Sunday, April 22, 2018

Retirement Benefit Withered in Run Up to Sellout


It's good you retired when you could afford to do so.  I'm sure Generic Hospice misses you.  We've been under Kindred for three long years and the retirement benefit decreased every year.  

I was excited at first with Kindred's core value, "Take care of our people."  Then I realized there was a Chief People Officer and the company takes good care of him and the executive team.  The employees at our hospice site, not so much.

One way to judge a society is the way they care for children and the elderly.  Kindred makes no bones about how little it does for its employees retirement.   

Spurred by corporate savings from GOP tax reform — as well as a desire to move the needle on retirement readiness — companies are beefing up retirement efforts by increasing contributions to employee retirement accounts with 32% of the S&P 500 companies surveyed plan to enhance retirement programs by improving 401(k) matching terms or making discretionary contributions to pension programs.

Kindred will file its executive compensation for 2017 with the Securities and Exchange Commission next week.  It will be interesting to review their pay for selling us out to Humana and two financial rapscallions. 

Retirement down by 50% since 2015.  Will executive pay be up?  That would be twisted.

Anonymous (from the marionette level and tired of being yanked)

Sunday, April 15, 2018

Kindred Employees Prepare

Strange Tony,

In prior sellouts senior leaders took their newfound fortunes and ran.  Not so with this deal.  Employees are stuck with executives who sneered at wage increases over the eighteen month shop period and the eight months needed to close the deal.

Humana has ample cash/investments to buy all of Kindred with no debt, so it is odd the insurer chose to partner with two financial rapscallions and buy the Kindred at Home side over a five year period.  Humana President Bruce Broussard once worked for a Welsh, Carson, Anderson and Stowe affiliate.  He is partnering with his old bosses on the deal.

Kindred's debt will be refinanced as interest rates rise in volatile financial markets.  Our new owners will take millions in deal fees and could use a portion of borrowings to pay themselves a dividend.  It's likely interest expense will be higher after we are acquired.

Humana's Broussard said Kindred at Home's cash flow will be used for expansion, buying more home health, hospice and personal care companies.  With more money going to pay interest and finance expansion what is left for the people doing the actual work?  Kindred employees:  Brace Yourself,

Anonymous (from a small portion of Kindred that still cares about people)

Friday, April 6, 2018

Shareholders Fail to Deliver Ringing Executive Endorsement

Strange Tony,

Kindred shareholders voted to sell the company to an investor consortium comprised of two private equity firms, Humana and a Canadian pension fund.  Of Kindred's 91 million shares over 54 million or 60% received yes votes.  The other 40% were negative votes, abstained or simply not voted. 

Support for executive compensation in the merger was less robust.  58% voted yes while 42% fit in the non-yes category.  Shareholders voted on future executive compensation without knowledge of recent information.

Executive pay for 2017 is yet to be shared in any SEC filing.  This is the executive team that trashed its one-stop post acute care strategy and abandoned its call for investor patience, that good times are just around the corner.  How will the board reward a C Suite that consistently failed to meet promises before selling out on the cheap?  The answer will be revealed, unfortunately a month after the sellout vote foisted by management. 

Prior executive teams had the decency to disappear after making millions from their golden parachutes.  This team will split and stick around.  That means employees can expect more of the same treatment going forward.  

Anonymous (Waiting for crumbs to fall from the executive table)

Wednesday, April 4, 2018

Kindred Executives Sell Stock at Premium to Negotiated Deal Price

Strange Tony,

Kindred executives sold stock 35 times in the period March 24-28.  The ten senior executives did so at a premium price to the one they negotiated over an eighteen month shop period.  Like the nursing home division executives started high then sold low.

While common stockholders get $9.00 a share executives received $9.15 per share.  Their trade proceeds will be used for payment of exercise price or tax liability.  Good thing executives received a little extra juice.  That way they can keep more of the millions they make on the deal.

Oddly, rumors have Walmart pondering the purchase of Humana, the company that will take four to five years to buyout the old Gentiva from two private equity firms.  In a few years time our hospice employees could be working for Walmart.  Will Sam Walton's kin keep wages low and use our hospice's cash flow to make new acquisitions?  Will they pull cash out of our hospice to funnel up to their executives?

People at our hospice site deserve better than Kindred executives, who want to enrich themselves by selling out and remaining in charge.  The last bunch had the decency to take their riches and go away.  Not so with this crew.

The vote will be announced tomorrow.  Kindred employees need to brace yourself.

Anonymous (Tired of being Sould-Soled-Sold)

Friday, March 23, 2018

Six Days to Go for Shareholder Vote

Strange Tony,

Battle lines are drawn as Kindred's Board and senior executives push for approval of the $9 per share buyout while investor Brigade Capital fights to kill the proposed deal.  Each side enlisted proxy advisors to support their case.  Brigade has one final legal challenge to postpone the March 29 shareholder vote.  It will be heard Tuesday March 27.

