Kindred Healthcare Inc. (NYSE:KND) reported 2% revenue growth in the first quarter ended March 31, 2014 boosted by newly acquired home care businesses along with improved margins in its rehabilitation and nursing care divisions.
Consolidated revenues for the first quarter increased 2% to $1.3 billion compared to last year. Income from continuing operations grew to $16.8 million or $0.31 per diluted share, compared to $10.4 million or $0.20 per diluted share in 2013’s first quarter.
Kindred’s investment in its Care Management division and Kindred at Home led to revenue growth of 70% and operating income growth of 30% compared to 2013, and has established a “platform for future growth.”
“Our Care Management division continues to make operating improvements in our home health and hospice operations as we assimilate numerous acquisitions and execute on a more standardized operating model,” said Kindred CEO Paul Diaz. “Our recent acquisitions of Senior Home Care and Kindred Home Based Primary Care (formerly Western Reserve Senior Care) have performed well and strengthen our commitment to further expand our Care Management division. We have made significant improvements in our management, processes and technology and hope to apply those tools across a larger platform over time.”
Kindred added a net total of 45 new skilled nursing rehab sites during the first quarter and its divestiture of 59 nursing centers leased from Ventas is on schedule. As of May 1, 26 nursing facilities had been transferred and all but one facility is scheduled to be transferred by the end of the third quarter.
“Strong” cost controls helped Kindred’s hospital division to perform well and mitigate the impact of a 2% decline in net revenues from volume softness, sequestration, and commercial rate pressures, the company reported.
The RehabCare division’s operating income increased 1% with operating margins improving to 11.4%, up three basis points from last year’s first quarter despite regulatory headwinds that went into effect last April.
Kindred’s nursing center division reported a 13% increase in operating income and in March marked its first profitable month of operation in two years.
“Our RehabCare division continues to make great progress, as evidenced by our operating income increase and margin improvement, notwithstanding Medicare reimbursement reductions,” said Diaz. “The efforts we have made to reshape our nursing center division are continuing to pay off as we saw a significant improvement in operating margins in the first quarter. We are developing three additional transitional care centers in Indianapolis, Phoenix and Las Vegas, which will add to the momentum in this division.”
Access Kindred’s first quarter 2014 earnings report.
Written by Alyssa Gerace