Seniors Housing Weekly Update - Skilled Nursing Companies Under Census Pressures

August 6, 2013

 
August 6, 2013. 60 Seconds with Steve Monroe. Skilled Healthcare Group and Kindred Healthcare both reported declines in patient days, but investors had very different reactions to the results at the two companies.

Skilled Nursing Companies Under Census Pressures

OUCH. Investors never like it when companies miss quarterly earnings estimates, but when it is a significant miss, watch out. Such was the case with Skilled Healthcare Group which just hasn’t seemed to be able to get on track ever since it announced its “strategic alternatives” initiative way back in the spring of 2011…just before CMS dropped the hammer on Medicare reimbursement. Revenues declined, patient days declined, year-over-year margins declined, and patients moved from traditional Medicare to the lower daily rate Medicare Advantage program. All of this resulted in Skilled Healthcare’s shares plummeting by18% in early trading, only to make up a few percentage points later in the day.
Kindred Healthcare was another story. Although it reported somewhat weak patient volumes and lower than expected revenues, operating margins picked up and perhaps cost controls are easier with the hyper focus on its 21 Integrated Care Markets. And investor reaction? After a quick 2% drop in price, investors sent the shares up to a new 52-week high.

 

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