Dive Brief:
- Kindred Healthcare reported a third quarter loss of $685.6 million late Monday. The Fortune 500 health services company's shares were down 23% Tuesday afternoon, Louisville Business First reported.
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The loss equated to $7.89 per share, though analysts had projected a profit of 6 cents per share.
- Kindred also announced its decision to finalize its exit from its skilled-nursing facility business it began several years ago.
Dive Insight:
Kindred's strategy is framed by its further expansion into the home health industry, which it marked earlier this year with a $39 million purchase of the home healthcare operations of the Arkansas Department of Health. In 2015, it acquired Gentiva Health Services Inc. for $1.8 billion.
The announcement follows a scandal in which Kindred agreed to pay $125 million to settle allegations it billed for unneeded therapy services for nursing home patients in a Medicare fraud scheme.
Kindred's exit from skilled nursing is expected to reduce its annual rent obligations by about $90 million and annual capital expenditures by about $30 million. It would also eliminate $70 million to $100 million of divisional and corporate overhead of which much is associated with supporting its skilled nursing facilities.
"We are taking proactive strategic steps to position Kindred for long-term success against the backdrop of dynamic changes in the health care services industry," Kindred President and CEO Benjamin Breier said in a statement. "Our plan to exit the skilled nursing facility business, together with the significant cost realignment initiative we are undertaking in connection with the exit, are substantial steps forward in our continuing effort to transform Kindred's strategy and growth profile to enhance shareholder value."
The company ultimately expects about half its earnings before interest and income taxes to come from its Kindred at Home division, a quarter from its Long-Term Acute Care (“LTAC”) Hospital Division, and a quarter from its Rehabilitation Services Division.