- Humana, along with private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe, announced a definitive agreement to acquire Curo Health Services, a hospice operator, for $1.4 billion.
- The same trio of companies announced in December they would acquire Kindred Healthcare in a $4.1 billion deal.
- The two separate deals, pending regulatory closure, would effectively make Humana owner of the country's largest hospice operator.
Merger mania continues in the U.S. healthcare industry with Humana going all in for a play on the market for aging baby boomers.
The major insurers, after mergers among themselves were blocked by federal regulators, are looking to non-traditional deals to boost their competition in the space.
Humana, which was blocked from a merger with Aetna over a concern of lack of competition in the Medicare Advantage market, is looking at acquisitions as a way to become a large home health and hospice operator.
The payer, alongside the investment firms, signaled as much in their announcement of the Curo deal. The members "partnered with the objective of investing in and building businesses that can help modernize, enhance and transform home healthcare in America."
Curo operates 245 locations in 22 states and presents the possible integration of Humana's services in managing home health, palliative and hospice care.
Humana is already investing in the senior population, as the second biggest provider of Medicare Advantage plans. More than 10,000 Americans are aging into Medicare each day.
Humana CFO Brian Kane in February said on the Q4 2017 earnings call that Medicare Advantage "membership growth, coupled with productivity initiatives undertaken in 2017 and the reduction of our corporate income tax rate under the tax reform law, provide a solid foundation for significant earnings growth in 2018 and beyond.”
U.S. President and CEO Bruce Broussard added on the call there’s 65% geographic overlap between Kindred and Humana’s MA populations.
There have been rumors that Walmart is in talks to acquire Humana outright. If an agreement is announced, the home health and hospice deals Humana has in the works would align with Walmart's goals of keeping its customer base, which skews toward the older side, healthy and out of hospitals.
Of note, Walmart is remodeling 500 stores, reportedly including plans to build out private consultation rooms in updated pharmacy areas.
Kindred stockholders approved the sale to Humana and the investment firms in early April. Kindred said the transaction is expected to close this summer.
Immediately following the acquisition, the home health, hospice and community care businesses will be separated from Kindred and operated as a standalone company owned 40% by Humana, with the remaining 60% owned by TPG and WCAS.
The Curo deal is expected to close in the summer, after the Kindred deal.