Shares of Kindred Healthcare fell sharply Wednesday after a federal agency said that it planned to reduce its payments to home health care providers next year by $80 million, with even bigger cuts to come.
The Centers for Medicare & Medicaid Services proposed that payments to providers be cut 0.4 percent for fiscal year 2018. The agency also said that it planned to revise its reimbursement model for fiscal 2019, which would cut payments to providers by $950 million, or 4.3 percent.
Kindred’s shares on Wednesday closed at $9.52, down nearly 15 percent. About 2 million shares changed hands, more than double the amount that was traded Tuesday. The S.&P. 500 on Wednesday was up slightly.
Kindred in the first quarter generated about a third of its nearly $1.8 billion revenue in its Kindred at Home Division, up 3.9 percent from the prior year. CEO Benjamin Breier at the time called the results “very encouraging.”
As of March 31, the Louisville-based company had more than 619 Kindred at Home home health, hospice and non-medical home care sites of service.
Shares of Kindred rival Amedisys on Wednesday plunged more than 18 percent.
CMS is still accepting comments on its plans until 5 p.m. Sept. 25.
Kindred, which could not be reached Wednesday afternoon, reported a first-quarter loss of more than $5.7 million. On June 30, it announced that it had signed a definitive agreement to sell its skilled nursing facility business to BM Eagle Holdings for $700 million in cash.
Kindred will release second-quarter earnings on Aug. 4.