Buyer: TPG Capital; Welsh, Carson, Anderson & Stowe and Humana
Seller: Kindred Healthcare
Sector: Healthcare, Homecare, Home Health
Kindred Healthcare (NYSE: KND) announced a definitive agreement to be acquired by a consortium of three companies — TPG Capital; Welsh, Carson, Anderson & Stowe (WCAS); and Humana Inc. (NYSE: HUM) — for approximately $4.1 billion in cash.
Under terms of the deal, Kindred stakeholders will receive $9 in cash per share of common stock, approximately a 27% premium to Kindred’s 90-day volume weighted average price.
“We are pleased to have reached this agreement, which will deliver significant cash value to Kindred’s stockholders and concludes a robust strategic review undertaken by the Board and management team over the course of 2017,” Benjamin Breier, president and CEO of Kindred, said in a press release. “We believe this agreement maximizes value for stockholders and represents a significant step forward in transforming home healthcare in America by enhancing access to care and reducing costs for people living with chronic conditions. In addition, the specialty hospital company, Kindred Healthcare, will be uniquely positioned to care for the most medically-complex and rehab-intensive populations.”
The deal separates Kindred’s hospital and rehabilitation business from its Kindred at Home branch, which operates home health care, hospice and community care locations. The home health, hospice and community-based care business will operate as a standalone company, with Humana owning 40% of the operations and TPG and WCAS owning the remaining 60%. Humana will have the right to acquire the remaining ownership interest over time.
As a health insurance provider, the move vastly boosts Humana’s home health operations. The insurer already provides care coordination capabilities through its Humana at Home division. Kindred at Home has 609 home health, hospice and non-medical home care sites of service.
Kindred at Home locations have a 65% overlap with Humana’s individual Medicare Advantage membership, the insurer noted in announcing the transaction.
“Humana is focused on enhancing our capabilities for care in the home to prioritize patient wellness while delivering high-quality care in a low-cost setting,” Humana President and CEO Bruce Broussard stated. “This transaction with Kindred underscores the successful and ongoing execution of our strategy by joining with the most geographically diverse home healthcare provider in the country. We are confident that these new capabilities will help Humana continue to modernize home health and meaningfully improve the member and provider experience. We look forward to completing this strategic transaction with TPG and WCAS.”
Upon completion of the deal, Breier will serve as CEO of the specialty hospital company, Kindred Healthcare, while David Causby, Kindred’s exectuive vice president and president of Kindred at Home, will serve as CEO of Kindred at Home.
Chicago-based real estate investment trust (REIT) Ventas Inc. (NYSE: VTR), which owns 30 long-term acute care hospitals and inpatient rehab facilities operated by Kindred, also supports the deal.
“We look forward to continuing our partnership with Kindred and working with the new owners as they drive above-market growth and serve increasing numbers of medically-complex patients,” Ventas CEO Debra Cafaro stated in a press release.
The deal is expected to close in the summer of 2018, pending certain closing conditions and agreements among stakeholders.