North Vista, Kindred owners post mixed quarterly results

Michelle Swafford

Friday, Aug. 6, 2004 | 10:46 a.m.

Two owners of Las Vegas Valley hospitals reported mixed quarterly results.

IASIS Healthcare Corp., parent company of North Vista Hospital in North Las Vegas, today reported a loss of $56 million for the third fiscal quarter. That compares with a profit of $82,000 for the year-ago quarter.

Separately, Kindred Healthcare Inc., owner of two skilled nursing centers and two long-term acute care hospitals in Las Vegas, reported Wednesday an 84 percent increase in its second-quarter profit as a result of Medicare and Medicaid settlements and an increase in patient admissions.

In a statement, Franklin, Tenn.-based IASIS attributed its results to a $51.9 million loss related to early retirement of debt, as well as $19.8 million of merger expenses incurred when Texas Pacific Group, a buyout firm founded by David Bonderman, agreed in May to buy the company for $1.4 billion.

Revenue for IASIS increased 27 percent to $355.3 million compared with $278.8 million in the year-ago quarter.

The company is "continuing (to) focus on operations, including facility improvements, the addition and expansion of services and physician recruitment," Chief Executive David White said in a statement.

IASIS, which operates 15 acute care hospitals and one behavioral health hospital nationwide, purchased the North Las Vegas hospital from financially troubled Tenet Healthcare Corp. on Feb. 1. North Vista Hospital changed its name from Lake Mead Hospital in June.

Louisville, Ky.-based Kindred reported its net income increased to $24.3 million, or 58 cents per share, in the second quarter from $13.2 million, or 38 cents per share, in the year-ago quarter. The net income beat analysts' estimates and includes one-time gains of $2.4 million for unneeded Medicare reserves from last year and $3.6 million in higher retroactive Medicaid rates in North Carolina.

Kindred's second quarter revenue rose 10 percent to $897 million.

Analysts surveyed by Thomson Financial Network had expected Kindred to earn an average of 40 cents per share for the second quarter and $1.70 per share for the year.

Kindred increased its annual guidance to between $1.88 per share to $1.95 per share. The company had previously announced that it expected to earn between $1.58 per share to $1.74 per share.

Shares of Kindred's stock were trading at $25.36 Thursday afternoon, up nearly 8 percent from Wednesday's closing price of $23.54.

Kindred Chief Executive Paul Diaz said the second quarter results were "another step in moving the company forward."

Diaz has been working to improve Kindred's profitability since he became chief executive Jan. 1. He served as company president and chief operating officer for two years.

Kindred's medical liability costs, which have been an ongoing challenge for the company, stabilized in the second quarter to $20.6 million compared with $20.9 million in the year-ago quarter.

In Las Vegas, Kindred operates Torrey Pines Care Center, Las Vegas Healthcare and Rehabilitation Center, Kindred Hospital Las Vegas-Sahara, Kindred Hospital Las Vegas-Flamingo and Kindred Pharmacy.

"We're having a good year (financially)," said Linn Billingsley, executive director and chief executive of the Kindred Hospital Las Vegas operations. "We're running better than 90 percent capacity."

The Las Vegas Valley's population growth and the increase in referrals of existing residents are the main reasons why Kindred's local hospitals are doing well, she said.

"Our referral base has expanded. We have more doctors using us than we had before," Billingsley said. "We have more patients using us now."

She said the two Las Vegas Valley Kindred hospitals have focused their treatment on patients recovering for pulmonary procedures, wounds and infectious diseases.

Kindred also announced plans to expand its operations in the coming quarters. Nationwide Kindred will add two or three more hospitals and spend $20 million to build a new hospital in Sacramento, replacing the existing one. The company opened six hospitals and acquired one in the last year, increasing the number of patient beds by 370.

Kindred also announced plans to open five additional pharmacies, which fill prescriptions for its nursing centers and hospitals as well as competing hospitals.

In April, Kindred announced it would lease 42 beds from King of Prussia, Pa.-based Universal Health Services Inc., to open a long-term care hospital inside Universal's Desert Springs Hospital in Las Vegas. Kindred will employ about 150 people in the hospital within a hospital. The beds will be in an older patient unit at Desert Springs that closed in 2001 and is scheduled to open late this year

Billingsley said Kindred is considering additional long-term care hospitals in the southwest and northwest parts of the Las Vegas Valley. Kindred has not decided whether the new locations will be freestanding hospitals or hospitals within hospitals such as the Desert Springs partnership.

She said the Kindred hospital on Flamingo Road serves most of the patients who are discharged from the hospitals in the southeast part of the valley.

At the end of the second quarter, Kindred operated 70 hospitals with 5,474 licensed beds nationwide.