Community care and other revenues
(included in Home Health business segment) ($ 000s)
$ 66,305 $ 68,229 $ 75,978 $ 74,875 $ 285,387 $ 74,095 $ 74,222 $
79,720 $ 69,974 $ 298,011 (6.5 )
Kindred Rehabilitation
Services: Kindred Hospital Rehabilitation Services:
Freestanding IRFs: End of period data: Number of IRFs 19 19 19 19
19 19 19 19 Number of licensed beds 969 969 969 995 995 995 995 995
Discharges (a) 4,448 4,646 4,644 4,671 18,409 4,775 4,766 4,755
5,011 19,307 7.3 Same-hospital discharges (a) 4,295 4,535 4,546
4,538 17,914 4,393 4,517 4,477 4,671 18,058 2.9 Occupancy % (a)
70.6 70.6 68.8 66.5 69.1 71.4 70.0 68.8 71.2 70.4 7.1 Average
length of stay (a) 13.2 12.9 12.7 12.6 12.8 12.8 12.8 12.7 12.5
12.7 (0.8 ) Revenue per discharge (a) $ 19,731 $ 19,318 $ 19,599 $
19,486 $ 19,531 $ 20,097 $ 20,620 $ 20,329 $ 19,523 $ 20,134 0.2
Contract services: Sites of service (at end of period): Inpatient
rehabilitation units 104 105 104 102 101 102 101 99 LTAC hospitals
119 121 120 119 119 116 110 104 Sub-acute units 7 7 7 5 7 6 6 4
Outpatient units 139 138 139 132
129 121 123 123 369 371
370 358 356 345 340 330
Revenue per site $ 211,417 $ 215,798 $ 210,810 $ 220,733 $ 858,758
$ 227,100 $ 228,534 $ 222,504 $ 225,919 $ 904,057 2.3
RehabCare: Sites of service (at end of period) 1,767 1,759 1,754
1,718 1,703 1,734 1,624 1,616 Revenue per site $ 114,331 $ 110,270
$ 108,755 $ 110,624 $ 443,980 $ 116,340 $ 112,292 $ 110,699 $
106,963 $ 446,294 (3.3 ) (a)
Excludes non-consolidating IRF.
KINDRED HEALTHCARE, INC. Condensed Business
Segment Data (Continued) (Unaudited)
Fourth quarter 2016
Quarters 2017 Quarters % change v. First
Second Third Fourth Year First
Second Third Fourth Year prior
year
Hospitals (excluding sub-acute units
and skilled nursing facility):
End of period data: Number of transitional care hospitals 95 97 94
82 82 81 77 75 Number of licensed beds 7,089 7,067 6,890 6,107
6,107 6,041 5,797 5,553 Revenues (000s) $ 643,299 $ 633,695 $
575,323 $ 530,746 $ 2,383,063 $ 540,280 $ 525,458 $ 487,012 $
489,621 $ 2,042,371 (7.7 ) Revenue mix %: Medicare 57.8 55.5 54.6
53.5 55.5 52.8 50.3 50.6 50.2 51.0 Medicaid 4.2 4.2 4.0 4.5 4.2 3.9
5.0 4.3 4.1 4.3 Medicare Advantage 11.5 12.0 12.1 11.0 11.7 12.2
12.3 12.3 13.5 12.6 Medicaid Managed 5.6 6.3 7.3 8.0 6.7 9.1 9.1
10.1 10.1 9.6 Commercial insurance and other 20.9 22.0 22.0 23.0
21.9 22.0 23.3 22.7 22.1 22.5 Patient criteria data:
Revenues: Compliant patients 88.5 % 86.0 % 88.3 % 89.1 % 91.8 %
88.7 % Site neutral 11.5 % 14.0 % 11.7 % 10.9 % 8.2 % 11.3 %
Revenues per patient day: Compliant patients $ 1,853 $ 1,816 $
1,806 $ 1,799 $ 1,835 $ 1,814 Site neutral 926 1,041 1,053 1,067
1,047 1,051 Total 1,662 1,645 1,667 1,674 1,729 1,677
Admissions: Medicare 8,919 8,253 7,861 7,351 32,384 7,529 6,743
6,073 5,862 26,207 (20.3 ) Medicaid 463 386 375 336 1,560 354 381
362 287 1,384 (14.6 ) Medicare Advantage 1,453 1,382 1,327 1,210
5,372 1,354 1,239 1,197 1,225 5,015 1.2 Medicaid Managed 733 768
861 787 3,149 851 903 861 875 3,490 11.2 Commercial insurance and
other 1,871 1,807 1,727 1,488
6,893 1,614 1,608 1,483
1,401 6,106 (5.8 ) 13,439
12,596 12,151 11,172 49,358
11,702 10,874 9,976
9,650 42,202 (13.6 ) Patient days:
Medicare 229,004 219,013 202,482 186,290 836,789 187,738 173,916
158,083 149,892 669,629 (19.5 ) Medicaid 21,134 19,409 16,781
12,181 69,505 13,334 13,333 13,429 12,048 52,144 (1.1 ) Medicare
Advantage 45,760 47,697 43,241 37,526 174,224 41,020 40,555 38,338
41,488 161,401 10.6 Medicaid Managed 25,341 27,267 28,534 29,275
110,417 32,713 32,635 31,249 32,389 128,986 10.6 Commercial
insurance and other 62,769 63,009 59,856
54,148 239,782 53,695
54,809 49,895 47,355
205,754 (12.5 ) 384,008 376,395 350,894
319,420 1,430,717 328,500
315,248 290,994 283,172
1,217,914 (11.3 ) Average length of stay: Medicare 25.7 26.5
25.8 25.3 25.8 24.9 25.8 26.0 25.6 25.6 1.2 Medicaid 45.6 50.3 44.7
36.3 44.6 37.7 35.0 37.1 42.0 37.7 15.7 Medicare Advantage 31.5
34.5 32.6 31.0 32.4 30.3 32.7 32.0 33.9 32.2 9.4 Medicaid Managed
34.6 35.5 33.1 37.2 35.1 38.4 36.1 36.3 37.0 37.0 (0.5 ) Commercial
insurance and other 33.5 34.9 34.7 36.4 34.8 33.3 34.1 33.6 33.8
33.7 (7.1 ) Weighted average 28.6 29.9 28.9 28.6 29.0 28.1 29.0
29.2 29.3 28.9 2.4 Revenues per admission: Medicare $ 41,717 $
42,579 $ 39,945 $ 38,602 $ 40,800 $ 37,867 $ 39,219 $ 40,577 $
41,904 $ 39,746 8.6 Medicaid 57,928 69,797 61,338 70,333 64,356
60,091 69,304 57,365 70,352 64,042 - Medicare Advantage 51,080
55,105 52,363 48,387 51,826 48,555 51,958 50,301 53,834 51,102 11.3
Medicaid Managed 49,287 51,696 48,631 54,238 50,932 57,736 53,159
57,172 56,881 56,198 4.9 Commercial insurance and other 71,651
77,193 73,515 82,066 75,819 73,750 76,007 74,435 77,140 75,289 (6.0
) Weighted average 47,868 50,309 47,348 47,507 48,281 46,170 48,322
48,818 50,738 48,395 6.8 Revenues per patient day: Medicare $ 1,625
