Humana Selling Curo-Kindred Hospice to "Free Up" Capital

Strange Tony,

Humana CFO Susan Diamond spoke at the Bank of America Securities Home Care Conference.   The moderator expressed his excitement about Diamond's background heading Humana's Home Division.  Before perusing a summary of her remarks, recall Humana served as the operating partner of Kindred at Home since July 2018.  Humana purchased the remaining 60% it did not own in August 2021.

The moderator asked why Humana would not hold onto Kindred at Home's Hospice Division?  Diamond said:

Given the amount of capital invested in the asset there is an opportunity to monetize the value of that asset, spin it off or set it up for independent operation.  It will free up capital, allow us to de-lever more quickly, allow capital to be deployed where we have stronger conviction that we need to own the asset.

Diamond indicated durable medical equipment as one such area.  She said Humana will eventually provide DME for all the people it insures.  Not so with the hospice division.

We will divest a majority stake and sell the rest of the company over time.

The moderator asked about the financial impact of selling the hospice division on Kindred at Home.

We intend to update disclosures in 2022.  It is hard to see the impact under current disclosures.  At the time of the buyout KAH had annual revenues of $3.2 billion and full year EBITDA of $650 million.  EBITDA is split close to 50/50 between Home Health and Hospice.  Hospice had a higher profit margin than Home Health.

She referred to the hospice division as "Curo - Kindred's hospice business."  In talking about the future of Home Health Diamond talked about staff.

Home Health could have top line organic growth of 6%.  Mergers and acquisitions could accelerate that.  The challenge comes in hiring/recruitment/retaining clinicians to take on that volume.  The industry just accepted higher turnover as a cost of doing business.  I have been challenging the Kindred team to buck that theory.  There are systemic challenges underneath.  Demand for nurses outweighs supply.  We need to train more nurses.

Humana has been the operating partner for Kindred at Home for more than three years.  Humana fomented massive turnover at our hospice via Curo Health's crappy, unreliable technology and sparse staffing model.  Humana ran off competent, well trained hospice nurses to the point our hospice census dropped 50% from July 2018.

Under Diamond's leadership Kindred at Home cut holidays 33%, reduced holiday pay 50%, rarely gave a pay raise, and consistently shorted staff on hours worked and miles driven.  That may have contributed to high employee turnover.

Humana wants to be the employer of choice in all areas of the home.  We are offering sign on bonuses and retention bonuses but are trying not to impact run rates (overall salary costs).  We expect to see some wage inflation but that will work its way into reimbursement.

Hesitant to raise wages until the very end, that's executive greed nowadays.  How dare the little people be paid like the Diamonds in the C Suite. 

CFO Susan Diamond had a HP Printer in clear view behind her.  I'm sure the boys at Bank of America know Humana CEO Bruce Broussard sits on HP's Board of Directors.  It's but one more handsome check for Bruce as his company conducts wage and mileage theft from hospice workers.

 Anonymous