Kindred Healthcare, Inc. (“Kindred” or the “Company”) (NYSE:KND) today announced its operating results for the first quarter ended March 31, 2015.
Benjamin A. Breier, President and Chief Executive Officer of the Company commented, “After our efforts to transform the Company over the last several years, I am pleased with the strides we made in the first quarter to strengthen our business and solidify Kindred’s position as a national leader in post-acute care. Our strong results and growth would not have been possible without the dedication of our 103,000 teammates and their commitment to improving the lives of more than one million patients each year.”
Mr. Breier further commented, “In the first quarter, we achieved our integration and synergy objectives for the acquired organizations and their operating results exceeded expectations. These strategic additions significantly improved the growth, margin and cash flow profile of the Company.”
All financial and statistical information included in this press release reflects the continuing operations of the Company’s businesses for all periods presented unless otherwise indicated. The acquisitions of Gentiva Health Services, Inc. (“Gentiva”) and Centerre Healthcare Corporation (“Centerre”) have been included in the operating results presented since the date of acquisition. Prior period segment information has been recast to conform with the current presentation, including the transfer of five inpatient rehabilitation hospitals from the Hospital Division to the Hospital Rehabilitation Services business segment.
First Quarter Consolidated Highlights(1):
- Core diluted EPS from continuing operations of $0.34 and adjusted core diluted EPS from continuing operations of $0.43 based upon 82.4 million weighted average diluted shares as compared to core diluted EPS of $0.35 and adjusted core diluted EPS of $0.46 a year ago based upon 52.7 million weighted average diluted shares
- Consolidated revenues increased 32% to $1.68 billion and earnings before interest, income taxes, depreciation, amortization, rent and certain charges (“core EBITDAR”) increased 29% to $234 million, each as compared to the same period last year primarily due to the acquisitions of Gentiva on February 2, 2015 and Centerre on January 1, 2015
- Core operating cash flows were $38 million compared to $14 million a year ago; core free cash flows were $17 million compared to a core free cash flow deficit of $8 million in the first quarter of 2014
- The Kindred Board of Directors declared regular quarterly cash dividend of $0.12 per share on the Company’s common stock payable on June 10, 2015
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(1) | See reconciliation of core and adjusted results to generally accepted accounting principles (“GAAP”) results beginning on page 12. | |
First Quarter Segment Highlights(1):
Kindred at Home (“KAH”) had a very strong start to the year, with the successful acquisition of Gentiva in February, which established KAH as the largest combined home health and hospice operator in the country. The home health segment of KAH experienced strong growth with combined Medicare admissions increasing 3.3% and revenues increasing 6.6%, both for the first quarter of 2015 over the prior year. The hospice segment of KAH is showing signs of stabilization and has begun a return to sequential admissions and census growth on a combined basis. In addition, Kindred achieved key first quarter integration milestones for the Gentiva acquisition and is on track to realize $35 million of contribution from synergies in 2015 and a synergy run rate at year end of at least $55 million.
Kindred’s Hospital Division (“HD”) revenue increased 2.1% over prior year driven by patient day growth of 3.3%, growth in revenue per admission of 2.7% offset by an admissions decline of 0.5%. Core EBITDAR contribution from HD was down 3.4% from prior year, to $135 million, driven primarily by shifts in payor mix and patient acuity. We continue to be pleased with the progress our long-term acute care (“LTAC”) hospital business is making as we transition through the Affordable Care Act roll-out and with preparations for the implementation of LTAC criteria, which will not impact the Company until late 2016.
Kindred’s Rehabilitation Division (“RHB”) had a solid start to the year with the successful acquisition of Centerre and its 11 freestanding inpatient rehabilitation hospitals (“IRFs”), all of which are joint ventured with prominent regional health systems. Strong performance in the quarter from RHB’s freestanding IRFs and contract hospital rehabilitation services business was offset, in part, by contract losses in the skilled nursing rehabilitation services segment.
Kindred’s Nursing Center Division (“NCD”) revenue and admissions grew 4.5% and 6.0%, respectively, over the prior year. Medicare average length of stay contracted 2.4% over the prior year, contributing to a core EBITDAR reduction of 1.6% to $37 million.
Mr. Breier commented, “Our patient-centered care management approach to provide the right care, in the right setting, at the right time - combined with the successful steps we have taken to expand our operations - are driving value creation for our patients, healthcare partners and shareholders. We recently issued our Annual Quality and Social Responsibility Report that highlights our clinical expertise, capabilities across the continuum and care innovations. These strengths support smooth transitions between care settings, produce positive clinical outcomes, and improve the patient experience.”
Mr. Breier continued, “Our solid start to 2015, together with the clarity and stability from the permanent “doc fix” and LTAC preliminary rulemaking in line with expectations, builds upon our excitement for the future and confidence that our strategy best positions us for long-term success.”
RehabCare Loss Contingency Reserve
The Company is engaged in active discussions with the United States Department of Justice in an effort to find a mutually acceptable resolution to the previously disclosed investigation of RehabCare Group, Inc., a therapy services company acquired by Kindred on June 1, 2011. Based on the progress of those settlement discussions beginning in mid-March and into the second quarter of 2015, the Company has accrued an estimated loss contingency reserve of $95 million in the first quarter of 2015. In the event the Company is able to reach a mutually agreeable settlement with the Department of Justice, the Company estimates that the financial component of such a settlement could range from $95 million to $125 million. The discussions are ongoing, and until concluded, there can be no certainty about the timing or likelihood of a definitive resolution, the scope of any potential restrictions that may be agreed upon in connection with a settlement or the cost of a final settlement.
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(1) | See reconciliation of core and adjusted results to GAAP results beginning on page 12. | |
2015 Outlook
Kindred today established guidance for its estimated 2015 financial results (1) including:
- 2015 annual revenues of approximately $7.2 billion
- Core EBITDAR of approximately $1.0 billion to $1.05 billion (2)
- Core earnings of $1.20 to $1.40 per diluted share (3)
- Adjusted core earnings of $1.70 to $1.90 per diluted share(3)(4)
For the second quarter of 2015, the Company expects core diluted earnings per share from continuing operations to approximate $0.27 to $0.37 and adjusted core diluted earnings per share from continuing operations to approximate $0.39 to $0.49.
Stephen D. Farber, Executive Vice President and Chief Financial Officer, commented, “We are encouraged by the strong performance and integration progress of our Gentiva and Centerre acquisitions, and our solid consolidated operating results. We are establishing guidance for the year at levels that represent significant growth, and we are on track to meet our synergy goal to realize $35 million of synergy contribution in 2015. Our cash flow and growth profile will continue to support a strong balance sheet and allow us to delever while continuing to invest in our businesses and return significant capital to shareholders through our quarterly cash dividends.”
The guidance excludes transaction costs, pre-closing financing costs and post-closing integration costs associated with the acquisitions of Gentiva and Centerre, the effect of reimbursement changes, debt refinancing costs, severance, retirement, retention and restructuring costs, litigation and related contingency expense, other transaction costs, any further acquisitions or divestitures, any impairment charges, any further issuances of common stock or any repurchases of common stock.
Quarterly Cash Dividend
The Company announced that its Board of Directors has approved the payment of the regular quarterly cash dividend of $0.12 per share of common stock to be paid on June 10, 2015 to shareholders of record as of the close of business on May 20, 2015.
Conference Call
As previously announced, investors and the general public may access a live webcast of the first quarter 2015 conference call through a link on the Company’s website at http://investors.kindredhealthcare.com. The conference call will be held on May 7 at 10:00 a.m. (Eastern Time).
A telephone replay of the conference call will become available at approximately 1:00 p.m. on May 7 by dialing (719) 457-0820, access code: 1193715. The replay will be available through May 15.
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(1) | Guidance includes Gentiva for eleven months and Centerre for the full year. | |
(2) | Includes $35 million from Gentiva synergies expected to be realized in the year. | |
(3) | The earnings per share estimate is based upon an estimated weighted average annual diluted share count for 2015 of 86 million shares. The estimated annual diluted share count of 2015 includes approximately 3.4 million shares of common stock issued in late February to holders of 78,010 tangible equity units that elected early conversion settlements. | |
(4) | Adjusted core earnings per diluted share is calculated by excluding non-cash expenses, net of the income tax benefit, related to amortization of intangible assets, stock-based compensation and deferred financing costs, from core income from continuing operations. | |
Forward-Looking Statements and Non-GAAP Reconciliations
See page 11 for important disclosures regarding our forward-looking statements and the non-GAAP financial reconciliations that follow.
About Kindred Healthcare
Kindred Healthcare, Inc., a top-85 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(1). At March 31, 2015, Kindred through its subsidiaries had approximately 102,600 employees providing healthcare services in 2,787 locations in 47 states, including 97 transitional care hospitals, 16 inpatient rehabilitation hospitals, 90 nursing centers, 21 sub-acute units, 664 Kindred at Home home health, hospice and non-medical home care sites of service, 100 inpatient rehabilitation units (hospital-based) and a contract rehabilitation services business, RehabCare, which served 1,799 non-affiliated sites of service. Ranked as one of Fortune magazine’s Most Admired Healthcare Companies for six 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.
