Kindred Healthcare presentation highlights growth capital, refinancing

By Lisa Kerner

Charlotte, N.C., June 18 - Kindred Healthcare, Inc. chief executive officer Paul Diaz discussed sequestration, leases and other industry topics during a question-and-answer presentation at the Wells Fargo Securities 2013 Healthcare Conference in Boston on Tuesday.

According to presentation materials, Kindred's business strategy - to transform its business and asset mix and redeploy capital - included investing over $240 million in its integrated care markets over the last two years.

Funding for growth capital will come from operating cash flows and the sale of non-strategic facilities.

The company expects the sale of its non-strategic assets outside integrated care markets to exceed $250 million by 2014.

By not renewing certain Ventas leases, Kindred expects to positively impact consolidated earnings per share in 2013.

Kindred improved its financial flexibility by expanding its credit capacity by $200 million in October and by extending the tenor of its agreements; the earliest maturity is in 2016.

The company also repriced its $788 million term loan credit agreement, reducing annual interest costs by 100 basis points and resulting in annualized interest savings of about $8 million, the presentation materials said.

First-quarter results

For the first quarter of 2013, Kindred's revenues increased 1% to $1.55 billion, while operating income rose 6% to $229 million year over year.

Kindred's diluted earnings per share for the quarter grew 14% to $0.49.

Operating cash flows for 2013 are expected to range from $230 million to $250 million. Operating cash flows in excess of routine and development capital expenditures are expected to be about $90 million, or about the same as 2012, according to the presentation.

Kindred Healthcare is a Louisville, Ky.-based health-care services company.

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