BY Fraser Tennant
In a transaction which gives it a strategic minority interest, US health insurance company Humana Inc. is to sell a majority stake in the hospice and personal care divisions of its Kindred at Home (KAH) unit to private investment firm Clayton, Dubilier & Rice (CD&R).
Under the terms of the definitive agreement, Humana will divest a 60 percent interest in KAH Hospice and receive cash proceeds of approximately $2.8bn, reflecting an enterprise valuation of $3.4bn. Humana intends to use proceeds from the transaction for the repayment of debt and share repurchases.
Upon closing of the transaction, Humana’s hospice and personal care divisions will be restructured into a standalone operation. These divisions include patient-centred services for hospice, palliative, community and personal care. The company had previously indicated its intent to divest a majority stake in these non-core businesses when it acquired the remaining interest in Kindred at Home in April 2021.
“While palliative and hospice services are important components in the continuum of care that Humana offers patients, we are confident that we can deliver desired patient outcomes and improved customer experiences through partnership models rather than fully owning KAH Hospice,” said Susan Diamond, chief financial officer of Humana. “We explored a broad range of alternatives and believe this transaction best allows Humana to divest majority ownership of these non-core businesses today, while still maintaining a strategic minority interest through our remaining stake.”
The transaction is expected to close in the third quarter of 2022 and is subject to customary state and federal regulatory approvals.
Ms Diamond continued: “With CD&R’s established physician relationships, value-based care expertise, and record of providing strategic capital to a wide range of businesses, we are certain that these divisions are well-positioned for success under the joint ownership of Humana and CD&R.”
A private investment firm with a strategy predicated on building stronger, more profitable businesses, since its inception CD&R has managed the investment of approximately $40bn in more than 100 companies with an aggregate transaction value of more than $175bn.
David Causby, president and chief executive of KAH’s hospice and personal care divisions, concluded: “We are excited by the new strategic partnership structure with Humana and look forward to working closely with CD&R to pursue growth that is centred on improved access, equity and quality of care across an expanded group of patients.”
News: Humana to sell majority stake in hospice business to CD&R for $2.8 billion