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(1) | Revenues were computed by combining the twelve months ended December 31, 2014 data for Kindred, Gentiva and Centerre. | |
KINDRED HEALTHCARE, INC. | ||||||||||
Condensed Consolidated Statement of Operations | ||||||||||
(Unaudited) | ||||||||||
(In thousands, except per share amounts) | ||||||||||
Three months ended | ||||||||||
March 31, | ||||||||||
2015 | 2014 | |||||||||
Revenues | $ | 1,675,967 | $ | 1,272,610 | ||||||
Salaries, wages and benefits | 847,093 | 618,694 | ||||||||
Supplies | 93,271 | 72,965 | ||||||||
Rent | 92,140 | 78,530 | ||||||||
Other operating expenses | 197,727 | 169,530 | ||||||||
General and administrative expenses | 406,102 | 231,272 | ||||||||
Other income | (480 | ) | (212 | ) | ||||||
Litigation contingency expense | 95,000 | - | ||||||||
Impairment charges | 6,726 | - | ||||||||
Depreciation and amortization | 38,935 | 39,092 | ||||||||
Interest expense | 62,518 | 25,799 | ||||||||
Investment income | (741 | ) | (182 | ) | ||||||
1,838,291 | 1,235,488 | |||||||||
Income (loss) from continuing operations before income taxes | (162,324 | ) | 37,122 | |||||||
Provision (benefit) for income taxes | (27,736 | ) | 14,195 | |||||||
Income (loss) from continuing operations | (134,588 | ) | 22,927 | |||||||
Discontinued operations, net of income taxes: | ||||||||||
Loss from operations | (3,424 | ) | (7,442 | ) | ||||||
Loss on divestiture of operations | - | (3,006 | ) | |||||||
Loss from discontinued operations | (3,424 | ) | (10,448 | ) | ||||||
Net income (loss) | (138,012 | ) | 12,479 | |||||||
(Earnings) loss attributable to noncontrolling interests: | ||||||||||
Continuing operations | (8,847 | ) | (4,529 | ) | ||||||
Discontinued operations | 29 | 70 | ||||||||
(8,818 | ) | (4,459 | ) | |||||||
Income (loss) attributable to Kindred | $ | (146,830 | ) | $ | 8,020 | |||||
Amounts attributable to Kindred stockholders: | ||||||||||
Income (loss) from continuing operations | $ | (143,435 | ) | $ | 18,398 | |||||
Loss from discontinued operations | (3,395 | ) | (10,378 | ) | ||||||
Net income (loss) | $ | (146,830 | ) | $ | 8,020 | |||||
Earnings (loss) per common share: | ||||||||||
Basic: | ||||||||||
Income (loss) from continuing operations | $ | (1.80 | ) | $ | 0.34 | |||||
Discontinued operations: | ||||||||||
Loss from operations | (0.04 | ) | (0.13 | ) | ||||||
Loss on divestiture of operations | - | (0.06 | ) | |||||||
Loss from discontinued operations | (0.04 | ) | (0.19 | ) | ||||||
Net income (loss) | $ | (1.84 | ) | $ | 0.15 | |||||
Diluted: | ||||||||||
Income (loss) from continuing operations | $ | (1.80 | ) | $ | 0.34 | |||||
Discontinued operations: | ||||||||||
Loss from operations | (0.04 | ) | (0.13 | ) | ||||||
Loss on divestiture of operations | - | (0.06 | ) | |||||||
Loss from discontinued operations | (0.04 | ) | (0.19 | ) | ||||||
Net income (loss) | $ | (1.84 | ) | $ | 0.15 | |||||
Shares used in computing earnings (loss) per common share: | ||||||||||
Basic | 79,575 | 52,641 | ||||||||
Diluted | 79,575 | 52,711 | ||||||||
Cash dividends declared and paid per common share | $ | 0.12 | $ | 0.12 | ||||||
KINDRED HEALTHCARE, INC. | ||||||||||
Condensed Consolidated Balance Sheet | ||||||||||
(Unaudited) | ||||||||||
(In thousands, except per share amounts) | ||||||||||
March 31, | December 31, | |||||||||
2015 | 2014 | |||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 96,525 | $ | 164,188 | ||||||
Insurance subsidiary investments | 110,700 | 99,951 | ||||||||
Accounts receivable less allowance for loss | 1,255,450 | 944,219 | ||||||||
Inventories | 27,151 | 25,702 | ||||||||
Deferred tax assets | 93,449 | 82,391 | ||||||||
Income taxes | 17,805 | 8,575 | ||||||||
Interest deposit on senior unsecured notes held in escrow | - | 23,438 | ||||||||
Other | 72,788 | 41,598 | ||||||||
1,673,868 | 1,390,062 | |||||||||
Property and equipment | 2,061,373 | 1,978,153 | ||||||||
Accumulated depreciation | (1,107,611 | ) | (1,076,049 | ) | ||||||
953,762 | 902,104 | |||||||||
Goodwill | 2,633,661 | 997,597 | ||||||||
Intangible assets less accumulated amortization | 809,597 | 400,700 | ||||||||
Assets held for sale | 2,432 | 3,475 | ||||||||
Insurance subsidiary investments | 183,122 | 166,045 | ||||||||
Deferred tax assets | 10,509 | 11,174 | ||||||||
Proceeds from senior unsecured notes held in escrow | - | 1,350,000 | ||||||||
Acquisition deposit | - | 195,000 | ||||||||
Other | 314,380 | 236,807 | ||||||||
Total assets | $ | 6,581,331 | $ | 5,652,964 | ||||||
LIABILITIES AND EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 195,397 | $ | 175,725 | ||||||
Salaries, wages and other compensation | 451,564 | 358,857 | ||||||||
Due to third party payors | 48,044 | 43,957 | ||||||||
Professional liability risks | 66,752 | 64,137 | ||||||||
Other accrued liabilities | 340,846 | 189,980 | ||||||||
Long-term debt due within one year | 33,240 | 24,607 | ||||||||
1,135,843 | 857,263 | |||||||||
Long-term debt | 3,242,780 | 2,852,531 | ||||||||
Professional liability risks | 260,781 | 243,614 | ||||||||
Deferred credits and other liabilities | 293,271 | 213,584 | ||||||||
Equity: | ||||||||||
Stockholders’ equity: | ||||||||||
Common stock, $0.25 par value; authorized 175,000 shares; issued 83,424 shares - March 31, 2015 and 69,977 shares - December 31, 2014 | 20,856 | 17,494 | ||||||||
Capital in excess of par value | 1,748,599 | 1,586,692 | ||||||||
Accumulated other comprehensive loss | (3,607 | ) | (2,551 | ) | ||||||
Accumulated deficit | (308,616 | ) | (159,768 | ) | ||||||
1,457,232 | 1,441,867 | |||||||||
Noncontrolling interests | 191,424 | 44,105 | ||||||||
Total equity | 1,648,656 | 1,485,972 | ||||||||
Total liabilities and equity | $ | 6,581,331 | $ | 5,652,964 | ||||||
KINDRED HEALTHCARE, INC. | ||||||||||
Condensed Consolidated Statement of Cash Flows | ||||||||||
(Unaudited) | ||||||||||
(In thousands) | ||||||||||
Three months ended | ||||||||||
March 31, | ||||||||||
2015 | 2014 | |||||||||
Cash flows from operating activities: | ||||||||||
Net income (loss) | $ | (138,012 | ) | $ | 12,479 | |||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||||
Depreciation and amortization | 39,077 | 41,304 | ||||||||
Amortization of stock-based compensation costs | 5,824 | 2,585 | ||||||||
Amortization of deferred financing costs | 3,062 | 2,397 | ||||||||
Payment of capitalized lender fees related to debt issuance | (28,012 | ) | - | |||||||
Provision for doubtful accounts | 8,292 | 8,760 | ||||||||
Deferred income taxes | (25,580 | ) | 3,975 | |||||||
Impairment charges | 6,726 | 444 | ||||||||
Loss on divestiture of discontinued operations | - | 3,006 | ||||||||
Other | 1,997 | 2,044 | ||||||||
Change in operating assets and liabilities: | ||||||||||
Accounts receivable | (31,656 | ) | (71,829 | ) | ||||||
Inventories and other assets | 53,022 | (6,218 | ) | |||||||
Accounts payable | 465 | (13,452 | ) | |||||||
Income taxes | (5,768 | ) | 29,413 | |||||||
Due to third party payors | (15,419 | ) | (2,013 | ) | ||||||
Other accrued liabilities | (13,620 | ) | (28,649 | ) | ||||||
Net cash used in operating activities | (139,602 | ) | (15,754 | ) | ||||||
Cash flows from investing activities: | ||||||||||
Routine capital expenditures | (20,769 | ) | (21,677 | ) | ||||||
Development capital expenditures | (5,788 | ) | (751 | ) | ||||||
Acquisitions, net of cash acquired | (659,071 | ) | (22,715 | ) | ||||||
Acquisition deposit | 195,000 | - | ||||||||
Sale of assets | 948 | 5,034 | ||||||||
Proceeds from senior unsecured notes offering held in escrow | 1,350,000 | - | ||||||||
Interest in escrow for senior unsecured notes | 23,438 | - | ||||||||
Purchase of insurance subsidiary investments | (25,918 | ) | (10,114 | ) | ||||||
