Exhibit 99.1

 

 

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

KINDRED HEALTHCARE REPORTS FOURTH QUARTER 2016 RESULTS

Consolidated Revenues of $1.75 Billion, GAAP Loss from Continuing Operations of $6 Million⁽¹⁾, GAAP Diluted Loss Per Share from Continuing Operations of $0.23⁽¹⁾ and EBITDAR of $190 Million⁽²⁾ in the Fourth Quarter

Core EBITDAR of $215 Million⁽³⁾ and Core Diluted EPS from Continuing Operations of $0.08⁽³⁾ in the Fourth Quarter

Consolidated Revenues of $7.2 Billion, GAAP Loss from Continuing Operations of $618 Million, GAAP Diluted Loss Per Share from Continuing Operations of $7.73 and EBITDAR of $540 Million⁽³⁾ for the Year

Core EBITDAR of $950 Million⁽³⁾ and Core Diluted EPS from Continuing Operations of $0.76⁽³⁾ for the Year

GAAP Operating Cash Flows of $147 Million in the Fourth Quarter;

Core Operating Cash Flows of $143 Million⁽³⁾ in the Fourth Quarter

GAAP Operating Cash Flows of $185 Million for the Year;

Core Operating Cash Flows of $299 Million⁽³⁾ for the Year

Core Free Cash Flows of $104 Million⁽³⁾ in the Fourth Quarter;

Core Free Cash Flows of $157 Million⁽³⁾ for the Year

Company Establishes Outlook for 2017 and 2018

LOUISVILLE, Ky. (February 27, 2017) – Kindred Healthcare, Inc. (“Kindred” or the “Company”) (NYSE:KND) today announced its operating results for the fourth quarter ended December 31, 2016.

Benjamin A. Breier, President and Chief Executive Officer of the Company, commented, “We are pleased to report fourth quarter and full year 2016 operating results in line with our expectations. We made significant progress growing our home health, hospice and inpatient rehabilitation businesses, and stabilized our nursing center and RehabCare volumes. We are further encouraged by the performance of our Hospital Division in its first full quarter under long-term acute care (“LTAC”) patient criteria. Our solid volume and cash flow performance, coupled with enterprise-wide cost realignment initiatives, position us to continue building on our success as the post-acute provider of choice among patients, families, healthcare systems and payors.”

Mr. Breier continued, “We continue to advance our strategic initiative to divest our skilled nursing center business, and are pleased with the level of interest in the portfolio. We hope to complete this accretive transaction by year end, and use the anticipated net cash proceeds of $100 million to $300 million to repay debt. Similar to our strategic move into the home health, hospice and community care space, our exit from the nursing center business will contribute to the ongoing transformation of Kindred’s growth, cash flow and earnings profile.”

Mr. Breier added, “We were especially pleased with the volume growth and stable revenue in our Hospital Division in its first full quarter under LTAC patient criteria, both of which were better than we expected. Despite the roughly $30 million revenue impact in the quarter from LTAC patient criteria, we maintained revenues essentially flat year-over-year and grew volumes 2.5% on a same-hospital basis. This solid performance on the topline did not translate directly into EBITDAR growth due in part to increases in labor costs. Nevertheless, our early performance gives us confidence in our multi-pronged LTAC criteria mitigation strategy, and our ability to mitigate at least half of the run-rate impact of criteria by the end of 2017.”

 

(1)	Results reflect after-tax costs of $27 million or $0.31 per diluted share related primarily to restructuring costs, a deferred tax valuation allowance and impairment charges.

(2)	Results reflect pre-tax costs of $26 million related primarily to restructuring costs and impairment charges.

(3)	See reconciliation of generally accepted accounting principles (“GAAP”) results to non-GAAP results beginning on page 15. As used herein, “EBITDAR” means earnings before interest, income taxes, depreciation, amortization and rent.

680 South Fourth Street    Louisville, Kentucky 40202

502.596.7300        www.kindredhealthcare.com

 

– MORE –

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 2

February 27, 2017

 

Mr. Breier continued, “Since September 1, 2016, all of the Company’s ongoing LTAC hospitals are under the new patient criteria model. With one full quarter under this new model now completed, we remain confident that we are successfully managing this transition. For the fourth quarter of 2016, approximately 89% of Kindred’s ongoing Hospital Division revenues came from compliant patients, which includes all patients except Medicare site-neutral patients, up from approximately 87% in the month of September. The remaining approximately 11% of revenues were from Medicare site-neutral patients.”

Mr. Breier said, “We are proud of our success to-date in implementing our strategic vision to create innovative post-acute solutions and deliver effective care coordination across the entire patient episode within a value-based healthcare system. Our strategy to pursue innovative solutions was recently confirmed when Kindred was named to Fortune magazine’s list of the World’s Most Admired Companies for the eighth time. Kindred ranked third among Health Care: Medical Facilities companies for innovation, recognizing Kindred’s network management and post-acute benefits management capabilities.”

Mr. Breier concluded, “We believe that a full complement of interrelated solutions is the best way to deliver a positive patient experience. In response to the evolving environment, one of Kindred’s solutions includes building strong relationships with other healthcare partners and providers to align patient care across care settings. For example, Kindred recently announced a clinical collaboration with Genesis HealthCare (NYSE:GEN) to complement our existing platform of post-acute services with unaffiliated nursing centers. We are setting the foundation for a stronger Kindred as we drive effective patient-centered solutions and proactively adapt to the changing healthcare marketplace.”

All financial and statistical information included in this earnings release reflects the continuing operations of the Company’s businesses for all periods presented unless otherwise indicated.

Fourth Quarter and Year Consolidated Results⁽¹⁾:

Fourth Quarter

 

•

Consolidated revenues were $1.75 billion, a 2.0% year-over-year decrease, while the GAAP loss from continuing operations was $6.4 million compared to income of $56.0 million in the same period in 2015. The decrease in consolidated revenues was primarily attributable to both the impact of the first full quarter of LTAC patient criteria and the sale or closure of 15 LTAC hospitals on or before October 1, 2016. The decrease in GAAP income from continuing operations was due to an increase in income taxes attributable to a non-cash deferred tax valuation allowance of $22 million in the fourth quarter of 2016 and a reduction in income tax benefits of $47 million associated with the settlement of a significant litigation contingency in the fourth quarter of 2015, LTAC patient criteria, skilled nursing Medicare census declines and an increase in labor costs. Core EBITDAR declined 13.1% to $215.3 million compared to $247.8 million in the same period in 2015, primarily due to LTAC patient criteria, skilled nursing Medicare census declines and an increase in labor costs.

 

•

GAAP operating cash flows were $146.9 million compared to $70.2 million for the same period a year ago. Core operating cash flows were $142.4 million compared to $53.9 million for the same period a year ago. Core free cash flows were $104.4 million compared to $2.0 million in the same period a year ago. The increase in GAAP operating cash flows, core operating cash flows and core free cash flows in the fourth quarter of 2016 was primarily attributable to reductions in net working capital and, for core free cash flows, lower routine capital expenditures.

 

•

GAAP diluted loss per share from continuing operations was $0.23 as compared to GAAP diluted earnings per share (“EPS”) from continuing operations of $0.50 a year ago. The decrease in GAAP diluted EPS from continuing operations was primarily attributable to an increase in certain charges in the fourth quarter of 2016, including a non-cash deferred tax valuation allowance, a reduction in income tax benefits associated with the settlement of a significant litigation contingency in the fourth quarter of 2015, LTAC patient criteria and an increase in labor costs. Core diluted EPS from continuing operations was $0.08 as compared to $0.33 a year ago. The decline in core diluted EPS was primarily attributable to LTAC patient criteria, declines in skilled nursing Medicare census and an increase in labor costs.

 

(1)	See reconciliation of GAAP results to non-GAAP results beginning on page 15.

 

- MORE -

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 3

February 27, 2017

 

Fourth Quarter and Year Consolidated Results⁽¹⁾(Continued):

 

Year

 

•

Consolidated revenues were $7.22 billion, a 2.3% year-over-year increase, while the GAAP loss from continuing operations was $617.5 million compared to a loss of $51.9 million in the same period in 2015. The increase in consolidated revenues was primarily attributable to the acquisition of Gentiva Health Services, Inc. (“Gentiva”) on February 2, 2015 and an increase in same-store volumes in both the Kindred at Home and Kindred Hospital Rehabilitation Services business segments. The increase in GAAP loss from continuing operations was primarily attributable to certain charges, net of income taxes, of $740.7 million related to impairments, deferred tax valuation allowance, restructuring, litigation, transaction, debt amendment, business interruption settlements, and research and development costs. GAAP loss from continuing operations for 2015 included certain charges, net of income taxes, of $206.4 million related to impairments, restructuring, litigation, transaction and severance costs. Core EBITDAR declined 3.1% to $950.1 million compared to $980.3 million in the same period in 2015, primarily due to LTAC patient criteria, a decline in skilled nursing Medicare census and an increase in labor costs.

 

•

GAAP operating cash flows were $185.0 million for 2016 compared to $163.3 million for the same period a year ago. The increase in GAAP operating cash flows was attributable to a decline in certain transaction and refinancing payments in 2016. Core operating cash flows were $298.8 million for 2016 compared to $318.1 million for the same period a year ago. Core free cash flows for 2016 were $156.8 million compared to $153.7 million in the same period a year ago. The decrease in core operating cash flows in 2016 was primarily attributable to an increase in net working capital and lower earnings. The increase in core free cash flows for 2016 was attributable to lower routine capital expenditures.

 

•

GAAP diluted loss per share from continuing operations was $7.73 for 2016 as compared to $1.12 a year ago. The increase in GAAP diluted loss per share was primarily attributable to an increase in certain charges in 2016, as noted above. Core diluted EPS from continuing operations was $0.76 as compared to $1.28 a year ago. The decline in core diluted EPS was primarily attributable to LTAC patient criteria, declines in skilled nursing Medicare census, increase in labor costs and a 4.4% increase in aggregate rent, depreciation, amortization, and net interest expense.

Fourth Quarter Segment Results⁽¹⁾⁽²⁾:

Our Kindred at Home Division, which comprises the Company’s home health, hospice, community care and home-based primary care businesses, recorded fourth quarter revenues that increased 4.3% over the prior year period to $630.2 million with home health episodes growing 2.6% and hospice average daily census growing 5.1% compared to the same period last year. Segment EBITDAR decreased 8.8% to $90.3 million as compared to $99.0 million and core EBITDAR decreased 10.3% to $88.9 million compared to $99.0 million, compared to the prior year period, both primarily due to an increase in labor costs and lower revenue rates. On a same-store basis, home health episodes grew 3.9% and hospice admissions grew 4.4% over the prior year period.

Kindred’s Hospital Division fourth quarter revenues declined to $530.7 million from the prior year period due to its full entrance into LTAC patient criteria and the impact of the sale or closure of 15 LTAC hospitals since the comparable period. These declines were offset partially by a 2.5% increase in same-hospital admissions and a 4.3% increase in same-hospital commercial revenue rates. Segment EBITDAR in the Hospital Division for the fourth quarter declined to $91.9 million from $116.5 million a year ago, and core EBITDAR for the fourth quarter declined to $91.3 million from $117.7 million a year ago, both due primarily to LTAC patient criteria, divestitures and an increase in labor costs. For the fourth quarter 2016, segment EBITDAR and core EBITDAR also reflect an unbudgeted EBITDAR decline compared to expectations of $2.9 million related to the operations of the LTAC hospitals acquired in a facility swap transaction in the second quarter of 2016. For the year, segment EBITDAR and core EBITDAR reflect unbudgeted declines of $5.9 million related to the LTAC hospitals acquired in the facility swap transaction and $3.9 million related to costs associated with the three closed LTAC hospitals in the third quarter of 2016.

Kindred Rehabilitation Services (“KRS”) Division, which comprises the Company’s hospital-based rehabilitation segment, recorded fourth quarter revenues that declined 0.2% from the prior year period to $361.5 million. Segment EBITDAR for KRS increased 25.4% to $54.9 million as compared to $43.8 million in the prior year period and core EBITDAR decreased 3.6% to $54.9 million compared to $57.0 million a year ago. Segment EBITDAR in the prior period was negatively impacted by

 

(1)	See reconciliation of GAAP results to non-GAAP results beginning on page 15.

(2)	See same-hospital and full segment data on pages 10 through 14.

