Kindred Healthcare Acquires Rehabilitation Company

  Kindred Healthcare Acquires Rehabilitation Company

   Acquisition will expand Kindred’s hospital-based rehabilitation services

Business Wire

LOUISVILLE, Ky. -- September 30, 2013

Kindred Healthcare, Inc. (the “Company” or “Kindred”) (NYSE:KND) today
announced that it has acquired TherEX, Inc. (“TherEX”) for a purchase price of
$14 million. TherEX, based in Franklin, Tennessee, a suburb of Nashville,
provides on-site, hospital-based, rehabilitation services in 11 states. In
2012, TherEX generated approximately $20 million in revenues.

As the nation’s largest contract rehabilitation manager, Kindred’s RehabCare
division provides high-quality, cost-effective therapy services to more than
535,000 patients annually in acute and post-acute settings nationwide. TherEX
will be incorporated into RehabCare’s hospital rehabilitative services (“HRS”)
line of business, which specializes in partnering with hospitals in the
management of rehabilitation departments serving both the facility’s inpatient
and outpatient populations. Prior to the acquisition, HRS managed 103
hospital-based inpatient rehabilitation facilities in 25 states.

“This acquisition further allows us to continue the expansion of our continuum
of post-acute services where we see demand for our services and better
Continue the Care for our patients throughout a post-acute episode,” said Paul
J. Diaz, Kindred’s Chief Executive Officer. “As the nation’s largest provider
of rehabilitation services, our specialized and expert therapists help deliver
on our promise of providing hope, promoting recovery and helping our patients
regain their lives as we work to improve care coordination and return them
home. The TherEX acquisition will allow us to expand and build on the
hospital-based rehabilitation services we have been growing since we acquired
RehabCare in 2011.”

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
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, (b) the impact of
final rules issued by CMS on August 1, 2012 which, among other things, will
reduce Medicare reimbursement to the Company’s transitional care (“TC”)
hospitals in 2013 and beyond by imposing a budget neutrality adjustment and
modifying the short-stay outlier rules, (c) 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, (d) 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, (e) 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 rules related to multiple therapy services will
reduce the Company’s Medicare revenues by $25 million to $30 million on an
annual basis, (f) 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 long-term acute care (“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, (g) 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, (h)
the ability of the Company’s hospitals to adjust to potential LTAC
certification and medical necessity reviews, (i) the impact of the Company’s
significant level of indebtedness on the Company’s funding costs, operating
flexibility and ability to fund ongoing operations, development capital
expenditures or other strategic acquisitions with additional borrowings, (j)
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, (k) the Company’s ability to pay
a dividend as, when and if declared by the Board of Directors, in compliance
with applicable laws and the Company’s debt and other contractual
arrangements, (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) the Company’s ability to control costs, particularly
labor and employee benefit costs, (r) the costs of defending and insuring
against alleged professional liability and other claims (including those
related to pending whistleblower and wage and hour class action lawsuits
against the Company) 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, (s) the Company’s
ability to successfully reduce (by divestiture of operations or otherwise) its
exposure to professional liability and other claims, (t) the Company’s
obligations under various laws to self-report suspected violations of law by
the Company to various government agencies, including any associated
obligation to refund overpayments to government payors, fines and other
sanctions, (u)national and regional economic, financial, business and
political conditions, including their effect on the availability and cost of
labor, credit, materials and other services, (v) increased operating costs due
to shortages in qualified nurses, therapists and other healthcare personnel,
(w) the Company’s ability to attract and retain key executives and other
healthcare personnel, (x) the Company’s ability to successfully dispose of
unprofitable facilities, (y) events or circumstances which could result in the
impairment of an asset or other charges, such as the impact of the Medicare
reimbursement regulations that resulted in the Company recording significant
impairment charges in 2012 and 2011, (z) 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 (aa)
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 approximately $6 billion and approximately 72,000 employees
in 46 states. At June 30, 2013, Kindred through its subsidiaries provided
healthcare services in 2,167 locations, including 116 transitional care
hospitals, six inpatient rehabilitation hospitals, 169 nursing centers, 24
sub-acute units, 105 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 1,644
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
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Kindred Healthcare, Inc.
Richard A. Lechleiter, 502-596-7734
Executive Vice President and
Chief Financial Officer
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