EX-99.1 2 d385298dex991.htm EX-99.1 EX-99.1

EXHIBIT 99.1

 

LOGO

 

Contact:       Todd Flowers
      Investor Relations
      (502) 596-6569

KINDRED HEALTHCARE REPORTS FIRST QUARTER 2017 RESULTS

 

Consolidated Revenues of $1.77 Billion, GAAP Income from Continuing Operations of $9 Million(1), GAAP Diluted Loss Per Share from Continuing Operations of $0.07(1) and EBITDAR of $202 Million(2) in the First Quarter

Core EBITDAR of $218 Million(3) and Core Diluted EPS from Continuing Operations of $0.04(3) in the First Quarter, including $0.03 EPS negative impact from 2017 Change in GAAP(4)

Solid Start to Year - Company Reaffirms Full Year Outlook for 2017 and 2018

LOUISVILLE, Ky. (May 3, 2017) – Kindred Healthcare, Inc. (“Kindred” or the “Company”) (NYSE:KND) today announced its operating results for the first quarter ended March 31, 2017.

Benjamin A. Breier, President and Chief Executive Officer of the Company, commented, “We are pleased to report progress in the first quarter of 2017, as evidenced by strong growth in our home health, hospice and inpatient rehabilitation businesses and continued advancement by our Hospital Division in its second full quarter under long-term acute care (“LTAC”) patient criteria. Furthermore, we are reaffirming our expectations for 2017 and 2018.”

Mr. Breier continued, “In the first quarter, we delivered very encouraging sequential and year-over-year improvement in our Kindred at Home Division, with strong same-store volume growth in both our home health and hospice businesses. Combined with a sequential reduction of labor costs in the first quarter, we returned to historic growth levels and delivered results in line with our 2017 expectations.”

“Our Hospital Division continued to advance our multi-pronged LTAC patient criteria mitigation strategy in the first quarter. Our successful execution is reflected in the exceptional growth of the Hospital Division’s same-hospital non-government admissions, a key element of our LTAC mitigation strategy that helped offset light Medicare volumes. We also continue to make progress in reducing patients’ length of stay through our efforts to eliminate avoidable clinical delays. We remain confident that our mitigation strategies will offset at least half of the expected run-rate impact of LTAC patient criteria by year-end,” remarked Mr. Breier.

Mr. Breier added, “Since announcing our transformative initiative to divest our skilled nursing center business, our Nursing Center Division has maintained high standards of care while delivering stable operating results. We continue to make progress on our nursing center divestiture and remain focused on completing an accretive, value-enhancing transaction by year end.”

Mr. Breier concluded, “On behalf of Kindred’s entire leadership team, I am proud to share that our recently completed 2017 Quality, Innovation and Social Responsibility Report demonstrates another year of outperforming quality benchmarks and success in sending more patients home with better outcomes. We continue to deliver innovative post-acute solutions while building and deepening our relationships with key partners. Our clinical excellence, national reach, and innovative use of technology and data enable the development of new products that create value for all of our stakeholders, including our shareholders, payors and partners.”

 

(1) Results reflect after-tax costs of $9.8 million or $0.11 per diluted share related to restructuring costs and impairment charges.
(2) Results reflect pre-tax costs of $15.4 million related to restructuring costs and impairment charges. As used herein, “EBITDAR” means earnings before interest, income taxes, depreciation, amortization and rent. See reconciliation of generally accepted accounting principles (“GAAP”) results to non-GAAP results beginning on page 13.
(3) See reconciliation of GAAP results to non-GAAP results beginning on page 13. During the first quarter of 2017, the Company updated its definitions of “core” non-GAAP measures. See “Non-GAAP Measures” beginning on page 13 for a discussion regarding the updated definitions. For comparability, “core” results for 2016 have been revised to conform to the current year presentation.
(4) Effective January 1, 2017, GAAP requires book to tax differences associated with stock-based compensation to be recorded to the provision for income taxes in the statement of operations rather than the statement of stockholders’ equity, which resulted in a $2.3 million or $0.03 per diluted share negative Core impact for the first quarter of 2017. There is no income tax provision impact (on a net provision basis) under GAAP reporting due to the deferred tax valuation allowance.

 

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680 South Fourth Street      Louisville, Kentucky 40202

502.596.7300        www.kindredhealthcare.com


Kindred Healthcare Reports First Quarter 2017 Results

Page 2

May 3, 2017

 

 

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.

First Quarter Consolidated Results(1):

 

    Consolidated revenues were $1.77 billion, a 3.8% year-over-year decrease, primarily attributable to the impact of the transition to LTAC patient criteria and the sale or closure of 15 LTAC hospitals in the second half of 2016. GAAP income from continuing operations was $8.8 million compared to $25.8 million in the same period a year ago, primarily due to the impact of LTAC patient criteria and an increase in restructuring costs. Core EBITDAR declined to $217.8 million compared to $245.2 million in the same period of 2016, primarily due to LTAC patient criteria and the sale or closure of 15 LTAC hospitals noted above.

 

    GAAP operating cash flows were a deficit of $92.6 million compared to a deficit of $130.4 million for the same period a year ago. Core operating cash flows were a deficit of $71.7 million compared to $1.0 million for the same period a year ago. Core free cash flows were a deficit of $109.4 million compared to a deficit of $33.4 million in the same period a year ago. GAAP operating cash flows improved in the first quarter of 2017 primarily due to a reduction in litigation settlements, including a $126 million litigation payment made in the first quarter of 2016. The decrease in core operating and core free cash flows was primarily attributable to an additional payroll of approximately $40 million, LTAC patient criteria and an increase in net working capital in the first quarter of 2017 compared to the prior year period.

 

    GAAP diluted loss per share from continuing operations was $0.07 as compared to GAAP diluted earnings per share (“EPS”) from continuing operations of $0.15 a year ago. This decrease was primarily attributable to LTAC patient criteria and an increase in restructuring charges in the first quarter of 2017. Core diluted EPS from continuing operations was $0.04 as compared to $0.24 a year ago. The decline in core diluted EPS was primarily attributable to LTAC patient criteria and a $2.3 million, or $0.03 per diluted share, increase in the provision for income taxes due to an accounting rule change effective January 1, 2017 that requires book to tax differences associated with stock-based compensation to be recorded to the provision for income taxes in the statement of operations rather than the statement of stockholders’ equity.

First Quarter Segment Results(1)(2):

Our Kindred at Home Division, which comprises the Company’s home health, hospice, community care and home-based primary care businesses, recorded first quarter revenues that increased 3.9% over the prior year period to $630.2 million. On a same-store basis, home health episodic admissions grew 4.3% (5.4% increase excluding the impact of the extra leap year day in the first quarter of 2016 (“leap year adjusted”)) and hospice admissions grew 3.9% (5.1% increase leap year adjusted) over the prior year period. Both Segment EBITDAR and Core EBITDAR were relatively flat in the first quarter of 2017 compared to the prior year period. On a sequential basis for both Segment EBITDAR and Core EBITDAR, home health direct labor costs per visit declined 3.7% and hospice direct labor costs per patient day were relatively flat in the first quarter of 2017 compared to the fourth quarter of 2016.

Kindred’s Hospital Division first quarter revenues declined to $540.3 million from $643.3 million in the prior year period primarily due to the impact of LTAC patient criteria, a 1.8% decline in same-hospital admissions (0.7% decline leap year adjusted) compared to last year and the sale or closure of 15 LTAC hospitals in the second half of 2016, which contributed approximately $63 million of revenue in the first quarter of 2016. Same-hospital non-government admissions increased 9.1% (10.3% increase leap year adjusted) in the first quarter of 2017 compared to the prior year period. Sequentially, same-hospital admissions increased 4.6%, non-government admissions increased 8.7% and same-hospital census improved 5.0% as compared to the fourth quarter of 2016. For the first quarter of 2017, approximately 86% (90% excluding Texas LTAC hospitals) of same-hospital revenue came from compliant patients, which include all patients except Medicare site neutral patients, down from 89% (92% excluding Texas LTAC hospitals) in the fourth quarter of 2016. Importantly, same-hospital compliant admissions grew 3.9% to 8,401 in the first quarter of 2017 from 8,087 compliant admissions in the fourth quarter of 2016. Segment EBITDAR and Core EBITDAR in the Hospital Division for the first quarter both declined to $91.2 million from $135.5 million a year ago, primarily due to the impact of LTAC patient criteria, increases in labor and other costs, and the sale or closure of 15 LTAC hospitals noted above, which contributed approximately $8 million of EBITDAR in the first quarter of 2016.

 

(1) See reconciliation of GAAP results to non-GAAP results beginning on page 13. During the first quarter of 2017, the Company updated its definitions of “core” non-GAAP measures. See “Non-GAAP Measures” beginning on page 13 for a discussion regarding the updated definitions. For comparability, “core” results for 2016 have been revised to conform to the current year presentation.
(2) See same-hospital and full segment data on pages 8 through 12.

