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Kindred Healthcare Announces Fourth Quarter Results and Plans for Ventas Lease Renewals

February 23, 2012

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Excluding Certain Items, Company Reports Fourth Quarter Continuing Operations Diluted EPS of $0.27 Compared to $0.54 in 2010; Full Year EPS of $1.80 Up 17% from Last Year’s $1.54

Company Reports GAAP Continuing Operations Loss of $1.42 per Diluted Share in the Fourth Quarter and $1.21 for the Year

Company Reduces Fiscal 2012 Earnings Guidance to $1.35 to $1.55

Company Intends to Allow Ventas Leases for 54 Nursing Centers and 10 Hospitals to Expire in 2013

LOUISVILLE, Ky.--(BUSINESS WIRE)--Feb. 23, 2012-- Kindred Healthcare, Inc. (“Kindred” or the “Company”) (NYSE:KND) today announced its operating results for the fourth quarter and year ended December 31, 2011 as well as its intentions with respect to the renewal of facility leases with its primary landlord, Ventas, Inc. (“Ventas”) (NYSE:VTR). The Company’s consolidated financial statements include the operating results of RehabCare Group, Inc. (“RehabCare”) since the closing of the acquisition on June 1, 2011.

Highlights (operating data adjusted to exclude certain items):

  • Favorable impact of RehabCare acquisition negated by fourth quarter regulatory changes
    • Initial quarter under new RUGs IV and rehabilitation therapy rule changes more challenging than expected
    • Annual impact of new Medicare rules now estimated at $150 million
  • Fourth quarter consolidated continuing operations key metrics compared to last year
    • Revenues grew 34% to $1.5 billion
    • Operating income rose 25% to $200 million
    • Income from continuing operations fell 35% to $14 million
    • Diluted earnings per share declined 50% to $0.27
  • Fourth quarter operating summary
    • Hospital revenues rose 40%; same-store revenues increased 5% while admissions rose 4%
    • Medicare cuts materially hampered nursing center and rehabilitation therapy results
    • Home health and hospice business reported strong results
  • Company continues to generate significant operating cash flows
    • Excluding transaction-related payments, full year operating cash flows grew 11% to $238 million
  • Company reduces 2012 earnings guidance
    • RehabCare synergy estimate rises to $70 million from $62 million
    • Company expects to implement $50 million to $55 million of additional cost reductions
  • Company expects non-renewal of seven Ventas bundles containing 64 facilities in April 2013
    • Future growth prospects for these facilities considered limited
    • Many of the facilities do not align with the Company’s operating plan and cluster market strategy
    • Expected 2013 EPS dilution of $0.10 to $0.15 from these divestitures considered manageable
    • Divestitures will improve the Company’s capital structure over the long term

Fourth Quarter Results

Continuing Operations

Consolidated revenues for the fourth quarter ended December 31, 2011 increased 34% to $1.5 billion compared to $1.1 billion in the same period in 2010. The Company reported a loss from continuing operations for the fourth quarter of 2011 of $72.8 million or $1.42 per diluted share compared to income of $19.7 million or $0.50 per diluted share in the fourth quarter of 2010. Operating results for the fourth quarter of 2011 included asset impairment charges, transaction-related costs and a loss on a hospital divestiture that reduced income from continuing operations by $86.7 million or $1.69 per diluted share. Operating results for the fourth quarter of 2010 included transaction-related costs that reduced income from continuing operations by $1.6 million or $0.04 per diluted share.

During the fourth quarter of 2011, the Company recorded approximately $102 million of pretax asset impairment charges to reflect circumstances in which the carrying value of certain assets exceeded their fair value. Goodwill impairment charges of approximately $46 million resulted primarily from the worse than expected decline in operating results in the Company’s rehabilitation division related to Medicare reimbursement changes that became effective on October 1, 2011. The Company also wrote off approximately $54 million of certain hospital and nursing and rehabilitation center intangible assets as part of its regular annual asset impairment testing. In addition, the Company wrote off approximately $2 million of leasehold improvements expended in the quarter at facilities that were considered impaired in a prior period.

Fiscal Year Results

Continuing Operations

Consolidated revenues for the year ended December 31, 2011 increased 27% to $5.5 billion compared to $4.4 billion in the previous year. The Company reported a loss from continuing operations of $56.0 million or $1.21 per diluted share in 2011 compared to income of $56.1 million or $1.42 per diluted share in 2010.

Operating results in 2011 included asset impairment charges, transaction-related costs and a loss on a hospital divestiture that reduced income from continuing operations by $141.1 million or $3.05 per diluted share. Operating results in 2010 included certain items that reduced income from continuing operations by $4.9 million or $0.12 per diluted share.

Management Commentary

Paul J. Diaz, President and Chief Executive Officer of the Company, commented, “Despite a very difficult fourth quarter brought on by significant Medicare cuts in both our nursing center and our rehabilitation therapy businesses, fiscal 2011 was an exceptional year for Kindred. Our acquisition of RehabCare in June added meaningful depth and strength to our core hospital and rehabilitation divisions and I am pleased with the highly successful integration of the organizations and the realization of significant cost synergies. Excluding asset impairment charges, transaction-related items and a loss on a hospital divestiture, our full-year diluted earnings per share from continuing operations of $1.80 were 17% higher than the adjusted $1.54 per share in 2010.”

Mr. Diaz further noted, “In addition to the RehabCare acquisition, we successfully completed a number of transactions to expand our growing home health and hospice business. We expect these acquisitions to continue, primarily in our cluster markets, and we are excited that this business will contribute meaningfully to our earnings going forward.”

Commenting on the Company’s liquidity and capital resources, Mr. Diaz noted, “Excluding transaction- related payments, our operating cash flows in 2011 grew 11% to $238 million. These results allow us to fund our routine capital spending internally, with the balance available to fund our ongoing acquisition and cluster market development activities. In addition, our $343 million of unused revolving credit capacity at December 31, 2011 provides significant capital for future growth.”

Mr. Diaz also commented on the Company’s recently issued 2011 Quality and Social Responsibility Report, “Kindred is proud to issue its fifth annual Quality and Social Responsibility Report to fulfill our commitment to be transparent about our quality results and our ongoing efforts to improve the care and services for our patients and residents.” Mr. Diaz noted that the report links the Company’s quality initiatives with its Continue the Care and cluster market strategies. “Both policymakers and the marketplace are demanding that healthcare providers participate in coordinated care strategies to improve quality, reduce avoidable hospitalizations and lower costs. Kindred’s cluster market strategy is designed to leverage Kindred’s national scale to build a continuum of post-acute services in local healthcare delivery markets to achieve these shared goals. Kindred is aggressively developing a post-acute continuum of service lines in local markets, including long-term acute care (“LTAC”) hospitals, inpatient rehabilitation facilities, sub-acute or transitional care, and home health and hospice services, in order to partner with physician groups, hospitals, health systems and payors to better manage episodes of care while at the same time improving quality and lowering costs.”

Earnings Guidance – Continuing Operations

The Company updated its earnings guidance for 2012. The earnings guidance provided by the Company excludes the effect of (i) any transaction-related charges, (ii) any other reimbursement changes, (iii) any acquisitions or divestitures, (iv) any impairment charges, or (v) any repurchases of common stock.

The Company expects consolidated revenues for 2012 to approximate $6.3 billion. Operating income, or earnings before interest, income taxes, depreciation, amortization and rent, is expected to range from $868 million to $884 million. Rent expense is expected to approximate $434 million, while depreciation and amortization should approximate $197 million. Net interest expense is expected to approximate $107 million. The Company expects to report income from continuing operations for 2012 between $73 million to $83 million or $1.35 to $1.55 per diluted share (based upon diluted shares of 52.5 million). The Company’s previous earnings per diluted share range for 2012 was $1.65 to $1.85.

As a result of the significant volatility in its earnings in connection with recent changes in Medicare reimbursements, the Company is suspending its practice of providing quarterly earnings guidance at this time.

The Company also indicated that it expects cash flows from operations in 2012 to range from $240 million to $260 million. Routine capital expenditures in 2012 are expected to range from $130 million to $140 million, including approximately $16 million of expenditures to complete the information systems integration of RehabCare. The Company’s expected routine capital expenditures also include approximately $11 million to upgrade the clinical information systems in its hospital, nursing center and home health businesses.

In addition, the Company continues its ongoing development of several previously announced projects. At December 31, 2011, projects related to the replacement, expansion and upgrade of its hospitals in Dayton, Ohio and Charleston, South Carolina, as well as the development of two new inpatient rehabilitation hospitals in Texas will be completed at an aggregate additional cost of approximately $23 million through 2013 (these expenditures are not included in the routine capital spending estimates discussed above).

Mr. Diaz remarked, “Our 2012 operating plan includes several initiatives to improve our operating results. These plans relate primarily to synergies associated with the RehabCare acquisition, changes in compensation and employee benefit programs and continued reductions in overhead costs.”

“Our fourth quarter operating results included the realization of approximately $40 million of annualized RehabCare integration synergies. For 2012, we expect these synergies to approach $70 million, up from our previous estimate of $62 million. In addition, we are implementing plans to reduce compensation, employee benefit and overhead costs by approximately $50 million to $55 million over the balance of 2012. These cost reductions should be fully implemented by the end of the third quarter.”