 

- MORE -

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 4

February 27, 2017

 

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

 

$12.9 million of customer contract litigation in the fourth quarter of 2015. Strong performance in the fourth quarter from Kindred Hospital Rehabilitation Services (“KHRS”) inpatient rehabilitation facilities (“IRFs”) was offset by the continuing impact of customer census declines and fewer sites of service operated in RehabCare. The KHRS segment achieved strong revenue growth of 9.3% to $170.0 million, and segment EBITDAR and core EBITDAR grew to $49.3 million each, an increase of 9.9% and 9.3%, respectively, compared to the same period a year ago, as a result of the development of new IRFs and a 4.6% increase in same-IRF discharges. For the year, segment EBITDAR and core EBITDAR results for KHRS included start-up losses of $2.8 million related to the development of new IRFs. RehabCare revenues declined 7.3% to $191.5 million compared to the fourth quarter last year. RehabCare fourth quarter segment EBITDAR increased to $5.6 million as compared to a loss of $1.1 million in the prior year period due to the previously mentioned customer contract litigation in the fourth quarter of 2015 and core EBITDAR decreased to $5.6 million compared to $11.9 million, in the prior year period primarily as a result of year-end training and implementation costs related to RehabCare’s corporate integrity agreement and customer census declines.

Kindred’s Nursing Center Division fourth quarter revenues declined 0.1% to $273.1 million compared to the same period last year. Segment EBITDAR and core EBITDAR in the fourth quarter each declined 8.0% to $33.7 million from $36.6 million a year ago, as a result of declining Medicare census, patient mix deterioration and higher labor costs.

2017 Outlook⁽³⁾

All forward-looking non-GAAP financial measures used to provide “2017 Outlook” and “2018 Outlook” (collectively “Outlook”) are provided only on a non-GAAP basis. This is due to the inherent difficulty of forecasting the timing or amount of items that would be included in the most directly comparable forward-looking GAAP financial measures. As a result, reconciliation of the forward-looking non-GAAP financial measures to GAAP financial measures is not available without unreasonable effort and the Company is unable to assess the probable significance of the unavailable information.

The Company’s Outlook excludes costs related to significant transactions, material litigation, the effect of any reimbursement changes, debt refinancing or amendment costs, restructuring costs, any further acquisitions or divestitures, any impairment charges, deferred tax asset valuation allowances, and any further issuances or repurchases of common stock.

For the 2017 Outlook, Kindred expects:

 

•

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

 

•

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

 

•

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

As previously discussed, the Company is in the process of divesting its skilled nursing facility business. For purposes of consistency with our year-end reporting, the 2017 Outlook assumes the Company’s skilled nursing facility business is operated for the entire year. For accounting purposes, this business may qualify as a discontinued operation prior to the completion of the divestiture. At the time the skilled nursing facility business qualifies as a discontinued operation, the Company will be required to recast its historical operating results from continuing operations to exclude the business for all periods presented. We also will update our 2017 Outlook in our quarterly reporting during the quarter in which the recasting occurs.

The Company is not providing a quarterly outlook for 2017 due to uncertainty related to the timing of both the divestiture of its skilled nursing facility business and when this business may qualify as a discontinued operation. However, the Company does expect the first quarter of 2017 to generate substantially similar results as the fourth quarter of 2016, with improving results as the range of initiatives discussed above gain traction over the course of the year.

 

(1)	See reconciliation of GAAP results to non-GAAP results beginning on page 15.

(2)	See same-hospital and full segment data on pages 10 through 14.

(3)	See Forward-Looking Statements beginning on page 15.

(4)	The EPS estimate is based upon an estimated weighted average annual diluted share count for 2017 of 88.5 million shares.

 

- MORE -

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 5

February 27, 2017

 

2018 Outlook⁽¹⁾

Kindred’s planned divestiture of its skilled nursing facilities will significantly impact the Company’s reported results, reducing revenues and expenses, and is expected to increase profitability. To assist investors, Kindred is providing the following outlook for 2018:

 

•

Annual revenues of approximately $6.3 billion.

 

•

Core EBITDAR of approximately $840 million.

 

•

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

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

Fourth Quarter Dividend and Change in Dividend Policy

The Kindred Board of Directors declared a cash dividend of $0.12 per share on the Company’s common stock payable on March 31, 2017 to shareholders of record as of the close of business on March 13, 2017. The Kindred Board of Directors has determined that trading levels of the Company’s common stock do not sufficiently reflect the value of the Company’s quarterly cash dividend. Following the payment of the quarterly cash dividend mentioned above, the Kindred Board of Directors has determined to discontinue the Company’s quarterly cash dividend on its common stock and redirect the funds to repay debt and invest in growth.

Cash Flow

Stephen D. Farber, Executive Vice President and Chief Financial Officer of Kindred, noted, “We remain focused on cash flows and were very pleased with our strong cash flow in 2016, and liquidity position at end of year, with only $62.5 million drawn on the Company’s $900 million revolving line of credit. Our fourth quarter GAAP operating cash flows, core operating cash flows and core free cash flows were each up considerably over the third quarter and over the same quarter last year. We were pleased that many of the transient working capital items identified in the third quarter were remedied this quarter, contributing to the fourth quarter’s strong cash flow results. For 2017, we expect modestly muted cash flow performance compared to 2016, based on our 2017 Outlook and adjusted for costs related to our skilled nursing facilities exit and our cost realignment initiatives. For the 2018 Outlook, we expect Kindred’s cash flow results to return to historical levels of roughly $300 million per year in core operating cash flows and approximately half of that amount in core free cash flows with potential upside from this expectation, as capital expenditures and NCI will be reduced meaningfully following our exit from our skilled nursing facility business.”

Mr. Farber continued, “In addition to our operating and free cash flows, we expect additional cash flow for the next several years from harvesting the Company’s net operating loss carryforwards (“NOLs”) to offset federal tax liability, and expect our cash taxes to be less than 10% of our federal book taxes. We ended 2016 with $464 million of federal NOLs, and expect additional NOLs to be generated by our skilled nursing facilities exit. In addition, please note that 2017 is the last year of dividend payments of $12 million per year on the mandatory redeemable preferred stock the Company issued in 2014 as part of the acquisition of Gentiva.”

Mr. Farber concluded, “We expect the combination of significant operational and free cash flows, nominal cash taxes, $100 million to $300 million of expected net cash proceeds from the skilled nursing facility exit, approximately $90 million of associated reduction of annual rent expense, $30 million of associated reduction of annual capital expenditures, $18 million of associated reduction of cash noncontrolling interest disbursements, and the elimination of $54 million of annual common stock and mandatory redeemable preferred stock dividends to drive significant deleveraging and growth for Kindred.”

 

(1)	See Forward-Looking Statements beginning on page 15.

(2)	The EPS estimate is based upon an estimated weighted average annual diluted share count for 2018 of 90.0 million shares.

 

- MORE -

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 6

February 27, 2017

 

Conference Call

As previously announced, investors and the general public may access a live webcast of the fourth quarter 2016 conference call through a link on the Company’s website at http://investors.kindredhealthcare.com. The conference call will be held on February 28 at 9:00 a.m. (Eastern Time).

A telephone replay of the conference call will become available at approximately 12:00 p.m. on February 28 by dialing (719) 457-0820, access code: 9155505. The replay will be available through March 10.

Forward-Looking Statements and Non-GAAP Reconciliations

See page 15 for important disclosures regarding the Company’s forward-looking statements and the non-GAAP financial reconciliations that follow.

About Kindred Healthcare

Kindred Healthcare, Inc., a top-90 private employer in the United States, is a FORTUNE 500 healthcare services company based in Louisville, Kentucky with annual revenues of approximately $7.2 billion. At December 31, 2016, Kindred through its subsidiaries had approximately 100,100 employees providing healthcare services in 2,654 locations in 46 states, including 82 LTAC hospitals, 19 inpatient rehabilitation hospitals, 91 nursing centers, 17 sub-acute units, 635 Kindred at Home home health, hospice and non-medical home care sites of service, 102 inpatient rehabilitation units (hospital-based) and contract rehabilitation service businesses which served 1,708 non-affiliated sites of service. Ranked as one of Fortune magazine’s Most Admired Healthcare Companies for eight years, Kindred’s mission is to promote healing, provide hope, preserve dignity and produce value for each patient, resident, family member, customer, employee and shareholder we serve. For more information, go to www.kindredhealthcare.com. You can also follow us on Twitter and Facebook.

 

- MORE -

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 7

February 27, 2017

 

 

KINDRED HEALTHCARE, INC.

Condensed Consolidated Statement of Operations

(In thousands, except per share amounts)

 

		Three months ended								Year ended
		December 31,								December 31,
		2016				2015				2016				2015
Revenues		$	1,745,951			$	1,780,949			$	7,219,519			$	7,054,907
Salaries, wages and benefits			945,611				909,171				3,758,423				3,614,091
Supplies			89,772				96,295				384,098				384,354
Rent			94,509				96,934				390,534				379,889
Other operating expenses			195,765				208,315				845,680				825,996
General and administrative expenses			304,869				341,052				1,303,428				1,385,038
Other income			(991	)			(1,317	)			(2,900	)			(3,016	)
Litigation contingency expense			—				8,261				2,840				138,648
Impairment charges			4,351				18,031				342,559				24,757
Restructuring charges			18,952				4,177				107,175				12,970
Depreciation and amortization			38,082				40,362				159,402				157,251
Interest expense			59,230				56,267				234,647				232,395
Investment income			(601	)			(603	)			(3,162	)			(2,806	)
			1,749,549				1,776,945				7,522,724				7,149,567
Income (loss) from continuing operations before income taxes			(3,598	)			4,004				(303,205	)			(94,660	)
Provision (benefit) for income taxes			2,860				(51,980	)			314,330				(42,797	)
Income (loss) from continuing operations			(6,458	)			55,984				(617,535	)			(51,863	)
Discontinued operations, net of income taxes:
Income (loss) from operations			4,194				1,509				6,616				(235	)
Gain on divestiture of operations			116				261				295				1,244
Income from discontinued operations			4,310				1,770				6,911				1,009
Net income (loss)			(2,148	)			57,754				(610,624	)			(50,854	)
(Earnings) loss attributable to noncontrolling interests:
Continuing operations			(13,261	)			(12,082	)			(53,602	)			(42,564	)
Discontinued operations			2				2				(4	)			34
			(13,259	)			(12,080	)			(53,606	)			(42,530	)
Income (loss) attributable to Kindred		$	(15,407	)		$	45,674			$	(664,230	)		$	(93,384	)
Amounts attributable to Kindred stockholders:
Income (loss) from continuing operations		$	(19,719	)		$	43,902			$	(671,137	)		$	(94,427	)
Income from discontinued operations			4,312				1,772				6,907				1,043
Net income (loss)		$	(15,407	)		$	45,674			$	(664,230	)		$	(93,384	)
Earnings (loss) per common share:
Basic:
Income (loss) from continuing operations		$	(0.23	)		$	0.50			$	(7.73	)		$	(1.12	)
Discontinued operations:
Income (loss) from operations			0.05				0.02				0.08				—
Gain on divestiture of operations			—				—				—				0.01
Income from discontinued operations			0.05				0.02				0.08				0.01
Net income (loss)		$	(0.18	)		$	0.52			$	(7.65	)		$	(1.11	)
Diluted:
Income (loss) from continuing operations		$	(0.23	)		$	0.50			$	(7.73	)		$	(1.12	)
Discontinued operations:
Income (loss) from operations			0.05				0.02				0.08				—
Gain on divestiture of operations			—				—				—				0.01
Income from discontinued operations			0.05				0.02				0.08				0.01
Net income (loss)		$	(0.18	)		$	0.52			$	(7.65	)		$	(1.11	)
Shares used in computing earnings (loss) per common share:
Basic			86,904				86,336				86,800				84,558
Diluted			86,904				87,232				86,800				84,558
Cash dividends declared and paid per common share		$	0.12			$	0.12			$	0.48			$	0.48

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 8

February 27, 2017

 

 

KINDRED HEALTHCARE, INC.