 

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Kindred Healthcare Reports First Quarter 2017 Results

Page 3

May 3, 2017

 

 

First Quarter Segment Results(1)(2)(Continued):

Kindred Rehabilitation Services (“KRS”) Division, which comprises the Company’s hospital-based rehabilitation segment, increased first quarter revenues by 1.8% to $376.8 million as compared to $370.0 million in the prior year period. Segment EBITDAR and Core EBITDAR for KRS both increased 3.6% to $62.0 million as compared to $59.9 million in the prior year period. The Kindred Hospital Rehabilitation Services segment achieved strong revenue growth of 6.7% to $176.8 million, and Segment EBITDAR and Core EBITDAR both grew to $51.4 million, an increase of 7.4% compared to the same period a year ago, as a result of the development of new inpatient rehabilitation facilities (“IRFs”) and a 2.3% increase (3.4% increase leap year adjusted) in same-IRF discharges. RehabCare revenues declined 2.1% to $200.0 million for the first quarter, while first quarter Segment EBITDAR and Core EBITDAR both decreased to $10.6 million as compared to $12.0 million, all relative to the prior year period, primarily due to the reduction in sites of service, declines in customer census and average wage rate pressure. Sequentially, RehabCare Segment EBITDAR and Core EBITDAR grew from $5.6 million in the fourth quarter of 2016 to $10.6 million in the first quarter of 2017.

Kindred’s Nursing Center Division first quarter revenues were up slightly to $272.8 million, due to a 2.2% increase in revenue per patient day partially offset by an overall average daily census decline of 0.9% and Medicare length of stay contraction of 5.3%, both as compared to the prior year period. Segment EBITDAR and Core EBITDAR in the first quarter both increased 5.4% to $31.7 million from $30.1 million a year ago, as a result of an increase in revenue per patient day and improved cost efficiencies.

2017 Outlook(3)

All forward-looking non-GAAP financial measures used to provide “2017 Outlook” and “2018 Outlook” (collectively “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.

The Company’s Outlook does not take into account the effect of any reimbursement changes, any further acquisitions or divestitures, and any further issuances or repurchases of common stock.

For the 2017 Outlook, Kindred reaffirms:

 

    Annual revenues of $7.2 billion, with a range of $7.1 billion to $7.3 billion.

 

    Core EBITDAR of $930 million, with a range of $910 million to $950 million.

 

    Core diluted EPS from continuing operations of $0.55, with a range of $0.40 to $0.70 per share(4).

For the second quarter of 2017, Kindred expects Core EBITDAR of approximately $225 million to $240 million, and Core diluted EPS from continuing operations of approximately $0.10 to $0.20.

The 2017 Outlook assumes the Company’s skilled nursing facility business is operated for the entire year. For accounting purposes, this business may qualify as a discontinued operation prior to the completion of the divestiture. At the time the skilled nursing facility business qualifies as a discontinued operation, the Company will be required to recast its historical operating results from continuing operations to exclude the business for all periods presented. Kindred will also update its 2017 Outlook during the quarter in which the recasting occurs.

 

(1) See reconciliation of GAAP results to non-GAAP results beginning on page 13. During the first quarter of 2017, the Company updated its definitions of “core” non-GAAP measures. See “Non-GAAP Measures” beginning on page 13 for a discussion regarding the updated definitions. For comparability, “core” results for 2016 have been revised to conform to the current year presentation.
(2) See same-hospital and full segment data on pages 8 through 12.
(3) See Forward-Looking Statements beginning on page 13.
(4) The EPS estimate is based upon an estimated weighted average annual diluted share count for 2017 of 88.5 million shares.

 

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Kindred Healthcare Reports First Quarter 2017 Results

Page 4

May 3, 2017

 

 

2018 Outlook(1)

Kindred’s planned divestiture of its skilled nursing facilities will significantly impact the Company’s reported results, reducing revenues and expenses, and is expected to increase profitability.

For the 2018 Outlook, Kindred reaffirms:

 

    Annual revenues of approximately $6.3 billion.

 

    Core EBITDAR of approximately $840 million.

 

    Core diluted EPS from continuing operations of approximately $0.80(2).

Please note that all of these items represent midpoint estimates that the Company expects to update over time, and these estimates assume that Kindred completes its skilled nursing facilities exit prior to the start of 2018.

Cash Flow

Stephen D. Farber, Executive Vice President and Chief Financial Officer of Kindred, noted, “Operating cash flows for the first quarter, which are typically lower than in other quarters of the year, were in line with our expectations, and, as noted above, included the impact of an extra payroll of approximately $40 million compared to the prior year quarter, LTAC patient criteria and typical fluctuations in working capital. As previously discussed, once we complete the sale of our skilled nursing facility business and with our continued progress in 2017 mitigating LTAC patient criteria, we expect Kindred’s cash flow in 2018 to return to historical levels of roughly $300 million per year in core operating cash flows. Core free cash flows, which have been approximately half of core operating cash flows, will benefit from reductions in capital expenditures and noncontrolling interests that will result from our exit from the skilled nursing facility business.”

Conference Call

As previously announced, investors and the general public may access a live webcast of the first quarter 2017 conference call through a link on the Company’s website at http://investors.kindredhealthcare.com. The conference call will be held on May 4 at 9:00 a.m. (Eastern Time).

A telephone replay of the conference call will become available at approximately 12:00 p.m. on May 4 by dialing (719) 457-0820, access code: 8925579. The replay will be available through May 14.

Forward-Looking Statements and Non-GAAP Reconciliations

See page 13 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-90 private employer in the United States, is a FORTUNE 500 healthcare services company based in Louisville, Kentucky with annual revenues of approximately $7.2 billion(3). At March 31, 2017, Kindred through its subsidiaries had approximately 100,100 employees providing healthcare services in 2,624 locations in 46 states, including 82 LTAC hospitals, 19 inpatient rehabilitation hospitals, 91 nursing centers, 19 sub-acute units, 619 Kindred at Home home health, hospice and non-medical home care sites of service, 101 inpatient rehabilitation units (hospital-based) and contract rehabilitation service businesses which served 1,693 non-affiliated sites of service. Ranked as one of Fortune magazine’s Most Admired Healthcare Companies for eight 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 13.
(2) The EPS estimate is based upon an estimated weighted average annual diluted share count for 2018 of 90.0 million shares.
(3) Revenues for the last twelve months ended March 31, 2017.

 

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Kindred Healthcare Reports First Quarter 2017 Results

Page 5

May 3, 2017

 

 

 

KINDRED HEALTHCARE, INC.

Condensed Consolidated Statement of Operations

(Unaudited)

(In thousands, except per share amounts)

 

     Three months ended
March 31,
 
     2017     2016  

Revenues

   $ 1,768,396     $ 1,837,971  
  

 

 

   

 

 

 

Salaries, wages and benefits

     931,880       926,214  

Supplies

     90,186       99,416  

Rent

     95,612       97,517  

Other operating expenses

     205,483       214,701  

General and administrative expenses

     323,236       353,826  

Other income

     (228     (952

Litigation contingency expense

     —         1,910  

Impairment charges

     1,157       7,788  

Restructuring charges

     16,172       1,952  

Depreciation and amortization

     34,960       40,681  

Interest expense

     59,334       57,499  

Investment income

     (527     (254
  

 

 

   

 

 

 
     1,757,265       1,800,298  
  

 

 

   

 

 

 

Income from continuing operations before income taxes

     11,131       37,673  

Provision for income taxes

     2,302       11,836  
  

 

 

   

 

 

 

Income from continuing operations

     8,829       25,837  

Discontinued operations, net of income taxes:

    

Income (loss) from operations

     387       (582

Gain on divestiture of operations

     —         262  
  

 

 

   

 

 

 

Income (loss) from discontinued operations

     387       (320
  

 

 

   

 

 

 

Net income

     9,216       25,517  

(Earnings) loss attributable to noncontrolling interests:

    

Continuing operations

     (14,965     (12,514

Discontinued operations

     1       (2
  

 

 

   

 

 

 
     (14,964     (12,516
  

 

 

   

 

 

 

Income (loss) attributable to Kindred

   $ (5,748   $ 13,001  
  

 

 

   

 

 

 

Amounts attributable to Kindred stockholders:

    

Income (loss) from continuing operations

   $ (6,136   $ 13,323  

Income (loss) from discontinued operations

     388       (322
  

 

 

   

 

 

 

Net income (loss)

   $ (5,748   $ 13,001  
  

 

 

   

 

 

 

Earnings (loss) per common share:

    

Basic:

    

Income (loss) from continuing operations

   $ (0.07   $ 0.15  

Discontinued operations:

    

Income (loss) from operations

     —         —    

Gain on divestiture of operations

     —         —    
  

 

 

   

 

 

 

Income (loss) from discontinued operations

     —         —    
  

 

 

   

 

 

 

Net income (loss)

   $ (0.07   $ 0.15  
  

 

 

   

 

 

 

Diluted:

    

Income (loss) from continuing operations

   $ (0.07   $ 0.15  

Discontinued operations:

    

Income (loss) from operations

     —         —    

Gain on divestiture of operations

     —         —    
  

 

 

   

 

 

 

Income (loss) from discontinued operations

     —         —    
  

 

 

   

 

 

 

Net income (loss)

   $ (0.07   $ 0.15  
  

 

 

   

 

 

 

Shares used in computing earnings (loss) per common share:

    

Basic

     87,085       86,590  

Diluted

     87,085       87,249  

Cash dividends declared and paid per common share

   $ 0.12     $ 0.12  


Kindred Healthcare Reports First Quarter 2017 Results

Page 6

May 3, 2017

 

 

 

KINDRED HEALTHCARE, INC.

