Return to search

CD&R to buy Humana hospice and personal care units for $2.8bn

The transaction is expected to close in the third quarter of 2022.

Clayton, Dubilier & Rice has agreed to acquire Humana’s hospice and personal care units for about $2.8 billion. The transaction is expected to close in the third quarter of 2022. Goldman Sachs and Barclays are acting as financial advisors to Humana while Deutsche Bank Securities Inc. and UBS Investment Bank are acting as financial advisors to CD&R.

PRESS RELEASE

Humana Inc. (NYSE: HUM) today announced that it has signed a definitive agreement with private investment firm Clayton, Dubilier & Rice (“CD&R”) to divest a majority interest in the Hospice and Personal Care divisions of Humana’s Kindred at Home subsidiary (“KAH Hospice”). These divisions include patient-centered services for Hospice, Palliative, Community and Personal Care. Humana had previously indicated its intent to divest a majority stake in these non-core businesses when it acquired the remaining interest in Kindred at Home in April 2021.

Under the agreement, Humana will divest a 60 percent interest in KAH Hospice and receive cash proceeds of approximately $2.8 billion, reflecting an enterprise valuation of $3.4 billion and a multiple of approximately 12 times the divisions’ current year forecast for adjusted earnings before interest, income taxes, depreciation and amortization, or Adjusted EBITDA.

“While palliative and hospice services are important components in the continuum of care that Humana offers patients, we are confident that we can deliver desired patient outcomes and improved customer experiences through partnership models rather than fully owning KAH Hospice,” said Susan Diamond, Chief Financial Officer of Humana. “We explored a broad range of alternatives and believe this transaction best allows Humana to divest majority ownership of these non-core businesses today, while still maintaining a strategic minority interest through our remaining stake. With CD&R’s established physician relationships, value-based care expertise, and record of providing strategic capital to a wide range of businesses, we are certain that these divisions are well-positioned for success under the joint ownership of Humana and CD&R.”

Diamond continued, “Humana started on our journey with Kindred at Home in 2018 and we are pleased that, when viewing this transaction in conjunction with our purchase of the broader Kindred at Home platform, we have been able to achieve our objective to substantively increase our footprint in home care by acquiring one of the leading home health platforms in the country at an attractive valuation for our shareholders.”

The transaction is expected to close in the third quarter of 2022 and is subject to customary state and federal regulatory approvals. Upon closing of the transaction, the Hospice and Personal Care divisions will be restructured into a standalone operation.
David Causby, current President and CEO of KAH’s Hospice and Personal Care divisions, will continue to lead these businesses under the new structure.

“We are excited by the new strategic partnership structure with Humana and look forward to working closely with CD&R to pursue growth that is centered on improved access, equity and quality of care across an expanded group of patients,” said Causby. “We share a common set of values and, like the CD&R team, are focused on driving quality care for patients and continuing to ensure that our company remains an employer of choice for health care professionals.”

Humana intends to use proceeds from the transaction for the repayment of debt and share repurchases. The company does not anticipate a material impact to 2022 earnings from this pending transaction.

Goldman Sachs & Co. LLC and Barclays are acting as financial advisors to Humana, while Fried, Frank, Harris, Shriver & Jacobson LLP and Manatt, Phelps & Phillips, LLP are acting as legal advisors. For CD&R, Deutsche Bank Securities Inc. and UBS Investment Bank are acting as financial advisors and Debevoise & Plimpton LLP and Ropes & Gray LLP are acting as legal advisors.