Hospice sector is evolving and health insurer Humana (HUM) is growing its presence in this booming industry amidst speculation that it may be acquired by retail giant Walmart (WMT). Humana — that failed to merge with rival company Aetna (AET) — struck the second deal in the hospice sector with an aim of being a leading hospice operator.
The Louisville-based health insurer joined hands with two private-equity companies — Welsh, Carson, Anderson & Stowe and TPG Capital — to acquire a hospice provider Curo Health Services in a deal valued at $1.4 billion. Humana currently awaits an approval from the state and federal regulators. The same group had teamed up last year to acquire Kindred Healthcare (KND), a long-term care provider, for $4.1 billion. This deal marked the first move of the health insurer into patient care.
Major health insurers who are keen on making deals among themselves are forced to look for other non-traditional deals due to the objection from the federal regulators. Similar to the top rivals — UnitedHealth Group (UNH) and Cigna (CI) — Humana is also eyeing at such acquisitions.
On the closure of the deal with Kindred, which is anticipated to happen this summer — Humana plans to make the latter’s home health, hospice and community care businesses into a separate entity, of which 40% will be owned by Humana and the rest by the two private-equity firms.
Humana currently serves over 3 million Medicare Advantage patients and with the two recent deals, the company aims at combining outpatient services with the Medicare Advantage plans.
Rumors stated that Walmart is looking at strengthening its existing ties with Humana and from the start, it was always regarded as an acquisition. However, due to these recent deals, some analysts have expressed their opinion that the health insurer will not be viewed as a takeover target by Walmart.