Welcome to the Dec. 12 Monday Business Briefing, your private business intelligence digest from Insider Louisville.
Kindred cuts support staff as it exits skilled nursing business
Kindred Healthcare has let go 30 people in Louisville to cut expenses as it begins to exit the skilled nursing facility business.
The Louisville-based hospital and nursing home operator had said in early November that it was leaving the skilled nursing facility business to focus on long-term care hospitals and rehabilitation facilities. In mid-November Kindred announced a $700 million deal to sell 36 skilled nursing facilities. The facilities, which are similar to nursing homes, will remain open and will be staffed by the same employees, and Kindred said it expects no impact on day-to-day care.
However, the company told IL Friday that as it exits the business, it is cutting overhead expenses related to the support of the skilled nursing facilities. As part of those efforts, Kindred eliminated 30 positions at its Louisville Support Center, at 680 S. Fourth St., on Thursday. The center employs about 1,000.
Nationwide, Kindred employs more than 100,000, including about 2,380 in the Louisville area.
Kindred said the employees whose positions were cut “are eligible for rehire if a position becomes available and they are qualified.”
The company also told IL via email that its decision to leave the skilled nursing facility business was difficult, but “strategically important and financially compelling for Kindred, and we are confident it is the right thing to do to succeed as the premiere post-acute provider in the country.”
When Kindred announced plans to change its business model in early November, along with $685 million third-quarter loss, shares plunged nearly 30 percent, to $6.15 from $8.75. A week later, when it announced the $700 million deal, shares spiked nearly 7 percent, to $7. On Friday, Kindred’s shares closed at $7.75, up 16.5 percent for the month. The S.&P. 500 has gained 2.8 percent so far in December. —Boris Ladwig
Pizza and beer delivery concept planned for New Albany
The founder of Big Four Burgers + Beer is at it again, and his latest concept is the kind of thing college students dream of: a pizza joint that delivers not only pies, but beer as well.
Matt McMahan describes District 22 Pizzeria, which he says will be located in an undisclosed spot in New Albany, as a fast-casual pizza place that focuses on carry-out and delivery. Too tired to go out? When you call District 22 for a couple of pepperoni pies, you can also get a case of Bud or a sixer of your favorite craft beer.
McMahan says he has procured a 210 liquor license, which will allow the delivery model. His goal is to stay as competitive as possible on beer prices, while providing moderately priced pizza.
“We’re going to keep it simple, with a Pizza King or Arni’s type of pizza,” he says. “We’re not going to try to compete with Wick’s.”
Village 8 to remain at Dutchmans Lane shopping center, for now
Theater-goers may be happy to hear that the Village 8 in St. Matthews will remain put for the time being.
The news spread after KentuckyOne Health confirmed last week that it no longer planned to buy the 5.3-acre shopping center at 4004 Dutchmans Lane. Village 8 Theatres is the primary tenant of Dupont Village Center.
KentuckyOne told IL in an emailed statement that its priorities had shifted since it secured the option on the property in 2013.
“The health care landscape has changed significantly in Kentucky and nationally over the past four years,” the system said. “As a result, our strategic priorities have evolved, and we no longer have an option to purchase this property.”
IL reached out Metts Company Realtors owner Sandy Metts, who is representing the property owner in the sale, but she did not return calls for comment. The Sotsky Family Limited Partnership currently owns the shopping center, which is valued at $5.4 million.
The Courier-Journal first reported the news last week and quoted Metts as saying that the other prospective buyers are looking at the shopping center. The property could sell in the next couple weeks, she told The C-J.
The deal’s disintegration means that tenants such as Village 8 won’t have to close by the end of this year as originally planned. Businesses will have more time as the property owner tries to find a new buyer.
“We aren’t going anywhere, anytime soon,” said Bryan Senteney, general manager of Village 8 and Baxter Avenue Theatres Filmworks.
KentuckyOne Health, part of Colorado-based Catholic Health Initiatives, was created by the merger of the former Jewish Hospital & St. Mary’s HealthCare and Saint Joseph Health System. Almost since its inception, the nonprofit health system has been plagued by financial difficulties, racking up losses of about $300 million in fiscal years 2010 to 2014, according to IRS records. —Caitlin Bowling
Work begins on new Main Street hotel
Expect to see construction workers coming in and out of 601 W. Main St. soon.
The city issued a building permit last week for interior demolition and renovation work on the five-story building, which is slated to become a boutique hotel. Tennessee-based general contractor The Strauss Company is handling the renovation.
Tennessee-based hotel development and management company Vision Hospitality Group bought the nearly 30,000-square-foot prime piece of real estate for $3.5 million in August. Vision Hospitality Group has developed Hilton and Marriott hotels in multiple states, including Tennessee, Georgia, North Carolina and Colorado.
Vision Hospitality Group declined to reveal the hotel brand, but Ashley Ewing, director of sales and marketing for the company’s lifestyle segment, said it would be a 50-room “upscale, luxury” hotel.
The renovation will include outfitting the basement for a restaurant and bar concept, Ewing said, declining to give more specifics. “It’s too soon for us to tell,” she added.
Construction will take a year, pending no surprises, Ewing said. “It’s always a moving target — especially with historic renovation.”
