J.P. Morgan 35 th Annual Healthcare Conference DRAFT 01/04/17 1p
Forward-Looking Statements This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act ), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act ). These forward-looking statements include, but are not limited to, all statements regarding the ability of Kindred Healthcare, Inc. ( Kindred or the Company ) to exit the skilled nursing facility business and the expected timing of such exit, as well as the Company s ability to realize the anticipated benefits, sale proceeds, cost savings and strategic gains from this initiative, all statements regarding the Company s 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, government investigations, regulatory matters 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 Company s business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends or other financial items, product or services line growth, and expected outcomes of government investigations and other regulatory matters, together with other statements that are not historical facts, are forward-looking statements that are estimates reflecting the best judgment of the Company 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 the Company s expectations as a result of a variety of factors. Such forward-looking statements are based upon 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, performance or plans 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 detailed from time to time in the Company s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission that may affect the Company s plans, results or stock price. Many of these factors are beyond the Company s control. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of 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 to reflect future events or developments, except as may be required by law. Kindred has provided in this presentation certain non-generally accepted accounting principles ( GAAP ) measures for specified periods. A reconciliation of the non-gaap measures to the comparable GAAP measures is included in this presentation. 2
Kindred is one of the Leading Providers of Rehabilitation and Post-Acute Care in the U.S. Kindred is 102,200 dedicated teammates taking care of approximately 1,040,000 patients and residents in more than 2,700 locations in 46 states Our Mission Kindred s mission is to promote healing, provide hope, preserve dignity and produce value for each patient, resident, family member, customer, employee and shareholder we serve. Our Management Philosophy Kindred s management philosophy is to focus on our people, on quality and customer service and our business results will follow. As of October 1, 2016. 3
The Kindred Investment Thesis An aging population is significantly increasing the demand for postacute services The need for higher value post-acute care is becoming increasingly recognized regardless of the pace of evolution toward valuebased payment models Kindred has unparalleled post-acute expertise across the continuum, with national scale, scope, and high quality outcomes Kindred s technology and analytics-enabled care capabilities are in demand by hospital systems and payors Kindred s flexible JV model is a key growth driver and unique in its breadth Kindred s repositioning will enhance future performance, with a focus on higher-growth, less capital-intensive businesses to drive earnings and cash flow growth 4
An Aging Population is Significantly Increasing Demand for Post-Acute Services Number of Americans 65 or Older There are 54 (1) million Medicare beneficiaries and 11,000 (2) are added to the program each day 2010 40 million The number of people 85 and older is expected to triple by 2050 43% (3) (nearly 7 million) will require post-acute care 2030 72 million More than 16 million Medicare Fee-For-Service Patients are discharged annually from Acute Care Hospitals Kindred is there for them. Source: U.S. Census Bureau, 2008 (1) Kaiser Family Foundation: Medicare at a Glance, September 2014. (2) HHS Secretary Sebelius: Senior Health Town Hall, June 11, 2012. (3) Mark Miller, MedPAC Executive Director: Congressional Testimony, June 2013. 5
