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CDR Asks State to Approve Sale of Two Oregon Kindred at Home Locations

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Two Oregon locations included in Humana’s (NYSE: HUM) divestiture of Kindred at Home’s hospice assets are currently under review by the state’s health authority — part of the diligence process involved in any M&A transaction.

Humana in April signed a definitive agreement to sell a 60% stake in Kindred at Home to private equity firm Clayton, Dubilier & Rice (CDR) for a price tag of $2.8 billion. The insurance giant and health care provider will retain the remaining 40%.

Kindred at Home operates 441 locations across 36 states. Some of these states, including Oregon, have laws on the books requiring certain administrative reviews of mergers and acquisitions.

CDR operates Falcon Holdings, which recently requested the Oregon Health Authority’s approval for the purchase of two Kindred Hospice locations, one in the town of Lake Oswego and the second in Salem.

Pending the state’s regulatory approval and consummation of the transaction, Falcon Holdings and the Humana subsidiary Gentiva Health Services will split ownership of the Kindred Hospices at 60% and 40%, respectively. 

Humana does not comment to the press on any specific regulatory activity related to the transaction and whether any hurdles are on the horizon that could delay its progression.

“This proposed transaction will allow partnership with the CD&R entities to maintain patient care at the Kindred Hospices while optimizing the efficiency of shared operations,” Falcon Holdings indicated in the request. “The transaction is not expected to have any impact on the price of or access to health care services within Oregon. There will be no changes to the Kindred Hospices’ location and no reduction in the number or quality of staff or services.”

Humana anticipates the Kindred at Home transaction to complete later this year, executives reported in a Q1 earnings call. Last year Humana acquired total ownership of the hospice, home health and personal care provider for $5.7 billion.

Oregon state legislators in 2021 passed a law to oversee health care consolidation in the state. This helped to launch the Health Care Market Oversight program, designed to ensure that business deals, mergers and acquisitions do not result in reduced access to affordable, equitable health care.

Regulators have been eying health care M&A due to questions of how the widespread consolidation will affect providers and patients. Lawmakers have been particularly concerned about the impact of increased private equity involvement.

Members of the U.S. Senate Finance Committee announced last year that they would investigate the relationship between Kindred at Home and its former private equity backers Welsh, Carson, Anderson & Stowe and TPG Capital. 

Ron Wyden (D-Ore.) and Sens. Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio) wrote to those firms last August, requesting information about the role they may have played in Kindred at Home’s operations. To date, none of the companies involved have been accused of any wrongdoing.

Private equity activity has ramped up in recent years throughout the health care continuum, and hospice is no exception.

In the last decade, the proportion of deals completed in home health and hospice by private equity rose from 30% to 50%, according to an industry transaction report from M&A firm The Braff Group. The firm projected that private equity activity will reach a new record high, anticipated to expand further into hospice at a “feverish pace.”

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