Humana Completes $2.8 Billion Kindred Hospice Divestiture

Humana Inc. (NYSE: HUM) has completed its $2.8 billion sale of Kindred at Home’s hospice and personal care segments, divesting a 60% stake to the private equity firm Clayton, Dubilier & Rice.

Humana will retain the remaining 40%. The sale coincides with Humana’s stated goal of raising its enterprise value by $1 billion, while building out its health care services and Medicare Advantage business, according to a first quarter 2022 earnings call.

“Humana will continue to support the long-term success of these operations through our minority ownership and ongoing strategic partnership,” Humana CFO Susan Diamond said in a statement. “Hospice and palliative services play an important role in the full continuum of care, and we are confident that this new standalone company will continue to provide patients and their families with the resources and high-quality care they need.”

Kindred at Home is the largest provider of home health services by market share in the United States and the second-largest hospice provider, according to LexisNexis.

The seeds of this transaction were planted in 2018, when the insurance company acquired 40% ownership of Kindred at Home. The private equity firms Welsh, Carson, Anderson & Stowe (WCAS) and TPG Capital held the remaining 60%.

Last year, Humana purchased the two firms’ shares for $5.7 billion. Soon thereafter, the company announced plans to divest the hospice and personal care segment. Humana will retain Kindred at Home’s home health segment.

Rather than operating a hospice business, the insurance company partners with those organizations through a preferred provider network. Post-closing, Humana plans to apply the bulk of these funds to debt repayment and share repurchases, executives indicated in a first-quarter 2022 earnings call.

“We are pleased to complete this transaction with Humana and CD&R,” said David Causby, CEO of the home health and hospice business. “Our dedicated hospice and personal care company is focused on improving access, equity, and quality of care for patients while remaining an employer of choice for health care professionals.”