Post-Acute Care is Vital to Improving Quality and Reducing Costs Nearly half of Medicare patients leaving acute care require post-acute care 10% of Medicare beneficiaries account for nearly 60% of spending (1) solutions to create savings and improved health are vital But today, most post-acute care is not well managed, with high readmissions and lack of care coordination from the hospital to home Institute of Medicine has shown that 73% of the variation in Medicare spending from market to market is attributable to post-acute care As a result, hospital systems and payors are demanding a post-acute care solution (1) Kaiser Family Foundation analysis of the CMS Medicare Current Beneficiary Survey Cost and Use File, 2009. 6
Kindred Has Built a Market-Leading Platform to Thrive in a Rapidly Changing Environment #1 Operator of Home Health and Hospice (1) #1 Operator of Transitional Care Hospitals (1) #1 Operator of Rehabilitation Services (1) $2.5 billion Revenues (2) $2.4 billion Revenues (2) $1.5 billion Revenues (2) 647 sites of service 395 home health, 185 hospice and 67 community care in 40 states (4) 40,368 caregivers serving 130,000 patients daily (4) Kindred House Calls home-based primary care 100 Practitioners in 12 markets (5) 82 Transitional Care Hospitals (3) 6,107 licensed beds (3) 12 Hospital-Based Sub-Acute Units (3) 19 Inpatient Rehabilitation Hospitals with 969 licensed beds (4) 104 hospital-based inpatient rehabilitation units (4) 1,740 sites of service served through 18,376 therapists (4) and Kindred outperforms national benchmarks on key quality indicators (6) 91% of home health locations rated 3 stars or higher in CMS s 5-Star rating system Low readmission rates, high ventilator weaning rates IRFs and ARUs outperformed peers in Functional Improvement Measures (FIM) (1) Ranking based on 2015 revenues. (2) Revenues for the twelve months ended September 30, 2016 (divisional revenues before intercompany eliminations). (3) As of October 1, 2016. (4) As of September 30, 2016. (5) As of December 31, 2016. (6) Kindred Quality Report. 7
National Scale and Presence in Local Integrated Care Markets Positions Kindred to Meet the Growing Demand for Post-Acute Care Kindred s 23 current Integrated Care Markets are among the top 30 MSAs in the U.S. National presence across 46 states Significant patient opportunity for improved care transitions and choice provides revenue synergies from referrals across the combined care delivery platform Transitional Care Hospitals (82) Inpatient Rehabilitation Hospitals (19) Kindred at Home Sites of Service (647) Hospital-Based Inpatient Rehabilitation Units (104) RehabCare External Customers (1,740) National and Regional Support Centers Integrated Care Markets (23) PR As of October 1, 2016. 8
Kindred has Significantly Diversified its Business Offerings and Transformed its Business Mix Revenues (1) YESTERDAY (2010 (2) ) TODAY (3), adjusted to exclude Nursing Center Division (LTM 3Q16) Kindred at Home Hospitals 47% 42% 39% 38% Rehab Nursing Centers 11% Kindred at Home 0% 23% Total: $4.7 billion Total: $6.4 billion Adjusted EBITDA (4) Divisional Mix YESTERDAY (2010 (2) ) 19% TODAY (5), adjusted to exclude Nursing Center Division (LTM 3Q16) 29% Kindred at Home Hospitals Rehab Nursing Centers 14% 67% Kindred at Home 0% 45% 26% Total: $225 million Total: $587 million (1) Revenues before intercompany eliminations for each respective period. See Appendix for reconciliation. (2) Revenues and Adjusted EBITDA (defined below) have not been restated for operations discontinued in the 2013/2014 restructuring. See the Appendix for a summary of amounts as originally reported in the Form 10-K. (3) Includes Kindred revenues for the twelve months ended September 30, 2016. (4) Adjusted earnings before interest, income taxes, depreciation and amortization ( Adjusted EBITDA ) is defined as core EBITDA (as calculated as set forth in the Appendix) after allocating support center overhead based upon percentage of total revenues by division (before intercompany eliminations) for each respective period. See Appendix for reconciliation. (5) Includes Kindred Adjusted EBITDA for the twelve months ended September 30, 2016, after allocating support center overhead based upon percentage of total revenues by division (before intercompany eliminations). 9
The Kindred Solution 10
