Humana Inc. (NYSE: HUM), TPG Capital (TPG) and Welsh, Carson,
Anderson & Stowe (WCAS) (collectively, the Consortium) today
announced the completion of the previously announced acquisition of
Kindred Healthcare, Inc. (Kindred).
In connection with the closing and in accordance with the terms
of the agreement, Kindred’s long-term acute care (LTAC) hospitals,
inpatient rehabilitation facilities (IRF) and contract
rehabilitation services business (collectively, Kindred Healthcare)
were separated from Kindred’s home health, hospice, and community
care businesses (collectively, Kindred at Home). Kindred Healthcare
will be operated as a separate specialty hospital company owned by
TPG and WCAS. Kindred at Home will be operated as a standalone
company owned 40 percent by Humana, with the remaining 60 percent
owned by TPG and WCAS. Humana will have a right to buy the
remaining ownership interest in Kindred at Home over time through a
put/call arrangement.
As a result of the completion of the acquisition, Kindred’s
stock has ceased trading on the New York Stock Exchange.
The Consortium expects the closing of the separate, previously
announced acquisition of Curo Health Services to occur later this
month.
Cautionary Statement
This news release includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
When used in investor presentations, press releases, Securities and
Exchange Commission (SEC) filings, and in oral statements made by
or with the approval of one of Humana’s executive officers, the
words or phrases like “expects,” “believes,” “anticipates,”
“intends,” “likely will result,” “estimates,” “projects” or
variations of such words and similar expressions are intended to
identify such forward-looking statements.
These forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties, and
assumptions, including, among other things, information set forth
in the “Risk Factors” section of the company’s SEC filings, a
summary of which includes but is not limited to the following:
- If Humana does not design and price its
products properly and competitively, if the premiums Humana
receives are insufficient to cover the cost of healthcare services
delivered to its members, if the company is unable to implement
clinical initiatives to provide a better healthcare experience for
its members, lower costs and appropriately document the risk
profile of its members, or if its estimates of benefits expense are
inadequate, Humana’s profitability could be materially adversely
affected. Humana estimates the costs of its benefit expense
payments, and designs and prices its products accordingly, using
actuarial methods and assumptions based upon, among other relevant
factors, claim payment patterns, medical cost inflation, and
historical developments such as claim inventory levels and claim
receipt patterns. The company continually reviews estimates of
future payments relating to benefit expenses for services incurred
in the current and prior periods and makes necessary adjustments to
its reserves, including premium deficiency reserves, where
appropriate. These estimates, however, involve extensive judgment,
and have considerable inherent variability because they are
extremely sensitive to changes in claim payment patterns and
medical cost trends, so any reserves the company may establish,
including premium deficiency reserves, may be insufficient.
- If Humana fails to effectively
implement its operational and strategic initiatives, particularly
its Medicare initiatives and state-based contract strategy, the
company’s business may be materially adversely affected, which is
of particular importance given the concentration of the company’s
revenues in these products. In addition, there can be no assurances
that the company will be successful in maintaining or improving its
Star ratings in future years.
- Certain proposed transactions,
including the divestiture of Humana’s subsidiary, KMG America
Corporation, as well as the acquisition of a minority interest in
Curo Healthcare Services by Humana are subject to various closing
conditions, including various regulatory approvals and customary
closing conditions, as well as other uncertainties, and there can
be no assurances as to whether and when these transactions may be
completed.
- If Humana fails to properly maintain
the integrity of its data, to strategically implement new
information systems, to protect Humana’s proprietary rights to its
systems, or to defend against cyber-security attacks, the company’s
business may be materially adversely affected.
- Humana is involved in various legal
actions, or disputes that could lead to legal actions (such as,
among other things, provider contract disputes relating to rate
adjustments resulting from the Balanced Budget and Emergency
Deficit Control Act of 1985, as amended, commonly referred to as
“sequestration”; other provider contract disputes; and qui tam
litigation brought by individuals on behalf of the government),
governmental and internal investigations, and routine internal
review of business processes any of which, if resolved unfavorably
to the company, could result in substantial monetary damages or
changes in its business practices. Increased litigation and
negative publicity could also increase the company’s cost of doing
business.
- As a government contractor, Humana is
exposed to risks that may materially adversely affect its business
or its willingness or ability to participate in government
healthcare programs including, among other things, loss of material
government contracts, governmental audits and investigations,
potential inadequacy of government determined payment rates,
potential restrictions on profitability, including by comparison of
profitability of the company’s Medicare Advantage business to
non-Medicare Advantage business, or other changes in the
governmental programs in which Humana participates.
- The Healthcare Reform Law, including
The Patient Protection and Affordable Care Act and The Healthcare
and Education Reconciliation Act of 2010, could have a material
adverse effect on Humana’s results of operations, including
restricting revenue, enrollment and premium growth in certain
products and market segments, restricting the company’s ability to
expand into new markets, increasing the company’s medical and
operating costs by, among other things, requiring a minimum benefit
ratio on insured products, lowering the company’s Medicare payment
rates and increasing the company’s expenses associated with a
non-deductible health insurance industry fee and other assessments;
the company’s financial position, including the company’s ability
to maintain the value of its goodwill; and the company’s cash
flows. Additionally, potential legislative changes, including
activities to repeal or replace, in whole or in part, the Health
Care Reform Law, creates uncertainty for Humana’s business, and
when, or in what form, such legislative changes may occur cannot be
predicted with certainty.
