Kindred Healthcare posted a second-quarter net loss of $409 million, dragged down by impairment and restructuring charges. The Louisville-based hospital and rehab center operator had earned a profit of $24 million a year earlier.
Second-quarter revenue, at $1.5 billion, fell 4.6 percent, in part because of the sale of some hospitals. Kindred said its results for the remainder of the year would come in at the lower end of its previous forecast.
Impairment charges, at $135 million, increased more than 22-fold from the second quarter of 2016. Restructuring charges, at $5 million, were up more than six-fold.
CEO Benjamin Breier described the second quarter as “historical” for the company, as it was marked by the agreement to sell its skilled nursing facility business.
Kindred had said last year that it would exit that business because of “significant headwinds … and labor cost challenges.”
The company on June 30 had announced that it had reached a deal with BM Eagle Holdings to sell the business for $700 million in cash. BM Eagle Holdings is a joint venture led by affiliates of BlueMountain Capital Management. The sale includes 89 nursing centers with 11,308 licensed beds and seven assisted living facilities with 380 licensed beds, which collectively have about 11,500 employees in 18 states.
The company said that the transaction would cut its annual expenditures by more than $200 million, including lower rent obligations, capital expenditures and skilled nursing facility overhead.
“After more than two decades of nursing center operations, this announcement clears the way to closing that chapter of Kindred’s story, and turns the page to the future of integrated post-acute care,” the CEO said in an earnings statement released after markets closed on Thursday.
“We expect these sales to be completed by the end of 2017, and believe they will significantly enhance shareholder value and increase our focus on higher margin, faster growing and less capital-intensive businesses, all of which will increase the fundamental cash generating capacity of our enterprise,” Breier said.