Kindred Healthcare Announces Agreement to Sell Eight Non-Strategic Nursing Centers Located Outside Integrated Care Markets for

  Kindred Healthcare Announces Agreement to Sell Eight Non-Strategic Nursing
  Centers Located Outside Integrated Care Markets for Approximately $49

        Company Continues to Pursue Aggressive Repositioning Strategy

Company Plans to Reinvest $49 Million of Net Sales Proceeds in Integrated Care
               Markets and Home Health and Hospice Acquisitions

  Company Announces Two Additional Home Health Acquisitions and Purchase of
                               Leased Hospital

Business Wire

LOUISVILLE, Ky. -- June 25, 2013

Kindred Healthcare, Inc. (the “Company” or “Kindred”) (NYSE:KND) today
announced that it has signed a definitive agreement to sell eight
non-strategic nursing centers (the “Facilities”) for approximately $49 million
to affiliates of Signature Healthcare, LLC (“Signature”). Each of the
Facilities is located outside of Kindred’s 21 designated Integrated Care

The Company also announced that it has signed definitive agreements to acquire
the assets of home health and hospice companies in its Phoenix, Arizona,
Integrated Care Market and in Virginia Beach-Norfolk-Newport News, Virginia.
In addition, the Company announced that it has acquired the real estate of a
previously leased hospital in Tampa, Florida.

Signature Transaction

The Company expects that the after-tax net proceeds from the Signature
transaction, including transaction costs and tax benefits, will approximate
$49 million. Over time, these proceeds will be reinvested in the Company’s
Integrated Care Markets and used to finance home health and hospice

In the near term, Kindred intends to use the net proceeds to pay down the
outstanding balance under its revolving credit facility. At March 31, 2013,
the outstanding balance on the Company’s $750 million revolving credit
facility approximated $350 million. The Company expects the Signature
transaction will be slightly dilutive to earnings in 2013.

The Facilities contain 996 licensed nursing center beds. Five of the
Facilities are owned and the remaining Facilities are leased. The Facilities
generated revenues of approximately $69 million and earnings before interest,
income taxes, depreciation and amortization of approximately $8 million
(including the allocation of approximately $2 million of overhead costs) for
the year ended December 31, 2012. The Facilities had aggregate rent expense of
approximately $2 million for the year ended December 31, 2012.

The Signature transaction is subject to regulatory approvals and other
customary conditions to closing. Kindred expects to complete the transaction
in the third quarter of 2013 when these conditions are satisfied.

RBC Capital Markets served as the exclusive financial advisor to Kindred on
the Signature transaction.

Home Health and Hospice Acquisitions

Phoenix, Arizona

A subsidiary of Kindred has signed a definitive agreement to acquire the
assets of Arrowhead Home Health, Inc. and Arrowhead Hospice Centers, Inc.
(“Arrowhead”). Terms of the transaction were not disclosed. Arrowhead is a
home health and hospice provider that operates two locations in the greater
Phoenix market.

Arrowhead currently generates annualized revenues of approximately $2.2
million. This transaction is subject to several regulatory approvals and other
conditions to closing and is expected to close in the third quarter of 2013.

In the Phoenix market, Kindred currently operates two Transitional Care
Hospitals (certified as long-term acute care (“LTAC”) hospitals). Kindred
recently announced that it intends to open a new 120-bed Transitional Care
Center (licensed for skilled nursing care) in Phoenix on the campus of IASIS
Healthcare’s St. Luke’s Medical Center. The Transitional Care Center will
specialize in intensive short-term rehabilitation therapy, including cardiac
and orthopedic rehabilitation.

Virginia Beach-Norfolk-Newport News, Virginia

A subsidiary of Kindred has signed a definitive agreement to acquire the
assets of All Heart Home Health Agency and Hospice, Inc. (“All Heart”). Terms
of the transaction were not disclosed. All Heart is a home health and hospice
provider that operates two locations in Norfolk.

All Heart currently generates annualized revenues of approximately $5.5
million. This transaction is subject to several regulatory approvals and other
conditions to closing and is expected to close in the third quarter of 2013.

In the Virginia Beach-Norfolk-Newport News market, Kindred currently operates
three nursing and rehabilitation centers.

Real Estate Acquisition

Tampa, Florida

The Company has announced that it has purchased the previously leased real
estate of Kindred Hospital Bay Area-Tampa for approximately $25 million. The
annual lease payments for this hospital were approximately $2.5 million.
Kindred Hospital Bay Area-Tampa is a 73-bed freestanding Transitional Care
(“TC”) Hospital. In the Tampa-St. Petersburg-Clearwater, Florida market,
Kindred currently operates three TC Hospitals.

