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Kindred reports 4Q loss, plans to release facilities

February 27, 2012
by Patricia Sheehan
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Shares of Kindred Healthcare took a dive Friday after the provider announced a fourth-quarter loss, reduced its 2012 earnings forecast and said it would not renew seven lease bundles with Ventas comprising 64 facilities in 2013.

The company, based in Louisville, Ky., said it lost $71.8 million, or $1.40 per share, in the three months that ended December 31. Kindred said it was suspending its offering of quarterly earnings guidance due to “the significant volatility in its earnings with recent changes in Medicare reimbursements.”

Kindred forecasts 2012 income from continuing operations to range between $1.35 and $1.55 per share, down from previous guidance of $1.65 to $1.85.

“Our 2012 earnings outlook reflects a more difficult than expected operating environment under the recent RUG-IV and rehabilitation therapy Medicare rule changes,” said Kindred President Paul Diaz. “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.”

Kindred announced its intention to not renew seven lease bundles containing 54 nursing and rehabilitation centers and 10 long-term acute care (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. Kindred will continue to operate the expiring facilities through the expiration of the lease term in April 2013.

“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,” said Diaz.

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