Kindred Healthcare reports financial results for the third quarter of 2009

Kindred Healthcare, Inc. (the “Company”) (NYSE:KND) today announced its operating results for the third quarter ended September 30, 2009.

Third Quarter Highlights:

• Consolidated revenues rose 6% to $1.1 billion

--Each operating division reported revenue growth compared to last year

• Diluted earnings per share reported at $0.14 compared to last year’s $0.05
• Hospital operating income grew 21% in the third quarter

-- Both reported and same-store admissions grew 4% compared to last year’s third quarter

• Nursing center results were in line with expectations

-- Revenue quality mix improved to 58.1% from 56.6% in the third quarter of 2008

• Peoplefirst rehabilitation services reported continued revenue growth and productivity gains

--Quarterly revenues were up 15% from last year’s third quarter; operating income grew 47%

• Financial liquidity strengthened during the quarter

--Third quarter operating cash flows surged to $53 million from $7 million last year

-- Accounts receivable days outstanding declined to 56.8 from 63.0 at September 30, 2008

--Long-term debt, net of excess cash, declined to $220 million at September 30, 2009 compared to $329 million at September 30, 2008

Continuing Operations

Consolidated revenues for the third quarter ended September 30, 2009 totaled $1.1 billion, an increase of 6% from last year’s third quarter. Income from continuing operations for the third quarter of 2009 totaled $5.4 million or $0.14 per diluted share compared to $2.1 million or $0.05 per diluted share in the third quarter last year.

As expected, the Company recorded a $1.7 million or $0.04 per diluted share favorable income tax adjustment in the third quarter of 2009. This adjustment was included in the Company’s previously issued third quarter earnings guidance.

Operating results for the third quarter of 2008 included certain items that, in the aggregate, reduced net income by $2.3 million or $0.06 per diluted share.

For the nine months ended September 30, 2009, consolidated revenues increased 5% to $3.2 billion compared to the first nine months of 2008. Income from continuing operations totaled $46.3 million or $1.18 per diluted share for the first nine months of 2009 compared to $38.8 million or $0.98 per diluted share in the same period a year ago.

Consolidated operating results for the first nine months of 2008 included certain items that, in the aggregate, increased net income by approximately $1.7 million or $0.04 per diluted share.