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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 26, 1999
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VENCOR, INC.
(Exact name of registrant as specified in its charter)
Delaware 001-14057 61-1323993
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
3300 Aegon Center
400 West Market Street
Louisville, Kentucky
(Address of principal executive offices)
40202
(Zip Code)
Registrant's telephone number, including area code: (502) 596-7300
Not Applicable
(Former name or former address, if changed since last report.)
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Items 1-4. Not Applicable.
Item 5. Other Information.
On January 26, 1999, Vencor, Inc. (the "Company") announced that it expects
earnings for the fourth quarter, exclusive of unusual transactions, to be
substantially lower than the third quarter of 1998. Excluding the effect of
unusual transactions and a change in the effective tax rate, the Company
reported a loss of $0.02 per share for the third quarter ended September 30,
1998.
Based on preliminary results, operating results for the fourth quarter in
each of the Company's three operating divisions are expected to be below
management's expectations. While volume trends in both the hospitals and the
nursing centers have improved over the results achieved in the third quarter of
this year, operating costs have increased. In addition, Vencare revenues are
expected to decline in the fourth quarter compared to those reported in the
third quarter.
The Company also announced that it expects that reported 1998 results will
be impacted adversely by certain recurring year-end adjustments, the most
significant of which relates to an increase in the provision for bad debts for
its nursing center and Vencare businesses which could aggregate approximately
$20 million. Adjustments to other accruals, as well as balance sheet
adjustments related to The Hillhaven Corporation, TheraTx, Inc. ("TheraTx") and
Transitional Hospitals Corporation mergers, are also expected to impact
negatively fourth quarter results.
Certain litigation assumed in connection with the TheraTx acquisition has
been recently settled. The settlement totaled approximately $16 million, of
which approximately one-half was previously recorded as part of the TheraTx
purchase price. The remainder, as well as a provision for legal fees, will be
charged to earnings in the fourth quarter.
The Company also stated that certain additional adjustments may be recorded
in connection with asset valuations in the fourth quarter, including a write-
down of its investment in a nursing center in Wisconsin and the previously
announced write-down of its investment in Behavioral Healthcare Corporation.
The Company also is reviewing the expected recoverability of recorded amounts of
goodwill and deferred tax assets at year end and may record a fourth quarter
charge based on the results of the review.
In addition, the Company announced that it may be required to renegotiate
its bank credit facility since the previously discussed operating results and
adjustments may result in certain covenant violations. The Company is in
discussions with its lead banks and anticipates that it will successfully
conclude its negotiations prior to releasing its financial results for 1998.
The Company is current with respect to its payment obligations under its debt
agreements.
At this time, the Company has not completed its analysis of operating
results and year-end adjustments, nor has the annual independent audit been
completed. Accordingly, other year-end accounting issues may arise prior to the
Company's formal earnings release.
Certain statements set forth above, including, but not limited to,
statements containing the words "anticipates", "expects", "will", "may" and
similar words constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements are based on management's current expectations and include known
2
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and unknown risks, uncertainties and other factors, many of which the Company is
unable to predict or control, that may cause the Company's actual results or
performance to materially differ from any future results or performance
expressed or implied by such forward-looking statements. These statements
involve risks, uncertainties and other factors detailed from time to time in the
Company's filings with the Securities and Exchange Commission. Such factors may
include, without limitation, the increase in the Company's cost of borrowing,
its ability to attract patients and the effect of healthcare reform and
legislation on the Company's business strategy and operations. The Company
cautions investors that any forward-looking statements made by the Company are
not guarantees of the future performance. The Company disclaims any obligation
to update any such factors or to announce publicly the results of any revisions
to any of the forward-looking statements included herein to reflect future
events or developments
A copy of the press release is included as an exhibit to this filing and is
incorporated herein by reference.
Item 6. Not Applicable.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
Exhibit 99.1 Press Release dated January 26, 1999.
Items 8-9. Not Applicable.
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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 hereunto duly authorized.
VENCOR, INC.
