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Humana (HUM) Jointly Buys Curo, Boosts Medicare Business


Humana Inc. HUM recently announced that it has completed the joint acquisition of Curo Health Services (Curo) with Welsh, Carson, Anderson & Stowe (“WCAS”), collectively known as the Consortium. The transaction was approximately valued at $1.4 billion. Humana will own a 40% minority interest in this deal.

A nationwide leading hospice operator, Curo caters to patients at 245 locations across 22 states. Acquiring Curo is one of the latest moves by Humana in order to expand its medical care services portfolio to complement its evolving Medicare Advantage business that has been showing solid performance from past many years.

Of late, Humana also completed its buyout of Kindred Healthcare, Inc. (KND) jointly with TPG Capital (“TPG”) and WCAS. Under this consolidation, Kindred Healthcare would be operated and owned by TPG and WCAS whereas Kindred at Home will be operated as a standalone company wherein Humana would hold a 40% ownership. This in turn, provides Humana with extensive geographic coverage.

The Consortium intends to combine Curo with the hospice business of Kindred at Home for creating one of the largest hospice operators in the United States. This is also an excellent opportunity for Humana and its partners to establish themselves in a leading position in the continuum of home health, palliative care and hospice.

The consortium has been actively investing and building businesses with a view to provide patients with modern and enhanced healthcare within the comforts of their homes. The integration of Curo is in line with its growth strategy since the consortium is well-equipped with a capable management team, is tech-enabled and has a centralized model, quite appropriate for hospice care.

With Kindred Healthcare and Curo Health Services, the company is making full efforts to expand its presence in the growing home health and hospice care business. These deals will enable Humana to provide enhanced services to its approximately 3.5 million aged Medicare Advantage members, which will open an additional source of revenues from the same customers.

Shares of this Zacks Rank #2 (Buy) company have rallied 27.4% year to date, outperforming its industry’s growth of 14.1%.

Other Stocks to Consider

Other top-ranked stocks from the same industry include Molina Healthcare, Inc MOH, WellCare Health Plans, Inc. WCG and Triple-S Management Corporation GTS. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Molina Healthcare provides Medicaid-related solutions to meet the health care needs of low-income families and individuals. The stock carries a Zacks Rank of 2 and exceeded estimates in three of the last four quarters with a whopping average earnings surprise of 112.27%.

WellCare offers managed care services for government-sponsored health care programs. This Zacks #2 Ranked player came up with an average four-quarter positive surprise of 51.7%.

Triple-S provides a portfolio of managed care and related products in the commercial, Medicare and Medicaid markets in Puerto Rico, the United States. The company has a Zacks Rank #3 (Hold) and delivered a skyrocketing average four-quarter beat of 260.65%.

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