Humana Inc. (NYSE: HUM) continues to actively explore divestiture strategies for the hospice assets of Kindred at Home.
At this point, though, the Louisville, Kentucky-based health care company doesn’t have much to say beyond that, according to CFO Susan Diamond. Humana expects to be able to share more information during its first quarter earnings call.
“We’ve said publicly, we do think that it makes sense for us to divest of our majority position in hospice,” Diamond said Tuesday at the Barclays Global Healthcare Conference. “As we said, we hope to have a more meaningful update to provide you in terms of timing and likelihood on our first quarter call and a few weeks.”
Humana finalized its acquisition of Kindred at Home in August 2021, buying out its remaining stake from TPG Capital and Welsh, Carson, Anderson & Stowe for $5.7 billion. The transaction is the largest Humana has ever executed.
Immediately upon announcing that deal, Humana leadership revealed the company planned to separate Kindred’s hospice assets while it committed to growing its home health operations, shifting them further into the value-based care field.
“We believe the model has significant value creation potential, both within Humana as well as payer agnostically,” Humana noted in a 2021 annual report.
While Humana views hospice as an important offering in the full continuum of care for its patients and members, it has a track record of delivering end-of-life services more through partnership models. That includes partners within the Value-Based Insurance Design (VBID) demonstration from the U.S. Centers for Medicare & Medicaid Services (CMS).
Hospice participation in the VBID program – otherwise known as the Medicare Advantage (MA) carve-in – began in 2021. After a small number of MA plans participated last year, at least 115 will in 2022, according to CMS.
In January, a report surfaced claiming that Humana had initiated a divestiture process in collaboration with Goldman Sachs targeting private equity interests.
There was at least $151 billion of PE capital pumped into health care globally in 2021, more than double the prior year, according to Bain & Company. In the U.S., PE investors have been particularly interested in the expanding hospice industry, despite steep valuations.
Diamond did not address the recent rumors while speaking at Barclays.
“We continue to actively pursue strategies [to divest], believing that strategically we don’t need to own that asset,” Diamond said. “That frees up some of that capital to de-lever and give us more capacity to do potentially other strategic M&A, beyond what we have the capacity for currently.”
As for those potential M&A opportunities, the CFO added that Humana is most interested in smaller tuck-in deals, especially in the area of primary care. But it’s also open to opportunities within “the home space,” she said.
Humana officially kicked off the rebranding of Kindred at Home’s home health division to “CenterWell Home Health” at the beginning of March. The hospice, palliative, community and personal care divisions of Kindred at Home were not part of the rebranding.
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