Humana Buys Out Partner TPG in $8.1 Billion Home-Care Unit

(Bloomberg) -- Humana Inc. has agreed to buy the slice of Kindred at Home that it doesn’t already own from two private-equity partners, in a deal that gives the home-health business an enterprise value of $8.1 billion.

The health insurer will acquire the 60% of Kindred currently held by TPG Capital and Welsh, Carson, Anderson & Stowe, according to a statement issued on Tuesday. The valuation includes the $2.4 billion equity stake in Kindred that Humana now holds.

Kindred at Home has locations in 40 states and serves more than 550,000 patients a year with home-health and hospice care.

Humana will fund the $5.7 billion transaction with a combination of cash and debt, the company said. The deal isn’t expected to have a material effect on earnings in 2021, and will “provide modest additional financial flexibility for 2022,” according to the company. Humana is scheduled to post first-quarter results early Wednesday.

The private-equity firms and Humana bought Kindred Healthcare in 2017 and split the company into two pieces. The investment firms kept the long-term acute care and rehabilitation facilities, while Humana took a minority stake in the home-care assets, Kindred at Home. At the time, Humana said the implied enterprise value of the business was $3.15 billion.

Traditional health insurers have been moving deeper into the business of taking care of patients. Humana rival Cigna Corp. purchased telehealth provider MDLive this year. UnitedHealth Group Inc., the largest U.S. insurer, has assembled a giant care-delivery arm in its Optum division with more than 53,000 physicians.

Humana is a top seller of private Medicare Advantage plans, in which the company receives set premiums from the U.S. government for taking care of elderly members.

“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,” Humana Chief Executive Officer Bruce Broussard said in the statement.

Humana recently announced a new health-services brand called CenterWell. Kindred at Home will be integrated with Humana’s existing home-care business and re-branded CenterWell Home Health, the company said.

Humana said the Kindred at Home hospice and community-care assets are included in the transaction, but the company plans to hold only a minority interest in that part of the business. It’s exploring a public listing or another transaction, according to the release. Kindred at Home CEO David Causby will lead that “future independent company,” Humana said.

The acquisition is expected to close in the third quarter.

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