13D Filing: Brigade Capital and Kindred Healthcare Inc (KND)

Exhibit B

March 19, 2018

Benjamin A. Breier

President and Chief Executive Officer

Kindred Healthcare, Inc.

680 South Fourth Street

Louisville, Kentucky 40202

Re:

Acquisition of Kindred Healthcare by TPG Capital, LLC, Welsh, Carson, Anderson & Stowe and Humana Inc. for $9.00 per Share

 
Dear Mr. Breier:

As you know, we are long-term shareholders
of Kindred Healthcare, Inc. (“Kindred” or the “Company”). Funds managed by us presently own 5.7% of the outstanding
shares of Kindred’s common stock.

We write to express our continued opposition
to the proposed acquisition of Kindred by TPG, WCAS and Humana. For the reasons set forth in our December 27, 2017 open letter,
and in light of the Board’s inadequate and misleading proxy disclosures, we intend to vote against the proposed acquisition and
urge other Kindred shareholders to do the same.

We are aware that Institutional Shareholder
Services (“ISS”) issued their report on March 16, 2018, recommending a vote for the proposed transaction. We think it
is telling that ISS highlights concerns over the sales process and the lack of premium offered in the proposed transaction, and
that ISS believes at the current $9 per share purchase price “the acquirer group has the potential to earn a substantial return
on its investment.” We respectfully disagree, however, with ISS’s apprehension about Kindred remaining independent and its
recommendation to Kindred shareholders to accept this inadequate transaction. ISS acknowledges our point that the “Board could
have negotiated a better deal for shareholders, especially after CMS decided not to move forward with its proposal to reduce reimbursement
rates.” ISS, however, appears to place undue weight on management’s and the Board’s self-interested view that remaining independent
outweighs the risks of rewarding Kindred’s existing shareholders by navigating the regulatory environment and managing the Company’s
capital structure. Management has highlighted on numerous investor conference calls that Kindred has made substantial progress
moving past the distractions associated with its business unit restructuring and the complicated divestiture of its skilled nursing
facilities. Building on that positive momentum and factoring in the improved regulatory and tax environment, Kindred is positioned
to remain a strong standalone company, with the tools to drive improved cash flow and significant incremental value for its existing
shareholders. Furthermore, as we discuss below, we think it is important for management to explain to its shareholders (and ISS)
why it made a series of downward adjustments to the financial forecast used in the fairness analysis and discuss in detail how
the Tax Cuts and Jobs Act of 2017 is expected to positively impact Kindred’s unleveraged free cash profile (which was not used
in the fairness opinion analysis) going forward.