UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 24, 2003
-----------------------
KINDRED HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 001-14057 61-1323993
(State or other jurisdiction (Commission File (IRS Employer
of incorporation or organization) Number) Identification No.)
680 South Fourth Street
Louisville, Kentucky
(Address of principal executive offices)
40202-2412
(Zip Code)
Registrant's telephone number, including area code: (502) 596-7300
Not Applicable
(Former name or former address, if changed since last report)
Item 9. Regulation FD Disclosure.
On March 24, 2003, the Company issued a press release announcing its
financial results for the fourth quarter and fiscal year ended December 31,
2002. The press release, dated March 24, 2003, is attached as Annex A to this
Item 9. On March 24, 2003, the Company also included the press release on its
website at www.kindredhealthcare.com.
Annex A is incorporated herein by reference and has been furnished, not
filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
KINDRED HEALTHCARE, INC.
Date: March 24, 2003 By:/s/ Richard A. Lechleiter
-------------------------
Richard A. Lechleiter
Senior Vice President, Chief Financial
Officer and Treasurer
Annex A
[Kindred Logo appears here]
Contact: Richard A. Lechleiter
Senior Vice President, Chief
Financial Officer and Treasurer
(502) 596-7734
KINDRED HEALTHCARE ANNOUNCES FISCAL 2002 RESULTS
---------------------
Fiscal Year Net Income - $34.8 million or $1.93 per Diluted Share
Fourth Quarter Net Income - $3.1 million or $0.18 per Diluted Share
LOUISVILLE, Ky. (March 24, 2003) - Kindred Healthcare, Inc. (the "Company")
(NASDAQ: KIND) today announced its operating results for the fourth quarter and
fiscal year ended December 31, 2002.
Fiscal Year Results
Revenues for the year ended December 31, 2002 aggregated $3.4 billion
and net income totaled $34.8 million or $1.93 per diluted share. Operating
results for 2002 included a $2.3 million pretax gain from the sale of property
in the fourth quarter and a $0.5 million lease termination charge for an
unprofitable hospital recorded in the second quarter. In addition, the Company
adjusted its accrued reorganization costs in the second quarter of 2002, the
effect of which increased pretax income by approximately $5.5 million. The
combined impact of these items increased reported net income by approximately $4
million or $0.25 per diluted share. Net income for 2002 also included an
extraordinary gain on extinguishment of debt totaling $1.4 million or $0.08 per
diluted share.
As previously disclosed, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142"), which, among other things, requires that
goodwill should no longer be amortized effective January 1, 2002. The adoption
of SFAS 142 increased 2002 net income by approximately $6.5 million or $0.36 per
diluted share.
As previously disclosed, operating results for fiscal 2002 were
favorably impacted by a $12 million ($7 million net of tax or $0.41 per diluted
share) settlement with a private insurance company in the third quarter related
to disputed amounts owed for services rendered to patients in the Company's
hospitals in prior years who were covered under Medicare supplemental insurance
policies.
Operating results for the year ended December 31, 2002 were adversely
impacted by a significant increase in professional liability costs, particularly
in the Company's nursing center business. Professional liability costs,
including the costs of insurance provided by a wholly owned limited purpose
insurance subsidiary and unaffiliated commercial insurance carriers, aggregated
$145 million for the year ended December 31, 2002. As discussed below, the
Company's operating results for 2001 have been segregated to present separately
the period prior to its emergence from bankruptcy. Aggregate professional
liability costs in 2001 were $53 million for the nine months ended December 31,
2001 and $13 million for the three months ended March 31, 2001. The portion of
the 2002 professional liability costs that related to changes in estimates for
prior year reserves approximated $30 million. A substantial portion of the
increase in professional liability costs in 2002 related to the Company's
nursing centers in
Florida. Pretax losses associated with the Company's Florida nursing center
operations aggregated $68 million ($42 million net of tax or $2.31 per diluted
share) in 2002.
Operating results for the year ended December 31, 2002 also were
adversely impacted by the expiration of certain Medicare reimbursements to the
Company's nursing centers on October 1, 2002. The impact of these reimbursement
changes reduced 2002 pretax income by approximately $15 million ($9 million net
of tax or $0.50 per diluted share).