$ 1,605 $ 1,551 $ 1,523 $ 1,579 $ 1,519 $ 1,521 $ 1,559 $ 1,639 $
1,556 7.6 Medicaid 1,269 1,388 1,371 1,940 1,444 1,595 1,980 1,546
1,676 1,700 (13.6 ) Medicare Advantage 1,622 1,597 1,607 1,560
1,598 1,603 1,587 1,571 1,590 1,588 1.9 Medicaid Managed 1,426
1,456 1,467 1,458 1,453 1,502 1,471 1,575 1,537 1,521 5.4
Commercial insurance and other 2,136 2,214 2,121 2,255 2,180 2,217
2,230 2,212 2,282 2,234 1.2 Weighted average 1,675 1,684 1,640
1,662 1,666 1,645 1,667 1,674 1,729 1,677 4.0
Medicare case mix index (discharged
patients only)
1.163 1.179 1.172 1.153 1.169 1.172 1.171 1.180 1.177 1.178 2.1
Average daily census 4,220 4,136 3,814 3,472 3,909 3,650 3,464
3,163 3,078 3,337 (11.3 ) Occupancy % 68.0 67.5 61.6 64.1 65.1 67.6
64.3 59.9 61.1 63.3 (4.7 )
KINDRED HEALTHCARE, INC. Condensed Business
Segment Data (Continued) (Unaudited)
Fourth quarter 2016
Quarters 2017 Quarters % change v. First
Second Third Fourth Year First
Second Third Fourth Year prior
year Same-hospital data (a): End of period data: Number
of transitional care hospitals 72 72 75 75 72 72 75 75 Number of
licensed beds 5,436 5,436 5,553 5,553 5,436 5,436 5,553 5,553
Revenues (000s) $ 531,815 $ 527,578 $ 493,480 $ 504,871 $ 2,057,744
$ 504,135 $ 492,002 $ 476,356 $ 482,677 $ 1,955,170 (4.4 ) Revenue
mix %: Medicare 58.1 55.2 53.8 53.3 55.2 52.2 50.2 50.6 50.6 50.9
Medicaid 3.6 3.6 3.5 4.4 3.8 3.9 4.9 4.2 3.4 4.1 Medicare Advantage
11.2 11.7 12.3 11.0 11.5 12.0 12.0 12.4 13.6 12.5 Medicaid Managed
6.0 6.9 8.0 8.4 7.3 9.6 9.5 10.2 10.3 9.9 Commercial insurance and
other 21.1 22.6 22.4 22.9 22.2 22.3 23.4 22.6 22.1 22.6
Patient criteria data: Revenues: Compliant patients 88.7 % 86.2 %
88.7 % 89.2 % 91.8 % 89.0 % Site neutral 11.3 % 13.8 % 11.3 % 10.8
% 8.2 % 11.0 % Revenues per patient day: Compliant patients
$ 1,860 $ 1,821 $ 1,811 $ 1,798 $ 1,815 $ 1,811 Site neutral 931
1,057 1,049 1,064 1,047 1,055 Total 1,671 1,656 1,674 1,674 1,711
1,678 Admissions: Medicare 7,322 6,770 6,620 6,879 27,591
6,884 6,260 5,942 5,848 24,934 (15.0 ) Medicaid 376 327 329 315
1,347 325 346 342 284 1,297 (9.8 ) Medicare Advantage 1,148 1,073
1,118 1,131 4,470 1,239 1,137 1,181 1,222 4,779 8.0 Medicaid
Managed 625 688 778 780 2,871 827 852 843 875 3,397 12.2 Commercial
insurance and other 1,477 1,450 1,385
1,386 5,698 1,484 1,489
1,450 1,397 5,820 0.8
10,948 10,308 10,230 10,491
41,977 10,759 10,084
9,758 9,626 40,227 (8.2 )
Patient days: Medicare 188,238 179,196 170,060 175,336 712,830
172,186 161,435 154,553 149,524 637,698 (14.7 ) Medicaid 13,731
12,381 11,211 11,396 48,719 12,610 12,378 12,985 11,777 49,750 3.3
Medicare Advantage 36,058 38,555 37,240 35,436 147,289 37,573
37,073 37,678 41,375 153,699 16.8 Medicaid Managed 22,124 24,571
26,384 29,047 102,126 31,970 31,606 30,759 32,355 126,690 11.4
Commercial insurance and other 50,711 51,293
49,622 50,861 202,487 50,116
51,465 48,591 46,990
197,162 (7.6 ) 310,862 305,996
294,517 302,076 1,213,451 304,455
293,957 284,566 282,021
1,164,999 (6.6 ) Average length of stay:
Medicare 25.7 26.5 25.7 25.5 25.8 25.0 25.8 26.0 25.6 25.6 0.4
Medicaid 36.5 37.9 34.1 36.2 36.2 38.8 35.8 38.0 41.5 38.4 14.6
Medicare Advantage 31.4 35.9 33.3 31.3 33.0 30.3 32.6 31.9 33.9
32.2 8.3 Medicaid Managed 35.4 35.7 33.9 37.2 35.6 38.7 37.1 36.5
37.0 37.3 (0.5 ) Commercial insurance and other 34.3 35.4 35.8 36.7
35.5 33.8 34.6 33.5 33.6 33.9 (8.4 ) Weighted average 28.4 29.7
28.8 28.8 28.9 28.3 29.2 29.2 29.3 29.0 1.7 Revenues per admission:
Medicare $ 42,215 $ 43,048 $ 40,145 $ 39,130 $ 41,154 $ 38,242 $
39,482 $ 40,587 $ 41,750 $ 39,935 6.7 Medicaid 50,166 58,447 52,583
69,628 57,318 60,805 70,237 57,650 57,482 61,762 (17.4 ) Medicare
Advantage 51,653 57,562 54,276 49,232 53,115 49,018 51,807 50,163
53,894 51,211 9.5 Medicaid Managed 51,395 52,601 50,491 54,389
52,252 58,227 54,789 57,538 56,854 56,840 4.5 Commercial insurance
and other 76,121 82,125 79,752 83,445 80,313 75,623 77,205 74,292
76,301 75,859 (8.6 ) Weighted average 48,576 51,181 48,239 48,124
49,021 46,857 48,790 48,817 50,143 48,603 4.2 Revenues per patient
day: Medicare $ 1,642 $ 1,626 $ 1,563 $ 1,535 $ 1,593 $ 1,529 $
1,531 $ 1,560 $ 1,633 $ 1,561 6.4 Medicaid 1,374 1,544 1,543 1,925
1,585 1,567 1,963 1,518 1,386 1,610 (28.0 ) Medicare Advantage
1,645 1,602 1,629 1,571 1,612 1,616 1,589 1,572 1,592 1,592 1.3
Medicaid Managed 1,452 1,473 1,489 1,460 1,469 1,506 1,477 1,577
1,538 1,524 5.3 Commercial insurance and other 2,217 2,322 2,226
2,274 2,260 2,239 2,234 2,217 2,268 2,239 (0.3 ) Weighted average
1,711 1,724 1,676 1,671 1,696 1,656 1,674 1,674 1,711 1,678 2.4
Average daily census 3,416 3,363 3,201 3,283 3,315 3,383
3,230 3,093 3,065 3,192 (6.6 ) (a) All
historical statistics have been adjusted to present the ongoing
hospital division portfolio excluding three hospitals acquired
during the second quarter of 2016. See reconciliation of
same-hospital revenues to reported hospital revenues on page 18.
