Home health and hospice revenues jumped 84% for Kindred Healthcare in the second quarter ended June 30, 2013 from last year, helping to offset the company’s overall revenue and operating income declines.
Consolidated revenues decreased by 1% to $141 billion, in part due to federal sequestration cuts of 2% to Medicare reimbursement rates, which resulted in a $13 million reduction to revenue in the second quarter. Home health and hospice revenues, however, reached $53 million compared to $28.9 million in 2012’s second quarter.
Income from continuing operations dropped by more than 60% to $6.2 million, or $0.12 per diluted share, in 2013’s second quarter. Net income dropped to $1.7 million from last year’s $15.5 million.
Among Kindred’s business divisions, home health and hospice recorded the biggest jump in income from continuing operations, improving 42% to nearly $4 million compared to last year. Income from the rehabilitation division’s continuing operations rose about 7% to $42.1 million, while the nursing center division dropped slightly to $54 million and the hospital division increased minimally to $142.9 million.
“Despite significant reimbursement pressures brought on by federal sequestration cuts of 2% beginning April 1, Kindred reported solid second quarter core results. This accomplishment reflects the commitment of our caregivers, and a relentless focus on cost management across the enterprise, all while maintaining our culture of quality service and patient satisfaction,” said Paul Diaz, CEO of Kindred, in a statement.
The second quarter provided “tangible evidence” that Kindred’s asset repositioning strategy and capital redeployment activities are accelerating, he added.
“In addition to the Ventas nursing center disposition, we recently completed the sale of seven nursing centers for $47 million, and we have announced another transaction to sell non-strategic facilities that should provide net sales proceeds of approximately $180 million before the end of the year,” Diaz said.
Looking forward, Kindred maintained its earnings guidance for 2013 and expects consolidated revenues to approximate $5.8 billion. Kindred expects to report income from continuing operations for 2013 between $60 million to $70 million.
Operating cash flow guidance for 2013 was raised to a range between $235 million to $255 million, up from a prior range of $230 million to $250 million. Estimated routine cap-ex was lowered to a range of $112 million to $122 million, a decrease of $8 million.
View Kindred’s second quarter 2013 earnings report.
Written by Alyssa Gerace