Kindred Healthcare gains after 1Q profit report

Associated Press

NEW YORK (AP) — Shares of Kindred Healthcare rose Wednesday after the health care services provider reported adjusted first-quarter profit that topped Wall Street expectations.

THE SPARK: The Louisville, Ky., company said Tuesday that its profit declined 18 percent in the first quarter. Kindred said its income fell to $18.2 million, or 35 cents per share, from $22.1 million, or 55 cents per share, one year ago. Excluding one-time charges Kindred said it earned 40 cents per share. Revenue climbed 33 percent, to $1.6 billion from $1.19 billion.

Analysts were forecasting a profit of 38 cents per share and $1.6 billion in revenue, according to FactSet.

THE BIG PICTURE: Kindred said it got $364 million in revenue from its RehabCare business during the quarter. RehabCare is a contract rehabilitation services business, and Kindred bought it in June. The company said revenue also improved at its home health care and hospice business. Nursing center admissions improved, but cuts in reimbursement rates and shorter stays by patients hurt its revenue.

The company said it still expects to report a profit of $1.35 to $1.55 per share in 2012 on $6.3 billion in consolidated revenue. Analysts expect Kindred to post income of $1.46 per share and $6.3 billion in revenue on average.

THE ANALYSIS: Jefferies & Co. analyst Arthur Henderson said the results were "impressive."

"Kindred Healthcare successfully stabilized its operations and improved core efficiencies" during the period, Henderson wrote. He kept a "Buy" rating on the stock with a price target of $13 per share.

SHARE ACTION: Kindred shares jumped as much as 12.8 percent on Wednesday. They backed off session highs and ended Wednesday up 15 cents, or 1.6 percent, at $9.79. The company's stock has traded between $7.60 and $26.15 in the last 52 weeks.