Condensed Consolidated Balance Sheet

(In thousands, except per share amounts)

 

		December 31,				December 31,
		2016				2015
ASSETS
Current assets:
Cash and cash equivalents		$	137,061			$	98,758
Insurance subsidiary investments			108,966				106,638
Accounts receivable less allowance for loss			1,172,078				1,194,868
Inventories			24,673				27,791
Income taxes			10,067				11,790
Other			63,693				61,054
			1,516,538				1,500,899
Property and equipment			2,026,430				2,162,398
Accumulated depreciation			(1,147,844	)			(1,190,402	)
			878,586				971,996
Goodwill			2,427,074				2,669,810
Intangible assets less accumulated amortization			790,235				755,655
Insurance subsidiary investments			204,929				204,498
Deferred tax assets			—				104,130
Acquisition deposit			—				18,489
Other			295,362				242,782
Total assets		$	6,112,724			$	6,468,259
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	203,925			$	187,061
Salaries, wages and other compensation			397,486				404,925
Due to third party payors			41,320				36,251
Professional liability risks			65,284				64,099
Other accrued liabilities			269,736				394,246
Long-term debt due within one year			27,977				24,630
			1,005,728				1,111,212
Long-term debt			3,215,062				3,086,348
Professional liability risks			295,311				263,273
Deferred tax liabilities			201,808				—
Deferred credits and other liabilities			353,294				301,379
Equity:
Stockholders’ equity:
Common stock, $0.25 par value; authorized 175,000 shares; issued 85,166 shares - December 31, 2016 and 83,792 shares - December 31, 2015			21,291				20,948
Capital in excess of par value			1,710,231				1,737,747
Accumulated other comprehensive income (loss)			1,573				(2,632	)
Accumulated deficit			(920,544	)			(256,209	)
			812,551				1,499,854
Noncontrolling interests			228,970				206,193
Total equity			1,041,521				1,706,047
Total liabilities and equity		$	6,112,724			$	6,468,259

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 9

February 27, 2017

 

 

KINDRED HEALTHCARE, INC.

Condensed Consolidated Statement of Cash Flows

(In thousands)

 

		Three months ended								Year ended
		December 31,								December 31,
		2016				2015				2016				2015
Cash flows from operating activities:
Net income (loss)		$	(2,148	)		$	57,754			$	(610,624	)		$	(50,854	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation expense			32,660				33,208				135,966				128,533
Amortization of intangible assets			5,422				7,645				23,673				29,841
Amortization of stock-based compensation costs			3,367				4,872				16,425				20,636
Amortization of deferred financing costs			4,005				3,566				15,267				13,721
Payment of capitalized lender fees related to debt issuance			—				—				(7,375	)			(28,012	)
Provision for doubtful accounts			9,849				22,643				40,804				52,460
Deferred income taxes			1,868				(45,738	)			310,338				(46,632	)
Impairment charges			4,351				18,031				342,559				24,757
Gain on divestiture of discontinued operations			(116	)			(261	)			(295	)			(1,244	)
Other			5,152				3,080				12,414				13,537
Change in operating assets and liabilities:
Accounts receivable			84,922				4,822				(59,031	)			(8,577	)
Inventories and other assets			(20,704	)			10,312				(24,226	)			54,493
Accounts payable			1,764				2,408				26,215				(10,380	)
Income taxes			1,882				(6,254	)			4,242				27,392
Due to third party payors			(16,625	)			(26,917	)			3,692				(30,882	)
Other accrued liabilities			31,265				(18,976	)			(45,082	)			(25,527	)
Net cash provided by operating activities			146,914				70,195				184,962				163,262
Cash flows from investing activities:
Routine capital expenditures			(27,349	)			(41,240	)			(96,052	)			(121,931	)
Development capital expenditures			(7,713	)			(7,865	)			(34,825	)			(19,931	)
Acquisitions, net of cash acquired			(1,800	)			—				(78,840	)			(673,547	)
Acquisition deposits			—				(18,489	)			18,489				176,511
Sale of assets			21,025				1,674				25,987				8,735
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			(22,318	)			(26,036	)			(97,740	)			(85,222	)
Sale of insurance subsidiary investments			17,010				24,295				95,488				75,075
Net change in insurance subsidiary cash and cash equivalents			(7,602	)			(3,875	)			877				(12,271	)
Proceeds from note receivable			—				—				—				25,000
Net change in other investments			577				(4,995	)			(32,770	)			(4,620	)
Other			1,022				592				(255	)			10,972
Net cash provided by (used in) investing activities			(27,148	)			(75,939	)			(199,641	)			752,209
Cash flows from financing activities:
Proceeds from borrowings under revolving credit			376,100				325,600				1,643,300				1,740,450
Repayment of borrowings under revolving credit			(473,600	)			(312,000	)			(1,689,400	)			(1,631,850	)
Proceeds from issuance of term loan, net of discount			—				—				198,100				199,000
Proceeds from other long-term debt			—				—				750				—
Repayment of Gentiva debt			—				—				—				(1,177,363	)
Repayment of term loan			(3,508	)			(3,002	)			(13,527	)			(12,010	)
Repayment of other long-term debt			(278	)			(5,352	)			(1,104	)			(6,752	)
Payment of deferred financing costs			(180	)			(162	)			(522	)			(3,446	)
Issuance of common stock in connection with employee benefit plans			—				—				—				534
Payment of costs associated with issuance of common stock and
tangible equity units			—				—				—				(915	)
Payment of dividend for mandatory redeemable preferred stock			(2,956	)			(2,752	)			(11,514	)			(10,887	)
Dividends paid			(10,221	)			(10,052	)			(40,738	)			(40,119	)
Contributions made by noncontrolling interests			3,253				660				14,514				2,152
Distributions to noncontrolling interests			(10,745	)			(10,635	)			(45,985	)			(42,458	)
Purchase of noncontrolling interests			—				—				(1,000	)			—
Other			—				1,306				108				2,763
Net cash provided by (used in) financing activities			(122,135	)			(16,389	)			52,982				(980,901	)
Change in cash and cash equivalents			(2,369	)			(22,133	)			38,303				(65,430	)
Cash and cash equivalents at beginning of period			139,430				120,891				98,758				164,188
Cash and cash equivalents at end of period		$	137,061			$	98,758			$	137,061			$	98,758

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 10

February 27, 2017

 

 

KINDRED HEALTHCARE, INC.

Condensed Consolidated and Business Segment Data

(Unaudited)

(In thousands, except per share amounts)

 

																																										Fourth quarter
		2015 Quarters																				2016 Quarters																				% change v.
		First				Second				Third				Fourth				Year				First				Second				Third				Fourth				Year				prior year
Condensed consolidated income statement data:
GAAP presentation:
Revenues		$	1,675,967			$	1,833,475			$	1,764,516			$	1,780,949			$	7,054,907			$	1,837,971			$	1,842,070			$	1,793,527			$	1,745,951			$	7,219,519				(2.0	)
Operating expenses			1,645,791				1,584,873				1,568,189				1,583,985				6,382,838				1,604,855				1,591,898				1,986,221				1,558,329				6,741,303				(1.6	)
Rent			91,788				95,731				95,436				96,934				379,889				97,517				100,093				98,415				94,509				390,534				(2.5	)
Depreciation and amortization			38,935				38,625				39,329				40,362				157,251				40,681				40,257				40,382				38,082				159,402				(5.6	)
Interest, net			61,777				56,140				56,008				55,664				229,589				57,245				57,559				58,052				58,629				231,485				5.3
Income (loss) from continuing operations before income taxes			(162,324	)			58,106				5,554				4,004				(94,660	)			37,673				52,263				(389,543	)			(3,598	)			(303,205	)			(189.9	)
Provision (benefit) for income taxes			(27,736	)			24,396				12,523				(51,980	)			(42,797	)			11,836				17,882				281,752				2,860				314,330				(105.5	)
Income (loss) from continuing operations			(134,588	)			33,710				(6,969	)			55,984				(51,863	)			25,837				34,381				(671,295	)			(6,458	)			(617,535	)			(111.5	)
Noncontrolling interests			(8,847	)			(11,735	)			(9,900	)			(12,082	)			(42,564	)			(12,514	)			(13,522	)			(14,305	)			(13,261	)			(53,602	)			9.8
Net income (loss) attributable to Kindred		$	(143,435	)		$	21,975			$	(16,869	)		$	43,902			$	(94,427	)		$	13,323			$	20,859			$	(685,600	)		$	(19,719	)		$	(671,137	)			(144.9	)
Diluted EPS		$	(1.80	)		$	0.25			$	(0.20	)		$	0.50			$	(1.12	)		$	0.15			$	0.23			$	(7.89	)		$	(0.23	)		$	(7.73	)			(146.0	)
Diluted shares			79,575				86,402				86,184				87,232				84,558				87,249				87,500				86,869				86,904				86,800				(0.4	)
Core presentation (a):
EBITDAR		$	234,211			$	261,800			$	236,477			$	247,839			$	980,327			$	246,834			$	267,895			$	220,075			$	215,315			$	950,119				(13.1	)
Rent			91,199				95,528				95,436				96,934				379,097				97,517				100,093				98,069				94,509				390,188				(2.5	)
Interest, net			44,346				56,140				56,008				55,664				212,158				57,245				57,559				58,052				58,629				231,485				5.3
Provision for income taxes			22,466				25,721				15,298				13,758				77,243				16,546				21,417				4,639				3,243				45,845				(76.4	)
Net income attributable to Kindred			28,418				34,051				20,506				29,039				112,014				22,331				34,031				4,340				7,591				68,293				(73.9	)
Core diluted EPS		$	0.34			$	0.39			$	0.23			$	0.33			$	1.28			$	0.25			$	0.38			$	0.05			$	0.08			$	0.76				(75.8	)
Diluted shares			82,422				86,402				86,892				87,232				86,098				87,249				87,500				87,529				87,641				87,491				0.5
Revenues by segment:
Kindred at Home:
Home health		$	300,867			$	427,820			$	424,054			$	425,759			$	1,578,500			$	430,035			$	438,556			$	449,958			$	444,073			$	1,762,622				4.3
Hospice			119,057				178,005				181,140				178,325				656,527				176,426				185,641				188,575				186,161				736,803				4.4
			419,924				605,825				605,194				604,084				2,235,027				606,461				624,197				638,533				630,234				2,499,425				4.3
Hospital division			640,483				627,206				579,497				593,593				2,440,779				643,299				633,695				575,323				530,746				2,383,063				(10.6	)
Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services			151,564				152,544				149,435				155,579				609,122				165,774				169,815				169,018				170,041				674,648				9.3
RehabCare			252,595				236,791				219,518				206,582				915,486				204,248				196,075				192,480				191,489				784,292				(7.3	)
			404,159				389,335				368,953				362,161				1,524,608				370,022				365,890				361,498				361,530				1,458,940				(0.2	)
Nursing center division			274,308				273,870				270,510				273,387				1,092,075				272,227				272,395				270,259				273,055				1,087,936				(0.1	)
			1,738,874				1,896,236				1,824,154				1,833,225				7,292,489				1,892,009				1,896,177				1,845,613				1,795,565				7,429,364				(2.1	)
Eliminations			(62,907	)			(62,761	)			(59,638	)			(52,276	)			(237,582	)			(54,038	)			(54,107	)			(52,086	)			(49,614	)			(209,845	)			(5.1	)
		$	1,675,967			$	1,833,475			$	1,764,516			$	1,780,949			$	7,054,907			$	1,837,971			$	1,842,070			$	1,793,527			$	1,745,951			$	7,219,519				(2.0	)

 

(a)	See reconciliation of GAAP results to non-GAAP results beginning on page 15.

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 11

February 27, 2017

 

 

KINDRED HEALTHCARE, INC.

