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Humana (HUM) Closes $2.8B Kindred Hospice Divestment to CD&R

Humana Inc. HUM recently announced that the company has closed the sale of a majority stake in its Kindred at Home subsidiary’s Hospice and Personal Care segments to Clayton, Dubilier & Rice ("CD&R"), a private equity firm. Per the deal, HUM divested 60% interest for $2.8 billion.

Humana retaining the remaining 40% stake will likely enable it to gain from the standalone company’s long-term success. Proceeds from the transaction are likely to be used in debt repayment and share repurchases. The move is expected to boost efficiency and keep costs down.

Humana, which previously held a 40% minority interest in Kindred at Home, bought the remaining 60% shares for $5.7 billion from TPG Capital or TPG and Welsh, Carson, Anderson & Stowe or WCAS in August 2021. After that, it planned to divest the hospice and personal care divisions, while retaining the more profitable home health segment. The company successfully executed the plan in a short period, which is impressive.

Strategic initiatives like these have carved a growth path for the company. HUM is a regular name in the M&A space. Some of the acquisitions made by the company have helped it achieve long-term growth. These include the purchase of Family Physicians Group, Your Home Advantage, Curo and others. The company also announced its iCare buyout in Wisconsin, which expanded its Medicare business.

Other companies in the Medical - HMOs space like Molina Healthcare, Inc. MOH and Centene Corporation CNC also focus on inorganic growth strategies.

Molina Healthcare completed the buyout of the Magellan Complete Care (MCC) line of business of Magellan Health. The transaction served more than 3.6 million members under government-sponsored healthcare programs across 18 states. In early 2022, Molina Healthcare closed the acquisition of Texas Medicaid and Medicare-Medicaid Plan (MMP) contracts and specific operating assets of Cigna Corporation CI for $60 million in cash. The company also closed other buyouts, such as YourCare and Passport, which led to membership increases. Molina Healthcare acquired AgeWell’s managed long-term care business in New York, which is likely to close in the third quarter of 2022. These buyouts boost the company's portfolio and diversify income.

Centene’s mergers and acquisitions strategy is mainly targeted at expanding the company’s markets and increasing its Medicaid membership. Acquisitions like Community Medical Holdings, MHM Services and Fidelis Care have contributed to its revenues and helped it to expand its capabilities. Centene acquired WellCare in January 2020 and the consolidated entity now has a wider scale and diversification with more than 12 million Medicaid and around 5 million Medicare members. Last year, it spent $185 million on buyouts. The acquisitions and partnerships should bolster the company’s operations, aiding long-term growth.


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Humana Inc. (HUM): Free Stock Analysis Report
 
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