Kindred Healthcare Announces Third Quarter Results; Company to Acquire for Resale Ten Unprofitable Facilities from Ventas, Inc.Business Editors/Health/Medical Writers LOUISVILLE Louisville (l  `ēvĭl), city (1990 pop. 269,063), seat of Jefferson co., NW Ky., at the Falls of the Ohio; inc. 1780. , Ky.--(BUSINESS WIRE)--Nov. 5, 2003Kindred Healthcare Kindred Healthcare Incorporated (NYSE: KND) is a Fortune 500 healthcare services company located in Louisville, Kentucky. Kindred Healthcare was founded in 1985 as Vencor, Inc. , Inc. (the "Company") (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : KIND) today announced its operating results for the third quarter ended September September: see month. 30, 2003. As previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). , the Company's divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of all of its Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and and Texas nursing centers (the "Florida and Texas Divestiture") in the second quarter of 2003 has been reflected as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. in the consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge . The Company also announced that it has agreed to purchase ten unprofitable facilities currently leased from Ventas, Inc. ("Ventas") (NYSE NYSE See: New York Stock Exchange : VTR (VideoTape Recorder) A videotape recording and playback machine. VTR may refer to consumer MiniDV and DV recorders or to professional machines such as Betacam, DVCPRO and DVCAM. ) for $85 million in cash. The Company intends to dispose of To determine the fate of; to exercise the power of control over; to fix the condition, application, employment, etc. of; to direct or assign for a use. See also: Dispose these properties as soon as practicable practicable adj. when something can be done or performed. . Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Results For the third quarter of 2003, the Company reported consolidated net income of $12 million or $0.67 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. Net income included income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $14 million or $0.78 per diluted share. Net income also included a loss from discontinued operations of $2 million or $0.11 per diluted share. For the nine months ended September 30, 2003, the Company reported a consolidated net loss of $45 million or $2.57 per diluted share. The net loss included income from continuing operations of $23 million or $1.34 per diluted share. The net loss also included a loss from discontinued operations of $32 million or $1.84 per diluted share and the loss from the Florida and Texas Divestiture of $36 million or $2.07 per diluted share. The Company's reported operating results for both the third quarter and nine-month periods of 2003 and 2002 were impacted by certain items discussed below. Continuing Operations Revenues in the third quarter of 2003 increased 4% to $860 million compared to $827 million in the third quarter of 2002. Income from continuing operations for the third quarter of 2003 totaled $14 million or $0.78 per diluted share compared to $14 million or $0.77 per diluted share in the year-earlier period. Provisions of the Balanced Budget Balanced budget A budget in which the income equals expenditure. See: budget. balanced budget A budget in which the expenditures incurred during a given period are matched by revenues. Refinement Act (the "BBRA BBRA Balanced Budget Refinement Act of 1999 (USA) BBRA Big Bike Riders Association BBRA Bad Block Relocation Area ") and the Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. , Medicaid Medicaid, national health insurance program in the United States for low-income persons; established in 1965 with passage of the Social Security Amendments and now run by the Centers for Medicare and Medicaid Services. , and State Child Health Insurance Program Benefits Improvement and Protection Act of 2000 ("BIPA BIPA Benefits Improvement and Protection Act of 2000 BIPA British Internet Publishers' Alliance BIPA British Indian Psychiatric Association (UK) BIPA Bristol Institute of Public Affairs (UK) ") that expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. in the fourth quarter of 2002 reduced Medicare revenues in the Company's nursing centers by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $14 million in the third quarter of 2003 compared to the same period a year ago. During the third quarter of 2003, the Company recorded income of approximately $10 million related to settlements of prior year hospital Medicare cost reports. On October October: see month. 1, 2002, the final regulations for a Medicare prospective payment system for long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. acute care hospitals ("LTAC LTAC Long-Term Acute Care LTAC Literary Translators' Association of Canada LTAC Light Tactical PPS (Packets Per Second) The measurement of activity in a local area network (LAN). In LANs such as Ethernet, Token Ring and FDDI, as well as the Internet, data is broken up and transmitted in packets (frames), each with a source and destination address. ") became effective. This new payment system became effective for all but two of the Company's long-term acute care hospitals on September 1, 2003. The Company's hospital operating results in the third quarter of 2003 included favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. Medicare reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. adjustments of approximately $4 million that resulted from the conversion to LTAC PPS. Interest expense for both the third quarters of 2003 and 2002 included approximately $2 million of gains resulting from prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. of long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . Operating results for the three months ended September 30, 2003 included a $1.3 million write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of the ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. services line of business in the hospital division. These operations were classified as held for sale at September 30, 2003. Operating results for the third quarter of 2002 included income of $12 million related to an accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying settlement with a private insurance company and a charge of $22 million related to