KINDRED HEALTHCARE SELLS UNDER-PERFORMING NURSING CENTERS
Company Completes Sale of Nine Under-performing Nursing Centers
and Expects to Sell
Two Additional Nursing Centers During 2007
Company also Completes Sale and Leaseback Transaction for Three Hospitals
Louisville, KY (February 1, 2007) – Kindred Healthcare, Inc. (“Kindred”) (NYSE:KND) today announced that it has sold nine under-performing nursing centers and expects to sell two additional nursing centers during 2007 (collectively, the “Nursing Centers”). In addition, Kindred also announced the completion of a sale and leaseback transaction with respect to three hospitals (the “Hospitals”) previously owned by Kindred.
On January 31, 2007, Kindred acquired the Nursing Centers that were previously leased in exchange for the Hospitals. In addition, Kindred paid a one-time cash payment of approximately $36 million. Kindred also amended its existing master lease with the landlord to (1) terminate the current annual rent of approximately $9.9 million on the Nursing Centers, (2) add the Hospitals to the master lease with a current annual rent of approximately $6.3 million and (3) extend the initial expiration date of the master lease until January 31, 2017 except for one hospital which will have an expiration date of January 31, 2022.
On February 1, 2007, Kindred sold nine of the Nursing Centers and expects to close on the sale of the other two remaining Nursing Centers during 2007. The Company generated approximately $74 million in proceeds from the initial sale transaction and expects to generate approximately $4 million in additional proceeds from the sale of the remaining two Nursing Centers.
The Nursing Centers, which contain 1,754 licensed beds, generated pretax losses of approximately $4 million for the year ended December 31, 2005 and $3 million for the nine months ended September 30, 2006. Kindred has accounted for the operations of the Nursing Centers as discontinued operations. Kindred expects to record a pre-tax loss of approximately $7 million to $10 million in the first quarter of 2007 relating to these divestitures.
The sale of the remaining two Nursing Centers is subject to the receipt of required approvals and the satisfaction of other customary conditions to closing.
Paul J. Diaz, President and Chief Executive Officer of Kindred, remarked “We are pleased to have completed these transactions, including the disposition of these under-performing nursing centers. These transactions have further repositioned our nursing center portfolio to eliminate unprofitable operations and allow us to focus our efforts on improving our operations going forward.”
This press 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. All statements regarding Kindred’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,” “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 Kindred’s expectations as a result of a variety
of factors, including, without limitation, those discussed below. Such
forward-looking statements are based upon management’s current expectations
and include known and unknown risks, uncertainties and other factors,
many of which Kindred is unable to predict or control, that may cause
Kindred’s actual results or performance to differ materially from
any future results or performance expressed or implied by such forward-looking
statements. These statements involve risks, uncertainties and other factors
discussed below and detailed from time to time in Kindred’s filings
with the Securities and Exchange Commission.
In addition to the factors set forth above, other factors that may affect
Kindred’s plans or results include, without limitation, (a) Kindred’s
ability to operate pursuant to the terms of its debt obligations and its
master leases with Ventas, Inc.; (b) Kindred’s ability to meet its
rental and debt service obligations; (c) Kindred’s and AmerisourceBergen
Corporation’s ability to complete the proposed merger of their respective
institutional pharmacy operations, including the receipt of all required
regulatory approvals and the satisfaction of other closing conditions
to the proposed transaction; (d) adverse developments with respect to
Kindred’s results of operations or liquidity; (e) Kindred’s
ability to attract and retain key executives and other healthcare personnel;
(f) increased operating costs due to shortages in qualified nurses, therapists
and other healthcare personnel; (g) the effects of healthcare reform and
government regulations, interpretation of regulations and changes in the
nature and enforcement of regulations governing the healthcare industry;
(h) changes in the reimbursement rates or methods of payment from third
party payors, including the Medicare and Medicaid programs, changes arising
from and related to the Medicare prospective payment system for long-term
acute care hospitals, including the final Medicare payment rules issued
in May 2006, the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003, and changes in Medicare and Medicaid reimbursements for Kindred’s
nursing centers; (i) national and regional economic conditions, including
their effect on the availability and cost of labor, materials and other
services; (j) Kindred’s ability to control costs, including labor
and employee benefit costs; (k) Kindred’s ability to successfully
pursue its development activities and successfully integrate new operations,
including the realization of anticipated revenues, economies of scale,
cost savings and productivity gains associated with such operations; (l)
the increase in the costs of defending and insuring against alleged professional
liability claims and Kindred’s ability to predict the estimated
costs related to such claims; (m) Kindred’s ability to successfully
reduce (by divestiture of operations or otherwise) its exposure to professional
liability claims; (n) Kindred’s ability to successfully dispose
of unprofitable facilities; and (o) Kindred’s ability to ensure
and maintain an effective system of internal controls over financial reporting.
Many of these factors are beyond Kindred’s control. Kindred cautions
investors that any forward-looking statements made by Kindred are not
guarantees of future performance. Kindred 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.
About Kindred Healthcare
Kindred Healthcare, Inc. (NYSE: KND) is a Fortune 500 healthcare services
company, based in Louisville, Kentucky, with annualized revenues of $4.3
billion that provides services in over 500 locations in 39 states. Kindred
through its subsidiaries operates long-term acute care hospitals, skilled
nursing centers, institutional pharmacies and a contract rehabilitation
services business, Peoplefirst Rehabilitation Services, across
the United States. Kindred’s 55,000 employees are committed to providing
high quality patient care and outstanding customer service to become the
most trusted and respected provider of healthcare services in every community
we serve. For more information, go to www.kindredhealthcare.com.
CONTACT:
Richard A. Lechleiter
Executive Vice President and Chief Financial Officer
(502) 596-7734
