-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IjZoiwV7QrhYtPkPO95kHhksFZ5capSzHZfTqAyTMo/7LzkSWG0FNPxPA/6ii1xC /Z+Tz8Mn9/4CGGiCmG5GnQ== 0000930661-96-000478.txt : 19960517 0000930661-96-000478.hdr.sgml : 19960517 ACCESSION NUMBER: 0000930661-96-000478 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VENCOR INC CENTRAL INDEX KEY: 0000740260 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOSPITALS [8060] IRS NUMBER: 611055020 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10989 FILM NUMBER: 96567478 BUSINESS ADDRESS: STREET 1: 3300 CAPITAL HOLDING CENTER STREET 2: 400 WEST MARKET STREET CITY: LOUISVILLE STATE: KY ZIP: 40202 BUSINESS PHONE: 5025697300 MAIL ADDRESS: STREET 1: 3300 PROVIDIAN CENTER STREET 2: 400 WEST MARKET ST CITY: LOUISVILLE STATE: KY ZIP: 40202 10-Q 1 FORM 10-Q - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . COMMISSION FILE NUMBER 1-10989 VENCOR, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 61-1055020 (STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 3300 PROVIDIAN CENTER 400 WEST MARKET STREET LOUISVILLE, KY 40202 (ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE) OFFICES) (502) 596-7300 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class of Common Stock Outstanding at April 30, 1996 ---------------------------- ----------------------------- Common stock, $.25 par value 70,346,623 shares - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- VENCOR, INC. FORM 10-Q INDEX
PAGE ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Condensed Consolidated Statement of Income -- for the three months ended March 31, 1996 and 1995.......... 3 Condensed Consolidated Balance Sheet -- March 31, 1996 and December 31, 1995........................ 4 Condensed Consolidated Statement of Cash Flows -- for the three months ended March 31, 1996 and 1995.......... 5 Notes to Condensed Consolidated Financial Statements........... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................................... 8 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K............................... 13
2 VENCOR, INC. CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1996 1995 -------- -------- Revenues.................................................. $626,337 $552,178 -------- -------- Salaries, wages and benefits.............................. 372,318 321,806 Supplies.................................................. 51,762 43,516 Rent...................................................... 19,167 19,579 Other operating expenses.................................. 104,501 99,247 Depreciation and amortization............................. 24,793 21,170 Interest expense.......................................... 12,480 15,458 Investment income......................................... (3,578) (3,180) -------- -------- 581,443 517,596 -------- -------- Income from operations before income taxes................ 44,894 34,582 Provision for income taxes................................ 17,284 13,410 -------- -------- Income from operations.................................... 27,610 21,172 Extraordinary loss on extinguishment of debt, net of income tax benefit....................................... - (66) -------- -------- Net income............................................. 27,610 21,106 Preferred stock dividend requirements..................... - (1,793) -------- -------- Income available to common stockholders................ $ 27,610 $ 19,313 ======== ======== Earnings per common and common equivalent share: Primary: Income from operations.................................. $ .39 $ .33 Extraordinary loss on extinguishment of debt............ - - -------- -------- Net income............................................. $ .39 $ .33 ======== ======== Fully diluted: Income from operations.................................. $ .39 $ .31 Extraordinary loss on extinguishment of debt............ - - -------- -------- Net income............................................. $ .39 $ .31 ======== ======== Shares used in computing earnings per common and common equivalent share: Primary................................................. 71,455 58,981 Fully diluted........................................... 71,455 70,826
See accompanying notes. 3 VENCOR, INC. CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