additional professional liability costs. For the nine months ended September 30, 2003, revenues increased 5% to $2.5 billion from $2.4 billion in the same period a year ago. Income from continuing operations totaled $23 million or $1.34 per diluted share for the first nine months of 2003 compared to $63 million or $3.29 per diluted share in the same period a year ago. Provisions of the BBRA and BIPA that expired in the fourth quarter of 2002 reduced Medicare revenues in the Company's nursing centers by approximately $42 million for the first nine months of 2003 compared to the same period a year ago. Professional liability costs aggregated $75 million for the nine months ended September 30, 2003 compared to $48 million in the first nine months of 2002, of which approximately $57 million and $35 million, respectively, were charged to the Company's nursing center business. Operating results for the nine months ended September 30, 2002 included income of $5 million resulting from a change in estimate for accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. items and a lease termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. charge for an unprofitable hospital. Discontinued Operations Net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. for the divested Florida and Texas nursing centers were $2 million in the third quarter of 2003 compared to $24 million in the third quarter of 2002. For the nine months ended September 30, 2003, net operating losses for the divested Florida and Texas nursing centers were $32 million compared to $31 million during the same period a year ago. Third Quarter Commentary Edward Edward killed his father at his mother’s instigation. [Br. Balladry: Edward in Benét, 302] See : Patricide L. Kuntz The introduction to this article provides insufficient context for those unfamiliar with the subject matter. Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. , Chairman and Chief Executive Officer of the Company, commented on the third quarter results. "We are continuing to build operational momentum in a number of key areas. First, our hospital team completed a successful transition to the new Medicare prospective payment system that began on September 1. While early in the transition, we reduced average length of stay and reimbursement rates were in line with our expectations. In addition, average hospital wage rates in the quarter were flat with a year ago as a result of reduced agency utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be and overtime Overtime is the amount of time someone works beyond normal working hours. Normal hours may be determined in several ways:
The action undertakes a country when it buys and sells its own currency to protect its exchange value. Actions registered competitive traders undertake by on the NYSE to meet the exchange requirement that 75% of their traded be stabilizing, meaning that sell orders in professional liability costs from levels reported in the second quarter this year. We also increased our nursing center occupancy rates Noun 1. occupancy rate - the percentage of all rental units (as in hotels) are occupied or rented at a given time pct, per centum, percent, percentage - a proportion in relation to a whole (which is usually the amount per hundred) to 86.3% in the third quarter from 85.1% in the second quarter of this year. Effective October 1, the 3% Medicare market basket market basket n. 1. A grocery cart. 2. A group of products or services in a specific market, especially when considered in terms of its fluctuating cost in determining a consumer price index: adjustment, along with the 3.26% correction CORRECTION,punishment. Chastisement by one having authority of a person who has committed some offence, for the purpose of bringing him to legal subjection. 2. It is chiefly exercised in a parental manner, by parents, or those who are placed in loco parentis. to the market basket adjustment, will help our nursing center business to keep pace with increasing labor costs. The pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. division turned in another solid quarter and expanded its external customer base from the second quarter level. Finally, we began to realize some benefits from overhead reductions implemented in the third quarter of this year." Transaction with Ventas The Company also announced that it has entered into an agreement to purchase eight nursing centers and two hospitals (collectively, the "Facilities") currently leased from Ventas. In the proposed transaction, the Company will pay $79 million to purchase the Facilities and $6 million in lease termination fees termination fee The one-time charge for terminating or transferring an individual retirement account. If a financial institution charges a termination fee, the fee must be spelled out in the original agreement that is signed when the account is opened. . The current annual rent of approximately $5 million on the Facilities will terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. on the closing of the proposed transaction. The Company expects to finance its obligations at closing through the use of existing cash. The consummation CONSUMMATION. The completion of a thing; as the consummation of marriage; (q.v.) the consummation of a contract, and the like. 2. A contract is said to be consummated, when everything to be done in relation to it, has been accomplished. of the proposed transaction is subject to several material conditions, including, but not limited to, the receipt of required approvals from the Company's lenders. The Company has provided a $1.5 million deposit to Ventas that is subject to forfeiture The involuntary relinquishment of money or property without compensation as a consequence of a breach or nonperformance of some legal obligation or the commission of a crime. The loss of a corporate charter or franchise as a result of illegality, malfeasance, or Nonfeasance. and has agreed to pay an additional $3.5 million termination fee if, among other things, the Company cannot obtain lender LENDER, contracts. He from whom a thing is borrowed. 2. The contract of loan confers rights, and imposes duties on the lender. 1. The lender has the right to revoke the loan at his mere pleasure; 9 Cowen, R. 687; 8 Johns. Rep. 432; 1 T. R. 480; 2 Campb. Rep. approval by November November: see month. 