The Company believes that its recent increases in professional
liability costs are expected to continue in the foreseeable future, particularly
in the state of Florida. In addition, the expiration of certain Medicare funding
on October 1, 2002 will continue to reduce materially the Company's nursing
center operating income.
As a result of the Company's emergence from bankruptcy in April 2001,
the reported operating results of the Company for fiscal 2001 have been
segregated for accounting purposes because the reported amounts after April 1,
2001 are not comparable to the amounts reported while the Company operated in
bankruptcy. For the nine months ended December 31, 2001, the Company reported
revenues of $2.3 billion and net income of $51.7 million or $2.83 per diluted
share. Operating results for this period included a pretax gain of $3.2 million
recorded in connection with the favorable resolution of a legal dispute in the
third quarter and a pretax gain of $2.2 million in connection with the
resolution of a loss contingency related to a partnership interest in the fourth
quarter. The combined effect of these items increased reported net income by
$3.3 million or $0.18 per diluted share. Net income for the nine months ended
December 31, 2001 also included an extraordinary gain on extinguishment of debt
totaling $4.3 million or $0.24 per diluted share.
For the three months ended March 31, 2001 (the period prior to the
Company's emergence from bankruptcy), revenues were $752 million and net income
totaled $472 million or $6.59 per diluted share. For accounting purposes, the
adjustments necessary to record the Company's court-approved financial
restructuring were reflected in the operating results of the Company during this
period. The impact of the reorganization increased net income from operations
for the three months ended March 31, 2001 by approximately $53.7 million or
$0.75 per diluted share. In addition, net income for this period included an
extraordinary gain from the restructuring of the Company's debt of $422.8
million or $5.90 per diluted share.
Fourth Quarter Results
Revenues for the fourth quarter of 2002 grew 7% to $848 million
compared to $790 million in the fourth quarter of 2001, and net income totaled
$3.1 million or $0.18 per diluted share compared to $19 million or $0.98 per
diluted share in the fourth quarter of 2001. Operating results for the fourth
quarter of 2002 included the previously discussed gain on the sale of property
totaling $2.3 million. Operating results for the fourth quarter of 2001 included
the previously discussed pretax gain of $2.2 million in connection with the
resolution of a loss contingency related to a partnership interest. Fourth
quarter 2001 net income also included an extraordinary gain on extinguishment of
debt totaling $2.9 million or $0.15 per diluted share.
The Company also recorded certain adjustments that impacted its
reported operating results for the fourth quarter of 2002. As previously
discussed, the expiration of certain Medicare reimbursements to the Company's
nursing centers on October 1, 2002 reduced fourth quarter pretax income by
approximately $15 million. In addition, certain provisions of the Balanced
Budget Act of 1997 that reduced allowable hospital capital expenditures by 15%
expired on October 1, 2002. As a result, hospital Medicare revenues increased
approximately $2 million in the fourth quarter of 2002.
In the fourth quarter of 2002, the regular quarterly independent
actuarial valuation of professional liability risks was performed. Based upon
the results of the valuation, the Company recorded additional professional
liability costs of $19 million, of which $10 million had been previously
announced at the time of the Company's third quarter earnings release. Aggregate
professional liability costs in the fourth quarter of 2002 were $37 million
compared to $24 million in the fourth quarter of 2001. Most of these costs ($33
million in the fourth quarter of 2002 and $18 million in the fourth quarter of
2001) were charged to the Company's nursing center business.
Operating results for the fourth quarter of 2002 also included certain
other year-end adjustments. Incentive compensation costs for 2002 were reduced
by approximately $3 million in the Company's nursing center business and $6
million in corporate overhead in the fourth quarter. In addition, certain
operating expense accruals related to the Company's information systems
operations were adjusted, reducing corporate overhead by approximately $4
million in the fourth quarter of 2002.
The adoption of SFAS 142 increased net income by $1.6 million or $0.09
per diluted share in the fourth quarter of 2002.
Commenting on the Company's operating results for 2002, Edward L.
Kuntz, Chairman and Chief Executive Officer of the Company, noted ,"Our hospital
business had an outstanding year, with revenue growth of 17% and operating
income growth of 23%. Our pharmacy business had a very good year as well,
growing its non-Kindred customer base by 17%. We also continued to keep our
overhead in line with our expectations."