MARCH 31, DECEMBER 31, 1996 1995 ---------- ------------ ASSETS Current assets: Cash and cash equivalents............................ $ 41,319 $ 35,182 Accounts and notes receivable less allowance for loss of $17,685 -- March 31 and $16,785 -- December 31... 396,742 360,147 Inventories.......................................... 24,828 24,862 Income taxes......................................... 64,513 77,997 Other................................................ 26,670 26,491 ---------- ---------- 554,072 524,679 Property and equipment, at cost....................... 1,581,663 1,552,293 Accumulated depreciation.............................. (385,208) (362,199) ---------- ---------- 1,196,455 1,190,094 Notes receivable less allowance for loss of $15,523 -- March 31 and $15,305 -- December 31................. 76,291 78,090 Intangible assets less accumulated amortization of $24,307 -- March 31 and $22,149 -- December 31 ...... 46,936 42,580 Other................................................. 77,124 77,011 ---------- ---------- $1,950,878 $1,912,454 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable..................................... $ 114,735 $ 99,887 Salaries, wages and other compensation............... 104,893 99,937 Other accrued liabilities............................ 63,357 75,617 Long-term debt due within one year................... 18,723 9,572 ---------- ---------- 301,708 285,013 Long-term debt........................................ 769,062 778,100 Deferred credits and other liabilities................ 75,206 77,277 Stockholders' equity: Common stock, $.25 par value; authorized 180,000 shares; issued 72,298 shares -- March 31 and 72,158 shares -- December 31........................ 18,075 18,040 Capital in excess of par value....................... 688,895 684,377 Retained earnings.................................... 130,475 102,865 ---------- ---------- 837,445 805,282 Common treasury stock; 1,970 shares -- March 31 and 2,025 shares -- December 31..................... (32,543) (33,218) ---------- ---------- 804,902 772,064 ---------- ---------- $1,950,878 $1,912,454 ========== ==========
See accompanying notes. 4 VENCOR, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED) (IN THOUSANDS)
1996 1995 ------- ------- Cash flows from operating activities: Net income.................................................. $27,610 $21,106 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization.............................. 24,793 21,170 Deferred income taxes...................................... 885 2,579 Extraordinary loss on extinguishment of debt............... - 99 Other...................................................... 5,752 533 Changes in operating assets and liabilities: Accounts and notes receivable............................. (38,827) (14,097) Inventories and other assets.............................. 554 (1,189) Accounts payable.......................................... 15,112 (4,534) Other accrued liabilities................................. 2,101 12,981 ------- ------- Net cash provided by operating activities................ 37,980 38,648 ------- ------- Cash flows from investing activities: Purchase of property and equipment.......................... (27,052) (38,874) Acquisition of healthcare businesses and previously leased facilities................................................. - (17,290) Sale of assets.............................................. 396 185 Collection of notes receivable.............................. 1,875 1,832 Net change in investments................................... (314) (26,086) Other....................................................... (7,019) (4,105) ------- ------- Net cash used in investing activities.................... (32,114) (84,338) ------- ------- Cash flows from financing activities: Net change in borrowings under revolving lines of credit.... 4,100 (12,000) Issuance of long-term debt.................................. 1,363 22,670 Repayment of long-term debt................................. (6,019) (17,039) Public offering of common stock............................. - 66,494 Other issuances of common stock............................. 900 404 Payment of dividends........................................ - (767) Other....................................................... (73) (98) ------- ------- Net cash provided by financing activities................ 271 59,664 ------- ------- Change in cash and cash equivalents.......................... 6,137 13,974 Cash and cash equivalents at beginning of period............. 35,182 39,018 ------- ------- Cash and cash equivalents at end of period................... $41,319 $52,992 ======= ======= Supplemental information: Interest payments........................................... $12,466 $16,627 Income tax payments......................................... 6,529 6,506
See accompanying notes. 5 VENCOR, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 -- REPORTING ENTITY Vencor, Inc. ("Vencor") operates an integrated network of healthcare services primarily focused on the needs of the elderly. At March 31, 1996, Vencor operated 36 hospitals, 311 nursing centers, a contract services business ("Vencare") which provides respiratory therapy, rehabilitation therapy and subacute medical services primarily to nursing centers, 54 retail and institutional pharmacy outlets and 23 retirement communities with 3,090 apartments. On September 28, 1995, Vencor consummated a merger with The Hillhaven Corporation ("Hillhaven") in a tax-free, stock-for-stock transaction (the "Hillhaven Merger"). See Note 5. Prior to its merger with Vencor, Hillhaven consummated a merger with Nationwide Care, Inc. ("Nationwide") on