Shares of home health companies Amedisys (AMED), LHC Group (LHCG) and Almost Family (AFAM) are all down following a report that Humana (HUM) is in talks to buy Kindred Health (KND).
HUMANA, KINDRED TALKS: Humana is in advanced talks to join private equity firms Welsh Carson Anderson & Stowe and TPG in a deal to acquire Kindred Healthcare that would value the company at $9 per share, the Wall Street Journal reported on Sunday. As part of the deal, Kindred, which has a market value of roughly $750M, would be split up, with Welsh, Carson, Anderson & Stowe and TPG taking over its facility-focused business and the private equity firms along with Humana would acquire its home- and hospice-care operations. The move comes as Humana looks to expand its home-health operations to improve care and reduce costs.
DEUTSCHE SAYS SALE PRICE ‘LOW’: Deutsche Bank analyst Chris Rigg said that the news of the deal is unsurprising as Humana has voiced interest in acquiring home health businesses, and Welsh, Carson is a member of Select Medical’s (SEM) board and has done deals with them in the past. Rigg said that while he’s Hold rated on Kindred Healthcare, he views the reported sale price of $9 per share as “too low.” The analyst noted that his sum-of-the-parts analysis has Kindred valued at $15 per share, or a 79% premium to Friday’s close and 71% premium to the takeout price reported this weekend.
RBC SAYS DEAL “NOT SURPRISING”: RBC Capital analyst Frank Morgan also said it is “not surprising” to see the report that Humana and partner private equity firms are in talks to take over Kindred Healthcare’s home health and hospice business, while the firms would retain the long-term acute care and rehab business. He noted that such a deal would complement Humana’s existing home health footprint and be similar to recent vertical integration moves by managed care organization rivals Aetna (AET) and UnitedHealth (UNH). Morgan has a Sector Perform rating on Kindred shares.
Leave A Comment