With respect to the nursing center business, Mr. Kuntz remarked, "The
significant increase in professional liability costs, particularly in Florida,
materially impacted our operating results. In response to this difficult
operating environment, we have focused on the divestiture of our Florida nursing
centers. The Medicare reimbursement reductions that took effect on October 1
also impacted negatively our nursing center business. We are continuing our
involvement in Washington to address the Medicare funding issues in our
industry."
Florida Divestiture
As previously announced, the Company intends to divest its Florida
nursing center operations during 2003. The Company operates 18 nursing centers
in Florida, of which 15 are leased from Ventas, Inc. ("Ventas") (NYSE: VTR). In
December 2002, the Company announced a non-binding letter of intent with a third
party to sublease its Florida nursing centers. The parties continue to make
progress in their negotiations of definitive agreements related to the letter of
intent but have not reached agreement at this time. In addition to entering into
a definitive agreement, the consummation of a proposed transaction is subject to
a number of material conditions including, without limitation, the receipt of
required approvals from regulators, governmental entities and other third
parties. Ventas has informed the Company that it will object to the sublease
transaction unless it receives a substantial and material consent fee and other
lease concessions. The Company has informed Ventas that this demand is improper.
The Company believes that under the master lease agreements it has the ability
to sublease 12 of these facilities without Ventas's consent and that Ventas
cannot unreasonably withhold its consent on the remaining three facilities.
In addition, Ventas has informed the Florida licensure agency that
it believes the proposed sublease transaction is not permitted under its master
lease agreements with the Company and has requested that the agency suspend
further processing of the necessary licensure applications for the change in
ownership. The third party to the proposed transaction and the Company have
independently informed the Florida agency that Ventas's request is improper and
that it lacks the authority to make any such request. The Company believes that
the Florida agency is aware that it must continue to process the change in
ownership applications.
The Company is continuing to pursue the proposed sublease transaction
and its divestiture of the Florida facilities. If Ventas improperly interferes
with the completion of the proposed transaction or the divestiture of these
facilities, the Company will seek appropriate legal remedies against Ventas as
well as damages for the continuing losses sustained by the Company.
Expected Liquidity Issues in 2003
Cash and cash equivalents at December 31, 2002 aggregated $244 million.
As previously discussed, the Company recorded substantial increases in the
provision for loss for professional liability costs in 2002. A portion of these
costs were not funded into the Company's limited purpose wholly owned insurance
subsidiary in 2002. Based upon actuarially determined estimates, the Company
will fund approximately $63 million into its limited purpose insurance
subsidiary on March 31, 2003 to satisfy fiscal 2002 funding requirements.
Consistent with its past practices, the Company intends to fund its 2003
professional liability premiums into its limited purpose insurance subsidiary
each month based upon actuarially determined estimates.
As previously disclosed, substantially all of the Company's hospitals
will adopt the new Medicare prospective payment system on September 1, 2003. In
connection with the transition, the new system includes certain regulations that
will impact the method and timing of Medicare payments to the Company's
hospitals that may increase substantially the level of Medicare accounts
receivable in the third and fourth quarters of 2003.
No Guidance for 2003
Due to uncertainties associated with professional liability costs and
government reimbursement, the Company does not intend to issue any earnings
guidance for fiscal 2003 at this time.
Credit Agreements
The Company was in compliance with the terms of its $120 million
revolving credit facility and $300 million senior secured notes at December 31,
2002. As previously announced, on March 19, 2003, the Company successfully
completed certain amendments to these agreements for reporting periods after
December 31, 2002.
Outstanding borrowings under the senior secured notes agreement
approximated $161 million at December 31, 2002 compared to approximately $211
million at December 31, 2001. There were no outstanding borrowings under the
revolving credit agreement at either December 31, 2002 or December 31, 2001.
Other News
The Company also announced that Edward L. Kuntz will become Executive
Chairman of the Board of Directors effective January 1, 2004. As Executive
Chairman, Mr. Kuntz will coordinate all Board matters, continue his
responsibility for public lobbying efforts, and advise senior management on
financing, development and regulatory matters. Upon assuming the duties as
Executive Chairman, Mr. Kuntz will relinquish his position as Chief Executive
Officer.
