US healthcare provider Humana has signed a definitive agreement to acquire 40 percent stake in the homecare business of Kindred Healthcare for around $800 million.
Humana will own 40 percent of Kindred at Home, a division of Kindred Healthcare, with the remaining 60 percent owned by a new entity owned by private equity firms TPG Capital (TPG) and Welsh, Carson, Anderson & Stowe (WCAS).
TPG and WCAS, along with Humana are jointly creating a consortium to purchase all of the outstanding and issued securities of Kindred Healthcare. Humana will have no economic interest in the Specialty Hospital company formed by TPG and WCAS following the closing of the transaction.
The implied enterprise value of Kindred at Home is $3.15 billion before these expenses. Currently, nearly 40,000 caregivers serve approximately 130,000 patients daily in Kindred at Home with annual revenues of approximately $2.5 billion.
The transaction will provide the company with extensive geographic coverage, with approximately 65 percent overlap with Humana’s individual Medicare Advantage membership.
"The acquisition of a minority interest in Kindred at Home, the largest home health company in the country with significant overlap with Humana membership, brings to us an experienced, well-respected home health provider with robust access to extensive clinical capabilities that will allow us to accelerate our strategy to more deeply integrate with our members’ lifestyles," said Bruce Broussard, Humana’s president and chief executive officer.
"We are excited about the opportunity this acquisition provides to advance our vision for integrated care delivery, as we continue to deliver our Humana At Home capabilities while building a transformative platform for the future. We believe that care in the home is a vital element of improving the health of seniors living with chronic conditions, allowing them to receive services in the comfort of their home, with less time in more costly institutional settings."
William Fleming, Humana’s president - Healthcare Services, added: "We look forward to transforming post-acute care through a value-based approach that will deliver improved clinical outcomes, ultimately lowering medical costs. We believe this work will lead to reduced hospitalizations, reduced emergency room visits, and allow physicians and clinicians to extend their care all the way to the patient’s home."
David Causby, currently executive vice president and president of Kindred at Home, will serve as chief executive officer of Kindred at Home.
The transactions, which are anticipated to close in the summer of 2018, are subject to customary state and federal regulatory approvals.
Humana, M&A, Kindred Healthcare, Kindred at Home, TPG Capital, Welsh, Carson, Anderson & Stowe, US