Filing pursuant to Rule 425 under the
Securities Act of 1933, as amended
Deemed filed under Rule 14a-12 under the
Securities Exchange Act of 1934, as amended
Filer: RehabCare Group, Inc.
Subject Company: RehabCare Group, Inc.
Commission File Number: 001-14655
RehabCare and Kindred Healthcare
Combining Our Strengths
March 3, 2011
Dear Colleagues,
Greetings. It has been a little more than two weeks since we announced plans to combine the
strengths of Kindred and RehabCare. We are working hard to ensure that this transition is as
seamless as possible for everyone. I know there are many questions about what this transaction will
mean for current RehabCare employees, so we have developed this newsletter as a forum for me to
communicate updates and information as well as to answer your many questions.
By bringing together these two strongly-aligned organizations and our dedicated and compassionate
teams of therapists, physicians, nurses and other caregivers, we will deliver on the promises of
both companies to provide hope, promote recovery and help our patients regain their lives as we
work to improve care coordination and return them home.
Before I take the opportunity to address some of the great questions that have already been posed,
I want to thank you for your hard work and commitment. The attorneys asked me to remind everyone
that until closing Kindred and RehabCare will continue to be competitors. From a legal and business
perspective, it is critically important to maintain RehabCares business as completely independent
from Kindreds until the closing is complete.
Now, Id like to respond to some of the questions that have been asked:
Will there be any changes to salary levels or benefits?
Your base pay will not be reduced and you will stay on your current benefit plans through the end
of the year. You will have an opportunity this fall to participate in Kindreds Open Enrollment for
2012.
(more detailed benefits information is provided on page 3)
We had heard that 200+ jobs in St. Louis & Houston were going to be eliminated. How does that
translate to the field? Are we going to experience similar layoffs?
There will be no change in employees at the care delivery levelyour patients and customers will
receive uninterrupted service.
Will Kindred contact employees with an offer to stay?
Let me first repeat that there will be no change in employment for those providing care delivery,
and 98% of RehabCare employees will be asked to stay with Kindred. Some non-caregiving employees
will be offered continued employment prior to close on an individual basis. For those individuals
who are not offered continued employment, Kindred will honor all severance agreements for those
that stay through their transition date. The transition date is a date after the close until which
an employee must continue working to successfully integrate Kindred and
RehabCare. These dates will vary upon the individual job and will be communicated at a later date
as we get further into the integration process.
Will employees retain current seniority at Kindred?
Yes, you will retain your current seniority. Kindred will honor your earliest date of employment
with RehabCare or Triumph.
Will there be more details regarding benefits/401K prior to the enrollment period?
Yes. There will be no benefit changes in 2011, and you will have an opportunity this fall to
participate in Kindreds Open Enrollment for 2012. We know there are many questions about Kindred
benefits and those will be best answered by our Human Resources team. As soon as the closing date
is known, we will schedule benefits meetings to review and discuss the Kindred plans and to answer
specific questions. We will be sure to tell you as soon as we have more information.
continued
Does Kindred have a 401(k) and will we be able to roll over our current RehabCare 401(K) into it?
Yes we offer a 401(k) and we anticipate that after the close of the transaction RehabCare
employees will have the opportunity to roll over their current 401(k) into the Kindred plan.
How long will employees remain on the RehabCare paperwork?
There will be no change in paperwork or processes until the close date, which is anticipated to
occur in June. After the close, you will transition over to the Kindred systems. Over the next
several months we will be working hard to ensure that the transition is as smooth as possible,
and provides no disruption from the care and rehabilitation you provide to your patients.
Will pay dates remain the same?
Pay dates are currently being evaluated and will be discussed in more detail as we get closer to
the close.
Does Kindred have annual performance reviews with rate adjustments?
Kindred does perform annual employee evaluations in order to acknowledge areas where employees
are doing well, to determine areas for improvement and to identify needed resources or training.
An employees compensation may or may not be reviewed at the same time as the performance
evaluation. Similar to RehabCare, merit increases will be based on performance.
What impact will there be on performance reviews and salary increases that are scheduled for Spring 2011?
