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Humana purchases remaining share of Kindred at Home for $5.7B

The payer is buying the remaining interest from TPG Capital and Welsh, Carson, Anderson & Stowe in a deal that values Kindred at $8.1 billion.

Mallory Hackett, Associate Editor

photo by IronHeart/Getty Imagesphoto by IronHeart/Getty Images

Humana will now be the sole owner of Kindred at Home after it announced this week it has signed a definitive agreement to purchase the remaining 60% interest in the home health and hospice provider from two private equity partners.

The payer is buying the remaining interest from TPG Capital and Welsh, Carson, Anderson & Stowe in a deal that values Kindred at $8.1 billion, which includes Humana's existing 40% share that is valued at $2.4 billion.

Under the terms of the deal, Kindred's home health operations will be integrated into Humana's Home Solutions business and it will take on the same branding as Humana's new payer-agnostic health-services arm, transitioning to CenterWell Home Health.

Humana plans to use a combination of cash and debt financing to pay for the $5.7 billion transactions, according to the announcement. The deal is subject to state and federal approvals but is expected to close in the third quarter of 2021.

WHAT'S THE IMPACT?

This deal signals Humana's home-based health services growth strategy. It will allow Humana to accelerate the implementation and scale of its value-based models and clinical innovation, the company said in the announcement.

The new deal follows Humana's 2017 deal with TPG Capital and Welsh, Carson, Anderson & Stowe to acquire a 40% minority interest in Kindred's home care business.

Kindred operates across 40 states, serving over 550,000 patients annually and employing approximately 43,000 caregivers. Its geographic coverage overlaps with 65% of Humana's individual Medicare Advantage membership.

THE LARGER TREND

It's becoming more common for payers to expand their business models.

In recent months, Cigna's health services subsidiary Evernorth acquired telehealth provider MDLive for an undisclosed amount. UnitedHealth's Optum announced plans to acquire Change Healthcare, but the deal has received pushback from the American Hospital Association, which said the proposed deal raises antitrust concerns.

ON THE RECORD

"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," said Bruce Broussard, Humana's president and CEO. "Since our initial investment in Kindred at Home, in partnership with the Sponsors 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."

Twitter: @HackettMallory
Email the writer: mhackett@himss.org