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Analysis

Humana, Private Equity Consortium Finalize $4.1B Kindred Purchase

By John Commins  
   July 05, 2018

The acquisition comes as the consortium finalizes the $1.4 billion acquisition of Curo Health Services. Humana will have a 40% stake in a separate home-health and hospice services unit.

Humana Inc. and private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe this week finalized their $4.1 billion acquisition of Kindred Healthcare, Inc., the companies said.

The deal, which was first announced in December, coupled with the soon-to-be finalized $1.4 billion purchase of privately held Curo Health Services, will make the three companies the nation's largest providers of hospice services.

Humana's acquisitions come as health insurers integrate outpatient services with their Medicare Advantage plans, as Forbes reports. Major payers including Humana, UnitedHealth Group, Anthem, Aetna, and Cigna are strengthening ties to providers that will funnel more seniors from doctors and clinics to insurance companies.

The acquisitions come amid speculation that Humana could be acquired by Walmart.

Under the Kindred acquisition:

  • Kindred's long-term acute care hospitals, inpatient rehabilitation facilities and contract rehabilitation services business, collectively known as Kindred Healthcare, were separated from Kindred's home health, hospice, and community care businesses, collectively known as Kindred at Home.
     
  • Kindred Healthcare will be operated as a separate specialty hospital company owned by TPG Capital and Welsh, Carson, Anderson & Stowe, Humana's private equity partners in the deal.
      
  • Kindred at Home will be operated as a standalone company owned 40% by Humana, with the remaining 60% owned by TPG and WCAS.
     
  • Humana will have an option to buy the remaining ownership interest in Kindred at Home over time through a put/call arrangement, the companies said.
     
  • Humana, TPG, and WCAS are also finalizing the previously announced $1.4 billion purchase of which provides hospice services at 245 locations in 22 states. Humana will have a 40% stake.

Louisville-based Kindred Healthcare generates annual revenues of about $3.4 billion, and includes 38,300 employees providing healthcare services in 1,831 locations in 45 states.

That includes 75 LTAC hospitals, 19 inpatient rehabilitation hospitals, 13 sub-acute units, 98 inpatient rehabilitation units and contract rehabilitation service businesses which served 1,626 non-affiliated sites of service.

John Commins is a senior editor at HealthLeaders.


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