Humana to Acquire a 40 Percent Minority Interest in Kindred's Homecare Business

Provides Humana an ownership interest in the nation's largest home health operator and complements Humana's existing Humana At Home care coordination capabilities.

Humana Inc. announced Dec. 19 that it has signed a definitive agreement to acquire a 40 percent minority interest in the Kindred at Home Division (Kindred at Home) of Kindred Healthcare, Inc., the nation's largest home health provider and second largest hospice operator, for estimated cash consideration of approximately $800 million, including Humana's share of transaction and related expenses to facilitate a complete separation from the Long Term Acute Care and Rehabilitation businesses (the Specialty Hospital company).


The transaction and related expenses include, among other costs, bond breakage fees, the extinguishment of certain legacy liabilities, the acceleration of certain stock awards, and advisory fees and expenses. The implied enterprise value of Kindred at Home is $3.15 billion before these expenses.

As announced, TPG Capital (TPG) and Welsh, Carson, Anderson & Stowe (WCAS), two private equity funds (the Sponsors), along with Humana are jointly creating a consortium to purchase all of the outstanding and issued securities of Kindred Healthcare, Inc. Simultaneously with the closing of that transaction, TPG and WCAS will separate Kindred at Home from the Specialty Hospital company and form a joint venture with Humana to own Kindred at Home.

Humana will own 40 percent of Kindred at Home, with the remaining 60 percent owned by a new entity owned by TPG and WCAS. Currently, nearly 40,000 caregivers serve approximately 130,000 patients daily in Kindred at Home with annual revenues of approximately $2.5 billion. Humana will have no economic interest in the Specialty Hospital company.

Humana believes that a key component of the next generation of its integrated care delivery model is the ability to provide care to consumers, including Humana members, in their home, meeting them where they want to be, in a preferred lower cost setting. This transaction will help Humana manage the chronic conditions of its members and others it serves and provide an additional avenue for the company to address activities of daily living, medication adherence and other health determinants, reinforcing its commitment to managing health holistically, not episodically.

"The acquisition of a minority interest in Kindred at Home, the largest home health company in the country with significant overlap with Humana membership, brings to us an experienced, well-respected home health provider with robust access to extensive clinical capabilities that will allow us to accelerate our strategy to more deeply integrate with our members' lifestyles," said Bruce D. Broussard, Humana's President and Chief Executive Officer.

"We are excited about the opportunity this acquisition provides to advance our vision for integrated care delivery, as we continue to deliver our Humana At Home capabilities while building a transformative platform for the future. We believe that care in the home is a vital element of improving the health of seniors living with chronic conditions, allowing them to receive services in the comfort of their home, with less time in more costly institutional settings."

This transaction will provide the company with extensive geographic coverage, with approximately 65 percent overlap with Humana's individual Medicare Advantage membership. In addition, the robust data sharing between Humana and Kindred at Home will yield improved analytics and predictive modeling, providing a transformative platform for the future to advance capabilities including remote monitoring, telehealth, and digital interactions with members and physicians. This technology, together with a collaborative advanced payment model, will arm clinicians with better information to close gaps in care and improve quality.

"The combination of Humana At Home's pursuit of improving care for seniors living with chronic conditions, in concert with Kindred At Home's care delivery, will allow these important capabilities to create more effective care in a compassionate way for our members," said William Fleming, Humana's President - Healthcare Services. "We look forward to transforming post-acute care through a value-based approach that will deliver improved clinical outcomes, ultimately lowering medical costs. We believe this work will lead to reduced hospitalizations, reduced emergency room visits, and allow physicians and clinicians to extend their care all the way to the patient's home."

The agreement with the Sponsors includes a put option under which they have the right to require Humana to purchase their interest in the joint venture starting at the end of year three and ending at the end of year four post close. Consideration upon exercise of the put option per the agreement would be valued at an exit multiple of 10.5 times the preceding twelve months earnings before interest, income taxes, depreciation and amortization, or EBITDA, subject to certain adjustments and other provisions customary for transactions of this nature. In addition, the multiple is subject to adjustment up to 11.5 times EBITDA based on the achievement of certain pre-defined value-based outcomes tied to clinical metrics.

