 Kindred Healthcare Third Quarter Investor Update November 6, 2014 Exhibit 99.3 |
 Forward-Looking Statements 2 This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, statements regarding the proposed business combination transaction between Kindred Healthcare, Inc. (“Kindred” or the “Company”) and Gentiva Health Services, Inc. (“Gentiva”) (NASDAQ:GTIV) (including financing of the proposed transaction and the benefits, results, effects and timing of a transaction), all statements regarding Kindred’s (and Kindred’s and Gentiva’s combined) expected future financial position, results of operations, cash flows, dividends, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management, and statements containing the words such as “anticipate,” “approximate,” “believe,” “plan,” “estimate,” “expect,” “project,” “could,” “would,” “should,” “will,” “intend,” “may,” “potential,” “upside,” and other similar expressions. Statements in this presentation concerning the business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends or other financial items, and product or services line growth of Kindred (and the combined businesses of Kindred and Gentiva), together with other statements that are not historical facts, are forward-looking statements that are estimates reflecting the best judgment of Kindred based upon currently available information. Such forward-looking statements are inherently uncertain, and stockholders and other potential investors must recognize that actual results may differ materially from Kindred’s expectations as a result of a variety of factors, including, without limitation, those discussed below. Such forward-looking statements are based upon management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which Kindred is unable to predict or control, that may cause Kindred’s actual results, performance or plans with respect to Gentiva to differ materially from any future results, performance or plans expressed or implied by such forward-looking statements. These statements involve risks, uncertainties and other factors discussed below and detailed from time to time in Kindred’s filings with the Securities and Exchange Commission (the “SEC”). Risks and uncertainties related to the proposed merger include, but are not limited to, the risk that Gentiva’s stockholders do not approve the merger, potential adverse reactions or changes to business relationships resulting from the announcement or completion of the merger, uncertainties as to the timing of the merger, adverse effects on Kindred’s stock price resulting from the announcement or completion of the merger, competitive responses to the announcement or completion of the merger, the risk that healthcare regulatory, licensure or other approvals and financing required for the consummation of the merger are not obtained or are obtained subject to terms and conditions that are not anticipated, costs and difficulties related to the integration of Gentiva’s businesses and operations with Kindred’s businesses and operations, the inability to obtain, or delays in obtaining, cost savings and synergies from the merger, uncertainties as to whether the completion of the merger or any transaction will have the accretive effect on Kindred’s earnings or cash flows that it expects, unexpected costs, liabilities, charges or expenses resulting from the merger, litigation relating to the merger, the inability to retain key personnel, and any changes in general economic and/or industry-specific conditions. In addition to the factors set forth above, other factors that may affect Kindred’s plans, results or stock price are set forth in Kindred’s Annual Report on Form 10-K and in its reports on Forms 10-Q and 8-K. Many of these factors are beyond Kindred’s control. Kindred cautions investors that any forward-looking statements made by Kindred are not guarantees of future performance. Kindred disclaims any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments. Kindred has provided information in this presentation to compute certain non-GAAP measurements for specified periods. A reconciliation of the non-GAAP measurements to the GAAP measurements is included in this presentation and on Kindred’s website at www.kindredhealthcare.com under the heading “investors.” Additional Information This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This communication may be deemed to be solicitation material in respect of the proposed merger between Kindred and Gentiva. In connection with the proposed merger, Kindred intends to file a registration statement on Form S-4, containing a proxy statement/prospectus, with the SEC. SHAREHOLDERS OF GENTIVA ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT/PROSPECTUS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Investors and security holders will be able to obtain copies of the proxy statement/prospectus as well as other filings containing information about Kindred and Gentiva, without charge, at the SEC’s website, www.sec.gov. Those documents, when filed, as well as Kindred’s other public filings with the SEC, may be obtained without charge at Kindred’s website at www.kindredhealthcare.com. Participants in Solicitation Kindred and its directors and executive officers, and Gentiva and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the holders of Gentiva common stock in respect of the proposed merger. Information about the directors and executive officers of Kindred is set forth in the proxy statement for Kindred’s 2014 Annual Meeting of Shareholders, which was filed with the SEC on April 3, 2014. Information about the directors and executive officers of Gentiva is set forth in the proxy statement for Gentiva’s 2014 Annual Meeting of Shareholders, which was filed with the SEC on March 25, 2014. Investors may obtain additional information regarding the interest of such participants by reading the proxy statement/prospectus regarding the proposed merger when it becomes available. |
