Humana Inc. (HUM - Free Report) recently announced that it has completed the acquisition of Kindred Healthcare, Inc. (KND) along with other companies, namely TPG Capital (“TPG”) and Welsh, Carson, Anderson & Stowe (“WCAS”).
Per the agreement, Kindred’s long-term acute care hospitals, inpatient rehabilitation facilities and contract rehabilitation services business were separated from its home health, hospice and community care businesses, which is collectively known as Kindred at Home.
While Kindred Healthcare would be operated and owned by TPG and WCAS, Kindred at Home will be run as a standalone company by Humana, which owns 40 % stake in it. TPG and WCAS are entitled to a 60 % interest. However, Humana will enjoy the right to purchase the remaining ownership interest in Kindred at Home over years through a put/call arrangement.
This acquisition will lend Humana an extensive geographic coverage with around 65 percent overlap via its individual Medicare Advantage Membership. Kindred at Home being the largest home health company in the country would enable Humana to provide better clinical facilities, integrated with the member’s lifestyles.
Care in the home is aimed at improving the health of senior members with chronic conditions within the comfort zone of their homes. The robust data sharing between Humana and Kindred at Home would offer a transformative platform for a brighter future with advanced capabilities such as remote monitoring, telehealth, digital interactions, etc.
The buyout structure will provide Humana with an improved geographic and clinical scale in a capital efficient manner as well as reduce the company’s upfront capital outlay. Moreover, the transaction would eliminate all exposure to non-core assets in this Specialty Hospital company.
Shares of this Zacks Rank 2 (Buy) stock have rallied 20.20% year to date, outperforming its industry’s growth of 10.91%.
Other Stocks to Consider
Other top-ranked stocks from the same industry include Molina Healthcare, Inc (MOH - Free Report) , WellCare Health Plans, Inc. (WCG - Free Report) and Triple-S Management Corporation (GTS - Free Report) .
Molina Healthcare offers Medicaid-related solutions to meet the health care needs of low-income families and individuals. The stock sports a Zacks Rank # 1 (Strong Buy) and exceeded estimates in three of the last four quarters with an average earnings surprise of 112.27%. You can see the complete list of today’s Zacks #1 Rank stocks here.
WellCare provides managed care services for government-sponsored health care programs. This Zacks Rank #2 (Buy) player came up with an average four-quarter positive surprise of 51.70%.
Triple-S provides a portfolio of managed care and related products in the commercial, Medicare and Medicaid markets in Puerto Rico, the United States. With a Zacks Rank of 2, the company delivered a whopping average four-quarter beat of 260.65%.
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