Forward-Looking Statements This earnings release
includes “forward-looking statements” within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. These
forward-looking statements are often identified by words such as
“anticipate,” “approximate,” “believe,” “plan,” “estimate,”
“expect,” “project,” “could,” “would,” “should,” “will,” “intend,”
“hope,” “may,” “potential,” “upside,” “seek,” “continue,” and other
similar expressions. 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. Such forward-looking statements are based upon
management’s current expectations and include known and unknown
risks, uncertainties and other factors, many of which the Company
is unable to predict or control, that may cause the Company’s
actual results, performance, or plans to differ materially from any
future results, performance or plans expressed or implied by such
forward-looking statements. Risks and uncertainties related to the
Merger include, but are not limited to, the occurrence of any
event, change or other circumstance that could give rise to the
termination of the merger agreement; the failure of the parties to
satisfy conditions to completion of the Merger, including the
failure of the Company’s stockholders to approve the Merger or the
failure of the parties to obtain required regulatory approvals; the
risk that regulatory or other approvals are delayed or are subject
to terms and conditions that are not anticipated; changes in the
business or operating prospects of the Company or its businesses;
changes in healthcare and other laws and regulations; the impact of
the announcement of, or failure to complete, the Merger on the
Company’s relationships with employees, customers, vendors and
other business partners; and litigation related to the Merger. In
addition, these statements involve risks, uncertainties, and other
factors detailed from time to time in the Company’s Annual Report
on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K filed with the SEC. Many of these factors are
beyond the Company’s control. The Company cautions investors that
any forward-looking statements made by the Company are not
guarantees of future performance. The Company disclaims any
obligation to update any such factors or to announce publicly the
results of any revisions to any of the forward-looking statements
to reflect future events or developments.
Non-GAAP
Measures In addition to the results provided in
accordance with GAAP, the Company has provided information in this
earnings release using certain non-GAAP measures. The use of these
non-GAAP measures is not intended to replace the presentation of
the Company’s financial results in accordance with GAAP.
Reconciliations of these non-GAAP measures to the most directly
comparable GAAP measures are included in the following pages of
this earnings release. During the first quarter of 2017, the
Company revised its definitions of “core” non-GAAP measures. As
revised, the Company’s core non-GAAP measures, including core net
income (loss) attributable to Kindred, core EBITDA, core diluted
EPS, core operating cash flows and core free cash flows, no longer
exclude (1) transaction, integration, research and development, and
litigation contingency expenses that are not individually material,
(2) non-restructuring related facility closing charges, and (3)
non-executive or non-restructuring related severance, retirement
and retention costs. For comparability, “core” results for 2016
were revised to conform to the current year presentation.
For each of the Company’s segments, Segment adjusted operating
income (loss) is a measure of performance used by the Company’s
chief operating decision makers in accordance with “Accounting
Standard Codification 280 − Segment Reporting.” In this context,
the Company defines Segment adjusted operating income (loss) as
earnings before interest, income taxes, depreciation, amortization
and total rent for each of the Company’s operating segments,
excluding litigation contingency expense, impairment charges,
restructuring charges, transaction costs, and the allocation of
support center overhead. EBITDA: The Company defines EBITDA
as earnings before interest, income taxes, depreciation, and
amortization, and believes that the presentation of EBITDA is
useful to investors because creditors, securities analysts and
investors use EBITDA to compare the performance and valuation of
companies in the healthcare industry before consideration of
non-cash depreciation and amortization expense, and financing
costs, which can vary significantly among companies.
Non-GAAP
Measures (Continued) Core Operating Results: The Company
calculates core operating results, including core net income (loss)
attributable to Kindred, core EBITDA, and core diluted EPS, by
excluding charges related to impairments, business interruption
settlements, restructuring charges, debt amendment costs, executive
or restructuring-related severance, retirement and retention costs,
restructuring-related facility closing charges, deferred tax asset
valuation allowance, deferred tax liability adjustment associated
with the Tax Reform Act, and material transaction, integration,
litigation, and research and development costs. The Company
believes that the presentation of core operating results provides
additional information to investors to facilitate the comparison
between periods by excluding certain charges that are not
representative of its ongoing operations due to the materiality and
nature of the charges. The Company’s management uses core net
income (loss) attributable to Kindred, core EBITDA, and core
diluted EPS as measures of operational performance that are
meaningful to investors. The Company uses these measures to assess
the relative performance of its operating divisions, as well as the
employees that operate these businesses. In addition, the Company
believes these measures are important, because securities analysts
and investors use these measures to compare the Company’s
performance to other companies in the healthcare industry.
Same-Hospital Revenues: The same-hospital revenues are calculated
by excluding from the Company’s Hospital division revenues the
results from two hospitals that closed during the fourth quarter of
2017, four hospitals that closed during the third quarter of 2017,
one hospital that closed during the second quarter of 2017, three
hospitals acquired in 2016, 15 hospitals sold in 2016, and three
hospitals that closed during 2016. The Company believes the
presentation of same-hospital revenues provides investors, equity
analysts and others with useful information regarding the
performance of the Company’s hospital operations that are
comparable for the periods presented. For core net income
(loss) attributable to Kindred and core EBITDA, the Company
believes that income (loss) from continuing operations is the most
comparable GAAP measure. For core diluted EPS, the Company believes
that GAAP diluted earnings (loss) per share from continuing
operations is the most comparable GAAP measure. Readers of the
Company’s financial information should consider income (loss) from
continuing operations and diluted earnings (loss) per share from
continuing operations as important measures of the Company’s
financial performance, because they provide the most complete
measures of its performance. For same-hospital revenues, the
Company believes that reported hospital segment revenues is the
most comparable GAAP measure. Readers of the Company’s financial
information should consider reported hospital segment revenues as
an important measure of the Company’s Hospital division financial
performance because it provides the most complete measure of its
revenue performance. Operating results presented on a core basis,
as well as a same-hospital basis, 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.
Also in this earnings release, the Company provides the financial
measures of operating cash flows and free cash flows excluding
certain items, which the Company refers to as core operating cash
flows and core free cash flows, respectively. Core Operating
Cash Flows: The Company defines core operating cash flows as
operating cash flows excluding payments related to business
interruption settlements, restructuring charges, debt amendment
costs, executive or restructuring-related severance, retirement and
retention costs, restructuring-related facility closing charges,
and material transaction, integration, litigation, and research and
development costs, net of income tax benefits. The Company believes
that core operating cash flows provide important information to
investors for comparability to other companies that use similar
measures. Management uses core operating cash flows to evaluate
consolidated operating performance and in making decisions related
to acquisitions, development capital expenditures, dividends,
long-term debt repayments and other uses. Core Free Cash
Flows: The Company defines core free cash flows as operating cash
flows excluding payments related to business interruption
settlements, restructuring charges, debt amendment costs, executive
or restructuring-related severance, retirement and retention costs,
restructuring-related facility closing charges, and material
transaction, integration, litigation, and research and development
costs, net of income tax benefits but including routine capital
expenditures and distributions to noncontrolling interests. The
Company believes that core free cash flows provide important
information to investors for comparability to other companies that
use similar measures. Management uses core free cash flows in
making decisions related to acquisitions, development capital
expenditures, dividends, long-term debt repayments and other uses.
The Company recognizes that core operating cash flows and
core free cash flows are non-GAAP measures and are not intended to
replace the presentation of the Company’s cash flows in accordance
with GAAP. For core operating cash flows and core free cash flows,
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 because it
provides the most complete measure of cash provided by operating
activities. Core operating cash flows and core free cash flows
should be considered in addition to, not as a substitute for, or
superior to, financial measures based upon GAAP as an indicator of
the Company’s cash flows provided by operating activities.
KINDRED HEALTHCARE, INC.