 Kindred Healthcare’s Third Quarter – Achievements and Opportunities Continued Progress on Employee Engagement, Quality Assurance, Clinical Outcomes and Patient Satisfaction Measures Across the Enterprise Strong Third Quarter Results and Reaffirming Confidence in 2014 EPS Guidance Continued Progress Advancing Integrated Care Market Strategy and Development of Care Management Capabilities Commencement of Growth Phase of Strategic Plan (Repositioning and Recapitalization Complete) Announced Definitive Agreement to acquire Gentiva, solidifying Kindred’s Position as the Premier Post-Acute Healthcare Services Provider in the U.S. 3 |
 Third Quarter – Continuing Operations (1) ($ millions, except statistics) • Key Q3 operating metrics: Strong revenue and operating income growth, up 6% and 7%, respectively, compared to prior year Improved operating income and operating margins across all divisions, lower interest costs and solid cost controls across the organization driving year-over-year results Hospital same-store volumes up 3% over prior year, cost Per Patient Day (“PPD”) up less than 1% over prior year Strong sequential cash flows with core operating cash flows of $95 million and core free cash flows were $72 million 4 (1) Before certain disclosed items reconciled in the appendix. (2) Prior year EPS of $0.10 is pro forma to include incremental 9.7 million shares issued in the June 2014 equity offering. Actual core EPS for Q3 ‘13 is $0.12. Actual Prior Year % change Revenues $1,243 $1,175 +6% Operating expenses 1,085 1,027 Core operating income (EBITDAR) 158 148 +7 Margin 12.7% 12.6% Net income - core 7 7 +7 Diluted EPS - core $0.11 $0.10 (2) +10 Diluted EPS - reported $0.03 ($0.31) |
 Core Operating Margins (1) Margin Expansion Across Enterprise Reflects Full Recovery from Reimbursement Cuts 5 (1) Before certain disclosed items reconciled in the Appendix. 3Q13 3Q13 3Q13 3Q13 3Q14 3Q14 3Q14 3Q14 20.0% 11.9% 11.0% 4.0% 20.1% 13.1% 11.7% 8.2% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Hospitals Nursing Centers RehabCare Kindred at Home |
 $595 $609 $1,628 $1,642 $1,250 $1,350 $1,450 $1,550 $1,650 $1,750 $450 $500 $550 $600 $650 Q3 '13 Q3 '14 Q3 '13 Q3 '14 Hospital Division $2.5 billion Revenues (1) $527 million Operating Income (2) Transitional Care Hospitals (certified as LTAC hospitals) • 97 Transitional Care Hospitals (3) • 7,145 licensed beds (3) Inpatient Rehabilitation Hospitals (IRFs) • 5 IRFs (3) • 215 licensed beds (3) (1) Revenues for the twelve months ended September 30, 2014 (divisional revenues before intercompany eliminations). (2) Operating income for the twelve months ended September 30, 2014. (3) As of September 30, 2014. (4) Before certain disclosed items reconciled in the Appendix. • Continued clinical success with low rates of rehospitalizations, reduced employee turnover and a strong online reputation • Strong results with same-store admissions increase of 3% and less than 1% growth in core operating costs per patient day • Strong operating income margin of 20.1% (4) 6 Q3 Revenue Revenue ($ millions) Per Patient Day Revenues Q3 Operating Income (4) ($ millions) $119 $122 $100 $110 $120 $130 Q3 '13 Q3 '14 |
 • 2,264 sites of service served through 20,338 therapists (3) • Including 102 hospital-based acute rehabilitation units (3) • RehabCare continues to deliver outstanding clinical results and improved patient functional improvement across sites of service • Year-over-year core operating income and margin improvements • Added 90 net new skilled nursing rehabilitation sites YTD through Q3 2014 $1.3 billion Revenues (1) $146 million Operating Income (2) (1) Revenues for the twelve months ended September 30, 2014 (divisional revenues before intercompany eliminations). (2) Operating income for the twelve months ended September 30, 2014. (3) As of September 30, 2014. 7 Total Sites of Service Productivity 2,139 2,264 0 600 1,200 1,800 2,400 2011 Q3 2014 80.4% 79.6% 0.0% 30.0% 60.0% 90.0% 2011 Q3 2014 |
 Nursing Center Division • 48 Transitional Care Centers (Sub-Acute facilities licensed as SNFs) (3) • 13 Nursing and Rehabilitation Centers (with Transitional Care Units) (3) • 12 Hospital-Based Sub-Acute Units (3) • 38 Skilled Nursing Centers (Traditional SNFs) (3) • Strong operations with low nursing turnover and improved performance on CMS 5-Star Program • Nursing center division core operating income increased 16% (4) primarily due to growth in revenues • Operating margins significantly improved due to increased reimbursement rates, ongoing repositioning and cost control initiatives • Admissions up 4% compared to prior year • Declines in average length of stay (ALOS) continue to weigh on average daily census (ADC) $1.1 billion Revenues (1) $147 million Operating Income (2) (1) Revenues for the twelve months ended September 30, 2014 (divisional revenues before intercompany eliminations). (2) Operating income for the twelve months ended September 30, 2014. (3) As of September 30, 2014. (4) Before certain disclosed items reconciled in the Appendix. 8 Nursing Center Operating Income Margin (4) 11.9% 13.2% 13.8% 14.3% 13.1% 10.0% 12.0% 14.0% 16.0% Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 |
 • High rates of patient satisfaction for Home Health and Hospice with nearly 50% of all home health locations named to HomeCare Elite as top 25% of the nation’s home health agencies • Kindred at Home division delivered 60% revenue growth in the third quarter of 2014 and more than tripled core operating income compared to prior year quarter • Focus on integration efforts has improved margin from 4.0% (3) in Q3 2013 to 8.2% (3) in Q3 2014 • Combination with Gentiva creates largest home health and hospice system in the U.S. 9 • 201 sites of service in 13 states (2) • 4,900 caregivers serving 17,300 patients on a daily basis (2) (1) Annualized based upon revenues (before intercompany eliminations) and operating income for the three months ended September 30, 2014. (2) As of September 30, 2014. (3) Before certain disclosed items reconciled in the Appendix. (4) Operating income for the twelve months ended December 31, 2013. Revenue ($ millions) Operating Income ($ millions) $345 million Revenues (1) $27 million Operating Income (1) (1) (1) (4) $225 $345 $0 $100 $200 $300 $400 2013 2014 $10 $27 $0 $10 $20 $30 2013 2014 |