Condensed Consolidated Balance Sheet

(Unaudited)

(In thousands, except per share amounts)

 

     March 31,
2017
    December 31,
2016
 
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 116,913     $ 137,061  

Insurance subsidiary investments

     110,872       108,966  

Accounts receivable less allowance for loss

     1,246,855       1,172,078  

Inventories

     24,701       24,673  

Income taxes

     7,776       10,067  

Other

     66,899       63,693  
  

 

 

   

 

 

 
     1,574,016       1,516,538  

Property and equipment

     2,014,453       2,026,430  

Accumulated depreciation

     (1,158,911     (1,147,844
  

 

 

   

 

 

 
     855,542       878,586  

Goodwill

     2,427,074       2,427,074  

Intangible assets less accumulated amortization

     783,020       790,235  

Insurance subsidiary investments

     201,115       204,929  

Other

     303,842       295,362  
  

 

 

   

 

 

 

Total assets

   $ 6,144,609     $ 6,112,724  
  

 

 

   

 

 

 
LIABILITIES AND EQUITY     

Current liabilities:

    

Accounts payable

   $ 179,151     $ 203,925  

Salaries, wages and other compensation

     378,805       397,486  

Due to third party payors

     34,481       41,320  

Professional liability risks

     66,073       65,284  

Other accrued liabilities

     241,387       269,736  

Long-term debt due within one year

     24,828       27,977  
  

 

 

   

 

 

 
     924,725       1,005,728  

Long-term debt

     3,344,511       3,215,062  

Professional liability risks

     300,773       295,311  

Deferred tax liabilities

     202,867       201,808  

Deferred credits and other liabilities

     354,277       353,294  

Equity:

    

Stockholders’ equity:

    

Common stock, $0.25 par value; authorized 175,000 shares; issued 85,691 shares - March 31, 2017 and 85,166 shares - December 31, 2016

     21,423       21,291  

Capital in excess of par value

     1,700,748       1,710,231  

Accumulated other comprehensive income

     3,444       1,573  

Accumulated deficit

     (926,292     (920,544
  

 

 

   

 

 

 
     799,323       812,551  

Noncontrolling interests

     218,133       228,970  
  

 

 

   

 

 

 

Total equity

     1,017,456       1,041,521  
  

 

 

   

 

 

 

Total liabilities and equity

   $ 6,144,609     $ 6,112,724  
  

 

 

   

 

 

 


Kindred Healthcare Reports First Quarter 2017 Results

Page 7

May 3, 2017

 

 

 

KINDRED HEALTHCARE, INC.

Condensed Consolidated Statement of Cash Flows

(Unaudited)

(In thousands)

 

     Three months ended
March 31,
 
     2017     2016  

Cash flows from operating activities:

    

Net income

   $ 9,216     $ 25,517  

Adjustments to reconcile net income to net cash used in operating activities:

    

Depreciation expense

     30,300       33,957  

Amortization of intangible assets

     4,660       6,826  

Amortization of stock-based compensation costs

     3,132       4,404  

Amortization of deferred financing costs

     4,132       3,567  

Payment of lender fees related to debt amendment

     (5,403     —    

Provision for doubtful accounts

     11,218       11,725  

Deferred income taxes

     1,227       11,496  

Impairment charges

     1,157       7,788  

Gain on divestiture of discontinued operations

     —         (262

Other

     6,050       303  

Change in operating assets and liabilities:

    

Accounts receivable

     (85,833     (87,892

Inventories and other assets

     (4,457     (5,232

Accounts payable

     (24,497     (10,621

Income taxes

     2,291       146  

Due to third party payors

     (6,839     (4,843

Other accrued liabilities

     (38,992     (127,219
  

 

 

   

 

 

 

Net cash used in operating activities

     (92,638     (130,340
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Routine capital expenditures

     (11,941     (18,106

Development capital expenditures

     (5,439     (10,019

Acquisitions, net of cash acquired

     (3,150     (26,339

Acquisition deposits

     —         18,489  

Sale of assets

     —         1,081  

Purchase of insurance subsidiary investments

     (22,308     (32,841

Sale of insurance subsidiary investments

     18,699       30,890  

Net change in insurance subsidiary cash and cash equivalents

     6,412       9,958  

Net change in other investments

     29       (33,981

Other

     154       (1,919
  

 

 

   

 

 

 

Net cash used in investing activities

     (17,544     (62,787
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from borrowings under revolving credit

     478,600       533,700  

Repayment of borrowings under revolving credit

     (343,400     (303,100

Proceeds from other long-term debt

     —         750  

Repayment of term loan

     (3,509     (3,003

Repayment of other long-term debt

     (284     (280

Payment of deferred financing costs

     (79     (151

Payment of dividend for mandatory redeemable preferred stock

     (3,010     (2,801

Dividends paid

     (10,228     (10,068

Contributions made by noncontrolling interests

     —         4,368  

Distributions to noncontrolling interests

     (25,801     (16,315

Purchase of noncontrolling interests

     —         (1,000

Payroll tax payments for equity awards issuance

     (2,255     (2,649
  

 

 

   

 

 

 

Net cash provided by financing activities

     90,034       199,451  
  

 

 

   

 

 

 

Change in cash and cash equivalents

     (20,148     6,324  

Cash and cash equivalents at beginning of period

     137,061       98,758  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 116,913     $ 105,082  
  

 

 

   

 

 

 


Kindred Healthcare Reports First Quarter 2017 Results

Page 8

May 3, 2017

 

 

 

KINDRED HEALTHCARE, INC.

Condensed Consolidated and Business Segment Data

(Unaudited)

(In thousands, except per share amounts)

 

     2016 Quarters          

First

Quarter

   

First quarter

% change v.

 
     First     Second     Third     Fourth     Year     2017     prior year  

Condensed consolidated income statement data:

              

GAAP presentation:

              

Revenues

   $ 1,837,971     $ 1,842,070     $ 1,793,527     $ 1,745,951     $ 7,219,519     $ 1,768,396       (3.8

Operating expenses

     1,604,855       1,591,898       1,986,221       1,558,329       6,741,303       1,567,886       (2.3

Rent

     97,517       100,093       98,415       94,509       390,534       95,612       (2.0

Depreciation and amortization

     40,681       40,257       40,382       38,082       159,402       34,960       (14.1

Interest, net

     57,245       57,559       58,052       58,629       231,485       58,807       2.7  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Income (loss) from continuing operations before income taxes

     37,673       52,263       (389,543     (3,598     (303,205     11,131       (70.5

Provision (benefit) for income taxes

     11,836       17,882       281,752       2,860       314,330       2,302       (80.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Income (loss) from continuing operations

     25,837       34,381       (671,295     (6,458     (617,535     8,829       (65.8

Noncontrolling interests

     (12,514     (13,522     (14,305     (13,261     (53,602     (14,965     19.6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Net income (loss) attributable to Kindred

   $ 13,323     $ 20,859     $ (685,600   $ (19,719   $ (671,137   $ (6,136     (146.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Diluted EPS

   $ 0.15     $ 0.23     $ (7.89   $ (0.23   $ (7.73   $ (0.07     (146.7

Diluted shares

     87,249       87,500       86,869       86,904       86,800       87,085       (0.2

Core presentation (a):

              

EBITDAR

   $ 245,209     $ 267,543     $ 217,596     $ 214,928     $ 945,276     $ 217,839       (11.2

Rent

     97,517       100,093       98,143       94,509       390,262       95,612       (2.0

Provision for income taxes

     16,013       21,335       3,901       3,262       44,511       9,837       (38.6

Net income attributable to Kindred

     21,239       33,761       2,525       7,185       64,710       3,658       (82.8

Core diluted EPS

   $ 0.24     $ 0.38     $ 0.03     $ 0.08     $ 0.72     $ 0.04       (83.3

Diluted shares

     87,249       87,500       87,529       87,641       87,491       87,744       0.6  

Revenues by segment:

              