Mr. Diaz commented further, “Our 2012 earnings outlook reflects a more difficult than expected operating environment under the recent RUGs IV and rehabilitation therapy Medicare rule changes. While we continue to believe that federal policymakers have over-reached in their attempt to adjust the RUGs IV rules, we must intensify our efforts to adjust our operations while still maintaining the quality of our services. Nevertheless, our strategic goals to expand our cluster market development and accelerate growth in areas like home health and contract therapy have not changed in light of current reimbursement pressures.”

Ventas Lease Renewals

Under its master lease agreements with Ventas, the Company has 73 nursing and rehabilitation centers and 16 LTAC hospitals within ten separate renewal bundles currently subject to lease renewals. The Company has until April 30, 2012 to exercise these renewals for an additional five-year term. Each renewal bundle contains both nursing and rehabilitation centers and LTAC hospitals. The master lease agreements require that the Company renew all or none of the facilities within a renewal bundle.

The Company intends to renew three renewal bundles containing 19 nursing and rehabilitation centers and six LTAC hospitals (collectively, the “Renewal Facilities”). The Renewal Facilities contain 2,178 licensed nursing and rehabilitation center beds and 616 licensed hospital beds and generated revenues of approximately $434 million for the year ended December 31, 2011. The current annual rent for the Renewal Facilities approximates $46 million.

The Company also announced that it does not intend to renew seven renewal bundles containing 54 nursing and rehabilitation centers and ten LTAC hospitals (collectively, the “Expiring Facilities”). The Expiring Facilities contain 6,140 licensed nursing and rehabilitation center beds and 1,066 licensed hospital beds and generated revenues of approximately $790 million for the year ended December 31, 2011. The current annual rent for the Expiring Facilities approximates $77 million. The Company will continue to operate the Expiring Facilities and include the Expiring Facilities in its results from continuing operations through the expiration of the lease term in April 2013.

Management believes that the divestiture of the Expiring Facilities could reduce the Company’s consolidated earnings per diluted share by $0.10 to $0.15 in 2013, but will not otherwise materially impact the Company’s cash flows or financial position. This estimate is based upon a number of assumptions, including the Company’s estimated impact of the recent and impending Medicare reimbursement reductions for nursing centers and LTAC hospitals and its ability to achieve overhead savings in connection with these divestitures.

Mr. Diaz remarked, “At this time, we believe it is important to give investors our views on the Ventas renewals. We have evaluated the lease renewals as we would any acquisition. The Renewal Facilities generally meet our targeted investment returns and rent coverage ratios after capital expenditures and otherwise fit within our strategic operating plan.”

Mr. Diaz continued, “While in general the individual Expiring Facilities are good assets, these bundles as a whole do not satisfy our targeted investment returns or fit within our strategic operating plan. The majority of the Expiring Facilities are outside our cluster markets and many of the nursing and rehabilitation centers that are predominantly chronic care and Medicaid dependent are not well suited for our higher acuity, transitional care strategy. Under our operating model, these facilities also have limited growth opportunities and our expected earnings from these operations do not support the allocation of capital, risk or management time over the renewal period. Given the current reimbursement environment, particularly around nursing centers, we believe that our capital investments and management efforts are best focused in other areas of growth including home health, acute rehabilitation units, newer owned LTAC and inpatient rehabilitation hospitals, as well as investments in new integrated care models. In addition, we believe that, over time, these divestitures will substantially improve our capital structure by reducing our lease obligations and related leverage and the earnings leakage associated with rent escalators.”

“As we have stated previously, we are focused on five key business strategies. First, we must be successful in our core operations by providing quality care and efficiently managing our costs. Second, we remain focused on accelerating our cluster market strategy both from an operational and capital investment perspective. In addition, we will continue to expand our home health and hospice operations. We also are active in developing new integrated care and payment models with other healthcare providers and payors that will be responsive to changes in the marketplace. Finally, we remain focused on re-deploying assets and management time to higher margin businesses. Exiting the Expiring Facilities is another significant step in our re-deployment strategy.”

Mr. Diaz concluded, “Over the next year, we will cooperate with Ventas as it finds suitable tenants for the Expiring Facilities and effectuate an orderly transition of our patients, employees and operations to the new tenants.”

The effectiveness of the renewals is contingent upon there being no event of default under the master lease agreements upon the renewal effective date in April 2013. Additional information regarding the master lease agreements is contained in the Company’s Form 10-K for the year ended December 31, 2010 and copies of the master lease agreements filed with the Securities and Exchange Commission.

Conference Call

As previously announced, investors and the general public may access a live webcast of the fourth quarter 2011 conference call through a link on the Company’s website at http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Finvestors.kindredhealthcare.com&esheet=50179981&lan=en-US&anchor=http%3A%2F%2Finvestors.kindredhealthcare.com&index=1&md5=aa95a7c1936680fd5302d6f6b48d14df or at http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.earnings.com&esheet=50179981&lan=en-US&anchor=www.earnings.com&index=2&md5=4210c18661ee822b56a52a207b5b767c. The conference call will be held February 24 at 11:00 a.m. (Eastern Time).

A telephone replay of the conference call will become available at approximately 2:00 p.m. on February 24 by dialing 888-203-1112, access code: 8694041. The replay will be available through March 4.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding the Company’s expected future financial position, results of operations, cash flows, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management and statements containing the words such as “anticipate,” “approximate,” “believe,” “plan,” “estimate,” “expect,” “project,” “could,” “should,” “will,” “intend,” “may” and other similar expressions, are forward-looking statements.

Such forward looking statements are inherently uncertain, and stockholders and other potential investors must recognize that actual results may differ materially from the Company’s expectations as a result of a variety of factors, including, without limitation, those discussed below. Such forward-looking statements are based upon management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control, that may cause the Company’s actual results or performance to differ materially from any future results or performance expressed or implied by such forward-looking statements. These statements involve risks, uncertainties and other factors discussed below and detailed from time to time in the Company’s filings with the Securities and Exchange Commission.

In addition to the factors set forth above, other factors that may affect the Company’s plans or results include, without limitation, (a) the impact of healthcare reform, which will initiate significant reforms to the United States healthcare system, including potential material changes to the delivery of healthcare services and the reimbursement paid for such services by the government or other third party payors. Healthcare reform will impact each of the Company’s businesses in some manner. Due to the substantial regulatory changes that will need to be implemented by the Centers for Medicare and Medicaid Services (“CMS”) and others, and the numerous processes required to implement these reforms, the Company cannot predict which healthcare initiatives will be implemented at the federal or state level, the timing of any such reforms, or the effect such reforms or any other future legislation or regulation will have on the Company’s business, financial position, results of operations and liquidity, (b) the impact of final rules issued by CMS on July 29, 2011 which significantly reduced Medicare reimbursement to nursing centers and changed payments for the provision of group therapy services effective October 1, 2011, (c) the impact of the Budget Control Act of 2011 which will automatically reduce federal spending by approximately $1.2 trillion split evenly between domestic and defense spending. At this time, the Company believes this will result in an automatic 2% reduction on each claim submitted to Medicare beginning February 1, 2013, (d) changes in the reimbursement rates or the methods or timing of payment from third party payors, including commercial payors and the Medicare and Medicaid programs, changes arising from and related to the Medicare prospective payment system for LTAC hospitals, including potential changes in the Medicare payment rules, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, and changes in Medicare and Medicaid reimbursements for the Company’s nursing and rehabilitation centers, inpatient rehabilitation hospitals and home health and hospice operations, and the expiration of the Medicare Part B therapy cap exception process, (e) the effects of additional legislative changes and government regulations, interpretation of regulations and changes in the nature and enforcement of regulations governing the healthcare industry, (f) the impact of the Medicare, Medicaid and SCHIP Extension Act of 2007 (the “SCHIP Extension Act”), including the ability of the Company’s hospitals to adjust to potential LTAC certification, medical necessity reviews and the moratorium on future hospital development, (g) the impact of the expiration of several moratoriums in 2012 under the SCHIP Extension Act which could impact the short stay rules, the budget neutrality adjustment as well as implement the “25 Percent Rule,” which would limit certain patient admissions, (h) the Company’s ability to integrate the operations of the acquired hospitals and rehabilitation services operations and realize the anticipated revenues, economies of scale, cost synergies and productivity gains in connection with the RehabCare acquisition and any other acquisitions undertaken, as and when planned, including the potential for unanticipated issues, expenses and liabilities associated with those acquisitions, (i) the potential for diversion of management time and resources in seeking to integrate RehabCare’s operations, (j) the impact of the Company’s significantly increased levels of indebtedness as a result of the RehabCare acquisition on the Company’s funding costs, operating flexibility and ability to fund ongoing operations, development capital expenditures or other strategic acquisitions with additional borrowings, particularly in light of ongoing volatility in the credit and capital markets, (k) the Company’s ability to successfully pursue its development activities, including through acquisitions, and successfully integrate new operations, including the realization of anticipated revenues, economies of scale, cost savings and productivity gains associated with such operations, (l) the potential failure to retain key employees of RehabCare, (m) failure of the Company’s facilities to meet applicable licensure and certification requirements, (n) the further consolidation and cost containment efforts of managed care organizations and other third party payors, (o) the Company’s ability to meet its rental and debt service obligations, (p) the Company’s ability to operate pursuant to the terms of its debt obligations, including its obligations under financings undertaken to complete the RehabCare acquisition, and the Company’s ability to operate pursuant to its master lease agreements with Ventas, (q) the condition of the financial markets, including volatility and weakness in the equity, capital and credit markets, which could limit the availability and terms of debt and equity financing sources to fund the requirements of the Company’s businesses, or which could negatively impact the Company’s investment portfolio, (r) national and regional economic, financial, business and political conditions, including their effect on the availability and cost of labor, credit, materials and other services, (s) the Company’s ability to control costs, particularly labor and employee benefit costs, (t) increased operating costs due to shortages in qualified nurses, therapists and other healthcare personnel, (u) the Company’s ability to attract and retain key executives and other healthcare personnel, (v) the increase in the costs of defending and insuring against alleged professional liability and other claims and the Company’s ability to predict the estimated costs related to such claims, including the impact of differences in actuarial assumptions and estimates compared to eventual outcomes, (w) the Company’s ability to successfully reduce (by divestiture of operations or otherwise) its exposure to professional liability and other claims, (x) the Company’s ability to successfully dispose of unprofitable facilities, (y) events or circumstances which could result in the impairment of an asset or other charges, (z) changes in generally accepted accounting principles (“GAAP”) or practices, and changes in tax accounting or tax laws (or authoritative interpretations relating to any of these matters), and (aa) the Company’s ability to maintain an effective system of internal control over financial reporting. Many of these factors are beyond the Company’s control. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance. The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments.