June 30, 1995 in a tax-free, stock-for- stock transaction (the "Nationwide Merger"). See Note 6. NOTE 2 -- BASIS OF PRESENTATION The Hillhaven and Nationwide Mergers have been accounted for by the pooling- of-interests method. Accordingly, the accompanying condensed consolidated financial statements give retroactive effect to these transactions and include the combined operations of Vencor, Hillhaven and Nationwide for all periods presented. The accompanying condensed consolidated financial statements do not include all of the disclosures normally required by generally accepted accounting principles or those normally required in annual reports on Form 10-K. Accordingly, these statements should be read in conjunction with the audited consolidated financial statements of Vencor for the year ended December 31, 1995 filed on Form 10-K with the Securities and Exchange Commission. The accompanying condensed consolidated financial statements have been prepared in accordance with Vencor's customary accounting practices and have not been audited. Management believes that the financial information included herein reflects all adjustments necessary for a fair presentation of interim results and that all such adjustments are of a normal and recurring nature. NOTE 3 -- REVENUES Revenues are recorded based upon estimated amounts due from patients and third-party payors for healthcare services provided, including anticipated settlements under reimbursement agreements with Medicare, Medicaid and other third-party payors. A summary of first quarter revenues by payor type follows (dollars in thousands):
1996 1995 -------- -------- Medicare................................................. $196,728 $165,964 Medicaid................................................. 199,835 184,994 Private and other........................................ 238,015 201,565 -------- -------- 634,578 552,523 Elimination.............................................. (8,241) (345) -------- -------- $626,337 $552,178 ======== ========
6 VENCOR, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) NOTE 4 -- EARNINGS PER SHARE The computation of earnings per common and common equivalent share gives retroactive effect to the Hillhaven and Nationwide Mergers and is based upon the weighted average number of common shares outstanding adjusted for the dilutive effect of common stock equivalents (consisting primarily of stock options) and, in 1995, convertible debt securities. NOTE 5 -- HILLHAVEN MERGER On September 27, 1995, the stockholders of both Vencor and Hillhaven approved the Hillhaven Merger, effective September 28, 1995. In connection with the Hillhaven Merger, each share of Hillhaven common stock was converted on a tax-free basis into 0.935 of a share of Vencor common stock, resulting in the issuance of approximately 31,651,000 Vencor common shares. The Hillhaven Merger has been accounted for as a pooling of interests, and accordingly, the condensed consolidated financial statements give retroactive effect to the Hillhaven Merger and include the combined operations of Vencor and Hillhaven for all periods presented. A summary of the results of operations of the separate entities for the first quarter of 1995 follows (dollars in thousands):
Vencor Hillhaven Elimination Consolidated -------- --------- ----------- ------------ Revenues......................... $120,431 $432,092 $(345) $552,178 Income from operations........... 9,148 12,024 - 21,172 Net income....................... 9,148 11,958 - 21,106
NOTE 6 -- NATIONWIDE MERGER Prior to its merger with Vencor, Hillhaven completed the Nationwide Merger on June 30, 1995. In connection therewith, 4,675,000 shares of common stock (effected for the Hillhaven Merger exchange ratio) were issued in exchange for all of the outstanding shares of Nationwide. The Nationwide Merger has been accounted for as a pooling of interests, and accordingly, the condensed consolidated financial statements give retroactive effect to the Nationwide Merger and include the combined operations of Hillhaven and Nationwide for all periods presented. A summary of the results of operations of the separate entities for the first quarter of 1995 follows (dollars in thousands):
Hillhaven Nationwide Consolidated --------- ---------- ------------ Revenues................................... $398,660 $33,432 $432,092 Income from operations..................... 10,724 1,300 12,024 Net income................................. 10,658 1,300 11,958
