More on Mergers & Acquisitions

Humana to buy Kindred's home, hospice operations, joins other insurers jumping into provider business

Deal signals another move by an insurer to enter the healthcare business.

Susan Morse, Managing Editor

Humana is in talks with two private-equity firms to acquire home health provider Kindred Healthcare, according to The Wall Street Journal.

The deal is seen as another move by an insurer to combine insurance and healthcare operations.

[Also: Optum to buy DaVita Medical Group for $4.9 billion]

Kindred, based out of Louisville, Kentucky,  is divesting of a business heavily dependent on Medicare reimbursement. A large part of Humana's business centers on Medicare Advantage plans.

Humana is getting the home and hospice-care operation of Kindred, while Welsh Carson Anderson & Stowe are taking over the long-term acute care hospitals and rehabilitation centers, according to the WSJ.

[Also: Tracking 2017 mergers and acquisitions]

Kindred is among the largest home health and hospice operators in the country. Two years ago, it acquired Gentiva Health Services for $1.8 billion. Gentiva became Kindred at Home and Kindred Hospice.

The acquisition placed a heavy debt load on Kindred, which since
October, has been announcing its intention to sell its skilled nursing facilities.

[Also: Kindred Healthcare wraps up sale of 12 hospitals to Curahealth]

On December 1, Kindred announced it had completed sale closings related to a previously-announced agreement with BM Eagle Holdings, to sell its skilled nursing facility business for a reported $700 million. This joint venture was led by Blue Mountain Capital Management, a New York City-based hedge fund.

Kindred's skilled-nursing division includes 89 nursing centers and seven assisted living facilities in 18 states.

Its facilities business includes around 77 long-term care hospitals and 19 rehabilitation hospitals.

A remaining six facilities will be sold outside of the agreement with Blue Mountain, Kindred said.

Kindred expects about $27 million of net proceeds from the sale of its remaining facilities, it said.

In addition, the company has for sale a parcel of property and various certificates of need related to its skilled nursing facility business that it estimates will generate additional proceeds ranging from $7 million to $10 million.

"We have substantially completed the divestiture of our skilled nursing facility business and continue to make steady progress on the sale of a few remaining facilities. We continue to believe that the sale of our skilled nursing facility business will significantly enhance shareholder value, enable us to sharpen our focus on higher margin and faster growing businesses, and further advance our efforts to transform Kindred," Kindred CEO Benjamin A. Breier said in a statement.

Twitter: @SusanJMorse
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