Kindred Healthcare Reports First Quarter Results

Kindred Healthcare, Inc. (the “Company”) (NYSE:KND) today announced its operating results for the first quarter ended March 31, 2012. The Company’s consolidated financial statements include the operating results of RehabCare Group, Inc. (“RehabCare”) since the closing of the acquisition on June 1, 2011.

First Quarter Highlights:

• Consolidated revenues rose 33% to $1.6 billion-- RehabCare acquisition added $364 million in current period revenues

• RehabCare synergy plan continues to track toward $70 million annual goal
• Hospital results were bolstered by the RehabCare acquisition, volume growth and cost efficiencies-- Reported admissions grew 40% from last year; same-facility admissions grew 2%-- Operating income grew 48% to $161 million

• Despite growth in nursing center admissions and improved cost management, reimbursement pressures and declining lengths of stay drove operating declines-- Nursing center revenues declined 4% from last year’s first quarter-- Operating income declined 25% to $66 million

• While recent Medicare changes impaired rehabilitation division’s operating margins compared to last year, operating margins improved from the fourth quarter of 2011--Successful RehabCare integration activities continue
• Home health and hospice division reported significant revenue and operating income growth

First Quarter Results

Continuing Operations

Consolidated revenues for the first quarter ended March 31, 2012 rose 33% to $1.6 billion compared to $1.2 billion in the first quarter last year. Income from continuing operations for the first quarter of 2012 totaled $18.1 million or $0.35 per diluted share compared to $22.3 million or $0.55 per diluted share in the first quarter last year.

First quarter 2012 operating results included certain pretax charges of $4.6 million related to costs incurred in connection with the closing of a regional office and a long-term acute care (“LTAC”) hospital and transaction-related costs, the effect of which reduced income from continuing operations by $2.8 million or $0.05 per diluted share.

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