NOTE 7 -- SUBSEQUENT EVENT On May 15, 1996, the Board of Directors authorized the establishment of a newly formed corporation, Atria Assisted Living Communities, Inc. ("Atria"), to operate Vencor's retirement housing business. As part of the transaction, Vencor intends to conduct an initial public offering of a minority share of Atria common stock. A registration statement detailing the proposed transaction will be filed as soon as practicable. Management expects that this transaction will be completed by the end of the summer. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HILLHAVEN AND NATIONWIDE MERGERS The Hillhaven Merger was consummated on September 28, 1995. At the time of the Hillhaven Merger, Hillhaven operated 311 nursing centers, 56 retail and institutional pharmacies and 23 retirement communities with 3,122 apartments. Annualized revenues approximated $1.7 billion. Prior to its merger with Vencor, Hillhaven completed the Nationwide Merger on June 30, 1995. At the time of the Nationwide Merger, Nationwide operated 23 nursing centers containing 3,257 licensed beds and four retirement communities with 442 apartments. Annualized revenues approximated $125 million. As discussed in the Notes to Condensed Consolidated Financial Statements, the Hillhaven and Nationwide Mergers have been accounted for by the pooling- of-interests method. Accordingly, the accompanying condensed consolidated financial statements and financial and operating data included herein give retroactive effect to these transactions and include the combined operations of Vencor, Hillhaven and Nationwide for all periods presented. ANTICIPATED MERGER SYNERGIES AND IMPLEMENTATION OF NETWORK STRATEGY As a result of the Hillhaven Merger, Vencor has become one of the nation's largest diversified healthcare providers, offering a broad continuum of specialized respiratory, rehabilitation and pharmacy services through its network of hospitals, nursing centers, Vencare contract services, institutional and retail pharmacies, and retirement communities. Management believes that Vencor will achieve significant operational synergies in connection with the Hillhaven Merger through (i) growth in revenues from increased patient referrals and expansion of ancillary services within the integrated continuum of healthcare services and (ii) reductions in operating costs from the elimination of duplicative services, improved purchasing power of the combined entity, and refinancing of higher rate long- term debt. The estimated effect of these synergies could increase pretax income approximately $100 million per year by 1997. There can be no assurances, however, that Vencor will successfully develop and expand its long-term care networks. The Hillhaven Merger substantially changed the nature, scope and size of Vencor's business, and significant efforts required to integrate the operations and management of the combined entity could have an adverse effect on Vencor's ability to realize the operating synergies described above. PROPOSED RETIREMENT HOUSING TRANSACTION As discussed in Note 7, Vencor intends to conduct an initial public stock offering of a minority share of its retirement housing business. Although a registration statement detailing the proposed transaction is not yet available, management believes that this transaction will not have a material effect on Vencor's liquidity, financial position or results of operations. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) RESULTS OF OPERATIONS Vencor operates an integrated network of healthcare services focused primarily on the needs of the elderly through the operations of hospitals, nursing centers and ancillary services businesses which include Vencare, pharmacies and retirement communities. A summary of revenues follows (dollars in thousands):
FIRST QUARTER ------------------ % 1996 1995 CHANGE -------- -------- ------ Hospitals......................................... $130,047 $101,145 28.6 -------- -------- Nursing centers: Long-term care................................... 263,130 261,145 0.8 Subacute medical and rehabilitation care......... 138,324 114,668 20.6 -------- -------- 401,454 375,813 6.8 -------- -------- Ancillary services: Vencare.......................................... 45,615 20,789 119.4 Pharmacies....................................... 45,372 43,620 4.0 Retirement communities........................... 12,090 11,156 8.4 -------- -------- 103,077 75,565 36.4 -------- -------- Elimination....................................... (8,241) (345) -------- -------- $626,337 $552,178 13.4 ======== ========
Hospital revenue increases in the first quarter of 1996 resulted from the acquisition of facilities and growth in same-store patient days. Hospital patient days rose 29% to 146,015 from 113,165 in the same period last year. As part of its integrated growth strategy, Vencor intends to expand its subacute medical and rehabilitation services provided in its nursing centers and reduce the percentage of patient days attributable to custodial patient care. Patient days related to subacute medical and rehabilitation services grew 25% to 503,507 from 402,261 last year, while patient days related to custodial care declined 3% to 2,624,013 from 2,700,250 during the same period last year. First quarter 1996 revenues related to custodial care were adversely impacted by a decline in private pay patient days. Growth in ancillary services revenues in the first quarter of 1996 was primarily attributable to the