Kindred Healthcare (NYSE: KND), the nation’s largest home health care provider, is in advanced talks to be acquired by insurance giant Humana Inc. (NYSE: HUM) and two private equity firms, the Wall Street Journal reported Sunday. The newspaper cited “people familiar with the matter.”
Kindred and Humana did not immediately respond to requests for comment from Home Health Care News on Sunday afternoon.
Louisville, Kentucky-based Kindred would be divided up as part of the complex deal, WSJ reported.
Under terms of the rumored deal, private equity firms Welsh, Carson, Anderson & Stowe and TPG would acquire Kindred’s 77 long-term care hospital and 19 rehabilitation facilities. The private equity firms and Humana would acquire Kindred’s home and hospice business.
The deal values Kindred’s stock at $9 per share, giving the company a $750 million market value with a total enterprise value of $4 billion, according to the Journal. KND shares were trading at $8.60 at market close on Friday. Kindred’s share price was buoyed last month, when the Centers for Medicare & Medicaid Services (CMS) announced it would hold off for now on a controversial new framework for reimbursing home health agencies.
The latest takeover rumor comes as Kindred has been in a period of transformation, and follows other reports that potential takeover bids had not been successful.
After its $1.8 billion merger with Gentiva Health Services, completed in 2015, Kindred became the largest home health and hospice provider in the United States but also increased its debt load. Since then, it has made a big move to divest its large skilled nursing business.
This potential Humana deal could be announced “soon,” WSJ reported, but noted that it still could fall through.
Insurers making big moves
Humana, which is also based in Louisville, is a major health insurance provider, with more than 13 million customers. The company also has some home health care operations and executives recently expressed their desires to expand the home care business line, in discussing third quarter earnings.
Should it materialize, the Humana transaction would come on the heels of another major health care deal; at the beginning of the month, CVS Health (NYSE: CVS) announced it will be acquiring Aetna (NYSE: AET), the nation’s third-largest health insurance provider, for $69 billion.
Early in 2017, Humana and Aetna called off their proposed $34 billion merger, facing federal opposition due to antitrust concerns.
Humana’s home care division, Humana at Home, took a hit at the beginning of 2017 as the health system experienced a $400 million loss. In February, the company announced 500 home care workers were laid off in its Ohio and Florida locations.
But both Humana and Kindred have touted their ability to enhance coordination between acute and post-acute settings in general, and home health in particular, as a way to improve outcomes while keeping costs down in value-based payment models.