When asked the estimated project cost, she said Vision Hospitality Group doesn’t release that information.
Ewing could say that the company is working with Louisville-based Via Studio to create the hotel’s brand story and is relying on the local advertising agency’s expertise as it is Vision Hospitality Group’s first foray into the Louisville market.
“Our No. 1 priority is focusing on what makes Louisville unique and really making sure our hotel/bar/lounge/restaurant is telling a Louisville story,” Ewing said. “Louisville is going through kind of another exciting time right now, and we just want to be a part of it.” —Caitlin Bowling
DOJ: Internal documents show Molina unprepared to handle Aetna-Humana assets
The federal government last week undermined claims by Aetna and Humana that their proposed asset sale to Molina Healthcare would address regulators’ worries about the insurance merger’s anti-competitive effects, according to a report by The Wall Street Journal.
Hartford, Conn.-based Aetna and Louisville-based Humana want to merge because they say that together they can offer better health care at lower costs. However, the U.S. Department of Justice filed a lawsuit to block the deal, saying it would reduce competition and increase prices for consumers. The trial began last week.
The insurers have argued that even if the court were to agree with the DOJ that their union would reduce competition, their proposed sale of $117 million worth of assets to Long Beach, Calif.-based Molina, should negate any anti-competitive concerns.
“Molina will be a formidable competitor,” the companies said in pretrial filings.
Internal documents introduced by the DOJ last week undermined that assertion, The WSJ reported, with one Molina board member saying in an email that the company was “woefully underresourced” to manage the Aetna-Humana assets.
In response, Molina CFO John Molina testified last week that the company would make investments and hire more employees to handle the new business, The Journal said.
Aetna CEO Mark Bertolini on Friday testified that the government’s contention that Aetna has reduced its participation on the exchanges in retaliation for the lawsuit is false, according to Reuters.
Bertolini said the company initially expected to break even on the ACA business for the year, but later revised its projection. It now expects to lose $350 million on the Obamacare customers for this year.
“We’ve got to stop the bleeding,” Bertolini said, according to the Reuters report.
Shares of Aetna and Humana declined steadily last week, as broader markets posted gains. Shares of Aetna on Friday closed at $128.91, down 3.4 percent for the week. Humana’s shares closed the week at $203.29, down 4.8 percent. Meanwhile, the S.&P. 500 gained 3.1 percent. —Boris Ladwig
Humane Society adds adoption center and plans main campus renovations
The Kentucky Humane Society has opened its latest adoption center in Shively at the North Dixie Feeders Supply, next to the Kroger Marketplace at 4921 Dixie Highway.
In an email newsletter, the organization said it is the ninth KHS adoption center in a Feeders Supply store and the second new center KHS opened with Feeders Supply this year. Its 20-year partnership with Feeders Supply has resulted in more than 40,000 pet adoptions since 2007, KHS said.
The organization also announced changes to its main campus at 241 Steedly Dr. After Dec. 31, pet adoptions at the main facility will cease, it said, to allow for renovations to expand the admissions areas, so that incoming animals can become ready for adoption at the 10 adoption centers.
In addition, the current adoptions lobby at the main campus will be repurposed to expand the Healthy Pets Program to a five-day-a-week Healthy Pets Clinic. The Healthy Pets Clinic will offer low-cost vaccines and basic preventatives as well as treatment of minor medical needs for local pets, the organization said. KHS anticipates renovations will be completed spring 2017.
“The goal is to help keep pets healthy and out of shelters,” the newsletter said. “Increasingly, KHS is focused on helping pets stay in their homes, so they aren’t surrendered to shelters in the first place. The changes to our main facility will help us better support shelter pets, plus provide needed services to local pet owners and their animals.”-Mickey Meece
Doggie daycare and kennel planned in Jeffersontown
A daycare and kennel will cap off a strip center in Jeffersontown.
The new business is called Dogtopia, a North American chain with more than 40 locations. Because it offers overnight boarding, the company has applied to the city for a conditional use permit to operate at 219 and 221 S. Hurstbourne Parkway.
Dogtopia offers a variety of spa and grooming services, including ear cleanings, baths, nail trimmings, and hair and teeth brushing. The company also offers daily babysitting for dogs and boarding for when owners go out of town.
Postmates jumps into the Louisville market with on-demand delivery
The everything-on-demand delivery chain Postmates has entered the Louisville market, just in time for the holidays.
“We will be in the Highlands, Downtown, Old Louisville/University of Louisville, and Crescent Hill,” said Nicole LeDoux, a communications specialist for Postmates, in an email. “This means you can get your favorites like El Taco Luchador, Mussel & Burger Bar, Feast BBQ, Apple, Chipotle and Starbucks.”
The company, which is based in San Francisco, was founded in 2011. LeDoux said it had a fleet of about 40,000 couriers to deliver across 46 major metropolitan markets in the United States. Postmates has driven nearly $500 million in revenue to local merchants and completed nearly 20 million deliveries to date, she said.
“Unlike the other delivery services, we can bring you wrapping paper, last-minute gifts, or a missing ingredient for your cookies,” LeDoux said. “With the holidays sometimes comes the flu or a hangover from the endless holiday parties, don’t worry, you can have all the elixirs, juices, or medicine you need delivered as well,” she added.