The 11.5 times EBITDA exit multiple is comparable to the valuation for Humana's 40 percent interest. Finally, Humana has a call option under which it has the right to require the Sponsors to sell their interest in the joint venture to Humana beginning at the end of year four and ending at the end of year five post close for cash consideration using the same valuation methodology applicable to the previously discussed put option consideration.

David Causby, currently Executive Vice President and President of Kindred at Home, will serve as Chief Executive Officer of Kindred at Home. The governance structure of the joint venture will be customary for transactions of this nature, including protective rights for Humana, with Humana having heightened oversight over quality, clinical outcomes and compliance.

"We are pleased with our unique partnership with the Sponsors in Kindred at Home, which is aligned around value-based care with incentives designed to drive improved outcomes for the people we serve," said Brian A. Kane, Humana's Senior Vice President and Chief Financial Officer.

"The transaction structure provides geographic and clinical scale at an attractive valuation in a capital efficient manner, minimizing our upfront capital outlay, limiting the distraction of an immediate outright acquisition, eliminating all exposure to non-core assets in the Specialty Hospital company, and providing us with a path to eventual control of the nation's largest home health company in three to five years via a put and call option structure.

"Our sophisticated Sponsor partners will focus on driving growth in the fee-for-service business while together we concentrate on executing a transformation of the home health model to a value-based care platform in a lower risk setting without distraction from our core operations, benefiting both Humana and Kindred at Home over the long-term."

These transactions, which are anticipated to close in the summer of 2018, are subject to customary state and federal regulatory approvals, including approval by the stockholders of Kindred and the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, as well as other customary closing conditions. Humana expects to fund the transaction through the use of parent company cash and will account for its minority investment under the equity method.

The company does not anticipate a material impact to earnings in 2017 from this pending transaction. Given that Humana's previous financial commentary for the year ending December 31, 2018 contemplated capital deployment, it is not expected that this acquisition will materially change the outlook that was provided. Humana expects the transaction to be slightly accretive to earnings per diluted common share in 2019 and beyond.

Morgan Stanley & Co. LLC is acting as lead financial advisor to Humana and the Sponsors. JPMorgan Chase is also acting as lead financial advisor to the Sponsors. TripleTree, LLC is acting as strategic and financial advisor to Humana. Evercore provided a fairness opinion to the Board of Directors of Humana. Fried, Frank, Harris, Shriver & Jacobson LLP is acting as legal advisor to Humana.

Humana and Walgreens to Offer Senior-focused Services in Kansas City Area via Primary Care Clinics and In-store Health Navigation Support

In-store Clinics and Health Navigation to Provide Expanded Clinical Services and Support to Seniors Participating in Medicare Advantage Plans from Multiple CarriersOriginally Published by Humana.

Originally Published by Humana.

Leading health and well-being company Humana Inc. and Walgreens, a provider of trusted pharmacy services and care in communities since 1901, are teaming up to provide easier access to primary care and other services for seniors, as part of the companies' ongoing and shared commitment to the health and well-being of the Kansas City community.

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Humana’s Chief Consumer Officer Talks Career and Leadership

NRGs provide personal, experience-based forums for exchanging ideas and building community. The largest NRG at Humana is the Women's NRG with more than 7,000 participants.

Originally Published by Humana.

When Jody Bilney, Humana's first chief consumer officer, spoke on a Louisville Business First panelwith three other local, female executives, she acknowledged that there is "not a single or standard route" to the leadership positions her and her peers hold.

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Humana: CarePlus Health Plans, Veterans of Foreign Wars (VFW) Join Forces to Focus on Florida Veterans

CarePlus has served the Medicare population in Florida for more than 17 years. Headquartered in Miami, the company serves about 115,000 Medicare Advantage members across the state.

Originally Published by Humana.

CarePlus Health Plans, a large Medicare Advantage provider in Florida, is now part of the exclusive agreement between its parent company, Humana Inc., and the Veterans of Foreign Wars of the U.S. (VFW), the nation's largest organization of combat veterans and the oldest major veterans' organization in the U.S¹.

In February 2018, Humana announced it had enhanced its agreement with the VFW as the national Medicare Advantage, Prescription Drug and Medicare Supplement plans carrier for the organization.

