Wells analyst says, "The company's estimates for the negative impact from the skilled nursing facility cuts are lower than our estimate and Kindred expects that it can mitigate a greater portion of those cuts than we had expected. The company believes that its increased scale from the recent RehabCare acquisition combined with higher operating synergies will be the primary factors in offsetting the rate cuts."
Kindred stock also experienced a healthy boost after announcing Thursday morning that it agreed to acquire Gentiva Health Services (GTIV) for $19.50 per share in a combination of cash and stock.
After the acquisition, the combined company will be based in Louisville, KY, and will be the nation's largest provider of long-term, acute-care hospitals; inpatient rehabilitation facilities; and hospice and home-health services, with annual revenue of about $7.1 billion, the company said.
Shares of Kindred are up 1.2% to $21.
TheStreet Ratings team rates KINDRED HEALTHCARE INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate KINDRED HEALTHCARE INC (KND) a HOLD. The primary factors that have impacted our rating are mixed--some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance and revenue growth. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, KND's share price has jumped by 36.76%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- KND's revenue growth trails the industry average of 20.7%. Since the same quarter one year prior, revenues slightly increased by 7.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- KINDRED HEALTHCARE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, KINDRED HEALTHCARE INC continued to lose money by earning -$0.93 versus -$0.94 in the prior year. This year, the market expects an improvement in earnings ($1.05 versus -$0.93).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Providers & Services industry. The net income has significantly decreased by 2152.2% when compared to the same quarter one year ago, falling from $1.75 million to -$35.81 million.
- Net operating cash flow has significantly decreased to -$49.96 million or 193.15% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: KND Ratings Report