In addition to the results provided in accordance with GAAP, the Company has provided non-GAAP measurements which present operating results and cash flows from operations for the fourth quarters and years ended December 31, 2011 and 2010 before certain charges or on a core basis. A reconciliation of the non-GAAP measurements to the GAAP measurements is included in this press release.

As noted above, the Company’s earnings release includes a financial measure referred to as operating income, or earnings before interest, income taxes, depreciation, amortization and rent. The Company’s management uses operating income as a meaningful measure of operational performance in addition to other measures. The Company uses operating income to assess the relative performance of its operating divisions as well as the employees that operate these businesses. In addition, the Company believes this measurement is important because securities analysts and investors use this measurement to compare the Company’s performance to other companies in the healthcare industry. The Company believes that income from continuing operations is the most comparable GAAP measure. Readers of the Company’s financial information should consider income from continuing operations as an important measure of the Company’s financial performance because it provides the most complete measure of its performance. Operating income should be considered in addition to, not as a substitute for, or superior to, financial measures based upon GAAP as an indicator of operating performance. A reconciliation of operating income to income from continuing operations provided in the Condensed Business Segment Data is included in this press release.

About Kindred Healthcare

Kindred Healthcare, Inc., a top-150 private employer in the United States, is a healthcare services company based in Louisville, Kentucky with annual revenues of $6 billion and approximately 77,800 employees in 46 states. At December 31, 2011, Kindred through its subsidiaries provided healthcare services in 2,200 locations, including 121 long-term acute care hospitals, five inpatient rehabilitation hospitals, 224 nursing and rehabilitation centers, 25 sub-acute units, 51 hospice and home care locations, 102 inpatient rehabilitation units (hospital-based) and a contract rehabilitation services business, RehabCare, which served approximately 1,670 non-affiliated facilities. Ranked as one of Fortune magazine’s Most Admired Healthcare Companies for three years in a row, Kindred’s mission is to promote healing, provide hope, preserve dignity and produce value for each patient, resident, family member, customer, employee and shareholder we serve. For more information, go to http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.kindredhealthcare.com&esheet=50179981&lan=en-US&anchor=www.kindredhealthcare.com&index=3&md5=2b102c3188a6da65c09269192730d83c.

KINDRED HEALTHCARE, INC.
Financial Summary
(In thousands, except per share amounts)
 
    Three months ended     Year ended
December 31, December 31,
2011     2010 2011     2010
 
Revenues $ 1,522,688   $ 1,135,484   $ 5,521,763   $ 4,359,697  
 
Income (loss) from continuing operations $ (72,914 ) $ 19,755 $ (56,271 ) $ 56,146
Discontinued operations, net of income taxes:
Income from operations 1,025 1,125 2,552 798
Loss on divestiture of operations   -     (456 )   -     (453 )
Income from discontinued operations   1,025     669     2,552     345  
Net income (loss) (71,889 ) 20,424 (53,719 ) 56,491
Loss attributable to noncontrolling interests   58     -     238     -  
Income (loss) attributable to Kindred $ (71,831 ) $ 20,424   $ (53,481 ) $ 56,491  
 
Amounts attributable to Kindred stockholders:
Income (loss) from continuing operations $ (72,856 ) $ 19,755 $ (56,033 ) $ 56,146
Income from discontinued operations   1,025     669     2,552     345  
Net income (loss) $ (71,831 ) $ 20,424   $ (53,481 ) $ 56,491  
 
Earnings (loss) per common share:
Basic:
Income (loss) from continuing operations $ (1.42 ) $ 0.50 $ (1.21 ) $ 1.42
Discontinued operations:
Income from operations 0.02 0.03 0.05 0.02
Loss on divestiture of operations   -     (0.01 )   -     (0.01 )
Net income (loss) $ (1.40 ) $ 0.52   $ (1.16 ) $ 1.43  
 
Diluted:
Income (loss) from continuing operations $ (1.42 ) $ 0.50 $ (1.21 ) $ 1.42
Discontinued operations:
Income from operations 0.02 0.03 0.05 0.02
Loss on divestiture of operations   -     (0.01 )   -     (0.01 )
Net income (loss) $ (1.40 ) $ 0.52   $ (1.16 ) $ 1.43  
 

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

Basic 51,335 38,790 46,280 38,738
Diluted 51,335 39,089 46,280 38,954
 
 
KINDRED HEALTHCARE, INC.
Condensed Consolidated Statement of Operations
(In thousands, except per share amounts)
 
    Three months ended     Year ended
December 31, December 31,
2011     2010 2011     2010
 
Revenues $ 1,522,688   $ 1,135,484   $ 5,521,763   $ 4,359,697  
 
Salaries, wages and benefits 911,417 652,703 3,255,815 2,505,690
Supplies 107,760 87,103 402,014 342,197
Rent 106,616 90,777 399,257 357,372
Other operating expenses 312,674 240,750 1,164,480 948,609
Other income (2,711 ) (2,687 ) (11,191 ) (11,422 )
Impairment charges 102,569 - 129,281 -
Depreciation and amortization 48,227 31,412 165,594 121,552
Interest expense 26,244 2,843 80,919 7,090
Investment income   (242 )   (342 )   (1,031 )   (1,245 )
  1,612,554     1,102,559     5,585,138     4,269,843  
Income (loss) from continuing operations before income taxes (89,866 ) 32,925 (63,375 ) 89,854
Provision (benefit) for income taxes   (16,952 )   13,170     (7,104 )   33,708  
Income (loss) from continuing operations (72,914 ) 19,755 (56,271 ) 56,146
Discontinued operations, net of income taxes:
Income from operations 1,025 1,125 2,552 798
Loss on divestiture of operations   -     (456 )   -     (453 )
Income from discontinued operations   1,025     669     2,552     345  
Net income (loss) (71,889 ) 20,424 (53,719 ) 56,491
Loss attributable to noncontrolling interests   58     -     238     -  
Income (loss) attributable to Kindred $ (71,831 ) $ 20,424   $ (53,481 ) $ 56,491  
 
Amounts attributable to Kindred stockholders:
Income (loss) from continuing operations $ (72,856 ) $ 19,755 $ (56,033 ) $ 56,146
Income from discontinued operations   1,025     669     2,552     345  
Net income (loss) $ (71,831 ) $ 20,424   $ (53,481 ) $ 56,491  
 
Earnings (loss) per common share:
Basic:
Income (loss) from continuing operations $ (1.42 ) $ 0.50 $ (1.21 ) $ 1.42
Discontinued operations:
Income from operations 0.02 0.03 0.05 0.02
Loss on divestiture of operations   -     (0.01 )   -     (0.01 )
Net income (loss) $ (1.40 ) $ 0.52   $ (1.16 ) $ 1.43  
 
Diluted:
Income (loss) from continuing operations $ (1.42 ) $ 0.50 $ (1.21 ) $ 1.42
Discontinued operations:
Income from operations 0.02 0.03 0.05 0.02
Loss on divestiture of operations   -     (0.01 )   -     (0.01 )
Net income (loss) $ (1.40 ) $ 0.52   $ (1.16 ) $ 1.43  
 

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

Basic 51,335 38,790 46,280 38,738
Diluted 51,335 39,089 46,280 38,954
 
 
KINDRED HEALTHCARE, INC.
Condensed Consolidated Balance Sheet
(In thousands, except per share amounts)
 
    December 31,     December 31,
2011 2010
ASSETS
Current assets:
Cash and cash equivalents $ 41,561 $ 17,168
Cash - restricted 5,551 5,494
Insurance subsidiary investments 70,425 76,753
Accounts receivable less allowance for loss 994,700 631,877
Inventories 31,060 24,327
Deferred tax assets 17,785 13,439
Income taxes 39,513 42,118
Other   32,687     24,862  
1,233,282 836,038
 
Property and equipment 1,975,063 1,754,170
Accumulated depreciation   (916,022 )   (857,623 )
1,059,041 896,547
 
Goodwill 1,084,655 242,420
Intangible assets less accumulated amortization 447,207 92,883
Assets held for sale 5,612 7,167
Insurance subsidiary investments 110,227 101,210
Deferred tax assets - 88,816
Other   198,469     72,334  
Total assets $ 4,138,493   $ 2,337,415  
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 216,801 $ 174,495
Salaries, wages and other compensation 407,493 291,116
Due to third party payors 37,306 27,115
Professional liability risks 46,010 41,555
Other accrued liabilities 130,693 87,012
Long-term debt due within one year   10,620     91  
848,923 621,384
 
