UBS Remains Sidelined on Kindred Healthcare (KND) Ahead of 3Q Report
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UBS maintained a Neutral rating on Kindred Healthcare (NYSE: KND), and cut the price target to $10.50 (from $12.50), ahead of the company's 3Q earnings report. The KND's model was updated to include the company's sale of 12 hospitals, as well as the purchase of the home health operations of the Arkansas Dept of Health. Q3 EPS estimates of $0.07 compares with the company's quarterly guidance of $0.02-0.12.
Analyst A.J. Rice commented, "We are updating our model to include the impact of KND's sale of 12 hospitals (closed early Oct), as well as the purchase of the home health operations of the Arkansas Dept of Health (closed Aug 1). On Oct 3, KND sold 12 LTACHs to Curahealth for cash proceeds of $21 mln (plus contingent consideration). The 12 hospitals were expected to generate revs of $215 mln, EBITDAR of $14 mln, and breakeven EBITDA in 2016. KND has noted in the past that trimming its LTAC footprint will allow it to focus on being efficient in its remaining markets. Also included in our updated model is the purchase of the home health operations of the Arkansas Dept of Health (closed Aug 1). The HH acquisition, which cost the company $39 mln, should provide $40 mln annual revenues. We are lowering our 2016 and 2017 revenue estimates by $48/$155 mln to $7,205/$7,237 mln, respectively. We are reducing our 2016 and 2017 EBITDAR estimates by $3/$9 mln to $982/$991 mln, respectively. However, given the EBITDA neutral impact of the sale of 12 hospitals and modestly accretive expectation for Arkansas home health, we are increasing our 2017 EPS estimates by $0.02 to $0.92. Neither of these two transactions is included in the company's current guidance."
Shares of Kindred Healthcare closed at $9.91 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst PT Change
Related EntitiesUBS, Earnings, Definitive Agreement
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