Kindred CFO and Executive Vice President Richard A. Lechleiter

Kindred Healthcare, one of the nation’s largest long-term care operators, has completed the first phase of a repositioning plan and is entering a period of growth, company leaders recently announced.

As the sector has shifted from custodial nursing home care to higher-acuity, shorter-stay residents, Kindred has moved aggressively to adjust. It has shed scores of skilled nursing facilities and moved into therapy, hospice and home care. Its nursing centers accounted for 47% of its 2010 business mix but will be just 21% in 2014, according to a November investor update.

More than a hundred of the offloaded SNFs were leased from real estate investment trust Ventas Inc. In 2013, Kindred completed the operational transition of 54 Ventas facilities. It will exit another 60 in 2014. These leases were set to expire in 2015, but the companies recently agreed to an expedited timeframe.

Ventas and Kindred are now “liberated” to discuss future growth, Kindred CEO Paul Diaz said in a third-quarter earnings call. 

Investors were not so sanguine. In part because of the new timetable with Ventas, Kindred posted a quarterly net loss of $107 million. Share prices slid 10% at the news.

But Kindred leaders chalked up the soft quarter to predictable seasonal trends and focused on the big picture in the earnings call. The “disposition phase” of its strategic plan is over and has paved the way toward growth, said Chief Financial Officer and Executive Vice President Richard A. Lechleiter. 

This growth will occur largely in rehabilitation, home health and hospice, and has already begun. Kindred will acquire Senior Home Care Inc., a major home health player in the Southeast, in a $95 million deal announced last month.