expansion of the Vencare contract services business, which provides respiratory and rehabilitation therapy services and subacute care primarily to nursing centers. The number of Vencare contracts grew from 1,093 at March 31, 1995 to 2,133 at March 31, 1996. Net income for the first quarter of 1996 totaled $27.6 million, up 31% from $21.1 million in the first quarter of 1995. The improvement resulted primarily from growth in (i) hospital patient days, (ii) Vencare contracts and (iii) higher margin subacute and rehabilitation therapy services in the nursing center business. Upon consummation of the Hillhaven Merger, Vencor recorded certain pre-tax charges aggregating $128.4 million related primarily to merger transaction costs, employee benefit plans, consolidation and restructuring activities, and changes in nursing center accounting estimates. Management expects that consolidation of duplicative corporate and operational functions will be substantially completed during the third quarter of 1996, and that dispositions of certain nursing center properties will be concluded in 1997. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY Cash provided by operations totaled $38 million for the first quarter of 1996 compared to $38.6 million for the same period of 1995. Despite growth in net income, cash flows from operations were adversely impacted by growth in accounts receivable aggregating $38.8 million since December 31, 1995. The increase in outstanding days of revenues in accounts receivable has resulted primarily from consolidation of nursing center corporate and operational functions in connection with the Hillhaven Merger. Management believes that nursing center accounts receivable days will improve from current levels by the end of the year. Since the consummation of the Hillhaven Merger, Vencor has maintained a $1 billion credit facility (the "Credit Facility"). At March 31, 1996, available borrowings under the Credit Facility approximated $300 million. Working capital totaled $252.4 million at March 31, 1996 compared to $239.7 million at December 31, 1995. Management believes that cash flows from operations and amounts available under the Credit Facility are sufficient to meet future expected liquidity needs. CAPITAL RESOURCES Excluding acquisitions, capital expenditures totaled $27.1 million for the first quarter of 1996 compared to $38.9 million for the same period of 1995. Planned capital expenditures in 1996 (excluding acquisitions) are expected to approximate $175 million and include significant expenditures related to the expansion of Vencor's retirement community and assisted living operations. Management believes that its capital expenditure program is adequate to expand, improve and equip existing facilities. At March 31, 1996, the estimated cost to complete and equip construction in progress approximated $32 million. Vencor also expended $17.3 million for acquisitions of new facilities (and related healthcare businesses) and previously leased nursing centers during the first quarter of 1995. Management intends to acquire additional hospitals, nursing centers and related healthcare businesses in the future. Capital expenditures were financed primarily through internally generated funds and, in 1995, from the public offering of 2.2 million shares of common stock, the proceeds from which aggregated $66.5 million. Vencor intends to finance a substantial portion of its capital expenditures with internally generated and borrowed funds. Sources of capital include available borrowings under the Credit Facility, public or private debt and equity. HEALTH CARE LEGISLATION Congress is currently considering various proposals which could reduce expenditures under certain government health and welfare programs, including Medicare and Medicaid. Management cannot predict whether such proposals will be adopted, or if adopted, what effect, if any, such proposals would have on its business. Medicare revenues as a percentage of total revenues were 31% and 30% for the three months ended March 31, 1996 and March 31, 1995, respectively, while Medicaid percentages of revenues approximated 31% and 33% for the respective periods. OTHER INFORMATION Various lawsuits and claims arising in the ordinary course of business are pending against Vencor. Resolution of such litigation and other loss contingencies is not expected to have a material adverse effect on Vencor's liquidity, financial position or results of operations. The Credit Facility contains covenants which require maintenance of certain financial ratios and limit amounts of additional debt and purchases of common stock. Vencor was in compliance with all such convenants at March 31, 1996. 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1995 QUARTERS FIRST -------------------------------------- QUARTER FIRST SECOND THIRD FOURTH YEAR 1996 -------- -------- -------- -------- ---------- -------- Revenues................ $552,178 $578,314 $575,339 $618,125 $2,323,956 $626,337 -------- -------- -------- -------- ---------- -------- Salaries, wages and benefits............... 321,806 330,455 347,251 360,506 1,360,018 372,318 Supplies................ 43,516 46,882 47,868 50,488 188,754 51,762 Rent.................... 19,579 19,771 20,225 19,901 79,476 19,167 Other operating expenses............... 99,247 104,635 105,335 107,752 416,969 104,501 Depreciation and amortization........... 21,170 22,507 23,263 22,538 89,478 24,793 Interest expense........ 15,458 17,171 15,169 13,120 60,918 12,480 Investment income....... (3,180) (3,548) (3,304) (3,412) (13,444) (3,578) Non-recurring transactions........... - 5,555 103,868 - 109,423 - -------- -------- -------- -------- ---------- -------- 517,596 543,428 659,675 570,893 2,291,592 581,443 -------- -------- -------- -------- ---------- -------- Income (loss) from operations before income taxes........... 34,582 34,886 (84,336) 47,232 32,364 44,894 Provision for income taxes.................. 13,410 13,799 (21,449) 18,241 24,001 17,284 -------- -------- -------- -------- ---------- -------- Income (loss) from operations............. 21,172 21,087 (62,887) 28,991 8,363 27,610 Extraordinary loss on extinguishment of debt, net of income taxes.... (66) (2,725) (19,196) (1,265) (23,252) - -------- -------- -------- -------- ---------- -------- Net income (loss).... 21,106 18,362 (82,083) 27,726 (14,889) 27,610 Preferred stock dividend requirements........... (1,793) (1,795) (1,692) - (5,280) - Gain on redemption of preferred stock........ - - 10,176 - 10,176 - -------- -------- -------- -------- ---------- -------- Income (loss) available to common stockholders........ $ 19,313 $ 16,567 $(73,599) $ 27,726 $ (9,993) $ 27,610 ======== ======== ======== ======== ========== ======== Earnings (loss) per common and common equivalent share: Primary: Income (loss) from operations........... $ .33 $ .32 $ (.91) $ .43 $ .21 $ .39 Extraordinary loss on extinguishment of debt................. - (.05) (.32) (.02) (.37) - -------- -------- -------- -------- ---------- -------- Net income (loss).... $ .33 $ .27 $ (1.23) $ .41 $ (.16) $ .39 ======== ======== ======== ======== ========== ======== Fully diluted: Income (loss) from operations........... $ .31 $ .30 $ (.91) $ .41 $ .29 $ .39 Extraordinary loss on extinguishment of debt................. - (.04) (.32) (.02) (.32) - -------- -------- -------- -------- ---------- -------- Net income (loss).... $ .31 $ .26 $ (1.23) $ .39 $ (.03) $ .39 ======== ======== ======== ======== ========== ======== Shares used in computing earnings (loss) per common and common equivalent share: Primary............... 58,981 60,673 60,011 68,270 62,318 71,455 Fully diluted......... 70,826 72,454 60,011 71,547 71,967 71,455
11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) OPERATING DATA (UNAUDITED)
1995 QUARTERS FIRST ------------------------------------------ QUARTER FIRST SECOND THIRD FOURTH YEAR 1996 --------- --------- --------- --------- ---------- --------- REVENUES (IN THOUSANDS): Hospitals............... $ 101,145 $ 116,186 $ 119,705 $ 119,450 $ 456,486 $ 130,047 --------- --------- --------- --------- ---------- --------- Nursing centers: Long-term care......... 261,145 261,370 271,274 279,624 1,073,413 263,130 Subacute medical and rehabilitation care... 114,668 120,504 125,952 131,788 492,912 138,324 Non-recurring transactions.......... - - (24,500) - (24,500) - --------- --------- --------- --------- ---------- --------- 375,813 381,874 372,726 411,412 1,541,825 401,454 --------- --------- --------- --------- ---------- --------- Ancillary services: Vencare (a)............ 20,789 27,015 33,067 39,075 119,946 45,615 Pharmacies (a)......... 43,620 42,674 40,773 41,700 168,767 45,372 Retirement communities. 11,156 11,415 11,648 12,152 46,371 12,090 --------- --------- --------- --------- ---------- --------- 75,565 81,104 85,488 92,927 335,084 103,077 --------- --------- --------- --------- ---------- --------- Elimination............. (345) (850) (2,580) (5,664) (9,439) (8,241) --------- --------- --------- --------- ---------- --------- $ 552,178 $ 578,314 $ 575,339 $ 618,125 $2,323,956 $ 626,337 ========= ========= ========= ========= ========== ========= HOSPITAL DATA: End of period data: Number of hospitals.... 34 36 35 36 36 Number of licensed beds.................. 2,859 3,275 3,214 3,263 3,225 Revenue mix %: Medicare............... 58 57 57 58 57 57 Medicaid............... 11 11 11 13 12 13 Private and other...... 31 32 32 29 31 30 Patient days: Medicare............... 74,742 80,236 79,282 79,749 314,009 94,087 Medicaid............... 14,609 19,330 21,014 21,828 76,781 24,152 Private and other...... 23,814 25,120 24,179 25,709 98,822 27,776 --------- --------- --------- --------- ---------- --------- 113,165 124,686 124,475 127,286 489,612 146,015 ========= ========= ========= ========= ========== ========= NURSING CENTER DATA: End of period data: Number of nursing centers............... 