Long-term debt 1,531,882 365,556
Professional liability risks 217,717 207,669
Deferred tax liabilities 17,955 -
Deferred credits and other liabilities 191,771 111,047
 
Noncontrolling interests-redeemable 9,704 -
 
Equity:
Stockholders' equity:

Common stock, $0.25 par value; authorized 175,000 shares; issued 52,116 shares - December 31, 2011 and 39,495 shares - December 31, 2010

13,029 9,874
Capital in excess of par value 1,138,189 828,593
Accumulated other comprehensive income (loss) (1,469 ) 135
Retained earnings   139,172     193,157  
1,288,921 1,031,759
Noncontrolling interests-nonredeemable   31,620     -  
Total equity   1,320,541     1,031,759  
Total liabilities and equity $ 4,138,493   $ 2,337,415  
 
 
KINDRED HEALTHCARE, INC.
Condensed Consolidated Statement of Cash Flows
(In thousands)
 
    Three months ended     Year ended
December 31, December 31,
2011     2010 2011     2010
Cash flows from operating activities:
Net income (loss) $ (71,889 ) $ 20,424 $ (53,719 ) $ 56,491

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 48,227 31,412 165,594 121,552
Amortization of stock-based compensation costs 3,208 2,600 12,819 10,714
Payment of lender fees related to debt issuance - - (46,232 ) -
Provision for doubtful accounts 13,084 6,010 35,133 24,397
Deferred income taxes 5,170 35,190 195 21,446
Impairment charges 102,569 - 129,281 -
Loss on divestiture of discontinued operations - 456 - 453
Other 4,053 2,118 5,518 252
Change in operating assets and liabilities:
Accounts receivable (36,758 ) (23,853 ) (144,830 ) (45,232 )
Inventories and other assets (4,451 ) (6,720 ) (802 ) (14,294 )
Accounts payable 299 25,139 685 9,446
Income taxes (25,537 ) (22,272 ) (4,745 ) 3,462
Due to third party payors (4,130 ) (8,886 ) 568 1,213
Other accrued liabilities   2,055     (2,485 )   54,241     20,088  
Net cash provided by operating activities   35,900     59,133     153,706     209,988  
 
Cash flows from investing activities:
Routine capital expenditures (37,640 ) (39,788 ) (132,903 ) (108,896 )
Development capital expenditures (18,085 ) (27,622 ) (87,655 ) (67,841 )
Acquisitions, net of cash acquired (4,551 ) (191,925 ) (715,458 ) (279,794 )
Sale of assets - 649 1,714 649
Purchase of insurance subsidiary investments (9,719 ) (9,229 ) (35,623 ) (43,913 )
Sale of insurance subsidiary investments 8,720 9,765 46,307 82,736

Net change in insurance subsidiary cash and cash equivalents

(9,343 ) 2,091 (14,213 ) (8,521 )
Change in other investments 3 - 1,003 2
Other   180     (317 )   (512 )   962  
Net cash used in investing activities   (70,435 )   (256,376 )   (937,340 )   (424,616 )
 
Cash flows from financing activities:
Proceeds from borrowings under revolving credit 493,500 920,900 2,126,800 2,030,800
Repayment of borrowings under revolving credit (448,500 ) (720,400 ) (2,198,300 ) (1,812,800 )
Proceeds from issuance of senior unsecured notes - - 550,000 -
Proceeds from issuance of term loan, net of discount - - 693,000 -
Repayment of other long-term debt (2,645 ) (22 ) (350,878 ) (86 )
Payment of deferred financing costs (383 ) (1,417 ) (9,098 ) (2,831 )
Issuance of common stock - 14 3,019 49
Purchase of noncontrolling interests in subsidiaries - - (7,292 ) -
Other   29     15     776     361  
Net cash provided by financing activities   42,001     199,090     808,027     215,493  
Change in cash and cash equivalents 7,466 1,847 24,393 865
Cash and cash equivalents at beginning of period   34,095     15,321     17,168     16,303  
Cash and cash equivalents at end of period $ 41,561   $ 17,168   $ 41,561   $ 17,168  
 
 
KINDRED HEALTHCARE, INC.
Condensed Consolidated Statement of Operations
(In thousands, except per share amounts)
 
    2010 Quarters         2011 Quarters    
First     Second     Third     Fourth Year First     Second     Third     Fourth Year
 
Revenues $ 1,089,837   $ 1,081,364   $ 1,053,012   $ 1,135,484   $ 4,359,697   $ 1,192,421   $ 1,292,592   $ 1,514,062   $ 1,522,688   $ 5,521,763  
 
Salaries, wages and benefits 627,175 612,205 613,607 652,703 2,505,690 678,695 765,133 900,570 911,417 3,255,815
Supplies 85,886 85,455 83,753 87,103 342,197 90,022 96,718 107,514 107,760 402,014
Rent 88,319 88,981 89,295 90,777 357,372 91,453 95,677 105,511 106,616 399,257
Other operating expenses 234,204 238,687 234,968 240,750 948,609 259,369 287,132 305,305 312,674 1,164,480
Other income (3,084 ) (2,857 ) (2,794 ) (2,687 ) (11,422 ) (2,785 ) (2,880 ) (2,815 ) (2,711 ) (11,191 )
Impairment charges - - - - - - - 26,712 102,569 129,281
Depreciation and amortization 31,121 29,852 29,167 31,412 121,552 32,549 37,871 46,947 48,227 165,594
Interest expense 1,307 1,298 1,642 2,843 7,090 5,728 23,157 25,790 26,244 80,919
Investment (income) loss   (877 )   377     (403 )   (342 )   (1,245 )   (495 )   (257 )   (37 )   (242 )   (1,031 )
  1,064,051     1,053,998     1,049,235     1,102,559     4,269,843     1,154,536     1,302,551     1,515,497     1,612,554     5,585,138  

Income (loss) from continuing operations before income taxes

25,786 27,366 3,777 32,925 89,854 37,885 (9,959 ) (1,435 ) (89,866 ) (63,375 )
Provision (benefit) for income taxes   10,631     11,230     (1,323 )   13,170     33,708     15,609     (3,419 )   (2,342 )   (16,952 )   (7,104 )
Income (loss) from continuing operations 15,155 16,136 5,100 19,755 56,146 22,276 (6,540 ) 907 (72,914 ) (56,271 )
Discontinued operations, net of income taxes:
Income (loss) from operations (154 ) 87 (260 ) 1,125 798 (179 ) 587 1,119 1,025 2,552
Gain (loss) on divestiture of operations   (137 )   54     86     (456 )   (453 )   -     -     -     -     -  
Income (loss) from discontinued operations   (291 )   141     (174 )   669     345     (179 )   587     1,119     1,025     2,552  
Net income (loss) 14,864 16,277 4,926 20,424 56,491 22,097 (5,953 ) 2,026 (71,889 ) (53,719 )

(Earnings) loss attributable to noncontrolling interests

  -     -     -     -     -     -     421     (241 )   58     238  
Income (loss) attributable to Kindred $ 14,864   $ 16,277   $ 4,926   $ 20,424   $ 56,491   $ 22,097   $ (5,532 ) $ 1,785   $ (71,831 ) $ (53,481 )
 
Amounts attributable to Kindred stockholders:
Income (loss) from continuing operations $ 15,155 $ 16,136 $ 5,100 $ 19,755 $ 56,146 $ 22,276 $ (6,119 ) $ 666 $ (72,856 ) $ (56,033 )
Income (loss) from discontinued operations   (291 )   141     (174 )   669     345     (179 )   587     1,119     1,025     2,552  
Net income (loss) $ 14,864   $ 16,277   $ 4,926   $ 20,424   $ 56,491   $ 22,097   $ (5,532 ) $ 1,785   $ (71,831 ) $ (53,481 )
 
Earnings (loss) per common share:
Basic:
Income (loss) from continuing operations $ 0.38 $ 0.41 $ 0.13 $ 0.50 $ 1.42 $ 0.56 $ (0.14 ) $ 0.01 $ (1.42 ) $ (1.21 )
Discontinued operations:
Income (loss) from operations - - (0.01 ) 0.03 0.02 - 0.01 0.02 0.02 0.05
Gain (loss) on divestiture of operations   -     -     -     (0.01 )   (0.01 )   -     -     -     -     -  
Net income (loss) $ 0.38   $ 0.41   $ 0.12   $ 0.52   $ 1.43   $ 0.56   $ (0.13 ) $ 0.03   $ (1.40 ) $ (1.16 )
 
Diluted:
Income (loss) from continuing operations $ 0.38 $ 0.41 $ 0.13 $ 0.50 $ 1.42 $ 0.55 $ (0.14 ) $ 0.01 $ (1.42 ) $ (1.21 )
Discontinued operations:
Income (loss) from operations - - (0.01 ) 0.03 0.02 - 0.01 0.02 0.02 0.05
Gain (loss) on divestiture of operations   -     -     -     (0.01 )   (0.01 )   -     -     -     -     -  
Net income (loss) $ 0.38   $ 0.41   $ 0.12   $ 0.52   $ 1.43   $ 0.55   $ (0.13 ) $ 0.03   $ (1.40 ) $ (1.16 )
 

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

Basic 38,626 38,756 38,778 38,790 38,738 39,035 43,231 51,329 51,335 46,280
Diluted 38,859 38,914 38,838 39,089 38,954 39,543 43,231 51,406 51,335 46,280
 