Kindred at Home:

              

Home health

   $ 430,035     $ 438,556     $ 449,958     $ 444,073     $ 1,762,622     $ 450,831       4.8  

Hospice

     176,426       185,641       188,575       186,161       736,803       179,378       1.7  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   
     606,461       624,197       638,533       630,234       2,499,425       630,209       3.9  

Hospital division

     643,299       633,695       575,323       530,746       2,383,063       540,280       (16.0

Kindred Rehabilitation Services:

              

Kindred Hospital Rehabilitation Services

     165,774       169,815       169,018       170,041       674,648       176,812       6.7  

RehabCare

     204,248       196,075       192,480       191,489       784,292       200,031       (2.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   
     370,022       365,890       361,498       361,530       1,458,940       376,843       1.8  

Nursing center division

     272,227       272,395       270,259       273,055       1,087,936       272,845       0.2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   
     1,892,009       1,896,177       1,845,613       1,795,565       7,429,364       1,820,177       (3.8

Eliminations

     (54,038     (54,107     (52,086     (49,614     (209,845     (51,781     (4.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   
   $ 1,837,971     $ 1,842,070     $ 1,793,527     $ 1,745,951     $ 7,219,519     $ 1,768,396       (3.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

(a) See reconciliation of GAAP results to non-GAAP results beginning on page 13. During the first quarter of 2017, the Company updated its definitions of “core” non-GAAP measures. See “Non-GAAP Measures” beginning on page 13 for a discussion regarding the updated definitions. For comparability, “core” results for 2016 have been revised to conform to the current year presentation.


Kindred Healthcare Reports First Quarter 2017 Results

Page 9

May 3, 2017

 

 

 

KINDRED HEALTHCARE, INC.

Condensed Consolidated and Business Segment Data (Continued)

(Unaudited)

(In thousands, except statistics)

 

     2016 Quarters          

First

Quarter

   

First quarter

% change v.

 
     First     Second     Third     Fourth     Year     2017     prior year  

Segment EBITDAR:

              

Kindred at Home:

              

Home health

   $ 66,941     $ 76,030     $ 75,073     $ 61,487     $ 279,531     $ 63,750       (4.8

Hospice

     24,866       31,329       31,326       28,805       116,326       27,581       10.9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   
     91,807       107,359       106,399       90,292       395,857       91,331       (0.5

Hospital division

     135,495       125,932       82,752       91,892       436,071       91,169       (32.7

Kindred Rehabilitation Services:

              

Kindred Hospital Rehabilitation Services

     47,870       50,469       49,470       49,314       197,123       51,403       7.4  

RehabCare

     11,987       13,269       9,248       5,578       40,082       10,609       (11.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   
     59,857       63,738       58,718       54,892       237,205       62,012       3.6  

Nursing center division

     30,100       33,662       29,922       33,658       127,342       31,718       5.4  

Core EBITDAR by segment (a):

              

Kindred at Home:

              

Home health

   $ 65,803     $ 75,859     $ 75,073     $ 61,185     $ 277,920     $ 63,750       (3.1

Hospice

     24,866       31,329       31,326       27,668       115,189       27,581       10.9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   
     90,669       107,188       106,399       88,853       393,109       91,331       0.7  

Hospital division

     135,495       125,932       82,752       91,262       435,441       91,169       (32.7

Kindred Rehabilitation Services:

              

Kindred Hospital Rehabilitation Services

     47,870       50,469       49,470       49,314       197,123       51,403       7.4  

RehabCare

     11,987       13,269       9,248       5,578       40,082       10,609       (11.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   
     59,857       63,738       58,718       54,892       237,205       62,012       3.6  

Nursing center division

     30,100       33,662       29,922       33,658       127,342       31,718       5.4  

Support center

     (69,945     (62,625     (58,463     (53,350     (244,383     (58,391     (16.5

Litigation contingency expense

     (885     (180     —         —         (1,065     —      

Transaction costs

     (82     (172     (1,732     (387     (2,373     —      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   
   $ 245,209     $ 267,543     $ 217,596     $ 214,928     $ 945,276     $ 217,839       (11.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

EBITDAR margin by segment:

              

Kindred at Home:

              

Home health

     15.6       17.3       16.7       13.8       15.9       14.1       (1.5

Hospice

     14.1       16.9       16.6       15.5       15.8       15.4       1.3  

Kindred at Home

     15.1       17.2       16.7       14.3       15.8       14.5       (0.6

Hospital division

     21.1       19.9       14.4       17.3       18.3       16.9       (4.2

Kindred Rehabilitation Services:

              

Kindred Hospital Rehabilitation Services

     28.9       29.7       29.3       29.0       29.2       29.1       0.2  

RehabCare

     5.9       6.8       4.8       2.9       5.1       5.3       (0.6

Kindred Rehabilitation Services

     16.2       17.4       16.2       15.2       16.3       16.5       0.3  

Nursing center division

     11.1       12.4       11.1       12.3       11.7       11.6       0.5  

Core EBITDAR margin by segment (a):

              

Kindred at Home:

              

Home health

     15.3       17.3       16.7       13.8       15.8       14.1       (1.2

Hospice

     14.1       16.9       16.6       14.9       15.6       15.4       1.3  

Kindred at Home

     15.0       17.2       16.7       14.1       15.7       14.5       (0.5

Hospital division

     21.1       19.9       14.4       17.2       18.3       16.9       (4.2

Kindred Rehabilitation Services:

              

Kindred Hospital Rehabilitation Services

     28.9       29.7       29.3       29.0       29.2       29.1       0.2  

RehabCare

     5.9       6.8       4.8       2.9       5.1       5.3       (0.6

Kindred Rehabilitation Services

     16.2       17.4       16.2       15.2       16.3       16.5       0.3  

Nursing center division

     11.1       12.4       11.1       12.3       11.7       11.6       0.5  

Consolidated

     13.3       14.5       12.1       12.3       13.1       12.3       (1.0

 

(a) See reconciliation of GAAP results to non-GAAP results beginning on page 13. During the first quarter of 2017, the Company updated its definitions of “core” non-GAAP measures. See “Non-GAAP Measures” beginning on page 13 for a discussion regarding the updated definitions. For comparability, “core” results for 2016 have been revised to conform to the current year presentation.


Kindred Healthcare Reports First Quarter 2017 Results

Page 10

May 3, 2017

 

 

 

KINDRED HEALTHCARE, INC.

Condensed Business Segment Data

(Unaudited)

 

    2016 Quarters          

First

Quarter

   

First quarter

% change v.

 
    First     Second     Third     Fourth     Year     2017     prior year  

Kindred at Home:

             

Home Health:

             

Sites of service (at end of period)

    384       384       395       390         379    

Revenue mix %:

             

Medicare

    79.8       79.3       78.1       77.9       78.8       76.7    

Medicaid

    2.1       2.1       2.5       1.9       2.1       1.7    

Commercial and other

    8.4       8.2       8.6       10.6       8.9       11.5    

Commercial paid at episodic rates

    9.7       10.4       10.8       9.6       10.2       10.1    

Episodic revenues ($ 000s)

  $ 325,821     $ 332,193     $ 332,562     $ 323,398     $ 1,313,974     $ 326,881       0.3  

Total episodic admissions

    71,426       70,212       69,219       67,501       278,358       73,270       2.6  

Same-store total episodic admissions

    65,485       64,326       63,529       62,132       255,472       68,278       4.3  

Medicare episodic admissions

    62,011       60,730       59,823       59,540       242,104       62,404       0.6  

Total episodes

    113,887       113,278       113,256       111,164       451,585       114,964       0.9  

Episodes per admission

    1.59       1.61       1.64       1.65       1.62       1.57       (1.3

Revenue per episode

  $ 2,861     $ 2,933     $ 2,936     $ 2,909     $ 2,910     $ 2,843       (0.6

Hospice:

             

Sites of service (at end of period)

    177       177       185       183         180    

Admissions

    13,234       13,149       12,916       12,660       51,959       13,649       3.1  

Same-store admissions

    12,387       12,365       12,104       11,946       48,802       12,870       3.9  

Average length of stay

    92       91       98       100       95       96       4.3  

Patient days

    1,183,908       1,238,584       1,277,125       1,246,152       4,945,769       1,193,061       0.8  

Average daily census

    13,010       13,611       13,882       13,545       13,513       13,256       1.9  

Revenue per patient day

  $ 149     $ 150     $ 148     $ 149     $ 149     $ 150       0.7  

Community Care and other revenues (included in Home Health business segment) ($ 000s)

  $ 66,305     $ 68,229     $ 75,978     $ 74,875     $ 285,387     $ 74,095       11.7  

Hospital division:

             

End of period data:

             

Number of transitional care hospitals

    95       97       94       82         82    

Number of licensed beds

    7,089       7,067       6,890       6,107         6,107    

Revenue mix %:

             

