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Kindred Healthcare Inc. Reports Operating Results (10-Q)

November 06, 2012 | About:

10qk

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Kindred Healthcare Inc. (KND) filed Quarterly Report for the period ended 2012-09-30.

Kindred Healthcare, Inc. has a market cap of $548.2 million; its shares were traded at around $11.11 with a P/E ratio of 6.9 and P/S ratio of 0.1.

Highlight of Business Operations:

As a result of deterioration in professional liability and workers compensation underwriting results of the Companys limited purpose insurance subsidiary in 2011, the Company made a capital contribution of $9 million during the nine months ended September 30, 2012 to its limited purpose insurance subsidiary. Conversely, as a result of improved professional liability underwriting results of the Companys limited purpose insurance subsidiary in 2010, the Company received a distribution of $3 million during the nine months ended September 30, 2011 from its limited purpose insurance subsidiary. These transactions were completed in accordance with applicable regulations. Neither the capital contribution nor the distribution had any impact on earnings.

Other than the impairment of intangible assets and property and equipment in connection with the planned divestiture of a LTAC hospital, the Company has determined that during the nine months ended September 30, 2012 there were no events or changes in circumstances since December 31, 2011 requiring an interim impairment test. Although the Company has determined that there was no other goodwill or other indefinite-lived intangible asset impairments as of September 30, 2012, adverse changes in the operating environment and related key assumptions used to determine the fair value of the Companys reporting units and indefinite-lived intangible assets or declines in the value of the Companys common stock may result in future impairment charges for a portion or all of these assets. Specifically, if the rate of growth of government and commercial revenues earned by the Companys reporting units were to be less than projected or if healthcare reforms were to negatively impact the Companys business, an impairment charge of a portion or all of these assets may be required. An impairment charge could have a material adverse effect on the Companys business, financial position and results of operations, but would not be expected to have an impact on the Companys cash flows or liquidity.

Revenues declined 6% to $534 million in the third quarter of 2012 compared to $571 million in the same period of 2011 and declined 5% to $1.6 billion compared to $1.7 billion for the nine months ended September 30, 2012 from the same period in 2011. The decline in revenues in both periods was primarily a result of the 2011 CMS Rules and a decline in admissions. Same-facility admissions declined 5% in the third quarter of 2012 and 3% for the nine months ended September 30, 2012 compared to the same respective prior year periods. Same-facility patient days declined 4% in the third quarter of 2012 and 3% for the nine months ended September 30, 2012, compared to the same respective prior year periods, primarily as a result of the decline in admissions and Medicare average length of stay.

Operating income for the Companys operating divisions excludes allocations of corporate overhead. These costs aggregated $46 million and $49 million in the third quarter of 2012 and 2011, respectively, and $133 million and $131 million for the nine months ended September 30, 2012 and 2011, respectively. The decrease in the third quarter of 2012 was primarily attributable to synergies realized from the RehabCare Merger. The increase for the nine months ended September 30, 2012 was primarily attributable to increased costs of assuming the RehabCare operations. As a percentage of consolidated revenues, corporate overhead totaled 3.0% and 3.2% in the third quarter of 2012 and 2011, respectively, and totaled 2.9% and 3.3% for the nine months ended September 30, 2012 and 2011, respectively.

As a result of deterioration in professional liability and workers compensation underwriting results of the Companys limited purpose insurance subsidiary in 2011, the Company made a capital contribution of $9 million during the nine months ended September 30, 2012 to its limited purpose insurance subsidiary. Conversely, as a result of improved professional liability underwriting results of the Companys limited purpose insurance subsidiary in 2010, the Company received a distribution of $3 million during the nine months ended September 30, 2011 from its limited purpose insurance subsidiary. These transactions were completed in accordance with applicable regulations. Neither the capital contribution nor the distribution had any impact on earnings.

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