Kindred Healthcare, a Louisville, Ky.-based post-acute-care operator, on Thursday reported growth in its core operations during the second quarter from higher volume, new acquisitions and cost controls. But restructuring and other charges hurt the company's bottom line.
Kindred reports growth in core operations, but one-time charges drag down net income
Kindred has been restructuring its operations and exiting unprofitable business lines. As of Aug. 1, it had divested 55 of the 59 nursing centers it had leased from Ventas. Kindred is seeking to build its capabilities in home health and rehabilitation and move away from skilled nursing.
Costs incurred from discontinuing those businesses contributed to a net loss in the second quarter.
In total, Kindred reported a net loss of $35.8 million on revenue of $1.3 billion compared to net income of $1.7 million on revenue of $1.2 billion in the same period last year.
In addition to the restructuring costs, Kindred also booked charges related to a debt refinancing, litigation and M&A transaction costs that dragged down earnings. Operating income before these charges increased 7% year over year.
Since December, Kindred has acquired Senior Home Care and the Silver State Accountable Care Organization.
On the call, CEO Paul Diaz declined to disclose a timeline for when Kindred might reach a definitive agreement to acquire Gentiva Health Services, which it has been pursuing since May. He echoed comments from Gentiva's earnings call, confirming that Kindred has signed confidentiality and standstill agreements, but declining to provide more details.
In its hospital division, Kindred saw a 3% increase in same-facility admissions as well as growth in its Medicaid population. That's a sign that the Affordable Care Act is starting to benefit not just acute-care hospitals but long-term acute-care providers, said Benjamin Breier, president and chief operating officer, on the call.
Pressed by an analyst, he said Kindred has benefited from more volume and a greater number of paying patients even if the overall reimbursement from Medicaid is lower than from commercial insurers. Still, he added, “Medicaid happens to be the slowest payer on earth so we're happy to have the incremental volume, but there's an incremental cost that goes along with that.”
The top-line revenue growth also signals that Kindred has achieved a full recovery from the Medicare payment cuts under sequestration, Chief Financial Officer Stephen Farber said on the call.
Kindred shares were trading 6.7% lower at $22.23 at midday after an earnings call Thursday morning.
Follow Beth Kutscher on Twitter: @MHbkutscher
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.