<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
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): October 22, 1997
----------------------------
VENCOR, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-10989 61-1055020
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
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 October 22, 1997, in connection with the third quarter earnings release,
Vencor, Inc. (the "Company") announced that it expects fourth quarter earnings
to approximate $0.40 to $0.45 per share. Excluding the effect of non-recurring
charges, the Company reported earnings per share of $0.51 in the fourth quarter
of 1996. A copy of the press release is included as an exhibit to this filing
and is incorporated herein by reference.
The above statements include forward-looking statements. The Company
cautions investors that any forward-looking statements made by the Company are
not guarantees of future performance. Numerous factors exist which, in some
cases have affected, and in the future could cause results to differ materially
from these expectations. These statements involve risks and uncertainties
concerning the implementation and interpretation of the healthcare reform
legislation and other factors as detailed from time to time in the Company's
filings with the Securities and Exchange Commission, including its Current
Report on Form 8-K dated October 21, 1997.
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 October 22, 1997 relating to downward
earnings estimate for the fourth quarter of 1997.
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: October 22, 1997 By: /s/ W. Bruce Lunsford
-------------------------
W. Bruce Lunsford
Chairman of the Board,
President and Chief
Executive Officer
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Exhibit 99.1
[LOGO OF VENCOR, INC. APPEARS HERE]
Contact: W. Earl Reed, III
Executive Vice President and
Chief Financial Officer
(502) 596-7380
VENCOR REPORTS THIRD QUARTER EARNINGS
EXPECTS TO REPORT LOWER EARNINGS IN FOURTH QUARTER
LOUISVILLE, Kentucky (October 22, 1997) Vencor, Inc. (NYSE: VC) today announced
higher revenues and net income for the third quarter and nine months ended
September 30, 1997.
For the quarter, revenues totaled $844.7 million, up 30% from $650.6
million in the year-earlier period. Excluding an extraordinary charge, income
from operations for the quarter totaled $36.9 million, or $0.52 per fully
diluted share, up 10% from income from operations of $33.6 million, or $0.48 per
fully diluted share, a year ago. For the quarter, Vencor recorded an
extraordinary charge of $346,000, or $0.01 per share, related to the early
extinguishment of debt.
For the nine months, revenues totaled $2.30 billion, up 21% from $1.91
billion in the year-earlier period. Excluding an extraordinary charge, income
from operations for the first nine months of 1997 totaled $107.9 million, or
$1.52 per fully diluted share, up 17% from income from operations of $92.0
million, or $1.30 per fully diluted share, a year ago. For the nine month
period, Vencor recorded an extraordinary charge of $4.2 million, or $0.06 per
share, related to the early extinguishment of debt.
The Company also announced today that it expects fourth quarter
earnings to approximate $0.40 to $0.45 per share. Excluding the effect of non-
recurring charges, the Company reported earnings per share of $0.51 in the
fourth quarter of 1996.
The downward revision in the earnings estimate is based primarily on
management's recently completed analysis of the Balanced Budget Act of 1997 (the
"Budget Act") and the expected impact of such legislation on both its business
and the long-term healthcare industry in general. As the long-term industry
transitions to the new Medicare prospective payment system (scheduled to be
implemented on July 1, 1998), management believes that the volume of ancillary
services provided per patient day to nursing center patients could decline and
that sales of new contracts are likely to slow from historical levels.
Accordingly, management expects that revenue growth rates in its Vencare
contract services business may moderate, which could result in declining
operating margins in the short term. In addition, in an effort to more rapidly
execute its integrated network strategy, the Company expects to accelerate
expenditures for marketing its full-service Vencare ancillary service products
and implementing its clinical and financial information systems beyond
previously anticipated levels. Costs associated with these actions are expected
to negatively impact earnings for the remainder of this year and into 1998.
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W. Bruce Lunsford, Chief Executive Officer, commented that,
"Regulatory changes in the long-term care industry are increasingly requiring
providers to develop cost-effective approaches of providing quality healthcare
services. To meet these changes, our full service Vencare strategy must replace
the fragmented industry practices of the past. Our commitment to accelerate the
integrated network and enhance the systems supporting the network confirms our
belief that this strategy positions us to respond to regulatory and competitive
changes in the industry, including those caused by the Budget Act. While our
profitability within Vencare will be adversely impacted in the short term, I am
confident that changes resulting from the Budget Act have increased our growth
potential over the long term. In addition, the current environment also provides
us with significant opportunities to excel in the nursing center business. As
patient acuity levels in nursing centers rise and our ability to manage costs
becomes more critical, I believe that our nursing center margins could show
considerable improvement."