 Kindred and Gentiva A Compelling Opportunity for American Healthcare and Shareholders 10 |
 Combination Creates One of the Nation’s Premier Healthcare Services Providers 11 Leadership Among Premium Healthcare Service Providers 2014 Wall Street Consensus Revenue ($ in billions) Pro Forma Post-Acute Providers Alternate Site Providers (4) $7.1 $5.5 $3.8 $3.1 $2.4 $6.4 $12.7 $4.4 IPCM DVA EVHC AMSG SCAI The acquisition of Gentiva further strengthens Kindred’s ability to serve patients across the full continuum of care ($ in millions) Kindred Gentiva Pro Forma States (1) 47 40 47 Locations (1) 2,376 493 2,869 Employees (1) 62,600 46,600 109,200 Revenue Guidance/Consensus $5.1 billion (2) $2.0 billion (2) $7.1 billion Patients Per Year (3) 535,000 550,000 1,085,000 $1.2 $2.7 $1.6 (1) As of September 30, 2014. (2) Per Kindred 2014 guidance as provided on November 5, 2014 and 2014 current average analyst consensus estimates for Gentiva. (3) Internal company data. (4) Twelve months ended (LTM) as of June 30, 2014 and pro forma for Skilled Healthcare merger. (2) |
 Revenues (1) $345 MM Total States (3) 13 Average Daily Census (4) 17,300 Total Sites of Service (3) 201 Home Health 141 Hospice 38 Personal Care 22 Total Caregivers (3) 4,900 Revenues (2) $2.0 B Total States (3) 40 Average Daily Census (4) 110,000 Total Sites of Service (3) 493 Home Health 294 Hospice 165 Community Care 34 Total Caregivers (3) 40,500 Revenues (1) (2) $2.3 B Total States 41 Average Daily Census 127,300 Total Sites of Service 694 Home Health 435 Hospice 203 Community Care 56 Total Caregivers 45,400 Kindred at Home Pro Forma Company Combination creates largest home health and hospice system in the United States Gentiva Kindred at Home 12 (1) Annualized based upon revenues for the three months ended September 30, 2014 (divisional revenues before intercompany eliminations). (2) Current average analyst consensus estimate for 2014. (3) As of September 30, 2014. (4) Internal company data for Kindred and investor presentation for Gentiva. Gentiva |
 Gentiva Integration Management Office Integration Operating Principles Integration Operating Principles Prevent disruption to patient care Prevent harm to target revenue streams Retain key talent Meet all reporting obligations Ensure Day 1 Readiness Achieve synergies INPUTS IMO steering committee feedback Future state objectives Integration red flags / anticipated complexities (1) Lessons learned from previous Kindred IMO (1) As identified during due diligence. 13 |
 Defining Day 1 Readiness Day one readiness focuses on the details necessary to bring business functions and processes into alignment at closing. Focus Areas for Day 1 Readiness / Controls: - Payroll Continuity - Stability of revenue cycle functions: - Accounts receivable - Accounts payable - Financial Reporting (i.e. financial suite & systems) - Synergy Capture - Validated synergy - Identified initiatives for realizations - Developed execution plans for realization To be completed Assessment of controls Assessment of systems Consolidation plan complete Ready for Day 1 execution Gentiva Integration Management Office Defining Day One Readiness 14 |
 Synergy Initiative Development Chris Consalus Day 1 Readiness and Transitional Operating Models Employee Retention Functional integration workstreams IT People Services Finance & Procurement Compliance & Legal Operations Sales Applications Networks Hosting Charlie Wardrip / Russ McDonough Payroll Organization Structure Benefits & Comp Selection Process Jeff Jasnoff / Ed Reisz Accounting Tax & Treasury Financial Reporting Internal Audit Purchasing Mark Laemmle / Todd Flowers / Eric Slusser Legal & Regulatory Risk Mgt & Compliance External Affairs Records Retention Kelly Priegnitz / Joe Landenwich / Suzanne Riedman / John Camperlengo Care Mgt Home Health Reimbursement Care Mgt Hospice Managed Care Facilities Jon Rousseau / Todd Higgins / Susan Sender / David Causby Identify Overlaps Plan Organization Structure Plan sales force rationalization David Mikula / Dean Johnson Plans for Revenue Synergies Cross-functional integration workstreams Integration team structure Executive Sponsorship Steve Cunanan, Scott Blanchette IMO Mark Douglas Gentiva IMO (support): Janet Nicoll KPMG Kindred / GTIV Advisory Team: Operations – Jon Rousseau / David Causby Corporate Development – Doug Curnutte Finance – Todd Higgins / Eric Slusser Benefits & Compensation – Andrea Romisher IS/IT – Vance Collins Communications – Susan Moss / Paula Shoemaker We Have Assembled Functional Teams, as Well as Teams That Will Help Us Work On Key Cross-Functional Integration Priorities Communication & Change Management Gentiva’s functional IMO leader indicated in orange font Gentiva Integration Management Office Integration Team Structure 15 IMO Lead: |