Kindred is Positioned to Provide Hospital Systems and Payors the Post-Acute Solution They are Demanding Hospital systems and payors want a solution that: Maintains line of sight on patients when they leave hospitals Has a reliable and high-performing postacute care network to improve core performance, care transitions and reduce readmissions Has objective site placement and care management solutions Prepares for the ongoing evolution to valuebased payments Kindred is uniquely positioned for a value-based world 11
Kindred is Developing High-Performance PAC Networks Through Partnerships with Health Systems Create Joint Ventures of PAC assets with Health Systems Convene & manage networks across the post-acute care continuum Kindred Health System Partner JV owned PAC assets Patient discharge (acute care) Kindred/JV PAC assets Kindred at Home Affiliated PAC providers Deploy differentiated Patient Placement and Care Management capabilities enabled by IT and analytics 12
Kindred is Developing Differentiated Capabilities to Enable High-Performance Networks Care Management Network Management Evidence-based site placement, with technology-enabled tool Centralized Contact Center that enables telephonic care management Innovative product development team Network creation and management infrastructure and processes Data integration and reporting across network facilities Kindred s Contact Center will enable comprehensive care management capabilities to support multiple post-acute networks 13
Kindred s Care Management Capabilities Over a Patient s Journey Patient admission Acute care stay (Health system partner) Discharge to post-acute facility Post-acute care stay (Network facility) Discharge to home 1-866 Kindred (performed by Kindred Contact Center) Risk stratification and patient placement recommendation Discharge Planning (performed by Kindred Contact Center) Onsite Care Management supports care transition Onsite Care Management supports care transition Telephonic guidance Driven by evidence Facility selection Facilitates workflows and documentation Manage transition home Telephonic support to discharged patients 14
Kindred Has Joint Venture Experience with Health Systems Across the Country (1) (1) Included: Transitional Care Hospitals IRF Home Health Hospice Care Management (1) The Craig and Shepherd relationships are affiliations. 15
Strengthening the Core 16
Kindred Has Taken Decisive Action to Successfully Execute its Strategy Acquired Gentiva to enable home-based care Divestiture of nursing centers Optimized LTAC portfolio and executing plan to mitigate LTAC criteria Significantly reducing overhead Focus on Higher-Growth, Less Capital-Intensive Businesses 17
Strategic and Financial Value of Nursing Center Divestiture Strategic Value Financial Value (1) Focuses resources on higher-growth, higher-margin and less capitalintensive businesses Exit allows Kindred to build a robust virtual portfolio of SNFs through preferred provider relationships with best-in-class SNF operators in each market Gives our integrated care markets significantly better coverage to support network strategy Expected to be accretive to earnings and cash flow; deleveraging Expected to reduce rent by $90 million/year and capex by $30 million/year After-tax net proceeds from the sale of these assets is expected to range from $100 million to $300 million after transaction costs, severance expenses, and amount payable to Ventas SNF divestiture part of broader company effort to optimize overhead (part of $70 million to $100 million planned reduction) (1) These are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. See Forward-Looking Statements on page 2. 18
Multi-Faceted Strategy to Mitigate LTAC Criteria Post-Intensive Care Patient Strategy (Paid at LTAC Rate) Complex Medical Patient Strategy (Paid at Site-Neutral Rate) Portfolio Repositioning Strategy Hospital and market-specific plans developed and being executed to admit and treat eligible LTAC patients Abundance of eligible LTAC patients not currently using LTACs with no occupancy constraints Acute Care Hospital benefits = enhanced LTAC referrals Lower acuity and length of stay support alternative care models 25-day length of stay requirement does not apply Acceptance of complex medical patients paid at the site-neutral rate is important to referring physicians and hospitals Covering direct care costs supports incremental margin for Kindred Managed Care value opportunity LTAC closures (three in 2016) and divestitures (swap with Select, sale of 12 LTACs to Curahealth) Conversion to other facility types (e.g., managed care hospital) Co-location with other bed types Addition of ancillary outpatient services 19
