Humana Announces Agreement to Divest Majority Interest in Kindred at Home Hospice and Personal Care Divisions to Clayton, Dubilier & Rice
21 April 2022 - 9:30PM
Business Wire
- Strategic partnership model for these lines of business is
aligned with Humana’s previously stated intent to divest the
majority interest in the Hospice and Personal Care divisions, while
maintaining a strategic minority interest.
- Divested divisions are expected to benefit from Clayton,
Dubilier & Rice’s track record of building and growing strong
businesses.
- When combined with Humana’s purchase of the broader Kindred at
Home platform, this transaction allows Humana to achieve its
objective to substantively increase its footprint in home care at
an attractive valuation.
Humana Inc. (NYSE: HUM) today announced that it has signed a
definitive agreement with private investment firm Clayton, Dubilier
& Rice (“CD&R”) to divest a majority interest in the
Hospice and Personal Care divisions of Humana’s Kindred at Home
subsidiary (“KAH Hospice”). These divisions include
patient-centered services for Hospice, Palliative, Community and
Personal Care. Humana 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.
Under the agreement, Humana will divest a 60 percent interest in
KAH Hospice and receive cash proceeds of approximately $2.8
billion, reflecting an enterprise valuation of $3.4 billion and a
multiple of approximately 12 times the divisions’ current year
forecast for adjusted earnings before interest, income taxes,
depreciation and amortization, or Adjusted EBITDA.
“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. 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.”
Diamond continued, “Humana started on our journey with Kindred
at Home in 2018 and we are pleased that, when viewing this
transaction in conjunction with our purchase of the broader Kindred
at Home platform, we have been able to achieve our objective to
substantively increase our footprint in home care by acquiring one
of the leading home health platforms in the country at an
attractive valuation for our shareholders.”
The transaction is expected to close in the third quarter of
2022 and is subject to customary state and federal regulatory
approvals. Upon closing of the transaction, the Hospice and
Personal Care divisions will be restructured into a standalone
operation.
David Causby, current President and CEO of KAH’s Hospice and
Personal Care divisions, will continue to lead these businesses
under the new structure.
“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 centered on improved access, equity and quality of
care across an expanded group of patients,” said Causby. “We share
a common set of values and, like the CD&R team, are focused on
driving quality care for patients and continuing to ensure that our
company remains an employer of choice for health care
professionals.”
Humana intends to use proceeds from the transaction for the
repayment of debt and share repurchases. The company does not
anticipate a material impact to 2022 earnings from this pending
transaction.
Goldman Sachs & Co. LLC and Barclays are acting as financial
advisors to Humana, while Fried, Frank, Harris, Shriver &
Jacobson LLP and Manatt, Phelps & Phillips, LLP are acting as
legal advisors. For CD&R, Deutsche Bank Securities Inc. and UBS
Investment Bank are acting as financial advisors and Debevoise
& Plimpton LLP and Ropes & Gray LLP are acting as legal
advisors.
About Humana
Humana Inc. is committed to helping our millions of medical and
specialty members achieve their best health. Our successful history
in care delivery and health plan administration is helping us
create a new kind of integrated care with the power to improve
health and well-being and lower costs. Our efforts are leading to a
better quality of life for people with Medicare, families,
individuals, military service personnel, and communities at
large.
To accomplish that, we support physicians and other health care
professionals as they work to deliver the right care in the right
place for their patients, our members. Our range of clinical
capabilities, resources and tools – such as in-home care,
behavioral health, pharmacy services, data analytics and wellness
solutions – combine to produce a simplified experience with the
goal of making health care easier to navigate and more
effective.
More information regarding Humana is available to investors via
the Investor Relations page of the company’s website at humana.com,
including copies of:
- Annual reports to stockholders
- Securities and Exchange Commission filings
- Most recent investor conference presentations
- Quarterly earnings news releases and conference calls
- Calendar of events
- Corporate Governance information
About Clayton, Dubilier &
Rice
Clayton, Dubilier & Rice is a private investment firm with a
strategy predicated on building stronger, more profitable
businesses. Since inception, CD&R has managed the investment of
approximately $40 billion in more than 100 companies with an
aggregate transaction value of more than $175 billion. The Firm has
offices in New York and London. For more information, please visit
www.cdr-inc.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20220421005421/en/
Investors: Lisa Stoner - Humana Investor Relations; (502)
580-2652; lstamper@humana.com
Media: Mark Taylor - Humana Corporate Communications;
(317) 753-0345; MTaylor108@humana.com
Jon Selib - Clayton, Dubilier & Rice; (212)-407-6035;
Jselib@cdr-inc.com
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