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Humana (HUM), CD&R Backed Gentiva to Buy Assets From ProMedica

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Humana Inc. (HUM - Free Report) and Clayton, Dubilier & Rice (CD&R) backed hospice company Gentiva is expected to acquire the hospice and home healthcare assets from Toledo-based not-for-profit healthcare system ProMedica. The deal is valued at $710 million, per Bloomberg.

Atlanta-based Gentiva was a part of Kindred at Home of Humana. Last year, HUM divested 60% of the business to Clayton, Dubilier & Rice for around $2.8 billion. It currently has a 40% stake in the business.

The acquisition is expected to boost Gentiva’s reach to over 500 locations. It currently operates in around 380 locations. The Heartland Hospice deal is expected to increase its patient count from 25,000 to 34,000. The combined company will likely see an increase in employee numbers by 4,000 from its current count of 30,000.

While most of the country is suffering from medical staff shortages, high salaries and benefits, Gentiva managed to keep a low turnover rate with a lower average patient per nurse than the industry levels. The acquisition is expected to increase its capacity and help it to offer improved services.

The transaction is reportedly expected to conclude in the second quarter of this year. The divestment is likely to bring some much-needed capital for ProMedica and simplify its organizational structure.

Price Performance

Humana’s shares have improved 14.9% in the past year compared with the 2.1% rise of the industry it belongs to.

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Zacks Rank & Key Picks

Humana currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader medical space are Avanos Medical, Inc. (AVNS - Free Report) , Harrow Health, Inc. (HROW - Free Report) and BioLife Solutions, Inc. (BLFS - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Avanos Medical’s 2023 earnings predicts 1.8% year-over-year growth. AVNS beat earnings estimates in all the past four quarters, with the average being 11%.

The consensus mark for Harrow Health’s 2023 earnings indicates a 119.7% year-over-year increase. Furthermore, the consensus estimate for HROW’s revenues in 2023 suggests 52.7% year-over-year growth.

The Zacks Consensus Estimate for BioLife Solutions’ 2023 earnings suggests 83.3% year-over-year growth. Also, the consensus mark for BLFS’ revenues in 2023 suggests 20.9% year-over-year growth.

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