310 311 311 311 311 Number of licensed beds.................. 39,418 39,509 39,513 39,480 39,510 Revenue mix %: Medicare............... 28 28 24 28 27 30 Medicaid............... 44 44 47 44 45 43 Private and other...... 28 28 29 28 28 27 Patient days: Long-term care......... 2,700,250 2,710,176 2,758,760 2,700,914 10,870,100 2,624,013 Subacute medical and rehabilitation care... 402,261 412,250 419,499 465,490 1,699,500 503,507 --------- --------- --------- --------- ---------- --------- 3,102,511 3,122,426 3,178,259 3,166,404 12,569,600 3,127,520 ========= ========= ========= ========= ========== ========= ANCILLARY SERVICES DATA: End of period data: Number of Vencare contracts............. 1,093 1,703 1,917 2,008 2,133 Number of pharmacy outlets............... 57 55 56 55 54 Number of retirement communities........... 23 23 23 23 23 Number of retirement community apartments.. 3,122 3,122 3,122 3,122 3,090
(a) Prior year rehabilitation therapy revenues have been reclassified to conform with the current year presentation. 12 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a)EXHIBITS: 11 Statement Re: Computation of earnings per common and common equivalent share for the three months ended March 31, 1996 and 1995. 27 Financial Data Schedule (included only in filings submitted under the Electronic Data Gathering Retrieval and Analysis ("EDGAR") system). (b)REPORTS ON FORM 8-K: No reports on Form 8-K were filed during the three months ended March 31, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. VENCOR, INC. Date: May 15, 1996 /s/ W. Bruce Lunsford - ------------------ ---------------------------------- W. Bruce Lunsford Chairman of the Board, President and Chief Executive Officer Date: May 15, 1996 /s/ W. Earl Reed, III - ------------------ ---------------------------------- W. Earl Reed, III Executive Vice President and Chief Financial Officer (Principal Financial Officer) 13 EX-11 2 COMPUTATION OF EARNINGS EXHIBIT 11 VENCOR, INC. COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1996 1995 ------- ------- PRIMARY EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE: Earnings: Income from operations...................................... $27,610 $21,172 Preferred stock dividend requirements....................... - (1,793) ------- ------- Income available to common stockholders..................... 27,610 19,379 Extraordinary loss on extinguishment of debt, net of income tax benefit................................................ - (66) ------- ------- Net income................................................ $27,610 $19,313 ======= ======= Shares used in the computation: Weighted average common shares outstanding.................. 70,258 57,928 Dilutive effect of common stock equivalents................. 1,197 1,053 ------- ------- Shares used in computing earnings per common and common equivalent share......................................... 71,455 58,981 ======= ======= Primary earnings per common and common equivalent share: Income from operations...................................... $ .39 $ .33 Extraordinary loss on extinguishment of debt................ - - ------- ------- Net income................................................ $ .39 $ .33 ======= ======= FULLY DILUTED EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE: Earnings: Income available to common stockholders..................... $27,610 $19,379 Interest addback on convertible securities, net of income taxes...................................................... - 2,465 ------- ------- Adjusted income available to common stockholders............ 27,610 21,844 Extraordinary loss on extinguishment of debt, net of income tax benefit................................................ - (66) ------- ------- Net income................................................ $27,610 $21,778 ======= ======= Shares used in the computation: Weighted average common shares outstanding.................. 70,258 57,928 Dilutive effect of common stock equivalents and other dilutive securities........................................ 1,197 12,898 ------- ------- Shares used in computing earnings per common and common equivalent share......................................... 71,455 70,826 ======= ======= Fully diluted earnings per common and common equivalent share: Income from operations...................................... $ .39 $ .31 Extraordinary loss on extinguishment of debt................ - - ------- ------- Net income................................................ $ .39 $ .31 ======= =======
EX-27 3 ARTICLE 5 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Vencor's condensed consolidated financial statements for the Quarter ended March 31, 1996 and is qualified in its entirety by reference to such statements. 1,000 3-MOS DEC-31-1996 MAR-31-1996 41,319 0 396,742 (17,685) 24,828 554,072 1,581,663 (385,208) 1,950,878 301,708 769,062 0 0 18,075 786,827 1,950,878 0 626,337 0 443,247 101,959 2,542 12,480 44,894 17,284 27,610 0 0 0 27,610 .39 .39
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