Reconciliation of GAAP Results to Non-GAAP Measures
(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 earnings release to
compute certain non-GAAP measures for the three months ended
December 31, 2017 and 2016, and for the year ended December 31,
2017 and 2016, 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, including the deferred tax liability
adjustment associated with the Tax Reform Act and the deferred tax
asset valuation allowance for the three months and for the year
ended December 31, 2017, and the deferred tax asset valuation
allowance for the three months and for the year ended December 31,
2016 was calculated using an effective income tax rate of 47.5% and
12.1% for the three months ended December 31, 2017 and 2016,
respectively, and 36.4% and 63.1% for the year ended December 31,
2017 and 2016, respectively. The difference in the effective income
tax rate compared to the same prior year period is primarily
attributable to the change in the amount of deferred tax valuation
allowance, the deferred tax liability adjustment associated with
the Tax Reform Act and the composition of charges that are
non-deductible for income tax purposes, including the impairment
charges.
Three months ended Year ended
December 31, December 31, 2017
2016 2017
2016 Reconciliation of income from continuing
operations before charges: As reported: Loss from continuing
operations attributable to Kindred ($145,361 ) ($10,455 ) ($289,377
) ($632,535 ) Diluted loss per common share from continuing
operations ($1.65 ) ($0.12 ) ($3.31 ) ($7.29 ) Weighted average
diluted shares outstanding 87,902 86,904 87,525 86,800
Detail of charges: Restructuring charges: Facility/branch
divestitures and closings ($1,806 ) ($3,745 ) ($18,731 ) ($23,539 )
Retention, severance and other costs (2,956 ) (5,302 ) (11,623 )
(8,781 ) Merger/transaction costs (9,989 ) (837 )
(9,989 ) (2,414 ) (14,751 ) (9,884 ) (40,343 )
(34,734 ) Lease termination and lease amendment costs (charged to
rent restructuring charges) (38,554 ) (2,029 ) (44,518 ) (61,392 )
Impairment charges (244,876 ) (3,534 ) (381,179 ) (314,729 )
RehabCare collection litigation - - (23,061 ) - Insurance
restructuring costs (10,406 ) - (10,406 ) - Research and
development - (4,293 ) - (11,520 ) Litigation contingency expense
(3,435 ) - (7,435 ) (1,775 ) Business interruption settlements -
2,069 1,803 3,378 Debt amendment fees not capitalized - - - (1,103
) Gentiva transaction costs: Professional and consulting fees -
(1,779 ) - (5,610 ) Severance and retention - - - (696 ) Lease
termination (charged to building rent) - -
- (272 ) (312,022 ) (19,450 ) (505,139
) (428,453 ) Income tax benefit 66,951 7,878 142,062 98,246
Deferred tax liability adjustment associated with the Tax Reform
Act 130,453 - 130,453 - Deferred tax asset valuation allowance
(49,072 ) (5,532 ) (88,398 ) (368,664 )
Charges net of income taxes (163,690 ) (17,104 ) (321,022 )
(698,871 ) Noncontrolling interests - -
320 1,304 (163,690 ) (17,104 ) (320,702
) (697,567 ) Allocation to participating unvested restricted
stockholders - - -
- Available to common stockholders ($163,690 )
($17,104 ) ($320,702 ) ($697,567 ) Diluted
loss per common share related to charges ($1.86 ) ($0.20 ) ($3.66 )
($8.04 ) Weighted average diluted shares outstanding 87,902
86,904 87,525 86,800 Core: Income from continuing operations
attributable to Kindred before charges $ 18,329 $ 6,649 $ 31,325 $
65,032 Diluted earnings per common share from continuing operations
before charges (a) $ 0.20 $ 0.07 $ 0.34 $ 0.73
Weighted average diluted shares
outstanding used to compute earnings per common share from
continuing operations before charges
88,485 87,641 88,200 87,491 Reconciliation of effective
income tax rate before charges: Effective income tax rate before
charges 18.3 % 12.8 % 26.8 % 30.2 % Impact of charges on effective
income tax rate 32.9 % -7.0 % 12.1 %
80.7 % Reported effective income tax rate 51.2 % 5.8
% 38.9 % 110.9 % (a) For
purposes of computing diluted earnings per common share before
charges, income from continuing operations before charges was
reduced by $0.6 million and $0.1 million for the three months ended
December 31, 2017 and 2016, respectively, and by $0.9 million and
$1.4 million for the year ended December 31, 2017 and 2016,
respectively, for the allocation of income to participating
unvested restricted stockholders.
KINDRED HEALTHCARE, INC. Reconciliation of
GAAP Results to Non-GAAP Measures (Continued)
(Unaudited) (In thousands)
In addition to the results provided in accordance
with GAAP, the Company has provided information in this earnings
release to compute certain non-GAAP measures for the quarters of
2016 and 2017, before certain charges or on a core basis. The
charges that were excluded from core operating results are denoted
in the table below.
2016 Quarters
2017 Quarters First Second Third
Fourth Year First Second Third
Fourth Year
Reconciliation of income (loss) from
continuing operations before charges:
As reported:
Income (loss) from continuing operations
attributable to Kindred
$ 14,129 $ 21,380 ($657,589 ) ($10,455 ) ($632,535 ) ($160 )
($115,186 ) ($28,670 ) ($145,361 ) ($289,377 ) Depreciation and
amortization 33,554 33,198 32,995 32,072 131,819 29,820 25,651
24,808 24,526 104,805 Interest, net 57,253 57,567 58,059 58,625
231,504 58,819 58,573 60,441 60,079 237,912 Provision (benefit) for
income taxes 11,817 19,379 283,182 (116 ) 314,262 2,234 (16,116 )
(1,225 ) (142,009 ) (157,116 ) Noncontrolling interest 7,851
8,847 9,574 8,575
34,847 10,483 10,791
10,960 9,942 42,176
EBITDA 124,604 140,371 (273,779 ) 88,701 79,897 101,196 (36,287 )
66,314 (192,823 ) (61,600 ) Detail of charges: Restructuring
charges: Facility/branch divestitures and closings 341 (759 )
20,212 3,745 23,539 5,360 2,842 8,723 1,806 18,731 Retention,
severance and other costs 924 446 2,109 5,302 8,781 2,741 274 5,652
2,956 11,623 Merger/transaction costs 436 649
492 837 2,414
- - - 9,989
9,989 1,701 336 22,813 9,884 34,734 8,101 3,116
14,375 14,751 40,343
Lease termination and lease amendment
costs (charged to rent restructuring charges)
251 462 58,650 2,029 61,392 1,905 1,934 2,125 38,554 44,518
Impairment charges 7,788 6,131 297,276 3,534 314,729 474 135,829 -
244,876 381,179 RehabCare collection litigation - - - - - - 25,304
(2,243 ) - 23,061 Insurance restructuring costs - - - - - - - -
10,406 10,406 Research and development 863 3,076 3,288 4,293 11,520
- - - - - Litigation contingency expense 1,025 750 - - 1,775 - -
4,000 3,435 7,435 Business interruption settlements (1,138 ) (171 )
- (2,069 ) (3,378 ) - (1,803 ) - - (1,803 ) Debt amendment fees not
capitalized - 1,103 - - 1,103 - - - - - Gentiva transaction costs:
Professional and consulting fees 1,048 1,319 1,464 1,779 5,610 - -
- - - Severance and retention 555 355 (214 ) - 696 - - - - - Lease
termination (charged to building rent) - -
272 - 272 -
- - - -
12,093 13,361 383,549
19,450 428,453 10,480
164,380 18,257 312,022
505,139 Core EBITDA $ 136,697 $ 153,732
$ 109,770 $ 108,151 $ 508,350 $ 111,676
$ 128,093 $ 84,571 $ 119,199 $ 443,539
KINDRED
HEALTHCARE, INC. Reconciliation of GAAP Results to Non-GAAP
Measures (Continued) (Unaudited) (In thousands)
A reconciliation of revenues for home
health for each historical period follows:
