WSJ: Humana in 'advanced talks' with private firms to buy Kindred Healthcare
Two of Louisville’s biggest publicly traded companies could be about to combine, according to the Wall Street Journal. Humana is “advanced talks” to join with a pair of private equity firms to buy Kindred Healthcare.
LOUISVILLE, Ky. (WDRB) -- Two of Louisville’s biggest publicly traded companies could be about to combine, according to the Wall Street Journal.
Humana is in “advanced talks” to join with a pair of private equity firms to buy Kindred Healthcare for about $9 a share, or about $785 million, according to the Journal report.
The deal would divide Kindred, with Humana taking the company’s home- and hospice-care operation while private equity firms Welsh Carson Anderson & Stowe and TPG would take over Kindred’s facilities-based business that includes about 77 long-term care hospitals and 19 rehabilitation hospitals, according to the Journal report.
Kindred, which is nearly finished with a second headquarters building on S. 4th Street, has about 2,216 Louisville employees, according to Louisville Business First. Humana – the state’s largest corporate headquarters – has about 12,500.
If Kindred is on the sale block, it’s better for Louisville that Humana is one of the buyers, said David Dubofsky, a professor of finance at the University of Louisville.
“If an outside company bought Kindred, they could move a lot of jobs to their home city,” Dubofsky said.
Neither Humana nor Kindred representatives responded to requests for comment on Monday.
In recent months, Humana executives have said they want to bulk up the company's in-home care offerings to improve the health of the elderly population that Humana serves.
About two-thirds of Humana's business is Medicare Advantage, the privately run version of the government's health insurance program for seniors. Meanwhile the Kindred at Home division that Humana would inherit gets about 75 percent of its business from Medicare, according Kindred reports.
"We continue to be very focused on the home, as home is often a superior clinical environment to deliver care and reduce high-cost hospital admissions," Humana CEO Bruce Broussard said on the company's Nov. 8 conference call with analysts.
Kindred's stock price has been on a downward trend since mid-2014. The company's debt is more than $3 billion, much of it stemming from the 2015 acquisition of Gentiva Health Services Inc.
A little over a year ago, Kindred said it would exit its nursing home business. Since then, the company has sold 80 skilled nursing facilities and five assisted living facilities for $658 million.
Humana itself is the subject of takeover speculation after its sale to health insurance rival Aetna was scuttled earlier this year.
Ana Gupte, an analyst with Leerink Partners, said in a note to clients Monday that the rumored Kindred acquisition does not mean that Humana is no longer a merger target.
"We do not think this precludes a potential future take-out of (Humana)," Gupte wrote, citing the "small size" of the Kindred deal and how it plays into Humana's Medicare Advantage strategy.