Humana pays $5.7 billion for remaining share of Kindred At Home, could take business public

Humana will pay $5.7 billion to buy the remaining shares of Kindred at Home, bringing its total investment in the nation’s largest home care and hospice provider to $8.1 billion.

While the proposed acquisition covers the totality of Kindred’s business, Humana eventually plans to integrate just the home health side into its Home Solutions business line, with the aim that it will eventually provide care to those insured outside Humana, and be rebranded to CenterWell Home Health, taking on the name of Humana’s recently-launched healthcare services company.

The rest of Kindred’s hospice and community care services could eventually join to create a separate public company that Humana would have a minority stake in, and which would be led by current Kindred CEO David Causby.

Whatever Humana does, it aims to use a combination of cash and debt to purchase the remaining 60% of the company from private equity firm TPG Capital. The Louisville, Ky.-based insurer first invested in Kindred in 2018. Now, the acquisition is expected to close in the third quarter of 2021, following state and federal regulatory approvals.

“Fully integrating Kindred at Home will enable us to more closely align incentives to focus on improving patient outcomes and on reducing the total cost of care,” Humana CEO Bruce Broussard said in a statement. “This is critical to deploying at scale a value-based, advanced home health model that makes it easier for patients and providers to benefit from our full continuum of home-based capabilities.”

Kindred’s 43,000 caregivers provide home health, hospice and community care services to more than 550,000 patients in 40 states each year. Sixty-five percent of Humana’s nearly 4.4 million Medicare Advantage customers are already located in Kindred footprint, the company said.

The acquisition follows Humana’s partnership with in-home emergency and acute provider DispatchHealth in February, as demand for out-of-office treatment rose during the COVID-19 pandemic, particularly among those living with chronic conditions. Humana will initially work with DispatchHealth on a fee-for-service basis, although the company aims to eventually transition to value-based payments.

Humana’s purchase also follows a year of record care deferral among enrollees. At the end of the company’s most recent third-quarter on Sept. 30, Humana reported $1.3 billion in net income, a more than 94.5% increase year-over-year driven by historically low utilization among members.

By purchasing the rest of Kindred, Humana will be able to further engage members in preventative care in a more comfortable, lower cost setting than a hospital, said Susan Diamond, president of Humana’s Home Business segment. The company has already led to a reduction in patient hospitalizations, readmissions and ED utilization.

“Our work with Kindred at Home allowed us to learn more about the advanced clinical models needed, proved that we can execute on the needed innovation, demonstrated that we can drive penetration and gave us confidence we can support a higher acuity patient by leveraging the other home-based assets and capabilities we’ve assembled,” Diamond said in a statement.


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