Kindred has 91 million shares with a float of nearly 88 million.  Nearly 95% of Kindred shares are held by institutions.  Insiders control 4% of Kindred stock.

The buyout fight escalated such that Brigade Capital is calling for reconstituted leadership, both executive and board.  Brigade noted details are missing on Kindred executive change in control compensation and employment contracts with new owners.  This information is absent from public view.  Executives often roll over a portion of their golden parachute into a higher equity stake in the newly private company.

This fight will intensify as the days tick down to Thursday, March 29, 2018.  If Kindred executives lose the vote their days may be numbered.  Brigade is in it solely for the money.  It is the battle of the greediest.

Kindred's growth story can be seen in the following data:

Kindred's ever shrinking employee group loses either way.  Neither side has appealed to people doing important daily work by offering substantive strategies.  Neither shared their plans to make Kindred a wage leader, much less compensation competitive. 

Over a five year period Humana can buyout the two private equity firms at a 35 to 44% premium to the 8x EBITDA multiple being offered to KND shareholders in the $9 a share offer.

After the proxy vote shareholders may learn how much Kindred's board paid executives in 2017 for further shrinking the company.  Executive compensation was not included in the company's 10-K or any of the numerous DEF filings on the proposed buyout.  Kindred CFO Stephen Farber offered in April 2017.

The first quarter of the year is always our softest cash quarter, as we have significant outflows from annual incentive compensation payments across the enterprise.

What do the board and senior executives have to hide by not revealing leadership pay before the sellout vote?

How does a competent board reward an executive team that drove down equity by 76% so corporate raiders could take out the company at a deep discount?

As the vote nears Kindred trickled out more information on the role of TPG Senior Advisor and Kindred board member Dr. Sharad Mankusani, who played a greater part than filings initially indicated.

Just before Kindred President Ben Breir played matchmaker between Humana and TPG the proposed buyout range was $11.00 to $13.00 per share, which is in the ballpark of 10x to 11.5x EBITDA.  It's not clear why TPG and WCAS deserve this pricing and shareholders do not.


Thursday, March 15, 2018

Roadmap to KND Sellout

Strange Tony,

Two weeks after the Ides of March Kindred shareholders will vote for or against the leveraged buyout by two private equity firms, a Canadian pension and Humana.  Oddly, Kindred stock again trades at a premium to the buyout price of $9 per share.

Major shareholder Brigade Capital sued to block the leveraged buyout takeover.  The next day KND stock closed at $9.45 per share, a 5% premium to the negotiated deal.  It closed today at $9.35.

Brigade Capital seeks injunctive relief prohibiting the shareholder vote.  Kindred management and board vigorously defend their long term equity decimation with both the stock price and company's balance sheet.

The vote will occur on March 29, 2018.  Kindred's recent 10-K had this to say regarding executive pay:

Executive Compensation  ---  Information required by this item will be provided by an amendment to this Annual Report on Form 10-K containing the applicable disclosures within 120 days after the end of the fiscal year covered by this report. 
The amendment could be provided as late as April 30, 2018, one month and a day after the shareholder vote.   Generic Hospice is not the only source who believes the deal is the floater in the Country Club pool.

Institutions and insiders will decide the deal.  Employees are the fly at the end of the bamboo cane pole.  Prepare to be whipped around and eaten by financial types, the fishy kind.

Anonymous (from the Kindred employee pool)

Tuesday, March 6, 2018

Shareholders Vote this Month on Complex Kindred Sellout

Strange Tony,

Kindred executives want employees to believe investment bankers developed the complex transaction for our benefit.  That is absurd on its face.   Yes, President Ben Breier offers hollow thanks to employee partners at the beginning of each quarterly earnings call.  After that salutation labor is only mentioned as a cost to control.  

A financial advisor discussed "with the Board the Board’s fiduciary duties in connection with a potential sale of Kindred and the differing incentives that senior management may face if Kindred pursued a transaction with a private equity buyer as compared to a strategic buyer."

Kindred's moving forward is for the benefit of the board and senior executives, not employees.  Humana's CEO stated future cash flow will be used for acquisitions with nary a mention of employee raises.   Somehow Humana needs to pay 2.5x to 3.5x more EBITDA for 60% of Kindred at Home to two private equity firms for a few years of ownership.

President David Causby and senior executives will participate in this premium exchange through their equity holdings in a private Kindred at Home.  Humana executives led by example by goosing profits to maximize recent bonuses.  Our future owner used atypical accounting to juice executive pay.  Greed is as greed does at both Kindred and Humana.

Employees are but numbers to TPG Capital, WCAS and Humana.  They won't know us for the work we do, for the care we provide, or for our hospice staff's heartfelt dedication.  New words have been spoken at our hospice.  They will know us by our numbers.  Executives will be handsomely enriched on our backs.

Breier and Causby did not partner with employees to take the company private.  They partnered with financial rapscallions for their benefit.  

Anonymous (a real person inside Kindred)