Medicare

    57.8       55.5       54.6       53.5       55.5       52.8    

Medicaid

    4.2       4.2       4.0       4.5       4.2       3.9    

Medicare Advantage

    11.5       12.0       12.1       11.0       11.7       12.2    

Medicaid Managed

    5.6       6.3       7.3       8.0       6.7       9.1    

Commercial insurance and other

    20.9       22.0       22.0       23.0       21.9       22.0    

Admissions:

             

Medicare

    8,919       8,253       7,861       7,351       32,384       7,529       (15.6

Medicaid

    463       386       375       336       1,560       354       (23.5

Medicare Advantage

    1,453       1,382       1,327       1,210       5,372       1,354       (6.8

Medicaid Managed

    733       768       861       787       3,149       851       16.1  

Commercial insurance and other

    1,871       1,807       1,727       1,488       6,893       1,614       (13.7
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   
    13,439       12,596       12,151       11,172       49,358       11,702       (12.9
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Patient days:

             

Medicare

    229,004       219,013       202,482       186,290       836,789       187,738       (18.0

Medicaid

    21,134       19,409       16,781       12,181       69,505       13,334       (36.9

Medicare Advantage

    45,760       47,697       43,241       37,526       174,224       41,020       (10.4

Medicaid Managed

    25,341       27,267       28,534       29,275       110,417       32,713       29.1  

Commercial insurance and other

    62,769       63,009       59,856       54,148       239,782       53,695       (14.5
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   
    384,008       376,395       350,894       319,420       1,430,717       328,500       (14.5
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Average length of stay:

             

Medicare

    25.7       26.5       25.8       25.3       25.8       24.9       (3.1

Medicaid

    45.6       50.3       44.7       36.3       44.6       37.7       (17.3

Medicare Advantage

    31.5       34.5       32.6       31.0       32.4       30.3       (3.8

Medicaid Managed

    34.6       35.5       33.1       37.2       35.1       38.4       11.0  

Commercial insurance and other

    33.5       34.9       34.7       36.4       34.8       33.3       (0.6

Weighted average

    28.6       29.9       28.9       28.6       29.0       28.1       (1.7

Revenues per admission:

             

Medicare

  $ 41,717     $ 42,579     $ 39,945     $ 38,602     $ 40,800     $ 37,867       (9.2

Medicaid

    57,928       69,797       61,338       70,333       64,356       60,091       3.7  

Medicare Advantage

    51,080       55,105       52,363       48,387       51,826       48,555       (4.9

Medicaid Managed

    49,287       51,696       48,631       54,238       50,932       57,736       17.1  

Commercial insurance and other

    71,651       77,193       73,515       82,066       75,819       73,750       2.9  

Weighted average

    47,868       50,309       47,348       47,507       48,281       46,170       (3.5

Revenues per patient day:

             

Medicare

  $ 1,625     $ 1,605     $ 1,551     $ 1,523     $ 1,579     $ 1,519       (6.5

Medicaid

    1,269       1,388       1,371       1,940       1,444       1,595       25.7  

Medicare Advantage

    1,622       1,597       1,607       1,560       1,598       1,603       (1.2

Medicaid Managed

    1,426       1,456       1,467       1,458       1,453       1,502       5.3  

Commercial insurance and other

    2,136       2,214       2,121       2,255       2,180       2,217       3.8  

Weighted average

    1,675       1,684       1,640       1,662       1,666       1,645       (1.8

Medicare case mix index (discharged patients only)

    1.163       1.179       1.172       1.153       1.169       1.172       0.8  

Average daily census

    4,220       4,136       3,814       3,472       3,909       3,650       (13.5

Occupancy %

    68.0       67.5       61.6       64.1       65.1       67.6       (0.6


Kindred Healthcare Reports First Quarter 2017 Results

Page 11

May 3, 2017

 

 

 

KINDRED HEALTHCARE, INC.

Condensed Business Segment Data (Continued)

(Unaudited)

 

     2016 Quarters             First
Quarter
    

First quarter

% change v.

 
     First      Second      Third      Fourth      Year      2017      prior year  

Same-hospital data (a):

                    

End of period data:

                    

Number of transitional care hospitals

     78        78        78        78           78     

Number of licensed beds

     5,960        5,960        5,960        5,960           5,960     

Revenues

   $ 563,201      $ 557,989      $ 508,608      $ 521,244      $ 2,151,042      $ 528,994        (6.1

Revenue mix %:

                    

Medicare

     58.0        55.4        54.1        53.0        55.2        52.3     

Medicaid

     3.7        3.9        3.7        4.5        3.9        4.1     

Medicare Advantage

     11.3        11.7        12.3        11.0        11.6        12.1     

Medicaid Managed

     5.8        6.6        7.8        8.2        7.1        9.3     

Commercial insurance and other

     21.2        22.4        22.1        23.3        22.2        22.2     

Admissions:

                    

Medicare

     7,802        7,209        6,882        7,132        29,025        7,319        (6.2

Medicaid

     395        342        343        336        1,416        354        (10.4

Medicare Advantage

     1,219        1,148        1,165        1,187        4,719        1,315        7.9  

Medicaid Managed

     632        702        792        787        2,913        849        34.3  

Commercial insurance and other

     1,567        1,528        1,462        1,456        6,013        1,566        (0.1
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    
     11,615        10,929        10,644        10,898        44,086        11,403        (1.8
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Patient days:

                    

Medicare

     200,004        190,955        177,079        180,794        748,832        182,442        (8.8

Medicaid

     14,670        13,547        12,085        12,175        52,477        13,587        (7.4

Medicare Advantage

     38,617        40,835        38,462        36,900        154,814        39,924        3.4  

Medicaid Managed

     22,421        24,893        26,698        29,284        103,296        32,701        45.8  

Commercial insurance and other

     53,613        53,821        51,772        53,391        212,597        52,473        (2.1
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    
     329,325        324,051        306,096        312,544        1,272,016        321,127        (2.5
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Average length of stay:

                    

Medicare

     25.6        26.5        25.7        25.3        25.8        24.9        (2.7

Medicaid

     37.1        39.6        35.2        36.2        37.1        38.4        3.5  

Medicare Advantage

     31.7        35.6        33.0        31.1        32.8        30.4        (4.1

Medicaid Managed

     35.5        35.5        33.7        37.2        35.5        38.5        8.5  

Commercial insurance and other

     34.2        35.2        35.4        36.7        35.4        33.5        (2.0

Weighted average

     28.4        29.7        28.8        28.7        28.9        28.2        (0.7

Revenues per admission:

                    

Medicare

   $ 41,876      $ 42,883      $ 39,959      $ 38,720      $ 40,896      $ 37,829        (9.7

Medicaid

     53,232        62,945        54,765        70,288        59,996        61,194        15.0  

Medicare Advantage

     51,955        57,112        53,701        48,440        52,757        48,690        (6.3

Medicaid Managed

     51,511        52,419        50,027        54,286        52,076        57,871        12.3  

Commercial insurance and other

     76,305        81,779        77,047        83,278        79,565        74,905        (1.8

Weighted average

     48,489        51,056        47,784        47,829        48,792        46,391        (4.3

Revenues per patient day:

                    

Medicare

   $ 1,634      $ 1,619      $ 1,553      $ 1,527      $ 1,585      $ 1,518        (7.1

Medicaid

     1,433        1,589        1,554        1,940        1,619        1,594        11.2  

Medicare Advantage

     1,640        1,606        1,627        1,558        1,608        1,604        (2.2

Medicaid Managed

     1,452        1,478        1,484        1,459        1,469        1,502        3.4  

Commercial insurance and other

     2,230        2,322        2,176        2,271        2,250        2,235        0.2  

Weighted average

     1,710        1,722        1,662        1,668        1,691        1,647        (3.7

Average daily census

     3,619        3,561        3,327        3,397        3,475        3,568        (1.4

 

(a) All historical statistics have been adjusted to present the ongoing hospital division portfolio excluding four hospitals acquired during the second quarter of 2016. See reconciliation of same-hospital revenues to reported revenues for the Hospital Division on page 16.


Kindred Healthcare Reports First Quarter 2017 Results

Page 12

May 3, 2017

 

 

 

KINDRED HEALTHCARE, INC.

