The worst seems to be over for nursing home chain Vencor, Louisville, Ky.
The company, on the cusp of ending 18 months in bankruptcy, reported last week it had slashed losses by more than 90% to $53.6 million, or 78 cents per share, in 2000 from $683.2 million, or $9.72 per share, in 1999. Revenue climbed 8.4% to nearly $2.9 billion.
Investors are showing their approval of Vencor's reorganization plan by bidding up the prices of its bank debt and bonds, said Tom Shinkle, a healthcare analyst at Imperial Capital, a Beverly Hills, Calif.-based brokerage and investment bank. The equity that lenders and bondholders will receive from the reorganization, when compared with the discount on Vencor's debt, implies a stock value of $27.50 per share, Shinkle said.
Vencor is expected to emerge from bankruptcy by May 1 and then will be renamed Kindred Healthcare.
The company and its landlord, Ventas, a Louisville-based real estate investment trust spun off from Vencor, also received good news on their settlement of federal False Claims Act charges.
Confirming a deal first reported in Modern Healthcare's Daily Dose, the U.S. Justice Department announced last week it had accepted a $104.5 million settlement of Medicare fraud charges predating the 1998 spinoff of Ventas. The Justice Department said the agreement is the largest False Claims Act settlement based on failure to provide adequate care.
Vencor and Ventas also will repay $90 million in overpayments received from Medicare and pay $25 million to resolve nonfraud Medicare claims. The companies already have paid back about one-third of the $90 million.
The former Vencor employees whose lawsuits initiated the investigation will collect $15 million from the settlement.