The above statements include forward-looking statements. The Company
cautions investors that any forward-looking statements made by the Company are
not guarantees of future performance. Numerous factors exist which, in some
cases have affected, and in the future could cause results to differ materially
from these expectations. These statements involve risks and uncertainties
concerning the implementation and interpretation of the healthcare reform
legislation and other factors as detailed from time to time in the Company's
filings with the Securities and Exchange Commission, including its Current
Report on Form 8-K dated October 21, 1997.
Vencor, a long-term healthcare company with over $3 billion in annual
revenues, owns and operates a national network of hospitals, nursing centers and
contract service providers in 46 states.
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VENCOR, INC.
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------------
1997 1996 1997 1996
--------- -------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues...................................... $844,740 $650,551 $2,303,731 $1,911,442
Net income:
Income from operations..................... $ 36,902 $ 33,558 $ 107,894 $ 92,033
Extraordinary loss on debt refinancing..... (346) - (4,195) -
-------- -------- ---------- ----------
Net income........................... $ 36,556 $ 33,558 $ 103,699 $ 92,033
======== ======== ========== ==========
Earnings per common share:
Primary:
Income from operations.................. $ 0.52 $ 0.48 $ 1.52 $ 1.30
Extraordinary loss on debt refinancing.. (0.01) - (0.06) -
-------- -------- ---------- ----------
Net income........................... $ 0.51 $ 0.48 $ 1.46 $ 1.30
======== ======== ========== ==========
Fully diluted:
Income from operations.................. $ 0.52 $ 0.48 $ 1.52 $ 1.30
Extraordinary loss on debt refinancing.. (0.01) - (0.06) -
-------- -------- ---------- ----------
Net income........................... $ 0.51 $ 0.48 $ 1.46 $ 1.30
======== ======== ========== ==========
Shares used in computing earnings
per common share:
Primary................................. 71,266 70,028 70,857 70,800
Fully diluted........................... 71,277 70,028 71,043 70,800
</TABLE>
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VENCOR, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ------------------------
1997 1996 1997 1996
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues......................................... $844,740 $650,551 $2,303,731 $1,911,442
-------- -------- ---------- ----------
Salaries, wages and benefits..................... 479,962 372,524 1,326,341 1,111,547
Supplies......................................... 81,148 64,967 224,509 191,150
Rent............................................. 23,954 19,681 64,685 57,950
Other operating expenses......................... 131,977 105,275 360,698 300,227
Depreciation and amortization.................... 33,385 24,787 87,236 74,426
Interest expense................................. 34,773 11,884 66,107 36,505
Investment income................................ (1,759) (3,132) (5,072) (10,010)
-------- -------- ---------- ----------
783,440 595,986 2,124,504 1,761,795
-------- -------- ---------- ----------
Income from operations before income taxes....... 61,300 54,565 179,227 149,647
Provision for income taxes....................... 24,398 21,007 71,333 57,614
-------- -------- ---------- ----------
Income from operations........................... 36,902 33,558 107,894 92,033
Extraordinary loss on extinguishment of
debt, net of income tax benefit............... (346) - (4,195) -
-------- -------- ---------- ----------
Net income........................... $ 36,556 $ 33,558 $ 103,699 $ 92,033
======== ======== ========== ==========
Earnings per common share and common
equivalent share:
Primary:
Income from operations.................. $ 0.52 $ 0.48 $ 1.52 $ 1.30
Extraordinary loss on extinguishment of
debt................................. (0.01) - (0.06) -
-------- -------- ---------- ----------
Net income........................... $ 0.51 $ 0.48 $ 1.46 $ 1.30
======== ======== ========== ==========
Fully diluted:
Income from operations.................. $ 0.52 $ 0.48 $ 1.52 $ 1.30
Extraordinary loss on extinguishment of
debt................................. (0.01) - (0.06) -
-------- -------- ---------- ----------
Net income........................... $ 0.51 $ 0.48 $ 1.46 $ 1.30
======== ======== ========== ==========
Shares used in computing earnings
per common and common equivalent share:
Primary.................................... 71,266 70,028 70,857 70,800
Fully diluted.............................. 71,277 70,028 71,043 70,800
</TABLE>
Note: Certain prior year amounts have been reclassified to conform with the
current year presentation.
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