 
KINDRED HEALTHCARE, INC.
Condensed Business Segment Data
(In thousands)
 
    2010 Quarters         2011 Quarters    
First     Second     Third     Fourth Year First     Second     Third     Fourth Year
Revenues:
Hospital division $ 507,062 $ 493,401 $ 465,198 $ 507,660 $ 1,973,321 $ 558,974 $ 593,425 $ 684,781 $ 712,812 $ 2,549,992
 
Nursing center division 539,321 542,215 539,914 566,435 2,187,885 567,472 568,199 571,226 547,202 2,254,099
 
Rehabilitation division:
Skilled nursing rehabilitation services 95,563 97,273 99,860 111,059 403,755 114,618 161,246 252,574 246,720 775,158
Hospital rehabilitation services   21,147     20,913     20,436     21,182     83,678     22,490     38,291     69,811     70,232     200,824  
  116,710     118,186     120,296     132,241     487,433     137,108     199,537     322,385     316,952     975,982  
 
Home health and hospice division   3,434     3,875     3,947     6,266     17,522     8,038     10,828     15,419     26,451     60,736  
1,166,527 1,157,677 1,129,355 1,212,602 4,666,161 1,271,592 1,371,989 1,593,811 1,603,417 5,840,809
 
Eliminations:
Skilled nursing rehabilitation services (56,127 ) (55,809 ) (56,323 ) (56,365 ) (224,624 ) (57,081 ) (57,587 ) (57,922 ) (57,087 ) (229,677 )
Hospital rehabilitation services (20,226 ) (20,034 ) (19,502 ) (20,034 ) (79,796 ) (21,225 ) (20,706 ) (20,528 ) (22,167 ) (84,626 )
Home health and hospice   (337 )   (470 )   (518 )   (719 )   (2,044 )   (865 )   (1,104 )   (1,299 )   (1,475 )   (4,743 )
  (76,690 )   (76,313 )   (76,343 )   (77,118 )   (306,464 )   (79,171 )   (79,397 )   (79,749 )   (80,729 )   (319,046 )
$ 1,089,837   $ 1,081,364   $ 1,053,012   $ 1,135,484   $ 4,359,697   $ 1,192,421   $ 1,292,592   $ 1,514,062   $ 1,522,688   $ 5,521,763  
 
Income (loss) from continuing operations:
Operating income (loss):
Hospital division $ 95,440 $ 91,790 $ 75,784 $ 97,343 $ 360,357 $ 108,385 $ 108,465 $ 125,701 $ 144,891 (a) $ 487,442
 
Nursing center division 70,614 76,529 69,363 86,912 303,418 87,350 93,532 89,592 67,791 338,265
 
Rehabilitation division:
Skilled nursing rehabilitation services 9,575 9,325 9,580 5,223 33,703 9,159 15,978 27,575 13,204 65,916
Hospital rehabilitation services   5,146     4,793     4,728     4,302     18,969     5,332     8,033     15,606     14,760     43,731  
  14,721     14,118     14,308     9,525     52,672     14,491     24,011     43,181     27,964     109,647  
 
Home health and hospice division (38 ) (18 ) (94 ) 84 (66 ) (10 ) (447 ) 1,107 2,453 3,103
 
Corporate:
Overhead (33,831 ) (32,799 ) (34,329 ) (33,002 ) (133,961 ) (38,315 ) (43,801 ) (48,806 ) (43,878 ) (174,800 )
Insurance subsidiary   (480 )   (791 )   (783 )   (1,099 )   (3,153 )   (602 )   (420 )   (750 )   (534 )   (2,306 )
(34,311 ) (33,590 ) (35,112 ) (34,101 ) (137,114 ) (38,917 ) (44,221 ) (49,556 ) (44,412 ) (177,106 )
 
Impairment charges (b) - - - - - - - (26,712 ) (102,569 ) (129,281 )
Transaction costs (c)   (770 )   (955 )   (771 )   (2,148 )   (4,644 )   (4,179 )   (34,851 )   (6,537 )   (5,139 )   (50,706 )
Operating income 145,656 147,874 123,478 157,615 574,623 167,120 146,489 176,776 90,979 581,364
Rent (88,319 ) (88,981 ) (89,295 ) (90,777 ) (357,372 ) (91,453 ) (95,677 ) (105,511 ) (106,616 ) (d) (399,257 )
Depreciation and amortization (31,121 ) (29,852 ) (29,167 ) (31,412 ) (121,552 ) (32,549 ) (37,871 ) (46,947 ) (48,227 ) (165,594 )
Interest, net   (430 )   (1,675 )   (1,239 )   (2,501 )   (5,845 )   (5,233 )   (22,900 )   (25,753 )   (26,002 )   (79,888 )

Income (loss) from continuing operations before income taxes

25,786 27,366 3,777 32,925 89,854 37,885 (9,959 ) (1,435 ) (89,866 ) (63,375 )
Provision (benefit) for income taxes   10,631     11,230     (1,323 )   13,170     33,708     15,609     (3,419 )   (2,342 )   (16,952 )   (7,104 )
$ 15,155   $ 16,136   $ 5,100   $ 19,755   $ 56,146   $ 22,276   $ (6,540 ) $ 907   $ (72,914 ) $ (56,271 )
 
(a) Includes loss on divestiture of a hospital of $1.5 million.
 
(b) Impairment charges for the third quarter of 2011 have been reclassified to conform with the current period presentation.
 
(c) Transaction costs for the 2010 periods have been reclassified to conform with the current period presentation.
 
(d) Includes lease cancellation charge of $1.8 million in connection with the RehabCare acquisition.
 
 
KINDRED HEALTHCARE, INC.
Condensed Consolidating Statement of Operations
(In thousands)
 
    Three months ended December 31, 2011
    Nursing     Rehabilitation division     Home         Transaction-        
Hospital center Skilled nursing     Hospital     health and related
division (a) division services services Total hospice Corporate costs Eliminations Consolidated
 
Revenues $ 712,812   $ 547,202   $ 246,720   $ 70,232 $ 316,952   $ 26,451   $ -   $ -   $ (80,729 ) $ 1,522,688  
 
Salaries, wages and benefits 321,657 269,454 221,404 50,151 271,555 19,155 28,976 647 (27 ) 911,417
Supplies 77,124 28,450 843 67 910 1,025 251 - - 107,760
Rent 52,299 49,748 1,415 72 1,487 568 695 1,819 - 106,616
Other operating expenses 169,140 181,507 11,269 5,254 16,523 3,818 17,896 4,492 (80,702 ) 312,674
Other income - - - - - - (2,711 ) - - (2,711 )
Impairment charges 54,325 2,245 45,999 - 45,999 - - 102,569
Depreciation and amortization 22,448 12,554 2,617 2,349 4,966 902 7,357 - - 48,227
Interest expense 228 26 - - - 1 25,989 - - 26,244
Investment income   (3 )   (28 )   -     -   -     (1 )   (210 )   -     -     (242 )
  697,218     543,956     283,547     57,893   341,440     25,468     78,243     6,958     (80,729 )   1,612,554  

Income (loss) from continuing operations before income taxes

$ 15,594   $ 3,246   $ (36,827 ) $ 12,339 $ (24,488 ) $ 983   $ (78,243 ) $ (6,958 ) $ -   (89,866 )
Income tax benefit   (16,952 )
Loss from continuing operations $ (72,914 )
 

Capital expenditures, excluding acquisitions (including discontinued operations):

Routine $ 9,521 $ 7,577 $ 1,031 $ 60 $ 1,091 $ 65 $ 19,386 $ - $ - $ 37,640
Development   13,157     4,027     -     -   -     901     -     -     -     18,085  
$ 22,678   $ 11,604   $ 1,031   $ 60 $ 1,091   $ 966   $ 19,386   $ -   $ -   $ 55,725  
 
 
Three months ended December 31, 2010
Nursing Rehabilitation division Home Transaction-
Hospital center Skilled nursing Hospital health and related
division division services services Total hospice Corporate costs Eliminations Consolidated
 
Revenues $ 507,660   $ 566,435   $ 111,059   $ 21,182 $ 132,241   $ 6,266   $ -   $ -   $ (77,118 ) $ 1,135,484  
 
Salaries, wages and benefits 230,028 274,784 102,835 16,213 119,048 4,719 23,813 357 (46 ) 652,703
Supplies 57,884 28,131 573 39 612 332 144 - - 87,103
Rent 39,406 49,647 1,540 27 1,567 122 35 - - 90,777
Other operating expenses 122,405 176,608 2,428 628 3,056 1,131 12,831 1,791 (77,072 ) 240,750
Other income - - - - - - (2,687 ) - - (2,687 )
Depreciation and amortization 13,421 11,646 646 99 745 85 5,515 - - 31,412
Interest expense 2 35 - - - - 2,806 - - 2,843
Investment income   (2 )   (14 )   (2 )   -   (2 )   -     (324 )   -     -     (342 )
  463,144     540,837     108,020     17,006   125,026     6,389     42,133     2,148     (77,118 )   1,102,559  

Income (loss) from continuing operations before income taxes

$ 44,516   $ 25,598   $ 3,039   $ 4,176 $ 7,215   $ (123 ) $ (42,133 ) $ (2,148 ) $ -   32,925
Provision for income taxes   13,170  
Income from continuing operations $ 19,755  
 

Capital expenditures, excluding acquisitions (including discontinued operations):

Routine $ 13,835 $ 12,292 $ 1,547 $ 208 $ 1,755 $ 61 $ 11,845 $ - $ - $ 39,788
Development   12,257     15,365     -     -   -     -     -     -     -     27,622  
$ 26,092   $ 27,657   $ 1,547   $ 208 $ 1,755   $ 61   $ 11,845   $ -   $ -   $ 67,410  
 

(a) Includes loss on divestiture of a hospital of $1.5 million in other operating expenses.