30, 2003 or close the transaction by December December: see month. 10, 2003. The deposit would be refundable Refundable Eligible for refunding under the terms of a bond indenture. to the Company in the event of a breach by Ventas. The Company intends to dispose of the Facilities as soon as practicable. The Company has targeted June June: see month. 30, 2004 to complete the divestiture of all of the Facilities. The Company expects to generate between $30 million and $40 million in proceeds from the sales of the Facilities. For the nine months ended September 30, 2003, the Facilities generated pretax losses pretax loss A loss reported before tax benefits are considered. of approximately $15 million. The Company expects to record a loss on the proposed transaction equal to the difference between the total consideration paid to Ventas and the estimated fair value of the assets acquired. The estimation estimation In mathematics, use of a function or formula to derive a solution or make a prediction. Unlike approximation, it has precise connotations. In statistics, for example, it connotes the careful selection and testing of a function called an estimator. of the fair value of the assets acquired and related loss will be determined in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the Company's ongoing divestiture negotiations with third parties. Assuming the Company can successfully complete the Ventas transaction, the operations of the Facilities will be accounted for as discontinued operations. Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. J. Diaz, President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. of the Company, stated that, "We are pleased to have quickly structured another transaction with Ventas that will be beneficial to both companies. While we are taking the necessary steps to complete the Ventas transaction, we also are proceeding expeditiously ex·pe·di·tious adj. Acting or done with speed and efficiency. See Synonyms at fast1. ex to divest To deprive or take away. Divest is usually used in reference to the relinquishment of authority, power, property, or title. If, for example, an individual is disinherited, he or she is divested of the right to inherit money. of these unprofitable facilities. We believe that these transactions will benefit our overall results in 2004. This transaction also reflects the continued improvement in the working relationship between the companies that should allow each company more opportunities to enhance shareholder value." Forward Looking Statements This press release includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding the Company's expected future financial position, results of operations, cash flows, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management and statements containing the words such as "anticipate," "approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. ," "believe," "plan," "estimate," "expect," "project," "could," "should," "will," "intend," "may" and other similar expressions, are forward-looking statements. Such forward-looking statements are inherently uncertain, and stockholders and other potential investors must recognize that actual results may differ materially from the Company's expectations as a result of a variety of factors, including, without limitation, those discussed below. Such forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control, that may cause the Company's actual results or performance to differ materially from any future results or performance expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. These statements involve risks, uncertainties and other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. Factors that may affect the Company's plans or results include, without limitation, (a) the Company's ability to operate pursuant to the terms of its debt obligations and its master lease agreements with Ventas; (b) the Company's ability to meet its rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. and debt service obligations; (c) adverse developments with respect to the Company's results of operations or liquidity; (d) the Company's ability to attract and retain key executives and other healthcare personnel; (e) increased operating costs operating costs npl → gastos mpl operacionales due to shortages in qualified nurses and other healthcare personnel; (f) the effects of healthcare reform and government regulations, interpretation of regulations and changes in the nature and enforcement of regulations governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. the healthcare industry; (g) changes in the reimbursement rates or methods of payment from third party payors, including the Medicare and Medicaid Medicare and Medicaid U.S. government programs in effect since 1966. Medicare covers most people 65 or older and those with long-term disabilities. Part A, a hospital insurance plan, also pays for home health visits and hospice care. programs and LTAC PPS; (h) national and regional economic conditions, including their effect on the availability and cost of labor, materials and other services; (i) the Company's ability to control costs, particularly labor and employee benefit costs; (j) the Company's ability to comply with the terms of its Corporate Integrity Agreement; (k) the Company's ability to integrate operations of acquired facilities; (l) the increase in the costs of defending and insuring against professional liability claims and the Company's ability to predict the estimated costs related to such claims; (m) the Company's ability to successfully reduce (by divestiture or otherwise) its exposure to professional liability claims, and (n) the Company's ability to successfully acquire and dispose of dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. the Facilities. 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 ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to any of the forward-looking statements to reflect future events or developments. Kindred Healthcare, Inc. is a national healthcare services company primarily operating hospitals, nursing centers and institutional pharmacies This article is a list of major pharmacies (also known as chemists and drugstores) by country. Australia Pharmacies in Australia are mostly independently-owned by pharmacists, often operated as franchises of retail brands offered by the three major .
