The company's earnings guidance for 2013 assumes that sequestration cuts of 2% related to all of its Medicare revenues will begin on April 1, 2013 and that the previously announced exit in 2013 from 54 skilled nursing facilities currently leased from Ventas (VTR) will be reflected as discontinued operations effective January 1, 2013. The earnings guidance also excludes the effect of any other reimbursement changes, any future acquisitions or dispositions, any impairment charges, and any repurchases of common stock. Paul J. Diaz, Kindred's CEO, commented, "The recently enacted American Taxpayer Relief Act of 2012, among other things, provided for two notable changes that will impact our business on April 1, 2013. First, the previously enacted 2% reduction for all Medicare payments, commonly referred to as the sequestration cuts, will be deferred from February 1, 2013 to April 1, 2013, thereby providing some earnings relief from our previous guidance. However, this benefit will be more than offset by the reductions in Medicare payments for rehabilitation therapy services, including those contained in the Taxpayer Relief Act, which are expected to range from $25M-$30M on an annual basis." Diaz also noted, "We are pleased to re-affirm our cash flow guidance for 2013 and would emphasize to investors the significant amount of expected cash flows in excess of our routine and development capital spending in 2013. Along with our recent $200 million credit expansion, our operating cash flows will provide adequate funding for the execution of our strategic plan to reposition the company over the next few years."
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