Jefferies downgraded Kindred Health (KIND) to hold from accumulate.
On Friday the company said it will record about $55 million of additional costs for professional liability claims above its normal third quarter provision. Analyst Frank Morgan says the additional costs reflect the revision of costs for 2001, and the first nine months of 2002. He notes Kindred attributed the increase to recent trends in cost rather than to the number of claims.
Morgan says the increase also implies a rise in reserves of $10,800 per bed for Florida, which calls the previous reserve levels for Florida into question. Morgan slashed the $3.58 2002 earnings per share estimate to $1.72, cut the $2.88 2003 estimate to $1.97; and trimmed the $49 target to $17.