Kindred quarterly earnings jump

Michelle Swafford

Thursday, Nov. 4, 2004 | 10:52 a.m.

Kindred Healthcare Inc., owner of two skilled nursing centers and three long-term acute care hospitals in Las Vegas, reported Wednesday a 33 percent increase in its third-quarter profit.

The Louisville, Ky.-based company reported its net income rose to $15.6 million, or 37 cents per share, in the third quarter from $11.7 million, or 33 cents per share, in the year-ago quarter. Per-share earnings were adjusted to reflect a two-for-one stock split in May.

Analysts surveyed by Thomson Financial had expected Kindred to earn an average of 49 cents per share.

Kindred's third-quarter operating results included a one-time gain of about $1 million in income related to settlements of prior-year Medicare costs and a $2.1 million charge for a terminated pension plan.

Kindred's financial results also included two items that are listed as discontinued operations: A $7.5 million loss for three leased nursing centers that Kindred purchased to resell, two of which were resold in the third quarter, and $6.8 million in income from changes in professional liability reserves for nursing centers in Florida and Texas.

Kindred's third-quarter revenue rose 7 percent to $889.4 million from $828.8 million a year ago.

Kindred cares for patients with complicated medical conditions that require rehabilitation, wound care or ventilators.

Shares of Kindred's stock were trading at $23.74 this morning, down nealy 4 percent, or 96 cents per share, in midmorning trading on the New York Stock Exchange.

"We made progress on several fronts during the third quarter," Kindred Chief Executive Paul Diaz said in a statement. "We reported same-store admissions growth of 5 percent compared to the third quarter of last year while continuing to improve our operating efficiencies and reduce length of stay compared to last year."

Diaz became chief executive Jan. 1.

Kindred's medical liability costs, which have been an ongoing challenge for the company, stabilized in the third quarter to $18.8 million compared with $20.7 million in the year-ago quarter.

Kindred also reported that it repaid $80 million in revolving credit, which was the last of the company's revolving debt as of Sept. 30.

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. Kindred Hospital Las Vegas at Desert Springs Hospital and Kindred Pharmacy.

Linn Billingsley, executive director and chief executive of the three Kindred long-term acute hospitals, said Kindred is doing well locally and the Sahara and Flamingo locations are at 90 percent of capacity.

Kindred opened the 40-bed hospital-within-a-hospital at Desert Springs on Sept. 27, which is a few months ahead of schedule, Billingsley said.

The new hospital has a handful of patients now, but is expecting to have about 12 patients by mid-November, she said.

Kindred leases space from Desert Springs and purchases dietary, surgical, radiology and emergency services from the Universal Health Services Inc.-owned acute care hospital, she said.

In 2005 Kindred plans to add 30 beds to its Flamingo hospital, Billingsley said.

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

"Over the next five years there may be a need for additional long-term acute care (hospitals)," she said.

During the third quarter Kindred also opened a 67-bed freestanding hospital in Dayton, Ohio, and hospitals-within-hospitals in St. Louis and Rahway, N.J., which have 38 beds and 28 beds respectively. A new pharmacy was added in New Hampshire during the quarter and three more pharmacies will open nationally in the coming months.

"We expect further development activities over the next several months," Diaz said in a statement.

At the end of the third quarter, Kindred operated 74 hospitals nationwide.