It is business as usual for all RehabCare/Triumph employees until the transaction is complete and
there will be no impact on activities until that time. After the two companies are combined,
annual reviews will be conducted according to Kindreds policies.
Will RehabCare employees retain banked paid time off?
Yes. Your paid days off (PDO) banks will be transferred to Kindred.
What will happen to the email system?
After the close of the transaction, all employees will be transitioned over to the Kindred email
system.
Does Kindred have similar PCA funds and Develop U?
Kindred has many programs for continuing education and training, and specifics for these programs
will be outlined in greater detail at a later date.
Will there be shared staff if there is a Kindred site close by?
It is Kindreds intention to combine the strengths of both organizations and share the talents,
expertise and best practices of our team. After the close, where appropriate there will be shared
staff.
Will there be continued use of SMART/Casamba and iPods?
We have the highest regard for RehabCares IT innovations and use of hand-held technology and
will be continuing their use after the close. As well, we believe that Kindreds robust IT system
will complement the technologies that RehabCare already has in place.
Does Kindred have a PatientPlus type program?
At this time Kindred does not have a program similar to RehabCares Patient Plus program, but the
integration team will be reviewing and considering the Patient Plus program for the combined
company.
We are committed to ensuring all of your questions are answered, so no matter how small of a
question, please share it with Patti Williams (corporate) at pswilliams@rehabcare.com, Brock
Hardaway (Triumph) at bhardaway@triumph-healthcare.com, Mary Pat Welc (HRS) at
mpwelc@rehabcare.com, or Pat Henry (SRS) at pmhenry@rehabcare.com. We will be working on a great
many issues over the course of the next several months, with the goal of making this transition
as smooth as possible. Thank you for your support and continued patience as we move through this
process. We will provide timely updates and answer all questions in upcoming Combining Our
Strengths, so be sure to check it out.
Thanks for all you do!
Benjamin A. Breier
Chief Operating Officer
continued
Please feel free to print this out and post it on your bulletin board.
KINDRED BENEFITS
Our employees have a complete, competitive benefits program that offers flexibility and
choice.
Your eligibility to participate in Kindreds plans will be based on your date of hire with
RehabCare (or Triumph).
We offer healthcare options administered by UnitedHealthcare or Anthem BC/BS (based on your
location) as well as a Kaiser HMO in California. Patient advocacy, health management and employee
assistance programs are provided at no additional cost to participants in any Kindred medical plan
option.
MEDICAL
Employees are eligible the first day of the month following one month of continuous full-time (30+
hours per week) or part-time (24+ hours per week) service. Spouse/ domestic partner and children up
to age 26 are also eligible.
Choice of UnitedHealthcare, Anthem BC/BS (based on location) and Kaiser HMO in California.
DENTAL
Employees are eligible the first day of the month following one month of continuous full-time or
part-time service. Spouse/domestic partner and children up to age 26 are also eligible.
Choice of CIGNA High or Low PPO options. Other options may be available in some locations.
LIFE
Employees are eligible the first day of the month following one month of continuous full-time
employment.
One-time base pay rounded to the next higher $1,000. Fully paid by Company.
DISABILITY
Full-time employees who have completed one year of continuous full-time service.
Disability coverage of 40% of pay for non-exempt employees, 60% of pay for exempt employees.
Maximums apply. Fully paid by Company.
401(K)
Employees are eligible the first day of the month following one month of full-time or part-time
service.
Employee contributions between 1-30%. Contribution limits apply to certain highly-paid employees.
Kindred provides a match if the Company meets certain financial targets.
EDUCATIONAL ASSISTANCE
Available to employees who have completed three months of continuous service.
TIME
OFF
Paid Time Off (PTO) begins accruing the first day of the month following one month of continuous
full-time or part-time service. Accruals vary based on division, hours worked, position and years
of service.