 Transaction Summary Purchase Price • $19.50 / share comprising $14.50 in cash and 0.257 shares of Kindred common stock • $1.8 billion total consideration, including assumption of net debt Financial Profile • Pro Forma combined company revenues of approximately $7.1 billion and Operating Income or EBITDAR (1) of $1.0 billion • Combination will enhance Kindred’s Revenue and Margin Growth Profile Accretion • Immediately and significantly accretive to Kindred’s Earnings and Operating Cash Flows (exclusive of transaction and integration costs) Synergies • $70 million in expected cost synergies within two years with approximately $35 million expected in first full year following the closing (2) • Revenue synergies of more than $60 million expected over time (approximately $20 – $30 million expected in the first full year following the closing) Financing • Fully committed financing from Citi and J.P. Morgan • Expect to use a combination of debt, equity and mandatory convertibles to maintain pro forma Adjusted Debt to EBITDAR leverage (3) of approximately 5.5x at closing, assuming half of $70 million run rate expected cost synergies Expected Closing • Q1 2015 – Already received Hart-Scott-Rodino clearance 16 Kindred to acquire Gentiva for $1.8 billion in a combination of cash and stock (1) EBITDAR, or operating income, is defined as earnings before interest, income taxes, depreciation, amortization and rent. EBITDAR was computed by combining the mid point of 2014 guidance for Kindred as provided on November 5, 2014 (see enclosed reconciliation) and 2014 current average analyst consensus estimates for Gentiva. In addition, pro forma EBITDAR includes full run rate expected cost synergies of $70 million, and estimated annualized rent expense for Gentiva of $41 million. (2) Excludes one-time integration costs. (3) Pro forma Adjusted Debt to EBITDAR leverage was computed by dividing a numerator comprised of estimated long-term debt at closing plus pro forma annual rent expense multiplied by six, less unrestricted cash, by a denominator comprised of pro forma EBITDAR. |
 17 Continued Confidence in 2014 Gentiva Performance (1) Per Gentiva November 5, 2014 earnings release, see reconciliation in appendix. (2) Based upon 2014 current average analyst consensus estimates. Sustained Improvement in Financial and Operating Performance Further Validates Our Acquisition Thesis Q3 Reported (1) Confirmed 2014 Guidance (1) Consensus Estimates (mean) (2) Revenue $498.0 million $1.96 - 2.00 billion $1.99 billion Adjusted EBITDA $48.5 million $183-195 million $191 million |
 Combined Company Overview Confirmed Confidence in Gentiva Performance Mid Point of 2014 Guidance/Consensus ($ in millions) Kindred (1) Gentiva (2) Expected Synergies (3) Pro Forma Revenue $5,100 $1,986 $7,086 EBITDAR 697 232 $70 999 EBITDAR Margin 13.7% 11.7% 14.1% Rent 322 41 363 % of revenue 6.3% 2.1% 5.1% EBITDA 375 191 70 636 EBITDA Margin 7.4% 9.6% 9.0% (1) Based upon the midpoint of earnings guidance for Kindred as of November 5, 2014. (2) Based upon 2014 current average analyst consensus estimates. Assumes annualized rent of $41 million. (3) Estimated full run rate of cost synergies expected to be achieved within two years of close. Excludes one-time transaction and integration costs. 18 Gentiva’s announcement of Q3 results and confirmed EBITDA guidance of $183-195 million further validates our acquisition thesis and diligence. |
 Significant and Immediate Accretion to Earnings and Cash Flows 19 Acquisition is significantly accretive at the contemplated transaction value and financing structure on both an EPS and cash flow basis (exclusive of transaction and integration costs) (1) Assumes pro forma share count of 85 million shares reflecting fully diluted shares at end of Q3 2014, share consideration as part of Gentiva transaction and the anticipated equity offering to finance the transaction. Kindred expects the acquisition to be approximately $0.40 to $0.60 accretive to pro forma earnings, on a run rate basis, once Gentiva is fully integrated and expected synergies are fully realized in the second full year following the closing. (2) Based upon 2014 net income guidance for Kindred as provided on November 5, 2014 and 2014 current average analyst consensus estimates for Gentiva and adding back depreciation and amortization per Kindred’s 2014 guidance and adding back depreciation and amortization based upon 2014 current average analyst consensus for Gentiva and annualized stock-based compensation and deferred financing cost amortization for both Kindred and Gentiva. In addition, expected full run rate estimated cost synergies, net of income taxes, of $42 million ($70 million full run rate annual costs and operating synergies less income taxes of $28 million) are included. EPS Accretion (1) $0.40 – $0.60 + Acceleration of cost synergies + Increased revenue through clinical integration + Incremental development activity fueled by combined company cash flows + Enhanced managed care and ACO opportunities from expanded integrated national platform Drivers for Potential Upside Pro Forma Cash Flows ($ millions) Operating Cash Flows before dividends, changes in working capital and capital expenditures (2) $350 – 400 Less: Routine CapEx $120 – 130 As adjusted $230 – 270 Fully Integrated Run Rate |
 Key Highlights • Expected to issue in aggregate ~$620 – $720 million of equity to maintain reasonable leverage • Expect to have shares outstanding of ~85 million at close Financing Plan 20 Sources ($ millions) New debt financing $1,300 – $1,400 New equity and mandatory convertible securities issued $200 – $300 Equity issued to Gentiva shareholders ~$200 Existing bank revolver draw ~$200 $2,000 Uses ($ millions) Purchase Gentiva equity $767 Retire Gentiva debt ~$1,050 Transaction fees & expenses ~$183 $2,000 Aggregate equity financing approximates purchase price of Gentiva equity – Proactively raised $220 million in net proceeds from June 2014 equity offering – Will issue Gentiva shareholders ~$200 million in Kindred stock as part of purchase consideration – Plan to raise ~$200 – $300 million in equity and / or mandatory convertible securities between announcement and close |
 Wrap-Up 21 |