KINDRED HEALTHCARE, INC.
Financial Summary
(Unaudited)
(In thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
----------------- ----------------------
2003 2002 2003 2002
-------- -------- ---------- ----------
Revenues $860,264 $827,141 $2,528,590 $2,413,159
-------- -------- ---------- ----------
Income from continuing
operations $ 13,711 $ 14,080 $ 23,269 $ 62,726
Discontinued operations,
net of income taxes:
Loss from operations (2,004) (24,236) (32,097) (31,042)
Loss on divestiture of
operations - - (36,019) -
--------- --------- ---------- -----------
Net income (loss) $ 11,707 $(10,156) $ (44,847) $ 31,684
======== ======== ========== ==========
Earnings (loss) per
common share:
Basic:
Income from continuing
operations $ 0.79 $ 0.81 $ 1.34 $ 3.62
Discontinued
operations:
Loss from operations (0.12) (1.39) (1.85) (1.79)
Loss on divestiture of
operations - - (2.07) -
--------- --------- ---------- -----------
Net income (loss) $ 0.67 $ (0.58) $ (2.58) $ 1.83
======== ======== ========== ==========
Diluted:
Income from continuing
operations $ 0.78 $ 0.77 $ 1.34 $ 3.29
Discontinued
operations:
Loss from operations (0.11) (1.32) (1.84) (1.63)
Loss on divestiture of
operations - - (2.07) -
--------- --------- ---------- -----------
Net income (loss) $ 0.67 $ (0.55) $ (2.57) $ 1.66
======== ======== ========== ==========
Shares used in computing
earnings (loss) per
common share:
Basic 17,443 17,380 17,409 17,345
Diluted 17,572 18,395 17,427 19,084
KINDRED HEALTHCARE, INC.
Condensed Consolidated Statement of Operations
(Unaudited)
(In thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
------------------ ----------------------
2003 2002 2003 2002
Revenues $860,264 $827,141 $2,528,590 $2,413,159
-------- -------- ---------- ----------
Salaries, wages and
benefits 486,217 467,276 1,445,045 1,374,407
Supplies 110,764 106,113 326,622 308,627
Rent 67,093 65,357 199,084 192,953
Other operating expenses 152,065 145,079 453,155 380,723
Depreciation 20,947 18,052 61,135 51,842
Interest expense 1,054 1,368 6,937 8,918
Investment income (1,334) (2,343) (4,645) (7,618)
-------- -------- ---------- ----------
836,806 800,902 2,487,333 2,309,852
-------- -------- ---------- ----------
Income from continuing
operations before
reorganization items
and income taxes 23,458 26,239 41,257 103,307
Reorganization items - - - (5,520)
Income from continuing
operations before
income taxes 23,458 26,239 41,257 108,827
Provision for income taxes 9,747 12,159 17,988 46,101
-------- -------- ---------- ----------
Income from continuing
operations 13,711 14,080 23,269 62,726
Discontinued operations,
net of income taxes:
Loss from operations (2,004) (24,236) (32,097) (31,042)
Loss on divestiture of
operations - - (36,019) -
--------- --------- ---------- -----------
Net income (loss) $ 11,707 $(10,156) $ (44,847) $ 31,684
======== ======== ========== ==========
Earnings (loss) per
common share:
Basic:
Income from
continuing
operations $ 0.79 $ 0.81 $ 1.34 $ 3.62
Discontinued
operations:
Loss from
operations (0.12) (1.39) (1.85) (1.79)
Loss on
divestiture of
operations - - (2.07) -
--------- --------- ---------- -----------
Net income
(loss) $ 0.67 $ (0.58) $ (2.58) $ 1.83
======== ======== ========== ==========
Diluted:
Income from
continuing
operations $ 0.78 $ 0.77 $ 1.34 $ 3.29
Discontinued
operations:
Loss from
operations (0.11) (1.32) (1.84) (1.63)
Loss on
divestiture of
operations - - (2.07) -
--------- --------- ---------- -----------
Net income
(loss) $ 0.67 $ (0.55) $ (2.57) $ 1.66
======== ======== ========== ==========
Shares used in computing
earnings (loss)
per common share:
Basic 17,443 17,380 17,409 17,345
Diluted 17,572 18,395 17,427 19,084
KINDRED HEALTHCARE, INC.
