As it recovers from a tough fourth quarter, Kindred Healthcare said it would not renew seven lease bundles containing 64 facilities in 2013.
The company said letting the facilities go would allow the provider giant to focus on different areas. While there is an expected earnings-per-share dilution of $0.05 from those divestitures, Kindred President Paul Diaz said he has “very little doubt” that the company will be able to replace the loss as the capital is redeployed, particularly into acute rehab facilities, integrated care models and home health.
“The majority of those facilities have limited upside for us under our operating models,” Diaz said in a conference call in February. “We’re very focused on our cluster market strategy.”
Bundles mean that while there are some individual facilities Kindred might have wanted to keep, it’s an “all or nothing” renewal with the landlord, Ventas, in this case. Kindred will renew three bundles that have 19 nursing and rehab centers and six long-term acute care hospitals (LTACs). Overall, Kindred currently operates about 120 LTACs, 224 nursing and rehab centers and more than 100 inpatient rehab facilities.
“While in general the expiring facilities are good assets, they do not satisfy our investment returns or strategic operating plan,” Diaz said.
Ventas will continue to receive rent on those properties until April 30, 2013, and will be marketing the skilled nursing and rehabilitation centers and long-term acute care hospitals.
“We believe these assets will be attractive to a wide variety of respected and quality healthcare providers,” Ventas Chairman and CEO Debra A. Cafaro said in a statement.
Kindred announced a fourth-quarter loss of $71.8 million, or $1.40 per share, which it attributed to the 11% average federal reimbursement cut that hit last fall. Kindred also lowered its 2012 profit to between $1.35 and $1.55.
From the April 01, 2012 Issue of McKnight's Long-Term Care News
