Kindred at Home Expansion Takes a Back Seat for Humana

The new parent company of Kindred at Home (NYSE: KND) isn’t moving toward growing the new business with urgency, executives said during an earnings call reviewing fourth quarter 2017 results.

Humana Inc. (NYSE: HUM) announced in December it would be acquiring 40% of the Kindred at Home business, with two private equity groups acquiring the other 60%. The total value of the deal, which also included the private equity groups acquiring Kindred’s hospital and rehabilitation business, is approximately $4.1 billion.

On Wednesday’s earnings call, executives stated that growing the Kindred at Home business, once it is operationally under new ownership, won’t be an immediate priority.


“On the home side, we’ll continue to build out geographic presence over time,” Humana CEO Bruce Broussard said. “It’s not an urgency for us today, but we would do it through the Kindred platform.”

Louisville-based Humana is one of the nation’s largest health insurance providers and one of the top two largest Medicare Advantage providers. Its Humana at Home division laid off 500 workers last February amid losses of more than $400 million across the overall company.

For the fourth quarter of 2017, Humana reported total revenue of $13.2 billion, slightly beating analysts’ expectations.


On the acquisition front, Broussard noted that the company would likely continue Kindred’s historical strategy, using capital from the home heath care operations.

“They, traditionally… have always been in the market of buying smaller agencies and being able to expand their geographic coverage,” Broussard said. “And so we would do it through the capital that would be coming from the cash flow of Kindred, and use it from that particular capital base.”

Earlier this week, Kindred filed a proxy statement on the deal with the Securities and Exchange Commission ahead of a special meeting by shareholders, which is scheduled to be held in April or May. An accompanying investor presentation underscored a number of current challenges in the home health care space.

The transaction between Humana and Kindred is anticipated to close mid-2018. Humana’s stock price was down more than 1.5% by end of day trading Wednesday.

Written by Amy Baxter

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