NEW YORK (Reuters) – U.S. health insurer Humana Inc (HUM.N) is in advanced talks to acquire acute care provider Kindred Healthcare Inc (KND.N) in partnership with private equity firms Welsh, Carson, Anderson & Stowe and TPG, a source familiar with the matter said on Sunday.
A deal would provide the latest example of the growing convergence between consumer health and insurance, following CVS Health Corp’s (CVS.N) agreement earlier this month to acquire Aetna Inc (AET.N) for $69 billion.
Humana has been investing significantly in its home health capabilities, Humana At Home, which the insurer touts as a compliment to its Medicare Advantage franchise. If the negotiations are successful, a deal could come as early as this week, the source said, asking not to be identified because the matter is confidential.
The Wall Street Journal, which first reported on the talks, said the deal could value Kindred at $9 per share. On Friday, the company’s stock closed at $8.60, giving it a market value of $750 million.
Welsh, Carson, Anderson & Stowe and TPG would take over Kindred’s facility-focused business, which includes long-term acute care hospitals and rehabilitation centers. The private equity firms together with Humana would get Kindred’s home and hospice care operations, the WSJ reported, citing sources it did not identify.
Kindred and Humana did not immediately respond to requests for comment. TPG and Welsh, Carson, Anderson & Stowe also were not immediately available for comment.
Based in Louisville, Kentucky, Kindred is the largest home healthcare provider and hospice operator in the United States.
The company, which has long-term debt of $3.2 billion, has suffered due to its reliance on the Medicare federal health insurance program for revenue. It is also at risk for changes to how post-acute care services are reimbursed if U.S. President Donald Trump restructures the healthcare system.
Earlier this year, Kindred announced plans to coordinate skilled nursing operations with Genesis HealthCare Inc (GEN.N), one of the largest operators of skilled nursing facilities in the United States.
In 2015, Kindred acquired Gentiva Health Services Inc for $1.8 billion, turning it into the biggest U.S. provider of home health and hospice care, but also saddling it with debt.
Health insurance companies are exploring new ways to diversify their revenues with acquisitions in acute care, after federal regulators blocked two major mergers in the sector, and insurance exchanges set up under the Affordable Care Act, popularly known as Obamacare, came under pressure from Republicans.
Source: https://www.pehub.com/2017/12/humana-in-talks-to-buy-kindred-healthcare-with-equity-firms-reuters/
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