 
 
KINDRED HEALTHCARE, INC.
Condensed Consolidating Statement of Operations
(In thousands)
 
    Year ended December 31, 2011
    Nursing     Rehabilitation division     Home         Transaction-        
Hospital center Skilled nursing     Hospital     health and related
division (a) division services services Total hospice Corporate costs Eliminations Consolidated
 
Revenues $ 2,549,992   $ 2,254,099   $ 775,158   $ 200,824   $ 975,982   $ 60,736   $ -   $ -   $ (319,046 ) $ 5,521,763  
 
Salaries, wages and benefits 1,164,486 1,085,476 679,177 144,147 823,324 45,378 120,478 16,769 (96 ) 3,255,815
Supplies 283,628 112,095 2,826 189 3,015 2,438 838 - - 402,014
Rent 189,332 198,556 6,275 228 6,503 1,366 1,681 1,819 - 399,257
Other operating expenses 614,436 718,263 27,239 12,757 39,996 9,817 66,981 33,937 (318,950 ) 1,164,480
Other income - - - - - - (11,191 ) - - (11,191 )
Impairment charges 57,427 25,855 45,999 - 45,999 - - 129,281
Depreciation and amortization 74,910 50,040 7,191 5,637 12,828 1,449 26,367 - - 165,594
Interest expense 500 102 - - - 1 66,514 13,802 - 80,919
Investment income   (7 )   (86 )   (3 )   (1 )   (4 )   (1 )   (933 )   -     -     (1,031 )
  2,384,712     2,190,301     768,704     162,957     931,661     60,448     270,735     66,327     (319,046 )   5,585,138  

Income (loss) from continuing operations before income taxes

$ 165,280   $ 63,798   $ 6,454   $ 37,867   $ 44,321   $ 288   $ (270,735 ) $ (66,327 ) $ -   (63,375 )
Income tax benefit   (7,104 )
Loss from continuing operations $ (56,271 )
 

Capital expenditures, excluding acquisitions (including discontinued operations):

Routine $ 46,393 $ 34,304 $ 1,700 $ 238 $ 1,938 $ 164 $ 50,104 $ - $ - $ 132,903
Development   67,321     19,167     -     -     -     1,167     -     -     -     87,655  
$ 113,714   $ 53,471   $ 1,700   $ 238   $ 1,938   $ 1,331   $ 50,104   $ -   $ -   $ 220,558  
 
 
Year ended December 31, 2010
Nursing Rehabilitation division Home Transaction-
Hospital center Skilled nursing Hospital health and related
division (b) division (b) services services Total hospice Corporate (b) costs Eliminations Consolidated
 
Revenues $ 1,973,321   $ 2,187,885   $ 403,755   $ 83,678   $ 487,433   $ 17,522   $ -   $ -   $ (306,464 ) $ 4,359,697  
 
Salaries, wages and benefits 894,345 1,080,344 356,171 62,173 418,344 12,880 99,480 357 (60 ) 2,505,690
Supplies 228,157 110,266 2,003 106 2,109 1,108 557 - - 342,197
Rent 152,986 198,105 5,644 106 5,750 386 145 - - 357,372
Other operating expenses 490,462 693,857 11,878 2,430 14,308 3,600 48,499 4,287 (306,404 ) 948,609
Other income - - - - - - (11,422 ) - - (11,422 )
Depreciation and amortization 51,639 45,471 2,169 306 2,475 234 21,733 - - 121,552
Interest expense 5 131 - - - - 6,954 - - 7,090
Investment income   (3 )   (70 )   (5 )   (1 )   (6 )   -     (1,166 )   -     -     (1,245 )
  1,817,591     2,128,104     377,860     65,120     442,980     18,208     164,780     4,644     (306,464 )   4,269,843  

Income from continuing operations before income taxes

$ 155,730   $ 59,781   $ 25,895   $ 18,558   $ 44,453   $ (686 ) $ (164,780 ) $ (4,644 ) $ -   89,854
Provision for income taxes   33,708  
Income from continuing operations $ 56,146  
 

Capital expenditures, excluding acquisitions (including discontinued operations):

Routine $ 36,967 $ 37,024 $ 2,356 $ 293 $ 2,649 $ 66 $ 32,190 $ - $ - $ 108,896
Development   41,140     26,701     -     -     -     -     -     -     -     67,841  
$ 78,107   $ 63,725   $ 2,356   $ 293   $ 2,649   $ 66   $ 32,190   $ -   $ -   $ 176,737  
 

(a) Includes loss on divestiture of a hospital of $1.5 million in other operating expenses.

 

(b) Includes $2.9 million in aggregate of severance and retirement costs in salaries, wages and benefits (hospital division - $ 1.1 million, nursing center division - $0.5 million and corporate - $1.3 million).

 
 
KINDRED HEALTHCARE, INC.
Condensed Business Segment Data
(Unaudited)
 
    2010 Quarters         2011 Quarters    
First     Second     Third     Fourth Year First     Second     Third     Fourth Year
Hospital division data:
End of period data:
Number of hospitals:
Long-term acute care 83 83 83 89 89 120 120 121
Inpatient rehabilitation - - - - - 5 5 5
83 83 83 89 89 125 125 126
 
Number of licensed beds:
Long-term acute care 6,580 6,576 6,563 6,887 6,889 8,609 8,597 8,597
Inpatient rehabilitation - - - - - 183 183 183
6,580 6,576 6,563 6,887 6,889 8,792 8,780 8,780
 
Revenue mix %:
Medicare 56 56 55 58 56 60 60 60 62 60
Medicaid 9 9 9 9 9 8 8 8 7 8
Medicare Advantage 10 10 10 9 10 10 10 10 10 10
Commercial insurance and other 25 25 26 24 25 22 22 22 21 22
 
Admissions:
Medicare 7,432 7,125 6,769 7,640 28,966 8,504 8,913 11,002 11,682 40,101
Medicaid 997 990 1,022 1,034 4,043 1,085 1,163 1,236 1,163 4,647
Medicare Advantage 1,129 1,106 936 1,071 4,242 1,172 1,348 1,609 1,549 5,678
Commercial insurance and other 2,262 2,048 1,978 2,020 8,308 2,282 2,290 2,669 2,853 10,094
11,820 11,269 10,705 11,765 45,559 13,043 13,714 16,516 17,247 60,520
Admissions mix %:
Medicare 63 63 63 65 64 65 65 67 68 66
Medicaid 8 9 10 9 9 8 8 7 7 8
Medicare Advantage 10 10 9 9 9 9 10 10 9 9
Commercial insurance and other 19 18 18 17 18 18 17 16 16 17
 
Patient days:
Medicare 202,882 195,964 179,324 198,129 776,299 219,213 237,257 275,561 285,358 1,017,389
Medicaid 47,813 45,952 48,514 46,596 188,875 45,650 45,746 48,911 48,648 188,955
Medicare Advantage 34,524 36,000 31,186 32,868 134,578 35,639 39,503 47,819 47,738 170,699
Commercial insurance and other 75,483 70,651 70,198 69,585 285,917 70,522 72,759 83,375 84,677 311,333
360,702 348,567 329,222 347,178 1,385,669 371,024 395,265 455,666 466,421 1,688,376
Average length of stay:
Medicare 27.3 27.5 26.5 25.9 26.8 25.8 26.6 25.0 24.4 25.4
Medicaid 48.0 46.4 47.5 45.1 46.7 42.1 39.3 39.6 41.8 40.7
Medicare Advantage 30.6 32.5 33.3 30.7 31.7 30.4 29.3 29.7 30.8 30.1
Commercial insurance and other 33.4 34.5 35.5 34.4 34.4 30.9 31.8 31.2 29.7 30.8
Weighted average 30.5 30.9 30.8 29.5 30.4 28.4 28.8 27.6 27.0 27.9
 
 
KINDRED HEALTHCARE, INC.
Condensed Business Segment Data (Continued)
(Unaudited)
 
    2010 Quarters         2011 Quarters    
First     Second     Third     Fourth Year First     Second     Third     Fourth Year
Hospital division data (continued):
Revenues per admission:
Medicare $ 38,078 $ 38,938 $ 37,675 $ 38,368 $ 38,272 $ 39,439 $ 40,089 $ 37,408 $ 37,643 $ 38,503
Medicaid 45,738 42,774 42,910 41,704 43,266 42,432 41,576 40,720 44,618 42,309
Medicare Advantage 45,187 46,169 48,122 44,744 45,979 46,217 42,708 43,616 46,154 44,630
Commercial insurance and other 56,344 59,842 61,314 61,131 59,553 54,065 56,850 57,216 52,465 55,078
Weighted average 42,899 43,784 43,456 43,150 43,313 42,856 43,271 41,462 41,330 42,135
 
