Strange Tony,
Insiders leaked the status of Humana's planned sale of Kindred Hospice/Community Care. "Axios" wrote:
A Goldman Sachs-run divestiture process aimed at private equity is underway, three sources tell Axios. The company last year explored a strategic sale of the hospice arm shortly after buying out its private equity JV partners, two people add.
- The company generates approximately $300 million in EBITDA, sources say.
- The sale aims to fetch 12x EBITDA for the assets, one person adds, which suggests a deal could be valued in the upper $3 billion range if that EBITDA is applied.
Between the lines: 12x is lower than recent private market trades for scale hospice companies.
It appears our hospice will be once again saddled with financial rapscallion owners. CEO Bruce Broussard's promise of a public listing turned out to be hollow.
Humana will spin off Kindred Hospice/Community Care for 12x EBITDA, essentially the same price it paid TPG Capital and WCAS (11.5X EBITDA).
Any divestiture of the hospice/ community care assets would trigger the requirement within the credit agreement to repay the debt and as a consequence could result in a different rating outcome.
The report indicates:
....at June 30, 2021, the company had a large cash position at around $200 million dollars, and consistently positive free cash flow.
Moody's also notes that KAH has been paying down debt of roughly $125 million per quarter, which we expect would continue.
Humana, as operating partner, mobilized KAH's cash toward paying down debt of $500 million per year. Hospice staff generate revenue from their hard work, yet received little in the form of raises or improved benefits.
The financialization of our hospice continues with staff having no opportunity to have a stake in the company. Going from financial rapscallion ownership to financial rapscallion ownership is not the least bit inspiring.
Executives continue looking out for themselves. Goldman Sachs is lining up their next king's ransom via a $3.6 to $3.9 billion sale.
Greed is as greed does. It's extremely grating and fatiguing for dedicated hospice professionals. Lord, hear our struggles and comfort us.
Anonymous
Executives held 1.6% of KAH stock when Humana bought out TPG and WCAS. That equated to a $96 million payday for top dogs.
ReplyDeleteI'm still thinking this makes sense for Advent - PE owners of seasons/accentcare
ReplyDeletedoubles their mkt share
It would be ironic if it were Aveanna, a Bain Capital affiliate, as their CEO Tony Strange was once Gentiva's chief. He and Board Chair Rod Windley sold us to Kindred.
DeleteI dread any next owner that is from private equity. These people are evil.
Moody's expects any hospice deal to close this summer. They said this in a January 2022 ratings review:
ReplyDeleteWe estimate that leverage will return to pre-transaction levels around mid-2022.
Texas Kindred Hospice RN said:
ReplyDeleteOur branch experienced a shift in both upper and local management after a buy-out and with it, the work environment shifted from a friendly feel to almost toxic.
Humana's new President of Home Solutions just got $340,000 in stock and has options to buy 3,000 shares at $430/share.
ReplyDeletehttps://www.sec.gov/Archives/edgar/data/49071/000106299322006530/xslF345X03/form4.xml
Humana CFO Susan Diamond promised one Wall Street firm that they would provide information on the sale of Kindred Hospice/Community Care in their next quarterly earnings call.
ReplyDeleteAM Best missed Humana's shopping Kindred Hospice to another set of financial rapscallions. They still refer to a pending IPO.
ReplyDelete"Financial leverage remains elevated at approximately 44%, as measured by AM Best, at year-end 2021 due to debt issuances in 2021 to finance the acquisition of Kindred at Home. On a long-term basis, Humana targets a more conservative debt-to-capital ratio of 35%. Humana announced plans to deleverage by divesting of Kindred at Home’s hospice and person care services business via an initial public offering (IPO) after close of the transaction, which was completed in August 2021. This has not occurred to date and absent the IPO, financial leverage will decline only through equity growth or retirement of debt."
https://finance.yahoo.com/news/am-best-assigns-issue-credit-145700689.html