Kindred getting out of nursing home business

Louisville, Kentucky-based Kindred Healthcare will be divesting its skilled nursing facilities to focus on more profitable business segments like long-term acute care and rehabilitation hospitals.

Kindred owns 91 nursing homes and is the company’s smallest business segment. It’s also on the decline, with third quarter earnings before interest, taxes, depreciation and amortization (EBITDA) declining 16.7 percent from the same quarter in 2015.

“Our strategic decision to exit the skilled nursing facility business as an owner and operator is the final step in a process that began years ago when Kindred operated approximately 300 skilled nursing facilities,” Kindred CEO Benjamin Braier said in a statement. “This decision will reduce annual rent obligations by approximately $90 million and annual capital expenditures by approximately $30 million. In addition, Kindred will optimize its overhead structure by eliminating approximately $70 million to $100 million of divisional and corporate overhead above the facility level, much of which is associated with supporting our skilled nursing facilities.”

Overall, the company reported a $671 million loss in the quarter

While Kindred had been downsizing its nursing home business, it had remained active in the industry. The U.S. Supreme Court agreed in October to take the company’s case defending the validity of arbitration agreements with nursing home residents.

No timeline has given for when Kindred will have completed the divesture of the facilities.