Condensed Consolidated and Business Segment Data (Continued)

(Unaudited)

(In thousands, except statistics)

 

		2015 Quarters																				2016 Quarters																				Fourth quarter % change v.
		First				Second				Third				Fourth				Year				First				Second				Third				Fourth				Year				prior year
Segment EBITDAR:
Kindred at Home:
Home health		$	46,798			$	72,917			$	67,682			$	68,776			$	256,173			$	66,941			$	76,030			$	75,073			$	61,487			$	279,531				(10.6	)
Hospice			16,996				27,887				34,025				30,212				109,120				24,866				31,329				31,326				28,805				116,326				(4.7	)
			63,794				100,804				101,707				98,988				365,293				91,807				107,359				106,399				90,292				395,857				(8.8	)
Hospital division			134,111				131,532				96,108				116,454				478,205				135,495				125,932				82,752				91,892				436,071				(21.1	)
Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services			44,564				44,531				42,141				44,891				176,127				47,870				50,469				49,470				49,314				197,123				9.9
RehabCare			15,708				14,681				14,544				(1,118	)			43,815				11,987				13,269				9,248				5,578				40,082				598.9
			60,272				59,212				56,685				43,773				219,942				59,857				63,738				58,718				54,892				237,205				25.4
Nursing center division			36,963				39,877				35,923				36,601				149,364				30,100				33,662				29,922				33,658				127,342				(8.0	)
Core EBITDAR by segment (a):
Kindred at Home:
Home health		$	46,798			$	72,917			$	68,155			$	68,826			$	256,696			$	65,803			$	75,859			$	75,073			$	61,185			$	277,920				(11.1	)
Hospice			16,996				27,887				34,025				30,212				109,120				24,866				31,329				31,326				27,668				115,189				(8.4	)
			63,794				100,804				102,180				99,038				365,816				90,669				107,188				106,399				88,853				393,109				(10.3	)
Hospital division			134,786				131,532				97,128				117,675				481,121				135,495				125,932				82,752				91,262				435,441				(22.4	)
Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services			44,564				44,531				42,141				45,098				176,334				47,870				50,469				50,217				49,314				197,870				9.3
RehabCare			16,493				14,681				14,544				11,858				57,576				11,987				13,269				9,248				5,578				40,082				(53.0	)
			61,057				59,212				56,685				56,956				233,910				59,857				63,738				59,465				54,892				237,952				(3.6	)
Nursing center division			36,963				40,461				35,923				36,601				149,948				30,100				33,662				29,922				33,658				127,342				(8.0	)
Support center			(62,389	)			(70,209	)			(55,439	)			(62,431	)(b)			(250,468)				(69,287	)			(62,625	)			(58,463	)			(53,350	)(b)			(243,725)				(14.5	)
		$	234,211			$	261,800			$	236,477			$	247,839			$	980,327			$	246,834			$	267,895			$	220,075			$	215,315			$	950,119				(13.1	)
EBITDAR margin by segment:
Kindred at Home:
Home health			15.6				17.0				16.0				16.2				16.2				15.6				17.3				16.7				13.8				15.9				(2.4	)
Hospice			14.3				15.7				18.8				16.9				16.6				14.1				16.9				16.6				15.5				15.8				(1.4	)
Kindred at Home			15.2				16.6				16.8				16.4				16.3				15.1				17.2				16.7				14.3				15.8				(2.1	)
Hospital division			20.9				21.0				16.6				19.6				19.6				21.1				19.9				14.4				17.3				18.3				(2.3	)
Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services			29.4				29.2				28.2				28.9				28.9				28.9				29.7				29.3				29.0				29.2				0.1
RehabCare			6.2				6.2				6.6				(0.5	)			4.8				5.9				6.8				4.8				2.9				5.1				3.4
Kindred Rehabilitation Services			14.9				15.2				15.4				12.1				14.4				16.2				17.4				16.2				15.2				16.3				3.1
Nursing center division			13.5				14.6				13.3				13.4				13.7				11.1				12.4				11.1				12.3				11.7				(1.1	)
Core EBITDAR margin by segment:
Kindred at Home:
Home health			15.6				17.0				16.1				16.2				16.3				15.3				17.3				16.7				13.8				15.8				(2.4	)
Hospice			14.3				15.7				18.8				16.9				16.6				14.1				16.9				16.6				14.9				15.6				(2.0	)
Kindred at Home			15.2				16.6				16.9				16.4				16.4				15.0				17.2				16.7				14.1				15.7				(2.3	)
Hospital division			21.0				21.0				16.8				19.8				19.7				21.1				19.9				14.4				17.2				18.3				(2.6	)
Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services			29.4				29.2				28.2				29.0				28.9				28.9				29.7				29.7				29.0				29.3				—
RehabCare			6.5				6.2				6.6				5.7				6.3				5.9				6.8				4.8				2.9				5.1				(2.8	)
Kindred Rehabilitation Services			15.1				15.2				15.4				15.7				15.3				16.2				17.4				16.4				15.2				16.3				(0.5	)
Nursing center division			13.5				14.8				13.3				13.4				13.7				11.1				12.4				11.1				12.3				11.7				(1.1	)
Consolidated			14.0				14.3				13.4				13.9				13.9				13.4				14.5				12.3				12.3				13.2				(1.6	)

 

(a)	See reconciliation of GAAP results to non-GAAP results beginning on page 15.

(b)	Includes changes in estimate of $8 million and $10 million for the fourth quarters of 2015 and 2016, respectively, to lower incentive compensation costs recorded in prior periods.

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 12

February 27, 2017

 

 

KINDRED HEALTHCARE, INC.

Condensed Business Segment Data

(Unaudited)

 

		2015 Quarters																				2016 Quarters																				Fourth quarter % change v.
		First				Second				Third				Fourth				Year				First				Second				Third				Fourth				Year				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)			415				411				388				373								384				384				395				390
Revenue mix %:
Medicare			80.9				80.4				80.0				80.0				80.3				79.8				79.3				78.1				77.9				78.8
Medicaid			2.1				2.1				2.1				2.1				2.1				2.1				2.1				2.5				1.9				2.1
Commercial and other			7.3				7.9				8.2				8.5				8.1				8.4				8.2				8.6				10.6				8.9
Commercial paid at episodic rates			9.7				9.6				9.7				9.4				9.5				9.7				10.4				10.8				9.6				10.2
Episodic revenues ($ 000s)		$	308,317			$	324,027			$	319,820			$	320,698			$	1,272,862			$	325,821			$	332,193			$	332,562			$	323,398			$	1,313,974				0.8
Total episodic admissions			69,936				67,808				66,753				66,157				270,654				71,426				70,212				69,219				67,501				278,358				2.0
Medicare episodic admissions			61,186				59,394				58,479				57,804				236,863				62,011				60,730				59,823				59,540				242,104				3.0
Total episodes			110,980				109,599				108,519				108,300				437,398				113,887				113,278				113,256				111,164				451,585				2.6
Episodes per admission			1.59				1.62				1.63				1.64				1.62				1.59				1.61				1.64				1.65				1.62				0.6
Revenue per episode		$	2,778			$	2,956			$	2,947			$	2,961			$	2,910			$	2,861			$	2,933			$	2,936			$	2,909			$	2,910				(1.8	)
Hospice:
Sites of service (at end of period)			190				185				181				175								177				177				185				183
Admissions			13,164				12,574				12,091				12,129				49,958				13,234				13,149				12,916				12,660				51,959				4.4
Average length of stay			95				93				101				100				97				92				91				98				100				95				—
Patient days			1,150,841				1,190,604				1,211,291				1,185,330				4,738,066				1,183,908				1,238,584				1,277,125				1,246,152				4,945,769				5.1
Average daily census			12,787				13,084				13,166				12,884				12,981				13,010				13,611				13,882				13,545				13,513				5.1
Revenue per patient day		$	151			$	150			$	150			$	150			$	150			$	149			$	150			$	148			$	149			$	149				(0.7	)
Community Care and other revenues (included in Home Health business segment) ($ 000s)		$	65,530			$	67,647			$	67,338			$	67,684			$	268,199			$	66,305			$	68,229			$	75,978			$	74,875			$	285,387				10.6
Hospital division:
End of period data:
Number of transitional care hospitals			97				96				95				95								95				97				94				82
Number of licensed beds			7,147				7,124				7,094				7,094								7,089				7,067				6,890				6,107
Revenue mix %:
Medicare			56.8				55.2				57.1				57.3				56.6				57.8				55.5				54.6				53.5				55.5
Medicaid			5.5				5.3				5.3				5.1				5.3				4.2				4.2				4.0				4.5				4.2
Medicare Advantage			11.9				11.6				10.8				11.1				11.4				11.5				12.0				12.1				11.0				11.7
Medicaid Managed			4.7				5.6				6.1				6.2				5.6				5.6				6.3				7.3				8.0				6.7
Commercial insurance and other			21.1				22.3				20.7				20.3				21.1				20.9				22.0				22.0				23.0				21.9
Admissions:
Medicare			8,775				8,267				7,976				8,169				33,187				8,919				8,253				7,861				7,351				32,384				(10.0	)
Medicaid			610				610				556				520				2,296				463				386				375				336				1,560				(35.4	)
Medicare Advantage			1,555				1,352				1,212				1,304				5,423				1,453				1,382				1,327				1,210				5,372				(7.2	)
Medicaid Managed			643				675				646				612				2,576				733				768				861				787				3,149				28.6
Commercial insurance and other			1,868				1,815				1,763				1,701				7,147				1,871				1,807				1,727				1,488				6,893				(12.5	)
			13,451				12,719				12,153				12,306				50,629				13,439				12,596				12,151				11,172				49,358				(9.2	)
Patient days:
Medicare			228,483				218,577				210,870				210,409				868,339				229,004				219,013				202,482				186,290				836,789				(11.5	)
Medicaid			28,663				25,213				23,167				21,795				98,838				21,134				19,409				16,781				12,181				69,505				(44.1	)
Medicare Advantage			48,448				44,740				39,585				41,079				173,852				45,760				47,697				43,241				37,526				174,224				(8.6	)
Medicaid Managed			22,013				24,833				24,412				24,802				96,060				25,341				27,267				28,534				29,275				110,417				18.0
Commercial insurance and other			62,241				62,922				58,631				57,321				241,115				62,769				63,009				59,856				54,148				239,782				(5.5	)
			389,848				376,285				356,665				355,406				1,478,204				384,008				376,395				350,894				319,420				1,430,717				(10.1	)
Average length of stay:
Medicare			26.0				26.4				26.4				25.8				26.2				25.7				26.5				25.8				25.3				25.8				(1.9	)
Medicaid			47.0				41.3				41.7				41.9				43.0				45.6				50.3				44.7				36.3				44.6				(13.4	)
Medicare Advantage			31.2				33.1				32.7				31.5				32.1				31.5				34.5				32.6				31.0				32.4				(1.6	)
Medicaid Managed			34.2				36.8				37.8				40.5				37.3				34.6				35.5				33.1				37.2				35.1				(8.1	)
Commercial insurance and other			33.3				34.7				33.3				33.7				33.7				33.5				34.9				34.7				36.4				34.8				8.0
Weighted average			29.0				29.6				29.3				28.9				29.2				28.6				29.9				28.9				28.6				29.0				(1.0	)
Revenues per admission:
Medicare		$	41,483			$	41,892			$	41,451			$	41,656			$	41,620			$	41,717			$	42,579			$	39,945			$	38,602			$	40,800				(7.3	)
Medicaid			57,594				54,795				55,415				57,724				56,352				57,928				69,797				61,338				70,333				64,356				21.8
Medicare Advantage			48,908				53,578				51,495				50,680				51,077				51,080				55,105				52,363				48,387				51,826				(4.5	)
Medicaid Managed			46,740				51,950				54,976				60,263				53,383				49,287				51,696				48,631				54,238				50,932				(10.0	)
Commercial insurance and other			72,395				77,110				68,151				70,735				72,150				71,651				77,193				73,515				82,066				75,819				16.0
Weighted average			47,616				49,312				47,683				48,236				48,209				47,868				50,309				47,348				47,507				48,281				(1.5	)
Revenues per patient day:
Medicare		$	1,593			$	1,584			$	1,568			$	1,617			$	1,591			$	1,625			$	1,605			$	1,551			$	1,523			$	1,579				(5.8	)
Medicaid			1,226				1,326				1,330				1,377				1,309				1,269				1,388				1,371				1,940				1,444				40.9
Medicare Advantage			1,570				1,619				1,577				1,609				1,593				1,622				1,597				1,607				1,560				1,598				(3.0	)
Medicaid Managed			1,365				1,412				1,455				1,487				1,432				1,426				1,456				1,467				1,458				1,453				(2.0	)
Commercial insurance and other			2,173				2,224				2,049				2,099				2,139				2,136				2,214				2,121				2,255				2,180				7.4
Weighted average			1,643				1,667				1,625				1,670				1,651				1,675				1,684				1,640				1,662				1,666				(0.5	)
Medicare case mix index (discharged patients only)			1.166				1.163				1.150				1.164				1.162				1.163				1.179				1.172				1.153				1.169				(0.9	)
Average daily census			4,332				4,135				3,877				3,863				4,050				4,220				4,136				3,814				3,472				3,909				(10.1	)
Occupancy%			69.2				66.1				62.2				62.2				64.9				68.0				67.5				61.6				64.1				65.1				3.1

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 13

February 27, 2017

 

 

KINDRED HEALTHCARE, INC.