Fourth quarter
2016 Quarters 2017 Quarters % change v.
First Second Third Fourth Year
First Second Third Fourth Year
prior year Home health $ 363,730 $ 370,327 $ 373,980 $
369,198 $ 1,477,235 $ 376,736 $ 384,954 $ 373,964 $ 388,692 $
1,524,346 5.3 Community care and other 66,305
68,229 75,978 74,875
285,387 74,095 74,222
79,720 69,974 298,011 (6.5 )
Reported home health revenues $ 430,035 $ 438,556 $
449,958 $ 444,073 $ 1,762,622 $ 450,831
$ 459,176 $ 453,684 $ 458,666 $ 1,822,357
3.3 A reconciliation of revenues
for the Hospital Division for each historical period follows:
Fourth quarter 2016 Quarters 2017 Quarters
% change v. First Second Third
Fourth Year First Second Third
Fourth Year prior year Transitional care
hospitals $ 643,299 $ 633,695 $ 575,323 $ 530,746 $ 2,383,063 $
540,280 $ 525,458 $ 487,012 $ 489,621 $ 2,042,371 (7.7 )
Sub-acute units and one skilled nursing
facility
10,799 11,711 13,620
15,118 51,248 16,366
15,351 16,126 16,161
64,004 Reported hospital division revenues $ 654,098
$ 645,406 $ 588,943 $ 545,864 $
2,434,311 $ 556,646 $ 540,809 $ 503,138
$ 505,782 $ 2,106,375 (7.3 )
A reconciliation of reported hospital revenues to
same-hospital revenues for each historical period follows:
Fourth quarter 2016 Quarters 2017 Quarters
% change v. First Second Third
Fourth Year First Second Third
Fourth Year prior year Transitional care
hospitals $ 643,299 $ 633,695 $ 575,323 $ 530,746 $ 2,383,063 $
540,280 $ 525,458 $ 487,012 $ 489,621 $ 2,042,371 (7.7 ) Hospitals
acquired during 2016 (a) - (2,217 ) - - (2,217 ) (9,724 ) (10,164 )
- - (19,888 ) Hospitals sold during 2016 (b) (71,941 ) (64,084 )
(47,098 ) 732 (182,391 ) 449 (623 ) (168 ) (746 ) (1,088 )
Hospitals closed during 2017 (c) (31,272 ) (30,952 ) (25,837 )
(26,424 ) (114,485 ) (26,838 ) (23,226 ) (10,400 ) (6,041 ) (66,505
) Hospitals closed during 2016 (d) (8,271 ) (8,864 )
(8,908 ) (183 ) (26,226 ) (32 )
557 (88 ) (157 ) 280
Same-hospital revenues $ 531,815 $ 527,578 $ 493,480
$ 504,871 $ 2,057,744 $ 504,135 $
492,002 $ 476,356 $ 482,677 $ 1,955,170
(4.4 ) (a) Three hospitals
acquired during the second quarter of 2016. (b) Three hospitals
sold during the second quarter of 2016 and 12 hospitals sold during
the fourth quarter of 2016. (c) One hospital closed during the
second quarter of 2017, four hospitals closed during the third
quarter of 2017 and two hospitals closed during the fourth quarter
of 2017. (d) Three hospitals closed during the third quarter of
2016.
KINDRED
HEALTHCARE, INC. Reconciliation of GAAP Results to Non-GAAP
Measures (Continued) (Unaudited) (In thousands, except
per share amounts)
Three months ended December 31, 2017 Charges
Deferred Deferred
tax liability
tax asset Before As Insurance
Litigation Impairment Restructuring Tax
Reform Act valuation charges reported
restructuring contingency charges
charges adjustment allowance Total
("core") (a) Income (loss) from continuing
operations: Segment adjusted operating income: Kindred at Home:
Home health $ 69,445 $ - $ - $ - $ - $ - $ - $ - $ 69,445 Hospice
34,147 - - - -
- - - 34,147
103,592 - - -
- - - -
103,592 Hospital division 91,014 - - - - - - - 91,014
Kindred Rehabilitation Services: Kindred Hospital
Rehabilitation Services 49,059 - - - - - - - 49,059 RehabCare
3,374 - - - -
- - - 3,374
52,433 - - - -
- - - 52,433
Support center expenses (66,098 ) 10,406 - - - - -
10,406 (55,692 ) Litigation contingency expense (3,435 ) 3,435
3,435 - Impairment charges (244,876 ) - - 244,876 - - - 244,876 -
Restructuring charges (14,751 ) - - - 14,751 - - 14,751 - Building
rent (63,577 ) - - - - - - - (63,577 ) Equipment rent (8,571 ) - -
- - - - - (8,571 ) Restructuring charges - rent (38,554 ) - - -
38,554 - - 38,554 - Depreciation and amortization (24,526 ) - - - -
- - - (24,526 ) Interest, net (60,079 ) -
- - - - - -
(60,079 )
Income (loss) from continuing operations
before income taxes
(277,428 ) 10,406 3,435 244,876 53,305 - - 312,022 34,594 Provision
(benefit) for income taxes (142,009 ) 4,095
1,351 43,909 17,596 130,453
(49,072 ) 148,332 6,323 (135,419
) $ 6,311 $ 2,084 $ 200,967 $ 35,709 $ (130,453 ) $ 49,072
$ 163,690 28,271 Noncontrolling interests
(9,942 ) (9,942 ) Income (loss) attributable to Kindred $
(145,361 ) $ 18,329 Diluted earnings (loss) per
common share $ (1.65 ) $ 0.20
Diluted shares used in computing earnings
(loss) per common share
87,902 88,485
Three months ended December 31,
2016 Charges Gentiva Deferred
Business transaction tax asset Before
As interruption Impairment Research and
Restructuring and valuation charges
reported settlements charges
development charges integration
allowance Total ("core") (a) Income (loss)
from continuing operations: Segment adjusted operating income:
Kindred at Home: Home health $ 61,487 $ (302 ) $ - $ - $ - $ - $ -
$ (302 ) $ 61,185 Hospice 28,805 (1,137 )
- - - - -
(1,137 ) 27,668 90,292 (1,439 )
- - - - -
(1,439 ) 88,853 Hospital division 93,778 (630
) - - - - - (630 ) 93,148 Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services 49,728 - - - - - - -
49,728 RehabCare 4,142 - -
- - - - -
4,142 53,870 - -
- - - - -
53,870 Support center expenses (58,627 ) - -
4,293 - - - 4,293 (54,334 ) Impairment charges (3,534 ) - 3,534 - -
- - 3,534 - Restructuring charges (9,884 ) - - - 9,884 - - 9,884 -
Transaction costs (2,166 ) - - - - 1,779 - 1,779 (387 ) Building
rent (64,350 ) - - - - - - - (64,350 ) Equipment rent (8,649 ) - -
- - - - - (8,649 ) Restructuring charges - rent (2,029 ) - - -
2,029 - - 2,029 - Depreciation and amortization (32,072 ) - - - - -
- - (32,072 ) Interest, net (58,625 ) -
- - - - - -
(58,625 )
Income (loss) from continuing operations
before income taxes
(1,996 ) (2,069 ) 3,534 4,293 11,913 1,779 - 19,450 17,454
Provision (benefit) for income taxes (116 ) (817 )
1,391 1,706 4,887 711
(5,532 ) 2,346 2,230 (1,880 ) $ (1,252
) $ 2,143 $ 2,587 $ 7,026 $ 1,068 $ 5,532 $ 17,104
15,224 Noncontrolling interests (8,575 )
(8,575 ) Income (loss) attributable to Kindred $ (10,455 ) $ 6,649
Diluted earnings (loss) per common share $ (0.12 ) $
0.07
Diluted shares used in computing earnings
(loss) per common share
86,904 87,641 (a) During the
first quarter of 2017, the Company revised its definitions of
“core” non-GAAP measures. See “Non-GAAP Measures” beginning on page
14 for a discussion regarding the revised definitions. For
comparability, core results for 2016 were revised to conform to the
current year presentation.