Sale of insurance subsidiary investments | 22,029 | 8,762 | ||||||||
Net change in insurance subsidiary cash and cash equivalents | (558 | ) | (6,599 | ) | ||||||
Change in other investments | 24 | 640 | ||||||||
Other | 5 | (551 | ) | |||||||
Net cash provided by (used in) investing activities | 879,340 | (47,971 | ) | |||||||
Cash flows from financing activities: | ||||||||||
Proceeds from borrowings under revolving credit | 807,450 | 508,700 | ||||||||
Repayment of borrowings under revolving credit | (610,050 | ) | (425,800 | ) | ||||||
Proceeds from issuance of term loan, net of discount | 199,000 | - | ||||||||
Repayment of Gentiva debt | (1,177,363 | ) | - | |||||||
Repayment of term loan | - | (1,969 | ) | |||||||
Repayment of other long-term debt | (441 | ) | (90 | ) | ||||||
Payment of deferred financing costs | (2,538 | ) | (270 | ) | ||||||
Issuance of common stock in connection with employee benefit plans | 66 | 3,804 | ||||||||
Payment of costs associated with issuance of common stock and tangible equity units | (915 | ) | - | |||||||
Payment of dividend for mandatory redeemable preferred stock | (2,778 | ) | - | |||||||
Dividends paid | (9,975 | ) | (6,514 | ) | ||||||
Distributions to noncontrolling interests | (11,019 | ) | (2,933 | ) | ||||||
Other | 1,162 | 1,873 | ||||||||
Net cash provided by (used in) financing activities | (807,401 | ) | 76,801 | |||||||
Change in cash and cash equivalents | (67,663 | ) | 13,076 | |||||||
Cash and cash equivalents at beginning of period | 164,188 | 35,972 | ||||||||
Cash and cash equivalents at end of period | $ | 96,525 | $ | 49,048 | ||||||
KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||||||
Condensed Business Segment Data (a) | |||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||
First | First quarter | ||||||||||||||||||||||||||||
2014 Quarters | Quarter | % change v. | |||||||||||||||||||||||||||
First | Second | Third | Fourth | 2015 | prior year | ||||||||||||||||||||||||
Consolidated income statement data: | |||||||||||||||||||||||||||||
Revenues | $ | 1,272,610 | $ | 1,261,397 | $ | 1,228,918 | $ | 1,264,674 | $ | 1,675,967 | 31.7 | ||||||||||||||||||
Core EBITDAR | $ | 181,044 | $ | 175,865 | $ | 157,218 | $ | 170,088 | $ | 234,211 | 29.4 | ||||||||||||||||||
Rent | 78,530 | 77,452 | 77,643 | 79,167 | 91,199 | 16.1 | |||||||||||||||||||||||
Core EBITDA | 102,514 | 98,413 | 79,575 | 90,921 | 143,012 | 39.5 | |||||||||||||||||||||||
Depreciation and amortization | 39,092 | 39,172 | 38,748 | 38,558 | 38,935 | (0.4 | ) | ||||||||||||||||||||||
Interest, net | 25,617 | 21,438 | 22,171 | 21,857 | 44,346 | 73.1 | |||||||||||||||||||||||
Income from continuing operations before income taxes | 37,805 | 37,803 | 18,656 | 30,506 | 59,731 | 58.0 | |||||||||||||||||||||||
Provision for income taxes | 14,445 | 13,612 | 6,168 | 8,471 | 22,466 | 55.5 | |||||||||||||||||||||||
Income from continuing operations | 23,360 | 24,191 | 12,488 | 22,035 | 37,265 | 59.5 | |||||||||||||||||||||||
Noncontrolling interests | (4,529 | ) | (4,828 | ) | (4,372 | ) | (5,143 | ) | (8,847 | ) | 95.3 | ||||||||||||||||||
Net income attributable to Kindred | $ | 18,831 | $ | 19,363 | $ | 8,116 | $ | 16,892 | $ | 28,418 | 50.9 | ||||||||||||||||||
Core EPS | $ | 0.35 | $ | 0.35 | $ | 0.13 | $ | 0.26 | $ | 0.34 | (2.9 | ) | |||||||||||||||||
Adjusted Core EPS | $ | 0.46 | $ | 0.50 | $ | 0.20 | $ | 0.38 | $ | 0.43 | (6.5 | ) | |||||||||||||||||
Diluted shares | 52,711 | 53,792 | 62,902 | 63,163 | 82,422 | 56.4 | |||||||||||||||||||||||
Revenues by segment: | |||||||||||||||||||||||||||||
Hospital division | $ | 627,245 | $ | 612,517 | $ | 591,121 | $ | 619,185 | $ | 640,483 | 2.1 | ||||||||||||||||||
Kindred at Home: | |||||||||||||||||||||||||||||
Home health | 74,791 | 75,502 | 74,026 | 74,588 | 300,867 | 302.3 | |||||||||||||||||||||||
Hospice | 12,913 | 12,484 | 12,160 | 12,538 | 119,057 | 822.0 | |||||||||||||||||||||||
87,704 | 87,986 | 86,186 | 87,126 | 419,924 | 378.8 | ||||||||||||||||||||||||
Rehabilitation division: | |||||||||||||||||||||||||||||
Hospital rehabilitation services | 93,177 | 94,963 | 93,139 | 92,922 | 151,564 | 62.7 | |||||||||||||||||||||||
Skilled nursing rehabilitation services | 253,943 | 253,694 | 246,732 | 252,667 | 252,595 | (0.5 | ) | ||||||||||||||||||||||
347,120 | 348,657 | 339,871 | 345,589 | 404,159 | 16.4 | ||||||||||||||||||||||||
Nursing center division | 262,590 | 264,437 | 263,897 | 271,625 | 274,308 | 4.5 | |||||||||||||||||||||||
1,324,659 | 1,313,597 | 1,281,075 | 1,323,525 | 1,738,874 | 31.3 | ||||||||||||||||||||||||
Eliminations | (52,049 | ) | (52,200 | ) | (52,157 | ) | (58,851 | ) | (62,907 | ) | 20.9 | ||||||||||||||||||
$ | 1,272,610 | $ | 1,261,397 | $ | 1,228,918 | $ | 1,264,674 | $ | 1,675,967 | 31.7 | |||||||||||||||||||
Core EBITDAR by segment: | |||||||||||||||||||||||||||||
Hospital division | $ | 139,505 | $ | 131,990 | $ | 117,604 | $ | 134,791 | $ | 134,786 | (3.4 | ) | |||||||||||||||||
Kindred at Home: | |||||||||||||||||||||||||||||
Home health | 2,845 | 5,769 | 5,961 | 7,398 | 46,798 | 1,544.9 | |||||||||||||||||||||||
Hospice | 1,852 | 2,139 | 1,149 | 524 | 16,996 | 817.7 | |||||||||||||||||||||||
4,697 | 7,908 | 7,110 | 7,922 | 63,794 | 1,258.2 | ||||||||||||||||||||||||
Rehabilitation division: | |||||||||||||||||||||||||||||
Hospital rehabilitation services | 25,710 | 25,742 | 24,887 | 23,884 | 44,564 | 73.3 | |||||||||||||||||||||||
Skilled nursing rehabilitation services | 18,016 | 19,863 | 17,080 | 16,029 | 16,493 | (8.5 | ) | ||||||||||||||||||||||
43,726 | 45,605 | 41,967 | 39,913 | 61,057 | 39.6 | ||||||||||||||||||||||||
Nursing center division | 37,572 | 38,614 | 35,920 | 38,810 | 36,963 | (1.6 | ) | ||||||||||||||||||||||
Support center | (44,456 | ) | (48,252 | ) | (45,383 | ) | (51,348 | ) | (62,389 | ) | 40.3 | ||||||||||||||||||
$ | 181,044 | $ | 175,865 | $ | 157,218 | $ | 170,088 | $ | 234,211 | 29.4 | |||||||||||||||||||
Core EBITDAR margin by segment: | |||||||||||||||||||||||||||||
Hospital division | 22.2 | 21.5 | 19.9 | 21.8 | 21.0 | (5.4 | ) | ||||||||||||||||||||||
Kindred at Home: | |||||||||||||||||||||||||||||
Home health | 3.8 | 7.6 | 8.1 | 9.9 | 15.6 | 310.5 | |||||||||||||||||||||||
Hospice | 14.3 | 17.1 | 9.4 | 4.2 | 14.3 | - | |||||||||||||||||||||||
Kindred at Home | 5.4 | 9.0 | 8.2 | 9.1 | 15.2 | 181.5 | |||||||||||||||||||||||
Rehabilitation division: | |||||||||||||||||||||||||||||
Hospital rehabilitation services | 27.6 | 27.1 | 26.7 | 25.7 | 29.4 | 6.5 | |||||||||||||||||||||||
Skilled nursing rehabilitation services | 7.1 | 7.8 | 6.9 | 6.3 | 6.5 | (8.5 | ) | ||||||||||||||||||||||
Rehabilitation division | 12.6 | 13.1 | 12.3 | 11.5 | 15.1 | 19.8 | |||||||||||||||||||||||
Nursing center division | 14.3 | 14.6 | 13.6 | 14.3 | 13.5 | (5.6 | ) | ||||||||||||||||||||||
Consolidated | 14.2 | 13.9 | 12.8 | 13.4 | 14.0 | (1.4 | ) | ||||||||||||||||||||||
____________ | |||||||||||||||||||||||||||||
(a) See reconciliation of core and adjusted results to GAAP results beginning on page 12. | |||||||||||||||||||||||||||||
KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||
Condensed Business Segment Data (Continued) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
First | First quarter | |||||||||||||||||||||||
2014 Quarters | Quarter | % change v. | ||||||||||||||||||||||
First | Second | Third | Fourth | 2015 | prior year | |||||||||||||||||||
Hospital division: | ||||||||||||||||||||||||
End of period data: | ||||||||||||||||||||||||
Number of transitional care hospitals | 97 | 97 | 97 | 97 | 97 | |||||||||||||||||||
Number of licensed beds | 7,145 | 7,145 | 7,145 | 7,147 | 7,147 | |||||||||||||||||||
Revenue mix %: | ||||||||||||||||||||||||
Medicare | 59.8 | 58.2 | 57.0 | 57.0 | 56.8 | |||||||||||||||||||