Condensed Business Segment Data (Continued)

(Unaudited)

 

		2015 Quarters																				2016 Quarters																				Fourth quarter % change v.
		First				Second				Third				Fourth				Year				First				Second				Third				Fourth				Year				prior year
Same-hospital data (a):
End of period data:
Number of transitional care hospitals			78				78				78				78								78				78				78				78
Number of licensed beds			5,965				5,965				5,965				5,965								5,960				5,960				5,960				5,960
Revenues		$	555,986			$	546,476			$	506,887			$	520,087			$	2,129,436			$	563,201			$	557,989			$	508,608			$	521,244			$	2,151,042				0.2
Revenue mix %:
Medicare			57.2				55.4				57.6				57.8				57.0				58.0				55.4				54.1				53.0				55.2
Medicaid			5.0				4.7				4.8				4.5				4.8				3.7				3.9				3.7				4.5				3.9
Medicare Advantage			11.5				11.2				10.2				10.7				10.9				11.3				11.7				12.3				11.0				11.6
Medicaid Managed			4.9				5.8				6.3				6.4				5.8				5.8				6.6				7.8				8.2				7.1
Commercial insurance and other			21.4				22.9				21.1				20.6				21.5				21.2				22.4				22.1				23.3				22.2
Admissions:
Medicare			7,594				7,155				7,008				7,161				28,918				7,802				7,209				6,882				7,132				29,025				(0.4	)
Medicaid			520				527				485				430				1,962				395				342				343				336				1,416				(21.9	)
Medicare Advantage			1,284				1,099				1,020				1,082				4,485				1,219				1,148				1,165				1,187				4,719				9.7
Medicaid Managed			562				609				572				547				2,290				632				702				792				787				2,913				43.9
Commercial insurance and other			1,548				1,514				1,457				1,410				5,929				1,567				1,528				1,462				1,456				6,013				3.3
			11,508				10,904				10,542				10,630				43,584				11,615				10,929				10,644				10,898				44,086				2.5
Patient days:
Medicare			198,834				189,440				184,829				185,149				758,252				200,004				190,955				177,079				180,794				748,832				(2.4	)
Medicaid			21,074				18,041				16,596				14,788				70,499				14,670				13,547				12,085				12,175				52,477				(17.7	)
Medicare Advantage			40,387				37,070				32,588				34,630				144,675				38,617				40,835				38,462				36,900				154,814				6.6
Medicaid Managed			19,537				22,351				21,700				22,063				85,651				22,421				24,893				26,698				29,284				103,296				32.7
Commercial insurance and other			52,945				53,110				49,896				49,141				205,092				53,613				53,821				51,772				53,391				212,597				8.6
			332,777				320,012				305,609				305,771				1,264,169				329,325				324,051				306,096				312,544				1,272,016				2.2
Average length of stay:
Medicare			26.2				26.5				26.4				25.9				26.2				25.6				26.5				25.7				25.3				25.8				(2.3	)
Medicaid			40.5				34.2				34.2				34.4				35.9				37.1				39.6				35.2				36.2				37.1				5.2
Medicare Advantage			31.5				33.7				31.9				32.0				32.3				31.7				35.6				33.0				31.1				32.8				(2.8	)
Medicaid Managed			34.8				36.7				37.9				40.3				37.4				35.5				35.5				33.7				37.2				35.5				(7.7	)
Commercial insurance and other			34.2				35.1				34.2				34.9				34.6				34.2				35.2				35.4				36.7				35.4				5.2
Weighted average			28.9				29.3				29.0				28.8				29.0				28.4				29.7				28.8				28.7				28.9				(0.3	)
Revenues per admission:
Medicare		$	41,914			$	42,350			$	41,669			$	41,954			$	41,973			$	41,876			$	42,883			$	39,959			$	38,720			$	40,896				(7.7	)
Medicaid			53,340				48,832				50,400				54,199				51,591				53,232				62,945				54,765				70,288				59,996				29.7
Medicare Advantage			49,842				55,649				50,807				51,604				51,909				51,955				57,112				53,701				48,440				52,757				(6.1	)
Medicaid Managed			48,002				52,017				55,653				61,296				54,156				51,511				52,419				50,027				54,286				52,076				(11.4	)
Commercial insurance and other			76,859				82,490				73,279				75,877				77,184				76,305				81,779				77,047				83,278				79,565				9.8
Weighted average			48,313				50,117				48,083				48,926				48,858				48,489				51,056				47,784				47,829				48,792				(2.2	)
Revenues per patient day:
Medicare		$	1,601			$	1,600			$	1,580			$	1,623			$	1,601			$	1,634			$	1,619			$	1,553			$	1,527			$	1,585				(5.9	)
Medicaid			1,316				1,426				1,473				1,576				1,436				1,433				1,589				1,554				1,940				1,619				23.1
Medicare Advantage			1,585				1,650				1,590				1,612				1,609				1,640				1,606				1,627				1,558				1,608				(3.3	)
Medicaid Managed			1,381				1,417				1,467				1,520				1,448				1,452				1,478				1,484				1,459				1,469				(4.0	)
Commercial insurance and other			2,247				2,352				2,140				2,177				2,231				2,230				2,322				2,176				2,271				2,250				4.3
Weighted average			1,671				1,708				1,659				1,701				1,684				1,710				1,722				1,662				1,668				1,691				(1.9	)
Average daily census			3,698				3,517				3,322				3,324				3,463				3,619				3,561				3,327				3,397				3,475				2.2

 

 

(a)	All historical statistics have been adjusted to present the ongoing hospital division portfolio excluding four hospitals acquired during the second quarter of 2016. See reconciliation of same-hospital revenues to reported revenues for the Hospital Division on page 18.

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 14

February 27, 2017

 

 

KINDRED HEALTHCARE, INC.

Condensed Business Segment Data (Continued)

(Unaudited)

 

		2015 Quarters																				2016 Quarters																				Fourth quarter % change v.
		First				Second				Third				Fourth				Year				First				Second				Third				Fourth				Year				prior year
Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services:
Freestanding IRFs:
End of period data:
Number of IRFs			16				16				18				18								19				19				19				19
Number of licensed beds			829				829				919				919								969				969				969				995
Discharges (a)			3,806				3,927				3,941				4,317				15,991				4,448				4,646				4,644				4,671				18,409				8.2
Same-hospital discharges (a)			3,806				3,927				3,842				4,173				15,748				4,016				4,089				4,069				4,366				16,540				4.6
Occupancy % (a)			73.2				71.5				68.7				68.0				70.2				70.6				70.6				68.8				66.5				69.1				(2.2	)
Average length of stay (a)			13.7				13.1				13.2				12.7				13.2				13.2				12.9				12.7				12.6				12.8				(0.8	)
Revenue per discharge (a)		$	19,517			$	19,325			$	18,992			$	18,640			$	19,104			$	19,731			$	19,318			$	19,599			$	19,486			$	19,531				4.5
Contract services:
Sites of service (at end of period):
Inpatient rehabilitation units			100				99				101				100								104				105				104				102
LTAC hospitals			120				120				119				119								119				121				120				119
Sub-acute units			8				8				7				7								7				7				7				5
Outpatient units			138				139				135				130								139				138				139				132
			366				366				362				356								369				371				370				358
Revenue per site		$	211,151			$	209,436			$	206,041			$	210,978			$	837,606			$	211,417			$	215,798			$	210,810			$	220,733			$	858,758				4.6
RehabCare:
Sites of service (at end of period)			1,829				1,789				1,821				1,798								1,767				1,759				1,754				1,718
Revenue per site		$	138,106			$	132,359			$	120,548			$	114,896			$	505,909			$	115,590			$	111,470			$	109,738			$	111,460			$	448,258				(3.0	)
Nursing center division:
End of period data:
Number of nursing centers			90				90				90				90								92				92				91				91
Number of licensed beds			11,535				11,535				11,535				11,535								11,815				11,815				11,568				11,568
Admissions (b)			10,376				9,831				9,558				9,237				39,002				9,815				9,480				9,698				9,409				38,402				1.9
Medicare average length of stay (b)			28.9				28.9				28.5				28.4				28.7				28.2				28.4				27.4				26.7				27.7				(6.0	)
Patient days (b)			861,278				852,691				851,332				845,924				3,411,225				846,578				842,681				845,037				846,361				3,380,657				0.1
Revenues per patient day (b)		$	319			$	321			$	318			$	323			$	320			$	322			$	323			$	320			$	323			$	322				—
Average daily census (b)			9,570				9,370				9,254				9,195				9,346				9,303				9,260				9,185				9,200				9,237				0.1
Occupancy % (b)			81.3				79.6				78.6				78.1				79.4				77.3				76.7				77.5				77.9				77.4				(0.3	)

 

(a)	Excludes non-consolidating IRF.

(b)	Excludes managed facilities.

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 15

February 27, 2017

 

 

Forward-Looking Statements

This earnings release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, all statements regarding the Company’s ability to exit the skilled nursing facility business and the expected timing of such exit, as well as the Company’s ability to realize the anticipated benefits, sale proceeds, cost savings and strategic gains from this initiative, all statements regarding the Company’s expected future financial position, results of operations, cash flows, dividends, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management, government investigations, regulatory matters, and statements containing words such as “anticipate,” “approximate,” “believe,” “plan,” “estimate,” “expect,” “project,” “could,” “would,” “should,” “will,” “intend,” “hope,” “may,” “potential,” “upside,” and other similar expressions. Statements in this earnings release concerning the Company’s business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends or other financial items, and product or services line growth, and expected outcome of government investigations and other regulatory matters, together with other statements that are not historical facts, are forward-looking statements that are estimates reflecting the best judgment of the Company based upon currently available information.

Such forward-looking statements are inherently uncertain, and stockholders and other potential investors must recognize that actual results may differ materially from the Company’s expectations as a result of a variety of factors. Such forward-looking statements are based upon management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control, that may cause the Company’s actual results, performance, or plans to differ materially from any future results, performance or plans expressed or implied by such forward-looking statements. These statements involve risks, uncertainties, and other factors detailed from time to time in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission.

Many of these factors are beyond the Company’s control. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance. The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments.

Non-GAAP Measures

In addition to the results provided in accordance with GAAP, the Company has provided information in this earnings release to compute certain non-GAAP measures. The use of these non-GAAP measures are not intended to replace the presentation of the Company’s financial results in accordance with GAAP. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in the following pages of this earnings release.

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

For each of the Company’s segments, EBITDAR is a measure of performance used by the Company’s chief operating decision makers in accordance with “Accounting Standard Codification 280—Segment Reporting.” In this context, the Company defines segment EBITDAR as earnings before interest, income taxes, depreciation, amortization, and rent, excluding litigation contingency expense, impairment charges, restructuring charges, transaction costs, and the allocation of support center overhead.

Core Operating Results: The Company calculates core operating results, including core net income attributable to Kindred, core EBITDAR and core diluted EPS, by excluding charges related to transaction, integration, severance, retirement, retention, impairments, business interruption settlements, research and development, restructuring, debt amendment costs, and litigation. The Company believes that the presentation of core operating results provides additional information to investors to facilitate the comparison between periods by excluding certain charges that are not representative of its ongoing operations due to the materiality and nature of the charges. The Company’s management uses core net income attributable to Kindred, core EBITDAR and core diluted EPS as meaningful measures of operational performance, and for the attainment of internal incentive compensation goals, in addition to other measures. The Company uses these measures to assess the relative performance and attainment of internal incentive compensation goals of its operating divisions, as well as the employees that operate these businesses. In addition, the Company believes these measures are important, because securities analysts and investors use these measures to compare the Company’s performance to other companies in the healthcare industry.

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 16

February 27, 2017

 

 

Non-GAAP Measures (Continued)

Same-Hospital Revenues: The same-hospital revenues are calculated by excluding from the Company’s Hospital Division revenues the results from four hospitals acquired in 2016, 15 hospitals sold in 2016, three hospitals that closed during 2016, and two hospitals that closed during 2015. The Company believes the presentation of same-hospital revenues provides investors, equity analysts and others with useful information regarding the performance of the Company’s hospital operations that are comparable for the periods presented.

For EBITDAR, core net income attributable to Kindred, and core EBITDAR, the Company believes that income (loss) from continuing operations is the most comparable GAAP measure. For core diluted EPS, the Company believes that GAAP diluted earnings (loss) per share from continuing operations is the most comparable GAAP measure. Readers of the Company’s financial information should consider income (loss) from continuing operations and diluted earnings (loss) per share from continuing operations as important measures of the Company’s financial performance, because they provide the most complete measures of its performance. For same-hospital revenues, the Company believes that reported hospital segment revenues is the most comparable GAAP measure. Readers of the Company’s financial information should consider reported hospital segment revenues as an important measure of the Company’s Hospital Division financial performance because it provides the most complete measure of its performance. Operating results presented on a core basis, as well as a same-hospital basis, should be considered in addition to, not as a substitute for, or superior to, financial measures based upon GAAP as an indicator of operating performance.

Also in this earnings release, the Company provides the financial measures of operating cash flows and free cash flows excluding certain items, which the Company refers to as core operating cash flows and core free cash flows, respectively.