Management Commentary

“The transaction with Signature further accelerates our repositioning strategy
with the goal of improving our long-term growth, profitability and financial
position. Like the Vibra Healthcare transaction announced in April, this
tax-efficient transaction allows us to sharpen our focus on our Integrated
Care Markets and provides more capital to grow our home health and hospice
operations,” said Paul J. Diaz, Kindred’s Chief Executive Officer.

“These home health and hospice acquisitions, along with the purchase of the
Tampa hospital, demonstrate the strength of our development and capital
redeployment activities,” Mr. Diaz said. “We plan to continue our efforts to
reduce our lease obligations (our most expensive debt) and selectively grow
Kindred at Home as part of our Integrated Care Market strategy, which enables
us to better Continue the Care for our patients and provide high-quality
clinical outcomes throughout an entire post-acute episode.”

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements regarding the
Company’s expected future financial position, results of operations, cash
flows, financing plans, business strategy, budgets, capital expenditures,
competitive positions, growth opportunities, plans and objectives of
management and statements containing the words such as “anticipate,”
“approximate,” “believe,” “plan,” “estimate,” “expect,” “project,” “could,”
“should,” “will,” “intend,” “may” and other similar expressions, are
forward-looking statements. Statements in this press release concerning the
Company’s business outlook or future economic performance, anticipated
profitability, revenues, expenses or other financial items, and product or
services line growth, together with other statements that are not historical
facts, are forward-looking statements that are estimates reflecting the best
judgment of the Company based upon currently available information.

Such forward-looking statements are inherently uncertain, and stockholders and
other potential investors must recognize that actual results may differ
materially from the Company’s expectations as a result of a variety of
factors, including, without limitation, those discussed below. 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 is 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. These statements involve risks, uncertainties and other factors
discussed below and detailed from time to time in the Company’s filings with
the Securities and Exchange Commission.