 15% Hospital 35% Nursing Rehab 18% (1) Kindred revenues before intercompany eliminations as reported in the respective Form 10-K. (2) Per Kindred 2014 guidance as provided on November 5, 2014 and 2014 current average analyst consensus estimates for Gentiva. Kindred has Significantly Diversified its Service Offerings & Transformed its Business Mix • Combination with Gentiva uniquely positions Kindred as one of the leading healthcare providers in the U.S. across a broad spectrum of critical services – Fundamentally different company today that is at the forefront of a changing healthcare delivery system – Results in a suite of services better positioned to help patients and drive shareholder value Yesterday Today Tomorrow • A focused operator of nursing facilities and hospitals – Diversified post-acute service offerings through acquisition of RehabCare • Right-sized operational footprint, yielding a focused approach across key integrated care markets – Negotiation with Ventas to exit certain assets and sold others • Acquisition of Gentiva results in a well- balanced portfolio of integrated service offerings – Addition of Gentiva accelerates capabilities to provide population health and take risk 2010 2012 Kindred at Home 0% Kindred at Home 2% LTM 9/30/2014 Kindred at Home 6% Pro Forma Kindred (2) 22 Kindred at Home 32% Nursing 21% Hospital 48% Rehab 25% Nursing 45% Hospital 33% Rehab 20% Nursing 47% Hospital 42% Rehab 11% |
 (1) Based upon current average analyst Consensus estimates for 2014 and 2015 for both Kindred and Gentiva, including $60 million of annual run rate revenue synergies. (2) Before certain disclosed items as reconciled in the appendix. (3) Based upon mid point of 2014 earnings guidance for Kindred as of November 5, 2014. (4) Based upon mid point of 2014 earnings guidance for Kindred as of November 5, 2014 and based upon current average analyst Consensus estimates for Gentiva (includes EBITDA impact of full run rate of $70 million of expected cost synergies). Kindred has Successfully Shifted its Business to Faster Growing Businesses, Improving Margins, Profitability and Operating Cash Flows Improves Margin and Profitability Enhances Growth Profile 2014 – 2015 Revenue Growth (1) 23 EBITDA Margin (4) (2) (3) 3.9% 4.5% 0.0% 2.0% 4.0% 6.0% Kindred Kindred + Gentiva 6.1% 7.4% 9.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Kindred 2011 Kindred 2014 Kindred + Gentiva PF 2014 |
 (1) Based upon mid point of 2014 earnings guidance for Kindred as of November 5, 2014. (2) Based upon mid point of 2014 current average analyst consensus estimates for Gentiva. Assumes annualized rent of $41 million. (3) Leases capitalized using 6x rent, equity represents market cap and funded debt calculated as of December 31 for 2010 and 2012. (4) Rent expense for the twelve months ended September 30, 2014 capitalized at 6x, funded debt and closing share price at September 30, 2014, respectively. (5) Pro forma values shown as of 12/31/2014 and include $1.6bn of additional debt and $363mm of annual rent expense based upon mid point of 2014 earnings guidance for Kindred as of November 5, 2014 and an estimate of annualized rent expense of $41 million for Gentiva. Pro forma value based on fully diluted Kindred shares outstanding plus newly issued shares as part of the transaction at Kindred share price of $21.24 on October 30, 2014. Kindred has Developed a Balanced and Flexible Capital Structure • Increasing traditional debt while deleveraging lease exposure will continue to drive long-term strategic flexibility and create shareholder value – Rent as a percent of revenue declines from 6.3% (1) for Kindred today to 5.2% (1)(2) Yesterday (3) Today (4) Tomorrow (5) • RehabCare transaction materially shifted Kindred’s capital structure, financed by the issuance of traditional financial debt • Recent negotiations with Ventas further reduced capitalized leases by greater than $600 million • Q1 refinancing added capacity, improved terms and Financial Flexibility • Gentiva transaction continues to shift Kindred’s capital structure towards more traditional debt/equity mix • Strong deleveraging profile Equity 22% Debt 11% Cap. Leases 67% Equity 12% Debt 34% Cap. Leases 54% ~5.5x net adj leverage at close with goal to delever below 5.0x over the next two years 24 2010 2012 As of September 30, 2014 Pro Forma Kindred Equity 27% Debt 32% Cap. Leases 41% Equity 25% Debt 44% Cap. Leases 31% |
 Kindred Has Delivered Attractive Financial Performances 25 Operating Margin (1) : 12.7% 14.0% 13.6% 13.7% Share Price & Dividends ($ millions) Closing Share Price Cumulative Dividends Despite sequential years of significant reimbursement cuts and a wholesale restructuring of the Company’s business and capital structure, the Company has delivered on its promise to its patients, customers, teammates and shareholders! $4.2 $4.9 $4.8 $5.1 $7.1 2011 2012 2013 2014 2014 PF Revenue ($ billions) Operating Income (1) ($ millions) $11.77 $10.82 $19.74 $21.24 $0.24 $0.60 12/31/2011 12/31/2012 12/31/2013 10/30/2014 14.1% (1)Before certain disclosed items as reconciled in the Appendix. (2)Reimbursement cuts totaled $70 million. (3)Reflects midpoint of Company’s November 5, 2014 earnings guidance. (4)Assumes Gentiva was acquired on January 1, 2014, and amount for Gentiva is based upon current analyst consensus estimates. In addition, pro forma EBITDAR includes full run rate expected cost synergies of $70 million, and estimated annualized rent expense for Gentiva of $41 million. (2) (3) (3) (4) (4) Kindred and Gentiva Kindred and Gentiva $529 $679 $658 $697 $999 2011 2012 2013 2014 2014 PF |
 Kindred Is Helping to Shape the Future of American Healthcare • As the U.S. population ages, demand for patient-centered healthcare is growing rapidly – and Kindred is pioneering an integrated approach to address this demand – implementing a better model to improve clinical outcomes and patient safety, smooth care transitions and lower costs • Kindred’s “Continue The Care” strategy delivers the services that patients need across the full spectrum of care, from transitional inpatient hospitalization, to post-acute rehab and skilled nursing services, to home health and hospice care • Kindred is growing to implement this strategy and fostering innovation to provide more patients, in more communities, with high quality, integrated, patient- centered care in the lowest-cost setting 26 The merger of Kindred and Gentiva accelerates the development of this integrated approach to patient care, creating significant value for both companies’ patients, employees and shareholders |