The Company also announced that at its annual meeting of shareholders
scheduled for May 22, 2003, the Nominating and Governance Committee of the
Company's Board of Directors will recommend Paul J. Diaz and Thomas P. Cooper,
M.D. as two new nominees to its Board of Directors to fill an open position
created by the expected departure of David A. Tepper and an additional position
to be created by the expansion of the Board. Mr. Diaz has been the Company's
President and Chief Operating Officer since January 2002. Dr. Cooper, a
physician, has over 30 years of experience in management positions in a
number of healthcare related companies. Mr. Tepper, a current Board member, has
elected not to stand for re-election to the Board.
Forward-Looking Statements
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
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,"
"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 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 plans or results of the Company include,
without limitation, (a) the ability of the Company 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 and debt service obligations; (c)
adverse developments with respect to the Company's liquidity or results of
operations; (d) the ability of the Company to attract and retain key executives
and other healthcare personnel; (e) increased operating costs 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 the healthcare
industry; (g) changes in the reimbursement rates or methods of payment from
third party payors, including the Medicare and Medicaid programs and the new
prospective payment system for long-term acute care hospitals; (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, including labor and employee benefit costs, in response to the
prospective payment systems, implementation of the Company's Corporate Integrity
Agreement and other regulatory actions; (j) the ability of the Company to comply
with the terms of its Corporate Integrity Agreement; (k) the effect of a
restatement of the Company's previously issued consolidated financial
statements; (l) the Company's ability to integrate operations of acquired
facilities; (m) the increase in the costs of defending and insuring against
alleged professional liability claims and the Company's ability to predict the
estimated costs related to such claims; and (n) the Company's ability to
successfully reduce (by divestiture or otherwise) its exposure to professional
liability claims in the state of Florida and other states. Many of these factors
are beyond the control of the Company and its management. 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 to any of
the forward-looking statements to reflect future events or developments.
Kindred Healthcare, Inc. is a national provider of long-term healthcare
services primarily operating nursing centers and hospitals.
KINDRED HEALTHCARE, INC.
Financial Summary
(In thousands, except per share amounts)
| Predecessor
Reorganized Company (a) | Company (a)
---------------------------------------------------------- | ------------
Three months Three months Year Nine months | Three months
ended ended ended ended | ended
December 31, December 31, December 31, December 31, | March 31,
2002 2001 2002 2001 | 2001
------------ ------------ ------------ ------------ | ------------
Revenues $848,284 $ 789,575 $3,357,822 $2,329,019 | $752,409
-------- --------- ---------- ---------- | --------
|
Income from operations $ 3,069 $ 16,054 $ 33,326 $ 47,342 | $ 49,185
Extraordinary gain on |
extinguishment of debt - 2,917 1,427 4,313 | 422,791
-------- --------- ---------- ---------- | --------
Net income 3,069 18,971 34,753 51,655 | 471,976
Preferred stock dividend |
requirements - - - - | (261)
-------- --------- ---------- ---------- | --------
Income available to |
common stockholders $ 3,069 $ 18,971 $ 34,753 $ 51,655 | $471,715
======== ========= ========== ========== | ========
|
Earnings per common share: |
Basic: |
Income from operations $ 0.18 $ 0.99 $ 1.92 $ 3.05 | $ 0.69
Extraordinary gain on |
extinguishment of debt - 0.18 0.08 0.28 | 6.02
-------- --------- ---------- ---------- | --------
Net income $ 0.18 $ 1.17 $ 2.00 $ 3.33 | $ 6.71
======== ========= ========== ========== | ========
|
Diluted: |
Income from operations $ 0.18 $ 0.83 $ 1.85 $ 2.59 | $ 0.69
Extraordinary gain on |
extinguishment of debt - 0.15 0.08 0.24 | 5.90
-------- --------- ---------- ---------- | --------
Net income $ 0.18 $ 0.98 $ 1.93 $ 2.83 | $ 6.59
======== ========= ========== ========== | ========
|
Shares used in computing earnings |
per common share: |
Basic 17,377 16,210 17,361 15,505 | 70,261
Diluted 17,384 19,304 18,001 18,258 | 71,656
-----------
(a) As used in this press release, the term "Predecessor Company" refers to the
Company and its operations for periods prior to April 1, 2001, while the
term "Reorganized Company" is used to describe the Company and its
operations for periods thereafter.