Revenues per patient day:
Medicare $ 1,395 $ 1,416 $ 1,422 $ 1,479 $ 1,428 $ 1,530 $ 1,506 $ 1,494 $ 1,541 $ 1,518
Medicaid 954 922 904 925 926 1,009 1,057 1,029 1,067 1,041
Medicare Advantage 1,478 1,418 1,444 1,458 1,449 1,520 1,457 1,468 1,498 1,485
Commercial insurance and other 1,688 1,735 1,728 1,775 1,730 1,749 1,789 1,832 1,768 1,786
Weighted average 1,406 1,416 1,413 1,462 1,424 1,507 1,501 1,503 1,528 1,510
 
Medicare case mix index (discharged patients only) 1.21 1.21 1.19 1.17 1.19 1.21 1.22 1.17 1.14 1.18
 
Average daily census 4,008 3,830 3,579 3,774 3,796 4,122 4,344 4,953 5,070 4,626
Occupancy % 68.2 66.1 62.0 64.0 65.1 68.7 65.5 62.6 63.5 64.8
 
Annualized employee turnover % 21.8 22.6 22.3 22.0 21.2 22.1 21.4 20.3
 
Nursing center division data:
End of period data:
Number of facilities:
Nursing and rehabilitation centers:
Owned or leased 218 219 222 222 220 220 220 220
Managed 4 4 4 4 4 4 4 4
Assisted living facilities   6   7   7   7   6   6   6   6
  228   230   233   233   230   230   230   230
Number of licensed beds:
Nursing and rehabilitation centers:
Owned or leased 26,711 26,760 27,030 26,957 26,767 26,687 26,687 26,663
Managed 485 485 485 485 485 485 485 485
Assisted living facilities   327   463   463   463   413   413   413   413
  27,523   27,708   27,978   27,905   27,665   27,585   27,585   27,561
Revenue mix %:
Medicare 35 34 33 36 35 38 37 36 33 36
Medicaid 41 41 41 39 40 37 38 38 40 38
Medicare Advantage 6 7 7 7 7 7 7 7 7 7
Private and other 18 18 19 18 18 18 18 19 20 19
 
 
KINDRED HEALTHCARE, INC.
Condensed Business Segment Data (Continued)
(Unaudited)
 
    2010 Quarters         2011 Quarters    
First     Second     Third     Fourth Year First     Second     Third     Fourth Year
Nursing center division data (continued):
Patient days (excludes managed facilities):
Medicare 369,102 363,149 346,837 344,018 1,423,106 370,395 358,760 345,362 334,156 1,408,673
Medicaid 1,312,517 1,292,246 1,289,643 1,287,739 5,182,145 1,232,620 1,229,517 1,255,418 1,248,442 4,965,997
Medicare Advantage 87,692 92,051 91,643 94,336 365,722 97,460 94,483 95,751 95,730 383,424
Private and other   397,550   415,921   437,413   453,357   1,704,241   425,414   435,667   436,074   441,362   1,738,517
  2,166,861   2,163,367   2,165,536   2,179,450   8,675,214   2,125,889   2,118,427   2,132,605   2,119,690   8,496,611
 
Patient day mix %:
Medicare 17 17 16 16 16 17 17 16 16 17
Medicaid 61 60 60 59 60 58 58 59 59 58
Medicare Advantage 4 4 4 4 4 5 4 5 4 5
Private and other 18 19 20 21 20 20 21 20 21 20
 
Revenues per patient day:
Medicare Part A $ 470 $ 469 $ 468 $ 534 $ 485 $ 537 $ 544 $ 550 $ 491 $ 531
Total Medicare (including Part B) 513 515 519 587 533 579 589 599 544 578
Medicaid 168 171 171 171 170 172 173 174 176 174
Medicare Advantage 398 400 405 432 409 416 420 421 405 415
Private and other 238 234 232 228 233 235 240 243 241 240
Weighted average 249 250 249 260 252 267 268 268 258 265
 
Average daily census 24,076 23,773 23,538 23,690 23,768 23,621 23,279 23,180 23,040 23,278
Admissions (excludes managed facilities) 19,026 18,924 19,383 19,118 76,451 20,619 20,143 20,118 19,914 80,794
Occupancy % 89.0 87.3 86.8 86.4 87.4 86.9 85.9 85.5 85.1 85.9
Medicare average length of stay 33.7 35.2 34.3 33.0 34.0 32.9 33.4 33.0 32.1 32.8
 
Annualized employee turnover % 36.7 38.8 39.8 39.6 37.8 39.8 40.2 39.2
 
Rehabilitation division data:
Skilled nursing rehabilitation services:
Revenue mix %:
Company-operated

59

57

56

51

56

50

36

23

23 30
Non-affiliated

41

43

44

49

44

50

64

77

77 70
 
Sites of service (at end of period) 554 568 595 635 641 1,848 1,835 1,774
Revenue per site $ 172,498 $ 171,254 $ 167,832 $ 174,896 $ 686,480 $ 178,812 $ 137,316 $ 137,643 $ 139,077 $ 592,848
 
Therapist productivity % 83.8 84.2 82.1 78.6 82.0 80.6 81.6 80.5 80.1 80.4
 
Hospital rehabilitation services:
Revenue mix %:
Company-operated 96 96 95 95 95 94 54 29 32 42
Non-affiliated 4 4 5 5 5 6 46 71 68 58
 
Sites of service (at end of period):
Inpatient rehabilitation units - - - 1 1 104 102 102
LTAC hospitals 85 85 85 91 93 97 99 115
Sub-acute units 7 7 7 7 8 22 23 25
Outpatient units 10 11 11 12 12 119 114 115
Other   2   2   4   4   5   8   7   8
  104   105   107   115   119   350   345   365
 
Revenue per site $ 203,337 $ 199,174 $ 190,986 $ 184,193 $ 777,690 $ 188,989 $ 199,661 $ 202,352 $ 192,410 $ 783,412
 
Annualized employee turnover % 12.6 14.2 15.4 14.4 14.5 17.1 16.5 16.5
 
 
KINDRED HEALTHCARE, INC.
Earnings (Loss) Per Common Share Reconciliation (a)
(In thousands, except per share amounts)
 
    Three months ended December 31,     Year ended December 31,
2011     2010 2011     2010
Basic     Diluted Basic     Diluted Basic     Diluted Basic     Diluted
Earnings (loss):
Amounts attributable to Kindred stockholders:
Income (loss) from continuing operations:
As reported in Statement of Operations $ (72,856 ) $ (72,856 ) $ 19,755 $ 19,755 $ (56,033 ) $ (56,033 ) $ 56,146 $ 56,146

Allocation to participating unvested restricted stockholders

  -     -     (347 )   (344 )   -     -     (1,015 )   (1,009 )
Available to common stockholders $ (72,856 ) $ (72,856 ) $ 19,408   $ 19,411   $ (56,033 ) $ (56,033 ) $ 55,131   $ 55,137  
 
Discontinued operations, net of income taxes:
Income from operations:
As reported in Statement of Operations $ 1,025 $ 1,025 $ 1,125 $ 1,125 $ 2,552 $ 2,552 $ 798 $ 798

Allocation to participating unvested restricted stockholders

  -     -     (20 )   (20 )   -     -     (14 )   (14 )
Available to common stockholders $ 1,025   $ 1,025   $ 1,105   $ 1,105   $ 2,552   $ 2,552   $ 784   $ 784  
 
Loss on divestiture of operations:
As reported in Statement of Operations $ - $ - $ (456 ) $ (456 ) $ - $ - $ (453 ) $ (453 )

Allocation to participating unvested restricted stockholders

  -     -     8     8     -     -     8     8  
Available to common stockholders $ -   $ -   $ (448 ) $ (448 ) $ -   $ -   $ (445 ) $ (445 )
 
Net income (loss):
As reported in Statement of Operations $ (71,831 ) $ (71,831 ) $ 20,424 $ 20,424 $ (53,481 ) $ (53,481 ) $ 56,491 $ 56,491

Allocation to participating unvested restricted stockholders

  -     -     (359 )   (356 )   -     -     (1,021 )   (1,015 )
Available to common stockholders $ (71,831 ) $ (71,831 ) $ 20,065   $ 20,068   $ (53,481 ) $ (53,481 ) $ 55,470   $ 55,476  
 
Shares used in the computation:

Weighted average shares outstanding - basic computation

  51,335   51,335   38,790   38,790   46,280   46,280   38,738   38,738
Dilutive effect of employee stock options - 137 - 135

Dilutive effect of performance-based restricted shares

  -     162     -     81  

Adjusted weighted average shares outstanding - diluted computation

  51,335     39,089     46,280     38,954  
 
Earnings (loss) per common share:
Income (loss) from continuing operations $ (1.42 ) $ (1.42 ) $ 0.50 $ 0.50 $ (1.21 ) $ (1.21 ) $ 1.42 $ 1.42
Discontinued operations:
Income from operations 0.02 0.02 0.03 0.03 0.05 0.05 0.02 0.02
Loss on divestiture of operations   -     -     (0.01 )   (0.01 )   -     -     (0.01 )   (0.01 )
Net income (loss) $ (1.40 ) $ (1.40 ) $ 0.52   $ 0.52   $ (1.16 ) $ (1.16 ) $ 1.43   $ 1.43  
 

(a) Earnings (loss) per common share are based upon the weighted average number of common shares outstanding during the respective periods. The diluted calculation of earnings (loss) per common share includes the dilutive effect of stock options. The Company follows the provisions of the authoritative guidance for determining whether instruments granted in share-based payment transactions are participating securities, which requires that certain unvested restricted stock be included as a participating security in the basic and diluted earnings (loss) per common share calculation pursuant to the two-class method.