 Q & A 27 * * * |
 Appendix 28 * * * * * * * * * * * |
 Explanation of Non-GAAP Measures In addition to the results provided in accordance with GAAP, Kindred Healthcare, Inc. (the "Company") has provided information in this presentation to compute certain non-GAAP measurements for the three months ended September 30, 2014 and 2013, the twelve months ended September 30, 2014, December 31, 2013, 2012 and 2011 before certain charges or on a core basis and on a pro forma basis. A reconciliation of the non-GAAP measurements to the GAAP measurements is included in this presentation. The Company's earnings presentation also includes financial measures referred to as operating income, or EBITDAR, and earnings before interest, income taxes, depreciation and amortization ("EBITDA"). The Company's management uses EBITDAR or EBITDA as meaningful measures of operational performance in addition to other measures. The Company uses EBITDAR or EBITDA to assess the relative performance of its operating divisions as well as the employees that operate these businesses. In addition, the Company believes these measurements are important because securities analysts and investors use these measurements to compare the Company's performance to other companies in the healthcare industry. The Company believes that income (loss) from continuing operations is the most comparable GAAP measure. Readers of the Company's financial information should consider income (loss) from continuing operations as an important measure of the Company's financial performance because it provides the most complete measure of its performance. EBITDAR or EBITDA should be considered in addition to, not as a substitute for, or superior to, financial measures based upon GAAP as an indicator of operating performance. A reconciliation of EBITDAR or EBITDA to income (loss) from continuing operations provided is included in this presentation. The pro forma EBITDAR total of $1.0 billion included in this presentation includes a 2014 EBITDAR estimate of $232 million for Gentiva, which is based upon Gentiva's 2014 current average analyst consensus estimates. In addition, pro forma EBITDAR includes full run rate expected cost synergies of $70 million from the transaction. Also in this presentation, the Company provides the financial measure of free cash flows excluding certain items. The Company recognizes that free cash flows excluding certain items is a non-GAAP measurement and is not intended to replace the presentation of the Company’s cash flows in accordance with GAAP. The Company believes that this non-GAAP measurement provides important information to investors related to the amount of discretionary cash flows that are available for other investing and financing activities. In addition, management uses free cash flows excluding certain items in making decisions related to acquisitions, development capital expenditures, dividends, long-term debt repayments and other uses. The Company believes net cash flows provided by operating activities is the most comparable GAAP measure. Readers of the Company’s financial information should consider net cash flows provided by operating activities as an important measure of the Company’s financial performance because it provides the most complete measure of its performance. Free cash flows excluding certain items should be considered in addition to, not as a substitute for, or superior to, financial measures based upon GAAP as an indicator of operating performance. A reconciliation of net cash flows provided by operating activities to free cash flows excluding certain items is included in this presentation. 29 |
 Reconciliation of Earnings Guidance (a) Continuing Operations ($ Millions, except per chare amounts) 30 As of November 5, 2014 Low High Revenues 5,100 $ 5,100 $ Operating income (EBITDAR) 692 $ 702 $ Rent 322 322 EBITDA 370 380 Depreciation and amortization 157 157 Interest, net 92 92 Income from continuing operations before income taxes 121 131 Provision for income taxes 44 48 Income from continuing operations 77 83 Earnings attributable to noncontrolling interests (18) (18) Income from continuing operations attributable to the Company 59 65 Allocation to participating unvested restricted stockholders (2) (2) Available to common stockholders 57 $ 63 $ Earnings per diluted share 0.98 $ 1.08 $ Shares used in computing earnings per diluted share 58.3 58.3 As of November 5, 2014 Various non-cash expenses included in earnings guidance above: Low High Amortization of stock-based compensation 13 $ 13 $ Amortization of deferred financing fees 8 8 Straight-line rent expense 9 9 (a) The earnings guidance excludes the effect of reimbursement changes, debt refinancing costs, severance, retirement, retention and restructuring costs, customer bankruptcy costs, litigation costs, transaction costs, any further acquisitions or divestitures, any impairment charges, any further issuances of common stock, debt or mandatory convertible equity securities in conjunction with the Gentiva transaction and any repurchases of common stock. |
