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Kindred Healthcare (KND)
Q2 2013 Earnings Call
August 06, 2013 11:00 am ET
Charles Edward Jones - Chairman and Principal
Paul J. Diaz - Chief Executive Officer, Director and Member of Strategic Development Committee
Richard A. Lechleiter - Chief Financial Officer and Executive Vice President
Benjamin A. Breier - President and Chief Operating Officer
Kevin M. Fischbeck - BofA Merrill Lynch, Research Division
Brandon Fazio - UBS Investment Bank, Research Division
Joshua R. Raskin - Barclays Capital, Research Division
Jack Meehan - Barclays Capital, Research Division
Christian Rigg - Susquehanna Financial Group, LLLP, Research Division
Gary Lieberman - Wells Fargo Securities, LLC, Research Division
Gary P. Taylor - Citigroup Inc, Research Division
Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division
Previous Statements by KND
» Kindred Healthcare Inc. - Analyst/Investor Day
» Kindred Healthcare Management Discusses Q1 2013 Results - Earnings Call Transcript
» Kindred Healthcare's CEO Presents at Barclays Global Healthcare Conference (Transcript)
Charles Edward Jones
Good morning. Welcome to the Kindred Healthcare Second Quarter Conference Call. This is Eddie Jones from Corporate Communications. Before the company's presentation, I would like to read the cautionary statement.
This conference call includes forward-looking statements as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which involves a number of risks and uncertainties. Such forward-looking statements are based upon management's current expectations and include known and unknown risks, uncertainties and other factors, many of which the company and its management are unable to predict or control, that may cause the company's actual results or performance to differ materially from any future results or performance expressed or implied by such forward-looking statements.
The company cautions participants that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information. The company refers you to its reports filed with the Securities and Exchange Commission, including the company's annual report on Form 10-K, the company's other reports filed periodically with the SEC and its press release regarding the second quarter operating results for a discussion of these forward-looking statements and other factors that could affect these forward-looking statements.
Many of these factors are beyond the control of the company, and it's management. The company cautions investors that any forward-looking statements made by the company are not guarantees of future performance. The information being provided today is as of this date only and the company disclaims any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments.
Certain references to operating income or EBITDAR, as well as other non-GAAP disclosures, have been reconciled to the company's consolidated operating results and are available on the company's website, www.kindredhealthcare.com.
It is now my pleasure to introduce the participants in today's call: Paul Diaz, Chief Executive Officer; Rich Lechleiter, Executive Vice President and Chief Financial Officer; and Ben Breier, President and Chief Operating Officer. Mr. Diaz will begin the call.
Paul J. Diaz
Thank you, Eddie, and good morning, everyone. Last night, we announced a very solid quarter with our core diluted EPS of $0.32 per share. These results are particularly impressive given the significant reimbursement pressures brought on by the federal sequestration cuts and soft volumes in our 2 largest divisions. I want to thank Ben and all of our operators and our caregivers who turned in another great quarter, delivering on our promise of quality and service for our patients, while also delivering on operating efficiencies that should continue to positively impact our financial results over the balance of the year.
While Rich and Ben will comment on the specifics, we're very pleased with our overall results as we continue to work to improve the quality of services and clinical outcomes for our patients, succeed in our core operations and position the company for future growth. In addition, we are continuing to see the benefits of the Ventas Nursing Center transition to our core operations. Disposition of these 54 nursing centers lifted our earnings from continuing operations by $0.11 per diluted share in the first half of 2013. The second quarter also provided tangible evidence that our asset repositioning strategy and related capital redeployment activities are accelerating.
Yesterday, we were also pleased to announce that our board has initiated a payment of a quarterly cash dividend to shareholders of $0.12 per share. We're excited to introduce yet another step of our plan to increase shareholder value and believe that this move is well aligned with our strong cash flows, improving liquidity and financial strength.
Before commenting further on our results and our opportunities going forward, I'd like Rich to recap our results and for Ben to provide some operational color as well. Rich?
Richard A. Lechleiter
Thanks, Paul. Good morning, everybody. As Paul indicated, $0.32 a share on the core in the quarter, a very strong showing for us. And while it's down from last year's adjusted $0.39, that's more than completely attributable to the sequestration cuts that began on April 1, which reduced revenues by over $13 million in the quarter. As Paul indicated, the reclassification of all 54 Ventas skilled nursing facilities to discontinued operations lifted EPS in the quarter by $0.06, in the first half by $0.11.
Items of note. The hospital margins were down slightly year-over-year. I think that's a very good result, considering the sequestration cut, while soft volumes were offset by marginal growth in our operating cost per patient day. In RehabCare, which also went through another round of reimbursement cuts this quarter, we still reported 7% growth in operating income year-over-year, a very good result.