Condensed Consolidated Balance Sheet
(Unaudited)
(In thousands, except per share amounts)
Sept. 30, Dec. 31,
2003 2002
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 131,959 $ 244,070
Cash - restricted 7,412 7,908
Insurance subsidiary investments 161,646 130,415
Accounts receivable less allowance for loss 436,538 420,611
Inventories 29,708 30,460
Other 89,692 86,852
---------- ----------
856,955 920,316
Property and equipment 648,052 611,944
Accumulated depreciation (174,576) (115,373)
---------- ----------
473,476 496,571
Goodwill 40,258 88,259
Insurance subsidiary investments 81,873 18,171
Other 131,092 120,861
---------- ----------
$1,583,654 $1,644,178
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 111,891 $ 124,466
Salaries, wages and other compensation 213,125 220,124
Due to third party payors 31,537 25,177
Professional liability risks 106,786 45,346
Other accrued liabilities 109,807 104,674
Income taxes 4,837 62,111
Long-term debt due within one year 4,335 258
---------- ----------
582,318 582,156
Long-term debt 140,603 162,008
Professional liability risks 211,744 211,771
Deferred credits and other liabilities 58,565 56,615
Stockholders' equity:
Common stock, $0.25 par value; authorized
175,000 shares; issued 17,862 shares -
September 30 and 17,649 shares - December 31 4,466 4,412
Capital in excess of par value 552,132 547,609
Deferred compensation (7,613) (6,967)
Accumulated other comprehensive income 172 460
Retained earnings 41,267 86,114
---------- ----------
590,424 631,628
---------- ----------
$1,583,654 $1,644,178
========== ==========
KINDRED HEALTHCARE, INC.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
(In thousands)
Three months ended Nine months ended
September 30, September 30,
------------------ --------------------
2003 2002 2003 2002
-------- -------- --------- ---------
Cash flows from operating
activities:
Net income (loss) $ 11,707 $(10,156) $ (44,847) $ 31,684
Adjustments to reconcile net
income (loss) to net
cash provided by (used in)
operating activities:
Depreciation 20,947 18,287 61,556 52,396
Amortization of deferred
compensation costs 1,643 1,682 3,880 5,588
Provision for doubtful
accounts 6,265 3,804 19,231 11,305
Loss on divestiture of
discontinued operations - - 36,019 -
Unusual transactions 1,345 - 1,345 525
Reorganization items - - - (5,520)
Other (393) (253) 1,023 352
Change in operating assets
and liabilities:
Accounts receivable (58,630) (62) (47,573) (3,610)
Inventories and other assets 9,471 6,592 16,277 9,658
Accounts payable (4,581) (2,084) (6,377) 5,091
Income taxes 7,684 16,706 (5,032) 22,595
Due to third party payors (295) (217) 6,360 (7,239)
Other accrued liabilities (6,245) 61,809 70,838 101,885
-------- -------- --------- ---------
Net cash provided by
(used in) operating
activities before
reorganization items (11,082) 96,108 112,700 224,710
Payment of reorganization
items (315) (808) (1,232) (4,484)
-------- -------- --------- ---------
Net cash provided by
(used in) operating
activities (11,397) 95,300 111,468 220,226
-------- -------- --------- ---------
Cash flows from investing
activities:
Purchase of property and
equipment (20,823) (20,966) (48,865) (50,193)
Acquisition of healthcare
facilities - (214) (63,795) (45,765)
Sale of assets 59,215 - 66,874 752
Surety bond deposits - - - 9,676
Net change in insurance
subsidiary investments 5,734 (4,931) (94,933) (39,135)
Net change in other
investments (447) 2,276 (2,487) 4,967
Other 512 (299) (1,523) (98)
-------- -------- --------- ---------
Net cash provided by
(used in) investing
activities 44,191 (24,134) (144,729) (119,796)
-------- -------- --------- ---------
Cash flows from financing
activities:
Repayment of
long-term debt (60,982) (50,182) (61,210) (50,461)
Payment of deferred
financing costs - (365) (2,872) (1,375)
Purchase of common stock - (1,046) - (1,046)
Other (9,990) 2,752 (14,768) (3,760)
-------- -------- --------- ---------
Net cash used in
financing activities (70,972) (48,841) (78,850) (56,642)
-------- -------- --------- ---------
Change in cash and cash
equivalents (38,178) 22,325 (112,111) 43,788
Cash and cash equivalents at
beginning of period 170,137 212,262 244,070 190,799
-------- -------- --------- ---------
Cash and cash equivalents at
end of period $131,959 $234,587 $ 131,959 $ 234,587
======== ======== ========= =========
KINDRED HEALTHCARE, INC.