Medicaid | 6.6 | 6.8 | 6.9 | 6.0 | 5.5 | |||||||||||||||||||
Medicare Advantage | 11.4 | 11.2 | 10.5 | 10.5 | 11.9 | |||||||||||||||||||
Medicaid Managed | 2.4 | 3.0 | 3.8 | 4.5 | 4.7 | |||||||||||||||||||
Commercial insurance and other | 19.8 | 20.8 | 21.8 | 22.0 | 21.1 | |||||||||||||||||||
Admissions: | ||||||||||||||||||||||||
Medicare | 9,038 | 8,555 | 8,460 | 8,525 | 8,775 | (2.9 | ) | |||||||||||||||||
Medicaid | 819 | 896 | 805 | 750 | 610 | (25.5 | ) | |||||||||||||||||
Medicare Advantage | 1,435 | 1,389 | 1,250 | 1,359 | 1,555 | 8.4 | ||||||||||||||||||
Medicaid Managed | 317 | 381 | 511 | 572 | 643 | 102.8 | ||||||||||||||||||
Commercial insurance and other | 1,914 | 1,885 | 1,703 | 1,696 | 1,868 | (2.4 | ) | |||||||||||||||||
13,523 | 13,106 | 12,729 | 12,902 | 13,451 | (0.5 | ) | ||||||||||||||||||
Patient days: | ||||||||||||||||||||||||
Medicare | 230,350 | 220,035 | 213,170 | 220,548 | 228,483 | (0.8 | ) | |||||||||||||||||
Medicaid | 32,712 | 32,619 | 30,480 | 30,454 | 28,663 | (12.4 | ) | |||||||||||||||||
Medicare Advantage | 44,025 | 43,027 | 39,938 | 41,260 | 48,448 | 10.0 | ||||||||||||||||||
Medicaid Managed | 10,733 | 13,191 | 16,556 | 20,000 | 22,013 | 105.1 | ||||||||||||||||||
Commercial insurance and other | 59,567 | 59,293 | 57,486 | 59,295 | 62,241 | 4.5 | ||||||||||||||||||
377,387 | 368,165 | 357,630 | 371,557 | 389,848 | 3.3 | |||||||||||||||||||
Average length of stay: | ||||||||||||||||||||||||
Medicare | 25.5 | 25.7 | 25.2 | 25.9 | 26.0 | 2.0 | ||||||||||||||||||
Medicaid | 39.9 | 36.4 | 37.9 | 40.6 | 47.0 | 17.8 | ||||||||||||||||||
Medicare Advantage | 30.7 | 31.0 | 32.0 | 30.4 | 31.2 | 1.6 | ||||||||||||||||||
Medicaid Managed | 33.9 | 34.6 | 32.4 | 35.0 | 34.2 | 0.9 | ||||||||||||||||||
Commercial insurance and other | 31.1 | 31.5 | 33.8 | 35.0 | 33.3 | 7.1 | ||||||||||||||||||
Weighted average | 27.9 | 28.1 | 28.1 | 28.8 | 29.0 | 3.9 | ||||||||||||||||||
Revenues per admission: | ||||||||||||||||||||||||
Medicare | $ | 41,492 | $ | 41,670 | $ | 39,828 | $ | 41,425 | $ | 41,483 | - | |||||||||||||
Medicaid | 50,894 | 46,106 | 50,344 | 49,760 | 57,594 | 13.2 | ||||||||||||||||||
Medicare Advantage | 49,666 | 49,352 | 49,814 | 47,756 | 48,908 | (1.5 | ) | |||||||||||||||||
Medicaid Managed | 47,803 | 48,814 | 44,321 | 48,691 | 46,740 | (2.2 | ) | |||||||||||||||||
Commercial insurance and other | 64,858 | 67,679 | 75,591 | 80,167 | 72,395 | 11.6 | ||||||||||||||||||
Weighted average | 46,384 | 46,736 | 46,439 | 47,991 | 47,616 | 2.7 | ||||||||||||||||||
Revenues per patient day: | ||||||||||||||||||||||||
Medicare | $ | 1,628 | $ | 1,620 | $ | 1,581 | $ | 1,601 | $ | 1,593 | (2.1 | ) | ||||||||||||
Medicaid | 1,274 | 1,266 | 1,330 | 1,225 | 1,226 | (3.8 | ) | |||||||||||||||||
Medicare Advantage | 1,619 | 1,593 | 1,559 | 1,573 | 1,570 | (3.0 | ) | |||||||||||||||||
Medicaid Managed | 1,412 | 1,410 | 1,368 | 1,393 | 1,365 | (3.3 | ) | |||||||||||||||||
Commercial insurance and other | 2,084 | 2,152 | 2,239 | 2,293 | 2,173 | 4.3 | ||||||||||||||||||
Weighted average | 1,662 | 1,664 | 1,653 | 1,666 | 1,643 | (1.1 | ) | |||||||||||||||||
Medicare case mix index (discharged patients only) | 1.173 | 1.182 | 1.157 | 1.139 | 1.166 | (0.6 | ) | |||||||||||||||||
Average daily census | 4,193 | 4,046 | 3,887 | 4,039 | 4,332 | 3.3 | ||||||||||||||||||
Occupancy % | 67.3 | 64.6 | 62.1 | 64.5 | 69.2 | 2.8 | ||||||||||||||||||
KINDRED HEALTHCARE, INC. | ||||||||||||||||||||||||
Condensed Business Segment Data (Continued) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
First | First quarter | |||||||||||||||||||||||
2014 Quarters | Quarter | % change v. | ||||||||||||||||||||||
First | Second | Third | Fourth | 2015 | prior year | |||||||||||||||||||
Kindred at Home (data combined to include Kindred and Gentiva for each historical period): | ||||||||||||||||||||||||
Home Health: | ||||||||||||||||||||||||
Sites of service (at end of period) | 447 | 440 | 439 | 427 | 415 | |||||||||||||||||||
Revenue mix %: | ||||||||||||||||||||||||
Medicare | 81.8 | 81.5 | 80.7 | 80.7 | 80.9 | |||||||||||||||||||
Medicaid | 2.7 | 2.6 | 2.4 | 2.2 | 2.1 | |||||||||||||||||||
Commercial and other | 9.1 | 9.0 | 8.9 | 6.7 | 7.3 | |||||||||||||||||||
Commercial paid at episodic rates | 6.4 | 6.9 | 8.0 | 10.4 | 9.7 | |||||||||||||||||||
Episodic revenues ($ 000s) | $ | 281,226 | $ | 294,208 | $ | 292,675 | $ | 305,668 | $ | 308,317 | 9.6 | |||||||||||||
Total episodic admissions | 65,077 | 63,676 | 65,049 | 65,183 | 69,936 | 7.5 | ||||||||||||||||||
Medicare episodic admissions | 59,248 | 58,140 | 57,921 | 57,372 | 61,186 | 3.3 | ||||||||||||||||||
Total episodes | 103,758 | 103,689 | 105,906 | 106,708 | 110,980 | 7.0 | ||||||||||||||||||
Episodes per admission | 1.59 | 1.63 | 1.63 | 1.64 | 1.59 | - | ||||||||||||||||||
Revenue per episode | $ | 2,710 | $ | 2,837 | $ | 2,764 | $ | 2,865 | $ | 2,778 | 2.5 | |||||||||||||
Hospice: | ||||||||||||||||||||||||
Sites of service (at end of period) | 216 | 200 | 199 | 193 | 190 | |||||||||||||||||||
Admissions | 13,807 | 12,751 | 12,088 | 12,151 | 13,164 | (4.7 | ) | |||||||||||||||||
Average length of stay | 103 | 106 | 103 | 103 | 95 | (7.8 | ) | |||||||||||||||||
Patient days | 1,252,787 | 1,251,301 | 1,236,792 | 1,215,209 | 1,150,841 | (8.1 | ) | |||||||||||||||||
Revenue per patient day | $ | 150 | $ | 148 | $ | 149 | $ | 154 | $ | 151 | 0.7 | |||||||||||||
Average daily census | 13,920 | 13,751 | 13,443 | 13,209 | 12,787 | (8.1 | ) | |||||||||||||||||
Rehabilitation division: | ||||||||||||||||||||||||
Hospital rehabilitation services: | ||||||||||||||||||||||||
Freestanding IRFs: | ||||||||||||||||||||||||
End of period data: | ||||||||||||||||||||||||
Number of IRFs | 5 | 5 | 5 | 5 | 16 | |||||||||||||||||||
Number of licensed beds | 215 | 215 | 215 | 215 | 829 | |||||||||||||||||||
Discharges (a) | 1,053 | 1,121 | 1,004 | 1,046 | 3,806 | 261.4 | ||||||||||||||||||
Occupancy % (a) | 71.6 | 71.6 | 68.5 | 69.6 | 73.2 | 2.2 | ||||||||||||||||||
Average length of stay (a) | 13.2 | 12.5 | 13.5 | 13.2 | 13.7 | 3.8 | ||||||||||||||||||
Revenue per discharge (a) | $ | 18,246 | $ | 17,519 | $ | 18,259 | $ | 17,039 | $ | 19,517 | 7.0 | |||||||||||||
Contract services: | ||||||||||||||||||||||||
Sites of service (at end of period): | ||||||||||||||||||||||||
Inpatient rehabilitation units | 105 | 104 | 102 | 100 | 100 | |||||||||||||||||||
LTAC hospitals | 121 | 118 | 117 | 117 | 120 | |||||||||||||||||||
Sub-acute units | 10 | 9 | 10 | 10 | 8 | |||||||||||||||||||
Outpatient units | 143 | 143 | 139 | 138 | 138 | |||||||||||||||||||
379 | 374 | 368 | 365 | 366 | ||||||||||||||||||||
Revenue per site | $ | 195,157 | $ | 201,400 | $ | 203,284 | $ | 205,749 | $ | 211,151 | 8.2 | |||||||||||||
Skilled nursing rehabilitation services: | ||||||||||||||||||||||||
Sites of service (at end of period) | 1,851 | 1,863 | 1,896 | 1,935 | 1,829 | |||||||||||||||||||
Revenue per site | $ | 137,193 | $ | 136,175 | $ | 130,133 | $ | 130,576 | $ | 138,106 | 0.7 | |||||||||||||
Nursing center division: | ||||||||||||||||||||||||
End of period data: | ||||||||||||||||||||||||
Number of nursing centers | 89 | 89 | 90 | 90 | 90 | |||||||||||||||||||
Number of licensed beds | 11,503 | 11,491 | 11,575 | 11,535 | 11,535 | |||||||||||||||||||
Admissions (b) | 9,789 | 9,621 | 9,746 | 9,616 | 10,376 | 6.0 | ||||||||||||||||||
Medicare average length of stay (b) | 29.6 | 29.8 | 29.9 | 29.0 | 28.9 | (2.4 | ) | |||||||||||||||||
Patient days (b) | 861,340 | 858,772 | 865,415 | 871,976 | 861,278 | - | ||||||||||||||||||
Revenues per patient day (b) | $ | 305 | $ | 308 | $ | 305 | $ | 312 | $ | 319 | 4.6 | |||||||||||||
Average daily census (b) | 9,570 | 9,437 | 9,407 | 9,478 | 9,570 | - | ||||||||||||||||||
