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Kindred Healthcare 3Q profit falls on higher costs

Thu, 11/03/2011 - 1:45pm
The Associated Press

Shares of Kindred Healthcare Inc. rose Thursday, a day after the health care services provider raised its full-year profit outlook despite lower third-quarter results.

Kindred reported late Wednesday its profit shrank in the third quarter after it acquired competitor RehabCare Group, but the deal bolstered its revenue and its contract service business.

The Louisville, Ky., company said its net income fell to $1.8 million, or 3 cents per share, from $4.9 million, or 12 cents per share. Excluding special items, the company said it earned 41 cents per share from continuing operations. Revenue grew 44 percent to $1.51 billion from $1.05 billion.

Analysts expected Kindred to report an adjusted profit of 29 cents per share on revenue of $1.54 billion.

Its shares rose 24 cents, or 2.1 percent, to $11.67. Shares are down 36 percent in the year to date.

Kindred bought RehabCare in June for $900 million. The company said its hospital revenue rose 47 percent to $684.8 million as admissions grew 54 percent. Revenue from nursing centers grew 6 percent to $571.2 million. Revenue from its rehabilitation business jumped to $337.8 million from $124.2 million as skilled nursing revenue and hospital rehabilitation service revenue both more than doubled.

"The RehabCare acquisition clearly smoothed out the typically volatile 3Q results," Frank G. Morgan of RBC Capital Markets said in a note Thursday.

Kindred raised the top end of its 2011 earnings-per-share forecast by 2 cents, saying it now expects to earn between $1.87 and $1.92 per share in 2011. That includes a profit of 35 to 40 cents per share in the fourth quarter.

Analysts were expecting an annual profit of $1.84 per share for the year and 39 cents per share in the fourth quarter, on average.

The company said it still expects to earn $1.65 to $1.85 per share in 2012, and analysts expect $1.72 per share.

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