Dated: January 26, 1999 By: /s/ Richard A. Schweinhart
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Richard A. Schweinhart
Senior Vice President and
Chief Financial Officer
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Exhibit 99.1
[Logo of Vencor, Inc. appears here]
CONTACT: Richard A. Schweinhart
Senior Vice President and Chief Financial Officer
(502) 596-7379
Richard A. Lechleiter
Vice President of Finance,
Corporate Controller and Treasurer
(502) 596-7734
Media Inquiries
Susan E. Moss
Vice President, Corporate Communications
(502) 596-7296
FOR IMMEDIATE RELEASE
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VENCOR ANNOUNCES FOURTH QUARTER EXPECTATIONS
LOUISVILLE, Ky. (Jan. 26, 1999) - Vencor Inc. (NYSE: VC) today announced that it
expects earnings for the fourth quarter, exclusive of unusual transactions, to
be substantially lower than the third quarter of 1998. Excluding the effect of
unusual transactions and a change in the effective tax rate, the Company
reported a loss of $0.02 per share for the third quarter ended September 30,
1998.
Operating results for the fourth quarter in each of the Company's three
operating divisions are expected to be below management's expectations. While
volume trends in both the hospitals and the nursing centers have improved over
the results achieved in the third quarter of this year, operating costs have
increased. In addition, Vencare revenues are expected to decline in the fourth
quarter compared to those reported in the third quarter. More detailed
information, including segment reporting, will be available at the time of the
Company's formal release of year-end results.
Vencor also announced that it expects that reported 1998 results will be
impacted adversely by certain recurring year-end adjustments, the most
significant of which relates to an increase in the provision for bad debts for
its nursing center and Vencare businesses which could aggregate approximately
$20 million. Adjustments to other accruals, as well as balance sheet
adjustments related to the Hillhaven, TheraTx and Transitional mergers, are also
expected to impact negatively fourth quarter results.
Certain shareholder litigation assumed in connection with the TheraTx
acquisition has been recently settled. The settlement totaled approximately $16
million, of which approximately one-half was previously recorded as part of the
TheraTx purchase price. The remainder, including a provision for legal fees,
will be charged to earnings in the fourth quarter.
The Company also stated that certain additional adjustments may be recorded
in connection with asset valuations in the fourth quarter, including a write-
down of its investment in a nursing
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center in Wisconsin and the previously announced write-down of its investment in
Behavioral Healthcare Corporation. The Company also is reviewing the expected
recoverability of recorded amounts of goodwill and deferred tax assets at year
end and may record a fourth quarter charge based on the results of the review.
In addition, the Company announced that it may be required to renegotiate
its bank credit facility since the previously discussed operating results and
adjustments may result in certain covenant violations. The Company is in
discussions with its lead banks and anticipates that it will successfully
conclude its negotiations prior to releasing its financial results for 1998.
The Company is current with respect to its payment obligations under its debt
agreements.
At this time, the Company has not completed its analysis of operating
results and year-end adjustments, nor has the annual independent audit been
completed. Accordingly, other year-end accounting issues may arise prior to the
Company's formal earnings release.
Edward L. Kuntz, newly appointed Chairman and Chief Executive Officer,
commented, "With the help of our independent auditors, we are conducting a
rigorous review of the Company's financial condition. While our fourth quarter
results will suffer from the operational performance and year-end adjustments,
we are now positioned to move forward. We are proceeding aggressively to
address the challenges presented to our three business lines by a difficult
industry environment. In addition, we have a team in place that is committed to
ensuring the success for Vencor as a premier provider of long-term health care
services across the country."
Vencor is a long-term healthcare provider operating hospitals, nursing
centers and contract ancillary services in 46 states.
Certain statements made in this press release, including, but not limited
to, statements containing the words "anticipates", "expects", "will", "may" and
similar words constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements are based on management's current expectations and include known and
unknown risks, uncertainties and other factors, many of which the Company is
unable to predict or control, that may cause the Company's actual results or
performance to materially differ from any future results or performance
expressed or implied by such forward-looking statements. These statements
involve risks, uncertainties and other factors detailed from time to time in the
Company's filings with the Securities and Exchange Commission. Such factors may
include, without limitation, the increase in the Company's cost of borrowing,
its ability to attract patients and the effect of healthcare reform and
legislation on the Company's business strategy and operations. The Company
cautions investors that any forward-looking statements made by the Company are
not guarantees of the future performance. The Company disclaims any obligation
to update any such factors or to announce publicly the results of any revisions
to any of the forward-looking statements included herein to reflect future
events or developments.