Condensed Business Segment Data
(Unaudited)
(In thousands)
2002 Quarters
--------------------------------------
First Second Third Fourth
-------- -------- -------- --------
Revenues:
Health services
division:
Nursing centers $428,217 $427,136 $436,329 $426,886
Rehabilitation
services 7,830 8,566 8,697 9,203
-------- -------- -------- --------
436,047 435,702 445,026 436,089
Hospital division:
Hospitals 296,442 322,764 330,910 326,183
Ancillary services 1,870 2,278 1,639 1,766
-------- -------- -------- --------
298,312 325,042 332,549 327,949
Pharmacy division 59,178 59,948 64,014 67,089
-------- -------- -------- --------
793,537 820,692 841,589 831,127
Elimination of pharmacy
charges to Company
nursing centers (14,063) (14,148) (14,448) (14,783)
-------- -------- -------- --------
$779,474 $806,544 $827,141 $816,344
======== ======== ======== ========
Income (loss) from
continuing operations:
Operating income (loss):
Health services division:
Nursing centers $ 84,695 $ 85,774 $ 63,480 $ 59,396
Rehabilitation services (66) 288 1,155 (1,639)
-------- -------- -------- --------
84,629 86,062 64,635 57,757
Hospital division:
Hospitals 59,574 62,326 70,979 67,561
Ancillary services 135 246 (240) 118
-------- -------- -------- --------
59,709 62,572 70,739 67,679
Pharmacy division 5,537 5,823 5,856 6,056
Corporate:
Overhead (31,674) (29,200) (30,812) (19,469)
Insurance subsidiary (1,001) (1,203) (1,745) (2,100)
-------- -------- -------- --------
(32,675) (30,403) (32,557) (21,569)
-------- -------- -------- --------
117,200 124,054 108,673 109,923
Unusual transactions - (525) - 2,320
Reorganization items - 5,520 - -
--------- -------- --------- ---------
Operating income 117,200 129,049 108,673 112,243
Rent (62,730) (64,866) (65,357) (65,838)
Depreciation (16,541) (17,249) (18,052) (18,735)
Interest, net (1,853) (422) 975 (1,085)
-------- -------- -------- --------
Income from continuing
operations before
income taxes 36,076 46,512 26,239 26,585
Provision for income taxes 14,821 19,121 12,159 10,661
-------- -------- -------- --------
$ 21,255 $ 27,391 $ 14,080 $ 15,924
======== ======== ======== ========
2003 Quarters
----------------------------
First Second Third
-------- -------- --------
Revenues:
Health services
division:
Nursing centers $424,907 $431,207 $447,202
Rehabilitation
services 8,502 8,795 12,065
-------- -------- --------
433,409 440,002 459,267
Hospital division:
Hospitals 340,855 346,054 346,127
Ancillary services 1,759 1,484 1,389
-------- -------- --------
342,614 347,538 347,516
Pharmacy division 68,828 67,136 69,436
-------- -------- --------
844,851 854,676 876,219
Elimination of pharmacy
charges to Company
nursing centers (15,743) (15,458) (15,955)
-------- -------- --------
$829,108 $839,218 $860,264
======== ======== ========
Income (loss) from
continuing operations:
Operating income (loss):
Health services division:
Nursing centers $ 41,925 $ 56,465 $ 54,249
Rehabilitation services (959) (750) 261
-------- -------- --------
40,966 55,715 54,510
Hospital division:
Hospitals 70,304 74,017 84,517
Ancillary services 180 (562) 7
-------- -------- ---------
70,484 73,455 84,524
Pharmacy division 6,902 6,109 6,201
Corporate:
Overhead (26,713) (28,354) (28,670)
Insurance subsidiary (2,607) (3,407) (4,002)
-------- -------- --------
(29,320) (31,761) (32,672)
-------- -------- --------
89,032 103,518 112,563
Unusual transactions - - (1,345)
Reorganization items - - -
--------- --------- ---------
Operating income 89,032 103,518 111,218
Rent (65,405) (66,586) (67,093)
Depreciation (19,830) (20,358) (20,947)
Interest, net (1,253) (1,319) 280
-------- -------- --------
Income from continuing
operations before
income taxes 2,544 15,255 23,458
Provision for income taxes 2,687 5,554 9,747
-------- -------- --------
$ (143) $ 9,701 $ 13,711
======== ======== ========
KINDRED HEALTHCARE, INC.