Positive Early Results of LTAC Criteria Mitigation Repositioning strategy reduced LTAC bed capacity by 14% or 960 beds Same-hospital admissions growth of 1%, 3Q 2016 vs 3Q 2015 Favorable mix and length of stay reduction have yielded an overall increase in revenue per patient day 86% of hospital revenues from all payor sources came from postintensive care patients paid at the LTAC rate for the first full month of criteria (September 2016) 3Q 2016 same-hospital revenues were equivalent year-over-year, post-criteria Multi-Faceted LTAC Mitigation Strategy Has Been Tailored to Specific Hospitals and Market Conditions 20
Summary
Kindred has Significantly Diversified its Business Offerings and Transformed its Business Mix $10.0 $9.0 $8.0 $7.0 $6.0 $5.0 $4.0 $3.0 Core EBITDA Margin (1) Revenue ($ billions) 8.9% 8.1% 7.2% 7.4% 5.2% $7.3 $6.2 $6.2 $5.0 $4.4 (2) (2) 2010 2012 2014 LTM 9/30/16 LTM 9/30/16 (3) (Excluding Nursing Center Division) 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% Revenues (4) YESTERDAY (2010 (2) ) TODAY (3), adjusted to exclude Nursing Center Division (LTM 3Q16) Kindred at Home Hospitals 47% 42% 39% 38% Rehab Nursing Centers 11% Kindred at Home 0% 23% (1) Represents core earnings before interest, income taxes, depreciation and amortization ( EBITDA ) margin as reconciled in the Appendix. (2) Revenues have not been restated for operations discontinued in the 2013/2014 restructuring. See the Appendix for a summary of amounts as originally reported in the Form 10-K. (3) Includes Kindred revenues for the twelve months ended September 30, 2016. (4) Revenues before intercompany eliminations for each respective period. See Appendix for reconciliation. 22
Kindred s Multiple Growth Platforms: Home Health and Hospice Number One Operator of Home Health in U.S. HHHHH $1.7 billion in revenues (LTM 3Q 2016) 395 sites of service in 38 states (1) Number Two Operator of Hospice in U.S. Number two operator of Hospice in U.S. $729 million in revenues (LTM 3Q 2016) 185 sites of service in 31 states (1) 8.5% 7.5% 6.5% 5.5% 4.5% Projected Growth of Medicare Home Health Spend (2) Projected Growth of Hospice Industry (3) 8.5% 7.5% 6.5% 5.5% 4.5% 3.5% 2017 2018 2019 2020 2021 2022 2023 2024 2025 Same-store episode growth, 3Q 2016 vs. 3Q 2015: 6.9% 3.5% 2017 2018 2019 2020 2021 2022 2023 2024 2025 Same-store admission growth, 3Q 2016 vs. 3Q 2015: 8.3% (1) As of September 30, 2016. (2) National Health Expenditures: 2015-2025 as published by the Office of the Actuary of the Centers for Medicare & Medicaid Services. (3) 2016 annual report of the boards of trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. 23
Kindred s Multiple Growth Platforms: IRFs Freestanding IRF Growth (1) $349 24 Kindred has one of the largest Inpatient Rehab Platforms in the country and is poised to continue growing with a robust pipeline of de novo JV IRFs $330 $305 22 $280 $230 $180 $130 $80 $250 19 18 16 $188 $148 13 11 $104 9 2011 2012 2013 2014 2015 LTM 9/30/16 20 18 16 14 12 10 8 LTM 3Q 2016 Revenues $478 million - IRF $349 million - ARU (2) $129 million Locations 123 (3) Revenue ($millions) IRF Locations Same-store discharge growth, 3Q 2016 vs. 3Q 2015: 5.9% (1) Revenue includes Kindred IRFs plus Centerre s (historical preacquisition) revenues for the consolidated entities for each respective period. See Appendix for a reconciliation. (2) An acute rehabilitation unit ( ARU ) is certified as an IRF as it provides acute rehabilitation in a hospital-based setting. (3) As of September 30, 2016. 24
Key Takeaways Demographic trends and the need for higher-value post-acute care aligns with Kindred s strategy Aggressive actions taken by Kindred to reposition assets and develop care management and network management capabilities further enhances Kindred s ability to take advantage of these trends Multiple growth platforms in core service lines and through strategic partnerships position Kindred for success Kindred is Well-Positioned to Become a Unique Post-Acute Benefits Management Company 25
Q & A 26
DRAFT 01/04/17 1p J.P. Morgan 35 th Annual Healthcare Conference Appendix
