Kindred Healthcare, Inc. (NYSE: KND) today announced that it has completed the sale of 14 non-strategic facilities for $165.8 million to an affiliate of Vibra Healthcare, LLC.
In the near term, Kindred intends to use the net proceeds from the sale to pay down the outstanding balance under its existing revolving credit facility.
Over time, the proceeds of approximately $166 million will be reinvested in the company’s Integrated Care Markets and used to finance home health and hospice acquisitions, according to a company release.
As previously announced, Kindred agreed to sell three additional facilities to Vibra, which it expects to close on the sale of two of these facilities before year end for $20.7 million. The company was unable to satisfy the closing conditions for the sale of one other facility and has elected to remove it from the transaction.
The 14 facilities already purchased by Vibra and the two remaining facilities still under contract for sale consist of 14 transitional care hospitals containing 1,002 licensed beds, one inpatient rehabilitation facility and one skilled nursing facility.
The inpatient rehab facility contains 44 licensed beds, while the skilled nursing facility contains 135 licensed beds.
For the year ended December 31, 2012, the facilities in the sale generated revenues of approximately $272 million and earnings before interest, income taxes, depreciation and amortization of approximately $20 million.
Additionally these facilities had aggregate rent expense of approximately $12 million for the year ended December 31, 2012.
“We are pleased to complete a significant portion of our planned sales to Vibra,” said Paul J. Diaz, Kindred’s CEO. “These transactions will significantly advance our repositioning strategy, strengthen our financial position and allow us to sharpen our focus on our Integrated Care Markets.”
The after-tax proceeds will be deployed to grow the company’s future earnings and also provide further capital to invest in Kindred’s new Care Management Division, while also expanding the company’s home health and hospice operations, Diaz added.
Recently, Kindred expanded its home care offerings in Ohio after signing an agreement to acquire a physician-based practice in Cleveland.
Western Reserve Senior Care, the company Kindred aims to acquire, will be an addition to Kindred’s Care Management Division as the company develops programs and capabilities across settings to better manage episodes of care.
Western Reserve’s Founder and Principal Dr. William Mills will become vice president of medical affairs for Kindred’s Care Management Division and chief medical officer for Kindred at Home.
“As we develop and test new models of care, Dr. Mills and his team will help us grow and succeed under today’s delivery and payment system while preparing for future models,” Diaz said.
Written by Jason Oliva