Occupancy % (b) | 81.7 | 80.7 | 80.1 | 80.5 | 81.3 | (0.5 | ) | |||||||||||||||||
____________ | ||||||||||||||||||||||||
(a) Excludes non-consolidating IRF. | ||||||||||||||||||||||||
(b) Excludes managed facilities. | ||||||||||||||||||||||||
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. These forward-looking statements include, but are not limited to, statements regarding the Company’s acquisitions of Gentiva and Centerre (including the benefits, results and effects of such acquisitions), 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, and statements containing the words such as “anticipate,” “approximate,” “believe,” “plan,” “estimate,” “expect,” “project,” “could,” “would,” “should,” “will,” “intend,” “may,” “potential,” “upside,” and other similar expressions. Statements in this press 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, 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, 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, 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 discussed below and detailed from time to time in the Company’s filings with the Securities and Exchange Commission. |
Risks and uncertainties related to the Company’s acquisitions of Gentiva and Centerre include, but are not limited to, uncertainties as to whether the acquisitions will have the accretive effect on the Company’s earnings or cash flows that it expects, the inability to obtain, or delays in obtaining, cost savings and synergies from the acquisitions, costs and difficulties related to the integration of Gentiva’s and Centerre’s businesses and operations with the Company’s businesses and operations, unexpected costs, liabilities, charges or expenses resulting from the acquisitions, adverse effects on the Company’s stock price resulting from the acquisitions, the inability to retain key personnel, and potential adverse reactions, changes to business relationships or competitive responses resulting from the acquisitions. |
In addition to the factors set forth above, other factors that may affect the Company’s plans, results or stock price are set forth in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. |
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 Measurements |
In addition to the results provided in accordance with GAAP, the Company has provided information in this release to compute certain non-GAAP measurements for the three months ended March 31, 2015 and 2014 before certain charges or on a core and adjusted core basis. The use of these non-GAAP measures are 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 that are not representative of its ongoing operations due to the materiality and nature of the charges. The Company believes the presentation of adjusted core operating results, which excludes non-cash expenses related to amortization of intangible assets, stock-based compensation and deferred financing costs from core operating results, is a useful performance measure used by some investors, equity analysts and others to make informed investment decisions and for comparability to other companies that use similar measures. The Company’s earnings release also includes financial measures referred to as operating income, or EBITDAR or core EBITDAR, and earnings before interest, income taxes, depreciation and amortization (“EBITDA”). The Company’s management uses core EBITDAR or core EBITDA as meaningful measures of operational performance in addition to other measures. The Company uses core EBITDAR or core EBITDA to assess the relative performance of its operating divisions as well as the employees that operate these businesses. In addition, the Company believes these measurements are important because securities analysts and investors use these measurements to compare the Company’s performance to other companies in the healthcare industry. The Company believes that income (loss) from continuing operations is the most comparable GAAP measure. Readers of the Company’s financial information should consider income (loss) from continuing operations as an important measure of the Company’s financial performance because it provides the most complete measure of its performance. Operating results presented on a core and adjusted core basis and core EBITDAR or core EBITDA 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. Reconciliations of the non-GAAP measurements to the GAAP measurements are included in the following pages of this press release. |
Also in this press 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. The Company recognizes that operating cash flows and free cash flows excluding certain items are non-GAAP measurements and are not intended to replace the presentation of the Company’s cash flows in accordance with GAAP. The Company believes that these non-GAAP measurements provide important information to investors for comparability to other companies that use similar measures. In addition, management uses operating cash flows and free cash flows excluding certain items in making decisions related to acquisitions, development capital expenditures, dividends, long-term debt repayments and other uses. 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 of the Company’s financial performance because it provides the most complete measure of its performance. Operating cash flows and free cash flows excluding certain items 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. Reconciliations of net cash flows provided by operating activities to operating cash flows and free cash flows excluding certain items are included in this press release. |
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 information in this release to compute certain non-GAAP measurements for the three months ended March 31, 2015 and 2014 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 was calculated using an effective income tax rate of 22.6% and 36.6% for the three months ended March 31, 2015 and 2014, respectively. The difference in the effective income tax rate for the three months ended March 31, 2015 compared to the same prior year period is attributable to the composition of charges that are non-deductible for income tax purposes, including the litigation contingency expense. | ||||||||||
The use of these non-GAAP measures are 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 three months ended March 31, 2015 and 2014 that are not representative of its ongoing operations due to the materiality and the nature of the charges. The Company’s core operating results also represent a key performance measure for the purpose of evaluating performance internally. The Company believes the presentation of adjusted core operating results, which excludes non-cash expenses related to amortization of intangible assets, stock-based compensation and deferred financing costs from core operating results, is a performance measure used by some investors, equity analysts and others to make informed investment decisions and for comparability to other companies that use similar measures. | ||||||||||
Three months ended | ||||||||||
March 31, | ||||||||||
Detail of charges: | 2015 | 2014 | ||||||||
Litigation contingency expense | ($95,000 | ) | $ | - | ||||||
Retirement and severance costs | (4,961 | ) | (339 | ) | ||||||
Home health and hospice closings | (1,619 | ) | - | |||||||
Development project cancellation and other restructuring costs | (1,027 | ) | - | |||||||
Gentiva transaction and integration costs: | ||||||||||
Professional and consulting fees | (32,134 | ) | - | |||||||
Severance and retention | (54,464 | ) | - | |||||||
Lease termination (charged to rent expense) | (589 | ) | - | |||||||
Pre-closing financing charges (charged to general and administrative expenses) | (6,005 | ) | - | |||||||