Explanation of Kindred Non-GAAP Measures In addition to the results provided in accordance with United States GAAP, the Company has provided information in this presentation to compute certain non-gaap measures. The use of these non-gaap measures is not intended to replace the presentation of the Company s financial results in accordance with GAAP. Reconciliations of the non-gaap measures to the most directly comparable GAAP measures are included in the following pages of this presentation. EBITDA: The Company defines EBITDA as earnings before interest, income taxes, depreciation, and amortization, and believes that the presentation of EBITDA is useful to the investors because creditors, securities analysts and investors use EBITDA as a measure of earnings used to compare the performance of companies in the healthcare industry before consideration of the capital structure of fixed assets and financing costs, which can vary significantly among companies. For each of the Company s segments, EBITDA is a measure of performance used by the Company s chief operating decision makers in accordance with Accounting Standard Codification 280 Segment Reporting. In this context, the Company defines segment EBITDA as earnings before interest, income taxes, depreciation, and amortization, excluding litigation contingency expense, impairment charges, restructuring charges, transaction costs, and the allocation of support center overhead. Core EBITDA: The Company calculates core EBITDA by excluding from the most comparable GAAP measure (income (loss) from continuing operations) those charges related to transaction, integration, severance, retirement, retention, impairments, business interruption settlements, research and development, restructuring, debt amendment costs, facility/branch closings, and litigation. Adjusted EBITDA: The Company defines Adjusted EBITDA as core EBITDA after allocating the Company s support center overhead among its operating divisions based upon percentage of total revenues by division (before intercompany eliminations), thereby providing a more meaningful measure of segment performance. The Company s management uses core EBITDA and Adjusted EBITDA as meaningful measures of operational performance, in addition to other measures. In addition, the Company believes these measures are important, because securities analysts and investors use these measures to compare the Company s performance to other companies in the healthcare industry. For both core EBITDA and Adjusted EBITDA, 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 measures of its performance. Operating results presented on a core or adjusted basis 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. 28
Reconciliation of Non-GAAP Measures ($ in thousands) Twelve Year ended 2016 Quarters months ended Revenues by segment: 12/31/2010 (a) Q4 2015 Q1 Q2 Q3 9/30/2016 Hospital division $ 1,973,321 $ 593,593 $ 643,299 $ 633,695 $ 575,323 $ 2,445,910 Kindred at Home: Home health - 425,759 430,035 438,556 449,958 1,744,308 Hospice - 178,325 176,426 185,641 188,575 728,967-604,084 606,461 624,197 638,533 2,473,275 Kindred Rehabilitation Services 504,955 362,161 370,022 365,890 361,498 1,459,571 Nursing center division 2,187,885 273,387 272,227 272,395 270,259 1,088,268 Total revenues before intercompany eliminations 4,666,161 1,833,225 1,892,009 1,896,177 1,845,613 7,467,024 Intercompany eliminations (306,464) (52,276) (54,038) (54,107) (52,086) (212,507) Total revenues $ 4,359,697 $ 1,780,949 $ 1,837,971 $ 1,842,070 $ 1,793,527 $ 7,254,517 (a) Amounts as originally reported on the Company's Form 10-K. 29
Reconciliation of Non-GAAP Measures (continued) ($ in thousands) Nine Twelve Year ended December 31, months ended months ended 2010 2012 2014 Q4 2015 9/30/2016 9/30/2016 Revenues $4,359,697 $6,181,291 $5,027,599 $1,780,949 $5,473,568 $7,254,517 Income (loss) from continuing operations: Operating income (EBITDAR) 574,623 743,630 638,734 197,853 349,957 547,810 Rent 357,372 428,979 313,039 97,823 355,388 453,211 EBITDA 217,251 314,651 325,695 100,030 (5,431) 94,599 Depreciation and amortization 121,552 201,068 155,570 40,362 121,320 161,682 Interest, net 5,845 106,842 164,767 55,664 172,856 228,520 Income (loss) from continuing operations before income taxes 89,854 6,741 5,358 4,004 (299,607) (295,603) Provision (benefit) for income taxes 33,708 39,112 462 (51,980) 311,470 259,490 Income (loss) from