KINDRED HEALTHCARE, INC. Reconciliation of GAAP
Results to Non-GAAP Measures (Continued) (Unaudited) (In
thousands, except per share amounts)
Year ended December 31,
2017 Charges Deferred Deferred
Business RehabCare tax liaiblity tax
asset Before As interruption
collection Insurance Litigation
Impairment Restructuring Tax Reform Act
valuation charges reported settlements
litigation restructuring contingency
charges charges adjustment allowance
Total ("core") (a) Income (loss) from continuing
operations: Segment adjusted operating income: Kindred at Home:
Home health $ 276,218 $ (795 ) $ - $ - $ - $ - $ - $ - $ - $ (795 )
$ 275,423 Hospice 129,273 - -
- - - - -
- - 129,273
405,491 (795 ) - -
- - - - - (795 )
404,696 Hospital division 337,487 (1,008 ) - -
- - - - - (1,008 ) 336,479 Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services 203,392 - - - - - - - - -
203,392 RehabCare 6,884 - 23,061
- - - - -
- 23,061 29,945
210,276 - 23,061 -
- - - - -
23,061 233,337 Support center expenses
(249,007 ) - - 10,406 - - - - - 10,406 (238,601 ) Litigation
contingency expense (7,435 ) - - - 7,435 - - - - 7,435 - Impairment
charges (381,179 ) - - - - 381,179 - - - 381,179 - Restructuring
charges (40,343 ) - - - - - 40,343 - - 40,343 - Building rent
(257,516 ) - - - - - - - - - (257,516 ) Equipment rent (34,856 ) -
- - - - - - - - (34,856 ) Restructuring charges - rent (44,518 ) -
- - - - 44,518 - - 44,518 - Depreciation and amortization (104,805
) - - - - - - - - - (104,805 ) Interest, net (237,912 )
- - - - -
- - - -
(237,912 ) Income (loss) from continuing operations before income
taxes (404,317 ) (1,803 ) 23,061 10,406 7,435 381,179 84,861 - -
505,139 100,822 Provision (benefit) for income taxes
(157,116 ) (709 ) 9,074 4,095
2,925 97,544 29,133 130,453
(88,398 ) 184,117 27,001
(247,201 ) (1,094 ) 13,987 6,311 4,510 283,635 55,728 (130,453 )
88,398 321,022 73,821 Noncontrolling interests (42,176 )
- (320 ) - - -
- - - (320 )
(42,496 ) Income (loss) attributable to Kindred $ (289,377 ) $
(1,094 ) $ 13,667 $ 6,311 $ 4,510 $ 283,635 $ 55,728
$ (130,453 ) $ 88,398 $ 320,702 $ 31,325
Diluted earnings (loss) per common share $ (3.31 ) $ 0.34
Diluted shares used in computing earnings
(loss) per common share
87,525 88,200
Year ended December 31, 2016
Charges Gentiva Deferred Business
transaction tax asset Before As
interruption Litigation Impairment Research
and Debt Restructuring and
valuation charges reported settlements
contingency charges development
amendment charges integration allowance
Total ("core") (a) Income (loss) from continuing
operations: Segment adjusted operating income: Kindred at Home:
Home health $ 279,531 $ (1,611 ) $ - $ - $ - $ - $ - $ - $ - $
(1,611 ) $ 277,920 Hospice 116,326 (1,137 )
- - - - - -
- (1,137 ) 115,189
395,857 (2,748 ) - -
- - - - -
(2,748 ) 393,109 Hospital division 441,644
(630 ) - - - - - - - (630 ) 441,014 Kindred Rehabilitation
Services: Kindred Hospital Rehabilitation Services 198,335 - - - -
- - - - - 198,335 RehabCare 32,586 -
- - - - - -
- - 32,586
230,921 - - -
- - - - - -
230,921 Support center expenses
(261,916 ) - - - 11,520 1,103 - - - 12,623 (249,293 ) Litigation
contingency expense (2,840 ) - 1,775 - - - - - - 1,775 (1,065 )
Impairment charges (314,729 ) - - 314,729 - - - - - 314,729 -
Restructuring charges (34,734 ) - - - - - 34,734 - - 34,734 -
Transaction costs (8,679 ) - - - - - - 6,306 - 6,306 (2,373 )
Building rent (264,306 ) - - - - - - 272 - 272 (264,034 ) Equipment
rent (39,929 ) - - - - - - - - - (39,929 ) Restructuring charges -
rent (61,392 ) - - - - - 61,392 - - 61,392 - Depreciation and
amortization (131,819 ) - - - - - - - - - (131,819 ) Interest, net
(231,504 ) - - -
- - - - - -
(231,504 )
Income (loss) from continuing operations
before income taxes
(283,426 ) (3,378 ) 1,775 314,729 11,520 1,103 96,126 6,578 -
428,453 145,027 Provision for income taxes 314,262
(1,329 ) (381 ) 54,578 4,533
431 37,826 2,588 (368,664 )
(270,418 ) 43,844 (597,688 ) (2,049 ) 2,156
260,151 6,987 672 58,300 3,990 368,664 698,871 101,183
Noncontrolling interests (34,847 ) - -
(1,304 ) - - - -
- (1,304 ) (36,151 ) Income (loss)
attributable to Kindred $ (632,535 ) $ (2,049 ) $ 2,156 $
258,847 $ 6,987 $ 672 $ 58,300 $ 3,990 $ 368,664
$ 697,567 $ 65,032 Diluted earnings
(loss) per common share $ (7.29 ) $ 0.73
Diluted shares used in computing earnings
(loss) per common share
86,800 87,491 (a) During the
first quarter of 2017, the Company revised its definitions of
“core” non-GAAP measures. See “Non-GAAP Measures” beginning on page
14 for a discussion regarding the revised definitions. For
comparability, core results for 2016 were revised to conform to the
current year presentation.
