Humana and WCAS to form JV focused on senior primary care centers

Humana Inc and Welsh, Carson, Anderson & Stowe have agreed to form a joint venture that will develop and operate senior-focused primary care centers.

Humana Inc and Welsh, Carson, Anderson & Stowe have agreed to form a joint venture that will develop and operate senior-focused primary care centers. The centers will be managed by Humana’s primary care subsidiary, Partners in Primary Care, and operate under the Partners in Primary Care brand. WCAS and Humana are making an initial commitment of about $600 million to the joint venture. WCAS will have a majority ownership in the JV while Humana will have a small minority stake.

PRESS RELEASE

NEW YORK & LOUISVILLE, Ky.–(BUSINESS WIRE)–Humana Inc.’s (NYSE: HUM) Partners in Primary Care and Welsh, Carson, Anderson & Stowe (WCAS) have entered into an innovative joint venture that will expand access to value-based primary care for Medicare patients. The joint venture will develop and operate senior-focused, payor-agnostic, primary care centers, which will be managed by Humana’s wholly-owned, primary care subsidiary, Partners in Primary Care, and operated under the Partners in Primary Care brand.

WCAS, a leading private equity firm specializing in healthcare and technology, together with Humana, is making an initial commitment of approximately $600 million to the joint venture. WCAS will have majority ownership in the new company; Humana will own a small minority stake.

Humana is committed to a strategy of improving the health of seniors through a value-based health ecosystem that brings simplicity and connectivity to the healthcare experience. Humana will continue to pursue that strategy through both a network of market-leading partners and its proprietary primary care businesses. The new joint venture is expected to more than double Partners in Primary Care’s footprint of senior-focused primary care centers over the next three years. Partners in Primary Care currently operates 47 care centers located throughout Kansas, Missouri, North Carolina, South Carolina, Texas, and Florida. This joint venture will further allow Partners in Primary Care to scale its core operations to facilitate the continued expansion of its care model.

“There is a significant unmet need for value-based, senior-focused primary care in the U.S.,” said David Caluori, General Partner of WCAS. “WCAS has a 40-year history of successfully building world-class healthcare companies. This transaction represents another example of how WCAS creatively partners within the healthcare ecosystem to enhance access to innovative healthcare services to improve patient care. Through this new joint venture, Partners in Primary Care is now well resourced to accelerate the deployment of its proven care model in areas across the country that need it most. We are thrilled to be able to partner with Humana and Partners in Primary Care to expand access to quality care to the millions of seniors living in underserved areas throughout the nation.”

“Partners in Primary Care is well positioned to meet the health needs of the growing senior population with our integrated primary care platform. Our integrated, whole-person, value-based care model comprehensively and proactively addresses chronic conditions, wellness and social determinants of health. We bring a differentiated offering and experience to seniors, often in areas where access to primary care is limited,” said Renee’ Buckingham, Segment President, Humana’s Care Delivery Organization. “We are excited to accelerate our growth through our partnership with WCAS. Together, we will be able to make this model available to more seniors and in more communities.”

Partners in Primary Care will receive a management fee, including performance-based incentives, for the management of all joint venture centers. In addition, the agreement includes a series of put and call options through which Partners in Primary Care may acquire WCAS’s interest in the joint venture, and through which WCAS may require Partners in Primary Care to purchase its interest in the joint venture, in stages over the next 5-10 years.

For clarification, Humana’s wholly owned Conviva operations, which operates 104 payor-agnostic senior-focused primary care centers located primarily in south Florida and Texas, is not party to this agreement.

The transaction is expected to have an immaterial impact to Humana’s earnings in 2020.

About Welsh, Carson, Anderson & Stowe
WCAS is a leading U.S. private equity firm focused on two target industries: healthcare and technology. Since its founding in 1979, the firm’s strategy has been to partner with outstanding management teams and build value for its investors through a combination of operational improvements, growth initiatives and strategic acquisitions. WCAS has deep experience in acquiring founder-led businesses and corporate carve-outs. The Firm has raised and managed funds totaling over $27 billion of committed capital. For more information, please visit www.wcas.com.

About Partners in Primary Care
Partners in Primary Care (Partners) is a primary care medical group practice operating centers in Kansas, Missouri, North Carolina, South Carolina, and Texas under the Partners in Primary Care brand, as well as centers in Florida operated under the Family Physicians Group brand. Partners has a strong emphasis on senior-focused primary care to members of Medicare Advantage health plans. Partners is committed to providing personalized, high-quality primary care combined with an excellent patient experience. Partners has experience in both the treatment and management of most chronic and acute-care conditions. The practices also provide health education and value-added, well-being services at their centers and around their neighborhoods to help both patients and community members improve their health. The management services organization for Partners is a wholly owned subsidiary of Humana Inc. (NYSE: HUM). For more information visit www.PartnersInPrimaryCare.com.

About Humana
Humana Inc. (NYSE: HUM) is committed to helping our millions of medical and specialty members achieve their best health. Our successful history in care delivery and health plan administration is helping us create a new kind of integrated care with the power to improve health and well-being and lower costs. Our efforts are leading to a better quality of life for people with Medicare, families, individuals, military service personnel, and communities at large.
To accomplish that, we support physicians and other health care professionals as they work to deliver the right care in the right place for their patients, our members. Our range of clinical capabilities, resources and tools – such as in-home care, behavioral health, pharmacy services, data analytics and wellness solutions – combine to produce a simplified experience that makes health care easier to navigate and more effective.