Core Operating Cash Flows: The Company defines core operating cash flows as operating cash flows excluding payments related to transaction, severance, retirement, retention, business interruption settlements, research and development, restructuring charges, debt amendment costs, and litigation, net of income tax benefits. The Company believes that core operating cash flows provide important information to investors for comparability to other companies that use similar measures. Management uses core operating cash flows to evaluate consolidated operating performance and in making decisions related to acquisitions, development capital expenditures, dividends, long-term debt repayments and other uses.

Core Free Cash Flows: The Company defines core free cash flows as operating cash flows excluding payments related to transaction, severance, retirement, retention, business interruption settlements, research and development, restructuring charges, debt amendment costs, and litigation, net of income tax benefits but including routine capital expenditures and distributions to noncontrolling interests. The Company believes that core free cash flows provide important information to investors for comparability to other companies that use similar measures. Management uses core free cash flows in making decisions related to acquisitions, development capital expenditures, dividends, long-term debt repayments and other uses.

The Company recognizes that core operating cash flows and core free cash flows are non-GAAP measures and are not intended to replace the presentation of the Company’s cash flows in accordance with GAAP. For core operating cash flows and core free cash flows, the Company believes net cash flows provided by operating activities is the most comparable GAAP measure. Readers of the Company’s financial information should consider net cash flows provided by operating activities as an important measure because it provides the most complete measure of cash provided by operating activities. Core operating cash flows and core free cash flows should be considered in addition to, not as a substitute for, or superior to, financial measures based upon GAAP as an indicator of the Company’s cash flows provided by operating activities.

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 17

February 27, 2017

 

 

KINDRED HEALTHCARE, INC.

Reconciliation of GAAP Results to Non-GAAP Measures

(Unaudited)

(In thousands, except per share amounts and statistics)

In addition to the results provided in accordance with GAAP, the Company has provided information in this earnings release to compute certain non-GAAP measures for the three months and year ended December 31, 2016 and 2015 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 (provision) associated with the excluded charges, including the deferred tax valuation allowance, was calculated using an effective income tax rate of 1.4% and 129.2% for the three months ended December 31, 2016 and 2015, respectively, and 56.9% and 36.8% for the year ended December 31, 2016 and 2015, respectively. The difference in the effective income tax rate for both periods compared to the same prior year periods is attributable to the deferred tax valuation allowance recorded in 2016 and the composition of charges that are non-deductible for income tax purposes, including the impairment charges, litigation contingency expense and transaction costs. For the three months ended December 31, 2015, the Company recorded an income tax benefit of $47.1 million based upon the final settlement terms of an investigation of RehabCare Group, Inc. by the United States Department of Justice, which was completed in January 2016. The investigation was settled for $126.3 million, including interest, and $125 million of the settlement cost was recorded during the nine months ended September 31, 2015.

 

		Three months ended								Year ended
		December 31,								December 31,
		2016				2015				2016				2015
Reconciliation of income from continuing operations before charges:
As reported:
Income (loss) from continuing operations attributable to Kindred		($	19,719	)		$	43,902			($	671,137	)		($	94,427	)
Diluted income (loss) per common share from continuing operations		($	0.23	)		$	0.50			($	7.73	)		($	1.12	)
Weighted average diluted shares outstanding			86,904				87,232				86,800				84,558
Detail of charges:
Restructuring charges:
Facility/branch divestitures and closings		($	6,742	)		($	3,288	)		($	28,976	)		($	9,727	)
Retention and severance costs			(9,344	)			—				(14,393	)			(523	)
Transaction costs			(837	)			—				(2,414	)			—
			(16,923	)			(3,288	)			(45,783	)			(10,250	)
Lease termination costs (charged to rent restructuring charges)			(2,029	)			(889	)			(61,392	)			(2,720	)
Impairment charges			(4,351	)			(18,031	)			(342,559	)			(18,031	)
Research and development			(4,293	)			—				(11,520	)			—
RehabCare customer contract litigation			—				(12,864	)			—				(12,864	)
Litigation contingency expense			—				(8,261	)			(2,840	)			(138,648	)
Other retirement and severance costs			—				(2,125	)			(658	)			(7,752	)
Other facility/branch sales/closings/consolidations			—				(50	)			(821	)			(2,136	)
Business interruption settlements			2,069				—				3,378				—
Debt amendment fees not capitalized			—				—				(1,103	)			—
Gentiva transaction costs:															—
Professional and consulting fees			(1,779	)			(2,662	)			(5,610	)			(37,840	)
Severance and retention			—				(1,527	)			(696	)			(60,358	)
Lease termination (charged to rent expense)			—				—				(272	)			(792	)
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			(387	)			(1,178	)			(2,373	)			(4,928	)
			(27,693	)			(50,875	)			(472,249	)			(326,481	)
Income tax benefit			22,385				65,738				119,987				120,040
Deferred tax valuation allowance			(22,002	)			—				(388,472	)			—
Charges net of income taxes			(27,310	)			14,863				(740,734	)			(206,441	)
Noncontrolling interest adjustment related to impairment charges			—				—				1,304				—
			(27,310	)			14,863				(739,430	)			(206,441	)
Allocation to participating unvested restricted stockholders			—				(204	)			—				—
Available to common stockholders		($	27,310	)		$	14,659			($	739,430	)		($	206,441	)
Diluted loss per common share related to charges		($	0.31	)		$	0.17			($	8.52	)		($	2.44	)
Weighted average diluted shares outstanding			86,904				87,232				86,800				84,558
Core:
Income from continuing operations before charges		$	7,591			$	29,039			$	68,293			$	112,014
Diluted earnings per common share from continuing operations before charges (a)		$	0.08			$	0.33			$	0.76			$	1.28
Weighted average diluted shares outstanding used to compute earnings per common share from continuing operations before charges			87,641				87,232				87,491				86,098
Reconciliation of effective income tax rate before charges:
Effective income tax rate before charges			13.5	%			25.1	%			27.1	%			33.3	%
Impact of charges on effective income tax rate			66.0	%			1273.1	%			76.6	%			11.9	%
Reported effective income tax rate			79.5	%			1298.2	%			103.7	%			45.2	%

 

(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 three months ended December 31, 2016 and 2015, respectively, and by $1.5 million and $1.8 million for the year ended December 31, 2016 and 2015, respectively, for the allocation of income to participating unvested restricted stockholders.

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 18

February 27, 2017

 

 

KINDRED HEALTHCARE, INC.

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

(Unaudited)

(In thousands)

A reconciliation of combined Kindred and Gentiva home health revenues (excluding community care) for each historical period follows:    

 

		2015 Quarters																				2016 Quarters																				Fourth quarter % change v.
		First				Second				Third				Fourth				Year				First				Second				Third				Fourth				Year				prior year
Kindred		$	254,965			$	360,173			$	356,716			$	358,075			$	1,329,929			$	363,730			$	370,327			$	373,980			$	369,198			$	1,477,235
Gentiva			87,520				—				—				—				87,520				—				—				—				—				—
		$	342,485			$	360,173			$	356,716			$	358,075			$	1,417,449			$	363,730			$	370,327			$	373,980			$	369,198			$	1,477,235				3.1
A reconciliation of reported revenues to same-hospital revenues for the Hospital Division for each historical period follows:
		2015 Quarters																				2016 Quarters																				Fourth quarter % change v.
		First				Second				Third				Fourth				Year				First				Second				Third				Fourth				Year				prior year
Reported revenues		$	640,483			$	627,206			$	579,497			$	593,593			$	2,440,779			$	643,299			$	633,695			$	575,323			$	530,746			$	2,383,063				(10.6	)
Hospitals acquired during 2016 (a)			—				—				—				—				—				—				(2,836	)			(10,655	)			(9,958	)			(23,449	)
Hospitals sold during 2016 (b)			(71,307	)			(68,185	)			(63,074	)			(66,533	)			(269,099	)			(71,941	)			(64,084	)			(47,098	)			732				(182,391	)
Hospitals closed during 2016 (c)			(7,682	)			(7,357	)			(7,376	)			(7,471	)			(29,886	)			(8,271	)			(8,864	)			(8,908	)			(183	)			(26,226	)
Hospitals closed during 2015 (d)			(5,508	)			(5,188	)			(2,160	)			498				(12,358	)			114				78				(54	)			(93	)			45
Same-hospital revenues		$	555,986			$	546,476			$	506,887			$	520,087			$	2,129,436			$	563,201			$	557,989			$	508,608			$	521,244			$	2,151,042				0.2

 

(a)	Four hospitals acquired during the second quarter of 2016.

(b)	Three hospitals sold during the second quarter of 2016 and 12 hospitals sold during the fourth quarter of 2016.

(c)	Three hospitals closed during the third quarter of 2016.

(d)	One hospital closed during the second quarter of 2015 and one hospital closed during the third quarter of 2015.

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 19

February 27, 2017

 

 

KINDRED HEALTHCARE, INC.

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

(Unaudited)

(In thousands, except per share amounts)

 

		Three months ended December 31, 2016
						Charges
		As reported				Business interruption settlements				Impairment charges				Research and development				Restructuring charges				Gentiva transaction and integration				Other transaction				Deferred tax valuation allowance				Total				Before charges (“core”)
Income (loss) from continuing operations:
Segment EBITDAR:
Kindred at Home:
Home health		$	61,487			$	(302	)		$	—			$	—			$	—			$	—			$	—			$	—			$	(302	)		$	61,185
Hospice			28,805				(1,137	)			—				—				—				—				—				—				(1,137	)			27,668
			90,292				(1,439	)			—				—				—				—				—				—				(1,439	)			88,853
Hospital division			91,892				(630	)			—				—				—				—				—				—				(630	)			91,262
Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services			49,314				—				—				—				—				—				—				—				—				49,314
RehabCare			5,578				—				—				—				—				—				—				—				—				5,578
			54,892				—				—				—				—				—				—				—				—				54,892
Nursing center division			33,658				—				—				—				—				—				—				—				—				33,658
Support center			(57,643	)			—				—				4,293				—				—				—				—				4,293				(53,350	)
Impairment charges			(4,351	)			—				4,351				—				—				—				—				—				4,351				—
Restructuring charges			(16,923	)			—				—				—				16,923				—				—				—				16,923				—
Transaction costs			(2,166	)			—				—				—				—				1,779				387				—				2,166				—
EBITDAR			189,651				(2,069	)			4,351				4,293				16,923				1,779				387				—				25,664				215,315
Rent			(94,509	)			—				—				—				—				—				—				—				—				(94,509	)
Restructuring charges - rent			(2,029	)			—				—				—				2,029				—				—				—				2,029				—
Depreciation and amortization			(38,082	)			—				—				—				—				—				—				—				—				(38,082	)
Interest, net			(58,629	)			—				—				—				—				—				—				—				—				(58,629	)
Income (loss) from continuing operations before income taxes			(3,598	)			(2,069	)			4,351				4,293				18,952				1,779				387				—				27,693				24,095
Provision for income taxes			2,860				(1,692	)			3,559				3,511				15,501				1,190				316				(22,002	)			383				3,243
			(6,458	)		$	(377	)		$	792			$	782			$	3,451			$	589			$	71			$	22,002			$	27,310				20,852
Noncontrolling interests			(13,261	)																																			(13,261	)
Income (loss) attributable to Kindred		$	(19,719	)																																		$	7,591
Diluted earnings (loss) per common share		$	(0.23	)																																		$	0.08
Diluted shares used in computing earnings (loss) per common share			86,904																																				87,641
		Three months ended December 31, 2015
						Charges
		As reported				Retirement and severance				Facility/ branch closings				RehabCare customer contract litigation				Litigation contingency				Impairment charges				Restructuring charges				Gentiva transaction and integration				Other transaction				Total				Before charges (“core”)
Income from continuing operations:
Segment EBITDAR:
Kindred at Home:
Home health		$	68,776			$	—			$	50			$	—			$	—			$	—			$	—			$	—			$	—			$	50			$	68,826
Hospice			30,212				—				—				—				—				—				—				—				—				—				30,212
			98,988				—				50				—				—				—				—				—				—				50				99,038
Hospital division			116,454				1,221				—				—				—				—				—				—				—				1,221				117,675
Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services			44,891				207				—				—				—				—				—				—				—				207				45,098
RehabCare			(1,118	)			112				—				12,864				—				—				—				—				—				12,976				11,858
			43,773				319				—				12,864				—				—				—				—				—				13,183				56,956
Nursing center division			36,601				—				—				—				—				—				—				—				—				—				36,601
Support center			(63,016	)			585				—				—				—				—				—				—				—				585				(62,431	)
Litigation contingency expense			(8,261	)			—				—				—				8,261												—				—				8,261				—
Impairment charges			(18,031	)			—				—				—				—				18,031				—				—				—				18,031				—
Restructuring charges			(3,288	)			—				—				—				—				—				3,288				—				—				3,288				—
Transaction costs			(5,367	)			—				—				—				—				—				—				4,189				1,178				5,367				—
EBITDAR			197,853				2,125				50				12,864				8,261				18,031				3,288				4,189				1,178				49,986				247,839
Rent			(96,934	)			—				—				—				—				—				—				—				—				—				(96,934	)
Restructuring charges - rent			(889	)			—				—				—				—				—				889				—				—				889				—
Depreciation and amortization			(40,362	)			—				—				—				—				—				—				—				—				—				(40,362	)
Interest, net			(55,664	)			—				—				—				—				—				—				—				—				—				(55,664	)
Income from continuing operations before income taxes			4,004				2,125				50				12,864				8,261				18,031				4,177				4,189				1,178				50,875				54,879
Provision (benefit) for income taxes			(51,980	)			836				20				5,062				50,329				6,205				1,643				1,487				156				65,738				13,758
			55,984			$	1,289			$	30			$	7,802			$	(42,068	)		$	11,826			$	2,534			$	2,702			$	1,022			$	(14,863	)			41,121
Noncontrolling interests			(12,082	)																																							(12,082	)
Income attributable to Kindred		$	43,902																																							$	29,039
Diluted earnings per common share		$	0.50																																							$	0.33
Diluted shares used in computing earnings per common share			87,232																																								87,232

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 20

February 27, 2017

 

 

KINDRED HEALTHCARE, INC.