continuing operations 56,146 (32,371) 4,896 55,984 (611,077) (555,093) Earnings attributable to noncontrolling interests for continuing operations - (1,043) (18,872) (12,082) (40,341) (52,423) Income (loss) from continuing operations attributable to Kindred (a) $56,146 ($33,414) ($13,976) $43,902 ($651,418) ($607,516) Detail of charges: Severance, employee retention and restructuring costs $2,906 $10,874 $18,581 $2,125 $658 $2,783 Business interruption settlements - - - - (1,309) (1,309) Research and development - - - - 7,227 7,227 Debt amendment - - - - 1,103 1,103 Customer bankruptcy - - 1,857 - - - Facility/branch closings - - - 50 747 797 RehabCare customer contract litigation - - - 12,864-12,864 Consulting fees related to LTAC criteria - - 2,460 - - - Litigation contingency - 5,000 4,600 8,261 2,840 11,101 Restructuring charges - - - 3,288 28,860 32,148 Transaction costs 4,644 2,231 17,983 5,367 6,513 11,880 Impairment charges - 107,899-18,031 338,208 356,239 7,550 126,004 45,481 49,986 384,847 434,833 Core EBITDAR $582,173 $869,634 $684,215 $247,839 $734,804 $982,643 Rent $357,372 $428,979 $313,039 $97,823 $355,388 $453,211 Restructuring charges - rent - - - 889 59,363 60,252 Lease cancellation charges (included in rent expense) - 1,691 247-346 346 Core Rent 357,372 427,288 312,792 96,934 295,679 392,613 Core EBITDA $224,801 $442,346 $371,423 $150,905 $439,125 $590,030 (a) Amounts as originally reported on each of the Company's respective Form 10-K. 30
Reconciliation of Non-GAAP Measures (continued) ($ in thousands) Twelve Year ended months ended Core EBITDA by segment: 12/31/2010 9/30/2016 Hospital division $ 205,237 $ 251,694 Kindred at Home - 351,293 Kindred Rehabilitation Services 45,817 201,696 Nursing center division 105,051 40,288 Core EBITDA before Support Center 356,105 844,971 Support Center (131,304) (254,941) $ 224,801 (a) $ 590,030 (a) Adjusted EBITDA by segment (b): Hospital division $ 149,708 $ 168,185 Kindred at Home - 266,850 Kindred Rehabilitation Services 31,608 151,863 Nursing center division 43,485 3,132 $ 224,801 (a) $ 590,030 (a) (a) See slide 30 for a reconciliation of these amounts to GAAP income (loss) from continuing operations. (b) Support Center overhead allocated based upon percentage of total revenues by division (before intercompany eliminations). 31
Reconciliation of Non-GAAP Measures (continued) ($ in thousands) A reconciliation of combined Kindred Hospital Rehabilitation Services and Centerre revenues for each historical period follows: Year ended December 31, Nine months ended Twelve months ended 2011 2012 2013 2014 2015 Q4 2015 9/30/2016 9/30/2016 Kindred Hospital Rehabilitation Services: Acute rehabilitation units $122,381 $121,145 $120,784 $122,941 $125,972 $31,619 $97,021 $128,640 Inpatient rehabilitation facilities 28,714 57,204 65,484 75,007 305,492 80,470 268,534 349,004 All other hospital-based rehabilitation contract services 78,443 172,435 165,829 176,253 177,658 43,490 139,052 182,542 229,538 350,784 352,097 374,201 609,122 155,579 504,607 660,186 Centerre consolidated IRFs (a) 75,563 90,938 122,666 175,252 - - - - Combined Hospital Rehabilitation Services Revenue $305,101 $441,722 $474,763 $549,453 $609,122 $155,579 $504,607 $660,186 Combined IRF revenue $104,277 $148,142 $188,150 $250,259 $305,492 $80,470 $268,534 $349,004 (a) For Centerre, only periods prior to acquisition are presented, or prior to January 1, 2015. 32
Reconciliation of Non-GAAP Measures (continued) ($ in thousands) A reconciliation of reported revenues to same-hospital revenues for the Hospital Division for each historical period follows: 2015 Quarters 2016 Quarters First Second Third Fourth First Second Third Reported revenues $640,483 $627,206 $579,497 $593,593 $643,299 $633,695 $575,323 Hospitals acquired and sold during 2016 (a) - (16,608) (14,679) (14,695) - (14,346) (13,731) Hospitals closed during 2016 (b) - - (7,376) (7,471) - - (5,447) Hospitals closed during 2015 (c) (5,508) (5,188) (2,160) 498 114 78 (54) Same-hospital revenues $634,975 $605,410 $555,282 $571,925 $643,413 $619,427 $556,091 (a) Five hospitals acquired and three hospitals sold during the second quarter of 2016. (b) Three hospitals closed during the third quarter of 2016. (c) One hospital closed during the second quarter of 2015 and one hospital closed during the third quarter of 2015. 33