Strange Tony,
Brigade Capital sued to stop Kindred's breakup sellout to two private equity firms and Humana. The investor claimed the deal severely undervalued Kindred. The court ruled in Kindred's favor on March 27, 2018. Kindred shareholders voted March 29, 2018 to sell out.
Humana and its financial rapscallion partners announced the deal to buy hospice provider Curo Health on April 23, 2018.
Both Kindred and Curo had leverage around 6 times EBITDA. The two companies shared a similar capital structure.
Had the Curo deal been announced earlier Brigade Capital would have had a stronger case. Kindred at Home sold for 0.78 times 2017 revenues while Curo went for 3.03 times 2017 revenues. Buyers paid nearly four times more for Curo than they did for Kindred at Home.
Long term Kindred investors did not make out well. Kindred's last 10-K showed a mere 1.87% return over a five year period for long term shareholders.
The end result is Kindred at Home will have $3 billion in revenues. It will also have $3 billion in debt, a massive increase from pre-buyout levels of $1.1 billion.
This is the new face of Kindred at Home. Despite buyout after buyout, legacy employees have never been in this precarious a position. Pray for coworkers as management gets marching orders from executives and owners who vastly overpaid for Curo relative to Kindred..
Just as Brigade Capital received short shrift, so may Kindred Hospice employees under Curo's executive rule.
Anonymous (from KAHtivacareplus Hospice)
I know that at least 1 of the 2 HR people were let go in KS. She got a severance. So lay offs seem to have started as I am sure there are more I am not aware of yet. BTW she had been with the company a long time, I don't expect people who haven't been there as long to get much of a severance.
ReplyDelete88.2% of the combined purchase price is debt financed. The remaining $400 million or 11.8% represents the cash/initial equity. Humana paid $800 million in cash. Did half of Humana's initial investment go to Wall Street fees?
ReplyDeleteMore posts please about the combination! I lost a ton of money on these last 2 "deals" and the blog offers me a little solace having lost a good chunk of my retirement nest...
ReplyDeleteThe South Atlantic region under Susan Beniot's leadership lost a lot of clinical operation directors and rehab leadership positions last week. So much for the push for Quality STAR ratings and Value based Purchasing..Employees many of whom had been with Kindred 10-15 years.. No loyalty!!
ReplyDeleteEstimated mark to market gain of approximately $7.73 per diluted common share associated with the company's existing 40 percent minority ownership of Kindred at Home; the gain will be recorded upon closing of the Kindred at Home transaction, which is anticipated in the third quarter of 2021.
ReplyDeletehttps://finance.yahoo.com/news/humana-reports-second-quarter-2021-103000520.html
More evidence Kindred sold us out on the cheap. Recall KAH revenues are basically stagnant since Humana and two financial rapscallions bought us out in 2018.
Moody's most recent rating of Kindred at Home (Gentiva) debt said:
ReplyDeleteRevenues are approximately $3 billion LTM June 30, 2021.
LTM stands for last twelve months. Leadership kept revenue stagnant for three years.
Today Humana's CFO admitted their original buyout of KAH was on the cheap.
ReplyDelete"our purchase of the broader Kindred at Home platform, we have been able to achieve our objective to substantively increase our footprint in home care by acquiring one of the leading home health platforms in the country at an attractive valuation for our shareholders."