"CarePlus has always made supporting our nation's veterans a top priority," said Bruno Piquin, Regional President of CarePlus Health Plans. "We're thrilled to expand our commitment, with a special focus on helping the 120,000 VFW members and their spouses in Florida achieve their best health."

CarePlus has served the Medicare population in Florida for more than 17 years. Headquartered in Miami, the company serves about 115,000 Medicare Advantage members across the state.

"For nearly 119 years, the VFW has made veterans' care one of its top priorities," said VFW National Commander Keith Harman. "We're happy to expand our current relationship with Humana to ensure even more of America's veterans receive the care and services they need."

CarePlus will offer numerous services to VFW members to provide education and access to healthcare coverage information.

These will include:

  • Hosting Medicare seminars annually during Medicare's Fall Annual Election Period (Oct. 15 through Dec. 7).
  • Conducting educational seminars throughout the year to inform VFW members of their Medicare options.
  • Providing VFW members with access to CarePlus Medicare Advantage information and enrollment capabilities which incorporate web-based tools, call centers, educational seminars, and self-enrollment.

Humana Partners with Feeding America to Address Food Insecurity Among Veterans Across the Country

Initiatives will help secure food donations and raise awareness that 20 percent of the Feeding America households has at least one member who served in the U.S. military

Originally published by Humana Inc.

Humana Inc. is partnering with the non-profit Feeding America® to help end hunger, a problem that impacts one in eight Americans. By working collaboratively, the two organizations will focus on helping veterans, as research shows one in five of the households Feeding America serves has at least one member who has served in the U.S. military.

"Humana is committed to improving the health of communities across the country as part of our Bold Goal initiative, and a key component of that is addressing food insecurity as poor nutrition can lead to obesity, diabetes, heart disease, depression and fatigue in adults and can hinder a child's development," said Ed Sandrick, director of the Veterans Channel, Humana. "No one should suffer from food insecurity, especially the service men and women who risked their lives to protect our country. We are thrilled to work with Feeding America as it amplifies our ability to honor those who served and help individuals who do not have access to enough nutritionally- adequate foods to live an active, healthy life."

Leveraging Feeding America's network of more than 200 food banks and 60,000 food pantries and meal programs, Humana will stage a series of events throughout the year that will drive food donations and elevate the issue of food insecurity, including:

  • Rolling Thunder XXXI: As the official corporate sponsor of the annual Rolling Thunder Run – which is the largest gathering of military retirees, veterans, active duty military and Vietnam Veterans – Humana will use its presence in Washington D.C. over Memorial Day Weekend to collect food and financial donations. For every $1 donated, Feeding America will be able to provide 10 meals* to people facing hunger.
  • VFW National Convention : Humana, through its ongoing partnership with the Veterans of Foreign Wars of the U.S. and local Feeding America food banks in Kansas City (Harvesters: The Community Food Network and After the Harvest), will launch a collaborative campaign to fight food insecurity in the Greater Kansas City area. The goal of the campaign, which will culminate during the 119th VFW National Convention in Kansas City from July 21-25, 2018, is to provide 50,000 meals to local individuals in need, with a special focus on veterans, via community-wide initiatives.
  • Rock 'n Roll Marathons : Humana is conducting food and fund drives at company sponsored Rock 'n Roll Marathon Series events across the country, with upcoming runs in Chicago, Virginia Beach, Va., Savannah, Ga., and San Antonio, Texas. The proceeds raised in each market will be donated to food banks in each respective market.

In addition to these initiatives, Humana is partnering with Feeding America-affiliated food banks in each of the Bold Goal communities (Baton Rouge, Broward County, Jacksonville, Kansas City, Knoxville, Louisville, New Orleans, San Antonio and Tampa Bay) on efforts to improve the health and accessibility to food at the local level.

"At Feeding America, we know that one in five households that come to us for help has a member who has served our country," said Andy Wilson, Chief Development Officer, Feeding America. "We are grateful for our partners at Humana and look forward to working together to help ensure our military families not face the challenge of putting food on the table."

Humana and Feeding America are also working with physicians to help identify potential barriers and provide assistance to patients who are food insecure. Together, they developed an online toolkit to guide physicians in implementing food insecurity screenings and connect patients to available resources and interventions.