KINDRED HEALTHCARE, INC. Reconciliation of GAAP
Results to Non-GAAP Measures (Continued) (Unaudited) (In
thousands, except per share amounts)
Three months ended March 31, 2017
Charges Deferred tax asset Before
As Impairment Restructuring valuation
charges reported charges charges
allowance Total ("core") (a) Income from
continuing operations: Segment adjusted operating income:
Kindred at Home: Home health $ 63,750 $ - $ - $ - $ - $ 63,750
Hospice 27,581 - - -
- 27,581 91,331 -
- - - 91,331
Hospital division 93,438 - - - - 93,438 Kindred
Rehabilitation Services: Kindred Hospital Rehabilitation Services
51,760 - - - - 51,760 RehabCare 8,704 -
- - - 8,704 60,464
- - - -
60,464 Support center expenses (60,014 ) - - - -
(60,014 ) Impairment charges (474 ) 474 - - 474 - Restructuring
charges (8,101 ) - 8,101 - 8,101 - Building rent (64,656 ) - - - -
(64,656 ) Equipment rent (8,887 ) - - - - (8,887 ) Restructuring
charges - rent (1,905 ) - 1,905 - 1,905 - Depreciation and
amortization (29,820 ) - - - - (29,820 ) Interest, net
(58,819 ) - - - -
(58,819 )
Income from continuing operations before
income taxes
12,557 474 10,006 - 10,480 23,037 Provision for income taxes
2,234 187 3,937 3,049
7,173 9,407 10,323 $ 287 $ 6,069 $
(3,049 ) $ 3,307 13,630 Noncontrolling interests (10,483 )
(10,483 ) Income (loss) attributable to Kindred $ (160 ) $
3,147 Diluted earnings (loss) per common share $ - $
0.03
Diluted shares used in computing earnings
(loss) per common share
87,085 87,744
Three months ended March 31,
2016 Charges Gentiva Business
transaction Before As interruption
Litigation Impairment Research and
Restructuring and charges reported
settlements contingency charges
development charges integration Total
("core") (a) Income from continuing operations:
Segment adjusted operating income: Kindred at Home: Home health $
66,941 $ (1,138 ) $ - $ - $ - $ - $ - $ (1,138 ) $ 65,803 Hospice
24,866 - - -
- - - - 24,866
91,807 (1,138 ) - -
- - - (1,138 )
90,669 Hospital division 136,416 - - - - - - -
136,416 Kindred Rehabilitation Services: Kindred Hospital
Rehabilitation Services 48,119 - - - - - - - 48,119 RehabCare
9,762 - - -
- - - - 9,762
57,881 - - -
- - - - 57,881
Support center expenses (72,022 ) - - - 863 - - 863
(71,159 ) Litigation contingency expense (1,910 ) - 1,025 - - - -
1,025 (885 ) Impairment charges (7,788 ) - - 7,788 - - - 7,788 -
Restructuring charges (1,701 ) - - - - 1,701 - 1,701 - Transaction
costs (1,685 ) - - - - - 1,603 1,603 (82 ) Building rent (65,985 )
- - - - - - - (65,985 ) Equipment rent (10,158 ) - - - - - - -
(10,158 ) Restructuring charges - rent (251 ) - - - - 251 - 251 -
Depreciation and amortization (33,554 ) - - - - - - - (33,554 )
Interest, net (57,253 ) - - -
- - - -
(57,253 )
Income from continuing operations before
income taxes
33,797 (1,138 ) 1,025 7,788 863 1,952 1,603 12,093 45,890 Provision
for income taxes 11,817 (403 ) 363
2,758 305 691 568
4,282 16,099 21,980 $ (735 ) $ 662 $ 5,030
$ 558 $ 1,261 $ 1,035 $ 7,811 29,791
Noncontrolling interests (7,851 ) (7,851 ) Income
attributable to Kindred $ 14,129 $ 21,940
Diluted earnings per common share $ 0.16 $ 0.25
Diluted shares used in computing earnings
per common share
87,249 87,249 (a) During the
first quarter of 2017, the Company revised its definitions of
“core” non-GAAP measures. See “Non-GAAP Measures” beginning on page
14 for a discussion regarding the revised definitions. For
comparability, core results for 2016 were revised to conform to the
current year presentation.
KINDRED HEALTHCARE, INC. Reconciliation of GAAP
Results to Non-GAAP Measures (Continued) (Unaudited) (In
thousands, except per share amounts)
Three months ended June 30, 2017
Charges Deferred Business RehabCare
tax asset Before As interruption
collection Impairment Restructuring
valuation charges reported settlements
litigation charges charges allowance
Total ("core") (a) Income (loss) from continuing
operations: Segment adjusted operating income (loss): Kindred
at Home: Home health $ 76,592 $ (795 ) $ - $ - $ - $ - $ (795 ) $
75,797 Hospice 32,784 - -
- - - -
32,784 109,376 (795 ) -
- - - (795 )
108,581 Hospital division 91,580 (1,008 ) - - - -
(1,008 ) 90,572 Kindred Rehabilitation Services: Kindred
Hospital Rehabilitation Services 53,422 - - - - - - 53,422
RehabCare (13,492 ) - 25,304
- - - 25,304
11,812 39,930 -
25,304 - - -
25,304 65,234 Support center expenses
(62,572 ) - - - - - - (62,572 ) Impairment charges (135,829 ) - -
135,829 - - 135,829 - Restructuring charges (3,116 ) - - - 3,116 -
3,116 - Building rent (64,861 ) - - - - - - (64,861 ) Equipment
rent (8,861 ) - - - - - - (8,861 ) Restructuring charges - rent
(1,934 ) - - - 1,934 - 1,934 - Depreciation and amortization
(25,651 ) - - - - - - (25,651 ) Interest, net (58,573 )
- - - - -
- (58,573 )
Income (loss) from continuing operations
before income taxes
(120,511 ) (1,803 ) 25,304 135,829 5,050 - 164,380 43,869 Provision
(benefit) for income taxes (16,116 ) (709 )
9,957 53,449 1,987 (35,235 )
29,449 13,333 (104,395 ) (1,094 )
15,347 82,380 3,063 35,235 134,931 30,536 Noncontrolling interests
(10,791 ) - (320 ) -
- - (320 ) (11,111 ) Income
(loss) attributable to Kindred $ (115,186 ) $ (1,094 ) $ 15,027
$ 82,380 $ 3,063 $ 35,235 $ 134,611 $
19,425 Diluted earnings (loss) per common share $
(1.32 ) $ 0.21
Diluted shares used in computing earnings
(loss) per common share
87,506 88,165
Three months ended June 30, 2016
Charges Gentiva Business transaction
Before As interruption Litigation
Impairment Research and Debt
Restructuring and charges reported
settlements contingency charges
development amendment charges
integration Total ("core") (a) Income from
continuing operations: Segment adjusted operating income:
Kindred at Home: Home health $ 76,030 $ (171 ) $ - $ - $ - $ - $ -
$ - $ (171 ) $ 75,859 Hospice 31,329 -
- - - - -
- - 31,329
107,359 (171 ) - -
- - - - (171 )
107,188 Hospital division 127,510 - - - - - -
- - 127,510 Kindred Rehabilitation Services: Kindred
Hospital Rehabilitation Services 50,729 - - - - - - - - 50,729
RehabCare 11,158 - -
- - - - -
- 11,158 61,887
- - - - -
- - -
61,887 Support center expenses (68,444 ) - - - 3,076
1,103 - - 4,179 (64,265 ) Litigation contingency expense (930 ) -
750 - - - - - 750 (180 ) Impairment charges (6,131 ) - - 6,131 - -
- - 6,131 - Restructuring charges (336 ) - - - - - 336 - 336 -
Transaction costs (1,846 ) - - - - - - 1,674 1,674 (172 ) Building
rent (67,025 ) - - - - - - - - (67,025 ) Equipment rent (11,211 ) -
- - - - - - - (11,211 ) Restructuring charges - rent (462 ) - - - -
- 462 - 462 - Depreciation and amortization (33,198 ) - - - - - - -
- (33,198 ) Interest, net (57,567 ) - -
- - - -
- - (57,567 )
Income from continuing operations before
income taxes
49,606 (171 ) 750 6,131 3,076 1,103 798 1,674 13,361 62,967
Provision for income taxes 19,379 (129 )
(1,511 ) (2,962 ) 2,324 833
2,054 1,265 1,874
21,253 30,227 (42 ) 2,261 9,093 752 270 (1,256 ) 409 11,487
41,714 Noncontrolling interests (8,847 ) -
- (1,016 ) - - -
- (1,016 ) (9,863 ) Income
attributable to Kindred $ 21,380 $ (42 ) $ 2,261 $
8,077 $ 752 $ 270 $ (1,256 ) $ 409 $ 10,471
$ 31,851 Diluted earnings per common share $
0.23 $ 0.35
Diluted shares used in computing earnings
per common share
87,500 87,500 (a) During the
first quarter of 2017, the Company revised its definitions of
“core” non-GAAP measures. See “Non-GAAP Measures” beginning on page
14 for a discussion regarding the revised definitions. For
comparability, core results for 2016 were revised to conform to the
current year presentation.