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

(Unaudited)

(In thousands, except per share amounts)

 

		Year ended December 31, 2016
						Charges
		As reported				Retirement and severance				Facility/ branch closings				Business interruption settlements				Litigation contingency				Impairment charges				Research and development				Debt amendment				Restructuring charges				Gentiva transaction and integration				Other transaction				Deferred tax valuation allowance				Total				Before charges (“core”)
Income (loss) from continuing operations:
Segment EBITDAR:
Kindred at Home:
Home health		$	279,531			$	—			$	—			$	(1,611	)		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	(1,611	)		$	277,920
Hospice			116,326				—				—				(1,137	)			—				—				—				—				—				—				—				—				(1,137	)			115,189
			395,857				—				—				(2,748	)			—				—				—				—				—				—				—				—				(2,748	)			393,109
Hospital division			436,071				—				—				(630	)			—				—				—				—				—				—				—				—				(630	)			435,441
Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services			197,123				—				747				—				—				—				—				—				—				—				—				—				747				197,870
RehabCare			40,082				—				—				—				—				—				—				—				—				—				—				—				—				40,082
			237,205				—				747				—				—				—				—				—				—				—				—				—				747				237,952
Nursing center division			127,342				—				—				—				—				—				—				—				—				—				—				—				—				127,342
Support center			(257,006	)			658				—				—				—				—				11,520				1,103				—				—				—				—				13,281				(243,725	)
Litigation contingency expense			(2,840	)			—				—				—				2,840				—				—				—				—				—				—				—				2,840				—
Impairment charges			(342,559	)			—				—				—				—				342,559				—				—				—				—				—				—				342,559				—
Restructuring charges			(45,783	)			—				—				—				—				—				—				—				45,783				—				—				—				45,783				—
Transaction costs			(8,679	)			—				—				—				—				—				—				—				—				6,306				2,373				—				8,679				—
EBITDAR			539,608				658				747				(3,378	)			2,840				342,559				11,520				1,103				45,783				6,306				2,373				—				410,511				950,119
Rent			(390,534	)			—				74				—				—				—				—				—				—				272				—				—				346				(390,188	)
Restructuring charges - rent			(61,392	)			—				—				—				—				—				—				—				61,392				—				—				—				61,392				—
Depreciation and amortization			(159,402	)			—				—				—				—				—				—				—				—				—				—				—				—				(159,402	)
Interest, net			(231,485	)			—				—				—				—				—				—				—				—				—				—				—				—				(231,485	)
Income (loss) from continuing operations before income taxes			(303,205	)			658				821				(3,378	)			2,840				342,559				11,520				1,103				107,175				6,578				2,373				—				472,249				169,044
Provision for income taxes			314,330				263				328				(1,349	)			36				69,438				4,599				440				42,788				2,497				947				(388,472	)			(268,485	)			45,845
			(617,535	)			395				493				(2,029	)			2,804				273,121				6,921				663				64,387				4,081				1,426				388,472				740,734				123,199
Noncontrolling interests			(53,602	)			—				—				—				—				(1,304	)			—				—				—				—				—				—				(1,304	)			(54,906	)
Income (loss) attributable to Kindred		$	(671,137	)		$	395			$	493			$	(2,029	)		$	2,804			$	271,817			$	6,921			$	663			$	64,387			$	4,081			$	1,426			$	388,472			$	739,430			$	68,293
Diluted earnings (loss) per common share		$	(7.73	)																																																		$	0.76
Diluted shares used in computing earnings (loss) per common share			86,800																																																				87,491
		Year ended December 31, 2015
						Charges
		As reported				Retirement and severance				Facility/ branch closings				RehabCare customer contract litigation				Litigation contingency				Impairment charges				Restructuring charges				Gentiva pre- closing financing costs				Gentiva transaction and integration				Other transaction				Total				Before charges (“core”)
Income (loss) from continuing operations:
Segment EBITDAR:
Kindred at Home:
Home health		$	256,173			$	—			$	523			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	523			$	256,696
Hospice			109,120				—				—				—				—				—				—				—				—				—				—				109,120
			365,293				—				523				—				—				—				—				—				—				—				523				365,816
Hospital division			478,205				1,887				1,029				—				—				—				—				—				—				—				2,916				481,121
Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services			176,127				207				—				—				—				—				—				—				—				—				207				176,334
RehabCare			43,815				897				—				12,864				—				—				—				—				—				—				13,761				57,576
			219,942				1,104				—				12,864				—				—				—				—				—				—				13,968				233,910
Nursing center division			149,364				—				584				—				—				—				—				—				—				—				584				149,948
Support center			(255,229	)			4,761				—				—				—				—				—				—				—				—				4,761				(250,468	)
Litigation contingency expense			(138,648	)			—				—				—				138,648				—				—				—				—				—				138,648				—
Impairment charges			(24,757	)			—				—				—				—				24,757				—				—				—				—				24,757				—
Restructuring charges			(10,250	)			—				—				—				—				—				10,250				—				—				—				10,250				—
Transaction costs			(109,131	)			—				—				—				—				—				—				6,005				98,198				4,928				109,131				—
EBITDAR			674,789				7,752				2,136				12,864				138,648				24,757				10,250				6,005				98,198				4,928				305,538				980,327
Rent			(379,889	)			—				—				—				—				—				—				—				792				—				792				(379,097	)
Restructuring charges - rent			(2,720	)			—				—				—				—				—				2,720				—				—				—				2,720				—
Depreciation and amortization			(157,251	)			—				—				—				—				—				—				—				—				—				—				(157,251	)
Interest, net			(229,589	)			—				—				—				—				—				—				17,431				—				—				17,431				(212,158	)
Income (loss) from continuing operations before income taxes			(94,660	)			7,752				2,136				12,864				138,648				24,757				12,970				23,436				98,990				4,928				326,481				231,821
Provision (benefit) for income taxes			(42,797	)			3,063				844				5,084				51,965				8,890				5,126				9,261				34,266				1,541				120,040				77,243
			(51,863	)		$	4,689			$	1,292			$	7,780			$	86,683			$	15,867			$	7,844			$	14,175			$	64,724			$	3,387			$	206,441				154,578
Noncontrolling interests			(42,564	)																																											(42,564	)
Income (loss) attributable to Kindred		$	(94,427	)																																										$	112,014
Diluted earnings (loss) per common share		$	(1.12	)																																										$	1.28
Diluted shares used in computing earnings (loss) per common share			84,558																																												86,098

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 21

February 27, 2017

 

 

KINDRED HEALTHCARE, INC.

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

(Unaudited)

(In thousands, except per share amounts)

 

		Three months ended March 31, 2016
						Charges
		As reported				Retirement and severance				Business interruption settlements				Litigation contingency				Impairment charges				Research and development				Restructuring charges				Gentiva transaction and integration				Other transaction				Total				Before charges (“core”)
Income from continuing operations:
Segment EBITDAR:
Kindred at Home:
Home health		$	66,941			$	—			$	(1,138	)		$	—			$	—			$	—			$	—			$	—			$	—			$	(1,138	)		$	65,803
Hospice			24,866				—				—				—				—				—				—				—				—				—				24,866
			91,807				—				(1,138	)			—				—				—				—				—				—				(1,138	)			90,669
Hospital division			135,495				—				—				—				—				—				—				—				—				—				135,495
Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services			47,870				—				—				—				—				—				—				—				—				—				47,870
RehabCare			11,987				—				—				—				—				—				—				—				—				—				11,987
			59,857				—				—				—				—				—				—				—				—				—				59,857
Nursing center division			30,100				—				—				—				—				—				—				—				—				—				30,100
Support center			(70,808	)			658				—				—				—				863				—				—				—				1,521				(69,287	)
Litigation contingency expense			(1,910	)			—				—				1,910				—				—				—				—				—				1,910				—
Impairment charges			(7,788	)			—				—				—				7,788				—				—				—				—				7,788				—
Restructuring charges			(1,701	)			—				—				—				—				—				1,701				—				—				1,701				—
Transaction costs			(1,685	)			—				—				—				—				—				—				1,603				82				1,685				—
EBITDAR			233,367				658				(1,138	)			1,910				7,788				863				1,701				1,603				82				13,467				246,834
Rent			(97,517	)			—				—				—				—				—				—				—				—				—				(97,517	)
Restructuring charges - rent			(251	)			—				—				—				—				—				251				—				—				251				—
Depreciation and amortization			(40,681	)			—				—				—				—				—				—				—				—				—				(40,681	)
Interest, net			(57,245	)			—				—				—				—				—				—				—				—				—				(57,245	)
Income from continuing operations before income taxes			37,673				658				(1,138	)			1,910				7,788				863				1,952				1,603				82				13,718				51,391
Provision for income taxes			11,836				226				(391	)			656				2,674				296				670				551				28				4,710				16,546
			25,837			$	432			$	(747	)		$	1,254			$	5,114			$	567			$	1,282			$	1,052			$	54			$	9,008				34,845
Noncontrolling interests			(12,514	)																																							(12,514	)
Income attributable to Kindred		$	13,323																																							$	22,331
Diluted earnings per common share		$	0.15																																							$	0.25
Diluted shares used in computing earnings per common share			87,249																																								87,249
		Three months ended March 31, 2015
						Charges
		As reported				Retirement and severance				Facility/ branch closings				Litigation contingency				Impairment charges				Restructuring charges				Gentiva pre-closing financing costs				Gentiva transaction and integration				Other transaction				Total				Before charges (“core”)
Income (loss) from continuing operations:
Segment EBITDAR:
Kindred at Home:
Home health		$	46,798			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	46,798
Hospice			16,996				—				—				—				—				—				—				—				—				—				16,996
			63,794				—				—				—				—				—				—				—				—				—				63,794
Hospital division			134,111				—				675				—				—				—				—				—				—				675				134,786
Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services			44,564				—				—				—				—				—				—				—				—				—				44,564
RehabCare			15,708				785				—				—				—				—				—				—				—				785				16,493
			60,272				785				—				—				—				—				—				—				—				785				61,057
Nursing center division			36,963				—				—				—				—				—				—				—				—				—				36,963
Support center			(66,565	)			4,176				—				—				—				—				—				—				—				4,176				(62,389	)
Litigation contingency expense			(95,000	)			—				—				95,000				—				—				—				—				—				95,000				—
Impairment charges			(6,726	)			—				—				—				6,726				—				—				—				—				6,726				—
Restructuring charges			(1,619	)			—				—				—				—				1,619				—				—				—				1,619				—
Transaction costs			(94,702	)			—				—				—				—				—				6,005				86,598				2,099				94,702				—
EBITDAR			30,528				4,961				675				95,000				6,726				1,619				6,005				86,598				2,099				203,683				234,211
Rent			(91,788	)			—				—				—				—				—				—				589				—				589				(91,199	)
Restructuring charges - rent			(352	)			—				—				—				—				352				—				—				—				352				—
Depreciation and amortization			(38,935	)			—				—				—				—				—				—				—				—				—				(38,935	)
Interest, net			(61,777	)			—				—				—				—				—				17,431				—				—				17,431				(44,346	)
Income (loss) from continuing operations before income taxes			(162,324	)			4,961				675				95,000				6,726				1,971				23,436				87,187				2,099				222,055				59,731
Provision (benefit) for income taxes			(27,736	)			2,133				290				—				2,891				848				10,075				33,063				902				50,202				22,466
			(134,588	)		$	2,828			$	385			$	95,000			$	3,835			$	1,123			$	13,361			$	54,124			$	1,197			$	171,853				37,265
Noncontrolling interests			(8,847	)																																							(8,847	)
Income (loss) attributable to Kindred		$	(143,435	)																																						$	28,418
Diluted earnings (loss) per common share		$	(1.80	)																																						$	0.34
Diluted shares used in computing earnings (loss) per common share			79,575																																								82,422

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 22

February 27, 2017

 

 

KINDRED HEALTHCARE, INC.

