Kindred Moving Forward by Moving Backward

Strange Tony,

Kindred CEO Ben Breier tried selling his deal with Humana and two private equity firms as beneficial to stockholders.  Buy and hold shareholders did not make out well with the $9 cash per share as most paid far more than that to purchase Kindred stock.

Two private equity firms are part of the consortium taking out Kindred.  

Kindred at Home, our home health, hospice and community care business, will become a standalone company owned 40 percent by Humana, with the remaining 60 percent owned by TPG and WCAS.  David Causby will be the CEO of Kindred at Home.

Ironically, Kindred acted like a publicly traded, private equity firm the last few years with its series of debt funded deals, buying Gentiva and Centerre.  Private equity firms like to buy low and sell high.  Kindred did the opposite, getting virtually nothing for its nursing home division and losing on Gentiva.

I expect employees to not do well either per this internal company communication.

Q. Will my salary or pay rate change?
A. We do not anticipate changes to base salaries or pay rates following the close of the transaction.

The communication said nothing of executive change in control payments, which will likely use up a chunk of Kindred's $250 million in cash, as estimated by Moody's.  Executive change in control payments were as follows at the end of 2016.

CEO Ben Breier -- $13.9 million
CFO Stephen Farber -- $5.5 million
COO Kent Wallace -- $5.3 million
KAH President David Causby -- $4.7 million
Corporate Counsel Joseph Landenwich -- $3.1 million

They are likely higher today than the numbers above. an estimated total of $32 million. 

The deal is expected to close in summer of 2018. I understand executive excitement over the sale as it will once again handsomely reward a select handful at the top, a group that failed to deliver on promises and ended up selling out.

An integrated Kindred is breaking down, much like its publicly traded stock price.  How mendacious are leaders who flip their strategic position on a dime to enrich themselves?

Anonymous (from disintegrating Kindred)

Our Care Matters Award Goes to Money Changer

Strange Tony,

VP Toad visited again and creeped out our hospice by walking around with his hands in his front pockets.  You could hear him jingling something.  It sounded like clinking coins but we've also heard rumors of his brass balls.  He did talk to office people.  Once again, I didn't see him speak to a single patient caregiver.

At the end of his visit staff attended an "Our Care Matters" celebration.  He showed a video that could have starred any of our site's nurses, given the heartfelt work they perform.  One of our caring nurses said she'd rather be out seeing patients, delivering actual care, than watching a polished video.

Our nurses were kind to Toad.  They did not bring up the many ways the company shows it does not care about employees, knowing it would make Toad mad.  They recalled how Kindred executives send forcefully and don't receive very well.  It's a form of mental blocking.

The climax came in the staff meeting when Toad started jingling.  He said, "The winner of an 'Our Care Matters' Kindred coin is.... drumroll please.......the Biller.  Huh?   Yep, they picked someone who does not provide a lick of patient care.

Toad was silent on news from Wall Street that Kindred could be sold.  Not again!  A seemingly endless series of executives over promised and under delivered to Wall Street analysts.  When it became clear they had no strategy for success each group sold out, taking a king's ransom in change in control payments and leaving employees to endure the next mendacious set of executives.

VP Toad had no information and no words of assurance for our team.  His attempt to inspire did the opposite.  That's the Kindred way.

Anonymous (from Kindredful)

A Look Back through Kindred Peephole

Strange Tony.

Four and a half years ago Kindred announced the creation of a new position, a Chief People Officer.  As Kindred employed strategic human resources to the detriment of workers I've re-branded the role Chief Peephole Officer.  Kindred Executive's submarine sunk employee treatment under Stephen Cunanan.  The C suite peephole warship is loaded with executive pay maximizing strategies.

Flash back to June 2013 when Kindred announced the hiring of Stephen Cunanan

"In recognizing that Kindred's greatest strength is our dedicated and compassionate employees, we believe that Chief Peephole Officer Stephen Cunanan's talents will further expand our ability to invest in our people. His proven leadership and human resources abilities will help ensure that our colleagues have the skills necessary to deliver clinical excellence and the opportunities to grow professionally."--Paul Diaz's hollow promise

"The mission of Kindred's People Services team is to provide integrated, cost effective and efficient human resources services that leverage the strength of our people to drive Kindred's clinical and business strategy.  Peephole Services will foster a culture of quality and engagement to enable our people to promote hope, healing and recovery for patients, residents and families."- Ben Breir's blather

In this newly created role, Cunanan will be responsible for Kindred's People Services, including employee engagement and satisfaction, leadership development, advancing Kindred's culture of patient safety, and leading Kindred's development of a shared services human resources model.

The words are lofty but executive actions have fallen far short.  Executives were true to their promise of employee engagement, the hostile encounter/battle version.  In less than four years Cunanan accumulated over 125,000 shares of Kindred stock, currently worth over $1 million.  Most are incentive stock awards.  He's clearly looking after executive peers and not employees.  That's the Kindred way.

Anonymous (wondering what 2018 will bring besides bountiful executive riches)

Ever Shrinking Kindred

Strange Tony,

Kindred remains in retrenchment mode.  Executives shrank the company after their early 2015 spending spree (buying Gentiva and Centerre).

Kindred dumped $1.1 billion in revenue and nearly 19,000 employees from levels shared in the run up to the Gentiva closing.

Kindred chiefs even shrank Kindred at Home which had a high of 656 locations in October 2015.  That's down to 609 as of yesterday's news release in which Kindred President Ben Breier said, "We continue to believe that the sale of our skilled nursing facility business will significantly enhance shareholder value, enable us to sharpen our focus on higher margin and faster growing businesses, and further advance our efforts to transform Kindred.”  It's hard to see growth anywhere in these Kindred statistics.

However, Kindred's long term debt remained mostly stable. 

The nursing home division sale means the rest of Kindred must carry the whole debt burden.  Executives were not generous before.  Their miserliness will likely continue.  Heaven forbid it should increase.

Their challenge is to sell the company's current predicament as outstanding management action, so they can be absurdly rewarded by Kindred's Board of Directors.

Kindred President Breier recently elevated employees to partners in a Wall Street analyst call.  Nurses, social workers and counselors have options in today's healthcare landscape.  I expect many to walk.  The grass may not be greener but hopefully it's less greedy at the top.

Anonymous (from debt bloated Kindred)