Condensed Business Segment Data (Continued)

(Unaudited)

 

     2016 Quarters             First
Quarter
     First quarter
% change v.
 
     First      Second      Third      Fourth      Year      2017      prior year  

Kindred Rehabilitation Services:

                    

Kindred Hospital Rehabilitation Services:

                    

Freestanding IRFs:

                    

End of period data:

                    

Number of IRFs

     19        19        19        19           19     

Number of licensed beds

     969        969        969        995           995     

Discharges (a)

     4,448        4,646        4,644        4,671        18,409        4,775        7.4  

Same-hospital discharges (a)

     4,295        4,535        4,546        4,538        17,914        4,393        2.3  

Occupancy % (a)

     70.6        70.6        68.8        66.5        69.1        71.4        1.1  

Average length of stay (a)

     13.2        12.9        12.7        12.6        12.8        12.8        (3.0

Revenue per discharge (a)

   $ 19,731      $ 19,318      $ 19,599      $ 19,486      $ 19,531      $ 20,097        1.9  

Contract services:

                    

Sites of service (at end of period):

                    

Inpatient rehabilitation units

     104        105        104        102           101     

LTAC hospitals

     119        121        120        119           119     

Sub-acute units

     7        7        7        5           7     

Outpatient units

     139        138        139        132           129     
  

 

 

    

 

 

    

 

 

    

 

 

       

 

 

    
     369        371        370        358           356     
  

 

 

    

 

 

    

 

 

    

 

 

       

 

 

    

Revenue per site

   $ 211,417      $ 215,798      $ 210,810      $ 220,733      $ 858,758      $ 227,100        7.4  

RehabCare:

                    

Sites of service (at end of period)

     1,767        1,759        1,754        1,718           1,703     

Revenue per site

   $ 115,590      $ 111,470      $ 109,738      $ 111,460      $ 448,258      $ 117,458        1.6  

Nursing center division:

                    

End of period data:

                    

Number of nursing centers

     92        92        91        91           91     

Number of licensed beds

     11,815        11,815        11,568        11,568           11,568     

Admissions (b)

     9,815        9,480        9,698        9,409        38,402        9,787        (0.3

Medicare average length of stay (b)

     28.2        28.4        27.4        26.7        27.7        26.7        (5.3

Patient days (b)

     846,578        842,681        845,037        846,361        3,380,657        829,970        (2.0

Revenues per patient day (b)

   $ 322      $ 323      $ 320      $ 323      $ 322      $ 329        2.2  

Average daily census (b)

     9,303        9,260        9,185        9,200        9,237        9,222        (0.9

Occupancy % (b)

     77.3        76.7        77.5        77.9        77.4        78.1        1.0  

 

(a) Excludes non-consolidating IRF.
(b) Excludes managed facilities.


Kindred Healthcare Reports First Quarter 2017 Results

Page 13

May 3, 2017

 

 

 

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 include, but are not limited to, all statements regarding the Company’s ability to exit the skilled nursing facility business and the expected timing of such exit, as well as the Company’s ability to realize the anticipated benefits, sale proceeds, cost savings and strategic gains from this initiative, all statements regarding the Company’s expected future financial position, results of operations, cash flows, dividends, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management, government investigations, regulatory matters, and statements containing words such as “anticipate,” “approximate,” “believe,” “plan,” “estimate,” “expect,” “project,” “could,” “would,” “should,” “will,” “intend,” “hope,” “may,” “potential,” “upside,” and other similar expressions. Statements in this earnings release concerning the Company’s business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends or other financial items, and product or services line growth, and expected outcome of government investigations and other regulatory matters, together with other statements that are not historical facts, are forward-looking statements that are estimates reflecting the best judgment of the Company based upon currently available information.

Such forward-looking statements are inherently uncertain, and stockholders and other potential investors must recognize that actual results may differ materially from the Company’s expectations as a result of a variety of factors. 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. 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 Securities and Exchange Commission (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 to compute certain non-GAAP measures. The use of these non-GAAP measures are 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 updated its definitions of “core” non-GAAP measures as a result of the Company’s continued review of its presentation of non-GAAP measures in response to the guidance issued by the SEC in May 2016. As updated, the Company’s core non-GAAP measures, including core net income attributable to Kindred, core EBITDAR, 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 have been revised to conform to the current year presentation.

EBITDAR: The Company defines EBITDAR as earnings before interest, income taxes, depreciation, amortization and rent, and believes that the presentation of EBITDAR is useful to the investors because creditors, securities analysts and investors use EBITDAR as a measure of earnings used to compare the performance of companies in the healthcare industry before consideration of the capital structure of fixed assets and financing costs, which can vary significantly among companies.

For each of the Company’s segments, EBITDAR 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 EBITDAR as earnings before interest, income taxes, depreciation, amortization, and rent, excluding litigation contingency expense, impairment charges, restructuring charges, transaction costs, and the allocation of support center overhead.


Kindred Healthcare Reports First Quarter 2017 Results

Page 14

May 3, 2017

 

 

 

Non-GAAP Measures (Continued)

Core Operating Results: The Company calculates core operating results, including core net income attributable to Kindred, core EBITDAR 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, 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 attributable to Kindred, core EBITDAR and core diluted EPS as measures of operational performance that are meaningful to investors, and for the measurement of internal incentive compensation goals, in addition to other measures. The Company uses these measures to assess the relative performance and attainment of internal incentive compensation goals 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 four hospitals acquired in 2016, 15 hospitals sold in 2016, three hospitals that closed during 2016, and two hospitals that closed during 2015. 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 EBITDAR, core net income attributable to Kindred, and core EBITDAR, 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 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 Reports First Quarter 2017 Results

Page 15

May 3, 2017

 

 

 

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 March 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 valuation allowance for the three months ended March 31, 2017, was calculated using an effective income tax rate of 43.5% and 34.5% for the three months ended March 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 deferred tax valuation allowance.

 

     Three months ended
March 31,
 
     2017     2016  

Reconciliation of income from continuing operations before charges:

    

As reported:

    

Income (loss) from continuing operations attributable to Kindred

     ($6,136     $13,323  

Diluted income (loss) per common share from continuing operations

     ($0.07     $0.15  

Weighted average diluted shares outstanding

     87,085       87,249  

Detail of charges:

    

Restructuring charges:

    

Facility/branch divestitures and closings

     ($5,487     ($341

Retention and severance costs

     (8,548     (924

Transaction costs

     (232     (436
  

 

 

   

 

 

 
     (14,267     (1,701

Lease termination costs (charged to rent restructuring charges)

     (1,905     (251

Impairment charges

     (1,157     (7,788

Research and development

     —         (863

Litigation contingency expense

     —         (1,025

Business interruption settlements

     —         1,138  

Gentiva transaction costs:

    

Professional and consulting fees

     —         (1,048

Severance and retention

     —         (555
  

 

 

   

 

 

 
     (17,329     (12,093

Income tax benefit

     6,819       4,177  

Deferred tax valuation allowance

     716       —    
  

 

 

   

 

 

 

Charges net of income taxes

     (9,794     (7,916

Allocation to participating unvested restricted stockholders

     —         117  
  

 

 

   

 

 

 

Available to common stockholders

     ($9,794     ($7,799
  

 

 

   

 

 

 

Diluted loss per common share related to charges

     ($0.11     ($0.09

Weighted average diluted shares outstanding

     87,744       87,249  

Core:

    

Income from continuing operations attributable to Kindred before charges

     $3,658       $21,239  

Diluted earnings per common share from continuing operations before charges (a)

     $0.04       $0.24  

Weighted average diluted shares outstanding used to compute earnings per common share from continuing operations before charges

     87,744       87,249  

Reconciliation of effective income tax rate before charges:

    

Effective income tax rate before charges

     34.6     32.2

Impact of charges on effective income tax rate

     -13.9     -0.8
  

 

 

   

 

 

 

Reported effective income tax rate

     20.7     31.4
  

 

 

   

 

 

 

 

(a) For purposes of computing diluted earnings per common share before charges, income from continuing operations before charges was reduced by $0.1 million and $0.3 million for the three months ended March 31, 2017 and 2016, respectively, for the allocation of income to participating unvested restricted stockholders.


Kindred Healthcare Reports First Quarter 2017 Results

Page 16

May 3, 2017

 

 

 

KINDRED HEALTHCARE, INC.

Reconciliation of GAAP Results to Non-GAAP Measures (Continued)

(Unaudited)

(In thousands)

Home health revenues (excluding community care) for each historical period follows:

 

     2016 Quarters           First
Quarter
2017
    First quarter
% change v.
prior year
 
     First     Second     Third     Fourth     Year      

Kindred

   $ 363,730     $ 370,327     $ 373,980     $ 369,198     $ 1,477,235     $ 376,736       3.6  

 

A reconciliation of reported revenues to same-hospital revenues for the Hospital Division for each historical period follows:

 

 

     2016 Quarters           First
Quarter
2017
    First quarter
% change v.
prior year
 
     First     Second     Third     Fourth     Year      

Reported revenues

   $ 643,299     $ 633,695     $ 575,323     $ 530,746     $ 2,383,063     $ 540,280       (16.0

Hospitals acquired during 2016 (a)

     —         (2,836     (10,655     (9,958     (23,449     (11,717  

Hospitals sold during 2016 (b)

     (71,941     (64,084     (47,098     732       (182,391     449    

Hospitals closed during 2016 (c)

     (8,271     (8,864     (8,908     (183     (26,226     (32  

Hospitals closed during 2015 (d)

     114       78       (54     (93     45       14    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Same-hospital revenues

   $ 563,201     $ 557,989     $ 508,608     $ 521,244     $ 2,151,042     $ 528,994       (6.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

(a) Four 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) Three hospitals closed during the third quarter of 2016.
(d) One hospital closed during the second quarter of 2015 and one hospital closed during the third quarter of 2015.