KINDRED HEALTHCARE, INC.
Consolidated Statement of Operations
(In thousands, except per share amounts)
| Predecessor
Reorganized Company | Company
---------------------------------------------------------- | ------------
Three months Three months Year Nine months | Three months
ended ended ended ended | ended
December 31, December 31, December 31, December 31, | March 31,
2002 2001 2002 2001 | 2001
------------ ------------ ------------ ------------ | ------------
Revenues $848,284 $789,575 $3,357,822 $2,329,019 | $752,409
-------- -------- ---------- ---------- | --------
|
Salaries, wages and benefits 491,121 448,203 1,924,439 1,316,581 | 427,649
Supplies 109,097 102,466 424,177 295,598 | 94,319
Rent 68,806 65,471 270,562 195,284 | 76,995
Other operating expenses 153,532 124,435 606,394 375,090 | 126,701
Depreciation and amortization 18,960 17,565 71,356 50,219 | 18,645
Interest expense 3,135 5,754 14,373 21,740 | 14,000
Investment income (2,050) (2,637) (9,674) (9,285) | (1,919)
-------- --------- ---------- ---------- | --------
842,601 761,257 3,301,627 2,245,227 | 756,390
-------- --------- ---------- ---------- | --------
Income (loss) before reorganization |
items and income taxes 5,683 28,318 56,195 83,792 | (3,981)
Reorganization items - - (5,520) - | (53,666)
-------- --------- ---------- ---------- | --------
Income before income taxes 5,683 28,318 61,715 83,792 | 49,685
Provision for income taxes 2,614 12,264 28,389 36,450 | 500
-------- --------- ---------- ---------- | --------
Income from operations 3,069 16,054 33,326 47,342 | 49,185
Extraordinary gain on extinguishment |
of debt - 2,917 1,427 4,313 | 422,791
------- --------- ---------- ---------- | --------
Net income 3,069 18,971 34,753 51,655 | 471,976
Preferred stock dividend requirements - - - - | (261)
-------- --------- ---------- ---------- | --------
Income available to |
common stockholders $ 3,069 $ 18,971 $ 34,753 $ 51,655 | $471,715
======== ========= ========== ========== | ========
|
Earnings per common share: |
Basic: |
Income from operations $ 0.18 $ 0.99 $ 1.92 $ 3.05 | $ 0.69
Extraordinary gain on |
extinguishment of debt - 0.18 0.08 0.28 | 6.02
-------- --------- ---------- ---------- | --------
Net income $ 0.18 $ 1.17 $ 2.00 $ 3.33 | $ 6.71
======== ========= ========== ========== | ========
|
Diluted: |
Income from operations $ 0.18 $ 0.83 $ 1.85 $ 2.59 | $ 0.69
Extraordinary gain on |
extinguishment of debt - 0.15 0.08 0.24 | 5.90
-------- --------- ---------- ---------- | --------
Net income $ 0.18 $ 0.98 $ 1.93 $ 2.83 | $ 6.59
======== ========= ========== ========== | ========
|
Shares used in computing earnings |
per common share: |
Basic 17,377 16,210 17,361 15,505 | 70,261
Diluted 17,384 19,304 18,001 18,258 | 71,656
KINDRED HEALTHCARE, INC.