OTHER VOLUNTARY BENEFITS AVAILABLE
Supplemental Life Insurance
Healthcare and Dependent Care Flexible Spending Accounts
Transit Benefit Plan
Long-Term Disability Buy-Up Plan
Legal Plan
Critical Illness Insurance
Whole Life Insurance
Accident Insurance
Vision Plan
continued
Additional Information About this Transaction
In connection with the proposed transaction with RehabCare Group, Inc. (RehabCare), Kindred
Healthcare, Inc. (Kindred) will file with the Securities and Exchange Commission (the SEC) a
Registration Statement on Form S-4 that will include a joint proxy statement of Kindred and
RehabCare that also constitutes a prospectus of Kindred. Kindred and RehabCare will mail the
definitive proxy statement/prospectus to their respective stockholders.
WE URGE INVESTORS AND
SECURITY HOLDERS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION
WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION
. You may obtain a free copy
of the joint proxy statement/prospectus (when available) and other related documents filed by
Kindred and RehabCare with the SEC at the SECs website at www.sec.gov. The joint proxy statement/
prospectus (when available) and the other documents filed by Kindred and RehabCare with the SEC may
also be obtained for free by accessing Kindreds website at www.kindredhealthcare.com and clicking
on the Investors link and then clicking on the link for SEC Filings or by accessing RehabCares
website at www.rehabcare.com and clicking on the Investor Information link and then clicking on
the link for SEC Filings.
Participants in this Transaction
Kindred, RehabCare and their respective directors, executive officers and certain other members of
management and employees may be soliciting proxies from their respective stockholders in favor of
the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be
considered participants in the solicitation of stockholders in connection with the proposed
transaction will be set forth in the joint proxy statement/prospectus when it is filed with the
SEC. You can find information about Kindreds executive officers and directors in Kindreds
definitive proxy statement filed with the SEC on April 1, 2010. You can find information about
RehabCares executive officers and directors in its definitive proxy statement filed with the SEC
on March 23, 2010. You can obtain free copies of these documents from Kindred or RehabCare,
respectively, using the contact information above.
Forward-Looking Statements
Information set forth in this document contains forward-looking statements, which involve a number
of risks and uncertainties. Kindred and RehabCare caution readers that any forward-looking
information is not a guarantee of future performance and that actual results could differ
materially from those contained in the forward-looking information. Such forward-looking statements
include, but are not limited to, statements about the benefits of the business combination
transaction involving Kindred and RehabCare, including future financial and operating results, the
combined companys plans, objectives, expectations and intentions and other statements that are not
historical facts.
The following factors, among others, could cause actual results to differ from those set forth in
the forward-looking statements: (a) the receipt of all required licensure and regulatory approvals
and the satisfaction of the closing conditions to the acquisition of RehabCare by Kindred,
including approval of the pending transaction by the shareholders of the respective companies, and
Kindreds ability to complete the required financing as contemplated by the financing commitment;
(b) Kindreds ability to integrate the operations of the acquired hospitals and rehabilitation
services operations and realize the anticipated revenues, economies of scale, cost synergies and
productivity gains in connection with the RehabCare acquisition and any other acquisitions that may
be undertaken during 2011, as and when planned, including the potential for unanticipated issues,
expenses and liabilities associated with those acquisitions and the risk that RehabCare fails to
meet its expected financial and operating targets; (c) the potential for diversion of management
time and resources in seeking to complete the RehabCare acquisition and integrate its operations;
(d) the potential failure to retain key employees of RehabCare; (e) the impact of Kindreds
significantly increased levels of indebtedness as a result of the RehabCare acquisition on
Kindreds funding costs, operating flexibility and ability to fund ongoing operations with
additional borrowings, particularly in light of ongoing volatility in the credit and capital
markets; (f) the potential for dilution to Kindred stockholders as a result of the RehabCare
acquisition; and (g) the ability of the Company to operate pursuant to the terms of its debt
obligations, including Kindreds obligations under financings undertaken to complete the RehabCare
acquisition, and the ability of Kindred to operate pursuant to its master lease agreements with
Ventas, Inc. (NYSE:VTR). Additional factors that may affect future results are contained in
Kindreds and RehabCares filings with the SEC, which are available at the SECs web site at
www.sec.gov. Many of these factors are beyond the control of Kindred or RehabCare. Kindred and
RehabCare disclaim any obligation to update and revise statements contained in these materials
based on new information or otherwise.
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