Kindred Healthcare Reports First Quarter 2017 Results

Page 17

May 3, 2017

 

 

 

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         
     As
reported
    Impairment
charges
     Restructuring
charges
     Deferred
tax
valuation
allowance
    Total      Before
charges
(“core”) (a)
 

Income (loss) from continuing operations:

               

Segment EBITDAR:

               

Kindred at Home:

               

Home health

   $ 63,750     $ —        $ —        $ —       $ —        $ 63,750  

Hospice

     27,581       —          —          —         —          27,581  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 
     91,331       —          —          —         —          91,331  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Hospital division

     91,169       —          —          —         —          91,169  

Kindred Rehabilitation Services:

               

Kindred Hospital Rehabilitation Services

     51,403       —          —          —         —          51,403  

RehabCare

     10,609       —          —          —         —          10,609  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 
     62,012       —          —          —         —          62,012  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Nursing center division

     31,718       —          —          —         —          31,718  

Support center

     (58,391     —          —          —         —          (58,391

Impairment charges

     (1,157     1,157        —          —         1,157        —    

Restructuring charges

     (14,267     —          14,267        —         14,267        —    
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

EBITDAR

     202,415       1,157        14,267        —         15,424        217,839  

Rent

     (95,612     —          —          —         —          (95,612

Restructuring charges - rent

     (1,905     —          1,905        —         1,905        —    

Depreciation and amortization

     (34,960     —          —          —         —          (34,960

Interest, net

     (58,807     —          —          —         —          (58,807
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Income from continuing operations before income taxes

     11,131       1,157        16,172        —         17,329        28,460  

Provision for income taxes

     2,302       455        6,364        716       7,535        9,837  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 
     8,829     $ 702      $ 9,808      $ (716   $ 9,794        18,623  
    

 

 

    

 

 

    

 

 

   

 

 

    

Noncontrolling interests

     (14,965                (14,965
  

 

 

              

 

 

 

Income (loss) attributable to Kindred

   $ (6,136              $ 3,658  
  

 

 

              

 

 

 

Diluted earnings (loss) per common share

   $ (0.07              $ 0.04  

Diluted shares used in computing earnings (loss) per common share

     87,085                  87,744  

 

    Three months ended March 31, 2016  
          Charges        
    As
reported
    Business
interruption
settlements
    Litigation
contingency
    Impairment
charges
    Research and
development
    Restructuring
charges
    Gentiva
transaction
and
integration
    Total     Before
charges
(“core”) (a)
 

Income from continuing operations:

                 

Segment EBITDAR:

                 

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

    135,495       —         —         —         —         —         —         —         135,495  

Kindred Rehabilitation Services:

                 

Kindred Hospital Rehabilitation Services

    47,870       —         —         —         —         —         —         —         47,870  

RehabCare

    11,987       —         —         —         —         —         —         —         11,987  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    59,857       —         —         —         —         —         —         —         59,857  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nursing center division

    30,100       —         —         —         —         —         —         —         30,100  

Support center

    (70,808     —         —         —         863       —         —         863       (69,945

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
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDAR

    233,367       (1,138     1,025       7,788       863       1,701       1,603       11,842       245,209  

Rent

    (97,517     —         —         —         —         —         —         —         (97,517

Restructuring charges - rent

    (251     —         —         —         —         251       —         251       —    

Depreciation and amortization

    (40,681     —         —         —         —         —         —         —         (40,681

Interest, net

    (57,245     —         —         —         —         —         —         —         (57,245
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before income taxes

    37,673       (1,138     1,025       7,788       863       1,952       1,603       12,093       49,766  

Provision for income taxes

    11,836       (393     354       2,690       298       674       554       4,177       16,013  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    25,837     $ (745   $ 671     $ 5,098     $ 565     $ 1,278     $ 1,049     $ 7,916       33,753  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Noncontrolling interests

    (12,514                   (12,514
 

 

 

                 

 

 

 

Income attributable to Kindred

  $ 13,323                   $ 21,239  
 

 

 

                 

 

 

 

Diluted earnings per common share

  $ 0.15                   $ 0.24  

Diluted shares used in computing earnings per common share

    87,249                     87,249  

 

(a) During the first quarter of 2017, the Company updated its definitions of “core” non-GAAP measures. See “Non-GAAP Measures” beginning on page 13 for a discussion regarding the updated definitions. For comparability, “core” results for 2016 have been revised to conform to the current year presentation.


Kindred Healthcare Reports First Quarter 2017 Results

Page 18

May 3, 2017

 

 

 

KINDRED HEALTHCARE, INC.

Reconciliation of GAAP Results to Non-GAAP Measures (Continued)

(Unaudited)

(In thousands, except per share amounts)

 

    Three months ended June 30, 2016  
          Charges        
    As
reported
    Business
interruption
settlements
    Litigation
contingency
    Impairment
charges
    Research and
development
    Debt
amendment
    Restructuring
charges
    Gentiva
transaction
and
integration
    Total     Before
charges
(“core”) (a)
 

Income from continuing operations:

                   

Segment EBITDAR:

                   

Kindred at Home:

                   

Home health

  $ 76,030     $ (171   $ —       $ —       $ —       $ —       $ —       $ —       $ (171   $ 75,859  

Hospice

    31,329       —         —         —         —         —         —         —         —         31,329  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    107,359       (171     —         —         —         —         —         —         (171     107,188  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Hospital division

    125,932       —         —         —         —         —         —         —         —         125,932  

Kindred Rehabilitation Services:

                   

Kindred Hospital Rehabilitation Services

    50,469       —         —         —         —         —         —         —         —         50,469  

RehabCare

    13,269       —         —         —         —         —         —         —         —         13,269  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    63,738       —         —         —         —         —         —         —         —         63,738  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nursing center division

    33,662       —         —         —         —         —         —         —         —         33,662  

Support center

    (66,804     —         —         —         3,076       1,103       —         —         4,179       (62,625

Litigation contingency expense

    (930     —         750       —         —         —         —         —         750       (180

Impairment charges

    (6,131     —         —         6,131       —         —         —         —         6,131       —    

Restructuring charges

    (4,346     —         —         —         —         —         4,346       —         4,346       —    

Transaction costs

    (1,846     —         —         —         —         —         —         1,674       1,674       (172
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDAR

    250,634       (171     750       6,131       3,076       1,103       4,346       1,674       16,909       267,543  

Rent

    (100,093     —         —         —         —         —         —         —         —         (100,093

Restructuring charges - rent

    (462     —         —         —         —         —         462       —         462       —    

Depreciation and amortization

    (40,257     —         —         —         —         —         —         —         —         (40,257

Interest, net

    (57,559     —         —         —         —         —         —         —         —         (57,559
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before income taxes

    52,263       (171     750       6,131       3,076       1,103       4,808       1,674       17,371       69,634  

Provision for income taxes

    17,882       (129     (1,511     4,633       2,324       833       (3,962     1,265       3,453       21,335  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    34,381       (42     2,261       1,498       752       270       8,770       409       13,918       48,299  

Noncontrolling interests

    (13,522     —         —         (1,016     —         —         —         —         (1,016     (14,538
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income attributable to Kindred

  $ 20,859     $ (42   $ 2,261     $ 482     $ 752     $ 270     $ 8,770     $ 409     $ 12,902     $ 33,761  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per common share

  $ 0.23                     $ 0.38  

Diluted shares used in computing earnings per common share

    87,500                       87,500  

 

     Three months ended September 30, 2016  
           Charges        
     As reported     Impairment
charges
    Research and
development
     Restructuring
charges
     Gentiva
transaction
and
integration
     Deferred
tax
valuation
allowance
    Total     Before
charges
(“core”) (a)
 

Income (loss) from continuing operations:

                   

Segment EBITDAR:

                   

Kindred at Home:

                   

Home health

   $ 75,073     $ —       $ —        $ —        $ —        $ —       $ —       $ 75,073  

Hospice

     31,326       —         —          —          —          —         —         31,326  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
     106,399       —         —          —          —          —         —         106,399  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Hospital division

     82,752       —         —          —          —          —         —         82,752  

Kindred Rehabilitation Services:

                   

Kindred Hospital Rehabilitation Services

     49,470       —         —          —          —          —         —         49,470  

RehabCare

     9,248       —         —          —          —          —         —         9,248  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
     58,718       —         —          —          —          —         —         58,718  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Nursing center division

     29,922       —         —          —          —          —         —         29,922  

