Kindred logoKindred shares were getting hammered Tuesday after the hospital and rehab center operator said Monday night that it lost $685 million in the third quarter.

Shares were down about 27 percent in late-afternoon trading, after plunging 34 percent with the opening bell. Shares on Monday had climbed 6.41 percent on slightly elevated volume as markets rallied ahead of the U.S. election. Traders were much more active Tuesday, trading nearly 9.2 million shares by late afternoon, more than 11 times the average daily volume in the last three months.

The company also said it expected weaker than previously expected results in the fourth quarter, because of “significant headwinds facing the skilled nursing facility business and labor cost challenges … (in) the health care industry in general.”

CEO Benjamin Breier said in an earnings release Monday that dynamic changes in the health care services industry were prompting Kindred to exit the skilled nursing facility business to transform the company and position it for long-term success.

“Our strategic decision to exit the skilled nursing facility business as an owner and operator is the final step in a process that began years ago when Kindred operated approximately 300 skilled nursing facilities,” Breier said.


Benjamin Breier

The CEO said that the move would save the company about $200 million annually, including about $90 million on rent obligations.

Breier said that the company was optimistic about growth in its home health hospice, community care and rehabilitation facilities.

The company had said that its $685 million third-quarter loss was a result in part of noncash goodwill and property impairment charges of $261 million, reflecting the diminishing value of the company’s assets in its hospital division.

Kindred said revenue and profits in its nursing and hospital divisions declined, while the rehab unit showed lower revenue but higher profit, and the home health business posted higher revenue and profits.

“I know that for many investors, the Kindred journey towards transformation has been a long and (winding) one,” Breier said in a conference call Tuesday morning. “We haven’t always had the smoothest of paths.”

But, he said, he remained optimistic about the company’s future because of the actions that the company had taken in the last few years.

“We’re growing actually more confident — not less — that our strategy for Kindred is the right one.”

Investors have remained skeptical. For the year, shares are down about 47 percent.

Kindred employs about 100,000 people who take care of more than 1 million patients annually at 2,700 locations in 46 states, including long-term acute care hospitals, nursing centers and rehabilitation units.