Pre-closing financing charges (charged to interest expense) | (17,431 | ) | - | |||||||
Trade name impairment charges | (6,726 | ) | - | |||||||
Other transaction costs | (2,099 | ) | (344 | ) | ||||||
(222,055 | ) | (683 | ) | |||||||
Income tax benefit | 50,202 | 250 | ||||||||
Charges net of income taxes | (171,853 | ) | (433 | ) | ||||||
Allocation to participating unvested restricted stockholders | - | 13 | ||||||||
Available to common stockholders | ($171,853 | ) | ($420 | ) | ||||||
Weighted average diluted shares outstanding | 79,575 | 52,711 | ||||||||
Diluted loss per common share related to charges | ($2.16 | ) | ($0.01 | ) | ||||||
Reconciliation of income from continuing operations before charges: | ||||||||||
Amounts attributable to Kindred stockholders: | ||||||||||
Income from continuing operations before charges | $ | 28,418 | $ | 18,831 | ||||||
Charges net of income taxes | (171,853 | ) | (433 | ) | ||||||
Reported income (loss) from continuing operations | ($143,435 | ) | $ | 18,398 | ||||||
Reconciliation of diluted earnings per common share from continuing operations before charges: | ||||||||||
Diluted earnings per common share before charges (a) | $ | 0.34 | $ | 0.35 | ||||||
Charges net of income taxes | (2.16 | ) | (0.01 | ) | ||||||
Other | 0.02 | - | ||||||||
Reported diluted earnings (loss) per common share from continuing operations | ($1.80 | ) | $ | 0.34 | ||||||
Weighted average diluted shares used to compute earnings per common share from continuing operations before charges | 82,422 | 52,711 | ||||||||
Reconciliation of effective income tax rate before charges: | ||||||||||
Effective income tax rate before charges | 37.6 | % | 38.2 | % | ||||||
Impact of charges on effective income tax rate | -20.5 | % | - | |||||||
Reported effective income tax rate | 17.1 | % | 38.2 | % | ||||||
____________ | ||||||||||
(a) For purposes of computing diluted earnings per common share before charges, income from continuing operations before charges was reduced by $0.5 million and $0.6 million for the three months ended March 31, 2015 and 2014, 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, except per share amounts and statistics) | ||||||||||||||||||||||||
A reconciliation of adjusted core earnings follows: | ||||||||||||||||||||||||
First | ||||||||||||||||||||||||
2014 Quarters | Quarter | |||||||||||||||||||||||
Reconciliation of adjusted core earnings: | First | Second | Third | Fourth | 2015 | |||||||||||||||||||
Income from continuing operations before charges (as calculated and reconciled to GAAP measurement on the following pages) | $ | 18,831 | $ | 19,363 | $ | 8,116 | $ | 16,892 | $ | 28,418 | ||||||||||||||
Add back non-cash expenses: | ||||||||||||||||||||||||
Amortization of intangible assets | 5,560 | 5,513 | 5,378 | 5,215 | 6,932 | |||||||||||||||||||
Amortization of stock-based compensation costs | 2,585 | 5,924 | 748 | 5,073 | 3,141 | |||||||||||||||||||
Amortization of deferred financing costs | 2,397 | 1,950 | 1,982 | 2,044 | 3,062 | |||||||||||||||||||
10,542 | 13,387 | 8,108 | 12,332 | 13,135 | ||||||||||||||||||||
Income tax benefit related to non-cash expenses | 4,148 | 5,268 | 3,190 | 4,853 | 5,169 | |||||||||||||||||||
Non-cash expenses, net of income taxes | 6,394 | 8,119 | 4,918 | 7,479 | 7,966 | |||||||||||||||||||
Adjusted core earnings | $ | 25,225 | $ | 27,482 | $ | 13,034 | $ | 24,371 | $ | 36,384 | ||||||||||||||
Reconciliation of diluted adjusted core earnings from continuing operations: | ||||||||||||||||||||||||
Diluted income per common share before charges (as calculated on the following pages) | $ | 0.35 | $ | 0.35 | $ | 0.13 | $ | 0.26 | $ | 0.34 | ||||||||||||||
Non-cash expenses, net of income taxes | 0.11 | 0.15 | 0.07 | 0.12 | 0.09 | |||||||||||||||||||
Diluted adjusted core earnings per common share from continuing operations | $ | 0.46 | $ | 0.50 | $ | 0.20 | $ | 0.38 | $ | 0.43 | ||||||||||||||
Weighted average diluted shares used to compute adjusted core earnings per common share | 52,711 | 53,792 | 62,902 | 63,163 | 82,422 | |||||||||||||||||||
A reconciliation of combined Kindred and Gentiva home health revenues (excluding community care) for each historical period follows: | ||||||||||||||||||||||||
First | First quarter | |||||||||||||||||||||||
2014 Quarters | Quarter | % change v. | ||||||||||||||||||||||
First | Second | Third | Fourth | 2015 | prior year | |||||||||||||||||||
Kindred | $ | 67,266 | $ | 67,830 | $ | 65,954 | $ | 66,491 | $ | 254,965 | ||||||||||||||
Gentiva | 253,895 | 267,018 | 266,340 | 275,342 | 87,520 | |||||||||||||||||||
$ | 321,161 | $ | 334,848 | $ | 332,294 | $ | 341,833 | $ | 342,485 | 6.6 | ||||||||||||||
KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Non-GAAP Measurements to GAAP Results (Continued) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three months ended March 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Charges | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Home health | Development | Gentiva | Gentiva | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement | and | project | pre-closing | transaction | |||||||||||||||||||||||||||||||||||||||||||||||||||
Before | and | hospice | cancellation | Litigation | Impairment | financing | and | Other | As | ||||||||||||||||||||||||||||||||||||||||||||||
charges | severance | closings | and other | contingency | charges | costs | integration | transaction | Total | reported | |||||||||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating income (loss) (EBITDAR): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hospital division | $ | 134,786 | $ | - | $ | - | $ | (675 | ) | $ | - | $ | - | $ | - | $ | - | $ | - | $ | (675 | ) | $ | 134,111 | |||||||||||||||||||||||||||||||
Kindred at Home: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Home health | 46,798 | - | (1,102 | ) | - | - | - | - | - | - | (1,102 | ) | 45,696 | ||||||||||||||||||||||||||||||||||||||||||
Hospice | 16,996 | - | (517 | ) | - | - | - | - | - | - | (517 | ) | 16,479 | ||||||||||||||||||||||||||||||||||||||||||
63,794 | - | (1,619 | ) | - | - | - | - | - | - | (1,619 | ) | 62,175 | |||||||||||||||||||||||||||||||||||||||||||
Rehabilitation division: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hospital rehabilitation services | 44,564 | - | - | - | - | - | - | - | - | - | 44,564 | ||||||||||||||||||||||||||||||||||||||||||||
Skilled nursing rehabilitation services | 16,493 | (785 | ) | - | - | - | - | - | - | - | (785 | ) | 15,708 | ||||||||||||||||||||||||||||||||||||||||||
61,057 | (785 | ) | - | - | - | - | - | - | - | (785 | ) | 60,272 | |||||||||||||||||||||||||||||||||||||||||||
Nursing center division | 36,963 | - | - | - | - | - | - | - | - | - | 36,963 | ||||||||||||||||||||||||||||||||||||||||||||
Support center | (62,389 | ) | (4,176 | ) | - | - | - | - | - | - | - | (4,176 | ) | (66,565 | ) | ||||||||||||||||||||||||||||||||||||||||
Litigation contingency expense | - | - | - | - | (95,000 | ) | - | - | - | - | (95,000 | ) | (95,000 | ) | |||||||||||||||||||||||||||||||||||||||||
Transaction costs | - | - | - | - | - | - | (6,005 | ) | (86,598 | ) | (2,099 | ) | (94,702 | ) | (94,702 | ) | |||||||||||||||||||||||||||||||||||||||
Impairment charges | - | - | - | - | - | (6,726 | ) | - | - | - | (6,726 | ) | (6,726 | ) | |||||||||||||||||||||||||||||||||||||||||
Operating income (EBITDAR) | 234,211 | (4,961 | ) | (1,619 | ) | (675 | ) | (95,000 | ) | (6,726 | ) | (6,005 | ) | (86,598 | ) | (2,099 | ) | (203,683 | ) | 30,528 | |||||||||||||||||||||||||||||||||||
Rent | (91,199 | ) | - | - | (352 | ) | - | - | - | (589 | ) | - | (941 | ) | (92,140 | ) | |||||||||||||||||||||||||||||||||||||||