- Humana’s business activities are
subject to substantial government regulation. New laws or
regulations, or changes in existing laws or regulations or their
manner of application could increase the company’s cost of doing
business and may adversely affect the company’s business,
profitability and cash flows.
- If Humana fails to develop and maintain
satisfactory relationships with the providers of care to its
members, the company’s business may be adversely affected.
- Humana’s pharmacy business is highly
competitive and subjects it to regulations in addition to those the
company faces with its core health benefits businesses.
- Changes in the prescription drug
industry pricing benchmarks may adversely affect Humana’s financial
performance.
- If Humana does not continue to earn and
retain purchase discounts and volume rebates from pharmaceutical
manufacturers at current levels, Humana’s gross margins may
decline.
- Humana’s ability to obtain funds from
certain of its licensed subsidiaries is restricted by state
insurance regulations.
- Downgrades in Humana’s debt ratings,
should they occur, may adversely affect its business, results of
operations, and financial condition.
- The securities and credit markets may
experience volatility and disruption, which may adversely affect
Humana’s business.
In making forward-looking statements, Humana is not undertaking
to address or update them in future filings or communications
regarding its business or results. In light of these risks,
uncertainties, and assumptions, the forward-looking events
discussed herein may or may not occur. There also may be other
risks that the company is unable to predict at this time. Any of
these risks and uncertainties may cause actual results to differ
materially from the results discussed in the forward-looking
statements.
Humana advises investors to read the following documents as
filed by the company with the SEC for further discussion both of
the risks it faces and its historical performance:
- Form 10‐K for the year ended December
31, 2017;
- Form 10-Q for the quarter ended March
31, 2018; and
- Form 8‐Ks filed during 2018
About TPG
TPG is a leading global alternative asset firm founded in 1992
with more than $82 billion of assets under management and offices
in Austin, Beijing, Boston, Dallas, Fort Worth, Hong Kong, Houston,
London, Luxembourg, Melbourne, Moscow, Mumbai, New York, San
Francisco, Seoul, and Singapore. TPG’s investment platforms are
across a wide range of asset classes, including private equity,
growth venture, real estate, credit, and public equity. TPG aims to
build dynamic products and options for its investors while also
instituting discipline and operational excellence across the
investment strategy and performance of its portfolio. For more
information, visit www.tpg.com.
About Welsh, Carson, Anderson &
Stowe (WCAS)
WCAS focuses its investment activity in two target industries:
technology and healthcare. Since its founding in 1979, WCAS has
organized 16 limited partnerships with total capital of over $22
billion. The Firm is currently investing an equity fund, Welsh,
Carson, Anderson and Stowe XII, L.P., which closed on over $3.3
billion in commitments. WCAS has a current portfolio of
approximately twenty companies. WCAS’s strategy is to partner with
outstanding management teams and build value for its investors
through a combination of operational improvements, internal growth
initiatives and strategic acquisitions. See www.wcas.com to learn more.
About Humana
Humana Inc. is committed to helping our millions of medical and
specialty members achieve their best health. Our successful history
in care delivery and health plan administration is helping us
create a new kind of integrated care with the power to improve
health and well-being and lower costs. Our efforts are leading to a
better quality of life for people with Medicare, families,
individuals, military service personnel, and communities at
large.
To accomplish that, we support physicians and other health care
professionals as they work to deliver the right care in the right
place for their patients, our members. Our range of clinical
capabilities, resources and tools – such as in-home care,
behavioral health, pharmacy services, data analytics and wellness
solutions – combine to produce a simplified experience that makes
health care easier to navigate and more effective.
More information regarding Humana is available to investors via
the Investor Relations page of the company’s website at humana.com,
including copies of:
- Annual reports to stockholders;
- Securities and Exchange Commission
filings;
- Most recent investor conference
presentations;
- Quarterly earnings news releases and
conference calls;
- Calendar of events; and
- Corporate Governance information.
About Kindred Healthcare
Kindred Healthcare is a healthcare services company based in
Louisville, Kentucky with annual revenues of approximately $3.4
billion(1). At March 31, 2018, Kindred Healthcare through its
subsidiaries had approximately 38,300 employees providing
healthcare services in 1,831 locations in 45 states, including 75
LTAC hospitals, 19 inpatient rehabilitation hospitals, 13 sub-acute
units, 98 inpatient rehabilitation units (hospital-based) and
contract rehabilitation service businesses which served 1,626
non-affiliated sites of service. Ranked as one of Fortune
magazine’s Most Admired Healthcare Companies for nine years,
Kindred Healthcare’s mission is to promote healing, provide hope,
preserve dignity and produce value for each patient, resident,
family member, customer and employee we serve. For more
information, go to www.kindredhealthcare.com. You can also follow
us on Twitter and Facebook.
About Kindred at Home
Kindred at Home is primarily a home health, hospice and
community care services company with annual revenues of
approximately $2.6 billion(1). At March 31, 2018, Kindred at Home
through its subsidiaries had approximately 46,000 employees
providing healthcare in 606 home health, hospice and non-medical
home care sites of service in 40 states. For more information, go
to www.kindredhealthcare.com. You can also follow us on Twitter and
Facebook.
(1) Revenues for the last twelve months ended March 31,
2018.
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version on businesswire.com: https://www.businesswire.com/news/home/20180702005714/en/
Humana Corporate CommunicationsTom Noland,
502-580-3674Tnoland@humana.comorHumana Investor RelationsAmy Smith,
502-580-2811Amysmith@humana.comorTPGLuke Barrett,
415-743-1550media@tpg.comorWCASJon Rather,
212-893-9570General Partnerjrather@wcas.com
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