 Reconciliation of Non-GAAP Measures 31 ($ Thousands) Three months ended September 30, 2014 2013 Detail of charges: Severance, retirement and other restructuring costs ($1,686) ($1,894) Customer bankruptcy (1,857) - Facility closing costs - (6,043) Litigation costs - (23,850) Debt refinancing charges (other operating expenses) - (459) Transaction costs (4,114) (613) Debt refinancing charges (interest expense) - (96) (7,657) (32,955) Income tax benefit 2,391 9,767 Charges net of income taxes (5,266) (23,188) Allocation to participating unvested restricted stockholders 133 - Available to common stockholders ($5,133) ($23,188) Weighted average diluted shares outstanding 62,902 52,323 Diluted loss per common share related to charges ($0.08) ($0.44) Reconciliation of operating income (EBITDAR) before charges: Operating income (EBITDAR) before charges $158,270 $148,245 Detail of charges excluded from core operating results: Severance, retirement and other restructuring costs (1,686) (1,894) Customer bankruptcy (1,857) - Facility closing costs - (6,043) Litigation costs - (23,850) Debt refinancing charges (other operating expenses) - (459) Transaction costs (4,114) (613) (7,657) (32,859) Reported operating income (EBITDAR) $150,613 $115,386 Reconciliation of income from continuing operations before charges: Amounts attributable to Kindred stockholders: Income from continuing operations before charges $7,040 $6,585 Charges net of income taxes (5,266) (23,188) Reported income (loss) from continuing operations $1,774 ($16,603) Reconciliation of diluted income per common share from continuing operations before charges: Diluted income per common share before charges (a) $0.11 $0.12 Charges net of income taxes (0.08) (0.44) Other - 0.01 Reported diluted income (loss) per common share from continuing operations $0.03 ($0.31) Weighted average diluted shares used to compute income per common share from continuing operations before charges 62,902 52,333 Pro forma diluted income per common share before charges $0.10 Weighted average diluted shares used to compute pro forma income per common share from continuing operations before charges (b) 61,954 Reconciliation of effective income tax rate before charges: Effective income tax rate before charges 32.4% 30.5% Impact of charges on effective income tax rate 1.0% -1.3% Reported effective income tax rate 33.4% 29.2% (a) (b) For purposes of computing diluted earnings per common share before charges, income from continuing operations before charges was reduced by $0.2 million for both the three months ended September 30, 2014 and 2013, and $1.2 million and $1.4 million for the nine months ended September 30, 2014 and 2013, respectively, for the allocation of income to participating unvested restricted stockholders. Includes the incremental 9.7 million shares, on a weighted average basis, issued in connection with the Company's equity offering completed in June 2014. |
 Reconciliation of Non-GAAP Measures (continued) 32 ($ Thousands) Twelve 2013 Quarters 2014 Quarters Months ended First Second Third Fourth First Second Third Sept. 30, 2014 Revenues: Hospital division 657,814 $ 606,604 $ 594,154 $ 606,988 $ 646,458 $ 632,156 $ 609,452 $ 2,495,054 $ Nursing center division 270,205 264,847 265,696 270,080 277,902 280,255 279,561 1,107,798 Rehabilitation division: Skilled nursing rehabilitation services 258,750 249,647 245,330 243,280 254,255 253,989 247,042 998,566 Hospital rehabilitation services 74,523 69,777 68,296 74,017 73,964 75,324 74,808 298,113 333,273 319,424 313,626 317,297 328,219 329,313 321,850 1,296,679 Care management division 51,621 53,039 53,801 66,466 87,704 87,986 86,186 328,342 1,312,913 1,243,914 1,227,277 1,260,831 1,340,283 1,329,710 1,297,049 5,227,873 Eliminations: Skilled nursing rehabilitation services (28,657) (28,660) (28,151) (28,157) (29,646) (30,031) (30,788) (118,622) Hospital rehabilitation services (23,609) (23,223) (22,520) (22,123) (23,233) (22,855) (22,172) (90,383) Nursing centers (1,213) (1,001) (1,161) (875) (662) (860) (776) (3,173) (53,479) (52,884) (51,832) (51,155) (53,541) (53,746) (53,736) (212,178) 1,259,434 $ 1,191,030 $ 1,175,445 $ 1,209,676 $ 1,286,742 $ 1,275,964 $ 1,243,313 $ 5,015,695 $ Income (loss) from continuing operations: Operating income (loss): Hospital division 147,493 $ 129,366 $ 112,483 $ 126,788 $ 145,395 $ 132,878 $ 121,744 $ 526,805 $ Nursing center division 29,145 36,018 31,505 35,585 38,471 36,880 36,179 147,115 Rehabilitation division: Skilled nursing rehabilitation services 13,239 21,623 (7,209) 14,260 18,328 19,982 17,552 70,122 Hospital rehabilitation services 18,132 19,573 18,215 18,005 19,820 20,084 18,273 76,182 31,371 41,196 11,006 32,265 38,148 40,066 35,825 146,304 - Care management division 2,786 3,961 1,085 2,131 4,697 7,065 6,789 20,682 Corporate: Overhead (45,585) (43,196) (39,157) (48,557) (44,050) (48,365) (45,173) (186,145) Insurance subsidiary (509) (384) (482) (539) (406) (443) (637) (2,025) (46,094) (43,580) (39,639) (49,096) (44,456) (48,808) (45,810) (188,170) Impairment charges (187) (438) (441) (76,127) - - - (76,127) Transaction costs (944) (108) (613) (447) (683) (4,496) (4,114) (9,740) Operating income (EBITDAR) 163,570 166,415 115,386 71,099 181,572 163,585 150,613 566,869 Rent (76,519) (77,324) (76,762) (80,921) (81,048) (80,209) (80,192) (322,370) EBITDA 87,051 89,091 38,624 (9,822) 100,524 83,376 70,421 244,499 Depreciation and amortization (41,598) (38,554) (36,507) (37,547) (39,337) (39,442) (39,023) (155,349) Interest, net (28,074) (27,600) (24,389) (23,900) (25,616) (78,081) (22,173) (149,770) Income (loss) from continuing operations before income taxes 17,379 22,937 (22,272) (71,269) 35,571 (34,147) 9,225 (60,620) Provision (benefit) for income taxes 6,505 9,208 (6,510) (20,522) 13,585 (13,082) 3,079 (16,940) 10,874 $ 13,729 $ (15,762) $ (50,747) $ 21,986 $ (21,065) $ 6,146 $ (43,680) $ |
 33 ($ Thousands) Reconciliation of Non-GAAP Measures (continued) Three months ended September 30, 2014 Charges Severance Before and other Customer Transaction As charges restructuring bankruptcy costs Total reported Income from continuing operations: Operating income (loss): Hospital division 122,361 $ (617) $ - $ - $ (617) $ 121,744 $ Nursing center division 36,662 (483) - - (483) 36,179 Rehabilitation division: Skilled nursing rehabilitation services 17,390 162 - - 162 17,552 Hospital rehabilitation services 20,130 - (1,857) - (1,857) 18,273 37,520 162 (1,857) - (1,695) 35,825 Care management division 7,110 (321) - - (321) 6,789 Corporate: Overhead (44,746) (427) - - (427) (45,173) Insurance subsidiary (637) - - - - (637) (45,383) (427) - - (427) (45,810) Transaction costs - - - (4,114) (4,114) (4,114) Operating income (EBITDAR) 158,270 (1,686) (1,857) (4,114) (7,657) 150,613 Rent (80,192) - - - - (80,192) EBITDA 78,078 (1,686) (1,857) (4,114) (7,657) 70,421 Depreciation and amortization (39,023) - - - - (39,023) Interest, net (22,173) - - - - (22,173) Income from continuing operations before income taxes 16,882 (1,686) (1,857) (4,114) (7,657) 9,225 Provision for income taxes 5,470 (923) (1,017) (451) (2,391) 3,079 11,412 $ (763) $ (840) $ (3,663) $ (5,266) $ 6,146 $ |