Support center

     (61,751     —         3,288        —          —          —         3,288       (58,463

Impairment charges

     (324,289     324,289       —          —          —          —         324,289       —    

Restructuring charges

     (22,813     —         —          22,813        —          —         22,813       —    

Transaction costs

     (2,982     —         —          —          1,250        —         1,250       (1,732
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

EBITDAR

     (134,044     324,289       3,288        22,813        1,250        —         351,640       217,596  

Rent

     (98,415     —         —          —          272        —         272       (98,143

Restructuring charges - rent

     (58,650     —         —          58,650        —          —         58,650       —    

Depreciation and amortization

     (40,382     —         —          —          —          —         —         (40,382

Interest, net

     (58,052     —         —          —          —          —         —         (58,052
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     (389,543     324,289       3,288        81,463        1,522        —         410,562       21,019  

Provision for income taxes

     281,752       58,278       1,156        28,650        535        (366,470     (277,851     3,901  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
     (671,295     266,011       2,132        52,813        987        366,470       688,413       17,118  

Noncontrolling interests

     (14,305     (288     —          —          —          —         (288     (14,593
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) attributable to Kindred

   $ (685,600   $ 265,723     $ 2,132      $ 52,813      $ 987      $ 366,470     $ 688,125     $ 2,525  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Diluted earnings (loss) per common share

   $ (7.89                  $ 0.03  

Diluted shares used in computing earnings (loss) per common share

     86,869                      87,529  

 

(a) During the first quarter of 2017, the Company updated its definitions of “core” non-GAAP measures. See “Non-GAAP Measures” beginning on page 13 for a discussion regarding the updated definitions. For comparability, “core” results for 2016 have been revised to conform to the current year presentation.


Kindred Healthcare Reports First Quarter 2017 Results

Page 19

May 3, 2017

 

 

 

KINDRED HEALTHCARE, INC.

Reconciliation of GAAP Results to Non-GAAP Measures (Continued)

(Unaudited)

(In thousands, except per share amounts)

 

     Three months ended December 31, 2016  
           Charges        
     As
reported
    Business
interruption
settlements
    Impairment
charges
     Research and
development
     Restructuring
charges
     Gentiva
transaction
and
integration
     Deferred
tax
valuation
allowance
    Total     Before
charges
(“core”) (a)
 

Income (loss) from continuing operations:

                      

Segment EBITDAR:

                      

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

     91,892       (630     —          —          —          —          —         (630     91,262  

Kindred Rehabilitation Services:

                      

Kindred Hospital Rehabilitation Services

     49,314       —         —          —          —          —          —         —         49,314  

RehabCare

     5,578       —         —          —          —          —          —         —         5,578  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
     54,892       —         —          —          —          —          —         —         54,892  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Nursing center division

     33,658       —         —          —          —          —          —         —         33,658  

Support center

     (57,643     —         —          4,293        —          —          —         4,293       (53,350

Impairment charges

     (4,351     —         4,351        —          —          —          —         4,351       —    

Restructuring charges

     (16,923     —         —          —          16,923        —          —         16,923       —    

Transaction costs

     (2,166     —         —          —          —          1,779        —         1,779       (387
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

EBITDAR

     189,651       (2,069     4,351        4,293        16,923        1,779        —         25,277       214,928  

Rent

     (94,509     —         —          —          —          —          —         —         (94,509

Restructuring charges - rent

     (2,029     —         —          —          2,029        —          —         2,029       —    

Depreciation and amortization

     (38,082     —         —          —          —          —          —         —         (38,082

Interest, net

     (58,629     —         —          —          —          —          —         —         (58,629
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     (3,598     (2,069     4,351        4,293        18,952        1,779        —         27,306       23,708  

Provision for income taxes

     2,860       (1,718     3,613        3,565        15,736        1,208        (22,002     402       3,262  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
     (6,458   $ (351   $ 738      $ 728      $ 3,216      $ 571      $ 22,002     $ 26,904       20,446  
    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

Noncontrolling interests

     (13,261                       (13,261
  

 

 

                     

 

 

 

Income (loss) attributable to Kindred

   $ (19,719                     $ 7,185  
  

 

 

                     

 

 

 

Diluted earnings (loss) per common share

   $ (0.23                     $ 0.08  

Diluted shares used in computing earnings (loss) per common share

     86,904                         87,641  

 

    Year ended December 31, 2016  
          Charges        
    As
reported
    Business
interruption
settlements
    Litigation
contingency
    Impairment
charges
    Research and
development
    Debt
amendment
    Restructuring
charges
    Gentiva
transaction
and
integration
    Deferred
tax
valuation
allowance
    Total     Before
charges
(“core”) (a)
 

Income (loss) from continuing operations:

                     

Segment EBITDAR:

                     

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

    436,071       (630     —         —         —         —         —         —         —         (630     435,441  

Kindred Rehabilitation Services:

                     

Kindred Hospital Rehabilitation Services

    197,123       —         —         —         —         —         —         —         —         —         197,123  

RehabCare

    40,082       —         —         —         —         —         —         —         —         —         40,082  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    237,205       —         —         —         —         —         —         —         —         —         237,205  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nursing center division

    127,342       —         —         —         —         —         —         —         —         —         127,342  

Support center

    (257,006     —         —         —         11,520       1,103       —         —         —         12,623       (244,383

Litigation contingency expense

    (2,840     —         1,775       —         —         —         —         —         —         1,775       (1,065

Impairment charges

    (342,559     —         —         342,559       —         —         —         —         —         342,559       —    

Restructuring charges

    (45,783     —         —         —         —         —         45,783       —         —         45,783       —    

Transaction costs

    (8,679     —         —         —         —         —         —         6,306       —         6,306       (2,373
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDAR

    539,608       (3,378     1,775       342,559       11,520       1,103       45,783       6,306       —         405,668       945,276  

Rent

    (390,534     —         —         —         —         —         —         272       —         272       (390,262

Restructuring charges - rent

    (61,392     —         —         —         —         —         61,392       —         —         61,392       —    

Depreciation and amortization

    (159,402     —         —         —         —         —         —         —         —         —         (159,402

Interest, net

    (231,485     —         —         —         —         —         —         —         —         —         (231,485
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

    (303,205     (3,378     1,775       342,559       11,520       1,103       107,175       6,578       —         467,332       164,127  

Provision for income taxes

    314,330       (1,356     (391     69,806       4,624       443       43,017       2,510       (388,472     (269,819     44,511  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    (617,535     (2,022     2,166       272,753       6,896       660       64,158       4,068       388,472       737,151       119,616  

Noncontrolling interests

    (53,602     —         —         (1,304     —         —         —         —         —         (1,304     (54,906
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) attributable to Kindred

  $ (671,137   $ (2,022   $ 2,166     $ 271,449     $ 6,896     $ 660     $ 64,158     $ 4,068     $ 388,472     $ 735,847     $ 64,710  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings (loss) per common share

  $ (7.73                     $ 0.72  

Diluted shares used in computing earnings (loss) per common share

    86,800                         87,491  

 

(a) During the first quarter of 2017, the Company updated its definitions of “core” non-GAAP measures. See “Non-GAAP Measures” beginning on page 13 for a discussion regarding the updated definitions. For comparability, “core” results for 2016 have been revised to conform to the current year presentation.


Kindred Healthcare Reports First Quarter 2017 Results

Page 20

May 3, 2017

 

 

 

KINDRED HEALTHCARE, INC.

Reconciliation of GAAP Results to Non-GAAP Measures (Continued)

(Unaudited)

(In thousands)

 

     Three months ended
March 31,
 
     2017     2016  

Reconciliation of net cash flows used in operating activities to core operating cash flows and core free cash flows:

    

Net cash flows used in operating activities

     ($92,638     ($130,340

Adjustments to remove certain payments (including payments made for discontinued operations) included in net cash flows used in operating activities:

    

Transaction, severance, research and development, and retention

     6,986       4,841  

Business interruption settlements

     (1,993     (1,138

Lease termination fees - restructuring

     1,998       —    

Capitalized lender fees related to debt amendment

     5,403       —    

Litigation

     8,536       127,669  
  

 

 

   

 

 

 
     20,930       131,372  
  

 

 

   

 

 

 

Net cash flows provided by (used in) operating activities excluding certain items before income tax benefit of certain payments

     (71,708     1,032  

Benefit of reduced income tax payments resulting from certain payments (a)

     —         —    
  

 

 

   

 

 

 

Net cash flows provided by (used in) operating activities excluding certain items (core operating cash flows)

     (71,708     1,032  

Less routine capital expenditures

     (11,941     (18,106

Less distributions to noncontrolling interests

     (25,801     (16,315
  

 

 

   

 

 

 

Free cash flows excluding certain items (core free cash flows)

     ($109,450     ($33,389
  

 

 

   

 

 

 

 

(a) No tax deposits were due in first quarter of 2017 or 2016.