KINDRED HEALTHCARE, INC. Reconciliation of GAAP Results
to Non-GAAP Measures (Continued) (Unaudited) (In
thousands, except per share amounts)
Three months ended September 30, 2017
Charges Deferred RehabCare tax asset
Before As collection Litigation
Restructuring valuation charges
reported litigation contingency charges
allowance Total ("core") (a) Income (loss)
from continuing operations: Segment adjusted operating income:
Kindred at Home: Home health $ 66,431 $ - $ - $ - $ - $ - $ 66,431
Hospice 34,761 - - -
- - 34,761 101,192
- - - - -
101,192 Hospital division 61,455 - - -
- - 61,455 Kindred Rehabilitation Services: Kindred Hospital
Rehabilitation Services 49,151 - - - - - 49,151 RehabCare
8,298 (2,243 ) - - -
(2,243 ) 6,055 57,449
(2,243 ) - - - (2,243 )
55,206 Support center expenses (60,323 ) - - - - -
(60,323 ) Litigation contingency expense (4,000 ) - 4,000 - - 4,000
- Restructuring charges (14,375 ) - - 14,375 - 14,375 - Building
rent (64,422 ) - - - - - (64,422 ) Equipment rent (8,537 ) - - - -
- (8,537 ) Restructuring charges - rent (2,125 ) - - 2,125 - 2,125
- Depreciation and amortization (24,808 ) - - - - - (24,808 )
Interest, net (60,441 ) - - -
- - (60,441 )
Loss from continuing operations before
income taxes
(18,935 ) (2,243 ) 4,000 16,500 - 18,257 (678 ) Income tax benefit
(1,225 ) (883 ) 1,574 5,612
(7,140 ) (837 ) (2,062 ) (17,710 ) $ (1,360 ) $ 2,426
$ 10,888 $ 7,140 $ 19,094 1,384 Noncontrolling
interests (10,960 ) (10,960 ) Loss attributable to
Kindred $ (28,670 ) $ (9,576 ) Diluted loss per common share
$ (0.32 ) $ (0.11 )
Diluted shares used in computing loss per
common share
87,597 87,597
Three months ended September 30,
2016 Charges Gentiva Deferred
transaction tax Before As
Impairment Research and Restructuring
and valuation charges reported
charges development charges integration
allowance Total ("core") (a) Income (loss)
from continuing operations: Segment adjusted operating income:
Kindred at Home: Home health $ 75,073 $ - $ - $ - $ - $ - $ - $
75,073 Hospice 31,326 - -
- - - - 31,326
106,399 - - -
- - - 106,399
Hospital division 83,940 - - - - - - 83,940
Kindred Rehabilitation Services: Kindred Hospital Rehabilitation
Services 49,759 - - - - - - 49,759 RehabCare 7,524
- - - - -
- 7,524 57,283 -
- - - - -
57,283 Support center expenses (62,823
) - 3,288 - - - 3,288 (59,535 ) Impairment charges (297,276 )
297,276 - - - - 297,276 - Restructuring charges (22,813 ) - -
22,813 - - 22,813 - Transaction costs (2,982 ) - - - 1,250 - 1,250
(1,732 ) Building rent (66,946 ) - - - 272 - 272 (66,674 )
Equipment rent (9,911 ) - - - - - - (9,911 ) Restructuring charges
- rent (58,650 ) - - 58,650 - - 58,650 - Depreciation and
amortization (32,995 ) - - - - - - (32,995 ) Interest, net
(58,059 ) - - - -
- - (58,059 )
Income (loss) from continuing operations
before income taxes
(364,833 ) 297,276 3,288 81,463 1,522 - 383,549 18,716 Provision
for income taxes 283,182 50,637
1,280 31,703 592 (363,132 )
(278,920 ) 4,262 (648,015 ) 246,639 2,008 49,760 930
363,132 662,469 14,454 Noncontrolling interests (9,574 )
(288 ) - - - -
(288 ) (9,862 ) Income (loss) attributable to Kindred
$ (657,589 ) $ 246,351 $ 2,008 $ 49,760 $ 930 $
363,132 $ 662,181 $ 4,592 Diluted
earnings (loss) per common share $ (7.57 ) $ 0.05
Diluted shares used in computing earnings
(loss) per common share
86,869 87,529 (a) During the
first quarter of 2017, the Company revised its definitions of
“core” non-GAAP measures. See “Non-GAAP Measures” beginning on page
14 for a discussion regarding the revised definitions. For
comparability, core results for 2016 were revised to conform to the
current year presentation.
KINDRED HEALTHCARE, INC. Reconciliation of GAAP Results
to Non-GAAP Measures (Continued) (Unaudited) (In
thousands)
Three months ended Year ended December 31,
December 31, 2017 2016
2017 2016
Reconciliation of net cash flows provided by operating activities
to core operating cash flows and core free cash flows: Net cash
flows provided by operating activities
$ 67,183 $
147,001
$ 75,695 $ 188,236
Adjustments to remove certain payments
(including payments made for discontinued operations) included in
net cash flows provided by operating activities:
Transaction, severance, research and development, and retention
20,160 12,822
56,479 30,780 Insurance restructuring
costs
10,406 -
10,406 - Business interruption
settlements
- -
(3,796 ) (1,309 ) Lease
termination fees - restructuring
7,458
4,998
13,389 8,498 Capitalized lender fees related to debt
amendment
- -
5,403 7,375 Other debt refinancing
costs (expensed)
- -
- 917 Litigation
-
-
12,593 132,643
38,024 17,820
94,474 178,904
Net cash flows provided by operating
activities excluding certain items before income tax benefit of
certain payments
105,207 164,821
170,169 367,140 Benefit of reduced
income tax payments resulting from certain payments (a)
(18,676 ) (22,343 )
(33,250
) (67,862 )
Net cash flows provided by operating
activities excluding certain items (core operating cash flows)
86,531 142,478
136,919 299,278 Less routine
capital expenditures
(24,006 ) (27,349 )
(69,806 ) (96,052 ) Less distributions to
noncontrolling interests
(12,854 )
(10,745 )
(61,226 ) (45,985 ) Free cash
flows excluding certain items (core free cash flows)
$
49,671 $ 104,384
$ 5,887
$ 157,241 (a) The Company
did not pay federal and state income taxes (where state unitary or
consolidated tax returns are allowed) in 2017 due primarily to the
loss associated with the sale of the Company's skilled nursing
facility business. In 2016, the Company did not pay these taxes as
a result of a consolidated taxable loss. These cash savings in both
years are recognized in GAAP cash flows and offer additional
sources of cash when evaluating the Company's cash flow generating
capability before certain payments. The Company anticipates it will
have approximately $775 million of federal NOLs that, on a tax
effected basis of approximately $160 million, should offset
approximately 90% of core book tax estimates until exhausted.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180228005452/en/
Kindred Healthcare, Inc.Todd Flowers, 502-596-6569
Kindred Healthcare (NYSE:KND)
Historical Stock Chart
From Mar 2024 to Apr 2024
Kindred Healthcare (NYSE:KND)
Historical Stock Chart
From Apr 2023 to Apr 2024