When Humana Inc. (NYSE: HUM) teamed up with private equity giants TPG Capital and Welsh, Carson, Anderson & Stowe (WCAS) to acquire Kindred Healthcare in July 2018, it was only a matter of time before the Louisville, Kentucky-based health insurer went off on its own.
That time has finally arrived.
As part of that $4.1 billion tag-team deal for Kindred three years ago, Kindred at Home was broken off into a standalone company, with Humana owning 40% and the remainder controlled by the TPG Capital and WCAS. Humana on Tuesday announced it’s acquiring the remaining 60% for an enterprise value of $8.1 billion, which includes Humana’s existing equity value of $2.4 billion associated with its existing ownership stake.
Taking the reins of Kindred at Home — the largest home health organization in the nation — will allow Humana to accelerate its in-home care strategy. It will also allow the insurer to more quickly implement and scale its value-based models focused on total cost of care and clinical outcomes, according to the company.
Kindred at Home has locations in 40 states, employing roughly 43,000 caregivers who deliver home health, hospice and community-based services to more than 550,000 patients annually.
“We continue to invest in assets that allow Humana to better manage the holistic needs of our members and patients by expanding care in the home, including primary care, telehealth and emergency room care, while also addressing social determinants of health,” Humana President and CEO Bruce Broussard said in a statement. “Since our initial investment in Kindred at Home, in partnership with [TPG and WCAS] and Kindred at Home management, we’ve learned a great deal about the home health space and recognize the significant value we can deliver to members and patients by integrating this asset into our holistic approach to care.”
The acquisition is expected to close in the third quarter of 2021.
At that time, Kindred at Home’s home health operations will be integrated into Humana’s Home Solutions business, led by Segment President Susan Diamond, who also currently serves as Humana’s interim CFO.
”Humana embarked on a journey with Kindred at Home in 2018 with the belief that a key component of the next generation of its integrated care delivery model was the ability to provide care to consumers, including Humana members, in their home at scale, meeting them where they want to be, in a preferred lower-cost setting, while also recognizing that the traditional volume-based, fee-for-service model limited innovation in home health,” Diamond said in a statement.
Humana isn’t just buying out TPG and WCAS from Kindred at Home.
On top of acquiring the remaining 60% of Kindred at Home, Humana is rebranding the asset under its payer-agnostic health care services brand, “CenterWell.” Moving forward, Kindred at Home will be known as “CenterWell Home Health.”
Additionally, the company is also looking to only hang on to Kindred’s home health capabilities. Under the right conditions, Humana may seek to unload its hospice and personal care services offerings.
‘“[While Kindred’s] hospice and community care operations are included in the transaction, Humana intends to ultimately only maintain a minority interest in this portion of the asset,” the Humana announcement notes. “The company is exploring, among other things, a public listing, conditions permitting, or another potential transaction, and intends for the future independent company to be led by David Causby, the current Chief Executive Officer of Kindred at Home.”