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

(Unaudited)

(In thousands, except per share amounts)

 

		Three months ended June 30, 2016
						Charges
		As reported				Business interruption settlements				Litigation contingency				Impairment charges				Research and development				Debt amendment				Restructuring charges				Gentiva transaction and integration				Other transaction				Total				Before charges (“core”)
Income from continuing operations:
Segment EBITDAR:
Kindred at Home:
Home health		$	76,030			$	(171	)		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	(171	)		$	75,859
Hospice			31,329				—				—				—				—				—				—				—				—				—				31,329
			107,359				(171	)			—				—				—				—				—				—				—				(171	)			107,188
Hospital division			125,932				—				—				—				—				—				—				—				—				—				125,932
Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services			50,469				—				—				—				—				—				—				—				—				—				50,469
RehabCare			13,269				—				—				—				—				—				—				—				—				—				13,269
			63,738				—				—				—				—				—				—				—				—				—				63,738
Nursing center division			33,662				—				—				—				—				—				—				—				—				—				33,662
Support center			(66,804	)			—				—				—				3,076				1,103				—				—				—				4,179				(62,625	)
Litigation contingency expense			(930	)			—				930				—				—				—				—				—				—				930				—
Impairment charges			(6,131	)			—				—				6,131				—				—				—				—				—				6,131				—
Restructuring charges			(4,346	)			—				—				—				—				—				4,346				—				—				4,346				—
Transaction costs			(1,846	)			—				—				—				—				—				—				1,674				172				1,846				—
EBITDAR			250,634				(171	)			930				6,131				3,076				1,103				4,346				1,674				172				17,261				267,895
Rent			(100,093	)			—				—				—				—				—				—				—				—				—				(100,093	)
Restructuring charges - rent			(462	)			—				—				—				—				—				462				—				—				462				—
Depreciation and amortization			(40,257	)			—				—				—				—				—				—				—				—				—				(40,257	)
Interest, net			(57,559	)			—				—				—				—				—				—				—				—				—				(57,559	)
Income from continuing operations before income taxes			52,263				(171	)			930				6,131				3,076				1,103				4,808				1,674				172				17,723				69,986
Provision for income taxes			17,882				(123	)			(1,307	)			4,403				2,209				792				(3,765	)			1,202				124				3,535				21,417
			34,381				(48	)			2,237				1,728				867				311				8,573				472				48				14,188				48,569
Noncontrolling interests			(13,522	)			—				—				(1,016	)			—				—				—				—				—				(1,016	)			(14,538	)
Income attributable to Kindred		$	20,859			$	(48	)		$	2,237			$	712			$	867			$	311			$	8,573			$	472			$	48			$	13,172			$	34,031
Diluted earnings per common share		$	0.23																																							$	0.38
Diluted shares used in computing earnings per common share			87,500																																								87,500
		Three months ended June 30, 2015
						Charges
		As reported				Facility/ branch closings				Litigation contingency				Restructuring charges				Gentiva transaction and integration				Other transaction				Total				Before charges (“core”)
Income from continuing operations:
Segment EBITDAR:
Kindred at Home:
Home health		$	72,917			$	—			$	—			$	—			$	—			$	—			$	—			$	72,917
Hospice			27,887				—				—				—				—				—				—				27,887
			100,804				—				—				—				—				—				—				100,804
Hospital division			131,532				—				—				—				—				—				—				131,532
Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services			44,531				—				—				—				—				—				—				44,531
RehabCare			14,681				—				—				—				—				—				—				14,681
			59,212				—				—				—				—				—				—				59,212
Nursing center division			39,877				584				—				—				—				—				584				40,461
Support center			(70,209	)			—				—				—				—				—				—				(70,209	)
Litigation contingency expense			(3,925	)			—				3,925				—				—				—				3,925				—
Restructuring charges			(2,802	)			—				—				2,802				—				—				2,802				—
Transaction costs			(5,216	)			—				—				—				4,342				874				5,216				—
EBITDAR			249,273				584				3,925				2,802				4,342				874				12,527				261,800
Rent			(95,731	)			—				—				—				203				—				203				(95,528	)
Restructuring charges - rent			(671	)			—				—				671				—				—				671				—
Depreciation and amortization			(38,625	)			—				—				—				—				—				—				(38,625	)
Interest, net			(56,140	)			—				—				—				—				—				—				(56,140	)
Income from continuing operations before income taxes			58,106				584				3,925				3,473				4,545				874				13,401				71,507
Provision for income taxes			24,396				62				416				368				386				93				1,325				25,721
			33,710			$	522			$	3,509			$	3,105			$	4,159			$	781			$	12,076				45,786
Noncontrolling interests			(11,735	)																											(11,735	)
Income attributable to Kindred		$	21,975																											$	34,051
Diluted earnings per common share		$	0.25																											$	0.39
Diluted shares used in computing earnings per common share			86,402																												86,402

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 23

February 27, 2017

 

 

KINDRED HEALTHCARE, INC.

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

(Unaudited)

(In thousands, except per share amounts)

 

		Three months ended September 30, 2016
						Charges
		As reported				Facility/ branch closings				Impairment charges				Research and development				Restructuring charges				Gentiva transaction and integration				Other transaction				Deferred tax valuation allowance				Total				Before charges (“core”)
Income (loss) from continuing operations:
Segment EBITDAR:
Kindred at Home:
Home health		$	75,073			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	75,073
Hospice			31,326				—				—				—				—				—				—				—				—				31,326
			106,399				—				—				—				—				—				—				—				—				106,399
Hospital division			82,752				—				—				—				—				—				—				—				—				82,752
Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services			49,470				747				—				—				—				—				—				—				747				50,217
RehabCare			9,248				—				—				—				—				—				—				—				—				9,248
			58,718				747				—				—				—				—				—				—				747				59,465
Nursing center division			29,922				—				—				—				—				—				—				—				—				29,922
Support center			(61,751	)			—				—				3,288				—				—				—				—				3,288				(58,463	)
Impairment charges			(324,289	)			—				324,289				—				—				—				—				—				324,289				—
Restructuring charges			(22,813	)			—				—				—				22,813				—				—				—				22,813				—
Transaction costs			(2,982	)			—				—				—				—				1,250				1,732				—				2,982				—
EBITDAR			(134,044	)			747				324,289				3,288				22,813				1,250				1,732				—				354,119				220,075
Rent			(98,415	)			74				—				—				—				272				—				—				346				(98,069	)
Restructuring charges - rent			(58,650	)			—				—				—				58,650				—				—				—				58,650				—
Depreciation and amortization			(40,382	)			—				—				—				—				—				—				—				—				(40,382	)
Interest, net			(58,052	)			—				—				—				—				—				—				—				—				(58,052	)
Income (loss) from continuing operations before income taxes			(389,543	)			821				324,289				3,288				81,463				1,522				1,732				—				413,115				23,572
Provision for income taxes			281,752				288				58,173				1,154				28,599				535				608				(366,470	)			(277,113	)			4,639
			(671,295	)			533				266,116				2,134				52,864				987				1,124				366,470				690,228				18,933
Noncontrolling interests			(14,305	)			—				(288	)			—				—				—				—				—				(288	)			(14,593	)
Income (loss) attributable to Kindred		$	(685,600	)		$	533			$	265,828			$	2,134			$	52,864			$	987			$	1,124			$	366,470			$	689,940			$	4,340
Diluted earnings (loss) per common share		$	(7.89	)																																		$	0.05
Diluted shares used in computing earnings (loss)
per common share			86,869																																				87,529
		Three months ended September 30, 2015
						Charges
		As reported				Retirement and severance				Facility/ branch closings				Litigation contingency				Restructuring charges				Gentiva transaction and integration				Other transaction				Total				Before charges (“core”)
Income (loss) from continuing operations:
Segment EBITDAR:
Kindred at Home:
Home health		$	67,682			$	—			$	473			$	—			$	—			$	—			$	—			$	473			$	68,155
Hospice			34,025				—				—				—				—				—				—				—				34,025
			101,707				—				473				—				—				—				—				473				102,180
Hospital division			96,108				666				354				—				—				—				—				1,020				97,128
Kindred Rehabilitation Services:
Kindred Hospital Rehabilitation Services			42,141				—				—				—				—				—				—				—				42,141
RehabCare			14,544				—				—				—				—				—				—				—				14,544
			56,685				—				—				—				—				—				—				—				56,685
Nursing center division			35,923				—				—				—				—				—				—				—				35,923
Support center			(55,439	)			—				—				—				—				—				—				—				(55,439	)
Litigation contingency expense			(31,462	)			—				—				31,462				—				—				—				31,462				—
Restructuring charges			(2,541	)			—				—				—				2,541				—				—				2,541				—
Transaction costs			(3,846	)			—				—				—				—				3,069				777				3,846				—
EBITDAR			197,135				666				827				31,462				2,541				3,069				777				39,342				236,477
Rent			(95,436	)			—				—				—				—				—				—				—				(95,436	)
Restructuring charges - rent			(808	)			—				—				—				808				—				—				808				—
Depreciation and amortization			(39,329	)			—				—				—				—				—				—				—				(39,329	)
Interest, net			(56,008	)			—				—				—				—				—				—				—				(56,008	)
Income from continuing operations before income taxes			5,554				666				827				31,462				3,349				3,069				777				40,150				45,704
Provision for income taxes			12,523				196				243				429				982				697				228				2,775				15,298
			(6,969	)		$	470			$	584			$	31,033			$	2,367			$	2,372			$	549			$	37,375				30,406
Noncontrolling interests			(9,900	)																															(9,900	)
Income (loss) attributable to Kindred		$	(16,869	)																														$	20,506
Diluted earnings (loss) per common share		$	(0.20	)																														$	0.23
Diluted shares used in computing earnings (loss) per common share			86,184																																86,892

---

Kindred Healthcare Reports Fourth Quarter 2016 Results

Page 24

February 27, 2017

 

 

KINDRED HEALTHCARE, INC.

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

(Unaudited)

(In thousands)

 

		Three months ended								Year ended
		December 31,								December 31,
		2016				2015				2016				2015
Reconciliation of net cash flows provided by operating activities to core operating cash flows and core free cash flows:
Net cash flows provided by operating activities		$	146,914			$	70,195			$	184,962			$	163,262
Adjustments to remove certain payments (including payments made for discontinued operations) included in net cash flows provided by operating activities:
Transaction, severance, research and development, retirement, and retention			13,546				4,548				34,535				106,648
Business interruption settlements			—				—				(1,309	)			—
Ventas, Inc. lease termination fee			4,998				—				8,498				40,000
Capitalized lender fees related to debt refinancing			—				—				7,375				28,012
Other debt refinancing costs (expensed)			—				—				917				40,439
Other lease termination fees			—				—				—				353
Litigation			—				—				133,523				16,575
			18,544				4,548				183,539				232,027
Net cash flows provided by operating activities excluding certain items before income tax benefit of certain payments			165,458				74,743				368,501				395,289
Benefit of reduced income tax payments resulting from certain payments			(23,012	)			(20,861	)			(69,686	)			(77,156	)
Net cash flows provided by operating activities excluding certain items (core operating cash flows)			142,446				53,882				298,815				318,133
Less routine capital expenditures			(27,349	)			(41,240	)			(96,052	)			(121,931	)
Less distributions to noncontrolling interests			(10,745	)			(10,635	)			(45,985	)			(42,458	)
Free cash flows excluding certain items (core free cash flows)		$	104,352			$	2,007			$	156,778			$	153,744

- END -