Condensed Consolidated Balance Sheet
(In thousands, except per share amounts)
Reorganized Company
-----------------------------
December 31, December 31,
2002 2001
------------ -------------
ASSETS
Current assets:
Cash and cash equivalents $ 244,070 $ 190,799
Cash-restricted 7,908 18,025
Insurance subsidiary investments 130,415 99,101
Accounts receivable less allowance for loss 420,611 418,827
Inventories 30,460 29,720
Other 86,852 75,501
----------- ----------
920,316 831,973
Property and equipment 611,944 508,205
Accumulated depreciation (115,373) (44,323)
----------- ----------
496,571 463,882
Goodwill 88,259 107,660
Other 139,032 105,359
----------- ----------
$ 1,644,178 $1,508,874
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 124,466 $ 100,473
Salaries, wages and other compensation 220,124 198,471
Due to third party payors 25,177 37,285
Other accrued liabilities 150,020 138,571
Income taxes 62,111 39,908
Long-term debt due within one year 258 418
----------- ----------
582,156 515,126
Long-term debt 162,008 212,269
Professional liability risks 211,771 136,764
Deferred credits and other liabilities 56,615 54,234
Commitments and contingencies
Stockholders' equity:
Common stock, $0.25 par value; authorized 175,000 shares - December 31, 2002
and 39,000 shares - December 31, 2001; issued 17,649 - December 31, 2002
and 17,683 shares - December 31, 2001 4,412 4,421
Capital in excess of par value 547,609 549,089
Deferred compensation (6,967) (14,764)
Accumulated other comprehensive income 460 80
Retained earnings 86,114 51,655
----------- ----------
631,628 590,481
----------- ----------
$ 1,644,178 $1,508,874
=========== ==========
KINDRED HEALTHCARE, INC.
Condensed Consolidated Statement of Cash Flows
(In thousands)
| Predecessor
Reorganized Company | Company
----------------------------- | ------------
Year Nine months | Three months
ended ended | ended
December 31, December 31, | March 31,
2002 2001 | 2001
------------ ------------ | ------------
Cash flows from operating activities: |
Net income $ 34,753 $ 51,655 | $471,976
Adjustments to reconcile net income to net cash |
provided by operating activities: |
Depreciation and amortization 71,356 50,219 | 18,645
Amortization of deferred compensation costs 6,778 6,698 | -
Provision for doubtful accounts 13,551 16,346 | 6,305
Deferred income taxes (17,608) 12,263 | -
Extraordinary gain on extinguishment of debt (1,427) (4,313) | (422,791)
Unusual transactions (1,795) (5,425) | -
Reorganization items (5,520) - | (53,666)
Other 1,224 (4,655) | 1,357
Change in operating assets and liabilities: |
Accounts receivable (3,063) (31,001) | (14,668)
Inventories and other assets (11,303) 18,698 | 12,476
Accounts payable 11,887 (300) | (10,845)
Income taxes 44,626 17,582 | 108
Due to third party payors (12,108) (16,570) | 2,051
Other accrued liabilities 122,315 79,504 | 28,628
--------- --------- | ---------
Net cash provided by operating activities before |
reorganization items 253,666 190,701 | 39,576
Payment of reorganization items (4,987) (47,937) | (3,745)
--------- --------- | ---------
Net cash provided by operating activities 248,679 142,764 | 35,831
--------- --------- | ---------
Cash flows from investing activities: |
Purchase of property and equipment (84,071) (65,243) | (22,038)
Acquisition of healthcare facilities (45,931) (14,152) | -
Sale of investment in Behavioral Healthcare Corporation - 40,000 | -
Sale of other assets 752 7,933 | -
Surety bond deposits 9,676 (300) | -
Net change in investments (26,343) (27,973) | (28,178)
Other 64 809 | 224
--------- --------- | ---------
Net cash used in investing activities (145,853) (58,926) | (49,992)
--------- --------- | ---------
Cash flows from financing activities: |
Repayment of long-term debt (50,570) (149,161) | (4,355)
Payment of debtor-in-possession deferred financing costs - - | (100)
Payment of other deferred financing costs (1,375) - | -
Issuance of common stock 159 89,796 | -
Repurchase of common stock (1,046) - | -
Other 3,277 11,172 | (5,971)
--------- --------- | ---------
Net cash used in financing activities (49,555) (48,193) | (10,426)
--------- --------- | ---------
Change in cash and cash equivalents 53,271 35,645 | (24,587)
Cash and cash equivalents at beginning of period 190,799 155,154 | 184,642
--------- --------- | ---------
Cash and cash equivalents at end of period $ 244,070 $190,799 | $160,055
========= ======== | =========
KINDRED HEALTHCARE, INC.