In addition to the factors set forth above, other factors that may affect the
Company’s plans, results or stock price include, without limitation, (a) the
receipt of all required regulatory approvals and the satisfaction of closing
conditions to the transactions discussed above, (b) the impact of healthcare
reform, which will initiate significant changes to the United States
healthcare system, including potential material changes to the delivery of
healthcare services and the reimbursement paid for such services by the
government or other third party payors, including reforms resulting from the
Patient Protection and Affordable Care Act and the Healthcare Education and
Reconciliation Act (collectively, the “ACA”) or future deficit reduction
measures adopted at the federal or state level. Healthcare reform is affecting
each of the Company’s businesses in some manner. Potential future efforts in
the U.S. Congress to repeal, amend, modify or retract funding for various
aspects of the ACA create additional uncertainty about the ultimate impact of
the ACA on the Company and the healthcare industry. Due to the substantial
regulatory changes that will need to be implemented by the Centers for
Medicare and Medicaid Services (“CMS”) and others, and the numerous processes
required to implement these reforms, the Company cannot predict which
healthcare initiatives will be implemented at the federal or state level, the
timing of any such reforms, or the effect such reforms or any other future
legislation or regulation will have on the Company’s business, financial
position, results of operations and liquidity, (c) the impact of final rules
issued by CMS on August 1, 2012 which, among other things, will reduce
Medicare reimbursement to the Company’s TC hospitals in 2013 and beyond by
imposing a budget neutrality adjustment and modifying the short-stay outlier
rules, (d) the impact of final rules issued by CMS on July 29, 2011 which
significantly reduced Medicare reimbursement to the Company’s nursing centers
and changed payments for the provision of group therapy services effective
October 1, 2011, (e) the impact of the Budget Control Act of 2011 (as amended
by the American Taxpayer Relief Act of 2012 (the “Taxpayer Relief Act”)) which
will automatically reduce federal spending by approximately $1.2 trillion
split evenly between domestic and defense spending. An automatic 2% reduction
on each claim submitted to Medicare began on April 1, 2013, (f) the impact of
the Taxpayer Relief Act which, among other things, reduces Medicare payments
by 50% for subsequent procedures when multiple therapy services are provided
on the same day. At this time, the Company believes that the new rules related
to multiple therapy services will reduce the Company’s Medicare revenues by
$25 million to $30 million on an annual basis, (g) changes in the
reimbursement rates or the methods or timing of payment from third party
payors, including commercial payors and the Medicare and Medicaid programs,
changes arising from and related to the Medicare prospective payment system
for LTAC hospitals, including potential changes in the Medicare payment rules,
the Medicare Prescription Drug, Improvement, and Modernization Act of 2003,
and changes in Medicare and Medicaid reimbursement for the Company’s TC
hospitals, nursing centers, inpatient rehabilitation hospitals and home health
and hospice operations, and the expiration of the Medicare Part B therapy cap
exception process, (h) the effects of additional legislative changes and
government regulations, interpretation of regulations and changes in the
nature and enforcement of regulations governing the healthcare industry, (i)
the ability of the Company’s hospitals to adjust to potential LTAC
certification and medical necessity reviews, (j) the impact of the Company’s
significantly increased levels of indebtedness as a result of the RehabCare
Group, Inc. acquisition on the Company’s funding costs, operating flexibility
and ability to fund ongoing operations, development capital expenditures or
other strategic acquisitions with additional borrowings, (k) the Company’s
ability to successfully pursue its development activities, including through
acquisitions, and successfully integrate new operations, including the
realization of anticipated revenues, economies of scale, cost savings and
productivity gains associated with such operations, as and when planned,
including the potential impact of unanticipated issues, expenses and
liabilities associated with those activities, (l) the failure of the Company’s
facilities to meet applicable licensure and certification requirements, (m)
the further consolidation and cost containment efforts of managed care
organizations and other third party payors, (n) the Company’s ability to meet
its rental and debt service obligations, (o) the Company’s ability to operate
pursuant to the terms of its debt obligations, and comply with its covenants
thereunder, and its ability to operate pursuant to its master lease agreements
with Ventas, Inc. (NYSE:VTR), (p) the condition of the financial markets,
including volatility and weakness in the equity, capital and credit markets,
which could limit the availability and terms of debt and equity financing
sources to fund the requirements of the Company’s businesses, or which could
negatively impact the Company’s investment portfolio, (q) national and
regional economic, financial, business and political conditions, including
their effect on the availability and cost of labor, credit, materials and
other services, (r) the Company’s ability to control costs, particularly labor
and employee benefit costs, (s) increased operating costs due to shortages in
qualified nurses, therapists and other healthcare personnel, (t) the Company’s
ability to attract and retain key executives and other healthcare personnel,
(u) the increase in the costs of defending and insuring against alleged
professional liability and other claims and the Company’s ability to predict
the estimated costs related to such claims, including the impact of
differences in actuarial assumptions and estimates compared to eventual
outcomes, (v) the Company’s ability to successfully reduce (by divestiture of
operations or otherwise) its exposure to professional liability and other
claims, (w) the Company’s ability to successfully dispose of unprofitable
facilities, (x) events or circumstances which could result in the impairment
of an asset or other charges, such as the impact of Medicare reimbursement
regulations that resulted in the Company recording significant impairment
charges in 2012 and 2011, (y) changes in generally accepted accounting
principles or practices, and changes in tax accounting or tax laws (or
authoritative interpretations relating to any of these matters), and (z) the
Company’s ability to maintain an effective system of internal control over
financial reporting. Many of these factors are beyond the Company’s control.
The Company cautions investors that any forward-looking statements made by the
Company are not guarantees of future performance. 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.

About Kindred Healthcare

Kindred Healthcare, Inc., a top-125 private employer in the United States, is
a FORTUNE 500 healthcare services company based in Louisville, Kentucky with
annual revenues of $6 billion and approximately 76,000 employees in 46 states.
At March 31, 2013, Kindred through its subsidiaries provided healthcare
services in 2,169 locations, including 116 transitional care hospitals, six
inpatient rehabilitation hospitals, 204 nursing centers, 24 sub-acute units,
101 Kindred at Home hospice, home health and non-medical home care locations,
103 inpatient rehabilitation units (hospital-based) and a contract
rehabilitation services business, RehabCare, which served 1,615 non-affiliated
facilities. Ranked as one of Fortune magazine’s Most Admired Healthcare
Companies for five years in a row, Kindred’s mission is to promote healing,
provide hope, preserve dignity and produce value for each patient, resident,
family member, customer, employee and shareholder we serve. For more
information, go to You can also follow us on
Twitter and Facebook.


Kindred Healthcare, Inc.
Richard A. Lechleiter, 502-596-7734
Executive Vice President and
Chief Financial Officer
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