Humana’s CenterWell Poised for Growth After Solidification of Hospice Sale

Following its hospice divestiture, Humana’s (NYSE: HUM) health care services business, CenterWell, is poised for growth, with demand for acute senior home care as a driver.

Humana anticipates expansion across each of CenterWell’s business lines, which encompasses the insurance mammoth’s home health, primary care, pharmacy and specialty pharmacy services. The segment also includes a joint venture with private equity firm Welsh, Carson, Anderson & Stowe (WCAS) that offer primary care services for seniors.

While each health care business segment saw financial improvement during the first quarter, home health represented a decent portion of growth thus far in 2023 for both CenterWell and its insurance business, according to Humana President and CEO Bruce Broussard.


“Our CenterWell portfolio comprising primary care, home and pharmacy continues to see strong growth,” Broussard said during today’s earnings call. “CenterWell’s home health represents more than 30% of home health episodes in these states compared to a national average of approximately 20% across geographies where CenterWell home health and Humana health plans have geographic overlap,” Broussard said during today’s earnings call.

Humana completed its divestiture of Gentiva Hospice (formerly Kindred at Home) in August 2022. It acquired total ownership of Kindred at Home the prior year for $5.7 billion. Subsequently, Humana spun off and sold a 60% stake in the hospice segment to the private equity firm Clayton, Dubilier & Rice (CDR) and retained the remaining 40%.

The Kindred deal marked a heavy investment into risk-based reimbursement programs such as Medicare Advantage while also propelling growth of Humana’s home-based health services arm.


During Q1, CenterWell brought in $4.5 billion, up from $4.36 billion in the prior year’s quarter. Part of that growth was offset by increases in operating expenses tied to its hospice business. The hospice segment had “significantly higher” operating cost ratios than that took a bit out of its margins, the company reported.

Humana’s overall operating revenue reached $25.7 billion in the first quarter, up from $23.9 billion in Q1 2022.

CenterWell has 249 health care centers nationwide with a census of roughly 266,000 patients. The business has seen 16% growth in its center count and an 11% year-over-year increase in its annual patient census, according to Broussard.

Growth in patient volumes has come through a combination of de novo builds and “programmatic M&A,” according to Broussard. With the addition of 17,000 new patients in Q1 alone, census growth was “significantly higher” compared to the same period in 2022 that saw a rise of 3,900 new patients, Broussard stated.

Humana has been increasingly wading deeper into home-based care through both its health care business and its value-based payment programs, he indicated.

On the home health side, the rollout of its value-based care model in certain new markets also has been a growth driver for the company, according to Broussard.

Humana covers roughly 815,000 home health Medicare Advantage beneficiaries under its value-based insurance model, largely with home health, infusion and durable medical equipment (DME) services, he said. That number represents a 200% increase in year-over-year growth, partly driven by its recent expansion in Virginia and North Carolina, Broussard explained.

“Under this [value-based] model, our home health utilization management program drives appropriate levels of care without compromising clinical outcomes,” Broussard stated. “As a result, in Virginia and North Carolina, we’ve experienced a 600-basis-point reduction in recertification rates, and episodic contracts across all home health providers. We firmly believe the Medicare Advantage program will remain a compelling value proposition for seniors.”

Clinical labor and reimbursement pressures are compressing the ability to grow its health care business, according to Humana CFO Susan Diamond.

The company saw a 2% year-over-year increase in cost per home health visit alongside delays in opening new health care centers that were related to clinical shortages, she said.

“With the planned openings of the centers, they certainly try to get ahead and add the physicians there ready to go,” Diamond said. “We did have some delays in center openings as a result of some sort of supply chain and other issues, and so it may be that some of the clinical teams were on staff in advance of some of those delays.”

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