Kindred Healthcare, Inc. (NYSE: KND) announced today that it has signed an agreement to sell 17 of its facilities to an affiliate of Vibra Healthcare, LLC, for $187 million.
The facilities consist of 15 transitional care hospitals containing 1,052 beds, one inpatient rehabilitation facility containing 44 beds and one skilled nursing facility (SNF) containing 135 beds.
Six of Kindred’s transitional care hospitals and the lone SNF are owned, whereas the remaining facilities are leased—each facility is outside of the company’s 21 designated integrated care markets.
“We believe that this transaction significantly advances our repositioning strategy, strengthens our financial position and immediately enhances shareholder value,” said Kindred CEO Paul J. Diaz.
This transaction will allow Kindred to sharpen its focus on the company’s integrated care markets, while also providing further capital to expand its home health and hospice operations, said Diaz.
Together, the facilities generated revenues of approximately $289 million and earnings before interest, income taxes, depreciation and amortization (EBITDA) of $20 million for the year ended December 31, 2012.
Kindred expects to complete the transaction through multiple closings occurring during the third and fourth quarters of 2013. In connection with the transaction, the company said it expects to record a pretax loss that could reach $100, including a significant write-off of both goodwill and other intangible assets.
RBC Capital Markets served as the exclusive financial advisor to Kindred on the transaction.
The deal is subject to Vibra finalizing its financing for the purchase and to regulatory approvals and other conditions, the company announced.
Vibra Healthcare, LLC is a specialty hospital provider based in Mechanicsburg, Pennsylvania that is focused on the development, acquisition and operation of freestanding long-term acute care hospitals, inpatient acute medical rehabilitation hospitals and outpatient physical rehabilitation centers.
The company currently owns and operates over 50 of these specialty hospitals and outpatient centers in 12 states.
Written by Jason Oliva
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It's highly unusual for public companies to shed any assets but it seems like CEO, Paul Diaz, is following the advice of "sticking to his knitting" and taking advantage of a low stock price to work out a divestiture that recapitalizes the company by pruning outlier properties.
With a stock price high of about $25 per share in 2011, the current roughly $10 per share stock price is obviously significantly lower and this type of transaction may be the "shot in the arm" necessary to pull the company's value back into higher ranges.
Chris Foley
CPA (Retired)
Equity National Seniors Housing Brokerage & Advisors
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