Business Segment Data
(In thousands)
| Predecessor
Reorganized Company | Company
---------------------------------------------------------- | ------------
Three months Three months Year Nine months | Three months
ended ended ended ended | ended
December 31, December 31, December 31, December 31, | March 31,
2002 2001 2002 2001 | 2001
------------ ------------ ------------ ------------ | ------------
Revenues: |
Health services division: |
Nursing centers $460,595 $ 456,671 $1,854,131 $1,348,236 | $ 429,523
Rehabilitation services 9,203 9,085 34,296 27,451 | 10,695
-------- --------- ---------- ---------- | ---------
469,798 465,756 1,888,427 1,375,687 | 440,218
Hospital division: |
Hospitals 326,183 278,245 1,276,299 822,935 | 271,984
Pharmacy 68,855 60,788 257,782 176,105 | 54,880
-------- --------- ---------- ---------- | ---------
395,038 339,033 1,534,081 999,040 | 326,864
-------- --------- ---------- ---------- | ---------
864,836 804,789 3,422,508 2,374,727 | 767,082
Elimination of pharmacy charges |
to Company nursing centers (16,552) (15,214) (64,686) (45,708) | (14,673)
-------- --------- ---------- ---------- | ---------
$848,284 $789,575 $3,357,822 $2,329,019 | $ 752,409
======== ========= ========== ========== | =========
Income from operations: |
Operating income: |
Health services division: |
Nursing centers $ 39,035 $ 75,426 $ 226,284 $ 234,500 | $ 70,543
Rehabilitation services 921 4,125 7,531 8,112 | 690
Other ancillary services 92 179 435 508 | 250
-------- --------- ---------- ---------- | ---------
40,048 79,730 234,250 243,120 | 71,483
Hospital division: |
Hospitals 67,561 52,119 260,440 157,613 | 54,778
Pharmacy 6,174 7,793 23,531 20,831 | 6,176
-------- --------- ---------- ---------- | ---------
73,735 59,912 283,971 178,444 | 60,954
Corporate overhead (21,569) (27,358) (117,204) (85,239) | (28,697)
-------- --------- ---------- ---------- | ---------
92,214 112,284 401,017 336,325 | 103,740
Unusual transactions 2,320 2,187 1,795 5,425 | -
Reorganization items - - 5,520 - | 53,666
-------- --------- ---------- ---------- | ---------
Operating income 94,534 114,471 408,332 341,750 | 157,406
Rent (68,806) (65,471) (270,562) (195,284) | (76,995)
Depreciation and amortization (18,960) (17,565) (71,356) (50,219) | (18,645)
Interest, net (1,085) (3,117) (4,699) (12,455) | (12,081)
-------- --------- ---------- ---------- | ---------
Income before income taxes 5,683 28,318 61,715 83,792 | 49,685
Provision for income taxes 2,614 12,264 28,389 36,450 | 500
-------- --------- ---------- ---------- | ---------
$ 3,069 $ 16,054 $ 33,326 $ 47,342 | $ 49,185
======== ========= ========== ========== | =========
KINDRED HEALTHCARE, INC.
Business Segment Data (Continued)
(In thousands)
| Predecessor
Reorganized Company | Company
---------------------------------------------------------- | ------------
Three months Three months Year Nine months | Three months
ended ended ended ended | ended
December 31, December 31, December 31, December 31, | March 31,
2002 2001 2002 2001 | 2001
------------ ------------ ------------ ------------ | ------------
Rent: |
Health services division: |
Nursing centers $43,093 $ 41,546 $169,242 $ 123,047 | $ 44,253
Rehabilitation services 42 24 101 75 | 39
Other ancillary services - - - 4 | -
------- -------- -------- --------- | --------
43,135 41,570 169,343 123,126 | 44,292
Hospital division: |
Hospitals 24,375 22,883 96,899 68,571 | 30,839
Pharmacy 1,230 1,001 4,106 2,953 | 941
------- -------- -------- --------- | --------
25,605 23,884 101,005 71,524 | 31,780
Corporate 66 17 214 634 | 923
------- -------- -------- --------- | --------
$68,806 $ 65,471 $270,562 $ 195,284 | $ 76,995
======= ======== ======== ========= | ========
|
Depreciation and amortization: |
Health services division: |
Nursing centers $ 6,619 $ 5,925 $ 25,446 $ 16,693 | $ 7,219
Rehabilitation services 13 11 37 24 | -
Other ancillary services - - - - | 129
------- -------- -------- --------- | --------
6,632 5,936 25,483 16,717 | 7,348
Hospital division: |
Hospitals 7,087 6,087 27,080 17,519 | 5,457
Pharmacy 616 523 2,387 1,446 | 627
------- -------- -------- --------- | --------
7,703 6,610 29,467 18,965 | 6,084
Corporate 4,625 5,019 16,406 14,537 | 5,213
------- -------- -------- --------- | --------
$18,960 $ 17,565 $ 71,356 $ 50,219 | $ 18,645
======= ======== ======== ========= | ========
|
Capital expenditures: |
Health services division $10,785 $ 3,602 $ 24,127 $ 13,315 | $ 7,962
Hospital division 12,262 7,942 30,124 19,830 | 8,901
Corporate: |
Information systems 9,140 9,290 25,576 20,266 | 3,496
Other 1,691 1,184 4,244 11,832 | 1,679
------- -------- -------- --------- | --------
$33,878 $ 22,018 $ 84,071 $ 65,243 | $ 22,038
======= ======== ======== ========= | ========
KINDRED HEALTHCARE, INC.
