Humana, two private equity firms will buy Kindred Healthcare for $4.1 billion
In the latest in a string of deals pairing insurers with healthcare providers, health insurer Humana and two private equity companies will divide and buy long-term care and home healthcare provider Kindred Healthcare for $4.1 billion, the companies announced Tuesday.
Humana, TPG Capital and Welsh, Carson, Anderson & Stowe will split Kindred into two companies, with TPG and Welsh taking over its long-term care hospitals and inpatient rehab facilities.
The two private equity companies and Humana together will operate Kindred’s home health, hospice and community care businesses as a stand-alone company. Humana will own 40% of that company, and the private equity firms will own the rest.
The 40% stake cost Humana $800 million, the insurer said. The private equity firms will have the ability to require Humana to purchase their stake in the home healthcare and hospice company after three years. The deal is expected to close in the summer of 2018.
The announcement comes on the heels of several other proposed mergers and acquisitions between insurers and providers aimed at shifting care away from hospitals and reducing medical spending. The largest is CVS and Aetna, which are combining in a $69 billion deal that hopes to position CVS’ retail stores and medical clinics at the center of patients’ care routines. UnitedHealth Group’s Optum unit also struck a deal to buy dialysis giant DaVita’s physician group.
Kindred is the nation’s largest operator of post-acute facilities in home and hospice care, rehabilitation services and long-term acute care. Its 2016 revenue totaled $7.2 billion. Its home and hospice care segment brought in $2.5 billion of that, while the hospitals and rehab facilities brought in $3.8 billion. It serves patients in 2,475 locations in 45 states.
The company’s board of directors began mulling a sale over the past year. Kindred CEO Benjamin Breier said Humana, with its focus on Medicare Advantage and interest in caring for patients in the home, is a great fit to transform home healthcare, particularly for people with chronic conditions.
“I think it’s just going to be an incredible leg up for them in terms of their ability to really manage their population in way that no other payer in America is going to be able to do,” Breier said in an interview.
After the acquisition, Breier will continue to head up the specialty hospital part of the company, called Kindred Healthcare, as CEO. David Causby, the current executive vice president and president of the home health segment, Kindred at Home, will serve as CEO of that new company.
Breier said the new capital from the private equity firms will allow him to grow the specialty hospital side into “a formidable company” in terms of size and its ability to care for the most medically complex patients at the best price…
Read the full article provided by Shelby Livingston here.