EBITDA | 143,012 | (4,961 | ) | (1,619 | ) | (1,027 | ) | (95,000 | ) | (6,726 | ) | (6,005 | ) | (87,187 | ) | (2,099 | ) | (204,624 | ) | (61,612 | ) | ||||||||||||||||||||||||||||||||||
Depreciation and amortization | (38,935 | ) | - | - | - | - | - | - | - | - | - | (38,935 | ) | ||||||||||||||||||||||||||||||||||||||||||
Interest, net | (44,346 | ) | - | - | - | - | - | (17,431 | ) | - | - | (17,431 | ) | (61,777 | ) | ||||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes | 59,731 | (4,961 | ) | (1,619 | ) | (1,027 | ) | (95,000 | ) | (6,726 | ) | (23,436 | ) | (87,187 | ) | (2,099 | ) | (222,055 | ) | (162,324 | ) | ||||||||||||||||||||||||||||||||||
Provision (benefit) for income taxes | 22,466 | (2,133 | ) | (696 | ) | (442 | ) | - | (2,891 | ) | (10,075 | ) | (33,063 | ) | (902 | ) | (50,202 | ) | (27,736 | ) | |||||||||||||||||||||||||||||||||||
37,265 | $ | (2,828 | ) | $ | (923 | ) | $ | (585 | ) | $ | (95,000 | ) | $ | (3,835 | ) | $ | (13,361 | ) | $ | (54,124 | ) | $ | (1,197 | ) | $ | (171,853 | ) | (134,588 | ) | ||||||||||||||||||||||||||
Noncontrolling interests | (8,847 | ) | (8,847 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to Kindred | $ | 28,418 | $ | (143,435 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Diluted earnings (loss) per common share | $ | 0.34 | $ | (1.80 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Diluted shares used in computing earnings (loss) per common share | 82,422 | 79,575 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Three months ended March 31, 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Charges | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | Transaction | As | |||||||||||||||||||||||||||||||||||||||||||||||||||||
charges | costs | reported | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Income from continuing operations: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating income (loss) (EBITDAR): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hospital division | $ | 139,505 | $ | - | $ | 139,505 | |||||||||||||||||||||||||||||||||||||||||||||||||
Kindred at Home: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Home health | 2,845 | - | 2,845 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Hospice | 1,852 | - | 1,852 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
4,697 | - | 4,697 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Rehabilitation division: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hospital rehabilitation services | 25,710 | - | 25,710 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Skilled nursing rehabilitation services | 18,016 | - | 18,016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
43,726 | - | 43,726 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Nursing center division | 37,572 | - | 37,572 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Support center | (44,456 | ) | - | (44,456 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Transaction costs | - | (683 | ) | (683 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Operating income (EBITDAR) | 181,044 | (683 | ) | 180,361 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Rent | (78,530 | ) | - | (78,530 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
EBITDA | 102,514 | (683 | ) | 101,831 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | (39,092 | ) | - | (39,092 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Interest, net | (25,617 | ) | - | (25,617 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Income from continuing operations before income taxes | 37,805 | (683 | ) | 37,122 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for income taxes | 14,445 | (250 | ) | 14,195 | |||||||||||||||||||||||||||||||||||||||||||||||||||
23,360 | $ | (433 | ) | 22,927 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests | (4,529 | ) | (4,529 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to Kindred | $ | 18,831 | $ | 18,398 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Diluted earnings per common share | $ | 0.35 | $ | 0.34 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Diluted shares used in computing earnings per common share | 52,711 | 52,711 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||||||||||||
Reconciliation of Non-GAAP Measurements to GAAP Results (Continued) | |||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||
Three months ended December 31, 2014 | |||||||||||||||||||||||||||||||||||
Charges | |||||||||||||||||||||||||||||||||||
Severance | LTAC | Gentiva | |||||||||||||||||||||||||||||||||
Before | and other | criteria | pre-closing | As | |||||||||||||||||||||||||||||||
charges | restructuring | consulting | financing | Transaction | Total | reported | |||||||||||||||||||||||||||||
Income (loss) from continuing operations: | |||||||||||||||||||||||||||||||||||
Operating income (loss) (EBITDAR): | |||||||||||||||||||||||||||||||||||
Hospital division | $ | 134,791 | $ | (318 | ) | $ | - | $ | - | $ | - | $ | (318 | ) | $ | 134,473 | |||||||||||||||||||
Kindred at Home: | |||||||||||||||||||||||||||||||||||
Home health | 7,398 | (828 | ) | - | - | - | (828 | ) | 6,570 | ||||||||||||||||||||||||||
Hospice | 524 | (106 | ) | - | - | - | (106 | ) | 418 | ||||||||||||||||||||||||||
7,922 | (934 | ) | - | - | - | (934 | ) | 6,988 | |||||||||||||||||||||||||||
Rehabilitation division: | |||||||||||||||||||||||||||||||||||
Hospital rehabilitation services | 23,884 | - | - | - | - | - | 23,884 | ||||||||||||||||||||||||||||
Skilled nursing rehabilitation services | 16,029 | - | - | - | - | - | 16,029 | ||||||||||||||||||||||||||||
39,913 | - | - | - | - | - | 39,913 | |||||||||||||||||||||||||||||
Nursing center division | 38,810 | (500 | ) | - | - | - | (500 | ) | 38,310 | ||||||||||||||||||||||||||
Support center | (51,348 | ) | (10,193 | ) | (2,460 | ) | - | - | (12,653 | ) | (64,001 | ) | |||||||||||||||||||||||
Transaction costs | - | - | - | - | (8,690 | ) | (8,690 | ) | (8,690 | ) | |||||||||||||||||||||||||
Operating income (EBITDAR) | 170,088 | (11,945 | ) | (2,460 | ) | - | (8,690 | ) | (23,095 | ) | 146,993 | ||||||||||||||||||||||||
Rent | (79,167 | ) | - | - | - | - | - | (79,167 | ) | ||||||||||||||||||||||||||
EBITDA | 90,921 | (11,945 | ) | (2,460 | ) | - | (8,690 | ) | (23,095 | ) | 67,826 | ||||||||||||||||||||||||
Depreciation and amortization | (38,558 | ) | - | - | - | - | - | (38,558 | ) | ||||||||||||||||||||||||||
Interest, net | (21,857 | ) | - | - | (17,041 | ) | - | (17,041 | ) | (38,898 | ) | ||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes | 30,506 | (11,945 | ) | (2,460 | ) | (17,041 | ) | (8,690 | ) | (40,136 | ) | (9,630 | ) | ||||||||||||||||||||||
Provision (benefit) for income taxes | 8,471 | (4,251 | ) | (875 | ) | (5,975 | ) | (2,197 | ) | (13,298 | ) | (4,827 | ) | ||||||||||||||||||||||
22,035 | $ | (7,694 | ) | $ | (1,585 | ) | $ | (11,066 | ) | $ | (6,493 | ) | $ | (26,838 | ) | (4,803 | ) | ||||||||||||||||||
Noncontrolling interests | (5,143 | ) | (5,143 | ) | |||||||||||||||||||||||||||||||
Net income attributable to Kindred | $ | 16,892 | $ | (9,946 | ) | ||||||||||||||||||||||||||||||
Diluted earnings (loss) per common share | $ | 0.26 | $ | (0.15 | ) | ||||||||||||||||||||||||||||||
Diluted shares used in computing earnings (loss) per common share | 63,163 | 65,135 | |||||||||||||||||||||||||||||||||
Three months ended September 30, 2014 | |||||||||||||||||||||||||||||||||||
Charges | |||||||||||||||||||||||||||||||||||
Severance | |||||||||||||||||||||||||||||||||||
Before | and other | Customer | As | ||||||||||||||||||||||||||||||||
charges | restructuring | bankruptcy | Transaction | Total | reported | ||||||||||||||||||||||||||||||
Income from continuing operations: | |||||||||||||||||||||||||||||||||||
