When Strategy Fails, Sellout

Strange Tony,

It's hard to see Kindred's planned sale to Humana, two private equity firms and a Canadian pension as anything but a move to enrich a failed executive team.  Humana will own 40% of the home health, hospice and community care company (old Gentiva plus Integracare) but is not in deal for LTAC and rehab hospitals/contract outpatient rehab services..

Enrich - Senior executives will do very well via change in control compensation.  Those that remain will become partners with Kindred's new owners.

Moody's estimated Kindred to have $250 million in cash as of the end of 2017.  If the deal were done today netting out cash would take the $810 million purchase price down to $560 million.  I expect executives and the board to use a good chunk of that cash to handsomely reward themselves between now and the closing date.

Failed - Kindred Healthcare's board is selling its pieces and parts at fire sale prices. The company went on a purchasing spree in 2014.  Audited financial statements for that year show equity at nearly $1.5 billion.   Two months later Kindred paid $700 million in cash as part of its $1.8 billion Gentiva buyout.

Executives drove down the value of the company from $1.7 billion (equity at end of 2016) to a mere $810 million (the buyout price).

Kindred President Ben Breier called employees "partners" in the Q3 earnings call, but there is no evidence the company considers us anything more than "hands."  Raises have been absent.  The retirement match is minuscule and employees have no opportunity to buy company stock without a brokerage fee, a benefit common in many publicly traded companies.

A number of high profile employers gave both raises and bonuses after Congress passed tax reform.  Will executives send just a smidgen to the hardworking caregivers down the chain of command?  Some are in need of crumbs from the King's table.

Anonymous (in ever shrinking Kindred)

Kindred Sale to Further Decimate Key Success Factors

Strange Tony

The last time our hospice was for sale the company did a number of peculiar things which polished Gentiva's financials but damaged patient care.  It appears our sellout to Humana, TPG Capital, WCAS and a Canadian pension company will trigger another run of customer service cuts.

Disintegrating a comprehensive post acute care company won't be easy.  Kindred's management, like Gentiva's before it, has not shown finesse or sensitivity, much less intelligence.  There will be lots of sledgehammer moves over the next six months.  Whose hand, limb or body will be under the hammer when it comes smashing down?

Rumors have executives considering giving staff raises, yet again.  The last time our hospice was sold there were no raises.  Many of our staff had their hours cut, both regular and on call.  Gentiva executives took 40 hours from the PTO accrual schedule in the run up to Kindred's buyout.

Kindred trashed its vision of an integrated post acute care company.

1. Long term care went to Blue Mountain Capital with Ventas getting the whole purchase price 


2. Hospice, home health and community care are going to Humana, two private equity firms and a Canadian pension.  (There's irony in a single payor country investing in America's overly complex, for-profit health care non-system). 


3.  LTACs, inpatient rehab hospitals and contract outpatient rehab are going to the two private equity firms and Canadian pension.

Kindred executives failed to fulfill the company's key success factors for nearly three years.  Disintegrating is much harder on staff, who have been long ignored.  Expect lots of pain.

Anonymous (from disintegrating Kindredful)