Condensed Business Segment Data (Continued)
(Unaudited)
(In thousands)
2002 Quarters
----------------------------------
First Second Third Fourth
------- ------ ------- -------
Rent:
Health services division:
Nursing centers $38,395 $39,136 $39,789 $40,124
Rehabilitation services 24 24 37 43
------- ------- ------- -------
38,419 39,160 39,826 40,167
Hospital division:
Hospitals 23,336 24,675 24,513 24,375
Ancillary services 225 234 225 232
------- ------- ------- -------
23,561 24,909 24,738 24,607
Pharmacy division 717 734 741 998
Corporate 33 63 52 66
------- ------- ------- -------
$62,730 $64,866 $65,357 $65,838
======= ======= ======= =======
Depreciation:
Health services division:
Nursing centers $ 5,921 $ 5,985 $ 6,363 $ 6,392
Rehabilitation services 9 6 13 15
-------- -------- ------- -------
5,930 5,991 6,376 6,407
Hospital division:
Hospitals 6,361 6,638 6,994 7,087
Ancillary services 146 200 131 103
------- ------- ------- -------
6,507 6,838 7,125 7,190
Pharmacy division 397 428 469 513
Corporate 3,707 3,992 4,082 4,625
------- ------- ------- -------
$16,541 $17,249 $18,052 $18,735
======= ======= ======= =======
Capital expenditures, excluding
acquisitions:
Health services division
(including
discontinued operations) $ 2,116 $ 4,728 $ 6,498 $10,785
Hospital division 3,316 6,430 6,056 10,831
Pharmacy division 396 782 882 1,431
Corporate:
Information systems 3,330 6,632 6,474 9,140
Other 710 787 1,056 1,691
------- ------- ------- -------
$ 9,868 $19,359 $20,966 $33,878
======= ======= ======= =======
2003 Quarters
----------------------------
First Second Third
-------- -------- --------
Rent:
Health services division:
Nursing centers $40,142 $40,956 $41,604
Rehabilitation services 69 95 123
------- ------- -------
40,211 41,051 41,727
Hospital division:
Hospitals 24,204 24,625 24,280
Ancillary services 201 213 235
------- ------- -------
24,405 24,838 24,515
Pharmacy division 725 638 789
Corporate 64 59 62
------- ------- -------
$65,405 $66,586 $67,093
======= ======= =======
Depreciation:
Health services division:
Nursing centers $ 6,674 $ 6,818 $ 6,898
Rehabilitation services 16 20 22
------- ------- -------
6,690 6,838 6,920
Hospital division:
Hospitals 7,255 7,658 7,894
Ancillary services 119 (39) 107
------- ------- -------
7,374 7,619 8,001
Pharmacy division 531 552 574
Corporate 5,235 5,349 5,452
------- ------- -------
$19,830 $20,358 $20,947
======= ======= =======
Capital expenditures, excluding
acquisitions:
Health services division (including
discontinued operations) $ 3,273 $ 6,422 $ 9,803
Hospital division 2,822 4,133 5,773
Pharmacy division 616 522 815
Corporate:
Information systems 3,207 5,992 4,071
Other 647 408 361
------- ------- -------
$10,565 $17,477 $20,823
======= ======= =======
KINDRED HEALTHCARE, INC.
Condensed Business Segment Data (Continued)
(Unaudited)
2002 Quarters
--------------------------------------
First Second Third Fourth
-------- -------- -------- --------
Hospital data:
End of period data:
Number of hospitals 57 63 64 65
Number of licensed beds 4,961 5,276 5,344 5,385
Revenue mix % (a):
Medicare 58 61 58 61
Medicaid 10 8 8 9
Private and other 32 31 34 30
Admissions:
Medicare 5,585 6,498 6,003 6,409
Medicaid 592 569 619 623
Private and other 1,168 1,615 1,255 1,243
-------- -------- -------- --------
7,345 8,682 7,877 8,275
======== ======== ======== ========
Patients days:
Medicare 196,057 218,392 209,158 211,990
Medicaid 33,864 32,635 33,590 34,733
Private and other 58,437 57,266 56,623 57,279
-------- -------- -------- --------
288,358 308,293 299,371 304,002
======== ======== ======== ========
Average length of stay:
Medicare 35.1 33.6 34.8 33.1
Medicaid 57.2 57.4 54.3 55.8
Private and other 50.0 35.5 45.1 46.1
Weighted average 39.3 35.5 38.0 36.7
Revenues per admission (a):
Medicare $ 30,904 $ 30,019 $ 31,827 $ 31,086
Medicaid 50,324 46,496 45,109 45,746
Private and other 80,521 62,691 89,186 79,209
Weighted average 40,360 37,176 42,010 39,418
Revenues per patient day (a):
Medicare $ 880 $ 893 $ 913 $ 940
Medicaid 880 811 831 821
Private and other 1,609 1,768 1,977 1,719
Weighted average 1,028 1,047 1,105 1,073
Average daily census 3,204 3,388 3,254 3,304
Occupancy % 67.6 65.9 63.6 64.2