 34 Reconciliation of Non-GAAP Measures (continued) ($ Thousands) Three months ended September 30, 2013 Charges Severance Before and Facility Debt Transaction As charges retirement closing Litigation refinancing costs Total reported Income (loss) from continuing operations: Operating income (loss): Hospital division 118,710 $ - $ (5,527) $ (700) $ - $ - $ (6,227) $ 112,483 $ Nursing center division 31,569 - (64) - - - (64) 31,505 Rehabilitation division: Skilled nursing rehabilitation services 15,941 - - (23,150) - - (23,150) (7,209) Hospital rehabilitation services 18,503 (288) - - - - (288) 18,215 34,444 (288) - (23,150) - - (23,438) 11,006 Care management division 2,138 (601) (452) - - - (1,053) 1,085 Corporate: Overhead (37,693) (1,005) - - (459) - (1,464) (39,157) Insurance subsidiary (482) - - - - - - (482) (38,175) (1,005) - - (459) - (1,464) (39,639) Impairment charges (441) - - - - - - (441) Transaction costs - - - - - (613) (613) (613) Operating income (EBITDAR) 148,245 (1,894) (6,043) (23,850) (459) (613) (32,859) 115,386 Rent (76,762) - - - - - - (76,762) EBITDA 71,483 (1,894) (6,043) (23,850) (459) (613) (32,859) 38,624 Depreciation and amortization (36,507) - - - - - - (36,507) Interest, net (24,293) - - - (96) - (96) (24,389) Income (loss) from continuing operations before income taxes 10,683 (1,894) (6,043) (23,850) (555) (613) (32,955) (22,272) Provision (benefit) for income taxes 3,257 (2,044) (5,805) (756) (599) (563) (9,767) (6,510) 7,426 $ 150 $ (238) $ (23,094) $ 44 $ (50) $ (23,188) $ (15,762) $ |
 Reconciliation of Non-GAAP Measures (continued) ($ Thousands) 35 2013 2012 2011 Detail of charges: One-time bonus (19,842) $ $ - $ - Severance, retirement and other restructuring costs (12,558) (8,730) (18,259) Litigation costs (30,850) (5,000) - Impairment charges (76,082) (107,899) (73,554) Transaction costs (2,112) (2,231) (33,937) Lease cancellation charges (rent expense) - (1,691) (1,819) Debt refinancing charges (interest expense) (1,461) - (13,802) (142,905) (125,551) (141,371) Income tax benefit 43,893 12,795 34,427 Charges net of income taxes (99,012) (112,756) (106,944) Allocation to participating unvested restricted stockholders - - - Available to common stockholders ($99,012) ($112,756) ($106,944) Reconciliation of EBITDAR before charges: Operating income (EBITDAR) before charges $657,914 $679,488 $528,902 Rent 311,526 303,564 276,540 EBITDA 346,388 375,924 252,362 Detail of charges excluded from core operating results: One-time bonus (19,842) - - Severance, retirement and other restructuring costs (12,558) (8,730) (18,259) Litigation costs (30,850) (5,000) - Impairment charges (76,082) (107,899) (73,554) Transaction costs (2,112) (2,231) (33,937) (141,444) (123,860) (125,750) Reported operating income (EBITDAR) $516,470 $555,628 $403,152 Reconciliation of income from continuing operations before charges: Amounts attributable to Kindred stockholders: Income from continuing operations before charges $53,216 $65,891 $40,482 Charges net of income taxes (99,012) (112,756) (106,944) Reported loss from continuing operations ($45,796) ($46,865) ($66,462) |
 Three months ended September 30, 2014 2013 Reconciliation of net cash flows provided by operating activities to free cash flows: Net cash flows provided by operating activities $90,039 $110,750 Adjustments to remove certain payments (including payments made for discontinued operations) included in net cash flows provided by operating activities: Capitalized lender fees related to debt refinancing - 4,589 Severance, retirement and retention 1,271 1,181 Transaction costs 4,565 6,362 5,836 12,132 Benefit of reduced income tax payments resulting from certain payments (1,269) (3,013) 4,567 9,119 Net cash flows provided by operating activities excluding certain items 94,606 119,869 Less: Routine capital expenditures (21,263) (23,152) Development capital expenditures (1,570) (3,235) (22,833) (26,387) Free cash flows excluding certain items $71,773 $93,482 Reconciliation of Non-GAAP Measures (continued) ($ Thousands) 36 |
 Gentiva Non-GAAP Disclosure (1) 37 Third quarter 2014 Adjusted EBITDA $48.5 Cost savings initiatives and acquisition and integration activities (0.5) Impact of closed locations (0.3) Impact of merger related expenses (1.6) EBITDA 46.1 Depreciation and Amortization (7.3) Interest Expense and Other, net (24.7) (Loss)/Income Before Income Taxes 14.1 Income Tax Benefit / (Expense) (5.6) Equity in net loss of CareCentrix (0.5) Net (Loss)/Income 8.0 Less: Net Income Attributable to Noncontrolling Interests - Net (Loss) / Income Attributable to Gentiva Shareholders $8.0 A reconciliation of Adjusted EBITDA and adjusted net income attributable to Gentiva shareholders to net income, the most directly comparable GAAP measure, is not accessible on a forward-looking basis without unreasonable effort due to inherent difficulities in predicting the charges for cost savings initiatives and acquisition and integration activities, the results of discontinued operations and the impact of any future acquisitions or divestitures, which can fluctuate significantly and may have a significant impact on net income. (1) Per Gentiva November 5, 2014 earnings release. ($ Millions) (1) |
 Kindred Healthcare Third Quarter Investor Update November 6, 2014 |