 

 
KINDRED HEALTHCARE, INC.
Reconciliation of Non-GAAP Measurements to GAAP Results
(Unaudited)
(In thousands, except per share amounts and statistics)
 

In addition to the results provided in accordance with GAAP, the Company has provided a non-GAAP measurement which presents operating results for the fourth quarters and years ended December 31, 2011 and 2010 before certain charges or on a core basis. The charges that were excluded from core operating results for the fourth quarter ended December 31, 2011 relate to transaction, severance, lease cancellation, loss on hospital divestiture and impairment charges. The charges that were excluded from core operating results for the year ended December 31, 2011 relate to transaction, financing, severance, lease cancellation, loss on hospital divestiture and impairment charges. The charges that were excluded from core operating results for the fourth quarter ended December 31, 2010 relate to transaction costs. The charges that are excluded from core operations results for the year ended December 31, 2010 relate to transaction, severance and retirement costs.

 

The income tax benefit associated with the excluded charges was calculated using an effective income tax rate of 21.9% and 28.4% for the fourth quarter and year ended December 31, 2011, respectively, and an effective income tax rate of 25.3% and 34.7% for the fourth quarter and year ended December 31, 2010, respectively. Certain of the excluded charges for the fourth quarter and year ended December 31, 2011 are not deductible for income tax purposes thus resulting in a lower effective income tax rate than the comparable prior year periods.

 

This non-GAAP measurement is not intended to replace the presentation of the Company's financial results in accordance with GAAP. The Company believes that the presentation of core operating results provides additional information to investors to facilitate the comparison between periods by excluding certain charges for the fourth quarter and year ended December 31, 2011 and 2010 that the Company believes are not representative of its ongoing operations due to the materiality and nature of the charges. The Company's core operating results also represent a key performance measure for the purposes of evaluating performance internally.

 
    Three months ended     Year ended
December 31, December 31,
2011     2010 2011     2010
Detail of charges excluded from core operating results:
Transaction costs ($4,492 ) ($2,148 ) ($33,937 ) ($4,644 )
Financing costs (in connection with the RehabCare acquisition) - - (13,802 ) -
Severance and retirement costs (in connection with the RehabCare acquisition for 2011 periods) (647 ) - (16,769 ) (2,906 )
Lease cancellation charge (in connection with the RehabCare acquisition) (1,819 ) - (1,819 ) -
Loss on hospital divestiture (1,490 ) - (1,490 ) -
Impairment charges   (102,569 )   -     (129,281 )   -  
(111,017 ) (2,148 ) (197,098 ) (7,550 )
Income tax benefit   24,313     543     56,021     2,623  
Charges net of income taxes (86,704 ) (1,605 ) (141,077 ) (4,927 )
Allocation to participating unvested restricted stockholders   -     28     -     89  
Available to common stockholders   ($86,704 )   ($1,577 )   ($141,077 )   ($4,838 )
 
Weighted average diluted shares outstanding   51,335     39,089     46,280     38,954  
 
Diluted loss per common share related to charges   ($1.69 )   ($0.04 )   ($3.05 )   ($0.12 )
 
Reconciliation of adjusted operating income before charges:
Operating income before charges $ 200,177 $ 159,763 $ 762,841 $ 582,173
Detail of charges excluded from core operating results:
Transaction costs (4,492 ) (2,148 ) (33,937 ) (4,644 )
Severance and retirement costs (647 ) - (16,769 ) (2,906 )
Loss on hospital divestiture (1,490 ) - (1,490 ) -
Impairment charges   (102,569 )   -     (129,281 )   -  
  (109,198 )   (2,148 )   (181,477 )   (7,550 )
Reported operating income $ 90,979   $ 157,615   $ 581,364   $ 574,623  
 
Reconciliation of adjusted income from continuing operations before charges:
Amounts attributable to Kindred stockholders:
Income from continuing operations before charges $ 13,848 $ 21,360 $ 85,044 $ 61,073
Charges net of income taxes   (86,704 )   (1,605 )   (141,077 )   (4,927 )
Reported income (loss) from continuing operations   ($72,856 ) $ 19,755     ($56,033 ) $ 56,146  
 

Reconciliation of diluted income per common share from continuing operations before charges:

Diluted income per common share before charges (a) $ 0.27 $ 0.54 $ 1.80 $ 1.54
Charges net of income taxes as computed above (1.69 ) (0.04 ) (3.05 ) (0.12 )
Other   -     -     0.04     -  
Reported diluted income (loss) per common share from continuing operations   ($1.42 ) $ 0.50     ($1.21 ) $ 1.42  
 

Weighted average diluted shares used to compute diluted income (loss) per common share from continuing operations before charges

51,371 39,089 46,587 38,954
 
Reconciliation of effective income tax rate before charges:
Effective income tax rate before charges 34.8 % 39.1 % 36.6 % 37.3 %
Impact of charges on effective income tax rate   -15.9 %   0.9 %   -25.4 %   0.2 %
Reported effective income tax rate   18.9 %   40.0 %   11.2 %   37.5 %
 

(a) For purposes of computing diluted earnings per common share before charges, income from continuing operations before charges was reduced by $0.2 million and $0.4 million for the fourth quarters ended December 31, 2011 and 2010, respectively, and $1.4 million and $1.1 million for the years ended December 31, 2011 and 2010, respectively, for the allocation of income to participating unvested restricted stockholders.

 

 
KINDRED HEALTHCARE, INC.
Reconciliation of Non-GAAP Measurements to GAAP Results (Continued)
(Unaudited)
(In thousands)
 

In addition to the results provided in accordance with GAAP, the Company has provided a non-GAAP measurement which presents operating cash flows for the fourth quarters and years ended December 31, 2011 and 2010 excluding certain payments, net of income tax benefit, or on an adjusted basis. The payments that were excluded from adjusted operating cash flows for the fourth quarter ended December 31, 2011 relate to transaction and severance costs, net of income tax benefit. The payments that were excluded from adjusted operating cash flows for the year ended December 31, 2011 relate to financing, transaction and severance costs, net of income tax benefit. The payments that were excluded from operating cash flows for the fourth quarter ended December 31, 2010 relate to transaction costs, net of income tax benefit. The payments that are excluded from adjusted operating cash flows for the year ended December 31, 2010 relate to transaction, severance and retirement costs, net of income tax benefit.

 

The income tax benefit associated with the excluded payments was calculated using an effective income tax rate of 38.3% and 30.1% for the fourth quarter and year ended December 31, 2011, respectively, and an effective income tax rate of 25.3% and 34.7% for the fourth quarter and year ended December 31, 2010, respectively. Certain of the excluded payments for the fourth quarters and years ended December 31, 2011 and 2010 are not deductible for income tax purposes resulting in variances in the effective income tax rate compared to prior year periods.

 

This non-GAAP measurement is not intended to replace the presentation of the Company's operating cash flows in accordance with GAAP. The Company believes that the presentation of adjusted operating cash flows provides additional information to investors to facilitate the comparison between periods by excluding certain payments for the fourth quarters and years ended December 31, 2011 and 2010 that the Company believes are not representative of its ongoing operations due to the materiality and nature of the payments. The Company's adjusted operating cash flows also represent a key cash flow measure for the purposes of evaluating cash flows internally.

 
    Three months ended     Year ended
December 31, December 31,
2011     2010 2011     2010
 

Reconciliation of net cash flows provided by operating activities to adjusted operating cash flows:

Net cash provided by operating activities $ 35,900 $ 59,133 $ 153,706 $ 209,988
Adjustments to remove certain payments:
Financing costs:
Capitalized as deferred financing costs - - 46,232 -
Charged to interest expense - - 13,074 -
Transaction costs 4,369 2,111 33,827 3,821
Severance and retirement costs 1,038 - 11,303 2,689

Benefit of reduced income tax payments resulting from financing, transaction, severance and retirement costs

  (2,656 )   (543 )   (20,502 )   (2,623 )
  2,751     1,568     83,934     3,887  
Adjusted operating cash flows $ 38,651   $ 60,701   $ 237,640   $ 213,875  
 
 
KINDRED HEALTHCARE, INC.
Reconciliation of Earnings Guidance for 2012 - Continuing Operations
(Unaudited)
(In millions, except per share amounts)
 
   

As of February 23, 2012

    As of November 2, 2011
Low     High Low     High
 
Operating income $ 868   $ 884   $ 911   $ 928  
 
Rent 434 434 445 445
Depreciation and amortization 197 197 200 200
Interest, net   107     107     110     110  
Income from continuing operations before income taxes 130 146 156 173
Provision for income taxes   54     60     63     69  
Income from continuing operations 76 86 93 104

Earnings attributable to noncontrolling interests

  (3 )   (3 )   (4 )   (4 )

Income from continuing operations attributable to the Company

73 83 89 100
Allocation to participating unvested restricted stockholders   (2 )   (2 )   (2 )   (2 )
Available to common stockholders $ 71   $ 81   $ 87   $ 98  
 
 
Earnings per diluted share $ 1.35 $ 1.55 $ 1.65 $ 1.85
 
Shares used in computing earnings per diluted share 52.5 52.5 53.0 53.0
 

(a) The Company's earnings guidance excludes the effect of (i) any transaction-related charges, (ii) any other reimbursement changes, (iii) any acquisitions or divestitures, (iv) any impairment charges, or (v) any repurchases of common stock.

Source: Kindred Healthcare, Inc.

Kindred Healthcare, Inc.
Richard A. Lechleiter, 502-596-7734
Executive Vice President and Chief Financial Officer