Business Segment Data (Continued)
(Unaudited)
| Predecessor
Reorganized Company | Company
---------------------------------------------------------- | ------------
Three months Three months Year Nine months | Three months
ended ended ended ended | ended
December 31, December 31, December 31, December 31, | March 31,
2002 2001 2002 2001 | 2001
------------ ------------ ------------ ------------ | ------------
Nursing Center Data: |
End of period data: |
Number of nursing centers: |
Owned or leased 278 282 | 278
Managed 7 23 | 35
--------- --------- | ---------
285 305 | 313
========= ========= | =========
Number of licensed beds: |
Owned or leased 36,573 36,926 | 36,469
Managed 803 2,367 | 3,861
--------- --------- | ---------
37,376 39,293 | 40,330
========= ========= | =========
Revenue mix %: |
Medicare 31 31 33 32 | 31
Medicaid 50 48 48 47 | 47
Private and other 19 21 19 21 | 22
|
Patient days (excludes managed |
facilities): |
Medicare 420,916 402,157 1,728,232 1,218,663 | 411,783
Medicaid 1,945,576 1,945,232 7,656,980 5,750,949 | 1,860,256
Private and other 492,888 537,582 1,998,116 1,613,658 | 532,943
--------- --------- ---------- --------- | ---------
2,859,380 2,884,971 11,383,328 8,583,270 | 2,804,982
========= ========= ========== ========= | =========
Revenues per patient day: |
Medicare $ 334 $ 357 $ 353 $ 349 | $ 325
Medicaid 119 113 116 111 | 109
Private and other 181 174 180 175 | 175
Weighted average 161 158 163 157 | 153
|
Average daily census 31,080 31,358 31,187 31,212 | 31,166
Occupancy % 84.7 85.1 84.7 84.9 | 85.2
|
Hospital Data: |
End of period data: |
Number of hospitals 65 57 | 56
Number of licensed beds 5,385 4,961 | 4,867
|
Revenue mix %: |
Medicare 61 59 59 57 | 56
Medicaid 9 6 9 9 | 11
Private and other 30 35 32 34 | 33
|
Patient days: |
Medicare 211,990 178,985 835,597 534,583 | 185,731
Medicaid 34,733 33,480 134,822 103,377 | 34,872
Private and other 57,279 56,399 229,605 164,465 | 52,426
--------- --------- ---------- --------- | ---------
304,002 268,864 1,200,024 802,425 | 273,029
========= ========= ========== ========= | =========
Revenues per patient day (a): |
Medicare $ 940 $ 920 $ 907 $ 877 | $ 820
Medicaid 821 511 836 733 | 871
Private and other 1,719 1,712 1,767 1,693 | 1,703
Weighted average 1,073 1,035 1,064 1,026 | 996
|
Average daily census 3,304 2,922 3,288 2,918 | 3,034
Occupancy % 64.2 62.4 65.3 62.6 | 65.3
--------
(a) Certain reclassifications recorded in the fourth quarter of 2001 increased
Medicare revenues per patient day by $34, reduced Medicaid revenues per
patient day by $255 and increased Private and Other revenues per patient
day by $44.