2003 Quarters
----------------------------
First Second Third
-------- -------- --------
Hospital data:
End of period data:
Number of hospitals 65 65 66
Number of licensed beds 5,408 5,430 5,461
Revenue mix % (a):
Medicare 60 59 63
Medicaid 8 8 7
Private and other 32 33 30
Admissions:
Medicare 6,853 6,557 6,252
Medicaid 656 615 681
Private and other 1,334 1,350 1,350
-------- -------- --------
8,843 8,522 8,283
======== ======== ========
Patients days:
Medicare 222,919 220,123 197,394
Medicaid 32,266 33,218 32,016
Private and other 58,369 61,136 55,486
-------- -------- --------
313,554 314,477 284,896
======== ======== ========
Average length of stay:
Medicare 32.5 33.6 31.6
Medicaid 49.2 54.0 47.0
Private and other 43.8 45.3 41.1
Weighted average 35.5 36.9 34.4
Revenues per admission (a):
Medicare $ 29,872 $ 31,415 $ 34,556
Medicaid 40,554 44,515 36,914
Private and other 82,112 83,474 77,737
Weighted average 38,545 40,607 41,788
Revenues per patient day (a):
Medicare $ 918 $ 936 $ 1,094
Medicaid 825 824 785
Private and other 1,877 1,843 1,891
Weighted average 1,087 1,100 1,215
Average daily census 3,484 3,456 3,097
Occupancy % 67.3 66.4 59.3
(a) Includes income of $14 million related to certain Medicare
reimbursement issues recorded in the third quarter of 2003 and $12
million related to a favorable settlement with a private insurance
company recorded in the third quarter of 2002.
KINDRED HEALTHCARE, INC.
Condensed Business Segment Data (Continued)
(Unaudited)
2002 Quarters
----------------------------------------------
First Second Third Fourth
---------- --------- ----------- ----------
Nursing center data:
End of period data:
Number of nursing
centers:
Owned or leased 260 258 258 258
Managed 14 10 10 7
---------- ---------- ---------- ----------
274 268 268 265
========== ========== ========== ==========
Number of licensed
beds:
Owned or leased 33,699 33,634 33,606 33,587
Managed 1,417 1,017 1,017 803
---------- ---------- ---------- ----------
35,116 34,651 34,623 34,390
========== ========== ========== ==========
Revenue mix %:
Medicare 34 34 33 31
Medicaid 46 47 48 50
Private and other 20 19 19 19
Patients days
(excludes managed
facilities):
Medicare 403,900 404,048 394,446 389,018
Medicaid 1,769,272 1,773,717 1,814,270 1,820,422
Private and other 463,345 462,196 461,289 452,894
---------- ---------- ---------- ----------
2,636,517 2,639,961 2,670,005 2,662,334
========== ========== ========== ==========
Revenues per patient
day:
Medicare $ 359 $ 358 $ 361 $ 334
Medicaid 113 112 115 118
Private and other 181 180 183 183
Weighted average 162 162 163 160
Average daily census 29,295 29,011 29,022 28,938
Occupancy % 86.1 85.7 86.0 85.8
Pharmacy data:
Number of customer
licensed beds at end
of period:
Company-operated 30,471 30,568 30,279 29,966
Non-affiliated 25,695 27,148 28,460 28,873
---------- ---------- ---------- ----------
56,166 57,716 58,739 58,839
========== ========== ========== ==========
2003 Quarters
----------------------------------
First Second Third
---------- ---------- ----------
Nursing center data:
End of period data:
Number of nursing centers:
Owned or leased 258 258 258
Managed 7 7 7
---------- ---------- ----------
265 265 265
========== ========== ==========
Number of licensed beds:
Owned or leased 33,563 33,394 33,387
Managed 803 803 803
---------- ---------- ----------
34,366 34,197 34,190
========== ========== ==========
Revenue mix %:
Medicare 33 33 31
Medicaid 48 48 50
Private and other 19 19 19
Patients days (excludes managed
facilities):
Medicare 411,096 411,289 407,207
Medicaid 1,755,036 1,765,407 1,816,395
Private and other 424,738 432,200 437,233
---------- ---------- ----------
2,590,870 2,608,896 2,660,835
========== ========== ==========
Revenues per patient day:
Medicare $ 337 $ 342 $ 344
Medicaid 117 118 124
Private and other 189 190 189
Weighted average 164 165 168
Average daily census 28,787 28,669 28,922
Occupancy % 85.5 85.1 86.3
Pharmacy data:
Number of customer licensed beds
at end of period:
Company-operated 29,804 27,566 27,886
Non-affiliated 28,365 28,848 29,507
---------- ---------- ----------
58,169 56,414 57,393
========== ========== ==========
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