Operating income (loss) (EBITDAR): | |||||||||||||||||||||||||||||||||||
Hospital division | $ | 117,604 | $ | (617 | ) | $ | - | $ | - | $ | (617 | ) | $ | 116,987 | |||||||||||||||||||||
Kindred at Home: | |||||||||||||||||||||||||||||||||||
Home health | 5,961 | (275 | ) | - | - | (275 | ) | 5,686 | |||||||||||||||||||||||||||
Hospice | 1,149 | (46 | ) | - | - | (46 | ) | 1,103 | |||||||||||||||||||||||||||
7,110 | (321 | ) | - | - | (321 | ) | 6,789 | ||||||||||||||||||||||||||||
Rehabilitation division: | |||||||||||||||||||||||||||||||||||
Hospital rehabilitation services | 24,887 | - | (1,857 | ) | - | (1,857 | ) | 23,030 | |||||||||||||||||||||||||||
Skilled nursing rehabilitation services | 17,080 | 162 | - | - | 162 | 17,242 | |||||||||||||||||||||||||||||
41,967 | 162 | (1,857 | ) | - | (1,695 | ) | 40,272 | ||||||||||||||||||||||||||||
Nursing center division | 35,920 | (483 | ) | - | - | (483 | ) | 35,437 | |||||||||||||||||||||||||||
Support center | (45,383 | ) | (427 | ) | - | - | (427 | ) | (45,810 | ) | |||||||||||||||||||||||||
Transaction costs | - | - | - | (4,114 | ) | (4,114 | ) | (4,114 | ) | ||||||||||||||||||||||||||
Operating income (EBITDAR) | 157,218 | (1,686 | ) | (1,857 | ) | (4,114 | ) | (7,657 | ) | 149,561 | |||||||||||||||||||||||||
Rent | (77,643 | ) | - | - | - | - | (77,643 | ) | |||||||||||||||||||||||||||
EBITDA | 79,575 | (1,686 | ) | (1,857 | ) | (4,114 | ) | (7,657 | ) | 71,918 | |||||||||||||||||||||||||
Depreciation and amortization | (38,748 | ) | - | - | - | - | (38,748 | ) | |||||||||||||||||||||||||||
Interest, net | (22,171 | ) | - | - | - | - | (22,171 | ) | |||||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes | 18,656 | (1,686 | ) | (1,857 | ) | (4,114 | ) | (7,657 | ) | 10,999 | |||||||||||||||||||||||||
Provision (benefit) for income taxes | 6,168 | (923 | ) | (1,017 | ) | (451 | ) | (2,391 | ) | 3,777 | |||||||||||||||||||||||||
12,488 | $ | (763 | ) | $ | (840 | ) | $ | (3,663 | ) | $ | (5,266 | ) | 7,222 | ||||||||||||||||||||||
Noncontrolling interests | (4,372 | ) | (4,372 | ) | |||||||||||||||||||||||||||||||
Net income attributable to Kindred | $ | 8,116 | $ | 2,850 | |||||||||||||||||||||||||||||||
Diluted earnings per common share | $ | 0.13 | $ | 0.04 | |||||||||||||||||||||||||||||||
Diluted shares used in computing earnings per common share | 62,902 | 62,902 | |||||||||||||||||||||||||||||||||
KINDRED HEALTHCARE, INC. | |||||||||||||||||||||||||||||||||||
Reconciliation of Non-GAAP Measurements to GAAP Results (Continued) | |||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||
Three months ended June 30, 2014 | |||||||||||||||||||||||||||||||||||
Charges | |||||||||||||||||||||||||||||||||||
Severance | |||||||||||||||||||||||||||||||||||
Before | and other | Debt | As | ||||||||||||||||||||||||||||||||
charges | restructuring | Litigation | refinancing | Transaction | Total | reported | |||||||||||||||||||||||||||||
Income (loss) from continuing operations: | |||||||||||||||||||||||||||||||||||
Operating income (loss) (EBITDAR): | |||||||||||||||||||||||||||||||||||
Hospital division | $ | 131,990 | $ | - | $ | (4,600 | ) | $ | - | $ | - | $ | (4,600 | ) | $ | 127,390 | |||||||||||||||||||
Kindred at Home: | |||||||||||||||||||||||||||||||||||
Home health | 5,769 | (721 | ) | - | - | - | (721 | ) | 5,048 | ||||||||||||||||||||||||||
Hospice | 2,139 | (122 | ) | - | - | - | (122 | ) | 2,017 | ||||||||||||||||||||||||||
7,908 | (843 | ) | - | - | - | (843 | ) | 7,065 | |||||||||||||||||||||||||||
Rehabilitation division: | |||||||||||||||||||||||||||||||||||
Hospital rehabilitation services | 25,742 | (170 | ) | - | - | - | (170 | ) | 25,572 | ||||||||||||||||||||||||||
Skilled nursing rehabilitation services | 19,863 | (176 | ) | - | - | - | (176 | ) | 19,687 | ||||||||||||||||||||||||||
45,605 | (346 | ) | - | - | - | (346 | ) | 45,259 | |||||||||||||||||||||||||||
Nursing center division | 38,614 | (3,205 | ) | - | - | - | (3,205 | ) | 35,409 | ||||||||||||||||||||||||||
Support center | (48,252 | ) | (556 | ) | - | - | - | (556 | ) | (48,808 | ) | ||||||||||||||||||||||||
Transaction costs | - | - | - | - | (4,496 | ) | (4,496 | ) | (4,496 | ) | |||||||||||||||||||||||||
Operating income (EBITDAR) | 175,865 | (4,950 | ) | (4,600 | ) | - | (4,496 | ) | (14,046 | ) | 161,819 | ||||||||||||||||||||||||
Rent | (77,452 | ) | (247 | ) | - | - | - | (247 | ) | (77,699 | ) | ||||||||||||||||||||||||
EBITDA | 98,413 | (5,197 | ) | (4,600 | ) | - | (4,496 | ) | (14,293 | ) | 84,120 | ||||||||||||||||||||||||
Depreciation and amortization | (39,172 | ) | - | - | - | - | - | (39,172 | ) | ||||||||||||||||||||||||||
Interest, net | (21,438 | ) | - | - | (56,643 | ) | - | (56,643 | ) | (78,081 | ) | ||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes | 37,803 | (5,197 | ) | (4,600 | ) | (56,643 | ) | (4,496 | ) | (70,936 | ) | (33,133 | ) | ||||||||||||||||||||||
Provision (benefit) for income taxes | 13,612 | (1,985 | ) | (1,757 | ) | (21,639 | ) | (914 | ) | (26,295 | ) | (12,683 | ) | ||||||||||||||||||||||
24,191 | $ | (3,212 | ) | $ | (2,843 | ) | $ | (35,004 | ) | $ | (3,582 | ) | $ | (44,641 | ) | (20,450 | ) | ||||||||||||||||||
Noncontrolling interests | (4,828 | ) | (4,828 | ) | |||||||||||||||||||||||||||||||
Net income attributable to Kindred | $ | 19,363 | $ | (25,278 | ) | ||||||||||||||||||||||||||||||
Diluted earnings (loss) per common share | $ | 0.35 | $ | (0.47 | ) | ||||||||||||||||||||||||||||||
Diluted shares used in computing earnings (loss) per common share | 53,792 | 53,714 | |||||||||||||||||||||||||||||||||
KINDRED HEALTHCARE, INC. | |||||||||
Reconciliation of Non-GAAP Measurements to GAAP Results (Continued) | |||||||||
(Unaudited) | |||||||||
(In thousands) | |||||||||
The Company recognizes that 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, are non-GAAP measurements and are not intended to replace the presentation of the Company’s cash flows in accordance with GAAP. The Company believes that these non-GAAP measurements provide important information to investors related to the amount of discretionary cash flows that are available for other investing and financing activities. In addition, management uses operating cash flows and free cash flows excluding certain items in making decisions related to acquisitions, development capital expenditures, dividends, long-term debt repayments and other uses. | |||||||||
Three months ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Reconciliation of net cash flows used in operating activities to free cash flows: | |||||||||
Net cash flows used in operating activities | ($139,602 | ) | ($15,754 | ) | |||||
Adjustments to remove certain payments (including payments made for discontinued operations) included in net cash flows used in operating activities: | |||||||||
Transaction, severance, retirement and retention | 82,340 | 4,187 | |||||||
Ventas, Inc. lease termination fee | 40,000 | - | |||||||
Capitalized lender fees related to debt refinancing | 28,012 | - | |||||||
Other debt refinancing costs (expensed) | 27,001 | - | |||||||
Lease cancellation charges | 353 | - | |||||||
Litigation | - | 25,150 | |||||||
177,706 | 29,337 | ||||||||
Benefit of reduced income tax payments resulting from certain payments (a) | - | - | |||||||
177,706 | 29,337 | ||||||||
Net cash flows provided by operating activities excluding certain items (core operating cash flows) | 38,104 | 13,583 | |||||||
Less routine capital expenditures | (20,769 | ) | (21,677 | ) | |||||
Free cash flows excluding certain items (core free cash flows) | $ | 17,335 | ($8,094 | ) | |||||
____________ | |||||||||
(a) No tax deposits were due in first quarter of 2015 or 2014. | |||||||||
Contacts:
Susan E. Moss, 502-596-6569
Investor
Relations