Last Week as Publicly Traded Company

Strange Tony,

Our hospice will soon be sold as part of Kindred at Home, formerly Gentiva.  Our first day under our new sponsors will be July 2, 2018.

It's a reverse independence day as financial rapscallions will own 60% and Humana 40%.  The three plan to add another hospice company, Curo Healthcare, after the first deal closes.   Our hospice will be placed under Curo's executives, who've spent years training under various financial rapscallions.

Humana and our new owners will saddle us with massive amounts of debt, over $3 billion in borrowings for a company with just $3 billion in annual revenue.  Kindred had $6 billion in revenue for a similar amount of debt.

Moody's cited Gentiva/Kindred at Home's very high leverage levels starting out, likely at 8.0 times earnings before various items (interest, taxes, depreciation, and amortization).  Increasing borrowings is odd for a management team that cited 6.0 times leverage as a reason to leave a publicly traded stock market.  

Our executives plan on hitting a home run and personally profiting from flipping the company to Humana.  That's the financial rapscallion model.  They face many challenges as they place our hospice on the edge of a financial razor blade.  Our site's management just got bonuses, likely as an incentive to hang around.

I don't expect them to be nearly as generous with our nurses, social workers or chaplains, many of whom have gone years without a raise.  The dirty men near and they have one priority, their bank accounts.  Fireworks are coming and I expect regular employees will be burned.

Anonymous (from KAHtiva)

Humana's Chief Consumer Officer Cashes In

Strange Tony,

Health insurance consumers often buy coverage on the basis of price.  One might expect a Chief Consumer Officer to do their part to keep premiums down.  Not Humana, our looming 40% owner. 

Humana's Chief Consumer Officer Jody Bilney exercised stock options worth $8.5 million.  Her net proceeds from the sale amount to $4.3 million. 

In weeks Humana and two financial rapscallions will buy Kindred's home health, hospice and community care divisions.  Many hard working, dedicated Kindred employees have gone years without raises.

Financial rapscallions did the following to employees of one acquired company:  They "eliminated positions, loading responsibilities onto other workers. Schedules became unpredictable. Employees had to pay more for fewer benefits."  That is Gentiva/Kindred at Home's likely fate, especially given the obscene levels of debt being loaded on our company.

Chief Consumer Officer Bilney just got hers.  I'm not sure how $4.3 million in stock option compensation will enable her to empathize with consumers struggling to keep outrageously expensive health insurance coverage.  I expect it will be a hindrance to her performing her job on behalf of consumers, however it will help her relate to board members, fellow executives and our new financial rapscallion owners.  She might take a chunk of her new wealth and become a TPG Capital or WCAS investor.

Lord, give us joy and peace as our earthly takeover occurs.  Protect us from arbitrary management decisions and actions inspired by greed.  Keep our hearts humble and focused on loving you and your beloved children.

Anonymous

Executives Say "No Changes" Coming with Buyout

Strange Tony,

My hospice co-workers believe our upcoming buyout will bring no changes.  They believe the latest missive from executives that answered micro questions about paychecks and PTO, avoiding the financial elephant in the room, the addition of massive debt.

Both Gentiva/Kindred at Home and Curo Health have leverage of at least 6 times EBITDA according to Moody's.  Our new owners will borrow over $3 billion to complete the two deals.  Moody's rated the new debt less than investment grade.  Their rating "reflects the company's very high debt/EBITDA following the leveraged buyout transaction and acquisition of Curo."

What kind of executives cite high leverage as the need to sellout then up the level of debt at least an order of magnitude?  Kindred at Home/Gentiva leaders did just that by inviting more moneychangers to set up in the temple. They did so in a rising interest rate environment, meaning additional debt will be more expensive.

"Three dark personalities, narcissism, Machiavellianism, and psychopathy have been studied in businesses.  Although the first two share similar traits with psychopathy, such as superficial charm, lying and manipulation, the inability to accept responsibility for their actions, and the complete lack of empathy, guilt and humility, a large body of research has demonstrated that psychopathic individuals are more dishonest, treacherous and destructive than the others.'

'While all three dark personalities can be bad news for a company, corporate psychopathy is the most dangerous.  Nevertheless, because they use hard/deceitful manipulation tactics, are perceived as more dominant, and use overt means to appear more 'attractive' to those they wish to manipulate, psychopathic individuals may have the upper hand when it comes time to identify and select the most likely to succeed candidate for employee selection and promotion."-- Cynthia Mathieu, The Devil Lurks In the Suit

"Psychopathy is a personality disorder characterized by twenty well-documented traits and characteristics.  The most visible are glib/superficial charm, a grandiose sense of self worth, a strong need for stimulation (that is, psychopaths are easily bored) and impulsivity.' 

'However, there are others, which they successfully hide from view, in particular pathological lying, conning, manipulation, a lack of empathy, remorse and guilt.  Over time, one might begin to see examples of irresponsibility, lack of realistic, long-term goals, and their failure to take responsibility for their own actions."-- Paul Babiak, co-author with Robert Hare of Snakes In Suits

Massive changes are coming, even as health insurance, PTO and mileage reimbursement remain the same.  Staffing is Kindred's biggest expense and executives count on integrating Curo in a way that saves big money and preserves revenues.  That did not happen when Gentiva integrated Harden's hospice division.  Revenue disappeared from poor management decisions that reduced the quality of patient care.

Greed is in the air and my co-workers think all is well.  Lord help and protect them.

Anonymous